Bus

Page 1

Topic 14 - Service marketing and social responsibility

four characteristics of service

1. intangibility - service cannot be tasted, felt, smelled, seen, touched before purchase

2. inseparability - services cannot be separated from the providers, neither the providers are people or machines that services have to be present as the service provided, according to the provider-customer interaction which is the special features of the service marketing

3. variability - the quality of the service depends on who provide them as well as when where how they provide it

4. perishability - service cannot be stored for late sale or use

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service profit chain - consist of five links

1, internal service quality

- superior employee selection and training

- a quality working environment

- strong support for those dealing wif customer

2. productive employee

- more satisfied, loyal and hardworking employee, higher return

3. greater service value

- more effective and efficient customer value creation and service delivery

4. satisfied loyal customers

- satisfy customers who remain loyal,

- repeat purchase

- and refer other customers

5. healthy service profit and growth

- superior service

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service marketing strategies

- apart from the external marketing, it requires internal marketing (company vs employee) and interactive marketing (customer vs employee)

internal marketing

- the service firm must orient and motivate its customer-contact employees and supporting service people to work as a team to provide customer satisfaction

interactive marketing

- the service quality depends heavily on the quality of buyer-seller interaction during the service encounter

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3 keys of services marketing task

1. service differentiation

2. service quality

3. service productivity

Managing service differentiation

1. - the firm can differentiate their service delivery by having more reliable customer-contact people,

- by developing a more superior physical environment in which the service product is delivered

- by designing a superior delivery process

2. - the service firm can work on differentiating their product through symbol and branding

E.g. the Westin Hotel in Kuala Lumpur 吉隆波 offer the complimentary 免費 soft drink in the lobby as a courtesy to its guest

Managing service quality

1. - service quality is hard to define and judge than the product quality

- coz it's always vary depending on the interaction between employees and customers

- good service recovery can turn the angry customer into the loyal one

e.g. 飛機公司多數賣多左飛但唔夠位坐戈陣會幫D 乖客UPGRADE 去頭等/ 商務 (first class/ business class

Managing service productivity/ quantity

- service firms are under great pressure to increase their service productivity

a) they can train current employees better or hire a new one who works harder or possess more skills

b) increase the quantity by giving the quality

c) harness駕(藉著) the power f technology

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sustainable marketing

-calls for socially and environmentally responsible actions that meet the present needs of consumers and businesses while also preserving or enhancing the ability of future generation to meet their need. It meets both of the present and future needs of the consumer and company

need of consumer/need of business

now/ now -> marketing concept

now/ future -> strategic plaaing concept

future/ now -> societal marketing concept

future/ future -> sustainable marketing concept

marketing concept

- the organization thrive from day to day by determining the current needs and wants of target group customer and fulfilling those needs and wants more effectively and efficiently than their competitor

- it focuses on meeting the short-term goals by giving customers what they want now

- satisfy customer immediate needs and desires doesn't always serve the future best interest of either customer or the business

sustainable marketing

- it considers the future welfare and need of both the consumer and company

- strategic planning consider just the company need

e.g. besides making the product more environmentally friendly, its also include grilled chicken and salad on its menu to promote healthier eating which becomes a trend recently

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impact on the individual consumers of the marketing

1. higher price

2. deceptive practices

3. high-pressure selling

4. shoddy or poor product

5. planned obsolescence報廢

6. poor service to disadvantaged consumers

1. higher price

- higher cost of distribution

- higher advertising and promotion cost

- excessive markup

e.g. Panadol vs generic Paracetamol

critics charge that promotion only add the psychological value but not the functional value to the product

2. deceptive practices

- deceptive pricing

- deceptive promotion

- deceptive packaging

e.g. Technically legal, that advertisement nowadays lure readers with the low, low price, but readers have to watch out for the small print at the bottom of the picosecond that you even need a magnifying glass to figure out the actual ticket cost

3. high-pressure selling

- salespeople are sometimes accused of high-pressure selling that persuades people to buy goods they have not thought of buying

- this tactics especially work in one-time selling situation for short-term gain

4. shoddy, unsafe, harmful product

E.g. Hardee offering big juicy burger that clearly pings customer taste buds which may lead to overweight is simply practicing good marketing or socially irresponsible

- Judging by the nutrition calculator at its Web Site, the company certainly isn't hiding the nutritional facts, disclosing the danger of their product honestly

E.g. Food scares such as melamine-tainted milk product in China result in illnesses and death among children

5. Planned obsolescence

e.g. many consumers have a drawer full of yesterday's hottest technological gadgets that have become obsolete even though they are still functioning -> 轉手機並唔係因為壞左而係想要新型號

? 6. poor service to the disadvantaged people

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impact on society as a whole

1. materialism

? 2. too few social goods

? 3. cultural pollution

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impact on other business

? 1. acquisition獲得 of the competitor

? 2. unfair marketing practice

- more resources, more advertisement, attracting more consumer

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business action toward sustainable marketing

1. consumer-oriented marketing - viewing and organizing its marketing activities from the consumer's point of view

2. customer value marketing - placing most of its resources into customer value-building marketing investment

3. innovative marketing - continuously seeking real product and marketing improvement

4. sense of mission marketing - defining its mission in board society terms

5. societal marketing - considering customer's want and interest, society's long-run interest, company requirement (future need of consumer + present need of business)

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marketing ethics

corporate marketing ethics policies are broad guidelines that everyone in the organization must follow

- covering

1. distributor relations

2. advertising standards

3. customer service

4. pricing

5. product development

6. general ethical standards

e.g. case of Mattel

when the discovery of lead paint on several of its best-selling products forced Mattel to recall millions of toys worldwide, the company's forthright response helped it maintain customer confidence. Mattel even involved its panel of 400 moms as "brand advisors" to help shape its response.

Page 2

Topic 13

Promotion I

integrated集成 marketing communication( IMC)

-the concept which a company carefully integrates and coordinates its many communication channels to deliver a clear, consistent and compelling message about the organization and its products

importance:

- consumer doesn't distinguish between message resources

- conflict message may cause when there are some confusion among the company image and brand position

it includes

1. advertising

2. sales promotion

? 3. direct marketing

4. public relations

? 5. personal selling

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promotion mix

- also called marketing communication mix, tools that the company used to pursue its advertising and marketing objectives

advertising

- paid non-personal presentation and promotion of idea, good, or service by an identified sponsor

e.g. manning to TVB

characteristic: - reach many buyers

repeat a message many times

impersonal

expensive

sales promotion

- short-term incentive to encourage the purchase of product or service

characteristics: -wide assortment品種of tools

rewards quick response

efforts short-lived

direct marketing

- gain an immediate response

- and lasting customer relationship

characteristic: nonpublic

immediate

customized

interactive

public relation

- building good relationship with the company's public through favorable publicity,

- a good corporate image

- effective handling on the unfavorable news/ scandal

characteristics: very believable

dramatize(exaggerate) a company or product

underutilized ?

personal selling

- personal selling or presentation by the sales force used to enhance sales

- and customer relationship

e.g. gym

characteristics: - personal interaction

relationship building

most expensive promotion tool

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How communication work

1. sender

2. encoding

3. noise

4. decoding

5. receiver

6. response

7. feedback

8. back to the sender

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Step of developing effective marketing communication

1. identify target audience

2. set communications objectives

3. design the message

4. choose the media

5. select message source

6. collect feedbacks

1. identify target audience

- find the potential buyers, or current users, those who make buying decision or those who influence it

- determining what, how, when, where will be said and who will say it

2. set the communication objective

- we need to know where the target audience now stands and to what stage of the six buyer-readiness stage it needs to be moved

including

-awareness

-knowledge

- liking

- preference

- conviction

- purchase

3. design the message

- to decide what and how it will be said

- aim to get attention, gain interest, arouse desire, and obtain action( AIDA model)

4. choose the media

- to select the channel for delivering the message

personal channel e.g. salesperson, word-of-mouth

non-personal channel e.g. print media, broadcast media, and online media

5. select the message sources

- to select the right person to deliver the message

- message delivered by the highly credible sources are more persuasive

- the company usually hire celebrity endorsers to deliver their message

e.g. louis koo are the celebrity endorser of manning to attract people attention (design the message/ AIAD model0

6. collect the feedback

- aim to evaluate the effectiveness of the marketing communication

e.g. customer's recall of the message

brand attitude

frequency/ amount of the store visits

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Two basic promotion mix strategy

Push / Pull strategy

- ? Push strategy

start from producer that offering the product to retailers零壽商 and wholesalers批發商 through the trade promotion and retailers and wholesalers sell the product to the consumer through the personal selling

reseller marketing activites: trade promotion: merchandise allowance 比哂錢之後 戈SELLER 就會按一定比例比番錢你 (BAFS 中學)

- personal selling

? pull strategy

start from the consumer that order what they demand from the consumer advertising(attention) and then to the retailer and from the consumer advertising and then retailers and wholesalers finish their order by purchasing the product from the producer

reseller marketing activities: - sales promotion 減價

consumer advertising

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Advertising strategy

advertising - any paid non-personal presentation or promotion an good, idea, service by an identified sponsor i.e. internet, broadcast, print, outdoor)

Step:

1. objective setting - communication and sales objective

2. budget decision - affordable approach, percent of sales, competitive parity 平價, objective and task

3. message decisions - message strategy, message execution執行

3. media decisions - reach, frequency, impact, Major media types specific media vehicles特別既廣告計劃, media timing

5. mpaign evaluation- communication impact and sales impact

objective setting

- including communication objective and sales objective

- a specific communication/ sales task to be accomplished with a specific target audience during a specific period of time

can be classified by its purposes

- inform

- persuade

- remind

informative advertising

- introduce or explain new information (e.g. marketing mix) to build the primary demand of the customer

e.g. advertisement that the McDonald introduce their new wheat roll product

persuasive advertising

- to educate the want

- persuade how ur product can best satisfy their need

- build selective demand

- comparative advertising 同competitor 比較既廣告

remind advertising

- keep the customer remind of their product and maintain awareness

e.g. the advertisement of the CoCola

2. budget decision

- including affordable approach

- percent of sales

- competitive parity

- objective and task

affordable approach

- the level which management think the companies are able to afford

percent of sales

- A certain percentage of current or forecast sales

competitive parity

- the level that matches competitors' promotion expenses

objective and task

- determined by communication objective, task, and cost

3. message decision

- including message strategy and message execution

- to gain and grab attention, today's advertising message must be better planned, more imaginative, more entertaining, more emotionally engaging to the customers

Message strategy

1. identify the customer benefits

2. link generic needs to brand specific wants

3. developing the compelling creative concept

4. advertising appeal should be meaningful, believable, and distinctive

Message execution

- turning big idea into an actual advertisement to capture the target market attention and interest

typical styles

1. testimonial evidence 証詞証供 e.g. overlord shampoo find jackie chan, advertisement of colgate

2. scientific evidence

3. technical expertise

4. personality symbol

5. musical

6. mood or image

7. fantasy

8. lifestyle

9. slice of life e.g. advertisment of the golden resources金香米

3. media decision

- including reach, frequency, impact, major media, specific media vehicles, media time

reach

percentage of people is exposed to the advertisement

?frequency

number of a time a person is exposed to the advertisement

impact

the qualitative value of a message exposure through a given medium

?- media time

the advertiser has to decide how to schedule the advertisement over the course of a year

some marketer do only seasonal advertising

the advertiser have to choose the pattern of advertisement

1. continuity - scheduling advertisement evenly within a given period

2. pulsing - scheduling advertisement unevenly within a given period

- specific media vehicle

things need to consider

1. cost per 1000 person reach by a vehicle

2 cost of producing advertisement for different media

3. effectiveness - audience quality

4. effectiveness - audience engagement

5. effectiveness - editorial quality 作戈個既QUALITY

evaluation of the feedback

communication effects - whether the advertisement and media are communicating the ad's message well and should be tested before or after, i.e. 1993 KCR advertisement a huge feedback among the society because of its unnatural inconsistency and color used, causing an atmosphere of terror and shifting of the focus

sales and profit effect - compare past sales and profit with past expenditures or through experiment

Page 3

Topic 13

Promotion II

Public Relations

- building good relationships with the company's various publics by obtaining favorable publicity

- building good corporate image

- handling unfavorable rumors, news, stories, event, scandal

function:

-press relation/ press agency機構

=creating and place newsworthy promotion in the news media to attract attention to a person, product, or service (Media public)

- product publicity: Publicizing specific product

- public affairs: building and maintaining national or local community relationship

e.g. Lee Ka Shing foundation gives $5000 to each DSE candidate in remote district

-lobbying

= building and maintaining relations with the government or the legislator officials to influence the legislation and regulation

investor relations - build and maintain relationship with the investor, shareholders and others in the financial community

? -development - working with donors or members of non-profit organization to gain financial or volunteer support

Impact:

- have strong impact on public awareness at a much lower cost than the advertising can

- coz they company doesn't not pay for space or time in the media

- if the company in developing an interesting story or event, it could pick up by several different media which have the same effect as advertising that would cost million of dollar while it would have more edibility than advertising

e.g. Oliver Elzer, 5 star Michelin chef offer his dishes with a relatively cheap price in Hong Kong. It attracts news media to report it

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Sales promotion consists of short-term incentive to encourage the purchase or sales of product

-different kinds of sales promotion, including

1. consumer promotion, targeting the final buyers, or known as selling promotion

2. trade promotion, targeting the wholesalers and the retailors, e,g, merchandise allowance

?3. business promotion, targeting the business customer

?4. sales force promotion, targeting the members of the sales force

1. consumer promotion

- increase short term sales and build long term market share

consumer promotion tools

1. sample - offer a trial amount of product

2. coupons - certificates that give buyers a saving when they buy a specific products

3. cash refund, similar to coupon but except that the price reduction occurs after the purchase

?4. price pack - offer consumer saving off the regular price of the product E..G. 買四送一戈D

5. premium - offer either for free or lower price E.g. 超市草印花換野 唔會有公司LOGO

6. advertising specialties- useful article imprinted the advertiser name, logo, or message that given as gifts to the customer e.g. 日曆

7. point of purchase promotion - include sales and demonstration that take place at the point of sales

8. contest, sweepstaker and game - give consumer chance to win sth, such as, cash, trip good by luck or through extra effort

9. event marketing/ sponsorship - allow company to create its own brand marketing event or serve as sole or participating sponsors of event created by others

e.g. Standard Chartered Marathon

2. trade promotion

- carry the new item and more inventory

- advertise product

- give the product more shelf place

- buy ahead

tools

- straight discount

- merchandise allowance

- free good

- push money 推動資金/ 賣到一定數量比獎金你

- free specialty advertising item 幫佢地賣廣告?

- sales contest- contest for sales people or dealer to motivate them to increase their sales performance over a period of time

3. sales force promotion

- getting more sales support

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Personal selling

paid, personal form of promotion and involves two-way communication between sales people and individual customers

function of salespeople

1. probe customer to learn about the problems

2. adjust marketing offer to fit special need

3. negotiate term of sales

4. build long-term personal relationship

5. serve as a critical link between company and its customer - they present company and also customer. Their goal is to balance customer satisfaction and company profit

- The selling process

1. prospect quality - identified qualified potential customers

2. pre-approach - salesperson gather information about the customers and prepare for the sales presentation before contacting the customer

3. approach the prospect - the step in the selling in which the salesperson meets and greets the buyer to get the relationship off to a good start

4. sales presentation - the salesperson describes the product and its benefits, price, available options, and associate service (i.e. warranties maintain period, and perhaps demonstrates the product

5. handle objection (either logical or psychological) - most people have at least one objection or problem they see with the product and mostly they are related to the quality and price.

- Effective salesperson should anticipate these objection and prepare to overcome them with additional information or persuasive argument

? 6. close the sale

- salesperson ask the customer for an order

- to spot out the most appropriate moment to close the deal and what methods could be employed to close up the completion of the sale

7. follow up

- ensure customer satisfaction

- maintain the relationship with the customer for future business

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? direct marketing

- consists of connecting directly with carefully targeted customer, often on a one-to-one interactive basis

- using detailed database, companies tailor their marketing offer and communication to the need of narrowly defined segment or individual buyers

e.g. budget airlines use the Web to promote their low fares because the web offer flexibility and immediacy

tools of direct marketing

1. personal selling ?

2. direct mail marketing

3. catalog marketing 目錄營銷

4. telephone marketing

5. direct-response television marketing

6. kiosk 亭marketing

7. new digital direct marketing technology

8. online marketing

benefit to the buyers

1. convenient, easy and private

?2. ready access to many products

3. access to comparative information

4. interactive and immediate

benefit to the be seller

1. power tool for building customer relationship

2. low cost, efficient and speedy

3. greater flexbility

4. give access to buyers they may not able to reach otherwise

Benefit: online marketing (Trend recently)

- effort to market product and services as well as build customer relationship over the internet

- click-only companies: operate only on the internet, e-tailor, such as, TaoBao, EBay, Amazon

- click and mortar companies: traditional companies also create their online sales and communication channels

-Ads can placed through the internet

- online adv appear while consumers are surfing the net, including displays ads, search-related ads

- Viral marketing 病毒式營銷 : creating a Web site plus a video, email, or cellphone message, advertisement or other marketing event that customer will want tot pass it along their friend

- usually the message is unusual and through media, like creating viral video nowadays, then pass along the message through the buzz

for example, A website will encourage you to pass along the link for 6 people in order to get a free apple color ipod

Page 4

Topic 11

Place

Supply chain consist of "upstream" 上游and "downstream"下游partner

upstream activities

-upstream from the company s the set of firms that supply the raw materials, components, part, information, finances and expertise needed to create a good or service (input)

downstream activities

-marketers have traditionally focused on the downstream side of the supply chain which refers to the marketing channels/ distribution channels, looking forward toward the customer

demand chain

- a better term because it suggests a sense-and-respond view of the market

- planning start with the demand of the target customer, to which company respond by organizing a chain of resources and activities with the goal creating a customer value.

value delivery network

- made up of the company, supplier distributor, and ultimately customer who"partner" with each other to improve the performance of the entire system

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marketing channel/ distribution channel

- company try to forge 鍛造 marketing channels which is a set of independent organization that help make a product or service available for use or consumption by the consumer or the business user

Function:

1. completing transaction

- information, gathering and distributing marketing research and intelligence information about actors and forces in the marketing environment needed for planning and aiding exchange

- promotion, developing and spreading persuasive communication about the offer

- contact, finding and communicating with the prospective buyers

- matching, shaping and fitting the offer to the buyer's needs, including activities, such as manufacturing, grading, assembling and packaging

- negotiation, reaching an agreement on price and other terms of offer that ownership or possession can be transferred

2. facilitating the completion of transaction

- physical distribution, transporting and storing goods.

- financing, acquire and use funds to cover the cost of the channels work

- risk taking, assuming the risk of carrying the channel works

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marketing channel

- each layer of marketing intermediaries that perform some work in bring the product and its ownership closer to the final buyer

- direct marketing channel has no intermediary level and the company sell the good or service directly to the customer

e.g. Avon and Amway sell their product door to door, through home and office sales parties and on the Web

- indirect marketing channel consists of one or more intermediary channel

= more intermediary, less control and higher channel complexity

- customer marketing channel

channel one= producer -> consumer

channel two = producer -> retailer -> consumer

channel three = producer -> wholesaler -> retailer -> consumer

e.g. Synergy and samsung

- business marketing channels

channel one = producer -> business customer

channel two = producer-> business distributor ->business customer

channel three = producer -> manufacturer's representatives or sale branch 銷售分公司 -> business distributor -> business customer

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channel behavior

- a marketing channel consists of firms that have partnered for their common good. Each channel member depend on others, known as channel cooperation - helping its dealer

e.g. Toyota created Toyota city which showcases some of its past and present car models. Visitors can test- drive some of the models. This help to introduce the new models before customers visits its dealer

- each channel member plays a specialized role in the channel. The channel will be the most effective when each channel member assume the task they do it best

- disagreement over goals, roles and rewards will cause and generate channel conflict

channel conflict, include

horizontal conflict - occur among firms at the same level of the channel

vertical conflict - occur between different level of the channel

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conventional marketing channel

producer -> wholesalers -> retailer -> consumer

- consists of one or more independent producers

- each is a separate business seeking to maximize its own profit, perhaps even at the expense of the system as a whole

vertical marketing system (VMS)

producer/ wholesaler/ retailer -> consumer

- consists of producer/ wholesalers and retailer acting as a unified system

- one channel members own the others, has contract with them wields so much power that they must all corporate

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types of the vertical marketing channel

corporate VMS

- integrated all successive stages of production and distribution under its ownership, associating with only one company,but performing separate task.

e.g. ZARA

Zara has control over every aspect of the supply chain, from design and production to its own worldwide distribution network

Zara make 40 percent of its own fabrics and produces more than half of its own clothes rather than relying on a hodgepodge 大雜燴 of slow-moving suppliers

new design feed into Zara manufacturing centers which ship the finished products directly to Zara stores in 68 countries, saving time, eliminating the need of warehouse, and keeping inventories low

Effective corporate vertical market system/integration makes Zara faster, more flexible and more efficient than its competitors.

?- contractual VMS consists of independent firms at different level of production or distribution who join together through contracts to obtain more economies or sales impact that each can't achieve alone

- concentrate on the success of whole system , different from conventional marketing channel

?- franchise VMS - franchised organization is the most common type of contractual relationship. A channel member call a franchisor link several stages in the production-distribution process, usually the producer license a wholesaler to distribute its product

Three types of franchises: Manufacturer-sponsored retailer franchise system

not include in the ppt (Manufacturer-sponsored wholesaler franchise system

Service-firm-sponsored retailer franchise system i.e. Fast food)

e.g. McDonald?

Administered VMS

- leadership is assumed not through common ownership or contractual ties but through the size and power of one or few dominant channel members other channel members have to follow becoz they dominate the market and guarantee the profit

Horizontal system

- happen when two or more companies at one level join together to follow a new market opportunity

e.g. McDonald join force wif Sinopec, China largest petrol retailer to place restaurant at its more than 30000 petrol stations

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Multichannel distribution System

- occur when a single firm sets up two or more marketing channels to reach one or more customer segments

e.g. first channel: catalogs, telephone internet

second = retailers

third = distributor -> dealers

fourth = sales force

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Steps of designing the channel

1. analyze consumer needs

2. set channel objectives

3. identify channel alternatives

4. evaluation

1, analyze consumer needs

- consider what target consumer want from channel

- whether company has resources or skills to satisfy these needs

- balance among consumer needs, feasibility and costs, and consumer price preferences

e.g. whether they prefer buy in person or via online

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2. set channel objectives

- state the marketing channel objective in terms of targeted level of customer services

- should decide which segment to serve and the best channels to use in each case

- while it's influence by the nature of the company, its product, its market intermediaries, its competitor and the environment

- environment factor including, economic condition, legal constraint may affect the objective and design

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3. identifying Major Alternatives

A.Types of Intermediaries

§A firm should identify the types of channel members available to carry out its channel work.

B.Number of Marketing Intermediaries

§Companies must also determine the number of channel members to use at each level.

- Intensive distribution—ideal for producers of convenience products and common raw materials. It is a strategy in which they stock their products in as many outlets as possible.

- Exclusive distribution—is when producers purposely limit the number of intermediaries handling their products. The producer gives only a limited number of dealers the exclusive right to distribute its products in their territories.

- e.g. rolls- roycemotorcar

luxury car makers suck as Bentley sell exclusively through a limited number of retailers. It enhance the car image and generates stronger retailer support(?)

Selective distribution—is the use of more than one, but fewer than all, of the intermediaries who are willing to carry a company’s products

-responsibilities of channel members

•The producer and intermediaries need to agree on the terms and responsibilities of each channel member.

•They should agree on price policies, conditions of sale, territorial rights, and specific services to be performed by each party.

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4. Evaluating the channel alternatives

- Using economic criteria, a company compares the likely sales, costs, and profitability of different channel alternatives.

- Control issues must be considered. Using intermediaries means giving them some control over the marketing of the product, and some intermediaries take more control than others.

- Adaptability criteria must be applied. Companies want to keep the channel flexible so that it can adapt to environmental changes.

Situation

A.Selecting Channel Members

When selecting intermediaries, the company should determine what characteristics distinguish the better ones.

B.Managing and Motivating Channel Members

The company must sell not only through the intermediaries but to and with them.

Most companies practice strong partner relationship management (PRM) to forge long‑term partnerships with channel members.

C.Evaluating Channel Members

The company should recognize and reward intermediaries who are performing well and adding good value for consumers.

Those who are performing poorly should be assisted or, as a last resort, replaced.

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Retailling

- Retailing includes all the activities involved in selling products or services directly to final consumers for their personal, non-business use.

- Retailers are businesses whose sales come primarily from retailing.

- Many marketers are now embracing the concept of shopper marketing, the idea that the retail store itself is an important marketing medium

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Non- store retailling

- In recent years non-store retailing has been growing much faster than has store retailing.

Growth of Non-store Retailing

- Consumers are increasingly avoiding the hassles and crowds at malls by doing more of their shopping by phone or computer.

- Much of the anticipated growth in online sales will go to multichannel retailers—the click-and-brick marketers who can successfully merge the virtual and physical worlds

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classified retailer by service level

1. limited-service - offer some level of service

-handling the point-of-purchase transaction

-product selection assistance

- arrange payment plans

- offer delivery;

2. self - service - to perform most of the services from the retailing puchase

- offering self-selection services, such as online purchasing and vending machine purchases,

- self-checkout services where the consumer may get help selecting the product but they use self-checkout stations to process the purchase including scanning and payment.

3. full - service - handle all aspect of the purchase, while customer need to do is to select the desired product

- Retailers that follow a full-price strategy often follow the full-service approach as a way of adding value to a customer’s purchase.

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?classified by the merchandise selection

specialty store - narrow production line with a deep assortment

-such as apparel stores, sport good stores, furniture store

- clothing store ( specific in selling one good) - single line store

women clothing store - limited line store

women clothing custom shirt store - superspecialty store

e.g. Giordano - single line store

Giordano ladies - limited line store

Department store - store that carries several production line - clothing, home furnishing and household hoods with each line operated as a separate department managed by specialist buyers or merchandisers.

E.G. Sogo, Tangs, Siam Paragon

Supermarket - A relative large, low cost, low margin, high- volume, self-service operation designed to serve the consumer's total needs for grocery and household product

E.g. Safeway, Wellcome, Giant

Convenience store

a relatively small store located near residential areas, open long hours seven days a week and carry a limit line of high-turnover convenience product at slightly higher price

e.g. 7-11, FamilyMart, Lawson

Discount store - a store that carries standard merchandise sold at lower prices with lower margins and higher volumes

e.g. Walmart, the Store, Daiso

Off-Price retailer - a store that sell merchandise bought at less-than-regular wholesale prices and sold at less than retail; often leftover good; overruns, and irregular obtained at reduced prices from manufacturers or other retailers

including

factory outlet - owned and operated by manufacturers ( e.g. Dickson Warehouse)

independent off-price retailers - owned and operated by entrepreneurs or by divisions of larger retail corporation (e.g. Sogo Club)

Warehouse/ wholesale clubs - selling a limited selection of brand-name groceries, appliances, clothing at a deep discount to consumers who pay membership fees (e.g. GrandMart, Metro Asia)

Superstore - a very large traditionally aimed at meeting consumers' total needs for routinely purchased food and non-food items.

Include category killers, which carry a deep assortment in a particular category and have a knowledgeable staff (e.g. eBay, Tokyu)

supercenters - combined supermarket and discount store (e.g. Jual Murah, Big C)

hupermarket - combing supermarket, discount and warehouse retailing (e.g. Carrefour, Pyrca)

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?classified by relative price

- Discount

-off price

- factory outlet

- Warehouse club

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classified by organizational approach

1. Corporate chain store

-two or more outlet that are commonly owned and controlled, employed central buying and merchandising and sell similar line of merchandise.

- appear in all type of retailing but they are strongest in the food stores, drug stores, shoe stores and women's clothing stores

E.g. Chow Sang Sang, Shell Select

?2. voluntary chain

- wholesaler - sponsored groups of independent retailer engaged in bulk buying and common merchandising, selling same kind of product

e.g. independent grocers alliance , Do it better handwares

?3. Retailer cooperative

- Groups of independent retailers who set up a central buying organization and conduct joint promotion efforts

e.g. Associated Grocers, Mitre 10

4. Franchise organization

- Contractual association between a franchisor ( a manufacturer, wholesaler, or service organization ) and franchisees (independent business people who buy the right to own and operate one or more units in the franchise system). Franchise organization are normally based on some unique product, service or method of doing business, or on a trade name or patent, or on goodwill that the franchiser has developed

e.g. 7-11, circle K

? 5. merchandising conglomerate - free form corporation that combine several diversified conglomerates retailing lines and forms under central ownership, along with some integration of their distribution and management

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wholesalers

- include all activities involved in selling goods and services to those buying for resale and business use

- wholesalers are those firms engaged primarily in wholesaling activities

- mostly buy from producer and sell it to retailer, industrial consumer and other wholesalers

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Types of wholesalers

1. Merchant wholesalers

2. Broker

3. manufacturers sales branch and offices

1. Merchant wholesalers, are the largest group of wholesalers, accounting roughly 50% of all wholesalers. including two broad types

1. full-service wholesalers - provide a full set if services

2. limited service wholesalers - offer fewer services to their supplier and customers

- different type of limited - service wholesalers perform varied specialized function

2. broker

- unlike merchant, they dun take the title of ownership to good

- they perform only a few function

- they bring buyers and sellers together and assists in negotiation

- agent represent buyers or sellers on a more permanent basis

- manufacture agent are the most common type of agent wholesaler

? 3. manufacturers sales branch and offices

Page 5

Topic 10

Pricing product

pricing and value

= in the narrow sense , price is the amount of money charge for a service or product

= in the board sense, price is the sum of all the value customer give up in order to gain the benefit of having or using a product or service

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consideration in setting price

1. customer perception of the value ( set a price ceiling that if customer perceive that price is greater than the product value, then no one will buy the product )

2. Production cost ( price floor that no profit can earn below this price)

3. other internal and external consideration

- marketing strategy : objective and marketing mix

- nature of the market and demand

- competitor strategy and price

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two basic pricing strategy

1. cost- based pricing

- design a good product

- determine the production cost

- set price based on the cost

- convince buyers of the product value

types of cost

1. fix cost + variable cost = total cost

fixed cost = cost do not vary with the production and sale level

variable cost = cost do directly vary with production and sale level

total cost = fix cost + variable cost

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Two Type of cost - based pricing

Marketup pricing strategy

Popularity for marketing up the price:

1. Sellers are more certain about costs than about demand

2. When all firms in the industry use this pricing method, prices tend to be similar and price competition is thus minimized

3. Many people feel that cost - plus pricing is fairer to both buyer and sellers

Simplest pricing method = cost- plus -pricing -adding a standard markup to the cost of the product

e.g. 759 store

Breakeven pricing / target profit pricing

- determine the price at which it will break even or make the target profit it is seeking

- concept of a break-even chart is used which shows the total cost and total revenue expected at different sales volume levels.

- break - even volume = unit cost / price - variable cost

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2. value- based pricing

value - based pricing reverses this process of cost - based pricing

- assess customer need and value perception

- set target price to match customer perceived value

- determined cost that can be incurred 發生

- design product to deliver desired value at target price

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Two type of value - value based pricing

1. Good value pricing

- offering just the righ combination of quality and good service at a fair price

divding in to

- EDLP (Everyday low pricing)

- High -Low pricing

Everyday low pricing

- involves charging a constant, everyday low price with few or no temporary price discount, which mean the product will be at low price without or few promotion or discount in daily basis

e.g. Jusco ten dollar plaza

High - Low pricing

involves charging hiher prices on an everyday basis but running frequent promotions to lower prices temporarily on selected items

e.g. Le Creuset , company selling kitchen furnishing

2. value - added pricing

the strategy of attaching value - added features and services to differentiate their offers and thus support higher prices

which means by adding some value, customer are still willing to buy though we charge a higher cost

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another pricing strategy

competition - based pricing

-involves setting prices based on competitors' strategies, costs, prices and market offerings

- consumers will base their judgments of a products' value on the prices that competitors charge for similar products

3 questions involved

1. how does the company's market offering compare wif competitors' offering in terms of customer value?

2. How strong are current competitors, and what are their current pricing strategies?

3. How does the competitive landscape influence customer price sensitivity

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When producing a new product, they can choose the strategy

1. Skim

2. Penetrate

market skimming = initial high price for high revenue

works when superior or quality and image

enough buyer

competitor cannot charge a lower price

market penetration

= set initial low price for high market share = build customer habbit to use ur product

work when

market is price sensitive

cost fall with large volume

competition is kept out

low price is maintained

time of adoption of innovations

innovators 2.5%

early adopter 13.5%

early majority 34%

late majority 34%

laggards 16%

- higher price to satisfy the innovators

- then slowly lower the price to satisfy the following segment

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product mix pricing strategy

1. product line pricing - setting price steps between product line items

2. optional product pricing - pricing optional or accessory product sold with the main product

3. captive product pricing - pricing product that must be used wif the main product

4. by- product pricing - pricing low value by - product tot get rid of them

5. product bundle pricing - pricing bundles of product sold tgt

1. produc line pricing

- companies usually develop product line rather than single product

- in product line pricing, management must decide price steps to set between the various product in a line. For example , there are different pricing for various of product, depending on their quality, function , cost, date of released etc. In this way, more customer can be attracted, thus expanding their product sale and maximize the profit

- in this case, the seller's task is to establish perceived quality differences that support the price difference

2. optional product pricing

- offering to sell optional or accessory products along wif their main produc

- pricing these option is a sticky problem. The company has to decide which items to include in the base price and which to offer as options

for example: budget airline

3. captive product pricing

- companies that make product that must be used along wif a main product are using captive prodcut pricing. Producer of the main products often price them at low and set high markup on the supplies

- in the case of services, this stratgy is called two- part pricing. The price of the service is broken in to a fixed fee plus a variable usage rate

e.g razor and the razor blade

4. by product pricing

- using by product pricing, a company will seek a market for by product and should accept any price that covers more than the cost of storing and delivering them

- by-prodcuc may even turn out to be profitable

e.g. processed meat and the bones can be used for pet food

5. product bundle pricing

- using product bundle pricing, sellers often combine several of their products and offer the bundle at a reduced price

- pricie bundling can promote the sales of products consumer might not otherwise buy bus the combined price must be low enough to get them to buy the bundle

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consideration affecting price decision

overall marketing strategy , objectives and mix

- before setting price, the company must decide on its overall marketing strategy for the produc or service. pricing strategy is largely determined by decision on marketing positioning

- price is only one of the marketing mix tools that a copany uses to achieve its marketing objectives

- price decision must be coordiated wif the produc design, distribution, and promotion decision to form a consistent and effective integrated marketing program

- companies often position their produc on price and then tailor other marketing mix decision to the prices they want to charge

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pricing objectives

- attract new customers

profitably retain existing customers

- prevent competition from entering market

- stabilize the market

- keep loyalty and support of the resellers

avoid government intervention

- help sales of other produc

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target costing start wif an ideal selling price based on customer- value considerations, and then target costs that ensure the price is met

1. produc position

2. sets ideal selling price

3. target market, competiton and design, allowing you to get the cost required and ensuring the price to be met

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non- price position

- some companies de-emphasize price and use other marketing mix tools to create non-price positions

- indeed, the best strategy is not to charge he lowest price, but to differentiate the marketing offer to make it worth a higher price

- some marketers even feature high price as prat of their product's allure( seduce )

create an image of a luxury attract people to buy

e.g. Ferrari --- pricing high and proud of it

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other pricing consideration

1. organizational factors

- in a small companies, price are often set by top management rather than by the marketing or sales departments

- in a large companies pricing is typically handled by divisional or product line manager

- in industrial market, salespeople may be allowed to negotiate wif customer within certain price ranges

- in industries in which pricing is a ket factors, companies often have pricing department to set the best prices or to help others in setting them

2. market and demand

- pure competition

- oligopoly

- monopolistic competition

- monopoly

pure competition

- consists of many buyers and sellers trading in a uniform commodity. No singe buyers or sellers has the marketing power which have effect on the going market price

- in a purely competitive market, mrketing research, product development, pricing, advertising, and sales promotion play little or no role. Thus, sellers in there markets dun spend much time on marketing strategy

- monopolistic competion: the market consists of many buyers and sellers who trade over a range of prices rather than a singe market price. A range of prices occurs because sellers can differentiate their offers to buyers

- oligopolistic competition / monopoly

- buyers and sellers are highly senstive pricing and marketing strategies

oligopolistic = it is difficult for new sellers to enter the market

pure monopoly = market consists of one seller oz government , private regulate, or private unregulated

analyzing the price - demand prelationsip

that price charged and the result of demand level which is shown in the demand curve

elasticity of demand

how responsive demand will be to a change in price

- Buyers are less price sensitive when the product they are buying is unique or when it is high in quality, prestige, or exclusiveness; substitute products are hard to find or when they cannot easily compare the quality of substitutes; and the total expenditure for a product is low relative to their income or when the cost is shared by another party.

- internet cause a effect of relatively elastic on the product

e.g. instant price comparison on the internet provided by companies like zuji.com

increased consumer sensitivity toward air tickets becoz it is more easily for them the look for the substitute

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the economy

- economic condition can have a stong impact on the firms pricing stratgies

- a boom or recession, inflation and interest rates affect consumer spending, consumer perception of the product price and value and the companys cost of producing and selling a prouc

- in a aftermath of the recent recssion, consumers have rethought the price - value equation

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other external factors

the company must also consider what impact its price will have on other parties in its environment . How will the resellers react to various prices

the company should set prices that give resellers a fair profit, encourage their support, and help them to sell the product effectively

- the goverment is another important external influence on pricing decision

penalty on the enviornment destruction

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social concern may have to be taken into account.

- in setting prices, a company's short term sales, market share, and profit goals may have to be tempered by broader societal consideration

e.g. discussion on the social media may effectively affect

Page 6

Topic 8

Denfinition of product

= anything that can be offered to a market for an attention, acquisition獲得, use or consumption that might satisfy a

want or a need

E.g. service, event, persons, place, organization, ideas or mix of these

Product - tangible = good

intangible = service (same as econ)

Company marketing's offering both good and service

Offer may consist pure good and pure service, i.e. soap/ courier service信遞服務, (primarily a good or a service)

To differentiate companies offer, marketers create and manage customer experience with their brand and company

Product experenice = buying more than just the physical product.

i.e. Iphone

You are not just buying a wireless mobile phone, email, Web-browsing device or personal organizer, but also buying the freedom and on-the-go connectivity to people and resources

Service experenice = offereing additional consumer services

i.e McDonald in Malaysia

Differeniate itself from other fast food restaurant by offering an atmosphere that encourage consumer, especially the youngster to spend time there when enjoying the restaurant's food

Core customer value/ Actual Product/ Argumented Product

Core customer value = what the buyer actually buying

Augmented = offering additional consumer services - satisfy customer experience- differ the product from other

Actual good

Brand name

Quality level

Features

Design

Packaging

Augmented good

Delivery and credit

Installation

Warranty

After-sale service

e.g. people who are buying iphone are not not only buying more than a wireless mobile phone, email and Web- browsing device or personal organizer. They are buying freedon and on-the-go connectivity to people and resources

Step to develop 1. identify the core customer value that customer seeks from the product

2. Design the actual produc

3. fin ways to aument it in order to create customer value and the most satisfying customer service

e.g. KIA offer a warranty to the customer they have sold the cars

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consumer products

- are products and services bought by final consumers for personal consumption

industrial products

- those purchased for further processing or for use in conduc a business

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consumer product can be classified as

- convenience

- shopping

- specialty

- unsought

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convenience product

are consumer produc and services that customer ususally buy frequently immediately and wif a minimum of comparison and buying effort

customer buying behavior

- frequent purchase

- little planning

- little comparison or shopping effort

- low customer involvement

price

-low price

distribution

-widespread distribution

-convenient location

promotion

mass promotion by the producer

toothpaste magazines

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shopping produc

are less frequently purchased consumer produc and services that customers compare carefully on suitability, quality, price and style

-less freuqent purchase

- much customer involvement

- much planning and shopping effort

- comparison of brands on price quality and style

price

- higher price

distribution

- selective distribution in fewer outlets

promotion

advertising and personal selling by both producer and resellers

e.g. tv, furniture

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specialty produc

are consumer produc and services wif unique characteristics or brand identification for which a signifiant grp of buyers is willing to make a special purchased effort

customer buying behavior

- strong brand preference and loyalty

- special purchase effort

- little comparison of brands

- low price sensitivity

price

-high price

distribution

- exclusive distribution in only one of a few outlets per market area

prmotion

- more carefully targeted promotion by both producer and resellers

e.g. luxury good : Rolex, watches pr fome crystal

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unsought product

are consumer produc that the consumer either does not know

or knows about but doesn't normally think or of buying

customer buying behavior

- little product awareness, knowledge

price

- varies

distribution

- vaires

promotion

- aggressive advertising and persoal selling by producer and resellers

e.g. life insurance and blood donation

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for Industrial product

it divided into

material and parts

- raw materials

- manufactured materials and parts

capital items

- installations

- accessory equipment

supplies and services

operating supplies

rapair and maintenance items

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raw materials and parts

- include raw materials and manufactured materials and parts

capital items

- are industrial products that aid in the buyer's production or operation, including installation and accessory equipment

e.g. buildings, factory, equipment, tools

supplies and services

- include operating supplies and maintenance and repair services

e.g. paper, pencils, paints, nails

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organization marketing

e,g, haier advertises that it wants to go " Haier and higher

companies such as Tsingtao Beer and Speedo have used sports personality like Kobe Bryant and Micheal Phelps to endorse their products or drawing attention to their brands

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person marketing

- consists of activities that undertaken to create maintain or change attitudes or behavior toward particular people

e.g. the idols

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place mareketing

- involves activities undertaken to create maintain or change attitudes or behavior toward particular places

e.g. Hong Kong and Shanghai are promoting themselves as fun cities to attract the creative elite

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social marketing

is the use of commercial markeing concepts and tools in programs designed to bring about social change

e.g. with the smoking among female teens on the rise in Malaysia, its Ministry of Health started an antismoking at educating youth about the harms of smoking

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product decisions

individual product decision step

1. product attributes -defining the benefit it will offer

2. branding

3. packaging

4. labeling

5. produc support services

produc attributes

- quality features and design

produc quality is creating customer value and satisfaction

Total quality management is an apporach in which all the company's people are involved in constantly improving the quality of produc services and the business processes

produc features are a competitive tools for differentiating the company's prudc from competitors' produc

the company should periodically survey buyers who have used the produc and ask

1. how do u like the product

2. which specific features of the produc do u like most

3. which features could we add to improv the produc

produc style and design

another way to add customer value

describe the appearannce of a produc. Design contributes to a produc usefulness as well as to its looks

e.g. Samsung use design to keep them wif the top three of the global mobile phone market. Galaxy S have been lauded and met wif success wif its orientation toward design

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branding

- name term sign symbol or design or a combination of these, that identifies the maker or sellers of a produc or services'

e.g. Muji has attained a culture status as a brandless brand

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packaging involves desgning and producing the container or wrapper for a produc

a innovative packing give a company an advantage over competitors and boost the sales

e.g. When Heinz inverted the good old ketchup bottle ,sales grew at three times the industry rate the following year

tranditionally it's developed to hold and protect the produc

now: attracting attention, describing the produc and making sale

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labeling

labels range from simple tags attached to produc to complex graphics that are part of the package

function:

1. identifies the produc or brand

2. describe several things about the product

3. promotes the brand

e.g. I LOHAS stands for I lifestyle of Health and Sustainability. This mineral water bottle Coca - Cola promotes environmentalism

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support servies

- companeis must continually assess the value of current services to obtain ideas for new ones.

- need to develop a package of services to satisfy customer and provide profit to the company

- they also can take step to fix problems and add new services that will both delight customer and yield profits to company

e.g. Samsung goes the extra mile in services for its high -end product

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produc line/ mix is a grp of produc that are closely related becoz they function in a similar manner, are sold to the same customer grp, are marketed through the same types of outlets or fall within given price ranges

E.g. BrAnd's has a long produc line for different needs like energy, stamina

E.g. procter and gambles

P&G get olay VS and Pantene / Pamper

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production line length is the number of items in the prouduct line

- filling involves adding more items wifthin the present range of the line

stretching occur when a company lengthen its produc line beyond its current rangee.g.

BrAND’S®

essence of Chicken with Cordyceps for

energy; BrAND’S® essence of Chicken

with ginseng for stamina; BrAND’S®

essence of Chicken with Lingzhi and

BrAND’S® essence of Chicken with

Tangkwei for general well-being;

upward stretch for adding prestige to current produc

earn higher margins

downward stretch for prevent competitive entry

retaliates against competitors's attack at upper end

capitalizes on faster growth at lower end

•Companies located at the upper end of the market can stretch their lines downward.

•

•Companies located at the lower end of the market can stretch their product lines upward.

•

•Companies located in the middle range of the market can stretch their lines in both directions.

e.g. Marriot offers a full line of hotel brands which aimed at a different taget market

product line filling

产品线中，导入一个新的产品，使产品线更加完整。

e.g. Eversoft Infinite fills the needs of a young segment who wants anti-ageing products. To differentiate this from its existing products, eversoft used Charmaine Sheh, a mature but youthful-looking celebrity, to endorse the product

four dimension for the production mix

1. width

2. length

3. depth - version offer of each produc in the line

4. consistency - how closely related the various produc lines are in end use , production requirement , distribution channels

increase its business by follow the four demension

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branding strategy

brand are seen as the major enduring assets, thus a powerful assets which must be carefully developed and managed

brand equity

brand are more than just names and symbols

they are key element in the company relationship wif customer

brand represent consumer's perceptions and feelings about a produc and its performance

Real value of a strong brand is its power to capture consumer preference and loyalty

e.g. Apple , Nike Disney become larger- than - life icons that maintain their power in the market for years

advantages including

1. higher level of consumer brand awareness and loyalty

2. more leverage in bargaining with resellers

3. more easily launch line and brand extension

4. Defense agianst fierce price competition

5. Forms the basis for building strong and profitable customer relationship

features that have good brand name

suggest sth about the produc benefits and qualityes

easy to pronounce, recognize and rmb

distinctive

extendable

translate easily into foreign language

capable of registration and legal protection

existing brand name existing produc line(categories)= line extension

- when a company extends existing brand names to new forms, colors, sizes, ingredients, or flavors of an existing product category

e.g. there are many different types of coca -cola avaliable

exising brand name wif new production line = brand extension

- extend a current brand name to new or modified products in a new category

Giorgio Armani has extended its brand to bookshops carrying children’s books, like this one located in Hong Kong

new brand name with existing production line = multibrands

establish different features and appeal to

different buying motives. It also allows a

company to lock up more reseller shelf space

e.g. p&G have vs, pantene and olay

- introduces additional brands in the same product category.

new brand name wif new production line = new brand

produc mix width = the number of different produc lines the company carries

Page 7