MKT243 Notes Chapter 4, 5, 6, 7, 8 PDF

lOMoARcPSD|19953698 MKT243 Notes chapter 4,5,6,7,8 Fundamental of Marketing (Universiti Teknologi MARA) Scan to open on Studocu Studocu is not sponsored or endorsed by any college or university Downloaded by d...

lOMoARcPSD|19953698 MKT243 Notes chapter 4,5,6,7,8 Fundamental of Marketing (Universiti Teknologi MARA) Scan to open on Studocu Studocu is not sponsored or endorsed by any college or university Downloaded by dheee dhuuu ([email protected])  lOMoARcPSD|19953698 MKT243 NOTES CHAPTER 4 ~ 8 Downloaded by dheee dhuuu ([email protected])  lOMoARcPSD|19953698 CHAPTER 4 : Product 2 Categories: What is a product? Def Product: A product as everything both Homogeneous goods favorable and unfavorable that a person - Similar in quality but different in receives in an exchange. price. - Choose lower price that suit with Group of products: desire. - Eg, electrical products ✓ Non-durable goods – tangible Heterogeneous goods goods/consume fast + purchase regular/ - Product’s features more important eg, soap, salt & sugar. than price. ✓ Durable good – tangible goods/ personal - Bef purchase - compare the sell & service/charge high margin/ eg: price,quality and product’s features TV,clothes,etc - Eg, clothes, furniture. ✓ Services – intangible goods/more Specialty Products guality control/sup’lier cre’lity/ - Unique and special characteristic eg,maintenance goods,consultation - Willing to make a special purc’sing services. effort. CLASSIFICATION OF PRODUCT - Reluctant to accept substitutes - Expensive products Types of consumer products - Sold in exclusive shop Convenience Products - Brand name and quality are more - Inexpensive item. important. - Little shopping effort. - Special advertising. - Purchase frequently. - Eg luxury car. - Less effort in com’ring brands Unsought Product 3 Categories : - Product unknown to potential buyer. Staples products – Purchase on regular - Know the product but does not basis,eg: cooking oil& rice. act’ly seek. Impulse product – purchased wóut any - Does not normally think buying. planning.search effort,eg: sweets - New product fall under this product. Emergency products - Purchase when - Eg, smoke detector,insurance need is urgent,eg: penadol Shopping Product. - Buy after co’ring price,quality and sui’lity. - Medium price range – more expensive than convenience products - Select the brand. Downloaded by dheee dhuuu ([email protected])  lOMoARcPSD|19953698 BRANDING Manufacturer’s brand vs private brand 3 Main Purposes: Strategies Description Examples Manufactures’ Brand name of Nivea, - Product identification. Brand manufactures. Dettol, - Repeat sales. Toshiba, - New product. Phillips Benefit of branding: Product Identification Private Brand Own by a Giant, wholesaler or Tesco, ✓ Branding allows marketers to dis’guish retailer. Watson, their product from all others. guardian ✓ The term brand equity refers to value of company and brand names. ✓ A brand that has high awareness, Individual brand vs Family brand perceived quality & brand loyalty among cust has high brand equity.eg, Strategies Description Examples Starbuck. Individual -Use different Laundry Brand name for detergent = Benefit of branding: Repeat sales different Downy,Dash, product Ivory Snow ✓ Best generator of repeat sales is satisfied -use when customers. greatly in ✓ Branding helps consumers identify per’mance product they wish to buy again and Family -different Sony’s avoid those they do not. Brand product under family brand ✓ Brans loyalty a consistent pre’rence for same brand -radios, tv on e brand over all others. name. sets, others ✓ Eg,cigafattes, mayonnaise,toothpaste, coffee,bath soap. Trademarks Benefit of branding: new product - The exclusive right to use a brand or ✓ The internet provides firms with new part of a brands. alternative for generating brand - Other prohibited from using the brand awareness - promoting a desire brand w’tout permission. (P. identification image - stimulating new and repeat may qualify for trademark protection. brand sales. Example Branding strategies - Shapes - coca cola bottle. Choose manufacturers’ brands, private - Ornamental color or design – decoration (distributor) brand or both. - Catchy phrases – nike’s “Just Do It” - Abbreviations Manufacturers’brands – brand name of - Sound – general electric broadcasting manufacturer company’s ship’s bell clock sound & Private brand – a private label or store MGM lion’s roar. brand – brand name own by wholesaler or retailer.eg Tesco brand. Downloaded by dheee dhuuu ([email protected])  lOMoARcPSD|19953698 Packaging Facilitating Recycling and Reducing Environment Damage. Def of packaging: One of the most important packaging - Service a practical function to hold the issues today is compatibility with the content together and to protect goods as envinroment. they move through the distribution Use packaging to target environmentally channel. (LAMB) concerned market segments. - Activities of designing and producing Creating perpetually recycled packaging the container or wrapper for a product. so materials do not ever end up in (KOTLER) landfills, damaging ecosystem. Important functions of packaging are: Importance of new product: Containing and protecting products. ❖ Increased sale through longer sales life Contain products that are liquid, ❖ Increased margins granular ❖ Increased product loyalty Packaging also enables manufacturers, ❖ More resale opportunities wholesalers and retailers to market ❖ Greater market responsiveness products in specific quantities. ❖ A sustained leadership position. Packages protect products from New product development process breakage,evaporation,spillage,spoilage, light,heat,cold,infestation. New product strategy - Link the new product development Promote product process with objective of mkt Diff’tiates a product from competing department. with a family of other products from the - A part of organization’s overall mkt same manufacturer. strategy – sharpen focus and provides general guidelines for Use designs,colors shapes and material generating, screening and evaluating to try to influences new product ideas. consumers’perceptions and buying Idea generation behaviour. - Comes from many sources including Facilitating storage, use and convenence. cust,employees,distributors,competit ors,vendor, R&D and consultant. Retailers prefer packages that are easy Idea screening to ship, store – like packages that - 1 filter,eliminates ideas that are protect product/prevent spoilage or inconsistent with the organization’s breakage. new product strategy. Consumer seeking items that are easy to - Concept test often usen at screening handle,open and reclose.Eg,packaging stage to rate concept(product) innovation = zipper tear strips,hinged alternatives/evaluates a new product lids,tab slots, pour spouts. ideas -bef prototype has been P. Convenience can increase a product’s created. utility and market profits. Downloaded by dheee dhuuu ([email protected])  lOMoARcPSD|19953698 Business analysis - Preliminary figures for demand,cost,sales and profitability are calculated. - What is the likely demand for product - W.impact would the new product. Development - Develop a prototype of the product. - Mkt department decide packaging,branding,labeling. - Allows to shorten the dev’ment process and reduce costs – all functional areas and outside supplier participate in all stages of development. Test Marketing - Limited introduction of a product and a marketing program to determine the reactions of potential cust. - Allows management to evaluate alternative strategies - To assess how well the various aspects of the mkt mix fit together. Commercialization - Final stages: - Ordering production materials and equipment - Starting production - Building inventories - Shipping the product to field distribution points - Training the sales force - Announcing the new product to trade. - Advertising to potential cust. Downloaded by dheee dhuuu ([email protected])  lOMoARcPSD|19953698 CHAPTER 5: PRICE Def price: Price is that which is given up in an exchange to acquire a good or service. Price plays two roles in the evaluation of product alternative. The sacrifice effect of price. The information effect of price. Importance of price to Marketing managers: ✓ Prices are the key to revenues. ❖ The cost determinant of price ✓ The price charged to cust multiplied by Markup pricing uses the cost of buying the num of unit sold/pay for every the product from the producer, plus activity of company amount for profit and expenses not (production,finance,sales, distribution) otherwise. ✓ Managers strive to charge a price that Eg item costs retailer RM1.80 and is will earn a fair profit – not high or to sold for RM2.20 carries a markup of low. RM0.40 cents which is a markup of 22 Price objectives: percent of the cost. Profit maximization ❖ Profit maximization pricing - Aim to make maximum profit - Setting prices that total revenue is as Occurs when marginal revenue equals large as possible relative to total marginal cost. costs. Marginal cost is the change in total cost - Notnecessarry charge high price but associated with a one unit change in set right & reasonable price to cust. output. - Price&profit depend on competitive Marginal revenue is the extra revenue environment. associated with selling an extra unit of Satisfactory profits output. - Marketer needs to set a process that ❖ Break even pricing can give a reasonable level profit. Determines what sales volume must be Target ROI RETURN ON INVSETMENT reached before the company break even - Known as firm;s return on total (total cost equal total revenue) no profit assets. earned. - ROI = net profits after taxes/total Advantages: assets - Provides a quick estimate of how - Measure mgt overall effectiveness in much the firm must sell to break generate profit. even and how much profit can be earned if higher sales volume is obtained. Downloaded by dheee dhuuu ([email protected])  lOMoARcPSD|19953698 Another determinant of price Price strategy: ❖ Stages in the product life cycle - Price skimming is a pricing policy The demand for the product and whereby a firm charge a high intro price competitive conditions tend to with heavy promotion. change.For example,mgt set prices - Penetration price is pp whereby fir high during the intro stage. – it hope charges a relatively low price for a to recover its development cost product initially to reach the mass quickly. market. ❖ The competition - Status quo pricing is a pp known as Competition varies during the meeting the competition or going rate product life cycle, of course, may pricing. – charging a price identical to strongly affect pricing decisions. or very close to the competition’s price. Fine tune the base price with pricing tactics ❖ Distribution strategy - Fine-tuning techniques are short-run ❖ The impact of the internet approaches that do not change the ❖ Promotion strategy general price level. ❖ Guaranteed price matching - allow the firm to adjust for competition ❖ Demand of large customers in certain markets, meet everchanging ❖ The relationship of price to quality. government regulations, take advantage of unique demand situations. Setting the right price ✓ Establish pricing goals - A conservative organization that is attempting to lower risks by being a follower, rather than attempting to be a market leader, may establish a status quo goal. ✓ Estimates demand, cost and profits ✓ Choose a price strategy to help determine a base price. - The basic, long-term pricing framework for a good or service should be a logical extension of the pricing objectives. Downloaded by dheee dhuuu ([email protected])  lOMoARcPSD|19953698 Chapter 6: Places Channel intermediaries and their functions Channel function performed by intermediaries Channel Intermediaries: Transactional function - Contracting& promoting (Contact Marketing channel(cha’nel distribution) potential customers) A business structure of interpendence - Negotiating: determining how many organization that involved in process of goods/services to buy & sell making a product or service available - Risk taking: assuming the risk of for consumption by end customers. owing inventory. Facilitate the physical movement of Logical function goods from location to location. - Physical distributing: Transporting Channel members = resellers, & sporting goods to overcome intermediaries, middlemen: temporal & spatial discrepancies) - Retailers (a channel intermediary - Storing: Maintaining inventories that sells mainly to customers) - Sorting : overcoming discrepancies - Merchant Wholesalers (institutions of quantity that buys goods from manufacturers, o Sorting out takes title to goods, and resells. o Accumulating - Agent and brokers (facilitate the sale o Allocating of a product by representing channel o Assorting members.) Facilitating function (they negotiate with each other, buy sell - Researching: gather information product) about other channel customers. - Financing: Extending credit& other Retailer. financial services to facilitate the - Firm that sell to cosumers.Take title flow of goods through the channel to to goods they sell. the final customer. Merchant wholesalers - Facilate then movement of products Consumer channel structure: and service from manu’turer to ✓ A product take many routes to reach its producers, reseller, government. final consumer. Agents and brokers ✓ Marketers search most efficient channel. -Facilitate sale of product from producer Direct channel = producer – consumers to end user y representing retailer.Do Retailer channel = producer – retailer – not take title. consumers. Wholesaler channel = producer – Channel Channel wholesalers – retailers – consumer. Intermediaries Functions Retailers Transactional Agent/Broker = producer – agents – Wholesalers Perform Logistical wholesalers – retailers – consumers. Agent&Brokers Facilitating Level of channel distribution intensity ✓ Intensive - Convenience good available everywhere. ✓ Selective ✓ Exlusive Downloaded by dheee dhuuu ([email protected])  lOMoARcPSD|19953698 Level of channel distribution intensity 3. Supermarket - large/self-service retailer that specializes in ✓ Intensive food/nonfood items. - Convenience good available Has wider selection than grocery stores, but everywhere. (Many intermediaries) smaller and more limited in the range of ✓ Selective merchandise than a hypermarket or big box - Typically used for shopping goods market. and some specialty goods (several intermediaries) 4. Drugstores ✓ Exclusive - stock pharmacy related products and - Require special resources/used for services as its main draw. major industrial equipment. (one) - carry an extensive selection of over the Understanding retailing: counter (OTC) medications,comestics,health and beauty aids,seasonal merchandise Retailing - all activity directly related to sale of (greeting cards) goods and services to the ultimate consumer for - Eg, Guardian,Watson personal, nonbusiness use has enhanced the quality of our daily lives. 5. Convenience stores 1. Department stores - Carrying only a limited ine of high turnover - Stor housing several departments convenient goods. under one roof. - self service stores are typically located near - Carries a wide variety of shopping residential areas and are open 24 hours and specialty goods including - prices are almost always higher at a apparel,cosmetics,housewares,electr convenience store than at a supermarket.(cust onic and furniture. pays for the convenience. - P. generally made within each - eg 7 eleven store,petrol stations department rather than at one central (petronas,Caltex) checkout area. - Eg,jaya jusco,sogo Aeon. 6. Discount stores 2. Specialty stores - competes on basis of low prices,high - Specializing in a given type of turnover and high volume. merchandise. 5 major categories: - Allow retailers – rifine their Full line discount store segmentation strategies (specific Specialty discount store(C-killer) target markets) Warehouse discount store - Specializing in (children’s Off-price discount store (Factory clothing,men’s clothing,candy,baked outlet) goods. - Eg, BATA Downloaded by dheee dhuuu ([email protected])  lOMoARcPSD|19953698 Full line discount store: Restaurants - Offer consumers very limited service Straddle the line between retailing and carries a broad assortment of well- establishment and service known. establishments. - Eg, Eco shop,Target,Walmart Sell tangible products(food drink)/ - Mass merchandising: strategy using provide service. moderate to low prices on large Deal with traditional retailer – personel quantities of merchandise and lower dist’tion , inventory service to stimulate high turnover of management,promotion,pricing and product. location. - Supercenters: combines groceries and Types of stores and their characteristic. general merchandise goods with wide range of service including pharmacy,dry cleaning – all in 1 locations. Specialty discount store: - Offer a nealy complete selection of single line merchandise and uses selft service,discount prices,high volume and high turnover suvh as stores selling sporting goods,electronics,auto Understanding retailing part,office supplies,housewares,toys. 1. Automatic vending - Category killers: heavily dominate their - Use of machine to offer goods for narrow merchandise segment.Eg, IKEA. sale. Warehouse membership clubs: - Eg,soft drink,candy ,vending machines found in college. - Limited service wholesalers that sell - Consu’ willng to pay higher rices for limited selection of brand name product from a vending machine. appliances,household items,groceries on 2. Direct retailing cash and carry basis to members. - The selling of product by - Sold in bulk from warehouse outlet on a representatives who work door to cash and carry basis to members door, office to office or at home. only.Indvl members of warehouse clubs 3. Direct marketing (direct response are charged lowmor no membership marketing) fees. - Techniques used to get consumer to Off-Price retailer: make a purchase from their home/office/nonretail setting. - Sell at prices below traditional - Direct mail: marketing material or department stores prices cuz it pays cash prioduct mailed directly to the for its stock and usually doesn’t ask for homes of consumers or offices of return privileges. business buyer such postcards with - Factory outlet: owned and operated by an offer. manufacturer. - Eg,johor premium outlet. Downloaded by dheee dhuuu ([email protected])  lOMoARcPSD|19953698 Electronic Retailing: - 24-hour shop at home television networks and online retailing. - Online retailing or e-tailing – eg ,shopee,Lazada - Shop at home networks – go shop,wow shop. Franchising: - A continuing relationship in which a franchisor grants to franchisee the business right to operate or to sell a product Franchisor – originator of trade name – grant operating right to other pparty to sell its product. Franchisee – granted the right to sell another party’s product. Downloaded by dheee dhuuu ([email protected])  lOMoARcPSD|19953698 CHAPTER 7: PROMOTIONS The role of promotion in marketing mix: The AIDA concept: Attention,Interent,Desire,Action ✓ Promotion – com’cation by marketers that informs,persuades and reminds Promotional Goal: To get people to buy potential buyers of a product in order to the good/service. incluncer their opinion or elicit a Attention - To gain attention of the response. target market by ✓ Promotional strategy: a plan for the informing them of optimal use of the promotional mix availability of the product elements,advertising,public relations, - To create awareness/gain personel selling and sales promotion. attention – advertising on ✓ Compettive advantages: cause tv. consumers to patronize that firm rather - Eg KFC introduce new than competitors. produce Interest - High effort in promoting The goals of promotion: thr product th’gh adve’ent - Eg, get free sample of 1. To inform rejoice 2 in 1 shampoo - Informative promotion – can Desire - Marketers need to arouse increase awareness of a new the want to try & use the brand,product attriute and build product. company image. - To attract cust to - Informative promotion explains the see&realize that the new purpose and benefit of a goods and product is good/beneficial service - Eg,pantene -emphasize on - Info mssg are important for “hair smooth & silky’ promoting complex and technical Action - Get people to buy the product such as automobiles,cmptr, product investment services. - Strategies: free trial product, size packages, 2. To persuade coupons& premium - Attempting to motivate a consumer offers. to purchase or use more of a product - Become primary prom goal when product enters the growth stage of The promotional mix the product life cycle. ✓ The combination of promotional tools - To convince the cust to buy the including advertising,public company’s brand than the relations,personal selling and sales competitor brand. promotion – used to reach the target 3. To remind market and fulfill goals. - To keep the product name in ✓ More fund allocated to reach public’s mind. promotional element and the more - Prevail during the maturity stage of managerial emphasis placed on each life cycle. technique. - To trigger a memory. Downloaded by dheee dhuuu ([email protected])  lOMoARcPSD|19953698 Def: advertising Personal selling - Impersonal,one mass communication Traditional selling: about a product that is paid for by a - Planned presentation to one or more marketer. prospective buyers. Ads media: Relationship selling Television/radio/book/radio - Goal is long term,committed (traditional) relationship based on trust and cust Internet loyalty. Electronic mail Def: Sales promotion Interactive video - Short term incentives to encourage Advantages: purchase/sales of product/service. - Reach large num of people. - Used to marketing firms to enhance& - Low cost per contact. improve the effectiveness of the other elements of promotional mix. Disadvantages: Target market: end consumers,trade - Total cost is high. cust/publics Def: public relation Tools: - The process of making evaluation publis - Free sample attitudes within the orgztion that public - Contest may be interested in/executes a program - Premium of action to earn public understanding. - Trade show - To enable cust,gov,supp,stockhlders, - Vacation gateway employees have accurate info about the - Coupon. orgztion’s mission,vision,goals Factors affecting promotional mix Function: Evaluates public attitudes Identifies area of public interest Executes programs to win public (mkteer use good program/gave company a favorable publicity) Publicity: public info about a company,goods,service appearing in media. Def: personal selling - Involves oral presentation in a conservation with one/more prospective purchases fro the purpose of making sales. Downloaded by dheee dhuuu ([email protected])  lOMoARcPSD|19953698 Target market characteristic - Highly informed buyers and brand loyal repeat purchasers requires a promotional mix with more ads and sales promotion/less personal selling. Type of buying decision - Depends on the type of buying decision - Eg, routine consumer decisions like Product advertising: buying toothpaste or soft drink - Pioneering advertising Factors affection promotional mix To stimulate primary demand for Available funds a new peoduct or product - Easily be the most important factor in category.Heavily used during the determining promotional mix (small introductory stage of the product manufacturer may rely on free publicity life cycle. if its product is unique. - Competitive advertising Push and pull strategies When a product enters the - push strategy (use aggressive personal growth phase of the product life selling and trade advertising to convince cycle. a wholesaler or retailer to carry and sell - Comparative advertising their merchandise) Directly or indirectly compares 2 - Pull strategy (stimulates consumer or more competing brands on 1 demand to product distribution. or more specific attributes. Def: Public relations - Maeketing function that evaluates public attitudes identifies areas within the organization the public may interested in and executes a program of action to earn public understanding. - Help org’tion communicate with cust,supp,stockholders,gov when its operates. Def: Advertising - To maintain a positive image but to - Any form of impersonal paid educate the public about the company’s communication which sponsor/company goal and objectives. is identified. Major public relation tools - Benefit : its ability to communicate to a - New product publicity large num of people at one time. - Product placement marketers - Consumer education - Sponsorships - Internet web sites. Downloaded by dheee dhuuu ([email protected])  lOMoARcPSD|19953698 Sales Promotion: - Consists all mkt activities – other than personal selling,advertising and public relations that stimulate consumer perchasing and dealer effectiveness. - To stimulate immediate increase in demand. - Aim at end consumers,trade cust or company emloyees. - Eg, free sample,trade show, giveaways and coupon. Tool for consumer sales promotion. 1. Coupons and rebates 2. Premium 3. Loyalty marketing program 4. Contest and sweepstakes 5. Sampling 6. Point 0f purchase (P-O-P) promotion 7. Online sales peomotions Personal selling Advantages: o Provide a detailed explanation or demonstration of the product o Sales message can be varied according to the motivations and interest of each prospective cust. o Directed only to qualified prospects o Cost can be controlled by adjusting the size of sales force in one person increments. Downloaded by dheee dhuuu ([email protected])  lOMoARcPSD|19953698 CHAPTER 8: CONTEMPORARY TOPICS IN MARKETING. Overview of customer relationship management (CRM) What is cust relationship management? - Cust relationship management (CRM) focuses on understanding cust as ind instead of as part of a group.To do so, marketers make their communications more customer specific like the personalized marketing efforts used by Amazon.com. - CRM was initially popularized as one to one marketing. But it has become a Social media & marketing much broader approach to - Has changed the way that marketers can understanding and serving cust needs communicates with their brands from than one to one marketing. mass messages to intimate - CRM is a company wide business conversations. As marketing moves into strategy designed to optimize social media,marketers must remember profitability,revenue and cust that for most people,social media is satisfaction by focusing on precisely meant to be a social experience not a defined customer groups. marketing experience. - Accomplished by organizing the - Defined as any tool/service that uses the company around cust internet to facilitate conversations. segments,establishing and tracking cust ✓ Social media and mobile technology: interactions with the company,fostering - These patforms include the multitude of cust satisfying behaviors and linking all smartphones such as iphone and processes of the company from its cust Blackberry as well as netbooks and through its suppliers. ipands.The major implication of new patform mean consumer can access The cust relationship management cycle popular web sites such as Facebook,Twitter from their various - Cust service is part of the CRM process, patforms. it is only a small part of a totally ✓ Application and widgets integrated approach to building cust relationships. - An increasingly popular smartphone - Described as a closed-loop system that marketing tool is the use of QR codes. builds relationship with cust.Exhibit - QR codes are small, square bar codes below illustrates this closed loop that smartphones photograph and read in system, one that is continuous and order to take the user to that product's circular with no predefined starting or Web site. end point. - Web widgets, also known as gadgets and badges, are software applications that run entirely within existing online platforms Downloaded by dheee dhuuu ([email protected])  lOMoARcPSD|19953698 Ethics and social responsibility Corporate social responsibility (CSR) Downloaded by dheee dhuuu ([email protected])  lOMoARcPSD|19953698 Downloaded by dheee dhuuu ([email protected])