; Understanding Organisational Context
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Understanding Organisational Context


  • pg 1
									Business and Its Environment

             Chapter 3

             Define Marketing
              Marketing mix
             Product lifecycle
    The Boston Consulting Group Matrix
Philip Kotler
      What is marketing?

• Philip Kotler et al. defined marketing
  as: a social and managerial process
  by which individuals and groups
  obtain what they need and want
  through creating and exchanging
  products and value with others.
• 市场营销是个人和集体通过创造并同他
• The basic concepts are human needs,
  wants and demands.
• People satisfy their needs and wants
  with products and services.
• Consumers make buying choices
  based on their perceptions of the
  value that various products and
  services deliver.
• Marketing occurs when people decide
  to satisfy needs and wants through
• A Chery QQ means basic
  transportation, low price and fuel
  economy. A Mercedes-Benz means
  comfort, luxury and status.
• Moreover, consumers will compare
  the value of owning a Mercedes
  against the value of owning other
  comparable manufacturers’ models –
  Lexus, Audi, BMW – and select the
  one that gives them the greatest
  delivered value.
             Marketing mix
• In 1953 Neil Borden尼尔·博登 developed
  the idea of a marketing mix to describe
  the marketing elements that could affect
  the way a product performed in the
• In 1963 Jerome McCarthy杰罗姆·麦卡锡
  summarized the marketing mix, or
  product, price, place, promotion, as the
  four Ps of marketing.
• In 1967 Philip Kotler further confirmed the
  4Ps as the core of the marketing mix.
Figure 3.1 The marketing mix
• Today the marketing mix or 4Ps is
  one of the traditional tools used to
  manipulate the organization’s
  relationship with the external
• That is to say, there are four basic
  ways in which organizations can
  affect the relationship they have with
  their customers to increase sales
  and profitability.
• The 4Ps can be manipulated, altered
  or improved as a product declines.
• The manufacturer will want to make as
  much of the product for as long as possible
  with little new investment or alteration in
  order to keep sales high and reap profits.
• In order to keep sales of the existing
  product buoyant, it is possible to
  manipulate certain aspects of that product
  at little cost in order to offer a newer,
  fresher and updated product.
• The clear aim is to continue to attract new
  customers and/or tempt existing customers
  to remain loyal and not be attracted by a
  competitor’s product.
• Product aspects that can be
  manipulated include style,
  performance, quality, branding,
  packaging and after-sales service.
• Examples of such product
  manipulation abound in the washing
  powder industry. Famous and
  familiar brands are often relaunched
  as ‘new’, ‘improved’ or as version
  two or three.
• The basic product is still washing
  powder, with additional features.
• Manipulation of the product:
  allows the manufacturer to claim
  continual innovation, improvement
  and customer orientation.
  requires co-operation between the
  marketing and operations
  management departments.
Style: LG–- the “chocolate” series

    KG90(2006)       KG90n(2007.2)
KG90n is almost the same with KG90
except the golden adornment. This
makes the “chocolate” keep high sales.
Performance: The Microsoft

   Windows XP           Windows 7
The Microsoft company releases the new
Windows 7 operating system. Windows 7 has
more functions than windows XP. Now more
and more users are choosing Windows 7 to
substitute XP.
Packaging: DOVE’ s chocolate

The better packaging of the chocolate, the
higher price will be charged. Organizations
always use this measure to increase the
products’ profitability.
After-sales service: The computer game--
 -- The Sims series.

 After the computer game (not the network
 games) was sold, customers can download
 many new resources free which are provided
 by the manufacturer. The new downloaded
 resources keep the game fresher.
• There are various ways in which
  organizations can use the price they
  charge to influence sales.
• The music industry has used pricing
  strategies aggressively to influence the
  positioning of new releases in the pop
• Most singles on release are now sold at a
  discount price in the first few weeks to
  entice customers to purchase them.
• The national music charts are compiled
  out of sales figures at monitored outlets,
  and these subsidised sales cause new
  releases to have a high entry position in
  the pop charts in the first week, which
  encourages more radio play.
• This produces continued sales as radio
  listeners go out to buy the music they
  have heard.
• Special offers and finance deals
  can be used to affect customers’
  buying habits.
• Price manipulation depends on
  co-operation between the
  marketing and finance
Discount ------Watsons

In order to increase sales, some products of
Watsons have been discounted even 50% to
attract more customers.
Watsons is a successful retailer that has a
Private Brand(PB). So he has more freedom
and flexibility in pricing.
• Decisions have to be made concerning the
  advertising media to be used: Press,
  Magazines, TV, Radio, Internet.
• A combination of advertising and
  promotional activities is required to create
  and support a successful product.
• To create an awareness and interest in the
  product and to ensure acceptance by the
• In supermarkets with loyalty cards,
  the offer of extra bonus points on
  certain products or goods entices
  customers to switch loyalty from one
  brand to another or to buy products
  not normally on their shopping list.
• The launch of new products can be
  heralded by the delivery to target
  households of free samples, discount
  vouchers or promotional literature.
• The sponsorship of television
  programmes is a relatively new activity
  in the UK following deregulation of
  broadcast advertising, and is an effective
  promotional method.
• Cadbury, ‘the nation’s favorite chocolate
  manufacturer, sponsors Coronation
  Street, one of the leading soap operas,
  and the holiday company Going Places
  sponsored Blind Date, where winning
  contestants are sent off on holiday dates
  around the world.
• Neither of these television programs
  explicitly advertises the companies’
  products, but implicitly links their
  products with the program in the
  viewers’ minds.
• Promotion and advertising
  support a product by:
- attracting new customers
- reminding consumers making
  repeat purchases to buy the
  same brand of product as before
  (crucial if customer loyalty low)
Do you love me?
A diamond is forever.

Customers could have a 100% opportunity
to get a surprise which was provided by
Pantene. Organizations always use gifts to
encourage customers to buy the products.
• Manipulation of place is to
  ensure the right amount of
  the product is in the right
  place at the right time
• Applies to all stages of the
  distribution process
      Distribution Channel
•   Manufacturer to wholesaler
•   Wholesaler to retailer
•   Retailer to customer
•   Manufacturer to consumer
•   Business-to-consumer (B2C)
•   Business-to-business(B2B)
• Careful positioning of goods
  in shops is to improve sales
• e.g. sweets by the
  supermarket checkout
• e.g. perfume next to the main
  doors in department stores
• e.g. petrol station links one-
• Dennis is a famous store in Zhengzhou.
  The store is always keeping the high
  sales and attracting a lot of customers
• The placement of goods is very
  appropriate such as placing the makeup
  on the first floor. When the customers
  come into the store, they can see the
  luxuries at the first sight. This increases
  the opportunities to be sold.
 The extended marketing mix: the
       fifth ‘P’ of marketing
• ‘People’ includes:
- staff inside the organisation
- customers and consumers outside the
• ‘Manipulation’ of people covers:
- effective use and management of staff
- sales staff building good relationships
  with customers
   Product life cycle
• A Harry Potter and the
  Philosopher’s Stone tee-shirt
  has a life cycle measurable in
  months or until the next big
  film hits the cinema screens
  and its associated merchandise
  arrives at the shops.
• In contrast, a product like a
  television set has a product life
  cycle of many years, due to
  continued product development in
  the field of television and
• Black-and-white, Colour, Liquid
  crystal display (LCD), Light
  emitting diode (LED).
Figure: The product lifecycle
• High costs, low sales - and
  no profit is made
• Aim to recover research and
  development costs
• Successful new product will
  move to growth phase
• Steady costs, sales increase
  rapidly and high profits can
  be made by pioneering firms
• Aim to attract first-time
  customers and build market
• Steady costs, sales increase
  more slowly and profits peak
• The outlay is minimal compared
  with that in the growth stage
• Aim to keep existing customers
  and persuade other consumers
  to switch from competing brands
• Steady costs, sales peak (no more
  growth) and reasonable profits
• Sales volume may be kept buoyant
  and loyal customers retained by
  price competition and special offers,
  although this will mean reduced
• These are competitive options that
  are easy for rivals to replicate
• Low costs, falling sales and
  falling profits - maybe loss
• Withdraw loss-making product
• Keep decline product if it may
  find a small, loyal, niche market
  that either breaks even or makes
  a limited profit
The Boston Consulting Group (BCG) matrix 波士顿咨询矩阵
     Question marks
• High growth markets
• Low market share
• Another product is current market
• Unlikely to be profitable
• High investment is required if a
  question mark is to become a
  market leader
• Successful question marks
  become stars
• Stars are market leaders in
  growth markets
• require investment to maintain
  market leadership in a high
  growth market
• are marginally profitable
         Cash cows
• are mature products
• occupy slower growth markets
• need less investment
• are the most profitable products
  in a portfolio
• are used to fund products in
  other quadrants
•   Occupy no growth markets
•   Have low market share
•   Maybe previous cash cows
•   Maybe marginally profitable
•   Should be withdrawn before they
    become loss making
 A successful product
• A successful product moves
  around the BCG matrix
• A question mark to … a star
  to …
• … a cash cow to … a dog or
  back to a question mark
 A less successful product

• A less successful product
  remains in right-hand side of
  the BCG matrix, and is
  therefore a low cash
• A question mark may move to
  … a dog
         BCG matrix and
      product lifecycle links
•                 plc
    BCG -----------
•                 introduction
    Q marks -------
•                 growth
    Stars -----------
•   Cash cow -----maturity and
• Dogs ---------- decline
 Balanced BCG matrix
• Tomorrow's products:
  - question marks and stars
• Today's products:
  - cash cows
• Yesterday’s products
  - dogs
• Check your understanding by naming
  and illustrating the components of the
  marketing mix. Use examples where
• Check your understanding by
  summarising the key attributes of
  product in different stages of the
  product life cycle. Use examples where
    Presentation              One minute left!!!
                                  Time up!!!
• Make a PPT and speech in English.
• Support original, reject copy and download.
• Work in pairs. In voluntary order.
• Have a rehearsal to control your
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• Speaks clearly and slowly. Uses a loud
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• Communication and interaction skills

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