Essentials of marketing

ACADEMY OF FINANCE Assoc Prof Dao Thi Minh Thanh MA Nguyen Thi Van Anh Essentials of Marketing FINANCIAL PUBLISHER Hanoi, 2018 TABLE OF CONTENTS Contents Page ACKNOWLEDGEMENT PREFACE 11 Chapter 1: INTRODUCTION TO MARKETING 13 1.1 Marketing literature development 15 1.1.1 Classic marketing theory 17 1.1.2 Modern marketing Theory 18 1.2 Basic concepts of marketing 20 1.2.1 Needs 21 1.2.2 Wants 22 1.2.3 Demands 24 1.2.4 Market offerings 25 1.2.5 Exchange 26 1.2.6 Market 27 1.2.7 Marketing 28 1.3 Marketing management 29 1.3.1 Marketing management orientations 29 3.2.1 Model of consumer buying behavior 96 1.3.2 Integrated marketing program 34 3.2.2 Characteristics affecting consumer behaviors 99 1.4 Marketing classification 43 3.2.3 Consumer decision process 116 1.4.1 Based on material form of exchanging process 43 3.3.2 Business buyer behavior 131 1.4.2 Based on scope of application 45 3.3.3 Trading businesses buying behavior 149 1.5 Functions and roles of marketing 45 3.3.4 Non-production and organization buying behavior 152 1.5.1 Functions of marketing 45 1.5.2 Roles of marketing 48 Charter 2: INFORMATION SYSTEM AND MARKETING ENVIRONMENT 51 Chapter 4: MARKET SEGMENTATION, TARGETING, AND POSITIONING 155 4.1 Market segmentation 157 2.1 Marketing information system 53 4.1.1 About market segmentation 157 2.1.1 About marketing information system 53 4.1.3 Market segment strategy 165 2.1.2 Marketing research 59 4.2 Targeting 167 2.2 Marketing environment 68 2.2.1 Overview of marketing environment 68 2.2.2 Macro marketing environment 70 2.2.3 Micro marketing environment 84 4.2.1 Evaluating market segments 168 4.2.2 Target market strategy 171 4.3 Positioning 174 4.3.1 About positioning 174 Chapter 3: CONSUMER BEHAVIOR 93 4.3.2 Objectives of positioning strategy 175 3.1 Classification of customers 95 4.3.3 Positioning strategy 177 3.2 Consumer buying behavior 95 Chapter 5: PRODUCT 183 6.1.2 Importance of price decisions 217 5.1 Overview of Product 185 6.2 Factors affecting price decisions 220 5.1.1 Product definition 185 6.2.1 Internal factors 221 5.1.2 Product classifications 188 6.2.2 External factors 226 5.2 Product life cycle 190 6.3 Pricing determination process 233 5.2.1 Introduction stage 191 6.3.1 Set pricing targets and direction 234 5.2.2 Growth stage 193 6.3.2 Determine demand on target market 235 5.2.3 Maturity stage 193 5.2.4 Decline stage 194 5.3 Product decisions 196 5.3.1 Product strategies and importance of product strategies 196 6.3.3 Determine and analyze costs 237 6.3.4 Analysis of market environment 238 6.3.5 Choosing methods of pricing 239 6.4 Price segmentation 245 5.3.2 Branding decisions 198 Chapter 7: PLACE 249 5.3.3 Packaging decision 200 7.1 Marketing distribution system 251 5.3.4 Product support services decisions 201 5.3.5 New products development decision 202 5.3.6 Product line decisions 209 7.1.1 About marketing distribution system 253 7.1.2 Roles of marketing distribution system 254 7.1.3 Functions of marketing distribution system.254 7.2 Distribution channel 257 Chapter 6: PRICE 213 7.2.1 About distribution channel 257 6.1 About price 215 7.2.2 Distribution channel types 259 6.1.1 Definition 215 7.2.3 Distribution channel structure 262 7.2.4 Distribution channel organization and decisions 268 7.2.5 Distribution channel forms 270 7.2.6 Distribution channel management decisions 274 7.3 Physical Distribution 280 7.3.1 Nature and objectives of physical distribution 281 7.3.2 Physical distribution decisions 283 7.4 Retailing and wholsaling 286 7.4.1 Retailing 287 7.4.2 Wholesaling 294 ACKNOWLEDGEMENT We would like to send our sincere thanks to researchers within and outside of the Academy who have contributed valuable ideas to complete and successfully defend the book The book still has shortcomings that need to be perfected; therefore, the authors wish to receive comments from all interested parties for the publication of the revised text in the future Authors Chapter 8: PROMOTION 303 8.1 Importance of promotion in marketing 305 8.1.1 About promotion 305 8.1.2 Importance of promotion mix 308 8.2 Promotion tools 309 8.2.1 Advertising 310 8.2.2 Sales Promotion 321 8.2.3 Public relations 326 8.2.4 Personal selling 330 8.2.5 Direct marketing 333 PREFACE To ensure the success of all business activities, Marketing has been acknowledged as a deciding factor by both academics and enterpreneurs With the aim to best satisfy the market’s and the customers’ needs and wants as well as to enhance the competitiveness of the business, a firm’s Marketing strategy is to guide other strategies in corporate governance such as financial strategy, human resources, technological and technical strategies to reach the final goal of success Having recognized the need of a text book providing basic Marketing knowledge for business-related students, the authors have compiled resources, materials, and relevant case studies for an overview of marketing theory The book inherits principles from the Essentials of Marketing book by Philip Kotler (2014) and other principles researched and publicized by the Academy’s Marketing Faculty The book is structured into chapters which presents major parts of knowledge Firstly, part about Introduction to Marketing Literature presents through Chapter Then part researches Marketing Environment via 10 11 Chapter and Chapter contains part about Market segment, targeting, and product positioning Finally, part discusses Marketing mix decisions via chapter 5, 6, 7, and The book was co- written by Associate Professor Dao Thi Minh Thanh and MA Nguyen Thi Van Anh Who wrote chapters 1,2,3,4,6,7; MA Nguyen Thi Van Anh and MA Tran Huong Giang in charge of chapter 5; and Assoc Prof Dao Thi Minh Thanh and MA Mai Mai for chapter This Essentials of Marketing text book hopes to serve as a relevant reference for students, academic researchers, and practitioners of marketing both in and outside of Academy of Finance Chapter 1: INTRODUCTION TO MARKETING Objectives to After reading this chapter, the students should be able Understand the development of marketing theory from the 20th century until present Define Marketing and outline the steps in the marketing program Be able to analyze and apply marketing management concepts in real business cases Preview This chapter introduces you to the development of marketing theory and basic concepts of marketing First, we start with the study of classic marketing theory theory when the market power belongs to the seller, then analyze the origin and the nature of the new business philosophy in modern marketing theory Second, we answer the question, “What is marketing?” Simply put, 12 13 marketing is to best satisfy customers’ needs and wants The aim of marketing is to create value for customers and capture value from customers in return Finally, we discuss the five marketing management orientations and the steps in the marketing process-from understanding customer needs, to designing marketing strategies and integrated marketing programs, and to build customer relationships and capturing value for the firm 1.1 Marketing literature development During the process of establishment and development, firms must solve a series of economic, technical, and business managing issues Among which, two most important matters are production and distribution of their products/services Together with the production stage, which has always been the core issue in business, distribution has also taken a very important stance recently In many cases, distribution is the key successive factor for the company Therefore, companies and managers are paying more and more attention to how to improve the distribution of their products and services to customers From the middle of the 17th century, based on practical experiences, businessmen from Japan and China had summarized the methods and secrets to be successful into five principles: (i) the products are of good quality, (ii) businesses have to satisfy customers, (iii) customers have the right to buy, (iv) if the customers are not satisfied with the product, businesses are willing to replace or refund, (v) businesses must record carefully all sold products to determine which ones sell better These experiences and salesmanship are key for the establishment of marketing theory in the future By the end of the 19th century, beginning of 20th century, with the development of science and 14 15 technology revolution, there appeared many issues in the market in terms of supply and demand and competition Businesses had to seek for methods to solve the issues of production such as how to speed up the distribution process of goods and services In the process of seeking solutions to speed up the distribution, attracting customers and strengthening the market competitiveness, a scientific subject which was gradually found and that is marketing The term “Marketing” first appeared in a lecture of “Product Marketing” in 1905 by Dr W.E.Krensi of Pensylvania University (United States of America) From then until 1915, this subject has been officially taught in California University and other universities in the country Many firms have then started to implement marketing in their business activities Over the years, the contents and philosophies of the subject have been more and more completed and developed, bringing real effectiveness to business activities In 1937, the American Marketing Association was established, a real contribution to the development of marketing in terms of both practical and theoretical aspects After the Second World War, marketing had spread to many countries worldwide Some Socialist countries such as Poland, Rumania, Hungary, German Democratic Republic and so on have also choosen to teach marketing at economic colleges since 1960s By the end of the 20th 16 century, marketing had been taught in most countries all over the world As a newly-born science, established and developed in the 20th century, marketing has developed thoroughly in terms of theories, business ideas, and practical application This development process can be divided in to two main stages as we so called classic marketing theory and modern marketing theory 1.1.1 Classic marketing theory Classic marketing theory (also known as traditional marketing theory) first appreared around the beginning of 20th century in the United States of America (USA) During this time, demand and supply relation in the market put not much pressure on the distribution of products and services as there was not yet a large distance in production and consumption Moreover, market competition was not fierce, monopoly and oligopoly played central in many countries This condition brought the advantage towards business producers The role and position of sellers was given prominence in market relationship, explaining the appearance of the term “Market of sellers” Marketing activities at this time was simple activities together with goods distribution activity of producers Activities which are seeking for new markets, skills and solutions to boost sales are advertising, promotion, 17 and salesmanship Therefore, a majority of the public considered classic marketing theory as selling activities for their firms’ products and services During this period, the American Marketing Association defined the marketing as “activities relating to the distribution of final products/services from manufacturer to endconsumer” Classic marketing theory’s philosophy is to “sell what enterprise has” Accordingly, businesses has no need for market demand research, as well as seeking solutions to best satisfy market demand and customers Customers are not the centre of marketing research and activities In practice, classic marketing theory limited its activities only to goods and service trading, not yet developed in to other domains of the social life 1.1.2 Modern marketing theory After the Second World War, due to the drastic impact of science and technology revolution and other factors, commodity market evolved quickly, which leadi to exceed supply, the market became saturated Distribution and sales became pressing matters for all businesses In addition, market competition at this stage became fierce as governments then started to employ anti-monopoly laws as well as effective antimonopoly solutions The appearance of a series of other socioeconomic issues such as economic crisis, market 18 replacement, and development of the socialist system also added more to the stress These caused fundamental changes in the relationship between sellers and buyers in the market The market changed from “market of the seller” to “market of the buyer” To solve these issues, activities under classic marketing theory were no longer enough and firms needed to adjust and changed their way of thinking and doing business As a result, marketing theory in this period developed into a new phase, so called modern marketing theory For comprehensive consideration, compared with classic marketing theory, modern marketing is not only an inheritance but also a revolution in business domain According to modern marketing perspective, marketing activities are no longer limited to market seeking and salesmanship Marketing now starts before products are made, ongoing during production process and distribution, during purchase, and finally postsale services As such, modern marketing theory has penetrated three other important steps of businesses: Production, Distribution, and Consumption It helps businesses answer two core issues “What to produce?” and “How to distribute products to end customers?” Modern marketing perspective places strong emphasis on research and satisfaction of customers is the centre of all activities According to this perspective, salesmanship is only a part of marketing, the basic and 19 - Guidance and education of consumption: Companies participate in the market not only to satisfy customer demand, but also to educate consumer The information in the advertising program must clearly indicate to consumers the benefits and disadvantages of consuming products, using the product, encouraging and restricting the consumption of some products 8.2.1.3 Advertising requirements Advertising information should be representative, reflecting the basic benefits of product consumption Featured advertising means advertising information must have the effect of differentiating and highlighting, highlighting the product in the competition The more unique the ad, the faster the information in the ad affects the consumer, and the more direct impact it has on the buying behavior It is not necessary to enumerate a lot of information Advertisements must be artistic and cultural Artistic advertising can create excitement for customers, while maintaining the cultural value of advertising Artistic and cultural advertising requires research into customer and social contexts, ensuring adherence to the customs, habits, and culture of the population, and at the same time raising High aesthetic value, accuracy and science of advertising information Advertisements must be honest and obey the law 316 Advertising is a business activity that introduces itself to customers about the product and the business Advertisements say good things about the products but donot mean to exaggerate the truth Advertising honestly creates favorable psychology for customers to receive products, while expressing the responsibility of businesses with consumers, retain the prestige of the business Truthful advertising is a legal obligation for businesses Advertisements must be repeated frequently and in the right moment Customers are affected by a variety of information Advertising information is not always of interest to the consumer Frequency of less than times will not impact the customer The most effective advertising time is when many people are in good mood When developing advertising programs, businesses need to plan their impact, frequency of advertising and impact level, main media channels, and when advertising occurs Advertisements must be practical, effective, and relevant to the cost of advertising In the Marketing costs, advertising costs accounted for a very large proportion Businesses need to calculate the cost and effectiveness of advertising Accurately evaluating the effectiveness of advertising is very difficult and lack specific By the effectiveness of test and control, businesses can evaluate advertising effectiveness through increased sales, market share 317 8.2.1.4 Advertising vehicles Marketer’s next task is to select the advertising medium to load the advertisement message Advertising is conducted through the following principal means: - Newspaper: A popular and important means, wide range, low cost, can bring information to separate readers - Audio Broadcasting: A medium-sized, low-cost medium, but due to its limited sound, it is limited in its ability to influence - Television is the advertising medium that allows the combination of sound and image, color, best effect, wide range of activities, allowing repeatedly repeated advertising messages, but high cost - Outdoor advertising: By panels, signage, electrical panels, banners Outdoor advertising can impact on size, image and location The amount of information is limited and there are no readers - Advertising on the Internet Vehicles Press Television Direct mail Broadcasting Magazine - Direct print advertising - Advertising in the air, on the means of transport - Advertising on product packaging Each advertising medium has its own advantages, disadvantages and appropriate location for each product and target customers 318 Outdoor Advantages Flexible, timely, covering the local market, a large number of people accept, high reliability Combining pictures, sounds, emotions, attract strong attention, wide coverage Public option, flexible, no competition advertising on the same medium, direct to each person General, carefully selected areas and the public, cheap Disadvantages Short lived time, poor quality reproduction, less people read Overpriced, overpriced, overexposed, and underprivileged Price is relatively high, the picture is faint Only sound, attracting less attention than TV, no standard layout Good selection of Time from the local and international time of purchase magazine, good to the time of the quality, good advertisement, some reproduction, long life, issue is useless, many readers Flexibility, high No public choice, repetition frequency, limited creativity low price, less competition Table 8.2: Advantages and disadvantages of advertising media 319 8.2.1.5 Deciding on the advertising budget After determining advertising objectives, the company can proceed to establish its advertising budget for each product The role of advertising is to shift the product’s demand curve upward The company wants to spend the amount required to achieve the sales goal But how does a company know if it is spending the right amount? If the company spends too little, the effect is insignificant, and the company is, paradoxically, spending too much On the other hand, if the company spends too much on advertising, then some of the money could have been put to better use Some critics charge that large consumerpackage-goods firms tend to overspend on advertising, and industrial companies generally under-spend on advertising: 8.2.1.6 Evaluate the effectiveness of advertising program When evaluating the effectiveness of advertising, it is often assessed in terms of both quantitative and qualitative assessments Quantitative assessment Evaluate the effectiveness of advertising based on indicators reflecting the overall results of business activities such as the volume of goods sold, the number of customers of the business, the scope of the market expansion, the growth rate of profit… Through 320 experimentation, one can indicate the growth of the indicators after advertising and before advertising Qualitative assessment Can evaluate the effect of advertising through: - Does the ad meet basic requirements and principles? - Ability to attract and persuade clients of the advertising program - Does advertising ensure the close coordination between advertising media, between images and words, between the cost and specific conditions of the business? - The suitability of the advertising program with the target customers and market characteristics - Influence and effect of advertising to the psychology of customers 8.2.2 Sales Promotion Although sales promotion tools - coupons, contests, premiums, and the like - are highly diverse, they have three distinctive characteristics: Communication: They gain attention and usually provide information that may lead the consumers to the product Incentive: They incorporate some concession, inducement, or contribution that gives value to the consumers 321 Invitation: They include a distinct invitation to engage in the transaction now Companies use promotion tools to create a stronger and quicker response Sales promotion can be used to dramatize product offers and to boost sagging sales Sales promotion effects are usually short run, however, and not effective in building long-run brand preference Kotler and Armstrong (2016) defined sales promotion as a diverse collection of incentive tools, mostly short term, designed to stimulate quicker and/or greater purchase of particular products/services by consumers or the trade Whereas advertising offers a reason to buy, sales promotion offers an incentive to buy Sales promotion includes tools for consumer promotion (like samples, coupons, cash refund, demonstrations, contests); trade promotion (like buying allowances, free goods, merchandise allowances, cooperative advertising, advertising and display allowances, push money, dealer sales contests); and salesforce producer (like bonuses, contests, sales rallies) Objectives Sales promotion tools in their specific objectives A free sample stimulates consumers’ trial, while a free management-advisory service cements a long-term relationship with a retailer Sellers use incentive-type promotions to attract new 322 triers, to reward loyal consumers, and to increaser the repurchase rates of occasional users New triers are of three types - users of another brand in the same category, users in other categories, and frequent brand switchers Sales promotions often attract the brand switchers, because users of other brands and categories not always notice or act on a promotion Brand switchers are primarily looking for low price, good value, or premiums Sales promotion is unlikely to turn them into loyal brand users Sales promotions used in markets of high brand similarity produce a high sales response in the short run but little permanent gain in market share In markets of high brand dissimilarity, sales promotions can alter market shares more permanently Major Decisions in Sales Promotion In using sales promotion, a company must establish the objectives, select the tools, develop the program, pretest the program, implement and control it, and evaluate the results We will examine these steps in the following paragraphs Establishing the sales promotion objectives Sales promotion objectives are derived from broader promotion objectives, which are derived from more basis marketing objectives developed for the product The specific objectives set for sales promotion will vary with the type of target market For consumers, 323 objectives include encouraging purchase of larger-size units, building trial among nonusers, and attracting switchers away from competitors’ brands For retailers, objectives include inducing retailers to carry new items and higher levels of inventory, encouraging off-season buying, encouraging stocking of related items, offsetting competitive promotions, building brand loyalty of retailers, and gaining entry into new retail outlets For the salesforce, objectives include encouraging support of a new product or model, encouraging more prospecting and stimulating off-season sales Selecting the sales promotion tools Many sales promotion tools are available to accomplish these objectives The promotion planner should take into account the type of market, sales promotion objectives, competitive conditions, and cost effectiveness of each tool We will now consider the main sales promotion tools used for consumer promotion, trade promotion, and business promotion Developing the sales promotion program The marketer must make further decisions to define the full promotion program Increasingly, marketers are blending several media into a total campaign concept In this context, there are specific tasks The marketer has to determine the size of the incentive to offer 324 Conditions for participation have to be established The marketer has to decide on the duration of promotion The marketer must choose a distribution vehicle The timing of promotion must be established Finally, the marketer must determine the total sales promotion budget Pre-tesing the sales promotion program Although sales promotion programs are designed on the basis of experience, pretests should be conducted to determine if the tools are appropriate, the incentive size optimal, and the presentation method efficient Sales promotion directed at consumer markets can be readily pretested Consumers can be asked to rate or rank different possible deals Or trial tests can be run in limited geographical areas Implementing and controlling the sales promotion program Implementation and control plans should be prepared for each individual promotion Implementation planning must cover lead time and sell-in time Lead time is the time necessary to prepare the program prior to launching it Evaluating the sales promotion results Evaluation is a crucial requirement, and yet, evaluation of promotion programs receives little attention Even where an attempt is made to evaluate a promotion, it is 325 likely to be superficial Evaluation in terms of profitability is even less common Manufacturers can use four methods to measure sales promotion effectiveness The most common method is to examine the sales data before, during, and after a promotion Consumer-panel data would reveal the kinds of people who responded to the promotion and what they did after the promotion In spite of these problems, sales promotion will continue to play a growing role in the total promotion mix Its effective use will require defining the sales promotion objectives, selecting the appropriate tools, constructing the sales promotion program, pre-testing it, implementing it, and evaluating the results 8.2.3 Public relations 8.2.3.1 About public relations According to Kotler and Armstrong (2016), public relations (PR) is to build good relations with the company’s various publics by obtaining favorable publicity, building up a good corporate image, and handling or heading off unfavorable rumors, stories and events The roles of PR in marketing strategy include: - To create image for the business, take advantage of the public feelings, towards long-term strategic goals 326 - To build public trust, overcome misunderstandings or prejudices, negative publicity for the organization, build good relationships within the organization - A unique role in the branding of the organization or individual - To build up the culture of company, create traditional values with ​​ typical characteristics of the enterprise, build a common concept of value, united solidarity, attached feelings of members, communication relations behave in work and life - Strengthening trust and preserving the reputation of the enterprise Especially in crisis management and press relations of the business Today, PR and branding are becoming increasingly important as we are overwhelmed by the variety of goods, brands, increased advertising costs, and information generated by advertising The harder it is to build trust for customers Thus, PR is often the pre-emptive action of corporate branding strategy, and also becomes important for new market entry or banned products The five main tasks of PR include: - Relationship with the media: The purpose of communication with the media is to publish valuable 327 information on the media to draw attention to a person, product, service or an organization - Product promotion: Product promotion is a different endeavor to announce specific products - Corporate Communications: This activity includes internal and external communication to give people a deeper understanding of the organization - Lobbying: Lobbying is about working with lawmakers and government officials to advocate for or abolish a law or regulation - Counseling: proposing to the board recommendations on issues related to the public and on the position and image of the company 8.2.3.2 Public relations techniques PR establishes and maintains good relationships between the organization and the target audience In general, the public of the business includes the public and the public The main contents of PR activities are: − PR strategic planning − Internal PR − Relationship with the press − Event 328 − Crisis management − Community relations When planning a PR strategy, managers need to identify the target audience of the organization, their attitudes to the organization, the approach and the technology to build relationships with them Public groups of the organization including: - Public: Employees, managers, retired people - Finance: Banks, investors, shareholders - Trading: Customers, Suppliers, Distributors, Competitors - Government: National Assembly, government, specialized committee - Community: Communication, community - Foreign: Customers, international organizations government, partners, PR techniques for the internal public: internal communications, organizing internal events, and building organizational culture PR techniques in community relations: Managers need to pay attention to the characteristics of each stakeholder group in order to develop an appropriate communication strategy Usually, community relations are divided into the following main groups: group of direct commercial 329 transactions, group of legal relationships and obligations, group financial investment, media relations and community relations, and corporate social responsibility group PR techniques in press relations: press conferences and press releases, writing articles for newspapers, editorial letters, interview, presentation skills, and communication with the media PR techniques with customers: product seminars, new product launch, branch opening, examination of products, celebrate the product/ customer x million, customer conference, customer care, and meetings, exchanges PR techniques with public groups: lobbying, participate in local activities, and communication with the public PR techniques with social organizations and communities: sponsorship activities like funding for cultural activities, sports, humanitarian activities; and charity activities such charity funds, charity programs 8.2.4 Personal selling Kotler and Armstrong (2016) defined personal selling as oral presentation in a conversation with one or more prospective purchasers for the purpose of making sales and building customer relationships 330 Personal selling is the most cost-effective tool at later stages of the buying process, particularly in building up buyers’ preference, conviction, and action The reason is that personal selling, when compared with advertising, has three distinctive qualities: - Personal Confrontation: Personal selling involves an alive; immediate, and interactive relationship between two or more persons Each party is able to observe each other’s needs and characteristics at close hand and make immediate adjustments - Cultivation: Personal selling permits all kinds of relationships to spring up, ranging from a matter-offact selling relationship to a deep personal friendship Effective sales representatives will normally keep their customers’ interests at heart if they want long-run relationships - Response: Personal selling makes the buyer feel under some obligation for having listened to the sales talk The buyer has greater need to attend and respond, even if the response is a polite “thank you” These distinctive qualities come at a cost A salesforce represents a greater long-term cost commitment than advertising Advertising can be turned on and off, but the size of a sales-force is more difficult to alter 331 Sales process The objective of the sales activity is to introduce the product and collect information To achieve this goal, salespeople must perform the following tasks: - Exploring and evaluating customers - Prepare to reach customers - Customer access - Introduce and explain the product - Behave customer’s objections - Close the offer - Checking and monitoring to ensure that the customer has satisfied the order Salesman Sales activity is also a form of communication, but it is a form of face-to-face communication that allows accurate and rapid feedback Through it can influence the behavior of the customer The success of this activity depends largely on the ability of the employee Tasks of salesman include: - Search for potential customers - Provide information, introduce products - Persuade customers to care and buy products - Make orders 332 - Gather information about the needs of customers and competitors - Customer care To perform the above tasks, a salesman requires the following knowledge to be able to communicate and persuade customers: - Understanding the product: Understand the product, characteristics, features, uses, product quality - Understanding the business: Understand the origin of the business, history, business philosophy of the business - Understanding the customer: Understand the characteristics, motives, needs habits, customs, habits of customers - Understand the market and competitors: characteristics of trading habits of the market, strengths, and weaknesses of competitors in the market - Salespeople need to have style and ability to communicate with their customers (3M: Smile, fun, sincerely: enthusiasm, Speed: agile) 8.2.5 Direct marketing Direct marketing is only one form of marketing in which the product or service is transferred from the producer to the consumer without the use of an intermediary In this 333 sense, companies that use salespeople to sell directly to end users or run out of factory outlets are direct marketing personal media and the establishment of customer databases increasingly easier This term is used to refer to marketing by mail, or catalog marketing or direct mail marketing When telephones and other media are used in direct selling to customers, direct marketing is defined by Kotler and Armstrong (2016) as “direct communications with carefully targeted individual consumers to obtain an immediate response” - Direct marketing helps to enhance competitiveness by combining the efficiency with other tools of mixed promotion In this definition, it is important that marketing is carried out in order to obtain a measurable response, usually an order of the customer Today, many direct marketing users have found that it is playing an increasingly bigger role These direct marketing people use direct response media to sell and learn about a customer whose name and specialty are entered into the customer database to establish a link Today, businesses tend to allocate more direct marketing budgets because: - Businesses want to establish direct relationships and keep existing customers - Make the customer feel interested, personalize the communication - Provides convenience, information when shopping - The explosion and development of electronic and 334 Direct marketing is usually done through the following tools: - Direct marketing on television and radio: These are two main forms of direct response advertising Direct marketers for advertising shows, typically 60 to 120 seconds, describe persuasion of a product and provide customers with a toll free number for their order and home shopping channels This includes television shows or home shopping channels - Letter of offerings: Marketers directly send letters, brochures, leaflets and other forms of offering such as audio tapes, recordings, computer disks to the general public Direct marketing hopes to sell products or services, collect or select leads for sales force, announce interesting news, or send gifts to loyal customers - Direct publication: Every year, posters of catalogs for selected customers The success of mail order sales depends very much on the ability of the company to manage the clerical and customer lists, strictly control the stock of goods, provide quality goods, and create a special image of the benefit to customers 335 - Online marketing: This is done through interactive computer services That is, two-way systems connect consumers and sellers by computer Consumers use computers at home to access the system via a cable or telephone line When preparing for a direct marketing campaign, the marketer must determine the target, the audience, the sales strategy, the different trials, and the success rate of the campaign - Determine the target Direct marketing often set the goal as to make customers buy prospects immediately The success of the campaign is measured by the response level The response rate of 2% is often considered quite reasonable in a direct marketing campaign - Identify target customers Direct marketing people need to visualize the characteristics of existing customers and potential customers most likely It is also possible to use market segmentation criteria when identifying target customers Good prospects can be identified based on age, gender, income, education level, etc The reason for buying a good can also be a good benchmark to segment the market Another good starting point to segment the market is the consumer lifestyle; there are consumers who love the 336 computer, passion for cooking, outdoor entertainment - Choosing a strategy Direct marketers must envision an effective sales strategy to meet the needs of the target market Offer strategy consists of elements: product, offer, media, distribution method and creative strategy All of these factors can be tested - Experiment the direct marketing elements One of the great advantages of direct marketing is that it can be tested in real-world market conditions for the effectiveness of the different elements in the offer strategy Can test the nature of the product, advertise, price, media, mailing list - Evaluate the effectiveness of direct marketing strategy Direct marketers need to evaluate the effectiveness of the strategy through the ordering rate, purchase of customers Costs should also be calculated, revenue, and profits, but also the ability to create and maintain relationships with customers Review Questions Chapter Why businesses need to advertise? What are the requirements for a successful advertisement? 337 Distinguishing advertising and promotion Demonstrate key communication tools in a company’s promotion strategy REFERENCES Assoc Prof Đào Thị Minh Thanh, MA Ngô Minh Cách (2010), Essentials of marketing, 2nd edition, Academy of Finance Assoc Prof Đào Thị Minh Thanh, MA Ngô Minh Cách (2016), Marketing management, 1st edition, Academy of Finance Dr Brassiton & Pettitt (2006), Essentials of marketing, 4th edition, Financial Times Prentice Hall Philip Kotler & Gary Armstrong (2010), Essentials of marketing, 13th edition, Prentice Hall Philip Kotler (2003), Marketing insights from A to Z: 80 Concepts Every Manager Needs to Know, 1st edition, Wiley William Bearden, Thomas Ingram, Raymond LaForge (2015), Marketing principles and perspectives, 4th edition, McGraw-Hill/Irwin Louis W Stern, Adel I El-Ansary (2016), Marketing channel strategy, 8th edition, London Routledge 338 339 LIST OF FIGURESPAGE Figure 1.1: Levels of customers’ satisfaction 26 Figure 1.2: steps of an integrated Marketing program 36 Figure 1.3: The 4Ps of Marketing mix 40 Figure 2.1: Marketing information system 55 Figure 2.2: Macro Environment Factors 71 Figure 3.1: General model of consumers’ behaviors 97 Figure 3.2: The stimulus-response model 98 Figure 3.3: Hierarchy of needs by Maslow 111 Figure 3.4: Stages in consumer buyer decision process 117 Figure 3.5: Laptop brands during evaluation 121 Figure 3.6: Factors impact on purchase decision 122 Figure 4.1: Example of a perpetual map for shampoo products 164 Figure 5.1: Three levels of a product 186 Figure 5.2: Three kinds of product life cycles 190 340 341 Figure 5.3: Product Life Cycle 192 Figure 5.4: New-product development process 203 Figure 6.1: Factors affecting price determination 220 Figure 6.2: The general relation between price and demand 227 Figure 6.3: Elastic demand and inelastic demand 229 Figure 6.4: Process of determining price 233 Figure 6.5: Graph of breakeven points 241 LIST OF TABLES PAGE Table 1.1: Model 4C of Robert Lauterborn (1990) 41 Table 3.1: Business buyer decision process 143 Table 3.2: Example of supplier analysis 147 Figure 7.1: Distribution channel of different levels 263 Table 4.1: Market segmentation of ready-made clothes 164 Figure 7.2: How intermediaries raise economies 267 Table 5.1: Product life cycle and marketing decisions 196 Figure 7.3: Supply chains of value-added flows 281 Table 6.1: Terms of price 215 Figure 8.1: Promotion mix tools (Kotler and Armstrong, 2016) 306 Table 6.2: Effects of prices on turnover and profit 243 Figure 8.2: Steps to carry out a communication program 308 Table 8.2: Advantages/ disadvantages of advertising media 319 Table 8.1: Possible advertising objectives 311 Figure 8.3: AIDA model (Elmo Lewis, 1898) 314 342 343 Essentials of Marketing Chịu trách nhiệm xuất bản: GIÁM ĐỐC - TỔNG BIÊN TẬP Phan Ngọc Chính Chịu trách nhiệm biên soạn: PGS TS Đào Thị Minh Thanh - Ths Nguyễn Thị Vân Anh Biên tập: Nguyễn Thị Phương Thư Trình bày bìa: Ban quản lý Khoa học, Hưng Hà Biên tập kỹ thuật: Hưng Hà Đơn vị liên kết: Học viện Tài chính, Phố Lê Văn Hiến, Phường Đức Thắng, Quận Bắc Từ Liêm, Hà Nội In 1000 cuốn, khổ 14.5 x 20.5cm Công ty TNHH Sản xuất Thương mại Hưng Hà Địa chỉ: Số 20, Hoàng Quốc Việt, Cầu Giấy, Hà Nội Số xác nhận ĐKXB: 45862018/CXBIPH/4-107/TC Số QĐXB: 253/QĐ-NXBTC ngày 11 tháng 12 năm 2018 Mã ISBN: 978-604-791995-6 In xong nộp lưu chiểu năm 2018 344 ... roles of marketing 45 3.3.4 Non-production and organization buying behavior 152 1.5.1 Functions of marketing 45 1.5.2 Roles of marketing 48 Charter 2: INFORMATION SYSTEM AND MARKETING. .. the costs for marketing mix activities Marketing mix is​​ a collection of marketing tools that the company uses to pursue its marketing goals There are four basic elements 39 of marketing mix,... society Sub-branch of non-goods 44 marketing is widely diversified Some typical non-goods marketing types are: political marketing, diplomatic marketing, cultural marketing, sport marketing 1.4.2