Session 1 Introduction

Definition​
A social and managerial process by which individuals and groups obtain what they need and
want through creating and exchanging products and value with others.

Marketing = create and capture consumer value

Step 1 Session 3 Analyzing the Marketing Environment (Ch.3)

Session 4 Understanding Customer Behaviours (Ch.5)
Session 5 Managing Marketing Information (Ch.4)

Step 2 Session 2 Company and Marketing Strategy

Session 6 Customer-Driven Marketing Strategy (Ch.7)

Step 3 Session 2 Company and Marketing Strategy

Session 7 Product, Services and Branding Strategy (Ch.8)
Session 8 New Product Development and PLC (Ch.9)
Session 9 Pricing Strategies (Ch.10-11)
Session 10 Integrated Marketing Programs
-​ Integrated Marketing Communication Strategy (Ch.12)
-​ Channel Strategy (Ch.14)
-​ Digital Marketing (Ch.17)

Step 4 Session 11 Review

1.1 Needs, Wants, Demands

Needs: States of deprivation (e.g., self-fulfilment needs, basic needs)
Wants: The form human needs take as they are shaped by culture and individual personality
Demands: Human wants that are backed by buying power

Needs Wants Demands

Survival To have financial buffer Insurance

against accidents or
retirement
Safety To lower risk in air travel Preference for large (vs.
small) planes

Love To feel valued by your Diamond

partner

→ Consumers’ needs and wants are fulfilled through market offerings—some combination
of products, services, information, or experiences offered to a market to satisfy a need or a
want.
Eg. De Beers company → “Diamonds are forever”

Marketing Myopia:
The mistake of paying more attention to the specific products a company offers than to the
benefits and experiences produced by these products.

Customer value and satisfaction

●​ Satisfied customers buy again and tell others about their good experiences.
Dissatisfied customers often switch to competitors and disparage the product to
others.
●​ Set expectations too low: they may satisfy those who buy but fail to attract enough
buyers.
●​ Set expectations too high, buyers will be disappointed.

1.2 Designing Customer Driven Marketing Strategies

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

Value proposition​
a statement that describes the value that a company or product offers to the customer

Marketing Management Orientations

1) Production concept
●​ Consumer favor products that are available and highly affordable
●​ Focus on improving production and distribution efficiency

2) Product concept
●​ Consumer favor products that offer the most quality, performance and innovative
features
●​ Devote energy on making continuous product improvements.

3) Selling concept
●​ Large-scale selling and promotion effort.

→ above three: obsolete (過時)

E.g. New Coke
●​ Won the blind taste tests over Coke classic and Pepsi
●​ Ignored the sentimental value which its loyal American consumers had towards Coke
Classic

4) Marketing concept
●​ Determines the needs and wants of target markets and delivers the desired
satisfactions more effectively and efficiently than competitors do.

5) Societal marketing concept

●​ Determine the needs, wants and interests of target markets.
●​ Asks if the firm that senses, serves and satisfies individual wants is always doing
what's best for consumers and society in the long run.

Selling concept vs Marketing Concept

Customer Driven- vs. Driving-Marketing

Customer-driven marketing
●​ When customers know what they want

Customer-driving marketing
●​ Customers do not always know what they want; Understanding and anticipating
customer needs even better than customers
●​ Creating products and services to meet current and future needs

Societal versus Sustainable Marketing Concept

●​ Both consider both the current and future needs of consumers
●​ The main distinction b/w them lies in whether they consider the *future* needs of
business

Social Criticisms of Marketing

Problem Consumer’s complaint Marketer’s response

High prices Prices are too high due to Intermediaries are

high costs of: important and offer value.
●​ distribution Although consumers can
●​ advertising and usually buy functional
promotion versions of products at
●​ excessive mark-ups lower prices, they want and
are willing to pay more for
products that also provide
psychological benefits—that
make them feel wealthy,
attractive, or special.

Deceptive practices Deceptive practices lead Support legislation to protect

them to believe they will get consumers from deceptive
more value than they practices. Make lines
actually do. clear—is it deception,
alluring imagery, or puffery
(exaggeration for effect)

1.3 Integrated Marketing Program

Marketing Mix: The 4Ps
If each single component of the marketing mix is viewed in isolation:
●​ Product → Product concept
●​ Price → Production concept
●​ Promotion → Selling concept
●​ Place → Selling concept
●​ It is important to integrate them

1.4 Building Customer Relationships

Customer-Engagement marketing:​
​Fostering direct and continuous customer involvement in shaping brand conversations,
experiences, and community

●​ Frequency marketing programs: reward customers who buy frequently or in large

amounts. Eg. Frequent flyer programs, Hotels’ room upgrades, Supermarkets
●​ Club marketing programs: offer members special benefits and create member
communities

1.5 Capturing Value from Consumers

Customer lifetime value
●​ The value of the entire stream of purchases a customer makes over a lifetime of Z

Customer equity
●​ Total combined customer lifetime values of all of the company’s customers.
●​ Eg. Cadillac making the classic car cool again among younger buyers → increase
customer equity

Customer Relationship groups

→ Maintaining existing customers is oftentimes cheaper than attracting new customers.

Session 2 Company and Marketing Strategy

Strategic Planning

1) Defining the Company Mission: Statement of an organization’s purpose; should be

market oriented.
2) Setting Company Objectives: Supporting goals and objectives to guide the entire
company.
3) Designing the Business Portfolio: Collection of businesses and products that make up
the company.
4) Planning Marketing Strategies: Detailed planning for each department designed to
accomplish strategic objectives.

2.1 Company Mission, Objective and Goals

Mission Statement

●​ Key market (customers) – who is your target client/customer? (generalize if needed)

●​ Contribution to the market (products/services) – what product or service do you
provide to that client /customer?
●​ Distinction (competences) – what makes your product or service unique, so that the
client would choose you?

Eg. Facebook
Product-oriented definition: “We are an online social network.”
Market-oriented definition: “We give people the power to build community and bring the
world closer together.”
Setting Company Objective and Goals
Broad mission → detailed supporting objectives

2.2 Business Portfolio

Business portfolio:
●​ The collection of businesses and products that make up the company
●​ Best fits the company’s strengths and weaknesses to opportunities in the
environment.

Portfolio analysis
The process by which management evaluates the products and businesses that make up
the company.
●​ Identify strategic business units (SBUs)
●​ An SBU can be a company division, a product line within a division, or sometimes a
single product or brand
●​ assess attractiveness of its various SBUs and decides how much support each
deserves. (Portfolio analysis + strategic planning = portfolio planning)

BCG approach: Classifying SBU using growth-share matrix

●​ Company invests funds from mature, successful products and businesses (cash
cows) to support promising products and businesses in faster-growing markets (stars
and question marks), hoping to turn them into future cash cows.

BCG Strength: Helps identify which SBUs will be future cash generators and users, guides
allocation of resources.
Weakness: Is often difficult to get and incorporate the needed competitive information, only
two dimensions are considered.

Product/market expansion grid

2.3 Planning Marketing and other functional strategies

Internal partnership: partner with other company departments

●​ Each company department can be thought of as a link in the company’s internal
value chain
External partnership: partner with others in the marketing system
●​ Join value chains of its suppliers, its distributors, and, ultimately, its customers. ​
E.g. Value delivery network

Segmentation: Dividing a market into distinct groups of buyers with different needs
Targeting: Evaluating each market segment’s attractiveness and selecting one or more
segments to serve
Positioning: Arranging for a product to occupy a clear, distinctive, and desirable place
relative to competing products

4Ps(Producer’s view) vs 4As(Consumers view)

●​ Product, Price, Place, Promotion
●​ Acceptability, Affordability, Accessibility, Awareness

2.5 Managing the Marketing Effort

SWOT Analysis

Marketing return on investment

(marketing ROI): The net return from a
marketing investment divided by the costs
of the marketing investment

●​ Standard performance measures: sales or market share

●​ Customer relationship measures: customer satisfaction, engagement, retention, and
equity

Session 3 Assessing Marketing Environment

3.1 Microenvironment
Definition: the actors close to the company that affect its ability to serve its customers

1)​ Company’s Internal Environment: functional areas such as top management,

finance, R&D and manufacturing, etc.

2)​ Suppliers - provide the resources needed to produce goods and services. ​
Possible problems:
●​ Supply shortage, Supply delay, Labor strikes, Rising supply costs •
●​ What can happen: Price increase, Defective products, Delayed delivery
Lower customer satisfaction

3)​ Marketing Intermediaries - help the company to promote, sell, and distribute its
goods to final buyers.
●​ Resellers: Distribution channel firms that help the company find customers or
make sales of them (wholesalers and retailers)
●​ Physical distribution firms: Help the company stock and move goods from
their points of origin to their destinations
●​ Financial intermediaries: Banks, credit companies, insurance companies,
and other businesses that help finance transactions or insure against the risks
associated with the buying and selling of goods.
●​ Marketing services agencies: Advertising agencies, media firms, marketing
consulting firms that help the company target and promote its products to
their right markets

4)​ Competitors - those who serve a target market with similar products and services.
●​ Potential new entrants
●​ Bargaining power of suppliers
●​ Bargaining power of Buyers
●​ Substitutes

5)​ Publics - any group that perceives itself having an interest in a company’s ability to
achieve its objectives.
●​ Financial publics, eg. Banks, investment analysts, stockholders
●​ Media publics, eg. newspapers, TV, magazines
●​ Government publics, eg. laws on product safety, truth in advertising
●​ Internal publics, eg. workers, volunteers, managers, board of directors
●​ General public
●​ Local public, eg. local community residents and organizations

6)​ Customers - five types of markets that purchase a company’s goods and services.
●​ Consumer markets (for personal consumption)
●​ Business markets (for production)
●​ Government markets (for public services)
●​ Reseller markets (to resell at a profit)
●​ International markets (the above buyers in other countries)

3.2 Macroenvironment

1)​ Demographics- Changes about people will affect the market

Eg. Family Structure, Geographic Shifts, Increased Education, Racial diversity

●​ Age Structure in US
-​ Baby boomers (born between 1946 and 1964)
-​ The wealthiest generation in U.S. history
-​ Spend carefully

-​ Generation X (born between 1965 and 1976)

-​ Seek success, but are less materialistic than the other groups
-​ Prize experiences rather than possession
-​ The first to grow up in the Internet era

-​ Millenials/Generation Y (born between 1977 and 2000)

-​ The most financially strapped generation, facing higher
unemployment rate and more debt
-​ Comfortable with digital technology

-​ Generation Z (born after 2000)

-​ The teen market
-​ Tend to do product research on their own

●​ Increasing diversity
-​ Targeting the LGBT
-​ Targeting consumers with disabilities
Eg. Samsung endorsing Paralympic athletes

2)​ Economic
●​ Economic development
●​ Changes in consumer spending pattern
●​ Changes in income

3)​ Natural (Eg. Walmart, sustainable marketing)

●​ More Government Intervention
●​ Shortages of Raw Materials
●​ Increased costs of energy
●​ Increased pollution

4)​ Technological
●​ Pace of Change
●​ R & D Budgets
●​ Increased Regulation
●​ Minor improvements enough?
Eg. Instant messaging: Decreasing the use of SMS
Digital camera: Brought challenges to Kodak

5)​ Political
●​ Increased Legislation
●​ Changing Enforcement
●​ Greater Concern for Ethics

6)​ Cultural
●​ Self-concept
Eg. Asians: More interdependent
Westerners: More independent
●​ Mindset
Eg. Asians: Holistic thinking (more abstractly) ​
Westerners: Analytic thinking (more concretely)

Eg. Rice farming in southern China, Rice farmers must work together to develop and
maintain an infrastructure upon→ Southern Chinese becoming more interdependent

Session 4 Understanding Consumer Behaviors

4.1 Buyer’s Characteristics

Cultural
1)​ Culture- set of values, perceptions, wants, and behaviors
Eg. Westerners: more independent self-construal, Asians more interdependent
self-construal.
●​ More independent self-construal: Angular Shape preferences → Logo design
●​ More independent self-construal: impulsive consumption
Ads aimed at decreasing impulse-related consumption may be more effective
when it induces an interdependent self-construal.

2)​ Subculture- shared value systems based on common life experiences and situations
Eg. Hispanic (easy to reach via Spanish media; brand loyal), Asian (more affluent
subculture; fast growing)
●​ Burger King sponsored an annual family-oriented Futbol Kingdom national
soccer tour in eight major Hispanic markets in US

3)​ Social Class- members share similar values, interests, and behaviors
●​ Share distinct product and brand preferences in clothing, home furnishings,
travel and leisure activity, financial services, automobiles, etc.

Social
1)​ Groups and social networks
●​ Membership group: One to which a person actually belongs
●​ Aspiration group: One which a person wishes to be a member of or wishes
to be identified with
●​ Dissociative group: One from which a person wishes to maintain a distance
due to differences in values or behaviors
●​ Signal membership group, or affiliate with the aspiration group or distance
from the dissociative group
●​ Social comparison → consumers’ satisfaction may also depend on what
other consumers get
●​ Opinion leaders: sends message of satisfaction to group members → Word
of Mouth
●​ Through Interactive, User-controlled content in online social media

2)​ Family - most important consumer-buying organization in society

●​ Eg. IKEA created an in-store area where retail phobic husbands and
boyfriends can hang out while the women shop.

3)​ Roles and status

Personal
1)​ Age and life-cycle stage
2)​ Occupation
3)​ Economic situation
4)​ Lifestyle
5)​ Personality and self-concept
●​ Brand personality attracts customers with similar personality​
Eg. MINI Cooper markets to personality segments of people who are
adventurous, individualistic, open-minded etc

Psychological

1)​ Motivation
●​ Needs provide motives for consumer behavior
●​ Maslow’s hierarchy of needs

2)​ Perception
●​ Selective attention - tendency for people to screen out most of the
information to which they are exposed
●​ Selective distortion - tendency for people to interpret information in a way
that will support what they already believe ​
Eg. Astrological sign; Personality types
●​ Selective retention - tendency to remember good points made about a
stimulus (e.g., a brand) they favor and forget good points about competing
brands
●​ Compromise effect - People tend to avoid extremes (Especially true in
Eastern cultures)
●​ Attraction effect （Decoy effect) - If A dominates B, but C does not dominate
B. People will feel it more justifiable to choose A
●​ People tend to choose the default option when perceiving it difficult to make
decisions

3)​ Learning - Changes in behaviors arising from experience

●​ A rewarding experience can reinforce the behavior that gives rise to this
experience.
E.g. Repeated purchase
●​ People may also “learn” (or more precisely, form implicitly) psychological
association between bodily experience and cognitive concepts
Eg. physical coldness activates a need for psychological warmth

4)​ Beliefs and Attitudes

●​ Belief: A descriptive thought that a person holds about something
●​ Attitude: A person’s consistently favorable or unfavorable evaluations,
feelings, and tendencies toward an object or idea
●​ Eg. The milk moustache campaign changed attitudes toward milk (in young
people)

4.2 Buyer’s Decision Process

1)​ Need Recognition
●​ Needs can be triggered by:
-​ Internal stimuli: own needs strong enough to drive behavior (e.g.,
hunger, cleanliness)
-​ External stimuli: Ads (e.g., dental floss), Friend, WOM
●​ Marketing implications:
-​ Consumers recognize their needs → They want a product/solution
-​ Consumers are not aware of their needs or cannot easily articulate
their needs →Marketers trigger a need → consumers buy a
product/solution
●​ Marketer’s Job:
-​ Understand consumers’ needs
-​ Trigger a need or problem, and provide a solution to the problem

2)​ Information Search - Which source is more reliable? How to influence consumer
information search
●​ Personal sources- family and friends
●​ Commercial sources—advertising, Internet
●​ Public sources—mass media, consumer organizations
●​ Experiential sources—handling, examining, using the product
●​ Not necessarily true that experiential sources will be more reliable (Eg. News
and insurance, cannot judge quality even if you buy them)
●​ Awareness set (only know subset of choices) → Consideration set (meet
the initial buying criteria) → Choice set (consumers choose from this set)
●​ Marketer’s Job: Enhance memory
●​ Some research proved that awareness can directly influence consumer
choice without being mediated by the attitude
-​ Sleep effect: After a delay, you may still remember the brand but may
not remember your attitude toward it
-​ Unconscious exposure may influence your choice
-​ Priming effects
-​ Spreading-activation model: Concepts are stored as “nodes” and
interconnected in our mind.

3)​ Evaluation of Alternatives

High-involvement items (Eg. iPhone): The expectancy-value model - consumers
evaluate products and services by combining their brand beliefs—the positives and
negatives—according to importance.
●​ What can marketers do? (using our phone example)
-​ Change attribute ratings
-​ Change attribute importance
-​ Adding or removing attributes
Low-involvement items: Affect-as-Information Heuristic - People may evaluate
options based on the feelings/emotions they experience at the time they make the
judgment
Eg. Capilano Suspension Bridge experiment

4)​ Purchase Decisions

●​ Attitudes of others - Depends on relationship type, confidence in one’s own
judgments, perceived similarity with others
-​ The intensity of other person’s attitude toward the consumer’s
preferred alternative.
-​ The consumer’s motivation to comply with the other person’s wishes
-​ Social interactions - Impression management (variety seeking),
embarrassment
●​ Unanticipated situational factors
-​ Ambient environment (Eg. Tempo of music)
-​ Emotion (Affect as-information heuristic)

5)​ Post-purchase evaluation

●​ Negative word-of-mouth spreads even faster than positive word-of-mouth
●​ Marketers can:
-​ Manage customer expectation
-​ Conduct consumer satisfaction survey and improve post-purchase
service

4.3 The Buyer Decision Process for New Products

1)​ Awareness
2)​ Interest
3)​ Evaluation
4)​ Trial
5)​ Adoption
​
Individual differences in innovativeness

●​ Innovators are venturesome—they try new ideas at some risk.

●​ Early adopters are guided by respect—they are opinion leaders in their communities
and adopt new ideas early but carefully.
●​ Early mainstream adopters are deliberate—although they rarely are leaders, they
adopt new ideas before the average person.
●​ Late mainstream adopters are skeptical— they adopt an innovation only after a
majority of people have tried it.
●​ Lagging adopters are tradition bound— they are suspicious of changes and adopt
the innovation only when it has become something of a tradition itself.

→Innovating firm should research the characteristics of innovators and early adopters in
their product categories and direct initial marketing efforts toward them

4.4 Types of Buyer Behavior

1)​ Complex Buying Behavior

●​ When the product is expensive, risky, purchased infrequently
●​ Marketers should present detailed information about the product

2)​ Dissonance-Reducing Buying Behavior

●​ Expensive, infrequent, and risky purchases
●​ May experience post-purchase dissonance (after-sale discomfort) when they
notice certain disadvantages of the product

3)​ Variety-Seeking Buying Behavior

●​ Market leader: dominate shelf space, keep shelves fully stocked, and run
frequent reminder ads to encourage habitual buying behavior
●​ Challenger firms: Encourage variety seeking by offering special deals,
coupons, free samples, etc.

4)​ Habitual Buying Behavior

●​ Marketer: Can do price and sales promotions
●​ Marketer: Can add new product features to differentiate own products
Session 5 Managing Market Information

5.1 Marketing Information System

5.2 Marketing Research

Step 1a: Define the Problem

Step 1b: Define marketing research objectives
-​ exploratory research: gather preliminary information to define research problem
-​ descriptive research: describe market and consumer characteristics
-​ casual research: test hypotheses

Step 2: Collect information = Collect data

Primary data: first-hand information collected for the specific purpose

Secondary data: using existing information for another purpose

Secondary data over Primary data

●​ Advantage
○​ be obtained more quickly and lower cost
○​ provide data an individual company cannot collect on its own information
○​ good starting point for research and help to define research problems and
objectives. But company must also collect primary data.
●​ Disadvantages:
○​ can rarely obtain all the data they need from secondary sources
○​ information might not be very usable

Primary Data Collection

1)​ [Qualitative] Observational Research (explorative)

●​ collect data by observing relevant people, actions, and situations
●​ provides ideas about a vague and broad problem

When use? dont have clear hypothesis → help generate more questions for next
step

Features interview small number, but spend a lot of time on each person

Methods ethnographic research (observing by experts)

-​ send observers to watch and interact with consumers in natural
environment.
Word Association, Laddering, neuromarketing (eye-tracking, face
reader

Advantage give fresh customer and market insights that people are unwilling or
unable to provide

Disadv attitudes, motives, or infrequent/long-term behaviour is difficult to

observe and interpret

2)​ [Quantitative] Surveys and questionnaires (descriptive)

●​ collect data by asking people questions

When use? -​ clear research objectives

-​ quantitative measures are needed

Methods 1.​ Choose Survey Method

2.​ Design Questionnaire (simple words, avoid complex and

leading questions)
3.​ sampling method
a.​ probability - known change + higher cost
-​ random, stratified, cluster sampling
b.​ nonprobability - lower cost
-​ convenience, judgement, quota sampling
4.​ Interview
5.​ Report (analyze data) → draw conclusions

Advantage flexible, best for descriptive information

Disadv unable/unwilling to answer, give pleasing or wrong answer

3)​ [Quantitative] Experimental Research (casual)

●​ collect data by selecting matched groups of subjects, giving them different
treatments, controlling related factors, and checking for differences in group
responces

When use? testable hypothesis

Advantage explain cause-and-effect relationship

Disadv may not be representative

difficult to control
may only applied to a specific situations

Step 3: Implementing the Research Plan: collecting, processing and analyzing the
information

Step 4: Interpreting and reporting the findings

Session 6 Customer-Driven Marketing Strategy

6.1 Market Segmentation

Definition
Dividing a market into smaller groups with distinct needs, characteristics, or behaviors that
might require separate marketing strategies or mixes

Objective: divide large, heterogeneous markets into smaller segments that can be reached
more efficiently and effectively with products and services that match their unique needs.

Assumption: Each consumer has a set of attributes

1)​ Geographic segmentation - Dividing a market into different geographical units such
as nations, provinces, regions, cities, or neighborhoods
●​ World region or country: Western Europe, Middle East, Pacific Rim, China
●​ Country region: East Asia, South Asia, North Asia
●​ Density: Urban, suburban, rural

2)​ Demographic segmentation

●​ Age
●​ Gender (eg. Ms Monopoly, Vanity Fair)
●​ Family life cycle: Young and single; married with no children; married with
children
●​ Income (Eg. Poundmart, AirAsia)
Pros:
●​ Data on demographics are more readily available for segmentation.
●​ Segmenting by the demographic variables allows companies to measure the
size and reach out to the segment easier
Cons:
●​ The demographic variables may not be closely associated with customers’
needs.

3)​ Psychographic segmentation - groups based on lifestyle or personality

characteristics
●​ Lifestyle: Achievers, strivers, survivors
●​ Personality: Compulsive, outgoing, authoritarian, ambitious

4)​ Behavioral segmentation - groups based on consumer knowledge, attitudes, uses,

or responses to a product.
●​ Occasions: Regular occasion; special occasion; holidays; seasonal
●​ Attitudes: coffee lover vs. tea lover
●​ Benefits: Quality, service, economy, convenience, speed
-​ Identifying the major benefits people seek in a product class, the types
of consumers who need each benefit, and the major brands/products
that offer each benefit
-​ Eg. Colgate cavity protection, extra white etc
●​ User status: Nonuser, ex-user, potential user, first-time user, regular user
●​ User rates: Light user, medium user, heavy user
●​ Loyalty status

Requirements for Effective Segmentation

●​ Measurable - The size, purchasing power, and profiles of the segments can be
measured.
●​ Accessible - The market segments can be effectively reached and served.
●​ Substantial - The market segments are large or profitable enough to serve. A
segment should be the largest possible homogeneous group worth pursuing with a
tailored marketing program.
●​ Differentiable - The segments are conceptually distinguishable and respond
differently to different marketing mix elements and programs.
●​ Actionable - Effective programs can be designed for attracting and serving the
segments

6.2 Market Targeting

Target market = A set of buyers sharing common needs or characteristics that the company
decides to serve.
1)​ Undifferentiated (mass) Marketing
●​ Ignore market segment differences and target whole market - focus on
common needs of consumers (Eg. homogenous products, basic
commodities)
●​ Advantage:
-​ Easy to implement
-​ Appropriate for something that is hard to target

●​ Disadvantage:
-​ Difficult to design something that satisfies all customers (so less
popular in modern marketing – especially given more heterogeneity in
tastes)
-​ Difficulties in brand cohesions
-​ Difficulty in competing against more focused firms that do a better job
of satisfying the needs of specific segments and niches

Eg. Coca Cola’s goal for mass marketing is to be market leader and achieve
market dominance

2)​ Differentiated (segmented) Marketing - Separate each segment and offer a

separate offer for each
●​ Advantage:
-​ Each niche has its needs catered to
-​ It’s a defensive strategy that prevents competitors from coming in
●​ Disadvantage:
-​ Very expensive; Need to invest a lot of R&D into each type and/or
promote separately
●​ Eg. Spotify, P&G

3)​ Concentrated (niche) Marketing - concentrate its efforts on one or a few key
segment(s) and give up on other segments.
●​ Advantage:
-​ Focus firm's resources
-​ Firms specialized and achieve a strong market position because of
unique expertise Allows small firms to have foothold against big firms
●​ Disadvantage:
-​ Involves higher than normal risk because you don’t spread your eggs
and rely on a couple of segments
-​ Potentially smaller profitability if the populations are small so there’s
smaller growth potential
-​ Large competitors may decide to come in
●​ Eg. Fedex, Dyson

4)​ Micromarketing (local / individual marketing)

Local marketing - Tailoring brands and promotions to the needs and wants of local
customer groups, Eg. Shopkick
Individual Marketing - Tailoring products and marketing programs to the needs and
preferences of individual customer, Eg. MINI Cooper

●​ Advantage:
-​ Technology allows this – caters to different needs yet can be
automated and relatively cheap, more accessible now due to spread
of technology like smart phones – one to one mass customization
●​ Disadvantage:
-​ Hard to pull off
-​ Maybe over-targeting / too many choices can confuse customers
-​ May be expensive/can only occur when technology is in place, data
storage, etc.; expensive for small firms

Target Broadly or Narrowly

Depends on:
●​ Company resources
●​ Product variability (gasoline vs. clothes)
●​ Market variability (Asian market of 1979 vs. 2009)
●​ Competitor’s marketing strategies

6.3 Market Positioning

Overview
●​ Consumers position products with or without the help of marketers.
Marketers must…
●​ Plan positions that will give their products the greatest advantage in selected target
markets
●​ Design marketing mixes (4Ps) to create these planned positions.

1)​ Identifying Differentiating Competitive Advantages

Positioning Maps
●​ Price
●​ Quality
●​ Service Environment/ location
●​ Choice of products/services

Eg. Porsche and BMW: Performance/ status, Volvo: safety

Choosing a Differentiation and Positioning Strategy

-​ serve the needs and preferences of well-defined target markets

1)​ Identifying a set of differentiating competitive advantages upon which to build a

position
●​ Competitive Advantage (differentiation): an advantage over competitors
gained by offering superior customer value, either through lower prices or by
providing more benefits that justify higher prices.
●​ Find points of differentiation along line of product, services, channels, people
or image
○​ Horizontal product differentiation: goods are different but with the
same price, Eg. Coke and Coke zero
○​ Vertical product differentiation: all consumers would perfer one if
they were sold at same price, Eg. iphone 256 gb vs iphone 128 gb
○​ Channel differentiation: gain competitive advantage through the way
they design their channel’s coverage, expertise, and performance
○​ Brand image differentiation: convey product’s distinctive benefits
and positioning

2)​ Choosing the right competitive advantages

●​ Companies should aggressively promote only one benefit
○​ Important: the difference delivers a highly valued benefit to target
buyers
○​ Distinctive: competitors don’t offer the difference, or company can
offer it in a more distinctive way.
○​ Superior: the difference is superior to other ways that customers
might obtain the same benefit
○​ Communicable: the difference is communicable and visible to buyers
○​ Preemptive: competitors can’t easily copy the difference.
○​ Affordable: Buyers can afford to pay for the difference.
○​ Profitable: the company can introduce the difference profitably.

3)​ Selecting an overall positioning strategy

●​ Positioning statement: • A statement that summarizes company or brand
positioning— it takes this form: To (target segment and need) our (brand) is
(concept) that (point-of-difference).

Session 7 Product, Services, and Branding

Strategy
Definitions​
Product is anything that can be offered in a market for attention, acquisition, use, or
consumption that might satisfy a need or want
-​ Include services, events, persons etc

Service is a form of product that consists of activities, benefits, or satisfactions offered for
sale that are essentially intangible and do not result in ownership
-​ Represent what buying the product or service will do for the customer

7.1 Classification of Products

1)​ Based on product form
Tangible products (e.g., physical goods) versus intangible products (e.g., service) • Service
as a product

Characteristics of Service:
●​ Intangibility- cannot be seen, tasted, felt, heard or smelled before purchase ​
Eg. cosmetic surgery, cannot see result before purchase → look for signals of service
quality to reduce uncertainty
●​ Inseparability- cannot be separated from their providers​
Services are first sold and then produced and consumed at the same time
●​ Variability- quality depends on who provides them and when, where, how​
Eg. different workers in Marriot Hotel
●​ Perishability- cannot be stored for later sale or use​
Service firms have difficult problems when demand fluctuates E.g, Delivery service
during 11.11 Shopping Festival

2)​ Based on Market

Consumer products: products and services bought by final consumers for personal
consumption.
●​ Convenience products: customers buy frequently, immediately, with minimal
comparison and buying effort
Eg. Newspapers, Candy, Fast food
●​ Shopping product: customer, in the process of selecting and purchasing, compares
on attributes such as suitability, quality, price and style
Eg. Furniture, clothing
●​ Speciality product: unique characteristics or brand identification for which a
significant group of buyers is willing to make a special purchase effort
Eg. Designer brands, services of medical/ legal professionals
●​ Unsought product: consumer does not know or does not consider buying
Eg. New innovations, life insurance, blood donations

Industrial products - purchased for further processing or for use in conducting a business
●​ Materials and parts, Eg. Wheat, lumber, iron
●​ Capital items, Eg. Buildings, elevators, large computer systems
●​ Supply and services, Eg. stationery, management consulting

7.2 Three levels of product

Levels of product and Services
1)​ Core customer value
●​ represents what the buyer is really buying.
●​ Benefits represent utility for consumers.
2)​ Actual product
●​ It represents the design, brand name, and packaging that delivers the core
benefit to the customer.
3)​ Augmented product
●​ Represents additional consumer services and benefits.

Individual product decisions

1)​ Product Attributes
●​ Product quality - performance quality and conformance quality (consistency
and defect rate)
●​ Product features - to differentiate product from competitors’ products
●​ Product style and design - appearance and usefulness
2)​ Branding - product name, tern, sign and design
3)​ Packaging
4)​ Labeling and Logos
5)​ Product Support Service

Product line decisions

Product Line: a group of products that are closely related because they function in a similar
manner, are sold to the same customer groups, are marketed through the same types of
outlets, or fall within given price ranges

-​ product line length - the number of items in the product line

Too short: increase profits by adding items
Too long: increase profits by dropping items.

1)​ Line filling: Adding more items within the present range of the line (e.g., new flavors)
●​ Potentially more profits
●​ Satisfying dealers
2)​ Line stretching: When a company lengthens its product line beyond its current
range
●​ Downward: Adding low-end products
●​ Upward: Adding high-end products

Product mix decisions

1)​ Product mix width: Number of different product lines ​
Apple has Iphone, Macbook, iPod
2)​ Product mix length: Number of product types in a product line
Apple: iphone 13, iphone 13 mini, iphone 13 pro, pro max
3)​ Product line depth: Number of versions offered of each product in the line. ​
iphone X, 11, 12, 13
4)​ Product mix consistency: How closely related the various product lines are in end
use, production requirements, distribution channels, or some other way. ​
Consumer products that go through the same distribution channels

7.3 Branding Strategy

1)​ Brand positioning

●​ Product or service attributes​
Eg: Fedex - speed, reliability, quality, convenience
●​ Desirable benefit
Eg: Fedex 0 peace of mind in knowing that packages are delivered
●​ Beliefs, values, feelings​
Engage on deep emotional level

2)​ Brand name selection

●​ Desirable qualities
●​ Suggest benefits and qualities
●​ Easy to pronounce, recognize, and remember
●​ Distinctive
●​ Extendable
●​ Translatable for the global economy
●​ Capable of registration and legal protection

3)​ Brand sponsorship

●​ National brand (manufacturer’s brand)​
Eg. Apple, Samsung
●​ Private brand (Store brand)​
Eg. Bestbuy in Parkenshop
●​ Licensed brands ​
Eg. Warner Bros
●​ Co-brand​
Eg. Luckin Coffee and Maotai

4)​ Brand development

●​ Line Extension - Expansion of existing product line
○​ Eg. Diet Coke
●​ Brand Extension - adding new product category using the existing brand name
○​ Eg. Apple Watch
●​ Multibrands - launching different brands within the same product category
○​ Eg. Coke and Fanta
●​ New brands: introducing new brand when adding new product category
○​ Eg P&G develops many brands for different product categories

Session 8 New Product Development and PLC

8.1 New Product Development

Definition: Development of original products, product improvements, product modifications,
and new brands through the firm’s own R&D efforts.

1)​ Idea generation

●​ Purpose: to create large number of ideas
●​ Internal sources: formal R&D
●​ External sources:
○​ Customers - analyze customer questions and complaints, invite
customers to share suggestions and ideas​
Eg. 3M innovation centres - Customer-driven new-product ideas
○​ Competitors
○​ Distributors
○​ Suppliers
○​ Outsourcing partners

2)​ Idea Screening

●​ Purpose: to reduce number of ideas
●​ Highly subjective and non-scientific
●​ Strategic fit with core competencies and product expertise.
●​ R-W-W (“real, win, worth doing”) •
○​ Real need and desire for the product?
○​ Can we win?
○​ Is it worth doing (i.e., profitable)?
3)​ Concept Development and Testing

4)​ Marketing Strategy Development

Strategy statements describe (STPD and 4Ps):
●​ The target market, product positioning, and sales, share, and profit goals
●​ for the first few years.
●​ Product price, distribution, and marketing budget for the first year.
●​ Long-run sales and profit goals and the marketing mix strategy.

5)​ Business Analysis

●​ Purpose: review of sales, costs, and profit projections for a new product to
find out whether these factors satisfy the company’s objectives
●​ Sales, Clicks, Views
●​ Contribution (Profit), CTR, Conversion Rate
●​ ROI

6)​ Product Development

Purpose: Developing the product concept into a physical product to ensure that the
product idea can be turned into a workable market offering.
Undergo rigorous test to make surer safe and effective performance

7)​ Test Marketing

●​ Introduce product/ marketing program in limited number of real market
settings.
●​ Avoids “broad launch” mistakes

8)​ Commercialization
Broad launch of product if market test results are positive.
●​ Timing of launch is important.
●​ Potential Rollout plans
○​ Local
○​ Regional
○​ National
○​ International
8.2 PLC Strategies

Product Life-Cycle

1)​ Product Development - Company finds and develops new-product idea, sales are
0, company investment costs mount
2)​ Introduction - period of slow sales growth, profits are nonexistent
3)​ Growth - period of rapid market acceptance and increasing profits
4)​ Maturity - slowdown in sales growth, profits level off or decline
5)​ Decline is the period when sales fall off and profits drop

●​ Style - A basic and distinctive mode of expression

●​ Fashion - A currently accepted or popular style in a given field
●​ Fad - A temporary period of unusually high sales driven by customer enthusiasm and
immediate product or brand popularity

Product Life-Cycle Characteristics

Product Life-cycle Strategies

Positioning Strategy at Different Product Life Cycle Stages

1)​ Breakaway positioning strategy
●​ Re-conceptualize the product
●​ Introduce a new dimension to the product (e.g. Swatch adding “fun” to watch)

2)​ Pay attention to new technology

●​ DOS → Windows (a new dimension: Using mouse to control)
●​ Film camera → digital camera
●​ Flat screen → foldable screen

Maturity Stage Modifying Strategies

1)​ Modifying the market: increase consumption by finding new users and new market
segments for its brands

2)​ Modifying the product: changing characteristics such as quality, features, style,
packaging, or technology platforms to retain current users or attract new ones.
3)​ Modifying the marketing mix: mix—improving sales by changing one or more
marketing mix elements.
●​ offer new or improved services to buyers. (Product)
●​ Cut prices to attract new users. (Price)
●​ Launch a better advertising campaign or use aggressive sales promotions.
(Promotion)
●​ Move into new marketing channels to help serve new users. (Place)

Decline Stage Strategies

1)​ Maintain the product
2)​ Harvest the product
3)​ Drop the product

Session 9 Pricing Strategies and Tactics

Price
●​ amount of money charged for product/ service
●​ the only element in marketing mix that produces revenue

9.1 Two Major approaches of pricing

1.​ Product Costs – Cost-based pricing strategies
2.​ Customer value – Value-based pricing strategies

Cost-based pricing
●​ Set prices based on the costs for producing, distributing, and selling the product plus
a fair rate of return for its effort and risk.

Company and Product Costs:

●​ Fixed costs - costs that do not vary with production or sales level
-​ Rent; Utilities, Interest and Executive salaries
●​ Variable costs - costs that vary with the level of production
-​ Packaging; Raw materials
●​ Total costs = fixed cost + (variable cost/unit * expected level of production (Q))
●​ Average cost - cost associated with a given level of output. (production may become
inefficient if a brand tries to manufacture more products than its designed capacity)
-​ Experience or learning curve is when the average cost falls as production
increases because fixed costs are spread over more units.

How to adopt Cost-based pricing

●​ Cost-plus pricing (also considered as target return pricing)
-​ adds a standard markup to the cost of the product
●​ Break-even pricing
-​ the price at which total costs are equal to total revenue and there is no profit.

Pros:
●​ simple
●​ avoids price competition
Cons:
●​ ignores demand and competition

Value-based pricing

●​ Good-value pricing: right cobination of quality and good service to fair price
○​ Everyday low pricing (EDLP) - constant low price but few or no temporary
price discount
○​ high-low pricing: usually higher prices but running frequent temporary
promotions to lower prices on selceted items
●​ Value-added pricing: attaches value-added features and services to support higher
prices and build pricing power (monopoly in price competition)

Factors to Consider when setting prices

1)​ analyze the price-demand relationship
-​ Normally: demand ∝ 1/price, i.e. higher price = lower demand
-​ luxury good: higher price (think higher quality) cause higher demand
2)​ price elasticity of demand

9.2 New Product Pricing Strategies

Market-skimming pricing
-​ Set high initial price to skim maximum revenues layer by layer from the segments
willing to pay the high price, the company make fewer but more profitable sales.

Conditions:
●​ Product quality and image must support the price
●​ Buyers must want the product at the price
●​ Competitors should not be able to enter the market easily

Problems:
●​ Competitors may lower price before you
●​ consumers may wait for you to lower price

Market-penetration pricing
-​ low initial price to penetrate the market quickly and deeply to attract a large number
of buyers quickly to gain market share

Conditions:
●​ Price sensitive market
●​ Production and distribution costs must fall as sales volume increases
●​ Low prices must keep competition out of the market

Problems:
●​ Low price may signal poor quality

9.3 Product Mix Pricing Strategies

Product line pricing
●​ Takes into account the cost difference between products in the line, customer
evaluation of their features, and competitors’ prices.
●​ Price difference = perceived quality differences within same product line

Optional product pricing

●​ Take into account optional or accessory products along with the main product
●​ Eg. A car buyer may choose to order a GPS navigation system & Bluetooth wireless
communication

Captive product pricing/Two-part pricing

●​ Involves products that must be used along with the main product.
●​ Price the main, or driver product low (sometimes lower than the cost) and seek high
margins on the supplies
●​ Eg. FUJI Instax and Film, Printer and Ink

Product bundle pricing

●​ Combine several products and offer the bundle at a reduced price
●​ Price bundling can promote the sales of products
●​ Eg. Bundle burger, fries and soft drink at combo price

9.4 Price Adjustment Strategies

Discount and allowance pricing
-​ Reduce prices to reward customers for certain responses such as paying early,
volume purchases, off-season buying
-​ Eg. Discounts: Cash discount for paying promptly, quantity discount for buying in
large volume​
Allowances: trade-in allowance for turning in old item when buying new one

Segmented pricing (price discrimination)

Company sells a product at two or more prices even though the difference is not based on
cost.

Conditions to be effective:
●​ Market must be segmentable
●​ Segments must show different degrees of demand
●​ Must be legal
1)​ Maximize profit
●​ Price higher when customer price sensitivity is low; price lower when
customer price sensitivity is high
2)​ Should be difficult for customers to switch to another group of customers
●​ Different consumption time: Dinner vs. afternoon tea; seasonal change
●​ Require identity proofs: Students, the elderly, the disabled
●​ Different locations: Outlet vs. stores in downtown
3)​ Ensure fairness
●​ Offer a cheaper price to consumers who buy a larger volume
●​ Loyal consumers
●​ Consumers who are willing to make efforts to get a cheaper price

Psychological pricing
●​ sellers consider psychology of prices and not simply the economics
●​ 14.99 instead of 15.00

Reference prices
●​ Prices that buyers carry in their minds and refer to
●​ Eg. display product next to more expensive ones to imply that it belongs to the same
class

Promotional pricing​
Temporarily price below list price or cost to increase demand

1)​ Loss-leader pricing - drop price on well known brands to stimulate additional store
traffic

2)​ Special-event pricing - well establish special pricing in certain seasons to draw in
more customers

3)​ Cash rebates - offer cash rebates to encourage purchase of the manufacturers
products within a specified time period

4)​ Low-interest financing: the company can offer customers low-interest financing

5)​ Longer payment terms: sellers especially mortgage banks and auto companies
stretch loans over longer periods and thus lower the monthly payment

6)​ Warranties and service contracts: adding a free or low cost warranty or service
contract

Dynamic pricing
-​ Adjust prices continually to meet characteristics and needs of individual customer
and situations

International pricing
Set prices based on country-specific factors
●​ Economic conditions
●​ Competitive conditions
●​ Laws and regulations
●​ Infrastructure
●​ Company marketing objectives

Session 10 Integrated Marketing Communication

Strategy and Channel Strategy
Three communication objectives: To inform, to persuade, to remind

10.1 Integrated Marketing Communication Strategy

Promotion Mix

Examples Payment Strengths Weakness

Advertisin Eg. mass Fees paid for Efficient means High absolute
g broadcast, space or time for reaching large costs
print, numbers of
internet, people Difficult to receive
outdoor feedback

Sales Eg. mass Wide range of Effective at Easily abused

promotion Discounts, fees paid changing
coupons, behavior in short Can lead to
displays, run promotion wars
demonstrat
ions Very felcible Easily duplicated

Personal Sales Cust Fees paid to Immediate Extremely

selling presentatio omiz salespeople as feedback expensive
ns, trade ed salaries or
shows commissions Very persuasive Messages may
differ between
Can give salespeople
complex
information

Public Press mass No direct often most Difficult to get

relations releases, media payment credible source in media cooperation
sponsorshi consumer;s mind
ps, special
events,
web pages

Push Strategy - pushing the product to the consumers by inducing channel members to
carry the product and promote it to final consumers.
-​ used by B2B companies

Pull strategy - directs its marketing activities toward the final consumers to induce them to
buy the product and create demand from channel members
-​ used by B2C companies

Effective Marketing Communication

Integrated marketing communication is the integration by the company of its
communication channels to deliver a clear, consistent, and compelling message about the
organization and its brands.

1)​ Identifying the Target Audience

2)​ Determining the Communications Objective
3)​ Designing a Message - what to say and how to say it
●​ Rational appeal relates to the audience’s self-interest.
●​ Emotional appeal is to stir up positive or negative emotions to motivate a
purchase. Eg. love, joy, and humor to fear and guilt.
●​ Moral appeal is directed at the audience’s sense of what is “right” and
“proper.”

4)​ Choosing Communication Channels and Media

●​ Personal communication: two or more people communicating directly
(Opinion leaders, Buzz marketing
●​ Non-personal communication: media that carry messages without personal
contact or feedback and affect the buyer directly (Major media, events, online
social networks)
5)​ Selecting the Message Source ​
Eg. Celebrities, professionals
6)​ Collecting Feedback
10.2 Channel Strategy
Marketing Channel
●​ Individuals and firms involved in the process of making a product or service available
for use or consumption by consumers or industrial users.

●​ Importance:
-​ Increase efficiency: buying and selling;
-​ Reduce cost: inventory cost; risk; investment on the store
-​ Increase consumer value: convenience, delivery service, promotion

●​ Channel level: each layer of marketing intermediaries performs some work in

bringing the product closer to the final buyer.
-​ Direct marketing channel: no intermediary levels (company directly sell to
customers)
-​ Indirect marketing channel: involve intermediaries
●​ producer: a greater number of levels = less control and greater channel complexity
●​ customer: marketing channel intermediaries (distributor) reduces the number of
channel transactions → make buying a lot easier

Channel Behavior and Organization

Conventional Distribution Systems

• Consist of one or more independent producers, wholesalers, and retailers.
• Each seeks to maximize its own profits and there is little control over the other members.

VMS (vertical marketing system): work for the same goal, act as unified system

Corporate VMS Controling the whole distribution chain - more flexible and more
efficient​
eg. zara

Contractual VMS = Franchise organization - obtain economies of scale impact

eg. mcdonalds

Administered VMS no contract, the largest and most powerful company will
dominate the activities of the other companies. eg. P&G,
Walmart

Horizontal marketing systems two or more companies at one level that join together to
follow a new marketing opportunity
eg. McDonald’s places “express” versions of its
restaurants in Walmart stores. McDonald’s benefits from
Walmart’s heavy store traffic, and Walmart keeps hungry
shoppers from needing to go elsewhere to eat.

Hybrid marketing channels

10.3 Digital Marketing

-​ the use of technology-intensive platforms such as the internet, mobile networks and
devices, and social media to engage directly with carefully targeted individual
consumers, consumer communities, and businesses.
Email marketing
social media marketing
mobile marketing
Content marketing

Paid media is any form of advertising/content/media that you pay for.

Owned media is any media channel that your company owns and controls.
Earned media is any coverage or promotion that your business receives
without paying for it.
Shared media is any type of content that your customers or followers share on
social media.