CHAPTER 8: PRODUCTS, SERVICES, AND BRANDS

In the request to create customer relationships, marketers must build and manage products and
brands that connect with customers

A. What is a product?

* Product: anything that can be offered to a market for attention, acquisition, use, or
consumption that might satisfy a want or need.

* Service: an activity, benefit, or satisfaction offered for sale that is essentiallu intangible and
does not result in the ownership of anything.

I. Products, Services, and Experiences

- Products are a key element in the overall market offering.

- A company’s market offering often includes both tangible goods and services. (pure
tangible good = no services accompany the product, ~ pure services). However, many goods-
and-services combinations are possible.

=> Creating and managing customer experiences with the brands/ companies are the new level
in creating value for customers.

II. Levels of Product and Services

Each level adds more customer value.

 - At the 2nd level: product planners must turn the core benefit into an actual product by
developing it in 5 aspects:
- At the 3rd level: product planners must build augmented product by offering additional
consumer services and benefits.
 Consumers see products as complex bundles of benefits that satisfy their needs =>
product planners must ensure that they finish all of the three levels above.

III. Product and Service Classifications

Products also include other marketable entities such as experiences, organizations, persons,
places, and ideas.

1. Consumer products

- is a product bought by final consumers for personal consumption. It has 4 types:

• Convenience product: a consumer product that customers usually buy frequently,

immediately, and with minimal comparison and buying effort.
• Shopping product: a consumer product that the customer, in the process of selecting and
purchasing, usually compares on such attributes as suitability, quality, price, and style.
• Specialty product: a consumer product with unique characteristics or brand
identification for which a significant group of buyers is willing to make a special
purchase effort.
• Unsought product: a consumer product that the consumer either does not know about or
knows about but does not normally consider buying.
2. Industrial products

- is a product bought by individuals and organizations for further processing or for use in
conducting a business. (3 groups)

• Materials and parts: include raw materials (farm products, natural products) as well as
manufactured materials and parts (component materials & parts).
• Capital items: industrial products that aid in the buyer’s production or operations,
including installations and accessory equipment. Installations consist of major purchases
(buildings, fixed equipment. Accessory equipment includes portable factory equipment
and tools (shorter life than installations)
• Supplies and services: Supplies include operating supplies and repair and maintainance
items, they are the convenience products of the industrial field.

3. Organizations, Persons, Places, and Ideas

- Organization/ person, place marketing consists of activities undertaken to create,

maintain, or change the attitudes and behavior of target consumers toward an organization/
particular people/ particular places.

- Ideas can also be marketed, all marketing is the marketing of an idea (general / specific)

* Social marketing: the use of traditional business marketing concepts and tools to encourage
behaviors that will create individual and societal well-being.

B. Product and Service Decisions

I. Individual Product and Service Decisions

1. Product and Service Attributes

a. Product quality

- is the characteristics of a product or service that bear on its ability to satisfy stated or
implied customer needs

- “Quality is when our customers come back and our products don’t”

- Total quality management (TQM) is an approach in which all of the company’s people
are involved in constantly improving the quality of products, services, and business
processes.

- 2 dimensions:
 + Level: product quality means performance quality – the product’s ability to
perform its functions.

+ Consistency: product quality means conformance quality – freedom from defects

and consistency in delivering a targeted level of performance.

b. Product Features

- 1 product ~ varying features => high-level models = more features

- Features are competitive tool for differentiating the company’s product from competitors’.

c. Product Style and Design

- Style simply describes the appearance of a product.

- Design contributes to a product’s usefulness as well as to its looks.

2. Branding

- A brand is a name, term, sign, symbol, or design, or a combination of these, that

identifies the products or services of one seller or group of sellers and differentiates them
from those of competitors.

- How does it help? => help identify the product, provide legal protection for unique
product, segment markets, become the basis on which a whole story can be built about a
product’s special qualities.

3. Packaging

- Packaging is the activities of designing and producing the container or wrapped for a
product.

4. Labeling and Logos

- Labeling and logos range from simple tags attached to products to complex graphics
that are part of the packaging

- Functions: identify the product/ brand, describe several things about the product,
promote the brand and engage customers.

5. Product Support Services (Customer Service)

II. Product Line Decisions

 - Product line: is a group of products that are closely related because they function in a
similar manner, are sold to the same customer groups, are marketed through the same
types of outlets, or fall within given price ranges
- Product line length: the number of items in the product line.
- A company can expand its product line in 2 ways;
+ Line filling = adding more items within the present range of the line.
+ Line stretching: occurs when a company lengthens its product line beyond its
current range.

III. Product Mix Decisions

- An organization with several product lines has a product mix.

- Aproduct mix (A product portfolio) is the set of all product lines and items that a
particular seller offers for sale.

- Product Mix has 4 dimensions:

+ Width: the number of different product lines the company carries.

+ Length: the number of items a company carries within its product lines.

+ Depth: the number or versions offered of each product in the line.

+ Consistency: how closely related the various product lines are in end to use,
production requirements, distribution channels, or some other ways.

- 4 ways for company to increase its business

+ add new product lines to widen its product mix.

+ lengthen its existing product lines to become a more full-line company

+ add more versions of each product, pursue more (or less) product line consistency.

C. Services Marketing

I. The Nature and Characteristics of a Service

1. Service intangibility

- Services cannot be seen, tasted, felt, heard, or smelled before they are bought.

2. Service inseparability
- Services cannot be separated from their providers, whether the providers are people or
machines.

3. Service variability

- The quality of services depends on who provides them as well as when, where, and how
they are provided.

4. Service perishability

- Services cannot be stored for later sales or use.

II. Marketing Strategies for Service Firms

III. The Service Profit Chain

Service Profit Chain is the chain that links service firm profits with employee and customer
satisfaction. (5 links)

- Internal service quality: Superior employee selection and training, a quality work
environment, and strong support for those dealing with customers, which results in…
- Satisfied and productive service employees: More satisfied, loyal, and hardworking
employees, which results in…
- Greater service value: More effective and efficient customer value creation,
engagement, and service delivery, which results in…
- Satisfied and loyal customers: Satisfied customers who remain loyal, make repeat
purchases, and refer other customers, which result in…
- Healthy service profits and growth: Superior service firm performance.

(*) Service marketing requires not only using the 4Ps, but also requires internal marketing
and interactive marketing

- Internal marketing: orienting and motivating customer-contact empoloyees and

supporting service employees to work as a team to provide customer satisfaction.

- Interactive marketing: training service employees in the fine art of interacting with
customers to satisfy their needs.
1. Managing Service Differentiation

- Innovative features that set one company’s offer apart from competitors’ offers.

- Service companies can differentiate their service delivery, images through symbols and
branding.

2. Managing Service Quality

3. Managing Service Productivity

- Service firms have to increase service productivity by traning current employees better/
hiring new ones/ increasing the quantity of their service by giving up some quality/ using the
power of technology.

D. Branding Strategy: Building Strong Brands

I. Brand Equity and Brand Value

“Products are created in the factory, but brands are created in the mind.”

1. Brand Equity:

- is the differential effect that knowing the brand name has on customer response to the
product or its marketing.

- 4 dimensions: differentiation (what makes the brand stand out), relevance (how
consumers feel it meets their needs), knowledge (how much consumers know about the
brand), esteem (how highly consumers regard and respect the brand)

2. Brand value

- is the total financial value of a brand.

+ High brand equity = many competitive advantages.

+ Customer equity: the value of customer relationships that the brand creates
II. Building Strong Brands

1. Brand Positioning

- Marketers need to position their brands clearly in target customers’ mind.

- 3 levels:

+ Product attributes: công dụng của sp, dễ làm nhất nhưng cũng dễ bị copy nhất

+ Associate product’s name with a desirable benefit.

+ Position on strong beliefs and values => engage customers on a deep, emotional level.

 When positioning a brand, the marketer should establish a mission for the brand and a
vision of what the brand must be and do. The brand promise must be clear, simple and
honest

2. Brand Name Selection

- beginning with a careful review of the product and its benefits, the target market, and
proposed marketing strategies => naming a brand becomes part science, part art, and a
measure of instinct.

Desirable qualities for a brand name include:

+ suggest something about the products’ benefits and qualities

+ easy to pronounce, recognize, remember

+ be distinctive

+ be extendable

+ translate easily into foreign languages

3. Brand Sponsorship

- National Brands vs Store Brands

+ National Brands (or manufacturers’ brands) have long dominated the retail scene.

+ Store Brands (or Private brands): a brand created and owned by a reseller of a
product/ service

- Licensing: most manufacturers take years and spend millions to create their own brand
names. However, some companies license names or symbols previously created by others
(for a fee = instant and proven brand name).
- Co-branding: the practice of using the established brand names of 2 different companies on
the same product.

4. Brand Development (4 choices)

- Line extensions: extending an existing brand name to new forms, colors, sizes,
ingredients, or flavors of an existing product category.

- Brand extensions: extending an exist brand name to new product category

- Multibrands: companies often market many different brands in a given product category.

- New brands: power of existing brand name is warning/ new brand name when entering a
new product categoty.

III. Managing Brands

- Continuously communicate to consumers

- Advertising
- Train people to be customer centered
- Periodically audit brands’ strengths and weaknesses.
 CHAPTER 9: DEVELOPING NEW PRODUCTS

& Managing the Product Life Cycle

A. New product Development Strategy

- A firms can obtain new products in 2 ways:

+ Through acquisition – by buying a whole company, a patent, or a license to

produce someone else’s product

+ Through the firm’s own new product development efforts

- New product development: The development of original products, product

improvements, product modifications, and new brands through the firm’s own product
development efforts

B. The New Product Development Process

I. Idea Generation

- Idea generation: the systematic search for new product ideas.

1. Internal idea sources

- Using internal sources, the company can find new ideas through formal R&D.
Moreover, it can pick the brains of its own people (employees).

2. External idea sources

- Companies can also obtain good new product ideas from any of a number of external
sources, for example, distributors and suppliers can contribute ideas. Competitors are another
important source. The most important source of new product ideas is customers.

3. Crowdsourcing

- Crowdsourcing = inviting broad community of people – customers, employees,

independent scientists and researchers, and even the public at large – into the new product
innovation process.

II. Idea Screening

- Idea Screening = screening new product ideas to spot good ones and drop poor ones
ASAP.
 - 1 marketing expert describes an R-W-W new product screening framework that asks 3
questions: “Is it real?”, “Can we win?”, “Is it worth doing?”.

III. Concept Development and Testing

- Product concept: is a detailed version of the new product idea stated in meaningful
consumer terms.

1. Concept Development

2. Concept Testing

- Concept Testing = testing new product concepts with a group of target consumers to
find out if the concepts have strong consumer appeal.

IV. Marketing Strategy Development

- Marketing Strategy Development = Designing an initial marketing strategy for a new

product based on the product concept.

- Marketing strategy statement consists of 3 parts:

+ 1st part: describes the target market, the planned value proposition, the sales,
market-share, and profit goals for the first few years.

+ 2nd part: outlines the product’s planned price, distribution, and marketing budget for
the first year.

+ 3rd part: describes the planned long-run sales, profit goals, and marketing mix
strategy.

V. Business Analysis

- Business Analysis = a view of the sales, costs, and profit projections for a new product
to find out whether these factors satisfy the company’s objectives.

VI. Product Development

- Product Development = Developing the product concept into a physical product to

ensure that the product idea can be turned into a workable market offering.

VII. Test Marketing

- Test Marketing = The stage of new product development in which the product and its
proposed marketing program are tested in realistic market settings.
VIII. Commercialization

- Commercialization = Introducing a new product into the market.

- A company launching a new product must first decide on introduction timing.

IX. Managing New Product Development

1. Customer-Centered New Product Development

- Customer-centered new product development = New product development that focuses

on finding new ways to solve customer problems and create more customer-satisfying
experiences.

2. Team-Based New Product Development

- Team-based new product development = New product development in which various

company departments work closely together, overlapping the steps in the product
development process to save time and increase effectiveness.

3. Systematic New Product Development (Innovation management system)

=> to collect, review, evaluate, and manage new product ideas.

- The innovation management system approach yields two favorable outcomes:

+ helps create an innovation-oriented company culture

+ yield a large number of new product ideas, among which will be found some
especially good ones.

TỔNG KẾT MỤC B

C. Product Life-Cycle Strategies (PLC)

- PLC is the course of a product’s sales and profits over its lifetime.

1. Product development begins when the company finds and develops a new product idea.
During product development, sales are $0, and the company’s investment costs mount.

2. Introduction is a period of slow sales growth as the product is introduced in the market.
Profits are nonexistent in this stage because of the heavy expenses of product introduction.

(a new product is first distributed and made available for purchase)

3. Growth is a period of rapid market acceptance and increasing profits.

(a product’s sales start climbing quickly)

4. Maturity is a period of slowdown in sales growth because the product has achieved
acceptance by most potential buyers. Profits level off or decline because of increased
marketing outlays to defend the product against competition.

(a product’s sales growth slows or levels off)

5. Decline is the period when sales fall off and profits drop. (a product’s sales fade away)

*not all products follow all 5 stages of the PLC.

* The PLC concept also can be applied to what are known as styles, fashions, and fads.

+ Style: a basic and distinctive mode of expression

+ Fashion: a currently accepted or popular style in a given field.

+ Fad: a temporary period of unusually high sales driven by consumer enthusiasm and
immediate product or brand popularity.
TỔNG KẾT MỤC C

D. Additional Product and Service Considerations

1. Product Decisions and Social Responsibility

- Marketers should carefully consider public policy issues and regulations regarding
acquiring or dropping products, patent protection, product quality and safety, and product
warranties.

- Companies dropping products must be aware that they have legal obligations, written or
implied, to their suppliers, dealers, and customers who have a stake in the dropped product.

- Manufacturers must comply with specific laws regarding product quality and safety.

2. International Product and Services Marketing

- International product and services marketers face special challlenges.

+ figure out what products and services to introduce and in which countries.
 + decide how much to standardize or adapt their products and services for world
markets.

- Companies would like to standardize their offerings because it helps develop consistent
worldwide image + lower the product design, manufactoring, marketing cost.

- Service marketers also face special challenges when going global, retailers are among
the lastest service businesses to go global.
 CHAPTER 10: PRICING

Companies today face a fierce and fast-changing pricing environment. Value-seeking

customers have put increased pricing pressure on many companies. But today’s consumers
are pursuing more frugal spending strategies.

A. What is a price?

- Price is the amount of money charged for a product or service, or the sum of the values
that customers exchange for the benefits of having or using the product or service.

- Price is the only element in the marketing mix that produces revenue – also the most
flexible element.

B. Major Pricing Strategies

I. Customer Value – Based Pricing

- In the end, the customer will decide whether a product’s price is right. Pricing decisions,
like other marketing mix decisions, must start with customer value.

- Customer value-based pricing = Setting price based on buyers’ perceptions of value rather
than on the seller’s cost.

1. Type 1: Good-Value Pricing

- Good-value pricing = offering just the right conbination of quality and good service at a
fair price

- An important type of good-value pricing at the retail level is called everyday low pricing
(EDLP). EDLP involves charging a constant, everyday low price with few or no temporary
price discounts.

2. Type 2: Value-Added Pricing

 - Value-added pricing = attaching value-added features and services to differentiate a
company’s offers and charging higher price.

II. Cost-Based Pricing

- Cost-based pricing = Setting prices based on the costs of producing, distributing, and
selling the product plus a fair rate of return for effort and risk.

1. Types of costs

- Fixed costs (overhead): costs that do not vary with production or sales level.

- Variable costs: costs that very directly with the level of production.

- Total costs: the sum of the fixed and variable costs for any given level of production.

2. Costs at different levels of production

- To price wisely, management needs to know how its costs vary with different levels of
production.

3. Costs as a function of production experience

- Experience curve (learning curve): The drop in the average per-unit production cost that
comes with accumulated production experience.

4. Cost-plus pricing (markup pricing)

- Cost-plus pricing (markup pricing) = Adding a standard markup to the cost of the
product.

Unit cost = variable cost + fixed cost / unit sales

Markup price = unit cost / (1 – desirable return on sales)

5. Break-even analysis and target profit pricing (target return pricing)

- Break-even analysis and target profit pricing (target return pricing) = Setting price to
break even on the costs of making and marketing a product or setting price to make a target
return.

Break-even volumn = fixed cost / (price – variable cost)

III. Competition-Based Pricing

- Competition-Based Pricing = Setting prices based on competitors’ strategies, prices,

costs, and market offerings.
C. Other Internal and External Considerations Affecting Price Decisions

I. Overall marketing strategies, objectives, and mix

- Price is the only one element of the company’s broader marketing strategies => before
setting price, the company must decide on its overall marketing strategy for the product or
service.

- If a company has selected its target market and positioning carefully, then its marketing
mix strategy, including price, will be fairly straightforward.

- Price may play an important role in helping to accomplish company objectives at many
levels. Price decisions must be coordinated with product design, distribution, and promotion
decisions to form a consistent and effective integrated marketing mix program.

- Target costing = Pricing that starts with an ideal selling price, then targets costs that will
ensure that the price is met.

II. Organizational Considerations

- Management must decide who within the organization should set prices. It can be top
management (small companies), it can be divisional or product managers (large companies),
salespeople, pricing departments.

III. The Market and Demand

1. Pricing in Different Types of Markets

- Under pure competition: the market consists of many buyers and sellers trading in a
uniform commodity. No single seller or buyer has much effort => not spend much time on
marketing strategy.

- Under monopolistic competition: the market consists of many buyers and sellers trading
over a range of prices rather than a single market price. => too many competitors, a range of
prices occurs because sellers can differentiate their offers to buyers.

- Under oligopolistic competition: the market consists of only a few large sellers.

- In a pure monopoly: the market is dominated by one seller.

2. Analyzing the Price-Demand relationship

- Demand curve: a curve that shows the number of units the market will buy in a given
time period, at different prices that might be charged.
 - Most companies try to measure their demand curves by estimating demand at different
prices.

3. Price elasticity of demand

- Price elascity: a measure of the sensitivity of demand to changes in price

IV. The economy

- Economic factors such as a boom or recession, inflation, and interest rates affect pricing
decisions because they affect consumer spending, customer perceptions of the product’s price
and value and the company’s costs of producing and selling a product.

V. Other external factors

- They can be resellers, government, social concerns.

 CHAPTER 11: PRICING STRATEGIES

A. New Product Pricing Strategies

Pricing strategies usually change as the product passes through its life cycle.

I. Market-Skimming Pricing (Price Skimming)

- Market-Skimming Pricing (Price Skimming) = Setting a high price for a new product to
skim maximum revenues layer by layer from the segments willing to pay the high price; the
company makes fewer but more profitable sales.

II. Market-Penetration Pricing

- 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.

B. Product Mix Pricing Strategies

I. Product line pricing

- Product line pricing = Setting the price steps between various products in a product line
based on cost differences between the products, customer evaluations of different features,
and compertitors’ prices.

II. Optional-product pricing

- Optional-product pricing = the pricing of optional or accessory products along with a

main product

III. Captive-Product Pricing

- Captive-Product Pricing = Setting a price for products that must be used along with a
main product, such as blades for a razor and games for a video-game console.

- It is also called “two-part pricing”. The price of the service is broken into a fixed fee plus
a variable usage rate.

IV. By-Product Pricing

- By-Product Pricing = Setting a price for by-products to help offset the costs of disposing
of them and help make the main product’s price more competitive.

V. Product Bundle Pricing

- Product Bundle Pricing = Combining several products and offering the bundle at a reduced
price.

C. Price Adjustment Strategies

I. Discount and Allowance Pricing

- Discount = a straight reduction in price on purchases during a stated period of time or of

larger quantities.

- 4 forms of discount: cash discount (for buyers paying bills promptly), quantity discount
(for buyers buying large volumes), functional discount (=trade discount), seasonal discount.

- Allowance = Promotional money paid bu manufacturers to retailers in return for an

agreement to feature the manufacturers’s products in some ways.

II. Segmented Pricing

- Segmented Pricing = Selling a product or service at two or more prices, where the
difference in prices is not based on differences in costs.

- Conditions to make Segmented Pricing effective:

+ The market must be segmentable, and segments must show different degrees of
demand.

+ The costs of segmenting and reaching the market cannot exceed the extra revenue
obtained from the price difference

+ The segmented pricing must also be legal.

+ Segmented prices should reflect real differences in customers’ perceived value.

1. Customer-segment pricing:

=> different customers pay different prices for the same product/

2. Product form pricing

=> different versions of the product are priced differently but not according to differences in
their costs.

3. Location-based pricing

=> a company charges different prices for different locations, even though the cost offering
each location is the same.
4. Time-based pricing

=> a firm varies its price by the season, the month, the day and even the hour.

III. Psychological Pricing

- Psychological Pricing = Pricing that considers the psychology of prices and not simply
the economics; the price is used to say something about the product.

- Reference prices = prices that buyers carry in their minds and refer to when they look at
a given product.

IV. Promotional Pricing

- Promotional Pricing = Temporarily pricing products below the list price, and sometimes
even below cost, to increase short-run sales.

- Several forms: discounts, special-event pricing, limited-time offers (flash sales), cash
rebates, low-interest financing, longer warranties, free maintenance

- Promotional pricing can help move customers over humps in the buying decision process.

V. Geographical Pricing

- Geographical Pricing = Setting prices for customers located in different parts of the country
or world.

1. FOB-origin pricing

=> Pricing in which goods are placed free on board a carrier; the customer pays the freight
from the factory to the destination

2. Uniform-delivered pricing

=> Pricing in which the company charges the same price plus freight to all customers,
regardless of their location

3. Zone pricing

=> Pricing in which the company sets up 2 or more zones. All customers within a zone pay
the same total price; the more distant the zone, the higher the price.

4. Basing-point pricing

=> Pricing in which the seller designates some cities as a basing point and charges all
customers the freight cost from that city to the customers.
5. Freight-absorption pricing

=> Pricing in which the seller absorbs all or part of the freight charges in order to get the
desired business.

VI. Dynamic and Online Pricing

- A fixed-price policy – setting one price for all buyers – is a relatively modern idea that
arose with the development of large-scale retailing at the end of the 19th century.

- Dynamic pricing = Adjusting prices continually to meet the characteristics and needs of
individual customers and situations.

VII. International Pricing

- Companies that market their products internationally must decide what prices to charge
in different countries. But in some cases, company can set a uniform worldwide price.

- The price that a company should charge in a specific country depends on many factors:
economic conditions, competitive situations, laws and regulations, the nature of the
wholesaling and retailing system.

D. Price Changes

After developing their pricing structures and strategies, companies often face situations in
which they must initiate price changes or response to price changes by competitors.

I. Initiating Price Changes

1. Initiating Price Cuts

- Several situations may lead a firm to consider cutting its price. One such circumstance is
excess capacity. Another is falling demand in the face of strong price competition or a
weakened economy.

- A company may also cut prices in a drive to dominate the market through lower costs.

2. Initiating Price Increases

- A successful price increase can greatly improve profits. A major factor in price increases
is cost inflation.

- When raising prices, the company must avoid being perceived as a price gouger.
Wherever possible, the company should consider ways to meet higher costs or demand
without raising prices.
3. Buyer Reaction to Price Changes

- Customers do not always interpret price changes in a straightforward way.

4. Competitor Reactions to Price Changes

- Competitors are most likely to react when the number of firms involved is small, when
the product is uniform, and when the buyers are well informed about products and prices.

II. Responding to Price Changes

E. Public Policy and Pricing

I. Pricing within channel levels

- Federal legislation on price-fixing states that sellers must set prices without talking to
competitors. Otherwise, price collusion is suspected.

- Sellers are also prohibited from using predatory pricing – selling below cost within the
intention of punishing a competitor or gaining higher long-run profits by putting competitors
out of business.

II. Pricing across channel levels

- To prevent unfair price discrimination, The Robinson-Patman Act ensures that sellers offer
the same price terms to customers at a given level of trade.
 - Laws also prohibit retail price maintenance – a manufacturer cannot require dealers to
charge a specified retail price for its product.

- Deceptive pricing occurs when a seller states prices or price savings that mislead
consumers or are not actually available to consumers. Other deceptive pricing issues include
scanner fraud and price confusion.
 CHAPTER 12: MARKETING CHANNELS

A. Supply Chains and the Value Delivery Network

Producing a product or service and making it available to buyers requires building

relationships not only with customers but also with key suppliers and resellers in the company’s
supply chain. This supply consists of upstream and downstream partners.

- Value delivery network: A network composed of the company, suppliers, distributors,

and, ultimately, customers who partner with each other to improve the performce of the entire
system in delivering customer value.

I. The nature and importance of marketing channels

- Marketing channel (distribution channel): A set of interdependent organizations that help

make a product or service available for use or consumption by the consumer or business user.

1. How channel members add value

- Members of the marketing channel perform many key functions. Some help to complete
transactions: Information, Promotion, Contact, Matching, Negotiation. Others help to fulfill
the completed transactions: Physical distribution, Financing, Risk taking.

- The question is not whether thesse functions need to be performed but who will perform.

2. Number of channel levels

- Channel level: A layer of intermediaries that performs some work in bringing the product
and its ownership closer to the final buyer.

- Direct marketing channel: A marketing channel that has no intermediary levels.

(Producer => Comsumer)

- Indirect marketing channel: A marketing channel containing one or more intermediary

levels.

(Producer => Retailer => Consumer / Producer => Wholesaler => Retailer => Consumer, etc)

B. Channel Behavior and Organization

I. Channel Behavior

- A marketing channel consists of firms that have partnered for their common good. Each
channel member depends on the others and plays a specialized role in the channel.
 - Channel conflict: Disagreements among marketing channel members on goals, roles, and
rewards – who should do what and for what rewards.

+ Horizontal conflict: occur among firms at the same level of the channel.

+ Vertical conflict: conflict between different levels of the same channel.

II. Vertical Marketing Systems

- Conventional distribution channel: A channel consisting of one or more independent

producers, wholesalers, and retailers, each a separate business seeking to maximize its own
profts, perhaps even at the expense of profits for the system as a whole.

- Vertical marketing system (VMS): A channel structure in which producers, wholesalers,

and retailers act as a unified system. One channel member owns the others, has contracts with
them, or has so much power that they all cooperate.

1. Corporate VMS

- Corporate VMS = A vertical marketing system that combines successive stages of

production and distribution under single ownership – channel leadership is established through
common ownership.

2. Contractual VMS

- Contractual VMS = A vertical marketing system in which independent firms at different

levels of production and distribution join together through contracts

- Franchise organization: A contractual vertical marketing system in which a channel

member, called a franchisor, links several stages in the production-distribution process.

3. Administered VMS

- Administered VMS = A vertical marketing system that coordinates successive stages of

production and distribution through the size and power of one of the parties.

III. Horizontal Marketing Systems

- Horizontal Marketing Systems = A channel arrangement in which two orr more companies
at one level join together to follow a new marketing opportunity.

IV. Multichannel Distribution Systems

- Multichannel Distribution Systems = A distribution system in which a single firm set up

two or more marketing channels to reach one or more customer segments.
V. Changing channel organization

- Disintermediation = The cutting out of marketing channel intermediaries by product or

service producers or the displacement of traditional resellers by radical new types of
intermediaries.

C. Channel Design Decisions

- Marketing channel design = Designing effective marketing channel by analyzing customer

needs, setting channel objectives, identifying major channel alternatives, and evaluating those
alternatives.

I. Analyzing Consumer Needs

- Providing fastest delivery, the greatest assortment, and the most services, however, may
not be possible, practical, or desired.

=> companies must balance consumer needs not only against the feasibility and costs of
meeting these needs but also against customer price preferences.

II. Setting channel objectives

- Affected factors:
+ target levels of customer service

+ nature of the company, its products, marketing immediaries, competitors, environment

III. Identifying Major Alternatives

1. Types of Intermediaries
 - A firm should identify the types of channel members available to carry out its channel
work. Most companies face many channel member choices. Using many types of resellers in a
channel provides both benefits and drawbacks.

2. Number of marketing indermediaries

- Companies must also determine the number of channel members to use at each level (3
strategies)

+ Intensive distribution: Stocking the product in as many outlets as possible.

+ Exclusive distribution: Giving a limited number of dealers the exclusive right to

distribute the company’s products in their territories.

+ Selective distribution: The use of more than one but fewer than all of the intermediaries
that are willing to carry the company’s products.

3. Responsibilities of channel members

- The producer and intermediaries need to agree on the terms and responsibilities of each
channel member (price policies, consitions of sale, territory rights, and the specific services to
be performed by each party).

- Mutual services and duties need to be spelled out carefully, especially in franchise and
exclusive distribution channels.

IV. Evaluating the major alternatives

- Each alternative should be evaluated against economic, control, and adaptability criteria.

V. Designing International Distribution Channels

- Global marketers must usually adapt their channel strategies to the existing structures within
each country.

D. Channel Management Decisions

- Marketing Channel Management: Selecting, managing, and motivating individual channel

members and evaluating their performance over time

I. Selecting channel members

=> when selecting intermediaries, the company should determine what characteristics
distinguish the better ones.

II. Managing and Motivating channel members

=> once selected, channel members must be continuously managed and motivated to do their
best. The company must sell not only through the intermediaries but also to and with them.

III. Evaluating channel members

=> Company must regularly check channel member performance – recognize and reward
intermediaries that are performing well > < those that are performing poorly should be assisted/
replaced.

IV. Public policy and distribution decisions

- Companies are legally free do develop whatever channel arrangements suit them.
Producers are free to select their dealers, but their right to terminate dealers is somewhat
restricted.

E. Marketing Logistics and Supply Chain Management

I. Nature and importance of marketing logistics

- Marketing logistics (physical distribution): Planning, implementing, and controlling the

physical flow of materials, final goods, and related information from points of origin to points
of consumption to meet customer requirements at a profit.

- Supply chain management: Managing upstream and downstream value-added flows of

materials, final goods, and related information among suppliers, company, resellers, final
consumers.

II. Sustainable supply chains

- Environmental sustainability has become an important factor in supplier selection and

performance evaluation. Company can contribute to saving our world for future generations.

III. Major logistics functions

1. Warehousing

- Company must decide: How many, what types, where

- Company can use storage warehouse or distribution centers.

- Distribution centers: A large, highly automated warehouse designed to receive goods from
various plants and suppliers, take orders, fill them efficienyly, and deliver goods to customers
as quickly as possible.

2. Inventory Management

=> managers must maintain the balance between carrying too little inventory and carrying to
much.

3. Transportation

- The choice od transportation carriers affects the pricing of products, delivery performance,
and the condition of goods when they arrive – all of which will affect customer satisfaction.

- For example: trucks, railroads, water carriers, air carriers, internet carriers,

- Multimodal transportation: combining 2 or more modes of transportation

4. Logistics Information Management

- Companies manage their supply chains through information. Information can be shared
and managed in many ways, but most sharing takes place through Electronic data interchange
(EDI)

IV. Intergrated Logictics Management

- Intergrated Logictics Management = The logistics concept that emphasized teamwork –

both inside the company and among all the marketing channel organizations – to maximize the
performance of the entire distribution system.

1. Cross-Functional teamwork inside the company

- Most companies assign responsibility for various logistics activities to many different
departments. Each function tries to optimize its own logistics performance without regard for
the activities of the othet functions.

2. Building Logistucs Partnership

- Companies must not only improve their own logistics, but also work with other channel
partners to imptove whole-channel distribution.
3. Third-party logistics.

- Third-party logistics (3PL) provider = An independemt logistics provider that performs

any of all the functions required to get a client’s product to market.

CHAPTER 13: RETAILING AND WHOLESALING

A. Retaling

- Retailing: all the activities involved in selling goods or services directly to final consumers
for their personal, nonbusiness use.

- Retailer: A business whole sales come primarily from retailing

I. Retailing: Connecting Brands with Consumers

- Shopper marketing: Focusing the entire marketing process on turning shoppers into buyers
as they approach the point of sale, whether during in-store, online, or mobile shopping.

- Omni-channel retailing: Creating a seamless cross-channel buying experience that

intergrates in-store, online, and mobile shopping.

II. Types of Retailers

1. Amount of Service

- Self-service retailers: serve customers who are willing to perform their own locate-
compare-select process to save time or money.

- Limited-service retailers: provide more sales assistance because they carry more shopping
goods about which customers need information.

- Full-service retailers (high-end specialty stores): carry more specialty goods for which
customers need or want assistance or advice => higher operating costs.

2. Product line

- Specialty store: A retail store that carries a narrow product line with a deep assortment
within that line

- Department store: A retail store that carries a wide variety of product lines, each operated
as a separate department managed by specialist buyers or merchandisers.
 - Supermarkets: A large, low-cost, low-margin, high volume, self-service store that carries
a wide variety of grocery and household products.

- Convenience store: A small store, located near a residential area, that is open long hours 7
days a week and carries a limited line of highturnover convenience goods.

- Superstore: A store much larger than a regular supermarket that offers a large assortment
of routinely purchased food products, nonfood items, and services.

- Category killer: A giant specialty store that carries a very deep assortment of a particular
line

- Service retailer: A retailer whose product line is actually a service; examples include hotels,
airlines, banks, colleges, etc.

3. Relative prices

- Discount store: A retail operation that sells standard merchandise at lower prices by
accepting lower margins and selling at higher volume.

- Off-price retailer: A retailer that buys at less-than-regular wholesales prices and sells at
less than retail.

- Independent off-price retailer: An off-price retailer that is independently owned and

operated or a division of a large retail corporation.

- Factory outlet: An off-price retailing operation that is owned and oparated by a

manufacturer and normally carries the manufacturer’s surplus, discontinued, or irregular goods.

- Warehouse club (wholesale clubs, membership warehouses): An off-price retailer that sells
a limited selection of brand name grocery items, appliances, clothing, and other goods at deep
discounts to members who pay annual membership fees.

4. Organizational approach
B. Retailer Marketing Decisions

I. Segmentation, Targeting, Differentiation, and Positioning Decisions

Retailers: segment and define target markets => decide how they will differentiative and
position themselves in these markets.

II. Product Assortment and Services Decision

1. Product assortment

=> differentiate while matching target shoppers’ expectations. One strategy is to offer a
highly targeted product assortment.

2. Service mix

=> help set one retailer apart from another.

3. Store’s atmosphere

III. Price Decision

- Price policy must fit targe market, positioning, product and service assortment, the
competition, economic factors.

- It can be high markups on lower volume (most specialty stores) or low markups on higher
volume (mass merchandisers and discount stores).

IV. Promotion Decision

- 5 promotion tools to reach customers:

Adertising – Personal selling – Sales promotion – Public relations – Direct and social media
marketing
V. Place Decision

- It’s very important that retailers select locations that are accessible to the target market in
areas that are consistent with the retailer’s positioning.

- Shopping center: A group of retail businesses built on a site that is planned, developed,
owned, and managed as a unit. (regional shopping center – largest with 50 to >100 stores,
community shopping center – 15 to 50 stores, neighborhood shopping center = strip malls – 5
to 15 stores, lifestyle center)

C. Retailing Trends and Developments

I. Tighter Consumer Spending

- can be beneficial or not.

II. New Retail Forms, Shortening Retail Life Cycles, and Retail Convergence

=> greater competition + greater difficulty in differentiating the product assortments of

different types of retailers.

III. The Rise of Megaretailers

- The rise of huge mass merchandisers and specialty superstores, the formation of vertical
marketing systems, and a rash of retail mergers and acquisitions have created a core of
superpower megaretailers.

IV. Growth of Direct, Online, Mobile, and Social Media Retailing

- Showrooming: The shopping practice of coming into retail store showrooms to check out
merchandise and prices but instead buying from an online-only rival, sometimes while in the
store.

- The flip side of showrooming is webrooming.

V. The Need for Omni-channel Retailing

VI. Growing Importance of Retail Technology

VII. Green Retailing

=> environmentally sustainable practices

VIII. Global Expansion of Major Retailers

D. Wholesaling

- Wholesaling: All the activities involved in selling goods and services to those buying for
resale or business use.

- Wholesaler: A firm engaged primarily in wholesaling activities.

- Wholesalers add value by performing one or more of the following channel functions:

+ Selling and promoting

+ Buying and assortment building

+ Warehousing

+ Transportation

+ Financing

+ Risk bearing

+ Market information

+ Management services and advice

I. Types of Wholesalers

1. Merchant wholesalers

- Merchant wholesaler: An independently owned wholesale business that takes title to the
merchandise it handles

+ Full-service wholesalers: provide a full set of services

+ Limited-service wholesalers: offer fewer services to suppliers, customers.

2. Brokers and agents:

- Do not take title to goods, performs only a few functions

+ Broker: brings buyers and sellers together and assists in negotiation

+ Agent: represents buyers or sellers on a more permanent basis.

3. Manufactures’ and retailers’ branches and offices:

=> Wholeselling by sellers or buyers themselves rather than through independent wholesalers

(*) Wholesaler Marketing Decisions

(*) Segmentation, Targeting, Differentiation, Positioning Decisions

(*) Marketing Mix Decisions

- Wholesalers add customer vaue through the products and services they offer.

- Price: wholesalers usually mark up the cost of goods by a standard percentage and operate
on small margins.

- Promotion: important but most wholesalers are not promotion minded. Digital and social
media play critical role in promotion

- Distribution (Location): wholesalers must choose their locations, facilities and other
locations carefully.

II. Trends in Wholesaling

- Challenges: the industry remains vulnerable, tight economic conditions.

- The distinction between large retailers and large wholesalers continues to blur.
 CHAPTER 14: ENGAGING CONSUMERS AND

COMMUNICATING CUSTOMER VALUE

A. The Promotion Mix

I. Promotion mix (marketing communications mix):

The specific blend of promotion tools that the company uses to persuasively communicate
customer value and build customer relationships.

II. 5 major promotion tools:

1. Advertising:

- Any paid form of nonpersonal presentation and promotion of ideas, goods, or services by an
indentified sponsor.

- Tools: broadcast, print, online, mobile, outdoor, etc.

2. Sales promotion:

- Short-term incentives to encourage the purchase or sale of a product or service.

- Tools: discounts, coupons, displays, demonstrations, events

3. Personal selling:

- Personal customer interactions by the firm’s sales force for the purpose of engaging
customers, making sales, and building customer relationships.

- Tools: sales presentations, trade shows, incentive programs

4. Public relations (PR):

- Building good relations with the company’s various publics by obtaining favorable
publicity, building up a good corporate image, and handling or heading off unfavorable
rumors, stories, and events.

- Tools: press releases, sponsorships, events, webpages.

5. Direct and digital marketing:

- Engaging directly with careful carefully targeted individual consumers and customer
communities to both obtain an immediate response and build lasting customer relationships.

- Tools: direct mail, email, catalogs, online and social media, mobile marketing, etc.
B. Intergrated Marketing Communications

I. The new marketing communications model

Several factors are changing the face of today’s marketing communications.

1. Consumer

- They are better informed and more communications empowered, high technologies to
update on their own => easy to change

2. Marketing strategies

- Mass marketing to engage customers and build customer relationships.

3. Digital technology

- Content marketing: Creating, inspiring, and sharing brand messages and conversations
with and among consumers across a fluid mix of paid, owned, earned, and shated channels.

II. The need for Intergrated Marketing Communications (IMC)

- Intergrated Marketing Communications (IMC): Carefully intergrating and coordinating the

company’s many communications channels to deliver a clear, consistent, and compelling
message about the organization and its products.
C. Developing Effective Marketing Communication

I. A view of the Communication Process

1. The sender: The party sending the message to another party

2. Encoding: The process of putting thought into symbolic form

3. Message: The set of symbols that the sender transmits

4. Media: The communication channels through which the message moves from the sender to
the receiver

5. Decoding: The process by which the receiver assigns meaning to the symbols encoded by
the sender.

6. The receiver: The party receiving the message sent by another party

7. Response: The reactions of the receiver after being exposed to the message

8. Feedback: The part of the receiver’s response communicated back to the sender

9. Noise: The unplanned static or distortion during the communication process

II. Steps in Developing Effective Marketing Communication

1. Identifying the target audience

- The audience can be current users or potential buyers; individuals, groups, special
publics, general public.

2. Determining the Communication Objectives

- Buyer-readiness stages: The stages comsumers normally pass through on their way to a
purchase:

Awareness => Knowledge => Liking => Preference => Conviction => Actual purchase

3. Designing a Message

- Ideally, the message should get attention, hold interest, arouse desire, obtain action

a. Message Content

- Rational appeals: relate to the audience’s self-interest

- Emotional appeals: attempt to stir up either negative or positive emotions that can
motivate purchase
 - Moral appeals: are directed to an audience’s sense of what is “right” and “proper”

b. Message Structure

- Whether to draw a conclusion or leave it to the audience

- Whether to present the strongest arguments first or last.

- Whether to present a one-sides argument (only product’s strengths) or two-sided

argument (both strengths and weaknesses).

c. Message Format

- Needs to be strong

- For examples: novelty and contrast, eye-catching pictures and headlines, distinctive
formats, message size and position, color, shape, movement.

4. Choosing Communication Channels and Media

a. Personal Communication Channels:

- Personal Communication Channels: Channels through which two or more people

communicate directly with each other, including face-to-face, one the phone, via mail or email,
or even through an internet “chat”.

- Word-of-mounth influence: The impact of the personal words and recommendations of

trusted friends, family, associates, and other consumers on buying behavior.

- Buzz marketing: Cultivating opinion leaders and getting them to spread information about
a product or a service to others in their communities.

b. Nonpersonal Communication Channels

- Nonpersonal Communication Channels: Media that carry messages without personal contact
or feedback, including major media (print, broadcast, display, online media), atmospheres, and
events (staged occurrences).

5. Selecting the Message Source

6. Collecting Feedback
D. Setting the Total Promotion Budget and Mix

I. Setting the Total Promotion Budget

1. Affordable Method

- Affordable method: setting the promotion budget at the level management thinks the
company can afford

2. Percentage-of-Sales Method

- Percentage-of-Sales Method: Setting the promotion budget at a certain percentage of

current or forecasted sales or as a percentage of the unit sales price.

3. Competitive-parity method

- Setting the promotion budget to match competitors’ outlays.

4. Objective-and-task method

- Developing the promotion budget by

+ defining specific promotion objectives

+ determining the tasks needed to achieve these objectives

+ estimating the costs of performing these tasks

=> the sum of these costs is the proposed promotion budget.

II. Shaping the Overall Promotion Mix

1. The nature of each promotion tool

- Advertising:

- Personal Selling:

- Sales Promotion:

- Public Relations:

- Direct and Digital Marketing:

2. Promotion Mix Strategies

- Push strategy: A promotion strategy that calls for using the sales force and trade promotion
to push the product through channels. The producer promotes the product to channel members
who in turn promote it to final consumers.
 - Pull strategy: A promotion strategy that calls for spending a lot on customer advertising
and promotion to induce final consumers to buy the product, creating a demand vacuum that
“pulls” the product through the channel.

III. Intergrating the Promotion Mix

IV. Socially Responsible Marketing Communication

1. Advertising and Sales Promotion

- Advertisers must not make false claims, such as suggesting that a product cures something
that it does not.

- Sellers must avoid bait-and-switch advertising that attracts buyers under false pretenses.

2. Personal Selling

- Salespeople must follow the rules of “fair competition”.

 CHAPTER 15: ADVERTISING AND PUBLIC RELATIONS

A. Advertising

- Advertising = Any paid form of nonpersonal presentation and promotion of ideas, goods,
or services by an identified sponsor.

B. Major Advertising Decisions

I. Setting Advertising Objectives

- Advertising objectives: A specific communication task to be accomplished with a specific

target audience during a specific period of time.

II. Setting Advertising Budget

- Advertising budget: the dollars and other resources allocated to a product or a company
advertising program.
 - A brand’s advertising budget often depends on its stage in the product life cycle.

1. Developing Advertising Strategy

- Advertising Strategy = the strategy by which the company accomplishes its advertising
objectives. It consists of 2 major elements: creating advertising messages and selecting
advertising media.

2. Creating the Advertising Message and Brand Content

- Breaking through the clutter

- Merging advertising and entertainment

+ Madison & Vine: A term that has come to represent the merging of advertising and
entertainment in an effort to break through the clutter and create new avenues for
reaching customers with more engaging messages.

+ Native advertising (sponsored content): Advertising or other brand-produced online

content that looks in form and function like the other natural content surrounding it on
a web or social media platform.

- Message and Content strategy:

+ Creative concept: the compelling “big idea” that will bring an advetising message
strategy to life in a distinctive and memorable way.

+ Advertising appeals should be meaningful, believable, distinctive.

- Message Execution:

+ Execution style: The approach, style, tone, words, and format used for executing an
advertising message.

+ Styles can be Slice of style, Lifestyle, Fantasy, Mood or image, Musical, Personality
symbol, Technical expertise, Scientific evidence, Testimonial evidence or endorsement.

- Consumer-Generated Content

3. Selecting Advertising Media

- Advertising media: The vehicles through which advertising messages are delivered to their
intended audiences

+ Step 1: Determining Reach, Frequency, Impact, and Engagement

 + Step 2: Choosing among Major Media Types

+ Step 3: Selecting Specific Media Vehicles

+ Step 4: Deciding on Media Timing

III. Evaluating Advertising Effectiveness and the Return on Advertising Investment

- Return on Advertising Investment: The net return on advertising investment divided by

the costs of the advertising investment.

IV. Other Advertising Considerations

1. Organizing for Advertising

- Advertising agency: A marketing services firm that assists companies in planning,

preparing, implementing, and evaluating all or portions of their advertising programs.

2. International Advertising Decisions

C. Public Relations

- Public Relations (PR): Building good relations with the company’s various publics by
obtaining favorable publicity; building up a good corporate image; and handling or heading off
unfavorable rumors, stories, events.

- PR’s functions:
I. The Role and Impact of PR

=> engage consumers and make a brand part of their lives and conversations

- PR can be a powerful brand-building tool.

D. Major Public Relations Tools

- News

- Special events (news conferences, speeches, brand tours, sponsorships,

etc)

- Written materials (annual reports, brochures, articles)

- Audiovisual materials (videos)

- Corporate identity materials (logos, stationery, brochures, signs, etc)

 CHAPTER 16: PERSONAL SELLING AND SALES PROMOTION

A. Personal Selling

I. The nature of personal selling

- Personal selling: Personal presentations by the firm’s sales force for the purpose of
engaging customers, making sales, and building customer relationships

- Salesperson: An individual who represents a company to customers by performing one or

more of the following activities: prospecting, communicating, selling, servicing, information
gathering, and relationship building.

II. The Role of the Sales Force

1. Linking the Company with its customers

- The sale force serves as a critical link between a company and its customers.

- Salepeople: represent the company to customers and vice versa. (*concept of salesperson-
owned loyalty)

2. Coordinating Marketing and Sales

- Sale force and other marketing functions should work together closely to jointly create
value for customers. However, some companies still treat sales and marketing as separated
functions.

B. Managing the Sales Force

- Sales Force Management: Analyzing, planning, implementing, and controlling sales force
activities

I. Designing the Sales Force Strategy and Structure

1. The Sales Force Structure

- The territorial sales force structure: A sales force organization that assigns each salesperson
to an exclusive geographic territory in which that salesperson sells the company’s full line
(company sells only 1 product line to 1 industry)

- Product sales force structure: A sales force organization in which salespeople specialize in
selling only a portion of the company’s products or lines (company sells many products to
many types of customers)
 - Customer (or market) sales force structure: A sales force organization in which salespeople
specialize in selling only to certain customers or industries.

- Complex sales force structure: combines several types of organization

2. Sales Force Size

- A company might use some form of workload approach to set sales force size.

3. Other Sales Force Strategy and Structure Issues

a. Outside and Inside Sales Force

- Outside Sales Force (or field sales force): Salespeople who travel to call on customers in
the field

- Inside Sales Force: Salespeople who conduct business from their offices via telephone,
online and social media interactions, or visits from prospective buyers. (eg: technical sales-
support people, telemarketers, online sellers)

b. Team Selling

- Team selling: Using teams of people from sales, marketing, engineering, finance, technical
suppport, and even uppoer management to service large, complex accounts.

II. Designing and Selecting Salespeople

- The best salespeople = intrinsic motivation, a disciplined work style, ability to close a
sale, ability to build relationships with customers.

III. Training Salespeople

- Initial training => training via seminars, meetings, online learning, etc.

- Goals:

+ get to know about customers and how to build relationships with them

+ teach salespeople about different types of customers and their needs, buying motives,
habits, etc.

+ know about the company, products, competitors

+ teach them about company’s objectives, organization, products

IV. Compensating Salespeople

- Compensation consists of 4 elements: a fixed amount (salary), a variable amount

(commissions, bonuses), expenses, frindge benefits.

V. Supervising and Motivating Salespeople

1. Supervision

=> help salespeople “work smart” by doing the right things in the right ways.

2. Motivation

=> encourage salespeople to “work hard” and energetically toward sales force goals.

- Sales quota: A standard that states the amount a salesperson should sell and how sales
should be divided among the company’s products

VI. Evaluating Salespeople and Sales Force Performance

VII. Social Selling: online, mobile, social media tools

- Social Selling: using online, mobile, social media to engage customers, build stronger
customer relationships, and augment sales performance.

C. The Personal Selling Process

- Selling process: the steps that salespeople follow when selling, which include prospecting
and qualifying, preapproach, approach, presentation and demonstration, handling objections,
closing, and follow-up.

I. Steps in Selling Process

1. Prospecting and Qualifying

- Prospecting: The sales step in which a salesperson or company identifies qualified

potential customers.

2. Preapproach

- Preapproach: The sales step in which a salesperson learns as much as possible about a
prospective customer before making a sales call

3. Approach:

- Approach: The sales step in which a salesperson meets the customer for the first time

4. Presentation and Demonstration

 - Presentation: the sales step in which a salesperson tells the “value story” to the buyer,
showing how the company’s offer solves the customer’s problems

5. Handling Objections

- Handling objections: The sales step in which a salesperson seeks out, clarifies, overcomes
any customer objections to buying

6. Closing

- Closing: The sales step in which a salesperson asks the customer for an offer

7. Follow-up:

- Follow-up: the sales step in which a salesperson follows up after the sale to ensure customer
satisfaction and repeat business

II. Personal selling and Managing customers

D. Sales Promotion

- Sales promotion: short-term incentives to encourage the purchase or sale of a product or

a service

I. The rapid growth of Sales Promotion

- Contributed factors:

+ inside the company: product managers face greater pressures to increase current sales

+ externally, company faces more competion

+ advertising efficiency has declined because of rising costs, media clutter, and legal
restraints

+ Consumers become more deal oriented

II. Sales Promotion Objectives

- Consumer promotions, trade promotions, business promotion

III. Major Sales Promotion Tools

1. Consumer Promotions

=> Boost short-term customer buying and engagement or enhance long-term customer
relationships.
 - Sample: offer of trial amount of a product

- Coupon: certificate that save buyers money when they purchase specified products

- Rebates (cash refunds): like coupon except that the price reduction occurs after the
purchase rather than at the retail outlet.

- Price packs (cents-off deals): offer consumers savings off the regular price of a product

- Premiums: goods offered either free or at low cost as an incentive to buy a product.

(*) Event marketing (event sponsorships): Creating a brand-marketing event or serving as a

sole or participating sponsor of events created by others.

2. Trade Promotion

=> Persuade resellers to carry a brand, give it shelf space, promote it in advertising.

3. Business Promotions

=> Generate business leads, stimulate purchases, reward customers, and motivate salespeople

IV. Developing the Sales Promotion Program

- Set size of incentive

- Set conditions for participation

- Promote and distribute the promotion program