Contents

1. Market Analysis.......................................................................................................................................................2
2. Segmentation..........................................................................................................................................................4
3. Targeting................................................................................................................................................................. 6
4. Positioning...............................................................................................................................................................8
5. Product.................................................................................................................................................................. 10
6. Pricing.................................................................................................................................................................... 13
7. Promotion.............................................................................................................................................................17
8. Place...................................................................................................................................................................... 20

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 1. Market Analysis
Micro Environment
Company Value chain: series of departments that carry out value-creating activities.
Existing and potential resources of the company:
1. Quantity and quality of resources available
2. Nature of resources
a. Tangible assets – physical/financial/human resources
b. Intangible assets – reputation, customer r/s, patents and trademarks
3. Extend to which the resources are unique
4. Strength or weakness
Suppliers Watch out for include supply availability and monitor price trends of key inputs
Marketing They help the company to promote, sell, and distribute its products to final buyers.
Intermediaries Resellers, Physical Distribution Firms, Marketing Service Agencies, Financial Intermediaries
Customers Types of Markets:
1. Consumer markets: Personal consumption
2. Business markets: Buy goods for further process or for use in production
3. Reseller markets: Buy goods to resell at a profit
4. Government markets: Buy goods for public services
5. International Markets: 1-4 from other countries
Business Markets:
1. Demand (demand is derived from final consumers, more inelastic, fluctuates more)
2. Market Structure (fewer but larger buyers)
3. Decision Characteristics (more complex, more formal buying process, high buyer-
seller dependency)
4. Nature of buying units (purchases involve more buyers and more professional
purchasing effort)
Customer Relationship Groups – Aim of the company is to produce high customer equity
Different types of customers require different relationship management strategies
High Butterflies True Friends
Profitability Good Fit between Company’s Good fit between company’s offerings
offerings and customer’s needs; and customer’s needs; highest profit
High profit potential (Use one off potential (Make continuous
strategies to earn their money and relationship investment to turn them
cease investing in them until the to true believers)
next time around)
Low Strangers Barnacles
Profitability Little fit between company’s Limited fit between company’s
offerings and customer’s needs; offerings and customer’s needs; low
lowest profit potential. ( Don’t profit potential. (Milk what you can to
bother) make them profitable if not get rid of
them)
Short-Term Customers Long-term Customers
Competitors Firms must gain strategic advantage by positioning themselves to provide greater customer
and satisfaction than its competitors.
1. Identify competitors – direct/indirect (Same product or product class/products with
the same benefits/products competing for the same consumer dollars)
2. Assessing competitors – objectives, strategies adopted, strengths/ weaknesses and
possible reactions
3. Selecting competitors to attack or avoid
Publics Any group that has an actual or potential interest in or impact on an organization’s ability to
achieve its objectives:
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 1. Financial Publics: Company’s ability to obtain funds
2. Media Publics: Carry news, features and editorial opinions
3. Government Publics: Determines civil issues like product safety & government
policies
4. Citizen-action Publics: NGOs
5. The General Public: Their impression of your product
6. Internal Publics: The internal environment’s impression of the company
Macro Environment
Demographic Demography is the study of human populations in terms of size, density, location, age,
Environment gender, race, occupation, and other statistics.
1. Changing household patterns: Divorce rates, marriage rates, birth rates, changing
gender roles.
2. Changing age structure:
 Baby Boomers: Lucrative market for new housing and home remodeling,
financial services, travel and entertainment, eating out, health and fitness
products and high-priced cars and other luxuries
 Generation X: Cautious about economic outlook, care about environment,
less materialistic and more skeptical
 Generation Y: Comfort with computer, digital and IT
 Generational Marketing: Marketers should segment based on lifestyle or life
stage instead of grouping by precise age segments
3. Geographic Shifts in population: Telecommuting, migratory movement between and
within countries
4. Education and Occupation: Level of education and Changes in occupation types
5. Increasing Diversity: Nationality, Ethnicity, Sexual Orientation, Disability
Economic Factors affecting consumer purchasing power and spending patterns.
Environment 1. Types of economies: Subsistence  Developing  Developed
2. Changes in income: Use value marketing to target the various tiered market
(lower/middle/higher income bracket)
3. Changes in consumer spending patterns: Engel’s law – As a household's income
increases, the percentage of income spent on food decreases while the proportion
spent on other goods (such as luxury goods) increases.
Natural Trends in the Natural Environment: Increased in governmental intervention, increased
Environment pollution, and shortage of raw materials.
Environmental sustainability involves getting profits while sustaining the environment.
Environmental Sustainability Portfolio model allows companies to gauge their progress
toward environmental sustainability by considering 4 dimensions.
Today: Greening Tomorrow: Beyond Greening
Focus on improving what companies Focus on improving what the
already do to protect the environment companies can do in the future
Internal Pollution prevention New clean technology
Eliminating or reducing waste before it Developing new sets of
is created environmental skills and capabilities
External Product Stewardship Sustainability vision
Minimizing environmental impact Creating a strategic framework for
throughout the entire product life cycle culture sustainability
Technological New Markets and Opportunities
Environment Safety of new, complex products and technology
Higher Research Cost
Longer times between ideas and product introduction
Political Increased Legislation: Protect companies/consumers/society
Environment Changing Government Agency Enforcement
Increased Emphasis on Social Responsibility – Cause related marketing: Companies linking to
worthwhile causes

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Cultural Institutions and other forces affect a society’s basic beliefs, values, perceptions and behaviors
Environment Persistence of Cultural Values: Core beliefs VS Secondary beliefs
Shifts in Secondary Cultural Values

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 SWOT Analysis
Strengths Weaknesses

 Specialist marketing expertise  Lack of marketing expertise

 Exclusive access to natural resources  Undifferentiated products and service (i.e. in
 Patents relation to your competitors)
 New, innovative product or service  Location of your company
 Location of your business  Competitors have superior access to distribution
 Cost advantage through proprietary know- channels
how  Poor quality of goods or services
 Quality processes and procedures  Damaged reputation
 Strong brand or reputation

Opportunities Threats

 Developing market (China, the Internet)  A new competitor in your home market
 Mergers, joint ventures or strategic alliances  Price war
 Moving into new attractive market segments  Competitor has a new, innovative substitute
 A new international market product or service
 Loosening of regulations  New regulations
 Removal of international trade barriers  Increased trade barriers
 A market that is led by a weak competitor  A potential new taxation on your product or
service

2. Segmentation
Effective Segmentation
Measurable The size, purchasing power, and profiles of the segments can be measured.
Accessible Marketing segments can be effectively reached and served.
Substantial Large, profitable to serve. A segment should be the largest possible homogenous group worth
pursuing.
Differentiable Conceptually distinguishable and respond differently to different marketing mix elements and
programs.
Actionable Effective programs can be designed for attracting and serving the segments.

Segmentation
Geographic Dividing the market into different geographical units. (e.g. Nations, cities, regions, states)
Segmentation  Localizing products, advertising, promotion and sales efforts to fit needs of individual
geographical units
 Cultivate untapped geographic territory
 Retailers are developing new store concepts assess access to higher-density urban areas
 Examples. (P&G’s Crest toothpaste comes in exotic flavors to target urban mainlanders
and rural Chinese, Coca-Cola’s ready-to-drink canned coffees targeted to a specific
geographic region in the Japan)
Demographic Variables: Age, Gender, Family size, Family life cycle, Income, Occupation, Education, Religion,
Segmentation Race, Generation and Nationality.
 Consumer needs, wants and usage rates often vary closely with demographic variables
 Easier to measure than most other types of variables  used to assess the size of TM
Gender Segmentation
 Used in clothing, cosmetics, toiletries and magazines
 Examples: (Nike’s revamped Nikewomen.com website to capture the women’s sports
apparel market)
Age and Life-Cycle Stage Segmentation
 Avoid stereotyping – age may be a poor predictor
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  Mature consumers  employ positive images and appeals
 Examples: (Nintendo targets aging baby boomers using a sub-brand of its video games)
Income Segmentation
 Affluent VS budget conscious customers
 Examples (Credit card companies offer premium cards with additional perks, Daiso)

Psychographic Variables: Social class, Lifestyle, or Personality characteristics

Segmentation
Examples: (Charles & Keith – created an image of the opulence of the rich and famous and
markets itself as a fashion specialist but also a provider of a new lifestyle)

VALS (Values and Lifestyles) Framework

Primary Motivations: Includes ideals, achievement and self-expression

 Ideals: Guided by knowledge and principles
 Achievement: Desire products and services that demonstrates success to their peers
 Self-expression: Desire social or physical activity, variety and risk
Resources:
 People with very high resources are classified as innovators exhibit all three primary
motivations in varying degrees
 People with very low resources are survivors and do not show a strong primary
motivation as their focus is on meeting needs rather than fulfilling desires
Behavioral Variables: Knowledge, Attitudes, Uses of or Responses to a product.
Segmentation  Best starting points for building market segments
 Examples: (Nielsen segmented attitudes towards internet usage and online purchasing
among Malaysia’s urban population
Occasion Segmentation
 Holidays or special events
 Examples: (Indofood created “aspirational noodle eaters” by marketing its limited edition
CNY noodles)
Benefit Segmentation – different benefits that consumers seek from the product
 Finding major benefits people look for in the product class
 Finding kinds of people who look for each benefit
 Finding major brands that deliver each benefit
 Example: (Pepsodent offers fluoride toothpaste to keep teeth clean and healthy while
other brands aim cater to customers different needs)
User Status Segmentation
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 Non-users, Ex-users, Potential users, First-time users, Regular users of a product.
 Different user groups require different marketing appeals to capture or retain them
 Potential users groups could be consumers facing life-stage changes who may become
heavy users
 Examples: (P&G’s direct marketing of its baby products to parents to be)

User Rate Segmentation

Light, Medium and Heavy product users
 Heavy users account for a high percentage of total consumption
 Example: (Burger King targets “super fans” with ads that exalt monster burgers for young
“super fans” with huge appetites)
Loyalty Status Segmentation
 Companies can study loyal customers to understand what appeals to them
 Less loyal buyers can provide analysis on which brands are most competitive
 Customers moving away can tell a company its marketing weakness

Evaluating Target Segments

Enter segments which it can offer superior value and gain advantages over competitors
Segment Size and Growth  Sales revenue, Growth Rate and Expected profitability
Structural Factors  Strong/weak competition
 Existence of substitute products  limits profits earned
 Buyer and supplier power
Objective and Resources  In line with Long-run objectives and strategies
 Possess skills and resources required

3. Targeting
Choosing a Targeting Strategy
Concentrated Undifferentiated Differentiated
marketing marketing marketing
Company resources Finite
Vast
Product Variability Limited (Uniform)
High
Product’s life-cycle Introduction
stage Maturity
Market Variability* Low
High
Competitors’ Undifferentiated
marketing strategies Differentiated HELL NO
*Depends on consumers taste, purchase quantity and reaction to marketing efforts

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 Targeting Strategies
Decide which and how many segments it will target
Undifferentiated Ignore market segment differences, go after the whole market with one offer
Marketing  Focuses on what is common in the needs of consumers rather than on what is
different  appeal to the largest number of buyers
 Difficult to compete with more focused firms and difficult to develop a
product/brand that satisfy all consumers
Differentiating Target several market segments and designs separate offers for each
Marketing  Adv: Higher sales and a stronger position within each market segment
 Disadv: Increases the cost of doing business due to the need to develop separate
marketing plans to target each group
 Example: (Procter and Gamble’s five different brands of laundry detergent to meet
the special needs of each segment of buyers)
Concentrated Goes after a large share of one or a few segments of niches
Marketing  Adv: Company achieves a strong market position because of its greater
knowledge of consumer needs in the niches it serves and the special reputation it
acquires
 Adv: Allows smaller companies to compete by focusing their limited resources on
serving niches that may be overlooked by larger competitors
 Adv: Market effectively and efficiently due to its knowledge of its targeted
segments needs
 Disadv: Involves higher-than-normal risks due to the lack of diversification
 Example: (AirAsia started by focusing on Malaysia’s intrastate market)
Micromarketing Local Marketing
Tailoring brands and promotions to the needs and wants of local customer groups – cities,
neighbourhoods, and even specific stores
 Adv: Market more effectively in the face of pronounced regional and local
differences in demographics and lifestyles
 Adv: Meets the needs of the company’s first-line customers – retailers – who
prefer more fine-tuned product assortments
 Disadv: High manufacturing and market costs by reducing EOS
 Disadv: Creates logistics problems as it tries to meet varied requirements
 Disadv: Dilution of brand image as it product and message vary too much in the
different localities
 Mitigating Factor: Increasingly fragmented markets and new supporting
technologies help to negate the disadvantages
 Examples: (Kinokuniya taps onto the high volume youth clientele in Bugis but
offers upmarket lifestyle activities in Ngee Ann City)
Individual marketing
Tailoring products and marketing programs to the needs and preferences of individual
customers.
 Adv: Better tailored to customer’s needs
 Adv: Stand out against competitors by building customer relationship
 Disadv: Cater to each person’s need can be costly and unprofitable
 Mitigating factors: Improvement in technology has allowed for mass
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 customization
 Examples: (Nike’s allows customers to personalize their sneakers online)

Socially Responsible Target Marketing

 Targeting of vulnerable or disadvantaged consumers with controversial or potentially harmful products
 Attempts to profit at the expense of targeted segments using questionable products or tactics to unfairly
target vulnerable segments
 Caused by growth of the internet (Irresponsible data mining, spamming)

4. Positioning
1. Identifying a set of possible competitive advantages to build a position
2. Choosing the right competitive advantage
3. Select an overall positioning strategy
4. Developing a positioning statement

Identifying Possible Competitive Advantages

Offering consumers greater value, through lower prices or by providing more benefits that justify higher prices
Product Products can be differentiated on features, performances or style and design
differentiation Examples: (Samsung’s Galaxy phone came in bold colours and stylish designs to target the
youth market)
Service Services can be differentiated through speed, convenience or careful delivery.
differentiation Examples: (Taj Hotels has “cyber butlers” that allows guests to connect to the internet
conveniently)
Channel Competitive advantage through channel coverage expertise and performance.
differentiation Example: (Amazon.com set itself apart through its smooth-functioning direct channels)
People Firms can hire and train better people than their competitors
differentiation Example: (SIA trains its flight attendants to provide top quality service)
Image Occurs when buyers perceive a difference even when competing offers look the same.
differentiation Example: (McDonald’s golden arches symbol provides strong brand recognition)

Choosing the Right Competitive Advantages

How many Companies should develop a unique selling proposition for each brand and stick to it as buyers
differences to tend to remember this better in an over-communicated society.
promote Example: (Volve promotes on its safety and Wal-Mart on its low prices)
Due to competition, companies may need to position their products on more than one
differentiator. The risk however is a loss of clear positioning.
Example: (Procter & Gamble positioning of Ariel on a combination of superior cleaning and
fragrance in the Indian Market)
Differences to Important – Difference delivers a highly valued benefit to target buyers
promote Distinctive – Competitors do not offer the difference or company can offer it more distinctively
Superior – Difference is superior to other ways that customers might obtain the same benefit
Communicable – Difference is communicable and visible to buyers
Pre-emptive – Competitors cannot easily copy the difference
Affordable – Buyers can afford to pay for difference
Profitable – Company can introduce difference profitably

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 Selecting an Overall Positioning Strategy
More for More Providing the most upscale product or service and charging a higher price to cover the
higher costs
 Introduce this in any underdeveloped product or service category
 Adv: Sell well during good times
 Disadv: Invite imitators who claim the same quality at a More for the same or
More for less positioning
 Disadv: During economic downturns, buyers are more cautious in their spending
 Examples: (Mont Blanc writing instruments claim superior craftsmanship)
More for the Same Offering more benefits for the same price
The Same for Less Offering brands similar brands as competitors but at deep discounts based on superior
purchasing power and/or lower-cost operations
 Example: (Huawei Technology selling reliable low-cost switches and routers)
Less for Much less Consumers might settle for less than optimal performance for a lower price due to
spending constraints. It involves meeting consumers’ lower performance or quality
requirements at a much lower price.
 Example: (Tiger Airways budget airlines, Daiso $2 merchandise)
More for Less  Adv: Achievable in the short run
 Disadv: Unsustainable in the long run due to higher cost
 Disadv: Companies that try to deliver both may lose out to more focused
competitors

Developing a Positioning Statement: To (target segment and need) our (brand) is (concept) that (point-of-
difference)

Competitive Positions
Market Leader The firm with the largest market share

Market Challengers Firms that fight hard to increase their market share

Market Followers Runner-up firms that want to hold their share without rocking the boat

Market Nichers Firms that serve small segments not being pursued by other firms

Market Leader Strategies

Threats  Firms are constantly challenging its strengths or trying to take advantage of its weakness
 Growing arrogant or complacent and misjudge the competition
 Look old-fashioned against newer and rivals
 Innovation from its competitors

Expanding the Leading firms gains the most when total market expands as they hold the largest share
Total Demand  Developing new users, new uses and more usage of the product
 New users example (Shiseido can introduce skin care products for men)
 New uses example (Nintendo used its gaming system as a teaching device)
 More Usage example (Campbell running ads containing new recipes)
Protecting Market  Fix weaknesses that provide opportunities for competitors
Share  Fulfill value promise to maintain strong relationships with valued customers
 Prices consistent with the value that customers see
 Continuous innovation
Expanding Market  Producing better quality products
Share  Reducing prices
 Increasing promotional efforts
 Increasing channel penetration
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  Buying up smaller competition
Market Challenger Strategies
Frontal Attack  Matching the competitor’s product, advertising, price, and distribution efforts
 Attacks the competitor’s strengths rather than its weaknesses
 Requires sufficient resources
Indirect Attack  Attacking the competitor’s weakness or on gaps in the competitor’s market coverage
 Example: (AirAsia and JetStar challenging large carriers with budget flights)

Market Follower Strategies Market Nicher Strategies

 Letting the market leader bear the cost of  Adv: Charge substantial markup to cover cost
developing the market  Finding one or more market niches that are safe
 Learning from the market leader and improving on from competitors and big enough to be profitable
their product at a lower investment  Adopt specialization by focusing few specific target
 Keeping the right distance from the market leader segments
to avoid retaliation but yet retain its customers  Disadv: Market niche may dry up or attract new
 Must keep manufacturing cost and prices low or its competitors
product quality and service high  Mitigating Factors: Multiple niching to increase
chances for survival
 Example: (Logitech dominates the PC mouse
market through skillful niching)

5. Product
Product
Core Customer The core problem-solving benefits or services that consumers seek.
Value
Actual Product Consist of the product and service features, design, a quality level, a brand name and packaging
Augmented Additional consumer services and benefits around the core benefit and actual product.
Product (E.g. Warranty, after-sales service support, websites Q&A)

Marketing Type of Consumer Product

Considerations Convenience Shopping Specialty Unsought
Customer Frequent purchase, Less frequent Strong brand Little product
buying little planning, little purchased, much preference and loyalty, awareness, knowledge
behavior comparison or planning and special purchase effort,
shopping effort, low shopping effort, little comparison of
customer comparison of brands, low-price
involvement brands on price, sensitivity
quality, style
Price Low Price Higher Price High price Varies
Distribution Widespread Selective Exclusive distribution in Varies
distribution, distribution in fewer only one or a few
convenient locations outlets outlets per market area
Promotion Mass promotion by Advertising and More carefully targeted Aggressive advertising
the producer personal selling by promotion by both and personal selling by
both producer and producer and resellers producer and resellers
resellers
Examples Necessities Appliances Luxury goods New innovations and
insurance

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 Long-Run Consumer Benefit

Immediate Satisfaction
Low High
High Salutary Products: Products that have low Desirable Products: Products that give both high
appeal but may benefit consumers in the long immediate satisfaction and high long-run benefits
run
Low Deficient Products: Products that have Pleasing Product: Products that give high
neither immediate appeal nor long-run immediate satisfaction but may hurt consumers in
benefits the long run

Individual Product Decisions

Product Product Quality – matches target market needs and quality level of competing products
Attributes
Decide a quality level that will support the product’s positioning.
 Performance quality: The ability of a product to perform its functions
 Conformance quality: Consistency in delivering the quality that consumers expect

Product Features
 Competitive tool for differentiating a company’s product from competitors’ products
 Compete by being the first producer to introduce a valued new feature
 Features that customers value highly in relation to costs should be added

Product Style and Design

Style describes the appearance of a product
Design contributes to product usefulness as well as to its looks
Branding Brand Equity – consumers react more favorably to it that generic versions of the same product
Identifies the Brand Positioning: Product attributes (competitors can easily copy, customers are not
maker or seller interested in attributes but what it will do for them), Product benefits, Product beliefs and
of a product or values
service, Importance of Branding:
represents the 1. Helps customers identify the product
consumer 2. Reflects product quality
perceptions and 3. Provides legal protection for unique features
feelings. 4. Building trust with the customer
5. Higher seller/buyer power  easily launch line and brand extensions
6. Command a premium price
7. Helps segment the markets (Toyota Motor Corporation offers major brands such as
Lexus, Toyota and Scion brands, each with numerous sub-brands, for different
segments)
Packaging  Helps to create instant consumer recognition of the company or brand
 Superior packaging signals quality and makes imitation difficult
 Innovative packaging gives a company a competitive advantage
Key factors to packaging:
1. User-friendly
2. Attractive
3. Functional
4. Ensure safety
5. Environmentally friendly
Labelling Labels identify the product or brand, describes attributes
It helps to promote the product and support its positioning

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 Key factors to labeling:
1. Informative
2. Attractive
3. Truthful
4. Abide by rules and regulations
Product Can be a minor or a major part of the total offering
Support
Services

Product Line Decisions

Product Line Length  Number of items in the product line
 Influenced by company objectives and resources
Product Line Filling  Adv: Reach for extra profits, satisfy dealers, use excess capacity, plugging holes to
Adding more items keep out competitors
within the present  Disadv: Cannibalization and customer confusion
range of the line  Mitigating factor: Ensure new items are noticeably different from existing ones
Product Line  Upward stretch (Add high-end products): Add prestige to current products and earn
Stretching – When a higher margin
company lengthens  Downward stretch (Add low-end products): Prevent competitive entry, retaliate
its product line against competitor’s attack at upper end and capitalize on faster growth at lower end
beyond its current  Both Directions: Done by companies in the middle range
range
Product Mix The set of all product lines and items that a particular seller offers for sale
Decisions  Width: Refers to the number of different product lines the company carriers
 Length: The total number of items the company carriers within its product lines
 Depth: The number of versions offered of each product in the line
 Consistency: How closely related the various product lines are in terms of end use,
production requirements, distribution channels
How Company can  Widen the product mix by adding new product lines (builds on its reputation)
Increase its Business  Lengthen its existing product lines to become a more full-line company
 Create more depth by adding more versions of each product, deepen its product mix
 Pursue more or less product line consistency depending on company objectives

Brand Development

Existing Product Category New Product Category

Existing Brand Name Line Extension Brand Extension
New Brand Name Multibrands New Brands
Line Extensions:
 Adv: Low-cost, low-risk way to introduce new products
 Adv: Meet consumer desire for variety
 Adv: Use up excess capacity
 Disadv: Lose brand’s meaning, cause consumer confusion, cannibalize into existing items

Brand Extensions:
 Adv: Instant recognition and faster acceptance
 Adv: Save on advertising cost required to build a new brand name
 Disadv: Confuse the image of the main brand
 Disadv: May harm consumer attitudes toward the other products carrying the same brand

Multibrands
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 Adv: Offers a way to establish different features and appeal to different buying motives
 Adv: Allows a company to lock up more reseller shelf space
 Disadv: Spreading resources over many brands instead of building a few brands to a highly profitable level

New Brands: Power of its existing brand name is waning and that a new brand name is needed.
 Disadv: Too many brands with too few differences
 Disadv: Spreading resources too thin
 Mitigating factor: Megabrand strategies whereby weaker brands are removed and the focus is only on brands
that can achieve top market share positions
Managing Brands
 Brand’s positioning must be continuously corrected
 All consumer touch-points must support brand positioning

Product Life- Cycle

Introduction New product is first distributed and make available for purchase
 Profits are negative or low due to low sales and high distribution and promotion expense
 Choose a launch strategy consistent with the intended product positioning
 Purchased by early adopters and innovators
Growth Product’s sales start climbing quickly
 Early adopters followed by early majority or late majority due to favourable word of mouth
 New competitors will enter the market and prices remain or fall by a bit
 Firms face a trade-off between high market share and high current profit
Maturity Sales growth slows or levels off. Normally last longer than previous stages.
 Slowdown of sales growth due to greater competition
 Weaker competitors drop out, well-established competitors remain
 Companies try to modify the market – new market segments, increase usage rate
 Companies can also try to modify the product – changing product characteristics to attract
new users and to inspire more usage
 Companies can try modifying the marketing mix – cut prices, sales promotion, advertising,
move into larger market channels
Decline Product’s sales decline due to technology, shifts in consumer tastes and increased competition.
 High opportunity cost whereby funds to support the product can be used for new ones
 Failing reputation might tarnish company’s image
 Determine whether to maintain, harvest or drop out
 Maintaining is in the hope that competitors will leave the industry or the product can be
reinvigorated to the growth stage
 Harvesting is done to reduce various cost and hoping sales hold up
 Dropping it is to sell to another firm or liquidate it at salvage value

Introduction Growth Maturity Decline

Sales Low sales Rapidly rising sales Peak sales Declining sales
High cost per Average cost per Low cost per Low cost per
Costs
customer customer customer customer
Profits Negative Rising profits High profits Declining profits
Characteristics
Customers Innovators Early adopters Middle majority Laggards
Stable number
Competitors Few Growing number beginning to Declining number
decline

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 Introduction Growth Maturity Decline
Maximize profit Reduce
Marketing Create product Maximize market
while defending expenditures and
Objectives awareness and trial share
market share milk the brand
Offer product
Diversify brand Phase out weak
Product Offer basic product extensions,
and models items
service, warranty
Price to penetrate Price to match or
Strategies Price Use cost-plus Cut price
market beat competitors
Build more Go selective, phase
Build selective Build intensive
Distribution intensive out unprofitable
distribution distribution
distribution outlets
Build product
Build awareness Stress brand Reduce to level
awareness among
Advertising and interest in differences and needed to retain
early adopters and
mass market benefits hard-core loyals
dealers
Reduce to take
Use heavy sales Increase to
Sales advantage of Reduce to minimal
promotion to entice encourage brand
Promotion heavy consumer level
trial switching
demand

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 6. Pricing
Pricing Approaches

Determines the focus and starting point of the pricing process but still considers other factors

Value Based Setting prices based on buyer’s perceptions of value. Analyze consumer needs and value
Pricing perceptions and set a price to match consumers’ perceived value
1. Adv: Customer driven strategy

2. Disadv: Hard to measure the value customers attach to their products

Value-Based Pricing
Customer
 Value  Price  Cost  Product
s

Good Value Pricing: Offering the right combination of quality and good service at a fair price.
1. Everyday low pricing  Charging a constant everyday low price with few or no
temporary price discounts

2. High-low pricing  Charging higher prices on an everyday basis but running frequent
promotions

3. More for the same, More for less, The same for less, Less for much less positioning

Value-added Pricing
Attaching value-added features and services to differentiate a company’s offers and to
support charging higher prices. (More for more positioning)

Cost Based pricing Setting prices based on the costs for producing, distributing, and selling the product plus a
fair rate of return for effort and risk
Cost-Based Pricing
Cos Valu
Product   Price   Customers
t e
Cost- Plus pricing: Adding a standard markup to the cost of the product
 Adv: Sellers are more certain about costs than about demand and this method is
simpler and does not require frequent adjustments

 Adv: Fairer to both buyers and sellers

 Disadv: Prices do not make sense and ignores demand and competitors prices

Break-Even Analysis and Target Profit Pricing

Setting prices to break even on the costs of making and marketing a product, or setting
prices to make a target profit
Competition Setting prices based on competitors’ strategies, costs, prices, and market offerings
Based pricing
 Perceived Customer Value (relative to competitors): HighHigh price, LowLow
price

 Pricing Strategies of Competitors:

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  Strength of Competitors: Low prices to drive out weaker competitors, high price to
target un-served market niches

 Market Structure: Determines information customers have as well as their price-

sensitivity

Other Pricing Considerations

Market Strategy  Pricing strategy is largely determined by decisions on market positioning
Considerations  Attract new customers
 Retain existing customers
 Prevent competition from entering the market
 Stabilize the market and avoid price wars
 Keep loyalty and support of resellers
 Avoid government intervention
 Help sales of other products
Organizational  Top management typically sets pricing objectives and policies
Considerations  Many internal parties can influence pricing
Market Market Structure
Considerations 1. Pure Competition: Uniform pricing for commodity
2. Monopolistic Pricing: Differentiated products and pricing
3. Oligopolistic Competition: Competitive pricing and strategies
4. Pure Monopoly: “Fair Return” Vs. Capture Consumer surplus

Price elasticity determines whether to charge a high price or low price

Higher price can equal higher demand for prestige goods
Other  Psychological Factors and Perceptions
Considerations  Economic Conditions
 Government
 Social Concerns
 Resellers’ Reaction

New Product Pricing Strategies

Market Skimming Setting a high price for a new product to skim maximum revenues from the segments willing
to pay the high price; the company makes fewer but more profitable sales.

Conditions for using Market Skimming

 Superior quality and image
 Enough buyers want the product at a high price
 High barriers of entry for low cost competitors
 High price to offset the high costs of producing in a smaller volume
Market Setting a low price for a new product to attract a large number of buyers and a large market
Penetration share. The high sales volume results in falling costs, allowing the company to cut its price
even further.

Conditions for using Market Penetration

 Market must be highly price-sensitive so that a low price produces more market growth
 Production and distribution costs must fall as sales volumes increases
 Low price keep competition out and the company must maintain its low-price position
 Experience curve drives cost down substantially with accumulated production.

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 7. Promotion
Integrated Marketing Communications
The integration and coordination of the company’s many communication channels to deliver a clear, consistent, and
compelling message about the organization and its brand.
Identifying the Will heavily affect the marketer’s decisions on
target audience  Content
 Context
 Media
 Timing
 Message Source
Determining the Seeks a desired response that results from a consumer decision-making process that includes the
communication stages of buyer readiness
objective Buyer-readiness stages
Awareness  Knowledge  Liking  Preference  Conviction  Purchase
Steps to improve awareness and knowledge: Promotional campaign to create awareness and
curiosity
Steps to move to stronger stages of feelings: Can use the promotional mix tools to create
positive feelings and conviction.
Steps to induce purchase: Offering special promotional prices, rebates, or premiums
Designing a AIDA Model: An effective message: (1) Gets attention, (2) Hold Interest, (3) Arouse Desire, (4)
Message obtain action
Breaking through the Clutter: Reducing the effectiveness in an increasingly hostile advertising
environment. VOD and channel surfing also prevents force-feed of old cookie-cutter ad
messages.
Message Content
Rational Appeal: Desired Benefits
Emotional Appeal: Positive or negative emotions that motivate purchased
Moral Appeal: Directed to the audience’s sense of what is right and proper
Message Structure
1. Draw a conclusion or leave it to the audience
2. Present the strongest arguments first or last
3. Present a one-sided (Effective in sales presentations unless audience highly educated) or
two-sided argument (Enhance advertiser’s credibility, make buyers more resistant to
competitor attacks)
Message Format: Determine the headline, copy, illustrations, colors, sounds
Execution Style (Page 497)
Choosing Media Personal Communication
1. Sales Person: Contact customers directly
2. Independent third parties: Making statements to potential buyers
3. Word of mouth influence: Personal communication about a product
4. Buzz Marketing: Cultivating opinion leaders and getting them to spread information
about a product or service to others in their communities. (Adv: Personal influence
carriers great weight for products that are expensive, risky or highly visible)

Non-personal Communication
Includes major media, atmospheres, and events. Should be aimed at opinion leaders and letting
them carry the message to others.
1. Print media
2. Broadcast media
3. Display media
4. Online media
5. Atmospheres of outlets
6. Planned events

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 Other factors that can determine media type
1. Reach: A measure of the percentage of people in the target market who are exposed to
the ad campaign during a given period of time
2. Frequency: A measure of how many times the average person in the target market is
exposed to the message
3. Impact: The qualitative value of a message exposure through a given medium
Selecting Specific Media Vehicles: (1) Cost per thousand, (2) cost of ad production, (3) audience
quality, (4) Audience engagement, (5) Editorial quality
Media Timing: (1) Seasonality, (2) Scheduling Patterns (Pulsing: Means scheduling ads unevenly
over a given period of time, can achieve the same impact but at a much lower cost and achieve
maximal awareness. However sacrifices the depth of advertising communications) (Continuity:
Means scheduling ads evenly over a given period of time)
Selecting the Use highly credible or recognized sources to promote or recommend the product to the target
Message Source audience  more persuasive
Collecting Understand the marketing communication efforts on the target audience to gauge the
Feedback effectiveness of this communication. Allows for more directed changes aimed at the marketing
communications
 Recall and recognition
 Attitude towards message
 Attitude towards brand
 Purchase intention
 Word-of-mouth behavior
Ways to measure effects on sales and profit
 Compare past sales and profits with past advertising expenditures
 Test the effects of different advertising spending levels

Promotional Mix
Promotion Remarks Advantages and Disadvantages
Tool
Advertising Objectives  Reach masses of geographically
 Informative advertising dispersed buyers at a low cost per
 Builds primary demand for new product category exposure
 Reminder advertising  Enables the seller to repeat a
 Maintains customer relationships for mature message many times
products  Consumers tend to view
 Persuasive advertising advertised products as more
 Builds selective demand, competition focused legitimate
 Comparative advertising  Very expressive and allows the
 Competitor focused company to dramatize its products
 Impersonal
 One-way communication
 Costly
Personal Personal presentation by the firm’s sale force for the purpose  Effective in building up Buyers’
selling of making sales and building customer relationship preferences convictions and
 Face-face communication actions
 Telephone communication  Allows personal interaction
 Video-or web conferencing  Allows all kinds of customer
relationships to develop
Managing the Sales Force  Buyer usually feels a greater need
Designing sales force strategy and structure  Recruiting and to listen and respond
selecting salespeople  Training salespeople   Requires a long-term commitment

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 Compensating salesperson  Supervising salespeople   Most expensive promotion tool
Evaluating salespeople

Sales Short-term incentives to encourage the purchase or sale of a  Attract consumer attention
Promotion product or service  Offer strong incentives to
purchase
Types of Sales Promotion  Can be used to dramatize product
 Trade Promotions offers and to boost sagging sales
 Consumer Promotions  Invite and reward quick customer
 Sales force promotions response
 Business Promotions  Effects are short-lived
 Not as effective in building long-
run brand preference and
customer relationships
Public Building good relations with the company’s various publics by  More believable than ads
Relations obtaining favorable publicity, building up a good corporate  Can reach prospects who avoid
image, and handling or heading off unfavorable rumors, sales people and advertisements
stories, and events  Stronger impact on public
awareness than advertising
 Very cost effective
Direct Direct connections with carefully targeted individual Benefits to Buyers
marketing consumers to both obtain an immediate response and  Convenient, easy ad private
cultivate lasting customer relationships  Ready access to many products
 Access to comparative info
Forms of Direct Marketing  Interactive and immediate
1.Direct-mail marketing:
2.Catalog Marketing Benefits to Sellers
3.Telemarketing  Powerful tool for building
4.Face-to-face selling customer relationships
5.Kiosk Marketing  Low-cost, efficient, and speedy
6.New Digital Technologies  Greater flexibility
7.Online Direct Marketing  Gives access to buyers they may
not be able to reach otherwise
Customer Database  Customized
An organized collection of comprehensive data about  Interactive
individual customers  Well suited to highly targeted
marketing efforts and building
Benefits: one-to-one customer relationships
 Generate Sales leads
 Evaluate the potential of the leads
 Fine-tune offerings
 Serve the long term needs of customers
Online  Online advertisements  Social Networks
promotion Display ads, search related ads, online classifieds 1. Adv: An ever-increasing
 Viral Marketing popular trend today
Word-of mouth influence in the internet. (Adv: Not costly and 2. Adv: Can target special-
higher chance of getting the message across) interest group
 Crowdsourcing 3. Disadv: New and results are
Consumers contribute ideas and vote on what proposed hard to measure
designs they like best for a forthcoming product launch 4. Disadv: Difficult to build a
 Email marketing presence and negative
Cost effective but may be treated as spam by customers. information can spread
 Content sponsorship equally fast too
 Alliances and affiliates program

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 8. Place
Analyzing Balance among consumer needs, feasibility and costs, and consumer price preferences
Consumer (consumers may accept lower service levels in exchange for lower prices e.g. discount retailing
Needs stores)
Several segments want different levels of service
 Convenience – location/delivery
 Product Mix
 Purchase and payment methods
 Add-on services
Setting  State marketing channel objectives in terms of targeted levels of customer service
Channel  Decide which segments to serve and the best channels to use
Objectives  Minimize total channel cost of meeting customer service requirements
Channel Objectives can be influenced by:
 Nature of the company and product
 Availability of marketing intermediaries
 Competitors – avoid/compete
 Legal Constraints
Identifying 1. Types of Intermediaries: Identifying the types of channel members available
Major
Alternatives 2. Number of Marketing Intermediaries
 Intensive Distribution: Stocking the product in as many outlets as possible.
 (Adv: Good coverage) (Disadv: High cost, less control)
 Exclusive Distribution: Giving a limited number of dealers the exclusive right to distribute the
products in their territories. Involves luxury goods or prestige goods.
 (Adv: Stronger distributor selling support, more control over prices/promotion/services
enhances the products image, allows for higher markups)
 Selective Distribution: The use of more than one but fewer than all of the intermediaries who
are willing to carry the products.
 (Adv: Develop good working relationships with selected channel members, expect a
better-than-average selling effort)
 (Adv: Decent coverage, more control and less cost than intensive distribution)

3. Number of Channels and Channel level

 Direct Marketing Channel: The company sells directly to customers
 Indirect Marketing Channels: Containing one or more intermediaries
 Producer  Retailers  Consumer Segment

4. Channel Organization
 Problems with conventional distribution Channel:
 Independent Channel Members
 Maximization of individual goals
 Little control over the other members
 No formal means for assigning roles and resolving conflict
 Vertical Marketing Systems
 A distribution channel structure in which producers, wholesalers, and retailers act as a
unified system.
 Horizontal marketing system
 A channel arrangement in which two or more companies at one level join together to
follow a new marketing opportunity

5. Responsibilities of Channel Members

Need to agree on the terms and responsibilities:
(1) Price Policies, (2) Conditions of sales, (3) Territorial rights and (4) Specific services
Evaluating Economy criteria: Sales, costs and profitability

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Major Control Issues: The degree of control over the marketing of a product
Alternatives Adaptive Criteria: Degree of flexibility for company to respond to environmental changes.
Channel involving long-term commitments should be greatly superior on economic and control
grounds

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