MKTG

Chapter 1 - basics
● Marketing is a process by which companies create value for customers and build
strong customer relationships in order to capture value from customers in return
● Retaining customers is less exp than acquiring new ones
● What can be marketed? Goods services, and experiences of using them (disney) if
you can attach a value you can market
● The Five-step Marketing Process: 1. Understand the marketplace and customer
needs and wants 2. Design a customer value – driven marketing strategy 3.
Construct an integrated marketing program that delivers superior value 4. Engage
customers, build profitable relationships, and create customer delight 5. Capture
value from customers to create profits and customer equity
● Needs: states of felt deprivation
● Wants: needs shaped by culture and personality
● Demands: wants backed by buying power
● Demand depends on willingness and ability of consumer
● Market offerings: a combination of goods serv info experiences offered to a market
to satisfy a need want demand.
● Marketing myopia: focusing only on existing wants and losing sight of consumer
needs
● Exchange: act of obtaining a desired object from sm1 by offering smth in return
● Marketing actions try to create maintain and grow desirable exchange relationships
● Seeking is when ur looking for products
● Value proposition: is how u can best serve sm1.. the set of benefits or values it
promises to deliver to customers to satisfy their needs

● Designing a customer value driven marketing strategy

○ Production concept: if u ramp up production like have more to sell your
product will do well - if u predict demand - however problem is marketing
myopia cuz ur assuming there's always a demand
○ Product concept: if i have the best product it will sell ultimately so they only
focus on the most profitable and optimal
○ Selling concept: if u sell it aggressively it will be successful. Push marketing
- really aggressive advertising PR packages // Pull marketing - incentive
(discounts) //////////// starts from factory focuses on existing products, selling
and promoting, profits thru sales volume
○ Marketing concept: customer at the centre. Does the customer always know
what they want? Not really (window shopping) /////// focuses on customer
needs integrated market profits thru customer satisfaction
○ Societal marketing concept: when u keep customer and environment in
mind plus broader implications. Society long run interests plus company
requirements plus consumer interests (biodegradable bags)
 ● How to design a customer value - driven marketing strategy (thru marketing mix)
● MARKETING MIX
○ Product - what u r selling
○ Price - at what price
○ Promotion - how r u advertising
○ Place - how to reach target (physical presence)

Product: Means the goods-and-services combination the company offers to the target
market.

Price: Amount of money customers must pay to obtain the product.

Place: Includes company activities that make the product available to target consumers.

Promotion: Refers to activities that communicate the merits of the product and persuade
target customers to buy it.

● Integrated marketing program: plan that communicates and delivers intended value
● Maintain customer relationships and strategies
● Customer relationship management: The overall process of building and maintaining
profitable customer relationships by delivering superior customer value and
satisfaction
● Customer-perceived value: The customer’s evaluation of the difference between all
the benefits and all the costs of a marketing offer relative to those of competing
offers.
● Customer satisfaction: The extent to which a product’s perceived performance
matches a buyer’s expectations.
● Customer-engagement marketing: Making the brand a meaningful part of
consumers’ conversations and lives by fostering direct and continuous customer
involvement in shaping brand conversations, experiences, and community.
● Consumer-generated marketing: Brand exchanges created by consumers
themselves—both invited and uninvited— by which consumers are playing an
increasing role in shaping their own brand experiences and those of other
consumers. Consumer created content.
● Partner relationship management: Working closely with partners in other company
departments and outside the company to jointly bring greater value to customers.
● Customer lifetime value: The value of the entire stream of purchases a customer
makes over a lifetime of patronage.
● Share of customer: The portion of the customer’s purchasing that a company gets in
its product categories.
● Customer equity: The total combined customer lifetime values of all of the company’s
customers.
● Digital and social media marketing: Using digital marketing tools such as websites,
social media, mobile apps and ads, online video, email, and blogs to engage
consumers anywhere, at any time, via their digital devices.
Types of customers

Butterflies (high potential profitability) True friends (high potential profitability)

Strangers (low potential profitability) Barnacles (low potential profitability)

Short term loyalty ----------------------------------------------------------------------- long term loyalty

(butterflies - traders not very loyal

Barnacles - small bank customers

Strangers - low in both

True friends - high net worth premium)

Chapter 2 - Strategic planning

Strategic planning: The process of developing and maintaining a strategic fit between the
organization’s goals and capabilities and its changing marketing opportunities

Steps in Strategic Planning: 1. Defining the company mission 2. Setting company objectives
and goals 3. Designing the business portfolio 4. Planning marketing and other functional
strategies

Mission statement: A statement of the organization’s purpose—what it wants to accomplish

in the larger environment. (dont make it miopic)

Business portfolio: The collection of businesses and products that make up the company.

Portfolio analysis: The process by which management evaluates the products and
businesses that make up the company.

Growth-share matrix: A portfolio-planning method that evaluates a company’s SBUs in terms

of market growth rate and relative market share.

Boston consulting group growth share mix:

Star (high mkt growth rate high market Question mark (high mkt growth rate low
share) share)

Cash Cow (low mkt growth rate high mkt Dog (low growth low share)
share)
Stars: Are high-growth, high-share businesses or products. They often need heavy
investments to finance their rapid growth. Eventually their growth will slow down, and
they will turn into cash cows (iphones)

Cash cows: Are low-growth, high-share businesses or products. These established

and successful SBUs need less investment to hold their market share. Thus, they
produce a lot of the cash that the company uses to pay its bills and support other
SBUs that need investment. (evergreen products)

Question marks: Are low-share business units in high-growth markets. They require a lot of
cash to hold their share, let alone increase it. Management has to think hard about which
question marks it should try to build into stars and which should be phased out. (chocolates)

Dogs: Are low-growth, low-share businesses and products. They may generate enough cash
to maintain themselves but do not promise to be large sources of cash (chewing gum lowly
choco brands)

Strategic business units (SBUs): An SBU can be a company division, a product line
within a division, or sometimes a single product or brand.

Product/market expansion grid:

A portfolio-planning tool for identifying company growth opportunities through market

penetration, market development, product development, or diversification

Market penetration (existing mkt existing Product development (existing mkt new
product) product)

Market development (new mkt existing Diversification (new mkt new product)
prod)

Market penetration: Company growth by increasing sales of current products to current

market segments without changing the product.

Market development: Company growth by identifying and developing new market

segments for current company products.

Product development: Company growth by offering modified or new products to current

market segments

Diversification: Company growth through starting up or acquiring businesses outside the

company’s current products and markets.

Value chain: The series of internal departments that carry out value-creating activities to
design, produce, markwet, deliver, and support a firm’s products.

Value delivery network: A network composed of the company, suppliers, distributors, and,
ultimately, customers who partner with each other to improve the performance of the entire
system in delivering customer value.
Marketing strategy: The marketing logic by which the company hopes to create
customer value and achieve profitable customer relationships.

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

Market segment: A group of consumers who respond in a similar way to a given set
of marketing efforts.

Market targeting: Evaluating each market segment’s attractiveness and selecting one
or more segments to serve.

Positioning: Arranging for a product to occupy a clear, distinctive, and desirable place
relative to competing products in the minds of target consumers.

Differentiation: Actually differentiating the market offering to create superior

customer value.

Swot analysis: strengths weakness opportunities threats

Marketing implementation: Turning marketing strategies and plans into marketing actions
to accomplish strategic marketing objectives

Marketing control: Measuring and evaluating the results of marketing strategies and plans
and taking corrective action to ensure that the objectives are achieved.

Marketing return on investment (marketing ROI): The net return from a marketing
investment divided by the costs of the marketing investment

How do you perceive the value of a brand: benefits, features of the product, public
eye, CSR, adverts

Downsizing - must prove businesses that are unprofitable - what happens? Firm grew
2 fast lacked experience, market changed, no demand

Chapter 3 micro macro

1. the marketing environment: actors and forces outside marketing that
influence marketing management’s ability to build and maintain profitable
customer relationships.
2. The microenvironment and the macroenvironment
3. Microenvironment works with other divisions and suppliers in designing
marketing (the company, suppliers, marketing intermediaries, customer
markets, competitors, and publics)
4. The company: must work in harmony with other company departments
(operations, management, HR, research and development) to create
customer value and relationships.
5. Suppliers: must partner with other firms in the company’s value delivery
network.
6. Marketing intermediaries: resellers (wholesale), physical distributors
(tcs), marketing services industries (advertising), financial
intermediaries
7. Competitors: must create strategic advantage by positioning their offerings
strongly against competitors’ offerings in the minds of consumers.
8. Publics: (actual or potential interest in or impact on an organizations
ability to achieve objectives) financial, media, government, citizen-action,
internal, general and local.
a. Financial publics. This group influences the company’s ability to obtain
funds. Banks, investment analysts, and stockholders are the major
financial publics.
b. Media publics. This group carries news, features, editorial opinions,
and other content. It includes television stations, newspapers,
magazines, and blogs and other social media.
c. Government publics. Management must take government
developments into account. Marketers must often consult the
company’s lawyers on issues of product safety, truth in advertising, and
other matters.
d. Citizen-action publics. A company’s marketing decisions may be
questioned by consumer organizations, environmental groups, minority
groups, and others. Its public relations department can help it stay in
touch with consumer and citizen groups.
e. Internal publics. This group includes workers, managers, volunteers,
and the board of directors. Large companies use newsletters and other
means to inform and motivate their internal publics. When employees
feel good about the companies they work for, this positive attitude spills
over to the external publics.
f. General public. A company needs to be concerned about the general
public’s attitude toward its products and activities. The public’s image of
the company affects its buying behavior.
g. Local publics. This group includes local community residents and
organizations. Large companies usually work to become responsible
members of the local communities in which they operate.
9. Customers: consumer markets, business markets, government markets,
reseller markets, international markets.
10. Macroenvironment: demographic, economic, natural, technological, political,
cultural.
11. Demography - The study of human populations in terms of size, density,
location, age, gender, race, occupation, and other statistics.
12. Demographic environment:
a. Changing age structure
b. Changing American family
 c. Geographic shifts in population
d. A better educated population
e. Increasing diversity

Chapter 4 Research
- The marketing information system: assessing information needs, developing
needed information (internal databases, marketing intelligence, marketing
research), analyzing and using information.
- Internal databases: collection of information about the consumer and market,
found within the company network.
- Competitive marketing intelligence: the monitoring, collection and analysis of
publicly available data about consumers, competitors, and developments in
the marketing environment.
- Marketing research: the design, collection, analysis, and reporting of data
relevant to a specific marketing situation.
- The marketing research process: defining the problem and research
objectives, developing the research plan for collecting information,
implementing the research plan (collecting and analyzing data), interpreting
and reporting the findings.
- Three types of research: exploratory, descriptive, causal
- Two types of data: secondary and primary
- Primary data collection: observational research, ethnographic research,
survey research, experimental research.
- Contact methods: mail, telephone, messages and personal interviewing
(individual and group)
- Focus group interviewing, online marketing research, online focus groups,
online behavioral targeting.
- The sampling plan: probability sample (simple random, stratified, cluster area)
and non-probability sample (convenience, judgement, quota)
- Research instruments: questionnaires and mechanical instruments such as
biometrics and neuromarketing.

Chapter 5 - buying behaviour

Consumer buying behaviour: Purchasing behaviour of final consumers individuals
households that buy goods services for personal consumption

Consumer markets: made up of all individuals and households that buy or acquire goods
and services for personal consumption.
Opinion leader: A person within a reference group who, because of special skills,
knowledge, personality, or other characteristics, exerts social influence on others. Some
experts call this group the influentials or leading adopters.

Model of buying behaviour: the environment (marketing stimuli like product price place
promotion) and Other (economic technological social cultural) ----> buyers black box (buyers
characteristics and decision process) -----> buyers reponses (attitudes, purchase behaviour
what where how when, and brand engagement and relationship).

Factors influencing consumer behavior: Cultural (culture, subculture, social class), Social
(groups and social networks, family, role and status) Personal (age and life cycle stage,
occupation, economic situation, lifestyle and personality and, self-concept), Psychological
(Motivation, Perception, Learning, Beliefs and Attitudes).

Social Factors: Membership Groups (groups you are already a part of), Aspirational Groups
(groups you might wish to belong to), Reference Groups (indicators of your loyalty to brands
for example wearing a Lahore Qalanders t-shirt).

Groups and Social Networks: Online social networks, buzz marketing, social media sites,
virtual worlds, word of mouth, opinion leaders.

Personal: Economic (spending, income, interest rates, savings), personality and

self-concept (Maslow’s Hierarchy of Needs)

Psychological: Perception, Learning - change in indv’s behavior arising from experience

and occurs through interplay of: drives, stimuli, cues, response, reinforcement).

Brand Personality traits: Sincerity (cheerful, wholesome honest), Excitement (imagination

up to date), competence (reliable intelligent), sophistication (upper class charming)
rugedness (outdoorsy).

Developing marketing info: Maslows hierarchy. First its physiological needs, then safety,
social, esteem, and lastly self actualizing

Perceptual Processes (allow us to select organize and interpret info)

1) Selective attention (recall certain info screen out the rest)
2) Selective distortion (interpret acc to our beliefs)
3) Selective retention (remember only good points)

Learning: changes in behaviour due to experiences

1) Stimuli (factor causing change in response)
2) Drives (internal stimuli that motivates us)
3) Cues: factors that motivate u (like symbols too)
4) Responses (u buy smth bcz of this)
5) Reinforcement (post purchase reaction)

Belief: knowledge, opinion faith

Attitude: consistent evaluation, feeling or tendency (mktg companies usually try to
work with attitudes of consumers)

There are 4 buying decision behaviours:

1) Complex buying (when u havent bought b4 and theres high involvement - laptop)
2) Dissonance reducing (lessens discomfort like netflix free trials and theres high
involvement)
3) Habitual (grocery) less involve
4) Variety seeking (low involvement but choices like trying new restaurant)

The Buyer Decision Process:

1) Need recognition
2) Info. search (should focus on increasing the ‘neighbor’s fence)
3) Eval. of alternatives
4) Purchase decision
5) Postpurchase behavior

For New Products: adoption process is the mental process an ind goes through from first
learning about an innovation to final regular use.
Includes: Awareness, Interest, Evaluation, Trial, Adoption

There’s also innovators, early adopters, early mainstream, late mainstream and
lagging adopters

Cognitive dissonance: discomfort post buying (u will try to justify the purchase to urself)

Hot wheels:
gateway into product
Mixed play as it was physical mixed with the virtual
Nfc chips
Targetted to 6-10 year olds (the 8 plus range would make the younger kids buy it
more bcz it was deemed cooler)
Idea was to keep kids engaged
Came with a car, race portal, smart track and an app
Appealing to adults too
They carried out ethnographic research with parents who were the gatekeepers
The children have nagging power
The positioning: it had a digital role, “Now you can prove it”, not just a toy but had
physical game play with a digital execution and appealed multi-generationally
Place: considered amazon apple walmart and target
Promotion: not tv… motive theatres and youtube
 Price: expensive, bundles? Charge for app? Skim demand: high price initially then
lower to penetrate market

Chapter 7 - segmenting
Key terms: Market segmentation, Market targeting, Market differentiation, Market
Positioning.

● Segmenting and Targeting helps with selecting customers to serve while

Differentiation and Positioning helps with deciding on a value proposition.
● Segmenting Consumer Markets: geographic segmentation (nations, regions,
states etc.), demographic segmentation (age and life cycle segmentation,
gender and income segmentation), Psychographic segmentation (behavioral
segmentation based on use of a product, responses to a product etc. -
occasion buying, benefits sought, user status, usage status, loyalty status).
● Market Segmentation: segmenting international markets (based on
geographic location, economic factors, political and legal factors, cultural
factors) and intermarket segmentation (forming segments of consumers who
have similar needs even if located in diff. countries).
● Requirements for Effective Segmentation: should be measurable (size),
accessible (reach and served), substantial (large profitable), differentiable,
actionable (effective programmes designed to attract and serve).
● Evaluating Market Segments: segment size and growth, segment structural
growth, company objectives and resources

Segment, target, differentiate, and position in minds to create value for customers

Behavioral: occasions (seasons), benefits sought (skincare), user status (ferari - user
non user), usage rate (family bundles) and loyalty status (very loyal somewhat loyal -
careems gold user)

4 ways to target (segments)

1)Undifferentiated (common needs and mass marketing)
2)Differentiated ( higher sales and position, more expensive)
3)Niche (concentrated marketing)
4)Micro marketing (specific tasks and locations --- includes local marketing to
local customer segments and individual marketing
How to select target marketing segments
1) Company resources product
2) Variability product
3) Life cycle stage
4) Market variability
5) Competitors marketing strategy
Positioning: way a product is defined by a consumer on imp attributes
To (target) our brand is (concept) that (point of difference)

Unique selling proposition (USP)

A difference is worth establishing to the extent that it satisfies the following criteria:
• Important. The difference delivers a highly valued benefit to target buyers.
• Distinctive. Competitors do not offer the difference, or the company can offer it in a more
distinctive way.
• Superior. The difference is superior to other ways that customers might obtain the same
benefit.
• Communicable. The difference is communicable and visible to buyers.
• Preemptive. Competitors cannot easily copy the difference
. • Affordable. Buyers can afford to pay for the difference.
• Profitable. The company can introduce the difference profitably

------------------------------------------------------------------

Chapter 8 - more abt product

- Product: Anything that can be offered to a market for attention,

acquisition, use, or consumption that might satisfy a want or need.
- Service: An activity, benefit, or satisfaction offered for sale that is
essentially intangible and does not result in the ownership of anything.
- There are 3 levels of a product: core customer value, actual product
(features, design, packaging, quality level, brand name) and augmented
product (after-sale services, warranty, product support, delivery and
credit).
- Two types of products: Consumer products and Industrial products.
- Consumer products (A product bought by final consumers for personal
consumption):
1. Convenience product: A consumer product that customers usually
buy frequently, immediately, and with minimal comparison and
buying effort.
2. Shopping product: A consumer product that the customer, in the
process of selecting and purchasing, usually compares on such
attributes as suitability, quality, price, and style.
3. Specialty product: A consumer product with unique characteristics
or brand identification for which a significant group of buyers is
willing to make a special purchase effort.
 4. Unsought product: A consumer product that the consumer either
does not know about or knows about but does not normally
consider buying.
Industrial products (A product bought by individuals and organizations for further
processing or for use in conducting a business):
1) Materials and parts
2) Capital items
3) Supplies and services.

Individual product and service decisions:

- Product quality: refers to the characteristics of a product or service that bear on
its ability to satisfy stated or implied customer needs.
- Total quality management, return on quality, quality level (performance and
conformance). Total quality management (TQM) is an approach in which all of
the company’s people are involved in constantly improving the quality of
products, services, and business processes. It has two dimensions: level and
consistency.
- Conformance: freedom from defects and consistency in delivering a targeted
level of performance
- Product features: competitive tool for differentiating a product from competitors’
products. Basic features and premium features. How do you decide what
features you should include in your product? You engage in extensive market
research, figure out what features to introduce immediately versus what features
to introduce later on. Assessment based on the value to the customer versus its
cost to the company.
- Product style (appearance) and product design (looks and usefulness). Through
careful discussions and observations, you come up with designs that contribute
to usefulness.
- Brand: why do you purchase what you purchase from certain brands only? It is
the name, term, sign, or design or a combination of these, that identifies the
maker or seller of a product or service.
- Quality (good standard) and consistency (quality/performance remains the same
- symbol of a good brand).
- Legal brand name helps sellers protect their market offerings from being copied.
- Packaging: involves designing and producing the container or wrapper for a
product.
- Labels: identify the product or brand, describe attributes, and provide promotion.
- PRODUCT AND SERVICE DECISIONS - Product line decisions
Product line: 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.
 Product line filling involves adding more items within the present range of the
line.
Product line stretching occurs when a company lengthens its product line beyond
its current range.

- Product line length is the number of items in the product line; line stretching
(upwards and downwards; upwards refers to venturing into luxury products while
downwards refers to going beneath your existing level of pricing, for example. Why?
Gap in the market, opportunity for you to go into this, you add low-end products
because more growth) and line filling (cannibalization - the profits of one type of
product eat up the profits of another product, customer confusion)
- Product mix: consists of all the product lines and items that a particular seller
offers for sale. Includes:
- Width: number of different product lines a company carries
- Length: total number of items a company carries within its product lines
- Depth: number of versions offered of each product in a line
- Consistency: how closely related the various product lines are in end use,
production requirements, distribution channels, or some other way.
- Service marketing: government, private not-for-profit, business organizations.
- 4 different aspects that differentiate a product from a service:
1. Intangibility
2. Inseparability (not separated from providers)
3. Variability
4. Perishability
- Marketing strategies for service firms: skill of the front-line service employees
and an effective support system.
- Focus on both, customers and employees; service-profit chain constituted by
both.
- 3 main types of service marketing: internal, external and interactive
- Internal: between the company and employees
- External: between company and customers
- Interactive: employees and customers
- Interactive marketing means that service quality depends heavily on the quality of
the buyer-seller interaction during the service encounter. Three aspects: service
differentiation, service quality, service productivity.
- Service differentiation: how do we differentiate our service to create a
competitive advantage - offers, delivery, image.
- Managing service quality - enables a service firm to differentiate itself by
delivering consistently higher quality than its competitors provide. Apology,
explanation and compensation.
- Managing service productivity - refers to the cost side of marketing strategies for
service firms. Employee hiring and training + service quantity and quality.
- Brand equity: the differential effect that knowing the brand name has on
customer response to the product or its marketing. LAYS versus a generic brand
 - Brand value: total financial value of a brand
- Brand equity leads to brand value
- Brand strategy: building strong brands - how do we do this?
- Brand positioning (attributes, benefits, beliefs and values), brand name selection
(suggests benefits and qualities, easy to pronounce and remember, distinctive,
extendable, translatable for the global economy, capable of registration and legal
protection), brand sponsorship (manufacturer’s brand, private brand, licensed
brand, co-brand)

- Brand development strategies: existing brand name/product category (line

extension - takes sales away from competing products), existing brand
name/new product category (brand extension), new brand name/existing
product category (multibrands - for example pepsi has mirinda and mountain
dew, many soft drinks fall under one brand name), new brand name/new product
category (new brands).
- Desirable qualities for a brand name include the following:
(1) It should suggest something about the product’s benefits and qualities:
Beautyrest, Slimfast, Snapchat, Pinterest.
(2) It should be easy to pronounce, recognize, and remember: iPad, Tide, Jelly
Belly, Twitter, JetBlue.
(3) The brand name should be distinctive: Panera, Swiffer, Zappos, Nest.
(4) It should be extendable—Amazon.com began as an online bookseller but
chose a name that would allow expansion into other categories.
(5) The name should translate easily into foreign languages. The official name of
Microsoft’s Bing search engine in China is bi ying, which literally means “very
certain to respond” in Chinese.
(6) It should be capable of registration and legal protection. A brand name cannot
be registered if it infringes on existing brand names.
- Co-branding - The practice of using the established brand names of two
different companies on the same product

Chapter 9: Developing New Products and

Managing the Product Life Cycle

- A product is born, goes through several phases, and eventually dies as

newer products come along that create new or greater value for
customers.
- Two challenges: new product development + product life cycle strategies
- New product development: The development of original products, product
improvements, product modifications, and new brands through the firm’s
own product development efforts.
- The purpose of this chapter is to understand how to keep up with
changing customer needs and demands in order to stay ahead of the
curve.
- Need to set up a systematic, customer-driven new product development
process for finding and growing new products.
- STAGES IN NEW PRODUCT DEVELOPMENT: Idea generation (the search
for new product ideas - internal (research and dev management and staff)
and external sources such as customers, competitors, crowdsourcing),
Idea screening (screening new product ideas to spot good ones and drop
poor ones as soon as possible - RWW; is it real, can we win, is it worth
doing), concept development and testing (product idea must be turned
into a product concept which is a detailed version of the new product idea,
stated in meaningful consumer terms).
- Remember three terms: product idea, product concept, product image.
- Concept testing: Testing new product concepts with a group of target
consumers to find out if the concepts have strong consumer appeal.
- Then, marketing strategy development which is designing an initial
marketing strategy for a new product based on the product concept. The
marketing strategy statement consists of: target market description, value
proposition, sales, market share and marketing mix.
- Business analysis: A review of the sales, costs, and profit projections for a
new product to find out whether these factors satisfy the company’s
objectives. Is the idea attractive business wise? This is important because
every company has a business goal. You might have a great product idea
but if this is not in line with the company’s objectives, then it is not feasible
to go ahead with it.
- Product development: Developing the product concept into a physical
product to ensure that the product idea can be turned into a workable
market offering. Here is the point where R&D and engineering come into
play. Investment-heavy part of the entire product development process.
- Test Marketing: The stage of new product development in which the
product and its proposed marketing program are tested in realistic market
settings. When is this likely? New product with large investment,
uncertainty about product or marketing program. When is this unlikely?
Simple line extension, copy of competitor product, low costs, management
costs.
- Commercialization: Introducing a new product into the market. It
addresses questions such as: when to launch, where to launch, planned
market rollout?
- MANAGING NEW PRODUCT DEVELOPMENT
- Customer-centered new product development: new product development
that focuses on finding new ways to solve customer problems and create
more customer satisfying experiences. Your product should delight
 consumers plus you should be able to predict demand and this is only
possible if you listen to your consumers.
- Team based new product development: New product development in
which various company departments work closely together, overlapping
the steps in the product development process to save time and increase
effectiveness. HR, Marketing, Engineering should see product
development through, from start to end, for example.
- The product development process should be holistic and systematic
rather than compartmentalized and haphazard.
- Systematic new product development - Innovation management system
approach has two favourable outcomes: creates an innovation oriented
company culture and yields a large number of new product ideas.
- Product life cycle strategies - the product life cycle has 5 distinct stages:
1. Product development begins when the company finds and
develops a new product idea.During product development, sales
are zero, and the company’s investment costs mount.
2. Introduction is a period of slow sales growth as the product is
introduced in the market. Profits are nonexistent in this stage
because of the heavy expenses of product introduction.
3. Growth is a period of rapid market acceptance and increasing
profits
4. Maturity is a period of slowdown in sales growth because the
product has achieved acceptance by most potential buyers. Profits
level off or decline because of increased marketing outlays to
defend the product against competition.
5. Modification strats: modify markets, products, marketing mix
6. Decline is the period when sales fall off and profits drop. You can
maintain product, harvest prod, or drop it

Chapter 10 - Pricing: Understanding

and Capturing Customer Value
- Both Amazon and Walmart are offering some value to consumers - what do we
mean by value or that this product is valuable to the consumer?
- Benefits relative to the price
- Price: 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.
- This is the most flexible aspect of marketing - can undergo changes quickly
- How is Second Cup pricing their products?
- Major Pricing Strategies - the product costs set the price floor (no profits below
this price) whereas perceived customer value sets the price ceiling (no demand
above this price)
- In the middle, we have competition and other external factors (competitors’
strategies and prices, marketing strategy, objectives and mix, nature of the
market and demand)
1. Customer value based pricing: this uses the buyers’ perceptions of value
rather than the seller’s costs. Value based pricing is customer driven, it is
set to match perceived value. For this, you access customer needs and
value perception, set target price to match customer perceived value,
determine costs that can be incurred, design product to deliver desired
value at target price.
2. Cost based pricing: you design a good product, determine product costs,
set price based on cost, convince buyers of the product's value.
- Within customer value based pricing, we have good-value pricing which is
offering just the right combination of quality and good service at a fair price.
More and more brands flock to this pricing strategy. You offer consumers
something extra or the same quality for less - everyday low pricing, for example.
- Other examples:
- EDLP - EDLP involves charging a constant, everyday low price with few or no
- temporary price discounts. For example, Imtiaz and ELO.
- High low pricing: involves charging higher prices on an everyday basis but
running frequent promotions to lower prices temporarily on selected items.
Examples: fashion brands, department stores with sales and coupons for store
credit-card holders.
- We also have value added pricing which is attaching value-added features and
services to differentiate a company’s offers and charging higher prices.
- Rather than cutting prices to match competitors, brands add quality, services, and
value-added features to differentiate their offers and thus support their higher
prices.
- Examples: business class flights, brands offering premium products.
- Cost-based pricing: sets prices based on the costs for producing, distributing,
and selling the product plus a fair rate of return for effort and risk (the markup).
- Fixed costs - do not vary with production or sales level so rent, heat, interest,
executive salaries.
- Variable costs - labour wages, raw materials, packaging, how long are you using
the machines for etc.
- Total costs: The sum of the fixed and variable costs for any given level of
production.
- Economies of scale: As you increase production, the cost per unit decreases.
Costs will be spread out now.
- The economies of scale slide: Over the long run, if you want to increase
production you might want to have different sizes of machinery in order to
 increase labour productivity and decrease average costs over time by increasing
the number of units.
- Cost plus pricing adds a standard markup to the cost of the product. Benefits:
sellers are more certain about costs - you're not changing prices when demand
goes up, for example because your costs do not depend upon this demand. Price
competition is minimized + buyers feel it is fair.
- Disadvantages: ignores demand and competitor prices. You don’t keep the
demand in mind. FMCG products.
- What if you don’t have the best machinery? Your cost will more likely be more
than that of your competitor.
- Break-even pricing: inverse engineering - setting price to break even on costs or
to make a target return.
- Competition-based pricing: Setting prices based on competitors’ strategies,
prices, costs, and market offerings. How does my product compare in terms of
the value it offers to consumers? How strong are the competitors?
- Q1: price conscious society, looking for more for less
- Q2: brand image of your competitor has to be taken into account
- Other considerations affecting price decisions - target costing: starts with an
ideal selling price based on customer value considerations and then target costs
that will ensure that the priceis met.
- The market and demand - pricing in different types of markets.
- Pure competition (many buyers, many sellers - not much time spent on marketing
strategy because they sell uniform commodities), monopolistic competition
(many buyers and sellers but the commodities are not similar, for example,
restaurants creating their niche), oligopolistic competition (3 to 4 companies
have a major market share, pure monopoly.
- Price elasticity of demand - price elasticity: measure of the sensitivity of demand
to changes in price.
- Inelastic demand: when demand (measured from number of sales) hardly
changes with a small change in price. Luxury products, necessities like
medicines.
- Elastic demand: when demand changes greatly with a small change in price.

Chapter 11 Pricing Strategies:

Additional considerations

- Market skimming pricing - strategy that sets high initial prices to skim revenue
layers from the market. Product quality and image must support the price +
buyers must want the product at this price.
- Market penetration pricing: involves setting a low price for a new product in order
to attract a large number of buyers and a large market share.
- Product mix pricing strategies:
- Product line pricing: takes into account the cost differences between products in
the line, customer evaluations of their features, and competitors’ prices.
- Optional product pricing: takes into account optional or accessory products
along with the main product.
- Captive product pricing: sets prices of products that must be used along with the
main product.
- By-product pricing: sets a price for by-products in order to make the main
product’s price more competitive.
- Product bundle pricing: combines several products at a reduced price.
- Price adjustment strategies; take into account different types of customers and
situations. Not everyone has the same kind of buying power.
- Discount and allowance pricing: reduces price to reward customer responses
such as making volume purchases, paying early, or promoting the product.
- Segmented pricing: selling at two or more prices to accommodate consumers;
different prices are not based on different costs - veteran discount, student
discount etc.
- Includes customer-segment pricing, product-form pricing, location-based
pricing, time based pricing.
- For segmented pricing to be effective, the market must be segmentable,
segments must show different degrees of demand, costs of segmenting cannot
exceed the extra revenue, must be legal.
- Psychological pricing: considers the psychology of prices and not simply the
economics; the price is used to say something about the product.
- Reference prices are prices that buyers carry in their mind and refer to when they
look at a given product.
- Promotional pricing: characterized by temporarily pricing products below the list
price, and sometimes even below cost to increase short-run sales. Examples:
special event pricing, limited time offers, cash rebates, low-interest financing,
extended warranties or free maintenance.
- Geographical pricing:
1. Free on board pricing
2. Uniform-delivered pricing: company charges the same price plus freight
to all customers, regardless of their location.
3. Zone pricing: company sets up two or more zones where customers
within a given zone pay the same price.
4. Basing-point pricing: means that a seller selects a given city as a basing
point and charges all customers the freight cost from that city to the
customer.
5. Freight-absorption pricing: strategy in which the seller absorbs all or part
of the freight charges in order to get the desired business.
 - Dynamic pricing: changing prices continuously to meet the needs and demands
of your individual consumers and situations. Hotels, airlines etc.
- International pricing: taxes, shipping charges etc.
- PRICE CHANGES - What strategies should you employ if a competitor cuts
prices?
- Initiating price changes - price cuts occur due to: excess capacity, increased
market share.
- Price increases occur due to: cost inflation, increased demand, lack of supply.
- Buyer reactions to price changes: price increase - product is hot, company greed
- Price cuts (low quality)
- Competitor reactions to pricing charges (pricing temporary or permanent, will
lower prices affect market share and profits, can/should action be taken?)
- Public policy and pricing strategies
- Pricing within channel levels - price fixing legislation requires sellers to set prices
without talking to competitors.
- Predatory pricing: prohibits selling below cost with the intention of punishing a
competitor or gaining higher long-term profits by putting competitors out of
business.

Chapter 14: Engaging Consumers and

Communicating Customer Value

- What is the key message behind Snickers “You’re Not You When You’re Hungry”
campaign?
- Do they communicate this message effectively? How?
- Try and dissect the ad as you think about this answer. What images are being
used, how are they capturing the attention of their target market? Think about not
just the message but also the setting.
- An integrated marketing communications campaign clearly and consistently
drives the brand’s “Snickers satisfies” positioning in an engaging and memorable
way.
- Think about the various ways you can reach your brand audience - you have to
come up with an integrated communications strategy, if you don’t have a
consistent message throughout, your audience might become confused about
your brand’s positioning + might think that you don’t know what your brand really
stands for.
- Quirky adverts in Pakistan - Ufone. What’s happened over time is that Ufone had a
funny/quirky theme - other brands started using the same actors which is why
 they lost their appeal (not novel anymore). All in all, the message lacked
consistency.
- Define the 5 promotion mix (marketing communications mix) tools for
communicating customer value.
- Difference between a consumer and a customer; customer buys, consumer
consumes (parent - customer, child - consumer).
- The 5 major promotion tools are: advertising, sales promotion, personal selling,
public relations (PR), direct and digital marketing.
- Advertising: Any paid form of nonpersonal presentation and promotion of ideas,
goods, or services by an identified sponsor (who is the ad by, for example). Types
are: broadcast, print, online, mobile, outdoor. Online and mobile are the most
convenient.
- Sales promotion: Short-term incentives to encourage the purchase or sale of a
product or a service. What sales promotions have you come across recently?
Also, do not confuse this with advertising.
- Sales promotions include seasonal sales, coupons/discounts, pakistan day sales,
black/white friday sales, PSL discounts on Foodpanda.
- Other types: discounts, coupons, displays, demonstrations
- Personal selling: Personal presentation by the firm’s sales force for the purpose
of engaging customers, making sales, and building customer relationships.
- Hotels/Restaurants, Insurance companies, personal interactions with a
consumer, service sectors thrive on personal selling + personal selling for
unsought products, pharma industries also thrive on personal selling - doctors are
educated, sent to conferences etc., the agricultural industry (reach out to farmers
personally in order to sell a fertilizer, for example). Basically anytime you have to
explain the benefits of your product/service is when you rely on personal selling.
- Public relations (PR): Building good relations with the company’s various publics
by obtaining favorable publicity, building a good corporate image, and handling or
heading off unfavorable rumors, stories, and events.
- Discuss the changing communications landscape and the need for integrated
marketing communications.
- The New Marketing Communications Model: We need this because consumers
are constantly changing, marketing strategies are changing + there are advances
in digital technology. This has brought a host of new ways of communications -
emails, messaging, blogs, social media marketing (via IG, FB and Twitter). Due to
the availability of these new mediums, you need this new marketing
communications model.
- The new marketing communications model comprises of content marketing -
creating, inspiring, and sharing brand messages and conversations with and
among consumers across a fluid mix of paid, owned, earned, and shared
channels.
- Integrated marketing communications (IMC) involves carefully integrating and
coordinating the company’s many communications channels to deliver a clear,
consistent, and compelling message about the organization and its products.
- Outline the communication process and the steps in developing effective
marketing communications.
- SENDER’S FIELD OF EXPERIENCE
- Starts with a sender: (entity that is taking part in sending the message)
- Encoding: how thoughts are creatively put into symbolic form
- Message: set of symbols transmitted to the target audience
- Media: ways in which the message travels from the sender to the receiver;
advertising, personal selling or direct marketing? What media do I want to use?
- Noise: Other advertisements that distort the communications process -
unplanned mostly, unintended message that you do not want your audience to
necessarily focus on.
- RECEIVER’S FIELD OF EXPERIENCE
- Decoding: Receiver assigns meanings to symbols, what is the interpretation.
- Receiver
- Response
- Feedback
- Steps in developing effective marketing communications:
- Identify the target audience, this will define your communication objectives.
- Determine the communications objective (for example, I want Coke sales to go
up)
- Design the message (advertise a lower price/bottle)
- Choose the media to send the message (electronic media, Youtube, social
networking websites?)
- Select message source and collect feedback
- The target audience: what will be said, who will say it, where will it be said, when
will it be said and how it will be said.
- There are different stages of an effective communications process - the goal of
marketing communications is to move target customers through the buying
process which is only possible if you understand customer needs and wants.
- The buyer-readiness stages: awareness, knowledge, liking, preference,
conviction, purchase. At each step, you will need to use a different marketing
communications strategy.
- Liking: you want the consumer to have an inclination towards your product.
- Preference: more inclined towards Brand A than Brand B
- The buyer-readiness stages help marketeers come up with effective marketing
communication strategies.
- In designing a message, you have to take care of 4 things: Get attention, hold
interest, arouse desire, obtain action aka the AIDA Model.
- Message content - “What to Say”
- Rational appeal: relates to the audience’s self-interest; to do with the direct
benefits of a brand. For example, “Dawlence reliable hai”
- Emotional appeal: this is an attempt to stir up positive or negative emotions to
motivate a purchase. For example, “Daagh toh ache hote hain”
- Moral appeal: directed to an audience’s sense of what is right and proper. For
example, public service messages.
- Message content is “what to say” and message structure and format is “how to
say it”(structure, lights, colours).
- Choosing communications channels and media:
- Personal communication - involves two or more people communicating directly
with each other. This could be face to face, phone, mail/e-mail, texting or internet
chat. Brand ambassadors, bank employees, personal messages about food
deals/discounts (foodpanda, for example), internet bots.
- This also includes opinion leaders (people’s whose opinions are regularly and
consistently sought), buzz marketing (involves cultivating opinion leaders and
getting them to spread information about a product or service to others in their
communities).
- Non-personal communication: media that carry messages without personal
contact or feedback, including major media, atmospheres, and events. Adverts on
TV, social media, adverts just there for your consumption. Atmospheres
important with restaurants, spas, offices etc.
- Events include PR events, exhibitions etc.
- NP communication impacts consumers directly - a channel used more often by
the target audience.
- Selecting the message source: impact of the message depends on how the
target audience views the message.
- Celebrities, athletes, entertainers, professionals, healthcare providers
- Collecting feedback: how many people who saw the ad even bought the
product/service - number of clicks, inversion, eye-ball stickiness, sales made etc.
- Explain the methods for setting the promotion budget and factors that affect the
design of the promotion mix.
- Setting the promotional budget: the affordable budget sets the promotion budget
at the level management thinks the company can afford.
- The percentage of sales method sets the promotion budget at a certain
percentage of current or forecasted sales or as a percentage of the unit sales
price. You have your sales as a proxy to decide what your promotional budget
will be.
- The competitive parity method sets the promotion budget to match competitors’
outlays.
- The objective and task method develops the promotion budget by specific
promotion objectives and the costs of tasks needed to achieve these objectives.
If you want to create awareness for example, you would want to use all channels
to reach the maximum number of your target audience - you will spend
accordingly.
- Shaping the overall promotional mix: In the push strategy, the company/producer
“pushes” the product to resellers, who in turn push it to consumers.
- In the pull strategy, the company promotes directly to final consumers, creating a
demand vacuum that “pulls” the product through the channel.
SESSION 26

The new marketing communications model:

Consumers are changing, marketing strategies are changing, advances in current digital
technologies.

Saad’s lecture last week – SMS, email, FB, IG, Twitter marketing. This is such a powerful
tool that we require entire departments to manage this type of marketing. When digital was
not being used so much, I would take some time for a bad review to spread.
Content Marketing: creating strong messages that resonate with your audiences, across a fluid
mix of paid, owned, earned, and shared channels.

Designing a message, how are you going to reach your audiences? You have to develop a
clear communications process. Starts with a sender (CocaCola deciding to send a message),
encoding (putting the thought into symbolic form – we care about
hunger/environment/aspects under corporate social responsibility – something creative needs
to be done. They’ve recently partnered with Rizq – using their logo to communicate that
they’re playing their role in society), the message (now that you’ve thought about the
imagery, you formulate a proper message that you then send out to your consumers), message
followed by media (refers the communication channels through which message reaches the
audiences – how do I want this message to reach my audiences?), noise (other advertisements
+ people’s perception of your message, clutter due to other advertisements, any unintended
message received from communication), decoding (consumer sees the ad, assigns meaning to
the message, is coke partnering with rizq or has it become cheaper?), response (reaction
towards the ad), response communicates feedback to the brand/company.

Steps in Developing Effective Marketing Communication

· Identify the target audience

· Determine the communication objectives

· Design the message

· Choose the media for message

· Select message source and collect feedback

- Identifying the target audience: what will be said, how it will be said, when
it will be said, where it will be said, who will say it?

- Buyer-Readiness Stages: Awareness, Knowledge, Liking, Preference,

Conviction, Purchase. A goal of marketing in general, and of marketing
communications in particular, is to move target audiences through the buying
process. Once again, it all begins with understanding customer needs and wants.

- Liking: the extent of your inclination towards your and other brands. Liking
could lead to preference (more inclined towards brand A than brand B – I like this
more than other market offerings), then your consumer should have strong
convictions about your product/service – they should be sure that their money will
not go to waste and that their needs and wants will be catered to. Remember
HotWheels example – had to build knowledge/awareness.
 - In DESIGNING AN EFFECTIVE MESSAGE, you have 4 goals: you want
for the audience to pay attention to your ad, should show interest, desire to own
the product/service, action (purchase/repurchase, engaging with the brand).

- Message content – what to say? Rational appeal relates to the audience’s

self-interest. For example, detergent ads – “clear benefits of the product”.

- Emotional appeal: an attempt to stir up positive or negative emotions to

motivate a purchase.

- Moral appeal: directed to an audience’s sense of what is right and proper.

- Message structure/format – how to say it? Do you want the audiences to

reach a conclusion, for example?

- CHOOSING COMMUNICATION CHANNELS AND MEDIA – personal

communication (BAs, for example) – involves 2 or more people communicating
directly with each other – includes face to face, phone, mail or email, texting.

- Opinion leaders – people whose opinions are sought by others.

- Buzz marketing: cultivating opinion leaders and getting them to spread the
core message.

- Non-personal communication: one way comm., ads on TV/billboards/social

media. These are basically channels that carry messages without personal
contact/feedback, including major media, atmospheres (for services), events
(launch/welcome events). Effects buyers directly (on avg you see 3-4k adverts
everyday)

- SELECTING THE MESSAGE SOURCE: the message’s impact depends

on how the target audience views the communicator – celebrities, athletes,
entertainers, professionals (health-care workers).

- FEEDBACK: involves the communicator understanding the effect on the

target audience.

Setting the total promotion budget and mix: 4 methods

1. Affordable method: sets the promotion budget at the level management thinks the
company can afford.

2. The percentage of sales method: sets the promotion budget at a certain % of current
or forecasted sales or as a % of the unit-sales price
3. The comparative-parity method: sets the promotion budget to match competitors’
outlays.

4. The objective and task method: develops the promotion budget by specific
promotion objectives and the costs of tasks needed to achieve these objectives.