Marketing notes.doc

8/20/2019 Marketing notes.doc

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Marketing Notes

Marketing:

Marketing is used to create the customer , to keep the customer and

to satisfy the customer. With the customer as the focus of its

activities, it can be concluded that marketing management is

one of the major components of business management. The

evolution of marketing was caused due to mature markets and

overcapacities in the last decades. Companies then shifted

the focus from production more to the customer in order to

stay profitable.

Concepts and Approaches:

Orientatio

n

Profit

driver

WesternEuropean

timeframe

Description

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ProductionProductionmethods

until the!"#s

$ firm focusing on a production orientationspeciali%es in producing as much as possibleof a given product or service. Thus, thissignifies a firm e&ploiting economies of scale,until the minimum efficient scale is reached. $production orientation may be deployed whena high demand for a product or servicee&ists, coupled with a good certainty thatconsumer tastes do not rapidly alter 'similar to the sales orientation(.

Product)uality of the product

until the!*#s

$ firm employing a product orientation ischiefly concerned with the +uality of its ownproduct. $ firm would also assume that aslong as its product was of a high standard,people would buy and consume the product.

Sellingellingmethods

!"#s and!*#s

$ firm using a sales orientation focusesprimarily on the selling-promotion of a

particular product, and not determining newconsumer desires as such. Conse+uently,this entails simply selling an already e&istingproduct, and using promotion techni+ues toattain the highest sales possible.

uch an orientation may suit scenarios inwhich a firm holds dead stock, or otherwisesells a product that is in high demand, withlittle likelihood of changes in consumer tastesdiminishing demand.

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Marketingeeds andwants of customers

!/# topresentday

The marketing orientation is perhaps themost common orientation used incontemporary marketing. 0t involves a firmessentially basing its marketing plans around

the marketing concept, and thus supplyingproducts to suit new consumer tastes. $s ane&ample, a firm would employ marketresearch to gauge consumer desires, use123 to develop a product attuned to therevealed information, and then utili%epromotion techni+ues to ensure personsknow the product e&ists.

Other Approaches:

Orientation Profit driver WesternEuropeantimeframe

Description

Relationshipmarketing -Relationshipmanagement456

7uilding andkeeping goodcustomer relations

!*#s topresentday

8mphasis is placed on the wholerelationship between suppliers andcustomers. The aim is to give the bestpossible attention, customer servicesand therefore build customer loyalty.

Businessmarketing -ndustrialmarketing

7uilding andkeepingrelationshipsbetweenorgani%ations

!5#s topresentday

0n this conte&t marketing takes placebetween businesses or organi%ations.The product focus lies on industrialgoods or capital goods than consumer products or end products. $ differentform of marketing activities like

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promotion, advertising andcommunication to the customer isused.

Socialmarketing 456

7enefit tosociety

!!#s topresentday

imilar characteristics as marketingorientation but with the added provisothat there will be a curtailment on anyharmful activities to society, in either product, production, or sellingmethods.

!"pes of marketing:

Reactive marketing:

After sale of product compan" contact its customers #ant to

kno# about the product performance it is kno#n as

reactive marketing$

Proactive marketing:

Before manufacturing product #hen compan" #ant to kno#

likeness of customer it is kno#n as proactive marketing$

Accountable marketing:

%hen compan" or its emplo"ee take the responsibilit" of product performance #hich is sale b" the compan" or

business is kno#n as accountable marketing$

Marketing &nvironment:

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Marketing environment:

The term marketing environment relates to all of the factors 'whether

internal, e&ternal, direct or indirect( that affect a firm9s marketing

decision:making or planning and is subject of the marketing research.

$ firm9s marketing environment consists of two main areas, which

are;

Macro environment:


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• 8mployees

• uppliers

• The Media

Market segmentation:

Market segmentation:

Market segmentation pertains to the division of a market of

consumers into persons with similar needs and wants. $s an

e&ample, if using >ellogg9s cereals in this instance, ?rosties are

marketed to children. Crunchy ut Cornflakes are marketed to adults.7oth goods aforementioned denote two products which are marketed

to two distinct groups of persons, both with like needs and wants.

The purpose for market segmentation is conducted for two main

issues. ?irst, a segmentation allows a better allocation of a firm9s

finite resources. $ firm only possesses a certain amount of resources.

$ccordingly, it must make choices 'and appreciate the related costs(

in servicing specific groups of consumers. ?urthermore the diversified

tastes of the contemporary Western consumers can be served better.

With more diversity in the tastes of modern consumers, firms are

taking noting the benefit of servicing a multiplicity of new markets.

Market segmentation can be defined in terms of the STP acronym,

meaning Segment , Target and Position.

Segment:

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Segmentation involves the initial splitting up of consumers into

persons of like needs-wants-tastes. ?our commonly used

criteria are used for segmentation, which include;

• 'eographical 'e.g. country, region, city, town, etc.(

• Ps"chographic 'i.e. personality traits or character traits

which influence consumer behaviour(

• (emographic 'e.g. age, gender, socio:economic class,

etc.(

• Behavioural 'e.g. brand loyalty, usage rate, etc.(

!arget:


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differentiation e&ist, which are commonly applied by firms.

These are;

• )ndifferentiated : Where a company produces a like

product for all of a market segment.

• (ifferentiated : 0n which a firm produced slight

modifications of a product within a segment.

• Niche : 0n which an organisation forges a product to

satisfy a specialised target market.

Position:

Positioning concerns how to position a product in the minds of

consumers. $ firm often performs this by producing a

perceptual map, which denotes products produced in its

industry according to how consumers perceive their price and

+uality. ?rom a product9s placing on the map, a firm would tailor

its marketing communications to suit meld with the product9s

perception among consumers.

Marketing information s"stem:

Marketing information s"stem:

$ marketing information system ( MKIS ) is an information system

that is commonly used by marketing management to analyse and

view information pertaining to marketing activities. $s the label

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suggests, an M>0 is a computer:based information system therefore

used to input, store, process and output marketing information.

!"pes of marketing research:

Marketing research, as a sub:set aspect of marketing activities, can

be divided into the following parts;

• Primary research 'also known as field research(, which involves

the conduction and compilation of research for the purpose is

was intended.

• econdary research 'also referred to as desk research(, is

initially conducted for one purpose, but often used to support

another purpose or end goal.

7y these definitions, an e&ample of primary research would be

market research conducted into health foods, which is used solely to

ascertain the needs-wants of the target market for health foods.

econdary research, again according to the above definition, would

be research pertaining to health foods, but used by a firm wishing to

develop an unrelated product.

Marketing plan:

The area of marketing panning involves forging a plan for a firm9s

marketing activities. $ marketing plan can also pertain to a specific

product, as well as to an organi%ationBs overall marketing strategy.

enerally speaking, an organi%ationBs marketing planning process is

derived from its overall business strategy. Thus, when top

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management are devising the firm9s strategic direction or mission, the

intended marketing activities are incorporated into this plan.

S%O! Anal"sis:

W


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0dentification of W


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introduction, growth, maturity and decline stage. ?urthermore it is

assumed that no product lasts perpetually on the market. =ast but not

least a firm must employ differing strategies, according to where a

product is on the P=C.

Stage Characteristics

1. Market

introduction stage

1. costs are high

2. slow sales volumes to start3. little or no competition - competitive manufacturers watch

for acceptance/segment growth losses

4. demand has to be created5. customers have to be prompted to try the product

6. maes no money at this stage


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2. Growth stage

1. costs reduced due to economies of scale

2. sales volume increases significantly

3. profitability begins to rise4. public awareness increases

5. competition begins to increase with a few new players inestablishing maret

6. increased competition leads to price decreases

3. Mature stage

1. costs are lowered as a result of production volumes

increasing and e!perience curve effects2. sales volume peas and maret saturation is reached

3. increase in competitors entering the maret

4. prices tend to drop due to the proliferation of competing

products

5. brand differentiation and feature diversification isemphasi"ed to maintain or increase maret share

6. #ndustrial profits go down

4. Saturation anddecline stage

1. costs become counter-optimal

2. sales volume decline or stabili"e3. prices$ profitability diminish

4. profit becomes more a challenge of production/distribution

efficiency than increased sales

=evels of poduct;

. Core Benefit

The fundamental need or want that consumers satisfy by consuming

the product or service.

E. Generic Product


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a version of the product containing only those attributes or

characteristics absolutely necessary for it to function.

F. Expected Product

the set of attributes or characteristics that buyers normally e&pect and

agree to when they purchase a product.

G. ugmented Product

inclusion of additional features, benefits, attributes or related services

that serve to differentiate the product from its competitors.

". Potential Product

all the augmentations and transformations a product might undergo in

the future.


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>otler noted that much competition takes place at the $ugmented

Product level rather than at the Core 7enefit level or, as =evitt put it;

9ew competition is not between what companies produce in their

factories,

but between what they add to their factory output in the form of

packaging, services, advertising, customer advice, financing, delivery

arrangements, warehousing, and other things that people value.9

Marketing mi#$

Product marketing mi+ or ,p-s:

0n the early !*#s, Professor eil 7orden at @arvard 7usiness

chool identified a number of company performance actions that can

influence the consumer decision to purchase goods or services.

7orden suggested that all those actions of the company represented

a HMarketing Mi&I. Professor 8. Jerome McCarthy, at the Michigan

tate Dniversity in the early !*#s, suggested that the Marketing Mi&

contained G elements product, price, place and promotion.

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Product%

The product aspects of marketing deal with the specifications of

the actual goods or services, and how it relates to the end:

user9s needs and wants. The scope of a product generallyincludes supporting elements such as warranties, guarantees,

and support.si%e, shape, +uality, brand, packaging etc.

Pricing:

This refers to the process of setting a price for a product, including

discounts. The price need not be monetaryK it can simply be what is

e&changed for the product or services, e.g. time, energy, or attention.

Methods of setting prices optimally are in the domain of pricing

science.

$ number of modes of pricing techni+ues e&ist, which span;

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• 8lasticities 'whether Price 8lasticity of 3emand, Cross 8lasticity

of 3emand, or 0ncome 8lasticity of 3emand(

• Market skimming pricing

• Market penetration pricing

8lasticities are a microeconomic concept, which gauges how elastic

demand is for a given good-service.

0n a marketing conte&t, its usefulness relates to the suitable level at

which a product can be priced, in accordance with price, a product9s

complements and substitutes, and the level of income a consumer possesses.

Market skimming pertains to firm releasing a good in a Lfirst to

marketL scenario. $s an e&ample, picture a company which releases

a new type of personal media playing system. 0t may set the good at

an initially high level, but reduce it over time, once the level of

demand gradually rises. Market skimming is best operable within a

first to market scenario, since there would be few competitors within

the company9s industry. This pricing strategy is also best

implemented within a market of high entry barriers 'such as a

monopoly or an oligopoly(. This is so since the high barriers to entry

discourage competitors into the industry for the product.

Market penetration concerns pricing policies for late entrants to a

market. $s another e&ample, a company could release a product into

a market years after it is initially introduced, but at an artificially low

price in order to stimulate demand. The result of such a pricing


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strategy would be to draw consumers from competitors and into

purchasing its own product. Market penetration, in contrast to market

skimming, best functions within a market form with low barriers to

entry 'such as perfect competition or monopolistic competition(. =ow

barriers to entry facilitates a company9s ability to sell goods at a price

lower than its market clearing point.

Placement .or distribution/:

This refers to how the product gets to the customerK for

e&ample, point:of:sale placement or retailing. This third P has

also sometimes been called Place, referring to the channel by

which a product or service is sold 'e.g. online vs. retail(, which

geographic region or industry, to which segment 'young adults,

families, business people(, etc. also referring to how the

environment in which the product is sold in can affect sales.

Promotion:

This includes advertising, sales promotion, publicity, and

publicity.

7randing refers to the various methods of promoting the

product, brand, or company. 0t also known as marketing

communication.

These four elements are often referred to as the marketing mi&, which

a marketer can use to craft a marketing plan. The four Ps model is

most useful when marketing low value consumer products.

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0ndustrial products, services, high value consumer products re+uire

adjustments to this model. ervices marketing must account for the

uni+ue nature of services.

Service Marketing Mi+0&+tended Marketing Mi+01p-s

@aving discussed the characteristics of a service, let us now look at

the marketing mi& of a service.

The service marketing mi& comprises off the /BpBs. These include;

Product

2 Price

2 Place

2 Promotion

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2 People

2 Process

2 Ph"sical evidence

People:

$n essential ingredient to any service provision is the use of appropriate staff and people. 1ecruiting the right staff and training

them appropriately in the delivery of their service is essential if the

organisation wants to obtain a form of competitive advantage.

Consumers make judgments and deliver perceptions of the service

based on the employees they interact with. taff should have the

appropriate interpersonal skills

Process:

1efers to the systems used to assist the organisation in delivering the

service. 0magine you walk into 7urger >ing and you order a Whopper

Meal and you get it delivered within E minutes. What was the process

that allowed you to obtain an efficient service delivery

Ph"sical evidence:


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This is the environment in which the service is delivered and any

tangible goods that facilitate the performance and communication of

the service. Customers look for clues to the likely +uality of a service

also by inspecting the tangible evidence.

?or e&ample, prospective customers may look to the design of

learning materials, the appearance of facilities, staff, etc.

ntegrated marketing or ntegrated marketing communications

.MC/:

0t is used in order to create a single and coherent marketing

communications process. $s an e&ample, a firm can advertise the

e&istence of a sales promotion, via a newspaper, maga%ine, TN,

radio, etc. The same promotion can also be communicated via direct

marketing, or personal selling. The aim of 0MC is to lessen confusion

among a product9s target market, and to lessen cost for the firm.

everal different subsets of marketing communications can be

distinguished.

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&lements MC

a( $dvertising O Classification of advertising, types, advertising

appropriation,

advertising campaigns

b( ales Promotion O 3ifferent types of ales Promotion, relationship

between ales

promotion and advertising

c( Publicity O Types of Publicity, relationship between advertising and

publicity

d( Personal elling

e( 3irect marketing and direct response methods

f( 8vent Management

g( Crisis Management


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h( Trade ?airs and 8&hibitions

%reen Marketing$

reen marketing can be defined as the marketing of products whichare environmentally sound. The notion of green marketing is a

comparatively new one within general marketing thought, as it has

chiefly grown in acceptance since the !!#s. onetheless, as a

contemporary branch of marketing thought, it can be seen as one of

the fastest growing areas of marketing principles.

Consumer Bu"ing Behavior:%

What influences consumers to purchase products or servicesA The

consumer buying process is a comple& matter as many internal and

e&ternal factors have an impact on the buying decisions of the

consumer.

Bu"ing behavior process:


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3actors affecting bu"er behavior:


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!"pes of bu"ing behavior:

( Comple+ bu"ing behavior:

Comple& buying behavior is where the individual purchases a high

value brand and seeks a lot of information before the purchase is

made.

E( 4abitual bu"ing behavior :

@abitual buying behavior is where the individual buys a product

out of habit e.g. a daily newspaper, sugar or salt.


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F( 5ariet" seeking bu"ing behavior :

Nariety seeking buying behavior is where the individual likes to

shop around and e&periment with different products. o an

individual may shop around for different breakfast cereals because

he-she wants variety in the mornings.

G( (issonance reducing bu"ing behavior :

3issonance reducing buying behavior is when buyer are highly

involved with the purchase of the product, because the purchase is

e&pensive or infre+uent. There is little difference between e&isting

brands an e&ample would be buying a diamond ring, there is

perceived little difference between e&isting diamond brand

manufacturers.

Product mi+:

Product lining: &roduct lining is the marketing strategy of offering for

sale several related products. 'nlie product bundling$ where several

products are combined into one$ lining involves offering several related

products individually. ( line can comprise related products of various

si"es$ types$ colors$ )ualities$ or prices

*ength of product :

The total number of products sold in all lines is referred to as lengthof product mi&.

%idth of product mi+:

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The number of different product lines sold by a company is referred toas #idth of product mi+$

*ine depth:

*ine depth refers to the number of product variants in a line.

5alue chain management:

Primar" activities:

. in&ound ogistics: materials handling, warehousing, inventory

control, transportationK


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E. operations: machine operating, assembly, packaging, testing and

maintenanceK

F. out&ound ogistics: order processing, warehousing,

transportation and distributionK

G. marketing and saes: advertising, promotion, selling, pricing,

channel managementK

". service: installation, servicing, spare part managementK

Support activities:

*. firm infrastructure: general management, planning, finance,

legal, investor relationsK

/. 'uman resource management : recruitment, education,

promotion, reward systemsK

5. tec'noogy deveopment : research 2 development, 0T, product

and

process developmentK

!$ procurement : purchasing raw materials, lease properties, supplier

contract negotiations.

Suppl" chain management .SCM/


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0t is the management of a network of interconnected businesses

involved in the ultimate provision of product and service packages

re+uired by end customers '@arland, !!*(. upply Chain

Management spans all movement and storage of raw materials,

work:in:process inventory, and finished goods from point of origin to

point of consumption 'supply chain(.

Suppl" chain management

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CRM;

stands for Customer Relationship Management. 0t is a process or

methodology used to learn more about customers9 needs and

behaviors in order to develop stronger relationships with them. There

are many technological components to C1M, but thinking about C1M

in primarily technological terms is a mistake. The more useful way to

think about C1M is as a process that will help bring together lots of

pieces of information about customers, sales, marketing

effectiveness, responsiveness and market trends.


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Personal selling:

0t is a face to face marketing in which strategic interaction between

customer and salesman held.

Ob6ective of personal selling

. create awareness

E. create interest

F. providing 0nformation

G. stimulating demand

". reinforcing the brand

Personal selling advantage

. advertisement

E. public relation

F. sales promotion

G. instant feedback

disadvantage

. high cost per action 'CP$(

E. training

F. not cover much area


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t"pes of selling role

. order getters

E. order takers

3. order influencer 'missionary selling these are salespersons

where customers purchase product on the advice or

re+uirement of others.(

Regression anal"sis:

0n statistics, regression analysis includes any techni+ues for

modeling and analy%ing several variables, when the focus is on

the relationship between a dependent variable and one or more

independent variables. More specifically, regression analysis helps

us understand how the typical value of the dependent variable

changes when any one of the independent variables is varied,

while the other independent variables are held fi&ed.

http://en.wikipedia.org/wiki/Statisticshttp://en.wikipedia.org/wiki/Dependent_variablehttp://en.wikipedia.org/wiki/Independent_variablehttp://en.wikipedia.org/wiki/Statisticshttp://en.wikipedia.org/wiki/Dependent_variablehttp://en.wikipedia.org/wiki/Independent_variable


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ANSO33-S MA!R7


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Boston Consulting 'roup Matri+

(eveloped b" .Bruce 4enderson/ in 891

• Stars. $ star is a product in a high growth market that controls

a si%eable share of that market. tars tend to generate strong

revenues.


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Acron"ms n Marketing

. $03$ $ttractive interest desire action

E. $P $pplication service provider

F. 7E7 7usiness to business

G. 7EC 7usiness to consumer

". 7E 7usiness to government

*. C=C Customer life cycle

/. CP$ Cost per action

5. C1M Customer relationship management

!. 3MD 3ecision making unit#. 3$ 3irect selling agent

. 31 3aily sale report

E. 3T 3irect selling team

F. 8


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E/. 7D trategic business unit

E5. CM upply chain management

E!. 3? tandardi%ation differentiation focus

F#. TP egment target positioning

F. W


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