Download Customer Value (Not Product!)

KING ABDUL AZIZ UNIVERSITY TOURISM INSTITUTE (KAUTI)
With the academic support of Ecole hôtelière de Lausanne (EHL)
Scope
Elements of behavioral science
- Strategies of market segmentation and positioning.
- The impact of marketing on uncontrollable environments in the market place
- The product life cycle
- Product classification and its effect on marketing strategies.
- Policies of pricing and practices used within distribution channels
- The role of promotion in the marketing mix
- Marketing distribution systems
- The components of marketing information system
-
King Abdul Aziz University Tourism Institute- Induction Week
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KING ABDUL AZIZ UNIVERSITY TOURISM INSTITUTE (KAUTI)
With the academic support of Ecole hôtelière de Lausanne (EHL)
Marketing concepts
- Marketing Definition
The process by which companies create value for customers and build strong customer relationships in
order to capture value from customers in return.
-
Customer Needs, Wants and Demands
The Differences between Sales & Marketing
Marketing: The systematic planning, implementation and control of a mix of business activities
intended to bring together buyers and sellers for the mutually advantageous exchange or transfer of
products.
Sales: The sales process is everything that you do to close the sale and get a signed agreement or
contract. The sales process consists of interpersonal interaction. It is often done by a one-on-one
meeting, cold calls, and networking. It's anything that engages you with the prospect or customer on
a personal level rather than at a distance. Advertising and marketing lay the ground work to warm
up the lead and prepare them for the close of the sales.
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KING ABDUL AZIZ UNIVERSITY TOURISM INSTITUTE (KAUTI)
With the academic support of Ecole hôtelière de Lausanne (EHL)
The selling & marketing concepts contrasted
The selling & marketing concepts contrasted
Element
Selling
Marketing
Factory
Market
Existing products
Customer needs
Means
Selling & promoting
Integrated marketing
Ends
Profits through sales
volume
Profits through
customer
satisfaction
Starting point
Focus
King Abdul Aziz University – Tourism Institute Diploma in Hospitality Management
sales & marketing 1- the marketing mix
Slide 13 of 20
Market
Customer needs
Integrated marketing
Profits through customer satisfaction
Marketing is - according to the official definition of the Assemblies of Marketing - deals with the
areas and the following elements:
(1) Clients: they specify the categories of targeted clients and potential and identify their
requirements and needs.
(2) Products: Maps the commodity and the potential benefits, packaging and competitive position.
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KING ABDUL AZIZ UNIVERSITY TOURISM INSTITUTE (KAUTI)
With the academic support of Ecole hôtelière de Lausanne (EHL)
(3) Pricing: Pricing of products to suit the circumstances of customers and competition, taking into
account production costs.
(4) Information: the transfer of information on goods / services to customer segments.
(5) Distribution: Planning outlets and policies to deal with it.
(6) ID: strategic planning for the selling methods that are appropriate to the item / service. Develop
policies and after-sales, in order to achieve a good cross-references, where the current customer
attracting a new customer. And marketing deals with these aspects of the six in the order
mentioned. This arrangement defines marketing steps and identifies the priority of each step in the
marketing process.
Sales: It is race, the final phase of marketing operations, and includes the following:
(1) Identify customers and contact them and identify their needs and potential.
(2) The transfer of detailed information to customers about the goods / services.
(3) To answer customer inquiries and dealing with objections and convince them purchase.
Completion of the sale to collect the sales value of the client and the delivery of goods / services.
Sales - Push the product - end of the day numbers matter
Marketing - Pull the customers towards the products / increase the reach and awareness of the
product. (Performance and effort too matters)
Marketing has sales as a small part in it.
Sales are only concerned with transfer of goods/service.
Marketing is concerned with customer satisfaction to make them aware and convince them to buy
the product/service.
Assignment
Write an assignment about the main differences between sales and marketing
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KING ABDUL AZIZ UNIVERSITY TOURISM INSTITUTE (KAUTI)
With the academic support of Ecole hôtelière de Lausanne (EHL)
MARKETING PROCESS MODEL
Create value for customers & build
customer relationships
Understand
customer
needs
&wants
Design a
customer
marketing
strategy
Construct a
marketing
program that
deliver superior
value
Build
profitable
relationship
and create
customer
delight
Capture value from customers to create
profits and customer equity
King Abdul Aziz University – Tourism Institute Diploma in Hospitality Management
sales & marketing 1 – the marketing mix
Slide 7 of 20
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KING ABDUL AZIZ UNIVERSITY TOURISM INSTITUTE (KAUTI)
With the academic support of Ecole hôtelière de Lausanne (EHL)
Customer – driven marketing strategy
-
The four major steps in designing a customer- driven market strategy :
-
Market segmentation
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Market targeting
-
Differentiation
-
Positioning
-
Market segmentation is dividing a market into smaller groups with distinct needs ,
characteristics , or behaviours who might required separate products or marketing
mix
-
Market targeting
The process of evaluating each market segment attractiveness and selecting one or more
segments to enter.
-
Differentiation
Actually differentiating the firm market to create superior customer value.
-
Positioning
Arranging for a product to occupy a clear, distinctive, and desirable place relative to
competing products in the minds of target markets
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KING ABDUL AZIZ UNIVERSITY TOURISM INSTITUTE (KAUTI)
With the academic support of Ecole hôtelière de Lausanne (EHL)
MAJOR BASES OF MARKET SEGMENTATION
-
Geographic segmentation
Such as nations, states, regions, countries, cities.
-
Demographic segmentation
-
Such as age, gender, family size, family life cycle, income, occupation, education, religion,
and nationality
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Behavioural segmentation
Such as knowledge of buyers, attitudes, uses or responses to a product
-
Psychographic segmentation
Such as social class, lifestyle
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KING ABDUL AZIZ UNIVERSITY TOURISM INSTITUTE (KAUTI)
With the academic support of Ecole hôtelière de Lausanne (EHL)
Product life cycle (PLC)
PLC is the course of a product sales and profits over its lifetime.
Stages of PLC:
1- Product development
2- Introduction
3- Growth
4- Maturity
5- Decline
1-Product development: Begins when the company find and develop a new product idea, sales
are zero & high investment cost
2- Introduction: It starts when the new product is first launched. It takes time, and sales
growth is apt to be slow. Profits are negative or law because of the law sales and high
distribution and promotion expenses.
3- Growth: is a period of rapid market acceptance and increasing profits .Promotion
Costs are spread over a large volume and unit manufacturing costs fall .
4- Maturity: is a period of slowdown in sales because the product has achieved acceptance by
most potential buyers. Profit level off or decline.
5- Decline: is the period when sales fall off and profits drop
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KING ABDUL AZIZ UNIVERSITY TOURISM INSTITUTE (KAUTI)
With the academic support of Ecole hôtelière de Lausanne (EHL)
The 4P's of Marketing - The Marketing Mix
These are the basic elements of the MARKETING PLAN for any business
PRODUCT:
The business has to produce a product that people want to buy. They have to decide which ‘market
segment’ they are aiming at – age, income, geographical location etc. They then have to
differentiate their product so that it is slightly different from what is on offer at present so that
people can be persuaded to ‘give them a try.
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KING ABDUL AZIZ UNIVERSITY TOURISM INSTITUTE (KAUTI)
With the academic support of Ecole hôtelière de Lausanne (EHL)
PROMOTION:
Customers have to be made aware of the product. The two main considerations are target market
and cost. A new business will not be able to afford to advertise on national television, for instance
and would not wish to because its market will be local to start with. Leaflets, billboards,
advertisements in local newspapers, Yellow Pages and ‘word of mouth’ would be more appropriate.
PRICE:
The price must be high enough to cover costs and make a profit but low enough to attract
customers. There are a number of possible pricing strategies. The most commonly used are:
PENETRATION PRICING – charging a low price, possibly not quite covering costs, to gain a
position in the market. This is quite popular with new businesses trying to get a ‘toehold.
CREAMING – the opposite to penetration pricing, this involves charging a deliberately high price
to persuade people that the product is of high quality. Luxury car makers often use this strategy.
COST PLUS PRICING – this is the most common form of pricing. Costs are totaled and a margin
is added on for profit to make the total price.
PLACE:
The business must have a location that it can afford, and that is convenient and suitable for
customers and any supplier.
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KING ABDUL AZIZ UNIVERSITY TOURISM INSTITUTE (KAUTI)
With the academic support of Ecole hôtelière de Lausanne (EHL)
What Are The “4 Cs”?
The “4 Cs” marketing mix definition seeks to turn traditional marketing thinking on it's head
by looking sales and marketing in a customer-centric way. Instead of looking at how each
aspect of marketing is seen by the business, you look at these from the customer's perspective.
The point in using “4 Cs” instead of “4 Ps” is not an exercise in semantics. Rather, key into
the thinking behind the exercise which is to get you to see thing from your customers' point of
view.
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KING ABDUL AZIZ UNIVERSITY TOURISM INSTITUTE (KAUTI)
With the academic support of Ecole hôtelière de Lausanne (EHL)
Customer Value (Not Product!)
A product is something you make which people come and buy. However, today, you can no
longer succeed by making what you want and must instead find out what customer's want.
Focusing on Customer Value allows you to reset your perceptions around what it is you are
creating and bringing to the market, be it a product, service or some other value. Everything
begins and ends with your customer and you exist to serve their needs.
Value is what your customer is concerned about, not you, your fabulous product or anything
else you do. Value is how you define marketing mix “products” and what you should seek to
engage your customer with. It is the value you provide that defines you in the marketplace.
Cost (Not Price!)
Instead of thinking of price as something you charge, think of cost as something customers
pay. This simple adjustment once again opens up a whole new way of thinking about sales and
marketing.
When you define marketing mix cost you tune into the customer dilemma of deciding how to
spend limited money to satisfy unlimited wants. Are you providing enough capital to compete
effectively?
Your motivation in going to market should not be to maximize your gain but to maximize
customer value. Therefore, you should ask how you can provide more for the same cost to the
customer instead of asking to make more profit from a product.
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KING ABDUL AZIZ UNIVERSITY TOURISM INSTITUTE (KAUTI)
With the academic support of Ecole hôtelière de Lausanne (EHL)
Convenience (Not Place!)
The day is not far off when the majority of shopping will not take place in shops or through
the traditional distribution channels of business. Your customers today are governed by
purchase when, where and how it is convenient to them.
Thinking about convenience not only allows you to open up to newer ways of connecting with
customers and distributing products, but helps you shift into the mindset of providing an
optimum overall experience for customers.
To define marketing mix in terms of convenience reminds you that customers today are very
busy and have many choices. It is no longer your right as a business owner but a privilege
when customers choose you. Make it as easy as possible for them to do so.
Communication (Not Promotion!)
The final new market mix definition replaces the traditional notion of “Promotion” with
Communication. This final concept of how you define marketing mix from the customer's
perspective ties into creating Interactive Marketing Communication.
“Promotion” hearkens back to the day's of mass marketing which does not work anymore.
Just like you cannot simply build a “good product” and expect people to buy it, so customers
no longer believe everything you say at face value.
Instead of virtuous pronouncement about how good your product or service is, customers
today seek to be engaged and have meaningful interactions with you. You must therefore
strive for two-way communication and building relationships
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KING ABDUL AZIZ UNIVERSITY TOURISM INSTITUTE (KAUTI)
With the academic support of Ecole hôtelière de Lausanne (EHL)
Promotion mix
Marketing mix is part of your marketing plan. It defines product, place, price and promotion. The
promotion mix targets raising product or brand awareness, communicating the unique value
proposition of your product and gaining acceptance of your products. The primary purpose and
focus of promotional mix is to get the desired result: the sale of your product. There are more than
seven common promotion mix tactics and while most businesses do not use all of these tactics to
promote and sell their products, they do use a mix of these tactics.
The Top 4 Promotion Mix Tactics:
1. Personal selling is one of the most common of the promotion tactics. Most
companies will hire people to do the selling: sales representatives, account
managers, inside sales representatives, retail sales, sales agents, or telemarketers.
Face-to-face selling is one of the most common methods of selling, although sales by
phone, and more recently, sales by email, are becoming well used. These are not
necessarily as effective, but they are low cost sales tactics.
2. Advertising is another common promotion tactic. Advertising focuses on brand
recognition and identity; not on the product alone. Advertising can be a costly tactic
that only the big businesses can invest in; particularly advertising on television
which can cost anywhere from $100,000 to over $1 million for a national broadcast
in prime time (for a 30-second spot!). This cost is in addition to the cost of
producing the commercial. Advertising in industry or consumer magazines is less
expensive and typically you can target your advertisement to a specific industry or
region. Other advertising can include car or bus 'wraps', events (such as sports,
music, art), and billboards. The Internet is becoming a very popular place to
advertise, and on a relative basis, it is more affordable.
3. In the retail marketplace, consumer promotion is very common. Buy one, get one
free. Coupons for discounted or free product. Free trial packages. Cash discounts or
refunds. Contests that give back cash, prizes, or products. The commitment by
marketers to consumer promotion is that this form of promotion can be designed to
be very measurable. Coupons, contests, and packaging can be coded to report
redemptions and to report sales increases and/or decreases related to consumer
promotion. Additionally, packaging new products as a trial, with a mature or
declining product, can often provide an opportunity to up-sell and extend the
declining product's life-cycle.
4. Public relations (PR) are another common promotion tactic. Public relations
include writing and distributing press releases (to the local newspaper, the national
newspapers, to online PR sites, to radio and television, to magazines, and more). The
key for effective PR is to identify and understand your target audience, the key
message or messages you want to deliver, the credibility of your organization, and
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KING ABDUL AZIZ UNIVERSITY TOURISM INSTITUTE (KAUTI)
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the recognition that PR is not a sales tactic but an identity (whether corporate, brand
or product) building tactic.
The most effective promotional program is usually one that uses a variety of tactics and techniques.
It is important to measure the effectiveness of the program you engage in, and adjust your
promotional program to increase effectiveness and outcome (sales).
Advantages and Disadvantages of Each Element of the Promotional Mix
Mix Element
Advertising
Advantages
Good for building awareness
Disadvantages
Impersonal - cannot answer all a
customer's questions
Effective at reaching a wide audience
Repetition of main brand and product
positioning helps build customer trust
Personal Selling Highly interactive - lots of
communication between the buyer and
seller
Not good at getting customers to
make a final purchasing decision
Costly - employing a sales force has
many hidden costs in addition to
wages
Excellent for communicating complex / Not suitable if there are thousands of
detailed product information and features important buyers
Relationships can be built up - important
if closing the sale make take a long time
Sales Promotion Can stimulate quick increases in sales by If used over the long-term, customers
targeting promotional incentives on
may get used to the effect
particular products
Too much promotion may damage the
Good short term tactical tool
brand image
Public Relations Often seen as more "credible" - since the Risk of losing control - cannot always
message seems to be coming from a third control what other people write or say
party (e.g. magazine, newspaper)
about your product
Cheap way of reaching many customers if the publicity is achieved through the
right media
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KING ABDUL AZIZ UNIVERSITY TOURISM INSTITUTE (KAUTI)
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Personal selling
Introduction
Personal selling can be defined as follows:
Personal selling is oral communication with potential buyers of a product with the intention of
making a sale. The personal selling may focus initially on developing a relationship with the
potential buyer, but will always ultimately end with an attempt to "close the sale"
Personal selling is one of the oldest forms of promotion. It involves the use of a sales force to
support a push strategy (encouraging intermediaries to buy the product) or a pull strategy (where
the role of the sales force may be limited to supporting retailers and providing after-sales service).
What are the main roles of the sales force?
Kotler describes six main activities of a sales force:
(1) Prospecting - trying to find new customers
(2) Communicating - with existing and potential customers about the product range
(3) Selling - contact with the customer, answering questions and trying to close the sale
(4) Servicing - providing support and service to the customer in the period up to delivery and also
post-sale
(5) Information gathering - obtaining information about the market to feedback into the marketing
planning process
(6) Allocating - in times of product shortage, the sales force may have the power to decide how
available stocks are allocated
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KING ABDUL AZIZ UNIVERSITY TOURISM INSTITUTE (KAUTI)
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What are the advantages of using personal selling as a means of promotion?
• Personal selling is a face-to-face activity.
• • The sales message can be customized to meet the needs of the customer.
• The two-way nature of the sales process allows the sales team to respond directly and promptly to
customer questions and concerns
• Personal selling is a good way of getting across large amounts of technical or other complex
product information.
• The face-to-face sales meeting gives the sales force chance to demonstrate the product.
• Frequent meetings between sales force and customer provide an opportunity to build good longterm relationships.
Main disadvantages of using personal selling
The main disadvantage of personal selling is the cost of employing a sales force. Sales people are
expensive. In addition to the basic pay package, a business needs to provide incentives to achieve
sales (typically this is based on commission and/or bonus arrangements) and the equipment to make
sales calls (car, travel and subsistence costs, mobile phone etc).
In addition, a sales person can only call on one customer at a time. This is not a cost-effective way
of reaching a large audience.
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KING ABDUL AZIZ UNIVERSITY TOURISM INSTITUTE (KAUTI)
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Advertising
Marketing definition
Is a form of communication intended to persuade an audience (viewers, readers or listeners) to
purchase or take some action upon products, ideas, or services? It includes the name of a product
or service and how that product or service could benefit the consumer, to persuade a target market
to purchase or to consume that particular brand. These messages are usually paid for by sponsors
and viewed via various media. Advertising can also serve to communicate an idea to a large
number of people in an attempt to convince them to take a certain action.
Types of advertising
- Digital advertising
Television advertising / Music in advertising
The TV commercial is generally considered the most effective mass-market advertising format, as
is reflected by the high prices TV networks charge for commercial airtime during popular TV
events.
Radio advertising
Radio advertising is a form of advertising via the medium of radio. Radio advertisements are
broadcast as radio waves to the air from a transmitter to an antenna and a thus to a receiving device.
Airtime is purchased from a station or network in exchange for airing the commercials. While radio
has the obvious limitation of being restricted to sound, proponents of radio advertising often cite
this as an advantage.
Online advertising
Online advertising is a form of promotion that uses the Internet and World Wide Web for the
expressed purpose of delivering marketing messages to attract customers.
Product placements
Covert advertising, also known as guerrilla advertising, is when a product or brand is embedded in
entertainment and media. For example, in a film, the main character can use an item or other of a
definite brand.
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KING ABDUL AZIZ UNIVERSITY TOURISM INSTITUTE (KAUTI)
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- Physical advertising
Press advertising
Describes advertising in a printed medium such as a newspaper, magazine, or trade journal. This
encompasses everything from media with a very broad readership base, such as a major national
newspaper or magazine, to more narrowly targeted media such as local newspapers and trade
journals on very specialized topics. A form of press advertising is classified advertising, which
allows private individuals or companies to purchase a small, narrowly targeted ad for a low fee
advertising a product or service. Another form of press advertising is the Display Ad, which is a
larger ad (can include art) that typically run in an article section of a newspaper.
Billboard advertising: Billboards are large structures located in public places which display
advertisements to passing pedestrians and motorists. Most often, they are located on main roads
with a large amount of passing motor and pedestrian traffic; however, they can be placed in any
location with large amounts of viewers, such as on mass transit vehicles and in stations, in shopping
malls or office buildings, and in stadiums.
Mobile billboard advertising
are generally vehicle mounted billboards or digital screens. These can be on Mobile billboards
dedicated vehicles built solely for carrying advertisements along routes preselected by clients, they
can also be specially equipped cargo trucks or, in some cases, large banners strewn from planes
In-store advertising
In-store advertising is any advertisement placed in a retail store. It includes placement of a product
in visible locations in a store, such as at eye level, at the ends of aisles and near checkout counters,
eye-catching displays promoting a specific product, and advertisements in such places as shopping
carts and in-store video displays.
Coffee cup advertising
Coffee cup advertising is any advertisement placed upon a coffee cup that is distributed out of an
office, café, or drive-through coffee shop. This form of advertising was first popularized in
Australia, and has begun growing in popularity in the United States, India, and parts of the Middle
East
Street advertising
This type of advertising first came to prominence in the UK by Street Advertising Services to create
outdoor advertising on street furniture and pavements. Working with products such as Reverse
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KING ABDUL AZIZ UNIVERSITY TOURISM INSTITUTE (KAUTI)
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Graffiti and 3d pavement advertising, the media became an affordable and effective tool for getting
brand messages out into public spaces.
Celebrity branding
This type of advertising focuses upon using celebrity power, fame, money, popularity to gain
recognition for their products and promote specific stores or products. Advertisers often advertise
their products, for example, when celebrities share their favorite products or wear clothes by
specific brands or designers. Celebrities are often involved in advertising campaigns such as
television or print adverts to advertise specific or general products.
Purpose of Advertising
Informing
The most obvious purpose of advertising a product is informing. Through advertising,
established businesses can announce new and existing products or services they are trying to
sell to the public. Likewise, a new company can use advertising to inform the public about its
business. Advertising is a strategy used to grab the attention of potential customers.
Advertisements use language and communication techniques that appeal to consumers.
Influencing
In some cases, it is not enough to simply inform the consumer about a product. Therefore,
influencing the consumer to buy the product or service is another important technique used by
companies. By using strategic language or images in an ad, businesses can influence consumers
to buy their product. Strategic language and imagery in advertising helps point out the strengths
of a product or service, which can influence consumers' purchasing decisions.
Reminding
Another function of advertising is to remind consumers about a product or service. There are
many brands within a specific product category and consumers may forget about or overlook
some brands because there are so many options. By using advertising to remind consumers,
companies can establish their product or service in consumers' minds.
Adding Value
Advertising adds value to a brand by influencing consumers to perceive the brand in a certain
way. Advertising is influential by nature; therefore, different elements within an ad, such as the
text and images, can be positioned in order to add value to the brand. For example, a car
advertisement in a magazine may include text that emphasizes the high quality materials and
labor used in making the car. This ad achieves the goal of adding value to the brand because it
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assures the consumers that it is a high-quality car. Advertising plays up the strong points of a
product or service, which in turn adds value to the brand.
Assisting with Other Company Efforts
Another purpose of advertising is to assist with other company efforts. For example, without
advertising, consumers may not hear about special promotions, such as sales and coupons.
Advertising also assists salespersons because it educates consumers about the products before
they get to the point of purchase. This is advantageous because it allows salespersons to spend
more time on making the sale instead of spending time explaining the product to the consumer.
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KING ABDUL AZIZ UNIVERSITY TOURISM INSTITUTE (KAUTI)
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Consumer Promotions
Consumer promotions can provide your business with a short-term boost in product sales or services
requested. However, promotions should be thought of as an “add-on” to your existing brand
advertising and marketing strategies. If you are considering running special consumer promotions,
there is good rationale for incorporating them into your marketing mix.
Reasons to Promote:








Create a general hype in sales
Launch a new product or service, generating initial trial
Announce news about an existing product or service, e.g., a new form, package size, product
use, bonus offer, extended service, location, etc.
Offset new competition or other competitive threat
Induce repeat purchases, product upgrades or services used
Announce a tie-in product or service, e.g., free suntan product with the purchase of sunglasses
Capitalize on holiday or seasonal occasions, e.g., Valentine’s Day, President Day Sales,
Back-to-School Sales, Holiday Sales
Enhance product or service awareness
Who Is Your Primary Target For the Promotion?
When planning a promotion, it is important to know which customers you are trying to reach. Will
your promotion target new users or current customers? Deciding on a target audience will depend on
factors such as current sales trends, competitive activity, seasonality or a combination of factors.
Targeting your customers is key to a promotion’s success. You also need to know your customers’
behavior, reading or listening habits or use of the Internet. Once you have determined which
customers to target and how to reach them, you can decide how to best use your available funds.
What Is Your Promotion Budget?
Your marketing budget should include an allocation for promotions, both planned and contingency
(i.e., for unexpected events). How you create awareness of the promotion will depend on how much
money you have to spend. Think about hidden promotional costs, which can reduce the cost
efficiency of the promotion if overlooked. Luckily, there are many forms of media available at all
different price ranges. Just be sure that the cost of your promotion will not outweigh the benefit.
What Type of Promotion Works Best?
Promotions come in different forms, with different budgets, and can yield very different results.
Sometimes it is a good idea to conduct a test promotion before launching a large-scale effort. This
can help you to stay within your promotion budget and ensure that your promotion tactics are sound.
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KING ABDUL AZIZ UNIVERSITY TOURISM INSTITUTE (KAUTI)
With the academic support of Ecole hôtelière de Lausanne (EHL)
As a starting point in figuring out what promotion will work best for your business, research common
promotion techniques in your industry and review the effectiveness of competitors’ promotions.
Examples of common, effective promotions include:
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Short-term price reductions such as coupons, rebates or bonus offers
On-pack premiums or cross/companion product promotions, like a free toothbrush with
toothpaste
One free month of service for new customers
Free services for referring a new customer, for example a Laundromat offering free wash and
dry
Analyze the benefits and drawbacks of each promotion type before you launch your promotion. For
example, will offering bonus packs or extended discounts postpone future purchases which
potentially could impact profits? Could frequent cost reductions negatively impact your brand image?
How much will deep promotional price reductions affect profits? Some other factors to consider
include ease of implementation (which you want) and ease of duplication by competition (which you
don’t want).
What Are the “Econometrics” of the Promotion?
In simpler terms, did your promotion pay off? Did it generate sufficient incremental sales or in-store
traffic to justify the additional costs? Did your customer “load-up” or buy-in heavily, delaying future
purchases? Will there be repeat purchases sufficient enough to pay for the promotion? These are
important questions to answer when planning your promotion, as well as when evaluating it after the
fact. In many cases a promotion will only generate a short-term switch in customer choice, but this
can still be important for product or service growth.
Promotion Evaluation
Evaluation is the most critical, yet the most overlooked, step in any promotion. Most promotion
planners fail to incorporate measurement devices to assess whether the promotion worked or not.
Consequently, except for a “gut feeling,” they never really know if their promotion was successful.
To measure the success or failure of a promotion, you must set specific, measurable, realistic
objectives prior to launching the promotion. Post-promotion, evaluate your success by comparing
original objectives and criteria to actual outcomes.
This overview on creating your promotion can give you a good starting point, but sometimes it is best
to consult with a promotion professional. If you’re planning to promote, seek help from your nearest .
King Abdul Aziz University Tourism Institute- Induction Week
Academic Affairs-Word Handout
Page 23 of 9
October 2010
KING ABDUL AZIZ UNIVERSITY TOURISM INSTITUTE (KAUTI)
With the academic support of Ecole hôtelière de Lausanne (EHL)
Market Research
Definition
Market Research is a systematic, objective collection and analysis of data about a particular target
market, competition, and/or environment.
Purpose of Marketing Research
Marketing research is a crucial management tool for helping businesses to discover whether or not
the product or service that they are providing is actually desired by their customer base. An
example of a market research strategy is convening a focus group to determine how a demographic
experiences interactions with a company. Market research should be conducted constantly to ensure
that the business is still meeting the needs of a changing market.
Types of Marketing Research
Marketing research incorporates the science of understanding human behavior in order to better
understand how consumers choose products. It asks questions related to the "whys" of
consumerism. Studies incorporate one or more of the following areas.
Consumer Satisfaction Research
This is a broad area that includes home and store surveys, telephone chats and mail-in
questionnaires. Exit interviews, either by phone or in person, are part of this technique.
Brand Name Surveys
Some products sell based simply on the brand name. Marketing research determines what brands
are immediately recognized and the reasons for this identification. New product names are surveyed
using this technique.
Test Marketing
This research method is the most recognized. Store sample tables, individual samples that arrive in
the mail, and automobile test drive offers all fall within this category of research marketing.
King Abdul Aziz University Tourism Institute- Induction Week
Academic Affairs-Word Handout
Page 24 of 9
October 2010
KING ABDUL AZIZ UNIVERSITY TOURISM INSTITUTE (KAUTI)
With the academic support of Ecole hôtelière de Lausanne (EHL)
Concept Testing
money is spent developing a potential flop, businesses bring in focus groups to discuss
the concept for the product. These meetings are held in many geographic locations around the
country.
Segmentation Research
This type of marketing research is frequently used to determine the groups of consumers buying, or
interested in, a specific product. Age, income, education level and geographic location are key
factors for Segmentation Research.
Comparison or Positioning Research
This research answers the question of how well one product compares against a similar product
made by other manufacturers.
How to Conduct Market Research
Market research is the process of gathering as much information as possible about your customers
and how they view your company and products. With enough information, you can determine the
best marketing strategy for your business.
Instructions
1 Determine the goal of your research. Do you need to improve customer service or increase
sales? Are you looking for the right market for a new product?
2 Use trade journals, marketing magazines, government reports and chamber of commerce market
profiles to determine the demographics of your market. These publications also provide data on
purchasing trends that will clue you in on the buying habits of your target market.
3 Conduct mail and telephone surveys using randomly selected addresses and telephone numbers
in your local area.
King Abdul Aziz University Tourism Institute- Induction Week
Academic Affairs-Word Handout
Page 25 of 9
October 2010
KING ABDUL AZIZ UNIVERSITY TOURISM INSTITUTE (KAUTI)
With the academic support of Ecole hôtelière de Lausanne (EHL)
4 Collect information from existing customers. Use questionnaires, personal interviews and focus
groups to get feedback on your products and services. If you have a Web site, start a chat room or
message board and encourage customers to participate.
5 Observe customers at various points of contact in your business, including reception, sales, and
customer service. Watch for glitches in your operation and how your employees interact with the
customers.
6 Analyze your sales records. Knowing your best customers and most profitable products can help
you to better focus your marketing efforts.
7 Organize the research data you've collected and determine - or reevaluate - your marketing
strategy based on the results.
King Abdul Aziz University Tourism Institute- Induction Week
Academic Affairs-Word Handout
Page 26 of 9
October 2010