1)IDENTIFY AND EXPLAIN MACRO

AND
MICRO
ENVOIRMENTAL
FACTORS
WHICH
INFLUENCE
MAKRETING DECESIONS :Macro environmental Factors are:
1.political
2.Economical
3.sociological
4.Technological
5.envoirmental
6.legal

Micro envoirmental factors :

1.customer
2.employess
3.suppliers
4.shareholders
5.media
6.competitors

Macro environmental Factors are:

There are many factors in the macro-environment that will effect
the decisions of the managers of any organisation. Tax changes,
new laws, trade barriers, demographic change and government
policy changes are all examples of macro change.

Political factors. These refer to government

policy such as the degree of intervention in the economy.

What goods and services does a government want to
provide? To what extent does it believe in subsidising firms?
What are its priorities in terms of business support? Political
decisions can impact on many vital areas for business such
as the education of the workforce, the health of the nation
and the quality of the infrastructure of the economy such as
the road and rail system.

Economic factors. These include interest rates,

taxation changes, economic growth, inflation and exchange

rates. As you will see throughout the "Foundations of
Economics" book economic change can have a major impact
on a firm's behaviour. For example:
- higher interest rates may deter investment because it
costs more to
borrow
- a strong currency may make exporting more difficult
because it may raise the price in
terms of foreign currency
- inflation may provoke higher wage demands from
employees and raise costs
- higher national income growth may boost demand for
a firm's products

Social factors. Changes in social trends can impact

on the demand for a firm's products and the availability and

willingness of individuals to work. In the UK, for example, the
population has been ageing. This has increased the costs for
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firms who are committed to pension payments for their

employees because their staff are living longer. It also means
some firms such as Asda have started to recruit older
employees to tap into this growing labour pool. The ageing
population also has impact on demand: for example,
demand for sheltered accommodation and medicines has
increased whereas demand for toys is falling.

Technological factors: new technologies

create new products and new processes. MP3 players,

computer games, online gambling and high definition TVs
are all new markets created by technological advances.
Online shopping, bar coding and computer aided design are
all improvements to the way we do business as a result of
better technology. Technology can reduce costs, improve
quality and lead to innovation. These developments can
benefit consumers as well as the organisations providing the
products.

Environmental factors: environmental

factors include the weather and climate change. Changes in

temperature can impact on many industries including
farming, tourism and insurance. With major climate changes
occurring due to global warming and with greater
environmental awareness this external factor is becoming a
significant issue for firms to consider. The growing desire to
protect the environment is having an impact on many
industries such as the travel and transportation industries
(for example, more taxes being placed on air travel and the
success of hybrid cars) and the general move towards more
environmentally friendly products and processes is affecting
demand patterns and creating business opportunities.

Legal factors: these are related to the legal

environment in which firms operate. In recent years in the

UK there have been many significant legal changes that
have affected firms' behaviour. The introduction of age
discrimination and disability discrimination legislation, an
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increase in the minimum wage and greater requirements for

firms to recycle are examples of relatively recent laws that
affect an organisation's actions. Legal changes can affect a
firm's costs (e.g. if new systems and procedures have to be
developed) and demand (e.g. if the law affects the likelihood
of customers buying the good or using the service).

Different categories of law include:

consumer laws; these are designed to protect customers
against unfair practices such as misleading descriptions of the
product
competition laws; these are aimed at protecting small firms
against bullying by larger firms and ensuring customers are not
exploited by firms with monopoly power
employment laws; these cover areas such as redundancy,
dismissal, working hours and minimum wages. They aim to
protect employees against the abuse of power by managers
health and safety legislation; these laws are aimed at
ensuring the workplace is as safe as is reasonably practical. They
cover issues such as training, reporting accidents and the
appropriate provision of safety equipment

Micro envoirmental factors :

Customers
Organisations survive on the basis of meeting the needs, wants
and providing benefits for their customers. Failure to do so will
result in a failed business strategy.

Employees
Employing the correct staff and keeping these staff motivated is
an essential part of the strategic planning process of an
organisation. Training and development plays an essential role
particular in service sector marketing in-order to gain a
competitive edge. This is clearly apparent in the airline industry .

Suppliers
Increase in raw material prices will have a knock on affect on the
marketing mix strategy of an organisation. Prices may be forced
up as a result. Closer supplier relationships is one way of ensuring
competitive and quality products for an organisation.

Shareholders
As organisation require greater inward investment for growth they
face increasing pressure to move from private ownership to
public. However this movement unleashes the forces of
shareholder pressure on the strategy of organisations. Satisfying
shareholder needs may result in a change in tactics employed by
an organisation. Many internet companies who share prices
rocketed in 1999 and early 2000 have seen the share price
tumble as they face pressures from shareholders to turn in a
profit. In a market which has very quickly become overcrowded
many havel failed.

Media
Positive or adverse media attention on an organisations product
or service can in some cases make or break an organisation..
Consumer programmes with a wider and more direct audience
can also have a very powerful and positive impact, hforcing
organisations to change their tactics.
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Competitors
The name of the game in marketing is differentiation. What
benefit can the organisation offer which is better then their
competitors. Can they sustain this differentiation over a period of
time from their competitors?. Competitor anlaysis and monitoring
is crucial if an organisation is to maintain its position within the
market.

Micro
Environmental
Factor/Stakeholder Analysis

2. OUTLINE THE FACTORS WHICH

INFLUENCE THE CHOICE OF TARGETING
STRATEGY :Targeting strategy decisions are influenced by:
market maturity
diversity of buyers' needs and preferences
strength of the competition
the volume of sales required for profitability
A competitive advantage could simply be defined as the
advantage or ability a firm has over its rivals in the industry; or
the ability a firm has to outperform its industry rivals.
A firm is said to have a competitive advantage when it has the
capabilities or means to push out its rivals in striving for the
favour of customers. This applies internationally or locally as well
as to both services and products.Thus, a sustainable competitive
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advantage is the persistence the firm applies despite efforts by

competitors or potential entrants to copy or overtake it.
Sustainability therefore, requires that strategic assets are not
easily available to others and imperfectly mobile. This will be
considered later.
Porter (1990) states that, though not all nations are in the
forefront of competition, the home nation which shapes the
competitive advantage is the starting point for a firm's
competitive advantage and also from which it must be sustained.
However, in whatever field of endeavor, competitive advantage
creation must be a choice of management and it must really fit to
achieve results. It must be noted here that competitive advantage
can normally be traced to one of three roots:
Superior resources, superior skills and superior positions.
Competitive strategy is one of the ways in which a business
relates to its environment by competing with other firms who are
also trying to adapt within the operating environment. It is with
this aspect- the competitive strategy which if appropriately
chosen and implemented appropriately give the firm a
competitive advantage over its rivals.
It must be noted here that the prescriptive view of strategic
planning emphasizes the importance of the organizational
environment as a source of threats and opportunities and the
need for effective responses by the organization if survival was to
be assured and the success achieved. The response is later
formulated into plan which formulates major decisions about
entry into new markets or development of new products and
services guided by set goals. Under the influence of Porter's
writings in the 1980s the emphasis shifted from the plan to the
selection of an appropriate generic strategy to position the
business unit in its competitive environment. Porter, arguing that
the environment poses threats and brings opportunities than with
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trends and events, suggested that the environment could be

analyzed using the five forces analysis to identify the issues which
affect the level of competition in an industry; after which a
strategy is formulated to combat it.
The resultant strategy, which he referred to as generic,
distinguished some strategic options the firm can possess:
Cost leadership: the business could position itself as offering a low
cost product as a standard price i.e. cost leadership strategy.
Costs are reduced at every element of the value chain. Producers
can exploit the benefits of a bigger margin than the competitors.
Toyota is a good example of an organization that produces quality
cars at low price coupled with a brand and marketing skills to use
a premium pricing policy.
It could offer a product that was different from that offered by
rivals. I.e. differentiation. This allows companies to make prices
less sensitive and focus on value that generates a comparatively
higher price and a better margin. Even though additional costs
will be incurred pursuing differentiation, it is possible that this will
be offset by the increased revenue generated by the sales.
By focusing on a small but well-defined part of the market, for
instance a particular buying group or product area or
geographical area. Also known as niche, this is usually suitable for
a small company i.e. focus strategy.
Generic Competitive strategy, usually used after competitive
analysis or as a response to competitors advantage, is defined as
the basis on which a strategic business unit (SBU) might achieve
or counter competitive advantage in its market. (Johnson and
Scholes, 5th Edition.)
Building on Porter's (1980) generic competitive strategies,
Bowman et al argues that organizations achieve competitive
advantage by providing their customers with what they want, or
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need better or more effectively than competitors and making it

difficult for competitors to imitate. This was later developed into
five generic strategies which would be used in this discussion.
Thus, the generic competitive strategies are the fundamental
activities on which an SBU seeks to achieve a lasting
advantageous position in its environment and gaining the favor of
stakeholders by meeting the expectations of buyers, users or
other stakeholders
The following are Bowman's five-generic competitive strategy
options and examples of organizations who applied them to gain
competitive advantage: no frills strategy, low price strategy,
hybrid strategy, focused differentiation strategy and added value
or differentiation strategy.
In brief, a no frills strategy combines a low price, low perceived
added value and targets a price-sensitive market. No frills
strategy is now a popular strategy with low-cos airlines Easy Jet
and Ryanair seeking to enter the airline industry to compete with
likes of Virgin and is a determinant in the market. This, therefore,
affords the firm the needed competitive edge over its competitors
who charge higher price. This strategy is a success because there
could possibly be a segment of the market that overlooks the low
quality of the commodity provided it fulfills the same purpose.
To obtain the competitive advantage using no fills strategy
revenues must increase and the product must really be pricesensitive. Easy Jet frills strategy seems to be going on well as a
result of the cost savings techniques they are using. For instance
no ticketing, no ticket agents, no in-flight food or drink for
customers as well as the short-haul flight. Now, almost all
supermarkets in the UK use no frills strategy by introducing own
brands the price of which have been reduced to attract customers
in order to gain a competitive advantage.

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The next generic strategy is the low price strategy. This strategy
pursues a lower price than pertains in the market whilst trying to
maintain similar value of product or service as those offered by
competitor alike. There is the potential of price war among
competitors and in the long run consumers are likely to lose as
the firms might not be able to sustain the lower-price-good-value
strategy. Notwithstanding the price war and low margins, there
are some suggested ways in which a low-priced strategy can
bring about a firms competitive advantage. The market segment
must be low-price sensitive, and also the SBU has a cost
advantage over its competitors.
However, in practice, the lower price strategy usually brought
about by lowering operational cost alone does not give the firm
the competitive advantage if the firm is not able to sustain it in
the long-term as there are now more firms entering the market
because of low or no entry barriers like small capital requirements
and also how efficient the staff might be.
Hybrid competitive strategy seeks to achieve differentiation and a
price lower than that of competitors simultaneously. This is not an
easy strategy to pursue because to differentiate a product or
service involves some money and increases cost the very thing
the low price seeks to reduce. This strategy is fit for the DIY
industry as the likes of Robert Dyas are not able to stand the
competition. The success of this is dependent on providing unique
more efficient products or services to consumers whilst at the
same time operating at a lower cost to be able to lower its price
below the industry level. The success of this strategy could
further be enhanced if the firm has economies of scale and can
increase volume of sales more than its competitors, thereby,
reducing its base cost as a result. Asda's George brand is an
example of a generic hybrid strategy in a SBU.
Another strategy is differentiation strategy. This seeks to provide
products or services completely different from those of its
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competitors by adding features valued by consumers. The main

objective of using this is to either maintain the market share or
increase market share relative to its competitors. A clear example
of this is aircraft manufacturer Airbus's wider fuselages, cockpits
designed for use in more than one aircraft and electrical rather
than mechanical flight controls.
Those features have helped Airbus win customers like New Yorkbased Jet blue; although Jet Blue is staffed with former employees
from Boeing. (Fortune, Europe Edition 22 November 17th 2003;
pp34) This strategy could be used to achieve a competitive
advantage which is its ultimate aim by the firm investing more in
R&D, unique designs and features. The marketing-based
approaches in terms of good marketing communication (example
advertising the products or services) as well as the brand power
to win the loyalty of consumers. (Example Airbus)
The fifth generic competitive strategy is the focused
differentiation strategy which seeks to provide high perceived
value; justifying a substantial price premium usually to a selected
market, segment. It is usually adopted to counter or to compete
others in seemingly similar segment. This could therefore be
argued that focused differentiation is just an extension of any of
the four strategies so far considered depending on the
competitors in this new segment which is usually middle to high
income earners. A convincing example is the introduction of Lexus
in 1989 by Toyota to compete with other luxury brands of BMW
and Mercedes Benz new series.
For the focused differentiation strategy to be used to obtain a
competitive advantage over competitors in the industry, the
business unit must find ways to make the production more
efficient to be able to pass on the savings to customers. The
business unit must identify new segments and must also be
prepared to aggressively create new market segment where it is
believed first movers get huge advantage. Again Toyota prides
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itself in this by being the first to introduce a

brand,scion,specifically for young buyers in January, 2003 which
was a success and the introduction of hybrids in 1997 selling
127,000 far more than Honda.( Hybrid uses two engines and is
environmentally friendly.) (Fortune, Europe Edition, Number 24
December 22 2003; pp57).
The essence of the various strategies discussed so far is to create
or add value to the products or services in order to give improved
and or enough satisfaction to the customer so that the firm will
gain a competitive advantage over its rivals. However, it is one
thing for a firm to gain a competitive advantage and another to
sustain the competitive advantage so gained. So when a firm is
able to get a competitive advantage over its competitors, it
becomes expedient to try to sustain this advantage.
Some of the ways to sustain the competitive advantage is by
what is described as isolating mechanism. This is the application
of forces like barriers of imitation which limit the extent to which a
competitive advantage can be duplicated or matched or even
possibly scrapped through the resource creation activities of other
firms. Though similar in principle to the barrier of entry force,
whereas the entry barriers protect profitability of an entire
industry, isolating mechanisms sustain the competitive advantage
of a single firm. For example legal barriers like trademarks,
patents or intellectual property rights as in Microsoft's case.
It could also be for the mere fact that the leading firm makes it
difficult for the competitor to catch up with the firm's technology
because it entered the market earlier and it continues to research
and might be able to move to a superior position by the time its
competitors catch up. This is known as the early mover
advantage. Because the business unit has entered the market
earlier, the past success in the market is believed to sustain the
firm.
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In my own opinion based on the discussions above, if really

sustainable competitive advantage is the persistence of a firm's
ability to outperform its industry, then suffice it to say that, as
much as gathering and use of competitive information as
illustrated in the Sears' story above can give a firm a (sustainable)
competitive advantage, it is really difficult if not impossible to
sustain any competitive advantage for a very long time. This is so
because of the rate of technological changes, changes in business
strategies, and the fact that customers' loyalty can wane and
affect sales leading to a fall in market share and thus competitive
advantage. Boeing was overtaken by Airbus in the aviation
industry at some time. Sears' leadership was taken away by Walmart.
In spite of the availability of choice of the five generic strategies,
it is supposed that the onus of their success rests with
management and how the technology and the information
gathered are blended for use. This is so because a careful
monitoring and evaluation constantly and the right identification
and proper timing of a particular segment are keys to the success
of these strategies due to market dynamism.

3)EXPLAIN HOW PRICES ARE SET TO

REFLECT AN ORGANISATIONS
OBJECTIVES AND MARKET CONDITONS:One of the four major elements of the marketing mix is price.
Pricing is an important strategic issue because it is related to
product positioning. Furthermore, pricing affects other marketing
mix elements such as product features, channel decisions, and
promotion.
While there is no single recipe to determine pricing, the following
is a general sequence of steps that might be followed for
developing the pricing of a new product:
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1. Develop marketing strategy - perform marketing analysis, segmentation, targeting, and

positioning.
2. Make marketing mix decisions - define the product, distribution, and promotional
tactics.
3. Estimate the demand curve - understand how quantity demanded varies with price.
4. Calculate cost - include fixed and variable costs associated with the product.
5. Understand environmental factors - evaluate likely competitor actions, understand
legal constraints, etc.
6. Set pricing objectives - for example, profit maximization, revenue maximization, or
price stabilization (status quo).
7. Determine pricing - using information collected in the above steps, select a pricing
method, develop the pricing structure, and define discounts.

Marketing
Strategy
Marketing Mix

and

the

Before the product is developed, the marketing strategy is

formulated, including target market selection and product
positioning. There usually is a tradeoff between product quality
and price, so price is an important variable in positioning.
Because of inherent tradeoffs between marketing mix elements,
pricing will depend on other product, distribution, and promotion
decisions.

Estimate the Demand Curve

Because there is a relationship between price and quantity
demanded, it is important to understand the impact of pricing on
sales by estimating the demand curve for the product.
15

For existing products, experiments can be performed at prices

above and below the current price in order to determine the price
elasticity of demand. Inelastic demand indicates that price
increases might be feasible.

Calculate Costs
If the firm has decided to launch the product, there likely is at
least a basic understanding of the costs involved, otherwise, there
might be no profit to be made. The unit cost of the product sets
the lower limit of what the firm might charge, and determines the
profit margin at higher prices.
The total unit cost of a producing a product is composed of the
variable cost of producing each additional unit and fixed costs
that are incurred regardless of the quantity produced. The pricing
policy should consider both types of costs.

Environmental Factors
Pricing must take into account the competitive and legal
environment in which the company operates. From a competitive
standpoint, the firm must consider the implications of its pricing
on the pricing decisions of competitors. For example, setting the
price too low may risk a price war that may not be in the best
interest of either side. Setting the price too high may attract a
large number of competitors who want to share in the profits.
From a legal standpoint, a firm is not free to price its products at
any level it chooses. For example, there may be price controls
that prohibit pricing a product too high. Pricing it too low may be
considered predatory pricing or "dumping" in the case of
international trade. Offering a different price for different
consumers may violate laws against price discrimination. Finally ,
collusion with competitors to fix prices at an agreed level is illegal
in many countries.
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Pricing Objectives
The firm's pricing objectives must be identified in order to
determine the optimal pricing. Common objectives include the
following:

Current profit maximization - seeks to maximize current profit, taking into account
revenue and costs. Current profit maximization may not be the best objective if it results
in lower long-term profits.

Current revenue maximization - seeks to maximize current revenue with no regard to

profit margins. The underlying objective often is to maximize long-term profits by
increasing market share and lowering costs.

Maximize quantity - seeks to maximize the number of units sold or the number of
customers served in order to decrease long-term costs as predicted by the experience
curve.

Maximize profit margin - attempts to maximize the unit profit margin, recognizing that
quantities will be low.

Quality leadership - use price to signal high quality in an attempt to position the product
as the quality leader.

Partial cost recovery - an organization that has other revenue sources may seek only
partial cost recovery.

Survival - in situations such as market decline and overcapacity, the goal may be to
select a price that will cover costs and permit the firm to remain in the market. In this
case, survival may take a priority over profits, so this objective is considered temporary.

Status quo - the firm may seek price stabilization in order to avoid price wars and
maintain a moderate but stable level of profit.

For new products, the pricing objective often is either to maximize

profit margin or to maximize quantity (market share). To meet
these objectives, skim pricing and penetration pricing strategies
often are employed. Joel Dean discussed these pricing policies in
his classic HBR article entitled, Pricing Policies for New Products.
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Skim pricing attempts to "skim the cream" off the top of

the market by setting a high price and selling to those customers
who are less price sensitive. Skimming is a strategy used to
pursue the objective of profit margin maximization.
Skimming is most appropriate when:
Demand is expected to be relatively inelastic; that is, the
customers are not highly price sensitive.
Large cost savings are not expected at high volumes, or it is
difficult to predict the cost savings that would be achieved at high
volume.
The company does not have the resources to finance the large
capital expenditures necessary for high volume production with
initially low profit margins.

Penetration pricing pursues the objective of quantity

maximization by means of a low price. It is most appropriate
when:
Demand is expected to be highly elastic; that is, customers are
price sensitive and the quantity demanded will increase
significantly as price declines.
Large decreases in cost are expected as cumulative volume
increases.
The product is of the nature of something that can gain mass
appeal fairly quickly.
There is a threat of impending competition.
As the product lifecycle progresses, there likely will be changes in
the demand curve and costs. As such, the pricing policy should be
reevaluated over time.

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The pricing objective depends on many factors including

production cost, existence of economies of scale, barriers to
entry, product differentiation, rate of product diffusion, the firm's
resources, and the product's anticipated price elasticity of
demand.

Pricing Methods
To set the specific price level that achieves their pricing objectives, managers may
make use of several pricing methods. These methods include:

Cost-plus pricing - set the price at the production cost plus a certain profit margin.

Target return pricing - set the price to achieve a target return-on-investment.

Value-based pricing - base the price on the effective value to the customer relative to
alternative products.

Psychological pricing - base the price on factors such as signals of product quality,
popular price points, and what the consumer perceives to be fair.

In addition to setting the price level, managers have the opportunity to design
innovative pricing models that better meet the needs of both the firm and its
customers. For example, software traditionally was purchased as a product in
which customers made a one-time payment and then owned a perpetual license to
the software. Many software suppliers have changed their pricing to a subscription
model in which the customer subscribes for a set period of time, such as one year.
Afterwards, the subscription must be renewed or the software no longer will
function. This model offers stability to both the supplier and the customer since it
reduces the large swings in software investment cycles.

Price Discounts
The normally quoted price to end users is known as the list price.
This price usually is discounted for distribution channel members
and some end users. There are several types of discounts, as
outlined below.
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Quantity discount - offered to customers who purchase in large quantities.

Cumulative quantity discount - a discount that increases as the cumulative quantity

increases. Cumulative discounts may be offered to resellers who purchase large quantities
over time but who do not wish to place large individual orders.

Seasonal discount - based on the time that the purchase is made and designed to reduce
seasonal variation in sales. For example, the travel industry offers much lower off-season
rates. Such discounts do not have to be based on time of the year; they also can be based
on day of the week or time of the day, such as pricing offered by long distance and
wireless service providers.

Cash discount - extended to customers who pay their bill before a specified date.

Trade discount - a functional discount offered to channel members for performing their
roles. For example, a trade discount may be offered to a small retailer who may not
purchase in quantity but nonetheless performs the important retail function.

Promotional discount - a short-term discounted price offered to stimulate sales.

Types of Pricing Strategies

There are a number of prevailing pricing strategies used in marketing. From
product to product, one or more of those pricing strategies may come into play
over a product's lifecycle.

Price Leader
o A product that has a demonstrated benefit or attribute over other products in the
same category can price itself far above the prevailing pricing rates. Tide
laundry detergent is such a product in the laundry detergent segment. Liquid
Tide can cost almost 10 times the amount of other brand name detergent
products like Arm & Hammer or Gain for the same amount of product. For
decades, Tide has made numerous product improvements, and heavy
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advertising spending communicated its superiority over competitors and

justified its position as the pricing leader.

Price Matching
o Matching a competitive price is a tactic used by marketers to take the issue of
price off the table. This tactic is used by a company that may be stronger
competitively on other features and benefits. Price matching puts a competitor
on the defensive. The gasoline industry sets price based upon the price of crude
oil primarily. However from block to block, there will be price matching and
even pricing wars among local competitors.

Price Undercutting
o

A product may undercut price with the recognition that it is in a difficult

position against a strong competitor and the only way to compete is to lose
money on price but make it up on the volume sold. This is known as price
undercutting. With this strategy, unit sales volume becomes the measurement of
market success rather than dollar sales volume. The goal here is to make up the
loss realized from a lower price with growth in unit sales from an attractive
price, which creates higher demand and thus higher total dollar volume.

Lost Leader
o Another pricing strategy is to sell a product at such a low price that the
company loses money with each purchase. This strategy is usually a short-term
strategy that the product employs to create demand for itself or another
company product selling in the same product category. A manufacturer of bread
spreads might price its jelly as a lost leader and charge a premium for its peanut
butter. The perception by customers is that both products have a good price
even though one might be significantly above competitors' pricing.

Close Out and Sale Pricing

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o This pricing strategy is employed when the goal is to move units of product
without regard to price. This is a technique often used by stores that are closing
or when new seasonal merchandise is due in the store but current stocks of last
season's goods have not been sold.

4 ) ILUSTRATE HOW PROMOTIONAL

ACTIVITY IS INTEGRATED TO ACHIEVE
MARKETING ONJECTIVES :Integrated Marketing Communication (IMC) involves the idea that
a firms promotional efforts should be coordinated to achieve the
best combined effects of the firms efforts. Resources are
allocated to achieve those outcomes that the firm values the
most.
Promotion involves a number of tools we can use to increase
demand for our The most well known component of promotion is
advertising, but we can also use tools such as the following:

Public relations (the firms staff provides information to the media in the hopes of
getting coverage). This strategy has benefits (it is often less expensive and media
coverage is usually more credible than advertising) but it also entails a risk in that we
cant control what the media will say. Note that this is particularly a useful tool for small
and growing businessesespecially those that make a product which is inherently
interesting to the audience.

Trade promotion. Here, the firm offers retailers and wholesalers temporary discounts,
which may or may not be passed on to the consumer, to stimulate sales.

Sales promotion. Consumers are given either price discounts, coupons, or rebates.

Personal selling. Sales people either make cold calls on potential customers and/or
respond to inquiries.

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In-store displays. Firms often pay a great deal of money to have their goods displayed
prominently in the store. More desirable display spaces include: end of an aisle, freestanding displays, and near the check-out counter. Occasionally, a representative may
display the product.

Samples

Premiums

PROMOTIONAL OBJECTIVES AND

EFFECTIVENESS
Generally, a sequence of events is needed before a consumer will
buy a product. This is known as a hierarchy of effects. The
consumer must first be aware that the product exists. He or she
must then be motivated to give some attention to the product
and what it may provide. In the next stage, the need is for the
consumer to evaluate the merits of the product, hopefully giving
the product a try. A good experience may lead to continued use.
Note that the consumer must go through the earlier phases
before the later ones can be accomplished.
Promotional objectives that are appropriate differ across the
Product Life Cycle (PLC). Early in the PLCduring the introduction
stagethe most important objective is creating awareness among
consumers. For example, many consumers currently do not know
the Garmin is making auto navigation devices based on the global
position satellite (GPS) system and what this system can do for
them. A second step is to induce trialto get consumers to buy
the product for the first time. During the growth stage, important
needs are persuading the consumer to buy the product and prefer
the brand over competing ones. Here, it is also important to
persuade retailers to carry the brand, and thus, a large proportion
of promotional resources may need to be devoted to retailer
incentives. During the maturity stage, the firm may need to focus
on maintaining shelf space, distribution channels, and sales.
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Different promotional approaches will be appropriate depending

on the stage of the consumers decision process that the
marketer wishes to influence. Prior to the purchase, the marketer
will want to establish a decision to purchase the product and the
specific brand. Here, samples might be used to induce trial.
During the purchase stage, when the consumer is in the retail
store, efforts may be made to ensure that the consumer will
choose ones specific brands. Paying retailers for preferred shelf
space as well as point of purchase (POP) displays and coupons
may be appropriate. After the purchase, an appropriate objective
may be to induce a repurchase or to influence the consumer to
choose the same brand again. Thus, the package may contain a
coupon for future purchase.
There are two main approaches to promoting products. The
push strategy is closely related to the selling concept and
involves hard sell and aggressive price promotions to sell at this
specific purchase occasion. In contrast, the pull strategy
emphasizes creating demand for the brand so that consumers will
come to the store with the intention of buying the product.
Hallmark, for example, has invested a great deal in creating a
preference for its greeting cards among consumers.
There are several types of advertising. In terms of product
advertising, the pioneering ad seeks to create awareness of a
product and brand and to instill an appreciation among
consumers for its possibilities. The competitive or persuasive ad
attempts to convince the consumer either of the performance of
the product and/or how it is superior in some way to that of
others. Comparative advertisements are a prime example of
this. For instance, note the ads that show that some trash bags
are more durable than others. Reminder advertising seeks to
keep the consumer believing what other ads have already
established. For example, Coca Cola ads tend not to provide new
information but keep reinforcing what a great drink it is.
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push and pull strategies :Marketing theory distinguishes between two main kinds of
promotional strategy - "push" and "pull".

Push
A push promotional strategy makes use of a company's sales
force and trade promotion activities to create consumer
demand for a product.
The producer promotes the product to wholesalers, the
wholesalers promote it to retailers, and the retailers promote it to
consumers.
A good example of "push" selling is mobile phones, where the
major handset manufacturers such as Nokia promote their
products via retailers such as Carphone Warehouse. Personal
selling and trade promotions are often the most effective
promotional tools for companies such as Nokia - for example
offering subsidies on the handsets to encourage retailers to sell
higher volumes.
A "push" strategy tries to sell directly to the consumer, bypassing
other distribution channels (e.g. selling insurance or holidays
directly). With this type of strategy, consumer promotions and
advertising are the most likely promotional tools.

Pull
A pull selling strategy is one that requires high spending on
advertising and consumer promotion to build up consumer
demand for a product.
If the strategy is successful, consumers will ask their retailers for
the product, the retailers will ask the wholesalers, and the
wholesalers will ask the producers.
25

A good example of a pull is the heavy advertising and promotion

of children's toys mainly on television. Consider the recent BBC
promotional campaign for its new pre-school programme the
Fimbles. Aimed at two to four-year-olds, 130 episodes of Fimbles
have been made and are featured everyday on digital children's
channel CBeebies and BBC2.
As part of the promotional campaign, the BBC has agreed a deal
with toy maker Fisher-Price to market products based on the
show, which it hopes will emulate the popularity of the Tweenies.
Under the terms of the deal, Fisher-Price will develop,
manufacture and distribute a range of Fimbles products including
soft, plastic and electronic learning toys for the UK and Ireland.
In 2001, BBC Worldwide (the commercial division of the BBC)
achieved sales of 90m from its children's brands and properties
last year. The demand created from broadcasting of the Fimbles
and a major advertising campaign is likely to pull demand from
children and encourage retailers to stock Fimbles toys in the
stores for Christmas 2002.

promotional mix elements :A business' total marketing communications programme is called

the "promotional mix" and consists of a blend of advertising,
personal selling, sales promotion and public relations tools. In this
revision note, we describe the four key elements of the
promotional mix in more detail.
It is helpful to define the four main elements of the promotional
mix before considering their strengths and limitations.

(1) Advertising
Any paid form of non-personal communication of ideas or
products in the "prime media": i.e. television, newspapers,
magazines, billboard posters, radio, cinema etc. Advertising is
26

intended to persuade and to inform. The two basic aspects of

advertising are the message (what you want your communication
to say) and the medium (how you get your message across)

(2) Personal Selling

Oral communication with potential buyers of a product with the
intention of making a sale. The personal selling may focus initially
on developing a relationship with the potential buyer, but will
always ultimately end with an attempt to "close the sale".

(3) Sales Promotion

Providing incentives to customers or to the distribution channel to
stimulate demand for a product.

(4) Publicity
The communication of a product, brand or business by placing
information about it in the media without paying for the time or
media space directly. otherwise known as "public relations" or PR.

27

Advantages and Disadvantages of Each

Element of the Promotional Mix
Mix Element

Advantages

Disadvantages

Good for building awareness

Impersonal - cannot answer all a

customer's questions

Advertising
Effective at reaching a wide audience
Repetition of main brand and product
positioning helps build customer trust

Not good at getting customers to

make a final purchasing decision

Personal Selling
Highly interactive - lots of
Costly - employing a sales force has
communication between the buyer and many hidden costs in addition to
seller
wages
Excellent for communicating
Not suitable if there are thousands
complex / detailed product information of important buyers
and features
Relationships can be built up important if closing the sale make take
a long time
Sales Promotion
Can stimulate quick increases in sales If used over the long-term,
by targeting promotional incentives on customers may get used to the effect
particular products
Too much promotion may damage
Good short term tactical tool
the brand image

28

Public Relations
Often seen as more "credible" - since
the message seems to be coming from
a third party (e.g. magazine,
newspaper)

Risk of losing control - cannot

always control what other people
write or say about your product

Cheap way of reaching many

customers - if the publicity is achieved
through the right media

5) ANAYLYSE THE ADDITIONAL

ELEMNTS OF EXTENDED
MARKETING MIX:(The 4 P's of Marketing)
Marketing decisions generally fall into the following four
controllable categories:
Product
Price
Place (distribution)
Promotion
The term "marketing mix" became popularized after Neil H.
Borden published his 1964 article, The Concept of the Marketing
Mix. Borden began using the term in his teaching in the late
1940's after James Culliton had described the marketing manager
29

as a "mixer of ingredients". The ingredients in Borden's marketing

mix included product planning, pricing, branding, distribution
channels, personal selling, advertising, promotions, packaging,
display, servicing, physical handling, and fact finding and
analysis. E. Jerome McCarthy later grouped these ingredients into
the four categories that today are known as the 4 P's of
marketing, depicted below:
The Marketing Mix

These four P's are the parameters that the marketing manager
can control, subject to the internal and external constraints of the
marketing environment. The goal is to make decisions that center
the four P's on the customers in the target market in order to
create perceived value and generate a positive response.

Product Decisions

30

The term "product" refers to tangible, physical products as well as

services. Here are some examples of the product decisions to be
made:
Brand name
Functionality
Styling
Quality
Safety
Packaging
Repairs and Support
Warranty
Accessories and services

Price Decisions
Some examples of pricing decisions to be made include:
Pricing strategy (skim, penetration, etc.)
Suggested retail price
Volume discounts and wholesale pricing
Cash and early payment discounts
Seasonal pricing
Bundling
Price flexibility
Price discrimination

Distribution (Place) Decisions

31

Distribution is about getting the products to the customer. Some

examples of distribution decisions include:
Distribution channels
Market coverage (inclusive, selective, or exclusive distribution)
Specific channel members
Inventory management
Warehousing
Distribution centers
Order processing
Transportation
Reverse logistics

Promotion Decisions
In the context of the marketing mix, promotion represents the
various aspects of marketing communication, that is, the
communication of information about the product with the goal of
generating a positive customer response. Marketing
communication decisions include:
Promotional strategy (push, pull, etc.)
Advertising
Personal selling & sales force
Sales promotions
Public relations & publicity
Marketing communications budget

32

6)RECOMMEND MARKETING MIX FOR

TWO DIFFERENT SEGMENTS IN
CONSUMER MARKET:Demographic Segmentation
Some demographic segmentation variables include:
Age
Gender
Family size
Family lifecycle
Generation: baby-boomers, Generation X, etc.
Income
Occupation
Education
Ethnicity
Nationality
Religion
Social class

Geographic Segmentation
The following are some examples of geographic variables often
used in segmentation
Region: by continent, country, state, or even neighborhood
Size of metropolitan area: segmented according to size of
population
33

Population density: often classified as urban, suburban, or rural

climate: according to weather patterns common to certain
geographic regions

7)EXPLAIN IN DIFFERENCES IN
MARKETING PRODUCTS AND SERVICES
TO ORGANISATIONS RATHER THAN
CONSUMERS :There are many differences in marketing a product compared to a
service. One difference is that with a product, it is generally
something the consumer can touch. Services are more based on
creating an end result. Another difference that is normally found
in marketing a service compared to a product is the guarantee. It
is harder to guarantee a service, although it can be done, while it
is fairly easy to guarantee a product. Another big factor is cost.
Pricing products is easier than pricing services. For example, one
copywriter may charge $250 for the service of writing a sales
letter while another copywriter may charge $10,000 to write a
sales letter. Which service is better? What is the price based on?
How does one copywriter justify charging $250 and the other
justify charging $10,000? It can be based on experience and proof
of being able to generate the results the consumer wants. Service
is more psychological marketing.
Marketing products and services to an orginization is different due
to the fact that those within an orginization are usually employees
of their assigned departments. This changes the atmosphere to
where you will be using more facts and hard data to present in
your advertisement. While a visual element will still be used, the
photography and artwork usually will want to relate to the reward
34

a orginization will receive for doing business with the advertiser.

In an orginization value and necessity are core concepts you want
to implement.
When marketing to an orginization your segment will go into
department channels as well as will need to target and address
the proper decision makers.
Consumer products and services have a greater focus on creating
desires and needs in a more social and less formal fashion. Hard
facts may be good to present to the consumer but a focus more
on simple functions and social status become core concepts in the
consumer market. Demographics and key market channels can be
less complex in the consumer market. This in part is due to
technology in today's media environment allowing better
statistics on segmented marketing channels.

8 ) EXPLAIN HOW AND WHY

INTERNATIONAL MARKETING DIFFERS
FROM DOMESTIC MARKET :Domestic marketing is the marketing practices within a
marketer's home country. Foreign marketing is the domestic
operations within a foreign country (i.e., marketing methods used
outside the home market). Comparative marketing analytically
compares two or more countries' marketing systems to identify
similarities and differences.
International marketing studies the "how" and "why" a product
succeeds or fails abroad and how marketing efforts affect the
outcome. It provides a micro view of the market at the company
level.
35

Multinational, global, and world marketing are all the same thing.
Multinational marketing treats all countries as the world market
without designating a particular country as domestic or foreign.
As such, a company engaging in multinational marketing is a
corporate citizen of the world, whereas international marketing
implies the presence of a home base. However, the subtle
difference between international marketing and multinational
marketing is probably insignificant in terms of strategic
implications.

People In Every Nation Differ

As any marketing student can tell you, the market segment of the
United States is dependent on many different factors, including
demographic and psychographic characteristics and buying
behaviors. Each of these types of characteristics change from
nation to nation so marketing that doesn't also change is doomed
to fail.
Good global marketing considers these characteristics and how
they change what people want, need, and will buy. Effective
global marketing campaigns alter marketing strategies, tactics,
and messages to match the people in each nation.

Demographic Characteristics Change By

Nations
Once you move beyond marketing in the United States, each
country is defined by a different history and culture. Thus,
marketing to the same generation differs. For example, what an
18-year-old in the United States wants, differs greatly from what
an 18-year-old in Sudan wants.
36

Psychographic Characteristics Are

Affected By Culture
A major part of the concept of marketing segments is
psychographic characteristics. These also be differ across the
nations. Every single culture on Earth has its own morals, values
and culture, and that means different cultures will put different
pressures on their citizens.North Korea puts the pressure of
following the "Glorious Leader" on its citizens, while Britain is very
different. What one culture wants is very different from what
another culture considers acceptable.Over time, what a culture
considers to be acceptable changes. Once marketers focused on
women as being only housewives. In some countries that is still
acceptable, and marketers still focus on that segment and
attitude. But in many nations, marketers no longer portray women
in that way.

Buying Power And Habits Vary

Throughout world markets, people buy differently because of
different buying behaviors that have been affected by what they
need, what they can buy and how much money they have. People
with more spending power have very different buying habits from
those with less money to spend. This is true across the world and
within nations.
Furthermore, people's buying habits change. For example, in
Europe people buy their food fresh for the meals they are having
that day, while in North America, they buy what they need for a
month at a time, and freeze it or store it.
North Americans don't want to keep going out to buy food,
Europeans don't want to eat frozen food.

REFRENCES:37

http://www.learnmarketing.net/microenvironment.htm
http://www.oup.com/uk/orc/bin/9780199296378/01student/additio
nal/page_12http://wiki.answers.com/Q/Outline_factors_that_influe
nce_the_choice_of_targeting_startegies#ixzz1GQ84UOLr
http://ezinearticles.com/?Sustaining-CompetitiveAdvantage&id=2240669
http://www.netmba.com/marketing/pricing/
Read more: Types of Pricing Strategies in Marketing | eHow.com
http://www.ehow.com/about_5561422_types-pricing-strategiesmarketing.html#ixzz1Glvi4Bt2
http://tutor2u.net/business/marketing/promotion_mix.asp
http://www.consumerpsychologist.com/intro_Promotion.html
http://tutor2u.net/business/marketing/promotion_pushpull.asp
http://www.netmba.com/marketing/mix/
http://www.netmba.com/marketing/market/segmentation/
http://wiki.answers.com/Q/How_Marketing_products_and_services_
to_organisation_differs_from_marketing_products_and_services_to
_consumers#ixzz1Gnd6LSeC
http://wiki.answers.com/Q/Distinguish_international_marketing_fro
m_domestic_marketing#ixzz1GnhWFoeI

Context :38

1)IDENTIFY AND EXPLAIN MACRO AND MICRO ENVOIRMENTAL

FACTORS WHICH INFLUENCE MAKRETING
DECESIONS(1-6)

2)OUTLINE THE FACTORS WHICH INFLUENCE THE CHOICE OF

TARGETING
STRATEGY
(7-13)

3)EXPLAIN HOW PRICES ARE SET TO REFLECT AN

ORGANISATIONS OBJECTIVES AND MARKET
CONDITONS
13-19

4 ) ILUSTRATE HOW PROMOTIONAL ACTIVITY IS INTEGRATED TO

ACHIEVE MARKETING
ONJECTIVES
19-25

5)ANAYLYSE THE ADDITIONAL ELEMNTS OF EXTENDED

MARKETING MIX26-29

6)RECOMMEND MARKETING MIX FOR TWO DIFFERENT SEGMENTS

IN CONSUMER
MARKET
29-30

39

7)EXPLAIN IN DIFFERENCES IN MARKETING PRODUCTS AND

SERVICES TO ORGANISATIONS RATHER THAN
CONSUMERS30-31

8 ) EXPLAIN HOW AND WHY INTERNATIONAL MARKETING DIFFERS

FROM DOMESTIC
MARKET
31-33

SUBMITTED TO :- SIR,ZAHID MEHMOOD

40

SUBMITTED FROM :OMER,TALHA,BINYA,ADNAN

UNIT NAME :- MARKETING

SUBMISSION DATE

:-

41

SUBMITTED TO :- SIR,ZAHID MEHMOOD

SUBMITTED FROM :OMER,TALHA,BINYA,ADNAN

UNIT NAME :- ORGANISATION AND

BEHAVIOUR

SUBMISSION DATE

:-

42