Download Chapter 1: INTRODUCTION TO MARKETING

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Marketing
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Chapter 1:
Introduction to Marketing
Chapter 2:
Marketing Environment
Chapter 3:
Managing Marketing System
Chapter 4:
Target Market
Chapter 5:
The Product
Chapter 6:
The Price
Chapter 7:
The Distribution
Chapter 8:
The Promotion
Chapter 1:
INTRODUCTION TO MARKETING
I. EVOLUTION OF MARKETING
What is marketing?
Market definition – is a group of people or organizations with common needs
 
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to satisfy or problems to solve, with the money to spend to satisfy needs or solve
problems, and with the authority to make expenditure decisions.
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Chapter 1:
INTRODUCTION TO MARKETING
I. EVOLUTION OF MARKETING
Market Concept:
The concept of Market finally brings us to the concept of Marketing.
- Market mean human activity that takes place in relation to
markets.
- Market mean working with markets to allow the exchange of
goods or services with the purpose of satisfying our needs or
wants.
Chapter 1:
INTRODUCTION TO MARKETING
I. EVOLUTION OF MARKETING
Marketing Concept:
The following we have several concepts of marketing
- Marketing : The process of planning and executing the concept,
pricing, promotion, distribution, of ideas goods and service to
create exchanges that individual and organizational objectives.
- Marketing : The process of identifying needs and satisfying these
needs and wants with suitable goods or services, through product
design, distribution and promotion and either as a business or
non-profit making organization.
Marketing definition:
Marketing mean human activity directed a satisfying needs and
wants through exchange processes.
Chapter 1:
INTRODUCTION TO MARKETING
I. EVOLUTION OF MARKETING
Needs:
- Basic needs for clothing, Warmth and safety, food, sex and so on.
- Social needs for love, belonging…
- Individual needs for knowledge and self expression.
These needs are not created by advertising agencies, but are a
basic part of human nature.
Wants:
Wants are human needs which are determined by culture and
individual personality.
Example: a hungry person in Cambodia might want rice and
spinach, in Australia a meat pie and potato.
Chapter 1:
INTRODUCTION TO MARKETING
I. EVOLUTION OF MARKETING
Demands:
People have almost unlimited wants but limited resources.
Therefore, they usually choose products that produce the most
satisfaction fore their money, so people wants become demands
when they have the money to be able to afford it.
Products:
A product is anything that can be offered in a market that might
satisfy a want or a need.
Example: Your wants and needs are to look better to be more
attractive. What are the product groups that may meet these needs
and wants?
- Clothing, Hairdressing services, Perfume, deodorant ect.
Chapter 1:
INTRODUCTION TO MARKETING
I. EVOLUTION OF MARKETING
Services:
Services are activities, that are intangible, exchange directly from
producer to customer, and consumed at the time of production.
e.g. Hotel, Air line, School,…etc.
Exchange:
Is the act of obtaining a desired object from someone by offering
something in return. e.g. money, barter, This way people can
concentrate on the things they can produce best and then trade
them for other products that are produced by others.
Exchange is the most fundamental concept of marketing.
Chapter 1:
INTRODUCTION TO MARKETING
I. EVOLUTION OF MARKETING
Transaction:
Transaction is the unit of measurement. Mr. A give money or
goods to Mr. B and services goods in return.
Chapter 1:
INTRODUCTION TO MARKETING
II. IMPORTANCE OF MARKETING
Why is Marketing important?
Marketing is one of most powerful tools employed by organizations
in their struggle for survival and growth.
-Marketing is important to every consumer
-Marketing will be important to your job
-Marketing affects standard of living and economic growth.
Difference between Marketing and Selling
- Selling concept : Business makes product and then tries to sell it.
- Marketing concept: Business finds out what a customer wants and
they develop a product to meet the customers need.
Chapter 1:
INTRODUCTION TO MARKETING
III. THE MARKETING MANAGER
Who is Marketing Manager?
- Anyone responsible for making significant marketing decisions.
- In a small business there may be only one marketing manager.
e.g. selling petrol on roadside, one person responsible for deciding:
-What type of petrol?
-How much stock,
-How to sell it,
-How much to sell it,
-For where to where place the business,
-How to present the petrol,
-What level of service.
Chapter 1:
INTRODUCTION TO MARKETING
III. THE MARKETING MANAGER
- In a large business there may be many people involved in
marketing. In a large business the marketing decision become
more complex.
TYPICAL RESPONSIBILITIES OF MARKETING MANAGERS
-Advertising,
-Competitor analysis,
-Customer analysis,
-Where to place people involved selling,
-How products are to be distribute,
-Preparation of marketing plans,
-Pricing
-Promotion,
-Product and service development
-Sales forecasting.
Chapter 1:
INTRODUCTION TO MARKETING
IV. MARKETING MANAGEMENT EVOLUTION
Production
Sales
Marketing
Social responsibility
Orientation
Orientation
Orientation
& human Orientation
1- Production Orientation
Function of sales department is to sell the company’s output at a
price set by production. Underlying assumption “Marketing effort is
not needed to get people to buy a product that is well made and
reasonably priced”.
Chapter 1:
INTRODUCTION TO MARKETING
IV. MARKETING MANAGEMENT EVOLUTION
2- Sales Orientation
A realization that simply to make a product was not enough. The
problem was to try to sell the output.
- The product had to be sold
- The idea of first finding out what the customer wanted
didn’t really enter the minds of the organization.
3- Marketing Orientation
Attention focused on marketing – what the customer really wanted.
Marketing managers introduced at the beginning of the production
cycle rater then at the end. Most businesses are now operating at
this level.
Chapter 1:
INTRODUCTION TO MARKETING
IV. MARKETING MANAGEMENT EVOLUTION
4- Social responsibility & human Orientation
The need to work in a socially responsible manner due to external
pressure,
e.g. Customer discontent, Environmental issues, Political/legal
forces.
Chapter 2:
THE MARKETING ENVIRONMENT
THE EXTERNAL ENVIRONMENT
Macro Environmental Forces
1-Demography
2-Economic Conditions
3-Social and Cultural Forces
4-Political and Legal Forces
5-Technology
6-Competitor
7-Natural
Micro Environmental Forces
Supplier
Intermediaries
Company’s Marketing
Organization
Intermediaries
Market
Chapter 2:
THE MARKETING ENVIRONMENT
I. MACRO ENVIRONMENTAL FORCES
1- Demography
Statistical Study of human population and its distribution.
- number, age, sex, nationality, density, occupation, income,
education, etc.
e.g. Setting up a specially shop-demographic study to determine
placement.
Chapter 2:
THE MARKETING ENVIRONMENT
I. MACRO ENVIRONMENTAL FORCES
2- Economics condition
People a lone do not make up a market. They must have money to
spend and be willing to spend it.
-Therefore economics environment is significant for almost all
organizations.
-Other economics factors
+Interest rates.
+Money supply/credit availability.
+Price inflation.
+Unemployment.
Chapter 2:
THE MARKETING ENVIRONMENT
I. MACRO ENVIRONMENTAL FORCES
3- Social and cultural forces
People and social and cultural customs are what shape the
economics, political and legal system and technology.
e.g. Social Pressures against air and water pollution, led to
legislation and government regulation. Which in turn stimulation new
technology to reduce pollution. (noise pollution in Cambodia).
Chapter 2:
THE MARKETING ENVIRONMENT
I. MACRO ENVIRONMENTAL FORCES
4- Political and Legal force
There are five broad categories:
A - General monetary and fiscal policies
B – Social legislation
C – Government relationship with individual industries
D – Marketing legislation
E – Provision of government
Chapter 2:
THE MARKETING ENVIRONMENT
I. MACRO ENVIRONMENTAL FORCES
5- Technology
Tremendous impact on marketing. It can
- Start entirely new industries, ie. Computer industry.
- Radically change or destroy existing industres.
Chapter 2:
THE MARKETING ENVIRONMENT
I. MACRO ENVIRONMENTAL FORCES
6- Competition
Competition is a vying among businesses for the same resource or
customer. There are two types of competitor-direct and indirect
competitor.
-Direct competitor-from direct competitors on cost, material and
service (who are the direct competitors in selling petrol).
-Indirect competitor-from limited buying power and having to choose
between products, e.g. Between food and clothing.
Chapter 2:
THE MARKETING ENVIRONMENT
I. MACRO ENVIRONMENTAL FORCES
7- Naturals
Natural factor can appear in an eventually occasion, it does not
controlled.
e.g. storm, volcano, earth quake, flood, etc.
Chapter 2:
THE MARKETING ENVIRONMENT
II. MICRO ENVIRONMENTAL FORCES
1- The market:
The focal point in all marketing decisions in an organization.
2- Suppliers:
You cannot sell a product if you cannot first make it or buy it.
Suppliers price and service have a significant impact on a
company’s marketing system.
3- Marketing Intermediaries:
Independent business organizations which directly help the flow of
products and services between marketing organizations and the
markets.
+Two type:
- Resellers – Wholesalers and retailers.
- Facilitators – Transport, warehousing, Financing.
Chapter 3:
MANAGING MARKETING SYSTEM
Within the environment we have just discussed, a company
must plan, implement and evaluate its marketing system.
So the managing a marketing system consists of:
Planning
Implementing
Evaluating
Selecting goal
Putting plan
Comparing
Strategies to
Into operation
Performance with
Achieve goals
Goals
Continual feedback to adopt future goals, fix faults, monitor External environment
Chapter 3:
MANAGING MARKETING SYSTEM
I. SOME BASIC MANAGEMENT TECHNOLOGY
1- Objectives and goals
- Something you aim to achieve.
- Should be stated clearly and precisely possible.
2- Strategies
A broad basic plan of action by which an organization intends to
reach is goal.
3- Tactics
- Implementing the plan of action.
- Generally covers shorter term period.
Chapter 3:
MANAGING MARKETING SYSTEM
I. SOME BASIC MANAGEMENT TECHNOLOGY
4- Policy
A method or course of action adopted by management to guide
future decision making in a given situation.
-Policies are present at all levels of the Organization.
-An automatic decision making mechanism.
5- Strategic Planning
We are now ready to talk about the design of a marketing program
within the environmental framework that we have discussed. So
now we introduce the concept of strategic planning.
The strategic planning process consists of:
- Setting organizational goals
- Selecting strategies and tactics that will help the company
reach its goals.
Chapter 3:
MANAGING MARKETING SYSTEM
II. STRATEGIC MARKETING PLANNING
The strategic marketing plan consists of :
-Situation analysis-where are we now and where are we going
reach its goals.
-Setting marketing goals.
-Selection and analyzing the target market.
-Developing a marketing mix.
-Preparing a marketing plan.
-Implementing and evaluation the plan.
Chapter 3:
MANAGING MARKETING SYSTEM
II. STRATEGIC MARKETING PLANNING
The marketing mix
The marketing mix is everything the company can do to influence
the demand for its product.
The term marketing mix is used to describe the combination of the
four inputs that constitute the core of the organizations marketing
system.
-Products- Planning and developing, Changing and adding,
Packaging and Branding.
-Price structure- Right base price, discounts, Freight
payments.
-Promotional activities- advertising, personal selling, sales
promotion, and publicity.
-Distribution system- trade channels, physical handing,
transporting.
Chapter 3:
MANAGING MARKETING SYSTEM
MARKETING INFORMATION SYSTEM AND MARKET RESEARCH
To manage a business well is to manage its future and manage the
future is manage information.
We have discussed previously how marketing manager must
- Anticipate change
- Forecast the intensity and direction of the changes, and
- Adjust their strategic marketing planning in line with these
changes.
Chapter 3:
MANAGING MARKETING SYSTEM
WHAT IS A MARKETING INFORMATION SYSTEM
A structure of people, equipment and procedures, designed to
provide information to help decision making in a company’s
marketing program. (compare to an army’s intelligence gathering on
is enemy).
A marketing information system is a systems approach to handling
information to:
-Determine what information is needed.
-Collect this information.
-Process the information.
-Provide for storage and future retrieval.
Chapter 3:
MANAGING MARKETING SYSTEM
WHAT IS A MARKETING INFORMATION SYSTEM
Advantages of a marketing information system
-Faster, less expensive and more complete information.
-Wider variety of information collected and used.
-Management can continually monitor the performance of
products.
NEED FOR A MARKETING INFORMATION SYSTEM
-Less time available to executives for decision marketing.
-Marketing activity is becoming broader and more complex
in its scope.
-Increased emphasis on profits.
-Growing consumer discontent.
-Information explosion.
Chapter 3:
MANAGING MARKETING SYSTEM
THE MARKETING RESEARCH PROCESS
Defining the
problem and
research goals
Developing the
research plan for
collecting data
Implementing the
plan-collecting and
analyzing the data
Interpreting
and reporting
findings
Chapter 3:
MANAGING MARKETING SYSTEM
WHERE IS INFORMATION COLLECTED FROM FOR MARKET
RESEARCH ?
A- Within the organization - information already available within the
organization.
B- Outside the organization – information already gathered form
some project.
- Libraries,
- Government, - Private business firms
- Professional and business associations,
- Advertising agencies
- Research organizations.
C- Information specifically collected for the project – including:
- Sampling,
- Telephone,
- Mail,
- Personal surveys (questionnaires)
Chapter 4:
TARGET MARKETS
I. SELECTING A TARGET MARKET
An organization’s marketing planning begins with a decision on its
marketing goals. Once these goals are set it is necessary to select
and analyze the organization target market.
1. What is target market ?
Target market is a group of customers at whom the organization
specifically aims its marketing effort.
Careful selection and accurate definition of the target market are
essential to the development of an effective marketing mix.
Chapter 4:
TARGET MARKETS
I. SELECTING A TARGET MARKET
2. Guidelines Regarding Market selection
1-The target market should fit in with organization goals
2-The organization must be able to market the product.
3-Seek markets that will provide sufficient profits for organization.
4-Seek a market where the number of competitors and their size are
small.
3. Target Marketing strategy
There are tow general approaches in looking at a market:
Marketing aggregation or market segmentation.
Chapter 4:
TARGET MARKETS
I. SELECTING A TARGET MARKET
3. Target Marketing strategy
1- Market aggregation
Advantages
- Cheaper to produce, distribute and promote.
- Inventory costs minimized (limited colour, size etc.)
- Warehousing and transport efforts more efficient.
- One promotional campaign.
- One price.
Chapter 4:
TARGET MARKETS
I. SELECTING A TARGET MARKET
3. Target Marketing strategy
2- Market Segmentation – The total market is seen as being
composed of many smaller components. The total market for most
products is too varied.
The organization breaks down the total market into several groups
and then selects one or more of these groups as its target market.
Then a separate marketing mix is developed for each of these
segments.
Market segmentation is customer oriented – it identifies the needs
of customer.
Ex. Car manufacturer – separate marketing mix developed to reach
people who needs cars but has a range of vehicles to reach
different groups.
Chapter 4:
TARGET MARKETS
I. SELECTING A TARGET MARKET
3. Target Marketing strategy
3- Conditions for effective segmentation
1- Each segment must be measurable and accessible
though existing marketing institutions.
Ex. Channels of distribution, advertising, minimum of cost
and waste.
2- Each segment should be large enough to be profitable.
Chapter 4:
TARGET MARKETS
I. SELECTING A TARGET MARKET
3. Target Marketing strategy
4- Segmentation can take any form
- Age
- Sex
- Family life
- Urban/rural population
- Regional population
- Cultural groups
- Personality
- Attitudes of consumers
- Size of consumer, Ex. Clothes for particular size range.
Chapter 4:
TARGET MARKETS
II. CUSTOMER ANALYSIS
The most important thing in the success of any organization is a
satisfied customer.
A- Why are customers important ?
- Without customers a business cannot even begin.
- Customers are the driving forces that powers a market economy.
- When customer stop placing orders or stop buying, a business
starts to die.
- A valuable source of new product ideas (ask a customer what ha
wants)
Chapter 4:
TARGET MARKETS
II. CUSTOMER ANALYSIS
B- Key points to analyze customer
What we are going to look at now is 6 questions about customer
and their motivation.
1-Who are my customers ?
It is important to identity that our customers are:
-Wholesalers, Retailers, End users.
There are two types of customer:
-Consumer customers: Everyone who purchases goods for their
own or family members use.
-Business customer: Products sold to business, Wholesalers,
retailers.
Chapter 4:
TARGET MARKETS
II. CUSTOMER ANALYSIS
B- Key points to analyze customer
2-Where are my customers ?
Knowing where your customers are helps to identify where to put
your marketing and advertising effort.
When you have good idea where your customers are, you know
areas to advertise in, and it helps in targeting areas where there are
few customer.
Chapter 4:
TARGET MARKETS
II. CUSTOMER ANALYSIS
B- Key points to analyze customer
3- When do customers buy ?
If there are periods when customers want to purchase, the
marketing manager should strategies to meet these customer
demands.
Ex. If people like to rent videos at night and on the weekend, stores
should adjust their hours to suit their customers needs.
Chapter 4:
TARGET MARKETS
II. CUSTOMER ANALYSIS
B- Key points to analyze customer
4- What do my customers want ?
-Monitor the habit buying, size style etc.
-Assess what is not selling.
-Check competitors products to see if they are selling better and
why.
5- Why do customer buy ?
-Need to replace stocks that have been use.
-Breakdown of old products.
-In response to advertising.
-Wanting what their friends have.
-Needs for food, shelter, clothing.
Chapter 4:
TARGET MARKETS
II. CUSTOMER ANALYSIS
B- Key points to analyze customer
6- How do you learn about Customers ?
Self Actualization Needs
MASLOWS HIERARCHY OF NEEDS
Status Needs
Social Needs
Safety Needs
Physiological Needs
Chapter 4:
TARGET MARKETS
II. CUSTOMER ANALYSIS
C- Customer Checklist
1- Are we easy to do business with ?
-Easy to contact.
-Provide information to customer.
-Easy to order form.
2- Do we dip our promises ?
-On product performance.
-On delivery.
-On installation.
-On training.
-On service.
Chapter 4:
TARGET MARKETS
II. CUSTOMER ANALYSIS
C- Customer Checklist
3- Do we meet the standard we set ?
-Specific.
-Do we even know the standard.
4- Are we responsive ?
-Do we listen.
-Do we follow up.
5- Do we work together ?
-Share information.
-Make decisions together.
Chapter 4:
TARGET MARKETS
III. THE INDUSTRIAL MARKET
The industrial market consists of organizations that buy goods and
service to use in their business. It is a very big and important market.
Industrial organizations are business that buy products or service to
use either :
1-In making other goods and services, or
2-To use in their own business.
Industries that make up this market include :
-Agriculture, forest and fishing
- Mining
-Manufacturing
- Electricity, water and gas
-Construction
- Wholesale and retail trade
-Transport and storage
- Communication
-Government and defense.
Chapter 4:
TARGET MARKETS
III. THE INDUSTRIAL MARKET
Classification of industrial products
The general category “industrial products” is too broad to use in
developing a marketing program so we have broken it down into five
broad categories:
1-Raw materials
2-Fabricating materials and parts
3-Installations
4-Accessory equipment
5-Operating supplies
Chapter 5:
PRODUCT
I. PRODUCT PLANNING AND DEVELOPMENT
A. Product planning
Product planning includes all activities that enable an organization
to decide what products will market.
These activities include:
1- What product to make and what to buy;
2- More or less products;
3- What row material uses for each products;
4- What brand and packaging should be used;
5- How should it be style and designed
6-In what quantities;
7- What price.
Chapter 5:
PRODUCT
I. PRODUCT PLANNING AND DEVELOPMENT
B. Product Development
1- The product life cycle
Sales
Volume
Profit
+0
0
-0
Introduction
Growth
Maturity
Decline
Chapter 5:
PRODUCT
I. PRODUCT PLANNING AND DEVELOPMENT
B. Product Development
1- The product life cycle
The product life cycle presents the company with two major
challenges.
1- To develop a process for finding new products to
replace again ones.
2- The company must understand how products age,
and adapt its market strategies for products as
they pass through different life cycles.
Chapter 5:
PRODUCT
I. PRODUCT PLANNING AND DEVELOPMENT
B. Product Development
2- Categories of new product development.
There are three categories.
a- Really innovative and truly unique.
b- Replacements for existing products that are
significantly different,
Ex. New fashion cloths, new model cars.
c- Imitative products-not new to the market but new to
the company (copying someone else’s product).
Chapter 5:
PRODUCT
I. PRODUCT PLANNING AND DEVELOPMENT
B. Product Development
3- Important of new product development
Why is an important to continue develop new products
a- Existing products will eventually become obsolete
as their sales volume and market share are
reduced by competitive products.
b- As a product ages, its profits generally decline.
Therefore if those products are not changed or
replaced, the company’s sales and profits will
reduce and eventually the company will fail.
c- The introduction of a new product at the proper time
help to maintain the company’s profit.
Chapter 5:
PRODUCT
I. PRODUCT PLANNING AND DEVELOPMENT
B. Product Development
4- Steps in the development of new product
1. Search for new product ideas
2. Primary evaluation
3. Income and cost analysis
4. Development and testing
5. Test market
6. Introduction
7. Evaluation
Chapter 5:
PRODUCT
I. PRODUCT PLANNING AND DEVELOPMENT
B. Product Development
5- Reasons for some new products fail
- Poor marketing research – misjudging what the market wanted,
overestimating goals, lack of knowledge of buying habits.
- Technical problem in design or production.
- Poor timing in product introduction.
6- Reasons for some new products success
- The product suits the customers needs.
- The product is better and cheaper than its competitions.
- The product is well supported by the company.
Chapter 5:
PRODUCT
II. PRODUCT LINE AND PRODUCT MIX STRATEGIES
1- Product line
A product line is a group of products that are closely related,
because they function is a similar manner, are sold to the same
customer group, are marketed through the same types of outlets
and cost about the same.
Product length decisions
- A product line is too small if the company can increase
profit by adding items.
- A product line is too long if the company can increase
profit by dropping items.
Chapter 5:
PRODUCT
II. PRODUCT LINE AND PRODUCT MIX STRATEGIES
2- Product mix
A product mix is the set of all product lines items that a particular
seller offers for sale to a buying.
3- Product Width
Product line length
Product Width (Product breadth)
Cigarettes
Cigars
Soft Drinks
Beers
555
Monopole
Coca Cola
ABC
Marlboro
Old Port
Fanta
Tiger
Davidoff
Statesman
Mirinda
Ancher
L&M
Sprite
Crown
Mild seven
Sarsi
ARA
Chapter 5:
PRODUCT
III. PRODUCT BRANDING
Product branding is the way that product is presented to the customers.
Why is it that people choose certain products and not others? The
Buyers choice may be influenced by the guarantee offered or by an
attractive package.
A Brand is a name, symbol, special design or a combination of
these that identify the goods of the seller a brand separates one
sellers product from those of competitor.
A Brand name consists of words, letter or number that be vocalized
A Brand mark is the part of the brand that appears in the form of a
symbol, design or distinctive colouring or lettering. It is recognized
by sight.
A trademark is a brand that is given legal protection – it is a legal
term. All trademark are brands and include works, letter and
pictures.
Chapter 5:
PRODUCT
III. PRODUCT BRANDING
Importance of brands
-Makes it easier for customers to identify products.
-Assures customers that they are getting the same quality when
they buy again.
-For sellers, brands are something that can be when advertised
and that will be recognized by the customers displayed in shops.
Reasons for not branding
-Companies unable maintains a consistent output or unwilling to
promotions the brand.
-Some things are difficult to brand, e.g. Fresh fruit and vegetables
-Products graded as poor quality – sold through different
channels at reduced prices.
-No name brands are generally cheaper in quality and price.
Chapter 5:
PRODUCT
III. PRODUCT BRANDING
Characteristics of a good brand.
-Brand says something about the product, e.g. Free and lovely
shampoo, cool charm deodorant.
-Should be easy to pronounce, spell and remember, e.g. 555,
ARA, Nokia.
-should be distinctive to capture attention, e.g. Poison the name
of a very expensive perfume.
Chapter 5:
PRODUCT
IV. PRODUCT PACKAGING
1-Reason for packaging
-Safety –in handling and storing
-Against wrong use. e.g. child proof bottles.
-Helps to identify the product – once two different brands are
opened you cannot tell the difference.
-To attract customers though attractive packaging.
2-Packaging Strategies
Changing the package
Why do companies change packaging?
-To stop decrease in sales and attract a new group of
customers
-To correct any fault in an existing package.
-To take advantage of new material.
Chapter 5:
PRODUCT
IV. PRODUCT PACKAGING
2-Packaging Strategies
Types of packaging
-reusable. e.g. Jars that can be used for other purpose
after the contents are finished.
-Multiple packaging – more that one item in the same
package, proved to increase sales.
-Disposable packaging – which covers most packaging.
There are many criticisms of this type of packaging.
e.g. -Big problem with disposal.
-Depletes our natural resources.
-Health hazard. e.g. Aerosol cans, plastic
packaging.
Chapter 5:
PRODUCT
V. PRODUCT LABELING
The label is the part of package that carries information about
product. A label may be part of the package or it may be a tag
attached directly to the products.
Some products by law, must carry labels which gives the customer
some information about the product.
e.g. -Weights and measures,
-Public health,
-Poisons,
-Pharmaceutical goods.
-Chemicals.
Chapter 5:
PRODUCT
V. PRODUCT LABELING
So that covers the areas of branding, packaging and labelling. A
well prepared program for product planning and development will
also include the following features:
-Product design
-Product color
-Product quality
-Product warranty.
Chapter 6:
PRICE
I. PRICING OBJECTIVES
The major pricing objectives are
1- To earn a return on investment or sales.
2- To maximize profits.
3- To increase sales.
4- To gain or hold a target share of the market.
5- To match competitions prices.
6- To increase buyer.
Chapter 6:
PRICE
II. FACTORS INFLUENCING PRICE DETERMINATION
1-Estimated demand for the product
-The “expected” price – what customers think its worth. This
provides a general guide to the price.
-Market it in a few test areas and check buyers reaction to
prices.
-Estimating demand at different price levels.
2-Target share of the market
The market share targeted by a company is a major factor
in determining the price.
A company trying to increase its market share may sell
cheaper or offer discounts.
Chapter 6:
PRICE
II. FACTORS INFLUENCING PRICE DETERMINATION
3-Competitive reactions
Present and potential competition must be considered.
Decision on whether to enter the market at a high price or
low price.
High profit pricing may be suitable for new products because :
-In the early stages, little competition.
-”Insurance” against setting the wrong price. If the original
price is too high and the market does not respond,
management can easily lower the price. If the original price
is too low and does not cover cost, then it is difficult to
increase the price.
-High initial price can keep demand within the company’s
production capacity.
Chapter 6:
PRICE
II. FACTORS INFLUENCING PRICE DETERMINATION
Low profit pricing is better where:
-The quantity sold is highly sensitive to the price.
-Substantial reduction in production and marketing cost can
be achieved through large scale operations.
-The product is expected to face very strong competition.
The nature of the potential competition will influence managements
choice between the two pricing strategies.
If competition can enter the market quickly and if the sales of the
product are expected to be high management should adopt low
profit pricing to:
-Discourage other businesses form entering the field
because of low profits.
-Get a strong hold on its share of the market.
Chapter 6:
PRICE
III. BASIC METHODS OF SETTING PRICE
There are three basic approaches to setting prices:
-Price based on total cost plus a desired profit (cost – plus
pricing)
-Price based on a balance between estimated of market
demand and supply. e.g. the cost of production and
marketing (break even analysis).
-Prices based on competitive marketing conditions.
Chapter 6:
PRICE
III. BASIC METHODS OF SETTING PRICE
Terms to become familiar with
-Fixed cost : a cost that remain constant regardless of how many
items are produced.
e.g. rent executive salaries.
-Variable cost : a cost that is directly related to production.
-Average variable cost : the total variable cost divided by the
number of units produced.
-Total cost : the sum of the total fixed cost and the total variable
cost.
Chapter 6:
PRICE
III. BASIC METHODS OF SETTING PRICE
1-Cost – plus pricing
In its simplest form, cost – plus pricing means setting the price of
one unit of a product to the units total cost plus the desired profit on
the unit.
Selling Price = Total Costs + Desired Profit
2-Break-even analysis
A break-even point is that quantity of units produced at which sales
revenue equals the total cost, assuming a certain selling price.
Break-even point=
Total Fixed Cost
Selling Price – Average Variable Cost
Chapter 6:
PRICE
Quantity
Sold
(Q)
Price
Per Unit
(P)
Total
Revenue
(PxQ)
Unit
Variable
Cost
(UVC)
Total
Variable
Cost
(UVCxQ)
0
1,000
2,000
3,000
4,000
5,000
$2
2
2
2
2
2
$0
2,000
4,000
6,000
8,000
10,000
$1
1
1
1
1
1
$0
1,000
2,000
3,000
4,000
5,000
Fixed
Cost
(FC)
$ 2,000
2,000
2,000
2,000
2,000
2,000
Total
Cost
(FC+VC)
Profit
(TR-TC)
$ 2,000
3,000
4,000
5,000
6,000
7,000
-$ 2,000
-1,000
0
1,000
2,000
3,000
Total cost and Total Income
Chapter 6:
PRICE
8,000 –
6,000 –
Breakeven Point
Total Variable Cost
4,000 –
2,000 –
Total Fixed Cost
0
+
+
+
+
+
1,000
2,000
3,000
4,000
5,000
Quantity
Chapter 6:
PRICE
III. BASIC METHODS OF SETTING PRICE
3-Prices based on competitive marketing conditions
A company is most likely to use this pricing method when
the market is highly competitive and the company’s product is not
significantly different to competing products.
The market – based method of pricing is also used where a
traditional or customary price level exists. e.g. Sweets, soft drinks.
A variation to market – based pricing is to set the price
below the competitive level. This is typically used by discount stores
which offer few services and operate on the principles of low markup and high volume.
Pricing above market level usually works only where the
product is distinctive or where the seller has gained prestige in its
field.
Chapter 6:
PRICE
IV. PRICING STRATEGIES AND POLICIES
After deciding on pricing goals and then setting the base price, the
next task in pricing is to establish specific strategies in several areas
of the pricing structure.
These strategies include the use of discounts and allowances.
Discounts and allowances result in a deduction from the base price.
The deduction may be in the form of the reduced price or some
other concessions, such as free merchandise.
Quantity discounts – deduction from the price if purchased in bulk
to encourage customers to buy in larger quantities.
Trade discounts – discount offered to buyers in payment for
marketing functions that they will presumably perform.
Cash discount – a deduction granted to buyers for paying their bill
on time.
Chapter 6:
PRICE
IV. PRICING STRATEGIES AND POLICIES
Geographic pricing strategy – in its pricing, the seller must take
into account freight cost involved in shipping the product to the
buyer. Therefore, pricing policies need to take into account what
charges will be made.
One Vs variable price
- One price policy is to charge the same price for the same
product to every buyer.
- Variable price policy is to charge different prices for the
same product to different buyers.
Psychological pricing – setting odd prices to increase sale.
Example: $ 20 ($ 19.99.99)
3.000 Riel (2,999.99 Riel)
Chapter 7:
DISTRIBUTION
I. INTERMEDIARIES (Middlemen)
Intermediary is an independent business that operates as a like
between producers and the ultimate consumer or industrial user.
The role of the middlemen is to buy and sell goods and services.
The two major middlemen are wholesalers and retailers.
Their job involves:
a- Collecting the outputs of the producers
b- Dividing the outputs into the amounts desired by the
customer and then putting the various items together in
the assortment wanted.
c- Selling the assortment to consumers and industrial users.
Chapter 7:
DISTRIBUTION
I. INTERMEDIARIES (Middlemen)
Why are middlemen important ?
- Not practical for producers to with the ultimate consumer.
- Inconvenient for customers not to have them.
- Middlemen serve as purchasing agents for their customers
and as sales specialists for their suppliers.
- Middlemen provide storage services, bulk – breaking
activities.
Chapter 7:
DISTRIBUTION
I. INTERMEDIARIES (Middlemen)
1- Retailing
Retailing includes all activities directly related to the sale of good
or services to the ultimate consumer for personal, non-business use.
A retailer or a retail store is a business enterprise that sells
primarily to household consumers for non-business use.
Example of retail outlets:
- Large department stores
- Supermarkets
- Boutiques
- Discount stores
- Fruit and vegetable shops or stalls
- Specialty stores (tobacconist, baker, etc.)
- Chain stores
- Franchise stores
Chapter 7:
DISTRIBUTION
I. INTERMEDIARIES (Middlemen)
Franchising
Franchising is a system of distribution where independent
business managers are given the right to sell products or services in
exchange for a fee or agreement on buying and merchandising
policies.
The basic agreement in franchising is and agreement (contract)
between an organization and a set of independent dealers specifying
how the two will do business together.
- A contractual arrangement between a franchiser (supplier)
and
franchisee (retailer).
- Franchiser grants right to sell certain goods or services in a
certain area.
- Franchiser usually provides equipment, the products for sale and
managerial service.
- Franchisee agrees to market the product in a manner established
by the franchiser.
Chapter 7:
DISTRIBUTION
I. INTERMEDIARIES (Middlemen)
Franchising
Advantages to franchisee
- Bulk buying power
- National advertising
- Strong support from franchiser
- Proven products
- “Guaranteed” market
- Safer than going alone.
2- The wholesale market
Wholesaling includes, the sale of products or services to those
who are buying for resale or business use.
Chapter 7:
DISTRIBUTION
I. INTERMEDIARIES (Middlemen)
2.1- Need for wholesalers
Most manufacturers are small and do not have the sales staff to
contact the business who are their customers. So they sell to
wholesalers are marketing specialist.
2.2- Structure of wholesaling
The structure of wholesaling middlemen can be divided into
three groups:
- Merchant wholesalers
- Manufacturers sales branch
- Agents and brokers.
2.3- Channels of distribution
A channel of distribution for a product is the route; it takes as it
moves from the producer to the final customer or industrial user.
Chapter 7:
DISTRIBUTION
I. INTERMEDIARIES (Middlemen)
2.3.1- Channels of consumer product
Five broad channels of distribution are generally used in the
distribution of consumer goods.
Producer
Direct
Agent
Wholesaler
Retailer
Retailer
consumer
Agent
Wholesaler
Retailer
Retailer
Chapter 7:
DISTRIBUTION
I. INTERMEDIARIES (Middlemen)
2.3.2- Channels of industrial product
Direct
Producer
Agent
Industrial
Wholesaler
Agent
Industrial
Wholesaler
Business Customer/ Industrial User
Chapter 7:
DISTRIBUTION
II. MANAGEMENT OF PHYSICAL DISTRIBUTION
Physical distribution consists of all activities concerned with
moving the right amount of the right products to the right place at the
right time.
A-Task of physical distribution
The task of physical distribution may be divided into five parts:
1-Inventory location and warehousing
2-Materials handing
3-Inventory control
4-Order processing
5-Transport
Chapter 8:
PROMOTION
I. PROMOTIONAL MIX
The marketing promotion mix consists of four major tools:
1-Advertising Paid non – personal presentation and promotion of
ideas, goods or services by seller.
2-Sale promotion – Short term incentives to encourage purchase or
sale of a product.
3-Publicity – Non – personal unpaid promotion by the media.
4-Personal selling Personal presentation to one or more potential
customers for the purpose of making sales.
Chapter 8:
PROMOTION
I. PROMOTIONAL MIX
A- Determination of promotional mix
1- The amount of money available for promotion.
2- The nature of the market:
-Geographic shape
-Type of customer
-Concentration of the market.
3- The nature of the product:
-Consumer market (more advertising)
-Industrial market (more personal selling).
4- The stages of the products life cycle
Chapter 8:
PROMOTION
I. PROMOTIONAL MIX
B- Guideline for determining a company’s promotional mix
When market is
When market is
Geographically dispersed
Geographically concentrated
Many customers
Many industries
Main element
in promotional
mix is:
Advertising
Few customers
Few industries
Personal Selling
When product is
When product is
Standardized
Customer made
Of low unit value
Of high unit value
Non-technical
Technical
Chapter 8:
PROMOTION
I. PROMOTIONAL MIX
C- Method of determining how much to spend on promotion
1- As percentage of company income
2- deciding what the promotional program must achive and
then determining what it will cost.
3- Use of all available funds – build sales.
4- Follow the competition – not a very sound method because
different companies have different strategies and gosls.
Chapter 8:
PROMOTION
I. PROMOTIONAL MIX
C- Method of determining how much to spend on promotion
The total promotional program for an organization should be built
into a campaign around
- The advertising campaign
- Personal selling effort
- Sales promotion devices – displays, samples etc.
- Physical distribution management – to ensure
adequate stock are available at the start of the campaign.
Chapter 8:
PROMOTION
II. MANAGEMENT OF PERSONAL SELLING
Personal selling is the major method of increasing profitable sales.
A. Sales jobs are different to other jobs
-Sales people represent their company to the outside would.
-Sales people operate with little or not direct supervision.
-Sales people generally need more tact, diplomacy and social
poise-need to mix socially with customers.
-Sales jobs frequently require a considerable amount of traveling
and much time spent away from home.
-Sales people have quotas to meet.
Chapter 8:
PROMOTION
II. MANAGEMENT OF PERSONAL SELLING
Personal selling is the major method of increasing profitable sales.
B. Types of sales jobs
-Driver/Salesman – soft drinks, milk etc.
-Shop assistants – behind counter, not much selling effort.
-Salespersons that go to customers outside the shop – door to
door, retail outlets etc.
-Jobs where the persons technical product knowledge is important,
example sales engineer.
-Advertising services, consulting services.
Chapter 8:
PROMOTION
II. MANAGEMENT OF PERSONAL SELLING
Personal selling is the major method of increasing profitable sales.
C. Function of personal selling management
Management of the personal selling function is simple a matter of
applying the three stage management process of planning,
implementing and evaluating to a sales force and its activities.
Planning
-Forecasting sales.
-Preparing sales budget.
-Establishing sales territories
-Setting quotas for the sales people.
Chapter 8:
PROMOTION
II. MANAGEMENT OF PERSONAL SELLING
Personal selling is the major method of increasing profitable sales.
C. Function of personal selling management
Implementing
Organizing staffing and operating the sales force to carry
out the plans to reach the goals.
Evaluating
Performance evaluation of individuals and the total sales
performance.
Chapter 8:
PROMOTION
III. MANAGEMENT OF ADVERTISING
A. Type of advertising
1- Product advertising – Advertising related to the product.
2- Institutional advertising – Designed to create a desired
attitude to wards the seller and to build goodwill.
3- National and local advertising – National advertising is
used by manufacturers or other producers using national
media.
4- Manufacturers and retailers advertising – Manufacturer
advertising focuses on the product – it does not care where
customers buy its products as long as they buy its brand.
Retailers advertising focus on the store. The retailer does not
care what product you buy so long as you buy at his shop.
Chapter 8:
PROMOTION
III. MANAGEMENT OF ADVERTISING
B. Objectives of advertising
1- Awareness: The consumer’s ability to recognize and
remember the product or brand name.
2- Interest: An increase in the consumer’s desire to learn
about brand some of the features of product or brand.
3- Evaluation: The consumer’ appraisal of the product or brand
on important attributes.
4- Trial: The consumer’ actual first purchase and use of
product or brand.
5- Adoption: Through a favorable experience on the first trial,
the consumer’s repeat purchase and use of product or brand.
Chapter 8:
PROMOTION
III. MANAGEMENT OF ADVERTISING
C. Selecting the media
Selecting the media to advertise in involves choosing between
television, radio newspapers and magazines.
Newspapers
- Flexible with placing and withdrawing adds.
- Intensive coverage of the local market.
- Life of a newspaper ads is very short.
Magazines
- Excellent for high quality printing and color.
- Can reach the national marketing at relatively low cost.
- Can reach selected market through advertising in specific magazines.
- Inflexible and infrequent.
Chapter 8:
PROMOTION
III. MANAGEMENT OF ADVERTISING
Radio
- Relatively low cost.
- Can reach a large number of people.
- Special interest programs can be targeted.
- Only aural presentation.
- Audience attention usually at low level.
Television
- Most versatile.
- Most expensive.
- Visual and aural.
Chapter 8:
PROMOTION
IV. MANAGEMENT OF SALES PROMOTION
-Includes displays, trade shows, demonstrations, samples etc.
-Sales promotional devices at the point of purchase inform.
-Remind or stimulate the buyer.
-Used to coordinate and supplement the advertising and sales force
programs.
Good Luck !!!
Marketing Principle
Chapter 1: Introduction to Marketing
After studying this chapter, students can be able to:
-Understand what is marketing.
-Understand the core of marketing concept.
-Understand the importance of marketing.
-Clarify who is the marketing manager.
-Understand the typical responsibilities of marketing managers.
-Understand the marketing management evolution.
Marketing Principle
Chapter 2: The Marketing Environment
After studying this chapter, students can be able to:
-Understand what is the external environment of marketing.
-Know the influence of these environment.
Marketing Principle
Chapter 3: Management Marketing System
After studying this chapter, students can be able to:
-Understand the marketing system and its management.
-Understand the some basic of management technology.
-Understand what the marketing mix.
-Know what is a marketing information system.
-Why company need for a marketing information system.
Marketing Principle
Chapter 4:
Target Markets
After studying this chapter, students can be able to:
-Understand what the target market.
-Understand the selection a target market.
-Know the guidelines regarding market selection.
-Understand the target market strategy.
-Know who are customers and why customers importance.
Marketing Principle
Chapter 5:
Product
After studying this chapter, students can be able to:
-Understand the product planning and development.
-Know the steps in the development of new products.
-Understand the reasons for some new-products success and failure.
-Understand the product line and product mix strategies.
-Know the product branding, labelling and packaging.
Marketing Principle
Chapter 6:
Price
After studying this chapter, students can be able to:
-Understand the major pricing objectives.
-Know the factors influencing price determination.
-Understand the basic methods of setting prices.
-Know the pricing strategies and policies.
Marketing Principle
Chapter 7:
Distribution
After studying this chapter, students can be able to:
-Understand the intermediaries.
-Understand the franchising and licensing.
-Know the channels of distribution.
-Understand the management of physical distribution.
Marketing Principle
Chapter 8:
Promotion
After studying this chapter, students can be able to:
-Understand what the promotion and promotional mix.
-Know the guideline for determining a company’s promotional mix.
-Understand the method of determining should be pended on
promotion.
-Know the management of personal selling.
-Understand the management of advertising and sales promotion.
-Know how to selecting the media.