Readings (recommended)

 Phan, T & Le, U, Vietnam’s search for tomorrow: Insights for brands, Think with Google, viewed 9 November
2020, <https://www.thinkwithgoogle.com/intl/en-apac/marketing-strategies/search/vietnams-search-for-
tomorrow-insights-for-brands/>.

This report could be useful for enriching your understanding of the latest Digital Search Trends (part of Marketing
Environment). It could be relevant to your assignments and any digital-related work.

 Euromonitor International 2020, Growth of Sustainability in Southeast Asia, Euromonitor International.

This report could be useful for enriching your understanding of the latest Sustainability trends in Southeast Asia (part of
Marketing Environment). There are 6 sustainability focus areas: Supply chain transparency, Sustainable sourcing, Water
scarcity, Technology accelerating sustainability, Circular economy, Net zero economy. You can also find information about
the impact of Covid-19 on Sustainability.

1. Chapter 3 'The marketplace and customers: Analysing the environment' of this book: Armstrong, G, Adam, S,
Denize, S, Volkov, M, & Kotler, P 2017, Principles of Marketing, Pearson Education Australia, Melbourne.
2. Chapter 2 'Online marketplace analysis: micro-environment' and Chapter 3 'The digital macro-environment' of
this book: Chaffey, D, & Ellis- Chadwick, F 2019, Digital Marketing, Pearson Education Limited, Harlow, United
Kingdom

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 TOPIC 1: What is Marketing?
Marketing: the process of engaging with customers, fostering strong customer relationships and creating value -> in
return, capture value back from customers (sales, money, customer equity)

The Marketing Process

1. Understand the marketplace & customer needs

2. Design a customer-driven marketing strategy
3. Construct an integrated marketing program that delivers superior value
4. Build profitable relationships and create customer delight
5. Capture value from customers to create profits and customer equity

Stage 1: Understand the Marketplace and Customer Needs

5 Core customer and marketplace concepts

 Needs, wants and demands MASLOW
 Market Offering (product, service, info., experience)
 Value and satisfaction
 Exchanges and relationships
 Markets

CUSTOMER NEEDS, WANTS & DEMAND

Needs – states of felt deprivation
 Physical needs: Food, clothing, warmth, safety
 Social: Belonging and love
 Individual needs: Knowledge & self-expression

Wants – The form that human needs take, are shaped by culture values + individual personality
Wants are described in terms as objects to satisfy needs

Demand – Human wants backed by Buying Power $$

Job of marketer -> find out can customer afford it/willing to spend that much -> transform needs/wants into
demand

Marketing offering: combination of Product, Service, Information & Experience offered to satisfy needs/wants of
customers
Marketing myopia: when the company is mistakenly focused on existing wants – losing sight of underlying customer
needs.
 Focused on attributes of the product INSTEAD of experience, benefits it provides to customers
 Smart marketers focus on the solution their products offer to cust. needs

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 CUSTOMER VALUE AND SATISFACTION
- Customers form expectations abt value & satisfaction various market offerings will deliver, and buy
accordingly
- Needs to balance: Customer expectations vs Marketers ability to deliver
Satisfied => buy again, tell others Dissatisfied => switch to competitors, tell others

EXCHANGES, TRANSACTIONS AND MARKETS

Exchange: The act of obtaining a desired object from someone – by offering something in return.
 Marketing occurs when: ppl decide to satisfy wants&needs through exchange relationships e.g a youtuber
wants views
Transaction: A trade between 2 parties, involves at least 2 things of values, agreed-upon conditions, and a time &
place of agreement
 Marketing’s unit of measurement – e.g one give $12 to a bakery, and gets a cake in return
Market: Set of all actual & potential buyers of a product/service
 Buyers share a specific needs/want that can be satisfied in exchange relationship

Stage 2: Design a customer-driven marketing strategy

Marketing Management: art and science of choosing a. Select customers to serve

target markets and building profitable relationships Company wants to select customers it can serve well an
with them. profitably
AIM: find, attract, keep, and grow target Decide who it’ll serve by dividing market into customer
customer by creating, delivering, and segments (market segmentation) -> selecting which
communicating superior customer value segment to go for (target marketing)

KEY Qs to determine marketing strategy b. Choose a Value Proposition

- What customers will we serve? => target - How it will differentiate and position itself in
market the market
- How can we best serve them? => value - Value Proposition: set of values or benefits it
proposition promises to deliver to consumers – to satisfy
their need

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 Marketing Management Orientations
Concern progresses: focus on business -> customer interest -> societal benefits

1. Production Concept 4. Marketing Concept

 Focus: improving production + distribution  Understanding wants & needs of target
efficiency market – deliver desired product
 focus on production process (productivity):  Customizing the product to suit the needs
o Decrease production cost + produce as of customer -> target customer then offer the
much as possible -> Lower price - more Application: Jolibee
affordable for ppl
o Increase availability e.g franchise Marketing concept:

2.Product Concept  production - adhere to world class

 Customer favour products: offer the most in
producing standards ISO, franchising
quality, performance, and innovative features available - increase availability distinct of P
 Management focuses on making continuous
concept
product improvements  product: tried tested formulas for items ->
 selling: drive ins, kids meal
3. Selling Concept  marketing : adapt to local taste e.g rice
 Uses heavy selling and large-scale promotion  social: support food banks
effort
 Products people don't usually think of buying product
e.g life insurance - inorder for customer to buy  Case: KFC customize menu to VN tastes
it -> explain benefits to customers  “OUTSIDE IN” approach:
 “INSIDE OUT” approach: Starts with market -> focus: customer needs ->
Starts with factory -> focus: existing products -> integrated marketing -> Profits thru. customer
selling and promoting -> Profits thru. sales volume satisfaction

5. Societal Marketing Concept

 Make marketing decisions -> ethics
 involves 3 parties:
1. Customer needs
2. Company’s requirement (profit)
3. Society’s long-run benefits (welfare)

Stage 3: Preparing an Integrated Marketing Plan and Program

To deliver marketing proposition, firms must:

 Product: create need-satisfying market offering

 Price: decide how much to charge
 Place: how MK offering is available to target cust.
 Promotion: communicate with target customer abt the offer – persuade them of its benefits

Blend 4P MK Mix into an integrated marketing program - communicates & deliver it’s value to chosen customers

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Stage 4: Building Customer Relationship

Customer Relationship Management (CRM): overall process of building and maintaining profitable customer
relationships by delivering superior customer value and satisfaction

Customer perceived value: Customer’s evaluation of the difference between all the benefits and costs of a market
offering compared to competing offers

Customer satisfaction: The extent a product’s perceived performance matches a buyer’s expectations

 Perceived performance < expectations => dissatisfied

 Perceived performance = expectations => satisfied
 Perceived performance > expectations => highly satisfied

Stage 5: Capturing Value from customers

CUSTOMER LIFETIME VALUE: The value of entire stream of purchases the customer would make over a lifetime of
patronage e.g 520 mil/10 years

SHARE OF CUSTOMERS: Good CRM also help marketers increase share of customers – The share they get from customer
purchasing in their product category.

INCREASE SHARE OF CUSTOMERS BY:

- Offer greater variety to current customer

- Train employees to cross-sell or up-sell to
market more service/products to current
customers

Amazon.com increases its share of each customer’s

purchases by offering not just music and videos, but
also many other products - toys, home improvement
items, and an online auction.

Building Customer Equity: The ultimate aim of CRM is to produce high customer equity.

CUSTOMER EQUITY: The total customer lifetime values of all company’s customers. The ↑ loyal the profitable
customers, ↑ customer equity

Building the Right relationship w/ Right

Customers

 Strangers: Don’t invest anything in

them.
 Butterflies & True Friends: Firm
should invest and pay attention to
them.
 Barnacles: Firm may need to get rid
off this group, depends on the
situation.

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 Topic 2: Marketing Environment
Marketing Environment: Forces outside marketing that affect marketing management’s ability to build and maintain
successful relationships with target customers.
=> Firms should take proactive approach rather than reactive approach

 Microenvironment: factors close to the company that affect its ability to service its customers
Only the company (internal – rest external factors)
 Macro-environment: larger societal forces that affect the microenvironment
All external factors (can’t be ctrl), affects all industries of the economy

I. Microenvironment (6)
1/ Company (internal): The relationship between the
Marketing dept w/ other depts – must take in account
when making marketing plan.

All interrelated groups form the internal environment

e.g Top Management, R&D, Finance, Accounting etc.

2/ Suppliers: provide the resources for company to produce

its’ products
Treated as partners to provide customer value
Environment can affect supply chain – one business’ output
is another b’s input -> supply chain effected by e.g covid
MKT Managers need to watch out for:
 Supply availability
 Labor strikes, other event that can cost sales/damage customer satisfaction
 Material price

3/ Marketing intermediaries: help the company to promote, sell, and distribute its products to final buyers.
Types:
1. RESELLERS: distribution channel firms - helps products reach customers (2 TYPES)
- Wholesaler: buys/sells in bulk
- Retail: where most customers buy from e.g supermarket
2. PHYSICAL DISTRIBUTION FIRMS: helps company to stock and move goods to the right place at the right time
3. MARKETING AGENCY: firms that help the company target and promote its products to the right markets e.g
marketing research firm, advert firm
4. FINANCIAL INTERMEDIARIES : financial firms (e.g banks, insurance co.) that helps with financial transactions and
insure firm from risk during the buying/selling process

4/ Competitors: Marketers must gain strategic advantage by positioning their offerings strongly against competitors’
offerings in the minds of consumers
Types of competitors:
1. Direct: businesses that offer similar products that serve same group of customers e.g instant coffee brands
2. Indirect: dissimilar products that satisfy the same need thus indirectly compete -> for example trains vs flights

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5/ Publics: any groups that have actual/potential interest in or have impact the company’s ability to achieve it’s
objectives => org has duty to satisfy the general public

Types:

1. Financial publics: influence the company’s ability to

obtain funds APPLICATION: RMIT UNI
2. Media publics: carry news, editorial opinions. 1. Financial e.g Vietcombank – transfer money
3. Government publics: Management must take 2. Media: Dantri etc
government developments into account. 3. Gov: Ministry of education – approval
4. Local publics: include neighbourhood residents and 4. Local: neighborhood
community organizations. 5. Citizen-action: student clubs and student
5. Citizen-action publics: include consumer council, founded by students (customers)
organizations, environment groups, and minority - Organize event that can generate god
groups press for the brand
6. General public: The general public’s image of the 6. General public: friends and relatives or those
who’ve heard about rmit
company affects its sales. (not necessary the
7. Internal public: teaching staff and internal
customers – but those who’ve heard & have strong
workers – NOT STUDENTS
opinions e.g can boycott)
7. Internal publics: include workers, managers,
volunteers, board of directors.

3. Top management have to keep them 😊-> unhappy

employee-> customer service->
cust.satisfaction – therefore, can be considered
INTERNAL CUSTOMERS

6/ Customers: company can target 5 types

1. Consumer markets: End-user or individual customers that buys for personal consumption
a. B2C market: produce P to sell to end user e.g Unilever – to individual
2. Business Market: buys for further processing or used in their production
a. B2B – not to individuals but to Businesses
3. Reseller market (marketing intermediary): both our customers & partners – buys to resell for profit
4. Government markets: government agencies announce what they need, sellers approach the gov office –
people select
a. Instead of seller going to the store, seller approach cust.
5. International markets: foreign customers, businesses need to know the political scenes and legal constraints of
the country

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 II. Macroenvironment (6)
3/ Natural Environment: includes natural resources
that are needed as inputs by marketers
Trends: shortages of raw materials, increased
pollution, increased government intervention
and a greater attention to environmentally
sustainable strategies.
4/ Technological Environment: creates new Products
and opportunities, kills off old ones

5/ Political (Legal) Environment: Laws, government

1/ Demographic environment: study of human agencies, and pressure groups that influence or limit
population in terms of size, density, location, age, various organizations and individuals in a given society
gender, occupation… Purpose of business legislation:
Change in demographic environment -> change in 1. Protect B from unfair competition
customer groups. Comprised 3 groups: 2. Protect consumers from unfair B
- Baby Boomers: born between 1946-1964 practices
- Gen X: 1965-1976 3. Protect society’s interest from
- Gen Y (Millennials): 1977-2000
unbridled/uncontrolled B behavior
Key changes (demo): 6/ Cultural Environment: Forces or institutions that
 Increase diversity influences a society’s basic values/beliefs and
 Changing age struct of population -> Vietnam behaviors
experiencing population ageing issues
Persistence of Cultural Values:
 Change in household patterns • Core beliefs and values persist because they
 Better educated, more professional population are passed on from parents to children and are
 Geographic shifts in population reinforced by schools, churches, business, and
government.
2/ Economic Environment: factors that influence
• Secondary beliefs and values are more open to
consumer purchasing power and spending patterns change.
 Change in income + spending patterns
SWOT
INTERNAL
Strengths: What do we do best? What advantages do we have over
competitors?
Weaknesses: What areas that need the most improvement? How do
customers think we could improve our business?

EXTERNAL:
 Social: What major social/lifestyle trends will impact the firm?
 Demographics: What impact will forecasted trends in the size, age,
profile, and distribution of population have on the firm?
 Economic: Trends in economic policy, taxation, income sources will
impact the firm?
 Political/ Legal: What laws are now being proposed that could affect marketing strategy and tactics?
 Competition: What new competitive trends seem likely to emerge?

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  Technological: What major technological changes are occurring that affect the firm?
 Ecological: Are the firm’s products, services, and operations environmentally friendly? Etc.

TOPIC 3: Customer-driven Marketing Strategy

SELECTING CUSTOMERS TO SERVE DECIDE ON A VALUE PROPOSITION

I. Differentiation
II. Segmentation
Differentiate market offering
Divide total market into
Create value for to create superior value
smaller segment
targeted
customer
IV. Market targeting III. Positioning

Selecting the segment(s) to Position the market offering

enter in the minds of customers

I. MARKET SEGMENTATION

Def: The process companies use to divide large markets into smaller markets – can reach more efficiently and
effectively with products /services that match their unique needs

Types of MK Segmentation (4):

GEOGRAPHIC Divides markets based on geography. Use geographic unit (such as regions, nations, cities, even
neighbourhoods) as filter to classify customers from different groups

DEMOGRAPHIC Divides market into groups based on age, gender, family size, family life cycle, income, occupation,
religion, race, education, generation and nationality (British etc)
- Age and life-cycle stage segmentation: the process of offering different products/using
different marketing approaches for different age groups & life cycle groups (consumer
needs/wants change with age)
Most popular bases for segmenting customer– esp in fashion industry

PSYCHOGRAPHI Divides customers into groups based on social class (upper/lower class), lifestyle, or personality
C characteristics (e.g INTJ)

BEHAVIOURAL Divides customers into groups based on knowledge, attitude, uses, and response to a product

Types (5):
Occasion segmented according to occasions when they get the idea to buy, actually
make their purchase, or use the purchase item
Benefits-sought segmented by the different Benefits they seek from the Product
User status segmented into non-user, ex-user, potential users, first-time users e.g first
time driver usually buy 2nd hand cars
User rate how often they use the product – light vs medium vs heavy users
Loyalty status according to different levels of Loyalty: selling for a random 1st time

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 customer -> different from a long-time loyal customer -> different price
schemes and different offers

CUSTOMER’S SEGMENT PROFILE

Marketers uses segmentation bases (above) to identify smaller, better defined target groups
EX: Trendy Girls segment: NIVEA
 Ladies who live in urban area –HCMC (GEO)
 With the age between 18-29 years old (DEMO) REMEMBER:
 With medium to high income (DEMO) Segmentation variable: way we
 Has high interest in fashion (PSYCH) categorize ppl/customers
 With active and youthful lifestyle (PSYCH) Segment: groups categorized using
 Who are heavy users of cosmetic (BEHAVIOR – user rate) segmentation variables

CHECKLIST FOR EFFECTIVE SEGMENT: (MSCAAD)

 Measurable: The size, purchasing power, and profiles of the segments can be measured – how many ppl are
there that lies in that -> to produce how much quantity
 Substantial: Market seg. are big enough to consider + be profitable
 Accessible: The market segments can be effectively reached and served (can be communicated e.g socmed)
 Actionable: Effective programs can be designed for attracting and serving the segments
 Differentiable: The segments are distinguishable and RESPOND DIFFERENTLY to different marketing mix 4P
o Across the group, need ppl to behave distinctly different, want different products
o Within the group, customer behave as similar as possible

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 II. MARKET TARGETING

CONCENTRATED MARKETING (NICHE MARKETING): firm

pursues a large market share of a small market.
Concentrate all effort resources of company for only
few segments only – focus on becoming expert of those
particular segment e.g whitening toothpaste.

- Suitable: when there’s few competitors and the

firm has a strong capability in this market.

Difference from differentiated marketing:

 Concentrated – concentrate all effort resources
of company for only FEW segments
 Differentiate – tries to serve everyone, EVERY
UNDIFFERENTIATED MARKETING (OR MASS MARKETING): segment. Requires lots of capital and
firm ignore market segment differences - target the technological resources (more difficult)
whole market with one offer

- Suitable: essential products e.g salt, gas, rice,

public transport

DIFFERENTIATED MARKETING (OR SEGMENTED MARKETING):

firms target several market segments & designs
- Acknowledge ppl are different – different marketing
mix program (4P) for each product -> often used by
FMCG (fast moving consumer goods) we use in daily
life e.g different toothpastes, shampoo
- Whether which type apply – depends on products

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MICRO MARKETING: the practice of tailoring products ‘one on one’ (e.g Amazon’s suggestions based
and marketing programs to the needs/wants of specific on prior purchases; B offer customer to make
individuals & local customers segments their own shampoo)

 LOCAL MARKETING: tailor brands,promotions to Difference:

needs& wants of local customer segments e.g  Differentiated & concentrated marketers tailor
cities, neighbourhoods, specific stores . (e.g their offers/ marketing programs to various
Bookstores offers different genres in different market segments
locations e.g more comics in certain locations NOT customise their offers to each individual
bcuz there’s more youths) customer
 INDIVIDUAL MARKETING: offer customer option to
customize product – one customer at a time

III & IV. DIFFERENTIATION & POSITIONING

Positioning Strategy
Product position: complex set of perceptions, impressions, and feelings consumers have for
product, compared to competing products

A product’s position: way the P is defined by consumers based on important attributes –

place it occupies in consumers’ minds relative to competing products

 Positioning Maps – marketers plan positions to give their P greatest

advantage in target markets -> create marketing mix for these
planned position
1) Show consumer perceptions of their brands vs competing products
2) Helps identify the gaps (in market)

Steps to choosing D & P strategy

1. Identify differentiating competitive advantage | differentiation

2. Choose the right competitive adv| differentiation
3. Select propositioning strategy |position

1/ Identify differentiating competitive advantage

Competitive advantage: An advantage over competitors gained by offering greater customer value, either through
lower prices or by providing more benefits that justify higher prices

Differentiation: differentiate your market offering from competitors to create superior customer value

5 Types of Differentiation:
Product differentiation Hire and train better staff e.g Cathay Pacific - well
Difference in feature, design, performance, style etc trained cabin crew-> customer satisfied
Service Channel
Superior service - often speedy, convenient, careful Advantage over channel coverage, expertise and
delivery; consultation, e.g IKEA - allow dog owners to performance e.g Coca cola has a good distribution
bring pets to the store channel - available in every corner of the world
People Image :
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 Brand image convey distinctive benefits and • Distinctive. Competitors do not offer
positioning - img u create in customers mind e.g • Superior. It’s superior to other ways customers might
Google’s colorful logo obtain the same benefit.
• Communicable. The difference is communicable and
visible to buyers.
2/ Choosing the right competitive advantage • Pre-emptive. Competitors can’t copy the difference.
• Affordable. Buyers can afford the difference $
A difference is worth establishing if it satisfies: IDSCPAP
• Profitable. The company can introduce the difference
• Important. The difference delivers a highly valued
profitably.
benefit to target buyers.

3/ Selecting an Overall Positioning Strategy

Value proposition: full positioning of a brand – full mix of benefits upon where it is positioned – answers to: why I
should buy this instead of that brand?

Simplified: the value your brand provide the customer compared to competitors

Rest is losing propositions e.g

IF Same benefit - same price;
why should customer buy
from you?

 More for more (more benefit, more price): Starbucks are expensive bcuz of their equipment, skilled
baristas, uses ethical sourcing

 More for the same(more benefit, same price of competitors): e.g Lexus has same price as Audi has
extra warranty

 More for less (more benefits, less price): Not Sustainable for companies but e.g Grab vs traditional taxis

 Same for less (same benefits as competitors, less price)

 Less for much less (less benefit than competitors, but less price) e.g Vietjet has no meals, less luggage
but is cheap
Positioning statement: statement that summarizes company of brand positioning

 To (target segment) our (brand) is (concept) that (point of difference) E.g. For every athlete, Nike’s
experience and expertise ensures that you have the perfect shoes for your sport.

13
14
 Topic 4: Product
What’s a Product?
Product: Anything that can be offered to a market for attention, acquisition, use, or consumption that might satisfy a
want/need

A product or market offering often includes both tangible goods & services

 Pure tangible goods ( toothpaste )

 Pure services – intangible (e.g massage, hair cuts)
 Good-and-services combination (e.g car showroom w/ repair services )

Product – Services

Services: special form of product that consists of activities, benefits, or satisfactions offered for sale that are essentially
intangible and don’t result in the ownership of anything

5 characteristics:

 Don’t result in ownership

 Intangibility: Can’t taste, smell, hear the service before buying it
 Inseparable: service provider is making service at the same time customer is using. Can’t be taken back
 Variability – quality of service varies, depending on who, where and when and how its completed
 Perishable: Can’t be resold

Product – Experience

Experiences: represents what the product/service will do for the customer (rather than focus on its product/service
features)
Create value: To differentiate their offers, firms will need to create and manage customer experience
_________________________

In addition to tangible products/services, marketers widened concept of product to include market offerings:

 Organizations (for/non - profit)

 Persons: Presidents, entertainers - use Personal Marketing to build
reputations
 Places: countries, cities (Vietnam - the timeless charm)
 Ideas: that MKT service agencies sell to clients

3 Levels of Product – adds customer value

Application:

- Core customer value: solution to the customers’ problem

- Actual product: put idea in action -> the physical features of the
product that can be described and measured (design, quality,
brand name, packaging etc). All makes the product work and deliver Core Values
- Augmented product: Additional customer services and benefits that create added value

Product Classification
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1) INDUSTRIAL products: purchased for processing or use in further conducting business
o Materials
o Capital items
o Supplies & services

2) CONSUMER Products: brought by final consumers for individual consumption. Separated by customer behavior (4)

Convenience Shopping Specialty Unsought

- Customer buy - Less frequently - Consumer product with - Product

frequently, purchased consumer unique characteristic customer doesn’t
immediately, with products and services or brand identification know or normally
minimum of – customer compare buyers are willing to think about e.g
comparison and carefully on quality, make a special life insurance,
buying effort suitability, price & purchase for funeral services
- Usually low-priced style - Buyers don’t compare
e.g FMCG - Decision making specialty products.
Products: longer: read online Only invest time
newspaper, candy, reviews, ask around - Big sum of money
cup noodles (b/c more money involved
involved)

16
Product Decisions
 Individual product decisions  Product Line decisions  Product Mix decisions
 Product attributes  Product Line filling  Adding new Product
 Branding  Product Line Lines
 Packaging Stretching  Widening product
 Labelling portfolio
 Support services

I/ Individual product decisions

1. Product attributes: benefits of the product/services 3. Packaging

 Quality: (2 dimensions = level & consistency) Def: involves designing and producing the container of
 Performance quality (level): ability to perform product
functions - supports positioning Uses:
 Conformance quality (consistency): no defects  Protect the product
& consistent in delivering a level performance  Promote the product (adv vs competitors)
e.g car has consistent fuel consumption  Attract customer’s attention, describes product
 Features: dimensions, source components, services,
performance, components, materials etc - tool for 4. Labels:
differentiating Role: Identify the product/brand, describe its attributes
 Style & design: + promote. from simple tags to complex graphics
o style = appearance  Describe: who/where/when it's made, content,
o design = more>appearance, includes how to use etc
architecture and building of P -> contributes to  Identify: products/brands -> help promote,
usefulness & looks support its positioning & connect w/customers
Issues w/ labels:
2. Branding  can mislead, fail to describe important
Brand: a name, term, sign, symbol, or design, or a ingredients, no safety warnings
combination of these, that identifies the maker or seller
of a product or service 5. Product support services
Branding helps buyers: Company’s offer usually includes some support services.
 Identify products that might benefit them E.g. After-sale service of many products
 Distinguish product quality & consistency
Branding helps sellers:
 Basis to built whole story on product's special
qualities
 Distinguish sellers vs competitors
 Help segment market e.g Lexus, Prius

17
II/ Product Line decisions
Product line: group of products closely related b/c they're function similarly, sold to the same customer group,
marketed through the same outlets/fall in given price range (e.g Adidas has several lines of clothing, shoes)

Product line length: no. of items in product line

 Too short = when managers can increase profit by adding items
 Too long = dropping items can increase profit
DECISIONS - Expand product line by (2):
 Line filling: add more items within present range of line e.g Coke favoured products
 Line stretching: lengthen product beyond current range (up/downwards or both ways) e.g Toyota launched
Lexus (up), while launching cheaper Yaris (downwards)
III/ Product Mix decisions
Product Mix (Product Portfolio): consists all the product lines and items that a particular seller offers for sale
Ex: 3M’s Consumer Product Mix consists of major product lines: Cleaning & Protecting; Personal Health care;
Home Improvement etc
DECISIONS - Increase its business in (4) ways:
1. Add new product lines - widen product Mix -> here, new lines build on company's reputation in it's other lines
2. Lengthen existing product lines - become full-line company
3. Add more versions of each product - deepen product mix
4. Pursue more product consistency (or less)

Branding Strategy: Building Strong Brands

Brand: represent customer perceptions and feeling abt a product and its performance. It’s the company’s promise to
deliver a specific set of features, benefits, services & experience consistently to customers

Brand equity: the differential effect the brand name has on customer response to the product and its marketing

Pros of Branding (5)

 Help differentiate from others – help consumers identify

 Says something about quality
 Provides legal protection – prevent other company register to that name
 Help segment the market
 Commands a premium for better quality brands

18
Brand Name seletion

Desirable qualities for a brand name:

1. Suggest benefits & qualities
2. Easy to pronounce, recognize & remember
3. Distinctive
4. Extendable (to other categories): amazon, Sony
5. Translatable to global economy – e.g Pizza Hut P'Zone: “Pe Zon” means “nipple” in Spanish:))
6. Capable of registration and legal protection: can’t be protected if reuses/similar to other brand names

Brand Sponsorship

 National brands: manufacturers sell their output under their own brand names.
o E.g. Sony Bravia HD TV or Samsung Galaxy, etc.
 Store brands (private brands): retailers and wholesalers create their own brands
o E.g Saigon Coop-mart has SGC brand name.
 Licensed brand: some companies license names or symbols previously created by other manufacturers, names
of well-known celebrities or characters from popular movies & books.
o E.g. sellers of children’s products use famous character names with their items, such as Winnie the
Pooh, Scooby Doo, Harry Porter, Biti’s Marvel, etc
 Co-brand: occurs when two established brand names of different companies are used on the same product
o E.g. Sony Ericsson, Nike+iPod Sport Kit, Virgin Master Card, Fiat – Mattel created Barbie car

Branding Development Strategy (4) <For developing brands>

1) Line Extension strategy – extend existing brand name to new forms

- more option in size, color, flavors, packaging etc of the same
product category (increase no. of offer in same product line)

2) Brand Extension – Extending an existing brand name to new

product categories e.g Doves bodywash, lotion, shampoo

3) Multi-brands – different brands in a given (exist) product category

- Establish different features and appeal to different buying
motives
- Allow company to lock up reseller shelf space –(give people MORE choices – MORE profit, target different
segments) same product, different brand name
a. Limitations: Application: VINAMILK
 Obtain only a small market share Line – liquid milk
 May end up spreading resources over many brands instead New Brand - Roasted rice milk, soy milk,
of building few brands to a hghly profitable level coffee
 Companies should reduce no. of brands they sell in a given Multi-brand – ice cream vinamilk & twin
category an cow, ngoi sao condensed milk & ngoi sao
Phuong nam
4) New brands: used when existing brands are inappropriate for new Brand Ext– liquid milk, ice cream, cheese
products in new product categories or markets e.g Chips and diapers

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Product and its Product Life Cycle
Product life cycle (5):

Product - Firm invest all resources into Researc

Development - product exist as an idea, created sam
market

Introduction - New product is first launched

- Profits = low/negative ; spending is h
-
Growth - Sales climb up fast
- Profits may also increase
- New competitors enter market
- Introduce new product features

Maturity - Sales slow down; characterized by slo

- Many producer w/ many products to
- Competitors start marking down pric

Decline - Sales of most product forms and bra

o Maintain brand without chan

Price
- amount of money charged for product and services

Factors to consider when setting price:

- Customer perceptions of value

- Product costs
- Price ceiling: maximum; no demand above this price (the value customer see)
- Price floor: no profits below this price (the cost of manufacturing) -> SET PRICE BETWEEN THIS RANGE
- Other internal/ext considerations:
o Marketing strategy, objectives and mix:

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  Maximizing sales – not necessarily profit -> sometimes reduce price, reduced profit margins
Pricing  Maximizing market share
objectives  Maximizing profits
 Meet short 7 long term brand growth objectives
o Nature of market & demand
o Competitor’s strategies & prices

Major pricing strategies/approaches : can only apply one at a tie

1. Cost -based pricing:

o Setting price based on costs of producing, distributing and selling the product plus fair rate of return for
the effort and risk
o Need to decide on appropriate makeup or profit margin e.g Cost of making+ profit markup want to
charge = price
 Profit markup/margin = profit margin
o Inside out approach: (product driven) start from product – determine product cost – set price based on
cost – convince buyers of product value
6. Value Based pricing
o Use customer perception of value to set price
o Understand how much value customer place on the benefits they receive from product & set a high
o Outside in approach: start with customer –
7. Competition based pricing
o Pricing at the same or below the competition
o Not necessarily lower but higher as well (link value proposition): more for more

Operational pricing strategy

New-product pricing strategy

- Market skimming: company invent new product – set price high initially to “skim” revenues layer by layer of the
market e.g iPhone (skim layer willing to pay high price for their P)-> price drop gradually (skim another layer of a
market)

High
Lower
Even
lower

- Penetration pricing: start with low price from start so everyone can buy, high market share

Market Skimming Market Penetration

- invent new product –> S - Set initial low price for high market share
- et price high initially to “skim” revenues layer by (everyone can buy
layer of the market e.g iPhone (skim layer willing
to pay high price for their P)-> price drop
gradually (skim another layer of a market)
o High
o Lower
o Even lower
Works when: Works when:
- Superior quality and image - Price-sensitive market
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 - Enough buyers - Costs fall with large volume – economies of scales
- Competitors can’t charge lower price (cost per unit falls)
- Competition is kept out
- Low price can be maintained

Product Mix pricing strategies – firm has many products

cost pricing. Decisions based on

 Cost differences between products

 Customer evaluations of different features
 Competitors pricing

Optional product pricing

 offering to sell optional product pricing to sell optional/accessory prodcucts along w/ their main product
 firm has to decide which terms to include in base price and which offer as options e.g optional meal on budget
airline’s flight

Captive product pricing:

 Set price for products that MUST be used along with main products e.g printer with cartridges

Product bundle pricing

 Sellers combine several of their different products to sell

Price Adjustment strategies

1. Discounts:

Type For:
Quantity discount Buying in large numbers
seasonal Buying out of season

2. Segmented pricing
-
o Customer-segment pricing: different customers pay different prices
o Time-based pricing: pay different prices depending on time
o Product-form: different product forms e.g liquid mouthwash and breth freshening film,deluxe rooms etc
o Location pricing: different prices for different locations
3. Psychological pricing
- Consider psychology of prices not just the economics e.g $7.99 or use lucky numbers
- Using a “decoy offer”: have something to decide how good an offering it - create reference by adding a decoy to
help boost appeal of product
4. Promotional pricing
- Temporarily price their products below list price
- Sellers may offer discounts to increase sales and reduce inventory
- Also use special-event pricing in certain seasons
- Some sellers offer low-interest financing …
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 5. Dynamic pricing
- Adjust prices continually to meet needs of buyers and market situations

Distribution Channels (downstream)

Network of interdependent organisations – intermediaries involved in the process of making goods and services

Functions:

- Information - gathering/distributing market research and intel information abt actors and firces in marketing
environment neededfor planning & aid exchange
- Contact – finding & communicate w/potential buyers
- Promotion – retailers sell many different brand, manufacturer needs wholesaler to promote to retailer
- Matching –
- Risk taking – assume the risks of carrying out channel work e.g if they can’t sell out product in time – wasted
- Financing – acquiring and using funds to cover costs e.g financial support comes through allowing delay in
payment
- Negotiation: reaching agreement on price - Wholesaler may want to negotiate in terms of profit margin – some
products have price printed in package-> suggested retail rice to sell to buyers
- Physical distribution -right time, not damaged

Types of channels:

- Direct marketing channel: Product straight to customer , manufacturer = seller

- Indirect marketing channel: includes intermediaries; less control vs direct – time arrives to consumers, quantity
or price

Channel design decisions/strategies

-setting channel obj

State their type of customer, find right dist channel, look out for competitors channel incase cust switch demand supply

Intensive distribution – Ideal for producers of convenience products and common raw materials. It is a strategy in which
they stock their products in as many outlets as possible. (convenience products – pepsi co., nestle)

Exclusive distribution – Is when producers purposely limit the number of intermediaries handling their products. The
producer gives only a limited number of dealers the exclusive right to distribute its products in their territories.
(specialty products – rolex, vertu)

Selective distribution – Is the use of more than one, but fewer than all, of the intermediaries who are willing to carry a
company’s products. (difficult to set up retail outlet – requires lots of space, or temp, require lots of knowledge of sales
ppl therefore more training etc have less place– NOT b/c they want to sell less – Samsung,honda)

Channel organization

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Conventional distribution channel:

Vertical marketing network (VMN): Producer, wholesaler and retailer act as a unified network

VMS: vertical marketing system

- CORPORATE VMS: one corp is everything

o e.g TRUNG Nguyen grew their own coffee, sell them at their own store
- Contractual VMS: independent companies; contract expire – relaionships stop
o Example: Nike partner up w/ companies to produce shoes, Nike work with other retailers – set
ups/display have to strictly follow Nike’s agreed,contract standards
o Franchised VMS: Most common type of contractual relationship– relationship between frachisor and
franchisee. Member: franchisor, links several stages in production-dist process
- Administrated VMS: coordinates success … not through common ownsership or contractual ties but thru size &
power of one dominant channel member > power over other
o Manufacturers e.g Kraft, Unilever, can command unusual cooperation/negotiate from resellers
regarding display s, shelf space and promotion, pricing
o Large retailers

Horizontal system: cooperation of 2 members at the same level– join together to pursue new marketing opportunity e.g
Disney & crocs both manufacturers work to produce Disney crocs

Multichannel distribution system: single firm set up multiple marketing channels to reach >1 customer segments

Channel dynamic:

- Horizontal conflict – between members at same level e.g healthy conflict etc - compete by price – offere batter
value for customers
- Vertical conflict – members at different levels
o Bad for the whole system

Key:

 Marketing system: Systematic organization of different marketing channels

 Marketing channel: flow of goods and includes direct & indirect
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 Channel level: position in channel organization
 Channel member: in one level, several members e.f 2 restaurants, 1 covenient store stores the same cake – one
retail level having 3 members

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