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Chapter 1: ● What is marketing:

■ Marketing: activity, set of institutions, and processes for creating, communicating, delivering and exchanging offerings that have value for customers, clients, partners and society at large.

● Recognising the broad scope of marketing. ● Recognises that marketing must involve an exchange that

benefits both the customer who buys the product and the organisation or organisations that are selling the product.

● Recognises that organisations need to conduct their marketing in such a way as to provide mutual benefit, not just for the users of their products, but also for partners in the supply chain, and that marketers must consider their impact on society.

■ ○ Marketing approach to business: puts the customer, client, partner and

society at the heart of all business decisions. Marketing requires customers to be at the core of commercial and civic organisational thinking.

○ Marketing process: combines core marketing principles and activities with a philosophy that places people at the heart of strategy and operations.

■ Co-creation: ● Stakeholder orientation: puts the people served by the

organisation or network at the heart of generating solutions and engages all stakeholders with a vested interest.

● Segmentation: adopts a philosophical position that recognises market heterogeneity and facilitates the search for commonalities among people to create groups.

● Competition: marketing is externally oriented, and marketers aim to offer alternatives containing a bundle of benefits that are superior.

● Theory: explains causal relationships and provides a roadmap that outlines what needs to be embedded into design to ensure optimal outcomes.

● Insight: outcome of the co-creation step. ■ Build:

● Marketing mix: focuses attention on delivering valued solutions that people can freely choose.

● Exchange: trading, bartering and swapping practices on which marketplaces were originally formed.

■ Engage: ● Behavioural change: focused on raising awareness, inducing

trial, purchase and repeat purchase of the solutions or alternatives offered by the organisation(s).

■ ● Exchange of values:

■ Exchange: ● Two or more parties must participate, each with something of

value desired by the other party. ● All parties must benefit from the transaction. ● The exchange must meet both parties’ expectations (e.g.

quality, price). ■ Value: customer’s overall assessment of the utility of an offering

based on perceptions of what is received and what is given. ○ Market: group of customers with different needs and wants. ○ Customers: people who purchase products for their own or someone else’s

use ■ Consumers: people who use goods or services.

○ Clients: ‘customers’ of not-for-profit organisations or social marketers

○ Partners: organisations or individuals who are involved in the activities and processes for creating, communicating and delivering offerings for exchange.

○ Society: body of individuals living as members of a community. ● Ethics, corporate social responsibility & sustainable marketing:

○ Ethics: set of moral principles that guide attitudes and behaviour. ○ Law: represent society’s attempt to ensure individuals and organisations act

in a way that the society deems beneficial, or at least acceptable. ○ Corporate social responsibility: businesses have an obligation to act in the

interests of the societies that sustain them through delivery of overall positive impact.

■ Stakeholders: ● Owners: the business must generate long-term wealth by

acting profitably and sustainably. ● Employees: businesses and not-for-profit organisations

provide jobs that ensure wealth is shared among members of society, and provide employees with safe working conditions.

● Customers (and clients): the business must attract and retain customers by offering products of value.

● Partners: the business must act in such a way towards its partners that those partners can achieve their own business aims and meet their own corporate social responsibilities.

● Government: the business must abide by laws and regulations.

● Society: business should operate in the interests of the communities in which they operate

● Environment: businesses should ensure positive impact for the environments in which they operate.

■ ○ Sustainability: needed to ensure the future.

■ Sustainable development: development that meets the needs of the present without compromising the ability of future generations to meet their own needs.

■ Sustainable marketing: promotion of environmental and socially responsible products, practices, and brand values.

○ Implementation of CSR & sustainability: can take time given that production processes need to change and plants may need to be retooled.

■ Greenwashing: dissemination of questionable or potentially misleading information by an organisation in relation to its products, in order for the organisation and its products to be perceived as environmentally friendly.

Chapter 2: ● Marketing environment: All of the internal and external forces that affect a

marketer’s ability to create, communicate, deliver and exchange offerings of value. ○ Environmental analysis: A process that involves breaking the marketing

environment into smaller parts in order to gain a better understanding of it.

○ ● Internal environment: The parts of the organisation, the people and the processes

used to create, communicate, deliver and exchange offerings that have value. The organisation can directly control its internal environment.

○ Internal marketing: A cultural framework and a process to achieve strategic alignment between front-line employees and marketing.

○ External environment: The people and processes that are outside the organisation and cannot be directly controlled.

○ ● Micro environment: The forces within an organisation’s industry that affect its ability

to serve its customers and clients — target markets, partners and competitors. ○ Partners: Important to know how each partner processes their work & they

add value to the end product. ○ Suppliers: Important to know risks from dependency on suppliers & preempt

problems in order to fulfill demands in times of crisis. Identify, assess, monitor & manage risks of suppliers & their rates / prices.

○ Competitors: Firms must ensure that their products / services outperforms that of the competition by understanding the competitors’ strategies.

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■ ● Macro environment: The factors outside of the industry that influence the survival of

the company; these factors are not directly controllable by the organisation. ○ Political forces: The influence of politics on marketing decisions. ○ Economic forces: Those factors that affect how much people and

organisations can spend and how they choose to spend it. ○ Sociocultural forces: The social and cultural factors that affect people’s

attitudes, beliefs, behaviours, preferences, customs and lifestyles. ○ Technological forces: Broad concept of finding a more efficient method in

doing something. ○ Environmental forces: The environmental factors that affect individuals,

companies and societies. ○ Legal forces: Laws & regulations set by the local government.

■ Laws: Legislation enacted by elected officials. ■ Regulations: Rules made under authority delegated by legislation.

○ Macro-environmental complexity: PESTEL analysis as one of many types of analysis and they are all interdependent.

○ ● Situation analysis & marketing planning:

○ Situational analysis: An analysis that involves identifying the key factors that will be used as a basis for the development of marketing strategy.

■ ○ Marketing planning: An ongoing process that combines organisational

objectives and situation analyses to formulate and maintain a marketing plan that moves the organisation from where it currently is to where it wants to be.

■ ○ Marketing metrics: Measures that are used to assess marketing

performance.

■ ○ SWOT analysis: An analysis that identifies the strengths and weaknesses

and the opportunities and threats in relation to an organisation. ■ Strength: Those attributes of the organisation that help it achieve its

objectives. ■ Weaknesses: Those attributes of the organisation that hinder it in

trying to achieve its objectives. ■ Opportunities: Factors that are potentially helpful to achieving the

organisation’s objectives. ■ Threats: Factors that are potentially harmful to the organisation’s

efforts to achieve its objectives.

■ Chapter 4:

● Consumer behaviour: Analysis of the behaviour of individuals and households who buy goods and services for personal consumption.

○ Influences on consumer behaviour: ■ Situational influences: Circumstances a consumer finds themself in

when making purchasing decisions. ● Physical: Characteristics of the location in which the purchase

decision is made. ● Social: Interactions with others at the time the purchase

decision is made ● Time: Time available for a purchase decision. ● Motivational: Reasons for the purchase. ● Mood: Mood of a person at the time of the purchase decision.

■ ● Group factors: Consumers’ purchasing decisions affected by group factors, or

influences from groups with which the individual interacts. ○ Cultural factors: Influences on behaviours that operate at the level of the

whole society or of major groups within society.

■ Culture: System of knowledge, beliefs, values, rituals and artefacts by which a society or other large group defines itself.

■ Hofstede’s dimensions of culture: ● Power distance: Degree of inequality among people that is

acceptable within a culture. ● Uncertainty avoidance: Extent to which people in a culture

feel threatened by uncertainty and rely on mechanisms to reduce it.

● Individualism: Extent to which people focus on their own goals over those of the group.

● Masculinity: Extent to which traditionally masculine values are valued over traditionally feminine values within a culture in Hofstede’s cultural dimensions.

● Long-term orientation: Extent to which a pragmatic, long-term orientation is valued over a short-term focus.

● Indulgence: Extent to which a relatively free gratification of basic and natural human drives related to enjoying life and having fun is allowed.

● Restraint: Extent to which gratification of needs is suppressed and regulated by means of strict social norms.

●

■ Subcultures: Groups of individuals whose members share common attitudes, values and behaviours that distinguish them from the broader culture in which they are immersed.

● Multiculturalism: Existence of diverse cultures within a society.

■ Social class: Group comprising individuals of similar rank within the social hierarchy.

○ Social factors: Concerned with developing an understanding of the behaviour of the individual within the wider group.

■ Reference groups: Any group to which an individual looks for guidance.

■ Social risk: Belief by a consumer that a particular choice of product may have potentially negative social consequences.

■ Membership reference groups: Groups to which the individual belongs.

■ Aspirational reference groups: Groups to which the individual would like to belong.

■ Dissociative reference groups: Groups with which the individual does not wish to be associated or which the individual may wish to leave.

■ Opinion leaders: Reference group member who provides relevant and influential advice about a specific topic of interest to group members.

■ Family: Family as the social group with the most influence over most people’s behaviour.

● Family life cycle: Series of characteristic stages through which most families pass.

○ Autonomic decisions: Household products purchased by either the husband or wife.

○ Wife dominant decisions: Wife makes the majority of household purchasing decisions related to food, health care, laundry etc.

○ Husband dominant decisions: Husband makes the majority of household purchasing decisions including hardware and garage products.

○ Syncratic decisions: Products are purchased by husband and wife acting jointly.

○ ● Pester power: Influence of children on their parents’

purchasing decisions. ○ Roles & status: Complex set of expectations.

● Individual factors: Personal and psychological characteristics. ○ Personal characteristics: Individual’s identity.

■ Demographics: General makeup of the population. ● Demographic factors: Vital and social characteristics of

populations, such as age, education and income. ■ Lifestyle: How a person spends their time and how they interact with

others. ■ Personality: Set of unique psychological characteristics and

behavioural tendencies that characterise an individual. ○ Psychological characteristics: Internal factors, independent of situational

and social circumstances, that shape the thinking, aspirations, expectations and behaviours of the individual.

■ Motivation: Individual’s internal drive to satisfy unfulfilled needs or achieve goals.

● Maslow’s hierarchy of needs: Theory of motivation that suggests that people seek to satisfy needs according to a hierarchy that places lower-order needs before higher-order needs.

○ ■ Perceptions: Psychological process that filters, organises and

attributes meaning to external stimuli. ● Selective exposure: Tendency to actively seek out messages

with which the audience already agrees or those that are pleasant and to avoid messages that are threatening or disagreeable.

● Selective attention: Process by which an individual chooses to take in only those messages which are relevant to their needs.

● Selective distortion: Individual’s tendency to perceive messages that are inconsistent with existing beliefs or attitudes in such a way as to reduce the inconsistency.

● Selective retention: Tendency to remember only that information which is consistent with other beliefs and which is relevant to an individual’s needs.

■ Beliefs & attitudes: Mental map that a consumer relies upon when making judgements about problems that require solutions and products for which there is no readily apparent need.

● Cognitive component: Comprises the person’s awareness of and knowledge about the object or issue.

● Affective component: Feelings towards, or approval of, the object or issue.

● Behavioural component: Individual’s actions or intentions towards the object or issue.

■ Learning: Process by which individuals acquire new knowledge and experience that they can apply to future problems, opportunities and behaviour.

● Behavioural learning theories: Role of experience and repetition of behaviour.

● Cognitive learning theories: Rational problem solving, and that emphasises the acquisition and processing of new information.

● Consumer involvement & the decision making process: ■ Consumer decision making process: Process of need/want

recognition, information search, evaluation of options, purchase and post-purchase evaluation that are common to most consumer buying decisions.

■ Involvement: Level of engagement undertaken by a consumer when considering perceived consequences of a purchase.

● Habitual decision making: Low-involvement purchasing decisions, usually involving small, routine, low-risk products.

● Limited decision making: Limited-involvement purchasing decisions, usually involving infrequently bought, but familiar, products.

● Extended decision making: High-involvement purchasing decisions involving high-price, high-risk and/or infrequent, unfamiliar products.

○ Need / want recognition: When a buyer becomes aware of a discrepancy between a desired state and the actual state.

○ Information search: Buyer searches for information about how to solve the problem.

○ Evaluation of options: Buyer uses a combination of objective criteria, such as price, and subjective criteria, such as style, image or feeling about a product.

○ Purchase: Consumer moves to the purchase stage, however the purchasing decision may, in fact, be to not purchase.

○ Post purchase evaluation: Buyer continues to evaluate their purchase decision after the purchase.

■ Cognitive dissonance: Purchaser’s second thoughts or doubts about the wisdom of a purchase they have made.

○ Chapter 6:

● Knowing the market: ○ Market: Group of customers with heterogeneous needs and wants.

○ ● Target marketing: Approach to marketing based on identifying, understanding and

developing an offering for those segments of the total market that the organisation can best serve.

■ Market segments: Subgroups within the total market that are relatively similar in regards to certain characteristics.

○ Mass marketing: Buyers seen as having common wants, needs and demands.

○ One to one marketing: Appeal to each customer by providing a unique, customised offering that will meet their individual needs.

○ Target marketing based on segments: Segment has distinctive needs, but the members of the segment have similar needs.

○

○ ● Differentiated targeting strategy: Marketing approach that

involves developing a different marketing mix for each target market segment.

■ Product & market specialisation: ● Product specialisation: Target marketing strategy in which all

marketing efforts are concentrated on offering a single product range to a number of market segments.

● Market specialisation: Target marketing strategy in which all marketing efforts are focused on meeting a wide range of needs within a particular market segment.

● Product-market specialisation: Target marketing strategy in which marketing efforts are concentrated on offering a single product to a single market segment.

● ○ Target marketing process: Fundamental component of marketing strategy

for any organisation involving three main stages, with each requiring detailed analysis and decision making.

■ ● Market segmentation: First step to identify variables to define meaningful market

segments and second to profile the market segment so it can be assessed in the second stage of target marketing process.

○ Identify segmentation variables: Each segment is unique and therefore an organisation will need to sell the product differently to each, depending on their wants and needs.

● Segmentation variables: segmentation variables Characteristics that buyers have in common and that might be closely related to their purchasing behaviour.

■ Geographic segmentation: Market segmentation based on variables related to geography, such as climate and region.

● Climate. ● Local population density. ● Region. ● Topography. ● Urban, suburban and rural locations.

■ Demographic segmentation: Market segmentation based on demographic variables, which are the vital and social characteristics of populations, such as age, education and income.

● Ethnicity.

● Household composition. ● Income. ● Gender.

■ Psychographic segmentation: Market segmentation based on the psychographic variables of lifestyle, motives and personality attributes.

● Psychological traits. ● Geo-demographics. ● Lifestyles.

■ Behavioural segmentation: Market segmentation based on actual purchase and/or consumption behaviours.

● Benefit expectations. ● Brand loyalty. ● Occasion. ● Price sensitivity. ● Volume of usage.

■ Segmenting business markets: Often characterised by a small number of buyers, each of which might display a very close relationship with the seller.

■ Effective segmentation criteria: Almost limitless number of segments can be created using segmentation variables.

● Measurability. ● Accessibility. ● Substantiality. ● Practicability

○ Profile market segments: ■ Market segment profile: Description of the typical potential customer

in the market segment; that is, a description of the common variables shared by members of market segments and how the variables differ between market segments.

● Market targeting: Systematic examination of the range of possible market segments, their potential sales volume and revenues, and the relative ability of the organisation to satisfy the expectations of members of these market segments.

○ Evaluate potential segments: Detailed and rigorous analysis of sales potential, the competitive situation and cost structures.

■ Sales potential: ● Market potential: Total sales of a product category that all

organisations in an industry are expected to sell in a specified period of time assuming a specific level of marketing activity.

● Sales revenue: Total volume of sales multiplied by the average selling price.

● Market share: Proportion of the total market held by the organisation.

■ Competitive situation: Estimates of sales potential must be conducted in the context of a thorough assessment of the organisation’s competitive situation — the activities of competitors already in the marketplace and their relative market shares.

■ Cost structure: Consider the costs involved in creating, communicating and delivering an offering to meet the needs of each potential market segment.

○ Select target markets: Proceed to decide which market segments it will target and which it will disregard. Organisation will also now better understand how it needs to tailor its offer to best meet the needs of each segment.

○ ● Positioning: Way in which the market perceives an organisation, its products and its

brands in relation to competing offerings. ○ Determine positioning for each segment: Undertake detailed market

research to understand the current position in the minds of the target market segments.

■ Analysing current positioning: Positioning is clearly of strategic importance and, as such, should be undertaken based on rigorous analysis and market research. Positioning is a long-term strategy and, as such, should not be changed frequently unless it is demonstrably necessary.

● Attributes. ● Use / application. ● Product user. ● Price & quality. ● Product class.

■ Competitive positioning & repositioning: Competitive position should be protected and nurtured for the long term by communicating a consistent message and delivering a consistent product and service offering over the long term. In this sense, positions should not be chopped and changed, but rather should be created, nurtured and consistently reinforced.

○ Determine the marketing mix for each segment: Determine an appropriate marketing mix for each target market segment.

■ Consistent with the desired positioning. ■ Internally consistent — each element of the marketing mix should be

coordinated and supportive of the other elements. ■ Sustainable in the long term.

○ Chapter 7:

● Products - goods, services & ideas: ■ Product: Good, service or idea offered to the market for exchange.

○ Total product concept: View of the product that describes the core product, expected product, augmented product and potential product in order to analyse how the product creates value for the customer.

■ Core product: Fundamental benefit that responds to the customer’s problem of an unsatisfied need or want.

■ Expected product: Attributes that actually deliver the benefit that forms the core product that fulfil the customer’s most basic expectations of the product.

■ Augmented product: Product delivers a bundle of benefits that the buyer may not require as part of the basic fulfilment of their needs to significantly differentiate their offerings from those of competitors.

■ Potential product: All possibilities that could become part of the expected or augmented product including features that are being developed, planned or prototyped, as well as features that have not yet been conceived.

■ ○ Product relationships: Organisations produce multiple products or several

different styles of a product. ■ Product item: Particular version of a product. ■ Product line: Set of product items related by characteristics such as

end use, target market, technology or raw materials. ■ Product mix: Set of all products that an organisation makes available

to customers. ○ Product classification: Classified into consumer products and business

products according to the circumstances in which they are bought and their intended use.

■ Consumer products: Products purchased by households and individuals for their own private consumption.

● Shopping products: Consumer products that involve moderate to high engagement in the decision-making process, in the purchase decision being based on consideration of features, quality and price.

○ Last a long time. ○ Purchased relatively infrequently. ○ Stocked by a small number of retail outlets. ○ Sell in low volumes. ○ Large profit margins.

● Convenience products (FMCG): Inexpensive, frequently purchased consumer products that are bought with little engagement with the decision-making process.

○ Staple: Bought and used by consumers regularly, not much promotion for branded staple products.

○ Impulse: Bought with little planning, often purchased only after seeing the item at the retail store, positioned immediately next to the cash register in a store.

○ Emergency: Bought when the product is needed in an emergency.

● Specialty products: Highly desired consumer products with unique characteristics that consumers will make considerable effort to obtain.

○ Pre-selected by the consumer. ○ No close substitutes or alternatives. ○ Available in a limited number of outlets. ○ Purchased infrequently. ○ Sell in low volumes. ○ High profit margins.

● Unsought products: Goods or services that a consumer either knows about but doesn’t normally consider purchasing, or doesn’t even know about.

■ Business-to-business products: Products purchased by individuals and organisations for use in the production of other products or for use in their daily business operations.

● Parts & materials: Business-to-business products that form part of the purchasing business’s products.

○ Raw materials: Unprocessed natural materials that are used in the production process to form part of the business’s products.

○ Components: Processed items that form part of a business’s product, usually incorporated into the business’s product through an assembly process.

● Equipment: Capital equipment and accessory equipment used in the production of the business’s products.

○ Capital equipment: Installations such as buildings and machinery.

○ Accessory equipment: Smaller items that support the production of a product but that do not form part of the product

● Services & supplies: Business-to-business products that are essential to business operations, but do not directly form part of the production process.

○ Business services: Specialised services that support the company’s operations.

○ Maintenance, repair & operating (MRO) supplies: Items that assist in the company’s production and operations but do not form part of the product.

● Product life cycle: ○ Overview of the product life cycle:

■ Product life cycle (PLC): Typical stages a product progresses through - new product development, introduction, growth, maturity and decline.

● New product development: Organisation develops an idea, undertakes research, prepares prototypes, pre-tests the product, and makes modifications before the product launch.

● Introduction: Investment in promotional activities in order to build awareness of, and interest in, the product — in turn to

trigger potential customers to evaluate, trial and purchase the new product.

● Growth: Increasing popularity, sales and profits. ● Maturity: Novelty of the product wears off, alternative —

potentially superior — products become available, and the product’s sales and profitability peak and start to fall.

● Decline: Sales and profits fall, little interest in the current product.

● ○ New product development: When the organisation develops the idea,

undertakes research, prepares prototypes, pre-tests the product and makes modifications before the product launch.

■ New to the market: New technology that has never been seen before.

■ New to the company: Product already in the marketplace but this is the first time it has been produced by a certain company.

■ New to the product line: Product that is an extension of whatever the company currently produces.

■ New to the product: Modifications, enhancements and improvements to a specific product that will revitalise it and move it into a growth stage in the product life cycle.

○ New product development process: ■ Idea generation: Phase in which ideas for new products are created

as the result of a planned approach to generating innovations. ■ Screening: Due to insufficient resources to pursue every product idea

by eliminating those that are not feasible, and to help identify the most promising of those that are.

■ Concept evaluation: Thoroughly tested and developed into a product concept that customers, management and other stakeholders can evaluate.

■ Marketing strategy: Describing the projected sales and profits, market positioning, potential target market, marketing mix strategies and long-term goals.

■ Business analysis: Undertake a business analysis to determine whether the strategy will be a good fit with the company’s current offerings and its overall business objectives.

■ Product development: Convert the product concept into an actual product.

■ Test marketing: Tested in a market setting by assessing the entire marketing mix that supports the product to work out any problems with the marketing mix in a smaller test market than to need to take corrective action nationwide.

■ Commercialisation: Launch the new product into the market. ○ Product adoption process: Sequential process of awareness, interest,

evaluation, trial and adoption through which a consumer decides to purchase a new product.

■ ■ Diffusion of innovation: Theory that social groups influence the

decisions made by individuals in such a way that innovations are adopted by the market in a predictable pattern over time.

● Innovators: Interested in new technology and ideas, and willing to take risks.

● Early adopters: Careful choosers of new products and are often opinion leaders, respected by peers and people in the other categories.

● Early majority: More deliberate in their choice of new product and try to avoid taking risks.

● Late majority: Cautious and sceptical about new products and technologies but will eventually adopt the new product after

most people have purchased it, and due to economic necessity or social pressure.

● Laggards: Often wary of new products and ideas, and generally prefer products that are familiar.

●

● ● Product differentiation: Creation of products and product attributes that distinguish

one product from another. ○ Desires in relation to the product category. ○ Attitudes towards the product offering. ○ Attitudes towards the product’s features.

● Branding: ■ Brand: Collection of symbols such as a name, logo, slogan and

design intended to create an image in the customer’s mind that differentiates a product from competitors’ products.

■ Brand image: Set of beliefs that a consumer has regarding a particular brand.

○ Brand name: Organisations with a well-known brand name are very protective of it and will be willing to spend large amounts of money to ensure it is not used or abused by other individuals or organisations.

■ Trade mark: Brand name or brand mark that has been legally registered so as to secure exclusive use of the brand.

○ Brand equity: Added value that a brand gives a product. ■ Identifies the organisation’s products. ■ Differentiates the organisation’s products from competing products. ■ Attracts customers. ■ Helps introduce new products. ■ Facilitates the promotion of same-brand products ■ Brand loyalty: Customer’s highly favourable attitude and purchasing

behaviour towards a certain brand. ■ Brand metrics: Measure the value of brands is extremely useful to

organisations. ● Brand assets. ● Stock price analysis. ● Replacement cost. ● Brand attributes. ● Brand loyalty. ● Willingness-to-pay analysis.

○ Brand strategies: ● Individual branding: Branding approach in which each

product is branded separately. ○ Help position a product in the marketplace. ○ Help reach a different market segment. ○ Avoid confusion with existing branded products.

● Family branding: Branding approach that uses the same brand on several of the organisation’s products.

● Brand extension: Giving an existing brand name to a new product in a different category.

■ Brand ownership: Owned by and identified with either the manufacturer or the reseller.

● Manufacturer brands: Brands owned by producers and clearly identified with the product at the point of sale.

● Private label brands: Brands owned by resellers, such as wholesalers or retailers, and not identified with the manufacturer.

● Generic brands: Products that only indicate the product category.

● Licensing: Agreement in which a brand owner permits another party to use the brand on its products.

● Franchising: Franchisor permits the franchisee to use its business model, including products, brands, processes and suppliers, and to benefit from coordinated promotional activities.

○ Franchisees pay fees to the franchisor, agree to abide by the systems and rules set out in the franchise agreement and assume the responsibility for the success of the individual franchise.

● Co-branding: Use of two or more brand names on the same product.

● Packaging: To make a product more convenient to store and use, and to protect them from waste, damage or spoilage.

■ Primary package: Holds the actual product. ■ Secondary package: Material used to hold or protect the product & it

can be removed and discarded after purchase. ■ Shipping package: To carry the product out of the factory, and

through the channel of distribution. ○ Labelling: Forms part of the package and provides identifying, promotional,

legal and other information. ■ Brand name and logo. ■ Product name. ■ Size of packaging. ■ Statement of quantity. ■ Origin of goods. ■ Name and address of packer or manufacturer. ■ Representations. ■ Nutritional information. ■ Ingredients list. ■ Use-by date or date of packaging. ■ Barcode.

● Managing products: ○ Approaches to management: Internal environment includes the structure of

the organisation — who is responsible for what. Decisions about how marketing is managed and how products are managed within an organisation can have a significant influence on the success of the organisation.

○ Product / market growth strategy mix: Product/market growth strategy matrix, or the Ansoff matrix which suggests that a business’s attempts to grow will depend on whether it markets its current or new products in the current or new markets. Helps assist managers to understand the different growth strategies and assess their degree of risk.

■ Market penetration: Business increases market share within the existing marketplace by selling more of the current product/service to the existing customers, or finding new customers within the current markets..

■ Product development: Developing new products for the current markets which can mean the development of new capabilities, modifications or an entirely new product.

■ Market development: When a business finds new markets for its existing products involving market research and segmentation of potential markets to identify new customers..

■ Diversification: When a business introduces new products into new markets.

■ ○ Managing products through the life cycle:

● Line extension: New product that is closely related to an existing product in a product line.

■ Repositioning: ● Product positioning: Way in which the market perceives a

product in relation to competing offerings. ■ Product obsolescence: Can be planned or unplanned.

● Product deletion: Process of removing a product from the product mix.

Chapter 8: ● Pricing objectives:

○ Determining pricing objectives: Both a marketing and accounting / finance responsibility and is derived from the organisation’s marketing objectives and financial objectives.

■ Profitability: Make a profit to reward the business’s owners for the risk they take in investing in the business.

■ Long-term prosperity: Ongoing survival as the fundamental goal of a business and brings a long-term perspective to the setting of pricing objectives.

■ Market share: Pricing objectives may be formulated to achieve particular market share outcomes.

■ Positioning: Pricing is a fundamental tool of positioning as consumers almost always compare competing products based on price.

● Product-line pricing: Setting a range of prices in a product line based on differences in manufactured costs, customer perceptions of product features and competitors’ prices.

○ Not for profit pricing: To generate enough funds to sustain their activities. ○ Legal environment: Pricing must comply with various legal restrictions to

ensure that organisations do not take pricing measures that are against the public interest.

■ Comparison discounting: Explicitly quoting a discounted price and the regular higher price together.

■ Bait pricing: Establishing an artificially low price for one item in a product line to attract potential buyers, then trying to sell them a higher-priced item in the product line.

■ Bait & switch: Seller has no intention of selling the lower-priced item and merely uses the ‘bait’ price as a pretext to lure shoppers into the store, then ‘switches’ to the normally priced items.

■ Price discrimination: Price differentials between business customers give one business customer an unfair advantage over another, thus reducing competition. Only allowed when:

● Not adversely affecting competition. ● Differences in the costs of selling or transportation to various

customers. ● Supplier has to cut its price to a particular buyer to meet a

competitor’s prices. ● Relate to volume discounts.

○ Selecting the pricing method: Price should be based on an understanding of the customer, reflect the value of the product to the customer (as well as the cost to the producer).

● Demand considerations: ■ Demand-based pricing: Approach to pricing based on buyers' likely

responses to a range of price levels. ○ Demand schedule & demand curve:

■ Demand schedule: Table showing actual or estimated quantity demanded for a particular good at particular prices.

● ■ Demand curve: Graph showing the relationship between price and

volume sold.

● ○ Price elasticity of demand: Sensitivity of quantity demanded to changes in

price. ■ Price elastic: Demand for which price elasticity is greater than 1 (i.e.

the percentage change in quantity demanded exceeds the percentage change in price).

■ Price inelastic: Demand for which price elasticity is less than 1 (i.e. the percentage change in quantity demanded is less than the percentage change in price).

■ ● Cost & revenue analysis:

■ Price floor: Minimum price that must be charged to cover costs. ■ Price leader: High-volume product priced near cost to attract

customers into the store, where it is expected they will buy other, normally priced, products.

■ Loss leader: High-volume product priced below cost to attract customers into the store, where it is expected they will buy other, normally priced, products.

○ Break-even analysis: Analysis designed to estimate the volume of unit sales required to cover total costs.

■ Fixed costs: Do not vary with changes in the volume of production or sales.

■ Variable costs: Vary directly with changes in the volume of production or sales.

■

■ ○ Marginal analysis: Analysis designed to determine the effect on costs and

revenue when an organisation produces and sells one more unit of product. ■ Average cost: Total cost divided by volume of production. ■ Marginal cost: Cost to produce and sell one more unit of output. ■ Average revenue: Total revenue divided by total unit sales volume. ■ Marginal revenue: Revenue obtained by selling one more unit of the

product. ○ Pricing based on costs: Achieving target profit margins and aggregate

profits. ■ Cost-based pricing: Approach to pricing in which a percentage or

dollar amount is added to the cost of the product in order to determine its selling price.

■ Cost-plus pricing: Used when it is difficult or impossible to determine the costs of the product until it has been made or completed.

■ Markup pricing: Used by wholesalers and retailers and involves adding a percentage of their purchase cost to determine the resale price.

● Competition considerations: ■ Competition-based pricing: Approach to pricing based on the prices

charged by competitors or on the likely response of competitors to the organisation’s prices.

■ Economies of scale. ■ Low-cost production.

○ Understanding competitors’ pricing: Business should almost always consider prices set by its competitors, although the importance of competitors’ prices will vary with the number and intensity of competitors in a market and with the degree of perceived uniqueness of the business’s products.

■ Monopoly: Can determine price without regard to competition.

■ Perfectly competitive market: Individual sellers have no control over the price.

■ Monopolistic competition: If a company's product is perceived to be unique, the organisation enjoys considerable flexibility in its prices.

○ Alternative to competing on price: Most organisations seek to compete using a strategy of ‘differentiation’, which emphasises the uniqueness of the organisation’s products.

■ Product quality. ■ Innovation. ■ Brand image. ■ Styling. ■ Customer service. ■ Distribution coverage. ■ Local convenience.

● Business-to-business pricing: Market consisting of individuals and organisations that purchase products for use in the production of other products, for use in their daily business operations, or for resale.

○ Pricing for intermediaries: Organisations will only choose to deal with intermediaries who can add value to the organisation’s offering.

■ Functional discounts: Percentage reduction off the list price and are provided by suppliers to marketing intermediaries or business customers in return for the various functions they perform such as retailing, transport and providing credit.

■ Quantity discounts: Provided to business customers that purchase large volumes. Can be based on single transactions or on the total purchase volume in a specified period.

■ Seasonal discounts: Provided to buyers who purchase products outside the peak selling period of the year.

■ Cash discounts: Offered to customers who pay promptly and who thus save the supplier time and money in managing and collecting accounts receivable.

■

■ ○ Pricing for distribution:

■ Geographic pricing: Pricing strategy that includes price differentials based on those costs that vary with distance between the buyer and seller.

■ Free on board destination (FOB destination): Seller has built the transport costs into the price.

■ Free on board origin (FOB origin): Price excludes the delivery costs, which must then be met by the buyer.

● Price management: ○ Psychology of pricing: Consumer purchasing behaviour is usually based on

a rational evaluation of value. ■ Customer value perception:

● Internal reference price: Price expected by consumers, largely based upon their actual experience with the product.

● External reference price: Price comparison provided by the manufacturer or retailer.

● ○ Pricing throughout the product life cycle:

■ Pricing new products: ● Penetration pricing: Pricing tactic based on setting a low

price in order to gain rapid market share and turnover for a new product.

● Price skimming: Charging the highest price that customers who most desire the product are willing to pay, and then later lowering the price to bring in larger numbers of buyers.

● Pricing established products: ○ Differential pricing: Practice of charging different

buyers different prices for the same product. Must be able to:

■ Identify market segments, or individual customers, that have different price sensitivities.

■ Administer the differential pricing in such a way as to avoid confusing or antagonising customers, or potential price discrimination.

■ Prevent the development of a ‘secondary’ market, in which low-paying customers resell the product to customers who would have been charged a higher price by the organisation.

○ Promotional pricing: Combination of a pricing approach with a promotional campaign.

■ Random discounting: Temporary price reductions implemented in an unpredictable fashion.

■ Everyday low prices (EDLP): Forgoes the advantages of differential pricing through discounts, but offers easier administration, more predictable sales volumes and lower inventory and promotional costs.

○ Trade-in allowances: Discounts based on a customer returning used products when buying new products.

■ Setting & managing the final price: Price must always be monitored as factors can change over time & that it is essential that the final price should be perceived by potential customers as consistent with all elements of the organisation’s offer, so that consumers believe they are receiving fair value for the price.

Chapter 10: ● Distribution channels: Group of individuals and organisations directing products

from producers to end users. ■ Marketing intermediaries: Individuals or organisations that act in the

distribution chain between the producer and end user. ■ Intensive distribution: Approach to market coverage that distributes

products through every suitable intermediary. ■ Exclusive distribution: Approach to market coverage that distributes

products through a single intermediary in any given geographic region. ■ Selective distribution: Approach to market coverage that distributes

products through intermediaries chosen for some specific reason. ■ Make products available to the consumer at the time that the

consumer wants to purchase them. ■ Make products available in the locations that the consumer wants to

purchase them. ■ Customise products to the consumer’s particular needs. ■ Make transactions as efficient, simple and cheap as possible for

consumers, producers and other intermediaries by establishing and managing efficient exchange processes.

○ Consumer product distribution channel: ■ Channel 1: Producer deals directly with the consumer. Producers

must also effectively manage distribution and deal with customers one-on-one.

● ■ Channel 2: Producers provide their products directly to retailers for

sale to consumers.

● ■ Channel 3: Producers sell to wholesalers who then sell on to the

retailers

● ■ Channel 4: Complexities of dealing with different legal, regulatory and

cultural factors suggest an experienced and skilled agent will be able to more effectively deal with intermediaries in the foreign market.

● ■ Channel 5: Commonly used in the financial services industry.

● ○ Business-to-business product distribution channels:

■ Channel 1: Business buyers are usually buying products that are crucial to their own business success and often want to deal directly with the producer so they can be sure of direct access to information and assistance.

● ■ Channel 2: Industrial distributors play roughly the same role in the

business-to-business product channel as retailers do in the consumer product distribution channel.

● ■ Channel 3: Agent in the business-to-business products market is an

intermediary who plays matchmaker between producers and organisational buyers and is paid a commission on the sales they bring to the producer.

● ■ Channel 4: Agent takes a commission on sales it secures with

industrial distributors.

● ○ Supply-chain management: Approach to managing marketing channels

based on ongoing partnerships among distribution channel members that create efficiencies and deliver value to customers.

■ Distribution channel partnerships: Each party in a distribution channel has expectations of and obligations to other parties in the channel. When one member of the distribution channel can exert power over the ability of other members of the channel to achieve their

goals, that powerful member is known as the channel captain and is said to have channel power. Distribution channel is only effective when all channel members benefit from their involvement.

■ Horizontal & vertical channel integration: ● Horizontal channel integration: Bringing organisations at the

same level of operation under a single management structure. ● Vertical channel integration: Bringing different stages of the

distribution channel under a single management structure. ○ Vertical marketing system: Distribution channel in

which all stages occur under a single management structure.

■ Franchising: Approach to business in which one party (a franchisor) licenses its business model to another party (a franchisee).

● Franchisor: ○ Licenses the right to use its business model or to sell its

products. ○ Provides services such as advertising, business

know-how and supplier networks. ○ Stipulates standards and rules by which the franchise

business must operate. ○ Sometimes promises exclusive rights to a particular

geographic area. ● Franchisee:

○ Pays the franchisor a fee and/or percentage of sales receipts

○ Supplies labour and capital. ○ Operates the business in accordance with the

conditions of the franchise agreement. ● Distribution of goods: Physical products moved from producers to consumers.

○ Order processing: Managing the information required to receive, handle and fill a sales order.

○ Inventory management: ■ Order lead time: Usual time between placing an order and receiving

the stock. ■ Usage rate: How much stock is sold during a particular period of time. ■ Safety stock: Quantity of stock held to cover unexpectedly high sales

and/or unexpectedly long order lead times. ■ Just-in-time (JIT): Approach to inventory management that involves

holding only that stock that is about to be used or sold. ○ Warehousing: Use of facilities to store and move goods.

■ Distribution centre: Warehouse focused on moving rather than storing products.

■ Cross-docking: Practice of expediting the movement of goods from receipt to shipping.

● Products designed with cross-docking in mind ● Protective packaging that reduces or eliminates the need to

check the state of the products on receipt.

● Packaging that is suitable for sale, eliminating the need for repacking

● Labelling that can be computer-read and is suitable for retail use.

● Close cooperation, communication and coordination between the suppliers, distribution centre and customer.

■ Materials handling: Physical handling of goods. ● Use of standard pallets to enable machinery to efficiently move

products. ● Use of standard containers to hold many small items to enable

their efficient transport. ● Special demands / containers due to the nature of the product.

○ Transportations: Process of moving products from their place of manufacture to their place of consumption.

● Freight forwarders: Specialist transportation businesses that combine cargo from different businesses in order to achieve efficient load sizes.

■ Choosing a mode of transport: Choice of mode of transport comes down to factors such as availability, cost, speed, flexibility, reliability and environmental impacts.

● Road: Offers the most flexibility of all the modes of transport because it has the most extensive infrastructure.

● Rail: Best suited to bulky items that need to travel long distances over land.

● Sea freight: Takes advantage of the massive cargo capacity of ocean-going vessels and is used for bulky items that do not need to be rushed to their destination.

● Air freight: Most suitable for perishables, lightweight items, urgent deliveries and high-value items.

● Pipelines: Specifically used for water, oil and gas.

● ○ Technology in physical distribution:

○ ● Distribution of services: Usually produced at the time of consumption and so the

notion of ‘service distribution’ is quite different to physical distribution. ■ Physical distribution is required for the physical inputs used in

producing and delivering the service product. ■ Some services are delivered using infrastructure. ■ Service businesses must ensure that the labour is available at the

right time and in the right quantities to ensure customers can be served.

○ Physical inputs: Creation and delivery of most services products requires physical inputs, therefore service business must ensure that the various physical inputs it needs to deliver the service are available.

○ Delivery infrastructure: Some services are distributed via a physical infrastructure therefore service providers bring the service to the customer.

○ Scheduling: Designed to smooth demand by managing inventory to minimise holding costs yet maximise availability to consumers.

● Retailing: Any exchange in which the buyer is the ultimate consumer of the product. ○ Retailing strategy: Physical presence.

■ Location: ● Natural geographic area from which customers will be

drawn: Locate retail stores close to their target customers. ● Proximity to competitors: Retailers might try to choose to be

removed from competitors or to be close to them. ● Proximity to complementary retailers: Groups of stores, if

they are the appropriate mix, can draw more customers overall

than any of the stores could manage by themselves.Groups of stores, if they are the appropriate mix, can draw more customers overall than any of the stores could manage by themselves.

● Customer access to public transport & public parking: Most customers will need to travel to get to a store therefore retailers should choose locations that make this convenient for the customer.

■ Positioning: Practice of identifying a gap in the market and targeting it by creating some distinguishing feature in the mind of customers. Store’s image is an important factor in attracting customers and positioning the store against competitors.

○ Benefits of retailers: Adds value for customers and producers by creating or providing the following:

■ Time utility: 24-hour service stations and corner shops ensure consumers can buy a range of basic goods when they need them.

■ Place utility: Retailers move products closer to the consumer & ensure consumers do not need to go directly to producers / wholesalers to make purchases.

■ Form utility: Customise products to the consumer’s particular needs and preferences.

■ Advice & personal service: Retailers are geared to deal with customers one-on-one, providing advice and personal service.

■ Exchange efficiencies: Retailers reduce the number of parties that producers and wholesalers must deal with and reduce the number of sellers that consumers must deal with. Retailers can offer consumers a wide range of products from numerous producers all in one place.

○ Types of retailers: ■ Specialty retailers: Carry just one or a small number of different

types of products, but within that product line, they carry a great deal of variety.

■ General-merchandise retail stores: Offer a wide variety of products. ■ The ‘wheel of retailing’ theory:

● Wheel of retailing: Theory that retailers enter the market with low costs, low margins and low prices, but move to high costs and high prices as they seek to compete with copiers, only to then have to compete with new low-price entrants.

● Retailers enter the market using some innovation to achieve low costs and use that to charge low prices.

● Other new and existing retailers copy the low-cost innovation and compete directly with the new entrants.

● To distinguish itself, the retailer adds extra services, improves its location and store image, and so on, which results in higher costs and higher prices.

● New retailers enter the market using some new innovation to achieve low costs and then compete with the original, now high-price, retailer.

■ Online retailing: Selling to customers via the internet.

● Mobile e-commerce: Use of a mobile phone to make purchases.

■ Other forms of retailing: ● Direct marketing: Type of non-store retailing that promotes

and sells products via mail, telephone or the web. ● Telemarketing: Performance of marketing-related activities

over the telephone. ● Catalogue marketing: Marketing organisation provides a

catalogue to customers who then place their orders by mail, telephone or the internet.

● Direct-response marketing: Requires customers to use the mail, internet or telephone to make a purchase by using advertising, such as a brochure in a mailbox, spam or a television advertisement.

● Door-to-door selling: Practice of a salesperson walking door to door to promote products to people at home.

● Automatic vending: Use of machines to dispense a product; used for small, routinely purchased products.

● Agents & brokers: Intermediaries that connect customers, industrial buyers and other participants with each other in the distribution channel.

○ Agents: Marketing intermediaries engaged by buyers or sellers on an ongoing basis to represent them in negotiations with other parties in the marketing channel.

■ Manufacturers’ agents: Selling specified, non-competing products in a particular region under standard terms and conditions.

■ Selling agents: Used by small producers that cannot afford a salesforce or marketing department. Selling agents usually work for multiple producers, but do not take on competing products.

■ Buying agents: Purchases and handles goods for long-term partners, such as retailers.

■ Commission merchants: Receive goods on consignment and negotiate the best possible price in centralised markets.

○ Brokers: Marketing intermediaries engaged by buyers or sellers on a short-term or one-off basis to represent them in negotiations with other parties in the marketing channel.

● Wholesaling: Exchanges in which products are bought for resale, for use as inputs in other products, or for some other use in a business.

○ Major wholesaling functions: Connection between producers and retailers and offer benefits to both.

■ For producer: ● Act as a salesforce, promoting and selling its products to

retailers. ● Hold and manage inventory, relieving the producer’s

warehousing and transport burden. ● Assume the risk when retailers are given products on credit. ● Provide cash flow by paying for and taking possession of

inventory shortly after it is produced. ● Communicate producer and market issues to retailers.

■ For retailers: ● Manage distribution. ● Help choose and source appropriate inventory ● Have bulk buying power and the ability to negotiate good deals

with producers. ● Provide access to a wide range of goods through one business

partnership. ● Can provide sophisticated technology solutions to manage

ordering. ● Can provide credit. ● Communicate market and retail issues to producers.

○ Types of wholesalers: ■ Merchant wholesalers: Independently owned wholesaling

businesses that take title to products. ● Full-service wholesalers: Perform the full gamut of

wholesaling activities, and retailers and producers rely heavily on them for numerous services.

○ General-merchandise wholesalers: Carry a wide variety of product lines, but relatively little depth within those product lines.

○ Limited-line wholesalers: Carry only a few different product lines, but have considerable depth in each line.

○ Specialty-line wholesalers: Carry a single product line and only a few items within that line.

● Limited-service wholesalers: Specialise in a narrow range of wholesaling services, leaving it to producers and retailers to perform for themselves many of the functions provided by full-service wholesalers.

○ Cash & carry wholesalers: Supply a limited number of lines of high-turnover products to small businesses, which pay in cash and transport the products themselves.

○ Drop shippers: Purchase from producers and sell to retailers, but organise shipment directly between those two parties rather than take possession of the products.

○ Mail-order wholesalers: Use catalogues and mail or courier services rather than salespeople and their own transport to promote, sell and deliver goods to retailers.

■ Manufacturers’ wholesalers: Wholesalers owned by the producer.

Good luck lmao