CMA 102

MARKETING MANAGEMENT
INTRODUCTION TO
MARKETING
.
MANAGEMENT
 Definitions
 Marketing refers to the managerial process of identifying, anticipating
and fulfilling customer needs and wants profitably.

 Marketing is a total system of business activities which are designed to

distribute goods which can satisfy wants and reach the target as well as the
objective of organization.
 cont’d
 Management is the art of getting things done through others and with
formally organised groups.

 Management Is a distinct process consisting of planning, organising,

actuating and controlling; utilising in each both science and art, in order to
accomplish pre-determined objectives.

 Management is the art of knowing what you want to do and then seeing that
they do it in the best and the cheapest way.
 cont’d
 Marketing (management) is the process of planning and executing the
conception, pricing, promotion, and distribution of ideas, goods, and
services to create exchanges that satisfy individual and organizational goals.

 We see marketing management as the art and science of applying core

marketing concepts to choose target markets and get, keep, and grow customers
through creating, delivering, and communicating superior customer value.
 Who does marketing?
 A marketer is someone seeking a response (attention, purchase, vote,
donation, etc.) from another party called the prospect.

 Marketers are responsible for stimulating demand for a company’s

product.

 Marketing managers seek to influence the level, timing, and composition

of demand to meet the organisation’s objectives.
 What is marketed?
Goods
 These are physically tangible items offered to the market for acquisition towards fulfilment of a
specific need. Physical goods constitute the bulk of production and marketing efforts.
Services
 Any act or performance that one party can offer to another that is essentially intangible and does not
result in the ownership of anything.
 Definition of service according to Murti Sumarni (2002:17) is an activity or an advantage which can
be given by a party to another party which is mostly intangible and cannot affect ownership, and its
production or is not related to any tangible product.”
Persons
 Celebrity marketing is a major business.
 cont’d
Events

 Marketers promote time-based events such as trade shows, artistic

performances, and sporting events. However, goods and services are used
to facilitate events marketing

Experiences

 By orchestrating several services and goods, a firm can create and

market experiences such as Walt Disney World‘s Magic Kingdom.
 cont’d
Places
 Cities, states, regions, and whole nations compete actively to attract tourists, factories,
and new residents. This is still the category of services marketing
Properties
 Are intangible rights of ownership of either real property (real estate) or financial
property (stocks and bonds)
Organisations
 Actively work to build a strong, favourable, and unique image in the minds of their
target publics.
 cont’d
Information

 Can be produced and marketed as a product. Schools, universities, and

others produce information and then market it.

Ideas

 Every market offering includes a basic idea. Products and services are
platforms for delivering some idea or benefit.
 Who is targeted?
Customers

 A customer is an individual, organization or a group of people who buy/s

goods and/or services from a supplier for reselling or consumption

Consumers

 A consumer is an organization, individual or a group of people who

buy/s goods and/or service for final use.
EVOLUTION OF
MARKETING
.
 Definition
 A marketing concept is “a way of thinking; a management philosophy
guiding an organisation's overall activities (affecting) all the efforts of the
organisation, not just its marketing activities".
 Production Philosophy
 Traces back to as far back as 1850s, through to the 1900s , which was a period of
industrial revolution in the United States.

 At this period the country witnessed growth in electricity generation, rail

transportation, division of labour, assembly lines, and mass production. These made it
possible to produce goods more efficiently with new technology and new ways of using
labour.

 Despite the increase in production of goods with these emerging ways of production,
there was heavy demand for manufactured goods.
 cont’d
 The production philosophy is premised on the assumption that consumers
will favour products that are available and highly affordable.

 This required that businesses’ concentration were directed toward product

improvement and efficient distribution of goods.

 The production philosophy assumes that “consumers are mostly interested

in product availability at low prices; its implicit marketing objectives are cheap,
efficient production and intensive distribution”.
 Product Philosophy
 The product philosophy was the dominant marketing philosophy at the dawn of 1900s and continued to the 1930s.

 Assumes that consumers will prefer product based on its quality, performance and innovative features . This means that
the company knows its product better than anyone or any organization. Since the company has the great knowledge and skill
in making the product.

 It also assumes it knows what is best for the consumer.

 The product concept compelled companies to ensure improving product quality, and introduce new features to enhance
product performance; as much as possible. This was done without consulting the customer to find his or her view on these
product features. Yet products were produced with the customer in mind.
 cont’d
 During the product era, organizations were able to sell all of the products that they made.

 Demand exceeded supply, hence the emphasis on production rather than the customer was quiet an
appropriate business thought at the time. Most goods were in such short supply that companies could
sell all that they made.

 A product philosophy often leads to the company focusing on the product rather than on the
consumer needs that must be satisfied, which leads to ‘marketing myopia’

 In the Contemporary market, the product concept cannot survive.

 Selling Philosophy
 Came after the product era, and has the shortest period of dominance compared to the two preceding philosophies. It
began to be dominant around 1930 and stayed in widespread use until about 1950.

 The emphasis of selling philosophy was to create a department to solely be responsible for the sale of the company’s
product; while the rest of the company could be left to concentrate on producing the goods.

 The concept assumes that “consumers are unlikely to buy the product unless they are aggressively persuaded to do so
– mostly that ‘hard sell’ approach”

 The emergence of the selling philosophy was necessary because of increase in production of variety of goods after the
Industrial Revolution, as companies became more efficient in production.
 cont’d
 The increase in amount of product and types of products led to competition which eventually led to the end of product
shortages and the emergence of surpluses. (Supply exceeding Demand)

 It was because of the surpluses that organizations turned to the use of advertising and personal selling to reduce their
inventories and sell their goods. The selling philosophy also enabled part of the organization to keep focusing on the
product, via the product philosophy.

 However, this selling concept is still available in the contemporary market especially when dealing with unsought
goods eg insurance, etc.

 Though the marketing philosophy has become the prescription for facing competition, “old habits die hard” and even
to date some companies still hold to the fact that they must use the ‘hard sell’ approach for business success and prosperity.
 Marketing Philosophy
 Its business dominance started during the 1950s and continues until the
twenty first century.

 This philosophy assumes that the starting point for any marketing process is
the customer needs and wants, and no longer the aggressive selling.

 The key assumption underlying the marketing philosophy is that “an

organization should make what it can sell, instead of trying to sell what it
has made” .
 cont’d
 The marketing concept is an “outside-in” approach, and it moves focus away
from the product to the market.

 The marketing concept starts with a well-defined market, focuses on

customer needs, and integrates all the marketing activities that affect the
customers.

 In turn, it yields profits by creating lasting relationship with the right

customers based on customer value satisfaction”.
 Societal Marketing Philosophy
 This emerged in the 1970s and has since overlapped with the marketing philosophy.
 The concept assumes that there is a conflict between consumer’s short-term wants and society’s
long-run interest, and that organizations should focus on a practice that ensures long run consumer and
societal welfare.

 This new concept represents an attempt to harmonize the goals of business to the occasionally
conflicting goals of society.

 The organisation’s task is to determine the needs, wants and interest of target markets and to
deliver the desired satisfactions more effectively and efficiently than competitors in a way that preserves
or enhances the consumer’s and society’s well-being.
 cont’d
 The importance of this concept became eminent as the effect of business activities on the
environment and society became too significant. It was then necessary for businesses to think on how to
satisfy the market with the aim of profit, and still minimize its effects on society.

 This was with the hope that, a happy society is more likely to buy and to recommend a firm’s
product, while an angry society will refuse purchase of a company’s product even if it could satisfy the
needs of the customer.

 The appropriateness of societal marketing philosophy is deduced from the fact that it supports a
socially responsible behavior of organizations
 Profit + Environmental Care
 Holistic Marketing Philosophy
 The holistic marketing concept is a 21st century business thinking.
 The concept is based on the “development, design, and implementation of marketing
programmes, processes and activities that recognizes their breadth and interdependencies.

 Holistic marketing recognizes that “everything matter” in marketing.

 Holistic marketing is thus based on the assumption that the approach to marketing should be
the adoption of all activities of marketing. Thus, holistic marketing includes internal marketing,
performance marketing, integrated marketing and relationship marketing.
 cont’d
 Holistic marketing concept seems to be an embodiment of marketing practice rather than a
concept or philosophy of business.

 The concept fails to acknowledge other activities of business such as production,

management style, organisation culture and other non-marketing factors of business that make a
firm business orientated.

 Thus, the holistic marketing concept should better be viewed as a summary of what effective
and efficient marketing involves rather than a business philosophy, and for that matter a
marketing concept, because a marketing concept means more than just marketing functions.
ROLES OF A MARKETING
MANAGER
.
 cont’d
Developing Marketing Strategies and Plans
 A strategic marketing plan is a blueprint which outlines the intended future of an
organisation. It contains issues like the environmental scanning results, goals, strategies,
assumptions, implementation and controlling plans among other things. A marketing manager
can be given such a task to develop strategic marketing plan.

Capturing Marketing Insights/ Marketing intelligence

 A marketing manager can also be responsible of capturing insights from the customers and
taking them back to the organization for better planning and decision making. This can be done
through various ways like, Marketing intelligence and marketing research among others.
 cont’d
Connecting with Customers
 It is also a responsibility of the marketing manager to connect with consumers and establish relationship/s with them
for the betterment of the organization.

Building Strong Brands

 A marketing manager must also put efforts on how to develop strong and competitive brands through the use of
various brand elements. An organization must aim to boost its brand equity.

Shaping the Market Offerings

 After collecting the information on customer needs, wants and insights, the marketing manager is then responsible for
shaping the market offerings so as to better fulfill customer needs and wants more that the competitors do.
 cont’d
Delivering Value
 Customers must receive value for their money since they also offer value to the organization. the marketing manager
must monitor the value delivery processes and ensure that value is being delivered as anticipated.

Creating Successful Long-Term Growth

 In the strategic marketing plans there must be goals for long-term growth of the organization. For the organization to
remain alive, it must have long-term success goals.

Managing Marketing Information Systems

 Information for marketing decision making is of importance, the marketing manager is then responsible for
determining the ways of collecting, storage and distribution of such information.
MARKETING OF SERVICES
VS MARKETNG
. OF GOODS
 Characteristics Of Ser vices
Intangibility:
 Since services are essentially intangible, it is impossible for customers to sample, to taste, feel, see,
and hear or smell-services before they buy them.

 This feature of services places some constraints on a marketing organization. The burden falls
mainly on a company promotional program. For example, the sales force and advertising department
most concentrate on the benefits to be derived from the service, rather than emphasizing the service
itself.

 To reduce uncertainty, buyers look for signs of service quality. They draw conclusions about quality
from place, .people, equipment communication, material, and price that they can see.
 cont’d
 Therefore, the task of a service provider is to make the service tangible
available in qualitative form in one way or the other. This calls for physical
paraphernalia to make the service tangible.

 For example, a bank that wants to convey the idea that its services are
quick and efficient. It must make this positioning strategy tangible in every
aspect of customers contact. The bank’s physical selling must suggest quick
and efficient service.
 cont’d
Inseparability
 Service often cannot be separated from the person of the seller. There is simultaneous
production and consumption of the services.

 For example, dentists create and dispense almost all their services at the same time.
From marketing point of view, it means that direct sale is only possible channel of
distribution.

 That is service inseparability means that services cannot be separated from their
providers, whether the providers are people or machines.
 cont’d
 It is difficult to duplicate services unless there is technological
innovation. Eg I cannot teach part2 and Part1s concurrently

 Strategies to deal with inseparability

 The services provider can learn to work on with larger groups,

 The services organization can train more service providers.

 cont’d
Heterogeneity/ variability: -
 Service variability means that the quality of services depends on who provides them, as well
as when, where and how they are provided.

 For example, some hotels have reputations for providing better service then others. Within a
given hotel- a receptionist/employee may be cheerful and efficient, whereas another standing
just a few kilometer may be unpleasant and slow.

 The service output cannot be standardized. Each unit of the service is somewhat different
from other units of the same service. For example, an airline does not give the same quality of
service on each trip.
 cont’d
 Strategies to deal with service variability.
 Service firms can select and train their personnel carefully.

 They can make service employees more visible and accountable to

consumers and

 A firm can check customers’ satisfaction regularly through suggestion and

complaint system, customer surveys, and comparison shopping.
 cont’d
Perishability
 Service perishability means that services cannot be stored for later sale or use. For example, unused electric power,
empty seats in a stadium, and idle mechanics in a garage, all represent business that is lost forever.

 In addition, many doctors charge patients for missed appointments because the service value existed only at that time
and disappeared when the patient did not show up. The market for services fluctuates considerably by season, by day of the
week, and hour of the day.

 In conclusion, it therefore means that service industries/providers should be sensitive to the services provided taking
into consideration where, when and how they are provided.

 Non Ownership
 A service is bought and consumed but cannot be owned. You can pay for a vehicle service, but you will not own the
mechanic or the garage. You can pay for a haircut, but you will not take with you either a barber man of a shaving machine.
Dif ferences Between Goods And
Ser vices
 Challenges In Ser vices
Marketing
 Need for a convincing physical environment

 Need to train customers especially when customers are to participate in service

delivery

 A risk of creating a competitor or industrial espionage as the services are

manufactured and delivered in the presence of customers

 Difficulties in monitoring the continual standard of service delivery due to services

heterogeneity
 cont’d
 Challenges in closing the knowledge gap between what the customer’s
real expectations and what the organization perceives them to be.

 Convincing lost customers is difficult unless there is a service recovery

action.

 Managing demand is difficult in services marketing

 Ser vices Marketing Mix
 Unlike product marketing, the marketing of service is more complicated due to the
characteristics of a service. Services call for the extra three (3) Ps which are People,
Process and physical evidence. The other four (4) Ps operates in services marketing in the
similar way to which they operate in the marketing of physical goods.

People
 Since the service is heterogeneous, intangible, inseparable, this calls for better
internal marketing practices like recruitment and selection, training, motivation and
monitoring of employees to make sure that services can be properly designed, delivered,
standardised and distributed.
 cont’d
Physical Evidence
 It is mainly due to the intangibility nature of the service that physical evidence becomes a
prerequisite for a successful service marketing venture.
 The services cape comes in for tangibilising the service and giving customers a positive
anticipation of a service prior to purchase.

Processes
 Due to simultaneous production and consumption of services, the service processes must not
be left uncontrolled.
 There is a need to control the service processes so as to guarantee customer satisfaction
under different tolerance zones.
 Dimensions Of Ser vices Quality
 Quality is the totality of features and characteristics which a product bears in
order to satisfy the intended customer needs and/or wants.

 Quality of goods can be examined through scrutinizing the physical features

of a product, however, in services due to their nature it will not operate in the
same way.

 Dimensions of service quality are summarized by the RATER Model as

follows:
 The RATER Model-Ser vice
Quality Dimensions
Dimension Meaning Specific criteria used by Customers

RELIABILITY The ability to perform the promised service dependably and accurately Timeliness
Delivering on promises Consistency
Accuracy
ASSURANCE The knowledge or courtesy of staff, their ability to inspire trust and Staff competence
confidence Respect for stakeholders
Credibility
Insuring trust and confidence safety and security

TANGIBILITY The physical representations or images of the service Physical facilities

Equipment
Technology
Employees
Representing the service physically Communication Material

EMPATHY The caring individualized attention provided to stakeholders Access to staff, services and information
Communication (Clear, appropriate and timely)
Understanding the customer
Individual attention

Treating customers as individuals

RESPONSIVENESS The willingness to help customers and to provide prompt service Willingness to help
Prompt attention to requests, questions
Problem resolution
Complaint handling
Willingness to help Flexibility
MARKETING RESEARCH
.
 Definition
 Marketing research refers to the systematic design, collection, analysis and reporting of
data findings relevant to a specific marketing situation facing the company.

 The basic reason for carrying out the marketing research is to find out the change in
the consumer behavior due to the change in the elements of the marketing mix (product,
price, place, promotion).

 Market research consists of systematically gathering data about people or companies –

a market – and then analyzing it to better understand what that group of people needs.
 Impor tance Of Marketing
Research
 Identifying and solving the problem areas in your business
 Understand the needs of existing customers and why they chose your service/product
over competitors
 Identify new business opportunities and changing market trends
 Recognize new areas for expansion, and increase your customer base
 Discover potential customers and their needs, which can be incorporated into your
products/services
 Set achievable targets for business growth, sales, and latest product developments
 Make well-informed market decisions about your services and develop effective
strategies
 Challenges In Conducting A
Marketing Research
 Costs eg transport, printing, communication etc

 Cultural barriers and restrictions

 Time constraints

 Defining a research problem

 Volatility of customer needs and wants

 Ethical issues
Marketing Research Process
 cont’d
 Define the Problem-The foremost decision that every firm has to undertake is
to find out the problem for which the research is to be conducted. The problem
must be defined adequately because if it is too vague, then it may result in the
wastage of scarce resources and if it is too narrow, then the exact conclusion
cannot be drawn. In order to define the problem appropriately, each firm must
have a clear answer to the questions viz. What is to be researched (content and the
scope)? And why the research is to be done (decisions that are to be made)?
 cont’d
 Develop the Research Plan– This step involves gathering the information
relevant to the research objective. It includes:

 Data Sources: The researcher can collect the data pertaining to the research
problem from either the primary source or the secondary source or both the
sources of information. The primary source is the first-hand data that does not
exist in any books or research reports whereas the secondary data is the second-
hand data which is available in the books, journals, reports, etc.
 cont’d
 Research Approaches: The Secondary data are readily available in books,
journals, magazines, reports, online, etc. But the primary data have to be collected
and to do so, the following research can be conducted:

• Observational Research: The researcher can collect the information by just

observing the happenings in the market and sometimes having a friendly
conversation with the customers to know about their purchase experiences.
cont’d
• Ethnographic Research: It is one of the forms of an observation research where
the researcher studies an individual in the real life situation and not under any
market setup or a lab. The purpose of this research is to know the way people live
(their lifestyles), What they do to earn their livelihood, how they consume goods
and services, what they need in their personal and professional lives etc.

• Focus Group Research: It is a form of group discussion wherein six to ten people
gather and discuss the common topic given by the moderator. A moderator is a
person who conducts the group discussion and is skilled in group dynamics. He also
keeps the discussion focused on the topic so that relevant information can be
obtained from the group members.
cont’d
• Survey Research: These are the descriptive research generally conducted to know
the about the customer’s knowledge about the product, their preferences, and
satisfaction level. The best way to conduct surveys is through the Questionnaires.

• Behavioral Data: The customer’s actual purchases at the store reflects its behavior
and the choice of products. Thus observing what customers are buying gives more
accurate information about the customer rather than the planned answers given by
them in the surveys.

• Experimental research: This is done to find out the cause and effect relationships.
This research is undertaken to study the effects of change in the customer’s
behavior due to the change in the product’s attributes.
 cont’d
 Sampling plan: Once the research approach is decided, the researcher has to
design a sampling plan and have to decide on the following:
• The sampling Unit i.e. whom, shall we survey?
• The sample size, i.e., How many units in the population shall be surveyed?
• The sampling procedure, i.e. How the respondents shall be chosen?

 Contact Methods: The researcher has to choose the medium through which
the respondents can be contacted. The respondents can be reached via emails,
telephone, in person or online.
 cont’d
 Collect the Information: This is one of the most expensive methods of marketing research.
At this stage, the researcher has to adopt the methods to collect the information, he may find it
difficult to gather the correct information because of the respondent’s biasedness, unwillingness to
give answers or not at home.

 Analyze the Information: Once the information is collected the next step is to organize it in
such a way that some analysis can be obtained. The researchers apply several statistical techniques
to perform the analysis, such as they compute averages and measures of dispersion. Also, some
advanced decision models are used to analyze the data.
 cont’d
 Present the Findings: Finally, all the findings and the research are shown to
the top management level viz. Managing director, CEO, or board of directors to
make the marketing decisions in line with the research.

 Make the Decision: This is the last step of the marketing research, once the
findings are presented to the top level management it is up to them either to rely
on the findings and take decisions or discard the findings as unsuitable.
 MARKETING
INFORMATION SY STEMS
M.I.S
 Definition

 A Marketing information system (MKIS) consists of people, equipment and

procedures to gather, sort, analyse, evaluate and distribute needed, timely and
accurate information to marketing decision makers (Kotler and Keller 2013)

 It as a system in which marketing data is formally gathered, stored, analysed

and distributed to managers in accordance with their informational needs on a
regular basis.
cont’d
 Components of MKIS
o Marketing Environment where information is collected
 Marketing Information Systems collects data from the marketing environment which comprises of:

o Target markets
 These are organisations, individuals or groups which the marketing organization is currently endeavoring to
satisfy. Eg Agritex will be targeting farmers as its target market.

o Marketing Channel Members

 These can be upstream and/or downstream supply chain members. A marketing organisation can collect
market information from such. eg Delta beverages, Dairibord among others collect information from upstream
members (famers) and downstream members (Wholesalers, Retailers among others).
 cont’d
o Competitors
 Competition includes all the actual and potential rival offerings and substitutes a buyer might consider. In collecting marketing
information and intelligence, the marketing manager must consider both rival and substitute product providers. Eg Uniliver when
considering competition for Stork Margarine product, it’s wise to check with other margarine products like Flora, Romi, Ola etc and
also the substitutes like peanut butter and salad and honey.

o Publics
 These are stakeholders of the organisations which are not necessarily targeted, but they affect the operational activities of the
organisation, eg Labour Unions, Legal practitioners among others. it is wise to continuously get updates concerning those publics

o Macro environmental forces

 This refers to the aggregate forces which affect not only the focal organisation but almost any organisation. These include the
Political, Economic, Sociological, Technological, Ecological and Legal forces.
 Ways Of Developing Infor mation
 Internal Records
 These are internal to the organization and they supply data for the Marketing
Information Systems.
 To sport important opportunities and potential problems, marketing managers
rely on internal records of (orders, sales, costs, inventory levels, receivables
and payables).
 The above mentioned records are of importance to the marketing managers
and need to be analyzed thoroughly and kept confidential.
 cont’d
 Marketing Intelligence
 Marketing intelligence system is a set of procedures and sources that managers use to obtain everyday
information about the development in the marketing environment (Kotler and Keller 2013).
 The marketing managers collect marketing intelligence in a variety of ways such as:
 Reading Newspapers, books, trade publications,
 Talking to suppliers, customers and distributors
 Ghost shopping
 Meeting with other managers from other companies
 Using social media and online resources
 Marketing intelligence also help in marketing decision making and can be used in conjunction with marketing
research findings.
 cont’d
 Marketing Research
 Marketing research refers to the systematic design, collection, analysis and
reporting of data findings relevant to a specific marketing situation facing the
company (Kotler and Keller 2013).
 Marketing research collects and analyses data from the external and internal
environment. It supplies marketing managers with information necessary for
decision making.
 For further information, refer back to the notes on marketing research
 cont’d
 Information analysis

 Data collected from various sources through various means eg marketing

research, marketing intelligence and internal records is analysed to provide
information for marketing decision making.

 The four components of information development (Marketing intelligence,

Internal records, Marketing research and Information analysis) work together in
mobilising and processing information.
 Advantages Of MkIS
 Boost information resources
 Facilitate informed decision making
 Helps in enlightened planning
 Facilitates forecasting
 Facilitates Organized Data collection. Thus MIS helps you to organize your database thereby improving
productivity.
 Storage of Important Data
 Acts as a foundation to strategy formulation
 The possibility of reducing operational costs if managed properly
 Optimizing the services offered to customers,
 Identifying target markets and new segments and managing inventories.
 Disadvantages Of MkIS
 The system depends basically, on individuals in the supply, summary,
generation, and dissemination, and interpretation of data

 It is difficult to maintain since it makes use of IT hence prone to various

threats

 It can be a costly process if poorly managed.

 Calls for other departments to participate and can create conflicts

CONSUMER & BUYER
MANAGEMENT
.
 Definition
Consumer behavior
 The study of how individuals, groups, and organizations elect, buy, use, and dispose of goods,
services, ideas, or experiences to satisfy their needs and wants(Kotler and Keller2013).

 Schiffman (2007) defines consumer behavior as “the behaviour that consumers display in
searching for, purchasing, using, evaluating, and disposing of products and services that they expect
will satisfy their needs”

 Consumer behaviour is the activities people undertake when obtaining, consuming and
disposing of products and services. (Blackwell et al. 2001)
 Deter minants Of Consumer
Behavior
 Age and life cycle stage
 Consumers usually change their buying patterns and habits over their life time.
 Choices in clothing, fashion, and recreation usually depend on age.

 Personality
 Personality means a set of distinguishing human psychological traits that lead to relevantly consistent and enduring responses to
environmental stimuli (including buying bahaviour) (Kotler and Keller 2013:178)
 The concept of personality refers to a person’s unique psychological make-up and how it consistently influences the way a person
responds to his or her environment.
 Personality is not easily changed, but it is affected by major life events like marriage, divorce, childbearing etc (Schiffman and
Kanuck 2009).
 We often describe personality referring to traits like: Confidence; dominance; sociability; defensiveness; adaptability.
 cont’d
 Life Style
 “The habits, attitudes, tastes, moral standards, economic level, etc., that together constitute the mode of living of an individual or
group”.
 Life style is a person’s pattern of living. It differentiates individuals and determines consumption patterns

 Psychological factors
 A person’s buying choices are further determined by various psychological factors viz. motivation, perception, learning, belief and
attitudes. Marketers have very little control over these variables and therefore call for great attention on these factors to tune their
marketing strategies.

 Motivation
 The psychological theories of Sigmund Freud and Abraham Maslow focus on the need for identifying motivational aspect of
consumers.
 cont’d
 Self
 It is the way in which a person regards him/herself.
 Consumers’ self-concepts are reflections of their attitudes toward themselves. Whether these attitudes are positive or negative,
they will guide many purchase decisions, products can be used to boost self-esteem or to reward the self.

 Perception
 Perception is the process by which people select, organize and interpret information to form a meaningful picture of the world
(Schiffman and Kanuck 2003). Under a similar environment, customers can behave differently. It is because of the fact that the
individuals receive, organize and interpret the sensory information on an individually unique way. Usually perception is influenced by
the background of the perceiver.

 Beliefs
 Belief is a descriptive thought that a person has about something. People have certain beliefs towards certain products and
services. Beliefs are also acquired through learning. Beliefs can highly influence consumer buying decision making.
 cont’d
 Consumer Learning
 Consumer learning is the process by which individuals acquire the purchase and consumption knowledge and
experience they apply to future related behaviour (Schiffman, and Kanuck 2003).
 Learning theorists stress that most human behaviour is learned. Learning occurs through the interplay of drives,
stimulus, cues, responses and reinforcement. Learning describes changes in an individual behaviour arising from
experience.
 Pavlov and Skinner also postulated some conditioning propositions which depended much on learning.

 Attitudes
 Attitude is a person’s consistently favourable or unfavourable evaluation of feelings and tendencies towards an
object or an idea. Attitudes are difficult to change. A person’s attitudes may fit into a person and to change this may
require difficult adjustments. This affects consumer buying behaviours.
Consumer Decision Making
Process
 cont’d
 Need Recognition = Someone realizes that s/he has got a need
 Information Search = The effort put by the customer to find information
concerning the item which fully meet his/her need prior to purchase
 Evaluation of Alternatives = The effort to compare and contrast offerings in
order to come up with the right product which satisfy the intended need
 Purchase = The decision to procure the product item
 Post-Purchase Evaluation = This is the comparison of the product’s actual
performance against the anticipated performance
 Organisational Buyer Behavior
Organizational Buyer Behavior
 Organizational buying Behavior , according to Webster and Wind (1972), is ‘the
decision making process by which formal organizations establish the need for
purchasing products and services and identify, evaluate and choose among
alternative brands and suppliers’.

 One of the important aspects of this definition is that organizational buying

behavior is a process rather than a static, once-off event.
 cont’d
Decision Making Unit (DMU)
 A buyer is a business which engages in the buying of goods and/or service for
the sake of reselling or further processing. They usually make buying decisions
which are complicated and more evaluative compared to the consumers.
 The buying decisions for the buying organisations are made by the Buying
decision-making unit which is referred to as the buying center by Webster and
Wind
 Members of the buying center play the following roles:
 cont’d
o Initiators = Users or others in the organization who request for something to be purchased
o Users = Those who will use the product or service. They usually help in specifying product
requirements
o Influencers = people who influence the buying decision often by helping define specifications
and providing dimensions of alternative evaluations
o Deciders = people who decide on product requirements or on suppliers
o Approvers = People who authorize the proposed actions of deciders or buyers
o Buyers = people with formal authority to select the supplier and arrange the purchase terms.
o Gatekeepers = People who have the power to prevent sellers or information from reaching
members of the buying center.
Industrial Buying Decision
Making Process
 cont’d
 Need or problem of recognition. Needs and problems may be recognised through either internal or external factors.
An example of an internal factor would be the realization of under capacity leading to the decision to purchase
plant or equipment.

 Determination of characteristics, specification and quantity of needed item. At this stage of the decision-making process
the DMU will draw up a description of what is required. For example, it might decide that five lathes are required
to meet certain specifications. The ability of a salesperson to influence the specifications can give their company an
advantage at later stages of the process.

 Search for and qualification of potential sources. A great deal of variation in the degree of search takes place in
organisational buying. Generally speaking, the cheaper, less important the item and the more information the buyer
possesses, the less search takes place.
 cont’d
 Acquisition and analysis of proposals. Having found a number of companies which, perhaps
through their technical expertise and general reputation, are considered to be qualified to supply the
product, proposals will be called for and analysis of them undertaken.

 Evaluation of proposals and selection of suppliers. Each proposal will be evaluated in the light of the
criteria deemed to be important to each DMU member. It is important to realise that various
members may use different criteria when judging proposals. Although this may cause problems, the
outcome of this procedure is the selection of a supplier or suppliers.
 cont’d
 Selection of an order routine. Next the details of payment and delivery are drawn
up. Usually this is conducted by the purchasing officer. In some buying decisions
this stage is merged into stages 4 and 5 when delivery is an important
consideration in selecting a supplier.

 Performance feedback and evaluation. This may be formal, where a purchasing

department draws up an evaluation form for user departments to complete, or
informal through everyday conversation
 Segmentation, Targeting And
Positioning
Segmentation of consumer markets

o This is the division of a heterogeneous market into small homogenous sub-

groups.

o Segmentation Variables
 Geographic
 Demographic
 Psychographic
 Behavioural
 Benefit Sought
 cont’d
Segmentation of Industrial Markets
The Nested Approach by Bonoma and Shapiro
 cont’d
Targeting
 This is the approach of aiming to satisfy specific group/s of individuals or
organisation’s needs and wants through providing goods and services tailored made
specifically for them.

Positioning
 It is the act of designing a company’s offering and image to occupy a distinctive place
in the minds of the target market (Kotler and Keller 2013:298)
 Mana ging Customer Value,
Satisfaction & Loyalty
Customer Value
 Customer Value is the difference between the customer gains from owning and using a product and the costs
of obtaining the product.

The Value Chain

 Harvard’s Michael Porter has proposed the value chain as a tool for identifying ways to create more customer
value.
 According to this model, every firm is a synthesis of activities performed to design, produce, market, deliver,
and support its product.
 The value chain identifies nine strategically relevant activities—five primary and four support activities—that
create value and cost in a specific business.
cont’d
Traditional vs Contemporar y
Organisational Char ts
 Explanation
 In the past Demand exceeded supply and the most important people in the organisation were the top
managers since everything which was produced was sold. There was no need to compete for customers.

 As technology continued to improve, production also increased with economies of scale and supply started to
outweigh demand.

 The selling concept was introduced but failed to clear the stocks.

 The contemporary situation is too congested with products failing to get customer attention.

 Mainly successful companies are those that take their customers to be on top of the hierarchy and operate
following a customer centric culture.
 cont’d
Customer Satisfaction
 The extent to which a product’s perceived performance matches a buyer’s expectations.

 In general, satisfaction is a person’s feelings of pleasure or disappointment that result from

comparing a product’s perceived performance (or outcome) to expectations. If the performance falls short
of expectations, the customer is dissatisfied. If it matches expectations, the customer is satisfied. If it
exceeds expectations, the customer is highly satisfied or delighted. Customer assessments of product
performance depend on many factors, especially the type of loyalty relationship the customer has with the
brand.

 If customers are satisfied they can become more loyal.

 cont’d
Customer Expectations
o Development of customer expectations

 From past buying experiences

 Friends’ and associates’ advice

 Marketers’ and competitors’ information and promises

 cont’d
Satisfaction Equations and Expressions
o CS = CE –CP
o Where: CS = Customer Satisfaction
o CE = Customer Expectation
o CP = Customer Perception

Satisfaction Equation
• CE- CP = 0
Customer Delight Expression
• CE – CP > 0 (Positive)
Cognitive Dissonance/ Dissatisfaction Expression
• CE – CP < 0 (Negative)
 Reasons For Monitoring
Customer Satisfaction
 Kotler and Keller (2013) posit that, “Wise firms measure customer satisfaction
regularly, because it is one key to customer retention. A highly satisfied customer
generally stays loyal longer, buys more as the company introduces new and
upgraded products, talks favorably to others about the company and its
products, pays less attention to competing brands and is less sensitive to
price, offers product or service ideas to the company, and costs less to serve
than new customers because transactions can become routine”.
 cont’d
• From the above paragraph it can be deduced that customer satisfaction can:
 Increases customer retention
 Increases organisationl sales
 Promotes new product development
 Promotes corporate image
 Increases customer awareness through referrals
 Strengthens the organisation’s competitive stance/posture
 Increases profits
 cont’d
Customer Loyalty
 Loyalty refers to a commitment to rebuy or repartronise a preferred product or
service (Kotler and keller 2013).
 The link between customer satisfaction and customer loyalty is not directly
proportional. In some cases unsatisfied customer can be loyal to the organisation’s
offerings due to various reasons eg, Lack of alternatives, lack of exposure, budget
constraints etc.
 Below is the loyalty segmentation model by Dick and Basu.
cont’d
 cont’d
Spurious Loyalty
 This is when customers repeatedly patronize the product, but having a weak relative attitude towards
that product. This can be due to unavailability of other products eg in rural areas, limited financial
resources among other variables. This kind of loyalty is dangerous and it triggers false organizational
projections. Therefore, there is no need for a marketing manager to sit and relax assuming that everything
is in order, by only considering sales and repeat patronage. There is threat of new entry in such markets.

Genuine Loyalty
 This is a situation whereby repeat purchases are due to the strong positive relative attitude towards a
product. This kind of loyalty is very difficult to attain. Furthermore, it establishes entry barriers once
attained
 cont’d
Latent Loyalty
 This is a situation whereby a customer does not repeatedly patronize the company’s offering but
having a strong relative attitude towards the offerings. This can happen due to several reasons like, Budget
constraints, Unavailability of goods, Decision making authority etc. Customers of this kind are not
difficult to manage since they already have a positive attitude towards the organisation’s products.

No Loyalty
 These are customers with a weak relative attitude towards the company’s offering and they even do
not what to buy the product repeatedly. In many cases these will be the competitors’ customers. They are
difficulty to win in many cases. However, once identified, they can be targeted and in future they can be
convinced and develop a strong relative attitude.
 Methods Of Building Customer
Loyalty
1. Thank customers for doing business with you. The value of the product or service will determine what is
appropriate. High cost service deals warrant a hand-written note; even smaller cost transaction companies can send
pre-printed appreciation notes to customers on a scheduled basis.

2. Stay in contact with existing and past clients on a consistent basis. By not forgetting them, they won’t
forget you. Phone calls, notecards or postcards, newsletters, and email are only some ideas. Consider also
opportunities for personal contact, a good idea in our high-tech, low-touch world.

3. Give the customer more than they expect. Anticipate a need and fill it. Answer a question before they ask it.
Delivering more than they expect is one of the most powerful ways to gain customer loyalty.

4. Listen. Take time to truly listen to what your customers say, and if they don’t volunteer information—ask for it.
 cont’d
5. Pay attention to the obvious. Mind your manners. Use please and thank you. Be on time for meetings.
Promptly return phone calls and e-mail messages.

6. Make realistic promises—and be consistent. It is far better to promise something in a week and
deliver in three days than the other way around.

7. Share information. Send pertinent articles or information that may be valuable or simply interesting to
a client. Always look for ways to help customers learn.

8. Give referrals to clients. Send business back to a client whenever possible, and let them know you are
doing it.
 cont’d
9. Explain how things work. If you sell a product, show how to use it. If you
sell a service, explain what the customer can do to maximize its value.

10. Have fun! Really enjoy your customers, develop relationships, look upon them
as your extended family. On occasion, treat a customer to something fun to show
your appreciation. Use your imagination!
MANAGING COMPETITION
IN THE MARKETING
.
ENVIRONMENT
 Impor tance Of Environmental
Scanning
Environmental Scanning is a continuous process of evaluating the internal and external
organizational environment for better planning and decision making.
 The environment is continually changing, so purposeful scanning by management is necessary
to keep abreast of change
 Scanning is necessary to determine which factors in the environment pose a threat to the
enterprise‘s present goals and strategy
 Scanning is also necessary to determine which factors in the environment present opportunities
for the more effective attainment of the goals of the enterprise by modifying its present strategy
 Enterprises that scan the environment systematically are more successful than those that do
not.
 Dimensions Of Environmental
Scanning
Macro-Environmental analysis (PESTEL Analysis)
 This seeks to analyse the external aggregate variables which affect the whole industry and not a just single
organizational entity.

1. Political Factors
o Political alliances, Foreign trade regulations, Political stability, Taxation policies, Government policies, Stability
of government

2. Economic Factors
o Business cycles, Money Supply, Inflation Rates, Investment levels, The interest rate, Disposable income of
buyers, Credit accessibility, Unemployment rates, The foreign exchange rate
 cont’d
3. Socio-Cultural Forces
o Social Mobility, Education Levels, Consumerism, The cultural implications, The
gender and connected demographics, The social lifestyles, Distribution of Wealth

4. Technological Factors
o Industrial R&D Expenditure, Speed and direction of technology transfer,
Diffusion of innovation, Rate of technological obsolescence/advances
 cont’d
4. Ecological Factors
 These are natural environmental factors which hinder or facilitate strategy
formulation and implementation, eg:
o Relief Features, Fluvial Features, Wild life, Vegetation, Seasonal variations etc

5. Legal factors
o Legal Structures, Operational Boundaries, Trade Restrictions, International Trade
Regulations, Company Registrations, Product regulations, Patent infringements, Health
and safety regulations
 cont’d
SWOT Analysis
Strengths
 These are positive internal factors which can help the firm in the marketing of its products eg:
• Low cost advantage, managerial experience, production efficiency, Production Capacity, Capital Base,
Transportation

Weaknesses
 These are internal organisational factors which are not good for the firm in terms of performance rating. They
need to be minimised. eg;
• Poor Product Quality, Poor Corporate image, Limited production capacity, Cost disadvantage, Lack of
managerial experience, poor capital Base, Poor labour Relations, Poor Vision, Poor Customer Base
 cont’d
Opportunities
 These are the external factors which can be taken advantage of and boots the firm’s current position.
The opportunities must be solicited, identified and taken advantage of. The ability to capitalise on
opportunities is also a factor of organisational Strengths. Examples:
• New Customer needs and or wants, Competitor failure, Competitor withdrawal, Economic Well-
being, Better Customer Relations, Increase in resource suppliers, Market Growth and Expansion

Threats
 These are external factors which may hinder the firm’s success. They include the following:
• Increase in competition, Changing Customer tastes and preferences, Economic down-turn, Power
Shortages, New Product alternatives, Price Controls
 cont’d
Customer analysis
 Customers may be the end users (Consumers) and/or intermediaries.
 They are of value to the marketing organisation. Analysing them minimise the chances of marketing
Myopia.
 Customer analysis seeks to address several questions including the following:
• Who are my customers?
• What do they buy?
• Why do they buy?
• When do they buy?
• How many are they?
 cont’d
Competitor Analysis
 This is the analysis and comparison of the organisation’s performance against
that of the competitors. This implies that ratings will be used for each and every
key success factor.
 This is more advantageous compared to the SWOT analysis since it uses ratings
and this can enable an organisation to consider the competitor’s performance,
rather than underestimating the competitors’ performance. However, this is
difficult since competitor information will be protected.
 cont’d
 Eg

Image Cost Managerial Innovation Service Product

advantage experience Quality quality

N Richards 5/10 9/10 4/10 4/10 3/10 7/10

FABS 3/10 3/10 3/10 3/10 5/10 6/10
Nyaningwe 2/10 2/10 3/10 2/10 3/10 6/10
TV SALES 7/10 2/10 4/10 5/10 6/10 6/10
AMICOs 5/10 7/10 3/10 5/10 3/10 6/10
HALSTEDS 4/10 5/10 5/10 3/10 5/10 5/10
BILCRO 3/10 6/10 4/10 3/10 7/10 6/10
 cont’d

Industrial Analysis
o Michael porter’s five forces framework

 Michael Porter provided a framework that models an industry as being

influenced by five forces. The strategic business manager seeking to develop an
edge over rival firms can use this model to better understand the industry context
in which the firm operates.
cont’d
 cont’d
Degree of rivalry
 This describes the intensity of competition among the existing firms in the industry.
 Highly Competitive industries generally earn low profits because the cost of competition is high. The Degree of Rivalry is
influenced by the following factors:
• Exit barriers , Exit Barriers, Industry growth, When the industry continues to grow then there are high chances that organisations
will not exit the industry, Industry concentration, Fixed costs/Value added, Intermittent overcapacity, Product differences, Switching
costs, Brand identity, Diversity of rivals, Corporate stakes

Supplier power
 This aims to diagnose the degree to which the suppliers can influence the performance of rival firms in an industry. Below are the
factors which affect the bargaining power of suppliers:
• Impact of inputs on cost or differentiation, Supplier concentration, Switching costs of firms, Importance of volume to supplier,
Differentiation of inputs in the industry, Presence of substitute inputs, Threat of forward integration, Cost relative to total purchases in
industry
 cont’d
Buyer power / Bargaining power of Buyers.
 This is the influence of buyers/Customers in an industry. The bargaining power of Buyers is
influenced by the following variables:
• Buyer information, Buyer volume, Brand identity, Price sensitivity, Threat of backward
integration, Product differentiation, Buyer concentration vs. industry, Substitutes available, Buyers'
incentives, Bargaining leverage

Threat of substitutes
• Switching costs, Buyer inclination to substitute, Price-performance trade-off of substitutes
 cont’d
Threat of new entrants
 This is the risk that new competitors will emerge and thereby stiffening the
competition. It is influenced by the Entry barriers eg:

• Access to inputs, Government policy, Absolute cost advantages, Economies of

scale, Brand identity, Switching costs, Access to distribution networks, Expected
retaliation, Proprietary products, Capital requirements, Proprietary learning curve
MANAGING PRODUCTS
.
 Reasons For New Product
Development
 Meet customer needs

 Broaden the market

 Utilizing excess capacity

 Fight competition

 Spreading Risk

 Changes in technology
 Reasons For New Product
Failure

 poor packaging  stiff competition

 poor branding  poor environmental monitoring

 poor marketing strategies  poor market segment selections

 poor promotional plans  product imitations

 poor product development  wrong timing

New Product Development
Process
Por tfolio Analysis (BCG Matrix)
 cont’d
Dogs
 Those are businesses that have a weak MS in a low growth market
 Typically they generate either low profit or return a loss
 The decision faced by the company is either to hold or divest

Question Marks (Low market Share High market Growth)

 They operate in high growth markets but have low relative market share.
 They generally require considerable sums of cash to invest in plant, equipment or manpower.
 cont’d
Stars (High market Share High market Growth).
 Those businesses/products which have moved to a position of market leadership in a high growth market.
 Their cash needs are often too high with cash being spent on order to maintain the market share and keep
competitors at bay.

Cash Cows
 When the rate of market growth begins to fall, stars typically become the company’s cash cows.
 The term cash cow was generated from the fact that, these are products which generate considerable sums of
cash due to lower growth rate.
 They are milked to feed other portfolios.
 Strategies To Be Pur sued
From The Study Of BCG
Matrix
Hold Build
 The Primary objective is to maintain the current market share  Increasing the SBU’s MS in order to strengthen its
 It is typically used for cash cows, to ensure that they continue position
generating maximum amounts of Cash  This strategy can be used for question marks or stars

Divest (terminate)
Harvest
 The essential objective here is to rid the organisation of
 By following the harvesting strategy, the management tries to
the SBU that act as a drain on its profits. or To realise that
increase short-term cashflows as far as possible even at the expense of
resources can be used to greater effectiveness elsewhere in the
the SBU’s long-term future. it can be used for weak cash cows, dogs
question marks following disaster sequence
business. it can be used for dogs

.
 Advanta ges Of Using BCG
Matrix
 It is an easy-to-use guide that helps managers to think about the investment
needs of portfolio businesses

 It provides a useful basis for thinking about priorities across a spread of

activities
 Disadvanta ges Of Using BCG
Matrix
 It is a guide to investment rather than strategy
 It rest on important assumptions that business planning is just driven by two factors,
Market growth and market share ignoring several factors eg competitive adva, customer
needs etc.
 Cash flow is seen as to be dependent on market growth and market share. In
practical this is not necessarily correct.
 market share is rarely as easily defined as the model suggests
 The models also fails to come up with terms in which the nature of strategy and the
form of competitive advantage that will lead to success.
INTEGRATED MARKETING
COMMUNICATIONS
.
 Definition
 A concept of marketing communications planning that recognizes the added
value of a comprehensive plan that evaluates the strategic roles of a variety of
communication disciplines.

 For example, general advertising, direct response, sales promotion, and public
relations—and Combines these disciplines to provide clarity, consistency, and
maximum communications impact (Belch and belch 2004)
 Evolution Of IMC
o During the 1980s many firms came to see the need for a strategic integration of their
promotional tools.

o Those firms began to move towards the process of IMC, which involves coordinating various
promotional elements and other marketing activities that communicate with the firm’s customers.

o Advertisings agencies also moved on from primary advertising to the IMC perspective and hence
the old concept was forsaken

o Advertising agencies became a “one stop shop” with all coordinated communication plans
 cont’d
o Advertising agencies also began to be involved in non-advertising areas so as to gain popularity

o The American Association of Advertising Agencies (4As) Developed one of the first definition of
IMC which was used by Belch and Belch (2004).

o However, the advocates of IMC like Don Schultz of North Western University argue for a broader
perspective that considers all sources of brand or company contact that a customer or prospect has with a
product or a service.

o Schultz and others advocated for a bigger picture approach to the planning, marketing and
promotional programs and coordinating various communication functions.
 cont’d
o The whole marketing program must be integrated, not just the. communication
mix elements.

o IMC is not just a fad, but a permanent change in the marketing of goods and
services.

o There is an increase in the competition which is giving birth to Relationship

marketing, which also triggers IMC Movements.
IMC Mix Elements

Integrated Marketing Communications

Advertising Direct Interactive Sales Publicity/ Personal

marketing / Promotion Public Selling
Internet Relations
marketing
 cont’d
Advertising
 Advertising is defined as any paid form of non-personal communication about an organization,
product, service, or idea by an identified sponsor.
 the paid aspect of this definition reflects the fact that the space or time for an advertising message
generally must be bought.
 The non-personal component means that advertising involves mass media (e.g., TV, radio, magazines,
newspapers) that can transmit a message to large groups of individuals, often at the same time.
 The non-personal nature of advertising means that there is generally no opportunity for immediate
feedback from the message recipient (except in direct-response advertising). Therefore, before the
message is sent, the advertiser must consider how the audience will interpret and respond to it
 cont’d
Direct marketing
 One of the fastest-growing sectors of the US economy is direct marketing,
 In which organizations communicate directly with target customers to generate a
response and/or a transaction.
 Traditionally, direct marketing has not been considered an element of the
promotional mix.
 However, because it has become such an integral part of the IMC program of many
organizations and often involves separate objectives, budgets, and strategies, we view
direct marketing as a component of the promotional mix.
 cont’d
Sales promotion
 Is generally defined as those marketing activities that provide extra value or incentives to the sales force, the
distributors, or the ultimate consumer and can stimulate immediate sales.
 Sales promotion is generally broken into two major categories: consumer-oriented and trade-oriented activities.
Consumer-oriented sales promotion is targeted to the ultimate user of a product or service and includes couponing,
sampling, premiums, rebates, contests, sweepstakes, and various point-of-purchase materials.
 These promotional tools encourage consumers to make an immediate purchase and thus can stimulate short
term sales.
 Trade-oriented sales promotion is targeted toward marketing intermediaries such as wholesalers, distributors, and
retailers.
 Promotional and merchandising allowances, price deals, sales contests, and trade shows are some of the
promotional tools used to encourage the trade to stock and promote a company’s products (Belch and Belch 2006).
 cont’d
Publicity/ Public Relations
 Publicity refers to non-personal communications regarding an organization, product, service, or idea
not directly paid for or run under identified sponsorship.
 It usually comes in the form of a news story, editorial, or announcement about an organization
and/or its products and services.
 Like advertising, publicity involves non-personal communication to a mass audience, but unlike
advertising, publicity is not directly paid for by the company.
 The company or organization attempts to get the media to cover or run a favorable story on a
product, service, cause, or event to affect awareness, knowledge, opinions, and/or behavior.
 Techniques used to gain publicity include news releases, press conferences, feature articles,
photographs, films, and videotapes.
 cont’d
Personal selling,
 A form of person-to-person communication in which a seller attempts to assist
and/or persuade prospective buyers to purchase the company’s product or service
or to act on an idea.

 Unlike advertising, personal selling involves direct contact between buyer and
seller, either face-to-face or through some form of telecommunications such as
telephone sales (Belch and Belch 2006).
 Benefits Of IMC
 Consistent messages

 Cost saving

 Avoid duplication of tasks (time saving)

 Operational Efficiency

 Better use of Media

 Greater agency accountability

 Creation of better internal working relations

 Creation of relationship with customers

 Criticisms Of IMC
 Time consuming if poorly managed

 can increase costs if poorly managed

 Difficult to carry

 Continuously changing customer needs and environmental factors makes the

process tiresome

 In case of a wrong perception made by the orgn, emphasis via coordinated

efforts can worsen the matter

 Difficult to monitor and coordinate

 MANAGING PRICING
POLICIES AND. STRATEGIES
 Definitions
Price
 Kotler et-al (2009:369) posit that, “price is not just a number on a tag or an
item”.
 Kotler et-al (2009) and Kerin et-al (2009) concur that, price is all around us,
like rent for apartment, tuition for education, a fee to the physician or dentist, a
fare for the bus, airline or taxi, an interest for the borrowed money, a premium
for an insurance service, a retainer to the lawyer, a commission to the sales
person a wage to the worker and a salary to an executive.
 Furthermore Kerin at-al (2009) argue that, “Although economists would
disagree, many marketers feel the income taxes are the price we pay for the
privilege of making money”.
 Pricing Theories
Naive Pricing Theory
 Naive price theory is grounded on the assumption that price will stay the same.

 The theory states that the only thing determining tomorrow's price is today's price.

 Naive price theory is a perfectly natural way of dealing with prices if you do not understand
what determines them (Friedman 1990).

 The use of this theory is least plausible because prices are volatile.
 cont’d
 Just as it makes very little sense to assume that as a baby grows older he/she remains
the same size, it makes no more sense to assume that the market price of a good
remains the same when you change its cost of production, its value to potential
purchasers, or both.

 One must understand the causal relations involved. According to Friedman (1990),
although the theory may have errors, the alternative to correct economic theory is not
doing without theory (sometimes referred to as just using common sense) but the
alternative to correct theory is incorrect theory.
 cont’d
Game Pricing Theory
 It is a collection of tools for predicting outcomes of a group of interacting agents
where an action of a single agent directly affects the payoff of other participating
agents. It is the study of multi-person decision problems.
 It could also be referred to as a bag of analytical tools designed to help us
understand the phenomena that we observe when decision-makers interact.
 It as the study of mathematical models of conflict and cooperation between
intelligent rational decision-makers.
 Game theory studies interactive decision-making.
 cont’d
 There are two key assumptions underlying this theory:
• 1) Each player in the market acts on self-interest. They pursue well-defined exogenous
objectives; i.e., they are rational. They understand and seek to maximize their own payoff
functions.
• 2) In choosing a plan of action (strategy), a player considers the potential responses/reactions
of other players. She takes into account her knowledge or expectations of other decision
makers’ behavior; i.e., the reasons strategically. A game describes a strategic interaction between
the players, where the outcome for each player depends upon the collective actions of all
players involved.
 Eg Oligopoly markets
 cont’d
Consumer Pricing Theory
 Consumer theory is concerned with how a rational consumer would make consumption decisions.
 The consumer theory arises because the consumer‘s choice sets are assumed to be defined by certain prices
and the consumer‘s income or wealth.
 The assumption of perfect information is built deeply into the formulation of this choice problem, just as it is
in the underlying choice theory . Some alternative models treat the consumer as rational but uncertain about the
products, for example how a particular food will taste or how well a cleaning product will perform. Some goods
may be experience goods which the consumer can best learn about by trying the good. In that case, the consumer
might want to buy some now and decide later whether to buy more. That situation would need a different
formulation. Similarly, if the agent thinks that high price goods are more likely to perform in a satisfactory way
that, too, would suggest quite a different formulation.
 cont’d
1. Agents are price-takers: The agent takes prices as known, fixed and exogenous.
This assumption excludes things like searching for better prices or bargaining for a
discount.

2. Prices are linear: Every unit of a particular good ‗x‘ comes at the same price ‗px‘
(Levin et al 2004). This excludes quantity discounts (though these could be
accommodated with relatively minor changes in the formulation).
 cont’d
3. Goods are divisible: means that the agent may purchase good x in any amount she can afford. Note that

this divisibility assumption, by itself, does not prevent us from applying the model to situations with
discrete, indivisible goods. For example, if the commodity space includes automobile of which consumers
may buy only an integer number, we can accommodate that by specifying that the consumer‘s utility
depends only on the integer part of the number of automobiles purchased. In these notes, with the
exception of the theorems that assume convex preferences, all of the results remain true even when some
of the goods may be indivisible.

Furthermore, there are two main features of the consumer theory: preferences and constraints, and these two
theories interact to produce choices.

4. The Budget Constraint: consumer‘s budget constraint identifies the combinations of goods and services
the consumer can afford with a given income and given prices. Two factors can cause a change
 Pricing Strategies
Cost Oriented Pricing Strategy
 Cost based-pricing approaches determine prices primarily with data from cost
of production. Its main advantage is that data is readily available.

 It does not take competition into consideration.

 It also does not examine customer‘s willingness to pay.

 Two methods are normally used here, they are cost plus method and direct or
marginal cost pricing:-
cont’d
• Cost plus method: One simple and common approach to price determination is the
naive cost plus method. It involves the addition of a predetermined margin to the
full unit cost of production and distribution without reference to prevailing demand
conditions. Usually a reasonable mark-up is added to unit cost.

• Mark-up pricing: the difference between the price of an item and its cost that is
generally expressed as a percentage. The whole essence of markup is for it to cover
the expenses of running the business and include the intended profit.
 cont’d
Competitors Oriented Pricing Strategy
 It is using competitor‘s price as a starting point for price setting (Blythe 2005).

 It is easy since data is always and readily available, but however, it is done without consulting customers.

a) Going rate pricing: It is setting a price for a product or service using the prevailing market price as a basis.
Going rate pricing is usually practiced in with homogeneous products with very little variation from one
producer to another, such as aluminum or steel (Kevin, et al., 2004). Going rate pricing is a pricing strategy
where firms examine the prices of their competitors and then set their own prices broadly in line with these.

 Going rate pricing is most likely to occur where:

 cont’d
• There is a degree of price leadership taking place within a particular market.
• Businesses are reluctant to set significantly different prices because of the risk of
setting off a price war, which would reduce profits to all firms.
• There is a degree of collusion taking place between firms.

b) Competitive bidding: the most usual process is the drawing up of detailed

specifications for a product and putting the contract out to tender and potential
suppliers quote a price that is confidential to themselves and the buyer(sealed bids)
(Jobber 2004). All other things being
 cont’d
c) Predatory pricing: This is a pricing policy in which a firm deliberately charges
lower price with the intention of driving out competitors from the market while
remaining the dominant or even monopoly firm in that industry after which it will
start the actions characteristic of a monopoly (Lamb, Hair and McDaniel 2004;
Brassington and Pettit 2006). Sometimes prices are pitched below the cost of
production. This usually favors the consumers since they get so much value for
their money.
 cont’d
 Demand based pricing: Demand based pricing looks outward from the production line and focuses on
customers and their responsiveness to different price levels (Brassington and Pettitt 2006). They are prices based
on the customers' demand for a product.

 Value based pricing: Customer value-based pricing uses the value that a product or service delivers to a
segment of customers as the main factor for setting prices (Hinterhuber 2008). Customer value-based pricing is
increasingly recognized in the literature as superior to all other pricing strategies (Ingenbleek et al 2003).

 Prestige pricing strategy: This involves setting a high price to a product to indicate its high quality. This can
also be called premium pricing. According to Cannon and Morgan (1990) "… to some target customers, relatively
high prices seem to mean high quality or high status”.
 cont’d
 Dynamic pricing: Haws and Bearden (2006) define dynamic pricing as a strategy in which prices vary over
time, consumers, and/or circumstances. It can also be referred to as adjusting prices continually to meet the
characteristics and needs of individual customers and situations (Kotler and Armstrong 2008).

 Differential pricing: Differential pricing involves selling the same product to different buyers under a variety
of prices (Bearden, Ingram and Laforge 2004) which means different prices are used for different segments
(Brassington and Pettitt 2006). It is the same as discriminatory pricing policy especially when the cost of production
and selling of the product are essentially the same.

 Odd even pricing: It involves using price ranges that are usually in odd numbers just under even numbers
which are more appealing to consumers (Businessdictionary.com 2013). The psychological principle at work here is
that odd numbers (₦79, ₦9.95, ₦499) convey a bargain image (Farese, Kimbrell and Woloszy 2003).
 cont’d
 Psychological pricing: Psychological pricing refers to applying prices that appeal to the customer‘s
emotions (Blythe 2005). A pricing approach that considers the psychology of prices and not simply the
economics; the price is used to say something about the product (Kotler and Armstrong 2008).
Psychological pricing is very much a customer based pricing method, relying on what it does on the
consumer‘s emotive responses, subjective assessments and feelings towards specific purchases (Brassington
and Pettitt 2006).

 Bundle pricing: Bundle pricing has to do with including several products in a single package that is
sold at a single price (Farese, Kimbrell and Woloszy 2003). Brassington and Pettitt (2006) see it as
assembling a number of products in a single package to save the consumer the trouble of searching out and
buying each one separately. This can increase sales of the organization.
 Pricing Strategies For New
Products
Price Skimming
 Stanton et-al (1996) posit that, “market skimming involves setting a price that is high in the range of expected
prices”. Barker (1994:417) also highlights that skimming pricing entails setting a high initial price which yield a high
profit margin over a relatively small volume and generally for a short period of time”. More so Nickels et-al
(2002:448) highlight that, “a skimming pricing strategy is one in which a new product is priced high to make
optimum profit while there is still little completion”. Wilson et-al (1992:332) argue that, “with a skimming objective,
the marketer enters the market with a high price and only gradually lowers it as he seeks a greater number of
market segments. Furthermore, Kotler and Keller (2006:438) argue that, “companies unveiling a new technology
favour setting high prices to maximise market skimming”. Kerin et-al (2009:356) concur that, “a firm introducing a
new or innovative product can use price skimming, setting the highest initial price that the customers really desiring
the product are willing to pay”.
 cont’d
Penetration
 Nickels et-al (2002) describe penetration pricing as a strategy in which a product is priced so low
to attract many customers and discourage competition. Stanton et-al (1996:311) posit that, “in
market penetration pricing a low initial pricing is set to reach the mass market immediately”. They
also argue that this strategy can be employed at a later stage in the product life cycle. More so
Barker (1994:417) states that, “market penetration pricing is when the firm prices low; sacrificing
short term profits to aim at a dominant market share”. Furthermore, Kerin et-al (2009:357) define
penetration pricing as, “the setting of low prices to new products to appeal immediately to the mass
market”.
 Factor s To Consider W hen
Setting A Price
 Costs

 Customers

 Competition

 Capacity
Framework For Setting A Price
A general pricing model

Setting pricing objectives

Evaluate product-price relationships

Estimate costs and other price limitations

Analyse profit potential

Set initial price structure

Change price as needed

 cont’d
Kotler’s six step procedure
Kotler and Keller (2006:437) indicate that, “a firm has to follow a six step procedure
which includes:

1. Selecting a pricing objective

2. Determining demand
3. Estimating costs
4. Analyse competitors’ prices, costs and offers
5. Selecting a pricing method
6. Selecting the final price
LOGISTICS AND
DISTRIBUTION
.
MANAGEMENT
 Definition
o Logistics is the . . . “process of planning, implementing, and controlling the efficient, effective
flow and storage of goods, services, and related information from point of origin to point of
consumption for the purpose of conforming to customer requirements”.

Key components of Logistics – Support activities

1. Warehousing (Space determination, stock layout, configuration, stock placement)
2. Materials handling ( equipment selection & replacement policies, order-picking
procedures, stock storage & retrieval)
3. Purchasing (supply source selection, purchase timing, purchase quantities)
 cont’d
4. Protective packaging (designed for handling, storage, protection from
loss/damage)

5. Cooperate with production/operations (specify aggregate quantities,

sequence & time production output, schedule supplies)

6. Information maintenance (info collection, storage & manipulation, data

analysis, control procedures)
Supply Chain Members
Types Of Flow In Logistics
a) Physical flow describes movement of goods from raw material that is processed in
various stages of manufacture until it reaches the final consumer. In the case of a towel
manufacturer raw material is cotton yarn which flows from the grower via transporters
to the manufacturer’s warehouses and plants.

b) Title flow is the passage of ownership from one channel institution to another; when
manufacturing towels, title to raw materials passes from the supplier to the manufacturer.
Ownership of finished towels passes from manufacturer to the wholesaler or retailer and
then to the final consumer.

c) Information flow involves the directed flow of influence from activities such as
advertising, personal selling, sales promotion and publicity from one member to other
members in the system. Manufacturers of towels direct promotion, and information
flows to retailers or wholesalers, known as trade promotion. This type of activity may
also be directed to end consumers, i.e. ‘end user’ promotion.
 Distribution Intensity
a) Intensive distribution where products are placed in as many outlets as possible. This is most common when customers
purchase goods frequently, e.g. household goods such as detergents or toothpaste. Wide exposure gives customers many opportunities
to buy and the image of the outlet is not important. The aim is to achieve maximum coverage.

b) Selective distribution where products are placed in a more limited number of outlets in defined geographic areas. Instead of
widespread exposure, selective distribution seeks to show products in the most promising or profitable outlets, e.g. high-end ‘designer’
clothes.

c) Exclusive distribution where products are placed in one outlet in a specific area. This brings about a stronger partnership
between seller and re-seller and results in strong bonds of loyalty. Part of the agreement usually requires the dealer not to carry
competing lines, and the result is a more aggressive selling effort by the distributor of the company’s products, e.g. an exclusive
franchise to sell a vehicle brand in a specific geographical area, in return for which the franchisee agrees to supply an appropriate after
sales service back-up.
 Distribution Channel Selection
1. Market Considerations:
 The nature of the market is a key factor influencing the choice of
channels of distribution.
a) Consumer or industrial market: If the product is meant for industrial
users, the channel of distribution will be a short one.
b) Number and location of buyers: If buyers are few in many cases it is
profitable to use direct channels
c) Size of order: Direct selling is convenient and economical where
customers place order in big lots as in case of industrial goods.
d) Customers buying habits
 cont’d
2. Product Considerations: The type and nature of the product influence the
number and type of middlemen to be chosen for distributing the product.

a) Unit value: Expensive products are usually sold directly while

cheaper ones go through middlemen.

b) Perishability: Perishables eg fruits, vegetables among others need

shorter channels compared to non-perishables.

c) Bulk and weight: Usually heavy and bulky products are distributed
directly to minimize handling costs. Eg coal, bricks, stones, etc.
cont’d
a) Standardisation: In many cases non-standardised goods require shorter channels
compared to standardized ones.

b) Technical nature: Industrial products requiring demonstration, installation and

after-sales service are often sold directly. Consumer products go through various
middlemen.

c) Product Range: An organization with a wide product range can prefer to establish
its own outlet compared to the one with a single product line.

d) Newness of the product: A new product needs greater promotional effort and few
middlemen may like to handle it. As the product gains acceptance in the market,
more middlemen may be employed for its distribution.
 cont’d
3. Middlemen Considerations: The cost and efficiency of distribution depend
largely upon the nature and type of middlemen as given in the following factors:
a) Availability: When middlemen as desired are not available, an entrepreneur
may have to establish his own distribution network.
b) Attitudes: Middlemen who do not like a firm’s marketing policies may refuse
to handle its products.
c) Services: Use of those middlemen is profitable who provide financing,
storage, promotion and after-sales services.
d) Sale Potential: An entrepreneur generally prefers a dealer who offers the
greatest potential volume of sales.
e) Costs: Choice of a channel should be made after comparing the costs of
distribution through alternative channels. (Proximity)
MANAGING SALES
.
 Definition
o Sales Management is the planning, direction, and control of the
personnel, selling activities of a business unit including recruiting,
selecting, training, assigning, rating, supervising, paying, motivating, as all
these tasks apply to the personnel sales-force (American marketers
association (AMA).

o Sales forecast is a best guess about customer demand for a company’s

goods in a particular time period (Moon and Mentzer 1999)
 Methods
 Judgmental Methods
Naive: It relies on Recent historical data and sales which are obtained with minimal
effort. It assumes that the best possible guess for future sales is today’s sales
(Makridakis, Wheelwright and Hyndman 1998)
Jury of Executive opinion: This is a method where executives from different
departments of the company meet and agree on the number/s which the forecast can
take. There is a risk of an over-optimistic forecast since executives hope for a positive
future.
Sales force composite: This is the use of the sales force in predicting future sales.
sales people are closer to the customers compared to executives (Moon and
Mentzer1999)
 cont’d
 Counting Methods
Industrial Survey: This is the process of analyzing the views of customers through
primary or secondary research in order to predict sales.
Intention to buy: This is where the company asks their potential customers whether
they have the intention to buy their product or not.

 Time Series
Moving averages: It seeks to analyse the historical trends in order to predict future
values
Exponential smoothening: It is almost the same with the moving average approach
 cont’d
 Causal Methods
Simple Regression Analysis: This tries to relate external forces to
demand. It analyses the relationship between variables and hence
allows forecasting.
Multiple Regression Analysis: This uses more variables than the
simple regression analysis.
Econometric methods
 cont’d
Advantages of Sales Forecasting
Monitoring Cash Flows
Purchasing decisions
Planning and targeting
Managing sales force

Disadvantages of Sales Forecasting

Can limit creativity
Risky
Can be biased
Can be misleading
CREATING SUCCESSFUL
LONG-TERM. GROWTH
 cont’d
Importance of growth in business
 Increased profits
 Spreading the risk
 Competitive strength
 Employee performance is boosted due to job security
 Motivation of employees

Growth impediments in Business

 Finance
 Failure to identify opportunities
 Human resources
 Competition
 Environmental factors
Ansoff Growth Strategies
 cont’d
Market Penetration:
When companies enter markets with their existing products or services it is
called market penetration
Increasing the existing share in the existing market to facilitate further growth.
Market penetration is considered a low risk method to grow the business

Market Development
When companies develop existing products into new markets, it is known as
market development.
Taking existing product into new markets, for example, expanding sales from
purely the domestic market into the African market.
The product can also be targeted to another customer segment. Either way, both
strategies can lead to additional earnings for the business
 cont’d
Product Development
Companies develop new products in existing markets. This is called product
development.
Offering new products or modifying existing products into the existing
markets.

Diversification
An organization that introduces new products into new markets has chosen
a strategy of diversification.
Either with related products and markets or unrelated products that are
totally unconnected with the existing products and markets.
Related diversification describes how companies stay in a market with
which they have some familiarity.
MARKETING PLANNING
.
 Definition
 Marketing Plan
 It is a broad set of guidelines as to show how the firm is to accomplish its strategic goals. A
living document that guide the Company throughout the year or a blueprint of future activity.

 Vision
 This is the overall goal of the business. It is broadly stated and it has to be used by managers
to develop their objectives

 Mission Statement
 These are statements that organizations develop to share with managers, employees and if
need be customers (Kotler and Keller 2013). A Mission statement helps as a strategic guideline
towards achieving the organizational vision.
 cont’d
Situation Analysis
 This is the process of scrutinizing the marketing environment in order to determine the organizational
stance. It takes various analyses eg:
Competitor analysis, Customer analysis, Macro-environmental (PESTEL) analysis. Industry Analysis,
Portfolio Analysis

Marketing Objectives
 Objectives, in simple terms, are where the business is heading for, and Strategies are the means for getting
there.
 The objectives are goals that the company would like to attain during the plan's term. (Kotler Et al 1999)
 A specific result that a person or system aims to achieve within a time frame and with available resources.
 An objective is derived from a goal, has the same intention as a goal, but it is more specific, quantifiable and
verifiable than the goal.
 Characteristic Of A Good
Marketing Objective
Specific
 The objective must target a specific area for improvement.
 A specific goal has a much greater chance of being accomplished than a general goal.
 A specific goal might answer the questions: What? When? Who? ETC

Measurable
 The objective must be quantifiable or at least suggest an indicator of progress.
 Establish concrete criteria for measuring progress toward the attainment of each goal you set.
 This includes answering the questions (How many? How Much? etc.) It generally helps us to know
that we are there or not.

Attainable/ Achievable:
 When you identify goals that are most important to you, you begin to figure out ways you can make
them come true.
 You to consider the attitudes, abilities, skills, and financial capacity to reach them. You begin seeing
previously overlooked opportunities to bring yourself closer to the achievement of your goals.
 There must means for you to be able to reach the achieve the
 cont’d
Relevant
 Goals should be instrumental to the mission of the department (and ultimately, the institution).
 Why is the goal important? How will the goal help the department achieve its objectives?
 Develop goals that relate to the staff member’s key accountabilities or link with departmental goals that align with the
institutional strategic goals.

Time-related
 Specify when the result(s) can be achieved.
 It is essential that goals have a timeframe or target date. A commitment to a deadline helps a team focus their efforts
towards completion of the goal and prevents goals from being overtaken by other unrelated routine tasks that may arise.
 A time restrained goal is intended to establish a sense urgency.
 cont’d
Examples
i) To increase Market share by 10% by 31 December 2016
ii) To increase profitability by 15% by 31 December 2016
iii) Boosting customer satisfaction by 20% by 31 December 2016
iv) Enhance brand awareness by 30% by the end of December 2016
 Characteristics Of A Good
Marketing Strateg y
1. Repeatable
That's great that a marketing tactic works once, but will it work again?
Find a way to do things that work well (and hopefully pay for themselves), when they're repeated over and over
again.

2. Measurable
Part of being able to repeat something, is knowing if it worked well the first time around. Feedback from different
marketing tactics helps you make decisions on stopping or going. Pick marketing strategies and tactics that allow
you to measure your progress along the way.

3. Flexible
In a dynamic marketplace, flexibility isn't just nice to have, it's a essential. If something isn't working, you need to
be able change it...quickly. Now more than ever...leave room for change.
 cont’d
4. Testable
If you're going to fail...fail fast, fail early, and fail small.
Direct marketing is a great example of this. If you send out 1000 mail pieces and nobody responds...well, shut it down...aren't you glad
you know that, before you paid for 1 million pieces?

5. Scalable
This is when marketing gets fun. As your marketing does well and yields results, can you make it bigger so it gets more results?
If you're a local Laundromat in Kentucky, you might be able to adjust your website and campaign just right so that 30% of your Google
Ads are converting to customers. That's fantastic!

6. Variable
Marketing strategies with tactics that are too repeatable, measurable, and testable can be BORING. People like consistency, but they also
want something that they don't expect. People like surprise. So make your marketing strategy multi-faceted, and also introduce
elements into your marketing strategy that they don't predict. Build it into your plan.
 cont’d
7. Momentum-able
We're talking about acceleration here.
For example, if your marketing strategy involves building partnerships with
high schools, does it get easier as you go along? Is it easier to get the 20th school
on board than the 2nd? Is it much easier to get the 200th school than the 20th?

Examples of marketing strategies

 Marketing strategies are generated from the marketing mix Elements namely
Product, Price Place, promotion, Processes, people and physical evidence.
 cont’d
Product strategies Pricing Strategies
 These are marketing strategies • Penetration
cantered on the product eg • Skimming
• New product development • Premium
• Branding • Predatory
• Rebranding • Bundling
• Positioning Repositioning
• Adding frills,
• Removing product frills
 cont’d
Promotional Strategies Place/Distribution Strategies
 These are communication • Mass Distribution
strategies i.e • Exclusive distribution
• Advertising • Selective distribution
• Personal selling
• Direct marketing
• Sales Promotion
• Exhibitions
 cont’d
Process strategies People Strategies
• Training employees
• Quickening Complaint handling • Employee recruitment
Processes • Employee motivation
• Speeding Booking Processes • Compensation of employees etc
• Controlling Service delivery
processes
• Personal service
• Self services
 cont’d
Physical Evidence / Servicescape strategies
• Layout designing strategies
• Air conditioning
• Airt freshening
• Lighting
• Signs
 Implementing Marketing
Strategies
 Implementation is the execution of the planned activities.
 Implementation can be guided by McKinsey 7Ss Framework.
 cont’d
What? By Who? When? Where? HOW?
Promotion Communications Beginning of Bindura Posters
Supervisor every month Flyers
starting June
2019
Pricing Marketing and June 2019 Bindura Undercutting
Finance Manager competitor
prices
Product Production August 2019 Harare Extending
Manager product lines
Place Logistics July 2019 Bindura Mass
Supervisor Urban Distribution
and rural
Control And Evaluation
 Feed forward

 Concurrent

 Feedback

 Contingency Planning
THE END
.