BA 170
CHAPTER 8 - PRODUCT
What is a Product?
− Anything that can be offered in the market for attention,
acquisition, use or consumption that satisfies needs and wants
− As anything both favourable and unfavourable that a person
receives in exchange
− Example: Canon camera ad for EOS 50D
Service
− Is a product that consists of activities, benefits or satisfaction
that is essentially intangible and does not result in the
ownership of anything
− Example: For the first time in forever "Frozen Fun"
− Experiences represent what buying the product or service will
do for the customer
− Example: Mickey, Disneyland
Three levels of products
1. Basic: Core Customer Value – what is the customer buying?
2. Middle: Actual Product - Core benefit of the product
− Brand name
− Features
− Design
− Packaging
− Quality level
3. Outer: Augmented Product – Additional customer service and
benefits
− Warranty
− Product support
− Delivery and credit
− After sales service
Product Classification
1. Consumer products – products and services bought by
final consumers for own personal consumption
a. Convenience Products – bought frequently,
immediately and with minimum comparison and
buying effort. They are low-priced and placed in
many locations to make them readily available
when consumers need or want them
Ex. Candy, soap, toothpaste
b. Shopping Products – less frequently purchased
consumer products and services that are
compared carefully on suitability, quality, price
and style. It is distributed less but has deeper
sales support
Ex. Furniture, cars, gadgets, airline
c. Specialty Products – with unique characteristics
or brand identification for which groups of
buyers are willing to make a special purchase
Ex. Luxury goods
d. Unsought Products – does not know about or
knows about but does not normally consider
buying
Ex. Funeral necessities, insurance
2. Industrial Products – products and services for further
processing or use in conducting a business
a. Materials and Parts – raw and manufactured
materials and parts usually sold directly to
industrial users
Ex. Wheat, cotton, lumber, cement
b. Capital Items – aid in the buyer’s production or
operations, including installations and
accessory equipment
Ex. Suzlon wind energy, generators, elevators
c. Supplies and Services – operating supplies,
repair and maintenance items, and business
services
Ex. DHL, legal management, consulting
Organizations As Products
Organization Marketing – consists of activities undertaken to create,
maintain, maintain or change the attitudes and behaviour of target
market towards an organization.
Ex. Non-profit organizations, mining corporations
Persons As Products
Person Marketing – consists of activities undertaken to create,
maintain, maintain or change the attitudes and behaviour of target
market towards particular people.
Ex. Barack Obama (Campaign)
Places As Products
Place Marketing – consists of activities undertaken to create,
maintain, maintain or change the attitudes and behaviour of target
market towards particular places.
Ex. Tourism (It's More Fun In The Philippines)
Society As Products (Ideas)
Social Marketing – Use of commercial marketing concepts and tools
in programs designed to bring about social change.
Ex. Environmental Campaigns
Product and Services Decisions
1. Individual Product Decisions
a. Product Attributes – quality (level and consistency),
features, style and design
b. Branding – Brand is name, term, symbol, design or a
combination of these, that identifies the products or
services of one seller of group of sellers and differentiates
them from those competitors.
c. Packaging – Involves designing and producing the
container or wrapper for a product
d. Labelling
e. Product support services
2. Product Line Decisions
− Product Line – A group of products that are closely related
because they:
o Function in a similar manner,
o Are sold to the same customer groups,
o Are marketed through the same types of outlets, and
o Fall within given price ranges
− Product Item
o A specific version of a product that can be designated as a
distinct offering among organizations product
o A product variant with its own distinctive attributes (price,
packaging, etc.)
o Ex. Lucky Me (chicken, beef)
− Benefits of a Product Line
1. Advertising costs saving – All are included in one advertising /
promotions campaign
2. Package uniformity – All look alike. Ex. Detergents
3. Standardized components – Components are the same, same
equipment used for different variants. Ex. Beet
4. Hardworking sales and distribution - You’re selling an entire
product line
5. Shared perceived equity – If one of the items suffers from a
setback or scandal, all of the products will suffer the same
thing, but the success of one is the success of all.
− Decisions
o Product Line Length (Depth) – Number of items in the product
line
o Product Line Width (Breadth) – Number of product lines the
organization offers
o Product Line Stretching (Extension) – Lengthens its product
line beyond its current range. It is to compete more broadly in
the industry.
• Downwards
• Upwards
• Both ways
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o Product Line Filling (Depth) – Adding more items within the o Benefits
present range of the line. This is to reach extra profits, satisfy o Beliefs and Values
dealers, use excess capacity, be a full-line company and plug − Brand Name Selection
holes to keep out competitors. o Selection
o Protection
3. Product Mix Decisions − Brand Sponsorship
− Product Mix o Manufacturer’s brand (national brand)
o A set of all product lines and items that a particular seller o Private Brand (store brand or distributor brand)
offers for sale. o Licensing
o Four important dimensions: width, length, depth and o Co-branding – The practice of using the
consistency established brand names of two different
o Ex. All the variants of the Lucky Me product items companies on the same product
o Four ways to increase the business: Add new product lines, − Brand Development
lengthen its existing product lines, add more versions of each Line Extension Brand Extension
product and pursue more product line consistency - Existing Product category - New Product category
- Existing brand name - Existing brand name
Services Marketing Multibrands New Brands
− Four special service characteristics - Existing Product category - New Product category
o Intangibility – Services cannot be seen, tasted, felt, heard - New brand name - New brand name
or smelled before they are bought.
o Inseparability – Services are produced and consumed at 22 IMMUTABLE LAWS – BRAND MANAGEMENT
the same time and cannot be separated from their
providers. 1. Leadership
o Variability – Quality of services depends on who provides − It is always better to be first than it is to be better
them and when, where and how. − Downside is that being first may lead to becoming a
o Perishability – Services cannot be stored for later sale or generic name
use. − Ex. San Miguel beer, Colgate
− Service Profit Chain – The chain that links service firm profits 2. Category
with employee and customer satisfaction. The five links are: − If you can’t be first, in a category make your own category
o Internal service quality to be first in.
o Satisfied and productive service employees
− Ex. Smartphones replaced Nokia
o Greater service value
3. The Mind
o Satisfied and loyal customers
− It is better to be first in mind than to be first in the
o Healthy service profits and growth
marketplace
− Internal Marketing – Orienting and motivating customer-contact
− You can get into the minds of the consumers by “blasting”
employees and supporting service people to work as a team to
your way. You can’t “slowly” do it. A brand does not grow.
provide customer satisfaction
− Through exaggerated promotions
− Interactive Marketing – Training service employees in the fine
4. Perception
art of interacting with customers to satisfy their needs
− Marketing is a battle of perception, not products.
Branding − There is no such thing as the “best product”. Everything is
− Brand Equity – The differential effect that knowing the brand perception.
5. Focus
name has on customer response to the product or its
marketing. Its four consumer perceptions dimensions are: − Owning a word (simple) in a prospect’s mind
o Differentiation – what makes the brand stand out − Simple, not complicated
o Relevance – how consumers feel it meets their needs − Available, Unattached, Identifiable, Relevant
o Knowledge – how much consumers know about the − You must be willing to defend and protect it
brand − Ex. Skin White vs. Ponds
o Esteem – how highly consumers regard and respect the 6. Exclusivity
brand − No two companies can own the word in the prospect’s
− Brand Valuation – process of estimating the total financial mind
value of the brand 7. Ladder
− Benefits − The strategy to use should depend on the rung you
1. Product Identification – Distinguish one product from occupy on the ladder
another − There is a strategy appropriate for the position you occupy
2. Repeat Sales 8. Duality
3. New Product Sales – If it is a known brand, there is − In the long run, every market will have a competitor.
credibility to the product − In the beginning, you may be alone in the category that
4. Ex. San Mig Coffee release you created but others will soon try to occupy the same
− Issues position.
1. One Brand Name - Globalization (It is a must, but it is 9. Opposite
difficult) − If you are shooting for second place, the leader should
Ex. Coke, Ford Fiesta determine your strategy.
2. Adaptations and Modifications – Mitsubishi Pajero is not − You can be an alternative through similarities or
same in South America because the meaning of the word differences.
is slang for something "very very bad" − Ex. Marlboro vs. Mild Seven, Ovaltines vs. Milo
3. Different Brand Names in Different Markets Ex. Tide = 10. Division
Ace = Vizir = Alo − Over time, a category will divide and become two or more
categories
Major Brand Strategy Decisions 11. Perspective
− Brand Positioning − Marketing effect takes place over an extended period of
o Attributes time

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− Long term effects are often the opposite of short term o Repositioned Products – Existing products that target a new
effects market or segment, or repositioned to change the current
− Ex. Cebu Pac Piso fares market’s perception of the product
12. Line Extension o Lower priced products – Product that provides the same
− There is an irresistible pressure to extend the equity of the performance of competing brands at a lower price
brand.
− When you try to be things for all people, you will fail New Product Development
− Ex. Vaseline overextended − The development of original products, product improvements,
13. Sacrifice product modifications, and ne brands through the firm’s own
− You have to give up something in order to get something product development efforts.
− If you want to be successful today, you have up − New Product Development Strategy - two ways to obtain
something: product line, target market and/or constant product:
change • Acquisition
14. Attribute • New Product Development
− For every attribute, there is an opposite, effective attribute
− It is much better to search for an opposite attribute that New Product Development Process
allows you play of against the leader. 1. Idea Generation – systematic search for new product ideas
− Own your most important attribute a. Internal Idea Sources – company’s own R&D
− If you don’t have one, make sure you have the lowest b. External Idea Sources – customers, competitors,
price suppliers, distributors
15. Candour c. Crowdsourcing – inviting broad communities of people
into the new product innovation process
− When you admit a negative, the prospect will give you a
2. Idea Screening – Screening new product ideas to spot food
positive
ideas and drop the poor ones as soon as possible.
16. Singularity
• It eliminates the ideas that are inconsistent with the
− In each situation, only one unit will product substantial
organisation’s new product strategy or inappropriate
results
17. Unpredictability • RWW Screening Framework
i. Is it real?
− Unless you write your competitor’s plans, you cant predict
ii. Can we win?
the future
iii. Is it worth doing?
− Failure to forecast competitive reactions is a major reason
3. Concept Development and Testing – evaluates new product
for marketing failures
ideas, usually before any prototype has been created
− Look for trends, research and study a. Product idea – An idea for a possible product that the
− Short term plans + long term decisions company can see offering
18. Success b. Product concept – A detailed version of new-product
− Success often leads to arrogance and arrogance to failure ideas stated in meaningful consumer terms
− Ego is the enemy to successful marketing. It replaces c. Product image – The way consumers perceive an actual
objectivity. or potential product
19. Failure TH
[4 STEP IN THE BOOK] Marketing Strategy Development –
− It is to be expected and accepted Designing an initial marketing strategy for a new product
− Learn to fix things and when to drop. based on the product concept.
− Recognise failures early, cut losses and learn the 3 Parts [Target market, Planned value proposition,
difference of taking a leap or risk, and being stupid. Forecasted sales]
20. Hype 4. Business Analysis – A review of sales, cost and profit
− The situation is often opposite of the way it appears to the projections for a new product to find out whether these factors
press. satisfy the company’s objectives
21. Acceleration 5. Product Development – Developing the product concept into a
− Successful programs are built on trends, and not on fads physical product to ensure that the product idea can be turned
(short term phenomenon) into a workable marketing offering.
− Dampen the fad, to stretch it out and make more like a a. Involves creation and testing of one or more physical
trend. versions
22. Resources b. Requires an increase in investment
− Without adequate funding, ideas won’t get off the ground. 6. Test Marketing – Product and the marketing programs are
tested in realistic market settings
a. Standard Test Marketing
CHAPTER 9 - PRODUCT b. Controlled Test Marketing – Controlled groups of
customers and stores
Importance of New Products c. Simulated Test Marketing – In laboratory stores or
− Sustain growth simulated shopping environments
− Guaranteed higher profits 7. Commercialisation – Introduction of a new product into a
− Replace obsolete products market
a. Decision sets several tasks in motion
New Product Classifications i. Ordering production materials and equipment
o New to the world – product creates a new market ii. Starting production
o New product lines – product that enters established markets iii. Building inventories
but not previously offered iv. Shipping the product to field distribution points
o Additions to existing product lines – supplements the firm’s v. Training the sales force
established market vi. Announcing the new product to the trade
o Improvement of existing products – “new and improved” vii. Advertising to potential customers
product may be significantly or slightly changed b. Issues to be resolved in commercialisation
i. When to launch
ii. Where to launch

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iii. Planned market rollout 2. Fashion – currently accepted style in a given field
8. New Product

Managing New Product Development

o Customer-Centred New Product Development – Focuses on
finding new ways to solve customer problems and create 3. Fads – temporary periods of unusually high sales driven by
more customer satisfying experiences consumer enthusiasm and immediate product popularity
o Team-Based New Product Development – Various company
departments work closely together, overlapping the steps in
the product development process to save time and increase
effectiveness.
o Systematic New Product Development – new ways to solve
customer problems and create more customer satisfying Global Issue of Product Life Cycles
experiences − Product, places and timing
− Amount of standardisation
Product Life Cycle − Different countries have different PLCs
− The course of a product’s sales and profits over its lifetime. − Customs, laws, etc.
− It involves 5 stages: Product development, introduction,
growth, maturity and decline Product Strategy
− Analyses a brand, a product form or a product category • BCG Matrix
o Cash Cow (High Market Share, Low Growth)
Product Development o Star (High Market Share, High Growth)
− Begins when the company finds and develops a new-product o Question Mark (Low Market Share, High
idea Growth)
− Sales are zero o Dog (Low Market Share, Low Growth)
− Investment costs start mounting • Ansoff Matrix
o Market Penetration
Introduction o Product Development
− Full-scale launch of new product into the marketplace o Market Development
− Low sales growth – majority of those in this stage o Diversification
− Little to no profit
− High distribution and promotion expense
CHAPTER 10&11 - PRICE
Growth
− If a product survives Introduction, it advances to this stage Price
− Sales increase − Amount of money charged for a product or service.
− New competitors enter market − It is the sum of all the values that consumers give up in
− Price stability or decline to increase volume order to gain the benefits of having or using a product or
− Consumer education service.
− Profits increase − Only element in the marketing mix that produces revenue,
all other elements represent cost
− Promotion and manufacturing costs gain EOS
− Importance
Maturity o Most flexible, it can easily change
o It is the biggest problem if not treated / dealt with
− Period of slowdown in sales growth because product has
properly
achieved acceptance by most potential buyers
o It is the only P that affects revenue
− Slowdown in sales
o It is a strategic tool in capturing customers
− Many suppliers o Small changes make big impacts
− Substitute products
− Overcapacity leads to competition Types of Pricing Strategies
− Increased promotion and R&D to support sales and profits 1. Customer Value-Based Pricing
− Setting prices based on buyer’s perception of value rather
Maturity Stage Modifying Strategies than the seller’s cost
o Market Modifying – finding new customers or segments
o Product Modifying – changing the product’s quality, style,
etc. to attract new customers and inspire more usage.
o Marketing Mix Modifying – changing one or more
marketing mix elements

Decline
− Period when sales falls and profits drop
− Steps in addressing the decline stage
o Maintain
o Harvest
o Drop − Two types
• Good-Value Pricing – offering the right combination of
Product Life Cycles Examples quality and good services at the right price
1. Style – basic and distinctive mode of expression • Value-Added Pricing – attaching value added
features and services to differentiate their offers and
thus support higher prices
2. Cost-Based Pricing
− Setting process based on costs for producing, distributing,

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and selling the product plus a fair value of return for its o Survival – when there is overcapacity, intense
effort and risk competition, changing consumer wants
− Types of costs: fixed (overhead), variable and total o Maximum Current Profit - when the emphasis is in the
− Two types current demand and profit over the long term
• Cost-Plus Pricing – Adding a standard markup to the performance
cost of the product. It is a simplified costing method o Maximum Market Share – when emphasis in the long
• Break-Even Pricing (Target Profit Pricing) – Setting term performance and increasing the market
price to break even on the costs of making and share using competitive pricing
marketing a product or setting price to make a target o Maximum Market Skimming – when company is unveiling
return a new technology and wants to maximize profit
3. Competition-Based Pricing o Product Quality Leadership – when company wants
− Setting prices based on competitor’s strategies, prices, to launch the best quality products possible
costs and market offerings 2. Determining demand
− Each price level will lead to a different demand level
Cost based Pricing VS Value based pricing − There is a price ceiling for each demand level
o COST BASED PRICING – Design a product > determine 3. Estimating costs
the production cost > set price and profit > sell 4. Analysing competitor’s costs, prices and offers
o VALUE BASED PRICING – Assess customer needs 5. Selecting the pricing model
and perception > set target price > determine 6. Selecting the final price
production costs > design the product
Adapting The Price
Target Costing   1. Geographical pricing
Pricing starts with an ideal selling price and then targets costs that 2. Price discounts and allowances
will ensure that the price is met. • Discount
• Quantity discount
Other Internal and External Considerations affecting price • Functional discount
decisions • Season discount
o Organizational considerations • Allowance
o Economy 2. Promotional pricing
o Overall Marketing Strategy 3. Differentiated pricing
o Nature of the market and demand − Customer segment pricing (student/senior citizen)
− Product-form pricing (draft beer)
Global issues of pricing − Image pricing (same product different brand)
o Export price escalation − Channel pricing (sari-sari versus hotel)
o Inflation (local purchasing power) − Location planning (theatre/airplane)
o Transfer pricing
− Time pricing (seasonal)
o Anti-dumping
o Price coordination
Changing The Price
1. Price cuts
Changing pricing environment
− Low quality trap
o Price Comparisons
o Auctions / bids − Fragile market share trap
o Get it for free − Shallow pocket trap
− Price war trap
Consumer Psychology 2. Price increase
− Purchase decision is based on how consumers − Delayed quotation pricing
perceive prices and what they consider the current − Escalator clause
price and not the marketer’s stated place − Unbundling
− Reduction of discounts
Reference Pricing
− Consumers compare the observed price to an CHAPTER 12
internal reference price they remember or an
external frame of reference Marketing Channels (Channels of Distribution)
1. Fair price − Is a business structure of interdependent organizations
2. Last price paid that reach from the point of product origin to the
3. Upper bound price consumer with the purpose of moving products to their
4. Lower bound price final consumption destination
5. Historical price
6. Expected future price Intermediaries (Marketing Channel Member)
7. Usual discounted price − Offer producers greater efficiency in making goods available
to target markets through their contacts, experience,
Other Determinants of Price specialization and scale of operations.
• Stages in product life cycle
• Competition Importance
• Distribution 1. Specialisation or Division of Labour
• Impact of technology − Marketing channels aid producers who lack
• Promotion strategy motivation, financing, or expertise to market
• Demands of large consumers directly to end users or consumers.
• Price – quality relationship − They breakdown the distribution to serve the
individuals
Setting Prices − Channel members have better relations with
1. Selecting the price objectives customers.

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2. Overcoming Discrepancies
− Producers manufacture in volume. Customers use just
a few units. Marketing channels are necessary to
provide the proper amounts.
• Discrepancy of Assortment - customers
require many items to receive maximum
satisfaction
• Temporal Discrepancy - customers are not yet
ready to buy
• Spatial Discrepancy - when customers are
scattered over large geographic areas
3. Contact Efficiency
− They provide contact efficiency by reducing the number of
stores customers must shop in to complete their
purchases
Functions
o Information – Gathering and distributing marketing
research and intelligence information about actors and
forces in the marketing environment needed for
planning and aiding exchange
o Promotion – Developing and spreading persuasive
communications about an offer.
o Contact – Finding and communicating with prospective buyers.
o Matching – Shaping and fitting the offer to the buyer's
needs, including activities such as manufacturing,
grading, assembling, and packaging.
o Negotiation – Reaching an agreement on price
and other terms of the offer so that ownership
or possession can be transferred.
Channel Structures
Producer > Agents/Brokers > Wholesalers > Retailers > Consumers
Multiple Channels
− When a producer selects two or more
channels to distribute the same product to
target markets. This is also known as dual
channel.
Non-traditional Channels
− Web
− Internet
− Mail-order channels
− Infomercials
Strategic Channel Alliances
− This enables producers to use another manufacturer's
already established channel
Channel Conflicts
− Channel conflict refers to disagreement over goals, roles,
and rewards by channel members
o Horizontal conflict
o Vertical conflict
Channel Design Decisions
1. Analysing Customer Needs/Wants
− Lot Size – Number of units the channel permits a typical
customer to purchase.
− Waiting and Delivery Time – The average time customers
wait to receive their purchases.
− Spatial Convenience - The degree to which the marketing
channel makes it easy for the customers.
2. Objectives and Constraint
− Targeted levels of customer service
− What segments to serve
− Best channels to use
− Minimizing the cost of meeting customer service
requirements
3. Major Channel Alternatives
BA 170
− Types of intermediaries
− Number of marketing intermediaries
• Exclusive Distribution: Suppliers agree with retailers
that their product is the only available product
• Intensive Distribution: Suppliers sell to as many
retailers as possible. Thus, retailers do not invest in
these products/brands.
• Selective Distribution: Suppliers sell to
selected retailers only. Suppliers provide some
marketing support to make products move.
− Responsibilities of channel members
• Price Policy calls for the producer to establish a price list
and schedule of discounts
• Conditions of Sale – refers to payment terms and
producer guarantees.
• Distributor's Territorial Rights define the distributor's
territories and the terms under which the producer will
enfranchise other distributors.
• Mutual Services and Responsibilities
Retailing
− Is the business of selling goods and services to
consumers for their personal, family, or
household use. This is the sale to the final
consumer. It is the last stage in the distribution
process.
Framework of Retailing
− For a manufacturer, retailing is getting the
product in the best channels to reach the most
customers -- increase sales.
− For a service provider, retailing is getting the services
in the most accessible and easiest to use channels.
− For a consumer, retailing is finding the best product or
services at the best cost or offer at the best
outlet/store.
Type of Retailers
1. Amount of Service
− Limited
− Self
− Full
2. Product Line
− Specialty Store – narrow product with deep assortment
− Department Store - large retailer with huge assortment
(width and depth)
− Supermarket - wide range of food products but limited
general merchandise
− Convenience Store - limited line of high turnover products
− Superstores - bigger than supermarkets, offers routinely
bought items
− Category Killers - deep in category with sales staff (giant
specialty stores)
3. Prices
− Discount stores sell standard merchandise at lower
prices by accepting lower margins and selling higher
volume
− Independent off-price retailers either are owned
and run by entrepreneurs or are divisions of
larger retail corporations
− Off-price retailers buy at less-than-regular wholesale
prices and charge customers less than retail
− Factory outlets are producer-operated stores. Students
are probably familiar with these types of shopping
location
− Warehouse clubs are large warehouse-like facilities
with few frills and offer ultra-low prices
4. Organizational Approach
− Corporate chains are two or more outlets that are
commonly owned and controlled
• Size allows them to buy in large quantities at lower
6

prices and gain promotional economies.
− Retailer cooperatives are a group of independent
retailers that band together to set up a joint-owned,
central wholesale operation and conduct joint
merchandising and promotion effort.
− Franchise organizations are based on some unique
product or service; on a method of doing business; or on
the trade name, good will, or patent that the franchisor has
developed.
Wholesaling
− Includes all activities involved in selling goods and
services to those buying for resale or business use.
− Benefits
o Selling and promoting involves the wholesaler's
sales force helping the manufacturer reach
many smaller customers at lower cost.
o Buying assortment building involves the selection of
items and building of assortments needed by their
customers saving the customers work.
o Bulk breaking involves the wholesaler buying in larger
quantity and breaking into smaller lots for its
customers.
o Warehousing involves the wholesaler holding
inventory, reducing its customers' inventory cost and
risk.
o Transportation involves the wholesaler providing quick
delivery due to its proximity to the buyer
o Financing involves the wholesaler providing credit and
financing suppliers by ordering earlier and paying on
time.
o Management services and advice involves wholesalers
helping retailers train their sales clerks, improve store
layouts, and set up accounting and inventory control
systems.
− Types
o Brokers and agents do not take title,
perform a few functions, and specialize by
product line or customer type.
! Brokers bring buyers and sellers
together and assist in negotiations
! Agents represent buyers or sellers
o Merchant wholesalers is the largest group of
wholesalers and include:
! Full-service wholesalers who provide
a full set of services
! Limited service wholesalers
who provide few services and
specialized functions
o Manufacturers' sales branches and offices
is a form of wholesaling by sellers or
buyers themselves rather than through
independent wholesalers.
CHAPTER 13-17
Promotional Strategy
− This is the plan for the optimal use of the elements of
promotion
− Closely related to the process of communication
Elements of Promotion
− Advertising
− Public Relations
− Personal Selling
− Sales Promotion
− Direct Marketing
Communications
− The process by which meanings are exchanged or
shared through a common set of symbols
− Types of Communications:
BA 170
o Interpersonal communications is direct, face-to-
face communications between two or more
people
o Mass communications involves communicating a
concept or message to a large audience
Communication Process
1. Sender and Encoding
− Originator of the message
− Interpersonal: Influencer or salesperson
− Mass Communication: Company or organization
2. Encoding
− Conversion of the sender's ideas and thoughts into a
message through the use of words, symbols, and signs
3. Message Transmission
− Transmission of a message requires a channel - voice,
radio, newspaper, computer, phone, or other
communication medium
− Anything that interferes with, distorts, or slows down the
transmission of information
− Clutter, competition, environment, consumer behaviour
4. Receiver and Decoding
− Customers who will decode the message
− Decoding is the interpretation of the language and
symbols sent by the source through a channel
− Miscommunication is caused by differences in
age, social class, education, culture, knowledge,
etc.
5. Feedback
− Receiver's response to a message is direct feedback to the
source
− Market research helps gather and analyse the feedback
− Internet is a big help in getting feedback from receivers
Objectives of Promotions
1. Informing
− Seeks to convert an existing need into a want
− Stimulate interest in a new product
− Objective is to build primary demand
− How to inform:
• Suggest new uses for the product
• Price change
• Available service or support
• Correcting wrong impressions
2. Persuading
− Designed to stimulate a purchase or an action
− Emphasizes the product's real and perceived competitive
advantages
− How to persuade:
• Purchase
• Receive sales call
• Convince customers to promote brand
3. Reminding
− Keep the product and brand name in the public's hand
− Help maintain customer relationships
− How to remind:
• Where to buy
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• Keep brand in mind even in off-season consistent, and compelling message about the
organization and its brands
Promotional Mix
− The combination of promotional elements to reach a target Factor Affecting the Promotion Mix
market − Nature of the Product
− The proper promotional mix is the one that − Stages in PLC
management believes will meet the needs of the − Target Market Characteristics
target market and fulfills the organization's overall − Type of Buying Decisions
goals. − Available Funds
− Push and Pull Strategies
Advertising
− Is any paid form of non-personal presentation and CHAPTER 18 – COMPETITIVE ADVANTAGE
promotion of ideas, goods, or services by an
identified sponsor Competitive Advantage
o Broadcast − Advantage over competitor gained by offering consumers
o Print greater value than competitors do.
o Internet − Requires delivering more value and satisfaction to target
o Outdoor consumers than competitors do

Sales Promotion Competitive marketing strategies – how companies analyse their

− The short-term incentive to encourage the purchase or competitors and develop value-based strategies for profitable
sale of a product or service customer relationships
o Discounts
o Coupons Competitor Analysis
o Displays − The process of identifying, assessing, and selecting key
o Demonstrations competitors
o Contests o Identifying the company's competitors
o Samples o Assessing the competitors objectives, strategies,
weaknesses and reaction patterns
Public Relations o Selecting which companies to attack and/or avoid
− Involves building good relations with the company's
various publics by obtaining favourable publicity, Identifying Competitors
building up a good corporate image, and handling or Competitors can include:
heading off unfavourable rumours, stories, and − All firms making the same product or class of products
events − All firms making products that supply the same service
o Press releases − All firms competing for the same consumer dollars
o Sponsorships When we identify the competitors, we can identify them using three
o Special events conditions:
o Web-pages − Same product
− Same service
Personal Selling
− Same share of money (allocation) ex. share of throat
− The personal presentation by the firm's sales force for
the purpose of making sales and building customer
Assessing Competitors
relationships
− Competitor's Objectives
o Sales presentations
o Profitability
o Trade shows
o Market share growth
o Incentive programs
o Cash flow
o Technology leadership
Direct Marketing
o Service leadership
− Involves making direct connections with carefully
− Competitor's Strategy
targeted individual consumers to both obtain an
o Strategic group offers the strongest competition
immediate response and cultivate lasting customer
relationships -- through the use of direct mail, − Competitor's Strengths and Weaknesses
telephone, direct-response television, e-mail, and the o What can our competitors do?
internet to communicate directly with specific o Benchmarking
consumers − Estimating Competitor's Reactions
o Catalogue o What will our competitors do?
o Telemarketing
o Kiosks Selecting Competitors to Attack and Avoid
− Customer value analysis determines the
AIDA Concept benefits that target customers' value and how
− The ultimate goal of an promotional mix is to make customers rate the relative value of the various
receivers/decoders to act and purchase competitors' offers
− AIDA Concept helps in reaching this goal − Identification of major attributes that customers value and
o Get Attention the importance of these values
o Hold Interest − Assessment of the company's and competitors'
o Arouse Desire performance on the valued attributes
o Obtain Action − Classifications
o Strong or weak competitors
IMC: Integrated Marketing Communications o Close or distant competitors
− The integration by the company of its o Good or bad competitors
communication channels to deliver a clear − Finding uncontested market spaces

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o This is called "blue ocean" strategy where there
are no direct competitors
Designing a Competitive Intelligence System
− Identifies competitive information and the best sources of
this information
− Continually collects information
− Checks information for validity and reliability
− Interprets information
− Organizes information
− Sends key information to relevant decision makers
− Responds to inquiries about competitors
Approaches to Marketing Strategy - based on the levels of the
maturity of the company
1. Entrepreneurial marketing
− Involves visualizing an opportunity and
constructing and implementing flexible
strategies.
− Almost all companies start from an entrepreneur venture.
Thus, the strategies used are those of a small company
trying to survive and grow. The strategies are creative
and fresh
2. Formulated marketing
− Involves developing formal marketing strategies and
following them closely
− As the company grows, the strategies become more
formal and formulated. The company relies of more
past procedures and policies instead of using out of
the box solutions
3. Intrepreneurial marketing
− Involves the attempt to reestablish an internal
entrepreneurial spirit and refresh marketing strategies
and approaches
− When a company becomes too old and too big. It
relies solely on published data and market research
and academic theories. It is too big and scared to
make risks and use unfamiliar strategies
Four basic competitive positioning strategies
1. Overall Cost Leadership
− A company achieves the lowest production and
distribution costs and allows it to lower its prices and
gain market share (ex. Sun Cellular)
2. Differentiation
− When a company concentrates on creating a highly
differentiated product line and marketing program so it
comes across as an industry class leader (ex. Apple)
3. Focus
− When a company focuses its effort on serving
few market segments well rather than going
after the whole market (ex. National Bookstore)
4. Middle of the Road
− No clear strategy
− Won’t succeed
! A company that pursued a clear strategy would achieve
superior performance
Strategies or "Value Disciplines"
− Operational excellence – refers to a company providing value
by leading its industry in price and convenience by reducing
costs and creating a lean and efficient value delivery system
(ex. Samsung)
− Customer intimacy – refers to a company providing superior
value by segmenting markets and tailoring products or services
to match the needs of the targeted customers (Rustan's, Makati
Shangri-La)
− Product leadership - refers to a company providing superior
value by offering a continuous stream of leading-edge products
or services. Product leaders are open to new ideas and
solutions and bring them quickly to the market (ex. Toyota)
BA 170
Competitive Positions
− Market leader is the firm with the largest market
share and leads the market price changes,
product innovations, distribution coverage, and
promotion spending
− Market challengers are firms fighting to increase market
share
− Market followers are firms that want to hold onto their
market share
− Market nichers are firms that serve small market segments
not being pursued by other firms
Market leader Strategies
1. Expand demand
− As industry leader, it is the responsibility of the
brand to increase demand. As demand increases,
it is the leader that benefits the most (having the
biggest share)
− Expand total demand by developing
a. New users
b. New uses
c. More usage of its products
2. Protect
− Some leaders are happy with their market share.
Therefore, it is their strategy to protect it at all
cost.
− Protect current market by:
a. Fixing or preventing weaknesses that provide
opportunities to competitors
b. Maintain consistent prices that provide value
c. Keep strong customer relationships
d. Continuous innovation
3. Expand market
− Sometimes, it is less expensive to go to other
markets or expand existing, than try to win
some of the market share of the smaller
brands. Although, killing the small should
also be a priority. But it should not be our
source of market share increase.
− Expand market share by:
a. Increasing profitability with increasing market
share in served markets
b. Producing high-quality products
c. Creating good service experiences
d. Building close relationships
e. It is easier to gain or grab market share, than to
protect and maintain.
Market Challenger Strategies
− Challenge the leader with an aggressive bid for more
market share
− Second mover advantage challenger observes what has
made the leader successful and improves on it
Market Follower Strategies
− Play along with competitors and not rock the boat
− Copy or improve on leader's products and programs with
less investment
− Brings distinctive advantages
− Must keep costs and prices low or quality and services
high
Market Niche Strategies
− Ideal market niche is big enough to be profitable with
high growth potential and has little interest from
competitors
o Key to market niching is specialization
o Market
o Customer
o Product
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4. Natural Resources
CHAPTER 19 GLOBAL MARKETING 5. Financial and human resources
− Joint Venturing – entering a foreign market by joining with
Global Firm foreign companies to produce or market a product or
− A firm that, by operating in more than one country, gains service
R&D, production, marketing, and financial advantages in • Licensing – Method of entering foreign market when a
its costs and reputation that are not available to purely company enters into an agreement with a license in
domestic competitors. the foreign market
• Contract manufacturing – A joint venture in which a
Major Decisions Facing International Marketing company contracts with manufacturers in a foreign
1. Looking at the global marketing environment market to produce the product or provide its service
− International Trade System • Management contracting – A joint venture in which the
• Tariffs domestic firm supplies the management the know-
• Quotas how to a foreign country that supplies the capital. The
• Exchange controls domestic firms exports management services rather
• Nontariff trade barriers than products
• The World Trade Organization and GATT • Joint ownership – A joint venture in which a company
• Regional Free Trade zones or Economic joins investors in a foreign market to create a local
communities – a group of nations organised to work business in which the company shares joint ownership
toward common goals in the regulation of and control.
international trade − Direct Investment – entering a foreign market by
− Economic Environment developing foreign based assembly or manufacturing
• Industrial Structure facilities
1. Subsistence economies – agriculture, few 5. Deciding on the global marketing program
market opportunities Standardized global marketing – international strategy that basically
2. Raw material exporting economies uses the same marketing strategy and mix in all of the company’s
3. Emerging economies (industrializing internal markets
economies) Adapted global marketing – international strategy that adjusts the
4. Industrial economies marketing strategy and mix elements to each international target
• Income Distribution market
− Political-Legal Environment − Product – strategies
− Cultural Environment o Straight product extension – don’t change
2. Deciding whether to go global product or communication
3. Deciding which markets to enter o Product adaptation – adjust to meet local needs
− Define its international marketing objectives and policies but don’t change communication
o Communication adaptation – don’t change
− Volume of foreign sales
product but change communication
− How many countries
o Dual adaptation – Change both product and
− Market size
communication
− Market growth o Product invention - creating a new product for
− Cost of doing business foreign markets
− Competitive advantage − Promotion
− Risk level o Communication adaptation – don’t change
4. Deciding how to enter the market product but change communication
− Exporting – entering a foreign market by selling goods − Price
produced in the company’s home country, often with little − Distribution Channels
modification – It can be direct or indirect o Whole channel view – designing international
• Demographic characteristics channels that take into account the entire global
1. Education supply chain and marketing channel, forging an
2. Population size and growth effective global value delivery network
3. Population age composition o Global value delivery network
• Sociocultural factors ! International seller > Channels
1. Consumer lifestyles, beliefs, and values between nations > Channels within
2. Business norms and approaches nations > Final user and buyer
3. Cultural and social norms 6. Deciding on the global marketing organization
4. Languages − Organize an export department
• Geographic Characteristics − Create an international division
1. Climate − Become a global organisation
2. Country size
3. Population density CHAPTER 20 SUSTAINABLE MARKETING
4. Transportation structure and market
accessibility Sustainable Marketing – socially and environmentally responsible
• Political and Legal Factors marketing that meets the present needs of consumers and
1. National priorities businesses while also preserving or enhancing the ability of future
2. Political stability generations to meet their needs
3. Government attitudes towards global trade − Sustainable marketing concept – considers both future
4. Government bureaucracy needs of both consumers and the business
5. Monetary and trade regulation − Marketing concept – considers both the present needs of
• Economic Factors consumers and the business
1. GDP size and growth − Strategic planning concept – considers present needs of
2. Income distribution consumers and future needs of the business
3. Industrial Structure

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− Societal marketing concept – considers future needs of lifecycle
the consumers and the present needs of the business
Sustainable Marketing Principles
Social Criticisms of Marketing − Consumer-Oriented Marketing
− Marketing’s impact on individual consumers − Customer-Value Marketing
o High Prices − Innovative Marketing
! High cost of distribution − Sense-of-Mission Marketing
! High advertising and promotion costs − Societal Marketing
! Excessive mark-ups o Deficient Products – neither with immediate
o Deceptive Practices appeal or long term benefits
o High-Pressure Selling o Pleasing Products – high immediate satisfaction
o Shoddy, Harmful or Unsafe Products but may hurt consumers in the long run
o Planned Obsolescence o Salutary Products – have low appeal but may
o Poor service to disadvantaged consumers benefit consumers in the long run
− Marketing’s impact of society as a whole o Desirable Products – high immediate
o False Wants and Too Much Materialism satisfaction and long-run benefits
o Too Few Social Goods
o Cultural Pollution
− Marketing’s impact on other businesses
o Acquisition of competitors
o Marketing practices that create barriers to entry
o Unfair competitive marketing practices

Consumerism
− An organised movement of citizens and government
agencies to improve the right and power of buyers in
relation to sellers
o Seller’s rights
! Introduce products
! Change price
! Spend any amount for promotion
! Use any product message
! Use buying incentive program
o Buyer’s rights
! Not to buy a product on sale
! Expect the product to be safe
! Expect the product to perform as
expected
! To be well-informed
! Protected against questionable
products
! Influence practices to improve “quality
of life”
! Consume now in way that will
preserve the world for future
generations

Environmentalism
− An organised movement of concerned citizens and
government agencies to protect and improve people’s
current and future living environment

Environmental Sustainability
− A management approach that involves developing
strategies that both sustain the environment to produce
profits for the company

Environmental Sustainability Portfolio

Today: Greening Tomorrow: Beyond
Greening
Internal Pollution New clean
Prevention – technology –
Eliminating or developing new sets
reducing waste of environmental
before it is created skills and
capabilities
External Product Sustainability
Stewardship – Vision - Creating a
Minimising strategic framework
environmental for future
impact throughout sustainability
the entire product

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