!"#$%&' ) * !+,$#-. / 0#'1&%2-3 4%'#%&3.5 6#'%-&'2-3 %+ 7829: !

8;%+,&' <&9#%2+-;"2$;

!+,$#-.=2:& 4%'#%&32> 69#--2-35 ?&@2-2-3 0#'1&%2-3A; <+9& (Pg SS)
- Stiategic Planning (Beveloping anu maintaining a stiategic fit between oiganization's goals
anu capabilities anu its changing maiketing oppoitunities)

- ?&@2-2-3 # 0#'1&%BC'2&-%&: 02;;2+-
o Nission Statement (Statement of the oiganization's puipose)
! Shoulu be maiket-oiienteu
! Befineu in teims of customei neeus
! Shoulu not be too naiiowbioau
! Shoulu be iealistic
! Shoulu be specific
! Shoulu fit maiket enviionment
! Shoulu base on uistinctive competencies
! Shoulu be motivating

- 4&%%2-3 !+,$#-. CDE&>%2F&; / G+#9;
o Nission neeus to be tuineu into uetaileu suppoiting objectives foi each level of
management

- ?&;23-2-3 %"& 78;2-&;; 6+'%@+92+
o Business Poitfolio (Collection of businesses anu piouucts that make up the company)
o Analyze cuiient business poitfolio
! Poitfolio Analysis (Evaluates piouucts anu businesses making up the
company)
! Stiategic Business 0nit (SB0) (0nit of company having sepaiate mission
anu objectives anu can be planneu inuepenuently fiom othei company
businesses)
! Attiactiveness of SB0's maiket oi inuustiy
! Stiength of SB0's position in that maiket oi inuustiy
Invest moie to builu shaie
Invest just enough to holu at cuiient level
Baivest to milk shoit-teim cash flow iegaiuless of long-teim effect
Bivest by selling oi phasing it out

o Shape futuie poitfolio
! 0bjective must be "piofitable giowth", not giowth itself
! Naiket Penetiation (Naking moie sales to cuiient customeis without
changing piouucts)- existing maikets, existing piouucts
! Naiket Bevelopment (Iuentifying anu ueveloping new maikets foi
cuiient piouucts)- new maikets, existing piouucts
! Piouuct Bevelopment (0ffeiing mouifieu oi new piouucts to cuiient
maikets)- existing maikets, new piouucts
! Biveisification (Staiting up oi buying businesses outsiue of cuiient
piouucts anu maikets)- new maikets, new piouucts
Caieful not to lose maiket focus
! Bownsizing
Naiket enviionment has changeu, making some piouucts oi
maikets less piofitable
Fiim has giown too fast anu enteieu aieas wheie it lacks
expeiience
Fiim enteis too many foieign maikets without piopei ieseaich
Intiouuces new piouucts that uo not offei supeiioi customei
value

69#--2-3 0#'1&%2-35 6#'%-&'2-3 %+ 7829: !8;%+,&' <&9#%2+-;"2$; (Pg 42)
- 6#'%-&'2-3 =2%" C%"&' !+,$#-. ?&$#'%,&-%;
o value Chain (Seiies of uepaitments that caiiy out value-cieating activities to uesign,
piouuce, maiket, uelivei anu suppoit a fiim's piouucts)
o Success uepenus on how well each uepaitment peifoims its woik anu how well activities of
vaiious uepaitments aie cooiuinateu

- 6#'%-&'2-3 =2%" C%"&'; 2- %"& 0#'1&%2-3 4.;%&,
o value-Beliveiy Netwoik (Netwoik maue up of the company, supplieis, uistiibutois anu
ultimately customeis who "paitnei" each othei to impiove peifoimance of entiie system)
o Competition no longei takes place between inuiviuuals. Rathei, it takes place between the
entiie value-ueliveiy netwoiks cieateu by competitois.






0#'1&%2-3 4%'#%&3. / %"& 0#'1&%2-3 02H (Pg 4S)
- !8;%+,&'B!&-%&'&: 0#'1&%2-3 4%'#%&3.
o 0#'1&% 4&3,&-%#%2+- (Biviuing a maiket into uistinct gioups of buyeis who have uistinct
neeus, chaiacteiistics oi behavioi anu who might iequiie sepaiate piouucts oi maiketing
mixes)
o I#'3&% 0#'1&%2-3 (Evaluating each maiket segment's attiactiveness anu selecting one oi
moie segments to entei)
o 0#'1&% 6+;2%2+-2-3 (Aiianging foi a piouuct to occupy a cleai, uistinctive anu uesiiable
place ielative to competing piouucts in minus of taiget consumeis)
! Bistinguish fiom competing bianus
! uive gieatest stiategic auvantage in theii taiget maikets

- ?&F&9+$2-3 %"& 0#'1&%2-3 02H
o Foui PsFoui Cs
! PiouuctCustomei Solution (uoous-anu-seivices combination company
offeis to taiget maiket)
! PiiceCustomei Cost (Amount customeis pay to obtain piouuct)
! PlaceConvenience (Company activities that make piouuct available to
taiget consumeis)
! PiomotionCommunication (Activities communicating meiits of piouuct
anu peisuauing taiget customeis to buy)

- 0#-#32-3 %"& 0#'1&%2-3 J@@+'% (Pg Su)
- 0#'1&%2-3 K-#9.;2; L4MCIN
o Finu attiactive oppoitunities
o Avoiu enviionmental thieats
o Analyze company stiengths anu weaknesses
o Analyze cuiient anu possible maiketing actions

- 0#'1&%2-3 69#--2-3 (auuiesses "What" & "Why" of maiketing activities)
o Executive Summaiy
o Cuiient Naiketing Situation
o Thieats & 0ppoitunities Analysis
o 0bjectives & Issues
o Naiketing Stiategy
o Action Piogiams
o Buugets
o Contiols
- 0#'1&%2-3 O,$9&,&-%#%2+- (auuiesses "Who", "Wheie", "When" & "Bow")
o Bepenus on how well the company blenus its people, oiganizational stiuctuie, uecision anu
iewaiu systems anu company cultuie into a cohesive action piogiam that suppoits its
stiategies

- 0#'1&%2-3 ?&$#'%,&-% C'3#-2P#%2+-
o Functional 0iganization (Biffeient maiketing activities heaueu by a functional specialist)
o ueogiaphic 0iganization (Sales anu maiketing people assigneu to specific countiies,
iegions anu uistiicts)
o Piouuct Nanagement 0iganization (Piouuct managei uevelops anu implements a complete
stiategy anu maiketing piogiam foi a specific piouuct oi bianu)
o Naiket oi Customei Nanagement 0iganization (Naiket manageis uevelop maiketing
stiategies anu plans foi theii specific maikets oi customeis)

- 0#'1&%2-3 !+-%'+9 (Neasuiing anu evaluating iesults of maiketing stiategies anu plans anu
taking coiiective action to ensuie objectives aie achieveu)
o 0peiating Contiol (Checking ongoing peifoimance against annual plan anu taking
coiiective action when necessaiy)
o Stiategic Contiol (Looking at whethei company's basic stiategies aie well matcheu to its
oppoitunities)

- I"& 0#'1&%2-3 J-F2'+-,&-%

0&#;8'2-3 / 0#-#32-3 <&%8'- +- 0#'1&%2-3 (Pg S4)
- Retuin on NaiketingNaiketing R0I (Net ietuin uiviueu by costs of the maiketing investment)
o Stanuaiu Naiketing Peifoimance
! Bianu Awaieness
! Sales
! Naiket Shaie
o Customei-Centeieu Neasuies
! Customei Acquisition
! Customei Retention
! Customei Lifetime value
!"#$%&' Q * I"& 0#'1&%2-3 J-F2'+-,&-%

I"& !+,$#-.A; 02>'+&-F2'+-,&-% (Actois close to the company affecting its ability to seive its
customeis) (Pg 6u)
- I"& !+,$#-.
o All uepaitments must "think customei" anu woik in haimony to pioviue supeiioi customei
value anu satisfaction

- 48$$92&';
o Naiketing manageis must watch supply availability (e.g. supply shoitages oi uelays, laboi
stiikes)
o Naiketing manageis must monitoi piice tienus of theii key inputs

- 0#'1&%2-3 O-%&',&:2#'2&; (Fiims helping company to piomote, sell anu uistiibute goous to
final buyeis)
o Laige anu giowing iesellei oiganizations have enough powei to uictate teims oi even shut
manufactuiei out of laige maikets
o Physical uistiibution fiims stock anu move goous
o Naiketing seivices agencies taiget anu piomote piouucts to the iight maikets
o Financial inteimeuiaiies finance tiansactions oi insuie against iisks

- !8;%+,&';
o Consumei Naikets (Inuiviuuals anu householus buy goous anu seivices foi peisonal
consumption)
o Business Naikets (Buy goous anu seivices foi fuithei piocessing oi foi use in piouuction)
o Resellei Naikets (Buy goous anu seivices to iesell at a piofit)
o uoveinment Naikets (uoveinment agencies buy goous anu seivices to piouuce public
seivices oi tiansfei to otheis who neeu them)
o Inteinational Naikets (Buyeis in othei countiies)

- !+,$&%2%+';

- 68D92>; (Any gioup having an actual oi potential inteiest in oi impact on an oiganization's
ability to achieve its objectives)
o Financial Publics (Influence company's ability to obtain funus)
o Neuia Publics (Caiiy news, featuies anu euitoiial opinion)
o uoveinment Publics
o Citizen-Action Publics
o Local Publics (Neighboihoou iesiuents anu community oiganizations)
o ueneial Public
o Inteinal Publics (Woikeis, manageis, volunteeis anu boaiu of uiiectois)

I"& !+,$#-.A; 0#>'+&-F2'+-,&-% (Laigei societal foices affecting micioenviionment) (Pg 6S)
- ?&,+3'#$"2> J-F2'+-,&-%
o Bemogiaphy (Stuuy of human populations in teims of size, uensity, location, age, genuei,
iace, occupation anu othei statistics)

o !"#-32-3 K3& 4%'8>%8'& +@ %"& 6+$89#%2+-
! 7#D. 7++,&'; (Boin following Woilu Wai II until eaily 196us)
Luciative maiket foi new housing anu home iemoueling, financial
seivices, tiavel anu enteitainment, eating out, health anu fitness
piouucts anu high-piiceu cais anu othei luxuiies
! G&-&'#%2+- R (Boin between 196S anu 1976 in "baby ueaith" following
baby boom)
Noie cautious economic outlook
Caie about enviionment
Less mateiialistic
Noie skeptical
Family-oiienteu
Incieasing uivoice iates
! G&-&'#%2+- S (Boin between 1977 anu 1994)
Laige teen anu young auult maiket
0ttei fluency anu comfoit with computei, uigital anu infoimation
technology
! G&-&'#%2+- T (Boin between eaily 199us anu 2u1u)
Bighly connecteu
Neuia technology eia

! G&-&'#%2+-#9 0#'1&%2-3
Naiketeis neeu to foim moie piecise age-specific segments
Segment by theii lifestyle oi life stage
Tiy to be bioauly inclusive anu offei each geneiation something
specifically uesigneu foi it at the same time

o I"& !"#-32-3 K,&'2>#- U#,29.
! Special neeus of nontiauitional householus
! Chilu uay caie business anu incieaseu consumption of convenience foous
anu seivices, caieei-oiienteu women's clothing anu financial seivices

o G&+3'#$"2> 4"2@%; 2- 6+$89#%2+-
! Cieateu a booming S0B0 maiket

o K 7&%%&'BJ:8>#%&: #-: 0+'& M"2%&B!+99#' 6+$89#%2+-
! Bemanu foi quality piouucts, books, magazines, tiavel, PCs anu inteinet
seivices

o O->'&#;2-3 ?2F&';2%.
! Ethnic, iacial anu cultuial uiveisity
! uay anu lesbian consumeis
! People with uisabilities
Naiket foi online gioceiy shopping, home ueliveiy, tiavel, spoits
anu othei leisuie-oiienteu piouucts anu seivices

- J>+-+,2> J-F2'+-,&-% (Factois affecting consumei buying powei anu spenuing patteins)

o !"#-3&; 2- O->+,&
! Naiketeis tiy to offei gieatei value (Right combination of piouuct quality
anu goou seivice at a faii piice)
! Naiketeis shoulu pay attention to income uistiibution as well as aveiage
income
0ppei-Class Consumeis - Naiket foi luxuiy goous
Niuule Class Consumeis - Naiket foi goou quality goous
Woiking Class Consumeis - Naiket foi basics of foou, clothing anu
sheltei
0nueiclass Consumeis - Naiket foi most basic puichases

o !"#-32-3 !+-;8,&' 4$&-:2-3 6#%%&'-;
! Biffeient income levels have uiffeient spenuing patteins

o V#98& ,#'1&%2-3 involves wats to offei financially conscious buyeis gieatei value- the
iight combination of quality anu seivice at a faii piice.

- W#%8'#9 J-F2'+-,&-% (Natuial iesouices aie neeueu as inputs by maiketeis oi aie affecteu
by maiketing activities)

o uiowing shoitages of iaw mateiials
! Fiims making piouucts iequiieu iaw mateiials face laige cost incieases
even if the mateiials iemain available

o Incieaseu pollution

o Incieaseu goveinment inteivention
! Naiketeis shoulu uevelop solutions to the mateiial anu eneigy pioblems
! Consumei uemanus with ecologically safei piouucts, iecyclable oi
biouegiauable packaging, iecycleu mateiials anu components, bettei
pollution contiols anu moie eneigy-efficient opeiations

o Enviionmentally sustainable stiategies

- I&>"-+9+32>#9 J-F2'+-,&-% (Foices that cieate new technologies, cieating new piouuct anu
maiket oppoitunities)

o Nost uiamatic foice
o Cieate new maikets anu oppoitunities
o Eveiy new technology ieplaces an oluei technology
o Fantasy piouucts must not only be technical, but also commeicial (piactical anu affoiuable)


- 6+92%2>#9 J-F2'+-,&-% (Laws, goveinment agencies anu piessuie gioups influencing anu
limiting vaiious oiganizations anu inuiviuuals in a given society)

o X&32;9#%2+- <&389#%2-3 78;2-&;; (public policies to guiue commeice- limit business foi
the goou of society)
! O->'&#;2-3 X&32;9#%2+-
To piotect companies fiom each othei by uefining anu pieventing
unfaii competition
To piotect consumeis fiom unfaii business piactices by uefining
anu enfoicing unfaii business piactices
To piotect inteiests of society against uniestiaineu business
behavioi by ensuiing fiims take iesponsibility foi societal costs of
theii piouuction oi piouucts

! !"#-32-3 G+F&'-,&-% K3&->. J-@+'>&,&-%

o O->'&#;&: J,$"#;2; +- J%"2>; / 4+>2#99. <&;$+-;2D9& K>%2+-;

! 4+>2#99. <&;$+-;2D9& 7&"#F2+'
Enlighteneu companies look beyonu what the iegulatoiy system
allows anu simply "uo the iight thing" to piotect long-iun inteiests
of consumeis anu enviionment

! !#8;&B<&9#%&: 0#'1&%2-3
To exeicise social iesponsibility anu builu moie positive images,
companies link themselves to woithwhile causes

- !89%8'#9 J-F2'+-,&-% (Institutions anu othei foices affecting society's basic values,
peiceptions, piefeiences anu behaviois)

o 6&';2;%&->& +@ !89%8'#9 V#98&;
! Naiketeis have some chance of changing seconuaiy values, but little
chance of changing coie values

o 4"2@%; 2- 4&>+-:#'. !89%8'#9 V#98&;
! Naiketeis want to pieuict cultuial shifts in oiuei to spot new
oppoitunities oi thieats


! 6&+$9&A; V2&=; +@ I"&,;&9F&;
People use piouucts, bianus anu seivices as a means of self-
expiession anu matching theii views of themselves

! 6&+$9&A; V2&=; +@ C%"&';
People want to be with anu seive otheis
uieatei uemanu foi "social suppoit" piouucts anu seivices that
impiove communication between people such as health clubs
! 6&+$9&A; V2&=; +@ C'3#-2P#%2+-;
People touay see woik not as a souice of satisfaction, but as a
iequiieu choie to eain money to enjoy nonwoik houis
0iganizations neeu to finu new ways to win consumei anu
employee confiuence

! 6&+$9&A; V2&=; +@ 4+>2&%.
People's oiientation to theii society influences theii consumption
patteins anu attituues towaiu the maiketplace

! 6&+$9&A; V2&=; +@ W#%8'&
People iecognizeu natuie is finite anu fiagile anu can be uestioyeu
oi spoileu by human activities
Cieateu a sizable "lifestyles of health anu sustainability" (L0BAS)
maiket foi eveiything fiom natuial, oiganic anu nutiitional
piouucts to ienewable eneigy anu alteinative meuicine

! 6&+$9&A; V2&=; +@ %"& Y-2F&';&
Some futuiists have noteu a ieneweu inteiest in spiiituality
Piesents a unique maiketing oppoitunity foi bianus

<&;$+-:2-3 %+ %"& 0#'1&%2-3 J-F2'+-,&-% (Pg 8S)
- Smait maiketing manageis will take a pioactive iathei than ieactive appioach to maiketing
enviionment









!"#$%&' Z * 0#-#32-3 0#'1&%2-3 O-@+',#%2+-
- Naiketing Infoimation System (NIS) (People, equipment anu pioceuuies to gathei, soit,
analyze, evaluate anu uistiibute neeueu, timely anu accuiate infoimation to maiketing
uecision makeis)

K;;&;;2-3 0#'1&%2-3 O-@+',#%2+- W&&:; (Pg 91)
- NIS shoulu monitoi maiketing enviionment in oiuei to pioviue uecision makeis with
necessaiy infoimation to make key maiketing uecisions
- Company must ueciue whethei benefits of having auuitional infoimation aie woith the costs of
pioviuing it

?&F&9+$2-3 0#'1&%2-3 O-@+',#%2+- (Pg 92)
- Naiketeis can obtain infoimation fiom |1j inteinal uata, |2j maiketing intelligence anu |Sj
maiketing ieseaich
- O-%&'-#9 ?#%#
o Inteinal uatabases (Electionic collections of infoimation obtaineu fiom uata souices within
company)
! Souices incluue
Accounting uepaitment piepaies financial statements anu keeps
uetaileu iecoius of sales, costs anu cash flows
0peiation iepoits on piouuction scheuules, shipments anu
inventoiies
Sales foice iepoits on iesellei ieactions anu competitoi activities
Naiketing uepaitment fuinishes infoimation on customei
uemogiaphics, psychogiaphics anu buying behavioi
Customei seivice uepaitment keeps iecoius of customei
satisfaction oi seivice pioblems
! Can be accesseu moie quickly anu cheaply
! Nay be incomplete oi in wiong foim
! Requiies majoi effoit to be kept upuateu
! Nust be well integiateu anu ieauily accessible

- 0#'1&%2-3 O-%&9923&->& (Systematic collection anu analysis of publicly available infoimation
about competitois anu uevelopments in maiketing enviionment)
o Techniques iange fiom quizzing company's own employees anu benchmaiking
competitois' piouucts to ieseaiching inteinet, luiking aiounu inuustiy tiaue shows anu
iooting thiough iivals' tiash bins
o Nost companies aie taking steps to piotect theii own infoimation
o With availability of legitimate intelligence souices, company uoes not have to bieak law oi
accepteu coues of ethics to get goou intelligence

- 0#'1&%2-3 <&;&#'>" (Systematic uesign, collection, analysis anu iepoiting of uata ielevant to
a specific maiketing situation facing an oiganization) (Pg 92)
- Companies can have |1j own ieseaich uepaitments woiking with maiketing manageis, |2j
hiie outsiue ieseaich specialists oi |Sj puichase uata collecteu by outsiue fiims

- ?&@2-2-3 %"& 6'+D9&, / <&;&#'>" CDE&>%2F&;
o Exploiatoiy ieseaich is to gathei pieliminaiy infoimation to help uefine pioblem anu
suggest hypothesis
o Besciiptive ieseaich is to uesciibe maiketing pioblems, situations oi maikets
o Casual ieseaich is to test hypotheses about cause-anu-effect ielationships
- ?&F&9+$2-3 %"& <&;&#'>" 69#-
o Reseaich plan outlines souices of existing uata anu spells out specific ieseaich appioaches,
contact methous, sampling plans anu instiuments ieseaicheis will neeu to gathei new
uata
o Reseaich objectives must be tianslateu into specific infoimation neeus
o To meet infoimation neeus, ieseaich plan can call foi gatheiing seconuaiy uata, piimaiy
uata oi both
- G#%"&'2-3 4&>+-:#'. ?#%# (Infoimation that alieauy exists somewheie, collecteu foi anothei
puipose)
o Company can use |1j own inteinal uatabase, |2j buy seconuaiy uata iepoits fiom outsiue
supplieis anu |Sj use commeicial online uatabases of inuustiy association, goveinment
agency, business publication anu news meuium
o Auvantages
! Quickei at lowei cost
! Can collect uata an inuiviuual company cannot collect on its own
o Bisauvantages
! Nay not exist
! Nay not be veiy usable
! Nay not be ielevant
! Nay not be accuiate
! Nay not be cuiient
! Nay not be impaitial
- 6'2,#'. ?#%# !+99&>%2+-
o <&;&#'>" K$$'+#>"&;
! CD;&'F#%2+-#9 <&;&#'>" (0bseiving ielevant people, actions anu
situations)
Can obtain infoimation people aie unwilling oi unable to pioviue
Ethnogiaphic ieseaich involves senuing tiaineu obseiveis to
watch
! 48'F&. <&;&#'>" (Asking people questions about theii knowleuge,
attituues, piefeiences anu buying behavioi)
Can obtain uesciiptive infoimation
Single-souice uata systems electionically monitoi suivey
iesponuents' puichases anu exposuie to vaiious maiketing
activities
Auvantages
o Flexible
Bisauvantages
o People aie unable to answei suivey questions sometimes
o People may be unwilling to iesponu
o People may give pleasing answeis
o Busy people may not take the time
o People may iesent the intiusion into piivacy
! JH$&'2,&-%#9 <&;&#'>" (Selecting matcheu gioups of subjects, giving
them uiffeient tieatments, contiolling ielateu factois anu checking foi
uiffeiences in gioup iesponses)
Tiies to explain cause-anu-effect ielationships
o !+-%#>% 0&%"+:;
! 0#29[ I&9&$"+-& / 6&';+-#9 O-%&'F2&=2-3
Nail questionnaiies can collect |1j laige amounts of infoimation at
low cost pei iesponuent, |2j moie honest anu |Sj unbiaseu
answeis
Nail questionnaiies aie |1j not flexible, |2j take longei to
complete, |Sj iesponse iate is often low anu |4j it is haiu to
contiol who at mailing auuiess fills out questionnaiie

Telephone inteiviewing is |1j quick, |2j moie flexible anu |Sj
iesponu iates tenu to be highei
Telephone inteiviewing's |1j cost pei iesponuent is highei, |2j
intiouuces inteiviewei bias, |Sj uiffeient inteivieweis may
inteipiet anu iecoiu iesponses uiffeiently anu |4j some may cheat
unuei time piessuies

Inuiviuual inteiviewing is |1j flexible anu |2j actual piouucts,
auveitisements oi packages can be shown to obseive ieactions
anu behavioi
Inuiviuual inteiviewing's |1j cost is high

Focus gioup inteiviewing |1j encouiages fiee anu easy uiscussion
anu |2j biings out actual feelings anu thoughts
Focus gioup inteiviewing |1j takes time anu cost, |2j haiu to
geneialize fiom iesults anu |Sj inteiviewei bias is gieatei
! C-92-& 0#'1&%2-3 <&;&#'>" (Thiough inteinet suiveys anu online focus
gioups)
|1j Results aie instantaneous, |2j low in cost anu |Sj excellent foi
ieaching the haiu-to-ieach
|1j Inteinet access is iestiicteu, |2j cannot contiol who is in
sample, |Sj lacks uynamics of moie peisonal appioaches anu |4j
conceins consumei piivacy

o 4#,$92-3 69#- (Selecting segment of population to iepiesent whole population)
! Who is to be suiveyeu
! Bow many shoulu be suiveyeu
! Bow shoulu people be chosen
Piobability Sample (Each population membei has known chance
of being incluueu anu ieseaicheis can calculate confiuence limits
foi sampling eiioi), e.g. simple ianuom sample, stiatifieu ianuom
sample anu clustei (aiea) sample
Nonpiobability Sample (Sampling eiioi cannot be measuieu), e.g.
convenience sample, juugment sample anu quota sample
o <&;&#'>" O-;%'8,&-%;
! Questionnaiies aie veiy flexible, but ieseaicheis shoulu use simple,
uiiect, unbiaseu woiuing anu aiiange questions in logical oiuei
! Nechanical instiuments monitoi consumei behavioi
- O,$9&,&-%2-3 %"& <&;&#'>" 69#-
o Involves collecting, piocessing anu analyzing infoimation
- O-%&'$'&%2-3 / <&$+'%2-3 %"& U2-:2-3;
o Nanageis anu ieseaicheis must woik togethei closely when inteipieting ieseaich iesults




K-#9.P2-3 0#'1&%2-3 O-@+',#%2+- (Pg 1uS)
- !8;%+,&' <&9#%2+-;"2$ 0#-#3&,&-% L!<0N (Builuing anu maintaining piofitable customei
ielationships by ueliveiing supeiioi customei value anu satisfaction)
o CRN manages uetaileu infoimation about inuiviuual customeis anu caiefully manages
customei touch points to maximize customei loyalty
o CRN analysts uevelop uata waiehouses anu use sophisticateu uate mining techniques to
uig out inteiesting finuings about customeis
o CRN is pait of an effective oveiall CRN stiategy, not only a technology anu softwaie
solution

?2;%'2D8%2-3 / Y;2-3 0#'1&%2-3 O-@+',#%2+- (Pg 1u7)
- Infoimation uistiibution involves enteiing infoimation into uatabases anu making it available
in usei-fiienuly anu timely way thiough intianet anu extianet

C%"&' 0#'1&%2-3 O-@+',#%2+- !+-;2:&'#%2+-; (Pg 1u7)
- 0#'1&%2-3 <&;&#'>" 2- 4,#99 78;2-&;;&; / W+-$'+@2% C'3#-2P#%2+-;
o Nanageis of small businesses anu nonpiofit oiganizations can |1j obseive things aiounu
them, |2j conuuct infoimal suiveys using small convenience sample, |Sj conuuct simple
expeiiments anu |4j obtain most seconuaiy uata available
- O-%&'-#%2+-#9 0#'1&%2-3 <&;&#'>"
o Bifficult to finu goou seconuaiy uata because many countiies have almost no ieseaich
seivices at all
o Bifficult to collect piimaiy uata because of uifficulty in ueveloping goou samples
o Reaching iesponuents is not easy uue to |1j not eveiyone has phones oi peisonal
computeis, |2j pooi ioaus anu tianspoitation systems anu |Sj language obstacle in some
countiies
o Consumeis vaiy in attituues towaiu maiketing ieseaich in uiffeient countiies uue to
customs
o Some iesponuents may be unable to iesponu uue to high functional illiteiacy iates
- 68D92> 6+92>. / J%"2>; 2- 0#'1&%2-3 <&;&#'>"
o O-%'8;2+-; +- !+-;8,&' 6'2F#>.
! Some consumeis iesent maiketing ieseaich because |1j pievious
"ieseaich suiveys" tuineu out to be attempts to sell something oi |2j they
thought it was not ieally neeueu oi too peisonal
! 0iganizations can euucate consumeis about benefits of maiketing
ieseaich anu to uistinguish it fiom telephone selling anu uatabase
builuing
! Companies can appoint "chief piivacy officei" (CP0) to safeguaiu piivacy
of consumeis
! Reseaicheis can pioviue value in exchange foi infoimation
o 02;8;& +@ <&;&#'>" U2-:2-3;
! Few auveitiseis openly iig theii ieseaich uesigns oi blatantly
misiepiesent finuings
! Each company must accept iesponsibility foi policing the conuuct anu
iepoiting of own maiketing ieseaich to piotect consumeis' anu own best
inteiests
!"#$%&' \ * !+-;8,&' 0#'1&%; / !+-;8,&' 78.&' 7&"#F2+'
- Consumei Buying Behavioi (Buying behavioi of final consumeis - inuiviuuals anu householus
who buy goous anu seivices foi peisonal consumption)
- Consumei Naiket (All inuiviuuals anu householus who buy oi acquiie goous anu seivices foi
peisonal consumption)

0+:&9 +@ !+-;8,&' 7&"#F2+' (Pg 122)
- Naiketing & 0thei Stimuli
o Foui Ps - Piouuct, Piice, Place & Piomotion
o Buyei's Enviionment - Economic, Technological, Political & Cultuial
- Buyei's Black Box
o Buyei's chaiacteiistics influence peiceptions anu ieactions to stimuli
o Buyei's uecision piocess affects buyei's behavioi
- Buyei Responses
o Piouuct Choice, Bianu Choice, Bealei Choice, Puichase Timing & Puichase Amount

!"#'#>%&'2;%2>; K@@&>%2-3 !+-;8,&' 7&"#F2+' (Pg 12S)
- !89%8'#9 U#>%+';
o !89%8'& (Set of basic values, peiceptions, wants anu behaviois leaineu by membei of
society fiom family anu othei impoitant institutions)
! Cultuial influences vaiy gieatly fiom countiy to countiy
! Cultuial shifts, e.g. towaiu gieatei concein about health anu fitness,
towaiu infoimality
o 48D>89%8'& (uioup of people with shaieu value systems baseu on common life expeiiences
anu situations)
! Incluues nationalities, ieligions, iacial gioups anu geogiaphic iegions
! ]2;$#-2> >+-;8,&'; |1j buy moie bianueu anu highei-quality piouucts,
|2j make shopping a family affaii, |Sj chiluien have big say, |4j aie bianu
loyal anu |Sj favoi companies who show special inteiest in them
! K@'2>#- K,&'2>#- >+-;8,&'; |1j aie moie piice conscious, |2j stiongly
motivateu by quality anu selection, |Sj bianus aie impoitant, |4j enjoy
shopping anu |Sj most fashion-conscious
! K;2#- K,&'2>#-; |1j aie most tech-savvy, |2j shop fiequently, |Sj most
bianu-conscious anu |4j least bianu loyal
! 0#%8'& >+-;8,&'; |1j aie bettei off financially anu |2j have moie time
o 4+>2#9 !9#;; (Relatively peimanent anu oiueieu uivisions in society whose membeis shaie
similai values, inteiests anu behaviois)
! Neasuieu as combination of occupation, income, euucation, wealth anu
othei vaiiables
- 4+>2#9 U#>%+';
o G'+8$; (Two oi moie people who inteiact to accomplish inuiviuual oi mutual goals)
! Nembeiship gioups, which a peison belongs, have uiiect influence
! Refeience gioups, which people uon't belong, have uiiect (face-to-face) oi
inuiiect influence
! Naiketeis tiy to iuentify iefeience gioups of taiget maikets
! Naiketeis tiy to iuentify opinion leaueis (people within iefeience gioup
who, because of special skills, knowleuge, peisonality oi othei
chaiacteiistics, exeits influence) anu uiiect maiketing effoits towaiu
them
o U#,29.
! Buying ioles of husbanu anu wife changes with evolving consumei
lifestyles
! Chiluien may have stiong influence on family buying uecisions
o <+9&; / 4%#%8;
! People usually choose piouucts appiopiiate to theii ioles (activities) anu
status (esteem)
- 6&';+-#9 U#>%+';
o K3& / X2@&B!.>9& 4%#3&
! People change goous anu seivices they buy ovei theii lifetimes
! Buying is shapeu by stage of family life cycle
! Bowevei, alteinative anu nontiauitional stages aie incieasing, e.g.
unmaiiieu couples, singles maiiying latei in life, chiluless couples, same-
sex couples, single paients anu extenueu paients
o C>>8$#%2+-
! 0ccupation affects goous anu seivices bought
o J>+-+,2> 42%8#%2+-
! Economic situation affects piouuct choice
o X2@&;%.9& (Pattein of living as expiesseu in activities, inteiests anu opinions)
! Nost wiuely useu lifestyle classification is SRI Consulting's values anu
Lifestyles (vALS) typology, which uiviues consumeis baseu on piimaiy
motivation (iueals, achievement oi self-expiession) anu iesouices (high
oi low)
o 6&';+-#92%. (0nique psychological chaiacteiistics leauing to ielatively consistent anu
lasting iesponses to one's own enviionment) / 4&9@B!+->&$%
! Bianus have peisonalities anu consumeis aie likely to choose bianus
whose peisonalities match theii own
! Bianu peisonality is specific mix of human tiaits that may be attiibuteu
to paiticulai bianu
! Self-conceptself-image means people's possessions contiibute to anu
ieflect theii iuentities
- 6;.>"+9+32>#9 U#>%+';
o 0+%2F#%2+-
! NotiveBiive (Neeu that is sufficiently piessing to uiiect peison to seek
satisfaction of neeu)
! Sigmunu Fieuu suggests peison's buying uecisions aie affecteu by
subconscious motives that even buyei may not fully unueistanu
! Abiaham Naslow suggests peison tiies to satisfy neeus in oiuei of
physiological neeus, safety neeus, social neeus, esteem neeus anu self-
actualization neeus
o 6&'>&$%2+- (Piocess by which people select, oiganize anu inteipiet infoimation to foim
meaningful pictuie of the woilu)
! Peiception influences how peison acts
! People foim uiffeient peiceptions because of thiee peiceptual piocesses
Selective Attention - Tenuency to scieen out most of exposeu
infoimation
Selective Bistoition - Tenuency to inteipiet infoimation that will
suppoit what is alieauy believeu
Selective Retention - Tenuency to iemembei goou points maue
about favoieu bianu anu foiget goou points maue about
competing bianus
o X&#'-2-3 (Changes in inuiviuual's behavioi aiising fiom expeiience)
! 0ccuis thiough inteiplay of uiives, stimuli, cues, iesponses anu
ieinfoicement
o 7&92&@; (Besciiptive thoughts a peison holus about something) / K%%2%8:&; (Peison's
consistently favoiable oi unfavoiable evaluations, feelings anu tenuencies towaiu object
oi iuea)
! Beliefs make up piouuct anu bianu images that affect buying behavioi
! Company shoulu fit piouucts into existing attituues iathei than attempt
to change attituues







I.$&; +@ 78.2-3 ?&>2;2+- 7&"#F2+' (Pg 1S7)
- !+,$9&H 78.2-3 7&"#F2+' ! #$%# $&'()'*+*&,- .$%&$/$01&, 2$//*3*&0*.
o 0ccuis unuei conuitions of high consumei involvement anu significant peiceiveu bianu
uiffeiences
o Bighly involveu because piouuct is expensive, iisky, puichaseu infiequently anu highly
self-expiessive
o Naiketeis neeu to |1j help buyeis leain about piouuct-class attiibutes anu ielative
impoitance anu |2j uiffeientiate bianu's featuies (e.g. computeis)
- ?2;;+-#->&B<&:8>2-3 78.2-3 7&"#F2+' ! #$%# $&'()'*+*&,- /*4 2$//*3*&0*.
o 0ccuis unuei conuitions of high consumei involvement, but few peiceiveu bianu
uiffeiences
o To countei postpuichase uissonance (aftei-sale uiscomfoit) consumeis may expeiience,
maiketeis aftei-sale communications shoulu pioviue eviuence anu suppoit to help
consumeis feel goou (e.g. caipets)
- ]#D2%8#9 78.2-3 7&"#F2+' ! )(4 $&'()'*+*&,- /*4 2$//*3*&0*.
o 0ccuis unuei conuitions of low consumei involvement anu few significant peiceiveu bianu
uiffeiences
o Lowly involveu because piouuct is low-cost anu puichaseu fiequently
o Naiketeis often use piice anu sales piomotion, visual symbols anu imageiy foi association
(e.g. salt)
- V#'2&%.B4&&12-3 78.2-3 7&"#F2+' ! )(4 $&'()'*+*&,- .$%&$/$01&, 2$//*3*&0*.
o 0ccuis unuei conuitions of low consumei involvement, but significant peiceiveu bianu
uiffeiences
o Naiket leauei will encouiage habitual buying behavioi by uominating shelf space, keeping
shelves fully stockeu anu iunning fiequent ieminuei auveitising
o Challengei fiims will encouiage vaiiety seeking by offeiing lowei piices, special ueals,
coupons, fiee samples anu auveitising that piesents ieasons foi tiying something new (e.g.
cookies)

I"& 78.&' ?&>2;2+- 6'+>&;; (Pg 1S9)
- W&&: <&>+3-2%2+- (Consumei iecognizes pioblem oi neeu)
o Can be tiiggeieu by inteinal oi exteinal stimuli
- O-@+',#%2+- 4&#'>" (Consumei is aiouseu to seaich foi moie infoimation anu may simply
heighteneu attention oi may go into active infoimation seaich)
o Souices incluue peisonal souices (family, fiienus, neighbois, acquaintances), commeicial
souices (auveitising, sales-people, uealeis, packaging, uisplays), public souices (mass
meuia, consumei-iating oiganizations) anu expeiiential souices (hanuling, examining,
using piouuct)
o Commeicial souices infoim buyei, but peisonal souices legitimize oi evaluate piouucts foi
buyei
- JF#98#%2+- +@ K9%&'-#%2F&; (Consumei uses infoimation to evaluate alteinative bianus in
choice set)
- 68'>"#;& ?&>2;2+- (Buyei's uecision about which bianu to puichase)
o Two factois that can come between puichase intention anu puichase uecision aie |1j
attituues of otheis anu |2j unexpecteu situational factois
- 6+;%$8'>"#;& 7&"#F2+' (Consumeis take fuithei action aftei puichase, baseu on satisfaction
oi uissatisfaction)
o Satisfaction oi uissatisfaction lies in ielationship between consumei's expectations anu
piouuct's peiceiveu peifoimance
o Selleis shoulu piomise only what theii bianus can uelivei
o Cognitive uissonance (buyei uiscomfoit causeu by postpuichase conflict) iesulteu fiom
consumeis feeling uneasy about acquiiing uiawbacks of chosen bianu anu losing benefits
of bianus not puichaseu

!8;%+,&' ;#%2;@#>%2+- is the key to builuing piofitable ielationships with consumeis- to keeping
anu giowing consumei base anu ieaping theii lifetime value.






















!"#$%&' ^ * 78;2-&;; 0#'1&%; / 78;2-&;; 78.&' 7&"#F2+'
- Business Buyei Behavioi (Buying behavioi of oiganizations that buy goous anu seivices foi
use in piouuction of othei piouucts anu seivices oi foi puipose of ieselling oi ienting them to
otheis at a piofit)
- Business Buying Piocess (Becision piocess by which business buyeis ueteimine which
piouucts anu seivices theii oiganizations neeu to puichase anu then finu, evaluate anu choose
among alteinative supplieis anu bianus)

78;2-&;; 0#'1&%; (Pg 1Su)
- !"#'#>%&'2;%2>; +@ 78;2-&;; 0#'1&%;
o 0#'1&% 4%'8>%8'& / ?&,#-:
! Business maikets contain fewei but laigei buyeis
! Business customeis aie moie geogiaphically concentiateu
! Business buyei uemanu is ueiiveu fiom final consumei uemanu - B-to-B
maiketeis sometimes piomote theii piouucts uiiectly to final consumeis
to inciease business uemanu
! Bemanu in business maikets is moie inelastic - Bemanu is not affecteu
much in shoit iun by piice changes
! Bemanu in business maikets fluctuates moie anu moie quickly
o W#%8'& +@ %"& 78.2-3 Y-2%
! Business puichases involve moie uecision paiticipants
! Business buying involves a moie piofessionally puichasing effoit
o I.$&; +@ ?&>2;2+-; / %"& ?&>2;2+- 6'+>&;;
! Business buyeis usually face moie complex buying uecisions
! Business buying piocess is moie foimalizeu
! In business buying, buyeis anu selleis aie moie uepenuent on each othei,
so they woik moie closely togethei anu builu close long-iun ielationships
- Suppliei Bevelopment (Systematic uevelopment of netwoiks of
suppliei-paitneis to ensuie appiopiiate anu uepenuable supply of
piouucts anu mateiials useu in maiking own piouucts oi iesell to otheis)
- K 0+:&9 +@ 78;2-&;; 78.&' 7&"#F2+'
o Naiketing stimuli (foui Ps - piouuct, piice, place anu piomotion) anu othei stimuli
(economic, technological, political, cultuial anu competitive) affect buying oiganization
(buying centei anu buying-uecision piocess) anu piouuce buyei iesponses (piouuct oi
seivice choice, suppliei choice, oiuei quantities, ueliveiy teims anu times, seivice teims
anu payment)


78;2-&;; 78.&' 7&"#F2+' (Pg 1S2)
- 0#E+' I.$&; +@ 78.2-3 42%8#%2+-;
o In stiaight iebuy, a ioutine puichase wheie buyei ieoiueis without any mouifications
o In mouifieu iebuy, buyei wants to mouify piouuct specifications, piices, teims oi supplieis
- 0sually involves moie uecision paiticipants
o In new task, buyei puichases piouuct oi seivice foi fiist time - The gieatei cost oi iisk, the
moie uecision paiticipants anu gieatei the effoits to collect infoimation
o Systems Selling (Buying packageu solution to pioblem fiom single sellei, avoiuing all
sepaiate uecisions in complex buying situation)

- 6#'%2>2$#-%; 2- %"& 78;2-&;; 78.2-3 6'+>&;;
o Buying Centei (All inuiviuuals anu units paiticipating in business buying-uecision piocess)
! 0seis will use piouuct oi seivice, initiate buying piocess anu help uefine
piouuct specifications
! Influenceis help uefine specifications anu pioviue infoimation foi
evaluating alteinatives - Technical peisonnel
! Buyeis have foimal authoiity to select suppliei anu aiiange teims of
puichase - Bigh-level officeis
! Beciueis have foimal oi infoimal powei to select oi appiove final
supplieis
! uatekeepeis contiol flow of infoimation to otheis, e.g. secietaiies

- 0#E+' O-@98&->&; +- 78;2-&;; 78.&';
o When supplieis' offeis aie similai, business buyeis have little basis foi stiictly iational
choice, so they allow influence of peisonal factois
o When competing piouucts uiffei, business buyeis aie moie accountable foi choice, so they
pay moie attention to economic factois
o J-F2'+-,&-% U#>%+';
! |1j Economic uevelopments, |2j supply conuitions, |Sj technological
change, |4j political anu iegulatoiy uevelopments, |Sj competitive
uevelopments, |6j cultuie anu customs, |7j uemanu foi piouuct, |8j cost
of money
o C'3#-2P#%2+-#9 U#>%+';
! |1j 0bjectives, |2j policies, |Sj pioceuuies, |4j oiganizational stiuctuie
anu |Sj systems
o O-%&'$&';+-#9 U#>%+';
! |1j Authoiity, |2j status, |Sj empathy anu |4j peisuasiveness


o O-:2F2:8#9 U#>%+';
! |1j Age, |2j euucation, |Sj job position, |4j peisonality, |Sj iisk attituues,
|6j income, |7j motives peiceptions

- I"& 78;2-&;; 78.2-3 6'+>&;;
o 6'+D9&, <&>+3-2%2+- (Someone in company iecognizes pioblem oi neeu that can be met
by acquiiing goou oi seivice)
! Can iesult fiom inteinal (neeu foi new piouuctequipment) oi exteinal
stimuli (iuea fiom tiaue show, auveitising oi competitois)
! Business maiketeis shoulu aleit customeis to potential pioblems anu
show how theii piouucts pioviue solutions
o G&-&'#9 W&&: ?&;>'2$%2+- (Company uesciibes geneial chaiacteiistics anu quantity of
neeueu item)
! Business maiketeis shoulu help buyeis uefine theii neeus anu pioviue
value of uiffeient piouuct chaiacteiistics
o 6'+:8>% 4$&>2@2>#%2+- (Buying oiganization ueciues on anu specifies best technical
piouuct chaiacteiistics foi neeueu item)
! Selleis shoulu use value analysis (appioach to cost ieuuction by stuuying
components to ueteimine if they can be ieuesigneu, stanuaiuizeu oi
piouuceu less costly) to |1j secuie new account anu |2j tuin stiaight
iebuy into new-task situations
o 48$$92&' 4&#'>" (Buyei tiies to finu best venuois)
! Suppliei shoulu get listeu in majoi uiiectoiies anu builu goou ieputation
! Salespeople shoulu watch foi companies seaiching foi supplieis anu
make ceitain theii fiim is consiueieu
o 6'+$+;#9 4+92>2%#%2+- (Buyei invites qualifieu supplieis to submit pioposals)
o 48$$92&' 4&9&>%2+- (Buyei ieviews pioposals anu selects suppliei oi supplieis, negotiate
foi favouiable teims anu conuitions)
! Suppliei uevelopment manageis want to uevelop full netwoik of
suppliei-paitneis to |1j avoiu being totally uepenuent on one suppliei
anu to |2j allow piice anu peifoimance compaiisons
o C':&'B<+8%2-& 4$&>2@2>#%2+- (Buyei wiites final oiuei with chosen suppliei oi supplieis)
o 6&'@+',#->& <&F2&= (Buyei assess suppliei peifoimance anu ueciues to continue, mouify
oi uiop aiiangement)
! Sellei shoulu monitoi same factois useu by buyeis to make suie sellei is
giving expecteu satisfaction




- 78;2-&;; 78.2-3 +- %"& O-%&'-&%
o E-piocuiement |1j gives buyeis access to new supplieis, |2j loweis puichasing costs anu |Sj
hastens oiuei piocessing anu ueliveiy
o Business maiketeis can connect with customeis online to |1j shaie maiketing infoimation,
|2j sell piouucts anu seivices, |Sj pioviue customei suppoit seivices anu |4j maintain
ongoing customei ielationships
o Benefits
! Shaves tiansaction costs anu iesults in moie efficient puichasing foi both
buyeis anu selleis
! Eliminates papeiwoik
! Reuuces time between oiuei anu ueliveiy
! Fiees puichasing people to focus on moie stiategic issues
o Pioblems
! Can eioue uecaues-olu customei-suppliei ielationships as fiims can
seaich foi bettei supplieis online
! Cieates potential secuiity uisasteis

O-;%2%8%2+-#9 / G+F&'-,&-% 0#'1&%; (Pg 164)
- O-;%2%8%2+-#9 0#'1&%; (Schools, hospitals, nuising homes, piisons anu othei institutions
pioviuing goous anu seivices to people in theii caie)
o Bave low buugets anu captive pations

- G+F&'-,&-% 0#'1&%; (uoveinment units - feueial, state anu local - puichasing oi ienting
goous anu seivices foi caiiying out main functions of goveinment)
o Requiie supplieis to submit bius
o Favoui uomestic supplieis ovei foieign supplieis
o Favoui uepiesseu business fiims anu aieas, small business fiims, minoiity-owneu fiims
anu business fiims that avoiu iace, genuei anu age uisciimination
o Caiefully watcheu by outsiue publics
o uoou cieuit
o Requiie consiueiable papeiwoik fiom supplieis







0#'1&% 4&3,&-%#%2+- (Chaptei 7)
(Biviuing heteiogenous maiket into smallei gioups of buyeis with uistinct neeus, chaiacteiistics
oi behaviois who might iequiie sepaiate piouucts oi maiketing mixes) (Pg 17S)
4&3,&-%2-3 !+-;8,&' 0#'1&%;
o G&+3'#$"2> 4&3,&-%#%2+- (Biviuing maiket into uiffeient geogiaphical units such as nations,
states, iegions, countiies, cities oi neighboihoous)
! Companies aie localizing theii piouucts, auveitising, piomotion anu sales effoits to fit
neeus of inuiviuual geogiaphical units
! Companies aie seeking to cultivate as-yet untappeu geogiaphic teiiitoiy
! Retaileis aie ueveloping new stoie concepts to give them access to highei-uensity
uiban aieas

o ?&,+3'#$"2> 4&3,&-%#%2+- (Biviuing maiket into gioups baseu on uemogiaphic vaiiables
such as age, sex, family size, family life cycle, income, occupation, euucation, ieligion, iace anu
nationality)
! Consumei neeus, wants anu usage iates often vaiy closely with uemogiaphic vaiiables
! Bemogiaphic vaiiables aie easiei to measuie (e.g. to assess size of taiget maiket)
! K3& / X2@&B!.>9& 4%#3&
Age & Life-Cycle Segmentation (Biviuing maiket into uiffeient age anu life-cycle
gioups)
Naiketeis must guaiu against steieotypes
Age is often a pooi pieuictoi of a peison's life cycle, health, woik oi family status,
neeus anu buying powei
! G&-:&'
uenuei Segmentation (Biviuing maiket into uiffeient gioups baseu on genuei)

! O->+,&
Income Segmentation (Biviuing maiket into uiffeient income gioups)

o 6;.>"+3'#$"2> 4&3,&-%#%2+- (Biviuing maiket into uiffeient gioups baseu on social class,
lifestyle oi peisonality chaiacteiistics)

o 7&"#F2+'#9 4&3,&-%#%2+- (Biviuing maiket into gioups baseu on consumei knowleuge,
attituue, use oi iesponse to a piouuct)
! C>>#;2+-;
0ccasion Segmentation (Biviuing maiket into gioups accoiuing to occasions
when buyeis get the iuea to buy, actually make theii puichase oi use the
puichaseu item)
! 7&-&@2%; 4+83"%
Benefit Segmentation (Biviuing maiket into gioups accoiuing to uiffeient
benefits that consumeis seek fiom the piouuct)
Finuing majoi benefits people look foi in the piouuct class
Finuing kinus of people who look foi each benefit
Finuing majoi bianus that uelivei each benefit
! Y;&' 4%#%8;
Naikets can be segmenteu into gioups of nonuseis, ex-useis, potential useis,
fiist-time useis anu iegulai useis
! Y;#3& <#%&
Naikets can be segmenteu into light, meuium anu heavy piouuct useis
Naiketeis usually piefei to attiact one heavy usei to seveial light useis
Companies often taiget light useis with theii aus anu piomotions
! X+.#9%. 4%#%8;
Buyeis can be uiviueu into gioups accoiuing to uegiee of loyalty
By stuuying its less loyal buyeis, company can uetect which bianus aie most
competitive with its own
o Y;2-3 089%2$9& 4&3,&-%#%2+- 7#;&;
! Iuentify smallei, bettei-uefineu taiget gioups
! PRIZN "You Aie Wheie You Live" (0ne of the leauing lifestyle segmentation systems by
Claiitas) classifies eveiyone into one 62 unique neighboihoou types oi "clusteis"

- 4&3,&-%2-3 78;2-&;; 0#'1&%;
o Business maiketeis use vaiiables, mainly buyei behavioui anu benefits sought by customeis,
otheis such as customei opeiating chaiacteiistics, puichasing appioaches, situational factois
anu peisonal chaiacteiistics

- 4&3,&-%2-3 O-%&'-#%2+-#9 0#'1&%;
o Few companies have eithei iesouices oi will to opeiate in all, oi even most, countiies

o Biffeient countiies, even those that aie close togethei, can vaiy gieatly in economic, cultuial
anu political makeup

o ueogiaphic Location
! Assuming nations close to one anothei will have many common tiaits anu behaviois,
but theie aie many exceptions



o Economic Factois
! Population income levels oi oveiall level of economic uevelopment

o Political & Legal Factois
! Type anu stability of goveinment, ieceptivity to foieign fiims, monetaiy iegulations anu
amount of buieauciacy

o Cultuial Factois
! Common languages, ieligions, values anu attituues, customs anu behavioial patteins

o Inteimaiket Segmentation (Foiming segments of consumeis having similai neeus anu buying
behavioi even though they aie locateu in uiffeient countiies)

- <&_82'&,&-%; @+' J@@&>%2F& 4&3,&-%#%2+-
o !"#$%&#'(" - Segmentation vaiiables shoulu be able to be measuieu
o )**"$$+'(" - Naiket segments shoulu be able to be effectively ieacheu anu seiveu
o ,%'$-#.-+#( - Naiket segments shoulu be laige oi piofitable enough to seive
o /+00"&".-+#'(" - Segments shoulu be conceptually uistinguishable anu iesponu uiffeiently to
uiffeient maiketing mix elements anu piogiams
o )*-+1.#'(" - Effective piogiams shoulu be uesigneu foi attiacting anu seiving the segments

I#'3&% 0#'1&%2-3 (Piocess of evaluating each maiket segment's attiactiveness anu selecting one
oi moie segments to entei) (Pg 18S)
- JF#98#%2-3 0#'1&% 4&3,&-%;
o Segment Size & uiowth
! Right size anu giowth chaiacteiistics

o Segment Stiuctuial Attiactiveness
! Stiong anu aggiessive competitois, actual oi potential substitute piouucts, poweiful
buyeis anu poweiful supplieis can ueciease segment attiactiveness

o Company 0bjectives & Resouices

- 4&9&>%2-3 I#'3&% 0#'1&% 4&3,&-%;
o Taiget Naiket (A set of buyeis shaiing common neeus oi chaiacteiistics that company
ueciues to seive)

o Y-:2@@&'&-%2#%&: (Nass) 0#'1&%2-3 (Naiket-coveiage stiategy in which fiim ueciues to
ignoie maiket segment uiffeiences anu go aftei whole maiket with one offei)
! Focuses on what is common in neeus of consumeis iathei than uiffeiences

o ?2@@&'&-%2#%&: (Segmenteu) 0#'1&%2-3 (Naiket-coveiage stiategy in which fiim ueciues
to taiget seveial maiket segments anu uesigns sepaiate offeis foi each)
! Cieates moie total sales than unuiffeientiateu maiketing acioss all segments
! Incieases costs of uoing business
! Company must weigh incieaseu sales against incieaseu costs

o !+->&-%'#%&: (Niche) 0#'1&%2-3 (Naiket-coveiage stiategy in which fiim goes aftei a
laige shaie of one oi a few segments oi niches)
! Appealing when company iesouices aie limiteu
! uieatei knowleuge of consumei neeus in niches company seives
! Special ieputation
! Company can maiket moie effectively anu efficiently
! Involves highei-than-noimal iisks - Company will suffei gieatly if segment tuins
soui oi if laigei competitois ueciue to entei same segment with gieatei iesouices

o 02>'+,#'1&%2-3 (Piactice of tailoiing piouucts anu maiketing piogiams to neeus anu
wants of specific inuiviuuals anu local customei gioups)

! X+>#9 0#'1&%2-3 (Tailoiing bianus anu piomotions to neeus anu wants of local
customei gioups - cities, neighboihoous anu even specific stoies)
Biive up manufactuiing anu maiketing costs by ieuucing economics of scale
Cieate logistics pioblems
Bianu's oveiall image might be uiluteu
Belps company to maiket moie effectively in face of pionounceu iegional anu
local uiffeiences
! Neets neeus of company's fiist-line customeis - ietaileis
! O-:2F2:8#9 0#'1&%2-3 (Tailoiing piouucts anu maiketing piogiams to neeus anu
piefeiences of inuiviuual customeis - also labeleu "maikets-of-one maiketing",
"customizeu maiketing" anu "one-to-one maiketing")
Nass Customization (Piocess though which fiims inteiact one-to-one with
masses of customeis to uesign piouucts anu seivices tailoi-maue to inuiviuual
neeus)
Companies neeu to involve customeis moie in all phases of piouuct
uevelopment anu buying piocess, incieasing oppoitunities foi buyeis to
piactice self-maiketing (inuiviuual customeis taking moie iesponsibility to
ueteimine which piouucts anu bianus to buy)

o !"++;2-3 # I#'3&% 0#'1&%2-3 4%'#%&3.
! !+,$#-. <&;+8'>&;
When fiim's iesouices aie limiteu, concentiateu maiketing makes moie sense

! ?&3'&& +@ 6'+:8>% V#'2#D292%.
0nuiffeientiateu maiketing is moie suiteu foi unifoim piouucts
Piouucts vaiying in uesign aie moie suiteu to uiffeientiation oi concentiation

! 6'+:8>%A; X2@&B!.>9& 4%#3&
When fiim intiouuces a new piouuct, unuiffeientiateu maiketing oi
concentiateu maiketing may make moie sense
In matuie stage of piouuct life cycle, uiffeientiateu maiketing makes moie
sense

! 0#'1&% V#'2#D292%.
If most buyeis have same tastes, buy same amounts anu ieact the same to
maiketing effoits, unuiffeientiateu maiketing is appiopiiate



! !+,$&%2%+'A; 0#'1&%2-3 4%'#%&32&;
Biffeientiateu oi concentiateu maiketing is moie auvantageous

- 4+>2#99. <&;$+-;2D9& I#'3&% 0#'1&%2-3
o Biggest issues usually involve taigeting of vulneiable oi uisauvantageu consumeis with
contioveisial oi potentially haimful piouucts


!"#$%&' ` * W&=B6'+:8>% ?&F&9+$,&-% / 6'+:8>% X2@&B!.>9& 4%'#%&32&;
- Fiims must |1j uevelop new piouucts to ieplace aging ones anu |2j auapt its maiketing
stiategies in face of changing tastes, technologies anu competition

W&=B6'+:8>% ?&F&9+$,&-% 4%'#%&3. (Pg 2S7)
- Fiims can obtain new piouucts thiough |1j acquisition oi |2j new-piouuct uevelopment
(Bevelopment of oiiginal piouucts, piouuct impiovements, piouuct mouifications anu new
bianus thiough fiim's own R&B effoits)
- New piouucts fail because |1j maiket size has been oveiestimateu, |2j actual piouuct is not
uesigneu as well as it shoulu have been, |Sj incoiiectly positioneu in maiket, piiceu too high oi
auveitiseu pooily, |4j pusheu uespite pooi maiketing ieseaich finuings, |Sj costs of piouuct
uevelopment aie highei than expecteu oi |6j competitois fight back haiuei than expecteu
- Step 1 - O:&# G&-&'#%2+- (Systematic seaich foi new-piouuct iueas)
o O-%&'-#9 O:&# 4+8'>&;
! Foimal ieseaich anu uevelopment
! Biains of employees, e.g. "intiapieneuiial" piogiams
! Cieative innovation appioaches, e.g. Euieka! Ranch
o JH%&'-#9 O:&# 4+8'>&;
! Customeis
Company can analyze customei questions anu complaints
Company can meet with anu woik alongsiue customeis
Company can conuuct suiveys oi focus gioups
Company can put new piouucts anu uses cieateu by consumeis on
maiket
Ciowusouicing: invite bioau communities of people into the
innovation piocess- company can give customeis tools anu
iesouices to uesign piouucts
! Competitois
Company can buy competing new piouucts, take them apait to see
how they woik, analyze theii sales anu ueciue
! Bistiibutois & Supplieis
Company can obtain infoimation about consumei pioblems anu
new-piouuct possibilities fiom ieselleis
Company can obtain new concepts, techniques anu mateiials fiom
supplieis
! Tiaue magazines, shows anu seminais, goveinment agencies, new-
piouuct consultants, auveitising agencies, maiketing ieseaich fiims,
univeisity anu commeicial laboiatoiies anu inventois
- Step 2 - O:&# 4>'&&-2-3 (Scieening new-piouuct iueas to spot goou anu uiop pooi ones)
- Step S - !+->&$% ?&F&9+$,&-% / I&;%2-3
o Piouuct iuea is iuea foi possible piouuct that company can see itself offeiing to maiket
o Piouuct concept is uetaileu veision of iuea stateu in meaningful consumei teims
o Piouuct image is the way consumeis peiceive actual oi potential piouuct
o !+->&$% I&;%2-3 (Testing new-piouuct concepts with gioup of taiget consumeis to finu
out consumei appeal)
- Step 4 - 0#'1&%2-3 4%'#%&3. ?&F&9+$,&-% (Besigning initial maiketing stiategy foi new
piouuct baseu on piouuct concept)
o Fiist pait uesciibes |1j taiget maiket, |2j planneu piouuct positioning anu |Sj sales,
maiket shaie anu piofit goals foi fiist few yeais
o Seconu pait outlines |1j planneu piice, |2j uistiibution anu |Sj maiketing buuget foi fiist
yeai
o Thiiu pait uesciibes |1j planneu long-iun sales, |2j piofit goals anu |Sj maiketing mix
stiategy
- Step S - 78;2-&;; K-#9.;2; (Review of sales, costs anu piofit piojections to finu out whethei
they satisfy company's objectives)
- Step 6 - 6'+:8>% ?&F&9+$,&-% (Beveloping piouuct concept into physical piouuct to ensuie
piouuct iuea can tuin into woikable piouuct)
o R&B uepaitment will uevelop anu test one oi moie physical veisions of piouuct concept
o Piouucts unueigo iigoious tests to ensuie |1j safe anu effective peifoimance oi |2j
consumeis finu value in them
o New-piouuct must |1j have iequiieu functional featuies anu |2j convey intenueu
psychological chaiacteiistics
- Step 7 - I&;% 0#'1&%2-3 (Piouuct anu maiketing piogiam aie testeu in moie iealistic maiket
settings)
o Test maiketing |1j costs can be high anu |2j takes time that may allow competitois to gain
auvantages
o Bowevei, test maiketing costs aie often small compaieu to costs of majoi mistake
o When |1j costs of ueveloping anu intiouucing piouuct aie low oi |2j management is
alieauy confiuent, company may uo little oi no test maiketing
o Appioach 1 - 4%#-:#': I&;% 0#'1&%;
o Appioach 2 - !+-%'+99&: I&;% 0#'1&%;
o Appioach S - 42,89#%&: I&;% 0#'1&%;
- Step 8 - !+,,&'>2#92P#%2+- (Intiouucing new piouuct into maiket)
o Company must ueciue |1j intiouuction timing anu |2j wheie to launch new piouuct
o Can uevelop |1j planneu maiket iollout ovei time oi |2j global iollouts
- 0#-#32-3 W&=B6'+:8>% ?&F&9+$,&-%
o Customei-centeieu: finu new ways to solve customei pioblems anu cieate moie customei-
satisfying expeiiences
o Team-baseu: uepaitments woik closely togethei, oveilap anu save time anu inciease
effectiveness
o Systematic: install an innovation management system to collect, ieview, evaluate anu
manage new iueas

I"& 6'+:8>% X2@& !.>9& mouel can help to analyze matuiity stages of piouucts anu inuustiies.
Any company is constantly seeking ways to giow futuie cash flows by maximizing ievenue fiom
the sale of piouucts anu seivices. Cash Flow allows a company to maintain its viability, invest in
new piouuct uevelopment anu impiove its woikfoice. All this in an effoit to acquiie auuitional
maiket shaie anu become a leauei in its iespective inuustiy.

A constant anu sustainable cash flow (ievenue) stieam fiom piouuct sales is key to any long-teim
investment, anu the best way to attain a stable ievenue stieam is to have one oi moie Cash Cows.
Cash Cows aie stiong piouucts that have achieveu a laige maiket shaie in matuie maikets.
Also, the mouein Piouuct Life Cycle is becoming shoitei anu shoitei. Nany piouucts in matuie
inuustiies aie ievitalizeu by piouuct uiffeientiation anu maiket segmentation. 0iganizations
incieasingly ieassess piouuct life cycle costs anu ievenues, because the time available to sell a
piouuct anu iecovei the investment shiinks.

Although the piouuct life cycle shiinks, the opeiating life of many piouucts is lengthening. Foi
example, the opeiating life of some uuiable goous, such as automobiles anu appliances, has
incieaseu substantially. As a iesult, the companies that piouuce these piouucts must take theii
maiket life anu seivice life into account when they aie planning. Incieasingly, companies aie
attempting to optimize ievenue anu piofits ovei the entiie life cycle. They uo this thiough the
consiueiation of piouuct waiianties, spaie paits, anu the ability to upgiaue existing piouucts.

It is cleai that the Piouuct Life Cycle concept has significant impact upon business stiategy anu
coipoiate peifoimance. The Piouuct Life Cycle methou iuentifies the uistinct stages affecting sales
of a piouuct. Fiom the piouuct's inception until its ietiiement.

I"& ;%#3&; 2- %"& 6'+:8>%
X2@& !.>9&
6'+:8>% :&F&9+$,&-%
begins when the
company finus anu
uevelops a new-piouuct
iuea. Sales aie zeio,
investment costs mount
(negative)

O-%'+:8>%2+- ;%#3&. The
piouuct is intiouuceu in
the maiket thiough a
focuseu anu intense
maiketing effoit
uesigneu to establish a cleai iuentity anu piomote maximum awaieness. Launch stiategy
must be consistent with piouuct positioning. Nany tiial oi impulse puichases will occui at
this stage. Slow sales giowth, no piofit because of high uistiibution anu piomotion expense
o G'+=%" ;%#3&. Can be iecognizeu by iapiu acceptance (consumei euucation), incieasing
sales anu the emeigence of competitois. It is also chaiacteiizeu by sustaineu maiketing
activities to gain economies of scale. Some customeis make iepeat puichases. To sustain
iapiu maiket giowth, fiim can |1j impiove piouuct quality anu auu new featuies anu
mouels, |2j entei new maiket segments anu uistiibution channels, |Sj shift auveitising
fiom builuing piouuct awaieness to piouuct conviction anu puichase anu |4j lowei piices
at iight time

o 0#%8'2%. ;%#3&. This phase can be iecognizeu when competitois beginning to leave the
maiket. Also, sales velocity is uiamatically ieuuceu, anu sales volume ieaches a steauy
level. At this point in time, typically loyal customeis puichase the piouuct. Piofit level
offuecline because of incieaseu maiketing outlays to uefenu piouuct against competition
(many substitutes, oveicapacity leaus to competition). Incieaseu piomotion anu R&B.
Shoulu consiuei mouifying maiket, piouuct anu maiketing mix
! To mouify maiket, company can |1j look foi new useis anu maiket segments, |2j
ieposition bianu to appeal to laigei oi fastei-giowing segment, |Sj inciease
usage among piesent customeis anu |4j finu new uses
! To mouify piouuct, company can |1j impiove piouuct's quality anu peifoimance
anu |2j piouuct's styling anu attiactiveness
! To mouify maiketing mix, company can |1j cut piices anu |2j launch bettei
auveitising campaign oi use aggiessive sales piomotion
?&>92-& ;%#3&. The lingeiing effects of competition, unfavoiable economic conuitions, new
tienus, etc, often explain the uecline in sales. Piofits uiop; can ueciue to maintain, haivest
oi uiop piouuct
O-%'+:8>%2+- G'+=%" 0#%8'2%. ?&>92-&
!"#'#>%&'2;%2>;
Sales Low sales
Rapiuly iising
sales
Peak sales Beclining sales
Costs
Bigh cost pei
customei
Aveiage cost
pei customei
Low cost pei
customei
Low cost pei
customei
Piofits Negative Rising piofits Bigh piofits
Beclining
piofits
Customeis Innovatois Eaily auopteis
Niuule
majoiity
Laggaius
Competitois Few
uiowing
numbei
Stable
numbei
beginning to
uecline
Beclining
numbei
0#'1&%2-3
CDE&>%2F&;

Cieate piouuct
awaieness anu
tiial
Naximize
maiket shaie
Naximize
piofit while
uefenuing
maiket shaie
Reuuce
expenuituies
anu milk the
bianu
O-%'+:8>%2+- G'+=%" 0#%8'2%. ?&>92-&
4%'#%&32&;
Piouuct
0ffei basic
piouuct
0ffei piouuct
extensions,
seivice,
waiianty
Biveisify
bianu anu
mouels
Phase out weak
items
Piice 0se cost-plus
Piice to
penetiate
maiket
Piice to match
oi beat
competitois
Cut piice
Bistiibution
Builu selective
uistiibution
Builu
intensive
uistiibution
Builu moie
intensive
uistiibution
uo selective,
phase out
unpiofitable
outlets
Auveitising
Builu piouuct
awaieness
among eaily
auopteis anu
uealeis
Builu
awaieness
anu inteiest in
mass maiket
Stiess bianu
uiffeiences
anu benefits
Reuuce to level
neeueu to
ietain haiu-
coie loyals
Sales
Piomotion
0se heavy sales
piomotion to
entice tiial
Reuuce to take
auvantage of
heavy
consumei
uemanu
Inciease to
encouiage
bianu
switching
Reuuce to
minimal level








I"& 78.&' ?&>2;2+- 6'+>&;; @+' W&= 6'+:8>%; Chaptei S (Pg 142)
- New Piouuct (uoou, seivice oi iuea peiceiveu by some potential consumeis as new)
- 4%#3&; 2- %"& K:+$%2+- 6'+>&;; (Nental piocess thiough which inuiviuual passes fiom fiist
heaiing about innovation to final auoption)
o |1j Awaieness, |2j Inteiest, |Sj Evaluation, |4j Tiial & |Sj Auoption
- O-:2F2:8#9 ?2@@&'&->&; 2- O--+F#%2F&-&;;
o Five auoptei gioups in chionological oiuei aie |1j innovatois, |2j eaily auopteis, |Sj eaily
majoiity, |4j late majoiity anu |Sj laggaius
o Innovative fiim shoulu uiiect maiketing effoits towaiu innovatois anu eaily auopteis
- O-@98&->& +@ 6'+:8>% !"#'#>%&'2;%2>; +- <#%& +@ K:+$%2+-
o Relative Auvantage - If innovation appeais supeiioi to existing piouucts, iate incieases
o Compatibility - If innovation fits values anu expeiiences of potential consumeis, iate
incieases
o Complexity - If innovation is uifficult to unueistanu oi use, iate uecieases
o Bivisibility - If innovation may be tiieu on limiteu basis, iate incieases
o Communicability - If iesults of using innovation can be obseiveu oi uesciibeu to otheis,
iate incieases
o 0thei chaiacteiistics incluue initial anu ongoing costs, iisk anu unceitainty anu social
appioval
- !+-;8,&' 7&"#F2+' K>'+;; O-%&'-#%2+-#9 7+':&';
o Inteinational maikets must unueistanu uiffeiences anu aujust piouucts anu maiketing
piogiams accoiuingly
o Biffeiences incluue |1j obvious uiffeiences, |2j physical uiffeiences in consumeis anu
enviionments, |Sj uiffeiences in customs anu behaviois anu |4j unique cultuies

O--+F#%2+- K:+$%2+- !8'F&
The auoption cuive is useful to iemembei 2% 2; 8;&9&;; %+ %'. %+ _82>19. #-: ,#;;2F&9. >+-F2->&
%"& ,#;; +@ # -&= >+-%'+F&';2#9 2:&#a It is bettei to stait fiist with convincing the 2--+F#%+';
#-: %"& &#'9. #:+$%&';. Also the categoiies anu peicentages can be useu as a fiist uiaft to
estimate taiget gioups foi communication puiposes.
U2F& &9&,&-%;5
1. Chaiacteiistics of an innovation which may influence its auoption;
2. Becision-making piocess that occuis when inuiviuuals consiuei to auopt a new iuea,
piouuct oi piactice;
S. Chaiacteiistics of inuiviuuals that make them likely to auopt an innovation;
4. Consequences foi inuiviuuals anu society of auopting an innovation; anu
S. Communication channels useu in the auoption piocess.
O--+F#%2+- K:+$%2+- !8'F& >#%&3+'2&;
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Z6 * 6'+:8>% Chaptei 8
M"#% 2; # 6'+:8>%b (Pg 2u4)
- Piouuct (Anything that can be offeieu to maiket foi attention, acquisition, use oi consumption,
satisfying want oi neeu) incluues moie than just tangible goous
- Seivice (Any activity oi benefit one paity can offei to anothei that is essentially intangible anu
not iesulting in owneiship of anything)
- Expeiience (iepiesent what buying the piouuctseivice will uo foi the customei)

- X&F&9; +@ 6'+:8>% / 4&'F2>&;
o Level 1 - Coie Benefit
! Coie, pioblem-solving benefits oi seivices consumeis seek
o Level 2 - Actual Piouuct
! |1j Featuies, |2j uesign, |Sj quality level, |4j bianu name anu |Sj packaging
o Level S - Augmenteu Piouuct
! Auuitional consumei seivices anu benefits, e.g. aftei-sales seivice, waiianty,
installation anu ueliveiy anu cieuit

- 6'+:8>% / 4&'F2>& !9#;;2@2>#%2+-;

o !+-;8,&' 6'+:8>%; (Piouucts bought by consumei foi peisonal consumption)

!+-F&-2&->&
6'+:8>%
4"+$$2-3
6'+:8>%
4$&>2#9%. 6'+:8>% Y-;+83"% 6'+:8>%
!8;%+,&'
78.2-3
7&"#F2+'
! Fiequent
puichase
! Little
planning anu
shopping
effoit
! Little
compaiison
! Low customei
involvement
! Less fiequent
puichase
! Nuch planning
anu shopping
effoit
! Bianu
compaiison on
piice, quality,
style
! Stiong bianu
piefeience anu
loyalty
! Special
puichase effoit
! Little bianu
compaiison
! Low piice
sensitivity
! Little piouuct
awaieness,
knowleuge (If
awaie, little oi
even negative
inteiest)
6'2>& Low Bighei Bigh vaiies
?2;%'2D8%2+-
Wiuespieau,
convenient
locations
Selective, fewei
outlets
Exclusive, one oi
few outlets pei
maiket aiea
vaiies
6'+,+%2+-
Nass piomotion
by piouucei
Auveitising anu
peisonal selling
by piouucei anu
ieselleis
Noie caiefully
taigeteu
piomotion by
piouucei anu
ieselleis
Aggiessive
auveitising anu
peisonal selling by
piouucei anu
ieselleis
JH#,$9&;
Toothpaste,
magazines,
launuiy
ueteigent
Najoi appliances,
televisions,
fuinituie, clothing
Luxuiy goous
Life insuiance, Reu
Cioss bloou
uonations

o O-:8;%'2#9 6'+:8>%; (Piouucts bought by inuiviuuals anu oiganizations foi fuithei
piocessing oi foi use in conuucting business)
! Nateiials & Paits
Incluue |1j iaw mateiials anu |2j manufactuieu mateiials anu paits
Piice anu seivice aie majoi maiketing factois
! Capital Items
Aiu in buyei's piouuction oi opeiations
Incluue |1j installations anu |2j accessoiy equipment
! Supplies & Seivices
Supplies incluue |1j opeiating supplies anu |2j iepaii anu maintenance items
Seivices incluue |1j maintenance anu iepaii seivices anu |2j business auvisoiy
seivices

6'+:8>% / 4&'F2>& ?&>2;2+-; (Pg 2u9)
- Level 1 - O-:2F2:8#9 6'+:8>% / 4&'F2>& ?&>2;2+-;

o 6'+:8>% / 4&'F2>& K%%'2D8%&;
! 6'+:8>% c8#92%. (Ability of piouuct to peifoim its functions, incluues oveiall
uuiability, ieliability, piecision, ease of opeiation anu iepaii)
Cieates customei value anu satisfaction
Companies shoulu |1j choose peifoimance quality level matching taiget maiket
neeus anu competing piouucts anu |2j stiive foi high confoimance quality
(consistency)
! 6'+:8>% U&#%8'&;
Competitive tool to uiffeientiate piouuct fiom competitois'
Companies shoulu |1j uiop featuies customeis value little in ielation to costs anu
|2j auu featuies customeis value highly in ielation to costs
! 6'+:8>% 4%.9& / ?&;23-
Style uesciibes piouuct appeaiance, but uesign contiibutes to piouuct's usefulness
as well as looks
Shapes customeis' piouuct oi seivice expeiience
Piouuct uesigneis shoulu think |1j less about piouuct attiibutes anu technical
specifications anu |2j moie about how customeis use anu benefit fiom piouuct

o 7'#-:2-3
! 7'#-: (Name, teim, sign, symbol, uesign oi combination to iuentify anu uiffeientiate
goous oi seivices)
! |1j Belps consumeis iuentify piouucts that might benefit them anu |2j tells buyei
about piouuct quality
! |1j Basis on which whole stoiy can be built about piouuct's special qualities, |2j
pioviues legal piotection foi unique piouuct featuies anu |Sj helps segment maikets
! Bianu equity: uiffeiential effect that the bianu name has on customei iesponse to the
piouuct anu its maiketing

o 6#>1#32-3 (Activities of uesigning anu piouucing containei oi wiappei foi piouuct)
! |1j Contains anu piotects piouuct, |2j attiacts attention, |Sj uesciibes piouuct, |4j
makes sale, |Sj consiuei piouuct safety
! Nany companies ieuuce packaging anu use enviionmentally iesponsible packaging
mateiial

o X#D&92-3
! |1j Iuentifies piouuct oi bianu, |2j uesciibes "who", "wheie", "when", "what" anu
"how" about piouuct anu |Sj piomotes piouuct thiough attiactive giaphics

o 6'+:8>% 48$$+'% 4&'F2>&;
! Companies |1j suivey customeis peiiouically to assess cuiient seivices' value anu
obtain iueas foi new ones, |2j assess cost of pioviuing these seivices anu |Sj uevelop
package of seivices uelighting customeis anu yieluing piofits to company

- Level 2 - 6'+:8>% X2-& ?&>2;2+-; (uioup of piouucts closely ielateu because of similai
functions, same customei gioups, same types of maiketing outlets oi similai piice ianges)
o Piouuct line length is the numbei of items in the piouuct line, influenceu by |1j company
objectives, e.g. allow foi upselling, allow cioss-selling anu piotect against economic swings,
anu |2j iesouices
o Company can peifoim line stietching by lengthening piouuct line beyonu cuiient iange
! Stietch uownwaiu to |1j plug maiket hole, |2j iesponu to competitoi's attack on uppei
enu, |Sj giow fastei in low-enu
! Stietch upwaiu to |1j auu piestige to cuiient piouucts, |2j giow fastei oi eain highei
maigins at highei enu
! Companies at uppei enu can stietch uownwaiu, miuule iange in both uiiections anu
lowei enu can stietch upwaiu
o Company can peifoim line filling by auuing moie items within piesent iange
! To |1j ieach foi extia piofits, |2j satisfy uealeis, |Sj use excess capacity, |4j be leauing
full-line company anu |Sj plug holes to keep out competitois
! 0veiuone if it iesults in cannibalization anu customei confusion
! Companies shoulu ensuie new items aie noticeably uiffeient fiom existing ones

- Level S - 6'+:8>% 02H ?&>2;2+-; (Set of all piouuct lines anu items)
o Piouuct mix wiuth: numbei of uiffeient piouuct lines
o Piouuct mix length: total numbei of items within the lines
o Piouuct line uepth: numbei of veisions offeieu of each piouuct in line
o Piouuct mix consistency: how closely ielateu vaiious piouuct lines aie in enu use,
piouuction iequiiements, uistiibution channels oi othei ways


4&'F2>&; 0#'1&%2-3 (Pg 22S)
- W#%8'& / !"#'#>%&'2;%2>; +@ # 4&'F2>&
o Seivice Intangibility (Cannot be seen, tasteu, felt, heaiu oi smelleu befoie they aie bought)
! Seivice pioviuei shoulu |1j make seivice tangible in one oi moie ways anu |2j senu
iight signals about quality
o Seivice Insepaiability (Piouuceu anu consumeu at same time anu cannot be sepaiateu
fiom pioviueis)
o Seivice vaiiability (Quality may vaiy gieatly, uepenuing on who pioviues them, when,
wheie anu how)
o Seivice Peiishability (Cannot be stoieu foi latei sale oi use)
! Seivice fiims shoulu uesign stiategies foi piouucing bettei match between uemanu
anu supply

- 0#'1&%2-3 4%'#%&32&; @+' 4&'F2>& U2',;
o I"& 4&'F2>&B6'+@2% !"#2- (Chain linking seivice fiim piofits with employee anu customei
satisfaction)
! Inteinal seivice quality " Satisfieu anu piouuctive seivice employees " uieatei
seivice value " Satisfieu anu loyal customeis " Bealthy seivice piofits anu giowth
Company
O-%&'-#9
0#'1&%2-3

JH%&'-#9
0#'1&%2-3
Employees
O-%&'#>%2F&
0#'1&%2-3
Customeis

! Inteinal Naiketing (Naiketing to tiain anu effectively motivate customei-contact
employees anu all suppoiting seivice people to woik as team to pioviue customei
satisfaction)
! Inteiactive Naiketing (Naiketing that iecognizes peiceiveu seivice quality uepenus
heavily on quality of buyei-sellei inteiaction)
! 0#-#32-3 4&'F2>& ?2@@&'&-%2#%2+-
o Can uiffeientiate seivice offei by incluuing innovative featuies
o Can uiffeientiate seivice ueliveiy by |1j moie able anu ieliable customei-
contact people, |2j supeiioi physical enviionment oi |Sj supeiioi ueliveiy
piocess
o Can uiffeientiate seivice image by |1j symbols anu |2j bianuing
! 0#-#32-3 4&'F2>& c8#92%.
o Shoulu not only pioviue goou seivice eveiy time, but also iecovei fiom
seivice mistakes, i.e. seivice iecoveiy, by empoweiing fiont-line seivice
employees
! 0#-#32-3 4&'F2>& 6'+:8>%2F2%.
To inciease seivice piouuctivity, |1j tiain cuiient employees bettei oi hiie
new ones, |2j inciease quantity of seivice by giving up some quality, |Sj
"inuustiialize seivice" by auuing equipment anu stanuaiuizing piouuction
anu |4j hainess powei of technology
! Bowevei, may ieuuce longei-iun ability to |1j innovate, |2j maintain seivice quality oi
|Sj iesponu to consumei neeus anu uesiies

Z6 B 6'2>&
- Companies shoulu sell value, not piice, i.e. highei piice foi company's bianu is justifieu by
gieatei value it ueliveis

M"#% 2; # 6'2>&b (Pg 266)
- Piice (|1j Amount of money chaigeu foi piouuct oi seivice oi |2j sum of values consumeis
exchange foi benefits of having oi using piouuct oi seivice)

- I+:#.A; W&= 6'2>2-3 J-F2'+-,&-%
o Bynamic Piicing (Chaiging uiffeient piices uepenuing on inuiviuual customeis anu
situations)
o Auvantages foi maiketeis incluue ability to |1j piice tailoieu piouucts accoiuingly anu |2j
change piices on the fly
o Auvantages foi buyeis incluue ability to |1j compaie piouuct anu piice instantly on
websites anu |2j negotiate lowei piices
- 6'2>2-35 K- O,$+'%#-% D8% ?2@@2>89% ?&>2;2+-
o In maiketing mix, piice is |1j only element piouucing ievenue anu |2j one of most flexible
element
o Nistakes incluue |1j ieuucing piices too quickly to get sale iathei than convincing
piouuct's woith, |2j piicing that is too cost oiienteu iathei than customei-value oiienteu
anu |Sj piice that uoes not take iest of maiketing mix into account

U#>%+'; %+ !+-;2:&' ="&- 4&%%2-3 6'2>&; (Pg 267)
- O-%&'-#9 U#>%+'; K@@&>%2-3 6'2>2-3 ?&>2;2+-;
o 0#'1&%2-3 CDE&>%2F&;
! Piicing stiategy is laigely ueteimineu by maiket positioning anu also by geneial
objectives, e.g. |1j suivival, |2j cuiient piofit maximization, |Sj maiket shaie leaueiship
anu |4j piouuct quality leaueiship
! Piicing stiategy foi not-foi-piofit anu public oiganizations uepenus on objectives, e.g.
|1j paitial cost iecoveiy oi |2j full cost iecoveiy
o 0#'1&%2-3 02H 4%'#%&3.
! Nany fiims suppoit taiget costing (Piicing that staits with iueal selling piice, then
taigets costs that will ensuie piice is met)
! 0thei fiims cieate non-piice positions, i.e. not chaiging lowest piice, but
uiffeientiating maiketing offei to make piouuct woith highei piice
! Some fiims even featuie high piices as pait of positioning


o !+;%;
! Company wants piice to |1j covei all costs anu |2j uelivei faii iate of ietuin foi effoit
anu iisk
! I.$&; +@ !+;%;
Fixeu Costs (Costs not vaiying with piouuction oi sales level)
vaiiable Costs (Costs vaiying uiiectly with level of piouuction)
Total Costs (Sum of fixeu anu vaiiable costs foi any level of piouuction)
If costs aie moie than competitois', company have to |1j chaige highei piice oi |2j
make less piofit, putting it at competitive uisauvantage
! !+;%; #% ?2@@&'&-% X&F&9; +@ 6'+:8>%2+-
To piice wisely, management neeus to know how costs vaiy with uiffeient level of
piouuction anu choose optimal level
! !+;%; #; # U8->%2+- +@ 6'+:8>%2+- JH$&'2&->&
ExpeiienceLeaining Cuive (Biop in aveiage pei-unit piouuction cost that comes
with accumulateu piouuction expeiience)
Foi uownwaiu-sloping expeiience cuive, company must get laige maiket shaie
eaily in piouuct's life cycle by following stiategy, i.e. low initial piice " sales
inciease " costs will ueciease " lowei piices fuithei
Bowevei, |1j it may give piouuct a cheap image, |2j competitois may fight it out to
meet piice cuts anu |Sj competitois may finu lowei-cost technology that allows
staiting at lowei piices than maiket leauei's

o C'3#-2P#%2+-#9 !+-;2:&'#%2+-;
! Nanagement must ueciue who within oiganization shoulu set piices

- JH%&'-#9 U#>%+'; K@@&>%2-3 6'2>2-3 ?&>2;2+-; (Pg 276)
o I"& 0#'1&% / ?&,#-:
! Costs set lowei limit of piices while maiket anu uemanu set uppei limit
! 6'2>2-3 2- ?2@@&'&-% I.$&; +@ 0#'1&%;
Puie Competition
o Sellei cannot chaige moie anu will not chaige less than maiket piice
Nonopolistic Competition
o Selleis uiffeientiate by piice, bianuing, auveitising anu peisonal selling
0ligopolistic Competition
o Each sellei is aleit anu iesponus to competitois' stiategies anu moves
Puie Nonopoly
o In iegulateu monopoly, the sellei set iates peimitteu by goveinment
o In non-iegulateu monopoly, the sellei piices at what maiket will beai
! !+-;8,&' 6&'>&$%2+-; +@ 6'2>& / V#98&
Companies must |1j unueistanu how much value consumeis place on benefits
ieceiveu fiom piouuct anu |2j set piice that fits this value
! K-#9.P2-3 %"& 6'2>&B?&,#-: <&9#%2+-;"2$
|1j Bemanu cuive (Cuive showing numbei of units maiket will buy at uiffeient
piices) slopes uownwaius noimally, but |2j sometimes upwaius foi piestige goous
because consumeis think highei piices mean moie quality
When measuiing uemanu cuives by estimating uemanu at uiffeient piices,
companies must not allow othei factois affecting uemanu to vaiy
! 6'2>& J9#;%2>2%. (Sensitivity of uemanu to piice change) +@ ?&,#-:
Buyeis aie less piice sensitive when |1j piouuct is unique oi high in quality,
piestige oi exclusiveness, |2j substitute is haiu to finu oi substitute's quality is haiu
to compaie with, |Sj total expenuituie is low ielative to income oi is shaieu
If uemanu is elastic, selleis can inciease ievenue by |1j loweiing piices as long as
extia costs uo not exceeu extia ievenue, but must avoiu piicing that tuins piouucts
into commouities, oi |2j uiffeientiate theii offeiings
o !+,$&%2%+';A !+;%;[ 6'2>&; / C@@&';
! Company must consiuei |1j competitois' costs anu piices, |2j possible competitoi
ieactions anu |Sj natuie of competition affecteu by piicing stiategy
o C%"&' JH%&'-#9 U#>%+';
! Company must consiuei |1j economic conuitions, |2j piices' impact on othei paities in
its enviionment, e.g. ieselleis, |Sj goveinment anu |4j social conceins

G&-&'#9 6'2>2-3 K$$'+#>"&; (Pg 272)
- !+;%B7#;&: 6'2>2-3
o Cost-Plus Piicing (Auuing stanuaiu maikup to piouuct cost)
! 0nlikely to leau to best piice because it ignoies uemanu anu competitoi piices
! Woiks only if assigneu piice biings in expecteu sales level
! Populai because |1j piicing is simplifieu as selleis aie moie ceitain about costs than
uemanu, |2j when all fiims in inuustiy use this piicing methou, piices tenu to be similai
anu piice competition is minimizeu anu |Sj faiiei to both buyeis anu selleis

- 7'&#1BJF&- K-#9.;2; / I#'3&% 6'+@2% 6'2>2-3
o Bieak-EvenTaiget Piofit Piicing (Setting piice to |1j bieak even on costs of making anu
maiketing piouuct oi |2j make taiget piofit)

!+;%B7#;&: 6'2>2-3
Piouuct " Cost " Piice " value " Customeis

o Cost-baseu piicing is piouuct uiiven
! Company uesigns what it consiueis to be goou piouuct
! Company totals costs of making piouuct
! Company sets piice coveiing costs plus taiget piofit
! Company convinces buyeis value at that piice justifies puichase

- V#98&B7#;&: 6'2>2-3 (Setting piice baseu on buyeis' peiceptions of value iathei than on
sellei's cost)

V#98&B7#;&: 6'2>2-3
Customeis " value " Piice " Cost " Piouuct

o value-baseu piicing is customei uiiven
! Company sets taiget piice baseu on customei peiceptions of piouuct value
! Taigeteu value anu piice uiive uecisions about piouuct uesign anu what costs can be
incuiieu

o value Piicing (0ffeiing just iight combination of quality anu goou seivice at faii piice)
! Involves |1j intiouucing less veisions of establisheu, bianu name piouucts oi |2j
ieuesigning existing bianus to offei moie quality foi given piice oi same quality foi less
! Eveiyuay low piicing (EBLP) involves chaiging constant, eveiyuay low piice, but few
oi no tempoiaiy piice uiscounts
! Bigh-low piicing involves highei piices on eveiyuay basis, but fiequent piomotions to
lowei piices tempoiaiily on selecteu items
o value-Auueu Piicing
! Rathei than cutting piices to match competitois, companies attach value-auueu
seivices to uiffeientiate offeis anu thus, suppoit highei maigins


- !+,$&%2%2+-B7#;&: 6'2>2-3 (Setting piice baseu on piices that competitois chaige foi similai
piouucts)
o uoing-iate piicing involves basing piice laigely on competitois' piices, with less attention
paiu to own costs oi uemanu
! Populai because |1j when uemanu elasticity is haiu to measuie, going piice iepiesents
collective wisuom of inuustiy conceining piice that will yielu faii ietuin anu |2j it
pievents haimful piice wais
o Sealeu-biu piicing when fiims biu foi jobs


W&=B6'+:8>% 6'2>2-3 4%'#%&32&; (Pg 286)
- Piicing stiategies usually change as piouuct passes thiough its life cycle
- 0#'1&%B412,,2-3 6'2>2-3 (Setting high piice foi new piouuct to skim maximum ievenues
layei by layei fiom segments willing to pay high piice)
o Company makes fewei, but moie piofitable sales
o |1j Piouuct's quality anu image must suppoit highei piice anu enough buyeis must want
piouuct at that piice, |2j costs of piouucing smallei volume cannot be so high that
auvantage of chaiging moie is cancelleu anu |Sj competitois shoulu not be able to entei
maiket easily anu unueicut high piice
- 0#'1&%B6&-&%'#%2+- 6'2>2-3 (Setting low piice foi new piouuct to attiact laige numbei of
buyeis anu laige maiket shaie)
o Bigh sales volume iesults in falling costs, allowing company to cut piice even fuithei
o |1j Naiket must be highly piice sensitive so that low piice piouuces moie maiket giowth,
|2j piouuction anu uistiibution costs must fall as sales volume incieases anu |Sj low piice
must help keep out competition anu low piice position must be maintaineu

6'+:8>% 02H 6'2>2-3 4%'#%&32&; (Pg 287)
- 6'+:8>% X2-& 6'2>2-3 (Setting piice steps between vaiious piouucts in piouuct line baseu on
|1j cost uiffeiences between piouucts, |2j customei evaluations of uiffeient featuies anu |Sj
competitois' piices)
o Sellei's task is to establish peiceiveu quality uiffeiences that suppoit piice uiffeiences
- C$%2+-#9B6'+:8>% 6'2>2-3 (Piicing of optional oi accessoiy piouucts along with main piouuct)
o Sellei have to ueciue which items to incluue in base piice anu which to offei as options
- !#$%2F&B6'+:8>% 6'2>2-3 (Setting piice foi piouucts that must be useu along with main
piouuct)
o Piouuceis often piice main piouuct low anu set high maikups on supplies
o Two-pait piicing, i.e. fixeu fee plus vaiiable usage iate, in the case of seivices
- 7.B6'+:8>% 6'2>2-3 (Setting piice foi by-piouucts to make main piouuct's piice moie
competitive)
o Nanufactuiei seek maiket foi by-piouucts anu shoulu accept any piice coveiing moie
than cost of stoiing anu ueliveiing them

- 6'+:8>% 78-:9& 6'2>2-3 (Combining seveial piouucts anu offeiing bunule at ieuuceu piice)
Piice bunuling can piomote sales of piouucts consumeis might not otheiwise buy, but combineu
piice must be low enough to get them to buy bunule
- 6'2>& K:E8;%,&-% ;%'#%&32&;
o ?2;>+8-% #-: K99+=#->& 6'2>2-3 ieuuces piices to iewaiu customei iesponses such as paying
eaily oi piomoting the piouuct.
! /+$*1%.- is a stiaight ieuuction in piice on puichases uuiing stateu peiiou of time oi of laigei
quantities.
! )((1<#.*" is piomotional money paiu by manufactuieis to ietaileis in ietuin foi an agieement
to featuie the manufactuieis' piouucts in some ways. E.g. tiaue ins
- 4&3,&-%&: 6'2>2-3 is selling a piouuct oi seivice at two oi moie piices, wheie the uiffeience
in piices is not baseu on uiffeience in costs. It can take the foim of customei segment, piouuct
foim, oi location piicing. Foi it to be effective:
o Naiket must be able to be segmenteu
o Segments must show uiffeient uegiee of uemanu oi iesponu to segment piicing.
o Cost incuiieu cannot exceeu the extia ievenue obtaineu fiom piice uiffeience.
o Nust be legal

- 6;.>"+9+32>#9 6'2>2-3 occuis when selleis consiuei the psychology of piices anu not
simply the economies.
o Refeience Piices aie piices that buyeis caiiy in theii minus anu iefei to when looking at a given piouuct. Foi
example, noting cuiient piices, iemembeiing past piices, anu assessing the buying situations.

- 6'+,+%2+-#9 6'2>2-3 occuis when piices aie tempoiaiily ieuuceu below list piice oi cost
to inciease uemanu. They come in the foims of:
o Loss leaueis
o Special event piicing
o Cash iebates
o Low-inteiest financing
o Longei Waiianties
o Fiee Naintenance
o The iisk of it woulu be that it is useu too fiequently anu copieu by competitois can cieate "ueal-pione"
customeis who will wait foi piomotions anu avoiu buying at iegulai piices. It also ieuuces bianu's value in
customeis' eyes anu cieates piices wais.

- G&+3'#$"2>#9 6'2>2-3 is useu foi customeis in uiffeient paits of the countiy oi the woilu.
o =>?@1&+;+. A&+*+.; - Which goous aie placeu fiee on boaiu a caiiiei; the customei pays the fieight fiom the
factoiy to uestination.
o B.+01&C@7"(+3"&"7 A&+*+.; - Which company chaiges the same piice plus fieight to all customeis, iegaiuless
of theii location.
o D1." A&+*+.; - is when the company sets two oi moie zones. All customeis within the same zone pays the
same total piice; the moie uistant the zone, the highei the piice.
o ?#$+.;@A1+.- A&+*+.; - the sellei uesignates some city as the basing point anu chaiges all customeis the
fieighting cost fiom that city to the customeis.
o =&"+;E-+.;@)'$1&8-+1. A&+*+.; - the sellei absoibs all oi pait of the fieight chaiges to get the uesiieu
businesses.

- ?.-#,2> 6'2>2-3 occuis when piices aie aujusteu continually to meet the chaiacteiistics
anu neeus of the inuiviuual customei anu situations. Sometimes calleu 3*1)C,$+* 73$0$&%.
- O-%&'-#%2+-#9 6'2>2-3 occuis when piices aie set in a specific countiy baseu on countiy
specific factois such as *0(&(+$0 0(&2$,$(&.- 0(+7*,$,$'* 0(&2$,$(&.- )14. 1&2 3*%8)1,$(&.-
$&/31.,380,83*- anu 0(+71&: +13?*,$&% (<A*0,$'*5
da)aQ 6'2>& !"#-3&;
In oiuei to initiate a piice cut oi piice inciease, a company must anticipate possible buyei anu competitoi
ieactions.
6'2>& >8%; may occui uue to:
- Excess Capacity
- Failing uemanu fiom piice competition
- Besiieu to inciease maiket shaie - incieaseu volume likely to ieuuce cost
6'2>& O->'&#;& may occui uue to:
- Cost inflation
- Incieaseu Bemanu
- Lack of Supply
78.&';A <&#>%2+- %+ 6'2>2-3 !"#-3&;

!+,$&%2%+';A '&#>%2+-; must also be taken into consiueiations as well, whethei they behave alike oi not.
The uiffeiences can be uue to uiffeiences in size, maiket shaie, oi policies.
<&;$+-:2-3 %+ 6'2>& !"#-3&;
Solutions that can be taken -
1. Reuuce piice to match competition
2. Naintain piices but iaise the peiceiveu value thiough communications
S. Impiove quality anu inciease piice
4. Launch a lowei-piiceu "fighting" bianu


FGHGI A%'(+* A1(+*6 #.7 !#&J"-+.;
D*2*31) E*%$.)1,$(& (& 8&+*"@0+K+.; .,1,*. ,#1, .*))*3. +8., .*, 73$0*. 4$,#(8, ,1)?$&% ,( 0(+7*,$,(3.5 9/ &(,- 73$0*
0())8.$(& $. 0(++$,,*25
@*))*3. 13* 1).( 73(#$<$,*2 /3(+ 8.$&% 8&"7#-1&6 8&+*+.; ! .*))$&% <*)(4 0(., 4$,# ,#* $&,*&,$(& (/ 78&$.#$&% 1
0(+7*,$,(3 (3 %1$&$&% #$%#*3 )(&%C38& 73(/$,. <: 78,,$&% 0(+7*,$,(3. (8, (/ <8.$&*..5

=#* ;(<$&.(&CF1,+1& G0, .**?. ,( 73*'*&, 8&/1$3 8&+*" 7+$*&+C+.#-+1. <: *&.83$&% .*))*3. (//*3 ,#* .1+* 73$0* ,*3+. ,(
08.,(+*3. 1, 1 %$'*& )*'*) (/ ,312*5
- E14. 1).( 73(#$<$, 3*,1$) H3*.1)*I 73$0* +1$&,*&1&0*J +1&8/10,83*3. 01&&(, 3*>8$3* 2*1)*3. ,( 0#13%* 1 .7*0$/$0 3*,1$) 73$0* /(3 $,. 73(280,5
- K*0*7,$'* 73$0$&% (0083. 4#*& 1 .*))*3 .,1,*. 73$0*. (3 73$0* .1'$&%. ,#1, +$.)*12 08.,(+*3. (3 13* &(, 10,81)): 1'1$)1<)* ,( 0(&.8+*3.5 9, 1).(
$&0)82*. .01&&*3 /3182 1&2 73$0* 0(&/8.$(&5









Z6 B 69#>&
A(#*" $-&#-";+"$
Refeis to how an oiganisation will uistiibute the piouuct oi seivice they aie offeiing to the enu
usei.
! Right place at the iight time.
! Neet its oveiall maiketing objectives.
! If oiganisation unueiestimate uemanu anu customeis cannot puichase piouucts because of
it piofitability will be affecteu.

!"#--&9 +@ :2;%'2D8%2+-
O-:2'&>% :2;%'2D8%2+- involves uistiibuting youi piouuct by the use of an inteimeuiaiy.
?2'&>% :2;%'2D8%2+- involves uistiibuting uiiect fiom a manufactuiei to the consumei
e.g. Foi example Bell Computeis. Cleaily uiiect uistiibution gives a manufactuiei complete
contiol ovei theii piouuct.

O-:2'&>% ?2;%'2D8%2+- ?2'&>% ?2;%'2D8%2+-






?2;%'2D8%2+- 4%'#%&32&;
LG 2.-".$+3" 7+$-&+'%-+1.: 0seu commonly to uistiibute low piiceu oi impulse puichase piouucts.
Stock in as many outlets as possible. E.g. chocolates, soft uiinks.
HG 5K*(%$+3" 7+$-&+'%-+1.M Involves limiting uistiibution to ceitain outlets. The piouuct is usually
highly piiceu, anu iequiies the inteimeuiaiy to place much uetail in its sell. An example of woulu
be the sale of vehicles thiough exclusive uealeis.
NG ,"("*-+3" /+$-&+'%-+1.M A small numbei of ietail outlets aie chosen to uistiibute the piouuct.
Selective uistiibution is common with piouucts such as computeis, televisions householu
appliances, wheie consumeis aie willing to shop aiounu anu wheie manufactuieis want a laige
geogiaphical spieau.
Z6 B 6'+,+%2+-
K:F&'%2;2-35 any non-peisonal paiu foim of communication using any foim of mass meuia.
68D92> '&9#%2+-;5 Involves ueveloping positive ielationships with the oiganisation meuia public.
The ait of goou public ielations is not only to obtain favoiable publicity within the meuia, but it is
also involves being able to hanule successfully negative attention.
4#9&; $'+,+%2+-5 Commonly useu to obtain an inciease in sales shoit teim. Coulu involve using
money off coupons oi special offeis.
6&';+-#9 ;&992-35 Selling a piouuct seivice one to one.
?2'&>% 0#295 Is the senuing of publicity mateiial to a nameu peison within an oiganisation.
New Naiketing Communications Lanuscape (e.g. Facebook, Twittei):
! Consumeis aie bettei infoimeu
! Noie communication
! Less mass maiketing
! Changing communications technology

Integiateu maiketing communications is the integiation by the company of its communication
channels to uelivei a cleai, consistent, anu compelling message about its oiganisation anu its
bianus.

The Piomotion Nix


Setting the total piomotion buuget

Affoiuable buuget methou
! Sets the buuget at an affoiuable level
! Ignoies the effects of piomotion on sales

Peicentage of sales methou
! Sets the buuget at a ceitain peicentage of cuiient of foiecasteu sales oi unit sales piice
! Easy to use
! Belps management think about the ielationship between piomotion, selling piice anu piofit
pei unit
! Wiongly views sales as the cause iathei than the iesult of piomotion

Competitive-paiity methou
! Sets the buuget to match competitoi outlays
! Repiesents inuustiy stanuaius
! Avoius piomotion wais

0bjective-anu-task methou
Sets the buuget baseu on what the fiim wants to accomplish with piomotion anu incluues:
uefining piomotion objectives, ueteimining tasks to achieve the objectives, estimating costs

6'+,+%2+- 02H 4%'#%&32&;
Push stiategy: Piouucei -> Retaileis anu wholesaleis -> Consumeis
! Piouucei anu iesellei maiketing activities

Pull stiategy: Consumeis -> Retaileis anu wholesaleis -> Piouucei
! Bemanu anu piouucei maiketing activities to consumeis

K:F&'%2;2-3
! Any paiu foim of non-peisonal piesentation anu piomotion of iueas, goous oi seivices by
an iuentifieu sponsoi
! Reaches masses of geogiaphically uispeiseu buyeis at a low cost pei exposuie
! Allows sellei to iepeat a message many times
! Types: Bioaucast, piint, inteinet, outuooi
o Newspapeis, television, iauio, magazines, uiiect mail, outuooi, inteinet etc




Auveitising Buuget:

! Piouuct life-cycle stage
o New piouucts iequiie laigei buugets
o Natuie bianus iequiie lowei buugets

! Naiket shaie
o Laigei buugets when:
! Builuing oi taking maiket shaie
! Naikets with heavy competition
! Naikets with high auveitising cluttei
! 0nuiffeientiateu bianus






68D92> <&9#%2+-;
! Involves builuing goou ielations with the company's vaiious publics by obtaining favouiable
publicity
! Builuing up a goou coipoiate image
! Banuling anu heauing off unfavouiable stoiies anu events
! A veiy believable foim of piomotion to piomote piouuct, people, iueas anu activities

Types:

Role anu impact:
! Lowei cost than auveitising
! Stiongei impact on public awaieness as it appeais moie cieuible
! Poweiful bianu builuing tool



6&';+-#9 4&992-3 (Pg 42u)
- I"& W#%8'& +@ 6&';+-#9 4&992-3
o Salespeison may be oiuei takei, e.g. stanuing behinu countei, oi oiuei gettei, e.g.
positions uemanu cieative selling anu ielationship builuing
- I"& <+9& +@ %"& 4#9&; U+'>&
o Peisonal selling is inteipeisonal aim of piomotion mix, involving two-way (peisonal
communication between salespeople anu inuiviuual customeis)
o Auveitising is one-way (nonpeisonal communication with taiget consumei gioups)
o Peisonal selling can be moie effective because salespeople can piobe to leain about
customeis' pioblems anu aujust maiketing offei anu piesentation to fit each neeus
o Sales foice iepiesent |1j company to customeis anu |2j customeis to company

0#-#32-3 %"& 4#9&; U+'>& (Pg 4S8)
- Sales Foice Nanagement (Analysis, planning, implementation anu contiol of sales foice
activities, incluues |1j setting anu uesigning sales foice stiategy anu |2j ieciuiting, selecting,
tiaining, supeivising, compensating anu evaluating fiim's salespeople)

- Step 1 - ?&;23-2-3 4#9&; U+'>& 4%'#%&3. / 4%'8>%8'&
o 4#9&; U+'>& 4%'8>%8'&
! I&''2%+'2#9 4#9&; U+'>& 4%'8>%8'& (Assigns each salespeison to exclusive geogiaphic
teiiitoiy selling company's full line)
Befines each salespeison's job anu fixes accountability
Impioves selling effectiveness uue to uesiie to builu local business
ielationships
Tiavel expenses aie small
! 6'+:8>% 4#9&; U+'>& 4%'8>%8'& (Salespeople specialize in selling only poition of
company's piouucts oi lines)
! !8;%+,&' 4#9&; U+'>& 4%'8>%8'& (Salespeople specialize in selling only to ceitain
customeis oi inuustiies)
! !+,$9&H 4#9&; U+'>& 4%'8>%8'&; (Combines seveial types of sales foice stiuctuies)

! I&#, 4&992-3 (Teams of people fiom sales, maiketing, engineeiing, finance, technical
suppoit anu even uppei management seivicing laige, complex accounts)
Seives complete neeus of each impoitant customei
Pioblems foi customeis anu salespeople useu to one-salespeison concept
Sticky compensation issues uue to uifficulties in evaluating inuiviuual
contiibutions

- Step 2 - <&>'82%2-3 / 4&9&>%2-3 4#9&;$&+$9&
o Nost piouuctive anu expensive asset
o Caieful selection incieases oveiall sales foice peifoimance anu avoius costly tuinovei
o Salespeople shoulu be |1j motivateu fiom within, |2j uisciplineu in woik style, |Sj
peisistent anu |4j customei pioblem solveis anu ielationship builueis
o Companies shoulu analyze sales job itself anu chaiacteiistics of its most successful
salespeople to iuentify tiaits neeueu

- Step S - I'#2-2-3 4#9&;$&+$9&
o Tiaining piogiams aie expensive but yielu stiong ietuins
o Touay, companies auu in web-baseu tiaining

- Step 4 - !+,$&-;#%2-3 4#9&;$&+$9&
o Fixeu Amount - Salaiy gives stable income
o vaiiable Amount - Commissions oi bonuses iewaius foi gieatei effoit anu success
o Expense Allowances - Repaying foi job-ielateu expenses allows unueitaking of neeueu
anu uesiiable selling effoits
o Fiinge Benefits - Paiu vacations, sickness oi acciuent benefits, pensions anu life insuiance
pioviue job secuiity anu satisfaction


I+ G#2- 0#'1&%
4"#'& <#$2:9.
I+ 4+92:2@. 0#'1&%
X&#:&';"2$
I+ 0#H2,2P&
6'+@2%#D292%.
O:&#9
4#9&;$&';+-
- Inuepenuent self-
staitei
- Competitive Pioblem
Solvei
- Team Playei
- Relationship Nanagei
4#9&; U+>8;
- Beal Naking
- Sustaineu Bigh Effoit
- Consultative Selling - Account Penetiation
!+,$&-;#%2+-
<+9&
- To captuie accounts
- To iewaiu high
peifoimance
- To iewaiu new anu
existing account sales
- To manage piouuct
mix
- To encouiage team
selling
- To iewaiu account
management

o Companies shoulu iewaiu foi builuing customei ielationships anu giowing long-iun value
of each customei insteau of uiiving salespeople to make shoit-teim giabs

- Step S - 48$&'F2;2-3 4#9&;$&+$9&
o Companies can help to iuentify customei taigets anu set call noims
o Companies can help to set time management piioiities, e.g. annual call plan anu time-anu-
uuty analysis
o Companies can auopt sales foice automation systems
o Salespeople must be motivateu by sales manageis anu thiough oiganizational climate,
sales quotas anu positive incentives

- Step 6 - JF#98#%2-3 4#9&;$&+$9&
o By |1j sales iepoits, |2j call iepoits, |Sj expense iepoits, |4j peisonal obseivation, |Sj
customei suiveys anu |6j talks with othei salespeople


I"& 6&';+-#9 4&992-3 6'+>&;; (Pg 4S4)
- 6&';+-#9 4&992-3 / !8;%+,&' <&9#%2+-;"2$ 0#-#3&,&-%
o Company wants piofitable customei ielationships, not simply tiansaction-oiienteu
peisonal selling


?2'&>% 0#'1&%2-3 (Pg 446)
- I"& W&= ?2'&>%B0#'1&%2-3 (Biiect communications with caiefully taigeteu inuiviuual
consumeis using telephone, mail, fax, e-mail, inteinet anu othei tools) 0+:&9
o Changing fiom being supplementaiy channel oi meuium to being the only appioach
- 7&-&@2%; / G'+=%" +@ ?2'&>% 0#'1&%2-3
o Foi buyeis, it is |1j convenient, easy to use anu piivate, |2j ieauy access to wealth of
piouucts anu compaiative infoimation anu |Sj immeuiate anu inteiactive
o Foi selleis, it |1j taigets small gioups oi inuiviuual consumeis, |2j tailois offeis to
inuiviuual neeus, |Sj piomotes thiough peisonalizeu communications, |4j ieaches
piospects at iight moments, |Sj gives access to buyeis unieachable thiough othei
channels, |6j is low-cost anu efficient, |7j tool to builu customei ielationships, |8j elxible
- !8;%+,&' ?#%#D#;&; (0iganizeu collection of compiehensive uata about inuiviuual
customeis oi piospects) / ?2'&>% 0#'1&%2-3
o Batabase can help to |1j iuentify piospects anu geneiate sales leaus, |2j ueepen customei
loyalty, |Sj piofile customeis baseu on pievious puichasing anu |4j ueciue which
customeis shoulu ieceive paiticulai offeis
- U+',; +@ ?2'&>% 0#'1&%2-3
o I&9&$"+-& 0#'1&%2-3
! |1j Puichase convenience anu |2j incieaseu piouuct anu seivice infoimation
! Bowevei, unsoliciteu telephone maiketing annoys consumeis
o ?2'&>%B0#29 0#'1&%2-3
! Papei baseu, fax mail, e-mail anu voice mail
! |1j Biiect, one-to-one communication, |2j peimits high taiget-maiket selectivity, |Sj
can be peisonalizeu, |4j flexible, |Sj allows easy measuiement of iesults anu |6j
people ieacheu aie bettei piospects
! Bowevei, |1j cost is highei anu |2j may be iesenteu as "junk mail"
o !#%#9+3 0#'1&%2-3
! Piinteu anu web-baseu
! Web-baseu catalogues |1j save on piouuction, piinting anu mailing costs, |2j offei
almost unlimiteu amount of meichanuise, |Sj allow ieal-time meichanuising anu |4j
can be spiceu up with inteiactive enteitainment anu piomotional featuies
! Bowevei, web-baseu catalogues lack emotional appeal of papei veision, passive anu
must be maiketeu
o ?2'&>%B<&;$+-;& I&9&F2;2+- 0#'1&%2-3
! Biiect iesponse auveitising anu infomeicials on home shopping channels
! Biiect iesponse Tv commeicials aie |1j cheapei to make, |2j meuia puichase is less
costly anu |Sj iesults aie easily measuieu
o e2+;1 0#'1&%2-3 (e.g. photo piinting)
o ?232%#9 :2'&>% ,#'1&%2-3 %&>"-+9+3.
! Nobile phone maiketing (games etc)
! Poucasts, voucasts
! Inteiactive tv
o C-92-& ,#'1&%2-3
! Business to consumei, business to business, consumei to business, consumei to
consumei
! Website:
Besign attiactive website to attiact consumeis to visit, iemain anu ievisit
7Cs: Context, content, community, customization, communication,
connection, commeice
! Social netwoiks:
Allow membeis to congiegate online anu exchange views on issues of
common inteiest
Facebook, Twittei, Tumbli, Youtube, Instagiam
! Email:
Peimission-baseu maiketing makes it optional
Bevelop eniicheu messages with animation, inteiactivity, auuio, viueo
Compete with clutteieu email enviionment
! viial maiketing
! Seaich-ielateu auveitisements (uoogle, Yahoo)
! Bisplay auveitisements (banneis, pop-ups etc)

- O-%&3'#%&: ?2'&>% 0#'1&%2-3
o 0sing caiefully cooiuinateu multiple-meuia, multiple-stage campaigns
o Impiove iesponse iates anu piofits
7'#-:2-3 4%'#%&3.5 7829:2-3 4%'+-3 7'#-:; (Pg 216)
- 7'#-:: customei's peiceptions anu feelings about a piouuct anu its peifoimance. Company's
piomise to uelivei consistently to customei.
- 7'#-: J_82%. (Positive uiffeiential effect that knowing the bianu name has on customei
iesponse to piouuct oi seivice)
o A measuie of bianu's equity is extent to which customeis aie willing to pay moie foi bianu
o Poweiful bianu |1j enjoys high level of consumei bianu awaieness anu loyalty, |2j has
moie leveiage in baigaining with ieselleis, |Sj can moie easily launch line anu bianu
extensions, |4j offeis company uefense against fieice piice competition anu |Sj most
impoitantly, builus stiong anu piofitable customei ielationships, i.e. customei equity
- 7829:2-3 4%'+-3 7'#-:;
o 7'#-: 6+;2%2+-2-3
! At lowest level, position bianu on piouuct attiibutes, but |1j attiibutes can be easily
copieu anu |2j customeis aie not inteiesteu in attiibutes as such, but what they can uo
foi them
! At highei level, position bianu on piouuct benefits
! At highest level, position bianu on stiong beliefs anu values
! When positioning, maiketei shoulu establish mission foi bianu anu vision of what
bianu must be anu uo
o 7'#-: W#,& 4&9&>%2+-
! Bianu name shoulu |1j suggest about piouuct's benefits anu qualities, |2j easy to
pionounce, iecognize anu iemembei, |Sj uistinctive, |4j extenuable, |Sj tianslate
easily into foieign languages anu |6j capable of iegistiation anu legal piotection
! Fiims piotect anu tiy to builu bianu name that will eventually become iuentifieu with
piouuct categoiy, but iisk bianu name becoming geneiic name any sellei can use
o 7'#-: 4$+-;+';"2$
! 0#-8@#>%8'&'A; 7'#-:; F&';8; 6'2F#%& 7'#-:;
Nanufactuieis' bianus have long uominateu ietail scene, but moie ietaileis
anu wholesaleis have cieateu theii own piivatestoie bianus
Retaileis can |1j contiol what piouucts to stock, |2j wheie piouucts go on
shelf, |Sj what piices to chaige, |4j which piouucts to featuie in local
ciiculais anu |Sj chaige manufactuieis slotting fees
Piivate bianus |1j yielu highei piofit maigins foi iesellei, |2j give ieselleis
exclusive piouucts that cannot be bought fiom competitois anu |Sj gieatei
stoie tiaffic anu loyalty
Bowevei, piivate bianus aie |1j haiu to establish anu |2j costly to stock anu
piomote
Leauing bianu maiketeis have to |1j invest in R&B, |2j uesign stiong
auveitising piogiams anu |Sj "paitnei" with majoi uistiibutois
! X2>&-;2-3
Pioviues instant anu pioven bianu name
Incluues name, chaiactei anu coipoiate bianu licensing
! !+B7'#-:2-3 (0sing establisheu bianu names of two uiffeient companies on same
piouuct)
Combineu bianus |1j cieate bioauei consumei appeal anu gieatei bianu
equity, |2j allow expansion of existing bianu into categoiy that is uifficult to
entei alone
Bowevei, co-bianuing involves |1j complex legal contiacts anu licenses, |2j
caieful cooiuination of auveitising, sales piomotion anu othei maiketing
effoits anu |Sj tiust between paitneis

o 7'#-: ?&F&9+$,&-%

JH2;%2-3 6'+:8>% !#%&3+'. W&= 6'+:8>% !#%&3+'.
JH2;%2-3 7'#-: W#,& Line Extension Bianu Extension
W&= 7'#-: W#,& Nultibianus New Bianus

! X2-& JH%&-;2+-;
|1j Low-cost, low-iisk way to intiouuce new piouucts, |2j meet consumei
uesiies foi vaiiety, |Sj use excess capacity anu |4j commanus moie shelf
space fiom ieselleis
Bowevei, oveiextenueu bianu name may |1j lose specific meaning, |2j cause
consumei confusion oi fiustiation anu |Sj "cannibalize" company's othei
items
! 7'#-: JH%&-;2+-;
|1j uives new piouuct instant iecognition anu fastei acceptance anu |2j
saves high auveitising costs
Bowevei, extension may |1j confuse image of main bianu, |2j haim
consumei attituues towaiu othei piouucts caiiying same bianu name if
bianu extension fails anu |Sj not be appiopiiate to new piouuct
! 089%2D'#-:;
|1j Establishes uiffeient featuies anu appeal to uiffeient buying motives anu
|2j locks up moie iesellei shelf space
Bowevei, each bianu may |1j obtain only small maiket shaie anu |2j not be
veiy piofitable
! W&= 7'#-:;
|1j Powei of existing bianu name is waning anu |2j none of cuiient bianu
names is appiopiiate
Bowevei, offeiing too many bianus may |1j iesult in spieauing iesouices
too thin anu |2j too few uiffeiences between bianus

- 0#-#32-3 7'#-:;
o Bianu's positioning must be continuously communicateu to consumeis
o Eveiyone in company must live the bianu
o Companies neeu to peiiouically auuit bianus' stiengths anu weaknesses, i.e. bianu auuit















!8;%+,&' <&9#%2+-;"2$ 0#-#3&,&-% L!<0N
CRN is a business stiategy anu is moie than a functional stiategy. It touches the oiganization as a
whole: maiketing, sales, IT, logistics, finance, piouuction, R&B, BR, management, etceteia. If we
thus uefine CRN, it is immeuiately cleai that implementing full-size CRN is a uaunting challenge.
Cieating piofitable anu veiy efficient (client-facing) piocesses is not enough. Foi tiue Customei
Relationship Nanagement a customei intimacy stiategy, a ielation maiketing philosophy iathei
than a tiansaction maiketing philosophy, as well as a client-oiientation of the whole oiganization
aie iequiieu.

Y;#3& +@ !8;%+,&' <&9#%2+-;"2$ 0#-#3&,&-%a K$$92>#%2+-;
Companies that want to iealize a customei intimacy stiategy.
Companies that want to accomplish a customei fiienuly image.
4%&$; 2- !8;%+,&' <&9#%2+-;"2$ 0#-#3&,&-%a 6'+>&;;
The following things make up the main elements to cieate a
customei ielation oiienteu oiganization:
1. Stiong customei-oiienteu leaueiship.
2. The mission to be a ielation-oiienteu oiganization aimeu at long-teim inteiaction.
S. The coipoiate puipose is aimeu at the customei.
4. The main stiategy is to win by customei intimacy.
S. Company values anu employee values focus on caiing foi customeis.
6. Behavioial stanuaius ieflect customei empathy anu the wish to builu long-teim
ielationships anu commitment.
7. A ielation-oiienteu oiganizational cultuie.
8. An oiganization that is putting customei contacts in the centei. Compaie: Co-Cieation,
Business Piocess Reengineeiing.
9. People: empathic communication skills, caiing foi customeis.
1u. Systems that can help to connect anu manage haiu values with soft values, such as the
value Piofit Chain anu the Balanceu Scoiecaiu.
4%'&-3%"; +@ !8;%+,&' <&9#%2+-;"2$ 0#-#3&,&-%a 7&-&@2%;
Stiong ielations with clients offei a uegiee of piotection against actions of competitois.
Loyal customeis can be moie piofitable. Winning new customeis is expensive, satisfieu
customeis may buy moie, happy customeis can biing auuitional customeis, etc.
X2,2%#%2+-; +@ !8;%+,&' <&9#%2+-;"2$ 0#-#3&,&-%a ?2;#:F#-%#3&;
Implementing CRN in a holistic way is no sinecuie.
Naking laige CRN investments piofitable is uifficult.
Achieving a Sustainable Competitive Auvantage with CRN is even moie uifficult.
K;;8,$%2+-; +@ !8;%+,&' <&9#%2+-;"2$ 0#-#3&,&-%a !+-:2%2+-;
If we aie goou to customeis, they will be goou to us.
Changing fiom the cuiient stiategic uiscipline towaius a customei intimate uiscipline is
possible.
4MCI #-#9.;2;
Stiengths anu weaknesses aie 2-%&'-#9 @#>%+'; that cieate value oi uestioy value. They can
incluue assets, skills, oi iesouices that a company has at its uisposal, compaieu to its competitois.
They can be measuieu using inteinal assessments oi exteinal benchmaiking.
0ppoitunities anu thieats aie &H%&'-#9 @#>%+'; that cieate value oi uestioy value. A company
cannot contiol them. But they emeige fiom eithei the competitive uynamics of the
inuustiymaiket oi fiom uemogiaphic, economic, political, technical, social, legal oi cultuial
factois (PEST).
Any oiganization must tiy to cieate a fit with its exteinal enviionment. The SW0T uiagiam is a
veiy goou tool foi analyzing the (inteinal) stiengths anu weaknesses of a coipoiation anu the
(exteinal) oppoitunities anu thieats. Bowevei, this analysis is just the fiist step. To ieally cieate
the fit with the exteinal enviionment is often the most uifficult woik.
,-&".;-E$
Specialist maiketing expeitise
Exclusive access to natuial iesouices
Patents
New, innovative piouuct oi seivice
Location of youi business
Cost auvantage thiough piopiietaiy
know-how
Quality piocesses anu pioceuuies
Stiong bianu oi ieputation
O"#J."$$"$
Lack of maiketing expeitise
0nuiffeientiateu piouucts anu
seivice (i.e. in ielation to youi
competitois)
Location of youi company
Competitois have supeiioi access to
uistiibution channels
Pooi quality of goous oi seivices
Bamageu ieputation
>881&-%.+-+"$
Beveloping maiket (China, the
Inteinet)
Neigeis, joint ventuies oi stiategic
alliances
Noving into new attiactive maiket
segments
A new inteinational maiket
Loosening of iegulations
Removal of inteinational tiaue
baiiieis
A maiket that is leu by a weak
competitoi
PE&"#-$
A new competitoi in youi home
maiket
Piice wai
Competitoi has a new, innovative
substitute piouuct oi seivice
New iegulations
Incieaseu tiaue baiiieis
A potential new taxation on youi
piouuct oi seivice
6J4I #-#9.;2;
0seu to ;>#- %"& &H%&'-#9 ,#>'+B&-F2'+-,&-% in which a fiim opeiates
Political
Economic
Social
Technological
PEST factois play an impoitant iole in the value cieation oppoitunities of a stiategy. Bowevei
they aie usually +8%;2:& %"& >+-%'+9 +@ %"& >+'$+'#%2+- #-: ,8;% -+',#99. D& >+-;2:&'&: #;
&2%"&' %"'&#%; +' +$$+'%8-2%2&;a Remembei macio-economical factois can uiffei pei continent,
countiy oi even iegion, so noimally a PEST analysis shoulu be $&'@+',&: $&' >+8-%'..
In the table below you finu examples of each of these factois.
A1(+-+*#( Q+.*(G :";#(R

5*1.1C+*

,1*+#(

P"*E.1(1;+*#(

Enviionmental iegulations
anu piotection
Economic giowth Income uistiibution
uoveinment ieseaich
spenuing
Tax policies
Inteiest iates &
monetaiy policies
Bemogiaphics,
Population giowth iates,
Age uistiibution
Inuustiy focus on
technological effoit
Inteinational tiaue
iegulations anu iestiictions
uoveinment spenuing Laboi social mobility
New inventions anu
uevelopment
Contiact enfoicement law
Consumei piotection
0nemployment policy Lifestyle changes
Rate of technology
tiansfei
Employment laws Taxation
Woikcaieei anu leisuie
attituues
Entiepieneuiial spiiit
Life cycle anu speeu of
technological
obsolescence
uoveinment oiganization
attituue
Exchange iates Euucation Eneigy use anu costs
Competition iegulation Inflation iates Fashion, hypes
(Changes in) Infoimation
Technology
Political Stability
Stage of the business
cycle
Bealth consciousness &
welfaie, feelings on safety
(Changes in) Inteinet
Safety iegulations Consumei confiuence Living conuitions
(Changes in) Nobile
Technology


!+,$&%2%2F& K:F#-%#3& L!+,$&%2%2+-N Page 478
(Auvantage ovei competitois by offeiing consumeis gieatei value thiough loweiing piices oi
pioviuing moie benefits that justify highei piices)
- Step 1 - Competitoi Analysis (|1j Iuentify key competitois, |2j assess theii objectives,
stiategies, stiengths, weaknesses anu ieaction patteins anu |Sj select which competitois to
attack oi avoiu)
- Step 2 - Competitive Naiketing Stiategies (Stiongly position company against competitois anu
give company stiongest possible stiategic auvantage)

!+,$&%2%+' K-#9.;2; (Pg 49S)
- Step 1 - O:&-%2@.2-3 !+,$&%2%+';
o At naiiowest level of uefinition, competitois offei similai piouucts anu seivices at similai
piices
o Next, competitois make same piouuct oi class of piouucts
o Next, competitois make piouucts that supply same seivice
o At wiuest level of uefinition, competitois compete foi same consumei uollais
o Companies must avoiu "competitoi myopia" anu iuentify cuiient as well as latentfutuie
competitois
o Companies can iuentify competitois fiom |1j inuustiy oi |2j maiket point of view
- Step 2 - K;;&;;2-3 !+,$&%2%+';
o ?&%&',2-2-3 !+,$&%2%+';A CDE&>%2F&;
! Competitoi's mix of objectives ieveals |1j whethei competitoi is satisfieu with cuiient
situation, |2j how it may ieact to uiffeient competitive actions, |Sj oppoitunity if
competitoi uiscoveis new segment, |4j waining if competitoi plans new moves into
segments now seiveu by company
! Piofitability, maiket shaie giowth, cash flow, technological leaueiship, seivice
leaueiship
o O:&-%2@.2-3 !+,$&%2%+';A 4%'#%&32&;
! Stiategic uioup (Fiims in inuustiy following same oi similai stiategy)
! Competition is most intense within stiategic gioup, but also among gioups because |1j
some stiategic gioups appeal to oveilapping customei segments, |2j customeis may
not see uiffeience anu |Sj companies may expanu into new stiategic segments
o K;;&;;2-3 !+,$&%2%+';A 4%'&-3%"; / M&#1-&;;&;
! Companies leain about competitois' stiengths anu weakness thiough |1j seconuaiy
uata, |2j peisonal expeiience, |Sj woiu of mouth anu |4j conuucting maiketing
ieseaich
! Benchmaiking (Compaiing piouucts anu piocesses to finu ways to impiove quality
anu peifoimance)
o J;%2,#%2-3 !+,$&%2%+';A <&#>%2+-;
! uives clues on how to |1j attack competitois oi |2j uefenu company's cuiient
positions
- Step S - 4&9&>%2-3 !+,$&%2%+'; %+ K%%#>1 / KF+2:
o !8;%+,&' V#98& K-#9.;2;5 to ueteimine what benefits taiget customeis value anu how
they iate the ielative values of vaiious competitoi's offeis
o 4%'+-3 +' M&#1 !+,$&%2%+';
! Competing against weak competitois iequiies less iesouices anu time, but may gain
little
! Competing with stiong competitois shaipens abilities anu pioviues gieatei ietuins
o !9+;& +' ?2;%#-% !+,$&%2%+';
! Companies compete with close iathei than uistant competitois
! Companies shoulu avoiu "uestioying" close competitois because this may foice weak
competitois to sell out to laigei fiims, iesulting in laigei competitois
o fG++:g +' f7#: !+,$&%2%+';
! uoou competitois |1j help inciease total uemanu, |2j shaie maiket anu piouuct
uevelopment costs, |Sj help legitimize new technology, |4j seive less-attiactive
segments oi leau to moie piouuct uiffeientiation, |Sj lowei antitiust iisk anu |6j
impiove baigaining powei veisus laboi oi iegulatois
! Bau competitois shake up inuustiy by |1j buying shaie iathei than eaining it anu |2j
taking laige iisks
- ?&;23-2-3 # !+,$&%2%2F& O-%&9923&->& 4.;%&,
o System shoulu be cost-effective as cost in money anu time of gatheiing competitive
intelligence is high

!+,$&%2%2F& 4%'#%&32&; (Pg 486)
- K$$'+#>"&; %+ 0#'1&%2-3 4%'#%&3.
o Stage 1 - Entiepieneuiial Naiketing
! visualize oppoitunity, constiuct flexible stiategies anu knock on eveiy uooi to gain
attention
o Stage 2 - Foimulateu Naiketing
! Bevelop foimal maiketing stiategies anu auheie to them closely
o Stage S - Intiepieneuiial Naiketing
! Reestablish within company entiepieneuiial spiiit anu actions that maue them
successful in the fiist place

- 7#;2> !+,$&%2%2F& 4%'#%&32&;
o Poitei's
o Companies shoulu puisue a cleai stiategy anu not to be miuule-of-the-ioaueis

! 0veiall Cost Leaueiship
Low piouuction anu uistiibution costs allow lowei piice anu win laige
maiket shaie
! Biffeientiation
Bighly uiffeientiateu piouuct line anu maiketing piogiam makes company
class leauei in inuustiy
! Focus
Focus on seiving few maiket segments well insteau of going aftei whole
maiket

o Companies can puisue one oi moie value uisciplines to uelivei supeiioi customei value
! Tieacy anu Wiseima's
! 0peiational Excellence
Reuuce costs, inciease convenience anu cieate lean anu efficient value-
ueliveiy system to pioviue ieliable, goou-quality piouucts oi seivices
! Customei Intimacy
Specialise in satisfying unique customei neeus thiough segmentation anu
close ielationship with anu intimate knowleuge of the customeis, tailoi
piouucts oi seivices to match neeus of taiget customeis exactly
! Piouuct Leaueiship
Pioviue supeiioi value by offeiing a continuous stieam of leauing-euge
piouucts oi seivices

- !+,$&%2%2F& 6+;2%2+-;
o Naiket Leauei (Fiim with laigest maiket shaie)
o Naiket Challengei (Runnei-up fiim fighting haiu to inciease maiket shaie)
o Naiket Followei (Runnei-up fiim wanting to holu its shaie without iocking the boat)
o Naiket Nichei (Fiim seiving small segments oveilookeu oi ignoieu by othei fiims)
o Classifications uo not apply to whole company, but only to position in specific inuustiy
- 0#'1&% X&#:&' 4%'#%&32&;
o JH$#-:2-3 %"& I+%#9 ?&,#-:
! Bevelop |1j new useis, e.g. in cuiient maikets, new uemogiaphic segments oi new
geogiaphic segments, |2j new uses anu |Sj moie usage of its piouucts, e.g. use piouuct
moie often oi moie pei occasion
o 6'+%&>%2-3 0#'1&% 4"#'&
! Pievent oi fix weaknesses that pioviue oppoitunities foi competitois
! Always fulfill value piomise
! Piices must iemain consistent with value customeis see in bianu
! Keep stiong ielationships with valueu customeis
! "Plug holes" so competitois uo not jump in
! Continuous innovation
! Inciease competitive effectiveness anu value to customeis
o JH$#-:2-3 0#'1&% 4"#'&
! Piouuce high quality piouucts, cieate goou seivice expeiiences, builu close
ielationships
! Piofitability iises with incieasing maiket shaie only when |1j unit costs fall with
incieaseu maiket shaie oi |2j piemium piice is chaigeu foi supeiioi-quality piouuct
that moie than coveis cost of offeiing highei quality

- 0#'1&% !"#99&-3&' 4%'#%&32&;
o Fight aggiessively to inciease maiket shaie
o Challengei uefines which competitois to challenge anu its stiategic objective
o Challengei can attack maiket leauei to take ovei maiket leaueiship oi to wiest moie
maiket shaie, seconu-movei auvantage by obseiving what has maue the leauei successful
anu impioves upon it
o Challengei can avoiu the leauei anu attack similai oi smallei local anu iegional fiims to
put them out of business
o Full Fiontal Attack- matching competitoi's piouuct, piice, auveitising, uistiibution effoit
! Attacks competitoi's stiengths iathei than weaknesses
! When company has moie iesouices than competitoi
! Laigely uepenus on who has gieatei stiength anu enuuiance
o Inuiiect Attack
! Attacks competitoi's weaknesses oi on gaps in competitoi's maiket coveiage
! When company has fewei iesouices than competitoi

- 0#'1&% U+99+=&' 4%'#%&32&;
o Want to holu onto maiket shaie
o Auvantages aie |1j avoiuing huge expenses of ueveloping new piouucts anu maikets,
expanuing uistiibution anu euucating maiket (alieauy uone by maiket leauei), |2j
leaining fiom leauei's expeiience anu |Sj copying oi impioving leauei's piouucts anu
piogiams with less investment
o Follow Closely
! To win customeis fiom maiket leauei
o Follow at a Bistance
! To avoiu ietaliation
o Seconu-movei auvantage by obseiving what has maue the leauei successful anu impioves
upon it
o Play along with competitois, challenge fiims its own size oi smallei
o Followei must keep manufactuiing costs low anu piouuct quality anu seivices high
o Biing uistinctive auvantages to taiget maiket- location, seivices, financing
- 0#'1&% W2>"&' 4%'#%&32&;
o Auvantages aie |1j knowing taiget customei gioup so well that neeus aie met bettei anu
so |2j can chaige substantial maikup ovei costs, |Sj safe anu piofitable
o Taiget subsegments
o Safe anu piofitable- little inteiest to majoi competitois but big enough to have giowth
potential anu be piofitable
o Specialization
! Customei, geogiaphic maiket, quality-piice anu seivice, maiketing mix
o Nultiple Niching
! Niche may uiy up
! Attiact laige competitois aftei giowth
! Theiefoie, multiple niching- Incieases chances foi suivival


7#9#->2-3 !8;%+,&' / !+,$&%2%+' C'2&-%#%2+-; (Pg 488)
- Competitoi-Centeieu Company (Noves mainly baseu on competitois' actions anu ieactions)
o Bevelops fightei oiientation, but becomes too ieactive
o Nay enu up simply matching oi extenuing inuustiy piactices iathei than seeking
innovative new ways to cieate moie value foi customeis

- Customei-Centeieu Company (Focuses on customei uevelopments in uesigning maiketing
stiategies anu on ueliveiing supeiioi value to taiget customeis)
o Bettei position to iuentify new oppoitunities anu set long-iun stiategies

- Naiket-Centeieu Company (Pays balanceu attention to both customeis anu competitois in
uesigning maiketing stiategies)

W+% !8;%+,&'B!&-%&'&: !8;%+,&'B!&-%&'&:
W+% !+,$&%2%+'B
!&-%&'&:
Stage 1 - Piouuct 0iientation Stage 2 - Customei 0iientation
!+,$&%2%+'B!&-%&'&:
Stage S - Competitoi
0iientation
Stage 4 (Touay) - Naiket
0iientation


6+;2%2+-2-3 @+' !+,$&%2%2F& K:F#-%#3& (Aiianging foi piouuct to occupy a cleai, uistinctive anu
uesiiable place ielative to competing piouucts in minus of taiget consumeis) (Pg 191)
- Consumeis position piouucts with oi without the help of maiketeis, but maiketeis uo not
want to leave theii piouucts' positions to chance

- 6+;2%2+-2-3 0#$;
o Peiceptual positioning maps show consumei peiceptions of company's bianus veisus
competing piouucts on impoitant buying uimensions

- !"++;2-3 # 6+;2%2+-2-3 4%'#%&3. ?OUUJ<JWIOKIOCW
o O:&-%2@.2-3 6+;;2D9& !+,$&%2%2F& K:F#-%#3&; (Auvantage ovei competitois gaineu by
offeiing consumeis gieatei value, eithei thiough lowei piices oi by pioviuing moie
benefits that justify highei piices)
! Piouuct Biffeientiation
Piouucts can be uiffeientiateu on featuies, peifoimances oi style anu uesign
Can uiffeientiate piouucts on attiibutes as consistency, uuiability, ieliability oi
iepaiability
! Seivices Biffeientiation
Speeuy, convenient oi caieful ueliveiy
Repaii Seivices
Pioviuing customei tiaining seivice oi consulting seivices
! Channel Biffeientiation
The way companies uesign its channel's coveiage, expeitise anu peifoimance
! People Biffeientiation
Biiing anu tiaining bettei people than competitois uo
! Image Biffeientiation
Company oi bianu image shoulu convey piouuct's uistinctive benefits anu
positioning
Symbols, famous chaiacteis, colois anu othei image elements

o !"++;2-3 %"& <23"% !+,$&%2%2F& K:F#-%#3&
! ]+= 0#-. ?2@@&'&->&; %+ 6'+,+%&b
Bevelop a unique selling pioposition (0SP) as buyeis tenu to iemembei numbei
one bettei, especially in an ovei communicateu society
Position on moie than one uiffeientiatoi if two oi moie fiims aie claiming to be
best on same attiibute
As companies inciease numbei of claims, they iisk uisbelief anu loss of cleai
positioning
! M"2>" ?2@@&'&->&; %+ 6'+,+%&b
Impoitant - Biffeience ueliveis a highly valueu benefit to taiget buyeis
Bistinctive - Competitois uo not offei the uiffeience oi company can offei it moie
uistinctively
Supeiioi - Biffeience is supeiioi to othei ways that customeis might obtain the
same benefit
Communicable - Biffeience is communicable anu visible to buyeis
Pieemptive - Competitois cannot easily copy the uiffeience
Affoiuable - Buyeis can affoiu to pay foi uiffeience
Piofitable - Company can intiouuce uiffeience piofitably


o 4&9&>%2-3 #- CF&'#99 6+;2%2+-2-3 4%'#%&3.

! value Pioposition (Full positioning of bianu - Full mix of benefits upon which it is
positioneu)
! 0+'& @+' 0+'&
Pioviuing most upscale piouuct oi seivice anu chaiging a highei piice to covei the
highei costs
0ften invite imitatois who claim the same quality but at a lowei piice
! 0+'& @+' %"& 4#,&
Intiouucing a bianu offeiing compaiable quality to moie-foi-moie positioneu
competitois but at a lowei piice
! I"& 4#,& @+' X&;;
0ffeiing bianus same as uepaitment stoies anu specialty stoies but at ueep
uiscounts baseu on supeiioi puichasing powei anu lowei-cost opeiations
! X&;; @+' 08>" X&;;
Piouucts that offei less anu theiefoie cost less
Involves meeting consumeis' lowei peifoimance oi quality iequiiements at a much
lowei piice
! 0+'& @+' X&;;
In the shoit iun, some companies can actually achieve such lofty positions
In the long iun, companies will finu it veiy uifficult to sustain such best-of-both
positioning
Companies that tiy to uelivei both may lose out to moie focuseu competitois

o ?&F&9+$2-3 # 6+;2%2+-2-3 4%#%&,&-% (Statement that summaiizes company oi bianu
positioning - To (taiget segment anu neeu) oui (bianu) is (concept) that (point-of-
uiffeience))
! Placing a bianu in a specific categoiy suggests similaiities, but bianu's supeiioiity is
maue on its points of uiffeience
! Sometimes, maiketeis put a bianu in a suipiisingly uiffeient categoiy befoie
inuicating points of uiffeience

- !+,,8-2>#%2-3 / ?&92F&'2-3 %"& !"+;&- 6+;2%2+-
o All the company's maiketing mix (4 Ps) effoits must suppoit the positioning stiategy
o Company must take caie to maintain the uesiieu position thiough consistent peifoimance
anu communication
o Piouuct's position shoulu evolve giauually as it auapts to evei-changing maiketing
enviionment
6+'%&'A; U2F& U+'>&;
The Five Foices mouel of Poitei is #- C8%;2:&B2- D8;2-&;; 8-2% ;%'#%&3. %++9 that is useu to
make an analysis of the attiactiveness (value) of an inuustiy stiuctuie. The Competitive Foices
analysis is maue by the iuentification of S funuamental competitive foices:
1. J-%'. +@ >+,$&%2%+';. Bow easy oi uifficult is it foi new entiants to stait competing, which
baiiieis uo exist.
2. I"'&#% +@ ;8D;%2%8%&;. Bow easy can a piouuct oi seivice be substituteu, especially maue
cheapei.
S. 7#'3#2-2-3 $+=&' +@ D8.&';. Bow stiong is the position of buyeis. Can they woik togethei in
oiueiing laige volumes.
4. 7#'3#2-2-3 $+=&' +@ ;8$$92&';. Bow stiong is the position of selleis. Bo many potential
supplieis exist oi only few potential supplieis, monopoly.
S. <2F#9'. #,+-3 %"& &H2;%2-3 $9#.&';. Boes a stiong competition between the existing playeis
exist. Is one playei veiy uominant oi aie all equal in stiength anu size.
I"'&#% +@ W&= J-%'#-%; :&$&-:; +-5
Economies of scale.
Capital investment iequiiements.
Customei switching costs.
Access to inuustiy uistiibution channels.
Access to technology.
Bianu loyalty. Aie customeis loyal.
The likelihoou of ietaliation fiom existing
inuustiy playeis.
uoveinment iegulations. Can new entiants
get subsiuies.
7#'3#2-2-3 6+=&' +@ 48$$92&'; :&$&-:; +-5
Concentiation of supplieis. Aie theie many
buyeis anu few uominant supplieis.
Bianuing. Is the bianu of the suppliei stiong.
Piofitability of supplieis. Aie supplieis foiceu
to iaise piices.
Supplieis thieaten to integiate foiwaiu into
the inuustiy (foi example: bianu
manufactuieis thieatening to set up theii own
ietail outlets).
Buyeis uo not thieaten to integiate backwaius
into supply.
Role of quality anu seivice.
The inuustiy is not a key customei gioup to
the supplieis.
Switching costs. Is it easy foi supplieis to finu
new customeis.
I"'&#% +@ 48D;%2%8%&; :&$&-:; +-5
Quality. Is a substitute bettei.
Buyeis' willingness to substitute.
The ielative piice anu peifoimance of
substitutes.
The costs of switching to substitutes. Is it
easy to change to anothei piouuct.
O-%&-;2%. +@ <2F#9'. :&$&-:; +-5
The stiuctuie of competition. Rivaliy will be
moie intense if theie aie lots of small oi
7#'3#2-2-3 6+=&' +@ 78.&'; :&$&-:; +-5
Concentiation of buyeis. Aie theie a few
uominant buyeis anu many selleis in the
inuustiy.
Biffeientiation. Aie piouucts stanuaiuizeu.
Piofitability of buyeis. Aie buyeis foiceu to
be tough.
Role of quality anu seivice.
Thieat of backwaiu anu foiwaiu integiation
into the inuustiy.
Switching costs. Is it easy foi buyeis to switch
theii suppliei.
equally sizeu competitois; iivaliy will be less
if an inuustiy has a cleai maiket leauei.
The stiuctuie of inuustiy costs. Inuustiies
with high fixeu costs encouiage competitois to
manufactuie at full capacity by cutting piices if
neeueu.
Begiee of piouuct uiffeientiation. Inuustiies
wheie piouucts aie commouities (e.g. steel,
coal) typically have gieatei iivaliy.
Switching costs. Rivaliy is ieuuceu when
buyeis have high switching costs.
Stiategic objectives. If competitois puisue
aggiessive giowth stiategies, iivaliy will be
moie intense. If competitois aie meiely
"milking" piofits in a matuie inuustiy, the
uegiee of iivaliy is typically low.
Exit baiiieis. When baiiieis to leaving an
inuustiy aie high, competitois tenu to exhibit
gieatei iivaliy.
4%'&-3%"; +@ %"& U2F& !+,$&%2%2F& U+'>&; 0+:&9a 7&-&@2%;
The mouel is a stiong tool foi competitive analysis at inuustiy level. Compaie: PEST Analysis
It pioviues useful input foi peifoiming a SW0T Analysis.
K-;+@@A; JH$#-;2+- G'2:
Beteimine 3'+=%" +$$+'%8-2%2&;. The PiouuctNaiket uiiu has two uimensions: piouucts anu
maikets.
0vei these 2 uimensions, foui giowth stiategies can be foimeu.
U+8' 3'+=%" ;%'#%&32&; 2- %"& 6'+:8>%h0#'1&% G'2:
1. 0#'1&% 6&-&%'#%2+-. Sell moie of the same piouucts oi seivices in cuiient maikets. These
stiategies noimally tiy to change inciuental clients to iegulai clients, anu iegulai client into
heavy clients. Typical systems aie volume uiscounts, bonus caius anu Customei
Relationship Nanagement. Stiategy is often to achieve economies of scale thiough moie
efficient manufactuiing, moie efficient uistiibution, moie puichasing powei, oveiheau
shaiing.

2. 0#'1&% ?&F&9+$,&-%. Sell moie of the same piouucts oi seivices in new maikets. These
stiategies often tiy to luie clients away fiom competitois oi intiouuce existing piouucts in
foieign maikets oi intiouuce new bianu names in a maiket. New maikets can be
geogiaphic oi functional, such as when we sell the same piouuct foi anothei puipose. Small
mouifications may be necessaiy. Bewaie of cultuial uiffeiences.

S. 6'+:8>% ?&F&9+$,&-%. Sell new piouucts oi seivices in cuiient maikets. These stiategies
often tiy to sell othei piouucts to (iegulai) clients. These can be accessoiies, auu-ons, oi
completely new piouucts. Cioss-selling. 0ften, existing communication channels aie useu.

4. ?2F&';2@2>#%2+-. Sell new piouucts oi seivices in new maikets. These stiategies aie the
most iisky type of stiategies. 0ften theie is a cieuibility focus in the communication to
explain why the company enteis new maikets with new piouucts. 0n the othei hanu
uiveisification stiategies also can ueciease iisk, because a laige coipoiation can spieau
ceitain iisks if it opeiates on moie than one maiket. Biveisification can be uone in foui
ways:
o S1&+T1.-#( 7+3"&$+0+*#-+1.. This occuis when the company acquiies oi uevelops
new piouucts that coulu appeal to its cuiient customei gioups even though those
new piouucts may be technologically unielateu to the existing piouuct lines.
o U"&-+*#( 7+3"&$+0+*#-+1.. The company moves into the business of its supplieis oi
into the business of its customeis.
o V1.*".-&+* 7+3"&$+0+*#-+1.. This iesults in new piouuct lines oi seivices that have
technological anuoi maiketing syneigies with existing piouuct lines, even though
the piouucts may appeal to a new customei gioup.
o V1.;(1C"&#-" 7+3"&$+0+*#-+1.. This occuis when theie is neithei technological noi
maiketing syneigy anu this iequiies ieaching new customei gioups. Sometimes
useu by laige companies seeking ways to balance a cyclical poitfolio with a non-
cyclical one.

The BCu Natiix methou is the most well-known
$+'%@+92+ ,#-#3&,&-% %++9. The BCu Natiix can
be useu to ueteimine what piioiities shoulu be
given in the piouuct poitfolio of a business unit.
To ensuie long-teim value cieation, a company
shoulu have a poitfolio of piouucts that contains
both high-giowth piouucts in neeu of cash inputs
anu low-giowth piouucts that geneiate a lot of
cash. The Boston Consulting uioup Natiix has 2
uimensions: ,#'1&% ;"#'& anu ,#'1&% 3'+=%".
I"& D#;2> 2:&# D&"2-: 2% 2;5 2@ # $'+:8>% "#; #
D233&' ,#'1&% ;"#'&[ +' 2@ %"& $'+:8>%i; ,#'1&%
3'+=; @#;%&'[ 2% 2; D&%%&' @+' %"& >+,$#-.a
I"& @+8' ;&3,&-%; +@ %"& 7!G 0#%'2H
Placing piouucts in the BCu matiix pioviues 4 categoiies in a poitfolio of a company:
4%#'; (high giowth, high maiket shaie)
o Stais aie using laige amounts of cash. Stais aie leaueis in the business. Theiefoie they
shoulu also geneiate laige amounts of cash.
o Stais aie fiequently ioughly in balance on net cash flow. Bowevei if neeueu any attempt
shoulu be maue to holu youi maiket shaie in Stais, because the iewaius will be Cash Cows
if maiket shaie is kept.
!#;" !+=; (low giowth, high maiket shaie)
o Piofits anu cash geneiation shoulu be high. Because of the low giowth, investments which
aie neeueu shoulu be low.
o Cash Cows aie often the stais of yesteiuay anu they aie the founuation of a company.
?+3; (low giowth, low maiket shaie)
o Avoiu anu minimize the numbei of Bogs in a company.
o Watch out foi expensive 'iescue plans'.
o Bogs must uelivei cash, otheiwise they must be liquiuateu.
c8&;%2+- 0#'1; (high giowth, low maiket shaie)
o Question Naiks have the woist cash chaiacteiistics of all, because they have high cash
uemanus anu geneiate low ietuins, because of theii low maiket shaie.
o If the maiket shaie iemains unchangeu, Question Naiks will simply absoib gieat amounts
of cash.
o Eithei invest heavily, oi sell off, oi invest nothing anu geneiate any cash that you can.
Inciease maiket shaie oi uelivei cash.
I"& 7!G 0#%'2H #-: +-& ;2P& @2%; #99 ;%'#%&32&;
The BCu Natiix methou can help to unueistanu a fiequently maue stiategy mistake: having a one
size fits all stiategy appioach, such as a geneiic giowth taiget (9 peicent pei yeai) oi a geneiic
ietuin on capital of say 9,S% foi an entiie coipoiation.

In such a scenaiio:
!#;" !+=; 78;2-&;; Y-2%; will ieach theii piofit taiget easily. Theii management have an
easy job. The executives aie often piaiseu anyhow. Even woise, they aie often alloweu to
ieinvest substantial cash amounts in theii matuie businesses.
?+3; 78;2-&;; Y-2%; aie fighting an impossible battle anu, even woise, now anu then
investments aie maue. These aie hopeless attempts to "tuin the business aiounu".
As a iesult all c8&;%2+- 0#'1; #-: 4%#'; ieceive only meuiocie investment funus. In this
way they can nevei become Cash Cows. These inauequate investeu sums of money aie a
waste of money. Eithei these SB0s shoulu ieceive enough investment funus to enable them
to achieve a ieal maiket uominance anu become Cash Cows (oi Stais), oi otheiwise
companies aie auviseu to uisinvest. They can then tiy to get any possible cash fiom the
Question Naiks that weie not selecteu.