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Marketing Notes
Marketing:
Marketing is used to create the customer , to keep the customer and
to satisfy the customer. With the customer as the focus of its
activities, it can be concluded that marketing management is
one of the major components of business management. The
evolution of marketing was caused due to mature markets and
overcapacities in the last decades. Companies then shifted
the focus from production more to the customer in order to
stay profitable.
Concepts and Approaches:
Orientatio
n
Profit
driver
WesternEuropean
timeframe
Description
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ProductionProductionmethods
until the!"#s
$ firm focusing on a production orientationspeciali%es in producing as much as possibleof a given product or service. Thus, thissignifies a firm e&ploiting economies of scale,until the minimum efficient scale is reached. $production orientation may be deployed whena high demand for a product or servicee&ists, coupled with a good certainty thatconsumer tastes do not rapidly alter 'similar to the sales orientation(.
Product)uality of the product
until the!*#s
$ firm employing a product orientation ischiefly concerned with the +uality of its ownproduct. $ firm would also assume that aslong as its product was of a high standard,people would buy and consume the product.
Sellingellingmethods
!"#s and!*#s
$ firm using a sales orientation focusesprimarily on the selling-promotion of a
particular product, and not determining newconsumer desires as such. Conse+uently,this entails simply selling an already e&istingproduct, and using promotion techni+ues toattain the highest sales possible.
uch an orientation may suit scenarios inwhich a firm holds dead stock, or otherwisesells a product that is in high demand, withlittle likelihood of changes in consumer tastesdiminishing demand.
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Marketingeeds andwants of customers
!/# topresentday
The marketing orientation is perhaps themost common orientation used incontemporary marketing. 0t involves a firmessentially basing its marketing plans around
the marketing concept, and thus supplyingproducts to suit new consumer tastes. $s ane&le, a firm would employ marketresearch to gauge consumer desires, use123 to develop a product attuned to therevealed information, and then utili%epromotion techni+ues to ensure personsknow the product e&ists.
Other Approaches:
Orientation Profit driver WesternEuropeantimeframe
Description
Relationshipmarketing -Relationshipmanagement456
7uilding andkeeping goodcustomer relations
!*#s topresentday
8mphasis is placed on the wholerelationship between suppliers andcustomers. The aim is to give the bestpossible attention, customer servicesand therefore build customer loyalty.
Businessmarketing -ndustrialmarketing
7uilding andkeepingrelationshipsbetweenorgani%ations
!5#s topresentday
0n this conte&t marketing takes placebetween businesses or organi%ations.The product focus lies on industrialgoods or capital goods than consumer products or end products. $ differentform of marketing activities like
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promotion, advertising andcommunication to the customer isused.
Socialmarketing 456
7enefit tosociety
!!#s topresentday
imilar characteristics as marketingorientation but with the added provisothat there will be a curtailment on anyharmful activities to society, in either product, production, or sellingmethods.
!"pes of marketing:
Reactive marketing:
After sale of product compan" contact its customers #ant to
kno# about the product performance it is kno#n as
reactive marketing$
Proactive marketing:
Before manufacturing product #hen compan" #ant to kno#
likeness of customer it is kno#n as proactive marketing$
Accountable marketing:
%hen compan" or its emplo"ee take the responsibilit" of product performance #hich is sale b" the compan" or
business is kno#n as accountable marketing$
Marketing &nvironment:
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Marketing environment:
The term marketing environment relates to all of the factors 'whether
internal, e&ternal, direct or indirect( that affect a firm9s marketing
decision:making or planning and is subject of the marketing research.
$ firm9s marketing environment consists of two main areas, which
are;
Macro environment:
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• 8mployees
• uppliers
• The Media
Market segmentation:
Market segmentation:
Market segmentation pertains to the division of a market of
consumers into persons with similar needs and wants. $s an
e&le, if using >ellogg9s cereals in this instance, ?rosties are
marketed to children. Crunchy ut Cornflakes are marketed to adults.7oth goods aforementioned denote two products which are marketed
to two distinct groups of persons, both with like needs and wants.
The purpose for market segmentation is conducted for two main
issues. ?irst, a segmentation allows a better allocation of a firm9s
finite resources. $ firm only possesses a certain amount of resources.
$ccordingly, it must make choices 'and appreciate the related costs(
in servicing specific groups of consumers. ?urthermore the diversified
tastes of the contemporary Western consumers can be served better.
With more diversity in the tastes of modern consumers, firms are
taking noting the benefit of servicing a multiplicity of new markets.
Market segmentation can be defined in terms of the STP acronym,
meaning Segment , Target and Position.
Segment:
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Segmentation involves the initial splitting up of consumers into
persons of like needs-wants-tastes. ?our commonly used
criteria are used for segmentation, which include;
• 'eographical 'e.g. country, region, city, town, etc.(
• Ps"chographic 'i.e. personality traits or character traits
which influence consumer behaviour(
• (emographic 'e.g. age, gender, socio:economic class,
etc.(
• Behavioural 'e.g. brand loyalty, usage rate, etc.(
!arget:
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differentiation e&ist, which are commonly applied by firms.
These are;
• )ndifferentiated : Where a company produces a like
product for all of a market segment.
• (ifferentiated : 0n which a firm produced slight
modifications of a product within a segment.
• Niche : 0n which an organisation forges a product to
satisfy a specialised target market.
Position:
Positioning concerns how to position a product in the minds of
consumers. $ firm often performs this by producing a
perceptual map, which denotes products produced in its
industry according to how consumers perceive their price and
+uality. ?rom a product9s placing on the map, a firm would tailor
its marketing communications to suit meld with the product9s
perception among consumers.
Marketing information s"stem:
Marketing information s"stem:
$ marketing information system ( MKIS ) is an information system
that is commonly used by marketing management to analyse and
view information pertaining to marketing activities. $s the label
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suggests, an M>0 is a computer:based information system therefore
used to input, store, process and output marketing information.
!"pes of marketing research:
Marketing research, as a sub:set aspect of marketing activities, can
be divided into the following parts;
• Primary research 'also known as field research(, which involves
the conduction and compilation of research for the purpose is
was intended.
• econdary research 'also referred to as desk research(, is
initially conducted for one purpose, but often used to support
another purpose or end goal.
7y these definitions, an e&le of primary research would be
market research conducted into health foods, which is used solely to
ascertain the needs-wants of the target market for health foods.
econdary research, again according to the above definition, would
be research pertaining to health foods, but used by a firm wishing to
develop an unrelated product.
Marketing plan:
The area of marketing panning involves forging a plan for a firm9s
marketing activities. $ marketing plan can also pertain to a specific
product, as well as to an organi%ationBs overall marketing strategy.
enerally speaking, an organi%ationBs marketing planning process is
derived from its overall business strategy. Thus, when top
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management are devising the firm9s strategic direction or mission, the
intended marketing activities are incorporated into this plan.
S%O! Anal"sis:
W
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0dentification of W
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introduction, growth, maturity and decline stage. ?urthermore it is
assumed that no product lasts perpetually on the market. =ast but not
least a firm must employ differing strategies, according to where a
product is on the P=C.
Stage Characteristics
1. Market
introduction stage
1. costs are high
2. slow sales volumes to start3. little or no competition - competitive manufacturers watch
for acceptance/segment growth losses
4. demand has to be created5. customers have to be prompted to try the product
6. maes no money at this stage
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2. Growth stage
1. costs reduced due to economies of scale
2. sales volume increases significantly
3. profitability begins to rise4. public awareness increases
5. competition begins to increase with a few new players inestablishing maret
6. increased competition leads to price decreases
3. Mature stage
1. costs are lowered as a result of production volumes
increasing and e!perience curve effects2. sales volume peas and maret saturation is reached
3. increase in competitors entering the maret
4. prices tend to drop due to the proliferation of competing
products
5. brand differentiation and feature diversification isemphasi"ed to maintain or increase maret share
6. #ndustrial profits go down
4. Saturation anddecline stage
1. costs become counter-optimal
2. sales volume decline or stabili"e3. prices$ profitability diminish
4. profit becomes more a challenge of production/distribution
efficiency than increased sales
=evels of poduct;
. Core Benefit
The fundamental need or want that consumers satisfy by consuming
the product or service.
E. Generic Product
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a version of the product containing only those attributes or
characteristics absolutely necessary for it to function.
F. Expected Product
the set of attributes or characteristics that buyers normally e&pect and
agree to when they purchase a product.
G. ugmented Product
inclusion of additional features, benefits, attributes or related services
that serve to differentiate the product from its competitors.
". Potential Product
all the augmentations and transformations a product might undergo in
the future.
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>otler noted that much competition takes place at the $ugmented
Product level rather than at the Core 7enefit level or, as =evitt put it;
9ew competition is not between what companies produce in their
factories,
but between what they add to their factory output in the form of
packaging, services, advertising, customer advice, financing, delivery
arrangements, warehousing, and other things that people value.9
Marketing mi#$
Product marketing mi+ or ,p-s:
0n the early !*#s, Professor eil 7orden at @arvard 7usiness
chool identified a number of company performance actions that can
influence the consumer decision to purchase goods or services.
7orden suggested that all those actions of the company represented
a HMarketing Mi&I. Professor 8. Jerome McCarthy, at the Michigan
tate Dniversity in the early !*#s, suggested that the Marketing Mi&
contained G elements product, price, place and promotion.
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Product%
The product aspects of marketing deal with the specifications of
the actual goods or services, and how it relates to the end:
user9s needs and wants. The scope of a product generallyincludes supporting elements such as warranties, guarantees,
and support.si%e, shape, +uality, brand, packaging etc.
Pricing:
This refers to the process of setting a price for a product, including
discounts. The price need not be monetaryK it can simply be what is
e&changed for the product or services, e.g. time, energy, or attention.
Methods of setting prices optimally are in the domain of pricing
science.
$ number of modes of pricing techni+ues e&ist, which span;
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• 8lasticities 'whether Price 8lasticity of 3emand, Cross 8lasticity
of 3emand, or 0ncome 8lasticity of 3emand(
• Market skimming pricing
• Market penetration pricing
8lasticities are a microeconomic concept, which gauges how elastic
demand is for a given good-service.
0n a marketing conte&t, its usefulness relates to the suitable level at
which a product can be priced, in accordance with price, a product9s
complements and substitutes, and the level of income a consumer possesses.
Market skimming pertains to firm releasing a good in a Lfirst to
marketL scenario. $s an e&le, picture a company which releases
a new type of personal media playing system. 0t may set the good at
an initially high level, but reduce it over time, once the level of
demand gradually rises. Market skimming is best operable within a
first to market scenario, since there would be few competitors within
the company9s industry. This pricing strategy is also best
implemented within a market of high entry barriers 'such as a
monopoly or an oligopoly(. This is so since the high barriers to entry
discourage competitors into the industry for the product.
Market penetration concerns pricing policies for late entrants to a
market. $s another e&le, a company could release a product into
a market years after it is initially introduced, but at an artificially low
price in order to stimulate demand. The result of such a pricing
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strategy would be to draw consumers from competitors and into
purchasing its own product. Market penetration, in contrast to market
skimming, best functions within a market form with low barriers to
entry 'such as perfect competition or monopolistic competition(. =ow
barriers to entry facilitates a company9s ability to sell goods at a price
lower than its market clearing point.
Placement .or distribution/:
This refers to how the product gets to the customerK for
e&le, point:of:sale placement or retailing. This third P has
also sometimes been called Place, referring to the channel by
which a product or service is sold 'e.g. online vs. retail(, which
geographic region or industry, to which segment 'young adults,
families, business people(, etc. also referring to how the
environment in which the product is sold in can affect sales.
Promotion:
This includes advertising, sales promotion, publicity, and
publicity.
7randing refers to the various methods of promoting the
product, brand, or company. 0t also known as marketing
communication.
These four elements are often referred to as the marketing mi&, which
a marketer can use to craft a marketing plan. The four Ps model is
most useful when marketing low value consumer products.
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0ndustrial products, services, high value consumer products re+uire
adjustments to this model. ervices marketing must account for the
uni+ue nature of services.
Service Marketing Mi+0&+tended Marketing Mi+01p-s
@aving discussed the characteristics of a service, let us now look at
the marketing mi& of a service.
The service marketing mi& comprises off the /BpBs. These include;
Product
2 Price
2 Place
2 Promotion
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2 People
2 Process
2 Ph"sical evidence
People:
$n essential ingredient to any service provision is the use of appropriate staff and people. 1ecruiting the right staff and training
them appropriately in the delivery of their service is essential if the
organisation wants to obtain a form of competitive advantage.
Consumers make judgments and deliver perceptions of the service
based on the employees they interact with. taff should have the
appropriate interpersonal skills
Process:
1efers to the systems used to assist the organisation in delivering the
service. 0magine you walk into 7urger >ing and you order a Whopper
Meal and you get it delivered within E minutes. What was the process
that allowed you to obtain an efficient service delivery
Ph"sical evidence:
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This is the environment in which the service is delivered and any
tangible goods that facilitate the performance and communication of
the service. Customers look for clues to the likely +uality of a service
also by inspecting the tangible evidence.
?or e&le, prospective customers may look to the design of
learning materials, the appearance of facilities, staff, etc.
ntegrated marketing or ntegrated marketing communications
.MC/:
0t is used in order to create a single and coherent marketing
communications process. $s an e&le, a firm can advertise the
e&istence of a sales promotion, via a newspaper, maga%ine, TN,
radio, etc. The same promotion can also be communicated via direct
marketing, or personal selling. The aim of 0MC is to lessen confusion
among a product9s target market, and to lessen cost for the firm.
everal different subsets of marketing communications can be
distinguished.
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&lements MC
a( $dvertising O Classification of advertising, types, advertising
appropriation,
advertising campaigns
b( ales Promotion O 3ifferent types of ales Promotion, relationship
between ales
promotion and advertising
c( Publicity O Types of Publicity, relationship between advertising and
publicity
d( Personal elling
e( 3irect marketing and direct response methods
f( 8vent Management
g( Crisis Management
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h( Trade ?airs and 8&hibitions
%reen Marketing$
reen marketing can be defined as the marketing of products whichare environmentally sound. The notion of green marketing is a
comparatively new one within general marketing thought, as it has
chiefly grown in acceptance since the !!#s. onetheless, as a
contemporary branch of marketing thought, it can be seen as one of
the fastest growing areas of marketing principles.
Consumer Bu"ing Behavior:%
What influences consumers to purchase products or servicesA The
consumer buying process is a comple& matter as many internal and
e&ternal factors have an impact on the buying decisions of the
consumer.
Bu"ing behavior process:
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3actors affecting bu"er behavior:
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!"pes of bu"ing behavior:
( Comple+ bu"ing behavior:
Comple& buying behavior is where the individual purchases a high
value brand and seeks a lot of information before the purchase is
made.
E( 4abitual bu"ing behavior :
@abitual buying behavior is where the individual buys a product
out of habit e.g. a daily newspaper, sugar or salt.
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F( 5ariet" seeking bu"ing behavior :
Nariety seeking buying behavior is where the individual likes to
shop around and e&periment with different products. o an
individual may shop around for different breakfast cereals because
he-she wants variety in the mornings.
G( (issonance reducing bu"ing behavior :
3issonance reducing buying behavior is when buyer are highly
involved with the purchase of the product, because the purchase is
e&pensive or infre+uent. There is little difference between e&isting
brands an e&le would be buying a diamond ring, there is
perceived little difference between e&isting diamond brand
manufacturers.
Product mi+:
Product lining: &roduct lining is the marketing strategy of offering for
sale several related products. 'nlie product bundling$ where several
products are combined into one$ lining involves offering several related
products individually. ( line can comprise related products of various
si"es$ types$ colors$ )ualities$ or prices
*ength of product :
The total number of products sold in all lines is referred to as lengthof product mi&.
%idth of product mi+:
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The number of different product lines sold by a company is referred toas #idth of product mi+$
*ine depth:
*ine depth refers to the number of product variants in a line.
5alue chain management:
Primar" activities:
. in&ound ogistics: materials handling, warehousing, inventory
control, transportationK
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E. operations: machine operating, assembly, packaging, testing and
maintenanceK
F. out&ound ogistics: order processing, warehousing,
transportation and distributionK
G. marketing and saes: advertising, promotion, selling, pricing,
channel managementK
". service: installation, servicing, spare part managementK
Support activities:
*. firm infrastructure: general management, planning, finance,
legal, investor relationsK
/. 'uman resource management : recruitment, education,
promotion, reward systemsK
5. tec'noogy deveopment : research 2 development, 0T, product
and
process developmentK
!$ procurement : purchasing raw materials, lease properties, supplier
contract negotiations.
Suppl" chain management .SCM/
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0t is the management of a network of interconnected businesses
involved in the ultimate provision of product and service packages
re+uired by end customers '@arland, !!*(. upply Chain
Management spans all movement and storage of raw materials,
work:in:process inventory, and finished goods from point of origin to
point of consumption 'supply chain(.
Suppl" chain management
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CRM;
stands for Customer Relationship Management. 0t is a process or
methodology used to learn more about customers9 needs and
behaviors in order to develop stronger relationships with them. There
are many technological components to C1M, but thinking about C1M
in primarily technological terms is a mistake. The more useful way to
think about C1M is as a process that will help bring together lots of
pieces of information about customers, sales, marketing
effectiveness, responsiveness and market trends.
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Personal selling:
0t is a face to face marketing in which strategic interaction between
customer and salesman held.
Ob6ective of personal selling
. create awareness
E. create interest
F. providing 0nformation
G. stimulating demand
". reinforcing the brand
Personal selling advantage
. advertisement
E. public relation
F. sales promotion
G. instant feedback
disadvantage
. high cost per action 'CP$(
E. training
F. not cover much area
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t"pes of selling role
. order getters
E. order takers
3. order influencer 'missionary selling these are salespersons
where customers purchase product on the advice or
re+uirement of others.(
Regression anal"sis:
0n statistics, regression analysis includes any techni+ues for
modeling and analy%ing several variables, when the focus is on
the relationship between a dependent variable and one or more
independent variables. More specifically, regression analysis helps
us understand how the typical value of the dependent variable
changes when any one of the independent variables is varied,
while the other independent variables are held fi&ed.
http://en.wikipedia.org/wiki/Statisticshttp://en.wikipedia.org/wiki/Dependent_variablehttp://en.wikipedia.org/wiki/Independent_variablehttp://en.wikipedia.org/wiki/Statisticshttp://en.wikipedia.org/wiki/Dependent_variablehttp://en.wikipedia.org/wiki/Independent_variable
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ANSO33-S MA!R7
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Boston Consulting 'roup Matri+
(eveloped b" .Bruce 4enderson/ in 891
• Stars. $ star is a product in a high growth market that controls
a si%eable share of that market. tars tend to generate strong
revenues.
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Acron"ms n Marketing
. $03$ $ttractive interest desire action
E. $P $pplication service provider
F. 7E7 7usiness to business
G. 7EC 7usiness to consumer
". 7E 7usiness to government
*. C=C Customer life cycle
/. CP$ Cost per action
5. C1M Customer relationship management
!. 3MD 3ecision making unit#. 3$ 3irect selling agent
. 31 3aily sale report
E. 3T 3irect selling team
F. 8
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E/. 7D trategic business unit
E5. CM upply chain management
E!. 3? tandardi%ation differentiation focus
F#. TP egment target positioning
F. W
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