Detailed Marketing Management Notes 📝

These notes are a comprehensive guide to the provided material on marketing management.
The content is broken down into easy-to-understand sections with examples and detailed
explanations, perfect for both written and viva examinations.

Module 1: The Foundations of Marketing 🧠

What is Marketing?

Marketing is the process of identifying and fulfilling human and societal needs. It's a blend of
art and science, requiring careful planning and execution. Good marketing turns a private or
social need into a profitable business opportunity.

 Example 1 (Google): The need was for people to find information on the internet
more easily. Google addressed this by creating a powerful search engine.
 Example 2 (IKEA): The need was for affordable, good-quality furniture. IKEA
responded with flat-pack furniture that customers assemble themselves, which lowers
costs.

The American Marketing Association defines marketing as "the activity, set of institutions,
and processes for creating, communicating, delivering, and exchanging offerings that have
value for customers, clients, partners, and society at large".

Marketing Management

Marketing management is the art and science of choosing target markets and building,
maintaining, and growing customer relationships by creating, delivering, and communicating
superior customer value. Its goal is to make selling unnecessary by understanding the
customer so well that the product or service sells itself.

 Example: Products like the Nintendo Wii or Apple iPad were incredibly popular at
launch because the companies had done their marketing homework. They understood
consumers, competitors, and other external factors to design the right product, which
led to high demand without aggressive selling.

What is Marketed?

Almost anything can be marketed. The ten main types are:

1. Goods: Physical products like cars, food, and refrigerators.

2. Services: Actions or performances such as flights, legal advice, or haircuts.
3. Events: Time-based occurrences like concerts or the Olympics.
4. Experiences: Creating immersive environments for customers. For example, Walt
Disney World's Magic Kingdom creates a fairy kingdom experience.
5. Persons: Marketing individuals like artists, athletes, or CEOs.
6. Places: Promoting cities, states, or countries to attract tourism or businesses.
7. Properties: Marketing real estate or financial properties like stocks and bonds.
 8. Organizations: Marketing non-profit groups like universities, museums, or charities.
9. Information: Marketing books or news from organizations.
10. Ideas: Marketing social messages like "Friends Don't Let Friends Drive Drunk".

The Marketing System

A simple marketing system involves an

industry (sellers) and a market (buyers). The industry sends goods and communications to
the market , while the market sends money and information back to the industry.

A modern exchange economy is more complex, with flows between different markets:

 Resource Markets provide resources to Manufacturer Markets.

 Manufacturer Markets create goods and sell to Intermediary Markets.
 Intermediary Markets distribute goods to Consumer Markets.
 Government Markets collect taxes and provide services to all other markets.

Key Customer Markets

Companies sell to four main types of customer markets:

 Consumer Markets: Companies selling everyday products like juice or shoes must
build a strong brand image through great products and wide availability.
 Business Markets: Companies selling to other businesses deal with professional
buyers. Sales teams, reputation, and price are more important than advertising.
 Global Markets: Companies operating globally must adapt to differences in culture,
language, laws, and politics.
 Nonprofit and Governmental Markets: These organizations often have limited
budgets, so companies must be careful with pricing. Government purchases often
require bids, with a preference for the lowest practical solution.

Needs, Wants, and Demands

 Needs: Basic human requirements like food, water, clothing, and shelter. Marketers
do not create needs; they already exist.
 Wants: Needs that are directed at specific things. A need for food becomes a want for
a pizza.
 Demands: Wants for specific products that are backed by the ability to pay.
Companies need to know who has the purchasing power to buy their products.

Five Types of Needs

Marketers must understand the different layers of customer needs:

1. Stated Needs: What the customer explicitly says they want ("I want an inexpensive
car.").
2. Real Needs: The actual underlying need (a car with low running costs).
3. Unstated Needs: What the customer expects but doesn't state (good service from the
dealer).
 4. Delight Needs: What would surprise and please the customer (a built-in GPS).
5. Secret Needs: What the customer might not admit to, but still desires (to be seen as a
smart shopper).

Marketing Channels

Marketers use three types of channels to reach customers:

1. Communication Channels: Used to send and receive messages from buyers.

o Dialogue Channels allow two-way communication (e.g., email, blogs).
o Monologue Channels are one-way (e.g., advertisements).
2. Distribution Channels: For showing, selling, or delivering products. These can be

direct (via internet or phone) or indirect (using intermediaries like retailers and
wholesalers).

3. Service Channels: Support transactions, including warehouses, banks, and insurance

companies.

Impressions and Engagement

 Impressions: When a consumer simply sees a communication. This tracks reach but
not effectiveness.
 Engagement: Measures how much attention a customer gives to a communication.
It's an active response and more likely to create value for a company. Online
examples include "likes" and sharing content.

Value and Satisfaction

 Value: Customers choose products that offer the most value. Value is the total of all
benefits and costs, both tangible (features) and intangible (brand reputation). It's a mix
of quality, service, and price (the

customer value triad).

 Satisfaction: A customer's judgment of a product's performance compared to their

expectations.
o Performance < Expectations = Disappointed.
o Performance = Expectations = Satisfied.
o Performance > Expectations = Delighted.

Supply Chain

The supply chain is the entire journey a product takes, from raw materials to the final
customer. A company can gain a larger share of the value created by expanding its
operations, either backward (toward raw materials) or forward (toward direct sales).

 Example (Johnson & Johnson): The company hired a top executive to fix consumer
and supply chain issues after problems with manufacturing.
Competition

Competition includes all actual and potential rivals and substitutes a buyer might consider.
Defining competition too narrowly can be a mistake.

 Example (Automobile Manufacturer): An automaker's competition for steel isn't

just other steel companies. It also includes substitute materials like aluminum or
engineered plastics that make the car lighter. A steel company is more likely to be
affected by these substitutes than by other steel companies.

Marketing Environment

The marketing environment has two main parts:

 Task Environment: Direct players involved in making and promoting an offering,

including the company, suppliers, distributors, dealers, and target customers.
 Broad Environment (PESTEL Factors): Six major forces that marketers must
monitor.
o Political: Government policies and political stability (e.g., international air
travel decreased after 9/11).
o Economic: Income, inflation, and recession (e.g., demand for mortgages falls
during a recession).
o Social-Cultural: Societal values and trends (e.g., as populations age, demand
for healthcare increases).
o Technological: New technologies and innovations (e.g., demand for internet
banking rises as more homes get computers).
o Environmental: Sustainability concerns (e.g., increased demand for energy-
efficient products).
o Legal: Laws and regulations (e.g., governments legalizing new products like
drones).

Company Orientations Toward the Marketplace

1. The Production Concept: Customers prefer products that are widely available and
inexpensive. Companies focus on efficient production and mass distribution.
o Example: Appliance giant Haier used its large, inexpensive labor force to
dominate developing markets with this approach.
2. The Product Concept: Customers prefer products with the best quality, performance,
or innovative features. The "better mousetrap" fallacy states that a great product will
sell itself, but this is not always true without proper pricing, distribution, and
promotion.
3. The Selling Concept: Consumers won't buy enough products on their own, so
companies must use aggressive selling. This is used for "unsought goods" like
insurance or when a company has too much stock. It is a risky approach because it
assumes unhappy customers won't bad-mouth the product.
4. The Marketing Concept: A customer-focused idea that states the goal is to find the
right products for your customers, not the right customers for your products.
o Example: Dell offers product "platforms" that allow customers to customize
the features they want, rather than making a standard PC for everyone.
Selling vs. Marketing (Theodore Levitt):

 Selling: Focuses on the seller's needs; aims to turn products into cash.
 Marketing: Focuses on the buyer's needs; aims to satisfy customer needs through the
entire process of creating, delivering, and using the product.

The Holistic Marketing Concept

This is a modern approach that recognizes that "everything matters" in marketing. It

develops, designs, and implements marketing programs with a broad, integrated view.

The Marketing Mix (4 P's)

The traditional marketing mix includes the elements a company uses to implement its
strategy. The

4 P's are:

 Product: The goods and services a company offers.

 Price: The amount customers pay for the product.
 Place (Distribution): How the product is made available to customers.
 Promotion: The activities that communicate the product's value.

The Value Delivery Process

The modern value delivery process has three phases, starting long before a product is created:

1. Choosing the Value (Strategic Marketing): This is the planning stage where
marketers segment the market, select a target, and define the product's value
proposition. This is known as

STP (Segmentation, Targeting, Positioning).

2. Providing the Value (Tactical Marketing): This involves setting product features,
prices, and distribution channels.
3. Communicating the Value (Tactical Marketing): This is the promotion phase,
where the company uses advertising, sales teams, and other tools to announce and
promote the product.

The Value Chain

Michael Porter's value chain identifies nine value-creating activities in a business:

 Primary Activities: Inbound Logistics, Operations, Outbound Logistics, Marketing

(including sales), and Service.
 Support Activities: Procurement, Technology Development, Human Resource
Management, and Firm Infrastructure.

Core Competencies
A core competency is a special skill a company has that meets three criteria:

1. It provides a competitive advantage and significant customer benefit.

2. It can be used in many different markets.
3. It's difficult for competitors to copy.

Strategic Planning

Strategic planning is a crucial process for marketers to ensure they are doing the right things.
It happens at four organizational levels:

1. Corporate Level: Headquarters defines the corporate strategic plan for the entire
company.
2. Division Level: Each division plans how to use its funds.
3. Business Unit Level: Each business unit creates a strategic plan.
4. Product Level: Each product line or brand develops a marketing plan.

A marketing plan has two levels:

 Strategic Marketing Plan: Defines the target markets and value proposition.
 Tactical Marketing Plan: Details specific marketing actions, including product
features, promotions, pricing, and sales channels.

Corporate Strategic Planning

Four main activities for corporate headquarters:

1. Defining the Mission: A good mission statement has limited goals, stresses policies
and values, defines competitive areas, is long-term, and is short, memorable, and
meaningful.
o Example (Google): "To organize the world's information and make it
universally accessible and useful".
o Example (Mary Kay): "Enriching Women's Lives".
2. Establishing SBUs: A Strategic Business Unit (SBU) is a single business or a group
of related businesses that can be planned separately, has its own competitors, and has
a manager responsible for its profit.
3. Assigning Resources: Deciding how to allocate resources to each SBU.
4. Assessing Growth Opportunities: Using Market Opportunity Analysis (MOA) to
assess opportunities by asking key questions like whether the company can reach the
target market cost-effectively and if it can deliver benefits better than competitors.

Porter's Generic Strategies

Michael Porter proposed three main strategies:

1. Overall Cost Leadership: A company aims to have the lowest production and
distribution costs to gain market share with lower prices.
2. Differentiation: A business focuses on being much better in a key customer benefit
area that a large part of the market values, such as quality or performance.
 3. Focus: A business concentrates on one or a few narrow market segments and then
pursues either cost leadership or differentiation within those specific segments.

Module 2: Customer Value, Satisfaction, and Loyalty 🤝

Traditional vs. Modern Organization

 Traditional: A top-down approach with customers at the bottom, seen as recipients

of the company's efforts.
 Modern: A customer-oriented approach where customers are at the top, and all other
levels of the organization (frontline staff, middle management, top management)
support them.

Customer-Perceived Value (CPV)

CPV is the difference between a customer's total benefits and total costs in getting a product.

 Total Customer Benefit: Includes the product's features, services, and image.
 Total Customer Cost: Includes money, time, energy, and mental effort.
 Example (Dell): Dell initially succeeded with low costs and efficient delivery.
However, when they moved call centers to save money, poor service (a cost to the
customer) reduced their overall customer value, even though the price was still low.

Delivering High Customer Value

Companies can improve their value offering by:

 Increasing functional or emotional benefits.

 Reducing monetary costs (price) or non-monetary costs (time, energy).

Total Customer Satisfaction

Satisfaction is how a customer feels when a product's performance matches their

expectations.

 The Satisfaction-Loyalty Link: Many companies mistakenly believe high

satisfaction equals high loyalty. Studies show that only

"completely satisfied" customers are truly loyal.

Measuring Satisfaction

Companies use methods like:

 Periodic surveys.
 Tracking customer loss rates.
 Using mystery shoppers.
 Monitoring social media.
Product and Service Quality

Quality is how well a product performs its job, meeting or exceeding customer expectations.
Higher quality leads to higher satisfaction, which supports higher prices and lower costs.

Total Quality Management (TQM) is a company-wide approach to continuously improving

quality.

Customer Profitability

Not all customers are equally profitable. Some may cost more to serve than they spend, even
if they are loyal.

Customer Profitability Analysis (CPA) helps identify profitable customers using Activity-
Based Costing (ABC), which estimates the real cost of serving them.

 Example: A company might classify customers: profitable (large stores buying

standard products), less profitable (medium stores), and unprofitable (small stores
needing lots of support). The goal is to encourage profitable customers and manage
unprofitable ones.

Customer Lifetime Value (CLV)

CLV is the estimated total profit a company can expect from a customer over their entire
relationship. It encourages companies to focus on long-term value and retention.

 Example (BMW): A customer who buys a BMW every five years for 50 years and
recommends others has a substantial CLV, potentially exceeding $300,000.

Attracting and Retaining Customers

It's often cheaper to keep existing customers than to acquire new ones. The

"leaky bucket" analogy illustrates that businesses are constantly losing customers and must
work to "plug the leaks". The goal is to move customers down the

funnel model from prospects to repeat customers, clients, advocates, and partners.

Building Customer Loyalty

 Loyalty: A deep commitment to a preferred product or service despite competitive

pressures.
 Relationship Marketing: Building strong, lasting relationships with customers by
understanding their needs and providing consistent value.
 CRM (Customer Relationship Management): Managing detailed customer
information and all "touch points" (interactions with the brand) to maximize loyalty.
o Example (Hotel): A hotel's touch points include reservations, check-in, room
service, and restaurants.

Strategies for Retaining Customers

 1. Reducing Customer Defection: Companies should measure their retention rate,
identify why customers are leaving, and fix the causes of dissatisfaction.
2. Loyalty Programs:
o Frequency Programs (FPs): Reward customers who buy frequently (e.g.,
airline frequent-flyer miles).
o Club Membership Programs: Offer special benefits to members (e.g.,
discounts, community events).

Customer Databases & Database Marketing

customer database is an organized collection of detailed customer information, including

demographic, psychographic, and behavioral data.

Database marketing uses this data to identify, track, and serve customers individually.

 Example (Catalog Companies): These companies use databases to send specific

catalogs to customers who are most likely to buy based on past purchases.

Module 3: Analyzing Consumer and Business Markets 📈

What Influences Consumer Behavior?

1. Cultural Factors: Culture is the main determinant of a person's wants and behavior.
Subcultures and social classes provide more specific identities.
2. Social Factors:
o Reference Groups: Groups that directly or indirectly influence a person's
attitudes or behavior.
 Primary Groups: Interact with continuously and informally (e.g.,
family, friends).
 Secondary Groups: More formal and less continuous (e.g.,
professional groups).
 Aspirational Groups: Groups a person hopes to join.
 Dissociative Groups: Groups whose values a person does not agree
with.
3. Personal Factors:
o Age and Life Cycle Stage: Preferences for products change with age and life
stages like marriage or childbirth.
o Occupation and Economic Situation: A person's job and financial status
affect buying choices.
o Personality and Self-Concept: Unique psychological traits that influence
how we buy things.
o Lifestyle and Values: A person's way of living, shown through their
activities, interests, and opinions, influences their purchasing behavior.

Model of Consumer Behavior

Consumer behavior is influenced by marketing stimuli (product, price, distribution,
promotion) and other stimuli (economic, technological, etc.). These inputs, along with
consumer psychology and characteristics, lead to the

Five-Stage Buying Decision Process and, ultimately, the final purchase decisions.

Key Psychological Processes

1. Motivation: The driving force behind behavior. Theories include

Freud's (unconscious desires), Maslow's Hierarchy of Needs (fulfilling basic needs

first), and Herzberg's Two-Factor Theory (satisfaction and dissatisfaction factors).

2. Perception: How we select, organize, and interpret information to make sense of the
world.
3. Learning: Changes in behavior based on experience. Consumers tend to take credit
for success and blame external factors like a product for failure (

Hedonic Bias).

4. Emotions: Marketers increasingly use emotional appeals and brand stories to connect
with consumers.
5. Memory: How consumers recall information.

Five-Stage Buying Decision Process Model

1. Problem Recognition: The buyer recognizes a need, triggered by internal stimuli

(e.g., needing a winter coat) or external stimuli (e.g., seeing a friend's new car).
2. Information Search: Consumers gather information from personal sources (friends),
commercial sources (ads), public sources (social media), and experiential sources
(using the product).
3. Evaluation of Alternatives: Consumers evaluate options. The

Expectancy-Value (EV) model helps understand this, where the overall value is a
weighted sum of a product's attributes.

o Example (Laptop): A consumer gives different weights to attributes like

memory, graphics, and price to calculate the perceived value of each laptop
and choose the best option.
4. Purchase Decision: The buyer decides whether to buy. This is influenced by feature
importance, emotions, and social pressure.
5. Post-Purchase Behavior: After the purchase, the customer is either satisfied
(performance meets expectations) or dissatisfied (performance doesn't meet
expectations).

Organizational Buying

Organizational buying is the process where formal organizations determine their need for
products and services and then find, assess, and select suppliers. The
business market includes all organizations that buy goods for making other products,
reselling, or renting them for a profit.

Differences Between Business and Consumer Markets

 Fewer, Larger Buyers: B2B marketers deal with far fewer, but much larger, buyers.

Example: Goodyear sells tires to a few large car manufacturers like GM and Ford.

 Close Relationships: Due to fewer customers, suppliers often work closely with their
business customers to build long-term relationships.
 Professional Purchasing: Business products are bought by trained purchasing agents
following specific policies.
 Multiple Buying Influences: Decisions are influenced by multiple people, and
buying committees are common.
 Derived Demand: Demand for business goods comes from the demand for consumer
goods. If consumer demand for shoes drops, the demand for leather will also drop.
 Inelastic Demand: Total demand for many business goods is not much affected by
price changes in the short run.
 Geographically Concentrated Buyers: Business buyers are often located in specific
regions (e.g., Silicon Valley).
 Fluctuating Demand: Demand for business goods can be more volatile than
consumer goods due to the acceleration effect.

Example: A small increase in consumer demand for shoes can lead to a much larger
percentage increase in demand for leather.

 Direct Purchasing: Business buyers often buy directly from manufacturers,

especially for large, complex items.

Business Buying Process

The process has eight stages:

1. Problem Recognition.
2. General Need Description.
3. Product Specification.
4. Supplier Search.
5. Proposal Solicitation.
6. Supplier Selection.
7. Order-Routine Specification.
8. Performance Review.

Vertical Coordination

Companies can classify buyer-supplier relationships into eight categories, from simple
exchanges to highly collaborative partnerships.
Module 4: Marketing Mix Decisions 📦

Product Levels: The Customer-Value Hierarchy

A product is anything offered to a market to satisfy a need or want. Marketers plan their
offerings across five levels:

1. Core Benefit: The fundamental service or benefit the customer is truly buying.

Example: A hotel guest buys "rest and sleep".

2. Basic Product: The actual product that delivers the core benefit.

Example: A hotel room with a bed and bathroom.

3. Expected Product: Attributes and conditions buyers normally expect.

Example: A clean bed, fresh towels, and a quiet environment in a hotel room.

4. Augmented Product: Features that exceed customer expectations. Competition often

happens at this level.

Example: A flat-screen TV and high-speed internet in a hotel room.

5. Potential Product: All possible future enhancements. This is where companies look
for new ways to satisfy customers.

Product Classifications

 Based on Durability:
o Nondurable Goods: Consumed in one or a few uses (e.g., shampoo). The
strategy is to make them widely available and advertise heavily.
o Durable Goods: Survive many uses (e.g., refrigerators). They require more
personal selling and service.
o Services: Intangible and perishable (e.g., haircuts). They require more quality
control and credibility.
 Based on Consumer-Goods Classification:
o Convenience Goods: Purchased frequently and with minimal effort (e.g., soft
drinks).
o Shopping Goods: Products a consumer compares on quality, price, and style
(e.g., furniture, clothing).
o Specialty Goods: Unique characteristics for which buyers make a special
purchase effort (e.g., cars, designer clothes).
o Unsought Goods: Products a consumer doesn't normally think of buying (e.g.,
life insurance).

Product and Service Differentiation

Companies can differentiate their products by:

  Form: Size, shape, or physical structure (e.g., different forms of aspirin).
 Features: How products vary in features that complement their basic function.
 Quality: Performance and conformance quality.
 Durability and Reliability: How long a product lasts and its probability of not
failing.
 Style: The product's unique look and feel (e.g., Mini Cooper).
 Services: Adding value through services like ease of ordering, delivery, installation,
customer training, and maintenance.

Example: GE's service revenue for its industrial products is greater than its product
sales.

 Design: A powerful differentiator that combines aesthetics and functionality.

Product Systems and Mixes

 Product System: A group of diverse but related items that work together.

Example: Samsung's smartphone system includes phones, chargers, and apps.

 Product Mix (or Assortment): All the different products and items a seller offers. It
has four dimensions:

width (number of product lines), length (total number of items), depth (variations of
each product), and consistency (how related the lines are).

Co-Branding and Ingredient Branding

 Co-Branding: Combining two or more well-known brands into one product.

Example: General Electric and Intel co-branded digital imaging workstations.

 Ingredient Branding: A specific type of co-branding where a brand is used as a

component within another product.

Example: Gore-Tex fabric in outdoor clothing or Intel Inside in computers.

Packaging

Packaging is often called the "fifth P" of marketing. It has five objectives:

1. Identify the brand.

2. Convey information.
3. Facilitate transportation and protection.
4. Assist at-home storage.
5. Aid product consumption.

Product Life-Cycle (PLC) Marketing Strategies

The PLC has four stages, each requiring different strategies:

 1. Introduction: Slow sales growth with negative profits due to high costs. A

pioneering advantage can be gained, but there are high development costs.

2. Growth: Rapid sales growth and increasing profits. Strategies include improving
quality, adding features, and expanding distribution.
3. Maturity: Sales growth slows, and profits may stabilize or decline. This is the longest
stage. Strategies to extend it include

market modification (converting nonusers, increasing usage) and product

modification (improving quality, features, or style).

4. Decline: Sales and profits fall consistently. Companies must decide whether to
continue investing, harvest (reduce costs to maximize short-term profits), or divest
(sell or liquidate).

Marketing Mix: Promotion

The promotion mix includes various tools to communicate with customers:

 Advertising: Paid, non-personal promotion by an identified sponsor. The

Five M's of advertising are Mission, Money, Message, Media, and Measurement.

 Sales Promotion: Short-term incentives to encourage purchase or sale. Tools include

samples, coupons, price packs, and free trials.
 Public Relations (PR): Building good relationships with various publics to get
favorable publicity and a good corporate image. PR stories are often seen as more
believable than ads.
 Personal Selling: Personal presentation by the sales force.
 Direct Marketing: Direct connections with targeted consumers to get an immediate
response and build lasting relationships.

Marketing Channels / Place Decisions

marketing channel is a group of interdependent organizations that help make a product or

service available to customers.

 Channel Levels (for Consumer Products):

o Zero-Level Channel (Direct): Manufacturer sells directly to the customer
(e.g., online selling).
o One-Level Channel: Manufacturer to retailer to customer (e.g., major
appliance retailers).
o Two-Level Channel: Manufacturer to wholesaler to retailer to customer (e.g.,
convenience goods).
 Types of Distribution:
o Intensive Distribution: Placing a product in as many outlets as possible (e.g.,
convenience goods).
 o Selective Distribution: Using more than one, but fewer than all,
intermediaries (e.g., shopping goods).
o Exclusive Distribution: Giving a limited number of dealers the exclusive
right to distribute in their territory (e.g., luxury brands).

Marketing Mix: Pricing Decisions

A six-step process for setting prices:

1. Select the pricing objective: Survival, maximum profit, maximum market share
(penetration pricing), maximum market skimming, or product-quality leadership.
2. Determine demand: Analyze price sensitivity and use surveys or statistical analysis
to estimate demand curves.

Price elasticity of demand measures how responsive demand is to a price change.

3. Estimate costs: Understand fixed costs (overhead), variable costs, and total costs.
4. Analyze competitors' costs, prices, and offers: Consider what competitors charge
and how they might react to your pricing.
5. Select a pricing method: Consider the floor (costs), a middle point (competitors'
prices), and the ceiling (customer's unique feature assessment).
6. Select the final price: Consider other marketing activities, company policies, and the
impact on other parties like suppliers and the government.

Possible Exam Questions & Answers 📝

Q1: What are the three main types of marketing channels? Provide an example for
each.

Answer: The three main types of marketing channels are communication, distribution, and
service channels.

1. Communication Channels: Used to send and receive messages from buyers. These
can be one-way (

monologue channels) like television advertisements or two-way (dialogue channels)

like email or blogs.

2. Distribution Channels: Used to show, sell, or deliver a product or service. These can
be

direct (e.g., a company selling products on its own website) or indirect, using
intermediaries like retailers or wholesalers.

3. Service Channels: Support transactions with potential buyers, including warehouses,

banks, and insurance companies.
Q2: Differentiate between needs, wants, and demands, and explain the five types of
needs. Provide a real-world example.

Answer:

 Needs are basic human requirements for things like food, shelter, and education;
marketers do not create them, they already exist.
 Wants are needs directed at specific things that can satisfy them, like wanting a deep-
dish pizza to satisfy a need for food.
 Demands are wants for specific products that are backed by the ability to pay.

The five types of needs are:

1. Stated Need: What the customer explicitly says they want.

2. Real Need: The actual underlying need.
3. Unstated Need: What the customer expects but doesn't say.
4. Delight Need: What would surprise and please the customer.
5. Secret Need: What the customer desires but might not admit to.

Example: A customer goes to a car dealership with the stated need of wanting an
"inexpensive car." Their real need is a car with low running costs and good fuel efficiency.
They have an unstated need for good service from the dealer. They would be delighted to
receive a free built-in GPS with the car. Their secret need might be for their friends to see
them as a smart shopper.

Q3: Explain the concept of "customer-perceived value" and how it differs from
"customer satisfaction."

Answer:

Customer-perceived value (CPV) is the difference between the total benefits a customer
gets from a product and the total costs of getting it. The total benefits include a product's
features, services, and image , while the total costs include money, time, energy, and mental
effort. CPV is a mix of quality, service, and price.

Customer satisfaction is a customer's judgment of a product's performance compared to

their expectations. While CPV is a measure of the overall value proposition before and after a
purchase, satisfaction is a more immediate post-purchase judgment. If performance is less
than expected, a customer is disappointed; if it meets expectations, they are satisfied; and if it
exceeds expectations, they are delighted. While a customer can be highly satisfied, only those
who are "completely satisfied" are truly loyal and unlikely to switch to a competitor.
This detailed study guide covers the key topics from your material on Contemporary Issues
in Marketing, specifically focusing on Green Marketing (through the lens of Corporate
Environmentalism) and Viral Marketing (including Paid, Owned, and Earned Media).

1. Green Marketing: Corporate Environmentalism 🌍

Green Marketing relates to a firm's efforts to promote products and services that are
environmentally friendly or sustainable. A major component of this is

Corporate Environmentalism.

A. What is Corporate Environmentalism?

Corporate environmentalism is the recognition of the

need to integrate environmental issues into a firm's strategic plans. It involves finding
ways to

reconcile prosperity with environmental protection, which presents significant

opportunities for businesses.

B. Examples of Corporate Environmentalism in Practice

 Investment in Control/Alternatives: Steel companies and public utilities invest

billions in pollution-control equipment and environmentally friendly fuels.
 Green Products/Services: Creating hybrid cars, low-flow toilets and showers,
organic foods, and green office buildings.
 Alternative Energy: Firms like the Irish company Airtricity develop new wind
farms as an alternative energy source. *

Environmentally Conscious Consumer Products: Seventh Generation offers a

range of household products aimed at environmentally conscious consumers.

C. Key Environmental Trends for Marketers to Know

Marketers must be aware of several critical environmental trends that affect business strategy:

1. Shortage of Raw Materials: This is particularly a concern for water.

o Resource Types: The Earth's raw materials are categorized as:
 Infinite
 Finite Renewable
 Finite Nonrenewable
o Business Impact: Firms using finite nonrenewable resources (like oil, coal,
platinum, zinc, silver) will face substantial cost increases as these resources
become depleted. Firms that can develop
 substitute materials have a significant opportunity.

2. Increased Cost of Energy: The soaring price of a finite nonrenewable resource, oil,
has caused serious problems for the world economy. Companies are searching for
practical means to harness alternative energies such as

solar, nuclear, and wind.

3. Increased Pollution Levels: Industrial activity will inevitably cause some damage,
creating a large market for pollution control solutions like scrubbers, recycling
centers, and landfill systems. It also creates a market for alternative ways to produce
and package goods.
o Global Issue: Many poor nations are doing little about pollution due to a lack
of funds or political will, and even richer nations today lack the necessary
funds to help them control it.
4. Changing Role of Governments.

2. Viral Marketing and Media Types

Viral Marketing is another key concept. The rise of digital media has given marketers many
new ways to interact with consumers.

A. What is Viral Marketing?

Viral marketing is a form of online word of mouth (sometimes called "word of mouse"). It
encourages consumers to pass along company-developed products, services, or other media
(audio, video, written information) to others online.

 Goal: Viral marketing tries to create a splash in the marketplace to showcase a brand
and its noteworthy features.
 Focus on Entertainment: Some believe these efforts are driven more by the rules of
entertainment than by the rules of selling.
 Ultimate Success Factor: The success of any viral or word-of-mouth campaign
depends entirely on the willingness of consumers to talk to other consumers.
 Reality Check: Not all online content is naturally shared or goes viral; one study
found that only 4% of content "cascaded" to more than one person beyond the initial
recipient.

B. Examples of Viral Marketing

 Blendtec's "Will It Blend?": This hilarious series of online videos promoted their
commercial blenders for home use.
o Founder/CEO Tom Dickson, wearing a lab coat, pulverizes objects from golf
balls to beer bottles in a deadpan manner.
o The videos tie into current events—for example, when the iPhone launched,
Blendtec aired a video where Dickson blended one, saying, "iSmoke"
afterward.
 o This clip drew over 3.5 million views on YouTube and led to appearances on
network television.
 Tip Top Ice Cream's "Feel Tip Top": This campaign used a Facebook app to allow
people to nominate friends to receive ice cream delivered in the company's new truck.
The happy reactions were filmed for ads and

viral videos. This campaign generated 30,000 nominations and increased sales by
5%. *

Other Content Examples:

o Walmart puts videos with money-saving tips on YouTube.

o Johnson & Johnson and Pampers have popular websites with parenting advice.

C. Creating Word-of-Mouth (WOM) Buzz

Research shows that consumers behave differently when sharing positive versus negative
consumption experiences:

 Positive WOM: Consumers tend to generate it themselves and share information

about their own positive consumption experiences.
 Negative WOM: Consumers tend to only transmit negative WOM and pass on
information they heard about others' negative consumption experiences.

D. Communication Options: Paid, Owned, and Earned Media

Digital media allows marketers to group communication into three categories:

1. Paid Media:
o Definition: Channels where marketers pay a fee to show their ad or brand.
o Examples: TV ads, magazine ads, display ads, paid search, and sponsorships.
2. Owned Media:
o Definition: Communication channels that marketers actually own.
o Examples: A company/brand brochure, corporate website, blog, Facebook
page, or Twitter account.
3. Earned Media:
o Definition: Streams where consumers, the press, or other outsiders
voluntarily communicate something about the brand. This is the channel
associated with viral marketing.
o Examples: Word of mouth, buzz, or viral marketing methods.
o Monitoring: Companies like Gatorade monitor this constantly using tools
like their HQ-based Mission Control Center, which tracks brand buzz 24/7.