Hilkka Jankkila, Principal Lecturer,
ROVANIEMI POLYTECHNIC, School of Forestry and Rural Industries
 Lectures = basic concepts and processes of
– Marketing ( 3 x 3 h )
– Product development ( 1 x 3 h )
– Quality management ( 1 x 3 h )
 Group working with practices ( 10 h )
 Excursions / notes / analysis ( 24 h )
 Exam and evaluation: ( 4,5-6 Hungarian credits )
-Active participating in the lectures + group reports; Hungarian and Finnis
students together prepare reports ( 2-3 groups ), see “Practises 1 and 2 “
-The Hungarian students give exam to professor Horvath Gabor
-The Finnish students have a written test and more practice in F inland
MARKETING -Jankkila 2004 -
MARKETING – PRODUCT DEVELOPMENT –
QUALITY MANAGEMENT
Literature in English:
Lancester, Geoff - Reynolds, Paul. 2004.
“ Marketing “
Kotler, Philip – Amstrong, Gary. 2004.
“ Principles of Marketing “
MARKETING -Jankkila 2004 -
THE MARKET
• A environment where the demand and supply
meets each other and the marketing occurs
• A group of people, who needs and wants
products/services/experiences/information and
who have buyingpower to satify their needs
• The set of all actual and potential buyers of a
product or service ( Kotler-Amstrong 2004 )
MARKETING - Jankkila 2004 -
MARKETING
”A social and managerial process whereby individuals
and groups obtain what they need and want through
creating and exchanging products and value with
others” –Kotler-Amstrong 2004; Principles of marketing
CONCEPTS
*needs *wants *demands,
*marketing offers = products, services, experiences
*value *satisfaction *exchanges
*transactions *relationships
*markets
MARKETING -Jankkila 2004 -
MARKETING
> A comprehensive, well planned social and managerial process
> Market and environment analysis to get information about
demand, cutomers, competition
> Studying the needs and wants of the customers/ creating needs
> Developing products satifying those needs and wants
> Pricing
> Presentation ( information, Public Relations, sales promotion,
advertising, profiling )
> Distribution
> Personnel, Service process, Physical Evidence
OBJECTIVES AND TARGETS
> The business is economically profitable
> The customers are satisfied
MARKETING -Jankkila 2004 -
THE MARKETING PROCESS MODEL
- Lancester-Reynolds 2004 -
Marketing
recearch
SUPPLIER
Sales
forecasting
Buyer
behavior
CUSTOMER
Product Price Distribution
Promotion Personal
Channels Logistics
selling
Segmentation
targeting and
positioning
Information Public Relations
Advertising Sales promotion
MARKETING -Jankkila 2004 -
MARKETING AND PRODUCT DEVELOPMENT
Market recearch - Feedback
MARKET - CUSTOMERS
Administration
MARKETING
PRODUCT
PROMOTION
DISTRIBUTION
Financing
SERVICE
Ideas
Channels Logistics
Legis- Ideageneration
lation
Ideascreening
Concept development
Compe- Business planning
Production
titors
and evaluation
- procedures
Product development
- capacity
Test market
- quality assurance
Launch
- raw materials
PRICING
- Strategies
- Price defining
Packing
-materials
-procedures
-the needs of
customers, retails and
wholesalers,
MARKETING
-Jankkila 2004 -
MARKETING ALONGSIDE OTHER
ELEMENTS OF BUSINESS
Production
Finance
Marketing
CUSTOMER
Recearch and
development
Marketing
Human secource
management
MARKETING -Jankkila 2004 -
MARKETING MANAGEMENT
ORIENTATIONS -Kotler-Amstrong 2004PRODUCTION CONSEPT
Consumers favor the products which are available and highly
affordable. Focus on improving production and distribution
efficiency
PRODUCT CONSEPT
Consumers favor products that offer the most quality,
performance and features. Focus on continous product
improvements
SELLING CONSEPT
Consumers do not buy enough unless the firm undertakes a
large-scale selling and promotion effort
MARKETING -Jankkila 2004 -
MARKETING MANAGEMENT
ORIENTATIONS -Kotler-Amstrong 2004MARKETING CONSEPT
Customer focus and value = paths to sales and profits.
Customer-centred sense and respond. Find the right
products for customers.
CUSTOMER RELATIONSHIP MANAGEMENT =
CRM
Create profitable relationships with the customers.
Customer database management activity. Achieve
customer’s loyalty
Bacic realtionship, full partnership
Financial and social benefits, frequency marketing
programs, club marketing programs
MARKETING -Jankkila 2004 -
MARKETING MANAGEMENT ORIENTATIONS Kotler-Amstrong 2004-
Selling ( 1 )and marketing ( 2 )concepts contrated:
Starting point Focus
Means
Ends
1 Factory
Existing Selling
products and promotion
Profits through
sales volume
2 Market
Customer Intergated
needs
marketing
Profits through
customer
satisfaction
MARKETING -Jankkila 2004 -
SOCIETAL MARKETING CONSEPT
-
Kotler-Amstrong 2004 –
-
 organization / firm should determine the needs / wants /
interests of target markets
 deliver the desired satisfactions more effeciently and
effective than the competitors do
 in a way that maintains or improves the consumer´s and
society´s well being
*Quality management and assurance !
*Environmental quality management !
MARKETING -Jankkila 2004
SOCIETAL MARKETING
SOCIETY
Human welfare
SOCIETAL
MARKETING
CONCEPT
CONSUMERS
Want satisfaction
COMPANY
Profits
Conflicts between consumer shot term wants
and consumer long-run welfare??
MARKETING -Jankkila 2004 -
MARKETING ENVIRONMENT
MICRO ENVIRONMENT
1. Elements over which a firm has control ( marketing mix = 4 + 3 Ps )
or which it can influence in order to gain information that will help it
in its marketing operations –Lancester-Reynolds 20042. Actors close to firm/company that affect its ability to serve the
customers = company, suppliers, marketing intermediaries,
customer markets, competitors- Kotler-Amstrong 2004 MACRO ENVIRONMENT
-all forces and agencies external to the marketing firm itself
>close to firm = customers, suppliers, agents, distributors, other
íntermediaries, competing firms, public - Lancester-Reynolds 2004-,
>wider external = legal, cultural, economic,demographictechnological
subenvironments, political -(Kotler-Amstrong & lancester-Reynolds MARKETING -Jankkila 2004 -
MARKETING ENVIRONMENT
• COMPANY
>top management, finance, recearc&development,
purchasting, operations, accounting
• SUPPLIERS
>raw material suppliers,
• INTERMEDIARIES
>firms that helps the company to promote, sell, distribute the goods to
final buyers; resellers, phycical distribution firms, marketing service
agencies, financial intermediers
MARKETING
-Jankkila 2004 -
MARKETING ENVIRONMENT
• CUSTOMERS
>consumer markets = individuals and households > personal
consumption
>business markets = buy goods and services for further processing or
for use in their product process
>reseller markets = buy goods and services to resell at a profit
>government markets = buy goods and services to produce public
services or transfer them to people who need them
>international markets = buyers in other countries
• COMPETITORS
>other firms
MARKETING -Jankkila 2004 -
MARKETING ENVIRONMENT
• PUBLICS
>groups that have an actual or potential interest in or impact on
an firm`s ability to achieve its objestives
-financial publics = banks, funds, investment houses, stocholders …
-media publics = newpapers, television stations, editorial opinion …
-government publics = product safety, truth of advertising ..
-citizen action publics = consumer organisations, environmental
groups, minority groups …
-local publics = community organizatios …
-general public and the public´s attitudes and images of company
-internal publics = workers, manaagers, directors …
MARKETING -Jankkila 2004 -
MARKETING ENVIRONMENT
Macro environment
• DEMOGRAPHIC
-human population’s size, density, location, age, gender,
race, occupation …
• ECONOMIC
-factors that affect consumer buying power and spending
patterns = income changes, income distribution, classes,
changing consumer spending patterns
• NATURAL
-natural recources that are needed as inputs by
marketers or that are affected by marketing activities
MARKETING -Jankkila 2004 -
MARKETING ENVIRONMENT
• TECHNOLOGICAL
-froces that create neeeew technologies, creating new product and
market opportunities
• POLITICAL
-increasing legislation regulating business
-laws, government agencies, pressure groups, ethics and socially
responsible actions ( social codes and rules)
-protect compnies from each other, protect consumers from unfair
business practices
• CULTURAL FORCES
>institutions and forces that affect ssocietys´s bacic values,
perceptions, preferenc es and behaviors
MARKETING -Jankkila 2004 -
BUYER BEHAVIOUR
Focus on the consumer buyer behaviour
• The acts of individuals directly involved in obtaining and
using economic goods and services, including the decision
process that precede and determine these acts-Lancester-Reynolds• Consumer buyer behaviour - the buying behaviour of
final consumers = individuals and households who buy
goods and services for personal consumption –Kotler-Amstrong• Consumer = most important of the marketing
environment
=> the firm must know : WHAT, WHEN, HOW, WHY
the customer buyes
MARKETING -Jankkila 2004 -
MODEL OF BUYER BEHAVIOUR –Kotler-Amstrong
MARKETING AND
OTHER STIMULI
BUYER’S
BLACK BOX
BUYER’S
RESPONSES
Marketing
Product
Price
Place
Promotion
Buyer
Buyer
character decision
istics
process
Product choice
Brand choice
Dealer choice
Purchace timing
Purchace amount
Other
Economic
Technologicál
Political
Cultural
MARKETING –Jankkilaa2004 -
FACTORS INFLUENCING CONSUMER
BEHAVIOUR –Kotler-Amstrong 2004 CULTURAL
Culture
Subculture
Social class
SOCIAL
Reference
groups
Family
Roles and
status
PERSONAL
PSYCHOLOGICAL
Age and lifeMotivation
cycle stage
Perception
Occupation
Learning
Economic
Beliefs and
situation
attitudes
Lifestyle
Personality and
self-concept
For the most marketers can not control such factors –
but they must be taken into account –
MARKETING -Jankkila 2004 -
Hierarcy of needs by Maslow
SELF
ACTUALISATION
Creativity fulfillment, Pursue
RESPECT AND SELF-ESTEEM
Achiement qualifications
SOCIAL NEEDS
Recognition and belonging, friends , family
SAFETY NEEDS;
Protection, security, stability, Freedom of fear
PHYSIOLOGICAL NEEDS; Hunger, Thirst, shelder, warmth
MARKETING -Jankkila 2004 -
BUYERS DECISION PROCESS
–Kotler-Amstrong-
Lancester-Reynolds -
PROBLEM / NEED RECOGNITION
INFORMATION SEARCH
EVALUATION OF ALTERNATIVES
PURCHASE DECISION
POSTPURCHASE BEHAVIOUR
MARKETING -Jankkila 2004 -
STAGES IN THE ADOPTION PROCESS –
NEW PRODUCT –Kotler-Amstrong- Lancester-Reynolds1. AWARENESS
2. INTEREST/INFORMATION
3. EVALUATION
4. TRIAL
5. ADOPTION
6. POST-ADOPTION CONFIRMATION
MARKETING -Jankkila 2004 -
DIFFUSION PROCESS OF INNOVATIONS
Rogers, Kotler-Amstrong, La´ncester-Reynolds
2,5 %
Innovators
13,5 %
Early
adopters
34 %
34 %
Early
majority
Late
majority
16 %
Laggards
MARKETING -Jankkila 2004 -
SEGMENTATION–TARGETING–
–Kotler-Amstrong 2004 -
MARKET SEGMENTATION =
- Dividing the market into distinct groups with distinct
needs, characteristics or behaviour who might require
separate products or markettin mixes
- geographic, demographic, psychographic, behavioral
TARGET MARKETING =
- The process of evaluating each market segment’s
attractiveness and selecting one or more segments
- undifferentiated=massmarketing, ifferentiated=segmented
marketing, concentrated=niche marketing,
micromarketing =local or individual marketing
MARKETING
-Jankkila 2004 -
POSITIONING
MARKET POSITIONING
Arranging for a product to occuby a clear, distinctive and
desirable place relative to competing products in the minds of
target consumers
PRODUCT POSITION
The Way the products is defined by consumers on important
attributes - the place the product occupies in consumers’ mind
relative to competing products
CONSUMERS ORGANIZE PRODUCTS INTO CATEGORIES
The consumers do not reevaluate the products every time they make a
buying decision > they organize products, services and companies into
categories and POSITION them in their minds
MARKETING MIX EFFORTS SUPPORT THE
POSITIONING STRATEGY !
MARKETING -Jankkila 2004 -
BUSINESS IDEA
WHAT
TO WHO
Products, services, experiences
experinces
- quality
- price
The market
-customers needs/wants
-market opportunities
-segmentation
-competition situation
HOW
IMAGES/POSITION
PROFILES
- enterprice´s structure
- way of doing/actioning, manners
- product/service/firm/
-marketing concept and processes managening profile
MARKETING -Jankkila 2004 -
FROM IDEA TO ACTION
From customer centred businessidea to action -Rope 1989 SEGMENTATION
-segment determining
-needs of the segment
COMPETITORS
-present/future
BUSINESS IDEA DESICIONS
-what, to who, how, ímages
FIRM at present
-know-how
-recources
BUSINESS IDEA REALIZATION
-internal marketing
EXTERNAL MARKETING
-profiling
SOCIETY
-economical/technical/
attitude changes
-profiling
MARKETING -Jankkila 2004 -
MARKETING MIX -Kotler-Amstrong and Booms-Bitner
• The set of controllable tactical marketing tools
• Everything the firm can do to influence the demand of
its products
Sellers view
Customers view
4 Ps:
4 Cs:
> Product
> Customer solution
> Price
> Customer cost
> Place
> Convenience
> Promotion
> Communication
3 more Ps:
> People
> Process
> Phycical evidence
MARKETING -Jankkila 2004 -
4 Ps
PRODUCT
PRICE
Variety, Quality
Design, Features
Brand name, Packaging
Services
PROMOTION
Advertising
Personal selling
Sales promotion
Public Relations
List price, Discounts
Allowances, Payment
period, Credit terms
TARGET
CUSTOMERS
INTENDED POSITIONING
PLACE
Channels, Coverage
Assortments, Locations
Inventory, Transportation
Logistics
MARKETING -Jankkila 2004 -
The 7 – Ps – Extended Marketing Mix
–Booms-Bitner -
 Marketing Strategy tool that expands the number of
controllable variables from the four in the original Marketing
Mix Model to seven.
 People
( explicit faktor )
 Process
( explicit faktor )
 Phycical Evidence ( implicit faktor )
 The traditional Marketing Mix model was primarily directed
and useful for tangible products.
 The 7-Ps model is more useful for services industries and
arguably also for knowledge-intensive environments.
•
MARKETING -Jankkila 2004 -
7- Ps
People
All people directly or indirectly involved in the consumption of a
service are an important part of the extended marketing mix.
Knowledge Workers, Employees, Management and other Consumers
often add significant value to the total product or service offering.
Process
Procedure, mechanisms and flow of activities by which services are
consumed (customer management processes)
Physical Evidence
The ability and environment in which the service is delivered
both tangible goods that help to communicate and perform the service
and intangible experience of existing customers and the ability of the
business to relay that customer satisfaction to potential customers.
MARKETING -Jankkila 2004 -
7 Ps
• Booms and Bitner also suggest that Place in a
service-oriented company includes the
accessibility of the service, and that Promotion in
a service-oriented company includes the input of
front-line service personnel.
MARKETING -Jankkila 2004 -
PRODUCT / SERVICE
Kotler-Amstrong 2004, Lancester-Reynolds 2004
• PRODUCT = Anything that can be offered to a market for
attention, acquisition, use or consumption that might satisfy
a want or need
>industrial goods = installations, assessories, raw materials,
component parts and materials, supplies
>consumer goods =convenience goods, shopping goods, speciality
goods, unsought goods
• SERVICE = Any activity or benefit that one party can offer
to another that is esssenntially intangible and does not
result in the ownership of anything
• EXPERIENCE = memorable, personal, take place in minds
MARKETING -Jankkila 2004 -
THREE LEVELS OF PRODUCT–Kotler-AmstrongAUGMENTED PRODUCT
Delivery
Credit
After
sale
ACTUAL PRODUCT
service
Brand
CORE
Features
name
BENEFIT
Core product
Quality
Design
Packing
Installation
Warranty
MARKETING -Jankkila 2004 -
PRODUCT/SERVICE CLASSIFICATIONS
–Kotler-Amstrong 2004 -
• CONSUMER PRODUCT
> bought by final consumer for personal consumption
• CONVENIENCE PRODUCT
> consumer product that the customer usually buys frequently with
a minimum of comparison and buying efforts ( fast food, newspaper )
• SHOPPING PRODUCT
> consumer good that the customer in the selection and comparison
process and purchase buys ( suitable, quality, price, style )
• SPECIALTY PRODUCT
> consumer product with unique characteristics or brand identifications
( specific brands and types of cars, cameras, phones, clothes, wines )
MARKETING -Jankkila 2004 -
PRODUCT/SERVICE CLASSIFICATIONS
• UNSOUGHT PRODUCT
> consumer product that the consumer either does nor
know about or knows about but does not normally think of
buying ( life insurance, consulting )
• INDUSTRIAL PRODUCT
> product bought by individual or organizations for further
processing or use in conducting business
1. Materials and parts ( raw materials, manufactured materials )
2. Capital items ( installations and accessory equipments )
3. Supplies and services ( operating supplies, repair items,
business services, business advisory services )
MARKETING -Jankkila 2004 -
MARKETING -Jankkila 2004 -
PRODUCT DEVELOPMENT STRATEGIES
-Kotler-Amstrong, Lancester-Reynolds
ANSOFF MATRIX ( Igor Ansoff 1957 )
New markets
New products
Existing products
True innovators
Risky strategy
Existing markets
Product development
strategy
Market development Market penetrations
MARKETING -Jankkila 2004 -
NEW PRODUCT DEVELOPMENT
–Kotler-Amstrong, Lancester-Reynolds -
• ACQUISITION
> By buying a whole company, a papent or a licence to
produce someone else’s product
• NEW PRODUCT DEVELOPMENT
> innovative, original products
> replacement products, product improvements, product
modifications
> Imitative products ”me to” products
> Relaunced, products, new brands
MARKETING -Jankkila 2004 -
NEW PRODUCT DEVELOPMENT STAGES
-Kotler-Amstrong, Lancester-Reynolds
IDEA GENERATION
IDEA SCREENING
CONCEPT DEVELOPMENT AND TESTING
MARKETING STRATEGY
BUSINESS ANALYSIS
PRODUCT DEVELOPMENT
TEST MARKETING
COMMERCIALIZATION
MARKETING -Jankkila 2004 -
NEW PRODUCT PROCESS …
ÍDEA GENERATION
*The systematic search for new-products ideas
*Internal = new-product managers, committees, departments,
venture teams
*External = customers, competitors
IDEA SCREENING
*Go or drop decisions- spot good ideas and drop poor ideas
as soon as possible
NEW-PRODUCT PROCESS …
CONCEPT DEVELOPMENT AND TESTING
*Product concept = A detailed version of the new-product
idea stated in meaningsful consumer terms
*Concept testing = testing a new-product concept wit a group
of tarket consumersto find out if thr concepts have strong
consumer appeal.
MARKETING STRATEGY
*The target market; positioning, sales, market share, profit
goals
*Outlines of the product; price, distribution, marketing
budget
*Long run sales, profit goals, marketing mix strategy
MARKETING -Jankkila 2004 -
NEW-PRODUCT PROCESS …
BUSINESS ANALYSIS
* A review of the sales, costs and profits projections for a new
product to find out whether these factors satisfy the firms’s
objectives
PRODUCT DEVELOPMENT
• Developing the product concept intoa phycical product in
order to ensure that the product idea can be turned into a
workable product
MARKETING -Jankkila 2004 -
NEW PRODUCT PROCESS ….
PRODUCT DEVELOPMENT
*prototypes, product appraisal tests
*product refinement and modification by feedback,
> development cost increace sharply !
TEST MARKETING
*The product and marketing program are tested in more
realistic market settings –Standard, Controlled, Simulated
- Problem = competitors see your product !
- Test marketing does not quarantee succees !
COMMERCIALIZATION
*Introducing a new-product into the market –
- few new-product ideas succeed !
MARKETING -Jankkila 2004 -
PRODUCT LIFE CYCLE MATRIX
by Barksdale-Harris
PIONEERING
-sales-
infants
Entry
GROWTH
stars
high market
share, high
growth
problem children
low market share
high growth
MATURITY
DECLINE
cash cows
war horses
high market high market
share, low
hare, negative
growth
growth
dogs/cash dogs
dodos
low market share low market share
low growth
negative growth
- time -
Exit
MARKETING -Jankkila 2004 -
INDIVIDUAL PRODUCT / SERVICE
DECISIONS – Kotler-Amstrong Product attributes
Branding
Packaging
Labeling
Product support services
MARKETING
-Jankkila 2004
PRODUCT QUALITY – Kotler-Amstrong”When our customers come back and our products do not”
• Ability of a product to perform its functions
• Characteristics of a product or service that satisfy
customer’s stated or implied needs
• Is closely linked to customer value and satisfaction
• One of the marketer’s major positioning tools
• Has a direct impact on product or service performance
• Freedom of defects – is it enough ?
MARKETING -Jankkila 2004 -
ATTRIBUTES OF PRODUCT – Kotler-Amstrong • Core benefit of the product
• Product features;
- stripped-down model
- more features as a tool of differentiating the
product from competitors
• Product and Desing
• Trade mark
• Brand = Manufacturer’s brand, Private/Store brand,
Licencing, Co-Branding, Multibrands, New Brands,
With the help of Customer Relationship Marketing !
MARKETING -Jankkila 2004
BRAND – BRANDING
–Kotler-Amstrong -
• A name, term, sign, symbol, design
or a combination of these
• Intended to identify the goods or services of one
seller or group of another sellers
• To differentiate these goods from these of
competitors
• Consumer view a brand is an important part of
product – may add value
• Branding = Perhaps the most distinctive skill of
professional marketers in their ability to create, maintain,
protect and enhance brands of their product and services
MARKETING -Jankkila 2004
PACKAGE – PACKAGING
– Lancaster-Reynolds , Kotler-
Amstrong--
• The end part of the product development; an external
appereance
• A part of the promotion
• The activities of designing and producing te container or
wrapper for the product
–
–
–
–
primary container
secondary package
package for storing
labeling = printed information
MARKETING -Jankkila 2004
THE FUNCTIONS OF PACKAGING
-Lancester-Reynolds-
• Protect and preserve its contents
• Help the distribution of the goods via a number of
logistics intermediaries from the factory/producer to
customer; transfering, stocking
• Selling; the promotional appeal, design, information,
trademark, brand
• For conceniency of users; storage of contents, suitable
sizes of package
• To conform the statutory and voluntary regulations in
providing a list of contents/weight/the origin of
product, E-numbers, ingrediants
MARKETING -Jankkila 2004
LABELING –
PRODUCT SUPPORT SERVICES –
LABEL
= identifies and promote the product or brand,
= describes several things of the good; who, where,
when made, contents, how to use, price per unit,
open dating, nutritional labeling, health-related
term
SUPPORT SERVICES
= Augmented parts of product
MARKETING -Jankkila 2004 -
PRODUCT LINE / MIX
PRODUCT LINE
= A group of products that are closely related together;
function in similar manner, sold to same customer group,
marketed through same types of outlets, given price ranges
”Nike athletic apparel” Nokia telecommunication products”
PRODUCT MIX – PRODUCT ASSORTIMENT
= Set of all product lines and items which a particular seller
offers for sale
*widht = number of different product lines
*lenght = total number of items
*depht = number of versions of each product in the line
*consistency = closeness of items ( distribution channels,
MARKETING -Jankkila 2004 -
PRICE – PRICING
–Kotler-Amstrong, Lancecter-Reynolds -
PRICE =
• The amount of money charged for a product or service or
the sum of the values the customers exchange for the
benefits of having or using the product or service
• The means whereby an organisation covers costs of all
activities
• The major factor affecting buyer choice – usually
• A flexible element in the marketing mix – can change quickly
DYNAMIC PRICING =
•
Charging different prices depending on individual
customers and situations
MARKETING -Jankkila 2004 -
PRICING PERCPECTIVES – Lancecter-Reynolds • ECONOMIST’s approach
The price is the means through which supply and
demand is brought into equilibrium
• ACCOUNTANTS’s approach
The price covers the costs and make profits
• MARKETER’s approach
Effect of price on the organisation’s competitive
market position
MARKETING
-Jankkila 2004
FACTORS AFFECTING PRICING
DECISIONS –Kotler-Amstrong,-INTERNAL
FACTORS
Marketing objectives
Marketing mix strategy
Costs
Organisational
considerations
P
EXTERNAL
FACTORS
R
I
C
I
N
G
Nature of the market
and demand
Competition
Other environmental
factors ( economy,
resellers, government
MARKETING
-Jankkila 2004
PRICING IN DIFFERENT TYPES OF
MARKETS –Kotler-Amstrong, Lancecter-Reynolds –
PURE COMPETITION
-Many buyers and sellers trading in uniform
commodity – many fully informed buyers and sellers of
similar products
-No single seller or buyer has much effect on the going
market price > going pricing
PURE MONOPOLY
A single producer of a product – no substitudes for product
– free price setting
OLIGOPOLISTIC COMPETITION
Few sellers who are highly sensitive to each other’s
pricing and marketing strategies
MARKETING -Jankkila 2004
MAJOR CONSIDERATIONS IN SETTING
PRICE –Kotler-AmstrongProduct
costs
Competitor’s
Consumer
prices and other
internal and external
factors
perception of
of value
PRICE
FLOOR
PRICE
CELLING
No profits below
this price
No demand
above this
price
MARKETING
-Jankkila 2004
COST-BASED PRICING “Cost-plus”
• Adding a standard markup ( profit ) to the costs of the
product
• Product driven pricing
 >Fixed costs = do not vary with production or sales level
 Variable costs = vary diriectly with the level of production
 Total costs = fixed costs + variable costs
PRODUCT
COST
PRICE
VALUE
MARKETING
CUSTOMER
-Jankkila 2004
TARKET PROFIT PRICING –Kotler-Amstrong• Setting price to break even on the costs of making and
marketing a product
or
• Setting price to make a target profit
• Target pricing uses the concept of a break-even chart –
it shows the total cost and total revenue expected at
different sales volume levels
TOTAL REVENUE
Costs
Target profit
TOTAL COSTS
FIXED COSTS
Sales volume in units
MARKETING
-Jankkila 2004
VALUE-BASED PRICING –Kotler-Amstrong 2004• Setting price based on buyer’s perceptions of value
rather than on the seller’s costs
• Offering just the right combination of quality and good
service at the fair price
• Pricing begins with analyzing consumer’s needs / wants
and value perceptions and the price is set to match
consumer’s percieved value > design the product
CUSTOMER
VALUE
PRICE
COST
PRODUCT
MARKETING -Jankkila 2004
COMPETITION-BASED PRICING –Kotler-Amstrong• Setting prices based on the price that competitors
charge for similar products
• Going rate pricing
• Price represents the ”collective wishdom” of the
industry sector when demand elasticity is hard to
measure
MARKETING -Jankkila 2004
PRICING STRATEGIES –Kotler-Amstrong•
MARKET-SKIMMING PRICING
>Setting high price for a new product to skim maximum
revenues from the segment willing to pay the high price.
-Company makes rewer but more profitable sales
-Product’s quality and image must support the high price
-Enough buyers must want the product at that price
-Competitors should not be able to enter the market and
undercut the price
1. MARKET-PENETRATION PRICING
>Setting a low price for a new product in order to attract a
large number of buyers and a large market share
MARKETING -Jankkila 2004
PRICING STRATEGIES –Kotler-Amstrong• PRICE ADJUSTMENT STRATEGIES
> Discount = price reduction > Allowance = promotional money
• BY-PRODUCT PRICING -Setting a price for by-products in
order to make the main product’s price more competitive
• SEGMENTED PRICING – two or more prices at same product
• PSYCHOLOGICAL PRICING – price says something of the
product
• REFERENCE PRICE - prices that buyers carry in their minds
• PROMOTIONAL PRICING – temporarily, increase short-run
sales
• GEOGRAPHICAL PRICING – different price on different
regions / or not
INTERNATIONAL PRICING – prices in the
international market
MARKETING -Jankkila 2004
PRICING > PRICE
+VARIABLE COSTS / product unit:
raw materials, other variable costs, labour costs,
costs connected wit labour costs ( social costs, assurance )
+COVER = fixed costs, charges, rates, incometaxes, profit
=NET RRICE
+VALUE ADDED TAX
=SELLING PRICE
+SELLING REWARDS
+FREIGHTS THAT WILL BE PAYD
+DISCOUNTS PROVISOS,
=TOTAL PRICE
MARKETING -Jankkila 2004
CHANNELS OF DISTRIBUTION
- Kotler-Amstrong, lancester-Reynols-
DISTRIBUTION
Channels /Supply chain
Agents
Wholesalers
Retailers
= intermediaries
Phycical distribution
Logistics
Right place !
Right time !
Suitable amounts !
With greatest ease !
Favourable costs !
MARKETING
-Jankkila 2004
MARKETING CHANNEL =
DISTRIBUTION CHANNEL –Kotler-AmstrongA set of interdependent organizations involved in the process
of making a product or service available for use or
consumption by consumer or business user
SUPPLY CHAIN = VALUE DELIVERY NETWORK,
-Information; gathers and distribute information
-Promotion; developes and spread information about offers
-Matching; shapes and fits the offer to the buyer’s need
-Negotiation; reach the agreement of price and
-Phycical distribution and stocking
-Financing, invoicing
-Risk taking / dealing
MARKETING
-Jankkila 2004
DIRECT – INDIRECT MARKETING
CHANNELS -Kotler-Amstrong, Lancester-ReynoldsDIRECT CHANNEL = no intermediaries
INDIRECT CHANNEL = one or more intermediaries
AFFECTING TO THE CHANNEL DECISIONS:
* Numbers of potential customers in the market
* How concentrated or dispersed the customers are
* How much each will buy in a given period = buying sensity
* Costs including transportation, warehousing, stockholding
* Product imago positioning, market share objective
* The need of by-services
* Absolute price of the product and the profit objective
* Firm’s recources
MARKETING
-Jankkila 2004
DIRECT
Small
Rarely
Large
Large
Concentrated
High
No need
Yes
DISTRIBUTION
Amount of customrs
Density of purchase
Size of one purchasing
Profit marginal
The buyer placement
Complexity of product
Need of by-services
Completely product
lines
INDIRECT
Large
Often
Small
Small
Disperced
Low
Yes
No
MARKETING -Jankkila 2004
MULTICHANNEL DISTRIBUTION
SYSTEM –Kotler-Amstrong-
Catalogs, telephone, internet, home-selling Customer 1
Own resailer places /warehouses
Customer 2
Retailers
Distributors
Sales force
Dealers
Customer 3
Business segment 1
Business segment 2
MARKETING
-Jankkila 2004
NUMBER OF MARKETING
INTERMEDIARIES –Kotler-AmstrongINTENSIVE DISTRIBUTION
-stocking the product in as many outlets as possible
-usually convenience products
EXCLUSIVE DISTRIBUTION
-giving a limited number of dealers the exclusive right to
distribute the products in their territories
-for exclusive products, product’s image, higher markups
SELECTIVE
-more than one dealer but not all dealers who are willingly
to carry company’s produts, ”Label-retailer”
-good market coverageto producer with more control and less
cost than intensive distribution
MARKETING -Jankkila 2004
MARKETING CHANNELS DECISIONS ?
Questions for a countryside firm
DIRECT MARKETING
•
•
•
•
•
•
•
•
reach few customers,
direct producer/customer contact,
not effective?
is product suitable for direct marketing?
larger profit marginal?
have producer time enouhg for producing and marketing?
small amounts of products can be marketed,
Important; quality, producers own capasity and knowledge
of marketingco, co-operation with other small producers?
MARKETING -Jankkila 2004
MARKETING CHANNELS DECISIONS ?
Questions for a countryside firm
RETAILER
• more customers, customers find the products in the same
place as other products=easier for customers,
• is the retailer interested in the small producer’s
products?
• do the customers find the products among other
products?
• important; quality, reliable distribution, is it sure you can
produce the amounts of products you aimed,
producer’s own activity to reach retailers, package
MARKETING -Jankkila 2004
MARKETING CHANNELS DECISIONS ?
Questions for a countryside firm
LARGE-SCALE KITCHENS ( restaurangs ..)
• one good possibilit for small firms, business to business
relation > product development together? easily to get feed
back from custemers, fresh raw materials, bigger ( suitable )
amounts to one place, saves distribution and packaking
SPECIAL / EXECUTIVE RETAILERS
• the importance of quality and package and image !
• better profit by pricing strategy
MARKETING -Jankkila 2004
MARKETING CHANNELS DECISIONS ?
Questions for a countryside firm
WHOLE SAILERS
• large-scale, concentrated distribution
> producers’s work decrease
• can you produce large amounts?
• is a long chain suitable for your ( fresh? ) goods?
• is the price competitive by the customers?
• packaging for the wholesailing and distribution >costs?
• logistics if the distribution ways are long?
• who does pay the freight?
MARKETING -Jankkila 2004
MARKETING CHANNELS DECISIONS ?
Questions for a countryside firm
CONTRACTUAL CO-OPERATION ( franchising .. )
PRODUCER NET WORK - THE SAME TRADEMARKSUBCONTACTOR PRODUCING
• small-scale producing is possible
• producer’s own name not seemed in the products
• the producer can concentrate to producing/marketing
/delivering/retailing
EXPORT
• a long, difficult and expencice process
• co-operation ! export know how !
MARKETING -Jankkila 2004
LOGISTICS – PHYSICAL DISTRIBUTION–
Kotler-Amstrong
MARKETING LOGISTICS
The tasks involved in planning, implementing, and
controlling the phycical flow of materials, final goods, and
related information from points of origin to points of
concumption to meet customer requirements at a profit
SUPPLY CHAIN MANAGEMENT =
Managing upstream and downstream value-added flows of
material, final goods, and related information among
suppliers, the company, resellers and final consumers
MARKETING -Jankkila 2004
LOGISTICS – PHYSICAL DISTRIBUTION–
Kotler-Amstrong
SUPPLIERS
Inbound logistics
COMPANY
Reverse
RESELLERS
logistics
Outbound logistics
CUSTOMERS
MARKETING -Jankkila 2004
PROMOTION –
MARKETING COMMUNICATION MIX
The specific mix
advertising, personal selling, sales
promotion, public relations and
information
MARKETING -Jankkila 2004
PROMOTION –
MARKETING COMMUNICATION MIX –
Kotler-Amstrong -
• The specific mix of advertising, personal selling,
sales promotion , public relations and information
ADVERTISING = any paid form of nonpersonal
presentation and promotion of ideas, goods, or services by
an identified sponsor
SALES PROMOTION = short-term incentives to
encourage the purchase or sale of a product or a servi´ce
MARKETING -Jankkila 2004
PROMOTION – MARKTING
COMMUNICATION MIX –Kotler-Amstrong PERSONAL SELLING = personal presentation by the
firm’s sales force for the purpose of making sales and
building customer relationships
PUBLIC RELATIONS = building good relations with the
firm’s various publics by obtaining favourable publicity,
good corporate image, and handing or heading
unfavourable stories and events
DIRECT MARKETING = direct connections with
carefully targeted individual consumers to obtain new
or cultivate lasting relationships
MARKETING -Jankkila 2004
ELEMENTS OF COMMUNICATION PROCESS
SENDER
IDEA
Encoding to
a message
MESSAGE
MEDIA
RECEIVER
IMAGE
Decoding to an
image
Disruptions
Disorders
FEEDBACK = knowledge that the
receiver
has reacted to the communication
MARKETING -Jankkila 2004
ADVERTISING Kotler-AmstrongOBJECTIVE
SETTING
communication objectives, sales objectives
BUDGET DECISIONS
affordable approach, percent of sales, competitive parity,
objective and task
MESSAGE DECISIONS
-
message strategy
- message execution
MEDIA DECISIONS
- reach, frequenc, impact
- major media types
- specific media vehicles
- media timing
CAMPAINGN EVALUATION
Communication and sales impact
MARKETING -Jankkila 2004
POSSIBLE OBJECTIVES
-Kotler-Amstrong-
• INFORMATIVE ADVERTISING
gives information about a new product, the firm, new uses
of product, price change, explain how the product works ..
• PERSUASIVE ADVERTISING
brand building, changing customer’s perceptions of
product attributes ..
• REMINDER ADVERTISING
remind consumer of the goods and services, remind the
selling palaces..
MARKETING -Jankkila 2004
SALES PROMOTION TOOLS–Kotler-Amstrong• SAMPLE
• COUPON
• CASH REFND OFFER ( RABATE )
• PRICE PACK
• PREMIUM
• ADVERTICING SPECIALITY
• PATRONAGE REWARD
• POINT-OF-PURCHASE ( POP )
• PROMOTIONAL EVENTS
MARKETING -Jankkila 2004
BUSINESS PROMOTION TOOLS
• DISCOUNT
a straight reduction in price on purchase during
stated period of time
• ALLOWANCE
promotional money paid by manufactures to
retailers in return for agreement to feature the
manufacture’s products in some way
MARKETING -Jankkila 2004
DIRECT MARKETING Kotler-Amstrong •
•
•
•
•
FACE TO FACE MARKETING
TELEMARKETING
DIRECT-MAIL MARKETING
CATALOG MARKETING
DIRECT RESPONSE TELEVISION
MARKETING
• KIOSK MARKETING
• ONLINE MARKETING
MARKETING -Jankkila 2004
COMPETITION
-Porter 1980-
-
Potential new firms
Threat
Suppliers
Negotiation
power
Competitions in
the branch
Buyers
Negotiation
power
Threat
Substitutes
MARKETING -Jankkila 2004
COMPETITION STRATEGIES –Porter 1980• Overall cost leadership
-producing a standard product at low cost or engaging in
heavy advertising in order to undercut competetion – price
competition
• Differentiation
-selling at a higher price than average, in the product unique
feature of quality, image or design
• Focus concentrates
-focusing on a specialist product rangeor a unique segment of
the market or a combination of them both
MARKETING -Jankkila 2004 -
-MARKETING
MkiS
INFORMATION SYSTEM
Kotler 1997, Lancester-Reynolds 2004
 A marketing information system ( MkiS )
 concists of people, equipment and procedures
> to gather, sort analyse, evaluate and distribute needed,
timely and accurate information to marketing desicion
makers
MARKETING -Jankkila 2004
MARKETING INFORMATION SYSTEM –
Lancester-Reynolds -
MANAGING
Marketing
Actions
Analysis, Planning, Tactics, Implementation,
Control, Review, Monitoring, Contingency
Defining information needs
Distiribution of information
Internal accounting system
Marketing research system
Component
parts
Analytical marketing system
Marketing intelligence system
MARKETING ENVIRONMENT
Tarket markets, Marketing channels, Communication, Logistics
Competition, International aspects, Macroénvironment
MARKETING -Jankkila 2004 -
MARKETING INTELLIGENCE SYSTEM
SALES
PERSONNEL
TRANSPORT
PERSONNEL
intelligence gathered from
Competition
Exhibitions
Conferences
Training courses
Customers
Sponsored events
Visiting customers
General chats with
other drivers
Visiting suppliers
General observastion
OTHER
PERSONNEL
Telephone calls and
requests
Visitors to firm
Letters and direct mails
Press and journals
General observation
MARKETING RESEARCH SYSTEM
-
Primary data
Secondary data
INTERNAL ACCOUNTING SYSTEM
MARKETING -Jankkila 2004 -
PRACTICE 1. Analyse the business idea of the ( small/medium size,
countryside branch ) firm and give ideas to develop the business concept by
using the theoretic knowledge you got on the
- lectures and from the books
The firm identification:
WHAT
TO WHOM
-product, service, experience
-quality
-price, pricing strategy
-how they have developed the product
- market, segmentation, market region
- custome’s needs/wants for the product
- competition situation
HOW
IMAGES/POSITION
-organization structure
-how they use the parts marketing
of marketing mix
-quality policy and the quality
management
-why the company has choosed this
way of operating?
-positioning on the market,
-profiling; trademark, brand ….
-your own opinion or image of the product
MARKETING
-Jankkila 2004
PRACTICE 2. Create a new product / service /experience idea on the basis
of local ( in Hungry+ in Finland ) possibilities or renew an old product; what,
customer segment, quality, pricing strategy, distribution, marketing, feature,
package, marketing communicatio …Compare the Hungrian and Fnnish
cases; are there similarities / dissimilarities?
USE SWOT ANALYSIS TOO
Strengt ( Strengthen )
Weakness ( Improve )
Opportunities ( Utilize )
Threats ( Avoid )
MARKETING -Jankkila 2004 -
EVALUATION OF THE COURSE
Give your evaluation of the coure, please
• Good points ; contents, practises, presentation, teaching
• Not good points; contents, practises, presentation, teaching
• What did you learn? Can you use this knowledge in your
job in future?
• Evaluate your own learning stage in numbers 1-5
• Your experience and opinion of studying in an
international group? Should this kind of operation
continue or not? Why?
• Please, send reports and evaluation by e-mail:
hilkka.jankkila@ramk.fi
THANK YOU 
MARKETING -Jankkila 2004 -
From an idea to a product
Type of product:
Identification number:
Date:
•
•
•
•
•
•
Name of product and the description of the product:
Origin of the idea?
Why the idea have been produced?
What kind of need or want the product does solve?
Competing products and substitudes?
Critical and hazardous points on tproduct development,
production and marketing? SWOT-analysis
• Objectives: Product quantity, marketing share, returns?
• What next? Item
Timing
Responsible
-core product
-packing
-pricing
-distribution
- promotion
MARKETING -Jankkila 2004
TOURIST PROGRAM DESCRIPTION
•
•
•
•
•
•
•
•
•
•
•
Name:
Timing, when:
Duration:
Place:
Description of content:
Price, min/max/discounts:
Price including:
Further information:
How it is reached:
Information of the firm/ reservations
Information of the retailer / reservations:
MARKETING -Jankkila 2004
BLUE PRINT FOR A TOURIST PROGRAM
• CONCRETE ELEMENTS; hotel, means of transfer,
accomandation during the program, food, reindeer,
snowmobile
• THE CUSTOMER PROCESS; what / how does the
customer do during the program
• VISIBLE SERVICE PROCESS – front office personnel,
responsible persons
• INVISIBLE SERVICE PROCESS – back office personnel
• THE TIMING OF THE PROGRAM – from the
beginning to the end minutes, hours, days
MARKETING -Jankkila 2004