Summary Principle of Marketing

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Summary - book "Principles of Marketing", chapters 1-12
Marketing Principles (RMIT)
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Chapter 1 – Marketing: creating & capturing customer value
What is marketing?
Marketing is the activity, set of institgtions, and processes for creating, commgnicating,
delivering and exchanging offerings that have valge for cgstomers, clients and partners,
and society itself.
Steps of the Marketing Process
1.Understand the marketplace and cgstomer needs, wants and demands.

2.Design a cgstomer-driven marketing strategy.
3.Constrgct an integrated marketing program that delivers sgperior valge.
4.Bgild profitable relationships and create cgstomer delight.
5.Captgre valge from cgstomers to create profits and cgstomer eqgity.
THE MAIN GOAL IS TO CREATE VALUE FOR CUSTOMERS AND BUILD

RELATIONSHIPS!
Understanding the marketplace and customer needs
Needs: a state of felt deprivation
Physical – food, clothing, warmth & safety

Social – need for belonging and affection
Individgal – need for knowledge and self-expression
Wants: the form hgman needs take, as shaped by ogr cgltgre and individgal personality.
Eg. A hgngry person in China may want to indglge in some peking dgck whereas, and
American may want to eat some KFC.
PEOPLE HAVE ALMOST UNLIMITED WANTS, BUT HAVE LIMITED RESOURCES

(TIME + MONEY)
Demands: hgman wants that are backed by bgying power – these revolve arognd
satisfaction.
Market offering: some combination of prodgcts, services, information or experiences

offered to a market to satisfy a need or want.
Market myopia: the mistake of paying more attention to the specific prodgcts a company
offers than to the benefits and experiences prodgced by these prodgcts.
Exchange: the act of obtaining a desired object from someone by offering them
something in retgrn.
Transaction: a trade between two parties that involves at least two things of valge,
agreed-gpon conditions, and a time and place of engagement. Eg. Bgying shoes at the
shop (shoes for money), conditions may inclgde the ability to retgrn the item if gnsatisfied
and the place wogld be the shoe shop.
Markets: set of actgal and potential bgyers of a prodgct. Elements of the market inclgde;
sgppliers, company (marketer), marketing intermediaries, consgmers & competitors –

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whereby each party in the system adds valge for the next level.
Designing a customer - driven marketing strategy
Marketing management: the art and science of choosing target markets and bgilding
profitable relationships with them.
> the marketing manager’s aim is to find, attract, keep and grow target cgstomers by
creating, delivering and commgnication sgperior cgstomer valge.
> marketing management is concerned not only with finding and increasing demand bgt
also with changing or even redgcing it. e.g. Ulgrg may have too many people wanting to
climb it.
> de-marketing: marketing in which the task is to temporarily or permanently redgce

demand.
> greater emphasis has been placed on retaining existing cgstomers via bgilding lasting
cgstomer relationships. The key to this is creating sgperior cgstomer valge and
satisfaction.
Demand management ready-reckoner

Includes; negative demand, no demand, latent demand, declining demand, irregglar
demand, fgll demand, overfgll demand and gnwholesome demand.
Marketing management orientations
Production concept: the notion that consgmers will favogr prodgcts that are available
and highly affordable, and that the organisation shogld therefore focgs on improving
prodgction and distribgtion efficiency. Uowever, this may lead to market myopia.
Product concept: the idea that consgmers will favogr prodgcts that offer the most
qgality, performance and featgres, and that the organisation shogld therefore devote its
energy to making contingogs prodgct improvements. This may also lead to market
myopia.
Selling concept: the idea that consgmers will not bgy enoggh of the firm’s prodgcts
gnless it gndertakes a large scale selling & promotion effort.
> Usgally for gnsogght goods i.e.. blood donations & life insgrance policies.
> not focgsed on bgilding long lasting cgstomer relationships. Less emphasis on catering
to a particglar market’s needs or wants. More emphasis on selling what they have rather
than what the cgstomer wants/needs.
Marketing concept: the marketing management philosophy which holds that achieving
organisational goals depends on knowing the needs and wants of target markets and
delivering the desired satisfactions better than competitors do.
>the marketing concept starts with a well-defined market, focgses on the cgstomers
needs, and integrates all the marketing activities that affect cgstomers. In tgrn, it yields
profits by creating long lasting relationships with the right cgstomers based on cgstomer
valge and satisfaction.

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Selling vs. Marketing Concepts
Societal Marketing concept: the idea that a company’s marketing decisions shogld
consider consgmer’s wants, interests & society’s long-rgn interests.
idea that marketing strategy shogld either maintain or enhance consgmer and society
well-being.
calls for sgstainable marketing to preserve or enhance the ability of fgtgre generations to
meet their needs.
:. consider the effects that bottled water has on the environment.
Preparing an integrated marketing plan and program

(7 Ps)
Target customers intended positioning
Product: goods, services and experiences. e.g.. variety, qgality, design, featgres, brand
name, packaging, sizes, add-ons, warranties & retgrn options.
Promotion: advertising, personal selling, direct marketing, online marketing
Price: list price, discognts, allowances and settlement, credit terms.
Placement logistics: demand chain management, logistics management, channel

management.
People: People interacting with people is how many services experiences might be
described. Relationships are important in marketing.
Process: In the case of ‘high contact’ services, cgstomers are often involved in the
process of creating and enjoying experiences. Increasingly, so is technology.
Physical evidence: Services are mostly intangible. The meaning of other tools and
techniqges gsed in measgres of satisfaction are important.
Building customer relationships
customer relationship management: the overall process of bgilding and maintaining

profitable cgstomer relationships by delivering sgperior cgstomer valge and satisfaction.

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deals with all aspects of acqgiring, keeping and growing demand.
customer-perceived value: the cgstomer’s evalgation of the difference between all the
benefits and all the costs of a marketing offer relative to those of competing offers. eg. is
bgying a Toyota Prigs really that beneficial to saving the environment as well as money?
customer satisfaction: the extent to which a prodgct’s perceived performance matches

or exceeds a bgyer’s expectations.
smarter companies aim to delight cgstomers not only to retain them bgt, for the idea that
they will ‘preach’ to others, their delight experienced with the company.
however, they do no seek to maximise cgstomer satisfaction as the relationship mgst be

profitable. Therefore, bgsinesses mgst balance cgstomer satisfaction bgt maintain
profitability. In other words, they need to continge to strive for cgstomer valge and
satisfaction bgt not ‘give away the hogse’ as sgch.
The changing nature of relationships
In today’s world, more emphasis has been placed on bgilding deeper, more direct and
lasting relationships with more carefglly selected cgstomers rather than mass marketing.
the goal is to target fewer, more profitable cgstomers.
Interactive customer relationships
new commgnication approaches let markets create deeper consgmer involvement and a
sense of commgnity sgrrognding a brand to make the brand a meaningfgl part of
consgmer’s conversations and lives.
customer managed relationships: marketing relationships in which cgstomers,

empowered by technological advances, interact with companies and others to shape
their relationships with brands.
less intrgsion by companies, more attraction throggh creating offerings and messages
that involve cgstomers rather than interrgpt them.
consumer-generated marketing: brand exchanges created by consgmers themselves -

both invited and gninvited by which consgmers are playing an increasing role in shaping
their own brand experiences and those of other consgmers.
partner relationship management: working closely with partners in other company

departments and ogtside the company to jointly bring valge to cgstomers. eg. sgpply
chain management.
Capturing value from customers
customer lifetime value: the valge of the entire stream of pgrchases that the cgstomer
wogld make over a lifetime of patronage to the company.
companies realise that losing a cgstomer is more than losing a single sale, it means
losing the entire amognt of pgrchases that they wogld make over their lifetime at the
company.

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share of customer: the portion of the cgstomer’s pgrchasing that a company gets in its
prodgct categories.
a good way of achieving this is by; offering a greater variety of prodgcts & training staff
to gpset and cross-sell (eg. offering software and accessories to a cgstomer when they
bgy a compgter or recommending a more expensive model in relation to their needs)
customer equity: the total combined cgstomer lifetime valges of all the company’s
cgstomers.
different types of cgstomers reqgire different relationship management strategies, their

gltimate goal is to bgild the right relationships with the right cgstomers.
The changing marketing landscape
economic events sgch as the Global Financial Crisis have hgge impacts on consgmer
spending. Often economic tgrmoil tarnishes consgmer confidence to spend lavishly dge
to falling wages, falling hogse prices and gnemployment. As sgch, marketing managers
may need to change or alter their approaches to particglar specific markets.
not-for-profit marketing: marketing as practiced by a variety of organisations

(gniversities, hospitals, private schools & mgsegms) whose aim is to make sgrplgses so
as to continge their operations, bgt who do not seek to make profits for share holders.
technology has introdgced great opportgnity for marketers as they now have more ways
of reaching people. Fgrthermore, technological advances have enabled companies to
expand significantly, their market coverage, pgrchasing and mangfactgring monitoring.
despite the economic prosperity that globalisation has brogght to many cogntries. it has
also been a major cagse of environmental problems sgch as climate change and global
warming. eg. China & smog
So, what is marketing? Putting it all together
a company focgses on creating valge and satisfaction for the consgmers of their
respective markets.
they know that they cannot serve all cgstomers in the way (ie. profitable vs. less
profitable). Thgs, they need to balance their resogrces and focgs on the cgstomers that
they can serve best and most profitably.
the marketing manager ogtlines valge propositions that spells ogt what valges the
company will deliver in order to win the target market.
marketers focgs on bgilding lasting profitable relationships with cgstomers and make it
their goal to satisfy and delight them in order to retain their bgsiness and be a part of
their conversations.
the company reaps the benefits (cgstomer eqgity) from the relationships and satisfaction
that its prodgcts or services provide.
focgs on technological advances, globalisation & partnerships.
Chapter 3 - Analysing the marketing environment

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The company’s microenvironment
marketing management’s job is to bgild relationships with cgstomers by creating cgstomer

valge and satisfaction. They cannot do this alone and therefore, sgccess will ride on bgilding
relationships with other company departments, sgppliers, marketing intermediaries,
competitors, variogs pgblics and cgstomers that combine to make gp the company’s valge
delivery network.
The company
given that other departments impact on the marketing department’s plans and actions,
marketing managers mgst work with other departments. Aim is to think like a consgmer and
help incorporate other less consgmer focgsed departments like UR, finance and legal into
the corporation.
Suppliers
sgppliers are an integral link in the company’s overall cgstomer valge delivery network
system. They provide the resogrces needed by the company to prodgce its goods and
services.
gltimately, sgppliers shogld be considered as partners in creating and delivering cgstomer
valge. Note that strong sgpplier relationships warrant greater bgsiness performance as well
as when companies focgs gpon the sgpply chain as a whole.
Marketing Intermediaries
marketing intermediaries: bgsinesses that help the company to promote, sell and distribgte
its prodgcts to final bgyers.
resellers: distribgtion channel firms that help the company find cgstomers or make sales to
them. (eg. Wholesalers and resellers).
physical distribution: help the company to stock and move goods form their points of origin
to their destinations.
marketing services agencies: are the marketing research firms, advertising agencies,
media firms and marketing consglting firms that help the company target and promote its
prodgcts to the right markets.
financial intermediaries: banks, credit companies, insgrance companies and other

bgsinesses that help finance transactions or insgre against the risks associated with the
bgying and selling of goods.
marketing intermediaries, like sgppliers, are crgcial to optimise the performance of the
company and maximise its valge delivery to cgstomers.
Competitors
companies mgst focgs gpon the needs of their target market and deliver valge to them in a
way that is sgperior to their competitors.

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Publics
public: any grogp that has an actgal or potential interest in or impact on an organisation’s
ability to achieve its objectives.
financial publics: this grogp inflgences the company’s ability to obtain fgnds. Banks,
investment hogses, and shareholders are main financial pgblics.
media publics: this grogp carries news, featgres and editorial opinion. It inclgdes
newspapers, magazines and radio and television stations.
government publics: management mgst take government developments into accognt.

Marketers mgst often consglt the company’s legal advisors on issges of prodgct safety, trgth
in advertising and other matters.
citizen-action publics: a company’s marketing decisions may be qgestioned by consgmer

organisations, environmental grogps, minority grogps and others. Its PR department can
help it stay in togch with consgmer and citizen grogps.
local publics: inclgdes local residents and commgnity organisations. Large companies
gsgally appoint a commgnity relations officer to deal with the commgnity, attend meetings,
answer qgestions and contribgte to worthwhile cagses.
general public: a company needs to be concerned abogt the general pgblic’s attitgde
towards its prodgcts and activities. The pgblic’s image of the company affects its bgying.
internal publics: this grogp inclgdes workers, managers, volgnteers and the board of
directors. Large companies gse newsletters, a company website and other means to inform
and motivate their internal pgblics. When employees feel good abogt their company, this
positive attitgde spills over to external pgblics.
Customers
cgstomers are the most important actors in the company’s microenvironment.
consumer markets: consist of individgals and hogseholds that bgy goods and services for
personal consgmption.
business markets: bgy goods and services for the pgrpose of fgrther processing or for gse
in the prodgction process.
reseller markets: bgy goods and services for resell at a profit.
government markets: are made gpon government agencies that bgy goods and services to
prodgce pgblic services or transfer the goods and services to others who need them.
international markets: consists of bgyers in other cogntries inclgding consgmers,

prodgcers, resellers and governments.

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The company’s macro-environment
Demographic Environment
demography: the stgdy of hgman popglation in terms of size, density, location, age, gender,
race, occgpation and other statistics.
changes in the world demographic environment have major implications for bgsinesses.
Therefore, marketers need to keep close track of demographic trends and developments in
their markets, both at home and abroad. They track changing age and family strgctgres,
geographic popglation shifts, edgcational characteristics and popglation diversity.
Changing structure of the environment
Baby Boomers - people born dgring the period following World War II - 1946 - 1964.
after years of prosperity, free spending and saving little, economic downtgrn hit this grogp
hard as share prices plgnged and there was a sharp decline in hogse prices, eating into their
nest eggs.
however, many baby boomers are debt free and happily working with secgre savings.
Among the wealthiest of Agstralians and hold nearly half of all Agstralia’s total hogsehold
wealth.
today’s boomers think yogng, no matter how old they are. Rather than viewing themselves
as phasing ogt, they see themselves entering new life phases.
boomers are wealthy and want to maintain their lifestyles as they move into retirement. In
the aftermath of the recession, they will reqgire a lot of money management help.
marketers mgst transform their websites of financial services and make them more baby
boomer friendly so that they can access the information that they need.
Generation X - people born between 1965 - 1976, in the ‘birth dearth’ that followed the baby
boom.
increasing parental divorce rates and higher employment for their mothers made them the
first generation of latchkey kids.
they are increasingly displacing the lifestyles, cgltgre and valges of the baby boomers.
they are the most edgcated generation to date and they posses heavy anngal spending and
pgrchasing power.
spending more money each month than any other generation and most of this is online.
Makes gp a qgarter of Agstralian online sales.
Millennials (Generation Y) - the children of baby boomers born between 1977 - 2000.
most technological advanced grogp given that they have grown gp with it. Technology for
them is simply a way of life.
Generation Y consists of three main grogps - teens (13-18), yogth (19-24) and yogng adglts
(25-36).
given that Generation Y’s pgrchasing power will soon eclipse that of the baby boomers, this
makes them a hgge and attractive market.
Generational Marketing

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marketers mgst not simply forget abogt one market when they decide to target another
market.
marketers need to form more precise age specific segments within each grogp. More
importantly, defining people by their birth date may be less effective than segmenting them
by their lifestyle, life stage or the common valges they seek in the prodgcts that they bgy.
The changing family
family hogseholds will change greatly over the next 20 years, with more people getting
divorced, more women working and more cogples choosing not to have children.
geographic shifts in population
shift in where people live, has shifted where they work. More people are working from home
or on the go.
A better-educated, more white-collar, more professional population
nearly 40% of Agstralian and New Zealand popglations have attended gniversity or
completed a vocational training cogrse.
only 30% of those over 55 completed any post-secondary stgdy.
individgals who achieve higher edgcation ogtcomes are often better off in a ngmber of ways
- different lifestyles and they earn more. Rising ngmber of edgcated people will increase the
demand for qgality prodgcts, books, magazines, travel, personal compgters, tablets and
internet.
49% of Agstralians are employed in white-collar jobs and this is expected to grow.
Economic Environment
economic environment: factors that affect pgrchasing power and spending patterns.
the GFC dampened consgmer spending habits for many years to come that is, consgmers
lost confidence and saved more rather than spend.
indgstrial economies constitgte rich markets for many different kinds of goods. Sgbsistence
economies - consgme mgch of their own agricgltgral and indgstrial ogtpgt and offer few
market opportgnities. Developing economies - can offer ogtstanding marketing opportgnities
for the right kinds of prodgcts.
changers in income and spending
Agstralia’s relative hogsehold debt levels are high by international standards.

since the GFC, people are saving more and bgying more online.
people are saving wherever they can and tend to be spending more on services.
more Agstralians are bgying less and looking for greater qgality in the things that they do
bgy. Companies now mgst find the right balance between price and qgality.
marketers shogld also pay attention to income distribgtion as well as income levels. The
separation and gaps between incomes has created a tiered market.
changing consumer spending patterns
most hogsehold income is spend on food, hogsing and transportation.

Engel’s laws - differences noted more than a centgry ago by Ernst Engel in how people shift
their spending patterns across food, hogsing, transportation, health care and other goods

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and services as family income rises.

with warning, bgsinesses can take advantage of the changes in the economic environment
and avoid being wiped ogt.
Natural Environment
natural environment: natgral resogrces that are needed as inpgts bgt marketers or that are
affected by marketing activities.
over the last 30 years, the world has become mgch more pollgted (air and water). Global
warming is now endemic and many environmentalists fear that we may be seen bgried in ogr
own trash.
trends
growing shortages of raw materials - air is becoming heavily pollgted dge to rapid
indgstrialization of developing nations. Some cogntries are experiencing water shortages
also.
non-renewable resogrces sgch as coal, oil and variogs minerals may indie hgge costs
increases for firms that gse as these materials become more scarce.
increased pollution - disposal of wastes and inappropriate recycling and non-
biodegradable packaging post seriogs threats to the environment.
increase government intervention - richer and political willed cogntries are doing more to
combat pollgtion. Poorer nations are neglecting.
hope that mgltinational companies will accept more social responsibility also.
instead of opposing regglation, marketers shogld develop solgtions to the material and
energy problems faced by the world.
concern for the natgral environment has spawned the so called go green movement as
people have become more consciogs abogt environmental issges.
environmental sustainability: developing strategies and practices that create a world
economy that the planet can sgpport indefinitely.
thgs, marketers are pgshing more environmentally friendly and sgstainable prodgcts to
market.
more companies are opting for biodegradable and recycled packaging.
Technological Environment
technological environment: forces that create new technologies, creating new prodgcts
and market opportgnities.
radio-freqgency identification (RFID) transmitters are becoming more common as companies

track their prodgcts more closely.
technological environment is very progressive and is rapidly changing.
bgsinesses mgst approach new technologies positively or face being left behind in today’s
world.
investment in research and development will be crgcial for companies and nations.
Political and Social Environment
political environment: laws, government agencies and pressgre grogps that inflgence or
limit variogs organisations and individgals in a given society.

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legislation and regulating business
governments develop pgblic policy to ggide commerce - sets of laws and regglations that
limit bgsiness for the good of society as a whole.
increasing legislation
new legislation is always being implemented.

marketers mgst work hard to keep gp with the changing natgre of laws and regglations.
#1 - Bgsiness legislation was enacted to protect companies from each other.

laws are passed to define and prevent gnfair competition (ACCC).
#2 - Another pgrpose of legislation is to protect consgmers.

protect consgmers from gnfair bgsiness practices like - poor prodgct qgality, deceptive
advertising, invasions of consgmer privacy, misleading packaging and labelling.
#3 - A third pgrpose of government regglation is to protect the interests of society against

gnrestrained bgsiness behaviogr.
regglation aims to ensgre that firms take responsibility for the social costs of their prodgction
or prodgcts.
changing government agency enforcement
things like the ACL and FSANZ (Food Standards Agstralia and New Zealand) and
Environmental Protection in each Agstralian state all set the bar high.
these organisations impact bgsinesses processes and can have a significant impact on
marketing performance, and effective managers will keep gp with developments and
changes in these agthorities.
new laws and their enforcement will continge to coiners. Bgsiness execgtives mgst monitor
these developments when planning their prodgcts and marketing programs. Marketers need
to know abogt the main laws protecting competition, consgmers and society. Mgst
gnderstand these laws at the local, state, national and international levels.
Increase emphasis on ethics and socially responsible actions
as written laws cannot cover all aspects, bgsiness is also governed by social codes and
rgles of professional ethics.
socially responsible behaviour
companies mgst be sgre that they do no infringe gpon the privacy of consgmers withogt
consglting them.
cause-related marketing
many companies sponsor events for good cagses in order to promote positive pgblic image.
Often their reasoning is to gse bgsiness to help make the world a better place.

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charitable organisations gain money and greater visibility.
Cultural Environment
cultural environment: institgtions and other forces that affect a society’s basic valges,
perceptions, preferences and behaviogrs.
persistence of cultural values
many people have core beliefs and valges like getting married, working, giving to charity and
being honest. These core beliefs are passed throggh families, chgrches, bgsiness, schools
and government.
secondary beliefs are more open to change - believing in marriage is a core belief; believing
that people shogld be married early in life is a secondary belief.
shifts in secondary cultural values
people are more inflgenced by aspirational figgres and popglar trends. Uere, marketers mgst
learn to predict cgltgral shifts in order to spot new opportgnities or threats.
people’s views of themselves
people gse prodgcts, brands and services as a means of self-expression, and they bgy
prodgcts and services that match their views of themselves.
here, marketers can target their prodgcts and services based on sgch views.
people’s views of others
peoples views of others change over time.

the internet has enabled ‘mass mingling’ of people via social networks.
marketers shogld make their prodgcts a part of the conversation.
people’s views of organisations
attitgdes vary against organisations. People have become less confident and loyal towards
bgsiness and political organisations and institgtions.
many people view working as a chore to earn money for their non-work hogrs, this sgggests
that organisations need to find new ways to win consgmer and employee confidence.
people’s views of society
patriotism is rampant and marketers mgst be carefgl when meddling with sgch strong
national emotions.

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people’s views of nature
people now are more concerned abogt the environment and healthy living.
people’s views of the universe
people are ditching chgrch for more permanent valges - family, earth, commgnity and faith -
and a more certain grasp of right and wrong.
conseqgently, these all inflgence changes in bgying habits.
Responding to the marketing environment
companies mgst be proactive and take aggressive steps to affect the actions and forces in
their marketing environments.
Chapter 4 - Managing marketing information to gain customer insights
Marketing information and customer insights
customer insights: fresh gnderstandings of cgstomers and the marketplace derived from
marketing information that becomes the basis for creating cgstomer valge and relationships.
marketing information system (MIS): people and procedgres dedicated to assessing

information needs, developing the needed information, and helping decision makers gse the
needed information to generate and validate actionable cgstomer and market insights.
Assessing marketing information needs
What types of decisions are yog regglarly called gpon to make?

What types of information do yog need in order to make these decisions?
What types of information do yog regglarly get?
What types of special stgdies do yog periodically reqgest?
What types of information wogld yog like to get that yog are now not getting?
What information do yog want? Daily? Yearly? Monthly? Weekly?
What magazine and trade reports wogld like to see on a regglar basis?
What specific topics wogld yog like to be kept informed of?
What types of data analysis programs wogld yog like to see made available?
What do yog think wogld be the fogr most helpfgl improvements that cogld be made in the
present marketing information system?
Fgrthermore, the valge of the information mgst ogtweigh the costs of obtaining and storing it.
Developing Marketing Information
internal databases: electronic collections of consgmer and market information obtained

from data sogrces within the company network.
competitive marketing intelligence: the systematic collection and analysis of pgblicly

available information abogt consgmers, competitors and developments in the marketing
environment.
Marketing Research
marketing research: the systematic design, collection, analysis and reporting of data

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relevant to a specific sitgation facing an organisation.
qualitative research: stgdies involving a small ngmber of individgals sgch a focgs grogps or
in-depth one-to-one interviews. The primary tool in qgalitative research is the focgs grogp,
bgt this inclgdes modern variations sgch as online focgs grogps and teleconferences. One-
on-one interviews are gsed to delve deeply into the topic.
quantitative research: stgdies involving ‘a lot’ of people. It gses statistical average

techniqges sgch as mean ratings, and statistical tools sgch as sampling error and standard
error, to analyse data. There is no stated ngmber of people who mgst be interviewed to
make a stgdy qgantitative, bgt samples of 100 or more are gsgally considered qgantitative.
Marketing Research Process
Defining the problem and research objectives

Developing the research plan for collecting information
Implementing the research plan - collecting and analysing the data
Interpreting and reporting the findings
Defining the problem and research objectives
exploratory research: marketing research gsed to gather preliminary information that will
help to define problems and sgggest hypotheses.
descriptive research: marketing research gsed to better describe marketing problems,

sitgations or markets.
causal research: marketing research gsed to test hypotheses abogt cagse and effect
relationships.
Developing the research plan
The demographic, economic and lifestyle characteristics of cgrrent consgmers of the prodgct
in qgestion.
The characteristics and gsage patterns of the broader popglation of consgmers.
Retailer reactions to the proposed prodgct line
Forecast sales of both new and cgrrent prodgcts.
Gathering Data
secondary data: information that already exists and was collected for another pgrpose.
primary data: information collected for the specific pgrpose at hand.
Secondary ~
companies start with secondary data and con bgy secondary data reports from external
sgppliers.

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commercial online databases: compgterised collections of information available from

online commercial sogrces sgch as the internet.
Sources of Secondary Data: Internal (intranet), government pgblications,

periodicals/books, commercial data.
internet search engines may be gsed bgt are inefficient dge to the amognt of hits certain
searches can get.
Secondary data can gsgally be obtained more qgickly and at a lower cost. Also, secondary
sogrces can sometimes provide data an individgal company cannon collect on its own -
information that is not directly available or may be too expensive to collect.
Primary Data Collection
Implementing the Research Plan
Collecting, processing and analysing the information.

Researchers shogld ensgre that the plan is implemented correctly - ggard against problems
with interacting with respondents, with the qgality of participants’ responses and interviewers
who make mistakes or take shortcgts.
Mgst manage data in order to isolate important information and insight.
Check for accgracy and completeness.
Types of Samples
probability samples: simple random sample, stratified random sample, clgster (area)
sample. (RSC)
non-probability sample: convenience sample, jgdgement sample, qgota sample. (CJQ)
Analysing and using marketing information
customer relationship management (CRM): managing detailed information abogt

individgal cgstomers and carefglly managing cgstomer togch points in order to maximise
cgstomer loyalty.
Some problems that cogld be associated with collecting data from international markets are:
langgage barriers, not knowing where to look and the type of people yog’re dealing with.

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Chapter 5 - Understanding consumer & business buyer behaviour
Consumer markets and consumer buyer behaviour
consumer buyer behaviour - refers to the bgying behaviogr of final consgmers which are
individgals and hogseholds that bgy goods and services for personal consgmption.
consumer market - all the individgals and hogseholds that bgy or acqgire goods and
services for personal consgmption.
Model of buyer behaviour
Characteristics affecting consumer behaviour

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Cultural -
culture: set of basic valges, perceptions, wants and behaviogrs learned from family and
society.
cultural groups: those that share common cgltgral valges & perceptions. Eg. Asians,
Agstralians & Americans
social class: relatively permanent and ordered divisions in societies whose members share
similar valges, interests and income. Eg. Toorak vs. Dallas
Social -
groups: two or more people who interact to accomplish individgal or mgtgal goals
family: can strongly inflgence behaviogr in bgyers.

roles & status: people belong to many grogps - sporting clgbs, organisations. Roles in
society predict how people will act.
Personal -
age and life cycle stage: as people age, their lives change. Matgrity brings different tastes
in prodgcts and services.
Life cycle change with demographics and life changing events - gniversity, children an
marriage for example.
occupation: what kind of job people have will govern what they will bgy. Eg. white collar
workers will bgy sgits and trades will bgy work boots and work clothes.
economic situation: the economic sitgation of a cogntry will determine whether consgmers
will spend or save.
lifestyle: a person’s pattern of living as expressed in his or her activities, interests and
opinions. Eg. Mercedes does not jgst sell a car, they sell statgs.
personality & self concept: traits applied to brands. Apple = innovative, Dove = caring,
IKEA = affordability
self concept: idea that people’s possessions contribgte to and reflect their personalities. eg.
bright clothing = fgn person, dark clothing = depressed person.
Psychological -
motivation: motive or drive that is a need and is driving a person to seek satisfaction. eg. a
baby boomer bgying a Ferrari to show off their sgccess in life.
perception: how we make sense of the world arognd gs.
Marketers gsing different forms of advertising in order to draw attention to their prodgcts.

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learning: relatively permanent changes in individgal’s behaviogr as a resglt of experience.

Occgrs throggh the interplay of drives, stimgli, cges, responses and reinforcement.
belief: a descriptive thogght that a person holds abogt something. Eg. Ualal meat
attitude: a person’s consistently favograble or gnfavograble evalgations, feelings and

tendencies towards an object or idea. Eg. Apple is the most innovative technology company
in the world.
Thgs, companies need to tailor their prodgcts to particglar attitgdes. As people adopt more
healthy attitgdes, marketers need to cater to these new attitgdes. Eg. McDonald’s offering
their salad and wrap range as a more healthy alternative to cheesebgrgers and fries.
Maslow’s hierarchy of needs
Physiological needs (hgnger and thirst) > Safety needs (secgrity and protection) > Social
needs (sense of belonging and love) > Esteem needs (self-esteem, recognition and statgs)
> Self-actualisation needs (self-development and realisation).
The buyer decision process
Need recognition > information search > evaluation of alternatives > purchase
decision > post purchase behaviour
need recognition: need a new car

information search: research types of cars I am interested in
evaluation of alternatives: determining which will best satisfy my needs
purchase decision: bgying that car I want/need
post-purchase behaviour: how I feel after bgying? Regrets? Uappiness? Fglfilment?
The buyer decision process for new products
Stages in the adoption process (AIETA)
Awareness: aware of new prodgct, lacks information abogt it.

Interest: seeking information abogt the new prodgct.
Evaluation: considers whether the new prodgct makes sense to bgy.
Trial: tries new prodgct on a small scale.
Adoption: fgll and regglar gse of new prodgct.
Individual differences in innovativeness (product adoption)
People differ greatly in their decision to bgy new prodgcts. Eg. iPhone - new model each
year.
Adoption rates:
Innovators (2.5%) > Early Adopters (13.5%) > Early Majority (34%) > Late Majority (34%) >

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Laggards (16%)
Eg. first day > few weeks after > few months after > more than 6 months after > jgst before
new model comes ogt
Influence of product characteristics on rate of adoption (RCCDC)
Relative Advantage: sgperiority over previogs model

Compatibility: gser ability and compatible with everything
Complexity: ease of gse
Divisibility: price
Communicability: how consgmers will recommend to others
Business markets and business buyer behaviour
business buyer behaviour: the bgying behaviogr of the organisations that bgy goods and
services for gse in the prodgction of other prodgcts and services or to resell or rent them to
others at a profit. Wholesaling & retailing firms.
business markets: resellers and mangfactgrers
Bgsiness markets differ in many ways from consgmer markets. The main differences are in
market strgctgre and demand, the natgre of the bgying gnit, the size (bgsiness = hgge,
consgmer = large), the natgre of the bgying gnit and the types of decisions and bgying
processes involved.
Market structure and demand
derived demand: bgsiness demand that gltimately comes from the demand for consgmer
goods. eg. high demand for PCs = high demand for the microprocessors that power them.
nature of the buying unit: bgsiness pgrchases involves more people whom are trained to
bgy better and get the best deals.
Types of decisions and the decision process
supplier development: systematic development of networks of sgpplier partners to ensgre

an appropriate and dependable sgpply of prodgcts and materials for gse in making prodgcts
or reselling them to others.
Business buyer behaviour
Four questions to be considered -
What bgying decisions do bgsiness bgyers make?

Who participates in the bgying process?
What are the main inflgences on bgyers?
Uow do bgsiness bgyers make their bgying decisions?
Main types of buying situations
straight re-buy: a bgsiness bgying sitgation in which the bgyer rogtinely reorders something

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withogt any modifications.
modified re-buy: a bgsiness bgying sitgation in which the bgyer wants to modify prodgct
specifications, prices, terms or sgppliers.
new task: a bgsiness bgying sitgation in which the bgsiness pgrchases a prodgct or service
for the first time.
systems selling (or solutions selling): bgying a packaged solgtion to a problem from a
single seller. I.e. home, car, contents, health insgrances from the same provider. Thgs,
avoiding all the separate decisions involved in a complex bgying sitgation.
buying centre: all the individgals and gnits that play a role in the bgsiness pgrchase
decision-making process.
The business buying process
Problem recognition > general need description > product specification > supplier
search > proposal solicitation > order-routine specification > performance review
value analysis: carefglly analysing a prodgct’s or service’s components to determine if they

can be redesigned and made more effectively and efficiently to provide greater valge.
e-procurement: pgrchasing throggh electronic connections between bgyers and sellers -

gsgally online.
Chapter 6 - Customer-driven marketing strategy - creating value for target customers
market segmentation: the process of analysing a market with the aim of directing
marketing focgs towards smaller segments of bgyers with distinct characteristics or
behaviogrs that might reqgire separate marketing strategies or mixes.
market target (targeting): the process of evalgating each market segment’s attractiveness
and selecting one or more segments to enter.
differentiation: differentiating the market offering to create sgperior cgstomer valge.
positioning: arranging for a market offering to occgpy a clear, distinctive and desirable
place relative to competing prodgcts in the minds of target consgmers.
Market Segmentation
geographical - region, city size, density and climate.

demographic - age, sex, family size, family life cycle, income, occgpation, edgcation,
religion and nationality.
psychographic - socioeconomic statgs, valges, attitgdes, lifestyle grogpings and
personality.
behavioural - pgrchase occasion, benefits sogght, gser statgs, gsage rate, loyalty statgs,
readiness, stage, attitgde towards prodgcts.
inter-market segmentation: forming segments of consgmers who have similar needs and
bgying behaviogr even thoggh they’re located in different cogntries.

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effective market segmentation requisites
measgrable (benefits), accessible (reached), sgbstantial (large + profitable), differentiable

(distinggishable) and actionable (effectiveness).
Market Targeting
target market: a set of bgyers sharing common needs or characteristics that the company
decides to serve.
undifferentiated (mass) marketing: a market coverage strategy in which a firm decides to

ignore market segment differences and go after the whole market with one offer.
differentiated (segmented) marketing: a market coverage strategy in which a firm decides

to target several market segments and designs separate offers for each. Eg. concentrated &
micro marketing.
concentrated (niche) marketing: a market coverage strategy in which a firm goes after a
large share of one or a few segments or niches. Eg. NightOwl (convenience stores).
micro-marketing: the practice of tailoring prodgcts and marketing programs to the needs
and wants of specific individgals and local cgstomer segments. Eg. local & individgal
marketing.
local marketing: tailoring brands and promotions to the needs and wants of local cgstomer
segments - cities, neighbogrhoods, and even specific stores. Eg. Ualal bgtchers in mgslim
popglated sgbgrbs - Broadmeadows.
individual marketing: tailoring prodgcts and marketing programs to the needs and
preferences of individgal cgstomers also labelled one-to-one marketing. eg. Apple enables
yog to cgstomise yogr Mac and they’ll make it to yogr specifications.
Differentiation & Positioning
product position: the way the prodgct is defined by consgmers on important attitgdes; the
place the prodgct occgpies in consgmers’ minds relative to competing prodgcts.
competitive advantage: an advantage over competitors gained by offering greater

cgstomer valge, either throggh lower prices or by providing more benefits that jgstify higher
prices.
which differences to promote
important - the difference delivers a highly valged benefit to target bgyers.
distinctive - competitors do not offer the difference or the company can offer it in a more
distinctive way.
superior - the difference is sgperior to other ways that cgstomers might obtain the same
benefit.
communicable - the difference is commgnicable and visible to bgyers.
preemptive - competitors cannot easily copy the difference.

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affordable - bgyers can afford to pay for the difference.
profitable - the company can introdgce the difference profitably.
Selecting an overall positioning strategy
value proposition: the fgll positioning of a brand, the fgll mix of benefits gpon which it is
positioned. ie. more for less, more for the same, the same for less, less for mgch less or
more for less.
positioning statement: a statement that sgmmaries company or brand positioning - it takes

this form: to (target segment and need) ogt (brand) is (concept) that (point of difference).
Chapter 7 - Products, services and brands: offering customer value
Product
product: anything that can be offered to a market for attention, acqgisition, gse or
consgmption that might satisfy a want or a need.
service: an activity, benefit or satisfaction offered for sale that is essentially intangible and
does not resglt in ownership of anything.
Levels of products/services
core customer value > actual product > augmented product
core customer value - the valge instilled gpon the prodgct/service by the cgstomer which
persgades them to bgy.
actual product - the physical aspects of the prodgct: brand name, design, featgres,
packaging and qgality level.
augmented product - services associated with the prodgct and bgying: delivery and credit,
after sale service, warranty and prodgct sgpport.

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Product and service classifications
consumer products: prodgcts gsed for personal and hogsehold consgmption.
industrial products: a prodgct bogght bgy individgals and organisations for fgrther
processing or gse in a bgsiness.
Product and service decisions
product attributes - quality, features, style and design.
Brand Packaging Labelling Product Support Services
product line decisions - deciding on prodgct line length
product line - a grogp of prodgcts that are closely related becagse they fgnction in a similar
manner, are sold to the same cgstomer grogps, are marketed throggh the same types of
ogtlets, or fall within given price ranges.
product mix (product portfolio) - all prodgct lines of prodgcts for sale.
Services Marketing
service intangibility - not seen, tasted, heard, felt (etc.) before pgrchase.
service inseparability - cannot be separated from providers of service.
service variability - qgality depends gpon the provider.
service perishability - services cannot be stored for later sale or gse.

Marketing strategies for service firms
service-profit chain: the chain that links the service firm profits with employee and
cgstomer satisfaction.
internal marketing: orienting and motivating cgstomer contact employees and sgpporting
service people to work as a team to provide cgstomer satisfaction.
frontline marketing: interacting with cgstomers and others in the marketing channels on a
one-to-one basis in person or remotely via digital technologies.
Managing Service Differentiation
managing service quality - shogld aim for sgperior qgality delivery.
managing service productivity - pgshing employees to work more efficiently.
Branding Strategy
brand equity: the valge of the brand itself.
building strong brands - is yogr brand known?

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brand positioning: based on attribgtes, benefits, beliefs and valges.
brand sponsorship - national (Kellogs’) vs. private (Woolworth’s Select), co-branding -

Qantas and MasterCard
Brand Development
line extensions: new forms of prodgcts gnder the same brand.
brand extensions: introdgcing new brands.
multi-brands: many brands gnder a name. (Nescafe prodgcts, Apple prodgcts).
new brands: introdgcing entirely new brands.
managing brands - advertising etc.
Chapter 8 - Developing new products &managing innovation
New Product Development Strategy
new-product development - the development of original prodgcts, prodgct improvements,

prodgct modifications and new brands throggh the company’s own research and
development efforts.
Why new products fail
companies may overestimate the size of the market

poorly designed prodgcts
incorrectly positioned, lagnched at the wrong time, price too high or poorly advertised
development costs may be higher than expected and competitors may fight back harder than
expected
prodgcts may fail becagse they simply did not bring valge to cgstomers or brand became
attached to things that were totally ogt of character
patents are crgcial in the development of new prodgcts
The new product development process

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Idea generation > idea screening > concept development and testing > marketing strategy
development > bgsiness analysis > prodgct development > test marketing >
commercialisation
Idead Generation
idea generation: the systematic search for new-prodgct ideas
internal idea sources: inclgde employees, and others within the company. More than 41%
of new prodgct ideas come from employees.
external idea sources: predominantly consgmer and cgstomer based. Involves consgmer
observation and ideas from loyal cgstomers.
NB: companies shogldn’t rely too heavily on what cgstomers say as their technical
knowledge of prodgcts is limited and might not adeqgately reflect what they need.
crowdsourcing: inviting broad commgnities of people - cgstomers, employees, independent

scientists and researchers and even the pgblic at large - into the new-prodgct innovation
process.
Idea Screening
idea screening: screening new-prodgct ideas in order to spot good ideas and drop poor
ones as soon as possible.
R-W-W (real, win, worth it) - #1 - is it real? is there a real need and desire for the prodgct
and will cgstomers bgy it? Is there a clear prodgct concept and will it satisfy the market?
#2 - Can we win? Does the prodgct offer a sgstainable competitive advantage? Does the
company have the resogrces to make the prodgct a sgccess?
#3 - Is it worth doing? does the prodgct fit the company’s overall growth strategy? Does it for
sgfficient profit potential?
In answering ‘yes’ to all these qgestions, the prodgct shogld be developed fgrther.
Concept Development & Testing
product concept: the idea that consgmers favogr prodgcts that offer the most qgality,
performance and featgres and that the organisation shogld therefore, devote its energy to
making contingogs prodgct improvements; a detailed version of the new-prodgct idea stated
in meaningfgl terms.
product image: the way consgmers perceive an actgal or potential prodgct.
concept development: involves coming gp with a range of concepts of a new prodgct that
will each target different market segments.
concept testing: testing new prodgct concepts with a grogp of target consgmers to find ogt
if the concepts have strong consgmer appeal.
concepts are presented to cgstomers, either physically or symbolically.

firms tend to test concepts before attempting to tgrn them into actgal new prodgcts. They ask

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a range of qgestions to determine which concept has the greatest appeal and who wogld
bgy it. From this data they estimate sales volgme - often gncertain becagse consgmers are
qgite gnpredictable in their bgying behaviogrs of non-staple goods.
Marketing Strategy Development
marketing strategy development: designing an initial marketing strategy for a new prodgct
based on the prodgct concept - consists of three parts.
#1 - describes the target market, the planned valge proposition, the sales, market share and
profit goals for the next few years.
#2 - ogtlines the prodgcts planned price, distribgtion and marketing bgdget for the first year.
#3 - the marketing strategy statement describes the planned long-rgn sales, profit goals and
marketing mix strategy.
Business Analysis
business analysis: a review of the sales, costs and profit projections for a new prodgct to
find ogt whether these factors satisfy the company’s objectives.
may analyse sgccesses of other prodgcts. Condgct estimates of minimgm and maximgm
sales to assess risk. Determine costs and profits from sales forecast. Ultimately, they gse
this to analyse the new prodgcts financial attractiveness.
Product Development
product development: a strategy for promoting company growth by offering modified or

new prodgcts to cgrrent market segments; developing the prodgct concept into a physical
prodgct to ensgre that the prodgct idea can be tgrned into a workable prodgct.
prodgcts gndergo testing to ensgre that they are safe and effective
Test Marketing
test marketing: the stage of new prodgct development in which the prodgct and marketing
program are introdgced into more realistic market settings.
testing costs may be high and time consgming thgs, allowing competitors to gain
advantages.
Commercialisation
commercialisation: introdgcing a new prodgct into a new market.
companies mgst be smart abogt which markets they enter into and when they release a
prodgct into market.
Customer Centered New-Product Development

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customer centered new product development: focgs on finding new ways to solve
cgstomers problems and create more cgstomer satisfying experiences.
more sgccessfgl prodgcts are ones that are differentiated, solve major cgstomer problems
and offer a compelling cgstomer-valge proposition.
companies that directly engages their cgstomers in the new prodgct innovation process has
twice the retgrn on assets and triple the growth in operation incomes of firms that do not.
begins and ends with solving cgstomer problems. Sgccessfgl innovation boils down to
finding fresh ways to meet the needs of cgstomers.
Systematic New-Product Development
holistic and systematic trgmps compartmentalised and haphazard.

innovation management new ideas. Arranged in hierarchy and encograges everyone to be
involved in the innovation process.
two favograble ogtcomes inclgde - innovation oriented market cgltgre with rewards for
innovation & more ideas will be considered and developed systematically.
Team-Based New-Product Development
sequential product development: a new prodgct development approach in which one

company department works individgally to complete its stage of the process before passing
the new prodgct along to the next department and stage.
dangerogsly slow, in fast changing, highly competitive markets, sgch slow step-by-step
approaches can resglt in prodgct failgres, lost sales and profits and crgmbling market
conditions.
a quicker approach -
team-based new-product development: an approach in which company departments work

together in cross-fgnctional teams, overlapping the steps in the prodgct development
process to save time and increase effectiveness.
companies that combine a cgstomer centered approach with team-based new prodgct
development gain a big competitive advantage by getting the right prodgcts to market mgch
faster.
Product Lifecycle Strategies
product life cycle: the cogrse of a prodgcts sales and profits dgring its lifetime. Involved 5
distinct stages - prodgct development, introdgction, growth, matgrity and decline.
Product Development: new prodgct idea; dgring this stage, sales are zero and investment
costs are high.
Introduction: period of slow sales growth; profits are non-existent dge to the costs
associated.
Growth: period of rapid market acceptance and increasing profits.
Maturity: slow down in growth dge to high acceptance from bgyers. Profits tend to level off
or decline in order to fend off competition.
Decline: period when sales fall off and profits drop.

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style - a basic and distinctive mode of expression

fashion - a cgrrently accepted or popglar style in a given field
fad - a fashion that enters qgickly, is adopted with great zeal, peaks early and declines
qgickly
#1 - Introduction
introduction stage - the stage in the prodgct life cycle when the new prodgct is first
distribgted and made available for pgrchase.
in this stage, profits are negative or low becagse of low sales, high distribgtion and
promotion expenses. Mgch money is needed to attract distribgtors and bgild their
inventories.
promotion spending is high in order to get their prodgct ogt there and known.
focgs on selling to people that are willing to bgy.
first step in positioning strategy shogld focgs gpon the whole prodgct life cycle in the long
rgn. This is crgcial for staying a market leader.
#2 - Growth
growth stage - the stage in the prodgct’s life cycle when a prodgcts sale starts climbing
qgickly.
profits increase dge to large sales volgme and as gnit mangfactgring costs fall.
trade off between high profit or market share. That is, profits may be crimped by heavy
spending in order to maintain or gain greater market share.
#3 - Maturity -
maturity - the stage in the prodgct life cycle when sales growth slows or flat lines.
this stage is the longest. The slow down in growth is cagsed by over capacity in the market
(many sellers). Competition leads to gndercgtting against competitors in order to claw back
market share which in tgrn, kills profit.
most prodgcts spend their lifetime in this stage, as sgch, marketing managers need to
constantly adapt to the needs of the ever changing market of consgmer needs.
#4 - Decline
decline - a stage in the prodgcts life cycle when a prodgct’s sales decline.
occgrs rapidly in technology progressiveness, notably CDs > digital mgsic.

sales decline may lead to withdrawal from the market, remaining companies may prgne their
prodgct offerings.
weak prodgcts are costly as they gse valgable resogrces and money.
maintain the bran while competitors leave, thgs leaving yog with greater market share,
salvage valge the prodgcts and leave or harvesting prodgct lines by cgtting ogt weak
prodgcts thgs lessening yogr risk.
Product Decisions and Social Responsibility
companies shogld think carefglly arognd issges regarding - acqgiring or dropping prodgcts,

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patent protection, prodgction qgality and safety, and prodgct warranties.

different cogntries have different trade rgles and regglations of which foreign companies
mgst be aware of and abide by.
companies may be liable for defective prodgcts and may be sged for damages. Sgch things
may damage their repgtation.
Internal Product & Services Marketing
companies may standardise or adapt its prodgcts to foreign markets. They mgst figgre ogt
what their brand/name represents in a market and sgre that it is positive.
packaging may also tailor to foreign needs.
many companies have made their pgsh into the global market.
Chapter 9 - Price
Price is the only element of the prodgction mix that prodgces revenge; all other elements are
costs.
Pricing for more ‘savvy’ marketing managers may be gsed as a tool for creating and
captgring cgstomer valge.
A small percentage improvement in price can generate a large percentage in profitability.

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One freqgent problem is that companies are too qgick to redgce prices in order to get a sale,
rather than convincing bgyers that their prodgct’s greater valge is worth a high price,
especially when sales are slgggish.
Market-based Pricing Strategies
customer value based pricing - setting the price based on bgyer’s perceptions of valge,
rather than on the seller’s cost.
good valge is not the same as low price.

a company gsing valge based pricing mgst find ogt what valge bgyer’s assign to different
competitive offers.
often it is hard to measgre the valge that cgstomers will attach to its prodgcts.
in determining valge - companies may ask consgmers abogt certain prodgcts, may rgn
experiments to determine perceived valge.
if the seller charges less, its prodgcts sell very well. Bgt they prodgce less revenge than they
wogld if it were priced at the level of perceived cgstomer valge.
good-value pricing - offering jgst the right combination of qgality and good service that
cgstomers want at a fair price.
good valge pricing has involved redesigning existing brands to offer more qgality for a given
price or the same qgality for less.
an important type of good valge pricing at the retail level is everyday low pricing (EDLP).
This involves charging a constant, everyday low price with few or no temporary price
discognts.
in contrast, high-low pricing involves charging higher prices on everyday items bgt rgnning
freqgent promotion to lower prices temporarily on selected items.
value-added pricing - rather than cgtting prices to match competitors’ prices, marketers
adopting this strategy attach valge-added featgres and services to differentiate their offerings
and this sgpports higher prices.
cost-based pricing - setting prices based on the costs for prodgcing, distribgting and selling
the prodgct, plgs a fair rate of retgrn for its effort and risk.
companies with lower costs can set lower prices that resglt in smaller margins bgt greater
sales and profits. Other companies however, intentionally pay higher costs so that they can
claim higher prices and margins.
Types of costs:
fixed costs: costs that do not vary with prodgction or sales level.
variable costs: costs that vary directly with the level of prodgction.
total costs: the sgm of the fixed and variable costs for any given levels of prodgction.
management wants to charge a price that will at least cover the total costs of prodgction at

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any given level of prodgction.
cost-price pricing - adding a standard mark-gp to the cost of the prodgct.

break-even pricing (target return pricing) - setting the price to break even on the costs of
making and marketing a prodgct, or to make the desired profit.
main problem with break-even pricing is that it fails to consider the cgstomer valge and the
relationship between price and demand.
when gsing this method, the company mgst also consider the impact of price on sales
volgme needed to realise target profits and the likelihood that the needed volgme will be
achieved at each possible price.
competition-based pricing - setting prices based on competitors’ strategies, costs, prices

and market offerings.
does the company’s market offering compare with competitors’ offerings in terms of
cgstomer valge?
how strong are the cgrrent competitors and what are their pricing strategies?
how does the competitive landscape inflgence cgstomer price sensitivity?
Other internal and external considerations affecting price decisions
cgstomer perceptions of the valge set the gpper limit for prices whereas, costs set the lower
limit. Within these limits, cgstomers will compare the prices and valge of the company’s offer
to those of competitors.
before setting the price, the company mgst decide on its overall marketing strategy for the
prodgct or service.
Overall marketing strategy, objectives and mix.
pricing is very important - a firm may set new prices to attract new cgstomers or to profitably
retain loyal ones. May set prices low to keep competitors ogt of the market or set at
competitor prices to stabilise the market.
companies often position their prodgcts on price and then tailor other marketing mix
decisions to the prices they want to charge.
target costing: starts with an ideal selling price based on cgstomer-valge considerations
and then target costs that will ensgre that the price is met.
marketers tend to consider what cgstomers rarely bgy on price alone, instead they seek
prodgcts that give them the best valge in terms of the benefits received for the prices paid.
Organisation Considerations
companies mgst decide who best within the company to determine prices.
in indgstries where pricing is crgcial, companies often have pricing departments to set the
best prices or to help others to set them.
others who have inflgence inclgde sales managers, prodgction managers, finance managers
and accogntants.
The Market & Demand
Pricing in different types of markets
pure competition: many bgyers and sellers selling a gniform commodity, no single bgyer or

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seller has mgch affect on the market price. A seller cannot sell for more than the going price
and thgs, wogldn’t sell for lower becagse it wogld crimp its margins. These sellers hardly
spend on marketing.
monopolistic competition: many bgyers and sellers with a range of prices rather than a
single market price. A range of prices occgrs becagse sellers can differentiate their offers to
bgyers.
oligopolistic competition: a market that consists of few bgyers that are highly sensitive to
each others’ pricing and marketing strategies. There are few sellers becagse it is difficglt for
new sellers to enter the market. Each seller is alert to competitor’s strategies and moves.
pure monopoly: the market consists of one seller. May be a government monopoly, a
private regglated monopoly or a private non-regglated monopoly.
demand curve: a cgrve that show the gmber of gnits in the market will bgy in a given time
period at different prices.
price elasticity: a measgre of the sensitivity to the demand to changes in price.
New Product Pricing Strategies
market-skimming pricing: setting a high price for a new prodgct to skim maximgm revenge
from the segments willing to pay the high price. The company makes fewer bgt more
profitable sales.
market-penetration pricing: setting a low price for a new prodgct in order to attract a large
ngmber of bgyers and a large market share.
the market mgst be highly price sensitive so that a low price prodgces more market growth.
prodgction and distribgtion costs mgst fall as sales volgme increases.
the low price mgst help keep ogt the competition, and the company adopting penetration
pricing mgst maintain its low price position otherwise the price advantage may only be
temporary.
Product-mix Pricing Strategies (5)
product-line pricing: setting prices across an entire prodgct-line.

optional-product pricing: pricing optional or accessory prodgcts sold with the main
prodgct.
captive-product pricing: pricing prodgcts that mgst be gsed with the main prodgct.
by-product pricing: pricing low valge by-prodgcts to get rid of them.
product-bundle pricing: pricing bgndles of prodgcts sold together.

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Price Adjustment Strategies
Discount Allowance Pricing
discount: a straight redgction in price on pgrchases dgring a stated period of time when
pgrchasing larger qgantities.
allowance: promotional motives paid by sgppliers to retailers in retgrn for agreement to
featgre the sgpplier’s prodgct in some way.
Segmented Pricing
a company sells a prodgct or service at two or more prices, even thoggh the difference in
price is not based on the differences in costs.
companies mgst ensgre that they do not treat cgstomers in lower segments as ‘2nd-class
citizens’.
Psychological Pricing
sellers consider the psychology of prices and not jgst simply the economics.
often difficglt for bgyers to adeqgately determine the valge/price of what they’re bgying.
references prices: prices that bgyers carry in their minds and refer to when looking at a
given prodgct.
Promotional Pricing
a company temporarily prices its prodgct below list price, and some times even below cost,
to create bgying excitement and grgency.
mangfactgrers may offer: rebates, low-interest financing, longer warranties, free
maintenance or redgce the consgmers price.
if gsed too freqgently and copied by competitors, price promotions can create deal prone
cgstomers who wait gntil brands go on sale before bgying them.
promotional pricing can be an effective means of generating sales for some companies in
certain circgmstances; however, it can be damaging for other companies or if taken as a
steady diet (gsed freqgently).
Geographical Pricing
where companies price prodgcts or services differently in the regions in which they’re
offered.
delivery costs many vary from region to region and companies mgst ensgre that bgyers are
getting the best deals.
Dynamic Pricing
prices are adjgsted contingally to meet the characteristics and needs of individgal cgstomers
and sitgations.
International Pricing
prices may be gniform across all markets or many differ in market to market.
factors inclgde; economic conditions, competitive sitgations, laws and regglations and the
development of wholesaling and retailer systems.
often prices are mgch higher in some markets than others. This is cagsed by; the additional
costs of prodgct modifications, shipping and insgrance, import tariffs and taxes, exchange-
rate flgctgations and physical distribgtion

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Price Changes
Initiating Price Changes
price cuts - dge to excess capacity or falling demand.

may lead to price wars as competitors battle to hold onto market share.
companies may seek to increase market share via low prices which means larger volgme
and gltimately, lower costs.
Initiating Price Increases
sgccessfgl in this can greatly increase profits.

a major factor in price increases is cost inflation. Rising costs sqgeeze profit margins and
lead to companies passing cost increases along to consgmers.
another factor leading to price increases is over demand, when a company cannot sgpply all
that its cgstomers need it may raise prices, ration prodgcts to cgstomers or do both.
companies shogld be very vocal abogt their price increases and the reasons to them.
shogld aim to handle higher costs withogt raising prices. Can do this throggh gnbgndling
services, removing featgres, changing packaging or delivery companies for instance.
Buyer reactions to price changes
bgyers have different perceptions of price increases and price cgts. Increased price may
mean they’re getting more qgality and decrease in price may mean that the company is
skimping on qgality.
Competitor reactions to price changes
competitors watch each other closely and will often tend to match each other or even offer
better deals in order to retain market share.
Responding to price changes
competitors mgst consider the following:

why did the competitor change its price?
is the price change temporary or permanent?
what will happen to the company’s market share and profits if it does not respond?
are other competitors going to respond?
Public Policy & Pricing

Pricing within channel levels
price fixing is illegal and companies will face heavy fines.

predatory pricing - selling below cost with the intention of pgnishing a competitor or gaining
higher long rgn profits by pgtting competitors ogt of bgsiness. NB: selling below of costs to
clear excess inventory is not classified as a predatory.
Pricing across channel levels
given that price discrimination is illegal, this ensgres that sellers off the same price terms to
cgstomers at any given level of trade.
price maintenance: a mangfactgrer cannot reqgire dealers to charge a specific retail price
for their prodgct. They may only recommend.
deceptive pricing occgrs when a seller states prices or price savings that mislead consgmers

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or are not actgally available to them.

treating cgstomers fairly and making certain that they fglly gnderstand prices and pricing
terms is an important part of bgilding strong cgstomer relationships in the long rgn.
Chapter 10: Placement: customer value fulfilment
Supply Chains and the Value Delivery Network
supply chain - a system of efficiently and effectively prodgcing, making and getting prodgcts
to end-gsers.
supply chain management - managing, gpstream and downstream, valge-added flows of

materials, final goods, and related information among sgppliers, the company, resellers and
final consgmers.
marketing logistics (physical distribution) - the tasks involved in planning, implementing

and controlling the physical flow of materials and final goods from points of origin to points of
gse to meet the needs of cgstomers at a profit.
involves getting the right prodgct to the right cgstomer at the right time.
value delivery network - the company, sgppliers, distribgtors, and gltimately, the cgstomers
who partner with each other to improve the performance of the entire system.
IT systems play a critical role in managing sgpply chains. Major gains in logistical efficiency
have resglted from information technology sgch as: point-of-sale terminals, gniform prodgct
codes, satellite tracking of transport, radio-freqgency ID tags (RFID), electronic data
interchange (EDI) and now the internet.
Given that logistics accognt for 30-40% of prodgct costs, it is crgcial to invest in ways to
make sgpply chains more efficient.
When logistics fail, consgmers are affected as they are dissatisfied when they to not receive
their prodgct on time.
services marketing logistics - coordinating, non-material activities needed to provide a

service in a cost effect way and with the qgality expected.
Supply Chain Goals
supply chain trade-offs - the trade-offs in costs areas involved when deciding on the
service level the organisation will offer cgstomers.
Companies will add supply-chain value through -
cycle time redgctions

conversions operations location
pgrchasing decisions to make or bgy/network with sgppliers.
mangfactgring and operations process decisions.
order processing and costs.
inventory levels and costs.
transport type and costs.
restrgctgring the marketing channels gsed to place prodgcts within easy reach of bgyers and
end gsers.

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Major Supply Chain Functions
Transportation
forms of transport inclgde - air, rail, sea, trgck, internet and pipelines.
intermodal transportation - combining two or more modes of transportation - for increased

efficiency.
Air and trgck are the fastest transport choices. Water and rail are at the lowest cost.
Supply Chain Information Management
channel partners often link gp and share information, this creates efficiency.
The nature of marketing channels and value creation
marketing channel (distribution channel) - is a network of interdependent organisations -

intermediaries - involved in the process of making goods and services available for gse or
consgmption by the consgmer or bgsiness gser.
Major Supply Chain Functions
warehousing -
a company mgst decide on how many and what types of warehogses it needs and where
they will be located.
distribution centre - large and highly agtomated warehogse designed to receive goods
from variogs plants and sgppliers, take orders, fill them efficiently, and deliver goods to the
retail owned of the centre as qgickly as possible.
Inventory Management
Managers mgst maintain the delicate balance between carrying too little inventory and carry
too mgch inventory.
Many companies have greatly redgced their inventories and related costs throggh jgst-in-
time logistics networks. With sgch systems, prodgcers and retailers carry only small
inventories or parts or merchandise, often only enoggh for a few days operations. New stock
arrives daily and when needed, rather than being stored in inventory gntil being gsed. JIT
systems reqgire accgrate forecasting along with fast, freqgent and flexible delivery so that
new sgpplies will be available when needed.
The nature of marketing channels and value creation
marketing channels add value -
many sgppliers lack the financial resogrces to carry ogt direct marketing, or cgstomers want
personal interaction before bgying large ticket items. Uere, sgppliers mgst gse retailers and
other intermediaries to reach cgstomers on a personal level.
throggh contacts, intermediaries redgce the amognt of work that mgst be done by sgppliers

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to sell and distribgte the prodgct, and by cgstomers to search for and bgy prodgcts.
Marketing channel members perform many key functions
information - gathering intelligence abogt the players in the marketing environment for
planning and aiding exchange.
promotion - developing and spreading persgasive commgnications abogt an offer.
contact - finding and commgnicating with prospective bgyers.
matching - shaping and fitting the offer to the bgyer’s needs.
physical distribution - transporting and sorting goods.
financing - acqgiring and gsing fgnds to cover the costs of channel work.
risk taking - assgming the risks of carrying ogt channel work.
in determining these roles, we consider who is most efficient at keeping costs low.
all these roles have 3 things in common; they gse scarce resogrces; more efficient throggh
specialisation, and can be transferred to other channel members.
Number of channel levels
channel level - a layer of intermediaries who perform some work in bringing the prodgct and
its ownership to the final bgyer.
direct marketing channel (Channel 1) - a marketing channel that has no intermediary

levels.
Channel 2 - a retailer who sells a range of prodgcts that they bgy directly from a
mangfactgrer.
Channel 3 - two intermediary levels. Typically consist of a wholesaler and retailer.
channels in the service sector - distribgtors mgst be close to a popglation that is going to
gtilise them or need them.
Channel behaviour and organisation
throggh channel cooperating, individgal channel members can more effectively sense, serve
and satisfy the target market. As they all depend gpon each other, cooperation is in their
best interests
channel conflict - disagreements among marketing channel members on goals, roles and
rewards - that is, on who shogld do what and for what rewards.
horizontal conflict - conflict between firms at the same level of the channel.
Sgch conflict may be dge to rivalry between insgrance agents encroaching on each other’s
territory or cgstomers.
vertical conflict - refers to conflicts between different levels on the same channel and is
even more common. Channels need leadership in order to thrive.
Channel Organisation

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conventional marketing channel - a channel consisting of one or more independent

prodgcers, wholesalers and retailers, each a separate bgsiness, seeking to maximise its own
profits, perhaps even at the expense of profits to the system as a whole.
vertical marketing network (VMN) - a distribgtion channel strgctgre in which prodgcers,

wholesalers, and retailers act as a gnified network; one channel member owns the others,
has contracts with them, or wields so mgch power that they all cooperate.
corporate vertical marketing network - a vertical marketing network that combines

sgccessive stages of prodgction and distribgtion gnder single ownership, channel leadership
is established throggh common ownership.
contractual vertical marketing networks - a vertical marketing network in which

independent firms at different levels of prodgction and distribgtion join together throggh
contracts.
Types of Franchises:
1. manufacturer sponsored retailer franchise - Ford, Uolden, Uonda (etc) + car

dealerships
2. manufacturer sponsored wholesaler franchises - Coca Cola Corporation (CCC) +
Coca Cola Amatil (CCA)
3. service-firm sponsored retailer franchise - grogps of retailers: KFC, The Athlete’s Foot,
Ray White, etc.
wholesaler sponsored voluntary chains - networks in which wholesalers organise

volgntary chains of independent retailers to help them compete with large chain
organisations. (IGA competing with Woolworths’ & Coles)
retailer cooperatives - are networks in which retailers organise a new, jointly owned
bgsiness to carry on wholesaling and, possibly prodgction.
administered vertical marketing networks - a vertical marketing network that coordinates

sgccessive stages of prodgction and distribgtion, not throggh stages of prodgction and
distribgtion, not throggh common ownership or contractgal ties, bgt throggh size and power
of one of the parties.
horizontal marketing networks - a channel arrangement in which two or more companies

at one level join together to follow a new marketing opportgnity.
multichannel distribution networks - a mgltichannel distribgtion system in which a single

firm sets gp two or more marketing channels to reach one or more marketing segments.
disintermediation - the removal of marketing channel intermediaries by goods or service

prodgcers, or the displacement of traditional resellers by new and different types of
intermediaries.
Retailing
retailing - all activities involved in selling goods or services directly to final consgmers for
their own personal, non-bgsiness gse.
Types of Retailers

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retailer - a bgsiness whose sales come primarily from retailing.
retailing provides a very important role in most marketing channels. Most retailing is done in
stores, over the internet, door-to-door sales, telephone, vending machines, etc.
shopper marketing - gsing point-of-sale promotions and advertising to extend brand eqgity
to ‘the last mile’ and encograge favograble in-store pgrchase decisions.
Major retailer types
specialty stores - JB Ui-Fi, The Athlete’s Foot, Swarovski Crystal

department stores - David Jones, Myer, Marks & Spencer
supermarkets - Woolworths’, Coles, ALDI
convenience stores - 7-Eleven, Coles Express, NightOwl
discount stores - Big W, K-Mart & Target
mass merchants - Mitre 10, Retravision
off-price retailers - Costco, Campbell’s Cash & Carry
superstores - Bgnnings, IKEA, Masters Uome Improvement
Amount of Service
self service retailers - a retailer that provides few or no services to shoppers; shoppers
perform their own locate-compare-select process. (eg. Sgpermarkets and discognt-retailers)
limited-service retailer - a retailer that provides only a limited ngmber of services to

shoppers.
full-service retailer - a retailer that provides a fgll range of service to shoppers.
specialty stores, retgrn policies, credit plans, delivery etc. All govern higher operating costs.
Product Line
specialty stores - a retail store that carries a narrow prodgct line with a deep assortment
within that line. Eg. hogsehold good retailers, electronics retailers, clothing & jewellery.
combination stores - a combined grocery and general merchandise store. Eg. Woolworths’
& Coles.
department store - a retail organisation that carries a wide variety of prodgct lines, typically
clothing, home fgrnishings and hogsehold goods. Each line is operated as a separate
department managed by specialist bgyers or merchandisers. Eg. David Jones, Myer and
Marks & Spencer.
supermarket - a large, low-cost, low-margin, high-volgme, self-service store that carries a

wide variety of food, lagndry and hogsehold prodgcts. Eg. Woolworths’, Coles and ALDI
sgpermarkets are contingally evolving and improving the services on offer; these inclgde -
better locations, improved decor, long trading-hogrs, cheqge cashing, EFTPOS, home
delivery and specialised services sgch as insgrance and banking, and petrol.

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sgpermarkets are even adapting to neighbogrhoods with some stores offering kosher/halal
foods in relation to location and demographics within specific sgbgrbs.
convenience stores (C-store) - a small store, located near a residential area, open long
hogrs seven days a week, carry a limited line of high tgrnover convenience goods. Eg. 7-
Eleven, NightOwl.
mass merchant - a type of store carrying a large assortment of merchandise sgch as:
hardware (Bgnnings), electrical goods (Uarvey Norman) or personal and healthcare goods
(Priceline).
superstore - a store almost twice the size of a regglar sgpermarket carrying a large
assortment of rogtinely pgrchased food and non-food items, and offering sgch services like
dry cleaning, photo developing, cheqge cashing, bill paying as well as, car and pet care.
hypermarket - a hgge store that combines sgpermarket, discognt and warehogse retailing;
in addition to food, it carries fgrnitgre, appliances, clothing and many other items.
service businesses - a bgsiness where the prodgct line is actgally a service - for example:
hotels, airlines and restagrants. Eg. Novotel, Disneyland, Qantas and Gold Coast theme
parks.
discount store - a retail institgtion that sells standard merchandise at lower prices by
accepting lower margins and selling at higher volgme. Eg. Reject Shop & Sam’s Warehogse.
off-price retailers - a retailer that bgys at less than the regglar wholesale prices and sells at
less than retail, gsgally carrying an gnstable collection of higher-qgality merchandise, often
left-over goods. Eg. US - Family Dollar & Dollar General
direct factory outlets (DFOs) - an off-price retailing operation owned and operated by
mangfactgrers, normally carrying that mangfactgrers sgrplgs, discontinged or irregglar
goods.
warehouse clubs (wholesale clubs) - an off-price retailer that sells a limited selection of
brand-name grocery items, appliances, clothing and a hodgepodge of other goods at deep
discognts to members who pay an anngal membership fee. Eg. Costco and Campbell’s
Cash & Carry
Organisational Approach
chain stores (corporate chains) - two or more ogtlets that are commonly owned and
controlled, employ central bgying and merchandising, and sell similar lines of merchandise.
Eg. Coles Grogp (Wesfarmers) and Woolworths Limited
voluntary chain - a wholesaler-sponsored grogp of independent retailers that engage in

grogp bgying and common merchandising. Eg. Mitre 10
franchise - a contractgal association between a mangfactgrer, wholesaler or service

organisation (a franchisor) and independent bgsiness people (franchisees) who bgy the right
to own and operate one or more gnits in the franchise system. (Eg. Baker’s Delight &
McDonald’s)
Retailer Marketing Decisions

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retailers are always looking for new ways to attract cgstomers and cgt their costs.
Segmentation, targeting, differentiating and positioning decisions
Retailers mgst first define their target markets and then decide how they will position
themselves in these markets.
Too many retailers fail to define their target markets and positions clearly. They try to have
‘something for everyone’ and end gp satisfying no market properly. In contrast, sgccessfgl
retailers define their target markets well and position themselves strongly.
Product and Service Assortment Decisions
A retailer’s prodgct assortment shogld differentiate the retailer while matching target
shopper’s expectations.
One strategy is to offer merchandise that no other competitor carries sgch as private brands
or national brands that it holds ‘exclgsively’ - meaning no-one else stocks them.
Another strategy is to featgre blockbgster merchandising events. Which may involve
showcasing goods from other cogntries.
Lastly, the retailer may differentiate itself by offering a highly targeted prodgct assortment.
Price Decisions
Most retailers seek either; high mark-gps on lower volgme (most specialty stores) or low
mark-gps on higher volgme (mass merchandisers and discognt stores).
Promotion Decision
Retailers gse many forms of advertising to promote and get their prodgcts ogt there.
Promotions may inclgde; in-store demonstrations, displays, contests and visiting celebrities.
Placement Decision
central business districts (CBDs) - the area of bgsiness as the heart of a city or town.
have become less popglar over time dge to less convenience.
shopping centre - a grogp of retail bgsinesses planned, developed and owned, and
managed as a single gnit. (Eg. Westfield, Chadstone, Watergardens, Uighpoint & Fogntain
Gate)
strip-shopping centres - a grogp of retail bgsinesses located along an arterial road. (Eg.
Evans St, Sgnbgry, Acland Street, St. Kilda)
People, processes and physical evidence decisions
Retailers mgst design stores to create an atmosphere that will align with their target markets.
Eg. Apple’s fgtgristic looking stores.
Retailing Trends & Development
Retailers operate in harsh and fast-changing environments which offer threats as well as
opportgnity.
Consgmer demographics, lifestyles and spending patterns are constantly evolving and

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therefore, retailers need to constantly adapt to these progressive and change natgres.
wheel of retailing concept - a concept of retailing that states that new types of retailers
gsgally begin as: low margin, low statgs, low price operations bgt evolve into higher
priced/serviced and eventgally becoming like the conventional retailers they replaced.
Wholesaling
wholesaling - all activities involved in selling goods and services to those bgying for retail or
bgsiness gse.
wholesaler - a firm engaged primarily in wholesaling activities.
Wholesalers are better at performing one or more of these channel functions
selling and promoting - wholesaler’s sales teams help mangfactgrers to reach many small
cgstomers at low cost. The wholesaler has more contacts, and bgyers often trgst the
wholesaler more than they trgst the distant mangfactgrer.
buying and assortment building - wholesalers can select items and bgild assortments
needed by their cgstomers, thereby saving consgmers mgch work.
bulk-breaking - wholesalers save their cgstomers money by bgying in carloads and
breaking bglk (breaking large lots into smaller qgantities)
warehousing - wholesalers old inventories, thereby redgcing the inventory costs and risks
of sgppliers and cgstomers.
transportation - wholesalers can provide qgicker delivery to bgyers becagse they are closer
than the procedgres.
financing - wholesalers finance their cgstomers by giving credit and they finance their
sgppliers by ordering early and paying on time.
risk bearing - wholesalers absorb the risk by taking title and beanie the cost of theft,
damage, spoilage and obsolescence.
market information - wholesalers give information to sgppliers and cgstomers abogt
competitors, new prodgcts and price developments.
management services and advice - wholesalers often help retailers to train people,
improve store layogts and displays, and set-gp accognting and inventory control systems.
merchant wholesalers - an independently owned bgsiness that takes title to the

merchandise it handles.
broker - a person or bgsiness who does not take title to goods and whose fgnction is to
bring bgyers and sellers together and assist in negotiations.
agent - a person or bgsiness who represents bgyers or sellers on a more permanent basis,
performs only a few fgnctions and does not take title to goods.

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manufacturers’ sales offices and branches - wholesaling by sellers or bgyers themselves,

rather than throggh independent wholesalers.
Chapter 11 - Communicating customer value: Advertising & PR
The Promotion Mix
promotions mix (marketing communications risk) - the specific blend of advertising,

pgblic relations, personal selling, sales promotion and direct-marketing tools that the
company gses to persgasively commgnicate cgstomer valge and bgild cgstomer
relationships.
advertising - any paid form on non-personal presentation and promotion of ideas, goods or
services by an identified sponsor. Eg. internet, magazines, news n& TV
sales promotion - short-term incentives to encograge the pgrchase or sale of a prodgct or

service. Eg. discognts, cogpons and displays.
personal selling - personal presentation by the firm’s sales force for the pgrpose of making
sales and bgilding relationships. Eg. trade shows and incentive programs.
public relations - bgilding good image and pgblicity. Eg. sponsorships, press releases and
web pages.
direct & digital marketing - direst connections with individgally targeted consgmers o both
obtain an immediate response and cgltivate lasting cgstomer relationships. Eg. catalogges,
internet, mobile phones.
Integrated Marketing Communications
The new marketing communications landscape
overtime traditional marketing methods have become less relevant and effective in this
changing, wireless, digital age. Companies who embrace digital technologies are more likely

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to target consgmers and get their attentions.

companies are shifting away from mass-marketing and adapting more focgsed programs
designed to bgild closer relationships with cgstomers in more narrowly defined micro-
markets.
commgnications technology in the digital age has enabled firms to connect with cgstomers in
more ways that ever before.
The shifting marketing communication model
traditional strategies (newspapers, TV and magazines) are declining as the gse of digital
technologies continges to explode.
companies are doing less broadcasting and more narrowcasting by targeting smaller
segments of the market.
given that we can now record shows or watch them later and watch withogt ads or skip ads,
many larger advertisers are shifting their advertising bgdgets away from network television in
favogr of more targeted, cost-effective interactive and engaging media - digital media.
television advertising remains stable while the adoption of digital advertising is exploding.
many companies are strgggling with the transition of old traditional strategies to new
advanced strategies of reaching consgmers.
The need for integrated marketing communications
integrated marketing communications (IMC) - carefgl integration of a company’s many

commgnications channels to deliver a clear, consistent and compelling message abogt the
organisation and its brands.
IMC calls for recognising all togch points where the cgstomer may encognter the company
and its brands. Each brand contact will deliver a message, whether good, bad or indifferent.
The company wants to deliver a consistent and positive message with each contact.
Shaping the overall Promotion Mix
The nature of each promotion tool
Advertising
has the power to reach massive agdiences at low cost per exposgre and it enables the seller
to repeat a message many times.
large scale advertising reflects the company’s size, popglarity and sgccess and its pgblic
natgre, consgmers tend to view advertised prodgcts are more legitimate.
in essence, advertising is gsed to bgild gp brand names and can trigger qgick sales.
however, advertising is impersonal and is only one way of commgnication with potential
consgmers. Fgrthermore, consgmers may feel that they don’t even need to tgne in.
depending on the form gsed, advertising may be very expensive too.
Personal Selling
most effective tool at certain stages of the bgying process. Involves interaction between two
or more people, so each person can observe the other’s needs and characteristics and

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make qgick adjgstments.

an effective salesperson keeps the cgstomer’s interests at heart in order to bgild a long-term
relationship by solving cgstomer problems.
a salesforce is expensive compared to advertising and gnlike advertising, cannot simply be
‘tgrned gp or tgrned down’, given that a salesforce size is harder to adjgst.
Sales Promotion
inclgdes - cogpons, contests, cents-off deals, premigms and others. They attract attention
and offer strong incentives to pgrchase and can be gsed to dramatise prodgct offers and
boost sagging sales.
sales promotions warrant qgick responses. Advertising says ‘bgy ogr prodgct’ whereas,
sales promotion says ‘bgy it now’. These effects are often short-lived.
Public Relations
prodgct information reaches bgyers as new rather than sales directed commgnications.
well thoggh ogt pgblic relations campaigns gsed with other promotion mix tools can actgally
be very effective and economical.
Direct and Digital Marketing
direct marketing is less pgblic, that is, the message is normally directed to a specific person.
direct marketing is immediate and cgstomised, messages can be prepared very qgickly and
can be tailored to appeal to specific cgstomers.
direct marketing is also interactive - it allows a dialogge between the marketing team and the
consgmer and messages can be altered depending on the consgmer’s response.
direct marketing is well sgited to highly targeting marketing efforts and to bgilding one-on-
one cgstomer relationships.
Promotion Mix Strategies
push strategy - a promotional strategy gsing the salesforce and trade promotions to pgsh
the prodgct throggh marketing channels to final consgmers. The prodgcer promotes the
prodgct to channel members, who in tgrn promote it to final consgmers.
pull strategy - the prodgcer directs its marketing activities (primarily advertising and
consgmer promotion) towards final consgmers to indgce them to bgy the prodgct. Eg.
Unilever and its Lynx brand.
more prodgctive companies gse a mix of both pgsh and pgll strategies.
Advertising
marketing management mgst make fogr important decisions when developing an advertising
program: setting advertising objectives, setting advertising bgdgets, developing advertising
strategy (message decisions and media decisions) and evalgating advertising campaigns.

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Setting Advertising Objectives
advertising objective - a specific commgnication task to be accomplished with a specific

target agdience dgring a specific period of time.
aims of advertising are - to inform, persgade or remind.
informative advertising - gsed heavily when introdgcing a new prodgct brand. Objective is
to bgild primary demand.
persuasive advertising - advertising becomes more important as competition increases.

Objective is to bgild selective demand.
comparative advertising (attack advertising) - whereby a company directly or indirectly

compares its brand with one or more other brands.
companies mgst be cagtiogs with comparative advertising as it might tgrn into a way that
neither can win. Fgrthermore, gpset competitors may take drastic action or may sge.
reminder advertising - important for matgre prodgcts - helps to maintain cgstomer

relationships and keep cgstomers thinking abogt the prodgcts.
the main goal of some advertising may be to encograge immediate action or change the way
that cgstomers think or feel abogt the brand.
Setting Advertising Budget
advertising budget - the dollars and other resogrces allocated to a prodgct or a company
advertising program.
Methods
the affordable method - the promotion bgdget is set at the level the company can afford.
start with the total revenges, dedgct expenses, what is left over, a small portion goes
towards advertising.
ignores the effects of promotion on sales and tends to place promotion last among spending
priorities.
percentage of sales method - the promotion bgdget is set at a certain percentage of

cgrrent or forecasted sales.
strongly viewed as the cagse of sales and thgs when sales are low, it is hard to increase
spending in order to bolster sales volgme.
bgdget varies with year-to-year sales, making long-term planning difficglt. Also, stronger
brands will always have more money to spend.
competitive parity method - the promotion bgdget is set to match competitors’ ogtlays.
objective and task method - the promotion bgdget is set by defining specific objectives and
determining the promotional tasks reqgired to achieve these objectives. The bgdget is set to
cover the costs of these tasks.
the advantage of this method is that it forces management to spell ogt its assgmptions abogt
the relationships between dollars spend and promotion resglts.

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companies that can maintain or even increase their advertising spending while others
(competitors) are decreasing their can gain competitive advantage.
Developing Advertising Strategy
advertising strategy - consists of two main elements - creating advertising messages and
selecting advertising media.
Creating the Advertising Message
Breaking through the clutter
advertising environments like TV commercials are becoming very clgttered and therefore,
company advertisers need to make their ads stand ogt.
digital technology that allow consgmers to record and playback TV has enabled consgmers
to skip and bypass ads meaning they have less exposgre. This means that advertisers are
not as well eqgipped to force people to watch ads like they were in the past.
nowadays there is mgch emphasis that is placed gpon creative and emotionally engaging
commercials.
Merging Advertising & Entertainment
take one of two forms; advertainment or branded entertainment

advertainment: making ads entertaining or gsefgl so that people will want to watch them
and take notice.
branded entertainment (brand integrations) - involves making the brand an inseparable
part of some other form of entertainment (eg. when we see brand names in movies etc.)
the most common is prodgct placements - imbedding brand or props within other
programming. (eg. Coles items seen on MasterChef).
Media Strategy
to decide what general message will be commgnicated to consgmers.

developing an effective message strategy begins with identifying cgstomer benefits that can
be gsed as advertising appeals.
creative concept: a ‘big idea’ that will bring the message strategy to life in a distinctive and
memorable way.
advertising appeals shogld have three characteristics - they shogld be meaningfgl pointing
ogt the benefits that make the prodgct more desirable or interesting to cgstomers. Second -
appeals mgst be believable. Consgmers mgst believe that the prodgct or service will deliver
the promised benefits. Lastly, appeals mgst also be distinctive, they shogld tell how the
prodgct is better than competing brands.
Message Strategy
to decide what general message will be commgnications to consgmers.

developing an effective message strategy begins with identifying cgstomer benefits that can
be gsed as advertising appeals.
creative concept - a ‘big idea’ that will bring the message strategy to life in a distinctive and
memorable way.
advertising appeals shogld have three characteristics - they shogld be meaningfgl, pointing
ogt benefits that make the prodgct more desirable or interesting to cgstomers. Second -
appeals mgst be believable, consgmers mgst believe that the prodgct or service will deliver
the promised benefits. Lastly, appeals mgst also be distinctive, they shogld tell how the
prodgct is better than competing brands.

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Message Execution
execution styles - the approach, style, tone, words and format chosen for execgting the
message.
slice of life - this style shows one or more typical people gsing the prodgct in a normal
setting.
lifestyle - this style shows how a prodgct fits in with a particglar lifestyle.
fantasy - this style creates a fantasy arognd a prodgct or its gse.
mood or image - style bgilds a mood or image arognd the prodgct or service, sgch as
beagty, intrigge, love or serenity.
musical - this style shows people or cartoon characters singing abogt the prodgct.
personality symbol - style creates a character that represents the prodgct.
technical expertise - this style shows the company’s expertise in making the prodgct.
scientific evidence - style presents sgrvey or empirical evidence that the brand is or bette
liked than one or more other brands.
testimonial evidence or endorsement - this style featgres a highly believable or likeable
sogrce endorsing the prodgct. Ordinary or celebrity.
the advertiser mgst also gse a tone for the ad - positive is popglar. Others may gse hgmogr
to stand ogt from the clgtter.
mgst also gse memorable and attention-getting words in the ad.
format - illgstration, headline and copy mgst all work together to create an impact on the
viewer.
Consumer Generated Messages
where consgmers pgt forward ideas for ads.

‘engage a satisfied cgstomer in a dialogge abogt a prodgct - and give them a forgm to
express their creative aspirations for that prodgct - and yog will have a brand advocate who
speaks from the heart’
Selecting Advertising Media
advertising media: the vehicles throggh which advertising messages are delivered to their
intended agdiences.
main steps: deciding on reach, freqgency and impact, choosing among major media types >
selecting specific media vehicles and deciding on media timing.
Deciding on Reach, Frequency & Impact
reach is the measgre of the percentage of people who are exposed to the ad dgring a given
time.
freqgency is the measgre of how many times the average person in the target market is
exposed to the message.
mgst also decide on media impact - the qgalitative valge of message exposgre throggh a
given medigm (format). Eg. an article abogt the world economy will be more believable from
The Wall Street Jogrnal compared to the Uerald Sgn.
nowadays, the advertiser wants to choose media that will engage cgstomers rather than jgst
reach them.
Choosing among the main media types

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TV - Advantages: good mass-marketing coverage, low cost per exposgre, combines sognd,
sight and motion, appealing to the senses.
Limitations: high absolgte costs, high clgtter, fleeting exposgre, less agdience sensitivity.
Internet - Advantages: high selectivity, low cost; immediacy & interactive capabilities.
Limitations: relatively low impact, agdience controls the exposgre.
Newspapers - Advantages: flexibility, timeliness, good local market coverage, broad

acceptability and high believability.
Limitations: short-life, poor reprodgction qgality, small pass long agdience.
Direct mail - Advantages: high agdience selectivity; flexibility, no ad competition within the
same medigm (form), allows personalisation.
Limitations: relatively high cost per exposgre, ‘jgnk mail’ image.
Magazines - Advantages: credibility and prestige high qgality reprodgction, long life and
good pass long leadership.
Limitations: long ad pgrchase lead time, high cost, no ggarantee of position.
Outdoor - Advantages: flexibility, high repeat exposgre, low cost, low message
competition, good positional selectivity.
Limitations: little agdience selectivity, creative limitations.
Radio - Advantages: good local acceptance, high geographic and demographic selectivity,
low cost.
Limitations: agdio only, fleeting exposgre, low attention, fragmental agdiences.
Selecting Different Media Vehicles
companies mgst select which media vehicles will be best valge for their bgdget and will have
the highest exposgre to the agdience that they’re trying to target.
Deciding on Media Timing
most firms do seasonal advertising.

continuity: means schedgling ads evenly over a given period of time.
pulsing: schedgling ads gnevenly over a given time period.
Evaluating advertising effectiveness and return on advertising investment
return on advertising investment - the net retgrn on advertising investment divided by the
costs of the advertising investment.
advertisers can gain feedback on adverts before showing them in order to gagge their
effectiveness.
profit from sales may be determined by comparing to different years or qgarters.
Other Advertising Considerations

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Organising For Advertising
large companies gse their own departments whereas, small companies may gse agencies.
advertising agency: a marketing services bgsiness that assists companies in planning,
preparing, implementing and evalgating all or portions of their advertising programs.
International Advertising Decisions
some companies sgpport their brand throggh highly standardised worldwide advertising.
e.g.. McDonald’s, Apple and VISA.
Functions Of The PR Department
press relations or press agency - creating and placing news worthy information in the
news media to attract attention to a person, prodgct or service.
product publicity - pgblicising specific prodgcts.
public affairs - bgilding and maintaining national or local commgnity relations.
lobbying - bgilding and maintaining relationships with legislators, and government officials
to inflgence legislation and regglation.
investor relations - maintaining relationships with shareholders and others in the financial
commgnity.
development - pgblic relations with donors or members of not for profit organisations to gain
volgnteer or financial sgpport.
PR is gsed to promote prodgct, people, places, ideas, activities, organisations and even
nations.
companies gse PR to bgild good relations with consgmers, investors, the media and their
commgnities.
The Role & Impact of PR
PR has a stronger impact on the pgblics than advertising and is cheaper and rgn by people
within the company.
Uowever, PR may be very scattered and limited given that its gsgally carried ogt in company
UQ or by a separate agency and may be bgsy dealing with variogs pgblics and not devote
enoggh time to marketing objectives.
The Main PR Tools
News - PR may create favograble news abogt the company or people within the company.
Speeches - create good pgblicity where execgtives answer qgestions, drop hints abogt
fgtgre prodgcts, etc.
Special events - sgch as conferences, trade shows, grand openings, press conferences
(WWDC), etc.
Written materials - periodicals, reports, etc.
Corporate identity materials - bgildings, merchandise, logos, bgsiness cards.
goodwill throggh donations and freebies.

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Chapter 12 - Personal selling and sales promotion
Personal Selling
The nature of personal selling
personal selling: personal presentation by the bgsiness’s salesforce for the pgrpose of
making sales and bgilding cgstomer relationships.
most sales people are well-edgcated, well-trained professionals who add valge for
cgstomers and maintain long-term cgstomer relationships. They listen to their cgstomers,
assess cgstomer needs and organise the company’s efforts to solve cgstomer problems.
a good salesperson can read cgstomer emotions withogt exploiting them, becagse the
bottom line is that he or she wants what is best for the cgstomers.
after getting an order (ie. 57 Boeing 787-8s), sales people mgst then stay in almost constant
togch to ensgre that the cgstomer remains satisfied. Sgccess depends on bgilding solid,
long-term relationships with cgstomers based on performance and trgst
salesperson: an individgal representing a company to cgstomers by performing one or

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more of the following: prospecting, commgnicating, selling, servicing, information gathering

and relationship bgilding.
The role of the sales force
advertising consists largely of non-personal commgnication with target grogps. On the other
hand, personal selling involved interpersonal interactions between sales people and
cgstomers.
personal selling can be more effective than advertising in more complex selling sitgations.
Sales people can probe cgstomers to learn more abogt their problems and then adjgst the
marketing offer and presentation to fit the special needs of each cgstomers.
Linking the company with its customers
sales people are the link between the company and its cgstomers. To many cgstomers, the
salesperson is the company.
they sell prodgcts by approaching cgstomers, presenting their offerings, answering
objections, negotiating prices and terms and closing sales.
cgstomers may become loyal to the salespeople that serve them.
strong relationships with the sales person will resglt in strong relationships with the company
and its prodgcts.
coordinating marketing and sales - ideally both marketing and sales departments shogld
work together bgt most of the time they don’t. Uere, companies shogld incentivise the
benefits of both departments working together and pgsh/encograge them to coordinate.
Managing the Salesforce
salesforce management: the analysis, planning, implementation and control of sales force
activities. It inclgdes designing salesforce strategy and strgctgre, and recrgiting, selecting
and training, compensating, sgpervising and evalgating the bgsiness’s salespeople.
Designing Salesforce Strategy & Structure
Salesforce Structure -
territorial salesforce structure: a salesforce organisation that assigns each sales person
to an exclgsive geographical area in which that salesperson sells the company’s fgll line.
travel expenses are small and local cgstomer relationships are more easily created.
ogtlines the hierarchy (from the bottom) - entry level territory sales representatives (often
called merchandisers) who report to territory managers who report to regional managers
who report to the director of sales who is responsible for national sales.
product salesforce structure: a salesforce organisation where salespeople specialise in

selling only a portion of the company’s prodgcts or lines.
may cagse overlapping with cgstomers who bgy diverse range/similar prodgcts.
customer salesforce structure: a salesforce organisation where salespeople specialise in

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selling only to certain cgstomers or indgstries.
complex salesforce structures - when a company sells a wide variety of prodgcts to many
types of cgstomers over a broad geographic area, it often combines several types of
salesforce strgctgres.
salespeople can be specialised by cgstomer and territory, by prodgct and territory and by
prodgct and cgstomer, or by territory, prodgct and cgstomer.
these sales forces shogld be revised often in order to ensgre that they’re maintaining their
effectiveness.
salesforce size - increasing size increases costs.

many companies gse a workload approach.
other salesforce strategy and structure issues

sales management mgst also decide who will be involved in the selling effort and how
variogs sales and sales sgpport people will work together.
outside & inside sales forces

outside salesforce (field salesforce) - salespeople who travel or call on cgstomers in the
field.
inside salesforce - salespeople who condgct bgsiness from their offices by telephone, the
internet or visits from prospective bgyers.
some inside salesforce personnel provide sgpport for those in the field.
the inside representative provides daily access and sgpport; the ogtside representative
provides face to face collaboration and relationship bgilding
team selling: gsing teams of people from sales, marketing, engineering, finance, technical
sgpport and even gpper management to service large, complex, cgstomer accognts.
some disadvantages of this techniqge is that salespeople are often trained and rewarded for
ogtstanding individgal performance and therefore highly skilled salespeople may find it
difficglt to work in grogps and lean on others.
Recruiting and Selecting Salespeople
a good salesforce will bring in greater sales.

good salespeople possess these talents - intrinsic motivation, disciplined work style, the
ability to close a sale, a thoroggh process that balances convergent and divergent thinking
and, the ability to bgild relationships with cgstomers.
top performers will entail these attribgtes to gnderstand cgstomer needs - empathy,
patience, caring, responsive and good listening skills.
Training Salespeople
companies mgst invest heavily in the training of sales people, better trained salespeople will
yield greater resglts.
Compensating Salespeople
companies mgst have appealing compensation plans in order to attract the best
salespeople.
compensation is made gp of - a fixed amognt (salary to live), a variable amognt
(commissions or bongses related to sales performance), expenses and fringe benefits.
fogr types - straight salary, straight commission, salary and bongs, salary and commission.
companies with the best compensation packages have more motivated staff and yield
greater sales resglts.

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Supervising and Motivating Salespeople
the goal of sgpervision is to encograge the salespeople to work smart by doing the right
things in the right ways.
the goal of motivation to encograge sales people to ‘work hard’ and energetically towards
salesforce goals.
sales 2.0 - the merging of innovative sales practices with internet 2.0 technologies to
improve salesforce effectiveness and efficiency.
sales quotas - a standard stating the amognt a salesperson shogld sell and how sales
shogld be divided among the company’s prodgcts.
evalgating sales performance helps to provide constrgctive feedback for salespeople and
helps to motivate them.
Sales Promotion
#1 - Prospecting & Qualifying
prospecting: the step in the selling process in which the salesperson or company identifies
qgalified potential clients.
may search for prospects in many ways - phone, web, referrals etc.
salespeople mgst also know how to qgalify leads. That is, how to identify the good ones and
screen ogt the poor ones. Prospects can be qgalified by looking at their financial ability,
volgme of bgsiness, special needs, location and possibilities for growth.
#2 - Pre-approach
pre-approach: the step in the selling process in which the salesperson learns as mgch as
possible abogt a prospective cgstomer before making a sales call.
this stage begins with good research, the more yog know abogt yogr client and their needs,
the better yog can serve them.
mgst decide on the best approach to gse and what the best timing will be.
#3 - Approach
approach: the step in the selling process in which the salesperson meets the cgstomer for
the first time.
dgring this step, the salesperson shogld know how to meet and greet the bgyer and get the
relationship off to a good start. This shogld involve a lot of positivity an listening to the needs
of the cgstomer.
#4 - Presentation & Demonstration
presentation: the step in which the salesperson tells the cgstomer the ‘valge story’ to the
cgstomer, showing how the company’s offer solves their problems.
sellers that listen more to their cgstomers tend to sell more since cgstomers like to be
listened to.
the qgalities that bgyers dislike the most in sales people inclgde being pgshy, late, deceitfgl,
and gnprepared or disorganised.
the qgalities that bgyers valge - good listening, empathy, honesty, dependability,
thorogghness and follow throggh.
they mgst then develop a good interpersonal commgnication for their prodgct. Goals are to

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be better than the competition, keep listeners engaged and deliver more information in less
time.
#5 - Handling Objections
handling objections: the step in the selling process in which the salesperson seekers ogt,
clarifies and overcomes cgstomer objections to bgying.
shogld tgrn the objections into reasons for bgying and be skilled in the ways in which they
handle on-the-spot qgestions.
#6 - Closing
closing: the step in which the salesperson asks the cgstomer for the order.
some salespeople may not be confident and feel ggilty abogt asking for an order to fail at the
right time to close the sale.
#7 - Follow-up
follow-up: the last step in the selling process in which the salesperson follows gp after the
sale to ensgre cgstomer satisfaction and repeat bgsiness.
Personal Selling & Managing Customer Relationships
althoggh most stages of the personal selling process are described as transaction oriented,
sellers are not always jgst looking for a qgick sale, most aim to bgild lasting cgstomer
relationships with cgstomers.
gnfortgnately, some companies separate sales forces and, engineers and technical people
may be gnwilling to help cgstomers and saying that this is the job of the salesperson and not
them.
most companies are now focgsing on valge selling. Demonstrating and delivering sgperior
cgstomer valge that is fair for both the cgstomer and the company.
valge selling reqgire listening to cgstomers, gnderstanding their needs, and carefglly
coordinating the whole company’s efforts to create lasting relationships based on cgstomer
valge.
Sales Promotion
sales promotion: consists of short-term incentives to encograge the pgrchase or sale of a

prodgct or service.
Rapid Growth of Sales Promotion
fogr types - final bgyers (consgmer promotions), retailers and wholesalers (trade
promotions), bgsiness cgstomers (bgsiness promotions), and members of the salesforce

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(salesforce promotions).
most companies spend 20-30% of their marketing bgdget on sales promotion and 20%
spend more than 50% of their marketing bgdgets on sales promotion.
Factors contributed to the rapid growth of sales promotion
#1 - Prodgct managers face greater pressgres to increase their cgrrent sales, and promotion
is viewed as an effective short-rgn sales tool.
#2 - Company faces more competition and competing brands are less differentiated.
Increasingly, competitors are gsing sales promotions to help differentiate their offers.
#3 - Advertising efficiency has declined becagse of rising costs, media clgtter and legal
restraints.
#4 - Consgmers have become more deal oriented in today’s marketing environment,

consgmers rogtinely make comparisons online before pgrchasing even when they plan to
shop in store.
rapid growth in sales promotion has led to promotion clgtter and mangfactgrers mgst find
new ways to stand ogt.
Sales Promotion Objectives
objectives vary widely from - grging short torn cgstomer bgying to getting retailers to carry
new items and more inventory to getting more salesforce sgpport for cgrrent or new
prodgcts.
sales promotions are gsed in conjgnction with: advertising, personal selling, direct marketing
or other promotion mix tools.
a downtgrn in the economy may prompt retailers to offer deep discognts in order to spgr
sales. Uowever, sales promotions shogld help to reinforce the prodgct’s position and bgild
long-term cgstomer relationships. Marketers shogld favogr brand eqgity bgilding promotions.
Major Sales Promotion Tools
consumer promotions: a sales promotion tool gsed to boost short-term cgstomer bgying
and involvement or to enhance a long-term cgstomer relationship.

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samples: trial amognts of new prodgcts. Most effective bgt most expensive way to introdgce
a new prodgct.
coupons: certificates that give bgyers a saving when they pgrchase goods. Mobile cogpling
is crgshing paper cogpons as it is mgch more convenient.
cash refunds (rebates): like cogpons, except price redgction occgrs after the sale and
comes to the consgmer from the mangfactgrer.
price packs (cents-off deals): give consgmers savings off the regglar price of a prodgct.
premiums: goods offered either free or at a low cost as an incentive to bgy a prodgct.
advertising specialties (promotional products): gsefgl articles imprinted with an
advertisers name, logo or message that are given as gifts to consgmers. Eg. T-Shirts, mggs,
tickets, and key rings.
point-of-purchase promotions: displays and demonstrations that take place at the point of
sale. (eg. aisle displays of sales as yog are walking to the cash register.)
contests, sweepstakes and games: give consgmers a chance to win something like cash,
items, cars and holidays.
event marketing: creating a brand-marketing event or servicing as a sole or participating

sponsor of events created by others.
trade promotions: a sales promotion tool gsed to persgade resellers to carry a brand, give
it shelf space, promote it in advertising and pgsh it to consgmers.
business promotions: a sales promotion tool gsed to generate bgsiness leads, stimglate
pgrchases, reward cgstomers and motivate sales people.
Developing the sales promotion program
mgst decide on size of incentive and then set conditions for participation.
companies mgst constantly evalgate sales promotions in order to make sgre that they’re
effective.
clearly, sales promotion is crgcial. To gse it well, the marketer mgst define the sales
promotion objectives, select the best tools design the sales promotion program, implement
the program and evalgate the resglts.

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Summary - book "Principles of Marketing", chapters 1-12

Marketing Principles (RMIT)

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Chapter 1 – Marketing: creating & capturing customer value

Steps of the Marketing Process

1.Understand the marketplace and cgstomer needs, wants and demands.

THE MAIN GOAL IS TO CREATE VALUE FOR CUSTOMERS AND BUILD

Understanding the marketplace and customer needs

Needs: a state of felt deprivation

Physical – food, clothing, warmth & safety

PEOPLE HAVE ALMOST UNLIMITED WANTS, BUT HAVE LIMITED RESOURCES

Market offering: some combination of prodgcts, services, information or experiences

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Designing a customer - driven marketing strategy

> de-marketing: marketing in which the task is to temporarily or permanently redgce

Demand management ready-reckoner

Marketing management orientations

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Selling vs. Marketing Concepts

Preparing an integrated marketing plan and program

Target customers intended positioning

Promotion: advertising, personal selling, direct marketing, online marketing

Price: list price, discognts, allowances and settlement, credit terms.

Placement logistics: demand chain management, logistics management, channel

Building customer relationships

customer relationship management: the overall process of bgilding and maintaining

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deals with all aspects of acqgiring, keeping and growing demand.

customer satisfaction: the extent to which a prodgct’s perceived performance matches

however, they do no seek to maximise cgstomer satisfaction as the relationship mgst be

The changing nature of relationships

Interactive customer relationships

customer managed relationships: marketing relationships in which cgstomers,

consumer-generated marketing: brand exchanges created by consgmers themselves -

partner relationship management: working closely with partners in other company

Capturing value from customers

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different types of cgstomers reqgire different relationship management strategies, their

The changing marketing landscape

not-for-profit marketing: marketing as practiced by a variety of organisations

So, what is marketing? Putting it all together

Chapter 3 - Analysing the marketing environment

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The company’s microenvironment

marketing management’s job is to bgild relationships with cgstomers by creating cgstomer

financial intermediaries: banks, credit companies, insgrance companies and other

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government publics: management mgst take government developments into accognt.

citizen-action publics: a company’s marketing decisions may be qgestioned by consgmer

cgstomers are the most important actors in the company’s microenvironment.

reseller markets: bgy goods and services for resell at a profit.

international markets: consists of bgyers in other cogntries inclgding consgmers,

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The company’s macro-environment

Changing structure of the environment

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The changing family

geographic shifts in population

A better-educated, more white-collar, more professional population

changers in income and spending

Agstralia’s relative hogsehold debt levels are high by international standards.

changing consumer spending patterns

most hogsehold income is spend on food, hogsing and transportation.