Individual Assignment on Advanced Marketing Management

Deadline: July 20/2020

Instruction; Answer the following Question in a very short and précised way?
1. Taking Mekelle city, What things do you think can be marketed? Explain with sufficient
explanations.

Almost anything can be marketed such as, Goods, Services, Events, Experiences, People, Places,
Information and Ideas. For example, when looking at a city like Mekele in in Tgray, the most
marketable aspect would be the city's tourism. The overall objective of this would be to greatly
grow or improve the businesses within the city via tourism/ destination marketing. Being that
there are a lot of gorgeous attractions inside the city that potential visitors aren't quite aware of, it
poses as Mekele's strengths as a tourist destination and it would be best to employ tourism
marketing strategies that utilizes specific plans and techniques to promote touristic products and
services such as destinations, hotels and transport services to promote growth within the multiple
businesses in the city. 

2. By taking five business organizations, show the six market segmentation steps for each
business organization’s products.

A high-end jewellery store and/or a software-selling company segmenting by Demographic

(Age, Gender, Occupation, Income, Family status, Education)

Demographic is one of the most common segmentation types used in market research (alongside
geographic). It is simple to use and understand, is readily accessible through common data
gathering methods, and it can eliminate irrelevant audience segments quickly and easily. For
Example;-

A high-end jewellery store segments their audience by high household income. This focus
ensures they don’t waste valuable resources on targeting an audience that wouldn’t be interested
in their products.

Meanwhile, a software-as-a-service company that sells software to research firms segments their
target audience by role hierarchy. This gives them the opportunity to create marketing campaigns
that resonate with relevant decision makers in their audience.
MNC Company’s segmenting by Geographic

Geographic segmentation splits your audience depending on where they are located.

For example: Continent, Country, Region, City, and Borough/District. The fact that nearly every
business will have some kind of geographical information on their customers (obtained through
address submissions for newsletters, coupons, apps, in-house services, etc) also makes this one
of the easiest to implement as well. Example A large business with international holdings
segments by geography to get a clearer picture on its audience volumes in the United States
versus the United Kingdom.

A retailer segments by Psychographic

Psychographic segmentation separates your audience by their personality such as, their
Interests, Attitudes, Values, Lifestyle etc.

This can be especially useful for businesses which sell a product or service that will make an
impact on people with specific world views or ideas. For example, a retailer segments their data
by the value of “budget-consciousness”, separating those among their audience who consider
themselves particularly frugal from those who are less concerned about how much they spend.

A local restaurant business segments by Behavioral

Behavioral segmentation divides your audience by their previous behavior in relation to your
brand. For example: Awareness of the business, Previous purchases, Purchase patterns, Usage
level, Product knowledge, Product/service rating. In this regard, a local restaurant segments its
audience data by purchase patterns, specifically when the purchase was made. This allows it to
investigate its lunch-time audience compared to its dinner-time audience. By comparing the
difference in the type of meals purchased between each of these times, the restaurant is able to
create a new lunch and dinner menu that better suits its individual groups of customers.

A food manufacturing business segment’s by Needs-based

Needs-based segmentation groups your audience by similar needs and/or benefits a particular
group is seeking. Needs-based segments have four broad categories: Problem-solving needs,
Functional needs, Emotional needs and Value alignment. In many cases, a needs-based segment
will fall into multiple categories, so it is important to consider each category and how it might
apply to a particular segment. Example, a food manufacturer segments its audience by those
who purchase its gluten free products. This allows the company to explore how well its gluten
free range solves the need for gluten-free alternatives for people with celiac disease or gluten
intolerance. Surveying this segment reveals that the company’s gluten free products are meeting
this segment's functional needs—i.e. dietary requirements, nutritious, tasty, easy to prepare.
However, the company also discovers that customers in this segment are tired of eating the same
gluten free meals that use their products. As a result, the company creates a series of new recipes
to bring in more meal variety and to help this segment further enjoy the product range.

A clothing chain business segments by Transactional

Transactional segmentation, or RFM modeling, looks at the spending patterns of your customers
to identify who your most valuable customers are and group them by behavior. The model
catalogues customers according to: Recency, Frequency and Monetary. Example, a clothing
chain re-engages their loyalty card customers who haven’t visited one of their stores in the last
six months. By looking at transactional data, they can first identify customers who haven’t
visited in six months, and next segment them according to their RFM behaviours. For example,
customers who visit often, but spend a small amount; customers who visit less frequently, but
spend a lot; and customers who don’t visit often and don’t spend much either. 

From here the company could create tailored promotions aimed specifically at their two most
valuable segments: frequent visitors with low spend (let’s call the Segment A) and the sometimes
visitors with high spend (Segment B). Segment A customers might receive a promotion relating
to the retailer’s accessories, while Segment B might get a promotion showcasing new season
arrivals or more expensive items now on sale.

3. How can companies use packaging, labeling, warranties, and guarantees as marketing tools?
Explain by giving practical examples.

Packaging as a marketing tool: - Factors contributing to growing use of packaging as a

marketing tool are
  Self-service - growing number of products

 Consumer affluence – pay a little more for overall impression

 Company and brand image - Instant recognition Ex: Garnier fructis

 Innovation opportunity – benefit to both consumer and producer

 Resalable spouts and the packaging objectives: 1. Identify the brand. 2. Convey
descriptive and persuasive information. 3. Facilitate product transportation and
protection. 4. Assist at-home storage. 5. Aid product consumption

Labeling as a marketing tool: - Objectives of labeling

 Identifies the product/brand – ex: Arctic apples

 Describes the product – ex: virgin oil, mfg. date etc

 Promotes the product

Warranty as a marketing tool: - Warranties are formal statements of expected product

performance by the manufacturer and legally enforceable. Example a warranty of damage for
2 years is common in Electronic sellouts.

Guarantee as a marketing tool: - uses when the company or product is not well known or •
when the product has superior quality to that of competitors. Because,

 Guarantees reduce the buyer's perceived risk.

 They suggest that the product is of high quality and the company and its service
performance are dependable.

In general, guarantees and warranties increase in sales by promoting the product, win
customer loyalty and good will and helps in creating a brand

4. How do we define and classify services and how do they differ from goods? Explain by
giving practical examples.
 Definition, A service is any act or performance one party can offer to another that is essentially
intangible and does not result in the ownership of anything. In short, It is something which we
do for someone.
Services Classification:- It is possible to carry out a classification of services based on two
general dimensions such as what is being processed, whether is it a person or an object, and
how is it being processed? In other words, what is the nature of the process (tangible or
intangible actions). Classification of services can be done on the basis of two points. These two
points or factors, are further sub divided into 2 further variables. All in all, service classification
considers four types of people or objects.

Classification of service based on tangible action: - Wherever people or products are involved
directly, the service classification can be done based on tangibility.

a) Services for people – Like Health care, restaurants and saloons, where the service is delivered
by people to people.

b) Services for goods – Like transportation, repair and maintenance and others. Where services
are given by people for objects or goods.

Classification of services based on intangibility: - There are objects in this world which cannot
be tangibly quantified. For example – the number of algorithms it takes to execute your banking
order correctly, or the value of your life which is forecasted by insurance agents. These services
are classified on the basis of intangibility.

a) Services directed at people’s mind – Services sold through influencing the creativity of
humans are classified on the basis of intangibility.

b) Services directed at intangible assets – Banking, legal services, and insurance services are
some of the services most difficult to price and quantify.

The most intangible form of service output is represented by information processing. The
customer’s involvement in this type is service is not required. Generally, customers have a
personal desire to meet face to face but there is no actual need in terms of the operational
process. Consultancy services can be an example of this type of services where the relationship
can be built or sustained on trust or telephone contact. However, it is more indicated to have a
face-to-face relationship in order to fully understand the needs of the customer.

A more general classification of services based on the type of function that is provided through
them can be as: Business services, Communication services, Construction and related
engineering services, Distribution services, Educational services, Environmental services,
Financial services, Health-related and social services, Tourism and travel-related services,
Recreational, cultural, and sporting services, Transport services, Other services not included
elsewhere.

Services differ from goods in the following perspectives to the minimum.

Ownership is not transferred:- When buying a service, the service ownership is not transferred
to the end customer. If you buy a car then the car is yours. But if you buy a ticket for an airline,
then the airline is definitely not yours.

Intangibility:- How do you measure service? In a restaurant, the dish can be measured, but the
efforts gone in making the same dish by two different chefs cannot be measured from the
customer end. Same goes for large service corporates like Accenture and Infosys. The time and
effort gone for giving service to the customer is intangible. Both ownership and intangibility are
old school differences between goods and services.

Involvement of customer:- When comparing the difference between goods and services we
have to look at the involvement of customer as well. In services involvement of customers is
much more than in products. For example – ATM’s are services wherein customer has to use the
machine. The same goes for vending machines as well as for self service restaurants. Today ice
cream chains like Hokey pokey and food chain like Subway have more than 50% involvement of
customer where the customer gets to decide the ingredients they want in their ice cream /
Subway sandwich.

Quality:- In case of products, mass manufacturing is common. And mass manufacturing means
uniformity. However, services involve a lot of manual labour due to which the quality may vary
each time. Uniformity in services is a factor which each service owner tries for. For example –
The major challenge of food chains like Subway, Pizza hut and dominos is to give the same
quality over and over again, whereas in local restaurants the quality of food may vary time to
time from the same restaurant.

Evaluation of services is tougher:- As quality varies from time to time and the involvement of
customer is maximum, evaluation of different services becomes tougher. For example – HDFC
has more number of ATM than SBI. Thus we can evaluate that HDFC service is better because
they have more reach to the end customer. But how do we evaluate how a barber cuts your hair.

Inventories are absent: - Production and consumption of services happens at the same time.
This does not mean that the raw material is not present to provide the service. For example in a
restaurant, a dish is made only after you order it. The raw material and the chef might be present.
But the production does not begin unless and until there is a customer to consume the service.

Time is very important in services: - Because inventories are absent in services, and because
production and consumption is at the same time, time is a very important difference between
goods and services. The keyword here is “delay”. There should be no delay in providing the
service. Thus the cab should arrive on time, the food should be prepared by time and the trains
should run on time. Because time is important.

Thus the difference between goods and services is based on many different factors.

5. How do we market services? Explain by giving practical examples.

For successful marketing of services, it is essential to use the marketing tools, especially the
expanded classical marketing mix, in close adjustment to the needs and characteristics of
services. One of the most important challenges for service companies is the task to show
reliability and therewith create trust to balance out the lack of quality guarantee a service has
because of its intangibility. Additionally, due to the already mentioned quality problem and
subjectivity of the customers, a service company is required to deliver a satisfying service
although the expectations and valuations differ depending from the people or the point of time
when the service is fulfilled. To avoid significant differences between the delivered service and
the expectation of the customer, companies have to assure that they do sufficient market research
and optimize the communication with the customers in order to gain information about the
customer’s expectation. This knowledge can then be used to develop and deliver this service
through an adjustment of the different tools of the marketing mix in an appropriate way. Also,
due to the already mentioned fact that the customer is often implemented in the production or
delivery of a service, it is very important to integrate the customer in this process.

Due to the already discussed special characteristics of services Magrath argued that the classical
4 Ps (product, price, place and- promotion)are not enough to cope with marketing of services.
His approach to handle this challenge is the implementation of three additional interconnected Ps
(personnel, physical facilities and process management)

Personnel as the first of the three additional Ps deals with the field of company’s staff. Relating
to newer approaches this field is named as people in this case study. These newer approaches
partly consider the customer in the 7 Ps approach. Physical Facilities are important in two ways
for the actual service: Firstly the visible setting directly affects the perception of the service’s
quality. But secondly, the settings which cannot be seen by the customer are often crucial for the
service. For example, visitors experience Disney World by what they see but the hidden
machinery is essential for the functioning of the whole attractions. Because of the already
described service characteristics like simultaneous production and consumption or the
perishability of services process management is necessary to assure the availability of services in
a consistent quality. Furthermore, without a proper process management it is difficult to balance
service supply and demand.

6. How can we improve service quality? Explain by giving practical examples.

Quality service is a fundamental element of a successful business. But many businesses struggle
to improve service and retain their customers. A bad experience can drive a customer away for
years. But don’t despair! There are several methods to improve quality service at your business,
from having clearly defined and measured service goals and motivating your employees, to using
customer feedback and updating your service tools to better serve your clients.

Periodically by;-
  Motivating Your Employees
 Measuring Customer Service Performance

 Defining Your Service Goals and

 Updating Your Quality Service Tools

Product Marketing and service marketing patterns or techniques are different for both.
Because products are tangible they can be touched, seen, felt, tasted, smelled etc. hence the
marketing techniques for sales of products are different. However marketing techniques
for services are way to different for intangible services because the customer cannot see,
feel, sense, taste or smell services.

7. How do service marketers create strong brands? Explain by giving practical examples.

The branding process is a systematic approach to creating and promoting a firm’s brand. It is
essential to the success of any marketing and business development program. Brand building
consists of five interrelated phases, each building upon the last:

Review Your Unique Selling Differential:- Determine your unique selling differential, which
separates you from the competition and is the basis of your brand. Unique differential can be
price, quality, quick delivery, warranty, customer service, features or the total combination of
these.
Improve Quality: - Simplest ways to improve the value is to improve its quality. This can be
achieved by using better materials or long lasting and economical manufacturing. Meeting with
the staff, surveying customers and talking vendors and suppliers about how one can improve the
quality.
Reduce Price:- To improve your value, decrease your price. This can be done by lowering the
sales price, offering a discount on multiple purchases or offering a free product after a customer
buys a specific number of products. For example, in exchange for a reduced price, the customers
might need to buy in bulk, reduction in packaging, shipping and other transaction costs might
help.
Increase Customer Service; - The product is more valuable to customers if they can use it with
fewer problems or in multiple ways. This implies that the product value can be increased without
changing it or lowering the prices. This can be achieved by offering free customer support;
providing a detailed frequently asked questions, area on the website; or extending the warranty
period.
8. How can goods marketers improve customer support services? Explain by giving practical
examples.

Identifying & Satisfying Customer Needs;- Downtime: Longer the downtime, higher the cost
borne by customer, Out-of-pocket loss: Amount incurred on regular maintenance and repair. To
provide best support, manufacturers must identify the relative importance customer assigns to
each service.
Facilitating services: installation, staff training, maintenance and repair services.
Value-augmenting services: those that extend beyond the functioning of the product.
Service-contracts: extended warranties at a contract price.
Post Sale Service Strategy: - Quality of customer service departments varies greatly. Some just
forward the call dispassionately while others proactively contact customers to provide service.
Customer Service Evolution Manufacturers usually run their own parts and service department.
They earn profits by selling parts and services at premium prices. Independent service firms also
emerge and offer a low price or faster service.
Increase Customer Service; - The product is more valuable to customers if they can use it with
fewer problems or in multiple ways. This implies that the product value can be increased without
changing it or lowering the prices. This can be achieved by offering free customer support;
providing a detailed frequently asked questions, area on the website; or extending the warranty
period.

9. What types of pricing strategies are there for a marketer? Under what conditions is each
strategy suitable? Explain by giving practical examples.

Here are some of the various strategies that businesses implement when setting prices on their
products and services.

Pricing at a Premium:- With premium pricing, businesses set costs higher than their
competitors. Premium pricing is often most effective in the early days of a product’s life cycle,
and ideal for small businesses that sell unique goods. Because customers need to perceive
products as being worth the higher price tag, a business must work hard to create a value
perception. Along with creating a high-quality product, owners should ensure their marketing
efforts, the product’s packaging and the store’s décor all combine to support the premium price.

Pricing for Market Penetration:- Penetration strategies aim to attract buyers by offering
lower prices on goods and services. While many new companies use this technique to draw
attention away from their competition, penetration pricing does tend to result in an initial loss of
income for the business. Over time, however, the increase in awareness can drive profits and
help small businesses to stand out from the crowd. In the long run, after sufficiently penetrating a
market, companies often wind up raising their prices to better reflect the state of their position
within the market.

Economy Pricing:- Used by a wide range of businesses including generic food suppliers and
discount retailers, economy pricing aims to attract the most price-conscious of consumers. With
this strategy, businesses minimize the costs associated with marketing and production in order to
keep product prices down. As a result, customers can purchase the products they need without
frills. While economy pricing is incredibly effective for large companies like Wal-Mart and
Target, the technique can be dangerous for small businesses. Because small businesses lack the
sales volume of larger companies, they may struggle to generate a sufficient profit when prices
are too low. Still, selectively tailoring discounts to your most loyal customers can be a great way
to guarantee their patronage for years to come.

Price Skimming:- Designed to help businesses maximize sales on new products and services,
price skimming involves setting rates high during the introductory phase. The company then
lowers prices gradually as competitor goods appear on the market.One of the benefits of price
skimming is that it allows businesses to maximize profits on early adopters before dropping
prices to attract more price-sensitive consumers. Not only does price skimming help a small
business recoup its development costs, but it also creates an illusion of quality and exclusivity
when your item is first introduced to the marketplace.
 Psychology Pricing:- With the economy still limping back to full health, price remains a
major concern for American consumers. Psychology pricing refers to techniques that marketers
use to encourage customers to respond on emotional levels rather than logical ones.For example,
setting the price of a watch at $199 is proven to attract more consumers than setting it at $200,
even though the true difference here is quite small. One explanation for this trend is that
consumers tend to put more attention on the first number on a price tag than the last. The goal of
psychology pricing is to increase demand by creating an illusion of enhanced value for the
consumer.

Bundle Pricing:- With bundle pricing, small businesses sell multiple products for a lower rate
than consumers would face if they purchased each item individually. Not only is bundling goods
an effective way of moving unsold items that are taking up space in your facility, but it can also
increase the value perception in the eyes of your customers, since you’re essentially giving them
something for free. Bundle pricing is more effective for companies that sell complimentary
products. For example, a restaurant can take advantage of bundle pricing by including dessert
with every entrée sold on a particular day of the week. Small businesses should keep in mind that
the profits they earn on the higher-value items must make up for the losses they take on the
lower-value product.

10. For each of the selected products of five companies (in above of Chapter-3 Question), apply
the steps of price setting activities

Here are the steps followed by the above listed businesses on how to set a prices

Step 1: Selecting the Pricing Objective

The company first decides where it wants to position its market offering. The clearer a firm’s
objectives, the easier it is to set price. Five major objectives are:

 Survival
 Maximum current profit

 Maximum market share

 Maximum market skimming

  Product-quality leadership

 Step 2: Determining Demand

Each price will lead to a different level of demand and have a different impact on a company’s
marketing objectives. The normally inverse relationship between price and demand is captured in
a demand curve. The higher the price, the lower the demand. Most companies attempt to measure
their demand curves using several different methods.

 Surveys
 Price experiments

 Statistical analysis

Step 3: Estimating Costs

For determination the price of product company should estimate the cost of product.

Variable and Fixed Cost: Price must cover variable & fixed costs and as production increases costs
may decrease. The firm gains experience, obtains raw materials at lower prices, etc., so costs
should be estimated at different production levels.

Differential Cost in Differential Market : Firms must also analyze activity-based cost accounting
(ABC) instead of standard cost accounting. ABC takes into account the costs of serving different
retailers as the needs of differ from retailer to retailer.

Target Costing : Also the firm may attempt Target Costing (TG). TG is when a firm estimates a
new product’s desired functions & determines the price that it could be sold at. From this price
the desired profit margin is calculated. Now the firm knows how much it can spend on
production whether it be engineering, design, or sales but the costs now have a target range. The
goal is to get the costs into the target range.

Step 4: Analyzing Competitors’ Costs, Prices, and Offers

The firm should benchmark its price against competitors, learn about the quality of competitors
offering, & learn about competitor’s costs.

Step 5: Selecting a Pricing Method

Various pricing methods are available to give various alternatives for pricing.

 Markup Pricing: a 20% markup

 Target Return Pricing: this is based on ROI

 Perceived-Value Pricing: buyers perception of the product is key, not cost so what is the
product worth to consumer sets the price.

 Value Pricing: more for less philosophy

 Going Rate Pricing: charge what everyone else is

 Auction-Type Pricing: companies bid prices to get a job

Step 6: Selecting the Final Price

Pricing methods narrow the range from which the company must select its final price. In
selecting that price, the company must consider additional factors.

 Impact of other marketing activities

 Company pricing policies

 Gain-and-risk-sharing pricing

 Impact of price on other parties

11. What is a marketing channel system and value network? Explain by giving practical
examples.

Marketing Channels are set independent organizations participating in the process of making
a product or service available for use. These are PATHWAYS that a product follows to reach
a customer
 A network which creates partnership and value in purchase, production and selling of
products is referred to as value network. Value network looks at the whole supply chain
system players as partners rather than customers. The purpose of value network is to increase
productivity, save cost and increase revenue. Companies are willing to take the procurement
process on online for accuracy and speed. Companies exactly know each partner’s role in
influencing or disrupting normal operations. Examples of Channels Dell (DTC) Avon
Canada Post Grainger (auto parts network) Coca-cola (bottlers) McDonald’s restaurants
(franchisee)

12. What work do marketing channels perform? Explain by giving practical examples.
Intermediaries can make good widely available and accessible to target market, usually offering
the firm more effectiveness and efficiency than it can achieve on its own Many producers lack
the financial resources and expertise to sell directly on their own. It is easier to work with
intermediaries. Channel functions and flows A marketing channel performs the work of moving
goods from producers to consumers. It overcomes the time, place and possession gaps that
separate goods & services from those who want them to those who need them.

Gather information about potential and current customers and other actors in the marketing
environment Develop and disseminate persuasive communications to stimulate purchasing
Negotiate and reach agreements on prices and other terms so that transfer of ownership can be
effective Place orders with manufacturers. Acquire the funds to finance inventories at different
levels in the marketing channel Assume risk connected with carrying out channel work Provide
for successive storage and movement of physical products Provide for buyers’ payment of their
bills and other financial institutions. Oversee actual transfer of ownership from one organization
or person to another.

13. How should channels be designed?

Channel design refers to those decisions that involve in the development of new marketing
channels or modifying the existent ones. The channel design decision can be broken down into
six steps namely:
 Recognizing the need for channel design decision
   Setting and coordinating distribution objectives
  Specify the distribution tasks
    Develop alternative channel structures
 Evaluate relevant variables and
 Choose the best channel structure

14. How should companies integrate channels and manage channel conflict? Explain by giving
practical examples.
An integrated marketing channel system is one in which the strategies and tactics of selling
through one channel reflect the strategies and tactics of selling through one or more other
channels. Adding channels increase
 market coverage
 Second benefit is lower channel cost
 Third is more customized selling, Companies should use different sales for different-
sized business customers: direct sales force for large customers, telemarketing for
midsize customers, distributors for small customers
Whereas, Channel conflict is generated when one channel member’s actions prevent another
channel from achieving its goal, so managing channel conflicts goes via;-
 Joint membership: Marketers can encourage joint memberships in trade associations.
 Dual compensation: It pays existing channels for sales made through new channels.
 Legal recourse: If nothing else proves effective, a channel partner may choose to file a
lawsuit.
 Employee exchange: TO exchange persons between two or more channel levels.
 Strategic justification: A convincing strategic justification serves distinctive segments
and do not compete as much as they think can reduce potential for conflict among
channel members.
 Co-optation: Co-optation is an effort by one organization to win the support of the
leaders of another by including them into advisory councils, board of directors, etc.
 Superordinate goals: Channel members can come to an agreement on the superordinate
goal they are jointly seeking.
 Diplomacy, mediation and arbitration: When conflict is acute, the parties resort to
these stronger means.
15. What are the key issues with e-commerce and m-commerce? Explain by giving practical
examples.
E-commerce is widely considered the buying and selling of products over the internet, but any
transaction that is completed solely through electronic measures can be considered e-commerce.
E-commerce is subdivided into three categories: business to business or B2B, business to
consumer or B2C and consumer to consumer or C2C also called electronic commerce. M-
commerce is a term that is used to refer to the growing practice of conducting financial and
promotional activities with the use of a wireless handheld device. The term m-commerce is short
for mobile commerce, and recognizes that the transactions may be conducted using cell phones,
personal digital assistants and other hand held devices that have operate with Internet access. E-
commerce Security is a part of the Information Security framework and is specifically applied to
the components that affect e-commerce that include Computer Security, Data security and other
wider realms of the Information Security framework. E-commerce security has its own particular
nuances and is one of the highest visible security components that affect the end user through
their daily payment interaction with business. The significant growth of M-commerce application
is remarkable. More and more consumer is transferring to M- commerce to achieve better and
fast transaction into market. M-commerce is emerging level. The astounding rate growth in
mobile penetration, higher mobile technology and networking is coming day by day. Now a
mobile phone is not only use for text SMS or phone call but also be used for many other
activities like browsing of net chatting or other virtual activities.