PMM 1

ACADEMIC YEAR 2020-2021

Prepared by:
Prof. Oscar D. Tapay Jr.
Instructor

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Course Outline must be included

Course outline

 Module 1: Marketing Management in the 21st Century

 Module 2: Marketing Strategies and Plans
 Module 3: Marketing Research and Metrics
 Module 4: Customer Markets
 Module 5: Segmentation and Targeting
 Module 6: Brand Differentiation and Positioning
 Module 7: The Product
 Module 8: Pricing
 Module 9: Place
 Module 10: Mass Communications and Promotion
 Module 11: Personal Communications
 Module 12: Global Markets

Learning Outcomes:

Upon successful completion of this course, the student will have reliably demonstrated the ability
to:

1. Address marketing problems and opportunities using a variety of strategies and tactics.
2. Evaluate the results of marketing activities using criteria related to forecasted sales, budgeted
expenses, forecasted profits, and other appropriate marketing criteria.
3. Formulate and prepare a marketing plan including marketing objectives, marketing mix
strategies and tactics, budgetary forecasts, and evaluation criteria.
4. Communicate marketing information persuasively and accurately in oral, written, and graphic
formats.

Course Content:
This course includes, but is not limited to:
1. introduction to strategic marketing, including customer
satisfaction and retention
2. Identification and evaluation of strategic opportunities,
utilizing market information and environmental scanning,
buyer behavior, competitive analysis, and segmentation
and target marketing
3. Analysis for creation of a marketing mix
4. Identification of appropriate evaluation and control

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tools
5. Preparation and presentation of a comprehensive marketing
plan.

Chapter 1: Why is Marketing Management Important?

Marketing – defined as the exchange between a firm and its customers

Marketing has evolved beyond being “product” or “production focused” where mindset is “Let's
just build a better mouse trap”

Marketing is also more advanced than the old sales-oriented days when the action in the market
place was “Let's make a deal”. Marketing is evidence of evolved markets; it signals that an
industry or country has moved beyond production and sales and seeks true relationship with
customers.

Today’s marketing is truly customer-oriented and customer-empowered.

Marketing and Customer Satisfaction is Everyone’s Responsibility

A management guru says that marketing has succeeded so well that it isn't just an organization
function anymore.

Marketing – is a philosophy – a way to approach thinking about business. The Marketing

orientation should permeate the organization:

 Those in accounting and finance need to acknowledge the importance of marketing

because their CEOs do. Thinking about customers is unimportant only if you're a
monopoly, and even then you won't be one for so long.
 Salespeople understand marketing immediately before they're the frontline interface with
the customer. They want to push their firm’s stuff, but their jobs would be easier if their
company actually made stuff that the customers want.
 R&D people tend to understand the marketing spirit too. They're hired because they're
technically sophisticated, but they enjoy watching their inventions sell and become
popular. It doesn't take much marketing research to test concepts or prototypes and veer
an R&D path one way or another.
Marketing Frameworks

5 Cs: Customer, Company, Context, Collaborators, competitors

STP: Segmentation, Targeting, Positioning

4Ps: Product, Price, Place, Promotion

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Book Layout – will train you to think like a marketer.

Great marketing is based on sound, logical –economic and psychological – laws of human and
organization behavior. You will also learn the scientific and rigorous way to think about
marketing issues.

Chapter 5

Positioning

What is the positioning, and why is it important the most important aspect of marketing?

Positioning companies much of a marketer’s responsibilities. It requires designing

a product with benefits that the target segment will value, pricing it so that it’s profitable yet seen
as valuable, building distributor relationships to make the market offering available and
communication all of this to the customer through an array of promotional activities. In other
words, positioning involves all the marketing mix variables. This chapter kicks off the rest of the
book. We’ll discuss the concept of positioning in this chapter and we’ll see the details of the
marketing mix activities in the chapters that follow.

Positioning via Perceptual Maps

Marketers and senior managers like to see graphical depiction of where their
brands are, and where their competitors are, in the minds of their customers. These pictures help
us envision how customers think about our brand and give us initial answers to many questions.
The brand managers and corporate headquarters of all of these firms would probably not be
surprised by these results, in that they indicate customers view Lexus and Lincoln as most
interchangeable, at least among this set of brands. In comparison, the Tesla and Prius are not
competing with each other.

China

Branding to china

Branding is still relatively new to china. Brands coming from China tend to carry
the sigma of lo9w quality. Chinese manufacturers are also learning that they can change higher
price. If there’s brand were viewed as high quality.

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 Brands that have been solid primarily through Hong Kong are reaching out in
branding and distribution. Coors nearly doubled their sales volume when they looked at a
positioning map and found two markets without existing competitors in premium beers. Ikea
tried to enter china as high-end brand, but sales took off when they modified their positioning to
emphasizetheir contemporary and popular design and their affordability.

Consumed in China

You’ve heard “Made in China” but how about this: China is the no. 1 consumers
of bikes and motorcycles, shies, cars, cell phone, and luxury goods and the no. 2 consumer of
home appliacnec, consumer electronics, jewelry and Web time.

Branding from China

China’s self-pride is growing with global importance, so they are beginning to

build brands. They want to export their Chesy cars and their Hailer Refrigerator. They’re
creating Chinese-centric social media. Youku.com is their Youtube, DangDang is like Amazon
RenRen is like Facebook, Iyayuan.com is a dating site. There reaching not globally and branding
their countries the “World’s Safest Tourist Destination.” And finally, to enhance brand equity
and positive brand association, they’re trying to be socially responsible in bringing telecom to
rural villages, cutting energy use in vehicles, building foundations for orphans, etc.

These perceptual maps tell us about the positioning of these titles via a vis the dimensions
of expense the activity. Paris and Rome are seen as places with lots to see and do, but they’re
relatively expensive. The map also identifies two customer segments. This survey was conducted
on the company’s typical traveler, and the sample was obtained from visitors to all of its hotels.
That is, the perceptions are those of their current customers, not of their potential customers, who
might belong to a different segment. The hotel is known for being reasonable in its rates, and so
it tends to attract younger crowds who don’t have quite deep pockets of older travelers.

The customer segments on the perceptual map offers another diagnostic to the company
about what’s going on in the market place. The first customer segment is very well served, they
are looking for beaches and cheap trips and the company has hotels in both Nassau and Tampa to
cater to those tourists.

Positioning Mix

Just as consumer are quiet demanding, wanting the very best of everything, companies
can be equally irrational. Most companies offer mission statements on their websites or in their

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manual, reports that they say are the very best at everything their consumers are their sole reason
for existence, they care about their employees who are the very best in the workforce and all that.

At this point, even though we began with 16 combinations, we’re simplified this
positioning matrix essentially that two strategies depicted.

1. Low price, low quality, widely available, heavy promotions.

2. High price, high quality, exclusive availability, light promotions.
The advantage of this simplifying assumption is that the two extremes give us very clear goals to
work toward. We can either position our brand as low price, low quality, etc., or we want to
achieve high quality and charge high prices, etc. if we have reason to modify on of the Ps, say,
go with the low price, low quality, widely available, but we went to lighten up on promotions.
Then that is our strategic and tactical choice. That is, some brands appear in all the other
suboptimal combinations. We might question how long a company or brand can sustain in a
suboptimal position, buy at any given point in time, market offerings could be spanning the
matrix.

Note that the positioning matrix is consistent with many management strategy gurus who
observe common themes underlying market leaders. Describe three basic corporate strategies to
creating value and achieving market stature. 1. Operational excellence (i.e. these companies are
good production and delivery and at price and convenience, such as Dell, Southwest Airlines,
Walmart and Costco.) 2. Product leadership (i.e. these companies pride themselves on quality
and innovation, such as Johnson & Johnson and Son); and 3. Customer Intimacy (i.e. companies
willing to tailor their products to their particular customer needs, which can be expensive but is
expected to pay off in long-term loyalty and enhanced customer life time value, such as
Nordstrom. Home Depot, or Amazon). In the matrix, operations and products would map
roughly onto the low-cost and high-quality cells, respectively. Customer intimacy is simply good
service, so we could classify that in the high-quality cell as well.

Thus, the assumptions we made in the positioning matrix are not unduly restrictive, and
the matrix provide a useful focus when making decisions in many marketing scenarios: very
simply, do we go basic or do we go upscale. You can move off these two extreme positions in
the matrix, but you better have a reason.

Writing a Positioning Statement

Once a company has decided on its positioning, either for the corporation as a
whole or for one of its brands, it must be able to communicate succinctly the parameters of that
position to a number of different audiences. A positioning statement is that communication and it
takes a pretty standard form. Just as marketing itself begins with the segmentation part of STP, a
positioning statement also includes the specification of the target segments. As we have tried to

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illustrate your positioning statement will have no meaning to customers who are not in that
segment.

The next element of a positioning statement is what has been called the unique
selling proposition (usp). The idea is express your brands competitive advantage clearly and
succinctly. The USP concept captures two things: First, what is the product category (the SP),
and second, how does your market offering dominate these other providers (the U). Why should
a customer buy form you and not one of your competitors?

It’s also important that these statements should be succinct. A simple statement
facilitates communication and an understanding in the market place. Thus, while you might
essence and use that word. Or make a list of you brand’s benefits and prioritize them. Then take
the most important, most compelling difference and make that the difference you insert into the
position statement.

The Alphatronics positioning statement compares itself directly to other gyms, so

gyms comprise the product category or the competitive frame. However, its point of
differentiation is implied more than stated explicitly. Some positioning statements are a bit
surprising. For example, Volvo is known for safety, yet at Volvo.com you’ll see: “We offer
transport solutions to demanding customers around the world.”

Some positioning statements are straightforward, such as FedEX’s “Dependable

Solutions for your shipping needs,” YouTube’s “Broadcast Yourself,” and Club Med’s “Where
Happiness Means the world.” Other are abstract and inspiring, such as Honda’s.

Finally, brand positioning can also evolve. For example, consider the positioning
statement, “Zipcar car-sharing is for urban dwelling, ttechie consumers, who want to save money
instead of owning a car.” The target customers are urban techies the competition is car
ownership, and the superior advantage is saving money. Zipcar could modify that positioning
instead of emphasizing saving money; it might try to appeal to the green-sensitive consumer,
e.g., “Zipacar car-sharing is for urban-dwelling, techie consumers, who wish to demonstrate their
commitment to protecting the environment for future generations.”

The positioning statement serves as an internal memorandum, keeping all managers

aligned as basic guiding principles in all their collective decisions, so as to enhance the
likelihood of consistencies in the results of those decisions. Positioning Statements also serve as
the foundation of the communications offered to external audiences, including customers,
shareholders, and the like as advertising tag lines or more extensive messages. Given these
audiences, positioning statements should be succinct, to communicates efficiently, and positive
and passionate, to be noteworthy and to spur attention and affection.

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Green

An important manifestation of corporate responsibility is today’s heightened

environmental sensibilities. Companies are seeking to recreate and reposition their brands so as
to be greener and to communicate to consumers about their greenies, hoping to win over
customers for their efforts. For examples, Clorox’s Green works line is positioned as “clean
cleaning products.” Products are effective at cleaning and are also environmentally safe.

One of the benefits frequently copremoted with a green brand is some kind of
price savings to the consumer. For examples, compact fluorescent lightly (CFL) bulbs are energy
efficient, and they last longer so they can be promoted as saving consumer money. Multiple
benefits allow a brand to appeal to more than one customer segment. Similarly, hybrid cars are
good for the environment because they require fewer fill-ups at the gas station, which, of course,
in turn also implies that they will save the consumer money. Hybrids cars can reach still more
segments by highlighting other require fewer fill-ups at the gas station, which, of course, in turn
also implies that they will save the consumer money. Hybrids cars can reach still more segments
by highlighting other resulting features, such as quieter ride or the social status of a caring driver.

But they are struggling to find solutions that provide quality and value to the
consumer, environmental friendliness, and all that with strong economic performance. For
example, Timberland incorporates recycled rubber into its shoes’ soles. Yet the product life
cycles of a shoe is relatively short, so it is a challenge to the company to create products that are
less harmful to the environment and low cost so that they may produce.

That tension is not uncommon. Many companies and marketers have sought to
please customers with green products and efforts toward environmental friendliness. They
develop new product concepts that sound appealing to customers in the early stages of concept
testing. Given such encouragement, products are developed, and they often fare well in product
testing with customers as well. Unfortunately, in later phases of a new product development, the
company must turn to practicalquestions of feasibility, and the determination of price points that
will enable the sales of the new product to be profitable.

Consumer’s tolerance of price points likely tied to age cohorts. The 1970’s broke a lot of
green ground, with the founding of the EPA, the passing of various clean air and water acts,
endangered species movements, and so forth. Just as people born since, say, 1990 take the
internet for granted, so do those born just thereafter fully insists that corporations behave in
socially responsible manners and expect products to be environmentally friendly.

Finally, two sets of green fun facts: 1. Natural marketing institute survey showed that
more than 50% of consumers say they regularly turn off lights when they leave a room, turn off
electronics when they’re not in use, conserve water, recycle plastic bottles and jars, and recycle
paper. Carpooling public transportation did not fare as well. 2. Green management gurus point
out that there are many ways to achieve green-ness, including sustainable harvesting and

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mining, recycled components, sources reduction, organic growers, fair trade, reducing toxicity,
using local growers, energy and fuel efficiencies, water efficiencies, reusability, and safe
disposal.

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Chapter 6

Products: Goods and Services

What do we mean by product?

A product is a general term we’ll use for both goods and services. We’ll talk about how
these classes of purchases differ and build on the differences when necessary, but remember that,
in either case, the fundamental objectives of marketing are the same. Marketing managers want
to understand and please their customers whether they’re the brand manager for Nordic Track
machines or for the clubs they’re in, like LA- Fitness. The product is the most central of the 4p’s,
the ultimate thing the customer is purchasing drivers who purchase Volvos are buying safety,
yes, but they’re buying a safe car. Safety is a modifier; the essential product into a brand that’s
become sine qua non for safety.

The Product in the Marketing Exchange

The product is something that the company believes would benefit its customers.
We think of marketing as an exchange, so the company offers something, and the customer
offers something in return. Each party, the customer and company, seeks something of value, and
each offers trade. The company can make the package more attractive and the customer can too.
Of course, the company can also make the package less attractive, intentionally or not and so can
customers.

Several questions arise in the marketing exchange. First, what do customers want?
Some segments of customers will seek value and low price, whereas other will seek premium
quality.

How are good different from service?

Some marketers make a big deal of the difference between goods and services and
others say, “Marketing is marketing” – that it’s the same whether you’re marketing pretzels or
medical checkups. We’re going to play it both ways we’ll emphasize the similarities to facilitate
your learning. However there are many tactical differences in the marketing of goods and
services, and also some conceptual and strategic differences in the marketing of goods and
services, and also some conceptual and strategic difference.

Intangibility

Marketers have always talked about goods and services being on a continuum. As
depicted in the figure 6.1, some product seems like so called pure goods and some services seem

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like pure services. Other purchases seem like a mix of obtaining goods and services. The
symphony is an example of experience marketing, where the experience is the main part of the
service. For example, themed retail outlets, such as Build-a-Bear, ESPN Zone, and Crayola
Café, are as much about providing a shopping and playing experience as they are about moving
merchandise.

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Search, Experience, Credence

The goods-to-services continuum is related to the concepts of search, experience, and

credence. Search qualities are those attributes that may be evaluated prior to purchase, as the
department store to purchase socks, you can just look at a pair and know before buying them
whether you’ll like them.

Experience attributes are those that need some trial or consumptions before evaluation. So, if
friends recommend a new restaurant, you might trust your friends and expect to like the
restaurant, but it’s not until you personally go there, experience the ambience and service, try the
food, pay bill, etc. that you can judge the purchase satisfactory or not for yourself.

Finally, Credence qualities are those that are difficult to judge even post consumption, hence the
term “credence.” You just have to trust or believe that the quality is good. When you leave your
psychotherapist’s office, did the therapy improve you? Did that vasectomy work? Sometimes
credence means we go beyond trust to sheer hope, e.g. we hope the mechanic fixed our car and
didn’t cause any new problems.

Goods are dominated by search and experience qualities, and services are mostly
compromised of experience and credence qualities. These distinctions drive some marketing
implications. For examples, it’s easier to price a pair of socks than it is to attach a numeric value
to consulting advice.

Note that goods aren’t necessarily being simpler purchase and services more complex. A
huge part of the U.S and global economy is automobiles, and cars are highly complex goods.
Laptops, durables, aircraft, hospital equipment- all are similarly complicated but tangible goods.

Sports

What’s being sold and purchased in sports? What’s the core? What’re the value-added?
Sports marketers are identify that the game itself- the particular sport, the rules, the techniques,
and the athletes and their equipment’s and apparel- are all part of the core. Some would say the
venue is core and perhaps it is indeed central or importantly. But the specifics of the core can
change the fan experience.

The value-added elements in the sports industry are many: the tickets and programs
obtained at the on-site venue, the luxury of a box if applicable, the music played on the field or
floor, the mascot and cheerleaders dancing and much more.

A further extension from the core is the licensing: clothing or other products that bear the
brand name and logo of a collegiate or professional sports team. With such merchandise, the fans
may continue to profess their beloved team beyond the duration of the relatively brief sporting
contest and, of course, even beyond the season.

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 Sponsorship is a different kind of commercial agreement, with two companies or brands
coming together, sometimes for only a brief partnership. The form of the sponsorship is highly
varied, from an expensive television advertising spot during the Super Bowl, to a sticker affixed
as car in Daytona or NASCAR, to a banner posted at a tennis game, to a soft drink being
exclusive sponsor of an NBA.

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Perishability

Services differ from goods in other ways: services are simultaneously produced and
consumed.
Whereas goods can be manufactured and then inventoried in distribution warehouses, most
services have to be created on the spot in the presence of the customer.

The inseparability of production and consumption also has consequences in the

interaction between the service provider and customer. The nature of interactions varies with
setting and societal norms, of course. An orchestra playing in the same auditorium would
generally expect no laughter and applause only at appropriate breaks in the music, premature
applause would be censured by froens of other patrons at the offending novice.

Good and Services are Mostly Different and yet.

A service is intangible, but you can hold your credit card, a service is inseparable
production and consumption, but you don’t need to be at your bank to access you checking
account.
A service is perishable, but you can use your credit card whenever you want. A service is
variable, but there is standard, mass production of insurance policies, saving accounts, data
systems for bond traders, etc.

Perhaps the most pervasive and successful example of self-service is online shopping.
Shopping at home when one cannot sleep at 3 a.m. is the ultimate in convenience. In addition,
comparing information on prices and product attributes in easier online than IRL and made even
easier with the AI of shopping bots.

To infinity and Beyond Goods and Services

Intangibility, the search/experience/credence qualities, inseparability and variability

comprise the fundamental differences between goods and services. Throughout the books, we’ll
bring in each concept as appropriate when discussing marketing issue.

What is the firm’s core marketing offer?

Some marketers say that everything we buy has some element of a good and some
element of services- that perhaps only raw materials such as coal or wheat are examples of pure
goods. Everything else, they say, has been processed, and that processing is value-added service.
Thus, we can examine any business and consider what the care vs. the value-added service is.
Distinguishing these elements also help us identify our competition.

Those are the corporate fundamentals, the reason the hotel is in business, and they’re
qualities that the company better get right. They’re the basics of what customers expect. The
value-added supplemental services are those on which the hotel might distinguish itself from
other hotels.

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Dynamic Strategies

The definition of a company’s core business is somewhat like asking for its mission
statement. When company says “we’re an advertising agency,” is that it? What princely are you
good at? What distinguishes you from the next ad guy?

Core business change as industries change or as a firms competencies change. For

example the business of the Victoria’s Secret megabrand used to be driven 70% by apparel, but
it is now 70% beauty and fragrance lines.

In a constantly changing business environment, the ability to modify and implement new
strategies quickly is important. Economic pressures, industry changes, regulatory pressures and
changes in consumer preference can all impact a business' ability to sell its products or services.
Dynamic business strategies help to ensure that a business can respond appropriately to changes
that may represent both potential opportunities and new threats to its operations.

Services

Think about all the times you paid for someone to do something for you. Maybe you paid
someone to paint your house, change the oil in your car or even prepare your meal at a
restaurant? You likely paid someone to do these things for you because you didn't have the time
or skills to do them yourself. Or maybe you just didn't feel like doing it on your own, and it was
worth it to you to pay someone else to do it instead.
Restaurants, car service shops, and the like are all service-based businesses. Collectively, they
are relied upon to satisfy the needs and desires of thousands of consumers each day. As long as
we have limited time, limited knowledge, and simply don't enjoy doing everything ourselves,
service businesses will thrive!

Product line: Breadth and Depth

Product Breadth

In its most basic definition, product breadth is the variety of product lines that a store
offers. It is also known as product assortment width, merchandise breadth, and product line
width.

For instance, a store may only stock four items of each SKU, but their product breadth (the
variety) may consist of 3,000 different types of products. A big box retailer like Walmart or
Target often has a large product breadth.

Product Depth

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The other part of the retail inventory equation is product depth (also known as product
assortment or merchandise depth). This is the number of each item or particular styles that you
carry of a particular product.

For instance, a store may strategize that to keep inventory costs down, they will have a shallow
product depth. This means they might only stock 3-6 SKUs of each product in the store. A good
example of a store with good breadth but less depth are club stores like Costco, which sells
almost everything under the sun, but only one or two options for each type of product.

Breadth + Depth = Product Assortment

The product breadth is the number of product lines, while the product depth is the variety within
each of those lines. These two elements combine to make up the store's product
assortment or merchandise mix.

Specialty retailers will likely have a smaller product breadth than a general merchandise store.
This is because their products have a narrower focus and specific niches. However, they may
have an equal, if not wider, product depth if they choose to stock a greater variety of each
product line.

A candle store, for example, will have a smaller variety (or breadth) of products than a corner
drug store, even if they have the same number of products in inventory:

 The candle store stocks only 20 varieties of candles (the breadth), but they may stock 30
colors and scents (the depth) of each of those candles.
 The corner drug store stocks 200 different products (the breadth) but may stock only one
or two variations, brands or styles (the depth) of each product.

These two stores have entirely different strategies for their product assortment because of the
needs of their customers.

Fragrance and color are more important to the candle store customer than having 100 candle
styles to choose from. On the other hand, convenience is essential to the drug store customer and
they may want to pick up toothpaste and batteries in one stop. The drug store needs to stock all
of the essentials, even if there is only one option for each.

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Chapter 2: Customer Behavior

Three Phrases of the Purchase Process

1. Pre purchase
2. Purchase
3. Post purchase
Different kind of Purchases under B2C and B2B Customers

1. B2C Customers
2. B2B Customers

The Marketing Science of Customer Behavior

Marketers seek to understand wha consumers need and to deliver suitable products.

It may be useful to compare the attempts to model and predict consumer behavior or trying to
predict the weather.

The complexities of consumer psychology invoke sensation and perception, learning and
memory, and emotions, motivation, attitudes, and decision making.

Sensation and Perception

An enormous wave of sensory stimulation washes over and through us everyday.

The human organism is very efficient at adapting the multitude of stimuli, helping us focus and
block out what is deemed to be irrelevant.

Marketers can use information through each of the senses. Visual stimuli are obviously important
to marketers.

Learning and Memory and Emotions

Learning is the process by which associations get past the sensory and perception stages into
short term memory and then, with religion and elaboration, into long term memory.

The first way that people learn is through classical conditioning. It is so well known and
integrated into our culture that most people have heard of the experiments by Ivan Pavlov on
salivating dogs.

Motivation

Abraham Maslow’s Hierarchy of Needs

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 - Self Actualization : achieving full potential
- Esteem and Social : prestige and accomplishments
- Love and Belongingness : friends, intimate relationships
- Safety and Security
- Physiological Needs : basic needs for survival
Attitudes in Decision Making

Attitude and decision making affect the extent to which consumers will buy a particular brand,
repeatedly purchase it, become loyal, recommend it to others, and be so loyal as the insensitive
to price increase.

Thus, marketers need to understand how to enhance attitudes about brands and encourage
particular brand choices, raising at least two questions: What are attitudes, and what does the
decision-making process look like?

In addition to individual differences in how much consumers respond to adds and brands, there
are also, predictable sociocultural effects:

Social Class – construct that is more complicated than just economic access to resources.

Age – cohorts also produce reliable, predictable shopping patterns.

Age Groups – are particularly important when they are large.

Social class and age cohort are among the various sociocultural factors that impinge upon how
buyers form impressions and preferences, collect information, form opinions, and make brand
choices.

Gender matters – men and women are socialized differently, they think about products
differently, and they shop differently.

Chapter 3 : Segmentation

Market segment – is a group of customers who share similar inclination toward a brand.

Mass marketing – all customers would be treated the same.

One-on-One Marketing – means that each customer serves as his/her own segment.

Niche – marketing is a type of segmentation in which a company strategically focuses, targeting

a smaller market, with particular needs that the company can serve well.

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Bases of Segmentation:

1. Demographic
2. Geographic
3. Psychological
4. Behavioral
Bases for Segmenting in B2C and B2B:

Segmenting Consumer: Demographic, Geographic, Behavior, Attitudes

Segmenting Businesses: Demographic, Geographic, Type of Firm, Attitudes

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Chapter 4 : Targeting

The Idea of targeting is selection. Recall that the reasons we segment and target is that it's
foolhardy to try to be all things to all people. Most markets are not comprised of customers with
identical tastes, thereby facilitating the identification of segments.

There are two perspectives in assessing the attractiveness of each segment in terms of its
potential for our targeting, and it is extremely important to consider both.

The first perspective is assessing segments to target is a view of the segments themselves, and
the primary question is how likely it that the segment will be profitable is?

Potential profitability – is a function of the current market size, it's anticipated growth, current
and anticipated lev las of competition, and customer behavior and expectations.

Targeting or selecting an optimal segment to serve, requires that we should have a clear
understanding of customer segments as well as our corporate strengths in the global tourism
industry, it's destination strength that we must try to match with customer segments.

How Do We Choose a Segment to Target:

- Profitability and Strategic Fit

- Tourism
- Competitive Comparisons
- Strategic Segment Comparison
- Sizing Markets

Chapter 7: BRANDS

Marketers care about brands because brands have value above and beyond the benefits of the
product itself.
The brand associations begin with qualities under the company’s control.
Beyond the name and other tangible qualities, other associative elements may also enhance the
imagery and market perception of the brands.

Brand Name

A brand is first and foremost name.

Many firm and brand names are merely those of the founder.
Logos and Color
Brand name meaning continues to build overtime through the firm’s communications to
customers.

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Why Brand?
Brands first convey information to customers. Brand names identify company production and
ownership.
Brand building is based fundamentally on the predictability of the item being purchased.
Brands can gain reputations for being bad, but the goal of a marketer is to create a product that is
realistic, or predictable in quality.

What are Brand Association?

The key brand association is the extent to which the customer feels a personal connection to the
brand.
Brands can also serve other social functions. Brands can become the focal point of bonding, as in
so-called brand communities.

Brand Personalities

One way that marketers get customers to relate to their brands is by creating a brand personality.
A brand doesn’t have to be personified or anthropomorphized, as with Keebler’s elves. Any
brand can be said to have a distinct personality.

Brand Communities

Some customers are also passionate about their love for certain brands that they like to connect
with other like-minded customers.

What are Brandings Strategies?

A company needs to answer several important branding questions as part of their overall
marketing strategy.
First, will the company offer multiple products under the same brand name or roll them out with
distinct brand name?
Second, what are the purposes of brand extensions, line extensions, and cobranding?
Umbrella Brands vs. House of Brands
A company that attaches the same brand name to all of its products is using an umbrella branding
approach.
House of Brands approach is one of which the company introduces a new brand name for every
major line of product it brings to the marketplace.
Each approach has strengths and liabilities.
In contrast, the independence between brands assures that any problems with one brand
shouldn’t negatively affect any of the other brands.
Evidence suggests that the umbrella branding strategy provides stronger financial outcomes to
the company than the house of brands.

Brand Extensions and Cobranding

Brand Extensions are a strategic use of a brand’s equity, in which the marketers leverage the
brand’s good name to get customers to buy something new.

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Cobranding is when two companies collaborate in a joint venture to create a good or service for
the customer.
Ingredient Branding is the primary form of cobranding in which one of the companies and its
product is the primary host, and the other company and its add-valued product to the host
product.

How Are Brands Best Rolled Out Globally?

A true global brand carries one brand name and logo anywhere it is offered, and it is available in
the most markets in the world.
If a company wishes to serve different kinds of customer segments in the different markets, they
would opt to use different brand names in those different markets.

Store Brands
Store brands are big business. The traditional idea behind private labels is that they’re less
expensive and more of a me-too product offering than an innovative brand.
Cost savings for customers isn’t the only motive for store brands.

Chapter 8: New Products

Why are New Products Important?

Companies seek to improve their current products for numerous reasons: a simple point of
corporate pride, to be consistent with an image as being innovative, as an effort to better satisfy
current customers or attract new customers, or to stave off competition.

Change is inevitable. The macro-environmental context continually shifts, and trends in

demographics create predictable transformations in markets and customer demands for new and
different products.

Change is good. New products increase a company’s long-term financial performance and the
firm’s value.

How Does Marketing Develop New Products for Their Customers?

Companies differ in their approaches to designing new products.

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Philosophies of Product Development

 Top down. The process of developing new products depends first on a company’s
culture.This approach is the build-a-better-mousetrap philosophy, and it has
facilitated zillions of successful new products.Top down is sometimes also called
inside out because the idea comes from within the company.
 Cocreation. If this process is called top down (or inside out), its opposite should
be called bottom up (or outside in), but these days it’s referred to as cocreation.

Idea Creation and Market Potential

- Ideas can come from anywhere.

- Ideas can come from observing social (or cultural or economic) trends, from listening to
customers, from your sales force or your frontline service workers.
- Ideas are often somewhat serendipitous; as Louis Pasteur said, “Chance favors the
prepared mind.”
Concept Testing and Design and Development

 Beta Testing
 Area test markets are a neat idea.
 Electronic test markets are also a cool idea.
 Simulated test markets are the popular means of pre-market launch tests.

Launch

 Forecasting
 Timing
How Do New Products and Brand Extensions Fit in Market Strategy?

- Strategic Thinking About Growth

- Market penetration means we’re hunkering down and trying to sell more – same stuff
same customers.
- Product Development is for the company who wishes to be innovative.
- Market development is the path to take when we’re settled on our product mix and we
think there are more segment opportunities to target
- Diversification is the toughest – we’re going after new customers with new products.
How to Evaluate the Segmentation Scheme?

 Data to identify segments

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  Databases to access segments
 Profitability matters
 Fit with corporate goals
 Actionable

Chapter 9

Pricing

Why is Pricing so important? Marketers need to know how to set prices. Whether the brand
positioning is at the low end or high end, prices must be set accordingly. Marketers have to
understand how customers perceive prices and price changes like promotion to know how prices
will be received and accept demand.

BACKGROUND: SUPPLY AND DEMAND

LOW PRICES

There are two issues regarding Low Prices:

1st : How do we determine whether costs are covered? 2nd: Whether low prices are a strategic
choice that is constant, such as everyday-low-price providers who position themselves around
good value in the minds of customers, or should we pulse the market with price fluctuations,
offering and rolling back temporary price discounts.

Concept in Action: Breakeven for a Good– A breakeven analysis is a mean of figuring out
how many units you’d have to sell before you make back your costs.

A breakeven can be computed in terms of the number of units sold or monetary values.

Profit = [(Price – Variable Costs) x Demand] -(Fixed Costs)

If we just broke eventhat would mean that profits would be zero, at a level of demand that we
will call BE:

0 = [(Price – Variable Costs) x BE] –(Fixed Costs)

Rearrange terms to solve for BE:

Fixed Costs
BE = Price – Variable Costs
The last term, Price – Variable Costs is also called contribution per unit to fixed costs.

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Concept in Action: Breakeven for a service – Services are tricky because they are notoriously
disproportionately high in variable costs.

BREAKEVENS– Breakeven for a product is calculated by dividing fixed costs by contribution

per unit to fixed costs. Contribution per unit to fixed costs is determined by subtracting variable
costs from price. It is the point at when revenues, or the number of units sold give you a
monetary profit (and loss) equal to zero. How many units do we need to sell to cover our costs
and start making money? Define profit:

Profit = [(Price – Variable Costs) x BE] – (Fixed Costs)

Solve for BE:

Fixed Costs
BE= Price – Variable Costs
The last term,Price + Variable costs is also called “contribution per unit to fixed costs”. For
example, you sell doodads, your fixed costs (administrative, salaries, rent) are $2,000 a month.
Variable costs is $1,000 per unit. How should you price the doodad?

$2,000
Price $110?BE =110 – 100= 200

$2,000
Price $120? BE = 120 – 100 = 100

$2,000
Price $130?BE = 130 – 100 = 66.7

HIGH PRICES

Scanner Data : this include the indicators of which brands are bought, the quantities bought, the
shelf price of the objects, the paid price, the price of the competitors’ brands that week, a flag for
whether any of the brands were featured in local weekend newspaper flyers or in end-of-aisle
displays in the store, advertising exposures to panel household, etc.

Survey Data: even without scanner data, several marketing research tools can be used to assess
a customer’s willingness to pay.

Conjoint Analysis : more than surveys, marketing managers’favourite tool to study pricing is
the conjoint analysis

UNITS OR REVENUE, VOLUME OR PROFITS

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There is, of course, a difference between maximizing the number of units sold to produce
volume vs. Objectives to maximize revenue and profits.

CUSTOMERS AND THE PSYCHOLOGY OF PRICING

Psychology of Prices–You can count on somereliable behaviours by your customers:

 Price is often used as acue to quality.

 Price differences can have more impact than absolute price differences.
 Customers feel happy if they think they get a deal.
 Without even knowing they do it, customers tend to process $49.99 as closer to $40 than
$50.
 Customers like to think they’re smart shoppers, so give them a good compromise
purchase (a product line of 3 items: a low price and basic quality item, a moderate price
and quality option, and a high-price and quality item).
Price Discrimination aka Segmentation Pricing

Price discrimination, with capital “P and a capital “D”, is not legal. We are not allowed to charge
different prices to different people for the same goods or services.

Quantity Discounts

Yield or Demand Management

NON LINEAR PRICING

If it is not complicated enough to set single price, marketers further complicate things by trying
to coordinate the pricing of multiple pieces of their product offerings. Some prices are set using a
so-called two-part tariff, meaning that a customer pays some amount for one part of the service
and another amount for another part of the service.

PRICE CHANGES

A smart company doesn’t just set a brand’s price and forget it. There are a number of reasons to
think about changing prices, including the product life cycle, coupons and price discounts.

Pricing and the Product Life Cycle

Two contrasting strategies are referred to as pricing for market penetration and skimming.

Penetrate the market : if you want to disperse your brand quickly and widely throughout the
marketplace.

Skimming strategy : high price is set because the company is seeking profit margin, not volume.

Price Fluctuations

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Another element changing prices is a price promotion temporary price cuts or the issuance of
coupons. These techniques are reliable in generating a modest short-term uptick in sales, but are
also equally predictable side effects that aren’t as positive.

Coupons

Are a slightly different vehicle . They are more temporary or ethereal because by definition they
are relevant only to the segment of customers who are coupon clippers

Competitive Strategy and Game Theory

Marketers frequently use game theory to try to estimate likely results of various actions, most
frequently price cuts and competitive response.

Auctions

The defining characteristics of an auction is that the price point isn’t set or fixed, nor is it even
negotiable between a seller and one buyer.

Have always been around as a mechanism of competition, pricing, and distribution. They have
been a common means of sale for fruits and vegetables, tobacco and timber. Contemporary
aunctions are numerous and financially voluminous selling.

Chapter 10 : Channels of Distribution and Logistics

What are Distribution Channels and Supply Chain Logistics and Why Do We Use Them?

• Distribution channel is a network of firms that are interconnected in their quest to provide
sellers a means of infusing the marketplace with their goods, and buyers a means of purchasing
those goods, doing it all as efficiently and profitably as possible.

• Logistics they're talking about coordinating the flow of all those goods and services and
information throughout the channel and among the channel members

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How to Design Smart Distribution Systems: Intensive or Selective

• Push and Pull refer to whether the manufacturer targets consumers or its channel partners with
its marketing communications.

Power and Conflict in Channel Relationships

A little bit of conflict can be healthy.

Conflict can be squashed if one player is inherently more powerful than another.

• Transaction Costs Analysis is a model that considers channel members ‘production costs and
governance costs, both of which are ideally minimized.

- Revenue Sharing

- Integration

A manufacturer could engage in forward integration by opening its own retail stores.

A manufacturer can also engage in backward integration by controlling some of the raw
material inputs.

- Retailing

A channel function that has generated a great deal of interest is retailing, in part because it is
the most visible element to the end customer, and so it can have the most direct impact on image,
positioning, and brand equity.

Retail outlets are classified along a number of criteria.

Retailing falls under the general rubric of services, and just as the employees are more
noticeable to customers, so are the operations elements, such as IT.

- Franchising

Is a unique format of multisite expansion. It's a means for a company to quasi-integrate; the
company can retain some control without complete ownership or capital expenditure.

Franchising systems offer benefits to both the franchisor(the company) and the
franchisee(the local front line).

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 2 Major Classes of Franchising

1. Product Distribution Franchising

2. Business Format Franchising

- E-Commerce

An enormously important channel is the Internet.

- Catalog Sales

The hardcopy predecessor to e-commerce was the direct-to-consumer catalogue.

- Sales Force

- Integrated Marketing Channels

As the number of channels proliferates, increasing care must be taken to coordinate and
integrate their efforts, data, customer touch points, etc. Companies are trying to understand
customer behaviour, to see what channel attributes are important and what impacts customer
choices.

Types of Power

1. Coercive Power : One party can make another do something by faking away benefits or
inflicting punishment. Quick Image - Bully

2. Information Expert Power : One party gets cooperation because they have information the
other seeks. Quick Image - Know-it-all

3. Legitimate Power : By size or expertise, one party can make claims and threats that encourage
the other party to conform. Quick Image - Great Dane and Chihuahua

4. Reference Power : One party cooperates with another because the former seeks affiliation with
the later. Quick Image - I want to be like you

5. Reward Power : One party has the ability to provide good outcomes for another. Quick Image
- I have goodies for you

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Chapter 11 : Integrated Marketing Communications: The Advertising Message

What is advertising?

Advertising is the primary means by which a company communicates to its customers about its
products and brands and position in the marketplace.

Product, price, and place also signal a brand's positioning, and certainly all these signals need to
tell a coherent story.

Why is Advertising Important?

• First, advertising facilitates customer awareness.

• Second, advertising attempts to persuade potential customers that the featured brand is superior
to competitors' market offerings.

Advertising has both short-term and long-term effect.

Not reasonably, advertising is expected to generate sales and profitability, but demontrating this
effort on the bottom line is rather complicated.

The reason that the financial impact is more difficult to assess is that advertising is complicated
and thought to operate in a longer-term manner.

We next consider the content of the advertising message. Advertising has rich communication
potential; ads can convey rational information as well as emotional imagery.

Why Marketing Goals are Sought from Advertising Campaigns?

Advertising, could be used to address many goals.

Models of Advertisement:

• Some describe the flow of the ad recipient from a level of awareness to greater knowledge, to
more liking preference, to a sense of brand conviction and then purchasing.

• Another variant goes from awareness to interest to brand evaluation, to trial and evaluation.

• Another model describes the process as one going from an ad exposure.

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Whichever the model, the goals fall into one of three camps

1. Cognition : Increase awareness and knowledge about our brand.

2. Affect : Enhance attitudes and positive associations about our brand, and, ultimately.

3. Behaviour : Encourage more buying of our brand.

Designing Advertising Messages to Meet Marketing and Corporate Goals

A marketing is a means of communication.

M&Ms

If marketing is said to be the 4Ps, here are the 6Ms of Advertising

1. Market

2. Mission

3. Message

4. Money

5. Media Choices

6. Measure

Cognitive Ads

A cognitive or rational appeal engages the consumer's brain. It gives the consumers a reason to
buy the product that is practice or functional. It's a utilitarian appeal.

• One-Sided Argument means that the company focuses on expressing the benefits of its product
to the consumer.

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• Two-Sided Argument the company describes the pros and cons of its brand. Are used when
your target customers already know that your brand has some weakness.

Benefits of Two-Sided Argument

1. They stand out

2. Seen more objective or neutral

In a noncomparative ad a brand mentioned, and its features and attributes and image portrayal,
etc. are conveyed in the message.

Emotional Ads

Another type of ad that elicits emotions uses humour.

Image Ads

Endorsements

How is Advertising Evaluated?

Whether the strategic goal of an ad campaign is cognitive(awareness, knowledge),

affective(image, preference), or behavioural(trial, repurchase), there are methods of measuring
the results. For cognitive tests, the primary consideration is memory.

When the respondent can think of no more ads, the advertising research turns to memory tests of
recognition.

Traditionally, marketers and advertisers have believed that, while memory is not the samebas
persuasion, it's a necessary starting point.

Ad concept testing is usually conducted in a focus group setting.

Copy testing is usually conducted via survey.

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