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:
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Orientation
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Profit driver
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Western European timeframe
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Description
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Production methods
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until the 1950s
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A firm focusing on a production orientation specializes in
producing as much as possible of a given product or service. Thus, this
signifies a firm exploiting economies of scale, until the minimum efficient scale is reached. A production
orientation may be deployed when a high demand for a product or service
exists, coupled with a good certainty that consumer tastes do not rapidly
alter (similar to the sales orientation).
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Quality of the product
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until the 1960s
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A firm employing a product orientation is chiefly concerned
with the quality of its own product. A firm would also assume that as long as
its product was of a high standard, people would buy and consume the product.
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Selling methods
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1950s and 1960s
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A firm using a sales orientation focuses primarily on the
selling/promotion of a particular product, and not determining new consumer
desires as such. Consequently, this entails simply selling an already existing
product, and using promotion techniques to attain the highest sales possible.
Such an orientation may suit scenarios in which a firm holds
dead stock, or otherwise sells a product that is in high demand, with little
likelihood of changes in consumer tastes diminishing demand.
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Marketing
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Needs and wants of customers
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1970 to present day
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The marketing orientation is perhaps the most common
orientation used in contemporary marketing. It involves a firm essentially
basing its marketing plans around the marketing concept, and thus supplying
products to suit new consumer tastes. As an example, a firm would employ
market research to gauge consumer desires, use R&D to develop a product
attuned to the revealed information, and then utilize promotion techniques to
ensure persons know the product exists.
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Other Approaches:
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Orientation
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Profit driver
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Western European timeframe
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Description
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Building and keeping good customer relations
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1960s to present day
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Emphasis is placed on the whole relationship between suppliers
and customers. The aim is to give the best possible attention, customer
services and therefore build customer loyalty.
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Building and keeping relationships between organizations
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1980s to present day
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In this context marketing takes place between businesses
or organizations.
The product focus lies on industrial goods or capital goods
than consumer products
or end products. A different form of marketing activities like promotion,
advertising and communication to the customer is used.
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Benefit to society
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1990s to present day
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Similar characteristics as marketing orientation but with the
added proviso that there will be a curtailment on any harmful activities to
society, in either product, production, or selling methods.
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Types of marketing:
Reactive marketing:
After sale
of product company contact its customers want to know about the product
performance it is known as reactive marketing.
Proactive marketing:
Before manufacturing product when company want to know likeness of
customer it is known as proactive marketing.
Accountable marketing:
When company or its employee take the responsibility of product
performance which is sale by the company or business is known as accountable
marketing.
Marketing Environment:
The term marketing environment relates to all of the factors
(whether internal, external, direct or indirect) that affect a firm's marketing
decision-making or planning and is subject of the marketing research. A firm's
marketing environment consists of two main areas, which are:
Macro environment:
On the macro environment a firm holds only little
control. It consists of a variety of external factors that manifest on a large
(or macro) scale. These are typically economic, social, political or
technological phenomena. A common method of assessing a firm's
macro-environment is via a PESTLE (Political, Economic, Social, Technological,
Legal, Ecological) analysis. Within a PESTLE
analysis, a firm would analyze national political issues, culture and
climate, key macroeconomic conditions, health and indicators (such as economic
growth, inflation, unemployment, etc.), social trends/attitudes, and the nature
of technology's impact on its society and the business processes within the
society.
Micro environment:
A firm holds a greater amount (though not necessarily
total) control of the micro environment. It comprises factors pertinent to the
firm itself, or stakeholders closely connected with the firm or company. A
firm's micro environment typically spans:
·
Customers/consumers
·
Employees
·
Suppliers
·
The
Media
Market segmentation:
Market segmentation pertains to the division of a market
of consumers into persons with similar needs and wants. As an example, if using
Kellogg's cereals in this instance, Frosties are marketed to children. Crunchy Nut Cornflakes
are marketed to adults. Both 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. First, a segmentation allows a better allocation of a firm's
finite resources. A firm only possesses a certain amount of resources.
Accordingly, it must make choices (and appreciate the related costs) in
servicing specific groups of consumers. Furthermore 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.
Segmentation involves the initial splitting up of
consumers into persons of like needs/wants/tastes. Four commonly used criteria
are used for segmentation, which include:
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Geographical
(e.g. country, region, city, town, etc.)
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Psychographic
(i.e. personality traits or character traits which influence consumer
behaviour)
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Demographic
(e.g. age, gender, socio-economic class, etc.)
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Behavioural
(e.g. brand loyalty, usage rate, etc.)
Target:
Once a segment has been identified, a firm
must ascertain whether the segment is beneficial for them to service. The DAMP
acronym, meaning Discernible, Accessible,
Measurable and Profitable, are used
as criteria to gauge the viability of a target market. DAMP is explained in
further detail below:
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Discernable -
How a segment can be differentiated from other segments.
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Accessible -
How a segment can be accessed via Marketing Communications produced by a firm.
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Measurable -
Can the segment be quantified and its size determined?
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Profitable - Can
a sufficient return on investment be attained from a segment's servicing?
The next step in the targeting process is
the level of differentiation involved in a segment serving. Three modes of
differentiation exist, which are commonly applied by firms. These are:
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Undifferentiated - Where a company produces a like product for all of a market segment.
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Differentiated - In
which a firm produced slight modifications of a product within a segment.
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Niche - In
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. A firm often performs this by producing a perceptual map,
which denotes products produced in its industry according to how consumers
perceive their price and quality. From a product's placing on the map, a firm
would tailor its marketing communications to suit meld with the product's
perception among consumers.
Marketing information system:
A marketing information system (MKIS)
is an information system
that is commonly used by marketing management to analyse and view information
pertaining to marketing activities. As the label suggests, an MKIS is a
computer-based information system therefore used to input, store, process and
output marketing information.
Types 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.
- Secondary
research (also referred to as desk research), is initially conducted for
one purpose, but often used to support another purpose or end goal.
By these definitions, an example 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. Secondary
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.
The area of marketing planning involves
forging a plan for a firm's marketing activities. A marketing plan can also
pertain to a specific product, as well as to an organization’s overall marketing strategy.
Generally speaking, an organization’s marketing planning process is derived
from its overall business strategy.
Thus, when top management are devising the firm's strategic direction or
mission, the intended marketing activities are incorporated into this plan.
SWOT Analysis:
SWOT Analysis is a
strategic planning method used to evaluate the Strengths, Weaknesses,
Opportunities, and Threats involved in a project or in a business venture. It involves specifying the
objective of the business venture or project and identifying the internal and
external factors that are favorable and unfavorable to achieving that
objective. The technique is credited to Albert Humphrey, who led a convention at Stanford University
A SWOT analysis must first start with defining a desired
end state or objective. A SWOT analysis may be incorporated into the strategic
planning model. An example of a strategic planning technique that incorporates
an objective-driven SWOT analysis is Strategic Creative Analysis (SCAN). Strategic
Planning, including SWOT and SCAN analysis, has been the subject of much
research.
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Strengths:
attributes of the person or company that are helpful to achieving the
objective.
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Weaknesses:
attributes of the person or company that are harmful to achieving the
objective.
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Opportunities:
external conditions that are helpful to achieving the objective.
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Threats: external
conditions which could do damage to the objective.
Identification of SWOTs is essential because subsequent steps
in the process of planning for achievement of the selected objective may be
derived from the SWOTs.
First, the decision makers have to determine whether the
objective is attainable, given the SWOTs. If the objective is NOT attainable a
different objective must be selected and the process repeated.
The SWOT analysis is often used in academia to highlight
and identify strengths, weaknesses, opportunities and threats. It is
particularly helpful in identifying areas for development
An SBU is an autonomous entity within a
firm, which produces a unique product/service. It could be a single product, a product line, or a subsidiary of a larger group of companies. The SBU
would embrace the corporate strategy, and attune it to its own particular
industry. For instance, an SBU may partake in the sports goods industry.
It thus would ascertain how it would attain
additional sales of sports goods, in order to satisfy the overall business
strategy.
Product Life Cycle:
The Product Life Cycle or PLC
is a tool used by marketing managers to gauge the progress of a product,
especially relating to sales or revenue accrued over time. The PLC is based on
a few key assumptions, including that a given product would possess an introduction,
growth, maturity and decline stage. Furthermore it is
assumed that no product lasts perpetually on the market. Last but not least a
firm must employ differing strategies, according to where a product is on the PLC.
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Stage
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Characteristics
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1. Market
introduction stage
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2. Growth
stage
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3. Mature
stage
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4. Saturation
and decline stage
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Levels of poduct:
1. Core Benefit
The fundamental need or want that consumers satisfy by consuming
the product or service.
2. Generic Product
a version of the product containing only those attributes or
characteristics absolutely necessary for it to function.
3. Expected Product
the set of attributes or characteristics that buyers normally
expect and agree to when they purchase a product.
4. Augmented Product
inclusion of additional features, benefits, attributes or
related services that serve to differentiate the product from its competitors.
5. Potential Product
all the augmentations and transformations a product might
undergo in the future.
Kotler noted that much competition takes place at the
Augmented Product level rather than at the Core Benefit level or, as Levitt put
it: 'New 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.'
Marketing mix:
Product marketing mix or 4p’s:
In the early 1960s, Professor Neil Borden at Harvard Business School
identified a number of company performance actions that can influence the
consumer decision to purchase goods or services.
Borden suggested that all those actions of the company
represented a “Marketing Mix”.
Professor E. Jerome McCarthy,
at the Michigan State
University in the early 1960s, suggested that the Marketing Mix
contained 4 elements product, price, place and promotion.
The product aspects of marketing deal with
the specifications of the actual goods or services, and how it relates to the end-user's needs and wants. The scope of a product
generally includes supporting elements such as warranties, guarantees, and
support.size, shape, quality, brand, packaging etc.
This refers to the process of setting a price
for a product, including discounts. The price need not be monetary; it can
simply be what is exchanged for the product or services, e.g. time, energy, or
attention. Methods of setting prices optimally are in the domain of pricing science.
A number of modes of pricing techniques
exist, which span:
- Elasticities
(whether Price Elasticity of Demand, Cross Elasticity of Demand, or Income
Elasticity of Demand)
- Market
skimming pricing
- Market
penetration pricing
Elasticities are a microeconomic concept, which gauges
how elastic demand is for a given good/service.
In a marketing context, its usefulness relates to the
suitable level at which a product can be priced, in accordance with price, a
product's complements and substitutes, and the level of income a consumer
possesses.
Market skimming pertains to firm releasing a good in a
"first to market" scenario. As an example, picture a company which
releases a new type of personal media playing system. It 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 company's 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. As another example, 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 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). Low barriers to entry facilitates a company's
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
customer; for example, 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.
This includes advertising, sales promotion, publicity, and publicity.
Branding refers to the various methods of promoting
the product, brand, or company. It also known as marketing
communication.
These four elements are often referred to as the marketing mix, which a marketer can use to craft a marketing plan. The four Ps model is most useful when
marketing low value consumer products.
Industrial products, services, high value consumer
products require adjustments to this model. Services marketing
must account for the unique nature of services.
Service Marketing Mix/Extended Marketing Mix/7p’s
Having
discussed the characteristics of a service, let us now look at the marketing
mix of a service.
The service marketing mix
comprises off the 7’p’s. These include:
• Product
• Price
• Place
• Promotion
• People
• Process
• Physical evidence
• Product
• Price
• Place
• Promotion
• People
• Process
• Physical evidence
People:
An essential
ingredient to any service provision is the use of appropriate staff and people.
Recruiting 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. Staff should have the
appropriate interpersonal skills
Process:
Refers to the
systems used to assist the organisation in delivering the service. Imagine you
walk into Burger King and you order a Whopper Meal and you get it delivered
within 2 minutes. What was the process that allowed you to obtain an efficient
service delivery
Physical evidence:
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 quality of a service also by
inspecting the tangible evidence.
For example, prospective customers may look to the design of
learning materials, the appearance of facilities, staff, etc.
It is used in order to create a single and
coherent marketing communications process. As an example, a firm can advertise
the existence of a sales promotion, via a newspaper, magazine, TV, radio, etc.
The same promotion can also be communicated via direct marketing, or personal
selling. The aim of IMC is to lessen confusion among a product's target market,
and to lessen cost for the firm. Several different subsets of marketing
communications can be distinguished.
Elements IMC
a) Advertising – Classification of
advertising, types, advertising appropriation,
advertising campaigns
b) Sales Promotion – Different types of
Sales Promotion, relationship between Sales
promotion and advertising
c) Publicity – Types of Publicity,
relationship between advertising and publicity
d) Personal Selling
e) Direct marketing and direct response
methods
f) Event Management
g) Crisis Management
h) Trade Fairs and Exhibitions
Green
Marketing:
Green marketing can be defined as the marketing of
products which are 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 1990s. Nonetheless, as a contemporary branch of
marketing thought, it can be seen as one of the fastest growing areas of
marketing principles.
Consumer Buying Behavior::
What
influences consumers to purchase products or services? The consumer buying
process is a complex matter as many internal and external factors have an
impact on the buying decisions of the consumer.
Buying behavior process:
Factors affecting buyer
behavior:
Types of buying behavior:
1)
Complex
buying behavior:
Complex buying behavior
is where the individual purchases a high value brand and seeks a lot of
information before the purchase is made.
2)
Habitual
buying behavior:
Habitual buying behavior is where the individual buys a product
out of habit e.g. a daily newspaper, sugar or salt.
3)
Variety
seeking buying behavior:
Variety seeking buying behavior
is where the individual likes to shop around and experiment with different
products. So an individual may shop around for different breakfast cereals
because he/she wants variety in the mornings.
4)
Dissonance
reducing buying behavior:
Dissonance reducing
buying behavior is when buyer are highly involved with the purchase of the
product, because the purchase is expensive or infrequent. There is little
difference between existing brands an example would be buying a diamond ring,
there is perceived little difference between existing diamond brand
manufacturers.
Product mix:
Product
lining: Product lining is the marketing
strategy of offering for sale several related products. Unlike product bundling,
where several products are combined into one, lining involves offering several
related products individually. A line can comprise related products of various
sizes, types, colors, qualities, or prices
Length of product:
The
total number of products sold in all lines is referred to as length of product mix.
Width of product mix:
The
number of different product lines sold by a company is referred to as width
of product mix.
Line depth:
Line depth refers to
the number of product variants in a line.
Value chain management:
Primary
activities:
1. inbound logistics:
materials handling, warehousing, inventory control, transportation;
2. operations:
machine operating, assembly, packaging, testing and maintenance;
3. outbound logistics:
order processing, warehousing, transportation and distribution;
4. marketing and sales:
advertising, promotion, selling, pricing, channel management;
5. service:
installation, servicing, spare part management;
Support
activities:
6. firm infrastructure:
general management, planning, finance, legal, investor relations;
7. human resource
management: recruitment, education, promotion, reward systems;
8. technology
development: research & development, IT, product and
process development;
9. procurement:
purchasing raw materials, lease properties, supplier contract negotiations.
Supply
chain management (SCM)
It is the management of a network of interconnected businesses involved in the ultimate provision of product and service
packages required by end
customers (Harland, 1996). Supply 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).
Supply chain
management
CRM:
stands for Customer Relationship Management.
It is a process or methodology used to learn more about customers' needs and
behaviors in order to develop stronger relationships with them. There are many
technological components to CRM, but thinking about CRM in primarily
technological terms is a mistake. The more useful way to think about CRM is as
a process that will help bring together lots of pieces of information about customers,
sales, marketing effectiveness, responsiveness and market trends.
Personal
selling:
It is a face to face marketing in which strategic interaction
between customer and salesman held.
Objective of
personal selling
1. create awareness
2. create interest
3. providing Information
4. stimulating demand
5. reinforcing the brand
Personal
selling advantage
1. advertisement
2. public relation
3. sales promotion
4. instant feedback
disadvantage
1. high cost per action (CPA)
2. training
3. not cover much area
types of
selling role
1. order getters
2. order takers
3. order influencer (missionary selling these are salespersons
where customers purchase product on the advice or requirement of others.)
Regression analysis:
In statistics, regression
analysis includes any techniques for modeling and analyzing 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 fixed.
ANSOFF’S
MATRIX
Developed by (Bruce Henderson) in 1970
·
Stars. A star is a product in a high growth market that
controls a sizeable share of that market. Stars tend to generate strong
revenues. Over time, as growth slows, stars become cash cows if they hold their
market share and dogs if they don't.
·
Cash cows. A cash cow commands a large share of a slow growth
market. The more the company invests in cash cows, the greater the return. Cash
cows tend to pay the dividends, the interest on debt and cover the corporate
overhead.
·
Dogs. A dog has a low share of a slow growth market. Dogs
often report a profit even though they are net cash users. They are essentially
cash traps.
·
Question
marks (sometimes called wildcats). A
question mark is a product with a low share of a high growth market. Their cash
needs are great because of their growth, but generate little in return because
their market share is low. Question marks are difficult to turn into stars
because the cost of acquiring market share compounds the cash needs. They may
be big winners if backed to the limit, but most often, they fail to develop a
leading market position before growth slows and become dogs.
Acronyms In Marketing
1. AIDA Attractive
interest desire action
2. ASP Application service provider
3. B2B Business to business
4. B2C Business to consumer
5. B2G Business to government
6. CLC Customer life cycle
7. CPA Cost per action
8. CRM Customer relationship management
9. DMU Decision making unit
10. DSA Direct selling agent
11. DSR Daily sale report
12. DST Direct selling team
13. ESOP Employee stock option plan
14. FSS Financial service sector
15. GRP Gross rating point
16. HNI High networth individuals
17. IMC Integrated marketing communication
18. ISP Internet service provider
19. LPG Liberalization privatization globalization
20. MIS Management information system
21. MKIS Marketing
information system
22. PLC Product life cycle
23. PPC Pay per click
24. PPL Pay per lead
25. PPS Pay per sale
26. ROMI Return on marketing investment
27. SBU Strategic business unit
28. SCM Supply chain management
29. SDF Standardization differentiation focus
30. STP Segment target positioning
31. SWOT Strength weakness opportunity threat
32. TCS Total customer service
33. USP Unique selling preposition
34. VCM Value chain management
35. WOM Word of mouth
36. POS Point
of sale
37. FMCG Fast
moving consumer goods
38. FMCDG Fast
moving consumer durables goods
39. IPO
Initial public offering
40. ASS
After sale service
41. CPC Cost
per click
42. DRA
Direct response advertisement
43. DINKY Double income no kids yet
44. EPOS Electronic point of sale
45. NPD New product development
46. SLAP Skills levels analysis process
47. SRM Supplier relationship management
48. TPS Telephone preference service
49. WOOF Well off older folk
50. WOOPIES Well off older people
51. YUPPIE Young urban proffessional
52. PESTLE
Political, economical. social, technological, legal,
ecological
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