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This is one of the most famous quotes inMarketing stressing the importance of Production concept and level of stress andimportance given to it.But with the continuous industrialization a
1 Explain the following : 1a Production concept Production Concept is a concept where goods are produced without taking into consideration the choices or tastes of your customers It is one of the earliest marketing concepts where goods were just produced on the belief that they will be sold because consumers need them Practiced by earlier industrials, it soon became an standardized practice Ford , considered as one of the early champions of this concept once remarked that Americans can get any car from Ford until it is black This is one of the most famous quotes in Marketing stressing the importance of Production concept and level of stress and importance given to it But with the continuous industrialization and more and more players entered into the market, the space available to sell your product have squeezed because too many people were selling the same product that is why it became too obvious that the mass production of goods which is the heart and soul of production concept can no longer work because of too many me too products so the focus slightly shifted from Production concept to Customization concept where each and every product is manufactured and delivered according the tastes and choices of the customer Dell is considered to be the pioneer of this field Production concept means where marketers think that consumer buy only those things which are available and highly affordable rather than think about the product quality and other things Here marketers think about only the production that's why they don't think about the value and the satisfaction of the customer So that marketing myopia occurs here 1.b Product line Product line is a group of products that are closely related such as same physical characteristics, same usage, same consumer groups, and same marketing strategy For example, VinaMilk Company has an extensive range of products, for customers to be aware of its nutritional products, the company has produced and launched Dielac product line Talking about Dielac, consumers will immediately realize that this is a brand of nutrition products This product line includes product groups such as nutritional products for mothers (Dielac Mama, Dielac Optimum Mama); nutritional products for children such as Dielac Optimum, Dielac Alpha, Dielac Star Care, Dielac Pedia); nutritional products for adults (Vinamilk Sure Prevent, Nutritious Vinamilk, Vinamilk Diecerna, Vinamilk weight loss, Vinamilk CanxiPro) 1.c Augmented product In the book "Principle Of Marketing" Philip Kotler et al devised a very interesting concept of benefit building for products Kotler suggested that if you view a product on three levels it will help you extract all the benefits that your product offers This strategy has various names including Total Product Concept, Augmented Product and Three Levels Of a Product (Core Product, Actual Product, Augmented product) (Source : http://www.learnmarketing.net/threelevelsofaproduct.htm) Level One : Core Product Level one is the most basic level and simply looks at what people set out to buy and what benefits the producer would like their product to offer buyers For example a camera is expected to take pictures but there may be other benefits that the producer wants the buyer to enjoy such as a wide lens, face recognition and high definition videos So prior to designing any product designers should list the core benefits the product needs to provide Level 2 : Actual Product Level two is about translating the list of core product benefits into a product that people will buy There may be competitor products offering the same benefits so the aim at this stage is to design a product that will persuade people to purchase your product Kotler states that this can involve deciding on the quality level, product and service features, styling, branding and packaging For example Apple's iPhone design has enabled it to become a smart phone market leader so that by September 2012 it was able to launch the iPhone 5, the 5th version of this product There are other smart phones on the market but Apple has managed to design a product which people pre-order and camp overnight outside Apple's retail stores so that they can be the first ones to buy the product Level 3 : Augmented product Level three involves deciding the additional non tangible benefits that a product can offer Competition at this level is based around after sales service, help lines, warranties, free/cheap delivery and so on In other words it is things that the product does not do but customers may find them useful Non tangible benefits such as product warranties offer customers peace of mind and demonstrate the manufacturer has faith in the quality of its product In fact the ubiquitous use of some augmented benefits have turn some level three benefits into a customer expectation for example customers expect cars to have manufacturer warranties Or as Apple's iPhone 5, in addition to the technological features of a smart mobile phone as listening, calling, texting, internet access, film, photography, watching movies, listening to music, manufacturers also provide free cloud memory with 5GB iCloud users to store personal data Or another example : When shopping at the supermarket, you get the added services such as free home delivery, free gift wrapping, accumulate points to get discounts 1.d Social marketing concept This is a new concept which was conceived in the 1970s and caused a lot of attention from social classes This views that activities of an enterprise is to determine the needs, wants and interests of target markets and satisfy them by more effective method than competitors while still maintaining and developing benefits for consumers and society as a whole Social Marketing Concept requires marketers to balance three objectives when designing marketing policies: satisfy customers’ needs, contribute to the achievement of the corporate’s profits and ensure social welfare As a result, marketing activities will be significantly better with longer-term benefits The choice of a particular philosophy in marketing in marketing management depends on a lot of factors: the competitive position of the business, product and service’s features, needs of target markets, abilities of marketing team, etc It is important that the implementation of its marketing philosophy is to maximize clients’ satisfaction, contribute to the achievement of the business’s goals and not to damage the interests of the society For example: Today, largest automobile manufacturers in the world such as Toyota, Nissan, Mazda, BMW, Hyundai has been developing many cars that are increasingly friendly to humans and the environment by saving manufacturing materials, fuel, reducing CO2 flowing into the environment, creating more utility for users; Hybrid cars can run by both internal combustion engines and battery This growing trend has created strong competition in the automobile industry in the world 2 Explain various concepts of marketing with suitable examples 2.1 The selling concept : selling concept is a traditional concept of Marketing In traditional concept emphasis was on only selling the product Maketers would not bother about customers wants and would think that customers would buy whatever is offered to them Marketing research was not given any importance Emphasis was only on production and selling the product 2.2.The Marketing concept : Marketing concept is the modern concept of marketing Here the customer is considered as the soul of the entire marketing activity The needs of customers are found out through marketing research and then products are developed to satisfy those needs Building customer relationship and maintaining those relationship is given lot of importance Customer is considered as the king of the market This approach is used in today’s globally competitive marketing world Marketing Concept Components : Goals, Customer Needs and Wants, Deliver Product or Service Company Goals : Defining your company's goals is one of the primary components of the marketing concept Make a plan for what you'd like to achieve for the year, whether it's to increase sales, introduce a new product to the market, explore new media for advertising, open an online store or retain customers Your goals help give your business direction and focus They should be specific; stay away from making general statements about what you'd like to do Achieve this by assigning a timeframe and a dollar amount to each goal, where applicable These tactics ensure that your goals are timely and measurable The goals you set should also be realistic and attainable Use previous sales and your knowledge of the market to help you Customer Needs and Wants : Without customers, your business will see a decline in sales and may eventually be forced to close its doors For this reason, marketing focuses on identifying your target audience and then identifying their needs and wants Relate their needs and wants to the products and services your company offers or plans to offer Find out customer needs and wants by conducting research You can email them surveys, ask questions on your social networks or company blog, hold focus groups or call them to conduct brief surveys over the phone Deliver Product or Service :With your goals and your customers' needs and wants solidified, create and deliver a product or service that will enhance their lives in some way Your product might help them relax, save time, save money, restore their energy, be more productive or decorate their homes In accordance with the marketing concept, the product or service you deliver should bring members of your target market a level of satisfaction (Source: http://www.ehow.com/info_7755500_three- components-marketing- concepts.html#ixzz32uEi9SQX) * Marketing Concept Vs Selling Concept Selling Concept (Source:http://www.equerry.biz/equerry/wordpress/ - Inward focus on business wp-content/uploads/2008/04/concept.gif) Marketing Concept - Outward focus on customer - Define business by goods and - Define business by benefits for services customer - For everybody or the average - To a specific group of customer consumer - Profitability through customer - Profitability through sales volume satisfaction - Less favorable in a competitive - More favorable in a competitive environment environment How the companies think ? - Converting product into cash - Converting customers need into - Emphasis of sale of the product product already used - Emphasis on product planning and - Fragmented approach to selling development - Buyer beware principle followed - Cost determine price - Integrated approach to marketing How the companies act ? - Seller beware principal followed - Focus on seller’s needs - Customer determine price, price - Holds customer and business - Manufactures the product first determine cost - Sales volume oriented - Focus on customer needs How the companies perform ? - Holds customer and business - Product supreme - Indentifies the customer first - Profit through sales volume - Customer satisfaction with profit oriented - Customer supreme - Profit through customer satisfaction - Planning is short term oriented - Planning is long term oriented - Aims at customer as profit targets - Aims at customer satisfaction with companies profit Examples : Selling oriented companies : Insurance, encyclopedia, online shopping, Door-to-door selling Marketing oriented companies : Dell computers – provides platforms on which each persons customizes the features desires; Automobile industries; Designer clothes 2.4 Customers Vs Consumers - Customers BUY the product (Ex : I bought a new TV) - Consumers USE the product (Ex : The comsumer/user is members of my family) 2.5 What is a Market ? All potential customers who share common needs and wants, and who have the ability and willingness to buy the product, are considered a market For example, nutritious milk markets in Vietnam is the subjects that interest buyers who care about health care, and who are able and demand nutritious products; Gas market serves households; housing market serves low-income people; the real estate market 2.6 Target Marketing Focusing all marketing decisions on a very specific group of people who you want to reach 2.7 Customer Profile Includes information about the target market with regard to the age, income level, ethnic background, occupation, attitudes, lifestyle, or geographic residence of the targeted customers To develop a clear picture of that target market, businesses create a customer profile Marketer’s spend a lot of money on research to clearly identify the most important characteristics of the target market’s customer profile to help them make intelligent marketing decisions 4 “PLC as a tool for marketing strategy" justify PLC is an acronym of Product Life Cycle Each product brought to market has its own life cycle It is the process of formation / introduction, growth, maturity and decline Typical life cycle of a product likes a sinusoidal curve and can be shown by sales line (Sales) and profit line (Profit) as shown below: (Source : http://helpsme.com/articles/marketing/product-life-cycle) The shape of the two lines will vary for each product However, the basic shape of the two lines and the relationship between them in general is alike The length of the life cycle varies between products It should be noted that studying the life cycle of a product must first attach to a certain market Because a product can be new in a market but may not new in other markets and vice versa A product can have a long life cycle in one market but in other markets it cannot exist We will examine the main characteristics of each stage in the life cycle of the product and marketing strategies corresponding to each time period 4.1 Introduction: This is the stage to sell products officially on the market This phase has a low consumption level, rates can be negative or very low because sales increases slowly, distribution and advertising costs are higher because consumers do not have much information about the product or they still do not give up previous consumption habits Failure rate of products in this stage is often very high Introduction stage usually requires high production cost and circulation cost so enterprises often sells as a loss or gets very little profit During this period, marketing cost accounts for a large percentage as it is used for promotional efforts (promotion) at a high level in order to (1) inform potential consumers about new and unknown products, (2) stimulate product trial, and (3) ensure distribution to retail stores Marketing strategy in the deployment phase is to convince customers, boost advertising promote sales, and sales at competitive prices At this stage, there are only a few competitors Businesses focus on customers who are the readiest to buy, usually high income ones Prices tend to be high because of high costs due to relatively low yields; technical problems in production can still be unfinished; there should be high interest rates to offset high advertising costs to an extent necessary to achieve development" When introducing new products to the market, marketing managers can set up different levels for marketing factors such as price, promotion and distribution Depending on its goals, enterprises can have the following marketing strategies: - Rapid skimming strategy: is a strategy which launches new products to the market with initial high prices and high level of promotion Enterprise spends more on activities such as advertising, promotions to convince customers about the benefits of the product and to increase market penetration rate This strategy is usually applied when most potential markets are unknown about products; people who know about the product desire to have them and are willing to pay high prices to buy; businesses face potential competition; - Slow skimming strategy: is a strategy which launches new products to the market with initial high prices and low level of promotion the strategy Enterprise believes that high prices will create higher levels of gross profit per unit of product, and low promotional rates will keep marketing cost low, and thus it can gain more profit This strategy is applied when the market size is restricted; most people know about the products; buyers are willing to pay high prices; and potential competition is not likely to happen - Rapid penetration strategy: is a strategy which launches new products to the market with initial low price and high promotion cost, hoping to achieve rapid penetration rate and rapidly increasing market share This strategy is appropriate only when the market is large and products are unknown; most buyers are sensitive to prices; competition may happen; businesses can achieve efficiency corresponding to scale and can cumulative production experience - Slow penetration strategy: is a strategy which launches new products to the market with initial low price and low promotion cost Low prices will encourage consumers to quickly accept products, low promotional costs help achieve high net income This strategy is suitable for large-scale market, products are well known and strongly change according to price; and there is potential competitiveness 4.2 Growth: During this period, sales and consumption volume begin to increase rapidly as most customers have accepted the product During this period, average cost reduces and profits start increasing This is when competitors begin to appear Marketing strategy in this stage is to take advantage to expand existing markets and penetrate into new markets Prices remain the same or decrease slightly as demand increases very fast Enterprises maintain promotion expenses at the same or increase slightly to deal with the competition During this period, companies may use some strategies to prolong rapid growth of the market for as long as possible, such as: - Improve product quality; enhance new features, and new designs for products - Penetrate into new market segments - Extend the scope of existing distribution channels and participate in new distribution channels - Change ad target from introducing products to create trust and favor in products - Discount at the right time to attract customers who are sensitive to price 4.3 Maturity: In maturity stage, consumption revenue reaches peak and begin a downward trend, marking saturation between supply and demand of goods on the market This also proves that big competitors have emerged To compete against them, businesses need to lower prices even though profits begin to fall Marketing strategy in this phase is to increase "harvest" by cutting marketing costs, changing advertising, stimulating distribution channels, continuing serving traditional customers At the end of this period, to maintain and change the declining sales of products, enterprises can choose the following options: - Innovate products: research, design and test new models, change and add non- physical factors as well as characteristics of the product (For example: Apple continually introduces new generations of mobile, constantly upgrades iOS operating system, and improves new models, new features to prolong maturity and saturation stages: from Iphone 3, Iphone 4, Iphone 5, 5S, and Iphone 6 in the future) - Innovate the market by searching and creating new markets - Improve marketing tools: apply methods, new sales art, consumption links, flexibly discriminate price under trading conditions 4.4 Decline: If in maturity stage, products cannot maintain their competitiveness, they will go into recession stage which contains of most obvious manifestation such as continuously decreased revenue The cause may be products of competitors are manufactured by using new and modern technology, making the enterprise’s products outdated; it may also because the tastes of the majority of customers have changed It is time enterprises faced harsh choices The choice of a marketing strategy in the declining stage of the product depends very much on the relative attractiveness level of the industry and the competitive strength of the business in that industry If the product becomes really obsolete, enterprises should stop production rather than to increase money on sales promotion In case, the enterprise likes to maintain production, the enterprise has to cut down production costs and marketing costs, give up inefficient distribution channels, consider lowering selling price in order to increase consumption to ensure to gain profit Especially, if the product is well-known, the product can be renewed and is aimed towards both current and new markets based on marketing efforts of the business Whether products are perishable depends on management capabilities of enterprises Thus, the study of the life cycle of products has important implications in business No product life cycle is predetermined but the important issue here is that businesses need to analyze volume and sales to recognize which stages of the life cycle their products are in Accurately forecasting product life cycle is very important to create appropriate marketing strategies to bring benefits to enterprises So it can be concluded that: "PLC as a tool for marketing strategy" 5 Explain process of selecting the final price Process of selecting the final price, that is Pricing strategy refers to method companies use to price their products or services Almost all companies, large or small, base the price of their products and services on production, labor and advertising expenses and then add on a certain percentage so they can make a profit There are several different pricing strategies, such as penetration pricing, price skimming, discount pricing, product life cycle pricing and even competitive pricing a Penetration Pricing A small company that uses penetration pricing typically sets a low price for its product or service in hopes of building market share, which is the percentage of sales a company has in the market versus total sales The primary objective of penetration pricing is to garner lots of customers with low prices and then use various marketing strategies to retain them For example, a small Internet software distributor may set a low price for its products and subsequently email customers with additional software product offers every month A small company will work hard to serve these customers to build brand loyalty among them b Price Skimming Another type of pricing strategy is price skimming, in which a company sets its prices high to quickly recover expenditures for product production and advertising The key objective of a price skimming strategy is to achieve a profit quickly Companies often use price skimming when they lack financial resources to produce products in volume, according to the article "Pricing Strategy" at NetMBA.com Instead, the company will use the quick spurts of cash to finance additional product production and advertising c Product Life Cycle Pricing All products have a life span, called product life cycle A product gradually progresses through different stages in the cycle: introduction, growth, maturity and decline stages During the growth stage, when sales are booming, a small company usually will keep prices higher For example, if the company's product is unique or of higher quality than competitive products, customers will likely pay the higher price A company that prices its products high in the growth stage also may have a new technology that is in high demand d Competitive-Based Pricing There are times when a small company may have to lower its price to meet the prices of competitors A competitive-based pricing strategy may be employed when there is little difference between products in an industry For example, when people purchase paper plates or foam cups or a picnic, they often shop for the lowest price when there is minimal product differentiation Consequently, a small paper company may need to price its products lower or lose potential sales In addition, there is a strategy, that is Temporary Discount Pricing Small companies also may use temporary discounts to increase sales Temporary discount pricing strategies include coupons, cents-off sales, seasonal price reductions and even volume purchases For example, a small clothing manufacturer may offer seasonal price reductions after the holidays to reduce product inventory A volume discount may include a buy-two-get-one-free promotion The company sells discount winter clothes in the summer to free up inventory, prepares to market new models in the coming winter 8 Explain “direct marketing" and its applicability with examples 8.1 Direct Marketing concept: Direct Marketing is the use of telephone, e-mail and other contact tools (not people) to communicate and attract a response from individual customers or from potential customers Companies commonly use direct marketing in business to establish, maintain and develop relationships with customers through a variety of means such as letter attached with flyer or catalog, phone, fax; introduce and sell directly through the media (television, radio and Internet), without intermediaries According to Direct Marketing Association, direct marketing is a marketing communication system with the interaction of a number of media to create positive exchange or transactions reaction (measurable) from customers with less limitation from space and time The most basic difference between direct marketing with traditional marketing methods is the interaction and exchange of information between buyers and sellers Hence, enterprises now easily evaluate the effectiveness of their communications Direct marketing is expressed through many specific communication activities to customers such as direct mail to introduce products and businesses, order mail with a list of products which can be ordered for customer to choose Targets that every marketing program directly aims towards are the direct and positive responses of customer to the program 8.2 Benefits of direct marketing: Direct Marketing brings about many benefits for both customers and businesses For customers, it save time for shopping, people know many new items to choose from, it is quite consistent with new lifestyle; it overcome obstacles of space, people can avoid travelling in unsafe conditions, or in lack of favorable choice but they can still get favorite products For businesses, direct marketing helps search for real orders for each item, get more information about customers quickly, properly target to high communication efficiency and low cost Besides, it ensures the privacy and the ability of "invisibility" against competitors (with traditional forms of marketing, competitors will easily access media programs of businesses; while with direct marketing, competitors seems to see nothing, because only target customers receive information) The biggest advantage of direct marketing is the ability to measure the response of target customers; thereby businesses can evaluate the effectiveness of each direct marketing program They can be sure about which programs are successful, which are not, thereby, they will have appropriate policies to each group of customers and each product category, as well as each market area Finally, direct marketing helps most effectively use resources, it is especially suitable for enterprises that are forced to shrink / lighten structure, small and medium enterprises or enterprises that aim towards discrete market segments with specific needs 8.3 However, direct marketing has some drawbacks such as it requires initial investment to construct databases, infrastructure; trained human resources with professional qualifications to meet the requirements A further problem is that direct marketing is always well received by customers In case, the market includes clients with daily buying behavior at the market and they just believe in their own experience after consuming products, direct marketing cannot be effective in the early stages, they need time to get familiar 8.4 Some forms of direct marketing (Direct Marketing): - Catalog marketing: many companies sell through e-mail after they release catalog - Direct-Mail Marketing: include letters, small ads, movies, free phone number - Remotely marketing through telephone (Tele Marketing) is an important tool in direct marketing and is being used more and more Customers use the phone and call the free number to place an order - Direct marketing on TV, radio, newspapers and magazines - Door-to-door leaflet marketing is a form of marketing mainly used in fast food industries This mode focuses entirely by region - Direct response television marketing has two types which are long form contract and short form contracts Long form uses a long period of time (30 minutes) to describe the product in detail and form short use a short period of time (30 seconds or 1 minute) to ask for customer feedback by calling the phone on the screen or on the Website - Couponing is a form using the print media to get feedback from readers by coupons cut out for a discount or gifts - Direct selling is a form that sells product face to face with customers through salespeople 8.5 Determinants of the success of direct marketing In traditional marketing, it is often said about mixed marketing that includes 4P: Product, Price, Place and Promotion For direct marketing, 6 important factors include Database, Offering, Creative, Media, Organizing, and Customer Service 8.5.1 Database: Collect customer data according to the following groups of information: personal information (name, age, sex, marital status, number of children, occupation, position); address information (house number, street name, district, city, company address, phone number, fax number, email address); financial information (income, ability to pay, account number and prestige in paid work, the number of making orders and the number of payments for goods, ); operation information (buying habits, contact with you, times of complaint, complaint cases, how complaint are handled ) 8.5.2 Offerings: is what you suggest potential customers Offerings include details about products or services, selling price, special incentives, benefits to consumers, In other words, offerings are the main content of what you recommend and believe that it meets customer’s needs, customer’s wants For example, "the opportunity to visit 5 European countries in 15 days and nights with only $ 2,000." 8.5.3 Creative: If saying offerings is the contents of what you suggest customers, creative is the form of the offerings, it includes layout, images, words, printing techniques 8.5.4 Media: the media mainly used is direct mail, phone calls, and information technology (email, internet ) 8.5.5 Organizing: is the work to be done, order and progress so that everything goes smoothly according to plan To succeed in direct marketing, sending to the right people is the most important factor, then the attractiveness of the offer, and then the creativity and the time factor All attractive and unique offers are meaningless if you sent to the wrong address All great marketing idea will be meaningless if they are not turned into action, so organizing is essential to make direct marketing programs successful 8.5.6 Customer Service and Call Center: All efforts of an enterprise are to achieve the ultimate goal that customers place orders, spend money on purchasing goods or services of the business If customers call your company but no one answers the phone, or he or she answers unenthusiastically, or goods is not enough to deliver, or goods is deliver late, payment is complicated, then direct marketing turns useless All the things mentioned are the concept of "customer service" Therefore, each direct marketing program is always associated with a phone number We can call it hotline, customer counseling line, support lines, etc A large company such as Life Insurance Company may have tens or hundreds of telemarketers, work 24/24 to be ready to answer, call or remind Such system is called "Call Center" 8.6 Direct marketing application Since the 60s of last century, direct marketing has developed rapidly and become a key marketing tool in many industrialized countries It has been predicted that, in the future, direct marketing will replace other forms of traditional marketing and become one of the main marketing tool because it is the integration of 3 forms: advertising, sales promotion and direct sales without intermediaries The industries which are predicted to continue spending more on direct marketing are transport, industrial services, communications, customer service, direct sales, technological products, banking, retail ( For example, in Vietnam, direct marketing are mainly used in the fields of business such as selling life insurance, credit, travel services, real estate introduction in the form of direct telephone, messages on mobile phone, email to customers ) Typical direct marketing activities most used in order are: Internet marketing, advertising and sales through television, radio, postal marketing Currently, direct marketing has flourished in most countries Direct Marketing Association of Europe said that in 1998, European businesses spent no less than $ 2 billion on direct marketing and the growth of this activity is not less than 10% / year In the U.S., direct-mail marketing has brought about billions of dollars in sales In 1991, over 45% of Americans "bought something" through direct mail and as reported by the Direct Marketing Association, direct marketing sales in the United States in 2006 increased 6% compared to 2005, reaching $ 6.5 billion In 2007, revenue from direct marketing increased 7.4%, reaching $ 7 billion, while average revenue from the marketing, advertising in general is only about 3.9% In Australia, over the last 5 years, the economic growth rate is about 4% / year, but direct marketing growth rate is 16% / year The country has 12 million available e-mail addresses that are willing to connect businesses Malaysia is a country with 20 million people; in the past 5 years, the cost of direct marketing has increased at a rate of 20% / year Direct Marketing is an inevitable development trend of marketing in the today’s digital age and the development of information technology (This was confirmed at a workshop titled "Direct Marketing - The Future of Marketing" in Asia in 2006 in two days with the participation of hundreds of large enterprises) REFERENCES 1/ Philip Kotler (2013), Quản trị Marketing, Nhà xuất bản lao động xã hội, Ha Noi (Philip Kotler (2013), Marketing Management, Labour and Social Publishing House, Ha Noi) 2/ Augmented Product Concept (Three levels of a product/Total product concept) Available from : [25 May 2014] 3/ Selling vs Marketing concept Available from : [25 May 2014]