This document discusses marketing management and new product development. It begins with an introduction to marketing concepts like the marketing mix and marketing orientations. It then covers developing a marketing plan, including performing a situational analysis, setting objectives and strategies, and creating a budget. Product development stages are also summarized, from idea generation to business analysis. The document emphasizes that the goal of marketing is to understand and satisfy customer needs in a profitable way.

1. Marketing management
By
Dr. Raafat Youssef Shehata

2. Table of contents
 Introduction about marketing
 Components of marketing plan
 STP
 Product mix
 Pricing
 Distribution
 Promotional mix
 Budgeting

3. Marketing
Marketing is defined to be the process
responsible for anticipation, identification ,
and satisfaction of customer needs through
a profit

4. What is the relation between these 3 terms
ProductBrandLove mark

5. Brand versus product
“Products are made in the factory but
brands are created in the mind”
Walter Landon

6. Marketing manager
 He is the bridge between the company and the
customers
 His functions are (APIC)
Analysis
Planning
Implementation
Control

7. What are Consumers’ Needs,
Wants, and Demands?
Needs - state of felt
deprivation including
physical, social, and
individual needs i.e hunger
Wants - form that a human
need takes as shaped by
culture and individual
personality i.e. bread
Demands - human wants
backed by buying power i.e.
money

8. Production Concept
Product Concept
Selling Concept
Marketing Concept
Societal Marketing Concept
Marketing Management
Philosophies

9. Production concept
The production concept holds that consumers will
prefer products that are widely available and
inexpensive.

10. Product concept
-The product concept holds that consumers will favor those products that
offer the most quality, performance, or innovative features
-In order to compete effectively, the product needs to have features that
appeal to individual consumers. In a product-oriented firm, the
products are designed to incorporate a large number of features in
order to meet the needs of a large number of consumers.
Unfortunately, the cost becomes too high for most people, and of
course people do not want to pay for features that they are unlikely
ever to use.

11. Selling concept
The selling concept holds that consumers and
businesses, will ordinarily not buy enough of the
organization’s products, therefore, the
organization must undertake aggressive selling
and promotion effort.

12. Marketing concept
The marketing concept holds that the key to achieving
organizational goals consists of the company being more
effective than competitors in creating, delivering, and
communicating superior customer value to its chosen
target markets.
Reactive marketing orientation: understanding and meeting consumers’
expressed needs.
Proactive marketing orientation: researching or imagining latent
consumers’ needs through a “probe-and-learn” process
e.g. Wal Mart

13. Company Orientations towards
business
.
Marketing Concept
Reactive market
Understanding and meeting
consumers’ expressed needs
Proactive marketing
Finding latent consumers’
needs through a “probe-and-
learn” process.

14. Marketing Concept Evolution
Production Concept Consumers prefer products that are
widely available and inexpensive
Product Concept Consumers favor products that offer the
most quality, performance, and
innovative features
Selling Concept Consumers will buy products only if the
company aggressively promotes/sells
these products
Marketing Concept Focuses on needs/wants of target
markets & delivering value better than
competitors

15. Bad examples marketing
orientation
• Pampers in Japan
• Philips in China

16. The 4 P’s & 4 C’s of the
Marketing Mix
 4 P’s
 Product
 Price
 Place
 Promotion
 4 C’s
 Customer Solution
 Customer Cost
 Convenience
 Communication

17. Planning and budgeting
Chapter 2

18. Plan
-It is a way of achieving something
Example :the shopping list you take to the supermarket is
a simple example
-Planning includes:
1-Setting objectives
2-Selecting strategies , tactics and policies

19. Strategy ,Tactics and Objectives
-Strategy: the method used to achieve objectives
e.g. we will achieve our objective of increasing profits by growing
market share in existing market
-Tactics: how resources are deployed in an agreed
strategy
e.g. we will set up a new telephone call center and target new
customers
-Objectives: are quantified goals

20. The contents and structure
of the marketing plan
 The executive summary
 Situational analysis and target market
 Marketing objectives
 Marketing strategies
 Marketing tactics
 Marketing mix
 STP
 Schedules and budgets
 Implementation
 Control

21. Situational analysis
 SWOT analysis
 Gap analysis
 PESTEL analysis
 Market analysis
 Five forces analysis

22. SWOT analysis
Strengths (internal)
Weaknesses (internal)
Opportunities (external)
Threats (external)

23. Definitions
A particular skill or distinctive competence which
organization possesses & will aid in achieving its
stated goals
Strength
Any aspect of the company that may hinder the
achievement of stated goals.
Weakness
Any feature that creates advantageous conditions
to the firm in relation to a particular objective or
set of them
Opportunities
Any environmental development which present
problems & may hinder the achievement of org.
objectives
Threats

24. PESTEL analysis
 Political factors
 Economic factors
 Socio-cultural factors
 Technological factors
 Ecological
 Legal

25. Political
 Taxation policy
 Government policy
 Pressure group

26. Economic Factors
 Inflation
 Employment
 Disposable income
 Business cycles
 Energy availability and cost
 Others?

27. Socio-cultural factors
 Demographics
 Distribution of income
 Social mobility
 Lifestyle changes
 Consumerism
 Levels of education
 Others?

28. Culture
 Language
 Religion
 Superstitions
 Etiquette
 Customs
 Traditions
 Notion of time

29. Market analysis
 Market size
 Growth rate
 Market trends

30. Objectives
Objective should be SMART
S Specific
M Measurable
A Achievable
R Realistic
T Time related

31. Strategies
 SWOT strategies
 Competitive strategies (Porter )
 Growth strategies (Ansoff)

32. SWOT strategies
 Matching & Conversion are 2 major strategic options from a
SWOT analysis; to match the strengths to the opportunities & to
convert the weakness & threats to strengths & opportunities.
WeaknessStrength
ThreatsOpportunities
Conversion
Conversion

33. 1. Market
Penetration
2. Market
Development
3. Product
Development
4. Diversification
Existing
Markets
New
Markets
Existing
Products
New
Products
Product/Market Expansion
Grid

34. Market Penetration
 making more sales to current customers without
changing its products.
 How? Add new stores in current market areas,
improvements in advertising, prices, etc.

35. Market Development
 identify and develop new markets for its current
products.
 How? Review new demographic (senior
consumers) or geographic (Asian, European &
Australian) markets.

36. Product Development
 offering modified or new products to current
markets.
 How? Increasing food offerings, extend to
Frappuccino drinks.

37. Diversification
 start up or buy businesses outside current
products and markets.
 How? Currently testing two new restaurant
concepts – Cafe Starbucks and Circadia, or
branded casual clothing.

38. Porter’s Generic Strategies
Michael Porter has proposed three generic strategies
that provide a good starting point for strategic
thinking:
• Overall cost leadership (WalMart)
• Differentiation (Sainsbury)
• Focus.

39. The marketing budget
 How much the company intend to spend
Methods:
1. Task method
2. Percentage of sales
3. Competitive parity
4. All you can afford
5. Same as Last Time (S.A.L.T.)

40. S.T.P
Market segmentation
Market Targeting
Market Positioning

41. Market Segmentation
“Market segmentation is a natural result of the
vast differences among people.”
Donald Norman

42. Connecting With Customers
 Market Segmentation: determining distinct groups of
buyers (segments) with different needs, characteristics,
or behavior.
 Market Targeting: evaluating each segment’s
attractiveness and selecting one or more segments to
enter.
 Market Positioning: arranging for a product to occupy a
clear, distinctive, and desirable place relative to
competing products in the minds of target consumers.
i.e. Chevy Blazer is “like a rock.”

43. Steps in Market Segmentation,
Targeting, and Positioning

44. Segmentation Variables

45. Geographic segmentation
 Cars in California always have air conditioning
 Cars in Sweden have headlights that stay on
constantly because of the poor quality of the
light for much of the year

46. Psychographic segmentation
personality
 The home insurance market may segment
into those who afraid of crime , those who
afraid of natural disasters and those who are
afraid of accidental damage to their property

47. Lifestyle segmentation
The Jeep Cherokee is aimed at lifestyle segment
that favors an outdoor ,adventure-some ,fun-
seeking style of life

48. Targeting
Once the firm has identified its market-segment
opportunities, it has to decide how many and
which ones to target. Marketers are increasingly
combining several variables in an effort to
identify smaller, better-defined target groups.

50. Undifferentiated Marketing
 Appeals to a broad spectrum of people
 Efficient due to economies of scale
 Effective when most consumers have similar
needs
 Example: Wal-Mart

51. Differentiated Marketing
 Develops one or more products for each of several
customer groups with different product needs
 Appropriate when it is possible to identify one or
more segments with distinct needs for different types
of products
 Example: L’Oreal (Elseve, L’Oreal, Lancome)

52. Concentrated Marketing
 Entails focusing efforts on offering one or more
products to a single segment
 Useful for smaller firms that do not have the
resources to serve all markets
 Example: Rolex – Rolls Royce – Porsche

53. Positioning
How the customers are perceiving the
product versus other products in the
market

54. Domino’s positioning
 A good hot pizza, delivered to your door within
30 minutes of ordering, at a moderate price

55. Positioning criteria
1. Benefits
2. Specific product features e.g. speed
3. User category
4. Against another products
5. Occasion
6. Hybrid basis

56. Perceptual map
Brands can be positioned against competitive
brands on product maps

57. Chapter 4
Products and services

58. What is a Product?
 A PRODUCT is anything that can be offered to a market
for attention, acquisition, use, or consumption and that
might satisfy a want or need.
 Includes:
 Physical Objects
 Services
 Events
 Persons
 Places
 Organizations
 Ideas
 Combinations of the above

59. What is a Service?
 A SERVICE is a form of product that consist of activities,
benefits, or satisfactions offered for sale that are
essentially intangible and do not result in the ownership
of anything.
 Examples include:
 Banking
 Hotels
 Tax preparation
 Home repair services

60. Unsought Products
 New innovations
 Products consumers don’t
want to think about
 Require much advertising &
personal selling
i.e Life insurance, blood donation
Product Classifications:
Consumer
Specialty Products
 Special purchase efforts
 High price
 Unique characteristics
 Brand identification
 Few purchase locations
i.e Lamborghini, Rolex
Shopping Products
 Buy less frequently
 Higher price
 Fewer purchase locations
 Comparison shop
i.e Clothing, cars, appliances
Convenience Products
 Buy frequently & immediately
 Low priced
 Mass advertising
 Many purchase locations
i.e Candy, newspapers

61. Product portfolio
(product assortment or
product mix)
 A company product portfolio is all the product
lines and items that the company offers for sale
 Portfolio aspects:
-Width “breadth”
-Length
-Depth

62. Product Mix
Decisions
Procter & Gamble's Product Mix
Baby Care Beauty Care Fabric & Home
Care
Food &
Beverage
Crest Tartar
Protection
Crest Cavity
Protection
Crest Multicare
Six Toothpastes
in Line
Health Care
 Width – number of different product lines
 Length – total number of items the
company carries within product lines
 Depth – number of versions offered of
each product in line

63. P&G’s Product Width and
Depth

64. Strategic business unit
(SBU)
 A division , product line , or other profit center within the
parent company
Each of a firm’s Strategic Business Units (SBU ) has six
attributes:
1- A specific target market
2- Its own senior marketing executive
3- Control over its resources
4- Its own marketing strategy
5- Clear-cut competition
6- Distinct differential advantages

65. Question Marks
• High growth, low share
• Build into Stars or phase out
• Require cash to hold
market share
Stars
• High growth & share
• Profit potential
• May need heavy
investment to grow
Cash Cows
• Low growth, high share
• Established, successful
SBU’s
• Produce cash
Dogs
• Low growth & share
• Low profit potential
Relative Market Share
High Low
MarketGrowthRate
LowHigh
Analyzing Current SBU’s:
BCG Growth-Share Matrix
?

66. Criticisms of BCG
1-It concentrates only on 2 dimensions
2-The matrix assumes a relationship between
profitability and market share

67. Time
Product
Develop-
ment
Introduction
Profits
Sales
Growth Maturity Decline
Losses/
Investments ($)
Sales and
Profits ($)
Sales and Profits Over the Product’s Life From Inception to
Demise
Product Life Cycle

68. Criticisms of PLC
1. The stages are not always easily defined
2. Not all the products go through each stage
3. Strategic decisions can change the cycle
4. The life cycle varies between different industries

69. New-Product Development

70. Original
Products
Product
Improvements
Product
Modifications
New
Brands
Acquired
Companies
Acquired
Patents
Acquired
Licenses
New-Product Development
Strategy
Strategies for Obtaining New-Product Ideas

71. Degrees of newness
1. Completely new product
2. Partially new product
3. Major product change
4. Minor product change

72. Causes of New-Product
Failures
 One study estimated that as many as 80% of new
consumer packaged products fail.
 Only about 40% of new consumer products are around
5 years after introduction.
 Why?
 Overestimation of market size,
 Product design problems,
 Product incorrectly positioned, priced, or advertised,
 Product may have been pushed despite poor marketing
research findings,
 Costs of product development, or
 Competitive actions.

73. Major Stages in New-
Product Development

74. 1.Idea Generation
Customers
Employees
Distributors
Competitors
R & D
Consultants
Creative Thinking
Sources of
New-Product
Ideas
On Line
http://www.ideo.com

75. 2. Idea Screening
 Helps spot good ideas and drop poor ones as soon
as possible.
 Many companies have systems for rating and
screening ideas which estimate:
 Market Size
 Product Price
 Development Time & Costs
 Manufacturing Costs
 Rate of Return
 Then, the idea is evaluated against a set of general
company criteria.

76. 1. Develop New Product Ideas
into Alternative Detailed
Product Concepts
2. Concept Testing - Test the
New-Product Concepts with
Groups of Target Customers
3. Choose the One That Has the
Strongest Appeal to Target
Customers
3. Concept Development
Product Image is the
Way Consumers
Perceive an Actual or
Potential Product

77. 4. Marketing Strategy
Part One Describes Overall:
Target Market
Planned Product Positioning
Sales, Market Share, & Profit Goals
Part Two Describes First-Year:
Product’s Planned Price
Distribution
Marketing Budget
Part Three Describes Long-Run:
Sales & Profit Goals
Marketing Mix Strategy

78. 5 .Business Analysis
Considerations
in
Business
Analysis Stage
Demand
Cost
Sales
Profitability

79. If No, Eliminate
Product Concept
Business Analysis
Review of Product Sales, Costs, and Profits
Projections to See if They Satisfy Company Objectives
6. Product Development
If Yes, Move to
Product Development

80. Product Development
 In new product development products can be tested
at three levels
1. Alpha testing: does the product work in the
laboratory ?
2. Beta testing :does it work in the customers “In-use”
situation?
3. Gamma testing : does it do what the customer
wants?

81. 7. Test Marketing
 Product and
marketing program
are introduced into
more realistic
market settings.
 Can be very
expensive and time
consuming.
 Test the following:
 Positioning
strategy,
 Advertising,
 Distribution,
 Pricing,
 Branding,
 Packaging,
 Budget levels.

82. When is the
Right Time to
Introduce
Product?
Where to
Launch a
New
Product?
Introducing the New Product into the
Market
8. Commercialization

84. Adoption
Adoption is the process by which consumers
incorporate the product into the buying pattern
Innovators and early adopters are thought to
operate as opinion leaders

85. Stages in the Adoption
Process
 Awareness: Consumer becomes aware of the new
product, but lacks information about it.
 Interest: Consumer seeks information about new
product.
 Evaluation: Consumer considers whether trying the new
product makes sense.
 Trial: Consumer tries new product on a small scale to
improve his or her estimate of its value.
 Adoption: Consumer decides to make full and regular
use of the new product.

86. Adopter Categories

87. 1-Relative advantage: The degree to which potential consumers
perceive a new product is superior to existing substitutes
2-Compatibility: The degree to which potential consumers feel a
new product is consistent with their present needs, values and
practices
3-Complexity: The degree to which a new product is difficult to
understand or use
4-Trialability: The degree to which a new product is capable of
being tried on a limited basis
5-Observability: The ease with which a product’s benefits or
attributes can be observed, imagined or described to potential
consumers
Product characteristics that influence
diffusion

88. Relative Advantage
 A product innovation is perceived as better than
existing alternatives
 Positively correlated with an innovation’s
adoption rate
 Exist when a new product offers:
 Better performance, increased comfort, saving in
time and effort, or immediacy of reward

89. Compatibility
 An innovation is perceived to fit into a person’s
way of doing things
 The greater compatibility, the more rapid a
product’s rate of adoption
 Overcome perception of incompatibility
through heavy advertising to persuade
consumers

90. Complexity
 The more complex the product, the more
slowly a product’s rate of adoption
 Overcome perception of complexity with
demonstrations, personal selling, and
emphasis on ease of use

91. Trialability
 An innovation can be used on a limited basis
prior to making a full-blown commitment
 The trial experience serves to reduce the risk
of a consumer’s being dissatisfied with a
product after having permanently committed
to it through outright purchase

92. Observability
 The product user or other people can observe
the positive effects of new product usage
 The higher the visibility, the more rapid the
adoption rate

93. Packaging
5 key functions:
1. Protection
2. Distribution
3. User convenience
4. Promotion
5. compliance

94. Service
Service is an activity or a benefit that one party
can offer to another that is essentially intangible
and does not result in the ownership of
anything.

95. Products, Services, and
Experiences
Pure
Tangible
Good
Pure
Service
Soap
Tangible Good
With
Accompanying
Services
Auto With
Accompanying
Repair
Services
Hybrid
Offer
Restaurant
Service
With
Accompanying
Minor Goods
Airline Trip
With
Accompanying
Snacks
Doctor’s
Exam

96. Nature and Characteristic
of a Service

97. Service characteristics & how to
deal with each of them
(Marketing response)

98. * Provide tangibility through:
-Physical appearance of facility
-Furnishings
-Employee uniforms
-Logo
-Website
-Packaging
1-Intangability

99. 2-Perishability
-The perishability of services is not a problem when demand
is steady however when demand fluctuates service firms
have difficult problems .
Example :because of rush- hour demand public
transportation companies have to own much more
equipment
-Adjust pricing to influence demand
-Capacity management: adjusting services to match
demand

100. 3-Inseparability
-Employee training
-Disintermediation

101. 4-Variability
-Service guarantees
- Improving service delivery process
- TQM

102. Chapter 5
Pricing

103. Old Russian proverb
There are two kinds of fools in any
market. One does not charge
enough. The other charges too
much

104. Pricing
Pricing is the monetary value placed upon a
product /service by the marketer
Revenue =price x quantity
Profit =revenue – cost

105. Types of Cost Factors that
Affect Pricing Decisions
Total Costs
Sum of the Fixed and Variable Costs for Any Given
Level of Production
Variable Costs
Costs that do vary
directly with the
level of production
Raw materials
Fixed Costs
(Overhead)
Costs that don’t
vary with sales or
production levels
Executive Salaries, Rent

106. Breakeven analysis
The point at which total revenue is exactly equal to
the total cost of production and marketing

107. Breakeven Analysis or Target
Profit Pricing
2
4
6
8
10
12
200 400 600 800 1,000
Total Revenue
Total Cost
Fixed Cost
Target Profit
($2 million)
Sales Volume in Units (thousands)
CostinDollars(millions)
Tries to Determine the Price at Which a Firm
Will Break Even or Make a Certain Target Profit.

108. Breakeven analysis
Breakeven analysis = fixed cost / contribution per unit

109. Factors Affecting Price Decisions

110. 4 Cs on price setting
Cost
Company
Customer
Competitor

111. Marketing
Objectives
Survival
Low Prices Hoping to Increase Demand.
Current Profit Maximization
Choose the Price that Produces the
Maximum Current Profit, Etc.
Market Share Leadership
Low as Possible Prices to Become
the Market Share Leader.
Product Quality Leadership
High Prices to Cover Higher
Performance Quality and R&D.
Internal Factors Affecting Pricing
Decisions: Marketing Objectives

112. Price
Product Design
Distribution
Promotion
Nonprice
Positions
Internal Factors Affecting Pricing
Decisions: Marketing Mix Strategy

113. Market and
Demand
Competitors’ Costs,
Prices, and Offers
Other External Factors
Economic Conditions
Reseller Reactions
Government Actions
Social Concerns
External Factors Affecting
Pricing Decisions

114. Pure Competition
Many Buyers and Sellers
Who Have Little
Effect on the Price
Monopolistic
Competition
Many Buyers and Sellers
Who Trade Over a
Range of Prices
Pricing in Different Types of Markets
Market and Demand Factors
Affecting Pricing Decisions
Oligopolistic
Competition
Few Sellers Who Are
Sensitive to Each Other’s
Pricing/ Marketing
Strategies
Pure Monopoly
Single Seller

115. Price Elasticity of DemandPrice
Quantity Demanded per Period
A. Inelastic Demand -
Demand Hardly Changes With
a Small Change in Price.
P2
P1
Q1Q2
Price
Quantity Demanded per Period
P’2
P’1
Q1Q2
B. Elastic Demand -
Demand Changes Greatly With
a Small Change in Price.

116. Price Elasticity of Demand
Change in quantity demanded %
Change in price %
-When elasticity is greater than 1 ----- Elastic
-When elasticity is less than 1 ----- Inelastic

117. Pricing methods

118. Strengths of cost plus pricing
1. It is an easy method to be calculated
2. It can be seen to be fairer to both buyers and
sellers
3. It provides a means of trying to ensure that all
overheads are met in addition it tries to allow for
profit return

119. Weaknesses of cost plus
pricing
1. It takes no account of other elements in the
marketing mix like product or place
2. It may be difficult to identify direct costs and
overheads for each item
3. It does not reflect customers perceptions
:cheap price =poor product
4. It does not consider the needs of customers
5. It does not consider the elasticity of demand for
the product

120. Methods for
Setting Prices
Going-Rate
Company Sets Prices Based on What
Competitors Are Charging
Sealed-Bid
Company Sets Prices Based on
What They Think Competitors
Will Charge?
?
Competition-Based Pricing

121. New-Product Pricing Strategies
(Pioneer Pricing strategies)
Market-Skimming
 Setting a High Price for a
New Product to “Skim”
Maximum Revenues from
the Target Market.
 Results in Fewer, But
More Profitable Sales.
 I.e. Intel
 Use Under These
Conditions:
 Product’s Quality and
Image Must Support Its
Higher Price.
 Costs Can’t be so High
that They Cancel the
Advantage of Charging
More.
 Competitors Shouldn’t
be Able to Enter Market
Easily and Undercut the
High Price.

122. Example of skimming pricing
Apple launched its iPhone in this way, a high price
was set and product availability was through a
specific telephone network (rather than being
available on all networks)

123. Strengths of skimming pricing
1. It allows for quick recovery on investment in the
new product
2. It provides prestigious/quality image to customers
3. Higher prices are likely to appeal to innovator
groups

124. Weaknesses of skimming pricing
1. It may encourage the competitors to enter the
market quickly
2. It results in lower levels of sales and so fewer
economies of scale
3. It may attract attention from regulatory bodies

125. Skimming
 It is commonly used in consumer electronics
market
 Recent research shows that customers are
aware of skimming in electronics markets and
are delaying purchases of new electronic
devices until the prices drop

126. New-Product Pricing
Strategies
Market Penetration
 Setting a Low Price for a
New Product in Order to
“Penetrate” the Market
Quickly and Deeply.
 Attract a Large Number of
Buyers and Win a Larger
Market Share.
 I.e. Dell
 Use Under These
Conditions:
 Market Must be Highly
Price-Sensitive so a Low
Price Produces More
Market Growth.
 Production/Distribution
Costs Must Fall as Sales
Volume Increases.
 Must Keep Out
Competition & Maintain
Its Low Price Position or
Benefits May Only be
Temporary.

127. Strengths of penetration pricing
1. Large sales volume
2. Economy of scale
3. Prevent competitors from entering the market

128. Weaknesses of penetration
pricing
1. It is often difficult to raise price after using this
policy
2. It may not be appropriate due to costs of R&D
and competitor positions

129. New-Product Pricing
 Skimming Price
A very high, premium price
Product is new & highly desirable with unique benefits
Demand is highly inelastic
Allows the company to recover R&D & promotional costs
There is a high barrier for entry to competitors
 Penetration Pricing
A very low price to encourage consumers to buy
The objective is to sell more at a short period of time
Discourage competitors to enter the market (increase entry barriers)
 Trial Pricing
Pricing a new product low for a limited period of time in order to lower the
risk for consumers
Win customer acceptance first, and then make profits later

130. Perceived value pricing
 Is perhaps one of the most marketing oriented ways
of setting prices
 The price is set on the perceived value of the product
to the customer
 The marketer uses other elements of the mix
(product or promotion ) to build the perceived value
of the product or service in the mind of customers

131. Demand pricing
 This method is customer-oriented, because prices are
set at a level that will ensure that demand for the
product is at a point that will meet corporate objectives.
For example, a company may be able to produce
economically at a particular level, so the price will be set
to ensure that demand reaches that level, no more and
no less. Alternatively, demand pricing can be used to
determine the point at which profit will be maximized,
i.e. the point at which a further increase in price will
reduce the production run past the most economical
point.

132. EDLP
- An important type of value pricing is everyday low pricing
which involves charging a constant , everyday low price
with few or no temporary price discounts. In contrast ,
high –low pricing involves charging higher prices on an
everyday basis ,but running frequent promotions to
temporarily lower prices on selected items below the
EDLP level
The king of EDLP is Wal-Mart that practically
defined the concept

133. Pricing for Multiple Products
 Price bundling (e.g., monitor, keyboard, CPU in a
computer package)
 Captive pricing (e.g., razors and razor blades)

134. Product Mix-Pricing Strategies
 Optional-Product
 Pricing optional or accessory products sold with the
main product. i.e camera bag.
 Captive-Product
 Pricing products that must be used with the main
product. i.e. film.

135. Temporarily Pricing
Products Below List
Price Through:
Promotional Pricing
Special-Event Pricing
Cash Rebates
Low-Interest Financing
Longer Warranties
Free Maintenance
Discounts
Loss Leaders

136. Psychological Pricing
 Considers the psychology of prices and not simply the
economics.
 Customers use price less when they can judge quality of a
product.
 Price becomes an important quality signal when customers
can’t judge quality; price is used to say something about a
product.

137. Odd-even pricing
Certainly it is less effective in some markets. An
extension of this type of pricing is found in China,
where some numbers are regarded as lucky;
collectively, pricing that creates perceptions of this
type is called psychological pricing.

138. Chapter 6
Place or distribution

139. What is a Distribution Channel?
Set of interdependent organizations
involved in the process of making a
product or service available for use or
consumption by the consumer or
business user.

140. Distribution channels
 Avon cosmetics for example broke new ground by
selling products door to door rather than through
department stores and pharmacies
 By so doing the company opened up an entirely
new market among women who were house-bound
for whatever reason

141. Number of Channel Levels

142. Intermediaries
1. Retailers :sell directly to consumers
2. Wholesalers: sell to retailers
3. Distributor and dealers: sell to customers
through profit
4. Agents : they do not purchase the products but
they earn commission
5. Franchisees e.g. KFC

143. Types of Distribution Channels
 Consumer channels
 Direct
 Manufacturer-retailer-consumer
 Manufacturer-wholesaler-retailer-consumer
 Business-to-business channels
 Manufacturer-industrial distributor-business
customer

144. Marketing Systems
 Conventional - multi-level distribution channel in
which members work independently of one another
 Vertical - channel in which there is cooperation
among channel members at two or more different
levels of the channel
 Horizontal - two or more firms at the same
channel level agree to work together

145. Conventional Distribution Channel
Vs. a Vertical Marketing System

146. Corporate VMS
Common Ownership at Different
Levels of the Channel i.e. Sears
Contractual VMS
Contractual (formal) Agreements Among
Channel Members i.e Franchising (KFC)
Administered VMS
Leadership is Assumed through informal agreement
a Few Dominant Members i.e. Marks &Spencer
Degree of
Direct
Control
Types of Vertical Marketing
Systems

147. Intensive
Distribution
Selective
Distribution
Exclusive
Distribution
Number of Marketing
Intermediaries

148. Select a distribution channel
for each of the followings
1-Rolex watches
2-Cigarettes
3-Mid priced high-fi systems

149. Chapter 7
Promotion

150. Marketing Communication Mix
or Promotion Mix
Product’s
Design
Product’s
Price
Product’s
Package
Stores that Sell
the Product

151. Advertising is better for creating awareness; personal
selling is more effective at promoting action and
purchase behavior.

152. Communication strategies
1. Push strategy
2. Pull strategy
3. Strategy mix

153. Communications models
DRIP model:
D Differentiate
R Remind
I Inform
P Persuade

154. AIDA
Attention
Interest
Desire
Action

155. Public relations
The planned and sustained effort to establish and
maintain goodwill and mutual understanding
between an organization and its publics

156. PR people
 PR people are often ex-journalists who have
some contacts with the news media and who
know how to create a story that will be printed
in the way the company wants it to be done

157. Publicity
Unpaid communication about an organization
appearing in the mass media
- Non personal paid ------ advertising
- Personal non paid ------- personal selling
- Non personal non paid ----- publicity

158. Corporate image :
How a company is perceived by its publics
Corporate identity:
Relates to logos , preferred colors …..
Public relations

159. Public relation activities
1. Press release & video news release
2. Press conferences
3. Sponsorship
4. Exhibitions
5. Corporate social responsibility
6. Corporate literature
7. Corporate hospitality
8. Videos
9. Special events “celebrity store openings”
10. Website

160. Exhibitions
Purposes
1. Public relations
2. Promotion and selling
3. Networking
4. Testing the response

161. Sponsorship
It is an agreement between a company and an
event organizer where the company gives
money in exchange for rights to associate the
company name with the event

162. Sponsorship
Objectives:
-Awareness creation
-Media coverage by the sponsored event
-Association with prestigious event
-Opportunity for corporate hospitality
-Internal employee motivation

163. Sales Promotion
It is one of the promotional tools used to add
value for a product or service on the short run

164. Rapid Growth of Sales
Promotion
 Sales promotion can take the form of consumer promotions,
business promotions, trade promotions, or sales force
promotions.
 Rapid growth in the industry has been achieved because:
 Product managers are facing more pressure to
increase their current sales,
 Companies face more competition,
 Advertising efficiency has declined,
 Consumers have become more deal oriented.

165. Sales Promotion Objectives
 Consumer Promotions:
increase short-term sales or help build long-term market
share.
 Trade Promotions: get retailers to:
 carry new items and more inventory,
 advertise products,
 give products more shelf space, and
 buy product ahead.

166. Evaluation of sales promotion
1-Consumer audits:
This will indicate if there has been a change in consumer behavior
2-Retail audits:
Change in stock levels , distribution & market share
3-Sales force feedback
4-Sales information

167. Two-thirds of purchases result from
in-store decisions

168. Point of sale display ( POS)
-It refers to the in store display that can influence
consumers to purchase products in shops
It includes:
-Shop layout and design
-The way goods are presented
-In store display materials

169. Personal Selling
It is personal paid promotional tool in which there
is a face to face contact between a company
representative and a customer

170. Major Steps in Effective Selling

171. Advantages of personal selling
1. It contributes to a relatively high level of customer
attention
2. Message customization
3. Two ways communications allows immediate feedback
4. It is an opportunity to develop long term relations
5. Using visual elements

172. Disadvantages of personal selling
1. The main disadvantage is the cost as a
salesperson can only interact with one buyer at a
time
2. The control on the message is limited

173. Direct marketing
-The planned recording ,analysis and tracking of customer
behavior to develop relational marketing strategies
-It creates and develop direct one to one relationships
-To carry out direct marketing you need Databases

174. Tools of direct marketing
1. Direct mail (mail shots) “most common”
2. E-mail
3. Mobile phone text messaging (SMS)
4. Direct response advertising
5. Catalogue marketing /brochures / website
6. Call centers and telemarketing
7. “V-Reps “ : Virtual Reps
8. Door drops
9. E-commerce

175. Forms of Direct Marketing

176. Chapter 8
Advertising

177. Advertising Execution Techniques

178. Rational advertising
 Factual
 Demonstration
 Comparison
 Slice of life

179. Demonstration
 Headache remedies, floor cleaners and tyre
commercials have traditionally demonstrated the
pain, the dirt and the danger respectively, and
have then shown how the focus brand relieves the
pain (Panadol), removes the stubborn dirt (Flash)
or stops in the wet on a coin (or the edge of a
rooftop – Continental tyres).

180. Emotional advertising
 Testimonial or endorsement
 Animation
 Music
 Fear
 Humor
 Sex
 lifestyle
•Joy
•Love
•Pleasure
•Pride
•Safety
•Security
•Self-esteem
•Combinations

181. Fear advertising
 Fear is used in one of two ways. The first type
demonstrates the negative aspects or physical dangers
associated with a particular behavior or improper product
usage.
 Drink-driving, life assurance and toothpaste advertising
typify this form of appeal.
 The second approach is the threat of social rejection or
disapproval if the focus product is not used.
 This type of fear is used frequently in advertisements for
such products as anti-dandruff shampoos and deodorants,
and is used to support consumers’ needs for social
acceptance and approval.

182. Animation
 Animation techniques have advanced considerably in
recent years, with children as the prime target audience.
However, animation has been successfully used in many
adult-targeted advertisements, such as those by
Schweppes, Compaq, Tetley Tea, Direct Line Insurance
and the Electricity Board.
 The main reason for using animation is that potentially
boring and low-interest/involvement products can be
made visually interesting and provide a means of gaining
attention.
 A further reason for the use of animation is that it is easier
to convey complex products in a way that does not
patronize the viewer.

183. Sex advertising
 Sex appeals normally work well for products such as
perfume, clothing and jewellery but provide for poor
effectiveness when the product is unrelated, such as
cars, photocopiers and furniture.
 The use of sex in advertising messages is mainly
restricted to getting the
 attention of the audience and, in some
circumstances, sustaining interest. It can be
 used openly, as in various lingerie, fragrance and
perfume advertisements, such as
 WonderBra and Escape; sensually, as in the H‫ن‬agen
Dazs and Cointreau campaigns;
 and humorously, as in the Locketts brand.

184. Media scheduling patterns
1. Continuous pattern
2. Flighting patterns
3. Pulsing

185. Communication Effects
(Copy Testing)
Is the Ad Communicating
Well?
Advertising Program Evaluation
Sales Effects
Is the Ad Increasing
Sales?
Evaluating Advertising

186. Evaluating Advertising
1-Pre-testing :
-Focus group
2-Post-testing :
-Recognition test
-Recall test

187. Media Selection

188. Raafat Shehata
Raafatshehata@Hotmail.com

189. Thank You