Marketing management notes NUST ZIMBABWE 2014

WELCOME TO THE MARKETING
MANAGEMENT MODULE
LECTURER: MR J. RANGANAI
OFFICE SD 17 (Business Management Dept)
Email: ranganaij@gmail.com
Cell: 0772 122 120 /0713 421 422 /0733 236 657
Marketing Management @ NUST 2014

Marketing & Marketing Management
Marketing consists of individual & organizational
activities that facilitate & expedite satisfying exchange
relationships in a dynamic environment through the
creation,distribution,promotion & pricing of goods.

The Marketing Management Process
Marketing Management is the process of planning,
organising,implementing & controlling marketing activities to
facilitate & expedite exchanges effectively & efficiently.
ANALYSIS
Collect and analyse
marketing
Information
(Environmental scanning)
MONITOR and CONTROL
Outcomes
Set standards and
Measurements
IMPLEMENTATION
Resource allocation,
organising,
programmes
PLANNING
Take decisions
about which consumers
to satisfy and the
marketing mix

Needs Wants and Demands
Needs ;- state of felt deprivation.
 Physiological needs, social needs, individual needs for
fulfillment.
 Most basic concept underlying marketing
Wants ;- desires shaped by culture and individual
personality.
Demands ;- wants backed by purchasing power.
 Given their resources, people demand products with the
benefits that give them the most satisfaction.
 Desire + Ability + Willingness + Authority = Effective
Demand
 Desire – needs/wants
 Ability – have resources for exchange
 Willingness – want to spend the resources
 Have legal capacity to enter into exchanges.

Value and Satisfaction
Customer Value ;- the relationship between the benefits the
customer gains from owning and using the product and the
costs of obtaining the product.
 Benefits can be functional and emotional
 Costs can be monetary (price), time & energy costs.
 Perceived value the key to understanding customer
judgments e.g. Is Omo better than Sunlight?
Customer Satisfaction ;- the extent to which a product’s
perceived performance matches a buyer’s expectations.
 Benefits of customer satisfaction include; (1) repeat
purchases, (2) less price sensitivity, (3) positive word of
mouth to friends and thus customer loyalty.

Customer Relationships
Relationships - The process of creating, maintaining and
enhancing strong, value driven relationships with
customers. (Kotler; 2003).
Important to create mutually beneficial relationships
because:
 Costs five times as much to attract a new customer as it
does to keep a current customer satisfied.
 Losing a customer means losing the entire stream of
purchases the customer would make over a life-time of
purchases.
 A happy customer normally tells 2 or 3 other people but a
disappointed customer will normally inform 10 or more
people.

Marketing Management Philosophies
*The orientations under which organisations may
conduct their marketing activities namely:
(i) Production Concept:Orgs that employ this concept
assume that customers are only interested in the availability of
products at lower prices such that marketing is not really
necessary.
(ii) Selling Concept: Companies oriented towards selling
focus on selling whatever they make
-They assume that customers will resist or are reluctant to
purchase products or services not essential to them and
therefore employ creative advertising and aggressive
salespeople to overcome customer resistance/reluctance

(iii) Product Concept: Premised or based on the belief
that customers favour quality, performance or
innovative featuresand will buy the high quality
products if made available.
(iv) Relationship Marketing Concept: Orgs that employ this
concept aim @ benefitting by nurturing long terms
relationships with customers.
-It aims to enhance profitability by retaining customers such
that the business benefits from repeat purchases/business.

(V) Societal Marketing Concept
Is one of the newest of the marketing management
philosophies
It focuses on satisfying both customer and societal
needs
*It aims to fulfil what society socially expects from
business in terms of the three considerations which are
Society welfare
Customer satisfaction
Company profits

(vi) Marketing Concept: Companies oriented
towards the marketing concept firmly believe that the
customer and the satisfaction of customer needs is
key to organisational success.
* Org places the customer needs at the heart of what it
does and its activities are driven by the need to
achieve the highest level of customer satisfaction
*Pillars of the Marketing Concept
Customer Centricity
Organisational Integration
 Mutually Profitable Exchange

Recent Marketing Challenges and
Developments
Rapid globalization
Changes in information technology and electronic
marketing
Income Inequalities
Ethical and socially responsible marketing
Growth of non-profit marketing
The Powerful Customer

Concept of the Marketing Mix
* A combination of controllable elements that are used
by marketers to satisfy their target markets &
achieve their objectives.
The traditional marketing mix (4ps) consists of:
-Product
-Price
-Promotion
-Place

Characteristics of a good marketing mix
*The use of the words mix & combination in relation
to the mkting mix are important in that the
marketing mix can only be successful if the elements
or the variables are well blended, integrated, flexible
and consistent with each other.
(i) Well-Blended: Means the elements must be
optimally combined such that the marketer offers a
quality product, whose price is consistent with the
consumer `s perception of value, give it adequate
promotional support and efficiently distribute it

(ii) Integrated: Means there must be synergy between
the marketing mix elements and as such no element
should be used in isolation.
-For example a good product that is poorly promoted
will fail.
-Or the other way around, trying to use creative
advertising to make up for a poor product will not
work either.
-Similarly, no matter the level of quality, a poorly
priced product will fail

(iii) Consistent: the elements of the marketing mix
must be consistent about what they say about the
product.
-If they are inconsistent, the consumer will reject the
total offering
(iv) Flexible: The marketing mix must be flexible
such that it should be continuously altered and
adjusted to align it with changes in customer tastes
and preferences or any other changes that may alter
the level of demand

Rethinking the Marketing Mix
The concept of building marketing strategy around
the “4ps”has been the foundational principle of
marketing which has served markets well for half a
century.
Although the “4ps” marketing mix has endured for
over a half-century, & continues to be the basis for
many marketing strategies, overtime, there has been
a progressively a groundswell of a push towards
rethinking the bedrock principle (4ps marketing mix)
in favour of including more variables or coming up
with totally different models to drive competitiveness
in markets as follows:

(1) Rethinking the Marketing Mix: the 7ps
*The drive in the trajectory of rethinking of the 4ps
started with the inclusion of an additional 3ps
(people, process & physical evidence) to the
traditional “4 ps ” resulting in the marketing mix
having “7 ps”
-Product - Price -Promotion -Place
-People -Processes -Physical Evidence
*The motivation for including the additional 3ps was to
improve the robustness & potency of the model (marketing
mix) pursuant to dealing with the challenges of service
marketing

(2) Rethinking the Marketing Mix:7 C’s
Scholars like Kotler have implored managers to
relook at the marketing mix from the customer
instead of the firm perspective thus focusing on the
7 Cs instead of 7 Ps
7 P’s
 Product
 Price
 Place
 Promotion
 People
 Processes
 Physical Evidence
7 C’s
 Customer Value
 Cost
 Convenience
 Communication
 Consideration
 Co-ordination & Concern
 Confirmation

(3) Rethinking the Marketing Mix: the
SAVE framework
*According to Motorolla, in business to business
markets, the “4ps”yield narrow, product-focused
strategies that are increasingly at odds with the
imperative to deliver solutions.
According to the org, its not that the 4 P’s are
irrelevant, just that they need to be reinterpreted (to
the SAVE model) in order to serve B2B markets well:
S- solutions (instead of products)
A- access (instead of place)
V- value (instead of price)
E-education (instead of promotion)

(4) Rethinking the Marketing Mix: the new
10 ps
*Bhagat (2012) highlights the 10 new “Ps” as reflecting
current thinking about marketing as follows:
i) Passion, Philosophy, and Purpose
ii) Predictive analysis: marketing information,
knowledge management etc
iii) People: stakeholder value, relationship marketing
and customer experiences
iv) Positioning: psychological value and perceptions

4) Rethinking the Marketing Mix: the new 10
ps
v) Processes: value chain linkages
vi) Pricing: economic value to stakeholders; dynamic
pricing; negotiations.
vii) Persuasion: communicating value to stakeholders;
integrated marketing communications; building &
protecting brand and corporate equity
viii) Performance and Profits: Return on mkting &
measuring mkting productivity.
viv) Philanthropy: CSR; economic, social, cultural, and
environmental sustainability.
(x) Prescient Prescriptions: ethics, cultural sensitivity &
technology in strategic planning.

(5) Rethinking the Marketing Mix: the SIVA
framework
*Protano (2011) suggests a new model represented by
the acronym SIVA:
Product → Solution
Promotion → Information & Incentive
Price → Value
Place → Access
*Protano `s model reflects a B2B thrust similar to that
of Motorolla `s SAVE framework

(6) Rethinking the Marketing Mix: the “OVER”
framework
*The 4 ps are “OVER”
O- offer (instead of product)
V- value (instead of price)
E- experience (instead of place)
R-relationships (instead of promotion)
* Best relied on by company is creating and selling
either complex services or solutions

7) Rethinking the Marketing Mix: the new
“4Es ” framework
*Brian Fetherstonhaugh at Olgilvy & Mather suggests the
use of the 4 E’s:
i. Product → Experience
ii. Place → Everyplace
iii. Price → Exchange
iv. Promotion → Evangelism

7) Rethinking the Marketing Mix: the new
“4ps ” frameworks
Process
People
Platforms
partners
Purpose
Passion
Pain
Power
Personality
Publishing
Packaging
Physics
The above frameworks rarely make sense in terms of
contrasting with the original “4ps” such that at best, they just
reflect some attempts to repackage the 4 “Ps” while at worst
they mirror the meaningless efforts of some people who want
to be seen as having said or done something in this debate
of rethinking the marketing mix

Conclusion: Rethinking the Marketing
Mix
Despite the suggestions towards rethinking the marketing
mix, the model remains a timeless,valuable,simple (but
effective) bedrock of mkting strategy especially in
consumer markets where benefits are offered to customers
through simple prdts
New additions /models like the additional 3ps (people,
process & physical evidence) and SAVE & SIVA
framework have shown potency in improving marketing
strategy in service & industrial markets respectively.
The 7Cs can be very effective in relation to achieving a high
level of customer centricity
The new 10Ps are a very comprehensive mkting strategy
framework

THE MARKETING ENVIRONMENT
An assessment of the
forces outside
marketing that affect
marketing manager’s
ability to develop and
maintain successful
relationships with its
target customers

Elements of the Marketing
Environment
Internal environment
Resources, management
Structure, culture, policies, etc.
Micro-environment
Suppliers, intermediaries
Agencies, customers, competitors
Macro-environment
•Demographic
•Political
•Economic
•Technological
•Socio-cultural
•Natural

Importance of Understanding the
Environment
Degree of dynamism ;- rate of change of factors in the
environment.
Degree of complexity ;- the many and varied factors in
the environment and their cross impact on each
other.
Degree of uncertainty ;- as a result of the dynamism
and complexity of the environment, marketing
decisions and outcomes are made under conditions
of risk.

Techniques for Analysing the
Environment
External Environment Analysis
 PESTLEI Analysis
 Industry and Competitive Analysis
Internal Environment Analysis
 Resources and capabilities analysis
 McKinsey 7s Framework
Overall Situational Analysis
 SWOT Analysis

The Marketing Mix
PRODUCT & SERVICES STRATEGY

What is a product?
 A product is anything that can be offered to a
market for attention, acquisition, use, or
consumption that might satisfy a want or need.
 Businesses should think in terms of customer
benefits instead of physical products and services to
gain competitive advantage
 A product has 4 levels: the core product, actual
product, augmented product & expected product

Product Anatomy

Product Anatomy
Core Product: is the basic problem-solving benefit that
consumers seek when they buy a product. e.g. transport,
status, beauty & can be functional or psychological
Actual product: A product`s parts,styling,features,brand name,
packaging and other attributes that combine to deliver and
communicate the core benefits.
Augmented product: additional consumer services and benefits.
e.g. warranty, repair services, training etc
Expected product: what the product could or should be in
future. This includes possible ways of differentiating it form
competitors

PRODUCT CLASSIFICATION
*Products can be broadly classified into consumer and
industrial products.
 Consumer products are those purchased for
personal use and consumption by final consumers
Industrial goods are those destined for use in a
production process in order to generate other goods
and services

Types of Consumer Goods
Marketers usually classify consumer goods on the
properties of durability, and customer shopping
habits.

(a) Basis of durability
*Based on the properties of durability, goods can be
divided into durable and non-durable goods as well
as services
• Durable goods:
• Non-durable goods
• Services

(b) Classification on the basis of shopping
habits
Convenience products: are bought frequently with minimum
comparison and effort e.g. Bread, chocolates, newspapers... are
usually low priced and intensively distributed.
Shopping products: are less frequently purchased, compared carefully
on quality, price, style, suitability e.g. furniture, clothing, basic
cars… are selectively distributed but given more sales support.
Specialty products: have unique characteristics and brand
identification for some consumers who spend special effort to
purchase e.g. specific brands and types of cars, Jewellery, designer
clothing… e.g. Rolls Royce buyers do not compare cars, they only
invest the time needed to reach the sellers.
Unsought products:Are consumer goods the consumer either do not
know about or knows about them but does not normally think of
buying them. Classic examples of unsought goods are life
assurance policies, encyclopedias, blood donation & vasectomy

2.Industrial Goods
Installations: industrial products such as heavy equipment, buildings and new
machinery which are relatively expensive and for long term
Assessory equipment: industrial products that provides peripheral support to
the production process without direct involvement e. g hand tools, forlift trucks,
storage bins etc
Raw materials: Primary industry output such as beef, cotton, milk, poutry,
soyabeans, copper,iron ore, in their natural state constitute raw materials.
Component parts and materials: finished products of one producer that
actually become part of the final products of another producer
Operating supplies: Frequently purchased consumable items that do not
become part of the product.eg lubricating oils, cleaning materials, floor polish,
and stationery etc.They are the convenience goods of the industrial markets
Business services: intangible products that firms buy to facilitate their
production processes e.g financial services, leasing services, rental services,
insurance services, security, legal advice and consultancy

Product Decisions
*There are five important decisions to be made in the
development and marketing of individual products;
a) Product Mix & Line Decisions
b) Product Attribute Decisions
c) Branding Decisions
d)Packaging Decisions
e) Product-support services decisions

Product AAttttrriibbuuttee DDeecciissiioonnss
Three attributes of importance to customers when selecting a product;
Product quality
 Involves a product meeting customer specifications in terms of
durability, reliability, precision, repair and other quality attributes
valued by the customer
Product features
 Features differentiate a company’s products to those of
competitors.
 A company needs to know which features are valued by the
customers e.g. computer features, cell phone features etc.
Product design
 Design contributes to a product’s usefulness and appearance.
 A good design can attract attention, improve product performance
and give a product a strong competitive edge

Product Mix & Line Decisions
* PRODUCT LINE
• A product line is a group of products that are closely
related because of any of the following reasons:
• they satisfy the same needs eg
shampoos,toothpaste,deodorants,soaps
• They are used together eg cellophone accessories
• They are bought by the same customer groups eg stationery
items bought by students
• They are marketed through similar channels e.g hardware
products
• They fall within the same price range e.g products with a
selling price of say between R10 and R15

Product Mix & Line Decisions
*PRODUCT MIX
Also known as an assortment, is a the set of
/combination of all product lines and items that a
particular firm /reseller offers for sale
Or it is the combination of all various kinds of all
products which a business makes/sells.

Example of a Prdt Mix and a Prdct Line:
Unilever South East Africa
Washing
Powders
Soaps Foodstuffs Personal Care
Prdts
Omo Geisha Royco Ponds
Surf Lifebuoy Stock Brut
Sunlight Key Rama Sunsilk
Vaseline Flora Fair & Lovely
Cream
Dove Knorr Axe
Lux Vaseline
Close-Up

BRANDING DECISIONS
A product brand is a name, term, sign, design or a
combination of all them intended to identify the
goods of a seller & differentiate them from those of
competitors
A brand is a flag that signifies to the buyer what he
has to expect in terms of quality, service and
functionality

Brand Equity
 Is the value of a brand.
 A powerful brand has high brand equity.
 Requirements for high brand equity:
High brand loyalty,
High brand awareness
High brand image
 Positive Brand Associations
 Interbrand `s Top five global brands (2013) were (1)Apple
(2) Google (3) Coca-Cola (4) IBM (5) Microsoft (6) General
Electric (7) McDonalds (8) Samsung (9) Intel (10) Toyota
.

Branding Decisions
Major branding decisions are
a)Selecting the brand name
b)Finding a brand sponsor
c)Identifying the brand strategy
d)Repositioning the brand

a) Selecting the brand name
*A good brand differentiates the product
communicates its benefits, suits the target market
and marketing strategies.
*Characteristics of good brand names
 Must be internationally acceptable ie it should blend into
various international cultures & should not be offensive.
Must say something very positive about the core product
eg Econet
Can be legally protected through registered trademarks

a) Selecting the brand name
*Characteristics of good brand names
They must be distinctive
They must be easy to pronounce e.g Sony
Must be easy to remember such that short names are
preferable : (if long customers usually shorten
themselves)
Must suggest quality e.g. Topics, Bakers` Pride

b) Brand Sponsorship
*A producer has four sponsorship options. The product may be
sold
i. as a manufacturer’s (producer’s) brand,
ii. to a reseller (middleman) who gives it a private brand (who
create and own the brand)
iii. As a licensed brand (a company may be licensed to sell its
products under another company’s brand)
iv. As a co-brand (two companies combine their brands and create
a new one).

(c) Brand strategy
A company has four choices;
(i) Line extension; using a successful brand name to introduce
additional items in an existing product category under the
same brand name, such as new flavors, forms, colors, added
ingredients, or package sizes.
(ii) brand extension; using a successful brand name to launch a
new product in a new category.
 Helps the company introduce new product categories more
easily, provides instant recognition and acceptance, decreases
advertising costs.
 But may be dangerous if it fails, because it may tarnish the
company’s whole image

(c) Brand strategy
(iii) Multi-brands; a strategy under which a seller develops two or
more brands in the same product category e.g Unilever
(Geisha,Lifebuoy,Lux & Dove)
(iv) New brands; introducing new brand names in new product
categories.
 Demands lot of company resources, that is why, nowadays some
companies use megabrand strategies - spending resources only on
brands that can achieve the number one or two market share
position in their categories and dropping the weaker brands.

BBrraannddiinngg SSttrraatteeggyy AAlltteerrnnaattiivveess
Product Category
Existing New
Existing Line Brand
Brand Name extension extension
New
Multi-brands New
brands

d) Repositioning the brand: Rebranding
Rebranding is the creation of a new name, term, symbol,
design, or a combination of them for an established brand
with the intention of developing a differentiated (new)
position in the mind of stakeholders and competitors.
Corporate re-branding is defined as “the practice of building
a new a name representative of a differentiated position in the
mind frame of stakeholders and a distinctive identity from
competitors

d) Repositioning the brand: Rebranding
contd
*Corporations often rebrand in order to respond to external and/or
internal issues that include:
 Need to differentiate from competitors e.g FBC Holdings
 Align brand with international positioning e.g Telecel Zimbabwe
 Shedding a negative image e.g Renaissance Bank to Capital Bank
 No enhance market appeal e.g Express to Jet Rebranding
 As part of corporate restructuring e.g Zimbabwe Broadcasting
Holdings
 To reflect a new ownership structure e.g Murray & Roberts to
Masimba Holdings /CFX to Interfin Bank ,TN to Steward
rebranding
 To refresh the brand e.g Toppers Uniforms rebranding
 To potray a new image e.g ZABG to Allied Bank

PPaacckkaaggiinngg DDeecciissiioonnss
*The activities of designing and producing the container or
wrapper for a product.
Packaging Functions
 Protecting the product and maintaining its functional form.
 To protect consumers from product tempering e.g. use of
plastic sealing.
 To offer convenience to shoppers e.g. pasteurised packaging
that does not require refrigeration, small single serving tins
to minimise waste…
 To promote the product by communicating its features, uses
and benefits.
 Re-usable packages can be developed to make the product
desirable e.g. ice cream containers as food storage
containers.

Product-Support Services
 The product-support services augment the actual product,
can help the product to gain a competitive advantage and
create customer loyalty.
 The company should periodically survey its customers to
assess its customers’ satisfaction and to get new ideas for
product improvements.
 E.g. services to handle complaints, credit, maintenance,
technical issues, customer information.

SERVICES MARKETING
*Are intangible activities, benefits and satisfaction that
are offered for sale.
*Services can be classified on the basis of provider or
on the basis of the levels of customer contact.

(a) Classification of the basis of provider
Governmental services - courts, hospitals, police, fire
departments, postal services, schools etc;
non-profit organization `s services - museums, colleges,
services by NGOs
business organizations `services - airlines, hotels,
restaurants, advertising, real estate etc.

(a) Classification of the basis of level of
customer contact
Contact Level Explanation
(i) High Contact
Services
Customers visit the service setting so that they are personally
involved throughout the service delivery process e.g a hair
cut,dentist `s services etc
(ii) Medium
Contact
Services
Customers visit the facility but not remain for the duration of
the service delievery e.g delivering & collecting items to be
repaired
(iii) Low
Contact
Services
Little or no contact between customer or service
provider.Service is delievered from a remote location often
through electronic means e.g social networks,radio & television
entertainment etc

Characteristics of Services
1.Intangibility
 Services do not have physical features that buyers
can see, touch, feel, smell or taste before the
purchase decision.
 Service firms essentially ask their customers to buy a
promise
2. Ininventorabilty
Services cannot be stockpiled for later use or sale. Because
of this characteristic, unused capacity cannot be stored for
future use. For example, spare seats on an aeroplane cannot
be transferred to the next flight.

3. Inseparability
 Production & consumption of services take place
simultaneously.
 Because services are real time experiences, services
providers have to get it right first time as correction of a
service blunder is impossible.
 Further because of the inherent characteristic of
simultaneity in production & consumption, the client has to
avail themselves at the point of service provision

4. Inconsistence (variability)
Service quality is usually not the same every time
because of the labour intensive nature of services.
The quality of the service depends on the morale,
motivation, mood, training and attitude of those
providing the service.
For example, there is a strong possibility that the
same enquiry would be answered slightly differently
by different people (or even by the same person at
different times)

5. Involvement of other people
Other people other than the service providers may be
involved in the service setting thus affecting the
quality of service provided for example a bank
customer may queue with other customers before
being served
(6) 6. Non-Ownership
A service as a nonmaterial equivalent of goods does
not result in ownership and this is what differentiates
it from providing physical goods.

Strategies to deal with unique
characteristics of services
The unique characteristics of services impose the need
for marketers to come up with strategies to deal with
the challenges.
(i)Intangibility
Develop a tangible presentation of the service which implies
high service quality eg cheque books, credit cards,calenders
Offer tangible benefits in sales promotions eg when hotel
occupancy rates are low offer say free breakfast.
Ensure high quality physical evidence like outlets design,
surroundings, and staff uniforms etc because it gives a good
impression of service quality to consumers
Use third party endorsements eg by credible high status
people

(ii) Ininventorability
Use of discounts to ensure usage of service during off peak hours e.g
mobile phone tariffs can be lowered say between 12 midnight and
6am
Educate customers to use service during non peak hours
(iii) Inconsistence
 Set service standards eg the telephone should be answered within
a certain number of seconds
Offer adequate training to personnel so that variability is
minimized
Employees should be well motivated by way of both monetary and
non-monetary methods
Benchmark your processes with those of the best service providers
internationally
Make sure employees are aware of values,mission,vision etc

(iv) Inseparability: Use technology to bridge the
inseparability gap eg internet banking such that the
consumer doesn’t need to visit the bank or online distance
education such that the student doesnt need to be physically
on campus
(v) Involvement of other people
Increase the number of service delievery channels to avoid
inconveniencing customers eg a bank can increase the
number of service counters, ATMs and use electronic
banking platforms like internet, sms and telebanking
Use of agents for example insurance companies can use
brokers to minimize congestion at the own premises.

(vi) Use of service blueprints.
A service blueprint is a graphical illustration of the service
process.
 It is a sequential illustration of the stages involved in the
service process.
 Pursuant to improving service quality, a service blueprint
helps managers to identify points potential points of failure
or where improvements can be made to improve service
quality.
(vii) Use of an expanded marketing mix
To improve service quality, managers have to harness the
additional variables of people, process and physical
evidence to improve service quality.

NEW PRODUCT DEVELOPMENT
Because of the rapid changes in consumer tastes, technology,
and competition, companies must develop new products
and
services. A firm can obtain new products in two ways;
• acquisition; buying a whole company, a patent, or a license.
• new-product development; developing original products,
product improvements / product modifications and new
brands.
• Strategic alliances

Importance of New Products
Keep up with changes in consumer tastes.
Adapt to new technologies
To stay ahead of competition
To widen the company’s product mix and thus growth and
profitability.
New products spread the marketing risk.
*Despite the importance of new products, many researches
indicate that over 70% of all new products fail within 2
years of launch. What are the likely reasons for such
failures?

New Product failure: Causes
*New Product failure is a very real and very common
phenomenon. There are many reasons for new
product failure and some of the more commonly
cited include:
Poor planning: incorporates issues such as
developing a product that doesn’t fit a company’s
strategy, competencies and/or distribution strength
Poor test market research: the failure of New Coke
in 1985 is a classic example of how poorly executed
test marketing can lead to product failure

Legislation: unfavorable legislation may lead to the failure
of a new product eg Dasani, a Coca-Cola Company
mineral water drink was stopped by the French gvt
because it had a high level of bromate level
Poor Market Analysis: failure to properly analyze the
market to understand whether and what type of
opportunity may exist in a category and what specific
unsolved problems consumers have
Improper blending of marketing mix elements: such as
overpricing of a product, for example, the entry price for
Mazda 929 was too high

Competition: the activities of competitors can lead
to product failure. For example IBM killed several
laptop models they had developed because
competitors introduced better and more advanced
machines to the market before IBM could get there.
Unconducive organizational climate: new product
failure is sometimes traced to organisational factors
like poor organizational culture, lack of mngt
support and inadequacy of resources to support the
new product `s strategy.

Poor timing of launch: Too early or late entry into
the market is a common cause of failure. Kinetic
Merlin was launched in India in June 1991.It was a 3
in 1 set consisting of a colour television, a stereo with
detachable speakers and a home computer.
Poor product concept: a new product that lacks a
compelling consumer benefit, is a simple me-too
item with no real and relevant difference from items
already available is bound to fail.

Kainotophobia: Kainotophobia means fear of
change and thus resistance to it. It is this fear of
various risks of associated with unknown
products that makes customers reluctant to adopt
them.
 Poor execution: failure to properly execute the
marketing plan and achieve targeted levels of
distribution, as well as failure to achieve appropriate
display and retailer support, all contribute to new
product failure

Poor Product Positioning
Poor or inconsistent quality
Insufficient differentiation from existing offerings
Branding blunders e.g black cat
Rapid change in the economy just after the product is
introduced eg an economic recession
Poor estimates of the market potential of the new
product
Non-delievery of promised product benefits
Improper channels of distribution selected

Types of New Products
*Seven types of new products exist
•Products which are new and original in every respect
e.g. the first telephone when it was introduced by
Alexander Bell in 1876
• Important alterations of existing products so that they
differ significantly from the current products e.g.
smartphones/high definition flat screen TVs
•Products which are new to the firm but not quite new
to the market eg if Apple starts making cars, the
products would be new to the firm (Apple),but not
quite new to the market

Types of New Products
• Products which are quite new to the target market
but not new to the firm.
• New according to the law: for example a product
that has been on the market for less than 12
months(Zimbabwe) or less than 6 months (USA)
• Additions to product lines: line extensions, flankers
so on
• Repositionings: Products retargeted for new uses or
applications

New Product Development
Is the development of original products, products
improvements, product modifications, and new
brands through the firm`s own R & D efforts.
NDP in companies is carried out as a process which
consists of 8 major steps which are as follows:

New Product Development Process
Stage Tasks to be Undertaken
1. Idea
Generation
•Systematic search for new ideas
•Org has to generate may ideas in order to find few good ones.
•Major sources of NP ideas include customers, competitors,
employees, senior management, channel members, scientists etc
2. Idea Screening •Ideas are evaluated to identify good ideas and drop poor ones as
soon as possible.
•In screening of ideas, companies take care to a void both drop and
go errors.
•Org needs to consider 3 categories of risk, i.e strategic, market &
internal risk.
3. Concept
Development
& Testing
•Turn surviving ideas into concepts by developing a detailed version of the
product idea in meaningful consumer terms
•Testing involves asking a sample of consumers what they feel of the product
concept before turning it into actual product.

Stage Tasks to be undertaken
4. Marketing
Strategy
Development
•Describes the target market, planned product positioning, the potential
sales, market share and profit goals for the first year.
•Outline the planned long-run sales, profit goals and marketing plan for a
given time-frame.
5. Business Analysis •Involves reviewing, (1) projection of sales, (2) costs and (3) profit (ideally
cash flow) for the new product to see whether it satisfies the company’s
objectives
6. Product
Development and
Testing
•Product concept is developed into a physical product (prototype) to see if
the idea can be turned into a workable product
•Developed prototype is then tested under laboratory and field conditions
to make sure the product performs safely and as expected.

Stage Tasks to be Undertaken
7. Test Marketing •Testing the product in realistic market conditions
•Company is able to judge product acceptability, effectiveness
of marketing strategy, customer reaction before going into full
production.
8. Commercialization
•If market testing returns with positive results, then the
firm commercializes/launches the product in the entire
market
•For a product launch to be successful, questions of when,
where, how and to whom should guide the marketers.
•Commercialization/launch brings us to the last stage of
the NPD process but however introduces us to the first
stage of the product life cycle

Product Life Cycle Concept
Time
Sales and
Profits ($)
Product
Develop-ment
Introduction
Profits
Sales
Growth Maturity Decline
Losses/
Investments ($)

PRODUCT LIFE CYCLE CONCEPT
 After launching a new product, management wants it to enjoy a long
and rewarding life, although it does not expect the product to sell
forever.
 The product life cycle (PLC) is the course that a product’s sales and
profits take over its lifetime. It has five stages;
1. Product development begins when the company develops a new-product
idea. During product development, sales are zero and the
company’s investment costs mount.
2. Introduction is a period of slow sales growth as the product enters in
the market. Profits are low or nonexistent in this stage because of
the heavy expenses of product introduction.
3. Growth is a period of rapid market acceptance and increasing profits.
4. Maturity is a period of slowdown in sales growth because the
product has achieved acceptance by most potential buyers.
 Profits level off or decline because of increased marketing
outlays to defend the product against competition.
5. Decline is the period when sales fall off and profits drop.

STAGES OF THE PRODUCT LIFE CYCLE
Introduction Growth Maturity Decline
Sales Low Rising
/Increasing
PEAK Declining
Average Costs High Falling Increasing Rising
Profits Negative Or Low Rapidly
Increasing
Peak To Declining Declining
Typical Customers Innovators Early Adopters &
Early Majority
Late Majority Laggards
Competitors
(Number Of Firms &
Products)
One Or A Few Few Bt Increasing High Number Of
Competitor
Low Number Of
Competitors

Introduction Stage Characteristics
Sales revenue is likely to be low because many
potential customers may be unaware of the product
and its benefits
Costs are very high at this stage because of high
distribution and promotional costs being incurred
The higher costs coupled with low sales revenue
make the introduction stage a period of low or
negative profits
There may be one or a few competitors at this stage
The New Product at this stage is typically bought by
innovators Marketing Management @ NUST 2014

Marketing Strategy @ Introduction Stage
*Goal of the marketing strategy is to establish a market
and build primary demand for the product.
Product – usually a basic product is offered to the
market
Price – Either a skimming or penetration pricing
strategy is employed.
Distribution is selective
High promotional expenditure aimed at building
brand awareness

Growth Stage Characteristics
Sales increase as more customers become aware of the
product and its benefits & additional market
segments are targeted
Average costs fall as promotional and distribution
costs are spread over a larger volume of output
Higher sales on the backdrop of falling average costs
results in an increase in profits in this stage.
The new product at this stage is typically bought by
early adopters and early majority
Attracted by the opportunities for profit, more
competitors enter the market

Marketing Strategy @ Growth Stage
*Goal of strategy is to gain consumer preference and
increase sales.
Product - New product features &packaging
options to improve product quality.
Price is maintained at a high level if demand is high,
or reduced to capture additional customers.
Distribution becomes more intensive.
Promotion - Increased advertising to build brand
preference.

Maturity Stage Characteristics
Sales reach their peak at this stage, while they continue to
increase, they do so at a slower pace
Costs increase as firm vigorously defends market share
against competitors
The triad of increased of increased costs, price reductions
and slowdown in sales growth results in profits being at
peak or mostly declining.
The product at this stage is typically bought by the late
majority
This stage is characterized by high number of competitors
and competitive products.

Marketing Strategy @ Maturity Stage
 Primary goal of strategy is to maintain market share and
extend the product life cycle
 Product - modifications are made and features are added
for differentiation.
Price - Possible reductions in response to competition
while avoiding a price war.
Distribution - new distribution channels & incentives to
resellers in order to avoid losing shelf space.
Promotion – Emphasises differentiation & building of
brand loyalty. Incentives to get competitors' customers to
switch to company brand.

Decline Stage Characteristics
Sales decline as the market becomes saturated, the
product becomes technologically obsolete, or
customer tastes change.
Unit costs may increase with the declining production
volumes and eventually no more profit can be made.
Decline in sales on the backdrop of rising unit costs
results in a corresponding decline in profits
As falling profits make the industry unattractive,
producers leave the industry resulting in a low
number of competitors and products
The product at this stage is typically bought by
laggards

Marketing Strategies @ Decline Stage
During the decline phase, the firm generally has FOUR
options in relation to the PRODUCT.
• Maintain the product without changing it in the hope that competitors will
exit the market.
• Harvest the product by reducing costs (advertising, sales force) hoping to
improve sales margins
• Divest the product either by liquidation or selling it off to another company
• Reposition the product to extend its useful life e.g by rebranding
Price - Prices may be lowered to liquidate inventory of discontinued
products. Prices may be maintained for continued products.
Distribution - Distribution becomes more selective with channels
that no longer are profitable being phased out.
Promotion - Expenditures are lower and aimed at reinforcing the
brand image for continued products.

Limitations of the PLC Concept
The term "life cycle" implies a well-defined life cycle
as observed in living organisms, but products do not
have such a predictable life and the specific life cycle
curves followed by different products vary
substantially.
Consequently, the life cycle concept may not be well-suited
for the forecasting of product sales.

Limitations of the Product Life Cycle
Concept
Further, critics have argued that the product life cycle
may become self-fulfilling.
-For example, if sales peak and then decline, managers
may conclude that the product is in the decline phase
and therefore cut the advertising budget, thus
precipitating a further decline.

Concept
According to Kotler & Armstrong (2006),using the
PLC Concept to develop marketing strategy can also
be difficult because the PLC is both a cause and
result of the marketing strategy

Concept
According to Brassington and Pettitt (2003), It is
difficult to predict when the key transition periods
from one stage to the next will happen, yet this is
critical information for planning strategy changes.
The problem is that the shape of the PLC is affected
by many things. It is not only the pace of change but
the organization `s handling of the product
throughout its life.

Concept
*However despite all the criticisms, the PLC Concept
remains a key theoretical framework that guides
manager in marketing strategy formulation a
product progresses through various stages of its life

Diffusion of Innovation:Definition
Is the rate at which a new product is adopted in
the market
Customers usually do not adopt a new product at
the same time. Some quickly adopt a new product
while others are a bit resistant to change and only
adopt a new product later when it will have been
tried and tested or only when it becomes the last
resort.

The Consumer Adoption Process
In the adoption process, consumers go through a
series of stages from learning about the new product
to trying it and deciding whether to purchase it
regularly or to reject it. The stages in the consumer
adoption process can be classified as follows:
a)Awareness: Individuals first learn about the new
product, but they lack full information about it
b)Interest: Potential buyers develop interest in the
product and begin to seek information about it

Stages in the Consumer Adoption
process
a) Evaluation: They consider the likely benefits of the
product
b) Trial: they make trial purchases to determine its
usefulness
c) Adoption/Rejection:If the trial purchase produces
satisfactory results, they decide to use the product
regularly

The Product Adoption Curve
Rogers (1962) came up with The Product Diffusion Curve
a theoretical framework that groups customers
according to how quickly they adopt a new product.

Adopter Groups
Adopter
Group
Description
Innovators Very knowledgeable grp of customers who are willing to take risk
by being the first to try a new and unproven product
Are only a small group (represent the first 2.5% to adopt the new
product) & are the earliest to buy
Tend to be younger, better educated, more confident & are wealthy
enough not to worry too much if the product doesn't work.
Important in the earliest stages of the PLC to get the product off the
ground & start the process of gaining acceptance as they are
influential.
Early
Adopters
Members of this group gauge the response of the innovators before
rushing in to purchase a new product.
Buy early (after the innovators) and are contend to let the
innovators take real pioneering risks with a new product.
They represent about 13.5% of the total consumer population.
Once early adopters enter the market, the growth stage of the PLC
starts developing

Adopter Groups
Adopter Group Description
Early Majority Represents 34% of the total consumer population,are
relatively well educated & careful consumers who tend to
avoid risk associated with purchasing an unproven product.
Adopt the product once it has been proven by the early
adopters.
Rely on recommendations or product endorsements from
others who have experience with the product
Late Majority Somewhat skeptical consumers who acquire a product only
after it has become commonplace.
Less interested and bothered about the product / are contend
to wait until they see how the market develops
Represent about 34% of consumers.

Adopter Groups

Factors affecting Rate of Adoption
(i) Relative Advantage: the greater the perceived value
possessed by a new product,the quicker it is likely to be
adopted.
(ii) Compability: Adoption is quicker if the new prdt is consistent
with current use & practice.
(iii) Complexity: speed adoption is hindered by products that are
difficult to understand & use.
(iv) Divisibility: Adoption is stimulated if customers can sample
the product in a part of their operations or sample it for a
limited period.
(v) Risk: The greater the risk attached to a prdt,the more reluctant
buyers will be to try it.
(vi) Communicability: Where prdt performance can be seen or
easily demonstrated,adoption is facilitated.

Usefulness of the Product Diffusion Curve
The Product Diffusion Curve`s strong links with the
PLC makes it a useful tool in formulating marketing
strategies for new products
The Product Diffusion Curve as a model guides you
as to who you should be targeting at different stages
of the life of your product or service i.e. whether its
innovators, early adopters, Laggards etc

MARKETING MANAGEMENT
PRICING PRODUCTS

PRICE
*Money or any other considerations exchanged for
ownership/use/consumption or enjoyment of a
product.
*Importance of Pricing Decisions
Price relates directly to the generation of revenue and
ultimately profits which are the life-blood for an
organization's survival.
Is a variable that a marketer can change quickly to respond to
changes in demand or to actions of competitors.
Can be used symbolically to communicate about the product.
*Price can be viewed from marketing, customer & societal
perspectives

Factors affecting pricing decisions
Nature of the product e.g. whether luxury or necessity,
industrial or consumer product etc
Costs
Competition
Company Objectives i.e profit maximization/sales
maximisation/growth /survival
Marketing Objectives e.g market share
Government Policies
Level of Demand
Stage of product in its PLC
Nature of the market e.g in terms of purchasing power
& price sensitivity

Factors affecting pricing decisions
Market Structure
Product` intended positioning
Prevailing economic fundamentals e.g inflation,
interests rates etc

Pricing Objectives
*Expectations that specify the role of price in an org`s
marketing & strategic plans. They include:
1.Sales Revenue maximization
2.Sales Volume Maximization
3.Profit maximization
4.Market Share
5.Quality leadership
6.Survival
7.Social Responsibility

Pricing Methods/Approaches
1.Cost Oriented Approaches
2.Profit Oriented Approaches
3.Demand Oriented Approaches
4.Competition Oriented Approaches

1.Cost Oriented Approaches
*Price setter stresses the cost side of the pricing task
(i) Standard Mark up Pricing: involves adding a certain
percentage of the cost to arrive at a price
(ii) Cost-Plus Pricing: Involves calculating/estimating the
total unit cost of producing a product & adding a specific
amount to the cost to arrive at a price for a given product
(iii) Marginal Cost Pricing – Price set in line with the cost of
producing an extra unit of a product
-allows for pricing flexible & variable pricing structure e.g
on a flight from Harare to Bulawayo – provided the cost
of the extra passenger is covered, the price could be
varied a good deal to attract customers and fill the aircraft

2.Profit Oriented Approaches
*Price setter is guided by a certain desired profit level
pursuant to setting a price:
(i)Target Profit Pricing: firm sets an annual target for a
specific dollar volume of profit
(ii)Target Return on Sales Pricing: Firms such as
supermarkets often use target return on sales prices that
will give them a profit that is a specified percentage say
10% of sales revenue
(iii)(iii) Target Return on Investment Pricing: firms such as
public utilities use target return on investment pricing
in order to set prices that will achieve a ROI target such
as a percentage mandated by the directors or regulators

3.Demand Oriented Approaches
*Price of a product is based on the extent and nature of its demand
by customers e.g
(i) Skimming Price Strategy: Selling a product at a higher initial
price to take advantage of high income innovators, to quickly
recover cost of R & D or position a product as high quality
(ii)Penetration Pricing Strategy
Launching a product at a low price to garner market share the
increase the price substantially once org gains foothold in the
market
‘Low’ price to secure high volumes
Typical in mass market products – chocolate bars, food stuffs,
household goods, etc.
Suitable for products with long anticipated life cycles

3.Demand-Oriented Approaches
(iii) Price Bundling
Offering a product, options and customer service for one total
price.
May unbundle,ie breakdown price & allow customers to decide
what they want to purchase among other reasons
(iv) Psychological Pricing
Used to play on consumer perceptions based on the consumer’s
emotive responses, subjective assessments and feelings towards
specific figures.
*Odd-Even Pricing - Odd numbers convey a bargain image --
$.79, $9.99, $699
*Even numbers convey a quality image -- $10, $50, $100
*Multiple-Unit Pricing – 3 for $.99 suggests a bargain and helps
increase sales volume.

(v) Prestige Pricing
Involves setting a high price so that quality or status
conscious consumers will be attracted to the product
e.g Rolls-Royce Cars, Rolex watches
(vi) Target Pricing
Mostly used by manufacturers, this strategy is based
on estimating the price the customer is willing to
pay for the product.
The producer then works backwards through marks
taken by intermediaries to determine what price to
charge to the wholesaler/immediate agent

vii) Price Discrimination
The practice of charging different prices for the same
product for reasons not related to production costs.
(viii) Value Based pricing
 Pricing a product based on the perceived value and
not on any other factor.
 Perceived value is made up of several elements , such
as the buyer’s image of the product performance,
channel deliverables, warranty, quality, customer
support, supplier’s reputation, trustworthiness etc

4.Competitor-Oriented Approaches
*Rather than focusing demand, cost or profit factors, a firm
relies on competitor/market prices as the benchmark when
setting prices e.g
(i) Loss Leader Pricing: This is when retail stores
deliberately sell a product below its customary price to
attract customers in hopes that they will buy other products
as well, particularly those with higher mark ups
(ii) Predatory Pricing: A firm set a very low price for one or
more of its products with the intention of pricing
competition out of the market.
Illegal in most countries but predation is difficult to prove

(iii) Going Rate Pricing
Firm follows the pricing leads of rivals especially
where those rivals have a clear dominance of market
share
In case of price leader, rivals have difficulty in competing on
price – too high and they lose market share, too low and the
price leader would match price and force smaller rival out of
market.
(iv) At, above or below the market pricing
Using the competitors` average price or market price as the
benchmark, a firm then may deliberately choose a strategy of
above-at-or below the market pricing e.g

(v) Tendering
Many contracts awarded on a tender basis
Firm (or firms) submit their price for carrying out the
work
Purchaser then chooses which represents best value
Mostly done in secret

MANAGEMENT OF PRICING
Concept of price elasticity of demand
Making special adjustments to prices

Concept of price elasticity of demand
Any pricing decision must be mindful of the impact of
price elasticity
The degree of price elasticity impacts on the level of sales
and hence revenue
Elasticity focuses on proportionate (percentage) changes
PED = % Change in Quantity demanded/% Change in Price

Concept of price elasticity of demand
(i) Price Elastic: % change in quantity demanded > % change
in price
e.g. A 50% rise in price would lead to sales falling by
something more than 50%
Revenue would fall
A 33% fall in price would lead to a rise in sales of
something more than 33% thus Revenue would rise
(ii) Price Inelastic:
% change in Q < % change in P
e.g. a 50% increase in price would be met by a fall in sales
of something less than 50%
Revenue would rise
A 33 % reduction in price would lead to a rise in sales of
something less than 33 % thus Revenue would fall

Special Adjustments to prices
Firms allow flexibility in their pricing models by
through special adjustments to prices that result in
different customers paying different net prices.
Discounts
Allowances
Geographical adjustments

Discounts
Deductions from the list price that the seller gives to
the buyer for some form of activity that is favorable to
the seller e.g
Quantity discount-to encourage purchase of larger
quantities
Seasonal Discounts- to encourage buyers to stock
inventory earlier than their normal demand would
require
Trade Discount-to reward intermediaries for channel
functions they perform
Cash Discount-to encourage early settlement of bills

Allowances
Trade in allowance: is a price reduction given when a
used is part of the payment on a new product.
An effective way to lower the price that a customer
can pay without formally reducing the list price.
Promotional Allowances: Reduction in price for
undertaking certain channel activities like advertising
or selling activities.

Geographical Adjustments
These are adjustments made by manufacturers
/wholesalers to list or quoted prices to reflect costs
such as transportation & insurance e.g FOB,CIF,CF
etc

DISTRIBUTION (PLACE)
STRATEGY
Channel Management and
Channel Design Decisions

What is Place / Distribution?
All activities that focus on making sure the product is
available to the customer at the right place, at the
right time in the right form
An order fulfillment function of the marketing mix
comprising the distribution channels and physical
distribution (Logistics)
Distribution activities should support the org`s
marketing strategy and ensure that customers derive
time, place, form and assortment utilities

The Role of Distribution
Driving growth
Order fulfilment
Market coverage
Customer service
Relationship and reputation building
Ensure consistent availability
Convenience
Customer satisfaction
Logistics efficiency – Transport, inventory
management, order processing.

Distribution Channels
The route that a product follows from the manufacturer
to the final intended consumer.
Producer
Middlemen /
Distributors /
Dealers
Consumer
Producer Consumer
Thus distribution channel levels can be direct (zero
channel level) or indirect distribution (multi-level
channel)

Distribution Channels contd
Producer uses strategies to reach end
users/consumers without going through any
intermediary.
*Examples of Direct Distribution Channels
Producer Consumer
Producer Business User
Service Provider Consumer/Business User

Circumstances which impose the need for a
direct channel
• The firm prefers direct interface with customers
• If special technical advice is needed e.g. industrial
equipment manufacturers
• If the product is highly perishable e.g.
flowers/services
• Where there is need to maintain personal
relationships with customers.
• Where specialist skills are involved e.g.
auditing/legal services

Circumstances which impose the need for a
direct channel
• Where after sales service is important and is best
provided by the manufacturer.
• To complement indirect channels of distribution
• Where there is need to dispose sub-standard goods
• To maximise profits by eliminating intermediaries

Indirect Channels of Distribution
Producer relies on intermediaries in distributing
products and services to final consumers/users.
• Examples of Indirect Channels
Producer Wholesaler Retailer Consumer
Producer Retailer Consumer
Producer Agent /Broker Wholesaler Retailer
Consumer
Service Provider Agent /Broker Consumer/Business User

Factors influencing the choice of
a distribution channel
*A considerable number of factors impact on the
selection of a distribution channel such that the
final distribution channel as follows;
(i) Product attributes
• Perishable products are typically sold through shorter
channels.
• Complex products are often sold directly to customers
• Services, because of their inseparability nature, are
mostly sold directly to customers

Factors influencing the choice of a
distribution channel
*(ii) Market Characteristics
Consumer / Business markets
Concentrated / dispersed market
(iii) Organisational Objectives
The objectives being pursued by an organisation can
influence its choice of a distribution channel
• e.g. where the company wants to achieve higher
market share it can try & maximize on distribution

(iv) Competition
• Org may use same channels used by competitors as they
are relevant as well as to ensure visibility of products
alongside those of competitors.
• Org may also opt for a shorter channel relative to
competition in order to achieve the highest possible level
of customer satisfaction in relation to customer utilities.
• Some orgs may develop new distribution channels to
remedy inadequate promotion of its products by
intermediaries who may have strong links with
competitors

*(v) Organizational Factors
• Factors specific to the org also influence the choice
of a distribution channel, e.g a production oriented
firm may need the marketing expertise of its
intermediaries to offset its own lack of such skills
OR
• A company with adequate financial, management
and marketing resources may feel little need for
help from intermediaries and therefore distribute
its products through a network of company owned
outlets

(vi) Degree of control required
If an org,desires a high degree of control over the
marketing of each products, it has to rely on direct
distribution
Use of many indirect forms of distribution means
firm has surrendered some control over the
marketing of its products

What are Middlemen/Channels of Distribution?
A group of individuals and organisations that direct
the flow of products from producers to customers
(Pride and Ferrell et al 2005)
Middlemen can be retailers,wholesalers,brokers or
agents

The Functions of Middlemen (Distributors)
Buying
Selling
Risk taking
Transportation
Sorting
Storing
Assorting
Financing
Grading
Marketing Information & research

Key Distribution Channel Decisions:
1.Understanding the different types of intermediaries
2. Selecting the right type of intermediary to use
3.Deciding on the level of market coverage required
4.Managing intermediary relationships

Levels of Market Coverage
*Intensive distribution
An approach to market coverage that involves
making the product available in as many outlets as
possible.
Typically used for convenient goods where
producers aim at enabling purchasers to buy their
products with minimum efforts.
Suits products with a wide appeal across broad
groups of consumers e.g. soft drinks
Usually employed in the growth & maturity stages
of PLC

*Selective Distribution
 An approach to market coverage whereby a limited
number of outlets in a specific geographical area
stocks a firm`s products.
By limiting the number of intermediaries reduce
marketing costs are reduced while establishing strong
working relationships in the channel.
 Typical for shopping goods
Usually employed in the introduction & decline stage
of the PLC for new products

*Exclusive Distribution
A producer practices exclusive distribution where it
grants exclusive rights to an intermediary to sell its
products in a given geographical area.
Marketers sacrifice total market coverage for the
product in order to develop and maintain an image
of quality and prestige for the product.
Limits marketing costs since the firm deals with a
small number of intermediaries
Typical for highly priced speciality goods

Which specific organisations to use?
Capability
Number of outlets & location
Reputation & Image
Accessibility
Resources
Compatibility – technology, culture, policies, stock
mgmt,
Business terms
Market share & performance
Co-operation

Managing Intermediary Relationships
Management issues include:-
Training and motivating channel members
Gaining cooperation and minimising conflict
Evaluating channel member perfomance

Channel Conflict
Arises when one channel member`s action prevents the
channel from achieving its goal (Kotler & Keller: 2005)
Horizontal conflict: occurs among firms at the same level of
the channel, e.g. Holiday Inn franchisees might complain
about other Holiday Inn franchisees over-charging guests or
giving poor service, hurting the overall Holiday Inn image.
Vertical Conflict: conflicts between different levels of the
same channel, e.g a furniture maker may create conflict with
its dealers if it opens an online store selling its products
directly to customers

The Marketing Logistics Network
Marketing Logistics ;- a system of efficiently and effectively
making and getting products and services to customers.
Involves the process of planning, implementing and
controlling the cost effective flow and storage of materials,
in-process inventory, finished goods and related
information from point of origin to point of consumption
for the purpose of conforming to customer requirements.

Physical Distribution;- A set of activities consisting of
order processing, materials handling, inventory
management and transportation used in the
movement of products from producers to
consumers and users.
Objectives of Physical Distribution
 To manage the costs of physical distribution to
acceptable levels so as to ensure profitability.
 To ensure effective customer service by ensuring
product availability, promptness and quality.
 The process calls for cost/service trade-off, that is; the
trade off in costs involved when deciding on the
service level to be offered to customers.

Tasks of Physical Distribution
1. Order Processing ;- the receipt and transmission of sales
order information.
Involves three main tasks;-
 Order entry – the placement of purchase orders from
customers or sales people by mail, telephone or on-line
 Order handling – checking customer credit, verifying
product availability and preparing products for
transportation
 Order delivery – selecting the transport mode most
suitable for a desired level of customer service

2. Materials Handling ;- physical handling of the product
and involves the coordination of packaging, loading and
movement systems taking into account the need for both
cost reduction and customer requirements.
3. Warehousing ;- the design and operation of facilities for
storing and moving goods.
4. Inventory Management ;- the development and
maintenance of sufficient assortments of products to meet
customer needs.
Decision involves balancing between stock-outs and inventory
holding costs.
5. Transportation ;- adds time and place utility to a
product by moving it from where it is made to
where it is needed.

Conclusion
Distribution management involves coordinating the
activities of the whole supply chain to deliver maximum
value to customers
It involves managing distribution channels (middlemen) as
well as the physical distribution interface.
Physical distribution functions account for about one-third
of all marketing costs and have a significant impact on
customer satisfaction.
Therefore, effective marketers are actively involved in the
design and control of the distribution strategy so as to meet
customer changing needs and preferences.

PROMOTIONAL (MARKETING
COMMUNICATIONS) STRATEGY

What is Promotion/Marketing Communication?
*Any form of communication used to inform, persuade & remind pple
of an org 's goals, goods, sevices,image, community involvement or impact
on society.
Elements of the Marketing Communications/Promotional Mix
(i) Advertising:- Any paid form of non-personal communication about org
& its products that is transmitted to the target market thru the mass
media.
(ii) Sales Promotion:- a variety of short term incentives to encourage trial
or purchase of a product or service.
(iii) Public Relations & Publicity:- a variety of programmes designed to
promote or protect a company’s image or its products
(iv) Direct Marketing:- use of mail, telephone, e-mail or the internet to
communicate directly with or solicit response or dialogue from specific
customers or prospects.
v)Personal selling:- face-to-face interaction with one or more prospective
purchasers for the purpose of making presentations, answering
questions Marketing Managem eant n@d N UpSTr o20c1u4 ring orders

What is Promotion/Marketing Communications?
Elements of the Marketing Communications/Promotional Mix
(vi)Interactive marketing:- online activities and programmes
designed to engage customers and directly or indirectly
raise awareness, improve image or elicit product sales.
(vii) Word of mouth marketing:- people to people oral,
written or electronic communications that relate to the
merits or experiences of purchasing or consuming a
product or service.

The strategic role of Marketing Communications
Create or increase awareness
Create interest & cultivate desire
Motivating purchasing action (induce behaviour)
Create, enhance & restore corporate image
Encourage brand loyalty & discourage brand switching
Educate consumers & other stakeholders
Inform consumers & other stakeholders about products,
prices, courses of action, changes, community activities
Positioning & Influence attitudes

Elements of the Marketing
Communications/Promotional Mix
1) ADVERTISING
2) SALES PROMOTION
3) PUBLIC RELATIONS & PUBLICITY
4) DIRECT MARKETING
5) PERSONAL SELLING
6) INTERACTIVE MARKETING
7) WORD OF MOUTH MARKETING

1. Advertising
*Any paid form of non-personal communication about
the org and its products that is transmitted to the
target market through the mass media.
Five critical decisions of advertising: 5 Ms
a) Mission: What are the advertising objectives?
b)Money: How much can be spent?
c) Message: What message should be sent?
d)Media: What media should be used?
e) Measurement: How should the results be evaluated?

(a) Setting the Advertising Objectives
(Mission)
(i) Output objectives are what the firm ultimately
wants to achieve, like higher sales, repeat
purchase,market share, and brand loyalty
(ii) Intermediate objectives relate to hierarchy-of-effects
models and include awareness
(inform),presuade,remind and reinforce which
respect to a product.

(ii) Intermediate Objectives
To inform
 Telling the market about a new product
 Suggesting new product uses
 Explaining how the product works
 Correcting false impressions
 Building company image
To persuade
 building brand preference
 Encouraging brand switching
 Persuading buyers to purchase now

(ii) Intermediate Objectives
 To remind
 Reminding buyers where to buy the product
 Maintaining a top of the mind awareness
 Reminding the buyers that the product may be
needed in future
 To reinforce
 Convince purchasers that they made the right choice
 Ensure customer satisfaction and repurchase

Setting the Advertising Objectives
(iii) Illustrative Advertising Objectives
Specific advertising targets to be achieved within an
indicated time frame e.g To increase repeat
purchase of Munchee chocolate bars from 30 to 50
percent among 10- to 16-year-old boys by April 2013

(b) Deciding on the Advertising Budget
(Money)
Management should consider these five factors
when setting the advertising budget:
i.Product life cycle stage
ii.Market share and consumer base
iii. Competition and clutter
iv. Advertising frequency
v. Product substitutability

Approaches to setting the advertising
budget
(i) Competitive Parity method: firms base their
budgets on competitors’ spending per market
share point.
(ii) Percentage of Sales method: The advertising
budget is set a percentage of sales.
(iii) Objective & task method: firm sets advertising
objectives, identifies the necessary tasks,
estimates the budget for each task, then adds up the
total cost

Approaches to setting the advertising
budget
(iv) Research approach: Here advertising budget is
argued for and presented on the basis of research
findings.
(v) Affordable: advertising budget set at a level the
company think they can afford.
(vi) Residual: advertising budget based on what is left
after allocating for other organisational tasks &
activities.

(c) Creating the Advertising Message
(Message)
• Advertising campaigns vary in their creativity.
• Advertisers and their agencies must be sure their
“creative” advertising does not overstep social
and legal norms.
*Advertising message creation comes in two major
forms ;
I. Rational approaches.
II. Emotional approaches.

(i) Rational approaches
Demonstration: Brands are presented in a problem solving
context which focuses on their performance.
Comparative: Direct Comparison with competitor brand e.g
brand x is compared favourably on two or three main
attributes with a leading competitor.
Factual: messages provided in a rational, logical and
straightforward manner.
Slice of life: Uses pple who are similar to the target
audience,presenting them in scenes that the target audience
can readily associate with & understand
Refutational Appeals: A special case of two-sided
advertising that explicitly mentions competitors claims, but
then directly refutes them.

(i)Rational approaches
*One-sided and Two-sided appeals
 One-sided appeals are most effective when the
target audience is less educated and feels positive
about the product.
 Two-sided appeals are more effective when the
audience’s initial opinion is not necessarily positive
and the audience is educated and/or sceptical.

(ii) Emotionals Appeals
*Advertising approaches appealing to emotions.The
main styles are:
Humour-based-effective @ creating awareness, sets a
positive tone, and enhances memory, but if improperly
crafted may distract from the core message.
Fear-based- Fear appeals creates anxiety, behaving as
the advertising suggests removes the anxiety
Celebrity endorsement-based. Advertisers often use
well-known people to endorse products, especially on
TV

(ii) Emotionals Appeals
(Storytelling: Storytelling can be a very effective way of
appealing to people’s emotions.
Animation: Used to reach children and as a way of
communicating potentially boring & uninteresting
products (gas,insurance) to adults.
Sex: excellent for getting the attention of the target
audience,but if the product is not related (e.g
perfume,clothing) these ads generally do not work.
Music: Good because of subliminal effect as well for
getting attention & differentiating brands.

(d) Developing Media Strategies (Media)
After creating the message, the next task is to choose
media to carry it.
When deciding which type of media to use – known
as an advertising medium – a business needs to
consider the following factors.

Factors affecting media choice
Reach of the media – national or local; number of potential
customers it could reach
Nature of the product – the media needs to reflect the image
of the product or should be appropriate to the product
Position in product life cycle – launch stage will need
different advertising from products undergoing extension
strategies
Cost of medium & size of advertising budget – e.g. local
newspaper advertising is cheaper than radio, which in turn is
cheaper than TV.
Effectiveness of the media – the final medium chosen
should be effective given the task @ hand
Message Characteristics –timeliness & info content influence
media choice

(v).Evaluating Advertising Effectiveness
(Measurement)
Good planning and control of advertising depend on
measures of advertising effectiveness.
 Advertisers should try to measure the
communication effect of an ad—that is, its potential
effect on awareness, knowledge, or preference—as
well as the ad’s sales effect.
 Advertisers should try to measure the sales-effect of
advertising

(2) Personal Selling
Communicating with the target market through personal
interaction in an exchange situation.
Involves use of the company’s own sales personnel (sales
reps, key account managers, sales consultants, sales
engineers etc.
*Role of the sales force
a) Identifying and qualifying prospects
b) Presentation and demonstration of a company’s offering
(product)
c) Negotiations
d)Closing a sale
e) Follow-up and maintenance to ensure customer satisfaction
f) Developing relationships.

(3) Direct marketing
 Communicating with customers without use of
middlemen.
 Includes use of E-mail, direct mail,telemarketing,
catalogues
 Factors fuelling the growth of direct marketing include;
technological developments,demographic &
lifestyle changes,product quality
improvements,improved delivery systems etc

(4) Public Relations
PR involves a variety of activities designed to promote
or protect a company `s imagine or its individual
products.
-Most org have PR depts that monitor the attitude of the
org `s publics & distributes info & communications to
build goodwill.
*PR departments perform five functions:
(a)Press Relations: presenting news & info about the org
in the most positive light.
(b)Corporate Communications: Promoting
understanding of the org thru internal & external
communications

(c) Lobbying: Dealing with legislators & gvt officials
to promote or defeat legislation.
(d) Counselling: Advising management about public
issues,company positions & image during good & bad
times.
(e) Publicity: Non-personal stimulation of demand
for a product, service or business unit by generating
commercially significant news about it in published
media or obtaining favourable presentation of it on
radio, television or stage.

(e) Publicity: Businesses cannot wait around for the news to
present opportunities. They must also try to create their own
news thru some of the following techniques:
Be involved in a activity that enhances the environment
Publish a report
Take a stand on a controversial subject
Announce an appointment/acquistion
Invent and then present an award
Stage a debate / Arrange a speech or talk
Organize a tour of your business or projects
Event sponsorship
Conduct a poll or survey

(5) Sales Promotion
Is a short term promotional technique designed to
improve sales by way of inventive to
customers,trade partners and sales people.
* Factors affecting sales promotion
Cost of promotional undertaking
Consistence with the brand image
Long term effectiveness of the promotion

Sales promotions directed @ customers
Money off coupons – customers receive coupons, or cut
coupons out of newspapers or a products packaging that
enables them to buy the product next time at a reduced
price
Competitions – buying the product will allow the
customer to take part in a chance to win a prize
Discount vouchers – a voucher (like a money off coupon)
Free gifts – a free product when buy another product
Loyalty cards –where customers earn points for buying
certain goods or shopping at certain retailers – that can
later be exchanged for money, goods or other offers

Sales promotions directed @ trade partners
• Price-Off (off-invoice or off-list): A straight
discount off the list price on each case purchased
during a stated time period.
• Allowance: An amount offered in return for the
retailer’s agreeing to feature the manufacturer’s
products in some way.
• Free Goods: offers of extra cases of merchandise to
intermediaries who buy a certain quantity or who
feature a certain flavor or size

Concept of Integrated Marketing
Communication
• It encompasses all the promotional mix elements in
combination to provide clarity, consistence and maximum
communication impact.
• Rather than consisting of separated marketing
communication elements with no unified control, the IMC
approach regards each of the business `s promotional
elements as part of a whole ,each of which offers a different
means to connect with the target audience
Ensures use of all communication tools some being the key
ones for any activity and others assuming a supportive role.
All tools must project the same message (consistency) and
reinforce each other in the market

Steps in Developing Integrated Marketing
Communication
 Identify the target audience – will affect the marketer’s decisions on
what will be said, how it will be said, when it will be said, where it
will be said and who will say it.
 Determine the response sought (objectives) ;- based on the hierarchy
of effects model.
 Develop the IMC budget;- how much will be spent in the
communication.
 Design an effective message;- ideal message should get Attention,
hold Interest, arouse Desire and obtain Action (AIDA)
 Select media to use ;- decide on personal communication channels
(sales reps, consultants) vs. non-personal channels (newspapers,
radio)
 Select the message source ;- who will deliver the message e.g.
celebrities, doctors, models etc.
 Collect feedback ;- assess effect of the message on target audience.

Conclusion
• As highlighted,the marketing communications mix consists
of five major modes of communication: advertising, sales
promotions, public relations and publicity, personal selling
and direct marketing.
• Managing and coordinating the entire communications
process calls for integrated marketing communications
(IMC), that combines the various communications mix to
provide clarity, consistency and maximum impact through
the seamless integration of discrete messages.

UNDERSTANDING MARKETS
MARKETING RESEARCH,CONSUMER
BEHAVIOUR,MARKET SEGMENTATION,
TARGETING, AND POSITIONING FOR
COMPETITIVE ADVANTAGE

MARKETING RESEARCH
*Is the systematic design, collection, analysis and
reporting of data relevant to a specific marketing
situation facing an org.
Marketing Research Process
Defining
the
problem
and
research
objectives
Developin
g the
research
plan for
collecting
informati
on
Impleme
nting the
research
plan
Interpreting
and
reporting
the findings

Importance of Marketing Research
Supports marketing efforts towards ensuring that the org
`s marketing mix is reflective of environmental
imperatives.
Ensures successful NPD for many product classes
Is a prerequisite for a successful market development
initiatives.
Provides info that helps marketing managers interpret
past performance as well as plan future activities.
Provides timely,actionable & accurate information on
consumers,competitors & their brands.

Defining Consumer Behaviour
The decision processes and physical activities
consumers engage when evaluating, acquiring
(obtaining), consuming/using or disposing goods
OBaTnAdIN sIeNrGvices CONSUMING OBTAINING
•How you decide you
•How you use the
want to buy
product
•Other products you
•How you store the
consider
product in your home
buying
•Who uses the product
•Where you buy
•How much you
•How you pay for
consume
product
•How product
•How you transport
compares with
product home
expectations
•How you get rid of
remaining product
•How much you throw
away after use
•If you resell items
yourself or
through a
consignment store
•How you recycle some
products

WHY STUDY CONSUMER BEHAVIOUR?
Marketing concept remains one of the best practices of
marketing.
To stay in business by attracting and retaining customers.
To benefit from understanding consumer needs.
Designing marketing strategies that create competitive
advantage.
Consumers do not always act or react as theory suggests.
Need to segment, target and position is line with consumer
behaviour imperatives.
To sell products that might not sell easily.
It helps them gain insights as to why a consumer behaves
differently to another consumer; as well as, why a consumer
behaves differently in different times and buying situations.

Consumer Decision Making
Consumer Decision Making pertains to making
choices/choosing courses of action regarding
product and service offerings.
Consumer decision making involves a continuous
flow of interactions among environmental factors,
cognitive and affective processes and behavioural
actions.

Consumer Decision Making Process
1. Need /Problem recognition
2. Pre-purchase information search
3. Evaluation of alternatives
4. Purchase decision
5. Post-purchase outcome and reactions

1.Need Problem Recognition
Is a stage of perceiving a deficiency/need which can
be triggered off by an internal or external stimuli.
Can be simple or complex
Can result when the Actual State (AS) or Desired
State (DS) changes

2.Pre-Purchase Information Search
After a need is recognized, the consumer goes for an
Info search, so as to be able to make the right
purchase decision by gathering info about the product
category
& the various alternatives available.
Can be specific, ongoing or incidental
Info sources can be in internal or external

3.Evaluation of Alternatives
Once the consumer has gathered info and
identified the alternatives, s/he compares the different
alternatives available on certain criteria like economic e.g price
value assessment or behavioral e.g need/motivation, lifestyle etc
or functionality.
In relation to generation of alternatives,a consumer moves from
evoked/consideration set towards the choice set as follows:
Evoked Set Inept Set Inert Set Choice Set

4.Purchase Decision
*After the consumer has evaluated the various
alternatives, he selects a particular brand.
Consumer purchases may be:
Trials/First purchase
Repeat purchases

Marketing management notes NUST ZIMBABWE 2014

Marketing management notes NUST ZIMBABWE 2014

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