Organizational structure refers to the way in which an organization’s activities are

divided, grouped, and coordinated into relationships between managers and

employees, managers and managers and employees and employees. An
organization’s departments can be formally structured in three major ways: by
function, byproduct/ market or in matrix form.
Functional Organization is perhaps the most logical and basic form of
departmentalization. It is used mainly by smaller firms that offer a limited line of
products because it makes efficient use of specialized resources. Another major
advantage of a functional structure is that it makes supervision easier, since each
manager must be expert in only a narrow range of skills. In addition, a functional
structure makes it easier to mobilize specialized skills and bring them to bear where
they are most needed.
As an organization grows, either by expanding geographically or by broadening its
product line, some of the disadvantages of the functional structure begin to surface.
Because functional managers have to report to central headquarters it can be
difficult to get quick decisions. It is often harder to determine accountability and
judge performance in a functional structure. If a new product fails, who is to blame
research and development, production or marketing? Finally coordination the
functions of members of the entire organizations may become a problem for top
managers. Because members of each department may feel isolated from or
superior to those in other departments, they may have difficulty working with
others in a unified way to achieve the organization’s goals. For example, the
manufacturing department may concentrate on meeting cost standards and delivery
dates and neglect quality. As a result, the service department may be flooded with
complaints. In short, a functional structure can be a difficult setting in which
managers must coordinate employees’ activities.
Product / Market organization:
Product or market organization, often referred to as organization by division, brings
together in one work unit all those involved in the production and marketing of a
product or a related group of products, all those in a certain geographic area, or all
those dealing with a certain type of customer. In the 1990 Hewlett-Packard
reorganization, John Young replaced one kind of product organization with another
kind of product organization.
Most large, multi-product companies such as General Motors have a product or
market organization structure. At some point in an organization’s existence, sheer
size and diversity of products make functional departments too unwieldy. When a
company’s departments becomes too complex or coordinating the functional
structure, top management will generally create semi-autonomous divisions. In
each division, managers and employees design, produce and market their own
products.
Organization by division has several advantages. Because all the activities, skills
and expertise are required to produce and market particular products are grouped
in one place under a single head, a whole job can more easily be coordinated and
high work performance maintained. In addition both the quality and the speed of
decision making are enhanced because decisions made at the divisional level are
closer to the scene of action. At the same time, the burden on central management
is eased because divisional managers have greater latitude to act. Perhaps most
important, accountability is clear. The performance of divisional management can
be measured in terms of the division’s profit or loss.
Matrix Organization:
The matrix structure sometimes referred to as ‘multiple command system’ is a
hybrid that attempts to combine the benefits of both types of designs while
avoiding their drawbacks. An organization with a matrix structure has two types of
structure existing simultaneously. Employees have in effect two bosses that is, they
work in two chains of command. One chain of command is functional or divisional.
The second is a horizontal overlay that combines people from various divisions or
functional departments into a project or business team led by a project or group
manager who is an expert in the team’s assigned area of specialization.

ORGANIZATION SRUCTURE
An organization overall structure generally falls into one of two designs One is the
mechanistic structure. It characterized by a high complexity ( especially a great deal of
horizontal differentiation ),high formalization , a limited information network (mostly
downward communication) and little participation by low level members in decision making.
At the other extreme is the organic structure. It is low in complexity and formalization ,it
possesses a comprehensive information network ( utilizing lateral and upward
communication as well as downward) and it involves high participation in decision making.
Mechanistic structures are rigid , relying on authority and a well defined hierarchy to
facilitate coordination .The organic structure on the other hand is flexible and adaptive.
Coordination is achieved through constant communication and adjustment.

The Design structure has been described as having the following characteristics

1. Division of labor
2. Well-defined authority hierarchy
3. High formalization
4.Impersonal nature
5. Employment decisions based on merit
6. Career tracks for employees
7. Distinct separation of members organizational and personal lives

The simple Structure

Simple structure are characterized most by what they are not rather than what they are?
The simple structure is not elaborated .It is low in complexity has little formalization and has
authority centralized in a single person .Overall it is organic than mechanistic.

The functional Structure

The distinguishing feature of the functional structure is that similar and related occupational
specialties are grouped together .Activities such as Marketing , accounting , manufacturing,
and personnel are grouped under a functional head who reports to a central headquarters.

The Product Structure

The Major advantage to the product form is accountability .The product manager is
responsible for all facets surrounding the product. Instead of having the marketing manager
oversee fifteen different product lines, each product structure will have its own marketing
manager with sole responsibility for marketing his or her division product. In this way
,product control is centralized with the products manager .The drawbacks of course are
need to coordinate activities between product structures and the duplication of function
within the various structures Whereas in the functional structure a department of five people
might be able to handle the entire organization purchasing activities if that organization is
structured around ten products divisions each will probably require a purchasing agent, thus
doubling the number of personnel engaged in purchasing.

The Matrix Structure

One of more recent organizational design innovations is the Matrix Structure,

Essentially the matrix combines the functional and product structures .Ideally it seek to gain
the strengths of each , while avoiding their weakness. That is , the strength of the functional
structure lies in putting like specialists together. which minimizes the number necessary, and
it allows the pooling and sharing of specialized resources across products .Its major
disadvantage is the difficulty of coordinating the tasks of diverse functional specialists so
that their activities are completed on time and within budget The product structure on the
other hand has exactly the opposite benefits and disadvantages .It facilitates the
coordination among specialties to achieve on-time completion and meet budget targets.
Further , it provides clear responsibility for all activities related to a product, but with
duplication of activities and costs.

Strategy

An organization structure is a means to help management achieve its objectives. Since

objectives are derived from the organization overall strategy .it is only logical that strategy
and structure should be closely linked. More specifically structure should follow strategy. If
management makes a significant change in its organization strategy structure will need to
be modified to accommodate and support this change.

In summary , the structure follows strategy thesis argues that as strategies move from
single product to vertical integration .to product diversification , management will need to
develop more elaborate structures to maintain effectiveness .

ansoff's product / market matrix

Introduction
The Ansoff Growth matrix is a tool that helps businesses decide their product and market growth
strategy.
Ansoff’s product/market growth matrix suggests that a business’ attempts to grow depend on whether
it markets new or existing products in new or existing markets.

The output from the Ansoff product/market matrix is a series of suggested growth strategies that set
the direction for the business strategy. These are described below:
Market penetration
Market penetration is the name given to a growth strategy where the business focuses on selling
existing products into existing markets.
Market penetration seeks to achieve four main objectives:
• Maintain or increase the market share of current products – this can be achieved by a combination of
competitive pricing strategies, advertising, sales promotion and perhaps more resources dedicated to
personal selling
• Secure dominance of growth markets
• Restructure a mature market by driving out competitors; this would require a much more aggressive
promotional campaign, supported by a pricing strategy designed to make the market unattractive for
competitors
• Increase usage by existing customers – for example by introducing loyalty schemes
A market penetration marketing strategy is very much about “business as usual”. The business is
focusing on markets and products it knows well. It is likely to have good information on competitors
and on customer needs. It is unlikely, therefore, that this strategy will require much investment in new
market research.
Market development
Market development is the name given to a growth strategy where the business seeks to sell its existing
products into new markets.
There are many possible ways of approaching this strategy, including:
• New geographical markets; for example exporting the product to a new country
• New product dimensions or packaging: for example
• New distribution channels
• Different pricing policies to attract different customers or create new market segments
Product development
Product development is the name given to a growth strategy where a business aims to introduce new
products into existing markets. This strategy may require the development of new competencies and
requires the business to develop modified products which can appeal to existing markets.
Diversification
Diversification is the name given to the growth strategy where a business markets new products in new
markets.
This is an inherently more risk strategy because the business is moving into markets in which it has
little or no experience.
For a business to adopt a diversification strategy, therefore, it must have a clear idea about what it
expects to gain from the strategy and an honest assessment of the risks.

\APPRECIATION OF DIFFERENT MARKETING ORIENTATIONS

Ethnocentric
• Home country is
superior; sees similarities
in foreign countries
•
•
•
Regiocentric
• Sees similarities and differences in a world region; is
ethnocentric or polycentric in its view of the rest of
the world
Polycentric
Each host country is unique;
sees differences in foreign
countries
Geocentric
Worldview;
Sees similarities and
differences in home and host
Source: Journal of Business-Global Marketing Management by
Warren J.Keegan
The EPRG framework identifies four types of attitudes or
orientations towards internationalization that are associated
with successive stages in the evolution of international operations.
These four orientations are:
1. Ethnocentrism (home country orientation)
2. Polycentrism (host country orientation)
3. Regiocentrism (regional orientation)
4. Geocentrism (world orientation)
Ethnocentric Orientation
In the ethnocentric company, overseas operations are viewed as
secondary to domestic operations and primarily as a means of
disposing of “surplus” domestic production. The top
management views domestic techniques and personnel as
superior to foreign and as the most effective in overseas
markets. Plans for overseas markets are developed in the home
office, utilizing policies and procedures identical to those
14 11.361/11.337
© Copy Right: Rai University
INTERNATIONAL MARKETING
employed in the domestic market. An export department or
international division most commonly administers overseas
marketing, and the marketing personnel are composed primarily
of home country nationals.
A person who assumes his or her home country is superior
compared to the rest of the World is said to have an ethnocentric
orientation. At some companies, the ethnocentric
orientation means that opportunities outside the home country
are ignored. Such companies are sometimes called domestic
companies. Ethnocentric companies that do conduct business
outside the home country can be described as international
companies; they adhere to the notion that the products that
succeed in the home country are superior and, therefore, can be
sold everywhere without adaptation.
In the ethnocentric international company, foreign operations
are viewed as being secondary or subordinate to domestic ones.
An ethnocentric company operates under the assumption that
“tried and true” headquarters’ knowledge and organizational
capabilities can be applied in other parts of the world. For a
manufacturing firm, ethnocentrism means foreign markets are
viewed at a means of disposing of surplus domestic production.
Polycentric Orientation
The polycentric orientation is the opposite of ethnocentrism.
The term polycentric describes management’s often-unconscious
belief or assumption that each country in which a
company does business is unique. This assumption lays the
groundwork for each subsidiary to develop its own unique
business and marketing strategies in order to succeed; the term
multinational company is often used to describe such a
structure.
As the company begins to recognize the importance of inherent
differences in overseas markets, a polycentric attitude emerges.
The prevalent philosophy at this stage is that local personnel
and techniques are best suited to deal with local market
conditions. Subsidiaries are established in overseas markets,
and each subsidiary operates independently of the others and
establishes its own marketing objectives and plans.
Regiocentric Orientation
A Regiocentric company views different regions as different
markets. A particular region with certain important common
marketing characteristics is regarded as a single market, ignoring
national boundaries. “Strategy integration, organizational
approach and product policy tend to be implemented at
regional level. Objectives are set by negotiation between
headquarters and regional Headquarters on the one hand and
between regional HQ and individual subsidiaries on the other.”
In a company with a Regiocentric orientation, management
views regions as unique and seeks to develop an integrated
regional strategy. For example, a U.S. company hat focuses on
the countries included in the North American Free Trade
Agreement (NAFTA) – the United States, Canada, and Mexico
– has a Regiocentric orientation. Similarly, a European company
that focuses its attention on the EU or Europe is Regiocentric.
Market Orientation – Essential foundation for a strong marketing strategy

Apple Computers, Starbucks Coffee, Virgin Group, L’Oreal, Nike, Singapore Airlines, Banyan Tree and Samsung are among
some of the most successful brands in the world. Much has been written about the power of their brands that has allowed
them to dominate their respective industries not only in the domestic markets but also globally. Most if not all accounts of
success of such brands have emphasized on the branding process, the systems of brand management and the role of the
brand equity in enhancing the company’s overall profile. The dynamics and the cultural aspect that are the powerful
underlying forces behind these brands are rarely talked about.
In today’s hyper competitive global markets, success depends more on the overall vision and philosophy of the companies
that drives their activities rather than on their product level or business unit level strategies. The role of brand equity in a
company’s market capitalization and shareholder value maximization is well documented. But to achieve such strong brand
equity, companies need to develop a culture and an orientation that not only supports market oriented thinking but also
nurtures the integration of cross functional integration of thought and activities. This article takes a detailed look into the
components of such an orientation and what makes a company’s internal structure conducive to building strong brands.

Market orientation
Market orientation is usually defined as the organization wide generation, dissemination, and responsiveness to market
intelligence. This definition at once changes the dominant paradigm that has defined marketing for decades. Marketing has
traditionally been defined within the narrow confines of the 4P framework. Such a conceptualization of marketing has
relegated marketing to a tactical discipline to be performed by middle level marketing managers who did not possess the
overall holistic view of the organization. But the connected knowledge economy, globalizing, converging and consolidating
industries, fragmenting and frictionless markets, empowered customers and adaptive organizations among others are
forcing organizations to alter their view of marketing.
The concept of market orientation is built on three pillars of customer focus, coordinated marketing and profitability. An
organization’s capabilities to develop an orientation towards each of these three pillars depend on the internal structure and
culture. The next section further elaborates these three constructs and how they allow companies to create a strong internal
culture that can support building brands.

Pillars of market orientation

Customer focus: Organizations have traditionally emphasized either profitability or market share (growth) as their
guiding orientations. As the fundamental responsibility of any organization is to maximize shareholder value, such an
orientation did not seem wrong. Further, with the advent of branded goods, globalization and increasing competition,
companies placed a very high emphasis on products. But all these extant orientations have been challenged with the
explosion of the Internet and resulting empowerment of customers. Internet to a great extent reversed the information
asymmetry and allowed access to hitherto unavailable information about product features, price and peer recommendation.
These factors are forcing companies to shift their fundamental orientation from that of profitability, growth and products to
customers.
Customer centricity is at the center of creating any future corporate strategies. Customer centricity primarily proposes that
the basic philosophy of companies should be to serve customers rather than sell products and in the course establish long-
term relationships by treating customer as strategic assets.
Coordinated Marketing: For a company to have a market orientation, marketing has to break the narrow confines of the
tactical 4P framework. Marketing should be transformed into a company-wide discipline practiced by anyone and everyone.
Simply, marketing has to become a coordinated, cross-disciplinary function. This is easier said that done.
For any discipline to claim a much broader responsibility and scope beyond its functional domain, the ability to
quantitatively measure the outcomes of its activities becomes paramount. This is where marketing has been suffering for a
long time. Measuring marketing productivity has indeed become a major challenge for marketers. But further, marketers
have refused to acknowledge that customers are not the sole responsibility of the marketing department but of the company
as a whole. These factors have together stalled marketing from becoming a coordinated activity that involves other functions
such as finance, operations, human resources and strategy within any company.
Profitability: In today’s global capital economy, the future potential of the company and its potential attractiveness is often
controlled by the capital markets. Companies and managers are constantly under immense pressure to demonstrate the
financial strength every quarter. The effect of quarterly results on the company’s stock price, the signals that such results
have come to convey to a wide array of stakeholders and the extent to which financial analysts have managed to unleash
havoc and terror for companies have collectively forced companies to adopt a very short-term perspective on profitability.
Further, the focus on short term profitability invariably comes at a very high cost. Most companies tend to ignore the impact
of their actions on the long term strategic capabilities. Moreover, under the traditional marketing paradigms, short-term
focus was inevitable as the emphasis was on products rather than on customers. But within the framework of market
orientation, profitability encompasses both financial measures (such as ROI, EVA, and market share) and non financial
measures (such as awareness, attitudes and behavioral patterns). Such a comprehensive measurement would allow
companies to balance between short term and long term profitability with a cautious eye on long term financial health of the
company.
These three pillars of market orientation have proven to allow companies to create a very strong philosophy and in turn
contribute to companies’ long term strategic competence. But having followed the traditional marketing model for decades,
it is indeed a tough call for companies to become market oriented. The following section of the article offers guidelines on
how companies can establish a structure that allows management and employees to inculcate new way of thinking about
marketing and ultimately channeling the aggregate mentality towards a market orientation.

Guidelines to adopt a market orientation

Leverage customer database systems: One of the greatest advantages that companies have today is the power of
customer databases. The explosion of internet and the possibility of recording very specific details about customers, their
online movement and their purchase behavior have only added power to these databases. The first step for companies in
moving towards market orientation is to optimally leverage these databases.
The potential marketing intelligence that these databases offer would allow companies to understand the customers’ current
and potential needs clearly. Such an understanding would lead to marketing functions to be in line with customers’ needs
rather than compulsions centered around products. As such, pricing will be in line with customer’s willingness to pay rather
than to cover costs, advertising and communications will inform, appeal and endear to customers, customer’s convenience
will dictate distribution rather than logistical ease and product features would essentially reflect customers’ unmet needs
rather than show off the latest technological supremacy. Such a shift from product centricity to customer centricity will be an
important first step.
Create a marketing dashboard: To achieve complete market orientation, companies should create a systematic
structure that would enable different functions to collectively discuss about customers and markets.
Traditionally, marketing department handles customers and their needs, finance looks after the money, operations is singly
focused on production and strategy generally looks at the market outside to decide on the company’s future. A market
orientation mandates that all these functions operate jointly. Marketing dashboards create a platform whereby
representatives from each of these departments can come together and discuss the various functional issues so that the
collective action will result in activities that enhances the company’s relationships with customers. Further, for marketing to
become an organization wide discipline, it must not only understand the different functions within a company but also
should be able to relate marketing activities to other functional activities. Marketing dashboards provides marketers a
structured platform to ensure marketing become coordinated and company wide.
Constantly update metrics: Metrics used to measure the outcomes of marketing activities cannot be generalized across
companies. Rather, they have to be modified and adopted depending on the company, the product class, the industry, the
important criteria being measured and the ability of the company to track marketing investments. A first step in recognizing
and developing useful metrics would be a collaborative discussion with other functional departments within the company.
Further, the corporate mission and underlying philosophy would offer some insights into what metric are regularly tracked
such as quarterly market share, relative share within the category, brand awareness, conversion ration through the purchase
funnel, shifts in attitudes in response to advertising campaigns, shift in purchase patterns in response to
discounts/promotions and so on.
But caution should be taken to ensure that these metrics capture both financial and non-financial measures. Marketing
should also strive for developing metrics that go beyond the discipline and are able to capture the outcomes of all activities
that bear on the relationship with customers. Such a move would take marketing a step closer to becoming an organization
wide discipline.

Conclusion
Brand equity is undoubtedly the most important of corporate assets. To create strong brands, as important as a structured
brand management process is a strong guiding philosophy that is customer and market oriented. Such an orientation spawns
a self-enriching culture that not only drives the company in the right direction but also facilitates the creation of a strong
corporate strategy. As such, companies would benefit tremendously by shifting from a complete product or growth
orientation to a market orientation. Such market orientation after all is the basis for building strong brands.
 Marketing Mix.
What is the marketing mix?
The marketing mix is probably the most
famousmarketing term. Its elements are the
basic,tactical components of a marketing plan. Also
known as the Four P's, the marketing mix
elements are price, place, product, and
promotion. Read on for more details on the
marketing mix.
The concept is simple. Think about another
common mix - a cake mix. All cakes contain eggs,
milk, flour, and sugar. However, you can alter the
final cake by altering the amounts of mix elements
contained in it. So for a sweet cake add more
sugar!

It is the same with the marketing mix. The offer

you make to you customer can be altered by
varying the mix elements. So for a high profile
brand, increase the focus on promotion and
desensitize the weight given to price. Another way
to think about the marketing mix is to use the
image of an artist's palette. The marketer mixes the
prime colours (mix elements) in different quantities
to deliver a particular final colour. Every hand
painted picture is original in some way, as is every
marketing mix.
 Some commentators will increase the marketing
mix to the Five P's, to include people. Others will
increase the mix to Seven P's, to include physical
evidence(such as uniforms, facilities, or livery) and
process (i.e. the whole customer experience e.g. a
visit the Disney World). The term was coined by
Neil H. Borden in his article The Concept of the
Marketing Mix in 1965.

Price
There are many ways to price a product. Let's have a look at some of them and try to
understand the best policy/strategy in various situations. There are many ways to price a
product. Let's have a look at some of them and try to understand the best policy/strategy in
various situations. See also eMarketing Price.

Premium Pricing.
Use a high price where there is a uniqueness about
the product or service. This approach is used where
a a substantial competitive advantage exists. Such
high prices are charge for luxuries such as Cunard
Cruises, Savoy Hotel rooms, and Concorde flights.
Penetration Pricing.
The price charged for products and services is set
artificially low in order to gain market share. Once
this is achieved, the price is increased. This
approach was used by France Telecom and Sky TV.
Economy Pricing.
This is a no frills low price. The cost of marketing
and manufacture are kept at a minimum.
Supermarkets often have economy brands for
soups, spaghetti, etc.
 Price Skimming.
Charge a high price because you have a substantial
competitive advantage. However, the advantage is
not sustainable. The high price tends to attract new
competitors into the market, and the price
inevitably falls due to increased supply.
Manufacturers of digital watches used a skimming
approach in the 1970s. Once other manufacturers
were tempted into the market and the watches
were produced at a lower unit cost, other marketing
strategies and pricing approaches are implemented.
Premium pricing, penetration pricing, economy
pricing, and price skimming are the four main
pricing policies/strategies. They form the bases
for the exercise. However there are other
important approaches to pricing.
Psychological Pricing.
This approach is used when the marketer wants the
consumer to respond on an emotional, rather than
rational basis. For example 'price point perspective'
99 cents not one dollar.
Product Line Pricing.
Where there is a range of product or services the
pricing reflect the benefits of parts of the range. For
example car washes. Basic wash could be $2, wash
and wax $4, and the whole package $6.
Optional Product Pricing.
Companies will attempt to increase the amount
customer spend once they start to buy. Optional
'extras' increase the overall price of the product or
service. For example airlines will charge for optional
extras such as guaranteeing a window seat or
reserving a row of seats next to each other.
Captive Product Pricing
Where products have complements, companies will
charge a premium price where the consumer is
captured. For example a razor manufacturer will
charge a low price and recoup its margin (and
more) from the sale of the only design of blades
which fit the razor.
Product Bundle Pricing.
Here sellers combine several products in the same
package. This also serves to move old stock. Videos
and CDs are often sold using the bundle approach.
Promotional Pricing.
Pricing to promote a product is a very common
application. There are many examples of
promotional pricing including approaches such as
BOGOF (Buy One Get One Free).
Geographical Pricing.
Geographical pricing is evident where there are
variations in price in different parts of the world.
For example rarity value, or where shipping costs
increase price.
 Value Pricing.
This approach is used where external factors such
as recession or increased competition force
companies to provide 'value' products and services
to retain sales e.g. value meals at McDonalds.

Place
Another element of Neil H.Borden's Marketing Mix is Place. Place is also known as channel,
distribution, or intermediary. It is the mechanism through which goods and/or services are
moved from the manufacturer/ service provider to the user or consumerchannel of
distribution comprises a set of institutions which perform all of the activities utilised to move
a product and its title from production to consumption.

Another element of Neil H.Borden's Marketing Mix is

Place. Place is also known as channel, distribution,
or intermediary. It is the mechanism through which
goods and/or services are moved from the
manufacturer/ service provider to the user or
consumer.

There are six basic 'channel'

decisions:
• Do we use direct or indirect channels? (e.g. 'direct' to a consumer,
'indirect' via a wholesaler).
• Single or multiple channels.
• Cumulative length of the multiple channels.
• Types of intermediary (see later).
• Number of intermediaries at each level (e.g. how many retailers in
Southern Spain).
• Which companies as intermediaries to avoid 'intrachannel conflict'
(i.e. infighting between local distributors).
Selection Consideration - how do
we decide upon a distributor?
• Market segment - the distributor must be familiar with your target
consumer and segment.
• Changes during the product life cycle - different channels can be
exploited at different points in the PLC e.g. Foldaway scooters are
now available everywhere. Once they were sold via a few specific
stores.
• Producer - distributor fit - Is there a match between their polices,
strategies, image, and yours? Look for 'synergy'.
• Qualification assessment - establish the experience and track record
of your intermediary.
• How much training and support will your distributor require?
 Types of Channel Intermediaries.
There are many types of intermediaries such as
wholesalers, agents, retailers, the Internet,
overseas distributors, direct marketing (from
manufacturer to user without an intermediary), and
many others. The main modes of distribution will be
looked at in more detail.
1. Channel Intermediaries -
Wholesalers
• They break down 'bulk' into smaller packages for resale by a retailer.
• They buy from producers and resell to retailers. They take ownership
or 'title' to goods whereas agents do not (see below).
• They provide storage facilities. For example, cheese manufacturers
seldom wait for their product to mature. They sell on to a wholesaler
that will store it and eventually resell to a retailer.
• Wholesalers offer reduce the physical contact cost between the
producer and consumer e.g. customer service costs, or sales force
costs.
• A wholesaler will often take on the some of the marketing
responsibilities. Many produce their own brochures and use their own
telesales operations.

2. Channel Intermediaries - Agents

• Agents are mainly used in international markets.
• An agent will typically secure an order for a producer and will take a
commission. They do not tend to take title to the goods. This means
that capital is not tied up in goods. However, a 'stockist agent' will
hold consignment stock (i.e. will store the stock, but the title will
remain with the producer. This approach is used where goods need
to get into a market soon after the order is placed e.g. foodstuffs).
• Agents can be very expensive to train. They are difficult to keep
control of due to the physical distances involved. They are difficult to
motivate.
3. Channel Intermediaries -
Retailers
• Retailers will have a much stronger personal relationship with the
consumer.
• The retailer will hold several other brands and products. A consumer
will expect to be exposed to many products.
• Retailers will often offer credit to the customer e.g. electrical
wholesalers, or travel agents.
• Products and services are promoted and merchandised by the
retailer.
• The retailer will give the final selling price to the product.
• Retailers often have a strong 'brand' themselves e.g. Ross and Wall-
Mart in the USA, and Alisuper, Modelo, and Jumbo in Portugal.
 4. Channel Intermediaries -
Internet
• The Internet has a geographically disperse market.
• The main benefit of the Internet is that niche products reach a wider
audience e.g. Scottish Salmon direct from an Inverness fishery.
• There are low barriers low barriers to entry as set up costs are low.
• Use e-commerce technology (for payment, shopping software, etc)
• There is a paradigm shift in commerce and consumption which
benefits distribution via the Internet

Product
For many a product is simply the tangible, phsysical entity that they may be buying or
selling. You buy a new car and that's the product - simple! Or maybe not. When you buy a
car, is the product more complex than you first thought? The Three Levels of a Product . . .
For many a product is simply the tangible, phsysical entity that they may be buying or selling.
You buy a new car and that's the product - simple! Or maybe not. When you buy a car, is the
product more complex than you first thought? In order to actively explore the nature of a
product further, lets consider it as three different products - the CORE product, the ACTUAL
product, and finally the AUGMENTED product.

These are known as the 'Three Levels of a Product.'

So what is the difference between the three
products, or more precisely 'levels?'

The CORE product is NOT the tangible, physical

product. You can't touch it. That's because the core
product is the BENEFIT of the product that makes it
valuable to you. So with the car example, the
benefit is convenience i.e. the ease at which you
can go where you like, when you want to. Another
 core benefit is speed since you can travel around
relatively quickly.

The ACTUAL product is the tangible, physical

product. You can get some use out of it. Again with
the car example, it is the vehicle that you test
drive, buy and then collect.
The AUGMENTED product is the non-physical part
of the product. It usually consists of lots of added
value, for which you may or may not pay a
premium. So when you buy a car, part of the
augmented product would be the warranty, the
customer service support offered by the car's
manufacture, and any after-sales service.
Another marketing tool for evaluating PRODUCT is
the Product Life Cycle (PLC).

•
The Product Life Cycle (PLC) is based upon the biological life cycle. For example, a seed is
planted (introduction); it begins to sprout (growth); it shoots out leaves and puts down roots
as it becomes an adult (maturity); after a long period as an adult the plant begins to shrink
and die out (decline). The Product Life Cycle (PLC) is based upon the biological life cycle.
For example, a seed is planted (introduction); it begins to sprout (growth); it shoots out
leaves and puts down roots as it becomes an adult (maturity); after a long period as an adult
the plant begins to shrink and die out (decline).

In theory it's the same for a product. After a period

of development it is introduced or launched into the
market; it gains more and more customers as it
grows; eventually the market stabilises and the
product becomes mature; then after a period of
time the product is overtaken by development and
the introduction of superior competitors, it goes
into decline and is eventually withdrawn.
However, most products fail in the introduction
phase. Others have very cyclical maturity phases
where declines see the product promoted to regain
customers.
 Strategies for the differing stages
of the Product Life Cycle.
Introduction.
The need for immediate profit is not a pressure.
The product is promoted to create awareness. If the
product has no or few competitors, a skimming
price strategy is employed. Limited numbers of
product are available in few channels of
distribution.
Growth.
Competitors are attracted into the market with very
similar offerings. Products become more profitable
and companies form alliances, joint ventures and
take each other over. Advertising spend is high and
focuses upon building brand. Market share tends to
stabilise.
Maturity.
Those products that survive the earlier stages tend
to spend longest in this phase. Sales grow at a
decreasing rate and then stabilise. Producers
attempt to differentiate products and brands are
key to this. Price wars and intense competition
occur. At this point the market reaches saturation.
Producers begin to leave the market due to poor
margins. Promotion becomes more widespread and
use a greater variety of media.
Decline.
At this point there is a downturn in the market. For
example more innovative products are introduced
or consumer tastes have changed. There is intense
price-cutting and many more products are
withdrawn from the market. Profits can be
improved by reducing marketing spend and cost
cutting.
Problems with Product Life Cycle.
In reality very few products follow such a
prescriptive cycle. The length of each stage varies
enormously. The decisions of marketers can change
the stage, for example from maturity to decline by
price-cutting. Not all products go through each
stage. Some go from introduction to decline. It is
not easy to tell which stage the product is in.
Remember that PLC is like all other tools. Use it to
inform your gut feeling.
Another marketing tool for evaluating PRODUCT is
the Three Levels of a Product.
•
The Customer Life Cycle (CLC) has obvious similarities with the Product Life Cycle (PLC).
However, CLC focuses upon the creation of and delivery of lifetime value to the customer i.e.
looks at the products or services that customers NEED throughout their lives. The Customer
Life Cycle (CLC) has obvious similarities with the Product Life Cycle (PLC). However, CLC
focuses upon the creation of and delivery of lifetime value to the customer i.e. looks at the
products or services that customers NEED throughout their lives. It is marketing orientated
rather than product orientated, and embodies the marketing concept. Essentially, CLC is a
summary of the key stages in a customer's relationship with an organisation. The problem
here is that every organisation's product offering is different, which makes it impossible to
draw out a single Life Cycle that is the same for every organisation.

Let's consider an example from the Banking sector.

HSBC has a number of products that it aims at its
customers throughout their lifetime relationship
with the company. Here we apply a CLC. You can
start young when you want to save money. 11-15
year olds are targeted with the Livecash Account,
and 16-17 year olds with the Right Track Account.
Then when (or if) you begin College or University
there are Student Loans, and when you qualify
there are Recent Graduate Accounts.
When you begin work there are many types of
current and savings account, and you may wish to
buy property, and so take out a mortgage. You
could take out a car loan, to buy a vehicle to get
you to work. It would also be advisable to take out
a pension. As you progress through your career you
begin your own family, and save for your own
children's education. You embark upon a number of
savings plans and schemes, and ultimately HSBC
offer you pension planning (you may want to insure
yourself for funeral expenses - although HSBC may
not offer this!).
This is how an organization such as HSBC, which is
marketing orientated, can recruit and retain
customers, and then extend additional products and
services to them - throughout the individual's life.
This is an example of a Customer Life Cycle (CLC).
Another important point is that a lifetime CLC is
made up many shorter CLC's. So, for example,
Volkswagen Cars retains a customer for many years
 and one can predict the products that meet a
customers needs throughout his or her family
lifetime. However the purchase of each car, will in
itself be a CLC with many Customer Touch Points.
The consumer may need a bigger vehicle as his or
her family expands - so they visit VW's website and
register.
The customer reviews models and books a test-
drive with her or his local dealer. He or she decides
to buy the car and arranges finance. The car is then
delivered from the factory, and returns every year
for its annual service. Then after three years, the
customer decides to trade in his or her car, and the
cycle begins again. The longer-term life cycle is
simply the shorter-term life cycles viewed
consecutively.
CRM is a term that is often referred to in marketing.
However, there is no complete agreement upon a
single definition. This is because CRM can be
considered from a number of perspectives. In
summary, the three perspectives are:
• Information Technology (IT) perspective

• The Customer Life Cycle (CLC) perspective

• Business Strategy perspective

Promotion
Another one of the 4P's is promotion. This includes all of the tools available to the marketer
for 'marketing communication'. As with Neil H.Borden's marketing mix, marketing
communications has its own 'promotions mix.' Think of it like a cake mix, the basic
ingredients are always the same. However if you vary the amounts of one of the ingredients,
the final outcome is different. Another one of the 4P's is 'promotion'. This includes all of the
tools available to the marketer for 'marketing communication'. As with Neil H.Borden's
marketing mix, marketing communications has its own 'promotions mix.' Think of it like a
cake mix, the basic ingredients are always the same. However if you vary the amounts of one
of the ingredients, the final outcome is different. It is the same with promotions. You can
'integrate' different aspects of the promotions mix to deliver a unique campaign. The
elements of the promotions mix are:

• Personal Selling.
• Sales Promotion.
• Public Relations.
• Direct Mail.
• Trade Fairs and Exhibitions.
• Advertising.
• Sponsorship.

The elements of the promotions mix are integrated

to form a coherent campaign. As with all forms of
communication. The message from the marketer
follows the 'communications process' as illustrated
above. For example, a radio advert is made for a
car manufacturer. The car manufacturer (sender)
pays for a specific advert with contains a message
specific to a target audience (encoding). It is
transmitted during a set of commercials from a
radio station (Message / media).
The message is decoded by a car radio (decoding)
and the target consumer interprets the message
(receiver). He or she might visit a dealership or
seek further information from a web site
(Response). The consumer might buy a car or
express an interest or dislike (feedback). This
information will inform future elements of an
integrated promotional campaign. Perhaps a direct
mail campaign would push the consumer to the
point of purchase. Noise represent the thousand of
marketing communications that a consumer is
exposed to everyday, all competing for attention.
The Promotions Mix.
Let us look at the individual components of the
promotions mix in more detail. Remember all of the
elements are 'integrated' to form a specific
communications campaign.
1. Personal Selling.
Personal Selling is an effective way to manage
personal customer relationships. The sales person
acts on behalf of the organization. They tend to be
well trained in the approaches and techniques of
personal selling. However sales people are very
expensive and should only be used where there is a
genuine return on investment. For example
salesmen are often used to sell cars or home
improvements where the margin is high.
2. Sales Promotion.
Sales promotion tend to be thought of as being all
promotions apart from advertising, personal selling,
and public relations. For example the BOGOF
promotion, or Buy One Get One Free. Others
include couponing, money-off promotions,
competitions, free accessories (such as free blades
with a new razor), introductory offers (such as buy
digital TV and get free installation), and so on. Each
sales promotion should be carefully costed and
compared with the next best alternative.
3. Public Relations (PR).
Public Relations is defined as 'the deliberate,
planned and sustained effort to establish and
maintain mutual understanding between an
organization and its publics' (Institute of Public
Relations). It is relatively cheap, but certainly not
cheap. Successful strategies tend to be long-term
and plan for all eventualities. All airlines exploit PR;
just watch what happens when there is a disaster.
The pre-planned PR machine clicks in very quickly
with a very effective rehearsed plan.
4. Direct Mail.
Direct mail is very highly focussed upon targeting
consumers based upon a database. As with all
marketing, the potential consumer is 'defined'
based upon a series of attributes and similarities.
Creative agencies work with marketers to design a
highly focussed communication in the form of a
mailing. The mail is sent out to the potential
consumers and responses are carefully monitored.
For example, if you are marketing medical text
books, you would use a database of doctors'
surgeries as the basis of your mail shot.
5. Trade Fairs and Exhibitions.
Such approaches are very good for making new
contacts and renewing old ones. Companies will
seldom sell much at such events. The purpose is to
increase awareness and to encourage trial. They
offer the opportunity for companies to meet with
both the trade and the consumer. Expo has recently
finish in Germany with the next one planned for
Japan in 2005, despite a recent decline in interest
in such events.
6. Advertising.
Advertising is a 'paid for' communication. It is used
to develop attitudes, create awareness, and
transmit information in order to gain a response
from the target market. There are many advertising
'media' such as newspapers (local, national, free,
trade), magazines and journals, television (local,
 national, terrestrial, satellite) cinema, outdoor
advertising (such as posters, bus sides).
7. Sponsorship.
Sponsorship is where an organization pays to be
associated with a particular event, cause or image.
Companies will sponsor sports events such as the
Olympics or Formula One. The attributes of the
event are then associated with the sponsoring
organization.
The elements of the promotional mix are then
integrated to form a unique, but coherent
campaign.
.
Physical Evidence
Physical Evidence is the material part of a
service. Strictly speaking there are no physical
attributes to a service, so a consumer tends to rely
on material cues. There are many examples of
physical evidence, including some of the following:
More . . .

People
People are the most important element of any service or experience. Services tend to be
produced and consumed at the same moment, and aspects of the customer experience are
altered to meet the 'individual needs' of the person consuming it. People are the most
important element of any service or experience. Services tend to be produced and consumed
at the same moment, and aspects of the customer experience are altered to meet the
'individual needs' of the person consuming it. Most of us can think of a situation where the
personal service offered by individuals has made or tainted a tour, vacation or restaurant
meal. Remember, people buy from people that they like, so the attitude, skills and
appearance of all staff need to be first class. Here are some ways in which people add value
to an experience, as part of the marketing mix - training, personal selling and customer
service.

Training.
All customer facing personnel need to be trained
and developed to maintain a high quality of
personal service. Training should begin as soon as
the individual starts working for an organization
during an induction. The induction will involve the
person in the organization's culture for the first
time, as well as briefing him or her on day-to-day
policies and procedures. At this very early stage the
training needs of the individual are identified. A
training and development plan is constructed for
the individual which sets out personal goals that
can be linked into future appraisals. In practice
most training is either 'on-the-job' or 'off-the-job.'
On-the-job training involves training whilst the job
is being performed e.g. training of bar staff. Off-
the-job training sees learning taking place at a
college, training centre or conference facility.
Attention needs to be paid to Continuing
Professional Development (CPD) where employees
see their professional learning as a lifelong process
of training and development.
Personal Selling
There are different kinds of salesperson. There is
the product delivery salesperson. His or her main
task is to deliver the product, and selling is of less
importance e.g. fast food, or mail. The second type
is the order taker, and these may be either
'internal' or 'external.' The internal sales person
would take an order by telephone, e-mail or over a
counter. The external sales person would be
working in the field. In both cases little selling is
done. The next sort of sales person is the
missionary.
Here, as with those missionaries that promote faith,
the salesperson builds goodwill with customers with
the longer-term aim of generating orders. Again,
actually closing the sale is not of great importance
at this early stage. The forth type is the technical
salesperson, e.g. a technical sales engineer. Their
in-depth knowledge supports them as they advise
customers on the best purchase for their needs.
Finally, there are creative sellers. Creative sellers
work to persuade buyers to give them an order.
This is tough selling, and tends to o ffer the biggest
incentives. The skill is identifying the needs of a
customer and persuading them that they need to
satisfy their previously unidentified need by giving
an order.
Customer Service
Many products, services and experiences are
supported by customer services teams. Customer
services provided expertise (e.g. on the selection of
financial services), technical support(e.g. offering
advice on IT and software) and coordinate the
customer interface (e.g. controlling service
engineers, or communicating with a salesman). The
disposition and attitude of such people is vitally
important to a company. The way in which a
complaint is handled can mean the difference
between retaining or losing a customer, or
improving or ruining a company's reputation. Today,
customer service can be face-to-face, over the
telephone or using the Internet. People tend to buy
from people that they like, and so effective
customer service is vital. Customer services can
add value by offering customers technical support
and expertise and advice.
 Process
Process is another element of the extended marketing mix, or 7P's.There are a number of
perceptions of the concept of process within the business and marketing literature. Some see
processes as a means to achieve an outcome, for example - to achieve a 30% market share a
company implements a marketing planning process. Process is another element of the
extended marketing mix, or 7P's.There are a number of perceptions of the concept of process
within the business and marketing literature. Some see processes as a means to achieve an
outcome, for example - to achieve a 30% market share a company implements a marketing
planning process.

Another view is that marketing has a number of

processes that integrate together to create an
overall marketing process, for example -
telemarketing and Internet marketing can be
integrated. A further view is that marketing
processes are used to control the marketing mix,
i.e. processes that measure the achievement
marketing objectives. All views are understandable,
but not particularly customer focused.
For the purposes of the marketing mix, process is
an element of service that sees the customer
experiencing an organisation's offering. It's best
viewed as something that your customer
participates in at different points in time. Here are
some examples to help your build a picture of
marketing process, from the customer's point of
view.
Going on a cruise - from the moment that you
arrive at the dockside, you are greeted; your
baggage is taken to your room. You have two
weeks of services from restaurants and evening
entertainment, to casinos and shopping. Finally, you
arrive at your destination, and your baggage is
delivered to you. This is a highly focused marketing
process.

Booking a flight on the Internet - the process

begins with you visiting an airline's website. You
enter details of your flights and book them. Your
ticket/booking reference arrive by e-mail or post.
You catch your flight on time, and arrive refreshed
at your destination. This is all part of the marketing
process.
At each stage of the process,
markets:
• Deliver value through all elements of the marketing mix. Process,
physical evidence and people enhance services.
• Feedback can be taken and the mix can be altered.
• Customers are retained, and other serves or products are extended
and marked to them.
• The process itself can be tailored to the needs of different
individuals, experiencing a similar service at the same time.
Processes essentially have inputs, throughputs and
outputs (or outcomes). Marketing adds value to
each of the stages. Take a look at the lesson on
value chain analysis to consider a series of
processes at work.