STT: 48

Mid – term – 8th day of class

 CHAPTER 1: INTRODUCTION TO MARKETING

1. What is marketing?

1.1. Definitions of marketing

Philip Kotler

“The performance of business activities that direct the flow of

goods and services from producers to consumers

The process of planning and executing the conception, pricing,

promotion, and distribution of ideas, goods, and services to create
exchanges that satisfy individual and organizational objectives.”

Kotler & Amstrong

Marketing is the process by which companies create value for

customers and build strong customer relationships in order to
capture value from customers in return.

M = R + STP + MM + CRM + C

M – marketing process

R – research

STP – Segmentation, targeting, and positioning

MM – marketing mix

CRM – customer relationship management

C – capturing value from customers

1.2. The marketing process

I.P.A.C

+ Information

+ Planning

+ Action

+ Control

1.3. Basic concepts in marketing

- Needs

Philip Kotler: Human needs are states of felt deprivation

- Maslow Hierarchy of Needs

“Human needs are arranged in a hierarchy, from the most pressing at the bottom to the least
pressing at the top.

A person tries to satisfy the most important need first. When that need is satisfied, it will stop
being a motivator, and the person will then try to satisfy the next most important need.

Case study: selling a product to people who don’t need it (sell as many combs as possible to a
monk)

https://www.linkedin.com/pulse/how-sell-combs-monks-joshua-chua/

- Wants

Wants are the form of human needs which is shaped by culture and individual personality.

- Demand

Demands are human wants backed by buying power. This is the content that businesses should
pay attention to.
- Exchange

Exchange is the act of obtaining a desired object from someone by offering something in return.

Exchange is the basis for all marketing activities

- Product

Products are all goods and services that can be offered to satisfy a human need or desire, attract
attention, stimulate shopping and consumption

A product can be:

+ tangible or intangible, ideas, etc…

+ different products have different levels of satisfaction of needs

- Satisfaction

Customer satisfaction measures how well the expectations of a customer concerning a product or
service provided by your company have been met

When a customer is satisfied with a product: a return customer/advocacy. This can be a powerful
marketing advantage.

When a customer is not satisfied with a product: unlikely to return/hurt the firm by making
negative comments to prospective customers.

- Traditional marketing

Consume any type of product that the business is capable of producing

- Modern marketing

Discover unmet needs and target production to meet those needs (Only produce what the market
needs, not what the business has)

2. Marketing management orientations

There are 5 alternative concepts under which organizations design and carry out their marketing
strategies

(Traditional marketing philosophy)

+ The production concept

+ The product concept

+ The selling concept

(Modern marketing philosophy)

+ The marketing concept

+ The societal concept

Production concept:

+ Consumers will favor products that are available and highly affordable.

+ Management should focus on improving production and distribution efficiency.

+ The production concept is still a useful philosophy in some situations. For example, in the
highly competitive, price-sensitive Chinese market, both personal computer maker Lenovo and
home appliance maker Haier dominate through low labor costs, high production efficiency, and
mass distribution

+ However, although useful in some situations, the production concept might lead to marketing
myopia and lose sight of the real objective – satisfying customer needs and building customer
relationships

Product concept

+ Consumers favor products that offer the most quality, performance, and features

+ The focus is on continuous product improvements

+ Product quality and improvement are important parts of most marketing strategies
+ However, focusing only on the company’s products can also lead to marketing myopia

Marketing myopia is a term used to describe a company’s narrow-minded approach to

marketing that focuses only on the company’s products and services, and not on what the
customers actually need and want. This can lead to the failure to adapt to market changes,
customer needs, and competitive threats. It’s crucial for businesses to focus on customer
satisfaction and value creation, rather than just their own products.

Example:

Blockbuster: In the early 2000s, Blockbuster was the undisputed king of the video rental
industry. However, they failed to adapt to the changing market trends and the rise of digital
streaming services. Despite the growing popularity of online streaming, Blockbuster continued to
focus on their physical rental business. This led to their downfall and they filed for bankruptcy in
2009

Railway Industry: Theodor Levitt, who coined the term “marketing myopia”, used the railway
industry as an example. The railway companies believed that people would always rely on trains
for transportation. They failed to realize that they were not just in the railway business, but in the
broader transportation business. As other forms of transportation like air travel became more
popular and convenient, the railway business suffered greatly

Selling concept:

+ Consumers will not buy enough of the firm's products unless the firm undertakes a large-scale
selling and promotion effort.

+ Such aggressive selling, however, carries high risks. It focuses on short-term creating sales
transactions rather than on building long-term, profitable customer relationships.

Marketing concept:
+ Know the needs and wants of the target markets and deliver the desired satisfactions better than
competitors.

+ Under the marketing concept, customer focus and value are the paths to sales and profits.

+ Instead of a product-centered make-and-sell philosophy, the marketing concept is a customer-

centered sense-and-respond philosophy.

+ The job is not to find the right customers for your product but to find the right products for your
customers.

Societal marketing concept:

A company's marketing decisions should consider consumers' wants, the company's

requirements, consumers' long-run interests, and society's long-run interests. It calls for
sustainable marketing, socially and environmentally responsible marketing that meets the
present needs of consumers and businesses while also preserving or enhancing the ability of
future generations to meet their needs.
3. Marketing mix

Marketing mix is the set of tactical marketing tools - product, price, place, and promotion - that
the firm blends to produce the response it wants in the target market.
Service Marketing Mix
Product Marketing Mix
The 7P’s Marketing

+ People are all human actors who play a part in service delivery and thus influence the buyers'
perceptions (firm's personnel, other customers, etc.)

+ Process are the actual procedures, mechanisms, and flow of activities by which the service is
delivered (hotel check-in, restaurant order-taking, etc.)

+ Physical evidence: The environment in which the service is delivered, and where the firm and
customer interact, and any tangible components that facilitate performance or communication of
the service (buildings, equipment website, etc.)
 Chapter 2: The marketing environment

1. Definition of marketing environments

1.1. Definition

A company’s marketing environment consists of the actors and forces outside marketing that
affects marketing management’s ability to build and maintain successful relationships with
targeted customers.

1.2. Classification of marketing environment

The marketing environment is made up of a microenvironment and a macroenvironment.

Microenvironment

+ The microenvironment consists of the actors close to the company that affects its ability to
serve its customers

+ 6 factors

Macroenvironment

+ Macroenvironment consists of the larger societal forces that affect the microenvironment

+ This macroenvironment consists of forces that shape opportunities and pose threats and affect
the company’s ability to build customer relationships

+ 6 forces
1.3. The importance of examining the marketing environment

+ Whether fluctuating rapidly or slowly, environmental forces are always dynamic. Changes in
marketing environment create uncertainty, threats, and opportunities for marketers.

+ Understanding the current state of the marketing environment and recognizing threats and
opportunities arising from changes within it helps companies with strategic planning

+ In particular, they help marketing managers assess the performance of current marketing efforts
and develop future marketing strategies

2. The company’s micro-environment

2.1. The company

In designing marketing plans, marketing management needs to take into consideration other
company’s groups such as top management, finance, R&D, purchasing, operations and
accounting department.

 Top management: set the company's mission, vision, objectives, broad strategies and
policies.
 Sales departments: focus on sales and sales promotion.
 R&D department: conduct surveys and other research work to improve the technology and
products. ....

 All departments - from manufacturing and finance to legal and human resources - share the
responsibility for understanding customer needs and creating customer value.

2.2. Suppliers

+ Provide the resources needed by the company to produce its goods and services
+ Marketing managers must watch supply availability and costs.

- Supply shortages or delays, natural disasters, and other events can cost sales in the short run
and damage customer satisfaction in the long run.
- Rising supply costs may force price increases that can harm the company's sales volume.

+ Most marketers today treat their suppliers as partners in creating and delivering customer value

- Provides resources for companies (input for production)

- Marketing managers must watch supply availability and

costs:

+ Supply shortages or delays, natural disasters, and other

events can cost sales (short term) and damage customer
satisfaction (long run)

+ rising supply cost  decreasing sales volume

 win-win situation between suppliers and companies

2.3. Marketing intermediaries

Marketing intermediaries are those that help the company to promote, sell and distribute its
products to final buyers.

+ Resellers: wholesalers and retailers

+ Physical distribution firms: shipping lines, logistics companies, cargo agents, freight forwarders

+ Marketing service agencies: marketing research firms, advertising agencies, media firms, and
marketing consulting firms

+ Financial intermediaries: banks, credit company, insurance companies

2.4. Customers

+ Customers are the most important actors in the company's microenvironment.

- Consumer markets consist of individuals and households that buy goods and services for
personal consumption.
- Business markets buy goods and services for further processing or for use in their
production process.
- Reseller markets buy goods and services to resell at a profit
- Government markets are made up of government agencies that buy goods and services to
produce public services or transfer the goods and services to others who need them.
- International markets consist of these buyers in other countries, including consumers,
producers, resellers, and governments.

Each market type has special characteristics that call for careful study by the seller.

4 types (different purposes  different purchasing behaviors)

+ Consumer markets: individuals and households = personal

consumption (personal preferences and requirements about the
product or service)

+ Business markets: processing or producing (do not care too

much about details but they pay attention to the needed input to
produce the wanted goods)

+ Reseller markets: reselling (care about profits = the gap

between the import price and export price)

+ Government markets: producing public services or

transferring the goods to others who need them

+ International markets: actors are foreign buyers (care about

tariff, special taxes,…)
2.5. Competitors

Companies must provide greater customer value and satisfaction than its competitors do.

+ Marketers must gain strategic advantage by positioning strongly against competitors’ offerings
in the minds of consumers

+ No single competitive marketing strategy is best for all companies.

 Each firm should consider its own size and industry position compared to those of its
competitors.

+ Companies must provide greater customer value and

satisfaction than its competitors do

+ Marketers must gain strategic advantage by positioning

strongly against competitors’ offerings in the minds of consumers

 No single competitive marketing strategy is best for all

companies  companies should consider its own size and industry
position
2.6. Publics (Further explanation)

A public is any group that has an actual or potential interest in or impact on an organization’s
ability to achieve its objectives:

+ Financial publics

This group influences the company’s ability to obtain funds. Banks, investment analysts, and
stockholders are major financial publics

+ Media publics

This group carries news, features, editorial opinions, and other content. It includes television
stations, newspapers, magazines, blogs and other social media.

+ Government publics

Management must take government developments into consideration. Marketers must consult the
company’s lawyers on issues of product safety, truth in advertising, and other matters.

+ Citizen-action publics

A company’s marketing decisions may be questioned by consumer organizations, environmental

groups, minority groups, and others. Its public relations department can help it stay in touch with
consumer and citizen groups

+ Local publics

This groups includes local community residents and organizations. Large companies usually
work to become responsible members of the local communities in which they operate.

+ General publics

A company needs to be concerned about the general public’s attitude toward its products and
activities. The public’s image of the company affects its buying behavior.

+ Internal publics
This group includes workers, managers, volunteers, and the board of directors. Large companies
use newsletter and other means to inform and motivate their internal publics. When employees
feel good about the companies they work for, this positive attitude spills over to the external
publics.

3. The company’s macro-environment

3.1. The demographic environment

- The study of human populations in terms of size, location, age, gender, race, occupation, and
other statistics.

- It’s important because it involves human. People make up markets

- Demographic trends:

+ population structure

+ geographic shifts in population

+ increasing diversity

 Marketers will continue to diversify their marketing programs to take advantage of

opportunities in fast-growing segments

3.2. Economic environment

Consists of factors that affect on consumer spending and buying behavior

+ Changes in major economic variables (income, cost of living, interest rates, and savings and
borrowing patterns) have a large impact on the marketplace

+ Companies watch these variables by using economic forecasting

3.3. Natural environment

…is the physical environment and the natural resources that are needed as inputs by
marketers or that are affected by marketing activities

Marketers should be aware of several trends:

- shortages of raw materials

- increased pollution

- increased government intervention

- environmentally sustainable strategies

3.4. Technological environment

Technological advances are the most dramatic forces affecting today’s marketing strategy

+ The technological environment changes rapidly

+ New technologies create new markets and opportunities

+ Marketers should watch the technological environment closely. Companies that do not keep
will soon find their products outdated

3.5. Political environment

+ Political environment consists of laws, government agencies, and pressure groups

+ Almost every marketing activity is subject to a wide range of laws and regulations such as
competition, fair trade practices, environmental protection, product safety, truth in advertising,
consumer privacy, packaging and labeling, pricing and other important areas.

3.6. Cultural environment

The cultural environment is made up of institutions and other forces that affects a society’s
basic values, perceptions, preferences, and behaviors

+ Core beliefs and values are persistent and are passed on from parents to children and are
reinforced by schools, churches, businesses, and government

+ Secondary beliefs and values are more open to change and include people’s views of
themselves, others, organizations, society, nature, and the universe

4. Responding to the marketing environment

 REACTIVE PROACTIVE

Passively accept the marketing environment Develop strategies to change the environment
and design strategies to avoid the threats and and overcome uncontrollable environmental
take advantage of the opportunities events.

Question: Differences in business environments between rural and urban areas and marketing
adaption?
 CHAPTER 3: THE MARKETING RESEARCH

1. Marketing research

Marketing research is the systematic design, collection, analysis, and reporting of data relevant
to a specific marketing situation facing an organization

The purpose of marketing research:

- Gives marketers insights into customer motivations, purchase behavior, and satisfaction

- Helps marketers to assess market potential and market share

- Helps marketers to measure the effectiveness of marketing mix activities

How companies carry out marketing research studies:

- have their own research departments that work with marketing managers on marketing research
projects

- hire outside research specialists to consult with management on specific marketing problems
and to conduct marketing research

- purchase data collected by outside firms

2. Marketing research process

Defining the problem and research

objectives

Developing the research plan

Gathering secondary data

Collecting primary data

 Data processing

Reporting the findings

2.1. Defining the problem and research objectives

- Hardest step: managers know what is wrong without knowing the specific causes

- most important step: guides the entire research process

- After defining the problem, market researchers must set specific research objectives

- 3 types: exploratory, descriptive, causal

Exploratory research Descriptive research Causal research

Gathers preliminary Describe things, such as the Tests hypotheses about cause
information to identify the market potential for a product – and – effect relationship
problems and suggest or the demographics and
hypotheses attitudes of consumers who
buy the product

2.2. Developing the research plan

- Outlines sources of existing data, and spells out research approaches, contact methods, sampling
plans, instruments to gather new data

- Research objectives must be translated into specific information needs

- The research plan must be presented in a written proposal which includes the following
information
 Management problem

Research objectives

Information needed

How the results will help

management decisions

Budget

2.3. Gathering secondary data

- Secondary data is already existing data that has been collected before for another purpose

Sources of secondary data:

- Company internal database

- External database: internet, Google, market research companies, government agency, business
publication

2.4. Primary data collection

Primary data consists of information collected for the specific purpose

Designing a plan for primary data collection requires a number of decisions on research
approaches, contact methods, sampling plans, and research instruments.

Research approaches

- observational research: gathering primary data by observing relevant people, actions, and
situations

- survey research: gathering information by asking people questions

- experimental research: gathering primary data by selecting matched groups of subjects, giving
them different treatments, controlling related factors, and checking for differences in group
responses.  most suitable for gathering causal information
Contact methods

Sampling plan

A sample is a segment of the population selected for marketing research to represent the
population as a whole.

Research instruments
- Questionnaire is the most common

- Mechanical instruments:

+ Researchers use mobile phone GPS technologies to track consumer movements

+ Retailers use check out scanners to record customers’ purchases

+ Neuromarketing measures, often combined with biometric measure (eye and facial movement,
heart rates)

2.5. Data processing

- Researchers process and analyze the collected data to isolate important information and
findings.

- The researchers then tabulate the results and then compute statistical measures:

+ Qualitative research: based on the density or frequency of responses, build hypothetical scores

+ Quantitative research: use software for data analysis: Excel or SPSS

2.6. Reporting the findings

- The researchers now have to interpret the findings, draw conclusions and report to the manager.

- Managers may be biased

They might accept what they expected and reject what is unexpected

 Researchers and managers should work closely together when interpreting the research results

3. Questionnaire

- The most common instrument for all contact methods

- Questionnaire is very flexible

3.1. Types of questions

- Personal questions
- Terminated questions

- Double-checked questions

- Close-end questions

- Open-end questions

- Semi-closed questions

- Direct questions

- Indirect questions

3.2. Type of answers

3.3. Questionnaire format

- Title

- Introduction

- Answer instructions

- Questions

- Personal questions

- Thank you
3.4. Point to make

- Researchers should also care about the wording and ordering of questions

- They should use simple, direct, and unbiased wording

- Questions should be arranged in a logical order

- The first question should create interest if possible, and difficult or personal questions should be
asked last so that the respondents are not defensive

3.5. Points to avoid

- Sensitive questions (competitors)

- Too long, too complicated questions

- Guiding question (agree?...)

- Translation and spelling errors

4. Marketing information system (MIS)

- Refers to the people and procedures dedicated to assessing information needs, developing
information, and helping decision makers to use this information to generate and validate
actionable customers and market insights.

- Companies must develop effective marketing information system that give managers the right
information, in the right forms, and at the right time and help them to use the information to
create customer value and build stronger customer relationships.
 CHAPTER 4: CONSUMER MARKETS AND CONSUMER BUYER BEHAVIOR

1. Consumer markets and model of consumer behavior

1.1. Consumer markets

Consumer buyer behavior is the buying behavior of final consumers – individuals and
households that buy goods and services for personal consumption

Consumer markets are made up of final consumers – individuals and household – who buy
goods or services for personal consumption

1.2. Consumer market classifications

Actual market or market

share

Potential market Potential market = opponents’ customers

Mix market

Theory market Theory market = maximum number of products that can be sold
in one market (for example: there are 100M people in VN 
there can be a maximum of 100M motorbikes sold in this market,
however, this is not necessarily true since in reality, there are
some segments that do not need to use such vehicles)

Test market Test market: distributing sample products to certain segments

1.3. The model of buyer behavior

The environment:

- Marketing stimuli: 4P

- Other: economic, technological, social, cultural

Buyer’s black box:

- Buyer’s characteristics

- Buyer’s decision process

Buyer’s response:

- Buying attitudes and preferences

- Purchase behaviors

- Brand engagement and relationships

2. Types of buying decision behavior

2.1. Complex buying behavior

Product:

- Expensive
- Purchase infrequently
- Risky
- Significant differences between brands perceived by consumers

Marketers should:

- Understand the information-gathering and evaluation behaviors of consumers

- Help buyers to understand the products’ attributes and their relative importance
- Describe and illustrate the brand’s benefits through printed promotional materials or in-
depth online information and videos
- Motivate store salespeople and the buyers’ acquaintances to influence the final decision

2.2. Dissonance-reducing buying behavior

Product:

- Expensive
- Purchase infrequently
- Risky
- Few differences between brands

Due to few differences between brands, buyers may shop around to see all the available options,
however, those make the buying decisions quite quickly. This leads to a potential post-purchase
dissonance (after-sale discomfort) after they experience some disadvantages of the product they
have just bought and regret about the brand they didn’t choose

Marketers should:

- Provide after-sale communications with evidence and support to make the customers feel
good about their brand choices

2.3. Habitual buying behavior

Product:

- Low cost
- Frequently purchased
- Fewer differences between brands perceived by customers

Consumers simply go to a store and reach for the product. If they keep buying the same product,
it is out of habit rather than strong brand loyalty.

Marketers should:

- Use price and sales promotion to stimulate product trial (market leader option)
- Ad campaigns should include high repetition of short-duration messages. TV is more
effective than print media because it is more suitable for passive learning
- Add features and developments to the product to differentiate their brands from the rest of
the pack and raise involvement

2.4. Variety-seeking buying behavior

Product:

- Low cost
- Frequently purchased
- Significant differences between brands perceived by consumers
- Consumers do a lot of brand switching, which occurs for the sake of variety rather than
because of dissatisfaction

Marketing strategies may be different for the market leader and minor brands:

- Market leader will try to encourage habitual buying behavior by dominating shelf, keep
shelves fully stocked and running frequent reminder advertising
- Minor brands will try to encourage minority seeking by offering lower prices, special
deals, coupons, free samples and advertising that represents reasons to try something new.

+ Complex buying behavior: motorbike, digital devices, …

+ Dissonance-reducing buying behavior: skincare products

+ Variety-seeking buying behavior: noodles

+ Habitual buying behavior: snacks

Trends in changing consumer purchasing behavior:

- Green consumption
- Instant products
- Online shopping
- E-wallets
- Healthcare products

3. Factors affecting consumer behavior

Cultural Social Personal Psychological

Culture Group and social Age and life cycle stage Motivation
network
Subculture Occupation Perception
Family
Social class Economic situation Leaning
Role and status
Lifestyle Belief and attitudes

Personality and self-

concept

3.1. Cultural factors

Culture: The set of basic values, perceptions, wants and behaviors learned by a member of
society from family and other important institutions.
Subculture: A group of people with shared value systems based on common life experiences and
situations.
Social class: Relatively permanent and ordered divisions in a society whose members share
similar values, interests and behaviours.
3.2. Social factors

Group and social networks: can have direct or indirect influence on a consumer’s decision. A
group is made up of two or more people who interact to accomplish individual or mutual goals.
Social networks are where people socialize or exchange information and opinions.
Family: whose role can be spouse or kin, can strongly influence a consumer’s purchase of
different products and services.
Social roles and status: is the image that a consumer maintains within Groups, Social Networks,
and among Family by buying certain products and services.
3.3. Personal factors

Age and life stage: People change the goods and services they buy over their lifetimes. Tastes in
food, clothes, furniture, and recreation are often age related.
Occupation: Marketers try to identify the occupational groups that have an above-average interest
in their products and services
Economic situation: A person’s economic situation will affect his or her store and product
choices.
Life style: A person’s pattern of living as expressed in his or her activities, interests, and
opinions.
Personality and self-concept: Personality refers to the unique psychological characteristics that
distinguish a person or group. Self- concept is the idea that possessions contribute to and reflect a
person’s identity.

3.4. Psychological factors

Motivation: is a need that is sufficiently pressing to direct the person to seek satisfaction of the
need
Perception: is the process by which people select, organize, and interpret information to form a
meaningful picture of the world from three perceptual processes which are selective attention,
selective distortion and selective retention
Learning: is the change in an individual’s behavior arising from experience
Belief and attitude: Belief is a descriptive thought that a person holds about something. Attitudes
describe a person’s relatively consistent evaluations, feelings, and tendencies toward an object or
idea.
4. The buyer decision process

4.1. Need recognition

Is the first stage of the buyer decision process, in which consumers recognize a problem or need
triggered by:

- Internal stimuli
- External stimuli

 The marketer should research the customers to find out what kind of need or problem arises
and how they led the consumer to this particular product

4.2. Information search

Is the stage in which the consumer is motivated to search for more information.

Sources of information:

- Personal sources: family, friends, …

- Commercial sources: advertising, sales force
- Public sources: mass media, Internet
- Experiential sources: handling, examining, using the products, …

 The marketer should research to find out the consumers’ sources of information and the
importance of each source

4.3. Evaluation of alternatives

- Consumers use information to evaluate alternative brands in the choice set

- Consumers do not use a simple and single evaluation process in all buying situations. It depends
on the individual consumer and the specific buying situation

 If the marketer knows what evaluative processes go on, they can take steps to influence the
buyer’s decisions

4.4. Purchase decision

- Is the buyer’s decision about which brand to purchase

- Buyer intention can be different from buyer decision due to:

+ Attitudes of others

+ Unexpected situational factors

 Marketers want to know what interferes between customer intention and decision

4.5. Post-purchase behavior

- The stage in which customers take further action after purchase, based on their satisfaction or
dissatisfaction

 Companies should set up systems that encourage customers to complain  they can better
understand how well they are doing and what they can improve
 Chapter 5: Business market and business buyer behavior

1. Business market definition and characteristics

- The business market is huge

- In some ways, similar to consumer market. Both involve people who assume buying roles and
make purchase decisions to satisfy needs. However, business markets differ in many ways from
consumer markets.

- The business market includes organizational customers who purchase goods and services to
support the organization’s activities (B2B)

Characteristics:

- Market structure (fewer but larger buyer)

- Business demand ultimately comes from the demand for consumer goods.
- Business purchase usually involves more decision participants
- More complex buying decisions (take time)
- More formalized (written purchase order)
- The buyer and seller are much more dependent on each other

2. Business buying behavior

2.1. Definition

Business buyer behavior refers to the buying behavior of the organizations that buy goods and
services for use in production of other products and services that are sold, rented, or supplied to
others

2.2. The model of business buyer behavior

The buying center = the people in an organization who make decisions about what to buy

2.3. Major types of Buying Situation

- Straight rebuy is a routine purchase decision such as reorder without any modifications

- Modified rebuy is a purchase decision that requires some research where the buyer wants to
modify the product specification, price, terms, or suppliers

- New task is a business buying situation in which the buyer purchases a product or service for
the first time

- Systems selling (or solutions selling) is buying a packaged solution to a problem from a single
seller, thus avoiding all the separate decisions involved in a complex buying situation

2.4. Participants in the Business Buying Process

Buying center is all of the individuals and units that participate in the business decision-making
process

Are those that will use the product or - Software Developers: These individuals
service. are the primary users of any new software or
tools adopted by the company. They interact
1. Users
In many cases, users initiate the buying
directly with the software on a daily basis to
proposal and help define product
develop applications.
specifications.
 - Quality Assurance Engineers: They test
the software developed by the developers to
ensure it meets quality standards before
deployment.

Help define specifications and provide - Lead Software Architects: They have a
information for evaluating alternatives. significant influence on the technology stack
and tools adopted by the company. Their
Technical personnel are particularly
recommendations heavily impact the
important influencers.
decision-making process.
2. Influencers
- Project Managers: They may influence
decisions regarding project management
tools and methodologies used within the
organization.

- Lead Software Architects: They

Control the flow of information.
control the flow of technical

For example, purchasing agents often information and recommendations

have authority to prevent salespersons regarding software and tools within

from seeing users or deciders. Other the organization.

gatekeepers include technical personnel - Project Managers: They may act as

3. Gatekeepers gatekeepers by controlling project-
and even personal secretaries.
related information and influencing
decisions on project management
tools and methodologies.

Have formal or informal power to select - Chief Technology Officer (CTO): The
4. Deciders and approve final suppliers. CTO is ultimately responsible for making
decisions regarding the adoption of new
 In routine buying, the buyers are often technologies and tools within the
the deciders, or at least the approvers. organization.

- Executive Committee: Depending on the

organization's structure, a committee of
executives or board members may
collectively make decisions on major
technology investments

Have formal authority to select the - Procurement Team: They negotiate

supplier and arrange terms of purchase. contracts and make purchases on behalf of
the organization, following the decisions
Buyers may help shape product
made by the deciders.
specifications, but their major role is in
5. Buyers selecting ven- dors and negotiating. In - Chief Financial Officer (CFO): The CFO
more complex purchases, buyers might approves budget allocations for purchasing
include high-level officers participating new software and tools. They have the final
in the negotiations. say on whether the organization can afford
the proposed investments.

3. Major influences on business buyers

3.1. Environmental factors

- Business buyers are heavily influenced by factors in the current and expected economic
environment, such as the economic outlook, the supply of key materials

- Culture and customs can strongly influence business buyer reactions to the marketer’s behavior
and strategies, especially in the international marketing environment.

3.2. Organizational factors

- Each buying organization has its own objectives, strategies, structure, systems, and procedures,
and the business marketer must understand these factors well.

- How many people are involved in the buying decision?

- Who are they?

- What are their evaluation criteria?

- What are the company’s policies and limits on its buyers?

3.3. Interpersonal factors

- The buying center usually includes many participants who influence each other, so interpersonal
factors influence the business buying process

- Participants may influence the buying decision because they control rewards and punishments,
are well-liked, have special expertise, or have a special. Relationship with other important
participants.

- Interpersonal factors are often very subtle.

3.4. Individual factors

- Each participant brings in personal motives, perceptions, and preferences which are affected by
personal characteristics.

- Buyers have different buying styles

4. Stages of the business buyer decision process

 Chapter 6: Market Segmentation, Targeting and Positioning (STP)

1. Market segmentation

1.1. Definition

Dividing a market into distinct groups of buyers who have different needs, characteristics, or
behaviors and who might require separate marketing strategies or mixes.

WHY?

Companies must identify the parts of the market they can serve best and most profitably.

1.2. Segmenting consumer market

1.3. Segmenting Business Market

Business buyers can be segmented geographically, demographically (industry, company size)

Additional variables, such as customer operating characteristics, purchasing approaches,

situational factors, and personal characteristics.

Starbucks has developed distinct marketing programs for each of its two business segments: the
office segment and the food service segment. (airlines, restaurants, colleges, and hospitals)

1.4. Segmenting international market

Intermarket (cross-market) segmentation involves forming segments of consumers who have
similar needs and buying behaviors even though they are located in different countries.

1.5. Requirements for effective segmentation:

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

Differentiable The segments are conceptually distinguishable and respond different

marketing mix elements and programs

Actionable Effective programs can be designed for attracting and serving the segments

2. Market targeting

2.1. Definition
- Target market consists of a set of buyers who share common needs or characteristics that a
company decides to serve

- After evaluating different segments, the company must decide which and how many segments it
will target

2.2. Evaluating market segments

- Segment size and growth

- Segment structural attractiveness

- Company objectives and resources

2.3. Market-targeting strategies

Undifferentiated (mass) marketing:

- ignore market segment

- whole market with one offer

Differentiated (segmented) marketing:

- target several market segments

- separate offers for each

Concentrated (niche) marketing:

- a few smaller segments or niches

Micromarketing (local or individual marketing):

- tailoring products for individuals and local customer segments

2.4. Target market selection: product market matrix

2.5. Mix marketing strategy and target market

3. Positioning

3.1. Definition

Position is the place the product occupies in consumers’ minds relative to competing product.
Products are made in factories, but brands happen in the minds of consumers.

A product’s position is the complex set of perceptions, impressions, and feelings that consumers
have for the product compared with competing products.

3.2. Positioning maps

Show consumer perceptions of marketer’s brands versus competing product on important buying
dimensions.

3.3. Choosing a Differentiation and Positioning Strategy

3 STEPS:
- Identifying a set of differentiating competitive advantages

- Choosing the right competitive advantages

- Selecting an overall positioning strategy

Competitive advantage is an advantage over competitors gained by offering consumers greater

value, either through lower prices or by providing more benefits than justify higher prices.

Identifying a set of possible competitive advantages to differentiate

Product differentiation brands can be differentiated on features,

performance, or style and design

Service differentiation Speedy, convenient service

Channel differentiation The way they design their channel’s coverage,

expertise, and performance

People differentiation Hiring and training better people than their

competitors do

Image differentiation Buyers may perceive a difference based on

company or brand image differentiation

Choosing the Right Competitive Advantage

Selecting an overall positioning strategy

- Value proposition is the full mix of benefits upon which a brand is positioned
- In the figure, the five green cells represent winning value propositions – differentiation
and positioning that gives the company a competitive advantage

3.4. Repositioning
 Is the redefining of a product’s position in the customer’s mind to match the competitive
situation or changes in the market and the business strategy of the enterprise.

3.5. Depositioning

Is the positioning of a product compared to competitors’ products in the minds of

customers in order to weaken the competitor’s positioning.
Chapter 7:

1. Product and types of product

1.2. Levels of product

Core product

- Fulfills basic benefit consumers want

- This refers to the basic product. Here, the focus is on the purpose for which the product is
intended

Generic product

- Provides actual product with tangible qualities. This represents all the qualities of the
product

Expected product:

- Offers generic product plus other attributes consumers want. This refers to all the benefits
consumers expects to get when purchase a product.

Augmented product:

- Product gives more than physical product. This refers to all the additional factors which
set the product apart from competition, that is its brand identity and image

Potential product:

- Provides additional tangible and intangible features. This refers to the augmentations and
transformations that the product may undergo in the future.
 Discuss the levels of product: Motorbike
Core product: traveling
Generic product: qualities, color, design, …
Expected product: speed, technical specifications, gasoline
consumption
Augmented product: warranty, repair services, showroom, web,
…
Potential product: event, roadside assistance, riding stories, GPS
navigation device

1.3. Product clarifications

Consumer products are products and services bought by final consumers for personal
consumption
Industrial product

- Are products purchased for further processing or for use in conducting a business

Material and parts Capital items Supplies and services

Natural products Buildings, factories Repair and maintenance

Component parts Office equipment Items
Farm products Accessory equipment Repair services
Advisory services

2. Product Life Cycle

- Is the course of a product’s sales and profits over its lifetime

- Product development begins when the company finds and develops a new product idea
 Introduction Growth Maturity Decline

The stage in which a The stage in which a The stage in which a The stage in which a
new product is first product’s sales start product’s sales product’s sales fade
distributed and made climbing quickly growth slows or away
available for purchase levels off

Introduction stage

- Profits: negative or low because of low sales, high distribution and promotion expenses
- Promotion spending: high to inform consumers of the new product and get them to try it
- Few competitors

 firm produce basic versions of the product

Growth stage:

- Sales start climbing quickly

- New competitors enter the market
- Price stability or decline to increase volume
- Promotion spending at the same or a slightly higher level
- Profits increase
- New market segments and new distribution channels
- Trade-off between high market share and high current profit
Maturity stage

- Slowdown in sales growth

- Overcapacity leads to greater competition
- Some of the weaker competitors start dropping out

Maturity stage modifying strategies:

Market modifying: finding new users and new market segments

Product modifying: changing characteristics such as quality, features, style, or packaging to

attract new users and inspire more usage

Marketing mix modifying: improving sales by changing one or more marketing mix elements

Decline stage

- Sales decline because of technological advances, shifts in consumer tastes, increased

competition, …
- Carrying a weal product can be very costly to a firm (profit, management’s time,
reputation, …)
- Management must decide whether to:
+ Maintain the product: reposition in hopes of moving it back into the growth stage
+ Harvest the product: reduce costs hoping that sales hold up. If successful, it will
increase the company’s profits in the short run
+ Drop the product from its line: sell the product to another firm or simply liquidate it

Various unusual PLC curves

 - Not all products follow all stages of the PLC
- Some products are introduced and die quickly
- Some stay in the maturity stage for a long time
- Some enter the decline stage and are then cycled back into the growth stage through
strong promotion or repositioning
 Well-managed brand could live forever

Why studying PLC?

- Useful framework for describing how products and markets work

- Help in developing good marketing strategies for its different stages
- Companies must continually innovate product

The length of PLC depends on what factors?

- customer demand
- the introduction of substitute products
- environmental factors
We need to develop our products at different levels to compete with other competitors in the
market.

1. Disadvantage: gaps between PLC

2. Disadvantage: limited resources, some products of the same company compete with each
other
3. Most suitable one: turnovers = profits are stable

3. Product-market matrix

Ansoff matrix

Four generic growth strategies are identified:

- Market penetration: more of the same to the same customers

- Market development: new customers for existing products
- Product development: new products for existing customers
- Diversification: new products and new customers
Case study:

Colorado Ricardo Mountain Bikes was founded by Ricardo Francisco in 1992. He was a keen
cyclist who spent his weekends with many friends cycling and having fun in the mountains of
Colorado. He was very competitive and loved to take his bike off-road to test his strength and
endurance.

As the mountain bike sport took off, Ricardo’s business grew to produce 10000 units in 1996.
However, sales have fallen annually since then and forecasted sales for 2000 are only 4000 units.
Ricardo’s company needs strategies for growth before it is too late. Use Ansoff’s matrix to
examine the options for Colorado Ricardo.

Answer: This firm can apply diversification by launching a new line of bicycles tailors for sport-
lovers living in high-density cities and flat terrace.

4. Branding

Definition:

- Brand is the name, term, sign, or design, or a combination of these, that identifies the
maker or seller of a product or service
- Branding can add value to a product

Brand Tree: Nestle

4.2. Brand structure

Brand name is the readable part of brand

Brand mark is the part of the brand that can be recognized but cannot be read (letters, logo,
symbol, …)

Brand name selection:

- Suggests benefits and qualities

- Easy to produce, recognize, and remember
- Distinctive
 - Extendable
- Translatable for the global economy
- Capable of registration and legal protection

Registered brand:

- Copyright

- Registered (for tangible products)

- Trademark (for intangible products)

FAMILY BRAND a single brand name is used for marketing a group of related products
INDIVIDUAL BRAND: individual branding assigns a unique brand name to each
product
NATIONAL BRAND
BRAND VALUE
Interbrand
Related issues:
- Selling brand
- Loss of brand in international markets
- Rename the brand in international markets
- Brand loyalty

5. Packaging

Definition

Packaging involves designing and producing the container or wrapper for a product:
primary package, secondary package, tertiary package. Marketers should focus on
commercial package
Package functions:
- Protection
- Presentation
- Preservation
- Portability
- Proportion
- Promotion
- Preparation
 CHAPTER 8: PRICE DECISIONS

1. What is a price?

- Price is the amount of money charged for a product or service, or the sum of all the values that
customers exchange for the benefits of having or using the product or service.

- Price is the only element in the marketing mix that produces revenue; all other elements
represent costs.

2. Internal and external considerations affecting price decisions

2.1. External factors

- The market and demand: types of market, price-demand relationship, price elasticity

- The Economy

- Others: Reseller’s response to price, government, social concerns

2.2. Internal factors

- Company’s overall marketing strategy

- Company’s objectives

- Other marketing mix elements

- Other organizational considerations

3. Considerations in setting price

Cost-based pricing: setting prices based on the costs of producing, distributing, and selling the
product plus a fair rate of return for effort and risk

Value-based pricing: setting price based on buyers’ perceptions of value rather than on the
seller’s cost

3.1. Cost-based pricing

Price = Total cost + rate of return (%)

Setting prices based on the costs of producing, distributing, and selling the product plus a fair rate
of return for effort and risk

 FC: costs that do not vary with production or sales level

 VC: costs that vary directly with the level of production
 TC: the sum of the fixed and variable costs for any given level of production
Rate of return should exceed the ROR from saving money in banks.

Disadvantages of cost-based pricing:

- Ignore competitors: it doesn’t consider the prices set by competitors, which can lead to
pricing that is not competitive in the market
- Overlooks customer value: cost-plus pricing doesn’t take into account the perceived value
of a product or service to the customer, potentially leading to prices that are too high or
low

Break-even pricing (target return pricing) is setting price to break even on costs or to make a
target return.

 TRbp = P x Qbp = TC
 FC: does not change but FC/Q changes

 VC: changes but VC/Q does not change

Fixed cost FC
BEPquantity = =
Unit Price − Unit Variable Cost P− UVC
3.2. Customer value-based pricing

Good-value pricing Value-added pricing

Offering just the right combination of quality Attaching value-added features and services
and good service at a fair price to differentiate a company’s offers and
charging higher prices

 More quality for a given price

 Same quality for less price  Quality
 Less value at very low prices (airlines)  Services

 Everyday low pricing (Walmart)  Value-added features

 High-low pricing (on selected items)

3.3. Competitor-based pricing

Involves setting prices based on competitors’ strategies, costs, prices, and market offerings
 - If consumers perceives that the company’s product or service provides greater value, the
company can charge a higher price
- If consumers perceive less value relative to competing products, the company must either
charge a lower price or change customer perceptions to justify a higher price
- If the company faces a host of smaller competitors charging high prices relative to the
value they deliver, it might charge lower prices to drive weaker competitors from the
market
- If the market is dominated by larger, lower-price competitors, a company may decide to
target unserved market niches by offering value-added products and services at higher
prices.

4. Pricing strategies

- New product pricing strategies

- Product mix pricing strategies

- Price adjustment strategies

- Price changes

4.1. New product pricing strategies

Market-skimming pricing: setting a high price for a new product to skim maximum revenues
from the market

Conditions:

- The product’s quality and image must support its higher price, and enough buyers want
the product at that price
- The costs of producing a smaller volume cannot be so high that they cancel the advantage
of charging more
- Competitors should not be able to enter the market easily and undercut the high price

Market-penetration pricing
Involves setting a low price for a new product in order to attract a large number of buyers and a
large market share.

The high sales volume results in falling costs, allowing companies to cut their prices even further.

Conditions:

- The market must be highly price-sensitive so that a low price produces more market
growth
- Production and distribution costs must decrease as sales volume increases
- The low price must help out the competition, and the penetration price must maintain its
low-price position

Why there are a few competitors in the market when a company applies market-penetration
pricing?

- Barrier to entry: the low price point can act as a barrier to entry for potential
competitors. It becomes challenging for new entrants to compete on price without
sustaining significant losses.
- Volume over margin: companies using penetration pricing are focusing on volume
over profit margins. Not all companies are willing or able to make this trade-off
- Economies of scale
- Temporary advantage: the low pricing may be temporary, just long enough to
discourage competitors. Once the company has secured a substantial market share,
it may increase prices.

4.2. Product mix pricing strategies

Product line pricing

- Setting the price steps between various products in a product line based on cost
differences between the products, customer evaluations of different features

Optional product pricing

- The pricing of optional or accessory products along with a main product

Captive product pricing

- Set prices of products that must be used along with the main product

By-product pricing

- Producing products and services often generates by-products

- The company seeks a market

Product bundle pricing

Chapter 10:

1. Marketing channels
- Marketing channel (distribution channel) is a set of interdependent organizations that help
make a product or service available for use or consumption by the consumer or business
user.
Chapter 11:

1. Integrated marketing communication

The new marketing communications landscape:

- Consumers are better informed

- Less mass marketing
- Advances in communications technology
- Content marketing: creating, inspiring, and sharing brand messages and conversations
with and among consumers across a fluid mix of paid, owned, earned, and shared
channels

Paid media: (paod

for by the
marketer) Owned
Including
traditional media
and online media
media

Integrated marketing communications (IMC) involves carefully integrating and coordinating

the company’s many communication channels to deliver a clear, consistent, and compelling
messages about the organization and its products
Communication process

Steps in Developing effective marketing communication

- Identify the target audience

- Determine the communication objectives
- Design a message
- Choose the media to send the message
- Select message source and collect feedback

Designing a message (A.I.D.A model)

2. Promotion mix strategies

In commercial,