DISTRIBUTION

Channel Organization (***)

Revenue ​**Price & Place (Rebates)**​-Cost of Good Sold (variable cost)​**Product**​ = Gross Margin -
Over Heads (Fix Cost) ​**Promotion**​ =Net Margin = Profit

Supply Chains and the Value Delivery Network

Producing a product or service and making it available to buyers requires building relationships not only
with customers but also with key suppliers and resellers in the company’s ​supply chain​.

Supply chains underlie value-chains because, without them, no producer has the ability to give customers
what they want, when and where they want, at the price they want.

This supply chain consists of upstream and downstream partners.

● Upstream from the company is the set of firms that supply the raw materials, components, parts,
information, finances and expertise needed to create a product or service. (Inbound)
● Downstream marketing channel partners, such as wholesalers and retailers, form a vital
connection between the firm and its customers. (Outbound)
○ Reverse logistics must be included in cost to cover

A ​value delivery network ​is composed of the company suppliers, distributors, and, ultimately, customers
who “partner” with each other to improve the performance of the entire system.
It is a part of the supply chain of a company and includes all its direct participants involved in production,
distribution, marketing, customer service, etc. It a chain of system where after each system more a more
value is added to the product or services thereby increasing its overall value for the customer. Each
system is partnering with other system to provide better value to the customer. The value created through
such partnering depends upon the quality of relationship between the systems.

The Nature and Importance of Marketing Channels

Few producers sell their goods to final users. Instead, most use intermediaries to bring their products to
market. They try to forge a ​marketing channel ​(​distribution channel​): a set of interdependent
organisations that help make a product or a service available for use or consumption by the consumer or
business user.
Distribution channel decisions often involve long-term commitments to other firms. A company’s channel
decisions directly affect every other marketing decision.
● Pricing depends on whether the company works with discount chains, uses high-quality specialty
stores, etc.
● The firm’s sales force and communication decisions depend on how much persuasion, training,
motivation and support its channels partner need.
 ● Whether a company develops or acquires certain new products may depend on how well those
products fit the capabilities of its channel members.

How Channel Members Add Value

Producers use intermediaries because they create greater efficiency in making goods available to target
markets. Through their contacts, experience, specialisation, and scale of operation, intermediaries usually
offer the firm more than it can achieve on its own.
From an economic system’s point of view, the role of marketing intermediaries is to transform the variety
of products made by producers into the specific product wanted by consumers. Producers make narrow
ranges of production in large quantities, but consumers want broad ranges of products in small quantities.
Marketing channel members buy large quantities from many producers and break them down into the
smaller quantities and broader ranges desired by consumers.

In marketing products and services available for consumers, channel members add value by bridging the
major time, place and possession gaps that separate goods and services from those who use them.
If the manufacturer performs these functions, its const goes up, and its price must be higher. When some
of these functions are shifted to intermediaries, the producer’s const and prices may be lower, but the
intermediaries must charge more to consumers to cover the costs of their work. In dividing the work of
the channel, the various functions should be assigned to the channel members who can add the most value
for the cost.

Channel Levels
Companies can design their distribution channels to make products and services available to customers in
different ways. Each layer of marketing intermediaries performs some work in bringing the product and
its ownership closer to the final buyer is a ​channel level​.
The number of intermediary levels indicates the ​length ​of the channel.
● 0 level channel - ​direct marketing channel, has no intermediary levels; the company sells directly
to consumers.
● 1 & 2 level channels​ - indirect marketing channels, containing one or more intermediaries.
○ 2 level channel​ - the most common distribution channel.

Marketing channels with even more level can be found, but these are uncommon. From the producer’s
point of view, a greater number of levels means less control and greater channel complexity.

Channel Behaviour and Organisation

A marketing channel consists of firms that have partnered for their common good. Each channel member
depends on the others.
Ideally, because the success of individual channel members depends on overall channel success, all
channel firms should work together smoothly. They should understand and accept their roles, coordinate
their activities and cooperate to attain overall channel goals. However, cooperating to achieve overall
channel goals sometimes means giving up individual company goals. Although channel members depend
on one another, they often act in their own short-term best interests. Such disagreements over goals, roles
and rewards generate channel conflicts.
● Horizontal conflict​ - occurs among firms at the same level of the channel (​e.g.: different
dealers​).
● Vertical conflict​ - occurs between different levels of the same channel (​e.g.: producer and
dealers​).

Some conflict in the channel takes the form of healthy competition. Such competition can be good for the
channel - without it, the channel could become passive and non-innovative.

Vertical Marketing Systems

For the channel as a whole to perform well, each channel member’s role must be specified, and channel
conflict must be managed. The channel will perform better if it includes a firm or mechanism that
provides leadership and has the power to assign roles and manage conflicts.
Historically, the ​conventional distribution channels​ have lacked such leadership and power, often
resulting in damaging conflict and poor performance. One of the biggest channel developments has been
the emergence of ​vertical marketing systems​ that provide channel leadership.

● A ​conventional distribution channel​ consists of one or more independent producers,

wholesalers and retailers. Each is a separate business seeking to maximize its own profit. No
channel member has much control over the other member, and no formal means exist for
assigning roles and resolving conflicts.
● A ​vertical marketing system​ ​(VMS)​ consists of producers, wholesalers and retailers acting as a
unified system.
 ○ Corporate VMS​ - integrates successive stages of production and distribution under a
single ownership (one channel member owns the others). Coordination and conflict
management are attained through regular organisational channels.
○ Contractual VMS​ - independent firms at different levels of production and distribution
who joined together through contracts to obtain more economies or sales impact than
each could achieve alone. Channel member coordinate their activities and manage
conflict through contractual agreements.
○ Administrative VMS​ - leaderships is assumed not through common ownership or
contractual ties, but the size and power of one or a few dominant channel members.

Horizontal Marketing Systems

Another channel development is the ​horizontal marketing system​, in which two or more companies at
one level join together to follow a new marketing opportunity. By working together, companies can
combine their financial, production or marketing resources to accomplish more than one company could
alone.
Companies might join forces with competitors or non-competitors. They might work with each other on a
temporary or a permanent basis, or they may create a separate company.

Multichannel Distribution System

In the past, many companies used a single channel to sell to a single channel segment. Today, more and
more companies have adopted the ​multichannel distribution system​. Such multichannel distribution
occurs when a single firm sets up two or more marketing channels to reach one or more customer
segments.

Multichannel distribution systems offer many advantages to companies facing large and complex markets.
With each new channel, the company expands its sales and market coverage and gains opportunities to
tailor its products and services to the specific needs of diverse customer segments. Nevertheless,
multichannel systems are harder to control, and they generate conflict as more channels compete for
customers and sales.

Changing Channel Organisation

Changes in technology and the explosive growth of direct online marketing are having a profound impact
on marketing channels.
One major trend is toward ​disintermediation​ - it occurs when product or service producers cut out
intermediaries and go directly to final buyers or when radically new types of channel intermediaries
displace traditional ones.

Disintermediation presents both opportunities and problems for producers and resellers. Channel
innovators who find new ways to add value in the channel can sweep aside traditional resellers and reap
the reward. In turn, traditional intermediaries must continue to innovate to avoid being swept aside.
To remain competitive, product and service producers must develop new channel opportunities, such as
the Internet and other direct channels. However, developing these new channels often bring them into
direct competition with established channels, resulting in conflict. To ease this problem, companies often
look for ways to make going direct a plus for the entire channel.

Channel Design Decisions (***)

In designing marketing channels, manufacturers struggle between what is ideal and what is practical.
Deciding on the best channels might not be a problem: the problem might simply be how to convince one
or a few good intermediaries to handle the line.
Marketing channel design​ calls for analysing consumer needs, setting channel objectives, and
identifying and evaluating major channel alternatives.

Analysing Consumer Needs

Each channel member and level adds value for the consumer. Thus, designing the marketing channel
starts with finding out what target consumers want from the channel.
The company and its channel members may not have the resources or skills needed to provide all the
desired services. The company must balance consumer needs not only against the costs of meeting these
needs, but also against customer price preferences.

Setting Channel Objectives

Companies should state their marketing channel objectives in terms of targeted levels of customer service.
Usually, a company can identify several segments wanting different levels of services. The company
should decide which segments to serve and the best channels to use in each case. In each segment, the
company wants to minimise the total channel cost of meeting customer-service requirements.
The company’s channel objectives are also influenced by the nature of the company, its products, its
marketing intermediaries, its competitors and the environment.

Identifying Major Alternatives

Intensive Distribution/Massive/Extensive
Intensive distribution aims to provide saturation coverage of the market by using all available outlets.
Intensive distribution is usually required where customers have a range of acceptable brands to choose
from. In other words, if one brand is not available, a customer will simply choose another.

Selective Distribution
Selective distribution involves a producer using a limited number of outlets in a geographical area to sell
products. An advantage of this approach is that the producer can choose the most appropriate or
best-performing outlets and focus effort on them. Selective distribution works best when consumers are
prepared to “shop around” – in other words – they have a preference for a particular brand or price and
will search out the outlets that supply.

Exclusive Distribution
Exclusive distribution is an extreme form of selective distribution in which only one or two wholesaler,
retailer or distributor is used in a specific geographical area. This is a common form of distribution in
products and brands that seek a high prestigious image.

Evaluating the Major Alternatives

In order to select the channel alternative that will be satisfying the company’s long-term objectives, each
alternative should be evaluated against economic, control and adaptability criteria.
 ● Economic criteria​ - a company compares the likely sales, costs and profitability of different
channel alternatives.
● Control issues​ - using intermediaries usually means giving them some control over the marketing
of the product, and some intermediaries take more control than others.
● Adaptability criteria​ - channels often involve long-term commitments, yet the company wants to
keep the channel flexible so that it can adapt to environmental changes. Thus, to be considered, a
channel involving long-term commitments should be greatly superior on economic and control
grounds.

Retailers (**)

Retailing Definition
Retailing includes all the activities involved in selling products or services directly to final consumers for
their personal, nonbusiness use. Many institutions - manufacturers, wholesalers and retailers - do retailing.
But most retailing is done by ​retailers​, businesses whose salers come primarily from retailing.
Retailing plays a very important role in most marketing channels. The connect brands to consumers in the
final stop in the consumer’s path to purchase.

Many marketers are now embracing the concept of ​shopper marketing​, using in-store promotions and
advertising to extend brand equity and encourage favorable in-store purchase decisions. Shopper
marketing recognises that the retail store itself is an important marketing medium. Thus, marketing must
drive shoppers to action at the store level. In fact, point-of-sale marketing inside a large retail store chain
can produce the same kinds of numbers as advertising on a hit TV show.
Type of Retailers

Wholesalers (**)

Wholesaling Definition
Wholesaling includes all the activities involved in selling goods and services to those buying for resale or
business use.
Wholesalers buy mostly from producers and sell mostly to retailers, industrial consumers and other
wholesalers. As a result, many of the largest and most important wholesalers are largely unknown to final
consumers.

Wholesalers add value by performing one or more of the following channel functions:
● Selling and Promoting ​ - wholesaler’s sales force help manufacturers reach many small
customers at low cost.
● Buying and Assortment Building​ - wholesalers can select items and build assortments needed
by their customers, thereby saving much work.
● Bulk breaking​ - wholesalers save their customers money by buying in large lots and breaking
those lots into small quantities.
● Warehousing​ - wholesalers hold stocks, thereby reducing the stocking cost and risk of suppliers
and customers.
● Transportation​ - wholesalers can provide quicker delivery to buyers because they are closer to
buyers than are producers.
● Financing​ - wholesalers finance their customers by giving credit, and they finance their suppliers
by ordering early and paying bills on time.
 ● Risk breaking​ - wholesalers absorb risk by taking title and bearing the cost of theft, damage,
spoilage and obsolescence.
● Market information​ - wholesalers give information to suppliers and customers about
competitors, new products and price developments.
● Management services and advice​ - wholesalers often help retailers train their sales staff,
improve store layouts and displays, and set up accounting and stock control systems.

Types of Wholesalers
Merchant Wholesalers
Wholesaling business that works independently and take the title of products it handles. In different
industries they are known as distributors, jobbers and mill supply houses.
Merchandise wholesalers are further divided into the following two types.
● Full Service Wholesalers
They are involved in provision of full line services like:
❖ Carrying Stock
❖ Maintaining a Sales Force
❖ Offering Credit
❖ Making Deliveries
❖ Providing Management Assistance

● Limited Service Wholesalers

They offer fewer services than full service wholesalers. They are classified into the following
categories:
❖ Cash & Carry Wholesalers
❖ Truck Wholesalers
❖ Drop Shippers
❖ Rack Jobbers
❖ Producer Cooperatives
❖ Mail Order Wholesalers

Brokers and Agents

These types of wholesalers do not take the title of products and they only facilitate the buying and selling
of products. They obtain a commission on the selling price of the products and are specialized by
customer types or product line. They are further divided into the following two types.
● Brokers
Brokers are involved in the assistance of negotiation by bringing the seller and buyer closer to each other.
The party that hired the broker makes him payment and the broker is not involved in inventory carrying,
financing or risk taking.

● Agents
Agents represent either seller or buyer on a much more permanent basis than the brokers. They are further
classified into the following types.
❖ Manufacturer Agents
❖ Selling Agents
❖ Purchasing Agents
❖ Commission Merchant

Manufacturers’ and Retailers’ Sales Offices and Branches

The activities of wholesaling carried out by the producers or customers themselves are included in this
category. The independent wholesalers are not involved under this head and separate offices or branches
are dedicated to either purchase or sales of products.
● Sales Offices and Branches
These institutions are set up by the producers to improve selling, promotion and Inventory Control.
Inventory is carried by the sales branches in industries of lumber and automotive parts & equipment’s. On
the other hand in the industries of dry fruits and notion, inventory is not carried out by the sales offices.

Marketing Logistics (**)

Inbound Logistics
Inbound logistics brings raw materials, packaging, other goods and services, and information from
suppliers to producers. Materials handling is the moving of goods from the warehouse to the factory floor
and to various workstations.

Outbound Logistics
Outbound logistics manages the flow of finished products and information to business buyers and
ultimate consumers.

Reverse Logistics
Reverse logistics brings goods back to the manufacturer because of defects or for recycling materials.

PROMOTION
Group 4: business consultants based on 4p’s + do people want the product is there something similar out
there?

Promotional Mix (***)

A company’s total ​promotion mix​ (marketing communication mix) consists of of the specific blend of
tools that the company uses to persuasively communicate customer value and build customer relationship.
The major five promotion tools are the following:
● Advertising​ - any paid form of nonpersonal presentation and promotion of ideas, goods or
services by an identified sponsor.
● Sales promotion​ - short-term incentives to encourage the purchase or sale of a product or a
service.
● Personal selling​ - personal presentation by the firm’s sales force for the purpose of making sales
and bulging customer relationships.
○ Management: Designing Sf Strategy & Structure, Recruiting Selecting, Training,
Compensating, Supervising, Evaluating
○ Sales for structure: Territorial (sales people to barcelona, madrid, andalucia...etc) Product
(knowledge of product) Customer (key account manager) Complex (any mix of the
above)
● Public relations​ - building good relations with the company’s various publics by obtaining
favourable publicity; building up a good corporate image; and handling or heading off
unfavourable rumors, stories and events
● Direct marketing​ - direct connections with carefully targeted individual consumers to both
obtain an immediate response and cultivate lasting customer relationships.

Integrated Marketing Communications (IMC) (***)

Several factors are changing the face of today’s marketing communications:

● Consumers​ - better informed and more communications empowered. They use the internet and
other technologies to find information on their own. They connect more easily with other
consumers to exchange brand-related information.
● Marketing strategies​ - shifting away from mass marketing. They are developing focused
marketing programmes designed to build closer relationships with customers in more narrowly
defined micro-markets.
● Communication technology​ - the digital age has spawned a host of new information and
communication tools. Although mass media remains very important, advertisers are now adding a
broad selection of more specialised and highly targeted media to reach smaller customer segments
with more personalised, interactive messages. Less ​broadcasting​ and more ​narrowcasting​.

I the new marketing communications world, rather than old approaches that interrupt customers and
force-feed them mass messages, new media formats let marketers reach smaller groups of consumers in
more interactive, engaging ways.

The shift towards a richer mix of media and communication approaches poses a problem for marketers.
Consumers today are bombarded by commercial messages from a broad range of sources. But consumers
don’t distinguish between message sources the way marketers do.
Today, more companies are adopting the concept of ​integrated marketing communications​ ​(IMC)​. The
company carefully integrates its many communication channels to deliver a clear, consistent and
compelling message about its organisation and its brands.
IMC calls for recognising all touch points where the customer may encounter the company and its brands.
Each ​brand contact​ will deliver a message. The company’s goal should be to deliver a consistent and
positive message to each contact. IMC leads to a total marketing communications strategy aimed at
building strong customer relationships by showing how the company and its products can help customers
solve their problems.
IMC ties together all of the company’s messages and images.

Advertising Definition (***)

Advertising is any paid form of nonpersonal presentation and promotion of ideas, goods or services by an
identified sponsor.
Although advertising is employed mostly by business firms, a wide range of not-for-profit organisations,
professionals and social agencies also employ advertising to promote their causes to various target
publics.

Communication Model (***)

● Sender/Encoder​ - decides on the message to be sent, the best/most effective way that it can be
sent.
● Encoding​ - process of putting thought into symbolic form.
 ● Message​ - set of symbols that the sender transmits.
● Media​ - communication channels through which the message moves from the sender to the
receiver.
● Receiver/Decoder​ - responsible for extracting/decoding meaning from the message. The receiver
is also responsible for providing feedback to the sender.
● Decoding​ - assigning meaning to the symbols encoded by the sender.
● Response​ - reaction of the receiver after being exposed to the message.
● Feedback​ - it determines whether or not the decoder grasped the intended meaning and whether
communication was successful.
● Experience​ - the more the sender’s field of experience overlaps with the receiver's, the more
effective the message is likely to be.
● Noise​ - the unplanned distortion during the communication process.

Message Strategy - Creative Concept (***)

The first step in creating effective advertising messages is to plan a ​message strategy​ - the general
message that will be communicated to consumers. The purpose of advertising is to get consumers to think
about or react to the product or company in a certain way. People will react only if they believe they will
benefit from doing so. Thus, developing an effective message strategy begins with identifying customer
benefits that can be used as advertising appeals.
Message strategies tend to be plain, straightforward outlines of benefits and positioning points that an
advertiser wants to stress. The advertiser must next develop a compelling ​creative concept​ that will bring
the message strategy to life in a distinctive and memorable way. Simple message ideas become great ad
campaigns. The creative concept may emerge as a visualisation, a phrase or a combination of the two.
The creative concept will guide the choice of specific appeals to be used in an ad campaign. ​Advertising
appeals​ should have three characteristics:
● Meaningful​ - pointing out benefits that make the product more desirable or interesting to
consumers.
● Believable​ - consumers must believe that the product or service will deliver the promised
benefits.
● Distinctive​ - the ad should tell how one product is better than its competing brands.

PR Basics (***)

Public relations (PR)​ - building good relationships with the company’s various publics by obtaining
favourable publicity; building up a good corporate image; and handling or heading off unfavorable
rumors, stories and events. PR specialist may perform any of the following functions:
● Press relations​ - creating and placing newsworthy information in the news media to attract
attention to a person, product or service.
● Product publicity​ - publishing specific products.
● Public affairs​ - building and maintaining national or local community relationships.
 ● Investor relations​ - maintaining relationships with shareholders and other financial community.
● Development​ - working with donors or members of non-for-profit organisations to gain financial
or volunteer support.

Companies use PR to build good relationships with customers, investors, the media and their
communities. Trade associations have used PR to rebuild interest in declining commodities. Even
government organisations use Pr to build awareness.

The Role and Impact of PR

PR can have a strong impact on public awareness at a much lower cost than advertising can. The company
does not pay for the space or time in the media; it pays for a staff to develop and circulate information and
manage events. If the company develops an interesting story or event, it could be picked by several
different media, having the same effect as advertising that would cost much more. PR can be a powerful
brand-building tool.
In this digital age, the lines between advertising and PR are becoming more and more blurred.

Major PR Tools
PR encompasses several tools:
● News​ - find or create favourable news stories about the company and itns products or people.
● Speeches​ - company executives must field questions from the media or give talks at trade
associations or ales meetings, and these events can either build or hurt the company’s image.
● Special events​ - designed to reach and interest target publics.
● Written materials​ - reach and influence their target markets.
● Audiovisual material​ - slide-and-sound programmes, DVDs and online videos.
● Corporate identity materials​ - help create a corporate identity that the public immediately
recognises.
● Public service activities.

Types of Sales Promotion (***)

Consumer Promotions
Consumer promotions include a wide range of tools:
● Samples​ - offers of a trial amount of a product. Sampling is the most effective - but most
expensive - way to introduce a new product or create new exciting for an existing one.
● Coupons​ - savings certificates for buyers when they purchase specified products. It is a tradition
better established in the US than Europe.
● Cash refunds​ - like coupons except that the price reduction occurs after the purchase. The
customers send a ​proof of purchase​ to the manufacturer, which then refunds part of the purchase
by mail.
● Price packs​ - offer consumers savings off the regular price of a product. The producer marks the
reduced prices directly on the label or package.
 ● Premiums​ - goods offered either free or at a low cost as an incentive to buy a product. A
premium may come inside the package, outside the package or through the mail.
● Advertising specialties​ - useful articles imprinted with an advertiser's name, logo, or message
that are given as gifts to consumers.
● Point-of-sales (POS) promotions​ - include displays and demonstrations that take place at the
point of sales.
● Contests, sweepstakes and games​ - give consumers the chance to win something by lucky or
through extra effort.

Marketer can also promote their brand through ​event marketing​ (event sponsorships). They can create
their own brand-marketing events or serve as sole or participating sponsors of events created by others.
Event marketing can provide a less costly alternative to expensive TV commercials.

Trade Promotions
Manufacturers direct more sales promotion expenditure toward retailers and wholesalers than to final
consumers. ​Trade promotions​ can persuade resellers to carry a brand, give it shelf space, promote it in
advertising and push it to consumers.
Manufacturers use several promotion tools:
● Offer ​discounts​ off the list price on each case purchased during a stated period of time.
● Offer an ​allowance​ in return for retailer’s agreement to feature the manufacturer’s product in
some way (compensates the retailer for the advertising).
● Offer ​free goods​, which are extra cases of merchandise, to retailers who buy a certain quantity or
who feature certain flavour or size.
● Offer ​push money​ - cash or gifts to dealers or their sales force to “push” the manufacturer’s
goods.
● Give ​free specialty advertising items​ that carry the company’s name.

Business Promotions
Companies spend huge amounts each year on promotion to industrial customers. ​Business promotions
are used to generate business leads, stimulate purchases, reward customers and motivate salespeople.
Business promotions include many of the same tools used for customer or trade promotion, plus two
additional major business promotion tools:
● Many companies and trade associations organise ​conferences, exhibitions and trade shows​ to
promote their products. Firms selling to a particular industry show their products at an industrial
trade show. Sellers receive many benefits, such as opportunities to find new sales leads, contact
customers, introduce new products, meet new customers, sell more to present customers and
educate customers ith publications and audiovisual material.
● A ​sales contest​ is a contest for salespeople or dealer to motivate them to increase their sales
performance over a given period. Sales contests motivate and recognise good company
performances.
 MARKETING PLAN

SWOT Analysis

SWOT stands for: ​S-​trength, ​W-​eakness, ​O-​pportunity, ​T-​hreat. A SWOT analysis guides you to identify
your organization’s strengths and weaknesses (S-W), as well as broader opportunities and threats (O-T).
Developing a fuller awareness of the situation helps with both strategic planning and decision-making.
SWOT diagrams can be especially useful when trying to decide whether or not to embark on a certain
venture or strategy by visualizing the pros and cons. By clearly outlining all positives and negatives of a
project, SWOT analysis makes it easier to decide whether or not to move forward.

The Marketing Plan (***)

Through strategic planning, the company decides what it wants to do with each business unit. Marketing
planning involves choosing marketing strategies that will help the company attain its overall strategic
objectives. A detailed marketing plan is needed for each business, product, por brand.
The major sections of a typical marketing plan are:
 MARKETING RESEARCH

Research Process Steps

The market research process is a systematic methodology for informing business decisions. The figure
below breaks the process down into six steps:
● Define the Objective & Your “Problem”
At the core of this is understanding the root question that needs to be informed by market
research. There is typically a key business problem (or opportunity) that needs to be acted upon,
but there is a lack of information to make that decision comfortably; the job of a market
researcher is to inform that decision with solid data.
By understanding the business problem clearly, you’ll be able to keep your research focused and
effective.

● Determine Your “Research Design”

Your choice of research instrument will be based on the nature of the data you are trying to
collect. There are three classifications to consider:
❖ Exploratory Research​ – This form of research is used when the topic is not well defined
or understood, your hypothesis is not well defined, and your knowledge of a topic is
vague. Exploratory research is a qualitative form of research.

❖ Descriptive Research​ – If your research objective calls for more detailed data on a
specific topic, you’ll be conducting quantitative descriptive research. The goal of this
form of market research is to measure specific topics of interest, usually in a quantitative
way.

❖ Causal Research​ – The most specific type of research is causal research, which usually
comes in the form of a field test or experiment. In this case, you are trying to determine a
causal relationship between variables.

● Design & Prepare Your “Research Instrument”

In this step of the market research process, it’s time to design your research tool. This is the part
of the process where you start executing your plan.

● Collect Your Data

The answers, choices, and observations are all being collected and recorded.
 ● Analyze Your Data
Run summaries with the tools provided, build tables and graphs, segment the results by groups
that make sense, and look for the major trends in your data.

● Visualize Your Data and Communicate Results

The researcher should present findings that are relevant to research objec​tive. It has to help
management in taking decisions. A research report is an effective tool used to present research
findings. It reflects the skills and quality of the researches.

B2B and B2C

Stimulus-Response Model (**)

Often, the consumers themselves don’t know exactly what influences their purchase. The human mind
does not work in a linear way. Instead, the mind is a mass of neurons bouncing around, constantly
creating new concepts and thoughts and relationships inside every single person's brain all over the world.

Marketing stimuli and the buyer’s environment enter the buyer’s black box, where they are turned into a
set of buyer responses.
Marketers want to understand how the stimuli are changed into responses inside the consumer's black
box, and for this they need to understand what is in the buyer’s black box.

Types of Buying Behaviours

Complex Buying Behaviour
Consumers undertake ​complex buying behaviour ​when are highly involved in a purchase and perceive a
significant difference among brands. Consumers may be highly 7involved when the product is expensive ,
risky, purchased infrequently and highly self-expressive. Typically, a consumer has much to learn about
the product category.

Dissonance -reducing Buying Behaviour

Dissonance-reducing buying behaviour occurs when consumers are highly involved with an expensive,
infrequent or risky purchase but see little difference among brands.
After the purchase, consumers might experience ​post purchase dissonance​ (after-sale discomfort) when
they notice certain disadvantages of the purchased brand or fear favorable things about brands not
purchased.

Habitual Buying Behaviour

Habitual buying behaviour occurs under conditions of low-consumer involvement and little significant
brand difference. Consumers appear to have low involvement with most low-cost, frequently purchased
products.
Consumers do not search extensively for information about the brands, evaluate brand characteristics and
make weighty decisions about which brand to buy. Instead, they passively receive information as they
watch television or read magazines. Ad repetition creates ​brand familiarity​ instead of ​brand conviction​.

Variety-seeking Buying Behaviour

Consumers undertake ​variety-seeking buying behaviour ​in situations characterised by low consumer
involvement but significant perceived brand differences. In such cases, consumers often do a lot of
switching. Brand switching occurs for the sake of variety rather than because of dissatisfaction.

Buyer Decision Process (KEY)

Need recognition
The buying process starts with ​need recognition​ - a buyer recognises a problem or a need. The need can
be triggered by:
● Internal stimuli​ - when one of the person’s normal needs rises to a level high enough to become
a drive.
● External stimuli ​- advertisements that consumers hear and see, or discussions with other people
can cause them to consider buying a particular product.
At this stage, a marketer should research consumers to find out what kinds of needs or problems arise,
what brought them about, and how they led a consumer to this particular product.

Information Search
An interested consumer may or may not search for more information. If a consumer’s drive is strong and
a satisfying product is near at hand, the consumer is likely to buy it then. If not, the consumer may store
the need in memory or undertake an ​information search r​ elated to the need. The relative influence of
these information sources varies with the product and the buyer.
Generally, a consumer receives the most information about a product from commercial sources - those
controlled by the marketer. The most effective sources, however tend to be personal. Commercial sources
normally ​inform​ a buyer, but personal sources ​legitimize ​or ​evaluate​ products for a buyer.
As more information is obtained, a consumer’s awareness and knowledge of the available brande brands
and features increase. A company must design its marketing mix to make prospective purchasers
awareness of and knowledge about its brand. It should carefully identify consumer’s sources of
information and the importance of each source.

Evaluation of Alternatives
Marketers need to know about ​alternative evaluation​ - how a consumer processes information to arrive
at brand choices.
A consumer arrives at attitudes toward different brands through an evaluation procedure. How consumers
go about evaluating purchase alternatives depends on the individual consumer and the specific buying
situation.
● Consumers can use careful calculations and logical thinking.
● The same consumer can do little or no evaluating; instead the buy on impulse and rely on
intuition.
● Sometimes consumers buy on their own; sometimes they turn to friends, online reviews or sales
people for buying advice.
Marketers should study buyers to find out how well they evaluate brand alternatives. If marketers know
what evaluative processes go on, thy can take steps to influence a buyer’s decision.

Purchase Decision
In the evaluation stage, a consumer ranks brands and forms purchase intentions. Generally, consumer’s
purchase decision​ will be to buy the most preferred brand, but two factor can come between the
purchase intention​ and the ​purchase decision​:
● Attitude of others​ - if someone important to you thinks that you should buy a different think than
you intended, they reduce your purchase intention and could actually change your purchase
decision.
● Unexpected situational factors​ - a consumer may form a purchase intention based on factors
such as expected income, expected price and expected product benefits. However, unexpected
events may change the purchase intention.

Purchase behaviour
A marketer’s job does not end when the product is bought. After purchasing the product, a consumer will
either be satisfied or dissatisfied and will engage in ​purchase behaviour​ of interest to marketers.

● If a product falls short of expectation, the consumer is disappointed.

● If a product meets expectation, the consumer is satisfied.
● If a product exceeds expectations, the consumer is delighted.
The larger the gap between expectations and performance, the greater a consumer’s dissatisfaction. This
suggests that sellers should promise only what their brands can deliver so that buyers are satisfied.
However, almost all purchases result in ​cognitive dissonance​ - discomfort caused by postpurchase
conflict. It occurs when someone holds two or more conflicting attitudes or beliefs about one product or
service.Products or services that involve a high level of commitment contain a greater risk for dissonance.

Customer satisfaction is key to building profitable relationships with consumers - to keeping and growing
consumers and reaping their customer lifetime value.
● Satisfied customers buy a product again, talk favourably to others about the product, pay less
attention to competing brands and advertising, and buy other products from the company.
● Dissatisfied consumers respond differently. Bad word of mouth often travels further and faster
than good word of mouth. It can quickly damage consumer attitudes about a company and its
products.
Most unhappy customers never tell the company about their problems. Therefore, a company should
measure customer satisfaction regularly. It should set up systems that ​encourage customers to complain​.

By studying the overall buyer decision process, marketers may be able to find ways to help consumers
move through it. If customers know about the product but are not buying because they hold unfavorable
attitudes towards it, marketers must find ways to change either the product or consumer perceptions.

Stages in Adoption Process (KEY)

A ​new product​ is a good, service or idea that is perceived by come potential customers as new. It may
have been around for a while, but our interest is in how consumers learn about products for the first time
and make decisions on whether to adopt them.
We define the ​adoption process ​as “the mental process through which an individual passes from first
learning about an innovation to final adoption”.

Consumers go through five stages in the process of adopting a new product:

1. Awareness​ - the consumer becomes aware of the new product but lacks information about it.
2. Interest​ - the consumer seeks information about the new product.
3. Evaluation​ - the consumer considers whether trying the new product makes sense.
4. Trial​ - the consumer tries the new product on a small scale to improve his estimate of its value.
5. Adoption​ - the consumer decides to make full and regular use of the new product.

This model suggests that the new-product marketer should think about how to help consumers move
through these stages.

Adopter’s values
People differ greatly in their readiness to try new products. In each product area, there are “consumption
pioneers” and early adopters. Other individuals adopt new products much later.
The five adopter groups have differing values.
● Innovators​ - adventuresome. They try new ideas at some risk.
 ● Early adopters​ - guided by respect. They are opinion leaders in their communities and adopt new
ideas early but carefully.
● Early majority​ - deliberate. Although they rarely are leaders, they adopt new ideas before the
average person.
● Late majority​ - sceptical. They adopt an innovation only after a majority of people have tried it.
● Laggards​ - tradition bound. They are suspicious of change and adopt the innovation only when it
has become something of a tradition itself.

This adopter classification suggests that an innovating firm should research the characteristics of
innovators and early adopters in their product categories and direct marketing efforts towards them.

Rate of adoption
The characteristics of the new product affect its rate of adoption. Some products catch almost overnight;
others take longer to gain acceptance.
Five characteristics are especially important in influencing an innovation’s rate of adoption.
● Relative advantage​ - the degree to which an innovation appears superior to existing products.
● Compatibility​ - the degree to which an innovation fits the values and experiences of potential
consumers.
● Complexity​ - the degree to which an innovation is difficult to understand or use.
● Divisibility​ - the degree to which an innovation may be tried on a limited basis.
● Communicability​ - the degree to which the results of using an innovation can be observed or
described to others.

Other characteristics influence the rate of adoption, such as ​initial and ongoing costs, risk and
uncertainty, ​and ​social approval​. The new-product marketer must research all these factors when
developing the new product and its marketing programme.

Participants in the Business Buyer Process (***)

The decision-making unit of a buying organisation is called its ​buying center​ - all the individuals and
units that play a role in the business purchase decision-making process.
The buying center includes all members of the organisation who play any of the five roles in the purchase
decision process:
● Users​ - members of an organisation who will use the product or service. Usually, users initiate
the buying proposal and help define product specifications.
● Influencers​ - often help define specifications and also provide information for evaluating
alternatives.
● Buyers​ - have formal authority to select the supplier and arrange terms of purchase. Buyers may
help shape product specifications, but their major role is in selecting vendors and negotiating.
● Deciders​ - have formal or informal power to select or approve the final suppliers. In routine
buying, the buyers are often the deciders or at least the approvers.
● Gatekeepers​ - control the flow of information to others.
The buying center is not a fixed and formally identified unit within the buying organisation. It is a set of
buying roles assumed by different people for different purchases. Within an organisation, the size and
composition of the buying center will vary from different products and for different buying situations.
● For some routine purchases, a purchasing agent may assume all the buying center roles and serve
as the only person involved in the buying decision.
● For more complex purchases, the buying center may include 20 or 30 people from different levels
and departments in the organisation.

The business marketer must learn who participates in the decision. Each participant’s relative influence,
and what evaluation criteria each decision participant uses.

SEGMENT AND POSITION

Concepts of Segmentation and Targeting (KEY)

Companies today recognise that they cannot appeal to all buyers in the marketplace - or at least not all
buyers in the same way. Buyers are too numerous, widely scattered, and aried in their needs and buying
practices.
Thus, most companies have moved away from mass marketing and towards ​target marketing​:
identifying market segments, selecting one or more of them, and developing products and marketing
programmes tailored to each.

There are 4 major steps in designing a customer-driven marketing strategy. In the first two steps, the
company selects the customers that it will serve.
● Marketing segmentation​ - involves dividing a market into smaller segments of buyers with
distinct needs, characteristics or behaviours that might require separate marketing strategies. The
company identifies different ways to segment the market and develops profiles of the resulting
market segments.
● Market targeting​ - consists of evaluating each market segment’s attractiveness and selecting one
or more market segments to enter.
Segmentation Criteria (**)

Effective Segmentation (***)

There are many ways to segment a market, but not all segmentations are effective. Tio be useful, market
segments must be:
● Measurable​ - the size, purchasing power and profiles of the segments can be measured.
● Accessible​ - the market segments can be effectively reached and served.
● Substantial​ - the market segments are large or profitable enough to serve. A segment should be
the largest possible homogeneous group worth pursuing with a tailored marketing programme.
● Differentiable​ - the segments are conceptually distinguishable and respond differently to
different marketing mix elements and programmes.
● Actionable​ - effective programmes can be designed for attracting and serving segments.

Market Targeting (***)

Market segmentation reveals a form’s market segment opportunities. A firm now has to evaluate the
various segments and decide which ones to serve (target segments).

Evaluating Market Segments

In evaluating different segments, a firm must look at three factors:
 ● Segment size and growth​ - the company must first collect and analyze data on current segments
that have the right size and growth characteristics. But, depending on the company, the largest,
fastest-growing segments are not always the most attractive ones.
● Segment structural attractiveness​ - the company needs to examine major structural factor that
affect long-term segment attractiveness. A segment is less attractive if:
○ Contains many strong and aggressive ​competitors
○ The existence of many actual or potential ​substitute products
○ Powerful suppliers​ who can control prices
● Company objectives and resources​ - some attractive segments can be dismissed quickly
because they do not fit with the company’s long-term objectives. Or the company may lack the
skills and resources needed to success in an attractive segment. A company should enter segments
only in which it can create superior customer value and gain advantages over its competitors.

Positioning (**)

Beyond deciding which segments of the market it will target, the company must decide on the ​value
position​ - how it will create differentiated value for targeted segments and what positions it wants to
occupy in those segments. A ​product’s position​ is the way a product is ​defined by consumers on
important attributes​ - the place a product occupies in consumers minds relative to competitive products.

Consumers are overload with information about products and services. They cannot reevaluate products
every time they make a buying decision. To simplify the buying process, consumers organise products,
services and companies into categories and “position” them in their minds. A product's position is the
complex set of perceptions, impressions and feeling that consumers have of the product compared with
competing products.

Positioning Maps
In planning their differentiation and positioning strategies, marketers prepare ​perceptual positioning
maps​ that show consumer perception of their brands versus competing products on important buyers
decisions.
Positioning maps show where existing products and services are positioned in the market so that the firm
can decide where they would like to position their product. Firms have two options they can either
position their product so that it fills a gap in the market or if they would like to compete against their
competitors they can position it where existing products have placed their product.
In this figure, the position of each circle on the map indicates the brand’s perceived positioning on two
dimensions: price and orientation. The size of each circle indicates the brand’s relative market share.

COMPETITIVE STRATEGY

Competitive Advantage(***)

To win in today’s marketplace, companies must become adept not only in managing products but also in
managing customer relationships in the face of determined competition and a difficult economic
environment. Understanding customers is crucial, burt it’s not enough. Building customer relationship and
gaining ​competitive advantage​ requires delivering more value and satisfaction to target consumers than
competitor do.

Competitive Positions (***)

Some firms are large, others small. Some have many resources, others are strapped for funds. Some are
mature and established, others new and fresh. Some strive for rapid market share growth, others for
long-term profits. All of these firms occupy different competitive positions in the target market.

Market Leader Strategies

The leader has the largest market share and usually leads the other firms in price changes, new product
introductions, distribution coverage and promotion spending. The leader may or may not be admired or
respected, but other firms concede its dominance. Competitors focus on the leader as the company to
challenge, imitate, or avoid. Other firms keep challenging its strengths or trying to take advantage of its
weaknesses.
To remain number one, leading firms can take any of three actions:
● Expanding total demand​ - the leading firm usually gains the most when the total market
expands. Market leaders can expand the market by developing new users and more usage of its
products.
● Protecting market share​ - the leading firm must prevent or fix weaknesses that provide
opportunities for competitors.
○ Fulfill its value promise.
○ Remain constant prices with the value that customers see in the brand.
○ Work tirelessly to keep strong relationships with valued customers.
○ “Plug holes” so that competitors do not jump in.
● Expanding market share​ - in many markets, small market share increases mean a very large
sales increase. Companies must not think, however, that gaining increased market share will
automatically improve profitability. Much depends on their strategy for gaining increased share.

Market Challenger Strategies

A market challenger must first define which competitors to challenge and its strategic objective.
● The challenger can attack the market leader, a high-risk but potentially high-gain. Its goal might
be to take over market leadership. Or the challenger's objective may simply be to wrest more
market share.
Although it might seem that the market leader has the most going for it, challengers often have
“second-mover advantage”. The challenger observes what has made the market leader successful
and improves on it.
Challengers often become market leaders by imitating and improving on the ideas of pioneering
processors.

● The challenger can avoid the leader and instead challenge firms its own size or smaller
local and regional firms. These smaller firms may be underfinanced and not serving their
customers well. It the challenger goes after a small company, its objective may be ut that
company out of business.

There are different types of attacks in order to achieve its strategic objectives:
● Frontal attack​ - matching competitor’s product, advertising, price and distribution efforts. It
attacks the competitor's strengths.
● Indirect attack​ - on the competitor’s weaknesses or on gaps in the competitor’s market coverage.

Market Follower Strategies

Not all runner-up companies want to challenge the market leader. Many firms prefer to follow rather than
challenge the market leader.
A follower can gain many advantages. The market leader often bears the huge expenses of developing
new products and markets, expanding distribution and educating the market. The market follower can
learn from the market leader’s experience. It can copy or improve on the leader’s products and
programmes, usually with much less investment. Although the follower will probably not overtake the
leader, it often can be as profitable.
A follower must know how to hold current customers and win a fair share of new ones. It must find the
right balance between following closely enough to win customers from the market leader but following at
enough of distance to avoid retaliation. Each follower tries to bring distinctive advantages to its target
market.

Market Nicher Strategies

Instead of pursuing the whole market or even large segments, these firms target sub-segments. Nichers are
often smaller firms with limited resources. But smaller divisions of larger firms also may pursue niching
strategies. Firms with low shares of the total market can be highly successful and profitable through smart
notching.
The market nicher ends up knowing the target customer group so well that it meets their needs better than
other firms that casually sell to the niche. As a result, a nicher can charge a substantial markup over costs
because of the added value. Whereas the mass marketer achieves high volume, the niche achieves high
margins.

Porter’s Competitive Strategies (***)

Michael Porter suggested four competitive strategies that companies can follow - three winning strategies
and one losing one. The three winning strategies are as follows:
● Overall cost leadership​ - the company works hard to achieve the lowest production and
distribution costs. Low costs let it price lower than its competitors and win a larger market share.
● Differentiation​ - the company concentrates on creating a high differentiated product line and
marketing programme so that it comes across as the class leader in the industry.
● Focus​ - the company focuses its efforts on serving a few market segments well rather than going
after the whole market.
 MARKETING MIX

The marketing mix refers to the set of actions, or tactics, that a company uses to promote its brand or
product in the market. The 4Ps make up a typical marketing mix - Product, Price, Promotion and Place.

● Product​ - refers to the item actually being sold. The product must deliver a minimum level of
performance; otherwise even the best work on the other elements of the marketing mix won't do
any good.

● Price​ - refers to the value that is put for a product. It depends on costs of production, segment
targeted, ability of the market to pay, supply - demand and a host of other direct and indirect
factors. There can be several types of pricing strategies, each tied in with an overall business plan.
Pricing can also be used a demarcation, to differentiate and enhance the image of a product.

● Promotion​ - this refers to all the activities undertaken to make the product or service known to
the user and trade. This can include advertising, word of mouth, press reports, incentives,
commissions and awards to the trade. It can also include consumer schemes, direct marketing,
contests and prizes.

● Place​ - refers to the point of sale. In every industry, catching the eye of the consumer and making
it easy for her to buy it is the main aim of a good distribution or 'place' strategy. Retailers pay a
premium for the right location. In fact, the mantra of a successful retail business is 'location,
location, location'.

All the elements of the marketing mix influence each other. They make up the business plan for a
company and handled right, can give it great success. But handled wrong and the business could take
years to recover. The marketing mix needs a lot of understanding, market research and consultation with
several people, from users to trade to manufacturing and several others.

SEGMENTATION, TARGETING AND POSITIONING

Companies today recognise that they cannot appeal to all buyers in the marketplace - or at least not all
buyers in the same way. Buyers are too numerous, widely scattered, and aried in their needs and buying
practices.
Thus, most companies have moved away from mass marketing and towards ​target marketing​:
identifying market segments, selecting one or more of them, and developing products and marketing
programmes tailored to each.
There are 4 major steps in designing a customer-driven marketing strategy. In the first two steps, the
company selects the customers that it will serve.
● Marketing segmentation​ - involves dividing a market into smaller segments of buyers with
distinct needs, characteristics or behaviours that might require separate marketing strategies. The
company identifies different ways to segment the market and develops profiles of the resulting
market segments.
● Market targeting​ - consists of evaluating each market segment’s attractiveness and selecting one
or more market segments to enter.
There are many ways to segment a market, but not all segmentations are effective. Tio be useful, market
segments must be:
● Measurable​ - the size, purchasing power and profiles of the segments can be measured.
● Accessible​ - the market segments can be effectively reached and served.
● Substantial​ - the market segments are large or profitable enough to serve. A segment should be
the largest possible homogeneous group worth pursuing with a tailored marketing programme.
● Differentiable​ - the segments are conceptually distinguishable and respond differently to
different marketing mix elements and programmes.
● Actionable​ - effective programmes can be designed for attracting and serving segments.

Market segmentation reveals a form’s market segment opportunities. A firm now has to evaluate the
various segments and decide which ones to serve (target segments).

Evaluating Market Segments

In evaluating different segments, a firm must look at three factors:
● Segment size and growth​ - the company must first collect and analyze data on current segments
that have the right size and growth characteristics. But, depending on the company, the largest,
fastest-growing segments are not always the most attractive ones.
● Segment structural attractiveness​ - the company needs to examine major structural factor that
affect long-term segment attractiveness. A segment is less attractive if:
○ Contains many strong and aggressive ​competitors
○ The existence of many actual or potential ​substitute products
○ Powerful suppliers​ who can control prices
● Company objectives and resources​ - some attractive segments can be dismissed quickly
because they do not fit with the company’s long-term objectives. Or the company may lack the
skills and resources needed to success in an attractive segment. A company should enter segments
only in which it can create superior customer value and gain advantages over its competitors.

Beyond deciding which segments of the market it will target, the company must decide on the ​value
position​ - how it will create differentiated value for targeted segments and what positions it wants to
occupy in those segments. A ​product’s position​ is the way a product is ​defined by consumers on
important attributes​ - the place a product occupies in consumers minds relative to competitive products.

Consumers are overload with information about products and services. They cannot reevaluate products
every time they make a buying decision. To simplify the buying process, consumers organise products,
services and companies into categories and “position” them in their minds. A product's position is the
complex set of perceptions, impressions and feeling that consumers have of the product compared with
competing products.
Positioning Maps
In planning their differentiation and positioning strategies, marketers prepare ​perceptual positioning
maps​ that show consumer perception of their brands versus competing products on important buyers
decisions.
Positioning maps show where existing products and services are positioned in the market so that the firm
can decide where they would like to position their product. Firms have two options they can either
position their product so that it fills a gap in the market or if they would like to compete against their
competitors they can position it where existing products have placed their product.

In this figure, the position of each circle on the map indicates the brand’s perceived positioning on two
dimensions: price and orientation. The size of each circle indicates the brand’s relative market share.

INTEGRATED MARKETING COMMUNICATION (IMC)

Several factors are changing the face of today’s marketing communications:

● Consumers​ - better informed and more communications empowered. They use the internet and
other technologies to find information on their own. They connect more easily with other
consumers to exchange brand-related information.
● Marketing strategies​ - shifting away from mass marketing. They are developing focused
marketing programmes designed to build closer relationships with customers in more narrowly
defined micro-markets.
● Communication technology​ - the digital age has spawned a host of new information and
communication tools. Although mass media remains very important, advertisers are now adding a
 broad selection of more specialised and highly targeted media to reach smaller customer segments
with more personalised, interactive messages. Less ​broadcasting​ and more ​narrowcasting​.

I the new marketing communications world, rather than old approaches that interrupt customers and
force-feed them mass messages, new media formats let marketers reach smaller groups of consumers in
more interactive, engaging ways.

The shift towards a richer mix of media and communication approaches poses a problem for marketers.
Consumers today are bombarded by commercial messages from a broad range of sources. But consumers
don’t distinguish between message sources the way marketers do.
Today, more companies are adopting the concept of ​integrated marketing communications​ ​(IMC)​. The
company carefully integrates its many communication channels to deliver a clear, consistent and
compelling message about its organisation and its brands.
IMC calls for recognising all touch points where the customer may encounter the company and its brands.
Each ​brand contact​ will deliver a message. The company’s goal should be to deliver a consistent and
positive message to each contact. IMC leads to a total marketing communications strategy aimed at
building strong customer relationships by showing how the company and its products can help customers
solve their problems.
IMC ties together all of the company’s messages and images.