MARKETING NOTES

Compiled by Bill Wright B.Com MBA

Based on Kotler, Shaw, Fitzroy & Chandler MARKETING IN AUSTRALIA, Prentice Hall. 1st ed. 1983, 2nd ed. 1989

CONTENTS MARKETING-INTRODUCTION ....................................................................................................... 3 THE MARKETING ORGANISATION............................................................................................... 4 THE MARKETING ENVIRONMENT................................................................................................ 6 CONSUMER MARKETS & BUYING BEHAVIOUR ....................................................................... 8 ORGANISATIONAL MARKETS & BUYING BEHAVIOUR ........................................................ 11 MARKET SEGMENTATION AND TARGETING .......................................................................... 13 NEW PRODUCT DEVELOPMENT & PRODUCT LIFECYCLE STRATEGIES .......................... 16 PRODUCT BRANDING, PACKAGING & SERVICE STRATEGY............................................... 19 PRICING STRATEGY ....................................................................................................................... 23 MARKETING-CHANNEL & PHYSICAL-DISTRIBUTION STRATEGY..................................... 25 RETAILING & WHOLESALING STRATEGY ............................................................................... 31 MARKETING COMMUNICATIONS STRATEGY......................................................................... 37 ADVERTISING, SALES PROMOTION & PUBLICITY STRATEGY ........................................... 41 PERSONAL SELLING & SALES MANAGEMENT STRATEGY ................................................. 47 MARKETING OF SERVICES, ORGANISATIONS, PERSONS, PLACES & IDEAS ................... 51

MARKETING-INTRODUCTION
The Marketing Concept w w originated as a defined concept in 1946 at General Electric 3 major features

Customer Orientation - Key objective in business and government is to satisfy customer needs. The products and services themselves are means to this end. The first step is to identify and define customer/consumer needs. The customer is sovereign. Integrated Programme - The right mix of inputs/resources/activities needs to be devised to satisfy needs and achieve financial objectives. Marketing activities are variables that must be individually weighed and selected in terms of their overall fit to satisfying customer needs. A key term is "the marketing mix". Organisational functions should be integrated to suit the marketing concept. All levels of the organisation should understand and be committed to the marketing concept, especially at the top-management level. Profit Orientation - The integrated programme must culminate in a budget that achieves a minimum, predetermined "bottom line" result. This is usually "return on investment" (ROI) the programme must be based on financial objectives as well as sales objectives (eg. sales volume targets, market share objectives). Remember to qualify the likely costs/benefits throughout the planning stage, perhaps only crudely at first but in detail at the final budget stages. The aim is effective planning and control. Marketing vs Selling Selling w w w w Emphasis First Step Managment Orientation Planning Product Manufacture Sales Volume Short Term Marketing Customer Needs Determine Customer Needs Profit Long and Short Term

In the early stages of growth an organisation may fall into a trap that many organisations found themselves in after World War II. The organisation is production oriented. The production and engineering managers are dominant and the sales people exist to sell the output at a price determined by those managers. Historically this approach worked well when demand exceeded supply. In a selling oriented organisation the Sales Manager becomes more important and "hard sell" methods are used to push the products (and the salesmen) in the market-place. This approach is still well entrenched in Australia and immense opportunities exist for a professional marketing approach by organisations and individual managers.

THE MARKETING ORGANISATION

1. Introduction w When markets change and/or when strong competitors emerge you need strong marketing organisation; w A marketing organisation is necessary to develop planning and control systems and to oversee the marketing research system. 2. Evolution of the Marketing Department Stage 1 - Simple sales department, only interested in the sales force. 2 - Stage 1 plus auxiliaries (uses specialists in research, advertising and service). 3 - Separate marketing department (recognises marketing as separate function from sales). 4 - Modern marketing department (places sales as subsidiary function to marketing). 5 - Modern marketing company (where marketing has more power and authority than other functions). Organisational Alternatives for Stage 4 w Functional w Geographic w Product Management w Market w Product/Market 4. w Corporate Division Relationship of Marketing to other Departments w How important is it? w Every department impacts on customer satisfaction. w Must avoid narrow departmental focus: e.g. R & D - only on managing new discoveries; Engineering - only on engineering standards for new products Purchasing - only on cost-reduction. Manufacturing - only on cost-reduction. Inventory - only on stock-reduction. Finance - only on cost-reduction. Accounting - only on low cost reporting systems Credit - to avoid bad debts at all costs. 5. Organisational Development w focus on marketing w chief executive leadership w use task force to develop strategy 4

3.

w maybe use outside consultant w establish the marketing department and recruit. w in-house marketing seminars w new experienced personnel w install marketing planning system.

THE MARKETING ENVIRONMENT

1. Introduction w spot changes and adapt w "macro" means totality of relevant major institutions & external forces. w analysing the marketing environment is the first step in target market analysis. 2. Demographic w World population doubling every 33 years. w Australian population: v HIGHER - marriageable age, marriages, household formation, divorce, remarriage, life expectancy, education, child dependance, women working, non-family households, migrant diversity. v LOWER - fertility rate, birth rate, no. of children per family 3. Economic w slower real growth as real income affected by higher taxes, inflation & unemployment. w inflation push on prices. w higher savings & debt. w changing consumer expenditure patterns (more on major items, luxuries & services). 4. Ecology w shortage of raw materials w cost of energy w pollution, conservation, etc. 5. Technology w accelerating rate of change w huge R & D budgets w increased regulation. 6. Politics w increased regulation w growth of public interest groups 7. Cultural

w core values change little (e.g. attitude to work, marriage, honesty) w secondary beliefs more changeable v more pleasure-seeking & self-realisation v more open & easy relationships v less loyalty to institutions v less religious conviction.

CONSUMER MARKETS & BUYING BEHAVIOUR

1. Introduction w Analysing a market is the starting point for company planning w A market is a set of actual/potential buyers (consumer, producer, reseller, government). 2. Consumer Market w great variation 3. Consumer Buying Decisions w 3 classes of buying situation (simple, limited & complex problem-solving). w Process from need, generics, product, product form, brand vendor, quality, timing & payment. w What alternatives were used? 4. Who is Involved? w Usually more than 1 w Many roles, e.g. initiator, influencer, decider, buyer & user. 5. Major Influences w Culture v a fundamental determinant of wants & behaviour v distinct social classes v each class shows distinct product/brand preferences in some areas w Social v reference groups can influence attitudes, opinions & values: - identify which ones - identify opinion leaders v family is direct influence v role playing is strong influence (expectations, esteem, etc.) w Personal v age and life cycle v occupation, economic circumstances, lifestyle v personality, self-concept/self-image w Psychological v motivation (Freud, Maslow, Herzberg)

v perception (a process for selection, organising & interpreting information) v learning (i.e. changes in behaviour arising from experience) v beliefs & attitudes. 6 Buying Process w Problem Recognition (buyer senses a variation between desired/actual state). w Information Search (attention awakens & then active search) w Information Evaluation (wide variety of preferred ways of processing information) w Purchase Decision (attitudes of others & situational factors) w Post-purchase Behaviour (afterwards? rationalisation, discomfort?)

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ORGANISATIONAL MARKETS & BUYING BEHAVIOUR

1. Introduction w w 2. organisational buying is a vast market a decision-making process.

Producer Market w w e.g. agriculture, mining, manufacturing, construction, banking sales to industrial buyers is bigger than to consumer buyers w fewer, larger, geographically concentrated, inelastic demand, more volatile demand, trained professional buyers. w w w re-order, modified re-order, new product/service. who makes the decision? influences on buyers v environment (demand, economy, cost of money, competition, supply conditions, etc.) v organisation (objectives, policies, structure, systems, trends to professionalism, centralisation, longer term contracts, performance evaluation). v inter-personal (e.g. authority, status, empathy, persuasiveness) v individual (e.g. age, income, education, job position, personality, risk attitudes) w 8 stages for procurement process: v Problem recognition v Need description v Product specification v Supplier search v Qualified supplier submissions v Selection v Order v Performance review

3.

Reseller Market w purpose is to resell or rent (incl. wholesalers & retailers) w reseller buying decisions v 3 types of decision (variety, vendors & prices/terms)

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v 3 buying situations (new item/first home, old item (choose best supplier, old item/best supplier/better terms) v who buys? individual or committee? v major influences? same as for producer marketing to industrial buyer. 4. Government Market w nearly one-third of all purchases from Federal, State, Local Government w public accountability w buying process usually competitive tendering w most companies serving the government have not been marketing-oriented.

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MARKET SEGMENTATION AND TARGETING

1. Introduction w Three Stages v Mass marketing is where a seller mass produces one product to attract everyone (undifferentiated marketing....not practised much any more). v Product differentiated marketing is where the seller produces two or more products designed to look different from each other and competitor's products (with separate marketing programmes). v Target marketing is where a seller distinguishes between segments, chooses one or more to concentrate on, and develops a marketing mix to satisfy them. w The benefits of target marketing are: v Spot market opportunities. v Fine-tune prices, distribution channels and promotional mix. w Definitions v Market segmentation is the act of dividing a market into distinct and meaningful groups of buyers who might merit separate products and/or marketing mixes. v Target marketing is the act of selecting one or more of the market segments and developing a positioning and market mix strategy for each. 2. Market Segmentation w Requirements for Effective Segmentation v Measurability (size & purchasing power) v Accessibility (reach and service) v Substantiality (large &/or profitable) w General Approach v no market segmentation, complete segmentation, segmenting by income class, age class, or income-age class. v Patterns of preference segments are: (a) Homogenous preferences where consumers have roughly the same preference. (b) Diffused preferences where preferences are scattered evenly throughout space. (c) Clustered preferences is where preferences are grouped together (called natural market segments). w Bases for Segmenting Consumer Markets v Geographic segmentation

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v Demographic segmentation (age, sex, family size, family life-cycle, income occupation, education, religion, race & nationality). (a) Age and life-cycle stage segmentation (consumer wants & capacities change with age and stage of family development). (b) Sex segmentation (e.g. clothing, hair dressing, cosmetics, magazines, cigarettes). (c) Income segmentation (e.g. automobiles, boats, clothing, cosmetics & travel). (d) Multivariable segmentation uses two or more demographic variables to break up the market. v Psychographic segmentation (buyers divided into groups on the basis of social class, life-style, or personality characteristics). (a) Social class (e.g. cars, clothes, home furnishings, leisure activities, reading habits and retailers). (b) Life-style uses people's attitudes, interests & opinions to group them into common life-styles. (c) Personality (develop products with brand personalities which correspond to consumer personalities). v Behaviouristic segmention (product-related segmentation by attitude, use or response to an actual product or its attributes). (a) Purchase occasion (e.g. season of year, holiday). (b) Benefits (according to what benefit consumers derive from using the product). (c) User status (non-users, ex-users, potential users, first-time users & regular users). (d) Usage rate (light, medium & heavy users). (e) Loyalty status (hard-core loyals, soft-core loyals, shifting loyals and switchers). (f) Stages of buyer readiness (unaware, aware, informed, interested, desirous, intend to buy). (g) Marketing factors (e.g. price and price deals, product quality, service). w Bases for segmenting Industrial Markets v Industrial buyers can also be segmented geographically, & by several behaviouristic variables (benefits sought, user status, usage rate, loyalty status, readiness stage & marketing factor sensitivity). v By end user (e.g. military, industrial & commercial). v Customer size v Macrosegmentation & then microsegmentation. 3. Target Marketing w Undifferentiated Marketing w Differentiated Marketing w Concentrated Marketing w Choosing Market Selection Strategies

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w Certain factors can narrow the choice, e.g. company resources, product homogeneity, stage in product lifecycle, market homogeneity, competitive marketing strategies.

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NEW PRODUCT DEVELOPMENT & PRODUCT LIFECYCLE STRATEGIES

1. Introduction w Two major challenges over lifecycle v find new products to replace those that are in the decline stage (new product development) v know how to manage products optimally in each stage (lifecycle strategies). 2. New Product Development Strategy w Obtain new products in two ways v acquisition (buying a company, patent or licence) v new-product development w New products mean original products, product improvements, product modifications & new brands. w Many product failures (failure rate varies from 20-80%) w Successful new product development difficult to achieve v Shortage of ideas v Fragmented markets v Social & governmental constraints v Cost of new-product development process v Capital shortage v Shorter life spans (competitors are quick to introduce similar products). w Reasons for failure v Subjectivity v Market size is overestimated v Poor design v Incorrectly positioned v Not advertised effectively v Overpriced. v Costs of product development higher than expected. 3. Idea Generation w Search should be systematic w Top management should define business domain, objectives, strategies

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w Sources of new product ideas (customers, scientists, competitor's products, company sales force & dealers, inventors, consultants & laboratories). w Use creativity techniques v Customer problem analysis (interviewing) v Product modification analysis (think about opportunities to modify, magnify, substitute, rearrange, combine one or more features). v Brainstorming. 4. Idea Screening w DROP-error (dismiss good idea because of lack of vision) w GO-error (poor idea proceeds to development & commercialisation). w Often use a rating form. 5. Concept Development & Testing w Concept development (product idea described in objective & functional terms). w Concept testing (taking these concepts to an appropriate group of target customers & getting their reactions). Symbolically or physically. 6. Marketing Strategy Development w Size, structure & behaviour of the target market. w Intended positioning w Sales, market share & profit goals sought w Intended price, distribution strategy marketing budget w Long-run, profit goals & marketing-mix strategy over time. 7. Business Analysis w Estimating sales, costs and profits. 8. Product Development w When prototype is ready, then functional & consumer tests. 9. Market Testing w Product & marketing programme introduced to learn how consumers & dealers react. w Several possible methods of market testing. 10. Commercialisation w When (timing) w Where (geographical strategy)

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w To whom (target market prospects) w How (introductory marketing strategy). 11. Product Lifecycle Strategies w Introduction Stage v Profits are negative or low v Few competitors w Growth Stage v Sales start climbing v New competitors enter v Prices tend to remain v Profit margins peak v Sustain growth by manipulating marketing-mix. w Maturity Stage v Poses most challenges to marketing management. v Possible strategies are: (a) Market modification (find new buyers for the product) (b) Product modification (change product characteristics such as quality, features & style to attract new users or more usage) (c) Marketing-mix modification (altering one or more elements of the marketing mix). w Decline Stage v Identify weak products v Determining marketing strategies (abandon the market or utilise a continuation, concentration or harvesting strategy if it decides to stay). v Drop decision (product could be sold, dropped).

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PRODUCT BRANDING, PACKAGING & SERVICE STRATEGY

1. Product Mix Decisions w Product mix is the set of all product lines & items w Product line is a group of products within a product mix that are closely related (e.g. they function in a similar manner, are sold to the same customer group, are marketed through the same types of outlets, or fall within given price ranges). w Product item is a distinct group within a product line that is distinguishable (by size, price, appearance, or some other attribute). w Width refers to how many different product lines are carried w Depth (length) refers to the number of items or brands in total. w Consistency of the product mix refers to how closely related the various product lines are (end use, production requirrements, or distribution channel, etc.). 2. Product Line Decisions w Each product line needs a marketing strategy w Various items contribute different amounts to sales & profits (20-80 rule). w How is product line positioned against competitor's product lines. w Line Length (Depth) relates to: v company's objectives v search for more volume & profit v manufacturing capacity w Line-Stretching Decision v Downward stretch (establish at the high end & add products to the lower end) (a) Risks are that the low-end might cannibalise high-end items, provoking competitors to counteract by moving into the higher end, dealers are not willing or able to handle the lower end. v Upward stretch (position at the lower end & enter the higher end) (a) Faster growth rate or higher margins at the upper end (b) Position as a full-line manufacturer v Two-way stretch (strongly position in the midrange & go after market dominance in both directions. w Line-Filling Decisions v Line lengthened by adding more items within the present range

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v Line filling can be overdone (cannibalisation & customer confusion). w Line Modernisation Decisions w Line-Featuring Decisions 3. v Select one or a few items for special featuring to draw attention to the line. Product Item Decisions w Core product answers 'why is buyer really buying?' and deals with benefits. w Tangible product has five characteristics (quality level, features, styling, a brand name & packaging). w Augmented product includes additional services & benefits (e.g. personal attention, delivery, money-back guarantee). w Nondurable goods are tangible goods normally consumed in one or a few uses. w Durable goods are tangible goods that normally survive many uses. w Services are activities, benefits or satisfactions that are offered for sale. w Convenience goods are purchased frequently, immediately and with the minimum of effort in comparison & buying (e.g. staples, impulse & emergency). w Shopping goods are goods that the consumer compares on such bases as suitability, quality, price and style v Homogenous goods (similar in quality but different in price) v Heterogenous goods (other qualities of the product rather than the price are important). w Specialty goods (unique characteristics and/or brand identification for which a significant group of buyers are habitually willing to make a special purchasing effort). 4. Brand Decisions w A brand is a name, term, symbol, design or a combination of them which is intended to identify the goods & services of one seller or group of sellers & to differentiate them from those of competitors (includes brand name, brand mark (symbol, design or distinctive colouring or lettering), trademark, copyright. w Buyer's viewpoint v Important information source (buyer benefits, product's quality). v Increased shopping efficiency v Call attention to new products. w Seller's viewpoint v To handle orders, track down problems, legal protection, to attract a loyal set of customers.

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w Society's viewpoint v higher quality, innovation & shopper efficiency. v unnecessary differentiation, higher consumer prices & status consciousness. w Brand Sponsor Decision v Three options (manufacturer's brand, private brand, both) w Brand Quality Decision (one of the major positioning tools) w Family Brand Decision v Four brand name strategies: (a) Individual brand names (Unilever) (b) A blanket family name for all products (GE) (c) Separate family names for all products (Coles) (d) Company trade name combined with individual product names (Kellogg's). v Desirable qualities for a brand name are: (a) It should suggest something about the product's benefits (b) It should suggest product qualities such as action or colour (c) It should be easy to pronounce, spell & remember (d) It should be distinctive. w Brand Extension Decision (use of a successful brand name to launch product modifications or additional products). w Multibrand Decision v Develops brands that compete with each other. w Brand Repositioning Strategy. 5. Packaging Decisions w Packaging is defined as activities involved in designing & producing the container or wrapper for a product. w Labelling refers to printed information appearing on or with the package that describes the product. w Self-service (package must perform many sales tasks). w Consumer affluence (consumers are willing to pay more for packaging). w Company & brand image can be enhanced by packaging. w Must establish packaging concept. w Decision on component elements must be made. w Must be tested. 21

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Service Decisions w First task is to survey customers w Customers expect service in product offer, amount and quality. w Should survey customers peridically. w How to price the service. w How to provide the repair service. w Customer service All these services should be co-ordinated & used as tools in creating customer satisfaction & loyalty. v Complaints & adjustments v Credit service v Maintenance service v Technical service v Information service

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PRICING STRATEGY
1. Introduction w Price is major determinant of demand and closely related to other marketingmix variables. w Price is the only element of the marketing mix that creates sales revenues; the other elements are all costs. 2. Setting Price w Target Market Objectives v Current profit maximization v Market-share leadership (long-run profitability via a dominant market share) where market is price-sensitive, economies of scale can be realized, and low price will discourage competition. v Market skimming (setting a high initial price to yield a high profit margin per unit sold) where sufficient buyers with high demand, economies of scale not realizable, high price will not attract competitors, and high price creates an impression of a superior product. w Product-quality leadership. w Marketing-Mix Strategy w Pricing Policies and Constraints v Must take into account compatibility with company policies and external constraints imposed by distributors, suppliers, and competitors. v Public policy issues are also important. w Pricing Strategy v Is the task of defining the initial price range and planned price movement through time that the company will use to achieve its marketing objectives in the target market. v Cost-oriented pricing strategies, including markup pricing (cost-plus) and target pricing (using a specified target rate of return). v Demand-oriented pricing strategies (based on consumer perceptions and demand intensity where prices are set on the basis of the product's perceived value by determining the market's perception of the relative value of a company's offer versus a competitor's offer. v Competition-oriented pricing strategies including going-rate pricing (price at the average level charged by the industry) and sealed-bid pricing. w Pricing Tactics

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v Psychological pricing tactics is where the final price set takes the psychology of the buyer into account including setting the price ending in odd numbers and usually just below the dollar amount, price lining (limited number of prices for selected lines of merchandise), prestige pricing (high price that generally indicates high quality), promotional pricing (below markup or below cost, e.g. price leaders, special-event pricing, and psychological discounting.) v Discount pricing tactics call for establishing a list price and a set of discounts and allowances as special incentives including cash discounts, quality discounts, trade discounts, seasonal discounts, trade-in allowances and promotional allowances, etc. 3. Initiating Price Changes w Price cuts. Consider when there is excess capacity, falling market share in the face of rigorous price competition and when you want a drive for dominance through lower costs. w Price Increases. Consider when persistent cost inflation and/or over-demand. w Buyer's Reactions to Price Changes v Price elasticity of demand is defined as the percentage change in quantity demanded divided by percentage change in price. v Perceptual factors in buyers' response affect consumers' reaction to price changes. w Competitors' Reactions to Price Changes. Particularly important where there are a number of firms, the product offering is homogeneous, and the buyers are discriminating and informed. 4. Responding to Price Changes w Ask questions about competitors' actions w Best response requires an analysis of the situation. 5. Pricing the Product Line w Modify thinking when pricing product lines. w Product line pricing situations v One situation consists of pricing related optional products such as accessories for automobiles or liquor at restaurant v Another deals with captive products (after-market products) like razor blades, camera film, and copier paper. v A third situation concerns pricing by-products that result from production of processed meats, petroleum products, and other chemicals.

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MARKETING-CHANNEL & PHYSICAL-DISTRIBUTION STRATEGY

1. Nature of Marketing Channels w A distribution channel is the set of all firms and individuals that take title, or assist in transferring title, to the particular good or service as it moves from the producer to the consumer, e.g. merchants, agents, facilitators, and marketing firms). w Intermediaries provide superior efficiency in making goods widely available and accesssible to target markets. w Work of intermediaries is designed to create form, time, place, and possession utilities. w Major marketing channel functions are: v Research - Gathering information necessary for planning & facilitating exchange. v Promotion - development and dissemination of persuasive communications about the offer. v Contact - Searching out and communicating with prospective buyers. v Matching - Shaping and fitting the offer to the buyer's requirements (e.g. manufacturing, grading, assembling and packaging). v Negotiation - Attempt to reach final agreement on price and other terms of the offer so that transfer of ownership or possession could be effected. v Physical distribution - Transporting & storing of the goods v Financing - Acquisition & dispersal of funds to cover the costs of the channel work. v Risk taking - Assumption of risks in connection with carrying out the channel work. w The first five functions deal primarily with consummating transactions, while the last three are facilitating functions. w Number of Channel Levels v A zero-level channel (direct marketing channel) consists of a manufacturer (M) selling directly to a consumer (C): M-C. v A one-level channel contains one selling intermediary, usually a retailer (R): M-R-C. v A two-level channel contains two intermediaries, usually a retailer & a wholesaler (W): M- W-R-C.

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v A three-level channel contains three intermediaries, sometimes an agent (A): M-W-A-R-C. v Higher-level channels exist, but with less frequency. w Types of Channel Flows Physical flow, title flow, payment flow, information flow, promotion flow. w Channels in the Service Sector Problem is one of developing & locating a set of agencies & facilities to provide services to a spatially distributed population. w Growth of Vertical Marketing Systems v A corporate vertical marketing system has as its distinguishing characteristics the combining of successive stages of production & distribution under a single ownership (company-owned stores). v A contractual vertical marketing system consists of independent firms at different levels of production & distribution integrating their programs on a contractual basis to obtain more economies and/or sales impact than they could achieve alone including wholesaler-sponsored voluntary chains (where wholesalers save the independent retailers they served against the competition of large chain organisations), retailer co-operatives (to defend themselves against the corporate chains), franchise organisations (e.g. manufacturer-sponsored retailer franchise system as in the auto industry, manufacturer-sponsored wholesaler franchise system as in the soft-drink industry, service-firm sponsored retailer franchise system as in the autorental industry. v An administered vertical marketing system achieves co-ordination of successive stages of production & distribution not through common ownership but through the size & power of one of the parties within the system. v The new competition in retailing is no longer between independent business units but rather between whole systems of centrally programmed networks (corporate, administered, and contractual) competing against each other to achieve the best economies and customer response. w Growth of Horizontal Marketing Systems Another development is the readiness of two or more companies to form alliances to jointly exploit an emerging marketing opportunity (e.g. symbiotic marketing). w Growth of Multichannel marketing Systems v Companies are increasingly adopting multichannel systems to reach the same or different markets. v If the multiple channels serve two different customers levels, it is called dual distribution. w Roles of Individual Firms in a Channel

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v Five types of role relationships of an individual firm to the dominant channel are insiders, strivers, complementors, transients and outsider innovators. v Another role is that of channel captain - the dominant member in the channel, the one who organized it and leads it. w Channel Co-operation, Conflict & Competition v Channel co-operation is usually the dominant theme among members of the same channel. They are striving for a common goal - satisfaction of consumers. v Channel conflict tends to occur within each channel system. Horizontal channel conflict refers to the conflict between firms at the same level in the channel. Vertical channel conflict refers to conflicts of interest between different levels of the same channel. v Channel competition describes the normal competition between firms & systems trying to serve the same target markets. It may be horizontal channel competition or channel system competition. 2. Channel-Design Decisions w Types of intermediaries should be identified first, such as manufacturers' agents, company sales force, mail order, distributors, and so on. w Number of intermediaries to use at each stage is influenced by the degree of market exposure sought by the company. v Intensive distribution refers to the stocking of the product in as many outlets as possible and is used by producers of convenience goods and raw materials. v Exclusive distribution is a policy of granting a limited number of dealers the exclusive rights to distribute the company's products in their respective territories. v Selective distribution involves the use of more than one but less than all of the intermediaries who are willing to carry a particular product. w Firms & responsibilities of channel members must be determined by the producer. v Price policy is one of the major elements in the trade-relations mix v Conditions of sale refer to the payment terms & to producer guarantees v Distributors' territorial rights are another element in the trade relations mix. v Mutual services & responsibilities must be carefully spelled out especially in franchised & exclusive-agency channels. w Evaluating the Major Channel Alternatives v Economic criteria refer to evaluating each channel alternative with respect to sales and costs. v Control criteria mean that the evaluation must be broadened by considration of the control aspects of the channel alternatives.

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v Adaptive criteria involve evaluating each channel alternative on the duration of commitment & loss of flexibility. 3. Channel-Management Decisions. w Selecting Channel Members Producers should determine what characteristics distinguish the better middlemen from the poorer ones. w Motivating Channel Members v The job of stimulating channel members to top performance must start with the manufacturer attempting to understand the needs & wants of the particular middleman. v Producer can use several approaches to handling a distributor relations. Most producers see the problem of motivation as one of the figuring out ways to gain co-operation from independent & sometimes difficult middlemen. More sophisticated companies try to forge a long-term partnership with their distributors. Distribution programming is building a planned, professionally managed, vertical marketing system that incorporates the needs of both the manufacturer & their distributors. w Evaluating Channel Members v Must evaluate middlemen performance again standards v Producer often issues sales quotas to define current performance expectations. 4. Channel-Modification Decisions w Adding or Dropping Individual Channel Members (use straightforward economic analysis). w Adding or Dropping Particular Marketing Channels w Modifying the Whole Channel 5. Physical Distribution Decisions w Nature of Physical Distribution v comprises the tasks involved in planning & implementing the physical flows of materials & final goods from points of origin to points of use or consumption to meet the needs of consumers at a profit. v Marketers have argued for market logistics thinking that starts with market considerations & works backward to the plant. w The Physical-Distribution Objective v Refers to getting the right goods to the right places at the right time for the least cost (Note these objectives can be conflicting.). v The company has to reserach the relative importance of the various services to target consumers. 28

v Also look at competitors' service standards. v Need to establish physical distribution objectives to guide physical distribution system planning. w Order Processing Physical distribution starts with the receipt of a customer order. w Warehousing v Stocking goods at various locations while they wait to be sold. v A storage warehouse is designed to store goods for moderate to long periods of time. v Distribution warehouses (distribution centres) receive goods from company plants on a daily basis, assemble them, & move them out to customers as fast as possible. v There is a move to single-storey automated warehouses with advanced materials handling systems under the control of a central computer. w Inventory v Another major type of physical distribution decision. v Investory cost increases at an increasing rate as the customer service level approaches 100%. v Inventory decision making is a two-step decision process calling for knowing when to order & how much to order. v Must determine reorder point, safety stock level & inventory carrying costs. v The optimal order quantity can be determined by observing how orderprocessing costs & inventory costs run up at a different possible order levels. w Transportation v Railways are one of the most cost-effective forms when shipping carload quantities of bulk products long distances. v Water (for shipping bulky, low-value, nonperishable products). v Trucks are highly flexible in their route opportunities & time schedule & are very efficient for short hauls of high-value merchandise. v Air is expensive. Used to ship high-cost perishables (fresh flowers) & highvalue, low-bulk items (jewellery). v Several criteria should be used to select transportation mode v Can use combinations of modes because of increasing containerization v Choice between private (own own fleet), contract (independent organization that sells transportation on contract basis), or common (transportation services at standard rates). w Organizational Responsibility

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v Takes high degree of co-ordination v Some companies have a committee & others a key executive to oversee physical distribution activities.

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RETAILING & WHOLESALING STRATEGY

1. Nature & Importance of Retailing w Retailing includes all activities involved in selling goods or services directly to final consumers for their personal, non-business use. w A retailer (retail store) is any business enterprise whose sale volume primarily comes from retailing. w Retailing is one of the major industries in Australia & employs over 13 million people. w Retailers range in size from very small to very large. 2. Types of Retailers w Range from self-service (supermarket), to self-selection retailing (variety store), to limited service (dealers), to full-service (department store). w Product line sold is the first basis for classifying retailing institutions: v Specialty store carries a narrow product line with a deep assortment within that line. Can be subdivided into single-line store, limited-line store & superspeciality store. Most are independently owned. v Department store carries several product lines (e.g. clothing, home furnishings, & household goods) where each line is operated as a separate department managed by specialist buyers or merchandisers. Most started in downtown areas and gradually moved to suburbs. v Supermarket is a relatively large, low-cost, low-margin, high-volume selfservice operation designed to service the consumer's total needs for food, laundry & household maintenance products. Grew in 1930s because of price-conscious consumers, mass ownership of automobiles, advances in refrigeration technology & developments in packaging technology. v Convenience stores are food stores that are relatively small, located near residential areas, open for long hours and seven days a week, and carry a highly limited line of high-turnover convenience products. v Combination store (primarily a diversification of the food store into the growing drug & prescription field). v Superstore (larger than the conventional supermarket & aims to meet the consumers' total needs for routinely purchased items such as food, personal care, alcoholic beverages, housewares and hardware, etc.) v Hypermarche (larger than the superstore & combines supermarket, discount & warehouse retailing principles). v Service business includes an array of retailers where product line is service, such as hotels & motels, banks, airlines, colleges, and tennis club. They are growing at a faster rate than product retailers.

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w Relative price emphasis refers to distinguishing retail forms according to their price image & pricing policy. v Discount store is one that sells standard merchandise at lower prices than conventional merchants through lower margins and higher volume. K Mart is largest & now discount retailing has moved into special merchanddise forms such as sporting goods & stereo equipment & food stores (box stores) v Warehouse store is a no-frill, discount, reduced-service operation which seeks to move high volume at low prices (e.g. furniture warehouse showroom). v Catalogue showroom applies catalogue & discounting principles to a wide selection of high-markup, fast-moving brand-name goods in the area of jewellery, power tools, luggages and photographic equipment. They first emerged in the 1960s and have grown rapidly. w Nature of business premises refers to where the product is sold. v Mail and telephone order retailing covers any selling that involves using the mail or telephone to get orders and/or using them to facilitate the delivery of the goods (including the mail-order catalogue, direct response from ad, direct mail and telephone selling). v Automatic vending (also called automatic merchandising or robot retailing) through coin-operated machines hasbeen a major post-World War II growth area. Vending only useful for small, standardized, low-unit value convenience items. v Buying service is a storeless retailer serving specific clienteles - usually the employees of large organizations such as schools, hospitals and government agencies. v Door-to-door retailing includes selling door-to-door, office-to-office, or athome sale parties (e.g. Fuller Brush, encyclopaedia companies, Avon & tupperware). meets the needs of people for convenience & personal attention. w Control of outlets refers to classifying retailing institutions by their form of ownership. v Corporate chain is two or more outlets that are commonly owned & controlled, sell similar lines of merchandise, have central buying & merchandising, and may use a similar architectural motif. v Voluntary chains & retailer co-operatives are a wholesaler sponsored group of independents engaged in bulk buying & common merchandising & a co-operative agreement between independent retailers who set up a central buying organization, respectively. v Consumer co-operative (coop) is any retail firm that is owned by its customers (e.g. credit unions).

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v Franchise organization is a contractual association between a franchiser (who may be a manufacturer, wholesaler, independent businesspeople who buy the right to own & operate one or more units in the franchise system). v Conglomerchant (merchandising conglomerates) are free-form corporations that combine several diversified retailing lines & forms under central ownership, along with some integration of their distribution & management functions. w Clustered stores refers to whether consumers face a single isolated store or one of several types of clustered stores. v Central business district includes department stores, specialty stores, banks and major cinemas. v Regional shopping centre is a group of commercial establishments planned, developed, owned and managed as a unit related in location, size & type of shop to the trade area that it services & providing on-site parking. May contain from 40 to over 100 stores. v Community shopping centre contains 15 to over 50 retail stores, one of which is a primary store (department or variety store). v Neighbourhood shopping contains 5 to 15 stores & customers can walk to the stores. 3. Retailer Marketing Decisions w Target market decision is the first & most important decision. May have to conduct marketing research to make sure target market is satisfied. w Product assortment & services decision must then be made. v Retailer's product assortment can be described in terms of decisions of width (narrow or wide) & depth (shallow or deep) & should match the shopping expectations of the target market. v Decisions must be made on the mix of services to be provided to customers. v The store's atmospherics can be used to differentiate it from competitors. w Pricing decisions means that retailers must develop a set of pricing policies suited to their target market & reflecting the quality of goods they carry, the services they offer & the type of price image they want. w Promotion decisions revolve around the normal promotional tools advertising, personal selling, sales promotion & publicity to reach consumers. w Place decisions largely mean the choice of locations, which is a key competitive factor in retailer's attraction of customers. 4. The Future of Retailing w Must adapt to major changes in the macroenvironment. w Trends call for more professional management.

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w Key need will be to find ways to increase retail productivity. 5. Nature & importance of Wholesaling w Wholesaling includes all activities involved in selling goods or services to those who are buying for purposes of resale or business use. w Wholesale transactions are usually larger than retail transactions. w Wholesalers perform several functions (selling & promoting, buying & assortment building, bulk-breaking, warehousing, transportation, financing, ris bearing, market information & management services & counselling). w Wholesalers are used because of their ability to perform one or more useful functions for manufacturers, retailers & other business establishments.

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6.

Types of Wholesalers w Over 30,000 wholesalers in Australia. w Merchant wholesalers are independently owned businesses that take title to the merchandise they handle (jobbers, distributors, or mill supply houses) and account for 50 percent of all wholesaling. v Full-service wholesaler provides several services, such as carrying stock, using a sales force, offering credit, making deliveries & providing management assistance. There are two types: wholesale merchants, who sell primarily to retailers & industrial distributors, who sell to manufacturers. v Limited-service wholesalers offer few services. There are several types: cash-and-carry wholesalers (limited line of fast-moving goods to retailers for cash); truck wholesalers (perform a selling & delivery function); drop shippers (do not carry inventory or handle the product, just take title); rack jobbers (deliver & set nonfood items in supermarket); producers' cooperatives (sell farm produce to local markets); & mail-order wholesalers (send catalogues to customers featuring jewellery, cosmetics, etc.). w Agents & brokers do not take title to the goods & they tend to perform even fewer functions than limited-sedrvice merchant wholesalers. v Brokers perform the function of bringing the buyers & sellers together (food & real estate). v Agents represent either buyers or sellers on a permanent basis. types are: manufacturers' agents (represent two or more manufacturers of compelmentary lines); selling agents (sell entire output of a manufacturer); purchase agents (make purchases for buyers); commission merchants (take physical possession & negotiate sales). w Manufacturers' & retailers' branches & offices are wholesaling operations conducted by sellers or buyers themselves rather than through independent wholesalers. v Sales branches & offices give manufacturers better control of inventory & improved selling & promotion. Branches carry inventory but offices do not. v Purchasing offices perform a role similar to brokers & agents but are part of the buyers' organization. w Miscellaneous wholesalers include: v Agricultural assemblers collect farm products from farmers & build them into larger lots for shipment to food processors, bakers, & government. v Petroleum bulk plants & terminals specialize in selling & delivering petroleum products to filling stations, other retailers & organizational users. v Auction companies (houses) are important where buyers want to see & inspect goods prior to purchase (tobacco & livestock markets).

7.

Wholesaler Marketing Decisions

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w Target market decisions have to develop a better definition of the target market & not serve everyone. w Product assortment & services decisions have to be examined in light of customer needs. w Pricing decision may change from the traditional mark-up approach. Promotion decision usually revolves around trade advertising, sales promotion, publicity & little personal selling. w Place decision means that wholesalers typically locate in low-rent, low-tax areas & do not put money into their physical setting & offices. 8. Future of Wholesaling w Changes less dramatic than in retailing. w Wholesalers will have to adapt to keep pace with rapidly changing world.

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MARKETING COMMUNICATIONS STRATEGY

1. Tools in the Marketing Communication Mix w Advertising (any paid form of nonpersonal presentation & promotion of ideas, goods or services by an identified sponsor). w Sales promotion (short-term incentives to encourage purchase or sale of a product or service). w Publicity (nonpersonal stimulation of demand for a product, service or business unit by planting commercially significant news about it in a published medium or obtaining favourable presentation of it on radio, television or stage that is not paid for by the sponsor.) w Personal selling (oral presentation in a conversation with one or more prospective purchasers for the purpose of making sales). w Within each category are found promotools such as sales presentations, point-of-purchase displays, trade shows, catalogues, contests, premiums, coupons and trading stamps. 2. Communication Model w Sender - The party sending the message to another party (also called the source or communicator). w Encoding - The process of putting thought into symbolic form. w Message - The set of symbols that the sender transmits. w Media - The paths through which the message moves from sender to receiver. w Decoding - The process by which the receiver assigns meaning to the symbols transmitted by the sender. w Receiver - The party receiving the message sent by another party (also called the audience or destination). w Response - The set of reactions that the receiver has after being exposed to the message. w Feedback - The part of the receiver's response that the receiver communicates back to the sender. 3. Clarifying the Response Sought w Awareness (the first state of buyer readiness & refers to how aware the target receiver is of the product or organization. w Knowledge (refers to whether the potential consumer knows about the product or organization.) w Liking (refers to how they feel about it).

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w preference (means that the consumer prefers the product or organization over the competition). w Conviction (refers to making a mental commitment to it.) w Purchase w These six states simplify to 3 stages, known as the cognitive (awareness, knowledge), affective (liking, preference, conviction) and behavioural (purchase). 4. Choosing a Message w An ideal message is one that would manage to get Attention, hold Interest, arouse Desire & obtain Action (known as the AIDA model). w Message content means the communicator has to figure out what to say to the target audience to produce the desired response. (a) Rational appeals aim to serve the audience's self-interest (b) Emotional appeals are designed to stir up some negative or positive emotion that will motivate product purchase. (c) Moral appeals are directed to the receiver's sense of what it is right and proper to do. w Message structure affects a message's effectiveness. v Conclusion drawing is more effective except when communicator is seen as untrustworthy, the issue is very simple or personal & the audience is highly intelligent. v One-sided messages tend to work best with audiences that are favourably disposed to the communicator's position. v Two-sided messages tend to work best with audiences who are opposed to the communicator's position, better educated & likely to be exposed to counter-propaganda. v Order of presentation raises the question of whether communicators should present their strongest arguments first or last. w Message format means that communicators must be able to convey the message in an effective format by using attention-getting devices such as novelty & contrast; arresting pictures & headlines; distinctive formats, message size & position; and colour, shape & movement. 5. Choosing Media w Personal communication can be of three types: v Advocate channels (company representatives directly contacting buyers in a target market). v Expert channels (independent persons with expertise, e.g. consultants, authorities, making statements to target buyers. v Social channels (neighbours, friends, family members & associates who may communicate with target buyers, i.e. word of mouth influence.

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w Nonpersonal communications carry influence without involving direct contact & are of three types: v Mass & selective media (newspapers, magazines, radio, television & billboards). v Atmospheres (environments that are designed to create or reinforce the buyer's leanings toward purchase or consumption of the product). v Events (occurrences designed to communicate particular messages to target audiences). NOTE: Mass communications affect attitudes & behaviour through a two-step flow-of-communication process which means that information flows first to opinion leaders & then to the general public. 6. Selecting Source Attributes w Three factors underlie source credibility v Expertise (degree to which the communicator is perceived to possess the necessary authority for what is being claimed). v Trustworthiness (related to how objective & honest the source is perceived to be). v Likeability (related to how attractive the source is to the audience). 7. Collecting Feedback w Generally involves surveying the target audience to measure recognition, recall, feelings and attitudes. 8. Establishing the Total Promotional Budget w The most common approach is to set the budget as a percentage of sales, either last year's sales or next year's projected sales or w Base promotional budget on competitors' expenditures, or w By setting communication objectives & tasks. 9. Establishing the Promotional Mix w Choosing the optimal promotional mix

w Type of product affects the amount spent on promotion, with advertising being more heavily used in consumer products marketing & personal selling more important in industrial market. w Push strategy calls for using the sales-force & trade promotion to push the product through the channel. w Pull strategy calls for spending a lot of money on advertising & consumer promotion aimed at the final consumer, to build up demand for the product. w Buyer readiness stage affects the use of promotional tools

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w Product-lifecycle stage also has implications on the effectiveness of promotional elements, with advertising & publicity used more in the earlier stages. w Size of the total promotional budget will affect which promotional tools will be emphasized. 10. Responsibility for Marketing Communications Planning w Members of the marketing organisation have strong & varying feelings about the proper proportions of the company's promotional budget to spend on different promotional tools. w Companies are moving toward the concept of integrated communications, which assigns someone the overall responsibility for the company's persuasive communication efforts.

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ADVERTISING, SALES PROMOTION & PUBLICITY STRATEGY

1. Advertising w Consists of nonpersonal forms of communication conducted through paid media under clear sponsorship. w Over $2 billion is spent on advertising in Australia each year. w Involves varied media, such as radio, magazine, TV, direct mail and so on. w Has multiple purposes (e.g. image building, information dissemination, advocacy, etc.) w The distinctive qualities of advertising are public presentation, persuasiveness, amplified expressiveness and impersonality. w Organisation arrangements vary from one person handling advertising to an internal advertising department to use of advertising agency. w Objectives Setting: v Objectives must flow from prior decision making on the target market, market positioning & marketing mix. v Advertising objectives can be sorted into whether their aim is to inform, persuade or remind. v The inform category includes such advertising objectives as telling the market about a new product, suggesting new uses for the product, informing the market of a price change & explaining how a product works (A subcategory is pioneering advertising which seeks to build primary demand, that is demand for a product category). v The persuade category includes such advertising as building brand preference, encouraging switching to the advertiser's brand, & persuading the customer to purchase now (A subcategory is competitive advertising whose purpose is to build selective demand, that is, demand for a particular brand. Comparative advertising is competitive advertising which seeks to establish the superiority of one brand along one or more product characteristics through specific comparison with one or more other brands in the product class). v The remind category includes such advertising objectives as reminding consumers that the product may be needed in the near future, reminding them where to buy it, keeping it in their mind during off-season, & maintaining its top-of-the-mind awareness. (A subcategory is reinforcement advertising that seeks to assure current users that they have made the right choice). w Budget Decision v Affordable method (where the company sets the advertising budget on the basis of what they think the company can afford.).

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v Percentage-of-sales method (refers to companies setting their advertising expenditures at a specified percentage of sales - either current or anticipated - or of the sales price). v Competitive-parity method (is where companies set their advertising budgets specifically to match competitors' outlays, that is, to maintain competitive parity.) v Objective-and-task method (calls upon advertisers to develop their budget by (a) defining their advertising objectives as specifically as possible, (b) determining the tasks that must be performed to achieve these objectives, and (c) estimating the costs of performing these tasks. v Other decision models call for estimating the advertising sales response function, showing the relation between different possible levels of advertising expenditure & resulting sales. w Message Decision v Message generation (the activity of developing a number of alternative messages that would help the product achieve its desired positioning in the market). v Message evaluation & selection (achieved by rating the contending messages on the scales of desirability, exclusiveness & believeability). v Message execution (means that the impact of a message depends not only on what is said but on how it is said. (a) To guide the development of message execution, the advertiser usually prepares a copy strategy statement describing the objective, content, support & tone of the ad. (b) Examples of execution styles used in advertising are slice-of-life, lifestyle, fantasy, mood or image, musical, personality symbol, technical expertise, scientific evidence & testimonial evidence. (c) Words that are memorable & attention-getting must be found. (d) Format elements such as ad size, colour & illustration can make a considerable difference in an ad's impact, as well as its cost. w Media Decision v Reach (must decide on how many persons in the target audience should be exposed to the ad campaign during the specified period of time). v Frequency (must also decide on how many times the average person in the target market should be exposed to the message within the specified time period). v Impact (must also decide on the quality of impact that the exposure should have). v Choosing among major media types means examining the major media types for their capacity to deliver reach, frequency & impact. Look at advantages & disadvantages. The major media types, in order of their advertising volume, are newspapers, television, direct mail, radio, magazines & outdoor. Professional media planners make their choice

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among these major media by considering several variables, including target audience media habits, product, message & cost. v Selecting specific media vehicles (means choosing the vehicle within each media type that would produce the desired response in a cost-effective way. The cost-per-thousand criterion is calculating the cost per thousand persons reached by a particular vehicle. It should be adjusted for audience quality, audience attention probability, and editorial quality. v Deciding on media timing (have to decide how to schedule the purchased advertising, e.g. Macroscheduling (refers to strategically scheduling the advertising expenditures over the year in response to such factors as the seasonal pattern of industry sales & expected competitive plans). Microscheduling (refers to allocating the purchased advedrtisng over a short period of time to obtain the maximum impact). 2. Campaign Evaluation w Communication-effect research (seeks to discover whether the advertising is achieving the intended communication effects. Procedure is called copy testing). v Ad pre-testing (used to make improvements in the advertising copy to the fullest extent possible prior to its release. The three major methods are direct ratings, portfolio tests, & laboratory tests). v Ad post-testing (used to assess the actual communication impact of the ad after it has appeared in the media. Two types are recall tests & recognition tests). w Sales-effect research (means measuring the effect of advertising on sales). v Historical approach (involves the researcher in fitting past company sales to past company advertising on a current or lagged basis using advanced statistical techniques). v Experimental design (used to measure the sales impact of advertising by varying the level of advertising and testing this effect on sales.). 3. Sales Promotion w Comprises a variety of tactical promotional tools of a short-term incentive nature designed to stimulate earlier and/or stronger market response. w Tools can be subclassified into tools for consumer promotion (samples, coupons, trading stamps, etc.), trade promotion (buying allowances, free goods, push money, etc.), and sales-force promotion (bonuses, contests, etc.). w Sales promotion activities have grown rapidly in recent years and are most effective when used in conjunction with advertising. Step 1 Establish the Sales-Promotion Objectives

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v They are derived from basic marketing communication objectives, which in turn are derived from more basic marketing objectives developed for the product. Step 2 Select the Sales-Promotion Tools v Samples are offers of a free sample or trial of a product to consumers & is the most effective & most expensive way to introduce a new product. v Price packs (cents-off deals) are offers to consumers of a certain amount of money off the regular price of a product. v Premiums are items of merchandise that are offered at a relatively low cost or free as an incentive or bonus to purchasers of a particular product. v Point-of-purchase (POP) displays & demonstrations take place at the point of purchase or sale, next to the merchandise. v Trade promotion is where manufacturers work out techniques for trying to secure the co-operation of wholesalers & retailers e.g. a buying allowance (a short-term offer of cents-off on each case purchased during a stated time period); a merchandise allowance (compensates dealers for featuring the manufacturer's product in their newspaper ads, radio programs, or handbills); a display allowance (compensates them for carrying or building special displays of the product); free goods (merchandise offered to middlemen who buy a certain quantity); push money (cash or gifts to dealers or their sales force to push the manufacturer's goods); specialty advertising (gift items that carry the company's name that help remind or reinforce a relationship between the manufacturer & middlemen, e.g. pens, matchbooks, calendars, memo pads, etc.). v Business conventions & trade shows (where industry trade associations organize annual or more frequent conventions for their members & typically sponsor a trade show at the same time. v contests (consumers submit an entry - jingle, guestimate, suggestion - to be examined by a panel of judges who will select the best entries). v sweepstakes (consumers submit their names to be included in a drawing of prize winners). v games (consumers receive something every time they make a purchase which may or may not help them win a prize). v sales contests (aimed at dealers or the sales force to induce them to make more sales & prizes will be given to the top performers. Step 3 Develop the Sales Promotion Programme v Size of incentive (the marketer has to determine the most cost-effective size of an incentive). v Conditions for participation (incentives may be made available to everyone or select groups). v Distribution vehicle for promotion (must decide how to promote & distribute the promotion program to the target audience). 44

v Duration of promotion (length of time that the promotion lasts). v Timing of promotion (construct a schedule for sales promotion). v Total sales promotion budget can be developed from ground up, including administrative & incentive costs & expected number of units to be sold or to use a conventional percentage of the total budget for sales promotion. Step 4 Pre-test Sales Promotion Programme v Pre-tests should be conducted whenever possible to determine if the tools are appropriate, the size of the incentive is optimal, and the method for presentation is efficient. Step 5 Implement & Control the Sales Promotion Programme v Requires that specific goals & implementation plans for individual promotions be established.

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Step 6 Evaluate the Sales Promotion Results v The most common consumer promotion evaluation technique is to compare sales performance movement before, during, & after a promotion. v Consumer-panel data could be used to examine the kinds of people who responded to the promotion & what they switched to after the promotion. v Consumer surveys can be conducted to learn how many recall the promotion, what they thought about it, how many took advantage of it, & how it affected their subsequent brand choice behaviour. v Sales promotions can also be evaluated through carefully arranged experiments that vary such attributes as incentive value, duration & distribution media. 4 .Publicity w The activity of receiving editorial space, as divorced from paid space, in all media read, viewed or heard by a company's customers & prospects, for the specific purpose of assisting in the meeting of sales goals. w Has three distinctive qualities: high credibility, off guard & dramatization. w Public relations practitioners perform the following functions: press relations, product publicity, corporate communications, lobbying & counselling. w The factors indicating that publicity has high potential in the total promotional mix are newsworthiness, stimulus for sales force & dealers, need for credibility & small budget. Step 1 Establish the Publicity Objectives v The objectives must be stated & then translated into specific goals. Step 2 Choose the Publicity Messages & Vehicles v Determine whether there are any interesting stories to tell about the product. Creating news (event creation) & finding news are two important tasks. Step 3 Implement the Publicity Plan v One of chief assets of publicists in getting stories placed is the personal relationships they have established with media editors. Step 4 Evaluate the Publicity Results v The easiest & most common measure of publicity effectiveness is the number of exposurres created in the media. v A better measure calls for finding out what change in product awareness/ comprehension/attitude occurred as a result of the publicity campaign. v Sales & profit impact is the most satisfactory measure, if obtainable.

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PERSONAL SELLING & SALES MANAGEMENT STRATEGY

1. Introduction w Every organization has one or more persons who have responsibility for contacting & selling to prospects & customers - called a sales force. w Classifications of Sales Positions v deliver the product (e.g. milk, bread, fuel, toil) v inside order-taker (e.g. the haberdashery salesperson standing behind the counter). v -field order-taker (as the packing-house, soap or spice salesperson does). v build goodwill or to educate the actual or potential user (e.g. the distiller's 'missionary person' or the medical 'detailer' representing an ethical pharmaceutical house). v creative sale of tangible products such as vacuum cleaners, refrigerators & encyclopaedias. w Qualities in Comparison to Advertising v alive, immediate & interactive v cultivation ranging from a matter-of-fact selling relationship to a deep personal friendship. v response (makes the buyer feel under some obligation for having listened to the sales talk or using up the sales representative's time). v expensive (average of $150 a sales call in 1982). 2. Establishing Sales-Force Objectives/Tasks w Prospecting (find & cultivate new customers) w Communicating (about the company's products & services to existing & potential customers). w Selling (art of 'salesmanship' - approaching, presenting, answering objections & closing sales). w Servicing (consulting on problems, rendering technical assistance, arranging financing & expediting delivery). w Information gathering (market research & intelligence work & supply sales reports on their customer calls). w Allocating (evaluate customer profitability & advise the company on allocating scarce products to their customers in times of product shortages). w Marketing tasks (analysing sales data, measuring market potential, gathering market intelligence & developing marketing strategies & plans).

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3.

Sales-Force Strategy w Developed by understanding the customer buying process & how the company can best position itself against competition. w Five types of selling situations can be distinguished: v sales representative to buyer v sales representative to buyer-group v sales team to buyer-group v conference selling; and v seminar selling. w Selling is increasingly becoming a matter of teamwork, requiring the support of the other personnel, such as top management, technical people, customer service representatives & an office staff. w The company has a choice between engaging several types of sales force, such as a direct sales force, inside sales personnel, field sales personnel or contractual sales force.

4.

Sales-Force Structure w Territorial-structure (each sales representative is given an exclusive territory in which to represent the company's full line. Works quite well in companies with a relatively homogeneous set of products & customers). w Product-structure (where the company structures their sales force along product lines & is used where the products are technically complex, highly unrelated, or numerous). w Customer-structure (where companies specialize their sales forces along customer lines & is used when a great knowledge of the customer is needed). w Complex sales-force structure (combines several principles of sales-force structure & occurs when a company sells a wide variety of products to many types of customers over a broad geographical area).

5.

Sales-Force Size w Most companies use the workload approach to establish the size of their sales force. w The company must determine the level of compensation which bears some relation to the going market price for the type of sales job & abilities required. w The company must also determine the components of compensation - a fixed amount, a variable amount, expenses & fringe benefits.

6.

Recruiting & Selection w At the heart of a successful sales-force operation is the selection of effective sales representatives.

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w Among the traits recognized as being good indicators of sales representative effectiveness are: high level of energy, abounding self-confidence, unger for money, willingness to work hard, empathy & ego drive. w Develop general criteria for new sales personnel; and then w Seek applicants through various means, including soliciting names from current sales representatives using employment agencies placing job ads, and contacting college students. w An increasing number of companies are giving formal tests to applicants for sales positions. 7. Training w Training Time (from a few weeks to many months) w Purpose of Training v know the company & identify with it v know the company's products v know customers' and competitors' characteristics v learn how to make effective sales presentations v be introduced to field procedures & responsibilities. w Steps in selling process v Prospecting & qualifying (identify prospects & qualify them by financial ability, volume of business, special requirements, location & likelihood of continuous business). v Pre-approach (learn as much as possible about the prospect company, whsat it needs, who is involved in the purchase decision and its buyers, personal characteristics & buying styles. v Approach (know how to meet & greet the buyer to get the relationship off to a good start). v Presentation & demonstration (tell the company story, show how the product will make or save money). (a) The oldest style of sales presentation is the canned approach, which is a memorized sales talk covering the main points deemed important by management. (b) The formulated approach is also based on stimulus-response thinking but attempts to identify early the buyer's needs & buying style & then use a formulated approach to this particular type of buyer. (c) The need-satisfaction approach does not start with a prepared presentation designed to sell the customer but rather with a search for the customer's real needs. v Handling objections (using techniques such as maintaining a positive approach, trying to have the buyer clarify & define the objections,

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questioning the buyer in a way that the buyer has to answer his/her own objections, & so on). v Closing (asking the prospect for the order, offer to write up the order, & ask whether the buyer wants A or B, and so on). v Follow up (to assure customer satisfaction & repeat business by completing any necessary details on delivery time, purchase terms and other matters). Directing w Help the sales representatives use their time effectively & efficiently. w Develop customer targets & call norms (involves classifying customers into account types, reflecting the sales volume, profit potential and growth potential & establishing a certain desired number of calls per period). w Develop prospect targets & call norms (involves specifying how much time the sales force should spend prospecting for new accounts). w Annual call schedule w Time-and-duty analysis (refers to time spent on travel, food & breaks, waiting, selling & administration). 9. Motivating w Organizational climate describes the feeling that the sales force gets from their company regarding their opportunities, value & rewards for a good performance. w Sales quota specifies to sales representatives what they should selling during the year, by product. w Positive incentives such as sales meetings & sales contests are used to stimulate sales-force effort. 10. Evaluating w Periodic reports w Annual territory marketing plan (outline of their program for developing new accounts & increasing business from existing accounts). w Call report (salesperson records pertinent aspects of his/her dealing with a customer). w Compare & rank the sales performance of the various sales representatives. w Compare a sales representative's current performance with his/her past performance. w Qualitative evaluation of the salesperson's knowledge of the company, products, customers, competitors, territory & responsibilities & personality characteristics.

8.

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MARKETING OF SERVICES, ORGANISATIONS, PERSONS, PLACES & IDEAS

1. Services Marketing w Services now account for a large percentage of GNP w Service industries are quite numerous & varied (e.g. government sector including courts, hospitals, police & fire; private nonbusiness sector, including museums, universities & colleges; and business sector, including airlines, banks, hotels, consultants & repair services). w A service is any activity or benefit one party can offer to another that is essentially intangible & does not result in the ownership of anything. Its production may or may not be tied to a physical product. w Services have a number of distinctive characteristics: v Intangibility (services cannot be seen, tasted, felt, heard or smelled before they are bought). v Inseparability (service is inseparable from the source that renders it). v Variability (same service can be highly variable, depending on who is providing it, even when it is being provided.) v Perishability (services cannot be stored). w Classification of Services v To what extent is the service people-based or equipment-based? In peoplebased services, we can distinguish between those involving professionals (accounting), skilled labour (plumbing), & unskilled labour (cleaning service). In equipment-based services, we can distinguish services involving automated equipment (vending machines), equipment operated by relatively unskilled labour (taxis), & equipment operated by skilled labour (computers). v To what extent is the client's presence necessary to the service? If the client must be present, the service provider has to be considerate of his/her needs. v By client's purchase motive (whether the service meets a personal need or a business need). v By service provider's motives (profit or nonprofit) & form (private or public). w The extent & Importance of Marketing in the Service Sector v Typically lag behind manufacturing firms in their development & use of marketing. v As competition intensifies, costs rise, productivity stagnates & service quality goes down, an increasing number of service firms are taking an interest in marketing for the first time.

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v As competition gets keener, more marketing sophistication will be needed in services marketing. v One of the main needs in services marketing is to find ways to increase productivity. w Marketing Mix Decisions for Service Firms v Product planning is a challenging area v Must be more imaginative in pricing v Several options for delivery systems v Many opportunities to use promotion (to build interest in the service, to differentiate the firm's offer from competitors' offers, & to build the organisation's overall image). 2. Organization Marketing w Organization marketing describes those activities undertaken to create, maintain or alter attitudes and/or behaviour of target audiences toward particular organizations. w Has traditionally been the responsibility of the public relations department. w Public relations is the management function which evaluates public attitudes, identifies the policies & procedures of an individual or an organization with the public interest, & plans & executes a programme of action to earn public understanding & acceptance. w Image Assessment v No image work can be done until research is conducted to find out how the organization is seen by its various key publics. v Calls for developing a survey instrument to measure the organization's image among its major publics. w Image Choice v Identify the image that the organisation would like to have. v Be realistic & not aim for the impossible. w Image Planning & Control v The firm has to develop a marketing plan that changes or preserves its image & to re-survey its publics to see whether its activities have succeeded in improving its image. 3. Person Marketing w Person marketing consists of activities undertaken to create, maintain, or alter attitudes and/or behaviour toward particular persons. w Celebrity marketing v Celebrities hire press agents to promote their stardom.

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v Celebrity marketers all recognize that celebrity lifecycles are quite varied & often limited. w Political Candidate marketing v Political campaigns have increasingly been compared with marketing campaigns in which the candidate goes into the voter market & uses modern marketing techniques, particularly marketing research & commercial advertising, to maximize voter purchase. v In the USA political candidates seeking election start with marketing research, develop a candidate concept & determine a communication & distribution strategy. w Personal Marketing v Personal marketing encompasses the efforts of individuals to create certain impressions about themselves in the minds of others. v Takes on higher-than-normal importance during job interviewing, public appearances & marriage courtship. v The job-seeker must see the recruiting company as a buyer & do his or her best to understand the buyer's motives & buying criteria. v At the same time that job-seekers are marketing themselves, so is the recruiting company. 4. Place Marketing w Place marketing involves activities undertaken to create, maintain or alter attitudes and/or behaviour toward particular places. w Domicile Marketing v Involves the effort to develop and/or promote the sale or rental of singlefamily dwellings, apartments, & other types of housing units. v Has traditionally relied on the classified want ad & the real estate agent. w Business Site Marketing v Involves the effort to develop, sell or rent business sites or properties such as plants, stores, offices & warehouses. v Developers, nations, States and cities practise this type of marketing. w Land Investment Marketing v Involves efforts to develop & sell land for investment purposes. v Has been used widely in Queensland. w Vacation Marketing v Involves the effort to attract vacationers to various spas, resorts, cities, States & even whole nations. v Carried on by travel agents, airlines, motor clubs, oil companies, hotels, motels & various governmental units.

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w National Marketing v Nations engage in continuous public relation activities to win a favourable image among the citizens of other countries. v Some call this work 'propaganda'. 5. Idea Marketing w Idea marketing is used to cover efforts to market social ideas & has been called social marketing. w Social marketing is the design, implementation & control of programmes seeking to increase the acceptability of a social idea, cause or practice in a target group(s). w It utilizes market segmentation, consumer research, concept development, communications, facilitation, incentives, & exchange theory to maximize target group response. w Marketing Social Ideas v More a change technology than a response technology. v The purpose of social marketing varies from trying to produce understanding to trigger one-time action, to attempting to change behaviour, to attempting to change a basic belief. v Calls for much more than public advertising. v Any organisation with a cause can approach its task through developing a marketing plan. v Social marketing is still too new to evaluate its effectiveness in comparison with other social change strategies.

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