Marketing exam
Chapter1
Marketing definition
It is the process by which companies create value for customers and build strong customer relationships to capture value from customers in return
Market
Set of current and potential buyers having needs, wants, and demands.
Value proposition/ Offer
set of benefits or values a company promises to deliver to customers to satisfy their needs
it is through market mix:
· Product
· Price
· Place
· Promotion: advertising, selling, publicity
Exchange is obtaining a desired object from someone by offering something in return
It happens when buyer is convinced of offer
Relationship is actions to build and maintain desirable relationships
Differences between marketing and related activities
Marketing is umbrella of other activities
Marketing orientations: 5 types
· Production concept:
mass output regardless of market demands. It is useful at monopoly, after wars or highest demand as bread, electricity and gas.
Examples: Egypt textiles, Nasr Cars and military factories
· Product concept:
quality, design and performance to attract buyer. technical aspect by Engineer
there is no marketing effort.
Examples: Swiss watches, England motorcycles
· Selling concept: large sales effort to convince of quality (hard sell).
It uses direct marketing, telesales and tele-marketing
Quality product with little care of customer demand.
It focuses on creating sales transaction rather than building long term customer relationships.
Examples: Time Share, home appliances, telemarketing, credit cards
· Market concept: taste and fashion. customer-driven. quality and taste. Customer is the inspirer
know the needs and wants of the target markets and deliver desired satisfactions better than competitors do
coordination with production, purchasing, selling, customer service
achieve long term customer satisfaction hence long term profit
Examples: DHL, MS, Mc
· Societal concept
As marketing beside considering long term society interests.
It keeps balance between 3c's, company, consumer, and community
Example: avoid pollution as paper instead of plastic packages
Application: 3
*3. The following is a number of activities which are related to the marketing mix. Read each activity carefully, and then determine the marketing mix element to which it pertains.
a. Selling three pieces of toilet soap at the price of two.
Sales Promotion (Promotion)
b. Sending a qualified marketer to a university to persuade its decision markers to buy computers produced by his company.
Personal Selling (Promotion)
c. Redesigning a refrigerator in order to consume less electricity.
Quality (Product)
d. Home-delivery of dairy products.
Service (Product: Augmented)
e. A grocery store opens 24 hours/day.
Distribution (Place)
Case: Arab Organization
Production then Product then Selling
The Arab Organization for Industrialization[*]
The Arab Organization for Industrialization (AOI) was established in Egypt in the mid 1970's by four Arab countries (Egypt, U.A.E., Kingdom of Saudi Arabia and Quarter). Its main objective has been to satisfy the Arab Countries’ needs and seek their common interests. AOI includes a number of factories which primarily manufacture military products as well as a very limited number of civil products at a small scale.
AOI’s performance was excellent until the late 1970's, when the demand for its military products sharply declined. As a result, the organization’s management has concluded that it has to expand its civil products. Otherwise, the rate of utilization of its factories production capacity as well as other resources available would be too low, causing its costs to go up, and its profits to go down.
The organization has started to manufacture civil products such as: television sets, gas cylinders, plastic products, and office and home furniture. AOI's concern was what its factories could produce of these products at a high quality level by which it is known.
As a result of the nature and characteristics of the labor force (highly skilled) as well as the machines and equipment (more expensive than equivalent equipment used by similar businesses) used by AOI in military products, its production costs have been higher than other competing industrial companies. Consequently, its prices are always higher than its competitors’ prices. This has caused AOI to face difficulties in marketing its products despite the fact that their quality is much higher than the quality of the competing products and AOI’s good reputation that is very well known.
The AOI marketing people have been trying hard to persuade customers to buy their factories’ products emphasizing such factors as: AOI’s quality, product features, and minor price reductions. However, the results of such efforts have not been as desired.
Marketing people made extraordinary effort to persuade AOI’s personnel who are in charge of setting the prices of the organization’s products, to change the pricing method used, which was basically a total cost plus a profit margin. Changing from the total-cost plus pricing method to another method would result in more flexibility in pricing the organization’s products. However, this was impossible, since the cost accounting system could not be changed and, as a result, the pricing method could not be changed either.
Marketing people were blamed for not being able to sell AOI’s products. They were told by other non-marketing personnel that a good marketer can sell anything to customers in the market. In contrast, marketing people complained that what was done by other non-marketing personnel and departments led to complications in their marketing tasks.
The end result was that AOI did not succeed in marketing most of its civil products. This negatively affected its revenues and profits. The organization’s capacity utilization rate was low, and there was an excessive inventory of some products.
Questions for Discussion:
1- What was (were) the orientation(s) / philosophy (ies) of AOI? What indicators can be used to identify such an orientation(s) /philosophy (ies) in the case?
Production / Product / Selling
2- In your opinion, what should AOI do in order to successfully market its products?
Cost-plus to market-based pricing method
Questions:
· Scope of marketing: definition & aspects
· Market orientations
· Market mix components
Chapter7
Marketing Segmentation
What is target segment and how to design plan for it?
What / Definition
It is to divide a whole market to smaller markets to serve each one with different marketing mix
Why / Purpose
· exploit emerging opportunities in the market place as organic food and ready food
· achieve better allocation of resources to get better profit
· differentiate in the market place
· improve company image and reputation
· prepare effective market plan
how / Methods
According to purchase behavior factor:
· geographic
different zones as counties, regions, …..
example:
o multinational companies as for drugs and cars: make gulf specifications for Toyota cars
o cloth shops
· demographic
different groups according to human aspects as gender, age, religion, income, occupation, education
· psychographic
social class
life style: Pepsi generation, fast food, residential compounds
personality traits: adventurers, achievers, religious
· behavioral
knowledge, attitudes, usage rate, occasions as Ramadan
application: 1 page 204
sports cars:
Product / geographic / demographic / psychographic / BehavioralSports cars / Income / Life style
soft drinks / Age / Life style / Benefit
personal computers / Occupation, education
fast food / Countries / Income / Life style
Mobiles / Income / Life style
visa card / Income
Q
basis of segmentation:
does the company use the proper way for segmentation or not?
Chapter8
Product definition
anything that can be offered in a market for attention, acquisition, use, or consumption that might satisfy a need or want
product types
1- physical
2- intangible: service
3- place: as for tourism
4- idea
5- experience
6- information
7- people: foot players
8- property
9- events
10- organizations
Levels of Product and Services
· Core benefits represent what the buyer is really buying: water for drink, washer for washing, cinema for films.
It is not useful for marketing as all instances provide the same benefit
· Actual product represents the design, brand name, and packaging that delivers the core benefit to the customer
Specification used in comparison between providers.
Example: car safety, fuel economy, price
· Augmented product represents additional services or benefits of the actual product
Example: car guarantee, washing
Consumer products are products and services for personal consumption. Classified by how consumers buy them
• Convenience product
customer usually buys frequently, immediately, and with a minimum comparison and buying effort as Newspapers, Candy, Fast food
• Shopping products
customer compares carefully on suitability, quality, price, and style as Furniture, Cars, Appliances
• Specialty products
with unique characteristics or brand identification for which a significant group of buyers is willing to make a special purchase effort as Medical services, Designer clothes, High-end electronics
• Unsought products
consumer does not know about or knows about but does not normally think of buying as Life insurance, Funeral services, Blood donations
Product and Service Classifications
Convenience / Shopping / SpecialtyEffort / Limited / Relatively high / Very high
Price / Low / Relatively high / Very high
Turnover / High / Average / Very high
Margin / Low / Relatively high / Very high
Advertising / Mass Advertising / Personal selling / Direct marketing
Distribution / Intensive / Selective / Exclusive
Q
Product levels
Types of consumer products
Application: 4
*4. The following is a number of consumer products. Indicate to which product category (convenience-shopping- specialty and unsought products) each of these products belongs, and why?
a. Insurance against fire. d. Cars
-Un Sought (Un willing to buy) -Shopping (Competition)
b. Milk e. Expensive and famous sports-ware
-convenience: Price low - Effect less- Turn over high -Specialty (used by high income segment)
-Margin Intensive – Distribution high -Turn over high - margin exclusive- price high
-Promotion advertising -effect high - Distribution -Promotion
c. Newspapers (Convenience) f. Soft drinks (Convenience)
-Price low - Effect less- Turn over high -Price low - Effect less- Turn over high
-Margin Intensive – Distribution high -Margin Intensive – Distribution high
-Promotion advertising -Promotion advertising
Case: The Generic Products[*]
In the late 1970's, a new type of consumer products was marketed in a number of states in U.S.A., one of which was Arizona. These products were referred to as generic/ unbranded products.
The generic/unbranded products include such consumer goods like canned food products (e.g., beans, tomato sauce, tuna fish, jams and preservatives) as well as other consumer products like macaroni and rice.
The prices of such products were much less than the prices of similar branded products (whether distributor’s or manufacturer’s brands). They were sold at an average price which was lower by more than 35% of the price of the branded products. These products met the minimum requirements set by the law and various concerned agencies (e.g., the Federal Trade Commission of U.S.A.), most of which were even produced by well-known companies. However, for some products, the generic product was not exactly similar to the product that has a brand in quality or specifications. Therefore, their manufacturers’ costs were lower than similar branded products, whether produced by the same manufacturer (of both generic and branded products) or produced by other manufacturers who produced only branded products.
In addition, since the promotional expenses of these products were minimal, advertised primarily on newspapers as a group of products rather than advertising each product, their marketing costs were less than similar branded products.
To make these products easy to locate by consumers at the supermarkets, most supermarkets allocated a certain place where all these products were displayed in an attractive way.
A pilot study was conducted to determine the reasons these products were not bought by a certain segment of consumers. The data collected revealed that these reasons were related to such variables like taste, which was not as good as the branded products, quality and features.
To measure whether consumers were able to differentiate between generic food products and similar brands of food products, a field experiment was conducted at one of Fry’s supermarket stores in the Tempe-Phoenix area of Arizona. It utilized peanut butter, as one of the popular food products sold in grocery stores and a representative sample of female consumers in the supermarket.
The experiment was basically a blind-folded taste test of three samples of three different peanut butters. The samples were: generic/unbranded, distributor’s (own/ private) brand, and a national brand peanut butter. Before asking the subject to taste, a short questionnaire was used to collect data about the subject, including, her preferred type of peanut butter that she bought, reasons for that, as well as some personal data. Most subjects tended to prefer, buy and use the national peanut butter brand for such reasons as better taste, features and quality, compared to other products (generic or other non-national brands).
Then, every subject was asked to taste each of the three samples of peanut butter. The three samples were randomly rotated every time a new subject was about to taste the peanut butter. The subject was asked to take a sip of a neutral soft drink between tasting one sample and tasting the second one in order to remove the effect of the taste of one sample on the other.
After tasting the three samples of peanut butters, the subject was asked to indicate which one tasted better. Surprisingly, the peanut butter chosen by most subjects as the one that tasted best was the generic/unbranded product. When the subjects were told that the product chosen and preferred was the generic product, they were astonished and could not believe it. They indicated that they would switch form their usual brands to it, since it tasted better and the price was much lower than other products’.
At the end of the experiment and after collecting the required data, the subjects were thanked by the researchers for their participation in the experiment. To show that the researchers appreciated the subjects’ participation, they were taken to a corner where jars of the three types of peanut butter were available, and they were told that they could choose any jar and take it as a gift. Almost all the subjects chose the national brand to take as a gift.
Questions for Discussion
1. How can you evaluate the generic/unbranded products from a marketing viewpoint?
As a marketer point of view my evaluation is the generic products attract the market segment by a generic offer with low prices, That prices of such products were much less than the prices of similar branded products (whether distributor’s or manufacturer’s brands). They were sold at an average price which was lower by more than 35% of the price of the branded products)