Marketing principle final exam

Topic 1: Marketing introductionTopic 2: Marketing environmentTopic 3: Marketing information system (MIS)Topic 4: Marketing researchTopic 5: STP (quan trọng)Topic 6: ProductTopic 7: PricingTopic 8: DistributionTopic 9: Integrated marketing communication

Topic 1: Marketing introduction

1 Definition of marketing

Marketing is the science and art of exploring, creating, and delivering value to satisfy the needs of a target market at a profit

Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large

2 Related concept

● Need

- Needs are a state of felt deprivation

- Deprivation = lack of something

- Felt = Consumers must feel/recognize their needs

- Marketers do not create needs; they are a part of human make up

- Marketers remind people of unsatisfied needs and recommend how to satisfy needs

- When a need is not satisfied, a person will do one of two things:

+ Look for an object that will satisfy it + Try to reduce the need

● Want

- Wants are the form human needs take as they are shaped by culture and individual personality

- For example:

+ We need FOOD

+ But we may want

● Demand

- People have narrow, basic needs (e.g for food or shelter), but almost unlimited wants However, they also have limited resources

- Demand = want + buying power

We need to contact with friends → I wants a smartphone → I have limited amount of money, I chose an average smartphone in the market (Oppo, maybe) but my friend is a rich kid → Iphone 11 Max Pro

3 The evolution of marketing concepts

● Production concept

- Consumers will favour products that are available and highly affordable, and that management should therefore focus on improving production and distribution efficiency → Mass production

- The production concept is a useful philosophy in two types of situation

+ The first occurs when the demand for a product exceeds the supply Here, management should look for ways to increase production

+ The second situation occurs when the product’s cost is too high and improved productivity is needed to bring it down

● Product concept

- Consumers will favour products that offer the most quality, performance and innovative features, and that an organisation should thus devote energy to making continuous product improvements

● Selling concept

- Consumers will not buy enough of the organisation’s products unless it undertakes a large-scale selling and promotion effort

- Focuses on creating sales transactions rather than on building long-term, profitable customer relationships

- The concept is typically practised with unsought goods (funeral service, insurance, …) – those that buyers do not normally think of buying

● Marketing concept

- Focuses on customer needs, coordinates all the marketing activities affecting customers and makes profits by creating long-term customer relationships based on customer value and satisfaction

● Societal marketing concept

- The organisation should determine the needs, wants and interests of target markets → deliver the desired satisfactions more effectively and efficiently than competitors in a way that maintains or improves both the consumer’s and society’s well-being

- Is the newest of the five marketing management philosophies

4 Marketing process

● (1) analysing marketing opportunities;

● (2) selecting target markets;

● (3) developing the marketing mix

● (4) managing the marketing effort

Topic 2: Marketing environment

● Two levels:

- The macroenvironment of broad societal forces that influence a business

- Microenvironment of forces closer to the company that affects its ability to serve its customers

1 Company’s micro environment

The forces close to the company that affect its ability to serve its customers – the company, market channel firms, customer markets, competitors and publics, which combine to make up the firm’s value delivery system

● The company

- Top management sets the company’s mission, objectives, broad strategies and

policies

- Marketing managers make decisions within the plans made by top

management

- Finance is concerned with finding and using funds to carry out the marketing

plan

- The R&D department focuses on the problems of designing safe and attractive

products

- Purchasing worries about getting supplies and materials,

- Operations is responsible for producing the desired quality and quantity of

products

- Accounting has to measure revenues and costs to help marketing know how

well it is achieving its objectives

● Suppliers

- Provide the resources needed by the company to produce its goods and services

- Marketing managers must watch: supply availability – supply shortages or delays, labour strikes → can cost sale in the short run and damage customer satisfaction in the long run

- Rising supply costs may force price increases → harm the company’s sales volume

● Marketing intermediaries

- Marketing intermediaries are firms that help the company to promote, sell and distribute its goods to final buyers

- They include:

+ Resellers: distribution channel firms that help the company find

customers or make sales to them These include wholesalers and retailers

+ Physical distribution firms: help the company to stock and move goods

from their points of origin to their destinations

+ Marketing services agencies: are the marketing research firms,

advertising agencies, media firms and marketing consultancies that help the company target and promote its products to the right markets

+ Financial intermediaries.

● Customers

- Consumer markets: individuals and households that buy goods and services

for personal consumption

- Business markets buy goods and services for further processing or for use in

their production process

- Reseller markets buy goods and services to resell at a profit

- Institutional markets are made up of schools, hospitals, nursing homes, prisons

and others Institutions that provide goods and services to people in their care

- Consumer markets: individuals and households that buy goods and services

for personal consumption

- Business markets buy goods and services for further processing or for use in

their production process

- Reseller markets buy goods and services to resell at a profit

- Institutional markets are made up of schools, hospitals, nursing homes, prisons

and other Institutions that provide goods and services to people in their care

● Competitors

- To be successful, a company must provide greater customer value and satisfaction than its competitors do → Marketers must do more than simply adapt to the needs of target consumers

● Public

- Financial publics Financial publics influence the company’s ability to obtain

funds Banks, investment houses and stockholders are the principal financial publics

- Media publics Media publics include newspapers, magazines and radio and

television stations that carry news, features and editorial opinion

- Government publics Management must take government developments into

account Marketers must often consult the company’s lawyers on issues of product safety, truth in advertising and other matters

- Citizen action publics A company’s marketing decisions may be questioned

by consumer organisations, environmental groups, minority groups and other pressure groups Its public relations department can help it stay in touch with consumer and citizen groups

- Local publics Every company has local publics, such as neighbourhood

residents and community organisations Large companies usually appoint a community-relations officer to deal with the community, attend meetings, answer questions and contribute to worthwhile causes

- General public A company needs to be concerned about the general public’s

attitude towards its products and activities The public’s image of the company affects its buying Thus, many large corporations invest huge sums of money to promote and build a healthy corporate image

- Internal publics These include its workers, managers, volunteers and the

board of directors Large companies use newsletters and other means to inform and motivate their internal publics When employees feel good about their company, this positive attitude spills over to their external publics

2 Company’s macro environment

PEST

● Political

- This can include – government policy, political stability or instability in overseas markets, foreign trade policy, tax policy, labour law, environmental law, trade restrictions and so on

● Economic

- Factors that affect consumer buying power and spending patterns

- Buying power:

+ Country: Experiencing economic crisis → Consumer purchasing power is reduced → consumers tend to spend more carefully and seek greater value in the products and services they buy

+ For example, ‘thrift shops’ have been booming in Japan, whose economy has been in recession → Value marketing becomes popular

→ Rather than offering high quality at a high price, or lesser quality

at very low prices, marketers have to look for ways to offer the more financially cautious buyers greater value – combination of product quality and good service at a fair price

- Income distribution/ average income:

+ Higher socioeconomic groups: Consumers with the greatest purchasing power → their rising incomes mean that their spending patterns are less sensitive to economic downturns than those of lower-income groups → target for expensive/luxury products

+ Middle income: more careful about spending, but can afford a good life sometimes

+ Lower income: afford basic food, housing, … + Underclass: struggling to make basic purchases

● Social

- The Socio-Cultural forces link to factors that affect society’s basic values, preferences and behavior The basis for these factors is formed by the fact that people are part of a society and cultural group that shape their beliefs and values Many cultural blunders occur due to the failure of businesses in understanding foreign cultures For instance, symbols may carry a negative meaning in another culture To understand these forces, Hofstede’s cultural dimensions can be used: Power Distance, Individualism versus Collectivism, Masculinity versus Femininity, Uncertainty Avoidance etc

● Technological

- Forces that create new technologies, creating new product and market opportunities

- Companies that fail to keep up with technological change soon find their products outdated

- But keeping pace with technological change is becoming more challenging for firms today → Technology life cycles are getting shorter

Topic 3: Marketing information system (MIS)

1 Definition

Marketing information system (MIS): People, equipment and procedures to gather, sort, analyse, evaluate and distribute needed, timely and accurate information to marketing decision makers

2 MIS

The MIS begins and ends with marketing managers

- First, it interacts with these managers to assess their information needs

- Next, it develops the needed information from internal company records, marketing intelligence activities and the marketing research process Information analysis processes the information to make it more useful

- Finally, the MIS distributes information to managers in the right form at the right time

to help them in marketing planning, implementation and control

Topic 4: Marketing research

1 Definition

The function that links the consumer, customer and public to the marketer through information that is used to identify and define marketing opportunities and problems, to generate, refine and evaluate marketing actions, to monitor marketing performance, and to improve understanding of the marketing process

2 Marketing research process

● Step 1: Define the problems and research objective

● Step 2: Develop research plan

● Step 3: Implementing the research plan

● Step 4: Interpreting and reporting data

3 Primary data and secondary data

● Primary data:

- Information collected for the specific purpose at hand

- Primary data is data that is collected by a researcher from first-hand sources This data can be extracted from qualitative or quantitative research

● Secondary data

- Information that already exists somewhere, having been collected for another purpose

4 Qualitative or quantitative research

● Qualitative research: Exploratory research used to uncover consumers’ motivations,

attitudes and behavior

● Quantitative research: Research which involves data collection from a sufficient

volume of customers to allow statistical analysis

Topic 5: STP (quan trọng)

1 Definition

● Market segmentation means dividing a market into distinct groups of buyers with

different needs, characteristics or behaviours, who might require separate products or marketing mixes The company identifies different ways to segment the market and develops profiles of the resulting market segments

● Market targeting involves evaluating each market segment’s attractiveness and

selecting one or more of the market segments to enter

● Market positioning is setting the competitive positioning for the product and creating

a detailed marketing mix

2 Segmentation

● Level of market segmentation

- No segmentation → Mass Marketing

- Complete segment → Micro marketing

- Or something in between (segment marketing or niche marketing)

● Segmenting consumers’ market

- Geographic segmentation: Dividing a market into different geographical units

such as nations, states, regions, counties, cities or neighbourhoods

- Demographic segmentation: Dividing the market into groups based on

demographic variables such as age, sex, family size, family life cycle, income, occupation, education, religion, race and nationality

- Psychographic segmentation: Dividing a market into different groups based

on social class, lifestyle or personality characteristics

- Behavioural segmentation: Dividing a market into groups based on consumer

knowledge, attitude, use or response to a product

- Occasion segmentation: Dividing the market into groups according to

occasions when buyers get the idea to buy, actually make their purchase, or use the purchased item

- Benefit segmentation: Dividing the market into groups according to the

different benefits that consumers seek from the product

3 Targeting

● Two steps of targeting

- Step 1: Evaluate a target market

- Step 2: Choose customer group(s)

● Undifferentiated Marketing Strategy

- A market-coverage strategy in which a firm decides to ignore market segment differences and go after the whole market with one offer

- The company designs a product and a marketing programme that appeal to the largest number of buyers It relies on quality, mass distribution and mass advertising to give the product a superior image in people’s minds

- Pros:

+ Lower production, inventory and transportation cost

+ Keep down advertising cost

+ Keep down advertising cost

- Cons

+ Effectiveness of one-size-fit-all approach?

+ Competition

● Differentiated Marketing Strategy

- A market-coverage strategy in which a firm decides to target several market segments and designs separate offers for each

- Pros: Better satisfy the needs of customers, medium risk and competition

- Cons: Cost, product portfolio management

● Concentrated Marketing Strategy

- A market-coverage strategy in which a firm goes after a large share of one market or a few submarkets

- Pros: Competitive advantage + best way to satisfy customers

- Cons: Risky

4 Positioning strategy

● Value positioning: Value positioning is a range of positioning alternatives based on the value an offering delivers and its price

- More for more

+ More for more’ positioning involves providing the most upscale product

or service and charging a higher price to cover the higher costs

+ Pros: High quality & prestige

+ Cons: Imitators & economic downturn

+ Example: Starbucks coffee

- More for the same

+ Companies can attack a competitor’s more for more positioning by introducing a brand offering comparable quality but at a lower price

+ Example: Lexus and Mercedes

- The same for less: Amazon e-commerce and traditional bookstore

- Less for much less

- More for less

● Product positioning

- The way the product is defined by consumers on important attributes – the place the product occupies in consumers’ minds relative to competing products

- A product’s position is the complex set of perceptions, impressions and feelings that consumers hold for the product compared with competing products

● Positioning Strategy

- Product attributes position many technical products The positioning of

Nokia’s 6600 is based on integration: ‘Zoom in and take a picture or video View it in full colour Add text and send a multimedia message Save

it Transfer wirelessly over Bluetooth .’; while much of BMW’s advertising promotes individual technical items, such as fresh air filters In the exclusive watch market Breitling, Baume & Mercier and Audemars Piguet’s positioning are on their mechanical movements Some of their designs leave

the mechanisms exposed and one ad argues ‘Since 1735 there has never been a quartz Blancpain And there never will be

- Benefits offered, or the needs they fill, position many products – Crest

toothpaste reduces cavities, Aim tastes good and Macleans Sensitive relieves the pain of sensitive teeth In the confectionery industry, Italian Baci and Ferrero Rocher are gifts, while Mars and Snickers bars satisfy hunger

- Usage occasions position many products Mentadent Night Action toothpaste,

for instance, is for evening use In the summer, Gatorade is positioned as a drink for replacing athletes’ body fluids; in the winter, it can be positioned as the drink to use when the doctor recommends plenty of liquids KitKat and After Eight mints sell alongside Snickers and Ferrero Rocher, but the positioning is on usage occasion Internationally, KitKat means ‘Have a break’, while After Eight is an after-dinner mint to share

- Users help position products Johnson & Johnson improved the market share

for its baby shampoo from 3 per cent to 14 per cent by repositioning the product towards a new user category of adults who wash their hair frequently and need a gentle shampoo Often products are positioned by associating them with their user class Nescafé Gold Blend increased sales dramatically after showing a series of ads romancing thirty somethings, as did Tango soft drinks

as a result of the youthful ‘You’ve been Tangoed’ campaign

- Activities are often used to sell expensive products The Geneva-based SMH

group positions its watches using sports Thus Rado has come to specialise in tennis, Omega in sailing and aerospace, ‘the first and only watch on the moon’, and Longines in skiing and aviation

- Personalities often help positioning Prestigious brands are often positioned

using successful personalities who can add to a product’s character American Express runs ads showing caricatures of famous businesspeople who are also users; Jameson Irish Whiskey uses sportsmen in its positioning; and Hugo Boss identifies successful people as models in its ‘Men at Work’ campaign

- Origin positions product by association with its place of manufacture Much of

Perrier’s success depended on the sophistication its French origin gave to it

- Other brands can help position products Clinique’s advertising for its ‘skin

supplies for men’ prominently features a Rolex watch

- Competitors provide two positioning alternatives A product can be positioned

directly against a competitor For example, in ads for their personal computers, Compaq and Dell directly compared their products with IBM personal computers

Topic 6: Product

1 Definition of product

Product is anything that can be offered to a market for attention, acquisition, use consumption that might satisfy a want or need It includes physical objects, services, persons, places, organisations and ideas

2 Product classification

● Non-durable product: A Consumer product that is normally consumed in one or a few uses

● Durable product: A consumer product that is usually used over an extended period of time and that normally survives many uses

● Consumer product: A product bought by final consumers for personal consumption

● Industrial product: A product bought by individuals and organisations for further processing or for use in conducting a business

3 Consumer product

● Convenience products are consumer goods and services that the consumer usually

buys frequently, immediately and with a minimum of comparison and buying effort Examples are soap, sweets, newspapers and fast food Convenience goods are usually low priced, and marketers place them in many locations to make them readily available when customers need them

- Example: Closeup toothpaste, Omo laundry, chocopie cake, head and shoulder shampoo

● Shopping products are less frequently purchased and consumers spend considerable

time and effort gathering information and comparing alternative brands carefully on suitability, quality, price and style

- Example: LG OLED TV, Dell Laptop, Honda motorbike,

● Speciality products are consumer goods with unique characteristics or brand

identification for which a significant group of buyers is willing to make a special purchase effort

- Example: Gucci clothing, Mercedes car, Vertu mobile phone, Channel perfume, Rolex watch

● Unsought products are consumer goods that the consumer either does not know about

or knows about but does not normally think of buying

- Example: home security systems, funeral services, blood donation

4 Industrial product

● Materials and parts are industrial goods that become a part of the buyer’s product,

through further processing or as components They include raw materials and manufactured materials and parts

● Raw materials consist of farm products (wheat, cotton, livestock, fruits, vegetables)

and natural products (fish, timber, crude petroleum, iron ore)

● Manufactured materials and parts include component materials (iron, yarn, cement,

wires) and component parts (small motors, tyres, castings) Component materials are usually processed further

5 Product lifecycle

The course of a product’s sales and profits over its lifetime It involves five distinct stages: product development, introduction, growth, maturity and decline