marketing in action

• A Business Organization is an integrated human matrix of interdependent entrepreneurs with subordinated goals aligned to the business of an organization for creating profit by satisfying the demand of market and in turn creating wealth for its stake holders

Defining a Business Organization

• Production of goods or creation of services.

•Marketing those goods and services.

Businesses have two major functions:

Copyright © 2001 by Harcourt, Inc. All rights reserved.

BUSINESSORGANISATION

PRODUCE SELL

VALUE CHAIN

The Operations System

• People

• Technology

• Capital

• Equipment

• Materials

• Information

Inputs Outputs

• Goods

• Services

TransformationProcess

© Prentice Hall, 2002 19-5

Definition

• Value Delivery Network– The network made up of the company,

suppliers, distributors, and ultimately customers who “partner” with each other to improve the performance of the entire system.

Value Chain Management• What is Value Chain Management?

– value - performance characteristics, features, and attributes, and any other aspects of goods and services for which customers are willing to give up resources• organizations must provide value to attract and keep

customers• value provided through the transformation of raw

materials into some product or service that end-users need where, when, and how they want it


Fundamental Principles of Marketing

Customer Value

Differentiation Focus

WHAT IS VALUE ?

• Value is perceived benefits over perceived cost

• V= PB/PC

• HERE PB = ∑ Functional + Mental + Emotional Benefits

• HERE PC = ∑ Time + Money + Energy spent

Customer Value

• Goal: – create customer value that is greater than the value created

by competitors

• Strategy: – Expand or improve product and/or service benefits

– Reduce the price

– Combine these two elements

V = PB PC

Value Chain Management (cont.)

• Goal of Value Chain Management– create a value chain strategy that meets and exceeds

customers’ needs• recognizes that ultimately customers are the ones with power

– create a full and seamless integration among all members of the chain

• sequence of participants work together as a team

• each adds a component of value to the overall process

• the better the collaboration among chain participants, the better the customer solutions



PRODUCE SELL

VALUE CHAIN

SO ……………..HOW DOES BUSINESS ORGANISATIONS SELL ?AND WHERE DO THEY SELL ? WHAT IS A MARKET ?WHERE IS THE MARKET?WHAT IS MARKETING?HOW IS MARKETING DONE?WHAT ARE MARKETING STRATEGIES?

• Consumer

• Business

SALESPEOPLE WORK IN TWO MARKETS


Household –Is the individual who buys goods for his or her own use. Decision-making unit buying for personal use.

Firm – an organization that produces goods and services.

Government – an organization that has two functions: the provision of goods and services to households and firms and the redistribution of income and wealth.

There are three groups of customers:



PRODUCE SELLING

VALUE CHAIN

MARKET TARGET CUSTOMER AUDIENCE

CONSUMERS(PERSONAL ENDUSE)

BUSINESS(RESALE, REMAKE

REUSE)

HOUSEHOLD MIDDLEMEN & FIRMS

GOVERNMENT & INSTITUTIONS

RETAILERSWHOLESALER, AGENT, BROKER, COMPANIES

Consumer Behaviour 2nd Ed. © Copyright 2001 Pearson Education Australia

The Marketing ConceptThe Marketing Concept

• To be successful, a company must determine the needs and wants of specific target markets and deliver the desired satisfactions better than the competition.

Consumer Behaviour 2nd Ed. © Copyright 2001 Pearson Education Australia

WHAT’S MARKETING IS ALLABOUT

• A HUMAN ACTIVITY DIRECTED AT SATISFYING NEEDS AND WANTS THROUGH EXCHANGE PROCESSES

PHILIP KOTLER

• IT IS HE PERFORMANCE OF BUSINESS ACTIVITIES THAT DIRECT THE FLOW OF GOODS AND SERVICES FROM PRODUCER TO CONSUMERS

AMERICAN MARKETING ASSOCIATION

What is Marketing??A. “A set of decisions and processes that every

organization uses to carry out an exchange with others”

B. “A series of activities leading to an exchange transaction between a seller and a buyer at a profit”

C. “The process of planning and executing the conception, pricing, promotion and distribution of ideas, goods and services to create exchanges that satisfy organizational objectives”

D. “Everything from the formation of an idea to satisfying a consumer need”

MARKETING CONTINUED…

IT IS THE PROCES OF

• IDENTIFYING CUSTOMER NEEDS

• CONCEPTUALISING THOSE NEEDS IN TERMS OF ANORGANISATION’S CAPACITY TO PRODUCE.

• COMMUNICATING THAT CONCEPTUALISATION TO THE APPROPRIATE LAWS OF POWER IN THE ORGANISATION.

• CONCEPTUALISING THE CONSEQUENT OUTPUT IN TERMS OF THE CUSTOMER NEEDS EARLIER IDENTIFIED, AND

• COMMUNICATING THAT CONCEPTUALISATION TO THE CUSTOMER

JOHN.A. HOWARDCOLUMBIA UNIVERSITY

1973

MARKETING CONTINUED…

• IT IS THE PERFORMANCE OF THOSE ACTIVITIES WHICH SEEK TO ACCOMPLISH AN ORGANISATION’S OBJECTIVES BY ANTICIPATING CUSTOMER OR CLIENT NEEDS AND DIRECTING A FLOW OF NEED- SATISFYING GOODS AND SERVICES FROM PRODUCER TO CUSTOMER OR CLIENT

E.JEROME MC CARTHY

MICHIGAN STATE UNIVERSITY

SELLING AND ADVERTISING IS JUST THE TIP OF ICEBERG WHILE MARKETING IS THE ICEBERG ITSELF.

Marketing Defined

“Marketing is the process of planning and executing the conception, pricing, promotion and distribution of ideas, goods and services to create exchanges that satisfy individual and organisational objectives.”

The Art of Marketing & Sales

• Marketing is about Loving a Customer

• Sales is about marrying a customer

• Marketing Creates Value and Sales Delivers it

• The art of marketing is connecting Value with Values

• We are an expression of others U α ∑ Pn

• A successful Marketer is able to connect within self and also able to connect with others

Marketing vs. Selling

Customer Oriented

Pull Strategy

Value/Consumer Satisfaction

Need Based

Seller Oriented

Push Strategy

Revenue/ Profits

Product Based

Source Dr. Pramod Kumar “ An introduction to sales management”

Pulling and PushingPromotional Strategies

• Pulling strategyPulling strategy: promotional effort by a seller to stimulate demand among final users, who will then exert pressure on the distribution channel to carry the good or service, pulling it though the marketing channel

• Pushing strategyPushing strategy: promotional effort by a seller to members of the marketing channel intended to stimulate personal selling of the good or service, thereby pushing it through the marketing channel

MARKETING

IS

A

WAY

OF

LIFE

NO MORE SELLING FROM TODAY

THERE WILL ALWAYS, ONE CAN ASSUME, BE NEEDFOR SELLING. BUT THE AIM OF MARKETING ISTO MAKE SELLING SUPERFLUOUS.

THE AIM OF MARKETING IS TO KNOW AND UNDER-STAND THE CUSTOMER SO WELLTHAT THE PRODUCT OR SERVICE FITS HIM AND SELLS ITSELF.

IDEALLY, MARKETING SHOULD RESULT IN A CUSTOMER WHO IS READY TO BUY.

ALL THAT SHOULD BE NEEDED THEN IS TO MAKETHE PRODUCT OR SERVICE AVAILABLE.

PETER DRUCKER

AND ULTIMATELY

MARKETING IS WAR

WEAPONS MAY CHANGE BUT WARFARE IS BASED ON TWO IMMUTABLE CHARACTERISTICS

STRATEGIES ANDTACTICS

KARL VON CLAUSEWITZ AUTHOR OR “ON WAR”

THE TOOLS FOR MARKETING WARFARE

The Marketing Mix: Four P’s • Product: how to develop the firm’s products;

how to develop tangible and intangible product features that meet customer needs in diverse markets

• PRODUCT: IT’S MORE THAN YOU MIGHT THINK– A good is a physical object that can be purchased.– Service is an action or activity done for others for a

fee.– Product refers to both goods and services.



• Pricing: how to price the products; how to develop pricing policies that bring in revenues and strategically shape the firm’s competitive environment

• Promotion: how to sell the products; how to devise ways to enhance the desirability of the product in the eyes of potential and actual buyers

• Place (distribution): how to distribute the product to customers; how to get the products into the hands of customers via transportation and merchandising

M a rk etin g M ix

FOUR MARKETING-MIX ELEMENTS AND FOUR PROMOTION ACTIVITIES

Product Price Place Promotion


MARKETING MIXIt is the set of marketing tools that the firm uses to pursue its marketing objectives

in the target market.

MARKETING MIX

TARGETMARKET

PRODUCT PLACE

QualityFeaturesOptionsStyleBrand NamePackagingSizesServicesWarrantiesReturns

ChannelsCoverageLocationsInventoryTransport

PRICE PROMOTION

List PriceDiscountsAllowancesPayment PeriodCredit terms

AdvertisingPersonal SellingSale promotionPublic Relations

The Four Ps of the Marketing Mix

BUSINESS ORGANISATION

MARKET

MARKETING + SELLING

PRODUCT PROMOTIONPRICE PLACE

BRAND

IMAGE

QUALITY

VARIETY

SIZES

WARRANTY

SERVICE

MRP

DISCOUNT

FINANCING

CREDIT

ADVERTISING

Personal Selling`

Sales Promotion

PUBLICITY

PR

MASS

DISTRIBUTION

INTENSIVE

DISTRIBUTION/ EXTENSIVE DISTRIBUTION

EXCLUSIVE OR SELECTIVE DISTRIBUTION

CHANNEL STRUCTURE

RETAILER

WHOLE SELLER/AGENT/BROKER

PHYSICAL DISTRIBUTION

PRODUCT PRICE PLACE PROMOTION

Brand name Credit term Channels Advertising

Features Discounts Inventory Coupons

Image List price Locations Free samples

Packaging Promotional allowances Retailers Personal selling

Quality level Transportation Product displays

Returns Wholesalers Publicity

Services Sales management

Sizes Trade shows

Warranties

EXAMPLES OF EACH MARKETING-MIX ELEMENT


MARKETING MANAGEMENTMarketing is so basic that it can’t be considered a separate function. It is the whole business seen from the point of view of its final result,that is, from the customer’s point of view

… Peter Drucker.

Key terms to be understand

-Needs - Wants - Demands -Product -Utility -Value -Satisfaction

Core concepts of Marketing Management

•Production Concept•Product Concept•Selling Concept•Marketing Concept

FUNDAMENTAL TERMINOLOGIES

NEEDS : FELT DEPREIVATIONWANTS : FORM TAKEN BY HUMAN NEEDS AS THEY ARE SHAPED BY

CULTURE AND PERSONALITY.DEMAND : WANTS BACKED BY PURCHASING POWER.PRODUCT : ANY OFFERING TO SATISFY NEEDS AND WANTS MAINLY

PHYSICAL OBJECTS, SERVICES, INFORMATION, PROPERTIES EXPERIENCES, EVENTS, PLACES, ORGANISATIONS, IDEAS, PERSONS.

FEATURES : PHYSICAL ATTRIBUTES OF THE PRODUCTADVANTAGES : OPERATIONAL FEATURES OF THE PRODUCTBENEFITS : IMPLICIT, SUBJECTIVE OUTCOME AFTER USE OF THE

PRODUCT WHICH LEADS SATISFACTION.VALUE : IT IS (FUNCTIONAL BENEFIT+ EMOTIONAL BENEFIT)/

(MONEY + TIME+ ENERGY + PSYCHIC COSTS)SATISFACTION : PERFORMANCE VS EXPECTATION FUNCTIONEXCHANGE : OBTAINING OF SOMETHING BY OFFERING SOMETHING ELSE

IN RETURN.TRANSACTION : MARKETING’S UNIT OF MEASUREMENT OF THE EXCHANGE.

CONCEPTS IN MARKETING

• PRODUCTION CONCEPT : WIDELY AVAILABLE AND INEXPENSIVE PRODUCTS WILL BE PREFERRED.

• PRODUCT CONCEPTS : MOST QUALITATIVE, HIGH PERFORMING AND INNOVATIVE FEATURES ORIENTED

PRODUCTS WILL BE PREFERRED.

• SELLING CONCEPTS : IF LEFT ALONE, CONSUMERS AND BUSINESS WON’T BUY ENOUGH OF PRODUCTS SO DO AGGRESSIVE SELLING

• MARKETING CONCEPT : MEETING NEEDS PROFITABLY; FIND WANTS AND FILL THEM;

LOVE THE CUSTOMER, NOT THE PRODUT;HAVE IT YOUR WAY… BURGER KINGYOU’RE THE BOSS… UNITED AIRLINES;PUTTING PEOPLE FIRST BRITISH AIRWAYS;

• SOCIAL MARKETING CONCEPTS: GIVE TASTE BUT NOT AT THECOST OF HEALTH

Exchange & Transactions

Five conditions for exchange potential

1. There are at least two parties2. Each party has something of value to other party.3. Each party is capable of communication and delivery.4. Each party is free to accept or reject the offer.5. Each party believers it is appropriate or desirable to deal with the other party.

Exchange is a process of value creation.

Transaction involves –two things of some value, agreed upon Conditions, a time of agreement, and a place of agreement and Above all a legal system to endorse it all.

STARTINGPOINT

FOCUS

MEANS

ENDS

SELLINGCONCEPT

FACTORY

EXISTINGPRODUCTS

SELLING/PROMOTING

PROFITS THROUGHSALES VOLUME

MARKETINGCONCEPT

MARKET

CUSTOMERNEEDS

INTEGRATEDMARKETING

PROFITS THROUGHCUSTOMERSATISFACTION

DIFFERENCES BETWEEN PRODUCTION-ORIENTED AND MARKET-ORIENTED ORGANIZATIONS

Business activity or function

Product offering

Product line

Pricing

Research

Packaging

Credit

Promotion

Production orientation

Company sells what it can make; primary focus on functional performance and cost.

Narrow.

Based on production and distribution costs.Technical research, focus on product improvement and cost cutting in the production process.

Protection for the product; minimize costs.

A necessary evil; minimize bad debt losses.

Emphasis on product features, quality and price.

Marketing orientation

Company makes what it can sell; primary focus on customers’ needs and market opportunities.

Broad.

Based on perceived benefits provided.

Market research; focus on identifying new opportunities and applying new technology to satisfy customer needs.

Designed for customer convenience; a promotional tool.

A customer service; a tool to attract customers.

Emphasis on product benefits and ability to satisfy customer’s needs orSolve problems.

Product Oriented vs Market Oriented Concept

Revlon

Ikea

Xerox

Bendigo Fertilisers

Esso

Columbia Pictures

Encyclopedia Britannica

Qantas

Kodak

We make cosmetics

We make furniture

We make copiers

We sell fertiliser

We sell petrol

We make movies

We sell encyclopedias

We run planes

We produce film

We sell hope

We create democracy

We improve office productivity

We improve agriculturalproductivityWe supply energy

We market entertainment

We are in the informationproduction and supply business

We bring people together

We bind families together

Company Product Oriented Market Oriented

How the Internet is Affecting the Four ‘P’s

• Place– From market place to market space (no borders!)

• Product– From batches to custom orders (CUSTOMer)

• Price– From cost plus to value minus (bidding, i.e. E-Bay)

• Promotion– From monologue to dialogue (interactive)

The Societal Marketing ConceptThe Societal Marketing Concept

• All companies prosper when society prospers.• Companies as well as individuals, would be better

off if social responsibility was an integral component of every marketing decision.

• Requires all marketers adhere to principles of social responsibility in marketing of their

goods and services endeavour to satisfy the needs and wants of their target

markets in ways that preserve and enhance the well-being of consumers

and society as a whole.

“The behaviour that consumers display in seeking, purchasing,

using, evaluating, and disposing of products and services that they expect will satisfy their personal

needs”- Schiffman et al (2001: 5)

Consumer Behaviour

The Scope of Consumer BehaviourThe Scope of Consumer Behaviour• How do individuals make decisions to spend their

resources (time, money, effort)? Includes:– what they buy,

– why they buy it,

– when they buy it,

– where they buy it,

– how often they buy it, and

– how often they use it.

• How do individuals dispose of their once-new purchases? Do they store it, throw it or give it away, sell it, rent it, or lend it out?

Firm’s Marketing Efforts1. Product2. Promotion3. Price4. Channels of distribution

Sociocultural Environment1. Family2. Informal sources3. Other noncommercial

sources4. Social class5. Subculture and culture

Output

Process

Input

Ext

ern

al I

nfl

uen

ceC

onsu

mer

Dec

isio

n M

akin

gP

ost

dec

isio

n

Beh

avio

r

Post purchase Evaluation

Purchase1. Trial2. Repeat purchase

Need Recognition

Pre-purchase Search

Evaluation of Alternatives

Psychological Field1. Motivation2. Perception3. Learning4. Personality5. Attitudes

Experience

Figure 1-2A Simplified Model of Consumer Decision Making

Pre-purchase activities

Purchase/Selection

Post-purchase activities

Consumer Decision ProcessesConsumer Decision Processes

Decision Making ModelDecision Making Model

Need Recognition

Information SearchExternal External SearchSearch

Internal Search

Pre-purchase Evaluation

Purchase

Consumption, Post-consumption Evaluation & Divestment

Individual Influence

Individual Influence

Environmental Influences

Environmental Influences

Individual InfluencesIndividual Influences

Individual Determinants

of Consumer Behavior

Demographics, Geographic's

Intentions, Attitudes, Beliefs

& Feelings

Consumer MotivationInformation Processing

Consumer Knowledge &

Behavioral Learning

Psychographics & Behavior-

graphic

Environmental InfluencesEnvironmental Influences

Environmental Influences of Consumer Behavior

Culture, Ethnicity &

Social Class

Group, Family & Personal

Influences

Overall Model Of Consumer BehaviorOverall Model Of Consumer Behavior

PRODUCT

Definitions

• Product– Anything offered to a market for attention,

acquisition, use, or consumption that might satisfy a need or want.

• Service– Any activity or benefit that one party can

offer to another that is essentially intangible and does not result in ownership of anything.

A GOOD/SERVICE CONTINUUM

R elativ ely P ure

G o o d s Salt Soup

R elativ ely P ure

Serv ices B aby- sitt in g I n suran ce Teach in g

Serv ice- I n ten sive

G o o d s A utom obiles

G o o d s- I n ten sive Serv ices

A ir travel

H yb rid s R estau ran ts


SERVICES ARE PRODUCTS

They present their own selling challenges and opportunities:

• Intangibility – customers cannot sample.

• Inseparability – cannot be separated from the seller.

• Heterogeneity – cannot standardize output.

• Perishability and fluctuating demand – highly perishable, seasonal fluctuations.

• A tough sell – most challenging sales job.


What is a Product?

• Product and Service Classifications– Organizations, persons, places, and ideas

• Organizational marketing makes use of corporate image advertising

• Person marketing applies to political candidates, entertainment sports figures, and professionals

• Place marketing relates to tourism

• Social marketing campaigns promote ideas

What is a Product?

• Product and Service Classifications– Consumer products– Industrial products

• Materials and parts

• Capital items

• Supplies and services

PRODUCT ANALYSIS

PRODUCT:

A PRODUCT IS SOMETHING THAT CAN BE OFFERED TO A MARKET FOR ATTENTION, ACQUISITION, USE OR CONSUMPTION:PRODUCT IS A SET OF TANGIBLE AND INTANGIBLE ATTRIBUTES THAT LEADS TO CUSTOMER SATISFACTION

IT INCLUDES

PHYSICAL OBJECTSSERVICESPERSONALITIESPLACESORGANIZATIONS, ANDIDEA

PRODUCT ATTRIBUTESQUALITY, FEATURES, DESIGN ADVANTAGE, BENEFITS

Feature

• A product feature is any physical characteristic of a product.

The Product’s Features : So What ?

Size Terms Packaging Color

Quantity Flavour Taste Price

Service Quality Shape Uses

Delivery Ingredients Technology

Advantage

• A product advantage is the performance characteristic of a product that describes how it can be used or will help the buyer.

• It is the fastest-selling soap on the market.

• You can store more information and retrieve it more rapidly with our computer.

• This machine will copy on both sides of the page instead of only one.

PRODUCT ATTRIBUTESQUALITY, FEATURES, DESIGN ADVANTAGE, BENEFITS

Benefit

• A product benefit is a favourable result the buyer receives from the product because of a particular feature or advantage that has the ability to satisfy a buyer’s need.

Two-carat diamond ring -- image of success, investment, or to please spouse.

Camera film -- memories of places, friends, and family.

STP motor oil -- engine protection, car investment, or peace of mind.

Movie tickets -- entertainment, escape from reality, or relaxation.

• General Example : Vacuum cleaner salesperson to householder. “This vacuum cleaner’s high speed motor (feature) works twice as fast (advantage) with less effort (advantage), saving you 15 to 30 minutes in cleaning time (benefit) and the aches and pains of pushing a heavy machine (benefit).

PRODUCT HIERARCHY• Need family. The core need that underlies the product family. Example : security.

• Product family All the product classes that can satisfy a core need with more or less effectiveness. Example : savings and income

• Product class. A group of products within the product family that are recognized as having a certain functional coherence. Example : financial instruments.

• Product line.. A group of products within a product class that are closely related because they function in a similar manner, or are sold to the same customer groups, or are marketed through the same types of outlets, or fall within given price ranges. Example : life insurance.

• Product type. Those items within a product line that share one of several possible forms of the product. Example : term life.

• Brand. The name associated with one or more items in the product line that is used to identify the source or character of the item(s). Example : Prudential.

• Item. A distinct unit within a brand or product line that is distinguishable by size, price appearance, or some other attribute. The item is called a stockkeeping unit, or product variant. Example : Prudential renewable term insurance.

PRODUCT-LINE DECISIONSA Product line is a group of products that are

closely related because they function in a similar manner, are sold to the same customer groups, are marketed though the same types of outlets, or fall within given price ranges.

A GROUP OF PRODUCTS WITHIN A PRODUCT CLASS THAT ARE CLOSELY RELATED

PRODUCT - MIX

THE COMPOSITE OF PRODUCTS OFFERED FOR SALE BY A FIRM OR BUSINESS UNIT

WIDTH + LENGTH + DEPTH

PRODUCT WIDTH

NUMBER OF DIFFERENT PRODUCT LINES IN A COMPANY

PRODUCT LINE - LENGTHS

TOTAL NUMBER OF ITEMS IN PRODUCT - MIX

PRODUCT DEPTH

VARIANTS OFFERED IN EACH PRODUCT IN THE LINENUMBER OF VERSIONS OFFERED OF EACH PRODUCT IN THE LINE

PRODUCT – LINE CONSISTENCY

PRODUCT LINES: HOW CLOSELY THEY ARE RELATED IN:

END - USE

PRODUCTION REQUIREMENTS

DISTRIBUTION CHANNELS ETC.

PRODUCT-MIX DECISIONSA product mix (also called product assortment is the

set of all product lines and items that a particular seller offers for sale to buyers.

----------------------------------------------------------------Product-Mix Width

Detergents Toothpaste Bar Soap Disposable CoffeeDiapers

Ivory Snow 1930 Gleem 1952 Ivory 1879 Pampers 1961 Folger’s 1963 Dreft 1933 Crest 1955 Camay 1927 Luvs 1975 Instant Folger’s 1963 Tide 1946 Denquel 1985 Lava 1928 High Point Instant 1975 Joy 1949 Kirk’s 1930 Folger’s Flaked Coffee 77 Cheer 1950 Zest 1952 Folger’s Decaffeinated 84 Oxydol 1952 Safeguard 1963 Dash 1954 Coast 1974 Cascade 1955 Duz 1956 Ivory Liquid 1957 Gain 1966 Dawn 1972 Era 1972 Bold 3 1976 Solo 1979

Product item 1Product item 2Product item 3Product item 4

Product line depth

Product mix width Product line 1 Product line 1 Product line 2Product line 2 Product line 3 Product line 3

Product Mix

The Product Offering

Core Benefit

Generic Product

Expected Product

Augmented Product

Potential Product

Source : Adapted from: P. Kotler, Marketing Management, 1994

What is a Product?• Kotler’s

Five levels to a product:

Generic Product

CORE BENEFIT

Expected Product

Augmented Product

Potential Product



CORE BENEFIT

Generic Product

Expected Product

Augmented Product

Potential Product

The Fundamental Need or Want that consumers satisfy by consuming the product or service



CORE BENEFIT

Expected Product

Augmented Product

Potential Product

Generic Product

Basic Version of the product containing only those elements absolutely necessary to function. No distinguishing features.



CORE BENEFIT

Augmented Product

Potential Product

Generic Product

Expected Product

Attributes and Characteristics that buyers normally expect and agree to when they purchase a product



CORE BENEFIT

Potential Product

Generic Product

Expected Product

Augmented Product

Additional product attributes, benefits, or related services that distinguish the product from competitors



CORE BENEFIT

Generic Product

Expected Product

Augmented Product

Potential Product All the augmentations and transformations that a product might ultimately undergo in the future


Five Levels to a Product:

Generic Product

CORE BENEFIT

Expected Product

Augmented Product

Potential Product

The Fundamental Need or Want that consumers satisfy by consuming the product or service

Generic ProductBasic Version of the product containing only those elements absolutely necessary to function. No distinguishing features.

Expected ProductAttributes and Characteristics that buyers normally expect and agree to when they purchase a product

Augmented ProductAdditional product attributes, benefits, or related services that distinguish the product from competitors

Potential ProductAdditional Product attributes, benefits, or related services that distinguish the product from competitors

Three Levels of Product

Corebenefit

or service

Augmentedproduct

Actual Formalproduct

Coreproduct

Installation

Warranty After-sale service

Delivery and credit

Packaging

Brandname

Features

Quality level Design

Figure 8-1

PRODUCT CLASSIFICATIONS• Durable Goods, Nondurable

Goods and services

• Nondurable goods. Nondurable goods are tangible goods that normally are consumed in one or a few uses. Examples include beer, soap, and salt. Since theses goods are consumed fast and purchased frequently, the appropriate strategy is to make them available in many locations, charge only a small markup, and advertise heavily to induce trial and build preference.

• Durable goods. Durable goods are tangible goods that normally survive many uses. Example include refrigerators, machine tools, and clothing. Durable products normally require more personal selling and service, command a higher margin, and require more seller guarantees.

• Services. Services are activities, benefits, or satisfactions that are offered for sale. Examples include haircuts and repairs. Services are intangible, inseparable, variable, and perishable. As a result, they normally require more quality control, supplier credibility, and adaptability.

PRODUCT CLASSIFICATIONS• Consumer-Goods Classification• Convenience goods. Goods that the customer usually purchases frequently,

immediately, and with the minimum of effort in comparison and buying. Example include tobacco products, soap, and newspapers.

• Shopping goods. Goods that the customer, in the process of selection and purchase, characteristically compares on such bases as suitability, quality, price and style. Examples include furniture, clothing, used cars, and major appliances.

• Specialty goods. Goods with unique characteristics and/or brand identification for which a significant group of buyers are habitually willing to make a special purchasing effort. Examples would include specific brands and types of fancy goods, cars, hi-fi components, photographic equipment, and men’s suits.

• Unsought goods. Goods that the consumer does not know about or knows about but does not normally think of buying. New products, such as smoke detectors and food processors, are unsought goods until the consumer is made aware of them through advertising. The classic examples of known but unsought goods are life insurance, cemetery plots, gravestones, and encyclopedias.

What is a Product?

• Convenience• Shopping• Specialty• Unsought

• Frequent purchases bought with minimal buying effort and little comparison shopping

• Low price• Widespread distribution• Mass promotion by

producer

Types of Types of Consumer Consumer ProductsProducts

What is a Product?


• Less frequent purchases requiring more shopping effort and price, quality, and style comparisons.

• Higher than convenience good pricing

• Selective distribution in fewer outlets

• Advertising and personal selling by producer and reseller


What is a Product?


• Strong brand preference and loyalty, requires special purchase effort, little brand comparisons, and low price sensitivity

• High price

• Exclusive distribution

• Carefully targeted promotion by producers and resellers


What is a Product?


• Little product awareness and knowledge (or if aware, sometimes negative interest)

• Pricing varies

• Distribution varies

• Aggressive advertising and personal selling by producers and resellers


Summary Types of Consumer Products

• Convenience:– Frequent purchase, low involvement, widespread distribution,

mass promotion

• Shopping:– Less frequent purchase, more effort, comparison of brands,

price, and quality, selective distribution and promotion

• Specialty:– Strong brand preference, special purchase effort, low price

sensitivity, exclusive distribution, targeted promotion

• Unsought:– Low product awareness, negative interest, use personal selling

Table 8-1

PRODUCT CLASSIFICATIONS• Industrial-Goods Classification

• Materials and parts. Goods that enter the manufacturer’s product completely. They fall into two classes : raw materials, and manufactured materials and parts.

• Capital items. Goods that enter the finished product partly. They include two groups : Installations and accessory equipment.

• Supplies and services. Items that do not enter the finished product at all.

Summary Types of Business Products

• Materials and parts:– Raw and manufactured materials, parts

• Capital items:– Buildings and equipment used in buyer’s production or

operations, long useful life

• Supplies and services:– Operating supplies, repair and maintenance items, and services

04/13/23 2004 Pearson Education Canada Inc. 84

Individual Product Decisions

• Product attribute decisions– Product quality, features, style and design

• Branding decisions– Brand equity, name selection, manufacturer’s versus private

brands, licensing, co-branding, line and brand extensions

• Packaging– Hold and protect contents, identify and promote the product and

brand

• Labeling– Ingredients, directions for use, identify and promote

• Product support services– Repair and maintenance, accessories

The Product Manager’s Interactions

Product Manager

Advertising agency

Manufacturing and distribution

Research anddevelopment

Legal

Fiscal

Marketresearch

Sales

Publicity

Purchasing

Packaging

Promotion services

Media

Agency media dept.Company media dept. Media sales reps

Premium suppliersPremium screening Store testing Sampling Couponing

Designers Researchers

Suppliers

TradeResearchSuppliers

Suppliers

Trade

Suppliers

PRODUCT DEVELOPMENT AS INTENSIVE GROWTH STRATEGIES

ACQUISITION

• Search for or buy other companies

• Buy Patents• Buy

License/franchise`

NEW PRODUCT DEVELOPMENT

• In its own laboratory• Independent research

or New product development agencies

New Product - Original , Improved, Modified & New Brands

SIX CATEGORIES OF NEW PRODUCTS

• New-to-the-world product. New products that create an entirely new market.

• New-product line. New products that allow a company to enter an established market for the first time.

• Additions to existing product lines. New products that supplement a company’s established product lines.

• Improvements in/revisions to existing products. New products that provide improved performance or greater perceived value and replace existing products.

• Repositioning. Existing products that are targeted to new markets or market segments.

• Cost reductions. New products that provide similar performance at lower cost.

PROBLEMS IN NEW PRODUCT DEVELOPMENT IN FUTURE

• Shortage of important new-product ideas in certain areas. Some scientists think there are too few feasible new technologies with the investment potential that was provided by automobiles, television, computers, xerography, and wonder drugs in times past.

• Fragmented markets. Keen competition is leading to increasingly fragmented markets. Companies have to aim new products at smaller market segments rather than the mass market, and this means lower sales and profits for each product.

• Social and governmental constraints. New products have to satisfy public-interest criteria such as consumer safety and ecological compatibility. Government requirements have slowed down innovation in the drug industry and have complicated product-design and advertising decisions in such industries as industrial equipments, chemicals, automobiles, and toys.

• Costliness of the new-product-development process. A company typically has to generate many new-product ideas in order to finish with a few good ones. Furthermore, the company has to face rising R&D, manufacturing, and marketing costs.

contd…

PROBLEMS IN NEW PRODUCT DEVELOPMENT IN FUTURE

• Capital shortage. Some companies with good ideas cannot raise the funds needed to research them. Venture capital has, in recent years, become much more cautious.

• Shortened time span to completion. Many competitors are likely to get the same idea at the same time, and the victory often goes to the swiftest. Alert companies have to compress development time by using computer-aided design and manufacturing techniques, joint partners, early concept tests, and advanced marketing planning. Japanese companies see the challenge as “achieving better quality at a cheaper price at a faster speed than competitors.”

• Shorter life spans for successful products. When a new product is successful, rivals are to quick to imitate it that the new product’s life cycle is considerably shortened. Thus IBM finds dozens of imitators offering IBM-compatible personal computers; and Apple finds foreign “knockoffs” of its computers being sold in the Far East.

IDEA GENERATION

IDEA SCREENING

CONCEPT DEVELOPMENT & TESTING

MARKETING STRATEGY DEVELOPMENT

BUSINESS ANALYSIS

PRODUCT DEVELOPMENT

MARKET TESTING

COMMERCIALIZATION

NEW PRODUCT DEVELOPMENT DECESION PROCESS

Should we send the idea back for product development

Would it help to modify the product or marketing program

Lay future plans

DROP

NO

NO

NO

NO

NO

NO

NO

YES

YES

YES

YES

YES

YES

YES

YES

YES

NO

NO

YES

PRODUCT LFE CYCLE

PLC PORTRAYS DISTINCT STAGES IN THE SALES HISTORY OF A PRODUCT PLC STAGE IDENTIFICATIO RESULTS IN BETTER MARKETING PLANNING PLC CONCEPT SUGGESTS:

PRODUCTS HAVE A LIMITED LIFE

PRODUCT SALES PASS THROUGH DISTINCTSTAGES, EACH POSING DIFFERENTCHALLENGES TO THE SELLER

PRODUCTS REQUIRE DIFFERENT MARKETING STRATEGIES IN EACH STAGEOF THEIR LIFE-CYCLES.

SALES AND PROFITS

SALES

PROFIT

A B C D

A- INTRODUCTIONB- GROWTHC- MATURITYD- DECLINE

TIME

STYLES FASHIONS FADS

STYLE

FASHION

FADS

BASIC AND DISTINCTIVE MODE OFEXPRESSIONCLOTHING – FORMAL VS. CASUAL

CURRENTLY ACCEPTED OR POPULARSTYLE IN A GIVEN FIELD

FASHION THAT ENTER QUCKLY, PEAK EARLY AND DECLINES VERYFAST

SALES

STYLE

TIME

SALES

FASHION

TIME TIME

FAD

SALES

(A) (B) (C)

PHASE- I INTRODUCTION

STAGE JUST AFTER THE LAUNCH

SALES GROWTH SLOW

PROFITS MAY BE LACKING

BECAUSE OF:

LOW SALES VOLUME

HIGH DISTRIBUTION ANDPROMOTION EXPENSES

HIGH COST OF MARKETDEVELOPMENT

TYPICAL FEATURES:

HIGH PRODUCT FAILURE RATE LITTLE COMPETITION FREQUENT PRODUCT MODIFICATION HIGH PRODUCTION AND MARKETING COST HIGH DEALER MARGINS

PROMOTION

RAPID SKIMMING

SLOW SKIMMING

RAPIDPENETRATION

SLOWPENETRATION

HIGH

LOW

HIGH LOWDIFFERENT PRICE/PROMOTION LEVELSCAN BE COMBINED

PRICE

STRATEGY

DEVELOP PRODUCT AWARENESS

INTENSIVE PERSONAL SELLING

SALE TO HIGH INCOME GROUPS

HEAVY SAMPLING / COUPENING FOR CONVE-NIENCE GOODS EDUCATIONAL ADVERTISING +PERSONAL SELLING FOR SPECIALITY PDT.

LIMITED DISTRIBUTION

PHASE – II GROWTH

IF PRODUCT SATISFIED MARKET ….. IT WILL ENTERGROWTH PHASE

SALES GROW AT INCREASING RATE

COMPETITION BUILDS UP FAST

NO. OF DISTRIBUTION OUTLETS GO UP

PROFITS HEALTHY ….. REACH AT PEAKPROMOTION/ SALES RATIO GO DOWN

STRATEGY

EFFORT IS TO SUSTAIN RAPID MARKET GROWTH RATEAND CAPTURING A DOMINANT POSITION

IMPROVING PRODUCT QUALITY AND ADDING NEWFEATURES AND MODELS

MORE PRODUCT EXPOSUREENTRY INTO NEW MARKET SEGMENTSAGGRESSIVE DISTRIBUTION STRATEGY

SWITCH FROM CATEGORY RELATED PROMOTION TOBRAND PROMOTION

PHASE – III MATURITY

LONGEST STAGE OF PLC MOST PRODUCTS … IN THIS STAGE MOST MARKETING STRATEGIES FOR MATURE PRODUCTS

GENERAL FEATURES:

CUT- THROAT COMPETITION

PROFIT – EROSION

WEAK AND MARGINAL COMPETITORS DROP OUT

STRONG COMPETITORS TRY FOR COMPETITIVE ADVANTAGE

PRICES AND PROFITS CONTINUE TO FALL

DEALERS MARGINS SHRINK AND RELUCTANCE TO PUSH THE PEODUCTS

BASIC STRATEGIES IN MATURITY STAGE

(A) MARKET MODIFICATION

LIFE OF PRODUCT CAN BE EXPANDED BY MARKETSTRETCHINGCONCENTRATING ON MARKET SEGMENTS YETUNTAPPEDSTIMULATING INCREASED USAGE AMONGCURRENT USERSPROMOTING MORE VARIED USAGE AMONGCURRENT USERS

- INCREASING NO. OF USE SITUATIONS USE OF BOROLINE FOR MANY PURPOSES

(B) THE PRODUCT MODIFICATION

PRODUCT RELAUNCH TO BOOST UP SALES

QUALITY IMPROVEMENTINCREASING FUNCTIONAL PERFORMANCE OFPRODUCT – DURABILITY, RELIABILITY ETC.

AMBASSADOR

VESPA XE

PREMIERPADMINI

AMBASSADOR- NOVA

VESPA 150

NEW LATCHESUNHOLSTRY, ETC.

FEATURE IMPROVEMENT

ADDING UP NEW FEATURES THAT EXPANDSPRODUCT’S VERSTALITY, SAFETY, OR CONVENIENCE

FORHAN’SCOLGATE

FORHAN’S FLOURIDE

COLGATE FLOURIGUARD

ONE PROBLEM: FEATURES HIGHLY IMITABLE

STYLE IMPROVEMENT

INCREASING AESTHETIC APPEAL IN CONTRASTTO FUNCTIONAL APPEAL

CHANGE IN COLOR / TEXTURE / PACKAGE

(C) MARKET – MIX MODIFICATION

SALES STIMULATION BY ALTERING MARKETINGMIX

SLASHING PRICES TO ATTRACT NEW CONSUMERS

MORE EFFECTIVE ADVERTISING CAMPAIGNS

HEAVY USE OF SALES PROMOTION TECHNIQUES

ALTERING DISTRIBUTION - CHANNELS

PROBLEM: ALL METHODS ARE HIGHLY IMITABLE

PHASE-IV DECLINE

WARNING SIGNAL: PERMANENT DROP IN SALESMOST PRODUCTS EVENTUALLY ENTERS IN DECLINE PHASERATE OF DECLINE DEPENDS ON:

CHANGE IN CONSUMERS’ TASTES AND ADOPTIONOF SUBSTITUTE PRODUCTS

TECHNOLOGICAL INNOVATIONS DEVELOPMENTOF EFFECTIVE SUSTITUTES

DECLINING DEMAND …. FORCE MANY COMPETITORS OUT OF MARKET

PROMOTION BECOMES SELECTIVE LESS EXPOSURE

STRATEGY IN DECLINE PHASE

IDENTIFY WEAK PRODUCTS THROUGH COMPREHENSIVE MARKETING RESEARCH

DETERMINE APPROPRIATE RESPONSE:

TO STAY ON OR

TO DROP THE PRODUCT

IF DECISIONS IS TO STAY:

THREE OPTIONS:

(A) CONTINUATION STRATEGY

- CONTINUE PAST PRACTICES

(B) CONCENTRATION - CONCENTRATE RESOURCES IN STRATEGY STRONGEST MARKETS

(C ) HARVESTING - REDUCING EXPENSES TO STRATEGY INCREASE PROFITS

IF DECISION IS TO DROP:

-WHEN PRODUCT’S RATING FAIL TO MEET COMPETITION ON CERTAIN KEY CRITERIA

OPTION

DROPPING ITCOMPLETELY

SELLING OR TRANSFERING IT TOOTHER COMPANY

PHASE-IV DECLINE

WARNING SIGNAL: PERMANENT DROP IN SALESMOST PRODUCTS EVENTUALLY ENTERS IN DECLINE PHASERATE OF DECLINE DEPENDS ON:

CHANGE IN CONSUMERS’ TASTES AND ADOPTIONOF SUBSTITUTE PRODUCTS

TECHNOLOGICAL INNOVATIONS DEVELOPMENTOF EFFECTIVE SUSTITUTES

DECLINING DEMAND …. FORCE MANY COMPETITORS OUT OF MARKET

PROMOTION BECOMES SELECTIVE LESS EXPOSURE

Pricing Products:

Pricing Considerations and Approaches

Price• Price is the sum of all the values that consumers

exchange for the benefits of having or using the product or service.

• “rent, tuition, fees, fares, tools, rates, premiums, honoraria, bribes, dues, bids, assessments, retainers, salaries, wages, commissions, taxes…”

• Why is it so dangerous? (1) Price is the only element in the marketing mix that produces revenues (PxQ); all others represent costs. (2) It’s the easiest element to change.

SELECTING THE PRICE OBJECTIVE

• Survival• Maximum Current Profit• Maximum Current Revenue• Maximum Sales Growth• Maximum Market Skimming• Product-Quality Leadership

PRICING OBJECTIVES-PROFIT OBJECTIVE

PROFIT MAXIMIZATIONTARGET RETURN

-SALES OBJECTIVEGROWTH IN SALESGROWTH IN MKT SHARESURVIVAL-MINIMUM SALESSTATUS QUO-VAL/MKT SHARE

-COMPETITION OBJECTIVETO MEET OR PREVENT COMPETITIONTO DESTROY COMPETITION

-DEVELOPMENT OBJECTIVE-EXPANDING EXISTING MARKETS (NON-USERS TO USERS) -PRODUCT DEVELOPMENT

DETERMINING DEMAND1. Unique value effect. Buyers are less price-sensitive when the product is more

unique.

2. Substitute awareness effect. Buyers are less price-sensitive when they are less aware of substitutes.

3. Difficult comparison effect. Buyers are less price-sensitive when they cannot easily compare the quality of substitutes.

4. Total expenditure effect. Buyers are less price-sensitive the lower the expenditure is as a ratio to their income.

5. End-benefit effect. Buyers are less price-sensitive the less the expenditure is to the total cost of the end product.

6. Shared cost effect. Buyers are less price-sensitive when part of the cost is borne by another party.

7. Sunk investment effect. Buyers are less price-sensitive when the product is used in conjunction with assets previously bought.

8. Price-quality effect. Buyers are less price-sensitive when the product is assumed to have more quality, prestige, or exclusiveness.

9. Inventory effect. Buyers are less price-sensitive when they cannot store the product.

Marketing

Objectives

SurvivalLow Prices to Cover Variable Costs

andSome Fixed Costs to Stay in

Business.Current Profit Maximization

Choose the Price that Produces the Maximum Current Profit, Etc.

Market Share LeadershipLow as Possible Prices to Become

the Market Share Leader.

Product Quality LeadershipHigh Prices to Cover Higher

Performance Quality and R & D.

Internal Factors Affecting Pricing Decisions: Marketing Objectives

Types of Cost Factors that Affect Pricing Decisions

Total CostsSum of the Fixed and Variable Costs for a Given

Level of Production

Total CostsSum of the Fixed and Variable Costs for a Given

Level of Production

Variable Costs

Costs that do varydirectly with sales or

production levels.

Commissions, Raw materials

Fixed Costs(Overhead)

Costs that don’tvary with sales or production levels.

Executive Salaries, Rent

Pure CompetitionPure CompetitionMany Buyers and Sellers

Who Have Little Effect on the Price

Pure CompetitionPure CompetitionMany Buyers and Sellers

Who Have Little Effect on the Price

Monopolistic Monopolistic CompetitionCompetition

Many Buyers and Sellers Who Trade Over a

Range of Prices

Monopolistic Monopolistic CompetitionCompetition

Many Buyers and Sellers Who Trade Over a

Range of Prices

Pricing in Different Types of Markets

Market and Demand Factors Affecting Pricing Decisions

Oligopolistic Oligopolistic CompetitionCompetition

Few Sellers Who AreSensitive to Each Other’s

Pricing/ Marketing Strategies

Oligopolistic Oligopolistic CompetitionCompetition

Few Sellers Who AreSensitive to Each Other’s

Pricing/ Marketing Strategies

Pure MonopolyPure MonopolySingle Seller

Pure MonopolyPure MonopolySingle Seller

Pricing Strategies

• Companies face many problems in setting their prices.– Standard pricing methods such as uniform

pricing, standard markup of costs everywhere, or charging what the market will bear ignores cost differentials and local market conditions.

04/13/23 120International MKTG Pricing Strategy

METHODS OF PRICINGCost Plus Pricing: This method is prevalent in urban markets, but it suits the rural market more, because a company has to incur the cost of the product, distribution expenses, and also add a small profit margin.Value Pricing: It means assigning a low price tag for a product and providing the benefits of low-cost mass production to the customer.Power Price Points: It is mostly used for FMCG brands for rural markets. 1,2,3,5,8,10

Cost-Based Pricing

Certainty About Costs

Pricing is Simplified

Price Competition Is Minimized

UnexpectedSituational

Factors

Attitudes of

Others

Ethical

Ignores Current

Demand & Competitio

n

Cost-Plus Pricing is an

Approach That Adds a

Standard Markup to the

Cost of the Product (see

example)

Simplest Pricing Method

Much Fairer to Buyers & Sellers

04/13/23 International MKTG Pricing Strategy

123

1)Variable cost pricing:

• Marginal or incremental cost of producing goods charged

• Sell products abroad at lower net prices than the domestic market

• Used when a Co. has high fixed cost and unused production

04/13/23 International MKTG Pricing Strategy

124

2)Full cost Pricing:

• Total fixed cost + variable cost

• High variable cost relative to fixed cost

• Price= Total cost +profit

PRICING METHOD• Markup Pricing Unit Cost

Markup Pricing = -----------------------------------

(1 - Desired return on sales)

• Target Return Pricing

Desired return x Invested Capital

Target return price = Unit + ---------------------------------------

cost Unit Sales

Setting Prices

Sealed-BidCompany Sets Prices Based on What They Think Competitors

Will Charge.

Going-Rate Company Sets Prices Based on What

Competitors Are Charging.

??

Competition-Based Pricing

Low High

Low

High

EconomyStrategye.g. Acer

Penetratione.g. Nokia

Skimminge.g. Class

Premiume.g. Kingfisher

Price

Quality

Pricing strategies• Premium pricing

• Uses a high price, but gives a good product/service exchange e.g. Honda, The Ritz Hotel

• Penetration pricing• offers low price to gain market share - then

increases price

• e.g. Vodafone- to attract new corporate clients

• Economy pricing• placed at ‘no frills’, low price

• e.g. Soups, spaghetti, Perk - ‘economy’ brands

• Price skimming• where prices are high - usually during introduction

• e.g new albums or films on release

• ultimately prices will reduce to the ‘parity’

• Psychological pricing• to get a customer to respond on an emotional, rather than

rational basis

• .e.g 99p not £1.01 ‘price point perspective

• Product line pricing• rationale of a product range

• Detergents

• Pricing variations• ‘off-peak’ pricing, early booking discounts,etc

• e.g Maruti offers a ‘cash back’ incentive for Wagon R

• Optional product-pricing• e.g. optional extras - BMW famously under-

equipped

• Captive product pricing• products that complement others

• e.g Gillette razors (low price) and blades (high price)

• Product-bundle pricing• sellers combine several products at the same price

• e.g software, books, CDs.

• Promotional pricing• e.g. toothpaste, soups, etc

• Geographical pricing• different prices for customers in different parts of

the world

• e.g.Include shipping costs, or place on PLC

• Value pricing• usually during difficult economic conditions

• e.g. Value menus at McDonalds

Penetration Pricing: A company introduces a product in the rural market at a low price, and hike the price once the brand succeeds.Differentiation Pricing: This involves different prices for different markets.

ConclusionAn analytical and quantitative approach is required in arriving at pricing decisions.Co Depot -> District Level – Level – Layer village (HAAT) or -> Retailer -> HUBS & SPOKES SYSTEM (SATELITE)

Product Mix-Pricing Strategies:Product Line Pricing

• Involves setting price steps between various products in a product line based on:– Cost differences between

products,

– Customer evaluations of different features, and

– competitors’ prices.

Discount and Allowance Pricing

Cash Discount Seasonal Discount

Quantity Discount T rade-In Allow ance

Functional Discount Prom otional Allow ance

A djus ting Bas ic Price to Rew ard C ustom ersF or C erta in Responses

Cash Discount Seasonal Discount

Quantity Discount T rade-In Allow ance

Functional Discount Prom otional Allow ance

A djus ting Bas ic Price to Rew ard C ustom ersF or C erta in Responses

Psychological Pricing

• Considers the psychology of prices and not simply the economics.

• Customers use price less when they can judge quality of a product.

• Price becomes an important quality signal when customers can’t judge quality; price is used to say something about a product.

Value $22.00Sale $14.99

Buyer reaction to pricing.

When Gibson lowered its prices, sales fell. Why?

What is it about a guitar that would cause this to happen?

What other products share these qualities?

•Computers?•Cars?•What else?

Click or press spacebar to return.

Special-Event PricingSpecial-Event Pricing

Cash RebatesCash Rebates

Low-Interest FinancingLow-Interest Financing

Longer WarrantiesLonger Warranties

Free MerchandiseFree Merchandise

DiscountsDiscounts

Loss LeadersLoss Leaders Temporarily Pricing Products Below List Price

to Increase Short-Term Sales

Through:

Promotional Pricing

This Sprint ad offers f ree long distance on Fridays.

Why can Sprint afford t o offer this promotion on Fridays rat her than on another day (like Monday)?

Promotional Pricing & Discriminatory Pricing

PROMOTIONAL PRICING

• Loss leader pricing• Special event pricing• Cash rebates• Low-interest

financing• Psychological

discounting

DISCRIMINATORY PRICING

• Customer-segment pricing

• Product-form pricing• Image pricing• Location pricing• Time pricing

PROMOTION

Types of Communication

Promotion

Personal Selling Advertising

Public Relations & Publicity

Marketing

Product Place Price

Sales Promotion Direct Marketing


PROMOTIONAL ACTIVITIES

• Advertising. Non- personal communication of information paid for by an identified sponsor such as an individual or an organization. Modes of advertising include television, radio, direct mail, catalogs, newspapers, and outdoor advertising such as billboards.

• Publicity. Non-personal communication of information that is not paid for by an individual or organization. Information appears in media such as television, radio, and newspaper.

• Sales promotion. Involves activities or materials used to create sales for goods or services. The two types of sales promotion are consumer and trade sales promotion. Consumer sales promotion includes free samples, coupons, con-tests, and demonstrations to consumers. Trade sales promotion encourages wholesalers and retailers to purchase and to sell aggressively using devices such as sales contests, displays, special purchase prices, and free merchandise.

• Personal selling. Personal communication of information to persuade a prospective customer to buy something – a good, service, idea, or whatever

that satisfies an individual’s needs.


Types of Promotion

Advertising Public Relations

Sales Promotion Personal Selling

Promotion Promotion MixMix


Advertising

• Public presentation

• Pervasiveness

• Amplified expressiveness

• Impersonality


Personal selling

• Personal interaction

• Cultivation of prospects

• Response to customers

• Relationship more than transaction


Sales Promotion

• Communication

• incentive

• invitation


Publicity• High credibility• Off guard• Dramatization


•Sponsorships, Scholarships•Contributions, Donations (Time, Money, materials & Services, web sites, online communities•Events, Community relations, news letter, material or ads, board memberships, subscriptions, etc •Employee Volunteer Programmes•Exhibitions and conferences

Public Relations

COMMON COMMUNICATION/PROMOTION TOOLS

--------------------------------------------------------------------------- Sales Personal

Advertising Promotion Publicity Selling

---------------------------------------------------------------------------Print and Contests,games Press kits Sales presentationsbroadcast ads sweepstakes, Speeches Sales meetingsPackaging-outer lotteries Seminars TelemarketingPackaging inserts Premiums and gifts Annual reports Incentive programsMailings,Catalogs Sampling Charitable Salesmen samplesMotion pictures Fairs and trade show donations Fairs and trade showsHouse magazines Exhibits Public relationsBrochures and Demonstrationsbooklets Coupon, RebatesReprints of ads Low-interest financingBillboards EntertainmentDisplay signs Trade-in allowancesPoint-of-purchase Trading stampsdisplay Tie-insAudiovisuals material

Symbols and logos Copyright © 2001 by Harcourt, Inc. All rights reserved.

THE COMMUNICATION PROCESS

Noise

ResponseFeedback

Message

Media

Sender Encoding Decoding Receiver


PERSONAL SELLING

PROCESS OF INDUCING AND ASSISTING A PROSPECTIVEBUYER TO BUY A COMMODITY OR SERVICE OR TOACT FAVOURABLY UPON A IDEA THAT HAS COMMER-CIAL SIGNIFICANT TO THE SELLER

PROCESS WHEREBY THE SELLER ASCERTAINSACTIVATES AND SATISFIES THE NEEDS AND WANTS OFTHE BUYER TO THE MUTUAL, CONTINUOUS BENEFIT OF THE BUYER AND THE SELLER

THIS TOOL IS A DIALOGUE & REST OF THE PROMOTOOLS ARE MONOLOGUES.

VERY STRONG PROMO-TOOL

INVOLVES TWO-WAY FACE-TO-FACE OR DIRECT RELATIONSHIP BETWEEN SELLER ANDBUYER

A PERSUASIVE PROCESS

FOCUS ON PROBLEM- SOLVING PERSPECTIVE

EDUCATIVE PROCESS

MODERN TREND: TOWARD …. “PRO- ACTIVE”

APPROACH – HIGHLY CREATIVE

PERSONAL SELLING

AMA

THE PERSONAL OR IMPERSONAL PROCESS OF ASSISTINGAND / OR PERSUADING A PROSPECTIVE CUSTOMER TOBUY A COMMODITY OR SERVICE OR TO ACTFAVOURABLY UPON AN IDEA THAT HAS A COMMER-CIAL SIGNIFICANCE TO THE SELLER

ART OF SUCCESSFULLY PERSUADING PROSPECTS ORCUSTOMERS TO BUY PRODUCTS OR SERVICES FROMWHICH THEY CAN DERIVE SUITABLE BENEFITS,THEREBY, INCREASING THEIR TOTAL SATISFACTION,

PERSONAL SELLING PROCES

PROSPECTING GETTING SALES LEADS

• INTERNAL SOURCES• EXTERNAL SOURCES

QUALIFYING GATHERING MORE INFOABOUT PROSPECTS

• CAN THEY BENEFIT FROM PURCHASE• CAN THEY AFFORD IT• ARE QUALIFIED TO MAKE DECISION?

COLLECTING SPECIFIC INFO ABOUT PROSPECT’S BACKGROUND, PDT NEEDS

• DETAIL HOME WORK FOR BETTER SALES PRESENTATION

PREPARING THEPRE-APPROACH

3.

APPROACHINGTHE PROSPECT4.

APPROACH CHOOSEN TOESTABLISH CONTACT WITHPROSPECT

MAKING THE SALESPRESENTATION

5.HEART OF PERSONAL SELLING

• COMMUNICATE PDT.MESSAGE• BUILDS UP DESIRE FOR PRODUCT APPROACHES:• STIMULUS- RESPONSE SELLING

BARRIERS SELLING• Traditional barrier approach• never ending spiral

FORMULIZED SELLING NEED SATISFACTION SELLING

HANDLINGOBJECTIONS

6. ENCOURAGING PROSPECTS TOVOICE OBJECTION

• TO PROVIDE FEEDBACK• HANDLES OBJECTIONS IN POSITIVE FASHION

CLOSING THESALES

7. ASKING THE PROSPECT FORORDER PICKING UP CUES AND SIGNALS FROM PROSPECTS TO KNOW WHEN THEY ARE READY TO BUY

FOLLOW-UPTHE SALES

8. ENSURING TIMELY DELIVERY

• PRODUCT …. DAMAGE FREE• INSTALLED PROPERLY

THE SALES PROCESS P ro sp ec ting

P reap p ro ach (P rec all P lann ing )

A p p ro ach

P resentatio n

P artic ip atio n D em o nstratio n D ram atiz atio n

P ersuasive C om m un ic atio n P ro o f V isualiz ation

T rial C lo se

D eterm in e O b jection s

M eet O b jec tio ns

T rial C lo se

C lo se

F o llow -up and Serv ic eCopyright © 2001 by Harcourt, Inc. All rights reserved.

PR: BUILDING UP GOOD RELATIONS WITH THE COMPANY’S VARIOUS PUBLICS BY OBTAININGFAVORABLE PUBLICITY, BUILDING UP AGOOD “CORPORATE IMAGE” AND HANDLINGOF UNFAVORABLE RUMOURS, STORIES OREVENTS:

PR TOOLS• PRESS RELATIONS •PRODUCT PUBLICITY

• CORPORATE COMMUNICATIONS

• LOBBYING

• COUNSELING

PR : USED TODAY TO PROMOTE

PRODUCTSPEOPLEPLACES

IDEASACTIVITIES

ORGANIZATIONS

ADVERTISING

TRANSLATED FROM GREEK … MEANS“TO TURN PEOPLE TO IDEA”

IT IS A COMMUNICATION PROCESS THATPERSUADES OTHERS TO ACT FAVOURABLY UPON THE IDEA, PRODUCT OR SERVICE WHICHTHEN PRODUCES PROFIT FOR SELLER

ANY PAID FORM OF NON-PERSONAL PRESENTA-TION AND PROMOTION OF IDEAS, GOODS ORSERVICES BY AN IDENTIFIED SPONSOR

NON-PERSONAL FORM OF COMMUNICATIONCONDUCTED THROUGH PAID MEDIA UNDERCLEAR SPONSORSHIP

CHARACTERISTICS OF ADVERTISING:

1. PAID FORM

2. NON-PERSONAL PRESENTATION

3. AN IDENTIFIED SPONSOR

4. INFORMATION AND PERSUASION

5. CONTROLLED FORM CONTENTTIMINGFOCUS

CONTROLLED BYSPONSOR

TYPES OF ADVERTISING

COMMERCIALADVERTISING

NON-COMMERCIALADVERTISING

OBJECTIVE.. TO EARN PROFIT SOUND BUSINESS PURPOSE

FOR PROMOTING SOCIALCAUSES ABSENCE OF ANYPROFIT MOTIVE

PRIMARY DEMAND TO CREATE DEMAND FORBASIC PRODUCTSvs

SELECTIVE DEMANDADVERTISING

TO CREATE DEMAND FORSPECIFIC BRANDS(BRAND ADVERTISING)

DIRECT ACTION TO GET IMMEDIATE SALESvs

INDIRECT ACTIONADVERTISING

TO CREATE A FAVORABLEATTITUDE TOWARDS THEPRODUCT FOR LONG-TERMGAIN

Major Decisions in Advertising Management

Objectives settingCommunication Objectives Sales Objectives

Budget decisions

Affordable approach Percent of sales Competitive parity Objectives and task

Message decision

Message generationMessage evaluation and selectionMessage execution

Media decision

Reach, frequency, impact Major media typesSpecific media vehicles Media timing

Advertising evaluation

Communication impact Sales impact

Possible Advertising Objectives

• To inform :Telling the market about a new product Describe available service

Suggesting new uses for a product Correcting false impression

Informing the market of a price change Reducing consumers’ fears

Explaining how the product works Building a company image

• To persuade : Building brand preference Persuading customer to purchase now

Changing customers’ perception of Persuading customer to receive a

product attributes sales call

• To remind Reminding consumers that the product may Keeping it in their minds during off

be needed in the near future seasons

Reminding them where to buy it Maintaining its top-of-mind awareness

DECIDING ON THE MEDIA

• Reach (R) : The number of different persons or households exposed to a particular media schedule at least once during a specified time period.

• Frequency (F) : The number of times within the specified time period that an average person or household is exposed to the message.

• Impact (I) : The qualitative value of an exposure through a given medium (thus a food ad in TV would have a higher impact than in the Times Ascent.)

FACTORS AFFECTING SELECTION OF MEDIA

1. SOCIAL CLASSES AND INTENTIONS2. CONSUMER RECEPTIVITY3. GROWING BRAND CONSCIOUSNESS4. LIFE STYLES5. BUYING ROLES Man v/s woman/Children6. Purchase Needs7. Community & Personal value Proposition – (Large

Screen TV for neighbors8. Value – for – Money Proposition.

EXPLORING MEDIA

MASS MEDIA RADIO (Dev. Pgms, News),TVCINEMA(IN VCDS/CDS, IN THEATRE, IN MOVIE), PRESS(POOR LITERACY)LOCAL MEDIAHAATS, MELAS, FAIRS HOARDINGS, WALL PAINTINGS, LEAFLETS, VIDEO VANS, FOLK MEDIA(Theatres, Songs, Dance, Narratives, Puppetry, Magic, Acrobatics, Martial Arts), ANIMAL PARADE, TRANSIT MEDIA (MOBILE DISPLAYS)

marketing in action

Business

marketing objectives

marketing definedmarketing

marketingmix elementcopyright

set of marketing tools

itthe art of marketing

aim of marketing isto

ps product

anticipating customer