Contents

1. What is marketing and what is its primary goal? What is export marketing?
What is international marketing? What is global marketing? What is international
marketing management? Explain the concept “global localization”.........................1

2. Concept and contrast customer needs, wants, and demands. Describe the market
offering, customer value and satisfaction, exchange and relationships. Explain the
different between share of customer and customer equity........................................2

3. Explain how a company design a customer-driven marketing strategy. What are

the five different marketing management orientation?.............................................4

4. Define strategic planning and briefly describe the four steps and lead managers
and the firm through the strategic planning process. Discuss the role marketing
plays in this process. Explain the main contents of an international marketing plan7

5. Name and describe the elements of a company’s micro-environment and macro-

environment.............................................................................................................10

6. Discuss how the international trade system and the economic, political-legal and
cultural environments affect a company’s international marketing decision..........12

7. Discuss the three ways to enter foreign markets.................................................15

8. Market Segmentation: Consumer markets, business markets and international

markets....................................................................................................................16

9. Market segmentation – Segmentation, targeting, differentiation, and positioning.

Variables used in segmenting markets....................................................................20

10. Requirements for effective regimentation. The way companies identify

attractive market segments and choose a market-targeting strategy in international
markets....................................................................................................................21

11. The way companies differentiate and position their product for maximum
competitive advantage in the marketplace..............................................................24
12. Product, how can product planner build customer value, key product decision
in international markets...........................................................................................28

13. Industrial product, customer product, product attribute....................................34

14. Width, length, depth and consistency of product mix.......................................35

15. Brand, brand equity. Brand development strategies and how to communicate
company’s brand in international markets..............................................................36

16. Product standardization and product adaptation. Factors affecting product

adaption decisions. How do governments affect product adaption decisions of
companies?..............................................................................................................40

17. Factors affecting decisions on packaging, labeling in international markets....45

18. The nature and importance of marketing channels and channels decisions......47

19. Channel of distribution structures in international markets..............................48

20. Alternatives middleman choices........................................................................50

21. Factors affecting choice of channels.................................................................51

22. Management of channels...................................................................................53

23. Channel conflicts, Horizontal conflicts, Vertical conflicts, Multichannel

conflicts...................................................................................................................56

24. What is integrated marketing communication strategy? List and briefly

describe the major promotion mix tools..................................................................58

25. Name and briefly describe the nine elements of the communications process.
Discuss steps in developing effective marketing communications.........................59

26. Explain how companies have direct contacts with international customers.
Compare and contrast push and pull promotion strategies. Which promotion tolls
are most effective in each? Discuss how companies should do when sending direct
mail to international customers. Give examples......................................................64
27. Why should Vietnamese companies participate in international trade fairs?
Discuss factors that Vietnamese companies should study when participating trade
fairs..........................................................................................................................69

Factors that Vietnamese companies should study when participating trade fairs...71

28. Name and describe the common methods for setting promoting budgets. What
are the key drivers that today’s marketer has to understand in planning, executing,
managing, and evaluating integrated marketing communication plans for the
international markets...............................................................................................72
1. What is marketing and what is its primary goal? What is export
marketing? What is international marketing? What is global marketing?
What is international marketing management? Explain the concept “global
localization”
Marketing is a process by which companies create value for customers and build
strong customer relationship to capture value from customers in return.
Primary goals of maketing: the goals of marketing can be broken down into five
main areas: to raise brand awareness, to generate high-quality leads, to grow and
maintain thought leadership, to increase customer value, and to empower your
colleagues to become brand ambassadors.
Export Marketing: is the practice by which a company sells products or services
to a foreign country. Products are produced or distributed from the company’s
home country to buyers in international locations. But there is a difference between
products that are available to foreign countries and products that are specifically
marketed to foreign customers.
International Marketing: is a process by which companies create value for
customers and build strong customer relationship to capture value from customers
in international market.
Global Marketing: is defined as the process of adjusting the marketing strategies
of company to adapt to the conditions of other countries. Of course, global
marketing is more than selling company’s product or service globally. It is the full
process of planning, creating, positioning, and promoting company’s products in a
global market.
International Marketing management: is consistent with companies’ decisions
on company’s strategies, company’s international business strategies and
international entry strategies. International Marketing management is the art and

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science of selecting target markets and building profitable relationships from target
market globally.
Global localization: is used to describe a product or service that is developed and
distributed globally but is also adjusted to accommodate the user or consumer in a
local market.
(Còn một cái theo định nghĩa của thầy trong slide – ngay đầu)

2. Concept and contrast customer needs, wants, and demands. Describe the
market offering, customer value and satisfaction, exchange and relationships.
Explain the different between share of customer and customer equity.
1. Needs: are a state of self-deprivation in an individual. The starting point of
marketing is human needs. Human needs can be physiological, social, cultural and
individual. There are unlimited human needs. All new inventions try to satisfy the
human needs. We cannot imagine marketing activities or existence of the market in
the absence of human needs.
2. Wants: are desires for specific satisfiers of needs. The needs of the human are
unlimited. So, to satisfy unlimited needs a person desire for different products,
services and methods. Such desire to satisfy the needs is called wants.
3. Demands: are human wants backed by ability and willingness to buy. The
person wants only those goods which provide them maximum satisfaction.
Marketers can also influence demand by offering products at different price and
quality. There are generally two types of demands and they are primary and
secondary demand.
4. Market offerings are some combination of products, services, information, or
experiences offered to a market to satisfy a need or want. Marketing offerings are
not limited to physical products. They also include services, activities or benefits
offered for sale that are essentially intangible and do not result in the ownership of
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anything. Examples include banking, airline, hotel, and tax preparation and home
repair services.
5. Customer value and Satisfaction:
Customer value is the amount of benefits which customers get from purchasing
products and services. It can also define as the difference between the values
customer gains from using a product and cost of the product. Customer value is
high if the customer gains more benefits as compared to the cost of product and
services and customer value is low if the customer gains less benefit as compared
to the product and services cost.
For example, customer value of Dell laptops and computers are high in view of its
customers. Dell products quality, efficiency, brand, delivery and after sale service
are the benefits for buyers and definitely it pays more than cost of the product and
services.
Customer value and satisfaction directly linked with the quality of products and
services. In recent years organizations are focusing on quality to increase customer
satisfaction. Total quality management is the set of continuous programs designed
to improve the quality product, services and marketing processes.
6. Exchange and relationships:
Exchange is the act of obtaining a desired object from someone by offering
something in return. Marketing consists of actions to build and maintain desirable
exchange relationships. When consumers decided they want to satisfy their needs
and wants they do so through what is known as exchange relationships. Exchange
relationships or exchanges is the act of obtaining a desired object from someone by
offering something in return. Marketers try to bring about a response to some
market offering. Responses by consumers may be buying or trading products or
services or something more. As an example, a church may want new membership
or a social action group may want the acceptance of their ideas.
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7. Share of customer:
The share marketers get of the customer's purchasing in their produc categories.
For example my own consumption on coffee. 50% of the time I purchase coffee at
starbucks, 10% on white coffee luwak, 10% on Kapal Api, and the rest on random
coffee shops. This percentage always differs from one to another because it
depends on the preference, and we understand that we people are all different in
preferences.
To increase share of customers, firm can leverage relationships by offering greater
variety to current customers. For example, Starbucks can add multiple new flavors
to the coffee shop. Obviously, the advertising of the new flavors are going to be
attractive to Starbucks customer.
8. Customer equity is the total lifetime values of your current and future
customer. A company with high customer equity will be valued at higher price
than a company with low customer equity.

3. Explain how a company design a customer-driven marketing strategy.

What are the five different marketing management orientation?
- A customer-driven marketing strategy means shifting focus from a product to its
user and basing your marketing strategy, plans and tactics on customers' needs and
objectives in the first place.... Your main goal is to satisfy your customers, deliver
exactly what they want and be as flexible for them as you can.

- The following approach may be followed for designing a customer driver

marketing strategy.
1. Select the customers to be served, then segment the market and target the
market(s) to be served

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2. Decide on value proposition through market differentiation (offering to create a
better value) and positioning (position the products in the minds of the customers)
3. Now, segmentation, targeting, market differentiation, and positioning need to be
fused together to create a value for targeted customers.

- The 5 marketing management orientations are production concept, product

concept, sales concept, marketing concept and social marketing concept.
• Production concept
This is the oldest concept of marketing under this concept the company focus on
production whatever they produce that is sold in the market. In this concept, they
don’t focus on what customers need. large production means the product so cheap
and affordable that it will be sold in the market. The main disadvantage of this
concept is that the customer not always purchase the easy and cheap available
product.

• Product concept
Production concept focuses on the better quality of the product. As they think the
better product means the customer buys the product easily. But the companies do
not care about the customer need and want. They produce the product as the best of
there knowledge.
The company thinks that the good quality of the product will be sold easily but in
reality, the only quality of the product does not matter that much the price is also
matter.

• Sales/selling concept

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In selling concept the marketers think that the production and quality of the
product do not lead to the sale so they start attracting the customer towards them.
The product needs to be sold by the salesman.
But the sales of the product does not mean the long term growth as the product is
sold force-fully and the uses of that product are not good that lead the decrease in
the reputation of the company in the market.

• Marketing concept
In the marketing concept, companies start to focus on the customer need and what
customer wants and how to satisfy their need. The company stops selling those
products what they produce they change the production according to the customer
need and wants. This is the first concept for the long term growth of the company.
The company focus on the long term profit and survival in the market but the
drawback of this concept there is no attention is paid to social welfare.

• Societal marketing concept

In this concept, the company focus on the satisfaction of the customer but also the
society will accept it or not. Focus on future generations’ use of resources on the
ground they start the use of solar power form the thermal power because of
renewable energy.
i.e, the company produce gas stove the uses less LPG which will help in customer
satisfaction and social welfare because it makes less pollution nowadays the
Societal Marketing Concept is used by the marketers and some firm use the
marketing concept. But the government force the company uses the Societal
Marketing Concept by making rules for CSR (corporate social responsibility).

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4. Define strategic planning and briefly describe the four steps and lead
managers and the firm through the strategic planning process. Discuss the
role marketing plays in this process. Explain the main contents of an
international marketing plan
- Strategic planning - the process of developing and maintaining a strategic fit
between the organization's goals and capabilities and its changing marketing
opportunities.
It set the primary stage for further planning in the organization and guides it to take
advantage of new opportunities emerging from dynamically changing
environment.
- The four steps for developing strategic planning for long run growth and survival
of an organization are:
1) Formation: Developing the plan. This will require the most effort and
coordination, as you will need to bring together a group of people with varying
perspectives and ideas to develop and write the plan. Transparency, objectivity,
open-mindedness, and unity are essential.
2) Communication: Sharing the plan. After the plan has been developed, it must
be communicated clearly, convincingly, and consistently. This is the primary
responsibility of the leader, but there must also be a coalition of people within the
organization who can communicate the essentials of the plan with others.
3) Implementation: Doing the plan. This stage will require a high level of
commitment and action on the part of everyone. Intentional leadership at all levels
of the organization is the key to successful implementation.
4) Evaluation: Assessing the plan. You need to establish clear metrics for each of
your goals in order to provide an objective measure of your progress. It is
recommended that your plan be evaluated at regular six-month intervals and
adjusted as needed.
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- Marketing supports company strategic planning with more detailed plans for
specific marketing opportunities.
- The main contents of an international marketing plan:
 The business level: Business-level considerations begin with the assessment
of the stakeholders involved in the business. It is important to clearly
identify the different stakeholder groups, understand their expectations, and
evaluate their power, because the stakeholders provide the broad guidelines
within which the firm operates. In the case of international marketing, it is
particularly important to address the concerns of the stakeholders in the host
company.
 The functional level: Having set the objectives for the company, both at the
corporate level and the business level, the company can now develop a
detailed program of functional activities to achieve the objectives. Following
the integrated approach employed throughout this text, each of the functional
elements (e.g. finance, human resources, research) must be considered
jointly. The best international marketing strategy is doomed to failure if
human resources can not find and train the appropriate employees, or
research cannot modify the product so that it is acceptable to consumers in
another country. Ultimately, this coordination between business functions is
contingent on the market entry strategy employed as well as the degree of
standardization or customization deemed.
 Product/ Promotion: the key aspect of marketing strategy as a combination
of standardization or adaptation of product and promotion elements of the
mix and offers five alternative and more specific approaches to product
policy:

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 + One product, one message, worldwide. While a number of writers have
argued that this will be the strategy adopted for many products in the future,
in practice only a handful of products might claim to have achieved this
already.
+ Product extension, promotion adaptation. While the product stays the same
this strategy allows for the adaptation of the promotional effort either to
target new customer segments or to appeal to the particular tastes of
individual countries.
+ Product adaptation, promotion extension. This strategy is used if a
promotional campaign has achieved international appeal, but the product
needs to be adapted because of local needs.
+ Dual adaptation. By adapting both products and promotion for each
market, the firm is adopting a totally differentiated approach.
+ Product invention. Firms, usually from advanced nations, that are
supplying products to less well-developed countries adopt product invention.
 Pricing: Pricing products in foreign nations is complicated by exchange rate
fluctuations, tariffs, governmental intervention, and shipping requirements.
A common strategy involves a marketer setting a lower price for their
products in foreign markets. This strategy is consistent with the low income
levels of many foreign countries, and the lower price helps to build market
share. Pricing strategies are also strongly influenced by the nature and
intensity of the competition in the various markets.
 Distribution and logistics: Distribution channels are the means by which
goods are distributed from the manufacturer to the end-user. Logistics, or
physical distribution management, is concerned with the planning,
implementing, and control of physical flows of materials and final goods
from points of origin to points of use to meet customer needs at a profit.
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5. Name and describe the elements of a company’s micro-environment and
macro-environment
- Microenvironment: all the factors close to the company that affect its ability to
create value for and relationship with its customers. These factors are the firm's
suppliers, competitors, marketing intermediaries, customers and pubics.
• Suppliers
Suppliers are the one who provides inputs such as material, components, labour
and other stock of goods to the firm, which is required to undertake manufacturing
activities. when there is uncertainty as to the supply constraints, it usually builds
pressure on the firms and they are required to maintain high inventories, which
leads to cost increases.
Suppliers have the power to change the firm’s position in the market and its
capabilities.
The relationship amidst the firm and its suppliers represents a power equation,
based on the industry conditions and their dependence on each other.
• Customers
The success of the organization greatly depends on how effectively the firm fulfils
the needs and wants of the customers, which is profitable to the firm and also
provides value to the customer. The firm needs to analyze what the customers
expect from their products and services so that the firm can satisfy them.
It must be noted that without customers no business can survive for a long time.
So, the primary objective of the firm is to create and retain customers, to keep itself
going.
• Competitors
Competition is what keeps the firm thriving. Competitors are the rival sellers
operating in the same industry. It must be noted that the nature and intensity of
competition highly influence the firm’s products and services. Product
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Differentiation is something that helps the firm to beat the cut-throat competition
in the market.
For a firm to survive competition it is required to keep a close watch on the
competitors (both existing and potential) future moves and actions, so as to prepare
in advance, as well as to predict the response of competitors to company’s moves.
Moreover, competitor analysis also helps in maintaining or improving market share
and position.
• Intermediaries
Intermediaries refer to marketing intermediaries which cover agents, merchants,
distributors, dealers, wholesalers, etc. that participate in the company’s supply
chain, in stocking and transporting the goods from their source location to their
destination.
It acts as a link between the business organization and the ultimate consumer.
• Publics
The public refers to the group of people who have an actual or potential interest in
company’s product or who can have an impact on the organizations ability to
achieve its objective. There are seven types of publics identified in a company’s
marketing environment which includes financial publics, media publics,
government publics, citizen-action publics, internal publics, local publics and
general public.

- Macroenvironment: the major external and uncontrollable factors that influence

an organization’s decision making, and affect its performance and strategies, create
opportunities and threats for the organization. (Political, social, legal,
technological, economic, environmental)
• Economic: consists of factor that affect consumer purchasing power and
spending patterns.
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• Technology: Most dramatic force in changing the marketplace. New technology
replaces an older one. Thus, marketers must watch the technological environment
closely and adapt in order to keep up. Products will be outdated, and the company
will miss new product and market opportunities.
• Natural environment involves the natural resources that are needed as inputs by
marketers or that are affected by marketing activities (water, forest, oils, coal,
minerals). Trends: Shortage of raw materials, increased pollution, increase
government intervention,...
• Legal environment includes health and safety, equal opportunities, advertising
standards, consumer rights and laws, product labelling and product safety.
• Political environment: consists of laws, government agencies and pressure
groups that influence or limit various organizations and individuals in a given
society.
• Social environment: represents the demographic, characteristics, norms, customs
and values of the population within which the organization operates. This includes
population trends such as the population growth rate, age distribution, income
distribution, career attitudes, safety emphasis, health consciousness, lifestyle
attitudes and cultural barriers.
6. Discuss how the international trade system and the economic, political-legal
and cultural environments affect a company’s international marketing
decision
A company must understand the global marketing environment, especially the
international trade system. It should assess each foreign market’s economic,
political-legal, and cultural characteristics. The company can then decide whether
it wants to go abroad and consider the potential risks and benefits. It must decide
on the volume of international sales it wants, how many countries it wants to

12
market in, and which specific markets it wants to enter. These decisions call for
weighing the probable returns against the level of risk.
The International Trade System
U.S. companies looking abroad must start by understanding the international trade
system. When selling to another country, a firm may face restrictions on trade
between nations. Governments may charge tariffs or duties, taxes on certain
imported products designed to raise revenue or protect domestic firms. Tariffs and
duties are often used to force favorable trade behaviors from other nations.
Countries may set quotas, limits on the amount of foreign imports that they will
accept in certain product categories. The purpose of a quota is to conserve on
foreign exchange and protect local industry and employment. Firms may also
encounter exchange controls, which limit the amount of foreign exchange and the
exchange rate against other currencies. A company also may face nontariff trade
barriers,
such as biases against its bids, restrictive product standards, or excessive host-
country regulations or enforcement.
At the same time, certain other forces can help trade between nations. Examples
include the World Trade Organization (WTO) and various regional free trade
agreements. Each nation has unique features that must be understood. A nation’s
readiness for different products and services and its attractiveness as a market to
foreign firms depend on its economic, political-legal, and cultural environments.
Economic Environment
The international marketer must study each country’s economy. Two economic
factors reflect the country’s attractiveness as a market: its industrial structure and
its income distribution. The country’s industrial structure shapes its product and
service needs, income levels, and employment levels. The second economic factor
is the country’s income distribution. Industrialized nations may have low-,
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medium-, and high-income households. In contrast, countries with subsistence
economies consist mostly of households with very low family incomes. Still other
countries may have households with either very low or very high incomes. Even
poor or emerging economies may be attractive markets for all kinds of goods. In
recent years, as the weakened global economy has slowed growth in both domestic
and emerging markets, many companies are shifting their sights to include a new
target—the so-called “bottom of the economic pyramid,” the vast untapped market
consisting of the world’s poorest consumers. These days, companies in a wide
range of industries—from cars to computers to soft drinks—are increasingly
targeting middle-income or low-income consumers in subsistence and emerging
economies.
Political-Legal Environment
Nations differ greatly in their political-legal environments. In considering whether
to do business in a given country, a company should consider factors such as the
country’s attitudes toward international buying, government bureaucracy, political
stability, and monetary regulations. Some nations are very receptive to foreign
firms; others are less accommodating. Political and regulatory stability is another
issue. Companies must also consider a country’s monetary regulations. Sellers
want to
take their profits in a currency of value to them. Ideally, the buyer can pay in the
seller’s currency or in other world currencies. Short of this, sellers might accept a
blocked currency—one whose removal from the country is restricted by the
buyer’s government—if they can buy other goods in that country that they need or
can sell elsewhere for a needed currency. In addition to currency limits, a changing
exchange rate also creates high risks for the seller. Most international trade
involves cash transactions. Yet many nations have too little hard currency to pay

14
for their purchases from other countries. They may want to pay with other items
instead of cash. Barter involves the direct exchange of goods or services.
Cultural Environment
Each country has its own folkways, norms, and taboos. When designing global
marketing strategies, companies must understand how culture affects consumer
reactions in each of its world markets. In turn, they must also understand how their
strategies affect local cultures.
7. Discuss the three ways to enter foreign markets
Once a company has decided to sell in a foreign country, it must determine the best
mode of entry. Its choices are exporting, joint venturing, and direct investment.
Exporting
The simplest way to enter a foreign market is through exporting. The company
may passively export its surpluses from time to time, or it may make an active
commitment to expand exports to a particular market. In either case, the company
produces all its goods in its home country. It may or may not modify them for the
export market. Exporting involves the least change in the company’s product lines,
organization, investments, or mission. Companies typically start with indirect
exporting, working through independent international marketing intermediaries.
Indirect exporting involves less investment because the firm does not require an
overseas marketing organization or network. It also involves less risk. International
marketing intermediaries bring know-how and services to the relationship, so the
seller normally makes fewer mistakes. Sellers may eventually move into direct
exporting, whereby they handle their own exports. The investment and risk are
somewhat greater in this strategy, but so is the potential return.
Joint Venturing
A second method of entering a foreign market is by joint venturing—joining with
foreign companies to produce or market products or services. Joint venturing
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differs from exporting in that the company joins with a host country partner to sell
or market abroad. It differs from direct investment in that an association is formed
with someone in the foreign country. There are four types of joint ventures:
licensing, contract manufacturing, management contracting, and joint ownership.
 Licensing: Entering foreign markets through developing an agreement with
a licensee in the foreign market.
 Contract manufacturing: A joint venture in which a company contracts with
manufacturers in a foreign market to produce its product or provide its
service.
 Management contracting: A joint venture in which the domestic firm
supplies the management know-how to a foreign company that supplies the
capital; the domestic firm exports management services rather than products.
 Joint ownership: A cooperative venture in which a company creates a local
business with investors in a foreign market who share ownership and
control.
Direct Investment
The biggest involvement in a foreign market comes through direct investment—the
development of foreign-based assembly or manufacturing facilities.
If a company has gained experience in exporting and if the foreign market is large
enough, foreign production facilities offer many advantages. The firm may have
lower costs in the form of cheaper labor or raw materials, foreign government
investment incentives, and freight savings. The firm may also improve its image in
the host country because it creates jobs. Generally, a firm develops a deeper
relationship with the government, customers, local suppliers, and distributors,
allowing it to adapt its products to the local market better. Finally, the firm keeps
full control over the investment and therefore can develop manufacturing and
marketing policies that serve its long-term international objectives.
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The main disadvantage of direct investment is that the firm faces many risks, such
as restricted or devalued currencies, falling markets, or government changes. In
some cases, a firm has no choice but to accept these risks if it wants to operate in
the host country.

8. Market Segmentation: Consumer markets, business markets and

international markets
What are a Business Markets?
Business markets refer to organizations, businesses or entities that acquire products
and services for use in the production of other services and products. These include
goods that are supplied, sold or rented to others. Among major players in business
markets include fisheries, agriculture, mining, transportation, construction, mining,
communication, finance, distribution and insurance services.
Many people are investing in more resources and money in business markets. A
case in point is Tesla’s plan to invest $5 billion in its new eclectic car and battery,
commonly referred to as ‘Gigafactory’ in Europe. Different suppliers will then
provide accessories and parts.
Characteristics of business markets include:
 Presence of fewer but larger buyers- While the buyers may be few, they
often buy in large quantities
 Geographically concentrated customers- Customers in these markets are at
vast geographical locations
 Final customer demand-driven- Since production is tailored for the final
consumer, the products are tailored towards the final consumers’ wants and
needs
 Inelastic demand- The prices in these markets do not affect the demands as
they do not change much
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  Quick fluctuation in demand- Since businesses prefer to buy sat the lowest
prices, an increase in prices decreases the products purchases since high
price selling products do not sell well in the market
 Professional purchasing units- Due to the need of maintaining a high level of
professionalism, the purchasing process is very detail-oriented.
 Has a formalized buying process- The purchasing process involves
following the organization’s protocol and the complete chain of command
What are Consumer Markets?
This is a market whereby businesses or producers sell their products or services
directly to the final consumers.
Marketing in consumer markets involves dividing the consumers into markets and
targeting them according to their likes, interests, dislikes, values and opinions.
Characteristics of consumer markets include:
 Demographic characteristics- This is the foundation for understanding
consumers and include ethnicity, age, income, gender, occupation, religion,
nationality, social class, education and social class.
 Behavioristic characteristics- These include consumer interests in a product
such as how they intend to use it.
 Psychographic characteristics- This entails the kind of lifestyle the customer
lives, their interest, opinions and attitudes as well as personal values.
 Geographic characteristics- This is information regarding where the
consumer lives. It includes the climate, religion or how densely populated
the geographical area is.
Features of consumer markets include:
 Consumer focused market- The consumer market solely focuses on the
consumers

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  Branding is carried out to change or improve the consumer’s perception of
the product
 Packaging- This is done to attract buyers in the market
 Promotion- Brands use different promotional tools to increase sales
 Demand- The demand for consumer products is elastic since it is affected by
income and price

Similarities between Business market and Consumer market

Both play an important role in the supply chain
Differences between Business market and Consumer market
 Definition
Business markets refer to organizations, businesses or entities that acquire products
and services for use in the production of other services and products. On the other
hand, consumer markets refer to markets whereby businesses or producers sell
their products or services directly to the final consumers.
 Demand
While business markets have inelastic demand (cầu không co dãn), consumer
markets have an elastic demand (cầu co dãn).
 Number of buyers
Business markets have fewer buyers who often buy in large quantities. On the
other hand, consumer markets have many buyers who purchase in small quantities.
 Buying process
While business markets have formalized buying processes whereby the purchasing
process involves following the organization’s protocol and the complete chain of
command, consumer markets do not have formalized buying processes.
 Decision making

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Since business markets entail many products, decision making before purchases
are made is slow. On the other hand, the decision making in consumer markets is
fast since impulse buying is rampant.
 Investments
While business markets invest heavily in capital equipment, consumer markets
invest heavily in marketing and promotion activities.
 Market segmentation
Business markets segment their businesses based on the industry, ownership, level
of technology and end market reached. On the other hand, consumer markets
segment their businesses based on demographic, behavioristic, psychographic and
geographic characteristics.

1. Segmenting Consumer Markets

There is no single way to segment a market. A marketer has to try different
segmentation variables, alone and in combination, to find the best way to view
market structure. The variables that might be used in segmenting consumer
markets namely: geographic, demographic, psychographic, and behavioral
variables.
Geographic segmentation calls for dividing the market into different geographical
units, such as nations, regions, states, counties, cities, or even neighborhoods. A
company may decide to operate in one or a few geographical areas or operate in all
areas but pay attention to geographical differences in needs and wants. Moreover,
many companies today are localizing their products, services, advertising,
promotion, and sales efforts to fit the needs of individual regions, cities, and other
localities.
Demographic segmentation divides the market into segments based on variables
such as age, life-cycle stage, gender, income, occupation, education, religion,
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ethnicity, and generation. Demographic factors are the most popular bases for
segmenting customer groups. One reason is that consumer needs, wants, and usage
rates often vary closely with demographic variables. Another is that demographic
variables are easier to measure than most other types of variables. Even when
marketers first define segments using other bases, such as benefits sought or
behavior, they must know a segment’s demographic characteristics to assess the
size of the target market and reach it efficiently.
 Age and life-cycle segmentation: Dividing a market into different age and
life-cycle groups.
 Gender segmentation: Dividing a market into different segments based on
gender.
 Income segmentation: Dividing a market into different income segments.
Psychographic segmentation divides buyers into different segments based on
lifestyle or personality characteristics. People in the same demographic group can
have very different psychographic characteristics.
Behavioral segmentation divides buyers into segments based on their knowledge,
attitudes, uses, or responses to a product. Many marketers believe that behavior
variables are the best starting point for building market segments.
2. Segmenting Business Markets
Consumer and business marketers use many of the same variables to segment their
markets. Business buyers can be segmented geographically, demographically
(industry, company size), or by benefits sought, user status, usage rate, and loyalty
status. Yet business marketers also use some additional variables, such as customer
operating characteristics, purchasing approaches, situational factors, and personal
characteristics.

21
Almost every company serves at least some business markets. For example,
Starbucks has developed distinct marketing programs for each of its two business
segments: the office coffee segment and the food service segment.
Many companies establish separate systems for dealing with larger or multiple-
location customers. For example, Steelcase, a major producer of office furniture
systems, first divides customers into several segments: health-care, education,
hospitality, legal, U.S. and Canadian governments, and state and local
governments. Next, company salespeople work with independent Steelcase dealers
to handle smaller, local, or regional Steelcase customers in each segment. But
many national, multiple-location customers, such as ExxonMobil or IBM, have
special needs that may reach beyond the scope of individual dealers. Therefore,
Steelcase uses national account managers to help its dealer networks handle
national accounts.
3. Segmenting International Markets
Few companies have either the resources or the will to operate in all, or even most,
of the countries that dot the globe. Although some large companies, such as Coca-
Cola or Unilever, sell products in more than 200 countries, most international firms
focus on a smaller set. Different countries, even those that are close together, can
vary greatly in their economic, cultural, and political makeup. Thus, just as they do
within their domestic markets, international firms need to group their world
markets into segments with distinct buying needs and behaviors.
Companies can segment international markets using one or a combination of
several
variables. They can segment by geographic location, grouping countries by regions
such as Western Europe, the Pacific Rim, South Asia, or Africa. Geographic
segmentation assumes that nations close to one another will have many common
traits and behaviors. Although this is sometimes the case, there are many
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exceptions. For example, some U.S. marketers lump all Central and South
American countries together. However, the Dominican Republic is no more like
Brazil than Italy is like Sweden. Many Central and South Americans don’t even
speak Spanish, including more than 200 million Portuguese-speaking Brazilians
and the millions in other countries who speak a variety of Indian dialects.
World markets can also be segmented based on economic factors. Countries might
be grouped by population income levels or by their overall level of economic
development. A country’s economic structure shapes its population’s product and
service needs and therefore the marketing opportunities it offers. For example,
many companies are now targeting the BRIC countries—Brazil, Russia, India, and
China—which are fast-growing developing economies with rapidly increasing
buying power.
Countries can also be segmented by political and legal factors such as the type and
stability of government, receptivity to foreign firms, monetary regulations, and
amount of bureaucracy. Cultural factors can also be used, grouping markets
according to common languages, religions, values and attitudes, customs, and
behavioral patterns.
Segmenting international markets based on geographic, economic, political,
cultural, and other factors presumes that segments should consist of clusters of
countries. However, as new communications technologies, such as satellite TV and
online and social media, connect consumers around the world, marketers can
define and reach segments of like-minded consumers no matter where in the world
they are. Using intermarket segmentation (also called cross-market
segmentation), they form segments of consumers who have similar needs and
buying behaviors even though they are located in different countries.

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9. Market segmentation – Segmentation, targeting, differentiation, and
positioning. Variables used in segmenting markets.
There are four major steps in designing a customer value–driven marketing
strategy. In the first two steps, the company selects the customers that it will serve.
Market segmentation involves dividing a market into distinct groups of buyers
who have different needs, characteristics, or behaviors and who might require
separate marketing strategies or mixes. The company identifies different ways to
segment the market and develops profiles of the resulting market segments.
Market targeting (or targeting) consists of evaluating each market segment’s
attractiveness and selecting one or more market segments to enter.
In the final two steps, the company decides on a value proposition—how it will
create value for target customers. Differentiation involves actually differentiating
the firm’s market offering to create superior customer value. Positioning consists
of arranging for a market offering to occupy a clear, distinctive, and desirable place
relative to competing products in the minds of target consumers. We discuss each
of these steps in turn.
Variables used in segmenting markets: Consumer markets, business markets
and international markets (Giống câu 8).

10. Requirements for effective regimentation. The way companies identify

attractive market segments and choose a market-targeting strategy in
international markets
Requirements for effective regimentation:
Clearly, there are many ways to segment a market, but not all segmentations are
effective. For example, buyers of table salt could be divided into blonde and
brunette customers. But hair color obviously does not affect the purchase of salt.
Furthermore, if all salt buyers bought the same amount of salt each month,
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believed that all salt is the same, and wanted to pay the same price, the company
would not benefit from segmenting this market. To be useful, market segments
must be:
 Measurable. The size, purchasing power, and profiles of the segments can
be measured.
 Accessible. The market segments can be effectively reached and served.
 Substantial. The market segments are large or profitable enough to serve. A
segment should be the largest possible homogeneous group worth pursuing
with a tailored marketing program. It would not pay, for example, for an
automobile manufacturer to develop cars especially for people whose height
is greater than seven feet.
 Differentiable. The segments are conceptually distinguishable and respond
differently to different marketing mix elements and programs. If men and
women respond similarly to marketing efforts for soft drinks, they do not
constitute separate segments.
 Actionable. Effective programs can be designed for attracting and serving
the segments. For example, although one small airline identified seven
market segments, its staff was too small to develop separate marketing
programs for each segment.
The way companies identify attractive market segments:
To target the best market segments the company first evaluates each segment's size
and growth characteristics, structural attractiveness, and compatibility with
company objectives and resources. First, a company wants to select segments that
have the right size and growth characteristics. But “right size and growth” is a
relative matter. The largest, fastest-growing segments are not always the most
attractive ones for every company. Smaller companies may lack the skills and
resources needed to serve larger segments. Or they may find these segments too
25
competitive. Such companies may target segments that are smaller and less
attractive, in an absolute sense, but that are potentially more profitable for them.
The company also needs to examine major structural factors that affect long-run
segment attractiveness. For example, a segment is less attractive if it already
contains many strong and aggressive competitors or if it is easy for new entrants to
come into the segment. The existence of many actual or potential substitute
products may limit prices and the profits that can be earned in a segment. The
relative power of buyers also affects segment attractiveness. Buyers with strong
bargaining power relative to sellers will try to force prices down, demand more
services, and set competitors against one another—all at the expense of seller
profitability. Finally, a segment may be less attractive if it contains powerful
suppliers that can control prices or reduce the quality or quantity of ordered goods
and services.
Even if a segment has the right size and growth and is structurally attractive, the
company must consider its own objectives and resources. Some attractive segments
can be dismissed quickly because they do not mesh with the company’s long-run
objectives. Or the company may lack the skills and resources needed to succeed in
an attractive segment. For example, the economy segment of the automobile
market is large and growing. But given its objectives and resources, it would make
little sense for luxuryperformance carmaker Mercedes-Benz to enter this segment.
A company should only enter segments in which it can create superior customer
value and gain advantages over its competitors.
The way companies choose a market-targeting strategy
A target market consists of a set of buyers who share common needs or
characteristics that a company decides to serve. Market targeting can be carried out
at several different levels.

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  Undifferentiated (mass) marketing: A market-coverage strategy in which
a firm decides to ignore market segment differences and go after the whole
market with one offer.
 Differentiated (segmented) marketing: A market-coverage strategy in
which a firm targets several market segments and designs separate offers for
each.
 Concentrated (niche) marketing: A market-coverage strategy in which a
firm goes after a large share of one or a few segments or niches.
 Micromarketing: Tailoring products and marketing programs to the needs
and wants of specific individuals and local customer segments; it includes
local marketing (Tailoring brands and marketing to the needs and wants of
local customer segments - cities, neighborhoods, and even specific stores)
and individual marketing (Tailoring products and marketing programs to the
needs and preferences of individual customers).

11. The way companies differentiate and position their product for maximum
competitive advantage in the marketplace
The differentiation and positioning task consists of three steps: identifying a set of
differentiating competitive advantages on which to build a position, choosing the
right competitive advantages, and selecting an overall positioning strategy. The
company must then effectively communicate and deliver the chosen position to the
market.
1. Identifying Possible Value Differences and Competitive Advantages
To build profitable relationships with target customers, marketers must understand
customer needs and deliver more customer value better than competitors do. To the
extent that a company can differentiate and position itself as providing superior
customer value, it gains competitive advantage.
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But solid positions cannot be built on empty promises. If a company positions its
product as offering the best quality and service, it must actually differentiate the
product so that it delivers the promised quality and service. Companies must do
much more than simply shout out their positions with slogans and taglines. They
must first live the slogan.
To find points of differentiation, marketers must think through the customer’s
entire experience with the company’s product or service. An alert company can
find ways to differentiate itself at every customer contact point. In what specific
ways can a company differentiate itself or its market offer? It can differentiate
along the lines of product, services, channels, people, or image.
Through product differentiation, brands can be differentiated on features,
performance, or style and design. Beyond differentiating its physical product, a
firm can also differentiate the services that accompany the product. Some
companies gain services differentiation through speedy, convenient service. Other
firms promise high-quality customer service. Firms that practice channel
differentiation gain competitive advantage through the way they design their
channel’s coverage, expertise, and performance. Companies can also gain a strong
competitive advantage through people differentiation—hiring and training better
people than their competitors do. People differentiation requires that a company
select its customer-contact people carefully and train them well. Even when
competing offers look the same, buyers may perceive a difference based on
company or brand image differentiation. A company or brand image should
convey a product’s distinctive benefits and positioning. Developing a strong and
distinctive image calls for creativity and hard work. A company cannot develop an
image in the public’s mind overnight by using only a few ads. Symbols can
provide strong company or brand

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recognition and image differentiation. The company might build a brand around a
famous person, or even become associated with colors.
2. Choosing the Right Competitive Advantages
Suppose a company is fortunate enough to discover several potential
differentiations
that provide competitive advantages. It now must choose the ones on which it will
build its positioning strategy. It must decide how many differences to promote and
which ones.
How Many Differences to Promote. Many marketers think that companies should
aggressively promote only one benefit to the target market. Other marketers think
that companies should position themselves on more than one differentiator. This
may be necessary if two or more firms are claiming to be best on the same
attribute. Today, in a time when the mass market is fragmenting into many small
segments, companies and brands are trying to broaden their positioning strategies
to appeal to more segments.
Which Differences to Promote. Not all brand differences are meaningful or
worthwhile, and each difference has the potential to create company costs as well
as customer benefits. A difference is worth establishing to the extent that it
satisfies the following criteria:
 Important. The difference delivers a highly valued benefit to target buyers.
 Distinctive. Competitors do not offer the difference, or the company can
offer it in a more distinctive way.
 Superior. The difference is superior to other ways that customers might
obtain the same benefit.
 Communicable. The difference is communicable and visible to buyers.
 Preemptive. Competitors cannot easily copy the difference.
 Affordable. Buyers can afford to pay for the difference.
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  Profitable. The company can introduce the difference profitably.
Thus, choosing competitive advantages on which to position a product or service
can be difficult, yet such choices are crucial to success. Choosing the right
differentiators can help a brand stand out from the pack of competitors.
3. Selecting an Overall Positioning Strategy
The full positioning of a brand is called the brand’s value proposition—the full mix
of benefits on which a brand is differentiated and positioned. It is the answer to the
customer’s question “Why should I buy your brand?”.
The company can choose from five different value propositions:
More for More. More-for-more positioning involves providing the most upscale
product or service and charging a higher price to cover the higher costs. A more-
for-more market offering not only offers higher quality, it also gives prestige to the
buyer. It symbolizes status and a loftier lifestyle. Although more-for-more can be
profitable, this strategy can also be vulnerable. It often invites imitators who claim
the same quality but at a lower price.
More for the Same. A company can attack a competitor’s value proposition by
positioning its brand as offering more for the same price.
The Same for Less. Offering the same for less can be a powerful value proposition
—everyone likes a good deal. Discount stores such as Walmart and “category
killers” such as Best Buy, PetSmart, David’s Bridal, and DSW Shoes use this
positioning. They don’t claim to offer different or better products. Instead, they
offer many of the same brands as department stores and specialty stores but at deep
discounts based on superior purchasing power and lower-cost operations. Other
companies develop imitative but lower-priced brands in an effort to lure customers
away from the market leader. For example, Amazon offers a line of Kindle Fire
tablets, which sell for less than 40 percent of the price of the Apple iPad or

30
Samsung Galaxy tablet. Amazon claims that it offers “Premium products at non-
premium prices.”
Less for Much Less. A market almost always exists for products that offer less and
therefore cost less. Few people need, want, or can afford “the very best” in
everything they buy. In many cases, consumers will gladly settle for less-than-
optimal performance or give up some of the bells and whistles in exchange for a
lower price. Less-for-much-less positioning involves meeting consumers’ lower
performance or quality requirements at a much lower price.
More for Less. Of course, the winning value proposition would be to offer more
for less. Many companies claim to do this. And, in the short run, some companies
can actually achieve such lofty positions.
Yet in the long run, companies will no doubt find it very difficult to sustain such
bestof-both positioning. Offering more usually costs more, making it difficult to
deliver on the “for-less” promise. Companies that try to deliver both may lose out
to more focused competitors. All said, each brand must adopt a positioning
strategy designed to serve the needs and wants of its target markets. More for more
will draw one target market, less for much less will draw another, and so on. In any
market, there is usually room for many different companies, each successfully
occupying different positions. The important thing is that each company must
develop its own winning positioning strategy, one that makes the company special
to its target consumers.
4. Developing a Positioning Statement
Company and brand positioning should be summed up in a positioning statement.
The statement should follow the form: To (target segment and need) our (brand) is
(concept) that (point of difference).

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12. Product, how can product planner build customer value, key product
decision in international markets
- What is product?
Product in marketing is anything that can be offered to the market to exchange, to
bring values and satisfaction to customers.
Three levels of product can be identified. Each level adds more customer value.
The first and most basic level is called the core customer value. The first one of
the levels of product, the core customer value, answers the question: What is the
buyer really buying? When a marketer designs a product, he should first think of

the core problem. What does the consumer really seek? If you buy a car, the most
basic core value you seek is transportation. For others, it might be status or
glamour. If you buy a smartphone, the core customer value might be
communication. Likewise, if you buy an iPad, you buy more than a mobile
computer or a personal organiser. The core customer value you buy is freedom and
on-the-go connectivity. A woman buying a lipstick seeks more than just a colourful
cosmetic. In fact, she might seek hope. You see that already the first one of the
three levels of product is much more than the product itself. Always ask yourself
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first when developing a product: What benefit does the customer really seek? What
is the problem that needs to be solved?
The second one of the three levels of product is the actual product. Marketers
should turn the core benefit, the core customer value they identified into an actual
product. This involves developing product features, design, a quality level, a brand
name and even a packaging. The smartphone you finally buy as well as the car are
actual products. You buy the phone, the packaging, the functionality and so on.
All these factors at the second one of the levels of product relate to the core
customer value. This reveals that the levels of product build up on each other. The
smartphone’s name, parts, styling, features, packaging and other attributes all have
been carefully combined to deliver the core customer value of staying connected.
Finally, the levels of product are completed with the augmented product. The
augmented product rounds of the three levels of product, being built around the
core value and the actual product. It simply offers additional consumer services
and benefits. If you buy an iPad, you get more than the core customer value (e.g.
communication), and also more than the actual product. These are only two levels
of product. The augmented product you get is the complete solution to your
connectivity problems as defined by the core customer value. This complete
solution might take the form of a warranty, after-sale service, product support,
instructions on how to use the device and so further.
=> Three levels of products are involved in any purchase. The levels of product
include the core customers value, the actual product and the augmented product.
What you buy is a complex bundle of benefits that aim to satisfy your needs. This
also means that when marketers develop products, they first should identify the
core customer value. What does the customer really need and want, what problem
does he have? Then, they should design the actual products and in addition find

33
ways to augment it in order to create customer value and the most satisfying
experience.
- Key product decision
1. Decisions on product standardization or adaptation
2. Decisions on product benefits (attributed – branding – packaging – labeling -
support services)
3. Decisions on product line and product mix
4. Decisions on branding
5. Decisions on packaging and labeling
Product Attributes – Stage one of Individual Product Decisions
Individual product decisions start by deciding on product attributes. This, in turn,
means that the development of a product starts by defining the benefits it will offer
to consumers. These benefits are communicated as well as delivered by the product
attributes. Thus, in stage one of the individual product decisions, we define the
product attributes, such as quality, features, style and design.
a. Product Quality
One element of the product attributes is the quality of the product. Although
quality can be defined in many ways, we can define it as the characteristics of a
product or service that determine its ability to satisfy the customer needs.
Therefore, the quality is one of the most important individual product decisions. It
has a direct impact on the product’s (or service’s) performance. It is directly linked
to customer value and satisfaction. So, we could say: Quality is when the customer
is satisfied and will come back, while the product does not (come back).
To be more specific, defining the product’s quality involves two levels or
dimensions. These are Quality Level and Quality Consistency. Firstly, we need to
choose a quality level which will support the product’s positioning. At this level,
the quality can be understood as performance quality: the ability of the product to
34
perform its functions. To give an example, a Mercedes-Benz car provides a higher
performance quality than a Dacia Logan: it has a smoother ride, offers more
luxury, comfort, lasts longer etc. The quality level should be chosen so as to meet
the target market needs and the quality levels of competing products.
The second level is the Quality Consistency. Here, the product quality means
conformance quality. Thus, we refer to freedom from defects and the consistency
in delivering the targeted quality level (level of performance). At this level, the
Dacia Logan can have as much quality as the Mercedes. Although it does not
perform at the same level as the Mercedes (Quality Level), it can deliver the
quality that customers pay for and expect.
b. Product Features
Another product attribute that is highly important for the individual product
decisions is that of the product features. Obviously, we can offer a product with
varying features. A low-level model, without any extras, or a high-level model,
with a lot of features. In fact, product features can be seen as a competitive tool for
differentiation. By features, we can differentiate our product from competitors’
products.
c. Product Style and Design
Individual product decisions also include the product style and design. Clearly, we
can add customer value by means of a distinctive product style and design. While
style describes the appearance of the product, design goes deeper. Good design
does not only contribute to the product’s look, but also to its usefulness. In order to
find the right product design, marketers should investigate how customers will use
and benefit from the product.
Branding – Stage two of Individual Product Decisions
Branding is one of the most crucial individual product decisions. Today, people do
not buy a product – they buy a brand. A brand is a name, term, sign, symbol,
35
design or a combination of these elements that identifies the products or services of
one seller and differentiates them from those of competitors. To give an example,
look at Coca-Cola. If you buy a bottle of coke, you do not only buy the pure
beverage, you buy the brand. You buy it because you know and value the
worldwide-known brand. For clothing, brands are even more important. Many
people do not buy a sweatshirt because of its features – they buy it because there is
a label on it showing the brand. They become part of the brand, show that they
have this brand, that they can afford this brand and so on. Thus, a brand is much
more than only the product, it is the whole identity around the offerings of a seller.
Today, branding has become so strong that hardly anything goes unbranded. Even
homogenous products such as gasoline or salt are packaged in branded containers
or sold as a brand. Likewise, even fruits and vegetables are branded: on many
apples, bananas and other fruits and vegetables you find the brand, such as
Chiquita Bananas or Pink Lady Apples.
Packaging – Stage three of Individual Product Decisions
Going on with the individual product decisions, we land at packaging. Packaging
refers to activities of designing and producing the wrapper or container for a
product. The packaging of a product is a more important decision than you would
expect it to be. Traditionally, the primary function of a package was to hold and
protect the product. However, packaging is nowadays an important marketing tool,
too. This is a result of increased competition and offer of products. Packaging must
now perform many tasks, which include attracting attention, describing the
product, and even making the sale.
Labelling – Stage four of Individual Product Decisions
Labels perform several functions and are therefore one of the important individual
product decisions. The most straight-forward function is to identify the product or
brand. But the label can also describe several things about the product: who made
36
it, where and when was it made, the contents, how it is to be used etc. Finally, the
label can promote a brand. It supports the brand’s positioning and may help to
connect with customers. By a brand logo, the label can add personality to a brand
and contribute to the brand identity.
However, a label should only show and state what is true and what the customer
can rely upon. Misleading or deceptive labels must be seen as unfair competition.
If labels mislead customers, fail to describe important ingredients or even fail to
mention required safety warnings, legal consequences are likely to follow.
Product Support Services – Stage five of Individual Product Decisions
Individual product decisions also include product support services. Usually, the
company’s offer includes some form of customer service, of product support
services. This can be a minor part of the product or a major part of the total
offering. Product support services contribute to the augmented product, as defined
by the three levels of product. Without doubt, support services do also belong to
the significant individual product decisions because they contribute to the
customer’s overall brand experience. The key is to keep customers happy after the
sale in order to build lasting relationships.
Besides these individual product decisions, many other choices need to be made.
However, these five individual product decisions built the base for the product
development and marketing. If individual product decisions are made carefully in
accordance with consumer needs and wants, the product can become a success.

13. Industrial product, customer product, product attribute

Industrial product: include the machinery and resources used to make consumer
products. Sometimes these products are referred to as the means of production. The
conveyor belt used in the process of manufacturing products is an example of an

37
industrial good. Any other piece of machinery used in the manufacturing process is
an example of an industrial product.
Customer product: is finished products that are sold to and used by consumers.
Customer products are ready for the consumption and satisfaction of human wants.
For example the television set that you use to watch.
Product attribute: are the components of a product that describe its features.
Product attribute is concrete, objective, and can be observed. That attribute of a
product doesn’t change. However which attribute you choose to show will vary
depending on campaign, customer, or brand. From a consumer perspective, these
attributes are what determine the consideration set and influence the ultimate
purchase decision. From a retail perspective, product attributes help define how
aisles, departments and shelf sets are organized. Manufacturers use attributes to
help define their products’ competitive set. Product attribute tell you something
about various aspects of a product and allow you to get at these other levels.
Looking at product segments based on different attribute allows you to keep on top
of important trends and more easily identify growth opportunities: Which is
growing faster – small or large sizes? sweet or savory flavors? cans or pouches?
floral, herbal, fresh or unscented? low sodium or gluten free?

14. Width, length, depth and consistency of product mix

Four important dimensions of a product mix can be identified. These are: width,
length, depth, and consistency. The first of the product mix decisions refers to the
product mix width. The width is all about the number of different product lines the
company carries. As mentioned in the previous example, Colgate has 3 product
lines. Thus, it has a rather limited width.
The product mix length refers to the total number of items a company carries
within the product lines. For instance, Colgate carries several different brands
38
within each line. In Colgate’s oral care product line, several different categories of
toothpastes can be identified. A car manufacturer may have several series in its car
product line, such as 3-series, 5-series, and 7-series.
The next one of the product mix decisions is the product mix depth. It refers to the
number of versions offered for each product in the product line. For instance,
Colgate toothpastes come in several tastes and variations. The vehicle
manufacturer’s 3-series in the car product line may be offered in several versions:
convertible, coupé, sedan, and so further.
Finally, the consistency of a product mix completes our four product mix decisions.
Consistency refers to how closely related the product lines are in terms of end use,
production requirements, distribution channels or any other way. In Colgate’s case,
we can observe a rather strong consistency, which is based on the fact that all
product lines constitute consumer products and go through the same distribution
channels. The vehicle manufacturer also has a relatively consistent product mix,
since both product lines contain consumer-vehicles, can be sold in the same way
etc.
For example: Width, length, depth and consistency of P&G’s product mix

Width (5) number of lines

Detergent Toothpaste Hand soap Nappy Tissue

Length Ivory snow Gleem Ivory 1879 Pampers Charmin
(26) the number 1930 1952 Kirk’s 1961 1928
of items in Dreft 1933 Crest 1955 1885 Luvs 1976 White
product mix Tide 1946 Denquel Lava 1893 cloud
Cheer 1980 Camay 1958
Oxydol 1926 Puffs
1952 Zest 1952 1960

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 Dash 1954
Bold 1965 Safeguard
Banner
Gain 1966 1963
1982
Era 1972 Coast 1974
Solo 1979
Dept: number of versions offered for each product in the line
Consistency: how closely product lines are in end use, production, distribution….

15. Brand, brand equity. Brand development strategies and how to

communicate company’s brand in international markets
Brand represents the consumer’s perceptions and feelings about a product and its
performance. It is the company’s promise to deliver a specific set of features,
benefits, services, and experiences consistent to the buyers.

40
Brand equity is the value of a brand. A popular brand enables a business to sell
more products at a higher profit margin; that ability is valuable. Brand equity is the
dollar value a company would pay to purchase the brand or sell their brand for.

Examples of Brand Equity

Apple’s Brand Equity
A third of the value of Apple is contained in their brands.
A third of the value of Apple of the company is the value of it’s brand.
The value of Apple (at this time) is $703.5 B, and the value of the brand $234 B
(according to Interbrand), so 30% of the total value of the company comes from
the Apple brand and all their sub-brands (iPhone, Mac, iCloud, etc.)

41
That $234 B brand value means that Apple would lose nearly half of its value
overnight if some bizarre trademark dispute meant that Apple could no longer sell
under the name “Apple,” use the logo, similar graphics, or the apple.com website,
and not use any other brands as well.
Brand development strategy:
A company has four choices when it comes to developing brands. It can introduce
line extensions, brand extensions, multibrands, or new brands.
Line extensions occur when a company extends existing brand names to new
forms, colors, sizes, ingredients, or flavors of an existing product category. For
example, over the years, KFC has extended its “finger lickin’ good” chicken lineup
well beyond original recipe, bone-in Kentucky fried chicken. It now offers grilled
chicken, boneless fried chicken, chicken tenders, hot wings, chicken bites, chicken
popcorn nuggets, a Doublicious chicken-bacon-cheese sandwich, and KFC Go
Cups—chicken and potato wedges in a handy car-cup holder that lets customers
snack on the go.
A company might introduce line extensions as a low-cost, low-risk way to
introduce new products. Or it might want to meet consumer desires for variety, use
excess capacity, or simply command more shelf space from resellers. However,
line extensions involve some risks. An overextended brand name might cause
consumer confusion or lose some of its specific meaning. For example, in its
efforts to offer something for everyone—from basic burger buffs to practical
parents to health-minded fast-food seekers—McDonald’s has created a menu
bulging with options. Some customers find the crowded menu a bit overwhelming,
and offering so many choices has complicated the chain’s food assembly process
and slowed service at counters and drive-thrus.
Brand extensions extends a current brand name to new or modified products in a
new category. For example, Nest—the maker of stylish, connected, learning
42
thermostats that can be controlled remotely from a phone—extended its line with
an equally smart and stylish Nest Protect home smoke and carbon monoxide alarm.
It’s now extending the Nest line to include “Works with Nest,” applications
developed with a variety of partners that let its smart devices interact with and
control everything from home video monitoring devices, smart door locks, and
home lighting systems to home appliances and fitness tracking bands. All of the
extensions fit together under Nest’s smart homes mission
Multibrands Companies often market many different brands in a given product
category. For example, in the United States, PepsiCo markets at least eight brands
of soft drinks (Pepsi, Sierra Mist, Mountain Dew, Manzanita Sol, Mirinda, IZZE,
Tropicana Twister, and Mug root beer), three brands of sports and energy drinks
(Gatorade, AMP Energy, Starbucks Refreshers), four brands of bottled teas and
coffees (Lipton, SoBe, Starbucks, and Tazo), three brands of bottled waters
(Aquafina, H2OH!, and SoBe), and nine brands of fruit drinks (Tropicana, Dole,
IZZE, Lipton, Looza, Ocean Spray, and others). Moreover, multibrands offers a
way to establish different features that appeal to different customer segments, lock
up more reseller shelf space, and capture a larger market share. A major drawback
of multibranding is that each brand might obtain only a small market share, and
none may be very profitable,
New brands A company might believe that the power of its existing brand name is
waning, so a new brand name is needed. Or it may create a new brand name when
it enters a new product category for which none of its current brand names is
appropriate. For example, Toyota created the separate Lexus brand aimed at luxury
car consumers and the Scion brand targeted toward millennial consumers. As with
multibranding, offering too many new brands can result in a company spreading its
resources too thin. And in some industries, such as consumer packaged goods,
consumers and retailers have become concerned that there are already too many
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brands with too few differences between them. Thus, P&G, PepsiCo, Kraft, and
other large marketers of consumer products are now pursuing megabrand strategies
—weeding out weaker or slower-growing brands and focusing their marketing
dollars on brands that can achieve the number-one or number-two market share
positions with good growth prospect,
How to communicate company’s brand in international market: Brand is not a
solution for company incapable of communicating brand to target customers.
3 basic questions:
1. what makes Brand special in target customers’ mind?
2. what make them recognise the differences
3. is company capable of making target customers to be aware of the differences

16. Product standardization and product adaptation. Factors affecting

product adaption decisions. How do governments affect product adaption
decisions of companies?
1. Product standardization refers to marketing a product in the overseas markets
with little change except for some cosmetic changes such as modifying packaging
and labelling. Generally, products with high technological intensity such as heavy
equipment’s, plants and machinery, microprocessors, hard disks, projectors etc. are
marketed as standardized products across the world.
Some of the consumer products with global appeal, viz. Big Mac, Coke,
Budweiser, Heineken, etc., are also marketed as globally standardized products.
Advantages of Product standardization
To the organization
 Reduction in cost – In the standardization, an identical product is produced
using the same materials and processes etc. So that the materials can be
purchased in bulk quantities and this will lead to have discounts in
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 purchasing. At the same time, this will cause less wastages in material usage
as well and reduces the cost.
 Production efficiency – When the product that we are currently producing is
being uniformed, the production process becomes efficient due to enabling
factors such as mass production, specialization of labour, automation of the
processes of production.
 Well established and well-strengthened brand – When an identical product is
being available in different markets it helps the organization to establish and
strengthen the brand.
 Increase in production – When the differences among products are reduced
the production of the company can be easily increased.
To the consumers
 Customers are enabled to choose the exact product that they want – When
the differences among the products are reduced then the customers are not
required to confuse as to which product or service to buy. So that they can
choose the exact product without any confusion.
 Can obtain a high-quality product – When the products are standardized
consumers can obtain relatively a high-quality product.
 Better living standards – When the consumers are capable of consuming
high-quality products at lower costs their living standards

2. Product adaption refers to the process of modifying the existing products in

order to reach to each market. There are several product adaption strategies that an
entity can use such as product, target market, package and design, ingredients,
language, culture, religion etc. That means in terms of target markets, packaging
and designs, ingredients, languages, culture and etc the organizations need to come

45
up with different ways so that they can cater different markets in a way where the
customer needs and requirements are addressed.
For example: The way the Red bull product is being sold in China and North
America are different from one another. Because the label of the Red bull which is
being sold in North America consist of red and silver for which the red bull stands
for action and the silver background stands for the youth spirituality and spirit.
Whereas in China the label is in red and gold for which the red colour stands for
good luck and the gold colour stands for wealth and happiness. North American
red bull : Red is a symbol of action and courage Silver-symbol of maturity Blue-
symbol of youth spirituality and peace
There are mainly two types of product adaption methods:
1. Mandatory Adaption – Adapting the products to a particular country’s local
requirements so that the legal and physical operations can be done by the company
in the respective country. Eg: left hand driving in the UK
2. Local non mandatory adaption – Adapting a product with the intention of
giving the consumers the chance to consume a better quality product which is not a
legal requirement.
The major factors influencing product adaptation are:
Consumer demographics:
Product modifications are required to suit the physical attributes of the target
consumers. Chinese and most East Asian people are shorter in size while
Europeans and Germans are generally taller.
Consumer products, such as readymade garments, undergarments, beds, and bed-
sheets differ significantly among these markets and the products need to be
adapted depending upon the consumer demographics. Consumers also look for
images matching their own demographic attributes in the products. For instance,

46
Mattel markets a variety of Barbie dolls to match customer demographics in
different markets.
Culture:
The sensitivity to culture varies with product categories. Food items and clothing
are generally more sensitive to culture whereas products with high technical
intensity, such as software, electronic goods, plant, and machinery are hardly
sensitive.
It takes a long time to change the food and clothing habits of consumers and
market the standardized products. Western food items, such as burgers, pizzas, ice
creams, soft drinks, etc., have gained global acceptance. Increased contact with
alien cultures primarily due to augmented movement of people across the countries
has made even Chinese and Indian foods popular in the West
The largest global fast food marketer, McDonald’s, faces the biggest challenge of
adapting its menu to local tastes without compromising on its strong universal
appeal of an American icon. The majority of Hindus in India are ardent
vegetarians. Although McDonald’s serves its famous Big Mac, the beef burger,
across the Globe, it promises an authentic vegetarian burger in India (Fig. 14.8).
As a result, McDonald’s does not serve either beef or pork in the Indian market.
Even among the non-vegetarian Indian consumers, red meat is not preferred, which
made it necessary for McDonald’s to serve chicken burger.
Conditions of use:
Products have to be adapted depending upon the conditions of use in the
international markets. These include climatic conditions, such as cold and hot
weather, humid and dry conditions, and the local dusty conditions of use. Nokia
introduced its brand ‘Nokia 1100’ emphasizing its ‘Made for India’ features, such
as anti-slip grip, built-in torchlight, dust resistance cover, and of course at a lower
price.
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The condition of product use is a significant reason for operational problems of
highly sophisticated electronic gadgets in low-income countries that have robust
conditions of use. This opens up tremendous marketing opportunities for products
manufactured in India which can withstand robust operating conditions in other
developing and least developed countries.
Price:
Low-income countries are highly sensitive to price, which constitutes the most
significant determinant of a purchase decision. The level of sophistication of
buyers in adopting new products and processes also varies among countries.
Therefore, core product benefits become the key to lower costs in developing and
least developed countries where the augmented product component, such as
packaging, product sophistication, and additional features are emphasized in
developed countries where the buyer has the capacity to pay considerably higher
prices.
Governemt affect:
A firm needs to adapt its products to various markets in order to comply with
government regulations. The differing quality specifications also require marketers
to follow the quality norms, such as approval by the Food and Drug Administration
(FDA) for marketing a product in the US or following codex standards for
European Union.
The ban on the use of azo-dyes in Europe requires use of natural dyes in all
products. Maps are a sensitive issue all over the world and the exporting company
needs to follow the regulations of the importing country. Chinese-made toy-globes
that depicted the northern territory of Kashmir in a different color to the rest of
India were found offensive by an Indian court and their imports were banned.

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17. Factors affecting decisions on packaging, labeling in international markets
There are a number of factors that influence decisions in respect of packaging
features like size, shape, design, surface graphics, color schemes, labeling,
materials etc.
(i) Physical Characteristics: Packaging decisions are influenced by certain
physical characteristics of the product like the physical state, weight, stability,
fragility, rigidity, surface finish etc.
(ii) Physical characteristics: Certain physio-chemical factors like the effect of
moisture, oxygen, light, flame, bacteria, fungi, chemical action etc., on the product
are vary important factors to considered while making packaging decisions.
(iii) Economy: While packaging is very important in marketing, it is costly too.
Indeed, there are a number of cases where the cost of packing is more than the cost
of the content. The rising cost of packaging has become a matter of serious
concern. Every effort should therefore, be made to reduce the packaging costs as
much as possible without impairing the packaging requirements.
(iv) Convenience: packaging should also necessarily possess the quality of
convenience from the point of view of consumers, distributors and producer.
Hence, apart from the functional needs, a good package should possess certain
features like ease to open and close, ease to dispense, ease to dispose of, ease to
recycle, ease to identify, ease to handle, convenience to pack, convenience to stack,
convenience to display etc.
(v) Miscellaneous Factors: Apart from the factors mentioned above, packaging
decisions may be influenced by a number of other factors. For example, if there is
any statutory rule in respect of packaging, it will have to be abided by. The socio-
cultural factors could influence packaging decision. Consumer attitudes also have
to be given due consideration. The growth of consumerism in a number of

49
countries, interalia, also suggests that packaging decisions should be made with
meticulous care.

* Special Considerations in International marketing:

In addition to the general considerations in packaging mentioned above, there are
certain special factors to be considered in export packaging decisions. Important
among them are the following:
Regulations in the Foreign Countries:
Packaging and labeling may be subject to government regulation in the foreign
countries. Some countries have specified packaging standards for certain
commodities. The trend toward requiring labeling in a country’s native
language is growing. If such regulations are not strictly followed, the goods may be
confiscated or may attract some other punitive action.
Buyer Specifications: In some cases, buyers like the exporters to give packaging
specification. While incorporating such specifications it should also be ensured that
packaging satisfies other requirements like the statutory requirements.
Socio-cultural factors: While designing the packaging for a product, socio-
cultural factors relating to the important country like customs, traditions, beliefs
etc, should also be considered.
Retailing Characteristics: The nature of retail outlets is a very important
consideration packaging decision. For instance as pointed out earlier, in some of
the foreign markets as a result of the spread of supermarkets and discount houses, a
large number of products are sold on a self-service basis. The package has,
therefore, to perform many of the sales tasks and hence it must attract attention,
describe the product’s features, give the consumer confidence and make a
favorable overall impression.

50
Environmental factors: Packaging decisions are also influenced by certain
environmental factors like weather and climate factors. The impact of such factors
in the place where the product originates, while the product is in transit and while
in the market etc., should be considered. The package should be capable of
withstanding the stresses and hazards of handling and transportation, stacking,
storing etc., under diverse conditions.
Disposability: Attention should also be paid to the aspects relating to the disposal
of the packaging. One of the qualities required for good package is that it could be
easily disposed of or recycled. In some of the developing countries like India many
packaging materials easily find some other use or are recycled. But the situation is
different in other countries. Indeed, the disposal of packaging materials is causing
environmental problems in a number of countries Reusable packages the risk of
misusing it for selling bogus products.

18. The nature and importance of marketing channels and channels decisions
Marketing channel (distribution channel): A set of interdependent organizations
that help make a product or service available for use or consumption by the
consumer or business user.
A company’s channel decisions directly affect every other marketing decision.
Pricing depends on whether the company works with national discount chains, uses
high-quality specialty stores, or sells directly to consumers online. The firm’s sales
force and communications decisions depend on how much persuasion, training,
motivation, and support its channel partners need. Whether a company develops or
acquires certain new products may depend on how well those products fit the
capabilities of its channel members.
Many companies have used imaginative distribution systems to gain a competitive
advantage. Ex: Apple turned the retail music business on its head by selling music
51
for the iPod via the internet on iTunes. And Amazon.com forever changed the face
of retailing and became the Walmart of the internet by selling anything and
everything without using physical stores.
Distribution channel decisions often involve long-term commitments to other
firms. For example, companies such as Ford, McDonald’s, or Nike can easily
change their advertising, pricing, or promotion programs. They can scrap old
products and introduce new ones as market tastes demand. But when they set up
distribution channels through contracts with franchisees, independent dealers, or
large retailers, they cannot readily replace these channels with company-owned
stores or internet sites if the conditions change. Therefore, management must
design its channels carefully, with an eye on both today’s likely selling
environment and tomorrow’s as well.

19. Channel of distribution structures in international markets

Types of channel structure
1. Import-oriented (traditional) distribution structure
In an import-oriented or traditional distribution structure:
- Importer controls a fixed supply of goods
- Marketing system develops around the philosophy of selling a limited supply of
goods at high prices to a small number of affluent customers
- Demand exceeds supply
- The customer seeks the supply from a limited number of middlemen
- Distribution systems are local
- Few countries fit the import-oriented model
2. Japanese distribution structure
Distribution in Japan has long been considered the most effective non-tariff barrier
to the Japanese market
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Japanese distribution structure features:
(1) A structure dominated by many small middlemen dealing with many small
retailers
(2) Channel control by manufacturers
(3) A business philosophy shaped by a unique culture
(4) Laws that protect the foundation of the system - the small retailer
- Evolved this way to serve consumers who make small, frequent purchases at
small, conveniently located stores.
*Changes in the Japanese Distribution System
 Structural Impediments (obstacle) Initiative –Wal-Mart are causing changes
in the Japanese distribution structure.
 Deregulation
 Wal-Mart
 “New” retailers
 The Internet
3. Trend: From Traditional to modern channel structures
- European retailers merging with former competitiors and other countries to form
Europe-wide enterprises
- Foreign retailers attracted by high margins and prices
- The internet may be most important distribution trend (Wal-mart, Dell)
- Covisint-GM, Ford and DaimlerChrysler craeted a single online site for
purchasing automotive parts from supplier
- GlobalNetXchange- a retail exchange that allows retailers and supplies to conduct
transaction online
- E-commerce
- 7-eleven(brick and martar have also created websites to extend their reach
globally)
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20. Alternatives middleman choices
Classification of Middlemen:
 Agent middlemen–represent the principal (manufacturer) rather than
themselves. Work on commission and arrange for sales in foreign country.
Does not take title to the goods.=> Less risk (manufacturer assumes risk)
 Merchant middlemen–take title to the goods and buy and sell on their own
account. (manufactures have less control). Motivated by profit, tend to be
less loyal to one brand
3 Alternative Types of Middlemen:
* Home country middleman
Home-country middlemen, or domestic middlemen, provide marketing services
from a domestic base and find foreign markets for products for local manufacturers
Frequently used types of domestic intermediaries include:
 U.S. Export Trading Companies
 Manufacturer’s Export Agent
 Export Merchants
 Export Management Companies
* Foreign-Country Middlemen
Some of the more important foreign-country middlemen, who find markets for
foreign manufacturers include:
 Foreign-Country Brokers
 Managing Agents and Compradors
 Dealers
 Import Jobbers, Wholesalers, and Retailers
* Government Affiliated Middlemen

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Marketers must deal with governments in every country of the world
Government purchasing offices
 Procure products, services, and commodities for the government’s own use
 Work at federal, regional, and local levels

21. Factors affecting choice of channels

- Cost: There are two types of international distribution channel costs: initial
investment costs for channel development and subsequent costs to maintain it. The
second type of cost includes the direct cost of the sales force of the company or in
the form of profit, interest or commission for intermediaries. The costs of
marketing (an important part of which is the cost of distribution channels) must be
considered to be the total difference between the cost of producing the goods and

55
the final cost paid by the consumer for the goods. . Broker’s costs include shipping
and handling costs, unloading costs, credit and local advertising costs, sales
representative fees, and expenses for the negotiations. The company can reduce
distribution costs by establishing shorter distribution channels
- Capital requirements: The key financial elements of a distribution strategy are the
capital and cash involved in the use of a particular type of intermediary. The
maximum capital investment is usually in the case of the company establishing its
own distribution channels or sales force. The use of distribution middlemen or
dealers may reduce the need to cash in on the distribution channel, but at this time
the producer is often required to provide information on the goods, credits, product
distribution plans ...
- Control: The more a company participates in distribution activities, the stricter it
controls the distribution channel. If the company uses its own sales force, it will be
able to best manage distribution operations. However, this will be costly and
sometimes impractical and inefficient. Each type of distribution channel requires
different levels of control. The longer the distribution channel, the lower the ability
to control prices, volume of goods, sales promotion activities, as well as the
operational capacity of the elements in the distribution channel. If the company
does not have the ability to sell directly to the end-user or end-retailer, then the
strict criterion of choosing distribution intermediaries is the only thing the
company can do.
- Coverage: Another important factor influencing channel selection is market
coverage in order to be able to sell the most goods in each market, achieve a
certain market share and penetrate the desired market. Market coverage can be
assessed on a geographic map and / or from market segments. The requirements
for market coverage will be different for each country's distribution system over a
period of time. In order to cover the entire market, a company can use different
56
elements of the distribution channel such as its own sales force in a country,
manufacturer's agents or vendors
- Character: The chosen channel system must match the characteristics of the
company and the markets in which it operates. Product characteristics are also
considered when channel selection forces, such as complex product preservation
characteristics, complexity of the sales process, sales services associated with the
product, as well as the value of the product. product.
The channel manager must be aware of the changes in channel types. Currently,
the trend in the world is to expand product categories in a distribution channel,
associate distribution and conduct extensive marketing activities. Thus, if the
company does not pay attention to the development trend of self-service sales,
discount sales, increased competition among wholesalers ... it may lose some
market segments because The company's distribution channels may no longer
properly reflect market characteristics.
- Continuity: Manufacturers often find it difficult to maintain distribution channels
in the long run. For example, most agency brokers tend to be small, independent
agencies. When an individual retires or leaves the business, it will greatly affect
distribution activities in that market. Most middlemen have very little loyalty to the
producer. They run the distribution operation in favorable times, when it is
possible to make a profit, but they can also quit the business quickly if it is no
longer effective. Therefore, manufacturers always have to try to reinforce the
loyalty of members in the distribution channel for distribution activities to be
maintained continuously.

22. Management of channels

- Channel Management is defined as a process where the company develops
various marketing and sales techniques as well as sales strategies to reach the
57
widest possible customer base and to satisfy them. Channel management is finding,
supporting and managing partners to ensure a continued supply of goods from
company to its consumers.
- Theo slides: Channel management decisions include (6 steps)
1. Selection of Channel Members: There are large number of wholesalers and
distributors available in the market from which the marketer needs to select their
channel intermediaries. Different manufactures have different abilities to select
qualified intermediaries. The factors that is need to be analysed are business
experience, profit and growth records, cooperation level, creditworthiness and
reputation.
In the case of sales agents as an intermediaries, the manufactures must evaluate the
character, quality and size of their sales force. If intermediaries are department
stores then the manufacturer must intend scrutinise the location, types of clients
and further sales growth.
Selection Process of Channel Members:
(1) Identifying the potential channel members: The channel manager has a wide
range of sources available to find the potential channel members. Some of the
sources are : Trade Sources (Sources like trade associations, directories, and trade
publication provide information regarding intermediaries); Customers (Customer
give an honest opinion about intermediaries who work for them. The formal or
informal survey helps to gain information); Advertising (The approach to find
potential channel members to publish advertisements in trade journals); Trade
Shows (Effective way of finding potential channel members)
(2) Selection Criteria for channel members: After identifying the needs of
customers to be fulfilled, the type of channel structure is determined. For the
selection of intermediaries there are two major criteria • The intermediaries must
have a good knowledge of market. • The market Coverage
58
(3) Finalising the Channel Members • A selection process is a mutual decision of
two parties. It is not only the manufactures who is involved in the selection process
but also the intermediaries at the wholesale and retail levels. • The management
can use various inducements to secure the services of channel members.
2. Training members: The selected intermediaries must be provided effective and
careful training sessions because the intermediaries are considered as the company
by the customers. It is the responsibility of intermediaries to maintain a good and
high image of the company they are representing.
Types of Training for Channel Members: • Field Training • Class Room Training •
Orientation Programs • Training for Paper • Servicing Training
3. Motivating members: • In order to receive the desired results the channel
members must be kept highly motivated. • Channel members can be motivated
through training programs, capacity building programs, promotional support, and
marketing research. • The manufactures use positive motivators like special deals,
high margins, premium , display allowances, Advertising allowances, and sales
contests. • The manufacturers also use negative ways like threaten to reduce
margins or terminate the relationship.
4. Evaluating, controlling channels: The evaluation of channel members is
crucial for determining the retention, training, and motivation decisions. Through
evaluation necessary information regarding the channel member is attained. It is
essential to evaluate the performance of the channel member on periodic basis
because a channel member may have been efficient earlier, but may not be
performing well in the present scenario.
5. Managing conflicts: Various members of the distribution channel set goals that
they want to achieve. Channel conflicts occur when one member of the distribution
channel perceives that some other member is preventing the first member from
achieving its goals. The intensity of conflict can range from occasional, minor
59
disagreements that are quickly forgotten, to major disputes that fuel continuous
bitter relationships.
6. Adjusting channels: it becomes necessary for a company to keep modifying
and adjusting the marketing channels as per the changing needs of the market.
Some of the major factors are changes in customer preference, competition, market
share, and environment factors

23. Channel conflicts, Horizontal conflicts, Vertical conflicts, Multichannel

conflicts
- Physical distributors, and dealers in goods and services that are more
conveniently ordered and/ or delivered online are indeed subject to increasing
pressure from e-commerce. This disintermediation process, with increasing direct
sales through the internet, leads manufaturers to compete with their resellers,
which may also result in channel conflicts.
- So, channel conflict is the disagreement among marketing channel members on
goals and roles- who should do what and for what rewards. A significant threat
arising from the introduction of an internet channel is that, while disintermediation
gives the opportunity for a company to sell direct and increase the profitability of
products, it also threatens distribution arrangements with existing partners.
- Horizontal and vertical marketing conflicts involve disagreements among
businesses in a marketing channel.
- A horizontal conflict refers to a disagreement among two or more channel
members at the same level. For example, a conflict between 2 distributors or a
conflict between 2 retailers is known as horizontal channel conflict. Another
example, suppose a toy manufacturer has deals with two wholesalers, each
contracted to sell products to retailers in different regions. If one wholesaler
decides to branch its operations into the other wholesaler’s region, a conflict will
60
result. If the toy manufacturer doesn't help solve the problem, its business dealings
with both the wholesalers – and the downstream retailers, as well – might be in
jeopardy.
- Vertical conflicts involve a disagreement between two channel members on
consecutive levels, or at different levels of the channel—say, a manufacturer, an
agent, a wholesaler, or a retailer. For example, if the toy manufacturer discovers its
products are arriving at retail stores later than scheduled, a conflict might develop
between the manufacturer and the wholesaler responsible for shipping to retailers.
At the same time, the retail stores might be in conflict with the wholesaler due to
its inability to ship products on time.
- Multichannel conflicts refer to disagreements among members in separate
marketing channels. Multichannel conflict occurs when a manufacturer has
established two or more channels that compete against each other for sales of the
same brands/products to the same market. While neither strictly horizontal nor
vertical, these conflicts can affect all members of every channel.
Example, a manufacturer may be selling their products direct-to-consumer (D2C),
while also selling to a wholesaler/retailer. This creates conflict because the
manufacturer and retailer may be selling the products to the same markets, but at
different prices. For instance, suppose the toy manufacturer participates in two
marketing channels. In the first channel, the manufacturer sells its products directly
to consumers via its official website. In the second channel, the manufacturer sells
its products to wholesalers for resale to retailers. If the toy manufacturer’s website
sells the products for much lower prices than retail stores, sales in the second
channel will plummet. The resulting conflict will require some solution that works
for both channels.

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24. What is integrated marketing communication strategy? List and briefly
describe the major promotion mix tools
- Intergrated marketing communications: A comprehensive plan that evaluates the
strategic roles of a variety of communication disciplines and combines these
disciplines to provide clarity, consistency , and maximum communication impact.
- The major promotion mix tools:
1. Advertising:
Advertising is defined as any paid form of non-personal presentation and
promotion of ideas, goods, and services by an identified sponsor. It is a way of
mass communication. It is the most popular and widely practiced tool of market
promotion. Major part of promotional budget is consumed for advertising alone.
Various advertising media – television, radio, newspapers, magazines, outdoor
means and so forth – are used for advertising the product.
2. Sales Promotion:
Sales promotion covers those marketing activities other than advertising, publicity,
and personal selling that stimulate consumer purchasing and dealer effectiveness.
Sales promotion mainly involves short-term and non-routine incentives, offered to
dealers as well consumers. The popular methods used for sales promotion are
demonstration, trade show, exhibition, exchange offer, seasonal discount, free
service, gifts, contests, etc.
3. Personal Selling:
Personal selling includes face-to-face personal communication and presentation
with prospects (potential and actual customers) for the purpose of selling the
products. It involves personal conversation and presentation of products with
customers. It is considered as a highly effective and costly tool of market
promotion.
4. Publicity:
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Publicity is also a way of mass communication. It is not a paid form of mass
communication that involves getting favourable response of buyers by placing
commercially significant news in mass media.
5. Public Relations:
The public relations is comprehensive term that includes maintaining constructive
relations not only with customers, suppliers, and middlemen, but also with a large
set of interested publics. Note that public relations include publicity, i.e., publicity
is the part of public relations.

25. Name and briefly describe the nine elements of the communications
process. Discuss steps in developing effective marketing communications
* Element of Marketing Communication Process
For Effective Communication, the marketer should know how communication
works? Following are the nine elements that are involved in the marketing
communication process.
 Sender: The party or person who is sending the message to the other party
or person is the sender.
 Encoding: The conversion of thought into the meaningful symbols is called
encoding.
 Message: The group of symbols transmitted by the sender is called a
message.
 Media: The channel of communication through which transfers the message
from sender to receiver is called media.
 Decoding: The conversion of symbols into meaning by the receiver is called
decoding.
 Receiver: The sent message received by another person or party is called the
receiver.
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  Response: The reaction shown by the receiver before the message is called
response.
 Feed Back: The portion of the response of the receiver that is sent back to
the sender is called feedback.
 Noise: The unplanned distortion during the process of communication due to
which the receiver understands the wrong meaning of the original message is
called noise.
The effective message is that where the process of encoding is matched with the
decoding of messages. Moreover, the message sent should consist of words and
symbols that are known to the receiver.

Marketing Communication Process Steps

There are certain steps that should be involved in the effective marketing
communication process. The marketing and promotional activities should focus on
these steps in order to attract a huge portion of long run customers. Following are
the steps that make the communication process effective.
 Identification of the Target Audience: The first step in the effective
marketing communication process is to identify the target audience. So these
audiences may be potential customers or other people that can influence the
decisions of these customers. The audience may include the individuals,
groups, general public or special public. Moreover the audience has a direct
effect on the decisions of the communication, like what to say? How to say?
And when to say? Etc.
 Determination of the Communication Objectives: In this step the
marketing communicator should clear the objectives of the communication
process. In most of the situations, the purchase is required by the marketing
communicator. However purchase is made after a prominent customer
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 decision making process. The communicators should also understand the
standing position of the customer. Generally there are six Stages of
Customer Readiness through which a customer passes to make a purchase
which are as follows.
 Awareness
 Knowledge
 Liking
 Preference
 Conviction
 Purchase
The target group of the marketing communicator is not much familiar with
the new product or its salient features. So the marketing communicator
should create the awareness and knowledge of its new product and features.
However this is not the surety to the success; the new product should also
provide superior customer value too.
 Designing of the Message: In this step the marketing communication
communicator focuses upon the design of the message. So any message that
can attract the attention, develop the interest, arousal of desire and stimulate
the action is the effectively designed message. Hence this procedure is best
known as the AIDA model that can make any message effective and
potential. Besides this the marketing communicator also decides about the
content and structure of the message.
 Select the Communications Channels: Selecting an efficient means to
carry the message becomes more difficult as channels of communication
become more fragmented and cluttered. Communications channels may be
personal and non-personal. Within each are many subchannels.

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 Establish the Total Marketing Communications Budget: One of the most
difficult marketing decisions is determining how much to spend on
marketing communications. John Wanamaker, the department store
magnate, once said: “I know that half of my advertising is wasted, but I
don’t know which half.” Industries and companies vary considerably in how
much they spend on marketing communications. Expenditures might be 40
percent to 45 percent of sales in the cosmetics industry, but only 5 percent to
10 percent in the industrial-equipment industry. Within a given industry,
there are low- and high-spending companies.
 Decide on media mix: Companies must allocate the marketing
communications budget over the eight major modes of communication—
advertising, sales promotion, public relations and publicity, events and
experiences, direct marketing, interactive marketing, word-of-mouth
marketing, and the sales force. Within the same industry, companies can
differ considerably in their media and channel choices. Companies are
always searching for ways to gain efficiency by substituting one
communications tool for others. Many are replacing some field sales activity
with ads, direct mail, and telemarketing. One auto dealer dismissed his five
salespeople and cut prices, and sales exploded. The substitutability among
communications tools explains why marketing functions need to be
coordinated.
 Measure results: Senior managers want to know the outcomes and revenues
resulting from their communications investments. Too often, however, their
communications directors supply only inputs and expenses: press clipping
counts, numbers of ads placed, media costs. In fairness, communications
directors try to translate inputs into intermediate outputs such as reach and
frequency (the percentage of target market exposed to a communication and
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 the number of exposures), recall and recognition scores, persuasion changes,
and cost-per-thousand calculations. Ultimately, behavior-change measures
capture the real payoff. After implementing the communications plan, the
communications director must measure its impact. Members of the target
audience are asked whether they recognize or recall the message, how many
times they saw it, what points they recall, how they felt about the message,
and what are their previous and current attitudes toward the product and the
company. The communicator should also collect behavioral measures of
audience response, such as how many people bought the product, liked it,
and talked to others about it.
 Manage integrated marketing communications: Many companies still
rely on only one or two communication tools. This practice persists in spite
of the fragmenting of mass markets into a multitude of mini markets, each
requiring its own approach; the proliferation of new types of media; and the
growing sophistication of consumers. The wide range of communication
tools, messages, and audiences makes it imperative that companies move
toward integrated marketing communications. Companies must adopt a
“360-degree view” of consumers to fully understand all the different ways
that communications can affect consumer behavior in their daily lives.
Media companies and ad agencies are expanding their capabilities to offer
multiplatform deals for marketers. These expanded capabilities make it
easier for marketers to assemble various media properties—as well as
related marketing services - in an integrated communication program.

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26. Explain how companies have direct contacts with international customers.
Compare and contrast push and pull promotion strategies. Which promotion
tolls are most effective in each? Discuss how companies should do when
sending direct mail to international customers. Give examples
(Slide 7 chap 7)
1) Sender:
It refers to the marketing firm which is conveying the message.
2) Encoding:
Before a message can be sent, it has to be encoded. Putting thoughts, ideas, or
information into a symbolic form is termed as encoding. Encoding ensures the
correct interpretation of message by the receiver, who is often the ultimate
customer.
3) Message:
A message may be verbal or non-verbal, oral, written, or symbolic. A message
contains all the information or meaning that the sender aims to convey. A message
is put into a transmittable form depending upon the channels of communication.
4) Medium:
The channel used to convey the encoded message to the intended receiver is
termed as medium. The medium can be categorized in the following manner:
i) Personal:
It involves direct interpersonal (face-to-face) contact with the target group.
ii) Non-Personal:
These are channels which convey message without any interpersonal contact
between the sender and the receiver.
The non-personal channels of communication may further be broadly classified as
follows:
a) Print Media:
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Newspapers, magazines, direct mails, etc.
b) Electronic Media:
Radio and Television.
5) Decoding:
It is the process of transforming the sender’s message back into thought. Decoding
is highly influenced by the self-reference criteria (SRC), which is unintended
reference to one’s own culture
6) Receiver:
It is the target audience or customers who receive the message by way of reading,
hearing, or seeing. A number of factors influence how the message is received.
These include the clarity of message, the interest generated, the translation, the
sound of words, and the visuals used in the message
7) Noise:
The unplanned distortions or interference of die message is termed as ‘noise.’ A
message is subjected to a variety of external factors that distort or interfere, its
reception.
8) Feedback:
In order to assess the effectiveness of the marketing communication process,
feedback from the customers is crucial. The time needed to assess the
communication impact depends upon the type of promotion used. For instance, an
immediate feedback can be obtained by personal selling, whereas it takes much
longer time to assess the communication effectiveness in case of advertisements

Compare and contrast push and pull strategy

PUSH STRATEGY PULL STRATEGY
BASIS FOR
COMPARISIO

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 N

Push strategy is a strategy thatPull strategy is a strategy

involves direction of that involves promotion of
Meaning
marketing efforts to channel marketing efforts to the
partners final consumers
A strategy in which
A strategy in which third party customers demand
What is it?
stocks company’s product company’s product from
seller
To make customer aware of To encourage customer to
Objective
the product or brand seek the product or brand,
Advertising, promotion and
Sales force, Trade promotion,
Uses other forms of
money
communication
Emphasis on Resource Allocation Responsiveness
When the brand loyalty is
Suitability When the brand loyalty is low
high
Lead time Long Short

Push strategy: In this strategy, the company takes their product to the customers,
who are neither aware of it nor seeking it but the product is introduced to them,
through various promotional activities.
The strategy uses trade show promotion, the point of sale display, direct selling,
advertisement on radio, television, emails etc. to make an impact on consumers
mind and reducing the time between discovery of product and purchasing it.
Pull strategy: the consumer demands are intensified by directing marketing
strategies on them, which results in the ‘pulling’ of products. Pull strategy uses
methods like social networking, blogging, word of mouth, strategic placement of a
product, media coverage and so on, for reaching a large audience.
When to use each strategy?
Push promotional strategies work well for lower cost items, or items where
customers may make a decision on the sopt. New business uses push strategy to

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develop retail markets for its product and to generate exposure. Once a product is
already in stores, a pull strategy creates additional demand for the product. Pull
strategies work with highly visible brands, or where there is good brand awareness.
This is usually developed through advertising,
Pull marketing is often the primary business strategy for companies looking to:
 Ensure long-term business growth
 Maintain dominance in a specific niche or industry
 Build a return customer base or improve loyalty
 To promote brand recognition with customer engagement and visibility
 Increase social media traffic as well as social media sharing
 Grow traffic to their site across organic, referral, and social segments
 Improve sales and revenue affordably, without an expensive ad budget
 Engage with customers before they know what they want, at the top of their
shopping funnel
Instances where push marketing can be helpful include:
 When launching a new business or website without a reputation
 When releasing new products
 During holidays, or seasonal events
 For sales and temporary promotional campaigns
 When expanding to a new niche
 To generate cash-flow or sales quickly
 To help clear out product stock before the end of a season
 To help promote brand recognition when competing against a dominant
competitor
 Just in general, when trying to subsidize a multi-channel strategy

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The truth is that businesses find the best success when they focus on a multi-
channel, multi-strategy approach in both push and pull. These two broad categories
are simply too important to focus on just one. Therefore, companies should look at
a lot of sides to choose the promotion strategies which is better.

How to send a direct mail to international customer?

There are plenty of ways to show the recipient of your direct mail how much
thought you put into your send.
If it’s a one-to-one direct mail send, take the time to research your recipient. Are
they active on social media? Find out what their interests are and try to align your
direct mail with one of those! Did they recently have a baby? Are they a dog lover?
Are they always traveling? Are they a huge basketball or football fan? Send them
something you feel will actually add value in their personal or professional lives.
For direct mail personalization on a mass scale, your campaign still has the power
to be effective. Make sure the item you’re sending is useful and practical. To keep
your gift relevant, try breaking your customers up into groups based on their
profession and send them something that will help make their day easier. For
example, if a portion of your customers are field marketers, a high-end water bottle
is a great idea for keeping them hydrated during long hours at a conference booth.
Or, test out sending out items applicable to where your customers live like nice
branded sunglasses for customers living in Florida, or fuzzy socks for customers in
the Northeast.
Hint: Always include a handwritten note addressed specifically to every single
recipient. Explain why you’re sending your item, what value you hope it can bring
to your customer, and how much you appreciate them doing business with you.
(Save yourself the hand-cramping. We’re happy to help you write all those notes.)

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Next comes the packaging. For packaging, what’s on the outside does indeed
count. Thinking literally “outside the box” can make a great impression, impact
your company’s perceived value, and set your brand apart from other sends that
may float across your customers’ desks. Don’t just use a white envelope or
standard brown box. Enhance your package either with things like unique logo
designs, custom patterns, and taping, or brightly colored crinkle paper.
This added step will definitely resonate with customers. People appreciate these
small but memorable gestures, and in turn, will feel valued and learn to trust your
brand. The more you can engage with your customers on a human (and by that we
mean “friendly and casual”) level, the more they’ll look forward to communicating
with you instead of thinking of your outreach as pushy pitch materials.
Earth Hour Candle campaign
The Earth Hour Candle campaign was created especially for direct mail marketing.
The campaign aimed to raise awareness about how much energy we waste when
we leave the lights on overnight and encouraged the companies and businesses to
turn off their office lights. The candle was sent to CEOs and industry leaders and
when pulled out of the box, (cut out to resemble an office building) would imitate
switching off the lights. It was a success with rates of the “switch off” going up by
260%.

27. Why should Vietnamese companies participate in international trade

fairs? Discuss factors that Vietnamese companies should study when
participating trade fairs
Why go to trade show?
Major objectives are; building awareness, introducing new products, reach
customers cost effectively, generate additional sales, and gain information about
competitors.
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More customers, less time: A perfect opportunity to network, discover clients, and
generate new leads, trade shows serve as a specialized marketing tool designed to
accelerate relationship building and sales by linking buyers, sellers, and other
stakeholders from common industries.
Personal contact and receptivity: Live shows allow sellers to appeal to all a buyers
senses when showcasing products or services and highlighting competitive
advantages. The nature of a trade show provides a unique opportunity for the direct
personal contact critical for building confidence and closing a sale. Buyers
themselves are in an ideal state of receptivity as they are actively looking to take
advantage of having multiple vendors in one place. They want to pose questions.
They want to physically examine and experience both products and the people
behind them. Shows can also be an excellent way to impress and attract investors
or reconnect with existing clients, and maintain a positive image.

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Study your market: consumers, competitors, and innovation: Simply being present
is often a cost-effective way to perform market research, stay informed on industry
trends, and check out the competition up close. It is also common for fairs to
include workshops, trainings, seminars, trade talks, and other activities geared
towards expanding the skills, capacity, and knowledge of participants. If you’re not
ready for the investment involved in hosting a full exhibition, registering as an
attendant will still give you the opportunity to make contacts and gather market
intelligence.

Factors that Vietnamese companies should study when participating trade

fairs
 Considering the time and cost aspects of a trade show, it is important to use
both time and money as efficient as possible
 Selecting an exhibition appropriate for your organization It is important to
attend trade shows that matches your organizations business. This way you
will most likely get in touch with your desired audience.
 Build a strategy and set objectives. The organization must set up goals and
plan the exhibition well for a successful trade show. It is important to set up
goals so the staff at the exhibition is striving to achieve the same goals.
 Choosing the right staff for your exhibition. It is of great importance to staff
your booth with the persons that are most appropriate for the job. If your
booth has attracted potential customers, it is up to these people to keep them
interested and gradually selling your product to them. Visitors will not only
remember the look of the booth, but also the staff. Therefore, the behaviour
and appearance of the staff is very important.
 Targeting the marketing. When contacting your desired visitors before the
trade show, and informing them about where you will be located and what
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 you will be demonstrating etc., the chance of them visiting your booth will
increase.
 Pre-show communication with first time visitors. Many people visiting the
trade show will be first-timers, which is a great opportunity for the
organization. By targeting this group, you do not only assist them at their
first visit at a trade show, but also increase the chance they will visit your
booth. This can be done by advertising in pre-show sources, such as
Facebook- pages. Pre-show communication is related to targeting the
marketing as mentioned above.

28. Name and describe the common methods for setting promoting budgets.
What are the key drivers that today’s marketer has to understand in
planning, executing, managing, and evaluating integrated marketing
communication plans for the international markets
Methods for setting promoting budgets
(1) Percentage of Sales Method
Due to its simplicity, the percentage of sales method is the most commonly used by
small businesses. Under this method,promotion expenditure is determined as a
percentage of sales . It might be safer for a small business to use this method if the
ownership feels that future returns cannot be safely anticipated. On the other hand,
an established business, with well-established profit trends, will tend to use
anticipated sales when figuring advertising expenditures. This method can be
especially effective if the business compares its sales with those of the competition
(if available) when figuring its budget.
The advantages of percentage of sales method are
First, expenditure on advertising is closely related to the sales. So, the company
can easily afford to spend a specified percentage of sale on promotion.
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Second, this method facilitates an analysis of the relationship among promotion
cost and selling price per unit.
Third, this method ensures stability when competitors are also spending the same
percentage of sales on promotion.
(2) Objective and Task Method
Because of the importance of objectives in business, the task and objective method
is considered by many to make the most sense and is therefore used by most large
businesses. The benefit of this method is that it allows the advertiser to correlate
advertising expenditures with overall marketing objectives. This correlation is
important because it keeps spending focused on primary business goals.
With this method, a business needs to first establish concrete marketing objectives,
often articulated in the "selling proposal," and then develop complementary
advertising objectives articulated in the "positioning statement." After these
objectives have been established, the advertiser determines how much it will cost
to meet them. Of course, fiscal realities need to be figured into this methodology as
well. Some objectives (expansion of area market share by 15 percent within a year,
for instance) may only be reachable through advertising expenditures beyond the
capacity of a small business. In such cases, small business owners must scale down
their objectives so that they reflect the financial situation under which they are
operating.
(3) Competitive Parity Method
Under this method, if a business is aware of how much its competitors are
spending to advertise their products and services, the business may wish to budget
a similar amount on its own advertising by way of staying competitive. This
method follows the policy of the competitors in respect of promotion budget.
Since the promotion budget of one firm is in parity with the competitor, promotion
war is avoided. However, this method has certain limitations. There is no assurance
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that competitors’ promotion budget represents collective wisdom of the industry.
Companies vary in reputation, resources, objectives and opportunities. So, the
promotion budget appropriate to one firm may not be appropriate to the other.
(4) All you can afford
Common to many businesses, the all-you-can-afford budgeting method allows
money to be spent on promotion only after all other budget items—such as
manufacturing costs—are covered.

The key drivers that today’s marketer has to understand in planning,

executing, managing, and evaluating integrated marketing communication
plans for the international markets
Because media costs are high, today’s marketer must be made carefully, using a
systematic approach. Paralleling the planning, implementation, and evaluation
steps
described in the strategic marketing process, the promotion decision process is
divided into (1) developing, (2) executing, and (3) assessing the promotion
program.

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Development of the promotion program focuses on the four Ws:
 Who is the target audience?
 What are (1) the promotion objectives, (2) the amounts of money that can be
budgeted for the promotion program, and (3) the kinds of promotion to use?
 Where should the promotion be run?
 When should the promotion be run?
DEVELOPING AN IMC PROGRAM
Identifying the Target Audience
The first step in developing the promotion program involves identifying the target
audience, the group of prospective buyers toward which a promotion program will
be directed. To the extent that time and money permit, the target audience for the
promotion program is the target market for the firm’s product, which is identified
from primary and secondary sources of marketing information. The more a firm
knows about its target audience—including demographics, interests, preferences,
media use, and purchase behaviors—the easier it is to develop a promotional
program. A firm might use a profile based on gender, age, and income, for
example, to place ads during specific TV programs or in particular magazines.
Similarly, a firm might use behavioral targeting—collecting information about
your web-browsing behavior to determine the banner and display ads that you will
see as you surf the Web.
Specifying Promotion Objectives
After the target audience has been identified, a decision must be reached on what
the
promotion should accomplish. Consumers can be said to respond in terms of a
hierarchy of effects, which is the sequence of stages a prospective buyer goes
through from initial awareness of a product to eventual action (either trial or
adoption
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of the product).The five stages are:
 Awareness—the consumer’s ability to recognize and remember the product
or brand name.
 Interest—an increase in the consumer’s desire to learn about some of the
features of the product or brand.
 Evaluation—the consumer’s appraisal of the product or brand on important
attributes.
 Trial—the consumer’s actual first purchase and use of the product or brand.
 Adoption—through a favorable experience on the first trial, the consumer’s
repeated purchase and use of the product or brand.
For a totally new product, the sequence applies to the entire product category, but
for a new brand competing in an established product category, it applies to the
brand
itself. These steps can serve as guidelines for developing promotion objectives.
Although sometimes an objective for a promotion program involves several steps
in
the hierarchy of effects, it often focuses on a single stage. Regardless of what the
specific objective might be, from building awareness to increasing repeat
purchases, promotion objectives should possess three important qualities. They
should (1) be designed for a well-defined target audience, (2) be measurable, and
(3) cover a specified time period.
Setting the Promotion Budget
After setting the promotion objectives, a company must decide how much to
spend. Determining the ideal amount for the budget is difficult because there is no
precise way to measure the exact results of spending promotion dollars. However,
several methods can be used to set the promotion budget.

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  Percentage of sales. In the percentage of sales budgeting approach, the
amount of money spent on promotion is a percentage of past or anticipated
sales. A common budgeting method, this approach is often staged in terms
such as “our promotion budget for this year is 3 percent of last year’s gross
sales.” See the Using Marketing Dashboards box for an application of the
promotion-to-sales ratio to the soft-drink industry.
 Competitive parity. Competitive parity budgeting matches the competitor’s
absolute level of spending or the proportion per point of market share.
 All you can afford. Common to many businesses, the all-you-can-afford
budgeting method allows money to be spent on promotion only after all
other budget items—such as manufacturing costs—are covered.
 Objective and task. The best approach to budgeting is objective and task
budgeting, whereby the company (1) determines the promotion objectives,
(2) outlines the tasks to accomplish those objectives, and (3) determines the
promotion cost of performing those tasks.
Of the various methods, only the objective and task method takes into account
what
the company wants to accomplish and requires that the objectives be specified.
Selecting the Right Promotional Tools
Once a budget has been determined, the combination of the five basic IMC tools—
advertising, personal selling, sales promotion, public relations, and direct
marketing—can be specified. While many factors provide direction for selection of
the appropriate mix, the large number of possible combinations of the promotional
tools means that many combinations can achieve the same objective. Therefore, an
analytical approach and experience are particularly important in this step of the
promotion decision process. The specific mix can vary from a simple program
using a single tool to a comprehensive program using all forms of promotion.
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Designing the Promotion
The central element of a promotion program is the promotion itself. Advertising
consists of advertising copy and the artwork that the target audience is intended to
see or hear. Personal selling efforts depend on the characteristics and skills of the
salesperson. Sales promotion activities consist of the specific details of
inducements such as coupons, samples, and sweepstakes. Public relations efforts
are readily seen in tangible elements such as news releases, and direct marketing
actions depend on written, verbal, and electronic forms of delivery. The design of
the promotion will play a primary role in determining the message that is
communicated to the audience. This design activity is frequently viewed as the step
requiring the most creativity. In addition, successful designs are often the result of
insight regarding consumers’ interests and purchasing behavior. All of the
promotion tools have many design alternatives. Advertising, for example, can
utilize fear, humor, attractiveness, or other themes in its appeal. Similarly, direct
marketing can be designed for varying levels of personal or customized appeals.
One of the challenges of IMC is to design each promotional activity to
communicate the same message.
Scheduling the Promotion
Once the design of each of the promotional program elements is complete, it is
important to determine the most effective timing of their use. The promotion
schedule describes the order in which each promotional tool is introduced and the
frequency of its use during the campaign. The scheduling of the various
promotions was designed to generate interest, bring consumers into theaters, and
then encourage additional purchases after seeing the movie. Several factors such as
seasonality and competitive promotion activity can also influence the promotion
schedule. Businesses such as ski resorts, airlines, and professional sports teams are
likely to reduce their promotional activity during the offseason. Similarly,
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restaurants, retail stores, and health clubs are likely to increase their promotional
activity when new competitors enter the market.
EXECUTING AND ASSESSING THE PROMOTION PROGRAM
The ideal execution of a promotion program involves pretesting each design before
it is actually used to allow for changes and modifications that improve its
effectiveness. Similarly, posttests are recommended to evaluate the impact of each
promotion and the contribution of the promotion toward achieving the program
objectives. The most sophisticated pretest and posttest procedures have been
developed for advertising. Testing procedures for sales promotion and direct
marketing efforts currently focus on comparisons of different designs or responses
of different segments. To fully benefit from IMC programs, companies must create
and maintain a test-result database that allows comparisons of the relative impact
of the promotional tools and their execution options in varying situations.
Information from the database will allow informed design and execution decisions
and provide support for IMC activities during internal reviews by financial or
administrative personnel.
Carrying out the promotion program can be expensive and time-consuming.
An important factor in developing successful IMC programs is to create a process
that facilitates their design and use. A tool used to evaluate a company’s current
process is the IMC audit. The audit analyzes the internal communication network
of the company; identifies key audiences; evaluates customer databases; assesses
messages in recent advertising, public relations releases, packaging, websites, e-
mail and social media communication, signage, sales promotions, and direct mail;
and determines the IMC expertise of company and agency personnel. This process
is becoming increasingly important as consumer-generated media such as blogs,
RSS, podcasts, and social networks become more popular and as the use of search
engines increases. Now, in addition to ensuring that traditional forms of
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communication are integrated, companies must be able to monitor consumer
content, respond to inconsistent messages, and even answer questions from
individual customers.

What is the role of people when making decisions in international marketing?

An organization can have many different managers, across a variety of titles,
authority levels, and levels of the management hierarchy that we illustrated below.
1. Administrative, Managerial, or Top Level of Management
This level of management consists of an organization’s board of directors and the
chief executive or managing director. It is the ultimate source of power and
authority, since it oversees the goals, policies, and procedures of a company. Their
main priority is on the strategic planning and execution of the overall business
success.
The roles and responsibilities of the top level of management can be summarized
as follows:
 Laying down the objectives and broad policies of the business enterprise.
 Issuing necessary instructions for the preparation of department-specific
budgets, schedules, procedures, etc.
 Preparing strategic plans and policies for the organization.

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  Appointing the executives for middle-level management, i.e. departmental
managers.
 Establishing controls of all organizational departments.
 Since it consists of the Board of Directors, the top management level is also
responsible for communicating with the outside world and is held
accountable towards an organization’s shareholders for the performance of
the enterprise.
 Providing overall guidance, direction, and encouraging harmony and
collaboration.
2. Executive or Middle Level of Management
The branch and departmental managers form this middle management level. These
people are directly accountable to top management for the functioning of their
respective departments, devoting more time to organizational and directional
functions. For smaller organizations, there is often only one layer of middle
management, but larger enterprises can see senior and junior levels within this
middle section.

The roles and responsibilities of the middle level of management can be

summarized as follows:
 Executing the plans of the organization in accordance with the policies and
directives laid out by the top management level.
 Forming plans for the sub-units of the organization that they supervise.
 Participating in the hiring and training processes of lower-level
management.
 Interpreting and explaining the policies from top-level management to
lower-level management.

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  Sending reports and data to top management in a timely and efficient
manner.
 Evaluating the performance of junior managers.
 Inspiring lower level managers towards improving their performance.
3. Supervisory, Operative, or Lower Level of Management
This level of management consists of supervisors, foremen, section officers,
superintendents, and all other executives whose work must do largely with HR
oversight and the direction of operative employees. Simply put, managers at the
lower level are primarily concerned with the execution and coordination of day-to-
day workflow that ensure completion of projects and that deliverables are met.
The roles and responsibilities of the lower level of management can be
summarized as follows:
 Assigning jobs and tasks to various workers.
 Guiding and instructing workers in day-to-day activities.
 Overseeing both the quality and quantity of production.
 Maintaining good relations within lower levels of the organization.
 Acting as mediators by communicating the problems, suggestions, and
recommendatory appeals, etc. of workers to the higher level of management,
and in turn elucidating higher-level goals and objectives to workers.
 Helping to address and resolve the grievances of workers.
 Supervising and guiding their subordinates.
 Taking part in the hiring and training processes of their workers.
 Arranging the necessary materials, machines, tools, and resources, etc.
necessary for accomplishing organizational tasks.
 Preparing periodical reports regarding the performance of the workers.
 Upholding discipline, decorum, and harmony within the workplace.

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 Improving the enterprise’s image as a whole, due to their direct contact with
the workers.

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