Download An Introduction to Marketing

An Introduction to
Marketing
SHAD Memorial 2008
What is Marketing?
“A
total system of business activities
designed to plan, price, promote and
distribute need satisfying products
or services to target markets in
order to achieve organizational
objectives”
So in other words…
Marketing
is designed to meet the
needs of customers through its
marketing mix
In
fact, a market is defined as having a
group of individuals with needs to satisfy,
money to spend and a willingness to spend it
The Marketing What?
The
traditional marketing mix is
composed of:
Product
Price
Place
(distribution)
Promotion
Evolution of Marketing Thinking
Product
=> Sales => Customer interest =>
Customer Service => Customer Relationship
Firms
are beginning to realize that
customer satisfaction is very important for
repeat business, thus they wish to develop
relationships with their customers
Implications?
This
has led to a “value” driven mentality,
whereby firms must be concerned with their
value proposition
In
sync with the evolution of marketing thinking,
delivering exceptional value means exceeding
customer expectations
Only
through the ongoing provision of value to
its customers can a company achieve high levels
of customer satisfaction, retention and loyalty
The Four R’s
This
marks the birth of the four R’s:
Retention
Relationships
Referrals
Recovery
Environmental Influences
The
operational environment influences the
organization’s operations
External
Macro-environment
External Micro-environment
Internal non-marketing
Environmental
Scanning / SWOT Analysis
Buying - Decision Process
1.
2.
3.
4.
5.
6.
Need Recognition
Choice of Involvement Level
Identification of alternatives
Evaluation of alternatives
Purchase and related decisions
Post-purchase behaviour
The
firm must work to reduce / eliminate
the cognitive dissonance felt by a consumer
after buying a product.
This
serves as part of CRM - Customer
Relationship Management
You
continue to look after the customer even after
the transaction
Selecting a Target Market
A
company has to aim its marketing
efforts at someone / some group
This
means you have to consider the
characteristics of various market segments,
and their potential
Rough segmentation may be done based on
demographics, geographics, psychographics or
the behaviour towards the product or service
Profiling
This
involves developing a profile of
your target segments
The
more detail the better as the more
you know about your customers, the
better you can hope to meet / exceed
their needs and expectations
Positioning
This
is the place your company /
product occupies in the mind of your
consumers
You can’t be all things to all people…
Marketers
market is:
Three
must determine who their target
main approaches:
Market
Aggregation
Single - segment strategy
Multiple - segment strategy
B2C / B2B
Selling
to a personal consumer differs
from selling to a business
Characteristics
Companies
of B2B:
are making less and buying more
Firms are under intense quality and time pressure
To get what they need, firms are concentrating their
purchases with fewer suppliers and developing longterm “partnering” relationships
Market Research
The
process of specifying, assembling and
analysing information used to identify and
define marketing opportunities and
problems
Approaches:
Qualitative
Quantitative
Observational
Experimental
Qualitative Research
Used
when research is intended to probe
more deeply into opinions and attitudes
Use
of:
Individual depth interviews
Focus group interviews
While
no quantifiable results are gathered,
valuable insight is gained into how
consumers feel about certain concepts and
why they make the decisions they do
Quantitative Research
Involves
measurement of concepts
using standard numeric measures
Quantitative research has the
advantage of using numbers that allow
for statistical calculations and
comparisons (benchmark)
Generally use surveys to gather data
Observational Method
Data
are collected by observing some
action of the respondent
Personal
Observation
Ex.
Mystery shopper
Ex.
Electric cord on highway
Mechanical
Observation
Experimental Method
Researcher
may view results of
changing one variable while holding all
else constant
Testing
may occur in a loboratory or
field (test marketing)
Conducting Market Research
1.
2.
3.
4.
5.
6.
Define research objectives
Conducting a situation analysis
Conduct an informal investigation
Plan and conduct a formal investigation
Data analysis and reporting
Following up
Consumer vs Business Product
Consumer
Product: A product intended for
use by household consumers for nonbusiness purposes
Business
Product: A product intended for
purchase and use in producing other
products or in rendering services in a
business
Criteria for new products…
1.
2.
There must be adequate market demand
The product must satisfy key financial
criteria
1.
2.
3.
3.
4.
Is adequate financing available?
Will the new item reduce seasonal and cyclical
fluctuations in the company’s sales?
Can we make sufficient profit with the product?
The product must be compatible with
environmental standards
The product must fit into the company’s
present marketing structure
Importance of Services
North
America has become a true
service economy
In
2001, 74.4% of the Canadian labour
force, and over 70% of the country’s
GDP were accounted for by services
Growth
in number and variety of
both personal and business services
Characteristics of Services
Intangibility
Impossible
to sample a service before buying it,
as a result there is a degree of risk involved
with the decision
Inseparability
We
cannot separate service production from
consumption
Characteristics of Services
Heterogeneity
It
is impossible for a service company to
standardize output
Perishability
Services
and Fluctuating Demand
cannot be stored, and their
market fluctuates considerably
Value Proposition of Services
1.
2.
3.
Core Service
Customer Service
Support Service
Service Failure and Recovery
No
matter how diligent a company’s employees
and how well designed its service processes,
service failure is inevitable
An
important issue relating to customer
satisfaction is how a company responds when
service fails. The process or dealing with
service failure to make amends with customers
is called service recovery
The Importance of Branding
Brand
Equity: The value a brand adds to a
product
Brand Loyalty: The situation in which a
customer buys a certain brand on a regular
basis because of its performance and
appeal
A brand can add value to a product in the
mind of the consumer, hence it can provide
differential advantage or serve as a
barrier to entry
Selecting a good brand
5 Desirable Brand Characteristics:
1.
2.
3.
4.
5.
Suggest something about the product’s
characteristics (it’s benefits, use, or action)
Be easy to pronounce, spell and remember
Be distinctive
Be adaptable to new products that may be added to
the product line
Be capable of being registered and legally
protected under the Trade-marks Act and other
statutory or common laws
Marketing Communications
Marketing
communications serves
three essential roles: it informs,
persuades, and reminds prospective
customers about a company and its
products
Marketing Communications Methods
Personal
selling
selling
using sales reps
Advertising
non-personal,
mass communication
Sales
promotion
Public
relations
demand
stimulating activity
efforts
to contribute to generally favorable attitudes
and opinions toward an organization
Publicity
creating
news stories, editorials or announcements
about an organization
Factors Influencing the
Marketing Communications Mix
1.
2.
3.
4.
5.
The Target Market
The objective of the communications effort
The nature of the product or service being
promoted
The stage in the life cycle of the product
The amount of money available for marketing
communications
Choosing a push or pull strategy
Push:
The product is pushed through the
channel of distribution.
Producer
Pull:
=> Wholesaler => Retailer => Consumer
Marketing communications are
directed at the end-user, usually the
public. Consumers will then ask retailers
for the product and so on
Marketing Communications Budget
Percentage
of sales
All available funds
Follow the competition
Task or objective
Developing an Advertising
Campaign
Defining
Objectives
Establishing a budget
Creating a message
Selecting Media
Evaluating the advertising effort
Channel of Distribution /
Supply Chain
Direct
Distribution: A channel consisting
only of producer and final customer, with
no intermediaries providing assistance
Indirect
Distribution: A channel consisting
of producer, final customer and at least
one level of intermediary
Choice of Channel
Depends
Market
upon:
considerations
Product considerations
Channel member considerations
Company considerations
Price and Value
Price:
The amount of money and/or other
resources needed to acquire some
combination of a product and its
accompanying services
Value:
The ratio of perceived benefits of a
product/service to perceived costs,
including price and other incurred costs
The Importance of Price
Price
epitomizes and makes tangible
the notion of value
Price
sensitivity: Extent to which the
market or a segment, will respond to
price changes
Pricing Objectives
Profit
oriented
Achieve a target
Maximize profit
Market
return
oriented
Achieve an image or position
Increase sales volume
Maintain / Increase market share
Status
quo oriented
Stabilize prices
To meet competition
Break-Even Analysis
TFC
/ Unit contribution to overhead
TFC
/ (selling price - AVC)
Market Skimming / Penetration
Pricing
Skimming:
A pricing strategy in which the
initial price is set high in the target
market’s range of expected prices
Penetration:
A pricing strategy in which a
low initial price is set to reach the mass
market immediately
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