Course Development Team

Head of Programme : Dr Guan Chong

Course Developer(s) : Dr Dianna Chang
Technical Writer : Diane Quek, ETP
Video Production : Mohd Jufrie Bin Ramli, ETP
Instructional Designer : Anna Phang, ETP

© 2018 Singapore University of Social Sciences. All rights reserved.

No part of this material may be reproduced in any form or by any means without
permission in writing from the Educational Technology & Production, Singapore
University of Social Sciences.

ISBN 978-981-4700-13-9

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Singapore University of Social Sciences
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Singapore 599494

Release V2.4
Table of Contents

Table of Contents

Course Guide
1. Welcome.................................................................................................................. CG-2

2. Course Description and Aims............................................................................ CG-3

3. Learning Outcomes.............................................................................................. CG-4

4. Learning Materials................................................................................................ CG-6

5. Assessment Overview.......................................................................................... CG-7

Study Unit 1: Introduction to Marketing and Market Analysis

Learning Outcomes................................................................................................. SU1-2

Overview................................................................................................................... SU1-3

Chapter 1: Defining Marketing.............................................................................. SU1-4

Chapter 2: Analysing Marketing Environment................................................... SU1-9

Chapter 3: Conducting Market Research........................................................... SU1-13

Summary................................................................................................................. SU1-17

Quiz.......................................................................................................................... SU1-18

References............................................................................................................... SU1-27

Study Unit 2: Customer Analysis

Learning Outcomes................................................................................................. SU2-2

Overview................................................................................................................... SU2-3

Chapter 1: Creating Long-Term Loyalty Relationships..................................... SU2-4

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Table of Contents

Chapter 2: Analysing Consumer Markets........................................................... SU2-9

Summary................................................................................................................. SU2-14

Quiz.......................................................................................................................... SU2-15

Study Unit 3: Segmentation, Targeting and Positioning (STP) and

Global Marketing
Learning Outcomes................................................................................................. SU3-2

Overview................................................................................................................... SU3-3

Chapter 1: Identifying Market Segments and Targets....................................... SU3-5

Chapter 2: Crafting Brand Positioning................................................................. SU3-8

Chapter 3: Tapping into Global Markets............................................................ SU3-15

Summary................................................................................................................. SU3-19

Quiz.......................................................................................................................... SU3-20

References............................................................................................................... SU3-29

Study Unit 4: Products and Services Price

Learning Outcomes................................................................................................. SU4-2

Overview................................................................................................................... SU4-3

Chapter 1: Marketing of Products......................................................................... SU4-4

Chapter 2: Marketing of Services........................................................................ SU4-10

Chapter 3: Developing Pricing Strategies and Programmes........................... SU4-14

Summary................................................................................................................. SU4-19

Quiz.......................................................................................................................... SU4-20

References............................................................................................................... SU4-29

ii
Table of Contents

Study Unit 5: Place & Promotions (Part 1)

Learning Outcomes................................................................................................. SU5-2

Overview................................................................................................................... SU5-4

Chapter 1: Designing and Managing Integrated Marketing Channels............ SU5-6

Chapter 2: Designing and Managing Integrated Marketing

Communications.................................................................................................... SU5-17

Chapter 3: Managing Mass Communications................................................... SU5-23

Summary................................................................................................................. SU5-28

Quiz.......................................................................................................................... SU5-29

References............................................................................................................... SU5-38

Study Unit 6: Promotions (Part 2) & Social Responsible Marketing

Learning Outcomes................................................................................................. SU6-2

Overview................................................................................................................... SU6-3

Chapter 1: Managing Digital Communications: Online, Social Media, and

Mobile........................................................................................................................ SU6-4

Chapter 2: Managing Personal Communications............................................. SU6-12

Chapter 3: Managing a Holistic Marketing Organisation for the Long

Run........................................................................................................................... SU6-15

Summary................................................................................................................. SU6-17

Quiz.......................................................................................................................... SU6-18

References............................................................................................................... SU6-27

iii
Table of Contents

iv
List of Lesson Recordings

List of Lesson Recordings

Holistic Marketing........................................................................................................ SU1-4

Macroenvironment Analysis....................................................................................... SU1-9

Marketing Research.................................................................................................... SU1-13

1. Customer Perceived Value...................................................................................... SU2-4

2. Customer Relationship Management.................................................................... SU2-4

Consumer Behaviour.................................................................................................... SU2-9

Segmentation, Targeting, Positioning (STP)............................................................. SU3-8

Market Entry Strategies............................................................................................. SU3-15

The Customer Value Hierarchy.................................................................................. SU4-4

Product Mix Pricing..................................................................................................... SU4-4

Marketing of Services................................................................................................. SU4-10

Pricing........................................................................................................................... SU4-14

Channel Strategy........................................................................................................... SU5-6

Integrated Marketing Communications.................................................................. SU5-17

Mass Communications............................................................................................... SU5-23

Digital Marketing.......................................................................................................... SU6-4

Direct Marketing......................................................................................................... SU6-12

Holistic Marketing 2................................................................................................... SU6-15

v
List of Lesson Recordings

vi
Course
Guide

Marketing Management
MKT202 Course Guide

1. Welcome

Presenter: Dr Dianna Chang

This streaming video requires Internet connection.

Access it via Wi-Fi to avoid incurring data charges on your personal mobile plan.

Click here to watch the video. i

Welcome to your study of MKT202, Marketing Management, a 5-credit unit (CU) course.

This Study Guide is divided into two sections – the Course Guide and Study Units.

The Course Guide provides a structure for the entire course. As the phrase implies, the
Course Guide aims to guide you through the learning experience. In other words, it may
be seen as a road map through which you are introduced to the different topics within
the broader subject. This Guide has been prepared to help you understand the aim[s] and
learning outcomes of the course. In addition, it explains how the various materials and
resources are organised and how they may be used, how your learning will be assessed,
and how to get help if you need it.

i
https://d2jifwt31jjehd.cloudfront.net/MKT202/IntroVideo/MKT202_Intro_Video.mp4

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MKT202 Course Guide

2. Course Description and Aims

This course aims to provide students with an introduction to marketing management

and seeks to provide insights into the key concepts and general activities associated with
the marketing function. It focuses on the fundamentals of consumer behaviour, market
research, segmentation, target marketing and positioning, branding and marketing mix
management. This course also aims to build students’ knowledge and skills in the
managerial aspects of marketing with a focus on the development and execution of
marketing plans and programmes.

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MKT202 Course Guide

3. Learning Outcomes

Knowledge & Understanding (Theory Component)

By the end of this course, you should be able to:

• Describe the role of marketing within an organisation and explain the key concepts
of marketing
• Summarise and give examples of the various steps in environment and market
analysis
• Execute various options based upon the results of market research and advise on
options for the organisation
• Examine market segmentation and the purpose of targeting and positioning
• Examine the consumer management process including value, satisfaction and
loyalty
• Describe the role of the marketing-mix in the process of market development
• Describe the role of product in managing a marketing effort
• Discuss how services are marketed
• Compare pricing strategies
• Explain the role of marketing channels and value networks in managing a
marketing effort
• Examine the fundamental factors that influence consumer behaviour
• Summarise the role of integrated marketing communications in managing a
marketing effort
• Examine the marketing communication tools such as advertising, sales promotions,
events, public relations, personal selling and direct marketing
• Discuss the impact of the global environment on marketing decision-making

Key Skills (Practical Component)

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MKT202 Course Guide

By the end of this course, you should be able to:

• Apply marketing principles and practices to real and hypothetical situations
• Analyse information and apply them to particular marketing scenarios
• Demonstrate course competence through discussions
• Demonstrate the essential knowledge and interpersonal skills to work effectively
in a team
• Demonstrate written proficiency
• Make oral presentations in areas related to marketing management

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MKT202 Course Guide

4. Learning Materials

The following is a list of the required learning materials to complete this course.

Required Textbook(s)
Kotler, P., & Keller, K. L. (2015). Marketing Management (15th ed.). Pearson.

Other recommended study material (Optional)

Principles of Marketing, 14th edition, by Philip Kotler and Gary Armstrong, 2011

Perspective on Social Media Marketing by B. Bonin Bough and Stephanie Agresta, 2011

The Big Book of Marketing: Reference and Best Practices from the World’s Greatest Companies

by Anthony G. Bennett, 2010

Website(s):
1. Brandchannel

2. http://www.brandchannel.com/home/

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MKT202 Course Guide

5. Assessment Overview

The overall assessment weighting for the day classes for this course is as follows

Assessment Description Weight Allocation

Assignment 1 Pre-Class Quiz 01 2%

Pre-Class Quiz 02 2%

Pre-Class Quiz 03 2%

Assignment 2 Group-based Assignment 38%

Participation Participation during 6%

seminars

Examination Written Examination 50%

TOTAL 100%

SUSS’s assessment strategy consists of two components: the Overall Continuous

Assessment Score (OCAS) and the Overall Examinable Score (OES), which make up the
overall course assessment score.

(a) OCAS: OCAS constitutes 50% of the final grade for this course.

(b) OES: The Final Examination constitute 50% of the final grade.

To be sure of a pass result, you need to achieve scores of 40% or above in each component.
Your overall rank score is the weighted average of both components.

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MKT202 Course Guide

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1
Study
Unit

Introduction to Marketing and

Market Analysis
MKT202 Introduction to Marketing and Market Analysis

Learning Outcomes

At the end of this unit, you are expected to:

• Summarise marketing
• Identify and describe the types of entities marketed to
• Identify and discuss the key players in a market
• Discuss the key customer markets
• Identify the core marketing concepts
• Explain each of the core marketing concepts
• Summarise the concept of holistic marketing
• Discuss the importance of adopting holistic marketing
• Explain the four broad components characterising holistic marketing
• Apply the four broad components of holistic marketing to a given scenario
• Explain needs, trends and megatrends
• Discuss the importance of identifying major forces that may affect consumer
behaviour
• Summarise the importance of analysing the macroenvironment
• Identify and describe major trends/developments in relation to the demographic,
economic, socio-cultural, natural, technological and political-legal environment
• Analyse the potential impact of demographic, economic, socio-cultural, natural,
technological and political-legal trends/developments on a company’s products
and services
• Summarise marketing research
• Discuss the importance of marketing research
• Describe the key steps in the marketing research process
• Employ appropriate approaches and instruments to conduct market research

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MKT202 Introduction to Marketing and Market Analysis

Overview

This unit starts by giving an overview of what marketing is, why it is important, and some
key marketing concepts. It introduces the holistic marketing concept, which is one of the
most important concepts in marketing.

A series of research-based analyses are necessary for the successful initiation and
implementation of a marketing plan. These include market analysis, consumer analysis,
competitive analysis and brand analysis. This unit will introduce market analysis. Unit 2
will introduce consumer analysis and Unit 3 brand analysis (positioning). These analyses
will pave ways for the introduction of 4Ps, namely product, price, place and promotions,
in Unit 4, 5 and 6.

For market analysis, it is important for marketers to look at both the macroenvironment,
as well as microenvironment companies operate in. To carry out analyses on
macroenvironment, companies need to monitor six environmental forces: demographic,
economic, socio-cultural, natural, technological and political-legal. To carry out analysis
on microenvironment, companies need to monitor how they are doing relative to the
competition.

Read

Chapter 1: Defining Marketing for the New Realities

Chapter 3: Collecting Information and Forecasting Demand

Chapter 4: Conducting Marketing Research

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MKT202 Introduction to Marketing and Market Analysis

Chapter 1: Defining Marketing

Lesson Recording

Holistic Marketing

1.1 The Importance of Marketing

Today’s competitive business environment often challenges firms to prosper financially
or even just to survive. Marketing plays a key role in addressing these challenges.
Finance, operations, accounting, and other business functions won’t really matter without
sufficient demand for products and services so the firm can make a profit. Marketing’s
broader importance extends to society as a whole. Marketing helps introduce and gain
acceptance of new products that ease or enrich people’s lives.

1.2 The Scope of Marketing

What Is Marketing?
a. The American Marketing Association offers the following formal definition:
“Marketing is the activity, set of institutions, and processes for creating,
communicating, delivering, and exchanging offerings that have value for
customers, clients, partners, and society at large”..
b. Marketing is about identifying and meeting human and social needs. One of the
shortest good definitions of marketing is “meeting needs profitably”.

In this traditional definition of marketing, can you find the four words that are
corresponding to the 4Ps of Marketing?

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MKT202 Introduction to Marketing and Market Analysis

What Is Marketed? Marketers market ten main types of entities: 1) goods; 2) services; 3)
events; 4) experiences; 5) persons; 6) places; 7) properties; 8) organisations; 9) information;
and 10) ideas.

The (five) Basic Markets: 1) resource markets; 2) government markets; 3) manufacturer

markets; 4) intermediary markets; and 5) consumer markets.

1.3 Core Marketing Concepts

Needs, Wants, and Demands

a. Needs Needs are basic human requirements; needs become wants when they are
directed to specific objects that may satisfy the need.
b. Marketers do not create needs; needs pre-exist marketers. Marketers influence
wants. We distinguish five types of needs: 1) Stated needs; 2) Real needs; 3)
Unstated needs; 4) Delight needs; and 5) Secret needs.

Value Proposition: key promises to consumers from the brand

Reflect

Using smart phone as an example, explain the concepts of needs, wants and demands.

1.4 The New Marketing Realities

a. Three transformative forces are shaping the marketing practices today:
technology, globalisation and social responsibility.
b. Widespread technology adoption has created new opportunities and challenges
to marketers. Product and information become more accessible to customers,
and technology helps promote consumer engagement and improve customer
relationship management. Meanwhile, technology also makes prices more

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MKT202 Introduction to Marketing and Market Analysis

transparent, placing pressures on the manufacturers and intermediaries to

compete on the price. As technology savvy customers become more powerful
and vocal, companies need to constantly monitor customer reviews.
c. Globalisation: 1) At the individual level, transportation, shipping, and
communication technologies have made it easier for us to know the rest of the
world, to travel, to buy and sell anywhere; 2) At the country level, globalisation
has made countries increasingly multicultural; and 3) At the business level,
globalisation changes innovation and product development as companies take
ideas and lessons from one country and apply them to another.
d. Social Responsibility: 1) The organisation’s task is to determine the needs, wants,
and interests of target markets and satisfy them more effectively and efficiently
than competitors while preserving or enhancing consumers’ and society’s long-
term well-being; and 2) Companies may incorporate social responsibility as a
way to differentiate themselves from competitors, build consumer preference,
and achieve notable sales and profit gains.
e. Three central trends that change the way companies do business: increased
consumer participation and collaborative marketing, globalisation, and the rise
of a creative society.

Watch

Watch the video "Marketing is changing"

https://www.youtube.com/watch?v=ba8OY7YhJkY

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MKT202 Introduction to Marketing and Market Analysis

Reflect

1. Summarise the key messages from the video about how the field of
marketing is changing.
2. Interview a key marketing management member of a company and ask what
s/he perceives as the major changes/forces/trends in marketing and how
the company is reacting to these changes.

1.5 The Holistic Marketing Concept

a. Holistic Marketing involves four components: 1) Integrated marketing; 2)
Internal marketing; 3) Relationship marketing; and 4) Performance marketing.
b. Integrated Marketing involves designing and implementing marketing
activities/programmes to create, communicate, and deliver value for consumers
such that “the whole is greater than the sum of its parts.” Integrated marketing
entails: 1) Products & Services; 2) Communications; and 3) Channels.
c. Internal Marketing ensures everyone in the organisation embraces appropriate
marketing principles. It recognises that marketing succeeds only when all
departments work together to achieve customer goal. Internal marketing
requires vertical alignment with senior management and horizontal alignment
with other departments to ensure everyone understands, appreciates, and
supports the marketing effort. Corporate communications and staff training are
important for internal marketing.
d. Relationship Marketing aims to build mutually satisfying long-term
relationships with key constituents in order to earn and retain their
business. These constituents include: customers, employees, marketing partners

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MKT202 Introduction to Marketing and Market Analysis

(channels, suppliers, distributors, dealers, agencies), governing bodies, and the

members of the financial community (shareholders, investors, analysts).
e. Performance Marketing requires understanding both the financial and non-
financial returns to business and society from marketing activities and
programmes. Performance marketing calls for financial accountability of
marketing activities. It is therefore important that companies conduct tracking
studies to link the marketing activities to sales revenue, and brand and customer
equity. Performance marketing also calls for social responsible marketing and
urges marketers to consider legal and ethical aspects of marketing, and the
impact of business activities to the environment and communities.

Reflect

Explain the concept of Holistic Marketing. Conduct some research about Singapore
Airlines. Discuss how Singapore Airlines has applied the Holistic Marketing Concept
in their marketing strategies.

SU1-8
MKT202 Introduction to Marketing and Market Analysis

Chapter 2: Analysing Marketing Environment

Lesson Recording

Macroenvironment Analysis

2.1 Fad, Trend and Megatrend

a. A fad is unpredictable, short-lived, and has no social, economic, and political
significance.
b. A trend is more predictable and long-lasting than a fad. A trend reveals the shape
of the future and can provide strategic directions to companies.
c. A megatrend is “large social, economic, political, and technological changes
[that] are slow to form, and once in place, they influence us for some time −
between seven and ten years, or longer”. Trends and megatrends merit close
attention.

2.2 Analysing the Macroenvironment

Successful companies recognise and respond profitably to unmet needs and trends. Firms
must monitor six major forces in the broad environment: 1) Demographic; 2) Economic;
3) Socio-Cultural; 4) Natural; 5) Technological; and 6) Political-Legal.

The Demographic Environment

The main demographic force that marketers monitor is population because people make
up markets. Demographic developments tend to be fairly predictable.

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MKT202 Introduction to Marketing and Market Analysis

Marketers are keenly interested in the following: a) Size and growth rate of populations
in cities, regions, and nations; b) Age distribution and ethnic mix; c) Educational levels;
d) Household patterns; and e) Regional characteristics and movements.

The Economic Environment

The available purchasing power in an economy depends on: 1) current incomes and
savings; 2) prices; and 3) debt, and credit availability.

Socio-Cultural Environment

a. From our socio-cultural environment, we absorb, almost unconsciously, a world

view that defines our relationships to ourselves, others, organisations, society,
nature, and the universe: i) Views of ourselves; ii) Views of others; iii) Views
of organisations; iv) Views of society; v) Views of nature; and vi) Views of the
universe.
b. Core beliefs and values are passed on from parents to children and are reinforced
by social institutions. Secondary beliefs and values are more open to change.
Marketers have some chance of changing secondary values, but little chance of
changing core values. Although core values are fairly persistent, cultural swings
do take place.
c. Each society contains subcultures, groups with shared values emerging from
their special life experiences or circumstances.

Natural Environment

Marketers must be aware of the key trends in the natural environment which include:
a) Shortage of raw materials, such as water; b) Increased cost of energy, such as oil; c)
Increased pollution levels, such as carbon monoxide and nitrogen oxide pollution; and d)
Changing role of governments.

Technological Environment

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MKT202 Introduction to Marketing and Market Analysis

The marketer should monitor the following trends in technology: a) Accelerating pace
of change; b) Unlimited opportunities for innovation; c) Varying R&D budgets; and d)
Increased regulation of technological change. The changing technological environment
also calls for marketers to actively embed technology in their marketing activities,
including distribution, marketing research, customer relationship management and
integrated marketing communications.

Political-Legal Environment

a. The political and legal environment consists of laws, government agencies,

and pressure groups that influence various organisations and individuals.
Sometimes, these laws create new business opportunities.
b. Increase in business legislation. This includes legislations to protect companies
from unfair competition, consumers from unfair business practices and society
from unbridled business behaviour; and charge businesses with the social costs
of their products or production processes.
c. Growth of special interest groups. The growth of special interest groups, such as
Consumer Association of Singapore (CASE), has seen more actions and pressures
undertaken by some of these groups to protect the rights of consumers and other
stakeholders in communities.
d. The personal data economy worries consumers. There will be regulations for
consumer protection.

Reflect

A company would like to explore the opportunity of introducing a movie

themed boutique hotel concept into Singapore. Analyse the demographic, economic,

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MKT202 Introduction to Marketing and Market Analysis

sociocultural and political-legal environment of Singapore to determine possible

opportunities or threats to this proposal.

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MKT202 Introduction to Marketing and Market Analysis

Chapter 3: Conducting Market Research

Lesson Recording

Marketing Research

3.1 The Marketing Research System

a. Marketing research is the systematic design, collection, analysis, and reporting
of data and findings relevant to a specific marketing situation facing the
company. Marketing research links the consumer, customer, and public to the
marketer through information, and helps the marketer identify problems and
opportunities.
b. Gaining marketing insights is crucial for marketing success. Marketing insights
provide diagnostic information about how and why we observe certain effects
in the marketplace, and what that means to marketers. Great consumer insights
also serve as springboard for creative and effective marketing strategies.
c. Most companies use a combination of marketing research resources to study
their industries, competitors, audiences, and channel strategies.

3.2 The Marketing Research Process

Effective marketing research involves six steps.

Step 1: Define the Problem, the Decision Alternatives, and the Research Objectives

Marketing research begins with defining the problem which must not be defined too
broadly or narrowly. There are three types of research objectives: 1) exploratory research
aims to shed light on the real nature of the problem and to suggest possible solutions or

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MKT202 Introduction to Marketing and Market Analysis

new ideas; 2) descriptive research seeks to quantify demand; and 3) causal research aims
to test a cause-and-effect relationship.

Step 2: Develop the Research Plan

Developing the research plan requires the researcher to make key decisions on data
sources, research approaches, research instruments, sampling plan, and contact methods.

a. Data Sources:The researcher can gather secondary data (collected for another
purpose, already exists), primary data (freshly gathered for a specific purpose
or project), or both.
b. Research Approaches: Marketers can collect primary data through various
research approaches: a) Observational Research (e.g. ethnographic research and
mystery shopper); b) Focus Group Research; c) Survey Research; d) Behavioural
Research; and e) Experimental Research.
c. Research Instruments: Marketing researchers often choose the following
instruments in collecting primary data: questionnaires, qualitative measures,
and mechanical devices.
d. Sampling Plan: a) Sampling unit: Whom to survey? b) Sample size; and c)
Sampling procedure.
e. Contact Methods: Researchers must decide how to contact the subjects: a) by
mail; b) by telephone; c) in person; or/and d) online.

Step 3: Collect the Information

The data collection phase of marketing research is generally the most expensive and the
most prone to error. Internationally, one of the biggest obstacles to collecting information
is the need to achieve consistency.

Step 4: Analyse the Information

In this step, researchers extract findings by tabulating the data and developing summary
measures.

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MKT202 Introduction to Marketing and Market Analysis

Step 5: Present the Findings

Step 6: Make the Decision

Characteristics of Good Marketing Research: Seven characteristics of good marketing

research: 1) Scientific method; 2) Research creativity; 3) Multiple methods; 4)
Interdependence of models and data; 5) Value and cost of information; 6) Healthy
scepticism; and 7) Ethical marketing.

3.3 Measuring Marketing Productivity

Marketing research can help address the increased need for accountability (performance
marketing). Two complementary approaches to measuring marketing productivity are: 1)
marketing metrics; and 2) marketing-mix modelling.

Reflect

Read the following research report Singapore in Figures 2017:

https://www.singstat.gov.sg/-/media/files/publications/reference/sif2017.pdf
1. Summarise some key macroenvironment forces in Singapore.
2. Describe the possible marketing research process that led to the report.

Reflect

Haw Paw Villa of Singapore would like to rejuvenate the brand and traffic to its sites
by conducting some marketing research. Please suggest appropriate research methods

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MKT202 Introduction to Marketing and Market Analysis

to the management of the park to help identify the issues the brand is facing and
propose new strategies.

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MKT202 Introduction to Marketing and Market Analysis

Summary

This unit discussed about a changing market place and how marketing develops for the
new realities. Although the field of marketing has changed significantly to respond to
rapidly changing technology and consumer behaviour, the fundamentals of marketing
still lay on a deep understanding of customers. Marketing research is the key for market
analysis, as well as for consumer analysis, although the field of marketing research has
evolved so much in the past years.

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MKT202 Introduction to Marketing and Market Analysis

Quiz

1. What are customer touch points?

a. all aspects of the offering that directly affect consumer preferences
b. all needs and wants of customers
c. all direct or indirect interactions between the customer and the company
d. interactions between customers and competitors
e. all factors that affect buying behaviour

2. What are the four broad components of holistic marketing?

a. relationship, internal, position, and performance marketing
b. integrated, internal, position, and performance marketing
c. relationship, integrated, internal, and performance marketing
d. integrated, relationship, social responsibility, and position marketing
e. relationship, social responsibility, internal, and performance marketing

3. Tracy's is a chain of hair dressing salons for women. They use the television,
magazines, radio, and newspapers to advertise their services. The owners ensure that
all communication channels deliver a common message to prospective customers.
Tracy's believes in ________.
a. internal marketing
b. integrated marketing
c. socially responsible marketing
d. global marketing
e. relationship marketing

4. Which of the following is most consistent with the integrated marketing approach?
a. A good product will sell itself.
b. If left alone, consumers are inclined to purchase only inexpensive products.

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MKT202 Introduction to Marketing and Market Analysis

c. All communication to consumers must deliver a consistent message

irrespective of the medium.
d. In order to succeed, the main focus should be on having an efficient production
process in place.
e. Online marketing is less important than traditional marketing efforts.

5. The marketing concept holds that ________.

a. a firm should find the right products for its customers, and not the right
customers for its products
b. customers who are coaxed into buying a product will most likely buy it again
c. a new product will not be successful unless it is priced, distributed, and sold
properly
d. consumers and businesses, if left alone, won't buy enough of the organisation's
products
e. a better product will by itself lead people to buy it without much effort from
the sellers

6. Companies address needs by putting forth a ________, a set of benefits that they offer
to customers to satisfy their needs.
a. brand
b. value proposition
c. deal
d. marketing plan
e. demand

7. A ________ is "unpredictable, short-lived, and without social, economic, and political

significance."
a. fad
b. fashion
c. trend

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MKT202 Introduction to Marketing and Market Analysis

d. megatrend
e. style

8. Each society contains ________, groups with shared values emerging from their
special life experiences or circumstances.
a. stakeholders
b. cliques
c. consumer bundles
d. subcultures
e. behavioural niches

9. The marketing research process begins by ________.

a. developing a research plan
b. defining the problem, the decision alternatives, and research objectives
c. analysing the internal environment
d. reading marketing research journals
e. contacting a professional research consultant

10. During a focus-group session, one set of participants indicated that Dell computers
reminded them of a surfer, Apple computers of a mad scientist, and IBM was equated
to Ebenezer Scrooge from Charles Dickens's tale, "A Christmas Carol". Which of the
following qualitative research approaches relates to the approach described above?
a. projective techniques
b. visualisation
c. brand personification
d. laddering
e. brand architecture

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MKT202 Introduction to Marketing and Market Analysis

Solutions or Suggested Answers

Quiz
1. What are customer touch points?
a. all aspects of the offering that directly affect consumer preferences
Incorrect

b. all needs and wants of customers

Incorrect

c. all direct or indirect interactions between the customer and the company
Correct

d. interactions between customers and competitors

Incorrect

e. all factors that affect buying behaviour

Incorrect.

2. What are the four broad components of holistic marketing?

a. relationship, internal, position, and performance marketing
Incorrect

b. integrated, internal, position, and performance marketing

Incorrect

c. relationship, integrated, internal, and performance marketing

Correct

d. integrated, relationship, social responsibility, and position marketing

Incorrect

e. relationship, social responsibility, internal, and performance marketing

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MKT202 Introduction to Marketing and Market Analysis

Incorrect.

3. Tracy's is a chain of hair dressing salons for women. They use the television,
magazines, radio, and newspapers to advertise their services. The owners ensure that
all communication channels deliver a common message to prospective customers.
Tracy's believes in ________.
a. internal marketing
Incorrect

b. integrated marketing
Correct

c. socially responsible marketing

Incorrect

d. global marketing
Incorrect

e. relationship marketing
Incorrect

4. Which of the following is most consistent with the integrated marketing approach?
a. A good product will sell itself.
Incorrect.

b. If left alone, consumers are inclined to purchase only inexpensive products.

Incorrect.

c. All communication to consumers must deliver a consistent message

irrespective of the medium.
Correct.

d. In order to succeed, the main focus should be on having an efficient

production process in place.

SU1-22
MKT202 Introduction to Marketing and Market Analysis

Incorrect.

e. Online marketing is less important than traditional marketing efforts.

Incorrect.

5. The marketing concept holds that ________.

a. a firm should find the right products for its customers, and not the right
customers for its products
Correct.

b. customers who are coaxed into buying a product will most likely buy it again
Incorrect.

c. a new product will not be successful unless it is priced, distributed, and sold
properly
Incorrect.

d. consumers and businesses, if left alone, won't buy enough of the

organisation's products
Incorrect.

e. a better product will by itself lead people to buy it without much effort from
the sellers
Incorrect.

6. Companies address needs by putting forth a ________, a set of benefits that they offer
to customers to satisfy their needs.
a. brand
Incorrect.

b. value proposition
Correct.

c. deal

SU1-23
MKT202 Introduction to Marketing and Market Analysis

Incorrect.

d. marketing plan
Incorrect.

e. demand
Incorrect.

7. A ________ is "unpredictable, short-lived, and without social, economic, and political

significance."
a. fad
Correct.

b. fashion
Incorrect.

c. trend
Incorrect.

d. megatrend
Incorrect.

e. style
Incorrect.

8. Each society contains ________, groups with shared values emerging from their
special life experiences or circumstances.
a. stakeholders
Incorrect.

b. cliques
Incorrect.

c. consumer bundles

SU1-24
MKT202 Introduction to Marketing and Market Analysis

Incorrect.

d. subcultures
Correct.

e. behavioural niches
Incorrect.

9. The marketing research process begins by ________.

a. developing a research plan
Incorrect.

b. defining the problem, the decision alternatives, and research objectives

Correct.

c. analysing the internal environment

Incorrect.

d. reading marketing research journals

Incorrect.

e. contacting a professional research consultant

Incorrect.

10. During a focus-group session, one set of participants indicated that Dell computers
reminded them of a surfer, Apple computers of a mad scientist, and IBM was equated
to Ebenezer Scrooge from Charles Dickens's tale, "A Christmas Carol". Which of the
following qualitative research approaches relates to the approach described above?
a. projective techniques
Incorrect.

b. visualisation
Incorrect.

SU1-25
MKT202 Introduction to Marketing and Market Analysis

c. brand personification
Correct.

d. laddering
Incorrect.

e. brand architecture
Incorrect.

SU1-26
MKT202 Introduction to Marketing and Market Analysis

References

Kotler, P., & Keller, K. L. (2016). Marketing Management (15e). Upper Saddle River, NJ:

Pearson Prentice Hall.

SU1-27
MKT202 Introduction to Marketing and Market Analysis

SU1-28
2
Study
Unit

Customer Analysis
MKT202 Customer Analysis

Learning Outcomes

At the end of this unit, you are expected to:

• Explain the importance of customer value, satisfaction, and loyalty
• Employ appropriate activities to maximise and deliver customer value, satisfaction,
and loyalty
• Discuss customer lifetime value
• Demonstrate how to maximise customer lifetime value
• Explain the importance of cultivating long-term customer relationships to
maximise customer value
• Discuss the key factors that can drive the building of customer relationships
• Discuss how to attract and retain customers, as well as build loyalty
• Execute appropriate activities to attract and retain customers, as well as build
loyalty
• Discuss the consumer characteristics that influence buying behaviour
• Analyse the impact of different consumer characteristics on buying behaviour
• Discuss the major psychological processes that influence consumer responses to
marketing programmes
• Discuss the steps involved in consumers purchase decision
• Apply the buying decision process to demonstrate how it affects a consumer’s
purchase decision

SU2-2
MKT202 Customer Analysis

Overview

The cornerstone of a well-conceived holistic marketing orientation is strong customer

relationships. Marketers must connect with customers − informing, engaging, and maybe
even energising them in the process.

Chapter 1 of this unit introduces a very important concept: customer relationship

management (CRM). The CRM concept is closely related to a few other concepts such as
product quality, loyalty and satisfaction.

The aim of marketing is to meet and satisfy target customers’ needs and wants better than
competitors. Marketers must have a thorough understanding of how consumers think,
feel, act, and be able to offer clear value to each and every target consumer. Chapter 2
discusses how to better understand consumers through studying the processes and factors
involved in the consumer decision making process (consumer behaviour). Chapter 2 also
introduces the five-stage consumer decision making model, which is especially useful to
analyse high-involvement product decisions.

Read

Chapter 5: Creating Long-term Loyalty Relationships

Chapter 6: Analysing Consumer Markets

SU2-3
MKT202 Customer Analysis

Chapter 1: Creating Long-Term Loyalty Relationships

Lesson Recording

1. Customer Perceived Value

2. Customer Relationship Management

1.1 Building Customer Value, Satisfaction, and Loyalty

Customer Perceived Value

a. Customers tend to be value maximisers. They evaluate and compare products’

benefits and cost to them. Customer-perceived value (CPV) is the difference
between the prospective customer’s evaluation of all the benefits and all the costs
of an offering and the perceived alternatives.
b. Total customer benefit is the perceived monetary value of the bundle of
economic, functional, and psychological benefits customers expect from a given
market offering because of the product, service, people, and image. Total
customer cost is the perceived bundle of costs customers expect to incur
in evaluating, obtaining, using, and disposing of the given market offering,
including monetary, time, energy, and psychological costs. Customer-perceived
value is thus based on the difference between benefits the customer gets and
costs s/he assumes for different choices.
c. Customer value analysis is used to reveal the company’s strengths and
weaknesses relative to those of competitors.

SU2-4
MKT202 Customer Analysis

Reflect

Explain the concept of Customer Perceived Value (CPV). Did you consider another
brand when you were buying your current mobile phone? Choose another major
brand in your consideration set. Summarise and compare the CPVs for the two brands
(the brand you are using vs. the brand you did not choose). Conclude why you chose
your mobile phone over another competitor brand.

The value proposition consists of the whole cluster of benefits the company promises to
deliver; it is more than the core positioning of the offering.

Total Customer Satisfaction

a. Satisfaction is the person’s feelings of pleasure or disappointment from

comparing a product’s perceived performance to expectations. If the
performance falls short of expectations, the customer is dissatisfied. If it matches
expectations, the customer is satisfied. If it exceeds expectations, the customer is
highly satisfied or delighted.
b. Expectations are formed from past experiences; friends’ and associates’ advice;
and marketers’ and competitors’ information and promises. It is important
that company’s product performance matches customer expectations, which are
influenced by the company’s promises and the market movement.
c. Satisfaction is highly dependent on product and service quality. High product
quality leads to satisfaction, which supports higher prices and leads to higher
profitability.
d. The handling of customer complaints is very important for customer satisfaction.
Given the potential downside of having an unhappy customer, it is critical that
markets deal with negative experiences properly.

SU2-5
MKT202 Customer Analysis

e. Companies should proactively monitor customer satisfaction through research

such as periodic surveys and mystery shoppers. They should also monitor brand
health indexes such as customer loss rate and customer complaints.

Product and Service Quality. Quality is the totality of features and characteristics of a
product or service that bear on its ability to satisfy stated or implied needs. Product and
service quality, customer satisfaction, and company profitability are intimately connected.

Loyalty is a deeply held commitment to re-buy or re-patronise a preferred product or

service in the future despite situational influences and marketing efforts having the
potential to cause switching behaviour.

1.2 Maximising Customer Lifetime Value

Customer Lifetime Value

a. Marketing is the art of attracting and keeping profitable customers. The 20-80
rule says the top 20% of customers generate 80% or more of the company’s
profits.
b. A profitable customer is a person, household, or company that over time yields
a revenue stream exceeding by an acceptable amount the company’s cost stream
for attracting, selling, and serving that customer.
c. Customer Lifetime Value (CLV) describes the net present value of the stream of
future profits expected over the customer’s lifetime purchases. CLV calculations
provide a formal quantitative framework for planning customer investment and
help marketers to adopt a long-term perspective.

Attracting and Retaining Customers

Companies seeking to expand their profits and sales must spend considerable time and
resources searching for new customers. A key driver of shareholder value is the aggregate
value of the customer base. Winning companies improve the value of their customer base
by excelling at strategies such as: 1) Reducing the rate of customer defection; 2) Increasing

SU2-6
MKT202 Customer Analysis

the longevity of the customer relationship; 3) Enhancing the growth potential of each
customer through “share-of-wallet, cross-selling, and up-selling”; 4) Making low-profit
customers more profitable or terminating them; and 5) Focusing disproportionate effort
on high-value customers.

Building Loyalty. Companies are using the following activities to improve loyalty and
retention: 1) Interacting with Customers; 2) Developing Loyalty Benefits; 3) Creating
Institutional Ties; and 4) Win-Backs.

1.3 Customer Relationship Management (CRM)

Customer Relationship Management (CRM)is the process of carefully managing
detailed information about individual customers and all customer “touch points” to
maximise loyalty. A customer touch point is any occasion on which a customer encounters
the brand and product − from actual experiences to personal or mass communications to
casual observations.

a. A successful CRM starts from the establishment of customer database. A well-

established customer database enables customised products, services, channels
and communications.
b. CRM adopts the following approaches: 1) Personalised marketing; 2) Customer
empowerment; 3) Management of customer reviews and recommendations; and
4) proper handling of customer complaints.

Permission marketing is the practice of marketing to consumers only after gaining their
expressed permission. This is based upon the premise that marketers can no longer use
“interruption marketing” via mass media campaigns.

SU2-7
MKT202 Customer Analysis

Reflect

Conduct some research on Singapore Airlines. Describe and analyse how the
Singapore Airlines brand has embedded the CRM philosophies in their marketing
strategies.

Reflect

Conduct some research on the share Your Singapore Story Campaign.

https://s.visitsingapore.com/story-submission.html

What does customer empowerment mean? Describe how the CRM concept, in
particular, the customer empowerment concept, has been applied in this campaign.

SU2-8
MKT202 Customer Analysis

Chapter 2: Analysing Consumer Markets

Lesson Recording

Consumer Behaviour

2.1 What Influences Consumer Behaviour?

Consumer behaviour is the study of how individuals, groups, and organisations select,
buy, use, and dispose of goods, services, ideas, or experiences to satisfy their needs and
wants.

A consumer’s buying behaviour is influenced by cultural, social, and personal factors.

Cultural Factors. Culture, subculture, and social class are particularly important
influences on consumer buying behaviour. Culture is the fundamental determinant of a
person’s wants and behaviours. Each culture consists of smaller subcultures that provide
more specific identification and socialisation for their members.

Social Factors such as reference groups, family, and social roles and statuses affect our
buying behaviour.

a. Reference Group. Individuals’ reference groups are all the groups that have a
direct or indirect influence on their attitudes or behaviour: 1) Reference groups
expose an individual to new behaviours and lifestyles, influencing attitudes and
self-concepts; 2) They create pressures for conformity that may affect product
and brand choices; 3) People are also influenced by groups to which they do
not belong such as aspirational groups (consumers want to be part of them)
and dissociative groups (consumers want to disassociate with); and 4) Where
reference group influence is strong, marketers must determine how to reach and
influence the group’s opinion leaders.

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MKT202 Customer Analysis

An opinion leader is the person in informal, product-related communications

who offers advice or information about a specific product or product category.

Society consists of cliques, small groups whose members interact frequently.

Some people can connect two or more cliques to facilitate information exchange
between cliques.
b. Family. The family is the most important consumer-buying organisation in
society, and family members constitute the most influential primary reference
group.
c. Roles and Statuses. We each participate in many groups. We can define a
person’s position in each group in terms of role and status. Marketers must be
aware of the status-symbol potential of products and brands.

Personal Factors that influence a buyer’s decision include: 1) age and stage in the life
cycle; 2) occupation and economic circumstances; 3) personality and self-concept; and 4)
lifestyle and values.

Reflect

Examine potential consumer characteristics that may influence the decision to

purchase a product such as iwatch.

2.2 Key Psychological Processes

The starting point for understanding consumer behaviour is the stimulus-response
model. The marketer’s task is to understand what happens in the consumer’s
consciousness between the arrival of the outside marketing stimuli and the ultimate
purchase decisions. Four key psychological processes – motivation, perception, learning,
and memory – fundamentally influence consumer responses.

SU2-10
MKT202 Customer Analysis

Motivation

a. We all have many needs at any given time. Some needs are biogenic (arising
from physiological states of tension such as hunger). Others are psychogenic and
arise from a need for recognition, esteem, or belonging. A need becomes a motive
when it is aroused to a sufficient level of intensity to drive us to act.
b. Three best-known theories of human motivation: Freud, Maslow, and Herzberg

Perception

a. Perception is the process by which we select, organise, and interpret information

inputs to create a meaningful picture of the world. It depends not only on
physical stimuli, but also on the stimuli’s relationship to the surrounding
environment and on conditions within each of us.
b. People emerge with different perceptions of the same object because of three
perceptual processes: selective attention, selective distortion and selective
retention.

Learning induces changes in our behaviour arising from experiences.

Emotions. Consumer response is not all cognitive and rational; much may be emotional
and invoke different kinds of feelings.

Memory

a. Cognitive psychologists distinguish between Short-term memory (STM), a

temporary repository of information, and Long-term memory (LTM) − a more
permanent repository.
b. Brand associations consist of all brand-related thoughts, feelings, perceptions,
images, experiences, beliefs, and attitudes linked to the brand node.
c. Memory is a very constructive process, because we don’t remember information
and events completely and accurately. Often, we remember bits and pieces and
fill in the rest.
d. Memory retrieval refers to how information gets out of memory.

SU2-11
MKT202 Customer Analysis

2.3 The Buying Decision Process: The Five-Stage Model

Marketing scholars have developed a “stage model” of the buying-decision process.
A typical decision making process consists of five stages: 1) Problem recognition; 2)
Information search; 3) Evaluation of alternatives; 4) Purchase decision; and 5) Post-
purchase behaviour.

a. Step 1: The buying process starts when the buyer recognises a problem or need.
With an internal stimulus, one of the person’s normal needs – hunger, thirst, etc.
– rises to a threshold level and becomes a drive; or a need can be aroused by an
external stimulus such as an advertisement.
b. Step 2: Information search. Through market research, a consumer gathers
information about the competing brands of a product and their features. The
consumer then advances through four sets with respect to brands before a
decision is reached. The four sets are: 1) the total set; 2) the awareness set; 3) the
consideration set; and 4) the choice set.
c. Step 3: Evaluation of alternatives. Consumers are searching for certain benefits
from the product. They see each product as a bundle of attributes with varying
abilities to deliver the benefits. They then form beliefs and attitudes from the
evaluations.
d. Step 4: At the purchase decisions stage, the attitudes of others and unanticipated
situational factors may intervene and affect decision making. A consumer’s
decision is also heavily influenced by perceived risks such as functional risk,
physical risk, financial risk, social risk, psychological risk and time risk.
e. Step 5: Post purchase behaviour. Consumers may experience dissonance
from product usage or competitive information. Marketers need to monitor
postpurchase satisfaction, postpurchase actions, & postpurchase uses and
disposals.

SU2-12
MKT202 Customer Analysis

Reflect

Describe the decision making process a consumer (e.g. student like you) may go
through in the purchase of a laptop computer.

2.4 Behavioural Decision Theory and Behavioural Economics

Decision Heuristics

a. The availability heuristic − Consumers base their predictions on the quickness

and ease with which a particular example of an outcome comes to mind.
b. The representativeness heuristic − Consumers base their predictions on how
representative or similar the outcome is to other examples.
c. The anchoring and adjustment heuristic − Consumers arrive at an initial
judgement and then adjust it − sometimes only reluctantly − based on additional
information.

Framing is the manner in which choices are presented to and seen by a decision maker.

Mental Accountingdescribes the way consumers code, categorise, and evaluate financial
outcomes of choices: 1) Consumers tend to segregate gains; 2) Consumers tend to integrate
losses; 3) Consumers tend to integrate smaller losses with larger gains; and 4) Consumers
tend to segregate small gains from large losses.

The principles of mental accounting are derived in part from prospect theory, which
maintains that consumers frame their decision alternatives in terms of gains and losses
according to a value function.

SU2-13
MKT202 Customer Analysis

Summary

1. Customers are value maximisers. They seek the best value from brands.
2. A deep understanding of consumers’ motivation, backgrounds and behaviours
is key for marketer to develop effective marketing strategies.
3. Companies are becoming skilful in CRM. They have to maintain good product
and service quality, manage customer expectations, build brand loyalty and
develop programmes to retain and connect with the right customers.

SU2-14
MKT202 Customer Analysis

Quiz

1. ________ is the difference between the prospective customer's evaluation of all the
benefits and all the costs of an offering and the perceived alternatives.
a. Perceived usefulness
b. Failure avoidance rate
c. Total customer benefit
d. Customer-perceived value
e. Competitors' market share rate

2. Total customer satisfaction is measured based on the relationship of ________.

a. expected value and total customer benefit
b. perceived performance and expectation
c. advertised outcomes and real outcomes
d. past experience and present experience
e. customer attitude and salesperson's attitude

3. Which of the following is the best method of recovering customer goodwill?

a. sending service people to conduct door-to-door surveys
b. contacting the complaining customer as quickly as possible
c. sidentifying prospective customers from the customer database
d. customising products according to individual customer need
e. defining and measuring the customer retention rate

4. The 80-20 rule reflects the idea that ________.

a. 20% of the company's profits are generated by the top 80% of customers
b. the top 20% of customers are highly satisfied and 80% of customers will
recommend the company to a friend
c. 20% of customers are unprofitable, and 80% make up a company's profits

SU2-15
MKT202 Customer Analysis

d. the top 20% of customers often generate 80% of the company's profits
e. any new product will be accepted by 20% of the customers immediately, but
80% of the customers will be up for grabs throughout the product's life cycle

5. ________ is the process of carefully managing detailed information about individual

customers and all customer "touch points" to maximise loyalty.
a. Customer relationship management
b. Customer lifetime value
c. Customer profitability analysis
d. Customer satisfaction analysis
e. Customer-value delivery

6. A customer ________ is any occasion on which a customer encounters the brand

and product—from actual experience to personal or mass communications to casual
observation.
a. touch point
b. point of order
c. point of difference
d. pivot point
e. point of parity

7. Companies address needs by putting forth a ________. A set of benefits that they offer
to customers to satisfy their needs.
a. value proposition
b. brand
c. deal
d. marketing plan
e. demand

SU2-16
MKT202 Customer Analysis

8. Some customers inevitably become inactive or drop out. The challenge for marketers
is to reactivate them through ________ strategies.
a. win-back
b. retention
c. defection
d. sell-out
e. recuperation

9. ________ refers to a set of distinguishing human psychological traits that lead to

relatively consistent and enduring responses to environmental stimuli.
a. image
b. Personality
c. Psychological transformation
d. Lifestyle
e. Acculturation

10. The level of engagement and active processing undertaken by the consumer in
responding to a marketing stimulus is called ________.
a. elaboration likelihood
b. consumer disengagement
c. consumer involvement
d. variety seeking
e. low involvement

SU2-17
MKT202 Customer Analysis

Solutions or Suggested Answers

Quiz
1. ________ is the difference between the prospective customer's evaluation of all the
benefits and all the costs of an offering and the perceived alternatives.
a. Perceived usefulness
Incorrect.

b. Failure avoidance rate

Incorrect.

c. Total customer benefit

Incorrect.

d. Customer-perceived value
Correct.

e. Competitors' market share rate

Incorrect.

2. Total customer satisfaction is measured based on the relationship of ________.

a. expected value and total customer benefit
Incorrect.

b. perceived performance and expectation

Correct.

c. advertised outcomes and real outcomes

Incorrect.

d. past experience and present experience

Incorrect.

SU2-18
MKT202 Customer Analysis

e. customer attitude and salesperson's attitude

Incorrect.

3. Which of the following is the best method of recovering customer goodwill?

a. sending service people to conduct door-to-door surveys
Incorrect.

b. contacting the complaining customer as quickly as possible

Correct.

c. sidentifying prospective customers from the customer database

Incorrect.

d. customising products according to individual customer need

Incorrect.

e. defining and measuring the customer retention rate

Incorrect.

4. The 80-20 rule reflects the idea that ________.

a. 20% of the company's profits are generated by the top 80% of customers
Incorrect.

b. the top 20% of customers are highly satisfied and 80% of customers will
recommend the company to a friend
Incorrect.

c. 20% of customers are unprofitable, and 80% make up a company's profits

Incorrect.

d. the top 20% of customers often generate 80% of the company's profits
Correct.

SU2-19
MKT202 Customer Analysis

e. any new product will be accepted by 20% of the customers immediately, but
80% of the customers will be up for grabs throughout the product's life cycle
Incorrect.

5. ________ is the process of carefully managing detailed information about individual

customers and all customer "touch points" to maximise loyalty.
a. Customer relationship management
Correct.

b. Customer lifetime value

Incorrect.

c. Customer profitability analysis

Incorrect.

d. Customer satisfaction analysis

Incorrect.

e. Customer-value delivery
Incorrect.

6. A customer ________ is any occasion on which a customer encounters the brand

and product—from actual experience to personal or mass communications to casual
observation.
a. touch point
Correct.

b. point of order
Incorrect.

c. point of difference
Incorrect.

d. pivot point

SU2-20
MKT202 Customer Analysis

Incorrect.

e. point of parity
Incorrect.

7. Companies address needs by putting forth a ________. A set of benefits that they offer
to customers to satisfy their needs.
a. value proposition
Correct.

b. brand
Incorrect.

c. deal
Incorrect.

d. marketing plan
Incorrect.

e. demand
Incorrect.

8. Some customers inevitably become inactive or drop out. The challenge for marketers
is to reactivate them through ________ strategies.
a. win-back
Correct.

b. retention
Incorrect.

c. defection
Incorrect.

d. sell-out

SU2-21
MKT202 Customer Analysis

Incorrect.

e. recuperation
Incorrect.

9. ________ refers to a set of distinguishing human psychological traits that lead to

relatively consistent and enduring responses to environmental stimuli.
a. image
Incorrect.

b. Personality
Correct.

c. Psychological transformation
Incorrect.

d. Lifestyle
Incorrect.

e. Acculturation
Incorrect.

10. The level of engagement and active processing undertaken by the consumer in
responding to a marketing stimulus is called ________.
a. elaboration likelihood
Incorrect.

b. consumer disengagement
Incorrect.

c. consumer involvement
Correct.

d. variety seeking

SU2-22
MKT202 Customer Analysis

Incorrect.

e. low involvement
Incorrect.

SU2-23
MKT202 Customer Analysis

SU2-24
3
Study
Unit

Segmentation, Targeting and

Positioning (STP) and Global
Marketing
MKT202 Segmentation, Targeting and Positioning (STP) and Global Marketing

Learning Outcomes

At the end of this unit, you are expected to:

• Identify and describe the major market segmentation variables for consumer
markets
• Apply the appropriate segmentation variables to segment a consumer market
• Summarise the key criteria for effective market segmentation
• Discuss the different levels of market segmentation
• Differentiate the various possible types of market segments targeting
• Summarise brand positioning
• Explain how a company can develop and establish an effective positioning in the
market
• Employ an effective positioning for a product in a given scenario
• Differentiate between points-of-difference and points-of-parity
• Discuss how brands may be differentiated using different strategies
• Explain the different types of differentiation strategies
• Employ appropriate differentiation strategies to market a brand effectively
• Discuss the different life-cycle patterns
• Describe the stages of the product life-cycle
• Discuss the different marketing strategies used at each stage of the product life-
cycle
• Implement appropriate marketing strategies for a product at each stage of the
product life cycle
• Discuss the factors that draw companies into the international market
• Analyse potential markets and select appropriate markets to enter
• Explain the various types of market entry strategies into a foreign market
• Execute the most appropriate market entry strategy in a given scenario

SU3-2
MKT202 Segmentation, Targeting and Positioning (STP) and Global Marketing

Overview

A company needs to identify which market segments it can serve effectively. This decision
requires a keen understanding of consumer behaviour and careful strategic thinking.
To develop the best marketing plans, managers need to understand what makes each
segment unique and different.

Chapter 1 and 2 introduce the important segmentation, targeting and position (STP)
process in marketing. The identification of a clear and unique positioning for a brand is the
most important process in the development of a brand strategy. A good brand positioning
is always based on deep consumer insights. The market analysis (Unit 1) and consumer
analysis (Unit 2), together with the market research that helps generate these analyses, are
all necessary processes from which great consumer insights arise.

Chapter 3 discusses the topic of global marketing. With ever faster communication,
transportation, and financial flows, the world is rapidly shrinking. Countries are
increasingly multicultural, and products and services developed in one country are
finding enthusiastic acceptance in others. Emerging markets that embrace capitalism
and consumerism are especially attractive targets. They are also creating marketing
powerhouses on their own.

Although opportunities to enter and compete in international markets are significant, the
risks can also be high. Companies selling in global industries, however, have no choice
but to internationalise their operations.

Read

Chapter 9: “Identifying Market Segments and Targets”

Chapter 10: “Crafting the Brand Positioning”

Chapter 12: “Addressing Competition and Driving Growth”

SU3-3
MKT202 Segmentation, Targeting and Positioning (STP) and Global Marketing

Chapter 8: “Tapping into Global Markets”

SU3-4
MKT202 Segmentation, Targeting and Positioning (STP) and Global Marketing

Chapter 1: Identifying Market Segments and Targets

All marketing strategies are built on STP − Segmentation, Targeting, and Positioning.

Effective target marketing requires that marketers: 1) identify and profile distinct groups
of buyers who differ in their needs and wants (segmentation); 2) select one or more market
segments to enter (targeting); and 3) for each target market, establish and communicate
the distinctive benefit(s) of the company’s market offering (positioning).

1.1 Segmentation
Market segmentation divides a market into well-defined slices. A market segment consists
of a group of customers who share a similar set of needs and wants. The marketer’s task
is to identify the appropriate number and nature of market segments and decide which
one(s) to target.

Marketers use the following variables to segment consumer markets: 1) geographic; 2)

demographics; 3) psychographic; and 4) behavioural considerations: consumer responses
to benefits, usage occasions, or brands.

Demographic Segmentation is to divide the market by variables such as age, family

size, family life cycle, gender, income, occupation, education, religion, race, generation,
nationality, and social class.

Psychographic Segmentation is to divide the market into different groups on the basis of
psychological/personality traits, lifestyle, or values.

Behavioural Segmentation is to divide buyers into groups on the basis of their knowledge
of, attitude towards, use of, or response to a brand.

a. Decision Roles. People play five roles in a buying decision: Initiator, Influencer,
Decider, Buyer, and User.
b. User and Usage-Related Variables such as occasions, user status, usage rate,
buyer-readiness stage, and loyalty status.

SU3-5
MKT202 Segmentation, Targeting and Positioning (STP) and Global Marketing

c. Loyalty Status: 1) hardcore loyals; 2) split loyals; 3) shifting loyals; and 4)

switchers.

Reflect

Using the fashion/apparel business as an example, think about how the market can
be segmented based on different segmentation variables (geographic, demographic,
psychographic and behavioural).

Then think about a brand, e.g. H&M. How would you describe the target customer for
the H&M brand? (Hint: you should try to use a combination of segmentation variables,
e.g. age, occupation, lifestyle, product usage and benefits, and brand attitude, etc.)

1.2 Targeting
Once a firm has identified its market-segment opportunities, it must decide how many
and which ones to target.

Effective Segmentation Criteria. To be useful, market segments must rate favourably

on five key criteria: 1) Measurable; 2) Substantial; 3) Accessible; 4) Differentiable; and 5)
Actionable.

Evaluating and Selecting the Market Segments. In evaluating different market segments,
the firm must look at two factors: 1) The segment’s overall attractiveness; and 2) the
company’s objectives and resources.

We can target markets at four main levels: 1) full market coverage/mass; 2) multiple
segments; 3) single (or niche); and 4) individuals. A niche is a more narrowly defined
group. Globalisation and the Internet have made niche marketing more feasible to many.

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Ethical Choice of Market Targets. Market targeting also can generate public controversy
when marketers take unfair advantage of vulnerable or disadvantaged groups, or promote
potentially harmful products.

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Chapter 2: Crafting Brand Positioning

Lesson Recording

Segmentation, Targeting, Positioning (STP)

2.1 Developing and Communicating a Positioning Strategy

Positioning

a. Positioning is the act of designing the company’s offering and image to occupy
a distinctive place in the mind of the target market.
b. Positioning requires that marketers define and communicate similarities and
differences between their brand and their competitors.
c. The result of positioning is the successful creation of a customer-focused value
proposition, a cogent reason why the target market should buy the product.
d. A good positioning has a “foot in the present” and a “foot in the future”. It needs
to be somewhat aspirational so the brand has room to grow and improve.
e. Brand positioning should have rational and emotional components that appeal
to both the head and the heart.

Points-of-Difference and Points-of-Parity

a. Points-of-Parity (POPs) are attributes or benefits associations that are not

necessarily unique to the brand but may in fact be shared with other brands.
The types of associations come in two basic forms: category and competitive.
Category point-of-parity associations are those which consumers view as being
necessary to a legitimate and credible product offering within a certain category.
Competitive point-of-parity associations are those associations designed to

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negate competitors’ points-of-difference or overcome perceived weaknesses or

vulnerabilities of the brand.
b. Communicating Category Membership can be achieved by: 1) Announcing
category benefits − reassure consumers that a brand will deliver on the
fundamental reason for using a category; 2) Comparing to exemplars −
comparing the brand to well-known, noteworthy brands in a category can help a
brand specify its category membership; and 3) Relying on the product descriptor.
c. Points-of-Difference (PODs) are attributes or benefits consumers strongly
associate with a brand, positively evaluate, and believe that they cannot find the
same extent with a competitive brand. Three key criteria determine whether a
brand association can truly function as a point-of-difference: 1) desirability; 2)
deliverability; and 3) differentiability.
d. Differentiation Strategies. Product and service differentiation offers the most
compelling differentiation to consumers. Beyond this, companies can try
to differentiate themselves through other dimensions such as: 1) employee
differentiation; 2) channel differentiation; 3) image differentiation; and 4)
services differentiation.

Reflect

Watch some videos from the "Get a Mac" campaign, for example, https://
www.youtube.com/watch?v=FxOIebkmrqs

Summarise the POP & POD for Apple and Windows (Hint: summarise both the
functional benefits and emotional benefits including brand personality)

Multiple Frames of Reference

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a. A company’s closest competitors are those seeking to satisfy the same customers
and needs and making similar offers. These brands all share the same category
membership and normally operate as close substitutes to each other.
b. It is useful to identify both the direct competitors and indirect/latent
competitors, which may include potential competitors beyond the current
product category. For example, Starbucks coffee may consider not just coffee
shops like Coffee Bean, but fast food companies like McDonald’s, or even the
instant coffee market, as its competitors.
c. Sometimes, a firm needs to develop the best possible positioning for each type
of competitors, and then a combined positioning to all. If the competition is too
diverse, the firm needs to prioritise competitors and choose the most important
set of competitors as competitive frame of reference. Trying to be all things to all
people leads to lowest common denominator positioning. This can be ineffective.

Reflect

Applying the concept of Multiple Frames of Reference, list potential competitors of

Singapore as a holiday destination. Describe profiles of target consumers and craft
possible positioning for each competitor category.

Perceptual Map
a. Perceptual maps are visual representations of consumer perceptions and
preferences. They provide quantitative portrayals of market situations and
the way consumers view different products, services, and brands along
various dimensions.
b. By overlaying consumer preferences with brand perceptions, marketers
can reveal “holes” or “openings” that suggest unmet consumer needs and
marketing opportunities.

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Brand Mantras (Brand Essence or Brand DNA)

a. Brand mantras are short, three- to five-word phrases that capture the
irrefutable essence or spirit of the brand positioning. Their purpose is to
ensure that all employees within the organisation and all external marketing
partners understand what the company wants the brand to represent in
consumers’ mind so they can adjust their actions accordingly.
b. Brand mantras must economically communicate what the brand is and what
it is not. Three key criteria for a brand mantra: 1) communicate; 2) simplify;
and 3) inspire.

2.2 Establishing a Brand Positioning

Brand bull’s eye exercise (textbook p.310) is very useful to summarise and communicate
brand positioning. It starts from listing POP and POD at the heart of the circle, then
substantiators or Reason to Believe (RTB) at the next level, and brand values/personality/
character and executional properties/visual identity at the outer circle.

Brand Narratives and Storytelling

a. Rather than outlining specific attributes or benefits, some marketing experts
describe positioning a brand as telling a narrative or story. Narrative branding is
based on deep metaphors that connect to people’s memories, associations, and
stories.
b. Five elements of narrative branding: 1) The brand story in terms of words and
metaphors; 2) The consumer journey or the way consumers engage with the
brand over time and touch points where they come into contact with it; 3) The
visual language or expression for the brand; 4) The manner in which the narrative
is expressed experientially or the brand engages the senses; and 5) The role the
brand plays in the lives of consumers.

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Watch

Here is an example of storytelling in brand positioning. Watch the video UOB brand
TV commercial: Our Values Define Us

https://www.youtube.com/watch?v=4tA8wtLaui4

2.3 Product Life Cycle Marketing Strategies

Product Life Cycles

The product life cycle is divided into four stages: 1) Introduction; 2) Growth; 3) Maturity;
and 4) Decline. Profits rise and fall at different stages of the product life cycle. Products
require different marketing, financial, manufacturing, purchasing, and human resource
strategies in each life cycle stage.

Introduction Stage and Pioneer Advantage

At this stage, the sales growth is low and costs are high. Promotional expenditures are
at their highest ratio to sales because of the need to: 1) Inform potential consumers; 2)
Induce product trial; and 3) Secure distribution in retail outlets. As a result, the profit is
low. There are normally few competitors at this stage. The objective of communication is
to build awareness and trial among early adopters and dealers.

Growth Stage

The growth stage is marked by a rapid climb in sales. Early adopters like the product, and
additional consumers start buying it. New competitors are attracted by the opportunities
and enter the market.

During this stage, the firm uses several strategies to sustain rapid market growth: 1)
improve product quality and add new product features and improved styling; 2) add new
models and flanker products; 3) enter new market segments; 4) increase its distribution

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coverage and enter new distribution channels; and 5) shift from product-awareness
advertising to product-preference advertising; and lower prices to attract the next layer of
price-sensitive buyers.

Maturity Stage

At some point, the rate of sales growth will be slow, and the product will enter a stage
of relative maturity. This stage normally lasts longer than the previous stages and poses
big challenges to marketing management. Most products are in the maturity stage of the
life cycle.
a. Some companies at this stage abandon weaker products and concentrate on
products that are more profitable and on new products.
b. Market Modification: The company might try to increase sales by working on
the two factors that make up sales volume: 1) number of brand users; and 2)
usage rate per user. Specifically, companies can try to: 1) convert non-users; 2)
enter new market segments; 3) win competitors’ customers; and 4) convince
current users to increase their brand usage.
c. Product Modification: Managers also try to stimulate sales by modifying the
product’s characteristics through quality improvement, feature improvement, or
style improvement.
d. Marketing Programme Modification: Product managers might also try to
stimulate sales by modifying other marketing programme elements: the 4Ps and
services.

Decline Stage

Sales decline for a number of reasons, including technological advances, shifts in

consumer tastes, and increased domestic and foreign competition. All lead to overcapacity,
increased price-cutting, and profit erosion. As sales and profits decline, some firms
withdraw from the market. Those remaining may reduce the number of products they
offer

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Reflect

Use the tablet market as an example. Which product lifecycle stage is a brand like
Samsung in the tablet market currently at? What are the characteristics of this product
stage in terms of sales, profit, customer and competition? Which marketing strategies
would you recommend for the brand in terms of the 4Ps?

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Chapter 3: Tapping into Global Markets

Lesson Recording

Market Entry Strategies

3.1 Competing on a Global Basis

a. In a global industry, competitors’ strategic positions in major geographic or
national markets are affected by their overall global positions.
b. A global firm operates in more than one country and captures R&D, production,
logistical, marketing, and financial advantages not available to purely domestic
competitors.
c. Global firms plan, operate, and coordinate their activities on a worldwide basis.
d. dA company doesn’t need to be large to sell globally.

3.2 Deciding Whether to Go Abroad

Most companies would prefer to remain domestic if their domestic market were large
enough. Yet several factors are drawing more and more companies into the international
arena: 1) Some international markets present higher profit opportunities than the domestic
market; 2) The company needs a larger customer base to achieve economies of scale; 3)
The company wants to reduce its dependence on any one market; 4) The company may
want to counter-attack these competitors in their home markets; and 5) Customers are
going abroad and require international servicing.

Before making a decision to go abroad, the company must weigh several risks (political,
legal, cultural, managerial, etc.): 1) Risk of not understanding foreign preferences;
2) Failure to offer a competitively attractive product; 3) Lack of business culture
understanding; 4) Underestimating foreign regulations; incurring unexpected costs; 5)

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Lack of managers with international experience; and 6) Commercial laws can change,
currency can be devalued, and a political revolution could occur.

3.3 Deciding Which Markets to Enter

Entry Strategy. Companies’ entry strategy typically follows one of two possible
approaches: 1) A waterfall approach – countries are gradually entered sequentially; or 2) A
sprinkler approach – many countries are entered simultaneously within a limited period
of time.

Evaluating Potential Markets. The readiness for different products and services and
their attractiveness as a market to foreign firms depend upon certain environments: 1)
Economic; 2) Political-Legal; and 3) Cultural.

3.4 Deciding How to Enter the Market

Once a company decides to target a particular country, it has to determine the best mode
of entry. Its broad choices are: 1) indirect exporting; 2) direct exporting; 3) licensing; 4) joint
ventures; and 5) direct investment. Each succeeding strategy involves more commitment,
risk, control, and profit potential.

Indirect Exporting has two advantages: less investment and less risk. The disadvantages
are lower potential returns and a lack of control over the sales and marketing.

Direct Exportinghas relatively higher risk and return, but generates greater potential
returns and a better control over its foreign sales and marketing.

Licensing is a simple way to engage in international marketing, and is widely used.

a. A foreign company gets a licence to use a manufacturing process, trademark,
patent, trade secret, or other item of value for a fee or royalty. Licensing
arrangements include management contracts, contract manufacturing, and
franchising.
b. Licensor gets market entry at little risk; licensee gets production expertise or
well-known product or brand name. Licensor has less control than if it had its

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own production and sales facilities, gives up profits, and may create a competitor
when the contract ends.
c. Best strategy is to lead in innovation so licensee will continue to depend on the
licensor.

Joint Venturesinvolve foreign investors and local investors. It may be necessary or

desirable for economic and political reasons for foreign firms which might lack financial,
physical and management resources to undertake the venture alone, or the foreign
government might require joint ownership as a condition for entry. The advantage is
that local partners can help with distribution and sales. The disadvantage is that foreign
partners might disagree over investment, marketing and future investment.

Direct Investment is direct ownership and has advantages: 1) Cost economies through
cheaper labour or raw materials, government incentives, and freight savings; 2) Stronger
image in the host country because it creates jobs; 3) Deeper relationship with the
government, customers, local suppliers, and distributors, enabling it to better adapt its
products to the local environment; 4) Full control over investment and can develop
manufacturing and marketing policies that serve its long-term international objectives;
and 5) Access to the market in case the host country insists that locally purchased goods
must have domestic content. A disadvantage is that the firm exposes large investment
risks such as blocked or devalued currencies, worsening markets, or expropriation.

Acquisition of local brands is another way of entering an international market.

3.5 Global Similarities and Differences

The global village shares many similarities across countries: 1) Technology-led
convergence of lifestyles; and 2) Shared needs and wants have created global markets for
more standardised products.

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3.6 Country of Origin Effect

a. The country of origin effect means consumers’ mental associations and beliefs
triggered by a country. Governments now recognise that the images of their cities
and countries affect more than tourism and have important value in commerce.
Country image can also help sell products.
b. Global marketers know that buyers hold distinct attitudes and beliefs about
brands or products from different countries. The impact of country of origin
varies with the type of product.

Internet is changing marketing in many profound ways, from products consumers buy,
to the way they acquire products, to the price they are willing to pay, and to how brands
communicate with consumers. Internet is also changing the value of brands and how
brands enter into the global markets.

Reflect

Study the report on the Best Perceived Brands by

Millennials in Singapore.http://www.marketing-interactive.com/top-10-brands-
singapore-millennials-love/Conduct some research on how brands such as Carousell
and Taobao enter into the Singapore market.

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Summary

1. Marketers often use the major segmentation variables, namely geographic,

demographic, psychographic and behavioural variables, in combination.
2. Marketing is moving away from mass market targeting to individual
customisation approach.
3. Points-of-parity are associations shared with other brands and Points-of-
difference are associations unique to the brand. Both POP and POD are important
in brand positioning.
4. Both consumers and brands are becoming more global. The ways brands enter
into new markets are constantly changing in the Internet era.

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Quiz

1. The identification and profiling of distinct groups of buyers who might prefer or
require varying product and service mixes is known as ________.
a. segmentation
b. integration
c. disintermediation
d. cross-selling
e. customisation

2. During market segmentation analysis, the marketer identifies which segments

present the greatest opportunity. These segments are called ________.
a. target markets
b. capital markets
c. tertiary markets
d. demographic markets
e. developing markets

3. If a marketing manager segments the market into culture-oriented, sports-oriented,

or outdoor-oriented groups, he or she is segmenting on the basis of ________.
a. loyalty status
b. behavioural occasions
c. user status
d. psychographic lifestyle
e. readiness stage

4. When Amy goes shopping for clothes, she goes into every store in the mall looking
for the best deal. She is very price conscious. On the basis of loyalty status, Amy can
be described as ________.

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MKT202 Segmentation, Targeting and Positioning (STP) and Global Marketing

a. a switchcer
b. a split loyal
c. a shifting loyal
d. a hard-core loyal
e. an antiloyal

5. The Marlboro Man was depicted in the advertisements of Marlboro cigarettes as

a rugged outdoor, tough cowboy type. This was done to establish what is called
________.
a. trademarking
b. a brand name
c. a brand personality
d. co-branding
e. a brand reference

6. Which of the following best describes a car company's value proposition?

a. We charge a 20% premium on our cars.
b. We target safety-conscious upscale families.
c. We sell the safest, most durable wagon.
d. We are the market leader in the small car category.
e. We focus on expanding in faster-growing markets.

7. The three criteria that determine whether a brand association can truly function as a
point-of-difference are ________.
a. comparability, authenticity, deliverability
b. desirability, peculiarity, deliverability
c. deviance, peculiarity, deformity
d. desirability, deliverability, differentiability
e. differentiability, authenticity, desirability

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8. Which of the following can induce a firm to expand into the international arena?
a. Consumer preferences in the domestic market vary widely.
b. Average income level of domestic consumers is high.
c. The firm operates in an industry that caters to the mass market.
d. The firm finds that the domestic market is almost saturated.
e. The firm is yet to achieve economies of scale even though the domestic market
has potential.

9. Identify a benefit of using joint ventures to enter a foreign market.

a. It entails minimum risk.
b. It provides access to an established distribution network in the host country.
c. It yields the highest returns.
d. It retains full control of its investment in the host country.
e. It is the best strategy for countries with psychic proximity.

10. As a result of the ad campaigns depicting Brazil as a multicultural land of carnivals

and beaches, any mention of the country makes people think of sun and sand. This
is an example of ________.
a. anchoring effect
b. target market impact
c. regiocentrism
d. country-of-origin effect
e. cognitive dissonance

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MKT202 Segmentation, Targeting and Positioning (STP) and Global Marketing

Solutions or Suggested Answers

Quiz
1. The identification and profiling of distinct groups of buyers who might prefer or
require varying product and service mixes is known as ________.
a. segmentation
Correct.

b. integration
Incorrect.

c. disintermediation
Incorrect.

d. cross-selling
Incorrect.

e. customisation
Incorrect.

2. During market segmentation analysis, the marketer identifies which segments

present the greatest opportunity. These segments are called ________.
a. target markets
Correct.

b. capital markets
Incorrect.

c. tertiary markets
Incorrect.

d. demographic markets

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MKT202 Segmentation, Targeting and Positioning (STP) and Global Marketing

Incorrect.

e. developing markets
Incorrect.

3. If a marketing manager segments the market into culture-oriented, sports-oriented,

or outdoor-oriented groups, he or she is segmenting on the basis of ________.
a. loyalty status
Incorrect.

b. behavioural occasions
Incorrect.

c. user status
Incorrect.

d. psychographic lifestyle
Correct.

e. readiness stage
Incorrect.

4. When Amy goes shopping for clothes, she goes into every store in the mall looking
for the best deal. She is very price conscious. On the basis of loyalty status, Amy can
be described as ________.
a. a switchcer
Correct.

b. a split loyal
Incorrect.

c. a shifting loyal
Incorrect.

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MKT202 Segmentation, Targeting and Positioning (STP) and Global Marketing

d. a hard-core loyal
Incorrect.

e. an antiloyal
Incorrect.

5. The Marlboro Man was depicted in the advertisements of Marlboro cigarettes as

a rugged outdoor, tough cowboy type. This was done to establish what is called
________.
a. trademarking
Incorrect.

b. a brand name
Incorrect.

c. a brand personality
Correct.

d. co-branding
Incorrect.

e. a brand reference
Incorrect.

6. Which of the following best describes a car company's value proposition?

a. We charge a 20% premium on our cars.
Incorrect.

b. We target safety-conscious upscale families.

Incorrect.

c. We sell the safest, most durable wagon.

Correct.

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MKT202 Segmentation, Targeting and Positioning (STP) and Global Marketing

d. We are the market leader in the small car category.

Incorrect.

e. We focus on expanding in faster-growing markets.

Incorrect.

7. The three criteria that determine whether a brand association can truly function as a
point-of-difference are ________.
a. comparability, authenticity, deliverability
Incorrect.

b. desirability, peculiarity, deliverability

Incorrect.

c. deviance, peculiarity, deformity

Incorrect.

d. desirability, deliverability, differentiability

Correct.

e. differentiability, authenticity, desirability

Incorrect.

8. Which of the following can induce a firm to expand into the international arena?
a. Consumer preferences in the domestic market vary widely.
Incorrect.

b. Average income level of domestic consumers is high.

Incorrect.

c. The firm operates in an industry that caters to the mass market.

Incorrect.

d. The firm finds that the domestic market is almost saturated.

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MKT202 Segmentation, Targeting and Positioning (STP) and Global Marketing

Correct.

e. The firm is yet to achieve economies of scale even though the domestic
market has potential.
Incorrect.

9. Identify a benefit of using joint ventures to enter a foreign market.

a. It entails minimum risk.
Incorrect.

b. It provides access to an established distribution network in the host country.

Correct.

c. It yields the highest returns.

Incorrect.

d. It retains full control of its investment in the host country.

Incorrect.

e. It is the best strategy for countries with psychic proximity.

Incorrect.

10. As a result of the ad campaigns depicting Brazil as a multicultural land of carnivals

and beaches, any mention of the country makes people think of sun and sand. This
is an example of ________.
a. anchoring effect
Incorrect.

b. target market impact

Incorrect.

c. regiocentrism
Incorrect.

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d. country-of-origin effect
Correct.

e. cognitive dissonance
Incorrect.

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References

Kotler, P., & Keller, K. L. (2016). Marketing Management (15e). Upper Saddle River, NJ:

Pearson Prentice Hall.

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4
Study
Unit

Products and Services Price

MKT202 Products and Services Price

Learning Outcomes

At the end of this unit, you are expected to:

• Explain a product
• Analyse the five levels of a product
• Express products by their classification
• Discuss the possible product and service dimensions that a company can adopt to
achieve differentiation
• Propose various product or service dimensions to differentiate a product offering
• Discuss how companies can effectively build and manage its product mix and
product lines
• Demonstrate how the four dimensions of product mix may be used to develop
effective marketing strategies
• Describe the different types of product mix pricing
• Apply the appropriate product mix pricing to maximize profits for a total product
mix
• Explain services
• Identify and describe the different categories of service mix
• Discuss the four distinctive characteristics of services
• Analyze a service using the four distinctive characteristics of services
• Develop appropriate strategies to overcome the challenges of marketing a service
• Discuss price and its role in the marketing mix
• Explain how consumers process and evaluate prices
• Discuss the key steps involved in setting price
• Apply the key steps in setting price for an offering
• Discuss the various price adaptation strategies
• Employ the relevant price adaptation strategy to a given scenario

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Overview

Product is the first and most important element of the 4Ps, or marketing mix. To achieve
market leadership, firms must offer products and services of superior quality that provide
unsurpassed customer value.

Services marketing can pose a challenge to the marketer as services possess the distinct
characteristics of intangibility, inseparability, variability and perishability. As such, the
marketing of services differs from the marketing of physical products.

Price communicates to the market the company’s intended value positioning of its
products or brands. Holistic marketers need to take into account many factors in making
pricing decisions − the company, customers, competition, and marketing environment.
Pricing decisions must be consistent with the firm’s marketing strategy and its target
markets and brand positioning.

Read

Chapter 13: “Setting Product Strategy”

Chapter 14: “Designing and Managing Services”

Chapter 16: “Developing Pricing Strategies & Programmes”

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Chapter 1: Marketing of Products

Lesson Recording

The Customer Value Hierarchy

Product Mix Pricing

1.1 Product Characteristics and Classifications

A product is anything that can be offered to a market to satisfy a want or need. Products
that are marketed include: physical goods, services, experiences, events, persons, places,
properties, organisations, information and ideas (the ten entities marketed to, Unit 1).

Product Levels: The Customer Value Hierarchy

In planning its market offering, the marketer needs to address five product levels. Each
level adds more customer value, and the five levels constitute a customer value hierarchy:
1) core benefits; 2) a basic product; 3) expected product; 4) augmented product; and 5)
potential product.

Product Classifications: Marketers have traditionally classified products on the basis

of characteristics: durability, tangibility, and use. Each product type has an appropriate
marketing-mix strategy.

Consumer-Goods Classification: The vast array of goods consumers buy can be classified
on the basis of shopping habits: 1) convenience goods; 2) shopping goods; 3) specialty
goods; and 4) unsought goods.

Industrial-Goods Classification: We classify industrial goods in terms of their relative

cost and how they enter the production process: materials and parts, capital items, and
supplies and business services.

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1.2 Product and Service Differentiation

Product Differentiation. Products are different in: 1) form; 2) features; 3) customisation;
4) performance quality; 5) comfort quality; 6) durability; 7) reliability; 8) reparability; and
9) style.

Services Differentiation. When the physical product cannot be easily differentiated, the
key to competitive success may lie in adding valued services and improving quality. The
main service differentiators are: 1) ordering ease; 2) delivery; 3) installation; 4) customer
training; 5) customer consulting; and 6) maintenance and repair.

Reflect

Discuss how a product, e.g. a laptop computer, can be differentiated along both
product and services differentiation dimensions, for example, features, customisation,
performance quality, durability, and maintenance.

1.3 Product Design

a. Design, the totality of features that affect the way the product looks, feels, and
functions, offers a potent way to differentiate and position a company’s products
and services.
b. A well-designed product is easy to manufacture and distribute. To the customer,
it is pleasant to look at and easy to open, install, use, repair, and dispose of.
The designer must take all these goals into account. Product design is exerting
a strong influence in consumers’ purchasing decisions, especially for certain
products.
c. Design generates emotional power for products. In a visually oriented culture,
transmitting brand meaning and positioning through design are critical.

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1.4 Luxury Products

Characteristics of Luxury Products

a. Luxury products are higher priced; often about social status and who a customer
was − or perhaps wanted to be. Luxury for many has become more about style
and substance, combining personal pleasure and self-expression.
b. Common denominators of luxury brands are quality and uniqueness. Some
common propositions − craftsmanship, heritage, authenticity, and history – are
used to justify an often extravagant price.

Marketing Luxury Brands

a. Globalisation, new technologies, financial crises, shifting consumer cultures, and

other forces require luxury brand marketers to be skilful and adept at their brand
stewardship to succeed.
b. Luxury brand marketers have been issued the following guidelines: 1) maintain
a premium image for luxury brands; control the image; 2) Create many intangible
brand associations and an aspirational image; 3) Align all aspects of the
marketing programme: must ensure high-quality products and services and
pleasurable purchase and consumption experiences; 4) Besides brand names,
other brand elements − logos, symbols, packaging, signage − can be important
drivers of brand equity for luxury products; 5) Secondary associations from
linked personalities, events, countries, and other entities can boost luxury-
brand equity as well; 6) Luxury brands must carefully control distribution via
a selective channel strategy; 7) Luxury brands must employ a premium pricing
strategy, with strong quality cues and few discounts and markdowns; 8) Brand
architecture for luxury brands must be managed carefully; 9) Competition for
luxury brands must be defined broadly because it often comes from other
categories; and 10) Luxury brands must legally protect all trademarks and
aggressively combat counterfeits.

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c. Success depends on getting the right balance of classic and contemporary

imagery and continuity and change in marketing programmes and activities.

1.5 Product and Brand Relationships

Product Line Management

a. A product mix consists of various product lines. It has a certain width, length,
depth and consistency.
b. A company can change the product component of its marketing mix by
lengthening its product via line stretching (down-market, up-market, or both) or
line filling, by modernising its products, by featuring certain products, and by
pruning its products to eliminate the least profitable.
c. Line Stretchingoccurs when a company lengthens its product line beyond its
current range. Line stretching includes: 1) down-market stretch (introducing a
lower priced line); 2) up-market stretch (entering the high-end of the market);
and 3) two-way stretch.

Reflect

Conduct some research on product lines of the Apple brand. Draw a chart of Apple's
product line mix. Discuss how Apple’s product line has evolved over the years. Are
there any line stretching activities involved? Why? Is the brand trying to reach the
lower-end or higher-end of the market or both?

Product Mix Pricing

We can distinguish six situations involving product-mix pricing:

1. Product-line pricing: prices are different for different lines of products, e.g.
different models of HP computers.

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2. Optional-feature pricing: optional products, features or services are offered and

charged separately from the main products, e.g. tour packages.
3. Captive-product pricing: once the product is purchased, the consumers are
locked by ancillary or captive products that have to go with the main products,
e.g. printer & inks.
4. Two-part pricing: products are charged by a fixed fee plus a variable usage fee,
e.g. taxi fare.
5. By-product pricing: the by-products of main products become sources of profit.
As a result, the price of the main product can be lowered if necessary, e.g.
petroleum and rubber products.
6. Product-bundling: products are offered as bundles (pure bundling or mixed
bundling), e.g. restaurant set menu, shampoo and conditioner set.

Co-Branding

Products are often combined with products from other companies in various ways. The
main advantage to co-branding is that a product may be convincingly positioned by virtue
of the multiple brands involved. For co-branding to succeed, the two brands separately
must have brand equity − adequate brand awareness and a sufficiently positive brand
image. The most important requirement is that there is a logical fit between the two brands
to maximise the advantages of each while minimising disadvantages.

Ingredient Branding is a special case of co-branding (e.g. “intel inside”). It creates brand
equity for materials, components, or parts that are necessarily contained within other
branded products. An interesting take on ingredient branding is “self-branding” in which
companies advertise and even trademark their own branded ingredients.

1.6 Packaging, Labelling, Warranties and Guarantees

Packaging

a. Packaging is important because it is the buyer’s first encounter with the product:
1) it draws the consumer in; 2) it acts as a “five-second commercial” for the

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product; 3) it affects consumers’ later product experiences when they open it and
use what’s inside; and 4) packaging may be an important part of a brand’s equity.
b. Several factors contribute to the growing use of packaging as a marketing tool: 1)
It facilitates self-service (more choices; less explanation); 2) Consumer affluence
(increases willingness to pay for the convenience, appearance, dependability,
and prestige of better packages); 3) Company and brand image (recognition of
the company or brand); and 4) Innovation opportunity (make products more
convenient and easier to use).
c. Packaging must achieve a number of objectives: 1) Identify the brand; 2) Convey
descriptive and persuasive information; 3) Facilitate product transportation and
protection; 4) Assist at-home storage; and 5) Aid product consumption.
d. Packaging colour is important because colour carries different meanings in
different cultures and market segments.

Labelling. A label performs several functions: 1) It identifies the product or brand; 2) The
label might describe the product: who made it, where and when, what it contains, how it
is to be used, and how to use it safely; and 3) The label might promote the product through
attractive graphics. Several legal acts regulate the labelling practices.

Several legal acts regulate the labelling practices.

Warranties and Guarantees

Warranties are formal statements of expected product performance by the manufacturer.

Whether expressed or implied, warranties are legally enforceable.

Many sellers offer either general or specific guarantees. Guarantees reduce the buyer’s
perceived risk. They suggest that the product is of high quality and the company and its
service performance are dependable. They can be especially helpful when the company or
product is not well known or when the product’s quality is superior to that of competitors.

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Chapter 2: Marketing of Services

Lesson Recording

Marketing of Services

Reflect

The service industry is very important to almost all countries. It is especially important
to the city state of Singapore, as much of the manufacturing industry has been moved
to more affordable places. Download and read the following infographics from the
government statistics website, and summarise the information that is interesting to
you, or you think is important. We will discuss some findings in the class if time
permits.

https://www.singstat.gov.sg/modules/infographics/services-industries

2.1 The Nature of Services

a. A service is any act or performance that one party can offer to another that is
essentially intangible and does not result in the ownership of anything. It may
or may not be tied to a physical product.
b. The service component can be a minor or major part of the total offering.
We distinguish five categories of service offerings: 1) pure tangible goods; 2)
tangible goods with accompanying services; 3) hybrid; 4) major service with
accompanying minor goods and services; and 5) pure service.

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c. Services differ in difficulty of evaluation (search quality, experience quality

and credence quality). For some services, customers cannot judge the technical
quality of some services even after they have received them.
d. Because services are generally high in experience and credence qualities, there
is more risk in purchase. This has several consequences: 1) Service consumers
generally rely on word of mouth rather than advertising; 2) Service consumers
rely heavily on price, personnel, and physical cues to judge quality; 3) Service
consumers are highly loyal to service providers that satisfy them; and 4) Because
of the switching costs involved, much consumer inertia can exist. It can be
challenging to entice a customer away from a competitor.

2.2 Distinctive Characteristics of Services

Services have four distinctive characteristics that greatly affect the design of marketing
programmes: intangibility, inseparability, variability, and perishability.

Intangibility refers to the fact that services cannot be seen, tasted, felt, heard or smelled
before they are bought. To reduce uncertainty, buyers usually look for evidence of quality.
Marketers need to transform intangible services into concrete evidences/benefits through
place (e.g. outlet and cashier layout), people, equipment, communication material,
symbols, and price.

Inseparabilityrefers to the fact that services have to be produced and consumed

simultaneously. Both the provider and client are a part of the service. In the case that
service providers have to provide services to a lot of people, the service providers need to
work out ways to handle large groups, work faster, train more service providers and/or
outsource services.

Variabilityrefers to the fact that services are highly variable depending on who provide
them, when and where and to whom services are provided. Service providers need
to increase quality control by 1) investing in good hiring and training procedures; 2)
standardising service process; 3) offering service guarantees; and 4) monitoring customer
satisfaction.

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Perishability refers to the fact that services cannot be stored. Service providers need to
work on both the demand side and supply side to manage perishability.

On the demand (customer) side: a) Differential pricing will shift some demand from peak
to off-peak periods; b) Nonpeak demand can be cultivated; c) Complementary services
can provide alternatives to waiting customers; and d) Reservation systems are a way to
manage the demand level.

Reflect

Using the hotel business as an example, discuss the four characteristics of services and
strategies companies can adopt to manage these characteristics.

2.3 The New Service Realities

a. Customer empowerment. Customers are becoming more sophisticated about
buying product-support services, are pressing for “unbundled services” and the
right to select the elements they want, and can give feedback with a mouse click.
b. Customer coproduction. Customers do not merely purchase and use a service;
they play an active role in its delivery. Their words and actions affect the quality
of their service experiences and those of others as well as the productivity of
frontline employees. Customers often feel they derive more value, and feel a
stronger connection to the service provider, if they are actively engaged in the
service process.
c. Satisfying Employees as well as Customers. There is normally a positive
correlation between customer satisfaction, employee satisfaction and store
profitability.

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Reflect

Can you try to link the above points to some previous concepts we have discussed,
for example, CRM and Internal marketing?

2.4 Achieving Excellence in Service Marketing

Best Practices of Top Service Companies: 1) Strategic Concept: Top service companies
have a clear sense of their target customers and their needs and have developed a
distinctive strategy for satisfying them; 2) Top-Management Commitment: Managers look
monthly not only at financial performance, but also at service performance; 3) High
Standards; 4) Profit Tiers: Firms adopt different service standards to different customers
depending on profitability levels; and 5) Monitoring Systems: Top firms audit service
performance, both their own and competitors’, on a regular basis.

2.5 Managing Product-Support Services

Postsale Service Strategy. Postsale services can be provided by the manufacturer,
the distributor, and outsourcing companies. Conducting after sales services by the
manufacturer enables manufacturers to stay close to consumers and understand their real
problems; Authorising intermediaries to conduct services enables better access to services
by consumers (convenience), and quicker service; Outsourcing services may be able to
offer lower price and faster service to consumers. The manufacturer needs to control the
quality of product support in all scenarios.

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Chapter 3: Developing Pricing Strategies and

Programmes

Lesson Recording

Pricing

3.1 Understanding Pricing

Pricing in a Digital World

a. In a digital world, buyers can: 1) Get instant price comparisons from thousands
of vendors; 2) Check prices at the point of purchase; and 3) Name their price and
have it met; and sometimes get products free. Sellers can: 1) Monitor customer
behaviour and tailor offers to individuals; and 2) Give certain customers access
to special prices. Both buyers and sellers can negotiate prices in online auctions
and exchanges or even in person.
b. Price has operated as a major determinant of buyer choice. Because consumers
and purchasing agents have better access to price information, both retailers
and manufacturers are under pressure for lower prices. The result can be a
marketplace characterised by heavy discounting and sales promotion.
c. A Changing Pricing Environment is also a result of the recession and the
resource constrained millennial cohort. The outcome is a sharing economy in
which consumers share bikes, cars, clothes, couches, apartments, tools, and skills
extracting more value from what they already own. The sector of the new sharing
economy that is really exploding is rentals.

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Reflect

Alibaba increased its investment in Lazada from 51% to 83%, according to

the following article. https://techcrunch.com/2017/06/28/alibaba-ups-its-stake-in-
southeast-asias-lazada-with-1-billion-investment/

Study the marketing strategy of LAZADA. If consumers want to buy something from
the Taobao collection, they have two options: 1/ they can order from LAZADA; or 2/
they can order from taobao.com and choose to ship the goods to Singapore. Q1:

Describe the pricing strategies of Lazada; Q2: Compare the Customer Perceived Value
of these two options.

Consumer Psychology and Pricing

Consumers generally do not accept prices at “face value”. They often actively process
prices information, interpreting prices in terms of their knowledge from: 1) prior
purchasing experiences; 2) formal communications, e.g. ads; 3) informal communications
with friends; or 4) point-of-purchase or online resources.

Reference Prices

Although consumers have fairly good knowledge of price ranges, they don’t usually
remember specific prices. When examining products, consumers often employ reference
prices, comparing an observed price to an internal reference price they can remember or an
external frame of reference such as a posted “regular retail price”. These reference prices
include: a) fair price – what consumers feel the product should cost; b) typical price; c)
last price paid; d) upper-bound price – reservation price or the maximum price consumer
would pay; e) lower-bound price – lower threshold price or the minimum most consumers
would pay; f) historical competitor price; g) expected future price; and h) usual discounted
price.

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Price-Quality Inferences. Many consumers use price as an indicator of quality. Some

companies adopt exclusivity and scarcity to justify premium prices..

Price Endings

a. Many sellers believe that prices should end in an odd number.

b. Research has shown that consumers tend to process prices in a “left-to-right”
manner rather than by rounding.
c. Prices that end with a “0” or “5” are also popular and are thought to be easier
for consumers to process and retrieve from memory.
d. Pricing cues like sale signs and prices that end in a “9” are less effective the more
they are employed.

3.2 Setting the Price

The firm has to consider many factors in setting its pricing policy. The six-step procedure
is: 1) Selecting the pricing objective; 2) Determining demand; 3) Estimating costs; 4)
Analysing competitors’ costs, prices, and offers; 5) Selecting a pricing method; and 6)
Selecting the final price.

Step 1: Selecting the Pricing Objective

The company first decides where it wants to position its market offering. The clearer a
firm’s objectives, the easier it is to set price. The five major objectives are: 1) survival;
2) maximum current profit; 3) maximum market share; 4) maximum market skimming
(prices start high but slowly lowered overtime, e.g. technology products); and 5) product-
quality leadership. Non-profit and public organisations have other pricing objectives.

Step 2: Determining Demand

Price Sensitivity

Consumers are also less price-sensitive when: 1) There are few or no substitutes or
competitors; 2) They do not readily notice the higher price; 3) They are slow to change
their buying habits; 4) They think the higher prices are justified; and 5) Price is only a small

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part of the total cost of obtaining, operating, and servicing the product over its lifetime
(total cost of ownership − TCO).

Step 3: Estimating Costs

Costs can take two forms: fixed and variable.

Step 4: Analyzing Competitors: Costs, Prices and Offers

Step 5: Price-Setting Method

There are six price-setting methods: 1) Markup pricing; 2) Target-return pricing; 3)

Perceived-value pricing; 4) Value pricing; 5) Going-rate pricing; and 6) Auction-type
pricing.

Step 6: Final Price Selection

Companies need to consider factors like its impact on other marketing activities, company
pricing policies, gain-and-risk-sharing pricing, and the impact of price on other parties.

3.3 Adapting the Price

Companies usually do not set a single price but rather develop a pricing structure that
reflects variations of the market.

Geographical Pricing

In geographical pricing, the company decides how to price its products to different
customers in different locations and countries.

Price Discounts and Allowances

Most companies will adjust their list price and give discounts and allowances for
early payment, volume purchases (quantity discount), and off-season buying (seasonal
discount). Companies must do this carefully or find their profits much lower than
planned. Some companies also offer discount to trade partners (functional discount),
especially when a push channel strategy is employed. (Table 14.5 of the textbook).

Promotional Pricing

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Companies can use several pricing techniques to stimulate early purchase: 1) Loss-leader
pricing; 2) Special-event pricing; 3) Special-customer pricing; 4) Cash rebates; 5) Low-
interest financing; 6) Longer payment terms; 7) Warranties and service contracts; and 8)
Psychological discounting.

Differentiated Pricing

Price discrimination happens when companies sell a product or service at two or more
prices that do not reflect proportional differences in costs. These include: 1) customer
segment pricing (e.g. theatre tickets for students & elderly); 2) product-form pricing (same
product, different packaging; e.g. cookies sold in tins or boxes); 3) image pricing; 4)
channel pricing (7/11 vs. giant supermarket); 5) location pricing (7/11 on campus vs.
seven eleven in CBD); and time pricing (early bird discount).

A special differentiated pricing is called Yield pricing that is widely used by the hotel and
airline companies. Yield pricing offers discounted but limited early purchases, higher-
priced late purchases, and the lowest rates on unsold inventory just before it expires.

Responding to Competitors’ Price Cut

Three possible responses to low-cost competitors are: 1) Further differentiate the product
or service; 2) Introduce a low-cost venture; and 3) Reinvent as a low-cost player.

Reflect

Hong Kong Disney land is facing a declining visitor number due to the opening of
Shanghai Disney land and a reduction of mainland visitors. Please suggest some price
adaptation strategies to the management of the theme park in order to bring the
company’s profitability back on track.

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Summary

1. In planning the product mix for a brand, marketers need to think about the five
levels of a product: the core benefit, the basic product, the expected product, the
augmented product and the potential product.
2. Products can be differentiated on the basis of product form,
features, performance, conformance, durability, reliability, repairability, style,
customisation and design.
3. Services are intangible, inseparable, variable and perishable. Marketers need to
take all these characteristics into considerations when they develop marketing
strategies for services.
4. Pricing strategies reflect variations in demand, costs, customer expectations,
purchase timing, order levels and other factors such as transportation and
competition.

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Quiz

1. At the heart of any marketing programme is the firm's ________, its tangible offering
to the market.
a. strategy
b. product
c. brand
d. value
e. people

2. When companies search for new ways to satisfy customers and distinguish their
offering from others, they look at the ________ product, which encompasses all the
possible augmentations and transformations of the product.
a. consumption
b. expected
c. potential
d. augmented
e. basic

3. Marketers have traditionally classified products on the basis of three characteristics:

________, tangibility, and use.
a. availability
b. affordability
c. aesthetics
d. durability
e. necessity

4. Many products can be differentiated in terms of their ________, which is its size,
shape, or physical structure.

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a. form
b. prototype
c. architecture
d. model
e. blueprint

5. Companies may wish to implement a(n) ________ to achieve more growth, to realise
higher margins, or simply to position themselves as full-line manufacturers.
a. up-market stretch
b. rebranding plan
c. outsourcing strategy
d. disintermediation policy
e. vertical integration strategy

6. Betty Crocker cake mixes using Hershey syrup in its cake mixes and "Lunchables"
lunch combinations with Taco Bell tacos are examples of what special type of
branding?
a. family branding
b. ingredient co-branding
c. co-branding
d. generic-branding
e. individual branding

7. To which of the following categories of services does a cell phone belong

a. major service with accompanying minor services
b. major service with accompanying minor goods
c. pure service
d. pure tangible good
e. tangible good with accompanying services

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8. Services high in ________ qualities have characteristics that the buyer can evaluate
after purchase.
a. privacy
b. experience
c. credence
d. search
e. stock

9. Unlike physical products, services cannot be seen, tasted, felt, heard, or smelled
before they are bought. This is known as the ________ aspect of services. .
a. inseparability
b. intangibility
c. variability
d. perishability
e. heterogeneity

10. A firm that is plagued with overcapacity, intense competition, or changing wants
would do better if it pursues ________ as its major objective.
a. market skimming
b. product-quality leadership
c. survival
d. profit maximisation
e. market penetration

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Solutions or Suggested Answers

Quiz
1. At the heart of any marketing programme is the firm's ________, its tangible offering
to the market.
a. strategy
Incorrect.

b. product
Correct.

c. brand
Incorrect.

d. value
Incorrect.

e. people
Incorrect.

2. When companies search for new ways to satisfy customers and distinguish their
offering from others, they look at the ________ product, which encompasses all the
possible augmentations and transformations of the product.
a. consumption
Incorrect.

b. expected
Incorrect.

c. potential
Correct.

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d. augmented
Incorrect.

e. basic
Incorrect.

3. Marketers have traditionally classified products on the basis of three characteristics:

________, tangibility, and use.
a. availability
Incorrect.

b. affordability
Incorrect.

c. aesthetics
Incorrect.

d. durability
Correct.

e. necessity
Incorrect.

4. Many products can be differentiated in terms of their ________, which is its size,
shape, or physical structure.
a. form
Correct.

b. prototype
Incorrect.

c. architecture
Incorrect.

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d. model
Incorrect.

e. blueprint
Incorrect.

5. Companies may wish to implement a(n) ________ to achieve more growth, to realise
higher margins, or simply to position themselves as full-line manufacturers.
a. up-market stretch
Correct.

b. rebranding plan
Incorrect.

c. outsourcing strategy
Incorrect.

d. disintermediation policy
Incorrect.

e. vertical integration strategy

Incorrect.

6. Betty Crocker cake mixes using Hershey syrup in its cake mixes and "Lunchables"
lunch combinations with Taco Bell tacos are examples of what special type of
branding?
a. family branding
Incorrect.

b. ingredient co-branding
Correct.

c. co-branding

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Incorrect.

d. generic-branding
Incorrect.

e. individual branding
Incorrect.

7. To which of the following categories of services does a cell phone belong

a. major service with accompanying minor services
Incorrect.

b. major service with accompanying minor goods

Incorrect.

c. pure service
Incorrect.

d. pure tangible good

Incorrect.

e. tangible good with accompanying services

Correct.

8. Services high in ________ qualities have characteristics that the buyer can evaluate
after purchase.
a. privacy
Incorrect.

b. experience
Correct.

c. credence
Incorrect.

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d. search
Incorrect.

e. stock
Incorrect.

9. Unlike physical products, services cannot be seen, tasted, felt, heard, or smelled
before they are bought. This is known as the ________ aspect of services. .
a. inseparability
Incorrect.

b. intangibility
Correct.

c. variability
Incorrect.

d. perishability
Incorrect.

e. heterogeneity
Incorrect.

10. A firm that is plagued with overcapacity, intense competition, or changing wants
would do better if it pursues ________ as its major objective.
a. market skimming
Incorrect.

b. product-quality leadership
Incorrect.

c. survival
Correct.

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d. profit maximisation
Incorrect.

e. market penetration
Incorrect.

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References

Kotler, P., & Keller, K. L. (2016). Marketing Management (15e). Upper Saddle River, NJ:

Pearson Prentice Hall.

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5
Study
Unit

Place & Promotions (Part 1)

MKT202 Place & Promotions (Part 1)

Learning Outcomes

At the end of this unit, you are expected to:

• Explain the importance of marketing channel system and value networks
• Explain hybrid and multichannel marketing
• Explain value networks
• Describe the roles of marketing channels
• Explain channel functions and flow, and channel levels
• Discuss the steps involved in channel-design decisions
• Apply the steps involved in channel-design decisions to a given scenario
• Summarise key areas involved in channel management decisions
• Execute effective decisions in channels management
• Describe vertical, horizontal and multichannel marketing systems
• Examine channel conflict, cooperation and competition
• Examine the causes of channel conflicts
• Implement effective ways to manage channel conflicts
• Discuss the role of marketing communications
• Describe the major modes of marketing communications
• Discuss the effects of marketing communications on brand building
• Explain the fundamental elements of effective communications
• Illustrate the impact of effective communications on consumer response
• Discuss the major steps involved in developing effective marketing
communications
• Apply the major steps involved in developing effective marketing communications
to a given scenario
• Describe the key steps involved in developing and managing an advertising
programme
• Propose effective advertising programmes for a brand or company

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• Discuss how key sales promotions decisions are made

• Propose effective sales promotion programmes for a brand or company
• Explain how events and experiences may be used for brand-building
• Propose effective events and experiences programmes for a brand or company
• Explain how public relations may be used to communicate with the company’s
public
• Propose effective public relations programmes for a brand or company

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Overview

This unit starts by introducing Place, or distribution channels (Chapter 1). Chapters 2 and
3 of this unit and the first two chapters of the next unit will talk about Promotions.

Companies today often need to build and manage a continuously evolving and
increasingly complex channel system and value network. Marketers are taking a value
network view of their businesses and examining the added value at each step through
the supply chain. Channel integrations are happening in many industries, for example,
the fashion and apparel industry, where manufacturers try to acquire and integrate with
upstream suppliers so as to streamline and take better controls over time, product design
and product quality.

Modern marketing calls for creative and effective communications to present and promote
products to customers, stakeholders, and the general public. Consumers are taking a more
active role in deciding what communications they want to receive as well as how they
want to communicate to others about the products and services they use. To effectively
reach and influence target markets, holistic marketers are creatively employing multiple
forms of communications.

Although there has been an enormous increase in the use of personal communications by
marketers in recent years, due to the rapid penetration of the Internet and other factors, the
fact remains that mass media, if used correctly, is still an important component of a modern
marketing communications programme. The old days of “if you build a great ad, they will
come,” however, are long gone. To generate consumer interest and sales, mass media must
often be supplemented and carefully integrated with other communications, and must be
used flexibly to adapt to the new – and still changing – communication environment.

Read

Chapter 17: “Designing and Managing Integrated Marketing Channels”

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Chapter 19: “Designing and Managing Integrated Marketing Communications”

Chapter 20: “Managing Mass Communications: Advertising, Sales Promotions,

Events and Experiences, and Public Relations”

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Chapter 1: Designing and Managing Integrated

Marketing Channels

Lesson Recording

Channel Strategy

1.1 Marketing Channels and Value Networks

The Importance of Channels

a. Marketing channels are sets of interdependent organisations participating in the

process of making a product or service available for use or consumption. They
are the intermediaries between producers and users (also called a trade channel
or distribution channel).
b. Marketing channels help to convert potential buyers into profitable buyers. From
this perspective, channels serve but also make markets.
c. The channel strategy affects other important decisions. For example, firm’s
pricing depends on whether it uses mass-merchandisers, online discounters or
high-quality boutiques. Firm’s sales force and advertising decisions depend on
how much training and motivation dealers need. Holistic marketers ensure that
marketing decisions in all these different areas are made to maximise value to
customers and to the firm.
d. Channel strategies involve high opportunity cost and long-term commitments
from the firm, including commitments to other firms (channel partners). Once
committed, channels strategies cannot be easily changed.

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Reflect

MARKETING DEBATE – Does It Matter Where You Sell?

Some marketers feel that the image of the particular channel in which they sell their
products does not matter − all that matters is that the right customers shop there and
the product is displayed in the right way. Others maintain that channel images – such
as a retail store − can be critical and must be consistent with the image of the product.

Take a position:Channel images do not really affect the brand images of the products
they sell that much versus channel images must be consistent with the brand image.

Push vs. Pull Strategy

a. A push strategy involves the manufacturer using its sales force and trade
promotion money to induce intermediaries to carry, promote, and sell the
product to end user. Push strategy is appropriate where there is low brand
loyalty in a category, brand choice is made in the stores, the product is an impulse
item, and product benefits are well understood.
b. A pull strategy involves the manufacturer using advertising and promotion
to induce consumers to ask intermediaries for the product, thus inducing the
intermediaries to order it. Pull strategy is appropriate when there is high brand
loyalty and high involvement in the category, when people perceive differences
between brands, and when people choose the brand before they go to the store..

Hybrid Channels and Multichannel Marketing

a. Hybrid channels or multichannel marketing occurs when a single firm uses

two or more marketing channels to reach customer segments. In multichannel
marketing, each channel targets a different segment of buyers, or different need

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states for one buyer, and delivers the right products in the right places in the
right way at the least cost.
b. Companies that manage hybrid channels must make sure these channels work
well together and match each target customer’s preferred ways of doing
business.
c. Channel conflict, excessive cost, or insufficient demand can result from bad
channel decisions.
d. Customers expect channel integration, characterised by the following features: 1)
Order a product online and pick it up at a convenient retail location; 2) Return an
online ordered product to a nearby store of the retailer; and 3) Receive discounts
based on total online and off-line purchases.

Integrating Multichannel Marketing Systems

a. Companies are increasingly employing digital distribution strategies, selling

directly online to customers or through e-merchants who have their own Web
sites.
b. An integrated marketing channel system is one in which the strategies and tactics
of selling through one channel reflect the strategies and tactics of selling through
one or more other channels.
c. The benefits of integrated multichannel marketing system include: 1) Increased
market coverage; 2) Lower channel cost; and 3) Ability to do more customised
selling.
d. However, new channels typically introduce conflict and problems with control
and cooperation. Multichannel marketers also need to decide how much of their
products to offer in each of the channels.

Value Networks

a. A supply chain view of a firm sees markets as destination points and amounts
to a linear view of the flow. The company should first think of the target market,
and then design the supply chain backward from that point.

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b. An even broader view sees a company at the centre of a value network – a system
of partnerships and alliances that a firm creates to source, augment, and deliver
its offerings. A value network includes a firm’s suppliers, its suppliers’ suppliers,
its immediate customers, and their end customers. The value network suggests
valued relationships with others. A company needs to orchestrate these parties
to enable it to deliver superior value to the target market.
c. Marketers have traditionally focused on the side of the value network that
looks towards the customer. In the future, they will increasingly participate in,
influence their companies’ upstream activities, and become network managers.
d. Managing this value network has required companies to make increasing
investments in information technology (IT) and software.
e. The Digital Channels Revolution is profoundly transforming distribution
strategies. Traditional brick-and-mortar channel strategies are being modified or
even replaced. Online retail sales (or e-commerce) have been growing rapidly.
Customers expect seamless channel integration. Retailers and manufacturers
are assembling massive amounts of social, mobile, and location (SoMoLo)
information they can mine to learn about their customers.

The value network concept calls for scrutinising the channel partners carefully. If that
partner or level of network adds value to the business and customers, then try to utilise
the benefits to the full. Otherwise, firms should consider getting rid of that partner or the
entire level in the supply chain by taking over the work by themselves.

1.2 The Role of Marketing Channels

Channel Functions and Flows

a. A marketing channel performs the work of moving goods from producers to

consumers. By using intermediaries, producers can make their products more
accessible by consumers, improving the effectiveness and efficiency in product
distribution.

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b. Channel partners (intermediaries) also help gather information, develop and

disseminate communications, negotiate, place orders, get funds, take on risk,
provide storage, arrange financing, and oversee transfer of ownership. Among
these functions, storage and movement, title, and communications constitute a
forward flow of activity from the company to the customer, whereas ordering
and payment constitute a backward flow from customers to the company.
c. A manufacturer selling a physical product and services might require three
channels: a sales channel, a delivery channel, and a service channel.
d. All channel functions have three characteristics in common: 1) They use up scarce
resources; 2) They can often be performed better through specialisation; and 3)
They can be shifted among channel members

Channel Levels

a. The producer and the final consumer are part of every channel. 1)
A zero-level channel (also called a direct-marketing channel) consists of
a manufacturer selling directly to the final consumer (e.g. mail order,
telemarketing, manufacturer-owned store); 2) A one-level channel contains one
selling intermediary such as a retailer; 3) A two-level channel contains two
intermediaries: a wholesaler and a retailer; and 4) A three-level channel contains
wholesalers, jobbers, and retailers.
b. Channels normally describe a forward movement of products from source to
user. One can also talk about reverse-flow channels. Reverse-flow channels
are important in the following cases: 1) to reuse products or containers; 2) to
refurbish products for resale; 3) to recycle products; and 4) to dispose of products
and packaging. Several intermediaries play a role in reverse-flow channels.
c. Reverse-flow intermediaries include manufacturers’ redemption centres,
community groups, trash-collection specialists, recycling centres, trash-recycling
brokers, and central processing warehousing.

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1.3 Channel Design Decisions

To design a marketing channel system, marketers analyse customer needs, establishing
channel objectives, identifying major channel alternatives, and evaluating major channel
alternatives. A channel decision involves the following steps: 1) Analysing Customers’
Desired Service Output Levels; 2) Establishing Objectives and Constraints; 3) Identifying
and Evaluating Major Channel Alternatives; and 4) Evaluating the Major Alternatives.

Step 1: Analysing Customers’ Desired Service Output Levels

a. Channel segmentation: Consumers may choose the channels they prefer based
on price, product assortment, and convenience, as well as their own shopping
goals (economic, social, or experiential). Even the same consumer may choose
different channels for different functions in a purchase. Some consumers are
willing to “trade up” or “trade down”.
b. Showrooms allow consumers to examine a product and collect information in a
store but make their actual purchase from the retailer later online or, in the store’s
least desirable outcome, from a different retailer altogether, typically to secure
a lower price.
c. Channels produce five service outputs: 1) Lot size; 2) Waiting and delivery time;
3) Spatial convenience; 4) Product variety; and 5) Service backup.
d. The marketing-channel designer knows that providing greater service outputs
means increased channel costs and higher prices for customers.

Step 2: Establishing Objectives and Constraints

a. Channel objectives vary with product characteristics.

b. Marketers must adapt their channel objectives to the larger environment.
c. Channel design must take into account the strengths and weaknesses of different
types of intermediaries.
d. In entering new markets, firms often closely observe what other firms are doing.

Step 3: Identifying and Evaluating Major Channel Alternatives

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Each channel has unique strengths as well as weaknesses. For example, sales forces
can handle complex products and transactions, but they are expensive. The Internet is
inexpensive but may not be as effective for complex products. Distributors can create sales,
but the company loses direct contact with customers. Several clients can share the cost of
manufacturers’ reps, but the selling effort is less intense than what company reps provide.

Number of Intermediaries

Three strategies based on the number of intermediaries are exclusive distribution,

selective distribution, and intensive distribution.

a. Exclusive distribution means severely limiting the number of intermediaries.

It is used when the producer wants to maintain control over the service
level and outputs offered by the resellers. Often, it involves exclusive dealing
arrangements.
b. Selective distribution involves the use of more than a few, but less than all, of the
intermediaries who are willing to carry a particular product.
c. Intensive distribution consists of the manufacturer placing goods or services in
as many outlets as possible.
d. Manufacturers are constantly tempted to move from exclusive or selective
distribution to intensive distribution to increase coverage and sales.

Step 4: Evaluating the Major Alternatives

Each channel alternative needs to be evaluated against economic, control, and adaptive
criteria.

a. For the economic criterion, each channel will produce a different level of sales
and costs. Firms will try to align customers and channels to maximise demand
at the lowest overall cost. Sellers normally try to replace high-cost channels with
low-cost channels as long as the value added per sale is sufficient.
b. For the control and adaptive criteria, in order to develop a channel, members
must make some degree of commitment to each other for a specified period
of time. Yet these commitments invariably lead to a decrease in the producer’s

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ability to respond to a changing marketplace. In rapidly, changing, volatile, or

uncertain product markets, the producer needs channel structures and policies
that provide high adaptability.

1.4 Channel Management Decisions

After a company has chosen a channel system, it must select, train, motivate, and evaluate
intermediaries for each channel. It must also modify channel design and arrangements
over time, including the possibility of expansion into international markets. It’s important
to realise that to customers, the channels are the company.

Channel management decisions involve: 1) selecting channel members; 2) training and

motivating channel members; 3) evaluating channel members; and 4) modifying channel
design and arrangement.

Modifying Channel Design and Arrangements

a. No channel strategy remains effective over the whole product life cycle.
In competitive markets with low entry barriers, the optimal structure will
inevitably change over time. Changes happen when 1) consumer buying patterns
change; 2) market expands; 3) new competitors arise; 4) innovative new channels
emerge; and 5) product moves into later stages in the product life cycle.
b. The change could mean adding or dropping individual market channels or
channel members or developing a totally new way to sell goods.

1.5 Channel Integration and Systems

Distribution channels don’t stand still. New wholesaling and retailing institutions emerge,
and new channel systems evolve.

Vertical Marketing Systems

a. A conventional marketing system comprises an independent producer,

wholesaler(s), and retailer(s). A vertical marketing system (VMS), by contrast,
comprises the producer, wholesaler(s), and retailer(s) acting as a unified system.

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One channel member, the channel captain or channel steward, owns the others,
franchises them, or has so much power that they all cooperate.
b. VMSs arise as a result of strong channel members’ attempts to control channel
behaviour and eliminate the conflict that results when independent members
pursue their own objectives.
c. VMSs achieve economies through: 1) Size; 2) Bargaining power; and 3) The
elimination of duplicated services.

Horizontal Marketing Systems

Another channel development is the horizontal marketing system, in which two or

more unrelated companies put together resources or programmes to exploit an emerging
marketing opportunity.

1.6 E-Commerce Marketing Practices

a. E-Commerce uses a Web site to transact or facilitate the sale of products and
services online. There are two types of companies: 1) Pure-click companies =
those that have launched a Web site without any previous existence as a firm; and
2) Brick-and-click companies = existing companies that have added an online
site for information or e-commerce.
b. Online retailers compete in three key aspects of a transaction: 1) customer
interaction with the Web site; 2) delivery; and 3) ability to address problems when
they occur.
c. For e-commerce to be successful, customer service is critical. To improve
conversion rates, firms should make the Web site fast, simple, and easy to use.
To increase customer satisfaction and the entertainment and information value
of online shopping experiences, some firms are employing avatars, animated
characters that act as company representatives, personal shopping assistants,
Web site guides, or conversation partners. Also ensuring security and privacy
online remains important.

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d. Although business-to-consumer (B-to-C) Web sites have attracted much

attention in the media, even more activity is being conducted on business-to-
business (B-to-B) sites, which are changing the supplier–customer relationship
in profound ways..

1.7 Mobile Marketing

Mobile channels and media can keep consumers as connected and interacting with a
brand as they choose. Consumers are fundamentally changing the way they shop in
stores, increasingly using a cell phone to text a friend or relative about a product while
shopping in stores. Consumers often use their smart phones to find deals or capitalise on
promotions.

1.8 Conflict, Cooperation, and Competition

Channel conflict is generated when one channel member’s actions prevent the channel
from achieving its goal. Channel coordination occurs when channel members are brought
together to advance the goals of the channel, as opposed to their own potentially
incompatible goals.

Types of Conflict and Competition

a. Horizontal channel conflict involves conflict between members at the same level
within the channel (Giant vs. 7/11)
b. Vertical channel conflict means conflict between different levels within the same
channel (suppliers vs. Giant)
c. Multi-channel conflict exists when the manufacturer has established two or more
channels that sell to the same market. Multi-channel conflict is likely to be
especially intense when the members of one channel get a lower price (based on
larger volume purchases) or work with a lower margin.

Causes of Channel Conflict include: 1) goal incompatibility; 2) unclear roles and rights;
3) differences in perception; and 4) intermediary’s dependence on the manufacturer.

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Managing Channel Conflict

There are several mechanisms for effective conflict management: 1) Strategic justification;
2) Dual compensation; 3) Superordinate goals; 4) Employee exchange; 5) Joint
membership; 6) Co-option; 7) Diplomacy, mediation, and arbitration; and 8) Legal
recourse.

Dilution and Cannibalisation

Marketers must also be careful not to dilute their brands through inappropriate channels,
particularly luxury brands whose images often rest on exclusivity and personalised
service.

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Chapter 2: Designing and Managing Integrated

Marketing Communications

Lesson Recording

Integrated Marketing Communications

2.1 The Role of Marketing Communications

Marketing communications are the means by which firms attempt to inform, persuade,
and remind consumers − directly or indirectly − about the products and brands that they
sell.

The Changing Marketing Communication Environment

Technology and other factors have profoundly changed the way consumers process
communications and even whether they choose to process the information. The rapid
diffusion of multipurpose smart phones, and Internet connections have eroded the
effectiveness of the mass media.

Marketing communications in almost every medium and form have been on the rise, and
some consumers feel they are increasingly invasive. Marketers must be creative in using
technology but not intrude in consumers’ lives.

2.2 Marketing Communications Mix

Marketing communications mix consists of eight major modes of communication: 1)
advertising; 2) sales promotion; 3) events and experiences; 4) public relations and
publicity; 5) online and social media marketing; 6) mobile marketing; 7) direct and
database marketing; and 8) personal selling.

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2.3 Developing Effective Communications

There are eight steps in developing effective communications: 1) identifying the target
audience; 2) determining the objectives; 3) designing the communications; 4) selecting the
channels; 5) establishing the budget; 6) deciding on media mix; 7) measuring results; and
8) managing integrated marketing communications.

Step 1: Identifying the Target Audience. The process starts with a clear target audience
in mind.

Step 2: Determine the Communication Objectives. There are four possible objectives: 1)
Category need; 2) Brand awareness; 3) Brand attitude; and 4) Brand purchase intention.
The most effective communications can often achieve multiple objectives.

Step 3: Designing the Communication

Formulating the communications to achieve the desired response will require solving
three problems: 1) what to say (message strategy); 2) how to say it (creative strategy); and
3) who should say it (message source).

a. Message Strategy. In determining message strategy, management searches for

appeals, themes, or ideas that will tie into the brand positioning and help to
establish points-of-parity or points-of-difference.
b. Creative Strategy

Creative strategies can be broadly classified as either “informational” or

“transformational” appeals.

Informational Appealelaborates on product or service attributes or benefits.

Examples are: 1) Problem solving ads; 2) Product demonstration ads; 3) Product
comparison ads; and 4) Testimonials. Informational appeals assume very rational
processing of the communication on the part of the consumer − logic and reason
“rule”.

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Transformational Appeal elaborates on a non-product-related benefit or image.

Transformational appeals often attempt to stir up emotions that will motivate
purchase. Motivational or “borrowed interest” devices (using devices that help
to attract attention, for example, cute babies, frisky puppies, popular music or
provocative sex appeals) are often employed.
c. Message Source. Messages delivered by attractive or popular sources can
potentially achieve higher attention and recall. The three most often identified
sources of credibility are expertise, trustworthiness and likability.

Step 4: Selecting the Communication Channels. Communication channels may be

personal or non-personal (mass). Although personal communication is often more
effective than mass communication, mass media might be the major means of stimulating
personal communication. The key is for channels to integrate.

Step 5: Establish the Total Marketing Communications Budget. Companies decide on

the promotion budget in four common ways: 1) the affordable method; 2) percentage-of-
sales method; 3) competitive-parity method; and 4) the objective-and-task method.

2.4 Deciding on the Marketing Communications Mix

Step 6: Deciding on the Marketing Communications Mix

Companies must allocate the marketing communications budget over the eight major
modes of communication. Each communication tool has its own unique characteristics
and costs.

a. Advertising
• Advertising can be used to build up a long-term image for a product or
trigger quick sales.
• Advertising can efficiently reach geographically dispersed buyers.
• Certain types of advertising require large budgets; others do not.
• Just the presence of advertising might have an effect on sales. Consumers
might believe that the advertised brand must offer a “good value”.

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b. Sales Promotion
• Companies use sales promotion tools to draw a stronger and quicker
buyer response, including short-run effects such as highlighting product
offers and boosting sagging sales.
• Sales promotion offers three distinct benefits: 1) Ability to be attention-
getting; 2) Incentive; and 3) Invitation.
c. Public Relations and Publicity
• The appeal of public relations and publicity is based on three distinctive
qualities: 1) High credibility; 2) Ability to catch buyers off guard; and 3)
Dramatisation.
d. Events and Experiences. There are many advantages to events and experiences:
1) Relevant; 2) Involving; and 3) Implicit (an indirect soft sale).
e. Online and Social Media Marketing is good at engaging customers. They are
also: 1) rich in content; 2) interactive by nature; and 3) up to date.
f. Mobile Marketing is: 1) timely; 2) influential (timely); and 3) pervasive (mobile
phone usage is everywhere).
g. Direct and Database Marketing ccan be: 1) personal; 2) proactive; and 3)
complementary.
h. Personal Selling. Personal selling is the most effective tool at the later stages
of the buying process, particularly in building up buyer preference, conviction,
and action. Personal selling has three distinctive qualities: 1) customised; 2)
relationship-oriented; and 3) response-oriented.

Factors in Setting the Marketing Communications Mix. Companies must consider

several factors in developing their communications mix: 1) type of product market
(consumer vs. business); 2) consumer readiness to make a purchase; and 3) stage in the
product life cycle.

Step 7: Measuring Communication Results through marketing research on factors such

as brand and communication awareness; recall; understanding and feeling; reach; and
behaviour measures such as product purchase, attitude and referral.

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2.5 Managing the Integrated Marketing Communications Process

a. The American Association of Advertising Agencies defines integrated marketing
communications (IMC) as “a planning process designed to assure that all brand
contacts received by a customer or prospect for a product, service, or organisation
are relevant to that person and consistent over time”.
b. Marketers need to seamlessly integrate a variety of communication channels to
achieve the maximum impact, while trying to keep the communication message
clear and consistent at the same time.
c. Companies must adopt a “360-degree view” of consumers to fully understand all
the different ways that communications can affect consumer behaviour in their
daily lives.
d. Media coordination can occur across and within media types. Marketers
should combine personal and non-personal communications channels through
multiple-vehicle, multiple-stage campaigns to achieve maximum impact and
increase message reach and impact. For example: 1) Promotions can be more
effective when combined with advertising; 2) Many companies are coordinating
their online and off-line communications activities; and 3) Web addresses in
ads (especially print ads) and on packages allow people to more fully explore
a company’s products, find store locations, and get more product or service
information.

Reflect

Conduct some research on the online grocery shopping website redmart.com.

Summarise the factors that have made redmart.com a successful story in Singapore.
Try to analyse these factors by using the theories and concepts we have learnt in this

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course. For example, the vertical integration of channel systems, customer service in
the online environment, and management of customer reviews, etc.

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Chapter 3: Managing Mass Communications

Lesson Recording

Mass Communications

3.1 Developing and Managing an Advertising Programme

a. Advertising can be a cost-effective way to disseminate messages, whether to
build a brand preference or to educate people.
b. In developing an advertising programme, marketing managers must always
start by identifying the target market and buyer motives. Advertising objectives
can be classified according to whether their aim is to: 1) Inform; 2) Persuade; 3)
Remind; and 4) Reinforce.
c. They can then make the five major decisions known as “the 5Ms”: 1) Mission; 2)
Money; 3) Message; 4) Media; and 5) Measurement.

Advertising Elasticity.The predominant response function for advertising is often

concave but can be S-shaped. When consumer response is S-shaped, some positive amount
of advertising is necessary to generate any sales impact, but sales increases eventually
flatten out..

Developing the Advertising Campaign

In designing and evaluating an ad campaign, marketers employ both art and science to
develop the message strategy or positioning of an ad – what the ad attempts to convey
about the brand, its creative strategy and how the ad expresses the brand claim.

a. Message Generation and Evaluation.Advertisers are always seeking “the

big idea” that connects with consumers rationally and emotionally, sharply
distinguishes the brand from competitors, and is broad and flexible enough to

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translate to different media, markets, and time periods. A good ad normally

focuses on one or two core selling propositions. Marketers can involve
consumers into the creative process by “open sourcing” or “crowdsourcing”.
b. Creative Development and Execution. The ad’s impact depends not only on
what is said, but often more importantly, on how it says it. Every advertising
medium has specific advantages and disadvantages.

Television ads. The advantages of TV are: 1) powerful and wide reach (low cost
per exposure); 2) vivid demonstration and strong persuasions; and 3) compelling and
dramatising. The disadvantages are: 1) short; 2) cluttered; and 3) high cost in production
and placement.

Print ads. The advantages include: 1) being more informational and expressive;
(effectively communicate user and usage imagery); 2) newspapers are timely and
pervasive; and 3) magazines are better at building imagery. The disadvantages are being
passive and static (difficult for dynamic presentations).

Radio ads are pervasive, flexible, highly targeted and relatively inexpensive to produce
and place. The disadvantages are: 1) lacking of visual images; and 2) relatively passive.

c. Legal and Social Issues. Advertisers and their agencies must be sure that
advertising does not overstep social and legal norms. Public policy makers have
developed a substantial body of laws and regulations to govern advertising.
Advertising can play a more positive role in promoting social causes.

3.2 Choosing Media and Measuring Effectiveness

After choosing the message, the advertiser’s next task is to choose media to carry it. The
steps here are: 1) deciding on desired reach, frequency, and impact; 2) choosing among
major media types; 3) selecting specific media vehicles; 4) deciding on media timing; and
5) deciding on geographical media allocation. Then the marketer evaluates the results of
these decisions.

Reach, Frequency, and Impact

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a. Reach is the number of different persons or household exposed to a particular

media schedule at least once during a specified time period (does the message
arrive?).
b. Frequency is the number of times within the specified time period that an
average person or household is exposed to the message (how frequent does it
arrive?).
c. Impact is the qualitative value of an exposure through a given medium (how
powerful?).

Place advertising, or out-of-home advertising, is a broad category including many

creative and unexpected forms to grab consumers’ attention where they work, play, and,
of course, shop: 1) Billboards use colourful, digitally produced graphics, backlighting,
sounds, movement, and unusual − even 3D − images; 2) Public Spaces: movie screens,
airplane bodies, and fitness equipment, as well as in classrooms, sports arenas, office and
hotel elevators, and other public places; 3) product placement in movies or television;
and 4) point of purchase (shopping carts, cart straps, aisles, and shelves and in-store
demonstrations, live sampling, and instant coupon machines).

3.3 Sales Promotions

a. Sales promotion, a key ingredient in marketing campaigns, consists of a
collection of incentive tools, mostly short-term, designed to stimulate quicker or
greater purchase of particular products or services by consumers or the trade.
b. Sales promotions include tools for: 1) Consumer promotion; 2) Trade promotion;
and 3) Business and sales-force promotion.
c. The effect of sales promotion can be short-term. Sales promotion encourages
brand switching and stockpiling.
d. Major consumer promotion tools include: samples, coupons, cash refund offers,
price packs, premiums, frequency programmes, prizes, patronage awards, free
trials, warranties, tie-in promotions, cross promotions and point-of-purchase
display and demonstrations.

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e. Major trade promotion tools include: award money (price-off, allowance or free
goods) to trade to carry the brand, to carry more units, to promote the brand by
featuring, display and price reduction, and to push the product.

3.4 Events and Experiences

Events

a. Events can generate personally relevant moments to broaden and deepen

consumer brand relationships. They create “packaged environments” to
reinforce leaning towards product purchase.
b. More firms are creating on-site or off-site product and brand experiences. Many
firms are creating their own events and experiences to create consumer and
media interest and involvement.
c. Events Objectives. Marketers report a number of reasons why they sponsor
events: 1) To identify with a particular target market or lifestyle; 2) To
increase awareness of company or product name; 3) To create or reinforce
consumer perceptions of key brand image associations; 4) To enhance corporate
image dimensions; 5) To create experiences and evoke feelings; 6) To express
commitment to the community or to social issues; 7) To entertain key clients
or reward key employees; and 8) To permit merchandising or promotional
opportunities. Despite these potential advantages, there are a number of
potential disadvantages to sponsorships: 1) The success of the event can be
unpredictable and out of the control of the sponsor; and 2) Some consumers may
still resent the commercialisation of events.
d. Major Sponsorship Decisions. Making sponsorships successful requires:
1) choosing the appropriate events; 2) designing the optimal sponsorship
programme for the event; and 3) measuring the effects of sponsorship.

Experiential Marketing.A large part of local, grassroots marketing is experiential

marketing, which not only communicates features and benefits, but also connects a
product or service with unique and interesting experiences.

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3.5 Public Relations

a. Not only must the company relate constructively to customers, suppliers, and
dealers, it must also relate to a large number of interested publics.
b. Public relations (PR) involves a variety of programmes designed to promote or
protect a company’s image. PR departments perform the following functions: 1)
Press relations; 2) Product publicity; 3) Corporate communications; 4) Lobbying;
and 5) Counselling.
c. Marketing Public Relations (MPR) goes beyond simple publicity and plays
an important role in the following tasks: 1) Launching new products; 2)
Repositioning mature products; 3) Building interest in a product category; 4)
Influencing specific target groups; 5) Defending products that have encountered
public problems; and 6) Building the corporate image in a way that reflects
favourably on its products. .

Major Decisions in Marketing PR

In considering when and how to use MPR, management must: 1) establish the marketing
objectives, 2) choose the PR messages and vehicles, 3) implement the plan carefully, and
4) evaluate the results.

Reflect

Watch the following commercial from the Singapore Health Promotion Board:
https://www.youtube.com/watch?v=3TmNCt1N9_4

1. Critically analyse the commercial with the concepts we have learnt in this
course.
2. Study other communications used by the Health Promotion Board. Analyse
the effectiveness of these communications.

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Summary

1. A company's chosen channel strategy profoundly affects all other marketing

strategies.
2. Today, marketing channels are characterised by the pervasiveness and the huge
impact of the Internet.
3. E-Commerce and M-Commerce are becoming the dominant form of shopping
for many.
4. Offline channels are still important to many companies. Channel integration is
crucial.
5. For communication strategies, it is important to understand each of the eight
tools in the communication tool box so that you can choose a good combination
of tools at the right time and use them properly to achieve effectiveness.

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Quiz

1. Total Beverages, a maker of fruit juices and health drinks, recently launched a new
brand of packaged drinking water called AquaPure. In order to induce distributors to
carry the product, Total offers all its intermediaries a free refrigerator to store bottles
of AquaPure. This is an example of a ________.
a. consumer promotion
b. push strategy
c. backward flow
d. reverse flow
e. pull strategy

2. Which of the following is a major disadvantage of using the Internet as a marketing

channel?
a. It is less effective for complex products.
b. It lacks convenience and practicality.
c. It cannot be used to reach a wide audience.
d. It is considered expensive.
e. It causes the company to lose direct contact with customers.

3. A(n) ________ includes the producer, wholesaler(s), and retailer(s) acting as a unified
system.
a. parallel marketing channel
b. vertical marketing system
c. extensive marketing channel
d. internal marketing system
e. conventional marketing channel

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4. ________ is an element of the marketing communications mix that involves people-

to-people oral, written, or electronic communications that relate to the merits or
experiences of purchasing or using products or services.
a. Personal selling
b. Sales promotion
c. Word-of-mouth marketing
d. Public relations
e. Advertising

5. ________ is one of the sources of a spokesperson's credibility that refers to the

specialised knowledge that he or she possesses to claim.
a. Trustworthiness
b. Expertise
c. Acquaintance
d. Likability
e. Professionalism

6. Which of the following is a form of mass communications channel?

a. interactive marketing
b. personal selling
c. public relations
d. word-of-mouth marketing
e. sales presentations

7. Advertising and publicity tools play the most important roles in influencing buying
decisions at the ________ stage of buyer readiness.
a. comprehension
b. conviction
c. ordering

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d. reordering
e. awareness-building

8. ________ is a measure of communications effectiveness that describes the percentage

of target market exposed to a communication.
a. Frequency
b. Reach
c. Width
d. Depth
e. Range

9. ________ aims to convince current purchasers that they made the right choice.
a. Persuasive advertising
b. Informational advertising
c. Reinforcement advertising
d. Reminder advertising
e. Comparative advertising

10. According to consumer-packaged goods companies, which of the following effects is

attributed to the heavy use of sales promotion?
a. increased brand loyalty
b. focus on long-run marketing planning
c. improved brand-quality image
d. increased price sensitivity
e. greater coupon redemption rates

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Solutions or Suggested Answers

Quiz
1. Total Beverages, a maker of fruit juices and health drinks, recently launched a new
brand of packaged drinking water called AquaPure. In order to induce distributors to
carry the product, Total offers all its intermediaries a free refrigerator to store bottles
of AquaPure. This is an example of a ________.
a. consumer promotion
Incorrect.

b. push strategy
Correct.

c. backward flow
Incorrect.

d. reverse flow
Incorrect.

e. pull strategy
Incorrect.

2. Which of the following is a major disadvantage of using the Internet as a marketing

channel?
a. It is less effective for complex products.
Correct.

b. It lacks convenience and practicality.

Incorrect.

c. It cannot be used to reach a wide audience.

Incorrect.

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d. It is considered expensive.
Incorrect.

e. It causes the company to lose direct contact with customers.

Incorrect.

3. A(n) ________ includes the producer, wholesaler(s), and retailer(s) acting as a unified
system.
a. parallel marketing channel
Incorrect.

b. vertical marketing system

Correct.

c. extensive marketing channel

Incorrect.

d. internal marketing system

Incorrect.

e. conventional marketing channel

Incorrect.

4. ________ is an element of the marketing communications mix that involves people-

to-people oral, written, or electronic communications that relate to the merits or
experiences of purchasing or using products or services.
a. Personal selling
Incorrect.

b. Sales promotion
Incorrect.

c. Word-of-mouth marketing

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MKT202 Place & Promotions (Part 1)

Correct.

d. Public relations
Incorrect.

e. Advertising
Incorrect.

5. ________ is one of the sources of a spokesperson's credibility that refers to the

specialised knowledge that he or she possesses to claim.
a. Trustworthiness
Incorrect.

b. Expertise
Correct.

c. Acquaintance
Incorrect.

d. Likability
Incorrect.

e. Professionalism
Incorrect.

6. Which of the following is a form of mass communications channel?

a. interactive marketing
Incorrect.

b. personal selling
Incorrect.

c. public relations
Correct.

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MKT202 Place & Promotions (Part 1)

d. word-of-mouth marketing
Incorrect.

e. sales presentations
Incorrect.

7. Advertising and publicity tools play the most important roles in influencing buying
decisions at the ________ stage of buyer readiness.
a. comprehension
Incorrect.

b. conviction
Incorrect.

c. ordering
Incorrect.

d. reordering
Incorrect.

e. awareness-building
Correct.

8. ________ is a measure of communications effectiveness that describes the percentage

of target market exposed to a communication.
a. Frequency
Incorrect.

b. Reach
Correct.

c. Width
Incorrect.

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MKT202 Place & Promotions (Part 1)

d. Depth
Incorrect.

e. Range
Incorrect.

9. ________ aims to convince current purchasers that they made the right choice.
a. Persuasive advertising
Incorrect.

b. Informational advertising
Incorrect.

c. Reinforcement advertising
Correct.

d. Reminder advertising
Incorrect.

e. Comparative advertising
Incorrect.

10. According to consumer-packaged goods companies, which of the following effects is

attributed to the heavy use of sales promotion?
a. increased brand loyalty
Incorrect.

b. focus on long-run marketing planning

Incorrect.

c. improved brand-quality image

Incorrect.

d. increased price sensitivity

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MKT202 Place & Promotions (Part 1)

Correct.

e. greater coupon redemption rates

Incorrect.

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MKT202 Place & Promotions (Part 1)

References

Kotler, P., & Keller, K. L. (2016). Marketing Management (15e). Upper Saddle River, NJ:

Pearson Prentice Hall.

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6
Study
Unit

Promotions (Part 2) & Social

Responsible Marketing
MKT202 Promotions (Part 2) & Social Responsible Marketing

Learning Outcomes

At the end of this unit, you are expected to:

• Explain how companies can integrate direct and interactive marketing, and word
of mouth for competitive advantage
• Apply the various tools used in direct and interactive marketing
• Propose effective direct or interactive marketing for a brand or company
• Explain the various tools used in word of mouth
• Propose effective word of mouth & personal selling programmes for a brand or
company
• Explain how sales force can be effectively used in marketing communications

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Overview

In the face of the Internet revolution, marketing communications today increasingly occur
as a kind of personal dialogue between the company and its customers. Companies must
ask not only “How should we reach our customers?” but also “How should our customers
reach us?” and “How can our customers reach each other?” New technologies have
encouraged companies to move from mass communication to more targeted, two-way
communications. Consumers now play a much more participatory role in the marketing
process.

Marketers are trying to figure out the right way to be part of the consumer conversation.
Personalising communications and creating dialogues by saying and doing the right thing
to the right person at the right time are critical for marketing effectiveness.

Companies must practise social responsibility through their legal, ethical, and social
words and actions. Cause marketing can be a means for companies to productively link
social responsibility to consumer marketing programmes. Used wisely, consumer may
develop a strong and unique bond with the firm that transcends normal product sales and
brings meaning to life.

Read

Chapter 21: “Managing Digital Communications: Online, Social Media, and Mobile”

Chapter 22: “Managing Personal Communications: Direct and Database Marketing

and Personal Selling”

Chapter 23: “Managing a Holistic Marketing Organisation for the Long Run”

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Chapter 1: Managing Digital Communications: Online,

Social Media, and Mobile

Lesson Recording

Digital Marketing

1.1 Online Marketing

The newest channels for direct marketers are electronic. The Internet provides marketers
and consumers with opportunities for much greater interaction and individualisation.

Advantages and Disadvantages of Online Marketing

a. The variety of online communication option means companies can send tailored
messages that engage consumers by reflecting their special interests and
behaviour.
b. The Internet is also highly accountable and its effects can be easily traced by
noting how many unique visitors or “UVs” click on a page or ad, how long they
spend on it, and where they go afterwards.
c. Marketers can build or tap into online communities, inviting participation from
consumers and creating a long-term marketing asset in the process.
d. The Web offers the advantage of contextual placement, buying ads on sites
related to the marketer’s offerings. Marketers can also place advertising based
on keywords from search engines, to reach people when they’ve actually started
the buying process.
e. Using the Web has disadvantages: 1) Consumers can effectively screen out most
messages; 2) Marketers may think their ads are more effective than they really are

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if bogus clicks are generated by software-powered Websites; 3) Advertisers also

lose some control over their online messages, which can be hacked or vandalised.

Websites

a. A Website’s performance will be judged on ease of use and physical

attractiveness.
b. Ease of use means: 1) The site downloads quickly; 2) The first page is easy to
understand; and 3) It is easy to navigate to other pages that open quickly.
c. Physical attractiveness is ensured when: 1) Individual pages are clean and not
crammed with content; 2) Typefaces and font sizes are very readable; and 3) The
site makes good use of colour (and sound).

Search Ads

a. In paid search, marketers bid in a continuous auction on search terms that serve
as a proxy for the consumer’s product or consumption interests. Advertisers pay
only if people click on the links, but marketers believe consumers who have
already expressed interest by engaging in search are prime prospects.
b. The cost per click depends on how highly the link is ranked on the page and the
popularity of the keyword.
c. Search engine optimisation (SEO) describes activities designed to improve the
likelihood that a link for a brand is as high as possible in the rank order of all
nonpaid links when consumers search for relevant terms: 1) Broader search terms
are useful for general brand building; more specific ones identifying a particular
product model or service are useful for generating and converting sales leads; 2)
Search terms need to be spotlighted on the appropriate pages of the marketer’s
Website so search engines can easily identify them; 3) Any one product can
usually be identified by means of multiple keywords, but marketers must bid
on each keyword according to its likely return on revenue. It also helps to have
popular sites link back to the marketer’s Website; and 4) Data can be collected
to track the effects of paid search.

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Display Ads

a. Display Ads or banner ads are small, rectangular boxes containing text and
perhaps a picture that companies pay to place on relevant Websites.
b. Interstitials are advertisements, often with video or animation that pop up
between page changes within a Website or across Websites.

Email

a. E-mail allows marketers to inform and communicate with customers at a fraction

of the cost of a d-mail, or direct mail, campaign. E-mails can be very productive
selling tools.
b. Consumers are besieged by e-mails, though, and many employ spam filters to
halt the flow. Privacy concerns are also growing.
c. E-mails must be timely, targeted, and relevant: 1) Give the customer a reason
to respond; 2) Personalise the content of your e-mails; 3) Offer something the
customer can’t get via direct mail; 4) Make it easy for customers to opt in as well
as unsubscribe; and 5) Combine e-mail with other communications such as social
media.

1.2 Social Media

a. Social media are a means for consumers to share text, image, audio, and video
information with each other and with companies and vice versa.
b. Social media allow marketers to establish a public voice and presence on the
Web and reinforce other communication activities. Because of their day-to-day
immediacy, they can also encourage companies to stay innovative and relevant.
c. There are three main platforms for social media: 1) Online communities and
forums; 2) Bloggers (individual blogs and networks such as Sugar and Gawker);
and 3) Social networks (like Facebook, Twitter, and YouTube).

Online Communities

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a. Online communities and forums can be a valuable resource for companies and
fill multiple functions by both collecting and conveying key information.
b. A key for success for online communities is to create individual and group
activities that help form bonds among community members.
c. Information flow in online communities and forums is two-way and can provide
companies with useful, hard-to-get customer information and insights.

Blogs

Blogs, regularly updated online journals or diaries, have become an important outlet for
word of mouth. One obvious appeal of blogs is bringing together people with common
interests. Popular blogs are creating influential opinion leaders.

Social Networks

a. Social networks have become an important force in both business-to-consumer

and business-to-business marketing.
b. Different networks offer different benefits to firms. For example, Twitter can be
an early warning system that permits rapid response, whereas Facebook allows
deeper dives to engage consumers in more meaningful ways.
c. Advertising is only one avenue, however. Like any individual, companies can
also join the social groups and actively participate.

Using Social Media

a. Only some consumers want to engage with some brands, and, even then, only
some of the time.
b. Social media may not be as effective in attracting new users and driving brand
penetration.
c. Consumers are most likely to engage with media, charities, and fashion and least
likely to engage with consumer goods.
d. Although consumers may use social media to get useful information or deals
and promotions or to enjoy interesting or entertaining brand-created content,

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a much smaller percentage wants to use social media to engage in two-way

“conversations” with brands.

1.3 Word of Mouth

a. Word of mouth (WOM) is a powerful marketing tool, one of the most effective
drivers of sales in some cases, along with unaided advertising awareness.
b. Viral marketing is a form of online word of mouth, or “word of mouse,” that
encourages consumers to pass along company-developed products and services
or audio, video, or written information to others online. Advice for getting a
viral ad shared: 1) Utilise brand pulsing so the brand is not too intrusive within
the video; 2) Open with joy or surprise to hook those fickle viewers who are
easily bored; 3) Build an emotional roller coaster within the ad to keep viewers
engaged throughout; and 4) Surprise but don’t shock − if an ad makes viewers
too uncomfortable, they are unlikely to share it.
c. Viral marketing tries to create a splash in the marketplace to showcase a brand
and its noteworthy features. Some believe viral marketing efforts are driven more
by the rules of entertainment than by the rules of selling.
d. Certain steps can improve the likelihood of starting positive buzz: 1) Identify
influential individuals and companies and devote extra effort to them; 2) Supply
key people with product samples; 3) Work through community influential; 4)
Develop word-of-mouth referral channels to build business; and 5) Provide
compelling information that customers want to pass along.

1.4 Mobile Marketing

The Scope/Characteristics of Mobile Marketing:1) Mobile device is uniquely tied to one
user; 2) It is virtually always “on” given it is typically carried everywhere; 3) It allows for
immediate consumption because it is in effect a channel of distribution with a payment
system; 4) It is highly interactive given that it allows for geotracking and picture and video
taking.

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Opportunities for Marketers include: 1) Mobile apps can perform useful functions −
adding convenience, social value, incentives, and entertainment and making consumers’
lives a little or a lot better; 2) Mobile coupons are getting more popular and offset
redemption declines in traditional coupons; 3) Although the cookies that allow firms to
track online activity don’t typically work in wireless applications, technological advances
are making it easier to track users across their smart phones and tablets too; 4) With
user privacy safeguards in place, marketers’ greater knowledge of cross-screen identities
(online and mobile) can permit more relevant, targeted ads; and 5) New measurement
techniques are also aiding the adoption of mobile marketing.

Developing Effective Mobile Marketing Programmes: 1) the Web experience can be very
different for users given smaller screen sizes, longer download times, and the lack of some
software capabilities; should design simple, clear, and clean sites, 2) paying even greater
attention than usual to user experience and navigation; and 3) being concise is critical with
mobile messaging.

Reflect

Read the following news article about Facebook's new marketing strategies. http://
www.bbc.com/news/business-42893051 Conduct some research about this topic and:

Analyse the trend in social media consumption. Why is facebook moving towards
more specialisation or focus (on social interactions among family friends) instead of
more generalisation or becoming a one-stop site for news, and social interactions?

Reflect

Conduct some research on the very successful Chinese social network application
Wechat. Compare Wechat with other popular social network websites or applications

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such as facebook or whatsapp. What has Wechat done right to grow the market among
Chinese consumers?

1.5 Sharing Economy

Sharing Economy：An economic and social system that enables shared access to
underutilised assets from skills/services to products for monetary or non-monetary
benefits. The sharing economy system consists of the suppliers, the platform and the
consumers.

The Rise of the Sharing Economy

PwC’s projections in 2015 show that five key sharing sectors—travel, car sharing, finance,
staffing, and music and video streaming— have the potential to increase global revenues
from roughly $15 billion in 2015 to around $335 billion by 2025.

Drivers of the Sharing Economy

• Internet of things and location-based mobile technologies -- a precise, real-time

measurement of spare capacity and the ability to dynamically connect that capacity
with those who need it
• Social media -- an economy built on trust
• Access over ownership
◦ Difficult economic times -- both suppliers and consumers can benefit from
the sharing economy system.
◦ Rise of urbanization and limited urban space -- increased sensibility about
sustainability
• Rise of urbanization and limited urban space -- increased sensibility about
sustainability
• The sociability that emerges via peer-to-peer collaborative consumption

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Reflect

Read the following article on the electric car-sharing plan

in Singapore: http://www.straitstimes.com/singapore/electric-car-sharing-plan-
starts-on-dec-12-with-80-vehicles
1. Analyse the benefits of car sharing in Singapore.
2. Conduct some research and analyse how Singapore is doing relative to other
countries in the area of shared economy.

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Chapter 2: Managing Personal Communications

Lesson Recording

Direct Marketing

2.1 Direct Marketing

a. Direct marketing is the use of consumer-direct (CD) channels to reach and deliver
goods and services to customers without using marketing middlemen. They
often seek a measurable response, typically a customer order, through direct-
order marketing.
b. Channels used include face-to-face selling, direct mail, catalogue marketing,
telemarketing, interactive TV, kiosks, Websites, and mobile devices.

The Benefits of Direct Marketing

Market demassification has resulted in an ever-increasing number of market niches.

a. Direct marketing benefits customers in many ways: 1) makes shopping fun,

convenient, and hassle-free; 2) saves time; 3) introduces consumers to a larger
selection of merchandise; 4) ease of comparative shopping; and 5) can order and
deliver goods for themselves and others.
b. Sellers benefit as well: 1) They can customise and personalise messages; 2) They
can build a continuous relationship with each customer; 3) Direct marketing
can be timed to reach prospects at the right moment; 4) can reach prospects
at the moment they need the product (relevant); 5) Permits the testing of
alternative media and messages in a cost-effective approach; 6) Direct marketers
can measure responses to their campaigns to decide which one has been
more profitable; and 7) can up-sell and cross-sell product through the existing
relationship.

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c. Direct marketing must be integrated with other communications and channel

activities.

Direct Mail

a. Direct-mail marketing involves sending an offer, announcement, reminder, or

other items to a person.
b. Direct mail is a popular medium because it: 1) Permits target market selectivity;
2) Can be personalised; 3) Is flexible; and 4) Allows for early testing and response
measurement.
c. One of the great advantages of direct marketing is the ability to test, under real
marketplace conditions, different elements of an offer strategy, such as products,
product features, copy platform, mailer type, envelope, prices, or mailing lists.

Catalogue Marketing

a. In catalogue marketing, companies may send full-line merchandise catalogues,

specialty consumer and business catalogues.
b. The success of a catalogue business depends on the company’s ability to: 1)
Manage its customer lists; 2) Manage its control inventory; 3) Offer quality
merchandise so returns are low; and 4) Project a distinctive image.

Telemarketing is the use of the telephone and call centres to attract prospects, sell to
existing customers, and provide service by taking orders and answering questions.

Public and Ethical Issues in Direct Marketing include: 1) Irritation; 2) Unfairness; 3)

Deception and Fraud; and 4) Invasion of privacy.

2.2 Database Marketing

Database marketingis the process of building, maintaining, and using customer databases
and other databases (of products, suppliers, or resellers) to contact, transact, and build
customer relationships..

Data Warehouses and Data Mining

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a. Savvy companies capture information every time a customer contacts any of

their departments, whether via purchase, a service call, an online query, or a
mail-in rebate card. These data are collected by the company’s contact centre
and organised into a data warehouse where marketers can capture, query, and
analyse them to draw inferences about an individual customer’s needs and
responses.
b. Customer service reps inside the company can respond to customer inquiries
based on a complete picture of the customer relationship, and customised
marketing activities can be directed to individual.
c. Through data mining, marketing statisticians can extract from the mass of data
useful information about individuals, trends, and segments.

2.3 Principles of Personal Selling

The six steps in effective sales process are: 1) prospecting and qualifying; 2) preapproach;
3) presentation and demonstration; 4) overcoming objections; 5) closing; and 6) follow-up
and maintenance.

Reflect

What do you think are some of the most important qualities for a sales person to
succeed? Everyone needs some sales skills to succeed. How can you develop some of
these skills in preparation for your future career?

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Chapter 3: Managing a Holistic Marketing Organisation

for the Long Run

Lesson Recording

Holistic Marketing 2

3.1 Socially Responsible Marketing

The most admired − and most successful − companies in the world abide by high
standards of business and marketing conduct that dictate serving people’s interests, not
only their own. Taking a more active, strategic role in corporate social responsibility is
thought to benefit not just customers, employees, community, and the environment but
also shareholders. Firms feel they also benefit in different ways.

Corporate Social Responsibility

a. CSR relies on proper legal, ethical, and social responsibility behaviour.

b. Legal Behaviour: Organisations must ensure every employee knows and
observes relevant laws.
c. Ethical Behaviour: Companies must adopt and disseminate a written code of
ethics, build a company tradition of ethical behaviour, and hold their people fully
responsible for observing ethical and legal guidelines.
d. Social Responsibility Behaviour: Marketers must exercise their social conscience
in specific dealings with customers and stakeholders.
e. Sustainability: The ability to meet humanity’s needs without harming future
generations.

Cause-Related Marketing

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a. Cause-Related Marketing links the firm’s contributions towards a designated

cause to customers’ engaging directly or indirectly in revenue-producing
transactions with the firm.
b. A successful cause-marketing programme can improve social welfare, create
differentiated brand positioning, build strong consumer bonds, enhance the
company’s public image, create a reservoir of goodwill, boost internal morale
and galvanise employees, drive sales, and increase the firm’s market value.
c. Backfires if consumers question the link between the product and the cause or see
the firm as self-serving and exploitive or if consumers do not think a company
is consistent and sufficiently responsible in all its behaviour.

Social Marketing

a. Social Marketing by a non-profit or government organisation furthers a cause,

such as “say no to drugs” or “exercise more and eat better”.
b. Choosing the right goal or objective for a social marketing programme is critical.
Social Marketing Programme Objectives can be cognitive, action, behavioural,
or value oriented.
c. Key success factors for changing behaviour include: 1) Choose target markets
that are most ready to respond; 2) Promote a single, doable behaviour in clear,
simple terms; 3) Explain the benefits in compelling terms; 4) Make it easy to
adopt the behaviour; 5) Develop attention-grabbing messages and media; and 6)
Consider an education-entertainment approach.

Reflect

What is social marketing? Conduct some research on some of the most successful
social marketing campaigns in Singapore, both historically and in recent years.

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Summary

1. Online marketing offers convenience, timeliness, greater interaction and

customisation.
2. Online reviews, as a format of online word-of-mouth, become extremely
important.
3. Effective salespeople are trained for analytical skills, customer management
skills and sales professionalism.
4. Companies motivate the sales forces with monetary rewards and supplementary
motivators.
5. Companies must practise social responsibility through legal, ethical and social
actions.

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Quiz

1. Which of the following is a major advantage of using direct mails?

a. Direct mails permit target market selectivity.
b. It is the best suited tool for selling complex products.
c. Campaign testing is not needed for direct mails.
d. Direct mails have very high conversion rates.
e. It is the best method to sell industrial products.

2. All the PR benefits a firm receives without having directly paid for anything is called
________ media.
a. earned
b. open
c. passive
d. inherent
e. internal

3. ________ marketing generates excitement, creates publicity, and conveys new

relevant brand-related information through unexpected or even outrageous means.
a. Live-in
b. Buzz
c. Viral
d. Guerrilla
e. Experimental

4. Which of the following is the first step in the process of personal selling?
a. prospecting and qualifying
b. sales preapproach
c. sales presentation

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d. unearthing objections
e. demonstrating advantages

5. Devin, an online marketing manager for the Gilt Groupe, sends more than 3,000
variations of its daily e-mail for its flash-sale site based on recipients' past ________,
browsing history, and purchase history.
a. complaints
b. click-throughs
c. comments
d. ratings
e. interstitials

6. Apple hosts a large number of ________, which become customers' primary source of
product information after warranties expire and are organised by product lines and
type of user (consumer or professional).
a. niche networks
b. social networks
c. microblogs
d. blogs
e. online communities

7. A salesperson sends e-mails to persuade prospects to buy the products of his

company. This is a type of ________ marketing.
a. buzz
b. virtual
c. word-of-mouth
d. direct
e. viral

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8. ________ refers to the ability to meet humanity's needs without harming future
generations.
a. Greenwashing
b. Sustainability
c. Ecological footprinting
d. Scalability
e. Legal practice

9. Social marketing programs designed to discourage cigarette smoking or excessive

consumption of alcohol are examples of ________ campaigns..
a. cognitive
b. active
c. behavioural
d. value
e. normative

10. A social marketing programme which aims to alter ideas about abortion is an example
of a(n) ________ campaign.
a. cognitive
b. active
c. behavioural
d. value
e. normative

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Solutions or Suggested Answers

Quiz
1. Which of the following is a major advantage of using direct mails?
a. Direct mails permit target market selectivity.
Correct.

b. It is the best suited tool for selling complex products.

Incorrect.

c. Campaign testing is not needed for direct mails.

Incorrect.

d. Direct mails have very high conversion rates.

Incorrect.

e. It is the best method to sell industrial products.

Incorrect.

2. All the PR benefits a firm receives without having directly paid for anything is called
________ media.
a. earned
Correct.

b. open
Incorrect.

c. passive
Incorrect.

d. inherent
Incorrect.

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e. internal
Incorrect.

3. ________ marketing generates excitement, creates publicity, and conveys new

relevant brand-related information through unexpected or even outrageous means.
a. Live-in
Incorrect.

b. Buzz
Correct.

c. Viral
Incorrect.

d. Guerrilla
Incorrect.

e. Experimental
Incorrect.

4. Which of the following is the first step in the process of personal selling?
a. prospecting and qualifying
Correct.

b. sales preapproach
Incorrect.

c. sales presentation
Incorrect.

d. unearthing objections
Incorrect.

e. demonstrating advantages

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Incorrect

5. Devin, an online marketing manager for the Gilt Groupe, sends more than 3,000
variations of its daily e-mail for its flash-sale site based on recipients' past ________,
browsing history, and purchase history.
a. complaints
Incorrect.

b. click-throughs
Correct.

c. comments
Incorrect.

d. ratings
Incorrect.

e. interstitials
Incorrect.

6. Apple hosts a large number of ________, which become customers' primary source of
product information after warranties expire and are organised by product lines and
type of user (consumer or professional).
a. niche networks
Incorrect.

b. social networks
Incorrect.

c. microblogs
Incorrect.

d. blogs

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Incorrect.

e. online communities
Correct.

7. A salesperson sends e-mails to persuade prospects to buy the products of his

company. This is a type of ________ marketing.
a. buzz
Incorrect.

b. virtual
Incorrect.

c. word-of-mouth
Incorrect.

d. direct
Correct.

e. viral
Incorrect.

8. ________ refers to the ability to meet humanity's needs without harming future
generations.
a. Greenwashing
Incorrect.

b. Sustainability
Correct.

c. Ecological footprinting
Incorrect.

d. Scalability

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Incorrect.

e. Legal practice
Incorrect.

9. Social marketing programs designed to discourage cigarette smoking or excessive

consumption of alcohol are examples of ________ campaigns..
a. cognitive
Incorrect.

b. active
Incorrect.

c. behavioural
Correct.

d. value
Incorrect.

e. normative
Incorrect.

10. A social marketing programme which aims to alter ideas about abortion is an example
of a(n) ________ campaign.
a. cognitive
Incorrect.

b. active
Incorrect.

c. behavioural
Incorrect.

d. value

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Correct.

e. normative
Incorrect.

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References

Kotler, P., & Keller, K. L. (2016). Marketing Management (15e). Upper Saddle River, NJ:

Pearson Prentice Hall.

PWC. (2015). The Sharing Economy, Consumer Intelligence Series, Retrieved

fromhttps://www.pwc.com/us/en/technology/publications/assets/pwc-
consumer-intelligence-series-the-sharing-economy.pdf

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