Download Marketing Identify customers` needs and wants Anticipate changes

Marketing
1. Identify customers’ needs and wants
2. Anticipate changes in these needs and wants
3. Satisfy customers’ with products/services offered at a price the customer is prepared to
pay
Marketing orientation: focus organisational attention on customer
 Aim isn’t to develop the best product but to develop the best product which the customer
needs & is willing to pay for.
Marketing personnel are typically responsible for:
 Researching customer needs
 Assisting in design of the product
 Suggesting a suitable pricing strategy
 Promotion: advertising, public relations etc.
 Distribution: identifying how the product should be distributed
 Customer Service: specifying service levels
Reasons for Segmenting the Market
o Focus strategy: firm can build itself a niche whose special needs can be catered for.
o More money: customer likely to spend more on specifically rather than generic product
o Convenience: a firm cannot be all things to all people. Need to choose how & where to
compete
Typical Market Segments
Geographical Area
Occupation
Sex
Lifestyle
End use
Family Life cycle
Education
Buyer behaviour
Age
Income
Social Class
Example
Commercial radio stations targeting local interest news
Men’s suits
Magazine content
Hobby magazines, activity sports shops
Quality of paper for formal reports versus rough work
Housing needs will depend on Single/married, children/no children
Newspapers
Impulses buyer, customer loyalty, sensitivity to sales promotions
Women’s clothes; children’s clothes & toys
Housing, luxury items etc.
Multi-variable segmentation
o Will generally need to use more than one variable to define a useful market
o Clothes for “20-30 year old well-off women” (age, income, sex)
Testing Segment validity
o Ask yourself:
o Can the segment be measured? (qualities like being a conservative person exist
but may be difficult to measure how many people share this trait)
o Is the segment big enough? (potential market needs to be profitable)
o Can the segment be reached? (are there specific promotion/distribution channels
that will go to these potential customers)
o Do segments respond differently? (do they react differently to a marketing mix.
than other segments. If not then no point in distinguishing as you could market to
them both)
Targeting
 Deciding which segments to prioritise in the company’s marketing effort.
 Need to clearly understand:
o Needs & wants of end user
o Market size & structure
o The company’s current market share & its resources & capabilities
o The intensity of competition
Product Positioning
 How a product relates to others on offer to appeal to a particular target market (e.g.
higher price/higher quality)
 The differences perceived by customers
Internal Marketing
 Idea where internal departments within organisation have to “market” their services (e.g.
an IT department). They are asked to research what user departments want, involve end
users in development, meet customer needs as far as possible and in some instances
charge for its services.
Societal Marketing
 Organisation should mould itself so as to satisfy customer needs more effectively &
efficiently than its competitors in a way that preserves/enhances the consumers’ and
society’s well-being. (e.g. ‘green’ products – lead free petrol, recyclable cards etc.)
Consumer Marketing
Branding
 Reasons:
o Product differentiation
o Separate product identity (particularly where products are v. similar e.g. pet food)
o Wholesalers & retailers (often shops will only stock branded goods)
o Facilitates self selection (allows consumers find your product)
o Reduces importance of price differentials
o Brand loyalty
o Convey psychic benefits (fashionable, exclusive etc.)
 Strategies:
o Individual Name (unique)
o Family Branding (loyalty, consistent brand e.g. Kelloggs)
o Brand Extension (loyalty to existing product e.g. Mars ice-cream)
o Multi-Branding (different names for similar goods in same market)
Buyer Behaviour – Industrial Markets
 Decision Making Unit (DMU) – people who actually take the decision to buy
 Industrial buyers more rational. Main factors in motivation mix:
o Quality
o Price
o Budgetary Control
o Fear of breakdown
o Credit
Developing International Markets
 Three ways of entering:
o Exporting
 Indirect exports
 Direct exports
o Overseas Manufacture
 Considerations
Firm’s Marketing
Firm’s size
Mode availability
Mode quality
Personnel Requirements
Marketing feedback
Learning Curve
Risks
Control Needs
Expectation of volume & timescale of sales e.g. setting up a factory
abroad inappropriate if sales expected to be short term or low volume.
Small firm wouldn’t have resources to set up overseas facility
Some countries restrict imports but encourage inward investment
Practicality. Does the product need specialist technical installation or
maintenance? If so cannot just be exported.
Is suitable staff available abroad? If not exporting may be only option
Would having your own sales staff/distribution channels on the
ground give you necessary feedback from the market
If you company plans heavy future expansion abroad might need to
gain experience now i.e. not use indirect exporting.
Political risk. Indirect export is safer option than manufacture for
certain countries.
Production by an overseas sub = full control. Indirect exporting =
virtually no control.
Advantage of Exporting
 Concentrate production in a single location (economies of scale & consistency of quality)
 Gain experience by trying international marketing on a small scale
 Can test overseas marketing plans before risking investment in overseas operations
 Minimise operating, administrative and personnel requirements
Indirect Exporting
Firms goods sold abroad by other organisations
 Export houses (benefit from market knowledge & relieved of risk around financing the
export transaction & the documentation requirements. Usually little control over the
market or the marketing effort)
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Specialist export management firms (similar to in house export department but out
sourced. Usually paid on commission)
Irish buying offices of foreign stores/governments (e.g. Tesco have permanent buying
house in Ireland which purchases €650m Irish products annually)
Complementary exporting (“piggy backing”) (a company with an established
international network uses them to sell the other company’s product as well)
Direct Exporting
 Sales to final user (usually industrial, government or mail order customer)
 Overseas export agent (sets up contracts between exporter & local buyer. Earns
commission)
 Company Branch abroad
Advantages
Disadvantages
When sales reach a certain level a branch is
Higher investment, overhead and running costs
more effective than an agency
Own staff should be more committed
Political risk
Retains complete marketing control
Subject to local employment law
Acquire better marketing information
Customer service should improve
Overseas Manufacture
 Benefits:
o Better understanding of overseas customer
o Economies of scale in a large market
o Production costs may be lower in some other countries
o Lower storage and transportation costs
o Overcomes the effects of tariff & non-tariff barriers
o Manufacture in the country may help win order from public sector
 Options
o Contract Manufacture
Advantages
Disadvantages
No need to invest in plant
Not easy to identify suitable producer
Lower risk from currency fluctuations
Need to train contractee producer’s staff
Risk of asset expropriation minimised
May eventually become a competitor
Control of marketing is retained
Quality control problems can arise
Lower transport costs (& sometimes
production costs)
o Joint Ventures
 Some governments discourage/prohibit foreign firms setting up
independent operations. Instead encourage joint ventures with indigenous
companies.
 JV with local firm provides local knowledge quickly
o Wholly owned Overseas Production

Either by acquisition or by creating new capacity
Advantages
Disadvantages
Does not have to share its profits
Need for a substantial investment
Full decision making authority
Difficult to obtain suitable managers
None of the communication problems of JVs,
Some governments oppose/prohibit 100%
licence agreements etc.
ownership by a foreign company
Able to operate integrated international
Forgoes benefits of a local partners knowledge,
systems
distribution networks etc.
Gains more experience in the overseas market
Financial Implications of Marketing
 Marketing Return on Investment (M-ROI) – difficult to quantify brand awareness; results
of marketing might not be seen for some time etc.
 Attempts are being made to evaluate return. E.g. Brewery might view daily statistics of
their volume shipments versus the actual size of the market
 Marketing costs can be viewed like normal costs:
o Fixed: Marketing dept salaries, long term sponsorship etc.
o Stepped – cost of direct sales staff, extended opening hours, limited free gift with
purchase
o Variable – reduced price sales promotion, sales force commission, advertising
campaign
Online Marketing
 4 types of online markets
o Business to consumer (B2C)
 Largest section (buying airline tickets online, Tesco shopping etc)
 Important difference. Traditionally marketer targets a specific group of
consumers. Online the consumer generally initiates and controls contact.
o Business to business (B2B)
o Consumer to consumer (C2C)
 E.g. eBay
 C2C areas (e.g. blogs, Facebook, Youtube) can offer highly targeted
audiences & huge market penetration. Beginning to be targeted for
advertising.
o Consumer to business (C2B)
 Consumer can communicate with the provider. Possibility to bid for
certain products & services.
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“Click Only”
o Online only business e.g. Amazon (books).
“Click and Mortar”
o Traditional retail stores with an added online presence (e.g. Tesco)
Setting up a presence online. Any combination of the below 4:
o Creating a website

“corporate website” – designed to provide positive information about the
company. Not designed to sell the product directly e.g. Big 4 websites.
 “marketing website” – designed to allow the customer buy online (e.g.
Tesco) or move the customer closer to a final purchase through detailed
product specifications and price info (e.g. Volvo)
o Creating web communities
 Blogs or other forums are a medium to target potential customers with
specific interests. These communities tend to have a high sense of
belonging & company can develop a strong position from this.
o Placing advertisements or promotions online
 Banner ads
 Interstitials – ads that display between screen changes on a website
 Pop-up ads – pop up in front of the screen being used e.g. gambling site
888.com
 Rich media ads – incorporate animation, video or interactivity
 Search related/contextual ads on search engines – e.g. Google get paid for
the links from the search engine to the advertisers website
o Using email
 Encourage customers to interact with the marketer
 Ideal for creating and using mailing list
 Risk as customers dislike ‘spam’ mail
Ethics of Online Marketing/Reputational Risks
 Invasion of privacy and time wasting with unsolicited emails & pop-ups
 Internet fraud – ‘phishing’ or seeking to gain personal details e.g. AIB
 Online security breaches – credit card details could be lost e.g. Sony
 Inappropriate access – underage access to adult sites or auctions
Marketing Mix and Marketing Plan
 Marketing Mix (5 P’s)
o The set of controllable variables that the firm uses to influence the target market
o Product
 Design (size, shape)
 Features
 Quality and reliability
 After-sales service
 Packaging
 Protect the contents
 Ease of distribution
 Attract buyers
 User convenience
 Meet government regulations
o Price
 Pricing strategies
 Value based pricing – based on customers perception of value not
on the producers cost
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Cost based pricing – based of cost of production + profit margin
Value added pricing – aim to add value to maintain pricing power
and avoid price competition
 Good value pricing – get the right combination of price & standard
– e.g. less expensive versions of established brand products
Influenced By:
 Economic influences
 Competitors prices
 Quality connotations (price too cheap, end up viewed as poor
quality)
 Payment terms
 Stage of product life cycle
o Place
 Channel: Supermarkets, wholesalers, online, to the customer’s door etc.
 Channel management is vital:
Advantages of direct distribution
Advantages of using intermediaries
Need to demonstrate a technical product (esp
A wide geographical market area makes the
in the sale of industrial goods)
costs of direct selling high
Retailers will try & sell all products they have
Financial resources can be more profitably
& won’t favour your products
employed elsewhere
Intermediary profit margins affect final sale
Lack of retailing know-how and expertise
price to consumer
If small market direct selling may be cheaper
Cheaper
Maintains good relationship with end
Often no other way of reaching consumer
customers & obtains feedback
 Logistics/speed of delivery: how fast does it get to the place
o Promotion
 Aim is to:
1. Arouse Attention
2. Generate Interest
3. Inspire Desire
4. Initiate Action (i.e. get them to buy)
 Advertising, sales promotions, direct selling by sales personnel, PR, online
marketing etc. A mix above depending on product e.g. product with a
wide target audience (e.g. breakfast cereal) might be advertised on TV
while a more niche product might go for a cheaper, more specific option
(e.g. a popular blog or special interest magazine)
 “Above the line”: Advertising – seen as long term
 “Below the line”: Sales promotion – seen as short-term
 Consumer promotions – free samples, drives consumer demand
 Retailer promotions – extended credit, gets product into stores
 Sales force promotions – bonuses
 Industrial promotions – exhibitions and trade fairs, client events
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o People
Appearance
Professionalism

Personal selling – emphasis on personal selling for specific items (e.g.
railway engine) more advertising for wide product bases (e.g. toothpaste)
PR – important element is publicity – unlike advertising it is not paid for
directly
 Varies between industry – attractive to music & tourist trade
Corporate Communication –
 Influencing the way an organisation behaves & communicating the
benefits of this behaviour to the public
 Research suggests people believe company with good reputation &
well known would not sell a poor product
Sponsorship – while cost can be high, the cost per second of TV exposure
can be much smaller
Attitude
Skills
Commitment
Number of
Product Life Cycle
o Introduction – development costs mean generally loss making at this point
o Growth – products sales rise quickly as do profits. Competition will begin to
increase.
o Maturity - sales and profits peak. Competition can be intense and weaker players
are forced from the market.
o Decline – sales & profits decline. Sooner or later company withdraws product.
Growth
Products have marked
quality & technical
differences
Customers increase in
number
Promotion
Introduction
No standard &
frequent design
changes
Need to be convinced
about buying. May be
able to extract high
price
High advertising costs
Competition
Few or none
Profit margins
& Pricing
High prices but losses
due to high fixed
costs
Over capacity
High production costs
High labour skill
content
Few distribution
channels
More entries. Barriers
important
High prices and
increasing margins
Products
Customers
Manufacturing
& distribution

Behaviour
Discretion
High costs but falling
as % of sale
Under capacity
Move to mass
production & away
from skilled labour
Flourishing
distribution channels
Marketing plan – several interrelated decisions
Maturity
Products become
more standardised
Decline
Products even less
differentiated.
Mass market
Repeat buying &
brand image becomes
important
Segmentation &
extending maturity
phase key
Competition at its
keenest
Falling prices but
good margins due to
high sales volume
Optimum capacity
Low labour skills
Developed
distribution channels
Sophisticated
customers understand
what they are buying
well
Less money spent on
advertising &
promotion
Competition
gradually exits
Still low price and
falling volumes
Over capacity as mass
production still in use
Dwindling
distribution channels
o Sales targets – set for each product & division
o Total marketing budget must be set
o Resources must be allocated to:
 Sales staff salaries
 Above the line expenditure (advertising)
 Below the line expenditure (promotion)
Marketing of Services
 Characteristics of service
o Intangibility (e.g. an audit)
 Counter by emphasising quality brochures & physical reports
 Word of mouth referrals are more effective  emphasis on alumni clubs.
o Inseparability e.g. created & consumed together e.g. dentist doing a filling)
 Counter by having staff who deliver service also have marketing skills
o Variability (quality service depends on who & when provided)
 Counter by careful recruitment, signoff procedures to maintain standard
o Perishability (cannot be stored/used later i.e. a day lost cannot be replaced later)
 Counter by better matching supply and demand
 Differential pricing – cheaper audit price during quiet summer months
 Reservations
 Part-time employees during peak demand
o Ownership (no transfer of ownership)
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Expanded Marketing Mix for Services
o Marketing mix difficult for services as extra complexity (e.g. poor service on one
occasion, difficulty in quality testing service before going to customer etc.)
o Extra 3 P’s
Processes
o E.g. queuing, information, capacity levels, speed/timing, accessibility etc.
Physical Evidence
o Environment (furnishings, layout, ambience etc.)
o Facilities (vans, equipment, uniforms etc.)
o Tangible Evidence (labels, tickets, logos, packaging)
People
o Selection, induction, training, remuneration, incentivisation of people who have
direct contact with customers
o Effects customer perception of the value & quality they have received