A – Marketing and Business Strategy
C – Developments in Marketing
A – Marketing and Business Strategy
1. The marketing concept
a. What is marketing
Marketing – process of planning and executing the concepts of pricing, promotion and distribution of ideas, goods and services in order to create exchanges that satisfy individual and organizational objectives.
Kotler – right product at the right price at the right time
b. Products, goods and services: a note on terminology
Product – something that is offered to a market
Examples:
FMCG – fast moving consumer goods like soaps and shampoo
Services – like haircut or tailor services
c. Strategic and tactical marketing
Strategic – this is the corporate strategy which identifies the products and markets the organization wishes to operate in (i.e. Fashion retailer opens a
Tactical – short-term and particular elements of marketing mix (i.e. Year-end Sale)
d. Exchanges – the role of marketing is to identify, anticipate and supply satisfaction to customers, to facilitate mutually beneficial exchanges
e. The marketing concept and marketing orientation – these are two interrelated terms.
Brassington and Pettit (2000)
Marketing concept – a philosophy of business
Marketing orientation – approach of the business
f. The marketing concept – a belief system. Can incorporate to culture. Normally refers to the customer satisfaction.
g. Marketing orientation – there are three types of other orientations that marketing orientation can relate to: production, sales and product
Production orientation – success is achieved through producing goods or services of optimum quality as cost-efficiently as possible
Sales orientation – makes the product and actively and aggressively sells it
Product orientation – focus on product development; new product features
h. The potential impact of a marketing orientation – bottom-line is that companies should focus on customer needs
i. Push VS Pull Marketing
Push marketing – traditional; pushing goods out to resellers and consumers
Pull marketing – produce a product that consumer demand will pull into retail outlets
j. Three Dimensions of Marketing (CST)
C – Culture, consumer needs
S – Strategy, select the markets it intends to sell to and the products or services it will sell
T – Tactics, 7Ps of the marketing mix
2. The marketing environment
Three levels:
Macro – all factors that can influence the organization (i.e. PESTEL factors)
Micro – factors specifically related to the organization (i.e. customer and suppliers)
Internal – factors within the organization (i.e. assets, employees and finance)
a. PESTEL Factors
P – Political, changes in gov’t policies will affect consumers’ spending power or rights
E – Economic, economic growth, exchanges rate which affects the demand for product or services
S – Social/Cultural, demography suggests the size and the purchasing power of the customers
T – Technological, new products or processes, which the customers have different attitudes towards innovation
E – Ecological, climate change or catastrophes can change the customers’ attitude towards products that will aid them
L – Legal, laws affect ways of doing business and it is the question to customers if they are willing and able to take legal action
b. SWOT Analysis
Internal appraisal: strengths and weaknesses – to shape the organization’s approach to external world
External appraisal: opportunities and threats --
3. Marketing and Corporate Strategy
a. Corporate and marketing strategy (BIOGESIC)
B – Between and among corporate and marketing strategy
I – Internal appraisal, corporate will review the effectiveness of different aspects of the organization, marketing will conduct marketing audit
O – Setting objectives, corporate will increase profit, marketing will increase market share
G – Gaps, corporate has gaps between objectives and forecast, marketing will focus on growth
E – External appraisal, corporate will review PESTEL factors that impacting on the whole organization, marketing will review the factors that affect customers, products and markets
S – Strategy, corporate will develop strategies to fill up the gap, marketing will focus on resources that will be allocated to them to be able to identify the target market, plan the product to produce and organize them.
I – Implementation, corporate will delegate this to each department, marketing will put this into action like ads space
C – Control, corporate is reviewing the results and starts planning again, marketing will review if the market share objectives have been achieved
b. The marketing plan – must be consistent with the corporate strategy (STAGES ABC)
S – Marketing Strategy, target markets, the marketing mix and marketing expenditure levels
T – Tactical marketing plan, one year time horizon
A – Situation analysis, SWOT analysis and forecasts
G – Goals and objectives, what organization is hoping to achieve
E – Executive summary, finalized the planning document
S – Strategic marketing plan, defines scope of product and market activities
A – Action plan, how strategies are to be achieved
B – Budgets, action programme
C – Controls, monitor the progress of the plan and the budget
4. Marketing strategy
Key activities (RMTP)
R – Research, initial stage on obtaining data about the customers and their needs
M – Market segmentation, group of customers with similar characteristics
T – Targeting, choose one or more targets after analyzing the attractiveness of the segment
P – Positioning, act of designing the company’s offer and image
a. Market research – gathering, recording, analyzing and reporting data and information relating to the company’s market, customers and competitors
Five Steps:
1) Defining the problem (i.e. why sales are decreasing, what are the potential demands in the market)
2) Developing hypotheses to be tested (i.e. the product is not effective?)
3) Analyze and interpret the data
4) Report the findings
Quantitative vs qualitative data
Quantitative – enables measurement (i.e. surveys)
Qualitative – not measurable but useful to get people to say what they feel and thing
Secondary vs primary
Secondary – generated by sources internal or external to the organization. It is not intended for specific research and cheaper than primary data (i.e. accounting data, customer databases, and published statistics from government)
Primary – intended for specific research (i.e. experiment, observation, focus groups)
b. Forecasting demand (CPF MISES)
C – Current Demand
P – Past-sales analysis, trends, seasonal factors
F – Future Demands
M – Market test
I – Survey of buyers’ intentions
S – Sales force opinions
E – Expert opinions
S – Sales potentials
c. Market segmentation – subdividing of a market into distinct and increasingly homogeneous subgroups of customers, where any subgroup can conceivably be selected as a target market to be met with a distinct marketing mix.
Bases of segmentation:
Simple – like geographical area, age, gender, level of income, occupation
Lifestyle – deals with person’s distinctive ways of living adopted by particular communities or subsections of society.
Four categories of lifestyle segmentation (SHUT)
S – Security and status seeking, safety and ego-defensive needs
H – Hedonistic preference, enjoying life now
U – Upwardly mobile, ambitious, more affluent lifestyle
T – Traditional and sociable, compliance and conformity to group
d. Target markets – market or segment selected for special attention by an organization
Mass or Undifferentiated – produce a single product and get as many customers as possible
Concentrated – produce an ideal product for a single segment of the market (Rolls Royce, Ferrari)
Differentiated – several products for different market segment
e. Positioning – market position refers to how customer perceive a brand or product relative to other brands or products
f. Developments in market segmentation and product positioning – refers to the evolution on how segmentation and positioning are considered in organizations (D’CASH)
D – Data Mining, interest on customer database analysis and the idea of ‘letting the data speak for itself’
C – Computer models are used
A – Awareness that consumers should be segmented
S – Soft data, focusing on the lifestyle rather than the hard or basic segmentation
H – Hybrid segmentation, sub-dividing a segment to different sub-segments
g. The Ansoff matrix – (1987) showing possible strategies for products and markets
Market penetration – existing products and markets
Market development – existing products for new markets
Product development – redesign or repositioning of existing products
Diversification – new products for new markets
B – Marketing Plans, Branding and Communications
1. Marketing action plans
a. The marketing mix (7P’s of marketing mix)
Four P’s of consumer goods:
Three P’s of services
b. Product – anything that satisfies a need or want.
Organization’s point of view: what is being sold
Customers’ point of view: solution to a problem or a package of benefits
Product classifications
Consumer goods – sold directly to the person (CUSS)
C – Convenience goods (i.e. groceries)
U – Unsought goods (i.e. wardrobe organizer)
S – Shopping goods (i.e. durable items like furniture or appliances)
S – Specialty goods (i.e. jewelries)
Industrial goods – used in the production of other products (RACIS)
R – Raw materials (i.e. plastic, metal, wood)
A – Accessories (i.e. PCs)
C – Components (i.e. Intel microchip in most PCs)
I – Installations (i.e. factory assembly line)
S – Supplies (i.e. office stationery)
Product levels
Core – all products should have
Actual/basic – features offered as part of the product
Expected – attributes that the customers expect, either will disappoint or delight them
Augmented – extra benefits that differentiate it from other products
Potential – possibility to enhance or develop the product
The BCG Matrix
Question mark – a small market share in a high growth industry, which means competition, is really strong and to be successful will require substantial funds
Star – high market share in a high growth industry, which has potential of generating significant earnings, currently and in the future.
Cash Cow – high market share in a mature slow-growth market, this has high degree of consumer loyalty and will make a substantial contribution to overall profitability
Dog – low market share in a low-growth market, losing consumer support.
The product life cycle
Introduction stage – offering something new to customers
Growth stage – the volume of demand for the product increases
Shake out – weaker players in the market are shaken out by the stronger organizations
Market Maturity – Demands levels off
Decline stage – total demand declines and competitors will start to withdraw from the market
c. Place – how product reaches its customers
Channel – supermarkets, corner shops
Logistics – warehouses
Direct distribution – retailers
d. Promotion
Aims of promotion (AIDA)
A – Arouse Attention
I – Generate Interest
D – Inspire Desire
A – Initiate Action
e. Price
Three main types of influence on price setting:
f. Price Setting strategies
Market Penetration – sets a relatively low price for the product or service in order to stimulate growth of the market
Market Skimming – sets a high initial price for a new product in order to take advantage of those buyers who are ready to pay a much higher price for it.
Early cash recovery – aims to recover the investment in a new product or service as quickly as possible to achieve a minimum payback period.
Product line promotion – focuses on profit from the range of products which the organization produces rather than to treat each product as separate entity.
Cost-plus pricing – marking up its unit costs by a certain percentage or fixed amount
Target pricing – price that gives a specified rate of return for a given output
Price discrimination/selective pricing – different prices for the same product when it is sold in different markets
Going rate/competitive prices – keep in line with industry norm for prices
Price leadership/predatory pricing – price leader generally has a large market share. The role of the price leader is based on a track record of having initiated price moves that have been accepted by both competitors and customers.
g. Services and service marketing
Characteristics of services (as distinguished from goods) (IHI PO)
I – Intangibility, lack of substance which is involved with service delivery
H – Heterogeneity, lack of sameness or consistency. The quality of service may depend heavily on who it is that delivers the service
I – Inseparability, services cannot be separated off from the provided. Should instill values of quality, reliability and to generate a service ethic
P – Perishability, services cannot be stores. Anticipating and responding to levels of demand is key planning activity
O – Ownership, services do not result in the transfer of property.
h. The extended marketing mix (3P’s)
P – People, services are provided by members of staff who are inseparable from the service
P – Process, services involve a process, for example a haircut may involve waiting to be served, a hair wash, styling, colouring and hair dying
P – Physical evidence, as services are intangible, some physical item should be provided to give the customer evidence of ownership
2. Branding
Brand – is a name, term, sign, symbol or design intended to identify the product of a seller and to differentiate it from those of competitors.
Brand name – refers strictly to letters, words, or groups of words which can be spoken
Brand Image – distinguishes a company’s product from competing products in the eyes of the user
a. Objective of branding
Key benefit of branding is product differentiation and recognition. Products may be branded for a number of reasons (DARED ME)
D – Product differentiation helps customers to identify the goods or service and creates customer loyalty to the brand
A – Advertising, maximizes the advertising for product identification and recognition
R – Readier acceptance, by wholesalers and retailers
E – Brand extension, or stretching which other products can be introduced into the brand range to ‘piggy back’ on the articles already known to the customer
D – Price differentials, reduces the differences on prices between goods
M – Market segmentation, different brands of similar products may be developed to meet specific needs of categories of uses
E – Eases the task of personal selling, by enhancing product recognition.
b. Branding Strategies
Three broad branding strategies
c. Brand value
Three approach on valuing brand: (MIC)
a. The promotion mix – consists of the blend of promotional tools that are considered appropriate for a specific marketing campaign
b. Consumer and business to business markets
Consumer markets (business-to-consumer markets B2C) – consists of mass audiences which are cost-effectively accessible by television or national newspaper advertising
Business-to-business markets (B2B) – involve a great deal of personal selling at different levels in the organization.
c. Integrated marketing communications – represent all the elements of an organization’s marketing mix that favorably influence its customers or clients.
d. Types of marketing
i. Consumer marketing (4Ps)
ii. Service marketing (3Ps)
iii. Direct marketing
iv. Indirect
v. Guerrilla
vi. Viral
vii. Interactive
viii. Experiential
ix. E-marketing
x. Internal marketing
e. Direct marketing – the planned recording, analysis and tracking of customer behavior to develop relational marketing strategies. (RIRAS)
R – Response, getting people to respond to invitations and offers
I – Interactive, two way involving supplier and customer
R – Relationship, on-going process of communicating and selling again and again to the same customer
A – Recording and Analysis, for most cost-effective procedures
S – Strategy, part of a comprehensive plan stemming from clearly formulated objectives
Example of direct marketing is TELEMARKETING. Telemarketing is a quick, accurate and flexible tool for gathering, maintaining and helping to exploit relevant up-to-date information about customers and prospects
Characteristics of telemarketing (IT FITS)
I – Interactive
T – Targeted
F – Flexible
I – Immediate
T – Telemarketers are attending personally
S – So costly
f. Indirect marketing – marketing of products as a consequence of another activity or action. Organization doesn’t push products or services onto customers. (i.e. posting blogs on internet, ‘word of mouth’)
g. Guerilla marketing – involves taking people by surprise and creating a buzz in unexpected places. It relies more use of imagination that large sums of money.
Principles of guerilla marketing:
- Small organization
- Based on psychology rather than experience
- Based on time, energy and imagination
- Judged on profit not sales
- New relationships created
- Standard of excellence
- Number of customer referrals
- Co-operate with competitors
- Combination of marketing methods should be used
- Use of technology
h. Viral marketing – involves the use of pre-existing social networks to spread brand awareness or other marketing objectives.
i. Interactive marketing –ability to address the customer, remember what the customer says and address the customer again in a way that illustrates that we remember what the customer has told us. Example is Amazon.com
j. Experiential marketing – involves providing an experience that creates an emotional connection between a person and a brand or idea. This is an effective way of connecting with customers, as the emotional connection encourages brand loyalty
k. E-marketing – includes website, SMS e-mail, online surveys and use of social networks like Facebook and Twitter.
C – Developments in Marketing
1. Consumer behaviour
a. The customer
Different roles of customer (PUB)
P – Payer, the person who finances the purchase
U – User, receives the benefit of the product
B – Buyer, who selects a product
b. Buyer behavior – describes the activities and decision processes relating to buying
i. Consumers as buyer
ii. Organization as buyer
c. Consumer buying behavior (HCL)
H – Habitual decision making, emphasizes habit and brand loyalty
C – Cognitive paradigm, purchase as outcome of a rational decision-making process
L – Learned behavior, importance of past purchases
5 stages of consumer buying process:
1) Need/problem recognition – the customer recognizes a need or a problem to solve. There is a motive to search for a solution
2) Pre-purchase/information search – the customer searches for information they can use to base their decision on
3) Evaluation of alternatives – the customer evaluates the various options they have generated
4) The purchase decision – is made and the product or service selected based on how it meets their needs and other factors such as cost
5) Post-purchase evaluation – if dissatisfied, they will be back at the problem recognition stage. If they are satisfied, the next decision process for the product may be cut short and they may skip straight to the decision, on the basis of loyalty
d. Influences on consumer buying
Social – relate to social groupings a consumer belongs to or aspires, and trends in society which influence buying patterns
Cultural – comprises the values, attitudes and beliefs in the pattern of life adopted by people that help them integrate and communicate as member of the society
Personal – include such things as age, stage of family and life cycle, occupation, economic circumstances and lifestyle
Psychological – includes the four factors;
1) Motivation – inner state that energizes, activates or moves that directs or channels
2) Perception – people select, organize and interpret sensory stimuli into a meaningful and coherent picture
3) Learning – individual’s behavior changes as a result of their experience
4) Beliefs and attitudes – descriptive thought that a person holds about something. Attitude describes a person’s enduring favorable or unfavorable cognitive evaluations, emotional feelings, and action tendencies toward some object or idea
e. Organizations as buyers
Organizations are viewed as more RATIONAL than individuals
Business-to-Business or B2B - transactions between organizations
Business-to-Consumer or B2C - transactions involving an organization and a consumer
Organizational markets (PICO)
P- Purchase decision is usually made by consensus in an organizational setting, rather than being the responsibility of one person
I - Inelastic demand for industrial goods, which means these are not affected by price changes
C - Close relationship between buyer and seller
O - Organizational markets normally comprise fewer buyers responsible for the majority of sales
Decision Making Unit (DMU)
Webster and Wind (1972) suggested six groups within DMU (GUIDES)
G - Gatekeepers. By controlling the flow of information, may be able to stop sellers from reaching individuals within the buying center
U - Users. Initiate the buying process and help define purchase specifications
I - Influencers. Help define the specification and also provide an input into the process of evaluating the available alternatives
D - Deciders. Have the responsibility for deciding on product requirements and suppliers
E - Example of approvers are Finance Director/Manager
S - Suppliers or Buyers. Have the formal authority for the selection of suppliers and negotiating purchase terms
2. Marketing not-for-profit organizations
a. Charity and not-for-profit marketing
b. Characteristics of charity and not-for-profit marketing
c. The charity marketing mix
3. Internal marketing
a. Implementing internal marketing
b. The internal marketing mix
c. Segmenting the internal market
d. The importance of internal customer communications
e. Challenges for internal communication
f. Tools of internal communication
4. Corporate social responsibility and social marketing
a. Social responsibility, ethics and the law
b. Ethical marketing
c. Social marketing
- The marketing concept
- The marketing environment
- Marketing and corporate strategy
- Marketing strategy
- Marketing action plans
- Branding
- Marketing communications
C – Developments in Marketing
- Consumer behaviour
- Marketing not-for-profit organisations
- Internal marketing
- Corporate social responsibility and social marketing
A – Marketing and Business Strategy
1. The marketing concept
a. What is marketing
Marketing – process of planning and executing the concepts of pricing, promotion and distribution of ideas, goods and services in order to create exchanges that satisfy individual and organizational objectives.
Kotler – right product at the right price at the right time
b. Products, goods and services: a note on terminology
Product – something that is offered to a market
Examples:
FMCG – fast moving consumer goods like soaps and shampoo
Services – like haircut or tailor services
c. Strategic and tactical marketing
Strategic – this is the corporate strategy which identifies the products and markets the organization wishes to operate in (i.e. Fashion retailer opens a
Tactical – short-term and particular elements of marketing mix (i.e. Year-end Sale)
d. Exchanges – the role of marketing is to identify, anticipate and supply satisfaction to customers, to facilitate mutually beneficial exchanges
e. The marketing concept and marketing orientation – these are two interrelated terms.
Brassington and Pettit (2000)
Marketing concept – a philosophy of business
Marketing orientation – approach of the business
f. The marketing concept – a belief system. Can incorporate to culture. Normally refers to the customer satisfaction.
g. Marketing orientation – there are three types of other orientations that marketing orientation can relate to: production, sales and product
Production orientation – success is achieved through producing goods or services of optimum quality as cost-efficiently as possible
Sales orientation – makes the product and actively and aggressively sells it
Product orientation – focus on product development; new product features
h. The potential impact of a marketing orientation – bottom-line is that companies should focus on customer needs
i. Push VS Pull Marketing
Push marketing – traditional; pushing goods out to resellers and consumers
Pull marketing – produce a product that consumer demand will pull into retail outlets
j. Three Dimensions of Marketing (CST)
S – Strategy, select the markets it intends to sell to and the products or services it will sell
T – Tactics, 7Ps of the marketing mix
2. The marketing environment
Three levels:
Macro – all factors that can influence the organization (i.e. PESTEL factors)
Micro – factors specifically related to the organization (i.e. customer and suppliers)
Internal – factors within the organization (i.e. assets, employees and finance)
a. PESTEL Factors
P – Political, changes in gov’t policies will affect consumers’ spending power or rights
E – Economic, economic growth, exchanges rate which affects the demand for product or services
S – Social/Cultural, demography suggests the size and the purchasing power of the customers
T – Technological, new products or processes, which the customers have different attitudes towards innovation
E – Ecological, climate change or catastrophes can change the customers’ attitude towards products that will aid them
L – Legal, laws affect ways of doing business and it is the question to customers if they are willing and able to take legal action
b. SWOT Analysis
Internal appraisal: strengths and weaknesses – to shape the organization’s approach to external world
External appraisal: opportunities and threats --
3. Marketing and Corporate Strategy
a. Corporate and marketing strategy (BIOGESIC)
I – Internal appraisal, corporate will review the effectiveness of different aspects of the organization, marketing will conduct marketing audit
O – Setting objectives, corporate will increase profit, marketing will increase market share
G – Gaps, corporate has gaps between objectives and forecast, marketing will focus on growth
E – External appraisal, corporate will review PESTEL factors that impacting on the whole organization, marketing will review the factors that affect customers, products and markets
S – Strategy, corporate will develop strategies to fill up the gap, marketing will focus on resources that will be allocated to them to be able to identify the target market, plan the product to produce and organize them.
I – Implementation, corporate will delegate this to each department, marketing will put this into action like ads space
C – Control, corporate is reviewing the results and starts planning again, marketing will review if the market share objectives have been achieved
b. The marketing plan – must be consistent with the corporate strategy (STAGES ABC)
T – Tactical marketing plan, one year time horizon
A – Situation analysis, SWOT analysis and forecasts
G – Goals and objectives, what organization is hoping to achieve
E – Executive summary, finalized the planning document
S – Strategic marketing plan, defines scope of product and market activities
A – Action plan, how strategies are to be achieved
B – Budgets, action programme
C – Controls, monitor the progress of the plan and the budget
4. Marketing strategy
Key activities (RMTP)
M – Market segmentation, group of customers with similar characteristics
T – Targeting, choose one or more targets after analyzing the attractiveness of the segment
P – Positioning, act of designing the company’s offer and image
a. Market research – gathering, recording, analyzing and reporting data and information relating to the company’s market, customers and competitors
Five Steps:
1) Defining the problem (i.e. why sales are decreasing, what are the potential demands in the market)
2) Developing hypotheses to be tested (i.e. the product is not effective?)
3) Analyze and interpret the data
4) Report the findings
Quantitative vs qualitative data
Quantitative – enables measurement (i.e. surveys)
Qualitative – not measurable but useful to get people to say what they feel and thing
Secondary vs primary
Secondary – generated by sources internal or external to the organization. It is not intended for specific research and cheaper than primary data (i.e. accounting data, customer databases, and published statistics from government)
Primary – intended for specific research (i.e. experiment, observation, focus groups)
b. Forecasting demand (CPF MISES)
C – Current Demand
P – Past-sales analysis, trends, seasonal factors
F – Future Demands
M – Market test
I – Survey of buyers’ intentions
S – Sales force opinions
E – Expert opinions
S – Sales potentials
c. Market segmentation – subdividing of a market into distinct and increasingly homogeneous subgroups of customers, where any subgroup can conceivably be selected as a target market to be met with a distinct marketing mix.
Bases of segmentation:
Simple – like geographical area, age, gender, level of income, occupation
Lifestyle – deals with person’s distinctive ways of living adopted by particular communities or subsections of society.
Four categories of lifestyle segmentation (SHUT)
H – Hedonistic preference, enjoying life now
U – Upwardly mobile, ambitious, more affluent lifestyle
T – Traditional and sociable, compliance and conformity to group
d. Target markets – market or segment selected for special attention by an organization
Mass or Undifferentiated – produce a single product and get as many customers as possible
Concentrated – produce an ideal product for a single segment of the market (Rolls Royce, Ferrari)
Differentiated – several products for different market segment
e. Positioning – market position refers to how customer perceive a brand or product relative to other brands or products
f. Developments in market segmentation and product positioning – refers to the evolution on how segmentation and positioning are considered in organizations (D’CASH)
C – Computer models are used
A – Awareness that consumers should be segmented
S – Soft data, focusing on the lifestyle rather than the hard or basic segmentation
H – Hybrid segmentation, sub-dividing a segment to different sub-segments
g. The Ansoff matrix – (1987) showing possible strategies for products and markets
Market penetration – existing products and markets
Market development – existing products for new markets
Product development – redesign or repositioning of existing products
Diversification – new products for new markets
B – Marketing Plans, Branding and Communications
1. Marketing action plans
a. The marketing mix (7P’s of marketing mix)
Four P’s of consumer goods:
- Product
- Price
- Place
- Promotion
Three P’s of services
- People
- Processes
- Physical evidence
b. Product – anything that satisfies a need or want.
Organization’s point of view: what is being sold
Customers’ point of view: solution to a problem or a package of benefits
Product classifications
Consumer goods – sold directly to the person (CUSS)
C – Convenience goods (i.e. groceries)
U – Unsought goods (i.e. wardrobe organizer)
S – Shopping goods (i.e. durable items like furniture or appliances)
S – Specialty goods (i.e. jewelries)
Industrial goods – used in the production of other products (RACIS)
A – Accessories (i.e. PCs)
C – Components (i.e. Intel microchip in most PCs)
I – Installations (i.e. factory assembly line)
S – Supplies (i.e. office stationery)
Core – all products should have
Actual/basic – features offered as part of the product
Expected – attributes that the customers expect, either will disappoint or delight them
Augmented – extra benefits that differentiate it from other products
Potential – possibility to enhance or develop the product
Question mark – a small market share in a high growth industry, which means competition, is really strong and to be successful will require substantial funds
Star – high market share in a high growth industry, which has potential of generating significant earnings, currently and in the future.
Cash Cow – high market share in a mature slow-growth market, this has high degree of consumer loyalty and will make a substantial contribution to overall profitability
Dog – low market share in a low-growth market, losing consumer support.
Introduction stage – offering something new to customers
Growth stage – the volume of demand for the product increases
Shake out – weaker players in the market are shaken out by the stronger organizations
Market Maturity – Demands levels off
Decline stage – total demand declines and competitors will start to withdraw from the market
c. Place – how product reaches its customers
Channel – supermarkets, corner shops
Logistics – warehouses
Direct distribution – retailers
d. Promotion
Aims of promotion (AIDA)
I – Generate Interest
D – Inspire Desire
A – Initiate Action
e. Price
Three main types of influence on price setting:
- Cost – most important influence on price, like cost-plus rules (cost plus profit margin)
- Competition – average level of price becomes the norm including the standard price differentials between brands. Price competition may be avoided by informal agreement, in cases of cigarettes and petrol.
- Demand – strong demand may lead to a high price, and a weak demand to a low price
f. Price Setting strategies
Market Penetration – sets a relatively low price for the product or service in order to stimulate growth of the market
Market Skimming – sets a high initial price for a new product in order to take advantage of those buyers who are ready to pay a much higher price for it.
Early cash recovery – aims to recover the investment in a new product or service as quickly as possible to achieve a minimum payback period.
Product line promotion – focuses on profit from the range of products which the organization produces rather than to treat each product as separate entity.
Cost-plus pricing – marking up its unit costs by a certain percentage or fixed amount
Target pricing – price that gives a specified rate of return for a given output
Price discrimination/selective pricing – different prices for the same product when it is sold in different markets
Going rate/competitive prices – keep in line with industry norm for prices
Price leadership/predatory pricing – price leader generally has a large market share. The role of the price leader is based on a track record of having initiated price moves that have been accepted by both competitors and customers.
g. Services and service marketing
Characteristics of services (as distinguished from goods) (IHI PO)
H – Heterogeneity, lack of sameness or consistency. The quality of service may depend heavily on who it is that delivers the service
I – Inseparability, services cannot be separated off from the provided. Should instill values of quality, reliability and to generate a service ethic
P – Perishability, services cannot be stores. Anticipating and responding to levels of demand is key planning activity
O – Ownership, services do not result in the transfer of property.
h. The extended marketing mix (3P’s)
P – People, services are provided by members of staff who are inseparable from the service
P – Process, services involve a process, for example a haircut may involve waiting to be served, a hair wash, styling, colouring and hair dying
P – Physical evidence, as services are intangible, some physical item should be provided to give the customer evidence of ownership
2. Branding
Brand – is a name, term, sign, symbol or design intended to identify the product of a seller and to differentiate it from those of competitors.
Brand name – refers strictly to letters, words, or groups of words which can be spoken
Brand Image – distinguishes a company’s product from competing products in the eyes of the user
a. Objective of branding
Key benefit of branding is product differentiation and recognition. Products may be branded for a number of reasons (DARED ME)
D – Product differentiation helps customers to identify the goods or service and creates customer loyalty to the brand
A – Advertising, maximizes the advertising for product identification and recognition
R – Readier acceptance, by wholesalers and retailers
E – Brand extension, or stretching which other products can be introduced into the brand range to ‘piggy back’ on the articles already known to the customer
D – Price differentials, reduces the differences on prices between goods
M – Market segmentation, different brands of similar products may be developed to meet specific needs of categories of uses
E – Eases the task of personal selling, by enhancing product recognition.
b. Branding Strategies
Three broad branding strategies
- Brand extension – introduction of new flavors, sizes etc to a brand, to capitalize on existing brand loyalty
- Multi-branding – introduction of a number of brands that all satisfy very similar product characteristics and normally used where there is no brand loyalty
- Family branding – uses the power of the brand name to assist all products in a range
c. Brand value
Three approach on valuing brand: (MIC)
- M – Market approach
- Based on market transactions
- Relief-from –royalty
- I – Income approach
- Based on net present values
- Calculating the overall economic benefit that will generate over its life
- C – Cost approach
- Based on the costs incurred to build the brand
- Example are costs involved in registering trademarks and promotional activities
a. The promotion mix – consists of the blend of promotional tools that are considered appropriate for a specific marketing campaign
b. Consumer and business to business markets
Consumer markets (business-to-consumer markets B2C) – consists of mass audiences which are cost-effectively accessible by television or national newspaper advertising
Business-to-business markets (B2B) – involve a great deal of personal selling at different levels in the organization.
c. Integrated marketing communications – represent all the elements of an organization’s marketing mix that favorably influence its customers or clients.
d. Types of marketing
i. Consumer marketing (4Ps)
ii. Service marketing (3Ps)
iii. Direct marketing
iv. Indirect
v. Guerrilla
vi. Viral
vii. Interactive
viii. Experiential
ix. E-marketing
x. Internal marketing
e. Direct marketing – the planned recording, analysis and tracking of customer behavior to develop relational marketing strategies. (RIRAS)
I – Interactive, two way involving supplier and customer
R – Relationship, on-going process of communicating and selling again and again to the same customer
A – Recording and Analysis, for most cost-effective procedures
S – Strategy, part of a comprehensive plan stemming from clearly formulated objectives
Example of direct marketing is TELEMARKETING. Telemarketing is a quick, accurate and flexible tool for gathering, maintaining and helping to exploit relevant up-to-date information about customers and prospects
Characteristics of telemarketing (IT FITS)
T – Targeted
F – Flexible
I – Immediate
T – Telemarketers are attending personally
S – So costly
f. Indirect marketing – marketing of products as a consequence of another activity or action. Organization doesn’t push products or services onto customers. (i.e. posting blogs on internet, ‘word of mouth’)
g. Guerilla marketing – involves taking people by surprise and creating a buzz in unexpected places. It relies more use of imagination that large sums of money.
Principles of guerilla marketing:
- Small organization
- Based on psychology rather than experience
- Based on time, energy and imagination
- Judged on profit not sales
- New relationships created
- Standard of excellence
- Number of customer referrals
- Co-operate with competitors
- Combination of marketing methods should be used
- Use of technology
h. Viral marketing – involves the use of pre-existing social networks to spread brand awareness or other marketing objectives.
i. Interactive marketing –ability to address the customer, remember what the customer says and address the customer again in a way that illustrates that we remember what the customer has told us. Example is Amazon.com
j. Experiential marketing – involves providing an experience that creates an emotional connection between a person and a brand or idea. This is an effective way of connecting with customers, as the emotional connection encourages brand loyalty
k. E-marketing – includes website, SMS e-mail, online surveys and use of social networks like Facebook and Twitter.
C – Developments in Marketing
1. Consumer behaviour
a. The customer
Different roles of customer (PUB)
U – User, receives the benefit of the product
B – Buyer, who selects a product
b. Buyer behavior – describes the activities and decision processes relating to buying
i. Consumers as buyer
ii. Organization as buyer
c. Consumer buying behavior (HCL)
C – Cognitive paradigm, purchase as outcome of a rational decision-making process
L – Learned behavior, importance of past purchases
5 stages of consumer buying process:
1) Need/problem recognition – the customer recognizes a need or a problem to solve. There is a motive to search for a solution
2) Pre-purchase/information search – the customer searches for information they can use to base their decision on
3) Evaluation of alternatives – the customer evaluates the various options they have generated
4) The purchase decision – is made and the product or service selected based on how it meets their needs and other factors such as cost
5) Post-purchase evaluation – if dissatisfied, they will be back at the problem recognition stage. If they are satisfied, the next decision process for the product may be cut short and they may skip straight to the decision, on the basis of loyalty
d. Influences on consumer buying
Social – relate to social groupings a consumer belongs to or aspires, and trends in society which influence buying patterns
Cultural – comprises the values, attitudes and beliefs in the pattern of life adopted by people that help them integrate and communicate as member of the society
Personal – include such things as age, stage of family and life cycle, occupation, economic circumstances and lifestyle
Psychological – includes the four factors;
1) Motivation – inner state that energizes, activates or moves that directs or channels
2) Perception – people select, organize and interpret sensory stimuli into a meaningful and coherent picture
3) Learning – individual’s behavior changes as a result of their experience
4) Beliefs and attitudes – descriptive thought that a person holds about something. Attitude describes a person’s enduring favorable or unfavorable cognitive evaluations, emotional feelings, and action tendencies toward some object or idea
e. Organizations as buyers
Organizations are viewed as more RATIONAL than individuals
Business-to-Business or B2B - transactions between organizations
Business-to-Consumer or B2C - transactions involving an organization and a consumer
Organizational markets (PICO)
I - Inelastic demand for industrial goods, which means these are not affected by price changes
C - Close relationship between buyer and seller
O - Organizational markets normally comprise fewer buyers responsible for the majority of sales
Decision Making Unit (DMU)
Webster and Wind (1972) suggested six groups within DMU (GUIDES)
U - Users. Initiate the buying process and help define purchase specifications
I - Influencers. Help define the specification and also provide an input into the process of evaluating the available alternatives
D - Deciders. Have the responsibility for deciding on product requirements and suppliers
E - Example of approvers are Finance Director/Manager
S - Suppliers or Buyers. Have the formal authority for the selection of suppliers and negotiating purchase terms
2. Marketing not-for-profit organizations
a. Charity and not-for-profit marketing
b. Characteristics of charity and not-for-profit marketing
c. The charity marketing mix
3. Internal marketing
a. Implementing internal marketing
b. The internal marketing mix
c. Segmenting the internal market
d. The importance of internal customer communications
e. Challenges for internal communication
f. Tools of internal communication
4. Corporate social responsibility and social marketing
a. Social responsibility, ethics and the law
b. Ethical marketing
c. Social marketing
