Marketing concepts pres1

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Marketing Concepts by Ron Newman

Transcript of Marketing concepts pres1

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Marketing Conceptsby Ron Newman

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Welcome to the Marketing Concepts lecture of VDIS10017 the Consumer and the Designer. This lecture will examine Marketing theories as they apply to designers. It is important that designers understand these theories and practices because in the most part designers are working directly with or for marketing professionals.

Marketing is the process of communicating the value of a product or service to customers. It is a critical business function for attracting customers. From a societal point of view, marketing is the link between a society’s material requirements and its economic patterns of response.

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Marketing satisfies these needs and wants through exchange processes and building long term relationships. The process of communicating the value of a product or service through positioning to customers. Marketing can be looked at as an organisational function and a set of processes for creating, delivering and communicating value to customers, and managing customer relationships in ways that benefit the organisation and its shareholders.

Marketing chooses target markets through market analysis and market segmentation, understanding consumer buying behaviour and providing superior customer value.

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There are five competing concepts under which organisations can choose to operate their business; the production concept, the product concept, the selling concept, the marketing concept, and the holistic marketing concept.

The four components of holistic marketing are relationship marketing, internal marketing, integrated marketing, and socially responsive marketing. Successful marketing management includes, capturing marketing insights, connecting with customers, building strong brands, shaping the market offerings, delivering and communicating value, creating long-term growth, and developing marketing strategies and plans.

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Customer Orientation: An organisation in the market economy survives by producing goods and services that persons are willing and able to buy.

Consequently, ascertaining consumer demand is vital for future viability and even existence as a going concern. Many organisations today have a customer focus (or market orientation). They focus their activities and products on consumer demands with designers involved. There are three key approaches to doing this; ie: consumer-driven, market change identification and/or product innovation.

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In the consumer-driven approach, consumer wants are the drivers of all strategic marketing decisions. No strategy is pursued until it passes the test of consumer research. Every aspect of a market offering, including the nature of the product itself, is driven by the needs of potential consumers.

The starting point is always the consumer. The rationale for this approach is that there is no reason to spend on Research and Development and design developing products that people will not buy. History attests to many products that were commercial failures in spite of being technological breakthroughs.

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Market change identification is an important task to undertake constantly through consumer research, as discussed in our lecture; A Designers Guide to Research. Every aspect of a market offering, can change regularly including the nature of the product and/or service required. This is always driven by the needs of potential consumers.

Product and service innovation is the area for Research and Development and the Design professionals and in the preceding lecture Emergent Design Methodologies and Ideas we have discussed their processes in depth.

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The Four Ps: A formal approach to this customer-focused marketing is known as SIVA (Solution, Information, Value, Access). This system is basically the four Ps renamed and reworded to provide a customer focus. The SIVA Model provides a demand/customer-centric alternative to the well-known 4four Ps supply side model (product, promotion, price, placement) of marketing management.

Product Promotion PricePlace (Distribution)→ →→ →Solution Information Value Access

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If any of the four Ps become problematic for an organisation or are not a marketing factor of the business, the business could find itself in trouble with competitors appearing in the market place, and its consumer demand on this product decreasing.

In recent years service marketing has widened the domains to be considered by marketers, increasing us to the seven P's of marketing. The proposed additional three P's of service marketing are: process, physical environment and people.

Some consider there to simply be a fifth "P": positioning.

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Organisational orientation: An organisation's marketing department is often seen as of prime importance within the functional level of that organisation. Information from an organisation's marketing department would be used to guide the actions of other departments. As an example, a marketing department could ascertain (via market research) that consumers desired a new type of product, or a new usage for an existing product. With this in mind, the marketing department would brief the Research and Development (R&D) department and designers to create a design of a product or service based on the consumers' new desires.

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The production department would then start to manufacture the product, while the marketing department would focus on the marketing; promotion, distribution, pricing, etc. of the product. Additionally, a organisation's finance department would be consulted, with respect to securing appropriate funding for the development, production and promotion of the product.

Often interdepartmental issues may arise: production may oppose the installation, support and servicing of new capital equipment and stock needed to manufacture a new product. Finance may oppose the required capital expenditure, since it could undermine the cash flow of the organisation.

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Herd Behaviour: Herd behaviour in marketing is used to explain the dependencies of customers' on mutual behaviour, relying on marketing mechanisms to increase impulse buying and get people to buy more by playing on the herd instinct.

People will buy more of products or services that are seen to be popular, and several feedback mechanisms to get product popularity information to consumers are known, including smart card technology, social media activity, mobile device connectivity and the use of radio frequency identification tags. Online retailers often inform consumers of "which products are popular with like-minded consumers” eg: Amazon, Ebay...

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Market Research: As discussed in our lecture; A Designers Guide to Research, market 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 conducting and compilation of research for a specific purpose.

- Secondary research (also referred to as desk research), initially conducted for one purpose, but often used to support another purpose or end goal.

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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 in this case would be research about health foods, but used by a firm wishing to develop an unrelated product into a similar market area.

Primary research is often expensive to prepare, collect and interpret from data to information. While secondary research is relatively inexpensive, it often can become outdated and outmoded quickly, given that it is used for a purpose other than the one for which it was intended.

Primary research can also be broken down into quantitative research and qualitative research, which, as the terms suggest, pertain to numerical and non-numerical research methods and techniques, respectively. The appropriateness of each mode of research depends on whether data can be quantified (quantitative research), or whether subjective, non-numeric or abstract concepts are required to be studied (qualitative research).There also exist additional modes of marketing research, which are:Exploratory research, pertaining to research that investigates an assumption.Descriptive research, which, as the term suggests, describes "what is".Predictive research, meaning research conducted to predict a future occurrence.Conclusive research, for the purpose of deriving a conclusion via a research process.

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Primary research can also be broken down into quantitative research and qualitative research, which, as the terms suggest, relate to the numerical and non-numerical research methods and techniques used, respectively.

The appropriateness of each mode of research depends on whether data can be quantified (quantitative research), or whether subjective, non-numeric or abstract concepts are required to be studied (qualitative research).

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Other additional modes of marketing research are:

- Exploratory research, research that investigates assumptions.

- Descriptive research, which, as the term suggests, describes "what is”

- Predictive research, meaning research conducted to predict a future occurrence.

- Conclusive research, for the purpose of deriving a conclusion via a research process.

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Market Segmentation: Market segmentation is the division of a market of consumers into persons with similar needs and wants. For instance, Kellogg's cereals, Frosties are marketed to children. Crunchy Nut Cornflakes are marketed to adults.

Above are two similar products which are marketed to two distinct groups of people, both with similar needs, traits, and wants. In another example, Sun Microsystems can use market segmentation to classify its clients according to their promptness to adopt new products. Market segmentation allows for a better allocation of a firm's finite resources.

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Any organisation only possesses finite resources and must make choices (and incur the related costs) in servicing specific segments of its consumers. In this way, the diversified tastes of contemporary consumers can be served better.

With growing diversity in the tastes of modern consumers, organisations are taking note of the benefit of servicing a multiplicity of segmented new markets. Market segmentation can be defined in terms of the STP acronym, meaning Segment, Target and Position.

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Marketing Strategy: Marketing strategy considers the total marketing environment and its impacts on a company or product or service. The emphasis is on "an in depth understanding of the market environment, particularly the competitors and customers.”

A given organisation may offer numerous products or services spanning numerous and sometimes wholly unrelated marketplaces. A marketing plan is required in order to effectively serve the strategy, including weighing up how to utilize finite resources such a communications design, advertising (traditional and online) and direct marketing.

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For example, a start-up car manufacturing firm would face little success should it attempt to rival Toyota, Ford, Nissan, Chevrolet, or any other large global car maker. Such a scenario would require a unique marketing strategy.

A marketing strategy differs from a marketing tactic in that a strategy looks at the longer term view of the products, goods, or services being marketed. A tactic refers to a shorter term view. Mailing of a postcard or sales letter is a tactic, but a campaign considering retail locations, regular postcards, letters, internet advertising, editorial placement is a strategy.

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Brand Management: Brand management is a communication function that includes analysis and planning on how any given brand is positioned in the market place, which segment of the public the brand is targeted at, and maintaining a desired reputation of the brand. Developing a good brand relationship with a market is essential for brand management.

Tangible elements of brand include the product itself; the look and feel, price, packaging. Intangible elements are experiences that the consumer takes away from the brand, and also the relationship that they have with the brand such as after sales service. A brand manager would oversee all of these things.

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B2C Buying Behaviour: This behaviour concerns consumers and their purchase of a given product such as a pair of sneakers, the desire for a pair of sneakers would be followed by an information search on available types/brands. This may include perusing media outlets, and the internet and commonly information from family and friends. Purchase decision is made the consumer buys the product through an outlet or online.

Following this stage, a post-purchase evaluation is often conducted, comprising an appraisal of the purchase. If the value/utility is high, then repeat purchases may occur which could develop consumer loyalty to the brand or organisation.

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B2B Buying Behaviour: Relates to organisational/industrial provider buying behaviour. Business buy either wholesale from other businesses or directly from the manufacturer in contracts or agreements.

B2B marketing involves one business marketing a product or service to another business and often the strategies and plans have to same content but with different targeting.

B2C and B2B behaviour are not precise terms, as similarities and differences exist between and within them.

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Use of Technologies: Marketing relies on various technologies. Computer-based information systems are employed, aiding in better processing and storage of data. Most common of these are Customer Relationship Management systems (CRM), software for direct marketing and data collection.

Marketing researchers within organisations use information systems, hardware and software components, to collect raw market data through enhanced data gathering methods. The data from information technology improves an organisation's marketing decision-making process.

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Information technology has typically progressed at a fast rate, leading to marketing managers needing to be aware of the latest technological developments. In recent years, the notebook/laptop personal computer has gained significant market share, largely due to its more user-friendly size and portability.

Smartphones resulted from a demand among consumers for more technologically advanced portable (mobile) and convenient products. An organisation can lose out to its competitors if it ignores these innovations in its industry.

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Technological advancements can lessen barriers between countries and regions. Using the internet, organisations can quickly dispatch information from one country to another without restrictions. Prior to the mass usage of the Internet, such transfers of information would have taken much longer.

More recently, there has been a large emphasis on data analytics. Data can be mined from various sources such as online forms, mobile phone applications, internet browsing and more recently, social media activity.

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Services Marketing: Services marketing is the marketing of services, as opposed to tangible products. A service is typically defined as a purchase which is used and consumed simultaneously. It does not have material form, and therefore requires a considered, different approach to its marketing.

The use of a service is inherently subjective, meaning that several persons experiencing a service would each experience it uniquely; ie: riding a train, viewing a movie or seeing a consultant. Services can also be viewed as a spectrum; not pure goods or pure services; ie: a restaurant, where a waiter's service is intangible, but the food is tangible.

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A Summary of Marketing Concepts: The purpose of this lecture is for you as a designer to consider how you will work with those in the marketing discipline and how your products will serve your customers as either the product itself or as the communication that promotes and positions the product or service.

Designers have a lead role to play in this business continuum and it is only by understanding the responsibilities and methodologies of your business colleagues that you will be able to appreciate their skills and work with them a s a team.

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Marketing Conceptsby Ron Newman