ANAS HIDAYAT, DRS, MBA, PHD

ANAS HIDAYAT, DRS, MBA, PHD
Grading
• Grade
%
A
90-100
A-
85-90
B+
80-84
B
75-79
B-
70-74
C+
65-69
C
60-64
C-
55-59
D
45-54
F
less than 44
E
Not Complete Task
Schedule
Meeting 1
Cultural Understanding in Business
Meeting 2
Service development
Meeting 3
Price Strategy
Meeting 4
Distribution Strategy
Meeting 5
Retailing
Meeting 6
Integrated Marketing Communication
Paperwork & Midterm
• An individual Paper
25 %
A review of marketing’s role in business
strategy
• An individual Paper
25 %
Evaluation or developing marketing plan
for a real company
• Take home exam (an individual task)
30 %
Developing IMC for a real company
Attendance and discussion
• Be active in class and in discussion 20 %


Company have shifted gears from
managing product portfolios to
managing customer portfolios.
Compiling databases on individual
customers so they can understand them
better and construct individualized
offerings and messages



They are doing less products and services
standardization and more niching and customization
They are replacing monologues with customer
dialogues
They also concerned with the ethical and social
implications of their marketing decisions

The first edition of Marketing Management,
published in 1987, introduced the concept
that companies must be customer and
market driven
•Marketing Departments
•Senior Managements
•Other Departments
•Communications
•Product & Services
•Channels
Integrated
Marketing
Internal
Marketing
Holistic
Marketing
Performance
Marketing
•Sales Revenue
•Brand & Customer Equity
•Ethics
•Environment
•Legal
•Community
Relationship
Marketing
•Customers
•Channel
•partners
Development in Marketing
• 1950s
Consumer Marketing
• 1960s
Industrial Marketing
• 1970s
Societal Marketing
• 1980s
Service Marketing
• 1990s
Relationship Marketing
• 2000s
New Media Marketing
The Best Product
Product
Leadership
Operational
Excellence
The Best Total Cost
Customer
Intimacy
The Best Total Solution
Three basic values of companies’
competitive advantage
The Scion Web Site
Consumers can now customize
the car they want to purchase
Values Driven
Values Driven
Customers
•
Product Driven
Market Driven
Norms Bases
Moral Base
Customers
•
Power Base
Ethical Base
Behavior/Business Natures
•Competency
•Transformational
•Rights Contribution
Customers
•
•Exploitation
•Profit Taking
•Mislead Rights
•Friendship
•Transactional
•Rights protections
Motivation of life
• Need for survive: self of existence
• Need for achievement : Self Actualization
• Need for Ibadah: Mission Accomplishment
MODIFIED Mc FARLAND’S MOTIVATION
Need for Ibadah
Need for Achievement
Need for Survive
Mission Accomplishment
Self Actualization
Self Existence
Modified Maslow’s Hierarchy of Needs
Need for Ibadah
•Mission
Accomplishment
Societal Mission/Khalifah
•Self Actualization
Need for Achievement
•Esteem
Self Mission/Ksatria
•Social/Belongingness
•Safety
Need for Survive
•Physiological Need
No Mission/Sudra
3 Tipe Wirausaha
Wirausaha untuk Survival
Needs for existence
Wirausaha untuk Sukses/Berprestasi
Needs for actualization
Wirausaha untuk Ibadah
Needs for Ridlo Allah SWT
Wirausaha untuk Survival
• Mencari Jati Diri (Self Existence)
• Orientasi Jangka Pendek
• Menekankan pada Outcome
• Product orientation
• Profesionalisme rendah
• Profit Taking
• Low culture: Exploitation
Wirausaha untuk Sukses/Berprestasi
• Mencari Aktualisasi Diri (Self
Actualization)
• Orientasi Jangka Menengah
• Menekankan pada Process
• Service orientation
• Profesionalisme Tinggi
• Win-Win Solution
• medium Culture: Friendship
Wirausaha untuk Ibadah
• Mencari Ridlo Allah SWT (Mission
Accomplishment)
• Orientasi Jangka Panjang
• Menekankan pada Process
• Halal dan Thoyib Orientation
• Profesionalisme Tinggi
• Win-Win Negotiation
• High Culture: Taking Care
Need for survive
Needs for actualization
Needs for Ridlo Allah SWT
Subculture
ads appeal to
shared beliefs,
values, and
norms
Slogan of Businesses Today
We don’t sell products
but we help to solve
your problem
Service in Businesses
Manufacturers, distributors
and retailers are providing
value added services or
excellent customer services
to differentiate themselves
The Nature of Services
Tangibility Spectrum
Salt
 Soft Drinks
 Detergents
 Automobiles
 Cosmetics Fast-food
 Outlets

Tangible
Dominant

Fast-food
Outlets
Intangible
Dominant


Advertising
Agencies
Airlines
Investment
Management
Consulting



Teaching


Any act or performance one party
can offer to another that is
essentially intangible and does
not result in the ownership of
anything
Its production may or may not be
tied to a physical product
Government sectors: courts,
employment services, hospitals, police
services, fire departments, schools,
regulatory services
 Non-profit sectors: museums,
charities, churches, foundations,
hospitals
 A good part of the business sectors:
airlines, banks, hotels, insurance
companies, law firms
 Workers in the manufacturer sectors:
legal staff, accountants, computer
operators

Level of Customer Contact with Service Organizations
HIGH
• Nursing Home
• Haircut• Management Consulting
• Four Start Hotel
• Good Restaurant
• Telephone Banking
• Car Repair
•Airline Travel
• Dry Cleaning
• Motel
• Fast Food
• Subway
• Movie Theater
• Insurance
• Cable TV
• Internet Banking
LOW
• Internet Based Services
Challenges for Services
• Defining and improving
quality
• Communicating and
testing new services
• Communicating and
maintaining a consistent
image
Challenges for Services
• Motivating and sustaining
employee commitment
• Coordinating marketing,
operations and human
resource efforts
• Setting prices
• Standardization versus
personalization
Level of Customer Contact with Service Organizations
HIGH
• Nursing Home
• Haircut• Management Consulting
• Four Start Hotel
• Good Restaurant
• Telephone Banking
• Car Repair
•Airline Travel
• Dry Cleaning
• Motel
• Fast Food
• Subway
• Movie Theater
• Insurance
• Cable TV
• Internet Banking
LOW
• Internet Based Services
Differences between
Goods and Services
Intangibility
Inseparability
Cannot be seen
tasted, felt or
smelled before
purchasing
From the
provider
Variability
Depends on who
provides and under
what conditions
Services
Perishability
Cannot be stored
for resale
or later use
Intangibility



Bank operation
provides the fast bank
in services
Management show
evidence to tangibilize
the intangible
Through Place,
people, equipment,
communication
material, symbols,
price
Implications




Services cannot be
inventoried
Services cannot be
patented
Services cannot be
readily displayed or
communicated
Pricing is difficult
Inseparability
Implications

Barbers cannot give haircut
without being present

Customers participate in
and affect the transaction

When clients have strong
provider preferences, the
provider can raise its price
to share its limited time

Customers affect each
other

Employees affect the
service outcome

Decentralization may be
essential

Mass production is difficult

Strategy exist for getting
around the limitation of
inseparability, the providers
can learn to work with
larger groups
Variability
Implications

Because the quality of service
depend on who provide them,
when and where, and to
whom, services are highly
variable

Service delivery and
customer satisfaction
depend on employee
actions

Some firms offer service
guarantees to reduce
consumer perception risks

Service quality depends
on many uncontrollable
factors

Management need to invest in
hiring and training procedures,
standardizes the service
performance, monitor
customer satisfaction

There is no sure
knowledge that the
service delivered
matches what was
planned and promoted
Perishability


The right services must be
available to the right
customers at the right places
at the right times and right
prices to maximize the
profitability
Doctors charge patients for
missed appointments
because the service value
exist only at the time of the
appointment
Implications

It is difficult to
synchronize supply and
demand with services

Services cannot be
returned or resold
Marketing Development: Ps & Cs
Customer Solution
Product
Customer Cost
Price
Marketing Mix
Promotion
Communication
Place
Convenience
Services Marketing Mix
Marketing Mix for Services
PRODUCT
PLACE
PROMOTION
PRICE
Physical good
features
Channel type
Promotion
blend
Flexibility
Quality level
Exposure
Salespeople
Price level
Accessories
Intermediaries
Advertising
Terms
Packaging
Warranties
Outlet location Sales
promotion
Transportation Publicity
Product lines
Storage
Branding
Differentiation
Allowances
Marketing Development: 7Ps
People
Processes
Product
7Ps
Physical
Evidence
Price
Promotion
Place
Services Marketing Mix
Expanded Marketing Mix
for Services (continued)
PEOPLE
PHYSICAL
EVIDENCE
PROCESS
Employees
Facility design
Flow of activities
Customers
Equipment
Number of steps
Communicating
culture and values
Signage
Level of customer
involvement
Employee research
Employee dress
Other tangibles
Evidence of Service from the
Customer’s Point of View



 Operational flow of
activities
Contact employees
Customer him/herself
Other customers
People
 Steps in process
 Flexibility vs. standard
 Technology vs. human
Process
Physical
Evidence
 Tangible
communication
 Servicescape
 Guarantees
 Technology
 Website
Listening, to understand what
customers really want
 Reliability, most important
dimension of service quality
 Basic Service, must deliver
promise and do what they are
supposed to do
 Service design, to develop a
holistic view of the service

Recovery, to satisfy customers who
encounter a service problem
 Surprising customers, surprising
them with competence,
commitment and understanding
 Fair play, take effort to be fair to
customers and employees
 Teamwork, by improving employee
motivation and capabilities



Employee research, to conduct
research with employees why
service problem occur
Servant leadership, quality
service come from inspired
leadership throughout the
organization
Holistic Marketing in Services
Company
External
Marketing
Internal
Marketing
Employees
Interactive
Marketing
Customers
Pricing
Inconvenience
High Price
Location/hours
Price Increases
Wait for
Appointment
Unfair Pricing
Deceptive Pricing
Wait for Service
Core Service
Failure
Service Mistakes
Billing Errors
Service Catastrophe
Service
encounter
failures
Uncaring
Impolite
Unresponsive
Unknowledgeable
Response to
Service Failure
Negative Response
Competition
Found Better
Service
Ethical
Problems
Involuntary
Switching
Cheat
Customer moved
No Response
Hard Sell
Provider Closed
Reluctant Response
Unsafe
Conflict of Interest





Gap between consumer
expectation and management
perception
Gap between management
perception and service quality
specification
Gap between service quality
specification and service delivery
Gap between service delivery and
external communications
Gap between perceived service
and expected service
Customer Perceptions of Service
Quality and Customer Satisfaction
 Price means to the consumers, it
is the cost of something, and to
the seller is revenue-the ultimate
source of profit
 Price is the perceive value that is
exchanged for something else

Perceived Value of a product means the
relationship between the consumer's expectations
of product quality to the actual amount paid for it.

There are some economists who assert that "value"
is always a subjective quality.

Value derived entirely from the psychology of
market participants.

It is often expressed as the
equation :


Value = Benefits / Price
or alternatively:
Value = Quality received /
Expectations

Price is the key to revenues – the
lifeblood of an organization

Revenue is what pays for every activity –
production, finance, advertising so on.

What’s left over (if any) is profit

Managers strive to charge a price that
will earn a fair rate of return on
investment

To achieve this goal, they must choose
the price that is not too high or too low,
means that price must equal the
perceived value to target consumers
• Pricing decisions are really complex and difficult
though, many marketers neglect their pricing
strategies.
• Marketers must take into account many factors
in making pricing decision: the company, the
customers, the competition, and the marketing
environment
• Pricing decision must be consistent with the
firm’s marketing strategy and its target markets
and brand positioning
Pricing is not just a number on a
tag
 Price comes in many forms and
performs many functions
 In some way to be price that we
pay for goods or services: rent,
fees, tuition, fares, rates, tolls,
retainers, wage, and commissions

Synonyms for Price
• Rent
• Special assessment
• Tuition
• Bribe
• Fee
• Dues
• Fare
• Salary
• Rate
• Commission
• Toll
• Wage
• Premium
• Tax
• Honorarium



Most history, prices were set by
negotiation by between buyers and
sellers
One price policy for all buyers is used
it because sellers carry out so many
items
Price has operated as determinant of
buyer choice. The result is heavy
discounting and sales promotion in
market



Company do their pricing in a
variety of ways
Small companies are often set by
the boss
Large company are handled by
division or product line managers
Pricing Strategies
Penetration Pricing
Penetration Pricing
Price set to ‘penetrate the market’
‘Low’ price to secure high volumes
Typical in mass market products – chocolate
bars, food stuffs, household goods, etc.
 Suitable for products with long anticipated life
cycles
 May be useful if launching into a new market



Market Skimming
Market Skimming




•Many are predicting a firesale in
laptops as supply exceeds demand.
•Copyright: iStock.com
High price, Low volumes
Skim the profit from the market
Suitable for products that have
short life cycles or which will
face competition at some point
in the future (e.g. after a patent
runs out)
Examples include: Playstation,
jewellery, digital technology,
new DVDs, etc.
Value Pricing
Value Pricing


Price set in accordance
with customer
perceptions about the
value of the
product/service
Examples include status
products/exclusive
products
•Companies may be able to set prices
according to perceived value.
•Copyright: iStock.com
Loss Leader
Loss Leader
Goods/services deliberately sold below cost to
encourage sales elsewhere
 Typical in supermarkets, e.g. at Christmas,
selling bottles of gin at £3 in the hope that
people will be attracted to the store and buy
other things
 Purchases of other items more than covers
‘loss’ on item sold
 e.g. ‘Free’ mobile phone when taking on
contract package

Psychological Pricing
Psychological Pricing



Used to play on consumer perceptions
Classic example - £9.99 instead of
£10.99!
Links with value pricing – high value
goods priced according to what
consumers THINK should be the price
Going Rate (Price Leadership)
Going Rate (Price Leadership))
In case of price leader, rivals have difficulty in
competing on price – too high and they lose
market share, too low and the price leader
would match price and force smaller rival out
of market
 May follow pricing leads of rivals especially
where those rivals have a clear dominance of
market share
 Where competition is limited, ‘going rate’
pricing may be applicable – banks, petrol,
supermarkets, electrical goods – find very
similar prices in all outlets

Tender Pricing
Tender Pricing
Many contracts awarded on a
tender basis
 Firm (or firms) submit their price for
carrying out the work
 Purchaser then chooses which
represents best value
 Mostly done in secret

Price Discrimination
Price Discrimination
Charging a different
price for the same
good/service in
different markets
 Requires each
market to be
impenetrable
 Requires different
price elasticity of
demand in each
market

•Prices for rail travel differ for the same
journey at different times of the day
•Copyright: iStock.com
Destroyer Pricing/Predatory Pricing
Destroyer/Predatory Pricing


Deliberate price cutting or offer of ‘free
gifts/products’ to force rivals (normally
smaller and weaker) out of business or
prevent new entrants
Anti-competitive and illegal if it can be
proved
Absorption/Full Cost Pricing
Absorption/Full Cost Pricing


Full Cost Pricing – attempting to set
price to cover both fixed and variable
costs
Absorption Cost Pricing – Price set to
‘absorb’ some of the fixed costs of
production
Marginal Cost Pricing
Marginal Cost Pricing
Marginal cost – the cost of producing ONE
extra or ONE fewer item of production
 MC pricing – allows flexibility
 Particularly relevant in transport where fixed
costs may be relatively high
 Allows variable pricing structure – e.g. on a
flight from London to New York – providing
the cost of the extra passenger is covered, the
price could be varied a good deal to attract
customers and fill the aircraft

Marginal Cost Pricing

Example:
•Aircraft flying from Bristol to Edinburgh – Total Cost (including
normal profit) = £15,000 of which £13,000 is fixed cost*
•Number of seats = 160, average price = £93.75
•MC of each passenger = 2000/160 = £12.50
•If flight not full, better to offer passengers chance of flying at £12.50
and fill the seat than not fill it at all!
•*All figures are estimates only
Contribution Pricing
Contribution Pricing




Contribution = Selling Price – Variable
(direct costs)
Prices set to ensure coverage of variable
costs and a ‘contribution’ to the fixed
costs
Similar in principle to marginal cost
pricing
Break-even analysis might be useful in
such circumstances
Target Pricing
Target Pricing



Setting price to ‘target’ a specified profit
level
Estimates of the cost and potential
revenue at different prices, and thus the
break-even have to be made, to
determine the mark-up
Mark-up = Profit/Cost x 100
Cost-Plus Pricing
Cost-Plus Pricing


Calculation of the average cost (AC) plus
a mark up
AC = Total Cost/Output
Influence of Elasticity
Influence of Elasticity
Any pricing decision must be mindful of the
impact of price elasticity
 The degree of price elasticity impacts on the
level of sales and hence revenue
 Elasticity focuses on proportionate
(percentage) changes
 PED = % Change in Quantity demanded/%
Change in Price

Influence of Elasticity






Price Inelastic:
% change in Q < % change in P
e.g. a 5% increase in price would be met by
a fall in sales of something less than 5%
Revenue would rise
A 7% reduction in price would lead to a rise
in sales of something less than 7%
Revenue would fall
Influence of Elasticity






Price Elastic:
% change in quantity demanded > % change in
price
e.g. A 4% rise in price would lead to sales
falling by something more than 4%
Revenue would fall
A 9% fall in price would lead to a rise in sales of
something more than 9%
Revenue would rise
Steps in Setting Price
• Select the price objective
• Determine demand
• Estimate costs
• Analyze competitor price mix
• Select pricing method
• Select final price
Step 1: Selecting the
Pricing Objective
• Survival: short run objectives with
plaguing over capacity, intense
competition or changing consumer
want
• Maximum current profit: Set price
that maximize current profit
• Maximum market share: Set a higher
sales of volumes leads to lower unit
cost (Market Penetration Pricing)


Maximum market skimming: Price
start with high and slowly drop
over times
Product-quality leadership:
premium price with intensively
loyal customer base
Step 2: Determining Demand
• Price sensitivity
• Estimating demand curves:
measuring using different methods
Survey, price experiment, statistical
analysis
• Price elasticity of demand:
marketers need to know how
responsive or elastic, demand would
be to a change in rice
The company wants to charge a
price that covers its cost of
producing, distributing and selling
the products, including a fair
return for its effort and risk.
Step 3: Estimating Costs
• Types of Costs: A company’s cost
take two form: fixed cost and
variable cost
• Accumulated Production: set
experience curve pricing focused on
manufacturer and marketing cost
• Target Costing: Cost change with
production scale and experience
It is complicated because the competitors can
put different interpretations on lower price or
a price cut; that the company is trying to
steal the market, that company is doing
poorly and trying to boost its sales, or the
company wants the whole industry to reduce
prices to stimulate total demand
Step 5: Selecting a Pricing
Method
• Markup pricing
• Target-return pricing
• Perceived-value pricing
• Value pricing
• Going-rate pricing
• Auction-type pricing
Unit Cost
Markup Price =
1-desired return on sale
Fixed Cost
Unit Cost : Variable Cost + -------------------Unit Sales
Desired return X invested capital
Unit Cost +
Unit Sales
$
$
$
$
$
$
$
$
90,000 is tractor price
7,000 is for durability
6,000 is for reliability
5,000 is for services
2,000 is for services
110,000 values
10,000 discount
100,000 Final Price
Caterpillar used perceived value to set prices on its construction equipments
Charging fairly low price for a high
quality offering
 It is a matter of reengineering
company’s operation to become
the low cost producer
 Type of value pricing is everyday
low pricing which take place at the
retail level




Firms bases its price largely
on competitor’s prices
Charging the same, more or
less than major competitor
In oligopolistic industries
charge the same price.
Smaller firms follow the leader


Growing more popular especially with the
growth of the internet.
E-bay as an example
Auction-Type Pricing
• English auctions: One seller and
many buyers
• Dutch auctions: One seller and many
buyers or one buyer and many
sellers
• Sealed-bid auctions: would be
supplier can submit only one bid and
cannot know the other bids
Pricing Must Be Coordinated with Other Factors
Pricing
Considerations
Price Must Be Consistent With
Perceptions of the Product
Higher Prices Communicate Higher
Product Quality
Lower Prices Reflect Bargain or
“Value” Perceptions
Price, Advertising and Distribution
must
be be
Unified
Unified
In In
Identifying the Product Position
A Product Positioned as High Quality
While Carrying a Lower Price than
Competitors Will Confuse Customers
© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
The Marketing
System
Manufacturers and producers
Agriculture
and raw
materials
suppliers
Marketing
intermediaries
Retailers
Agents-brokers
Wholesalersdistributors
End users
Consumer
Industrialinstitutional
Facilitating
organizations
Financial
Transportation
Advertising
Other
Why Use Channel Intermediaries?
Without Intermediaries
Milk P1
Bread P2
C1
Reducing
Transaction
Costs
ShampooP3
C2
Soap P4
C3
With Intermediaries
P1
P2
P3
P4
Wholesaler
or Retailer
C1
C2
C3
MARKETING CHANNELS
Marketing channel: system of
marketing institutions that
promotes the physical flow of
goods and services, along with
ownership title, from producers
to consumer or business user;
also called a distribution channel
Channel Function and
Flows
• Marketing channels performs the work of
moving goods from producers to
consumers
• It overcome the time, place and
possession gaps that separate goods
and services from those who need or
want them
Marketing Channels
• Marketing intermediary: wholesaler or
retailer that operates between producers
and consumers or business users; also
called a middleman
• Wholesaler: marketing intermediary that
takes title to goods and then distributes
these goods further; also called a jobber or
distributor
Marketing Channels
Manufacturers/producers
Agents/brokers
Wholesalers/
distributors
Retailers
Retailers
Consumers and organizational end users
Types of Marketing Channels
•Direct Selling
• Direct channel: marketing
channel that moves goods directly
from a producer to ultimate user
• Direct selling: strategy designed
to establish direct sales contract
between producer and final user
Dell
Dell Computer:
A Direct Seller
of Computers
Types of Marketing Channels
Consumer Goods
Types of Marketing Channels
Business Goods
Services
Types of Marketing Channels
• Dual Distribution: Network that moves
products to a firm’s target market through
more than one marketing channel
• Reverse Channels: Channels designed to
return goods to their producers
The Role of Marketing Channels in
Marketing Strategy
• Channels provide the means by which
the firm moves the goods and services it
produces to ultimate users
– Facilitate the exchange process by cutting
the number of contacts necessary
– Standardize exchange transactions
– Facilitate searches by both buyers and
sellers
Channel is a Vital Link in the Chain
Selecting
Selecting
Distribution
Channel
Decisions
Managing
Managing
Motivating
Terms and Responsibilities
of channel members
• Price policy, calls for the producer to
establish a price list and schedule of
discounts
• Conditions of sale, refers to payment
terms and producer guarantees
• Distributors’ territorial rights, defines the
distributors’ territories
• Mutual services and responsibilities,
must be carefully spelled out especially
in franchised and exclusive agency
channels
• Factors influencing Marketing Channel Strategies
Characteristics of Short
Channels
Market
factors
Product
factors
Characteristics of Long
Channels
Business users
Consumers
Geographically
concentrated
Geographically diverse
Extensive technical
knowledge and regular
servicing required
Little technical knowledge
and regular servicing not
required
Large orders
Small orders
Perishable
Durable
Complex
Standardized
Expensive
Inexpensive
Producer
factors
Competitive
factors
Characteristics of Short
Channels
Characteristics of Long
Channels
Manufacturer has
adequate resources to
perform channel
functions
Manufacturer lacks
adequate resources to
perform channel
functions
Broad product line
Channel control
important
Limited product line
Channel control not
important
Manufacturing feels
satisfied with marketing
intermediaries’
performance in promoting
products
Manufacturer feels
dissatisfied with
marketing
intermediaries’
performance in promoting
products
Determining Distribution Intensity
Distribution intensity: number of
intermediaries through which a
manufacturer distributes its goods
• Intensive distribution: channel policy in
which a manufacturer of a convenience
product attempts to saturate the market
• Selective distribution: channel policy in
which a firm chooses only a limited
number of retailers to handle its product
line
• Exclusive distribution: channel policy in
which a firm grants exclusive rights to a
single wholesaler or retailer to sell its
products in a particular geographic area


A conventional marketing channel: comprise
an independent producers, wholesalers and
retailers
A vertical marketing system: comprises
producers, wholesalers and retailers acting as
unified system
Vertical Marketing Systems
• Vertical marketing system (VMS):
planned channel system designed to
improve distribution efficiency and cost
effectiveness by integrating various
functions throughout the distribution
chain
– Forward integration
– Backward integration
Types of VMS
• Administered marketing system: VMS
that achieves channel coordination when a
dominant channel member exercises its
power
• Corporate marketing system: a VMS in
which a single owner operates at each
stage in its marketing channel
Examples of VMS
•Corporate VMS
Sherwin-Williams make paint but also
owns and operates 3,000 outlets
•Administered VMS
Relies on Distribution programming.
Manufacturer establish a department
within the company called distributor
relations planning
Types of VMS
• Contractual marketing system: VMS that
coordinates channel activities through
formal agreements among channel
members like:
– Wholesaler-Sponsored Voluntary Chains
– Retail Cooperatives
– Franchises
Types of Contractual VMS
• Wholesaler-sponsored voluntary chains,
wholesalers organize voluntary chains of
independent retailers to help them standardize their
selling practices
• Retailer cooperative, retailer take an initiative and
organize a new business entity to carry on
wholesaling and some possible of production
• Franchise organizations, a channel member called
a franchisor might link several successive stages in
the production distribution process


Goal Incompatibility. An example, set up
different price between manufacturers and
wholesalers
Unclear roles and rights. An example,
territory boundaries and credit for sales
often produce conflict
Logistics
Logistics and Supply Chain
Management
• Supply (value) chain: sequence of
suppliers that contributes to the
creation and delivery of a good or
service
– Upstream management
– Downstream management
The Supply Chain of a Manufacturing Company
Physical Distribution
• A company’s physical distribution system
contains the following elements:
– Customer Service
– Transportation
– Inventory Control
– Protective packaging and materials
handling
– Order Processing
– Warehousing
Allocation of Physical Distribution Expenditures
Major Modes of Transportation
– Railroads
– Motor Carriers
– Water Carriers
– Pipelines
– Air Freight
– Inter-modal Coordination
Comparison of Transport Modes
Mode
Speed
Dependability in
Meeting
Schedules
Frequency Availabil- Flexibility
of
ity in
in
Shipments Different Handling
Locations
Cost
Rail
Average
Average
Low
Low
High
Water
Very
slow
Average
Very low
Limited
Very high Very
low
Truck
Fast
High
High
Very
extensive
Average
High
Pipeline Slow
High
High
Very
limited
Very low
Low
Average
Average
Low
Very
high
Air
Very fast High
Avera
ge
Retailing
What is retailing?
• All the activities in selling goods and
services directly to final consumers
• ‘…business firms engaged primarily in
selling merchandise for personal or
household consumption and rendering
services incidental to the sale of goods
(Rosenbloom 1999, p. 55).
Retailing functions
• Customer contact
• Promotion
• Information on customer demands
and trends
• Breaking bulk and providing
assortment
• Holding inventory close to the
customer
– location convenience
• Risk taking
History of retailing
• barter - money-less exchange
• peddlers and trading posts
• 1700-1900 - industrial revolution
– mass production led to the
general store
• 1852 - first department store in
Paris ‘Bon Marche’
• 1880’s - automatic vending
machines
History of retailing
• early 1890’s - speciality stores,
chain stores and supermarkets
• Post WWII - supply > demand
– price cutting - discount stores, variety
stores
• 1950’s - urban spread and car
ownership
– suburban supermarkets
History of retailing
•1980’s - non-store retailing
•direct marketing, direct selling
•1990’s – e-tailing
•clicks and mortar
Classifications of Retailers
• Store retailing
– department store, supermarkets, specialty
stores, convenience stores, discount stores,
category killers
• Non-store retailing
– ATM’s, direct selling, direct marketing, vending
machines, electronic shopping
• Services
• Various classifications
Classification by ownership
• Independent retailers
– own and operate only one retail outlet
• Chain stores
– two or more similar retail establishments
that are owned and operated by one firm
– 57% of retail sales
• Franchises
– product trademark
– business format
Classification by retail strategy
• Merchandise width
– different product lines (variety)
– ie department and discount stores
• Merchandise depth
– different brands/styles of the same product line
– ie speciality stores
• Consistency
– degree of scrambled merchandising
– ie chemists, newsagents
Retailer Positioning
Breadth of
Product Line
Broad
Narrow
Broad product
assortment and
high value added.
Focus on store
design, product
quality, service &
image
Narrow product
assortment and high
value added. Focus on
exclusive image,
limited volume & high
margin
Broad line & low
value focus on
price low, good
place, high
volume & low
margin
Narrow line & low
value added. Focus
on cost, price by
buying,
merchandising,
advertising &
distribution
Value added
Classification by retail strategy
Low end v high end retailers
•relative emphasis on price and service
•differences in retail mix
•markets served
•location
• service levels
•price levels
•product types
•promotional strategy
•store design, atmosphere (décor)
Low end retailers include
• warehouse food stores
– Bi-lo, Franklins
• variety stores
– Best and Less
• discount stores
– K-Mart, Target
• off-price chains
– Silly Sollys, Crazy Clarkes
• Factory seconds
outlets
• Weekend markets
High end retailers include
• Convenience stores
• Supermarkets
– Coles, Woolworths
• Specialty stores
• Department stores
Type of Retailers
• Store retailers
• Non store retailers
• Retailer organizations




Specialty Store. Narrow product line
Department Store. Several product lines
Supermarket. Large, low cost, low
margin, high volume, self service store
designed to meet total needs for food
and household products
Convenience Store. Small store in
residential area, often open 24/7, limited
line of high convenience products plus
takeout
Discount Store. Standard or specialty
merchandise, low price, low margin, high
volume stores.
 Off Price Retailer. Leftover goods,
overruns, irregular merchandise sold at
less than retail
 Superstore. Huge selling space, routinely
purchased food and household items,
plus services
 Catalog Showroom. Broad selection of
high markup, fast moving, brand name
goods sold by catalog at discount.
Customers pick up merchandise at the
sore





Self service
Self selection
Limited service
Full service




Direct selling. Doors to doors selling
Direct marketing. Direct mail & catalog
marketing
Automatic vending by machines
Buying service. Storeless retailer serving
a specific clientele


Corporate chain store. Two or more
outlets owned and controlled, employing
central buying and merchandising and
selling similar lines of merchandise
Voluntary chain. Wholesaler sponsored
group of independent retailers engaged
in bulk buying and common
merchandising
Retailer cooperative. Independent retailers
using central buying organization and joint
promotion efforts
 Consumer cooperative. Retails owned by its
consumers
 Franchise organization. Contractual
association between franchisors and
franchisees
 Merchandising conglomerate. Corporation that
combine several diversified retailing lines and
forms under central ownership with some
integration of distribution and management










Target Market
Product Assortment
Procurement
Prices
Services
Store Atmosphere
Store activities and experiences
Communications
Location





Central business district
Regional shopping centers
Community shopping centers
Shopping strips
Location with large stores
Brands that retailer or wholesalers develop
All activities in selling goods or services to
choose who buy for resale or business use


Merchant wholesalers. Independently owned
businesses that take title to the merchandise
they handle
Full service wholesalers. Carry stock,
maintain sales forces, offer credits, make
deliveries & provide management assistance


Limited service wholesalers. Cash & carry
wholesalers sell a limited line of fast moving
goods to small retailers for cash
Brokers and Agents. Facilitate buying and
selling, on commission of 2 % to 6 % of
selling price, limited functions, generally
specialize by product line or customer type


Manufacturers’ and Retailers’ branches and
offices. Wholesaling operations conducted by
sellers or buyers themselves rather than
through independent wholesalers
Specialized wholesalers.
The structure of retailing in Australia
• diversity of type and size
• 40% of GDP (1999)
• retail turnover 1997-98 ($134,582 million)
– food is major sector ($54,616 million 39.7%)
• top ten retailers account for 40% of retail sales
• about 170,000 retail establishments
• about 1.1 million employees (13.5% of
workforce)
Retail Marketing Decisions
• Who is our target market?
• What is our positioning
strategy?
– Store image
• What range of merchandise
will we carry?
– Product lines (categories),
product mix (brands)
– Scrambled merchandising
• What services will we offer?
Retail Marketing Decisions
• What will the store look and feel like?
– Atmosphere, décor, music etc
• What pricing strategy will we use?
– Everyday low prices or high/low pricing
• Will we offer discounts or payment options
– Credit, layby etc.
• How will we promote the store?
– Message, media, budgets etc.
• Where will we locate?
• When will we operate?
Selecting a retail site
• trading area characteristics
• affinity
• pedestrian & vehicular
traffic counts
• transportation access/parking
• visibility
MARKETING COMMUNICATIONS
• MARKETER INITIATED TECHNIQUES USED TO SET
UP CHANNELS OF INFORMATION AND PERSUASION
WITH TARGETED AUDIENCES TO INFLUENCE
ATTITUDES AND BEHAVIOR
“Promotion”
 Message and Media
• MARKETING COMMUNICATIONS MIX
“Tool Box” of Media and Techniques
 Integration and Coordination
 Based on Communications Model
MAJOR OBJECTIVES OF
MARKETING COMMUNICATIONS
Informing
Persuading
Reminding
MARKETING COMMUNICATIONS
OBJECTIVES
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Increase Market Penetration
Develop Repeat Purchase Behavior
Establish Customer Relationships
Increase Rate of Consumption
Encourage Product Trial
Stimulate Impulse Buying
Stimulate Demand
Differentiate the Product
Establish a Product Image
Influence Sales Volume
Establish, Modify, or Reinforce Attitudes
Develop Sales Leads
Stimulate Interest
Establish Understanding
Build Support & Acceptance
It’s Google’s World
The most powerful brand in the world
It’s Google’s World
• Founded in 1998
– Delivers relevant search results by favoring pages
linked to by other sites
– Sells ads linked to search keywords
– Annual revenue exceeds $10 billion
• Keys to success
– Simplicity
– Speed
– Accuracy
Google Adwords
• Keyword-targeting advertising
– Text ads at top or side of search results
– Advertisers compete for top spot
– Cost is “per click” (CPC)
• Contextual ads
– Appear on other relevant Web sites
• Site-targeted
– Generates sales and branding
– Cost is per thousand impressions (CPM)
Google Rapidly Expanding
• Beyond online search advertising
– Automated purchase of radio ads
– Magazine and newspaper ad-buying
– YouTube
– Google TV Ads
– Partnership with Nielsen Media Research
– New varieties of online ads
Rapidly Changing Media Environment
• Increasingly difficult to target audiences &
communicate effectively
– Consumers no longer passive recipients
– They demand more than information
– From a myriad of sources
Integrated Marketing Approach
• Traditional mass media
– Television, radio, magazines, newspapers,
billboards
– Now drive consumers to Web sites
• Online strategies
– Provide detailed information
– Be experiential, entertaining, interactive
– MySpace, YouTube, Facebook, wireless mobile
media devices, e-mail
The New Look of Advertising
Interactive, Informative, Entertaining
Growth of Advertising and Promotion
Expenditure in Billions of Dollars
Advertising Outside
U.S.
2007
1980
U.S. Advertising
$0
$50
$100
$150
$200
$250
$300
$350
$400
What is Marketing?
• An organizational function
• Processes for creating,
communicating, and
delivering value to customers
• Managing customer
relationships in ways that
benefit the organization and
its stakeholders
Value
Relationship marketing
Mass customization
Customer relationship
management (CRM)
The Scion Web Site
Consumers can now customize
the car they want to purchase
Coordinated Marketing Elements Build
Image
Traditional Marketing Approach
Point of
purchase
Interactive
marketing
Special
events
Media
Advertising
Public
relations
Direct
marketing
Publicity
Sales
promotion
Packaging
Direct
response
Contemporary IMC Approach
Packaging
Sales
promotion
Point of
purchase
Publicity
Interactive
marketing
Media
Advertising
Direct
marketing
Direct
response
Public
relations
Special
events
Defining IMC
IMC is a strategic business
process used to plan, develop,
execute and evaluate
coordinated, measurable,
persuasive brand
communication programs with
consumers, customers, prospects
employees and other relevant
external and internal audiences.
The goal of IMC is to
generate short-term
financial returns and
build long-term brand
value.
Contemporary Perspective of IMC
Recognized as a business process
IMC
Importance
of relevant
audience
Multiple relevant
audiences
Demand for accountability and
Demand for accountability
measurement of outcomes
Growing Importance of IMC
• Strategic integration of communications
functions
– Avoids duplication
– Synergy among promotional tools
– More efficient and effective marketing
• Rapidly changing environment
– Consumers
– Technology
– Media
Behind the Growing Importance of IMC
From
Toward
Media advertising
Multiple forms of
communication
Mass media
Specialized media
Manufacturer dominance
Retailer dominance
General focus
Data-based marketing
Low agency
accountability
Greater agency accountability
Traditional compensation
Performance-based
compensation
Limited Internet
availability
Widespread Internet availability
The Role of IMC in Branding
• Brand identity is a combination of
– Name
– Logo
– Symbols
– Design
– Packaging
– Performance
– Image or associations
IMC plays a major role
in developing and
sustaining brand
identity and equity
The Most Valuable Brands in the World
Rank
Brand
Brand Value
(Billions)
1
Coca-Cola
$65.32
2
Microsoft
58.71
3
IBM
57.09
4
General Electric
51.57
5
Nokia
33.70
6
Toyota
32.07
7
Intel
30.95
8
McDonald’s
29.39
9
Disney
29.21
10
Mercedes-Benz
23.57
Finding New Ways to Build Brands
• Consumers are driving the trend
– They view brands as a form of
self-expression
– They know more about brands and the companies
that make them
– Cynicism about corporations is at an
all-time high
– They seek and share information with other
consumers via the Internet
Finding New Ways to Build Brands
• Get consumers involved
– Apple Computer lets consumers test products in
store
– Starbucks positions stores as a community
gathering place
• Interaction can be the best marketing
– MySpace
– Facebook
– Google
Finding New Ways to Build Brands
• Get consumers involved
– Apple Computer lets consumers test products in
store
– Starbucks positions stores as a community
gathering place
• Interaction can be the best marketing
– MySpace
– Facebook
– Google
The Promotional Mix
Advertising
Direct Marketing
Interactive/
Internet Marketing
Sales Promotion
Publicity/Public
Relations
Personal Selling
Advertising
• Paid forms of non-personal communication
– About an organization, product, service, or idea by
an identified sponsor
– No feedback from audience
– Important for products and services aimed at mass
consumer markets
– Cost effective
The Most Common Forms of Advertising
National Advertising
Retail/Local Advertising
Consumers
Primary vs. Selective
Demand Advertising
Business-to-Business
Advertising
Professional Advertising
Trade Advertising
Organizations
DEVELOPING AN
ADVERTISING CAMPAIGN
Design
Creative
Strategy
Select
Target
Market
Determine
Advertising
Objectives
Evaluate
Advertising
Effectiveness
Determine
Advertising
Budget
Select &
Schedule
Media
ADVERTISING STRATEGY
• MESSAGE STRATEGIES
 Objective vs. Subjective Messages
 Comparative Message Techniques
 Emotional Techniques: Mood, Fear, Humor
 Celebrity Endorsements vs. Non-Celebrity Images
• MEDIA STRATEGIES
 Broadcast: Television, Radio
 Print: Newspapers, Magazines, Journals
 Specialized: Outdoor, Transit, Direct Mail, Internet
ADVERTISING STRATEGY
• RELATIVE STRENGTHS AND WEAKNESSES OF
STRATEGIES
Effectiveness and Efficiency: Reach and Frequency
Target Capabilities
Cost
Believability
Appropriateness for Message (Image, Details)
EVALUATING ADVERTISING
EFFECTIVENESS
Pretesting
Posttesting
Sales Effectiveness
Evaluations
Tools:
•Focus Groups
•Screening
•Persuasion Scores
Tools:
•Unaided Recall Tests
•Aided Recall Tests
•Inquiry Evaluations
Tools:
•Monitor Sales
Direct Marketing
• Techniques used to get consumers to
make a purchase from their home, office
or other nonretail setting
– Direct mail, catalogs, mail order,
telemarketing, electronic retailing
Direct Marketing
Direct
Mail
Direct
Response
Advertising
Internet
Sales
Direct
Marketing
Shopping
Channels
Telemarketing
Catalogs
Bose Uses Direct Response Advertising
Includes call
for action.
Phone number,
mail-in form,
website address
provided.
Interactive/Internet Marketing
• Back-and-forth communication
– Users participate in and modify the form and
content of information
– Happens in real time
• Interactive media
– Internet
– CD-ROMs
– Kiosks
– Interactive television
– Digital cell phones
Using the Internet as an IMC Tool
The
Internet
Educates or
informs
customers
Obtains
customer
database
information
A
persuasive
advertising
medium
Communicate
s and
interacts
with buyers
A sales tool
or an actual
sales
vehicle
Provides
customer
service and
support
Builds and
maintains
customer
relationship
s
Sales Promotion
• SALES PROMOTION
– Those marketing activities - other than
advertising, public relations/publicity, and
personal selling - that stimulate consumer
purchasing and dealer effectiveness
• Displays, shows and exhibitions, coupons,
contests, samples
Sales Promotion
Coupons
Samples
Premiums
Contest/Sweepstake
Refunds/Rebates
Bonus Packs
Trade Allowances
POP Displays
Training
Programs
Loyalty Programs
Trade Shows
Events
Coop Advertising
Consumer-oriented
Trade-oriented
[For end-users]
[For resellers]
Sales Promotion
• Most of the promotional budget now goes to
sales promotion
– Declining brand loyalty
– Increased consumer sensitivity to “deals”
– Larger and more powerful retailers are demanding
more trade promotion support
THE GROWTH IN SALES
PROMOTION
Reasons for the Growth in Sales Promotion:
Consumer Factors
Accountability
Impact of Technology
Short-Term Focus
Increased Retail Power
LIMITATIONS OF SALES
PROMOTION
Cannot Reverse Declining Sales
Trend
Cannot Overcome Inferior
Product
May Encourage Competitive
Retaliation
May Hurt Profit
Advertising Versus Publicity
Factor
Advertising
Publicity
Control
Great
Little
Credibility
Lower
Higher
Reach
Measurable
Undetermined
Frequency
Schedulable
Uncontrollable
Cost
High/Specific
Low/Unspecified
Flexibility
High
Low
Timing
Specifiable
Tentative
Publicity Vehicles
Feature
Articles
News
Releases
Publicity
Vehicles
Press
Conferences
Interviews
Special
Events
Public Relations
Systematically planning and
distributing information in an attempt to control
and manage image and the nature of the
publicity received.
PUBLIC RELATIONS
• EFFORTS TO IMPROVE AND MANAGE RELATIONSHIPS
WITH PUBLICS
Customers
Stock Holders
Community
Government
News Media
• PROACTIVE vs. REACTIVE
DuPont vs. Exxon
• PUBLICITY
Not Overtly Sponsored
High Credibility
PUBLIC RELATIONS
Public Relations Functions
Press
Relations
Advising
Management
Lobbying
Product
Promotions
Corporate
Communications
Public Relations Tools
Cause-related
Marketing
Publicity
Vehicles
Special
Publications
Community
Activities
Corporate
Advertising
Public Affairs
Special Event
Activities
Sponsorship
Personal Selling
• Person-to-person communication
– A seller attempts to assist and/or persuade
prospective buyers to make a purchase or act on
an idea
Personal Selling
• PERSONAL SELLING
– Oral presentation in a conversation with one or more
prospective purchasers for the purpose of making a
sale
– Personal selling represents the most popular
promotional effort in terms of financial expenditures
and number of people employed
– Personal Selling is:
• (1) Dyadic, (2) Flexible, (3) Focused (personalized), and
(4) Often results directly in a sale
• Other promotional elements move the customer toward
the sale, personal selling closes the sale
PERSONAL SELLING AND
SALES MANAGEMENT
• FUNCTIONS AND CONTRIBUTIONS OF
PERSONAL SELLING
“Boundary Spanner” Role, Relationship
Management (Trust)
Two-Way Information Channel (Diffusion of
Product and Market Information)
Facilitate Exchange
PERSONAL SELLING AND
SALES MANAGEMENT
• ROLES OF SALESPERSON
Psychologist
Consultant
Educator / Teacher
Problem Solver
Team Leader
• TYPES OF SELLING POSITIONS
New Business (Prospector)
Existing Business (Order Taker)
Detailing
Support (Marketing, Technical)
Integrating Marketing Communications
To Build Brand Equity
Sales
promotion
Adv.
Brand
Awareness
Event &
Experiences
Public Relation
& Publicity
Direct & Interactive
Marketing
Marketing
Communications
Program
Brand
Image
Brand Equity
Brand
Responses
Word of Mouth
Marketing
Personal
Selling
Brand
Relationship
Direct
Marketing
The IMC Planning Process
• Developing an integrated marketing
communications plan requires
Planning
Executing
Evaluating
Controlling
Basic Elements of a Marketing Plan
1. A detailed situation analysis
2. Specific marketing objectives
3. A marketing strategy and program
4. A program for implementing the strategy
5. A process for monitoring and evaluating performance
MARKETING COMMUNICATIONS
PLANNING
Marketing Plan Review
Situation Analysis
Communications Process
Analysis
Budget Development
METHODS
Program Development
PUSH vs.
PULL
Integration & Implementation
Monitoring, Evaluating,
Controlling
Model of the IMC Planning Process
Review of marketing plan
Analysis of Promotional program situation
Analysis of communications process
Budget determination
Develop integrated marketing communications program
Advertising
Sales
promotion
PR/
publicity
Personal
selling
Direct
marketing
Develop objectives and strategy for each
Develop message, media strategy, and tactics
Integrate and implement marketing communications strategies
Monitor, evaluate and control IMC Program
Internet/
interactive
TERIMA KASIH
MOHON MAAF LAHIR DAN
BATIN
BILA ADA KESALAHAN
SELAMA INTERAKSI
DALAM PROSES
BELAJAR MENGAJAR
SEMOGA KETEMU DALAM
SITUASI YANG LAIN
AMIN
Strategic Thinking
Intepretivist
Structuralist
Common Sense
(Ethically
Illegitimate)
Radical Rationalist
(Ethically
Legitimate)
Radical
Irrationalist
(Morally
Illegitimate)
Functional
Rationalist
(Morally Legitimate)
Rational
Hidayah



Need for survive: self of existence
Need for achievement : Self Actualization
Need for Ibadah: Mission Accomplishment
Modified Maslow’s Hierarchy of Needs
Need for Ibadah
Mission
Accomplishment Societal Mission/Khalifah
Self Actualization
Need for Achievement
Esteem
Self Mission/Ksatria
Social/Belongingness
Safety
Need for Survive
Physiological Need
No Mission/Sudra
3 Tipe Wirausaha
• Wirausaha untuk Survival
Needs for existence
• Wirausaha untuk Sukses/Berprestasi
Needs for actualization
• Wirausaha untuk Ibadah
Needs for Ridlo Allah SWT
Wirausaha untuk Survival
• Mencari Jati Diri (Self Existence)
• Orientasi Jangka Pendek
• Menekankan pada Outcome
• Product orientation
• Profesionalisme rendah
• Profit Taking
• Low culture: Exploitation
Wirausaha untuk Sukses/Berprestasi
• Mencari Aktualisasi Diri (Self
Actualization)
• Orientasi Jangka Menengah
• Menekankan pada Process
• Service orientation
• Profesionalisme Tinggi
• Win-Win Solution
• medium Culture: Friendship
Wirausaha untuk Ibadah
• Mencari Ridlo Allah SWT (Mission
Accomplishment)
• Orientasi Jangka Panjang
• Menekankan pada Process
• Halal dan Thoyib Orientation
• Profesionalisme Tinggi
• Win-Win Negotiation
• High Culture: Taking Care