Bài tập marketing về chiến lược tiếp thị quá trình định giá cuối cùng, marketing trực tiếp

Bài tập marketing về Chiến lược tiếp thị - Quá trình định giá cuối
cùng, Marketing trực tiếp

1. Explain the following:
(a) Production concept
(b) Product line
(c) Augmented product
(d) Social marketing concept
2. Explain various concepts of marketing with suitable examples.
3. “PLC as a tool for marketing strategy” justify.
4. Explain process of selecting the final price.
5. Explain “direct marketing” and its applicability with examples

CONTENT

I. INTRODUCTION
Nowadays, marketing is increasingly focused by most enterprises. It is possible

that marketing is the key to success in business. A product or service whether may be
sold or not and an enterprise whether may develop or not depend mainly on marketing
activities.

The question is how to drive all marketing operations towards a motto:
Thoroughly understand and satisfy the needs and desires of your customers more
strongly than competitors. Accordingly, business objectives will be successfully
implemented. This relates to the marketing management.

In view of the marketing management of Philip Kotler: "Marketing management
include analysis, planning, implementation and inspection for the implementation of
measures to establish, consolidate, maintain and develop beneficial discussion with
selective buyers to achieve the fixed targets". (Kotler, Philip (2012), Marketing management, 14th

edition).

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Marketing management has a very important role for managing other business
operations such as: production management, financial management and human
resource management. Marketing management shall direct other management
activities by showing the needs of the targeted customers, competitive pressures and
supply of appropriate products and services.

From the knowledge of Marketing management course and my instructor's
guidance, I have decided the following topic: "Marketing Management" and analysis
of several contents to demonstrate the important role of the marketing management.
My assignment focuses on 5 contents: (1) Production concept, Product line,
Augmented product, Social marketing concept; (2) Explain various concepts of
marketing with suitable examples; (3) “PLC as a tool for marketing strategy” justify;
(4) Explain process of selecting the final price; and (5) Explain “direct marketing”
and its applicability with examples.

My assignment includes three parts: the introduction, the body and the conclusion.
My analysis will be accompanied with a number of examples to prove.
II. BODY

1. Explain the following:
(a) Production concept
(b) Product line
(c) Augmented product
(d) Social marketing concept

Several important marketing concepts are described as follows:
Production concept:

The production concept indicates that consumers will favor products to be
available for use and widely distributed at a low cost. Thus, the marketing
management should focus on manufacturing and product distribution.

This policy is usually explained by two major reasons:
Firstly, when a product demand exceeds the ability to supply, buyers will be
interested in obtaining products to consume rather than focus on the sophisticated
attributes of product quality. For example, in the developing countries, the food
demand of buyers is quite high while the ability of producers to meet is not sufficient.

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At that time, the manufacturers only pay attention to increase their production scale
for the purpose of increasing sales and profits. They do not pay much attention to
product quality.

Secondly, if the production costs are high and need to be declined, manufacturers
seek how to increase production to achieve the economic efficiency in scale in order
to expand the market. For example, in the '90s, Vietnamese consumers were less
likely to own a motorcycle though it was produced in the country (such as Super
Dream ...) because its price was too high. But later, due to mass production, its price
has been dropped significantly and many people are easy to buy.

Product line:
This concept means that all goods produced by a manufacturer. This is a group of
relative products, or because they perform a similar function, are sold to the same
group of customers, are marketed under the same distribution channels, or classified a

certain price...
For example, the line of personal hygiene products of Procter & Gamble (P&G)
consists of all kinds of products such as toothpastes, mouthwashes, toothbrushes,
shampoo, shower gels ... with so many extensive goods.

Augmented product:
In business, when main products offered to add additional values will positively
impact the purchase decisions of customers. They are called as Augmented products.
These values are considered as part of augmented products, in particular:

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- Guarantee: If the product is damaged, it will be replaced with a new one,
repaired or refunded to customers.

- Warranty: Maintenance shall be provided during the warranty by repairing or
replacing a number of products and equipment.

- Customer service: Additional services shall be provided to support the needs of
customers such as manuals, client consultation via phone or website.

- Additional products: Several product utility shall be strengthened so that major
products may be easier to use. For example, scratch-resistant cover shall be given
when you buy an ipad...

- Accessibility: Products may be accessed by customers quickly such as
availability when needed, quick delivery, shipment in person.

Social marketing concept
The social marketing concept shows that the business mission is not only to bring

customer satisfaction but also ensure the social benefits.
The social marketing concept requires marketers to balance three objectives for
the purpose of designing the marketing policies: customer satisfaction; profit target,
social welfare.
For example, an enterprise specializing dishwashing liquid focuses on high
detergent, no damage to users' hands ... but now its focuses on manufacturing
biological products without polluting the environment (such as dishwashing liquid bio
products of Amway company ...). Thus, products shall ensure consumers’ benefits and
social benefits.
2. Explain various concepts of marketing with suitable examples.
The marketing management is the conscious efforts to achieve desired exchange
outcomes with the targeted markets. In the course of business, each company may
apply various marketing management concepts.
There are five basic concepts:
(1) Production Concept
(2) Product Concept
(3) Selling Concept
(4) Marketing Concept
(5) Societal Marketing Concept
The following viewpoints of the said philosophies include:

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Production Concept:
As described in section 1. The production concept focuses on production, because
customers will benefit for availability and widely distributed at low prices.
The positive aspect of this concept is obvious when the demand exceeds the
supply. However, the supply sometimes exceeds the demand. For example, when the
supply exceeds the demand, it if hard for companies to sell their products, revenue is
not sufficient to offset the cost. At that low price, the ease of shopping will motivate

customers to buy.

Product Concept:
The product concept focuses on production, because customers will benefit if
products with best designs, innovative models are provided to them. The marketing
management should try its best efforts to obtain the continuously advanced.
The positive aspect of this concept is to promote the market to get many good
products, but there are difficulties due to emergence of substitute products on increase.
Therefore, customers will buy the substitute products with better uses and benefits.
For example, Elgin watches (produced in USA) with a concep of product respect, the
manufacturer made expensive watches with high strength, excellent accuracy. But it
failed when consumers change their views. It is said that the watch function is to
show time only, it should not be very durable, exact, but its shape must be
fashionable, convenient and affordable. So they chose to buy watches from other
manufacturers.

Selling Concept:
The sale mission is focused, because consumers will not buy all products of a
company if its strong promotional sales are insufficient.
This concept is applied to detect the potential customers by convincing the
product benefits. For example, the seller convinces the buyer to buy the products with
passive demand (unsought goods) that the buyer normally does not think about it such
as insurance, functional food or products with active demands (sought goods) but
expensive such as houses, cars…
The shortcoming of this concept makes many potential customers be surrounded
by the advertising programs, promotional services. They are very fretful and avoid.

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Marketing Concept:

The customer satisfaction is focused on bringing success, so manufacturers should
only offer products to be wanted by customers.
The marketing philosophy is based on four main pillars such as: targeted market,
customer trends, mixed marketing and profitability. The marketing philosophy
indicates that the key to achieve the targets of the organization is to determine the
needs and wishes of the targeted market, and distribute the satisfaction more
effectively than competitors.
This concept quickly becomes the foundation of modern business philosophies.
However, its limitation is not to pay attention to social welfare. For example, a
company specializes in selling chemical pesticides with efficiency of fast insect
killing responding to customer needs, but affecting the environment (social benefits).
However, they are not interested in producing biological pesticides due to slow insect
killing, high prices, customers do not like them.

Societal Marketing Concept:
As described in section 1. The social marketing concept is not only to respond the
customer satisfaction but also ensure the social benefits.
Previously, most companies established their marketing decisions on the basis of
profit, but they now focus on satisfying customer needs and perceptions of the
importance of the social benefits. As a result, the marketing activities will be
significantly better with the longer-term benefits.
From the basic concepts, companies may choose to apply to their business
activities. The choice of a particular concept depends on factors such as: competitive
position, product and service features, market situation ... But the most important
thing in modern marketing management trends is to bring high satisfaction to their
customers, business profits and social benefits.
3.“PLC as a tool for marketing strategy” justify:
A product in the market will go through the stages of development and
declination. The development phases of the product from time to time are known as
the "Product Life Cycle", abbreviated as PLC.

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Product life cycle is a key concept of marketing. It vividly describes four stages in
product consumption: Introduction, growth, maturity and decline.

Product Life Cycle may be illustrated by the following chart:

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Companies should be aware of their products stages to propose the following
appropriate marketing plans: Product introduction, old product renewal, or
replacement with a new product line. It can be said that PLC is a useful tool to help
businesses applications in numerous marketing strategies.

Specifically:
1/ Introduction Stage: The product is being marketed. Customers do not know or
do not know much about the product. Sales growth is slow and unprofitable because it
takes a lot of costs to introduce and advertise products on the market.
In this stage, if the pricing strategy is made, wrong product positioning would
reduce the product value. Due to small market size, big sales may not be created. The
enterprises must consider their marketing strategies in case of market uncertainty. The
targeted customers like to explore and experiment. They always want to be the first
person to use the product.
For example: In the late '90s, the motorcycle market of Vietnam almost did not
know the Chinese motorcycle brand. When introduced in the motorcycle market in
Vietnam, the Chinese companies used the "rapid penetration strategy." This strategy
used the high-support and low initial rates, for the purpose of rapid penetration and

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market share domination. This strategy was consistent with the market where had not
known the product, price sensitive, potential market and intensive competition. As a
result, Chinese motorcycle brand was successful, achieved a large market share in
Vietnam.

2/ Growth Stage: After the introduction stage, many customers are interested in
the product. The products are received by the market rapidly. When the product is
dominant to the market, it will bring profits significantly.

In this stage, companies may develop several marketing strategies to prolong the
rapid market growth.

For example, after the motorcycle brand has been dominant to the market, the
product improvement strategy may be made; new features and models are enhanced.
Or the strategy to penetrate into new market segments may be implemented.

3/ Maturity Stage: After the growth stage, the number of customers who have got
the products at a high level. Attractiveness of the product is not significant as ever
before. The product demand has been gradually matured.

Sales stops growing and begin to decline gradually from time to time. Many
competitors appear, so it is risky to lose the market share or the product is not met to
consumers.

In this stage, enterprises should deploy marketing strategies for new products or
alternative products.

For example, a motorcycle manufacturer has owned the "numbered motorcycle"
to be matured; accordingly motor-scooter line is made to replace the existing products.

4/ Decline Stage: At this time, the product has become too familiar and not so
attractive. Consumers are boring. They want to buy new products with more features.
Purchasing power is declined strongly, sale costs are on increase and profits are on
decrease.

In this stage, enterprise should now decide whether to implement any marketing
strategy: Maintenance, collection or removal.

For example, a “numbered motorcycle" manufacturer should apply discount
strategies to attract customers at a lower segment and to obtain revenue in the period.

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In short, the selection of appropriate marketing strategies for each stage of the
product life cycle is to exploit the strengths of the product and the market. When a
product is introduced to the market, enterprise should forecast its product life cycle to
develop the appropriate marketing activities. Accordingly, they will achieve their
profit maximization.

4. Explain process of selecting the final price:
Price is the sole factor in the marketing-mix to generate revenue, other factors
create costs. It is important to determine the prices of products or services in the
process of circulation on the market for the purpose of attracting customers as well as
achieve profits or targets.
For product price that becomes an effective marketing tool in the marketing-mix,
enterprise have to analyze the impact of factors affecting product pricing in order to
take steps to determine the price to provide the highest efficiency.
Pricing:
Enterprises must establish a price for the first development of a new product,
introduction of a new distribution channel or geographical area. This is usually done

as follows:
- Identify the targeted market segments for products or services.
- Establish the prices for consumers of such prices targeted market segments.
- Check prices (and costs if possible) of actual or potential competitors.
- Check different prices in quality or product distribution method.
- Identify profits to be obtained at each price.
- If profits are low, it is needed to change specifications of products to reduce
costs and generate profits as desired.
The order to design the pricing policy
Step 1: Selecting the pricing Objective
This is the most important step in pricing. The major objectives include: The
survival of the enterprise, highest profit, maximum market share, maximum market
surf and product quality management. Enterprises use prices as a strategic instrument
to be more beneficial than other companies that use the cost and market to determine
their prices.

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For example, Samsung, one of the groups, has experienced in market surf. They
sell at a high price when a high-tech phone is launched in the market for consumers
who have a lot of money (high segment). When the purchasing power in this segment
is declined, its prices will be rapidly discounted to attract the purchasing power in
lower market segments.

Step 2: Determining the demand
The next step is to determine demands. Each rate will create different demands
that will be inversely proportional to each other and have different impacts on
marketing objectives.
The demand estimation leads to:
- Estimation of sensitivity;

- Estimation and analysis of the demand curve;
- Determination of the demand elasticity in price.
Step 3: Estimating Costs
Product costs include: Production cost, distribution cost and sale of products.
These costs depend on each different production levels.
Step 4: Analyzing competitor’s costs, prices and offers
This is an important factor in pricing. This step depends on market demand and
product costs, competitors’ cost and possible reactions. For example, if a product or
service is poor, the enterprises will not impose a high price to their competitors. On
the other hand, they can also change prices to compete.
Step 5: Selecting a pricing method
There are three methods of valuation to be used:
First, price oriented costs: Two methods are commonly used:
- Full cost: Includes all related costs; however its shortcoming leads to an increase
in prices, in contrast to the solvency of potential customers.
- Direct cost: Includes the costs that are likely to increase in case of increased
production to determine the lowest prices and increase profits in case of price
reduction for the purpose of increasing sales during off-peak hours. For example, the
enterprise may reduce call and message charge from 23:00 pm to 6:00 am to attract
more users.

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Second, competitors’ prices:
- Market valuation: Based much on competitors’ prices that may equal, greater
than, or less than competitors. For example, higher pricing against competitors, the
enterprise should approve the delivery schedule or service quality to justify a higher
selling price.
- Competitive bidding: The buyer will choose the supplier at a lowest cost.
Third, price-oriented marketing:

A product price shall be consistent with the marketing strategy. For example, for a
new product, its price depends on location and strategy; while the existing products
are affected by strategic objectives.
Step 6: Selecting the final Price
This step is to narrow the business scope to select the final price. The enterprise
should consider additional factors such as psychological price, favorable and risky
prices, marketing impact, policies and market price. For example: for motorcycle
manufacturers such as Honda. When its models are launched, often depend on
customers’ psychology, they are eager to own a new unit with an actual price higher
than the initially expected price.
In short, via 6 steps as mentioned above, depending on specific conditions that
should be prioritized for several steps to achieve their targets. Price is only one factor
of marketing-mix to be used to achieve their marketing targets. The optimum pricing
will help companies achieve the initial targets, attract the targeted customers of each
stage and achieve optimal profitability permanently.
5. Explain “direct marketing” and its applicability with examples:
Today, together with the development of digital media, direct marketing is an
interactive marketing system using one or more mean of advertising media to effect a
measurable response and / or transaction at any location. Therefore, direct marketing
is done to obtain such measurable response, typically the buyer's orders (also known
as direct marketing order).
Direct marketers use means of direct response advertising to sell and learn about
customers whose names and major characteristics have been entered into a customer
database in order to establish a regular relationship. For example, airlines, restaurants,

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hotels, travel agents ... that establish close relationships with their clients through
awards due high frequency. They used a database of customer to offer to each
customer, including existing customers and potential customers.

Direct marketing gives customers many benefits such as time and effort saving.
For example, direct marketing introduces products to customers so that they may save
the time of shopping, know many new products to select. They do not have to meet
the limitations of space and movements, but may select favorable products.

Direct marketing helps companies convenient for their orders. They may collect a
lot of information from customers quickly, with high efficiency and low cost. In
addition, it may ensure the privacy and "invisibility" of strategies against competitors.
I can be said that direct marketing can contribute to an efficient use of resources. It is
not only appropriate for companies with streamlined structure but also discrete market
segments with specific needs.

Direct marketing applications:
The common forms of marketing are:
- Direct Mail: Send a letter by mail to customers in the region or to those who are
listed in the portfolio.
- Email Marketing: Send e-mail to customers.
- Door to Door Leaflet Marketing: Use commonly in the field of Fast Food
Industries (Fast Food Industries). This form focuses entirely by region.
- Direct response television marketing: There are two forms: television-call or
website. Long form is to use a long period of time (about 30 minutes) to describe a
product in detail. Short form is to use a short period of time (about 30 seconds or 1
minute) to clarify the client's feedbacks.
- Telemarketing: Call by phone directly to communicate with customers, and
help them reach to marketers regardless of distance, time, weather.
- Couponing: Use the printed newspapers to get feedbacks from readers with
vouchers to be cut in exchange for discount. For example, restaurants, shops
commonly attach their vouchers to newspaper, magazines to invite customers to join
any event or procurement with a discount from 5-10% ...

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- Direct selling: Salespersons will meet with clients directly. For example, the life
insurance companies (Prudential, AIA, Dai-Ichi Life ...) ask their staff to meet directly
potential customers. They will advise the benefits of insurance products such as:
Continuous guarantee of financial safety in case of possible risks, and attractive
benefits of financial investment. Then they convince customers to buy their products
and services.

- Integrated Campaigns: This is a combination of all above mentioned forms to
achieve optimum efficiency. A company may apply many forms of an integrated
marketing campaign to customers flexibly.

For example, Dai-Ichi Life Vietnam life insurance company implements a
integrated marketing campaign to Vietnamese customers Vietnam to introduce a new
insurance product known as "An Tam Hung Thinh" . They incorporate many forms of
marketing on television, newspapers, websites, and ask their staff to meet directly
clients as well as call regularly, take messages, send email to customers in the course
of campaign. Thereby, they assess the level of customer attention for these products to
provide appropriate solutions.

In summary, the direct marketing is an effective tool in marketing communication
mix. To succeed in the direct marketing, managers must make decisions about the
objectives and targeted customers, strategies to offer, questionnaire for direct
marketing factors and success measurement. An effective application of the direct
marketing tool will contribute to the success of your company.

III. CONCLUSION
Nowadays, in the context of rich and diverse market demand, increasingly

competitive, scarce business resources, the role of marketing management is
becoming increasingly important in business maintenance and development.

Marketing management plays a decisive role and coordinates the connection of
business activities and market. It ensures that the business operation will be oriented
in market, thereby the market – demand and desires of the customers shall be a solid
background for all business decisions.

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Proper understanding and application of marketing management knowledge will
contribute to the success of business operations. This will establish a strong position
and grow in a modern business environment.
REFERENCE
1. Documents, presentations of the guiding teacher of Marketing Management.
2. Christian Homburg, Sabine Kuester and Harley Krohmer (2009): Marketing

Management - A Contemporary Perspective (1st ed.), London.
3. Kotler, Philip (2012), Marketing management, 14th edition, Pearson Pulishing

House.
4. Marketing topics: Products. Available at:

(Accessed: May 20th 2014)
5. Website of PACE Institute of Management (2014). Available at:

(Accessed: May 25th 2014)

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