Marketing

Definition:

• Market consist of actual and potential customer → target market
• To market: to offer a product to target market
• Marketing is to plan and execute
  • create meaningful exchange to satisfy customers’ needs
  • need: state of deprivation, sources of needs
    1. Physical: food, med, clothes,…
    2. Mentality: musics, new clothes,…
    3. External sources: friends, family, society, marketers,…
• types of need: Maslow’s Hierarchy of needs
• want: needs that are shaped bny individuality, culture, personality, religion,…
• Demand: need and want backed by buying power
• 4 Ps:
  • product
  • price
  • place (distribution)
  • promotion
• Product, price and place happen backstage

Stages of marketing:

• Production Oriented:
  • When supply < demand
  • No competion as the sole supplier
• Product Orientation:
  • When supply ⇐ demand
  • There are some competition
  • Needs to improve product quality
• Selling Orientation:
  • When suply > demand
  • Too many good products option for customer to choose
  • Companies make a product then approach and convince customer to buy (push marketting, ads)
• Marketting orientation:
  • When supply > demand
  • Fiere competition
  • Needs to satisfy customer needs
  • → create products that sovle customer needs then market to them(pull marketing)
• Societal Marketing:
  • Supply >> Demand
  • Pressure from people health and environment
  • Focus is now to sell the products while minimizing negative impact on people health and environment

Marketing environment:

• Includes factors and actors outside of the marketing department that can affect marketter’s job
  • even a tree outside the building
• Micromarketting environment includes factors and actors outside of the marketing department that are closer to the firm & can be influenced back
  • company: BOD, other departments, employee, employees’ families,…
  • customer (Customer Behaviour)
  • Suppliers
  • Competitors:
    • direct: sells similar product
    • indirect: sells substitute that can take time/money
  • Marketing intermediaries:
    • finance intermediaries: financial supports (goiv, banks, investors, insurances,..)
    • physical transportation firm
    • resellers
    • marketting services/agency
  • public: includes anyone who may developer an interest (good & bad) in the business
    • gov public
    • media
    • local
    • consumer group
• Macromarketting environment includes factors and actors outside of the marketing department that are further away the firm & very difficult to control. PESTEL
  • Gov
  • economy
  • natural env
  • labor
  • politics
  • social env

Consumer behaviour:

• Different from Psychology is that CB only study the buying behaviour
• Cusomter Behaviour model
  • input:
    • Marketer’s 4P
    • Stituational factors: oftened ignored as it is outside control for marketters
  • Consumer blackbox: a lot of important information but take long time to retrieve
    • --- psychology factors ---
    • perception model: a person’s viewpoint of the world around them:
      • include 5 senses
        • light→ eye
        • smell → nose
        • sound → ear
        • taste → tongue
        • texture/temp → skin
      • → mind interprete them but cant view them all → selection process
        1. Selectrive attention: not paying attention to most of what we sense
        2. Selective distortion: dont understand most of what we paid attention to
        3. Selective retention: dont remember most of what we understood
    • attitude
    • personality
    • learning
    • --- social factors ---
    • group
      • membership group: customers are a part of
      • aspirational group: cusomters want to be a member of
      • reference group: people that a customer seek for advice, suggestion, reccommendation
        • change based on product cusomter buying
        • Opinion Leader: people with the most powerful advice, example: dad to son when buying a car
        • opinion leader of the mass: Key Opinion Leader
    • family
    • culture
    • social class
  • Output: buying decision

Product:

• Product is anything that can be offered to the market & it might satisfy a need or a want
  • come from research
• Types of products:
  • ranked by involments (how much customers care about the product being good, it is highly subjective)
  1. Specialty products: a very small group of customers are willing to spend extra effort & money to buy, ex: idol items, collectible, medication, organ transplant,…
  2. Shopping products: customers spend some efforts in researching, comparing, trying out,… → make it good
  3. Convenience products: customers only buy it when its convenient to → make it available
  4. Unsought products: they dont know about it, not aware
• Product life cycle:
  • 
  • Introduction:
    • newly launched products
    • sales very slow
    • investment is higher
    • no competition
  • Growth:
    • highest growth rate
    • break-even for investments
    • new competitors emerge
  • Maturity:
    • Peak of sale
    • first time sale goes down
    • most profit
  • Decline:
    • decline at fastest rate
    • investment = 0
    • harvesting whats left
• Product decision:
  • Function: main benefit of a product (what it does)
  • Features: added benefits, what is can do
  • Quality:
    • level: high vs low
    • comformance: consistency of quality level accross all production units
  • Style: physical appearance/packaging
    • materialssize
    • shape
    • texture
    • labels
  • Design: user-friendliness, ease of use

Pricing:

• Determining the right price for the product
• Price is the amount of money that
  • a company wants to charge its customers
  • and customer is willing to pay for a product/service
• How to determines: 3 pricing approaches, must choose 1 or 2 out of 3
  1. Cost based: Price = Total Cost (fixed + variable + opportunity + sunk) + profits
     • price dumping: illegal
  2. Competition-based pricing approach: use competitors’ price as point of reference
     • premium position: higher price
     • about same: direct competition with existing brands
     • cost-leadership: cheapter
  3. Value-based pricing strategy: price = Customer Perceived value
     • Ways to increase CPV:
       • packaging
       • name
       • benefits
       • Technology
       • distribution
• Pricing strategies:
  • new product:
    • market penetration strategy: low price at first
    • market skimming strategy: high price at first
  • line of product:
    • product line pricing strategy, different product with stepping price
    • optional product pricing strategy: sell accessiries together with main products so the accessories seem cheaper
    • captive product pricing strategy: force buy expensive ink with printers
    • By-product pricing strategy: the waste of the product, sell the by product to lower the price of the main product

Promotion:

• Integrated Marketing Communication, IMC Plan

  • Consist of 5 promotion tools:
    • Advertising: Non-personal communication tool with an idenfitied sponsor (through some medium)
      • Audience can identify who is paying for the advertising immediately
      • One way and limited feedback
      • Main purposes:
        • inform
        • pursuit
        • remind (cut short version of other ads)
        • → usually used together
    • Public relation: aim to build and maintain a favorable relationship with the public with event and sponsorship
      • relationship with customers & non-customers (gov, general pulic, customers’ families)
    • Sales promotion: provide instant added benefits to encourage customers to make purchase dicision
      • only work if its short-run
      • Only tool to motivate people to buy immediately
      • include:
        • price-off, coupon, voucher
        • non-financial: sales promotion (value based), premium (gift), customer service, loyalty, free refund.
    • Direct marketing: telesale, email, text, shopping
      • presentation of a product to target audience throu direct channel
    • Personal selling: face-to-face
      • Presentaion of a product to target audience thru a sales person
      • for expensive, unsought product (insurance)

• Advertising vs PR:

  • 	Advertising	Public relation
    cost	$$$	free (or little for sponsorship)
    content	full control	0 control
    trust from customers	v	vvv

• Communication model:

  • Brand (Sender) —(encode)→ Message —(decode)→ Customer (Receiver)
    • Sometimes decode can be wrong
      • example: Milo to be complementary to breakfast -⇒ Milo breakfast -⇒ Ah, milo as breakfast!
      • better: Milo breakfast, fullfilling is not enought -⇒ Ah, milo with breakfast!
    • Must go through a medium (media)

• Promotion Plan (campaign planning)

  1. Define objctive:
     • Goal: AIDA, to make customers
       • Aware
       • Interested
       • Desire
       • Action
     • Must be SMART (Specific, Measurable, Agreed, Realistic, Time-bound)
  2. Define target audience: who should see the promotion, different from target audience
  3. Create a message:
     • Insight: umet need (under explored) → problem statement
     • Big idea: solution (1 paragraph) → encode → Key message (1-3 sentences, different from slogan)
     • 3 message appeals:
       • rational appeal
       • emotional appeal
       • ethical appeal
  4. Choose promotion tools:
     • To make aware: PR, Ad
     • To make Aware → Interested: PR, Ad
     • To make Interested → Decision: DM, PS
     • To make Decision → Action: SP
  5. Choose media:
     • Types:
       • broadcast: TV, radio, sportify, live
       • print: poster, flyers, magazine
       • out of home: billboard, banner, bus
       • internet: social media, email, website, search engine,…
       • etc
     • depends on:
       • promotion tool
       • target audience
       • budget
  6. Budget

Services marketing:

• Importance of service:
  • service sector contributes the most to GDP
  • Service jobs are very well paid
• Service is an economic exchange made by one party to another party that provides benefit without transfering ownership
• Types of services

Nature of process\	People receive	Possession receives
Tangible	1. People processing service: services performed on our physical body. ex: massage, haircut, nails,…	2. Possession processing service: services performed on our physical possessions ex: car wash, pet grooming, repaint house
Intangible	3. Mental stimuli processing service: services aimed to change the way we think or feel. ex: entertainment, education (transfering, receiving knowledge),	4. Information processing service: services performed on intangible possession ex: e-banking, accounting

1. People processing service:
   • customers need to be physically present → make it pleasant, convenient
2. Possention processing service:
   • separation between the customer and their possessions (leave it sometimes) → loss, damage, privacy invasion,..
3. Mental p.s.: customers are very vulnerable → ethics/code of conduct
4. Information p.s.: easy to have fraud → need to design & enforcing laws

• 7Ps, 3 more than product:
  • People (service providers, staffs):
    • perform the service
    • interact with customers:
      • satisfy customers
      • brand image
    • bring more profit to the firm by upselling & cross selling
    • Conflicts:
      • u with customer
      • u with jobs
      • customer vs company
      • customer vs customer
  • Physical evidence:
    • service have intangible element → hard for customers to evaluate
    • → 3 service attributes: service that are high in service attributes are easier for customer to evaluate before purchasing
      • experience attribute: experience during purchase
      • credence attribute: experience after purchase, ex: medicine
    • Buying Process:
      • need aware → info search → alternatives evaluation → purchase → post purchase
    • →provide physical cues to convince customers of our quality
      • floorplan/layout
      • ambient condition
      • decor, symbols, artifacts
  • Process:
    • steps a staff need to follow to perform a service correctly

Marketing channels:

Supply chains and the Value Delivery Network

• Value delivery network: a network composed of the company, suppliers, distributors and ultimately, customers who partner with each other to improve the performace of the entire system in delivering customer value
• Marketing channel (distribution channel): a set of independent organizations that help make a product or service available to user or consumption by the consumer or business user
• Marketing intermediaries: transform the narrow assortments of products made by producers into the broader assortments wanted by consumers.
• How channel members add value:
  • information
  • promotion
  • contact
  • matching
  • negatition
  • physical distribution
  • financing
  • risk taking
• Channel level: a layer of intermediaries that performs some work in bringing the product and its ownership close to the final buyer
  • Direct marketing channel: has no intermediary levels
  • Indirect marketting channel: has 1 or more intermediary levels

Channel Behavior and organization:

• Channel behavior:
  • the success of individual channel members depends on the over-all channel’s success,
  • Although channel members depend on one another, they often act alone in their own short-run best interests.
    • They often disagree on who should do what and for what rewards → channel conflict
  • Horizontal conflict: among firms at the same level of the channel
  • Vertical conflict: between different levels of the same channel
• Conventional distribution channels: A channel consisting of one or more independent producers, wholesalers, and retailers, each a separate business seeking to maximize its own profits, perhaps even at the expense of profits for the system as a whole. → conflict
• 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 contracts with them, or has so much power that they all cooperate.
  • Corporate VMS: A vertical marketing system that combines successive stages of production and distribution under single ownership—channel leadership is established through common ownership.
  • Contractual VMS: A vertical marketing system in which independent firms at different levels of production and distribution join together through contracts.
  • Administered VMS: A vertical marketing system that coordinates successive stages of production and distribution through the size and power of one of the parties.
• Horizontal marketing system: A channel arrangement in which two or more companies at one level join together to follow a new marketing opportunity.
• Multichannel distribution system A distribution system in which a single firm sets up two or more marketing channels to reach one or more customer segments.
• Changing channel organization:
  • Disintermediation: The cutting out of marketing channel intermediaries by product or service producers or the displacement of traditional resellers by radical new types of intermediaries.

Channel Design decision

• Marketing channel design: Designing effective marketing channels by analyzing customer needs, setting channel objectives, identifying major channel alternatives, and evaluating those alternatives.
• Analyzing consumer needs:
  • Do they value breath of assortment or specialization, add-on services (delivery, installation, repairs) or not? but fastest delivery, greatest assortment and most services is not possible
• Setting channel objectives:
  • Company should decide which segments to serve and best channels to use each case. In each segment, company wants to minize the total channel cost of meeting requirements
  • Channel objectives are constrained by nature of company, product (perishable), intermediaries, competitors (avoid using same channel) and environment (legal, economics).
• Identifying major alternatives:
  • Type of intermediaries: value-added, retailers, distributors, online vs offline.
    • harder to control and created conflicts
  • Number of marketing intermediaries:
    • Intensive distribution > Selective distribution > Exclusive distribution
    • from using as many intermediaries and highest availability (convenience) to lowest availability (exclusivity)
  • Reponsibility of channel members:
    • The producer and intermediaries need to agree on the terms and responsibilities of each channel member
• Evaluating major alternatives:
  • Each alternative should be evaluated against
    • economic: ROI
    • control: how much control is given up
    • adaptability: how flexible in adapting to change
• Design International distribution channels:
  • Countries have unique distribution system → companies must adapt its channel alternatives to design efficient and effective channel system

Channel management decisions:

• Marketing channel management: Selecting, managing, and motivating individual channel members and evaluating their performance over time.
• Selecting channel members:
  • When selecting intermediaries, the company should determine what characteristics distinguish the better ones.
  • It will want to evaluate each channel member’s years in business, other lines carried, location, growth and profit record, cooperativeness, and reputation.
• Managing and motivating channel members:
  • Once selected, channel members must be continuously managed and motivated
  • Many companies practice strong partner relationship management to forge lonterm partnerships with channel members. This creates a value delivery system that meets the needs of both the company and its marketing partners. → Partnership Relationship Management (PRM along with CRM)
• Evaluating channel members:
  • The company must regularly check channel member performance against standards such as sales quotas, average inventory levels, customer delivery time, treatment of damaged and lost goods, cooperation in company promotion and training programs, and services to the customer.
  • Recognize and reward intermediaries that are performing well.
• Public policy and distribution decisions:
  • Most channel law deals with the mutual rights and duties of channel members once they have formed a relationship.
  • Many producers and wholesalers like to develop exclusive channels for their products.
    • When the seller allows only certain outlets to carry its products, this strategy is called exclusive distribution.
    • When the seller requires that these dealers not handle competitors’ products, its strategy is called exclusive dealing.
    • they are legal as long as they do not substantially lessen competition or create monopoly
  • Exclusive dealing often includes exclusive territorial agreements. The producer may agree not to sell to other dealers in a given area (franchise), or the buyer may agree to sell only in its own territory (producer tries to keep a dealer inside a territory has many legal issues)
  • Full-line forcing: only sell to dealers if dealers will take some/all rest of the line
  • Producers have right to terminate dealers with justified reasons

Marketing logistics and supply chain management:

• Nature and importance of marketing logistics:
  • Marketing logistics (physical distribution): Planning, implementing, and controlling the physical flow of materials, final goods, and related information from points of origin to points of consumption to meet customer requirements at a profit.
    • not only outbound logistics (moving products from the factory to resellers and ultimately to customers)
    • but also inbound logistics (moving products and materials from suppliers to the factory)
    • and reverse logistics (reusing, recycling, refurbishing, or disposing of broken, returned by consumers or resellers).
  • Supply chain management: Managing upstream and downstream value-added flows of materials, final goods, and related information among suppliers, the company, resellers, and final consumers.
  • Importance:
    • competitive advantage
    • cost saving for company and its customer
    • variety of products need better logistic management
    • environment and sustainability
• Sustainable supply chain:
  • Companies green up their supply chains through greater efficiency, and greater efficiency means lower costs and higher profits.
• Goals of logistic system
  • no logistics system can both maximize customer service and minimize distribution costs
  • The goal of marketing logistics should be to provide a targeted level of customer service at the least cost
• Major logistics functions:
  • warehousing: A company must decide on how many and what types of warehouses it needs and where they will be located
    • Distribution center: A large, highly automated warehouse designed to receive goods from various plants and suppliers, take orders, fill them efficiently, and deliver goods to customers as quickly as possible.
  • Inventory management:
    • managers must maintain the delicate balance between carrying too little inventory and carrying too much
    • just-in-time logistics systems: producers and retailers carry only small inventories of parts or merchandise, often enough for only a few days of operations
  • Transportation: The choice of transportation carriers affects the pricing of products, delivery performance, and the condition of goods when they arrive—all of which will affect customer satisfaction
    • Shippers also use multimodal transportation—combining two or more modes of transportation
  • Logistic information management:
    • Channel partners often link up to share information and make better joint logistics decisions.
    • flows of information, such as customer transactions, billing, shipment and inventory levels, and even customer data, are closely linked to channel performance.
• Integrated Logistics management: The logistics concept that emphasizes teamwork—both inside the company and among all the marketing channel organizations—to maximize the performance of the entire distribution system.
  • Cross-Functional Teamwork Inside the Company
    • The goal of integrated supply chain management is to harmonize all of the company’s logistics decisions. Close working relationships among departments can be achieved in several ways.
    • companies can employ sophisticated, system-wide supply chain management software, now available from a wide range of software enterprises large and small
  • Building logistics partnerships:
    • The members of a marketing channel are linked closely in creating customer value and building customer relationships. One company’s distribution system is another company’s supply system
    • Smart companies coordinate their logistics strategies and forge strong partnerships with suppliers and customers to improve customer service and reduce channel costs. Many companies have created cross-functional, cross-company teams
    • Other companies partner through shared projects
  • Third-party logistics (3PL) provider: An independent logistics provider that performs any or all of the functions required to get a client’s product to market.
    • 3PL providers like UPS can help clients tighten up sluggish, overstuffed supply chains; slash inventories; and get products to customers more quickly and reliably.
    • Companies use third-party logistics providers for several reasons.
      • getting the product to market is their main focus, using these providers is more efficiently and at lower cost.
      • Second, outsourcing logistics frees a company to focus more intensely on its core business.
      • Finally, integrated logistics companies understand increasingly complex logistics environments.