AU

College of business &

economics
Department of Management
Principle of Marketing

November, 2013
 Chapter One
Overview of marketing
Many people define marketing as advertising &
selling, but advertising and selling are particular
components of marketing.
Marketing is integrated activity & it needs a number
of actors performing different tasks.
Marketing concept works and benefits not only
business firms rather used for other forms of
organizations.
 Marketing defined:
American Marketing Association; marketing is the
performance of business activities that direct the flow
of goods and services from producers to consumers
or users.
William Stanton, Marketing is a system of business
activities designed to plan, price, promote and
distribute want satisfying goods and services to
present and potential customers.
Evans and Berman, Marketing is the anticipation,
stimulation, facilitation, regulation and satisfaction of
consumer and public’s demand for products (goods,
services, organizations, people, places, and ideas
through the exchange process.
 Definition cont’d…
Philip Kotler, Marketing is a social and
managerial process by which individuals and
groups obtain what they need and want
through creating and exchanging products and
value with others.
From the above definitions:
 Marketing is concerned with the flow of products
from producers to consumers.
 Marketing generates and facilitates exchange
 The concept of marketing lies on needs, wants, and
demands of customers.
 Marketing is greater than selling and advertising.
 Marketing is an integrated activity & focus on
customer satisfaction.
 Basic Marketing Concepts
Needs, wants and Demand:
 Needs are defined as basic forces which move people
to act.
 Human beings are born with needs to be satisfied
and they are in continuous effort to satisfy needs of
hierarchical in nature.
 Wants can be defined, as the desire for specific
satisfiers of needs & shaped by culture, institutions and
personality.
 Demand: When want is backed up by purchasing
power, wants become demand.
Marketers are advised to consider demand in the
production of goods and services.
 Value and Satisfaction
 Consumers make product choices based on their
perceptions of the value and satisfaction that various
products and services deliver.
 Customer value is the difference between the
values the customer gains from owning and using a
product and the costs of obtaining/using the product.
 Costs = monetary costs + time costs + energy costs
+ psychic costs
 Value = Benefits + Functional benefits + emotional
benefits
 Customer satisfaction depends on
their expectation versus the products
performance.
 Satisfied customers buy again and tell others about
their good experiences.
 Customer expectations are based on past buying
experiences, the opinions of friends, and marketer
and competitor information and promises.
 Satisfied customer good mouth while dissatisfied
customers badmouth the product/firm
 Cont’d…
 Marketing offer: People satisfy their
needs and wants with satisfiers or
products which involves anything offered
for the market (goods, services, person,
idea, place, organization and information)
 Exchange,Transactions, and Relationships:
 Exchange is the act of obtaining a desired object
form someone by offering something in return.
 For exchange to exist, there are conditions:
 Transaction When exchanging parties reach an
agreement after negation of terms.
It consists of a ride of values between two parties.
 Cont.d…

 Relationships: Beyond attracting customers and

creating transactions, marketing has the goal to
retain customers and grow their business with the
company.
 Market: it is defined as a group of actual and
potential customers with needs to satisfy, money to
spend, and willingness to spend it.
 Demarketing refers the act of temporarily
reducing or shifting overfull demand until firms
capacity is increased and become sufficient to serve
the market.
Marketing Approaches: old Vs New
 Old
 The boundary of marketing ranges between
production and selling;
 Sales and promotion are the means to increase the
sales volume so as to get profit.
 The focal point of the effort is the product
 Marketing is a disintegrated activity /it is the
responsibility of the sales department/.
 Marketing is equal to selling.
 New
 Marketing starts early before manufacturing of
products and continues after selling;
 Customer satisfaction is emphasized to increase
profit.
 The focal point is the customer.
 Marketing is an integrated activity /it is the
responsibility of every member department in the
organization/.
 Marketing is greater than selling
 Marketing Functions
 According to W.J. Stanton and McKarthy, there are
basic economic activities in marketing that are
classified as below:
I. Marketing mix determination:
 Product Planning: Involves developing and
maintaining products, product assortments, product
images, brands, and packaging, and optional features;
and deleting non profitable products.
 Distribution Involves facility locatio, establishing
relations with intermediaries, physical distribution,
inventory management, warehousing,
transportation, the allocation of goods and services,
wholesaling and retailing
Marketing mix Cont’d…
 Promotion : Involves communicating with
customers, the general public and others
through advertising, publicity, personal
selling, and/or sales promotion.
 Pricing: Involves determining price levels and
ranges, pricing techniques, terms of purchase,
price adjustments, and the use of price as
competitive strategy.
Cont.....
II. Exchange: It is the process by which
parties provide something of value to one
another to satisfy the needs of each.
 Buying: It is acquisition and procurement of
goods for resale or for production of other
goods or to render services.
 Selling: It is not only just to make sales but
also to find buyers, stimulate them, and
provide advice and service to buyers.
III. Physical Distribution: Refers to handling and
movement of goods from production area to
market center. It consists of:
 Storage: It provides proper handling and storage
of goods until they are demanded and sold.
 Transportation: It is the shipment and movement
of goods from their manufacturing place to the
market center /place of sale/. It enables to make
goods reachable to the consumers.
IV. Facilitating Function /Auxiliary Function

These are functions that facilitate and assist the

proper performance of other functions of
marketing. It encompasses
 Financing: To carry out business operations
smoothly, it requires finance or money.
 Marketing as a major business activity, leads us to the
need for finance.
Without it, organizations are unable to schedule their
operations.
 Cont.....
 Market Research and information:
Managers of businesses do not make
decisions on the basis of common sense or
intuition. They require information.
Therefore, to make marketing decisions and
to design effective marketing policies,
Marketing managers should get information
via makg and mkt research.
 Risk Bearing: Business organizations when they are
established, it is with the objective of getting profit,
expansion, growth, etc. Nevertheless, they fail to
achieve their objectives because of uncertainty of
the future.
 Product standardization and Grading: These
are facilitating functions that are used to
identify the quantity and quality of
production.
 When goods are standardized and graded neither
the buyer nor the seller is required to check each
and every part of the product.
Marketing Management or Demand
Management

 According to Kotler it is defined as “the

analysis, planning, implementation, and
control of programs to create, build, and
maintain mutually beneficial exchanges and
relationships with target markets for the
purpose of achieving organizational
objectives”.
 States of demand
1. Negative demand: This is a state in which all or the major
parts of the society, dislikes the product and may even pay
a price to avoid it.
 Examples: vaccination, alcoholic employees, dental work,
and seat belts.
 The marketing task is conversional marketing; analyzing
why the market dislikes the product and working to change
their attitude via product redesign, lower price, or more
positive promotion.
 2. No demand:
This is a case where target customers may be
uninterested in or indifferent to a particular product
 Example: Farmers may not know about a new
farming method; college students may not be
interested in taking foreign language courses.
 Marketing managers are concerned with finding
ways to connect the product’s benefits with the
user’s needs and create awareness. This marketing
task is known as stimulation marketing
 3. Latent demand:
This state of demand where customers share a
strong need for a product that does not exist
in the market.
 Examples: harmless cigarettes, more fuel-
efficient cars, etc.
The marketing task is called developmental
marketing and its task is to measure the size of the
potential market and trying to develop a new product
that would satisfy the demand.
4. Falling demand:
In later stage of operation, many organization faces
falling demand for one or more of their products.
 Example: Public telephone, type writing etc
 The marketer must find the causes of market
decline and re-stimulate demand by finding new
markets, changing product features, or creating
more effective communication and the marketing
task is remarketing.
 5. Irregular demand:
It is a state in which the timing pattern of
demand is marked by seasonal and volatile
fluctuations causing problems of idle capacity.
Example:
 The right marketing task is synchro-
marketing, i.e., to find ways to alter the
pattern of demand through flexible pricing,
promotion and other incentives.
6. Full demand:

Here the amount of demand and the amount the

firm can handle is equivalent.
Example:
 The marketing task is maintenance marketing
and is designed to maintain the current level of
demand against changing consumer preferences.
maintains quality, and
continually measures satisfaction
Product improvement
 7. Overfull demand: .
It is a state in which demand is higher than the
company can or wants to handle.
Example:
 The marketing task is called de-marketing
and it involves finding ways to reduce the
demand temporarily:
 Raising prices and
Reducing promotion and
Reducing services.
 8. Unwhole-Some demand:
 Unwholesome products such as cigarettes, alcohol,
and hard drugs will attract organized effort to destroy
the demand or interest in particular product or
service.
 The corresponding marketing task is known as
counter marketing it is to get people give up usage
of such product. Marketing manager should
communicate the right information about such
product and should replace by another product via
market research.
MARKETING MANAGEMENT CONCEPTS

 What philosophy should guide these marketing

efforts.
 What weights should be given to the interests of the
organization, the customers and society?
 Very often these interests may conflict.
marketing activities should be carried out under a clear
philosophy of efficient, effective, and responsible marketing.
 There are five competing concepts under which
organizations conduct their marketing activity.
 The production concept:
 This concept holds that consumers will favor
those products that are widely available and
low in cost.
 Management of production oriented
organization concentrates on achieving high
production efficiently and wide distribution
coverage.
 The production concept is one of the oldest
concepts guiding sellers.
The concept works when:
1. The demand for a product exceeds supply as in
many developing countries.
 Here consumers are more interested in obtaining the
product than in its fine points.

2. The product’s cost is high and has to be brought

down through increased productivity via
economies of scale.
The product concept(make what you can sell):
 It assume that consumers will prefer those products
that offer the most quality, performance & features.
 It assume that buyers admire well-made products
and can select, purchase and appreciate product
quality.
 Here companies often design their product with
little or no customer input this leads to marketing
myopia; too focus on product than customer
needs/wants.
The Selling concept(sale what you make)
 Under this philosophy, marketing managers assume
that consumers purchase products if the
organization undertakes an aggressive selling and
promotion effort.
 Most firms practice the selling concept when they
introduce new products and when they have over
capacity.
 Their aim is to sell what they make rather than make
what the market wants.
The Marketing Concept(sense & Respond)

 It assumes that the key to achieving organizational

goals is level of determination of the needs and
wants of consumers and delivering or providing the
desired satisfaction more efficiently, and effectively,
than do competitors.
 The marketing concept rests on four main pillars,
namely target market, customer needs,
coordinated marketing, and profitability.
 Cont...
A. TARGET MARKET: No company can operate in every
market and satisfy every need & thus they define their target
markets carefully and prepare a tailored marketing program.
B. CUSTOMER NEEDS: full understand of customers’
needs/wants is vital element.
C. COORDINATED MARKETING:
 With various marketing functions: sales, advertising, market research &
so on- must be coordinated within.
 Marketing must be well coordinated with the other company
departments.
D. PROFITABILITY: the company should work to secure long-
term profitability or sustainable business.
 Via win-win relation ship with customer
Selling concept Marketing concept
1. The Starting point is factory 1. 1. Starting point target market
2. Focus customer needs & wants
2. Focus is on product
3. Means coordinated marketing
3. Means selling and promotion
4. Ends profit via customer
4. Ends profit via sales volume satisfaction
5. The Holistic Marketing Concepts
 It based on the development, design, and
implementation of marketing programs, processes,
and activities that recognizes their width and
interdependencies of activities and stakeholders.
 It holds integrated perspective is often necessary.
 Holistic marketing has 4 components:
1. Relationship marketing
2. Integrated marketing
3. Internal marketing, and
4. Social responsibility marketing.
 1. Relationship Marketing
 Developing deep, enduring relationships with all
people or organizations that could affect the success
of the firm's marketing activities such as customers,
suppliers, distributors, and other partners.
 It also builds strong economic, technical, and social ties
with those stakeholders.
 Here companies must not only do customer
relationship management (CRM), but also partner
relationship management (PRM) as well.
 2. Integrated Marketing
 The marketer's task is to devise marketing activities
and assemble fully integrated marketing programs (4p’s
or 4c’s) to create, communicate, and deliver value for
consumers.

 The marketing program consists of numerous

decisions on value-enhancing marketing activities to
use.
 3. Internal Marketing
 It is the task of hiring, training, and motivating
employees who want to serve customers well.

 Marketing thinking must be pervasive throughout the

company.
4. Social responsibility marketing-
 concerns with the ethical, environmental,
legal, and social context of marketing
activities and programs.
 Ethical and Social responsibility also requires
that marketers carefully consider the
adverse effect of their operation, works to
reduce the effect and try to offset the effect.
 MARKETING ORGANIZATION

1. Functional
 Based on types of activities done.
 Here a number of specialists such as marketing
administration manager, advertising and sales
promotion manager, sales manager, marketing
research manager and new product manager.
 2. Geographical organization:

 Many companies organize their sales force along

geographical lines.
 The national sales manager may supervise four
regional sales managers, each one of them supervises
may supervise six zonal managers, who in turn
supervise eight district sales managers, each one of
them supervise say, 10 salespersons.
 In this type of organization, the span of control
increases as we move down from the national sales
manager.
 3. Product Organization:
 Companies producing a variety of products and
brands often establish a product (or brand)
organization for managing their marketing function.
 The product organization is good if the products are
quite different and demand a focused attention
and/or there may be too many products, which
cannot be handled by functional managers.
 4. Market /customer Organization:

 When customers fall into different user groups with

distinct buying preferences and practices, a market
management organization is desirable.
 For example, Canon sells its FAX machines to
consumer, business and government markets.
 5. Product-Market Matrix:
 The companies that produce several products
and sell into a range of markets may organize
their marketing function as a product-market
matrix.
 The product managers plan the sales and
profits of their respective fibers. Also they
seek assistance from the market managers and
get the estimates of demand from them.
 CONTROLLING IN MARKETING
 Company operational results should be evaluated
against planned marketing activities.
 Marketing planning is done considering organizational
intent and resources, making SWOT & PEST analysis.
 Annual –plan control the purpose of annual–plan
control is to ensure that the company achieves the
sales, profits, and other goals established in its annual
plan.
 Profitability control companies clearly need to
measure the profitability of their various products,
territories, customer groups, trade channels, and
order sizes.
 Efficiency control suppose a profitability analysis
reveals that the company is earning poor profits in
connection with certain products, territories, or
markets. the question is whether there are more
efficient ways to manage the sales force, advertising,
sales promotion, and distribution in connection
with units, territories etc
 Strategic control from time to time, companies
need to undertake a critical review of the overall
marketing goals and effectiveness.
Chapter Two
THE MARKETING ENVIRONMENT
2.1. Micro environment
 Close to the company & directs affect its performance.
 Consist internal & direct external factors.
 A company have some degree of control.
2.2. Macro environment
 Are large societal forces/general influences
 Said to be indirect external
 Beyond the control of a firm
 Demographic
Socio-Cultural
Company

Publics
Suppliers Economic
Competitors
Company
Customers
Intermediaries

Political Natural

Technological
afriyeshu@yahoo.com 51
 2.1 Company’s micro environment

 Company’s micro environment involves the forces

close to the company that affect its ability to serve
its customers the company, market channel firms,
customer markets, competitors and publics.
 These forces has direct effect on the company and
they are close to the firms operation.
 The Company:

 In designing marketing plans, marketing

management should take into account
◦ The influence of units (purchasing, R&D, finance etc)
◦ The influence of top management
◦ Company intent
◦ Company’s structure, policies and procedures
 All these interrelated groups form the internal
environment.
 Suppliers:

 Suppliers are business firms and individual

who provide resources needed by the
company and its competitors to produce the
particular goods and services.
 Input price
 Quality and quantity
 Dependability of input
 Marketing Intermediaries

 Marketing intermediaries are firms that aid the

company in promoting, selling, and distributing
its goods to the final buyers.
 They include middlemen, physical distribution
firms, marketing service agencies, and financial
intermediaries.
1. Middlemen: Middlemen are business firms
that help the company find customers and/or
sales via them.
 Agent middlemen-such as agents, brokers,
and manufacturers’ representatives-find
customers and /or negotiate contracts but do
not take title to merchandise.
 Merchant middlemen-such as wholesaler,
retailers, and other resellers-buy, take title to,
and resell merchandise.
2.Physical distribution firms: Physical
distribution firms assist the company in
stocking and moving goods from their original
locations to their destinations.
◦ Warehousing & transportation firms
 3. Marketing Service Agencies:
Marketing service agencies-marketing research
firms, advertising agencies, media firms, and
marketing consulting firms- assist the company
in targeting and promoting its products to the
right markets.
◦ When the decision is to buy from other than to
make inside.
◦ When there is outsourcing intention.
4. Financial Intermediaries:
 Financial intermediaries include banks, credit
companies, insurance companies, and other
companies that help fiancé and/or insure risk
associated with the buying and selling of
goods.
◦ Cost of credit
◦ Credit availability
◦ Insurance services
 Customers:
 Consumer markets. buy goods and services for
personal consumption.
 Industrial markets. Organizations that buy goods and
services needed for producing other products/further
processing.
 Reseller markets. in order to resell them at a profit.
 Government markets. Government agencies that buy
goods and services in order to produce public services,
or transfer these goods and services to others who
need them.
 International markets. Buyers found abroad,
including foreign consumers, producers, resellers, and
governments.
 Competitors:
 The company’s marketing system is surrounded
and affected by a host of competitors.
 These competitors have to be identified,
monitored, and outmaneuvered to gain and
maintain customer loyalty.
 Successful marketing is a matter of achieving an
effective alignment of the company with
customer, channels, and competitors.
 Publics:
 A pubic is any group that has an actual or potential
interest or impact on an organization’s ability to
achieve its objectives. Include:
1. Financial publics. Influence the company's ability to
obtain funds. Include banks, investment houses,
insurance firms and stockholders.
2. Media publics. Are those that carry news, features
and editorial opinion such as TV, radio, newspaper etc.
3. Government public: Marketers must often consult
the company's lawyers on issues of product safety,
truth-in-advertising and other matters.
4. Citizen action publics. A company's marketing
decisions may be questioned by consumer
organizations, environmental groups, minority groups
and other pressure groups.
5. Local publics. Every company has local publics, such
as neighborhood residents and community.
6. General public. A company needs to be concerned
about the general public's attitude towards its
products and activities.
◦ Many large corporations invest huge sums of money
to promote and build a healthy corporate image.
7. Internal publics. A company's internal publics
include its workers, managers, volunteers and the
board of directors.
2.2.The Company's Macro environment

 The macro environment consists of the larger

societal forces that affect all of the actors in
the company’s micro environment such as:
demographic, economic, physical (natural),
technological, legal and socio-cultural forces.
 They are general external factors and has
effect on overall industry than on particular
firms.
 Demographic Environment
 Demography is the study of human
populations in terms of size, density, location,
age, gender, race, occupation and other
statistics.
 The demographic environment is of
considerable interest to marketers because it
involves people, and people make up market
Elements in demographic factor:
 Population Size and Growth Trends
 Changing Age Structure of a Population.
 Household Patterns/family structure.
 Rising Number of Educated People.
 Growing Ethnic and Racial Diversity.
Natural Environment
 Shortages of Raw Materials.
 Increased Cost of Energy.
 Increased Pollution & related regulation.
 Government Intervention in Natural
Resource Management.
 Technological Environment
 Increased innovation
 Fast Pace of Technological Change
 Varying R&D Budgets.
 Concentration on Minor Improvements.
 Increased Regulation (of ethicality)
 Political Environment
 Legislation regulating business
◦ Increased legislation
◦ Changing government agency enforcement
 Increased emphasis on ethics
◦ Socially responsible behavior
◦ Cause-related marketing
 Growth of Public Interest Groups.
 Economic Environment:
 Change in income level & its distribution.
 savings, debt, and credit availability-
 outsourcing and free trade
 employment condition,
 inflation, GDP,
 money supply and interest rate,
 Import-export & exchange rate and
 Business cycle.
◦ Trends indicate the kind of economic issues that marketing
strategists must take into account to determine their
strategies.

Socio-cultural environment

 Social class
 Life style
 Core cultures
◦ Marriage
◦ Being engaged in some job
 Secondary culture
◦ Early marriage
◦ Being self employed than paid employee
A societies cultural values is expressed from:

 peoples view of themselves

 Vie toward other people
 View of their society
 Their view of organizations
 Their view of nature
 Their view of universe
 Chapter Three
Marketing Information & Market Research
 Information defined
Difference between information and data
Customer insights/behavior is difficult to know.
Some times the desired information may not be
available in full.
Benefits of Marketing Information
◦ Gain a competitive edge
◦ Reduce financial and image risks
◦ Determine consumer attitudes
◦ Monitor the environment
◦ Measure performance
◦ Better position the marketing mix
◦ Gain support for decision
◦ Coordinate strategy/activities
◦ Improve effectiveness & efficiency
 Marketing information system
 A marketing information system consists
of people, equipment and procedures to
gather, sort, analyze, evaluate and distribute
needed, timely and accurate information to
marketing decision makers.
 It begins and ends with marketing managers.
 It consists activities consisting:
Assessing the information need
 Developing needed information
providing relevant information for decision makers
(both for internal and external user)
Developing Marketing Information
Marketing managers obtain information from:

Internal data

Marketing intelligence

Marketing research
Developing Marketing Information
Internal Data
 Internal databases are manual or electronic
collections of marketing information from data
sources within the company.
 Used for making day-to-day planning,
implementation and control decisions
 It is usually quicker and cheaper, but it may be
incomplete for making marketing decisions.
Internal sources include:
 Financial statements which have records of
sales, orders, costs and cash flows.
 Manufacturing reports on production
schedules, shipments and inventories.
 The sales force reports on reseller reactions
and competitor activities.
 The customer service department provides
information on customer satisfaction or
service problems.
 Marketing Intelligence

 Marketing intelligence is the systematic collection

and analysis of publicly available information about
consumers, competitors, and developments in the
marketplace
 It is the activity of searching everyday
information about developments/changes in the
marketing environment
 The marketing intelligence system determines
the intelligence needed, collects it by searching
the environment and delivers it to marketing
managers
Sources of Market intelligence
 Company staff: Much intelligence is from
the company's personnel - executives,
engineers and scientists, purchasing agents
and the sales force.
 The staff scans relevant opinions,
publications, summarize important news and
send news bulletins to marketing managers.
Sources cont’d…
 Business partners/competitors: The
Company must also persuade suppliers,
resellers and customers to pass along
important intelligence. Some information
about competitors’ comes from what they
say about themselves in annual reports,
speeches, press releases and advertisements.
 Separate marketing intelligence office:
Moreover, some companies set up an office
to collect and circulate marketing
intelligence.
 Marketing Research

 Marketing research is the systematic design,

collection, analysis, and reporting of data
relevant to a specific marketing situation.
What should a marketing research be?
Marketing research should be
 ethical.
 systematic-
 coherent:
 Done considering available data & other
resources
 applicable to different aspect of marketing that
requires information to aid decision making.
 communicated to the appropriate decision
mater.
When should a marketing research be
done?
 To introduce a product in the market
 When sale of product (demand) is failing
 When the figures and facts about the demand of the
product are not available.
 To have knowledge of consumers’ habits and
preferences
 When product development is needed
 When the income, habits, fashion, and preferences are
changing fast
 When company’s own pricing policy is conducive to
competitors’ policies & it needs change.
marketing research areas:

Market research
Sales analysis
Competitors analysis
Promotional research
Marketing research by not for profit organizations
Limitation of Marketing Research
 Marketing research does not guarantee
success: it specify alternative courses of
action and the probability of success it not
guarantee success as decision is made by the
manager.
 It does not work with deterministic
models: involves x is a not necessary and
sufficient condition for y to occur.
Developing the Research Plan

 Outlines sources of existing data

 Spells out the specific research approaches,
contact methods, sampling plans, and
instruments to gather data
Marketing Research process

Problem definition and setting

objectives

Developing research
plan

Implementing the
plan

Interpretation and
reporting/presenting
Problem Definition and setting objectives:

 Without a precise definition of the topic to be

studied, a researcher may collect irrelevant
and expensive data that confuses rather than
classifies issues. Research objectives are
developed from research problem. A good
problem definition directs the continuing
research process.
Developing a research plan
Involves Decisions on:
1. the data source and type
Source:
 Primary, secondary or both
Type:
 Qualitative, quantities or both
 Cross sectional versus time series
research design and type
 Research design:
observational
Survey
Case study
Experimental design
 Research type
Exploratory
Descriptive
Explanatory
 Determining sample size and
sapling technique
 Sample size:
Sample determination formula
Census
Basing on previous studies
 Sampling technique:
Random:
Non random
The data collection instruments

 Questionnaire
 Interview
 Observation
 Focus group discussion
 Document analysis (for secondary data)
Triangulation is usually advisable
 The methods of analyzing the data

 Descriptive statistics
◦ Used mainly for exploratory and descriptive study
 Econometric model
◦ used mainly with explanatory study

 Supported with software

Implementing the plan
1. Data collection:
 The data to be collected have to answer the
study question.
2. Data Analysis:
 This is a step where those collected data are
going to be assessed and analyzed. It consists
of coding, tabulation and analysis.
 Analysis means the evaluation of responses,
usually by statistical techniques or by
econometric model as they pertain to the
specific problem under study and
investigation.
 Interpretation and reporting
I. Interpretation:
 The meanings and implications of data have to be
drawn.
 done in order to relate the findings to research
objectives.
II. Report writing:
 Involves writing the research report clearly and
effectively, communicating the findings of the study.
 Using an appropriate style (words, syntax, citation,
punctuation etc) is critical in all research writings.
III. Drawing Recommendations:
 Recommendations are finding based
suggestions for future actions that should be
taken by managers.
 Recommendations should be drawn only
from what is analyzed and concluded.
 It should be specific, applicable and gap filling.
Distributing and Using Marketing
Information
Information distribution involves entering
information into databases and making it
available in a time-useable manner
 Intranet provides information to
employees and other stakeholders
 Extranet provides information to key
customers and suppliers
 Internet used to link with the alost all
people
 Forecasting
 It is the predication, projection or estimation
of the occurrences of uncertain future
events or levels of activity.
 In business environments, forecasting most
often pertains to predict future
demand/sales.
 Done by using qualitative, quantitative or
both techniques.
 Forecasting methods
I. Quantitative: uses statistical methods.
 Time series method: using historical data.
 Last period method
 Arithmetic average
 Moving average
II. Econometric model
Using relevant models.
III. Economic variables
Y= +X,
Qualitative- uses judgmental methods
 Expert opinion method
 Delphi technique
 Arranging focus group discussion
 Chapter Four
Analyzing Consumer and
Organizational Market

102
4.1. Consumer market & their buying behaviour
 Consumer market involves all individuals and
households who buy or acquire goods and services
for personal/family consumption.
 Consumer Buying Behavior refers to the buying
behavior of final consumers (individuals &
households) who buy goods and services for
consumption.

103
Models of Consumer Behaviour
 The central question for marketers is; how do
consumers respond to various marketing
stimuli (such as price) that the company
might consider.
 The company that really understands how consumers
will respond to different product features, prices and
advertising appeals has a great advantage over its
competitors.
 there is strong relationship between marketing
stimuli and consumer response.

104
 The starting point is the stimulus - response model of
buyer behaviour which shows that marketing and
other stimuli enter the consumer's 'black box and
produce certain responses.
 Marketers must figure out what is in the buyer's
black box:
 Marketing stimuli consist of the four Ps:
 Other stimuli include significant forces and events
in the buyer's environment; economic, technological,
political and cultural.
 All these stimuli enter the buyer's black box, where
they are turned into a set of observable buyer
responses: product choice, brand choice, dealer
choice, purchase timing and purchase amount.
105
 The marketer wants to understand how the stimuli
are changed into responses inside the consumer's
black box, which has two parts.
1. the buyer's characteristics influence how he or she
perceives and reacts to the stimuli.
2. the buyer's decision process itself affects the
buyer's behaviour.
 Studying consumer behavior involves answering how
consumers respond to marketing efforts

106
Model of Consumer Behavior
Product Marketing and Economic
Other Stimuli
Price Technological
Place Political
Promotion Cultural

Buyer’s Characteristics
Decision Buyer’s Black Box Affecting
Process Consumer
Behavior

Product Choice Purchase

Buyer’s Response Timing
Brand Choice
Purchase
Dealer Choice Amount
107
Characteristics Affecting Consumer
Behavior:
Culture
Social
Personal
Psychological
Buyer

108
 1. Cultural Factors
 Cultural factors exert the broadest and
deepest influence on consumer behaviour.
 The marketer needs to understand the role
played by the buyer's
 culture,
 Subculture
 Social class.

109
 a. Culture
 Culture is the set of basic values, perceptions,
wants and behaviors learned from the family
and other important institutions. Human
behavior is largely learned .
Eg. Americans are characterized by their learned
values about achievement, material comfort,
individualism and freedom.

110
 b. Sub culture
 Subculture is groups of people with shared
value, systems based on common life
experiences and situations.
 Each culture contains smaller subcultures or
groups of people with shared value systems
based on common life experiences and
situations.
 Subcultures include nationalities, religions,
racial groups and geographic regions

111
 c. Social Class
 Almost every society has some form of social
class structure. Social classes are society's
relatively permanent and ordered divisions
whose members share similar values, interests
and behaviours.
 Social class is not determined by a single
factor, such as income, but is measured as a
combination of occupation, income, education,
wealth and other variables.

112
 2. Social factors
 A consumer's behavior is also influenced by
social factors, such as:
Groups,
 Family, and
Social roles and status.
Because these social factors can strongly affect
consumer responses, companies must take them
into account when designing their marketing
strategies.

113
 a. Groups
 Are two or more people who interact to accomplish
individual or mutual goals .
I. Membership groups: have a direct influence and to
which a person belongs. Can be primary secondary.
 Primary groups such as family, friends, neighbours
and fellow workers. Here there is regular but
informal interaction
 Secondary groups, which are more formal and
have less regular interaction. These include
organizations like religious groups, professional
associations and trade unions.

114
 II. Reference groups
 are groups that serve as direct (face-to-face) or
indirect points of comparison or reference in forming
a person's attitudes or behaviour.
 People are also influenced by groups to which they do
not belong often influence people.
1. Aspirational group: is one to which the individual
wishes to belong/hops to join/ , as when a young
football player hopes to play some day for
Manchester United.
2.Dissociative groups are those whose values or
behaviour an individual rejects.

115
 Opinion leaders is person with in the
reference group who, because of special skill ,
knowledge ,personality or other characteristics,
exerts influence on others.
 The importance of group influence varies
across products and brands, but it tends to be
strongest for conspicuous purchases.

116
 b. Family
 Family members can strongly influence buyer
behaviour.
 Size and dominance in purchase decision is
important.

117
 c. Role and status:
 A person belongs to many groups - family,
clubs, organizations. The person's position in
each group can be defined in terms of both
role and status
 A role consists of the activities a person is
expected to perform.
 A status is the general esteem given to it by
society due to position, achievement etc.

118
Personal factors

Personal Influences

Age and Family Life Cycle

Occupation
Stage

Economic Situation Personality & Self-Concept

Lifestyle Identification

Activities Opinions

Interests

119
 Personal factors
a.Age and stage in the life cycle
 The goods and services that people buy change over their
lifetime. The types of food and cloth people need changes
with age.
b. Occupation
 A person's occupation will lead to certain wants and needs for
goods and services. Accordingly, the clothes, households, furniture,
recreational systems needs and tastes, etc for a manager of a certain
corporation is different from the daily laborers of corporation.
c. Economic Circumstances:
 The buying decision that a person makes is tremendously
affected by the economic conditions of the person.
 The income that he/she earns, the attitude towards
spending and saving, the borrowing power and so on
affect his/her buying decision.
120
 D. Life style:
 It is the person's pattern of living in the world expressed in
the person's activities, interests and opinions. It portrays the
whole person interacting with his or her environment.
 People coming from the same subculture, income, occupation
may lead quite different lifestyle may be reflected by wearing
conservative clothes, spending a lot of time helping family,
the poor, church etc.
e. Personality and Self Concept (Self - image):

 Personality is another factor that affects the buying behavior

of a person. It describes the person's distinguishing character,
traits, attitudes and habits. A person can be creative or
conventional, active or passive etc.
 Self concept: The attitude of people or mental picture
towards themselves is also called self-concept or self-image.
Thus people buy products which fit their assumed self -
image. Personality is expressed in terms of self-confidence,
dominance, autonomy, deference, sociability, defensiveness,
and adaptability.
 Psychological factors

Motivation

Beliefs and Psychological

Factors Perception
Attitudes

Learning

123
a. Motivation:
•A person has certain needs.
•Some of the needs are bio-genic that arise from
physiological states of tension such as the need for
food, drink, sex and others.
•Some of the needs are psycho-genic which arise
from psychological states of tension such as the
need for social affinity, recognition, respect and so
on.
•A need becomes a motive when it is aroused to a
sufficient level of intensity.
•There are different theories about motivation:
b. perception
The process by which an individual selects,
organizes, and interprets information inputs to
create a meaningful picture of the world
 People can emerge with different perceptions
of the same object because of three
perceptual processes:
 selective attention,
 selective distortion and
 selective retention.

125
 Selective attention -the tendency for people to
screen out information which suit to their needs.
 Thus marketers have to work especially hard to
attract the consumer's attention; which stimuli will be
noticed?
 People are more likely to notice stimuli that relate to
a current need.
 Selective distortion is the tendency to interpret
information in a way that will fit our preconceptions.
 selective retention -The tendency of people to
retain only part of the information that supports their
attitudes or beliefs.

126
 c. Learning
Involves changes in an individual's behavior
arising from experience. Learning theorists
believe that learning is produced through the
interplay of drives, stimuli, cues, responses, and
reinforcement.

127
 d. Beliefs and Attitudes
 Belief is a descriptive thought that a person
holds about something.
 Attitude describes a person's relatively
consistent evaluations, feelings and tendencies
towards an object or idea.
 It is difficult to change.

128
 Types of Buying Decision behavior

High Low
Involvement Involvement
Significant Complex Variety-
differences Buying Seeking
between Behavior Behavior
brands
Few Dissonance- Habitual
differences Reducing Buying Buying
between Behavior Behavior
brands

129
The Buyer Decision Process

Need Recognition

Information Search

Evaluation of Alternatives

Purchase Decision

Postpurchase Behavior
130
Step 1. Need Recognition
Difference between an actual state and a desired state

Internal Stimuli External Stimuli

• Hunger • TV advertising

• Thirst
• Magazine ad
• A person’s normal
needs • Radio slogan

•Stimuli in overall the

environment

131
 Step 2. Information Search

Personal Sources •Family, friends, neighbors

•Most influential source of
information

Commercial Sources •Advertising, salespeople

•Receives most information
from these sources

Public Sources •Mass Media

•Consumer-rating groups

•Handling the product

Experiential Sources •Examining the product
•Using the product

132
Step 3. Evaluation of Alternatives
Product Attributes
Evaluation of Quality, Price, & Features

Degree of Importance
Which attributes matter most to me?

Brand Beliefs
What do I believe about each available brand?

Total Product Satisfaction

Based on what I’m looking for, how satisfied
would I be with each product?

Evaluation Procedures
Choosing a product (and brand) based on one
or more attributes.
133
Step 4. Purchase Decision

Purchase Intention
Desire to buy the most preferred brand

Attitudes Unexpected
of others situational
factors

Purchase Decision

134
Step 5. Post purchase Behavior

Consumer’s Expectations of
Product’s Performance

Product’s Perceived
Performance

Satisfied Dissatisfied
Customer! Customer

Cognitive Dissonance
135
Analysis of Customers Character(by sales force):

I. based on purchase behavior

Carriage: Carriage is the way in which the customer
walks into the shop.
Expression: Expression of the customer can be read
from the face as face is believed to be the mirror of
a person.
Conversation: Conversation is also one of the useful
sources of information about customer nature,
attitude, likes and dislikes.
Actions: The salesperson must observe customers
action carefully, like watching how the customer
deals with the product, looks at it, how he/she is
crazy about the latest and new articles, etc.
ON THE BASIS OF AREA
-Urban
-Rural

ON THE PURPOSE OF BUYING:

-The industrial purchasers
-The resale purchasers
-The personal consumption purchasers
-The government purchasers

On the basis of sex

-Male
-Female
Organizational Markets and their Buying Behaviour
Organizational Market - all the that buy goods and services
to use in the production of other products and services
that are sold, rented, or supplied to others. Business
markets involve many more dollars and items do
consumer markets.
 Also included are retailing and wholesaling firms that
acquire goods to resell or rent to others for profit.
Organizational buyer behavior refers to the buying
behavior of the organizations that buy goods and services
for use in production of other products and services that
are sold, rented, or supplied to others.

138
 Characteristics of organizational Markets
1.Market structure and demand
.Fewer buyers but volume purchase
• Geographically concentrated
• Demand derived from consumer market
• Inelastic demand as quantity bought not vary as such vary with price.
• Fluctuating/seasonal demand
2.Nature of the buying units
 professional purchasers.
3.Type of decision and decision process
 More complex decisions
 Process is more formalized
 Buyer and seller are more dependent on each other
 Build close long-term relationship with supplier.

139
 Major Types of Buying Situations

1. Straight rebuy is a routine purchase decision such as a

reorder without any modification.

2. Modified rebuy is a purchase decision that requires some

research where the buyer wants to modify the product
specification, price, terms, or suppliers.

3. New task purchase is a purchase decision that requires

thorough research/detail analysis such as a new product.

140
Participants in the organizations Buying Process

I. Users are those that will use the product or

service
II. Influencers help define specifications and provide
information for evaluating alternatives
◦ are experts
III.Buyers have formal authority to select the
supplier and arrange terms of purchase
IV. Deciders have formal or informal power to select
and approve final suppliers
V. Gatekeepers control the flow of information
between the buying firm and supplier.
141
 Major Influences on organizations Buyers
1) Environmental-Economic, Technological,
Political, Competitive & Cultural
2) Organizational-Objectives, Policies, Procedures,
Structure, & Systems
3) Interpersonal-Authority, Status, Empathy &
Persuasiveness
4) Individual-Age, Education, Job Position,
Personality & Risk Attitudes

142
The organizations Buying Process
1. Problem recognition
2. General need description
3. Product specification
4. Value analysis
5. Supplier search
6. Proposal solicitation
7. Supplier selection
8. Order-routine specifications
9. Performance review

143
1.Problem recognition occurs when

someone in the company recognizes a problem or

need it can be due to Internal stimuli or external
stimuli.

144
2. General need description
Involves description of characteristics and quantity of the
needed item and Product specification describes the
technical criteria

3.Value analysis is an approach to cost reduction where

components are studied to determined if they can be
redesigned, standardized, or made with less costly methods
of production

4. Supplier search: Involves advertising for potential

suppliers to compete and compiling a list of qualified
suppliers. 145
5. Proposal solicitation is the process of requesting proposals
from qualified suppliers

6. Supplier selection is the process when the buying center

creates a list of desired supplier attributes and negotiates
with preferred suppliers for favorable terms and conditions

7. Order-routine specifications is the final order with the

chosen supplier and lists all of the specifications and terms
of the purchase

8. Performance review involves a critique of supplier

performance to the purchase terms

146
 Chapter Five
Market segmentation, targeting & positioning

6. Develop Marketing
Mix for Each Target Segment Market
5. Develop Positioning Positioning
for Each Target Segment
4. Select Target
Segment(s) Market
3. Develop Measures Targeting
of Segment Attractiveness
2. Develop Profiles
of Resulting Segments
Market Segmentation
1. Identify Bases
for Segmenting the Market

147
 Market segmentation
 Market segmentation is thus the process of dividing the total,
heterogeneous market for a product into distinct and
meaningful groups of buyers, each of which tends to be
homogenous in all significant aspects.

 Management then selects one or more of these markets

groups or segments as the organization's target market.

 The objective is to serve them in better and profitable way.

Benefits of Market Segmentation
 Channeling money and effort to a most profitable
market segments.
 Designing and developing 4ps, which match with
the market demand.
 It enables small businesses to have a better chance
to compete with big companies.
 Efficient flexibility of organizational resources and
programs during fierce competition.
Limitations:
◦ Costly related with increasing production and marketing
expenses of customized products.
◦ Less market coverage via such marketing
program.
 Levels of Market Segmentation
Mass Marketing
Same product to all consumers-based on what is common
(no segmentation/one fits all)

Segment Marketing
Different products to one or more segments
(some segmentation)

Niche Marketing
Different products to subgroups within segments
( more segmentation)

Micromarketing
Products to suit the tastes of individuals or locations
(complete segmentation)

150
 1. Mass-marketing:
 The starting point for discussing segmentation is mass-
marketing .
 In mass marketing, the seller engages in the mass
production, mass distribution, and mass promotion
of one product for all buyers.
 Thus mass marketing strategy focuses on what is
common in the needs of consumers rather than on
what is different.
Segmented /Differentiated Marketing.
 A market segment consists of a large identifiable group
within a market, with similar wants, purchasing power,
geographical location, buying attitudes, or buying habits.
 The marketer does not create the segments; the
marketer’s task is to identify the segments and decide
which one (s) to target.
Niche marketing:-
 A niche is a more narrowly defined group seeking a
distinctive mix of marketing program.
 Marketers usually identify niches by dividing a
segment into sub segments.
 An attractive niche is characterized by:
◦ customers sharing distinct set of needs;
◦ they will pay a premium to the firm that best satisfies them;
◦ the niche is not likely to attract competitors/big firms;
◦ the niche gains certain economies through specialization; and
◦ the niche provides the firm sales volume, profit, and growth
potential.
Local marketing:-
 Target marketing is leading to marketing
programs tailored to the needs and wants of
local customer groups (trading areas,
neighborhoods, even individual stores).
 Those favoring localizing a company’s marketing
see national advertising as wasteful because it
fails to address local needs.
Individual customer marketing:-
 The ultimate level of segmentation leads to
“segments of one”, “customized
marketing”, or “one –to-one marketing”.
Ultimately, every individual has a unique set
of wants and preferences.
 The tailor made the suit and the cobbler
designed shoes for the individual.
 Much business-to-business marketing today is
customized, in that a manufacturer will
customize the offer, logistics, communications,
and financial terms for each major buyer.
 Bases for Segmenting Consumer Markets

Geographic
Nations, states,
regions or cities

Demographic
Age, gender,
family size and
life cycle, or
income
Psychographic
Social class, lifestyle,
or personality

Behavioral
Occasions, benefits,
uses, or responses

156
Requirements for Effective Segmentation

Measurable • Size, purchasing power, profiles

of segments can be measured.

Accessible • Segments must be effectively

reached and served.

Substantial • Segments must be large or

profitable enough to serve.

Differential • Segments must respond

differently to different marketing
mix elements & actions.

Actionable • Must be able to attract and serve

the segments.

157
 Market Targeting
Evaluating Market segments:
 Size and Growth
◦ Analyze sales, growth rates and expected profitability.

 Segment Structural Attractiveness

◦ Consider effects of: Competitors, Availability of Substitute
Products and, the Power of Buyers & Suppliers.

 Company Objectives and Resources

◦ Company skills & resources relative to the segment(s).
◦ Look for Competitive Advantages.

158
 Selecting target markets
 Having evaluated different segments, the
company can consider five patterns of target
market selection:
 Single-Segment Concentration
◦ Serving a single segment via concentrated
marketing program.
◦ Risky as the taste of consumer may change
 Selective Specialization
◦ Selecting and serving multi segments having different
needs of marketing programs.
 Product Specialization
◦ The firm makes different products for different
customer groups
 Market Specialization
◦ The firm concentrates on serving many needs of a
particular customer group by providing a set of products.
 Full Market Coverage
◦ Here a firm attempts to serve all customer groups with
all of the products they might need.
◦ Only very large firms can undertake a full market
coverage strategy.
◦ Examples IBM (computer market), General Motors
(vehicle market).
◦ Large firms can cover a whole market through
undifferentiated marketing or differentiated marketing.
 Positioning for Competitive Advantage
 Product’s Position - the place the product occupies
in consumers’ minds relative to competing
products; i.e.Volvo positions on “safety”.
 Marketers must:
◦ Plan positions to give products the greatest advantage
◦ Develop marketing mixes to create planned positions

161
 Choosing and Implementing a Positioning Strategy

 Step 1. Identifying a set of possible competitive

advantages: Competitive Differentiation:
Competitive frame of reference: Deter-mine
◦ category membership the products or sets of products with
which a brand competes and which function as close
substitutes.
Points-of-Parity & Points-of-Difference
◦ Defining the appropriate points-of-difference (uniqueness)
and points-of similarity with competing brands.
 Step 2. Selecting the right competitive advantage.
 Step 3. Effectively communicating and delivering the
chosen position to the market.
162
Developing Competitive Differentiation

Marketing mix Technology

Areas for Competitive

Differentiation

Personnel Additional services

163
Criteria for Selecting the Right Competitive
Advantages:

Not easily copied

Profitable Distinctive
Criteria
for
Determining
Which
Differences
Affordable to Superior
Enhance:

Pre-emptive Communicable

164
 Ch-6: Product
 Anything that can be offered for a market for
attention, acquisition, use or consumption to
satisfies a want or a need:
 Goods
 Services
 Persons
 Places
 Organizations
 Ideas/information
 Events
 Combinations of the above

165
Product Levels:
 In planning its market offering, the marketer
needs to address five product levels .
 Each level adds more customer value, and
the five constitute a customer value hierarchy.
These are
 Core benefit
 Basic product
 Expected product
 Augmented product
 Potential product
166
 1. Core benefit
 The fundamental level is the core benefit: the service or
benefit the customer is really buying.
 Refers a problem solving ability of the product.
 A hotel guest is buying "rest and sleep.”
2. Basic product.
 At the second level, the marketer has to turn the core benefit
into a basic product.
 Thus a hotel room includes a bed, bathroom, towels, desk,
dresser, and closet.
3. Expected product:
 refers a set of attributes and conditions buyers normally expect
when they purchase this product.
 Hotel guests expect a clean bed, cleaned toilet fresh towels,
working lamps, and a relative degree of quiet.
167
4. Augmented product
 A product that exceeds customer expectations. In developed
countries, brand positioning and competition take place at this
level. In developing countries and emerging markets however,
competition takes place mostly at the expected product level.
Example: Some bed room provide TV.
 Differentiation arises on the basis of product augmentation.
Product augmentation also leads the marketer to look at the
user's total consumption system: the way the user performs
the tasks of getting and using products and related services
such as:
◦ Credit services
◦ Installation
◦ Shipment services
◦ Guarantee
◦ Discounts and gifts etc
168
5. Potential product
 Encompasses all the possible augmentations and
transformations the product or offering might
undergo in the future.
 Here is where companies search for new ways to
satisfy customers and distinguish their offer.

Internet facility
comuter

169
Product Classifications
1.Consumer Products
Convenience Products Shopping Products

> Buy frequently & immediately > Buy less frequently

> Low priced > Gather product information
> Many purchase locations > Fewer purchase locations
> Includes: > Compare for:
• Staple goods • Suitability & Quality
• Impulse goods • Price & Style
• Emergency goods
Specialty Products Unsought Products

> Special purchase efforts > New innovations

> Unique characteristics > Products consumers don’t
> Brand identification want to think about
> Few purchase locations > Require much advertising &
personal selling

170
2. Industrial Products
Raw Materials:
used in the form of their natural state or processed some
extent such as minerals, land, products of forests and the
seas; and agricultural products such as wheat, cotton,
fruits, vegetables, livestock, and animal products.
Operating Supplies: includes materials which are used in
the operation of a business and which are purchased
routinely. These are expense items and thus do not
become part of the finished good.
Accessory Equipment: These are industrial goods used
to facilitate basic operation of an industrial firm.
•They do not become an actual part of the finished
product.
• Examples would include forklift trucks, photocopier, and
typewriter.
171
 Installations:
They are long-lasting and expensive equipment performing the
basic operations of a firm. Examples include large generators in
a dam, a factory building, Jet airplanes for an airline.
 Directly affect the scale of operation in a firm.

Fabricated Materials and Parts

 These are industrial goods that become an actual part of the
finished product.
 They are already processed to some extent and will undergo
some processing/fitted to the major part.
New-Product Development Strategy
A firm can obtain new products through:
• Acquisition refers to the buying of a whole
company, a patent, or a license to produce
someone else’s product.
• New product development refers to
original products, product improvements,
product modifications, and new brands
developed from the firm’s own research
and development.
9-173
Reason for new Product Development
•Justification of a Firms Existence and Growth by
developing a product that can satisfy current needs
and wants.
•To ensure maximum resource utilization: to
assure that organizational resource are being used
effectively and efficiently.
•Product is a Basic Profit Determinant
New products are essential for sustaining a firm's
expected rate of profit.

9-174
Reasons for new product failure
• Overestimation of market size
• Poor design
• Incorrect positioning
• Wrong timing
• Priced too high
• Ineffective promotion
• Management influence
• High development costs
• Competition

9-175
New-Product Development Process
1. Idea generation
2. Idea screening
3. Concept development and testing
4. Marketing strategy development
5. Business analysis
6. Product development
7. Test marketing
8. Commercialization

9-176
New-Product Development Process
Idea Generation
 New idea generation is the systematic search for new
product ideas.
 To create a large number of ideas
 Sources of new-product ideas

◦ Internal sources refer to the company’s own

formal research and development, management
and staff, and intrapreneurial programs.
◦ External sources refer to sources outside the
company such as customers, competitors,
distributors, suppliers, and outside design firms.
9-177
Idea Screening
 Idea screening refers to reviewing new-product ideas in order to drop
poor ones as soon as possible.
Concept Development and Testing
 Product concept is a detailed version of the idea stated in meaningful
consumer terms.
 Concept testing refers to testing new-product concepts with groups of
target consumers. To find out how attractive each concept is to customers,
and choose the best one.
Marketing Strategy Development
 Marketing strategy development refers to the initial marketing
strategy for introducing the product to the market.
Marketing strategy development consists:
◦ Description of the target market
◦ The planning product positioning; sales, market share, and profit goals
◦ Price distribution and budget
◦ Long-term sales, profit goals, and marketing mix strategy

9-178
Business Analysis
 Business analysis involves a review of the sales, costs, and
profit projections to find out whether they satisfy the
company’s objectives.
Product Development
 Product development involves the creation and testing of
one or more physical versions by the R&D or engineering
departments. - Requires an increase in investment.
Test Marketing
 Test marketing is the stage at which the product and
marketing program are introduced into more realistic
marketing settings.
 Test marketing provides the marketer with experience in testing the
product and entire marketing program before full introduction.

9-179
Commercialization
 Commercialization is the introduction of the new
product into the market
◦ When to launch
◦ Where to launch
◦ Planned market rollout (the widespread public
introduction of a new product )

9-180
 Product Life-Cycle Strategies
 Product life-cycle (PLC) is the course that a
product’s sales and profits take over its lifetime.
◦ Product development
◦ Introduction
◦ Growth
◦ Maturity
◦ Decline

9-181
 Product Life-Cycle Strategies

Sales and profits over the product’s life from inception to decline
9-182
Product Life-Cycle: refers fluctuations in sales, profits, costs and level of
competition over time:

Introduction Growth Maturity decline

characteristics
sales Low sales Rising sales Peak sales Declining sales
Costs High cost average Low cost Low cost
profits negative Rising profit High profits declining
customers innovators Early adopters Middle majority laggards
competitors few Growing Stable number Declining
numbers
Marketing Create pdt Max. mkt share Max. profit Reducing
objectives awareness& trial expenditure
Strategies
product offer a basic Offer pdt Diversify brand Phase out weak
product extension and models items
price Use cost plus Penetration Competition Cut price
based pricing
place Selective intensive More intensive Go selective
183
 Introduction stage
Introduction stage is when the new product is first
launched.
◦ Takes time
◦ Slow sales growth
◦ Little or no profit
◦ High distribution and promotion expenses
◦ Few competitors

9-184
 Growth
Growth stage is when the new product satisfies the
market.
◦ Sales and profits increase
◦ New competitors enter the market
◦ Price stability or decline to increase volume
◦ Promotion and manufacturing costs gain economies of scale
◦ New features
◦ New market segments and distribution channels are entered

9-185
Maturity stage
Maturity stage is a long-lasting stage of a product that has
gained consumer acceptance.
◦ Slowdown in sales
◦ Many suppliers/Substitute products
◦ Overcapacity leads to competition
◦ Increased promotion and R&D to support sales and profits.
Marketers consider modifying strategies at the maturity stage
 Market modifying
 Product modifying
 Other marketing mix modifying

9-186
 Cont’d….
 Market modifying is when a company tries to increase
consumption of the current product (New users; Increase usage of
existing users; New market segments)
 Product modifying is changing characteristics (quality, features,
or style) to attract new users and to inspire more usage.
 Other marketing mix modifying is when a company
changes one or more of the marketing mix elements.
◦ Price
◦ Promotion
◦ Distribution channels

9-187
 Decline stage
 Is stage when sales decline for an extended time resulting in
low/no profit and the recommended action could be:
◦ Maintain the product without change in the hope that
competitors leave the industry
◦ Reposition or reformulate the product in hopes of
moving back into the growth stage
◦ Harvest the product that means reducing various costs and
hoping that sales hold up.
◦ Drop the product by selling it to another firm or simply
liquidate it at salvage value.
◦ Develop new product by divesting existing

9-188
 Product features
Brand
A name, term, symbol, design, or combination of
these that identifies a seller’s products and
differentiates them from competitors’ products.

189
 Branding
Brand That part of a brand that can be spoken,
Name including letters, words, and numbers.

Brand The elements of a brand that

Mark cannot be spoken.

A brand or part of a brand that has been

Trade
given legal protection so that the owner has
mark
exclusive rights to its use

Chapter 9 Version 6e 190

 Benefits of Branding

Branding
distinguishes
products from
competitors product
Provide legal Enhance Sales
protection Efficient ordering
Used for image
building

191
Requirements of good brand
 Is easy to pronounce
 Is easy to recognize and remember
 Is short, distinctive, and unique
 Describes the product, use, and benefits
 Has a positive connotation
 Reinforces the product image
 Is legally protectable

192
Individual Brands Versus Family Brands

Individual Using different brand names for different

Brand products.

Marketing several different

Family
products under the same
Brand brand name.

193
Packaging
concerned with the design and production of the
container or wrapper for a product.
Used to protect the product and also used as
differentiation strategy
Labeling:
Label is part of a package that carries verbal
information about the product of the seller. The
essence of label is expository by nature because it
expresses some features of the product such as
ingredients, weight measure, use, warning, performance,
etc.
Design-refers overall structure and layout of the
product.
Color: affects eye catching ability of the product
product quality: product capability to perform the
intended function:
Warranties are formal statements of expected
product performance by the manufacturer. Warranties,
whether expressed or implied, are legally enforceable.
Product Mix Decisions
Width - number of
different product
lines

Product Mix -
all the product
lines offered

Depth - number of
versions of each
product

196
 Example
Gillette’s Product Lines and Mix
Width of the product mix
Depth of the product lines

Blades and Writing

razors Toiletries instruments Lighters

Mach 3 Series Paper Mate Cricket

Sensor Adorn Flair S.T. Dupont
Trac II Toni
Atra Right Guard
Swivel Silkience
Double-Edge Soft and Dri
Lady Gillette Foamy
Super Speed Dry Look
Twin Injector Dry Idea
Techmatic Brush Plus

197
 Unit 7: Pricing
 Refers the amount of money customers pay to obtain and use a
product:
 Cost and desired mark up form a selling price for a seller while
for buyer the amount paid usually greater than sellers price.
 Price have a number of particular names:
◦ Rent
• Fare
◦ Tuition • Salary
◦ Commission • Wage
◦ Interest • Other

Importance of pricing
 price of a product influences the price paid for the factors of production
 price determines what will be supplied and who will get a product
(demand)
 It is among variables regulating the overall economy.

198
Factors to Consider When Setting Prices

Internal Factors

Positioning Pricing Target

Objectives Market
Decisions

External Factors

199
Internal Factors Affecting Pricing Decisions

Marketing
Objectives
Marketing-Mix
Strategy

Costs

Organizational
Considerations

200
Marketing Objectives that Affect Pricing
Decisions
Survival
Low Prices to Cover Variable Costs and
Some Fixed Costs to Stay in Business.

Current Profit Maximization

Choose the Price that Produces the
Marketing Maximum Current Profit, Cash Flow or ROI.

Objectives Market Share Leadership

Low as Possible Prices to Become
the Market Share Leader.

Product Quality Leadership

High Prices to Cover Higher
Performance Quality

201
Marketing Mix Variables that Affect
Pricing Decisions
Product Design
and Quality

Marketing-Mix
Non-Price
Factors Strategy Distribution

Promotion

202
Types of Cost Factors that Affect Pricing Decisions

Total Costs
Sum of the Fixed and Variable Costs for a Given
Level of Production

Fixed Costs Variable Costs

(Overhead)
Costs that don’t Costs that do vary
vary with sales or directly with the
production levels. level of production.
Executive Salaries Raw materials
Rent

203
External Factors Affecting Pricing
Decisions

Market and
Demand

Competitors’ Costs,
Prices, and Offers
Other External Factors
Economic Conditions
Reseller Needs
Government Actions
Social Concerns

204
The Market and Demand Factors that Affect Pricing
Decisions
Pure Competition Monopolistic Competition
Many Buyers and Sellers Who Many Buyers and Sellers Trading
Have Little Affect on the Price. Over a Range of Prices.

Different Types of Markets

Oligopolistic Competition
Pure Monopoly
Few Sellers Each Sensitive to Other’s
Single Seller
Pricing/ Marketing Strategies

205
 BASIC METHODS OF DETERMINING PRICE
 Cost plus pricing
 Price Based on market demand and production level
◦ Value based
◦ Break even pricing
 Competition based
◦ Setting price higher than competitors(skimming pricing)
 Premium pricing (with higher quality, service & unique brand)
◦ Setting price lower than competitors(penetration pricing)
◦ Pricing equal/equivalent pricing
 Pricing Strategies
Price - Quality Strategies
Price
Higher Lower

Higher Premium Good-Value

Quality

Strategy Strategy

Overcharging Economy
Lower Strategy Strategy

207
Pricing policies:
Discounts and Allowances
quantity discount made for quantity
buyers
trade discount made for those provided
some services
cash discount provided for prompt
payment
seasonal discount
promotional allowances
merchandize bonuses
 2. Promotional pricing
To promote the product by selling at lower price
3. Discriminatory Pricing:
◦ Customer segment pricing
◦ Product form pricing
◦ Location pricing:
◦ Time based discrimination
◦ Image pricing
4. One Vs flexible pricing
5. Price Vs non price competition
 Unit 8: promotion
 Promotion/Marketing communication includes brand
names, packaging, personal sales force, trading stamps,
coupons, mass media (newspapers, television, radio,
direct mail, billboards, and magazines).
 It can be paid or non paid, company sponsored or
controlled by independent media.
Types of Promotion
 Advertising
 Sales Promotion
 Personal Selling
 Publicity/ Public Relations
 Direct marketing
ADVERTISING
 Advertising is any paid form of non-personal, oral
and/visual messages conveyed by identified sponsor
about product and/or a firm.
◦ Public presentation
◦ Repeatable
◦ Enables dramatic expression
◦ Impersonal (no pressure of attention)
◦ Have several objectives (informing, warning, explanation,
attitude changing)
SALES PROMOTION
 Sales promotion
 Sales promotions a set of incentive tools
designed to stimulate interest, trial or
purchase of a particular product by final
consumers or others in the channel.
 stimulate purchases
 increase store traffic
PERSONAL SELLING
•Personal selling can be defined as a direct
person-to person communication with one
or more prospective customers for the
purpose of making sales.
•The PERSONAL presentation of a
product or company to one or more
potential buyers
•Telling about the product & satisfying
those who comes to the company
PUBLICITY and PUBLIC RELATIONS
 Public relation defined as the management of
communications and relationships to establish goodwill
and mutual understanding between an organization and
its public.
 By communicating to other groups, a public relations
creates an environment in which it is easier to conduct
marketing. Public relations activities include publicity,
seminars, news conferences, seminars, exhibitions,
anniversaries, and so on.
 It can be defined as the communication about a
product or organization by the placing of news about it
in the media without paying for the time or space
directly.
Determinants of Promotional strategy selection:

 Funds available
 Nature of the competition
 Scope of geographic operation
 Types of customer
 Stage of PLC
 Unit-9: Distribution
 Marketing channels are sets of interdependent
organizations involved in the process of making a
product or service available for use or consumption.

 Refers major activities of the manufacturer and all of

the intervening institutions and operations that move
the goods along toward the ultimate user.

 The basic functions in distribution are buying, selling,

transporting, and warehousing.
216
 Research
 Promotion
 contact- searching out and communicating with prospect
buyers.
 Matching – the shaping and fitting of the offer to the buyer’s
requirements.
◦ It involves such activities as grading, standardizing, packaging, assorting, and
so on.
 Negotiation
 Physical distribution – transportation and storing of the goods
 Risk taking – the assumption of risks in connection with
carrying out the channel work.
 Customer services – this includes delivery, credit, in-home
purchase, warranties, and return policies.
Basic Channels of Distribution

Manufacturers/products

Agents/brokers

Wholesalers/distributors

Retailers Retailers

Consumers and organizational end users

218
Considerations to select distribution strategy
◦ Market consideration
◦ Geographic operation
◦ Order size
◦ Nature of the product
◦ Middle men consideration
◦ Company consideration
Distribution-Scope Strategies
 Exclusive Distribution
◦ Limiting the distribution to only one intermediary in the
territory
 Intensive distribution
◦ Distribute from as many outlets as possible to provide
location convenience
 Selective distribution
◦ Appoint several but not all retailers

220