MARKETING - PLANNING
Presented by
Dr. Ben Dewald
The Collins School of
Hospitality Management
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Outline
• Marketing
• The 4 P’s
• The 7 P’s
• Promotion strategy
• People strategy
• Physical evidence strategy
• Process strategy
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Marketing
Organizations use marketing to develop and sell
their products and services.
Most firms have a marketing department that
carries out the functions of marketing.
How to market products and services.
The main emphasis is on the marketing mix
which is the specific combination of interrelated
and interdependent marketing activities that an
organization does to achieve its objectives.
When we think of the marketing mix we often
think of the four P’s.
These are sometimes called the controllable
variables because they can be manipulated by
marketers.
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Source: Adapted from McDonald (1999)
The 4P’s
Product
Developing objectives and policies for product
additions, modifications and deletions. Deciding on
what core product and supplementary services to
offer. Resolving issues such as what design,
branding and positioning to use.,
Price
Developing objectives and pricing policies to be
used for product groups in market segments.
Place
Developing objectives and policies for channels of
distribution, Resolving location issues.
Promotion
Developing objectives and policies for
communication with customers. Resolving issues
concerning advertising, publicity, personal selling,
sales promotion, public relations and direct
marketing
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The 7P’s
However the 4Ps have been much debated and
extended to include other elements. We shall follow
Cowell's (1984) approach which is to consider
services to have seven elements in the marketing
mix (i.e. 7Ps).
– Product
– Price
– Place
– Promotion
– People
– Physical evidence
– Process
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Source: Adapted from McDonald (1999) & Cowell (1993)
The Additional P’s
People
Developing objectives and policies in
relation to behavior, attitudes, and
interpersonal selling skills in service
delivery.
Physical
evidence
Developing objectives and policies for
the physical environment, facilitating
goods and other tangible clues.
Process
Developing objectives and policies for
the processes, mechanisms and routines
used to create and deliver service.
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Marketing Mix
• Remember that by adapting the marketing
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mix elements, you can develop a marketing
program that achieves your objectives.
The marketing mix elements will often alter
as a product-market changes, and a business
continues to look for ways to be successful.
• Here we will look at promotion, people,
physical evidence and process.
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Topic 1 : Promotion Strategy
• Examine the communications process and describe the two
parties that are involved, the sender (usually the business) and the
audience (the customers).
• 6 promotional tools that restaurants can use in a promotion
strategy: advertising, publicity, direct marketing communications,
sales promotion, personal selling and public relations,
Topic 2: People Strategy
• Employees of service businesses
• The service encounter and the role of internal marketing.
• Customers and their 3 roles: as producers of services, as users of
services, and as an influence on other customers.
Topic 3: Physical Evidence Strategy
• We look at how a servicescape includes the physical environment
and the atmosphere of an organization.
• 3 ways that buyer behavior is affected by the look and feel of the
environment and image a business creates.
Topic 4: Process Strategy
• We examine what a service process is and at why managers need
to think about complexity and divergence in service processes.
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Your Objectives
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Distinguish between the six promotional tools that can be used
in a promotion strategy. Comment on how each can be used by
hospitality/tourism businesses to communicate with customers
(and potential customers).
Define the term 'service encounter' and explain why service
personnel are particularly important in restaurant businesses.
Describe the purpose of internal marketing for hospitality
businesses and how this relates to the development of a people
strategy.
Briefly explain the three levels that marketing professionals can
use to consider customers when they develop a people strategy.
Define the term 'servicescape' and describe three ways that
buyer behavior is affected by physical evidence and atmosphere.
Comment on why hospitality/tourism businesses should develop
a physical evidence strategy.
Explain how operations management and marketing
management come together to develop a process strategy for
hospitality/tourism businesses.
Distinguish between process complexity and process divergence
and explain briefly how they relate to improving service quality
as part of a process strategy.
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Who is your Customer?
• University related
• Business
• Pleasure
• Tourist
• Age group
• Income
•…
• Track reservations
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& walk-ins.
Share information
(by email) with
other Groups.
See where you are
up or down.
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4. Promotion Strategy
As Cravens et al (2000) forcefully tell us:
"Marketing communications are essential to
marketing strategy. Without … it, sales
would not be transacted, prospective buyers
may not ever become aware of, let alone
sufficiently interested to search out and buy,
the goods and services that we have to offer
them."
(Cravens et al. 2000 p227)
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The Communication Process
• The objective of communication is
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to get a response from the audience.
In marketing this usually means
getting customers to try, and then
repurchase the brand (to become
adopters): Regulars
Marketing communications can also
be used to build customer loyalty.
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Promotional Tools
• Your challenge is determining who is
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the target audience, deciding what
needs to be communicated and
formulating the mixture of tools that
will best suit these objectives.
You than have to plan a promotional
strategy and budget each component
before launching their campaign
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Advertising
• Defined as any non-personal form of
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communication through a designated paid
medium with an identifiable sponsor.
Media included but limited to television
and radio broadcasting, newspaper and
magazine, transits, outdoors and others.
Most advertisements aim to persuade
customers that the product or service will
meet their needs and offer them value.
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Advertising 2
• It is important to be clear about the objectives
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of advertising (as it can be very expensive) and
to develop an appropriate message. It is also
important to have a carefully calculated budget.
Then it is necessary to select the media to be
used. Typically the choice is between television,
radio, press, magazines or outdoor billboards.
Recently the Internet has offered another media
option - banner advertising. Each of the
different broad choices of media have different
characteristics (coverage, frequency and
impact).
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Publicity
• Publicity is free advertising.
• A business may have to do something to
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attract attention, but they do not pay for the
media exposure they receive. It can be very
beneficial (and cost effective) and has the
benefit of enhanced credibility because it
does not appear to be advertising.
Publicity can be negative as well as positive.
It is also less controllable than other aspects
of marketing communication.
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Public Relations
Public relations are activities that the business
undertakes to communicate to the public which
are not paid for directly.
– The public can include customers, the trade,
shareholders, government bodies, local communities
and employees.
According to Doyle (1994) the major public
relations activities are:
1. achieving positive coverage in the media;
2. creating and reinforcing the corporate image; .
sponsoring special events;
3. lobbying politicians and officials; and
4. advising management about key public issues.
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Public Relations
• Large businesses find public relations a
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useful marketing tool, and one that is
cheaper and more effective than
advertising.
Public relations can create product
awareness and interest. It can influence
specific target market segments and
enhance corporate image. It can be useful
when dealing with crises (such as food
contamination scares).
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Direct Marketing Communications
• Direct mail and telesales are examples of
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direct marketing communications.
They are sometimes called direct marketing or
direct response marketing.
Direct mail (brochures, letters and catalogues)
is usually received through the post, whereas
telesales are received via the telephone.
More recently fax and e-mail have been used
to send direct communications.
Will you do you do any of these?
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Direct Communications
vs. Advertising
• It usually targets named individual
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customers, rather than operating
indirectly through a mass medium (like
newspapers or television).
It normally aims at an immediate
response, rather than an increase in
awareness of positive feelings about a
brand.
Customers buy direct rather than through
an intermediary (a salesperson or agent).
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Database
• Direct communications rely on a good database
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of customers that should be targeted. Some
companies buy databases from research
agencies.
With technology advances it is becoming
increasingly common for businesses to build
their own from their records of the activities of
existing customers.
For a business it is relatively low cost and
efforts can be precisely targeted. It may also
allow for some degree of customization.
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Sales Promotion
• Sales promotions give customers an
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economic incentive to buy.
These incentives are often in the
form of price reductions, free goods
or the chance to win prizes.
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3 Types of Sales Promotions
• Consumer promotions - price
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reductions, coupons, vouchers,
competitions, free goods, premium
offers, trade-in offers, stamps,
guarantees, events and displays.
Trade promotions - dealer loaders, loyalty bonuses,
sale or return, range bonuses, credit, delayed
invoicing, new product offers, competitions, trade-in
offers, free services, training and reciprocal buying.
Sales force promotions - bonuses, commissions,
coupons, free gifts, competitions, vouchers, free
services, points and money equivalents.
Doyle (1994)
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Sales Promotions
• Sales promotions can be targeted quite carefully
and can be used flexibly.
• They can be used to manipulate or shift
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demand, to encourage greater volume or
frequency of purchasing, to add value to a
product or service offering and to reward
customer loyalty.
Sales promotions are popular with businesses
but are usually used to support other
promotional tools.
Sales promotion campaigns may have a limited
life-span, and not be re-used. The development
costs must therefore be carefully assessed.
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Coupons and Discount Cards
• McDonalds - coupon campaign in May 2000
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offering 85 food combinations for $16.
Watsons Wine Cellar - coupon offer in May
2000 with $3 discount on selected wines with
purchases over $30.
Tony Romas - ongoing lucky draw
promotions and other privileges to diners such
as a appetizer coupon and a $5 cash coupon.
Koublai's group - privilege card offering 25%
discount for cash at lunchtime and 15% at
dinner. Credit card purchases discounts of
20% and 10% respectively.
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Your Thoughts
• Think about your own use of
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coupons and discount cards.
Do they tempt you to try new
places/new products?
Do they encourage your loyalty?
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What About:
• RKR-Club-Card for a price allowing the
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customer to eat for free with another
guest for a specified time period.
Cards for Concierges and/or other
hotel/tourism personnel who assist
guests in making restaurant reservations.
Take away menus.
Sales Blitzes using Cal Poly Students
• ...
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Personal Selling
• Personal selling deals with customers on a
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direct or face-to-face basis.
Personal selling allows two-way
communication between buyers and sellers.
The business can investigate the needs of the
buyer.
It generally has more flexibility in adjusting its
offer and can alter the way its products/services
are presented to meet those needs.
Relationship Marketing vs. Hard sell.
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Promotion Summary
• Promotion (marketing communications)
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is essential to marketing strategy.
In the promotion strategy, there is an
integrated mix of promotional tools that
are designed to be effective at reaching
the target market(s), that sustain the
positioning strategy and that are cost
effective.
Objectives must be set carefully for the
whole promotional campaign, and for
each component of the mix.
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5. People Strategy
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Employees are service personnel.
Service encounter and the role of
internal marketing.
Customers have three roles:
1. Producers of services,
2. Users of services,
3. Influence on other customers.
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Service Personnel
• In the foodservice industry we are aware of the
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importance of good service personnel and how
they 'sell' the products/services as much as
formal sales staff do.
Service personnel are trained to do their job
efficiently and effectively - they are usually
also trained to have a strong customer
orientation.
This in turn reflects the image of your
restaurant.
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Internal Marketing
• The success of marketing a service is
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tied closely to the selection, training,
motivation and management of people.
"an important activity in, contributing
to the people element of the marketing
mix and in developing a customerfocused organization."
(Payne 1993 p167)
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Customers as
Producers of Services
• Because customers go to the service facility,
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many service businesses develop multi-site
operations. Each site has a limited geographic
area from which to draw customers.
This can result in difficulties achieving
uniform service standards.
For example chain restaurants may have
identical menus but customers may use
whichever is most convenient (in terms of
location) at the time. They may have different
meal experiences according to which of the
chain restaurants they use.
This is called called this heterogeneity
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Customers as
Users of Services
The customer needs are translated into a set of
desired attributes like:
• Security (e.g. service reliability);
• Consistency (e.g. reliability of reactions);
• Attitude (e.g. interpersonal reactions);
• Completeness (e.g. array of services provided);
• Condition (e.g. 'atmosphere' of the service
environment);
• Availability (e.g. the ease of access in terms of
time or location); and
• Timing (e.g. length of time required for service).
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Customers as
Users of Services
• Competitors also offer services with a
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range of attributes, all of which are
communicated in a variety of ways.
They are perceived and judged by
consumers who then make a choice
about what to buy.
You have to consider the message
you give and the complex buying
behavior of your target customers.
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Customers as an
Influence on other Customers
• Cowell (1984) comments that this is an area
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that is often overlooked by marketing
professionals.
He notices that particularly during group
services the interaction between customers
may be significant in affecting their
perceptions of product/service quality.
At present the nature of these interactions is
only implicitly recognized by marketing
professionals.
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Define People Strategy
• A people strategy is deciding how
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staff behavior, attitudes and
interpersonal skills are to be
directed to sustain the positioning of
the business.
This may involve consideration of
customer behavior.
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Consider when developing a
People Strategy
• Recognize whether the service
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business has high- or low-contact
service encounters
Understand the value of internal
marketing and work w/ HR
Have clear view about how the
service element of the product
contributes to a sustainable
competitive advantage.
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6. Physical Evidence Strategy
• A physical evidence strategy is used to shape
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the image of a business and its services.
There are things that managers can control
that have a direct impact on customer
perceptions.
Physical evidence relates to buildings,
furnishings, layout, color and lighting.
It also includes the goods associated with the
service like tickets and brochures.
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Physical Evidence
• The physical environment includes
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the furnishings, color, layout and
noise level.
The facilitating goods are things that
enable the service to be provided - for
example, the chinaware used in your
grill rooms.
Other tangible clues are the
'packaging' of take-away food.
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Servicescape
• Lovelock and Wright (1999) use the
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term servicescape to mean the
“Impressions created by the design of
the physical environment where
service is delivered”.
They suggest that servicescapes can
create positive or negative impressions
and that care should be taken to design
appropriate environments.
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Restaurant Pétrus
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Affecting Buyer's Behavior
Lovelock and Wright (1999) suggest that
physical evidence and atmosphere affect
buyer's behavior in three ways.
1. Attention grabbing - to make the business
stand out from competing businesses and to
attract customers from target segments.
2. Message creation - to use symbolic clues to
communicate with the intended audience
about the distinctive nature and quality of the
service experience.
3. Effect creation - using colors, textures,
sounds, scents, and spatial design to create or
heighten an appetite for certain goods,
services or experiences.
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7. Process Strategy
• A process strategy is all about the
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linkages between marketing
management and operations
management.
A process strategy looks at the
processes, mechanisms and routines
used to create and deliver service.
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Processes
• These are the procedures, mechanisms and
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routines by which a service is created and
delivered to a customer. (These are a separate
issue from the behavior of people such as
service staff).
Process management is a key aspect of service
quality improvement.
You must therefore be involved in how these
processes operate, because customers'
perceptions of satisfaction with services are a
major concern and are often tied up with their
experience of a process.
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Reliable Service Systems
• Customers want service systems
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that run to time, require little effort
on the part of the customer, are
reliable and deliver what they
promise.
These are operational issues that
marketing professionals can use in
their marketing programs.
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Service Delivery & Process
• Service personnel can look after
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customers whose table is not ready
The inter-personal skills and concern
they show may make the system
breakdown less worrying for customers.
Similarly a pleasant waiting area may
mean that the delay passes more
comfortably.
Neither will entirely compensate for the
system inefficiencies and breakdown.
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Improve Service Quality
To improve service quality it is
necessary to
• design or redesign processes –
• it is not enough purely to focus on
service skills.
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Reduce or Increase Service
• Reduce - moving towards greater
standardization. This can reduce costs, improve
productivity and make distribution easier.
– Produces more uniform service quality and
improved service availability.
– Negative effects may be a perception of limited
choice and a rejection of the highly standardized
service.
• Increase - moving towards greater
customization and flexibility. This may lead to
being able to charge higher prices and
achieving greater profit margins. This suggests
a niche positioning strategy where volume is
less important than margins. This is often used
to gain higher levels of penetration in a market
by adding more services.
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Advantages and Disadvantages
• They provide opportunities for a
business to alter customer’s
perceptions about the services they
are buying. They also provide
opportunities to alter the positioning
of the product/service by appealing
to new market segments or more
people within the existing target
market.
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Conclusion
• The marketing mix is not fixed - it can and
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should be changed periodically.
Some elements (such as pricing strategy) may
be quite flexible, others (such as the physical
evidence strategy) may be more costly and
difficult to adjust.
There is a great deal of inter-dependence
among the marketing mix elements - changing
one element (such as the product) will effect
all the other elements in the marketing
program.
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Where to go from here:
• Do A SWOT analysis of the RKR
• Understand corporate strategy & business purpose
• Research & analyze environmental opportunities
& internal strengths
• Develop competitive strategy
• Undertake market segmentation, targeting &
positioning
• Develop marketing strategy
• Plan marketing program & prepare budget
• Organize marketing department, implement &
control marketing effort
• Evaluate effectiveness of the marketing strategy
& competitive strategy
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References and Resources
Baker M J (1994) The Marketing Book 3rd edit. Butterworth
Heinemann
Christopher M. Payne A, and Ballantyne D (1991) Relationship
Marketing Butterworth Heinemann
Cowell D (1984) The Marketing of Services. ButterworthHeinemann Ltd.
Cravens D W (2000) Strategic Marketing 6th edit. Irwin McGrawHill
Cravens D W, Merrilees B and Walker R H (2000) Strategic
Marketing Management for the Pacific Region. The McGrawHill Companies, Inc.
Doyle P (1994) Marketing: Management & Strategy Prentice Hall
Drucker P (1974) Management: Tasks, Responsibilities, Practices
New York, Harper and Row
Fifield P and Gilligan C (1998) Strategic Marketing Management
1998-99 - CIM Workbook Butterworth Heinemann
Payne A (1993) The Essence of Services Marketing Prentice Hall
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