marketing exam study

8/13/2019 Marketing Exam Study

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Marketing Exam Study!Needs/wants/demands

Societal marketing concept

Marketing management orientations

Strategic planning

Defining a market-oriented mission

Growth Strategies/Product-Market Expansion Grid

What are serices!

Distinctie serice marketing challenges" P#s of serice

Enlightened marketing

Enironmentalism

$onsumer concerns of MarketingMacro enironment s% microenironment and their components

Marketing &ntelligence

'esearch ()*ecties+ explorator, descriptie causal

&nnoation .dopter $ategoriation

$onsumer market

$onsumer )u,er )ehaiour

0our categories of serice

Marketing Segmentation

1arget marketing

Market positioning

'e2uirements for effectie segmentation

0our serice focus strategies

&mportant s% determinant attri)utes

Esta)lishing serice leels

3ack 1rout#s four principles of positioning

Goods Serices and Experiences

Goods and serices classifications

1otal 4ualit, Management

5rand SponsorshipNew product deelopment strateg,

Product 6ife c,cle

St,le fashion fad

General Pricing .pproaches

New product pricing strategies

Price-ad*ustment strategies

0lowcharting

$ore product 7 Supplementar, serices 8flower of

serice9

$ompetition-)ased pricing 8serices9:alue-)ased pricing 8serices9

$onentional distri)ution channel s% ertical marketing

s,stem

Marketing logistics and suppl, chain management

Marketing communications mix

Push s% pull strateg,

Stimulate or dampen demand to match capacit,

(ercome the pro)lems of intangi)ilit,

Serice )lueprints

Serice process redesign

$ustomers as partial emplo,ees

3a, customers

$apacit, constrained serice organiationsProductie capacit,

; approaches to managing demand

4ueue configurations

Elasticit, in the serice sector

0rom excess demand to excess capacit,

Serice emplo,ees are cruciall, important

1he c,cle of failure

1rain serice emplo,ees actiel,

Empower the front line

leels of serice performance

3ohn ?otter#s " stages of leadership

Eolution ersus turnaround

6eadership $ulture and climate

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Marketing Exam Study!

Needs/Wants/Demands

Needs

- States of felt depriation including )asic ph,sical needs for food clothing warmth and safet,%

Social needs for )elonging and affection indiidual needs for knowledge and self expression

these needs were not created ), marketersA the,#re )asic part of human make up%Wants

- 0orm of human needs that take as shaped ), culture and indiidual personalit,

- We need food )ut we want 5ig Mac#s

Demands

-


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Marketing Exam Study!#ro$th Strategies/%roduct"Market Expansion #rid

- Growth share matrix

o . portfolio planning method that ealuates a compan,#s S5=s in terms of their market

growth rate and relatie market share% S5=s are classified as stars cash cows 2uestion

marks or dogs

Stars


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Marketing Exam Study!o Defined space and place rentals F priate space shared with other customers

o 6a)our and expertise rentals F hire people

o .ccess to shared ph,sical enironments F share use of an enironment not priate

o S,stems and networks+ access 7 usage F rent right to participate

- Serice product

o . serice product comprises of all the elements of the serice performance )oth

tangi)le and intangi)le that creates alue for customers

Distincti&e ser&ice marketing challenges

- Most serice products cannot )e inentoried

o Most serices inole actions or performances so it can#t usuall, )e stocked

o &f there#s no demand unused capacit, is wasted and firm loses the chance to create

alue from these assets

- &ntangi)le Elements usuall, dominate alue creation

o =suall, intangi)le elements like internet-)ased transactions and the expertise and

attitudes of serice personal create most alue in serice performances

- Serices are often difficult to isualie and understand

o Mental intangi)ilit, the, cannot picture their serice the, receie so the, ma, night

purchase ito 5usinesses educate customers and proide confidence for the customers

- $ustomers ma, )e inoled in $o-production

o $ustomers ma, need to co-operate with serice personnel in hair salons hotels 2uick-

serice restaurants li)raries .1M

o $ustomers often function as partial emplo,ees!

- People ma, )e part of the serice experience

o Sometimes depends on the attitude of people 8emplo,ees9 if the, hae a )ad attitude

there ma, )e a )ad serice experience

o Een people standing in line with ,ou

o Should organie segments that are similar together and ones that are different set

them apart- (perational &nputs and (utputs 1end to :ar, More Widel,

o When a serice is deliered face to face and consumed as it#s produced final

Cassem)l,+ must take place in real time

o Performance speed and 2ualit, ma, ar, widel,

- 1ime 0actor 0re2uentl, .ssumes Great &mportance

o Man, serices now a da, are in more of a hurr, willing to pa, extra to sae time

o Should minimie customer waiting times

- Distri)ution make take place through non-ph,sical channels

o Manufactures re2uire ph,sical distri)ution channels to moe their products from

factor, to customers

o Serice )usinesses are a)le to use electronic channels to delier all or most of their

serice elements 8internet9

%)s o ser&ice

- Product Elements

o Serice products lie at the heart of a firm#s marketing strateg, if it#s poorl, designed it

won#t create meaningful alue for customers

o Serice products need a core product that response to the customers# primar, need and

an arra, of supplementar, serice elements that help use the core product effectiel,

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Marketing Exam Study!- Place and 1ime

o When deliering it inoles decisions on when and where to delier as well as methods

o =se the electronic or ph,sical channels speed and conenience of place and time hae

)ecome important determinants of effectie serice delier, toda,

- Price and other user outla,s

o Make sure customer sees this price as Cworth it if not go )e,ond this

o Make it worth it to the customer and gie the customer satisfaction

- Promotion and Educationo 5e sure to use marketing programs without them no one will know a)out ,our product

o Suppliers need to inform customers a)out )enefits of this serice where and when to

o)tain it and how their participation can proide the )est results

- Process

o


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Marketing Exam Study! Needed for each )usiness product or )rand

&mplementation

1he process that turns marketing plans into marketing actions to

accomplish strategic marketing o)*ecties

$ontrol

1he process of measuring and ealuating the results of marketing

strategies and plans and taking correctie action to ensure that

o)*ecties are achieed 0our steps inoled in showing the marketing control

o 0&G %

Set goals H Measure

performance H

Ealuate

performance H

1ake correctie

action H

What do we

want to achiee!

H

What is

happening!

H

Wh, is it

happening!

H

What should we

do a)out it!

H

Operating control inoles checking ongoing performance against

annual plan and taking correctie action when necessar, it#s purpose is

to ensure the compan, achiees the sales profits and other goals set

out in its annual plan Strategic control inoles looking at whether the compan,#s )asic

strategies are well matched to its opportunities marketing strategies

and programs )ecome 2uickl, outdated ), using a tool such as the

marketing audit

o Marketing audit is a comprehensie s,stematic independent

and periodic examination of a compan,#s enironment

o)*ecties strategies and actiities to determine pro)lem areas

and opportunities and to recommend a plan of action to

improe the compan,#s marketing performance

Enlightened marketing- . marketing philosoph, holding that a compan,#s marketing should support the )est long-run

performance of the marketing s,stem

- $onsists of ; principles

o $ustomer-(riented Marketing

$ompan, should iew and organie its marketing actiities from the customer#s

point of iew

o &nnoatie marketing

. principle of enlightened marketing that re2uires a compan, to continuousl,

seek real product and marketing improements

o :alue marketing

. principle of enlightened marketing that holds that a compan, should put most

of its resources into alue-)uilding marketing inestments

1hings like one shot sales promotion minor packaging changes

adertising puffer, F ma, rise in short run sales )ut in long run tr, to

change product#s 2ualit, features or conenience

Enlightened marketing calls for )uilding long term customer lo,alt,

o Sense-of-mission marketing

. principle of enlightened marketing that holds that a compan, should define its

mission in )road social terms rather than the narrow product terms

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Marketing Exam Study!o Societal marketing

. principle of enlightened marketing that holds that a compan, should make

marketing decisions ), considering consumers# wants the compan,#s

re2uirements and societ,#s long run interest

$ompanies should turn eer,thing the, manufacture and market into such

desira)le enironmentall, friendl, products

*our %rinciples o %ositioning Strategy- Must esta)lish position for firm or product in minds of customers

- Position should )e distinctie proiding one simple consistent message

- Position must set firm/product apart from competitors

- . compan, cannot )e all things to all people- must focus its efforts

3ack 1rout

Consumer concerns o Marketing

-


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Marketing Exam Study!o Marketers respond that consumers like changes and the, proide as much satisfaction

as possi)le

o $ompanies do not design their products to )reak down earlier )ecause the, do not

want to lose customers to other )rands

o 1he, seek constant improement to ensure that products will consistentl, meet or

exceed customer expectations

- We) lining

o Discriminating against certain groups of customers )ased on neigh)ourhoodso 1his is done through the internet )ased on factors that lead them to )eliee the,

change prices

o 1he, can find information online a)out ,ou to discriminate against ,ou

o 1he, can sort people into more categories in some cases predict how ,ou )ehae

*our ser&ice ocus strategies

- 0ramework for deeloping effectie serice marketing strategies

o 1he figure outlines ke, steps the process of creating a strateg, is an iteratie process

one who#s components are isited more than once

o 0ig @B%

- 1he > strategieso =nderstanding the $ustomer

1hink like the customer understand the customer#s needs and how the, )ehae

in serice enironments


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Marketing Exam Study! .chieing profita)ilit, will re2uire creating relationships with customers right

from the right market segments and finding wa,s to )uild on and reinforce their

lo,alt,

&f things go wrong organie 2uick serice recoer, to retain customers

()tain customer feed)ack to help firm aoid repeating failures and to )etter

meet customers# future needs and expectations

Deelop strategies for improing serice 2ualit, and productiit, this will lead

to financial success unless ,our customers are satisfied with the 2ualit, the,receie

*our categories o ser&ice

- 0ig @>%@

o People Processing

Some serices re2uire ,ou to )e in ph,sical contact with the suppliers e,e

exam haircuts etc%

.s a customer ,ou must co-operate with them to enhance and en*o, ,our

serice

1he, are serices directed at peoples )odies

1angi)le action

o Possession Processing

Serices directed at ph,sical possessions

0or example a sick pet malfunctioning snow )lower a parcel that needs to )e

sent to another cit,

$ustomers are less ph,sicall, inoled with this t,pe of serice than with people

processing serices

Production and consumption ma, )e descri)ed as separa)le

o Mental-Stimulus Processing

Serices directed at people#s minds

.n,thing affecting people#s minds has the power to shape attitudes and

influence )ehaiour

'ecipients don#t hae to )e ph,sicall, present in serice factor,

Jou can sleep through a flight )ut ,ou can#t sleep through a educational

seminar and )e an, wiser

1hings are entertainment professional adice ps,chotherap,

o &nformation Processing

Serices directed at intangi)le assets

Professionals in a wide ariet, of fields use their )rains to perform information

processing and packaging

.ccounting )anking insurance legal serices etc

0or simplicit, com)ine coerage of mental-stimulus processing serices and

information processing serices under the term information-based services

En&ironmentalism

- .n organied moement of concerned citiens )usinesses and goernment agencies working to

protect and improe the natural enironment

- Enironmental sustaina)ilit,+ a management approach that inoles deeloping strategies that

)oth sustain the enironment and produce profits for the compan,

o Sustaina)ilit, is a crucial )ut difficult goal

Macro en&ironment &s+ microen&ironment and their components

K



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Marketing Exam Study!- 1he marketing microenironment

o 1he forces close to the compan, that affect its a)ilit, to sere its customers F the

compan, suppliers marketing intermediaries customer markets competitors and

pu)lics

- Ma*or forces in the Marketing Micro Enironment 80ig >%@9

o 1he $ompan,

When designing market plans marketing management takes other compan,

groups into account F groups such as top management finance research anddeelopment purchasing operations and accounting

Marketer managers make decisions within strategies and plans made ), top

management and work closel, with other departments

1ogether all these departments hae an impact on the marketing department#s

plans and actions

1he, should think harmon, to proide superior customer alue and satisfaction

o Suppliers

Suppliers are an important link )ecause it#s the oerall customer alue delier,

s,stem

Supplier pro)lems can affect marketing marketer managers must watch closel,

for suppl, shortages or dela,s la)our strikes and other eents can cost sales inthe short run and damage customer satisfaction in the short run

Most marketers toda, treat their suppliers as partners in creating and deliering

customer alue

Good partnership relationship management results in success for suppliers and

ultimatel, its customers

o Marketing &ntermediaries

0irms that help the compan, to promote sell and distri)ute its goods to its

customers

1he, include retailers wholesalers distri)utors )rokers marketing serices

agencies and financial intermediaries

'etailers )u, merchandise from manufacturers wholesalers and

distri)uters to resell them usuall, in stores to customers

Wholesalers )u, merchandise from arious manufacturers organie it

and sell it to retailers

Distri)utors ph,sicall, stock and moe goods from their points of origin

to their destinations usuall, from the manufacturer to the wholesaler

or directl, to the retailer

5rokers are another t,pe of marketing intermediar, the, arrange for

moement of goods from their point of origin to the retailer or

wholesaler )ut neer ph,sicall, touch or take possession of the

merchandise

o 1he alue the, add is the knowledge and relationship with

producer of goods Marketing serice agencies are the marketing research compan, target

and promote its products to the right markets firms use them to

promote their compan,

0inancial intermediaries include )anks credit companies insurance

companies and other )usinesses that help finance transactions or

insure against the risks associated when )u,ing and selling of goods

o Most firms and customers depend on financial intermediaries to

finance their transactions

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Marketing Exam Study! 6ike suppliers marketing intermediaries form in important component of the

compan,#s alue delier, s,stem its 2uest is to create satisf,ing customer

relationships

o $ustomers

1here are three )road t,pes of customers that an organiation ma, sere

$onsumers

o .re indiiduals who )u, goods and serices for their own use or

Cconsumption the, t,picall, )u, items one at a time do notnegotiate prices and )u, from retailers

5usiness )u,ers

o 0all into one or more su)categories

Some use to purchase goods and serices for use in

their production process

(thers include resellers such as retailers and

wholesalers who )u, goods from manufacturers or

producers to resell at a profit

.nd eer, )usiness also )u,s supplies such as pens

paper computers and telephone serices

Goernment )u,ers

o Purchase goods and serices to produce pu)lic serices or

transfer goods and serices to others who need them

o $ompetitors

1he marketing concept states that to )e successful ,ou must proide greater

customer alue and satisfaction that competitors do

Marketers must also gain strategic adantage ), positioning their offerings

strongl, against their competitors# offerings in the minds of those customers

No competitie single marketing strateg, is )est for all companies

Each firm should consider its own sie and industr, position compared with

those of its competitors

1here are man, different strategies for different companies

o Pu)lics

.n, group that has an actual or potential interest in or impact on an

organiation#s a)ilit, to achiee its o)*ecties

Seen different t,pes of pu)lics

0inancial pu)lics

o &nfluence compan,#s a)ilit, to o)tain funds

o 5anks inestment houses and stockholders are ma*or financial

pu)lics

Media pu)lics

o $arr, news features and editorial opinion

o Newspapers magaines radio teleision stations

Goernment pu)lics

o Management must take goernment deelopments into

account marketers must consult the compan,#s law,ers on

issues of product safet, truth in adertising and other matters

$itien-action pu)lics

o . compan,#s marketing decisions ma, )e 2uestioned ),

consumer organiations enironmental groups minorit,

groups and others

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Marketing Exam Study! 6ocal pu)lics

o Neigh)ourhood residents and communit, organiations

General pu)lic

o $ompan, needs to )e concerned a)out the general pu)lic#s

attitude towards its products and actiities

&nternal pu)lics

o &nclude workers managers olunteers and )oard of directors

- 1he marketing macroenironmento 1he larger societal forces that affect the organiation#s marketing actiities F

demographic economic natural technological political and cultural forces

- Six ma*or factors affecting the marketing macroenironment 80ig >%9

o Demographic Enironment

1he stud, of human populations in terms of sie densit, location age gender

race occupation and other statistics

People who stud, demographics assume certain people do certain things at

certain ages

o Economic Enironment

0actors that affect consumer purchasing power and spending patterns

$hanges in &ncome $hanging $onsumer Spending Patterns

o Natural Enironment

Natural resources that are needed as inputs ), marketers or that are affected

), marketing actiities

Marketers should )e aware of seeral trends in the natural enironment

Shortages of raw materials

&ncreased pollution

&ncreased goernment interention

&n toda,#s age we#e spawned the Cgreen moement

o 1echnological Enironment

0orces that create new technologies creating new product and marketopportunities

1echnolog, is perhaps the most dramatic force now shaping our destin,

New technologies create new markets and new opportunities and marketers

must )e aware of new technolog, deelopments to take adantage of them

o Political Enironment

6aws goernment agencies and pressure groups that influence and limit

arious organiations and indiiduals in a gien societ,

Most political people agree some regulation in free markets are good to ensure

fairness

1here are B things wh, )usiness legislation has )een enacted

0irst is to protect companies from each other

Second is to protect consumers from unfairness

1hird is to protect the interests of societ,

o $ultural Enironment

&nstitutions and other forces that affect societ,#s )asic alues perceptions

preferences and )ehaiours

$ore )eliefs are )eliefs and alues passed on from parents to children and

reinforced ), schools churches )usinesses and goernment

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Marketing Exam Study! Secondar, )eliefs are alues more open to change )elieing in marriage is a

core )eliefA )elieing that people should get married in earl, life is a secondar,

)elief

Marketers hae some chance at changing secondar, alues )ut little

chance of changing core alues

Marketing ,ntelligence

- . s,stematic collection and anal,sis of pu)licl, aaila)le information a)out competitors anddeelopments in the marketing enironment

- &s a specific )ranch of competitie intelligence

- Goal is to improe strategic decision making asses s and track competitors# actions and proide

earl, warning of opportunities and threats

- Growing use of marketing intelligence raises some ethical issues most techni2ues are legal )ut

some are considered 2uestiona)le

Consumer market

- .ll indiiduals in a particular geographic region who are old enough to hae their own mone,

and choose how to spend it

Consumer -uyer -eha&iour

- 1he )u,ing )ehaiour of consumers F indiiduals who )u, goods and serices for their own use

or consumption

0actors &nfluencing $onsumer 5ehaiour

- $ultural 0actors

o $ultural factors exert a )road and deep influence on consumer )ehaiour the marketer

needs to understand the role pla,ed ), the )u,er#s culture su)culture and social class

$ulture

1he set of )asic alues perceptions wants and )ehaiours learned ), a

mem)er of societ, from famil, and other important institutions

Su)culture

. group of people with shared alue s,stems )ased on common life

experiences and situations

Social $lasses

'elatiel, permanent and ordered diisions of a societ, into groups

whose mem)ers share similar alues interests and )ehaiours

- Social factors

o . consumer#s )ehaiour is also influenced ), social factors such as mem)ership in small

groups and famil, and social roles and status

Groups

. person#s )ehaiour is influenced ), man, small groups

. group consists of two or more people who interact to accomplish

indiidual or mutual goals Primar, groups are with which a person has regular )ut informal

interaction F such as famil, friends neigh)ours and co-workers

Secondar, groups F organiations such as religious groups professional

associations and trade unions

'eference groups F sere as face to face or indirect points of

comparison or reference in forming a person#s attitude or )ehaiour

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Marketing Exam Study! (pinion leaders are a person within a reference group who )ecause of

special skills knowledge personalit, or other characteristics exerts

influence on others

o Marketers find wa,s to influence the opinion leaders

0amil,

0amil, mem)ers hae a strong influence on )u,er )ehaiour marketers

are interested in the roles and influence of the hus)and wife and

children with the purchase of different products 'oles and Status

. person )elongs to man, groups+ famil, clu)s organiations

1he persons position in each group can )e defined as )oth role and

status

- Personal 0actors

o . )u,er#s decisions are also influenced ), personal characteristics such as the )u,er#s

age and life-c,cle stage occupation economic situation lifest,le and personalit, and

self-concept

.ge and 6ife-$,cle Stage

People change preferences in goods and serices the, )u, oer lifetimes

(ccupation Peoples occupation affect the goods and serices the, )u, rich people

and poor people )u, different products

Economic Situation

. persons economic situation will affect product choice so marketers

watch trends in personal income saings interest rates

=se economic indicators to point out recession and other situations

6ifest,le

. person#s patter of liing as expressed in his or her actiities interests

and opinions

Personalit, and Self-$oncept

Each person#s distinct personalit, influences his or her )u,ing )ehaiour Personalit, refers to the uni2ue ps,chological characteristics that lead

to relatiel, consistent and lasting responses to one#s own enironment

1he idea is that )rands hae personalities and that consumers are likel,

to choose )rands whose personalities match their own

0ie )rand-personalit, traits

o Sincerit, 8down to earth honest wholesome and cheerful9

o Excitement 8daring spirited imaginatie and up to date9

o $ompetence 8relia)le intelligent and successful9

o Sophistication 8upper class and charming9

o 'uggedness 8outdoors, and tough9

- Ps,chological 0actorso . persons )u,ing choices are further influenced ), four ma*or ps,chological factors+

motiation perception learning and )eliefs and attitudes

Motiation8drie9

. need that is sufficientl, pressing to direct the person to seek

satisfaction of the need

Maslow#s



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Marketing Exam Study! 1he process ), which people select organie and interpret information

to form a meaningful picture of the world

People can form different perceptions of the same stimulus )ecause of

three perceptual processes+ selectie attention selectie distortion and

selectie retention

o Selectie attention

1he tendenc, for people to screen out most of the

information to which the, are exposed meaningmarketers hae to work especiall, hard to attract the

customer#s attention

o Selectie distortion

Descri)es tendenc, of people to interpret information

in a wa, that will support what the, alread, )eliee

o Selectie retention

People tend to select and retain information that

supports their )eliefs

6earning

$hanges in an indiidual#s )ehaiour arising from experience

5eliefs and .ttitudes . )elief is a descriptie thought that a person holds a)out something

o Ma, )e )ased on real knowledge opinion or faith and ma, or

ma, not carr, an emotional charge

.n attitude is a person#s relatiel, consistent ealuations feelings and

tendencies toward an o)*ect or idea

$onsumer 5u,er Decision ProcessNeed recognition&nformation searchEaluation of alternaties Purchase decision Post purchase )ehaiour

,nno&ation .dopter Categoriation

- 0ig I%;

- &nnoators are defined as first %; of )u,ers to adopt new ideaA the earl, adopters are the next

@B%;A the earl, ma*orit, are the next B>A late ma*orit, is the next B>A laggards are the last

@I

o &nnoators are enture some F the, tr, new ideas at some risk

o Earl, adopters are guided ), respect the,#re opinion leaders in their communities

adopting new ideas earl, )ut carefull,

o Earl, ma*orit, are deli)erate F although the, are rarel, leaders the, adopt new ideas

)efore the aerage person

o 6ate ma*orit, are sceptical F the, adopt an innoation onl, after ma*orit, of people hae

tried it

o 6aggards are suspicious of changes and adopt the innoation onl, when it has )ecome

something of a tradition itself

%roduct 0ie Cycle

- .ll products will pass through the P6$

o What#s different is


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Marketing Exam Study!- Growth F earl, ma*orit, customers rapid sales growth and reenues

- Maturit, F late maturit, customers flat sales declining profits

- Decline F laggard customers declining sales replaced ), new products

Marketing Segmentation

- Diiding a market into distinct groups with distinct needs characteristics or )ehaiours who

might re2uire separate products or marketing mixes

- 0our important segmentation topics+ segmenting consumer markets segmenting )usiness

markets segmenting international markets and re2uirements for effectie segmentation

o Segmenting $onsumer Markets

1here is no single wa, to segment a market a marketer has to com)ine seeral

segmentation aria)les to find the )est structure

Ma*or aria)les are+

Geographic Segmentation

o Diiding market into groups )ased on geographic units such as

nations regions proinces countries cities or neigh)ourhoods

Demographic Segmentation

o Diiding market into groups )ased on demographic aria)les

such as age gender famil, sie famil, life c,cle income

occupation education religion race generation and

nationalit,

o Demographic segmentation characteristics+

.ge and life-c,cle stage

Gender &ncome

Ps,chographic Segmentation

o Diiding a market into different groups )ased on social class

lifest,le or personalit, characteristics

5ehaioural Segmentation

o Diiding a market into groups )ased on consumer knowledge

attitude use or response to a product

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17/44

Marketing Exam Study!o 5ehaioural aria)les are+

(ccasions

5enefits sought

=ser status

=sage rate

6o,alt, status

o Segmenting 5usiness Markets

5usinesses use the same aria)les to segment their markets the, also use someadditional aria)les such as operating characteristics purchasing approaches

situational factors and personal characteristics

o Segmenting &nternational Markets

$ompanies can segment international markets using one or a com)ination of

seeral aria)les

Re1uirements or Eecti&e Segmentation

- 1here are man, wa,s to segment a market )ut not all segmentations are effectie

o 1o )e useful markets segments must )e+

Measurea)le+ the sie purchasing power profiles of the segments can )e

measured .ccessi)le+ the segments can )e effectiel, reached and sered

Differentia)le+ the segments are conceptuall, distinguisha)le and respond

differentl, to different marketing mix elements and programs

.ctiona)le+ effectie programs can )e designed for attracting and sering the

segments

2arget marketing

- . set of )u,ers sharing common needs or characteristics that the compan, decides to sere

- When ealuating market segments a firm must look at three factors+ segment sie and growth

segment structural attractieness and compan, o)*ecties and resources

o Segment Sie and Growth

$ompan, must first collect and anal,e data on current segment sales growth

rates and expected profita)ilit, for arious segments

o Segment Structural .ttractieness

$ompan, must examine ma*or structural factors that affect long run segment

attractieness

Segment is less attractie it if contains man, aggressie competitors or man,

su)stitute products

o $ompan, ()*ecties and 'esources

Een if a segment has the right sie and growth is structurall, attractie

compan, must consider its own o)*ecties and resources in relation to that

segment

Some attractie segments can )e dismissed )ecause the, do not mesh with thecompan,#s long-run o)*ecties

Selecting 1arget Segments

- =ndifferentiated 8mass9 marketing

o . market-coerage strateg, in which a firm decides to ignore market segment

differences and go after the whole market with one offer

o 1argeting )roadl, focusing on what is common in the needs of the market rather than

what is different

- Differentiated 8segmented9 marketing

@



18/44

Marketing Exam Study!o . market-coerage strateg, in which a firm decides to target seeral market segments

and designs separate offers for each

o (ffering product and marketing ariations to segments companies hope for higher sales

and a stronger position within each market segment

o Differentiated marketing also causes increase in costs of doing )usiness

- $oncentrated 8niche9 Marketing

o . market-coerage strateg, in which a firm goes after a large share of one or a few

segments or nicheso &nstead of going after a small share of a large market the firm goes after a large share of

one or a few segments or niches

o &t can market more effectiel, ), fine-tuning its products prices and programs to the

needs of carefull, defined segments

o $oncentrated marketing can )e er, highl, profita)le at the same time it inoles

higher-than-normal risks

- Micromarketing

o Differentiated and concentrated markets tailor their offers and marketing programs to

meet the needs of arious market segments and niches

o Micromarketing is the practice of tailoring products and marketing programs to the

needs and wants of specific indiiduals and local customer groupso &ncludes+

6ocal Marketing

&noles tailoring )rands and promotions to the needs and wants of

local customer groups F cities neigh)ourhoods and een specific stores

&ndiidual Marketing

1ailoring products and marketing programs to the needs and

preferences of indiidual customers F also la)elled Cmarkets-of-one

marketing Ccustomied marketing and one-to-one marketing%

Market positioning

- Products position

o 1he wa, the product is defined ), customers on important attri)utes F the place the

product occupies in customers# minds relatie to competing products

- $hoosing a positioning strateg,

o 1he positioning task consist of three steps+

&dentif,ing possi)le competitie adantages

1he ke, to winning customers and )uilding profita)le relationships with

them is to understand their needs )etter than competitors do and

delier more alue

Jou must delier the 2ualit, serice ,ou adertise

&dentif, ,our competitie adantages differentiate through+

o Product differentiation

Ph,sical design ,our product differentl,

o Serices differentiation

Proide speed, conenient or careful delier,

o $hannel differentiation

Gain competitie adantage through the wa, the,

design their channel#s coerage expertise and

performance

o People differentiation

@"



19/44



20/44

Marketing Exam Study! . statement that summaries compan, or )rand positioning F it takes

this form+ to 8target segment and need9 our 8)rand9 is 8concept9 that

8point-of-difference9%

#oods3 Ser&ices3 and Experiences

- . product is a ke, element in the marketing offeringA it#s one of the > Ps of the marketing mix

- $ompan,#s marketing offer often includes )oth tangi)le good and serices

- Goods and serices are tangi)le and intangi)le experiences are memora)le6eels of Goods and Serices

- Product planners need to think a)out goods and serices on three leels 80ig "%@9

- $ore product or )enefit

- .ctual product

o Packaging features design 2ualit, leel )rand name

- .ugmented product

o Warrant, delier, credit installation serice

#oods and ser&ices classiications

- Goods and serices fall into two )road classes )ased on the t,pes of consumers that use them

o

$onsumer Products $onenience+ fre2uent immediate purchases low inolement

1oilet paper soap

Shopping+ less fre2uent purchases careful comparison )etween products

$lothes hotels cars 8regular9

Specialt,+ uni2ue characteristics or )rand )u,ers put forth special effort to

purchase

Designer clothes legal serices real-estate luxur, cars

=nsought+ not usuall, purchased or known a)out

New innoations )lood donations

o &ndustrial Products

Product )ought ), indiiduals and organiations for further processing or for

use in conducting a )usiness

Difference )etween consumer and industrial is the purpose for which the

product is )ought

Ex9 if a lawnmower is )ought for a home it#s a consumer product if it#s )ought

for a landscaping )usiness it#s an industrial product

1here are B groups

Materials and parts

o &nclude raw materials and manufactured materials and parts

o Price and serice are the ma*or marketing factors in purchase

usuall, not adertising

$apital items

o &ndustrial products that aid in the )u,er#s production or

operations including installations and accessor, e2uipment

&nstallations

o consist of ma*or purchases such as )uildings and fixed

e2uipment

Supplies and serices

o &nclude operating supplies 8lu)ricants coal paper pencils9 and

repair and maintenance items 8paint nails )rooms9

L



21/44

Marketing Exam Study!o Supplies are the conenience products of the industrial field

)ecause usuall, purchased with minimum of effort or

comparison

o Serices are maintenance and repair serices and )usiness

adisor, serices

Product marketing decisions

- 0ig "%B

o Product attri)utes 4ualit, features st,le and design

o 5randing

Name term sign s,m)ol or com)ination that identifies the maker or seller of a

product/serice

o Packaging

o 6a)elling

o Product support serices

.dditional serices that delights the customer and ,ields profits for compan,

Product line

- . group of products that are closel, related )ecause the, function in a similar manner are sold

to the same customer groups are marketed through the same t,pes of outlets or fall withingien price ranges

4rand Sponsorship

- . manufacturer has > sponsorship options+

o 1he, can launch the product as a manufacturers brand (or national brand)or the

manufacturer can sell it to resellers who gie it aprivate brand 8store brandor

distributor brand9

o Most manufacturers create their own )rand names others market licensed brands%

o Some companies can *oin forces and co-branda product

Manufacturer#s 5rands s% Priate 5rands

- Priate )rands

o . )rand created and owned ), a reseller of a product

o Ma, )e hard to esta)lish and costl, to stock and promote

o 'etailers usuall, price their priate )rand cheaper than manufacturers )ecause the,

hae more control

- Manufacturer#s )rands

o 6ong dominated the retail scene )ut there hae )een increase in priate )rands

o Not as profita)le in economic down times

6icensing

- Most manufacturers spend millions to create their own )rand names

- Some companies license names or s,m)ols preiousl, created ), other manufacturers names

of well-known cele)rities or characters from popular moies and )ooks

o 1he, do this at a fee

$o-)randing

- 1he practice of using the esta)lished )rand names of two different companies on the same

product

- &n most co-)randing situations one compan, licenses another compan,#s well known )rand to

use in com)ination with its own

- 1hese relationships usuall, inoled complex legal contracts and licences

- Cgiing awa, ,our )rand is a lot like giing awa, ,our child F ,ou want to make sure eer,thing is

perfect

@



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Ne$ product de&elopment strategy

- 1he deelopment of original products new )rands and product improement and

modifications through the firm#s own research and deelopment 8'7D9 efforts

- 0irm can o)tain a new product in two wa,s

o .c2uisition+

5, )u,ing a whole compan, patent or a licence to produce someone else#s

producto New product deelopment+

Deelopment of original products new )rands and product improements and

modifications through the firm#s own research and deelopment efforts

- Ma*or stages in the new product deelopment process are+

@% &dea Generation

% &dea Screening

B% $oncept Deelopment and 1esting

>% Marketing Strateg, Deelopment

;% 5usiness .nal,sis

I% Product Deelopment and 1esting

% 1est Marketing"% $ommercialiation

- @% &dea Generation

o 1he s,stematic search for new product ideas

o $ompan, must usuall, generate man, ideas to find a good one

o Good product ideas usuall, come out from watching and listening to customers

- % &dea Screening

o Sorting through new product ideas to identif, good ideas and separate them from the

not-so-good ideas

- B% $oncept Deelopment and 1esting

o Deeloping the new product idea into arious alternatie forms and testing the concepts

with a group of potential customers

- >% Marketing Strateg, Deelopment

o Designing an initial marketing strateg, for a new product )ased on the product concept

Product concept+ a detailed ersion of the new product idea that can )e shown

to potential customers

- ;% 5usiness .nal,sis

o . reiew of the sales cost and profit pro*ections for a new product to determine

whether the compan,#s o)*ecties will )e met

- I% Product Deelopment and 1esting

o Deeloping the product concept into a real working ersion of the product and

su)*ecting it to a ariet, of tests

o .ll new products must pass through the product deelopment and testing phase- % 1est Marketing

o 1esting the product and marketing program in real )ut limited market conditions

- "% $ommercialiation

o 1he full-scale introduction of the new product into the market

Style3 ashion3 ad

- St,le

o . )asic and distinctie mode of expression



23/44

Marketing Exam Study!- 0ashion

o . currentl, accepted or popular st,le in a gien field

- 0ad

o . fashion that enters 2uickl, is adopted with a great eal peaks earl, and declines er,

2uickl,

#eneral %ricing .pproaches

- 1he price the compan, charges will )e somewhere )etween one that is too low to produce a

profit and one that is too high to produce an, demand

- $ompanies select prices ), selecting a general pricing approach that includes one or more of

these three sets of factorso $ost-5ased Pricing

.dding standard mark-up to the cost of the product

$ost-plus pricing ma, not alwa,s )e optimal if it ignores demand and

competitor pricesA howeer this approach remains popular and effectie in

man, sectors

(ne adantage is that sellers are more certain a)out costs than

demand and so mark-up-)ased pricing is less risk,

.nother cost-oriented pricing approach is )reak-een pricing or a ariation

called target profit pricing

Setting price to )reak een on the costs of making and marketing a

productA or setting a price to make a target profito :alue-5ased Pricing

Setting price )ased on )u,ers# perceptions of alue rather than on the sellers

cost

Price is considered along with the other marketing mix aria)les )efore

marketing program is set

$ost )ased pricing and alue )ased pricing are reerse processes

0ig @L%;

B



24/44

Marketing Exam Study! :alue pricing is offering *ust the right com)ination of 2ualit, and good serice at

a fair price

o $ompetition-5ased Pricing

Setting prices )ased on the prices that competitors charge for similar products

.lso known as going-rate pricing

Going-rate pricing is 2uite popular when demand elasticit, is hard to measure

firms feel that the going price represents a fair return

.lso the, feel that holding the going price will preent harmful price wars

Ne$ product pricing strategies

- Pricing strategies usuall, change as the product passes through its life c,cle

- 1he, choose )etween two )road strategies+

o Market-Skimming Pricing

. high price for a new product to skim maximum reenues la,er ), la,er from

the segments willing to pa, the high priceA the compan, makes fewer )ut more

profita)le sales

Going through each price leel to sell as much as high prices as possi)le and

then lowering price and selling as much as possi)le

Market skimming onl, makes sense under certain conditions product musthae a high 2ualit, and image must support the higher price as well as enough

)u,ers must want the product at that price

.lso costs of producing a smaller olume cannot )e so high that the, cancel the

adantage of charging more

0inall, competitors should not )e a)le to enter the market easil, and undercut

the high price

o Market-Penetration Pricing

Setting a low price for a new product in order to attract a large num)er of

)u,ers and a large market share

6arge num)er of sales olume results in falling costs allowing the compan, to

cut its price een further

Seeral conditions must )e met for this low-price strateg, to work

Market must )e highl, price sensitie so that a low price produces more

market growth

Production and distri)ution costs must fall as sales olume increases

6ow price must help keep out the competition

Penetration pricing organiation must maintain its low-price position or

the price adantage ma, onl, )e temporar,

%rice"ad5ustment strategies

- $ompanies must ad*ust their )asic prices to account for arious market differences and changing

situations

- Six price ad*ustment strategies+o Discount and allowance pricing

$ompanies ad*ust their price to reward customers for certain responses such as

earl, pa,ment of )ills olume purchases and off-season )u,ing

1hese are called discounts and allowances

Discount+ a straight reduction in price on purchases during a stated period of

time

$ash discount+ a price reduction to )u,ers who pa, their )ills promptl,

4uantit, discount+ price reduction to )u,ers who )u, large olumes

>



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26/44

Marketing Exam Study!o 0alls )etween 0(5 and uniform pricing compan, sets up two or

more ones all customers within a gien one pa, a single total

price

5asing-point pricing

o Sellers select a gien cit, as C)asing point and charges all

customers the freight cost from that cit, to the customer

location regardless of the cit,

0reight-a)sorption pricingo Seller a)sor)s all or part of the actual freight charges in order to

get the desired )usiness

o =suall, used for market penetration

o &nternational Pricing

$ompanies marketing outside of their countr, must decide what prices to

charge in the different countries in which the, operate

*lo$charting

-


27/44


28/44


>% &ncreasing surplus capacit, in the industr,

Price competition decreases with

@% Non-price-related costs of using competing alternaties are high F saing time

and efford are of e2ual or greater importance to customers than price

% Personal relationship matter F serices that are highl, personalied andcustomied are er, important customers thus discouraging them from

responding to price competitie offers

B% Switching costs are high F taking time mone, and effort to switch proiders

customers are less a)le to take adantage of competing offers

>% 1ime and location specificit, reduce choice

Managers should watch that firms should not fall in to the trap of comparing

competitors# prices dollar for dollar and then seeking to match them

8alue -ased pricing

Understanding Net alue

$ustomers weigh the perceied )enefits o)tained from the serice against the

perceied costs the, will incur

:alarie etihaml proposes four )road expressions of alue+

@% :alue is low price

% :alue is whateer & want in a product

B% :alue is the 2ualit, is the 2ualit, & get for the price & pa,

>% :alue is what i get for what & gie

> is known as Net :alue F the sum of all the perceied )enefits 8gross alue9

minus the sum of all the perceied costs of serice

0our distinct )ut related strategies for capturing and communicating the alue of

a serice+

@% =ncertaint, reduction relationship

% 'elationship enhancement

B% 6ow-cost leadership

>% :alue perception management

'educing uncertaint, include+

"



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@% 5enefit-drien pricing F inoles pricing the aspect of the serice that

directl, )enefits customers

% 0lat-rate pricing F inoles 2uoting a fixed price in adance of serice

delier, so as to aoid surprises for users

Discounting is not the )est wa, to win new )usiness if a firm is to seek lo,al

customers 8offering discounts on large purchases or two or more serices)undled together will9

Cost leadership

6ow-priced serices appeal to customers on tight financial )udgets and ma, also

stimulate larger purchases

$hallenge is to price low to conince customers that the, are getting good alue

Second challenge is to ensure that economic costs are low enough to ena)le

profits

Managing the %erception &alue

Effectie communications and een personal explanations are needed to

help customers understand the alue the, receie

6&ercome the pro-lems o ,ntangi-ility

Mittal suggests intangi)ilit, of serices can cause > pro)lems

@% !bstractnessF a)stract concepts such as financial securit, do not hae a

one to one correspondence with ph,sical o)*ects it can )e challenging for

marketers to connect their serices to those concepts

% "eneralityF refers to items that comprise a class of o)*ects persons or

eentsA marketers must communicate that the, hae a specific offering distinctl,

different from competing offerings

B% Non-searchabilityF refers to the fact that intangi)les cannot )e searched

or inspected )efore the, are purchased 8ie% surgeon#s expertise9

>% #ental impalpabilityF man, serices are sufficientl, complex that it is

difficult for customers to understand what the )enefits of the products are

Marketing communications mixF marketers that hae access to numerous forms of communication

Different communication elements hae distinctie capa)ilities relatie to the

t,pes of messages that the, can cone, and the market segments most likel, to )e

exposed to them 8fig% @%9

K



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Personal communications F inole personalied messages that moe in )oth

directs to )oth parties 8&e% 1elemarketing9 Qleft columns of fig% @%R

&mpersonal communications F messages that moe in one directions are

targeted a group of customers than one indiidual Qright columns of fig @%R

Ser&ice 4lueprints

Serice )lueprints clarif, the interactions )etween customers and emplo,ees and how

these are supported ), )ackstage actiities and s,stems

Distinguishes )etween what customers experience Cfront-stage and the actiities of

emplo,ees and support processes C)ackstage where customers can#t see them

Gies managers the opportunit, to identif, potential fail points

Ser&ice %rocess Redesign

SP' reitalies processes that hae )ecome outdated

.chiee the following ke, performance measures

@% 'educed num)er of serice failures

% 'educed c,cle time

B% Enhanced productiit,

>% &ncreased customer satisfaction

Serice process redesign encompasses reconstitution rearrangement or su)stitution of

serice processes

@% Eliminating non-alue-adding steps 0ig @K%@ pg >BL

% Shifting to self-serice

B% Deliering direct serice

>% 5undling serices

;% 'edesigning the ph,sical aspects of serice processes

Customers as %artial Employees

:iewing customers as Cpartial emplo,ees can influence the productiit, and 2ualit, of

serice processes and outputs

Managing customers as partial emplo,ees inoles+

@% $onduct a C*o) anal,sis of customers# present roles in the )usiness and

compare it with the roles the firm would like them to pla,

BL



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% Determine if customers are aware of how the, are expected to perform and

hae the skills needed to perform as re2uired

B% Motiate customers ), ensuring that the, will )e rewarded for contri)uting and

performing well

>% 'egularl, appraise customers# performance

9ay customers

=ndesira)leA aoid attracting them first place

2hie : no intention of pa,ing and steals

Rule -reaker :serice )usinesses need to esta)lish rules of )ehaiour for emplo,ees

and customers to guide them safel, through the arious steps of the serice encounter

4elligerent :those that get er, angr, or icil, calm and swearing at machines serice is

clums, customers are ignored etc%

*amily euders :people who get into arguments with other customers 8often with their

own famil,9

8andal :using securit, to preent people from andalising and ph,sical a)use from

customers or drunks

Capacity Constrained 6rganiations pg ;;;

Productie capacit, can take on seeral forms+

@% Ph,sical facilities designed to contain customers and used for deliering people

processing serice or mental- stimulus processing serices

% Ph,sical facilities designed for storing or processing goods that either )elong g to

customers or are )eing offered to them for sale

B% Ph,sical e2uipment used to process people possessions or information ma,

em)race a huge range of items and )e er, situation-specific

>% 6a)our is a ke, element of productie capacit, in all high-contact serices and

man, low-contact ones

;% &nfrastructure F man, organiations are dependent on access to sufficientcapacit, in the pu)lic or priate infrastructure to )e a)le to delier high-2ualit,

serice to their own customers

Measures of capacit, utiliation include the num)er of hours that facilities la)our and

e2uipment are productiel, emplo,ed in reenue operation and the units or

percentage of aaila)le space that is utilied in reenue operations%

$hasing demand 8seeral actions that managers can take to ad*ust capacit, as needed+

B@



32/44


@% Schedule downtime during periods of low demand

% =se temporar, emplo,ees

B% 'ent or share extra facilities and e2uipment

>% $ross-train emplo,ees

;% 6et customers perform self-serice

*i&e approaches to managing demand

@% 1aking no action and leaing demand to find its own leel

% 'educe demand in peak periods

B% &ncrease demand when there is excess capacit,

>% &nentor,ing demand until capacit, )ecomes aaila)le

;% $reating formalied 2ueuing s,stems

Dierent


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%emand and supply are ell balancedStaff and facilities are )us, without )eing

oerworked and customers receie good serice without dela,s

&'cess capacityDemand is )elow optimum capacit, and productie resources are

underutilied resulting in low productiit,

Marketing 0ogistics and Supply chain management pg =>?

Marketing logistics (physical distri-ution : the tasks inoled in planning implementing and

controlling the ph,sical flow of materials final goods and related information from points fo origin to

points of consumption to meet customer re2uirements at a profit%

&noles getting the right product to the right customer in the right place at the right time

Marketing logistics addresses not onl, outbound distribution8moing products from the

factor, to resellers and ultimatel, to customers9 )ut also inbound distribution8moing

products and materials from suppliers to the factor, and reverse distribution8moingunwanted products returned ), consumers9

Supply chain management : managing alue-add flows of materials final goods and related

information )etween suppliers the compan, resellers and final users

Minimum distri)ution costs impl, slower delier, smaller inentories and larger

shipping costs

1he goal of marketing logistics should )e to proide a targeted leel of customer serice

at the least cost

#a*or logistics functions

(rder processing F orders set up m, salespeople through mail or telephone ia the

internet

o :endor-managed inentor, 8:M&9 s,stems F allows customers to share real-

time data on sales and current inentor, leels with the supplier

Warehousing

o Distri-ution centres : a large highl, automated warehouse designed to

receie goods from arious plants and suppliers take order sill theefficientl, and delier goods to customers as 2uickl, as possi)le

o $ompanies must store their tangi)le goods until the, are sold

&nentor, leels affect customer satisfaction

BB



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o Man, companies hae greatl, reduced their inentories and related costs

through *ust in time logistics s,stems where producers and retailers carr,

onl, enough inentor, of parts or merchandise for a few da,s of operations

1ransportation carriers affects the pricing of products delier, performance and

condition of the goods when the, arrie F which affect customer satisfaction

o ,ntermodel transportation : com)ining two or more modes oftransportation

+ntegrated supply chain management

,ntegrated supply chain management : the logistics concept that emphasies

teamwork )oth inside the compan, and among all the channel organiations to

maximie the performance of the entire distri)ution s,stem

$ompanies are adopting the concept of integrated suppl, chain managemement with te

goal of harmoniing all of the commpan,#s logistics decisions in order to create high

market satisfaction at a reasona)le cost

(ne compan,#s distri)ution s,stem is another compan,#s suppl, s,stem

Growing num)er of firms now outsource some or all of their logistics to third-part,

logistics 8BP69 proiders

third"party logistics (@%0 pro&idersF an independent logistics that performs an, or all

of the functions re2uired to get its clients# product to market

Stimulate or Dampen Demand to match capacity pg @A

adertising and sales promotions can help to change the timing of customer use andthus help to match demand with the capacit, aaila)le at a gien time

demand management strategies include reducing usage during peak demand periods

and stimulating it during off-peak periods with high fixed costs 8ie hotels9

%ush &s pull strategy

Promotional Strategies 8know the difference9

- Push strateg,+

o Promotional effort to channel mem)ers to stock promote products to consumers

o Personal selling and trade promotion-drien

o '.'E

- Push Strateg, Example

o M(NS1E' Energ, Drink

o Sales force pushes product to+

$onenience stores

Gas station

5ars and clu)s

B>



35/44

Marketing Exam Study!o Stores in turn push products onto consumers

- Pull strateg,+

o Promotional efforts to appeal directl, to consumers

o .dertising and sales promotion-drien

- Pull Strateg, Example

o :&.G'.

.dertises directl, to consumers $onsumers ask for the product ), name

Con&entional marketing channel &s &ertical marketing =;

0ig @@%I

Con&entional distri-ution channelF consists of one or more independent producers

wholesalers and retailers each a separate )usiness seeking to maximie its own profits

een at the expense of profits for the s,stem as a whole

o no channel mem)er has much control oer the other mem)ers and no formal

means exists for assigning roles and resoling channel conflict

8ertical marketing system (8MS : consists of producers wholesalers and retailers

acting as a unified s,stem% (ne channel mem)er owns the other has contracts with

them or has so much power that the, all cooperate 8ie% sears )u,s more than ;L of its

goods from companies that it partl, or wholl, owns9

*ranchises are special t,pes of ertical marketing s,stems that link seeral stages in the

production-distri)ution

Elasticity in the ser&ice sector

Price Elasticit,

- . wa, of measuring how sensitie the market is to price changes

o &nelastic+ minimal change in demand as price increases

o Elastic+ significant drop in demand as price increases

Ser&ice Employees are crucially important

Serice emplo,ees are+

@9 $art of the product+ emplo,ees are the most isi)le element of the serice

deliers the serice and significantl, determines serice 2ualit,

9 +s the service firm+ front-line emplo,ees represent the serice firm and from a

customer#s perspectie are the firm

B;



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B9 +s the brand+ front-line emplo,ees and serice are often a core part of the )rand%

&t is the emplo,ees who determine whether the )rand promise gets deliered or

not

Serice emplo,ees pla, a ke, role in anticipating customers# need customiing the

serice delier, and )uilding personalied relationship with customers which ultimatel,

lead to customer lo,alt,%

3ames


37/44

Marketing Exam Study!2rain ser&ice employees acti&ely

serice emplo,ees need to learn+

o 2he organi3ational culture, purpose and strategy 4 start strong with new hires

focus on getting emotional commitment to the firm#s core strateg, and

promote core alues such as commitment to serice excellence responsieness

etc%9

o +nterpersonal and technical skills 4interpersonal skills tend to )e generic across

serice *o)s and include isual communications skills such as making e,e

contact )od, language etc%9

o $roduct5service knoledge 4knowledgea)le staff are a ke, aspect of serice

2ualit,

1raining is extremel, effectie in reducing person/role stress

1raining and learning professionalies the front line moing these indiiduals awa, from

the common image of )eing in low-end *o)s that hae no significance

Empo$er the ront line

Empowerment approach is more likel, to ,ield motiated emplo,ees and satisfied

customers than the Cproduction line alternatie where management designs a

relatiel, standardied s,stem and expects workers to execute tasks within narrow

guidelines%

Empowerment is most likel, to )e appropriate when most of the factors are present in

compan,

1he firm#s )usiness strateg, is )ased on competitie differentiation and on

offering personalied customied serice

1he approach to customers is )ased on extended relationship rather than on

short term transactions

1he organiation uses technologies that are complex and non-routine in nature

1he )usiness enironment is unpredicta)le and surprises are to )e expected

Existing managers are comforta)le with letting emplo,ees work independentl,

for the )enefit of )oth the organiation and its customers

Emplo,ees hae a strong need to grow and deepen their skills in the work

enironment are interested in working with others and hae good interpersonal

and group process skills

0our features for empowerment throughout the organiation

B



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$oer to make decisions that influence work procedures and organiation

direction

+nformation about organi3ation performance

1eards )ased on organiation performance such as )onuses

6noledge that ena)les emplo,ees to understand and contri)ute toorganiational performance

Empowerment can take at seeral leels+

Suggestion involvementempowers emplo,ees to make recommendations

through formalied programs

7ob involvementrepresents a dramatic opening up of *o) content

3o)s redesigned to allow emplo,ees to use a wider arra, of skills

8igh involvementgies een the lowest-leel of emplo,ees a sense ofinolement in the compan,#s oerall performance

Bo$ to identiy the -est candidates

()sere )ehaiour

o


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3effre, Pfeffer+ Cthe effects of unions depend er, much on what management does

1he higher wages lower turnoer clearl, esta)lished grieance procedures and

improed working conditions often found in highl, unionied organiations are all

characteristics of the c,cle of success+ ,ielding positie )enefits in a well managed

serice organiation

*our ad&antages to incremental proits o a loyal customer) $rofit derived from increased purchases

&ndiiduals or )usinesses ma, purchase more as their families or

)usinesses grow larger and need to purchase larger 2uantities

) $rofit from reduced operating costs

.s customers )ecome more experienced the, make fewer demands on

the supplier 8less mistakes made9

.) $rofit from referrals to other customers

Positie world of moth recommendations are like free sales and

adertising saing the firm from haing to inest as much mone, in these

actiities

0) $rofit from price premium

new customers often )enefit from introductor, promotional discounts

whereas long-term customers are more likel, to pa, regular prices and

when highl, satisfied are een willing to pa, a price premium

Mem-ership relationships and loyalty programs

Mem)ership relationship

- . formalied relationship )etween the firm and an identifia)le customer which ma,

offer special )enefits to )oth parties

o .dantage to firms is it allows serices to know who it current customers are

and usuall, what use the, make of the serice offered%

o Good for segmentation purposes

1he wheel of 6o,alt,

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- . framework for thinking a)out how to )uild customer lo,alt,

- $omprises B se2uential strategies+

@9 5uild a foundation for lo,alt,+

a% Segment the market

)% 5e selectie- ac2uire customers who fit the core alue proposition

c% Manage the customer )ase ia effectie tiering of serices

d% Delier 2ualit, serice

9 $reate 6o,alt, 5onds+

a% 5uild higher leel )onds+ social customiation structural

)% Gie lo,alt, rewards

c% Deepen the relationship ia+ cross-selling )undling

B9 'educe churn driers 8see 1&%US+N" /US2O#&1 %&9&/2+ONSsection9

9+"U1& : 2he heel of loyalty $g 0;.

Reducing customer deections

'educing customer defection 8also called customer churn9+

1he first step is to understand the reasons for customer switching-

o 1hese include+ core serice failure 8greatest reason9A dissatisfactor, serice

encountersA high deceptie or unfair pricingA inconenience in terms of

time location or dela,sA and poor response to serice failure%

address ke, churn driers+

o after understanding some generic churn driers ,ou should address these

pro)lems ), deliering 2ualit, serice minimiing inconenience and other

non-monetar, costs and fair and transparent pricing%

&mplement effectie complaint handling and serice-recoer, procedures

o Effectie complaint handling crucial in persuading unhapp, customers not to

switch proiders

increase switching costs

o man, serices hae natural switching costs 8time consuming to switch ma*or

)ank account etc%9o ,ou can increase or create new switching costs ), instituting penalties

through contracts

dierent perspecti&es o ser&ice 1uality

1here are ; different perspectie one can iew the word L



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@91he 1ranscendent iew+ 4ualit, is s,non,mous with excellenceA argues that people

recognie 2ualit, onl, through the experience gained from repeated exposure%

$ustomers will know 2ualit, onl, when the, see it%

91he Produce-5ased approach+ 2ualit, is a measura)le aria)le% difference in 2ualit,

represent differences in the attri)utes possessed ), the product% 1his iew fails to

account for differences in the tastes needs and preferences of indiidual customers%

B9=ser 5ased definitions+ C2ualit, lies in the e,e of the )eholder% 4ualit, e2uals

maximum satisfaction% 'ecognies that different customers hae different wants and

needs

>91he manufacturing-)ased approach+ concerned primaril, with engineering and

manufacturing practices% 0ocuses on conformance to internall, deeloped specification

which are often drien ), productiit, and cost-containment goals%

;9:alue 5ased definitions+ define 2ualit, in terms of alue and price% 1rade-off )etween

performance and price%

#aps in ser&ice design and deli&ery

1here are t,pes of gaps that can occur at different points during the design and delier, of aserice performance+

@92he knoledge gap:the difference )etween what serice proiders )eliee customers

expect and customers# actual needs and expectations%

92he standards gap:the difference )etween management#s perceptions of customer

expectations and the 2ualit, standards esta)lished for serice delier,%

B92he delivery gap:the difference )etween specified delier, standards and the serice

proider#s actual performance on these standards%

>92he internal communications gap:the difference )etween what the compan,#s

adertising and sales personnel think are the product#s features performance and

serice 2ualit, leel and what the compan, is actuall, a)le to delier%;92he perceptions gap:1he difference )etween what is deliered and what customers

perceie the, hae receied 8una)le to accuratel, ealuate serice 2ualit,9

I92he interpretation gap: the difference )etween what a serice proider#s

communication efforts actuall, promise and what a customer thinks was promised

92he service gap:81


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using automated machines

training emplo,ees to work more productiel,

$ustomer-Drien .pproaches+

-Man, situations inole high customer input

-managers should examine improing customer inputs

-examine B strategies+@9$hanging the timing of customer demand 8shift demands awa, from peak

timesA offering demand though other channels i%e% internet9

9&nole customer more in production 8customers can assume roles of

organiation emplo,ees9

B9.sk customers to use third parties 8 delegating one or more support functionsA

eg% Delier, team so customer doesn#t need to trael eg% 1rael agenciesA third

parties can )e cheaper and more productie and allow the main organiation to

specialie on serice features9

; le&els o ser&ice perormance

Serice performance can )e categoried into four leels+

@9 Service =osers:

o organiations that are at the )ottom of serice 2ualit,

o )ottom of the )arrel# from )oth managerial and customer perspectie

o t,picall, surie )ecause there is no ia)le alternatie

) Service Nonentities:

o Performance leaes much to )e desired

o Eliminated the worst features of losers

o Marketing strategies unsophisticated

o Difficult, distinguishing one from anotherB9 Service $rofessionals+

o Different league from nonentities

o $lear market-positioning strateg,

o $ustomers seek out these firms )ased on good reputation

o Explicit links )etween )ackstage and front stage actiities

.) Service =eaders:

o CcrTme de la crTme of their industries

o serice leaders are outstanding

o reputation of excellent serice and a)ilit, to delight customers

firms can either moe up or down the performance ladder%

9ohn otter)s stages o leadership

3ohn ?otter argues that in most successful processes of change management those in

leadership roles must naigate through eight stages+

@9creating a sense of urgenc, to deelop the impetus 8momentum9 for change

>



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9putting together a strong enough team to direct the process

B9creating an appropriate ision of where the organiation needs to go

>9communication that new ision )roadl,

;9empowering emplo,ees to act on that ision

I9producing sufficient short term results to create credi)ilit, and counter c,nicism

9)uilding momentum and using that to tackle the tougher change pro)lems

"9 anchoring the new )ehaiours in the organiational culture

E&olution &ersus turnaround

1ransformation of an organiation can take place in two pa,s+ eolution or turnaround

Eolution+

in )usiness context inoles continual mutations designed to ensure surial of the

fittest

management must eole focus strateg, of the firm to take adantage of changing

condition and new technologies

firm can#t remain successful without a continuing series of mutations

1urnaround+

leaders 8usuall, new ones9 tr, to )ring failing organiations )ack from the )rink of

failure

adantageous to )ring a new $E( in from outside the organiation in turnaround

situations

> hurdles leaders face in reorienting and formulating strateg,+

@% $ognitie hurdles- when people cannot agree on the causes of pro)lems and the

need for change

% 'esource hurdles- when the organiation is constrained ), limited funds

B% Motiational hurdles- preent a strateg,#s rapid execution when emplo,ees arereluctant to make needed changes

>% Political hurdles- organied resistance from powerful ested interests seeking to

protect their positions

0eadership3 Culture3 and climate

(rganiational $ulture+

Shared perception or themes regarding what is important in the organiation

Shared alues a)out what is right and wrong Shared understanding a)out what works and what doesn#t work

Shared )eliefs and assumptions a)out wh, these things are important

Shared st,les of working and relation to others

(rganiational $limate

o 'epresents the tangi)le surface la,er of the organiation#s underl,ing culture

>B



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marketing exam study

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