Principles_of_Marketing__-_Acct-1-1-1-1(0)[1].pdf

marketing pdf for under graduted students

1. 1
UNIT 1
INTRODUCTION AND BACKGROUND OF
MARKETING

2. 1.1 DEFINITION OF MARKETING
1.
2.
Simple definition
Marketing is managing
profitable customer relationships.

Goals
Attract new customers by promising superior
value.
Keep and grow current customers by delivering
satisfaction.
2

3. 1.1 DEFINITION OF MARKETING
•Marketing is the process by which
companies create value for customers
and build strong customer relationships
in order to capture value from customers
in return.
3

4. A Simple Model
of the Marketing Process
4

5. 1.1 DEFINITION OF MARKETING
•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.


OLD view of
marketing:

Making a
sale—“telling and
selling”
NEW view of
marketing:

Satisfying
customer needs
5

6. Marketing is an organizational function and a collection of
processes designed to plan for, create, communicate, and
deliver value to customers.

Marketing also builds effective customer relationships in
ways that benefit the organization and its stakeholders.
The AMA’s definition has two distinct elements:
1) an organizational function and
2) a collection of processes or tasks that are performed
by the organization.
1.1 DEFINITION OF MARKETING
6

7. Marketing
Organization
al Function
Collection of
Processes
Assembl
e
Pric
e
Promot
e
7

8. Marketing involves a specific set of processes/
activities (such as assembling, pricing, and
promoting) undertaken by the organization. This
leads to the development of products, services,
and ideas which allows for the fulfillment of
organizational goals (such as profits).

These processes are not the sole responsibility of
an organization’s marketing department, but can
encompass the entire organization.

1.1 DEFINITION OF MARKETING
8

9. 1.2 BASIC CONCEPTS
•
–
–
–
–
–
–
Marketers must understand six
core customer and marketplace
concepts:
Needs, wants, and demands.
Market offerings.
Value and satisfaction.
Exchanges and Transaction.
Relationships and Networks
Markets.
9

10. 1.2 BASIC CONCEPTS: Needs, Wants, and
Demands
•
•
•
Need:
State of felt deprivation including physical,
social, and individual needs.

Wants:
Form that a human need takes, as shaped by
culture and individual personality.

Wants + Buying Power = Demand.
10

11. Marketers must understand the difference between needs
and wants. Needs are necessities to meet urgent
requirements. A want is a desire for something that is not
essential.

Marketing can be used to turn a want into a perceived need
(many feel that a cell phone is a need).

Marketing can also be used to stimulate demand through
advertising (one element of marketing).
Need Want
11

12. 1.2 BASIC CONCEPTS: Needs, Wants, and
Demands
•
–
•
–
•
–
•
Types of Needs:
Physical needs:
Food, clothing,
shelter, safety.
Social needs:
Belonging, affection.
Individual needs:
Learning, knowledge,
self-expression.
Is ice cream a “need”?
12

13. 1.2 BASIC CONCEPTS: Market Offerings
•
•
•
•
Some combination of products, services,
information, or experiences offered to a market
to satisfy a need or want
Marketing offers fulfill needs and wants
Market offerings are not limited to physical
products.
Marketing can be applied to both tangible and
intangible items, such as the ones listed here.

13

14. 14

15. Marketing Myopia
•
–
–
Marketing myopia:
Occurs when sellers pay more
attention to the specific products
they offer than to the benefits and
experiences produced by the
products.
They focus on the “wants” and lose
sight of the “needs.”
15

16. 1.2 BASIC CONCEPTS: Customer Value and
Satisfaction
•
–
–
Care must be taken when setting
expectations for market offerings:
If performance is lower than
expectations, satisfaction is low.
If performance is higher than
expectations, satisfaction is high.

16

17. 1.2 BASIC CONCEPTS: Customer Value and
Satisfaction
–
•
•
•
Customer Satisfaction
Extent to which the product’s perceived performance
matches a buyer’s expectations.
High levels of customer satisfaction often leads to
consumer loyalty.
Some firms seek to DELIGHT customers by exceeding
expectations.
Profitability must be considered.
17

18. Advertising sets expectations, and marketers must be
careful not to promise too much.
Marketing is much more than just developing, advertising,
and selling a product – it is about creating value for
customers, which in turn keeps customers coming back
again and again; this allows the organization to generate
profits (or to meet other organizational goals).

Value is derived from the economic concept of utility,
which is the satisfaction one receives from owning or
consuming a product or service.
Value$
18

19. 1.2 BASIC CONCEPTS: Customer Value and
Satisfaction
•
–
–
•
–
Value
Customers form expectations regarding value
Marketers must deliver value to consumers
Satisfaction
A satisfied customer will buy again and tell others
about their good experience

19

20. Value is a ratio between what the customer gets and what he/
she gives; i.e. ratio of benefit obtained to cost incurred.

Marketers can increase the value of the customer offering in
several ways:
Raise benefits
Reduce costs
Rise benefit and reduce cost
Lower benefits by less than the reduction in cost
20

21. 1.2 BASIC CONCEPTS: Exchanges and Transaction
•



Exchange:
Act of obtaining a
desired object from
someone by offering
something in return.
One exchange is not the
goal, relationships with
several exchanges are
the goal
Relationships are built
through delivering value
and satisfaction

•



Transaction:
A trade of values between
two parties.
One party gives X to
another party and gets Y in
return.
Can include cash, credit,
or check
21

22. 1.2 BASIC CONCEPTS: Exchanges and Transaction
22

23. 1.2 BASIC CONCEPTS: Relationships and Networks
•
•
Marketing actions build and maintain
relationships with target audiences involving an
idea, product, service, or other object.
Marketers build
strong relationships
by by by by consistently
delivering superior
...customer value.



23

24. 1.2 BASIC CONCEPTS: Market
•
–
•
A market:
Is the set of actual and potential
buyers of a product.
These people share a need or want
that can be satisfied through
exchange relationships.

24

25. 1.3 MARKETING MANAGEMENT ORIENTATIONS
•
–
–
–
–
–
Organizations design and carry out their marketing
strategies under five alternate concepts:
Production Concept.
Product Concept.
Selling Concept.
Marketing Concept.
Societal Marketing Concept.

Production
Concept
Product
Concept
Selling
Concept
Marketing
Concept
Societal
Concept
25

26. 

1) The Production Concept
The The The The production concept holds that consumers will favor
products that are available and highly affordable.
Management should focus on improving production and
distribution efficiency.


2) The Product Concept
The The The The The The The product concept holds that consumers will favor
products that offer the most in quality, performance, and
innovative features.
Under this concept, marketing strategy focuses on making
continuous product improvements.
26

27. 


3) The Selling Concept
The The The The The The The selling concept holds that consumers will not buy
enough of the firm’s products unless it undertakes a large-
scale selling and promotion effort.
The concept is typically practiced with unsought goods –
those that buyers do not normally think of buying, such as
insurance or blood donations.
These industries must be good at tracking down prospects
and selling them on product benefits.

27

28. 


4) The Marketing Concept
The marketing concept holds that achieving organizational
goals
depends on depends on depends on depends on knowing the needs and wants of target
markets and delivering the desired satisfactions better than
competitors do.
Under the marketing concept, customer focus and value
are the paths to sales and profits.
The job is not to find the right customers for your product
find the right products for your customers
The job is not to find the right customers for your product
find the right products for your customers
The job is not to find the right customers for your productThe job is not to find the right customers for your product The job is not to find the right customers for your product
but to find the right products for your customers.
28

29. 


The selling concept takes an inside-out approach, whereas
the
marketing concept uses an outside-in perspective.

Customer-driven companies research current customers
deeply to learn about their desires, gather new product and
service ideas, and test proposed product improvements.

Customer-driving marketing is understanding customer
needs even better than customers themselves do and
creating products and services that meet existing and latent
needs.
29

30. The Selling and Marketing Concepts
Contrasted
30

31. •
–
5) The Societal Marketing Concept
The societal marketing concept:
The idea that a company’s
marketing decisions should
consider consumer’s wants, the
company’s desires, consumers’
and society’s long-run interests.
31

32. The Considerations Underlying the
Societal Marketing Concept
32

33. Production
Sales
Market
Societal
What can we make or do best?
How can we sell more aggressively?
What do customers
want and need?
What do customers want and need, and
how can we benefit society?
Orientation Focus
33

34. 1.4 MARKETING MANAGEMENT
•
–
The art and science of choosing
target markets and building
profitable relationships with them.

Aim is to find, attract, keep, and
grow customers by creating,
delivering, and communicating
superior value.

34

35. 1.4 MARKETING MANAGEMENT
•Designing a winning marketing
strategy requires answers to the
following questions:

1. What customers will we serve?
— What is our target market?

2. How can we best serve these
customers?
— What is our value proposition?
35

36. 36
UNIT 2
MARKETING
ENVIRONMENT
Genanew Ayalneh: IICM - Foundation
for Academic Excellence Ministry

37. 2.1 Introduction to Marketing Environment




marketing marketing marketing marketing marketing marketing that that that
maintain successful relationships with customers
that
maintain successful relationships with customers
that
maintain successful relationships with customers
that
maintain successful relationships with customers
that that that that that that that that that
maintain successful relationships
that
maintain successful relationships
that thatConsists of actors and forces out/in-side marketing that
affect marketing management’s ability to build and
maintain successful relationships with target customers.

Studying the marketing environment allows marketers to
take advantage of opportunities and to combat threats.

Marketing intelligence and research are used to collect
information about the environment.

Both the macro environment and microenvironment are
important.




37

38. 2.2. Microenvironment
and and and close to the company that and close to the company that and the company that and the company thatininin the company thatin the company thatin the company thatin the company thatActors in and close to the company that
affect its ability to serve its customers.



MARKETING
INTERMEDIARIE
S
COMPANY
COMPETITO
RS
PUBLICS
SUPPLIERS
38

39. •
–
–
–
–
The company itself:
Areas/departments inside of a company.
Affects the marketing department’s planning and
strategies.
All departments must “think consumer” and
work together to provide superior customer
value and satisfaction.
All the interrelated groups form the internal
environment.

The Microenvironment
39

40. •
–
–
–
–
Suppliers:
Important link in the overall customer value delivery
system.
Provide resources needed to produce goods and
services.
Most marketers treat suppliers like partners in creating
and delivering customer value.
Marketing managers must watch supply
availability—supply shortages or delays, labor strikes,
and other events can cost sales in the short run and
damage customer satisfaction in the long run.

The Microenvironment
40

41. •
–
–
•
–
–
Competitors:
Marketers must seek to gain strategic advantage
against competitive organizations.
Size of firm and industry position will influence
choice of strategy.

Marketing intermediaries:
Help the company to promote, sell, and distribute its
goods to final buyers.
Marketers recognize the importance of working with
their intermediaries as partners rather than simply as
channels through which they sell their products.

The Microenvironment
41

42. Microenvironment
•
•
Marketing intermediaries:
Resellers are distribution channel firms
that help the company find customers or
make sales to them. These include
wholesalers and retailers.

Physical distribution firms help the
company to stock and move goods from
their points of origin to their destinations.
42

43. Microenvironment
•
•
Marketing intermediaries:
Marketing services agencies are the marketing
research firms, advertising agencies, media
firms, and marketing consulting firms that help
the company target and promote its products to
the right markets.
Financial intermediaries include banks, credit
companies, insurance companies, and other
businesses that help finance transactions or
insure against the risks associated with the
buying and selling of goods.

43

44. The Microenvironment
•
–
Publics:
Any group that has an
actual or potential
interest in or impact on
an organization’s ability
to achieve its
objectives.
•
–
–
–
–
–
–
–
Types of Publics:
Financial public
Media public
Government public
Citizen-action public
Local public
General public
Internal public

44

45. Microenvironment
•
•
•
•
•
•
•
Types of Publics:
Financial publics influence the company’s ability to obtain funds.
Media publics carry news, features, and editorial opinion.
Government publics. Management must take government
developments into account.
Citizen-action publics. Consumer organizations, environmental groups,
etc.
Local publics include neighborhood residents and community
organizations.
General public. The general public’s image of the company affects its
buying.
Internal publics include workers, managers, volunteers, and the board
of directors.
45

46. •
–
–
•
•
•
•
•
Customers:
Companies may target any or all of the types of
markets that may purchase a company’s goods and
services.

Five types of customer markets:
Consumer
Business
Reseller
Government
International
The Microenvironment
46

47. •
•
•
•
•
Consumer markets: individuals and households
that buy goods and services for personal
consumption.
Business markets: buy goods and services for
further processing or for use in their production
process.
Reseller markets: buy goods and services to
resell at a profit.
Government markets: made up of government
agencies that buy goods and services to
produce public services.
International markets: buyers in other countries,
including consumers, producers, resellers, and
governments. 47

48. Macro
Environment
ECONOMIC
ENVIRONMENT
DEMOGRAPHIC
ENVIRONMENT
TECHNOLOGICAL
ENVIRONMENT
POLITICAL/LEGAL
ENVIRONMENT


CULTURAL
ENVIRONMENT
NATURAL
ENVIRONMENT
2.3. Macroenvironment
48

49. Macro environment
The company and all of the other actors operate
in a larger macro-environment of forces that
shape opportunities and pose threats to the
company.

The macro-environment consists of larger
societal forces that affect the microenvironment.

49

50. –
–
–
–
The study of human population in terms of size, density,
location, age, gender, race, occupation, and other
statistics.

Marketers track changing age and family structures,
educational characteristics, geographic population shifts,
and population diversity at home and abroad.

Demographic environment is important because it
involves people, and people make up markets.

Thus, marketers keep close track of demographic trends
and developments in their markets, both at home and
abroad.

1. Demographic Environment
50

51. Demographic Environment
•
•
•
•
•
Important trends in demographic
environment
Changing Age Structure of the Population
The Changing Family
Geographic Shifts in Population
A Better‑Educated, More White‑Collar, More
Professional Population
Increasing Diversity
51

52. 2. Economic Environment
•
•
–
–
–
The economic environment consists of
factors that affect consumer purchasing
power and spending patterns.
Industrial structure
Industrial economies – constitute rich
markets for many different kinds of goods.
Developing economies – offer outstanding
marketing opportunities for the right kinds of
products.
Subsistence economies – consume most of
their own agricultural and industrial output.
52

53. 3. Natural Environment
•
•
–
–
–
–
•
Involves natural resources that are needed as
inputs by marketers or that are affected by
marketing activities.
Key trends include:
Shortages of raw materials.
Increased pollution.
Increased government intervention.
Changing climate
Many firms now focus on creating
environmentally sustainable strategies.
53

54. 4. Technological Environment
•
•
•
•
Technology is the most dramatic force shaping
our destiny.
Changes rapidly, creating new markets and
opportunities and/or danger of products
becoming obsolete.
Challenge is to make practical, affordable new
products.
Government bans unsafe products and sets
safety standards, resulting in higher research
costs, and longer time to market for new
products.

54

55. 5.Political Environment
•
•
–
–
–
–
–
Includes laws, government agencies, and pressure
groups that influence or limit various organizations and
individuals in a given society.

Marketing activities face:
Increasing legislation.
To protect companies from each other.
To protect consumers from unfair business
practices.
To protect the interests of society against
unrestrained business behavior.

Increased emphasis on ethics and socially responsible
behavior.
55

56. 6. Cultural Environment
•
–
–
•
•
The institutions and other forces that affect a
society’s basic values, perceptions, preferences,
and behaviors.
are passed on fromare passed on fromare passed on fromCore beliefs and values are passed on from
parents to children and are reinforced by
schools, religious institutions, business, and
government.
are more openare more openare more openSecondary beliefs and values are more open
to change.
Marketers may be able to change secondary
beliefs, but NOT core beliefs.
Marketers want to predict cultural shifts in order to
spot new opportunities or threats.

56

57. 57
UNIT 3
BUYER BEHAVIOR: CONSUMER AND BUSINESS

58. 3.1 Consumer Markets and Consumer
Buying Behavior
•
–
–
•
–
Consumer buying behavior:
Refers to the buying behavior of individuals and
households who buy goods and services for personal
use.
These people make up the consumer market.
The central question for marketers is:
“How do consumers respond to various
marketing efforts the company might use?”

58

59. 3.2. Model of Buyer Behavior
59

60. Model of Buyer Behavior
•
•
•
Marketing mix factors and other external stimuli are
inputs into the “buyer’s black box.”
Stimuli are evaluated in light of the buyer decision
process and the buyer’s characteristics.
Buyer responses include formation of attitudes and
preferences, purchase behavior, and the development of
a relationship with the brand or firm.

60

61. 3.4. Factors Affecting Consumer
Behavior
61

62. 1. Cultural Factors
•
–
–
–
A. Culture
Culture is the most basic cause of a
person’s wants and behavior.
Culture is learned from family, church, school,
peers, colleagues.
Culture reflects basic values, perceptions,
wants, and behaviors.
Cultural shifts create opportunities for new
products or may otherwise influence
consumer behavior.

62

63. –
–
–
–
B. Subculture:
Groups of people with shared value systems
based on common life experiences.
C. Social class:
Society’s relatively permanent and ordered
divisions whose members share similar values,
interests, and behaviors.
Measured by a combination of occupation,
income, education, wealth, and other variables.
Class categories include upper class, middle
class, working class, and lower class.

Cultural Factors
63

64. •
–
•
•
–
Groups and social networks:
Membership, reference, and aspirational groups.
Marketers attempt to reach opinion leaders within
groups important to target market.
Opinion leaders are recruited as brand ambassadors
or for buzz marketing.
Online social networks allow marketers to
interact with consumers.

2. Social Factors
64

65. •
–
–
–
•
–
–
Family:
Strongly influences buying behavior.
Gender stereotypes for certain types of
purchases are relaxing
Children are very influential, and have
substantial disposable income of their own.
Roles and status:
Role = Expected activities.
Status = Esteem given to role by society.
Social Factors
65

66. –
•
–
•
–
–
. Age and life-cycle stage:
People change the goods they buy over their
lifetimes.
Occupation:
Occupation influences the purchase of
clothing and other goods.
Economic situation:
Some goods and services are especially
income-sensitive.
Economic situation often influences choice of
store as well.

3. Personal Factors
66

67. •
•
–
•
People within the same subculture, social
class, and occupation may have different
lifestyles.
Lifestyle:
Pattern of living as expressed in his or her
activities, interests, opinions.
People buy the lifestyles represented by
products or services.
Personal Factors
67

68. •
–
–
–
–
Personality:
Refers to the unique psychological
characteristics that distinguish a person or
group.
Generally defined in terms of traits.
Self-concept theory suggests that people’s
possessions contribute to and reflect their
identities.
Brands may also have personalities.
Personal Factors
68

69. •
–
•
–
–
Perception:
Process by which people select, organize, and
interpret information to form a meaningful
picture of the world.
Motivation:
A motive (or drive) is a need that is sufficiently
pressing to direct the person to seek
satisfaction.
Maslow’s hierarchy of needs explains why
people are driven by needs at particular times.

4. Psychological Factors
69

70. •
–
–
–
•
Learning:
Defined as changes in an individual’s
behavior arising from experience.
Occurs due to an interplay of drives,
stimuli, cues, responses, and
reinforcement.
Strongly impacted by the consequences
of an individual’s behavior.
Behaviors with satisfying results tend
to be repeated.

Psychological Factors
70

71. •
–
•
–
Belief:
A descriptive thought that a person
holds about something.
Attitude:
A person’s consistently favorable or
unfavorable evaluations, feelings, and
tendencies toward an object or idea.
Psychological Factors
71

72. 




Need recognition
Information search
Evaluation of alternatives
Purchase decision
Post-purchase behavior

3.5. Buyer Decision Process
72

73. Buyer Decision Process
73

74. •
1. NEED RECOGNITION
Need recognition can be triggered by
internal or external stimuli.

Buyer Decision Process
Marketing helps consumers recognize
an imbalance between
present status and preferred state
Present
Status

Preferred
State
Internal
Stimuli
External
Stimuli
74

75. Buyer Decision Process


3. INFORMATION SEARCHES
Several sources of information
may be used during information
search:
Personal sources
Commercial sources
Public sources
Experiential sources
75

76. Buyer Decision Process
Evoked Set
Purchase!

Analyze product attributes


Rank attributes by
importance


Use cutoff criteria

3. EVALUATION OF ALTERNATIVES
Evaluation process is dependent upon the specific
buying situation and the individual consumers.
76

77. •
–
–
4. PURCHASE DECISION
Purchase decision—Two factors may
interfere with realization of purchase
intentions:
Attitudes of others
Unexpected situational factors

Buyer Decision Process

77
Genanew Ayalneh: IICM - Foundation
for Academic Excellence Ministry

78. •
–
–
–
•
–
5. POST PURCHASE BEHAVIOR
Consumer satisfaction is a function of
consumer expectations and perceived
product performance.
Performance < Expectations -----
Disappointment
Performance = Expectations ----- Satisfaction
Performance > Expectations ----- Delight
Cognitive /reasoning/ dissonance/conflict/:
A buyer’s doubts shortly after a purchase about
whether it was the right decision.

Buyer Decision Process

78

79. 3.2.Business Markets and Business Buyer Behavior
In this model, marketing and other stimuli affect the buying
organization and produce certain buyer responses. In order to
design good marketing strategies, the marketer must
understand what happens within the organization to turn
stimuli into purchase responses.
79

80. Business Markets and Business Buyer Behavior
•
–
•
Business buyer behavior:
Refers to the buying behavior of the
organizations that buy goods and services for
use in the production of other products and
services or to resell or rent them to others for a
profit.
Business market is huge and involves far more
dollars and items than do consumer markets.

80

81. 3.2.1. Characteristics of the Business
Markets

•
–
–
–
Market structure and
demand:
Contains far fewer
but larger buyers.
Business demand
is derived from
consumer demand.
Business markets
have more
fluctuating demand.

•
–
–
Nature of the buying
unit:
Business purchases
involve more decision
participants.
Business buying
involves a more
professional
purchasing effort.

81

82. Characteristics of the Business Markets
•
–
–
–
Key differences exist between business
and consumer buying situations:
Business buyers usually face more complex
buying decisions.
The business buying process tends to be
more formalized.
Buyers and sellers are much more dependent
on each other in business markets.
82

83. 3.2.2 Major Influences on Business Buyers
83

84. 3.2.3 The Business Buying Process
1.
2.
3.
4.
Problem recognition
General need
description
Product
specification
Supplier search
5.
6.
7.
8.
Proposal solicitation
Supplier selection
Order-routine
specification
Performance review

84

85. UNIT 4: MARKET SEGMENTATION, TARGETING,
AND POSITIONING
85

86. 4.1 Market Segmentation
Market segmentation involves dividing a
market into smaller
segments of buyers
with distinct needs,
characteristics, or
behaviors that
might require
separate marketing
strategies or mixes.

86

87. Market Segmentation
Market segmentation is the process that companies use
to divide large heterogeneous markets into small
markets that can be reached more efficiently and
effectively with products and services that match their
unique needs.



87

88. Market Segmentation
Market
segmentation
More precise
definition of
customers needs
and wants
More accurate
marketing
objectives
Improved
resource
allocation
Better marketing
results
The Importance of Market Segmentation
88

89. Major Segmentation Variables
Market Segmentation
89

90. 
–
–
–
–
A. Geographic segmentation
Geographic segmentation calls for dividing
the market into different geographical units
such as
Geographic segmentation calls for dividing
the market into different geographical units
such as
Geographic segmentation calls for dividing
the market into different geographical units
such as
Geographic segmentation calls for dividing
the market into different geographical units
such as
Geographic segmentation calls for dividing
the market into different geographical units
such as
Geographic segmentation calls for dividing
the market into different geographical units
such as
Geographic segmentation calls for dividing
the market into different geographical units
such as nations, regions, states, countries,
cities, or even neighborhoods
Regions (by country, nation, state, neighborhood)
Population Density (Urban, suburban, rural)
City size (Size of area, population size and
growth rate)
Climate (Regions having similar climate pattern)

90

91. Market Segmentation

•
•
•
•
B. Demographic Segmentation:
Age, Gender, Income, Occupation, Education,
Social Class, Generation, Family size, Family life
cycle, Home Ownership, Religion, Ethnic group/
Race, Nationality
The most popular bases for segmenting customer groups.
Demographic factors are most important factors for
segmenting the customers groups.
Consumer needs, wants, usage rate these all depend upon
demographic variables. So, considering demographic
factors, while defining marketing strategy, is crucial.

91

92. •
•
•
Age and Life‑Cycle Stage means offering
different products or using different
marketing approaches for different age and
life‑cycle groups.
Gender segmentation has long been used
in clothing, cosmetics, toiletries, and
magazines.
Income segmentation has long been used
by the marketers of products and services
such as automobiles, clothing, cosmetics,
financial services, and travel.

92
Demographic Segmentation:

93. Market Segmentation

•
•
•
C. Psychographic Segmentation
In Psychographic Segmentation, segments are
defined on the basis of social class, lifestyle and
personality characteristics.
Psychographic variables include:
Interests, Opinions, Personality, Self Image,
Activities, Values, Attitudes
A segment having demographically grouped
consumers may have different psychographic
characteristics.
93

94. Market Segmentation
•
–
–
•
D. Behavioral Segmentation
Behavioral segmentation divides a market into segments
based on consumer knowledge, attitudes, uses, or
responses to a product.
Occasion segmentation means grouping buyers
according to occasions when they get the idea to buy,
actually make their purchase, or use the purchased
item.

Benefits Sought means grouping buyers according to
the different benefits that they seek from the product.
Quality, service, economic, convenience, speed

94

95. Behavioral

–
•
–
•
–
•
–
•
–
•
User Status
segmenting markets into nonusers, ex-users,
potential users, first-time users, regular users
Usage Rate
Light user, medium user, heavy user
Loyalty Status
None, medium, strong, absolute
Readiness stage
Unaware, aware, informed, interested, desirous
Attitude towards a product
Enthusiastic, positive, indifferent, negative, hostile

95

96. Market Segmentation
•
–
–
Best to use multiple approaches in order to
identify smaller, better-defined target groups.
Start with a single base and then expand to other
bases.
Geodemographic segmentation is becoming
more common.


96

97. Requirements for Effective Segmentation
•
–
•
•
•
•
A segment should be measurable. It means you A segment should be measurable. It means you A segment should be measurable. It means youMeasurable: A segment should be measurable. It means you
should be able to tell how many potential customers and how
many businesses are out there in the segment.
The size, purchasing power, and profiles of the segment can be
measured.
andandandAccessible: The market segments can be effectively reached and
served. A segment should be accessible through channels of
communication and distribution like: sales force, transportation,
distributors, telecom, or internet.
enough enough enoughSubstantial: The market segments are large or profitable enough
to serve.
andandandDifferentiable: The segments are conceptually distinguishable and
respond differently to different marketing mix elements and
programs.
Effective programs can be designed for attracting and Effective programs can be designed for attracting and Effective programs can be designed for attracting andActionable: Effective programs can be designed for attracting and
serving the segments.

97

98. Requirements for Effective
Segmentation
98

99. 4.2 Targeting Market Segments
A target market consists
of a set of buyers who
share common needs
or characteristics that
the company decides
to serve.


Market Targeting:
Evaluate segments
and decide which one
to pursue

99

100. Targeting Market Segments
•
–
•
–
•
–
–
Evaluating Market Segments
Segment Size and Growth
Analyze current segment sales, growth rates, and
expected profitability.

Segment Structural Attractiveness
Consider competition, existence of substitute products,
and the power of buyers and suppliers.

Company Objectives and Resources
Examine company skills & resources needed to
succeed in that segment.
Offer superior value and gain advantages over
competitors.

100

101. Targeting Market Segments
•
–
•
–
•
–
•
4.2.1 Selecting Marketing Segment Strategies

Undifferentiated (mass) marketing
Ignores segmentation opportunities
Differentiated (segmented) marketing
Targets several segments and designs
separate offers for each
Concentrated (niche) marketing
Targets one or a couple small segments
Micromarketing (local or individual
marketing)
101

102. Targeting Market Segments
•
–
–
Micromarketing
Tailoring products and marketing
programs to suit the tastes of specific
individuals and locations.
Local Marketing: Tailoring brands and
promotions to the needs and wants of local
customer groups—cities, neighborhoods,
specific stores.
Individual Marketing: Tailoring products and
marketing programs to the needs and
preferences of individual customers.

102

103. Targeting Market Segments
Strategies for Selecting Target Markets
103

104. Targeting Market Segments
•





4.2.2 Choosing a Market Coverage Strategy
Factors to consider:
Company resources: When the firm’s resources are
limited, concentrated marketing makes sense.
Product variability: Undifferentiated marketing is more
suited for uniform products.
Product’s life-cycle stage: For new product,
concentrated or undifferentiated marketing makes
sense. However, for product at maturity stage use
differentiated marketing.
Market variability: If most buyers have the same taste,
buy the same amounts, and react the same way to
marketing efforts, undifferentiated marketing is
appropriate.
Competitors’ marketing strategies: When competitors
use differentiated or concentrated marketing,
undifferentiated marketing can be suicidal.
104

105. 4.3 Differentiation and Positioning
•A product’s position is
the way the product is
defined by consumers
on important
attributes – the place
the product occupies
in the consumer’s
mind relative to
competing products
105

106. 4.3.1 Choosing a Positioning Strategy
The positioning task involves three steps:
106

107. Choosing a Positioning Strategy

•
•
–
A. Identifying a set of differentiating competitive
advantages
Key to winning target customers is to
understand their needs better than
competitors do and to deliver more value.
Competitive advantage – extent to which a
company can position itself as providing
superior value.
Achieved via differentiation.

107

108. Choosing a Positioning Strategy
•Competitive advantage is an advantage
over competitors gained by offering
greater customer value, either through
lower prices or by providing more
benefits that justify
higher prices.
108

109. Choosing a Positioning Strategy
•
•
•
•
•
Identifying Possible Competitive Advantages
Product differentiation: Consistency, durability,
reliability, or reparability
Services differentiation: Speedy, convenient, or
careful delivery
Image differentiation: Company or brand image
Channel differentiation: Coverage, expertise,
performance
People differentiation: Hiring and training better
people

109

110. 4.3.2 Choosing the Right Competitive Advantages
•
•
•
•
•
•
•
Which difference to promote?
Important: the difference delivers a highly valued
benefits to target buyers.
Distinctive: Competitors do not offer the difference or
the company can offer it in a more distinctive way
Superior: The difference is superior to other ways that
consumers might obtain the same benefit
Communicable: The difference is communicable and
visible to buyers
Preemptive/Defensive: Competitors can not easily
copy the difference
Affordable: Buyers can afford to buy the difference
Profitable: The company can introduce the difference
profitably

110

111. Choosing the Right Competitive Advantages
111

112. UNIT 5

Marketing Mix
112

113. 113
5.1. PRODUCT STRATEGY

114. DefinitionsDefinitionsDefinitions 5.1.1. Definitions
•
–
–
Product
Anything offered to a
market for attention,
acquisition, use, or
consumption that might
satisfy a need or want.

Broadly defined, products
include physical objects,
services, events, persons,
places, organizations,
ideas, or mixes of these
entities.

114

115. Definitions
•
–
Service
A form of product that
consists of activities,
benefits or
satisfactions offered
for sale that are
essentially intangible
and do not result in
the ownership of
anything.

115

116. Definitions
•
•
•
Service offering
A company’s market offering often includes both
tangible goods and intangible services.
At one extreme, the offer may consist of a pure
tangible good, such as soap or toothpaste.
At the other extreme, the offer may consist of a
pure services.

116

117. 5.1.2 Levels of a Product

117

118. Levels of a Product
•
–
–
–
A product is made up of the core product, the actual
product, and the augmented product.
Core Product: all the benefits the product will provide for
consumers or business customers
Actual Product: the physical good or the delivered service that
supplies the desired benefit; also includes the unique features of
the product, such as its appearance or styling, the package, and
the brand name
Augmented Product: the actual product plus other supporting
features such as warranty, credit, delivery, installation, and repair
service after the sale

118

119. 5.1.3 Product and Service Classification
Consumer
products
Industrial
products
119

120. Product and Service Classification
1. Consumer products are
products bought by final
consumer for personal
consumption.
2. Industrial products are
those purchased for further
processing or for use in
conducting a business
120

121. Product and Service Classification



•
•
•
•
Convenience
Shopping
Specialty
Unsought
•
•
•
•
•
Frequent purchases
bought with minimal
buying effort and little
comparison shopping
Low price
Widespread distribution
Mass promotion by
producer
Eg. Salt, sugar, soft-paper
Types of Consumer
Products
121

122. Product and Service Classification
1. Consumer products



•
•
•
•
Convenience
Shopping
Specialty
Unsought
•
•
•
•
•
•
Less frequent purchases
More shopping effort for
comparisons.
customers compare
carefully on suitability,
quality, price, and style.
Selective distribution in
fewer outlets
Advertising and personal
selling
Eg. Furniture, electronic
goods, and clothing
Types of Consumer
Products
122

123. Product and Service Classification


•
•
•
•
Convenience
Shopping
Specialty
Unsought
•
•
•
•
Strong brand preference
and loyalty, requires
special purchase effort,
little brand comparisons,
and low price sensitivity
High price
Exclusive distribution
Carefully targeted
promotions
Types of Consumer
Products
123

124. Product and Service Classification

•
•
•
•
Convenience
Shopping
Specialty
Unsought
•
•
•
•
Little product awareness
and knowledge (or if
aware, sometimes
negative interest)
Pricing varies
Distribution varies
Aggressive advertising
and personal selling by
producers and resellers
Types of Consumer
Products
124

125. Unsought
Product
125

126. Product and Service Classification
•
•
•
2. Industrial Products
Materials and parts include raw
materials and manufactured
materials and parts.

Capital items are industrial
products that aid in the buyer’s
production or operations,
including installations and
accessory equipment.

Supplies include operating
supplies (lubricants, coal, paper,
pencils) and repair and
maintenance items (paint, nails,
brooms).

126

127. 3. Specialty products are consumer products and services
with unique characteristics or brand identification for
which a significant group of buyers is willing to make a
special purchase effort.
Product and Service Classification
127

128. 3. Organizations, Persons, Places and Ideas
- all are Marketable entities
- sell the organization itself
- people can also be thought of as products
128

129. StrategyStrategyStrategy
5.1.5 New-Product Development
Strategy
•
–
New product development:
, , ,
, and
product
, and
product
, and, and
product
improvements , and
product
improvements , and, and
product
, and
product
, and
through the firm’s own product
product
through the firm’s own product
product
through the firm’s own product
development efforts.
product
development efforts.
product
development efforts.
The development of original products, product
improvements, product modifications, and
new brands through the firm’s own product
development efforts.

129

130. New-Product Development Strategy
•
•
•
•
•
•
•
•
Idea generation
Idea screening
Concept development and testing
Marketing strategy development
Business analysis
Product development
Test marketing
Commercialization
130

131. New-Product Development Strategy
–
•
–
•
•
•
•
•
1. Idea generation:
Internal sources:
Company employees at all levels.
External sources:
Customers
Competitors
Distributors
Suppliers
Outsourcing (design firms, product consultancies,
online collaborative communities)
131

132. New-Product Development Strategy
–
–
–
2. Idea screening:
Process used to spot good ideas and drop poor ones.
Executives provide a description of the product along
with estimates of market size, product price,
development time and costs, manufacturing costs,
and rate of return.
Evaluated against a set of company criteria for new
products.
132

133. New-Product Development Strategy
–
•
–
•
–
•
3. Concept development and testing:
Product idea:
Idea for a possible product that the company can see
itself offering to the market.
Product concept:
Detailed version of the new-product idea stated in
meaningful consumer terms.
Concept testing:
Testing new-product concepts with groups of target
consumers to find out if the concepts have strong
consumer appeal.
133

134. •
•
•
4. Marketing strategy development:
Describes the target market, planned value
proposition, sales, market share, and profit
goals.
Outlines the product’s planned price,
distribution, and marketing budget.
Describes the planned long-run sales and
profit goals, and marketing mix strategy.


New-Product Development Strategy
134

135. –
–
5. Business analysis:
Involves a review of the sales, costs, and
profit projections to assess fit with company
objectives.
If results are positive, project moves to the
product development phase.

New-Product Development Strategy
135

136. New-Product Development Strategy
–
–
–
–
–
6. Product development:
Develops concept into a physical product.
Calls for a large investment.
Prototypes are made.
Prototypes must have correct physical
features and convey psychological
characteristics.
Prototypes are subjected to physical tests.
136

137. –
–
–
7. Test marketing:
areareareareare
realistic market setting
are
realistic market setting
and are
introduced in a more
and are
introduced in a more
and are
introduced in a more
Product and marketing program are
introduced in a more realistic market setting.
Not needed for all products.
Can be expensive and time consuming, but
better than making a major marketing mistake.

New-Product Development Strategy
137

138. –
–
–
8. Commercialization:
Must decide on timing (i.e., when to introduce
the product).
Must decide on where to introduce the
product (e.g., single location, state, region,
nationally, internationally).
Must develop a market rollout plan.

New-Product Development Strategy
138

139. 5.1.6. Product Life Cycle
139

140. Product Life Cycle
•
•
–
–
–
–
–
Product life cycle
The course of a product’s sales and profits
in its lifetime.
It involves five distinct stages:
Product development
Introduction
Growth
Maturity
Decline

140

141. Product Life Cycle


•
•
•
•
•
•
1. Introduction Stage of PLC
Sales: Low
Costs: High cost per customer
Profits: Negative or low
Customers: Do not know the product
Competitors: Few

Marketing objective: Create product
awareness and trial.

141

142. Product Life Cycle
•
–
–
–
–
–
Marketing strategies:
Product: Offer a basic product.
Price: Use cost-plus pricing.
Distribution: Build selective distribution.
Advertising: Build product awareness
Promotion: Use heavy promotion to attract
product trial.

142

143. Product Life Cycle
•
•
•
•
•
•
2. Growth Stage of PLC
Sales: Rapidly rising
Costs: Average cost per customer
Profits: Rising profits
Customers: Early adopters
Competitors: Growing number

Marketing objective: Maximize market
share.
143

144. Product Life Cycle
•
–
–
–
–
–
Strategies:
Product: Offer product extensions, service,
warranty.
Price: Price to penetrate the market.
Distribution: Build intensive distribution.
Advertising: Build awareness and interest in
the mass market.
Promotion: Reduce to take advantage of
heavy consumer demand.

144

145. Product Life Cycle
•
•
•
•
•
•
3. Maturity Stage of PLC
Sales: Peak sales
Costs: Low cost per customer
Profits: High profits
Customers: Middle majority
Competitors: Stable number beginning to
decline

Marketing objective: Maximize profits while
defending market share.
145

146. Product Life Cycle
•
–
–
–
–
–
Strategies:
Product: Diversify brand and models.
Price: Match our best competitors.
Distribution: Build more intensive distribution.
Advertising: Stress brand differences and
benefits.
Promotion: Increase to encourage brand
switching.

146

147. Product Life Cycle
•
•
•
•
•
•
4. Decline Stage of PLC
Sales: Declining sales
Costs: Low cost per customer
Profits: Declining profits
Customers: Laggards
Competition: Declining number

Marketing objective: Reduce expenditures
and milk the brand.
147

148. •
–
–
–
–
–
Strategies:
Product: Phase out weak items.
Price: Cut price.
Distribution: Go selective—phase out
unprofitable outlets.
Advertising: Reduce to level needed to retain
hardcore loyal.
Promotion: Reduce to minimal level.
Product Life Cycle
148

149. •
•
–
–
–
–
–
Branding
A brand is a name, term, sign, symbol, or design, or a
combination of these, that identifies the maker or seller
of a product or service.
Brand names:
help consumers identify products that might benefit
them.
say something about product quality and consistency.
become the basis on which a whole story can be built
about a product.
provide legal protection for unique product features.
help the seller to segment markets.


149

150. •
•
Packaging
A package is the covering or
container for a product, but it is
also a lot more.
Packaging protects the product.
It makes it easy for consumers
to handle and store the product.
Packaging also plays an
important role in communicating
brand personality.

150

151. Labeling
151

152. 5.2 Pricing Strategies
•
•
What Is a Price?

price is the
or .
price is the
or .
price is the
or .
price is the
.
price is the
money charged for a product .
price is the
money charged for a product .
price is the
.
price is the
.
price is the
.
Narrowly defined, price is the amount of
money charged for a product or service.

, price is the , price is the , price is the , price is the , price is the , price is the , price is the , price is the , price is the , price is the , price is the , price is the Broadly defined, price is the sum of all of
the values that consumers give up in order
to gain the benefits of having or using the
product or service.

152

153. 5.2.1 Internal Factors Affecting Pricing Decisions
•
•
1. Overall marketing objectives
Company must decide on its overall marketing
strategy for the product and the role that price
will play in accomplishing objectives.
,survival,survival,
,
survival
,
survival
, ,
survival
,
survival
,
, or
survival
, or
survival
, or , or
survival
, or
survival
, or
.
survival
.
survival
.
survivalsurvivalGeneral pricing objectives might include survival,
current profit maximization, market share
leadership, or customer retention and
relationship building.

153

154. Internal Factors Affecting Pricing Decisions
•
•
2. Marketing mix strategies
Price decisions must be coordinated with
product design, distribution, and
promotion decisions to form a consistent
and effective integrated marketing
program.
Companies often position their products
on price and then tailor other marketing
mix decisions to the prices they want to
charge.


154

155. Internal Factors Affecting Pricing Decisions
•
–
–
–
•
3. Costs
Types of costs:
Variable
Fixed
Total costs
How costs vary at different production levels will
influence price setting

155

156. Internal Factors Affecting Pricing Decisions
•
–
–
–
–
4. Organizational Considerations
Who sets the price?
In small companies, prices are often set by top
management rather than by the marketing or sales
departments.
In large companies, pricing is typically handled by
divisional or product line managers.
In industrial markets, salespeople may be allowed to
negotiate with customers within certain price ranges.
In industries in which pricing is a key factor,
companies often have pricing departments to set the
best prices or to help others in setting them.

156

157. 5.2.2 External Factors Affecting Pricing Decisions
–
–
•
•
•
•
A. The market and demand
A firm’s flexibility in setting price varies
depending on the nature of the market.
Four types of markets exist:
Pure competition
Monopolistic competition
Oligopolistic competition
Pure monopoly
157

158. External Factors Affecting Pricing Decisions
•
–
–
•
–
Pure competition: The market consists of many buyers and
sellers trading in a uniform commodity.
No single buyer or seller has much effect on the going market price.
In a purely competitive market, sellers do not spend
much time on marketing strategy.
Monopolistic competition: The market consists of many
buyers and sellers who trade over a range of prices rather
than a single market price.
A range of prices occurs because sellers can differentiate their offers
to buyers.
158

159. External Factors Affecting Pricing Decisions
•
–
•
–
Oligopolistic competition: The market consists of a few
sellers who are highly sensitive to each other’s pricing
and marketing strategies.
There are few sellers because it is difficult for new sellers to
enter the market.

Pure monopoly: The market consists of one seller.
The seller may be a government monopoly, a private regulated
monopoly, or a private non-regulated monopoly.

159

160. External Factors Affecting Pricing Decisions
•
–
•
–
–
–
Analyzing the price-demand
relationship:
Different prices result in different
levels of demand, as shown by
the demand curve.
Price elasticity of demand:
Refers to how responsive
changes in demand will be to a
change in price.
Small demand change = inelastic
demand.
Large demand change = elastic
demand.

160

161. External Factors Affecting Pricing Decisions
•
•
–
–
–
B. Competitors cost, prices and offers
Sometimes a firm’s pricing strategy involves pricing its
wares/product near, at, above, or below the competition.
In assessing competitors’ pricing strategies, the
company should ask several questions.
How does the company’s market offering compare with
competitors’ offerings in terms of customer value?
How strong are current competitors and what are their current
pricing strategies?
How does the competitive landscape influence customer price
sensitivity?

161

162. External Factors Affecting Pricing Decisions
–
–
•
•
C. Other External Factors
Economic factors have a strong impact on
pricing strategies.
The recent recession has led to many
consumers becoming more value-conscious.
While some firms have cut price, others have
shifted to featuring more affordable items in the
marketing mix.
Some firms have held price, but repositioned
brands to enhance their value.

162

163. 5.2.4 Pricing strategies



Common pricing strategies
New-product Pricing
Price Adjustments
Product Mix Pricing

163

164. Pricing strategies
•
•
New-Product Pricing
Market-skimming pricing: Setting a high
price for a new product to skim maximum
revenues layer by layer from the segments
willing to pay the high price; the company
makes fewer but more profitable sales.
Market-penetration pricing: Setting a low
price for a new product in order to attract a
large number of buyers and a large market
share.

164

165. Pricing strategies
Price Adjustments
165

166. Price Adjustment Strategies
•
•
•
Discounts and Allowances includeDiscounts and Allowances includeA. Discounts and Allowances include
A cash discount—a price reduction to buyers who pay their bills
promptly. A typical example is “2/10, net 30,” which means that
although payment is due within 30 days, the buyer can deduct 2 percent
if the bill is paid within 10 days.
A quantity discount is a price reduction to buyers who buy large
volumes. Such discounts provide an incentive to the customer to buy
more from one given seller, rather than from many different sources.
A functional discount is offered by the seller to trade-channel members
who perform certain functions, such as selling, storing, and record
keeping.
166

167. Price Adjustment Strategies
•
•
•
A seasonal discount is a price reduction to buyers who
buy merchandise or services out of season.
Allowances are another type of reduction from list price.
Trade-in allowances are price reductions given for
turning in an old item when buying a new one.
Promotional allowances are payments or price
reductions to reward dealers for participating in
advertising and sales support programs.

167

168. Price Adjustment Strategies
1.
2.
3.
4.
B. In segmented pricing, the company sells a product or
service at two or more prices, even though the
difference in prices is not based on differences in
costs.

Types of segmented pricing:
Customer-segment: different customers pay different prices
for the same good.
Product-form: different versions are priced differently but not
according to cost.
Location pricing: different prices are charged for each
location even when the cost of offering the good is the same.
Time pricing: price is varied according to time of year, season,
month, day, or hour.
168

169. Price Adjustment Strategies
–
•
•
Psychological pricingPsychological pricingC. Psychological pricing
Considers the psychology of
prices and not simply the
economics; the price is used
to say something about
product.
Price can often influence
perceptions of quality.
Reference prices are
important.
169

170. Price Adjustment Strategies
•
excitement and urgency
promotional pricing
excitement and urgency
promotional pricing
excitement and urgency
D. promotional pricing, companies will temporarily price their products
below list price and sometimes even below cost to create buying
excitement and urgency.
Promotional pricing takes several forms.
--The seller may simply offer discounts from normal prices to increase
sales and reduce inventories.
--Supermarkets and department stores will price a few products as
loss leaders to attract customers to the store in the hope that they
will buy other items at normal markups.
--Sellers will also use special-event pricing in certain seasons to draw
more customers.
--Manufacturers sometimes offer cash rebates to consumers who buy
the product from dealers within a specified time; the manufacturer
sends the rebate directly to the customer.
--Some manufacturers offer low-interest financing, longer warranties,
or free maintenance to reduce the consumer’s “price.”


170

171. Genanew Ayalneh: IICM - Foundation
for Academic Excellence Ministry
171
Product Mix Pricing

172. 5.3 Promotion
172

173. 5.3.1. Basic Concept of Marketing Communication
The promotion mix is the
specific blend of
advertising, public
relations, personal selling,
and direct-marketing tools
that the company uses to
persuasively
communicate customer
value and build customer
relationships.

173

174. Copyright © 2011 Pearson
Education, Inc. Publishing as
Prentice Hall
Consistent, clear,
compelling messages
ADVERTISING SELLING
PUBLIC
RELATIONSSALES
PROMOTION
DIRECT MARKETING
174

175. The Need for Integrated Marketing Communications
175

176. 5.3.3. Advertising
Paid non-personal
presentation and
promotion of ideas,
goods, or services by
an identified sponsor


176

177. Advertising
•
•
•
Advertising can reach masses of geographically dispersed buyers at
a low cost per exposure, and it enables the seller to repeat the
message many times.

Beyond its reach, large-scale advertising says something positive
about the seller’s size, popularity, and success. Because of
advertising’s public nature, consumers tend to view advertised
products as more legitimate.

However, advertising is impersonal and cannot be as directly
persuasive as can company salespeople. For the most part,
advertising can carry on only a one-way communication with the
audience, and the audience does not feel that it has to pay attention
or respond. In addition, advertising can be very costly.


177

178. Advertising
•
–
–
–
–
Advertising objectives can
be classified by purpose:
Informative advertising.
Persuasive(Influential )
advertising.
Comparative advertising
(a special type of
persuasive advertising).
Reminder advertising.

178

179. Short-term incentives
used to encourage the
purchase of a product
or service
179

5.3.4. Sales Promotion

180. Sales Promotion
•
•
•
Sales promotion includes a wide assortment of
tools—coupons, contests, cents-off deals,
premiums, and others—all of which have many
unique qualities. They attract consumer attention,
offer strong incentives to purchase, and can be
used to dramatize product offers and to boost
sagging sales.
Sales promotions invite and reward quick
response.
Sales promotion effects are often short-lived.

180

181. 5.3.5. Public Relations
–
–
–
Building good relations with the
company’s publics through
favorable publicity, a good
corporate image, and effective
handling of unfavorable news
press releases,
sponsorships,
damage control
181

182. Public Relations
•
–
–
–
•
Public relations:
May strongly impact public awareness at a lower cost
than advertising.
Can yield spectacular results.
Is beginning to play an increasingly important brand-
building role.
Major Public Relations Tools
•
•
•
•
Corporate identity materials
Public service activities
Buzz marketing & social
networking
Company Web site

•
•
•
•
•
News
Speeches
Special events
Written materials
Audiovisual materials


182

183. 5.3.6. Personal Selling
•
•
•
Personal presentation by the sales force used to
enhance sales and customer relationships
Personal selling: flexible but high cost per contact
Personal selling is the most effective tool at certain
stages of the buying process, particularly in building up
buyers’ preferences, convictions, and actions. The
effective salesperson keeps the customer’s interests at
heart in order to build a long-term relationship.


183

184. Personal Selling
•However, a sales force requires a longer-term
commitment than does advertising—advertising can be
turned on and off, but sales force size is harder to
change. Personal selling is also the company’s most
expensive promotion tool.

184

185. 5.3.6. Direct Marketing
•
•
•
Gain an immediate response and lasting relationship
with targeted consumers
Direct marketing is less public: The message is normally
directed to a specific person.
It is also immediate and customized. Messages can be
prepared very quickly and can be tailored to appeal to
specific consumers.

185

186. Direct Marketing
•
•
Direct marketing is interactive: It allows a dialogue
between the marketing team and the consumer, and
messages can be altered depending on the consumer’s
response.
Use of direct mail, telephone, direct-response television,
e-mail, and the Internet to reach carefully targeted
customers.

186

187. –
–
–
–
–
–
Face to face selling
Telemarketing
Direct mail marketing
Catalog marketing
Kiosk marketing
Electronic commerce
Forms of direct marketing
187

188. Genanew Ayalneh: IICM - Foundation
for Academic Excellence Ministry
188
5.4 PLACE AND DEVELOPMENT OF
CHANNEL SYSTEMS

189. 5.4.1 Basic Concepts of Supply Chain & Marketing
Channel
•
–
–
Producing and making products available
to buyers requires building relationships
with “upstream” and “downstream” supply
chain partners.

Upstream: Firms that supply the raw materials,
components, parts, and other elements
necessary to create a good.

Downstream: Marketing channel partners that
link the firm to the customer.
189

190. Nature and Role of Marketing Channels
•
–
•
•
•
•
–
How channel members add value:
Channel members can offer more:
Contacts.
Experience.
Specialization.
Scale of operation.
Channel members may perform many
functions.

190

191. Nature and Role of Marketing Channels
•
–
–
–
Transaction
fulfillment:
Physical
distribution
Financing
Risk taking

Key functions performed by channel members:
191

192. Distribution Channel Functions
•
•
•
•
•
Members of the marketing channel perform many key functions.
Information: Gathering and distributing marketing research and
intelligence information about actors and forces in the marketing
environment needed for planning and aiding exchange
Promotion: Developing and spreading persuasive communications
about an offer
Contact: Finding and communicating with prospective buyers
Matching: Shaping and fitting the offer to the buyer’s needs, including
activities such as manufacturing, grading, assembling, and packaging
Negotiation: Reaching an agreement on price and other terms of the
offer so that ownership or possession can be transferred
192

193. Distribution Channel Functions
•
•
•
Physical distribution: Transporting and storing goods
Financing: Acquiring and using funds to cover the costs
of the channel work
Risk taking: Assuming the risks of carrying out the
channel work

193

194. 5.4.3. Level of Major distribution channels
194

195. 1.








Product considerations:
price of product
Weight
Product nature
2. Market consideration
Market size
Nature of customers
Location of buyers
3 consumers considerations
Number of customers
Quantity to be purchased
Factors Affecting choice of distribution channels
195

196. Genanew Ayalneh: IICM - Foundation
for Academic Excellence Ministry
196






4. Middlemen consideration:
Availability
Cost
Effect on sales
4. Manufacturer’s considerations
Financial position
Volume of production
Control over distribution

197. The End