MARKETING

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MARKETING MANAGEMENT
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Definition of Marketing

• the process of planning and executing the
  conception, pricing, promotion, and distribution
  of ideas, goods, and services to create exchanges
  that satisfy individual and organizational
  objectives.

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• E.g. Vitasoy

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• Exchange
• a process by which two or more persons give and
  receive something of value.

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The Marketing Concept -Focus on the Customer

• Market focus
• Customer orientation
• Co-ordinated marketing
• Profit seeking

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Drawbacks of Marketing Concept

• ignores public
• influences values ideas

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Recent Development-- Societal Marketing Concept

• Concerns public welfare and social responsibility
• e.g. CLP

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The role of Marketing

• Marketing Analysis
• Marketing Planning
• Marketing Implementation
• Marketing Control

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Marketing Research
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Marketing Research

• Gathering, recordingand analysis of data
• to solve a specificproblem that is tooimportant
  to be answered by guessing
• an informational input to decisions

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What M.R. can tell ?

• How satisfied the consumers are
• How products are perceived
• Evaluate the sales potential
• Determine the effectiveness of ad
• Predict the impact of price changes

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The Marketing Research Process
Defining the Problem Research Objectives
Developing the Research Plan
Implementing the Research Plan
Interpreting and Reporting the Findings
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1. Defining the problem and research
objectives

• to find out the real problem but not the symptom
• set the research objectives
• research approaches
• exploratory
• descriptive
• causal

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Examples
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2. Developing research plan

• Determine specific information needs
• Source of information
• secondary data
• Internal
• External
• primary data

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Benefits and Limitations of Secondary Data

• Benefits
• Low cost
• Less effort
• Less time
• Sometimes more accurate
• Some information only from secondary sources

• Limitations
• Collected for other purpose
• No control over data collection
• Potential accuracy problem
• May not be reported in required form
• May be outdated
• May not meet requirements
• A number of assumptions made

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• Planning primary data collection
• research approach
• contact methods
• sampling plan
• research instruments

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Research approach

• Observational research
• survey research
• focus group
• experimental research

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Contact methods

• Telephone survey
• mail questionnaires
• personal interviews

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Sampling plan

• sampling unit
• sampling size
• sampling procedure

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Sampling Techniques

• Probability Sampling
• All population members have a known probability
  of being in the sample
• Simple Random Sampling
• Each population member, and each possible sample,
  has equal probability of being selected
• Stratified Sampling
• The chosen sample is forced to contain units from
  each of the segments or strata of the population

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Sampling Techniques (Contd.)

• Cluster Sampling
• Involves dividing population into subgroups
• Random sample of subgroups/clusters is selected
  and all members of subgroups are interviewed
• Very cost effective
• Useful when subgroups can be identified that are
  representative of entire population

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Research instrument

• The most common instrument is questionnaire
• what questions to ask
• question structure
• wording of question
• order of question

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Implementing the research plan

• collecting and analyzing data

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Interpreting and reporting the finding

• Interpret the findings, draw conclusions and
  report to management
• the manager willutilize these findingsto make
  decisions

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Customer Behaviour
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Consumer behaviour

• refers to the buying behaviour of final consumers
• it includes the analysis of factors that
  influences purchase decisions and product use

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Definition

• Consumer behaviour studies how individuals,
  groups,and organizations select, buy, use, and
  dispose of goods, services, ideas,or experiences
  to satisfy their needs and desires.

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Consumer Behaviour
Marketing and other stimuli
Buyers black box
Buyers response
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External factors

• 1. Culture

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• 2. Social factor
• - reference groups

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• 3. Family

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• 4. Salesperson

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• 5. Advertising
• e.g. Fancl

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• 6. Situation

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Internal factors

• 1. Perception
• the process by which we select organize and
  interpret these stimuli into a meaningful and
  consistent picture

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2. Motivation

• to fulfill some kind of need

Self-actualization Needs
Esteem Needs
Esteem Needs
Social Needs
Security Needs
Physiological Needs
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3. Learning

• creates changes in behaviour through experience
  and practice

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4. Attitude

• Consistently favourable or unfavourable
  evaluation, feelings and tendencies toward an
  idea.

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5. Personality

• refers to the unique psychological
  characteristics that lead to relatively
  consistent and lasting responses

E.g. Vita Distilled Water
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6. Demographic factors

• such as age, sex, income, education, occupation,.

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Industrial Buying behaviour
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Industrial market

• Consists of all the individuals and organizations
  acquiring goods and services that enter into the
  production of other products and services that
  are sold, rented, or supplied to others

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Types of buying situations

• Straight rebuy
• modified rebuy
• new task buying

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Industrial buying process

• Recognise the problem
• determine product needs and describe product
  specifications
• search for suppliers
• assess and select suppliers
• evaluate overall performance

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Participants in the industrial buying process

• Users
• influencers
• buyers
• deciders
• gatekeepers

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Factors affecting industrial buying behaviour
External factors

• Level of demand
• economic outlook
• budget constraints
• supply conditions
• political/legal and competitive environmental
  changes
• rate of technological change

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internal factors

• Organizational influences
• interpersonal influences

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Differences between consumer market and
industrial market
Buying motive

• Industrial market
• Businesses do not buy products for final
  consumption. Instead, they make purchases to be
  used directly or indirectly in meeting the needs
  of final consumers.

• Consumer market
• For direct consumption

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Differences between consumer market and
industrial market
Size of purchase

• Industrial market
• Tend to be larger

• Consumer market
• Tend to be smaller

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Differences between consumer market and
industrial market
Frequency of purchase

• Industrial market
• Less frequent

• Consumer market
• More frequent

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Differences between consumer market and
industrial market
Buyer-seller relationship

• Industrial market
• Stable and long term relationship with seller

• Consumer market
• Businesses that produce products for sale to
  final consumers often have little contact with
  customers

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Differences between consumer market and
industrial market
Product

• Industrial market
• More complex, customized product support is
  critical.

• Consumer market
• Less complex, standardized product support is
  important

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Differences between consumer market and
industrial market
Price

• Industrial market
• Competitive bidding and negotiation list prices
  on standard products

• Consumer market
• List prices

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Differences between consumer market and
industrial market
Distribution

• Industrial market
• More direct (shorter)

• Consumer market
• Less direct (longer)

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Differences between consumer market and
industrial market
Promotion

• Industrial market
• Emphasis on personal selling

• Consumer market
• Emphasis on advertising

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Marketing Strategies
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Marketing strategy

• the plan of action for accomplishing the
  marketing objectives
• consists of
• specific strategies for target market
• marketing mix
• marketing expenditure level

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Analyze and select target market

• Market
• the set of all actual and potential buyers of a
  product

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• steps of selecting target market
• market segmentation
• market targeting
• market positioning

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Step 1
Marketing Segmentation
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Market segmentation

• the act of dividing large, heterogeneous
  (dissimilar) markets into smaller, homogeneous
  (similar) submarkets.

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Advantages of segmentation

• Precise market definition
• better analysis of competition
• rapid response to changing market needs
• effective resources allocation
• effective strategic planning

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Dimensions for segmenting consumer markets

• Geographic segmentation
• dividing the market into different geographical
  units.

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Demographic segmentation

• dividing the market into groups based on
  variables like age, sex, family size, family life
  cycle, income, occupation, education, religion,
  race, nationality,
• popular because of
• consumer needs vary closely with demographic
  variables
• easier to measure

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Psychographic segmentation

• based on social class, lifestyle, or personality
  characteristics

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Segmentation by benefits

• base on what a product will do rather than
  consumer characteristics

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Criteria for effective segmentation

• Substantial enough to serve
• Accessible by marketing means
• Differentiable
• conceptually distinguishable and responding
  differently

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• Actionable
• effective programs can be designed for
  attracting target customers
• Measurable
• size of market segment, purchasing power and
  profile of target customers

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Step 2
Market Targeting
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• to reveal the firm market-segment opportunities
• to evaluate the various segments
• segment size and growth
• segment structural attractiveness
• company objectives and resources

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Undifferentiated marketing

• A firm decides to ignore market segment
  differences and go after the whole market with
  one offer. E.g. McDonald

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Differentiated marketing

• A firm decides to target several market segments
  and design separate offers for each
• E.g. Giordano men, ladies

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Concentrated marketing

• A firm goes after a large share of one or a few
  sub-markets.
• Selected segments
• Specific products
• Specific markets

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Step 3
Market Positioning
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Market positioning

• to arrange for a product to occupy a clear,
  distinctive and desirable image relative to
  competing products in the minds of target
  consumers.

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• Purpose
• to reinforce or develop an image concerns a
  product in customer mind

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Ways of positioning

• Product features
• product benefits
• associating the product with a use or application
• user category

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Steps of positioning

• 1. Identifying a set of possible competitive
  advantages
• 2. Selecting the right competitive advantages
• 3. Communicating and delivering the chosen
  position to the market

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Marketing Mix
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Marketing Mix

• the set of controllable marketing variables that
  the firm blends to produce the response it wants
  in the target market
• 4 Ps
• product
• price
• place
• promotion

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Product
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• A product is anything that can be offered to a
  market for attention, acquisition, use, or
  consumption and that might satisfy a want or need
• 3 levels of product
• core product
• actual product
• augmented product

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Product Classification

• Convenience goods
• Shopping goods
• Specialty goods
• Unsought goods

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Classification of consumer goods
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Individual product decisions

• Product attribute decisions
• Brand decisions
• Packaging decisions
• Product-Support decisions

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Product Line Decisions

• A product line is a group of products that are
  related in function, customer-purchase needs, or
  distribution channels.

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Product mix decisions

• the set of all product lines and items that a
  particular seller offers for sale
• 4 dimensions
• width
• length
• depth
• consistency

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How new is new?

• New to the world
• New to the firm
• Product line extensions
• Product improvement
• Product modification

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Why does a company need new products?

• Obtain greater profits/ROI
• Capture larger market share
• Meet customers changing needs tastes
• Shorter product life cycle
• Build competitive advantages
• Planned obsolescence

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New product development

• Steps
• Product idea generation
• Product idea screening and product concept
  development
• Business analysis
• Product testing
• Market testing
• Commercialization

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Product life cycle (PLC)

• the course of a products sales and profit over
  its lifetime
• 4 stages
• introduction
• growth
• maturity
• decline

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Sales
Sales and profit
Profit
Introduction
Growth
Maturity
Decline
Time
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Introduction Stage

• slow sales growth
• profit are nonexistent
• high promotion spending
• a few competitors
• usually focus on high-income groups

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Growth Stage

• rapid market acceptance
• new competitors will enter
• introduce new product features
• market will expand
• profit increases

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Maturity Stage

• slowdown in sales
• competitors begin marking down prices,. to
  find better versions of the product
• drop in profit
• only well-established competitors

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Decline Stage

• sales fall off and profits drop
• some firms withdraw from the market

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Ways to extend PLC

• To increase the frequency of use
• to add new user
• to find new uses
• to change package size, label, or product quality

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Pricing
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Factors influencing pricing decisions ----
Internal Factors

• 1. Business and marketing objectives
• pricing objectives derive directly from
• company objectives

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• 2. Marketing mix strategy
• must coordinate with product, design,
  distribution and promotion decisions

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• 3. Costs
• set the floor for the price

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External factors

• 1. The market and demand
• Pricing in different types of market
• consumer perception of
• price and value

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• 2. Competitors prices and offers

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• 3. Other external factors
• economic conditions
• reseller conditions
• Government

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Pricing Objectives

• Profit maximizing objective
• Market share objective
• Competition objective
• Social objective
• Image objective

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General Pricing Approaches

• Cost-based approach
• Buyer-based approach
• Competition-based approach

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Pricing Strategies for New Products

• Market-skimming pricing
• Penetration pricing

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Price-adjustment strategies

• Discount pricing and allowances
• cash discounts
• quantity discounts
• functional discounts
• seasonal discounts
• trade-in allowances
• promotional allowances

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• Discriminatory pricing
• customer-segment pricing
• product-form pricing
• location pricing
• time pricing

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• Psychological pricing
• Promotional pricing
• loss leaders
• special event pricing
• cash rebates

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Promotion
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Promotion tools

• advertising
• sales promotion
• public relations
• personal selling

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Setting the promotion budget

• Affordable method
• ignores the effect of promotion on sales

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• Percentage-of-sales method
• wrongly view sales as the cause of promotion
  rather than as the result

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• Competitive-Parity
• method

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• Objective-and-task method

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Advertising
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Five important decisions

• 1. Setting objectives
• to inform,
• persuade, or
• remind

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• 2. Setting the advertising budget
• stage in the PLC
• market share
• competition
• advertising frequency
• product differentiation

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• 3. Creating the advertising message
• message generation
• message evaluation
• message execution

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• 4. Selecting advertising media
• reach, frequency, impact
• media types
• media vehicles
• media timing

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• 5. Advertising evaluation
• communication effects
• sales effects

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Sales Promotion
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Sales promotion

• A wide variety of short-term incentive tools
• coupons
• premiums
• contests
• buying allowances
• to stimulate consumers, the trade partners, and
  the companys own salesforce

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Purposes of sales promotion

• to stimulate consumer trials, to reward loyal
  customers, to increase repurchase rate, to cement
  long-term relationship with retailers,
• used together with advertising or personal selling

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Steps of sales promotion

• Setting sales-promotion objectives
• selecting sales-promotion tools
• pretesting and implementing
• evaluating

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Public Relations
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Public relations

• Building good relations with the companys
  various publics obtaining favorable publicity
• building up good corporate image
• handling or heading off unfavourable rumors,
  stories and events

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Public relations tools

• Create news
• speeches
• special events
• written materials
• audiovisual materials
• corporate identity materials
• contributing money and time to public-service
  activities

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Major public relations decisions

• Setting public relations objectives
• choosing public relations messages and vehicles
• implementing the public relations plan
• evaluating public relations results

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Personal Selling Sales Management
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Steps of sales management

• Setting salesforce objectives
• designing salesforce strategy
• structure, size and compensation
• recruiting and selecting
• training
• supervising
• evaluating

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Personal Selling Process

• Prospecting
• Preapproach
• Approaching the prospect
• Making the presentation
• Handling Objections
• Close the sale
• Follow up

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Factors affecting the promotion mix

• Type of product/market
• push vs. pull strategy
• buyer readiness state
• PLC stage

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Placing Products
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• The role of distribution is getting a product to
  its target market.
• Channels of distribution the routes followed by
  products as they change ownership in the movement
  from production to consumption

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Distribution channel functions

• Information
• promotion
• contact
• matching

• Negotiation
• physical distribution
• financing
• risk taking

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Designing distribution channel

• Selecting the proper type of distribution channel
• selecting the types of middlemen
• determining the intensity of distribution

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Meaning of logistics

• the movement of all materials
• raw materials from the sources to the
  processing point
• finished goods from the plant to ultimate
  customers

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• concerns with the management of physical flow

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Major logistics activities

• Transportation
• inventory maintenance
• order processing
• warehousing
• materials handling

• Protective packaging
• acquisition
• product scheduling
• information maintenance

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Marketing services
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Definition

• Service is an activity or benefit that one party
  can offer to another that is essentially
  intangible and does not result in the ownership
  of anything.
• Its production may or may not be tied to a
  physical product
• Diamond
  medical diagnosis

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The Servuction system

• 5 elements influence the service
• Organization and system (invisible)
• Environment (visible)
• Contact personnel / service provider
• Customer A
• Customer B

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The Servuction System
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Characteristics of service

• Intangibility
• inseparability
• heterogeneity
• perishability
• fluctuating demand

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Characteristics of Services differing from Goods
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Characteristics of Services differing from Goods
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Characteristics of Services differing from Goods
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Characteristics of Services differing from Goods
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Marketing Mix for Services

• Product
• Price
• Promotion
• Place
• People
• Process
• Physical evidence Singapore air

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Product

• Tangiblize the intangible
• core and supplementary services
• customization vs. standardization
• the service mix

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Price

• Customer being inseparable in the process, outlay
  by customers include
• Time
• Physical effort
• Psychological burdens (mental effort, negative
  feelings)
• Negative sensory burdens (unpleasant sensations
  affecting any of the 5 senses)

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Price

• Good understanding of the costs is needed as
  decrease of above burdens justify higher pricing
• Difficult to define a unit of service,
  considering
• Visible vs. invisible
• Difference in speed
• Direct contact vs. impersonal channel

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Promotion

• Different from advertising for goods
• Intangible nature
• vivid information that produce a clear
  impression on the senses, e.g. symbols
• Services are harder for customer to evaluate
• Use tangible cues, e.g. high calibre personnel
  (DHL)
• Strong organizational image
• Use personal information source, e.g. celebrity
  endorsements ????
• Engaging in post-purchase communication

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Place

• Identify core services
• Reduce contact of low contact element e.g.
  download application forms
• Use of technology to create new channels
• e.g. Octopus for ticketing, online shopping
• Convenience
• Number of outlets
• Location
• scheduling

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Fluctuating Demand

• Supply side
• Cross training
• Use part time staff
• Rent or share facilities equipment
• Schedule down time during period of low capacity
  (take vacation)
• Extra service hours
• Use technology
• Use price

• Demand side
• Price discrimination
• Reservation
• Overbook
• Queuing (make the waiting more tolerable)
• Shift demand
• Change the salespersons assignment
• Create promotional events

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People

• Importance of customer contact personnel
• Internal marketing (customer focus philosophy,
  bonus, awards, recognition as incentive)
• Ritzcarlton

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Internal Marketing

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Process

• Customer involvement in production
• Educate customers in using technology or
  self-service
• Develop service oriented internal process
• Logistic support
• Empowerment of staff for service recovery

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Physical Evidence

• Intangible nature makes service difficult to
  evaluate
• Communicate through corporate image, word of
  mouth, pricing physical evidence, warranty,
  awards
• ritzcarlton
• Judge by process, post-purchase information
  search needs re-assurance

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Customer Relationship Marketing
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Meaning of CRM

• the process of creating, maintaining, and
  enhancing strong, value-laden relationships with
  customers and other stakeholders.

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Rationale behind CRM

• to retain current customers vs. to attract new
  customers
• new Marketing view the science and art of
  finding, retaining and growing profitable
  customers

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• challenges
• changing demographics
• more sophisticated competitors
• overcapacity
• customer lifetime value

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Key concepts in relationship building

• Customer satisfaction
• perceived performance gt expectations
• Customer loyalty and retention
• create emotional affinity, not just rational
  preference
• share of customer
• cross-selling

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Tools to build lasting customers

• Frequency marketing programs
• affinity program
• co-marketing and co-branding
• customisation and prompt response
• create long term contract

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• Frequency marketing programs

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• affinity program

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• co-marketing

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• Co-marketing

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• Co-branding
• Sony Ericsson Mobile Communications was
  established in 2001 by telecommunications leader
  Ericsson and consumer electronics powerhouse Sony
  Corporation. The company is owned equally by
  Ericsson and Sony.

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Consumerism
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Meaning of consumerism

• a movement that put pressure on businesses to
  consider consumer needs and interests
• consumer rights
• right to be informed
• right to be heard
• right to safety
• right to choose

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Why consumers need protection?

• Manufacturer may be unfair to consumers
• consumers may be unable to judge the quality
• insufficient information to evaluate service
• advertisements are exaggerating
• concern about health

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Consumer protection in Hong Kong

• Legislation
• Consumer Council

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Responses of businesses to consumerism

• Provide more and better information
• improve product safety
• quicker response to consumer complaints
• provide customers with a wide range of products
  and services

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International Marketing
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International marketing

• The process of focusing the resources and
  objectives on global market opportunities

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Environmental forces in International Markets

• Cultural environment
• economic environment
• political and legal environment

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Standardization vs. adaptation

• Arguments for standardization
• reduce costs
• moving to a world living style
• international brand

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• Arguments for adaptation
• most exported goods needed adaptation
• take care of environmental differences
• max. sales and profits through customization
• favours local management inputs

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Methods of entering overseas market

• Exporting
• contract manufacturing
• licensing
• franchising
• joint venture
• strategic alliance
• direct investment
• countertrade

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Factors affecting the choice of entry strategy

• desired speed
• firm expertise
• costs
• flexibility
• resources
• profit objectives

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Marketing in the case of economic downturn

• moving down-market
• lowering price
• promoting image of good quality and durable
• find new markets

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END
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Contents of a Marketing Plan

• Situational analysis
• Marketing Objectives
• Selecting the Target Market
• Developing marketing mix
• Budget
• Controls

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Product attribute decisions

• Product quality
• Product features
• Product design

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Brand decisions

• To brand or not to brand
• Brand sponsor
• manufacturers brand
• private brand
• Licensed brands
• Co-brands

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• Brand equity
• High level of consumer awareness, loyalty
• Lower marketing costs
• Consumer expect stores to carry the brand
• The company has more bargaining power in
  channeling
• High credibility
• Easily launch brand extensions
• Powerful brand
• Defense against fierce price competition

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• Brand Strategy / Brand Development
• line extensions
• brand extensions
• Multi-brands
• new brands

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• Brand Positioning
• Attributes
• Benefits
• Beliefs /values
• Create surprise, passion excitement
• Brand Re-positioning
• Competitors close positioning cutting market
  share
• Customers wants may shift
• Technology
• www.euyansang.com

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• Brand Name selection
• Suggest benefits and qualities
• Easy to pronounce, recognize
• Distinctive, extendable
• Capable of registration and legal protection

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Packaging decisions

• to create benefits protection, economy,
  convenience and promotion
• Major decisions
• the main functions
• specific elements of package
• selecting the package design

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Product-Support Services Decisions

• deciding which product-support services to offer
• how to deliver the services to customers

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Cost-based approach

• Cost-plus Pricing
• to add a standard mark-up to the cost
• Breakeven analysis and Target Profit Pricing

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Buyer-based Pricing

• base on the products perceived value

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Competition-based pricing

• Going rate pricing
• base on competitors price

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Market-skimming pricing

• Set an initial high price
• after initial sales slow down, it lowers the
  price to draw in the next price-sensitive layer
  of customers and so on

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Penetration pricing

• set an initial low price
• seek to generate consumer interest and stimulate
  trial purchase

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Types of distribution channel

• 1.

producer
customer
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• 2.

manufacturer
retailer
consumer
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manufacturer

• 3.

wholesaler
retailer
consumer
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manufacturer

• 4.

agent
wholesaler
retailer
consumer
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manufacturer

• 5.

agent
retailer
consumer
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Factors affecting choice of distribution channel

• Industrial goods vs. consumer goods
• no. of customers
• importance of control
• characteristics of products
• services

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Determining the types of middlemen

• Wholesalers
• full-service merchant wholesalers
• limited service merchant wholesalers
• manufacturer-owned wholesaler
• agent

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• Retailers
• store retailing
• nonstore retailing

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Factors affecting the choice of middlemen

• Manufacturer requirement
• costs

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Determining the intensity of distribution

• Intensive distribution
• exclusive distribution
• selective distribution

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Observational Research

• Observing relevant people, actions and situations
• unwilling or unable to provide
• limitations
• feelings, attitudes and motives, or personal
  behaviour
• long-run or infrequent behaviour

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Survey

• Find out people knowledge, attitude, preference,
  or buying behaviour
• gather descriptive information
• structure or unstructured

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• Flexibility
• however
• cannot remember
• privacy
• time pressure
• appear to be smart
• pleasing answer

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Focus Groups

• Small group of people, led by a moderator
• opened discussion of a product/service or buyer
  behaviour
• focus on specific problems or market opportunities

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Experimental Research

• Explain cause-and-effect relationships between
  experimental (independent) variables and
  dependent variables

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Legislation - Ordinances

• Weights Measure ?????
• Sale of Goods ??????
• Trade Descriptions ??????
• Control of Exemption Clauses????????
• Toys Children Products Safety???????????
• Consumer Goods Safety???????