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Transcript
Book 4.1
An Introduction to Marketing in Business
What is marketing?
The marketing concept:


i.
The UK defined marketing as: "Marketing is the management process which identifies,
anticipates, and supplies customer requirements efficiently and profitably".
The US defined marketing as: "Marketing is an organizational function and a set of
processes for creating, communicating and delivering value to customers and for managing
customer relationships in ways that benefit the organization and its stakeholders.”
Marketing Orientation:
Orientation
Key ideas
Product
- “An approach to business that centres its activities on continually improving and
refining its products, assuming that customers simply want the best possible quality
for their money.”
- Consumers want quality, performance, and features (Focus: Superior product).
- Low price, convenient distribution or convincing selling or advertising becomes.
- Consumer also wants value for money.
Production
- “An approach to business that centres its activities on producing goods more
efficiently and cost effectively, assuming that price is the only factor important to
customers.”
- Assumption: buyers will buy it if it’s cheap (Lower prices).
- Assumes consumers favor products that are widely available and highly affordable.
Selling
- “An approach to business that centers its activities on selling whatever it can
produce, assuming that customers are inherently reluctant to purchase.”
- Assumes that consumers will either buy or not enough of the organisations’
products unless the organization makes a substantial effort to stimulate the
customer’s interest in the product (Focus: needs of the seller).
Marketing
- “An approach to business that centers its activities on satisfying the needs and
wants of its customers.”
- The three previous orientations take an 'inside-out' approach, starting with what the
business is good at doing and what they think customers wants. But, in the
marketing orientation approach, takes an 'outside-in' approach. According to this
approach, business philosophy incorporating the marketing concept that emphasises
first determining the needs and wants of target markets and then trying to fulfill
those needs and expectations, and delivering the desired satisfactions more
effectively and efficiently than competitors. (Focus: different needs of buyers).
Shift from seller’s to buyer’s market (consumer orientation).
The consumer is king! Find a need and fill it.
“The difference between marketing and selling is more than semantic. Selling focuses on the needs
of the seller, marketing on the needs of the buyer. Selling is preoccupied with the seller’s need to
convert the product into cash; marketing with the idea of satisfying the need of the customer”.
Author; Dr. Helal Afify ~~ Editor; Omar Abu Jbara
Page | 1
Some marketing terms:
The term
Need
Want
Product
Customer
Consumer
Market
The description
- State of deprivation of some satisfaction.
- A specific satisfier for a need, one may be hungry: that is, in need for food, and
therefore want a roast dinner.
- Desire for specific satisfier of need.
- The end result of the manufacturing process, to be offered to the marketplace to
satisfy a need or want.
A person or business buying a product; also called a buyer.
A person who actually uses the product or could potentially do so.
- A market consists of all the actual and potential buyers of the business's products.
Markets are the set of actual and potential buyers of a product.
 Need = Necessity, Requirement, Essential, Pre-requisite.
- A state of felt deprivation.
 Want = Aspiration, Desire, Wish.
- The form shaped by a human need by culture and personality.
ii.
1-
Market segmentation, targeting and positioning:
Market segmentation:
- Is grouping the customers according to the differences in their needs and behaviour. In other
words, market segmentation is the process of dividing a market into distinct groups of buyers with
different needs, characteristics, or behaviour who might require separate products of marketing
programs. Divide the overall market into homogeneous groups (segments), in which consumers
have similar characteristics.
Criteria for effective segmentation: (NEEDS)
The following conditions typically need to be satisfied:
1- Measurable: It must be possible to define who the members of the segment are and how
many of them there are.
2- Accessible: Marketers must have some way of communicating with the chosen segment.
Targeted market segment itself must be accessible through existing channels and media.
3- Substantial: A segmentation exercise must be cost effective to be justifiable. Therefore, the
segment(s) have to be large enough to be worth aiming for (provide the required return on
investment). Each segment should be large enough to be profitable; it should have good
buying potential.
4- Congruent: Consumers within the segment have to react in a clearly different way from
other groups of consumers, so that they are distinguishable. What is important is different
across segments.
5- Stable: The nature and membership of the segment must be reasonably constant. Stability is
also required for long-term customer satisfaction and loyalty.
Author; Dr. Helal Afify ~~ Editor; Omar Abu Jbara
Page | 2
Marketing segmentations: (TYPES)
Segmentation
Geographic
Demographic
Psychographic
Behavioural
Key ideas
- This type groups potential customers according to where they live (where they are
located) because different geographical locations vary with regard to climate (e.g. cold
weather closing).
- Dividing a market into different geographical units, such as national, regional, local,
city size, density of population, and climate.
- This type groups people according to factors (demographic variables) such as age,
gender, family size/lifestyle, education and economy on the bases that people's needs
often vary with their demographic characteristics (what their characteristics are).
- Demographic segmentation, aport from its usefulness in predicting many types of
buying behaviour, is popular with marketers because it is relatively easy to do.
- Most popular because our needs, wants and usage rates depend on the
demographics.
- Age and life cycle groups: kids (corn flakes), adults, magazines (teen stuff).
- This type groups potential customers according to their beliefs, attitudes and opinions,
as well as their psychological characteristics.
- Dividing a market into different groups based on social class, lifestyle, or personality
characteristics.
- This type groups people according to the way in which they use, and benefit from, the
product (why/how they use the product or service) (e.g. car drivers might be
segmented into business and private users).
- Dividing a market into groups based on purchase occasion, benefits sought, user status,
usage rate, loyalty status, readiness state, and attitude towards the product.
2- Targeting segment:
- The process of evaluating each market segment’s attractiveness, and selecting one or more segments
to enter.
- Consists of a set of buyers who share common needs or characteristics that the company decides to
serve.
- Involves evaluating each market segment’s attractiveness and selecting one or more segments to enter.
Evaluate the segments identified in the segmentation process; select a market focus - target market(s).
At a generic level, there are three principles targeting strategies that marketers can pursue:
1- Niche (Concentrated) marketing: One product/plan to one group of consumers. The firm
concentrates on one group of consumers with a distinct set of needs and uses a tailor-made
marketing plan to attract this single group. One product to one market niche. Useful for
smaller firms that do not have the resources to serve all markets.
2- Segment (Differentiated) marketing: Appeals to two or more market segments with a
different plan for each. A market-coverage strategy in which a firm decides to target several
market segments and designs separate offers for each. Multiple segmentation the firm aims
at two or more different market segments, each of which has a distinct set of needs, and
offers a tailor-made marketing plan for each segment (e.g. Lexus versus Toyota). Two or
more products to two or more groups.
3- Undifferentiated (Mass) marketing: One product, one plan to one basic market. A marketcoverage strategy in which a firm decides to ignore market segment differences and go after
the whole market with one offer (e.g. the market for petrol remains largely
Undifferentiated). Mass marketing, the firm tries to reach a wide range of consumers with
one basic marketing plan. These consumers are assumed to have a desire for similar goods
and service attributes. One product for everybody.
Author; Dr. Helal Afify ~~ Editor; Omar Abu Jbara
Page | 3
3-
Positioning the business's offerings:
-
-
Arranging for a product to occupy a clear, distinctive, and desirable place relative to
competing products in the minds of target consumers. How the target market perceives the
product offering in comparison to competitors’ brands.
In the minds of target consumers,
Formulating competitive positioning for a product, and creating a detailed marketing mix.
Steps in market segmentation, targeting and positioning:
Market Segmentation:
 Identify bases for segmenting the market.
 Develop segment profiles.
Target Marketing:
 Develop measure of segment attractiveness.
 Select target segments.
Market Positioning:
 Develop positioning for target segments.
 Develop a marketing mix for each segment.
Transaction and relationship marketing:
Transaction marketing: Transaction is a trade between two parties that involves at least two things
of value, agrees upon conditions, a time of agreement and a place of agreement.
Relationship marketing: gives a company new opportunities to gain a competitive edge by moving
customers up a loyalty hierarchy from new customers to regular purchasers, then to loyal supporters
of the company and its goods and services, and finally to advocates who not only buy
the company’s products but recommend them to others.
Relationship Marketing vs. Marketing Mix: Relationship marketing is a more wholistic approach
than marketing mix - 4Ps. As part of marketing strategy, they both seek to recruit and retain
customers. However, relationship marketing has communication at its center
Factors driving relationship marketing:
Relationship marketing concerns attracting, developing, and retaining customer relationships. The
increased attention to relationship marketing since the 1990s has been driven by number of factors:
 More intense, often global competition has meant that businesses have needed methods of
differentiating themselves from their competitors in ways that go beyond the traditional
marketing mix.
 Many markets have become fragmented into smaller and smaller segments and thus traditional
market segmentation has reached its limited.
 Product quality has become generally high and business have found increasingly difficult to
compete on superior quality alone as most competitors are able to offer similar quality. This is
forcing businesses to seek competitive advantage in other ways.
 Customers have become more demanding and are not as brand loyal.
Author; Dr. Helal Afify ~~ Editor; Omar Abu Jbara
Page | 4
Book 4.2
Understanding marketing environments
• The marketing environment: the actors and forces that affect a business’s ability to build
and maintain successful relationships with customers.
• Studying the environment allows marketers to take advantage of opportunities as well as to
combat threats. Marketing intelligence and research are used to collect information about the
environment.
• Responding to Environmental Forces:
- Reactive approach: passive view of environment as uncontrollable.
- Proactive approach: actively attempts to shape and influence environment. Strategies are constructed to
overcome market challenges and take advantage of opportunities.
• Aspects of the marketing environment:
- Micro-environment.
- Macro-environment.
Macro-environment
Interest rates
Micro-environment
Competitors
Exchange rates
Customers
Technology
Government
Firm: internal
environment
Some publics
Culture
Intermediaries
Climate
Suppliers
Some publics
Foreign competition
Figure 1: The marketing environment
The internal environment:
- Areas inside of a business.
- All departments must “think consumer” and work together to provide superior customer value and satisfaction.
- Affects the marketing department’s planning strategies.
- Marketing must consider other parts of the organisation including finance, R&D, purchasing, operations and
accounting.
The micro-environment:
The micro-environment: forces close to the business that affects its ability to serve its customers. The
micro-environment consists of individuals and organisations that are in direct contact with the business. They
include existing and potential customers, suppliers, competitors, intermediaries and some other stakeholders.
Author; Dr. Helal Afify ~~ Editor; Omar Abu Jbara
Page | 5
The macro-environment:
Larger societal forces that affect the micro-environment. The business and all of the other actors
operate in a larger macro-environment of forces that shape opportunities and pose threats to the
business.
• External to the business, but part of its marketing system because of its close relationship.
• Its market; the people or organizations whose wants and needs the business intends to
satisfy.
• The widely accepted STEEP (Sociological, Technological, Economic, Environmental,
Political) model offers one way of classifying the macro-environment factors.
Sociological factors:
• Marketing's social-cultural environment: the relationship between marketing and society
and its culture.
Some of sociological factors include:
•
•
•
Demographic factors: population size; growth trends; age structure; education levels; and family
structures.
Social factors: impact of social class; impact of family and other social groupings; roles of men and
women; and attitudes toward divorce and single parenthood.
Cultural factors: language; ethnicity; religion; national culture; globalization; increased migration;
and continued cultural differences between and within nations.
Technological factors:
• Technology refers to all the ways in which humans work upon and modify their environment, and it
changes all the time. The technological environment represents the application of knowledge in
science, inventions, and innovations to marketing.
• Advancing technology creates new forms of competition and communications; Fax, ATM’s, CDROM, Internet. Also creates new industries to be supplied. Also has important effects on how
people spend their time: working and shopping from home, voice mail, surfing the Net.
Economic factors:
• From a marketer's perspective the most important aspect of the economic environment is its capacity
to influence consumer buying power and spending patterns.
• The economic environment consists of factors that affect consumer purchasing power and spending
patterns. It is not enough to have people, the people must have buying power.
• The economic environment represents the relationship between economic changes and marketing
decisions: Distribution of income; real world growth; saving, debt, and credit availability; exchange
rates; inflation; employment; business cycles, and others.
Natural environmental forces:
• The natural environment consists of natural resources required by marketers or affected by
marketing activities. The natural environment represents the interface between the earth’s natural
resources and marketing: availability and cost of raw materials; availability and cost of energy; role
of government; and pollution problems and regulation.
Political factors:
• Political factors refer to laws, government agencies, and pressure groups (such as: consumer rights
groups) that influence and limit the activities of various organisations and individuals in society.
• Political trends: Increased legislation and regulation affecting business; laws protect companies,
consumers and the interests of society; and increased emphasis on socially responsible actions.
• In capitalist economies laws that regulate business behaviour are passed for three main reasons:
1) To protect businesses from each other (E.g. to prevent cartels and monopolies, and to limit unfair
competition);
2) To protect consumers from unfair practices (such as depictive advertising or unsafe products); and
3) To protect the interests of society as a whole from the negative consequences of unrestrained business
behaviours.
Author; Dr. Helal Afify ~~ Editor; Omar Abu Jbara
Page | 6
Book 4.3
Understanding customers and consumption
A- Consumer buying behaviors’:
• Defined as the buying behaviour of the final consumers, individuals and households who
buy goods and services for personal consumption. Or refers to the buying behavior of
people who buy goods and services for personal use.
• Successful marketing decisions require a thorough knowledge of consumer behaviour.
• The consumer behaviour model is conceptual and organisational: provides logical way of
organising the many variables which influence consumers and their decision making
processes.
There are a number of different academic approaches to understanding consumer behaviour:
1- The rational approach (Belk, 1995):
- This approach assumes that consumers tend to make rational choices about the products and
services they buy and use.
- This approach is concerned with understanding how individual consumers evaluate and
choose the products, so that marketers can tailor their offerings more effectively to
consumer needs and expectations.
2- The model of consumer behaviour (Kolter et al., 2001): this model does not go into detail on
what goes on inside the buyer's mind - it treats this as a 'black box'; that is, something which
is known to exist but the internal workings of which are unknown (This box consists of the
buyer’s characteristics and the buyer’s decision process. Those factors have a large influence in
the buyer’s decision process).
This model assumes that there are two main types of external influence on consumers:
1- Market stimuli: the marketing offerings of different businesses.
2- Elements of the business environment (STEEP model).
Types of consumer buying behaviour:
There are four types of consumer buying behaviour according to Assael (1987) (Figure 5):
1- Complex buying behaviour: First develop beliefs about product, then develop attitudes
and then make a choice. Consumers undertake complex buying behavior when they are
highly involved in a purchase and perceive significant differences among brands.
Consumers may be highly involved when the product is expensive, risky, purchased
infrequently, and highly self-expressive. Typically, the consumer has much to learn about
the product category. For example, a house, cars, a personal computer buyer may not know
what attributes to consider.
2- Dissonance-reducing buying behaviour: First Act, then develop beliefs, then end up with
attitudes. Dissonance-reducing buying behavior occurs when consumers are highly involved
with an expensive, infrequent, or risky purchase, but see little difference among brands. E.g.
financial services products, such as insurance or investment products.
3- Habitual buying behaviour: Habitual buying behavior is perhaps the most common type of
buying behaviour. This occurs under conditions of low consumer involvement and little
significant brand difference. Consumers have little involvement in this product categorythey simply go to the store and reach for a brand. If they keep reaching for the same brand, it
is out of habit rather than strong brand loyalty. Consumers appear to have low involvement
with most low-cost, frequently purchased products. Because buyers are not highly
committed to any brands, marketers of low-involvement products with few brand
differences often use price and sales promotions to stimulate product trial.
4- Variety-seeking buying behaviour: Consumers undertake variety-seeking buying behavior
in situations characterized by low consumer involvement but significant perceived brand
differences. In such cases, consumers often do a lot of brand switching. E.g. different types
of biscuit, bread or ice-cream.
Author; Dr. Helal Afify ~~ Editor; Omar Abu Jbara
Page | 7
B- Business buying behaviour (Business-to-Business):
• Business-to-business (B2B) buying behavior: refers to decision making and other activities of
organisations as buyers.
• Business buyer behavior refers to the buying behavior of the organisations that buy goods and
services for use in the production of other products and services that are sold, rented, or supplied to
others.
The differences between consumer and business-to-business markets (Kolter et al., 2001):
Compared to consumer markets, business markets:
1- Market structure and demand: Fewer but larger buyers, concentrated - Business demand is
derived from consumer demand - Customers are more geographically concentrated.
2- The nature of buying unit: Multiple decision-makers (Business purchases involve more decision
participants) - Business buying involves a more professional purchasing effort - rational.
3- Types of buying behaviours: More complex - formalised - dependent.
Types of Buyer Business Behaviour:
•
•
•
New task buy: The buyer purchases a product or service for the first time. The greater the cost or
risk, the larger the number of decision participants and the greater the information gathering.
Straight re-buy: The buyer routinely reorders something without any modifications (routine or
regular basis). E.g. office stationary.
Modified re-buy: the buyer wants to modify product specifications, prices, delivery requirements, or
other terms. E.g. replacement for worn-out equipment.
C- Social and cultural aspects of consumption:
Marketing is not only an aspect of business management; increasingly, it is also seen as an
important feature of contemporary, affluent societies (sometimes called consumer societies).
Cultural and social aspects of consumption:
1- Hedonistic consumption: many people enjoy the fact of shopping itself; for instance, the
anticipation, the browsing and the comparison of goods, the atmosphere of smart shops or lively
markets.
2- Consumption and identity: a second aspect of consumption is the way in which it can become a
means to help people construct (and communicate) their psychological identity.
3- Consumption and communication: many consumption activities take place in social settings, most
frequently the family, but also within circles of friends, work groups, and others. Consumption
becomes a kind of language through which people show their status and taste; and through which
they express social relationships.
Ethical issues in customer relations:
• Customers are some of the most important stakeholders in a business, hence it is widely accepted that
businesses have responsibilities towards their customers. Most businesses realize that it is in their own
best interest to treat their customers well.
• There are may examples of businesses behaving in unethical ways towards their customers, such as:
1- Customers enter into purchase agreements out of their own free will and that it is up to them to
make sure that the products and services they buy meet their requirements (this is known as the
'caveat emptor' or 'buyer beware' principle).
2- Consumers have less knowledge than producers about products, particularly about the less
abvious aspects, such as quality and safety standards or durability.
3- Tobacco companies have been accused of knowingly hooking their customers on a product
hazardous to their health, whilst denying denying its addictive properties.
4- Financial services companies have been accused of deliberately misleading their customers in
order to enhance sales of insurance policies, pensions, and other personal finance products.
Author; Dr. Helal Afify ~~ Editor; Omar Abu Jbara
Page | 8
Book 4.4
The marketing mix
1- Product:
• The product should be what the customer wants and expects to get.
• Products can be described as a 'bundle of benefits'. This means that it is not usually the actual
product itself which is important to customers but what it will do for them.
• There are three levels of product benefits (see figure 1):
1- The core benefit: is the kind of main benefit and is NOT the tangible, physical product You
can't touch it. That's because the core product is the benefit of the product that makes it valuable to
you. So when you buy a car for example, the benefit is convenience i.e. the ease at which you can
go where you like, when you want to. Another core benefit is speed since you can travel around
relatively quickly. Marketers must first define what the core benefits the product will provide the
customer.
2- The actual product benefit: is the tangible, physical product. You can get some use out of it.
Again with the car example, it is the vehicle that you test drive, buy and then collect. Marketer must
then build the actual product around the core product. May have as many as five characteristics
(quality level, features, design, brand name and packaging).
3- The augmented product benefits: is the non-physical part of the product. It usually consists of
lots of added value, for which you may or may not pay a premium. So when you buy a car, part of
the augmented product would be the warranty, the customer service support offered by the car's
manufacture, and any after-sales service. Augmented Product - offer additional consumer benefits
and services (installation, after-sale service, warranty, delivery and credit, and customer training).
Core product
Actual product
Augmented product
Installation
Packaging
Brand name
Delivery
and credit
Features
Core benefit or
servcie
Quality
After-sale
service
Styling
Warranty
The three levels of product
The product life cycle (PLC):
Author; Dr. Helal Afify ~~ Editor; Omar Abu Jbara
Page | 9
• The course of a product’s sale and profit over it lifetime. It involves four distinct stages (see
figure 3): introduction, growth, maturity, and decline. The characteristic profile is an Sshaped growth curve.
- The introduction stage: after a new product has been developed and is first introduced to the
market. In this stage sales are small and the rate of market penetration is low because the industry’s
products are little known and customers are few.
- The growth stage: characterized by accelerating market penetration as product technology
becomes more standardized and prices fall.
- The maturity stage: increasing market saturation and slowing growth as new demand gives way to
replacement demand (direct: customers replacing old products with new products, or indirect: new
customers replacing old customers).
- The decline stage: product becomes challenged by new products that produce technologically
superior substitute products.
The life cycle concept is useful for describing what is happening to a product at a particular moment
but it is not much use for predicting the product's future.
Sales
Money
Profit
Introduction
Growth
Maturity
Decline
Time
New product development:
• To create successful new products, the business must:
- Understand its customers, markets and competitors;
- Develop products that deliver superior value to customers.
• Model of the new product development process (Crawford, 1991): in this model, a number
of steps of new product development are shown in the following sequence:
Steps of new product development:
Steps
1 New product planning
2 Idea generation
3
4
5
6
Idea screening and evaluation
Technical development
Market appraisal
Lunch
Features
A business looks at its current products, how well they are performing, and where the marketing
environment poses threats to existing products and opportunities for new products.
Specific ideas for new products are generated and collected, perhaps through group discussion
techniques such as brainstorming.
The ideas generated in the previous step are examined for their feasibility and marketability.
The technical aspects of the product are investigated and prototype is developed.
Market research is carried out to assess whether the product would be successful in the market.
The product is produced and offered in the market.
2- Pricing:
Author; Dr. Helal Afify ~~ Editor; Omar Abu Jbara
Page | 10
• Pricing is one of the most important and complex marketing decisions. Of all the aspects of
the marketing mix, price is the one, which creates sales revenue - all the others are costs.
The price of an item is clearly an important determinant of the value of sales made. In
theory, price is really determined by the discovery of what customers perceive is the value
of the item on sale. Researching consumers' opinions about pricing is important as it
indicates how they value what they are looking for as well as what they want to pay.
• Objectives in pricing: Achieve a target return on investment; create stabilization of price
and margin; reach a market share target; meet or prevent competition; profit maximization;
and survival.
• Pricing must be carefully coordinated with the other marketing mix elements.
Approaches to pricing:
There are three main approaches to setting prices, which vary in the degree to which they are customer
oriented.
Approaches of pricing:
Approach
1
Features
Cost-based
- Adding a standard markup (a fixed profit percentage) to cost, to cover unassigned costs and provide a
pricing
(Cost- profit.
- The least customer-oriented pricing method.
Plus Pricing)
2
Customer-based
pricing
3
Competitionbased pricing
- Popular pricing technique because it simplifies the pricing process, Price competition may be
minimized, and it is perceived as more fair to both buyers and sellers.
- By using solely a cost-based approach the seller my miss opportunities for additional profit or set a
price too high to realise adequate sales to even cover cost.
- The fundamental flaw of this approach to pricing is that it ignores demand and fails to account for
competition.
- Uses customers' perceptions of value rather than seller’s costs to set price.
- Is more in line with a marketing orientation, as it stats with the customer's willingness to pay.
- Net value = Perceived benefits to customer (gross value) minus all Perceived outlays (Money, Time,
Mental/Physical effort)
- Pricing influenced primarily by competitors’ prices.
- Involves comparing the prices of all competing products and then setting the price of one's own
product.
- Determine your competitor’s pricing, after this, you must decide to: price below or in line with or
above the competition.
- Method importance increases when: competing products are homogeneous or lack differentiation, and
business is serving markets in which price is a key consideration.
Cost-based pricing:
Product
Cost
Price
Value
Customer
s
Customer-based pricing:
Customers
Value
Price
Cost
Product
Approaches of Pricing
In practice, businesses will take into account all three elements of costs, customer perceptions and
competition when setting prices.
3- Place:
Author; Dr. Helal Afify ~~ Editor; Omar Abu Jbara
Page | 11
•
•
•
Place: Making goods and services available in the right quantities and at the right locations when customers want them.
Distribution Channels: A series of businesses or individuals participating in the flow of
products from producer to final user or consumer.
Marketing channel strategy is growing in importance. Why?
1234-
Search for sustainable competitive advantage.
Growing power of retailers in marketing channels.
The need to reduce distribution costs.
The increased role and power of technology.
5- The new stress on growth.
Members of the distribution channel:
1- The shortest distribution channel (also called direct distribution or producer to
customer): are those in which producers sell directly to final customers without any
intermediaries. The internet now plays an important role in connecting businesses directly
with their customers (e.g. mail order) without the need for further intermediaries.
2- Slightly longer: are those channels which include retailers as well as producers and final
customers. Distribution channels involving large retail businesses often take this shape.
3- Smaller retailers: are often not in a position to buy directly from manufacturers. In this case
the channel contains a further level, namely wholesalers.
4- Wholesalers: are businesses that buy products from producers and sell them on to retailers.
They often carry out a number of functions in the distribution channel, such as storage and
transportation, information gathering and dissemination, or certain promotional activities.
5- Retailers: are businesses that buy from producers or wholesalers and sell on to consumers
(such as: high street shops, out-of-town superstores, internet seller, door-to-door salespeople).
Technology has the power to greatly enhance the effectiveness and efficiency of marketing
channels and could potentially change the entire structure of distribution around the world.
4- Marketing communications (Promotion):
•
Marketing Communication or Promotion is the communication undertaken by a firm to
persuade/inform potential buyers to accept ideas, concepts, or things. The concept under which
a business carefully integrates and coordinates its many communications channels to deliver a clear,
consistent, and compelling message about the business and its products. Marketing communications
is not a straight forward, one-way process from marketers to potential customers.
•
Marketers often follow the so-called AIDA approach, which suggests that good marketing
communication should go through the sequence of stimulating 'Awareness', 'Interest', 'Desire' and
'Action' on the part of consumers (get your customer’s Attention, keep them Interested, generate a
Desire and encourage them to take Action). AIDA framework guides message design.
•
Promotional Mix: is the specific mix of advertising, personal selling, sales promotion, and public
relations that a firm uses to pursue its advertising and marketing objectives (see figure 5).

Direct marketing: direct communications with carefully targeted individual consumers-the
use of telephone, mail, fax, e-mail, the internet, and other tools to communicate directly with
specific consumers. Direct marketing such as: sending catalogues and telemarketing.
Book 4.5
Author; Dr. Helal Afify ~~ Editor; Omar Abu Jbara
Page | 12
Addressing societal and environmental concerns in marketing
The societal marketing concept:
• The societal marketing concept holds that a business should work out what the needs, wants
and expectations of its target customers and markets are.
• It should then satisfy these needs, wants and expectations better and more effectively and
efficiently than competing businesses, in a way that maintains or improves the customer's
and society's well-being.
• Societal Marketing: A societal oriented marketer intends to design products that are both pleasing
and beneficial
• Kotler (1972), who was among the first to write about the idea of societal marketing, argue
that businesses should think of the product they offered and where developing in terms of
two dimensions:
1- The immediate satisfaction they provided to consumers;
2- The long-term consumer welfare they provided.
Figure 1 shows four different types of product, depending on whether the score is high or low on
these two dimensions.
Long-run
consumer welfare
Immediate satisfaction
Low
High
High
Low
Salutary products
Desirable
products
Deficient products
pleasing products
Classification of new product opportunities (Kolter, 1972, p. 56)
• Societal Classification of Products
In the above diagram the products are classified according to their degree of immediate consumer
satisfaction and long-run consumer benefit.
1- Desirable Products: gives both high immediate satisfaction and high long run benefits e.g. Fresh
fruit juices.
2- Salutary Products: have low appeal but may benefit consumers in the long run e.g. seat belts,
pension plan insurance.
3- Pleasing Product: gives high immediate consumer satisfaction but may hurt the consumer in the
long run e.g. cigarettes and junk food.
4- Deficient Product: gives neither immediate appeals nor long run benefits e.g. poor quality cheap
imitations.
Marketers must become aware of the ethical standards and acceptable behaviour in today’s society.
This awareness means that marketers must recognise the viewpoints of three key players: the
company, the industry, and society.
Green marketing:
Author; Dr. Helal Afify ~~ Editor; Omar Abu Jbara
Page | 13
Unfortunately, a majority of people believe that green marketing refers solely to the
promotion or advertising of products with environmental characteristics. Terms like Recyclable,
Ozone Friendly, and Environmentally Friendly are some of the things consumers most often
associate with green marketing. While these terms are green marketing claims, in general green
marketing is a much broader concept, one that can be applied to consumer goods, industrial goods
and even services.
Thus, green marketing incorporates a broad range of activities, including product
modification, changes to the production process, packaging changes, as well as modifying
advertising. Yet defining green marketing is not a simple task. Indeed the terminology used in this
area has varied, it includes: Green Marketing, Environmental Marketing and Ecological
Marketing. While green marketing came into prominence in the late 1980s and early 1990s, it was
first discussed much earlier.
Green marketing is the best known and most frequently applied designation in the
management practice. This refers to the leading role of environmental considerations compared to
that of the principle of social equity as basic elements of the sustainability concept.
There are a large number of well-known environmental problems which are largely or partly
the result of human economic activity. Throop (1993) list the following problems at local, regional
and global level:
Steps of new product development:
Environmental issues
1
2
3
Features
Modern society produces ever large quantities of industrial and household waste, whereas
suitable places for landfill sites and other forms of waste disposal become ever scarcer.
Inadequate solid waste disposal
capacity
Industrial processes and consumer use of more and more machinery, including cars, leads to
Air pollution
4
Declining fish
populations
Topsoil erosion
5
Ozone depletion
and
crustacean
6
7
8
air pollution.
Modern fishing fleets use high-tech methods to find and catch more and more fish, to a
point where major fisheries worldwide have collapsed.
This is a common problem associated with modern agriculture, particularly large-scale,
industrial-style agriculture - heavy machinery disturbs top soils which are then blown away
by wind or washed away by rain.
CFCs (chlorofluorocarbon), a chemical once common in aerosols and refrigerators, is the
main culprit of ozone depletion; the pushing out of such chemicals from consumer products
and industrial processes may be able to reverse this process.
This results from industry, agriculture, households, shipping and other sources.
Such as many artificial chemicals.
Population pressure, intensive agriculture and industrial development all encroach on the
habitats of plant and animal species and can lead to their extinction.
Marine and fresh water pollution
Toxic waste accumulation
Species extinction and reduction of
biodiversity
This is one example of valuable wildlife habitats being destroyed by development.
9 Wetlands destruction
Accelerated use of fossil fuels in industrial processes and consumption is thought to
10 Climate modification
contribute to global climate change.
Environmental marketing
As a term for marketing with a concern for ecological issues has established itself during the past
few years as consumer behavior has become more environmentally conscious. It can be seen as a
continuation of the adaptation of marketing thinking to the requirements of each marketing era. A
common feature of most definitions for “green”, “ecological”, “ecologically oriented”, or
“environmental” marketing is that marketing in the ecological era attempts to connect the classical
components of marketing and management of ecological issues.
Author; Dr. Helal Afify ~~ Editor; Omar Abu Jbara
Page | 14