PRINCIPLES OF MARKETING
MARKETING AND COMMUNICATION INSTITUTE
UNIVERSITY OF THE GAMBIASTUDENT NAME:ALI SANKANU
LECTURER: Mr. Yahya Bah
MARKETING is the management process which identifies, anticipates and satisfies customer requirements efficiently and profitably (CIM).MARKETING is the management process that seeks to maximize returns to shareholders by developing and implementing strategies to build relationships of trust with high-value customers and create a sustainable differential advantage (Peter Doyle).
INTERNAL MARKETING is the creation of an internal environment that supports customer-consciousness and sales-mindedness amongst all personnel with in an organization.
ROLE/ IMPORTANCE OF INTERNAL MARKETING1. Helps foster a market oriented culture2. Encourages collective responsibilities3. Reinforces good customer service4. Promotes information sharing hence adequate knowledge management5. Facilitates interpersonal relations, conducive working environment hence low labour
turnover.6. Helps provide staff with adequate information regarding corporate objectives, products
and services of an organization
THE INTERNAL MARKETING PLANThis refers to a programmed of actions through which activities could be successfully be implemented with in an organization as indicated below.
TELL: involves informing employees clearly, realistically and openly as to what is to be done
SELL: persuading employees by telling them the need for the change through selling the pressures necessitating the change and vision.
EVOLVE: developing employee attitudes, skills and knowledge to effectively and efficiently perform the required task.
INVOLVE: empower employees to be fully involved in the planning and implementation of activities.
PROBLEMS OF INTERNAL MARKETING1. High cost of training and developing2. High technology needs to promote effective knowledge management3. It is complex and time consuming4. Difficulty of creating the right culture to promote internal marketing
Organizational values & orientations(Marketing concepts)Production orientation: This is the organizational or values where competitive advantage is attained through increase productivity or volume. It’s a traditional orientation that exists in the Henry ford era. In modern times this is practised in compliment with other orientations.Product orientation: An organisational culture where competitive advantage gained through the creation of product leadership (high quality features) becomes the sole objective 0f a business. Day, 1999 identified IBM as such on the basis of its statement of goal.
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Sales orientation: An organisational culture where competitive advantage attained through the creation of superior sales force to generate adequate sales becomes the objective of a business. Carphone warehouse attained its objective through telemarketing.
Marketing orientation: An organisational culture where beating competition through the creation of superior customer value is the paramount objective throughout the business (piercy, market led strategic change 2001)Relationship marketing: Refers to all marketing activities directed towards establishing and maintaining successful and relational exchange (Morgan and Hunt, 1994). This is enhanced through effective database management, customer service and efficient use of the extended marketing mixes. Tesco has highly been associated with this in continuation of its market leadership.Societal marketing: Is a management orientation that holds that the key task of the organisation is to determine the needs and wants of the target market and to adapt the organisation to delivering the desired satisfaction more effectively and efficiently than its competitors in a way that preserves or enhances consumers and society’s well- being. This implies being green focus in all organisational marketing activities. The Body shop has been the leading practitioner of societal marketing.
THE MARKETING PLANNING PROCESS
A marketing plan is a specification of an organization’s marketing intentions and the relative
activities for achieving the firm’s intentions or objectives.
Planning is the establishment of objectives, formulation, evaluation and selection of policies, strategies, tactics and actions required to achieve set objectives. It could also a programme of schemes for implementing marketing activities. This takes three forms namely:
Strategic planning: Entails long term planning Tactical Planning: Medium term planning Operational planning: Reflects short term planning
Role/ Importance of planning It structurally analyses the marketing environment Helps integrate marketing programmes Provides adequate customer information for the implementation of customer orientation It promotes pro-activeness. Provides adequate knowledge of key marketing trends, future changes and development
to guide decisions. Enhances the formulation of objectives and strategies on the basis of company core
competence to exploit opportunities.
Limitations/ Criticisms of planning Time and cost constraints. Dynamic, complex and unpredictable nature of the marketing environment makes its
implementation difficult. Requires personnel with high analytical, information management and forecasting skills
hence the need for training and development. Requires high technology needs to promote information processing and analysis.
Purpose of the marketing plan
A ‘road map’ for achieving objectives and implementing strategy
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A framework for monitor and control
Clarifies roles and functions
Specifies how resources are to be allocated
Assigns responsibilities and deadlines
Creates awareness of barriers to achievement
Ensures customer focus and competitor awareness
Barriers to marketing planning
Weak support from top management
Poorly managed communication of its purpose or nature
Lack of line management support- short-term focus
Too much detail- indigestible volumes of data
Annual ritual- seen as a meaningless chore
Too much bureaucracy
The marketing planning process involves the following steps, which sometimes referred to as the
SOSTAC Model.
S = Situation Analysis = Where are we now?
O = Objective setting = what do we want to achieve?
S = Strategy development = How do we achieve objectives?
T = Tactical development = How do we achieve strategy?
A = Action = Implementation of the plan!
C = Control = How do we ensure arrival or have we achieved our objectives?
S = SITUATION / ENVIRONMENTAL ANALYSIS
This involves a through study of the broad trends within the economy and society, and a
comprehensive analysis of markets, competitors and the company itself. The firm’s environment
consists of both the internal and external environments.
Internal analysis
This refers to analysis of organizational internal activities in an effort to determine its capabilities.
The Micro-environmental Analysis
The Micro- environment consists of activities or aspects within its environment that the firm has
some element of control over and these include the following:
Customers
Competitors
Suppliers
Distributors
There are number of marketing techniques that can be used in analyzing an organization’s Micro-
environment. These include the following:
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Porters 5 Forces. Michael Porter categorized five competitive forces in the analysis of
the environment of the firm, which the firm must consider and understand.
1) The threat of new entrants to the industry
2) The threat of substitute products or services
3) The bargaining power of suppliers
4) The bargaining power of customers
5) The rivalry amongst current competitors in the industry
MACRO-ENVIRONMENTAL ANALYSIS
The macro-environment (external environment) consists of activities beyond the firm’s control
and such as, the firm should at best try to adapt to its changing external environment.
The PESTLE Analysis Model is the most widely used technique for analyzing the firm’s
external environment
PESTLE ANALYSIS
This is mainly used to analyze the wider macro-environmental or the external environment in
which the firm operates. The organisation will normally have no control over PESTLE factors
and at best should try to accommodate and devise strategies around it.
SWOT ANALYSIS
This is an overall evaluation of a company’s Strengths, Weaknesses, Opportunities and Threats.
Strengths and Weaknesses are internal and can be controlled by the organisation whilst
Opportunities and Threats are external.
The objective of SWOT analysis is to identify and convert threats into opportunities and
weaknesses into strengths.
Strengths refer to an organization’s capabilities or aspects of its business that it does better than
its competitors. For example:
Coca Cola has a brand name
Marks and Spencer is noted for its high quality products
Tesco for its high levels of customer service
Microsoft for its product innovation
Weaknesses refer to aspects of an organisation’s activities that it does not excel in or does
comparatively worse than its competitors. For example,
Lidl supermarket is criticised for its poor customer service.
Macdonald’s for its ‘junk food’
Virgin trains for lateness or delays to train times.
Opportunities are aspects in the business environment that the organisation can capitalise upon
or take advantage of. For example,
Tesco using its huge customer database to offer non-grocery products such as
insurance, credit cards and loans.
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Threats are aspects in the business environment that pose a challenge or can hamper the
organisation from achieving its objectives. For example,
Competitors
Changing pace of technology
Government legislation
Natural disasters such as earthquakes or floods
OBJECTIVE SETTING
Objectives are basically what the organisation wants to achieve in its operational activities.
Objectives can be set at different levels of organisation.
Corporate objectives define specific goals for the organisation as a whole. This may be
expressed in concrete terms such as profitability, return on investment, growth of asset base and
earnings per share. They will permeate the planning process and be reflected in the objectives for
business units and functional objectives.
Business objectives define the goals of the various SBUS or individual business units that form
the corporation and are used by such multi-product organisations as Virgin and Unilever.
Marketing objectives relates to what the organisation wants to achieve in its marketing
activities. Examples of marketing objectives include growth in market share for a particular
product, increase in its customer base or growth in the usage of certain facilities.
Criteria for setting objectives
The SMART criterion should serve as a guide when objectives are set. This criterion stipulates
that objectives should be:
S = Specific
M = Measurable
A = Attainable
R = Relevant and
T = Time-bound
S = STRATEGY DEVELOPMENT
Strategies are the means to achieving the organisation’s stated objectives.
Broadly speaking, strategies can be categorised as growth, competitive and institutional
strategies.
Growth strategies include:
The Ansoff matrix or Product-market strategy
Growth strategies are used when the objective of the firm is to expand, grow, increase or develop
its activities such as sales, profits, market share and international expansion.This is perhaps the
most popular method employed by organisations in an attempt to grow their businesses.
The strategy is mainly based on the manipulation of the two variables of markets and products so
as to grow the business. This produces four possible strategy options.
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1. Market penetration: This involves selling more of the firm’s existing products to its
existing markets. This can be achieved by means of heavy advertising and sales promotions
and sales promotions focussing on the following:
Persuading existing users to use more
Persuading non-user to use
Attracting consumers from competitors
Sales promotions activities such as BOGOF, discount pricing, more for less
2. Market development: This involves expanding into new markets with existing products.
These may be achieved by way of expanding into:
New markets geographically (international markets)
New market segments or
New users for products.
3. Product development: This approach requires the organisation to develop modified
products, which can appeal to existing markets. By tailoring the products specifically to the
needs of existing customers, the organisation can strengthen its competitive advantage.
4. Diversification: This implies developing new products for new markets. It is very risky
because the organisation might be entering into new areas in which it has no expertise. The
Virgin group has been very successful in its diversification efforts.
COMPETITIVE STRATEGIES
Organisations have to decide whether to compete across the entire market or only in certain
segments (competitive scope) and whether to compete through low costs and prices or through
offering a differential product range (competitive advantage).
These competitive strategy options according to Michael Porter can be expressed as three possible
strategies.
Cost leadership: attempts to control the market through being the low cost producer. This
would be appropriate if an organisation has a costing advantage over competitors. This
could be due to many factors such as economies of scale, superior working practices or a
technological advantage.
Differentiation: This aims to offer products, which are recognised as unique in areas,
which are highly valued by the consumer. It is the product’s uniqueness and the associated
customer loyalty that protects the firm from competition.
Focus: This uses either costs or differentiation but rather than concentrating on the entire
market, the organisation looks to operate only in particularly attractive segments or niches.
T = TACTICS
Tactics are measures or techniques that aid the achievement of strategies.
These tactics principally includes that use and manipulation of the7Ps– namely
Product, Price, Place, Promotion, Process, People and Physical evidence.
A = ACTION / IMPLEMENTATION
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Once marketing strategies and tactics have been set, it becomes necessary to turn them into action
plans. Implementations of marketing plans include the following 3 activities:
Allocating tasks and responsibilities (use of internal staff or outsourcing to external
agencies or both)
Scheduling of marketing activities: This implies the use of a Gantt chart, which is a
diagrammatic illustration of the marketing activities that will be executed and the times
when they will executed.
Setting the marketing budget: A budget is a financial statement showing how much the
company intends to spend on its marketing activities for a given period. The company can
use any of the following methods for setting its marketing budget.
1. Percentage of sales : Research has shown that in the UK some marketing budgets are fixed
by some non scientific methods such as the following.
- A percentage of the previous year’s sales
- A percentage of the budgeted annual sales
- A percentage of the previous year’s profit
2. Competitive parity: This implies fixing marketing expenditure in relation to the
expenditure incurred by competitors.
3. All-you-can-afford : This is crude and unscientific, but commonly used. The firm simply
takes a view on what it thinks it can afford to spend on marketing.
4. The objective and task method : The marketing objectives are set and then the tasks
needed to accomplish them are identified. Estimating the cost of these tasks then sets the
budget. This is the most scientific method but can be difficult and time consuming.
5. Arbitrary: This implies a senior manager using his own initiative and judgement to se the
marketing budget.
6. Historical: This implies past budgetary records to se the present or current marketing
budget.
C = CONTROL AND EVALUATION
Once the marketing plan starts to be implemented, the task of management is to monitor and
control what goes on.
Monitoring mean checking that everything is going according to plan.
Control means taking corrective actions as early as possible if things are not going according to
plan. Methods for controlling the organisation’s marketing activities include:
The Balanced scorecard method: This method is the most comprehensive control method
as it involves measuring or evaluating the performance of all the different functions of the
organisations such as marketing, production, human resources and finance.
PRODUCTPRODUCT: is any tangible activity of benefit that one party can offer to another that results to the ownership of something as an exchange value.
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Components of a productThis refers to the various levels of a product needed to enhance value creation to customers.
Core product: is the basic functional attributes of a product that a customer needs i.e. the benefit offered. E.g. the core benefit of any vehicle is transportation.
Basic product: refers to product features such as design, colour, quality etc Expected product: Product attributes that customers expect when they purchase a
product. E.g. performance Augmented product: Product attributes that create customer delight i.e. the provision of
services over and above customer expectations. These include customer advices, warrantees, guarantees, free delivery etc
Potential product: Product attributes that offer solutions to customer potential needs. This implies being proactive and embarking on continuous product and service improvements to meet changing customer needs.
In today’s increasingly competitive era, potential product is the best possible means to creating customer value, sustainable customer relationship hence competitive advantage.
Product decisions Product attributes: quality, style and design Branding: creating, maintaining and enhancing the brand Packaging: designing and producing the container/wrapper for the product Labeling: tags, graphics and illustrations attached to the package Product support: augmented services
New Product Development (NPD) processThis refers to the stages that a product undergoes from conceptualization to commercialization. Idea generation and screening: Entails the gathering of adequate information that leads to the development of product concept. Sources of ideas mostly from marketing and research and development are extracted from the environment through market research and intelligence. Ideas generated are filtered on the basis of their ability to create value to customers, viability and matching firm’s core competenceConcept development and testing: Valuable ideas from the screening process are developed into product concepts. These product concepts are further tested on the basis of;
Strong needs Benefit believed and understood Uniqueness User friendliness
Business analysis: Involves assessing the financial viability of chosen product concepts. It includes the estimation and permutation of cost of production and correlating it to expected demand.Product development: This the product prototype stage where chosen product concepts are developed into tangible products and brand name assigned to them. The marketing mix should be used to complement and communicate product value. However for the first time, production should be on a small scale.Test marketing: is the launching of a product on a small scale to test target market product acceptability. This should be done in an authentic market setting (on sample of shops or distributors for industrial goods and representative geographical area for consumer goods).Commercialization: Full scale product launch after ascertaining market demand for a product. Speed to market become quite paramount to enhance a sustainable product leadership in a given market.
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Classification of productsProducts are mainly classified into two categories namely; Consumer goods(FMCG) and Industrial goodsA. Fast Moving Consumer Goods (FMCG): Goods produced for immediate consumption. These are;
Convenience goods: Consumers basic needs such as bread, sugar, salt, tooth paste etc Shopping goods: Semi-durable products that are relatively expensive hence need rational
purchase decision. Consumers mostly look around at different places for information and comparison prior to buying.
Unsought goods: Products whose needs and existence consumers do not realize until seen on promotion mostly on door to door drop leaflets.
B. Industrial goods: Mostly durable goods produced to help further production. These are; Installation: Plants and machinery items required for the production of goods Accessories: Replacement items or parts to goods existing in the market. E.g. mobile
jackets, covers, batteries etc Raw materials: Items consumed in the process of production Supplies: Usually called the convenience goods of industrial requirement. It includes
office stationery and cleaning materials.
The Product life cycle (PLC)This is an analytical tool that stipulates the stages that a product undergoes from the launch of the product to its phase out in any given market.
Role / importance of the PLC1. Product stage identification2. Strategy generation: provides basis at each stage of the plc3. Forecasting potential future demand4. Profit analysis: to some extent it helps predict profit levels
Stages of the Product Lifecycle (PLC) Introduction: The period at the initial launch of a product into a market. Growth: stage at which the product gets accepted into a market hence sales and product
performance increases. Maturity: The stage at which a product reaches its peak as sales and product
performance begins to fall. Decline: Stage at which a product becomes obsolete due to changing customer demand
and competition resulting to sharp fall in sales and product performance.
Characteristics of the plcCUSTOMER SALES COMPETITION PROFIT
Introduction Mostly innovators
Low sales Few competitors Negative
Growth Early adopters Rapidly rising More competitors Rising
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Maturity Early majority High Competitor no. declining
High
Decline Laggards Sharply falling Small no. of competitors
declining
The Marketing mix strategies for the plc stagesProduct Price Promotion Place
Introduction Unique product features 4 innovative products, Basic product features 4 me too products.
Price skimming, innovative products, price penetration 4 me too products
Advertise heavily to create awareness, adverts should reflect product benefit as USP ,use sales promotion and personal selling
Intensive distribution 4 me too products, selective and exclusive for innovative products
Growth Improved quality, unique product features, widened product mix
Price skimming, price penetration
Heavy promotion to expand market and strengthen mkt position, use more of advertisement
` ` ` `
Maturity Product modification, augmented features, widened product mix
Competitive pricing
More promotion to maintain mkt share, emphasis on sales promotion, little advert to remind
` ` ` `
Decline Reduce product features
Maintain a steady price to maximize cash flow
Less promotion, emphasis on sales promotion
` ` ` `
Criticisms of the product life cycle (plc)1. Poor stage definition: There exist not clearly defined stages hence making it quite risky
to be used as a basis for marketing planning.2. Product stage disuniformity: Not all products strictly follow the stages of the plc3. Stage inevitability: plc stages do not strictly stand as products can be modified or
repositioned4. Industry variations: The length of the plc is not unique as they vary across different
industries.
Product AdoptionThis describes the process and timings of customers or users acceptance of a product. This is referred to as diffusion. Diffusion of innovation: the rate at which a product moves through the adoption proces
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The process of product diffusion Innovators: First to accept a product. They are highly educated, affluent with high social
status. Early adaptors: Similar to innovators but are rather more influential as the society look
upon them. E.g. opinion leaders such as celebrities Early majority: They are a bit more cautious as their decisions are influenced by social
and economic patterns. Late majority: Above average socio-economic status and rely on opinion leaders for
information. They are more risk averse as they make their choice only when they are sure to like it.
Laggards: Usually older and relatively low socio-economic status. They resist new products. They are generally timid and cautious in nature.
Factors enhancing fast diffusion process Communicability: Product should have the ability to communicate potential benefits Relative advantage: Ability to make customers understand and appreciate the relative
advantage of the product Observability: Ensure that the product is highly distributed to promote extensive
accessibility and usage hence easily seeing others using it Congeniality: Product should be unique and easily recognized Triability: User friendly product
The adoption process Awareness: The consumer becomes aware of the product/service but lacks adequate
knowledge or information Interest: The consumer becomes interested in the product or service and search for
information relevant to it Evaluation: The consumer decide to either try the product or not Trial: The consumer becomes a customer by trying (purchasing) the product/service Adoption: The customer continue to be a loyal customer by regularly using the product Post adoption confirmation: The customer evaluates the extent of product value
creation
BrandingBranding is the process of developing and enhancing a brandBrand is a name, term, sign, symbol, design or a combination of them intended to identify products and services of a seller and differentiate them from those of competitors (Kotler). Brand Equity: is the asset the marketer builds to ensure continuity of satisfaction for the customer and profit for the supplier.
Role / Importance of a brand Differentiating a product/service Adding value to a product Creating positive impression hence reducing the importance of price Facilitating customer choice Creating brand equity Supporting aspirations and self image Encouraging shelf space(pull strategy)
Branding decisions Brand positioning Brand name selection Brand sponsor
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Brand developmentSuccess criteria for branding
Suggest benefit. E.g. Ariel washes whiter Suggest quality. E.g. BMW featuring strong body and quality engine Easy to pronounce E.g. Boots Be acceptable in all markets E.g. Nike Be distinctive Be meaningful
Branding strategies/Brand architecture Umbrella branding: Using single brand name for several products in different markets.
E.g. Philips- computer, hi fi, phones, television Source branding: Double branded with corporate or range name plus product brand
name. E.g. Kellogg corn flakes. Family/ Company branding: Company’s products carrying company name.E.g. Honda Multi/ product branding: Assigning a unique name and position to each product. E.g. in
the detergent market, P&G has tide, bold, Ariel, vizir and dash brands Line brands: Several complementary products sharing the same brand name. E.g.
L’Oreal sells shampoo, hair spray, gel and lacquer under the line of hair products Range branding: Same brand name for products of same area of competence. E.g. Heinz
uses the Weight watchers brand for its diet range Co-branding: Established brands combine for maximum impact. E.g. Skoda car with
Volkswagen engine. Own label branding: Retail shops using their own label brands
Strategies for improving/updating brands1. Brand repositioning: This applies to instances where a brand has a weak position in an attractive market. It is enhanced in the following:
Real repositioning: Entails updating a product by improving its features (quality, technology, functions and design).Jaguar was turn around in this way in the 1990’s
Augmentation: Offering additional products or services. E.g. the Travel inn hotel chain has added children channel films as a family package on top of its core products.
Psychological repositioning: This is very common in the financial service companies. It involves changing buyers belief about the quality of product attributes or brand status
Reweighing values: Connotes putting emphasis and importance to particular values. E.g. Lexus emphasis on quietness as a factor for choosing luxury car.
Competitive advertising: Engagement on promotional activities that undermine competitors brand value. E.g. Tesco in store promotion showing price comparison of UK supermarkets in an effort to highlight itself as the lowest price brand.
2. Brand revitalisation: Becomes necessary where a brand is potentially strong but lacks adequate market attractiveness to offer maximum profit. It is enhanced in the following:
Finding new markets: Developing new international markets were used by Cocoa cola & McDonalds in maintaining the strength of their brands after reaching maturity in the US market.
Enter new segments: E.g. Timberland extension into fashion shoes New application: Creating new uses. E.g. Arm& Hammer baking soda used as a
deodoriser, cleaner for refrigerators, sinks, animals and tooth paste Increasing usage: Creating additional incentives such as easy product use (instant tea),
frequent discounts and new ways of increasing quantity consumption (large packages).
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3. Improving brand productivity: This is achieved through cost cutting, reducing working and fixed capital, raising prices and reducing badly performing brands4. Brand rejuvenation: Involves bringing a brand back to life after realising strong customer demand for it. E.g. Lego experienced this with its duplo brand5. Brand elimination: Withdrawing or killing brands with less viable markets or too many brands to prevent the risk of spreading marketing spend too thinly.
Problems of branding Protectionism: This refers to the need for trademarks, copy rights and registration of
designs to protect intellectual property Competitive messages: There exist the likelihood of consumers forgetting brands as a
result of confusing variety adverts Ineffective brand identity: This is certainly possible if a brand does not match
customer needs Wrong media use: This prevent adequate reach and customer confidence Brand superiority: The existence of more renounce and powerful brands over shadow
the strength of others.
ServiceA service is any activity of benefit that one party can offer to another that is essentially intangible and does not result in the ownership of anything(Kotler, Societal marketing)
Characteristics of service (PIVIN)1. Perishability: Services could not be kept for future use as they do not last long2. Intangibility: They can not be seen, felt, smell or tasted before use3. Variability (heterogeneity): Service standards are never the same hence signifies service inconsistency4. Inseparability: It is impossible to separate service and the service provider as it is produced and consumed instantaneously5. Non ownership: It is only possible to buy and consume service but not to own or carry away.
The Service Mix People: Staff and management skills and expertise Process: The manner in which service is delivered. It includes speed, approach, accuracy,
convenience, hassle free etc. Physical evidence: The structure and nature of place of service provision. E.g. design,
staff appearance, ambience, logo etc
PRICEPRICE is the exchange value of a product or service usually expressed in monetary terms.
Role / importance of price Revenue generation: It serves as the basis for generating revenue and determining
profitability Customer acquisition and retention Exchange creation: It brings customers and suppliers into business Product definition: It signals to customers the nature of a product on offer
Price determinants (factors influencing pricing)
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1. Pricing objectives: These could be to generate short term profit, increase sales and market share, gain market presence etc
2. Price elasticity(demand and supply interactivity): If elasticity is high, price should be low whilst low elasticity should be followed by high price
3. Competition : Prices should always reflect competitors pricing most especially where price elasticity is high
4. Inflation: This substantially increases the prices of goods through devalued currency or economy
5. Customer purchasing power: price should always reflect this to enhance corresponding buying rate
6. Cost of production: This should be reflected on pricing to enable the recovery of cost incurred in the process of producing a particular product
7. Legal factors: Should be in line with the pricing policies made by the authorities8. The marketing mix variables: Price should complement effectively with other marketing
mix in communicating value to customers.
The pricing process Determine the objective of the pricing Assess customers buying power and price perception Assess the level of demand Carry out a cost-volume-profit analysis Assess competitors pricing Select an appropriate pricing policy Develop a pricing method Establish the actual price
Pricing methods1. The economist perspective (demand based): Determine price on the basis of bringing
demand and supply into equilibrium. This varies from perfectly, imperfectly competition and monopolistic market structures.
2. The accountant perspective (cost based): Determines price on the basis of cost of production. This takes the form of marginal or cost plus pricing
3. The marketer perspective( competition based/value based): Determines price to reflect competitor pricing
Pricing objectives To maximize profit To generate return on investment To acquire product leadership Survival Increase sales and market share
Pricing strategies Price skimming: Initial high price attached to exclusive products Price penetration: Initial low prices on goods to enable market presence and acceptance Price adjustment policies;
1. Discount pricing: Pricing reduction to increase consumption2. Differential pricing: Differing prices on the basis of seasonality, location and
customer type 3. Promotional pricing: Short term tactical pricing to promote increase usage. E.g.
Bogof(buy one get one free), 2 for the price of 1
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Psychological pricing: Strategies that influences buyers mentally. E.g. 1.99(odd number pricing), reduction in size or quality for the same price
Marginal pricing: Temporary pricing to lure customers to switch Cost plus pricing: mark up pricing
Cost BehaviourThis reflects how cost and revenue vary at different activity levels hence the way in which cost is affected by changes in volume of output.
Patterns of CostFixed cost: Cost that is unaffected by activity levels hence remain constant over time.e.g Rent, lighting e.t.c. Total fixed cost: Accumulated fixed costVariable cost: Cost that varies with the levels of activity e.g. Salary, raw materials e.t.c.Total variable cost: Accumulated variable costTotal cost: Over all (fixed & variable) cost of producing a product
C alculation of a price Fixed cost per unit * Output levels = Total fixed cost Variable cost per unit * Output levels = Total variable cost Total fixed cost + Total variable cost = Total cost Total cost = Unit cost(cost per unit) = Price @ breakeven
Total output Mark up: is always calculated on cost and added on unit cost to form the expected profit
price. Margin: Calculated on sales, added to unit cost to form the expected profit price.
PROMOTION
Modern marketing calls for more than just developing a good product, pricing it attractively, and
distributing it to potential stakeholders, such as consumers, suppliers, distributors, employees,
pressure groups , shareholders, the media, local community and the government. The objectives of
marketing promotions can best be described by the DRIP factors:
D = Differentiate: This makes it possible for companies to promotional activities in order
to show that their product or services are unique or different as compared to competitors.
R = Remind: This implies using promotion aimed at reaching established or existing
consumers about the availability of an organisation’s products and services.
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I = Inform: This is aimed at creating awareness about the existence of a product in the
minds of new or potential customers.
P=Persuade: This is the ultimate goal of promotion and it is aimed at convincing
customers to actually buy organisation’s products and services.
The Promotional Tools/Techniques/Methods
These refer to the tools that organisation uses in the communications with their targeted audiences
and include the following:
1. Advertising
2. Sales promotion
3. Direct marketing
4. Sponsorship
5. Public relation
6. Personal selling
ADVERTISING
Advertising is any paid form of non-personal communication that is transmitted through mass
media by an identified sponsor. The AIDA Model best explains the objectives of advertising.
A = Awareness
I = Interest
D = desire
A = Action
The following points also help our understanding of why organisations advertise
Promoting product, organizations and services
Stimulating demand for products
Increasing sales
Educating the market
Increasing the use of a product or service
Reminding and reinforcing
Reducing fluctuations in demand
Advertising Media
Broadcast(Television and Radio)
Print media (newspaper and magazines)
New media( Internet, Digital television and CD-ROM)
Outdoor(Billboards, Fly Posters, Street furniture and transit)
In-store(Point of purchase displays, Packaging
Cinema
ADVERTISING CAMPAIGN / PROCESS
Situation analysis
Advertising objective definition
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Identifying target audience
Setting advertising budget
Media planning and selection
Advertising development and testing
Scheduling and implementation
Monitoring and evaluation
SALES PROMOTINS
These are range of tactical marketing techniques designed with a strategic marketing frame work,
to add value to a product or service in order to achieve a specific sales and marketing objectives
(institute of sales promotion). The main aims and objectives of sales promotion are usually:
To increase brand and product awareness-attracting new customers
To increase trial and adoption of new or existing products
To attract customer to switch brands from competing organisations
To level out fluctuations in supply and demand
To increase brand usage
To increase customer loyalty
To disseminate information
Sales Promotions Techniques
Money-off vouchers or coupons
Buy one get one free (BOGOF)
Customer loyalty bonus schemes (loyalty cards, Air miles )
Price/trade discounts
Samples
Competitions
Point of sales display
More for less (3 for the price of 2)
DIRECT MARKETING
This is an interactive system of marketing, which uses one or more advertising media to effect a
measurable response at any location. It tends to exclude the intermediary.
It is the planned, recording, analysis and tracking of customer behavior to develop relational
marketing strategies (Institute of direct marketing). The aims and objectives of direct marketing
include:
Increasing direct mail order levels from new and existing customers
Dissemination of information – provision of information to aid customer enquiries and
support adopting process
Generation of sales leads
Generation of trial leads-to increase the number of customers willing to try the product.
Direct Marketing Techniques
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Direct mail
Telemarketing
Home shopping television channels
Use of sales force
Catalogues
Direct response advertising
The internet
SPONSORSHIP
Sponsorship implies an organisation undertaking to carry the cost of hosting an event in return for
advertising space. The objectives of sponsorship include the following:
Increasing brand awareness
Building and enhancing corporate image
Raising awareness of brands related to products restricted in advertising through various
legislation such as alcohol and cigarettes.
Types of Sponsorship
1. Programme sponsorship: Involves mainly sponsoring programmes on television for
example Cadburys sponsor Coronation Street on ITV.
2. Event sponsorship: Involves sponsoring major event for example
MasterCard sponsored the last football World Cup.
3. Person or individual sponsorship: for example, Nike sponsors
Tiger Woods.
3. Art sponsorship: Companies sponsor museums and music events. For example,
Saatchi and Saatchi sponsors the Tate Gallery, Capital Radio sponsors Party in
the Park.
PUBLIC RELATIONS (PR)
Public relations are planned and sustained effort on the part of an organisation to create goodwill
and a positive public perception in the minds of its publics. Organisations publics include:
Customers
The general public
Financial institution
Shareholders
Employees
The media-TV, press, radio
Trade Unions
Governments
Objectives of Public Relations
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To create and maintain the corporate and brand name
To enhance the position and standing of the organisation in the eyes of the public
To communicate the organisation’s ethos and philosophy and corporate values
To disseminate information to the public
To undertake damage limitation exercises to overcome poor publicity for the company
To raise the company profile and forge stronger, lasting customer and supply chain
relationships.
Public Relations Techniques
Press releases and Press conferences
Publications
Sponsorship
Advertising and Media relations
Events
Annual reports
Lobbying and Internal PR
PERSONAL SELLINGThis refers to the personal presentation of products / services and persuasive communication to potential customers in an effort to generating sales leads
Objectives of the sales force Increasing sales returns Generating sales leads Reducing cost of sales Stimulating trial and purchasing
FUNCTIONS OF PERSONAL SELLING Prospecting Communicating Selling Servicing Information gathering Administration Customer relationship enhancement
Personal selling techniques Face-face contact with sales force Telephone contact( telemarketing) Text messaging
PERSONAL SELLING PROCESS Prospecting customers Qualifying customers Developing relationship
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Presenting the sales message Handling queries and objections Closing the sale Providing service and support Developing a sustainable relationship and maintaining commitment
PLACE (Distribution)Place represents the distribution element of the marketing mixes that constitute all activities involved in getting products and services to the final consumer.Place (distribution) is facilitated by the marketing channels.A marketing channel refers to the route (individuals and organisations) through which products and services are taken from the producers to consumers.
Role / importance of place Facilitates exchange Promote product accessibility Enhances timely delivery of products and services
Channels of distributionDirect: Manufacturer Consumer
Indirect: Manufacturer Retailer ConsumerManufacturer Wholesaler Retailer ConsumerManufacturer Agent Wholesaler Retailer Consumer
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Functions of the Marketing channels Information Promotion Prospecting Matching Negotiation Physical evidence
Channel determinants (factors influencing channel decision)1. Nature of the product2. Location of the target market3. Target market buying habit4. channel cost5. competitors channel usage6. channel availability
Distribution strategies1. Intensive: Wider distribution2. Selective: Average scale distribution with in few outlets3. Exclusive: Small scale distribution with in few outlets
Evaluation of distribution effectiveness1. Cost effectiveness2. Product suitability3. Customer satisfaction4. Quality and timing
Logistics Management: refer to the planning, implementing and controlling the physical flow of materials and related information from one point to the point of consumption to meet customer requirement profitably.
Functions of logistics Warehousing Inventory management Transportation Logistic information management such as customer orders, billing, inventory levels and
customer data through EDI, intranet and extranet, telemarketing
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Industry AnalysisThis is also referred to as competitive forces or porter’s five forces analysis. It influences the state of competition in an industry hence determines the average profitability of a market. It entails the following:1. Threat of new entrants: This is very pertinent in the drink and pharmaceutical industry. It is influenced by the strength of barriers to entry which explains high profit margins as outlined below.
Patents and legal regulation requirements Economic of scale Capital requirement Brand superiority Access to distribution channels Threat of retaliation
How ever this has been lowered by globalisation, deregulation and technological advancements (internet)2. Threat of substitute: Substitutes are indirect products that can undermine demand and prices. This is common in the glass manufacturing industry. It is influence by:
Availability of alternative products New products Technological advancement that leads to elimination of needs. For instance new cars use
less oil whilst sealed engines make replacement lubricant unnecessary.
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Abstinence: Consumers doing without Generic substitution: Consumers shifting in purchase.
3. Power of suppliers: This is common in the textile and petroleum industry. It is influence by the following:
Number of suppliers in the industry Level of differentiation Switching cost involved Size and strength of customers Prevalence of forward integration
4. Power of customers: This is pertinent in the chemical and auto tyre industry where profitability disappear except for low cost suppliers. It is determined by:
Size and strength of customers Number of suppliers Level of differentiation Switching cost Prevalence of backward integration
5. Inter company / Competitive rivalry: This is common in the steel and textile industry where profits are eliminated except for the most efficient producers. It is influence by;
Production capacity Product standardisation Number of competitors Growth levels.
Competitor AnalysisThis is the assessment of competitor behaviour and activities with a view to acquiring adequate information to enhance the formation of effective marketing strategies. Information about competitors could be gathered from primary and secondary research.
Dimensions of competitor analysis1. Who are your competitors?This involves the identification of competitors in the below given means. A. Market and product similarity analysis B. Strategic group analysis: This involves the analysis of firms with in an industry on the basis of similar strategies aimed at similar target customer in order to determine ones competitors.2. What are their goals?This entails identifying competitor goals in terms of market share improvement, service leadership, technology leadership, cash flow enhancement and profit maximisation.3. What are their capabilities and weaknesses?This facilitates the identification of the core competencies and short falls of competitors. It enables the generation of strategies to over come their capabilities and capitalising on their short comings to gain competitive advantage.4. What are their current and likely future strategies?This gives a summary of competitors’ likely future positions. This is enhanced in conjunction with adequate knowledge as who they are and what their capabilities are.5. What are their likely responses?
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From the above analysis a competitor response profile (kotler) can be extrapolated to determine their likely responses.
Competitor response profile (Kotler) Tiger: Reacts to any attack Selective: Respond to certain type of attack Laid back: Irresponsive to attacks Stochastic: Response difficult to predict
Competitive / Generic strategies (Michael Porter)1. Cost Leadership: Refers to the leveraging of organisational productivity and cost to enhance competitive advantage. It is mostly associated with market leaders in an industry. Cost leadership strategies
Economies of scale Experience and learning curve Capacity utilisation Strategic alliance Effective value chain enhancement Effective supply chain management Proximity low cost factors Globalisation Advanced technology Operational excellence
2. Differentiation: Creating competitive advantage through uniqueness of offer. For instance being a quality leader (Mercedes Benz) Strategies for differentiation
Creation of strong brand identities Creation of strategic break point Improving service levels After sale service Relationship enhancement Greater flexibility Innovative packaging and distribution Superior financing deals Speed to market Relevant and unique product features New technologies
3. Focus/Niche: Concentration of activities on a segment or segments that matches your core competencies. This could either be cost or differentiations focus. E.g. Morgan in car market. Strategies for niche
Creation of strong and specialist reputation Effective and efficient use of R&D resources Concentration of effort on chosen specialist and defensible position Choosing niche on the basis of segment attractiveness and company exploitative strength.
Categories of market players (classification of market position)1. Market leaders: Are firms with the largest market share hence determine the nature, pace and basis of competition by virtue of its pricing, intense advertising and distribution, technological advance and rapid product launches in the industry. For example Nokia in the mobile industry. Strategies for market leadersA. Expansion of current market share
Heavy advertising
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Improved distribution Price incentives New product development Alliances Geographic expansion Distribution expansion
B. Defending market share Strong customer relations Strong distribution relations Proactiveness Continuous product and process innovation Strong market position Economies of scale & experience effects Product / service differentiation
2. Market challengers: Firms with relatively small market share adopting an aggressive stance to improve market share and perhaps gain dominance.
Strategies for challengers Discount pricing Cheap goods Innovative products and distribution Improved services Intense advertising Product range proliferation Cost reduction
3. Market followers: Firms with relatively low market share who adopt a less aggressive stance to maintaining its status quo.
Strategies for followers Careful market segmentation Competing only in highly valued market areas Effective and efficient use of R&D resources Profitability focus Specialise in high value added products/ services.
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Customer AnalysisThis is the assessment of customer behaviour in an effort to accessing information on customer present and future needs to enable effective segmentation, targeting and positioning.
Customer analysis technique Who are your customers?The useful way of customer definition is the recognition of the roles involve in purchase situations (Decision making unit). These are stated below:
Initiator: An individual pioneering the search for a solution Influencer: The person holding the purse strings Decider: The decision maker in the purchase. Purchaser: The individual who performs the act of buying User: The consumer of the products / services
The above knowledge facilitates the adoption of an effective marketing approach to satisfying the needs of all involved.
What do they buy?This entails the identification of customer purchases through the assessment of their buying behaviour. Effective data mining is a possible way of achieving this.
Why do they buy?This involves the need for insight knowledge into the purpose of customer purchase hence reflecting this into products / services.
Factors influencing customer behaviour
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1. Cultural: Achievements, success, efficiency, progress, material comfort, practicality, individualism, freedom and youthfulness (Schiffman and Kanuk 1983)
2. Social factors: Reference group, family, social role and status.3. Personal: Age and gender, occupation, economic circumstances, life style and
personality.4. Psychological: Motivation, learning, perception, beliefs, attitude and values.
Factors influencing organisational buying behaviour Environmental factors Inter-personal factors Organisational factors Individual factors
When do they buy?This entails information on customers purchase frequency. It permits the availability of products as at when needed by customers which necessitates an effective stock control system.Where do they buy?Information on customer purchase location buying habit. This is also influenced by the determinants of buyer behaviour.
How do they buy?This involves the understanding of the customer buying process. It is shown below.
Need / Problem recognition Information search Information evaluation Purchase decision Post purchase confirmation
Organisational buying process Problem recognition Develop product specification Supplier search Supplier evaluation and selection Product order(purchase) Performance review
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SEGMENTATION, TARGETING AND POSITIONING
SEGMENTATION: refers to the act of dividing a market into specific groups of customers who share common needs and who might require separate products and marketing mixes (Kotler et al 1998).
ROLE/ IMPORTANCE OF SEGMENTATION1. Enhances effective customer targeting2. Facilitates adequate provision of customer needs3. Promotes profitability through effective targeting(choosing customers that match firm’s
core competence)4. Promotes effective and efficient resource utilization5. Facilitates the gathering and management of adequate customer information
THE SEGMENTATION PROCESS The identification of possible segments with in the market through thorough market
analysis Gathering of information on identified segments through adequate market research Evaluating the attractiveness of the various specified segments. This involves the
processing and analysis of gathered information to ascertain if selected segments match the firm’s core competence
Developing competitive positioning on the basis of benefit, usage, user status, quality etc Developing a product(s) that specifically meet the needs of the chosen target segment(s) Designing the appropriate communication mix to promote and develop relationship with
target customers
BASIS FOR SEGMENTING A CONSUMER MARKET
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Geographic segmentation: Segmenting a market on the basis of location. E.g. region, country, city, town etc. This is quite common with multi-national companies such as coca cola, Ford etcDemographic segmentation: Segmentation on the basis of gender, age, wealth etc. E.g. Mother care UK specializes in the sale of baby clothing.Geo-demographic segmentation: Segmentation using both geographic and demographic variables. E.g. in the UK, ACORN (A Classification Of Residential Neighborhood) classified suburban dwellers as people with good economic background (wealth achievers).Psychographic segmentation: Segmentation on the basis of individual personalities and lifestyles. It is very common in the electronic industry and relates to attributes such asSOCIAL ACTIVITIES: leisure activities, shopping habits etcINTEREST: food, music, reading, watching television etcOPINION: politics, business, education, ethics etcBehavioral segmentation: Segmentation on the basis of the following;
Frequency of purchase. A common practice of supermarkets Benefit sought. Unilever segments on this basis Consumption pattern. Kellogs uses this
B2B BASIS FOR SEGMENTATION Standard industrial classification(SIC) Industry type e.g. chemical, sport, media, furniture etc Behavior(operation trend) Geographic(location) Size(small, medium or large) Product type(FMCG or industrial goods) Customer type(b2b, b2c or c2c)
TARGETING: refers to the decision as to which market segment(s) a firm decides to prioritize its sales and marketing efforts (Dibb et al 2001). This implies selecting the target segment(s) that match (es) a firm’s core competence whose needs are met with distinct marketing mix.
Target segment determinants Measurable: Potential to easily quantify existing variables Accessible: Potential to be reached with marketing activities Substantial: Capable of creating sufficient demand to match profitable returns Distinctive: Should be unique Strategic: It should match the firm’s core competence
Forms / types of targeting segments Mass or undifferentiated: Single product for an entire market Differentiated: Specific product offer for each segment. Tesco offers Tesco value and
premium products Concentrated: Focusing on a particular segment. Jaguar focuses on class A segment Customised: Tailoring offers to reflect individual needs. E. g. Dell uses this in an effort
to dominating the computer industry. POSITIONING: is the act of designing an offer so that it occupies a distinct and value space in the minds of customers (kotler).
Basis for positioning1. Price and quality: E.g. House of Fraser, Marks and Spencer2. Features or attributes: Bentley emphasis on silent and confortability
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3. Usage: Kellogs recommends kellogs cornflakes for all day use 4. User status: GlaxoSmithKline recommends lucozade as sporting fraternity 5. Product class dissociation: Heinz diet products are classified as weight watchers but
more calorific6. Competition: Barclay card showing customers to be offering customers with lower
interest rates than Halifax credit card
Problems of segmentation1. High cost of information collection and management2. High demand for personnel with highly specialized skills3. The process is complex and time consuming4. It requires adequate technologies for effective and efficient information management
Enhancing effective segmentation, targeting and positioning1. Prevalence of highly trained and motivated database management personnel2. Accurate and up to date database system3. Fully furnished marketing information system(MKIS)4. Process highly standardized and communicated to all with the firm5. Prevalence of market oriented mission6. Ensuring a continuous monitoring and control system
The Marketing Information SystemInformation refers to the facts gathered both internally and externally, organised into a form to help making informed decisions.Information can be in to three categories namely;
Data: raw facts not organised in to any form to suit purpose. E.g. sales figures Information: Processed data organised into a format to suit purpose. E.g. sales figures in
tabular format to portray performance in particular month Intelligent: analysed and interpreted information. E.g. portray of a correlation between
sales performance in January and a sales promotion. Information management is therefore the gathering, processing, analysing, interpreting, organising and presentation of information to management for effective decision making.The MKIS (Marketing information system) is an adequate tool for data collection and management with in an organisation. It is defined as a collection of people, equipment, techniques and procedures used to gather, sort, analyse, interpret and distribute needed, timely and accurate information to marketing decision markers.
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Marketing Research System
Marketing Intelligent System
Decision Support System
Internal Record System
Management functions
PlanningOrganisingCoordinatingCommandingControlling
The Marketing enviroment
Micro and Macro- enviroments
1. Internal Report System: This gathers information generated by internal reports which
includes orders, billing, receivable, inventory levels, stock outs and so on. In many cases, the
internal report system is called the accounting information system. A sophisticated internal report
system can yield valuable historical information for a given product, product line, location or
region including:
Revenue
Product cost
Gross margin
Direct and indirect costs
2. Marketing Intelligence System : This is defined as a set of procedures and sources used by
managers to gather or obtain everyday information about pertinent development in the
environment. Such systems include both formal and informal information-gathering procedures.
Informal information-gathering procedures involve such activities as scanning newspapers
magazines and trade publications. Formal-gathering information procedures involve assigning
staff specific tasks of searching for any information that seems pertinent to the company. They
can edit and disseminate this information to the appropriate members or company departments.
3. Marketing Decision Support System (DSS): This is defined as collected data that can be
accessed and analysed using tools and techniques that assist managers in decision-making. Once
companies collect large amounts of information, they store this information in huge data bases
that when accessed with decision making tools and techniques such as break even analyses,
regression models and linear programming, allows companies to ask ‘what if’ questions. Answers
to these questions are then immediately available for decision making.
4. Marketing Research System: The marketing research system gathers information not
gathered by the other three MIS components. Marketing research studies are gathered for specific
situation facing the company, hence it is sometimes referred to as ‘ad hoc’ research or ‘projects’.
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Such ad hoc research unlike the other three MIS components is not continuous; they have a
beginning and an end.
The Role of MKIS
Providing adequate marketing information to enhance effective planning of marketing
activities
Guiding the formation of well informed decisions
Effective distribution of required information to marketing decision makers
Monitoring and evaluating marketing activities
Serves as a nose piece to an organization by getting constantly abreast with the
environment
Problems of MKIS1. High cost of information collection, processing, analysis and interpretation2. High cost of staff training and development3. Time and cost implication of developing a marketing culture 4. Cost of technology needed to effectively gather, analyse and interpret data
MARKETING RESEARCH IN CONTEXT
The marketing research process explains the various stages or steps involved in conducting
marketing research. The process identifies the researcher’s path that leads to a quality market
knowledge. The marketing research process is best explained by the acronym DODCAR.
D = Define the research problem
O = Objectives of the research should be determined
D = Design the research plan
C = Collect the research data
A = Analyse the research data
R = Report the research findings
1. Define the research problem or the need for marketing research :
Marketing research is needed when decision makers must make a decision and they do not
have the information to help them make the decision.
Marketing research is needed to determine if problem exists, to generate, refine and evaluate
marketing actions and to evaluate marketing performance. It is also needed to determine if
there are opportunities in the market. This is the most important step in the marketing research
process because all the subsequent steps are very much influenced by the nature of the research
problem or need for the research.
2. Determine the objectives of the research :
Research objectives are determined by the research problem, which when achieved, provides
the necessary information to solve the research problem.
A good way of setting research objectives is to ask, ‘‘what information is needed in order to
solve the problem’’.
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Research objectives identify what specific pieces of information are necessary to solve the
research problem at hand.
3. Design the research plan :
Designing the research involves the various issues that need to be considered for the successful
implementation of the research. These issues include the following:
a. The research methods to be chosen such as exploratory, descriptive or casual
research methods
b. The cost of the research
c. The time period involved in conducting the research
d. Who will do the research- in-house or the use of external research agencies
e. The research sample and the size of the research sample
f. The methods for collecting the research data
g. The types and sources of information to be used in the research
h. The methods to be used in presenting the data.
4. Collect the research data :
Data can be collected from two main sources namely primary and secondary data sources.
Primary data is information collected specifically for the study under consideration.
Secondary data is data collected for another purpose not specifically related to the proposed
research.
5. Analyse the research data :
Once data is collected, data analysis is used to give the raw data meaning. Data analysis
involves entering data into computer files, inspecting the data for errors and running tabulations
and various statistical tests (for quantitative data) and other means of analysis and summary
(qualitative data) to find out what the data reveals.
6. Report the research findings :
The final stage of the marketing research process is to prepare and present the final research
report.
Preparing the marketing research report involves describing the process used, building
meaningful tables and using presentation graphics for clarity. The research report can be
presented in any of the following forms:
Tables
Graphs
Charts
Oral presentations
Combination of any or all of the above
MARKETING RESEARCH METHODSPrimary and secondary researches are categorically the forms of methods for conducting marketing research activities.Primary research refers to the method of gathering first hand data specifically for an intended project. This implies the use of required techniques for gathering primary data (data collected and used for intended purposes).
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Advantages of Primary research It makes it possible to get access to first hand data It helps in establishing the accuracy and truthfulness of secondary data It helps find the right data for a specified problem at stake It helps exploiting the potential of internal staff hence improving their morals If carried out by the right people with right resources, data accuracy percentage is high
Disadvantages of Primary research It requires adequate time and resources High cost of implementation as it requires highly skilled market research personnel It is sometimes unnecessary It does not exist alone by itself without secondary data It is sometimes result to bias data as result of lack of skill and sabotage from the field
personnelSecondary research on the other hand refers to the method of gathering second hand data that could be used for a purpose different from its intended reason of collection. Secondary data sources take internal and external sources.
Internal source: This refers to data collected and stored in the internal record system of an organization. E .g includes customer transactions, revenue and cost, performances etc.
External sources: These include data collected from DTI, central statistic office, trade journals and magazines, trade organizations, financial institutions, Universities, libraries and the internet.
Advantages of Secondary research It sometimes stands alone it can be the only means to accessing particular data type It can be used as a preliminary to primary research to give it a sense of direction It is relatively less expensive and time consuming
Disadvantages of secondary research Staff with adequate skills required for sorting out data The reliability of the data collected could be questioned Difficulty of finding bespoke data It could result to staff demotivation as they are rarely involved in any sort of research
activity. Problem of data interpretation.
Enhancing the collection of accurate and up to date secondary data Choice right and reliable source of data: This is guided by the source being a member of
a certified body Determining the source experience Assessing the quality of skills and experience of source field staff Assessing the resource availability of the source Assessing the age of the data Assessing the overall process of data collected by the source
Research Methodology
It would definitely be quite helpful to adopt the methodology that best suits the project
background, interest and the subject under investigation. This is made possible with the use of
Quantitative or Qualitative research or the combination of them.
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Quantitative research: This is a research approach used when studying objects with numerical
values. Quantitative research describes, explains and test relationships. E .g in an effort to
investigating the punctuality of students, the numerical nature of the topic at stake necessitates the
use of such research. Mathematical and statistical methods (descriptive statistics) are also used
for interpreting such information.
Qualitative research: This refers approach where the object under study has non- numerical
values such as behaviour, perception etc. E .g studying the behaviour of students
Techniques for collecting Quantitative dataQuestionnaires: Consist of a set questions with alternative answers presented to respondents to
choose. Because of its flexibility, the questionnaire is by far the most commonly used primary
research data collection instrument. They need to be carefully developed and tested before they
are administered on a large scale.
A questionnaire serves six key functions:
It translates the research objectives into specific questions that are asked.
It standardises those questions and the response categories so that every respondents
respond to identical stimuli
By its wording, question flows and appearance fosters cooperation and keeps respondents
motivated throughout the interview.
Questionnaire serves as permanent records of the research
Depending on the type of questionnaire used, a questionnaire can speed up the process of
data analysis. Online questionnaire, for example, can be transmitted to thousands of
potential respondents in seconds.
Finally, questionnaires contain the information on which reliability assessment may be
made, and they are used in follow-up validation of respondent’s participation in the
survey.
Types of questions
1. Open questions
2. Closed questions
3. Scale or rating questions
Likert scales: Entails statements where respondents could show their degree of agreement.
Colleges generally give better services.
1 2 3 4 5
Strongly agree Agree Neither agree nor
disagree
Disagree Strongly disagree
Semantic differential scale: This entails the use of two bio-popular or opposite words
where the respondent selects a point in between. It used for brand, store or company image.
Rating: entails the use of adjectives to describe a particular subject. E .g HSMF tutorials
are; please choose from the following
1. Excellent 2. Very good 3. Good 4. Fair 5. Poor
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Ways of administering questionnaires
1. Postal questionnaires: Questionnaires sent to respondents and returned by mail. The following
issues are important to help secure a good response rate;
Simple and clear wordings
Simple, clear and bold instruction with an example of how to complete the questionnaire
Accurate time for sending questionnaires to respondents
Reflect learning experience through high value interest questions
Create incentives for completing the questionnaires
Enclose first class business reply stamps to encourage reply
Allocate codes to questionnaires in order to non replies hence creating the chance for
follow ups.
Advantages of postal questionnaires
They are cheap
They can be sent to wider areas of survey
They are a relatively quick way of receiving response
They have relatively high response rate as respondents are often willing to answer personal
questions
Disadvantage of postal questionnaires
The extent of simplicity required may lead to less rich information collection
There is no guarantee of independent respondent judgments
Name of the respondents might not be the replier to a questionnaire
2. Internet survey: This refers to a survey where questionnaires are administered through the
internet.
3. Self-administered questionnaires: This refers to questionnaires which are administered by
organization officials through face-face and telephone.
Experiments: An experiment is defined as manipulating an independent variable to see how it
affects a dependent variable.
Independent variables are those variables over which the researcher has control and
wishes to manipulate such as the level of advertising expenditure, price and type of
product.
Dependent variables on the other hand, are those variables that the researcher has little or
no control over but yet has a strong interest in such as level of market share or demand for
its products.
Marketing researchers use experiments to establish casual relationships between independent and
dependant variables. A study of the link between employment and the acquisition of IT skills can
be a basis for an experiment. This involves experimental approach, planning and literature search in
order to produce high quality work.
Types of experiments
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The one-shot case study: Involves allowing administrators to take part in an exercise
and studying the effect on them.
The one-group pre-test post-test: This entails testing the subject before and after an
exercise
The static group comparison: Entails comparing the reaction of two groups regarding a
particular subject
SAMPLING: This is the process of collecting data from subset of a population for investigation.
Sample is a subset of a population under study. Census is the technique used in studying or
accounting a population. The population (sampling framework) consists of sampling units
(subjects) that are under investigation. Hypothesis testing is the technique of measuring the
degree of representativeness of sample data to a sample population.
Qualities of a representative sample
It should be large enough to avoid distortion
It should complete to avoid bias
It should be proportionate to the population
It should be accurate and up to date
Sampling Process
Define the relevant population on the basis of the problem under research
Design a sampling framework
Determine a sample size. This is influenced by the size of population, number of
subgroups, type of data and test, the degree of accuracy required, time and financial
resources availability
Select a sampling method. This is determined by the nature of population under study
Draw a sampling plan
Pilot test the drawn plan
Administer or carry out the sampling
Advantages of Sampling
It makes population studies a possibility through limiting the number of units to be
investigated hence promoting accuracy.
It helps minimize unnecessary work load by creating a truly representative group of the
population.
It helps save time and cost
Disadvantages of Sampling
Risk of sampling error as a result of unrepresentative sample size arising from poor
sample selection
Risk of sample bias resulting from prejudice, self judgement and carelessness.
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Risk of insufficient and incomplete data
Problem of non response. This occurs as a result of the following
Respondent’s refusal to participate
Inability to participate
Inavailability at the time of call
Refusal to answer sensitive questions
Relocation or change of address at the time of call
These non responses could be minimized through the following
Giving out financial incentives
Replacing disables with able ones
Giving advance notices and negotiating prior meeting agreements
Avoiding sensitive information seeking
Replacing relocates
Sampling Methods
These refer to the ways and means of conducting sampling. These are categories into Random
(probability) and Non random (non probability) sampling methods.
Random Sampling methods
These are methods where every sampling unit or member of the population has an equal chance
of being selected. These require accurate and up to date sampling frame and mostly where
statistical analysis is paramount.
1. Simple random sampling: This refers to the use of a sampling frame to select a sample
that guarantees every sampling unit or member of the population equal chance of being
selected. It is suitable for small sampling frames.
Advantages- It always produced unbiased sample
Disadvantages- Sampling units might be difficult and expensive to contact
2. Systematic random sampling: Refers to the selection of a random starting point (nth)
from a sampling frame which is persistently used as an interval for the selection of
sampling units or members. E .g if a sample 20 is required from a population of 100
units, every 5th item on the frame is selected (5, 10, 15….). It is suitable for large
sampling frames.
Advantages- It is simple and fast to select sampling units
Disadvantages- Tendency sample bias
3. Stratified random sampling: Refers to the use of simple random sample to select
sample from a population with a distinctive characteristics (strata). Basis for the strata
include gender, age, occupation and income levels. It is suitable for population with
distinguishable strata.
Advantages- Results from sample is less bias or distorted by emphasis on
extreme observation
Disadvantages- Difficulty of defining strata. It could also be very be time
consuming, expensive and complicated to analyse.
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4. Multi- stage sampling: Consists of a number of stages designed to retain the advantages
of simple random sampling whilst minimizing the cost of a sample.
Advantages- It saves time and cost as there is no need to create a sample
framework of the entire population
Disadvantages- Risk of interview bias and inconsistency at each of the different
stages
5. Cluster Sampling: Refers to the creation of definable subgroups (clusters) within the
population and the random selection of a group which is assumed to be representative of
the whole. E .g the sampling of beer drinkers in one pub selected to be the representative
of the entire drinkers.
Advantages- It is relatively cheap and fast to carry out
Disadvantages- It only works well in homogeneous groups (clusters)
Non random Sampling methods
These refer to sampling methods where there exist no equal chances of selection to every
sampling unit or member of the population. These methods involve subjectivity as the researcher
sample with definite purpose.
1. Quota Sampling: A sampling base on a restricted number of groups and individual with
definable characteristics such as gender, income, age. It is suitable for research surveys
involving street interviews regarding large population
Advantages- It is probably the cheapest sampling method
Disadvantages- It is difficult to ascertain the degree of confidence in deduction
with less control.
2. Judgemental (purposive): A sampling method where the individual discretion is used as
a basis for sample selection. The researchers subjectively select the sample they think
will deliver the best information (satisfy the research objectives).
3. Snowball sampling: A sampling method in which a small number of samples is selected
and a questionnaire given foe members to pass to acquaintances to enable the selection of
a larger sample
4. Convenience sampling: A sampling method in which sample members are selected on
the basis their availability and willingness to participate
Qualitative research techniques
Interviews: are one to one communications in which immediate responses are obtained through
exchange of information. There are at least four types of person-administered interviews, and
their differences are largely based on the location of the interview;
In-home interview: The interviewer conducts the interview in the respondent’s home
and appointments are usually made in advance. Two important factors justify the use if
in-home interviews. First, the researcher must believe that the respondent in important to
the success of the interview and secondly, the researcher must be convinced that the in-
home environment is conducive to the interview process.
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In the street interview: These interviews are conducted in the street or in large shopping
and they are cheaper per interview than in-home interviews.
The disadvantages of this interview method include accuracy of the sample
representativeness as well as the fact that people do not feel comfortable being interviewed in
the street.
In-office interview: These are conducted at executives or managers’ places of work
because they are the most suitable locations and are mostly used in business-to-business
markets. It has the same advantages as in-home interviews. Its disadvantages are that they
are expensive and time-consuming due to difficulties in accessing managers or
executives.
Telephone interviews: This implies surveying people by means of the telephone rather
than face-to-face. Its advantages are instant response, wider reach, relatively cheap and
much easier when it comes to asking sensitive or embarrassing questions.
Among its disadvantages can be mentioned lack of personal touch to gauge respondent’s
reactions, high participation refusal rate and the respondent cannot be shown anything such as the
product.
Focus Group Interviews These are depth interviews with a group of people, and involves
interaction between respondents (Wilson 2003)
Generally consists of between 6 and 12 respondents
Runs at the beginning of the research project
Conducted by skilled interviewer referred to as a moderator
Lasts generally between 45 minutes to 2 hours
Discussion is usually tape recorded and videoed
Possibility for the client to observe the group remotely or form a special room with
one-way window
Characteristics of the focus group moderator
Highly qualified and experienced in research/ psychology
Possess a high level of business and marketing awareness
Strong communicator, being able to relate to a wide range of people
Social disposition, relaxed and friendly attitude but strong enough to control group
Flexible and quick thinking with ability to respond to the unexpected
Discussion guide
Introduction Greeting and welcoming message from the group moderator Introduction of participant or self introduction by participants Brief summon of Agenda(the purpose of the event) and the nature of the session Briefly outline the topics for discussion
Discussion phase Exploration on topic areas Projective techniques to be used during the discussion
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Break(tea time) to avoid boring session and encourage participation Discussion continues
Summary phase Summary of discussions Questions time Thank participants and hand out gifts as a sign of appreciation
Projective techniques: Are techniques used to create stimuli that help to unearth interviewees’
unconscious beliefs and true opinions that could not have been revealed under direct questioning.
Psychodrama: This entails the placing of participants in a role playing action to determine
their respond at specific situation. E .g asking a participant to play the role of customer
service personnel.
Third person or Friendly Martian: This involves getting an individual talk about an
issue at stake by asking the respondent what would be done if someone wants to do
something.
Sentence completion: Entails asking respondents to complete a list of incompleted
sentences in an effort to unearth underlying attitudes and opinions. Example
Smart looking personnel are ……………
Wider stores are ……………….
Thematic apperception tests (TAT): Involves showing respondents a picture and
asking them to describe it. It could also involve asking what has happened before the
picture and what might happen after.
Word association: Entails the invasion of respondents mind by asking a sudden
question in order to reveal ones subconscious thought.
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Relationship MarketingRelationship marketing refers to all activities directed towards establishing and maintaining successful relational exchange (Morgan and Hunt).Relationship marketing has gone beyond customer relationship to include all stakeholders’ relationships.
Characteristic of Relationship marketing against Transactional marketing Relationship marketing Transactional marketing
1. Customer oriented Sales oriented2. Frequent customer contact Low customer contact3. Sales relies on customer value Sales on product features4. Long term focus Short term focus5. High customer service levels Low customer service levels6. Quality concern for all staff Quality production concern
Importance of relationship marketing Fosters high customer loyalty Increase customer retention Increase sales and revenue Low cost customer acquisition Premium price customer acceptance Easy and reduce cost customer serving
The Relationship marketing ladder (Payne et al ’98) Advocate Emphasis on retention Supporter Client
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Customer
ProspectsEmphasis on acquisition
Problems or demerits of Relationship marketing High cost of customer retention Sacrifice of non loyal customers to competitors High cot of staff training to improve service levels High cost technology needed to improve customer value Adequate time and cost needed to nurture relationship marketing culture
Values necessary for the existence of relationship marketing1. Service enhancement: The integration and rationalisation of the extended marketing mix to create customer value proposition through improved service levels2. Trust and commitment: The willingness of parties involved to duly perform their part of the contract promotes trust and strengthen the partnership hence win-win relations3. Win-win value creation: The prevalence of gain for each of the parties to a contract makes relationship marketing a possibility4. Customer service: The need to share information helps find solution to the needs and perception of parties to a contract. Information sharing could further create trust and strengthen the relationship5. Long term focus: The willingness to sacrifice short term gains for future ones.
Techniques for developing Relationship Marketing Database marketing Key account management Interactive web and telephone handling system Internal marketing Loyalty schemes Customer service system
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Ethics and Corporate Social Responsibility Ethics refers to a morals code of conduct that determines what is wrong and right
Ethical stanceThis refers to the extent to which an organisation exceeds it minimum obligation to stakeholders (Johnson & Scholes). Following are the various ethical stances an organisation can take (Henderson).
Ethical and legal e.g. the body shop sale of products not tested on animals Ethical and illegal- An employee disclosure of misappropriation in an organisation Legal and unethical- Sale of products harmful to the society e.g. cigarettes Unethical and illegal- Child and force labour
Determination of an organisation ethical behaviourProduct
Disclosure of all risk associated with product or service usage Quality product or service provision Provision of products and services less harmful to the society( environmentally friendly)
Promotion Avoidance of false and misleading advertising Avoidance of advert detriment to children Avoidance of sales promotion deception
Price Avoiding price fixing Engaging in full price disclosure Avoiding predatory pricing
Place Avoiding product hoarding during recession Avoiding channel members exploitation Avoiding over extensive distribution that might curb competition
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Corporate Social Responsibility (CSR) This refers to the provision of societal benefits over and beyond the organisation obligation or commercial purpose. It helps create long term goodwill and positive publicity
Components of CSR1. Societal responsibility: This entails the provision of benefits to the public in the following means
Sponsorship of community events. E.g. Barclay card premiership football sponsorship Charitable donations. E.g. Tesco computer donation to UK primary schools Employee volunteer days Promotion of fair trade
2. Green Marketing: This connotes the involvement in activities that are less harmful to the society in the below given means
Prevention of pollution Promoting recycling Production of ethical products/service
Role/ Importance of CSR Generating long term goodwill and positive publicity Avoiding penalties such as fines, revoke of registration etc. Attracting potential investors Attract government recognition and support in the form of tax rebates and subventions High skill employee attraction and motivation
Limitations/ Criticisms of CSR It conflicts with business obligation(shareholder value creation) in the short run It requires high cost of operation High demand for technology and skilful employee Adequate time and capital required for business process re-engineering Renders existing plant and products obsolete
CSR Strategies1. Proactive strategy: Acting on ones own initiates to prevent an incident or damage. E.g. Dell recalls all its 2006 batches of computer batteries when it realised the threat/ risk of explosion
2. Reactive strategy: Acting as at when a damage or incident occurs and complaints heard. E.g. Cadbury acted as a result of consumerist group agitation despite its knowledge of salmonella content contamination3. Defensive strategy: Attempting to avoid or minimise obligation arising from an incident or damage in the following means
Legal actions Trade union support Lobbying government
4. Accommodation: Taking responsibility for actions as a result of the following Encouragement from a specialist interest group
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Expectation of government intervention
InternationalisationThis generic term refers to the getting into business or trading beyond local or domestic boundaries into overseas countries.
Evolution of globalisation Domestic marketing: Trading or doing business locally Export marketing: Trading of domestic goods abroad International marketing: Trading in one or two overseas countries Multi-national marketing: Trading in three or more countries Global marketing: Trading world wide
Role/Benefit/Reason for internationalisation Keeping away from intense and fierce domestic competition Fleeing a saturated domestic market Expanding market size to improve profitability Reducing cost of operation through getting closer to cheaper sources of raw materials and
labour force Improving scale of operation to enjoy economies of scale Creating investment opportunities for excess capacity
Approaches to international marketingThis refers to the manner in which organisational activities are implemented at international levels. It therefore works around the manipulation of standardisation and adaptation strategies as shown below
Ethnocentrism: This signifies verily standardisation. It involves the disposing of surplus productions to overseas with little or no modification.
Polycentrism: This represents adaptation. It entails the prevalence of independently operating subsidiaries that operate to meeting the needs of their individual areas of existence.
Geocentrism: This refers to the combination of standardisation with adaptation. It works on the principle of standardisation where possible and adaptation if necessary
Determinants of international market entry methods
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Capital requirement Firm’s objective Degree of control needed Level of risk involved Method availability Effectiveness and efficiency of method
International market entry methods1. Licensing agreement: Is a commercial contract where by the licensor gives something of value to the licensee in exchange for specific performance and payment
Exchange valuables from the licensor Patented products Manufacturing know how Technical advice and assistance Trademark or brand
Exchange valuables from the licensee Payment of royalties Brand strength enhancement and awareness Cooperation
Advantages of licensing It helps create market presence hence improving market size It is cheap and simple to operate in practical sense It is relatively less risky It helps improve brand awareness
Disadvantages of licensing It has a relatively low revenue generation capability It stimulates competition between a licensor and licensee Difficulty of getting government approval Problem of controlling licensee operations Difficulty of maintaining consistent product quality which might lead to bad publicity
Enhancing the effective management of licensing Ensuring adequate controlling authority from the licensor Existence of clear and mutually beneficent contract Prevalence of chemistry between the licensor and the licensee Provision of adequate skills to the licensee
2. Franchise: Is a contract where a franchiser provides a standard package of goods and services in exchange for a payment from the franchisee
Franchiser’s exchange valuables Structure design Management advice and assistance Skills provision through training and development Goods, components and materials supplies
Franchisee’s exchange valuables Royalty payment
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Brand awareness Cooperation
Condition for choice of franchise Political: Stability of the location of the potential franchisee Economic: Ability to fulfil financial obligations such as royalty payment Social: Customer proximity(nearness to target customers and ability to providing their
needs) Technological: Ability to provide the technologies needed for adequate operation Legal: Possibility of getting government approval
3. Contract manufacturing: Is a contract whereby a firm (contractor) authorises a contractee to manufacture or assemble product(s) on its behalf
Advantages of contract manufacturing It is relatively cheap It is relatively less risky It also helps gain market presence
Disadvantages of contract manufacturing It involves high cost of training and development Tendency of intense competition arising between the contractor and contractee Adequate control required to maintain consistent product quality Poor quality will result to negative publicity and disrepute
4. Joint ventures: This refers to the combination of resources by two or more firms usually competing ones in an effort to enhancing their competencies without sacrificing their autonomy. Such firms get together to promote effectiveness and efficiency
Advantages of joint ventures It helps improve company performance and profitability It helps acquire market presence It helps minimise individual firms’ risk through risk sharing It makes huge capital ventures a possibility Individual partners benefit from skills and knowledge amongst themselves
Disadvantages of joint ventures Likelihood of conflict of interest amongst partners It leads to the lost of intellectual property by partners It requires a high cost of investment Sizes of such ventures might lead to diseconomies of scale
5. Consortium: Refers to the creation of working relationship amongst partners to help minimise risk and cost with out actually surrendering autonomy Advantages of consortium
It is relatively less risky It helps gain market presence It makes possible the existence of high capital investment ventures It create a room for surplus funds investment hence full capacity and opportunity
exploitation
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Disadvantages of consortium Tendency of conflict of interest arising amongst partners Difficulty of managing different cultures and interest It is costly to run
6. Mergers: Two firms combining resources together to enhance their competitive position in a market7. Acquisition: Refers to the buying of another firm to build up strength for effective operation and competitiveness
Advantages It enhances market presence It helps improve competitive position
Disadvantages It is relatively the riskiest Problem of managing different cultures High tendency of employee redundancies and demotions Possibility of conflict of cultures and values Dangers of diseconomies of scale
8. Wholly owned subsidiaries: Is the establishment of a firm that is wholly owned and centrally managed by a parent company
Advantages It promotes effective management and control It encourages high employee commitment It helps gain market presence
Disadvantages High risk of losses arising in the case of instability and appropriation It requires high cost of capital investment Difficulty of getting government registration approval
Barriers to international marketing Political instability Economic policies Socio-cultural differences Technological presence Legal regulations Ethic and social responsible
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ControlThis refers to the continuous assessment, detection and taking of corrective actions to enhance perfect match between performance/ results and objective.
The control process Setting objectives: Note, they should be SMART Measure performance Examine performance Take corrective action
Technique for controlling marketing activities1 The Balance Scorecard (Kaplan & Norton, 1996)This is a set of measures that give top managers a fast but comprehensive view of a business. It provides a link between setting objectives and measuring performance.
Role / Importance of the balance scorecard1. It helps in measuring organisational performance at wider perspective2. It therefore helps in guiding organisational activities and performance3. It enhances the use of short term achievement in creating long term value4. It encourages management thinking on how strategic value drivers can be used in generating long term value5. It is an actionable objectives or basis for strategy
Limitation of the balance scorecard1. It is complex in practical sense2. It requires too much information accessibility3. It is costly to run4. It requires adequate technology
Composition of the balance scorecard
Financial perspective: This incorporates the financial drivers of shareholder value. It set objectives for and measure performance of:
Return on capital employed Operating margin Economic value added Cash flow Sales growth
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Internal business perspective: This determines the efficiency of the business processes. The goals and measures are focused on
Percentage of sales from new products Manufacturing cost Manufacturing cycle time Inventory management
Innovation and learning perspective: This refers to the firm’s core capabilities and its ability to up grade them over time. Goals and measures can be set for competency developments in
New product and service developments Manufacturing cycle time Technology efficiency Marketing and sales effectiveness Number of new ideas generated
Customer perspective: As growth and profitability depend crucially on the ability of a firm to satisfy its customers, goals and measures will therefore be required for
Market share Brand image and awareness Customer satisfaction and loyalty Customer retention Customer acquisition
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