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PRINCIPLES OF MARKETING
BY
DR GERALD MUNYORO
CHINHOYI UNIVERSITY OF TECHNOLOGY
SCHOOL OF BUSINESS SCIENCES AND MANAGEMENT
DEPARTMENT OF INTERNATIONAL MARKETING
COURSE OUTLINE
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Introduction
The significance of information and research in
marketing
Consumer behaviour
Market segmentation
Product
Price
Place
Promotion
Definitions of Marketing
‘Marketing is the management process that identifies,
anticipates and satisfies customer requirements
profitably’
The Chartered Institute of Marketing
Marketing is the activity, set of institutions, and
processes for creating, communicating, delivering,
and exchanging offerings that have value for
customers, clients, partners, and society at large
American Marketing Association
Definitions of Marketing
‘Marketing is a social and managerial process by which
individuals and groups obtain what they want and
need through creating, offering and exchanging
products of value with others’
Kotler et al (2010)
‘The right product, in the right place, at the right time,
and at the right price’
Adcock et al (2001)
The Marketing concept
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Choosing and targeting appropriate
customers
Positioning your offering
Interacting with those customers
Controlling the marketing effort
Continuity of performance
The Marketing concept
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Customer focus, profits, and integration of
organizational efforts.
• Customer orientation
 Satisfying its customers at a profit…
 Determining the needs and wants of target
markets…
Discovering the wants of a target audience and then
creating the goods and services to satisfy them
The Marketing concept
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According to Levitt (1960), "the organization must
learn to think of itself not as producing goods or
services but as buying customers, as doing the things
that will make people want to do business with it."
Since its publication, corporate leaders have moved
from product-orientation toward market-orientation.
Firms overemphasize the satisfaction of customer
wants and needs and as a result ignore competition.
The Marketing concept
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Profitable
Offensive (rather than defensive)
Integrated
Strategic (is future orientated)
Effective (gets results)
Davidson (1972)
MARKETING MANAGEMENT PHILOSOPHIES
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The role that marketing plays within a company
varies according to the overall strategy and
philosophy of each firm.
There are five alternative concepts under which
organizations conduct their marketing activities:
• Production concept
• Product concept
• Selling concept
• Marketing concept
• Societal marketing concepts
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Marketing Management
Production
Concept
Management
Orientations
Selling
Concept
Marketing
Concept
Societal
Marketing
Concept
1 - 10
Product
Concept
Company Orientations Towards the
Marketplace
Production
Consumers prefer products that are
Concept widely available and inexpensive
Product Concept
Selling Concept
Marketing Concept
Consumers favor products
that
offer the most quality,
performance,
Consumers
will buy
products
or innovative
features
only if
the company aggressively
promotes/sells these products
Focuses on needs/ wants of
target
markets & delivering value
better than competitors
Marketing Concept
The marketing management
philosophy that holds that achieving
organizational goals depends on
determining the needs and wants of
target markets and delivering the
desired satisfactions more effectively
and efficiently than competitors do.
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Marketing Concept
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The key to achieving its organizational goals
consists of the company being more effective
than competitors in creating, delivering, and
communicating superior customer value to its
chosen target markets.
Slogans: 麥當勞都是為您, 以客為尊, 顧客永遠是對的,
We do it all for you (Toyota).
Four pillars: target market, customer needs,
integrated marketing and profitability.
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Societal Marketing Concept
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The idea that the organization should determine the needs,
wants, and interests of target markets and deliver the desired
satisfactions more effectively and efficiently than competitors
in a way that maintains or improves the consumer’s and
society’s well – being. Company’s negative effects on society
Conflict between consumer wants and long-term social welfare
Marketing managers should be concerned with social
responsibility
Company’s task is to determine needs and wants of target
markets & to satisfy them more effectively and efficiently than
competitors --in a way that preserves or enhances the
consumer’s and society’s well-being.
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Societal Marketing Concept
Society
(Human Welfare)
Societal
Marketing
Concept
Consumers
(Want Satisfaction)
Company
(Profits)
Production Concept
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The philosophy that consumers will favour products
that are available and highly affordable and that
management should therefore focus on improving
production and distribution efficiency.
Consumers will favor those products that are widely
available and low in cost.
Managers concentrate on achieving high production
efficiency and wide distribution.
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Production Concept
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Consumers will prefer products that are
widely available and inexpensive.
Focus: achieving high production
efficiency, low costs, and mass
distribution.
It is useful when (1) the demand for a
product exceeds the supply; (2) the
product’s cost is too high.
Examples: Standard Raw Materials and
Components, CD, LCD.
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Product Concept
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The philosophy that consumers will favour
products that offer the most quality,
performance, and innovative features.
Consumers will favor those products that offer
the most quality, performance or innovative
features.
Managers in product-oriented organizations
concentrate on making superior products and
improving them over time.
The assumption ğ the customers will admire wellmade products and can evaluate product quality
and performance
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This concept may lead to marketing myopia
Product Concept
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Consumers will favor those products that offer
the most quality, performance, or innovative
features.
Focus: making superior products and
improving them over time.
Examples: Digital Camera, CPU.
Better Mousetrap Fallacy
Marketing Myopia. (Theodoes Levitt, 1965)
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Selling Concept
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The idea that consumers will not buy enough of the organization’s
products unless the organization undertakes a large – scale selling and
promotion effort. Agressive selling and promotion
Assumptions are;
• Consumers must be convinced of buying company products
• Company is powerful in generating effective selling and promotion to
stimulate more buying
This concept is mostly used by firms which have overcapacity.
The aim is “to sell what they make” rather than “make what the market
wants.”
Short-term profits are more important (customer dissatisfaction may occur)
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Selling Concept
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Consumers and businesses, if left
alone, will ordinarily not buy enough
of organization’s products.
Focus: undertake an aggressive
selling and promotion effort.
Examples: unsought goods:
encyclopedias, funeral plots,
foundations.
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Marketing management process
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Analysis/Audit - where are we now?
Objectives - where do we want to be?
Strategies - which way is best?
Tactics - how do we get there?
(Implementation - Getting there!)
Control - Ensuring arrival
Marketing planning
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Systematic futuristic thinking by management
better co-ordination of a company’s efforts
development of performance standards for
control
sharpening of objectives and policies
better prepare for sudden developments
Building relationships with consumers
Firms that embrace the marketing concept seek ways to build a long-term
relationship with each customer. This is an important idea. Even the most
innovative firm faces competition sooner or later. And trying to get new
customers by taking them away from a competitor is usually more costly
than retaining current customers by really satisfying their needs. Satisfied
customers buy again and again. This makes their buying job easier, and it
also increases the selling firm’s profits. Building mutually beneficial
relationships with customers requires that everyone in an organization
work together to provide customer value before and after each purchase. If
there is a problem with a customer’s bill, the accounting people can’t just
leave it to the salesperson to straighten it out or, even worse, act like it’s
“the customer’s problem.” Rather, it’s the firm’s problem.
Marketing’s role in non profit organisations
The marketing concept is as important for nonprofit organizations as it is
for business firms. However, prior to 1970 few people in nonprofits paid
attention to the role of marketing. Now marketing is widely recognized as
applicable to all sorts of public and private nonprofit organizations
Ñranging from government agencies, health care organizations,
educational institutions, and religious groups to charities, political parties,
and fine arts organizations. Some nonprofit organizations operate just like
a business. For example, there may be no practical difference between
thegift shop at a museum and a for-profit shop located across the street. On
the other hand, some nonprofits differ from business firms in a variety of
ways. As with any business firm, a nonprofit organization needs resources
and support to survive and achieve its objectives. Yet support often does
not come directly from those who receive the benefits the organization
produces.
Marketing Research
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Marketing research is the systematic gathering, recording and analyzing of
data about problems relating to the marketing of goods and services.
A systematic inquiry whose objective is to provide information to solve
managerial problems.
Marketing research is the function that links the consumer, customer, and
public to the marketer through information--information used to identify
and define marketing opportunities and problems; generate, refine, and
evaluate marketing actions; monitor marketing performance; and improve
understanding of marketing as a process. Marketing research specifies the
information required to address these issues, designs the method for
collecting information, manages and implements the data collection
process, analyzes the results, and communicates the findings and their
implications.
American Marketing Association
Marketing Research
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Market research will give you the data you need to identify and reach your
target market at a price customers are willing to pay.
Research provides you with the knowledge and skills needed for the fastpaced decision-making environment.
Applied Research
• Emphasis on solving practical (specific) problems
• It could be exploring opportunities also
 Rectifying an inventory system that is resulting into lost sales
 Opportunity to increase stockholder wealth by acquiring another
firm
Pure Research/Basic Research
• Emphasis on problem solving but of a general nature (not specific)
 Effect of coupon as against rebate to stimulate demand
Consumer behaviour
Those activities directly involved in obtaining , consuming and
disposing of products and services, including the decision
processes that precede and follow these actions
 ‘You cannot take the consumer for granted any more’
Therefore a sound understanding of consumer behaviour is
essential for the long run success of any marketing program
Logical Positivism
 Understanding and predicting consumer behaviour
 Cause and effect relationships that govern persuasion and/or
education
 Post Modern – to understand consumption behaviour without
any attempt to influence it
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Consumer behaviour
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“MEET THE NEW CONSUMER
and smile when you do because she is your boss. It may not
be the person you thought you knew. Instead of choosing
from what you have to offer, she tells you what she wants.
You figure it out how to give it to her.”
-Fortune Editor
A new product must satisfy consumer needs, not the needs and
expectations of management
Understanding and adapting to consumer motivation and
behaviour is not an option – it becomes a necessity for
competitive survival
Consumer behaviour
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Consumer sovereignty presents a formidable
challenge but skilful marketing can affect both
motivation and behaviour if the product or
service offered is designed to meet consumer
needs and expectations.
A sales success occurs because demand either
exists already or is latent and awaiting
activation by the right marketing offering.
Consumer behaviour
Dominant forces shaping Consumer
Research
 Factors that move an economy from
Production-driven to Market-driven
 Level of sophistication with which
human behaviour is understood in
psychology and other behavioural
sciences
Consumer behaviour
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Motivational Research
It seeks to learn what motivates people in
making choices. The techniques are such as to
delve into the conscious, subconscious and the
unconscious.
‘women don’t buy cosmetics, they buy hope.’
‘women bake cakes out of the unconscious
desire to give birth’
Consumer behaviour
The advice to footwear salesmen should be ‘Don’t sell shoes –
sell lovely feet’
 Marketers must contend with small changing segments of
highly selective buyers intent on receiving genuine value at the
lowest price
 All managers must become astute analysts of Consumer
motivation and Behaviour
Three foundations for marketing decisions
 Experience
 Intuition
 Research
Consumer behaviour
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Enhancing Consumer Value-added
Marketers have to constantly innovate after understanding
their consumers to strip out costs permanently by focusing on
what adds value for the customer and eliminating what
doesn’t.
Individualised Marketing
A very personal form of marketing that recognises,
acknowledges, appreciates and serves individuals who become
or are known to the marketer.
Data – based marketing; DM
Customized marketing
Consumer behaviour
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Variables involved in understanding
consumer behaviour
Stimulus – ads, products, hungerpangs
Response – physical/mental reaction to the
stimulus
Intervening variables – mood, knowledge,
attitude, values, situations, etc
Overall Model of Consumer Behaviour
External Influences
Culture
Subculture
Demographics
Social status
Reference groups
Family
Marketing Activities
Internal Influences
Perception
Learning
Memory
Motives
Personality
Emotions
Attitudes
Decision Processes
Problem Recognition
Information Search
Self-Concept
&
Learning
Alt Eval & Selection
Outlet select &
Purchase
Postpurchase
Processes
Marketing Environment
A company’s marketing environment consists of the actors and forces
outside marketing that affect marketing management’s ability to develop
and maintain successful relationships with its target customers.
1). Being successful means being able to adapt the marketing mix to trends
and changes this environment.
2). Changes in the marketing environment are often quick and
unpredictable.
3). The marketing environment offers both opportunities and threats.
4). The company must use its marketing research and marketing intelligence
systems to monitor the changing environment.
5). Systematic environmental scanning helps marketers to revise and adapt
marketing strategies to meet new challenges and opportunities in the
marketplace.
Marketing Environment
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Includes:
• Micro environment: actors close to the company
that affect its ability to serve its customers.
• Macro environment: larger societal forces that
affect the microenvironment.
 Considered to be beyond the control of the
organization.
Marketing Environment
1. Micro Environmental
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The microenvironment consists of five components.
The first is the organization’s internal environment—its
several departments and management levels—as it affects
marketing management's decision making.
The second component includes the marketing channel firms
that cooperate to create value: the suppliers and marketing
intermediaries (middlemen, physical distribution firms,
marketing-service agencies, financial intermediaries).
The third component consists of the five types of markets in
which the organization can sell: the consumer, producer,
reseller, government, and international markets.
Marketing Environment
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The fourth component consists of the competitors facing the organization.
The fifth component consists of all the publics that have an actual or
potential interest in or impact on the organization’s ability to achieve its
objectives: financial, media, government, citizen action, and local, general,
and internal publics.
- So the microenvironment consists of six forces close to the company that affect its
ability to serve its customers:
a. The company itself (including departments).
1). Top management is responsible for setting the company’s mission, objectives,
broad strategies, and policies. 2). Marketing managers must make decisions within
the parameters established by top management. 3). Marketing managers must also
work closely with other company departments. Areas such as finance, R & D,
purchasing, manufacturing, and accounting all produce better results when aligned
by common objectives and goals. 4). All departments must “think consumer” if the
firm is to be successful. The goal is to provide superior customer value and
satisfaction.
Marketing Environment
b. Suppliers.
Suppliers are firms and individuals that provide the
resources needed by the company and its competitors
to produce goods and services. They are an important
link in the company’s overall customer “value
delivery system.”
1). One consideration is to watch supply availability
(such as supply shortages).
2). Another point of concern is the monitoring of
price trends of key inputs. Rising supply costs must
be carefully monitored.
Marketing Environment
c. Marketing channel firms (intermediaries).
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Marketing intermediaries are firms that help the company to promote, sell, and distribute its
goods to final buyers.
1). Resellers
are distribution channel firms that help the company find customers or make sales to them.
2). These include wholesalers and retailers who buy and resell merchandise.
3). Resellers often perform important functions more cheaply than the company can perform
itself. However, seeking and working with resellers is not easy because of the power that
some demand and use.
Physical distribution firms
help the company to stock and move goods from their points of origin to their destinations.
Examples would be warehouses (that store and protect goods before they move to the next
destination).
Marketing service agencies
(such as marketing research firms, advertising agencies, media firms, etc.) help the company
target and promote its products.
Financial intermediaries
(such as banks, credit companies, insurance companies, etc.) help finance transactions and
Marketing Environment
d. Customer markets'. Competitors'. Publics.
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The company must study its customer markets closely since each market has its
own special characteristics. These markets normally include:
1). Consumer markets
(individuals and households that buy goods and services for personal consumption).
2). Business markets
(buy goods and services for further processing or for use in their production
process).
3). Reseller markets
(buy goods and services in order to resell them at a profit).
4). Government markets
(agencies that buy goods and services in order to produce public services or transfer
them to those that need them).
5). International markets
(buyers of all types in foreign countries).
Marketing Environment
e. Competitors.
Every company faces a wide range of competitors. A
company must secure a strategic advantage over
competitors by positioning their offerings to be
successful in the marketplace. No single competitive
strategy is best for all companies.
Marketing Environment
f. Publics
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A public is any group that has an actual or potential interest in or impact on an
organization’s ability to achieve its objectives. A company should prepare a
marketing plan for all of their major publics as well as their customer markets.
Generally, publics can be identified as being:
1). Financial publics--influence the company’s ability to obtain funds.
2). Media publics--carry news, features, and editorial opinion.
3). Government publics--take developments into account.
4). Citizen-action publics--a company’s decisions are often questioned by consumer
organizations.
5). Local publics--includes neighbourhood residents and community organizations.
6). General publics--a company must be concerned about the general public’s
attitude toward its products and services.
7). Internal publics--workers, managers, volunteers, and the board of directors.
Marketing Environment
2. MACRO
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ENVIRONMENT
The Company’s Macro environment
The company and all of the other actors operate in a larger macro
environment of forces that shape opportunities and pose threats
to the company.
The company and all of the other actors operate in a larger macro environment of
forces that’s have opportunities and pose threats to the company. There are six
major forces (outlined below)in the company’s macro environment. There are six
major forces (outlined below) in the company’s macro environment.
a. Demographic.
b. Economic.
c. Natural.
d. Technological.
e. Political.
f. Cultural.
Marketing Environment
a. Demographic Environment
Demography
is the study of human populations in terms of size, density, location, age, sex, race, occupation, and other
statistics. It is of major interest to marketers because it involves people and people make up markets.
Demographic trends are constantly changing. Some more interesting ones are.1). The world’s population
(though not all countries) rate is growing at an explosive rate that will soon exceed food supply and ability
to adequately service the population. The greatest danger is in the poorest countries where poverty
contributes to the difficulties. Emerging markets such as China are receiving increased attention from
global marketers.2). The most important trend is the changing age structure of the population. The
population is aging because of a slowdown in the birth rate (in this country) and life expectancy is
increasing.
The baby boomers
following World War II have produced a huge “bulge” in our population's age distribution. The new prime
market is the middle age group (in the future it will be the senior citizen group). There are many
subdivisions of this group.
a). Generation X--this group lies in the shadow of the boomers and lack obvious distinguishing
characteristics. They are a very cynical group because of all the difficulties that have surrounded and
impacted their group. b). Echo boomers
(baby boom lets) are the large growing kid and teen market. This group is used to affluence on the part of
their parents (as different from the Gen Xers). One distinguishing characteristic is their utter fluency and
comfort with computer, digital, and Internet technology(sometimes called Net-Gens).
Marketing Environment
c). Generational marketing is possible, however, caution must be used to
avoid generational alienation. Many in the modern family now
“telecommute”--work at home or in a remote office and conduct their
business using fax, cell phones, modem, or the Internet. In general, the
population is becoming better educated. The work force is becoming more
white-collar. Products such as books and education services appeal to
groups following this trend. Technical skills (such as in computers) will be
a must in the future. The final demographic trend is the increasing ethnic
and racial diversity of the population. Diversity is a force that must be
recognized in the next decade. However, companies must recognize that
diversity goes beyond ethnic heritage. One of the important markets of the
future are that disabled people (a market larger any of our ethnic minority
groups).
Marketing Environment
b. Economic Environment
The economic environment -includes those factors that affect consumer purchasing
power and spending patterns. Major economic trends in the United States include:
1). Personal consumption (along with personal debt) has gone up (1980s) and the
early 1990s brought recession that has caused adjustments both personally and
corporately in this country. Today, consumers are more careful shoppers.
2). Value marketing
(trying to offer the consumer greater value for their dollar) is a very serious strategy
in the 1990s. Real income is on the rise again but is being carefully guarded by a
value-conscious consumer.
3). Income distribution
is still very skewed in the U. S. and all classes have not shared in prosperity. In
addition, spending patterns show that food, housing, and transportation still account
for the majority of consumer dollars. It is also of note that distribution of income
has created a “two-tiered market” where there are those that are affluent and less
affluent. Marketers must carefully monitor economic changes so they will be able
to prosper with the trend, not suffer from it.
Marketing Environment
c. Natural Environment
The natural environment -involves natural resources that are needed as inputs by
marketers or that are affected by marketing activities. During the past two decades
environmental concerns have steadily grown. Some trend analysts labelled the
specific areas of concern were:
1). Shortages of raw materials.
Staples such as air, water, and wood products have been seriously damaged and
non-renewable such as oil, coal, and various minerals have been seriously depleted
during industrial expansion.
2). Increased pollution
is a worldwide problem. Industrial damage to the environment is very serious. Farsighted companies are becoming “environmentally friendly” and are producing
environmentally safe and recyclable or biodegradable goods. The public response to
these companies is encouraging. However, lack of adequate funding, especially in
third world countries, is a major barrier.
Marketing Environment
3). Government intervention
In natural resource management has caused environmental concerns to be
more practical and necessary in business and industry. Leadership, not
punishment, seems to be the best policy for long-term results. Instead of
opposing regulation, marketers should help develop solutions to the
material and energy problems facing the world.
4). Environmentally sustainable strategies.
The so-called green movement has encouraged or even demanded that
firms produce strategies that are not only environmentally friendly but are
also environmentally proactive. Firms are beginning to recognize the link
between a healthy economy and a healthy environment.
Marketing Environment
d. Technological Environment
The technological environment -includes forces that create new technologies,
creating new product and market opportunities.
1). Technology is perhaps the most dramatic force shaping our destiny.
2). New technologies create new markets and opportunities.3). The following trends
are worth watching
a). Faster pace of technological change. Products are being technologically outdated
at a rapid pace.
b). There seems to be almost unlimited opportunities being developed daily.
Consider the expanding fields of health care, the space shuttle, robotics, and
biogenetic industries.
c). The challenge is not only technical but also commercial--to make practical,
affordable versions of products.
d). Increased regulation. Marketers should be aware of the regulations concerning
product safety, individual privacy, and other areas that affect technological changes.
They must also be alert to any possible negative aspects of an innovation that might
harm users or arouse opposition.
Marketing Environment
e. Political Environment
The political environment
includes laws, government agencies, and pressure groups that influence
and limit various organizations and individuals in a given society. Various
forms of legislation regulate business.
1). Governments develop public policy to guide commerce--sets of laws and
regulations limiting business for the good of society as a whole.
2). Almost every marketing activity is subject to a wide range of laws and
regulations. Some trends in the political environment include:
- Increasing legislation to:
a). Protect companies from each other.
b). Protecting consumers from unfair business practices.
c). Protecting interests of society against unrestrained business
behaviour.
Marketing Environment
-Changing government agency enforcement. New laws and their
enforcement will continue or increase.
3). Increased emphasis on ethics and socially responsible actions. Socially
responsible firms actively seek out ways to protect the long-run interests of
their consumers and the environment.
a). Enlightened companies encourage their managers to look beyond
regulation and “do the right thing.”
b). Recent scandals have increased concern about ethics and social
responsibility.
c). The boom in e-commerce and Internet marketing has created a new set
of social and ethical issues. Concerns are Privacy, Security, Access by
vulnerable or unauthorized groups.
Marketing Environment
f. Cultural Environment
The cultural environment
is made up of institutions and other forces that affect society’s basic values, perceptions,
preferences, and behaviours. Certain cultural characteristics can affect marketing decisionmaking. Among the most dynamic cultural characteristics are:
1). Persistence of cultural values. People’s core beliefs and values have a high degree of
persistence.
Core beliefs and values are passed on from parents to children and are reinforced by schools,
churches, business, and government. Secondary beliefs and values are more open to change.
2). Shifts in secondary cultural values. Since secondary cultural values and beliefs are open to
change, marketers want to spot them and be able to capitalize on the change potential.
Society’s major cultural views are expressed in:
a). People’s views of themselves. People vary in their emphasis on serving themselves versus
serving others. In the 1980s, personal ambition and materialism increased dramatically, with
significant implications for marketing. The leisure industry was a chief beneficiary.
b). People’s views of others. Observers have noted a shift from a “me-society” to a “wesociety.” Consumers are spending more on products and services that will improve their lives
rather than their image.
Marketing Environment
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c). People’s views of organizations.
People are willing to work for large organizations but expect them to become
increasingly socially responsible. Many companies are linking themselves to
worthwhile causes. Honesty in appeals is a must.
d). People’s views of society.
This orientation influences consumption patterns. “Buy American” versus buying
abroad is an issue that will continue into the next decade.
e). People’s view of nature.
There is a growing trend toward people’s feeling of mastery over nature through
technology and the belief that nature is bountiful. However, nature is finite. Love of
nature and sports associated with nature are expected to be significant trends in the
next several years.
f). People’s views of the universe.
Studies of the origin of man, religion, and thought-provoking ad campaigns are on
the rise. Currently, Americans are on a spiritual journey. This will probably take the
form of “spiritual individualism.”
Market Segmentation
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Market segmentation is a marketing strategy involves dividing a broad
target market into subsets of consumers, businesses, or countries who have
common needs and priorities, and then designing and implementing
strategies to target them. Market segmentation strategies may be used to
identify the target customers, and provide supporting data for positioning to
achieve a marketing plan objective. Businesses may develop product
differentiation strategies, or an undifferentiated approach, involving
specific products or product lines depending on the specific demand and
attributes of the target segment.
A marketing term referring to the aggregating of prospective buyers into
groups (segments) that have common needs and will respond similarly to a
marketing action. Market segmentation enables companies to target
different categories of consumers who perceive the full value of certain
products and services differently from one another.
Types of Market Segmentation
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The following are the most common forms of market segmentation practices:
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Geographic Segmentation
Marketers can segment according to geographic criteria—nations, states,
regions, countries, cities, neighborhoods, or postal codes.The geo-cluster
approach combines demographic data with geographic data to create a
more accurate or specific profile.[1] With respect to region, in rainy regions
merchants can sell things like raincoats, umbrellas and gumboots. In hot
regions, one can sell summer clothing. A small business commodity store
may target only customers from the local neighborhood, while a larger
department store can target its marketing towards several neighborhoods in
a larger city or area, while ignoring customers in other continents.
Geographic Segmentation is important and may be considered the first step
to international marketing, followed by demographic and psychographic
segmentation. The use of national borders is the institutional use of
geographic segmentation, although geographic segments may be classified
by identified geological regions.
Types of Market Segmentation
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Demographic Segmentation
Segmentation according to demography is based on variables such as age,
gender, occupation and education level [2] or according to perceived
benefits which a product/service may provide. Benefits may be perceived
differently depending on a consumer's stage in the life cycle. Demographic
segmentation divides markets into different life stage groups and allows for
messages to be tailored accordingly.
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Behavioral Segmentation
Behavioral segmentation divides consumers into groups according to their
knowledge of, attitude towards, usage rate, response,[4] loyalty status, and
readiness stage to a product. There is an extra connectivity with all other
market related sources.
Types of Market Segmentation
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Psychographic Segmentation
Psychographic segmentation, which is sometimes called Lifestyle. This is
measured by studying the activities, interests, and opinions (AIOs) of
customers. It considers how people spend their leisure,[6] and which
external influences they are most responsive to and influenced by.
Psychographic is highly important to segmentation, because it identifies the
personal activities and targeted lifestyle the target subject endures, or the
image they are attempting to project. Mass Media has a predominant
influence and effect on Psychographic segmentation. Lifestyle products
may pertain to high involvement products and purchase decisions, to
speciality or luxury products and purchase decisions.
Types of Market Segmentation
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Cultural Segmentation
Cultural Segmentation[7] is used to classify markets according to cultural origin.
Culture is a strong dimension of consumer behaviour and is used to enhance
customer insight and as a component of predictive models. Cultural segmentation
enables appropriate communications to be crafted to particular cultural
communities, which is important for message engagement in a wide range of
organisations, including businesses, government and community groups. Cultural
Segmentation can be applied to existing customer data to measure market
penetration in key cultural segments by product, brand, channel as well as
traditional measures of recency, frequency and monetary value. These benchmarks
form an important evidence-base to guide strategic direction and tactical campaign
activity, allowing engagement trends to be monitored over time.
Cultural Segmentation can also be mapped according to state, region, suburb and
neighbourhood. This provides a geographical market view of population
proportions and may be of benefit in selecting appropriately located premises,
determining territory boundaries and local marketing activities.
The Benefits of Segmentation
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While there may be theoretically 'ideal' market segments, in reality, every
organization engaged in a market will develop different ways of imagining market
segments, and create product differentiation strategies to exploit these segments.
The market segmentation and corresponding product differentiation strategy can
give a firm a temporary commercial advantage. Most market segmentations are the
techniques used to attract the right customer.
In essence, the marketing objectives of segmentation analysis are:
To reduce risk in deciding where, when, how, and to whom a product, service, or
brand will be marketed
To increase marketing efficiency by directing effort specifically toward the
designated segment in a manner consistent with that segment's characteristics
Market segmentation is a twofold process that includes:
Identifying and classifying people into homogeneous groupings, called segments
Determining which of these segments are viable target markets.
The Benefits of Segmentation
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There are several advantages of segmentation.
1) Focus of the Company: Segmentation is an effective method to
increase the focus of a firm on market segments. If you have better focus, obviously
you will have better returns. Numerous automobile companies have started focusing
on small car segments. This is nothing else but a company changing its focus for
better returns. Thus companies base their strategy completely on a new segment
which increases its focus and profitability.
2)
Increase in competitiveness: Naturally, once your focus
increases, your competitiveness in that market segment will increase. If you
are focusing on youngsters, your brand recall and equity with youngsters
will be very high. Your market share might increase and the chances of a
new competitor entering might be low. The brand loyalty will definitely
increase. Thus market segmentation also increases competitiveness of a
firm from a holistic view.
The Benefits of Segmentation
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3) Market expansion: Geographic segmentation is one type of
segmentation where expansion is immediately possible. If you have your
market strategy on the basis of grography, then once you are catering to a
particular territory, you can immediately expand to a nearby territory. In
the same way, if you are targeting customers based on their demography
(Ex – reebok targets fitness enthusiasts) then you can expand in similar
products (Ex – reebok expanding with its fitness range of clothes and
accessories). Segmentation plays a crucial role in expansion. You cannot
expand in a territory when you have no idea of which segment of customers
you will be meeting.
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4) Increases profitability: Segmentation increases competitiveness,
brand recall, brand equity, customer retention, communications. Thus if it is
affecting so many factors of your business, then definitely it affects the profitability
of the firm. Do you ever see people negotiating in a Nike, Gucci or BMW
showrooms? You wont. One of the USP’s of these brand is their segmentation.
They are in fact targeting segments which have no need of bargaining or
negotiation. Thus their profitability is high.
Publicity Strategy
1.
A.
B.
C.
D.
E.
F.
Types
Press release
Feature article
Captioned photograph
Press conference
Letters to editor/editorials
Films/tapes/videos
2. Requirements
3. Limitations
Public Relations
•
Public relations - a public organization’s
communications and relationships with its various
audiences.
–
•
Helps a firm establish awareness of goods and services
and builds a positive image of them.
Publicity - stimulation of demand for a good,
service, place, idea, person, or organization by
disseminating news or obtaining favorable unpaid
media presentations.
–
Good publicity can promote a firm’s positive image.
–
Negative publicity can cause problems.
The Benefits of Public Relations
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Credibility
Let’s face it– consumers today are more cautious when spending. That’s why
having credibility is so essential to a successful business. Because PR and
advertising are very different things, consumers are likely to give credibility to your
business when they see it mentioned in the media (uncompensated!) compared to
when they see your ads or billboards. Studies show that PR has 7 times more
credibility among consumers than advertising!
2. Target Market
With PR, it’s much easier to aim and fire on that target market you are hoping to
reach. Media sources can place the information that is right up the consumers alley
and give them the required information they need. If you are an accountant hoping
to generate some new clientele, placing an ad in a teen magazine likely won’t help
you. But a well written article smack dab in the middle of the finance section will
probably lead you right where you want to be. These target markets are especially
vital in businesses that only appeal to a small target market.
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3. Cost
While it’s true that PR can be costly if you hire the wrong firm, considering the cost
of other promotional advertising, it is on the cheap end of the scale. When you step
back and look at the cost of PR considering the possible leads when reaching the
right market, you’ll find that the cost is very beneficial.
4. Lead Generation
The media placement that you receive from PR is long lasting. You’ll likely have
an initial flood of leads, and then as time wheres on, you’ll notice that there is still
the possibility of lead generation from just one good media mention. As people and
businesses stumble on the PR, it will still be effective at generating leads (thus
leading back to our #3 point: cost).
5. Image
PR isn’t just promoting an item or a special. PR takes your entire business and puts
it in the lights. This helps create an image of your company and creates the
possibility of a more well rounded patronage. Effective PR leaves your company
with a positive image, which is always helpful in the future.
The Disadvantages of PR
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The major disadvantage of PR is the potential for not
completing communication process. While PR messages can
break through the clutter of commercials, the receiver may not
make the connection to the source. Many firms’ PR efforts are
never associated with their sponsors in the public mind.
PR may also mis-fire through mis management and a lack of
co-ordination with the marketing department. When the
marketing and PR department operate independently, there is a
danger of inconsistence communication, redundancies in
efforts and so on.
The key to effective PR is to establish a good program, worthy
of public interest and manage it properly. To determine if this
program is working, the firm must measure the effectiveness
of the PR effort.
RECOMMENEND TEXTBOOKS
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Kotler, P,. Armstrong, G,. Wong, V and Saunders, J
(2010) Principles of Marketing: Pearson Education
Limited: Harlow, Engand, UK
Armstrong, G,. Kotler, P,. Harker, M and Brennan, R
(2012) Marketing: A Introduction: Pearson Education
Limited: Harlow, Engand, UK
Kotler, P,. Keller, K,. L,. Brady,. M,. Goodman, M
and Hansen, T (2009) Marketing Management:
Pearson Education Limited: Harlow, Engand, UK
Pride, W,. M and Ferrell, O,. C (2012) Foundations of
Marketing: Cengage Learning: South-Western: USA
RECOMMENEND TEXTBOOKS
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Jobber, D (2004) Principles and Practice of
Marketing: McGraw-Hill International (UK) Limited
Brassington, F and Pettitt, S (2006) Principles of
Marketing: Pearson Education Limited: Harlow,
Engand, UK
Adcock, D,. Halborg, A,. L,. Ross, C (2001)
Marketing: Principles and Practice: Pearson
Education Limited: Harlow, Engand, UK
Perreault, J,. R,. Cannon, J and McCarthy, E,. J
(2011) Essentials of Marketing: McGraw-Hill
International (UK) Limited