Marketing Management Core Concepts & Strategies

Marketing Management
II Semester

CLO’S
At the end of the Course student should be able to:
1. explain the core concepts of marketing (L2)
2. discuss business environment (L4)
3. Examine the strategies used by the marketers to classify
the markets (L2)
4. examine the buying process in consumer market and
business markets (L3)
5. appraise the initiatives followed by the companies for
effective product or services marketing (L4)
6. discuss the contemporary issues in marketing and
promotional activities (L2)

Course Content
Content Sessions
Chapter No. 1. Introduction
Introduction to marketing, Core concepts, marketing Mix,
Scanning the marketing Environment, Marketing Planning and
Strategies, Customer value and customer relationships.
6 Sessions.
Chapter No. 2. Business Markets
Consumer markets, Business Markets, Market segments and
Targets, Competitive Dynamics.
7 Sessions
Chapter No. 3. Branding and Integrated Marketing Channels
Brand positioning, Brand Equity, Setting Product Strategy,
Managing Services, Pricing strategies and programs,
integrated marketing channels, retailing wholesaling and
logistics
5 Sessions.
Chapter No. 4. Integrated marketing communications
Integrated marketing communications, Managing Mass
communications, Managing Personal Communication, global
markets, contemporary issues in marketing
5 Sessions

Assessment Weightage in Marks
Minor 1 12
Minor 2 13
Assignments 05
Course project and
presentations
10
Class Test/
Swayam Course/
Coursera/ Udamy/
any other Moocs
Certificate
10
Total 50
Evaluation Scheme
CIA Scheme

References
• Kotler and Keller,, Marketing Management, 14th
Edition, Person Education, 2013
• Kotler P, and Armstrong G, Principles of Marketing,
13th Edition, Pearson Education, 2013
• ArunKumar, N Meenakshi, Marketing Management ,
2nd Edition, Vikas, 2013

Course Code and Title: 20MBAC709 / Marketing Management
Module Number and Title: 1. Introduction to
Marketing
Planned Sessions:
6
Topic Learning Objectives Cos BL CA Code
i. define marketing for 21st century CO1 L2 1.1.1
ii. discuss the core marketing concepts CO1 L2 1.1.3
iii. apply the marketing mix CO1 L2 2.1.1
iv. Analyze prevailing market environment
of an enterprise
CO2 L3 2.2.2
v. identify the customer relationship
practices of enterprise
CO2 L2 2.1.1
Learning Objectives: -
At the end of the topic the student should be able to:

• What is Market?
• Broad Segregation of Markets or Different types of
Markets?
• What is Marketing?
• What all be marketed?
• Evolution of Marketing.
• Why marketing is important to firm?
• Discuss the core concepts of Marketing.
• Discuss the forces which influence the marketing
Environment.
• Discuss the traditional and contemporary Marketing Mix.

• Consumer markets
• Business markets
• Global markets
Broad Segregation of Markets

What Is Marketing?
Or
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.
Marketing is an organizational function and a
set of processes for creating, communicating,
and delivering value to customers and for
Managing customer relationships in ways that
benefit the organization and its stakeholders.
Old
Definition
New
Definition

History of the Definition of Marketing

What Is Marketing Management?
Marketing management
is the art and science of choosing target markets and
getting, keeping, and growing customers through creating,
delivering, and communicating superior customer value.

What Is Marketed?
• Goods
• Services
• Events
• Experiences
• Places

Core Concepts
• Needs, wants,
and demands
• Segmentation,
Targeting and
Positioning (STP)
• Offerings and
brands
• Value and
satisfaction
• Marketing
channels
• Supply chain
• Competition
• Marketing
environment

Market Segmentation
Father of Term- Market
Segmentation in his article
“Product Differentiation and Market
Segmentation as a alternative
marketing Strategies”
Wendell R Smith

Targeting Segment
Targeting Specific Group Decision Depends on :
• Competition
• Size and Growth
• Compatibility
• Profitability

Major Forces in the Environment
Demographic
Economic
Socio-cultural
Natural
Technological
Political-legal

Population and Demographics
• Population growth
• Population age mix
• Ethnic and other markets
• Educational groups
• Household patterns

Demographic Details of India- for the Year 2022

Source: https://www.drishtiias.com/daily-updates/daily-news-analysis/population-pyramid

Economic Environment
Consumer Psychology
Income Distribution
Income, Savings, Debt, Credit

Economics
of Region
• Subsistence economies
• Raw-material-
exporting economies
• Industrializing
economies
• Industrial economies

Sociocultural Environment
• Non-material
accomplishments
• Increasing value
of Time
• Strongly held
enduring belief
• Mode of Living
• Increased
complexity of
Purchase
Lifestyles Values
Time
Starved
Customer
Family
Structure

Technological Environment
• Accelerating Pace of change
• Opportunities for innovation
• Varying R&D budgets
• Increased regulation of change

The Political-Legal Environment
Business Legislation
Growth of Special Interest
Groups
Government Agencies

Forecasting and
Demand Measurement
• How can we measure market demand?
–Potential market
–Available market
–Target market
–Penetrated market

A Vocabulary for
Demand Measurement
Market Demand
Market Forecast
Market Potential
Company Demand
Company Sales Forecast
Company Sales Potential

The Marketing Mix
Traditional 4 P’s of Marketing Mix
Modern Marketing Mix involve 7 P’s

Marketing Myopia
A Short- Sighted inward looking approach to marketing that focuses on the needs of
company instead of defining the company and its products in terms of customer needs
and wants.

Developing Marketing
Strategies and Plans

Phases of Value Creation and
Delivery
Assessing market opportunities and customer value
Choosing the value
Designing value
Delivering value
Communicating value
Growing and sustaining value

What is the Value Chain?
• The value chain as a tool for identifying
ways to create more customer value / s
• According to this model every firm is a
blend / synthesis of activities performed
to design, produce, market, deliver and
support its product or services
• The value chain identifies nine
strategically relevant activities – five
primary and four supporting that creates
value and cost in a specific business

Primary activities
• Inbound logistics or bringing materials into
business;
• Operations or converting materials into
final products
• Outbound logistics or shipping out final
products
• Marketing, which includes sales
• Service, specialized department handle
the support activities

Support activities
• Procurement
• Technology development
• Human resource management
• Firm infrastructure

• The main objective of the firm is to
examine its costs and performance in
each value- creating activity and look for
ways to improve it.
• Firms should assess them-self and work
on enhancing the competitive advantage.

Core Business Processes
• Core business processes include:
Market-sensing process- All the activities in gathering and
acting upon market information.
New-offering realization process- All the activities in
researching, developing, and launching new high-quality offerings quickly
and within budget
Customer acquisition process- All the activities in defining
target markets and prospecting new customer
Customer relationship management process
Fulfillment management process- All the activities in
receiving and approving orders, shipping the goods on time, and collecting
payment
• Firms also need to look into the value chains of their
suppliers, distributors, and customers.

Core Competencies
Creativity
Innovation
Design
• It is Source of competitive advantage
and make significant contributions to
perceived customer benefits
• It is difficult imitate
• It has application in wide variety of
market

Holistic Marketing Orientation
Address
Three key management questions
Value
exploration
Value Creation
Identifies
new
value
opportunities
How a company efficiently creates more Promising new
value offering
How
a
company
uses
its
capabilities
and
infrastructure
to
deliver
the
new
value
offerings
more
efficiently

The Strategic Planning, Implementation, and
Control Processes

What Is a Marketing Plan?
A marketing plan is the central instrument
for directing and coordinating the marketing
effort.
It operates at a strategic and tactical level.

Levels of a Marketing Plan
• Strategic
– Target marketing
decisions
– Value proposition
– Analysis of
marketing
opportunities
• Tactical
– Product features
– Promotion
– Merchandising
– Pricing
– Sales channels
– Service

Corporate Headquarters’
Planning Activities
• Define the corporate mission
• Establish strategic business units
(SBUs)
• Assign resources to each SBU
• Assess growth opportunities

Good Mission Statements
• Focus on a limited number of goals
• Stress major policies and values
• Define major competitive spheres
• Take a long-term view
• Short, memorable, meaningful

Major Competitive Spheres
• Industry
• Products
• Competence
• Market segment
• Vertical channels
• Geographic

The Strategic Planning Gap
Copyright © 2013 Dorling Kindersley (India) Pvt Ltd. Authorized adaptation from
the United States edition of Marketing Management, 14e.

Intensive growth
• Intensive growth is when a firm grows by expanding its
product line or its market reach. Thus, if a firm introduces a
new product, enters a new market, or further develops its own
competency, than the firm is undergoing intensive growth.
Intensive growth strategies are likely to help the firm grow in
the market faster and make the company stronger.

Integrative growth strategy
Integrative growth A growth strategy in which a
company increases its sales and profits through
backward, forward, or horizontal integration within its
industry. A company may acquire one or more of its
suppliers to gain more control or generate more
profits (backward integration). It might acquire some
wholesalers or retailers, especially if they are highly
profitable (forward integration). Or finally, it might
acquire one or more competitors through acquisition
(horizontal integration).

Diversification is part of the four main growth strategies defined by Igor
Ansoff's Product/Market matrix:[1]

• Strategies for intensive growth.
Market penetration – Market penetration is the
most commonly used strategy for intensive
growth. This strategy is used when the current
products are expanding in current markets. Thus
a firm might reduce the price of the product to
penetrate the market better. This ensures that
the firm expands its market share and shows
intensive growth.

Market development –
Market development happens when an existing
product is introduced in a new market
environment. In such a case, the company will
have to use various promotional tactics as well
as implement a marketing strategy to cover the
new market.

Product development –
• Expansion through product development involves development of
new or improved products for its current markets.
• The firm remains in its present markets but develops new products
for these markets. Growth will accrue if the new products yield
additional sales and market share.
• This strategy is likely to succeed for products that have low brand
loyalty and/or short product life cycles. A Product development
strategy may also be appropriate if the firm’s strengths are related
to its specific customers rather than to the specific product itself. In
this situation, it can leverage its strengths by developing a new
product targeted to its existing customers. Although the firm
operates in familiar markets, product development strategy carries
more risk than simply attempting to increase market share since
there are inherent risks normally associated with new product
development.

The three possible ways of implementing the product
development strategy are:
• The company can expand sales through developing
new products.
• The company can create different or improved
versions of the currents products
• The company can make necessary changes in its
existing products to suit the different likes and dislikes
of the customers.

Diversification strategy –
The last strategy of intensive
growth is diversification
strategy. Most commonly
observed in geographical
expansion, this form of
intensive growth strategy takes
place when a new product is
introduced in a new market.
Thus the challenges involved in
diversification strategy is huge,
but if the strategy is a success,
than the profit and return on
investment is huge as well.

What Is Corporate Culture?
Corporate culture is the shared
experiences, stories, beliefs, and
norms that characterize an
organization.

The Business Unit Strategic
Planning Process

SWOT Analysis
Strengths
Weaknesses
Opportunities
Threats

Porter’s Generic Strategies
Overall cost leadership
Differentiation
Focus

Customer Perceived Value
Customer perceived value is the difference
between the prospective customer’s evaluation
of all the benefits and all the costs of an offering
and the perceived alternatives.

Determinants of
Customer Perceived Value
Image benefit Psychological cost
Personal benefit Energy cost
Services benefit Time cost
Product benefit Monetary cost
Total customer benefit Total customer cost

Applying Value Concepts
A firm can improve its offers in three ways:
1. By improving the economic, functional, and
psychological benefits of its product, services,
people, and/or image.
2. By reducing the buyer’s nonmonetary costs by
lesser time, energy, and psychological
investment.
3. By reducing the product’s monetary cost to
the buyer.

Steps in a
Customer Value Analysis
• Identify major attributes and benefits that
customers value
• Assess the qualitative importance of
different attributes and benefits
• Assess the company’s and competitor’s
performances on the different customer
values against rated importance
• Examine ratings of specific segments
• Monitor customer values over time

What Is Loyalty?
Loyalty is a deeply held commitment to
re-buy or re-patronize a preferred
product or service in the future despite
situational influences and marketing
efforts having the potential to cause
switching behavior.

Delivering Superior Value
Customer Value Management (CVM) by Tata Steel
through a cross-functional joint team of the
company and the customer has succeeded in
delivering superior customer value

Measuring Satisfaction
• Periodic surveys
• Customer loss rate
• Mystery shoppers
• Monitor competitive performance

Managing Customers
Dealing with negative experiences and recovering
customer goodwill:
1. Set up a 7-day, 24-hour toll-free hotline to receive
and act on customer complaints.
2. Contact the complaining customer as quickly as
possible to avoid negative word of mouth.
3. Accept responsibility for the customer’s
disappointment; don’t blame the customer.
4. Use customer service people who are empathic.
5. Resolve the complaint swiftly and to the customer’s
satisfaction.

What is Quality?
Quality is the totality of features and
characteristics of a product or
service that bear on its
ability to satisfy
stated or implied needs.

Maximizing Customer Lifetime Value
Customer Profitability
Customer Equity
Lifetime Value

Customer profitability (CP) is the profit the firm makes from
serving a customer or customer group over a specified period of
time, specifically the difference between the revenues earned
from and the costs associated with the customer relationship in
a specified period.

Customer equity is the total of lifetime values of all your
current and future customers – the sum total of all the value
you'll ever realize from customers. Because customers create
all value, this means that customer equity is virtually the same
number as the "going concern" value of your business.
Customer Life type Value=
Annual profit contribution per customer * Avg. no. of Years
they remain as a loyal customer – Initial cost of acquiring
the customer.

What Is
Customer Relationship Management?
CRM is the process of carefully managing
detailed information about individual
customers and all customer touch points
to maximize customer loyalty.

Framework for CRM
• Identify prospects and customers
• Differentiate customers by needs and value
to company
• Interact to improve knowledge

Customer Reviews and
Recommendations
• The strongest influence on consumer choice
remains “recommended by relative/friend”.
• With increasing mistrust of some companies and
their advertising, online customer ratings and
reviews and recommendations from consumers are
playing an important role.
• Bloggers who review products or services, online
retailers who add their own recommendations have
also become important.

Attracting and
Retaining Customers
• Reduce the rate of defection
• Increase longevity
• Enhance share of wallet
• Terminate low-profit customers
• Focus more effort on high-profit customers

Database Key Concepts
• Customer database
• Database
marketing
• Mailing list
• Business database
• Data warehouse
• Data mining

Using the Database
• To identify prospects
• To target offers
• To deepen loyalty
• To reactivate customers
• To avoid mistakes

Lesson Schedule
Class No. - Portion covered per hour / per Class
9. . Analyzing Customer Markets1
10. Analysing Customer Markets 2
11. Analysing Customer Markets 3
12. Identifying Market Segments and Targets 1
13. Identifying Market Segments and Targets 2
14. Competitive Dynamics
15. Review

Consumer Behavior
Consumer behavior is the study of how individuals,
groups, and organizations select, buy, use, and dispose
of goods, services, ideas, or experiences to satisfy
their needs and wants.

Stimulus Response model of Buyer
Behavior

What Influences
Consumer Behavior?
Cultural Factors
Social Factors Personal Factors

What Is Culture?
Culture is the fundamental
determinant of a person’s wants and
behaviors acquired through
socialization processes with family
and other key institutions.

Subcultures
• Nationalities
• Religions
• Racial groups
• Geographic regions

Social Factors
Reference groups
Family
Roles
Statuses
A person’s reference groups are all the
groups that have a direct( face-to-face) or
indirect influence on attitude or behavior. The
ref. groups are broadly classified into 1)
Primary groups and 2) Secondary
Family is most important part of consumer
behavior, they are most influential primary
reference groups. The family orientation
consists of parents and siblings.
A role consists of activities a person is
expected to perform in a given set-up or
organization.
Each role an individual performs give
rise to status, responsibility and power
Trade union
Religious and
Professional

Reference Groups
 Membership groups
 Primary groups
 Secondary groups
 Aspirational groups

Family
 Family of orientation: parents and siblings
 Family of procreation: spouse and children

Personal Factors
• Age
• Life cycle stage
• Occupation
• Wealth
• Personality
• Values
• Lifestyle
• Self-concept

Occupation and Economic
Circumstances
Marketers try to identify the occupational groups
that have above-average interest in their products
and services. Product and brand choice are also
affected by economic circumstances—spendable
income, savings and assets, debts, borrowing
power, and attitudes toward spending and saving—
to a greatextent.

Personality
Personality refers to a set of distinguishing human
psychological traits that lead to relatively consistent and
enduring responses to environmental stimuli. Personality
can be a useful variable in analyzing consumer brand
choices.
Personality refers to individual
differences in characteristic
patterns of thinking, feeling
and behaving.

Brand Personality
• Sincerity
• Excitement
• Competence
• Sophistication
• Ruggedness

Lifestyle and Values
Is a Proprietary research methodology used for
Psychographic market segmentation.
• Market Segmentation is designed to guide
companies in tailoring products and service in order
to appeal to the people who are most are most
likely to buy or purchase.
• This Concept was developed in 1978 by Social
Scientist and consumer futurist Arnold Mitchell
• He Classify the consumers into eight basic lifestyle
groups on the basis of two dimensions
Resources Self- Orientation

Motivation
Freud’s
Theory
Behavior
is guided by
subconscious
motivations
Maslow’s
Hierarchy
of Needs
Behavior
is driven by
lowest,
unmet need
Herzberg’s
Two-Factor
Theory
Behavior is
guided by
motivating
and hygiene
factors

Perception
• “Perception is the process by which we
select, organize and interpret information
inputs to create a meaning picture of the
world.”
• Selective attention
• Selective retention
• Selective distortion
• Subliminal perception
Tendency to interpret information in a way that
fits consumers preconceived perceptions
Customer likely to remember and retain
information that supports attitude and belief
Perception or reaction to a stimulus that
occurs without awareness or
consciousness

Learning
 Drive: A strong internal stimulus impelling action
 Cue: Minor stimuli that determine when, where, and
how a person responds
 Discrimination: Learning to recognize differences in
sets of similar stimuli and adjusting our responses
accordingly

Memory
• Short term memory
• Long term memory

Roles Played by the Customer / buyer in Decision
Making Process
Initiator
Influencer
Decider
Buyer
User
1
2
3
4
5

Consumer Buying Process
Problem Recognition
Information Search
Evaluation of alternatives
Purchase Decision
Postpurchase Behavior

Sources of Information
Commercial
Personal
Public Experiential

Successive Sets in Decision
Making

Non-Compensatory Models of Choice
• Conjunctive heuristics- the consumer sets a
minimum acceptable cutoff level for each
attributes and choose the first alternative that
meets the minimum standard for all attributes.
• Elimination-by-aspects – the consumer
compares brands on an attributes selected by
probabilistically – where the probability of
choosing an attribute is positively related to
importance – and eliminates brands that do not
meet minimum acceptable cutoffs.

Steps Between Alternative
Evaluation and Purchase

Perceived Risk
• Functional
• Physical
• Financial
• Social
• Psychological
• Time

6
Analyzing Business
Markets
https://youtu.be/C40_1XRE7M0?t=24

Chapter Questions
• What is the business market, and how
does it differ from the consumer
market?
• What buying situations do
organizational buyers face?
• Who participates in the business-to-
business buying process?

Chapter Questions
• How do business buyers make their
decisions?
• How can companies build strong
relationships with business customers?

What Is Organizational Buying?
Frederick E. Webster Jr. and Yoram
Wind define
Organizational buying as the decision-
making process by which formal
organizations establish the need for
purchased products and services, and
identify, evaluate, and choose among
alternative brands and suppliers.

Top Marketing Challenges
Business Marketers face many of the challenges similar to
consumer marketers. In particular understanding their
customer/consumer and what they value is paramount
important for both the case. To name a few identified by top B-
B firms as follows:
• Understanding customer needs;
• Identifying new opportunities for business growth;
• Improving / Enhancing customer value;
• Calculating better marketing performance and accountability
metrics;
• Competing and growing in global markets, particularly in
developing countries;
• Convincing influencers / purchase executives;

Fewer, Larger buyers
• The B-B market normally
deals with fewer and
much larger buyers then
the consumer marketer.
• Ex- Aircraft engines and
Defense weapons
Close supplier-customer
relationship
• Customer base is small
and they poses larger
buying power, supplier
are frequently expected
to customize the offering
to suit the individual
customer needs.

Professional purchasing
• Business goods are
purchased by trained
purchasing agents, who
keep the organization
policies, constraints and
requirements.
• The use of buying
instruments like
quotations, proposals are
used.
Multiple Buying Influence
• Multiple people are
involved in decision
making in B-B process.
• There is concept called
buying committee.
• The committee
constituted by
management consists of
technical experts and
management
representatives.

Multiple Sales Calls
• B-B Sales, Sales Reps
need to under take
multiple sales calls to win
the orders from the client.
• It is seen by the research
that reps need 5 calls to
close an average
industrial sales.
Geographically
Concentrated buyers
• B-B marketers are
geographically
concentrated , some
times near to customer
base or location.

Buying Situation
Straight Rebuy
Modified Rebuy
New Task

Straight Rebuy
• In a straight rebuy, the purchasing department
reorders supplies such as office supplies and bulk
chemicals on routine basis and chooses from
suppliers on an approved list.
• The supplier make an effort to maintain product
and service quality and often proposes automatic
reordering system.
• Those who are not in the supplier list attempt to
offer something new or explicit so that they can
win the client and get a fair percentage of the
business.

Modified Rebuy
• The buyer in a modified rebuy wants to
change product specifications, prices
delivery requirements, or the other terms.
• This development make the supplier and
client to put more efforts to be in the race.
• The in supplier feels as challenge and
out supplier then this as an opportunity
to enter in wish list of the client .

New Task
• A new-task process, the client will like to buy the
materials from the new supplier for the first time.
Ex- the college feels they want an advanced
security system to track the moments.
• In this client want best quality at reasonable price.
• This gives the opportunity for new vendors to get
associated with client and win the confidence of
his.
• This process involves more commitment from
both parties .

The Buying Center
• Initiators
• Users
• Influencers
• Deciders
• Approvers
• Buyers
• Gatekeepers
Uses or others in the organization who
identifies the problem request for solution
The ultimate user of the product / service
People who have information and
influence the buying decision. Most of the
time technical experts.
People who decide on the product
requirements or supplier
People who have the authorities
give the consent to actions of the
deciders
People who the power to
prevent the sellers to meet
Initiators and they act as

Stages in the Buying Process:
• Problem recognition
• General need description
• Product specification
• Supplier search
• Proposal solicitation
• Supplier selection
• Order-routine specification
• Performance review

Supplier Search
• Catalog sites
• Vertical markets
• Pure play auction sites
• Spot markets
• Barter markets
• Buying alliances

Proposal Solicitation
• The buyer next invites the qualified supplier to
submit proposals. If the item is complex or the
expensive the proposal is written and detailed.
• After evaluating the proposals the buyer will invite
the supplier for the presentations.
• Business reps should be skilled in researching ,
writing and presenting the proposals.
• The written proposals are marketing documents
that describe the values and terms to the
customer.
• Oral presentations should inspire the confidence
and position the company’s capabilities and
resources so that they stand out from competition.

Supplier Selection
• Ranking the suppliers based on the
attributes. The companies use vender
analysis technique.
• Overcome the price and quality challenges
• Analyze the terms and conditions of the
supply
Finally the Review the Performance of the
Supplier

Customer Relationship
Management Practices in B-B
• Assignment
• By taking an Industrial i.e. B-B
company,
Student s are asked to submit an
assignment on the CRM practices followed
in the chosen Industrial organization and
then compare the practices followed in B-C
organizations.

Institutional Markets
The institutional market consists of schools,
college and university hostels, hospitals and
nursing homes, and other institutions that provide
goods and services to people in their care. Many of
these organizations are characterized by low
budgets and captive clienteles.

Module 3: Branding and Integrated
Marketing Channels
• Learning Objectives:
1. Discuss the brand management practices
2. Analyze the influence of the price on the
consumer buying decision
3. Discuss the role of the Integrated marketing
channels of distribution in the modern
business environment.

“At the heart of the a great brand is a great
product.”

Chapter Questions
•What are the characteristics of products
and how do marketers classify products?
•How can companies differentiate
products?
•Why is product design important and
what factors affect a good design?

Introduction to Product
• “Product is tangible and intangible
objectives/ideas or mixture of these offered by
the marketer to the selected market for
seeking attention, acquisition, use or
consumption that might satisfy need or want.”
• To differentiate their offering from
competition, marketers are working on
creating and managing
expectations/experience with their products

Components of the Market Offering

Core Product Actual Product
Augmented Product

Classification of the Product/service

Consumer Products
• Convenience Products

• Specialty Goods
Special Purpose Cars
Camera
Cloths Medical and Legal Services

Industrial Products
• Materials and Parts
• Capital Items
• Supplies and Service

• Materials ( Raw Materials )
• Component Parts

• Industrial Products supplies and Services

Product and Service Decisions
• Marketers make product and service decisions
at 3 levels
Individual
Product
Decisions
Product
Line
Decisions
Product Mix
Decisions

Individual Product and Service
Decisions

Product and Service Attributes
Product Quality
Product Features
Product Style
and Design

Product Line Decisions
Product line is group of the product that are closely related, because they function in
the similar manner and sold to same customer group, are marketed through same
outlets or fall within same price-range
Enterprise can expand its product-line by two approaches

9
Crafting the Brand
Positioning

Chapter Questions
• How can a firm develop and establish an
effective positioning in the market?
• How do marketers identify and analyze
competition?
• How are brands successfully differentiated?
• What are the differences in positioning and
branding with a small business?

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sourced from Ghana, Equador, Sao Tome,
Madagascar, Venezuela, Ivory Coast, to name a
few. It does not contain added vegetable fat,
but contains cocoa butter. The chocolates have
between 33 per cent to 84 per cent of cocoa in
it and are priced starting at ₹495 for a box of
five pralines and ₹1,800 for a box of 12 single
origin cocoa bars, including taxes.

• Positioning is the act of designing a company’s
offering and image to occupy a distinctive place
in the minds of the target market.
• The goal is to locate the brand in the minds of
consumers to maximize the potential benefit to
the firm.
• A good brand positioning helps guide marketing
strategy by clarifying the brand’s essence.

Competitive Frame of Reference
 Identifying Competitors
 Analyzing Competitors

Customer Ratings
of Competitors

Defining Associations
Points-of-difference
Attributes or benefits
consumers strongly
associate with a
brand, positively
evaluate, and believe
they could not find to
the same extent with
a competitive brand
Points-of-parity
Associations that are
not necessarily
unique to the brand
but may be shared
with other brands

Point-of-Difference Criteria
Desirable to consumer
Deliverable by company
Differentiating from competitors

• A brand mantra is an articulation of the heart
and soul of the brand and is closely related to
other branding concepts like “brand essence”
and “core brand promise.” Brand mantras are
short, three- to five-word phrases that capture
the irrefutable essence or spirit of the brand
positioning

Designing a Brand Mantra
Communicate
Simplify
Inspire

• Communicate. A good brand mantra should
define the category (or categories) of business
for the brand and set the brand boundaries. It
should also clarify what is unique about the
brand.
• Simplify. An effective brand mantra should be
memorable. For that, it should be short, crisp,
and vivid in meaning.
• Inspire. Ideally, the brand mantra should also
stake out ground that is personally meaningful
and relevant to as many employees as possible.

Brand mantras typically are designed to capture
the brand’s points-of difference, that is, what is
unique about the brand.
Other aspects of the brand positioning—
especially the brand’s points-of- parity—may
also be important and may need to be
reinforced in other ways.

Means of Differentiation
Employee
Channel
Image
Services

• Employee differentiation: train employees to provide
superior customer service. Singapore Airlines is well
regarded in large part because of its flight attendants.
• Channel differentiation: design distribution channels’
coverage, expertise, and performance to make buying
the product easier and more enjoyable and rewarding.
• Image differentiation: craft powerful, compelling
images that appeal to consumers ’ social and
psychological needs.
• Services differentiation: design a better and faster
delivery system that provides more effective and
efficient solutions to consumers.

Emotional Branding
Strong culture
Communication style
Emotional hook

What Is Brand Equity?
Brand Equity is the set of associations and
behaviors on part of brand’s consumer channel
members, and parent corporation that permits
the brand to earn greater volume and margins
than it could without the brand name, that gives
the brand a strong sustainable and differential
advantage over the competitors ( Marketing
Science Institute 1988)
Brand equity is the added value endowed on
products and services, which may be reflected in
the way consumers, think, feel, and act with
respect to the brand.

• Brand Equity is a set of brand assets and liabilities
linked to a brand, its name and symbol that adds
value to or subtracts from the value provided by the
product or service to a firm or its consumers or
customers.( Aaker 1991)

Need for Building Brand Equity
• Study of the brand seen major shift in 1990
• The strong brand help the marketer to
connect the consumer.
• It helps the firm to innovate at continues
intervals
• It helps the firm in brand extensions
• Develop the trust and loyalty among the
consumers

Advantages of Strong Brands
• Improved perceptions
of product
performance
• Greater loyalty
• Less vulnerability to
competitive marketing
actions
• Less vulnerability to
crises
• Larger margins
• More inelastic
consumer response
• Greater trade
cooperation
• Increased marketing
communications
effectiveness
• Possible licensing
opportunities

Customer Based brand equity
• CBBE, Is thus the differential effect brand
knowledge has on consumer response to the
marketing of that brand.
• A brand has positive customer based brand
equity when consumers react more favorably to a
product and way it is marketed when the brand is
identified . Then when it is not identified.
• A brand has negative customer based brand
equity if the consumers react less favorably to
marketing activity for the brand under same
circumstances .

Three Key ingredients of CBBE
• Brand equity arises from difference in the
consumer response. (if no difference occurs, the
brand – name product is essentially a commodity)
• Difference in response are a result of consumers’
brand knowledge. All the thoughts, feeling, images,
experiences and beliefs associated with the brand.
Brands must create a strong favorable and unique
association with customers. Such as Toyota (
reliability).
• Brand equity is reflected in perceptions,
preferences and behavior related to all the aspects
of the marketing of the brand.

• A brand promise is the marketer’s vision of what
the brand must be and do for consumers.
Consumers will decide, based on what they think
and feel about the brand, where (and how) they
believe the brand should go and grant permission
(or not) to any marketing action or program. The
growth story of Lifebuoy is an illustration of how
the company has consistently maintained the
brand’s key promise of health over the years and
yet introduced several variants and line
extensions with a more generic interpretation of
the brand promise and contemporary execution
of marketing-mix elements, keeping in mind the
changing consumer preferences.

Brand Equity Models
Brand Asset Valuator (BAV)
Brand Resonance

• Advertising agency Young and Rubicam (Y&R)
developed a model of brand equity called the
BrandAsset® Valuator (BAV). Based on research
with almost 800,000 consumers in 51 countries,
BAV compares the brand equity of thousands of
brands across hundreds of different categories.
• There are four key components—or pillars—of
brand equity, according to BAV.

• BAV provides comparative measures of the brand
equity of thousands of brands across hundreds of
different categories. There are four key components—
or pillars— of brand equity, according to BAV.
• Differentiation measures the degree to which a brand
is seen as different from others.
• Relevance measures the breadth of a brand’s appeal.
• Esteem measures how well the brand is regarded and
respected.
• Knowledge measures how familiar and intimate
consumers are with the brand.
• Differentiation and Relevance combine to determine
Brand Strength. These two pillars point to the brand’s
future value, rather than just reflecting its past. Esteem
and Knowledge together create Brand Stature, which is
more of a “report card” on past performance.

BAV Model
Source: Courtesy of
BrandAsset®
Consulting,
a division of Young &
Rubicam.

• Examining the relationships among these four
dimensions—a brand’s “pillar pattern”—reveals much
about its current and future status. Brand Strength and
Brand Stature can be combined to form a Power Grid
that depicts the stages in the cycle of brand
development—each with its characteristic pillar
patterns—in successive quadrants.
• New brands, just after they are launched, show low
levels on all four pillars.
• Strong new brands tend to show higher levels of
Differentiation than Relevance, while both Esteem and
Knowledge are lower still.
• Leadership brands show high levels on all four pillars.
• Finally, declining brands show high Knowledge—
evidence of past performance—relative to a lower
level of Esteem, and even lower Relevance and
Differentiation.

• Energized differentiation and relevance combine to
determine brand strength—a leading indicator that
predicts future growth and value. Esteem and
knowledge together create brand stature, a “report
card” on past performance and a current indicator of
current value. The relationships among these
dimensions—a brand’s “pillar pattern”—reveal much
about a brand’s current and future status. Energized
brand strength and brand stature combine to form the
power grid, depicting stages in the cycle of brand
development in successive quadrants. Strong new
brands show higher levels of differentiation and energy
than relevance, whereas both esteem and knowledge
are lower still. Leadership brands show high levels on
all pillars. Finally, declining brands show high
knowledge—evidence of past performance— a lower
level of esteem, and even lower relevance, energy, and
differentiation.

Brand Dynamics Pyramid
Source: BrandDynamics™ Pyramid. Reprinted with permission of Millward Brown.

• Marketing research consultants Millward Brown and WPP have
developed the BrandZ model of brand strength, at the heart of
which is the BrandDynamics pyramid. According to this model,
brand building follows a series of steps (see Figure 10.3). For
any one brand, each person interviewed is assigned to one
level of the pyramid depending on their responses to a set of
questions. The BrandDynamics Pyramid shows the number of
consumers who have reached each level.
• Bonding. Rational and emotional attachments to the brand to
the exclusion of most other brands
• Advantage. Belief that the brand has an emotional or rational
advantage over other brands in the category
• Performance. Belief that it delivers acceptable product
performance and is on the consumer’s short-list
• Relevance. Relevance to consumer’s needs, in the right price
range or in the consideration set
• Presence. Active familiarity based on past trial, saliency, or
knowledge of brand promise
• There are more consumers at the lower levels, so the
challenge for marketers is to help them move up.

• The brand resonance model also views brand building as
an ascending series of steps, from bottom to top:
(1) ensuring customers identify the brand and associate it
with a specific product class or need;
(2) firmly establishing the brand meaning in customers’
minds by strategically linking a host of tangible and
intangible brand associations;
(3) eliciting the proper customer responses in terms of
brand-related judgment and feelings; and
(4) converting customers’ brand response to an intense,
active loyalty.
According to this model, enacting the four steps means
establishing a pyramid of six “brand building blocks” as
illustrated in Figure The model emphasizes the duality of
brands—the rational route to brand building is on the left
side of the pyramid and the emotional route is on the right
side.

• According to Keller (2004), the building blocks
for establishing a strong brand, which he
represented with the help of the pyramid,
wherein instituting a proper brand identity
forms the first step and the base of the
pyramid. This is followed by crafting a suitable
brand meaning bringing forth the right brand
response from the consumers, which leads to
creating the right brand relationships at the
top of the pyramid.

• Brand identity: it was found that the
manufacturer’s corporate brand name played an
important role in developing brand identity.
• Brand Meaning brand meaning includes the
performance of the product rather than the
brand elements like name and slogans. The user
profiles and purchase and usage situations have
special relevance in brand imagery. The
performance of the brand in varies situations and
the personality, values and history are part of the
image.

• Brand response: it relates to how consumer
reacts or respond to marketing activities of
the brand and meaning they derive from it. It
depicts how customer think ( i.e brand
judgment, which is rational aspects) or feel (
i.e brand feeling which is emotional aspect)
about the brand.

• Brand resonance : is developed when the
customer form the relationship with the brand
and feel in sync with the brand.
• Brand resonance is directly proportional to
the depth of the psychological bond the
customers have built and the level of activity
generated due to this.
• Ex- Royal Indians Enfield Owners Club (RIEOC
)

Aaker’s Brand Equity model
In his Brand Equity model, David A. Aaker identifies five brand
equity components:
(1) brand loyalty, (2) brand awareness, (3) perceived quality, (4)
brand associations and (5) other proprietary assets.
Aaker defines brand equity as the set of brand assets and
liabilities linked to the brand – its name and symbols – that add
value to, or subtract value from, a product or service. These
assets include brand loyalty, name awareness, perceived quality
and associations. This definition stresses ‘brand-added value’;
however, his model does not make a strict distinction between
added value for the customer/ consumer and added value for
the brand owner/ company.

Apart from the five components, the model also
reflects indicators (and/or consequences) of the
pursued branding policy. It goes without saying that
brand equity will rise as brand loyalty increases, brand
name awareness increases, perceived quality
increases, brand associations become stronger (and
more positive), and the number of brand-related
proprietary assets increase. The model also provides
insight into the criteria that indicate to what degree
actual value is created with both consumer and
company due the pursued branding policy. David
Aaker’s Brand Equity Model defines the five following
brand equity components:

Brand loyalty
The extent to which people are loyal to a brand is expressed in
the following factors:
– Reduced marketing costs (hanging on to loyal customers is
cheaper than charming potential new customers)
– Trade leverage (loyal customers represent a stable source of
revenue for the distributive trade)
– Attracting new customers (current customers can help boost
name awareness and hence bring in new customers)
– Time to respond to competitive threats (loyal customers that
are not quick to switch brands give a company more time to
respond to competitive threats)

Brand awareness
The extent to which a brand is known among the public, which
can be measured using the following parameters:
– Anchor to which associations can be attached (depending on the
strength of the brand name, more or fewer associations can be
attached to it, which will, in turn, eventually influence brand
awareness)
– Familiarity and liking (consumers with a positive attitude
towards a brand, will talk about it more and spread brand
awareness)
– Commitment to a brand.
– Brand to be considered during the purchasing process (to what
extent does the brand form part of the evoked set of brands in a
consumer’s mind)

Perceived quality
The extent to which a brand is considered to provide good quality
products can be measured on the basis of the following five criteria:
– The quality offered by the product/ brand is a reason to buy it
– Level of differentiation/ position in relation to competing brands
– Price (as the product becomes more complex to assess, and status is
at play, consumers tend to take price as a quality indicator)
– Availability in different sales channels (consumers have a higher
quality perception of brands that are widely available)
– The number of line/ brand extensions (this can tell the consumer
the brand stands for a certain quality guarantee that is applicable on a
wide scale)

Associations
• The measures are meant to understand how
the brand is associated in the minds of the
customers and how it is different from the
competitors in same product/ service
category.
• Brand Personality
• Perceived value

Other proprietary
• The competitive advantage
• Trade marks
• Channel relationship

• The initial choices for the brand elements or identities
making up the brand includes brand names, URLs, logos,
symbols, characters, spokespeople, slogans, jingles,
packages, and signage. Microsoft chose the name Bing for
its new search engine because it felt it unambiguously
conveyed search and the “aha” moment of finding what a
person is looking for. It is also short, appealing, memorable,
active, and effective multiculturally.
• Marketers also have to choose the product and service and
all accompanying marketing activities and supporting
marketing programs. Virgin Mobile, one of the later
entrants in the mobile service space in India, uses edgy and
humorous advertisements that depict pranks and
mischievous acts by youngsters. These advertisements
connect with young consumers and help the brand in
creating an edgy attitude with a touch of irreverence.

• Other associations indirectly transferred to the brand
by linking it to some other entity (a person, place, or
thing)—Airtel, the GSM mobile phone service from
Bharati Airtel Limited, uses A. R. Rahman, the Oscar-
winning music composer, as a brand endorser in its
advertisements. The signature tune of the brand
composed by A. R. Rahman has become one of the
most downloaded ringtones in the history of
telecommunications. Recently, the brand changed the
logo by interpreting the letter “a” in the brand name to
graphically represent “air” and by changing the color to
a deeper red that has a positive meaning, especially in
the African continent where the brand is developing
strong footprints.

Brand Elements
• Brand names
• Slogans
• Characters
• Symbols
• Logos
• URLs

Product Levels
•In Planning its market offerings the marketer
needs to address 5 product levels.
•Each level adds more customer values, and
five clubbed together constitute the a
customer- value hierarchy.

Five Product Levels
The
Fundamental
Level

•The Fundamental level is the core benefit: The
product / service or benefit the customer is really
interested in buying.
( Ex. A hotel guest is buying rest and sleep)
•The second level, the marketer must turn the
core benefits into basic product.
( Ex. The Hotel room includes a bed, bathroom, working
table, desk, and dressing table.)
•At the third level, the marketer prepares an
expected product, a set of attributes and
conditions buyer normally expect when they
purchase the product or service.
(Ex. Hotel guests minimally expect a clean bed,
fresh towels, working lights and water facility and at
last relative degree of quiet environment)

• The forth level, the marketer prepares an augment
product that exceeds customer expectations. By
providing more then the expected benefits to the
customer at a price.
• The fifth and final level stands Potential Product,
which encompasses all the possible augmentation
and transformations the product and offering might
undergo in future. Here marketer try to find new
ways to satisfy consumer and also distinguish his/her
offering from the competition.
• As the competition increases, marketer try to provide
more augmented products/services to induce the
customer to buy in turn enhance consumption
system.

•Consumption system is defined as the set of
related tasks performed by the user to acquire
and consume the identified product or services
to meet the needs/wants/ demands.

Product Classification Schemes
Durability
Tangibility
Use

Durability and Tangibility
Nondurable goods
Durable goods
Services
Are tangible goods normally
consumed in One or few Uses
Are tangible goods that normally
survive more days / uses
Are intangible, inseparable, perishable,
that normally require more Quality
Control (QC), supplier credibility and
adaptability.

Consumer Goods Classification
Convenience
Shopping
Specialty
Unsought
Goods which are purchased frequently,
immediately with minimal involvement.
Goods which are purchased by consumers
by comparing the characteristics, such as
quality, price, style and suitability. Most of
the time they are durable goods
Goods which are purchased by consumers
for special purpose. They are exclusive
goods, Customer make a special effort to
buy or purchase these products or
services
The Goods that consumers are not
normally aware about think of buying.

Industrial Goods Classification
•Materials and parts: Raw Materials and
Manufactured materials and parts
•Capital items: Are long-lasting goods that
facilitate developing or managing the
finished products.
•Supplies/business services: are short
term goods and services that facilitate
developing or managing the finished
products.

Materials and Parts
•Goods that enter the Manufacturer’s
Product completely.
•They are broadly classified into 2 classes
Raw Materials Manufactured materials
and parts
Farm Products Natural Products Component Materials Component Parts

Manufactured Materials and Parts
•Usually fabricated
for further use.
•Ex. Yarn, Pig iron,
etc.
•Price and Supplier
reliability key
components in
buying decision.
• Enter the finished
product with no further
change in the form.
• Ex. Small motors, Tires
etc.
• Price and Service are
major marketing
considerations.
• Most manufactured
materials are directly
sold to the users
Component Materials Component Parts

Capital Items
• Building and Heavy
Equipment's(HE)
• Factories and offices,(Buildings)
generators and elevators ( Heavy
Equipment's)
• HE. Are brought directly from
the producers/ manufactures.
• Personal selling is the tool used
by the marketer to promote the
products.
• Portable factory equipment's
and office equipment's.
• Ex. Small machine tools, PC,
etc.
• Personal selling is the tool used
by the marketer to promote
the products, but to cover
greater geographical area
intermediaries are used.
Installations Equipment's

Supplies and Business Services
• Paints brooms, nails etc.
• The materials used to over come
ware and tare problems.
• The marketing technique used in
this is straight rebuy.
• Marketed through
intermediaries.
• Price and after sales service
import considerations in
decision making
• Lubricants, coal, office
stationary items.
• The materials that are used for
support manufacturing.
• The marketing technique used in
this is straight rebuy.
• Marketed through
intermediaries.
• Price and after sales service
import considerations in
decision making
Maintenance and repair items Operating supplies

Product Differentiation
•Product form
•Features
•Customization
•Performance
•Conformance
•Durability
•Reliability
•Repairability
•Style

Products can be differentiated in many ways including:
Form, features, customization, performance quality,
conformance quality, durability, reliability, reparability,
and style.
•Many products can be differentiated in form—the size,
shape, or physical structure of a product.
•Most products can be offered with varying features that
supplement their basic function.
•Marketers can differentiate products by customizing
them.
•Most products occupy one of four performance levels:
low, average, high, or superior. Performance quality is the
level at which the product’s primary characteristics
operate.

• Buyers expect a high conformance quality, the degree to
which all produced units are identical and meet promised
specifications.
• Durability, a measure of the product’s expected operating
life under natural or stressful conditions, is a valued
attribute for vehicles, kitchen appliances, and other durable
goods.
• Reliability is a measure of the probability that a product
will not malfunction or fail within a specified time period.
• Reparability measures the ease of fixing a product when it
malfunctions or fails. Ideal reparability would exist if users
could fix the product themselves with little cost in money
or time.
• Style describes the product’s look and feel to the buyer. It

Service Differentiation
•Ordering ease
•Delivery
•Installation
•Customer training
•Customer consulting
•Maintenance and
repair
•Returns

• The main service differentiators are ordering ease,
delivery, installation, customer training, customer
consulting, and maintenance and repair.
• The key to competitive success may lie in adding valued
services and improving product quality.
• Ordering ease refers to how easy it is for the customer to
place an order with the company.
• Delivery refers to how well the product or service is
brought to the customer. It includes speed, accuracy, and
care throughout the process.
• Installation refers to the work done to make a product
operational in its planned location.
• Customer training helps the customer’s employees use
the vendor’s equipment properly and efficiently.

• Customer consulting includes data, information
systems, and advice services the seller offers to
buyers.
• Maintenance and repair programs help customers
keep purchased products in good working order.
• Product returns can be thought about in two ways:
• Controllable returns result from problems or errors by the
seller or customer and can mostly be eliminated with
improved handling or storage, better packaging, and
improved transportation and forward logistics by the seller
or its supply chain partners.
• Uncontrollable returns result from the need for customers
to actually see, try, or experience products in person to
determine suitability and can’t be eliminated by the
company in the short run through any of these means

• As competition intensifies, design offers a potent way
to differentiate and position a company’s products and
services.
• Design is the totality of features that affect how a
product looks, feels, and functions to a consumer.
• Design offers functional and aesthetic benefits and
appeals to both our rational and emotional sides.
• Well-designed features can help differentiate a product
from others in the market. Hawkins is a brand that is
known for its functional and innovative designs.

The Product Hierarchy
Need family
Product family
Product class
Product line
Product type
Item

• The product hierarchy stretches from basic needs
to particular items that satisfy those needs.
• A product system is a group of diverse but related
items that function in a compatible manner. A
product mix is the set of all products and items a
particular seller offers for sale.
• Product line analysis: companies develop a basic
platform and modules of a product line that can
be added to meet different customer
requirements and lower production costs.
Managers need to know the sales and profits of
each item in their line to determine which items
to build, maintain, harvest, or divest, as well as
each product line’s market profile.
• Product line length is influenced by company
objectives and tend to lengthen over time.

The product hierarchy stretches from basic needs to particular
items that satisfy those needs. E.g., life insurance.
1. Need family—The core need that underlies the existence of a
product family. Example: Financial security.
2. Product family—All the product classes that can satisfy a core
need with reasonable effectiveness. Example: savings and income.
3. Product class—A group of products within the product family
recognized as having a certain functional coherence, also known as
a product category. Example: financial instruments.
4. Product line—A group of products within a product class that are
closely related because they perform a similar function, are sold to
the same customer groups, are marketed through the same outlets
or channels, or fall within given price ranges. A product line may
consist of different brands, or a single family brand, or individual
brand that has been line extended. Example: life insurance.

5. Product type—A group of items within a
product line that share one of several possible
forms of the product. Example: term life
insurance.
6. Item (also called stock-keeping unit or
product variant)—A distinct unit within a brand
or product line distinguishable by size, price,
appearance, or some other attribute. Example:
Prudential renewable term life insurance.

Need Family
The core need that
underlies the existence of
a product family.
Core need is thirst

• Product hierarchy stretches from basic needs to particular
items that satisfy those needs. We can identify six levels
of product hierarchy.
• Need Family : The core need that underlies the existence
of a product family.
• Product Family- All the product class that can satisfy a
core need with reasonable effectiveness.
• Product Class – A group of the products within a product
family recognized as having a certain functional
coherence , also known as product category.
• Product line – a group of the products within a product
class that are closely related because they perform a
similar function, a sold to same customer groups
marketed to the same outlets or channels.

• Product type – A group of items within a product line that
share one of several possible forms of the product.
• Items- also called as SKU or product variant- A distinct
unit with in a brand or a product line, distinguishable by
size, price, appearance or any other attributes.

Line Stretching
Down-Market Stretch
Up-Market Stretch
Two-Way Stretch

• Line stretching occurs when a company
lengthens its product line beyond its current
range.
• Line filling occurs when a company lengthens its
product line by adding more items within the
present range.
• Line modernization, featuring, and pruning:
Companies continuously modernize product
lines to encourage customer migration to higher-
valued, higher-priced items; boost demand for
certain product lines by featuring them; and
optimize their brand portfolios by focusing on
core brand growth and concentrating resources
on the biggest and most established brands.

What Is Cobranding?
In co-branding—also called dual
branding or brand bundling—two or
more well-known brands are combined
into a joint product or marketed
together in some fashion.

What is the Fifth P?
Packaging, sometimes called the
5th P, is all the activities of designing
and producing the container for a
product.

Factors Contributing to the
Emphasis on Packaging
•Consumer affluence
•Company/brand image
•Innovation opportunity

Objectives of Packaging
• Identify the brand
• Convey descriptive and persuasive information.
• Aid product consumption
• Build the assurance.

Designing and
Managing
Services

Chapter Questions
• How do we define and classify services and
how do they differ from goods?
• How can we achieve excellence in services
marketing?
• How can we improve service quality?
• How can goods marketers improve customer
support services?

What is Services?
• A service is any act of
performance that one party
can offer another that is
essentially intangible and
does not result in the
ownership of anything; its
production may or may not
be tied to a physical product.

Major Services we come across in our
routine life
• The Transportation Service
• Milk Distribution service
• Media Service
• Mobile Service
• Education Service
• Hospital Service
• Hotel Service… Etc.

Categories of Service Mix
• Pure tangible good
• Good with accompanying services
• Hybrid
• Service with accompany goods
• Pure service

The service component can be a minor or a major part of the
total offering. We distinguish five categories of offerings.
• A pure tangible good is a tangible good such as soap,
toothpaste, or salt with no accompanying services.
• A tangible good with accompanying services is a tangible
good, like a car, computer, or cell phone, accompanied by
one or more services.
• A hybrid is an offering, like a restaurant meal, of equal parts
goods and services.
• A major service with accompanying minor goods and
services refers to a major service, like air travel, with
additional services or supporting goods such as snacks and
drinks. This offering requires a capital-intensive good—an
airplane—for its realization, but the primary item is a
service.
• A pure service is primarily an intangible service, such as
babysitting, psychotherapy, or massage.

Service Distinctions
• Equipment-based or people-based
• Service processes
• Client’s presence required or not
• Personal needs or business needs
• Objectives

Continuum of Evaluation for
Different Types of Products
Source: Valarie A. Zeithaml, “How
Consumer
Evaluation Processes Differ between
Goods and
Services,” James H. Donnelly and
William R. George,
eds., Marketing of Services (Chicago:
American
Marketing Association, 1981). Reprinted
with permission
of the American Marketing Association.

Distinctive Characteristics
of Services
Intangibility
Inseparability
Variability
Perishability

• Service companies can try to demonstrate their service
quality through physical evidence and presentation.
Suppose a bank wants to position itself as the “fast” bank.
It could make this positioning strategy tangible through
any number of marketing tools.
1. Place—The exterior and interior should have clean lines.
The layout of the desks and the traffic flow should be
planned carefully. Waiting lines should not get overly long.
2. People—Employees should be busy, but there should be
a sufficient number to manage the workload.
3. Equipment—Computers, copy machines, desks and
ATMs should look like, and be, state of the art.
4. Communication material—Printed materials—text and
photos—should suggest efficiency and speed.
5. Symbols—The bank’s name and symbol could suggest
fast service.
6. Price—The bank could advertise that it will deposit Rs. 50
in the account of any customer who waits in line more than
five minutes.

Inseparability
Provider–client interaction is a special feature of
services marketing.

Variability
Steps to increase quality control:
1.Invest in good hiring and training procedures
2.Standardize the service-performance process
3.Monitor customer satisfaction

Matching Demand and Supply
Demand side
• Differential pricing
• Nonpeak demand
• Complementary
services
• Reservation systems
Supply side
• Part-time employees
• Increased consumer
participation
• Shared services
• Facilities for future
expansion

Figure -Root Causes of Customer
Failure
Source: Stephen Tax, Mark Colgate, and David
Bowen, MIT Sloan Management Review (Spring
2006): pp. 30–38. ©2006 by Massachusetts
Institute of Technology. All rights reserved.
Distributed by Tribune Media Services.

Solutions to Customer Failures
• Redesign processes and redefine customer
roles to simplify service encounters
• Incorporate the right technology to aid
employees and customers
• Create high-performance customers by
enhancing their role clarity, motivation, and
ability
• Encourage customer citizenship where
customers help customers

Figure -Types of Marketing in Service
Industries

Table -Factors Leading to Customer
Switching Behavior
• Pricing
• Inconvenience
• Core Service Failure
• Service Encounter Failures
• Response to Service Failure
• Competition
• Ethical Problems
• Involuntary Switching

Improving Service Quality
• Listening
• Reliability
• Basic service
• Service design
• Recovery
• Fair play
• Teamwork
• Employee research

Figure- Service-Quality Model
Sources: A. Parasuraman, Valari
A. Zeithaml, and Leonard L. Berry
“A Conceptual Model of Service
Quality and Its Implications for
Future Research,” Journal of
Marketing (Fall 1985), p. 44.
Reprinted with permission of the
American Marketing Association.
The model is more fully discussed
or
elaborated in Valarie Zeithaml,
Mary Jo Bitner, and Dwayne D.
Gremler, Services Marketing:
Integrating Customer Focus acros
the Firm, 4th ed. (New York:
McGraw-Hill, 2006).

1. Gap between consumer expectation and management
perception—Management does not always correctly perceive
what customers want. Hospital administrators may think
patients want better food, but patients may be more
concerned with nurse responsiveness.
2. Gap between management perception and service-quality
specification Management might correctly perceive
customers’ wants but not set a performance standard.
Hospital administrators may tell the nurses to give “fast”
service without specifying it in minutes.
3. Gap between service-quality specifications and service
delivery—Employees might be poorly trained, or incapable of
or unwilling to meet the standard; they may be held to
conflicting standards, such as taking time to listen to
customers and serving them fast.

4. Gap between service delivery and external
communications—Consumer expectations are
affected by statements made by company
representatives and ads. If a hospital brochure
shows a beautiful room but the patient finds it to
be cheap and tacky looking, external
communications have distorted the customer’s
expectations.
5. Gap between perceived service and expected
service—This gap occurs when the consumer
misperceives the service quality.

Determinants of Service Quality
• Reliability- The ability to perform the promised
service dependably and accurately.
• Responsiveness- Willingness to help customers
and provide prompt service.
• Assurance- The knowledge and courtesy of
employees and their ability to convey trust and
confidence.
• Empathy- The provision of caring,
individualized attention to customers.
• Tangibles- The appearance of physical facilities,
equipment, personnel, and communication
materials.

For Review
• How do we define and classify services and
how do they differ from goods?
• What are the new services realities?
• How can we achieve excellence in services
marketing?
• How can we improve service quality?
• How can goods marketers improve customer
support services?

13
Developing Pricing
Strategies and
Programs

Chapter Questions
• How do consumers process and evaluate
prices?
• How should a company set prices initially for
products or services?
• How should a company adapt prices to meet
varying circumstances and opportunities?
• When should a company initiate a price
change?
• How should a company respond to a
competitor’s price challenge?

Synonyms for Price
• Rent
• Tuition
• Fee
• Fare
• Rate
• Toll
• Premium
• Honorarium
• Special assessment
• Bribe
• Dues
• Salary
• Commission
• Wage
• Tax

The Internet Changes the
Pricing Environment –
By Providing Information

Common Pricing Mistakes
• Determine costs and take traditional industry
margins
• Failure to revise price to capitalize on market
changes
• Setting price independently of the rest of the
marketing mix
• Failure to vary price by product item, market
segment, distribution channels, and
purchase occasion

Consumer Psychology
and Pricing
• Reference prices
• Price-quality inferences
• Price endings
• Price cues

Table 13.1 Possible Consumer
Reference Prices
• “Fair price”
• Typical price
• Last price paid
• Upper-bound price
• Lower-bound price
• Competitor prices
• Expected future
price
• Usual discounted
price

Steps in Setting Price
• Select the price objective
• Determine demand
• Estimate costs
• Analyze competitor price mix
• Select pricing method
• Select final price

Step 1: Selecting the Pricing Objective
• Survival
• Maximum current profit
• Maximum market share
• Maximum market skimming
• Product-quality leadership

Step 2: Determining Demand
• Price sensitivity
• Estimate demand curves
• Price elasticity of demand

Figure 13.2 Cost Per Unit at Different
Levels of Production

Cost Terms and Production
• Fixed costs
• Variable costs
• Total costs
• Average cost
• Cost at different levels of
production

Figure 13.3 Cost per Unit as a
Function of Accumulated
Production

Target Costing
Market research establishes a new product’s
desired functions and the
price at which it will sell, given its appeal and
competitors’ prices. This price less desired
profit margin leaves the target cost the
marketer must achieve.

Step 4: Analyzing Competitor’s Costs
 Competitors’ costs
 Competitors’ prices
 Possible price reactions

The Three Cs Model for Price-Setting

Step 5: Selecting a Pricing Method
• Markup pricing
• Target-return pricing
• Perceived-value pricing
• Value pricing
• Going-rate pricing
• Auction-type pricing

Break-Even Chart for
Determining Target-Return
Price and Break-Even Volume

Perceived-Value Pricing
Customer’s perceived-value
 Performance
 Warranty
 Customer support
 Reputation

Auction-Type Pricing
English
Dutch
Sealed-Bid

Step 6: Selecting the Final Price
• Impact of other marketing activities
• Company pricing policies
• Gain-and-risk sharing pricing
• Impact of price on other parties

Geographical Pricing
Countertrade forms:
• Barter
• Compensation deal
• Buyback arrangement
• Offset

Price Discounts and Allowances
• Discount
• Quantity discount
• Functional discount
• Seasonal discount
• Allowance

Promotional Pricing Tactics
• Loss-leader pricing
• Special-event pricing
• Special customer pricing
• Cash rebates
• Low-interest financing
• Longer payment terms
• Warranties and service contracts
• Psychological discounting

Differentiated Pricing
• Customer-segment pricing
• Product-form pricing
• Image pricing
• Channel pricing
• Location pricing
• Time pricing
• Yield pricing

Traps in Price Cutting Strategies
• Low-quality trap
• Fragile-market-share trap
• Shallow-pockets trap
• Price-war trap

Methods for Increasing Prices
• Delayed quotation pricing
• Escalator clauses
• Unbundling
• Reduction of discounts

Brand Leader Responses to Competitive Price
Cuts
• Maintain price
• Maintain price and add value
• Reduce price
• Increase price and improve quality
• Launch a low-price fighter line

For Review
• How do consumers process and evaluate
prices?
• How should a company set prices initially for
products or services?
• How should a company adapt prices to meet
varying circumstances and opportunities?
• When should a company initiate a price
change?
• How should a company respond to a
competitor’s price challenge?

Designing and Managing
Integrated Marketing Channels

Chapter Questions
• What is a marketing channel system and value
network?
• What work do marketing channels perform?
• How should channels be designed?
• What decisions do companies face in managing
their channels?
• How should companies integrate channels and
manage channel conflict?
• What are the key issues with e-commerce and
m-commerce?

What Is a Marketing Channel?
A marketing channel system is the
particular set of interdependent
organizations involved in the process of
making a product or service available for
use or consumption.

Some intermediaries—such as wholesalers and
retailers—buy, take title to, and resell the
merchandise; they are called merchants.
Others—brokers, manufacturers’ representatives,
sales agents—search for customers and may
negotiate on the producer’s behalf but do not take
title to the goods; they are called agents.
Still others—transportation companies, independent
warehouses, banks, advertising agencies—assist in
the distribution process but neither take title to goods
nor negotiate purchases or sales; they are called
facilitators. Landmark, a Tata enterprise, is India’s
largest books and music retailer.

Channels and
Marketing Decisions
• Push strategy
• Pull strategy

• In managing its intermediaries, the firm must decide how
much effort to devote to push versus pull marketing.
• A push strategy uses the manufacturer’s sales force, trade
promotion money, or other means to induce intermediaries
to carry, promote, and sell the product to end users.
• A push strategy is particularly appropriate when there is
low brand loyalty in a category, brand choice is made in
the store, the product is an impulse item, and product
benefits are well understood.
• In a pull strategy the manufacturer uses advertising,
promotion, and other forms of communication to persuade
consumers to demand the product from intermediaries,
thus inducing the intermediaries to order it.
• Pull strategy is particularly appropriate when there is high
brand loyalty and high involvement in the category, when
consumers are able to perceive differences between
brands, and when they choose the brand before they go to
the store.

Hybrid channels
Hybrid channels or multichannel marketing
occurs when a single firm uses two or more
marketing channels to reach customer
segments.

Buyer Expectations for
Channel Integration
• Ability to order a product online and pick it
up at a convenient retail location
• Ability to return an online-ordered product
to a nearby store
• Right to receive discounts based on total
online and offline purchases

Table -Channel Member Functions
• Gather information
• Develop and disseminate persuasive
communications
• Reach agreements on price and terms
• Acquire funds to finance inventories
• Assume risks
• Provide for storage
• Provide for buyers’ payment of their bills
• Oversee actual transfer of ownership

Figure -Marketing Flows
in the Marketing Channel
for Forklift Trucks

Marketing Channel Levels
 Zero-level channel (direct marketing channel)
 One-level channel
 Two-level channel
 Three-level channel

Reverse-Flow Channels
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall
Reverse-flow channels are important to:
(1)reuse products or containers (such as
refillable chemical-carrying drums);
(2)refurbish products for resale (such as circuit
boards or computers)
(3)recycle products (such as paper)
(4)dispose of products and packaging

Designing a
Marketing Channel System
• Analyze customer needs
Consumer may choose the channels they prefer based on
the price, product assortment and convenience, as well as
shopping goals ( economic, social and experimental)
• Establish channel objectives
Marketers should state their channel objectives in terms of
service output levels and associated cost and support levels

• Identify major channel alternatives
Each channel – from sales forces to agents, distributors, dealers,
direct mail, telemarketing and internet has unique strength and
weakness.
Sales force of company can handle complex products and
transactions, but they are expensive. Internet is cost effective
medium but fail to nitty-gritty of complex products. Distributors
can pull the rabbit out hat but company may loose the direct
contact with customers.
The on distributive channel depends on three major factors 1)
Type of Intermediaries 2) Number of intermediaries 3) Term and
responsibilities of channel members
• Evaluate major channel alternatives
Economic Criteria and control and adaptive criteria

Identifying Channel Alternatives
• Types of intermediaries
• Number of intermediaries
• Terms and responsibilities

Number of Intermediaries
• Exclusive
• Selective
• Intensive

Terms and Responsibilities
of Channel Members
• Price policy
• Condition of sale
• Distributors’ territorial rights
• Mutual services and responsibilities

Figure- The Value-Adds versus
Costs of Different Channels
Source: Oxford Associates, adapted from Dr. Rowland T. Moriarty. Cubex Corp.

Channel-Management Decisions
• Selecting channel members
• Training channel members
• Motivating channel members
• Evaluating channel members
• Modifying channel members

Channel Integration and Systems
• Vertical marketing
systems
– Corporate VMS
– Administered VMS
– Contractual VMS
• Horizontal
marketing systems
• Multichannel
systems

Integrated Marketing Channel System
An integrated marketing channel system is one in
which the strategies and tactics of selling through
one channel reflect the strategies and tactics of
selling through one or more other channels.

Channel Conflict
• What types of conflict arise in channels?
A- Horizontal Conflict, Vertical conflict, and Multi channel
conflict
• What causes conflict?
A- Goal incompatibility, unclear roles, difference in perception,
and relationship with manufacturer
• What can marketers do to resolve it?
A- Strategic justification, employee exchange, co-potation ,
Mediation among manufacturer and channel partners, joint
membership, finally legal resource.

Causes of Channel Conflict
• Goal incompatibility
• Unclear roles and rights
• Differences in perception
• Intermediaries’ dependence on
manufacturer

Table - Strategies for Managing
Channel Conflict
• Strategic
justification
• Dual compensation
• Superordinate
goals
• Employee
exchange
• Joint memberships
• Cooptation
• Diplomacy
• Mediation
• Arbitration
• Legal recourse

E-Commerce
Pure-click
Brick-and-click

For Review
• What is a marketing channel system and value
network?
• What work do marketing channels perform?
• How should channels be designed?
• What decisions do companies face in managing
their channels?
• How should companies integrate channels and
manage channel conflict?
• What are the key issues with e-commerce and
m-commerce?

16
Designing and
Integrating Marketing
Communications

Chapter Questions
• What is the role of marketing
communications?
• How do marketing communications work?
• What are the major steps in developing
effective communications?
• What is the communications mix and how
should it be set?
• What is an integrated marketing
communications program?

Modes of Marketing Communications
• Advertising
• Sales promotion
• Events and
experiences
• Public relations
and publicity
• Direct marketing
• Interactive
marketing
• Word-of-mouth
marketing
• Personal selling

Table - Communication Platforms
Advertising
• Print and broadcast ads
• Packaging inserts
• Motion pictures
• Brochures and booklets
• Posters
• Billboards
• POP displays
• Logos
• Videotapes
Sales Promotion
• Contests, games,
sweepstakes
• Premiums
• Sampling
• Trade shows, exhibits
• Coupons
• Rebates
• Entertainment
• Continuity programs

Table -Communication Platforms
(Contd)
Events/ Experiences
• Sports
• Entertainment
• Festivals
• Art
• Causes
• Factory tours
• Company museums
• Street activities
Public Relations
• Press kits
• Speeches
• Seminars
• Annual reports
• Charitable donations
• Publications
• Community relations
• Lobbying
• Identity media

Table -Communication Platforms
(Contd)
Personal Selling
• Sales presentations
• Sales meetings
• Incentive programs
• Samples
• Fairs and trade shows
Direct Marketing
• Catalogs
• Mailings
• Telemarketing
• Electronic shopping
• TV shopping
• Fax mail
• E-mail
• Voice mail
• Websites

Figure -Elements in the
Communications Process

Figure Micromodels of
Communications
Sources: E. K. Strong, The
Psychology of Selling
(New York: McGraw-Hill, 1925),
p. 9; Robert J.
Lavidge and Gary A. Steiner, “A
Model for Predictive
Measurements of Advertising
Effectiveness,” Journal
of Marketing (October 1961), p.
61; Everett M.
Rogers, Diffusion of Innovation
(New York: Free
Press, 1962), pp. 79–86;
dvarious sources.

An Ideal Ad Campaign
• The right consumer is exposed to the
message at the right time and place
• The ad causes consumer to pay attention
• The ad reflects consumer’s level of
understanding and behaviors with product
• The ad correctly positions brand in terms
of points-of-difference and points-of-parity
• The ad motivates consumer to consider
purchase of the brand
• The ad creates strong brand associations

Steps in Developing Effective Communications
• Identify target audience
• Determine objectives
• Design communications
• Select channels
• Establish budget
• Decide on media mix
• Measure results/manage IMC

Communications Objectives
• Category need
• Brand awareness
• Brand attitude
• Purchase intention

Designing the Communications
• Message strategy
• Creative strategy
• Message source

Creative Strategy
• Informational and transformational
appeals

Creative Strategy (Contd)
 Positive and Negative Appeals

Message Source
The three most often identified sources of
credibility are:
 expertise,
 trustworthiness,
 and likability.

Select Communication Channels
Personal
Nonpersonal

Establish the Budget
• Affordable
• Percentage-of-sales
• Competitive parity
• Objective-and-task

Objective-and-Task Method
• Establish the market share goal.
• Determine the percentage that should be reached.
• Determine the percentage of aware prospects that should
be persuaded to try the brand.
• Determine the number of advertising impressions per 1%
trial rate.
• Determine the number of gross rating points that would
have to be purchased.
• Determine the necessary advertising budget on the basis of
the average cost of buying a GRP.

Characteristics of the Mix
Advertising
• Pervasiveness
• Amplified
expressiveness
• Control
Sales Promotion
• Ability to draw
attention
• Incentive
• Invitation

Characteristics of the Mix (Contd)
Public Relations and
Publicity
• High credibility
• Ability to reach
hard-to-find buyers
• Dramatization
Events and
Experiences
• Relevant
• Engaging
• Implicit

Characteristics of the Mix (Contd)
Direct Marketing
• Customized
• Up-to-date
• Interactive
Word-of-Mouth Marketing
• Influential
• Personal
• Timely
Personal Selling
• Personal
interaction
• Cultivation
• Response

Factors in Setting Communications Mix
• Type of product market
• Buyer-readiness stage
• Product life-cycle stage

Figure -Cost-Effectiveness
of Different Communication Tools

For Review
• What is the role of marketing
communications?
• How do marketing communications work?
• What are the major steps in developing
effective communications?
• What is the communications mix and how
should it be set?
• What is an integrated marketing
communications program?

19
Introducing New
Market Offerings

Chapter Questions
• What challenges does a company face in
developing new products and services?
• What organizational structures and
processes do managers use to oversee
new-product development?
• What are the main stages in developing
new products and services?

Chapter Questions
• What is the best way to manage the new-
product development process?
• What factors affect the rate of diffusion
and consumer adoption of newly launched
products and services?

Categories of New Products
New to the World
Additions
Improvements
Repositionings
Cost reductions

Factors That Limit
New Product Development
• Shortage of ideas
• Fragmented markets
• Social and governmental constraints
• Cost of development
• Capital shortages
• Faster required development time
• Shorter product life cycles

Table -Finding One Successful Product

What is a Venture Team?
• A venture team is a cross-functional group
charged with developing a specific product
or business.

Criteria for Staffing Venture Teams
• Desired team leadership style
• Desired level of leader expertise
• Team member skills and expertise
• Level of interest in concept
• Potential for personal reward
• Diversity of team members

Figure -New-Product Development
Decision Process

Ways to Find Great New Ideas
• Run informal sessions with customers
• Allow time off for technical people to putter
on pet projects
• Make customer brainstorming a part of
plant tours
• Survey your customers
• Undertake “fly on the wall” research to
customers

More Ways to Find Great Ideas
• Use iterative rounds with customers
• Set up a keyword search to scan trade
publications
• Treat trade shows as intelligence missions
• Have employees visit supplier labs
• Set up an idea vault

Marketing Management Core Concepts & Strategies

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