F10 MCS 1000 Adlam Notes

MARKETING FINAL EXAM NOTES
List of Topics:
7 Ps of service
Brand Equity
Competition-based pricing (services)
Consumer buyer behavior
Consumer surplus
Consumerism
Conventional distribution channel vs vertical marketing system
Core product & Supplementary services (flower of service)
Criticisms of marketing
CRM (Customer Relationship Management) Strategies
Cycle of failure, mediocrity, success
Demand management approaches
Demand Management Strategies
Differentiation Strategies
Dimensions of service quality
Distribution channel conflict
Environmentalism
Establishing service levels
Four categories of service
Four service focus strategies
Front and back stage personnel
Gaps in service design and delivery
General Pricing Approaches
Good vs. Service
High vs. Low involvement products
Important vs determinant attributes
Jack Trouts four principles of positioning
Marketing communications mix
Marketing concepts
Marketing Environment
Marketing Intelligence
Marketing Mix
Marketing Research
Marketing/Distribution channels
Maslows Hierarchy of Needs
Needs/Wants/Demands
New product Development
www.uofgexamnetwork.com
LECTURE 1
MARKETING INVOLVES:
-consumers
-government
-advertisers
-producers
-manufacturers
WHAT CAN YOU MARKET?
-everything, but air
WHAT CAN WE CONTORL IN MARKETING?
-target market
-availability/supply
-demand
-product
WHERE CAN YOU MARKET?
-internet
-side of buses
-stocks
-magazines
-posters
-T.v.
-newspapers
WHAT IS MARKETING?
-conception
-pricing
-promotion
-distribution of ideas goods and services
-to create exchanges that satisfy individual
SOME EXAMPLES OF MARKETING:
-product/services
-pricing
-promotion
-distribution
Concept of life, luxury, clothes, cars
LECTURE 1
Who are the experts?
Consumers
Exposure: to messages, tactics, programs
What is marketing?
Attracting new customers by promising and delivering superior value
Building long-term relationships with customers by delivering continued customer

satisfaction
Creating, building, and managing these relationships profitably over time
The Marketing Process: (fig. 1.1)

1. Understand the marketplace and customer needs and wants
2. Design a customer driven marketing strategy
3. Construct a marketing program that deliver superior value
4. Build profitably relationships and create customer delight

5. Capture value from customers to create profits and customers equity
Needs, Wants, Demands
needs are states of felt deprivations
wants are needs shaped by culture and individual personality
demands are wants combined with buying power
Value and Satisfaction
if the performance and the customers experience is lower than expectations, the
customer satisfaction is low
if the performance and the customers experience meet expectations, the

customer is satisfied
if the performance and the customers experience exceeds expectations, the

customer is delighted
Terminology
Market
Consumers vs. Customers
Exchange and Transactions

Exchange: the act of obtaining a desired object from someone by offering them of
something in return
Transaction (unit of measurement): a trade between two parties that involves:
two things of value
agreed upon conditions
time of agreement
place of agreement
Customer-Driven Marketing
Divide markets into segments
Choose the right segment to target
Offer a unique value proposition
Differentiate your offer from competitor offers
Build customer value and satisfaction
Nurture long-term customer relationships
Marketing Concepts
Production: affordability and availability
Product: quality and innovation
Selling: promotion and hard selling
Marketing: customer satisfaction and relationships
Societal: long-term value to both customer and society
Relationship Marketing
Customer Relationship Management:
The process of building and maintaining profitable customer relationship by

delivering superior customer value and satisfaction
-figure 1.4
The Customers Experience:

Customer perceived value:
customers subjective view of the offers value compared to competitive offers
Customer satisfaction:
customers subjective view of the value received in return for the purchase price
Customer delight
Customers subjective view of the increased value received above the purchase
price
Non-For-Profit Marketing
Marketing of ideas, values and institutions
-increasing awareness that these organizations must build relationships with

constituents and stakeholders
-challenge of using new marketing techniques for non-profit initiatives
Lecture 2
CHAPTER 2: MARKETING STRATEGY
What is Strategic planning?
-The process of developing and maintaining a strategic fit between the organizations
goals and capabilities and its changing marketing opportunities.
Steps in Strategic Planning
Corporate Level
Business unit, product, and market levels
Defining the
company mission
Setting company objectives and goals
Designing the business portfolio
Planning, marketing and other functional strategies
Strategic Planning
-Defining a clear company mission:
Setting supporting objective
Designing a sound business portfolio
Coordinating functional strategies
-Mission Statement:
Statesthe organizations purpose
Market and customer-oriented
Provides direction to internal stakeholders
-Customers are the front-line

Strategic Business Unit (SBU)
-
a unit of the company that has a separate mission and separate objectives and
that can be planned independently from other company businesses
can be a company division, a product line within a division or sometimes a single

product or brand
The Marketing Process
analyze current situation
analyze marketing opportunities
select target markets
develop the marketing mix
manage the marketing effort
BCG- Growth-Share Matrix

Value Delivery Network:
1. Companys Value Chain
2. Suppliers
3. Customers
4. Distributors
Number one goal in marketing- Long-term profitable customers relationships
Marketing Mix:
The set of controllable, tactical marketing tools that firm blends to produce the
response it wants in the target market
Product, Price, Promotion, Place
The Four Ps and the Four Cs

Product
provides
Customer Satisfaction
Price
represents
Customer Cost
Place
provides
Convenience
Promotion
enables 2-way Communication
Manage the Marketing Effort
Build strong operational Marketing plan
Organize marketing department
Leverage vale chain and value network
Exercise Control
-Set goals
-Measure and evaluation performance
-Take corrective action
What is a Marketing Plan?

Marketing Control Process
Set goalsMeasure PerformanceEvaluate performanceTake corrective action
CHAPTER 13: Introduction to Services

Why Study Services?
Services Dominate Economy in Most Nations
Most New Jobs are Generated by Services
-Fastest Growth Expected in Knowledge-based industries

-Many new jobs are Well-paid requiring good educational qualifications
Many manufacturing firms moved to marketing stand-alone services.
Contribution of Services Industries to Global GDP

Agriculture, 4%
Industry, 32%
Services, 64%
What are Services?
Services involve a form of rental, offering, benefits without transfer of ownership

Include rental of goods
Marketing tasks for services differ from those involved in selling foods
and transferring ownership
Five Broad categories within non-ownership framework:

1. Rented goods services
2. Defined space and place rentals
3. Labor and expertise rentals
4. Access to shared physical environments
5. Systems and networks: access and usage
Four Broad categories of Services:
Based on differences in nature of service act (tangible/intangible) and who or

what is the direct recipient of service (people/possessions), there are four
categories of services:
1. People
2. Possessions
3. Tangible Actions
4. Intangible Actions
The 7 Ps of Services Marketing:
1. Product elements
2. Place and time
3. Price and other user outlays
4. Promotion and education
5. Process *
6. Physical environment *
7. People *
Chapter 3 Overview:
What is our role as consumers?
What is our role of producers?
What is the role of the marketing system?
Socially Responsible Marketing:
-Most Canadians feel that companies are 'just average' in their social responsibility
-Half of consumers say they would not purchase from a company that was not socially
responsible
-Canadians have high expectations of their companies
-What is the difference between being responsible and socially responsible marketers?
- following laws/socially looking after community
Ethics:
In your own words:

--> Differences about what's right and wrong?
--> What is meant by professional ethics?
--> What differentiates 'illegal' from 'unethical'?
Guidelines/polices and procedures of what company thinks is right and wrong,

usually made public
shouldnt do it, cant do it

Criticism of Marketing:
-High Prices: lead to higher prices due to marketing activities
-Unnecessary Advertising: Ex. Ads in washrooms, email spam

-High pressure selling: ex. limited time deal
-Deceptive advertising: ex. vacation prices (taxes)
-Creating false needs: ex. cologne/perfume
Consumerism
Environmentalism
Consumer Protection Act: Scanner Price Accuracy Voluntary Code
-If the scanned item is higher than the shelved price, you can get it for free, up to a $10
maximum
-endorsed by the Competition Bureau
-Over 5000 retailers across Canada are Voluntary Code participants
Lecture 3
CHAPTER 4
Marketing Environment Defined:
The process and forces outside marketings direct control that affect marketing
managements ability to develop and maintain successful transactions with target
customers.
Microenvironment:
Factors close to the company that affect its ability to serve its customers
Unique to the company
Factors: The company, suppliers, marketing intermediaries, customers,
competitors, publics
Microenvironment:
Larger societal forces that affect the microenvironment
Considered to be beyond the control of the organization
Forces: Demographic forces, economic forces, natural forces, technological

forces, political forces, cultural forces
Demographics
Marketers track changing age and family structures, geographic population shifts,
educational characteristics and population diversity
Baby Boomers:
9 million born between 1946-1964
Account for one-third of population
High amount of disposable income
Now moving into middle-age
Economic Environment:
All those factors that affect consumer buying power and spending patterns
-Income levels and distribution
-The necessity of products
-Changes in trends and consumer spending
-Economies of different nations
Cultural Environment:
The institutions and other forces hat affect a societys basic values, perceptions,
preference and behaviors
Cultural values are highly persistent
Learned from family and community
International Trade Issues
Trade restrictions
-tariffs
-quotas
-Exchange controls
-Non-tariff barriers
World Trade Organization
Economic conditions
Chapter 5
Managing Information
Imagine a type of company that needs information to be successful
Conducting Marketing Research:

-What is the difference between primary and secondary data?
Types of Research:
Exploratory: preliminary information that will help define problems and suggest
hypothesis
Descriptive: to better describe marketing problems, situations, or markets
Casual: to test hypothesis about cause-and-effect relationships
A new Pepsi Product:
Give the product a name:
What questions do you need to have answered before launching this product?
-Is there a market?
-What is the target market?
-How much target market is willing to pay for it
-Does it taste good?
Putting Marketing Research to use:
Marketing research is conducted to collect data- but marketing managers much

translate that data information
Customer Relationship Management (CRM) systemswhat are they and what

do they do?
-Company based system managing potential suppliers

CRM Example:
Netflix, QVC.com, Amazon Lead E-Retailers in Customer Satisfaction
-Kellogg wants to investigate if young children have an impact on their parents

decisions to buy breakfast foods: secondary, casual
-University Bookstore wants to get some insights into the impact on sales If they
increased process by 20%: primary, casual, survey
-Gillette wants to determine whether a market exists for a new line of deodorant for
children: primary, descriptive, focus group
Important to understand how cultural, social, personal, physiological factors

affect purchase decisions.
-Same decision-making process applies to cars as it does to coffee
From a buyers perspective

An example of a business buyer would be a hospital
Who do you think buys the scalpels and the x-ray machines, how do they decide
which ones to buy?
-Same decision-making process applies to cars as it does to coffee
The Consumer Buyer Decision Process:

Figure 6.4
Business markets and business buyer behavior
What factors would influence business buyer behavior?

-Fixed price vs. negotiation
-Cash/credit vs. payments
Decision criteria is professional, not personal

-Consumers buy items one at a time and focus on brand/price
-Business buyers purchase by the thousands, focus on total cost of
ownership and after-sales service

Types of Needs:
Overall aspects, not categorize
Main not individuals
Maslows Hierarchy of Needs

Personal Needs:
Goals, achievements, self-satisfaction/actualization
Social Needs:
Friends, Family
Safety Needs:
Free from attack
Physiological Needs:
Shelter, Food
CHAPTER 14: Consumer Behavior in a SERVICES Context

Pre-purchase Stage Service Encounter Stage Post-purchase Stage
Pre-purchase Stage:
Risk-reduction strategies that service suppliers can develop
Service expectations
Need awareness
Information Search
Evaluation of Alternatives
Purchase Decision
-Evoked set: set of possible services or brands that a customer may consider in the
decision process
-the different alternatives need to be evaluated before a final choice is made
Service Attributes: Style, color, texture, taste, sound
Experience Attributes: vacations, sporting events, medical procedures
Credence Attributes: Quality of repair and maintenance work
Perceived Risks:
-Functional
-Financial
-Temporal
_Physical
-physiological-fears negative emotions
-social- how others think and act
-sensory-unwanted impact on 5 senses
How to handle them?
-seeking information from respected personal sources
-using internet to compare service offerings and search for independent reviews and
ratings
replying on a firm that has a good reputation
-looking for guarantees and warranties
-visiting service facilities or trying aspects of service before purchasing
-asking knowledgeable employees about competing services
Service Encounter Stage:
Encounters range from high to low contact
An integrative perspective: Service facilities, Personnel, Role and script theories
2.20
The Servuction System Fig. 2.22

Post Purchase Stage
-Evaluation of service performance
-future intentions
Lecture 4
Segmentation, Targeting, and Positioning
Understand that a market, a market segment, and a target market are all
variations of the same concept-a group of people!
Think of a pie
No such thing as a product that is for everyone
Segmentation leads to stereotypes
Dont be afraid to look beyond push yourself beyond simply indentifying every
market segment according to age and gender
Dont be afraif touse demographic and psycholographic characteristics
Overview of the 3-Step Process

Market Segmentation: Identify bases for segmenting market
Develop profiles of resulting segments
Market targeting:
Develop measures of segment attractiveness

Select the target segments
Market Positioning:
Develop positioning for each segment

Develop marketing mix for each segment
Market Segmentation
-Bases of segmentation:
Geographic:
Area, population density, climate, etc
Demographic:
Age, sex, lifecycle, income, job, etc.
Psychographic:
Lifestyle, personality
Behavioral:
Benefits sought, status, usage rate, loyalty, attitudes, etc.
Example: Labatts Beer

Segments: Watch sports who also play want light beer
Example 2: YouTube video
Segment: Loyalty to your friend, focused on guys
Segmenting Business Variables
Major Criteria for segmenting business marketings are:

-operating characteristics of the company
-purchasing approaches
-situational factors
-customer size
-Geographic location
Segmenting International Markets
Geographic locations
Economics Factors
Political and legal factors
Cultural factors (language)
Evaluating Segments
Marketers must evaluate the effectiveness of those segments:
Measurability
-Can be measured
Accessibility
-Can be reached and served
Substantiality
-profitable/large enough to serve
Differentiability
-Substantially different than other segments
Actionability
-Effective programs can be designed
Mass Marketing
No segments and single marketing mix
Differentiated (segment) Marketing
Large segments with specific marketing mixes
Concentrated (niche) marketing
Small segments with specialized marketing mixes
Micromarketing
Customized marketing to individuals
Positioning
Designing the companys offering and image for a distinctive place in the mind of the
target market.
Successful Positioning
Product position:
How a product is viewed by consumers relative to competing products
Three positioning steps
Identify competitive advantages on which to build a differentiated position
Choose the right competitive differentiation
Select an overall positioning strategy
Gaining Competitive Advantage
Key to wining target customers is to understand their needs better than your
competitors do and to deliver more value
Competitive Advantage: extent to which a company can position itself as

providing superior value
Identifying Competitive Advantage

1. Product Differentiation (eg. Consistency durability, reliability, reparability)
2. Services Differentiation (eg. Speed, convenience, careful delivery)
3. Image Differentiation (eg. Convey benefits and positioning)
4. People Differentiation (eg. Hiring, training better ppl than competitors)
5. Channel Differentiation (eg. Retail outlet stores vs. the internet)
Example: Mountain Dew:
-Image: you will do anything you can to get your hands on or protect your drink
sponsoring to extreme sports, high energy, live on the edge consumer
Successful Differentiation
Important- of value to consumers
Distinctive- obvious and clear
Superior- better value than competitors
Communicable- explainable
Pre-emptive- defendable and unique
Affordable- delivers value for cost
Profitable- company can make money
Positioning Errors
Under-positioning
Failing to really position the company at all
Over-positioning
Giving buyer too narrow a picture of the company
Confused positioning
Leaving buyers with a confused image of a company
-To young, active, soft-drink consumers with little time for sleep
Basic Focus Strategies for Services

Considerations for using the Focus Strategies
Market focused:
Narrow market segment with wide range of services
Need to make sure firms have operational capability to do and deliver each of the
different services selected
Need to understand customer purchasing practices and preferences

Service Focused:
Narrow range of services to fairly broad market
As new segments are added, firm needs to develop knowledge and skills in
service each segment

Unfocused:
Broad markets with wide range of services
Many service providers fall into this category
Danger- become a jack of all trade and master of none
Importance of Determinant Attributes
Consumers choose between alternative service offerings
Determinant attributes determine buyers choices between competing

alternatives
Establishing Service Levels and Tiers
Need to make decisions on service levels-level of performance firm plans to offer

on each attribute
Segment customers according to willingness to trade off price versus service

level
Service tiering: positioning strategy based on offering server price-based classes

of service concept
**Four Principles of Positioning Strategy JACK TROUT**

Positioning as a Diagnostic tool

Understand relationships between products and markets
Compare to competition on specific attributes
Evaluate products ability to meet consumer needs/expectations
Predict demand a specific prices/performance levels
Identify market opportunities
Introduce new products
Redesign existing products
Eliminate non-performing products
Make marketing mix decisions, respond to competition
Distribution/service delivery
Pricing
Communication
**Developing a Market Positioning Strategy (Everything that goes into creating)
Anticipating Competitive Response
Competitors might pursue same market position
Get inside competitors heads
Analyze possible effects of alternative competitive moves

-impact of price cut on demand, market share, and profits
-Responses of different segments to changes in service attributes
Using positioning Maps to Plot Competitive Strategy- used as a diagnostic tool, help you
gain advantage over competitors, and see where you are.
Lecture 5
Chapter 8: Product Strategy

What is a product?
A product need not be a tangible good
A product is anything that the marketers market.
-Cuba
-Hospital Lotteries
-Politicians
-Services
Defining products and services
Experience: type of product that combines a service or physical product with a

memorable experience
o Biggest influence on purchase of product
o Purchase experience
Describe your last retail purchase experience
Levels of Product
Core product or benefit
Actual product
o Packaging, features, design, quality level, brand name
Augmented product
o Warranty, delivery, credit, installation service
The most basic level of a product: the core

The best illustration of a product category would be: augmented
Consumer or Business Products
Business Products:
o Parts, materials, capital items, supplies
Consumer products:
o Convenience, shopping, specialty, unsought
Industrial/business products
o Parts & Materials
Raw and Manufactured
o Capital Items
Aid in production or operation
Buildings, offices, equipment
o Supplies
Operating supplies
Paper, lubricants
Maintenance items
Consumer Products
o Convenience: frequent, immediate purchases, low involvement
Toilet paper
o Shopping: Less frequent purchases, careful comparison between products
Clothing, hotels
o Specialty: unique characteristics or brand, buyers put forth special effort to

purchase
Designer Clothes, legal services
o Unsought: not usually purchases, or not known about
New innovations, blood donations
Product Marketing Decisions
Figure 8.3
o Product Attributes
Quality, features, style and design
o Branding
Name, term, sign, symbol or combination that identifies the maker

or seller of product/service
o Packaging
o Labeling
o Product support services
Additional services that delights the customers and yields profits for
company
Product Line and Mix
Branding Advantages
What are the advantages of branding?

o For consumer
o For marketer
Service Characteristics Fig. 8.5
Intangibility
Inseparability
Variability
Perishability
Branding Decisions
A brand is not a logo
A brand is an idea
o Not a physical or visual thing it is an idea
o Set of attributes and emotions
o May be represented by objects, logos, names
o Set of associations that exist in the mind of the consumer
Brand Equity
The idea that a brand has numeric dollar value even though there are no tangible
assets
Chapter 9: Developing and Marketing New Products

Why develop new products?
Follow changing marketing demands
Remain competitive
Keep up with changing technology
Replace dying products
Refresh and evolve existing products
Diversify product offering to reduce risk
New Product Development

Idea generation
Idea Screening
Product concept
Marketing strategy
Business analysis
Product development
Test marketing
Commercialization
Product Life Cycle
All products will pass through the PLC

o How long it takes between stages
o How long it remains in each stage
Development- No customers, no profits, heavy spending
Introduction- Early adopter customers no profits, high launch costs
Growth- Early majority customers, rapid sales growth and revenues
Maturity-late majority customers, flat sales declining profits
Decline- laggard customers, declining sales, replaced by new products
Maturity Stage Strategy
Modify the market
Modify the product
Modify the marketing mix
Lecture 6
Pricing Considerations and Strategies
What is a price?
Sum of all the values that consumers exchange for the benefits of having or
using the good or service
Price vs. Cost
Marketers do not make decisions about costs, they make decision about prices
Dynamic Pricing:
The practice of charging different prices depending on individual customers and

situations
Internet and web-purchasing provides the technological capability
Sites like eBay even add the ability to negotiate price to dynamic pricing
practices
Factors
What INTERNAL factors influence pricing?

-Marketing objectives
-Marketing mix strategies
-Costs
-Organizational considerations
EXTERNAL:
-Nature of the market and demand
-Competition
-Other environmental factors ( economy, resellers, government, social concerns)
Fixed vs. Variable- Your Call
Product packaging- Variable
VP of Marketings salary- Fixed
Cost of 3 month billboard campaign- Fixed
Annual advertising budget- Fixed
Cost of the parts that go into manufacturing the marketers product- Variable
Price Elasticity
A way of measuring how sensitive the market is to price changes

-Inelastic: minimal change in demand as price increases
-Elastic: significant drop in demand as price increases
General Pricing Strategies:
Cost-based approach
-Cost-plus pricing
-Break-even analysis
-Target profit pricing
Value-based approach
-Consumer perceptions of value
Competition-based approach (most common approach)
-What competitors are charging
Pricing in Different Markets:

Pure Competition:
Many buyers and sellers where each has little effect on the going market price
Monopolistic Competition:
Many buyers and sellers who trade over a range of prices
Ex. Airlines
Oligopolistic Competition:
Few sellers and sensitive to each others pricing/marketing strategies
Pure Monopoly:
Market consists of a single seller
Ex. LCBO
Pricing New Products
Marketing skimming pricing

-High price to reap maximum profit from early adopter segments
-Strategy must be supported by product quality, production costs, and
competitors difficulty in entering market
Market penetration pricing

-Low price to gain maximum market share
-Market must be price sensitive, costs must fall with rising volume, and
must discourage competition
Product Line Pricing

Involve setting price steps between various products in a product line based on:
Cost differences between products
Customer evaluations of different features
Competitors prices
Optional/Captive product pricing

price
Optional Product
-Pricing optional or accessory products sold with the main product (eg.
Ice
maker with the refrigerator)
Product Bundle Pricing

-Combining several products and offering the bundle at a reduced price
(eg.
Computer with software and Internet access.
Captive-product
-Pricing products that must be used with the main product (eg.
Replacement cartridges for Gillette razors)
By-product pricing
-setting a price for by-products in order to make the main products
price more
competitive (eg. Sawdust and buttermilk)
Discounts and Allowances
Discounts:
-Cash
-Quantity
-Seasonal
Allowances:
-Trade-In
-Promotional
Segmented Pricing
Selling a good or service at two or more prices, where the difference in prices is
not based on differences in costs
-Customer-segment
-Product-form
-Location pricing
-Time pricing
Psychological Pricing
Considers the psychology of prices and not simply the economics
Consumers usually perceive higher-priced products as heaving higher-quality
Consumers use price less when they can judge quality of a product
Promotional Pricing
Temporarily pricing products below list price and sometimes even below cost to
create buying excitement and urgency
----------Approaches---------
Loss Leaders
Low-Interest Financing
Special-Event Pricing
Longer Warranties
Cash Rebates
Free Maintenance
Discounts
Geographical Pricing
FOB (free on board)-origin pricing
Uniform-delivered pricing
Zone pricing
Basing-point pricing
Freight-absorption pricing
International Pricing (NOT BEING TESTED)

Price depends on many factors, including
Economic conditions
Competitive situations
Laws and regulations
Development of the wholesaling and retailing system
Costs
Initiating Price Changes

Price Cuts:
Excess capability
Falling market share
Dominate market through lower costs
Price Increases:
Cost inflation
Over-demand. Cannot supply all customers needs
Price Ethics
Competitors:
-Price-fixing
-Predatory pricing
Manufacturer and retailer

-Retail price and maintenance
-Discriminatory pricing
Manufacturer/retailer and consumer

-Deceptive pricing
Planning and Creating Services
A service product comprises all elements of service performance, both tangible

and intangible, that create value customers
The service concept is represented by:

-A core product
-Accompanied by supplementary services-facilitate and enhance use of
core product and add value and differentiation
Designing a Service Concept
Core product
-Central component that supplies the principal, problem-solving benefits
customers seek
the
Supplementary Services
-Augment the core product, facilitating its use and enhancing its value
and
appeal
Delivery Processes
-Used to deliver both the core product and each of the supplementary
services
Core and Supplementary Services at Luxury Hotel
Reservation
Valet parking
Reception
Baggage service
Cocktail bar
Restaurant
Entertainment/sports/exercise
Internet
Wake-up call
Room Service
Business Centre
Cashier
The Flower of Service

- Need to know this like its going out of style
How to Determine What Supplementary Services Should be Offered
Market positioning strategy determines which supplementary services should be

included
Firms with different levels of service often add extra supplementary services for
each upgrade in service level
Managerial Implications
To develop product policy and pricing strategy, managers need to determine:

Which supplementary services should be offered as a standard package
or as
fee based options
Firms that compete on a low-cost, no-frills basis needs fewer supplementary

elements than those marketing expensive, high-value-added services
Setting Prices and Implementing Revenue Management
Harder to calculate financial costs than a manufactured good
Difficulty in defining a unit of service
Services hard to evaluate
Customers may be prepared to pay more for faster delivery
Delivery through physical or electronic channels-may create differences in

perceived value
The Pricing Tripod

Pricing Strategy
|
Costs
|
Competition
|
Value to Customer
Cost-based Pricing:
Traditional vs. Activity-Based Costing
Traditional Costing Approach

-Labor and infrastructure costs are considered fixed costs
Activity-based costing (ABC)
-Sets of delivery activities and related goods

-Firms can pinpoint profitability of different services, channels etc.
How do you Reduce Price Competition?
Outsourcing
Non-price related costs of using competing alternatives are high
Personal relationships mater
Switching costs are high
Time and location specificity

Net Value: Perceived benefits to customer (Gross value- All Perceived outlays
(Money, Time, Mental/Physical Effort)
Pricing Issues:
Putting Strategy into Practice
How much to charge?
What basis for pricing?
Who should collect payment?
Where should payment be made?
When should payment be made?
How should payment be made?
How to communicate prices?
Lecture 7
Chapters 11, 12, 18
Implications of intangibility in service performances
Customers are involved in production
Role of customer-contact personnel
Difficulty of evaluating many services
Need to bring supply and demand into balance
Overcoming Problems of Intangibility
May be difficult to communicate service benefits to customers especially when

intangible
Intangibility creates 4 problems

Generality items that comprise a class of objects, persons, or events
Non-search ability cannot be searched or inspected with physical objects
Abstractness no one-to-one correspondence with physical objects
Mental impalpability Customers find it hard to grasp benefits of complex,
multidimensional new offerings
Advertising Strategies for Overcoming Intangibility in text

Accenture Promotes Ability to Turn Innovative ideas into results : all ads use this
DHL: promoting the efficiency of its import express service
Facilitate Customer Involvement
When customers are actively involved in service production, they need training to
perform
Show service delivery in action
Television and videos engage viewer

-dentists showing patients videos of surgical procedures before surgery
Streaming videos on Web and podcasts are new channels to reach active
customers
Advertising and publicity can make customers aware of changes in service

features and delivery systems in b2b and b2c contexts
Sales promotions to help change customer behaviour

- offer incentives to make necessary changes
-Price discounts to encourage self-service on an ongoing basis
Help Customers to Evaluate Service Offerings
Customers may have difficulty distinguishing one firm from another

-provide tangible clues related to service performance
Some performance attributes lend themselves better to advertising than others

-Airlines
- boast about punctuality
-Do not talk overtly in advertising about safety, admission that things might go
wrong make prospective travelers nervous
-Use indirect approach: promote pilot expertise, mechanics, maintenance skills,

newness of aircraft
Firms expertise is hidden in low-contact service

- need to illustrate equipment, procedures, employee activities that take place
backstage
(focus on the positives of your firm, not the negatives)
Target audience and communications objectives
Connect to target audience

-First time users advertising, public relations, direct marketing
-Existing users contact personnel and point of sale promotions
-Employees secondary audience in front stage roles
Specify clear communications objectives, select most appropriate messages and

communications tools to achieve
Key planning considerations

-know your service product, how buyers evaluate and their exposure to different
media
-Determine the content, structure, style of message and best media
- Budget, timing and measurement system
Message Transmission (1) read in text
Through Productions Channels Developed within organization and transmitted

through production channels that deliver the service itself
- Knowledgeable, empathetic front-line staff , programs providing customer training,
and imbedding messages in service environment
Through marketing Channels Traditional tools of personal selling, account

management programs, trade shows, advertising, direct marketing, sales
promotion, public relations
Message Transmission (2) read in text

Through messages originating outside the Organization very influential and powerful
- Word of Mouth (WOM) more credible than firms messaging. Customers rely on it
when making high risk decisions
-Blogs on line journals where people can post their point of view, bloggers can
become de factor watch dogs, links enable information sharing
-Editorial Coverage editorial coverage about a company initiated by broadcasters and
publishers
Strategies for Corporate Design
Many service firms employ a unified and distinctive visual appearance for all
tangible elements to reinforce the brand
-for example, logos, uniforms, physical facilities
Provide a recognizable theme linking all the firms operations
Use of trademarked symbol as primary logo, with name secondary

-Shells yellow scallop shell on a red background
-MacDonalds Golden Arches
Marketing or Distribution Channel
A set of interdependent organizations involved in the process of making a product or

service available for use or consumption by the consumer or business user. (see
text)
Wholesalers/Retailers
Wholesalers
-Merchant wholesalers
-Agents and brokers

-Manufacturers sales branches and offices
Retailers
-Amount of service
-product time
-relative prices
-retail organization
(understand the difference between wholesalers and retailers)
What is retailing?
Retailing includes all the activities involved in selling products or services directly to
final consumers for their personal, non-business use.
Amount of Service (NEED TO KNOW)
Self-service retailers: Service customers who are willing to perform their own
locate-compare-select process to save money
Limited-service retailers: provide more sales assistance because they carry more
shopping goods about which customers need information
Full-service retailers: usually carry more specialty goods for which customers like to
be waited on
Conventional vs. Vertical

Conventional Marketing Channel
manufacturer
Wholesaler
Retailer
Consumer
Vertical Marketing System
Manufacturer
Wholesaler
Retailer
Consumer
Vertical marketing System
A distribution channel structure in which procedures, wholesalers and retailers act as
a unified system
One channel member owns the other, has contracts with them or has so much
power that they all cooperate.

Channel Conflict
Disagreement between members over goals
Horizontal Conflict
-conflict between firms on the same level
Vertical conflict
-conflict between firms on different levels

Disintermediation
-displacement of a traditional member from the marketing channel

-selling direct via the internet
Franchise Organization
Manufacturer sponsored wholesaler franchise system.
Disintermediation
Bypassing intermediaries and going directly to final buyers
Radically new types of channel intermediaries that compete with or displace

traditional ones
Internet and e-commerce are the most common cause of disintermediation
Number of Intermediaries
Intensive distribution
-as many distributors as possible
Exclusive distribution
-only one distributor in a given territory
Select distribution
-A select few distributors in a given territory
Logistics and Supply Chain
Planning, implementing and controlling the physical flow of goods, services and
related information from points of origin to points of consumption to meet customer
requirements at a profit
Includes
-Outbound distribution
-Inbound distribution
-Reverse distribution
Evaluating Advertising
Ultimate test is whether sales have increased.
Measure before and after an ad campaign to measure results.
Online advertising the easiest to measure based on conversion rates and the
ability to prompt immediate calls to action.

Sales Promotion
Coupons, contests, premiums, and incentives.
Used to attract attention.
Provide incentive for trial or purchase.
Generates results now versus later.
Effectiveness easier to track than advertising.
May detract from brand equity and loyalty.
Sales Promotion Objectives
Consumer: increase short-term sales or help build long-term market share.
Trade: get retailers to:
-Carry new items and more inventory.
-advertise products.
-give products more shelf space.
-buy ahead.
Personal Selling
Personal, flexible, two-way communication, provides direct feedback.
Builds preference, conviction, action.
Suited to complex, higher priced products.
Basis for building a buyer relationship.
Requires long-term commitment and ongoing management.
Direct Response
Hard to appreciate why marketers choose this type of marketing.
More than just junk mail!
Marketers must make a thousand decisions to execute a DM campaign
-Who to send it to
-database
Direct Mail Marketing Type of Direct Response

Involves sending an offer, announcement, reminder or other item to a person at a
particular address.
Permits high target-market selectivity.
Personal and flexible.
Easy to measure results.
Public Relations
Public relations involves building good relations with the companys various publics
by obtaining favorable publicity, building up a good corporate image and handling
or heading off unfavorable rumors, stories and events.
Cannot be purchased - challenging!
Directly opposite to advertising journalists cannot be paid.
News stories, features, press conferences, annual reports, corporate website.
Seen as more believable than advertising messages.
More cost efficient.
Can be difficult to control.
Can be proactive and reactive.
Public Relations Tools

News.
Speeches.
Special events.
Buzz marketing.
Mobile marketing.
Written materials.
Audiovisual materials.
Corporate identity materials.
Public service activities.
Company website.
Lecture 8:
Chapters: 19, 20, 23
Four Categories of Services
Delivery of a Possession-Processing Service (Fig. 8.2a-d)
People-Processing (Fig. 8.2a)
Mental Stimulus (Fig. 8.2 c)
Information Processing (Fig. 8.2 d)
Blue Printing
Developing a Blueprint:
Identify key activities in creating and delivering service
Define big picture before drilling down to obtain a higher level of detail
Advantages of Blue printing:
Distinguish between frontstage and backstage
Clarify interactions between customers and staff, and support by backstage

activities and systems
Identify potential fail points; take preventative measures; prepare contingency
Pinpoint stages in the process where customer commonly have to wait
Blueprinting The Restaurant Experience: A Three-Act Performance
Act 1: Introductory Scenes
Act 2: Delivery of Core Product
Cocktails, seating, order food and wine, wine services

Potential fail points: menu information complete? Menu intelligible?
Mistakes in transmitting information a common cause of quality failure
Customers may not evaluate quality of food and drink, but how promptly its
served.
Act 3: The Drama Concludes
Improving reliability of Processes by Failure Proofing
Indentify fail products
Analysis of reasons for failure often reveals opportunities of failure proofing to

reduce/eliminate future risk of errors
Need fail-safe methods for both employees and customers
Have poka-yokes to ensure service staff do things correctly, as requested, or at

the right speed
Customer poka-yokes focus on preparing the customer for:

The encounter
Understanding and anticipating their roles
Selecting the correct a service or transaction
Process Redesign: Approaches and Potential Benefits
Eliminating non-value-adding steps
Simplify front-end and back-end processes with gal of focusing on benefitproducing part of service encounter
get rid of non-value
Delivering direct service
Bring service to customers instead of bringing customers to service firm
Improve convenience for customers
Productivity can be improved if companies can eliminate expensive retail
locations
Increase customer base
Redesigning physical aspects of service processes
Focus on tangible elements of service processes; include changes to
facilities and equipment to improve service experience
Increase convenience
Psychological Factors Related to the use of SSTs

Advantages:
Time savings
Cost Savings
Flexibility
Convenience of locations
Greater control over service delivery
High perceived level of customization
Disadvantages:
Anxiety and stress experienced by customers who are uncomfortable wit
h using them
Some see service encounters as social experiences and prefer to deal with
people
Nature of Services
Services cannot be stockpiled

This is problematic for people or physical possession services due to
wide swings in demand
Goal is to utilize staff, equipment, and facilities as productivity as
possible
From Excess Demand to Excess Capacity
Excess Demand
Too much demand relative to capacity at a given time
Demand exceeds optimum capacity
Upper limit to a firms ability to meet demand at a given time
Optimum Capacity
Point beyond which service quality declines as more customers are
serviced
Excess Capacity
Too much capacity relative to demand at a given time
Addressing the Problem of Changing Demand

Two Basic Approaches:
Adjust level of capacity
Manage level of demand
How to Determine Demand Patterns
Understand why customers from specific market segments select this

service
Keep good records of transactions to analyze demand patterns
Sophisticated software can help to track customer consumption
patterns
Record weather conditions and other special factors that might influence
demand
Alternative Demand-Management Strategies
Take no action
Let customers sort it out
Reduce demand
Higher prices
Communication promoting alternative times
Increase demand
Lower prices
Communication, including promotional incentives
Vary product features to increase desirability
More convenient delivery times and places
Inventory demand by reservation system
Inventory demand by formalized queuing
Information Need for Demand and Capacity Management Strategies
Historical data on demand level and composition, noting responses to

marketing variables
Demand forecasts by segment under specified conditions
Segment-by-segment data
Fixed and variable cost data, profitability of incremented sales
Meaningful location-by-location demand variations
Customer attitudes toward queuing:
Lining up-when it is acceptable? Pg. 477
Customer opinions of quality at different levels of capacity utilization: ex.
Hotels/air travel/retail service
What is Service?
Different Perspectives of Service Quality
Transcendent:
Quality=Excellence
Recognized on through experiences
Manufacturing-based:
Quality is n conformance to the firms developed specifications
User-based:
Quality lies in the eyes of the beholder
Value-based:
Quality is a trade-off between price and value
Dimensions of Service Quality

Tangibles: Appearance of physical elements
Reliability: Dependable and accurate performance
Responsiveness: Promptness; helpfulness

Assurance: Competence, courtesy, credibility, security
Empathy: Easy access, good communication, understanding of customer
Seven Service Quality Gaps

Fig. 23.1
1. Knowledge Gap: Difference between expectations and needs
2. Standards Gap: Specify SQ standards that reflect expectations
Translation into design/delivery specs
3. Delivery Gap: Ensure service performance meets standards
Execution of design/delivery specs
4. Internal Communications Gap: Ensure that communications promises
are realistic
5. Perceptions Gap: Educate customers to see reality of service quality
delivered
Customer perceptions of service execution
6. Interpretation Gap: Pretest communications to make sure message is
clear and unambiguous
7. Service Gap: Close gaps 1 to 6 to meet customer expectations
consistently
Soft and Hard Measures of Service Quality
Soft measures- not easily observed, must be collected by talking to

customers, employees or others
Provide direction, guidance and feedback to employees on ways to
achieve customer satisfaction
Can be quantified by measuring customer perceptions and beliefs
eg. SERVQUAL, surveys, and customer advisory panels
Hard measures- can be counted, timed, or measured through audits

Typically operational processes or outcomes
Standards often set with reference to percentage of occasions on
which a particular measure is achieved.
Customer feedback Collection Tools
Total market surveys

Annual surveys
Transactional surveys
Service feedback cards
Mystery shopping
Unsolicited customer feedback
Focus group discussions
Service reviews
Analysis, Reporting and Dissemination of Customer Feedback
Choosing the relevant feedback tools and collecting customer feedback is

meaningless If the information is not passed back to the relevant parties
to take action
Reporting system needs to deliver feedback to frontline staff, process
owners, branch/department managers and top management
Three types of performance reports:
Monthly Service Performance Update
Quarterly Service Performance Review
Annual Service Performance Repot
Tools to Analyze and Address Service Quality Problems
Fishbone diagram
Cause-and-effect diagram to identify potential causes of problems
Pareto Chart
Separating the trivial from the important. Often, a majority of problems
is causes by a minority of causes (ie. The 80/20 rule)
Blueprinting
Visualization of service delivery, identifying points where failures are
most likely to occur
Cause-and-Effect Chart for Flight Departure Delays (Fig. 14.10)

Analysis of Causes of Flight Departure Delays (Fig. 14.11)
Service Efficiency, Productivity and Effectiveness
Efficiency: involves comparison to a standard, usually time-based

how long employee takes to perform specific task)
Productivity: involves financial value of outputs to inputs
Effectiveness: degree to which firm meets goals
(eg.
Generic Productivity Improvement Strategies

Typical strategies to improve service productivity:
Careful control of costs at every step in process
Efforts to reduce wasteful use of materials or labor
Matching productive capacity to average rather than peak demand levels
Replacing workers by automated machines or self-service technologies
Teaching employees how to work more productively
Broadening variety of tasks that service worker can perform
Installing expert systems that slow paraprofessionals to take on work
previously performed by professionals who earn higher salaries
Although improving productivity can be approached incrementally, major
gains often require redesigning entire processes
Customer-Driven Ways to Improve Productivity
Change timing of customer demand

By shifting demand away from peaks, managers can make better use
of firms productive assets and provide better service
Involve customers more in production
Get customers to self-serve
Encourage customers to obtain information and buy from firms
corporate websites
Ask customers to use third parties
Delegate delivery of supplementary service elements to intermediary
organizations
Evaluating Advertising
Ultimate test is whether sales have increased.
Measure before and after an ad campaign to measure results.
Online advertising the easiest to measure based on conversion rates and the
ability to prompt immediate calls to action.
Sales Promotion
Coupons, contests, premiums, and incentives.
Used to attract attention.
Provide incentive for trial or purchase.
Generates results now versus later.
Effectiveness easier to track than advertising.
May detract from brand equity and loyalty.
Sales Promotion Objectives
Consumer: increase short-term sales or help build long-term market share.
Trade: get retailers to:
-Carry new items and more inventory.
-advertise products.
-give products more shelf space.
-buy ahead.
Personal Selling
Personal, flexible, two-way communication, provides direct feedback.

Builds preference, conviction, action.
Suited to complex, higher priced products.
Basis for building a buyer relationship.
Requires long-term commitment and ongoing management.
Direct Response
Hard to appreciate why marketers choose this type of marketing.
More than just junk mail!
Marketers must make a thousand decisions to execute a DM campaign
-Who to send it to
-database
Direct Mail Marketing Type of Direct Response
Involves sending an offer, announcement, reminder or other item to a person at a
particular address.
Permits high target-market selectivity.
Personal and flexible.
Easy to measure results.
Public Relations
Public relations involves building good relations with the companys various publics
by obtaining favorable publicity, building up a good corporate image and handling
or heading off unfavorable rumors, stories and events.
Cannot be purchased - challenging!
Directly opposite to advertising journalists cannot be paid.
News stories, features, press conferences, annual reports,corporate website.
Seen as more believable than advertising messages.
More cost efficient.
Can be difficult to control.
Can be proactive and reactive.
Public Relations Tools
News.
Speeches.
Special events.
Buzz marketing.
Mobile marketing.
Written materials.
Audiovisual materials.
Corporate identitymaterials.
Public service activities.
Company website.
Lecture 9
Chapters: 21, 22
Service Staff
Crucially important to the success of a service firm

-Most visible
-Represents company and delivers brand promise
-Service staff= brand
Instead of a brand manager- people manager

-Gain a competitive advantage
-Help ensure sustainability in the marketplace
Understand that the work of service staff can be demanding, challenging

and difficult
Higher performing, satisfied employees are key
Front-line work can be demanding (boundary spanners)
Often have conflicting roles
Emotional labor
Conflict comes from 3 sources:
Person/role conflicts
-Between job requirements, and own personality
Organization/client conflicts
-Follow company rules or satisfy customer

Inter-client conflicts
-Client to client conflict
EXAMPLES?
CYCLE OF FAILURE- the search for productivity

CYCLE OF MEDICRITY- no incentive to improve
-employees unresponsive
-increased pay the longer you are there
-taking initiative, making decisions, providing insight is discouraged
-high job security
-emphasis on rules
-not satisfied with job
CYCLE OF SUCCESS
-happy employees, whole cycle is positive
-bigger job designs
-employees satisfied
What are the key barriers for firms seeking to break the cycle of failure and
move in to the cycle of success?
Short sighted management
Low margins
Forced efficiency (Wal-Mart)
The best candidates
Observe behavior
-Interviews, exercises
Conduct Personality tests
-Does personality match the job?
Multiple, structured interviews
-Different interviewers
Realistic job preview
-Expectations much match job offering
Other aspects of HR
Train service employees actively

Empower the front line
Build high performance service delivery teams
Motivate and energize people
The Service Talent Cycle for Service Firms ** in text**

1. Hire the right people
2. Enable your People
3. Motivate and Energize your People
Customer Value
The longer a customer stays with a firm, the more profitable that
customer is to serve:
-increased usage over time
-reduced operating costs
-profits from referrals and price premium
Why is Customer Loyalty Important to A Firms Profitability?

Customers become more profitable the longer they remain with a firm:
Increase purchases and/or account balances
-Customers/ families purchase in greater quantities as they grow
Reduced operating costs
-Hewer demands from suppliers and operating mistakes as customer
becomes experienced
Referrals to other customers
-Positive word-of-mouth saves firm from investing money in sales and
advertising
Price premiums
-long-term customers willing to pay regular price
-willing to pay higher price during peak periods
The Wheel of Loyalty Fig 22.1
Effective Tiering of Service: The Customer Pyramid
What would you do?
-How would YOU create loyalty in the service industry?
Restaurants
Airlines
Banking
Credit Cards
Electrician
Strategies for Developing loyalty Bonds with Customers **in text**
Common Objectives of CRM Systems

(Service Perspectives)
Data collection
Data analysis
Sales force automation
Marketing automation
Call centre automation
Comprehensive CRM Strategy ** in text **
Common Failures in CRM

Implementation (part 1 of 2)
Unfortunately, there is a high failure rate of CRM implementations
Common reasons for failures
-viewing CRM as a technology initiative
-lack of customer focus
-not enough understanding of customer lifetime value (CLV)
PART 2:
Inadequate support from top management
Lack of coordination
Failure to reengineer business processes
Underestimating the challenges in data integration

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MARKETING FINAL EXAM NOTES

Exposure: to messages, tactics, programs

Attracting new customers by promising and delivering superior value

Building long-term relationships with customers by delivering continued customer

Creating, building, and managing these relationships profitably over time

The Marketing Process: (fig. 1.1)

4. Build profitably relationships and create customer delight

Needs, Wants, Demands

needs are states of felt deprivations

wants are needs shaped by culture and individual personality

demands are wants combined with buying power

Value and Satisfaction

if the performance and the customers experience meet expectations, the

if the performance and the customers experience exceeds expectations, the

Consumers vs. Customers

Exchange and Transactions

two things of value

agreed upon conditions

Divide markets into segments

Choose the right segment to target

Offer a unique value proposition

Differentiate your offer from competitor offers

Build customer value and satisfaction

Nurture long-term customer relationships

The process of building and maintaining profitable customer relationship by

The Customers Experience:

customers subjective view of the offers value compared to competitive offers

-increasing awareness that these organizations must build relationships with

Business unit, product, and market levels

Planning, marketing and other functional strategies

Setting supporting objective

Designing a sound business portfolio

Coordinating functional strategies

Statesthe organizations purpose

Market and customer-oriented

Provides direction to internal stakeholders

-Customers are the front-line

can be a company division, a product line within a division or sometimes a single

The Marketing Process

analyze current situation

analyze marketing opportunities

select target markets

develop the marketing mix

manage the marketing effort

BCG- Growth-Share Matrix

Product, Price, Promotion, Place

The Four Ps and the Four Cs

enables 2-way Communication

Manage the Marketing Effort

Build strong operational Marketing plan

Organize marketing department

Leverage vale chain and value network

What is a Marketing Plan?

CHAPTER 13: Introduction to Services

Services Dominate Economy in Most Nations

Most New Jobs are Generated by Services

-Fastest Growth Expected in Knowledge-based industries

Many manufacturing firms moved to marketing stand-alone services.

Contribution of Services Industries to Global GDP

Services involve a form of rental, offering, benefits without transfer of ownership

Five Broad categories within non-ownership framework:

Based on differences in nature of service act (tangible/intangible) and who or

In your own words:

Guidelines/polices and procedures of what company thinks is right and wrong,