Bài tập cá nhân marketing management2

Topic 2: Marketing Management

CONTENT
4. “PLC as a tool for marketing strategy" justify
Product life cycle is the process showing how products go through from the development
to decline stage in the market.
Sales

Introduction Growth Maturity Decline Time
PLC is used to emphasize on these things: s

 Every product has a limited life

 Each stage brings a variety of obstacles, challenge and also opportunities to the

company

 Profits earned may go up or down through different steps in the cycle

 At one stage, the company needs to develop strategies in order to gain more

profits

There are 04 stages in a PLC process:

a. Introduction: a step of introducing new product to the market, this requires a lot of
time and cost invested in to attract potential customers. In addition, market research
and analysis with research and development plan (R&D) are necessary. Due to it, the
company can identify and observe competitors and prepare to launch market
campaigns for sales increase. Sale promotion is really important to build product
awareness.

b. Growth: this step can bring profits and help increase product sales as well as customer
awareness. However, competitors’ reactions should be focused for a better product
improvement. Sale promotions are sometimes used to increase awareness and
customers’ concern in the market.

c. Maturity: the product reaches at peak sales. At this stage, the company needs to think
of new strategies, which can stop moving to the decline stage. They can be updating
product to a newer version (IPhone 4, 4S, 5, 5S and now IPhone 6), or developing
new product based on the existing one’s popularity. No cost is included and number
of competitors is decreasing. The company prepares for three main strategies
including market modification; product modification and marketing mix modification
to simulate sales.

d. Decline/Withdrawal: due to changes and competition in the market, there are several
strategies for the company to think of:
 Increasing investment for being a leading market or gaining competitive
advantages
 Maintaining investment in the product until the company gets everything clear
 Decreasing investment on mass market and focus more on target market
 Harvesting investment to get cash back quickly
 Divesting the company by arranging its properties for the best benefit
Example: In order to introduce IPhone to the market, at the beginning, Apple invested

a large amount of money in running lots of advertising campaigns to attract customers
about a new high fashion technology. After a while, clients started increasing and other
companies launched products for competition. Then, Apple reaches the peak sales;

consumers became addicted to IPhone. To prevent decline stage, Apple has continuously
produced many versions of IPhone such as 4, 4S, 5, 5S and now following version 6.

Needless to say that Apple has been very successful and proud of this great achievement.

5. Explain process of selecting the final price.
The process of selecting the final price is:
1. Select the objective: emphasize on major objectives:

 Survival: short-term orientation for remaining in the market in case the company
has enough financial resources.

 Maximum current profit: the company just concentrates on choosing the best price
that helps bring maximum current profit.

 Maximum market share: applicable when cost of production and distribution
declines; low price can disappoint competitors and motivate the market growth

 Maximum market skimming: a high price is set for the product. This type is used
when the set price does not get competitors’ attention; production cost is
acceptable; there are potential customers with high demand and the price shows
exactly the product quality

 Product-quality leadership: offers customers with high quality product at top price
2. Determine demand:

There will a wide range of demand depending on product price
Price sensitivity: Implications for branding
Estimating demand curves: Done primarily through marketing research
Price elasticity of demand: Elastic or inelastic
3. Estimate costs:
There are two forms fixed and variable cost. Then managers can estimate total and
average costs of production that will help them set up plans and strategies to get profit

effectively with minimum cost.
4. Analyze competitors:
Examining competitors’ pricing strategy to gain competitive advantages against them

5. Select pricing method:
Focusing on three Cs customer demand, cost function and competitors price, they are
considered as important influences in setting the final price. There are five types of
pricing strategy:
Skimming: used in Introduction Stage of the PLC which the company will set high
price for the product in order to earn profit quickly
Penetration: Set a low price for the product in order to attract customers as much as
possible
Product life cycle: includes 4 stages introduction, growth, maturity and decline.
Competitive-based: Compete on other product attributes or set lower price against
competitors.
Temporary discount: use temporary discounts to increase sales. Temporary discount
pricing strategies include coupons, cents-off sales, seasonal price reductions and even
volume purchases
In addition, mangers should consider some factors that has impact on pricing strategy:
 Impact of other marketing activities
 Company pricing policies
 Gain-and-risk sharing pricing
 Impact of price on other parties

6. Advertising forces people to buy goods they do not want
Advertising is any paid form of non-personal presentation and promotion of ideas, goods
and services through mass media such as newspapers, magazines, television or radio by
an identified sponsor” (Kotler, 2011)
However, this definition is no longer appropriate with the development today as people
can make and post their own advertisements thanks to different kinds of technology

without payment. In addition, not all advertisements has identified sponsor at the start, in

some cases customers get information at the end only.
Aspects influence consumer’s minds:

- Motivation: Base on people’s inspirations according to Maslow’s hierarchy,
advertising is used to change perception and create more essential needs for
customers

- Perception: there are different reactions for a same stimuli
o Selective attention
o Selective distortion
o Selective retention

The company can predict customers’ responses and use various ways of
advertising in order to influence their decision making
- Buying situation: there are lots of steps in the buying decision process of
customers which are: Problem recognition, Information search, Emergence and
evaluation of alternatives, Purchase decision, Purchase and Post purchase
evaluation. These steps will help the company in persuading and manipulating
customers to buy their products.
Ways of advertising to target markets based on these aspects:
- Salesman’s techniques: limited time offer, loyalty card, buy 1 get 1 free, etc.
- Guerrilla marketing: daily advertisement on TV, word of mouth, celebrity, free
sample, etc. Example of Pepsi, they always use celebrity in their advertisements to
attract more customers from their fan clubs. Or brands as Colgate, PS, etc.,
representatives are experts or doctors who will easily form reliability to customers.
- Psychological pricing:

o Odd pricing: creates an illustration of value example which makes customer

feel of paying less (example: the product price is 99.000 instead of
100.000)

o Prestige pricing: used in luxury industry that makes customers believe the
balance in quality and value of the product. Louis Vuitton, Channel,

Mercedes are examples of this advertising tool. Even though their products
are extremely expensive and also there are no special offers from these
brands; they still have loyalty customers because besides the high quality of
products, customers state their positions in the society beyond others.
- Use social network: Internet, Facebook, communication network, etc.
Advertising is considered as a power force to manipulate customers to buy things that
they do not want. Because there are a lot of methods of advertising that the company can
use to convince and influence customers’ buying decision.

7. Explain the process of integrated Marketing communication
The marketing communication mix includes advertising, sales promotion,
public/publicity relations, direct marketing and personal selling. A product itself is not
just a good but also presents a service, an idea for the company. So these above methods
should be integrated to deliver a constant message to customers for their brand
awareness.
There are six steps developing IMC strategy as following:
a. Identifying target audience: identify the market segmentation who makes the most
effective use of product
b. Determining marketing communication objectives: assume the desired response from
customers through their cognitive, affective and behavioral stages
c. Designing a message: develop an efficient message based on AIDA model (get
attention, embrace interest, stimulate desire, and extract action)

• Content: has 3 types of appeal which are rational, emotional and moral

- Rational appeal: provides information and benefits of product, which can help

customers in making buying decision.
- Emotional appeal: has two sides positive and negative that will influence

purchasing.
- Moral appeal: convinces customers the right and appropriate thing to do.
 Structure: impacts on the message effectiveness that has one-sided presentation or

two-sided arguments. Basing on the situation, the company can decide which one
will be suitable to attract customers.
 Format: the message will have different formats depending on media types such as
print ad, radio, TVC, etc.
 Source: sources are used for delivering the message should be popular or attractive
in order to achieve more customers’ attention (celebrity, expert, etc.)
d. Selecting communication channels: there are two types in general:
 Personal: direct communication by face-to-face, telephone or email
 Nonpersonal: the company uses various types of media (print, broadcast,
electronic or display) following with atmospheres (the package environment which
is decorated to support customers’ decision) and events organized to deliver
message to target market.
e. Establishing the Marketing communication budget: there are four common methods
for the company to work on budget estimation:
 Affordable: budget is set at the amount which manager thinks they can afford.
 Percentage-of-sale: cost is set at a specified percentage of sales price.
 Competitive-parity: company decides the expenditure for a competitive parity to
prevent promotion wars.
 Objective-and-task: manager establishes objectives and tasks to achieve and then
estimates the budget for these performances.
f. Developing and managing Marketing communication mix: at this step the company

needs to decide which promotional tool they should use for their product
 Advertising: is used to build product image or for a quick sales. It can be at very
high cost (TVC) or a smaller budget (print ad, newspaper)
 Sales promotion: provides product information to customers, let them see the
value that product offers and encourage them to the transaction
 Public/Publicity relations: gives more persuasive and reliable than advertisements
as well as prevent bothering customers like seller
 Personal selling: direct communication with customers to help deepen the

relationship
 Direct marketing: the message is updated frequently and delivered directly to

specified customers. Then it may be improved depending on their response
g. Measuring result:

The company have to collect information about customers’ feedbacks to see whether
their strategies effective or not. After that, they can make improvements for a better
communication
h. Managing the Integrated Marketing Communications process:

The company integrates IMC tools (advertising, direct marketing, public relations and
personal selling) to carry out product message effectively and strengthen its impact to
customers.
Ex: Louis Vuitton’ target customers are people who desire to state their positions, their
values in the society, therefore the company chooses to produce luxury products at very
high price. People around may not know how much you earn, but with a Louis Vuitton
product, they understand how high of the level you are at in the society. There are
website, catalogs and image display in front of stores in order to attract customers. The
company do not use much promotions and the price is so high; however; customers
always receive the message of best products with best service from Louis Vuitton. Thus,

after being the first customer, they tend to become loyal of this brand.

8. Explain “direct marketing" and its applicability with examples.
Direct marketing is a marketing system to communicate directly with target customers for
generating reactions and transaction at any place. Applying direct marketing is
advantageous because today customers are more open to direct communication. It targets
to specific segments of customers with customized message. Moreover, company will
find it easy to assess the effectiveness. On the contrary, besides annoying customers, this
tool receives an actual low response rate and also causes image problem sometimes,
especially with telemarketing.

Using direct marketing brings many benefits: to buyers they are convenience, easy usage,
privacy, immediacy and interaction; to seller they are requiring low cost, building
association and an active substitute channel to reach target customers
Major channel of direct marketing:
- Face-to-face selling: uses skilled sales persons and agents to sell products: insurance,
real estate, etc.
- Direct mail: fax, email, voice mail, etc. which is used to pronounce, offer or repeat the
product to indicated customers
- Catalog marketing: customers have opportunity to check product availability,
information and promotion on print, CD, or online catalogs. Clothing, shoe stores
frequently update their product information through online catalogs to make more
convenient for customers in purchasing.
- Telemarketing: phone is utilized for direct communication with customers. Speaker
should always be patient, calm and passionate with a gentle voice.
- Direct-response television marketing: direct-response TV advertising and home
shopping: BestBuy and Viet Nam Home Shopping are two popular channels in Vietnam
today. They advertise everyday on TV with a wide range of products for customers.
- Kiosk marketing: a type of machine set in store or other specified locations. It is more
convenient for customers to check availability and order product by themselves.

To sum up, a variety types of direct marketing will help the company present their
products directly to customers. Conversely, the user should be carefully in the way of
attracting instead of bothering customers.

REFERENCES:
 Call, Guillaume; Audousset Geoffroy; Bayrak Samet; Vaskova Petra; Pistecky Jan;

Kopecky Daniel; Heydrich Lukas; Fiser Martin 2010, ‘Advertising makes you buy
things you do not need! it manipulates you!’, Marketing Group Project, Czech

University of Life Sciences Prague.


 Philip Kotler, 2002, ‘Marketing, Management, Millenium Edition’, Custom Edition
for University of Phoenix