Hilkka Jankkila, Principal Lecturer, ROVANIEMI POLYTECHNIC, School of Forestry and Rural Industries

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Hilkka Jankkila, Principal Lecturer, ROVANIEMI POLYTECHNIC, School of Forestry and Rural Industries

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Title: Hilkka Jankkila, Principal Lecturer, ROVANIEMI POLYTECHNIC, School of Forestry and Rural Industries

1
Hilkka Jankkila, Principal Lecturer, ROVANIEMI
POLYTECHNIC, School of Forestry and Rural
Industries

Lectures basic concepts and processes of
Marketing ( 3 x 3 h )
Product development ( 1 x 3 h )
Quality management ( 1 x 3 h )
Group working with practices ( 10 h )
Excursions / notes / analysis ( 24 h )
Exam and evaluation ( 4,5-6 Hungarian credits )
-Active participating in the lectures group
reports Hungarian and Finnis
students together prepare reports ( 2-3
groups ), see Practises 1 and 2
-The Hungarian students give exam to professor
Horvath Gabor
-The Finnish students have a written test and
more practice in F inland

MARKETING -Jankkila 2004 -
2
MARKETING PRODUCT DEVELOPMENT QUALITY
MANAGEMENT

Literature in English
Lancester, Geoff - Reynolds, Paul. 2004.
Marketing
Kotler, Philip Amstrong, Gary. 2004.
Principles of Marketing

MARKETING -Jankkila 2004 -
3
THE MARKET

A environment where the demand and supply meets
each other and the marketing occurs
A group of people, who needs and wants
products/services/experiences/information and who
have buyingpower to satify their needs
The set of all actual and potential buyers of a
product or service ( Kotler-Amstrong 2004 )

MARKETING - Jankkila 2004 -
4

MARKETING A social and managerial process
whereby individuals and groups obtain what
they need and want through creating and
exchanging products and value with others
Kotler-Amstrong 2004 Principles of marketing
CONCEPTS needs wants demands, marketing
offers products, services, experiences value
satisfaction exchanges transactions
relationships markets
MARKETING -Jankkila 2004 -
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MARKETING

gt A comprehensive, well planned social and
managerial process
gt Market and environment analysis to get
information about
demand, cutomers, competition
gt Studying the needs and wants of the customers/
creating needs
gt Developing products satifying those needs and
wants
gt Pricing
gt Presentation ( information, Public Relations,
sales promotion, advertising, profiling )
gt Distribution
gt Personnel, Service process, Physical Evidence
OBJECTIVES AND TARGETS
gt The business is economically profitable
gt The customers are satisfied

MARKETING -Jankkila 2004 -
6
THE MARKETING PROCESS MODEL- Lancester-Reynolds
2004 -

Marketing Sales Buyer
recearch
forecasting behavior
SUPPLIER CUSTOMER
Product Price Distribution Promotion
Personal Segmentation
Channels Logistics selling
targeting and
positioning
Information Public Relations

Advertising Sales promotion
MARKETING -Jankkila 2004 -
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MARKETING AND PRODUCT DEVELOPMENT

Market recearch - Feedback
MARKET - CUSTOMERS
Administration MARKETING Financing
PROMOTION
PRODUCT DISTRIBUTION SERVICE PRICING
Ideas Channels Logistics - Strategies
Legis- Ideageneration - Price -
lation Ideascreening
defining
Concept development
Compe- Business planning Production Packing
titors and evaluation - procedures -materials
Product development - capacity -procedures
Test market - quality assurance -the needs of
Launch - raw
materials customers, retails and
wholesalers,

MARKETING -Jankkila 2004 -
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MARKETING ALONGSIDE OTHER ELEMENTS OF BUSINESS

Production
Marketing
Finance CUSTOMER Recearch and
development
Marketing
Human secource
management

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9
MARKETING MANAGEMENT ORIENTATIONS
-Kotler-Amstrong 2004-

PRODUCTION CONSEPT
Consumers favor the products which are available
and highly
affordable. Focus on improving production and
distribution
efficiency
PRODUCT CONSEPT
Consumers favor products that offer the
most quality,
performance and features. Focus on
continous product
improvements
SELLING CONSEPT
Consumers do not buy enough unless the firm
undertakes a
large-scale selling and promotion effort

MARKETING -Jankkila 2004 -
10
MARKETING MANAGEMENT ORIENTATIONS
-Kotler-Amstrong 2004-

MARKETING CONSEPT
Customer focus and value paths to sales and
profits. Customer-centred sense and respond. Find
the right products for customers.
CUSTOMER RELATIONSHIP MANAGEMENT CRM
Create profitable relationships with the
customers. Customer database management activity.
Achieve customers loyalty
Bacic realtionship, full partnership
Financial and social benefits, frequency
marketing
programs, club marketing programs

MARKETING -Jankkila 2004 -
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MARKETING MANAGEMENT ORIENTATIONS
-Kotler-Amstrong 2004-Selling ( 1 )and
marketing ( 2 )concepts contratedStarting
point Focus Means Ends1
Factory Existing Selling Profits
through products and promotion sales
volume2 Market Customer Intergated Profits
through needs marketing customer
satisfaction
MARKETING -Jankkila 2004 -
12
-

SOCIETAL MARKETING CONSEPT
Kotler-Amstrong 2004
organization / firm should determine the needs /
wants / interests of target markets
deliver the desired satisfactions more
effeciently and effective than the competitors do
in a way that maintains or improves the
consumers and societys well being
Quality management and assurance !
Environmental quality management !

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SOCIETAL MARKETING

SOCIETY
Human welfare
SOCIETAL
MARKETING
CONCEPT
CONSUMERS COMPANY
Want satisfaction Profits
Conflicts between consumer shot term wants
and consumer long-run welfare??

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MARKETING ENVIRONMENT

MICRO ENVIRONMENT
1. Elements over which a firm has control (
marketing mix 4 3 Ps )
or which it can influence in order to gain
information that will help it
in its marketing operations Lancester-Reynolds
2004-
2. Actors close to firm/company that affect its
ability to serve the
customers company, suppliers, marketing
intermediaries,
customer markets, competitors- Kotler-Amstrong
2004 -
MACRO ENVIRONMENT
-all forces and agencies external to the
marketing firm itself
gtclose to firm customers, suppliers, agents,
distributors, other
íntermediaries, competing firms, public -
Lancester-Reynolds 2004-,
gtwider external legal, cultural,
economic,demographictechnological
subenvironments, political -(Kotler-Amstrong
lancester-Reynolds -

MARKETING -Jankkila 2004 -
15
MARKETING ENVIRONMENT

COMPANY
gttop management, finance, recearcdevelopment,
purchasting, operations, accounting
SUPPLIERS
gtraw material suppliers,
INTERMEDIARIES
gtfirms that helps the company to promote, sell,
distribute the goods to
final buyers resellers, phycical distribution
firms, marketing service
agencies, financial intermediers

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MARKETING ENVIRONMENT

CUSTOMERS
gtconsumer markets individuals and households gt
personal
consumption
gtbusiness markets buy goods and services for
further processing or
for use in their product process
gtreseller markets buy goods and services to
resell at a profit
gtgovernment markets buy goods and services to
produce public
services or transfer them to people who need
them
gtinternational markets buyers in other
countries
COMPETITORS
gtother firms

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MARKETING ENVIRONMENT

PUBLICS
gtgroups that have an actual or potential interest
in or impact on
an firms ability to achieve its objestives
-financial publics banks, funds, investment
houses, stocholders
-media publics newpapers, television stations,
editorial opinion
-government publics product safety, truth of
advertising ..
-citizen action publics consumer organisations,
environmental
groups, minority groups
-local publics community organizatios
-general public and the publics attitudes and
images of company
-internal publics workers, manaagers, directors

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MARKETING ENVIRONMENTMacro environment

DEMOGRAPHIC
-human populations size, density, location, age,
gender,
race, occupation
ECONOMIC
-factors that affect consumer buying power and
spending
patterns income changes, income distribution,
classes,
changing consumer spending patterns
NATURAL
-natural recources that are needed as inputs by
marketers or that are affected by marketing
activities

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MARKETING ENVIRONMENT

TECHNOLOGICAL
-froces that create neeeew technologies, creating
new product and market opportunities
POLITICAL
-increasing legislation regulating business
-laws, government agencies, pressure groups,
ethics and socially
responsible actions ( social codes and rules)
-protect compnies from each other, protect
consumers from unfair
business practices
CULTURAL FORCES
gtinstitutions and forces that affect ssocietyss
bacic values,
perceptions, preferenc es and behaviors

MARKETING -Jankkila 2004 -
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BUYER BEHAVIOURFocus on the consumer buyer
behaviour

The acts of individuals directly involved in
obtaining and using economic goods and services,
including the decision process that precede and
determine these acts-Lancester-Reynolds-
Consumer buyer behaviour - the buying behaviour
of final consumers individuals and households
who buy goods and services for personal
consumption Kotler-Amstrong-
Consumer most important of the marketing
environment
gt the firm must know WHAT, WHEN, HOW, WHY
the customer buyes

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MODEL OF BUYER BEHAVIOUR Kotler-Amstrong

MARKETING AND BUYERS BUYERS
OTHER STIMULI BLACK BOX RESPONSES
Marketing Other Buyer Buyer Product choice
Product Economic character decision Brand
choice
Price Technologicál istics
process Dealer choice
Place Political Purchace timing
Promotion Cultural Purchace amount

a
MARKETING Jankkila 2004 -
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FACTORS INFLUENCING CONSUMER BEHAVIOUR
Kotler-Amstrong 2004 -

CULTURAL SOCIAL PERSONAL PSYCHOLOGICAL
Culture Reference Age and life- Motivation
Subculture groups cycle stage
Perception
Social class Family Occupation Learning
Roles and Economic Beliefs and
status situation attitudes
Lifestyle
Personality and
self-concept
For the most marketers can not control such
factors
but they must be taken into account

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Hierarcy of needs by Maslow

SELF
ACTUALISATION
Creativity fulfillment, Pursue
RESPECT AND SELF-ESTEEM
Achiement qualifications
SOCIAL NEEDS
Recognition and belonging, friends , family
SAFETY NEEDS
Protection, security, stability, Freedom of fear
PHYSIOLOGICAL NEEDS Hunger, Thirst, shelder,
warmth

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BUYERS DECISION PROCESS Kotler-Amstrong-
Lancester-Reynolds -

PROBLEM / NEED RECOGNITION
INFORMATION SEARCH
EVALUATION OF ALTERNATIVES
PURCHASE DECISION
POSTPURCHASE BEHAVIOUR

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STAGES IN THE ADOPTION PROCESS NEW PRODUCT
Kotler-Amstrong- Lancester-Reynolds-

1. AWARENESS
2. INTEREST/INFORMATION
3. EVALUATION
4. TRIAL
5. ADOPTION
6. POST-ADOPTION CONFIRMATION

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DIFFUSION PROCESS OF INNOVATIONS Rogers,
Kotler-Amstrong, Lancester-Reynolds

34 34
Early Late
majority majority
2,5 13,5 16
Innovators Early Laggards
adopters

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SEGMENTATIONTARGETING Kotler-Amstrong 2004
-

MARKET SEGMENTATION
- Dividing the market into distinct groups with
distinct
needs, characteristics or behaviour who
might require
separate products or markettin mixes
- geographic, demographic, psychographic,
behavioral
TARGET MARKETING
- The process of evaluating each market
segments
attractiveness and selecting one or more
segments
- undifferentiatedmassmarketing,
ifferentiatedsegmented
marketing, concentratedniche marketing,
micromarketing local or
individual marketing

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POSITIONING

MARKET POSITIONING
Arranging for a product to occuby a clear,
distinctive and
desirable place relative to competing products in
the minds of
target consumers
PRODUCT POSITION
The Way the products is defined by consumers on
important
attributes - the place the product occupies in
consumers mind
relative to competing products
CONSUMERS ORGANIZE PRODUCTS INTO CATEGORIES
The consumers do not reevaluate the products
every time they make a
buying decision gt they organize products,
services and companies into
categories and POSITION them in their minds
MARKETING MIX EFFORTS SUPPORT THE
POSITIONING STRATEGY !

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BUSINESS IDEA

WHAT TO WHO
Products, services, experiences The market
experinces -customers needs/wants
quality -market opportunities
price -segmentation
-competition situation
HOW IMAGES/POSITION
- enterprices structure PROFILES
- way of doing/actioning, manners -
product/service/firm/
-marketing concept and processes managening
profile

MARKETING -Jankkila 2004 -
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FROM IDEA TO ACTIONFrom customer centred
businessidea to action -Rope 1989 -

SEGMENTATION COMPETITORS
-segment determining -present/future
-needs of the segment
BUSINESS IDEA DESICIONS FIRM at present
-what, to who, how, ímages -know-how
-recources
BUSINESS IDEA REALIZATION
-internal marketing SOCIETY
-economical/technical/
EXTERNAL MARKETING attitude changes
-profiling
-profiling

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MARKETING MIX -Kotler-Amstrong and Booms-Bitner

The set of controllable tactical marketing tools
Everything the firm can do to influence the
demand of its products
Sellers view Customers view
4 Ps 4 Cs
gt Product gt Customer solution
gt Price gt Customer cost
gt Place gt Convenience
gt Promotion gt Communication
3 more Ps
gt People
gt Process
gt Phycical evidence

MARKETING -Jankkila 2004 -
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4 Ps

PRODUCT PRICE
Variety, Quality List price,
Discounts
Design, Features Allowances, Payment
Brand name, Packaging period, Credit terms
Services TARGET
CUSTOMERS
INTENDED POSITIONING
PROMOTION PLACE
Advertising Channels, Coverage
Personal selling Assortments,
Locations
Sales promotion Inventory,
Transportation
Public Relations Logistics

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The 7 Ps Extended Marketing MixBooms-Bitner
-

Marketing Strategy tool that expands the number
of controllable variables from the four in the
original Marketing Mix Model to seven.
People ( explicit faktor )
Process ( explicit faktor )
Phycical Evidence ( implicit faktor )
The traditional Marketing Mix model was primarily
directed and useful for tangible products.
The 7-Ps model is more useful for services
industries and arguably also for
knowledge-intensive environments.

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34
7- Ps

People
All people directly or indirectly involved in the
consumption of a
service are an important part of the extended
marketing mix.
Knowledge Workers, Employees, Management and
other Consumers
often add significant value to the total product
or service offering.
Process
Procedure, mechanisms and flow of activities by
which services are
consumed (customer management processes)
Physical Evidence
The ability and environment in which the service
is delivered
both tangible goods that help to communicate and
perform the service
and intangible experience of existing customers
and the ability of the
business to relay that customer satisfaction to
potential customers.

MARKETING -Jankkila 2004 -
35
7 Ps

Booms and Bitner also suggest that Place in a
service-oriented company includes the
accessibility of the service, and that Promotion
in a service-oriented company includes the input
of front-line service personnel.

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PRODUCT / SERVICEKotler-Amstrong 2004,
Lancester-Reynolds 2004

PRODUCT Anything that can be offered to a
market for attention, acquisition, use or
consumption that might satisfy a want or need
gtindustrial goods installations, assessories,
raw materials, component parts and materials,
supplies
gtconsumer goods convenience goods, shopping
goods, speciality goods, unsought goods
SERVICE Any activity or benefit that one party
can offer to another that is esssenntially
intangible and does not result in the ownership
of anything
EXPERIENCE memorable, personal, take place in
minds

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THREE LEVELS OF PRODUCTKotler-Amstrong-

AUGMENTED PRODUCT
Delivery Credit After
sale
ACTUAL PRODUCT service
Brand CORE Features
name BENEFIT
Core product
Quality Design
Packing
Installation Warranty

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PRODUCT/SERVICE CLASSIFICATIONS Kotler-Amstrong
2004 -

CONSUMER PRODUCT
gt bought by final consumer for personal
consumption
CONVENIENCE PRODUCT
gt consumer product that the customer usually
buys frequently with
a minimum of comparison and buying
efforts ( fast food, newspaper )
SHOPPING PRODUCT
gt consumer good that the customer in the
selection and comparison
process and purchase buys ( suitable,
quality, price, style )
SPECIALTY PRODUCT
gt consumer product with unique characteristics
or brand identifications
( specific brands and types of cars,
cameras, phones, clothes, wines )

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PRODUCT/SERVICE CLASSIFICATIONS

UNSOUGHT PRODUCT
gt consumer product that the consumer either does
nor know about or knows about but does not
normally think of buying ( life insurance,
consulting )
INDUSTRIAL PRODUCT
gt product bought by individual or organizations
for further
processing or use in conducting business
1. Materials and parts ( raw materials,
manufactured materials )
2. Capital items ( installations and accessory
equipments )
3. Supplies and services ( operating supplies,
repair items,
business services, business
advisory services )

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MARKETING -Jankkila 2004 -
41
PRODUCT DEVELOPMENT STRATEGIES-Kotler-Amstrong,
Lancester-Reynolds

ANSOFF MATRIX ( Igor Ansoff 1957 )
New markets Existing markets
New products True innovators Product
development
Risky strategy strategy
Existing products Market development Market
penetrations

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NEW PRODUCT DEVELOPMENT Kotler-Amstrong,
Lancester-Reynolds -

ACQUISITION
gt By buying a whole company, a papent or a
licence to
produce someone elses product
NEW PRODUCT DEVELOPMENT
gt innovative, original products
gt replacement products, product improvements,
product
modifications
gt Imitative products me to products
gt Relaunced, products, new brands

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NEW PRODUCT DEVELOPMENT STAGES-Kotler-Amstrong,
Lancester-Reynolds

IDEA GENERATION
IDEA SCREENING
CONCEPT DEVELOPMENT AND TESTING
MARKETING STRATEGY
BUSINESS ANALYSIS
PRODUCT DEVELOPMENT
TEST MARKETING
COMMERCIALIZATION

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NEW PRODUCT PROCESS

ÍDEA GENERATION
The systematic search for new-products
ideas
Internal new-product managers, committees,
departments,
venture teams
External customers, competitors
IDEA SCREENING
Go or drop decisions- spot good ideas and
drop poor ideas
as soon as possible

45
NEW-PRODUCT PROCESS

CONCEPT DEVELOPMENT AND TESTING
Product concept A detailed version of the
new-product
idea stated in meaningsful consumer terms
Concept testing testing a new-product concept
wit a group of tarket consumersto find out if thr
concepts have strong consumer appeal.
MARKETING STRATEGY
The target market positioning, sales, market
share, profit goals
Outlines of the product price, distribution,
marketing budget
Long run sales, profit goals,
marketing mix strategy

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NEW-PRODUCT PROCESS

BUSINESS ANALYSIS
A review of the sales, costs and profits
projections for a new product to find out whether
these factors satisfy the firmss objectives
PRODUCT DEVELOPMENT
Developing the product concept intoa phycical
product in
order to ensure that the product idea can be
turned into a workable product

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NEW PRODUCT PROCESS .

PRODUCT DEVELOPMENT
prototypes, product appraisal tests
product refinement and modification by feedback,
gt development cost increace sharply !
TEST MARKETING
The product and marketing program are tested in
more
realistic market settings Standard,
Controlled, Simulated
Problem competitors see your product !
- Test marketing does not quarantee succees !
COMMERCIALIZATION
Introducing a new-product into the market
- few new-product
ideas succeed !

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PRODUCT LIFE CYCLE MATRIX by Barksdale-Harris

PIONEERING GROWTH MATURITY
DECLINE
-sales- stars cash cows war
horses
high market high
market high market
share, high share, low hare,
negative growth
growth growth
infants problem children
dogs/cash dogs dodos
low market share
low market share low market share
high growth
low growth negative growth
Entry - time - Exit

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INDIVIDUAL PRODUCT / SERVICE DECISIONS
Kotler-Amstrong -

Product attributes
Branding
Packaging
Labeling
Product support services

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PRODUCT QUALITY Kotler-Amstrong-

When our customers come back and our products do
not
Ability of a product to perform its functions
Characteristics of a product or service that
satisfy customers stated or implied needs
Is closely linked to customer value and
satisfaction
One of the marketers major positioning tools
Has a direct impact on product or service
performance
Freedom of defects is it enough ?

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ATTRIBUTES OF PRODUCT Kotler-Amstrong -

Core benefit of the product
Product features
stripped-down model
more features as a tool of differentiating the
product from competitors
Product and Desing
Trade mark
Brand Manufacturers brand, Private/Store
brand, Licencing, Co-Branding, Multibrands, New
Brands,
With the help of Customer Relationship
Marketing !

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BRAND BRANDING Kotler-Amstrong -

A name, term, sign, symbol, design
or a combination of these
Intended to identify the goods or services of one
seller or group of another sellers
To differentiate these goods from these of
competitors
Consumer view a brand is an important part of
product may add value
Branding Perhaps the most distinctive skill of
professional marketers in their ability to
create, maintain, protect and enhance brands of
their product and services

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PACKAGE PACKAGING Lancaster-Reynolds ,
Kotler-Amstrong--

The end part of the product development an
external appereance
A part of the promotion
The activities of designing and producing te
container or wrapper for the product
primary container
secondary package
package for storing
labeling printed information

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THE FUNCTIONS OF PACKAGING-Lancester-Reynolds-

Protect and preserve its contents
Help the distribution of the goods via a number
of logistics intermediaries from the
factory/producer to customer transfering,
stocking
Selling the promotional appeal, design,
information, trademark, brand
For conceniency of users storage of contents,
suitable sizes of package
To conform the statutory and voluntary
regulations in providing a list of
contents/weight/the origin of
product, E-numbers, ingrediants

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LABELING PRODUCT SUPPORT SERVICES

LABEL
identifies and promote the product or brand,
describes several things of the good who,
where, when made, contents, how to use, price per
unit, open dating, nutritional labeling,
health-related term
SUPPORT SERVICES
Augmented parts of product

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PRODUCT LINE / MIX

PRODUCT LINE
A group of products that are closely related
together function in similar manner, sold to
same customer group, marketed through same types
of outlets, given price ranges Nike athletic
apparel Nokia telecommunication products
PRODUCT MIX PRODUCT ASSORTIMENT
Set of all product lines and items which a
particular seller
offers for sale
widht number of different product lines
lenght total number of items
depht number of versions of each product in
the line
consistency closeness of items (
distribution channels,

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PRICE PRICING Kotler-Amstrong,
Lancecter-Reynolds -

PRICE
The amount of money charged for a product or
service or
the sum of the values the customers exchange
for the
benefits of having or using the product or
service
The means whereby an organisation covers costs of
all activities
The major factor affecting buyer choice usually
A flexible element in the marketing mix can
change quickly
DYNAMIC PRICING
Charging different prices depending on
individual
customers and situations

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PRICING PERCPECTIVES Lancecter-Reynolds -

ECONOMISTs approach
The price is the means through which supply
and demand is brought into equilibrium
ACCOUNTANTSs approach
The price covers the costs and make profits
MARKETERs approach
Effect of price on the organisations
competitive
market position

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FACTORS AFFECTING PRICING DECISIONS
Kotler-Amstrong,--

INTERNAL EXTERNAL
FACTORS P FACTORS
Marketing objectives R Nature of the market
Marketing mix strategy I and demand
Costs C Competition
Organisational I Other environmental
considerations N factors ( economy, G
resellers, government

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PRICING IN DIFFERENT TYPES OF MARKETS
Kotler-Amstrong, Lancecter-Reynolds

PURE COMPETITION
-Many buyers and sellers trading in uniform
commodity many fully informed buyers and
sellers of
similar products
-No single seller or buyer has much effect on the
going
market price gt going pricing
PURE MONOPOLY
A single producer of a product no substitudes
for product free price setting
OLIGOPOLISTIC COMPETITION
Few sellers who are highly sensitive to each
others pricing and marketing strategies

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MAJOR CONSIDERATIONS IN SETTING PRICE
Kotler-Amstrong-

Product Competitors Consumer
costs prices and other
perception of
internal and external of value
factors
PRICE PRICE
FLOOR CELLING
No profits below No demand
this price above this
price

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COST-BASED PRICING Cost-plus

Adding a standard markup ( profit ) to the costs
of the product
Product driven pricing
gtFixed costs do not vary with production or
sales level
Variable costs vary diriectly with the level of
production
Total costs fixed costs variable costs
PRODUCT COST PRICE VALUE
CUSTOMER

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TARKET PROFIT PRICING Kotler-Amstrong-

Setting price to break even on the costs of
making and marketing a product or
Setting price to make a target profit
Target pricing uses the concept of a break-even
chart
it shows the total cost and total revenue
expected at different sales volume levels
TOTAL REVENUE
Costs
Target profit
TOTAL COSTS
FIXED COSTS
Sales volume in units

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VALUE-BASED PRICING Kotler-Amstrong 2004-

Setting price based on buyers perceptions of
value rather than on the sellers costs
Offering just the right combination of quality
and good service at the fair price
Pricing begins with analyzing consumers needs /
wants and value perceptions and the price is set
to match consumers percieved value gt design the
product
CUSTOMER VALUE PRICE COST PRODUCT

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COMPETITION-BASED PRICING Kotler-Amstrong-

Setting prices based on the price that
competitors charge for similar products
Going rate pricing
Price represents the collective wishdom of the
industry sector when demand elasticity is hard to
measure

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PRICING STRATEGIES Kotler-Amstrong-

MARKET-SKIMMING PRICING
gtSetting high price for a new product to skim
maximum
revenues from the segment willing to pay the
high price.
-Company makes rewer but more profitable sales
-Products quality and image must support the
high price
-Enough buyers must want the product at that
price
-Competitors should not be able to enter the
market and
undercut the price
MARKET-PENETRATION PRICING
gtSetting a low price for a new product in order
to attract a
large number of buyers and a
large market share

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PRICING STRATEGIES Kotler-Amstrong-

PRICE ADJUSTMENT STRATEGIES
gt Discount price reduction gt Allowance
promotional money
BY-PRODUCT PRICING -Setting a price for
by-products in order to make the main products
price more competitive
SEGMENTED PRICING two or more prices at same
product
PSYCHOLOGICAL PRICING price says something of
the product
REFERENCE PRICE - prices that buyers carry in
their minds
PROMOTIONAL PRICING temporarily, increase
short-run sales
GEOGRAPHICAL PRICING different price on
different regions / or not
INTERNATIONAL PRICING
prices in the
international
market

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PRICING gt PRICE

VARIABLE COSTS / product unit
raw materials, other variable costs,
labour costs,
costs connected wit labour costs ( social
costs, assurance )
COVER fixed costs, charges, rates,
incometaxes, profit
NET RRICE
VALUE ADDED TAX
SELLING PRICE
SELLING REWARDS
FREIGHTS THAT WILL BE PAYD
DISCOUNTS PROVISOS,
TOTAL PRICE

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CHANNELS OF DISTRIBUTION - Kotler-Amstrong,
lancester-Reynols-

DISTRIBUTION
Channels /Supply chain Phycical distribution
Agents Logistics
Wholesalers
Retailers Right place !
intermediaries Right time !
Suitable amounts !
With greatest ease !
Favourable costs !

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MARKETING CHANNEL DISTRIBUTION CHANNEL
Kotler-Amstrong-

A set of interdependent organizations involved in
the process
of making a product or service available for use
or
consumption by consumer or business user
SUPPLY CHAIN VALUE DELIVERY NETWORK,
-Information gathers and distribute information
-Promotion developes and spread information
about offers
-Matching shapes and fits the offer to the
buyers need
-Negotiation reach the agreement of price and
-Phycical distribution and stocking
-Financing, invoicing
-Risk taking / dealing

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DIRECT INDIRECT MARKETING CHANNELS
-Kotler-Amstrong, Lancester-Reynolds-

DIRECT CHANNEL no intermediaries
INDIRECT CHANNEL one or more intermediaries
AFFECTING TO THE CHANNEL DECISIONS
Numbers of potential customers in the market
How concentrated or dispersed the customers are
How much each will buy in a given period
buying sensity
Costs including transportation, warehousing,
stockholding
Product imago positioning, market share
objective
The need of by-services
Absolute price of the product and the
profit objective
Firms recources

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DIRECT DISTRIBUTION INDIRECTSmall Amount
of customrs LargeRarely Density of
purchase OftenLarge Size of
one purchasing SmallLarge Profit
marginal SmallConcentrated The buyer placement
Disperced High Complexity of
product LowNo need Need of by-services
YesYes Completely product No
lines

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MULTICHANNEL DISTRIBUTION SYSTEM
Kotler-Amstrong-

Catalogs, telephone, internet, home-selling
Customer 1
Own resailer places /warehouses Customer 2
Retailers Customer 3
Distributors Dealers Business segment
1
Sales force Business segment 2

PRODUCER
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NUMBER OF MARKETING INTERMEDIARIES
Kotler-Amstrong-

INTENSIVE DISTRIBUTION
-stocking the product in as many outlets as
possible
-usually convenience products
EXCLUSIVE DISTRIBUTION
-giving a limited number of dealers the exclusive
right to
distribute the products in their territories
-for exclusive products, products image, higher
markups
SELECTIVE
-more than one dealer but not all dealers who are
willingly
to carry companys produts, Label-retailer
-good market coverageto producer with more
control and less
cost than intensive distribution

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MARKETING CHANNELS DECISIONS ? Questions
for a countryside firm

DIRECT MARKETING
reach few customers,
direct producer/customer contact,
not effective?
is product suitable for direct marketing?
larger profit marginal?
have producer time enouhg for producing and
marketing?
small amounts of products can be marketed,
Important quality, producers own capasity and
knowledge of marketingco, co-operation with other
small producers?

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MARKETING CHANNELS DECISIONS ? Questions for
a countryside firm

RETAILER
more customers, customers find the products in
the same place as other productseasier for
customers,
is the retailer interested in the small
producers products?
do the customers find the products among other
products?
important quality, reliable distribution, is it
sure you can produce the amounts of products you
aimed, producers
own activity to reach retailers, package

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MARKETING CHANNELS DECISIONS ? Questions for
a countryside firm

LARGE-SCALE KITCHENS ( restaurangs ..)
one good possibilit for small firms, business to
business
relation gt product development together? easily
to get feed
back from custemers, fresh raw materials, bigger
( suitable )
amounts to one place, saves distribution and
packaking
SPECIAL / EXECUTIVE RETAILERS
the importance of quality and package and image !
better profit by pricing strategy

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MARKETING CHANNELS DECISIONS ? Questions for
a countryside firm

WHOLE SAILERS
large-scale, concentrated distribution
gt producerss work decrease
can you produce large amounts?
is a long chain suitable for your ( fresh? )
goods?
is the price competitive by the customers?
packaging for the wholesailing and distribution
gtcosts?
logistics if the distribution ways are long?
who does pay the freight?

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MARKETING CHANNELS DECISIONS ? Questions for
a countryside firm

CONTRACTUAL CO-OPERATION ( franchising .. )
PRODUCER NET WORK - THE SAME TRADEMARK-
SUBCONTACTOR PRODUCING
small-scale producing is possible
producers own name not seemed in the products
the producer can concentrate to
producing/marketing /delivering/retailing
EXPORT
a long, difficult and expencice process
co-operation ! export know how !

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LOGISTICS PHYSICAL DISTRIBUTIONKotler-Amstrong

MARKETING LOGISTICS
The tasks involved in planning, implementing, and
controlling the phycical flow of materials, final
goods, and
related information from points of origin to
points of
concumption to meet customer requirements at a
profit
SUPPLY CHAIN MANAGEMENT
Managing upstream and downstream value-added
flows of
material, final goods, and related information
among
suppliers, the company, resellers and final
consumers

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LOGISTICS PHYSICAL DISTRIBUTIONKotler-Amstrong

SUPPLIERS
Inbound logistics
COMPANY Reverse
Outbound logistics
RESELLERS logistics
CUSTOMERS

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PROMOTION MARKETING COMMUNICATION MIX

The specific mix
advertising, personal selling, sales promotion,
public relations and information

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PROMOTION MARKETING COMMUNICATION MIX
Kotler-Amstrong -

The specific mix of advertising, personal
selling, sales promotion , public relations and
information
ADVERTISING any paid form of nonpersonal
presentation and promotion of ideas, goods, or
services by
an identified sponsor
SALES PROMOTION short-term incentives to
encourage the purchase or sale of a product or a
service

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PROMOTION MARKTING COMMUNICATION MIX
Kotler-Amstrong -

PERSONAL SELLING personal presentation by the
firms sales force for the purpose of making
sales and
building customer relationships
PUBLIC RELATIONS building good relations with
the firms various publics by obtaining
favourable publicity, good corporate image, and
handing or heading unfavourable stories and
events
DIRECT MARKETING direct connections with
carefully targeted individual consumers to obtain
new or cultivate lasting
relationships

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ELEMENTS OF COMMUNICATION PROCESS

SENDER RECEIVER
IDEA MESSAGE IMAGE
Encoding to Decoding to an
a message MEDIA image
Disruptions
Disorders
FEEDBACK knowledge that the receiver
has reacted to the communication

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ADVERTISING Kotler-Amstrong-

OBJECTIVE SETTING
communication objectives, sales objectives
BUDGET DECISIONS
affordable approach, percent of sales,
competitive parity,
objective and task
MESSAGE DECISIONS MEDIA DECISIONS
message strategy - reach, frequenc, impact
message execution - major media types
- specific media vehicles
- media timing
CAMPAINGN EVALUATION
Communication and sales impact

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POSSIBLE OBJECTIVES -Kotler-Amstrong-

INFORMATIVE ADVERTISING
gives information about a new product, the
firm, new uses of product, price change, explain
how the product works ..
PERSUASIVE ADVERTISING
brand building, changing customers
perceptions of product attributes ..
REMINDER ADVERTISING
remind consumer of the goods and services,
remind the selling palaces..

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SALES PROMOTION TOOLSKotler-Amstrong-

SAMPLE
COUPON
CASH REFND OFFER ( RABATE )
PRICE PACK
PREMIUM
ADVERTICING SPECIALITY
PATRONAGE REWARD
POINT-OF-PURCHASE ( POP )
PROMOTIONAL EVENTS

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BUSINESS PROMOTION TOOLS

DISCOUNT
a straight reduction in price on purchase
during stated period of time
ALLOWANCE
promotional money paid by manufactures to
retailers in return for agreement to feature the
manufactures products in some way

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DIRECT MARKETING Kotler-Amstrong -

FACE TO FACE MARKETING
TELEMARKETING
DIRECT-MAIL MARKETING
CATALOG MARKETING
DIRECT RESPONSE TELEVISION MARKETING
KIOSK MARKETING
ONLINE MARKETING

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-

COMPETITION -Porter 1980-
Potential new firms
Threat
Suppliers Competitions in Buyers
Negotiation the branch Negotiation
power power
Threat
Substitutes

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COMPETITION STRATEGIES Porter 1980-

Overall cost leadership
-producing a standard product at low cost or
engaging in
heavy advertising in order to undercut
competetion price
competition
Differentiation
-selling at a higher price than average, in the
product unique
feature of quality, image or design
Focus concentrates
-focusing on a specialist product rangeor a
unique segment of
the market or a combination of them both

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-MARKETING INFORMATION SYSTEMMkiS
Kotler 1997, Lancester-Reynolds 2004

A marketing information system ( MkiS )
concists of people, equipment and procedures
gt to gather, sort analyse, evaluate and
distribute needed, timely and accurate
information to marketing desicion makers

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MARKETING INFORMATION SYSTEM Lancester-Reynolds -

MANAGING
Marketing Analysis, Planning, Tactics,
Implementation,
Actions Control, Review, Monitoring, Contingency
Defining information needs Distiribution of
information
Internal accounting system Marketing research
system
Component
parts
Marketing intelligence system Analytical
marketing system
MARKETING ENVIRONMENT
Tarket markets, Marketing channels,
Communication, Logistics
Competition, International aspects,
Macroénvironment

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MARKETING INTELLIGENCE SYSTEM

SALES TRANSPORT OTHER
PERSONNEL PERSONNEL PERSONNEL
intelligence gathered
from
Competition Telephone calls and
Exhibitions Visiting customers
requests
Conferences General chats with
Visitors to firm
Training courses other drivers Letters
and direct mails
Customers Visiting suppliers
Press and journals
Sponsored events General observastion
General observation
MARKETING RESEARCH SYSTEM
Primary data
Secondary data
INTERNAL ACCOUNTING SYSTEM

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96
-

PRACTICE 1. Analyse the business idea of the (
small/medium size,
countryside branch ) firm and give ideas to
develop the business concept by
using the theoretic knowledge you got on the
lectures and from the books
The firm identification
WHAT TO WHOM
-product, service, experience - market,
segmentation, market region
-quality - customes needs/wants for the
product
-price, pricing strategy - competition
situation
-how they have developed the product
HOW IMAGES/POSITION
-organization structure -positioning on the
market,
-how they use the parts marketing -profiling
trademark, brand .
of marketing mix -your own opinion or image of
the product
-quality policy and the quality
management
-why the company has choosed this
way of operating?

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PRACTICE 2. Create a new product / service
/experience idea on the basis of local ( in
Hungry in Finland ) possibilities or renew an
old product what, customer segment, quality,
pricing strategy, distribution, marketing,
feature, package, marketing communicatio Compare
the Hungrian and Fnnish cases are there
similarities / dissimilarities?

USE SWOT ANALYSIS TOO
Strengt ( Strengthen ) Weakness (
Improve )
Opportunities ( Utilize ) Threats (
Avoid )

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EVALUATION OF THE COURSEGive your evaluation of
the coure, please

Good points contents, practises, presentation,
teaching
Not good points contents, practises,
presentation, teaching
What did you learn? Can you use this knowledge in
your
job in future?
Evaluate your own learning stage in numbers 1-5
Your experience and opinion of studying in an
international group? Should this kind of
operation continue or not? Why?
Please, send reports and evaluation by e-mail
hilkka.jankkila_at_ramk.fi
THANK YOU ?