Summary
Marketing Management Summary (BT1203)
- Course
- Institution
52 pages of Article summaries for the course ‘Marketing Management’ (BT1203). Includes all course required literature.
[Show more]
Seller
Follow
ibcomsums2021
Reviews received
Content preview
Marketing Management (BT1203)Marketing Strategy- An Overview
- Strategy: plan of action designed to achieve certain defi ned objectives
- In Business firms, objectives may be stated as sales volumes, growth rate, profit percentages, market
share and return on investment (ROI)
- Strategies are developed at multiple levels at the organisation - corporate, divisional, business unit,
and departmental and form an integrated plan for the enterprise
- Corporate strategies: sum of business unit strategies + any plans for new business initiatives
- The marketing strategy is at the heart of any business plan to deliver products and services
Elements of Marketing Strategy
- Marketing strategy is composed of several interrelated elements
- Product/market selection: What will we serve with what products? What prices will be set? Will
there be quantity discounts/rental options? What price promotions are needed to compete
effectively?
- Distribution systems: the wholesale and retail channels through which the products/services move
to the users
- May include business entities like company’s salesforce, independent distributors, agents,
franchised outlets
- Market communications: components such as print and tv advertising, direct mail, sampling,
telemarketing, merchandise displays
- Companies with products that need repair/maintenance also need product service programs-
repair shops, service personnel & spare parts inventories
- Technical service- helping to support customers manufacturing and product development
operations
- Plant location (critical strategic component) - may defi ne the geographic market boundaries if
products can only be economically shipped within a limited distance from the plant location
- Brand strategy- chose between using a family brand name or a product-specifi c name
- Marketing mix: the combination of these factors and the relative emphasise on each
- The use and combination vary from one product/market to another
4 primary elements in any marketing mix
Product/market selection
- Most important choice made is to decide what markets it will serve with what products
- This selection commit firms to a particular customer groups, specific technology field and
competitive milieu
- Product- is the total package of attributes the customer obtains when making a purchase
- Product benefits include what the product does, manufacturer/retailer warranties, repair service,
technical assistance, value of the brand name (product quality and reliability), product availability
- A list of product attributes can also include negatives (eg. Repair frequency, costs)
- Thus, product meaning must be defined in full range of benefits, risks and disadvantages
- What counts for strategic planning purposes is the prospective purchaser’s opinion and value they
put on the product vs competitive offerings
- Perceived value: customer’s existing perception of the product
- Potential value: what the buyer can be educated to recognise, realisation of potential value can
be accomplished eg.through marketing communication
- Market: A pocket of latent demand - it may refer to a place where buyer and sellers meeting, retail
outlet or to a set of potential customers
, - A major source of new market opportunities is new technology (eg. In electronics, aerospace,
medial sciences)
- Societal needs such as crime prevention, health care and population control also create new
markets
- Market segmentation: set of potential customers that are a like in the way they perceive and value the
product, in their buying behavior and the way they use the product
- Defining relevant market segments is the first step in product/market selection
- Dimensions markets can be segmented along
- Demography: relies on factors such as family income,
age, sex, ethnicity and educational background as
explanatory variables for differences in taste, buying
behaviour and consumption patterns
- Geography: geographic segmentation are useful in
consumer and industrial markets - different areas and
countries may vary in market potential, competitive
intensity, product-form preferences and government
trade regulations
- eg. Economical shipping distance based on high
weight- or bulk-to-value products, plant location will
define the market area
- Through increased globalisation - this segmentation
has declined in importance due to greater
commonality and advances in communication/transportation
- Psychographic variables: attempt to segment markets based on individual lifestyles and
attitudes toward self, work, home, family identity
- Some firms focus intensely on price factors while others prioritise developing long-term
elations with suppliers based on technical and service contributions
- Product application and use: the way industrial purchasers use the product and how it fi ts into
their processes and systems
- Any one consumer may exhibit different purchasing behavior in buying comparable products if
they are intended for different purposes
- Market segmentation scheme appropriate at one development stage of a market may become
obsolete with market growth and maturation as customers become educated in buying and
using the product - increased demand and new competitors
- Market segmentation has the purpose to delineate groups of potential buyers according to their
needs, market potential and buying behavior
- Product/Market Selection Criteria
- Product value: focus on segments that value the product the most and target the applications in
which it makes its greatest contribution
- Long-rung growth potential: market size and profi t potential - growth potential estimates
- Resource commitments: choices often commit fi rms to heavy fi nancial drains (marketing costs
and production facilities etc) - Does the estimated return on assets justify the investment
- Competitive positioning: occupy certain spaces, recognise market opportunities and spaces
occupied by weak competitors that can be attacked
- New market entrants succeed to the extent that they bring something to the table - a
differentiated product/service
- Company-product/market fit: new product opportunities need to be assessed in the context of
existing business operations - Will the proposed offering enhance the company’s position with
existing customers? Will the firm’s reputation be of value?
(The Art of) Pricing
- 5 (interrelated) factors determining the prices of products/services
, - Supply/demand conditions: the greater the supply of a good, the lower the price
- The problem is often of excess production and how to bring supply in line with demand to
maintain prices - attempting to control supply by monopolising supply sources
- Production and overhead costs: supplier’s can’t sell below the costs of making and marketing for
long
- Fixed costs: depreciation, R&D, sales and advertising
- Variable costs: labor and materials per unit
- Lost-cost producers have a substantial competitive edge - low cost = high profits
- Competition: price competitiveness intensifi es as increasing fi rms enter the market
- Firms may respond to competitive pressures:
- By differentiating their products- any unique product benefit yields a degree of freedom in
pricing against competitive offerings
- Attempting to dampen intra-brand competition among their resellers- pressure on price levels
as resellers of the same brand compete for market share in a region
- Intra-brand competition is intenser if the reseller number in an area is high
- Exercising price leadership- (industry’s largest firm) price leaders seek to set price levels in
response to changes in supply and demand, product cost factors and competition
intensification
- Pricing is usually characterised by conscious parallelism (often essential for survival)
- Buying bargaining power
- In price negotiations buyers account for a significant portion of the seller’S sale and they have
multiple options for meeting their procurement needs
- High degree of dependency on the firm’s latest buyers and leads to the seller’s willingness to
offer price reductions
- Buyers are in strong negotiating positions if they have multiple supply sources competing for
their business
- Sellers have negotiating strength to the extent that they offer differentiated products
- Product value to potential customers
- The worth of a thing is the price it will bring
- Customer value may vary considerably across market segments and between buyer’s priority they
assign to a product’s attributes
- For physical goods, sellers may implement differentiated price strategies through product design
differences in the product
- Successful price differentiation by market segment has to be based on functional product
differentiation
- Black-market phenomenon: low-priced products sold in one market will make their way across
segments into markets where higher prices prevail
- Skimming v. Penetration pricing: entering new markets/products sellers may elect to price high
to reach those segments for which the product has the greatest value (skimming) and then bring
the price down over time to tap other pockets of demands
- Skimming price approach is used to maximise unit profit in the early stages and to gain market
experience at low market volume levels
- Penetration pricing: preempts competition and allows the fi rm to gain learning curve
experience to quickly achieve scale economies in manufacturing and marketing
- (Higher-risk strategy) conditions that have to be met to succeed
- Product must be free of any defects that may create customer dissatisfaction
- Production capacity must be in place to satisfy anticipated demand
- Distribution channels but reach potential buyers
- Product adoption shouldn’t require long testing periods by potential customers
- Most profitable firms: low cost structures, successful exercise price leadership, and effectively price
differentiate among market segments
, - They continually monitor price levels and make timely price changes based on shifts in demand and
cost factors
(Channels of) Distribution
- Leading firms typically have the strongest distribution systems, strong
product lines & constant product innovation & a large installed based
- Distribution systems traditionally included the firms personal
salesforce, with wholesale distributors and retail outlets providing
geographically structured market coverage
- Recently electronic commerce channels have grown rapidly
- Key choices in structuring sales channels
- Whether the business will sell through a field salesforce direct to
its user-customers or rely on middlemen
- What kinds of resellers will be needed to reach the firms market
- Will they be recruited selectively in any given geographic area
- Most distribution systems comprise a mix of intermediaries based on
the nature of the product, market demographics and buyer behavior
- Elements in the Distribution System
- Direct sales reps: employees of the fi rm call directly on its customers- economically and effective in
serving accounts that buy in large quantities and need extensive product service/customisation
- Sales agents: independent operators who carry the lines of several suppliers - they represent a
variable cost
- Agents are the channel of choice if firms don’t have the resources to support an in-house sales
organisation & often used as first stage intermediaries in entering new and unfamiliar markets
- Distributors- buy from many suppliers and have wide product lines
- Role to serve customers who purchase small amounts of a various different items and want ready
and reliable availability
- Distributors are often independent businesses operating as single outlets or chains
- Retail outlets: (pharmacies, restaurants, hardware stores, supermarkets etc) comprise a vast
infrastructure supplying end-products and services to both consumers and business buyers
- In some product areas- retail outlets are franchised (required to purchase some or all their
supplies from the franchisor or conform to certain standards of store design, service quality etc.
- Internet: provides consumer and industrial buyers exceedingly convenient access to product
offerings (gain product info, place orders, make payments)
- Yields significant savings in transaction costs as dealer margins, catalogs, point-of-sale display
materials, inventory, storage
- However, the accessible market is limited - less-educated, older and lower-income segments are
inaccessible through electronic channels
- Also the growth of electronic commerce is security concerns- problems in qualifying and verifying
the legitimacy of orders
- Channels support: how effectively suppliers support the channels through which their products
move to markets
- The supplier seeks to assure that its products are stocked and available at the resale level
- Seek that reseller actively display, advertise and promote the product to end-customers
- Seek to resale prices and margins do not deteriorate - desire to preserve resale price levels due to
the concern for sustaining reseller interest in marketing the product
- Selective rather than intensive distribution: the fewer the intermediaries in a given geographic
area, the less incentive resellers have to cut resale prices
- Superior product line breadth and quality: gives reseller a competitive edge
- A high degree of supplier/reseller interdependency: the greater the shame of the dealer’s
sales the more dependent each is on the other and greater pressure to work together to maximise
sales volume and profi ts
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller ibcomsums2021. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $4.59. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
52355 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now