SB2118.

FOUNDATION OF ENTREPRENEURSHIP

Marketing Strategy
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Table of Contents

EXECUTIVE SUMMARY ........................................................................................ii

AUTHOR .................................................................................................................ii
MODULE INTRODUCTION................................................................................... 1
Module Description ....................................................................................................... 1
Module objectives .......................................................................................................... 1
References ..................................................................................................................... 1
MODULE CONTENT ............................................................................................. 2
Chapter 1. Introduction to Marketing Strategy ......................................................... 2
Chapter 2. Strategic Planning .................................................................................. 6
2.1. Strategic Planning ................................................................................................... 6
2.2. Missions, Goals, Corporate and Business-Unit Strategies ........................................ 6
2.3. Evaluating a company’s resources and opportunities. ............................................. 9
2.4. Marketing Objectives & Strategy .......................................................................... 11
2.5. Strategic Performance Evaluation......................................................................... 12
2.6. Marketing Plan Development ................................................................................ 13
Chapter 3. Defining Target Market ......................................................................... 14
3.1. Choosing the correct targeting strategy ................................................................. 14
3.2. Selecting segmentation variables for consumer and business markets. .................. 15
3.3. Creating profiles for each market segment ............................................................ 16
3.4. Assessing the viability for each market segment. ................................................... 16
3.5. Selecting the target market.................................................................................... 16
3.6. Sales Forecast. ....................................................................................................... 16
Chapter 4. Product Strategy .................................................................................... 17
4.1. Product Overview ................................................................................................. 17
4.2. Branding ............................................................................................................... 19
4.3. Packaging & Labeling ........................................................................................... 20
4.4. Developing & Managing Products ......................................................................... 20
Chapter 5. Distribution Strategy .............................................................................. 24
5.1. Supply Chain Management ................................................................................... 24
5.2. Marketing Channel ............................................................................................... 24
5.3. Retailing ................................................................................................................ 27
5.4. Other distribution channel .................................................................................... 27
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Chapter 6. Price Strategy ........................................................................................ 28

6.1. Pricing Concept ..................................................................................................... 28
6.2. Price Setting .......................................................................................................... 29
Chapter 7. Integrated Marketing Communication ................................................... 30
7.1. Promotion Mix ...................................................................................................... 30
7.2. Selecting Promotion Mix ....................................................................................... 31
7.3. Word of Mouth Communication & Product Placement ........................................ 32

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EXECUTIVE SUMMARY

Marketing strategy is central to navigating the ever-evolving business landscape.

It’s vital to apply marketing fundamentals to actual challenges. Quality is the
essence of effective advertising, and a company’s brand is built by consistently
tackling challenges well. Marketing is the crucial link between businesses and
consumers, navigating the complexities of consumer needs and business goals. It’s
visible in every commercial interaction and is the driving force behind product
creation, promotion, and delivery, aiming to fulfill customer desires. A strategic
blend of sales and marketing is key for small businesses to connect with customers
and facilitate transactions.

Strategic frameworks are essential in areas such as digital marketing, understanding

consumer behavior, and establishing brands. As digital progress transforms how we
communicate in business, comprehending marketing strategy becomes imperative
for students and professionals to evolve and succeed which is the focus of this
module.

AUTHOR

Lydia Karnadi, S.T., M.B.A.

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MODULE INTRODUCTION

Module Description

Marketing strategy is key to thriving in the dynamic business world, applying core
principles to real-life challenges. It’s about building a brand through quality and
addressing consumer needs effectively. This strategy is vital for business-customer
connections and is especially crucial in digital marketing and brand development. The
goal of this module is to introduce students to various theories and concepts that form
the foundation of marketing strategy.

Module objectives
Upon completion of this module, students should be able to:

01 Applying the fundamental strategic marketing concepts such as segmentation,

targeting, positioning, marketing mix strategy and brand portfolio strategies
02 Experimenting the established and emerging market strategies
03 Reviewing the essential marketing tools and conduct market and competitive
analysis

References
Pride, W. M. and Ferrell, O.C. (2020). Marketing. Cengage Learning

Kotler, P. and Keller, K. L. (2016). Marketing Management: Global Edition. Harlow,

Essex: Pearson Education

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MODULE CONTENT

Chapter 1. Introduction to Marketing Strategy

Marketing:
- Marketing is the creation, distribution, promotion, and pricing of products,
services, and ideas to foster rewarding exchanges with customers and cultivate
positive stakeholder relationships within an ever-evolving market landscape.
- It prioritizes customers, who, as buyers of the marketed offerings, are the central
concern of all marketing initiatives.
- Marketing’s goal is to enable transactions that reward both the customer and
the marketer, with each expecting to receive value from the interaction.
- Marketing campaigns are often designed for a specific group of consumers,
termed the target market, which can be defined by marketing experts in either
broad or specific terms.

Figure 1.1.
Strategic Marketing Components

Source: Pride, W. M. and Ferrell, O.C. (2020). Marketing. Cengage Learning

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The Marketing Mix explained marketing transcends mere advertising or sales; it

encompasses:
1. Product development and management
2. Strategic placement to ensure product availability
3. Pricing that aligns with buyer expectations
4. Communication to assist customers in assessing product suitability

The components of product, distribution, promotion, and pricing are collectively termed
the marketing mix. This is due to the marketer’s role in determining the specific nature
and proportion of each element to effectively strategize their marketing efforts.

The objective of marketing is to enable transactions that are advantageous to both the
consumer and the marketer, with each expecting to derive value from the engagement.
Marketing efforts are usually customized for a specific group of consumers, referred to
as the target market, which marketing experts can define in broad or specific terms.

Figure 1.2.
Buyer and Seller value exchange

Source: Pride, W. M. and Ferrell, O.C. (2020). Marketing. Cengage Learning

Marketing Mix Elements:

1. Product:
Involves understanding customer needs and designing products that fulfill them.
This includes goods, services, or ideas, along with branding, packaging,
warranties, and services.
2. Place (Distribution)
Ensures product availability in desired quantities to the target market, optimizing
inventory, transportation, and storage costs, and managing supply chains.

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3. Price
Entails setting pricing strategies and objectives. Price is vital as it reflects the
value perceived by customers and can be a key differentiator in the market.
4. Promotion
Promotion encompasses various activities aimed at increasing awareness about
an organization and its offerings. Beyond traditional advertising, it includes
personal selling, sales promotions, and public relations. The goal is to educate,
engage, and sustain customer interest.

While the marketing mix elements are adjustable, external factors like economic
conditions, competition, and regulations can influence a marketer’s control over them.

The marketing environment impacts marketers in three key ways:

1. It influences customers’ lifestyles, standards of living, preferences, and product
needs.
2. It shapes a marketing manager’s ability to execute specific marketing activities.
3. It affects decision-making by influencing buyers’ reactions to the organization’s
marketing mix.

Customer Value
- Customer value is the personal evaluation of gains versus expenses, which
dictates a product’s perceived value. The equation for customer value is:
customer value = customer benefits – customer costs
- Benefits: This includes all that a buyer receives from a transaction.
- Costs: This covers all that a buyer relinquishes to acquire the product,
encompassing both the financial cost and intangible expenses like time and
effort.
- Varied Perspectives: People evaluate value differently based on their
experiences.
- Enhancing Value: Marketing activities, especially promotions and additional
services, can enhance customers’ perceptions of value.

Building Relationship:
- Marketing aims to create and sustain satisfying exchange relationships.
- Marketers also engage with stakeholders—such as customers, employees,
investors, suppliers, governments, and competitors—who have a vested interest
in the company’s products, operations, and outcomes.

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Marketing Concept
- The marketing concept focuses on delivering products that fulfill customer needs
in alignment with achieving the goals of the organization.
- Key elements:
o Customer analysis: Understand customer preferences and needs.
o Competitor analysis: Assess the competitive landscape.
o Resource integration: Align organizational resources for customer value,
satisfaction, and long-term profits.
- Marketing begins and ends with customers, and there’s a positive link between
customer satisfaction and shareholder value.
- It’s a management philosophy guiding overall organizational activities.
- Marketing is a strategic approach to achieve objectives.
1. A firm adopting the marketing concept must satisfy both customer and
organizational objectives.
2. Being customer-oriented is crucial for success.
- Consider long-term societal needs alongside business goals.

Evolution of Marketing Concepts

1. Production Orientation:
During the late 19th century (Industrial Revolution), products flooded the market
due to technological advancements and labor utilization. Consumer demand was
strong.
2. Sales Orientation:
In the early 20th century, competition intensified. Sales were seen as the primary
profit driver. Major marketing activities included personal selling, advertising,
and distribution.
3. Market Orientation:
By the 1950s, businesses recognized the need to produce what consumers
wanted. Customer-centric approach replaced persuasion-based marketing.

Implementing the Marketing Concept

- Information System:
o Establish systems to uncover real customer needs.
o Expensive and time-consuming but essential.
- Coordination:
o Restructure internal operations (production, marketing, etc.) to align
activities.
o Achieve seamless coordination for effective implementation.

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Chapter 2. Strategic Planning

2.1. Strategic Planning

Strategic planning is the process of planning, implementing, and evaluating the

performance of marketing activities and strategies, both effectively and efficiently. It
focuses on building long-term customer relationships which align with the company’s
goals and using resources wisely.
• The main aim is to nurture good customer relations while keeping costs low.
• Strategic planning sets the company’s direction, defines its mission, goals, and
overall strategy, SWOT (Strength, Weakness, Opportunity, Threat) Analysis,
and then creates specific marketing plans.

Figure 2.1.
Strategic Planning Stages

Source: Pride, W. M. and Ferrell, O.C. (2020). Marketing. Cengage Learning

2.2. Missions, Goals, Corporate and Business-Unit Strategies

An organization’s goal are derived from its mission statement, which reflects the
company’s vision or long-term aspirations. The mission addresses two fundamental
questions:
• Who are the target customers?
• What are the organization’s key strengths?

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A company’s mission, goals, and objectives must be effectively implemented to

establish and communicate its distinct corporate identity. Originating from the mission
statement, these components guide the company’s strategic planning and focus on
realizing the intended results.

Figure 2.2.
Steps in Strategic Planning

Source: Pride, W. M. and Ferrell, O.C. (2020). Marketing. Cengage Learning

Corporate Strategy:

• Corporate strategy guides resource allocation across marketing, production,

finance, R&D, and human resources to achieve organizational goals.
• Planners address broad issues like culture, competition, differentiation,
diversification, and environmental/social concerns.
• The goal is to align resources with environmental opportunities and threats.

Business-Unit Strategies:

• A Strategic Business Unit (SBU) is a distinct section, product category, or profit-

generating component within a larger corporation.
• It’s important for strategic planners to assess the performance potential of each
SBU and distribute resources judiciously across these units.
• A market consists of individuals or entities that require products within a certain
category and possess the means, desire, and authority to make a purchase.
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• The proportion of a market that purchases a specific company’s product is

known as the market share of that product or business unit.
• The BCG matrix, a concept introduced by the Boston Consulting Group,
suggests that a product’s market growth rate and its market share are critical in
shaping its marketing strategy.
• The BCG matrix classifies products into four types:
o Stars: Dominant market share, growth prospects, high cash usage.
o Cash Cows: Dominant market share, low growth, generate excess cash.
o Dogs: Subordinate market share, low growth, often in established
markets.
o Question Marks: Small market share in growing markets, require cash
for growth.

Figure 2.3.
Boston Consulting Group (BCG) Matrix

Source: Pride, W. M. and Ferrell, O.C. (2020). Marketing. Cengage Learning

• Competitive Strategies: A company might adopt various competitive strategies

after evaluating each product or business unit:
o Market Penetration: Boost sales in current markets with existing
products.
o Product Development: Expand sales of current products into new
markets (including international).
o Market Development: Enhance existing products or create new ones
for current markets.
o Diversification: Develop new products for new markets.\

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Figure 2.4.
Competitive Strategies

Source: Pride, W. M. and Ferrell, O.C. (2020). Marketing. Cengage Learning

2.3. Evaluating a company’s resources and opportunities.

Strategic planning starts with evaluating the marketing environment to shape an
organization’s goals and resource use. It involves reviewing financial and human assets
that provide a competitive edge, including:
1. Customer loyalty
2. Goodwill
3. Reputation
4. Brand strength, and
5. Core competencies

Analysis of the marketing environment also includes identifying opportunities in the

marketplace, which requires a solid understanding of the company’s industry.
1. A market opportunity exists when the right combination of circumstances and
timing permits an organization to take action to reach a particular target market.
2. Strategic windows are temporary periods of optimal fit between the key
requirements of a market and the particular capabilities of a firm competing in
that market.
A company is said to have a competitive advantage when it matches a core competency
to opportunities it has discovered in the marketplace

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Figure 2.5.
SWOT Matrix

Source: Pride, W. M. and Ferrell, O.C. (2020). Marketing. Cengage Learning

SWOT analysis evaluates a company’s internal strengths and weaknesses, and external
opportunities and threats.
• Strengths are the company’s assets that cater to market needs, while weaknesses
are internal hurdles.
• Opportunities and threats are external factors that can lead to success or
challenges.
• Aligning strengths with opportunities can give a company a competitive edge,
and transforming weaknesses and threats into strengths and opportunities is a
strategic goal.

Early vs. Late Market Entry Benefits

• Early Entry:
o An innovative company can secure a lasting market edge by being the
pioneer in offering a new product.
o Pros: Gains a leader’s reputation, lessens competition, fosters brand
loyalty, and safeguards proprietary information.
o Cons: Faces high initial costs, unpredictable sales growth, and risk of
product failure.
• Late Entry:
o Companies entering the market later can also gain lasting advantages by
learning from the trailblazers.
o Pros: Benefits from the pioneers’ errors, refines products and strategies,
saves on initial costs, enjoys a more stable market, and deals with
informed customers.
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o Cons: Challenges include overcoming established patents and

convincing customers to switch brands.
• The market entry timing is pivotal and can significantly influence the level of
success

2.4. Marketing Objectives & Strategy

Marketing objectives outline the achievements to be reached through marketing
efforts. Goals may involve product updates, sales growth, profit enhancement, market
expansion, price revision, distribution improvement, advertising increase, or skill
development. Originating from a detailed SWOT analysis, they aim to use strengths to
capture opportunities, tackle weaknesses, and counter threats.

Effective marketing goals are:

1. Clearly articulated
2. Quantifiable
3. Time-bound
4. Aligned with business and corporate strategies
5. Realistic, making smart use of resources to contribute to the company’s broader
strategy

Marketing strategy involves choosing a target market and crafting a marketing mix to
meet its members’ needs. These strategies may evolve with the changing business
environment.

Selecting the Target Market:

• Choosing the right target market is a critical decision in strategic planning.
• Before adjusting the marketing mix, companies must select their target audience.
• Marketing managers evaluate how entering a market impacts sales, costs, and
profits.
• Alignment with the company’s mission and resources is essential.
• Competitor size and number are also considered.

Creating the Marketing Mix:

• A good marketing mix depends on understanding the target market.
• Research into demographics, customer needs, and behavior informs decisions.
• Consistency with business and corporate strategies is crucial.
• Flexibility allows adjustments based on changing conditions.

Marketing Implementation:
• Putting marketing strategies into action is marketing implementation.
• Organizational structure and relationships affect marketing activities.

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Organizing the Marketing Unit:

Companies choose between centralized and decentralized operations.
• Centralized: Top-level managers retain authority; common in traditional
organizations.
• Decentralized: Decision-making authority delegated down the chain; adapts to
customer needs.
• Aligning marketing activities with overall strategy enhances efficiency and
performance.

For effective marketing execution, it’s vital that team members are aware of their
specific tasks and the deadlines for each. To create implementation schedule, follow
these steps:
1. List out all necessary tasks.
2. Estimate the completion time for each task.
3. Distinguish between tasks that follow one after another and those that can
happen at the same time.
4. Arrange the tasks in a logical sequence.
5. Delegate each task to specific employees, groups, or managers.

2.5. Strategic Performance Evaluation

Assessing Strategic Performance:
1. Set clear performance benchmarks.
• Define expected outcomes, like fewer complaints or higher sales.
• Use marketing goals to establish benchmarks related to sales, costs, or
communication.
2. Measure real-world results.
• Analyze performance to check if objectives are met.
• Technology helps in assessing actual results
3. Compare outcomes with benchmarks.
• Sales Review:
o Use sales data to gauge current performance.
o Compare sales figures with projections and competitors.
o Adjust for price changes to avoid skewed data.
o Market share analysis compares strategies with competitors, mindful
of external factors
• Cost Review
o Break down costs to see their link to marketing activities.
o Identify profitable or costly customers, products, or regions.
o Manage costs to maintain a price edge.
o Compare costs with industry norms, considering unique company
factors.
o Classify costs as fixed or variable, and by business function.
4. Adjust the strategy as necessary.

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• Check if results meet, exceed, or fall short of standards.

• Understand the effectiveness of strategies for improvement.
• Modify objectives to be more attainable if needed

2.6. Marketing Plan Development

Marketing plan is a guide that details how to execute and manage the company’s
marketing strategies.
A good marketing plan:
• Sets a consistent marketing direction for everyone in the company.
• Clarifies who does what and when in the marketing process.
• Defines goals and how to use resources to reach them.
• Assists in tracking and assessing how well the marketing is doing.
• It’s important that the marketing plan matches the company’s overall goals and
is known to all important staff members.

Figure 2.6.
Marketing plan component

Source: Pride, W. M. and Ferrell, O.C. (2020). Marketing. Cengage Learning

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Chapter 3. Defining Target Market

A market is a group with a common need for a product type and the financial ability,
willingness, and legal authority to purchase it. All these attributes are essential for a true
market definition. For example, teenagers do not make up the market for alcohol
because legal restrictions prevent them from making such purchases.

Markets are classified into two types:

• The consumer market (B2C) includes buyers and families who buy products
for personal use, not for profit.
• The business market (B2B) involves entities or individuals who buy products
for:
o Reselling them.
o Incorporating them into other products.
o Supporting everyday business activities.

Marketers typically use a five-stage approach to identify their target markets:

1. Choosing the correct targeting strategy.
2. Selecting segmentation variables for consumer and business markets.
3. Creating profiles for each market segment.
4. Assessing the viability of each market segment.
5. Selecting the target market

3.1. Choosing the correct targeting strategy

A target market is a group of people or organization that a company creates and targets
with a customized marketing mix to satisfy their needs. The approach for choosing a
target market depends on:
• The traits of the target market.
• The features of the product.
• The goals and capabilities of the organization.

There are three main targeting strategies:

1. Undifferentiated Strategy
Targeting a general, broad-spectrum approach with a single marketing mix offering.
Suitable for markets where most customers share similar product needs.
2. Concentrated Targeting Strategy
Focusing on a specific group with relatively similar product needs (single market
segment) using one marketing mix.
3. Differentiated Targeting Strategy
Targeting multiple market segments with different marketing mix offerings.

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3.2. Selecting segmentation variables for consumer and business markets.

Segmentation variables are traits of people or organizations that segment a market.
These variables must connect to customer needs, product usage, or behavior and be
quantifiable. The selection of these variables, influenced by the company’s resources,
product type, and customer behavior diversity, is crucial as the wrong choice can hinder
a successful marketing strategy.

Segmentation variables for consumer markets are typically classified into four main
groups:
1. Demographic
2. Geographic
3. Psychographic
4. Behavioristic

Figure 3.1.
Consumer market’s segmentation variables

Source: Pride, W. M. and Ferrell, O.C. (2020). Marketing. Cengage Learning

Segmentation variables for business markets can be classified into four main groups:
1. Geographic Location: Organizational needs vary based on climate, landscape,
or local consumer tastes.
2. Type of Organization: Different organizations need varied product features,
distribution methods, pricing, and sales tactics.
3. Customer Size: an organization’s size can influence its purchasing processes,
types, and volumes of products it needs.
4. Product Use: How an organization utilizes products determines the variety and
quantity of purchases, as well as the purchasing process.
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3.3. Creating profiles for each market segment

Market Segment Profiles describe similarities within a segment and differences across
segments.
• Cover demographics, geography, product preferences, lifestyles, brand affinity,
and usage patterns.
• Help marketers tailor capabilities to serve customer groups effectively.
• Aid in selecting target segments.

3.4. Assessing the viability for each market segment.

After reviewing market segment profiles, a marketer can narrow their focus to promising
segments for further analysis. Key factors to consider include:
1. Sales estimates
Potential sales for a segment can be gauged by product, region, time, and
competition. Market potential represents the industry’s total product sales within a
set time and marketing effort. An individual firm’s sales potential is the highest share
of this market potential it can capture for a product. To estimate this, firms typically
use two methods: breakdown and build-up.
2. Competition
Accurate sales forecasts require understanding the competitive landscape. Consider
these key points about rivals in your market segment:
a) What’s the number of existing competitors?
b) What strengths and weaknesses do they have?
c) Are there dominant competitors with significant market shares?
d) Can we develop a marketing mix that competes effectively?
e) What’s the likelihood of new entrants?
f) How might they impact our competitive edge?
3. Estimated costs.
To cater to a target segment, a company needs a tailored marketing mix. High costs,
however, may render the segment unapproachable for marketers.

3.5. Selecting the target market.

Marketers initially determine if customer needs vary sufficiently to justify market
segmentation. The company’s leadership must evaluate if they have the necessary
financial means, management capabilities, staff proficiency, and infrastructure to
successfully engage and compete in chosen market segments.

3.6. Sales Forecast.

Sales forecast is the projected product sales within a certain timeframe, based on a
defined marketing effort. It is distinct from sales potential, which estimates the
maximum sales achievable under varying marketing conditions. Forecasting methods
include: executive judgment, surveys, time series analysis, regression analysis, and
market tests.

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Chapter 4. Product Strategy

4.1. Product Overview

A product can be a good, service, or idea exchanged between parties. It comprises three
key elements:
1. Core Product: The fundamental benefit it provides to consumers.
2. Supplemental Features: Additional attributes beyond the core utility, such as
installation, guarantees, repair, and delivery. These differentiate brands.
3. Customer Benefits: Derived from experiences with the product. Some stores
create special customer experiences.

Products fall into two main categories:

1. Consumer Products: Satisfy personal and family needs.
Consumer products further divide into four types:
a) Convenience Products: Inexpensive, frequently purchased items.
b) Shopping Products: Require planning and effort.
c) Specialty Products: Unique and sought-after.
d) Unsought Products: Bought for sudden needs or unawareness.
2. Business Products: Used in operations, resale, or manufacturing.

Product Line & Mix

- Product Item: A unique version within a firm’s offerings.
- Product Line: A set of related products marketed as a collective due to shared
characteristics.
- Product Mix: The total array of products a company provides, measured by:
o Width: The count of different product lines.
o Depth: The average variety within each line.

Figure 4.1. Example of Procter & Gamble’s Product Mix

Source: Pride, W. M. and Ferrell, O.C. (2020). Marketing. Cengage Learning

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The product life cycle stages:

1. Introduction Stage: Begins when a product first enters the market, with zero sales
and negative profits. The marketing strategy should target the most interested
and capable segment.
2. Growth Stage: Sales rise rapidly, reaching a peak, and then decline. Adjust
marketing to strengthen brand loyalty and address geographic gaps.
3. Maturity Stage: Sales peak and decline, profits continue to fall. Marketers
explore new uses and differentiate from competitors.
4. Decline Stage: Sales drop rapidly. Marketers decide whether to reposition or
eliminate the product. Unprofitable channels may be removed.

Figure 4.2.
Product Life Cycle Stages

Source: Pride, W. M. and Ferrell, O.C. (2020). Marketing. Cengage Learning

A product life cycle represents the journey of a product through four stages from first
learning about a product (awareness), interest, evaluation, product trial, and final
acceptance.

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4.2. Branding
Branding:
• A brand is A distinctive identifier of a seller’s goods or services, including a
brand name (spoken part) and brand mark (symbolic part).
• Trademark: Legal right for exclusive brand use.
• Trade Name: Organization’s official legal name.

Brand value to Buyers:

1. Product Identification: Streamlines purchasing.
2. Risk Reduction: Lowers perceived purchase risks.
3. Status Symbol: Offers psychological benefits of ownership.

Brand value to Sellers:

1. Product Differentiation: Helps identify products.
2. Promotion: Aids in marketing efforts.
3. Customer Loyalty: Stabilizes market share and improves resource efficiency.

Brand Equity Components:

1. Brand Awareness
2. Brand Loyalty
Brand loyalty is a customer’s positive perception of a brand, crucial for reducing
competition impact and assuring new customers. Quality judgment may be
inferred from the brand name. The three loyalty levels are:
a. Insistence: Unwavering preference for a brand, rejecting alternatives.
b. Preference: Favoring one brand over others.
c. Recognition: Awareness of a brand.
3. Perceived Brand Quality
It supports premium pricing and differentiates from competitors.
4. Brand Associations
Marketers link specific lifestyles or personalities to brands, appealing to
relatable consumers.

There are three brand categories:

1. Manufacturer Brands: Producer-initiated brand.
2. Private Distributor Brands or private brands: Reseller-initiated and own brand.
3. Generic Brands: brands that only indicate product category.

There are two branding strategies:

1. Individual Branding: Unique names for each product.
2. Family Branding: A common name across products.

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Brand Extension occurs when a firm uses an established brand for new products in
different categories. Meanwhile, co-branding is the use of multiple brands on a single
product to capitalize brand equity of multiple brand. Brand Licensing is an agreement
in which companies allow other organizations to use their brand on different products
for a fee.

4.3. Packaging & Labeling

Packaging involved container development to store a product. It is vital for product to
enhance versatility, safety, and ease of use. It conveys essential details and shapes
customer perceptions and purchase decisions, akin to a brand name

Packaging design factors:

1. Cost: Balancing consumer willingness to pay.
2. Regulations: Compliance and tamper-evident features.
3. Consistency: Harmonizing package designs across products.
4. Family Packaging: Uniform design elements.
5. Promotion: Color, shape, and texture create desirable associations.
6. Retailer Needs: Facilitating transportation and storage.
7. Environment: Balancing conservation and customer convenience.

Packaging is a key marketing component, rapidly establishing market recognition for

new products. Marketers must weigh packaging costs and changes.

Provides identification, promotion, and other information. Labels enhance promotional

efforts by highlighting discounts, larger sizes, and new features.

4.4. Developing & Managing Products

Marketer analyze the product mix to identify and address gaps through line extensions
or modifications (quality, function, aesthetics). The seven-phase process for new
product development is shown in Figure 4.3

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Figure 4.3.
Phases of New Product Development

Source: Pride, W. M. and Ferrell, O.C. (2020). Marketing. Cengage Learning

Product Differentiation is the process of designing products to stand out from

competitors by focusing on:
1. Product quality (level and consistency)
2. Product design and features, and
3. Product support services.

Product Positioning refer to the decision and activities to shape customer perceptions
through advertising and maintain a desired product image. Perceptual Maps are creating
by using consumer feedback to create visual maps, showing customer preferences and
brand positioning.

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Figure 4.4.
Sample Perceptual Map of Pain Relievers Products.

Source: Pride, W. M. and Ferrell, O.C. (2020). Marketing. Cengage Learning

Product Deletion is the process of removing products that no longer meet customer
needs.

Figure 4.5.
Product Deletion Process

Source: Pride, W. M. and Ferrell, O.C. (2020). Marketing. Cengage Learning

4.5. Service Marketing

Marketers must account for additional issues within the four major marketing mix
considering the service characteristics:
1. Intangibility
Marketers promote service promises, often using physical cues like clean
facilities to signify quality.
2. Inseparability
3. Perishability

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4. Heterogeneity
Leads to service quality variability. Therefore standardized packages and
word-of-mouth are key to managing this.
5. Client relationships, and
6. Customer contact.

Service Quality: Judged by customer expectations and experiences, it’s crucial as

consumers readily share negative experiences.

Service Quality Dimensions, include:

1. Tangibles (e.g., appearance of facilities and employees)
2. Reliability
3. Responsiveness
4. Assurance, and
5. Empathy (e.g., caring, and individual attention provided by employees)

Service Expectations shaped by past experiences, word-of-mouth, and advertising,

they’re pivotal in quality judgments. Providing consistent service quality is challenging
but vital, influenced by:
1. Understanding customer expectations,
2. Setting quality standards,
3. Employee performance, and
4. Managing expectations

Figure 4.6.
Service Quality Model

Source: Pride, W. M. and Ferrell, O.C. (2020). Marketing. Cengage Learning

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Chapter 5. Distribution Strategy

5.1. Supply Chain Management
Distribution in marketing ensures products are available to consumers when and where
they want to buy. It involves creating an effective supply chain, which encompasses all
activities from raw materials to the end customer. Supply Chain Management (SCM) is
a coordinated approach that synchronizes operations, logistics, procurement, and
marketing channels to ensure products are efficiently produced and delivered in the
correct amounts, to the right places, and at the right times

5.2. Marketing Channel

A marketing channels (distribution channel) is a group of individuals and organization
that direct product flow from producers to consumers, ensuring availability in the right
quantity, place, and time. Marketing channel functions, including:
- Create utilities (time, place, possession, form), facilitate exchanges, and
- Enhance efficiency.

Most marketing channel have intermediaries to connect product producers to consumer

that can help reduce exchange costs.

Figure 5.1. The intermediary benefit of increasing efficiency in exchange

Source: Pride, W. M. and Ferrell, O.C. (2020). Marketing. Cengage Learning

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Marketing channels can be classified for consumer products (Figure 5.2.) and business
products (Figure 5.3.)

Figure 5.2.
Marketing Channels for Consumer Product

Source: Pride, W. M. and Ferrell, O.C. (2020). Marketing. Cengage Learning

Figure 5.3.
Marketing Channels for Business Product

Source: Pride, W. M. and Ferrell, O.C. (2020). Marketing. Cengage Learning

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To ensure maximum distribution, the firms may use multiple channels and alliances for
broader distribution, including digital platforms via the internet.

Several factors influencing channel selection:

1. Customer characteristics
2. Product attributes
3. Organizational type
4. Competition
5. Environmental forces
6. Intermediary characteristics

There are three levels of market coverage intensity:

1. Intensive: All outlets for convenience products.
2. Selective: Chosen outlets for shopping products.
3. Exclusive: Single outlet for specialty products."
This concise version captures the key points about marketing channels, their functions,
types, and strategies for distribution intensity.

Figure 5.4.
Market Coverage Intensity

Source: Pride, W. M. and Ferrell, O.C. (2020). Marketing. Cengage Learning

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5.3. Retailing
Retailing covers transactions where buyers intend to use products personally or within
the household. A retailers is organizations that buy products to resell to end consumers.
The key success factors of retailing is to have a strong customer focus and retail strategy
that provides the level of service, product quality, and innovation consumer desire.
Online Retailing provide product access via the internet, complementing physical stores.

There are two general categories of retail stores:

1. General Merchandise: Broad product range (e.g., department store, convenience
store, hypermarket, warehouse showroom).
2. Specialty Retailers: Narrow but deep product selection (e.g., Traditional
Specialty Retailers, category killers, off-price retailers)
- Category Killers: Large stores specializing in a product category, offering
low prices and wide availability.
- Off-price retailers are stores that buy manufacturer’s seconds, overruns,
returns, and out-of-season goods from manufacturers at lower-than-
wholesale rates and sell them to customers at significant discounts.

Consumer purchase are influenced by social and psychological factors. A retailers must
create appealing environments and strategies to attract customers. The strategic issues
in retailing are as follows:
1. Location
2. Ownership: Including franchising arrangements.
3. Technology: Adoption of websites and apps.
4. Positioning: Targeting specific market gaps.
5. Store Image
6. Category Management: Coordinating similar products from various producers

5.4. Other distribution channel

An increasing share of total product sales comes from direct selling and direct
marketing, bypassing traditional physical retail stores.
- Direct Marketing Types:
1. Catalog Marketing: Customers order from catalogs via mail, phone, or
online.
2. Direct-Response Marketing: Products advertised for mail or phone orders.
3. Television Home Shopping: Viewers buy products using toll-free numbers
and credit cards.

Wholesaling refers to all transactions for resale, production, or business operations.

Types of Wholesalers:
1. Merchant Wholesalers: Own and resell goods.
2. Agents/Brokers: Facilitate sales without owning goods.
3. Manufacturers’ Outlets: Sell and support their own products.

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Chapter 6. Price Strategy

6.1. Pricing Concept

Price is the monetary value exchanged for a product during marketing transactions. The
significance of price in marketing:
1. Price can be adjusted quickly.
2. Directly influences total revenue.
Profit is calculated as (price x quantity sold) – total costs
3. Impacts customer perception psychologically
High pricing can signal superior quality and elevate the product’s prestige.

Price Competition:
- Focuses on price to compete and strives to meet or undercut competitors’ prices.
- Being the most cost-efficient seller is crucial for effective competition.
- The primary risk is initiating a price war.

Non-Price Competition:
- Differentiates a product based on attributes other than price.
- Strengthens brand loyalty.
- Competitors’ pricing must still be monitored.

Demand Curves:
- Typically, price and demand share an inverse relationship.
- Prestige products may deviate from this standard pattern.

Price Elasticity of Demand:

- Measures demand sensitivity to price changes.
- Inelastic demand is common for essential products with no alternatives, like
electricity.
- Products like recreational vehicles exhibit elastic demand, with significant
quantity reductions following price hikes.

Demand, Cost, and Profit Relationship:

- Costs and potential profits at varying sales volumes are crucial.
- Marginal analysis investigates cost and revenue shifts when adjusting
production by a single unit.
- Total Cost = quantity x (average fixed cost + average variable cost)
- To increase sales, prices often need to be reduced, affecting marginal revenue.
- Optimal production occurs where Marginal Revenue equals Marginal Cost

Breakeven Point:
- The juncture where production costs match the revenue from sales.
- Assumes demand remains constant regardless of price changes.

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Complexities in Pricing Decisions:

- Influenced by numerous factors including organizational goals, pricing
objectives, costs, marketing mix elements, channel member expectations,
competition, customer reactions, and legal considerations.
- Pricing affects promotional strategies, with premium prices being less advertised
than discount prices.
- Legal frameworks like the Sherman Antitrust Act regulate price control
practices.

Figure 6.1.
Factors affecting pricing decisions

Source: Pride, W. M. and Ferrell, O.C. (2020). Marketing. Cengage Learning

Pricing in Business Markets:

- Comprises entities purchasing for resale, operational use, or production.
- Unique considerations include discounts, geographic pricing, and transfer
pricing.
- Geographic pricing adjusts for distance-related costs, with F.O.B. terms
determining shipping cost responsibility.
- Transfer pricing involves internal sales and varies based on management
strategies and unit interactions.

6.2. Price Setting

There are six steps in the price-setting process:
1. Formulating Pricing Goals
2. Analyzing How the Target Market Perceives Price
3. Reviewing Competitors’ Pricing
4. Choosing a Foundation for Pricing
5. Deciding on a Pricing Approach
6. Setting an Exact Price

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Chapter 7. Integrated Marketing Communication

7.1. Promotion Mix
Integrated Marketing Communication (IMS) aligns promotional activities for maximum
impact. The key goal of IMS is to have consistency in messaging.

Decline in mass media use due to costs and audience unpredictability.

Enhanced targeting through database marketing and analyticss.

Integrated Marketing Communications (IMC) has gained effectiveness due to various

factors:
1. The decline in mass media advertising due to high costs and audience
unpredictability.
2. New promotional tools enable specific targeting of individual customers,
3. Database marketing and analytics enhance the accuracy of customer targeting.
4. Need for cost-effective communication strategies with measurable ROI.

Promotion is communication that aims to foster positive relationships and product

acceptance. Success of promotion relies on planning, implementation, coordination, and
control of communication. IMC effectiveness is driven by feedback from customer and
marketing environment, often obtained from an organization’s marketing information
system. Promotional objectives vary across organizations and evolve over time.
Common objectives include:
- Creating awareness,
- Stimulating demand,
- Encouraging product trials,
- Identifying prospects,
- Retaining loyal customers,
- Supporting resellers,
- Countering competitors’ efforts, and
- Minimizing sales fluctuations.

Promotion Mix Elements:

1. Advertising
Advertising is paid communication through mass media to inform a target
audience about an organization’s products. Advertising is cost-effective for
broad reach but can be expensive overall. It can have repeated exposure boosts
visibility but lacks immediacy and measurability.
2. Personal Selling:
Personal selling is a paid form of communication aimed at informing and
persuading customers to buy products in a transactional context.
3. Public Relations

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Public relations encompasses a range of communication tactics aimed at

developing and maintaining favorable connections between a company and its
various stakeholders.
4. Sales Promotion
Sales promotion refers to activities or materials that provide added value or
incentives to encourage the purchase of a product by resellers, salespeople, or
customers. Marketers allocate more budget to sales promotion than advertising,
and it is growing more rapidly.
An effective promotion mix balances advertising, personal selling, public relations, and
sales promotion for optimal results.

Figure 7.1.
Integrated Marketing Communication

Source: Pride, W. M. and Ferrell, O.C. (2020). Marketing. Cengage Learning

7.2. Selecting Promotion Mix

There are several factors influencing a marketer’s promotion mix:
1. Promotion resources, objective, and policies
Limited budgets may lead to a preference for personal selling due to its
measurable impact on sales.
2. Target Market characteristic
The size, distribution, and demographics of the target market are key
considerations.
3. Push and Pull Channel Strategy
A push policy involves the producer promoting products to the next entity in the
distribution channel, typically emphasizing personal selling as the main
promotional method. Meanwhile, a pull strategy involves direct promotion to

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consumers to create strong demand, mainly through advertising and sales

promotions.
4. Product Characteristics
Business products often focus on personal selling, while consumer goods rely
more on advertising. The product life cycle stage also dictates the mix, with
advertising being crucial during growth and maturity.
5. Promotional Costs
The expense and reach of promotional methods affect the mix. National
campaigns are costly but can be cost-effective if they reach a large audience.

7.3. Word of Mouth Communication & Product Placement

Word-of-mouth (WoM) communication refers to the casual and personal conversations
that customers have with each other regarding their experiences with products, brands,
and companies. It’s a powerful tool in marketing due to its personal nature and the trust
between individuals sharing the information.

Word-of-mouth (WoM):
- Buyers may rely on WoM for personal contacts like family and friends,
depending on the product and customer type.
- Smart marketers recognize the value of word-of-mouth communication. They
identify opinion leaders and encourage them to try their products, hoping they’ll
spread positive publicity.
- Consumers tend to share negative word-of-mouth information more readily than
positive feedback.
- Customers increasingly seek information and opinions online. Electronic word
of mouth (eWoM) occurs through websites, blogs, email, social networks, and
online forums.
- Buzz Marketing: This tactic aims to create excitement and public interest around
a product through creative events. Buzz marketing works best as part of an IMC
Program that also uses advertising, personal selling, sales promotion, and
publicity.
- Viral Marketing: A method to encourage consumers to spread a marketing
message quickly, often via email or online video.
- Product Placement: a method to strategically placing products within media
content to subtly promote to the target audience, which has proven effective in
engaging consumers.

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