Marketing Management

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Definition of Marketing:

Definition of Marketing the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational objectives.

The Marketing Concept - Focus on the Customer:

The Marketing Concept - Focus on the Customer Market focus Customer orientation Co-ordinated marketing Profit seeking

Drawbacks of Marketing Concept:

Drawbacks of Marketing Concept ignores public influences values & ideas

Recent Development -- Societal Marketing Concept:

Recent Development -- Societal Marketing Concept Concerns public welfare and social responsibility e.g. CLP

The role of Marketing:

The role of Marketing Marketing Analysis Marketing Planning Marketing Implementation Marketing Control

Marketing Research:

Marketing Research Gathering, recording and analysis of data to solve a specific problem that is too important to be answered by guessing an informational input to decisions

What M.R. can tell ?:

What M.R. can tell ? How satisfied the consumers are How products are perceived Evaluate the sales potential Determine the effectiveness of ad Predict the impact of price changes

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Defining the Problem & Research Objectives Developing the Research Plan Implementing the Research Plan Interpreting and Reporting the Findings The Marketing Research Process

1. Defining the problem and research objectives:

1. Defining the problem and research objectives to find out the real problem but not the symptom set the research objectives research approaches: exploratory descriptive causal

2. Developing research plan:

2. Developing research plan Determine specific information needs Source of information secondary data Internal External primary data

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Planning primary data collection research approach contact methods sampling plan research instruments

Research approach:

Research approach Observational research survey research focus group experimental research

Contact methods:

Contact methods Telephone survey mail questionnaires personal interviews

Sampling plan:

Sampling plan sampling unit sampling size sampling procedure

Sampling Techniques:

Sampling Techniques Probability Sampling All population members have a known probability of being in the sample Simple Random Sampling Each population member, and each possible sample, has equal probability of being selected Stratified Sampling The chosen sample is forced to contain units from each of the segments or strata of the population

Sampling Techniques (Contd.):

Sampling Techniques (Contd.) Cluster Sampling Involves dividing population into subgroups Random sample of subgroups/clusters is selected and all members of subgroups are interviewed Very cost effective Useful when subgroups can be identified that are representative of entire population

Research instrument:

Research instrument The most common instrument is questionnaire what questions to ask question structure wording of question order of question

Implementing the research plan:

Implementing the research plan collecting and analyzing data

Interpreting and reporting the finding:

Interpreting and reporting the finding Interpret the findings, draw conclusions and report to management the manager will utilize these findings to make decisions

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Customer Behaviour

Consumer behaviour:

Consumer behaviour refers to the buying behaviour of final consumers it includes the analysis of factors that influences purchase decisions and product use


Definition Consumer behaviour studies how individuals, groups,and organizations select, buy, use, and dispose of goods, services, ideas,or experiences to satisfy their needs and desires.

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Buyer’s black box Buyer’s response Marketing and other stimuli Consumer Behaviour

Internal factors:

Internal factors 1. Perception the process by which we select organize and interpret these stimuli into a meaningful and consistent picture

2. Motivation:

Esteem Needs 2. Motivation to fulfill some kind of need Self-actualization Needs Esteem Needs Social Needs Security Needs Physiological Needs

3. Learning:

3. Learning creates changes in behaviour through experience and practice

4. Attitude:

4. Attitude Consistently favourable or unfavourable evaluation, feelings and tendencies toward an idea.

5. Personality:

5. Personality refers to the unique psychological characteristics that lead to relatively consistent and lasting responses E.g. Vita Distilled Water

6. Demographic factors:

6. Demographic factors such as age, sex, income, education, occupation,….

Industrial Buying behaviour:

Industrial Buying behaviour

Industrial market:

Industrial market Consists of all the individuals and organizations acquiring goods and services that enter into the production of other products and services that are sold, rented, or supplied to others

Types of buying situations:

Types of buying situations Straight rebuy modified rebuy new task buying

Industrial buying process:

Industrial buying process Recognise the problem determine product needs and describe product specifications search for suppliers assess and select suppliers evaluate overall performance

Participants in the industrial buying process:

Participants in the industrial buying process Users influencers buyers deciders gatekeepers

Factors affecting industrial buying behaviour: External factors:

Factors affecting industrial buying behaviour: External factors Level of demand economic outlook budget constraints supply conditions political/legal and competitive environmental changes rate of technological change

: internal factors:

: internal factors Organizational influences interpersonal influences

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Industrial market Businesses do not buy products for final consumption. Instead, they make purchases to be used directly or indirectly in meeting the needs of final consumers. Consumer market For direct consumption B uying motive: Differences between consumer market and industrial market

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Industrial market Tend to be larger Consumer market Tend to be smaller Size of purchase: Differences between consumer market and industrial market

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Industrial market Less frequent Consumer market More frequent Differences between consumer market and industrial market Frequency of purchase:

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Industrial market Stable and long term relationship with seller Consumer market Businesses that produce products for sale to final consumers often have little contact with customers Buyer-seller relationship: Differences between consumer market and industrial market

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Industrial market More complex, customized; product support is critical. Consumer market Less complex, standardized; product support is important Product: Differences between consumer market and industrial market

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Industrial market Competitive bidding and negotiation; list prices on standard products Consumer market List prices Differences between consumer market and industrial market Price:

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Industrial market More direct (shorter) Consumer market Less direct (longer) Differences between consumer market and industrial market Distribution:

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Industrial market Emphasis on personal selling Consumer market Emphasis on advertising Differences between consumer market and industrial market Promotion:

Marketing strategy:

Marketing strategy the plan of action for accomplishing the marketing objectives consists of specific strategies for target market marketing mix marketing expenditure level

Analyze and select target market:

Analyze and select target market Market the set of all actual and potential buyers of a product

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steps of selecting target market market segmentation market targeting market positioning

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Step 1 Marketing Segmentation

Market segmentation:

Market segmentation the act of dividing large, heterogeneous (dissimilar) markets into smaller, homogeneous (similar) submarkets.

Advantages of segmentation:

Advantages of segmentation Precise market definition better analysis of competition rapid response to changing market needs effective resources allocation effective strategic planning

Dimensions for segmenting consumer markets:

Dimensions for segmenting consumer markets Geographic segmentation dividing the market into different geographical units.

Demographic segmentation:

Demographic segmentation dividing the market into groups based on variables like age, sex, family size, family life cycle, income, occupation, education, religion, race, nationality,… popular because of consumer needs vary closely with demographic variables easier to measure

Psychographic segmentation:

Psychographic segmentation based on social class, lifestyle, or personality characteristics

Segmentation by benefits:

Segmentation by benefits base on what a product will do rather than consumer characteristics

Criteria for effective segmentation:

Criteria for effective segmentation Substantial enough to serve Accessible by marketing means Differentiable: conceptually distinguishable and responding differently

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Actionable: effective programs can be designed for attracting target customers Measurable: size of market segment, purchasing power and profile of target customers

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Step 2 Market Targeting

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to reveal the firm market-segment opportunities to evaluate the various segments segment size and growth segment structural attractiveness company objectives and resources

Undifferentiated marketing:

Undifferentiated marketing A firm decides to ignore market segment differences and go after the whole market with one offer. E.g. McDonald

Differentiated marketing:

Differentiated marketing A firm decides to target several market segments and design separate offers for each E.g. Giordano: men, ladies

Concentrated marketing:

Concentrated marketing A firm goes after a large share of one or a few sub-markets. Selected segments Specific products Specific markets

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Step 3 Market Positioning

Market positioning:

Market positioning to arrange for a product to occupy a clear, distinctive and desirable image relative to competing products in the minds of target consumers.

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Purpose: to reinforce or develop an image concerns a product in customer mind

Ways of positioning:

Ways of positioning Product features product benefits associating the product with a use or application user category

Steps of positioning:

Steps of positioning 1. Identifying a set of possible competitive advantages 2. Selecting the right competitive advantages 3. Communicating and delivering the chosen position to the market

Marketing Mix:

Marketing Mix the set of controllable marketing variables that the firm blends to produce the response it wants in the target market 4 Ps product price place promotion


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 3 levels of product core product actual product augmented product

Product Classification:

Product Classification Convenience goods Shopping goods Specialty goods Unsought goods

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Classification of consumer goods

Individual product decisions:

Individual product decisions Product attribute decisions Brand decisions Packaging decisions Product-Support decisions

Product Line Decisions:

Product Line Decisions A product line is a group of products that are related in function, customer-purchase needs, or distribution channels.

Product mix decisions:

Product mix decisions the set of all product lines and items that a particular seller offers for sale 4 dimensions width length depth consistency

Why does a company need new products?:

Why does a company need new products? Obtain greater profits/ROI Capture larger market share Meet customers’ changing needs & tastes Shorter product life cycle Build competitive advantages Planned obsolescence …

New product development:

New product development Steps: Product idea generation Product idea screening and product concept development Business analysis Product testing Market testing Commercialization

Product life cycle (PLC):

Product life cycle (PLC) the course of a product’s sales and profit over its lifetime 4 stages: introduction growth maturity decline

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Introduction Growth Maturity Decline Sales Profit Time Sales and profit

Introduction Stage:

Introduction Stage slow sales growth profit are nonexistent high promotion spending a few competitors usually focus on high-income groups

Growth Stage:

Growth Stage rapid market acceptance new competitors will enter introduce new product features market will expand profit increases

Maturity Stage:

Maturity Stage slowdown in sales competitors begin marking down prices,…. to find better versions of the product drop in profit only well-established competitors

Decline Stage:

Decline Stage sales fall off and profits drop some firms withdraw from the market

Ways to extend PLC:

Ways to extend PLC To increase the frequency of use to add new user to find new uses to change package size, label, or product quality

Factors influencing pricing decisions ---- Internal Factors:

Factors influencing pricing decisions ---- Internal Factors 1. Business and marketing objectives pricing objectives derive directly from company objectives

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2. Marketing mix strategy must coordinate with product, design, distribution and promotion decisions

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3. Costs set the floor for the price

External factors:

External factors 1. The market and demand Pricing in different types of market consumer perception of price and value

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2. Competitors’ prices and offers

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3. Other external factors economic conditions reseller conditions Government

Pricing Objectives:

Pricing Objectives Profit maximizing objective Market share objective Competition objective Social objective Image objective

General Pricing Approaches:

General Pricing Approaches Cost-based approach Buyer-based approach Competition-based approach

Pricing Strategies for New Products:

Pricing Strategies for New Products Market-skimming pricing Penetration pricing

Price-adjustment strategies:

Price-adjustment strategies Discount pricing and allowances cash discounts quantity discounts functional discounts seasonal discounts trade-in allowances promotional allowances

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Discriminatory pricing customer-segment pricing product-form pricing location pricing time pricing

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Psychological pricing Promotional pricing loss leaders special event pricing cash rebates

Promotion tools:

Promotion tools advertising sales promotion public relations personal selling

Setting the promotion budget:

Setting the promotion budget Affordable method ignores the effect of promotion on sales

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Percentage-of-sales method wrongly view sales as the cause of promotion rather than as the result

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Competitive-Parity method

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Objective-and-task method

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Five important decisions:

Five important decisions 1. Setting objectives to inform, persuade, or remind

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2. Setting the advertising budget stage in the PLC market share competition advertising frequency product differentiation

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3. Creating the advertising message message generation message evaluation message execution

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4. Selecting advertising media reach, frequency, impact media types media vehicles media timing

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5. Advertising evaluation communication effects sales effects

Sales promotion:

Sales promotion A wide variety of short-term incentive tools coupons premiums contests buying allowances to stimulate consumers, the trade partners, and the company’s own salesforce

Purposes of sales promotion:

Purposes of sales promotion to stimulate consumer trials, to reward loyal customers, to increase repurchase rate, to cement long-term relationship with retailers,…… used together with advertising or personal selling

Steps of sales promotion:

Steps of sales promotion Setting sales-promotion objectives selecting sales-promotion tools pretesting and implementing evaluating

Public relations:

Public relations Building good relations with the company’s various publics obtaining favorable publicity building up good “corporate image” handling or heading off unfavourable rumors, stories and events

Public relations tools:

Public relations tools Create news speeches special events written materials audiovisual materials corporate identity materials contributing money and time to public-service activities

Major public relations decisions:

Major public relations decisions Setting public relations objectives choosing public relations messages and vehicles implementing the public relations plan evaluating public relations results

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Personal Selling & Sales Management

Steps of sales management:

Steps of sales management Setting salesforce objectives designing salesforce strategy structure, size and compensation recruiting and selecting training supervising evaluating

Personal Selling Process:

Personal Selling Process Prospecting Preapproach Approaching the prospect Making the presentation Handling Objections Close the sale Follow up

Factors affecting the promotion mix:

Factors affecting the promotion mix Type of product/market push vs. pull strategy buyer readiness state PLC stage

Placing Products:

Placing Products The role of distribution is getting a product to its target market. Channels of distribution: the routes followed by products as they change ownership in the movement from production to consumption

Distribution channel functions:

Distribution channel functions Information promotion contact matching Negotiation physical distribution financing risk taking

Designing distribution channel:

Designing distribution channel Selecting the proper type of distribution channel selecting the types of middlemen determining the intensity of distribution

Meaning of logistics:

Meaning of logistics the movement of all materials : raw materials : from the sources to the processing point finished goods : from the plant to ultimate customers

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concerns with the management of physical flow

Major logistics activities:

Major logistics activities Transportation inventory maintenance order processing warehousing materials handling Protective packaging acquisition product scheduling information maintenance

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Marketing services


                                                                                                                                                                                                                                                              Definition Service is an activity or benefit that one party can offer to another that is essentially intangible and does not result in the ownership of anything. Its production may or may not be tied to a physical product Diamond medical diagnosis

The Servuction system:

The Servuction system 5 elements influence the service: Organization and system (invisible) Environment (visible) Contact personnel / service provider Customer A Customer B

The Servuction System:

The Servuction System

Characteristics of service:

Characteristics of service Intangibility inseparability heterogeneity perishability fluctuating demand

Marketing Mix for Services:

Marketing Mix for Services Product Price Promotion Place + People Process Physical evidence


Product Tangiblize the intangible core and supplementary services customization vs. standardization the service mix


Price Customer being inseparable in the process, outlay by customers include: Time Physical effort Psychological burdens (mental effort, negative feelings) Negative sensory burdens (unpleasant sensations affecting any of the 5 senses)


Price Good understanding of the costs is needed as decrease of above burdens justify higher pricing Difficult to define a unit of service, considering: Visible vs. invisible Difference in speed Direct contact vs. impersonal channel


Promotion Different from advertising for goods Intangible nature ‘vivid information’ that produce a clear impression on the senses, e.g. symbols Services are harder for customer to evaluate Use tangible cues, e.g. high calibre personnel (DHL) Strong organizational image Use personal information source, e.g. celebrity endorsements Engaging in post-purchase communication


Place Identify core services Reduce contact of low contact element e.g. download application forms Use of technology to create new channels: e.g. Octopus for ticketing, online shopping Convenience Number of outlets Location scheduling

Fluctuating Demand:

Fluctuating Demand Supply side Cross training Use part time staff Rent or share facilities & equipment Schedule down time during period of low capacity (take vacation) Extra service hours Use technology Use price Demand side Price discrimination Reservation Overbook Queuing (make the waiting more tolerable) Shift demand Change the salesperson’s assignment Create promotional events


People Importance of customer contact personnel Internal marketing (customer focus philosophy, bonus, awards, recognition as incentive) Ritzcarlton

Internal Marketing:

Internal Marketing


Process Customer involvement in production Educate customers in using technology or self-service Develop service oriented internal process Logistic support Empowerment of staff for service recovery

Physical Evidence:

Physical Evidence Intangible nature makes service difficult to evaluate Communicate through corporate image, word of mouth, pricing physical evidence, warranty, awards ritzcarlton Judge by process, post-purchase information search – needs re-assurance

Meaning of CRM:

Meaning of CRM the process of creating, maintaining, and enhancing strong, value-laden relationships with customers and other stakeholders.

Rationale behind CRM:

Rationale behind CRM to retain current customers vs. to attract new customers new Marketing view: the science and art of finding, retaining and growing profitable customers

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challenges changing demographics more sophisticated competitors overcapacity customer lifetime value

Key concepts in relationship building:

Key concepts in relationship building Customer satisfaction perceived performance > expectations Customer loyalty and retention create emotional affinity, not just rational preference share of customer cross-selling

Tools to build lasting customers:

Tools to build lasting customers Frequency marketing programs affinity program co-marketing and co-branding customisation and prompt response create long term contract

Meaning of consumerism:

Meaning of consumerism a movement that put pressure on businesses to consider consumer needs and interests consumer rights right to be informed right to be heard right to safety right to choose

Why consumers need protection?:

Why consumers need protection? Manufacturer may be unfair to consumers consumers may be unable to judge the quality insufficient information to evaluate service advertisements are exaggerating concern about health

Consumer protection in Hong Kong:

Consumer protection in Hong Kong Legislation Consumer Council

Responses of businesses to consumerism:

Responses of businesses to consumerism Provide more and better information improve product safety quicker response to consumer complaints provide customers with a wide range of products and services

International marketing:

International marketing The process of focusing the resources and objectives on global market opportunities

Environmental forces in International Markets:

Environmental forces in International Markets Cultural environment economic environment political and legal environment

Standardization vs. adaptation:

Standardization vs. adaptation Arguments for standardization reduce costs moving to a world living style international brand

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Arguments for adaptation most exported goods needed adaptation take care of environmental differences max. sales and profits through customization favours local management inputs

Methods of entering overseas market:

Methods of entering overseas market Exporting contract manufacturing licensing franchising joint venture strategic alliance direct investment countertrade

Factors affecting the choice of entry strategy:

Factors affecting the choice of entry strategy desired speed firm expertise costs flexibility resources profit objectives

Marketing in the case of economic downturn:

Marketing in the case of economic downturn moving down-market lowering price promoting image of good quality and durable find new markets

Contents of a Marketing Plan:

Contents of a Marketing Plan Situational analysis Marketing Objectives Selecting the Target Market Developing marketing mix Budget Controls

Product attribute decisions:

Product attribute decisions Product quality Product features Product design

Brand decisions:

Brand decisions To brand or not to brand Brand sponsor manufacturer’s brand private brand Licensed brands Co-brands

Brand equity :

Brand equity High level of consumer awareness, loyalty Lower marketing costs Consumer expect stores to carry the brand The company has more bargaining power in channeling High credibility Easily launch brand extensions Powerful brand Defense against fierce price competition

Brand Strategy / Brand Development :

Brand Strategy / Brand Development line extensions brand extensions Multi-brands new brands

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Brand Positioning Attributes Benefits Beliefs /values Create surprise, passion excitement Brand Re-positioning Competitor’s close positioning cutting market share Customers’ wants may shift Technology

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Brand Name selection Suggest benefits and qualities Easy to pronounce, recognize Distinctive, extendable Capable of registration and legal protection

Packaging decisions:

Packaging decisions to create benefits: protection, economy, convenience and promotion Major decisions: the main functions specific elements of package selecting the package design

Product-Support Services Decisions:

Product-Support Services Decisions deciding which product-support services to offer how to deliver the services to customers

Cost-based approach:

Cost-based approach Cost-plus Pricing to add a standard mark-up to the cost Breakeven analysis and Target Profit Pricing

Buyer-based Pricing:

Buyer-based Pricing base on the product’s perceived value

Competition-based pricing:

Competition-based pricing Going rate pricing base on competitors’ price

Market-skimming pricing:

Market-skimming pricing Set an initial high price after initial sales slow down, it lowers the price to draw in the next price-sensitive layer of customers and so on

Penetration pricing:

Penetration pricing set an initial low price seek to generate consumer interest and stimulate trial purchase

Types of distribution channel:

Types of distribution channel 1. producer customer

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2. manufacturer retailer consumer

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3. manufacturer wholesaler retailer consumer

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4. manufacturer wholesaler retailer consumer agent

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5. manufacturer agent retailer consumer

Factors affecting choice of distribution channel:

Factors affecting choice of distribution channel Industrial goods vs. consumer goods no. of customers importance of control characteristics of products services

Thank You:

Thank You

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