Marketing - Jankkila 2004

Hilkka Jankkila, Principal Lecturer,
ROVANIEMI POLYTECHNIC, School of Forestry and Rural Industries
 Lectures = basic concepts and processes of

– Marketing ( 3 x 3 h )
– Product development ( 1 x 3 h )
– Quality management ( 1 x 3 h )
 Group working with practices ( 10 h )
 Excursions / notes / analysis ( 24 h )
 Exam and evaluation: ( 4,5-6 Hungarian credits )
-Active participating in the lectures + group reports; Hungarian and Finnis
students together prepare reports ( 2-3 groups ), see “Practises 1 and 2 “
-The Hungarian students give exam to professor Horvath Gabor
-The Finnish students have a written test and more practice in F inland
MARKETING -Jankkila 2004 -

MARKETING – PRODUCT DEVELOPMENT –
QUALITY MANAGEMENT
Literature in English:
Lancester, Geoff - Reynolds, Paul. 2004.

“ Marketing “
Kotler, Philip – Amstrong, Gary. 2004.

“ Principles of Marketing “

THE MARKET
• A environment where the demand and supply
meets each other and the marketing occurs
• A group of people, who needs and wants
products/services/experiences/information and
who have buyingpower to satify their needs
• The set of all actual and potential buyers of a
product or service ( Kotler-Amstrong 2004 )
MARKETING - Jankkila 2004 -

MARKETING
”A social and managerial process whereby individuals
and groups obtain what they need and want through
creating and exchanging products and value with
others” –Kotler-Amstrong 2004; Principles of marketing
CONCEPTS
*needs *wants *demands,
*marketing offers = products, services, experiences
*value *satisfaction *exchanges
*transactions *relationships
*markets

MARKETING
> A comprehensive, well planned social and managerial process
> Market and environment analysis to get information about
demand, cutomers, competition
> Studying the needs and wants of the customers/ creating needs
> Developing products satifying those needs and wants
> Pricing
> Presentation ( information, Public Relations, sales promotion,
advertising, profiling )
> Distribution
> Personnel, Service process, Physical Evidence
OBJECTIVES AND TARGETS

> The business is economically profitable
> The customers are satisfied

THE MARKETING PROCESS MODEL
- Lancester-Reynolds 2004 -
Marketing Sales Buyer

recearch forecasting behavior
SUPPLIER CUSTOMER
Product Price Distribution Promotion Personal Segmentation

Channels Logistics selling targeting and
positioning
Information Public Relations
Advertising Sales promotion

MARKETING AND PRODUCT DEVELOPMENT
Market recearch - Feedback
MARKET - CUSTOMERS
Administration MARKETING Financing
PROMOTION
PRODUCT DISTRIBUTION SERVICE PRICING
Ideas Channels Logistics - Strategies
Legis- Ideageneration - Price -
lation Ideascreening defining
Concept development
Compe- Business planning Production Packing
titors and evaluation - procedures -materials
Product development - capacity -procedures
Test market - quality assurance -the needs of
Launch - raw materials customers, retails and
wholesalers,
MARKETING ALONGSIDE OTHER
ELEMENTS OF BUSINESS
Production
Marketing
Finance CUSTOMER Recearch and
development
Marketing
Human secource
management

MARKETING MANAGEMENT
ORIENTATIONS -Kotler-Amstrong 2004-
PRODUCTION CONSEPT
Consumers favor the products which are available and highly
affordable. Focus on improving production and distribution
efficiency
PRODUCT CONSEPT
Consumers favor products that offer the most quality,
performance and features. Focus on continous product
improvements
SELLING CONSEPT
Consumers do not buy enough unless the firm undertakes a
large-scale selling and promotion effort

MARKETING MANAGEMENT
ORIENTATIONS -Kotler-Amstrong 2004-
MARKETING CONSEPT
Customer focus and value = paths to sales and profits.
Customer-centred sense and respond. Find the right
products for customers.
CUSTOMER RELATIONSHIP MANAGEMENT =

CRM
Create profitable relationships with the customers.
Customer database management activity. Achieve
customer’s loyalty
Bacic realtionship, full partnership
Financial and social benefits, frequency marketing
programs, club marketing programs

MARKETING MANAGEMENT ORIENTATIONS -
Kotler-Amstrong 2004-
Selling ( 1 )and marketing ( 2 )concepts contrated:

Starting point Focus Means Ends
1 Factory Existing Selling Profits through

products and promotion sales volume
2 Market Customer Intergated Profits through

needs marketing customer
satisfaction

SOCIETAL MARKETING CONSEPT
- Kotler-Amstrong 2004 –
-
 organization / firm should determine the needs / wants /

interests of target markets
 deliver the desired satisfactions more effeciently and
effective than the competitors do
 in a way that maintains or improves the consumer´s and
society´s well being
*Quality management and assurance !

*Environmental quality management !
MARKETING -Jankkila 2004

SOCIETAL MARKETING
SOCIETY
Human welfare
SOCIETAL
MARKETING
CONCEPT
CONSUMERS COMPANY
Want satisfaction Profits
Conflicts between consumer shot term wants
and consumer long-run welfare??

MARKETING ENVIRONMENT
MICRO ENVIRONMENT
1. Elements over which a firm has control ( marketing mix = 4 + 3 Ps )
or which it can influence in order to gain information that will help it
in its marketing operations –Lancester-Reynolds 2004-
2. Actors close to firm/company that affect its ability to serve the
customers = company, suppliers, marketing intermediaries,
customer markets, competitors- Kotler-Amstrong 2004 -
MACRO ENVIRONMENT
-all forces and agencies external to the marketing firm itself
>close to firm = customers, suppliers, agents, distributors, other
íntermediaries, competing firms, public - Lancester-Reynolds 2004-,
>wider external = legal, cultural, economic,demographictechnological
subenvironments, political -(Kotler-Amstrong & lancester-Reynolds -

• COMPANY
>top management, finance, recearc&development,
purchasting, operations, accounting
• SUPPLIERS
>raw material suppliers,
• INTERMEDIARIES
>firms that helps the company to promote, sell, distribute the goods to
final buyers; resellers, phycical distribution firms, marketing service
agencies, financial intermediers

• CUSTOMERS
>consumer markets = individuals and households > personal
consumption
>business markets = buy goods and services for further processing or
for use in their product process
>reseller markets = buy goods and services to resell at a profit
>government markets = buy goods and services to produce public
services or transfer them to people who need them
>international markets = buyers in other countries
• COMPETITORS
>other firms

• PUBLICS
>groups that have an actual or potential interest in or impact on
an firm`s ability to achieve its objestives
-financial publics = banks, funds, investment houses, stocholders …

-media publics = newpapers, television stations, editorial opinion …
-government publics = product safety, truth of advertising ..
-citizen action publics = consumer organisations, environmental
groups, minority groups …
-local publics = community organizatios …
-general public and the public´s attitudes and images of company
-internal publics = workers, manaagers, directors …

Macro environment
• DEMOGRAPHIC
-human population’s size, density, location, age, gender,
race, occupation …
• ECONOMIC
-factors that affect consumer buying power and spending
patterns = income changes, income distribution, classes,
changing consumer spending patterns
• NATURAL
-natural recources that are needed as inputs by
marketers or that are affected by marketing activities

• TECHNOLOGICAL
-froces that create neeeew technologies, creating new product and
market opportunities
• POLITICAL
-increasing legislation regulating business
-laws, government agencies, pressure groups, ethics and socially
responsible actions ( social codes and rules)
-protect compnies from each other, protect consumers from unfair
business practices
• CULTURAL FORCES
>institutions and forces that affect ssocietys´s bacic values,
perceptions, preferenc es and behaviors

BUYER BEHAVIOUR
Focus on the consumer buyer behaviour
• The acts of individuals directly involved in obtaining and

using economic goods and services, including the decision
process that precede and determine these acts-Lancester-Reynolds-
• Consumer buyer behaviour - the buying behaviour of

final consumers = individuals and households who buy
goods and services for personal consumption –Kotler-Amstrong-
• Consumer = most important of the marketing

environment
=> the firm must know : WHAT, WHEN, HOW, WHY
the customer buyes

MODEL OF BUYER BEHAVIOUR –Kotler-Amstrong
MARKETING AND BUYER’S BUYER’S

OTHER STIMULI BLACK BOX RESPONSES
Marketing Other Buyer Buyer Product choice

Product Economic character decision Brand choice
Price Technologicál istics process Dealer choice
Place Political Purchace timing
Promotion Cultural Purchace amount
MARKETING –Jankkilaa2004 -
FACTORS INFLUENCING CONSUMER
BEHAVIOUR –Kotler-Amstrong 2004 -
CULTURAL SOCIAL PERSONAL PSYCHOLOGICAL
Culture Reference Age and life- Motivation
Subculture groups cycle stage Perception
Social class Family Occupation Learning
Roles and Economic Beliefs and
status situation attitudes
Lifestyle
Personality and
self-concept
For the most marketers can not control such factors –

but they must be taken into account –

Hierarcy of needs by Maslow
SELF
ACTUALISATION
Creativity fulfillment, Pursue
RESPECT AND SELF-ESTEEM
Achiement qualifications
SOCIAL NEEDS
Recognition and belonging, friends , family
SAFETY NEEDS;
Protection, security, stability, Freedom of fear
PHYSIOLOGICAL NEEDS; Hunger, Thirst, shelder, warmth

BUYERS DECISION PROCESS –Kotler-Amstrong-
Lancester-Reynolds -
PROBLEM / NEED RECOGNITION
INFORMATION SEARCH
EVALUATION OF ALTERNATIVES
PURCHASE DECISION
POSTPURCHASE BEHAVIOUR

STAGES IN THE ADOPTION PROCESS –
NEW PRODUCT –Kotler-Amstrong- Lancester-Reynolds-
1. AWARENESS
2. INTEREST/INFORMATION
3. EVALUATION
4. TRIAL
5. ADOPTION
6. POST-ADOPTION CONFIRMATION

DIFFUSION PROCESS OF INNOVATIONS
Rogers, Kotler-Amstrong, La´ncester-Reynolds
34 % 34 %
Early Late
majority majority
2,5 % 13,5 % 16 %
Innovators Early Laggards
adopters

SEGMENTATION–TARGETING–
–Kotler-Amstrong 2004 -
MARKET SEGMENTATION =
- Dividing the market into distinct groups with distinct
needs, characteristics or behaviour who might require
separate products or markettin mixes
- geographic, demographic, psychographic, behavioral
TARGET MARKETING =
- The process of evaluating each market segment’s
attractiveness and selecting one or more segments
- undifferentiated=massmarketing, ifferentiated=segmented
marketing, concentrated=niche marketing,
micromarketing =local or individual marketing
POSITIONING
MARKET POSITIONING
Arranging for a product to occuby a clear, distinctive and
desirable place relative to competing products in the minds of
target consumers
PRODUCT POSITION
The Way the products is defined by consumers on important
attributes - the place the product occupies in consumers’ mind
relative to competing products
CONSUMERS ORGANIZE PRODUCTS INTO CATEGORIES
The consumers do not reevaluate the products every time they make a
buying decision > they organize products, services and companies into
categories and POSITION them in their minds
MARKETING MIX EFFORTS SUPPORT THE
POSITIONING STRATEGY !
BUSINESS IDEA
WHAT TO WHO
Products, services, experiences The market
experinces -customers needs/wants
- quality -market opportunities
- price -segmentation
-competition situation
HOW IMAGES/POSITION
- enterprice´s structure PROFILES
- way of doing/actioning, manners - product/service/firm/
-marketing concept and processes managening profile

FROM IDEA TO ACTION
From customer centred businessidea to action -Rope 1989 -
SEGMENTATION COMPETITORS
-segment determining -present/future
-needs of the segment
BUSINESS IDEA DESICIONS FIRM at present

-what, to who, how, ímages -know-how
-recources
BUSINESS IDEA REALIZATION

-internal marketing SOCIETY
-economical/technical/
EXTERNAL MARKETING attitude changes
-profiling
-profiling
MARKETING MIX -Kotler-Amstrong and Booms-Bitner
• The set of controllable tactical marketing tools
• Everything the firm can do to influence the demand of
its products
Sellers view Customers view

4 Ps: 4 Cs:
> Product > Customer solution
> Price > Customer cost
> Place > Convenience
> Promotion > Communication
3 more Ps:
> People
> Process
> Phycical evidence

4 Ps
PRODUCT PRICE
Variety, Quality List price, Discounts
Design, Features Allowances, Payment
Brand name, Packaging period, Credit terms
Services TARGET
CUSTOMERS
INTENDED POSITIONING
PROMOTION PLACE
Advertising Channels, Coverage
Personal selling Assortments, Locations
Sales promotion Inventory, Transportation
Public Relations Logistics

The 7 – Ps – Extended Marketing Mix
–Booms-Bitner -
 Marketing Strategy tool that expands the number of

controllable variables from the four in the original Marketing
Mix Model to seven.
 People ( explicit faktor )

 Process ( explicit faktor )
 Phycical Evidence ( implicit faktor )
 The traditional Marketing Mix model was primarily directed

and useful for tangible products.
 The 7-Ps model is more useful for services industries and
arguably also for knowledge-intensive environments.
•
7- Ps
People
All people directly or indirectly involved in the consumption of a
service are an important part of the extended marketing mix.
Knowledge Workers, Employees, Management and other Consumers
often add significant value to the total product or service offering.
Process
Procedure, mechanisms and flow of activities by which services are
consumed (customer management processes)
Physical Evidence
The ability and environment in which the service is delivered
both tangible goods that help to communicate and perform the service
and intangible experience of existing customers and the ability of the
business to relay that customer satisfaction to potential customers.

7 Ps
• Booms and Bitner also suggest that Place in a
service-oriented company includes the
accessibility of the service, and that Promotion in
a service-oriented company includes the input of
front-line service personnel.

PRODUCT / SERVICE
Kotler-Amstrong 2004, Lancester-Reynolds 2004
• PRODUCT = Anything that can be offered to a market for

attention, acquisition, use or consumption that might satisfy
a want or need
>industrial goods = installations, assessories, raw materials,
component parts and materials, supplies
>consumer goods =convenience goods, shopping goods, speciality
goods, unsought goods
• SERVICE = Any activity or benefit that one party can offer
to another that is esssenntially intangible and does not
result in the ownership of anything
• EXPERIENCE = memorable, personal, take place in minds

THREE LEVELS OF PRODUCT–Kotler-Amstrong-
AUGMENTED PRODUCT
Delivery Credit After
sale
ACTUAL PRODUCT service
Brand CORE Features
name BENEFIT
Core product
Quality Design
Packing
Installation Warranty
PRODUCT/SERVICE CLASSIFICATIONS
–Kotler-Amstrong 2004 -
• CONSUMER PRODUCT
> bought by final consumer for personal consumption
• CONVENIENCE PRODUCT
> consumer product that the customer usually buys frequently with
a minimum of comparison and buying efforts ( fast food, newspaper )
• SHOPPING PRODUCT
> consumer good that the customer in the selection and comparison
process and purchase buys ( suitable, quality, price, style )
• SPECIALTY PRODUCT
> consumer product with unique characteristics or brand identifications
( specific brands and types of cars, cameras, phones, clothes, wines )

PRODUCT/SERVICE CLASSIFICATIONS
• UNSOUGHT PRODUCT
> consumer product that the consumer either does nor
know about or knows about but does not normally think of
buying ( life insurance, consulting )
• INDUSTRIAL PRODUCT
> product bought by individual or organizations for further
processing or use in conducting business
1. Materials and parts ( raw materials, manufactured materials )
2. Capital items ( installations and accessory equipments )
3. Supplies and services ( operating supplies, repair items,
business services, business advisory services )

PRODUCT DEVELOPMENT STRATEGIES
-Kotler-Amstrong, Lancester-Reynolds
ANSOFF MATRIX ( Igor Ansoff 1957 )
New markets Existing markets
New products True innovators Product development

Risky strategy strategy
Existing products Market development Market penetrations

NEW PRODUCT DEVELOPMENT
–Kotler-Amstrong, Lancester-Reynolds -
• ACQUISITION
> By buying a whole company, a papent or a licence to
produce someone else’s product
• NEW PRODUCT DEVELOPMENT

> innovative, original products
> replacement products, product improvements, product
modifications
> Imitative products ”me to” products
> Relaunced, products, new brands

NEW PRODUCT DEVELOPMENT STAGES
-Kotler-Amstrong, Lancester-Reynolds
IDEA GENERATION
IDEA SCREENING
CONCEPT DEVELOPMENT AND TESTING
MARKETING STRATEGY
BUSINESS ANALYSIS
PRODUCT DEVELOPMENT
TEST MARKETING
COMMERCIALIZATION

NEW PRODUCT PROCESS …
ÍDEA GENERATION
*The systematic search for new-products ideas
*Internal = new-product managers, committees, departments,
venture teams
*External = customers, competitors
IDEA SCREENING
*Go or drop decisions- spot good ideas and drop poor ideas
as soon as possible
NEW-PRODUCT PROCESS …
CONCEPT DEVELOPMENT AND TESTING
*Product concept = A detailed version of the new-product
idea stated in meaningsful consumer terms
*Concept testing = testing a new-product concept wit a group
of tarket consumersto find out if thr concepts have strong
consumer appeal.
MARKETING STRATEGY
*The target market; positioning, sales, market share, profit
goals
*Outlines of the product; price, distribution, marketing
budget
*Long run sales, profit goals, marketing mix strategy

NEW-PRODUCT PROCESS …
BUSINESS ANALYSIS
* A review of the sales, costs and profits projections for a new
product to find out whether these factors satisfy the firms’s
objectives
PRODUCT DEVELOPMENT
• Developing the product concept intoa phycical product in
order to ensure that the product idea can be turned into a
workable product

NEW PRODUCT PROCESS ….
PRODUCT DEVELOPMENT
*prototypes, product appraisal tests
*product refinement and modification by feedback,
> development cost increace sharply !
TEST MARKETING
*The product and marketing program are tested in more
realistic market settings –Standard, Controlled, Simulated
- Problem = competitors see your product !
- Test marketing does not quarantee succees !
COMMERCIALIZATION
*Introducing a new-product into the market –
- few new-product ideas succeed !
PRODUCT LIFE CYCLE MATRIX
by Barksdale-Harris
PIONEERING GROWTH MATURITY DECLINE

-sales- stars cash cows war horses
high market high market high market
share, high share, low hare, negative
growth growth growth
infants problem children dogs/cash dogs dodos

low market share low market share low market share
high growth low growth negative growth
Entry - time - Exit

INDIVIDUAL PRODUCT / SERVICE
DECISIONS – Kotler-Amstrong -
Product attributes
Branding
Packaging
Labeling
Product support services

PRODUCT QUALITY – Kotler-Amstrong-
”When our customers come back and our products do not”
• Ability of a product to perform its functions

• Characteristics of a product or service that satisfy
customer’s stated or implied needs
• Is closely linked to customer value and satisfaction
• One of the marketer’s major positioning tools
• Has a direct impact on product or service performance
• Freedom of defects – is it enough ?

ATTRIBUTES OF PRODUCT – Kotler-Amstrong -
• Core benefit of the product
• Product features;
- stripped-down model
- more features as a tool of differentiating the
product from competitors
• Product and Desing
• Trade mark
• Brand = Manufacturer’s brand, Private/Store brand,
Licencing, Co-Branding, Multibrands, New Brands,
With the help of Customer Relationship Marketing !

BRAND – BRANDING –Kotler-Amstrong -
• A name, term, sign, symbol, design

or a combination of these
• Intended to identify the goods or services of one
seller or group of another sellers
• To differentiate these goods from these of
competitors
• Consumer view a brand is an important part of
product – may add value
• Branding = Perhaps the most distinctive skill of
professional marketers in their ability to create, maintain,
protect and enhance brands of their product and services

PACKAGE – PACKAGING – Lancaster-Reynolds , Kotler-
Amstrong--
• The end part of the product development; an external

appereance
• A part of the promotion
• The activities of designing and producing te container or

wrapper for the product
– primary container
– secondary package
– package for storing
– labeling = printed information

THE FUNCTIONS OF PACKAGING
-Lancester-Reynolds-
• Protect and preserve its contents

• Help the distribution of the goods via a number of
logistics intermediaries from the factory/producer to
customer; transfering, stocking
• Selling; the promotional appeal, design, information,
trademark, brand
• For conceniency of users; storage of contents, suitable
sizes of package
• To conform the statutory and voluntary regulations in
providing a list of contents/weight/the origin of
product, E-numbers, ingrediants
LABELING –
PRODUCT SUPPORT SERVICES –
LABEL
= identifies and promote the product or brand,
= describes several things of the good; who, where,
when made, contents, how to use, price per unit,
open dating, nutritional labeling, health-related
term
SUPPORT SERVICES
= Augmented parts of product

PRODUCT LINE / MIX
PRODUCT LINE
= A group of products that are closely related together;
function in similar manner, sold to same customer group,
marketed through same types of outlets, given price ranges
”Nike athletic apparel” Nokia telecommunication products”
PRODUCT MIX – PRODUCT ASSORTIMENT

= Set of all product lines and items which a particular seller
offers for sale
*widht = number of different product lines
*lenght = total number of items
*depht = number of versions of each product in the line
*consistency = closeness of items ( distribution channels,

PRICE – PRICING –Kotler-Amstrong, Lancecter-Reynolds -
PRICE =
• The amount of money charged for a product or service or
the sum of the values the customers exchange for the
benefits of having or using the product or service
• The means whereby an organisation covers costs of all
activities
• The major factor affecting buyer choice – usually
• A flexible element in the marketing mix – can change quickly
DYNAMIC PRICING =
• Charging different prices depending on individual
customers and situations

PRICING PERCPECTIVES – Lancecter-Reynolds -
• ECONOMIST’s approach
The price is the means through which supply and
demand is brought into equilibrium
• ACCOUNTANTS’s approach
The price covers the costs and make profits
• MARKETER’s approach
Effect of price on the organisation’s competitive
market position

FACTORS AFFECTING PRICING
DECISIONS –Kotler-Amstrong,--
INTERNAL EXTERNAL
FACTORS P FACTORS
Marketing objectives R Nature of the market
Marketing mix strategy I and demand
Costs C Competition
Organisational I Other environmental
considerations N factors ( economy,
G resellers, government

PRICING IN DIFFERENT TYPES OF
MARKETS –Kotler-Amstrong, Lancecter-Reynolds –
PURE COMPETITION
-Many buyers and sellers trading in uniform
commodity – many fully informed buyers and sellers of
similar products
-No single seller or buyer has much effect on the going
market price > going pricing
PURE MONOPOLY
A single producer of a product – no substitudes for product
– free price setting
OLIGOPOLISTIC COMPETITION
Few sellers who are highly sensitive to each other’s
pricing and marketing strategies

MAJOR CONSIDERATIONS IN SETTING
PRICE –Kotler-Amstrong-
Product Competitor’s Consumer

costs prices and other perception of
internal and external of value
factors
PRICE PRICE
FLOOR CELLING
No profits below No demand
this price above this
price
COST-BASED PRICING “Cost-plus”
• Adding a standard markup ( profit ) to the costs of the

product
• Product driven pricing
 >Fixed costs = do not vary with production or sales level
 Variable costs = vary diriectly with the level of production
 Total costs = fixed costs + variable costs
PRODUCT COST PRICE VALUE CUSTOMER

TARKET PROFIT PRICING –Kotler-Amstrong-
• Setting price to break even on the costs of making and
marketing a product or
• Setting price to make a target profit
• Target pricing uses the concept of a break-even chart –

it shows the total cost and total revenue expected at
different sales volume levels TOTAL REVENUE
Costs
Target profit
TOTAL COSTS
FIXED COSTS
Sales volume in units

VALUE-BASED PRICING –Kotler-Amstrong 2004-
• Setting price based on buyer’s perceptions of value

rather than on the seller’s costs
• Offering just the right combination of quality and good
service at the fair price
• Pricing begins with analyzing consumer’s needs / wants
and value perceptions and the price is set to match
consumer’s percieved value > design the product
CUSTOMER VALUE PRICE COST PRODUCT

COMPETITION-BASED PRICING –Kotler-Amstrong-
• Setting prices based on the price that competitors

charge for similar products
• Going rate pricing
• Price represents the ”collective wishdom” of the

industry sector when demand elasticity is hard to
measure

PRICING STRATEGIES –Kotler-Amstrong-
• MARKET-SKIMMING PRICING
>Setting high price for a new product to skim maximum
revenues from the segment willing to pay the high price.
-Company makes rewer but more profitable sales
-Product’s quality and image must support the high price
-Enough buyers must want the product at that price
-Competitors should not be able to enter the market and
undercut the price
1. MARKET-PENETRATION PRICING
>Setting a low price for a new product in order to attract a
large number of buyers and a large market share

PRICING STRATEGIES –Kotler-Amstrong-
• PRICE ADJUSTMENT STRATEGIES
> Discount = price reduction > Allowance = promotional money
• BY-PRODUCT PRICING -Setting a price for by-products in
order to make the main product’s price more competitive
• SEGMENTED PRICING – two or more prices at same product
• PSYCHOLOGICAL PRICING – price says something of the
product
• REFERENCE PRICE - prices that buyers carry in their minds
• PROMOTIONAL PRICING – temporarily, increase short-run
sales
• GEOGRAPHICAL PRICING – different price on different
regions / or not
INTERNATIONAL PRICING – prices in the
international market
PRICING > PRICE
+VARIABLE COSTS / product unit:
raw materials, other variable costs, labour costs,
costs connected wit labour costs ( social costs, assurance )
+COVER = fixed costs, charges, rates, incometaxes, profit
=NET RRICE
+VALUE ADDED TAX
=SELLING PRICE
+SELLING REWARDS
+FREIGHTS THAT WILL BE PAYD
+DISCOUNTS PROVISOS,
=TOTAL PRICE

CHANNELS OF DISTRIBUTION
- Kotler-Amstrong, lancester-Reynols-
DISTRIBUTION
Channels /Supply chain Phycical distribution

Agents Logistics
Wholesalers
Retailers Right place !
= intermediaries Right time !
Suitable amounts !
With greatest ease !
Favourable costs !
MARKETING CHANNEL =
DISTRIBUTION CHANNEL –Kotler-Amstrong-
A set of interdependent organizations involved in the process
of making a product or service available for use or
consumption by consumer or business user
SUPPLY CHAIN = VALUE DELIVERY NETWORK,

-Information; gathers and distribute information
-Promotion; developes and spread information about offers
-Matching; shapes and fits the offer to the buyer’s need
-Negotiation; reach the agreement of price and
-Phycical distribution and stocking
-Financing, invoicing
-Risk taking / dealing
DIRECT – INDIRECT MARKETING
CHANNELS -Kotler-Amstrong, Lancester-Reynolds-
DIRECT CHANNEL = no intermediaries
INDIRECT CHANNEL = one or more intermediaries
AFFECTING TO THE CHANNEL DECISIONS:

* Numbers of potential customers in the market
* How concentrated or dispersed the customers are
* How much each will buy in a given period = buying sensity
* Costs including transportation, warehousing, stockholding
* Product imago positioning, market share objective
* The need of by-services
* Absolute price of the product and the profit objective
* Firm’s recources
DIRECT DISTRIBUTION INDIRECT
Small Amount of customrs Large

Rarely Density of purchase Often
Large Size of one purchasing Small
Large Profit marginal Small
Concentrated The buyer placement Disperced
High Complexity of product Low
No need Need of by-services Yes
Yes Completely product No
lines

MULTICHANNEL DISTRIBUTION
SYSTEM –Kotler-Amstrong-
Catalogs, telephone, internet, home-selling Customer 1

Own resailer places /warehouses Customer 2
Retailers Customer 3
Distributors Dealers Business segment 1
Sales force Business segment 2

NUMBER OF MARKETING
INTERMEDIARIES –Kotler-Amstrong-
INTENSIVE DISTRIBUTION
-stocking the product in as many outlets as possible
-usually convenience products
EXCLUSIVE DISTRIBUTION
-giving a limited number of dealers the exclusive right to
distribute the products in their territories
-for exclusive products, product’s image, higher markups
SELECTIVE
-more than one dealer but not all dealers who are willingly
to carry company’s produts, ”Label-retailer”
-good market coverageto producer with more control and less
cost than intensive distribution

MARKETING CHANNELS DECISIONS ?
Questions for a countryside firm
DIRECT MARKETING
• reach few customers,
• direct producer/customer contact,
• not effective?
• is product suitable for direct marketing?
• larger profit marginal?
• have producer time enouhg for producing and marketing?
• small amounts of products can be marketed,
• Important; quality, producers own capasity and knowledge
of marketingco, co-operation with other small producers?

RETAILER
• more customers, customers find the products in the same

place as other products=easier for customers,
• is the retailer interested in the small producer’s
products?
• do the customers find the products among other
products?
• important; quality, reliable distribution, is it sure you can
produce the amounts of products you aimed,
producer’s own activity to reach retailers, package

LARGE-SCALE KITCHENS ( restaurangs ..)
• one good possibilit for small firms, business to business
relation > product development together? easily to get feed
back from custemers, fresh raw materials, bigger ( suitable )
amounts to one place, saves distribution and packaking
SPECIAL / EXECUTIVE RETAILERS

• the importance of quality and package and image !
• better profit by pricing strategy

WHOLE SAILERS
• large-scale, concentrated distribution
> producers’s work decrease
• can you produce large amounts?
• is a long chain suitable for your ( fresh? ) goods?
• is the price competitive by the customers?
• packaging for the wholesailing and distribution >costs?
• logistics if the distribution ways are long?
• who does pay the freight?

CONTRACTUAL CO-OPERATION ( franchising .. )

PRODUCER NET WORK - THE SAME TRADEMARK-
SUBCONTACTOR PRODUCING
• small-scale producing is possible
• producer’s own name not seemed in the products
• the producer can concentrate to producing/marketing
/delivering/retailing
EXPORT
• a long, difficult and expencice process
• co-operation ! export know how !

LOGISTICS – PHYSICAL DISTRIBUTION–
Kotler-Amstrong
MARKETING LOGISTICS
The tasks involved in planning, implementing, and
controlling the phycical flow of materials, final goods, and
related information from points of origin to points of
concumption to meet customer requirements at a profit
SUPPLY CHAIN MANAGEMENT =

Managing upstream and downstream value-added flows of
material, final goods, and related information among
suppliers, the company, resellers and final consumers

LOGISTICS – PHYSICAL DISTRIBUTION–
Kotler-Amstrong
SUPPLIERS
Inbound logistics
COMPANY Reverse
Outbound logistics
RESELLERS logistics
CUSTOMERS

PROMOTION –
MARKETING COMMUNICATION MIX
The specific mix
advertising, personal selling, sales
promotion, public relations and
information

PROMOTION –
MARKETING COMMUNICATION MIX –
Kotler-Amstrong -
• The specific mix of advertising, personal selling,

sales promotion , public relations and information
ADVERTISING = any paid form of nonpersonal

presentation and promotion of ideas, goods, or services by
an identified sponsor
SALES PROMOTION = short-term incentives to

encourage the purchase or sale of a product or a servi´ce

PROMOTION – MARKTING
COMMUNICATION MIX –Kotler-Amstrong -
PERSONAL SELLING = personal presentation by the
firm’s sales force for the purpose of making sales and
building customer relationships
PUBLIC RELATIONS = building good relations with the
firm’s various publics by obtaining favourable publicity,
good corporate image, and handing or heading
unfavourable stories and events
DIRECT MARKETING = direct connections with
carefully targeted individual consumers to obtain new
or cultivate lasting relationships
ELEMENTS OF COMMUNICATION PROCESS
SENDER RECEIVER
IDEA MESSAGE IMAGE
Encoding to Decoding to an
a message MEDIA image
Disruptions
Disorders
FEEDBACK = knowledge that the receiver

has reacted to the communication
ADVERTISING Kotler-Amstrong-
OBJECTIVE SETTING
communication objectives, sales objectives
BUDGET DECISIONS
affordable approach, percent of sales, competitive parity,
objective and task
MESSAGE DECISIONS MEDIA DECISIONS

- message strategy - reach, frequenc, impact
- message execution - major media types
- specific media vehicles
- media timing
CAMPAINGN EVALUATION
Communication and sales impact
POSSIBLE OBJECTIVES
-Kotler-Amstrong-
• INFORMATIVE ADVERTISING
gives information about a new product, the firm, new uses
of product, price change, explain how the product works ..
• PERSUASIVE ADVERTISING
brand building, changing customer’s perceptions of
product attributes ..
• REMINDER ADVERTISING
remind consumer of the goods and services, remind the
selling palaces..
SALES PROMOTION TOOLS–Kotler-Amstrong-
• SAMPLE
• COUPON
• CASH REFND OFFER ( RABATE )
• PRICE PACK
• PREMIUM
• ADVERTICING SPECIALITY
• PATRONAGE REWARD
• POINT-OF-PURCHASE ( POP )
• PROMOTIONAL EVENTS
BUSINESS PROMOTION TOOLS
• DISCOUNT
a straight reduction in price on purchase during
stated period of time
• ALLOWANCE
promotional money paid by manufactures to
retailers in return for agreement to feature the
manufacture’s products in some way

DIRECT MARKETING Kotler-Amstrong -
• FACE TO FACE MARKETING

• TELEMARKETING
• DIRECT-MAIL MARKETING
• CATALOG MARKETING
• DIRECT RESPONSE TELEVISION
MARKETING
• KIOSK MARKETING
• ONLINE MARKETING

COMPETITION -Porter 1980-
-
Potential new firms
Threat
Suppliers Competitions in Buyers

Negotiation the branch Negotiation
power power
Threat
Substitutes

COMPETITION STRATEGIES –Porter 1980-
• Overall cost leadership
-producing a standard product at low cost or engaging in
heavy advertising in order to undercut competetion – price
competition
• Differentiation
-selling at a higher price than average, in the product unique
feature of quality, image or design
• Focus concentrates
-focusing on a specialist product rangeor a unique segment of
the market or a combination of them both

-MARKETING INFORMATION SYSTEM
MkiS Kotler 1997, Lancester-Reynolds 2004
 A marketing information system ( MkiS )
 concists of people, equipment and procedures
> to gather, sort analyse, evaluate and distribute needed,

timely and accurate information to marketing desicion
makers

MARKETING INFORMATION SYSTEM –
Lancester-Reynolds -
MANAGING
Marketing Analysis, Planning, Tactics, Implementation,
Actions Control, Review, Monitoring, Contingency
Defining information needs Distiribution of information
Internal accounting system Marketing research system

Component
parts
Marketing intelligence system Analytical marketing system
Tarket markets, Marketing channels, Communication, Logistics
Competition, International aspects, Macroénvironment
MARKETING INTELLIGENCE SYSTEM
SALES TRANSPORT OTHER
PERSONNEL PERSONNEL PERSONNEL
intelligence gathered from
Competition Telephone calls and
Exhibitions Visiting customers requests
Conferences General chats with Visitors to firm
Training courses other drivers Letters and direct mails
Customers Visiting suppliers Press and journals
Sponsored events General observastion General observation
MARKETING RESEARCH SYSTEM

- Primary data
- Secondary data
INTERNAL ACCOUNTING SYSTEM

PRACTICE 1. Analyse the business idea of the ( small/medium size,
countryside branch ) firm and give ideas to develop the business concept by
using the theoretic knowledge you got on the
- lectures and from the books
The firm identification:
WHAT TO WHOM
-product, service, experience - market, segmentation, market region
-quality - custome’s needs/wants for the product
-price, pricing strategy - competition situation
-how they have developed the product
HOW IMAGES/POSITION
-organization structure -positioning on the market,
-how they use the parts marketing -profiling; trademark, brand ….
of marketing mix -your own opinion or image of the product
-quality policy and the quality
management
-why the company has choosed this
way of operating?

PRACTICE 2. Create a new product / service /experience idea on the basis
of local ( in Hungry+ in Finland ) possibilities or renew an old product; what,
customer segment, quality, pricing strategy, distribution, marketing, feature,
package, marketing communicatio …Compare the Hungrian and Fnnish
cases; are there similarities / dissimilarities?
USE SWOT ANALYSIS TOO
Strengt ( Strengthen ) Weakness ( Improve )
Opportunities ( Utilize ) Threats ( Avoid )

EVALUATION OF THE COURSE
Give your evaluation of the coure, please
• Good points ; contents, practises, presentation, teaching

• Not good points; contents, practises, presentation, teaching
• What did you learn? Can you use this knowledge in your
job in future?
• Evaluate your own learning stage in numbers 1-5
• Your experience and opinion of studying in an
international group? Should this kind of operation
continue or not? Why?
• Please, send reports and evaluation by e-mail:
hilkka.jankkila@ramk.fi
THANK YOU 
From an idea to a product
Type of product: Identification number: Date:
• Name of product and the description of the product:

• Origin of the idea?
• Why the idea have been produced?
• What kind of need or want the product does solve?
• Competing products and substitudes?
• Critical and hazardous points on tproduct development,
production and marketing? SWOT-analysis
• Objectives: Product quantity, marketing share, returns?
• What next? Item Timing Responsible
-core product
-packing
-pricing
-distribution
- - promotion
TOURIST PROGRAM DESCRIPTION
• Name:
• Timing, when:
• Duration:
• Place:
• Description of content:
• Price, min/max/discounts:
• Price including:
• Further information:
• How it is reached:
• Information of the firm/ reservations
• Information of the retailer / reservations:

BLUE PRINT FOR A TOURIST PROGRAM
• CONCRETE ELEMENTS; hotel, means of transfer,

accomandation during the program, food, reindeer,
snowmobile
• THE CUSTOMER PROCESS; what / how does the
customer do during the program
• VISIBLE SERVICE PROCESS – front office personnel,
responsible persons
• INVISIBLE SERVICE PROCESS – back office personnel
• THE TIMING OF THE PROGRAM – from the
beginning to the end minutes, hours, days

Marketing - Jankkila 2004

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Hilkka Jankkila, Principal Lecturer,

ROVANIEMI POLYTECHNIC, School of Forestry and Rural Industries

 Lectures = basic concepts and processes of

MARKETING -Jankkila 2004 -

Lancester, Geoff - Reynolds, Paul. 2004.

Kotler, Philip – Amstrong, Gary. 2004.

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OBJECTIVES AND TARGETS

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Marketing Sales Buyer

Product Price Distribution Promotion Personal Segmentation

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CUSTOMER RELATIONSHIP MANAGEMENT =

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Selling ( 1 )and marketing ( 2 )concepts contrated:

1 Factory Existing Selling Profits through

2 Market Customer Intergated Profits through

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 organization / firm should determine the needs / wants /

*Quality management and assurance !

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-financial publics = banks, funds, investment houses, stocholders …

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• The acts of individuals directly involved in obtaining and

• Consumer buyer behaviour - the buying behaviour of

• Consumer = most important of the marketing

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MARKETING AND BUYER’S BUYER’S

Marketing Other Buyer Buyer Product choice

For the most marketers can not control such factors –

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PROBLEM / NEED RECOGNITION

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BUSINESS IDEA DESICIONS FIRM at present

BUSINESS IDEA REALIZATION

Sellers view Customers view

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 Marketing Strategy tool that expands the number of

 People ( explicit faktor )

 The traditional Marketing Mix model was primarily directed

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• PRODUCT = Anything that can be offered to a market for

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ANSOFF MATRIX ( Igor Ansoff 1957 )