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Wed pgd 7 -10 am School of Entrepreneurship, Procurement and Management (SEPM); Department of Entrepreneurship and Technology, Leadership and Management (ETLM) HPS 2110: PRINCIPLES OF MARKETING Prof. Henry M. Bwisa [email protected] com; www. mukmik. co. ke 0722858507 5/30/2016 H. M. BWISA 1
Disclaimer • Some materials used in compiling these notes were obtained from a number of internet sources. This was done in full recognition of copyright and plagiarism rules and regulations and the aspects which allow for fair use including teaching purposes.
My delivery philosophy 1946 Confucius 450 BC David Kolb - 1984 5/30/2016 Benjamin Bloom 1956 H. M. BWISA 3
Teaching method and instructional materials INSTRUCTIONAL METHODS • Lectures and readings • Group and individual assignments and discussions • Field studies and observations • Case studies • INSTRUCTIONAL MATERIALS • Boards, lecture notes, reading materials, case studies/successful stories, computer, and projector. 5/30/2016 H. M. BWISA 4
COURSE STRUCTURE ACTIVITY START-END DURATION % OF TOTAL TIME CLASSROOM LECTURES WEEK 1 -4 4 WEEKS 27 FIELD WORK WEEK 5 - 11 7 WEEKS 47 CLASS PRESENTATIONS WEEK 12 -14 3 WEEKS 20 EXAMINATION WEEK 15 1 WEEK 06 TOTALS WEEK 1 -15 15 WEEKS 100 CHANGES IN SEMESTER DURATION WILL BE ACCOMMODATED ON PRO RATA BASIS 5/30/2016 H. M. BWISA 5
Unit course assessment • ASSESSMENT MODE MARKS • • • Class participation 10% Group presentations 20% Continuous assessment tests 20% End of semester project 50% TOTAL 100% 5/30/2016 H. M. BWISA 6
Course evaluations • The course will be evaluated via class participation, group presentations and an end of semester project as an examination • CATs will comprise of regular classroom queries and class presentations • End of semester project will be a practical assignment that addresses real issues in the Kenyan environment and calls for the application of theoretical knowledge gained from this unit in particular and other course units in general 5/30/2016 H. M. BWISA 7
The philosophy and approach of the course The course will be conducted on Confucius’ philosophy of: • I hear and I forget • I see and I remember • I do and I understand 5/30/2016 H. M. BWISA 8
References 1) MAKE COMPREHENSIVE USE OF THE INTERNET ENGINES 2) For general aspects visit www. professorbwisa. com; www. mukmik. com 5/30/2016 H. M. BWISA 9
CAT AND EXAMINATION ASSIGNMENTS CAT • • In a group of not more than three: 1. Select a micro, small or medium enterprise in Kenya or around the university. 2. Research the background, skills, and experiences of the business owner. 3. Answer the following questions: a. b. c. d. e. What education and work experience does the owner have? What marketing skills does the owner possess and how did (s)he develop them? What marketing philosophy does the own employ? Describe the owner’s personality traits. How did they help or hinder? Was the entrepreneur a solo founder, or did they have a partner or a team of founders? How did this help or hinder them? EXAMINATION Brand yourself as a marketer, identify a product you want to market and present its canvas.
Qualities/characteristics of marketers Quality Explanation M A MINDFULNESS Mindful of others. Place themselves in customer shoes, empathize ACTION-ORIENTED Take practical action to solve problems. Do not shy away from difficulties R RESULT-ORIENTED Positive and optimistic about results. See a glass as half full rather than half empty or halfway K E KINETIC Work hard. Don’ t wait for business to come to them; they go for it. ENVISAGE/ENVISION Know what they want to accomplish, set SMART goals and objectives. They visualize their target T E TOLERANCE Are persistent. Tolerate difficulties including difficult customers ENQUIRING Ask clients and prospects plenty of quality questions to fully determine their situation and buying needs. R RESPONSIBLE They do not blame others if they fail to meet their sales quotas. They take the blame. S SELF-CONFIDENT Have high self-esteem. Believe in themselves © hmbwisa
Traits Buyers Like and Dislike Desirable Traits 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Knowledgeable Empathizes Well organized Prompt Follows through Has solutions Punctual Hard working Energetic Honest Objectionable Traits 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Unprepared Uninformed Aggressive Undependable No follow through Presumptive Walk-ins Gabbers Problem avoiders No personal respect
Your Business Canvas template
Guide to filling business canvas My product will be……………… Customer Segments: the customers for this product are/will be ………. . Value Propositions: the value I will give the customers is ……. . Channels: I will reach he customers via………. Customer Relationships: I will interact with customers by………… Revenue Streams: this is how the product will earn me money………. . Key Activities: my unique activities will include ……………. Key Resources: I will require the following resources…………. . Key Partnerships: I will require the following partnerships…………… Cost Structure: I will spend on the following things……………… the following estimates…………….
• • • RULES FOR THE END OF SEMESTER EXAMINATION YOU MAY WORK IN GROUPS BUT THE END PROJECT MUST BE INDIVIDUAL PROJECTS FOUND TO BE SIMILAR WILL BE CONSIDERED AN EXAMINATION IRREGULARITY (CHEATING) AND MARKED OUT OF ZERO PERCENT A SOFT COPY OF THE PROJECT MUST BE SUBMITTED TO [email protected] com LATEST A DAY BEFORE THE OFFICIAL UNIVERSITY EXAMINATION DATE A HARD COPY MUST BE SUBMITTED (NO PRESENTATIONS) IN PERSON ON THE OFFICIAL UNIVERSITY EXAMINATION DAY EVERY STUDENT WILL SIGN THE EXAMINATION ROLL CALL ON SUBMISSION OF THE HARD COPY FAILURE TO SUBMIT BY THE SAID DEADLINES WILL BE DEEMED AN EXAMINATION FAILURE I. E. A ZERO MARK WILL BE AWARDED
From the course syllabus • Marketing overview (definition). Marketing philosophies, Marketing information systems(market research and marketing intelligence), marketing environment, consumer behaviour, marketing segmentation, market targeting, market positioning, product decisions, promotional decisions, pricing decisions, distribution decisions, extended marketing mix of service marketing. Tasks performed by marketing managers. Marketing management philosophies. Influences of the micro and macro environmental factors in a firm’s marketing activities. Ethical Issues in Marketing
• Marketing overview (definitions).
Definition l Marketing: The process of creating consumer value in the form of goods, services, or ideas that can improve the consumer’s life.
What is marketing ? l More than selling and advertising l Identifying and satisfying customers needs l Range of activities (marketing mix - 4 P’s)
What is Marketing? Learning to make what you can sell vs. selling what you can make. Identifying and satisfying customer needs and wants.
Peter Drucker l l l Goal of all organizations is to gain and retain customers Innovation and marketing are the only two ways to achieve the goal “The rest only adds cost”
l The AMA managerial definition: l “Marketing is the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational objectives. ”
l Marketing Involves having the Right Product available in the Right Place at the Right Time and making sure that the customer is Aware of the Product.
• Marketing philosophies A philosophy is a theory or attitude that acts as a guiding principle for behaviour.
MARKETING CONCEPTS • There are FIVE competing concepts under which organizations conduct their marketing activities: • • • The Production Concept The Product Concept The Selling Concept The Marketing Concept The Societal Marketing Concept
(1) THE PRODUCTION CONCEPT Company Produce more & more Produce Sell Practically sells itself Consumers
THE PRODUCTION CONCEPT • Consumers will favour those products that are widely available and low in cost. • Therefore increase production and cut down costs. • And build profit through volume.
(2) THE PRODUCT CONCEPT Produce Quality Products Sell Practically sells itself, if it gives most quality for money Consumers Buyers admire well-made products and can appraise product quality and performance.
THE PRODUCT CONCEPT • Consumers will favour those products that offer the most quality, performance, or innovative features. • Therefore, improve quality, performance and features. • This would lead to increased sales and profits.
(3) SELLING CONCEPT • Consumers have normal tendency to resist. Produce Sell it Aggressive selling & promotion efforts Consumers Making sales becomes primary function and consumer satisfaction secondary.
THE SELLING CONCEPT • Consumers , if left alone , will not buy enough of company’s products. • Therefore, promote sales aggressively. • And, build profit through quick turnover.
(4) MARKETING CONCEPT • “ LOVE THE CUSTOMER , NOT THE PRODUCT ” Consumers Learn what they want(MR) Produce it Market it Sell what they want(Satisfy needs of customers)
THE MARKETING CONCEPT • The key to achieving organizational goals consist in determining the needs and wants of target markets and delivering the desired satisfactions more effectively and efficiently than competitors. • And build profit through customer satisfaction and loyalty.
(5) THE SOCIETAL MARKETING CONCEPT • It is Marketing Concept (+) Society’s well being. • Balancing of following three considerations while setting marketing policies : -Customer’s want satisfaction -Society’s well being -Company’s profits
THE SOCIETAL MARKETING CONCEPT • The societal marketing concept holds that the organization’s task is to determine the needs, wants, and interests of target markets and to deliver the desired satisfactions more effectively and efficiently than competitors in a way that preserves or enhances the consumer’s and the society’s well being. - It addresses conflicts between consumer’s and firm’s short run wants and long term welfare.
SELLING AND MARKETING CONCEPT CONTRASTED
STRATEGIC CONCEPT OF MARKETING • Shifted the focus of Marketing from Product or customer to the CUSTOMER IN THE CONTEXT OF THE BROADER EXTERNAL ENVIRONMENT. To succeed, marketers must know the customer in a context including the competition, Govt. Policy& regulation and the broader economic, social and political macro forces that shape the evolution of market.
Management Philosophies Orientati on Focus Characteristi cs & aims Producti on Manufact -Increase production uring “Any colour you want – as long as it’s black” Product Goods “Just look at the quality of the paintwork” -Cost reduction & control -Make profit through volume -Quality is all that matters -Improve quality levels -Make profit though volume Eavesdroppi ng Main Era USA (generalised) Up to 1940’ s West Euro pe Up to 1950’ s East Euro pe Late 1980’ s Up to 1940’ s Up to 1960’ s Largel y omitte d Source: Brassington, F. & Pettit, S. (2000) Principles of Marketing 2 nd ed, UK: FT/Prentice Hall
Management Philosophies Orientati on Focus Characteristi cs & aims Eavesdroppi ng Main Era (generalised) USA West Euro pe 1950 – 1960’ s East Euro pe Early 1990’ s Mid 1990’ sonw ard Selling -Aggressive sales Selling & what’s promotion produced -Profit through – seller’s quick need turnover of high “You’re not keen about black? What if I throw in a free sun roof” 1940 – 1950’ s Marketin g Defining what customer s want – buyer’s need volume -Integrated marketing -Defining needs in advance of production -Profit through customer satisfaction & loyalty “Let’s find out if they want it in black, and if they would pay a bit more for it” 1960’ 1970’ s s onwar d d Source: Brassington, F. & Pettit, S. (2000) Principles of Marketing 2 nd ed, UK: FT/Prentice Hall
The selling and Marketing Concepts Contrasted Starting point Focus Factory Existing products Means Selling and promoting Ends Profits through sales volume The selling concept Market Customer Integrated needs marketing Profits through customer satisfaction The marketing concept 41
Marketing information systems(market research and marketing intelligence)
Marketing Information System • A marketing information system is a set of procedures to collect, analyze and distribute accurate, prompt and appropriate information to different levels of marketing decision makers • “A system that consists of people, equipment and procedures to gather, sort, analyze, evaluate and distribute needed, timely and accurate information to marketing decision makers (Philip Kotler)
Marketing Information System • CHARACTERISITICS • It is planned system developed to facilitate smooth and continuous flow of information • It provides pertinent information (both internal and external) for making marketing decisions • It provides right information at right time to the right person
Marketing Information System • MKIS & IT • With the advent of computer technology, MIS provides direct access to the database for the managers • This is called as MARKETING DECISION SUPPORT SYSTEM (MDSS) • The system called Marketing Decision Support System (MDSS) links a decision maker to relevant database • Companies perform Data Warehousing to organize and store huge information • The process of searching through information in data warehouse to identify meaningful patterns that guide decision making is called Data Mining
BENEFITS OF MKIS • Carry out marketing analysis, planning, implementation and control more effectively • Effectively utilize the marketing opportunities and overcome potential threats • Provides marketing intelligence to the firms and helps in early spotting of changing trends • Helps the firms to adapt its product and service to the needs and tastes of the customers • Helps in improving the quality of decision making by managers
TYPES OF MARKETING INFORMATION • MAKIS provides three types of information 1 - Recurrent Information • This is the periodic data supplied by MIS on weekly, monthly, quarterly or annual intervals • This includes data pertaining to sales, market share, sales call reports, inventory levels, payables, receivables, customer awareness of company’s brands, ad campaigns, data relates to competitors etc
TYPES OF MARKETING INFORMATION 2 -MONITORING INFORMATION • This pertains to data obtained from regular scanning of certain sources such as trade journals and other publications • The data relates to the changing trends, competitors activities etc • Some of these data is purchased by companies from Market Research agencies, govt sources etc
TYPES OF MARKETING INFORMATION 3 -PROBLEM RELATED OR CUSTOMIZED INFORMATION • This information is developed in response to some specific requirements related to a marketing problem or any particular data requested by a manager • This consists of both primary data as well as secondary data • Such data is collected by conducting market research study with adequate sample size
COMPONENTS OF MIS • The diagram represents the following components of mis o 1. Internal Record System o 2. Marketing Intelligence System o 3. Marketing Research System o Analytical Marketing System
MARKETING INFORMATION SYSTEM MKTG ENVN INTERNAL REPORTS SYSTEM Target Marketing Channels Competitors Publics MKTG RESEARCH SYSTEM MKTG MGRS Analysis Planning Implementation Control Macro Envn Forces MKTG INTELLIGENCE SYSTEM ANALYTICAL MKTG SYSTEM
• 1 - INTERNAL RECORD SYSTEMrecords related to (i) This comprises of the internal Order to Payment Cycle and (ii) Sales Information System 1. ORDER TO PAYMENT CYCLE • This provides the following: o o o Timing and size of orders placed by consumers The payment cycle followed by consumers The shortest time taken to fulfill the orders o o o Decide production and dispatch schedule Inventory and accounts receivable schedule Logistics and distribution management schedule • This helps the managers to plan the following activities
1 - INTERNAL RECORD SYSTEM 2. SALES INFORMATION SYSTEM • This record all the activities in the sales department • This comprises of the following: o Sales call reports to prospects o Sales territory information o Quota information o Information related to sales forecasting
2 -MARKETING INTELLIGENCE SYSTEM • This is a set of procedures and sources used by managers to obtain everyday information about developments in the marketing environment • This supplies data related to ‘happenings’ whereas internal record system supplies ‘results’ data • Marketing managers use the following methods to collect the data
2 -MARKETING INTELLIGENCE SYSTEM • Marketing managers use various methods to collect the data. The most important sources are: o o o Published sources such as books, magazines, journals etc Directly from customers, intermediaries and sales personnel Appointed specialists to conduct mystery shopping to collect data regarding competitors Competitors information is collected by buying their products, attending their press conference, trade shows and reading their annual reports Information is also collected from marketing research agencies
3 - MARKETING RESEARCH SYSTEM • This provides information to marketing managers to resolve the marketing problems • This involves conducting marketing research survey by collecting primary data • This may be either conducted by the marketing department of a company or it may be conducted by a marketing research organization
4 - ANALYTICAL MARKETING SYSTEMS OR MDSS • This is also called as marketing decision support system (MDSS) • This is a composite system that comprises of collection of data, systems, tools, techniques etc with supporting software and hardware by which an organization gathers and interprets relevant information from business and environment and turns it into a basis of marketing action • All the data generated through the other three systems are stored in a database which is retrieved by managers whenever they need it
MARKETING RESEARCH • “ The systematic design, collection, analysis and reporting of data findings relevant to a specific marketing situation facing the company” (PHILIP KOTLER) • FEATURES OF MARKETING RESEARCH o It is a systematic process carried out in a stepwise process o It should be objective and the research should not be carried out to establish an opinion o It is multi-disciplinary in the sense that it is related to Statistics, Economics, Psychology and Sociology
OBJECTIVE OF MR • To understand why consumers buy a product • To forecast future sales and market share • To assess competitive strengths and strategies • To evaluate the effectiveness of marketing actions already undertaken • To asses customer satisfaction
MR PROCESS Define the problem and research objective Develop the research plan and design Collect the information Analyze the information Present the findings
MR PROCESS • STEP I • DEFINE THE PROBLEM & RESEARCH OBJECTIVE • Proper definition of the marketing problem will lead to useful and relevant results which can solve the marketing problem • Usually research is conducted with one or more objectives and this forms the broad frame within which the research has to be conducted • STEP 2 • DEVELOP THE RESEARCH PLAN AND DESIGN • A research plan is a framework within which collection and analysis of data is undertaken • This involves decisions on the following a. Data sources b. Research Approaches c. Research Instruments d. Sampling Plan e. Contact Methods
MR PROCESS 1. Data Sources • The researcher has to decided which source of data to use – Primary data or secondary data • Primary data are freshly gathered for a specific purpose or a specific research project • Secondary data are data which collected for some other purpose or for commercial purpose of selling • Secondary data is cheaper and easy to collect but it should be checked for its reliability
MR PROCESS 2. Research Approaches • Research approach helps the marketer to collect primary data. There are five different approaches for collecting primary data: 1. Observational Research • Fresh data is collected by observing people and situation 2. Focus Group Research • This is a group discussion method in which eight to twelve people are involved in the presence of a skilled moderator to discuss a product, service, a firm or any marketing related activity • The proceedings are observed and recorded in videotape to analyze consumer attitudes, beliefs and behavior
MR PROCESS 3. Survey Research • Survey is undertaken with the help of questionnaires 4. Behavioral Research • Customers’ actual behavior in terms of actual purchases are obtained 5. Experimental Research • This is the most scientific method of research which tries to capture cause and effect relationship
MR PROCESS 3. Research Instruments • The instruments used in research can be of two types. They are (i) Questionnaire (ii) Mechanical Device 1. Questionnaire • This is the most commonly used to instrument which is highly flexible 2. Mechanical Device • Mechanical devices such as galvanometers, eye cameras, audiometers etc are used as research instruments
MR PROCESS 4. Sampling Plan • The researcher has to prepare a sampling plan that should outline the following: o Who should be surveyed (Sampling Unit) o How many should be surveyed (Sample Size) o How should they be selected for the survey (Sampling Procedure)
MR PROCESS 1. Sampling Unit • Researcher must define the element of the target population by whom information shall be collected 2. Sample Size • Sample size is decided based on the nature of the study and variance in the population, level of accuracy desired and the budget available for research 3. Sampling Procedure • Two types of methods are available for selecting samples – Probability Sampling & Non-Probability Sampling
MR Process 5. Contact methods • The choices of methods available are as follows: 1. Mail Questionnaire • This is the best way to reach people • The questionnaire should be simple and clearly worded so that respondents can fill up the answers without any assistance 2. Telephone Interview 3. Personal Interview 4. Online Interviews
MR Process • Step III – Collect the Information • After designing the research instrument, the researcher should now actually contact the respondent and collect the information • At this stage, it is very important to keep the quality of the data under control by ensuring accurate unbiased answers and by seeking the entire respondent’s cooperation. • The data collectors should be well trained
MR Process Step IV: Analyze the information • In this stage researcher collects the data and codify it • Nowadays, many questionnaires are precoded • The coded data is then tabulated • Then the data is analyzed with the help of several statistical tools • Here the data is converted into information
MR Process Step V: Present the findings • The researcher should present the findings to the decision makers or users of the information • General format of report – Introduction – Statement of purpose – Research methodology – Analysis of data – Findings and conclusions – Recommendations – Appendix and bibliography
MR Process Advantages • Uses scientific approach in designing the problem and finding out alternative solutions • It helps to make better marketing decisions as they are based on authentic information • It helps in evaluating the effectiveness of various marketing actions • It is helpful in ascertaining the reputation of the firm and its products • It helps the firm in knowing the marketing and pricing strategies of its competitors • It is helpful to a firm in making sales forecasts for its products and thereby ensure harmony between demand supply
MR Process • • DISADVANTAGES Not an exact science It is not a panacea Human tendencies Inexperienced research staff Involves high cost Limitations of tools and techniques
Assessing Marketing Information Needs • A marketing information system (MIS) consists of people, equipment, and procedures to gather, sort, analyze, evaluate, and distribute needed, timely, and accurate information to marketing decision makers. • • 4 -75 Assess the information needs Develop needed information Analyze information Distribute information
The Marketing Environment • Marketing environment: – Factors and forces outside of marketing’s direct control – Affect management’s ability to develop and maintain – Successful transactions with target customers • Microenviroment: – Forces close to the company – That affect its ability to serve customers • Macroenvironment: – Larger, societal forces that affect the organization’s microenvironment
The Company’s Microenvironment • The company: – Management, finance, research & development, purchasing, manufacturing, accounting, and human resources • Suppliers • Marketing intermediaries: – Resellers – Physical distribution firms – Marketing service agencies – Financial intermediaries
The Company’s Microenvironment • Customers: – Consumer, business, reseller, government, and international markets • Competitors • Publics: – – – – Financial Media Government Citizen-action groups Local General Internal
The Company’s Macroenvironment • Demographic environment: – Study of human population – Size, density, location, age, race, sex, occupation, and education • Trends of interest: – World population growth – Increased diversity – Changing age structure within Canada – Changing households – Higher education – Geographic shifts
The Company’s Macroenvironment • Economic environment: – Factors that affect consumer buying power and spending patterns • Trends of interest: – Changes in income, continued spending by consumers – Consumer debt levels rising, savings down – Changing spending patterns • Engel’s laws: amount spent on various categories changes as income rises
The Company’s Macroenvironment • Natural environment: Growing shortages of raw materials Increased pollution Increased government intervention Canadian federal law: Environmental Protection Act (1989) – Green movement – Focus on environmental sustainability strategies – –
The Company’s Macroenvironment • Technological environment: New technology creates new markets and opportunities Replaces existing products and services Research and development activity drives this sector Canadian spending on R&D is low, ranked 15 th in the world – Government programs to encourage more – Government agencies to regulate new product safety – –
The Company’s Macroenvironment • Political environment: Laws, government agencies, and pressure groups Influence and limit organizations and individuals within a society Increasing legislation Increased emphasis on ethics and social responsibility – Cause-related marketing – Business legislation is used to protect consumers, businesses, and the interests of society – –
The Company’s Macroenvironment • Cultural environment: Institutions and other forces that influence Society’s basic values, perceptions, preferences, and behaviours Core beliefs passed on through family, reinforced by institutions Secondary beliefs are more open to change – People’s views of: – – • • • Themselves Others Organizations Society Nature The universe
Model of Consumer Behavior Consumer buyer behavior refers to the buying behavior of final consumers—individuals and households who buy goods and services for personal consumption Consumer market refers to all of the personal consumption of final consumers
Model of Consumer Behavior Marketing stimuli consists Other stimuli include: of the 4 Ps • Economic forces • Product • Technological forces • Price • Political forces • Place • Cultural forces • Promotion
Characteristics Affecting • Cultural Factors • Buyer’s culture • Buyer’s subculture • Buyer’s social class Consumer Behavior • Social Factors • Reference groups • Family • Roles and status
Characteristics Affecting • Personal Factors • • • Age and life-cycle stage Occupation Economic situation Lifestyle Personality and selfconcept Consumer Behavior • Psychological Factors • • Motivation Perception Learning Beliefs and attitudes
Characteristics Affecting Behavior Consumer Culture is the learned values, perceptions, wants, and behavior from family and other important institutions
Characteristics Affecting Behavior Consumer Subculture are groups of people within a culture with shared value systems based on common life experiences and situations • • Hispanic African American Asian Mature consumers
Characteristics Affecting Behavior Consumer Social classes are society’s relatively permanent and ordered divisions whose members share similar values, interests, and behaviors Social class is measured by a combination of occupation, income, education, wealth, and other variables
Characteristics Affecting Consumer Behavior The major American social classes • Upper class • Middle class • Working class • Lower class
Characteristics Affecting Behavior Consumer Social Factors Groups Membership groups have a direct influence and to which a person belongs Aspirational groups are groups to which an individual wishes to belong Reference groups are groups that form a comparison or reference in forming attitudes or behavior
Characteristics Affecting Behavior Consumer Social Factors Groups Opinion leaders are people within a reference group with special skills, knowledge, personality, or other characteristics that can exert social influence on others • Buzz marketing enlists opinion leaders to spread the word • Social networking is a new form of buzz marketing • My. Space. com • Facebook. com
Characteristics Affecting Behavior Consumer Social Factors Family is the most important consumer-buying organization in society Social roles and status are the groups, family, clubs, and organizations to which a person belongs that can define role and social status
Characteristics Affecting Behavior Personal Factors • • • Personal characteristics Age and life-cycle stage Occupation Economic situation Lifestyle Personality and self-concept Consumer
Characteristics Affecting Behavior Personal Factors Age and life-cycle stage • RBC Royal Band stages: • • • Youth—younger than 18 Getting started— 18 -35 Builders— 35 -50 Accumulators— 50 -60 Preservers—over 60 Consumer
Characteristics Affecting Behavior Consumer Personal Factors Occupation affects the goods and services bought by consumers Economic situation includes trends in: • Personal income • Savings • Interest rates
Characteristics Affecting Behavior Consumer Personal Factors Lifestyle is a person’s pattern of living as expressed in his or her psychographics • Measures a consumer’s AIOs (activities, interests, and opinions) to capture information about a person’s pattern of acting and interacting in the environment
• marketing segmentation, market targeting, market positioning
Definition • Market Segmentation: – Dividing a market into distinct groups with distinct needs, characteristics, or behavior who might require separate products or marketing mixes.
Market segmentation Definition: • This is the process of dividing the total market for a good or service into several smaller, internally similar (or homogeneous) groups. • All members in a group have similar factors that influence their demand for the particular product. 4 -104
Steps in Market Segmentation, Targeting, and Positioning
Bases for segmentation • Geographic — The city size, urban/ suburban/ rural population distribution and climate. • Demographic — The distribution of a population’s age, sex, income, stage in family cycle and ethnic background. • Psychographic — Personalities, lifestyles, social class including activities, interests and opinions (AIO). • Behaviour towards products. – Benefits desired or sought. – Product usage rate. 4 -106
Benefits of segmentation Segmentation enables marketers to: • Identify and satisfy specific benefits sought by particular groups. • Divide the market into segments by separating marketing programs. • Select target market. • Action the market segmentation plan. 4 -107
Market segmentation process The process involves: • Identifying the needs and wants of customers. • Identifying the different characteristics between market segments. • Estimating the market potential. 4 -108
Identify the needs and wants of customers The objective is to identify needs not currently satisfied. For example: • Airlines might consider offering business travel although research shows that preferred departure and arrival times vary from those being offered. 4 -109
Identify different market segments Identify characteristics that distinguish particular segments from others. For example: • Business persons needing varying flights, may opt to fly first or business class instead of economy class. 4 -110
Positioning Definition: • Customers’ image or perception of a particular brand or company, relative to their perceptions of others in the same category. 4 -111
Positioning strategies Positioning is assessed: • In relation to a competitor. • According to a product class or attribute. • By price and quality. Positioning can be in various forms, although it always incorporates a statement that identifies, (based on the marketing mix) how a business wants its products or services to be perceived 4 -112
Selecting a position Factors to consider: • Competition — look for a gap or niche. • Customers — seek product attributes. • Company image — what is the current image? • Target market — have the needs of the target market changed? Do we need repositioning? • The marketing mix — does it support the selected position? 4 -113
Marketing Mix: The 7 P’s of Marketing
• Marketing Mix • Buyer Behavior • Assembling the Marketing Mix • Diagnostic Marketing Mix • Marketing Plan • 4 S’s in Marketing Plan
Marketing Mix • The Marketing Mix is one of two interrelated components of strategy • The Marketing Mix, more popularly referred to as the 7 Ps of Marketing is a set of controllable and interrelated variables composed of product, place, price and promotions that a company assembles to satisfy a target group better than it’s competitor. • Marketing Mix strategy is choosing and implementing the best possible course of action to attain the organization’s longterm objectives and gain competitive edge.
Product Place Promotions Price People Physical Appearance Process
Product To satisfy the needs and wants of the target market.
Place To make the product conveniently available to the target market consistent with their purchasing pattern.
Promotions To build and improve consumer demand. Promotions has four components called the Promotions Mix as follows: • Advertising – to effectively inform and persuade the target market • Public Relations – to offer a positive image of the company and the brand • Selling – to get the customers buy • Sales Promotions – to convince customers to buy immediately
Price To make the product affordable to the target market and reflect the value of benefits provided.
People They are the target consumers of the company. They are the ones who are the consumers
Physical Appearance Physical appearance is the first distinction of a product. A product could be easily recognized by it’s appearance.
Process The process of the product is essential in marketing. This determines the capability of the product to supply the demand of the consumers.
• Product, place and people are considered as the strategic Ps of marketing mix since they cannot be changed overnight. • Promotions, price, process and physical appearance are considered as the tactical Ps of marketing mix because these can be changed more easily.
• Marketers of consumer packaged goods such as food and personal care products sold in supermarkets would often add “Merchandising” as another component of the marketing mix. • Merchandising aims to extend advertising message at the point of purchase (POP) by generating superior presence within the store. • Many companies uses store signs, posters, price tags, shelf takers and island displays. • Companies spend a significant 1% of their sales on merchandizing.
Format of a Marketing Plan Executive Summary Business Review (performance of the previous years) Environmental Analysis Key Factors for Success Strengths and Weaknesses Analysis Threats and Opportunities Analysis Market Segmentation Marketing Objectives and Goals Marketing Strategy Product Positioning Customer Satisfaction Strategy Preferred Brand Strategy Contingency Plan Marketing Budget Marketing Implementation Guide Appendix
4 S’s in Marketing Plan • The marketing mix can change over time. However, all marketing programs must be able to meet the 4 basic criteria to be considered a diligently through-out campaign 1. Sufficiency – the marketing mix must be able to adequately meet the defined marketing objectives. This means ambitious growth objectives would naturally need the corresponding heavier investment in marketing support programs.
2. Selective – the marketer must be able to consider all potential alternatives of each marketing mix before short-listing all possible combinations of the marketing mix that can meet their marketing objectives. The one that can provide the best profitability is the one logically to be chosen. This is not easy as there are literally millions of combinations. But the least the marketing man can do is to short list the more obvious one and apply due diligence in planning each possible option.
3. Synchronize – when the marketing mix is selected, the different elements must combine harmoniously for the brand become successful. For example, a marketer cannot choose to invest in heavy advertising of a low quality product sold on a high price. In such a case, the elements of the marketing mix is not logically synchronized. 4. Sustainability – the marketing mix that is finally chosen must be able to last in the long term vis-à-vis competition. For instance, a lower price strategy not only risks a price war but is not sustainable unless the firm is the cost leader in the industry.
• Tasks performed by marketing managers.
Marketing Management Tasks Responsibilities of Marketing Management 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Market analysis Set Goals Forecast sales & profits Strategies, policies & procedures Evolve appropriate marketing mix Organize marketing activities Organize resources Participation in product planning Managing Supply chain After Sales activities
Marketing Management Tasks 1. Conversional Marketing - Used during negative demand - Customer dislikes the product - May even pay to avoid the product - It is a rare condition - e. g. Waste Water
Marketing Management Tasks 2. Stimulational Marketing - Used during No demand - Customer is indifferent to the product - Task of converting no-demand into positive demand - Connect the product with existing need - Create environment where need is felt - e. g. Mushrooms
Marketing Management Tasks 3. Developmental Marketing - Used during Latent demand - Consumers share need for something which does not exist - Opportunity for Marketer to develop a product - e. g. Electronic cigarette
Marketing Management Tasks 4. Remarketing - Used during fading demand - Consumers find either no use for the product or better alternatives in the market - Marketers recreate the demand - e. g. Cinema halls
Marketing Management Tasks 5. Synchro Marketing - Used during irregular demand - Seasonal products - Results in wasteful underutilization of production capacity - Marketers attempt to streamline the demand to meet supply capacity - e. g. Hotels at hill stations, flight tickets during peak season
Marketing Management Tasks 6. Maintenance Marketing - Used during robust demand - Established products - Does not need efforts to push supplies - Keep a watch on competition - Keep sharpening the saw
Marketing Management Tasks 7. Demarketing - Used during overfull demand - Or when you want to exit certain business - Supply falls short of demand - Marketers discourage customers in choosing certain products
Marketing Management Tasks 8. Counter Marketing - Used when demand is considered unwholesome - Like alcohol, drugs - Marketers try to destroy demand
• Ethical Issues in Marketing
Ethical Issues in Marketing • Creation of Needs • Retail Developments • Sugging
Creation of Needs • Marketing can now create a need in a consumers mind instead of targeting a demand in customers. • Issues with advertising to kids • ‘Impulse buying’
Sugging • Selling under the guise of a survey or research. • Not illegal but highly unethical • You need to be smarter when filling in details.
Consumer Law in Australia • Deceptive and misleading advertising - This is illegal under Section 53 of the trade Practices Act 1974. - Page 208 in the text book
Price Discrimination • The practice of selling the same product at different prices in different markets. • Section 49 states businesses must not charge different prices for goods, if those prices do not reflect differences in the costs of providing those goods to different businesses.
Implied Conditions and Warranties • Implied conditions is a condition of sale that requires a product to be fit to serve the purpose for which it is purchased. • Merchantable quality is a condition that the product is in a condition reasonable for its advertised condition and price.
Resale Price Maintenance • Resale Price Maintenance is a practice which involves a manufacturer making an agreement with its distributors that a product be sold at a certain price.
Marketing Mix Elements of marketing mix: Marketing Mix Product Price Place Promotion -Appearance -Function -production costs -Cost based -Competition based -Consumer based -Retailers -Wholesalers -Distribution -Transportation -Advertising -Sales promotion -Personal selling Capable or solution Cost Convenience Communication
M A R K E T I N G BWISA’S NINE Ps OF MARKETING Measure consumer/customer needs People Assemble the product/services Rate the product/service Kite the product/service Exchange the product/service Tele-cast new/emerging needs Innovate/improve the product/service Nurture the improvements Grow/graduate your venture Product Price Promotion Place Projecting pepping-up Piloting Profiteering
Bwisa’s 9 Ps of marketing Marketing Process Stage Marketing Mix P M Measure consumers People needs Major Activities Consumer needs assessment; Market size/segmentation study’ Market share/competitor assessment Designing; Developing; Quality checks; Packaging Price level assessment; Credit terms; Payment terms Discounts A Assemble product Product R Rate product Pricing K Kite product Promotion Advertising; Publicity; Public relations; Sales promotion Place Distributors; Retailers; Locations; Inventory; Transport Planning New needs forecasts Pep up Re-design; Re-train; Re-package ; Add value Pilot-test; Re-launch Profiting New break-even analysis; Rehabilitation; Expansion; Diversification; New markets E Exchange product T I N G Tele-cast needs Innovate/Improve Nurture product Grow/Graduate
Lets go marketing The end