Marketing concept Marketing concept is a combination of customer satisfaction, total company integration and profit

Customer ValueCustomer value considers customer costs and customer benefits

Costs may be economic or emotional

A company must aim to increase customer value

In regards to competition, a company must satisfy a customer’s needs that others have not

Types of UtilityForm utility is provided when something tangible is produced

Task utility is provided when someone performs a task for someone else

However, form and task utility do not necessarily result in customer satisfaction; the customer must actually want the product

Product utility is provided by marketingTime utilityPossession utilityPlace utility

Marketing Planning Steps1. Analyse the current market environment2. Undertake market research3. Segment the market4. Analyse buyer behaviour5. Design the marketing strategy6. Implementation and control of the marketing strategy

Marketing MixControllable variables that the company puts together to satisfy a target group

1. Product 2. Place 3. Promotion 4. Price

Criteria for Segmenting a Broad Product Market

Creating/defining a suitable target market

1. Homogeneous – similar as possible2. Heterogeneous – as different to other segments as possible3. Substantial – large enough to be profitable4. Operational - live close together, speak the same language

Market Segmentation

Market – group of potential customers with similar needs who are willing to pay for need satisfying goods or services

Generic market – a market with broadly similar needs with sellers offering various and often diverse ways of satisfying these needs

Product market – a market with very similar needs with sellers offering similar or substitute products to satisfy these needs

Market segmentation is the process of breaking down broad product markets to identify potentially attractive target markets

When defining a market a manager should take a marketing-orientated approach and describe the market in terms of benefits desired by consumers.

Market Segmentation

1. Name broad product market2. Segment broad product market to select target market

Disaggregating – breaking down all possible needs into some generic market in which the company may be able to operate

Segmenting – aggregating process, grouping people with similar needs into a market segement.

Market-Orientation Strategy Planning

Once a broad product market has been segmented into a target market one of three approaches for market orientation strategy planning can be used.

1. Single target market approach2. Multiple target market approach3. Combined target market approach

Single target market approach - segmenters Segmenting the market and selecting a homogenous segment as the company’s target market (cosmetics White Linen v Ralph)

Multiple target market approach - segmentersSegmenting the market and choosing two or more segments, then treating each as a separate target market the requires a different marketing mix (business class and economy)

Combined target market approach - combiners Combing two or more submarkets into one larger target market as the basis for one marketing strategy

Differentiation and Positioning

Competitive advantage exists when the marketing mix of the company is perceived by the target market to be superior to that of the company’s competitors. Positioning refers to how customers regard proposed and/or present brands in a market.

Segmentation Targeting Positioning Qualifying dimensions – the dimensions that a relevant to the decision of whether or not to include a customer type in a product market.

Determining decisions – the dimensions that actually affect the customer’s purchase of a specific brand or product in a product market

Qualifying dimension help identify the core features that must be offered to everyone in a product market whereas determining dimensions are pivotal for achieving the consumers ultimate preference and purchase.

Segmenting dimensions of consumer markets include behavioural, geographic and demographic dimensions.

Strategic Market Planning

The necessary steps marketing managers must take when developing sound marketing strategies, based on four broad categories of activities called the marketing mix.

Understanding Markets

Market research and information management

Market research is a set of procedures to develop and analyse new information for assistance in decision making.

Primary Research – is information specifically collected to solve a specific problem a company encounters. It consists of observation and questioning. Observation relates to mechanical and personal approaches, while questioning refers to in-depth and focus group interviews, mail, phone and personal surveys and panels.

Secondary Research – is information previously collected or published for purpose unrelated to the current problem. It includes information generated inside the company such as company files, sales, information obtained from employees, cost data and reports. It also includes information sourced from outside the company, such as from the internet, government, libraries, universities and private research associations.

Marketing MixControllable variables that the company puts together to satisfy a target group

1. Product 2. Place 3. Promotion 4. Price

Marketing Management

1. Planning marketing activities2. Directing the implementation of these plans3. Controlling these plans

Market Exposure

1. Intensive distribution requires the use of all available outlets that are able to reach a target market.

2. Selective distribution uses only the better intermediaries and gains some of the benefits of exclusive distribution while still achieving widespread coverage.

3. Exclusive distribution restricts sales to one intermediary in any particular sales area.

Five Levels of Brand Familiarity

1. Rejection2. Non-recognition3. Recognition4. Preference 5. Insistence

Product Life Cycle

1. Market introduction2. Growth 3. Maturity4. decline

Ladder of Customer Loyalty

1. Prospect2. Customer3. Client 4. Supporter5. Advocator

Products Products are the need satisfying offerings of an organisation

Product attributes are the features or characteristics of a product or service

Quality – the ability of the product to satisfy customer’s needs or requirements

Product is part of the marketing mix

Strategy decisions include – features, quality level, accessories, instructions, product lines,

A company’s product must satisfy the needs of its target market

Services differ from goods in four main ways1. Tangibility2. Simultaneous production3. Perishability4. Variability

Consumer product classes

Consumer product classes assist marketers to develop appropriate marketing strategies

Consumer product classes are based on consumer’s buying behaviour. There are four major classes:1. Convenience products – needed, but spend little time or money on them2. Shopping product – time and effort3. Speciality products - brands4. Unsought products – people don’t know about

Consumers view brands as a guarantee of quality

Marketing Strategy and Planning

Customer Value/Relationships/Marketing Opportunities

Marketing has been defined as the creation and delivery of a standard of living. It:

1. Provides direction for production and helps ensure the right goods and services are produced and distributed to consumers,

2. Stimulate research and new ideas, resulting in new goods and services3. Is equally relevant for produces of goods and services, non profit organisations and

government sectors

Macro-marketing is the social process that matches supply and demand and accomplishes the economic, legal, technological, political and social objectives of a society.

Micro-marketing anticipates consumer needs and directs flow of goods and services from the producer to the consumer, to accomplish a company’s objectives.

The Marketing Concept

The marketing concept stresses that organisational efforts should be coordinated or integrated, and should focus on satisfying target customer’s needs while simultaneously achieving appropriate organisational goals.

Marketing should ensure these three things occur.

Measures of Performance - include profit, raising money, achieving set objects (increase market share, brand recognition)

1. Customer satisfaction2. Integration 3. Profit

Customer Satisfaction

Marketing involves the creation and delivery of customer value. It relies on collaborative links with other functional areas in order to direct a company’s resources towards identified and profitable marketing opportunities.

Types of utility

Utility is value that comes from satisfying human needs. Production and marketing supply five kinds of economic utility.

Form and task utility are provided by production with guidance of marketing. However, task and form utility do not necessarily result in customer satisfaction. The customer must actually want the product.

1. Form Utility – is provided when something tangible is produced

2. Task Utility – is provided when someone performs a task for someone else.

3. Product utility is provided by marketing:-a. Time utility (makes something quicker)b. Possession utility (allows someone to own something)c. Place utility (where they can get it from)

Ethics

Teleology – assessing the moral worth of a behaviour by its consequences

Deontology – judging individual acts by the nature of the act itself

Relativism – no universal ethical rules exist, all normative beliefs are a function of a culture or individualism

Marketing: the creation and delivery of a standard of living

Marketing is a process that provides needed direction for production and helps ensure that the 'right' goods and services are produced and distributed to customers. It creates customer satisfaction by responding to customer needs, desires and expectations. To do this, it must acquire an understanding of those needs; other competitors that might be involved in meeting those needs may attempt to fulfil them by being cost effective. This objective may encompass market research, advertising, and so on.

The successful application of marketing concepts helps to increase an organisation's sales, revenue and profit. Marketing helps create and provide fuller employment, higher incomes and higher standards of living. Marketing concepts are widely applied to all marketing transactions-even to the provision of services, like free or subsidised healthcare, education, and the provision of welfare services.

The focus of macro-marketing switches from an individual organisation to the whole marketing system. It looks at the big picture-macro aspects-to understand how the system works and then match society's supply and demand.

'micro-marketing takes the perspective of the marketing manager in a marketing organisation', as opposed to big, or macro, issues, which may impact on the whole of society.

Marketing should begin with existing and potential customer needs and not with the production process.

Six stages of marketing

1. Simple trade orientation2. Production orientation - Production orientation focuses on production efficiency-it is

definitely more efficient for a manufacturer

3. Sales orientation4. Marketing department orientation5. Marketing company orientation6. Social marketing orientation - Societal marketing takes account of social issues such

as health, environmentalism, social welfare and so forth, even though it may hurt immediate sales.

The logical sequence in the evolutionary process is simple trade, production, sales, marketing department, marketing company and societal marketing.

Marketing concept: the idea that an organisation aims all its efforts, in a coordinated and integrated manner, at simultaneously satisfying its customers and achieving its own corporate goals

The core idea of the marketing concept is that an organisation focuses all its efforts (integration) on simultaneously satisfying its customers and achieving its own goals ('profits' or some other measure of successes).

The marketing concept suggests that building a long-term relationship with a customer is a profitable way of adding customer value. That is, a customer may place a higher value on the quality of the relationship than he/she does on the cost for the organisation to provide the relationship.

An important element of integration is that all players in the organisation see the 'big picture'-customer satisfaction is the route to achieving organisational objectives.

Customer satisfactionprofit =the marketing concepttotal company effort

Differences between production and marketing orientation figure 1.1 (pg15)

Customer value: the difference between the benefits a customer sees from a market offering and the costs of obtaining those benefits be noted that these costs do not refer only to the purchase price; they include other elements such as time spent and inconvenience entailed in making the purchase.

Satisfying consumers with superior value figure1.2 (pg20)

Form utility: provided when something tangible is producedtask utility: is provided when someone performs a task for someone else <-provided by production with guidance of marketing

time utility: having the product available when the consumer wants itPlace utility: having the product available where the consumer wants it <-provided by

marketingpossession utility: obtaining a good or service ad having the right to consume it

(pg20)

CRMIn devising customer relationship management (CRM) strategies , companies must be ready to make up-front financial investments in databases and data-management systems and have a sound understanding of the customers and their individual needs.

Profit-a common corporate goal-is the difference between revenue and cost. It represents the most important measure of an organisation's success and its ability to survive. The balance between customer-need satisfaction and profit helps a company to determine on which needs it should focus its efforts.

Competitive success: Offering better levels of customer satisfaction than competitors, or maximising customer value, illustrates that competitive strengths flow from the use of the marketing concept.

ethics: decisions involving a judgment as to what is morally right or wrong

3 ethical theories teleologydeontologyrelativism (pg29)

testing for ethics-the golden rule test – would u like it if this was done to u-the family test – would u be comfortable explaining the decision to ur family-the court test – would u be happy to defend ur decision in court-the tv test – would u be happy to justify ur decision to aca/today tonite etc

ethicality is often confused with legality. Actions such as dismissing a young single mother from her job due to cost considerations may be legal, but would this be ethical when a 65-year-old male is allowed to keep his job in the same department?

Marketing plan: a written statement of a marketing strategy and the time related details for carrying out the strategy

Essentials of marketing plan

1. Marketing mix-we must design the marketing mix in line with the marketing objectives, the marketing environment, and so on.

2. Costs-we must have cost details before we know whether or not we can deliver the preferred marketing mix.

3. Results-the marketing mix has been planned with an expectation of sales and profits, and these should be specified so that, as the plan is put in place, we receive feedback on the plan's progress in relation to meeting sales and profits expectations.

The marketing plan serves as a 'blueprint' of what the company will do. This blueprint consists of six logical steps (in order)

Analysis of the current marketmarket researchmarket segmentationanalysis of buyer behaviourdesigning the strategyimplementation and control of the strategy.  

S.M.A.R.T.SMART is the acronym for specific, measurable, achievable, reasonable and time-bound.used for setting objectives or goals

Marketing plan structure-Executive summary – single page synopsis of the main points of the marketing plan-intro-situation analysis – details of the company’s background, relevant environments and competition, current distribution methods as well as any existing market research findings-target market and segments – the segmentation of the market and the strategic choice of some segments as targets-objectives and goals – an achievable, specific and measureable statement of what the company expects to achieve over the duration of the planning period-strategic options – analysis of possible strategic choices within selected target markets-selected strategy – a broad description of how the company intends to reach its objectives-tactics – details of operational decisions that allow the implementation of the selected strategy-budget – a costing of all strategic and operational decisions within the planning period, as well as a schedule for such expenditures-audit and control procedures – performance evaluation activities to be undertaken during and after the planning period

Target market +marketing mix =marketing strategymarketing strategy + time related details and control procedure =

marketing plan

marketing plan + other marketing plans = a company’s marketing program

Marketing management must plan and implement an overall marketing program which blends all the company's marketing plans. Because of the pervasiveness of the marketing program, the whole organisation is responsible for its success.

Once the marketing plan is developed, it must be implemented-that is, put into action, which requires short-run decisions (such as product policies, place policies and so on) to be made within the guidelines set down during strategy planning.

The performance measures used by market research organisations are likely to be the outcomes of a marketing program

the text reinforces the point that the most important driver of change should be the need to continue to offer improved value to customers as their needs change. This constant monitoring of customer needs and satisfactions is a key part of a marketing manager's job.

Plans must be flexible to facilitate their adoption by different environments. Regional grouping of countries that are similar facilitates the transfer of know-how and reduces the cost of overall supervision.

Strategy planning: a creative and logical process that considers many variables. It is guided by a number of principles and the process involves narrowing down a broad set of possible marketing opportunities to a specific strategy.

Global marketing : focuses on the similarities between markets around the world and attempts to develop and implement common product, place and promotion strategies and plans in those various markets

Global marketing is not a synonym for international marketing. While international marketing refers to marketing in countries with significant environmental differences, global marketing emphasises the similarities of nations and tends to develop common strategies.

Market Research

Market research has evolved as a way of developing and analysing new information for assistance in marketing decision making. As such, it is increasingly demanded by marketing managers who want to make better decisions and lower the risks involved in the judgements they are forced to make in the day-to-day job of marketing management.

Market research reduces uncertainty by developing and analysing new information for assistance in marketing decision making. Political parties and non-profit organisations may use market research to conduct surveys to assess voters' attitudes towards a party or candidate or donors' attitudes towards, say, a fund-raising campaign.

The marketing manager must be actively involved in specifying research projects in order to ensure that the research focuses on real problems, which must be carefully defined by the research 'customer'-that is the marketing manager in this case. He/She must also understand the limitations of the findings; otherwise he/she may impute inappropriate and potentially misleading meanings to the data.

Marketing managers need objective information in order to improve the quality of the marketing decisions they make. They rarely have sufficient information and often its reliability may be doubtful. Sometimes information may be so difficult and costly to obtain that its use cannot be justified. As well, marketing managers are often called on to make decisions quickly. Hence, a market information system is valuable because it provides useful information quickly, and cheaply enough, to be of practical help to the manager, even though the data may sometimes be of less-than-perfect quality.

Research should be conducted in an objective manner. Pursuing a hidden agenda must be avoided as such agendas tend to compromise objectivity.

Children cannot be interviewed if under the age of 14, unless parents' /guardians' consent has been given.

Types of hypotheses to research [ A ] technical research.    [ B ] product-in-use testing.    [ C ] the scientific method.    [ D ] before-and-after testing.    [ E ] exposure testing.  

The scientific method involves the development of a hypothesis which is then tested by objective measurement such as market research. It is important to distinguish between decisions made by the scientific method and by intuition or guesswork.

The five step approach to market research-defining the problem-analysing the situation-obtaining problem-specific data-interpreting the data -solving the problem

This sequence has been suggested as a practical, scientific, method-based approach that is designed to avoid common pitfalls, such as assuming the answer before the approach to the research is planned.

A research proposal: a plan specifying what information is to be obtained and how. Typically, it will form the outline for subsequent research, which may be modified after further discussion with the client.

random sampling: where each member of the population has an equal chance of being included in the sample.

The larger the sample size, the greater the accuracy of estimates from a random sample. This is a fundamental aspect of sampling theory.

Validity: as an estimate of the extent to which data measure what they are intended to measure, serves to remind users of research that data may give a distorted view of reality because of inevitable flaws in the research methodology.

Reliability: the extent to which results can be expected to remain the same when a test or survey is repeated,

Reliability is an important measure for marketers, highlighting the changeability of many of the measures used in marketing

A sampling frame has absolutely no relationship with either validity or reliability.

Mall intercept: an interviewing technique involving the interviewer stopping people in a shopping centre to ask questions. This common practice offers easy access to shoppers, and may lend itself to some forms of targeting-for example, women with young children emerging from a supermarket. Typically, researchers must pay the centre for this privilege.

Scanner data: data collected by scanners at supermarket checkouts and analysed by product, store, region and so forth. This data can give fast feedback to grocery product marketers who can, for a fee, get day-by-day sales data for their products across an entire country or several countries if they wish. The data can be broken down in many useful ways, for example, by pack size, suburb and so forth.

The experimental method involves a comparison of the responses of two or more groups that are similar in all respects except the characteristic being tested.

Syndicated researchIt is popular because of its relatively low cost. The cost is shared by all the users of the data. Some research companies sell tracking syndicated research, where regular updates of data are provided to clients, usually at a price much lower than could be achieved if individual clients were to conduct the research themselves.

The marketing information system: used to collect, access and analyse information that helps marketing managers to make better decisions. As such, it can be drawn from quite diverse sources, both internal and external.

Market research is a set of procedures to develop and analyse new information for assistance in decision making. The obtaining of factual information allows marketers (and hence organisations) to be aware of changes in the market.

Research of overseas markets is vital to the success in international markets.- Competitive pricing structures- Knowledge of competitor companies/products- Environmental and cultural factors

Scientific method of research is a decision-making approach that focuses on the objective and orderly testing of ideas before they are accepted.

A hypothesis should lend itself to an orderly research process

Five step approach to market research

1. Define the problem – set research objectives2. Analyse the situation – informed opinions3. Obtain problem specific data – primary data – quantitative and qualitative research 4. Interpret the data – statistics and tables5. Solve the problem

Marketing Information System

A marketing information system is an organised way of continually collecting, accessing and analysing information necessary to make better marketing decisions.

Strategic Market Planning

Strategic Market Planning is the necessary steps marketing managers must take when developing sound marketing strategies based on four broad categories of activities called the marketing mix.

Marketing Management is the process of1. Planning Marketing Activities2. Directing the implementation of these plans3. Controlling these plans

Marketing strategy Planning – finding attractive opportunities and developing profitable marketing strategies.

Marketing StrategySpecifies a target market and related marketing mix

Marketing MixControllable variables that the company puts together to satisfy a target market.Focuses on:-

1. Product 2. Place3. Price4. Promotion

The Marketing Mix

Product

Products are the needs satisfying offerings of an organisation

Product attributes are features or characteristics of a product or service.

Quality is the ability of a product to satisfy a customer’s needs or requirements

Strategic Decisions include features, quality level, accessories, installations, instructions, warranties, product lines.

Product Mix and Product LinesProduct mix is a combination of product lines.Product line is a set of individual products that are closely related.

Marketers can use:-Family brandsLicensed brandsIndividual brandsPrivate labels

A company’s product must satisfy the needs of its target market.

Services differ from goods in four main ways:-- Tangibility- Simultaneous production- Perishability- Variability

Consumer product classes assist marketers to develop appropriate marketing strategies.

Consumer product classes are based on consumer’s buying behaviour. There are four major classes:- Convenience products – need but devote little time or money – repeat or habitual purchases Shopping products – require time and effort – either homogonous or heterogenous Specialty products - brands Unsought products – people don’t know about

Consumers view brands as a guarantee of quality

Place

Managing Distribution ChannelsPlace strategy focuses on making the right goods available in the right quantities and at the right locations, when customers want them. A channel of distribution consists of a series of organisations or individuals participating in the flow of product from producer to final user.

Direct distribution is common when service products are involved and the producer is often the seller. Many business products are also sold direct to customers. The use of intermediaries can enable producers to meet customers’ need more effectively and efficiently. However, dual distribution may be required to reach different segments of a broad product market and to ensure that each segment is adequately serviced.

It is necessary to anticipate customers’ needs.

Vertical marketing systems exist when the entire channel focuses on the same target market. Customers benefit from the economies of vertical integration through lower prices and better products.

Intensive distribution requires the use of all available outlets that are able to reach a target market. Selective distribution uses only the better intermediaries and gains some of the benefits of exclusive distribution while still achieving widespread coverage. Exclusive distribution restricts sales to one intermediary in any particular sales area.

Retailing in crucial to consumers. If retailers are ineffective, products are not sold and the whole channel suffers. Retailers must consider both the economic and emotional needs of their customers.

Marketing logistics

The physical distribution activities of transportation, storage and handling provide time and place utility and make possession utility possible. Strategy planning in this area should focus on meeting customers’ needs for an acceptable level of service at a fair price.

Marketing managers must focus on how logistics should be coordinated throughout the chain of supply to meet the needs of the customers at the end of the distribution channel. Just-in-time delivery and electronic data interchange can assists organisations and channels to compete more successfully in the market and thus increase their profit.

Customers think in terms of how rapidly and dependably an organisation can deliver what they require. Strategy decisions must be aimed at delivering the desired level of service and customer value at the lowest possible cost. The majority of physical distribution decisions require a trade-off between costs, customer service and sales.

Price

Pricing Objectives and PolicyThe choice of pricing policies depends on the pricing objectives:-

Profit Oriented Objective- Target Return- Profit Maximisation

Sales Oriented Objective- Unit Sales- Market Share

Status-Quo Objectives- Concentrate on price stability- Non-price Competition

Pricing policies must explain:-1. How flexible prices will be2. Level of the prices over the product life-cycle3. Discounts/allowances4. Transport costs

Product Life CyclesPrice Skimming – aims to sell to the top of the market first, then to the price sensitive consumers

Penetration Pricing – attempting to sell to the whole market at one low price

Marketing managers must consider where the product is in its life cycle and how fast it is moving through the cycle.

Competitive pricing – considers the prices set by competitors

Setting PricesIn periods of low demand, prices may be lowered to stimulate volumes and in periods of high demand, raised to drive revenue yield.

Demand Oriented Approaches

Price sensitivity depends upon:-- Availability of substitutes- Ability to compare prices- If someone else pays of the cost is shared- Greater total expenditure- Significance of the end benefit- Sunken investment

Value-in-use pricing

Setting prices that will capture some of what customers will save by substituting the company’s product for the one currently in use. Ie, a new machine may be expensive but it also reduces labour costs, quality control costs and costs of warranty repairs.

Reference price – the price consumers expect to pay

Leader price – setting some very low prices to attract customers into retail stores.

Promotion

Marketing communications need to inform customers about products. Source Receiver --- Noise (distractions)

Marketing Communications include:- Advertising Sales promotion Sponsorship Product placement Direct-Response promotions Publicity Public Relations Personal Selling

SWOT analysis – identifies a company’s strengths, weaknesses, opportunities and threats.

Marketing Environments

Direct Factors1. Customers2. Company 3. Competitors

External Factors1. Cultural and social environments2. Political and legal environments3. Competitive environment

Porter’s Five Forces1. Entry barriers2. Substitution threat3. Rivalry determinants 4. Buyer power5. Supplier power

4. Economic and technological environment5. Resources and objectives of company

Identifying Marketing Opportunities

Mass Marketing - identifies all of society as potential customers

The marketing manager is responsible for developing a workable mix by integrating all of the company’s efforts into a coordinated whole that makes effective use of the company’s resources and guides it to its objectives.

The marketing manager must develop a marketing plan for implementing each strategy and then merge a set of plans into a marketing program. If planning is effective, then budgeting should be relatively simple.

Breakthrough opportunities

Describe opportunities that enable innovators to develop marketing strategies that are difficult to imitate and are more likely to be profitable for a long period of time.

Innovative strategy is needed for survival in increasingly competitive markets. Identifying the strengths, weaknesses, opportunities and threats facing the organisation and being able to develop competitive advantage are key to successful marketing strategies.

FOUR BASIC TYPES OF GROWTH OPPORTUNITIES

There are four main types of strategic opportunities:-1. Market penetration2. Market development3. New-product development4. Diversification

Each of these represents different levels of risk and must be carefully considered by marketers.

FOUR BASIC TYPES OF GROWTH OPPORTUNITIES [Ansoff’s Matrix]

PRESENT PRODUCTS NEW PRODUCTSPRESENT MARKETS Market penetration

(discount, sponsorship, promotion, PR)

New-product development(make accessories, new features)

NEW MARKETS Market development(Target it to someone else, export, sell online)

Diversification (make something totally different)

BOSTON CONSULTING GROUP MATRIX

Relative market share position High Low

Industry growth rate High Star Question mark

Low Cash cow Dog

STAR – market leaders, moving fast, substantial profits, requires large investments to finance growth

Strategies – protect existing share, obtain larger share of new users, re-invest earnings in price reductions, innovation, research development

CASH COW – profitable products, generate more cash than need to to maintain market share, don’t need to spend so much on them

Strategies – maintain market dominance, invest in process, technological improvements to maintain leadership, maintain price leadership, use excess cash to finance other areas

QUESTION MARKS – rapid growth but low profit margin, enormous need for cash

Strategies – invest to increase share of new sales, acquire competitors to gain increase share, focus to gain dominance in a niche market.

DOGS – most products fall into this category, operate at a cost disadvantage, few opportunities for growth, stagnant market so little new business

Strategies, focused marketing, sell or abandon

Customers Adoption Process

A ttention I nterest D esire A ction

Push Advertising – normal marketing, where information is given to consumers

Pull Advertising – making consumers ask for a product/further information

The marketing communications need to be appropriate to appeal to the target audience.

Establish a relationship with customers1. Inform2. Persuade3. Remind

Communication Method

Source Encoding Message Channel Decoding Receiver Feedback

Marketing Communication Mix

The effectiveness of an advertising campaign depends of using the best available medium, and the best message, and considering promotional objectives, target markets and funds available for advertising. This is a particularly challenging task when dealing with international markets.

Specific advertising objectives determine what kind of advertising to use.

Product Advertising Promotes the sale of a specific products

Corporate/Institutional AdvertisingAims to promote the organisations image/reputation/ideasDifferent types of advertising are suitable for different types of products and different objectives.

Direct Response Communications is possible through advances in technology and because of its impact.

Sponsorship creates a favourable association between the company and the event, athlete, sport, or cause.

Need to mix promotional tools for the best response.

Horizontal Cooperation – Coke at Hungry Jakes

Vertical Cooperation – franchises participating in corporation’s advertisingOnce overall marketing objectives are designed, advertising managers should set specific objectives for each advertisement.

Copy Strategy – what to communicate to the target market. What words or illustrations should communicate to the target market. Advertising specialists and advertising strategies should execute the copy strategy.

Understanding Markets

Market Segmentation

Generic Market – a market with broadly similar needs, with sellers offering various and often diverse ways of satisfying those needs.

Product Market – a market with very similar needs, with sellers offering similar or substitute products to satisfy those needs

Market – a group of potential customers with similar needs, who are willing to pay for “need satisfying” goods and/or servicesMarket Segmentation is the process of breaking down broad product markets to identify potentially attractive target markets.

When defining a market a manager should take a marketing orientated approach and describe the market or potential market in terms of the benefits desired by customers (holes in paper)

Market Segmentation1. Name broad product market2. Segment broad product market to select target market

Disaggregating – breaking down all the possible needs into some generic markets and broad product markets in which the company may be able to operate.

Segmenting – aggregating process – grouping people with similar needs into a market segment.

Market Orientation Strategy Planning

Once a broad product market has been segmented into a target market, one of three approaches for a market orientation strategy planning can be used:-

4. Single target market approach5. Multiple target market approach6. Combined target market approach

Single target market approach - segmenters Segmenting the market and selecting a homogenous segment as the company’s target market (cosmetics White Linen v Ralph)

Multiple target market approach - segmentersSegmenting the market and choosing two or more segments, then treating each as a separate target market the requires a different marketing mix (business class and economy)

Combined target market approach - combiners Combing two or more submarkets into one larger target market as the basis for one marketing strategy

Qualifying dimensions – the dimensions that a relevant to the decision of whether or not to include a customer type in a product market.

Determining decisions – the dimensions that actually affect the customer’s purchase of a specific brand or product in a product market

Qualifying dimension help identify the core features that must be offered to everyone in a product market whereas determining dimensions are pivotal for achieving the consumers ultimate preference and purchase.

Segmenting dimensions of consumer markets include behavioural, geographic and demographic dimensions.

Segmenting dimensions of business markets include sector, industry, geographic, location and size dimensions

Differentiating and Positioning Competitive advantage exists when the marketing mix of the company is perceived by the target market as superior to those of the company’s competitors.

Positioning refers to how customers regard proposed and/or present brands in the market

Segmentation Targeting Positioning

Consumer Behaviour

Situation

Problem Recognition

Information Search

Evaluation and Selection

Store Choice and Purchase

Post-Purchase Processes

SOR Model

Stimulus Organism Response

Maslow’s Hierarchy

1. Physiological – health foods, medicines, exercise equipment 2. Safety – smoke detectors, preventative medicines, retirement investments, insurance.3. Belonging – personal grooming, foods, entertainment, clothing 4. Esteem – clothing furniture, alcohol, hobbies, cars5. Self actualisation – education, hobbies, sports, holidays, charities

Maslow’s hierarchy of needs Is a theory designed to account for most human behaviours in general terms. While it appears to be a good guide to general consumer behaviour, it has been submitted that Maslow’s Hierarchy is too simple to be of any use to marketers. This essay will consider the advantages and disadvantages of Maslow’s Hierarchy of needs before concluding whether or not it is too simple to be of any use to marketers. Does not consider ‘other’ human behaviours: Smokers, gamblers, anorexia Religious sects and cultures Not everyone prioritises like that eg, life insurance v clothes

Just because people prioritise like that doesn’t mean people are going to purchase particular products on that basis, the Hierarchy might not be a good basis for advertising water as essential, when people may buy particular brands of water. Products might fulfil 2 ‘needs’

Perception Process

Exposure Attention Interpretation Memory

Situations Influences

1. Communication situation2. Purchase situation3. Consumption situation

Purchase Involvement

Refers to how much interest you have in the decision, specifically the level of concern, or interest in, the purchase process, once the purchase process has been triggered by the need to consider a particular purchase.

The level of perceived personal importance and/or interest evoked by a stimulus or stimuli within a specific situation.

The level of involvement can be assessed by recognising the importance of negative consequences, subjective probability of incorrect purchase, pleasure value and sign value (what the product says about the purchaser).

Three types of decision making

Habitual – A purchase decision effectively involving no decision as such, occurs when there is very low involvement with the purchase and results in repeat purchasing behaviour. Habitual decisions can be divided into two distinct categories, brand loyal decisions and repeat purchase decisions.

Brand loyal decisionsDecisions made by the consumer who displays a high degree of product involvement and emotional attachment to that brand.

Repeat purchase decisionsA pattern of consumer behaviour that involves the purchase of the same good or service over time, with or without loyalty to that good or service.

Limited – Decision making that covers the middle ground between habitual decision making and extended decision making. In its simplest form, very similar to habitual decision making, for example, a consumer may select a product without seeking information beyond internal memory, in addition, no other alternative may be considered.

Extended – the response to a very high level of purchase involvement. An extensive internal and external information search is followed by a complex evaluation of multiple alternatives, after the purchase, uncertainty about its correctness is likely, and a thorough evaluation of the purchase will take place.

The Process of Problem Recognition

Problem Recognition – A consumer problem is a difference between an actual state and a desired one.

Desired State – the condition the consumer would like to be in at this point in time.

Actual State – the condition the consumer perceives him or herself to be in at this point in time.

Without recognition of a problem, there is no need for a consumer decision. When there is no discrepancy between the consumer’s desired state and actual state, no action results.

When there is a discrepancy between actual and desired state, recognition of a problem occurs.

The desire to resolve recognised problems depends of the:-1. Magnitude of the discrepancy; and the 2. Importance of the problem.

Active Problem – a problem the consumer is aware of, or will become aware of in the normal course of events

Inactive Problem – a problem of which the consumer is not yet aware. These types of problems require marketers to convince consumers a problem exists.

Adopter Categories

1. Innovators2. Early adapters3. Early majority4. Late majority5. Laggards

Business to Business Marketing

Business to Business Markets1. Producers – acquire goods and services to produce other goods and services2. Intermediaries – retailers 3. Government Markets – goods and services that assist them with carrying out their function4. Non – profit organisations

Buying InfluencesBuying Centre

1. Buyers2. Influencers3. Deciders4. Gatekeepers5. Users

Organisational buying processes

New-task buying – new need new information required evaluate establish order proceduresStraight re-buy – routine purchaseModified re-buy – review of buying situation is required

Buying Process1. Problem recognition2. General need description3. Product specification4. Supplier search5. Proposal solicitation6. Order7. Performance review

Steps in Selling to Government1. Get to know government market2. Develop relationship/promote product3. Tender for business4. Utilise advantage

Product and Branding

Product - Need-satisfying offerings of an organisationQuality – ability of a product to satisfy a customer’s needs or requirementsProduct Mix – set of all products and lines belonging to a companyProduct Line - set of closely related productsThree levels of product

1. Core product – benefit2. Actual product – packaging, quality, brand names, features, styling3. Augmented product – installation, warranty, delivery and credit, after sales service

Branding

The use of a brand, term, symbol or design to identify a product or service

Advantages of Branding to Consumers Easy identification of productsAssurance of quality and of regular satisfactionPrestige, status symbolsCultural, sub-cultural meanings, expressiveBrands can become a part of lives and relationships

Advantages of Branding to Manufacturers Encourages repeat buyingAids development of loyalty – attitudesProduct differentiationHelps in launching new productsAllows for price differentialsAids in segmentationEnhances company’s image

Product Life Cycle

New-product development can extend the product lifecycle, providing the answer to changing customer needs.

Product Life Cycle

1. Market introduction Objective – Create product awareness and trial Selling and trade promotions, advertising and distribution

2. Market growth

Objective – Maximise market share

Advertising and promotions are keyDistribution channels are added as demand increasesProduct features and support may be added

3. Market maturity

Objective – maximise profit while defending market share

Price, merchandising and trade promotions are keyOften lower prices to match or undermined competitors

4. Sales declineObjective – reduce expenditure and milk the brand

Price and POS merchandising are keyDistribution becomes more selectiveAdvertising is cut back, is remind orientated

New product development process

Idea generation screening idea evaluation development commercialisation

Idea generation – customers and users, market research

Screening – Strengths and Weaknesses, ROI estimates, market trends

Idea evaluation – concept testing, reactions from customers

Development – develop model/prototype, test marketing mix

Commercialisation – finalise product and marketing plan, start production and marketins

Distribution Issues

Place decisions - Offering products to consumers at the right time, in the right place, in the right quantity

Direct Distribution - manufacturer to consumer

Traditional Channel System – Manufacturer Wholesaler Retailer Consumer [supply chain]

Vertical Marketing Channel – the whole channel focuses on the same target market at the end of the channel. [streamline] --- corporate channel systems, administered channel systems, contractual channel systems

Pricing Strategy

Profit orientated- Target return- Maximise profits

Sales orientated- Dollar/unit sales growth- Growth in market share

Status Quo orientated - Meeting competition- Non-price competition

Price Level Policies

Price skimming – selling to the top of the market at a high price, before aiming at more price sensitive customers

Penetration Pricing – attempting to sell to the whole market at one low price

Competitive Pricing – setting prices relative to the competition

Legal Aspects of Pricing

Price Fixing – competitors illegally getting together to raise or stabilise pricesMisleading Price Lists –suggesting that prices consumers are paying has been discountedResale Price Maintenance – producer setting a minimum price that goods may not be sold belowBait Pricing - setting very low prices to attract customers, but selling more expensive brands in store

Key Factors that Influence Price Setting

Pricing objectivesPrice flexibilityDiscounts and allowancesLegal environmentGeographic pricing termsMark-up chain in channelsCompetitionCostDemandPrice of other products in the line

Communications and Promotional Mix

Communication Process Signs are used. Culturally and segmentely based.

Source/sender Encoding Channel Message Decoding Receiver

Noise & Feedback

Sources – who sends the message, ie celebrity, organisationEncoding – verbal, graphic, musical, animationChannel Message – personal (arguable more effective) or non-personal (reaches more people)Noise –distractions

Marketing Communications Mix

1. Advertising2. Sales promotion3. Sponsorship4. Public Relations and Publicity5. Personal Selling6. Direct Marketing

Television Advertising

Strengths Demonstration abilityIntrusion values – engage senses and attract attention even when you prefer not to be exposed. Ability to generate excitementOne-to-one reachAbility to use humourEffective with sales force and tradeAbility to achieve impact

Limitations CostAudience fractionalisation - dvd, pay tv, many programs to chose from, internet popularityZapping – channel surfer Zipping – fast forwarding Clutter Fleeting messageLimited viewer attention

Radio Advertising

Advantages of RadioCost and efficiencyAbility to reach segmented audiencesIntimacy

Short lead times/flexibility (can make changes quickly, can change which ad plays when)Transfer of imagery from televisionUse of local personalitiesIntegrated marketing opportunites

Disadvantages of RadioClutterNo visualsAudience fractionalisationBuying difficultiesLimited listener attentionCreative limitations

Newspaper Advertising

Strengths Audience in appropriate mental frame to process messagesMass audience coverageFlexibilityAbility to use detailed copyTimeliness“Comparison shopping” advertisers with competitive advantage can benefitAdvertisements seen as current and credible

LimitationsShort lifespanClutterNot a highly selective mediumHigher rates for occasional advertisersMediocre reproduction qualityComplicated buying for national advertisersChanging compositions of readersLimited coverage of certain groups

What is Sales Promotion “ any incentive used by a manufacturer to encourage distributors, such as wholesalers, retailers or other channel members, and/or consumers, to buy a brand”(Promotion is generally short term)

Objectives of Sales Promotion Facilitate the introduction of new products Obtain trial purchases Increase product usage Invigorate sales of a mature brand Neutralise competitive ads and promotions Pre-empt competitors Reinforce advertising Hold current users Stimulate the sales force Increase on- and off-shelf merchandising space

Sponsorship MarketingEither Event or Cause-Orientated SponsorshipInvolve investments in events or causes for the purpose of achieving various corporate objective

Why Growth in SponsorshipsAvoid the clutter inherent in advertising mediaHelp companies respond to consumers’ changing media habitsHelp companies gain the approval of various constituenciesCan enhance brand equityEnables marketers to target their efforts to geographic regions and/or to lifestyle groups

The Practice of Public Relations Creating goodwill is a goal of most public relations programs Public relations is sometimes mistaken for publicity (getting news media coverage) Public relations is defined as helping “an organisation and its publics adapt mutually to each

other”

Product releasesAnnounce new productsProvide relevant information, features and benefitAudiovisual product releases (video news releases, or VNRs) gained wide usageExecutive Statements:News releases quoting CEOs and other corporate executivesMay address a wide variety of issuesPublished in the news sectionCarry a significant degree of credibilityFeature Articles:Detailed descriptions of products or other newsworthy programs Written by a PR firm for immediate publications or airing Inexpensive to prepare

Advertising Functions1. Informing – usage expansion advertising2. Persuading3. Reminding – influence brand switching if haven’t used product in a while4. Adding Value – 3 ways to do this, improve quality, innovate, change customer perceptions5. Assist other company efforts – Integrated Marketing Communications

Consumer Adaption Process – response to advertisingAttention InterestDesireAction

Push vs Pull

Push Advertising – normal marketing, where information is given to consumers, directed at retailers to gain their support

Pull Advertising – making consumers ask for a product/further information from retailers

Budgeting

Top Down BudgetingAmount allocated by Management

Percentage-of-sales budgeting

Competitive parity method

Affordability method

Arbitrary allocation

ROI

Bottom Up Budgeting

Objective-and-task method generally regarded as most defensible advertising budgeting method specify what role they expect advertising to play for a brand and then set budget

accordingly

International Marketing

What is international marketing

- The process of planning and undertaking transactions across national boundaries.- Subject to different set of macro-environmental factors and constraints

Why is international marketing important

- Economic contribution of exports- Australian jobs depend on exports- Exporting firms pay higher wages- More consumer choice and power to Australians

“Internationalisation” and reasons for it

- Saturation of the domestic market- Movement of customers- Risk diversification- Sourcing- Government incentives- Technological advances- Retaliation to competition

Success factors in International Marketing

Understanding the external environment Company issue Marketing factors

o Competitiono Market structureo Consumer issueso Market research

E-commerce and International Marketing- Improve/d communications- Generation of information- Powerful sales and promotion tool- Revenue enhancement

Customer Service and Relationship Marketing

Customer Satisfaction

Expectations influence perceived performance. Expectations are the set of outcomes expected by consumers before entering into an exchange while perceived performances is the way a good or service delivers benefits, as perceived by the customer.

Consumer satisfaction/dissatisfaction depends upon– Expectations – Perceived performance (instrumental, symbolic and affective)– Satisfaction/dissatisfaction and re-purchase intention

The instrumental performance of a product refers to the physical or functional performance of the products.

Symbolic performance refers to the aesthetic or image enhancement performance of a product.

Affective performance is the emotional response that owning or using a product provides.

Expectations are based on:Word of mouthThe four PsPast experience

Measuring Customer SatisfactionConsumer focus groupsBenchmarkingTransaction based surveysComplaint managementMystery shoppers

Service Quality

(quality of what was done) Technical Quality v Functional Quality (How it was done/delivered)

Can compensate each other.

The GAPS model of service quality

Gap 1 - The company does not fully understand the customer’s expectations of the product requiredGap 2 – The managers have difficulty in translating their understanding of expectations into product specificationsGap 3 – A discrepancy between customer-drive product standards and what the company actually delivers Gap 4 – Difference between what is promised by a marketer and what is delivered to the customer Gap 5 – difference between customer expectations and their perception of what they receive

Types of Customer LoyaltyIncludes attitude and re-buying

1. Switching cost loyalty2. Differentiated loyalty (technical advantage)3. Social contract loyalty (receive an advantage - frequent flyer)4. Familiarity loyalty (Coke)5. Convenience loyalty (McDonalds)6. Identity loyalty (Rolex)7. Emotional loyalty

Relationship Marketing

Refers to strategies which aim to build and develop long-lasting and profitable relationships with customers.

Recognises that while getting new customers is fundamental to success, keeping them is more important.

Relationship Marketing Ladder of Customer Loyalty

1. Prospect2. Customer3. Client4. Supporter 5. Advocator

Implications of RM

Delivering satisfaction is vital for tomorrow’s businessLoyalty is an asset and must become the focusConstant improvement must be undertakenLarge number of contacts with customersConsistency is important throughout all contactsPersonal relationships take an important role

Profit/Potential GridProfit Contribution

Potential

Large share of big walletRetain

Small share of big walletAcquire

Large share of small walletReactive

Small Share of small walletDiscourage

Direct Marketing

What is Direct Marketing

The total of activities by which the seller directs efforts to a target audience using one or more media for the purpose of soliciting a response by phone, mail, or personal visit from a prospect or customer

Marketing material sent directly to the consumer that is designed to create an immediate response. This response is often in the form of creating sales, but it can also be responses as to commit to attending a launch event, or to provide personal information.

It is interactive.

Advantages of DM

Selective reach, which lets the advertiser reach a large number of people, while minimizing waste coverage.Segmentation capabilities, based on geographic area, occupation, demographics, job title, and more.Frequency potential, which means how often the target market is exposed to the ad. Flexibility. Ad creativity is limited only by the imagination of the person creating it and the medium being used.Timing. Direct marketing materials can often be put together and distributed quickly, unlike other media, which may require long-range planning.Personalization. No other advertising medium can personalize the message as well as a direct media.Costs. The ability to target the audience and eliminate waste coverage reduces the actual CPM.Measurement of effectiveness. Feedback is often immediate and always accurate.

Disadvantages of DM

Image factors. The mail segment of this industry is often referred to as junk mail, and junk emails fare no better.Accuracy. Computerization has greatly improved the accuracy and currency of lists, but the cost of generating a lead can be expensive, depending on the quality desired.Content support. Mood creation is limited to the surrounding program and/or the editorial content.Rising costs. As postal rates and print costs increase, direct-mail profits are immediately impacted. “Do not contact” lists. Do Not Call lists now exist for both land and cell phones, and a “Do Not Contact” list for junk mail is under consideration.

Advantages of Internet MarketingTarget marketingMessage tailoringInteractive capabilitiesInformation accessSales potentialCreativityExposure/speedComplement to Integrated Marketing Communications

Disadvantages of Internet Marketing

Measurement problems, such as unreliable research numbers.Annoyance with such things as slow download, having to install additional software, and navigation difficulty.Clutter. As the number of ads increases, the likelihood of your ad being noticed drops accordingly.Potential for deception. The Center for Media Education has referred to the Web as “a web of deceit” in regard to advertisers’ attempts to target children with subtle advertising messages. In addition, data collection often occurs without the consumers’ knowledge, and hacking and credit card theft are major issues.Privacy. Like their direct-marketing counterparts, Internet marketers must not impinge upon the privacy of users.Poor reach. Although Internet numbers are growing by leaps and bounds, its reach still lags behind television.Irritation. Consumers are unhappy with clutter, email SPAM, pop-ups, and pop-unders.

Marketing Management

Marketing Management Process

1. Planning2. Implementation3. Controlling

Two Approaches of Forecasting1. Extending past behaviour 2. Predicting future behaviour

Typical Marketing Planning Format1. Analysis – where are we now, situation analysis, SWOT, environment and competitor 2. Objectives - SMART3. Strategy – how and can we do this 4. Tactics - how and can we do this5. Audit – can it be done, considers all previous steps, realist, unbiased6. Implementation

a. Allocating skills (budget)b. Monitoring (system of controls)c. Organisation (effective and efficient)d. Interacting (motivating, communication)

TQM – Total Quality Mix, quality of the whole marketing mix

Personal Selling

Personal selling involves a person-to-person communications process. The emphasis placed on personal selling varies from firm to firm, and depends on the product or service being marketed, the size of the organization, and the type of industry.

In an integrated marketing communications program, personal selling is a partner with, not a substitute for, other promotional mix elements.

Selling Process• Approach• Presentation• Demonstration• Overcoming objections• Close• Follow-up

Personal Selling Tasks

Creative selling – requires skill and preparation, and the ability to assess the situation and determine needs, present capability to satisfy those needs, and get an order.

Order taking – role is more casual and often involves straight re-buying by the customer but can also involve modified re-buys which requires creative selling

Supporting Sales People -Missionary sales rep, role is one of supporting and servicing the customer rather can trying to get new business

Advantages of Personal Selling

Two-way interaction with prospectMessage can be tailored to recipientProspect isn't likely to be distractedSeller involved in purchase decisionSource of research information

Disadvantages of Personal Selling

Messages may be inconsistentCost is often extremely highReach may be very limited

Quantitative Measures of Sales ResultsOrders – number, average order size, batting average, cancellationsSales volumes – dollars, units, customer type, product category, market share, percent of sales quota achievedMargins – gross, net profit, by customer type, by product categoryCustomer accounts – new accounts, lost accounts, percentage of accounts sold, overdue accounts, a/r amount, a/r collections madeSales calls – number made on current and potential new customers, time spent per call, selling vs. non-selling time, frequency ratioSelling expenses – per sales call, percentage of sales volume, percentage of sales quota by customer type, product category, direct and indirect selling ratiosCustomer service – number of service calls, delivery costs per unit sold, displays set up, inventory time, number of customer complains, percentage of goods returned

Qualitative Measures of Sales ResultsSelling skills – knowing the company and its policies, knowing the competition, understanding and executing selling techniques, customer feedback, product and customer knowledge, quality of sales presentations, and communication skills.Sales related activities – territory management, marketing intelligence, follow-ups, customer relations, reports, and personal characteristics

TYPES OF SALES JOBS:

Trade selling:o build sales volume by providing customers with promotional assistanceo servicing accounts

Missionary selling:o Typically employees of manufacturerso sells for its direct customers

Technical selling:o Trained in fields such as chemistry, engineering, computer science, accountingo Must be knowledgeable about company’s product lines and be able to communicate

complicated features to prospective customers New-business selling:

o Salespeople must continuously call on new accountso Continually work to open new accounts because sales to most customers are

infrequent Retail selling:

o Customer comes to the sales persono Varying levels of expertise required

Telemarketing:o Uses outbound calls from telephone salespeople to (a) open new accounts and (b)

qualify advertising leads and (c) service existing business including re-orders etco Used in conjunction with advertising, direct mail, face-to-face, catalogue mail

o Nb: not appropriate for all sales organisations Team selling:

o Trend in recent years towards use of selling teams to combine reps from marketing, logistics, finance, sales, other corporate units

o Eg Proctor&Gambleo Usually coordinated by an account executive

Salesperson Performance Honesty Lose a sale graciously Admit mistakes Problem-solving capabilities Friendly but professional Dependable Adaptability Know the business they’re prospecting Well prepared Patient

Ethics

Teleology

The moral worth of behaviour is determined by its consequences

An action is morally right if it produces the greatest good for the greatest number of people

The end justifies the means

It is a broad picture approach and emphasis on doing what is best for the collective good

Problem with theory – common good can come at unreasonable expense to an individual

Deontology

The worth of the behaviour is judged by the nature of the act itself

No matter how good the consequences of an action, an unethical means to achieve it is never justified

Highlights that it is the decision-maker’s responsibility to examine actions and impacts

It is difficult to apply, may not have a win-win situation

Relativism

What is right or wrong matters but it depends on each individual’s or society’s point of view.

Actions must be taken on case-by-case basis

Strength of theory –the respect for values and practices in different countries

Weakness of theory – it is often used as a justification for immoral behaviour