Marketing

Contents

Marketing principle

Marketing philosophy
4 pillars of marketing concept
Marketing response

Marketing Information System (MkIS)

Market Segmentation

Segmentation
- Segmenting consumer market
Targeting
- Each segment attractiveness
- Targeting strategy
Positioning
- Competitive advantages

Consumer behaviour

Type of consumer behaviours
Buying decision process
Factor influencing buying behaviour

Product

Product classification
Service classification
Product strategy
Product attributes
Levels of product
Product line
Product life cycle

Price

Factor affecting price
Pricing method
Price Adjustment Strategy

Promotion

Promotional Tools
Steps in developing EFFECTIVE communication
Setting promotional budget $$$
Setting promotional mix

Marketing philosophy (top)

Concept	Description	Example
Production	consumer favour available, affordable product company focus on increased prductivity risk : ignore market preference because over-emphasize on productivity	Discount Store
Product	consumer favour quality, performance product risk : marketing myopia - narrow-sighted view of marketing opportunities/threat. Seller emphasize on quality product but not consumer wants	oil company regard oil as product not as energy
Selling	consumer will buy enough organization product unless large-scale selling and promotional effort done used by over-capacity industry aim : sell what they make 'inside-out' perspective tracked down interested buyers	unsought product - insurance, encyclopedia
Marketing	outside-in perspective determine needs of market then sell the demanded product involve 4 pillars of marketing target customer consumer needs integrated marketing profit	college provide courses for over-demanded degree courses
Societal marketing	must balance company profits customer wants society interest	Phillips Morris (cigar) advertise on smoking hazards Body Shop banned on animal testing

4 pillars of marketing concept (top)

target market
- specific group of buyer whose wants is focused by marketing company
- eg : Nike shoes for teenagers
customer needs
- needs marketing research
- consists of
  - stated needs - I want expensive cars
  - real needs - I want a car with low cost operation
  - unstated needs - I expect good service
  - delight needs - Buy ticket cinema, free poster
  - secret needs - wearing branded stuff to be seen by friends
integrated market
- 1st level - various marketing function - sales force, advertising, market research
- 2nd level - coordination - coordinate with other department eg Finance, HR, R&D
profitability

Marketing response (top)

passive - Wait and see approach although competitors start to change their strategy
reactive - 'Fight back' - eg hawker reduced fried noodles price when others do so
proactive - initiate action 1st, eg : promotion

Marketing Information System (MkIS) (top)

Internal Records / Accounting Records
- info collected within company
- internal sources :
  - sales figure
  - pricing info
  - customer complaints
  - accounting info
- adv : cheap, fast to get
- disadv : incomplete, out of date, info collected for other purposes
Marketing intelligence
- info available publicly
- source :
  - agents, suppliers, competitiors
  - publication : magazine, news report
  - international sources : WHO, FAO, ILO on demographic facts
Marketing research
- research process
- define objective, develop research plan ,survey, interview, collect info, analysis, report
Information Analysis / Decision Support System
- statically analysis eg SPSS

Market Segmentation ( 3 Stages - segmentation, targeting, positioning) !!! (top)

Segmentation (top)
- divide market into segment + develop marketing mix tailored to that segments
- outcome
  - mass marketing eg 'Coke for all ages'
  - segment marketing
  - niche marketing
  - micromarketing
    - individual (1-1)
    - self (online shopping, eBay)
- choices/variable used for segmenting consumer market (top)
  - geographic - KFC must halal in Muslim, Japanese (island based country) like fish
  - demographic - high income likes luxury car, elders demand better health care
  - psychographic (lifestyle) - prefer diet-related product, health conscious food, herbal food
  - behavioral -Valentine sells more flowers, house sales increased because property speculation
  - multi-variable - combination of variables
Targeting (top)
- evaluate each segment attractiveness (top)
  - measurable - eg : size of purchasing power (income)
  - accesible - can be reached/ served eg service to the rural area
  - sustainable - market large / profitable eg China population
  - differentiable - distinguishable eg cinema ticket - kid, adult, elderly
  - actionable - programme can be designed - promotion, adverting, post-sales service
  - size growth - sales, growth rate, demand of product
  - structural - eg : bargaining power in grocery vs supermarket
- targeting strategy (top)
  - differentiated
    - target several segment + design separate offer for each segment
    - product modification leads to higher expenses because of R&D
    - create more total sales
    - eg: M'sia car indusry
      - small, low income, compag size - Kancil
      - Sedan type - middle income - Wira
      - SUV(sport utility vehicle), family car - Kembara
      - luxury car - Perdana
  - concentrated
    - towards niche market
    - specialization leads to lower operating cost
    - disadv : hard to enter other segment eg Ferrari only served to rich people
    - 2 type specialization
      - product specialization
        
        one product many market
        
        eg : furniture for govern office, college classroom, house
      - market specialization
        
        one market many product
        
        eg : Bunsen burner, microscope, medium culture, slides for university laboratory
  - undifferentiated
    - towards mass marketing
    - lower operating cost because no R&D, inventory, product modification
    - standardization, mass production will reduce costs
    - heavy competition will reduce profit
    - eg : clothes, Cola drink as compared to Pepsi Blue/Lemon
Positioning (top)
- create / maintain concept of product eg Volvo- safety
- identify competitive advantages (top)
  - product differentiation - feature, performance, durable, reliable, style, design
  - service - ordering ease (Pizza), post sales service, warranty card
  - personnel (staffing) - courtesy, experience, skills, responsible, reliable
  - channel - marketing network, coverage area eg telecommunciation Digi cover rural area
  - image - symbol, logo eg Maybank use tiger head

Consumer behaviour

type of consumer behaviours - depends on what is bought (top)

High	Type of consumer behaviour
Consumer involvement	Dissonance Reducing	Complex
	Habitual	Variety seeking
Low	Brand significance perceived		High

Habitual buying behaviour
- eg : groceries - onions, sugar, bread
- marketing strategy
  - use price, sales promotion
  - use visual, symbols which easily recognized / remembered because buyer xxx committed to any brand
Variety seeking buying behaviour
- consumer do brand switching
- eg shoe - Bata, Nike, Power
- marketing strategy
  - dominating shelf space, avoid out-of stock condition because consumer kept changing brand
  - reduce $, give coupon to encourage consumer to seek new/switch to our brand
Complex buying behaviour
- product - expensive, risky, purchased rarely
- eg : car, land , house
- marketing strategy
  - salesperson promote product, influence customer mind
Dissonance- reducing buying behaviour
- expereince post purchase dissonance
- eg : TV, air-con, refrigerator
- marketing strategy
  - supplying belief that consumer feel good after purchase

buying decision process (top)
- need recognition
  - internal stimuli leads to drive
  - eg: Chinese New Year - mandarin oranges
  - marketing strategy - build customer demand, product awareness, product importance
- info search
  - info sources:
    - personal - family, friends
    - commercial - salesperson, newspaper
    - public source - mass media
    - experimental sources - handling, examining
- evaluation alternative
  - compare physical attribute - quality, price, design, brand
  - develop set of brand belief
- purchase decision
  - influenced by
    - other attitude eg sales personal, relative influence
    - unexpected situational factor - job lost, accident
- post-purchase behaviors
  - cognitive dissonance - post purchase conflict
  - satisfaction - product performance > consumer expectation
    - new customer - 'expensive' to be attracted
    - repeated customer - tells others about experience. Hence, need to satisfy them happily
factor influencing buying behavior (top)
- cultural
  - culture
    - set of basic value learned in the society
    - culture shift ( healthy diet food in the 1990s)
  - subculture
    - different races, religion belief
    - KFC-halal in M'sia
  - social class
    - social status - RICH buy BRANDED names for social recognition
- social
  - reference
    - close reference - family, friend
    - option leader - Chef Wan promoting cooking oil (expert promote related field)
    - aspiratinal - Britney Spear for Pepsi
  - family value
    - wife - kitchen, clothing stuff
    - husband - car, television
  - role/status
    - manager drive Volvo, clerk use motorbike
- personal
  - age - young, old
  - occupation - computer engineer buy more IT stuff
  - income - purchasing power
  - lifestyle - health conscious society prefer sport stuff, low-sugar diet
  - self-concept - self-confidence ppl dress smart, use branded stuff
- psychological
  - motivation
    - Maslow - needs according to certain time
    - basic necessities, psychological, safety, self-esteem, self actualization
  - perception
    - process ppl intepret info to form meaningful picture
      - selective attention - tendency to screen out most info - advertisement
      - selective distortion - tendency to twist facts - salesman
      - selective retention - tendency to retain what to believed - MAS safe airline
  - learning
    - changes in behaviour result from experience
    - positive reinforcement eg reward, prize draw winning in supermarket
  - belief
    - person 'hold' about something
    - eg : Fengshui, fortune teller

Product

Product classification (top)

consumer product
- convenience
  - staple - regular - toothpaste, onions
  - impulse - no planning - magazine, candy
  - emergency - urgent - panadol
- shopping
  - selection process - car, cloth
- specialty
  - unique, willing to buy - custom made jacket
- unsought
  - not known , less product awareness - insurance, encyclopedia
industrial product (business, further processing)
- raw materials - agriculture products, raw steels, ore irons
- major equip. - capital item - crane, truck, lorry
- accessory equip. - office use - calculator, stapler
- components - tyres, spare parts
- service - consultation fees, advertising
organizational, place, person, ideas
- org. marketing - INTI Fest, sponsorship
- person mkt. - campaign leader, politics, celebrities
- place mkt - tourism, Visit Malaysia Year
- idea mkt - Recycling, Crime Watch Neighbourhood

Service classification (top)

market type
- consumer - mechanics, child care
- business - consultation, janitorial services
degree of labour intensive
- people based - education, haircut, construction
- equipment based - telecommunication, public transport
skill of service provider
- professional - health care, accounting
- non-porfessional - dry cleaning, public trnasport
goal of service provider
- profit - insurance, health care
- non-profit - education, government, health care

Product strategy (top)

product -anything offered for attention, acquisition, use, consumption
service - characteristic :
- intangible - cannot owned, attained
- inseparability - service produced + consumed at the same time
- variability - quality varied
- perishability - no storage
hybrid - goods + service eg airline service - transportation and food, drink

Product characteristic / attributes (top)

Attribute	Description
Quality	perform as expected level quality relative concept - Rolex > Casio eg : Rolls Royce - performance consistence quality degree quality same / better over time/ different places eg : Mc Donald burger taste same at all branches
Design / Feature	feature = performed task Nokia hp - SMS, communication, calculator, camera design = style HP - laser printer, Levi - jeans
Branding	brand - name, term, sign, symbol identify product brand name - part of brand can be spoken / written eg Kodak, 7Ups brand mark - not made up of word eg Tiger (Maybanl), M (McD) trade mark - legal designation of brand eg Ford trade name - full and legal name of org. eg Ford Motor Company ^TM brand loyalty - customer favorable attitude towards a brand brand equity - marketing / financial value eg Coca-Cola $43 247 million brand type manufacturer initiated by producer eg SONY, APPLE private distributor / reseller / dealer brand initiated by reseller eg Everise Rice, Wal Mart 'GREAT VALUE BUY' license brand borrowed by manufacturer to use on its product Nike symbol on clothes, cap, eyewear
Packaging	type 1° - product inside it (Colgate tube) 2°- box the tubes shipping package - cardboard caste for box, contenna consideration cost - sandwich box contribute much to entire cost promotion - graphic, design of package colour - assoc, feeling red - fire, dynamic yellow - warmth blue - cool, eg mint toothpaste reseller needs - convenient carrying eg 24 tin canned drinks in cartons environment - recylable, biodegradable product eg distilled water bottle
Labeling	function identify product grading - eg rice grade A, B, C describe ingredients promote - graphic eg enriched Vit C product Universal Product Code (ISDN) - pricing, inventory
Product Support Service	service augment product monitor customer complaints

Levels of product (top)

refers to customer value hierachy
consisted of

Product level	Description	Example eg hotel
core product	core benefit that really bought	rest & sleep - bed, bathroom
actual / expected product	expectation about the product	clean bed fresh towel automatic light
augmented product	additional benefit	remote control / satelite TV water bed rapid check in and out free brakfast
potential product	future benefit	biometric scan for check-in/out

Product line (top)

group of closely related product eg Stabilo product - pen, eraser, colour pencil
product line length - number of items along product line
product line strategy :
- stretching [high end (expensive stuff) vs low end (cheap stuff)
  - downward stretch. Reasons :
    - growth increase at low end market
    - need a lower end to fill gap eg baby shoes
    - xx compete with high end from other company
  - upward stretch. Reasons:
    - growth increase an high end market
    - position as full line company eg Honda made cheap and expensive cars
  - 2-way stretch eg hotel provides expensive presidential suite but cheaper rooms during weekends.
- filling - add new items to fill gap eg: baby shoes which is rare. Reasons:
  - reap extra profit by opening new market segment
  - satisfy users
  - become full-line company

Product life cycle (top)

Stages	Profit / Sales	Characteristic	Marketing strategy
Development / Introduction	sales zero profit negative due to research cost development cost	price high because low output high promotion expenses zero competition	launch product with long term focus focus on buyers who is ready educate customer on new product awareness
Growth	sales climb profit positive	early adopters followed by late adopters (laggards) new competitors (entry) price will be reduce to prevent lost of customer to new competitors create entry barrier capture more market share	increase aggressive promotion continue educating consumer trade off between high market share or high current profit
Maturity	sales peak / levels off/ maximum profit peaks / levels off / maximum	'defend' product	modify market reposition brand look for new user / segment eg : Johnson & Johnson initially baby product now into drug modify product change product attributes eg style, design, quality modify marketing mix
Decline	sales decline profit decline	Due to technology advance eg groceries loss out to supermarket which use computerised system shift customer taste increased competition	mantain brand - hope competiors leave the market harvest product - reduce various costs by minimize promotion. Promote only to those loyal customer drop product -unworthy which increase storage costs

Price (top)

definition : amount of money charged for a product / service
the ONLY marketing mix that produce REVENUE ( marketing mix, 4Ps - product, price, promotion, place)

Factor affecting price (top)

internal
- marketing objective
  - survival - reduce to price to keep u demand just to strive
  - current profit maximazation - MC=MR (marginal cost = marginal revenue)
  - market share leadership (low price to capture market share)
  - non-profit (eg hospital government)
- marketing mix strategy
  - use price as product positioning factor eg Ferrari - expensive
  - target costing - set selling price, then target cost to ensure price is met. "Design to price"
  - now, customer emphasize VALUE eg customer dont mind to pay high price for tasty food in restaurant
- cost
  - internal factor that FLOOR the price
  - cheaper over long term / experience / specialization /production
- organization consideration
  - dependent on company
    - small company - top mgt
    - large company - product line mgt
    - price department
external
- market type / demand
  - monopoly market - price increase compared to perfect competition
  - value by customer - price increase in Mercedes car
  - price elasticity - customer sensitivity to price change
- competitor cost /price
  - price high - attract competitors
  - price low - cannot reap prfot, but dominate market share
- other external factors
  - economic condition - boom / recession / inflation
  - government policy - AFTA, protectionism of Malaysia local car
  - social concern - alcohol, tobacco price increased

Pricing method (top)

product cost set the floor
consumer perception set the ceiling
3 approaches
- cost-plus pricing
  - adds a STANDARD mark-up to the cost product
  - eg : professional service - lawyer, doctor
  - disadv : ignore current demand / competition
  - popular because
    - seller certain about cost than demand
    - pricing simplified - only need to consider cost
    - price similar to all firm in same industry, which prevent competition
    - fairness to both seller / buyer
- break even / target profit pricing
  - initially, set price to break even / target profit, then achieve that volume sales
- psychological pricing
  - odd-even pricing
    - $99.95(odd) - sense product < $100.00, bargain
    - S88.00 (even) - perceived as high quality product because of .00
  - prestige pricing
    - price set high to show quality eg jewellery, perfume, liquor
pioneer pricing policies
- set the BASE price
- provide a reference point
  - price skimming
    - set a HIGH price to skim maximum revenue
    - occurs only if
      - product quality support its higher price
      - competitor unable to undercut
  - penetration price
    - set a LOW price to gain market share
    - condition applied when
      - market is price-sensitive
      - keep out customers, dominate market share
      - long term production when cost decrease as sales volume increase due to economies of scale and learning experience

Price Adjustment Strategy (top)

promotional pricing
- temporary pricing, $ </= cost to increased short term sales
  - loss leader pricing - < markup, attract customer eg supermarket
  - special event pricing - reduce price in event eg Christmas, Chinese New Year holiday
  - cash rebate given by manufacture to customer at a specified time, valid at short period only eg voucher
discount / allowance
- cash discount - price reduced if pay bill on time-improve seller cash flow and reduce bad debt
- quantity discount - price reduced if buy big quantity
- trade discount - price reduced for trade channel (dealer agent) eg pharmaceutical sells to pharmacy
- seasonal discount - discount during season eg winter clothing
- allowance - price reduced for turning old item when buy new eg car/handphone trade in
perceived value (value-based)
- setting price based on buyer perception rather than cost
- eg : everyday low pricing (EDLP) for consumer goods, expensive for jewellery (value)
competition based
- going-rate pricing - set based on competitor price
- sealed-bid pricing - based on how firm thinks competitor will price rather than its own cost eg tender, contract
segmented pricing
- set price based on differences in customer, product, location
  - product form - different version, different price eg car -automatic vs manual
  - location pricing -eg Proton in KL vs Kuching different price
  - time pricing - eg movie ticket cheaper on holiday
geographical
- FOB (free on board) pricing - goods placed free on board a carrier
- uniform delivery pricing - same price + freight regardless location
- zone pricing - higher in distant zone, duty free in airport
- basing-point pricing - charge same freight cost
- freight absorption pricing - company absorb the freight cost not the customer
product mix
- product line pricing - based on cost differences eg different size clothes RM10,20,30
- optional product pricing - accesory product eg car -power steering, CD player
- captive product pricing - product must be used along main product eg torchlight and battery
- 2-part pricing - fixed plus variable fee eg electricity - 1st 100 unit and subsequent 50 units different price
- by-product pricing - chicken drop (fertiliser), oil palm hurst (fertiliser)
- product bundling pricing - in a bundle eg Gillete razor blade and holder, battery + torchlight

Promotion

Promotional Tools (top)

Type	Description	Advantage	Disadvantage
Advertising	paid form on non-personal presentation	expressive impressive seller can repeat many times	impersonal not persuasive compared to salesman costly 1-way communication, non interactive
Personal selling	personal presentation by firm	build up preference personal interaction, 2-way communication	long term commitment required most expensive tools
Sales promotion	short term incentive eg coupon, discount	attract customer offers strong incentive for purchase quick response improve company cash flow	short lived not good in building long term brand
Public relationship	building favorable publicity eg press conference, seminar	can dramatize a product eg hiring actor to promote/ explain a product in a hotel reach those who avoid salesperson and advertising
Direct marketing	targeted individual eg mail, fax, telephone	immediate customised - selected target interactive - response of subscribe /unsubscribe non-public - targeted e-mail	non-personal

Steps in developing EFFECTIVE communication (top)

identify target audience - potential customer
determine communication objective
- determine buyer readiness eg Mc Donald emphasize on 'conviction' advertising
  - awareness
  - knowledge
  - likeness
  - preference (comparison)
  - conviction (loyalty)
  - purchase
design message
- effective message -AIDA
  - get Attention
  - hold Interest
  - arouse Desire
  - obtain Action
- design appeal / theme
  - rational appeal - audience self-ineterst in product quality, economy, value, performance
  - emotional appeal - fear, guilt, pride , humor, joy eg anti-smoking advertising create fear disease
  - moral appeal - environmental, human right eg child abuse advertising
choose media (channels of communication)
- personal communication channel - direct
  - words of mouth,
  - opinion leaders
  - chat, mail
- non-personal communication channel - indirect
  - media - TV, newspaper
  - atmosphere - cinema with dark surrounding equipped with stereo system, big screen
  - event - grand opening, news conference
select message source (create impact on audience
- credible, persuasive
- eg: Britney Spear - Pepsi, Tiger Woods - Nike
collect feedback
- research the effect
- ask if
  - remember the message
  - how many times saw it
  - what is the main points
  - feeling about message
  - past/present attitude towards product / company

Setting promotional budget $$$ (top)

affordable method
- cheap, affordable
- used by small business
percentage (%) of sales method
- setting % of sales price for promotion budget
- help mgt to correlate between promotion and sales. If promotion budget increased means sales good
competitive parity method
- match competitors outlays
objective task method
- promotion according to objectives
- determine task first

Setting promotional mix (top) ( blending of promotional tools) - influenced by :

nature of promotional tool - the adv and disadv of promoting tools.
promotion mix strategy
- push strategy
  - using sales force to force/trade/promotion to push product through channels eg producer to wholesaler/retailer to customer
- pull strategy
  - build up consumer demand
  - if successful, customer will come to wholesaler
type of product / market
- consumer goods - pull strategy
- business to business - push strategy
buyer readiness stage
- awareness - public relationship + personal selling
- knowledge - public relationship + personal selling
- liking - personal selling + advertising
- preference - personal selling + advertising
- conviction- personal selling + advertising
- purchase - sales promotion
product life cycle stage
- introduction - advertising, public relationship, personal selling
- growth - advertising, public relationship
- maturity - sales promotion
- decline- minimal / little advertising + personal selling just to maintain loyal customers