MKTG101 Marketing Fundamentals
Week 13 General Revision
8/10/2008
MKTG 101 Unit review L13
1
What is Marketing
Marketing is the management process responsible for identifying, anticipating and satisfying customer requirements profitably
8/10/2008
MKTG 101 Unit review L13
2
Relationship Marketing
• A focus on building an ongoing series of contacts with the customer
• The process is based on continually understanding, anticipating and satisfying customer needs
8/10/2008 MKTG 101 Unit review L13 3
Evolution of Marketing Philosophies
1. Production Concept
2. Product Concept 5. Societal Concept
Key Marketing Concepts
4. Marketing Concept
8/10/2008 MKTG 101 Unit review L13
3. Selling Concept
4
Societal Marketing
• Responsible marketers recognise that their actions have an impact beyond their customers and their organization
8/10/2008
MKTG 101 Unit review L13
5
The Societal Marketing Concept
Society (Human Welfare)
Consumers (Satisfaction)
Societal Marketing Concept
Company (Profits)
8/10/2008
MKTG 101 Unit review L13
6
Social Marketing
• The application of marketing principles and practices to the maintenance or improvement in a society‟s wellbeing
8/10/2008
MKTG 101 Unit review L13
7
The Marketing Environment
Political Macro-environment Economic
Micro-environment Customers Competitors
Intra-firm
Suppliers Technological
8/10/2008 MKTG 101 Unit review L13
Distribution Social
8
Cultural environment
• A set of learned responses to recurring situations
– It is learned, not genetically transmitted – It is shared by members of a group and defines the boundaries between different groups
8/10/2008 MKTG 101 Unit review L13 9
Actors in Microenvironment
Company Suppliers Competitors Marketing Intermediaries Customers
Publics
8/10/2008
MKTG 101 Unit review L13
10
The Importance of Information
Marketing Environment Competition Why Information Is Needed Strategic Planning
8/10/2008 MKTG 101 Unit review L13 11
Customer Needs
Marketing information
• MkIS assist Marketers to make informed and therefore better decisions • Data: usually only organised facts • Information: facts that are useful in making a marketing decision • Intelligence: info interrogated to assist in executive decision-making
8/10/2008 MKTG 101 Unit review L13 12
Marketing Research Cycle
Feedback Report Presentation Problem Recognition Exploratory Research Problem Definition Research Approval Sample Selection Research MKTG 101 Unit review L13 Methodology Research Design
13
Data Analysis
Data Collection
8/10/2008
Planning terms
• Vision: statement of “what the company wants to become.” • Mission: “Reason for being in existence?” • Objective: a shorter term goal leading to the achievement of the Mission • Strategy: a description of the method of achieving the objective • Tactic: the short term application of the strategy
8/10/2008 MKTG 101 Unit review L13 14
Marketing plan
Executive Summary
V, M & Situation Analysis
Action Programs
Objectives
Financial Analysis & Structure determination
Strategies
8/10/2008
Monitoring & Assessment
MKTG 101 Unit review L13 15
Objectives
• • • • • Specific Measurable Achievable Realistic Timely
8/10/2008
MKTG 101 Unit review L13
16
Business Portfolios
Market Growth Rate
High
Stars
Question Marks
?? ? ??
Cash Cows Dogs
Low
High
Low
The BCG Matrix
8/10/2008
Relative Market Share
MKTG 101 Unit review L13 17
Ansoff‟s Growth Vector Matrix
PRODUCTS / SERVICES
Present Present New
MARKET
Market penetration
Product / Service development
New
Market development
Diversification
Source: D.T. Brownlie & C.K. Bart, Products and Strategies, MCB University Press, Vol.11, No.1, 1985, p.29 8/10/2008 MKTG 101 Unit review L13 18
What is a Consumer Market?
• The consumer market consists of all the individuals and households who buy or acquire goods and services for personal consumption.
8/10/2008
MKTG 101 Unit review L13
19
A Model of Buyer Behaviour
8/10/2008
MKTG 101 Unit review L13
20
Factors Influencing Consumers
Psychological •Motivation •Perception •Learning (memory) •Beliefs & attitudes •Personality & self-concept Personal •Age & lifecycle stage •Occupation •Education •Economic situation Social •Household type •Reference groups •Roles & status
Marketing programs •Marketing objectives •Marketing strategy •Marketing mix
Buyers’ responses •Product service & category selection BUYER DECISION •Brand selection PROCESS Experiences •Reseller selection •Purchase timing & Lifestyle repurchase intervals •Purchase amount
Consumer
Environmental influences •Economic •Technological •Political
8/10/2008
Cultural •Culture •Subculture •Social Class
21
MKTG 101 Unit review L13
Perceptual Selectivity
All Stimuli
Selective Exposure
Selective Attention
Selective Interpretation
Retention
Discarded
8/10/2008 MKTG 101 Unit review L13 22
Consumer‟s state of mind
Awareness
Interest
Desire
Action
8/10/2008 MKTG 101 Unit review L13
Strong, 1925
23
The Buyer Decision Process
Need Recognition
Information Search
Evaluation of Alternatives Purchase Decision Post-purchase Behaviour
8/10/2008 MKTG 101 Unit review L13 24
Business-to-Business Markets
B2B customer behaviour refers to customers who purchase products for resale in some form or for the satisfaction of needs other than their own. Characteristics include:
Purchase Very large in value terms – Involves Complex products – Within Complex business structures
8/10/2008 MKTG 101 Unit review L13 25
Characteristics of Business Markets
Market Structure and Demand
Other Characteristics
Characteristics of Business Markets
Nature of Buying Unit
Types of Decisions and Decision Process
8/10/2008 MKTG 101 Unit review L13 26
Stages in the Business Buying Process
Problem Recognition General Need Description Product Specification Supplier Search
Proposal Solicitation
Supplier Selection Order Routine Specification Performance Review
8/10/2008
MKTG 101 Unit review L13
27
Steps in Segmentation, Targeting and Positioning
6. Develop Marketing Mix for Each Segment 5. Develop Positioning for Each Segment 4. Select Target Segment(s)
Market Positioning
3. Develop Measures of Attractiveness 2. Develop Profiles of Segments
1. Identify Bases for Segmentation
8/10/2008
Market Targeting
Market Segmentation
MKTG 101 Unit review L13 28
Effective Segmentation
Measurable
Actionable
Requirements for Effective Segmentation
Accessible
Substantial
8/10/2008 MKTG 101 Unit review L13 29
Market Coverage Strategies
Company Marketing Mix
A. Undifferentiated Marketing
Market
Company Mix 1 Company Mix 2
Segment 1 Segment 2 Segment 3
Company Mix 3
B. Differentiated Marketing
Company Marketing Mix
8/10/2008
Segment 1 Segment 2 Segment 3
C.MKTG 101 Unit review L13 Concentrated Marketing
30
Promoting Differences
Important Criteria for Determining Which Differences to Promote
Profitable
Distinctive
Affordable
Superior
Preemptive
8/10/2008
Communicable
31
MKTG 101 Unit review L13
Product/Service
• Anything that can be offered to customers for the satisfaction of their needs These are really just perceived as a
bundle of benefits
8/10/2008
MKTG 101 Unit review L13
32
Product Levels
Augmented Product
Installation
Packaging Brand Name Delivery & Credit Quality Core Benefit or Service Features
Styling
AfterSale Service
Warranty
Actual Product
8/10/2008 MKTG 101 Unit review L13
Core Product
33
Consumer Product Classifications
Shopping Convenience Specialty
Unsought
8/10/2008
MKTG 101 Unit review L13
34
Services
• Intangible products • A service is an activity purchased from the supplier by the customer that usually does not result in the ownership of a physical asset
8/10/2008
MKTG 101 Unit review L13
35
Service types
• Instrumental service: work performed by the supplier to achieve a customer goal without the direct participation of the customer • Consumatory service: the consumer is directly involved in the activity
8/10/2008
MKTG 101 Unit review L13
36
Characteristics of Services
Equipment based: • Automated ATM, Electricity supply •Unskilled workers Taxi •Skilled workers Airline People based: •Unskilled labour Prison warder •Skilled labour Electrician •Professional Accountant
Intangibility Inseparability Variability Perishability
8/10/2008 MKTG 101 Unit review L13 37
Individual Product Decisions
Product Attributes Branding
Packaging
Labelling Product Support Services
8/10/2008 MKTG 101 Unit review L13 38
Brands
• A promise of consistent quality
• The brand is a symbol for the characteristics of the product as perceived by the market.
• A name, term, sign, symbol or design, or a combination of these, intended to identify the goods or services of one seller or group of sellers and to differentiate them from those of competitors
8/10/2008
MKTG 101 Unit review L13
39
Major Brand Decisions
To Brand or Not to Brand
Brand No Brand
Brand Name Selection
Selection Protection
Brand Sponsor
Manufacturer’s Brand Private Brand Licensed Brand
Brand Strategy
New Brands Line/Brand Extensions Multibrands
Brand Repositioning
8/10/2008
Brand Repositioning MKTG 101 Unit review L13 No Brand Repositioning
40
Packaging and labelling
Key packaging and labelling functions:
• Containment: ensuring the product reaches the point of consumption in its entirety
• Protection: ensuring the product reaches the point of consumption in suitable condition
8/10/2008 MKTG 101 Unit review L13 41
Packaging and labelling contd
• Storage: ensuring the product can be stored and retrieved when needed • Usage facilitation: minimising the difficulties associated with consuming the product
• Promotion: packaging provides a large, long term, point of purchase and point of consumption communication vehicle.
8/10/2008
MKTG 101 Unit review L13
42
Product Life Cycle
Sales and Profits ($) Sales
Profits Time Decline
Product Development Stage
Introduction
Growth
Maturity
Losses/ Investments ($)
8/10/2008 MKTG 101 Unit review L13
Sales and Profits Over the Product’s Life From Inception to Demise
43
8/10/2008
MKTG 101 Unit review L13
44
8/10/2008
MKTG 101 Unit review L13
45
New Product Development Process
Marketing Strategy Concept Development and Testing Business Analysis Product Development
Idea Screening
Test Marketing
Idea Generation
8/10/2008 MKTG 101 Unit review L13
Commercialisation
46
What is Price
• Price is the amount of money charged for a product or service. • More broadly, price is the sum of the values consumers exchange for the benefits of having or using the product or service.
8/10/2008
MKTG 101 Unit review L13
47
General Pricing Approaches
• Cost-Plus Pricing • Breakeven Analysis and Target Profit Pricing • Economists‟ market price model • Value Based Pricing • Competitor Based Pricing • Special situation pricing
8/10/2008 MKTG 101 Unit review L13 48
Value-Based Pricing
Cost-Based Pricing Value-Based Pricing
Product Cost
Price
START
Customer Value
Price Cost Product
Value Customers
8/10/2008 MKTG 101 Unit review L13
49
New product pricing strategies
• Penetration: launch onto the market at the lowest long-term sustainable price
– Strong price elasticity of demand – No market price segments – Non-premium marketing mix – Potential competitors anticipated
8/10/2008
MKTG 101 Unit review L13
50
Market conditions
• Skimming: launch onto the market at the highest price, then slowly reduce price over time
– Demand inelastic – Significantly different segments – Competitive entry unlikely
8/10/2008
MKTG 101 Unit review L13
51
Product Mix Pricing Strategies
Setting Price Steps Between Product Line Items
Product Line Pricing
Pricing Products That Must Be Used With The Main Product
Captive-Product Pricing
Pricing Bundles Of Products Sold Together
Product-Bundle Pricing
Pricing Optional Products Sold With The Main Product
Optional-Product Pricing
Pricing Low-Value By-Products To Get Rid of Them
8/10/2008 MKTG 101 Unit review L13 52
By-Product Pricing
Marketing Channel Functions
Risk Taking
Information
Financing
Promotion
Physical Distribution
Contact
Negotiation
8/10/2008 MKTG 101 Unit review L13
Matching
53
Channel Levels and Channel Conflict
Consumer Marketing Channels
Direct
M
B2C
C
Retail
M
B2B2C
R
B2B2B2C
C
Wholesale-Retail M
W
B2B2J2B2C
R
C
Wholesale-Jobber-Retail M
8/10/2008
W
J
R
C
54
MKTG 101 Unit review L13
Conventional vs Vertical Networks
Conventional
Manufacturer
Vertical
Manufacturer
Wholesaler
Retailer
Retailer
Consumer
8/10/2008
Consumer
MKTG 101 Unit review L13 55
Channel Alternatives
Intensive
Channel Selective Distribution Strategies
Exclusive
8/10/2008 MKTG 101 Unit review L13 56
Retailer
• An intermediary that deals directly with consumers • Retailers are grouped according to several criteria depending on the situation:
8/10/2008
MKTG 101 Unit review L13
57
Retailing
Type of Store Cluster Amount of Service
Control of Outlets
Classifications of Retail Outlets
Product Line Sold
Relative Prices
8/10/2008 MKTG 101 Unit review L13 58
Control of Outlets
Merchandising Conglomerate Corporate Chain
Franchise
Categories by Control of Outlets
Voluntary Chain
Retailer Cooperative
8/10/2008 MKTG 101 Unit review L13 59
Wholesaler
• A distribution channel intermediary • An organization engaged in selling in larger quantities to other businesses for their use or resale
8/10/2008
MKTG 101 Unit review L13
60
Integrated marketing communications
Objective: to have all of a company‟s marketing and promotional activities project a consistent, unified image to the marketplace
8/10/2008
MKTG 101 Unit review L13
61
The Communications Mix
Advertising Personal Selling
Public Relations
Sales Promotion
8/10/2008
MKTG 101 Unit review L13
62
The Communication Process
Noise Noise Noise Noise Noise Noise Noise Sender Noise Noise Noise Noise Noise Noise Noise Noise Noise Noise Noise Noise Noise Noise Encoding Feedback Noise Noise Noise Noise Noise Noise Noise Noise Noise Noise Noise Noise Noise Noise Noise Noise Noise Noise Noise Noise Noise Message The Noise Noise Noise Noise Noise Noise Noise Channel Media Noise Noise Noise Noise Noise Noise Noise Noise Noise Noise Noise Noise Noise Noise Response Decoding Noise Noise Noise Noise Noise Noise Noise Noise Noise Noise Noise Noise Noise Noise Receiver 8/10/2008 MKTG 101 Unit review L13 63 Noise Noise Noise Noise Noise Noise Noise
The 5 Ms
• Mission
– Setting objectives – Target audience – Response
• Message
– Content – Structure – Execution
8/10/2008 MKTG 101 Unit review L13 64
The 5 Ms (cont)
• Media
– Reach and frequency – Media selection
• Money
– Setting the budget
• Measurement
– Collecting feedback – Assessment
8/10/2008 MKTG 101 Unit review L13 65
Message Execution
Testimonial Evidence Slice of Life
Scientific Evidence
Technical Expertise Personality Symbol
Typical Message Execution Styles
Lifestyle
Fantasy
Mood or Image Musical
8/10/2008
MKTG 101 Unit review L13
66
Selecting Advertising Media
Media Timing Key Issues in Selecting Media Reach
Media Vehicles
Frequency
Media Impact
8/10/2008 MKTG 101 Unit review L13 67
Public relations
• Building good relations with the company‟s various publics by obtaining favourable publicity, building up a good „corporate image‟, and handling or heading off unfavourable rumours stories or events
– Objective: Achieving favourable coverage of the company or its products in media not paid for by the sponsor
8/10/2008 MKTG 101 Unit review L13 68
Public Relations
• Non-bought space/time • Standard message despatched by sender • Uncontrolled message • Unidentified sponsor
8/10/2008
MKTG 101 Unit review L13
69
Sales Promotion
A short term initiative designed to boost a business by increasing the perceived builtin value of the product mix on a temporary basis
8/10/2008
MKTG 101 Unit review L13
70
Sales promotion
• A short-term initiative to promote sales by augmenting the normal customerperceived value.
Benefits
Increased benefits and/or Reduced cost equals Augmented value
71
Costs
Value
8/10/2008 MKTG 101 Unit review L13
Sales promotion assessment
• Achievement of the objectives, within the time span and budget • The quantitative, net improvement in sales due to the promotion alone and the time over which the improvement was sustained
8/10/2008
MKTG 101 Unit review L13
72
Ethics
• A failure to recognise another person‟s right to their autonomy, safety and privacy • The intention is to undermine the other person‟s right to make an informed, voluntary decision • To induce the consumer to engage in a transaction they might not have engaged in had the information and power balance been more even
8/10/2008 MKTG 101 Unit review L13 73
Ethical issues
• Deception: inducing the customer to enter at transaction
based on wrong or incomplete information
• Exploitation: taking advantage of the customer‟s reduced negotiating power • Manipulation: taking advantage of the customer‟s weakness or vulnerability • Intimidation: taking advantage of the customer‟s lesser power in the situation
8/10/2008 MKTG 101 Unit review L13 74