Kotler

Krasher
2018
Krash-kourse for your
interviews this summer!
 CONTENTS
Chapter 1 Marketing: Creating
Customer Value and Engagement
Chapter 2 Company & Marketing
Strategy: Partnering to Build Customer
Engagement
Chapter 3 Analysing the Market
Environment
Chapter 4 Managing Marketing
Information to Gain Customer Insights
Chapter 5 Consumer Markets and
Buyer Behavior
Chapter 6 Business Markets and
Business Buyer Behavior
Chapter 7 Customer Value-Driven
Market Strategy
Chapter 8 Products, Services, and
Brands
Chapter 9 Developing New Products
and Managing the Product Life Cycle
Chapter 10 Pricing: Understanding and
Capturing Customer Value

*Hyperlinks may not work in some mobile phone readers.

 CONTENTS
Chapter 11 Pricing Strategies:
Additional Considerations
Chapter 12 Marketing Channels:
Delivering Customer Value
Chapter 13 Retailing and Wholesaling
Chapter 14 Engaging Consumers and
Communicating Customer Value
Chapter 15 Advertising and Public
Relations
Chapter 16 Personal Selling and Sales
Promotion
Chapter 17 Direct, Online, Social
Media and Mobile Marketing
Chapter 18 Creating Competitive
Advantage
Chapter 19 The Global Marketplace
Chapter 20 Sustainable Marketing:
Social Responsibility and Ethics

*Hyperlinks may not work in some mobile phone readers.

 Marketing:
Creating Customer
Value and
Engagement
Chapter 1
 Key Marketing Terminologies

The process by which companies

engage customers, build strong
Marketing
Marketing customer relationships, and create
customer value in order to capture
value from customers in return

Some combination of products,

services, information, or
Market Offerings
Offerings experiences offered to a market
to satisfy a need or want

Marketing
Marketing The art and science of choosing
Management target markets and building
Management profitable relationships with them

Customer Customers evaluation of the

Customer-perceived
perceived difference between all the
value benefits and cost of an offer
value
relative to a competing offer

Customer lifetime
lifetime The value of the entire stream of
value purchases a customer makes
value over a lifetime of patronage

The total combined customer

Customer
Customer Equity
Equity lifetime values of all of the
company’s customers
 Core Marketing Concepts

Marketing Concepts

Consumers prefer products that are

Production Concept widely available and inexpensive

Consumers favor products that

Product Concept offer the most quality,
performance, or innovative
features

Consumers will buy products only if

Selling Concept the company aggressively
promotes/sells these products

Focuses on needs/ wants of target

Marketing Concept markets & delivering value
better than competitors
 Delivery of Value to Customers

Starting
point Focus Means Ends

Existing Selling and Profits through

Factory products promotion sales volume

(a) The selling concept

Customer Integrated Profits through

Market needs marketing customer
satisfaction

(b) The marketing concept

Modern Marketing System

 Company &
Marketing Strategy:
Partnering to Build
Customer
Engagement
Chapter 2
 BCG Matrix
Used to evaluate a company’s SBU in terms of
Market growth rate and relative market share

Also known
as Growth-
share matrix

Used for Long

term product
portfolio
managemen
t

Ansoff Matrix

Used for
developing
strategies
for
growth and
downsizing

Market Penetration: Company growth by increasing sales of

current products to current market segments without changing
the products
Market Development: Company growth by identifying and
developing new market segments for current company products
Product Development: Company growth by offering new
products to current market segments
Diversification: Company growth through starting up or acquiring
businesses outside the company’s current products and markets
 Marketing Mix
The set of tactical marketing tools – product, price,
place and promotion that the firm blends to
produce the response it wants from the target
market

Goods and services combination

Product the company offers to the target
market

The amount of money customers

Price must pay to obtain the product

Company activities that make the

Place product available to target
consumers
Activities that communicate the
merits of the product and
Promotion persuade target customers to buy
it

4Ps to 4Cs

4Ps: Seller Oriented Model

4Cs: Buyer/ Consumer oriented Model

Product Customer Value

Price Cost

Place Convenience

Promotion Communication
 SWOT Analysis
Objective: To match the company’s strengths to
attractive opportunities while eliminating the
weaknesses and minimizing the threats
Positives:
Strengths and
Opportunities
Negatives:
Weaknesses
and Threats

Internal
Analysis:
Strengths and
Weaknesses
External
Analysis:
Opportunities
and Threats

Porter’s Value Chain

Value Chain: set of activities that an organization carries out

to create value for its customers
Porter proposed a generic value chain that companies can
use to examine all of their activities, and see how they're
connected
 Mission Statement & Positioning
Statement
Mission Statement (Internal)
Describes a company's function, markets and
competitive advantages, and it includes a statement of
the business' goals and philosophies. The mission
statement defines not only what your organization is but
also explains its purpose and rationale.

Positioning Statement (External)

It defines how a product or a brand distinguishes itself
from the competition, explains how the benefits from the
product or brand will help the client, and how these
benefits will be communicated to the prospective
customers keeping in mind the customers' view of the
business

Growth Strategies

Intensive
Intensive growth is when a firm grows by expanding
its product line or market reach.
- Ex: Market Penetration, Product Development and
Market Development

Integrated
Integrated growth is when a firm expands through
acquisition or merger.
- Ex: Forward Integration, Backward Integration and
Horizontal Integration

Diversification
Diversification is a corporate strategy to enter into a new
market or industry in which the business doesn't currently
operate, while also creating a new product for that new
market.
Analysing the
Market
Environment
Chapter 3
 Micro-Environment

Marketing Intermediaries: Help company promote,

sell and distribute its products to final buyers.
Publics: Group having actual or potential interest in
the organization’s ability to achieve its objectives.
Ex: Media, Govt., General Public, Financial
publics(Banks, stockholders).

Macro-Environment

DEPEST Model : Demographic, Economic,

Political, Ecological or Natural, Socio-Cultural
and Technological factors
 Managing
Marketing
Information to
Gain Customer
Insights
Chapter 4
 Marketing Information System

Marketers can obtain required information

from Internal Data, Marketing Intelligence
and Marketing Research
Internal Data
Data collected from sources within the
company.
Example: Customer relation team furnishes
data related to customer satisfaction and
issues, Marketing team furnishes data related
to customer characteristics, sales transactions
etc.
Marketing Intelligence
Monitoring, Collection and Analysis of Data
from publicly available sources related to
customer, competitors & development of
market place.
Example: Customer Observing consumer,
online research, benchmarking competitors
products, monitoring social media buzz.
 Marketing Research

Systematic designing, collection, analysis and

reporting of data relevant to a specific situation
faced by an organisation.
Example: It can be used in a variety of
situation, like Outlook of customer towards new
product concept, satisfaction level of the
customer, outreach of promotional activities
etc.

THE MARKETING RESEARCH PROCESS

Defining Problems and Research
Objectives: Research Objectives

Descriptive Casual
Exploratory
Research Research
Research
Research that Research
Research that
help that test
help define
understand hypothesis
problems and
the current about cause
suggest
market and effect
hypothesis
condition relationships
 Developing Research Plan:
Sources of Data
Primary Data: Data directly collected from
source, for some specific purpose at hand.

Secondary Data: Information that already

exists somewhere, having been collected for
some else purpose.
Research Approaches

Observational Gathering Data by

Research Observing People
Gathering Data by Asking
Survey Research
People
Experimental Gathering Data by
Research Experimenting with People

Contact Methods

Mail, Telephone, Personal

Interview, Focus Groups
Interview, Online Marketing
Research, Online Social
Tracking
 Implementing the Research
Plan: Collecting and Analysing
Data
• Gathering, processing and
analysing the information, either
by in-house teams or external
agencies
• Check data for accuracy and
completeness
Interpreting and Reporting the
Findings

• Work in cohesion with research

groups to understand trends and
draw conclusions backed up by
key statistical evidences
Customer Relationship
Management (CRM)
• Managing detailed information
about individual customers and
carefully managing customer
touch points to maximize customer
loyalty.
• Special software used for this
purpose, Example: Salesforce,
Zoho, Cratio etc.
 Consumer
Markets and
Buyer Behavior
Chapter 5
 Model of Consumer Behavior
• Marketing Stimuli; Product, Price, Place,
The Promotion
Environment • Other; Economic, Technological,
Social, Cultural
•E.g People buy more sweets during festivals

• Buyer’s characteristics
Buyers • Buyer’s decision process
‘Black Box’
•E.g People are more likely to choose iphones if there
are in upper middle class

• Buying attitudes and preferences

• Purchase behavior; what the buys, when,
Buyer
where, and how much
Responses
• Brand engagements and relationships
•E.g People may select iphones for prestige

Characteristics Affecting
Consumer Behavior
Psychological:
Cultural:
Motivation, Perception,
Culture, Subculture and
Learning, Beliefs and
Social Class
Attitudes
E.g a lady would choose sarees
E.g a consumer may buy Dettol over salwar-suit because it’s her
over Savlon because he believes culture
Dettol is better

Factors Influencing Consumer Behavior

Social: Personal:
Groups and social Age, Occupation,
networks, Family, Roles Economic situation,
and Status Lifestyle, Personality
E.g consumer buys a Timex watch
E.g people may eat out if they
instead of Fastrack because of its
don’t have time to cook (lifestyle)
prestige
 Buying Decision Behavior
High involvement Low involvement
of consumer of consumer
Complex Variety-seeking
When Buying buying
there’s Behavior behavior
Significant E.g a consumer may
E.g a consumer buying
differences a car will first learn choose a new product
brand just out of
between about attributes and
curiosity to try
options, then an
brands informed decision something now

When Dissonance Habitual

there’s Few reducing buying buying
differences behavior behavior
between E.g a consumer making a E.g consumer doesn’t
brands risky, infrequent bother between
purchase, but they see product difference,
little different in brands like table salt

Buyer Decision Process

Need Recognition: Consumer recognizes
problem/need E.g you’re hungry – you buy a burger

Information Search: Consumer is motivated to search

for more info E.g before buying a car, you research
through internet

Evaluation of Alternatives: Consumer uses info to

evaluate brands E.g you buy a phone based on price

Purchase Decision: Consumer chooses a brand to

purchase from

Post-purchase Behavior: Consumer takes further action

based on their satisfaction/dissatisfaction E.g consumer
is dissatisfied with his car, he regrets the pruchase
 Buyer Decision Process for New
Products

Awareness Interest Evaluation Trial Adoption

Adopter Categories Vs Relative

Time of Adopting a New Product

Factors Influencing Rate of

Adopting a New Product

Relative
Compatibility Complexity
Advantage

Divisibility Communicability
Business Markets
and Business
Buyer Behavior
Chapter 6
 Model of Business Buyer Behavior

• Marketing Stimuli; Product, Price,

Place, Promotion
The • Other; Economic, Technological,
Environment Political, Cultural, Competitive
•E.g business buys raw material when prices
are low

• Buying center (interpersonal and

Buying individual influences)
Organization • Buyer’s decision process
•E.g Board of directors take buying decisions

• Buying attitudes and preferences

• Purchase behavior; what the buys,
Buyer when, where, and how much
Responses • Brand engagements and
relationships
•E.g Product distribution system

Participants of Business Buying

Process
The Decision making unit of an organization is
called its Buying Center
Users; people from the organization who will
use the product
Influencers; They affect buying decision

Buyers; They make the actual purchase

Deciders; They have power to approve the
purchase
Gatekeepers; They control flow of information
 Factors affecting Business Buyer
Behavior

Environmental:
Organizational:
Economy, Supply
Objectives, Strategies,
conditions, Technology,
Structure, Systems,
Regulation,
Procedures
Competition, Culture

Factors Influencing
Business Buyers

Individual:
Interpersonal: Age/Education, Job
Position, Motives,
Influence, Expertise,
Personality,
Authority, Dynamics
Preferences, Buying
Style

Business Buyer Decision Process

General
Problem Product
need
Recognition specification
description

Supplier Proposal Supplier

search solicitation selection

Order-
Performance
routine
review
Specification
Customer Value-
Driven Market
Strategy
Chapter 7
 Marketing Strategy
Segmentation Differentiation
Dividing market into Differentiating the
distinct group of buyers market offerings to
who have different needs create superior customer
or behaviour and might value
require varied marketing
strategies.
Creating
Customer
value
Positioning
Targeting
Arranging for a market
Evaluating each market offering to occupy a clear,
segment’s attractiveness distinctive and desirable
and selecting one or place relative to
more segments to serve competitors in minds of
target consumers
Market Segmentation
Geographic  Nation, Region , population density
(Urban, Sub-urban, Rural)

Demographic  Age: Lunchables- packaged lunch for

children
 Gender: Nike-Athleisure, women
wearing work out gear as everyday
fashion
 Income: Luxury brands target affluent
customers

Psychometric  Lifestyle: Panera- Healthy and tasty

food without preservatives
 Personality Characteristics: Sherwin
William paints-appeals to old , do it
yourself personalities

Behaviourial  Occasion: Starbucks welcomed

autumn with its Pumpkin spics latte
 Benefit Sought :Basic Fitbit Zip, High tech
Fitbit Surge
 Loyalty Status: Dew Nation-Passionate
superfans of Mountain Dew
 For Effective Segmentation

Measurable Accessible

Differentiab
Sustainable
le

Actionable

Market Targeting
Mass Telecom companies, Personal
Marketing Hygiene Products

Segmented Six different laundry detergent

Marketing brands in USA by P&G

Niche Stance- selling socks as main

marketing product
Stitch Fix- online personalized
styling to women

Local Shopkick-special offers and

Marketing rewards for checking into client
stores

Individual Rolls Royce Bespoke –

Marketing customized cars for unigue
experience
 Targeting Strategy

Product
Variability

Market Variability

Competitors strategies

Differentiation and Positioning

Perceptual Positioning Map shows consumer

perception of their brands versus those of competing
product on important buying dimension
 Competitive Advantage

Competitive Advantage- An advantage over

competitors gained by offering greater customer
value either by having low prices or providing
more benefits that justify higher price.

Identifying Differentiating Competitive

Advantage.
Differentiation based on
Product: Bose-better sound through research
Channel: Amazon-smooth functioning direct
channel
People: Zappos-powered by service
Image: Apple-bite-mark logo

Choosing the Right Competitive advantage

How many differences to promote?
 Unique selling point(USP):
Burger King-have it your way
More than one differentiator:
 Walmart- Expect more. Pay less
Which difference to promote?
 Important, Distinctive, Superior,
Communicable, Pre-emptive, Affordable,
Profitable

Selecting overall positioning Strategy

Brand’s Value Proposition-’Why should I buy your
Brand?’
BMW-’ultimate driving machine designed for
driving pleasure’
American Express-’The Journey Never Stops’
Buffalo Wide Wings-’Come hungry. Leave happy’
 Strategy
PRICE

More For More For More For

More- the same- Less-
Starbucks, Walmart, Home Depot
Louis Kohl’s
Vuitton
These are The same
losing Value For Less-
BENEFIT

Proposition BestBuy,
PetSmart,
DSW shoes
Less For
Much Less-
Hotel Inn
Express

More-for-more: Hearts on fire diamonds-

’The world’s most perfectly cut diamond-
those who expect more and give more in
return’
Same-for-less: Amazon kindle Fire tablets-
’Premium products at non-premium
prices’
Less-for-much less: ALDI grocery stores-
‘You can’t eat frills, So why pay for them’
 Positioning Statement

To (Target Segment and need),our (brand) is

(POP-Point of parity) that (POD-Point of
Difference)

POP- Similar attributes in specified category

POD-Unique or differentiated attributes

‘Evernote is a digital content management

application that makes it easy to capture and
remember moments and ideas from your
everyday life using computer, tablet.’
Ikea offers a wide range of well designed
home furnishing products at prices so low that
as many people as possible will be able to
afford them.
Haldiram is ready to eat, high quality Indian
snack for consumers having inclination
towards traditional food that provides
excellent packaging and improved shelf life
For wealthy, middle-aged men, BMW is the
luxury car that is the ultimate high
performance status symbol and comes with a
no-cost maintenance guarantee.

Coca-cola touches lives of million people

each and everyday. From special occasions
to exceptional moments, Coca-Cola is there.
 Products,
Services, and
Brands
Chapter 8
 What are products and services
Anything that is offered to market for
attention, acquisition, use,
Product
consumption that satisfies need or
want ( Tangible)
Activities, benefits, satisfaction that are
Service intangible and do not result in
ownership (Intangible)

3 levels of products
Actual Augmented
Core
Product- Product-Provides
customer
Brand name, additional benefits
value-
quality level, and services like
Problem
features, Delivery, credit,
solving
design, after sales, product
benefit
packaging support, warranty

Classification of Products
Convenience- Frequently Shopping- Less frequently
bought, minimum buying bought, comparison of
efforts and comparison price, style, quality. Eg-
eg- detergent, grocery. Furniture, clothing. Deeper
Low priced and readily sales support is provided.
available. Consumer
Products-
Personal
consumption
Specialty- Unique Unsought- Not known by
characteristics and brand, consumers or not
special purchase efforts. considered for buying. Eg-
Eg- Lamborghini, designer Pre planned funeral
clothes. These are not services. They require
compared generally. extensive promotions.
Industrial Products- Purchased for the business purpose. Eg-
Farm products, motors, elevators, maintenance supplies
 3 levels of Product and service
decisions
1. Individual product and service decisions
1. Product Quality- Freedom from defects,
delivering targeted level of performance
• 2. Features That can add value and
differentiate your product
• 3. Style and Design Differentiating factor,
adds usefulness

Branding- Buyers attach meanings and form

relationships with brands. It assures quality,
consistency, legal protection. Whole product
story is built on a brand
Packaging- Attracts buyers, communicates
brand positioning, optimum and easy
packaging is preferred

Labeling and Logos Supports brand positioning

and personality, digital friendly logos preferred

Customer Support- Used to build lasting

relationships, constant interaction through
online-offline medium, survey to improve
products
2. Product Line Decisions- Product line is group of
products with have similar functions, price ranges,
sold through same channels to same customers

Line Filling- Adding Line Stretching- Lengthening of

more item to present product line beyond its product
line range for extra range. Downward stretch- Premium
profits, using excess company stretches into lower
capacity, satisfying market eg- Mercedes launching
dealers, plugging CLA. Upward stretch- adding
holes, keeping out premium products to reap higher
competition. profits eg- Titan launching Raga
Overdoing results into series
cannibalization
 Product Mix

Width- No. of different Length- Total no. of

product lines a company product within product
carries lines.
Eg- Colgate has 4 lines- Eg- Colgate’s personal
oral care, personal care, care line has brands like
home care, pet nutrition Softsoap liquid, Speed
stick deo, and many
Product Mix- It
more
is set of all
product lines
and items that
a company
offers

Depth- No. of versions

offered of each product
in the line
Eg- Colgate toothpaste-
Colgate total, optic
white, tartar protection,
enamel health, etc
Consistency- It depends
on how closely related
the various product lines
are in terms of use,
production and
distribution.

Characteristics of services

Intangibility Inseparability
Eg. Airlines, hospitals, Can’t be separated from
salons their providers

Services

Variability
Quality depends upon who
provides when, where and
how. Eg. Quality of one
Marriott hotel will be
different than another
Perishability
Can’t be stored for later
use
Eg. Lower prices in off
season for hotels
 Company
Internal Marketing
Make sales people External Marketing
believe in the brand
so that they
authentically deliver
brand's promise
to customers Employees Customers

Interactive Marketing
Improve buyer seller interaction through
trainings

Branding Strategy
Brand Equity: It’s a differential effect that knowing the
brand name has on customer response to the product
and its marketing. Its brand ability to capture consumer
preference and loyalty. Nike, Coca Cola, Disney have
become larger than life icons creating special
relationships with consumers.

Brand Value: It is total financial value of the brand. High

brand equity provides high value. Walmart, Google,
Facebook, Microsoft are some the highly valued
brands.

Brand Positioning: Instead of positioning on the

attributes brands can be positioned on benefits, beliefs
and values, emotional engagement etc. Clear, simple
and honest promise works. Mission and vision is
necessary.

Brand Sponsorship: Retailers or whole sellers create

their own store brands to compete with national
brands.
Licensing- Some companies license names or symbols
previously created by other well known companies or
names of famous characters, celebrities etc by
licensing agreements.
 Brand Development
Line Extension:
Extending an existing
brand name to new
forms, colours, flavors
of existing product
category. It should
take competitors sales
away and should not
cannibalize own items.
Eg- McDonald
Brand Extension: Using an extended its menu as
established existing brand line extension but
name to launch new product resulted into creating
categories. New category confusion in
should fit the parent brand. consumers
Eg- Ponds cream brand is also
used for its talc, facewash, Multibrands:
deo etc. Companies often
market many brands in
New Brands: Companies create a product category to
new brands either to enter into capture larger market
new market or when its old brand share. Combined
name seems to be waning. brands reap grater
Multibranding may lead to market share than a
underutilization of resources. Eg. single brand. Eg-
HUL has different brand names as PepsiCo markets Pepsi,
per categories, Titan’s Raga Mountain Dew, Mirinda,
brand for premium sector. etc.

https://www.facebook.com/mPowerIIMK/
 Developing New
Products and
Managing the
Product Life Cycle
Chapter 9
 New Product Development Strategy
• Internal Sources – R&D teams,
Hackathons, intrapreneurual programs
• External Sources – Distributors, Suppliers,
Competitors, Customers
Generate
• Crowdsourcing – Public, Independent
Idea Researchers

• RWW model - Must answer yes to all three

• Real? Customers need it? Is product
concept clear?
• Win? Sustainable competitive advantage,
Screen sufficient resources available?
Ideas • Worth Doing? Sufficient profit potential
and fits growth strategy?

• Form detailed version of idea in

meaningful consumer terms
• Test with groups of target consumers
Develop • Analyze consumer reactions to questions
about the concept
& Test
• e.g. How much will you pay? Would you
Concept buy such a product?

• Describe target market, value proposition

• Price, distribution, marketing budget
Market • Sale, profit goals, marketing mix
Strategy

• Review sales, costs, profit projections

• Use sales history of similar products,
conduct market surveys
Business • Estimate range of risk, costs of marketing,
Analysis R&D, operations, accounting, finances
 Cont…

• Prototype developed by R&D team

• Test for safety, effectiveness, value
Develop • Involve consumer volunteers
Product

• Real Market Test – Test product and

entire marketing program
• Controlled Test – Combine consumer’s
purchase with demographics and media
Test viewing information
Marketing • Simulated Test – Laboratory stores or
simulated online shopping environments

• Introduction timing – effect on other

product, economic conditions,
competitors’ release
• Locations – A region (e.g. Uber Eats),
Commerci national market (e.g. Car launch),
alization international market (e.g. Iphone
launch)

New
Product
Develop
ment

Customer-
Systematic
Centric
Team
Based
 Product Life Cycle

Find and Heavy Rapid Already

Develop expenses Market accept Time for
Idea Slow Accepta ed by change
growth nce buyers

Additional Considerations
•Govt may prevent acquisition to avoid
monopoly
•Legal obligations to stakeholders before
dropping products
•Cannot make product illegally similar to
competitors’ patent
•Product quality and safety laws must be
complied with
•Standardization (develops consistent
image) vs adapting to different customer
needs e.g. McDonalds’ signature burgers
worldwide but McAloo Tikki in India
 Pricing:
Understanding
and Capturing
Customer Value
Chapter 10
 Price
• Definition : The amount of money charged for a
product or service, or the sum of values that a
customer exchanges for the benefit of having or
using the product or service
• Price is the only Element in the marketing mix that
produces revenue
• Price is one of the most flexible marketing mix
elements
Major Pricing Strategies

Customer
Cost Based Competition
Value Based
Pricing Based Pricing
Pricing

1.CUSTOMER VALUE BASED PRICING

Definition :Setting price based on buyer’s
perceptions of value rather than on the seller’s cost.
Example : iPhone X cost -$412.75. Sold at $999
2. TYPES OF VALUE BASED PRICING:

a). Good value pricing: Offering just the right combination of

quality and good service at a fair price. E.g. Macdonald’s
offer Value meal. An important type of Good value pricing is
EDLP.

EDLP (Everyday Low Pricing): Definition :Charging a constant,

everyday low price with few or no temporary price discounts.
E.g. Walmart promises everyday low prices on everything it
sells except few sale items.

Value added pricing: Attaching value added features and

services to differentiate a company’s offers and charging
higher
prices. E.g. Bose speakers
 2.COST BASED PRICING
Definition: Setting prices based on the costs of
producing, distributing and selling the product plus a
fair rate of return for the company’ effort and risk.
Types of Cost:

1. Fixed costs (overhead): Costs that do not vary with

production or sales level. E.g. bills, rent , salaries
2. Variable costs: Costs that vary directly with the level
of production. E.g. packaging costs
3. Total costs: The sum of fixed and variable costs for
any given level of production.

Cost based pricing methods:

1. Cost-plus pricing: Adding a standard markup to the

cost of the product. E.g. Price charged by Lawyers,
accountants.
2. Break-even pricing (or Target ):Setting price to break
even on the costs of making and marketing a product,
or to make a target return.

3.COMPETITION BASED PRICING

Setting prices based on competitors strategies, prices, costs,
and market offerings.
Consumers base their judgments of a product’s value on
the prices that competitors charge for similar products
Example: When Airtel and other Telcom players reduced
their prices to match Jio’s offering.

OTHER FACTORS AFFECTING PRICING

INTERNAL FACTORS:
1. Marketing strategy, Objectives and Marketing mix.
2. Organizational Factors
EXTERNAL FACTORS:
1. Market and Demand
2. Environmental Factors
 Marketing Strategy, Objectives and Marketing mix
• If a company has selected its target market and positioning
carefully, then its marketing mix strategy, including price, will
be fairly straightforward.
• Price decisions must be coordinated with the product
design, distribution, and promotional decisions to form a
consistent and effective integrated marketing mix program.
• Many firms support pricing positioning strategies with a
technique called Target Costing.
• TARGET COSTING- Definition : Pricing that starts with an ideal
selling price based on customer value considerations and
then targets costs that will ensure that the price is met.
• Often the best strategy is not to charge the lowest price but
rather to differentiate the marketing offer to make it worth
the higher price.

Organizational Factors
Management decides who within the organization should set
the prices.
• In small companies, prices are often set by top management.
• In large companies, prices are handled by divisional or
product managers.
• In Industrial companies, salespeople are allowed to negotiate
price with customers within a certain range.

Nature of the Market and Demand

• Under PURE competition, market consists of many buyers and
sellers trading in a uniform commodity
• Under MONOPOLISTIC competition, market consists of many
buyers and sellers trading over a range of prices rather than a
single market price
• Under OLIGOPOLISTIC competition, market consists of only a
few large sellers responsive to competitors marketing
strategies and moves.
• Under PURE MONOPOLY, market is dominated by one seller.
• Price Elasticity of demand: A measure of the sensitivity of
demand to changes in price.
 Environment Factors

• ECONOMIC factors such as boom or recession,

inflation and interest rates affect pricing decisions.
• Economic factors affect consumer spending,
consumer perceptions of product’s price and value,
and company’s costs of production and selling a
product.
• After the Great recession of 2008-09 many consumers
rethought the price-value equation forcing marketers
to increase their emphasis on value-for-money pricing
strategies.
• GOVERNMENT influence pricing decisions.
• SOCIAL concerns may affect the pricing decisions
Pricing Strategies:
Additional
Considerations
Chapter 11
 Price

Price is an important marketing mix tool for both creating and

capturing customer value.
There are of 4 kinds of additional pricing strategies

1.New Product Pricing Strategies

2.Product Mix Pricing Strategy

3.Price Adjustment Strategy

4.Strategy to Respond to Price Changes

1.New Product Pricing Strategies

Market Skimming Pricing
What : Set High Initial Prices
and subsequently lower
prices to Skim revenue
layer by layer from the
market
Market Penetration Pricing
What : Set a low initial
price to penetrate the
market quickly and
deeply to win a large
market share

Condition for it to work Condition for it to work

1. Product quality and
image should support
higher price
2. No easy entry for
competitors
3. Only possible when low
cost of production
1. Market must be Price-
Sensitive
2.Production and
distribution cost must
decrease as sales volume
increases
3.Low price must keep
out competition

Eg- Iphone(introductory • Eg-Strategy used by Jio

price - $799, after 6 to enter the Market
months-$499, after a year- where they charged very
$299) low prices for data
 2.PRODUCT MIX PRICING STRATEGIES

Product Line Pricing

• Here price should take into account cost
differences between products in the line
• Should account for differences in Customer
perception of value
•E.g. iPad with Wi-Fi and limited storage costs $499.
iPad with 4G and the same limited storage, costs
$150 more.

Optional Product Pricing

• Here companies price optional or accessory products
along with main product
• E.g.Cars with optional premium features ,
Refrigerators with optional ice makers

Captive Product Pricing

• Here companies make products that must be
mused along with main product
• E.g.Razor blade cartridges , video games, printer
cartridges

By Product Pricing
• It means setting a price for by-products to help offset
the costs of disposing of them and make the main
product’s price more competitive
• E.g.Animal dung in zoo sold as compost as most
exotic and highly priced

Product Bundle Pricing

• Combine different products and offer at reduced
price
•Price bundling can promote the sales of products
consumers might now otherwise buy
•E.g. Happy Meals at fast food restaurants
 3.PRODUCT ADJUSTMENT STRATEGIES

Discount and Allowance Pricing

Discount Pricing - Price reduction to reward
customer responses for more volumes purchased,
early payment of bills and off-season purchase
Allowance pricing -Allowance for returning old
product to buy a new one

Segmented pricing
• Means selling a product at two or more prices
based on differences in customers, products or
locations and not on difference in cost
• Eg. Museums, Movie Theatres may charge lower
prices for Students and senior citizens

Psychological Pricing
• Here price is used to say something about the
product
• Prices are adjusted for Psychological effect
• High price=high quality, status(and vice versa)

Promotional Pricing
• Temporarily pricing products below list price , and
sometimes even below cost , to increase short-run sales
• Eg. Flash sales, limited time offers etc
•But his should not be done frequently , as it can
create customers who are “deal-Prone” – only shop
during sale or offers.

Dynamic Pricing
• Adjusting prices continuously to meet the demands
of individual consumer
• Eg. “Surge Pricing” followed in Uber and Ola
 3.PRODUCT MIX PRICING STRATEGIES

International Pricing

• Adjusting prices for international markets

• Lower prices to target middle class in developing
economies like India, Brazil and China

Geographical Pricing

• Means setting prices for customers located in

different parts of the country or world
They are of different kinds :
• FOB-origin pricing - Freight charge borne by
consumer based on distance
• Uniform delivery pricing – charging the same to
all customers irrespective of distance
• Zone pricing – Dividing area into zones and
same price within a zone
• Basing Point Pricing- A Base point selected. Seller
charges as per the distance from base point
• Freight absorption pricing- In this seller absorbs
all or part of freight charges absorbed to
penetrate the market and get desired business
 Price Changes

A company may sometimes find it desirable to

initiate either a price change or a price increase.
In both cases it must anticipate buyer and
customer reactions
Initiating Price Cuts: Initiating Price Increase:
A firm may resort to this 3 Reasons why it may be
when it has done:
a. Excess Capacity 1).The major factor is cost
b. Falling Demand inflation
It may also adopt this To 2).Company cannot fulfil all
dominate market through its demand
lower cost 3).showcase better quality
E.g. Lenovo uses a low-cost , E.g. for this tactic of initiating
low-price strategy to price changes is the
increase its PC market in worldwide oil and gas
Developing Countries industry.

Initiating
Price
Changes

Buyer reaction to Price Competitor Reactions:

Changes:
E.g. Rolex increased the
price of its latest watch
Negative reaction-Brand is
being greedy
Positive Reaction : The
watch is more exclusive
A competitor reacts to price
changes in any of 3 cases:
1.no. of firms involved is
small
2.The product produced is
uniform
3.Buyer’s are well informed
about products and prices.
4.Responding to Price Changes
Marketing Channels:
Delivering Customer
Value

Chapter 12
Marketing Channels

Consumer and Business

Marketing Channels
Channel Behavior and
Organization

Conventional, Vertical and

Horizontal Marketing Systems
 Multi Channel Distribution System

Channel Management System

Managin Motivatin Evaluatin

Selecting
g g g

Channel Members

Managing the supply chain calls

for customer-centred thinking.
Remember, it’s also called
customer value delivery network.
Retailing and
Wholesaling
Chapter 13
 Retailing
Activities involved in selling product and
services directly to final customers for personal
use.
Walmart is world’s largest retailer and also world’s
largest company. Last year its sales was $482 billion
which is more than double the sales of competitors
Costo,Target, Macy’s, Sears etc.

Shopper Marketing- Focussing the entire marketing

process on turning shoppers into buyers as they
approach point of sale.
It builds on what P&G calls “First Moment of Truth”- 3 to
7 seconds shopper spends considering product on store
shelf or now searching for it online

Types of Retailer
Amount of Service
• Locate-compare-select process
yourself to save time or money
Self-service • Supermarket, FMCG such as
Target, Kohl’s

• Provide sales assistance,

Limited- increased operating cost results
in higher price
service • Sears, JCPenney

• Assist in all phase of buying

process, high operating cost,
Full-service high price
• High end stores Tiffany,
Nordstrom
 Product Line
Department Store-wide variety of product lines each
operated as a separate department managed by
specialities, e.g. ALDI
Supermarket-A large, low-cost, low-margin, high-volume,
self-service store that carries variety of household
products, e.g. Walmart.

Service Retailer-
product line is actually
service
Eg. Hotels, airlines,
banks

Superstores-larger than
Speciality Stores- supermarkets, offer a
narrow product lines variety of routinely
with deep assortment purchased goods.
within those lines, eg. Superstores that are
Sunglass Hut speciality stores are
Category Killers

Relative Price
Discount Store-
Standard Off-price retailer-buys
merchandise at low at less than wholesale
price. Low margin, prices and sells at less
high volume. e.g. than retail, of 3 types
Walmart

1)Independents-
2)Factory outlets-
independently
owned and operated
owned and operated
by a manufacturer,
or a division of larger
eg. Gap ,Levis Strauss
retail, eg.TJ Maxx

3)Warehouse clubs-
sells limited branded
items at discounts to
members who pay
annual membership
fees,eg.Costco
 Organizational Approach
 Corporate Chain-2 or more outlet commonly
owned and controlled, strongest in
department stores, discount stores, food
stores, drug stores and restuarant.eg. Macy’s
 Voluntary Chain- Wholesaler sponsored group
of retailers engaged in group buying and
merchandising ,e.g. Western Auto
 Retailer Cooperative- group of retailers who
establish a central buying organization,
conduct joint promotions, e.g. Ace Hardware.
 Franchise-Association between a franchisor
and a franchisee who buy right to own and
operate one or more unit in franchisor system
,e.g. Subway

Retail Marketing Decisions

•Retail Product Creating
Retail Strategy

Value Proposition
Retail Marketing Mix

Segmentati and value for

on and Service targeted
targeting assortment retail
•Store Retail customer
differentiati Prices
on and Promotion
positioning
Distribution
 Trends in Retailing

 Tight consumer spending- When economy is

bad, consumers move towards discounters
such as Costco while several large retailers
had to declare bankruptcy such as Linen N
Things. Drastic price discounting can lead to
death by discount
 New Retail Forms- Limited time Pop-up Stores,
during NBA All Star week, Nike opened
Jordon themed pop up shops. Online and
mobile equivalents are flash sales sites
,Amazon’s MyHabit.
 Experiential Retailing- To create unique store
experience, retailers create an atmosphere
which suits the target segment and moves
them to buy, Eg. Furnishing retailer Restoration
Hardware has unleashed a new generation of
furniture galleries that is a store, a design
studio and a restaurant. ‘You don’t see
furnishing, you experience them’.
 Omni- Channel Retailing- Many shoppers
check out merchandise at physical stores but
buy online, called showrooming. Buyers first
check out merchandise online and then buy
it in physical stores called webrooming.
Hence the need of integrating store and
online channels for single shopper experience
 Retail Technologies- Advanced information
technology and software systems such as
virtual reality at North Face Manhattan store
to experience hiking, base- jumping etc.
 Green Retailing- Under its ‘People & planet
positive’ sustainable strategy, Ikea long-term
goal is to become 100% sustainable, both in
operation and product it sells.
 Wholesaling

Wholesaling includes all activities involved in

selling goods and services to those buying
them for resale or business use. Eg. McKesson,
Arrow Electronics, Grainger.

Need for wholesalers

Selling and Promoting, Buying and Assortment
Building, Bulk Breaking, Warehousing,
Transportation, Financing, Risk Bearing,
Market Information, Management Services
and advice.

Trends in Wholesaling

The goal is to build value-added customer

relationship.
Sysco a giant food distributing wholesaler
lives up to ‘Good things come from Sysco’
provide food supply more dependably,
efficiently and cheaply.

Some large wholesalers are setting up their

own retail operations. SuperValu has retail
stores like FarmFresh, Shoppers etc.
Increase in the use of computerized,
automated and internet- based systems will
help wholesalers contain cost of ordering,
shipping and inventory holding thus boosting
productivity.
 Engaging
Consumers and
Communicating
Customer Value
Chapter 14
 Branding Strategy

Promotion Mix: Blend of promotion tools that

company uses to persuasively communicate
customer value and build customer relationships.
1. Advertisement: Paid and non personal
presentation or promotion
2. Sales Promotion: Short term incentives to
encourage purchase or sale
3. Personal Selling: Sales force engaging customers
and building relationships
4. Public Relations: Building good corporate image,
obtaining favourable publicity, handling
unfavourable rumors etc.
5. Direct and Digital Marketing: Engaging carefully
targeted consumers to obtain immediate response
As consumers are changing, marketing strategies are
changing. Mass markets have fragmented and marketers
are focussing on micro markets. Digital media is growing at
rate of 15% a year.

Integrated Marketing Communication

Integrating many communication channels to deliver
a clear, consistent and compelling message about
company and products.
Developing effective marketing communication: It
includes auditing all touchpoints with the target
customers, assessing what influences each
communication experience, developing feedback
system, etc.
1. Identifying target audience: People who buy and
people who make buying decisions.
2. Determining the communication objectives: Initial
awareness is created through TV commercials,
social media sites engage and educate
consumers, press releases and PR keep the buzz
going on, then discounts are offered to push
customers towards buying.
Buyer readiness stages:

Awareness Knowledge Liking Preference Conviction Purchase

3. Designing a message: AIDA (Attention, Interest, Desire,

Action) Model is used. Consumers feel before they think.
Persuation is emotional in nature. So emotional and moral
appeals are used.
4. Personal Communication Channels: Bloggers, word of
mouth, reviews from friends and family, social interactive
media, buzz marketing using opinion leaders come under
this.
5. Non personal communication channels: Print media,
display media and online media.
6. Selecting the message source
7. Collecting feedback
Total promotion budget and
mix
Objective and task method- It
depend on following 3 parameters. Affordable Method
Its most logical method.
1.Defining specific promotion Promotion budget is set as per
company’s affordability
objectives, 2.Determining tasks
needed to achieve objectives, 3.
Estimating costs of performing tasks

Methods of setting
budget advertising

Competitive parity method-

Percentage of sales method-
Setting promotion budget to match
competitors’ outlays. Setting promotion budget at certain
% of current or forecasted sales.
 Nature of promotion Tools

Promotion Advantages Shortcomings

Tool
Advertising Huge audience, wider Impersonal mode, lacks
reach, Building long direct persuasiveness,
term image, expressive one way
ads, enhanced communication, can
legitimacy be costly
Personal Most effective, can Most expensive, size of
Selling make adjustments sales force is hard to
according to buyers change, requires long
needs, long term term commitment
customer relationships,
trust
Sales Attracts consumer Not effective for
Promotion attention, boosts building long run brand
sagging sales preference
Public Very believable, gains It has been underused
Relations trust, PR messages are by marketers
perceived as news
rather than sales
communication
Direct and Highly targeted to -
digital individuals, one to one
marketing relationships, real time
interaction, customer
engagement

Promotion mix strategies

1. Push Strategy: Sales force and trade promotions are used
to push the products through channels. Producers
promote it to channel members who in turn promote it to
consumers. B2B focus more on push strategy. Funds are
spent more on personal selling than sales promotion,
advertising and PR.
2. Pull Strategy: Spending on advertisements and
promotions to induce consumers to buy products,
creating a demand vacuum that pulls product through
channels. B2C focus more on pull strategy so more
spending on advertisement.
 Socially responsible marketing
communication
Advertisers should avoid making false claims and
attracting consumers under false pretences. Sales people
must follow the rules of fair competition. Should not obtain
bribes to obtain technical and trade secrets. They should
not disparage the competitors.

Nike have been using promotional mix very effectively.

Advertisement- It uses highly popular athletes to inspire
people buy their products. By showing celebrity’s humble
background it tries to evoke aspirations of people and
connects on emotional level.
Personal Selling- Nike stores have well trained sales
personnel who persuade customers, educate them on
products and improve their shopping experience. So
customers feel good and empowered while purchasing
products.
Sales Promotions- Nike gives discounts to attract new
customers.
Public Relations- Nike uses PR to address social issues linked
to its business. It sponsors sports events and communicates
targeted customers about what are they doing to address
social issues.
Direct Marketing- Nike communicates directly with targeted
universities, schools, sports institutions to develop brand
loyalty and stronger relations which results into multiple
purchases.
Advertising and
Public Relations
Chapter 15
 Major Advertising Decisions

1) OBJECTIVE SETTING

Informative Persuasive Reminder

• Communica • Build brand • Maintain

te value preference relationships
• Build brand • Change • Remind of
• Tell about perception future need
new product of product • Remind
• Explain value where to
functionality • Persuade to buy
• Suggest new buy now • Keep in
use • Engage customer’s
• Describe customer mind in off-
service and • Build brand season
support community
• Correct false
impressions

2) BUDGET DECISIONS (refer Chap.14)

Depends on -
 Life Cycle Stage: Newer product need
more budget
 Competition: More the advertisement
clutter, more the budget requirement
 Differentiation: Lower the product
differentiation, higher the budget need
 Major Advertising Decisions

3) Advertisement Strategy Development

Message Strategy
• Madison & Vine - Merger of advertisements
and entertainment
• Advertainment: Ads, short films (Dove)
• Brand Integration: Product Placements
(Starbucks)
• Native Advertising/Sponsored Content
• Characteristics of Advertising Appeals –
meaningful, believable, distinctive

Message Execution
• Use of Tones - positive (P&G), humour (e.g. Doritos)
• Memorable words - BMW “Ultimate Driving Machine”
• Format - Strong illustration, enticing headline, simple
convincing body (called copy)
• Consumer generated content e.g. “Meri Maggi”
• Styles – (Click the tiles below to view respective ad)

Slice of Life Lifestyle Fantasy

e.g. Calvin Klein
Display typical e.g. Athleta
“Drive in to
people e.g. IKEA Activewear
Fantasy”

Mood or Musical Personality

Image e.g. M&M’s
Symbol
e.g. Budweiser “Anything for
love” e.g. Mr. Clean Ad
Lost Dog Ad

Technical Scientific Testimonial

Expertise Evidence Evidence
e.g. Samuel
e.g. Colgate ad e.g. Dove ad
Adams ad
 Major Advertising Decisions

Media Selection
Determine Choose Select Choose
Reach
Frequency
Media Media Media
Impact Type Vehicles Timing

Profiles of Major Media Types

Medium Advantage Limitations

Television Good coverage, Low High absolute

(Chlormint Ad) cost per exposure, costs, high clutter,
appealing to senses audience
selectivity
Digital, Mobile, Good coverage, Low Potentially low
Social Media cost per exposure, impact, high
(Oneplus Ads) appealing to senses audience control
Newspapers Flexibility, Timelessness, Short life, poor
believability reproduction
quality
Direct Mail Audience selectivity, High cost per
(Buzzfeed flexibility exposure, “junk
newsletter) mail image”
Magazines High selectivity, lead time, high
credibility & prestige, cost, no position
long life guarantee
Radio Good local Audio only, low
(Washing acceptance, low cost, attention,
Powder Nirma high selectivity fragmented
Jingle) audience
Outdoor Flexibility, high repeat Low audience
(Ola ads exposure, low cost, selectivity,
behind Autos) low competition, creative limitations
good positional
selectivity
 Public Relations
Press Relations
Placing attractive
information in
media
Development
Relations with
Brand Publicity
non-profits and of specific
donors for products & brand
support

PR
Functions
Investor
Relations Public Affairs
Maintain Maintain
relations with community
financial relationships
community Lobbying
Maintain
relations with
govt and
legislators (for
influence)

Major PR Tools
Corporate
Special Written
Identity Web
Events Material
Material

Annual Logos &

Brand Tours Signs Website
Reports
Business
Brochures, Cards Social
Speech
Newsletters Media
Buildings

Articles & Company

Sponsorship Blogs
Magazines Vehicles
Personal Selling and
Sales Promotion

Chapter 16
 Personal Selling

Personal selling is a broader concept and involves

oral presentation in a conversation with one or more
prospective purchasers for the purpose of making
sales.
Steps in Selling Process
These steps focus on the goal of getting new
customers and obtaining orders from them:

Steps in Sales Force

Management
• Designing sales force strategy and structure
1

• Recruiting and selecting sales people

2

• Training sales people

3

• Compensating sales people

4

• Supervising sales people

5

• Evaluating sales people

6
 Sales Promotion

Sales Promotion consists of short-term incentives

to encourage the purchase or sales of a product
or service. Whereas advertising offers reasons to
buy a product or service, sales promotion offers
reasons to buy now.
Tools for Sales Promotion

Consumer Promotions
• Boosts short term customer buying or
enhances long term customer relationships

Trade Promotions
• Persuades resellers to carry a brand, give it
shelf-space, promote it in advertising and
push it to consumers

Business Promotions
• Generates business leads, stimulates
purchases, rewards customers and
motivates sales people
Developing Sales Promotion
Program
• Size of incentive
• Conditions for participation
• Promote and distribute the promotion
• Length of promotion
• Evaluation
 Direct, Online,
Social Media and
Mobile Marketing
Chapter 17
 Direct Marketing

It is a form of advertising where

organizations communicate directly to
customers through a variety of media it is
also known as direct response marketing.
Online Tools

• Websites: Direct marketing through

company's website
• Search Ads: Paid search, Pay-per-click ads
• Search Engine Optimization (SEO): The
process of maximizing the number of visitors to
a particular website by ensuring that the site
appears high on the list of results returned by
a search engine
• Display Ads: Small boxes containing text
and/or picture that companies pay to place
on relevant web sites
• Interstitials: Ads that pop up between page
changes within or across web sites
• Mass E-mail: They are cheap, but more
effective than social media. Problem may
arise with spam filters
• Online communities and forums: Created by
consumers or sponsored by companies for
primary research and to allow consumers to
talk to each other
• Blogs: Paid blogs by Social Media Influences
or companies own blog
 Continued

• Social Media: Advertisement over Social

Media platforms like Facebook, Quora,
Twitter etc. Can be paid or unpaid.
• Word of Mouth (Viral Marketing): It is a form
of online "word of mouth", that encourages
consumer to pass along company-
developed products and services or audio,
video, or written information to others
online
• Mobile Marketing: Marketing messages,
promotions and other content delivered to
on-the-go consumers through their mobile
phones.
Traditional Tools

• Direct to Mail: Sending an offer,

announcement, reminder or other item
directly to a person through mail
• Direct Response Television Marketing
(DRTV): Advertising via Television through
Infomercials or Interactive Television
Advertisement (iTV)
• Telemarketing: Using Telephone to directly
sell to customers
• Kiosk Marketing: Marketing through Kiosk
that sell product or service at places like
airport, offices, colleges etc.
• Catalog Marketing: Marketing through
print or digital catalog that are either
mailed, or made available at stores or
presented online.
 Creating
Competitive
Advantage
Chapter 18
 Competitor Analysis

Identifying key competitors, assessing their

objectives, strategies, strengths and
weaknesses, and selecting which
competitor to attack or avoid.

Process
• Identifying companies
Identifying the which offer similar or
company’s substitute goods to same
competitors customers at same price

Assessing their • Determining their

objectives, Objective
strategies, • Identifying their Strategy
strength and • Benchmarking product/
weaknesses service against others.
• Estimating their reaction

• Good vs Bad Competitors

Selecting which • Strong vs Weak
competitor to Competitors
• Finding Uncontested
attack or avoid Market Space
 Competitive Strategies

Overall Cost
Leadership
Differentiation
(Cheapest Cost)
(Differentiated product
which stand apart from
Focus
competition)
(Focus on a certain
segment)

Operational Excellence
(Providing superior value by leading in price and
convenience)
Customer Intimacy
(Providing superior value by tailoring its product
or service to exactly match the needs of its
targeted customer)
Product Leadership
(Providing superior value by offering best
product)
Competitive Positions
Market Leaders:
- Focus on expanding total demand
- Defending market share, especially from
challengers
- Expand market share further through
aggressive tactics
Example: Nescafe in Coffee Business
Market Challengers:
- Attack Market Leaders to expand
market share
Example: Bru in Coffee Business
 Continued..

Market Followers:
- Runner up firm that holds its share in the
market
Example: Tata Coffee in Coffee Business
Market Nichers:
- Serves small segment, ignores the rest
Example: Sleepy Owl in Coffee Business
Orientation

Examples:
Product Orientation: Telemarketing Firms
Customer Orientation: American Express
Competitor Orientation: Micromax
Market Orientation: Maruti Suzuki
 The Global
Marketplace
Chapter 19
 Major International Marketing Decisions

There are 6 major decisions which a

company faces in international marketing

Looking at the Elements of the Global

Marketing Environment

Deciding Whether to Go Global

Deciding Which Markets to Enter

Deciding How to Enter the Market

Deciding on the Global Marketing

Program

Deciding on the global marketing

organization
 1.Elements of the Global Marketing
Environment
a). International Trade System
• Countries looking abroad must start by
understanding the international trade system
• While selling to another country a firm may face
restrictions on trade between nations e.g. Tariffs,
duties, Quotas
• Certain forces can help in trade between nations:
1. World Trade Organization
2. Various Regional Free Trade Agreements(e.g.
European Union(EU), TPP( Trans-Pacific Partnership)
b). Economic Environment
Two economic factors reflect the country’s
attractiveness in market:
1. Country’s Industrial Structure
• Subsistence Economies- where most people
engage in agriculture e.g. Majority of African
countries
• Industrial Economies – They are major importers
and exporters of manufactured goods eg.US ,
Japan
• Emerging Economies – They are those which are
experiencing rapid economic growth and
industrialization E.g. BRICS Countries
2. Income Distribution
c). Political-Legal Environment
• A company should consider factors such as the
country’s attitude towards International Buying
,Government Bureaucracy, Political Stability and
Monetary Regulations
• E.g. India bothers foreign business with import
quotas
• Contrary countries such as Singapore and Thailand
invite foreign investors and give them incentives
d).Cultural Environment
• Each company must understand how culture
affects consumer reactions in every world market
• E.g. French man uses twice as many cosmetics and
grooming aids in comparison to his wife
• E.g. Germans eat more spaghetti than Italians do
 2. Deciding Whether to Go Global

3. Deciding Which Markets to Enter

A company should :
• Define its international marketing objectives
and policies
• Decide what volume of foreign sales it wants
• Decide on type of countries to enter
• Carefully evaluate each country
 4.Deciding how to enter the Market

A Company can enter the market through any

of the 3 ways given below
1. Exporting
2. Joint Venturing
3. Direct Investment
4.Deciding how to enter the Market
 5.Deciding on the Global Marketing
Program
They are of two types:

Example of Adapted Marketing Mix

6.Deciding on the Global Marketing
Organization
Companies manage their international marketing activities
in at least 3 different ways:

First Organize Then Create an Finally become

an Export International a Global
DEpartment Division Organization
Example of A Company which went
global
 Sustainable
Marketing: Social
Responsibility
and Ethics
Chapter 20
 Sustainable Marketing
Needs of Business
NOW FUTURE

Strategic
Needs of Consumers

Marketing
NOW Planning
Concept
Concept

Societal Sustainable
Marketing Marketing
FUTURE
concept Concept

Non-Sustainable Marketing;
Impact on Individual Customers

Deceptive High-Pressure
High Prices
Practices Selling

Shoddy Poor Service

Harmful, Planned to
Unsafe Obsolescence Disadvantage
Products Customers
High Prices are due to excessive Mark-ups
Deceptive Practices include deceptive pricing,
deceptive promotions, deceptive packaging
Planned Obsolescence, when products
become obsolete before they actually need
replacement
 Non-Sustainable Marketing;
Impact on Society
False Wants
Too Few Cultural
and Too Much
Social Goods Pollution
Materialism

Overselling of private goods (e.g

automobiles) at the expense of
public/social goods (e.g highways). E.g
traffic congestion due to cars
Excessive marketing and ads lead to
cultural pollution
Consumer Actions to Promote
Sustainable Marketing

1. Consumerism 2. Environmentalism

Societal Classification of
Products
Immediate Satisfaction
LOW HIGH
Long-Term consumer benefit

Salutary Products; Desirable

low immediate Products; High
LOW appeal, may immediate
benefit in long satisfaction, long
term term benefits

Deficient Pleasing Products;

HIGH
Products; Neither High immediate
immediate satisfaction, may
appeal, nor long hurt consumers in
term benefit long run
 Marketing Ethics

Unethical Marketing:

1. Harms 2. Eventually damages a

society as company’s reputation and
a whole effectiveness

Corporate Marketing Ethics Policies:

Broad guidelines everyone in an
organization must follow. Policies should
cover:

Distribution Advertising Customer

relationships standards service

General
Product
Pricing Ethics
Development
Standards

Principles of Ethical Marketing

Free Market Principle

• Companies are not responsible for
making moral judgments, they can do
whatever the legal system allows.
Social Conscience Principle
• Companies should be highly moral and
ethical in their business decisions
regardless of what the legal system
allows.
“Who should ultimately
design the product? The
customer, of course.”

-Philip Kotler