CH11
Marketing CH11 P222
What is marketing?
Marketing is concerned with exchange relationship.
Relationship marketing:The concept of relationship marketing is concern on creating a long term customer
relationship.
It involves moving activities away from those designed to create a series of one off transaction.
The different between the two kind of marketing:Transaction marketing
Relationship Marketing
Orientation towards single purchase
Orientation towards repeat sales
Limited direct customer/supplier contact
Close frequent customer/supplier contact
Focus on product benefits
Focus on value to customer.
Emphasis on short – term performance
Emphasis on long – term performance
Limited level of customer services
High level of customer services
Goal of customer satisfaction
Goal of delighting the customer
Quality is manufacturing responsibility
Quality is the responsibility of the whole
orgnisation.
The Key relationships in relationship marketing:Value – driven market culture:-
An orgnisation has to progress from a culture (in which marketing is the preserve of the
marketing department, to one is which there is market orientation throughout the business.
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The four key relationships occur in most business orgnisation within the net work of
business system, supply chain and virtual net work.
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Suppliers
Employees
Key
relationship
share
holder
Customers
Supply chains and virtual net works, suppliers, share holder, customer and employees are not
rival in profits, they are partners.
-
Organization will successful if it work together will these partners.
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Relationship marketing is a concept that focuses on managing this series of net works
interaction.
Understanding Customer Behavior:1-The traditional model:The traditional model of buying behavior has stages of any decision making process but also
includes post purchase stage:
Need recognition

Information search

Evaluation of alternatives

Buying decision

Post purchase evaluation
Factor involved in the decision- making process
2
Environmental
PEST
Marketing
Factors
Information search
Buyer's individual charterstics
External stimuli
Evaluation of
Alternative
Buying Decision
Cultural influences and
decision process
Problem or
need
recognition
Post purchase
evaluation
Dimensions of decision making:If the purchase is completed, there are two dimensions of purchase decisions:1- The extent of the decision making.
2- The degree of involvement in the purchase.
necessary)
(Decision
High
High
Low
Complex decision making
Limited decision making
High risk purchase, such as buying home Low risk purchase, such as washing
or car
powder or food
(Habit)
Brand Loyalty
Low
Extent of decision making
There are four categories of customer decision making from theses tow dimensions:-
High
risk
products
or
Intertie
brands
customers have purchase before
that Customer is buying out of habit
because it's not worth the trouble to
search for another brand
Segmentation
Segmentation is the process of breaking down a total market into smaller.
Two phases of segmentation:1- Understanding the customer and the market:
The orgnisation products, services and those of its competition are scrutinized.)‫(فحص دقيق‬
This will identify customers buying behavior to decide between alternative products and
services.
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2- Identifying customer characteristics:
Particular features of customer buying behavior
are combined to form segments and to
develop profiles that describe the resulting segments.
-
Features of viable segments are size, identify, relevance, and acceptability.
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The segments should be different to have their own personalities and compatible within
organization.
The Marketing Mix:Our main factors are considered in the marketing mix
First: Product: This is tangible product or intangible services offered for sale
There are three levels of a product or services:
1- Core product or services: describe customer fundamental reason for wants to buy this
item.
2- Actual product services: describe the key feature customer expect.
3- Augmented )‫(زيادة‬product or services: This feature additional benefits and customer
services that have been built around the actual product.
The benefits from the three levels. It helps a marketer to create effective marketing
messages which stress the benefit also It helps organization compare their product or
services offering with those competitors.
Branding: - Branding means creating an identity for a product, associating it with buying in to a lifestyle
and certain values.
The benefits of branding: - Branding name to differentiating products.
- Branding trust name can serve as shortcut for consumers trlying to choose between
competing offers.
- Branding name to give customer to identify the products.
- Companies can benefit from brand image when lunching new products.
- Sellers benefit because branding encourages repeat purchasing, leading to brand loyalty.
- Brand loyalty can enable companies to charge a premium price, leading to higher profit
margins.
Successful brands do the following: -
Deliver functional benefits to meet the market needs.
-
Offer intangible benefits over the basic benefit of the core products.
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Comprise various benefits and present an identity.
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Offer special features that customer wants.
Product life cycle
- The stages in a products growth
1- Introduction:
When the product is start the company gives awareness, If the products appeals to
consumer's, sales will rise, then product go to the second stages, Growth stages.
2- Growth Sages: this stages characterized by a much faster rate of increase of sales, the
orgnisation still promoting the product.
3- Maturity: the rate of increase of sales falls, the products has reached the maturity stages,
the orgnisation will forming a body of loyal customer and defending its customers against
competition products.
4- Decline: the product become overshadowed by competing products is much the same way
that the product.
- The profits of the product following the stages.
The Boston matrix:Boston Consulting Group (BCG) is a powerful model to contribute to the management of an
orgnisation cash flow.
- The horizontal axis shows the relative market share,. The higher a brands share of the
market the higher the earning a brand will produce relative to the strongest competitors.
- The vertical axis shows the market growth rate, the higher the growth rate the higher
investment in a brand.
Relative Market Share
Low
Occupy low / high growth
Here the market is growing but
There is no market Share for products,
so the product required more cash.
Market Growth Rate
Problem children: High
Low
Problem children
Dogs
High
Stars
Cash cows
Stars: Occupy high share/ high growth, the market growing with high share for the product
relative to the strongest competitors, the cash cover the investment.
Cash cows: Occupy high share/ low growth, the product has high market share and so is
generating cash, the need for investment in the product is low because the market growing
slowly.
Dogs: Occupy low share/ low growth then the next step will be withdraw from the market.
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Second: Price:
- This is the sum of money and / or other valuable resources that the customer must exchange
for the product or service.
Demand
- Demand for product or service is the extent to which people are able and willing to buy the
product or services at different prices.
- The determination of demand: The demand for products depend on;-
The price
-
The competing price
-
The consumers in come.
-
The consumer's preferences.
The first three determinants of demand are objective ones, and also relate to consumers ability
to buy the product.
The forth determinants the consumer preferences, this relate to the consumers’ willingness to
buy.
These four elements clarify how person demand for product and also determine the market
demand as whole.
Pricing strategies
Orgnisation need to set their pricing levels to meet all the following:-
Provide the customers with value for money.
-
Cover the costs of the product or service.
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Be competitive.
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Be consistent with corporate objectives.
Some pricing policies:1- Penetration )‫ (عالي‬pricing
If a new product has high volume sales and low production costs, it may be attractive to price
the product at its long term equilibrium price from the start. The result is losses in early stages.
2- Marginal pricing
If the company can boost its volume and reduce costs, it may be attractive for it to price the
product below full cost but above variable cost in selected markets.
3- Market based pricing
A product or services can be priced at the maximum that the market will bear at, or below
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the level at which it is beginning to encounter price resistance.
4- Loss leading:
This policy offering products at below cost. Its describe a deliberate)‫ (يتشاور‬pricing policy aimed
at attracting initial)‫ (ابتدائي او اولي‬customer.
5- Skimming: Price skimming common in high technology products where the differentiation based on the
technological edge be short lived. Profit need to be taken quickly before the competition
increase and reduce the product.
Price elasticity of demand: - (PED)
- (PED) describe the way in which the demand for a product responds to a change in price.
- Price elastic, small change in price lead to large change in demand.
- Price inelastic: - if the demand for a product shows little response to changes in price.
- PED = %change in demand for the products
% change in price of the product
- PED of 0 means that the product is perfectly price inelastic.
- PED between 0 – 1 the product is price inelastic.
- PED 1 this mean the product has unit elasticity.
- PED more than 1 means that the product is price elastic, the higher the value the more price
elastic the product is, the demand for the product changes by a larger percentage than the
price change.
- An increase in price will result in a decrease in revenue.
- PED Less than 1, an increase in price will result an increase in revenue.
Third : "Place":
Distribution channels
- This where the product or services will be available to provides the opportunity for an
orgnisation to arrange is distribution system to make its products or services conveniently
available to customer.
- Distribution is concerned with transporting goods and services is most cost effective and
efficient way.
- A distribution channel is a rout between the supplier and the delivery of the product or
services and customer service.
- It is the face of the supplier as far as customer is concerned.
- Suppliers have range of choices in reaching the customer: 7
1. Directly through mail, Internet and face to face.
2. Through a sales force
3. Through retailer.
4. Through an agent of facilitator as is many business to business sales.
- There are Five main issues to be considered in distribution: 1. Cost
2. Coverage
3. Communication
4. Control
5. Competitive advantages
The forth Ps for market Mix is Promotion:
Customer decision and marketing communication
- Marketing communication seeking to convince potential customers to purchase specific
goods or services.
-AIUAPR used to identify the steps in the customer decision making process and the role of
communication at each step.
1. Awareness: customer must be aware that the product exit.
2. Interest: customer receive message that interest him
3. Understanding: customer must be understood how the products or services meet his
need.
4. Attitude: customer must be persuaded to adopt a positive attitude to the product or
services.
5. Purchase : the customer facilitated by personal selling or a sales promotion such as
reduce price
6. Repeat purchase: persuade the customer and give him satisfaction to repeat purchase.
- The customer is assisted in this decision making process by two sets of influences:
1. Peer group influence: family or friends.
2. Supplier influence: the provider of product or services.
The communication loop: - The loop reflects the long term relationships between providers and users of goods and
services.
- The stages in this loop are: 1. Understanding user needs.
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2. Identify appropriate groups of potential users.
3. Providing information on product or services benefits to the target audience.
4. Collecting information on user satisfaction.
5. Using this information to evaluate the quality of delivery of the product or services.
6. Similarly, evaluating the effectiveness of the communication programe.
7. Modifying the product or services on the basis of this feedback.
8. Informing users of these modifications and of any new products or service being offers.
The Communication Mix: - A number of tools are used to communicate with customer, for example public relation,
advertising, trade fairs, sponsorships, direct mail and personal selling ….. Etc
Push or pull strategies: - Companies that are not market leader adopt a push strategy.
-This involves an emphasis on promotional activities aimed at the distributors with the
objectives of encourage them to push the product to the consumers.
Sometimes the four Ps are extended to seven to include
People : Many products are combined with services when they offered to customers.
- People who are involved with delivering a service are responsibility fulfilling the promises.
- Services can be divided into back and front office activities.
- Front office activities are concerned with managing the customer supplier's interface.
- Back office activates supported the visible process.
Process: process of services delivery described as back office activities.
Physical evidence :- Because services are intangible, customer uses physical evidence to help
them make judgment about quantity.
The Four Cs:- The marketing mix concentrates on an orgnisation operation rather than on its customer's
requirements.
- The four Cs concentrate on the customer perspective as following:
1. Customer needs and wants: The product must be a partial or complete answer to customer needs and wants.
2. Cost to the customer:
The customer will consider many factors before deciding to purchase.
3. Convenience )‫( مناسبة‬
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- The delivery of products and services to customer involves factor such as quality –
availability and the need to develop good relationship with customer.
- The place of delivery should be convenient.
4. Communication
- The communication between the orgnisation and customer to informed the customer
about the benefits of the products.
The Marketing Plan:
- A marketing plan is set of activities that detail a company's marketing effort.
- The plan will specific time period and will detail specific strategies to be followed to achieve
them.
- It conation a timetable of events and detailed responsibilities for carrying out the plan.
Developing a marketing Plan:- Marketing plans should answer the following: 1. Where are we now?
2. Where we do want to go?
3. How will are get there?
4. How we will ensure arrived?
The stages of a marketing plane: - Answering of last questions has number of stages
1. Complete a situation analysis
2. Set objectives
3. Chose a strategy to help you achieve your objectives.
4. Segment, target and position your offer so it is differentiated in the mind of your
customer
5. Creat an action plane.
6. Design control and evaluation measures to close the planning loop.
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