Product. Price. Promotion. Place.

Product area is concerned with developing the ”right” product for the target market. This offering may involve a physical good, a service, or a blend of both.

Merchandise generally similar in appearance, that is, in style or design, but varying in such elements as size, price, and quality is collectively known as a product line. Product lines must be intimately correlated with consumer needs and wants.

In order to develop a line effectively, marketing research is conducted to study consumer behaviour. Changing attitudes and modes of living directly affect the salability of products. For example, the trend to informal dress has changed clothing styles drastically. Also, a high-income economy triggers a demand for products very different from those selected in a declining business cycle. The availability or lack of disposable income, meaning income over and above that spent for basic necessities such as food, shelter, and clothing, affects the buying pattern for so-called luxury products. Similarly, the purchase of durable or long-lived goods, such as refrigerators, cars, and houses, may be deferred when the economy is declining and may increase rapidly in periods of prosperity. Staple goods, such as food and clothing, tend not to be seriously affected by the business cycle.

Consumers today are conditioned to expect product innovations and tend to react favourably to new features. This has an important bearing on the usable life deliberately designed into a product, which in turn has a significant effect on the costs to the manufacturer and ultimately on the price to the consumer. Competition between manufacturers of similar products naturally accelerates the speed of changes made in those products.

Price. The two basic components that affect product pricing are costs of manufacture and competition in selling. It is unprofitable to sell a product below the manufacturer’s production costs and unfeasible to sell it at a price higher than that at which comparable merchandise is being offered. Other variables also affect pricing. Company policy may require a minimum profit on new product lines or a specified return on investments, or discounts may be offered on purchases in quantity.

Attempts to maintain resale prices were facilitated for many years under federal and state fair-trade laws. These have now been nullified, prohibiting manufacturers from controlling the prices set by wholesalers and retailers. Such control can be still maintained if the manufacturers wish to market directly through their own outlets.

Attempts have also been made to maintain product-price competition in order to minimize the danger of injuring small businesses.

Promotion is concerned with telling the target market about the “right” product. Promotion includes personal selling, mass selling, and sales promotion. It is the marketing manager’s job to blend these methods.

Personal selling involves direct communication between sellers and potential customers. Personal selling usually happens face-to-face, but sometimes the communication occurs over the telephone. Personal selling lets the salesperson adapt the firm’s marketing mix to each potential customer. But this individual attention comes at a price; personal selling can be very expensive. Often this personal effort has to be blended with mass selling and sales promotion.

Mass selling is communicating with large numbers of customers at the same time. The main form of mass selling is advertising - any paid form of nonpersonal presentation of ideas, goods, or services by an identified sponsor. Publicity - any unpaid from of nonpersonal presentation of ideas, goods, or services - is another important form of mass selling.

Sales promotion refers to those promotion activities - other than advertising, publicity, and personal selling - that stimulate interest, trial, or purchase by final customers or others in the channel. This can involve use of coupons, point-of-purchase materials, samples, signs, catalogues, novelties, and circulars. Sales promotion specialists work with the personal selling and mass selling people.

Place is concerned with all the decisions involved in getting the “right” product to the target market’s place. A product isn’t much good to a customer if it isn’t available when and where it’s wanted.

A product reaches customers through a channel of distribution. A channel of distribution is any series of firms (or individuals) from producer to final user or consumer.

Some products are marketed most effectively by direct sale from manufacturer to consumer. Among these are durable equipment, for example, computers, office equipment, industrial machinery and supplies, and consumer specialties, such as vacuum cleaners and life insurance. The direct marketing of products such as cosmetics and household needs is very important. Formerly common “door-to-door products”, these are now usually sold by the more sophisticated “house party” technique.

Most consumer products, however, move from the manufacturer through agents to wholesalers and then to retailers, ultimately reaching the consumer. Determining how products should move through wholesale and retail organizations is another major marketing decision.

Wholesalers distribute goods in large quantities, usually to retailers, for resale. Some retail businesses have grown so large, however, that they have found it more profitable to bypass the wholesaler and deal directly with the manufacturers or their agents.

Retailing has undergone even more change. Intensive preselling by manufacturers and the development of minimum-service operations, for example, self-service in department stores, have drastically changed the retailer’s way of doing business. More recently, warehouse retailing has become a major means of retailing higher-priced consumer goods such as furniture, appliances, and electronic equipment.

Transporting and warehousing merchandise are also technically within the purview of marketing. Products are often moved several times as they go from producer to consumer. Products are carried by rail, truck, ship, airplane, and pipeline. Efficient traffic management determines the best method and timetable of shipment for any particular product.

Sometimes a channel system is quite short. It may run directly from a producer to a final user or consumer. This is especially common in business markets and in the marketing of services. Often the system is more complex - involving many different kinds of intermediaries and specialists. And if a marketing manager has several different target markets, several different channels of distribution might be needed.

Text 5

Read the text and be ready to fulfill the task that follow it.

International Marketing

Stated simply, international marketing is marketing across national boundaries. Since the end of World War II, improved travel, communications, and technology have fostered a tenfold increase in trade among nations.

The General Agreement on Tariffs and Trade (GATT) was an international agreement established in 1948 that sought to “liberalize world trade and place it on a secure basis, thereby contributing to economic growth and development and to the welfare of the world’s peoples”. It assisted in reducing trade barriers around the world and in creating more favourable conditions for world trade. Since GATT was established, this agreement has helped build world trade from $60 billion to $6 trillion annually. However, GATT negotiations “to liberalize world trade” could bog down and extend for years because of the desire of countries to protect jobs in their domestic industries.

Benefits and difficulties. A company choosing to enter international markets can achieve many benefits, but it can also encounter many difficulties.

The main reason for companies to do international marketing is to exploit a better business opportunity in terms of increased sales and profits. Either firms are limited in their home country or their opportunities are great in the foreign countries.

Many companies find themselves with little room for growth in their domestic market. Competition may increase and leave a smaller portion of the pie to enjoy, or demand may shift to a newer, better product. The economic environment in the home country may be undesirable because of higher taxes or a recession. It would seem logical to turn to other markets in any of these cases, as Japan’s Honda has done.

So foreign markets can offer an opportunity for growth. A product that is mature and facing dwindling sales at home may be new and exciting in other countries. For example, France’s Sodima whose Yoplait yogurt was in a mature phase of its product life cycle at home, was happy to license its product to General Mills for sale in the United States, where yogurt sales were growing rapidly. Similarly, Kellogg hopes that its Corn Flakes will catch hold in France, where the product is at an early stage in its product life cycle and competition in the ready-to-eat cereal market is less intense than in the United States. The following figure summarizes the main reasons why U.S. companies consider entering international markets.

1. To counter adverse economic factors in the home market.

2. To extend a product’s life cycle.

3. To reduce or avoid competition.

4. To enhance economies of scale in production and marketing.

5. To spread fixed costs over more units sold.

6. To dispose inventories.

7. To export (and import) new technology.

8. To increase profits/shareholder economic well-being.

Is international marketing easy? Not in the least. For U.S. firms anxious to enter the Japanese market and make profits quickly, strategy consultant Kenichi Ohmae reminds them it took perhaps 50 years to build their U.S. firm and 15 years to develop their European business. So he asks these firms to recognize that in entering the Japanese market - one of the toughest markets in the world - it may take at least 25 years to achieve the same success it found in the United States or Europe. Although international marketing involves the same principles of domestic marketing, those principles must be applied with care.

Campbell Soup, the company with 60 percent market share in the U.S. wet soups category, lost $30 million in Great Britain. The problem was that Campbell didn’t clearly communicate that the soup was condensed, and consumers saw it was a poor value compared with the larger cans stocked next to it.

Americans recognize the brand names of foreign products that have been introduced successfully here: Honda and BMW cars, Sony TV sets, Nestle candy bars, and Shell gasoline products.

Global versus customized products. As international marketing grows, firms selling both consumer and industrial products in foreign countries face a dilemma: should they use a global or customized strategy in the products they sell, or a strategy in between?

A global approach is an international marketing strategy that assumes that the way the product is used and the needs it satisfies are universal. Therefore, the marketing mix need not be adjusted for each country. In contrast, a customized approach (or local approach) is an international marketing strategy that assumes that the way the product is used and the needs it satisfies are unique to each country. This then requires a marketing mix tailored to the needs, values, customs, languages, and purchasing power of the target country. The global approach is less common but has been successful for some firms.

McDonald’s - the undisputed world hamburger rule - seems to have achieved the ideal hybrid between a global and a customized strategy. Although it has standardized much of its menu, it gives a degree of flexibility to franchisees to allow for local customer preferences in their countries. Experts have coined the term globalization to describe the McDonald’s approach, which is an international marketing strategy that seeks to combine the best features of both the global and customized (local) approaches by encouraging local managers to modify the global strategy, where appropriate, to the needs of customers in their country.

McDonald’s in Germany and France has beer on its menu, and its restaurants in Japan offer saki. In the Philippines, where noodle houses are popular, its customers can find - what else? - McSpaghetti!

Speak on the following:

1. Benefits and difficulties of international marketing.

2. The main reasons and alternatives of entering international marketing.

3.Global versus customized product.

Language

1.Practise reading the following words correctly. If necessary, use a

dictionary .

Transact; consumption; society; luxury; guide; allocate; purchase; scarce; supply; wholesale; challenger; market share; monopoly; niche; concept; procedure; approval; decision; analysis; qualitative; quantitative; suggest; research; target; consumer; manufacturer; minimize; coupon; sample; catalogue; technology; customized; globalization.

2. The word market can be used in many word combinations. Consult

Marketability; marketer

1. Fruit and vegetables are much cheaper from/in/on the … than in supermarket. 2. … were trying to convince men that such products were not just for women. 3. We like to get the … done on Thursday so we can have the weekend free. 4. How do you expect us to sell something that has such low … . 5. She’s hoping for a career in …, advertising or public relations. 6. We estimate the potential … for the new phones to be around one million people in this country alone. 7. We put our house on the … as soon as house prices started to rise. 8. The indoor flower … is a big tourist attraction. 9. Dad’s gone … but he’ll be back in an hour. 10. Thanks for the offer but I’m not in the … for another car at the moment. 11. Our … people have come up with a great idea for the launch of the model. 12. This is a highly … product. 13. Free … are vehemently opposed to the safety regulations which they say will increase employers’ costs. 14. They are asking $60000 for their flat, but the … price is nearer $55000. 15. The product would have sold more if it had been … better.

4.Complete the following passage using the word produceor its derivatives.

… is a very important economic activity. Whether for lack of skill and resources or just lack of time, most people don’t make most of the … they use. Picture yourself, for example, building a 10-speed bicycle, a compact disc player, or a digital watch - starting from scratch! We also turn to others to … …services - like health care, air transportation, and entertainment. Clearly, the high standard of living that most people in advanced economies enjoy is made possible by specialized … .

Although … is a necessary economic activity, some people overrate its importance in relation to marketing. Their attitude is reflected in the old saying: “Make better mousetrap and the world will beat a path to your door”. In other words, they think that if you just have a good … , your business will be a success.

The “better mousetrap” idea probably wasn’t true in Grandpa’s time, and it certainly isn’t true today. In modern economies, the grass grows high on the path to the Better Mousetrap Factory - if new mousetrap is not properly marketed.

The point is that … and marketing are both important parts of a total business system aimed at providing consumers with need-satisfying goods and services. Together, … and marketing supply five kinds of economic utility - form, task, time, place, and possession utility - that are needed to provide consumer satisfaction. Here, utility means the power to satisfy human needs.

Read the passage again and answer the following question: How

does marketing relate to production?

5.Give the synonyms to the following:

Goods; scarce; to demand; viewpoint; wage; profit; to offer; to buy; desire; competition; to encourage; frequently; entire; competitor; to expand; attempt; to increase; recession; pervasive; to enhance; warehouse; durables; staple products; to accelerate; to convince; utilization; potent; manufacturer; drastically; to meet the needs; research; basic; reason; to make decisions; purpose.

6.Match the verb with the correct preposition, then give their Russian

equivalents.

to with into in on of

Market research; marketeer; consumer; compete; consumerism; market price; market forces; target market; marketing mix; central markets; middleman; channel of distribution; substitutes; market development; market penetration; market segment; trademark

1. A social movement that seeks to increase the rights and powers of consumers. 2. Try to do or be better than someone else. 3. A price which is likely to be paid for something. 4. The controllable variables the company puts together to satisfy the target group. 5. Someone who works in or supports a particular market system. 6. A person who buys goods or services for their own use. 7. The collection and examination of information about things that people buy or might buy and their feelings about things they have bought. 8. The forces that decide price levels in an economy or trading systems whose activities are not influenced or limited by governments. 9. Convenient places where buyers and sellers can meet one-on-one to exchange goods and services. 10. Any series of firms (or individuals) from producer to final user or consumer. 11. Trying to increase sales by selling present products in new markets. 12. A fairly homogeneous (similar) group of customers to whom a company wishes to appeal. 13. A person who buys goods from a producer and makes a profit by selling them to a shop or a user. 14. Products that offer the buyer a choice. 15. Trying to increase sales of a firm’s present products in its present markets. 16. A legal term that includes only those words, symbols or marks that are legally registered. 17. A (relatively) homogeneous group of customers who will respond to a marketing mix in a similar way.

8.Fill in the gaps with the correct preposition.

The term marketing comes … the word market, which is a group … potential customers … similar needs who are willing to exchange something … value … sellers offering various goods and/or services - that is, ways … satisfying those needs. Of course, some negotiation may be needed. This can be done face-to-face … some physical location. Or it can be done indirectly - … a complex network … middlemen who link buyers and sellers leaving far apart. … primitive economies, exchanges tend to occur … central markets. Central markets are convenient places where buyers and sellers can meet one-on-one to exchange goods and services. We can understand macro-marketing better … seeing how and why central markets develop.

Imagine a small village … five families - each … a special skill … producing some need-satisfying product. … meeting basic needs, each family decides to specialize. It's’ easier ... one family to make two pots and another to make two baskets than ... each one to make one pot and one basket. Specialization makes labour more efficient and more productive. It can increase the total amount … form utility created. Specialization can also increase the task utility … producing services, but … the moment we’ll focus … products that are physical goods.

If these five families each specialize … one product, they will have to trade … each other. It will take the five families 10 separate exchanges to obtain some of each … the products. If the families live near each other, the exchange process is relatively simple. But if they are far apart, travel back and forth will take time. Who will do the travelling - and when?

Faced … this problem, the families may agree to come … a central market and trade … a certain day.

Read the passage again and speak on central markets.

9.Complete the sentences with the words given below.

Micro-marketing, question, marketing, broad, welfare, making, obvious, company, marketing system, delivery, activities, macro-marketing, needs, support, social, advertising, focus on, define, definition, between, advanced, perform, middlemen, exist, set of.

Some people think of … too narrowly as “selling and …”. On the other hand, one author … marketing as the “creation and … of a standard of living”. That definition is too … .An important difference … the two definitions may be less … . The first definition is a micro-level definition. It … activities performed by an individual organization. The second is a macro-level definition. It focuses on the economic … of a whole society.

Which view is correct? Is marketing a … activities done by individual firms or organizations? Or is it a … process? We see that a producer of tennis rackets has … many customer-oriented activities besides just … rackets. The same is true for an insurance …, an art museum, or a family-service agency. This … the idea of marketing as a set of … done by individual organizations. On the other hand, people can’t live on tennis rackets and art museums alone! In … economies, it takes thousands of goods and services to satisfy the many … of society. For example, a typical Wal-Mart store carries 75,000 different … . A society needs some sort of … to organize the efforts of all the producers and … needed to satisfy the varied needs of all its citizens. So marketing is also an important social process. The answer to our … is that marketing is both a set of activities performed by organizations and a social process. In other words, marketing … at both the micro and macro levels. Therefore, we will use two … of marketing - one for micro-marketing and another for macro-marketing. … looks at customers and the organizations that serve them. … takes a broad view of our whole production-distribution system.

10.Rephrase the italicized words.

Most modern economies have advanced well beyond the five-family village, but the same ideas still apply. The main purpose of market intermediaries is to make exchange easier and allow greater time for production, consumption, and other activities - including leisure. Although it is tempting to conclude that more effective macro-marketing systems are the result of greater economic development, just the opposite is true. An effective macro-marketing system is necessary for economic development. Improved marketing is often the key to growth in less-developed nations. Without an effective macro-marketing system, many people in less-developed nations are not able to leave their subsistence way of life. They can’t produce for the market because there are no buyers. And there are no buyers because everyone else is producing for their own needs. As a result, distribution systems and intermediaries do not develop. Breaking this “vicious circle of poverty” may require major changes in the inefficient micro- and macro-marketing systems that are typical in less-developed nations. At the least, more market-oriented middlemen are needed to move surplus output to markets - including foreign markets where there is more demand. You can see how this works, and why links between the macro-marketing systems of different countries are so important, by considering the differences in markets that are typical at different stages of economic development.

11.Match the halves.

1. Mass marketing is a) is designed to offer variety to the

market and set the seller’s products

apart from competitor’s products.

2. Product differentiation is b) the act of dividing a market into

distinct groups of buyers.

3. Market segmentation is c) the decision to mass-produce and

mass-distribute one product and

attempt to attract all kinds of buyers.

4. Target marketing is d) the decision how many segments to

cover.

5. Market positioning is e) the decision to identify the different

groups that make up a market and to

develop products for selected target

markets

6. Market targeting is f) the decision whether to take a position

similar to that of some competitor or

go after a hole in the market.

12.Read the passage carefully. There is a word in each line which should not be there. Find it and cross it out.

By the 1950s consumers had a higher level of an income and a diversity of a product offerings available to them. Businesses began to realize that these sales and advertising could not sell a product if it was not that what the consumer wanted. Thus it had became important to first find out what he consumer wanted or needed and then to produce a product to satisfy that need or want. This attitude led up to the development of the marketing concept. Over the years of the marketing concept has evolved into a philosophy aimed at the pursuing organizational goals by identifying the their wants and their needs of the organization’s consumers (the organization’s) target markets) and to designing an integrated product/service offering on to fill those wants and needs.

13.Complete the following sentences with:

a) many; much (more); few/a few (fewer); little/a little (less)

1. … evolve into a multinational organization, which means world-wide marketing is planned and managed by the top offices of the company. 2. Companies move into international marketing for … reasons. 3. Packaging is not well developed because it would add … to the cost of product. 4. If the manufacturer charges … in the foreign market than in the home market this is called dumping. 5. Many foreign middlemen use high markups even though this means … units. 6. Marketing affects so … people in so … ways that it inevitably stirs controversy. 7. There are too … different kinds of consumers with too … different kinds of needs. 8. The company has a policy of permanently low pricing. In fact, they guarantee that all branded products will be at least 10% … than the recommended sale price. 9. The wholesale price of a given item is usually … than the retail price. 10. There is … long-term planning in the US than in Japan.

b) some/any or their derivatives

1.… capable of satisfying a need can be called a product. 2. Exchange is the act of obtaining a desired object from … by offering … in return. 3. A market can grow up around a product, a service, or … else of the kind. 4. Most people think of a marketing manager as … who finds enough customers for the company’s current output. 5. Marketing activities should be carried out under … philosophy. 6. Target markets are the core of … marketing strategy. 7. A product is … a firm markets and includes the actual product and all accompanying factors that satisfy the customer’s needs. 8. A wholesale transaction can be defined as … nonretail sale. 9. A brand is … combination of words or symbols that identifies the goods or services of a specific producer and distinguishes them from the products of other manufacturers. 10. The desire to exchange occurs only when … produces more than he/she can consume (a surplus).

14.Fill in the gaps with a comparative or superlative form of words

in brackets.

1. Wholesale transactions are usually much (large) than retail transactions. 2. The loyalty of consumers to specialty products allows for (exclusive) distribution and (high) prices. 3. (obvious) channel leaders are found in franchise organizations. 4. This company’s (important) market segment is men aged from 18 to 30. 5. Sales are much (high) this year because the company have spent a lot on marketing. 6. In the early 1950s, the supply of goods began to grow (fast) than the demand. 7. The production concept is one of (old) philosophies guiding sellers. 8. Organizational purchasing decisions are (complex) and the buying process is (formal). 9. Organizational markets usually have fewer and (large) buyers who are geographically (concentrated). 10. The majority think that a TV commercial is (good) advertising medium.

15.Complete the following sentences using the correct article.

1. Marketing revolves around … exchange process. 2. … evolution of marketing is … evolution of … exchange process. 3. It is … responsibility of those engaged in … marketing to discover … wants and needs of … consumers and to stimulate and fulfil this demand. 4. Demand stimulation is … key not only to … consumption but also to income and employment. 5. Without marketing … companies could not maintain … efficiencies of production and distribution necessary to survive. 6. Product-related decisions include … kinds of product to make, how to package it, and what to call it. 7. Promotion decisions facilitate … exchange process by communicating with and persuading … target market to buy … product. 8. Marketing is closely related to … economics, … social science concerned with … production, distribution, and consumption of useful goods and services. 9. … controllable elements of … marketing environment revolve around … corporate planning and organization. 10. … revenue or sales forecast is … estimate of how much money … firm will receive from … sales of its product during … specified period. 11. Dividing … market into segments helps … company identify … opportunities available to it. 12. International marketing consists of … marketing across … national boundaries.

16.Put the verbs in brackets into the correct infinitive form or –ing form.

Marketers perform two basic tasks in (to meet) their exchange objectives: first, they identify potential markets and select certain target markets (to serve); then they design and implement marketing strategies (to meet) these target market objectives. Marketing strategies, or action plans for (to accomplish) objectives, then, are thought of in terms of particular markets. Thus, (to identify) and (to select) target markets are critical early tasks of marketing managers. In affluent economies there are few completely homogeneous markets, that is, markets of people who want identical products at identical prices and quantities. For instance, think about a product as basic as drinking water. Most people in the United States turn on the water faucet when they want a drink of water. But a few people pay extra for a refrigerator accessory that provides water and ice cubes without (to open) the door. And more and more people are buying their favorite brand of drinking water in bottles from the supermarket shelf. Among a group of young people, all (to share) a common need for housing, many rent apartment in cities, others insist on houses in the suburbs, while one or two will scan the ads in a newspaper for a few timbered acres in Maine where they can build their own log cabins. The point is that most markets are segmented into different groups (to share) preferences for a specific set of product characteristics.

17. Render the following passage in Russian(10-12 sentences) focusing on key vocabulary.

Speaking

1. Define marketing and discuss the activities it involves.

2. Market leaders, challenger, followers, novices: what are their real position on the market? Are they all vulnerable? If not then why?

3. Describe the differences between convenience products, shopping products, and specialty products.

4. List the various factors affecting pricing decisions.

5. Speak on the factors affecting the general price level.

6. Explain why promotion is important to a company’s marketing strategy.

7. Explain the difference between wholesale and retail transactions.

8. Discuss the functions performed by channels of distribution and various factors affecting their selection.

9. “Economic success is not guaranteed simply because a producer makes a good product for which there is a need”. How does this fact relate to channel management?

10. Explain the environmental forces impacting on the international marketing.

11. Speak on the following: “there is no “right” marketing mix. Product, price, promotion and placement decisions must be made with the target customer in mind.”

12. Some time ago, Apple Computer was one of the first to mass maker PCs. IBM, the giant, had no competing product, but within a short time it announced its PC model. Steven Jobs, the founder of Apple, is said to have exclaimed, “We’re glad to see IBM is entering the market”. According to the product life cycle, is there any rationale for this statement?

Writing

Express your opinion on the following (150-200 words):

a)”Marketing is vital and virtually all-pervasive element in any economy”.

b)”International marketing or trade between nations is filled with risks and problems but promises profits to those who undertake it”.

c)”The process and principles of marketing strategy are universal”.

d)”Factors that influence buyer behaviour include culture, subculture, social class, self-image and situational factors”.

Key Vocabulary

UNIT III

ADVERTISING

Lead-in

1.What is advertising?

2. What is the role of advertising in modern world?

3. What are the objectives of advertising?

4. The power of an advertisement is conveyed through two channels –

the image shown and the language used. What is more attractive to you?

5. In what way does advertising influence your behaviour as a consumer?

Reading

Text 1

Read the following text. Speak on the stages of the development of advertising.

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