Marketing

Topic: Final Note-taking

Course: Marketing
Date: Winter September 2022
Professor/Speaker: Dr. Nariman Kandil

Questions Topics - Note-Taking:

Marketing Lecture One- Overview of Marketing

Marketing is a social and managerial process by which individuals and

organizations obtain what they need and want through creating and
exchanging values with each other.
What is marketing? Marketing- An organizational Function and a set of processes for
creating , capturing , communicating and delivering values to customers
and for managing costumers relationship in ways that benefit the
organisation and its stakeholders

Marketers need to understand the consumer's needs and wants and the
marketplace in which they operate - market research.
What are the four 1. Costumers needs & wants & demands
concepts of marketing ? 2. Market Offering
3. Costumer value & satisfaction
4. Exchanges and relationships

Needs:
• States of deprivation
• Physical—food, clothing, warmth, safety
• Social—belonging and affection
• Individual—knowledge and self-expression
Wants:
Form that human needs take as they are shaped by culture and individual
1- Costumers needs , personality
wants & demands: • Wants are shaped by one’s society and are described in terms of objects that
will satisfy those needs.
• For example, you need to write, for this your choice will be the best pen. For
write is your needs but the best brand of pen is your wants.
Demands:
• Are wants for specific products backed by ability and buying power
• Wants backed by money and willingness to spend the money become
demand.

Market Offerings - are some combination of products , services, or

experiences offered to a market to satisfy a need or want , more broadly market
offerings also include other entities such as persons, places , organization ,
2- Markets Offering: ideas, and information.
Market Myopia- is focusing only on existing wants , and losing sight of
underlying consumer needs.
(a lack of insight into what a business is doing for its customers.)

When the marketers balance between the expectations , setting them

3- Costumer value &
not too high and not to low then there will be in return costumer value
satisfaction
and satisfaction.
4- Exchanges and Exchange : Is the act of obtaining a desired object from someone by offering
relationships something in return ( giving money and information for a seller for example)

Marketing management is the art and science of choosing target markets and
building profitable relationships with them.
Define Marketing
-The marketing manager’s aim is to find, attract, keep, and grow target
Management :
customers by creating, delivering, and communicating superior customer
value.

Market segmentation refers to dividing the markets into segments of

Define Market Segment:
customers

Define Target Marketing Target marketing refers to which segments to go after

Demarketing is marketing to reduce demand temporarily or permanently; the

Define Demarketing:
aim is not to destroy demand but to reduce or shift it.

The value proposition is the set of benefits or values a company promises to

deliver to customers to satisfy their needs- how it will differentiate and position
Define Value
itself in the marketplace.
Preposition:
It is a statement that says why the costumer should buy your
product

Five Marketing Management Orientations:

1- Production Concept
What are the five
2- Product Concept
different marketing
3- Selling Concept
management orientation:
4- Marketing Concept
5- Social Marketing Concept

Production concept is the idea that consumers will favor products that are
available and highly affordable and that the organization should therefore focus
on improving production and distribution efficiency.
The idea that a company should make low cost products in large
What does production quantities rather than products that suit customers' particular
concept mean : needs for which they would pay more
✓It is useful in these situations; low labor costs, high production efficiency, and
mass distribution
✓It can lead to marketing myopia ( RISK ) (a lack of insight into what a
business is doing for its customers.)

Product concept is the idea that consumers will favor products that offer the
most quality, performance, and features. Organizations should therefore devote
What does product
its energy to making continuous product improvements.
concept mean ?
The main focus of product concept is maintaining high quality of
product
 ✓ Focus-
Product Concept -Delivering a quality product that would satisfy the
needs and wants of the costumers
Production Concept-producing goods in a bulk quantity and pushing it
into the market
✓ Means-
What is the difference
Production concept - Improving the quality of the goods and services
between production
continuously
concept and product
Product Concept - supply in bulk into the market to make it easily
concept?
available to the consumers
✓Ending-
Production concept - Earning profit by producing and delivering quality
products in the market.
Product Concept - Earning profit by manufacturing products at a mass
scale

Selling concept is the idea that consumers will not buy enough of the firm’s
products unless it undertakes a large scale selling and promotion effort. The
aim often is to sell what the company makes rather than making what the
What is selling concept? market wants ( Example insurance companies).
The idea that a company should sell the products that they have
already produced rather than creating and selling new products
that customers might want

Marketing concept is the idea that achieving organizational goals depends on

knowing the needs and wants of the target markets and delivering the desired
satisfactions better than competitors do.
-It starts with a well-defined market, focuses on customer needs, and
integrates all the marketing activities that affect customers.
What is the marketing
-The job is not to find the right customers for your product but to find the
concept
right products for your customers.
The marketing concept is the use of marketing data to focus on the
needs and wants of customers in order to develop marketing
strategies that not only satisfy the needs of the customers but also
the accomplish the goals of the organization.

Selling Concept - focuses on seller needs, holds costumers and businesses ,

What is the difference manufactures the product first ,sales volume oriented.
between selling concept Marketing Concept - Focuses on costumer needs, holds costumers and
and marketing concept? businesses, identifies the costumers first, costumer satisfaction with profit
oriented.

Societal marketing concept is the idea that a company should make good
marketing decisions by considering consumers’ wants, the company’s
What is social Marketing requirements, consumers’ long-term interests, and society’s long-run interests.
? Social marketing is an approach used to develop activities aimed at
changing or maintaining people's behaviour for the benefit of
individuals and society as a whole
 The marketing mix is the set of tools (four Ps) the firm uses to implement its
marketing strategy. It includes product, price, promotion, and place.
What does marketing -Product: To deliver on its value proposition, the firm must first create a need
mix mean ? and what satisfying market offering.
are the four P’s? Explain -Price: It must decide how much it will charge for the offering .
each. -Place: how it will make the offering available to target consumers
-Promotion: it must communicate with target customers about the offering and
persuade them of its merits

What is the integrated Integrated marketing program is a comprehensive plan that communicates
marketing program? and delivers the intended value to chosen customers.

Customer Relationship Management (CRM) is the overall process of building

What is costumer
and maintaining profitable customer relationships by delivering superior
relationship
customer value and satisfaction. It deals with all aspects of acquiring, keeping,
management ?what is
and growing customers.
customer perceived
1- Costumer Value- The difference between total customer value and total
value and costumer
customer cost • CPV=TCV-TCC
satisfaction?
2- Costumer Satisfaction- The extent to which a product’s perceived
performance matches a buyer’s expectations

lecture Two- Analyzing the Marketing Environment

The marketing environment includes the actors and forces outside marketing
What is the marketing
that affect marketing management’s ability to build and maintain successful
Environment :
relationships with customers

Microenvironment consists of the actors close to the company that affect its
What is ability to serve its customers, the company, suppliers, marketing intermediaries,
microenviroment? customer markets, competitors, and publics
External factors that are directly linked to the organization

The Five Actors in Microenviroment:

1. The Company -
2. The Consumers
3. Marketing intermediaries- Help the company to sell , promote, and
distribute products to final buyers, this is mostly related to the
What are the actors in distribution.
the marketing 4. Competitors- Firms must gain strategic advantage by positioning their
microenvironment ? offerings against competitors’ offerings
Explain each: 5. The Public - Any group that has an actual or potential interest in or
impact on an organization’s ability to achieve its objectives ( example;
the media publics, government publics, financial publics ( bank ,
investors etc.) citizen action public.
6. Suppliers - Provide the resources to produce the goods and services, ,
treated as partners to provide the costumers value.

Four Types of Marketing intermediaries :

What are the types of 1- Resellers
marketing 2- Marketing Agencies
intermediaries? 3- Physical distribution firms
4- Financial intermediaries

What is the difference Microenviroment : External factors that are directly linked to the organization-
between Suppliers, customers, competitors, financial intermediaries
microeviroment and Macroenviroment: External factors that affect the industry as a whole-
macroenviorment ? Demographics, economic, social culture, technological, political
 The Six actors in The Marketing Macroenviroment :
1. Nature
What are the actors in
2. Politics
the marketing
3. Economic
macroenviroment ?
4. Demographic
Explain each :
5. Technological
6. Cultural

Demography is the study of human populations in terms of size, density,

What is demography?
location, age, gender, race, occupation, education, diversity and others.

Generational marketing is a marketing approach that uses generational

What is generational
segmentation in marketing communication (not only by age, but by
marketing ?
characteristics of this generation).

What is an economic Economic environment consists of factors that affect consumer purchasing
environment ? power and spending patterns. Example (Inflation)

Value marketing is the difference between a prospective customer's evaluation

What is value marketing of the benefits and costs of one product when compared with others.
: centered on strategies that look to exceed the client's expectations
and fuel consumer loyalty to achieve customer success.

What is a green Green marketing: A strategic effort by firms to supply customers with
marketing: environmental friendly, sustainable merchandise and services.

Political environment consists of laws, government agencies, and pressure

What is a political
groups that influence or limit various organizations and individuals in a given
environment ?
society

Cultural environment is an important factor that should be analyzed while

What is a cultural
formulating company business strategies. If company is ignoring the customs,
environment ?
traditions, tastes and preferences and education, it can affect the business.

-Proactive: is defined by the use of analytics to determine the best direction

What are the two views for a marketing strategy before a plan is actually launched.
on responding ?Define -Reactive is one of the most widely used marketing approach that involves
proactive , and reactive? tactics being employed when opportunities or challenges arises. i.e.; it waits
for crisis to happen and then reacts.

lecture three- Consumer Behavior

The five Consumer Decision Process:

1. Need Recognition
What is the five
2. Information Research
consumer decision
3. Alternative Evaluation
Process?
4. Purchase
5. Post Purchase
 The Five Types Of Buying Decisions:
1. Limited Problem Solving - in this type of buying behavior, the consumer
is familiar with the product and various brands available but does not
have established brand preference.
-Buying situations in which a purchaser has had some previous
experience but is unfamiliar with suppliers, product options, prices
1. Habitual / Convenience Problem Solving - This occurs when the
What are the five types
consumer already has some experience of buying and using the product.
of buying decisions?
2. Extended Problem Solving - This occurs when the consumer is in an
Explain in detail each
unfamiliar product class and is not clear about what criteria to consider
one of them:
for buying
3. Variety Seeking Consumers often express satisfaction with their current
brand, but still engage in brand switching.
4. Impulsive Buying -an unplanned purchase by the consumer which is an
important part of the buying behavior.
-The tendency of a customer to buy goods and services without
planning in advance.

1- The Need Recognition:

-The beginning of the consumer decision process occurs when consumers
recognize they have an unsatisfied need and want to go from their actual
What are the two types
needy state to a different desired state.
of need recognition?
1- Functional Needs- it depends on the specific needs of the purchaser related
Explain each type:
to the performance of the product
2- Psychological Needs- relates to the personal gratification (pleasure)
consumers associate with products/services.

2- Information Researching :
What are the two types Internal Search of information- Based on his/ her knowledge about the
of information product or service gathered through the past experience
searching: explain each- External Research of information- Seeks information outside his/ her
knowledge

What are the factors

affecting consumer’s Perceived benefits vs perceived costs
research process?

5 types of risks associated with purchase decisions can

delay/discourage a purchase.
1. -Financial risk - : risk associated with a monetary outlay; includes the
initial cost of the purchase as well as the costs of using the item/service.
What are the 5 types of
2. -Performance risk the perceived danger inherent in a poorly performing
risks associated with
product.
purchase decisions can
3. -Psychological risk : the risk the way that consumers will feel that the
delay/discourage a
product/service does not convey the right message.
purchase.
4. -physiological/safety risk the actual harm if the product does not
perform properly.
5. - Social risk - fears that consumers suffer when they worry others might
not regard their purchases positively.
 3- Evaluation of alternatives:
1. Universal sets: All possible choices for a product/service.
Evaluation of
2. Retrieval sets: those brands or stores that can be readily brought forth
alternatives: attribute
from the memory.
sets- what are the three
3. Evoked sets: comprises the alternative brands or stores that the
sets , explain-
consumer states he or she would consider when making a purchase
decision.

What is an evaluation Evaluative Criteria consists of important attributes of product..e.g. selling

criteria ? price,material,etc

What is a determinant Determinant Attributes: to differentiate one brand from another (something
attribute ? special about this brand

What is the conversion

Conversion rate: % of the consumers who buy a product after viewing it
rate?

4- Post Purchase :
Costumer Satisfaction:
Post purchase costumer 1. Customer contact
satisfaction the five 2. Encourage feedback
example: 3. Provide money back guarantee
4. Build realistic expectations
5. Demonstrate correct product use

Cognitive dissonance: the consumer questions the appropriateness of a

What is Cognitive decision after being made.
dissonance: -Firm’s attempt to reduce dissonance by reinforcing the decision
-Thank you letters, congratulations letters, quality ratings

4 Factors Influencing the consumer decision process:

What are the Factors
1-Social Factors
Influencing the
2- Physiological Factors
Consumer Decision
3- Situational Factors
Process ?
4- Market Mix

Four physiological factors:

1. Motives
2. Learning- Learning: refers to a change in person’s thought process or
behavior that arises from experience and takes place throughout the
consumer decision process.
What are the four -Affects both attitudes and perceptions Affected by social experiences
physiological factors ? 1. Attitudes
explain each: -Behavioral: comprises of actions a person takes with regard to an issue at
hand.
-Cognitive: comprises of what a person believes to be true.
-Affective: what a person feels about this issue at hand (emotions).
1. Perception- the process by which people select, organize, interpret
information to form a meaningful picture of the world.
 Family
-Decision makers
-Influencers
Reference Groups
1. -Family
What are the three 2. -Friends
social factors? Explain 3. -Coworkers
each : 4. -Famous people
Culture
What do they do ?
Offer information
Provide rewards for specific purchasing behaviors
Enhance consumer’s self image

The three situational factors

1. Purchase Situation: Customers may be predisposed to purchase certain
products or services because of some underlying physiological traits or
What are the three
social factor.
situational factors?
2. Shopping Situation: Consumers might be ready to purchase a product
Explain each :
or services but be completely derailed once they are arrive in store.
3. Temporal state: Our state of mind at any particular time can alter our
preconceived notions of what we are going to purchase.

lecture Four- Developing Marketing Strategies

A marketing strategy identifies a firm's target markets and related marketing

What is a marketing
mix ( the four ps) and the bases on which the firm plans to build a sustainable
Strategy?
competitive advantage.

What is a sustainable A sustainable Competitive advantage is an advantage over the competition

competitive advantage? that is not easily copied and be maintained over a long period of time.

Macro Strategies for developing customer value:

1-Costumer Excellence- Focuses on retaining loyal customers and excellent
customer service.
Macro Strategies for
2-Operational Excellence - Achieved through efficient operations and excellent
developing customer
supply chain and human resource management.
value:
3-Product Excellence- Having products with high perceived value and effective
branding and positioning.
4- Location Excellence- having a good physical location ad internet presence.

Marketing plan is a written document composed of an analysis of the current

What is a marketing
marketing situation, opportunities and threats, marketing objectives and
plan?
strategy in terms of 4 Ps, action programs and projected income.

The three phases of a strategic plan:

Phase One- Planning Phase:
-where marketing executives and other top managers define the mission
and objectives of the business and evaluate the situation by assessing how
What are the three other players affect the firm
phases of a strategic Phase Two -Implementation:
plan? -Marketers identify and evaluate different opportunities by engaging in a
process known as segmentation, targeting, and positioning with help from
the 4 P’s
Phase Three-Control:
-managers evaluate the performance and take corrective actions
 Step 1- Define business mission & objectives
Step 2- Conduct situational Analysis *Swot
Step 3- Identify and evaluate opportunities
-Segmentation
1. Planning Phase -Targeting
2. Implementation -Positioning
Phase Step 4- Implementing Marketing Mix
3. Control Phase -Product
-Price
-Place
-Promotion
Step 5-Evaluate performance using marketing metrics

Step One: Defining the Mission and/or Vision-

-Mission Statement: a broad description of a firm’s objectives and the scope
of activities it plans to undertake: attempts to answer the questions; What
type of business is it? And what does it need to do to accomplish its goals?
-Marketing Objective: includes market share, revenues and profitbaility
targets, unit sales volume etc.
Step Two : Conduct a Situation Analysis Using SWOT
-After Developing its mission, a firm would perform a situation analysis using
a SWOT analysis that asses both the internal environment with regard to its
strength and weakness, and the external environments its oppurtunites and
Detailed steps threats.
Explanation Step Three- : Identifying and Evaluating
Opportunities Using STP
-Segmentation: the process of dividing the market into distinct groups of
customers where each individual group has similar needs, wants or
characteristics. A market segment consists of consumers who respond
similarly to a firms marketing efforts.
-Targeting: evaluating the attractiveness of various segments and then
deciding which to pursue as a market
-Positioning: Involves defining the marketing mix variables so that target
customers have a clear, distinct, desirable understanding of what the
product does or represents in comparison with competing goods
 Step Four: Implement Marketing Mix and Allocate
Resources
Step Five: Evaluate Performance and Make
Adjustments
- A metric is a measuring system that quantifies a trend, a dynamic or a
characteristic.
-They make it possible to compare results across regions, strategic business
units, product lines and time periods.
-The firm can determine why it achieved or did not achieve its performance
goals with the help of these metrics.
Performance objectives and matrics:
-Comparing a firm’s performance over time or to competing firms using
common financial metrics such as profits and sales
-Viewing the firm’s products as a portfolio; depending on the firm’s relative
performance, the profits from some products are used to fuel growth for
others
-Companies may compare its growth relative to a benchmark (e.g. Coke
may compare itself to Pepsi).
The metrics used to evaluate firm performance may vary according
to two factors:
(1) the level of organization at which the decision is made.
(2) the resources that the manager controls

Lecture Five- Segmentation, Targeting, and Positioning

(Segmentation)
Step 1- Establish strategy or objectives
Step2- Use segmentation methods
Segmentation Targeting (Targeting)
Positioning Process Step 3- Evaluate segment attractiveness
Step 4- Select the target market
(Positioning)
Step 5- Identify and develop a positioning strategy

Step 1- Establish strategy or objectives

Step 1- Establish -The segmentation strategy must be consistent with and derived from the
strategy or objectives firm's mission and objectives as well as its current situation - its strengths
weaknesses opportunities and threats.

Step 2- Use segmentation methods

-This step develops descriptions of the different segments. With this
information, firms can distinguish customer similarities within the segment and
dissimilarities across the segments.
-Marketers use geographic, demographics, psychographics, benefits, and
behavioral segmentation methods.
Step 2- Use Geographics Segmentation - the grouping of customers based on where they
segmentation methods live .
-Geographic segmentation is most useful for companies whose products
satisfy the needs that vary by region.
Demographic Segmentation - dividing groups according to easily measured
objective characteristics such as age, gender, income, and education.
Psychographic segmentation- means dividing the market into groups based on
social class, lifestyle, or personality characteristics.
 -Determining psychographics involves knowing and
understanding three components :
1-Self values- are goals in life, not just the goals one wants to accomplish in
a day. It is more related to the desires that drive how a person lives his life.
(Self respect-Self fulfillment).
2- Self- concept- is the image people ideally have of themselves.
3-Lifestyles- If values provide an end goal, and self-concept is the way one
sees oneself in the context of that goal, lifestyles of how we live our lives to
achieve our goals.

VALS Framework: Value and Lifestyle Survey

VALS is a phenomenographic tool developed by SRI Consulting Business
Intelligence that classifies consumers into eight segments: innovators, thinkers,
believers, achievers, strivers, experiencers, makers, or survivors.

Benifits- Focuses on the attributes that people seek in a good or service and the
benefits that they expect to receive from that good or service – Groups
consumers into segments based on what they want a product to do for them

Behavioral Segemenation
Segmenting involves grouping people based on their attitudes toward the
product or service. Some common behavioural measures include occasions and
loyalty.
Occasion segmentation is a type of behavioural segmentation based on when a
product or service is purchased or consumed.
Loyalty segmentation is the strategy of investing in initiatives to retain the firm's
most profitable customers.

Brand Loyality -
Segmenting consumers grouped according to the strength of brand loyalty felt
toward a product – Frequent flyer programs of airlines and many hotels

Lecture 6- Segmentation, Targeting, and Positioning

Step 3-Evaluate Segment Attractiveness

Segment Attractiveness:
1: Identifiable: Firms must be able to identify who is within their markets to be
able to design products to meet their needs.

2-Substantial: Once the firm has identified its potential target market, it needs
to measure their sides.
If the market is too small, its buying power is insignificant, and it won't
generate sufficient profits or be able to support the marketing mix activities.
Step 3-Evaluate
Segment Attractiveness 3-Reachable: The product or service cannot have any impact, no matter how
identifiable or substantial the target market is, if that market cannot be reached
through persuasive communications and product distribution.
The customer must know that the product or service exists.

4: Responsive: for the segmentation strategy to be successful, the customers in

the segment must react similarly and positively to the firm's offering.

5-Profitable: Marketers must also focus on their assessments of the potential

profitability of each segment, both current and future.
 Step 4: Selecting a Target Market
Targeting Strategies:
1. Differentiated: A strategy through which a firm targets several market
segments with a different offering for each.

2. Concentrated: A marketing strategy of selecting a single, primary target

market and focusing all energies on providing a product to fit that market’s
needs.
-allows entrepreneurs to employ their limited resources more efficiently.

Step 4: Selecting a Micromarketing, also known as "one-to-one," is an extreme form of

Target Market segmentation in which a product or service is tailored to an individual
customer's wants or needs.

4- Undifferentiated or mass marketing: A marketing strategy that a company

can use if the product or service is perceived to provide the same benefits to all
customers, eliminating the need to develop separate strategies for different
groups.As an example (sugar and salt),
-Focuses on the similarities of customer needs rather than differences; if
the products or services are expected to provide similar benefits to the
majority of consumers, there is simply no need to develop separate
strategies for different groups.

Step 5: Identify and Develop Positioning Strategy

Positioning Strategy:
1-Value: It is an important positioning method because the relationship
between price and quality is among the most important considerations for
customers when they make a purchasing decision.

2-Salient Attribute: Focus on the attributes that are most important to the
target market.

Step 5: Identify and 3-Symbols: They can be used as a positioning tool in that they create a position
Develop Positioning for the brand that distinguishes it from the competition.
Strategy
4: Competition: Firms can choose to position their products or services against
a specific competitor or an overall product or service classification.
Steps of Implementing Positioning Strategies
1. Determine consumers’ perceptions and evaluations of the product or
service in relation to competitors’
2-Identify competitors’ positions.
3-Determine consumer preferences.
4-Select the position
5-Monitor the positioning strategy.

Lecture 7 - Chapter Twelve Developing New Products

 What is a Product?
A product is anything that can be offered to a market to satisfy needs and wants.
New Product -
A New product is any product that is perceived by the customer as being new.
New Product Categories-
Product 1- New to the world
2- New to the product lines
3- Additions to the existing product line
4- Improvements & revisions of existing products.
5- Repositioning
6- Cost Reduction

Brand repositioning strategy

Brand repositioning strategy is not a complete remake of your company’s
identity — it’s a calculated adjustment.
You’re aiming to update your brand’s status, associations, personality, or core
message while retaining a continuous, recognizable identity
Repositioning When a company changes the status of a brand in the marketplace but
maintains its identity at the same time
It offers a new path when:
1-Growth has delayed or stopped
2- Competitors are taking the lead
3- Customers aren’t connecting with your company like they used to.

Innovation :
Innovation: is the process by which ideas are transformed into new products
Innovation and services that will help the firms grow.
-New market offerings provide value to the firms as well as to the
customers.

Innovation & Value-

1- Changing Costumers needs
2- Market Saturation
Innovation and Value
3- Managing Risks through Diversity
4- Fashion Cycles
5- Improving Business Relationships

Changing Customer Needs-

When firms add products, and services to their offerings, firms can
create and deliver value more effectively by satisfying the changing
1- Changing Costumers needs of their current and new customers.
needs Or by keeping customers from getting bored with the current
product or service.
Sometimes, companies can identify problems and develop products
that customers never need they needed.

Market Saturation -
The longer a product exists in the marketplace, the more likely is that
the market will be saturated.
2- Market Saturation Without new products or services, the value of the firm will
ultimately decline.
In some cases, saturated markets can also offer opportunities for a
company that is willing to adopt a new process or mentality.
3- Managing Risks
through Diversity

Fashion Cycles:
In industries that rely on fashion trends and experience short
4- Fashion Cycles
product life cycles including books, arts, apparel, and software
markets.

Improving Business Relationships :

5- Improving Business
New products do not always target end consumers; sometimes they
Relationships
function to improve the relationships with the suppliers.

What is the diffusion of Innovation?

-The process by which the use of an innovation spreads throughout a
market group over time and across categories of adopters.
Diffusion Of Innovation
Pioneers or breakthroughs establish completely new markets or
radically change competition and consumer preferences.
Pioneers have the advantage of being first movers.

Lecture Eight - Chapter Twelve Developing New Products

Why new products might fail?

Why new products 1- Neglecting to do appropriate product testing.
might fail? 2- Targeting the wrong segment
3- Poor Positioning
 What are the Five types of Purchasers?
1- Innovators
2- Early Adaptors
3- Early Majority
4- Late Majority
5-Laggards

Five types of Purchasers

:

Innovators: are those buyers who want to be the first to have a new
product/service.
Innovators are usually risk-takers and are regarded as highly
knowledgeable.
Innovators represent 2.5% of the total market of a new
Innovators product/service
Innovators are crucial to the success of any new product or service, because:
Help the product gain market acceptance, through, spreading
positive word of mouth about the new product.
They prove instrumental (practically) in bringing in the next adopter
category which is known as an early adopter.

Early adopters: they are the second subgroup that begins to use a
product/service.
They are not as risk takers as the innovators do, they wait and
purchase the product after careful review.
Early Adaptors
Early adopters tend to enjoy the novelty and are often regarded as
opinion leaders
They represent 13.5% of the market and they are crucial to bringing
the other 3 buyer categories to the market.

Early majority: A group of consumers in the diffusion of innovation that

represents approximately 34% of the population; members don’t like to take
much risk and therefore, tend to wait until bugs are worked out of a particular
product/service.
Early Majority
Few new products can be profitable until this large group buys them
A note: When the early majority enters the market, the number of competitors
in the marketplace usually also reached its peak, so those buyers have many
price and quality choices.

Late majority: The last group of consumers to enter a new product market
representing approximately 34% of the population; when they do, the product
Late Majority
has achieved its full market potential and the sales tend to level off or may be in
decline.
 Laggards: are consumers representing approximately 16% of the population
who like to avoid change and rely on traditional products until they are no
Laggards
longer available
Sometimes, laggards never adopt a product or service.

1- Penetration pricing:
refers to a pricing technique where a new product is introduced to
the market at a low price to make market penetration easier.
In other words, pricing strategy is where the price of a product is
initially set low to rapidly reach a wide fraction of the market and
initiate word of mouth.

-Objectives- Aims to penetrate the market easily

-Sales Quantity- Achieves bulk of sales dues to low prices
The Two Pricing -Type of new products- Products that has little/no competitions
Strategies
When to use Penetration strategy:
The brand is introducing a new product in the market that is also
provided by other brands. The lower price lures consumers to the
new product.
When a brand is looking to increase revenue over a short period. A
lower price often makes consumers make purchases, even when they
were unplanned.
When a brand wants to restrict new entrants offering similar
products in the market.

1- Advantages of penetration pricing:

The lower prices help the demand grow faster
Brand awareness grows faster
Customer base and market share grow faster
Advantages & Brands get to attract the price-sensitive customers
Disadvantages of
penetration pricing 2-Disadvantages of penetration pricing:
It can easily cause price wars
Lowering the price may give the perception of a lower-quality
product
Decreased profits in the introductory phase

Skimming Pricing Strategy - Refers to a pricing strategy where high markups

are charged for a new product, hence the high price
Skimming Pricing objective- Aims to skim the market via the introduction of new
Strategies: products.
Sales Quantity - Achieves small sales due to high profits
Type of new products - Products that have no competition.

The Diffusion of Innovation Theory-

Factors affecting product diffusion :
The Diffusion of 1- Relative Advantage
Innovation Theory 2- Compatability
3- Observability
4- Complexity & Triability

Relative advantage: If a product/service is perceived to be better than

Relative Advantage
substitutes, then the diffusion will be relatively quick.
 Compatibility: A diffusion process may be faster or slower, depending on
Compatibility
various consumer features (needs), including international cultural differences.

Observability: When products are easily observed, their benefits or uses are
Observability
easily communicated to others, which facilitates the diffusion process.

Complexity and Trialability:

Products that are relatively less complex are also relatively easy to try.
Complexability &
These products will generally diffuse more quickly and lead to
Triability
greater and faster adoption than those that are not easy to try.
Example testing samples for this new product.

Lecture 9: Developing New Products

what is product Product development is the process of building a new product, from forming
development? ideas all the way through launch.

How do firms develop new products?

1- Idea Generation (ideation) - development of viable new product ideas
2- Concept testing- testing the new product idea among a set of potential
costumers
How do firms develop
3-Product development - development of the prototypes or the product
new products?
4- Market Testing - testing the actual products in a few testing markets
5-Product Launch - Full-scale commercialization of the product
6- Evaluation of results - analysis of the performance of the new product and
making appropriate modifications

Sources of New Product Ideas-

1. Internal R&D
2. R&D consortia
1- Idea Generation 3. Licensing
(ideation) - 4. Brainstorming
5. Outsourcing
6. Competitors products
7. Customer input

Internal R&D
Internal R&D is an activity of the company whereby it sets up and fulfills a
research project within itself.
The product development costs for firms are very high, but the resulting
new product or service is expected to have a good chance of being a
technological or market breakthrough.
A breakthroughproduct IS every invention or innovative product
creation.
Firms expect such products to generate enough revenue and profit to
1-Internal R&D make the cost of R&D worthwhile.
R&D investments generally are considered continuous investments, so
firms may lose money on a few new products.
In the long run, firms are betting that a few extremely successful new
products are known as blockbusters.
Blockbusters can generate enough revenues and profits to cover the
losses from other introductions that might not fare so well.
Reverse Innovation Strategy- is a strategy of innovating in emerging (or
developing) markets and then distributing/marketing these innovations in
developed markets.
 R&D Consortia
The R&D Consortium - is a group of firms and institutions, possibly including
government and educational institutions, that explore new ideas or obtain
solutions for developing new products.
The R&D Consortium is about bringing together organizations with
problems to be solved and technology companies that can develop
2-R&D Consortia and implement the most innovative solutions, leveraging emerging
technology.
Firms join together to form research consortiums to explore new ideas or
obtain solutions for developing new products.
One of the main benefits that the R&D Consortium is that it has lower
costs and risks
Example: Pharmaceutical industry research

Licensing
A Licensing Agreement - a method used in developing new products in which
a firm buys the rights to use a technology or idea from another firm.
3- Licensing
is when Firms purchase the rights to use technology or ideas from
other research-intensive firms.
This approach saves the high cost of internal ( in-house).

Brainstorming
Brainstorming -are sessions during which a Group works together to generate
ideas.
One of the key characteristics of brainstorming is No idea is immediately
4- Brainstorming
accepted or dismissed.
At the end of the session, the members vote on the best idea or
combination of ideas. Those ideas that receive the most votes are carried
forward to the next stage of the product development process.

Outsourcing
Outsourcing - a practice in which the client firm hires an outside firm to
facilitate some aspects of its business. In the context of new product
development, the outsourced firm helps its client develop new products or
services.
5- Outsourcing
A practice in which hiring an outside firm to help generate ideas and
develop new products and services
Design firms help clients generate new product and service ideas in
industries such as health care, toys, and computers.

Competitors products
A new product entry by a competitor may trigger a market opportunity for a
firm, which can use reverse engineering to understand the competitor's product
and then bring an improved version to the market.

6- Competitors products Reverse engineering -Taking apart a competitor’s product,

analyzing it, and creating an improved product that does not violate
the competitor’s patents, if any exist.
is the act of analyzing an existing system, process, or structure and
using the knowledge gained from that analysis to recreate a
duplicate or similar system
 Costumer Input:
listening to costumers in both B2B and B2C markets is essential for sucessful
idea generation and throuht the product development process.
costumers for B2B products are relatively few , therefore firms can follow
their use of the products closely , and request suggestions and ideas to
improve these products , eiher by using formal approach , such as:
focus groups
interveiws
7- Customer input
surveys
Costumers in B2C markets come from a variety of sources , though
increasingly through social media, by monitoring online feedbacks
Lead users: innovative product users who change existing products according
to their own specific needs.
If lead users costumize a firm's products other costumers might wish
to do so as well , theregore studying lead users helps the firms
undertsnad general market trends that might be just on the horizon.

Concept testing is the proces in which a concept statment that descibes a

product or a service is presented to potential buyers or users to obtain their
reaction.
these reaction enable the developer to estimate the sales value of the
product or sales concept , mainly to make changes to enhance its sales
value , and determine whether the idea is worth further development .
2- Concept testing-
if the concept fails to meet costumer's expectations , it is doubtful it
would succeed if it were to be produced and markteted
it occurs very early in the new product introduction phase.
A concept is a brief written description of the product, its technology, working
principals, what customer needs it would satisfy. A concept includes visual
images about what the product would look like.

Product development ( product design) entails a process of balancing various

engineering , manufacturing, markting , and economic considerations to
develop a products form and features or a service's features.
an engineering team develops a product prototype that is based on
research findings from the previous concepts testing step as well as their
own knowledge about material and technology.
Prototype- the first physical form of a service describtion of a new product , still
in rough or tentative form , that has the same properties as a new product , but
is produced through diffrent manufacturing processes , sometimes even crafted
individually.
Prototype products are usually tested through alpha and beta testings.
3-Product development
Alpha testing- an attempt by the firm to determine whether a product will
perform according to its design and whether it satisfies the need for which it
was intended , occurs in the firms research and development department
Alpha testing is the first end-to-end testing of a product to ensure it
meets the business requirements and functions correctly
Beta Testing-having potential costumers examine a product prototype in a real-
use setting to determine its functionability , performance , potential problems
and other issues specific to its use.
Beta testing is an opportunity for real users to use a product in a
production environment to uncover any bugs or issues before a
general release
 Market Testing -
The firm now has devloped its new product or service nand tested the
prototypes , now it must test the market for the new product with a trial batch
Market Testing -
of products , these tests can take two forms :
1- Premarket testing
2- Test marketing

1-Premarket Testing
Firms conduct premarket tesing before they acctually bring the product or
service to the market to determine how many costumers will try then continue
to use the product or service, according to a small group of potential costumers .
One popular proprietary premarket test version is called Nielsen
BASES . during the test , potential costumers are exposed to the
marketing mix variable , such as advertising , then surveyed and then
1-Premarket Testing
given a sample of the product to try , after ythe costumers try the
product , they would be surveyed on whether they would try the buy
or use the product again .
this second survey provides an estimation of the propability of a
costumers repeat purchase, from these data , the frims generate a
sales estimate for the new product that enables it to decide whether
to introduce the product or not.

2-Test Marketing
Test marketing is a method of determining the success potential of a new
product ; it introduces the offering to a limited geograohical area prior to a
national launch.
Test marketing is a strong predictor of a product success because
the firm can study actual purchase behavior which is more reliable
than a stimulated test
a test marketing effort uses all elements of the marketing mix; it
2-Test Marketing includes promotions such as advertising and coupons
On the basis of the results of the test marketing, the firm can
estimate the demand of the entire market.
Test marketing is widely used by the fast food chains.
Test marketing costs more and takes longer than premarket tests
do, which may provide an advantage to the competitors that could
get a similar or better product to market first without test marketing.
For this reason, some firms might launch a new product without
extensive consumer testing and rely instead on intuitions.

5-Product Launch
If the market testing returns with positive results, the firm is ready to introduce
the product to the entire market.
This step requires tremendous financial resources and extensive
coordination of all aspects of the marketing mix.
If a new product launch is a failure, it may be difficult for the product
5-Product Launch and perhaps the firm to recover.
The firm confirms its target market(s), decides how the product will
be positioned, finalizes the remaining marketing mix variables
including the marketing budget for the first year.
Timing of the launch may be critical (example: the fashion products
are just launched before the season of the year for which they are
intended).
 6- Evaluation of results
After the product has been launched, marketers must undertake a critical post
launch review to determine whether the product and its launch were a success
or failure and what additional resources or changes to the marketing mix are
needed if any.
Firms can measure the success of new product by three interrelated
6- Evaluation of results factors
1- its satisfaction of technical requirments such as performance
2- costumer acceptance
3- its satisfaction of the firms financial requirments , such as
sales and profits
if the product is not performing sufficintly well , poor costumer acceptance will
result, which in turn leads to poor financial performance .

The product life cycle defines the stages that products move through as they
entr, get established in and ultimately leave th market place
therefore it offers marketers a starting point for their strategy planning.
lifecyle products pass through 4 stages
1- introduction - stage of the product life cycle when innovators start buying
the product
What is the product
2-growth - stage of the product life cycle when the product gains acceptance ,
lifecycle?
demand and sales increase , and competitors emerge i the product category.
3- maturity - stage of the product life cycle when industry sales reacg their
peak , so firms try to rejuvenate their products by adding new features or
repositioning them
4- decline - stage of the product lifecyle when sales decline and product
eventually exits the market.

Characteristics of
Different Stages of the
Product Life Cycle

Lecture 10&11- Integrated Marketing communication

 integrated marketing communication (IMC)
Each element of an integrated marketing communication startegy must have a
well defined purpose and support , and extend the message delivered by all the
other elements.
consumers will most likely not try another product unless they are aware of
tem , therefore marketers must consider how to communicate the value of
the product or service - or more specifically the value preposition - to the
target market .
integrated marketing A firm must develope a communication startegy to demostrate the value of the
communication (IMC) product.
integrated marketing communication - : Represents the
promotion dimension of the four Ps; encompasses a variety of
communication disciplines—general advertising, personal selling,
sales promotion, public relations, direct marketing, and electronic
media—in combination to provide clarity, consistency, and maximum
communicative impact
the integration of the channels provides the firm with the best means to
reach the target audience with the desired message.

The three elements of 1- Costumer focused

the integrated 2-Results- the evaluation of the results of the communication
marketing 3-Communication channels - the channels trhrough which the message is
communication communicated

Communicating with Consumers: The Communication Process

how communications go from the firm to the consumer and the factors
that affects the consumer precieves the message.
Communicating with
The communication process:
Consumers: The
1- The sender (firm)
Communication Process
2-The transmitter (encodes message)
3- Communication channel (media)
4-The reciever (consumer decodes message)

Sender: The firm from which an IMC message originates; the sender must be
clearly identified to the intended audience.
1- Sender (firm)
for example ; pepsi seeks to communicate in new ways with costumers , mainly
throug its packaging and promotion programs.

The transmitter: An agent or intermediary with which the sender works to

develop the marketing communications; for example, a firm’s creative
department or an advertising agency.
The sender works with a creative departement , whether in-house or with
a marketing agency , to develope marketing communication to highlight
the new beverage.
2-The transmitter
(encodes message) Encoding: The process of converting the sender’s ideas into a message which
could be verbal, visual or both. The most important aspect of encoding is not
what is sent but rather what is received.
Within coding, consumers must receive information that makes them
want to try the new emoji's, use Pepsi linked symbols to communicate
with their friends and continue to purchase new versions of the
beverages.
 Communication channel: is the medium-print, broadcast, the internet and so
3- Communication forth that carries the message (e.g., Tv, radio and various print advertisements).
channel (media) pepsi could transmit through television, radio , the various print
advertisments

The receiver: is the person who reads, hears or sees and processes the
information contained in the message and/or advertisement.
the sender wants the person that will be receiving will be the one
originally intended.
for instance, pepsi wants the message recieved, and decoded properly.
Decoding : the process by which the receiver interprets the sender’s message.

Noise- is any interference that stems from competing messages, a lack of clarity
in the message, or a flaw in the medium.-
4-The reciever it posses a problem for all communication channels, for example pepsi
(consumer decodes may choose to advertise in the newspaper that its target market does
message) not read, which means that the rate in which the message is recieved by
those whom its has relevance has been slowed consideraby. as we said
encoding iswhat the sender intends to say, and decoding is what the
reciever hears, therefore if theres diffrence between them , then it is
propably due to noise.

Feedback loop: allows the receiver to communicate with the sender and
thereby informs the sender whether the message was received and decoded
properly. Feedback can take many forms: a customer’s purchase of the item, a
complain or a compliment.

How Consumers Perceive Communication

Receivers decode messages diffrently , each reciever decodes a message in her
or his own way , which is not necessary what the messager intended
Senders adjust messages according to the medium and receivers’
traits depending on whether they want to communicate with
How Consumers suppliers, shareholders, customers, the general public or even
Perceive Communication specific segments of those groups.
Generally, IMC is not a straightforward process.
There is not always a direct link between a particular form of
marketing communications and a consumer’s purchase.
To create effective IMC programs, marketers must understand how
marketing communications work.

The AIDA Model (Think, feel and do model)

Clearly IMC is not a straightforward process. After being exposed to marketing
communications, consumers go through several steps before acttually buying or
taking some other actions.
AIDA Model- a common model of the series of mental stages
The AIDA Model (Think,
through which consumers move as a result of marketing
feel and do model)
communications; awarness leads to desire which leads to action.
1- Awarness
2-Intrest
3-Desire
4-Action
 1- Awarness
Senders first must gain the attention of the consumers.
Brand awareness: refers to a potential customer’s ability to recognize or recall
that the brand name is a particular type of retailer or a product/service.
There are several awareness methods as aided recall and top of mind
awareness:
1- Awarness Aided recall: when the consumers indicate that they know the brand
when the name is presented to them.
Top of mind awareness: the highest level of awareness occurs when
consumers mention a specific brand name first when they are asked
about a product/service.
High top of mind awareness means that the brand probably enters
the evoked set of brands.

2-Interest
After the customer is aware, they must be persuaded.
The customer must want to further investigate the product/service
Example: The ads’ message includes attributes that are of interest to
2-Interest
the target audience.
For instance, parents who want to sit down to a nice dinner with
their children, Disney increases interest in an upcoming tour in a
television show

3- Desire
3- Desire After the firm has piqued the interest of its target market , the goal of the IMC
messages should move the consumer from "i like it " to "i want it"

4- Action
The goal of any form of marketing communication is to drive the receiver to
actio.
4- Action As long as the message has caught costumer's attention and made them
intrested enough toconsider the product as a mean to satisfy a specific
desire of theirs , they likely will act on that intrest by either searching for
the product or making a purchase.

The Lagged effect

Sometimes consumer dont act immiditely after receiving a form of
marketing communication because of the lagged effect - a delayed
response to a marketing communication campaign.
The Lagged effect
it generally takes several exposures to a campaing before the costumer
fully procesess its message.
Measuring the effect of the current campaign becomes more difficult
because of the possible lagged respose to a previous one.

For any communication campaign to succeed , the firm must deliver the right
message to the right audience through the right media , with teh ultimate goal
of profiting from long-term costumer relationships rather than just short term
transactions.
Channels of an examples,: electronic media, advertising , direct marketing ,consumer, personal
Integrated selling , public relations, sales promotion.
Communication Strategy 1- Advertising
2-Public Relations (PR)
3-Personal Selling
4-Sales Promotions
5-Direct Marketing
 1- Advertising
Advertising is the most visible element of IMC. Advertising entails the
placement of annoncmenets and persusive messages in time or space
purchased in any of the mass media by business firms , nonprofit organizations,
governement agencies,and indivisuals who seek to inform/ and or persude
1- Advertising
members of a particular target market or audience about their product.
Advertising is extremely effective at creating awareness and generating
interest.
There are two types of advertising: Traditional (offline) as newspapers,
TV, magazines and online ones.

2-Public Relations (PR)

Public Relations are a set of techniques and strategies related to managing
how information about an individual or company is disseminated to the public,
and especially the media
2-Public Relations (PR) These set of techniques include building and maintaining a positive
image, handling unfavorable stories or events and maintaining
positive relationships with the media.
The benefits of PR: it is free, support advertising efforts and often
more credible.

Personal selling is a two way flow of communication between a buyer and a

seller that is designed to influence the buyer’s purchase decision.
Personal selling can take place in various setting ; face to face, video
teleconferecing, on the telephone , or over the internet .
personal selling represnets an important channel in many IMC
programs , espcially in business-to-business (B2B) settings
3-Personal Selling
Some products require the help of a salesperson
More expensive than other forms of promotion
Salespeople can add significant value, which makes the expense
worth it.
A two way flow of communication between a buyer and a seller that
is designed to influence the buyer’s purchase decision.

4-Sales Promotions
Sales promotions are special incentives or excitement building programs as
coupons, rebates , free samples and point of purchase displays, that encourages
4-Sales Promotions
the purchase of a product or service.
Can be used for both short-term and long-term objectives
Used in conjunction with other forms of IMC

5-Direct Marketing
The IMC channel that has received the greatest increase in aggregate spending
is direct marketing , or marketing that communicates directly with target
consumers to generate a response transaction.
Traditional direct marketing includes mail and catalogues sent
through mail, and also mobile marketing (one of the direct
5-Direct Marketing marketing techniques).
Traditional direct marketing includes mail and catalogs sent through
the mail; direct marketing also includes e-mails and mobile
marketing,
Direct marketing is easily personalizable.
Growth of databases has fueled the growth of direct marketing
New technologies have opened new direct marketing channels
 Measuring Success of Results of IMC efforts
Once the firm has decided how to set its budget for marketing communications
and its campaigns have been developed and implemented , it reaches a point
that must measure the success of the campaigns using various marketing
matrices.
when measuring IMC success , the firm should examine when and how
often consumers have been exposed to various marketing
communications. Specifically, the firm uses measures of frequency and
reach to gauge consumers exposure to marketing communications
Frequency-: Measure of how often the audience is exposed to a
Measuring Success of
communication within a specified period of time.
Results of IMC efforts
Reach-Measure of consumers’ exposure to marketing
communications; the percentage of the target population exposed
to a specific marketing communication, such as an advertisement, at
least once
Gross rating points (GRP)-used in advertising to measure the size
of an audience (or total amount of exposures) reached by a specific
media vehicle or schedule during a specific period of time.
(GRP=Reach x Frequency)
The purpose of the GRP metric is to measure impressions in relation to the
number of people in the audience for an advertising campaign.