Chapter 12 :Setting product strategy Product differentiation ‐Form many products can be differentiated in form –size,shape,or physical structure of a product. ‐features most products can be offered with varying features that supplement their basic function. ‐customization marketers can differentiate products by customizing them.They have increased their ability to individualize market offerings,messages,and media. Mass customization is the ability of a company to meet each customer’s requirements. ‐Performance quality it is the level at which the product’s primary characteristics operate .Firm should design a performance level appropriate to the target market and competition. ‐Durability a measure of the product’s expected operating life under natural stressful conditions ‐Reliability it is a measure of the probability that a product will not malfunction or fail within a specified time period. ‐Repairability it measures the ease of fixing a product when it malfunctions or fails ‐Style it describes the product’s look and feel to the buyer.It creates distinctiveness that is hard to copy. Design the totality of features that affect how a product looks and functions in terms of customer requirement. Service differentiation ‐Ordering ease it refers to how easy it is for the customer to place an order with the company. ‐Delivery it refers to how well the product or service is bought to the customer (speed and care). ‐installation it refers to the work done to make a product operational in its planned location. ‐customer training it helps the customer’s employees use the vendor’s equipment properly and efficiently. ‐customer consulting it includes data,information systems,and advice services the seller offers to buyers. ‐Maintenance and repair it helps customers keep purchased products in good working order. ‐returns 2 ways of product returns 1. 1.controllable returns it result from problems or errors by the seller or customer and can mostly be eliminated with improved handling or storage,better packaging,and improved transportation and forward logistics by the seller or its supply chain partners. 2. 2.Uncontrollable returns it result from the need for customer to see,try,or experience products in person to determine suitability and can’t be eliminated by the company in the short run through any of these means. Product system and Mixes 
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A product system is a group of diverse but related items that function in a compatible manner. A product mix is the set of all products and items a particular seller offers for sale. A product mix should contain the following things 1.Width ; refers to how many different product lines that the company carries. 2.Length ;refers to the total number of items in the mix 3.depth ; number of variants offered of each product in the line. 4.consistency ;how closely related the various lines are in end use,product requirements,distribution channels. Product line length Company objectives influence product line length 1. create a product line to induce upselling. 2. create a product line that facilitate cross selling. 3. create a product line that protects against economic ups and downs. A company lengthens its products line in two ways 
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Line stretching occurs when a company lengthens its product line beyond its current range,whether down‐market,up‐market or both ways. Line filling adding more items within the present range. Down market stretch (Thai Airways Nok Air) A company positioned in the middle market may want to introduce a lower priced line for any of three reasons. 1.Shoppers want value‐priced goods. 2.wish to tie up lower‐end competitors 3.find that the middle market is stagnating or declining Company may wish to enter the high end of the market for 1.more growth 2.higher margins 3.simply to position themselves as full line manufacturers Two way stretch Companies serving the middle market might decide to stretch the line in both directions Line filling refers to add more items within the present range Several reasons for line filling : 1.reaching for incremental profits . 2.trying to satisfy dealers who complain about lost sales because of missing items in the line. 3.tryting to utilize excess capacity. 4.trying to be the leading full‐line company 5.trying to plug holes to keep out of competitors. Product Mix pricing 1.product line pricing companies normally develop product lines rather than single products and introduce price steps.it is to establish perceived quality differences that justify the price differences. 2.optinal‐feature pricing many companies offer optional products,featurers,and services with their main product. Companies must decide which items to include in the standard price and which to offer as options. 3.Captive‐product pricing some products require the use of ancillary or captive products. Set high markups on these products. 4.Two part pricing service firms often engage in two‐part pricing,consisting of a fixed fee plus a variable usage fee. 5.By product pricing the product of certain goods results in by products (leftover) if they have value they should be priced (bread from S&P sold for feeding fish) 6.Product bundling pricing pure bundling occurs only when a firm only offers its products as a bundle. In mixed‐bundling,the seller offers goods both individually and in bundle Co branding It is also called dual branding or brand bundling. Two or more well known existing brands are combined into a joint product or marketed together in some fashion. Advantages ‐co branding can generate greater sales from the existing target market as well as open additional opportunities with new consumers and channels ‐it can also reduce the cost of product introduction because it combines two well know images and speeds adoption. Co branding may be a valuable means to learn about consumers and how other companies approach them. Disadvantages ‐The risks and lack of control from becoming aligned with another brand in the mind of consumers ‐Risk of overexposure if the other brands has entered into a number of co‐branding arrangements. Ingredient branding It is a special case of co‐branding .it creates brand equity for materials,components,or parts that are necessarily contained within other products.It is try to create awareness and preference for their product so consumers whill not buy a host product that doesn’t contain it. Packaging Packaging includes all the activities of designing and producing the container for a product. Various factors contribute to the growing use of packaging as a marketing tool. 1.self service effective package must perform sales task: attract attention ,describe the product’s features ,and make overall impression. 2.consumer affluence They are willing to pay more for convenience, appearance ,and prestige of better packages. 3.company and brand image packages contribute to instant recognition of company and brand 4.innovation opportunity innovation packaging can bring large benefits to consumers and profits to producers. Packaging must achieve the following objectives 1.identify the brand 2.convey descriptive and persuasive information 3.facilitate product transportation and protection 4.assist at home storage 5.aid product consumption Labeling 1.the label identifies the product or brand. 2.the label might also grade the product. 3.the label might describe the product. 4.the label might promote the product through attractive graphics. Chapter 14 : Developing pricing strategies and programs Setting the price Step 1 :Selecting the pricing objective Survival companies pursue survival as their major objective if they are plagued with overcapacity, intense competition,or changing consumer wants Maximum current profit try to set a price that will maximize current profits. Maximum market share They believe a higher sales volume will lead to lower unit costs and higher long run profit. Maximum market skimming it is when prices start high and slowly drop over time. Product‐quality leadership a company might aim to be the product‐quality leader in the market. Many brands strive to be “affordable luxuries” Step 2 : Determining Demand For prestige goods,the demand curve sometimes slopes upward. Some consumers take the higher price to signify a better product.However,if the price is too high,demand may fall. Price sensitivity They will be 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 Price elasticity of demand **Always put absolute sigh after calculation and if the elasticity is more than or equal 1 the demand is elastic on the other hand if the elasticity is less than it means demand is inelastic. Step 3 : Estimating Costs Fixed cost or overhead which means cost that do not vary with production level or sales revenue. 
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Variable cost vary directly with the level of production. Total costs consist of the sum of the fixed and variable costs. Average cost is the cost per unit at the level of production ;it equals total costs divided by production. Accumulated production ;This decline in the average cost with accumulated production experience is called the experience curve or learning curve. Target costing costs change with production scale and experience. They can also change as a result of a concentrated effort by designers,engineers ,and purchasing agents to reduce them through target costing. Step 4 : Analyzing competitors’ costs ,prices,and offers If the firm’s offer contains features not offered by the nearest competitor,it should evaluate their worth to the customer and add that value to the competitor’s price Step 5 : Selecting a pricing method 3.Perceived value pricing Perceived value is made up of a host of inputs, such as the buyer’s image of the product performance, the channel deliverables, the warranty quality, customer support, and softer attributes such as the supplier’s reputation, trustworthiness, and esteem. Value pricing They win loyal customers by charging a fairly low price for a high quality offering EDLP (everyday low pricing) is a retailer that holds to an EDLP pricing policy charges a constant low price with little or no price promotions and special sales In high low pricing (end of season sales) the retailer charges higher prices on an everyday basis but runs frequent promotions with price temporarily lower than EDLP level. Going‐rate pricing the firm bases its price largely on competitors prices. Step 6 : Selecting the final price Price discounts and Allowances 1.Discount : a price reduction to buyers who pay bill promptly 2.Quantity discount : a price reduction to those who buy large volumes 3.functional discount : discount offered by a manufacturer to trade channel members if they will perform certain functions ,such as selling,storing,and record keeping. 4.Seasonal discount : a price reduction to those who buy merchandise or services out of season. 5.allowance : Trade in allowances are granted for turning in an old item when buying a new one. Promotional allowances reward dealers for participating in advertising and sales support programs. Promotional Pricing 1.Loss‐leader pricing : supermarket and department stores often drop the price on well‐known brands to stimulate additional store traffic. 2.Special event pricing: sellers will establish special prices in certain seasons to draw in more customers. 3.Special customer pricing :sellers will offer special prices in exclusively to certain customers. 4.Cash rebates :companies offer cash rebates to encourage purchase of the manufacturers’ products within a specified time period. 5.low interest financing 6.longer payment terms 7.warranties and service contracts 8.psychological discounting :the shop might set a fake price. Differentiated pricing 1.Customer‐segment pricing : different customer groups pay different prices for the same product or service. 2.product‐form pricing : different versions of the products are priced differently 3.image pricing : some companies price the same product at two different levels based on image differences. 4.channel pricing :depend on distribution 5.location pricing : concert seats 6.time pricing : prices are varied by season,day,or hour Chapter 15 : Designing and Managing integrated marketing channel 
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Marketing channels are sets of interdependent organizations participating in the process of making a product or service available for use or consumption. A marketing channel system is the particular set of marketing channels a firm employs,and decisions about it are among the most critical ones management faces. Hybrid channels occurs when a single firm uses two or more marketing channels to reach customer segments. HP has used its sales force to sell to large accounts,outbound telemarketing to sell to medium‐sized accounts,direct mail with an inbound number to sell to small accounts and so on. Channel design decisions Marketers will analyze customer needs and wants,establish channel objectives and constraints,and identify and evaluate major channel alternatives. Channels product five service outputs. 1. Lot size ;the number of units the channel permits a typical customer to purchase on one occasion 2. Waiting and delivery time the average time customers wait for receipt of goods. 3. Spatial convenience how easy for customers to purchase the products. 4. Product variety 5. Service Backup Types of intermediaries 1.Exclusive distribution means severely limiting the number of intermediaries. It is to maintain control over the service level and outputs offered by the resellers.It requires a closer partnership between seller and reseller and is used in the distribution of new automobiles,some major appliances. 2.Selective distribution relies on only some of the intermediaries willing to carry a particular product. It can gain adequate market coverage with more control and less cost than intensive distribution. 3.Intensive distribution places the goods or services in as many outlets as possible. Especially snack foods,soft drinks,newspapers,candies,and gum. It will help coverage and sales but in long term price wars can then erode profitability,harming brand equity. Sales force person to person ,but expensive Internet less expensive Distributors create sales E‐commerce marketing 
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It uses a web site to transact or facilitate the sale of products and service online. Online retailers compete in three key aspects of transaction which are 1.customer interaction with the website 2.delivery 3.ability to address problems when they occur. Pure click companies are those that have launched website without any previous existing firms. Brick and Click companies are existing companies that have added an online site for information or e‐commerce. M‐Commerce Allow people to connect to the internet and place online orders on the move. Chapter 16 : Managing retailing,wholesaling,and logistics 
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Major Types of Store Retailers Specialty Stores Carries a narrow product line in a relatively small store. Provide high level of service and sales expertise. Department stores Offer service to customer Supermarket Large,low‐cost,high volume,self service store designed to meet perishable market (TOP) Convenience store It is small store,self‐service,tend to open all day Drug store Prescription and pharmacies,health and beauty aids Discount store Standard or specialty merchandise;low price,low margin,high volume stores 
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Extreme Value Selling general merchandise products Off price retailers Leftover goods,irregular merchandise sold at less than retails Superstore Hugh selling space Chapter 17 : Designing and Managing integrated marketing Communicatioins Marketing communications mix consists of eight modes of communications 1.Advertising – Any paid form of nonpersonal presentation and promotion of ideas,goods,or services by an identified sponsor via print media. 2.Sales promotion – a variety of short term incentives to encourage trial or purchase of a product or service including consumer promotions. 3.Events and experiences 4.Public relations and publicity 5.Direct marketing 6.interactive marketing online activities and programs designed to engage customers or prospects and directly or indirectly raise awareness 7.WOM marketing 8.personal selling Developing effective communications 1.Identify target audience The process must start with a clear target audience in mind :potential buyers of the company’s products,current users,deciders,or influencers,and individuals,groups 2.Determine communications objectives 2.1 Category need‐ create primary demand or a new to the world product such as electric cars will always begin with a communications objectives of establishing category need. 2.2 Brand awareness –fostering the consumer’s ability to recognize or recall the brand within the category 2.3 Brand attitude – help consumers evaluate the brand’s perceived ability to meet a currently need. 2.4 Brand purchase intention –move consumers to decide to purchase the brand or take purchase‐related action. Promotional offers should be presented to the customers 3.Design the communication Massage strategy what to say ,the management searches for appeals,themes,or ideas that will tie in to the brand positioning and help establish points of parity or points of difference Creative strategy depends on how a message is being expressed,and on its content. Informational appeals ; it elaborates on product or service attributes or benefits. ‐Problem solution ads ,product demonstration, product comparison,testimonials from endorsers Transformational appeals it elaborates on a nonproduct‐related benefit or image Negative appeals such as fear,guilt,and shame to get people to do things (brush their teeth,have an annual health checkup) Positive emotional appeals such as humore,love,pride,and joy Message source delivered by attractive or popular sources can achieve higher attention and recall ,which is why advertisers often use celebrities as spokespeople. Three factors for creating source credibility ‐Expertise it is the specialized knowledge the communicator possesses to back the claim. ‐Trustworthiness describes how objective and honest the source is perceived to be. ‐Likability describes the source’s attractiveness. 4.Select the communication channels Personal communication channels let two or more persons communicate face to face or person to audience through a phone,surface,mail,or email. Advocate channels consist of company salespeople contacting buyers in the target market. Expert channels consist of independent experts making statements to target buyers. Social channels consist of neighbors,friends,family members,and associatiates talking to target buyers. Nonpersonal communication channels are communications directed to more than one person and include advertising,sales promotions,events and experiences,and public relation. For example,Media,sales promotion,events and experience ,PR 5.Establish the total marketing communication budget 5.1Affordable method it sets the communication budget at what they think the company can afford.It leads to an uncertain annual budget,which makes long‐range planning difficult 5.2 Percentage‐of‐sales method some companies set communication expenditures at a specified percentage of current or anticipated sales 5.3Competitive parity method competitor’s expenditures represent the collective wisdom of the industry,and the maintaining competitive parity prevents communication wars. 5.4Objective and task method such as to remind customers and increase sales by 10% 6.Deciding on the marketing Mix Factors to consider 1.Type of product market communications‐mix allocations vary between consumer and business markets. Consumer marketers tend to spend comparatively more on sales promotion and advertising ; business marketers tend to spend comparatively more on personal selling 2.Product‐life cycle stage introduction stage of the product life cycle,advertising,events and experiences,and publicity have the highest cost‐effectiveness . Advertising,events and experiences,and personal selling all become more important in the maturity stage. Brand A should improve redesign products and communication for Brand B needed to be improved. Coordinating media multiple‐vehicle,multiple stage campaigns to achieve maximum impact and increase message reach and impact Many companies are coordinating their online and offline communications activities. Chapter 18 : Managing Mass communications 
Advertising can be a cost‐effective way to disseminate messages,whether to build a brand preference or to educate people. 
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Informative advertising aims to create brand awareness and knowledge of new products or new features of existing products. Persuasive advertising aims to create liking,preference,conviction,and purchase of a product or service. Some persuasive advertising uses comparative advertising. Reminder advertising aims to stimulate repeat purchase of products and services Reinforcement advertising aims to convince current purchasers that they made the right choice. Place advertising or out of home advertising is a broad category including many creative and unexpected forms to grab consumers’ attention. Billboard use colorful,graphics,sounds and so on. Public spaces are placed on movie screens,on airplanes,and in fitness clubs,hotel,and other public areas. Product Placement pay fees on movie or television Point of purchase includes ads on shopping carts,cart straps,aisles,and shelves,as well as promotion option. Deciding on Media timing and allocation 1.Continuity ;advertisers use continuous advertising in expanding market situations with frequently purchased items. (convenience goods,buy often) 2.Concentration ; calls for spending all the advertising dollars in a single period. This one is used for one selling season or related holiday. 3.Flighting ; advertise during a period followed by a period with no advertising (run and then stop) it is useful when funding is limited.the purchase cycle is infrequent,and seasonal. 4.Pulsing ;it is continuous advertising at low weight levels,reinforced periodiacally by waves of heavier activity. It is to maintain minimum level but increase specification combining flighting +continuity Evaluating advertising effectiveness Communication‐effect research called copy‐testing,seeks to determine whether an ad is communicating effectively. Marketers should perform this test both before an ad is put into media and after it is printed or broadcast. Pretest critics maintain that agencies can design ads that test well but may not necessarily perform well in the marketplace. Proponents maintain that useful diagnostic information can emerge and that pretests should not be used as the sole decision. Sales‐effect research what sales are generated by an ad that increases brand awareness. 
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A company’s share of advertising (spending of adver for total budget) expenditures produces a share of voice (proportion of company advertising of that product to all advertising of that product) that earns a share of consumer’s minds and hearts and ultimately a share of market. Sales promotion is a key ingredient in marketing campaigns,consists of a collection of incentive tools, mostly short term. It is designed to stimulate quicker or greater purchase of particular products or services by consumers or trade. Major consumer promotion tools 1.samples 
offer of a free amount of a product or service delivered door to door. 2.Coupons 
certificates entitling the bearer to a stated saving on the purchase of a specific product. 3.Cash refund offers (rebates) 
provide a price reduction after purchase rather than at the retail shop. 4.Price packs (cent‐off deals) 
offers to consumers of saving off the regular price of a product. A reduced‐price pack is a single package sold at a reduced price. A banded pack is two related products banded together ( such as a toothbrush and toothpaste) 5.Premium (gifts) 
offered at a relatively low cost or free as incentive to purchase a particular product. 6.Frequency programs 
providing rewards related to the consumer’s frequency 7.prizes 
offers of the chance to win cash,trips,or merchandise as a result of purchasing something. A sweepstakes asks consumers to submit their names in drawing. 8.Pratonage awards 
values In cash or in other forms that are proportional to patronage of a certain vendor or group of vendors. More long term program 9.Free trials 
inviting prospective purchasers to try the product without cost in the hope that they will buy. 10.Tie‐in promotions 
two or more brands or companies team up on coupons,refunds,and so on. 11.Cross‐promotions using one brand to advertise another noncompeting brand. 12.Point‐of‐purchase (POP) displays and demonstrations Chapter 19 : managing personal communication 
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Direct marketing is the use of consumer‐direct (CD) channels to reach and deliver goods and services to customers without using marketing middleman. Interactive marketing the internet provides marketers and consumers with opportunities for much greater interaction and individualization. Designing the sales force 1.Sales force objectives 2. Sales force strategy 3.sales force structure 4.sales force size 5.sales force compensation Sales Force Objectives and Strategy 1.Prospecting searching for prospects or leads. 2.Targeting deciding how to allocate their time among prospects and customers. 3.communicating communicate information about the company’s products and closing sales. 4.selling approaching,presenting,answering questions,overcoming objections,and closing sales. 5.servicing providing various services to the customers 6.information gathering conducting marketing research 7.allocating which customers will get the product first Sales force size 
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Group customers into size classes according to annual sales volume establish desirable call frequencies multiple the number of accounts in each size class determine the average number of calls a sales representative can make per year (per one sale) divide the total annual calls required by the average annual calls made by a sales representative Suppose the company estimates it has 1,000 A accounts and 2,000 B accounts . A accounts require 36 calls a year ,and B accounts require 12,so the company needs a sales force that can make60,000 sales calls (36,000+24,000) a year. If the average full‐time rep can make 1,000 calls a year the company needs 60. Sales force compensation 
The fixed amount,a salary, satisfies the need for income stability. The variable amount, whether commissions,bonus,or profit sharing, serves to stimulate and reward effort. Expense allowances enable sales reps to meet the expenses of travel and entertaining. Benefits ,such as paid vacations,sickness,or accident benefits,pensions,and life insurance,provide security and job satisfaction.