PRINCIPLES OF MARKETING

Principle of Marketing Department – Marketing Faculty

Thuongmai University

12/08/2024 Principle of Marketing Department

 Contents
 Chapter 1: Introduction to marketing
 Chapter 2: Marketing environment
 Chapter 3: Information systems and marketing research
 Chapter 4: Customer behavior
 Chapter 5: Marketing strategy
 Chapter 6: Product policy
 Chapter 7: Pricing policy
 Chapter 8: Distribution policy
 Chapter 9: Marketing communication policy
 Chapter10: Development of marketing
Principle of Marketing Department
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 CHAPTER 1
INTRODUCTION TO MARKETING

1.1. Overview of marketing

1.2. Functions and roles of marketing
1.3. The marketing process
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 1.1. Overview of marketing

1.1.1. Scientific basis and history of marketing

development
1.1.2. Basic concepts of marketing

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 1.1.1. Scientific basis and history of
marketing development
 Scientific rationale of marketing theory
Social division of labor: Production - Consumption
 The result: Production conflicts with the market
 Competition in the market and the development of a
free business environment
 Marketing resolves the conflict between production
and consumption; increase competitiveness and
adaptability of enterprises.
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  The development of marketing

MKT 1.0 MKT 2.0 MKT 3.0 MKT 4.0 MKT 5.0
(1925) (1960) (2000) (2015) (2020)
• Focus on the • Focus on the • Focus on the • Focus on the • Technology
product customer human connecting for Human
• Supply << • Supply (Create value people Beings
Demand >Demand to (Community) • Developing
customers) • The demand AI artificial
• Fierce for quality intelligence
competition, and living technology
fast-growing standards to serve
technology grows humans
and
technology

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  The concept of marketing
 What is marketing?
 Marketing is engaging customers and managing profitable
customer relationships.
 Marketing is a process by which companies create value for
customers and build strong customer relationships to
capture value from customers in return. (P. Kotler et al, 2018)
 The twofold goal of marketing:
 Attract new customers by promising superior value.
 Keep and grow current customers by delivering value and
satisfaction.
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  The concept of marketing
Micro-marketing Macro-marketing
The performance of A social process that
activities that seek to directs an economy’s flow
accomplish an of goods and services to
organization’s objectives effectively match supply
by anticipating customer and demand and to meet
needs and directing the society’s objectives.
flow of need-satisfying
goods and services.
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 Implications of the concept of micro-marketing

 Applies to profit and nonprofit organizations.

 NOT just persuading customers to buy.
 Begins with customer needs and focuses on customer
satisfaction.
 Marketing activities - but it is a philosophy that guides
the whole business.
 Seeks to builds a relationship with the customer.

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 1.1.2. Basic concepts of marketing

 Customer needs, wants, and demands

 Market offerings
 Customer value and satisfaction expectations
 Exchanges and relationships
 Markets

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 Customer needs, wants, and demands

States of deprivation
Physical - food, clothing, warmth, safety
Needs Social - belonging and affection
Individual - knowledge and self-expression

Form that human needs take as they are

Wants shaped by culture and individual personality

Demands Human wants backed by buying power

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 1.1.2. Basic concepts of marketing

 Market offerings are some combination of

products, services, information, or experiences
offered to a market to satisfy a need or want.

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  Customer value and satisfaction
expectations

Customers
• Value and satisfaction

Marketers
• Set the right level of expectations
• Not too high or low
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  Customer value and satisfaction
expectations
 Customer-perceived value: The customer’s
evaluation of the difference between all the benefits
and all the costs of a market offering relative to
those of competing offers.
 Customer satisfaction: The extent to which a
product’s perceived performance matches a buyer’s
expectations.
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  Exchanges and relationships

Marketing occurs when people decide to satisfy their

needs and wants through exchange relationships.
 Exchange is the act of obtaining a desired object
from someone by offering something in return.
 Marketers create, maintain, and grow desirable
exchange relationships with target audiences
involving a product, service, idea, or other object.
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 1.1.2. Basic concepts of marketing

 Markets are the set of actual and potential buyers of

a product or service.

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 1.2. Functions and roles of marketing

1.2.1. Roles of marketing

1.2.2. Functions of marketing

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 1.2.1. Roles of marketing

✵ Connect your business to the

market.
✵ It is an important functional
Customer
part to help businesses
achieve their goals in the most
effective way.

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 1.2.2. Functions of marketing

• Adaptation
• Distribution
• Sales
• Support
• Risk
• Regulation, coordination

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  Adaptation
⮚ Product marketing: features, designs, models,
style,...
⮚ Market demand research: understand customer
requirements.
⮚ Consulting for the production department: providing
information about customer requirements for
products/services.

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  Distribution
⮚ Find out and select the most potential customers.
⮚ Guide customers to sign contracts, orders, etc.; Prepare for delivery.
⮚ Transport and guide customers to deliver products at the lowest cost,
suitable for customers.
⮚ Organize warehouse/store system.
⮚ Organize appropriate packaging and transportation activities.
⮚ Establish a system for moving goods, distribution methods, and
conditions for buying/selling and payment in the distribution channel.
⮚ Quickly detect and handle stagnation, bottlenecks and distribution
channel conflicts that may occur during the movement of products.

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  Sales

The most important function represents the quality of

operation of other functions:
Marketing research with customers.
Organizing logistics activities.
Set and control the selling price.
Organize advertising and sales promotion.
Selection of methods, technologies and technical qualifications
for negotiation and sales.
Decide on the selling power and organize the selling force.
Track and manage sales activities.
⮚ Organize the services before, during and after sales.
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  Support

Typify and classify products.

Commercial advertising.
Sales promotion.
Product support services.
Fairs/exhibitions.
Relations with the public and friends.
Organize trade and service credit activities.
Apply functional intermediaries.
• Organizing the market information system...
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  Risk

Make decisions without certainty on the basis of market

understanding and research.
Choice of behavior to strengthen forces and safe business solutions.
Establish many situational solutions to accept and handle risks.
Building insurance funds, complying with commercial insurance relations.
Adopt and strengthen competitive strategies.
Comply with activities within the limits of the enterprise's capacity.
Effective and quality marketing organization.
⮚ Perfecting market information technology and business intelligence.

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  Regulation, coordinate
⮚ The regulation between the functional departments of the
enterprise:
⮚ Regulating organizational order.
• Reconcile disputes and conflicts in the operation of business
functions.
⮚ Coordination within the organization and operation of the marketing
function of the enterprise:
⮚ Choosing a marketing mix.
⮚ Regulating the situation and taking advantage of opportunities.
• Combining functional marketing activities with operational marketing.
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 1.3. The marketing process

1.3.1. A simple model of the marketing process

1.3.2. An expanded model of the marketing process

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 1.3.1. A simple model of the marketing
process

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 1.3.2. An expanded model of the marketing process

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  Marketing process

 Understand the marketplace and customer needs and

wants
 Analyzing the marketing environment.
 Managing marketing information to gain customer
insights.
 Understanding consumer markets and buyer behavior.
 Understanding business markets and business buyer
behavior.

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  Marketing process

 Design a customer value – driven marketing strategy

 Targeting customers: Selecting customers to serve,
market segmentation and targeting.
 Designing customer values – decide on a value
proposition: differentiation and positioning.
 Planning marketing strategies.

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  Marketing process

 Construct an integrated marketing program that

delivers superior value
 Developing products and service plans, developing new
products and managing a product’s life cycle, building strong
brands.
 Understanding and capturing customer value; developing
pricing strategies.
 Delivering customer value; developing marketing channels.
 Engaging consumers and communicating customer value;
developing integrated
Principle marketing
of Marketing Departmentcommunication strategies.
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  Marketing process

 Engage customers, build profitable

relationships, and create customer satisfaction
 Customer relationship management: build engagement
and strong relationships with chosen customers.
 Partner relationship management: build strong
relationships with marketing partners.

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  Marketing process

 Capture value from customers to create

profits and customer equity
 Create satisfied, loyal customers
 Capture customer lifetime value
 Increase share of market and share of customer

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 CHAPTER 2
MARKETING ENVIRONMENT

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 MARKETING ENVIRONMENT

2.1. Overview of marketing enviroment

2.2. Macromarketing environment
2.3. Micromarketing environment

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 2.1.1. The concept of marketing environment

Marketing environment includes of the actors and forces

outside marketing that affect marketing management’s
ability to build and maintain successful relationships with
target customers. (P. Kotler et al, 2018)

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 2.1.1 The concept of marketing environment

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 2.1.2. The needs of studying marketing environment

• The marketing environment either creates conflict,

inhibits development and also creates motivation for
businesses.
• The forces of the marketing environment are always
fluctuating, requiring businesses to research, monitor
and predict.

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 2.2. Macromarketing environment

2.2.1. The demographic environment

2.2.2. The economic environment
2.2.3. The natural environment
2.2.4. The technological environment
2.2.5. The political and legal environment
2.2.6. The cultural and social environment

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 2.2. Macromarketing environment

The macroenvironment consists of broader forces

that affect the actors in the microenvironment.

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 2.2. Macromarketing environment

Major forces in the macromarketing environment

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 2.2.1. The demographic environment

Demography: The study of human populations in terms of size, density, location,

age, gender, race, occupation, and other statistics.
• The demographic environment is of major interest to marketers because it
involves people, and people make up markets.
• Marketers analyze changing age and family structures, geographic population
shifts, educational characteristics, and population diversity.
 Influencing the marketing activities of the business

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 2.2.1. The demographic environment

Demographic environment
• Changing age structure of the population: Baby boomers (1946-
1964), Generation X (1965-1980), Generation Y (Millennials or
echo boomers,1981-1996), Generation Z (1997-2009), Generation
Alpha (2010 – 2025)
• Generational marketing is important in segmenting people by
lifestyle of life state instead of age.

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 2.2.1. The demographic environment

More people:
Divorcing or separating
Choosing not to marry
Choosing to marry later
Marrying without intending to have children
Increased number of working women
Stay-at-home dads

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 2.2.2. The economic environment

Economic environment consists of factors that affect consumer purchasing

power and spending patterns.
• Industrial economies are richer markets.
• Subsistence economies consume most of their own agriculture and
industrial output.
• Changes in income.
• Value marketing involves ways to offer financially cautious buyers greater
value - the right combination of quality and service at a fair price.
 Influencing the marketing activities of the business

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 2.2.2. The economic environment

How is the local or global economy influencing a company? –

Inflation rates, exchange rates and interest rates, unemployment
rates, disposable income of buyers, credit accessibility, the
monetary or fiscal policies, etc.
Economic factors can have a dramatic effect on consumer spending
and buying behavior.
 Influencing the marketing activities of the business

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 2.2.3. The natural environment

Natural environment involves the natural resources that are needed

as inputs by marketers.
• How is the environment influencing a company? - Geographical
location, the climate and weather, natural resources (renewable
resources, non-renewable resource), etc.
• At the most basic level, unexpected happenings in the physical
environment - anything from weather to natural disasters - can
affect companies and their marketing strategies.
 Influencing the marketing activities of the business
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 2.2.4. The technological environment

Forces that create new technologies, creating new product and

market opportunities.
• Most dramatic force in changing the marketplace
• Creates new products and opportunities, Safety of new product
always a concern
• Technology and innovations require heavy investments in
research and development.
 Influencing the marketing activities of the business

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 2.2.5. The political and legal environment

Consists of laws, government agencies, and pressure groups that influence or

limit various marketing activities.
Polotical institutions
Legislation regulating business
• Increased legislation
• Changing government agency enforcement
Increased emphasis on ethics
• Socially responsible behavior
• Cause-related marketing
 Influencing the marketing activities of the business
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 2.2.6. The cultural and social environment

Cultural environment consists of institutions and other forces that affect a society’s
basic values, perceptions, and behaviors.
Persistence of cultural values
• 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.
Social groups, trends, community lifestyles
 Influencing the marketing activities of the business

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 2.3. Micromarketing environment

2.3.1. The company

2.3.2. Suppliers
2.3.3. Marketing intermediaries
2.3.4. Competitors
2.3.5. Publics
2.3.6. Customers

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 2.3. Micromarketing environment
Microenvironment consists of the actors close to the company that affect its
ability to serve its customers. (P. Kotler et al, 2018)
Actors in the micro marketing environment

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 2.3.1. The company
The company
 Top management
 Finance
 R&D
 Purchasing
 Operations
 Accounting

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 2.3.2. Suppliers

Firms and individuals that provide the resources needed by the company and its
competitors to produce goods and services.
• Provide the resources to produce goods and services.
• Treated as partners to provide customer value
Including:
Raw materials, finished products, semi-finished products
Machinery and equipment, technological processes
Labor
Information
Other factors
 Influencing the marketing activities of the business

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 2.3.3 Marketing intermediaries

Help the company to promote, sell and distribute its products to final
buyers.
Types of marketing intermediaries:
• Resellers, Physical distribution firms
• Marketing services agencies
• Financial intermediaries
 Influencing the marketing activities of the business

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 2.3.4. Competitors

Enterprises or individuals that aim at the same customer that the

business is targeting.
• Competitor angles/types
• Competitive behaviour
 Models and methods of behaviour offered by opponents.
 Affecting the business marketing activities
Businesses must provide superior value and customer satisfaction
compared to their competitors.

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 2.3.5 Publics

Any group that has an actual or potential interest in or impact on an

organization’s ability to achieve its objectives.
 Financial publics
 Media publics
 Government publics
 Citizen-action publics
 Local publics
 General public
 Internal publics
 Influencing the marketing activities of the business
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 2.3.6 Customers

Including enterprises/ individuals that purchase/ consume products/

services of a company.
The company might target any or all of five types of customer markets:
• Consumer markets
• Business markets
• Reseller markets
• Government markets
• International markets
 Influencing the marketing activities of the business
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 CHAPTER 3
INFORMATION SYSTEMS AND
MARKETING RESEARCH

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 Structure

3.1. Marketing information systems

3.2. Marketing research

3.3. Marketing research process

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 3.1.1. Concept and roles of marketing
information
 The concept of marketing information
=> Marketing information refers to the data that helps
manager make marketing decisions, including the data
about the market and customer insights, business
resources and factors that impact their marketing
activities.

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 3.1.1. Concept and roles of marketing
information
 The roles of marketing information
• Making better marketing decisions based on
customer insights.
• Improving business operations.
• Creating business competitive advantages.
• Transforming business models: marketing
information data is a business asset.
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 Customer insights
Concept: Customer Insights are Fresh marketing information-based
understandings of customers and the marketplace that become the basis for
creating customer value, engagement, and relationships.
• Who is the customer?
• What problems is the customer trying to solve with a given purchase?
• What does the customer desire in the way of satisfaction?
• How does the customer get information about available choices?
• Where does the customer choose to purchase?
• Why does the customer buy, or not buy?
• When does the customer purchase?
• How does the customer go about seeking satisfaction in the market?
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 3.1.2. Concept and roles of marketing
information system

 Concept of marketing information system (MIS):

People and procedures dedicated to assessing
information needs, developing the needed
information, and helping decision makers to use the
information to generate and validate actionable
customer and market insights.

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 3.1.3. Structure of marketing
information system

 The roles of MIS

• Support the marketing management decision-
making process
• The foundation for creating customer value and
building customer relationships.

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 3.1.3. Structure of marketing
information system

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 3.1.3. Structure of marketing
information system
1. Assessing marketing information needs
• Meet the need of business managers
• Overview of marketing environment that provides information and insights.
• Assessing the cost
2. Developing needed information
• Internal marketing
• Marketing intelligence
• Marketing research
3. Analysing and using information
• Marketing analysis: statistic techniques and models
• Distribution and marketing information usage.
• Customer relationship management
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 3.2. Marketing research

3.2.1. Concept and roles of marketing research

3.2.2. Marketing research contents

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 3.2.1. Concept and roles of marketing
research
 Concept: Marketing research is the systematic design, collection, analysis
and reporting of data appropriate to the specific marketing situations of a
business.
 The roles of marketing research
• Reducing business risks.
• Searching for new opportunities, new markets.
• Providing information for strategic planning.
• Being a premise to support marketing solutions
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 3.2.2. Marketing research contents
1. Research characteristics and general measurements of the market
2. Customer research
3. Market segmentation research
4. Product research
5. Price research
6. Distribution research
7. Communication research
8. Competition research
9. Forecasting research

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 1/ Research characteristics and general measurements of the market

• Environmental research => situational analysis

• Collecting overall information about market size
• Geographical research, population distribution,
purchasing ability, market share…
• Researching market and industrial trends

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 2/ Customer research
• Identify the characteristics and classify potential
customers
• Research factors that impact customer behaviour
• Research customer buying process

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 3/ Market segmentation research
- Research market segmentation bases
- Research attractiveness and sell ability of market
segments…
4/ Product research
- Research on the structure of product-mix, product
life cycle, and new product development...
5/ Price research
- Research of the price elasticity of demand;
competitive price, price-quality correlation...
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 6/ Distribution research: types of distribution channels;
logistics; types of selling...
7/ Communication research: factors affecting
communication, the effectiveness of communication
tools...
8/ Competition research: Competitor identification;
competitive factors; Characteristics of competitors'
resources; Competitor goals and strategies...
9/ Forecasting research
- Sales forecast
- The enterprise development forecast
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 3.3. Marketing research process

Identify the problems and objectives

of marketing research

Develop a marketing research plan

Collect and analyse data

Report marketing research results

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 3.3.1. Identify the problems and
objectives of marketing research

 Identifying the marketing research problems.

 Identifying marketing research objectives
⇒ Marketing managers and researchers must work together
closely to define the problem and agree on research objectives.
⇒ Identifying the problem and research objectives is often the
hardest step in the research process.
⇒ The statement of the problem and research objectives guides
the entire research process.
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 3.3.2. Develop marketing research plan

No. Contents

1 Select data sources

2 Choose a research approach

3 Identify research tools

4 Selection of research sample

5 Choose a communication method

6 Implementation of research plan

7 Research timetable

8 Cost of research

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 3.3.2. Develop marketing research plan

1/ Select data sources

 Secondary data: Information that already exists
somewhere, having been collected for another
purpose.
 Primary data: Information collected for the specific
purpose at hand.

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 3.3.2. Develop marketing research plan

2/ Choose a research approach

⮚ Observation: Observational research gathering primary data by
observing relevant people, actions, and situations.
⮚ Survey: Survey research Gathering primary data by asking people
questions about their knowledge, attitudes, preferences, and buying
behaviour.
⮚ Experiment: 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.
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 3.3.2. Develop marketing research plan
3/Identify research tools
Questionnaire
- Definition
- The requirements of questionnaire construction
Content
Form
Word
Order of questions
-Types of questions
Closing questions
Open-ended questions
- Questionnaire preparation process
Research support tools
- Cameras, counters, other specialised equipment...
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 3.3.2. Develop marketing research plan

4/ Selection of research sample 6/ Implementation of research

- Sample size plan
- Sampling method - Self-study
5/ Choose a communication - Outsourcing
method - Coordinate
- Direct 7/ Research timetable
- By mail 8/ Cost of research
- By phone
- Online

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 3.3.3. Collect and analyse data
- Collect secondary and primary data
• Collect secondary data
• Collect primary data
- Analyse data

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 3.3.3. Collect and analyse data
⮚ Collect secondary data
1. Determining the data needed for the study
2. Exploiting the internal data source
3. Searching for external data sources
4. Gathering searched information
5. Evaluating data according to 03 criteria:
• Authenticity
• Relevance
• Validity
6. Shaping the collected data
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 3.3.3. Collect and analyse data
⮚ Collect primary data (Applied with interview method)
1. Determining research plans, interviews
2. Pre-appraisal and adjustment of interview projects
3. Searching for means and ways to improve interview
effectiveness
4. Selecting and training interview investigators
5. Conducting and supervising investigative activities
6. Testing and evaluating collected data
7. Shaping primary data
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 3.3.3. Collect and analyse data
 Analyse data
- Purpose: To draw conclusions and findings
- Some methods of data analysis
- Primary data processing process
Data value
Correction of acceptable answers
Encrypt answered questions
Import data into a machine or catalogue table
"Cleaning" the data apparatus
Data storage for analysis
Analyse data by target task
- Data processing software
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 3.3.4. Report marketing research results

 Form of report
- Written report
- Presentation
 Functions of the report
- As a means of organising data
- Reflecting the quality of the research
- Proposing solutions to research problems

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 Key contents
1. Issues relate to marketing information and MIS
2. The structure of M.I.S
3. Issues and types of marketing research
4. Research marketing objectives
5. Research marketing plan
6. Collect and analyse data
7. Presenting the research results

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 Some expansion
• Marketing Research in SMEs and NGOs
• International Marketing Research
• Disclosure Policy and Ethics in Marketing Research
• Today's marketing intelligence and big data

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 CHAPTER 4
CUSTOMER BEHAVIOR

4.1. Overview of market

4.2. Consumers behavior
4.3. Organizational behavior

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 4.1. Overview of marketing
4.1.1. The concept of market

What is the market?

Market is a set of actual potential buyers and suppliers
of a product that an enterprise has a business project in
relationship with marketing environment factors and sets
of other sellers - its competition

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  Market determining factors
1. What consumers buy?

2. Where they buy?

3. Why they buy?

Market determining
factors 4. How they buy?

5. How much to buy?

6. When they buy?

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 The core elements of market

Demands Supply

Markets

Price
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 The core elements of market
 Demands is the consumer's purchasing power demand for a
certain type of good that the consumer is ready to buy or will buy.
 Supply is a large organizational and operational system covering
the entire field of production and business to meet and satisfy
market demand.
 Price is the amount of money charged for a product or service, or
the sum of the values that customers exchange for the benefits of
having or using the product or service.
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 Market definition conceptual diagram
Total population The potential market
100%

40% The available market

20%
The qualified market
10% The target market
Potential market
5% The penetrated market

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 Market definition conceptual diagram
 Total population: the whole number of people or the population figure
 Potential market: those in the total population who have interest in
acquiring the product
 Available market: those in the potential market who have have income
and are close to the business's offering activities
 Qualified available market: those in the market who are interested,
have income, are close, and have the conditions to participate in the
business's offering activities
 Target market: the segment of the qualified market that the firm
decided to pursue
 Penetrated market: those in the target market who have purchased
the product
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 4.1.2. Modern marketing system model

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 4.1.3. Market classification
 Based on trading relationships between countries: domestic market,
world market
 Based on the level of socialization of the market: regional market, unified
national market
 Based on goods circulating in the market: business buyer market and
consumer market
 Based on the position and role of buyers and sellers: seller's market,
buyer's market
 Based on the correlation of the number of buyers and sellers in the
market: Monopolistic market, competition and mixed types between them

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 4.2. Consumers behavior
4.2.1. Concept and model of consumer behavior

 What is consumer behavior?

• Consumer market refers to all of the personal consumption
of final consumers.
• Consumer behavior refers to the buying behavior of final
consumers - individuals and households who buy goods
and services for personal consumption.

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  Model of Consumer Behavior

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 4.2.2. Characteristics affecting
consumer behavior

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 ⮚ 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 behaviors.
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 ⮚ Social factors

🏳 Reference group and social networks

• Group (reference group): Two or more people who
interact to accomplish individual or mutual goals.
• Word-of-mouth influence: The impact of the personal
words and recommendations of trusted friends, family,
associates, and other consumers on buying behavior.

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 🏳 Reference group and social networks

• Opinion leader (key opinion leader - KOL): A person

within a reference group who, because of special skills,
knowledge, personality, or other characteristics, exerts
social influence on others.
• Online social networks: Online social communities-
blogs, online social media, brand communities, and other
online forums-where people socialize or exchange
information and opinions.

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 ⮚ Social factors

🏳 Family: The family is the most important consumer

buying organization in society. Family members can
strongly influence buyer behavior. Husband, wife, and
children play different roles and influence on the purchase
of different products and services.

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 ⮚ Social factors

🏳 Roles and status: A person belongs to many groups:

family, clubs, organizations, online communities,... The
person’s position in each group can be defined in terms of
both role and status.
A role consists of the activities people are expected to
perform according to the people around them. Each role
carries a status reflecting the general esteem given to it
by society.

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 ⮚ Personal factors

🏳 Age and life stage: People change the goods and services
they buy over their lifetimes. Life-stage changes usually result
from demographics and life-changing events -marriage, having
children, purchasing a home, divorce, children going to college,
changes in personal income, moving out of the house, and
retirement.
🏳 Occupation: A person’s occupation affects the goods and
services bought. A company can even specialize in making
products needed by a given occupational group.

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  Personal factors

🏳 Economic situation: A person’s economic situation will affect

his or her store and product choices. Marketers watch trends in
spending, personal income, savings, and interest rates.
🏳 Lifestyle: A person’s pattern of living as expressed in his or
her activities, interests, and opinions.
🏳 Personality: The unique psychological characteristics that
distinguish a person or group. The idea is that brands also have
personalities, and consumers are likely to choose brands with
personalities that match their own.

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 ⮚ Psychological factors

🏳 Motivation: A person has many needs at any given

time. Motive (drive): A need that is sufficiently pressing
to direct the person to seek satisfaction of the need.
🏳 Perception: The process by which people select,
organize, and interpret information to form a meaningful
picture of the world.

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 ⮚ Psychological factors

Maslow’s Hierarchy of Needs

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 ⮚ Psychological factors

🏳 Learning: Changes in an individual’s behavior arising

from experience.
🏳 Belief: A descriptive thought that a person holds about
something.
🏳 Attitude: A person’s consistently favorable or
unfavorable evaluations, feelings, and tendencies toward
an object or idea.

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 4.2.3. Types of buying decision behavior
 Paticipants in consumer buying process: Initiator,
Influencer, Decider, Buyer, User
 Types of buying decision behavior

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 Paticipants in consumer buying process

 Initiator: is the person who first suggests purchasing a particular

product or service
 Influencer: is a person with opinions and advice that influences the
final decision.
 Decider: is the person who decides on any component of the
purchasing decision: when to buy, what to buy, how and where to
buy.
 Buyer: is the person who actually buys
 User: is a person who uses and consumes products and services.

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 Complex Buying Behavior
 Consumer buying behavior in situations characterized by
high consumer involvement in a purchase and significant
perceived differences among brands.
 Consumers may be highly involved when the product is
expensive, risky, purchased infrequently, and highly self-
expressive
 Marketers of high involvement products must understand the
information-gathering and evaluation behavior of high-
involvement consumers.
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 Dissonance-Reducing Buying Behavior
 Consumer buying behavior in situations characterized by
high involvement but few perceived differences among
brands.
 Consumer may respond primarily to a good price or
purchase convenience.
 To counter such dissonance, the marketer’s after-sale
communications should provide evidence and support to
help consumers feel good about their brand choices.

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 Habitual Buying Behavior
 Consumer buying behavior in situations characterized by low
consumer involvement and few significant perceived
differences among brands.
 Consumers appear to have low involvement with most low-
cost, frequently purchased products.
 Marketers often use price and sales promotions to promote
buying, they can add product features, varieties,
enhancements, or marketing content to differentiate their
brands from the rest of the pack and raise involvement.
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 Variety-Seeking Buying Behavior
 Consumer buying behavior in situations characterized by low consumer
involvement but significant perceived differences among brands.
 Consumers often do a lot of brand switching. Brand switching occurs for
the sake of variety rather than because of dissatisfaction or based on a
deep evaluation of product differences and merits.
 The market leader will try to encourage habitual buying behavior by
dominating shelf space, keeping shelves fully stocked, and running
frequent reminder advertising. Challenger firms will encourage variety
seeking by offering lower prices, special deals, coupons, free samples,
and advertising that presents reasons for trying something new

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 4.2.4. The buyer decision process

Need
recognition

Information
search
Evaluation of
alternatives Purchase
decision

Postpurchase
behavior

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 Need recognition (1)
 Need Recognition is the first stage of the buyer decision
process, in which the consumer recognizes a problem or need
triggered by:
 Internal Stimuli
 External Stimuli

=> Marketing response: understanding the circumstances that

promote consumer awareness:
 What problems arise?
 What makes it appear?
 What products do customers think of?
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 Information search (2)
 Information search is the stage of the buyer decision process in which
the consumer is motivated to search for more information.
 Sources of information:
 Personal sources (family, friends, neighbors, acquaintances),
 Commercial sources (advertising, salespeople, dealer and
manufacturer web and mobile sites, packaging,
displays)
 Public sources (mass media, consumer rating organizations,
social media, online searches and peer reviews),
 Experiential sources (examining and using the product)
=> Marketing response: Evaluate search patterns, roles and usage
Principle of Marketing Department
costs
12/08/2024of information sources => Appropriate marketing activities
 Evaluation of alternatives (3)

Evaluation of Alternatives is the stage of the buyer

decision process in which the consumer uses information
to evaluate alternative brands in the choice set.
=> Marketing response: Highlight quality and brand
advantages

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 Purchase decision (4)
 Purchase decision is the buyer’s decision about which
brand to purchase
 The purchase intention may not be the purchase
decision due to:
 Attitudes of others
 Unexpected situational factors
=> Marketing response: Limit negative impacts on decision-
making.
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 Postpurchase behavior (5)
 Postpurchase behavior is the stage of the buyer decision
process in which consumers take further action after purchase,
based on their satisfaction or dissatisfaction.
=> Marketing response: Marketers need to build a well customer
service system to follow-up and receive customer feedback to
improve products/services. Marketers need to generate the
satisfaction even when customers do not buy from the business,
using tools:
- Control information
- Customer care
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 4.3. Organizational behavior

4.3.1. Concept and model of business buyer behavior

 Concept of business buyer behavior
 Characteristics of business buyer
 Model of business buyer behavior

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 4.3. Organizational behavior

4.3.1. Concept and model of business buyer behavior

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. Also included are
retailing and wholesaling firms that acquire goods to resell
or rent to others for profit.

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 Characteristics of business buyer
⮚ Fewer and larger buyers
⮚ Geographic concentration
⮚ Derived demand
🏳 Inelastic demand
🏳 Fluctuating demand
⮚ Buyer and seller dependency
⮚ More decision participants
⮚ More professional purchasing effort

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 Model of business buyer behavior

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 4.3.2. The buyer decision process

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 (1) Problem Recognition
 Problem recognition can result from internal or external
stimuli.
 Internally, the company may decide to launch a new
product that requires new production equipment and
materials
 Externally, the buyer may get some new ideas at a trade
show, see an ad or website, or receive a call or email from
a salesperson who offers a better product or a lower price

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 (2) General Need Description
 Describes the characteristics
 Quantity of the needed item

(3) Product Specification

The stage of the business buying process in which the
buying organization decides on and specifies the best
technical product characteristics for a needed item.

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 (6) Supplier Selection
Analyze, compare, evaluate and select suppliers
(7) Order-routine specification
It includes the final order with the chosen supplier or suppliers
and lists items such as technical specifications, quantity needed,
expected delivery time, return policies, and warranties.
(8) Performance Review
The buyer assesses the performance of the supplier and decides
to continue, modify, or drop the arrangement.
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 Key contents
• Overviews of market
• Concept and model of consumer behavior
• Characteristics affecting consumer behavior
• Consumer buying decision process
• Model off business buyer behavior
• Business buyer decision process

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 CHAPTER 5
MARKETING STRATEGY

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 5.1. Overview of marketing strategy

5.1.1. Target marketing

5.1.2. Concept and content of marketing strategy
5.1.3. Types of marketing strategies

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 5.1.1. Target marketing

Target marketing is the decision to identify the different

groups that make up a market and to develop products
and marketing mixes for selected target markets.

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 5.1.1. Target marketing
Segmentation

Targeting

Positioning

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 5.1.1. Target marketing

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 Market segmentation

Market segmentation is the division of a market into

distinct groups of buyers who have distinct needs,
characteristics, or behavior, and who might require separate
products or marketing mixes.
Market segmentation is a group of consumers who
respond in a similar way to a given set of marketing efforts.

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 Market segmentation

Bases for segmenting: Market segmentation divides a

market into well-defined slices. The marketer’s task is to
identify the appropriate number and nature of market
segments and decide which one(s) to target. The major
segmentation variables: geographic, demographic,
psychographic, and behavioral segmentation.

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 Market segmentation

Geographic segmentation: nations, states, regions,

countries, cities,...
Demographic segmentation: age and life cycle stage,
family size, family life cycle, gender, income,
occupation, education, religion, race and culture,
generation, nationality, social class,...

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 Market segmentation
Psychographic segmentation: is the science of using
psychology and demographics to better understand
consumers. Buyers are divided into groups on the basis of
psychological/personality traits, lifestyle, or values.
Behavioral segmentation: knowledge of, attitude toward,
use of, or response to a product.

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 Targeting market

Evaluating Market Segments: Enterprises must look at

three factors: segment size and growth, segment
structural attractiveness, and company objectives and
resources.
Selecting Target Market Segments: After evaluating
different segments, the company must decide which and
how many segments it will target.

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 Market positioning
Market positioning is the arranging for a product to
occupy a clear, distinctive, and desirable place relative to
competing products in the minds of the target consumer.
The goal is to locate the brand in the minds of consumers to
maximize the potential benefit to the company.

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 Market positioning

product differentiation

Service differentiation

There are four

Personnel differentiation
main ways to
differentiate
Image differentiation
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 5.1.2. Concept and content of marketing
strategy

 Marketing strategy: The marketing logic by which

the company hopes to create customer value and
achieve profitable customer relationships. (P. Kotler &
G. Armstrong, 2019)
 The company decides which customers it will serve
(segmentation and targeting) and how (differentiation
and positioning).
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 5.1.2. Concept and content of marketing
strategy
 Marketing analysis: Analyze the marketing situation -
Use SWOT analysis: overall analysis of strengths,
weaknesses (resources), opportunities and threats.
 Strategic planning is the process of developing and
maintaining a strategic fit between the organization’s
goals and capabilities and its changing marketing
opportunities.
 Developing marketing activities: The process of
realizing Principle
marketing strategies
of Marketing and plans
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 Marketing - mix
 Marketing Mix is the set of controllable variables that
the firm can use to influence the buyer's response.

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 4Ps of Marketing - mix

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 Marketing - mix
 Product: Product characteristics and classifications; Service concept
and characteristics; Product life cycle; Service life cycle management;
Improve service quality; The brand; New product development.
 Price: Factors affect price decisions; Major pricing strategies (New-
product pricing strategies; Product mix pricing strategies; Price
adjustment strategies; Price changes).
 Place: Distribution systems; Channel design decisions; Channel
management decisions; Marketing logistics and supply chain
management; Retailing and wholesaling.
 Promotion/communication: Integrated marketing communications;
Communications process.
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 5.1.3. Types of marketing strategies

Market-Targeting Strategies

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 5.1.3. Types of marketing strategies
Undifferentiated Ignore market segment differences and
marketing go after the whole market with one offer

Differentiated Decide to target several market segments

marketing and designs separate offers for each

Concentrated Marketing Go after a large share of one

(niche marketing) or a few submarkets

Tailoring products and marketing programs to

Micromarketing
(Local marketing) suit the tastes of specific individuals and local
customersegments.
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 5.2. Marketing strategy process

5.2.1. Analyze the marketing strategy situation

5.2.2. Determine marketing strategy goals
5.2.3. Plan marketing strategy options
5.2.4. Choose a marketing strategy option

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 5.2.1. Analyze the marketing strategy
situation
 Type of marketing strategy situation
• Market situation
• Brand/Product situation
• Competitive situation
• Distribution/sales situation
• Macroenvironment situation
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 5.2.1. Analyze the marketing strategy situation

 Techniques for analyzing marketing stiuation

• SWOT
• TOWS
• BCG

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 SWOT analysis

(Source: Horn-Haacke)
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 BCG Matrix

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 5.2.2. Determine marketing strategy goals

 How to determine goals:

After conducting a SWOT analysis, enterprises can
establish objectives, develop specific goals for the
implementation plan. These goals must be specific in terms
of importance and time frame.

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 5.2.2. Determine marketing strategy goals

 How to determine goals: qualitative, quantitative

Enterprises entities establish these goals and then manage them
through the “Manage by Objectives” (MBO). For an MBO system to
operate effectively, the objectives of the business unit must meet the
following criteria:
1. They must be arranged in a hierarchical system from top to bottom
2. Objectives should be quantitative.
3. Objectives must be realistic.
4. Objectives must be consistent.
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 5.2.2. Determine marketing strategy goals

 Request
o Not to ambitious
o Have close relationship
o Hierarchy
o Feasibility and challenge
 Basic goals
o Profit
o Safety
o Power/Position
o Socialization
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 5.2.3. Plan marketing strategy options
Undifferentiated Core product, aim at the masses limited
marketing customers and enterprises

Differentiated Large market

marketing Enterprises have enough resources

Concentrated Enterprises have differences/ strengths,

marketing Go after different market sizes

Individual Enterprises have strengths in R&D

marketing Customers have different needs
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 5.2.3. Plan marketing strategy options

 Determine implementation plan

 Works need to be implemented
 Participants
 Proceed
 Implementation time

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 5.2.4. Choose a marketing strategy option

Choosing marketing strategy options

 Quality evaluation: Adaptation; Connection; Partial
advantages.
 Objective quantitative evaluation: evaluate data that
reflect the expected strategy outcome on a specific
market segment
Decide a marketing strategy option and prepare for
implementing the strategy.
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 Key contents

Marketing strategy: Definition and content

Targeting marketing: Definition and process
Types of marketing strategies
Market segmentation: Definition and Base for
segmenting
 Marketing strategy process

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 CHAPTER 6
PRODUCT POLICY

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 CHAPTER 6: PRODUCT POLICY

6.1. Overview of product

6.1.1. The concept of product
6.1.2. Product classification
6.1.3. Product lifecycle
6.2. Product policy
6.2.1. Concept and objectives of product policy
6.2.2. Contents of product policy
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 6.1. Overview of product

6.1.1. The concept of product

• Product
• Services
• Product items
• Product line
• Product mix

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 6.1. Overview of product

6.1.1. The concept of product

• Product: Anything that can be offered to a market
for attention, acquisition, use, or consumption that
might satisfy a want or need.
• Products also include services, events, persons,
places, organizations, and ideas or a mixture of
these.
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 6.1. Overview of product

6.1.1. The concept of product

 Service: An activity, benefit, or satisfaction offered for
sale that is essentially intangible and does not result in
the ownership of anything
⮚ Examples include banking, hotel, airline travel, retail,
wireless communication, and home-repair services

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 6.1. Overview of product
6.1.1. The concept of product
 Product items are various varieties offered within
product line, which are similar in one or other
ways. Varieties are based on quality, size, colour,
capacity, price, model, performance,...

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 6.1. Overview of product

6.1.1. The concept of product

A product line is a group of products that are
closely related because they function in a similar
manner, are sold to the same customer groups, are
marketed through the same types of outlets, or fall
within given price ranges.

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 6.1. Overview of product

6.1.1. The concept of product

A product line is a group of products that are
closely related because they function in a similar
manner, are sold to the same customer groups, are
marketed through the same types of outlets, or fall
within given price ranges.

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 6.1. Overview of product

6.1.1. The concept of product

Product mix: A product mix (or product
portfolio) consists of all the product lines and items
that a particular seller offers for sale

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 🕭 Levels of Product
Augmented product
Aftersale
service

Packaging
Design
Delivery Core
Core
Brand
and Customer
Customer Warranty
name
credit Value
Value
Features
Quality
level

Product
support
Core
Actual Product
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 6.1.2 Product classifications

Consumer products

Industrial products

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 Product classifications

• Consumer products are products and services for

personal consumption
• Classified by how consumers buy them
- Convenience products
- Shopping products
- Specialty products
- Unsought products
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 Product Classifications

Convenience products are consumer products and

services that the customer usually buys frequently,
immediately, and with a minimum comparison and buying
effort.
• Newspapers
• Candy
• Fast food

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 Product classifications

 Shopping products are consumer products and

services that the customer compares carefully on
suitability, quality, price, and style.
• Furniture
• Cars
• Appliances

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 Product classifications
 Specialty products are consumer products and
services with unique characteristics or brand
identification for which a significant group of buyers
is willing to make a special purchase effort
• Medical services
• Designer clothes
• High-end electronics

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 Product classifications
 Unsought products are consumer products that the
consumer does not know about or knows about but
does not normally think of buying.
• Life insurance
• Funeral services
• Blood donations

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 Principle of Marketing Department
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 🏵 Industrial product
 Materials and parts
🗶 Raw materials consist of farm products: wheat, cotton,
livestock, fruits, vegetables, etc.
🗶 Natural products: fish, lumber, crude petroleum, iron ore, etc.
 Capital items
🗶 Installations
🗶 Accessory equipment
 Supplies and services
🗶 Operating supplies and repair and maintenance items
🗶 Maintenance and repair services and business advisory
services.
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 6.1.3 Product life cycle concept
 Product life cycle: The course of a product’s/service’s
sales and profits over its lifetime.

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 Product/service life cycle concept

 Product/service life cycle stages:

• Introduction stage
• Growth stage
• Maturity stage
• Decline stage

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 ⮚ Introduction stage
New service or new form of current service is in the
introductory stage when offered first time.
Can be introduced on a small scale and expanded if
acceptance grows
Small scale introduction reduces financial risk
New services faces few or no direct competitors
Introductiony stage normally short
Strategy to ensure new service accepted by consumers is
to have users of current service participate in new service
design. Principle of Marketing Department
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 ⮚ Growth stage
• Industry growing rapidly
• Firms seeing positive cash flow
• Industry is expanding and demand is high – firms offering
service can normally increase their prices – higher margins
and greater profits.
• Thus more companies enter the market.
• Distinct market segments emerge
• Service providers need to develop a sustainable competitive
advantage.
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 ⮚ Maturity stage

• Sales level off.

• Competition becomes very intense – intense
competitive advantage required – results in overall
industry profits.
• Weaker companies will be shaken out of the industry.
• At this stage in service life cycle, consumers see very
few distinguishable characteristics among the various
companies in a service industry.
• Requires strong marketing program.
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 ⮚ Decline stage

• Industry sales decline – because of new technology

development
• Because of decrease in demand – many companies
delete the service reducing competition
• Cash flow and profit for companies throughout the
industry have declined.
• Companies with the services in decline part of life cycle
have five options: Divest, harvest, prune, reentrench or
rejuvenate.
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 Principle of Marketing Department
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 P.L.C. Research Implications
Sale
C

A B
0
Introduction Growth Maturity Decline Time

🏱 Helps marketers respond appropriately to customer needs and desires at

each stage in the life cycle.
🏱 To enhance the quality of marketing activities.
🏱 The basis for design and development of product lines, brands, styles, etc.
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 6.2. Content of Product Policy

6.2.1. Concept and objectives of product policy

6.2.2. Content of Product Policy
6.2.2.1 Product decision
6.2.2.2 Brand decision
6.2.2.3 New product decision

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 6.2.1. Concept and objectives of
product policy
Concept of Product policy:
Includes a combination of orientations, principles, and
guidelines for making decisions on product management of
enterprises.

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 The objectives of product policy
 Product policy objectives
- Improve the ability to sell, increase profits
- Ensure reputation, improve competitiveness
- Extend the product life cycle
 The role of product policy
- The foundation of the marketing strategy
- Conditions to achieve the goals of the marketing
strategy
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 6.2.2. The contents of product policy

6.2.2.1 Product decision

6.2.2.2 Brand decision
6.2.2.3 New product decision

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 6.2.2.1 Product Decisions
• Individual Product Decisions
• Product Line Decisions
• Product Mix Decisions

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 6.2.2.1 Product Decisions

Individual Product Decisions:

• Product attributes: Quality, Features, Style and design
• Branding
• Packaging
• Labeling and logo
• Product Support Services

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 6.2.2.1 Product Decisions
Individual Product Decisions:
- Product quality includes level and consistency
• Quality level is the level of quality that supports the
product’s positioning
• Conformance quality is the product’s freedom from
defects and consistency in delivering a targeted level of
performance

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 6.2.2.1 Product Decisions
Individual Product Decisions
- Product features are a competitive tool for
differentiating a product from competitors’ products
- Product features are assessed based on the
value to the customer versus the cost to the company

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 6.2.2.1 Product Decisions
Individual Product Decisions
Product attributes
• Style describes the appearance of the product
• Design contributes to a product’s usefulness as well
as to its looks

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 6.2.2.1 Product Decisions
Individual Product Decisions
Branding
- A brand is “a name, term, sign, symbol, or
design, or a combination of them, intended to
identify the goods or services of one seller or
group of sellers and to differentiate them
from those of competitors”
- Brand equity is the differential effect that the
brand name has on customer response to
the product and ofitsMarketing
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 6.2.2.1 Product Decisions
Individual Product Decisions
- Packaging: Packaging involves designing and producing
the container or wrapper for a product
- Labeling: Labels identify the product or brand, describe
attributes, and provide promotion

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 6.2.2.1 Product Decisions

Individual Product Decisions

• Packaging: involves designing and producing the
container or wrapper for a product
• Used as a marketing tool
❑ Self-service
❑ Consumer affluence
❑ Company and brand image
❑ Innovation opportunity
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 6.2.2.1 Product Decisions
Individual Product Decisions
⮚ Packaging
- Packaging objectives:
• Identify the brand
• Convey descriptive and persuasive information
• Facilitate product transportation, protection, and
storage
• Aid consumption
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 6.2.2.1 Product Decisions
Individual Product Decisions
⮚ Packaging
 Packaging decisions
• Packaging needs to comply with specific regulations and criteria when
designing and manufacturing.
• What is the role of packaging for products in marketing?
• Packaging decision aspects of designing: size, shape, material, color,
product information
• Packaging testing decisions: testing of technique, appearance, and
consumer acceptability.
• PackingPrinciple
decision aspects Department
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company's own benefits
 6.2.2.1 Product Decisions
Individual Product Decisions
 Labeling
- Labels identify the product or brand, describe attributes, and
provide promotion
- Functions of Labels
❑ Identify the product or brand.
❑ Grade the product
✔ Canned peaches are grade-labeled A, B, and C.
❑ Describe the product
✔ Who made it, where and when, what it contains,
how Department
Principle of Marketing it is to be used, and how to use it safely.
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 6.2.2.1 Product Decisions
Individual Product Decisions
⮚ Labeling
- The role of brand labels and logos:
• Support the brand’s positioning
• Add personality to the brand
- Note:
• Be careful when changing your brand logo
• Must ensure legality related to packaging
• Sellers must ensure that their labels contain all the
required information.
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 6.2.2.1 Product Decisions
Individual Product Decisions
⮚ Product Support Services
• Identify the service factors that customers require
and the responsiveness of the business.
• The quality level of services that businesses provide
to customers compared to competitors.
• Decide on the cost customers must pay
Form of service provision
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 6.2.2.1 Product Decisions
 Product Line Decisions
Product line is a group of products that are closely related
because they function in a similar manner, are sold to the
same customer groups, are marketed through the same
types of outlets, or fall within given price ranges

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 Product Line Analysis
Product line
A group of related products sold by the same company

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 6.2.2.1 Product Decisions
 Product Line Decisions
Product line length is the number of items in the product line
• Line stretching
• Line filling

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 12/08/2024

Product Line Length

• Line stretching
- Down-market stretch
- Up-market stretch
- Two-way stretch
• Line filling
• Line modernization
• Line featuring
• Line pruning
 6.2.2.1 Product Decisions
 Product Mix Decisions (portfolio)
Product mix consists of all the products and items that a particular
seller offers for sale.
• Establish 4 product mix dimensions: width, length, depth, and
consistency
• Limitation product portfolio: eliminate ineffective product
specialization.
• Modification product portfolio: changing products to satisfy
customers’ need.
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 12/08/2024

Product Portfolio Width and Product Line Length for

Procter & Gamble Products
 6.2.2. Decision brand
Brand strategy decisions

(Philip Kotler and G. Armstrong, 2018)

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 Brand strategy decisions
 Brand positioning (1)
 Produc attributes: The least desirable level for brand
positioning that competitors can easily copy. Customers
interested in what the attributes will do for them, not
attributes.
 Benefits: desirable benefits a brand can bring to customer.
E.g: FedEx: guaranteed on-time delivery, Instagram:
capturing and sharing moments,...
 Beliefs and values: The strongest way is positioned on
strong beliefs and values - engaging customers on a deep,
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emotional level.
 Brand strategy decisions
 Brand name selection (2)
• Name selection: begins with a careful review of
the product and its benefits, the target market, and
proposed marketing strategies.
• Naming a brand becomes part science, part art,
and a measure of instinct

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 Brand strategy decisions
 Brand name selection (2)
• Brand protection is the process and set of actions that
a right holder undertakes to prevent third parties from
using its intellectual property without permission, as this
may cause loss of revenue and, usually more
importantly, destroys brand equity, reputation and trust.
• Effective brand protection measures generally involve
implementing prevention processes, monitoring
processes, and reaction processes.
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 Brand strategy decisions
 Brand name selection (2)
Desirable qualities for a brand name include:
• Suggest something about the product’s benefits and qualities:
Slimfast, Snapchat, Pinterest,...
• Easy to pronounce, recognize, and remember: iPad, Twitter,...
• Distinctive name: Panera, Zappos,...
• Extendable: Amazon.com began as an online bookseller but can
be expanded into other categories.
• Translate easily into foreign languages.
• Capable of registration and legal protection.
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 Brand strategy decisions

 Brand sponsorship (3)

• Manufacturer’s brand
• Private brand
• Licensing
• Co-branding

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 Brand strategy decisions
 Brand development (4)

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 6.2.3 New product decision

- New product: A product that has achieved technical and

economic progress and is considered new by consumers,
better satisfying their needs.
- New product categories:
• Original new product
New and improved product
New prototype product

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 6.2.3. New product decision
Product development matrix – market

(Soure: Igor Ansoff, 1957)

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 6.2.3. New product decision
- Aim at developing new products for existing
markets or new products for new potential market
- Result:
• Consolidate current market
• Penetrate new segments of the current market
• Reach out to new markets

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 New product development process

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 Idea generation (1)
Idea generation is the systematic search for new product ideas.
Sources of new product ideas
 Internal sources refer to the company’s own formal research
and development, management and intrapreneurial programs
 External sources refer to sources outside the company such
as customers, employees, distributors, suppliers and outside
design firms
 Crowdsourcing involves inviting broad communities of
people customers, employees, independent scientists and
researchers and even the public at large into the new product
Principle
innovation of Marketing Department
process.
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 Idea screening (2)
 Identify good ideas and drop poor ideas
 R-W-W screening framework
• Is it real? Can the idea be feasibly implemented and produced?
• Can we win? Does the company have the capability to successfully bring
this product to market and compete?

• Is it worth doing? Does the potential benefit of pursuing this idea justify
the investment of resources?

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 Concept development and testing (3)

• Product idea is an idea for a possible product that the

company can see itself offering to the market.
• A product concept is a detailed version of the idea stated
in meaningful consumer terms.
• A product image is the way consumers perceive an
actual or potential product.
• Concept testing refers to testing new product concepts
with a group of target consumers
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 Marketing strategy development (4)
 Marketing strategy development is designing an initial
marketing strategy for a new product based on the product
concept. The strategy will guide how the product is positioned and marketed.
 Marketing strategy statement consists of
• Target market description - Defining the target customer segments for the
product.

• Value proposition planned - Determining the key benefits and value the
product will deliver to customers.

• Sales, market-share, and marketing-mix - Outlining the sales goals,

target market share, and the specific marketing tactics and mix (pricing, promotion, distribution,
etc.) to be used.
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 Business analysis (5)

 Business analysis involves a review of the sales,

costs, and profit projections for a new product to
find out whether these factors satisfy the company’s
objectives.

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 Product development (6)
 Product development is developing the product
concept into a physical product to ensure that the
product idea can be turned into a workable market
offering.

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 Test marketing (7)
 Test marketing is the stage of new product
development in which the product and its proposed
marketing program are tested in realistic market
settings.
Standard test markets
Controlled test markets
Simulated test markets
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 Commercialization (8)

 Commercialization involves introducing a new product

into the market.
• When to lauch?
• Where to lauch?
• Planned market rollout?

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 Key contents

1. Concepts
2. Product structure and product life cycle
3. Product decisions
4. Brand decisions
5. New product decision and stages of new product
development

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 CHAPTER 7
PRICING POLICY

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 CHAPTER 7: PRICING POLICY
7.1. Overview of price
7.1.1. The concept of price
7.1.2. Factors affecting price decisions
7.1.3. Pricing process
7.2. Pricing policy
7.2.1. Concept and objectives of pricing policy
7.2.3. Contents of pricing policy

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 7.1.1. The concept of Price

- Concept: Price is the amount of money charged for a

product or service. It is the sum of all the values that
consumers give up in order to gain the benefits of having or
using a product or service.
(Principles of marketing, 2021, p. 297)
- Price is the only element in the marketing mix that
produces revenue; all other elements represent costs

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 Reflecting the relative
power of selling Reflecting the
competitors comprehensiveness and
autonomy of enterprises
in the market

Trade Price - A derivative

benefit when demand
meets market supply and is Reflecting the
exchanged, is the monetary realism of your
value of the product that is business activities
incurred as the result of
market interaction between
seller and buyer. As an important
component of the
concept - Product’s
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 7.1.2. Factors affecting price decisions

External factors
Internal factors The nature of market
Pricing and demand
 Marketing objectives  Competition
 Marketing–mix strategy
 Cost
decisions  Other environment
factors
 Pricing
(Law,...)

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 7.1.3. Pricing process
Selecting the pricing objectives

Determining Estimating Analysing

demand cost competitors’ cost,
price and
offerings

Selecting a pricing method

Selecting a final price

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 7.1.3. Pricing process

 Step 1: Selecting the pricing objectives

🏳Before setting price, the company must decide on its overall
marketing strategy for the product or service.
🏳Pricing may play an important role in helping to accomplish
company objectives at many levels.
🏳Price decisions must be coordinated with product design,
distribution, and promotion decisions to form a consistent and
effective integrated marketing mix program.

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 7.1.3. Pricing process

Step 1: Selecting the pricing objectives

+ Survival Ensuring the company can continue operating and remain viable.
+ Maximum current profit Maximizing the company's profits in the short-term.
+ Maximum market share Gaining the largest possible share of the market.
+ Product – quality leadership Positioning the product or service as a
premium, high-quality offering.

+ Other objectives The company may have other specific goals it wants to achieve
through its pricing strategy, beyond the examples provided.

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 7.1.3. Pricing process

Step 2: Determining demand

 The price-demand relationship
 Each different price will lead to different levels of demand and have a different
impact on a company’s marketing objectives.
 Price and demand often have an inversely proportional relationship. However,
this relationship at different prices must be based on consumer acceptance.
 Consumer awareness
 Price & Value
 Effect of perception on purchase decision
 Other variables of the marketing-mix

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 7.1.3. Pricing process

Step 2: Determining demand

 Price elasticity of demand:
 The relationship between demand and price
• Marketers need to understand how demand will react to
price changes in demand-based elasticity (Ed).
• Price elasticity: A measure of the sensitivity of demand
to changes in price.
Ed
= 𝚫𝑸
𝚫𝑷
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 7.1.3. Pricing process
Step 2: Determining demand

Price
• Inelastic

P2
P1

Q2 Q1 Quantity
Price

• Elastic
P2
P1

Q2 Q1 Quantity

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 7.1.3. Pricing process
Step 2: Determining demand
 Determine the size of demand
 Number of potential buyers
 The expected consumption rate of potential buyers.
 Estimated sale volume.
 The economic strength (purchasing power) of potential consumers and
the allocation of their spending personal budgets.

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 7.1.3. Pricing process
Step 3: Analysing cost
 Types of cost

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  Types of cost
• Fixed costs are the costs that do not vary with production or sales
level.
Including: Rent, heat, interest, executive salaries…
• Variable costs are the costs that vary with the level of production.
Including: Packaging and raw materials.
 Total cost: The sum of the fixed and variable costs for any given level
of production.
Total cost = Fixed cost + variable cost

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 Break-even point: total revenue equals total costs
and profit is zero.

Increase
Profit Total revenue

Revenue, Cost
Total cost
Break-even point
Loss VCs
Fixed cost

FCs

0 Increase
Sales volume in unit
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 7.1.3. Pricing process
Step 4: Analysing competitors: cost, prices and offers
Within the range of possible prices identified by market demand and company costs,
the firm must take competitors’ costs, prices, and possible reactions into account.
 If the firm’s offer contains features not offered by the nearest competitor, it should
evaluate their worth to the customer and add that value to the competitor’s price.
This allows the firm to price its offering competitively while accounting for any unique
value it provides.
 If the competitor’s offer contains some features not offered by the firm, the firm
should subtract their value from its own price. This ensures the firm's price is
appropriately positioned relative to the competition.

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 7.1.3. Pricing process
Step 5: Selecting a pricing method
 Customer value-based pricing method: This approach sets the price based
on the perceived value and willingness to pay of the target customers, rather than simply
based on costs.
 Cost-based pricing method: This method sets the price by calculating the costs
of production and adding a desired profit margin.
 Competition-based pricing method: This approach sets the price in relation
to competitor prices, rather than strictly based on internal costs or customer value.

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  Customer value-based pricing

 Value-based pricing uses the buyers’ perceptions of value, not the

sellers cost, as the key to pricing. Price is considered before the
marketing program is set.
 Value-based pricing is customer-driven
 Good-value pricing: Offering just the right combination of quality and
good service at a fair price.
 Value-added pricing: Attaching value-added features and services to
differentiate a company’s offers and charging higher prices.

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  Cost-based pricing

Cost-based pricing involves setting

prices based on the costs for producing,
distributing, and selling the product plus
a fair rate of return for its effort and risk
Cost-based pricing adds a standard
markup to the cost of the product
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  Cost-based pricing

Break-even pricing is the price

at which total costs are equal
Increase
to total revenueProfit
Revenue, Cost
and there is Total revenue
Total cost

no profit LossBreak-even point VCs

Fixed cost

FCs

0 Increase
Sales volume in unit
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  Cost-based pricing
 Total costs are the sum of the fixed and
variable costs for any given level of
production
 Average cost is the cost associated with a
given level of output
 Average cost is the cost associated with a
given level of output
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 
Cost-plus
Cost-based pricing

pricing adds a
standard
markup to the
cost of the
Cost- Target profit
product
based
pricing pricing is the
price at which
the firm will
break even or
make the profit
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  Competition-based pricing

• Concept: Setting prices based on competitors’

strategies, prices, costs, and market offerings.
• Analysing the price and competitor reaction.
• Studying the correlation of the competitor’s price –
product quality.

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 7.1.3. Pricing process

Step 6: Choose a final price

 Foundation for choosing the final price
-Profit
-Demand
- Psychological valuation
- Pricing Policy
Setting the optimal price within the price range
Adaptation of prices: geographical valuation, form of
payment, differentiated valuation.
Principle of Marketing Department
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 7.2. Pricing policy

7.2.1. Concept and objectives of pricing

policy
7.2.2. Contents of pricing policy
1/ New product pricing
2/ Product-mix pricing

3/ Price adjustment strategies

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 7.2.1. The concept and objective of pricing policy

7.2.1.1. The concept of pricing policy

7.2.2.2. The objectives of pricing policy

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 7.2.1.1. The concept of pricing policy

Concept: is a collection of methods and rules that determine

the base price of a product and stipulate a range that allows
the change of the base price under certain conditions of
production and business activities in the market (Nguyen Thi
Nhu Liem, 1997)
The roles of price policy:
Create income and profit.
Affect the purchase decision.
 An effective tool to penetrate the market.
Principle of Marketing Department
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 7.2.1.2. The objectives of pricing policy

The objectives of pricing policy

????
Correspond
Correspondwith
withthe
theobjectives
objectives

$
of the marketing strategy
of the marketing strategy

???? Correspond
Correspondwith
product
with
productpolicy
policyobjectives
????
objectives

???? Correspond
Correspondwith
objectives
withcompetitive
competitive
objectives and pricevariability
and price variability

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 7.2.1.2 The objectives of pricing policy

 Specific objectives
 Financial target group
 Non-financial target group

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 7.2.2. The contents of pricing policy

1/ New product pricing

2/ Product-mix pricing policy
3/ Price adjustment policy

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 7.2.2. The contents of pricing policy

1/ New
product
pricing

Market- Market-
kimming penetration
pricing Pricing
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 Market- skimming pricing
Concept:
Setting a high price for a new product to skim maximum revenues layer by layer
from the segments willing to pay the high price; the company makes fewer but more
profitable sales. (p 318, 18th)

Conditions
🏳 Product quality and image must support the price.
🏳 Buyers must want the product at the price.
🏳 Costs of producing the product in small volume
should not cancel the advantage of higher prices.
🏳 Competitors should not be able to enter the
market easily.
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 Market- Penetration pricing
Concept:
Setting a lower price for a new product in order to
attract a large number of buyers and gain a large
market share.
Conditions:
Price-sensitive market.
Inverse relationship of production and distribution
cost to sales growth.
 Low prices must keep competitors out of market.

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 2/ Product - Mix Pricing Policy

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 Product line pricing

Concept
Setting the price steps between various
products in a product line based on cost
differences between the products, customer
evaluations of different features, and
competitors’ prices.

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 Product line pricing
Condition Honda Wave 2022 Suggested Retailer’s
retail price price

The price steps should take Wave Alpha 2022

(Standard)
17.890.000 20.900.000
into account cost differences
Wave Alpha 2022
between products in the line (Limited)
18.390.000 21.300.000

 The company should Wave RSX 2022 (

Mechanical 21.790.000 22.500.000
account for differences in Brakes)
customer perceptions of
Wave RSX 2022 (D
the value of different isc brakes)
22.790.000 23.500.00

features.
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 Optional- product pricing
Concept Feature

The pricing of optional or By-products charge low prices or no

prices to incentivise buyers but
accessory products must achieve the highest total profit.
along with a main
product. Pricing is difficult because the
company needs to decide which
items should be included in the
base price and which items guests
can be optional.

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 Optional-product pricing

Example. Condition
When buying a car, you By-products will often
can choose to add a charge lower prices
by-product such as when purchased
installing a camera
individually or compared
or navigation device.
to competitors to
- When buying a
encourage customers to
laptop, choose to
add a by-product that buy more
is antivirus software
or bundled services.
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 Captive-product pricing
Concept
 Captive-product pricing involves products that
must be used along with the main product.
 Two-part pricing involves breaking the price
into:
- Fixed fee
-Variable usage fee

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 Captive-product pricing

Example Condition
Blades for razor o Unique designs,
Ink for printers exclusive brands, or
- Park ticket prices distinct symbols that limit
and game ticket the scope of “authentic"
prices in the use
park.

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 By-product pricing
Concept
Setting a price for by-products to help offset the costs of
disposing of them and help make the main product’s price
more competitive.

Main • Sugar
Products
LAM SON
SUGAR
FACTORY –
THANH HOA

By-products • Input materials for

(bagasse) pulp production

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 Product bundle pricing

Concept:
Product bundle pricing combines several products at a reduced price.
Feature: The bundle/set price must be lower when purchasing
individually.
Conditions
The difference must be large enough to attract not only customers who
are likely to buy the whole package but also customers who do not
intend to buy the whole package.
Example
Cosmetics in set: cream, chalk, lipstick => cheaper than buying
individually.
Shampoo + conditioner + steaming oil
 Monthly bus fares vs. daily fares...
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 3/ Price Adjustment Policy
Discount
and Segmente Psychologic
allowance d pricing al pricing
pricing Geograph
Promotional ic Dynamic
pricing pricing
pricing
Internatio
nal pricing
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 3/ Price Adjustment Policy

Discount and allowance pricing reduces prices to

reward customer responses such as paying early or
promoting the product
 Discounts: A straight reduction in price on
purchases during a stated period of time or of larger
quantities.
 Allowances: Promotional money paid by
manufacturers to retailers in return for an
agreement to feature the manufacturer’s products in
some way.
 3/ Price Adjustment Policy

Segmented pricing
Concept: Selling a product or service at two or more
prices, where the difference in prices is not based on
differences in costs.
To be effective:
 Market must be segmentable.
 Segments must show different degrees of demand.
 The costs of segmenting and reaching the market
cannot exceed the extra revenue obtained from the
price difference.
 Must be legal.
 3/ Price Adjustment Policy
 Psychological pricing Pricing that
considers the psychology of prices
and not simply the economics; the
price is used to say something about
the product.
 Another aspect of psychological
pricing is reference prices - prices that
buyers carry in their minds and refer
to when looking at a given product
 3/ Price Adjustment Policy

Promotional pricing
Concept: Temporarily pricing product below the
list price or sometimes even below the cost to
increase short-run sales.
Forms
 Discount
 Special-event pricing
 Cash rebates
 Low-interest financing
 Longer warranties
 Free maintenance
 3/ Price Adjustment Policy

Risks of promotional pricing

 Used too frequently, and
copies by competitors can
create “deal-prone” customers
who will wait for promotions
and avoid buying at regular
price
 Creates price wars
 3/ Price Adjustment Policy
Geographical pricing
Concept: Geographical pricing is used for
customers in different parts of the country or
the world.
Forms
 FOB pricing
 Uniformed-delivery pricing
 Zone pricing
 Basing-point pricing
 Freight-absorption pricing
 3/ Price Adjustment Policy
Dynamic pricing: Adjusting prices continually to
meet the characteristics and needs of individual
customers and situations.
International pricing: Companies that market their
products internationally must decide what prices
to charge in different countries. They can set a
uniform worldwide price or adjust their prices to
reflect local market conditions and cost
considerations.
 Key contents
 Price concept and factors affecting
business prices
 Pricing Process
 Pricing methods
 New product pricing
 Product–mix pricing
 Price Adjustment Policy

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 CHAPTER 8
DISTRIBUTION POLICY

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 Topic outline

8.1. Overview of distribution

• 8.1.1. The concept of distribution
• 8.1.2. The concept of distribution channel

8.2. Distribution policy

• 8.2.1. Concept and objectives of distribution policy
• 8.2.2. Contents of distribution policy
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 8.1. Overview of distribution

8.1.1. The concept of distribution

Distribution in marketing is the activities that bring
products from production to consumption effectively,
satisfying the goals of buyers and sellers.

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 8.1. Overview of distribution

8.1.2. The concept of distribution channel

A set of interdependent organizations that help make a
product or service available for use or consumption by the
consumer or business user.

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 8.1.2. The concept of distribution channel

- Few producers sell goods directly to final users.

- Most use intermediaries to bring products to market 
They try to forge a distribution channel - a set of interdependent
organizations that help make a product or service available for
use or consumption by the consumer or business user.

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 8.1.2. The concept of distribution channel

 The nature and importance of distribution channels

- A company’s channel decisions directly affect every other
marketing decision.
- Pricing depends on whether the company works with
national discount chains, uses high-quality specialty stores,
or sells directly to consumers online.

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 8.1.2. The concept of distribution channel

 How a distributor reduces the number of channel transactions

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 8.1.2. The concept of distribution channel

 Members of the distribution channel’s key functions:

Information Promotion Contact

Physical
Matching Negotiation
distribution

Financing Risk Taking

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 8.1.2. The concept of distribution channel

 Members of the distribution channel’s key functions:

- Information: Gathering and distributing information about
consumers, producers, and other actors and forces in the marketing
environment - information needed to make effective manufacturing and
marketing decisions.
- Promotion: Developing and spreading persuasive communications
about an offer.
- Contact: Finding and engaging customers and prospective buyers.

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 8.1.2. The concept of distribution channel

 Members of the distribution channel’s key functions:

- Matching: Shaping offers to meet the buyer’s needs,
including activities such as downstream manufacturing and
assembly, grading, assembling, and packaging.
- Negotiation: Reaching an agreement on price and other
terms so that ownership or possession can be transferred.

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 8.1.2. The concept of distribution channel

 Members of the distribution channel’s key functions:

- Physical distribution: Transporting and storing goods.
- Financing: Acquiring and using funds to cover the costs of
the channel work.
- Risk taking: Assuming the risks of carrying out the channel
work.

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 8.1.2. The concept of distribution channel
 All the institutions in the channel are connected by several
types of flows

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 8.1.2. The concept of distribution channel

 Number of channel levels

- The number of intermediary levels indicates the length of a
channel.
- Direct marketing channel: has no intermediary levels, with the
producer selling directly to the consumer.
- Indirect marketing channel: contains one or more intermediary
levels between the producer and the consumer.

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 Consumer distribution channels

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 Distribution channels for consumer products

 Retailing
- All the activities involved in selling goods or services directly
to final consumers for their personal, nonbusiness use.
- Most retailing is done by retailers (businesses whose sales
come primarily from retailing).
- Retailing plays a very important role in most marketing
channels.

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 Distribution channels for consumer products

 Wholesaling
- Including all the activities involved in selling goods or
services to those who are buying for resale or business use.
- Firms engaged primarily in wholesaling activities are called
wholesalers.
- Wholesalers buy mostly from producers and sell mostly to
retailers, industrial consumers, and other wholesaler.

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 Distribution channels for consumer products

 Types of Wholesalers
- Merchant wholesaler: An independently owned wholesale
business that takes title to the merchandise it handles.
- Broker: A wholesaler who does not take title to goods and
whose function is to bring buyers and sellers together and
assist in negotiation.
- Agent: A wholesaler who represents buyers or sellers on a
relatively permanent basis, performs only a few functions,
and does not take title to goods.
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 Business distribution channels

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 8.2. Distribution policy

8.2.1. Concept and objectives of distribution policy

 Concept:
Including a combination of orientations, measures and
operational rules implemented in the selection of distribution
channels, assignment of marketing tasks between different
subjects and basic behaviors oriented towards satisfying
market demand.

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 8.2. Distribution policy

8.2.1. Concept and objectives of distribution policy

 Objectives:
- Market coverage Ensuring the product is available across the desired market
segments.
- Profit, market share and sales across market segments
Maximizing profitability, market share and sales through effective distribution.
- Level of market control Maintaining the desired level of control over the
distribution channels.
- Cost savings Reducing the costs associated with the distribution process .
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 8.2.2. Contents of distribution policy
Distribution MKT Intermediaries Channel integration
channels policy policy policy
• Designing • Intensive • Vertical marketing
distribution distribution systems (VMS)
channels • Exclusive • Horizontal
• Managing distribution marketing
distribution • Selective systems
channel distribution • Multichannel
distribution
system

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 8.2.2.1. Distribution channels policy

 Designing distribution channels

• Analyzing consumer needs

1

• Setting channel objectives

2

• Identifying major alternatives

3

• Evaluating the major alternatives

4

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 Designing distribution channels

STEP 1: ANALYZING CONSUMER NEEDS

Finding out what target consumers want from the channel:

- Buy nearby, or willing to travel to more centralized locations?
- Buy in person or online?
- Value breadth of assortment, or prefer specialization?
- Want many add-on services (delivery, installation, repairs), or obtain
these services elsewhere?

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 Designing distribution channels

STEP 2: SETTING CHANNEL OBJECTIVES

- Targeted levels of customer service

- What segments to serve
- Best channels to use
- Minimizing the cost of meeting customer service requirements

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 Designing distribution channels

STEP 3: IDENTIFYING MAJOR ALTERNATIVES

- Types of intermediaries
- Number of intermediaries
- Responsibilities of each channel member

STEP 4: EVALUATING THE MAJOR ALTERNATIVES

- Each alternative should be evaluated against: economic,
control, and adaptability criteria

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  Managing distribution channels

Selecting channel members

Managing and motivating channel members

Evaluating channel members

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 Managing distribution channels

 Selecting channel members:

- Determining what characteristics distinguish the better
ones.
- Evaluating each channel member’s years in business,
other lines carried, location, growth and profit record, overlap with
competitors, cooperativeness, and reputation

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 Managing distribution channels

 Managing and motivating channel members

- Practicing strong partner relationship management to forge
long-term partnerships with channel members  create a value delivery
system that meets the needs of both the company and marketing
partners.
- Convincing suppliers and distributors that they can succeed
better by working together as a part of a cohesive value delivery system.

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 Managing distribution channels
 Evaluating channel members
- Regularly checking channel member performance: sales
quotas, average inventory levels, customer delivery time, treatment of
damaged and lost goods, cooperation in company promotion and training
programs, and customer service quality.
- Recognizing and rewarding intermediaries that are performing
well and adding good value for customers. Those that are performing
poorly should be assisted or replaced.
- Being sensitive to the needs of channel partners. Treating
partners poorly risk not only losing their support but also causing some
legal problems.
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 8.2.2.2. MKT Intermediaries policy
 Intensive distribution
- Stock products in as many outlets as possible.
- Products must be available where and when consumers want them.
 Exclusive distribution
- The producer gives only a limited number of dealers the exclusive right to
distribute its products in their territories.
- Often found in the distribution of luxury brands.
 Selective distribution
- Between intensive and exclusive distribution lies selective distribution.
- Use more than one but fewer than all of the intermediaries who are willing to
carry a company’s products.
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 8.2.2.2. MKT Intermediaries policy

 Intensive distribution
- Purpose: Widely distribute products, ensuring maximum
consumer-oriented goods.
- Applicability: For common products (cigarettes, gasoline, snack
foods, soap...) that are easy to store, preserve and display.
- Pros: Wide market coverage. High customer accessibility.
- Cons: The cost burden falls on the manufacturer. Low control
ability (quality, service, price...).

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 8.2.2.2. MKT Intermediaries policy

 Exclusive distribution
- Purpose: Strictly limit the number of franchise agents selling
goods/services of the owner, within the defined territory.
- Applicability: When the owner wants to maintain tight control
over the level of product and service quality assurance.

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 8.2.2.2. MKT Intermediaries policy

 Exclusive distribution
- Pros and cons with agents:
+ Pros: Eliminate duplication to focus on sales; Have conditions to
improve competitiveness; Have a close relationship with producers; Have
many price incentives and discounts.
+ Cons: Loss of autonomy, limited growth; Large possibility of
stagnation due to high reserves.
- Pros and cons for manufacturers: Control over prices, customers,
products, customer service, reduce physical transportation costs; Difficulties
in choosing an agent, agent quality (scale, experience, qualifications...)

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 8.2.2.2. MKT Intermediaries policy
 Selective distribution
- Characteristic:
+ Use some intermediaries
+ Limit consumption locations in each area
- Applicability: When the number of intermediaries is less than the
number of people willing to sell.
- Advantages:
+ Moderate focus on each point of sale
+ Developing good relationships with members
+ Dominate a large market with tight control
+ Lower costs compared to widespread distribution
- Disadvantages: Conflicts easily occur between distributors.
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 8.2.2.3. Channel integration policy
 Vertical marketing system (VMS)
- A channel structure in which producers, wholesalers, and
retailers act as a unified system.
- One channel member owns the others, has strong
contracts with them, or has so much power that they all cooperate.
- Three major types of VMSs: corporate, contractual, and
administered.
- Each uses a different means for setting up leadership and
power in the channel.
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 Principle of Marketing Department
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 8.2.2.3. Channel integration policy
 Horizontal marketing system
- Two or more companies at one level join together to
follow a new marketing opportunity.
- By working together, companies can combine financial,
production, or marketing resources to accomplish more than any
one company could alone.

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 8.2.2.3. Channel integration policy
 Multichannel distribution system
- A single firm sets up two or more marketing channels to
reach one or more customer segments, coordinating channel
strategies to maximize total profits across all the channels.

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 Principle of Marketing Department
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 KEY CONTENTS

• The basic concepts

• Types, roles and functions of distribution intermediaries
• Flows of distribution
• Types of distribution channels
• Main distribution policies

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 CHAPTER 9
MARKETING COMMUNICATION POLICY

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 OUTLINE

9.1. Overview of marketing communication

9.1.1. The concept of marketing communication
9.1.2. Elements in the marketing communication process
9.2. Marketing communication policy
9.2.1. Concept and objectives of marketing communication policy
9.2.2. Contents of marketing communication policy

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 9.1. Overview of marketing communication

9.1.1. The concept of marketing communication

9.1.2. Elements in the marketing communication process

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 9.1. Overview of marketing communication

9.1.1. The concept of marketing communication

Marketing communication is the

activity of encouraging and exchanging
information about products or businesses
with target audiences in order to establish
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 9.1. Overview of marketing communication

9.1.1. The concept of marketing communication

Essence
Buying Faith
- Messaging and networking
Establish and
- Engage and get feedback maintain good
- Encourage relationships

Loyalty

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 9.1.2. Elements in the marketing communication
process

Elements in the
communication
process

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 9.1.2. Elements in the marketing communication process

 Group 1: Representing communication partners (Sender and

Receiver)
 Group 2: Denoting communication tools (Messages and
Media)
 Group 3: Communication functions (Encoding, Decoding,
Response and Response)
 Group 4: Noise
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 9.1.2. Elements in the marketing communication process

 Sender. The party sending the message to another party—here

 Encoding. The process of putting thought into symbolic form
 Message. The set of symbols that the sender transmits
 Media. The communication channels through which the message moves from the sender to the receiver
 Decoding. The process by which the receiver assigns meaning to the symbols encoded by the sender
 Receiver. The party receiving the message sent by another party
 Response. The reactions of the receiver after being exposed to the message—any of hundreds of possible
responses
 Feedback. The part of the receiver’s response communicated back to the sender
 Noise. The unplanned static or distortion during the communication process, which results in the receiver
getting a different message than the one the sender sent

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 9.1.2. Elements in the marketing communication
process

Senders:
- Need to know what audiences they wish to reach and what responses
they want.
- Must be good at encoding messages that take into account how the
target audience decodes them.
- Must send messages through media that reach target audiences, and
they must develop feedback channels so that they can assess an
audience’s response to the message.
 In today’s interactive media environment, companies must be prepared to
“flip” the communications process - to become good receivers of and
responders toPrinciple
messages sent byDepartment
of Marketing consumers
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 9.2. Marketing communication policy

9.2.1. Concept and objectives of marketing

communication policy
9.2.2. Contents of marketing communication policy

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 9.2.1. Concept and objectives of marketing
communication policy

 The concept of marketing communication policy

The marketing communication policy includes the
principles and guidelines for making decisions in marketing
communication to achieve the goals of the business.

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 9.2.1. Concept and objectives of marketing
communication policy

 Objectives of marketing communication policy:

 Improve the effectiveness of tools and reduce the total cost of
marketing communications.
 Create consistency and synchronization in the process of
implementing marketing communications.
 Develop customer relationships and improve the
competitiveness of businesses.
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 9.2.2. Contents of marketing communication policy

9.2.2.1. Identifying the target audience

9.2.2.2. Determining the communication objectives
9.2.2.3. Setting the total marketing communication budget
9.2.2.4. Choosing message and communication channels
9.2.2.5. Identifying marketing communication tools
9.2.2.6. Evaluating of marketing communication

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 9.2.2.1. Identifying the target audience

- A marketing communicator starts with a clear target audience in mind.

- The audience may be current users or potential buyers, those who make
the buying decision or those who influence it.
- The audience may be individuals, groups, special publics, or the general
public.
- The target audience will heavily affect the communicator’s decisions on
what, how, when, where, and who.

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 9.2.2.2. Identifying the communication objectives
 Basis for determining goals

Advertising objectives
External factors
Sales promotion
objectives
Marketing
General objectives Marketing Public Relations
communicatio Objectives
of the business objectives
n objectives
Personal selling
Internal factors Objectives
Direct marketing
objectives
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 9.2.2.2. Identifying the communication objectives
 Basis for determining goals

6 stages of buyer readiness – stages that

consumers typically go through in the
purchase decision process.
Liking
Awareness Knownledge Preference Conviction Purchase

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 9.2.2.2. Identifying the communication objectives
 Specific goals

Information

Impact on cognition Specific

objectives
Sales adjustment

Addressing volatility
XEM LẠI DỊCH TA
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 9.2.2.3. Setting the total marketing communication
budget
The 5 common methods used to set the total budget for marketing
communication:
 The affordable method
 The percentage-of-sales method
 The competitive-parity method
 The objective and-task method
 The fixed budget method

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 9.2.2.3. Setting the total marketing communication
budget
The affordable method
 Setting the promotion budget at the level the company can afford.
 Small businesses often use this method, reasoning that the company cannot spend more on
promotion than it has. Starting with total revenues, deduct operating expenses and capital
outlays, and then devote some portion of the remaining funds to promotion.
 This method ignores the effects of promotion on sales, tends to place promotion last among
spending priorities, even in situations in which promotion is critical to the firm’s success 
leads to an uncertain annual promotion budget, which makes long-range market planning
difficult.
 Although the affordable method can result in overspending on promotion, it more often
results in underspending.

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 9.2.2.3. Setting the total marketing communication
budget
The percentage-of-sales method
• Other companies use the percentage-of-sales method, setting promotion
budget at a certain percentage of current or forecasted sales. Or they budget
a percentage of the unit sales price.
• The method is simple to use and helps management think about the
relationships between promotion spending, selling price, and profit per unit.
 The method is based on the availability of funds rather than on opportunities.
 The method does not provide any basis for choosing a specific percentage,
except what has been done in the past or what competitors are doing.

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 9.2.2.3. Setting the total marketing communication
budget
The competitive-parity method
 Setting promotion budgets to match competitors’
outlays.
 Monitoring competitors’ promotion activity or get industry promotion spending
estimates from publications or trade associations and then set their budgets based on
the industry average.
 Competitors’ budgets represent the collective wisdom of the industry.
 Spending what competitors spend helps prevent promotion wars.
 Companies differ greatly, and each has its own special promotion needs.
 There is no evidence that budgets based on competitive parity.
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 9.2.2.3. Setting the total marketing communication
budget

The objective and-task method

 Setting promotion budget based on what it wants to accomplish with promotion.
 This budgeting method entails (1) defining specific promotion objectives, (2)
determining the tasks needed to achieve these objectives, and (3) estimating the
costs of performing these tasks  The sum of these costs is the proposed
promotion budget.
 Advantage: force management to spell out its assumptions about the relationship
between dollars spent and promotion results.
 Disadvantage: the most difficult method to use, hard to figure out which specific.

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 9.2.2.3. Setting the total marketing communication
budget
The fixed budget method
 Enterprises set a fixed budget for annual marketing
communication activities.
 The budget is stable every year and facilitates the formation of a
long-term market strategy of the enterprise.
 Don’t into account the impact of media on the amount of goods
consumed, on sales.
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 9.2.2.4. Choosing message and communication channels

Choosing message
(1) Message content
- Three types of appeals: rational, emotional, and moral.
+ Rational appeals relate to the audience’s self-interest and show that the product will
produce the desired benefits.
+ Emotional appeals attempt to stir up either positive or negative emotions that can motivate
purchase. Communicators may use emotional appeals ranging from love, joy, and humor to
fear and guilt. The idea is that consumers often feel before they think, and persuasion is
emotional in nature.
+ Moral appeals are directed to an audience’s sense of what is “right” and “proper.” Often
used to urge people to support social causes, such as a cleaner environment or aid to the
disadvantaged.
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 9.2.2.4. Choosing message and communication channels

(2) Message structure

+ The first is whether to draw a conclusion or leave it to the audience. In many
cases, rather than drawing a conclusion, the advertiser is better off asking
questions and letting buyers come to their own conclusions.
+ The second message structure issue is whether to present the strongest
arguments first or last. Presenting them first gets strong attention but may
lead to an anticlimactic ending.
+ The third message structure issue is whether to present a one-sided
argument (mentioning only the product’s strengths) or a two-sided argument
(touting the product’s strengths while also admitting its shortcomings).
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 9.2.2.4. Choosing message and communication channels

(3) Message format

- To attract attention, advertisers can use novelty and contrast; eye-
catching pictures and headlines; distinctive formats; message size and position;
and color, shape, and movement.
- Presenters plan every detail carefully, from start to finish.
- If the message is to be communicated by television or video content,
the communicator must incorporate motion, pace, and sound.
 If the message is carried on the product or its package, the communicator must
watch texture, scent, color, size, and shape.

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 9.2.2.4. Choosing message and communication channels

(4) Message source

- Messages delivered by highly credible or popular sources are
more persuasive. Thus, many food companies promote to doctors, dentists,
and other health-care providers to motivate these professionals to
recommend specific food products to their patients.
- Marketers hire celebrity endorsers - well-known athletes, actors,
musicians, and even cartoon characters - to deliver their messages.

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 9.2.2.4. Choosing message and communication channels

Choosing communication channels

+ Personal communication channels: two or more people communicate directly
with each other. They might communicate face-to face, on the phone, via mail or
email, or through texting or chat. Personal communication channels are effective
because they allow for personal addressing and feedback.
+ Nonpersonal communication channels are media that carry messages without
personal contact or feedback. Including major media, atmospheres, and events.
Major media include broadcast media (television, radio), print media
(newspapers, magazines, direct mail), display media (billboards, signs, posters),
and online and digital media (email, websites, and mobile and social media).

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 9.2.2.5. Identifying marketing communication tools

 Marketing communication tools

 Advertising
 Sales promotion
 Public relations
 Direct and digital marketing
 Personal selling
 Integrated marketing communications (IMC)

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  ADVERTISING

 Definition: Any paid form of nonpersonal presentation and

promotion of ideas, goods, or services by an identified sponsor.
 Characteristics:

- Massivity
- Virality
- Amplified Expression
- Insensitivity
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 Advertising requirements
 Ensure high information content
 Reasonable assurance
 Ensure legality
 Ensure artistic and scientific
 Ensure consistency and diversity
 Ensure budget suitability
 Ensure efficiency
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  Advertising channel
Advertising audiences

Recipients
Advertising of
subjects advertisin
g

Advertising media
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 Advertising media
 Traditional advertising
 Print media: newspapers, magazines...
 Outdoor vehicles: panels, posters...
 Electronic media: television, radio...
 Online advertising: appears when users visit the network, including display
ads, search-related ads.
 Build brand sales or attract customers to the internet, mobile phones and social
networking sites.

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 Sales Promotion
 Concept: Sales promotion consists of short-term incentives to encourage
the purchase or sales of a product or service
 Characteristics
- Communication is momentarily vibrant
- Engaging and informative
- Motivate and encourage buying/selling action.
 Consumer promotions include a wide range of tools—from
samples, coupons, refunds, premiums, and point-of-purchase
displays to contests, sweepstakes, and event sponsorships
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  Public Relations

 Concept: Build good relationships with different types of business public,

build a good image, handle/manage scandals with events, stories or
other marketing content.
 Activities designed to engage the company’s various publics and build good
relations with them.
 Characteristics
- The content of the message is geared towards the business/brand.
- The content of the message is difficult to control.
- Be objective.
- Benefit specific audiences.
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  Public Relations Media

 Publications events
 Community activities and reconstruction
 Funding
 Lobbying
 Developing other relationships

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  Direct and Digital Marketing

 Concept: Direct and digital marketing involve engaging directly with

carefully targeted individual consumers and customer communities to
both obtain an immediate response and build lasting customer
relationships
 Characteristics
- It is a form of two-way communication.
- Highly personalized.
- No space or time restrictions.
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  Direct and Digital Marketing Media

 Traditional direct marketing: direct mail marketing; marketing

through catalogs; telemarketing; direct response television
marketing; marketing at the sales counter (automation).
 Digital and social media marketing: Online marketing
(website, online advertising, email, online video, blog); Social
media marketing; Mobile marketing.

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  Online Marketing

 Concept: Online marketing refers to marketing via

the internet using company websites, online
advertising and promotions, email marketing,
online video, and blog.
 Media: Marketing through websites, online advertising,
email marketing, online videos, blogs.
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  Online Marketing

- Online marketing through websites: A website that engages

consumers to move them closer to a direct purchase or other
marketing outcome
- Brand community website: A website that presents brand content
that engages consumers and creates customer community
around a brand.

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  Online Marketing

 Email marketing: a form of sending highly personalized and selective

marketing messages with the aim of building relationships with target
customers.
 Advantages: colorful, attractive design increases high interactivity; Build
closely defined and personalized relationships.
 Disadvantages: The explosion of spam (spam) creates frustration and
annoyance for customers.

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  Online Marketing

 Blogs and other online forums: are places where people and businesses can
post their thoughts and other content, often related to specific defined
topics.
 Blogs can be about anything in life and society.
 Blogs Online forums where people and companies post their thoughts and
other content, usually related to narrowly defined topics
 Provide a new, original, personal, and low-cost way to engage in
conversations online and on consumer social media.
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  Social media marketing
 Social media: Social media Independent and commercial online social networks where
people congregate to socialize and share messages, opinions, pictures, videos, and
other content.
 Social networks: Facebook, google+, Youtube, Instagram,...
 Use of social media: (1) Use of existing social networks; (2) Use your own social
network.
 Advantages: directional and personalized; highly interactive; be instantaneous and
timely; very cost-effective; Ability to engage and share socially
 Disadvantages: difficult to control and measure.

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 Mobile Marketing

Mobile marketing: Marketing messages, promotions, and

other content delivered to on-the-go consumers through
their mobile devices.
Advantages: stimulate customers to buy immediately, make
shopping easier, enrich the brand experience.
Disadvantages: annoying to customers.

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  Personal Selling

 Concept: Personal presentations by the firm’s sales force for the purpose
of engaging customers, making sales, and building customer relationships.
 Characteristics
- Direct communication with customers.
- Find customers.
- Collect feedback.

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  Personal Selling Media
 Product Introduction Stores
 Sales seminars
 Samples
 Trade fairs
 Trade shows
 Other forms

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 Basis for integrating marketing communication tools

 Market/product characteristics
 Buyer acceptance and readiness stages
 Product life cycle
 Push – Pull Strategy

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  Market/product characteristics

 Consumer market Advertising is most effective,

Advertising followed by direct marketing,
Direct Marketing sales promotion, personal sales
and finally public relations.
Sales Promotion
Personal Selling
Public Relations
 Business Market
Personal sales are most effective,
Personal Selling
followed by direct marketing,
Direct Marketing sales promotion, advertising and
Personal Selling finally public relations.
Advertising
Public Relations
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  Buyer acceptance and readiness stages

Personal
Selling

Advertising

Sale
promotion
Public
relationshi
p

Awareness Knowledg Convictio Purchas

e
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  Stages in the product life cycle
Sales & Profit
(USD/VND)

Sales
Profit
0 Time
Product Introduction Growth Maturity Decline
Development

Introduction: Advertising and Public Relations are appropriate to create awareness, then Sales Promotion
and Personal Selling.
Growth: Advertising and Public Relations are appropriate to drive sales, other tools decrease depending on
conditions.
Maturity: Sales Promotion is most effective. Other instruments may remain at sufficient levels
Decline: Instruments are all down and some are excluded. Advertising acts as a reminder, Sales Promotion
becomes the most important tool because it also promotes positive effects
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  Push-Pull Strategy

Push versus Pull

marketing
communication
strategy

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 9.2.2.6. Evaluating of marketing communication
 Qualitative: target audience recognize or recall the message, how many
times they saw it, what points they recall, how they felt about the
message, and what are their previous and current attitudes toward the
product and the company.

 Quantitative: outcomes and revenues: inputs into intermediate outputs

such as reach and frequency (the percentage of target market exposed to
a communication and the number of exposures), recall and recognition
scores, persuasion changes, and cost-per-thousand calculations.

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 KEY CONTENTS

 Concept and components of marketing communication

 Concept and objectives of the marketing communication policy

 Contents of the marketing communication policy

 Marketing communication tools

 Basis for integrating marketing communication tools

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 CHAPTER 10
THE FUTURE OF MARKETING
10.1. Relationship marketing
10.1.1. The concept of relationship marketing
10.1.2. Characteristics of relationship marketing
10.2. Sustainable marketing and global marketing
10.2.1. Sustainable marketing
10.2.2. Global marketing
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 10.1. RELATIONSHIP MARKETING

10.1.1. The concept of relationship marketing

10.1.2. Characteristics of relationship marketing

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 10.1.1. The concept of relationship marketing

Relationship marketing refers to “building

mutually satisfying long-term relationships
with key parties, in order to earn and retain
their business.”
(Kotler & Keller, 2009)

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 The nature of relationship marketing

● Focus on customer loyalty and long-term engagement.

● Create a strong connection with customer.
● Activities take place continuously and stably.
⇨ Personalize products and services; create a business
impression; diversify interactions;…

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 10.1.2. Characteristics of relationship marketing

1 Oriented towards the​long term

2 Mutually beneficial
3 Customers have less price sensitivity
4 Towards commitment​​and strong relationship

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 Principle of Marketing Department
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 10.2. Sustainable marketing and global marketing

10.2.1. Sustainable marketing

- Concept and principles of sustainable marketing
- Factors that promote sustainable marketing
10.2.2. Global marketing
- Concept of global marketing
- Important issues of global marketing

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 10.2.1. Sustainable marketing

✵Concept: Sustainable marketing calls for socially and

environmentally responsible actions that meet the
present needs of consumers and businesses while
also preserving or enhancing the ability of future
generations to meet their needs.
( Philip Kotler & Gary Armstrong, 2021).
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 ✵ Principles of sustainable marketing

Five principles of sustainable marketing:

1. Customer-oriented marketing
2. Customer value marketing
3. Innovative marketing
4. Sense-of-Mission Marketing
5. Societal Marketing

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 ✵ Principles of sustainable marketing

1. Customer-oriented marketing
⮚ Businesses perceive and organize marketing activities from the
customer's perspective.
⮚ Enterprises strive to explore, discover, serve and meet the
needs of specific customer groups, now and in the future.
2. Customer value marketing
⮚ Businesses invest resources in marketing to create value for
customers.
⮚ Enterprises continuously improve value and build cohesion
and long-term loyalty to customers
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 ✵ Principles of sustainable marketing

3. Innovative marketing
⮚Businesses continuously improve
products and marketing activities.
⮚Always looking for new and better
ways to create customer value.
4. Sense-of-Mission Marketing
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 ✵ Principles of sustainable marketing

5. Social marketing
⮚ Businesses consider customer
desires, business requirements, and
the long-term interests of customers
and society.
⮚ Focus on products that bring long-
term benefits.

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 ✵ Factors promote sustainable marketing

(1) NEGATIVE IMPACT OF MARKETING ON CONSUMERS

☹ Selling at high prices

☹ Fraudulent practices

☹ Intentional obsolescence/outdated

☹ Selling poor quality products, harmful or unsafe product

☹ Poor service to disadvantaged consumers

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 Social activities promote sustainable marketing

Present: Future:
Green action Sustainable green action
Prevent pollution New cleaning technology
Inside Eliminate or reduce waste before it Develop skill sets and capacity to
is created protect the environment

Product Management Vision for sustainable development

Outside Minimize environmental impact Build/develop a strategic
throughout the entire product life framework to create sustainable
cycle value

Framework of criteria for environmental sustainability and sustainable values

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 10.2.2. Global marketing

✵ Concept:
Global marketing is carried out on a global scale with the
orientation of harmonizing or taking advantage of differences,
similarities and opportunities in global activities to achieve the
global goals of the business.
(Philip Kotler & Gary Armstrong, 2021)

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 10.2.2. Global marketing
✵ Major global marketing decisions

1. Looking at the global marketing environment

2. Deciding whether to go global
3. Deciding which markets to enter
4. Deciding how to enter the market
5. Deciding on the global marketing program
6. Deciding on the global marketing organization
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 10.2.2. Global marketing
1. Looking at the global marketing environment
Before deciding whether to operate internationally, a company must understand
the international marketing environment. That environment has changed a
great deal in recent decades, creating both new opportunities and new
problems.
- The International Trade System
- Economic Environment
- Political-Legal Environment
Principle of Marketing Department
- Cultural Environment
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 10.2.2. Global marketing
2. Deciding whether to go global
Before going abroad, the company must weigh several risks and answer:
(1) Can the company learn to understand the preferences and buyer behavior of consumers in
other countries?
(2) Can it offer competitively attractive products?
(3) Will it be able to adapt to other countries’ business cultures and deal effectively with foreign
nationals?
(4) Do the company’s managers have the necessary international experience?
(5) Has management considered the impact of regulations and the political environments of
other countries?
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 10.2.2. Global marketing

3. Deciding which markets to enter

- Define international marketing
objectives and policies
- Decide volume of foreign sales
(start small when go abroad)
- Determine the potential of each
market
🡪 Indicators of Market Potential

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 10.2.2. Global marketing

4. Deciding how to enter the market

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 10.2.2. Global marketing
5. Deciding on the global marketing program
- Standardized marketing program
- Adapted global marketing program
6. Deciding on the global marketing organization
- A firm normally gets into international marketing by simply shipping out its goods.
- If its international sales expand, the company will establish an export department with a
sales manager and a few assistants.
- As sales increase, the export department can expand to include various marketing
services so that it can actively go after business.
- If the firm moves into joint ventures or direct investment, the export department will no
longer be adequate.

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 Key contents

★ The concepts
★ Characteristics of relationship marketing
★ Principles of sustainable marketing
★ Factors promoting sustainable marketing
★ Major lobal marketing decisions

Principle of Marketing Department

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