Samenvatting MM.

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Samenvatting van 'Marketing Management - A Strategic
Decision-Making Approach
TU Delft | Industrieel Ontwerpen | Strategic Product Innovation

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Chapter1:MarketingManagement

Whentheglobalmarketplacebecomesmorecrowdedandcompetitive,astrongcustomerfocusand
wellconceivedandexecutedmarketingstrategieswillbemorecrucialforthesuccess.

Marketingattemptstomeasureandanticipatetheneedsandwantsopagroupandrespond:
Target those customer groups whose needs and wants are most consistent with the firms
resourcesandcapabilities
Develop products and/or services that meet the needs of the target market better than
competitors
Makeitsproductsandservicesreadilyavailabletopotentialcustomers
Develop customer awareness and appreciation of the value provided by the companys
offerings
Obtain feedback from the market as a basis for continuing improvement in the firms
offerings
Worktobuildlongtermrelationshipswithsatisfiedandloyalcustomers

In financial markets the bottom line (profitability) is most important. But there cant be a positive
bottomlinewithouttheabilitytobuildandsustainatopline:salesrevenue.

A customer focus enables firms to enjoy success by exploiting changes in the marketplace, by
developingproductsandservicesthathavesuperiorityoverwhatiscurrentlyavailable,andbytaking
amorefocusedandintegratedcrossfunctionalapproachtotheiroveralloperations.

Marketingisasocialprocessinvolvingactivitiesnecessarytoenableindividualsandorganizationsto
obtainwhattheyneedandwantthroughexchangeswithothersandtodevelopongoingexchange
relationships.

Ultimatecustomersorendconsumer:
Buygoodsandservicesfortheirownpersonaluseor
theuseofothers(consumergoodsandservices)B2C

Organizationalcustomers:
Buy goods and services for resale, as inputs to production of other
goods or services or for use in the daytoday operations of an
organization(industrialgoodsandservices)B2B

Need: Gapbetweenactualanddesiredstatus

BasicPhysicalNeeds(food,drink,warmth,shelter,sleep)

Social&EmotionalNeeds(security,belonging,love,esteem,selffulfillment)

Want: Desiretosatisfyaneed

Productsandserviceshelpsatisfyacustomersneed
Products:tangiblephysicalobjects

 Services:lesstangible,oftenprovidedbypeople
Productsbenefitschoicecriteriaproductfeatures
Customersbuybenefits,notproducts.

Value= benefitsdeliveredcosttoobtainproduct
a function of intrinsic product features, service and price and it means different
thingstodifferentpeople

Deliveringsuperiorvaluecriticalforbusinesssuccess

Lifetimecustomervalue
Many firms have turned their attention to building a continuing longterm
relationship between the organization and the customer as the ultimate
objectiveofasuccessfulmarketingstrategy.

Brand equity (linked to customers) reflects the value of the brand name and logo as promotional
toolsforattractingfuturebuyersandbuildingmarketshareandprofitability.

Market=a)Individualsandorganizationswhoare
b) Interested and willing to buy a particular product to obtain benefits that will satisfy
specificneedorwant,andwho
c)Havetheresources(time,money)toengageinsuchatransaction

Segment=Partofthemarket,homogeneousintheirneeds,wantsandproductbenefits
Betweenthesesegmentstheremustbeheterogeneity

Instrategicmarketingmanagementdeterminethefollowingpointstodefineatargetmarket:
Which customer needs and wants are currently not being satisfied by competitive product
offerings
Howdesiredbenefitsandchoicecriteriavaryamongpotentialcustomersandhowtoidentify
resultingsegments(agesex,lifestyle)
Whichsegmentstotargetandwhichproductofferings&marketingprogramsappealmostto
customers

How to position the product to differentiate it from competitors and give the firm a
sustainablecompetitiveadvantage

Marketing management is the process of analyzing, planning, implementing, coordinating and

controlling programs involving the conception, pricing, promotion, and distribution of product,
services,andideas,designedtocreateandmaintainbeneficialexchangeswithtargetmarketsforthe
purposeofachievingorganizationalobjectives.

Analysis4Cs:

Company:internalresources,capabilities,strategies
Context:broadsocial,economic,technologytrends
Customers:needs,wants&characteristics
Competitors:relativestrengths&weaknesses,trends

Corporatestrategy:reflectsthecompanysmissionandprovidesdirectionfordecisionsaboutwhat
businessesitshouldpursue,howitshouldallocateitsavailableresources,anditsgrowthpolicies.

Businesslevel (or competitive) strategy: addresses how the business intends to compete in its
industry.
Marketingstrategy:companysplanforpursuingitsobjectiveswithinaparticularproductmarket.


Incaseofsmallcompaniesorstartupswithasingleproductline,businessandmarketingstrategy
substantiallyoverlap
Themarketingobjectivesandstrategyforaparticularproductmarketentrymustbeachievablewith
thecompanysavailableresourcesandcapabilitiesandconsistentwiththedirectionandallocationof
resourcesinherentinthefirmscorporateandbusinesslevelstrategies

Inamarketopportunityanalysisamarketingmanager:

understandsthemarketopportunities

analysesthebehaviorandmotivationsofpresentandpotentialcustomers(customeranalysis)

obtainsobjectiveinformationaboutpotentialcustomers,theirsatisfactionandloyalty,firms
wholesaleandretailpartners,strength&weaknessescompetitors(research&forecasting)

dividescustomersintomarketsegments

decideswhichsegmentrepresentattractiveandviableopportunities

decideshowtopositiontheproductorserviceofferinganditsbrandwithinatargetsegment

Formulatingastrategicmarketingprogram,themanagermust:

set specific objectives to be accomplished within the target market (sales volume, market
share,profitabilitygoals).

decideonanoverallmarketingstrategytoappealtocustomersinthetargetmarket

thenmakedecisionsabouteachelementofthetacticalmarketingprogramusedtocarryout
thestrategy.

The marketing mix is the combination of controllable marketing variables that a manager uses to
carry out a marketing strategy in pursuit of the firms objectives in a given target market (4Ps:
Product,Price,Promotion,Place).

The various analyses and the strategic marketing program should be summarized in a marketing
plan:awrittendocumentdetailingthecurrentsituationwithrespecttocustomers,competitors,and
the external environment and providing guidelines for objectives, marketing actions, and resource
allocationsovertheplanningperiodforeitheranexistingoraproposedproductorservice.

3majorpartstotheplan:
1) Marketingmanagerdetailshisassessmentofthecurrentsituation(resultsanalyses)
2) Strategyofthecomingperiod(specifyingobjectives,4Ps)
3) Financial&resourceimplicationsofthestrategy

Vertical integration is the internal control of the full range of marketing functions and activities.
Whentheyuseanetworkforthis,thisiscalledmarketingchannelsorchannelsofdistribution.This
also can have advantages for the consumers, transactional efficiency en functional efficiency. (Zie
hoofdstuk12)

Utility/price relationship: A product had greater utility for a potential customer when it can be
purchasedwithaminimumofriskandshopping(possessionutility),ataconvenientlocation(place
utility),andatthetimethecustomerisreadytousetheproduct(timeutility).

Creatingvalueisacrossfunctionalendeavor,andmarketingandnonmarketingexecutivesalikemust
operatewithaclearcustomerfocustomakeithappen.

Recentdevelopmentsaffectingmarketingmanagement:

Increasedglobalizationofmarketsandcompetition

Growth of the service sector of the economy and the importance of service in maintaining
customersatisfactionandloyalty

Rapiddevelopmentofnewinformationandcommunicationtechnologies

Growing importance of relationships for improved coordination and increased efficiency of

marketingprogramsandforcapturingalargerportionofcustomerslifetimevalue.

Chapter2:MarketingManagement

Marketorientated firms coordinate their activities around satisfying unmet customer needs, their
businessphilosophyiscalledthemarketingconcept.

Amarketingconceptholdsthattheplanningandcoordinationofallcompanyactivitiesaroundthe
primary goal of satisfying customer needs is the most effective means to attain and sustain a
competitiveadvantageandachievecompanyobjectsovertime.

Customerfocus

Crossfunctionalcoordination

Profitability

Each level of strategy must be consistent with and therefore influenced and constrained by
higherlevelswithintheirhierarchy(services,advertisingappeal,prices,etc)

Strategicplanning:threatstoavoid&opportunitiestopursue

Tabelblz35

Amarketorientationhasasignificantpositiveeffectonvariousdimensionsofperformance,
includingreturnonassets,salesgrowth,andnewproductsuccess.

Tabelblz37

Manycompaniesaroundtheworldarenotveryfocusedontheircompanies&competitors
(marketoriented)becauseofthesereasons:

Competitive conditions may enable a company to be successful in the short

runwithoutbeingparticularlysensitivetocustomersdesires.

Differentlevelsofeconomicdevelopmentacrossindustriesorcountriesmay
favordifferentbusinessphilosophies

Firms can suffer from strategic inertia the automatic continuation of

strategies successful in the past, even though current market conditions are
changing.

Productoriented or productionoriented businesses focus most on such functions as

product and process engineering, production, and finance to keep pace with growing
demand

Tabelblz38

When industries grow, they become more competitive which results in a salesoriented
response.Thisstillfocusesonsellingwhatthefirmwantstomakeratherthanoncustomer
needs.Butsimplyspendingmoreonsellingeffortsdoesnotcreateasustainablecompetitive
advantage.

A strategy is a fundamental pattern of present and planned objectives, resource

deployment, and interactions of an organization with markets, competitors, and other
environmentalfactors.

What?(Plannedobjectives)

Where?(Industries&productmarkets)

How?(Meetenvironmentalopportunities&threats,gaincompetitiveadvantage)

Awelldevelopedstrategycontains5components

Scope

Breadthofitsstrategicdomain,aboutmission

Goals&Objectives

ResourceDeployments

Howresourcesaretobecontainedandallocated

Identificationofasustainablecompetitiveadvantage

Howtocompete

Synergy

Thewholebecomesgreaterthanthesumofitsparts

Allrelatedbusinessescomplementandreinforceeachother

Hierarchyofstrategies

Corporatestrategy

Businesslevelstrategy

Functionalstrategies

Corporate strategy has as primary focus decisions about the organizations scope and
resourcedeploymentsacrossitsdivisionsorbusinesses.

Whatbusiness(es)arewein?

Whatbusiness(es)shouldwebein?

How to organize resources to these businesses to achieve the goals &

objectives?

The critical focus of a businesslevel strategy is how a business unit competes within its
industry.Itsaboutsustainablecompetitiveadvantage.

Whatcompetenciescangivethebusinessunitacompetitiveadvantage?

Which of those competencies best match customer needs & wants in the
businessstargetsegment(s)?

Howmanyandwhichmarketsegments?

Overallbreadthofproductofferings?

Synergy across productmarkets and functional departments within the

business.

Marketingstrategyfocusesonaffectivelyallocateandcoordinatemarketingresourcesand
activitiestoaccomplishthefirmsobjectives.

Scope:Specifyingatargetmarketforaparticularproduct(line).

4Ps

Tabelblz42


Ausefulcorporatestrategy,managementmustaddress6interrelateddecisions:

1)
Overallscope&missionoftheorganization

2)
Companygoals&objectives

3)
Sourceofcompetitiveadvantage

4)
Developmentstrategyforfuturegrowth

5)
Allocationofcorporateresourcesacrossthefirmsvariousbusinesses

6)
Searchforsynergy

An organizations mission should fit both its internal characteristics and the opportunities
andthreatsinitsexternalenvironment.

Many firms specify their domain in physical terms, focusing on products, services or
technology used. This can lead to slow reactions to technological or customerdemand
changes.
Levitt: Its better to define a mission as what customer needs are to be satisfied and the
functions the firm must perform to satisfy them. This can be too broad to provide clear
guidance.

Most useful mission statements focus on the customer need to be satisfied and the
functions that must be performed to satisfy that need Specific to customer and
products/technologies.

Tabelblz45

Crafting mission statements that specify explicit social values, goals, and programs is
becominganimportantpartofcorporatestrategicplanning.

RoughlytwothirdsofU.S.firmshaveformalcodesofethics.

Ethics is concerned with the development of moral standards by which actions and
situations can be judged. It focuses on those actions that may result in actual or potential
harmofsomekindtoanindividual,group,ororganization.
Ethicsismoreproactivethanthelaw.

Unethical practices can damage the trust between a firm and its suppliers or customers,
therebydisruptingthedevelopmentoflongtermexchangerelationshipsandresultinginthe
likelylossofsalesandprofitsovertime.

Tabelblz47

U.S.companiesaremoreconcernedaboutproprietaryinformation,Canadianfirmsaremore
likely to have explicit guidelines concerning environmental responsibility, and European
companiesmorefrequentlyhavestandardsfocusedonworkplacesafety.

Corporateobjectivesmustbespecificandmeasurable.4components:

Aperformancedimensionorattributesought

Ameasureorindexforevaluatingprogress

Atargetorhurdleleveltobeachieved

Atimeframewithinwhichthetargetistobeaccomplished.

SMART:Specific,Measurable,Attainable,Relevant,Timebound

Achieve many objectives at once leads to conflicts and tradeoffs. Managers can reconcile
conflicting goals by prioritizing them. Another approach is to state one of the conflicting
goals as a constraint or hurdle a firm attempts to maximize growth subject to meeting
someminimumROI(returnoninvestment)hurdle.

Tabelblz49

Important:
Developingandmaintaininglongtermcustomerrelationships

Customerfocusedobjectives

Inmostcasesasustainablecompetitiveadvantageisbasedonresourcesthatotherfirmsdo
nothave,takealongtimetodevelopandarehardtoacquire
thetrickistodevelopacompetitivestrategythatconvertoneormoreofthecompanys
uniqueresourcesintosomethingofvaluetocustomers.

A firm can go in 2 major directions in seeking future growth: expansion of its current
businessesandactivities,ordiversificationintonewbusinesses.

Tabelblz51

Expansionbyincreasingpenetrationofcurrentproductmarket
Making improvements, cutting costs & prices, outspending competitors on
advertising&promotion
Encouragingcurrentcustomerstobecomemoreloyal,usetheirproductmore
often,innewways

Expansionbydevelopingnewproductsforcurrentcustomers

Productlineextensions,newproduct/serviceaimedatexistingcustomers

Expansionbysellingexistingproductstonewsegmentsorcountries

Couldhavethegreatestpotentialforgrowth!!
Develop new markets aimed at nonuser or occasionaluser segments of
existingmarkets

Expansionbydiversifying

Riskiernewoperations,unfamiliarcustomergroups

Forwardverticalintegration:Movesdownstreamintermsofproductionflow

Backwardverticalintegration:Movesupstreambyacquiringasupplier
Related(orconcentric)diversification:afirminternallydevelopsoracquiresa
new business that doesnt have products or customers common with its
currentbusiness.
Unrelated(orconglomerate)diversification:motivationsarefinancial

Two businesses that have no commonalities. Occurs when disproportionate

number of current business face decline because of decreasing demand,
increasedcompetitionorproductobsolescence.
Riskiestgrowthstrategyintermsoffinancialoutcomes.
Expansionbydiversifyingthroughorganizationalrelationshipsornetworks
Trytoaccomplishtogainsomebenefitsofmarketexpansionordiversification
by forming relationships or organizational networks with other firms instead
ofacquiringownership.

Therearetwosetsofanalytictoolsthathaveproventobeusefulinmakingdecisionsinhow
toallocatefinancialandhumanresources:portfoliomodels&valuebasedplanning.

Portfolio models enable managers to classify and review their current and prospective
businesses by viewing them as portfolios of investment opportunities and then evaluating
eachbusinessscompetitivestrengthandtheattractivenessofthemarketitserves.

GrowthShareMatrixdevelopedbyTheBostonConsultinggroup,late1960s.
Analyzes the impact of investing resources in different businesses on the
corporationsfutureearningsandcashflows.

Themarketgrowthrateontheverticalaxisisaproxymeasureforthematurityand
attractivenessofanindustry.
A businesss relative market share is a proxy for its competitive strength within its
industry.

Tabelblz54

Question Marks (problem children): Low relative market share. By increasing

questionmarkbusinessStar,byfailureDog.
Stars: Market leader in highgrowth industry, critical to continued success. As their
industriesmaturetheybecomecashcows.
CashCows:Highrelativeshareoflowgrowthmarket.Primarygeneratorsofprofits
andcash.
Dogs: Lowshare businesses in lowgrowth markets. Generate low profits or losses.
Divestiture(hard)orharvestaretwooptionsforsuchbusinesses.

Tabelblz55

LimitationsoftheGrowthShareMatrix

Marketgrowthrateisaninadequatedescriptorofoverallindustryattractiveness

Notalwaysdirectlyrelatedtoprofitabilityorcashflow.

Relativemarketshareisinadequateasadescriptionofoverallcompetitivestrength

Theoutcomesofagrowthshareanalysisarehighlysensitivetovariationsinhow
growthandsharearemeasured.

Whilethematrixspecifiesappropriateinvestmentstrategiesforeachbusiness,it
provideslittleguidanceonhowbesttoimplementthosestrategies.

Thereisnothingsaidaboutcompetitiveadvantage
Themodelimplicitlyassumesthatallbusinessunitsareindependentofoneanother
exceptfortheflowofcash.

Becauseoftheselimitationsanumberoffirmshaveattemptedtoimprovethebasic
portfoliomodel.
Tabelblz56

Value based planning provides a basis for comparing the economic returns to be gained
from investing in different businesses pursuing different strategies or from alternative
strategiesthatmightbeadoptedbyagivenbusinessunit.

Threebasicfeatures:

Theyassesstheeconomicvalueastrategyislikelytoproducebyexaminingthecash
flowsitwillgenerate

They estimate the shareholder value that a strategy will produce by discounting its
forecastedcashflowsbythebusinesssriskadjustedcostofcapital.

They evaluate strategies based on the likelihood that the investment required by a
strategywilldeliverreturnsgreaterthanthecostofcapital.

EVA, Economic Value Added: The amount of return a strategy or operating program
generatesinexcessofthecostofcapital.

DiscountedCashFlowModelBestknownvaluebasedplanning

Determinedby:

Cashflowitgenerates

Businesscostofcapital

Marketvalueofthedebt

Futurecashflowsaffectedby6valuedrivers:

Selfexplanatory:

Salesgrowth

Operatingprofitmargin

Incometaxrate

Workingcapitalinvestment

Fixedcapitalinvestment

Elaboration:

Durationofvaluegrowth

Tabelblz58

LimitationsofValueBasedPlanning
Valuebased planning is only one tool for evaluating strategy alternatives identified and
developedthroughmanagersjudgments.
Some kinds of strategy alternatives are consistently undervalued. Particularly worrisome
fromamarketingviewpointisthetendencytounderestimatethevalueofkeepingcurrent
customers.
Valuebasedplanningcanevaluatealternatives,butitcannotcreatethem.


To overcome some of the above limitations there is a recent variation that uses customer
equitytoestimatethevalueofalternativemarketingactions.(sumofthelifetimevaluesof
itscurrentandfuturecustomers.

Sourcesofsynergy
Synergy exists when two or more businesses or productmarkets, and their resources and
competencies,complementandreinforceoneanothersothatthetotalperformanceofthe
relatedbusinessesisgreaterthanitwouldbeotherwise.

Knowledgebased synergies: The performance of one business can be enhanced by the

transfer of competencies, knowledge, or customerrelated intangibles from other units
withinthefirm.
Thesesynergiesareafunctionofthecorporationsscope.

Corporateidentityflowsfromthecommunications,impressions,andpersonalityprojected
byanorganization.

StrategicBusinessUnits(SBUs)arethecomponentsofafirmengagedinmultipleindustries
orbusinesses.
The rationale for breaking larger firms into semiautonomous SBUs usually stems from a
marketoriented desire to move strategic decision making closer to the customers the
businessistryingtoreach.
DivideinSBUs:themanagersineachSBUmustmakerecommendationsabout:

Theunitobjectives

Thescopeofitstargetcustomersandofferings

Whichbroadcompetitivestrategytopursuetobuildacompetitiveadvantage
initsproductmarkets

How resources should be allocated across its productmarket entries and

functionaldepartments.

StrategicBusinessUnitshavethefollowingcharacteristics:

A homogeneous set of markets to serve with a limited number of related

technologies.

Minimizing diversity enables the units manager to better formulate and

implementacoherentandinternallyconsistentbusinessstrategy

Auniquesetofproductmarkets

Firmavoidsduplicationofeffortandmaximizeseconomiesofscale

Controloverthosefactorsnecessaryforsuccessfulperformance

Determine how SBUs share of the joint resource is used to effectively carry
outitsstrategy

Responsibilityfortheirownprofitability

Thethreedimensionsthatdefinethescopeandmissionoftheentirecorporationalsodefine
individualSBUs:

Technicalcompatibility

Similarityinthecustomerneedsortheproductbenefits

Similarityinthepersonalcharacteristicsorbehaviorpatternsofcustomersin
thetargetmarket

Achievingacompetitiveadvantagerequiresabusinessunittomaketwochoices?

WhatistheSBUscompetitivedomainorscope?Whichtargetsegmentscanittarget
andwhichcustomerneedscanitsatisfy?

How can the business unit distinguish itself from competitors in its target market?
What distinctive competencies can it rely on to achieve a unique position relative to its
competitors?

Thescopeofabusinesssstrategicfocushadramificationsfornearlyeverycomponentofits
marketingprogram.

After decide on the scope of market segments and productmarket entries to pursue, SBU
managers allocate the financial and human resources provided by corporate management
acrossthoseproductmarkets.

Threecharacteristicsofacompetitivestrategy:

Itshouldgeneratecustomervalue.

Thesuperiorvaluemustbeperceivedbythecustomer.

Theadvantageshouldbedifficultforcompetitorstocopy.

Tabelblz63

Thekeypointsofbusinessstrategiesare:

Competitivestrategiesarebuiltonmarketingresourcesandcompetencies

The competitive strategy pursued by an SBU helps determine what strategic

marketingprogramsareviableforitsvariousproductmarketentries.

Chapter3:Understandingmarketopporunities

A growing market doesnt guarantee success, equally or more important are the industry
conditions and the competitive advantage a company can sustain. You can do the
competitiveadvantagewiththefourCs(company,context,competitionandcustomer).

Threequestionscrucialtotheassessmentofanymarketopportunity;
- Howattractiveisthemarketweserveorproposetoserve?
- Howattractiveistheindustryinwhichwecouldcompete?
- Aretherightresourcesintermsofcapabilitiesandconnectionsinplaceto
effectivelypersuetheopportunityathand?

Differencebetweenmarketandindustry
Market; is the customer of a service or good that is willing to, and has the resources to
engageinsuchtransaction.buyers

Industry; is group of firms that offer a product that is similar and are close substitutes for
oneanother.sellers

Weassesthemarketandindustryonbothmacroandmicrolevel.
Marco Environmental conditions that influence the market or industry as a whole
(externalandlargelyuncontrollableforces.)

Microlooksatindividualsinthatmarketorindustryspecificcustomersandcompanies.

Macroenvironmentaltrends
- Demographicenvironment
- Socialculturalenvironment
- Economicenvironment
- Technologicalenvironment
- Regulatoryenvironment
- Naturalenvironment

Ask yourself for every component what the trends are that influence the demand of the
market,favourableofunfavourable.

Demographic

Fivemajordemographictrendsthatinfluencemarkets
1. Agingofworldpopulation(ivmhealthcare,vacationhomes,lifeinsurance)
2. Effectofaidsplague(Pharmaceutical,worldhealthorganisations)
3. Imbalancebetweenratespopulationgrowth(Marketersfocusongrowing
markets,inEuropepeopletendtogetlesschildrencomparedtoAfrica)
4. Increasedlevelsofimmigration(Marketnotonlyoriginalcitizens,also
immigrants)
5. Declineinmarriedhouseholdsindevelopedcountries(Bridebusiness
focusesonage30+insteadof20s)

Socialculturalenvironment
Social cultural trends are trends that have to do with values, attitudes and behaviour of
individualsinagivensociety.Theindustrycanadapttothosetrends.

Relevantsocialculturaltrends
- Businessethics(forinstanceimprovingcoffeeproducingethics)
- Fitnessandnutrition(organicfoodisin,sugarisout,adaptingtoproducts)

Economicenvironment
Basicallysaysthatithasahugeimpactonthemarket.Itdoesnottellastrongeconomyis
thebest,asthereareloadsofcompaniesthatgethugeinaneconomiccrises(forinstance
Ebay,ennatuurlijkdeprijsvechters)

Regulatoryenvironment

The regulatory environment depends on the political and legal trends. Can result in
regulationofderegulation.Forinstance,therejectionoftheeurobySwedenmakesithard
formarketerstomakedecisions,astheexchangerateisalwaysuncertain.
Withderegulationsitispossibleforsmallercompaniestoenteramarketandtakemarket
shareofestablishedmonopolies.

Technologicalenvironment
- Nieuwetechniekenmakennieuwemarkten(Zoalsbijcds,dvdsenz)
- Metnieuwetechniekenveranderdhetzakendoen,hetismakkelijk,snelleren
goedkopercommuniceren.
Technologiekanooktegenwerken,zoalshetdownloadenvanmuziekenfilms.Technologie
helptookeenhoopomnieuwetrendstevoorspellen,doordathetmakkelijkerisomdeklant
te leren kennen (advertenties op zoekresultaten, google. Griepvoorspelling door te kijken
hoevaakhoestenwordtgegoogled.)

Naturalenvironment
Duetotheclimatechange,themarketingchages.Technologydevelopsforinstancethefuel
savingToyota Prius. You can make the climate change into a business opportunity, for
instanceinvestinresearchandcomeupwithclimatefriendlysolutions.

Soyourmarketisattractive,whataboutyourindustry?
Toseeiftheindustryisattractivelongterm,weusePortersFivecompetitiveforces
1. Rivalryamongpresentcompetitors
2. Threatofnewentrants
3. Bargainingpowerofsupplies
4. Bargainingpowerofbuyers
5. Threatofsubstituteproducts

1.Rivaltyamongpresentcompanies
Whatonefirmdoes,willaffecttheothers.Profitabilitydecreasesasrivalryincreases.Rivalry
isgreaterunderfollowingconditions.
- Thereishighinvestmentintensity.Thatistheamountoffixedandworkingcapital
requiredtoproduceadollarofsalesislarge.
- Therearemanysmallfirmsornodominantfirmexist.
- Thereislittleproductdifferentiation(noinnovationstocompetewith)
- Itiseasytoswitchfromonesellertoanother.

2,Threatofnewentrants
The greater the threat of new entrants, the less attractive the industry is. Entry is more
difficultunderthefollowingconditions.
- Whenstrongeconomicsofscaleandlearningeffectsarepresent.
- Iftheindustryhasstrongcapitalrequirementsattheoutset.
- Whenstrongproductdifferentiationexistsamongcurrentplayers

Ifgainingdistributionisparticularlydifficult.

3,Bargainingpowerofsuppliers
Powerofsuppliersincreasesunderfollowingconditions
- Ifthecostofswitchingsupplierishigh
- Ifpricesofsubstitutesarehigh
- Ifsupplierscanrealisticallythreatenforwardintegration
- Whensuppliersproductisalargepartofthebuyersvalueadded.
Lost of companies want a cooperation with their suppliers, to improve quality and dismiss
thepowerofsuppliers.

4.Bargainingpowerofbuyers
Powerofbuyersishuge,astheydecidewhethertheywanttobuytheproductornot.The
extentofsuccessthebuyersgetintheirbargainingeffortsdependsonseveralfactors.
- Extentofbuyerconcentration(largebuyersinfluencelargeportionofindustrysales,
forinstancethepowerofautomakersoversuppliersoftires.)
- Switchingcoststhatreducethebuyersbargainingpower(zoals
telefoonabbonomenten)
- Thethreatofbackwardintegration
- Theproductsimportancetotheperformanceofthebuyersproduct.(greater
importance,lowerbargainingpower)
- Buyerprofitability

Thegreaterthepowerofthehighvolumecustomers,thelessattractivetheindustryis.

5.Threatofsubstituteproducts
Ishetgevaarvanproductendiedezelfdefunctievervullen.Dusbijplasticflessennietalleen
plasticflessen,maarookblikjes,funcieisbijbeidenimmershetzelfde.

Soafterthereanalyses,youasamarketeerwanttoenteramarketif:
- Theenvironmentalcontextisfavourable
- Thecompetitivesituationisattractive

Challengesinmarcolevelmarketandindustryanalysis
Alwayschoosetherightmarkettoanalyse!!Samewithindustry,nottobroad,nottosmall.
Dan komt er nog een stuk over het zoeken van informatie (en waar, in tijdschriften en op
internet)watvoornunietzorelevantlijkt.

Understandingmarketsatmicrolevel;
Watwasmicroookalweer?
Microlooksatindividualsinthatmarketorindustryspecificcustomersandcompanies.

Evenifthemarketlooksfavourable,itdoesntmeanthecustomerwillbuytheproduct.The
microlevellooksindividuallyatthecustomers.
Whenisanopportunityattractiveonmicrolevel?
- Thereisaclearlyidentifiedsourceofcustomerpain,forsomeclearlyidentifiableset
oftargetcustomers,whichtheofferingresolves.(customerneedisestablished)
- Theofferingprovidescustomerbenefitsthatothersolutionsdonot
- Thetargetsegmentislikelytogrow
- Thereareothersegmentsforwhichthecurrentlytargetedsegmentmayprovidea
springboardforsubsequententry.

Entering a market without a sustainable competitive advantage is a trap, soon people will
copyandyouwillloseyourmarket.

Opportunities are attractive at micro level on industry side when it meets most or all
followingtests;
- Itpossessessomethingproprietarythatothercompaniescannoteasilyduplicate
- Thebusinesshasorcandevelopsuperiororganizationalprocesses,capabilitiesor
resourcesthatotherswouldfinddifficulttoimitateorduplicate
- Thecompaniesbusinessmodeliseconomicallyviable

Thenatlast,everycompanyshouldlookiftheopportunityisrightfortheircompany,ifitfits
withtheirmissionstatement,dotheyhavethepeopletodoitanddotheyhavetheright
connections.
Criticalsuccessfactors(CSF)separatesthewinnercompaniesfromthealsorans.
- Whichfewdecisionsoractivitiesaretheonesthat,ifgottenwrong,willalmost
alwayshaveseverelynegativeeffectsoncompaniesperformance?Locationissucha
factor.
- Whichdecisionsoractivities,doneright,willalmostalwaysdeliver
disproportionatelypositiveeffectsonperformance?Againlocationqualifies.

Endanalstoetje!Een2x2matrix;Opportunity/threatmatrix

Chapter4:Understandingconsumerbuyingbehaviour
Thischapterisaboutanalysingthementalprocessesindividualconsumersgothroughwhen
makingpurchasedecisionsandthefactorsaffectingthosedecisions.
Psychologicalimportanceaffectsthedecisionmakingprocess:highinvolvementpurchases
involve goods that are psychological important to the buyer (they carry
social/psychological/financialrisks).
Purchasinghighinvolvementproductscomeswithfivestepsofproblemsolving:
problemidentification
Purchasingtriggeredbyunsatisfiedneeds/wants,differencebetweenidealandactualstate.
Changesinactualstateoccurbyphysicalneeds(hungry,etc.),depletionofcurrentsolutionorby
expecteddeclineinactualstate.
Changesindesiredstateoccurbynewinformationorbythesatisfactionofapreviousneed.
informationsearch
Peopleseekinformationaboutalternativesuntiltheyperceivethatthecostsofobtainingmore
informationareequaltotheadditionalvalueorbenefitderivedfromtheobtainedinformation.
Peoplesearchmorewhentheyneedtheproductverymuch/theresaegoinvolvementwiththe
product/severityofmakingapoorchoiceishigh.
Thecostsofinformationsearchare:opportunitycosts(timespendsearching)andpsychological
costs(searchingisnotfun).
Sourcesofinformationare:personal(friends)andpublic(reviews)havingaevaluatingand
legitimizingfunctionandcommercial(advertisements)withainformingfunction.
evaluationofalternatives
Withintheirevokedset(fewproductsthatarelikelytosatisfyneeds),peopleevaluatethose
productsonafewproductdimensionsorattributes.Thoseattributestogetherwiththeir
importancerepresenttheconsumerschoicecriteria.Altogetherisapersonsattitude.
purchase
postpurchaseevaluation

Evaluationofapurchasedependsonhowapersonthoughtitwouldperform(aspiration
orexpectationlevel,influencedbystrengthofneedandinformationcollected),andhow
itreallyperformed.Positiveevaluationcanleadtobrandloyalty.
Lowinvolvementdecisionsaremadeimpulsivelyonbasisofbrandfamiliarityorcomparison
ofbrandsontheshelf.Involvementislow,soextensiveinformationsearchisnotnecessary.
Unconsciousadvertisingworks,butpositivebrandassociationisfaraway.
There are two types of lowinvolvement buying decisions: inertia (random choice or
repetitive buying to avoid making a choice) and impulsive purchasing and variety seeking
(impulsivelybuyadifferentbrandtovary).

Itsimportantforthe4Pstopredictifyourcustomerwillbemoreloworhighinvolved:
Marketingmix
Productdecisions

Highinvolvement
Lowinvolvement
Oneormorecompellingproductbenefitsarenecessary.

Pricingdecisions

Demonstrableconsumerbenefits
aremorelikelythanpricetodrive
consumerschoice.
Promotionthatcommunicatein
greaterdetailarelikelytobe
effective.
Relativelylessextensive
distributionisnecessary

Promotionaldecisions
Distributiondecisions

Substantiallowerpricemay
providesufficientinertiaforrepeat
purchase.
Consumersarenotinterested,so
largeadvertisementbudgetis
necessary.
Relativelymoreextensive
distributionisnecessary

To increase the consumers involvement , a product can be linked to some involving issue.
Causerelated marketing is the practice of designating a portion of the brands profit to a
nonprofit source (e.g. charity). The product can also be tied to a personally involving
situation(latenightsleepingaidadvertisements),oranimportantnewfeaturecanbeadded
toanunimportantproduct.
Whydodifferentpeoplebuydifferentthings?Becausetheinformationtheycollect,theway
they process and interpret it and their evaluation are all influenced by psychological and
personalcharacteristics.Acoupleofpsychologicalcharacteristicsare:
Perception
For highinvolvement it consist of an exposure to a piece of information leading to
attention, comprehension and finally retention in memory. For lowinvolvement
exposuremaycauseconsumerstoretainenoughinformationforrecognition.
Selectivity is picking only part of the total information received. For highinvolvement
only the needs that should be satisfied are picked (perceptual vigilance). For low
involvement, selectivity helps avoiding wasting mental effort. Perceptual defence is
avoidingsmokingkillsadvertisementswhenyousmoke.
Categorisation is categorising information for quicker playback. Integration means
perceivingseparatepiecesofinformationasawhole.
Needsandattitude
Anattitudeisafeelingaboutanobject.Modelsdescribingattitudeare:Fishbeinmodel
(compensatory:poorevaluationiscancelledoutbygoodevaluation),noncompensatory
models (especially with lowinvolvement products. E.g.: lexicographic model: buying
superiorproductonmostimportantattribute)
Acoupleofpersonalcharacteristicsare:
Demographics
Demographics influence the nature of consumers needs and wants, their ability to buy
products, the perceived importance of various attributes used to evaluate brands and
consumersattitudetowardsproductsorbrands.
Personality
Consumerstendtouseproductsthatmatcheithertheirownselfconceptortheirideal
selfconcept.

Lifestyle

Socialinfluencesaffectingpurchasedecisions,mainlyforhighinvolvement,include:
Culture
Cultureisthesetofbeliefs,attitudes,andbehaviourpatterns,sharedbymembersofa
societyandtransmittedfromonegenerationtothenext.Cultureinvolvessubculture.
Socialclass
Groupingbasedonsimilaritiesinincome,educationandoccupation.
Referencegroup
Include variety of groups influencing consumer through normative compliance, value
expressedinfluenceandinformationalinfluence.Animportantreferencegroupisfamily.

Chapter6:Measuringmarketopportunities:forecastingand
marketknowledge
Noforecastevercameinexactlyonthemoney.

Anestimateofmarketpotentialoftenservesasastartingpointforpreparingasalesforecast.Next
thesizeofthecurrentlypenetratedmarketisneededtodetermineatargetmarket.Alsoansales
forecastisneeded.

Topdownforecast:acentralpersonorpersonstaketheresponsibilityforforecasting(most

advantages).

Bottomupforecast:eachpartofthefirmpreparesitsownsalesforecast.

Therearesixmajorevidencebasedmethodsforestimatingmarketpotentialandforecatingsales:
Statisticalandotherquantitativemethods:thismethodcanonlybeusedifthereisany
historyofthecompany.Statisticalmethodsusepasthistoryandvariousstatistical
techniquestoforecastthefuture.Theygenerallyassumethatthefuturewilllookverymuch
likethepast.
Observation:directlyobserveorgatherexistingdataaboutwhatrealconsumersdointhe
productmarketofinterest.Itisattractivebecauseitisbasedonwhatpeopleactuallydo.If
secondarysourcesprovidedata,collectionisbothfasterandcheaperthanstartinganew
study.Fornewtotheworldproducts,thismethodisnotpossiblebecausetheproductdoes
notyetexist.
Surveysorfocusgroups:afterbeingshownastatementoftheproductconceptora
prototypeorsampleoftheproduct,canbeaskedhowlikelytheyaretobuy,creatinga
surveyofbuyersintentions.Salespeoplecanbeaskedtoconductasurveyofsalesforce
opinion.Notes:whatpeoplesayisnotalwayswhatpeopledo.Personswhoaresurveyed
maynotbeknowledgeable,butifaskedfortheiropiniontheyprobablyprovideit.What
peopleimagineabouttheproductmaynotbewhatisactuallydeliveredoncetheproductis
launched.
Analogy:Underthismethod,theproductiscomparedwithsimilarhistoricaldatathatare
available.(alsofornewtotheworldhightechproducts)Notes:newproductisneverexactly
likethattowhichtheanalogyisdrawn.Marketandcompetitiveconditionsmaydiffer
considerablyfromwhentheanalogusproductislaunched.
Judgment:trendforecastingisavisceralthingthatcannotbetrained.Difficulttodefend.
Markettests:usedlargelyfornewconsumerproducts,markettestssuchasexperimental
testmarketsorlivetestmarkets.Livetestsdeclinedbeacauseofhighcosts.
Thecombinationofjudgmentandothermethodsoftenleadstotheuseofeitheroftwoapproaches
todeterminetheultimatenumbers:thechainratiocalculation.(EX.6.3)

RATEOFDIFFUSIONOFINNOVATIONS:anotherperspectiveonforecasting

Diffusionofinnovationtheoryseekstoexplaintheadoptionofaninnovativeproductorserviceover
timeamongagroupofpotentialbuyers.
ThepercentageofpeopleadoptinganewproductovertimeresemblesanScurve.

Theseadoptergroupscanbeconsideredmarketsegments.

Agoodwaytoestimatehowquicklyaninnovationislikelytomovethroughthediffusionprocessis
toconstructachartthatratestheadoptiononthesixkeyfactorsinfluencingadoptionspeed(EX.
6.8)

KEYSTOIMPROVETHECREDEBILITYANDACCURACYOFFORECASTS
Makeexplicittheassumptionsonwhichtheforecastisbased.

Providedatatosupporttheassumptionscanbeobtained.
Usemultiplemethods.Whenforecastsobtainedbydifferentmethodsconvergenearacommon
figure,greaterconfidencecanbeplacedinthatfigure.

SOURCESOFERRORINFORECASTING

Thatmeansaanalyseoftheconsumerneedsisrequired.

Enablecustomerstobuyproduct.Accesstoproductisnever100percent.

CUSTOMERRELATIONSHIPMANAGEMENTANDMARKETKNOWLEDGE
SYSTEMS
Thesesystemslieattheheartofthesystematicpracticeofcustomerrelationshipmanagement
(CRM).Therearefourcommonlyusedmarketknowledgesystemsonwhichcompaniesrelytokeep
pacewithdailydevelopments:
Internalrecordssystems:accountingsystemsgenerallydontcollectdataaboutwhatishot
whatsnot.Marketersneedinternalrecordsystemstotrackwhatisselling,howfast,in
whichlocations,towhichcustomersandsoon.Butwhatconstitutescriticalmarketing
informationvariesfromcompanytocompany(EX.6.10)

MarketingdatabasesmakeCRMpossible:thegoalofmostCRMeffortsistoprofitablywina
growingshareofkeycustomersbusinesswhilefindinglowercostbuteffectivewaysof
servinglessvaluablecustomers.(databasesandcallcenters)

Clientcontactsystems:forcompanieshavinglimitedresources.Toenablethemtobemore
productiveandmoreabletosatisfycustomerneeds.
Competitiveintelligencesystems:systemforgatheringandanalyzinginformationabout
competitorsactivitiesandrelatedbusinesstrends

MARKETINGRESEARCH:AFOUNDATIONFORMARKETINGDECISION
MAKING

Lookaboveforfurtherdescriptionofthesteps.
Step1:Defineasetofresearchobjectivesthatwilldrivetheresearch.
Step2:
Primarydataaregatheredandinterpretedfortheparticularresearchobjectiveat
hand.

Secondarydataalreadyexist.Iftheresearchobjectivecanbemetusingsecondary
data, thatsusuallythebestcoursetofollow.(Quickerandcheaper)

Qualitativedatamayyielddeeperinsightsintoconsumerbehaviorthanareavailable

formquantitativeresearch.Forthisreason,qualitativeresearchisoftenconducted
firstand
usedtoguidesubsequentquantitativeresearch.Animportantdrawbackof
qualitativeresearch, however,isthatisgenerallysmallsamplesmaynotfairlyrepresentthelarger
population.

Quantitativeresearchcollectsdatathatareamenabletostatisticalanalysis.Because
of
theirlargersamplesizesandquantitativemetrics,greaterconfidencecanbeplaced.
Step3:
Determinedatacollectionmethod:mostcommonareobservation,surveyand

experiment.(Surveysinvolvewritingaquestionnaire.)

Determinethecontactmethod:Facetoface,mail,telephone,fax,emailorinternet.
A
significantproblemwithsurveyresearchisthatthosewhochoosenottoparticipatediffer
from thosewhodo.Responseratecanalsobeaproblem.

Designthesamplingplan:ingeneral,thelargerthesamplesize,thesmallerthe
margin
oferror.Randomsampling:everypersonhasanequalchanceofbeingselected.
Nonprobabilitysamples:thesamplemaybebiased.

Step4:Insomecases,whenmaketersconductmarketingresearchthemselves,collectorbiascanbea

problem.

Step5:Thecompeteddataformsmustbeprocessedtoyieldtheinformationtheprojectwas
designed
tocollect.
Step6:Ifnoclearobjectivesareset,reportingcanbedifficult.

WHATUSERSOFMARKETINGRESEARCHSHOULDASK

Chapter7:Targetingattractivemarketsegments

Marketsegmentation&targetmanaging

Marketsegmentation=theprocessbywhichamarketisdividedintodistinctsubsetsof
customerswithsimilarneedsandcharacteristicsthatleadthemtorespondinsimilarways
toaparticularproductofferingandmarketingprogram.

Targetmarketing:requiresevaluatingtherelativeattractivenessofcarioussegmentsin
ordertochoosewhichsegmentsitwillserve.

Brandpositioning:Designingproductofferingsandmarketingprogramsthatvanestablish
anenduringcompetitiveadvantageinthetargetmarketbycreatingauniquebrandimage,
orpositionintheconsumersmind.

Marketingsegmentationhasbecomeincreasinglyimportantbecause:
1.Populationgrowthhasslowed,moreproductmarketsarematuringmoreintense
competitioninexistingmarketsasfirmsseekgrowthviagainsinmarketshareand
encouragescompaniestofindnewmarkets.Astheysearchforfaster0growingmarkets,
theirattentionturnstodevelopingworld:enormousdiversityindemographicprofilesand
marketconditionsmakescarefulmarketsegmentationandtargetingessential.
2.social&economicforcesasexpandingdisposableincomes,highereducationallevels,more
awarenessoftheworldcustomerswithmorevariedandsophisticatedneeds,tastes,etc
thaneverbefore!
3.Increasinglyimportanttrendtowardmicrosegmentationextremelysmallmarket
segmentsaretargetedExample?Seeexhibit7.1
4.Manymarketingorganizationshavemadeiteasiertoimplementsharplytargetingtheir
ownservices.Forexamplemanynewmediahavesprunguptoappealtonarrowinterest
groups:specialinterestmagazines,radiochannelsetc.Andadvertisercantargetspecific
regions,cities,postcodesorevenselectedincomegroups.

Threeimportantstepsinthemarketsegmentationprocess:
1.Identifyahomogeneoussegmentthatdiffersfromothersegments:Theprocessshould
identifyoneormorerelativelyhomogeneousgroupsofprospectivebuyerswithregardto
theirwantsandneedsor/andtheirlikelyresponsestodifferencesintheelementofthe
marketingmix(4Ps!!)
2.Specifycriteriathatdefinethesegment:Criteriashouldmeasureordescribesegments
clearlyenoughmemberscanbeidentified&accessedknowifcustomerisinornotin
targetmarketreachthem!
3.Determinesegmentsize&potentialprioritizewhichsegmentstopursue.Moreinfo

laterinchapter!

Segmentationdecisionsarebestmadeinoneofthreeways:basedon
1.Whothecustomersare
2.Wheretheyare
3.Howtheybehave
Relevanttothemarketinquestion

1.Whotheyare:segmentingdemographically
Attributesofindividualconsumers:
age
sex
Income
occupation
education
Raceandethnicorigin
Demographicdescriptorsarealsoimportantinsegmentationofindustrialmarketstwo
stages
Macrosegmentationdividesmarketaccordingtocharacteristicsofbuyingorganization
usingageoffirm,firmsize&industryaffiliation(SICcodeinUS)
Microsegmentationgroupscustomersbycharacteristicsofindividualswhoinfluencethe
purchasingdecision.age,ex,positionwithintheorganization.
2.Wheretheyare,segmentinggeographically
Geographicsegmentationisusedinconsumerandorganizationalmarketsimportantin
retailingandmanyservicesbusinessescustomersareunwillingtotravelveryfartoobtain
goods/services.Onewaytosegmentretailmarketsdistanceordrivingtimetradearea.
3.Howtheybehave:behavioralsegmentation
consumerneeds:benefitssoughtfromproductorservice,differentneedsetc.
Purchasing=problemsolvingprocess.
Choicecriteria:customersevaluateproductorbrandalternativeonthebasisofdesired
characteristicsandhowvaluablethecharacteristicischoicecriteria.
Lifestyle:segmentsmarketsonbasisofconsumersactivities,interests&opinionswhat
theydoorbelieve.
Selforientation:howconsumerspursueandacquireproducts&servicesthatprovide
satisfactionandshapetheiridentities.

Organizationalbehavioralattributes:
Purchasingstructureisdegreetowhichthepurchasingactivityiscentralized.
Instructure:buyerIslikelytoconsideralltransactionswithgivensupplieronaglobalbasis,
emphasizecostsavingandminimizerisk.
Decentralized:buyerisapttobemoresensitivetousersneedsemphasizeproductquality
andfastdelivery,lesscostconscious.

Innovativesegmentation:Akeytomarketingbreakthroughs:
Inbeginningweidentified3stepsinmarketingsegmentation:
identifyahomogeneoussegmentthatdiffersfromothers
specifycriteriathatdefinethesegment

determinesegmentsizeandpotential

Understandingthedemographicprofileofatargetmarketenablesthemarketertobetter
choosetargetedadvertisingmediaorothermarketingcommunicationvehicles.

Choosingattractivemarketsegments:Afivestepprocess.
Step1:selectmarketattractivenessandcompetitivepositionfactors:
marketattractivenessFactors:(lookbackatchapter3!)assessingtheattractivenessof
marketsormarketsegmentsinvolvesdeterminingthemarketssizeandgrowthrateand
assessingvarioustrends(demographic,sociocultural,economic,politicalet.Thatinfluence
demandinthatmarket.morecriticalfactorindeterminingwhethertoenteranew
marketorsegment,isdegreetowhichunmetcustomerneeds,canbeidentified.
Competitivepositionfactors:(seechapter3!)Understandingtheattractivenessofthe
industryinwhichoncecompetesisalsoimportant.Moreimmediateconcernis:degreeto
whichthefirmsproposedproductentryintothenewmarketorsegmentwillbesufficiently
differentiatedfromcompetitors,giventhecriticalsuccessfactorsandproductlifecycle
conditionsalreadyprevalentinthecategory.
Enteringanewmarketorsegmentwithoutasourceofsustainablecompetitiveadvantageis
atrap!

Step2:WeightEachfactor.
Numericalweightisassignedtoeachfactortoindicateitsrelativeimportanceintheoverall
assessment.

Step3:RateSegmentsonEachFactor,PlotResultsonMatrices.
Evidencebecollectedtoobjectivelyassesseachofthecriteriaidentifiedinstep1.Both
qualitativeandquantitativemarketingresearchresultsaretypicallyusedforthispurpose.
Whenassessmentsmadeplotonamarketattractiveness/competitivepositionmatrix.

Step4:ProjectFuturepositionforEachSegment.
Assessmentforfutureverydifficultconsiderpossibleshiftsinconsumerneedsand
behavior,entry/exitofcompetitors,changesintheirstrategies.Consideralso:changesin
productorprocesstechnology,shiftsineconomicclimate,socialorpoliticaltrendsetcetc.
Theexpectedchangesinbothmarketattractivenessandcompetitivepositioncanthenbe
plottedonthematrixintheformofavectortoreflectdirectionandmagnitudeofexpected
changes.
Step5:ChoosingSegmentstoTarget,AllocateResources
Managersshouldconsideramarketsegmenttobeadesirabletargetonlyifitisstrongly
positiveonatleastoneofthetwodimensions,andatleastmoderatelypositiveonthe
other.

Iflowerthanthat,onlyenterif:managersbeliefattractivenessorcompetitivestrengthis
likelytoimproveoverafewyears,theyseesuchmarketsassteppingstonestoentering
larger,moreattractivemarketsinthefutureorsharedcostsorsynergiesarepresent,
therebybenefitinganotherentry.
NicheMarketStrategy
Servingoneormoresegmentsthat,whilenotthelargest,consistofasufficientnumberof
customersseekingsomewhatspecializedbenefitsfromagoodorservice.Designedtoavoid
directcompetitionwithlargerfirmsthatarepursuingthebiggersegments.
MassMarketStrategy
Canbepursuedintwoways:1.Itcanignoreanysegmentdifferencesanddesignasingle
productandmarketingprogramwhatwillappealtothelargestnumberofconsumers.
Primaryobjectiveistocapturesufficientvolumetogaineconomiesofscaleandacost
advantage.Thisrequiressubstantialresources,productioncapacity,andgoodmass
marketingcapabilities.
2.Designseparateproductsandmarketingprogramsforthedifferingsegments.
Differentiatedmarketing.
GrowthMarketStrategy
Withthisstrategytheyoftentargetoneormorefastgrowingsegments,eventhoughthese
segmentsmaynotcurrentlybeverylarge.Favoredbysmallercompaniestoavoiddirect
confrontationswithlargerfirmswhilebuildingvolumeandshare.Mostventurecapitalfirms
investonlyinfirmspursuinggrowthmarketstrategiesonlywaytoearnthe30to60%
annualratesofreturnoninvestmentthattheyseekforportfoliocompanies.
RequiresstrongR&Dandmarketingcapabitlitiestoidentityanddevelopproductsappealing
tonewlyemergingusersegments,plusresourcestofinancerapidgrowth.
Problem:fastgrowth,attractslargecompetitors.
Globalmarketsegmentation
Traditionalapproach:viewacountryorgroupofcountriesasasinglesegmentcomprisingall
consumers.
NowAttempttoidentifyconsumerswithsimilarneedsandwantsreflectedintheir
behaviorinthemarketplaceinarangeofcountries.Eventuallyscaleeconomies.
Whydocountriesexpandinternationally:
defendtheirhomepositionagainstglobalcompetitors
servicecustomerswhoarealsoengaginginglobalexpansion.

Chapter8:Differentiationandbrandpositioning

Brandpositioning:theplaceabrandoccupiesincustomersmindersrelativetotheirneedsand
competingbrands,andtothemarketersdecisionmakingintendedtocreatesuchaposition.

Brandpositioningisbasicallyconcernedwithdifferentiation.

Thebrandpositioningdecisionisastrategicone,withimplicationsnotonlyforhowthefirmsgoods
orservicesshouldbedesigned,butalsofordevelopingtheotherelementsofthemarketingmix.

InGeneralpeoplebuystuffbecauseitsbetterinsomewayorcheaper.Eithercasetheproductis
almostalwaysdifferentfromothers.

MichealPorter:
Acompanycanoutperformitsrivalsonlyifitcanestablishadifferencethatitcanpreserve.Itmust
delivergreatervaluetocustomersorcreatecomparablevalueatalowercost,orboth

Creatingbothphysicalandperceptualdifferencesiswhateffectivebrandpositioningseeksto
accomplish.

Physicalpositioning:
Onewaytoassessthecurrentpositionofabrandrelativetocompetitorsisonthebasisofhow
variousbrandscompareonsomesetofobjectivephysicalcharacteristics.Primarilytechnicaldata,
somemarketingdata

LimitationsofPhysicalpositioning:
Positioningultimatelyoccursincustomersminds.Customersperceivecharacteristicsdifferentthen
whatthefirmexpects/designs,becauseofsocialorpsychologicalattributes.

Perceptualpositioning:
Manycustomersdonotcareaboutaproductsphysicalcharacteristicsbutthebenefitstheyprovide.
AlsotheevaluationofmanygoodsandissubjectivebecauseItisinfluencedbyfactorotherthan
physicalpropertiesincludingthewayproductsarepresented,ourpastexperienceswiththemand
theopinionsofothers.

Leversmarketerscanusetoestablishbrandpositioning:
Marketersendowtheirbrandwithvariouskindsofattributes:
Simplephysicallybasedattributes:quality,powersize
Complexphysicallybasedattributes:compositeattributestoevaluatecompetitiveoffers.For
example.Speedofacomputer,roominessofacar,productuserfriendliness.Mostly
subjective
Essentiallyabstractattributes:sexinessofperfume,qualityofFrenchwine,prestigeofacar.
Highlysubjective
Price:mayimplyotherattributessuchashighorlowquality.

Importanceofperceptualattributeswiththeirsubjectivecomponentvariesacrosscostumersand
productclasses.Perceptualpositioningmostlyforconsumergoods,physicalforindustrygoods.As
physicalattributesaregrowingmoresimilarperceptualattributesplayabiggerrole.

Step1:Identifyarelevantsetofcompetitiveproducts
Atthecompanyorbusinessunitlevelapositionanalysisisusefultodeterminehowanentire
companyorbusinessunitispositionedrelativetoitscompetitors.
Apositioninganalysisattheproductorbrandlevelcanbehelpfultobetterunderstandhowvarious
brandsappealtocustomers,topositionproposednewproductsorbrandsorrepositioncurrent
ones,andtoidentifywherenewcompetitiveopportunitiesmightbefound.
Marketerswhoomitimportantsubstituteproductsorpotentialcompetitorsriskbeingblindsidedby
unforeseencompetition

Step2:identifydeterminantattributes
Differentkindsofattributes:
Features:queitdishwasher,1clickorderingsystem
Benefits:safety,reliability
Parentage:whomakesitandpriorproducts
Manufacturingprocess:veeltijdergensingestokenbijv.
Ingredients:100%katoen
Endorsements:aangeradendoorprofessionalsofgebruiksexperts.
Comparison:withotherproducts
Proenvironment:
Price/quality

Thenumberofattributesacustomerevaluatesaproductonisverysmall.Themorevariablesusedin
positioningabrand,thegreaterthechanceofconfusionandevendisbeliefonthepartofthe
customer.
Animportantattributemaynotgreatlyinfluenceaconsumerspreferenceifallthealternativebrands
areperceivedtobeaboutequalonthatdimension.
Marketersshouldfocusprimarilyondetermentattributes.

Step3:collectdataaboutcustomersperceptionsforbrandsinthecompetitiveset
Themarketerneedstoknowwhatattributesaredeterment.Thisisresearchedbyfirstconducting
qualityresearch:interviews/focusgroups,andthenquantitativeresearch:surveys.

Step4:Analyzethecurrentpositionsofbrandsinthecompetitiveset
Todevelopaclearunderstandingofthepositioningoftheexistingbrandsinthecompetitiveset2
toolscanbeused.Determiningtheattributesonwhichthebrandspositioningwillbebasedisakey
outcomeofthepositioningprocessandadriverofthemarketingcommunicationstrategy.

Positioninggrid:

Only2dimensions

Valuecurve:

Moredimensionspossible.
Sometimescompaniesfocusmoreon1attributeandlessontheothersorviceversa.

Marketingoppurtunitiestogainadistinctposition:

Alseralveelconcurentieisineengebiedishetbeteromjedaarnietmeetebemoeienmaareen
marketsegmenttezoekendienognietgedomineerdword(dOh).Hoewelbedrijvenmoetenzoeken
naareenuniekeenintensepositievoorhunmerken,moetenzeniettevervanhuneigenleer
afgaan.(dOh)

Limitationsofproductpositionsanalysis:
Hoewelerstaathoedeproductenvanelkaarafstaan,staaternietwaterfijnwordtgevondenvoor
dekopers.

Step5:Determinecustomersmostpreferredcombinationofattributes
Vershillendetechniekenmogelijk:
Surveys,conjointanalysis.Komtneeropvragenstellenwatmensengoedvindeneninwelkemate.

Dewittecirkelisdegemiddeldebesteplekomtegaanzitten.

Geldisvaaknieteengoededimentievoordepostioninggridstenzijheteenkeydriverisvande
marketingstrategy.Teneersteomdatprijsmakkelijkconcureerbaaris.Tentweedealsdeprijslaagis
geeftditdeimpressiedathetbedrijfooknietheelgeloofwaardigis.

Step6:considerfitofpossiblepositionswithcustomerneedsandsegmentattractiveness
Animportantcriterionfordefiningmarketsegmentsisthedifferenceinthebenefitssoughtby
differentcustomers.Helestukjekomtneeropdaterverschillendemensenmetverschillende
behoefteszijn.Wanneernaardeconcentratievanwaardeconcurrentiealzitgekekenwordtkunnen
verschillendedingengeleerdworden:thecompetitivestrengthofthedifferentbrandsindifferent
segments,intensityoftherivalrybetweenbrandsandtheopportunitiesforgainingadifferentiated
positionwithinaspecifictargetsegment

Step7:Writepositioningstatementorvaluepropositiontoguidedevelopmentofmarketing
strategy

Thefinaldecisionaboutwheretopositionanewbrandorrepositionanexistingoneshouldbebased
onboththemarkettargetinganalysis(hst7)andtheresultsofamarketpositioninganalysis.The
positionchosenshouldmatchthepreferencesofaparticularmarketsegmentandshouldtakeinto
accountthecurrentpositionsofcompetingbrands.Itshouldalsoreflectthecurrentandfuture
attractivenessofthetargetmarket,andstrengthsandweaknessesofcompetitors.
Mostsuccessfulproductsarepositionedbasedononeortwodeterminantattributes.(physicalof
perceptual)

Nowitsnecessarytowriteapositioningstatementorvalueproposition.
positioningstatement:hierinstaatinwelkemarkthetproductkomt,decategoriehetinconcureerd
enhetuniquevoordeelvanhetproduct.
Valueproposition:hetzelfdemaardanmetdeprijstenopzichtevanconcurenten.

Thesestatementsgenerallyreflectauniquesellingproposition(USP).Inthissensetheyreflectthe
basisonwhichthemarketerintendstowinsustainablecompetitiveadvantagebydifferentiatingthe
productformothersinitscompetitivespace.

Typischevalueproposition:
Targetmarket
Benefitsoffered
Pricerange(relativetoothers)

Hierinzijndebenefitsbelangrijkerdandefeatures.Dithelegebeurengeeftinformatieaaniedereen
diebetrokkenisbijhetproduct.Dereclamemakers,winkelsvoorprijzenetc.

Uitkomstvanditalles:
Brandequity:hoecustomerstegenhetmerkaankijken/voelen/denkenetc.
Hetisbelangrijkomjemerktemaintainenentelatengroeien:brandreinforcmentandbrand
revitalization.

Enowjahetisnatuurlijkallemaalheelmoeilijkomditgoedtedoenzelfsvoormensendieindeze
businesswerken

Dansluitenzenoghethstafdoortezeggendathetnietaltijdzoisdatdecustomersnaariets
unieks/gedifferentierdszoektmaarookvaaknaarhetvertrouwdenormale.
Ookishethetbelangrijkstomopdebenefitstefocussenookinreclamemaarditkanvaakniet
andersdandoorookdefeaturestemelden

Chapter 9: Business Strategies: A foundation for marketing

programdecisions
Detabellenvandithoofdstukbevattenzonbeetjealleinformatie.Leesdezedusgoed.

AcompanyisorganizedintoalargenumberofStrategicBusinessUnitsorSBUs.

Strategicfit:Goodinternalandexternalconsistencyofthestrategiesofthemarketoppurtunities,
technologicaladvancesandcompetitivethreatsinthecompanysexternalenvironment.

Whenthereisagoodfitbetweenabusinesscompetitivestrategyandthestrategicmarketing
programsofitsvariousproductorserviceofferings,thebusinesswillachievebetterresults.

Businessstrategiesareprimarilyconcernedwithallocatingresourcesacrossfunctionalactivitiesand
productmarketstogivethe/aSBUasustainableadvantageoveritscompetitors.

GenericBusinesslevelcompetitivestrategies
RobertMilesandCharlesSnowidentifiedanothersetofbusinessstrategies,differentthanPorters.

Spreektvoorzichlijktme,welevengoeddoornemen.
Aldezestrategienwerkenvoorbedrijvendieproductenleveren,maarookvoorservices.
Vliegtuigmaatschappijenbv.


Spreektookwelvoorzichlijktme.
Reactorwordtnietbesprokenomdatdateenstrategieisdiegeencompetatievestrategiehebben
maarslechts,jajeraadthetal,reageren
Prospectorwordtookals1genomenomdatditeenstrategieisdiealleengaanvoornieuwe
productenenmarktenennietverderingaanophoehetopdemarktligt.

Costleadership:zolaagmogelijkeproductiekosten,transportkosten,materiaalkostenetc.zodatook
hetproductgoedkoopverkochtkanworden
Differentation:uniekzijnenhierdoorklantenwinnenen/ofhouden.D.m.v.goedeservice,
customisabledingen,kwaliteitsproducten,netevenanderszijn,klantenbinding.Prijzenmogen
hogerliggen.

Dezestrategienzijnzowelbruikbaarvoorgrotealskleinebedrijven.zolangdecompetetivestrategy
aangepastisopderesourcesdiezehebbenenzeeensustainableadvantagekunnenhouden
daarmee.

Eris1belangrijkverschilendatisdatbijkleinebedrijvendebusinesslevelcompetetivestrategyand
marketingstrategysamengaan(tendtoblurtogether)enbijgrotebedrijvenkanditechtniet.

Nogeenverschilisdatdemeesteentrepreneursnietderesourceshebbenomalsgelijkwaardig
competitoropdemarkttekomen,daaromishungrootstekansvansuccesomalsprospectorte
beginnen.

Voorhetzelfdeproductkanineenanderlandeentotaalanderestrategienodigzijn

Hetinternetzorgtervoordaterveelvergelijkingssiteszijnvoorproducten.Hetwordtdusmoeilijker
voorbedrijvenomzichtedifferentirenopbasisvanlageprijzen.Maaralseenbedrijfandere
uniekenservicesofgoederenlevertisditgeenprobleemenwordternietgeheelnaarprijsgekenen.
Hetinternetzorgterookvoordatbedrijvenmakkelijkerkunnencustomizenendaarmee
persoonlijkererelatiesmethunklantenkunnenkrijgen.


Allestrategienberustenopvijfcomponentenofdimensies:
Scope(breadthofdomain),goalsandobjectives,resourcedeployments,abasisforachievinga
sustainablecompetitiveadvantageandsynergy.(Hst2)

Nogmaalsneemditgoeddoor.
Scopespreektvoorzichlijktme.Gaatoverdebreedtevanhetdomein.

Goalsandobjectives:optesplitsenin3criteria:
Effectiveness:successofabusinessproductsrelativetothecompetition.Measuredbysales
growth,changesinmarketshare
Efficiency:outcomesofabusinessprogramrelativetotheresourcesusedimplementing
them.Measuredbyprofitability,returnofinvestment(ROI)
Adaptability:businesssuccessinrespondingovertimetochangingconditionsand
opportunities.Measuredbynumberofsuccessfulnewproducts,percentageofsales
accountedforbynew(5yearold)products
Nietallepuntenkunnengoednageleefdworden,veelopdeeenbetekentopgevenopeenander.

Resourcedeployments:spreektookwelvoorzich.Prospectorsstoppenveelgeldenresourcesin
nieuweproductenenmarktendiekunnenfloppenofheelwinstgevendzijn.Defendershebbenaleen
stabielemarktendoorweinigonkostenkomtergoedgeldbinnen.Grotebedrijvenhebbenaltijdiig
eenbasisvancashcows(defenders),dienieuweSBUsquestionMarksorrisingstars(prospectors)
kunnensponseren.

Synergy:idem.
Defendersdelen:resources,facilitiesandfunctionalactivaties.
Prospectorsdelentechnologie,engineeringskillsormarketknowledge.


BusinessstrategiesvsEnvironment.


AppropriateconditionsforaProspectorstrategy
Prospectorwellsuitedinunstablerapidchangingenvironments,shiftingcustomerneeds,no
competitors.Zietabel.

AppropriateconditionsforaAnalyzerstrategy
.Dezestrategyisgoedvoorontwikkeldemarktendienogsteedsgroeienveranderingmeemaken
doorcustomerneedsanddesiresenontwikkelingindetechnologie.

AppropriateconditionsforaDefenderstrategy
Alleenalserietswaardisomteverdedigenenaleengrootdeelvandemarktinbezitis.Werkthet
besteinenvironmentswaardetechnieksimpelisennietgaatveranderenopdekortetermijn.
Differentiateddefender:moetsterkblijvenindegebiedenwaarzeeensustainableadvantage
hebben.Superiorproductqualityhasastrongimpactonabusinessreturnofinvestments.
Lowcostdefenders:zoefficintmogelijkzijn,dingenstandaardiseren.Samenwerkenmet
toeleveringsbedrijvenwerktookgoed.

TheSBUsstrategyinfluencestheamountofresourcescommittedtomarketingandultimatelythe
budget.

Alleswordteigenlijkalinhettabeluitgelegd.Deminnenwordenvooralveroorzaaktdoordatdeze
puntenstrokenmetdebusinessstrategyalseenlowcostdefendermeerservicewilgevenzaler
daarmeergeldnaartoemoetenwaardoorerbijdeproductieweermindergeldisendeproducten
dusuiteindelijkduurderworden.
Devraagtekenzijntwijfelgevallen.Ookverschilthetnogaleensperproductofserviceofdateenplus
ofminzoumoetenzijn.Hetiseenvrijlogischtabeleigenlijk.

Whatifthebestmarketingprogramforaproductdoesnotfitthebusinesscompetetivestrategy?
AlseenSBUgefocustisopslechtseenproductcategorieoftechnischdomein,kandezehetbest
switchenvanstrategie.Alsdemarktmeervolwassenwordtvanprospectoranalyzerdefender.
Omdatnuallesmoetveranderenisdezeovergangvaaklastig.
VeelbedrijvendoenditdanooknietmaarvormeneennieuweSBUdiedezetaakoverneemtzodat
deoudeweerverderkanmetbijv.eennieuwidee.
Veelsuccesvolleentrepreneurssplitsenzichdanookuiteindelijk.eengaatverdermethetsuccesvolle
ideealsanalyzerofdefender,deandergaatweernieuwedingenbedenken.
Demarktisaltijdinbewegingenermoetdusaltijdgoedgekekenwordennaarnieuwe
ontwikkelingenzijnenermoetopgereageerdworden.BvdooreennieuweofveranderdeSBUdus.

Chapter10:Productdecisions
This chapter is about the first of the four Ps: Product decisions. This to differentiate the
productyouwanttoofferformthoseofyourcompetitors.

Aproductisanythingthatsatisfiesawantorneedthroughuse,consumptionoracquisition.

Difference between product features and benefits; Features are tangible or intangible
attributes given the products by its designers. Benefits are the solutions to customer
problemsorneedsdeliveredbytheproduct.Sotalkingaboutproduct,wemeanbothgoods
andservices.Formarketers,alltheshellsofthepictureareimportant.

Position statement tells the designers what benefits are to be delivered, so designers can
imbue the product with the necessary features. It also tells how the product should be
differentiatedformotherproducts.

Brandingdecisions
Abrandnamecanbevocalized(Philips,Sonyenz).Abrandmarkissomethingthatcannot
bevocalized;asymbol,designoruniquepackaging(RedBullblikje).ATrademarkissimplya
brandorsomepartofabrandthatlegallybelongsexclusivelytoagivenseller.

Brandingbenefitssellersbyenhancing;

Theeffectivenessoftheirmarketingprograms.

Brandloyalty

Theopportunitiesforsuccessfullylaunchingbrandextensions

Pricesandmarginsresultingfromacompetitiveadvantage

Channelrelationships
Brandequitypositionconsistsoffourcategories:
1. Brandnameawareness
2. Brandloyalty
3. Perceivedquality
4. Brandassociation

Brandingstrategies
Adecisioncouldbetouseindividualbranding;thenyoubrandtheproductonitsownorin
a product line. Individual branding reduces a companys risk that a failure is not readily
associatedwiththefirmsotherproducts.Further,itenablesafirmtocompeteviamultiple
entrieswithinthesameproductclass.Familybrandingusesthesamebrandnametocovera
groupofproductsorproductlines.Itreducesthecostsandtransferofcustomersatisfaction
fromoneproducttoanother.Itcanalsoincreasetheimpactofshelffacinginstores.Family
brandingisnotagoodideaifitcoversproductsfromdifferentqualities,consumerscanget
confused about what quality to expect. Then there is cobranding where two companies
cometogether(HaagenDazssBaileysIrishCream)

Corporateidentitytogetherwithastrongbrandnamecanhelpafirmtostandoutfromits
competitors and give it a sustainable advantage. Corporate identity flows from the
communications,impressionsandpersonalityprojectedbyanorganization.

Packagingdecisions
Packaging is a great marketing, as more consumers see the packaging then an
advertisement.

Servicesdecisionsandwarranties
Servicescouldbe;
- Deliveryreliability
- Warranty
- Repairandmaintenance
- Efficienthandlingofcomplaintsandreturns
- Creditavailability
- Promptinquirieshandling
- Buyerpersonneltraining
- Promptclaimsettlement
- Fastpricequotations
- Fastorderprocessing
Service and quality are connected; the more service, the higher the quality is rated.
Warrantiesassurepeoplethattheirproductisgood,quality.

Managingproductlinesforcustomerappealandprofitperformance
Theproductlineshouldbecarefullychosen.Ifyoustartanewproductmarket,youwantto
start with a small line thats easy to manage. But you may want to expend the line to be
aheadofcompetitorsthatcouldcomeupwithmorespecializedproducts.Abalanceshould
be found! Other product line decisions are; Line filling, line stretching, line extension and
productabandonment.

Linefilling

Thisstrategylengthenstheproductlinebyaddingitemswithinthepresentrangetosatisfy
alconsumers.Athreatisthatthelinecangettoolong.

Linestretching
Thisstrategylengthenstheproductlinebeyonditscurrent(price)range.Gettingupcanbe
hard as the consumers could think the company is not able to produce better quality,
stretchingdownismostlyeasiertoservethelowerpricemarket.

Lineextensions
Thisstrategyconsistofintroducingnewproductsthatdifferfromthoseintheexistingline
morethanjustsizeandprice.(likeaforkidsversion,GARDENAYOUNGRULES!!)

Brandextensions
Brandextensionsusesabrandnameofoneproductclasstoenteranewproductclass,so
thenamewillberecognized.Ofcoursethiscouldalsoworkouttheoppositeway.

Droppingproducts
Legt uit dat bedrijven hun productlijnen wel moeten blijven bekijken. Als een product niet
verkochtword,kanhetimmersnetzogoeduitproductiewordengehaald.

Productsystems
Offering a product system (more than one product like a airfare, hotel, rental car) could
benefitacompany,aslongasthedifferentsystemsoftheproductarecompatible.

Newproductdevelopmentprocessdecisions
Newproductscanbeahugeopportunitytogrowacompany.Therearefourclassesofnew
products; New to the world, new to the firm, productline extensions and product
improvements.Newtotheworldideasaremostofthetimeafailure,butitisveryhardto
getaclearpictureofwhattheconsumerswant,astheydonsknowthenewmarketyet.

Cocreation is a way for new product development where the customers are brought into
the development process. They create a platform where they can make new products
(facebookapps,iphoneapps).

Anothercustomerdrivenapproachiscollectivecustomercommitment.Herecustomersare
askedforpurchasecommitmentsbeforegoingintoproduction.

Mostinnovationstakeplaceinthecompanyitself.Ahugeadvantagecanbetoreducetime
tomarkettime,especiallyinfastchangingproductranges.

Thekeydecisionsintheproduct,developmentprocess.

Adevelopmentprocessisthestagegatesystemasshowninthediagram.Thegoalofthis
stage gate system is to kill ideas that lack strategic or market potential before money is
spent.

Firstmoveradvantage;deeerstezijndieeennieuwemarktbetreed.
Hetstagegatesystemwordtgedaanmeteenmultidisciplinairteammeteengatekeeper,die
naelkestagebepaaldofeenideewelofnietverderontwikkeldmagworden.

Gate1;Ideagenerationandinitialscreeningdecisions.
The company has to have objectives for the product as a guideline. Ideas could come
anywhere,customers,R&D,marketing,distributionchannels.Forgateone,theideahasto
have a strategic fit. Does it fit in the companys mission? Strengthen competences?
Recoursesavailable?No?Thantheideawouldprobablyberejected.

Gate2;Secondaryscreeningdecisions
Managers aretypicallyaskedtoundertakeassessmentsoftheideastechnicalandmarket
feasibility.Couldbedoneinthediagrambelow.Productthatpassthisstagearelikelytogo
furtherinmarketresearchandproductdevelopmentsoweakideasshouldbedismissedin

this

stage.

Gate3;Decisionsonthebusinesscase
More detailed research is done in market potential. Last chance to step out before
developmentoftheproductandthemarketingplanaremade.

Gate4;Postdevelopmentreviewdecisions
Inthisstagethetechnologicaldevelopmentproceedsandamarketingplanincludingatotal
product/service offering is developed. Prices, brand name, packaging, marketing
communicationprogramandchannelsaredetermined.

Gate5;precommercializationbusinessanalysesdecisions.
Atestmarkethastobedone.Twokindsoftestmarkets;fieldandlaboratorytestmarkets.
Small companies that do not have the money for these kind of test simply begin the
marketingoftheproductandseehowtheconsumersreact.Newnowadaysisstartingtosell
theproductinlimitededitionsthrutheinternet.

Fieldtestmarket

Here the product is introduced in a small area, so the results can be a prediction for the
bigger audience. A huge disadvantage is that the competitors can use the results and be
quickerinintroducingacompetitiveproductonabiggermarket.Thatiswhylaboratorytest
areusedmore.

Laboratorytestmarket
Hasthreesteps;awareness,trialandrepeatbuying.Customersareforinstanceshownatv
programwithcommercialoftheproductandsendintoasimulatedstoretoseeiftheybuy
theproduct.Iftheydothewillbefollowedtoexaminethesatisfaction.Itisacheapwayto
dothetest,butgivenoinformationaboutthedifficultiesinthedistribution.

Stage5;Commercializationdecisions
Theroleofcommercializationiscritical,asthemarketingisresponsibleformakingthenew
productavailable,developingawareness,inducingtrialandfosteringrepeatpurchases.

Productdecisionsovertheproductlifecycle
Theproductlifecyclehasfivestages
1. Introduction(notmanybuyersdueignoranceoftheproduct)
I. Productlineshouldberelativelyshorttoreduceproductioncostsandhold
downinventories.Focusoncompetitiveadvantage.
II. Pricingisaffectedbyvaluetoenduser,howeasyitistoimitate,effectprice
onvolumeofproduction.Basicchoicesareskimmingorpenetration.
Skimmingobtainsasmuchmarginperunitaspossible.Thisenablestoearn
investmentsbackasquickaspossible.Thisisappropriateinnichemarkets.
Penetrationpricingenablesthefirmtostriveforquickmarketdevelopment
andmakessensewhenthereisasteepexperiencecurve,whichlowercosts;
alargemarketandstrongpotentialcompetition.
III. Place;especiallyimportantforconsumergoods,astheyshouldbeableto
buytheproducteasily.
IV. Promotion;Thecostsinthisstagearehigh,astheadvertisementsstartsin
thisstage.Forindustrialgoodthecostsarehighforpersonalselling.
2. Growth
I. Productlineshouldbeexpandedtoattractnewmarketsegments.
II. Pricestendtodeclinetostimulategrowth
III. Promotionfocusesmoreonbuildingdemandforacompanysbrand.Costs
forpromotionremainhigh.
3. Shakeout(Endofthegrowthstage,decreasinggrowthrate)
I. Inadditiontoentermoreintodirectpricecompetition,firmsmakeevery
efforttomaintainandenhancetheirdistributionsystem.
II. Promotioncostsmayincrease.
4. Maturity(Whenthesalesstaysteadily)
I. Prijsenpromotieblijvenhetzelfdeindezefase.Welkanergedachtworden
overuitbreidingvanhetproductofhetwellichtverkopenvaneensysteem.
5. Decline(Whenthesalesdropdown,theproductsshouldbetakenoutofthe
shelves.)

Chapter11:Pricingdecisions
Thischapterisabouthowamarketercandetermineapricethatcapturesafairshareofthe
value customers receive from a product without violating the constrains imposed by its
strategicobjectives,coststructureandcompetitiveenvironment.Theflooroftherangeof
feasible prices is what comes from the companies costs, the ceiling from the customers
demand. Situational factors important when setting a product price are: business strategy
and other components of marketing mix, outstandingness of product compared to
competitors,competitorscosts/pricesandavailability/costs/pricesofsubstitutes.
The strategic pricing objective should reflect what the firm hopes to accomplish with the
productinitstargetmarket.Thedifferentpricingobjectivesare:
Maximisesalesgrowthandpenetration
Most appropriate when productmarked is in introductory stage. Firm is early entrant,
targetcustomersarepricesensitive,firmhadalowcostpositionandpursuesalowcost
businessstrategy.
Companysetsarelativelylowprice,slightlyabovecosts.Penetrationisaimedatwinning
newcustomers,expandingdemandandcapturingaslargeamarketshareaspossible.
Maintainqualityorservicedifferentiation
Mostappropriatewhenproductmarketisinmaturitystage.Firmsofferingisperceived
tohavequality/serviceadvantageovercompetitors.Firmdoesextensiveadvertisingand
hashighcosts.Firmispursuingdiffererentiateddefenderstrategywithpriceinsensitive
customers.
Companysetsrelativelyhighpricetocovercostsandreinforceprestigeimage.
Maximisecurrentprofit:skimming
Product is in early life stage, firm is first market entrant and pursues a prospector
strategy.Firmhaslimitedcapacity,butadvancedtechnology.
Set price high to appeal only most priceinsensitive customers. When market matures,
firmcanreducepriceorwithdrawfrommarket.
Maximisecurrentprofit:harvesting
Productmarketisinmaturity/declinestageandfirmpursuesadifferentiateddefender
strategy.Noplanstosustainproductdemandandproductiscashcowfundinggrowthin
othermarkets.
Companymustsetpricetomaintainmarginsandmaximiseprofit.
Survival
Firms product has a weak competitive position, firm must buy time and maintain cash
flowtomakeadjustments.Productmarketisingrowth/maturitystage.
Reducepriceaslongasitcoversvariablecosts.
Socialobjectives
Firmisanotforprofitorganisation,costsaresubsidized.
Companymustsetalowprice,perhapsbelowcosts,tostimulatedemand.

Abuyerswillingnesstopayagivenpriceforaproductisinfluencedbytheirperceptionsand
preferences. The price, availability and attractiveness of alternative brands and substitute
products affect the willingness to pay the product too. Finally, the size of their incomes
relativetothepriceinfluencescustomersabilitytopayforatheproduct.
The price elasticity of demand is the percent change in quantity demand divided by the
percentchangeinprice.Itshowsthepricesensitivityofaproduct.Aproductispriceelastic
whenthepriceelasticityissmallerthan 1,itspriceinelasticwhenitsbetween0and1.
Withapriceelasticityof1,aproductisunitary.
Costs take two forms: fixed (or overhead, constant in the short term. Fixed costs per unit
decreaseswhenmoreunitsareproduced),orvariable(costsperunit,staysthesameevenif
moreunitsareproduced)costs.Marketingmixcostsmayincludefixedandvariablecosts,
but also costs for retailers and distributors etc. Because measuring costs can be hard,
companiesoftendevelopsystemsforfinancialreporting,likeactivitybasedcostingsystems.
There are relations between cost and volume, the first relationship involves economies of
scale:intheshortrun,itresultsinmorecompleteuseofavailablecapacity.Inthelongrun,
companies can gain further economies by constructing larger and more efficient facilities.
Thesecondrelationshipinvolvestheexperiencecurve:thefallinproductionandmarketing
costsperunitasafirmgainsaccumulatedexperience.
To measure competitors costs, it can be necessary to do reverse engineering and find out
the price of used materials, packing and production costs. Services and labour costs, are
usuallyfixed,solookingatthenumberofemployeesgivesagoodestimate.
Methods managers can use to determine an appropriate price level are costoriented,
competitionorientedanddemand/customerorientedpricing:
Costorientedmethods
Addastandardmarkuptothecostoftheproduct(costplus/markuppricing).Oftenused
whenhundredsofpricingdecisionsayearmustbemade.Themarkuppriceis
determinedbytakingthecostsperunitanddividingitby1minusthedesiredpercent
markuponretail.Thishowever,ignoresthepricesensitivityofdemand.
Rateofreturnortargetreturnpricingissimilartomarkuppricingbutbringsonemore
costelementintothepricingdecision:thecostofcapitaltiedupinproducingand
distributingtheproduct.Theobjectiveistosetapriceyieldingatargetrateofreturnon
investments.Thepricecanbedeterminedbytakingthedesiredpercentreturntimesthe
capitalinvestedintheproductanddivideisbyunitsales.
Abreakevenanalysiscanexaminetheimpactofvariationsinvolume.Thebreakeven
volume(wheretotalcostsmeettotalrevenue)canbedeterminedbytakingthefixed
costsanddivideitbythepriceminusthevariablecosts.
Competitionorientedmethods
Firms pursuing a method like these, dont ignore cost or return on investments
considerations. Instead they try to control costs to make adequate returns at prices
consistentwiththoseofcompetitors.

Goingrateorcompetitiveparitypricingtriestomaintainpricesequaltothoseofoneor
moremajorcompetitors(commonforoligopolisticindustrieswithlittleproduct
differentiation).Nofirmscanincreaseitspriceswithoutsomeassuranceotherwill
follow.Pricesareusuallystable.
Ifquality/service/availabilityvariesacrossbrands,afirmwillbaseitspriceonthe
competitorsbutslightlyhigherorlower(discount/premiumpricepolicies).Thispolicy
isalsoonlysustainableifthefirmcanmaintainatotalcostadvantageoverits
competitors.
Scaledbiddingiswhenyourequestabidonaproductwithouttheopportunityto
changeit.

Customerorientedmethods
Pricingtocapturethevalueperceivedbythecustomer.
Valueinuse,isaboutestimatingtheincrementalbenefitacustomerreceiveswhen
usingtheproductofthecompanyinsteadofthereferenceproduct(whichwiththetests
weredone).Thedifferencebetweenthevalueperceivedandthemanufactoriesmarginal
costsdefinestherangeofpossibleprices.
Insomeproductcategories,consumersexpectasinglecustomarypricefortheproduct.
Priceliningissettingdifferentpricesfordifferentproductvariationswithrespectto
certainpricepointsorlevels(e.g.20,,25,and30,).
Psychologicalpricingispricinghighforstatusordoingoddpricingwhereyousellstuff
for29,99insteadof30,.
Promotionalpricingisforexamplesale:sellingforareducedpriceforalimitedtime.
A price structure adapts the price to variations in costs and demand across geographic
territories,nationalboundaries,typesofcustomersanditemswithintheproductline.
Geographic pricing adjustments include FOB origin pricing where the customer pays the
freight charges (verzendkosten). Freight absorption pricing is the opposite (seller pays
all/part of the freight charges). Uniform delivered pricing costs every customer the same
amountoffreightcharges.
Globally,whentransportingbetweencountries,managerscanuseFOBtoo,ordelegatethe
task of charging to the local managers. Countertrade is trading stuff for stuff without
involvementofmoney.
Acoupleofdiscountandallowancesmethodsforcompaniestoretailersare:tradediscount
and quantity discount (reduction of regular price for purchases of large quantities), cash
discounts(pricereductionwhencustomerspayquick),allowances(e.g.moreshelfspace),
priceoffpromotions(temporaryreductionofproductsprice),coupons/rebates/refunds.
Differential pricing occurs when a company sells a product for two or more prices not
determinedbydifferentcosts.Somefactorsaffectingdifferentialpricing:time(e.g.movies
moreexpensiveinweekends),location(e.g.firstrowmoreexpensiveinatheatre),customer
segment (e.g. lower price arts organisations for seniors). It is not always possible to set

different prices, first there have to be different pricesensitiveness in customer segments.

Second,thecustomersegmentsmustbedifferent.Pricedifferentiationisnotalwayslegal.
Inaproductline,pricesmustbedeterminedsimultaneously,takingintoaccountthecross
elasticity (percent change in sales by one product induced by percent change of other
product).Thiselasticityisdifficulttodetermine,somanagersoftenchangetheirpricesuntil
thepricesoftherelatedgoodsseemreasonable.

Chapter12:DistributionChannelDecisions
Aneffectivedistributionchannelmakestherightquantitiesoftherightproductavailablein
therightplaceattherighttimetosatisfythetargetcustomer.

Channeldesigndecisions:developingachannelstructurethatlinksthefirmsmarketing
strategywiththeneedsofitstargetmarket.
Channelmanagementdecisions:developmentofpoliciesandprocedurestogainand
maintainthecooperationof(andoftentoformmutuallybeneficiallongtermrelationships
with)thevariousinstitutionswithinthechannel.
Whydomultiformmarketingchannelsexist?
(see1stchapter)someonemustperformanumberofmarketingfunctionsoractivities
beforeaproducerandacustomercanexchangegoodsorservicesetcetc.Mostgoodsare
distributedthroughsystemsconsistingofavarietyofmiddlemensuchasretailers
wholesalersandagents.Amarketingchannelisthesetofindependentorganizations
involvedintheprocessofmakingaproductorserviceavailableforconsumptionoruseby
consumersorindustrialusers.
Manyservicesaredistributedthroughmarketingchannelstoo.

Designingdistributionchannels:Whataretheobjectivestobeaccomplished?
increasetheavailabilityofthegoodorservicetopotentialcustomers
satisfycustomerrequirementsbyprovidinghighlevelsofservice
ensurepromotionaleffort
obtaintimelyanddetailedmarketinformation
increasecosteffectiveness
maintainflexibility

Productavailability:
Mostimportantobjective:makeproductconvenientlyavailableforcustomers.
Coverageofrelevantretailersmeasuredin:ACVallcommodityvolume.

Meetingcustomersservicerequirements:
Particularlycrucialobjectiveforanalyzeranddefenderbusinessesattemptingto
differentiatethemselvesfromcompetitiorsononeormoreservicedimensions.Service
requirementsmightmetargetedinclude:
ordercycletime
dependability,whichrelatestothereliabilityofdelivery.Probmostimportantelementof
distributionservice.
commuciation
convenience,flexibletoaccommodatespecialneedsofcustomer
postsaleservices


PromotionalEffort
Obtainstrongpromotionalsupportfromchannelmembersforthefirmsproduct,useoflical
media,instoredisplays,cooperationinspecialpromotionevents.
Broadretailersupportforinstorepromotionsisparticularlyimportantforlowinvolvement,
conveniencegoods.
Strongsellingsupportisimportantwhen:firmsaremarketingtechnicallycomplexand
expensiveconsumerdurablesorindustrialgoods,themarketishighlycompetetitve,or
differentiateddefenderistryingtosustainacompetetitveadvantagebasedonsuperior
productqualityorcustomerservice.
ZieExhibit12.2allemaalergduidelijkdusnietechtveeltoegevoegdewaardeomdeze
poepteksttetypen:Pwegaanverderbijblz315!Gezelligdatjulliemeelezen!

Designingdistributionchannels:whatkindsofinstitutionsmightbeincluded?
4broadcategoriesofinstitutionsthatamanagermightdecidetoincludeinthedirstribution
channel:
merchantwholesalers
agentmiddlemen
retailers
facilitatingagencies

Zieexhibit12.3(roelikhoopdatjehetboekhebtgekocht:P)vooruitlegvanbovenstaande
mensjes.(Blz315!)
Manufacturersagentsormanufacturersreps
Usuallyworkforseveralmanufacturers,carrynoncompetetitve,complementary
merchandiseinanexclusiveterritory,andconcentrateonlyonsellingfuction.Important
whereamanufacturerssalesarenotsufficienttosupportacompanysalespersonina
particularterritory.Commoninindustrialequipments,automotivesupply,footwearandtoy
industries.

SalesAgents
incontrasttheyonlyrepresent1manufacturerandareresponsibleforthefullrangeof
marketingactivitiesneededbythatproducer.
primarilyusedbysmallfirmsorstartupswithlimitedmarketingcapabilities.Commonin
electronics,apparel,andhomefurnishingindustries.

Brokers
Independentfirmswithpurposetobringbuyersandsellerstogetherforanexchange.
Producersofseasonalproductssuchasfruitsandvegetablesandrealestateusebrokers.


EHubs
Emergingformsofbusinesstobusinessinternetsitesservethesamemajorfunctionas
brokers,andarealsousuallycompensatedbycommissionsfromoneorbothparties.
Whilehubisnotdirectlyresponsibleforperforminganyofthephysicaldistribution
functions,itmaymaintainrelationshipswiththirdpartyfacilitatingagenciessuchasUPSto
helpensurethatbuyersgetwhattheypayforinatimelymanner.
Retailers
Sellgoodsandservicesdirectlytofinalconsumersfortheirpersonal,nonbusinessuse.They
usuallytaketitletothegoodstheycarrycompensationismarginbetweenwhattheypay
forthemerchandiseandthepricestheychargetheircustomers.
Retailstorescanbecategorizedinmanywaysoneusefulclassificationschemegroups
accordingtotheirmethodofoperation:lowmargin/highturnovervshighmargin/low
turnover
Lowmargin/highturnover:tokeepvolumehighwhileminimizinginventoryinvestments
storesconcentrateonfastmovingitems(food,health,clothingetc)carryrelativelylimited
selectionineachproductcategory.(supermarkets,drugchaines)
Toprofitminimizecostsfocusonstandardizedprepackagedmerchandiselowers
personnelcostsbyreducinginstoresaleassistance.Alsominimizecapitalinvestment.
Highmargin/lowturnover:retailersdifferentiatethemselveswithuniqueassortments,
qualitymerchandise,goodcustomerservice,prestigiousstoreimage.Specialtygoods.Most
departmentstoresandupscalespecialtystores.
Nonstoreretailing
Fitdefinitionofretailerbutdonthavefixedphysicallocationandmostdonotenable
customerstopersonallyinspectthemerchandiseortakeimmediatepossession.Includes
directselling(doortodoor)mailordercatalog,tvshoppingetc.
Channeldesignalternatives
Decidingwhichchannelmemberstoincludewhemdesigningadistributionsystemdepends
inpartonwhetherthegoodorserviceissoldtoindividualconsumerororganizational
customers.SoEnumerateoptionsavailablefordistributingconsumervsindustrialgoods.
Butalsodependsoncompetitivestrategyandresources.

Alternativeconsumergoodschannels
Seeexhibit12.55channeldesignscommonlyused
A=direct;mailcatalogs,doortodoorselling
B=walmart,marks&spencer
C=lowcostfrequentlypurchaseditemsdistributedthroughlargenumberofretailers
packagedfood,liquor
D=usedwhenmanufactureristoosmall
E=whensmallproducersellstoretailchainslargeenoughtotakecareoftheirownwhole
sellingfunctions


Alternativeindustrialgoodschannels
4alternativesseeexhibit12.6
A=muchmorecommonthaninconsumersphere.Whenbuyersarelarge&wellknown,
product/serviceistechnicallycomplexandhighunitvalueneedstechnicalexpertise
B=wholesalerscanimprovedistributionefficiencybyloweringcostsforsellingstorage
&transportation.Likelywhenproductisstandardized,manypotentialbuyerswithsimilar
requirements,averageordervalueisrelativelysmall&itemiseasytohandleandstore.
C&D=Manufacturerstoosmalltosupportacompanysalesforcemostfrequentlyuseagents.
Therearetradeoffsamongthevariousobjectivesacompanymighttrytoaccomplishwith
itsdistributionchannel,itsgenerallyimpossibletodesignachannelthatperformswellon
allofthem.

Availabilityandthesatisfactionofacustomerservicerequirements:
Amanufacturercanpursue3basicstrategiesofretailcoverage:intensive,exclusiveor
selectivedistribution.
Seeexhibit12.7!!!!

Daarnaheelveelbla,erglogischallemaal.

Promotionaleffort,marketinformation,postsaleserviceobjectives
Itseasiertocontrolacompanysalesforceandcompanyownedwarehouses,retailoutletsor
websitesthanitistomonitorthebehaviorsofmanyindependentmiddlemenandfind
replacementsforthosewhoperformpoorly.
Thetheoryoftransactioncostanalysis(TCA)arguesthatwhensubstantialtransaction
specificassetsareinvolvedcostofadministeringindependentchannelmembersarelikely
tobehigherthatthecostofmanagingacompanysalesforceand/ordistributioncenters.
TCAassumesindependentchannelmemberswillpursueownselfinterestevenatthe
expenseofmanufacturertheypresent

Costeffectiveness
Makeorbuydecisions:Foragivenservicelevel,aremoredirect,verticallyintegrated
channeldesignssuchasChannelsAandBinexhibit12.5orAin12.6morecosteffective
thanchannelsincorporatingindependentwholesalersand/oragentmiddlemen?
Answermanagerneedstocomparerelativecostsofperformingthenecessaryselling,
storage,orderprocessingandtransportationfunctionsacrossthevariousalternative
institutionsfordifferentlevelsofsalesvolume.Forinstance,ateachsaleslevelthemargins
thatwouldhavetobepaidtowholesaledistributorscouldbecomparedtothecoststhefirm
wouldincurifittookoverthesalesanddistributivefunctionsnecessarytosupportthatlevel
ofvolumeetcetc.

Agentsaretypicallymorecostefficientatlowerlevelsofsalesbutlesssoasvolumes
increase.sousedbysmallerfirms.
SupplychainmanagementTheimpactofnewtechnologiesandalliances:Newprocessesin
distribution(newdatacollecting,materialshandlingetc)arereferredtoassupplychain
management(consumerpackagegoodsfirmsthatdistributethroughsupermarketscallit
efficientconsumerresponse(ECR).
Numberofdistributionpointsrequiredtoprovideagivenlevelofcustomerserviceisoften
reduced.cutinventorycarryingcosts,storagecostsanddamagetothestock.
Flexibility
Differentchannelsdesignsinvolvedifferentlevelsofcommitmentandlossofflexibilityby
manufacturers.Generallyverticallyintegratedsystemsaredifficulttoalter
quickly,particularlywhenafirmhasmadesubstantialinvestmentinphysicalandhuman
resources.Channelsinvolvingindependentmiddlemenareoftenmoreflexible.
Manufacturersfacinguncertainandrapidlychangingmarketorcompetitiveenvironments
oftenrelyonindependentrepsorwholesalerstopreservetheadaptabilityoftheir
distributionchannels.
Multichanneldistribution
Companiesareincreasinglyusingmultiplechannels.Someusedualdistribution(two
channel)systems.Anincreaseinthenumberoftargetsegmentstypicallyforcesmany
companiestousemorethantwochannels.Multichannelsystemscancreateconflictand
controlproblems.Nevertheless,suchsystemsoftenprovidemorecompletemarket
coveragewithgreaterefficiencywhichvanprovideacompetitiveadvantage.
Variationofmultichannelsystemsisthehybridsystem.Whilemultichannelsystemsemploy
separatechannelstoreachdifferenttargetsegments,themembersofahybridsystem
performcomplementaryfunctionsforthesamecustomersegment.Seeexhibit12.8for
example.
Channeldesignforglobalmarkets
Decisionshouldbemadewhethertorelyonmiddlemeninthefirmshomecountrythat
specializeinsellingtoforeignmarketsortodealdirectlywithforeignmiddlemenwho
operateinthosemarkets.
Marketentrystrategies
Thereare3majorwaysofenteringaforeigncountry:viaexport,bytransferringtechnology
andtheskillsneededtoproduceandmarketthegoodstoanorganizationinaforeign
countrythroughacontractualagreement,andthroughdirectinvestment.
Export:simplestway,leastcommitmentandrisk,canbedirectandindirect.Latterrelieson
theexpertiseofdomesticinternationalmiddlemen:exportmerchantswhobuytheproduct
andsellitoverseasfortheirownaccount.Exportagentswhosellonacommissionbasisand
cooperativeorganizationswhichexportforseveralproducers,especiallythosesellingfarm
products.Directexportingusesforeignbaseddistributors/agentsoroperatingunitssetupin
theforeigncountry.
Contractualentrymodes:nonequityarrangementsthatinvolvethetransferoftechnology

and/orskillstoanentityinaforeigncountry.
Inlicencingafirmofferstherighttouseitsintangibleassetsinexchangeforroyaltiesor
someotherformofpayment.Lessflexibleandprovideslesscontrolthanexporting.If
contractisterminated,licensormayhavedevelopedacompetitor.Appropriatewhen
marketisunstableordifficulttopenetrate.
Franchisinggrantstherighttousethecompaniesname,trademarksandtechnology.
Attractivewayforservicefirmstopenetrateforeignmarketsatlowcostandtocoupletheir
skillswithlocalknowledgeandentrepreneurialspirit.
Contractmanufacturing;involvessourcingaproductfromamanufacturerlocatedina
foreigncountryforsalethereorelsewhere.Mostattractivewhenthelocalmarketistoo
smalltowarrantmakinganinvestment,exportentryisblockedandqualitylicenseeisnot
available.
Turnkeyconstructioncontract:requiresconstractortohavetheprojectupandoperating
beforereleasingittotheowner.
Coproduction:companysprovidingknowhowandcomponentsinreturnforashareofthe
ouput,whichitmustsell.
Countertradetransactions:(Chapter22)includebarter(directexchangeofgoods),
compensationpackages(cashandlocalgoods),counterpurchase(delayedsaleofbartered
goodstoenablethelocalbuyertosellthegoods),andbuybackarrangementproductsbeing
soldareusedtoproduceothergoods.
Overseasdirectinvestment:canbeimplementedintwoways:throughjointventuresor
soleownership.
Jointventures:involvejointownershiparrangementtoproduceand/ormarketgoodsina
foreigncountry.Commonbecausetheyavoidquotasandimporttaxesandsatisfy
governmentdemandstoproducelocally.Advantageofsharinginvestmentcostsandgaining
localmarketexpertise.
Soleownershipinvestmententrystrategyinvolvessettingupaproductionfacilityina
foreigncountry.Directinvestmentusuallyallowstheparentorganizationtoretaintotal
controloftheoverseasoperationandavoidstheproblemsofsharedmanagementandloss
offlexibility.Appropriatewhenpoliticsofthesituationrequireadedicatedlocalfacility.
directinvestmenthighrisks,butacceleratingbecausecompanieshaveconcludedthat
capturingandretainingcustomersdemandsconstantinnovationandarapidflexible
responsetothedynamicsoftheenvironment.
Channelalternatives
Twomajortypesofinternationalchannelalternativesareavailabletoadomesticproducer.
1.Useofdomesticmiddlemen2.Useofforeignmiddlemen.
Domesticmiddlemen:convenienttouse,maysufferfromalackofknowledgeaboutspecific
foreignmarket.Morecommonmerchantmiddlemen(thosetakingtitle)includeexport
merchant(takesphysicalpossessionofgoods)hasabroadlineandsellsinhisownright.
Exportjobber,handlesmostlybulkyandrawmaterials(nophysicalcontroloverthem)and
tradingcompaniessellmanufacturedgoodstodevelopingcountriesandbuybackraw

materialsandunprocessedgoods.
Agentmiddlemeninclude:brokers,buyingoffices(primarilyconcernedwithsearchingfor
andpurchasingmerchandiseuponrequest;sellinggroups(anarrangementbywhichvarious
producerscooperatetoselltheirgoodsoverseas);exportmanagementcompanywhich
operatesinthenameofitsprincipal;manufacturersexportagent(MEA)whichspecializes
inonlyafewcountriesandhasashorttermrelationshipwithclients.

Foreignmiddlemen:
Incontrastwithdomesticmiddlemen,manufacturermaydecidetodealdirectlywithforeign
middlemen.Shortenschannelmanufacturerclosertothemarket.Problem=foreign
middlemenaredistanceawaymoredifficulttocontrol.Especiallymerchantmiddlemen
arepronetoactindependentlyoftheirsuppliersdifficulttousewhenmarketcultivation
isneeded.
Broadgeneralization:lessdevelopedacountrysmallerwholesalerandmorefragmented
wholesalechannels.
Growthofnationalwholesalersinmanycountrieshasmadeiteasiertodistributeproducts
worldwide.

RetailstructuresinForeigncountries.
Varytremendouslyacrosscountries(differencesinculture,economy,politicsetc)
Whileinternetenablesfirmstocontactcustomersandgenerateorders,theymuststillrely
onforeignmiddlementocarryoutthenecessaryphysicaldistributionfunctions.

Channeldesignforservices
Producersofservicesalsofacetheproblemofmakingtheiroutputsavailabletotargeted
customersegments.Insomecasesthisresultsinforwardverticalintegrationinvolving
decisionsaboutbranchoutletsasinbankservicesthatareaccessiblethroughbranchbanks
(someinsupermarkets)andautomatitellers.
Marketingchannelsforservicestendtobeshort(directfromcreatororperformertoend
user).
Channelmanagementdecisions:
Manufacturershavedevelopedverticalmarketingsystems(VMSs)toimprovecoordination
amongchannelmembers,therebyimprovingtheirperformance.VMSshavebecomethe
dominantformofchannelarrangement,particularlyinthedistributionofconsumergoods
andservices.

Verticalmarketingsystems:
Integrateddistributionsystemsinoneoffourways:
1.corporateVMS(verticallyintegratedsystem)
2.ContractualVMS(formulatesagreementsspellingoutacoordinatedsetofrightsand
obligationsformembersofthesystem)

3.AdministeredVMS(inwhichonefirmusesitseconomicpositionorexpertisetoprovide
inducementsforcooperationfromothermembers
4.RelationalVMS(normsofmutualtrustandexpectationthatcooperationwillincrease
totalsustemssuccessallmembersbetteroffinlongterm
Extrainfo:
CorporateVMS:backwardintegrationoccurswhenretailerorwholesalerassumes
ownershipofinstitutionthatnormallyprecedethemintheirdistributionchannels.
Primaryadvantage=tightcontrol.Importantwhemproductistechnicallycomplex.
Disadvantage:largecapitalinvestmentrequiredlessflexibility.

ContractualVMSs:3basictypes:
wholesalersponsoredvoluntarychains:formedbygettingindependentretailerstosign
contractsinwhichtheyagreetostandardizetheirsellingpracticesandtopurchaseacertain
portionoftheirinventoriesfromthewholesaler.
Retailercooperatives:groupsofindependentretailerswhoformtheirowncooperative
chainorganizations.Typicallytheyagreetoconcentratetheirpurchasesbyformingtheir
ownwholesaleoperations.Profitsarepassedbacktothememberretailersinproportionto
theirpurchases.

Infranchisesystemschannelmembercancoordinatetwosuccessivestagesbyoffering
franchisecontractthatgiveothertherighttoparticipateinthebusinessprovidedthey
accepttheagreementtermsandpayafee.
Fourmajortypesoffranchisesystems:
1.Manufacturerretailerfranchisesystems:largestnumberoffranchisesandlargest
volumeofsalescommoninautomotive.
2.Manufacturerwholesalerfranchisesystems:exemplifiedbysoftdrinkindustry.Sell
syrupconcentratetofranchisedwholesalebottlers.
3.Wholesalerretailerfranchisesystems:agreetoconductandcoordinatetheiroperations
accordingtodetailedstandardsspecifiedbyfranchiseagreement.
4.Servicesponsorretailerfranchisesystems:mostfamiliartoconsumers(mcdonalds,KFC)
AdministeredVMSs:
Firmscoordinatethenecessaryactivitiesatsuccessivestagesofdistributionthroughthe
informalguidanceandinfluenceofoneoftheparties.Theadministrationofsuchsystems
developsadetailedmerchandisingprograminwhichthemanufacturerspellsoutshelfspace
arrangements,apromotionalcalendar,pricingpoliciesandguidelinesforotheractivitiesto
befollowedbyitswholesalersandretailers.Designedbymostpowerfulmember.

RelationalVMSs:
Relyoneconomicrewardstospecifywhatisexpectedofeachchannelmemberandto
provideincentivesforcooperation.

Sourcesofchannelpower:
Economicpower:whenchannelmembersperceivethatfirmvanmediateeconomic
rewardsforthemiftheyfollowdirectives
Coercivepower:onechannelmemberwillpunishanotherforfailuretocooperate.Inverse
ofeconomicpower.(withholdingofrewards)
Expertpower:onechannelhasspecialknowledgeorexpertisethatcanbenefitother
membersofthesystems.
Referentpower:benefitsgeneratedarelikelytocontinue.
Legitimatepower:onechannelmemberhastherighttomakecertaindecisionsor
demandsandtoexpectcompliancefromothermembers.Usuallyresultofownershipor
contractualagreements,butinsomeinstancesitisbasedonmoralauthorityorcommon
beliefsaboutwhatisrightandproper.

Channelcontrolstrategies:
Pullstrategy:Manufacturerfocusesprimarilyonbuildingselectivedemandandbrand
loyaltyamongpotentialcustomersthroughmediaadvertising,consumerpromotions,
extendedwarrantiesandcustomerserviceaimedatwinningcustomerpreference.
Bybuildingstrongconsumerdemand,manufacturerincreasesitsabilitytopromote
economicrewards.
Pullstrategiesarecommonlyemployedbylargeconsumergoodsmarketers.Productshave
sufficientlybroadappealtomakeanaggressiveconsumerpromotionandadvertising
programworthwhile.
Pushstrategy:Smallerfirmswithlimitedresources,thosewithoutestablishedreputations
assavvymarketersandthoseattemptingtogainbetterchannelsupportforexisting
productswithrelativelysmallsharesandvolumesoftenhavedifficultyachieving
cooperationsolelyonthepromiseoffuturesalesandprofitspushstrategymuchof
productmarketingisdevotedtodirectinducementtogainthecooperationofwholesalers
andretailers.Mostsmallandmediumsizedmarketersofconsumergoodsemploypush
becausetheylackthenecessaryresourcesfor,orsellproductswhoserelativelynarrow
appealcannotjustify,theexpenseinvolvedinapullstrategy.
Tradepromotionsincentivesformotivatingchannelmembers

Salespromotions:incentivesdesignedtostimulatethepurchaseorsaleofaproductinthe
shortterm.
Twocategoriesofsalespromotion:
consumerpromotions:coupons,rebates,contestsaimedatstimulatingconsumer
purchases.
tradepromotions:encourageresellerstoengageinactivitiesthatwillsupportandincrease
localsalesoftheproduct.
Exhibit12vooruitlegverschillendeincentives:
Incentivetoincreaseresellerpurchasesandinventories

Incentivestoincreasepersonalsellingeffort
Incentivestoincreaselocalpromotionaleffort
Incentivestoimprovecustomerservice.
Channelconflictsandresolutionstrategies:
Someamountofchannelconflictisinevitable.conflictshouldresultinmoreeffectiveand
efficientchannelperformanceprovideditdoesnotbecomedestructive.
Noteliminatebutmanageconflicts.Involvechannelmembersinpolicydecisions,increasing
interactionamongpersonnelatalllevels.Etc

Chapter13:IntegratedPromotionDecisions
THEPROMOTIONMIX
IMC:integratedmarketingcommunication
IMCplanningprocess:buildingandreinforcingmutuallyprofitablerelationshipswithemployees,
customers,otherstakeholders,andthegeneralpublicbydevelopingandcoordinatingastrategic
communicationprogramthatenablesthemtomakeconstructivecontactwiththecompanybrand
throughavarietyofmedia.

Theprincipaltools(thoughthereareotherpromotionaltools,suchassponsorshipandstaged
events,thatdonotfallneatlyintoanyofthesecategories):

ADVERTISING
Developinganintegratedmarketingcommunicationplan(afivestep
progress):
1Definetheaudience(s)tobetargeted:Segmentationdecisionsareespeciallyimportanttothe
marketingcommunicationeffortbecausetheyindentifywhothetargetmarketis,sothoseplanning
thecommunicationseffortcanidentifythebestwaystoreachthetargetcustomers.
2Setthepromotionalobjectives:AppropriatepromotionalobjectivesshouldfollowtheSMART
model:specific,measurable,attainable,relevant(tothefirmsmissionandoveralmarketan
competitivecontext)andtimebound.

3Setthepromotionbudget:Threemethodscanbeused:
Percentageofsales(mostcommon):Theprocedureconsistsofsettingthisyearsbudget
asapercentageofthisyearsanticipatedsales.Underthisapproach,salesdeterminethe
promotionalactivity.

Competitiveparity:Setstherelativelevelofpromotionalspendingequaltothebrands
marketshare,orlargerifanattemptisbeingmadetoincreaseshare.(Percentageofthe
totalamountspentbytheentireonpromotiingbrandsinthatcategory)
Objectiveandtask(thebestone):Firstdefinepromotionalobjectivesasspecificallyas
possible;second,determinethestrategiesandspecefictasksnecessarytomeetthose
objectives;andthird,estimatethecostsofperformingthosetasksandbudget
accordingly.
4Designthepromotionmix(athreestepprocess):
Decidewhichpromotioncomponentstouse:advertising,personalselling,sales
promotion,publicrelations,orother.
Choosethespeceficactivitieswithineachcomponent.
Withineachactivity,decidewhichspeceficvehicletoemploy(channel)

Pullstrategy:encouragethecunsumertopulltheproductthroughthedistributionchannel

Pushstrategy:convincechannelmemberstostocktheproduct
5Evaluatetheresults:Thisstepinvolvesfindingoutwhethertheobjectivesofthepromotional
activityhavebeenmet.

Makingadvertisingdecisions
Settingadvertisingobjectives:insettingadvertisingobjectives,aclearunderstandingofprecisely
whattheadvertisingofpreciselywhattheadvertingisexpectedtoaccomplish,oftenmeasuredin
termsofattitudechange,providesanadagencyorotherswhomakethemediachoicesanddevelop
theadswiththedirectionneedtodotheirjobs.

Settingadvertisingbudgetsandmakingmediachoices:influencestheextendtowhichamessageis
deliveredtoitstargetaudience,orreach,andthefrequencywithwhichitdoesso.
Inestimatingthecostofagivenschedule,mediaplannerssimplifytheirtaskbyusinggrossrating
points(GRPs),whicharecalculatedbymultiplyingreachbyaveragefrequency.Costsareexpressed
incostperthousandimpressions(animpressionisonepersonbeingexposedtotheadonetime),or
CPM.

Itisathreestageprogress:
1.
Establishamarketsharegoal
2(a). Determinethepercentofthetargetaudiencethatneedstobemadeawareofthenewbrand
2(b). Determinethenumberofimpressionsneededtoobtainanawarenesslevel
2(c). Determinethenumberofgrossratingpoints(GRPs)needed.
3.
DeterminethecostoftheneededGRPsbymultiplybytheaveragecostperGRP.

Mediatypes
Traditionalmediatypes:
Television(bestatcommunicatingimagesandsymbols,enormousreach),Radio(targetsspecefic
audiences,suffersinthatitreachespeoplemostlywhentheyaredoingsomethingelse),Printmedia
(effectiveincommunicatingdetailedinformationaboutaproduct,magezinescanbecategorizedon
thenatureoftheiraudience),Outofhome(billboards),exhibition(instoredisplaymaterials),and
supplementarymedia(adressenboek),Directmarketingusingadvertisingmedia.

Newmediatypes:
Companywebsites(costeffectiveway,goodwaytobuildoneononerelationshipwithcustomers),
Bannerads,Searchkeywords(becausetheyarehighlytargeted,theyreworthmuchmore),Portal
deals(marketerspayWebportalsforprimeorexplusivepositionsontheportalswebsites),E
mail(costfree,onlyprofitablewhenpermissonofcustomerisgranted),Blogging,Podcasting.
Internationalmedia:speaksforitself.

Promotion
Designingcreativeandeffectivemarketingcommunications
Theissuesinvolvedinmanagingthecreativeeffort,includedecisionsabouttheuniqueselling
propositiontobedelivered(basedonthedesiredpositioningoftheproduct),thesourceofthe
message(shouldacompanyspokespersonoracelebritybeused?),thenatureoftheappeal
embodiedinthemessage(sfeerreclame).

Measuringadvertisingresults
Whateffectdidithaveonthebehaviorofthereceiver.
Beforetests:recalltests(personcanrememberadvertisement?),salestests
Afterteststendtomeasuretheeffectivenessofthetotaladvertisingeffort:recognition
tests,recalltest(furtherexplanation,seepage360)

Personalselling
Planningasalesprograminvolvesfoursetsofdecisions.

Thesalescyclereferstothedurationthatitwilltaketomeetwiththevariousdecisionmakersand
convincethemtotrytheproduct,andthentoadoptitmorefully.

Organizingthesaleseffortinglobalmarkets.Thehigherlevelsofproductknowledgeandpostsale
servicerequiredtosellsuchhightechproductsmakeitrelativelymoredesirableforfirmstoemploy
theirownsalespeople.

Customerservice:anincreasinglyimportantpersonalsellingfunction:Managingcustomerservice
involvesthinkingcarefullyaboutthefirmsobjectivesforservingcustomersbeforethesaleand
addingadditionalobjectivesforaftersaleservice.

Usingtechnologytoenhancesalesandcustomerserviceperformance:

Recruiting(withtheaptitudeforeffectivelycarryingouttheactivitiesinvolvedinthejob),training
(knowledge),andcompensating(motivation)salespeople:thekeystosalesperformance.

Evaluatingandcontrollingsalesforceperformancetoensuredeliveryofbudgetedresults:threemain
approaches:
Salesanalysis(foreachsalesperson),costanalysis(monitorthecostsofvarioussellingactivities),
andbehavioralanalysis(monitorandevaluatetheactualbehaviorofthesalespersonaswellasthe
outcomesofthatbehavior.

SALESPROMOTION
Salespromotiontypicallyofferanincentivetoconsumersandresellerstostimulateshortterm
demandforaproduct.Varioustechniquesare:priceoffpromotion,premiums,sampling,rebates,
contestsandsweepstakes,andtradepromotions.Salespromotionislessriskythanadvertising.
However,thereisalsoadownside:customerslearntowaitforthenextpromotion.

PUBLICRELATIONS
Whenitcatchesthemediasfancy,itcanmakeanewcompanyoranewbrand.Themajor
disadvantageisthatpublicityisbeyondthecompanyscontrol.