School Of Forestry And Rural Industries

Hilkka Jankkila, Principal Lecturer, ROVANIEMI POLYTECHNIC, School of Forestry and Rural Industries

Lectures = basic concepts and processes of – Marketing ( 3 x 3 h )– Product development ( 1 x 3 h )– Quality management ( 1 x 3 h )

Group working with practices ( 10 h ) Excursions / notes / analysis ( 24 h ) Exam and evaluation: ( 4,5-6 Hungarian credits )

-Active participating in the lectures + group reports; Hungarian and Finnis

students together prepare reports ( 2-3 groups ), see “Practises 1 and 2 “

-The Hungarian students give exam to professor Horvath Gabor

-The Finnish students have a written test and more practice in F inland

MARKETING -Jankkila 2004 -

MARKETING – PRODUCT DEVELOPMENT – QUALITY MANAGEMENT

Literature in English:

Lancester, Geoff - Reynolds, Paul. 2004.

“ Marketing “

Kotler, Philip – Amstrong, Gary. 2004.

“ Principles of Marketing “


THE MARKET

• A environment where the demand and supply meets each other and the marketing occurs

• A group of people, who needs and wants products/services/experiences/information and who have buyingpower to satify their needs

• The set of all actual and potential buyers of a product or service ( Kotler-Amstrong 2004 )

MARKETING - Jankkila 2004 -


MARKETING”A social and managerial process whereby individuals and groups obtain what they need and want through creating and exchanging products and value with others” –Kotler-Amstrong 2004; Principles of marketing

CONCEPTS*needs *wants *demands, *marketing offers = products, services, experiences*value *satisfaction *exchanges*transactions *relationships*markets

MARKETING > A comprehensive, well planned social and managerial process > Market and environment analysis to get information about demand, cutomers, competition > Studying the needs and wants of the customers/ creating needs> Developing products satifying those needs and wants > Pricing > Presentation ( information, Public Relations, sales promotion, advertising,

profiling ) > Distribution > Personnel, Service process, Physical Evidence

OBJECTIVES AND TARGETS> The business is economically profitable> The customers are satisfied


THE MARKETING PROCESS MODEL- Lancester-Reynolds 2004 -

Marketing Sales Buyer

recearch forecastingbehavior

SUPPLIER CUSTOMER

Product Price Distribution Promotion Personal Segmentation

Channels Logistics selling targeting and

positioning

Information Public Relations


Advertising Sales promotion

MARKETING AND PRODUCT DEVELOPMENT

Market recearch - Feedback MARKET - CUSTOMERS

Administration MARKETING Financing

PROMOTIONPRODUCT DISTRIBUTION SERVICE PRICING

Ideas Channels Logistics - StrategiesLegis- Ideageneration - Price -lation Ideascreening defining

Concept developmentCompe- Business planning Production Packingtitors and evaluation - procedures -materials

Product development - capacity -proceduresTest market - quality assurance -the needs of Launch - raw materials customers, retails and wholesalers,


MARKETING ALONGSIDE OTHER ELEMENTS OF BUSINESS

Production

Marketing

Finance CUSTOMER Recearch and

development

Marketing

Human secource

management


MARKETING MANAGEMENT ORIENTATIONS -Kotler-Amstrong 2004-

PRODUCTION CONSEPT

Consumers favor the products which are available and highly

affordable. Focus on improving production and distribution

efficiency

PRODUCT CONSEPT

Consumers favor products that offer the most quality,

performance and features. Focus on continous product

improvements

SELLING CONSEPT

Consumers do not buy enough unless the firm undertakes a

large-scale selling and promotion effort



MARKETING CONSEPT Customer focus and value = paths to sales and profits.

Customer-centred sense and respond. Find the right products for customers.

CUSTOMER RELATIONSHIP MANAGEMENT = CRM

Create profitable relationships with the customers. Customer database management activity. Achieve customer’s loyalty

Bacic realtionship, full partnership Financial and social benefits, frequency marketing programs, club marketing programs



Selling ( 1 )and marketing ( 2 )concepts contrated:

Starting point Focus Means Ends

1 Factory Existing Selling Profits throughproducts and promotion sales volume

2 Market Customer Intergated Profits throughneeds marketing customer

satisfaction


-

SOCIETAL MARKETING CONSEPT- Kotler-Amstrong 2004 –

organization / firm should determine the needs / wants / interests of target markets

deliver the desired satisfactions more effeciently and effective than the competitors do

in a way that maintains or improves the consumer´s and society´s well being

*Quality management and assurance !

*Environmental quality management !

MARKETING -Jankkila 2004

SOCIETAL MARKETING

SOCIETY Human welfare

SOCIETAL MARKETING CONCEPT

CONSUMERS COMPANY Want satisfaction Profits

Conflicts between consumer shot term wants and consumer long-run welfare??


MARKETING ENVIRONMENT

MICRO ENVIRONMENT1. Elements over which a firm has control ( marketing mix = 4 + 3 Ps ) or which it can influence in order to gain information that will help it in its marketing operations –Lancester-Reynolds 2004-

2. Actors close to firm/company that affect its ability to serve the customers = company, suppliers, marketing intermediaries, customer markets, competitors- Kotler-Amstrong 2004 -

MACRO ENVIRONMENT-all forces and agencies external to the marketing firm itself>close to firm = customers, suppliers, agents, distributors, other íntermediaries, competing firms, public - Lancester-Reynolds 2004-,

>wider external = legal, cultural, economic,demographictechnological subenvironments, political -(Kotler-Amstrong & lancester-Reynolds -



• COMPANY>top management, finance, recearc&development,

purchasting, operations, accounting

• SUPPLIERS>raw material suppliers,

• INTERMEDIARIES>firms that helps the company to promote, sell, distribute the goods to

final buyers; resellers, phycical distribution firms, marketing service

agencies, financial intermediers



• CUSTOMERS>consumer markets = individuals and households > personal

consumption

>business markets = buy goods and services for further processing or

for use in their product process

>reseller markets = buy goods and services to resell at a profit

>government markets = buy goods and services to produce public

services or transfer them to people who need them

>international markets = buyers in other countries

• COMPETITORS>other firms



• PUBLICS>groups that have an actual or potential interest in or impact on an firm`s ability to achieve its objestives

-financial publics = banks, funds, investment houses, stocholders …-media publics = newpapers, television stations, editorial opinion …-government publics = product safety, truth of advertising ..-citizen action publics = consumer organisations, environmental groups, minority groups …-local publics = community organizatios …-general public and the public´s attitudes and images of company-internal publics = workers, manaagers, directors …


MARKETING ENVIRONMENTMacro environment

• DEMOGRAPHIC

-human population’s size, density, location, age, gender,

race, occupation …

• ECONOMIC

-factors that affect consumer buying power and spending

patterns = income changes, income distribution, classes,

changing consumer spending patterns

• NATURAL

-natural recources that are needed as inputs by

marketers or that are affected by marketing activities



• TECHNOLOGICAL

-froces that create neeeew technologies, creating new product and market opportunities

• POLITICAL

-increasing legislation regulating business

-laws, government agencies, pressure groups, ethics and socially

responsible actions ( social codes and rules)

-protect compnies from each other, protect consumers from unfair

business practices

• CULTURAL FORCES

>institutions and forces that affect ssocietys´s bacic values,

perceptions, preferenc es and behaviors


BUYER BEHAVIOURFocus on the consumer buyer behaviour

• The acts of individuals directly involved in obtaining and using economic goods and services, including the decision process that precede and determine these acts-Lancester-Reynolds-

• Consumer buyer behaviour - the buying behaviour of final consumers = individuals and households who buy goods and services for personal consumption –Kotler-Amstrong-

• Consumer = most important of the marketing environment

=> the firm must know : WHAT, WHEN, HOW, WHY the customer buyes


MODEL OF BUYER BEHAVIOUR –Kotler-Amstrong

MARKETING AND BUYER’S BUYER’S

OTHER STIMULI BLACK BOX RESPONSES

Marketing Other Buyer Buyer Product choice

Product Economic character decision Brand choice

Price Technologicál istics process Dealer choice

Place Political Purchace timing

Promotion Cultural Purchace amount

MARKETING –Jankkila 2004 -

a

FACTORS INFLUENCING CONSUMER BEHAVIOUR –Kotler-Amstrong 2004 -

CULTURAL SOCIAL PERSONAL PSYCHOLOGICAL Culture Reference Age and life- MotivationSubculture groups cycle stage PerceptionSocial class Family Occupation Learning

Roles and Economic Beliefs andstatus situation attitudes

Lifestyle Personality and self-concept

For the most marketers can not control such factors – but they must be taken into account –


Hierarcy of needs by Maslow

SELF

ACTUALISATION

Creativity fulfillment, Pursue

RESPECT AND SELF-ESTEEM

Achiement qualifications

SOCIAL NEEDS

Recognition and belonging, friends , family

SAFETY NEEDS;

Protection, security, stability, Freedom of fear

PHYSIOLOGICAL NEEDS; Hunger, Thirst, shelder, warmth


BUYERS DECISION PROCESS –Kotler-Amstrong-

Lancester-Reynolds -

PROBLEM / NEED RECOGNITION

INFORMATION SEARCH

EVALUATION OF ALTERNATIVES

PURCHASE DECISION

POSTPURCHASE BEHAVIOUR


STAGES IN THE ADOPTION PROCESS – NEW PRODUCT –Kotler-Amstrong- Lancester-Reynolds-

1. AWARENESS

2. INTEREST/INFORMATION

3. EVALUATION

4. TRIAL

5. ADOPTION

6. POST-ADOPTION CONFIRMATION


DIFFUSION PROCESS OF INNOVATIONS Rogers, Kotler-Amstrong, La´ncester-Reynolds

34 % 34 %

Early Late

majority majority

2,5 % 13,5 % 16 %

Innovators Early Laggards

adopters


SEGMENTATION–TARGETING– –Kotler-Amstrong 2004 -

MARKET SEGMENTATION =- Dividing the market into distinct groups with distinct

needs, characteristics or behaviour who might require separate products or markettin mixes - geographic, demographic, psychographic, behavioral

TARGET MARKETING =- The process of evaluating each market segment’s

attractiveness and selecting one or more segments - undifferentiated=massmarketing, ifferentiated=segmented marketing, concentrated=niche marketing, micromarketing =local or individual marketing


POSITIONINGMARKET POSITIONINGArranging for a product to occuby a clear, distinctive anddesirable place relative to competing products in the minds of target consumersPRODUCT POSITIONThe Way the products is defined by consumers on importantattributes - the place the product occupies in consumers’ mindrelative to competing productsCONSUMERS ORGANIZE PRODUCTS INTO CATEGORIESThe consumers do not reevaluate the products every time they make a buying decision > they organize products, services and companies into categories and POSITION them in their minds

MARKETING MIX EFFORTS SUPPORT THE POSITIONING STRATEGY !


BUSINESS IDEA

WHAT TO WHOProducts, services, experiences The market

experinces -customers needs/wants

- quality -market opportunities

- price -segmentation

-competition situation

HOW IMAGES/POSITION

- enterprice´s structure PROFILES - way of doing/actioning, manners - product/service/firm/

-marketing concept and processes managening profile


FROM IDEA TO ACTIONFrom customer centred businessidea to action -Rope 1989 -

SEGMENTATION COMPETITORS-segment determining -present/future -needs of the segment

BUSINESS IDEA DESICIONS FIRM at present-what, to who, how, ímages -know-how

-recources BUSINESS IDEA REALIZATION-internal marketing SOCIETY

-economical/technical/EXTERNAL MARKETING attitude changes-profiling

-profiling


MARKETING MIX -Kotler-Amstrong and Booms-Bitner

• The set of controllable tactical marketing tools• Everything the firm can do to influence the demand of

its products

Sellers view Customers view 4 Ps: 4 Cs:

> Product > Customer solution > Price > Customer cost

> Place > Convenience> Promotion > Communication

3 more Ps:> People> Process> Phycical evidence


4 PsPRODUCT PRICEVariety, Quality List price, DiscountsDesign, Features Allowances,

PaymentBrand name, Packaging period, Credit terms

Services TARGET CUSTOMERS

INTENDED POSITIONING

PROMOTION PLACEAdvertising Channels, CoveragePersonal selling Assortments, LocationsSales promotion Inventory,

TransportationPublic Relations Logistics


The 7 – Ps – Extended Marketing Mix–Booms-Bitner -

Marketing Strategy tool that expands the number of controllable variables from the four in the original Marketing Mix Model to seven.

People ( explicit faktor ) Process ( explicit faktor ) Phycical Evidence ( implicit faktor )

The traditional Marketing Mix model was primarily directed and useful for tangible products.

The 7-Ps model is more useful for services industries and arguably also for knowledge-intensive environments.

•

•


7- Ps

PeopleAll people directly or indirectly involved in the consumption of a service are an important part of the extended marketing mix. Knowledge Workers, Employees, Management and other Consumers often add significant value to the total product or service offering.

ProcessProcedure, mechanisms and flow of activities by which services areconsumed (customer management processes)

Physical EvidenceThe ability and environment in which the service is deliveredboth tangible goods that help to communicate and perform the serviceand intangible experience of existing customers and the ability of the business to relay that customer satisfaction to potential customers.


7 Ps

• Booms and Bitner also suggest that Place in a service-oriented company includes the accessibility of the service, and that Promotion in a service-oriented company includes the input of front-line service personnel.


PRODUCT / SERVICEKotler-Amstrong 2004, Lancester-Reynolds 2004

• PRODUCT = Anything that can be offered to a market for attention, acquisition, use or consumption that might satisfy a want or need

>industrial goods = installations, assessories, raw materials, component parts and materials, supplies

>consumer goods =convenience goods, shopping goods, speciality goods, unsought goods

• SERVICE = Any activity or benefit that one party can offer to another that is esssenntially intangible and does not result in the ownership of anything

• EXPERIENCE = memorable, personal, take place in minds


THREE LEVELS OF PRODUCT–Kotler-Amstrong-

AUGMENTED PRODUCT Delivery Credit After

sale ACTUAL PRODUCT service

Brand CORE Features name BENEFIT Core product Quality Design

Packing

Installation Warranty


PRODUCT/SERVICE CLASSIFICATIONS –Kotler-Amstrong 2004 -

• CONSUMER PRODUCT> bought by final consumer for personal consumption

• CONVENIENCE PRODUCT> consumer product that the customer usually buys frequently with

a minimum of comparison and buying efforts ( fast food, newspaper )

• SHOPPING PRODUCT> consumer good that the customer in the selection and comparison

process and purchase buys ( suitable, quality, price, style )

• SPECIALTY PRODUCT> consumer product with unique characteristics or brand identifications

( specific brands and types of cars, cameras, phones, clothes, wines )


PRODUCT/SERVICE CLASSIFICATIONS

• UNSOUGHT PRODUCT

> consumer product that the consumer either does nor know about or knows about but does not normally think of buying ( life insurance, consulting )

• INDUSTRIAL PRODUCT

> product bought by individual or organizations for further

processing or use in conducting business

1. Materials and parts ( raw materials, manufactured materials )

2. Capital items ( installations and accessory equipments )

3. Supplies and services ( operating supplies, repair items,

business services, business advisory services )



PRODUCT DEVELOPMENT STRATEGIES-Kotler-Amstrong, Lancester-Reynolds

ANSOFF MATRIX ( Igor Ansoff 1957 )

New markets Existing markets

New products True innovators Product development

Risky strategy strategy

Existing products Market development Market penetrations


NEW PRODUCT DEVELOPMENT –Kotler-Amstrong, Lancester-Reynolds -

• ACQUISITION > By buying a whole company, a papent or a licence to

produce someone else’s product

• NEW PRODUCT DEVELOPMENT > innovative, original products

> replacement products, product improvements, product

modifications

> Imitative products ”me to” products

> Relaunced, products, new brands


NEW PRODUCT DEVELOPMENT STAGES-Kotler-Amstrong, Lancester-Reynolds

IDEA GENERATION

IDEA SCREENING

CONCEPT DEVELOPMENT AND TESTING

MARKETING STRATEGY

BUSINESS ANALYSIS

PRODUCT DEVELOPMENT

TEST MARKETING

COMMERCIALIZATION


NEW PRODUCT PROCESS …

ÍDEA GENERATION *The systematic search for new-products ideas

*Internal = new-product managers, committees, departments,

venture teams

*External = customers, competitors

IDEA SCREENING *Go or drop decisions- spot good ideas and drop poor ideas

as soon as possible

NEW-PRODUCT PROCESS …CONCEPT DEVELOPMENT AND TESTING

*Product concept = A detailed version of the new-product

idea stated in meaningsful consumer terms

*Concept testing = testing a new-product concept wit a group of tarket consumersto find out if thr concepts have strong consumer appeal.

MARKETING STRATEGY

*The target market; positioning, sales, market share, profit goals

*Outlines of the product; price, distribution, marketing budget

*Long run sales, profit goals, marketing mix strategy


NEW-PRODUCT PROCESS …

BUSINESS ANALYSIS* A review of the sales, costs and profits projections for a new

product to find out whether these factors satisfy the firms’s objectives

PRODUCT DEVELOPMENT• Developing the product concept intoa phycical product in

order to ensure that the product idea can be turned into a workable product


NEW PRODUCT PROCESS ….

PRODUCT DEVELOPMENT*prototypes, product appraisal tests*product refinement and modification by feedback,> development cost increace sharply !

TEST MARKETING*The product and marketing program are tested in more realistic market settings –Standard, Controlled, Simulated- Problem = competitors see your product !- Test marketing does not quarantee succees !

COMMERCIALIZATION*Introducing a new-product into the market – - few new-product ideas succeed !


PRODUCT LIFE CYCLE MATRIX by Barksdale-Harris

PIONEERING GROWTH MATURITY DECLINE

-sales- stars cash cows war horses

high markethigh market high market

share, high share, low hare, negative growth growth growth

infants problem children dogs/cash dogs dodos

low market share low market share low market share

high growth low growth negative growth

Entry - time - Exit


INDIVIDUAL PRODUCT / SERVICE DECISIONS – Kotler-Amstrong -

Product attributes

Branding

Packaging

Labeling

Product support services


PRODUCT QUALITY – Kotler-Amstrong-

”When our customers come back and our products do not”

• Ability of a product to perform its functions• Characteristics of a product or service that satisfy

customer’s stated or implied needs • Is closely linked to customer value and satisfaction• One of the marketer’s major positioning tools• Has a direct impact on product or service performance• Freedom of defects – is it enough ?


ATTRIBUTES OF PRODUCT – Kotler-Amstrong -

• Core benefit of the product• Product features;

- stripped-down model- more features as a tool of differentiating the

product from competitors• Product and Desing • Trade mark• Brand = Manufacturer’s brand, Private/Store brand,

Licencing, Co-Branding, Multibrands, New Brands,

With the help of Customer Relationship Marketing !


BRAND – BRANDING –Kotler-Amstrong -

• A name, term, sign, symbol, design or a combination of these• Intended to identify the goods or services of one

seller or group of another sellers• To differentiate these goods from these of

competitors• Consumer view a brand is an important part of

product – may add value• Branding = Perhaps the most distinctive skill of

professional marketers in their ability to create, maintain, protect and enhance brands of their product and services


PACKAGE – PACKAGING – Lancaster-Reynolds , Kotler-

Amstrong--

• The end part of the product development; an external appereance

• A part of the promotion

• The activities of designing and producing te container or wrapper for the product– primary container

– secondary package

– package for storing

– labeling = printed information


THE FUNCTIONS OF PACKAGING-Lancester-Reynolds-

• Protect and preserve its contents

• Help the distribution of the goods via a number of logistics intermediaries from the factory/producer to customer; transfering, stocking

• Selling; the promotional appeal, design, information, trademark, brand

• For conceniency of users; storage of contents, suitable sizes of package

• To conform the statutory and voluntary regulations in providing a list of contents/weight/the origin of product, E-numbers, ingrediants


LABELING –PRODUCT SUPPORT SERVICES –

LABEL

= identifies and promote the product or brand,

= describes several things of the good; who, where, when made, contents, how to use, price per unit, open dating, nutritional labeling, health-related term

SUPPORT SERVICES

= Augmented parts of product


PRODUCT LINE / MIX

PRODUCT LINE= A group of products that are closely related together;

function in similar manner, sold to same customer group, marketed through same types of outlets, given price ranges ”Nike athletic apparel” Nokia telecommunication products”

PRODUCT MIX – PRODUCT ASSORTIMENT= Set of all product lines and items which a particular seller offers for sale

*widht = number of different product lines*lenght = total number of items *depht = number of versions of each product in the line

*consistency = closeness of items ( distribution channels,


PRICE – PRICING –Kotler-Amstrong, Lancecter-Reynolds -

PRICE = • The amount of money charged for a product or service or the sum of the values the customers exchange for the benefits of having or using the product or service• The means whereby an organisation covers costs of all

activities• The major factor affecting buyer choice – usually • A flexible element in the marketing mix – can change

quickly

DYNAMIC PRICING =• Charging different prices depending on individual customers and situations


PRICING PERCPECTIVES – Lancecter-Reynolds -

• ECONOMIST’s approach The price is the means through which supply and

demand is brought into equilibrium

• ACCOUNTANTS’s approach The price covers the costs and make profits

• MARKETER’s approach Effect of price on the organisation’s competitive

market position


FACTORS AFFECTING PRICING DECISIONS –Kotler-Amstrong,--

INTERNAL EXTERNAL

FACTORS P FACTORSMarketing objectives R Nature of the market

Marketing mix strategy I and demand

Costs C Competition

Organisational I Other environmental

considerations N factors ( economy, G resellers, government


PRICING IN DIFFERENT TYPES OF MARKETS –Kotler-Amstrong, Lancecter-Reynolds –

PURE COMPETITION-Many buyers and sellers trading in uniform commodity – many fully informed buyers and sellers of similar products-No single seller or buyer has much effect on the going market price > going pricing PURE MONOPOLYA single producer of a product – no substitudes for product

– free price settingOLIGOPOLISTIC COMPETITION

Few sellers who are highly sensitive to each other’s pricing and marketing strategies


MAJOR CONSIDERATIONS IN SETTING PRICE –Kotler-Amstrong-

Product Competitor’s Consumercosts prices and other perception of

internal and external of value factors

PRICE PRICEFLOOR CELLINGNo profits below No demand this price above this

price


COST-BASED PRICING “Cost-plus”

• Adding a standard markup ( profit ) to the costs of the product

• Product driven pricing >Fixed costs = do not vary with production or sales level Variable costs = vary diriectly with the level of production Total costs = fixed costs + variable costs

PRODUCT COST PRICE VALUE CUSTOMER


TARKET PROFIT PRICING –Kotler-Amstrong-

• Setting price to break even on the costs of making and marketing a product or

• Setting price to make a target profit

• Target pricing uses the concept of a break-even chart – it shows the total cost and total revenue expected at

different sales volume levels TOTAL REVENUE

Costs Target profit

TOTAL COSTS

FIXED COSTS

Sales volume in units


VALUE-BASED PRICING –Kotler-Amstrong 2004-

• Setting price based on buyer’s perceptions of value rather than on the seller’s costs

• Offering just the right combination of quality and good service at the fair price

• Pricing begins with analyzing consumer’s needs / wants and value perceptions and the price is set to match consumer’s percieved value > design the product

CUSTOMER VALUE PRICE COST PRODUCT


COMPETITION-BASED PRICING –Kotler-Amstrong-

• Setting prices based on the price that competitors charge for similar products

• Going rate pricing

• Price represents the ”collective wishdom” of the industry sector when demand elasticity is hard to measure


PRICING STRATEGIES –Kotler-Amstrong-

• MARKET-SKIMMING PRICING>Setting high price for a new product to skim maximum revenues from the segment willing to pay the high price. -Company makes rewer but more profitable sales-Product’s quality and image must support the high price-Enough buyers must want the product at that price-Competitors should not be able to enter the market and undercut the price 1. MARKET-PENETRATION PRICING>Setting a low price for a new product in order to attract a large number of buyers and a large market share


PRICING STRATEGIES –Kotler-Amstrong-

• PRICE ADJUSTMENT STRATEGIES> Discount = price reduction > Allowance = promotional

money

• BY-PRODUCT PRICING -Setting a price for by-products in order to make the main product’s price more competitive

• SEGMENTED PRICING – two or more prices at same product

• PSYCHOLOGICAL PRICING – price says something of the product

• REFERENCE PRICE - prices that buyers carry in their minds

• PROMOTIONAL PRICING – temporarily, increase short-run sales

• GEOGRAPHICAL PRICING – different price on different regions / or not

INTERNATIONAL PRICING – prices in the international market


PRICING > PRICE

+VARIABLE COSTS / product unit: raw materials, other variable costs, labour costs,

costs connected wit labour costs ( social costs, assurance )

+COVER = fixed costs, charges, rates, incometaxes, profit

=NET RRICE

+VALUE ADDED TAX

=SELLING PRICE

+SELLING REWARDS

+FREIGHTS THAT WILL BE PAYD

+DISCOUNTS PROVISOS,

=TOTAL PRICE


CHANNELS OF DISTRIBUTION- Kotler-Amstrong, lancester-Reynols-

DISTRIBUTION

Channels /Supply chain Phycical distribution Agents Logistics Wholesalers Retailers Right place ! = intermediaries Right time !

Suitable amounts !With greatest ease !Favourable costs !


MARKETING CHANNEL = DISTRIBUTION CHANNEL –Kotler-Amstrong-

A set of interdependent organizations involved in the process of making a product or service available for use or consumption by consumer or business user

SUPPLY CHAIN = VALUE DELIVERY NETWORK, -Information; gathers and distribute information-Promotion; developes and spread information about offers-Matching; shapes and fits the offer to the buyer’s need-Negotiation; reach the agreement of price and

-Phycical distribution and stocking-Financing, invoicing-Risk taking / dealing


DIRECT – INDIRECT MARKETING CHANNELS -Kotler-Amstrong, Lancester-Reynolds-

DIRECT CHANNEL = no intermediariesINDIRECT CHANNEL = one or more intermediaries

AFFECTING TO THE CHANNEL DECISIONS:* Numbers of potential customers in the market* How concentrated or dispersed the customers are* How much each will buy in a given period = buying sensity* Costs including transportation, warehousing, stockholding* Product imago positioning, market share objective* The need of by-services

* Absolute price of the product and the profit objective * Firm’s recources


DIRECT DISTRIBUTION INDIRECT

Small Amount of customrs LargeRarely Density of purchase OftenLarge Size of one purchasing SmallLarge Profit marginal SmallConcentrated The buyer placement Disperced High Complexity of product LowNo need Need of by-services YesYes Completely product No lines


MULTICHANNEL DISTRIBUTION SYSTEM –Kotler-Amstrong-

Catalogs, telephone, internet, home-selling Customer 1

Own resailer places /warehouses Customer 2

Retailers Customer 3

Distributors Dealers Business segment 1

Sales force Business segment 2


NUMBER OF MARKETING INTERMEDIARIES –Kotler-Amstrong-

INTENSIVE DISTRIBUTION

-stocking the product in as many outlets as possible -usually convenience productsEXCLUSIVE DISTRIBUTION

-giving a limited number of dealers the exclusive right to distribute the products in their territories-for exclusive products, product’s image, higher markupsSELECTIVE

-more than one dealer but not all dealers who are willingly to carry company’s produts, ”Label-retailer”-good market coverageto producer with more control and less cost than intensive distribution


MARKETING CHANNELS DECISIONS ? Questions for a countryside firm

DIRECT MARKETING• reach few customers, • direct producer/customer contact, • not effective?• is product suitable for direct marketing? • larger profit marginal? • have producer time enouhg for producing and marketing? • small amounts of products can be marketed, • Important; quality, producers own capasity and

knowledge of marketingco, co-operation with other small producers?



RETAILER

• more customers, customers find the products in the same place as other products=easier for customers,

• is the retailer interested in the small producer’s products?

• do the customers find the products among other products?

• important; quality, reliable distribution, is it sure you can produce the amounts of products you aimed, producer’s own activity to reach retailers, package



LARGE-SCALE KITCHENS ( restaurangs ..)

• one good possibilit for small firms, business to business

relation > product development together? easily to get feed

back from custemers, fresh raw materials, bigger ( suitable )

amounts to one place, saves distribution and packaking

SPECIAL / EXECUTIVE RETAILERS• the importance of quality and package and image !

• better profit by pricing strategy



WHOLE SAILERS

• large-scale, concentrated distribution

> producers’s work decrease

• can you produce large amounts?

• is a long chain suitable for your ( fresh? ) goods?

• is the price competitive by the customers?

• packaging for the wholesailing and distribution >costs?

• logistics if the distribution ways are long?

• who does pay the freight?



CONTRACTUAL CO-OPERATION ( franchising .. )PRODUCER NET WORK - THE SAME TRADEMARK- SUBCONTACTOR PRODUCING• small-scale producing is possible • producer’s own name not seemed in the products • the producer can concentrate to producing/marketing

/delivering/retailing EXPORT• a long, difficult and expencice process• co-operation ! export know how !


LOGISTICS – PHYSICAL DISTRIBUTION–

Kotler-Amstrong

MARKETING LOGISTICSThe tasks involved in planning, implementing, and

controlling the phycical flow of materials, final goods, and

related information from points of origin to points of

concumption to meet customer requirements at a profit

SUPPLY CHAIN MANAGEMENT =Managing upstream and downstream value-added flows of

material, final goods, and related information among

suppliers, the company, resellers and final consumers


LOGISTICS – PHYSICAL DISTRIBUTION–

Kotler-Amstrong

SUPPLIERS Inbound logistics

COMPANY ReverseOutbound logistics

RESELLERS logistics

CUSTOMERS


PROMOTION –MARKETING COMMUNICATION MIX

The specific mix

advertising, personal selling, sales promotion, public relations and information


PROMOTION –MARKETING COMMUNICATION MIX –

Kotler-Amstrong -


• The specific mix of advertising, personal selling, sales promotion , public relations and information

ADVERTISING = any paid form of nonpersonal presentation and promotion of ideas, goods, or services by an identified sponsor

SALES PROMOTION = short-term incentives to encourage the purchase or sale of a product or a servi´ce

PROMOTION – MARKTING COMMUNICATION MIX –Kotler-Amstrong -

PERSONAL SELLING = personal presentation by the

firm’s sales force for the purpose of making sales and

building customer relationships

PUBLIC RELATIONS = building good relations with the firm’s various publics by obtaining favourable publicity, good corporate image, and handing or heading unfavourable stories and events

DIRECT MARKETING = direct connections with

carefully targeted individual consumers to obtain new or cultivate lasting relationships


ELEMENTS OF COMMUNICATION PROCESS

SENDER RECEIVER

IDEA MESSAGE IMAGE

Encoding to Decoding to an

a message MEDIA image

Disruptions

Disorders

FEEDBACK = knowledge that the receiver

has reacted to the communication


ADVERTISING Kotler-Amstrong-

OBJECTIVE SETTINGcommunication objectives, sales objectives

BUDGET DECISIONSaffordable approach, percent of sales, competitive parity,

objective and task

MESSAGE DECISIONS MEDIA DECISIONS- message strategy - reach, frequenc, impact

- message execution - major media types- specific media vehicles

- media timing

CAMPAINGN EVALUATIONCommunication and sales impact


POSSIBLE OBJECTIVES -Kotler-Amstrong-

• INFORMATIVE ADVERTISING gives information about a new product, the firm, new uses

of product, price change, explain how the product works ..

• PERSUASIVE ADVERTISING brand building, changing customer’s perceptions of

product attributes ..

• REMINDER ADVERTISING remind consumer of the goods and services, remind the

selling palaces..


SALES PROMOTION TOOLS–Kotler-Amstrong-

• SAMPLE• COUPON

• CASH REFND OFFER ( RABATE )• PRICE PACK• PREMIUM

• ADVERTICING SPECIALITY• PATRONAGE REWARD

• POINT-OF-PURCHASE ( POP )• PROMOTIONAL EVENTS


BUSINESS PROMOTION TOOLS

• DISCOUNT

a straight reduction in price on purchase during stated period of time

• ALLOWANCE

promotional money paid by manufactures to retailers in return for agreement to feature the manufacture’s products in some way


DIRECT MARKETING Kotler-Amstrong -

• FACE TO FACE MARKETING• TELEMARKETING• DIRECT-MAIL MARKETING• CATALOG MARKETING• DIRECT RESPONSE TELEVISION

MARKETING• KIOSK MARKETING• ONLINE MARKETING


-COMPETITION -Porter 1980-

Potential new firms

Threat

Suppliers Competitions in BuyersNegotiation the branch Negotiation

power power

Threat

Substitutes


COMPETITION STRATEGIES –Porter 1980-

• Overall cost leadership-producing a standard product at low cost or engaging in heavy advertising in order to undercut competetion – price competition• Differentiation-selling at a higher price than average, in the product unique feature of quality, image or design • Focus concentrates-focusing on a specialist product rangeor a unique segment of the market or a combination of them both


-MARKETING INFORMATION SYSTEMMkiS Kotler 1997, Lancester-Reynolds 2004

A marketing information system ( MkiS )

concists of people, equipment and procedures

> to gather, sort analyse, evaluate and distribute needed, timely and accurate information to marketing desicion makers


MARKETING INFORMATION SYSTEM –

Lancester-Reynolds -

MANAGINGMarketing Analysis, Planning, Tactics, Implementation,

Actions Control, Review, Monitoring, Contingency

Defining information needs Distiribution of information

Internal accounting system Marketing research system

Component

parts

Marketing intelligence system Analytical marketing system

MARKETING ENVIRONMENTTarket markets, Marketing channels, Communication, Logistics

Competition, International aspects, MacroénvironmentMARKETING -Jankkila 2004 -

MARKETING INTELLIGENCE SYSTEM

SALES TRANSPORT OTHERPERSONNEL PERSONNEL PERSONNEL

intelligence gathered fromCompetition Telephone calls andExhibitions Visiting customers requestsConferences General chats with Visitors to firmTraining courses other drivers Letters and direct mailsCustomers Visiting suppliers Press and journalsSponsored events General observastion General observation

MARKETING RESEARCH SYSTEM- Primary data

- Secondary data

INTERNAL ACCOUNTING SYSTEM


-

PRACTICE 1. Analyse the business idea of the ( small/medium size, countryside branch ) firm and give ideas to develop the business concept by using the theoretic knowledge you got on the lectures and from the booksThe firm identification:

WHAT TO WHOM-product, service, experience - market, segmentation, market region-quality - custome’s needs/wants for the product-price, pricing strategy - competition situation-how they have developed the product

HOW IMAGES/POSITION-organization structure -positioning on the market, -how they use the parts marketing -profiling; trademark, brand …. of marketing mix -your own opinion or image of the product-quality policy and the quality management-why the company has choosed this way of operating?


PRACTICE 2. Create a new product / service /experience idea on the basis of local ( in Hungry+ in Finland ) possibilities or renew an old product; what, customer segment, quality, pricing strategy, distribution, marketing, feature, package, marketing communicatio …Compare the Hungrian and Fnnish cases; are there similarities / dissimilarities?

USE SWOT ANALYSIS TOOStrengt ( Strengthen ) Weakness ( Improve )

Opportunities ( Utilize ) Threats ( Avoid )


EVALUATION OF THE COURSEGive your evaluation of the coure, please

• Good points ; contents, practises, presentation, teaching• Not good points; contents, practises, presentation, teaching• What did you learn? Can you use this knowledge in your job in future?• Evaluate your own learning stage in numbers 1-5 • Your experience and opinion of studying in an

international group? Should this kind of operation continue or not? Why?

• Please, send reports and evaluation by e-mail: [email protected]

THANK YOU


From an idea to a product

Type of product: Identification number: Date:

• Name of product and the description of the product:• Origin of the idea?• Why the idea have been produced?• What kind of need or want the product does solve?• Competing products and substitudes?• Critical and hazardous points on tproduct development, production and marketing? SWOT-analysis• Objectives: Product quantity, marketing share, returns?• What next? Item Timing Responsible

-core product -packing

-pricing -distribution

- - promotion


TOURIST PROGRAM DESCRIPTION

• Name:

• Timing, when:

• Duration:

• Place:

• Description of content:

• Price, min/max/discounts:

• Price including:

• Further information:

• How it is reached:

• Information of the firm/ reservations

• Information of the retailer / reservations:


BLUE PRINT FOR A TOURIST PROGRAM

• CONCRETE ELEMENTS; hotel, means of transfer,

accomandation during the program, food, reindeer, snowmobile

• THE CUSTOMER PROCESS; what / how does the

customer do during the program

• VISIBLE SERVICE PROCESS – front office personnel,

responsible persons

• INVISIBLE SERVICE PROCESS – back office personnel

• THE TIMING OF THE PROGRAM – from the

beginning to the end minutes, hours, days
