study unit 1 marketing management · marketing research studies conducted for specific situations...
TRANSCRIPT
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Study Unit 1 – Marketing Management
What is Marketing SU 1 pg. 4-5; par. 1.1 & TB Ch. 1 pg. 1-7; par. 1.1-1.3
Marketing is a: - way of thinking/philosophy that permeates every aspect (& departments) of business; - strategic process/sequence of steps that need to be followed in order to satisfy consumer needs profitably.
Marketing's core aim = ensure customer's needs & wants are understood, met & satisfied.
The Development of Marketing: SU 1 pg.4-5; par 1.1.1 & TB Ch. 1 par 1.2-1.3
Gaps between production & consumption of a product can only be filled by marketing activities:
Intermediaries: Offer specialised services that bridge the gap between buyer & seller, acting as go- between for participants who are no longer in close contact:
Functions & activities of marketing: used to fill the gap between consumers and producers.
8 Universal marketing functions/activities categorised into 3 groups i.e. Primary; Auxiliary; Exchange
discover consumer needs &
wants
create goods/ services
that meet needs &
wants
price; promote; deliver
goods/services which meet identified
needs & wants
•Geological space between consumer and manufacturer Space Gap
•between time of production and time of consumption Time Gap
•Informing consumers on correct product to use for specific needs eg. medicine Information Gap
•Providing finance/documents for a purchase eg. banks Ownership Gap
•that buyers & sellers must bridge to agree on acceptable exchange rate Value Gap
•Take title of products which are later sold to others e.g. Ackermans Middlemen
•Agents (not taking title)
•Provide & are paid for services to facilitate sales process Sales Intermediary
•Not directly involved in title transfer
•Provide support services to facilitate selling process e.g. Ad. agencies Auxilliary Enterprises
Traditional Definition
of Marketing
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The Marketing Concept SU 1 pg. 5-6; par. 1.2 & TB Ch. 1 pg. 7-12; par. 1.4
Marketing Orientations – Marketing's role strongly influenced by its philosophy/orientation:
The Marketing Concept – Everyone in the organisation aims to satisfy the consumer completely while making money
and satisfying the long term needs of society. Consists of 4 Pillars = Marketing Thought:
Marketing Functions/Activities
Primary Function
Transport Deliver
product or serivice in
fastest/ most
efficient/ safest way
possible
Facilitating Function
Storing Holding goods until
needed Closes time gap
Standardise & grading
production of goods to certain
standards set by
government
Financing Funding between channel
members e.g. offering
credit at cost of interest
Risk Taking risk of matching
supply with future demand
exposure to loss/damage
Securing Marketing Info Collect info on
consumers, competitors,
channel members to
assist in decision making
Exchange Function
Buying Buy
products consumers
will find appealing
Selling Match
between org.
offering & consumer need using promotion sales, ads.
•Focus lies on increasing production and internal capability
•Cost reduction and control
•Increase in profit due to increase in sales
•Disadvantage: does not consider whether goods/services produced also meet market needs
Production Orientation
•Consumers will favour products that offer most in performance, innovation and quality
•Marketing strategy = continuous product improvement
•Company core focus = improving products & quality control
•Assume good quality products will sell themselves
•Quality products leads to increased sales and profit
Product Orientation
•Focus is on clearance of stock
•companies make use of forceful sales and promotion strategy
•companies earn profits through quick sales and high volumes
Sales Orientation
•Focus is on consumer needs to distinguish products from offerings of competitors
•Intergrate all org functions to satisfy needs and wants of market
•Achieve long term goals and objectives by satisfying consumers needs and wants responsibly and legally
Marketing Orientation
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Identify Target
Market - Know wants
& needs
Marketing Strategy/Programm
e (4 P's) to meet consumers' needs
Ensure that value for customers is exceeded in the integrated plan
Long-term relationships &
customer happiness (return business &
referrals)
= Profit & Customer
Equity
The Marketing Process SU 1 pg. 6-7; par. 1.3 & TB Ch. 1 pg. 14-19; par. 1.6
Occurs within marketing environment & in turn is influenced by org. decision making
•All org.'s actions directed towards satisfying customer needs.
•Aim to delight customer
•Customer is focal point of dicision making
•While meeting customer needs & wants also aim to meet primary objective - maximizing profit
•A group of units working together to achieve a shared objective.
•All activities are integrated to satisfy customer needs and achieve ROI
•Business is part of society in which they exist and is accountable to society for their performance
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Study Unit 2 – The Marketing Environment SU 2 pg. 10-15; par 2.1 & TB Ch. 2 pg. 30-50;
In this study unit pay particular attention to the following: 1. The marketing environment and its influence on the organisation 2. Micro Environmental Variables 3. Market Environmental variables and the influence it has on an organisation 4. The Macro Environmental variables and the influence it has on an organisation
- ALL ORGANISATIONS OPERATES WITHIN AN ENVIRONMENT WHICH INCLUDES INTERNAL AND EXTERNAL FACTORS. THIS ENVIRONMENT IS DYNAMIC AND CHANGEs ALL THE TIME - BUSINESS AND SOCIETY INFLUENCE EACH OTHER AND DEPEND ON EACH OTHER FOR THEIR EXISTENCE - ORGANISATIONS SHOULD MONITOR THE ENVIRONMENT IN WHICH THEY OPERATE CONTINUOUSLY COMPONENTS OF THE MARKETING ENVIRONMENT:
MICRO ENVIRONMENT - Inside organisation itself - Variables directly controlled by management
Variables in Micro-Environment: (Table 2.1 p 32) 1. Business Aim
Mission & strategy: explain why business exist / declaration of "reason for being"
When formulating the mission statement consider the following questions: a) Who is the customer?
Macro-Environment
Political/legal International Physical Technological Economic Socio-cultural
Threats & Opportunities
Market Environment Consumers Competitors Suppliers
Threats & Opportunities
Micro-Environment Mission Statement Resources, skills, abilities Marketing Objectives Marketing Instruments
Strengths & Weaknesses
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b) What does the customer buy? c) Where is the customer located? d) How does the customer buy? e) How can the customer be reached? f) What does the customer regards as value for money?
MISSION STATEMENT SHOULD ALWAYS FOCUS ON THE CUSTOMER
2. Target Market
Select Size: e.g. big enough segment for company to meet objectives & ensure long term survival and growth
All markets have specific characteristics (main features of selected target group) – marketers must be aware of these characteristics in order to develop a marketing strategy to ensure the highest possible return
Examples table 2.2 p 34 (size, growth rate, profit margins, competitors, resources, distribution channels)
3. Marketing Objectives
Stated mission leads to a set of objectives
Each functional area will have its own set of objectives that together with others help an organisation to execute its mission e.g. Marketing objectives, financial objectives, HR objectives.
Objectives need to meet 5 requirements = SMART Specific – not vague must relate to single specific topic Measurable – Must be stated in specific terms that can be measured Achievable – Challenging but reasonable and realistic Result – Objective should relate to a result rather than an activity to be performed Time – An objective should be set within a timeframe
- There are different types of objectives: See detail on TB pg. 36-37
Business/Long term objectives – 8 major areas: Functional/ Short term objectives
Market Standing (Sell what & to whom) Profit (max profit/ROI)
Productivity (input/output ratio) Customer Orientation (satisfy needs/wants)
Innovation Survival & Growth (keep up with changing demands)
Physical & Financial Resources Sales & Market Share ( by differentiation/new lines/location)
Profitability Efficiency Motive
Manager Performance & Development (Quality of mngr.) Marketing Instruments Objectives
Worker Performance & Attitude (e.g. output per employee)
Public & Social Responsibility
4. Resources, Skills and Abilities
Used to take advantage of external opportunities / counter threats
Internal analysis: review org.'s strengths, weaknesses & capabilities of finance, facilities, product knowledge
Examples are capital, skills, structures, systems, knowledge 5. Marketing instruments/marketing mix (4 P's)
Use of marketing instruments is determined by the specific target market
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MARKET ENVIRONMENT – Forces outside the business. Influenced/partially controlled by management
Variables in Market Environment: 1. Suppliers
Businesses/individuals who provide resources the business needs to produce goods & services
Having the right supplier may mean the difference between success and failure
Supply of materials & services is N.B: directly influences business' profit & price charged to the customer
2. Customers
Focal point of every business : their needs; purchasing power; behaviour patterns (in-depth analysis)
A MARKET CAN BE DEFINED AS CONSISTING OF PEOPLE WITH NEEDS WHO HAVE MONEY TO SPEND AND IS
WILLING TO SPEND THAT MONEY
There are 5 types of customer markets (TB p 40)
a) Consumer Markets: individuals/households who buy goods/services for personal consumption
b) Industrial / B2B Markets: org.'s buy goods/services for further processing/use in manufacturing process
c) Reseller Markets: buy goods/services and resell them at a profit
d) Government Markets: government agencies buy goods to produce public service/transfer to others
e) International Markets: foreign buyers (incl. consumers, producers, resellers & governments)
3. Competitors
Define competition: situation in a market where several businesses offer similar kinds of products or services and compete for the business patronage of the same customers
Competitive Market Structures: (TB p 41)
THE MACRO ENVIRONMENT – External forces in-/directly influencing individual org. – Org. has no influence/control.
•Best communication method to reach specific market
•Must reflect value perceived by consumer
•Customers buying patterns
•Distribution Channels
•Best product (quality, size) to meet needs of market
Product
/Service
Place
Promo-tion
Price
Monopoly
One Competitor
No real substitutes
Complete Control
Oligopoly
Few Competitors
Few differentiated / homogeneous
products
Control much of supply
Monopolistic Competition
Many Competitors
Many differentiated products
Perfect Competition
Unlimited Competitors
Many products, little differentiation
No Influence on price / supply
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Variables in the macro environment
Macro environment is dynamic – it changes rapidly and impact of such change can be felt very quickly
1. Political & Legal (Institutional Environment)
Political stability / government decisions: one of the most N.B influencers of the marketing environment
International law and regulations will also effect how organisations do business in other counties
2. International Environment
What happens in world almost immediately reported and markets reacts to these events instantaneously.
Sourcing suppliers is much easier than in the past – organisations are not limited to local suppliers only
It is important to understand relevant regulations and conditions of all countries you do business in.
Also be aware of cultural differences that may impact trade 3. Physical Environment
Natural resources are not available in infinite quantities – businesses must be aware of limitations
Availability of raw materials used in manufacturing will have an effect on supply of a product 4. Technological environment
Technological innovations can be described as the process that expands people’s capacity.
It originates in research and development of enterprises and the state
It results in new machinery and products and also new processes, methods and management approaches.
This bring about changes in the environment 5. Economic environment
6. The Socio-cultural Environment
Impacts marketing techniques, media used, types of ads., organisational structures, products designed and offered for sale across all types of businesses and industries
Social trends directly affect marketing strategies
Trends include – demographics, lifecycles, cultural values, and sub cultural influencers
THE SWOT ANALYSIS Helps managers identify internal strengths and weaknesses as well as external opportunities and threats
ENVIRONMENTAL SCANNING
Measurement; projection and evaluation of change in different environmental variables
Importance of environmental analysis:
Economic environment
Inflation
Interest rates
Unemployment
Consumer Income
Exchange Rate
Monetary Policy
The Business
Cycle
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1. Helps business capitalise on early opportunities 2. Early signal of impending problems or threats 3. Sensitises business to changing needs and wants of customers 4. Objective info about SWOT 5. Improves image of business by showing it is sensitive and responsive to environment
Study Unit 3 – Marketing Research SU 3 pg. 19-24; par 3.1 & TB Ch. 4 pg. 67-119;
N.B. Learning objectives: 1. Understand the role of marketing research in decision making 2. Explain components of MIS [Marketing Information System] 3. Explain and illustrate the steps in the Marketing Research Process 4. Role of internet in Marketing Research
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5. Potential Sales and Forecasting MARKETING RESEARCH AND DECISION MAKING TB par. 4.2
Define: The process of gathering and analysing data based on solving a problem or exploiting an opportunity – then reporting information on opportunity or problem in such a way that management can use it when making decisions.
THUS PROVIDE QUALITY INFORMATION THAT FACILITATE MARKETING DECISIONS
1. Value of marketing information TB par. 4.2.1
How does a company know what consumers’ needs & wants are – through marketing research
Quality & customer service and satisfaction = key competitive weapons – marketing research is mechanism that enables companies to determine type & forms of quality, service etc. important to the target market.
Marketing research provides info as to which marketing mix elements to use and in what combination.
Marketing research provides information about changes in the environment, threats and opportunities.
MARKETING RESEARCH ADDS VALUE TO A BUSINESS BY: 1. Identifying consumers’ need 2. Helping companies to plan ahead 3. Ensuring business focus on identified consumer wants & needs 4. Making it possible to improve competitive advantage
2. Marketing research and the marketing mix TB par. 4.2.2 Marketing research helps marketing departments to determine what combination of the 4 P’s (price, place, promotion, product) will best take advantage of an existing marketing opportunity.
3. Marketing research and the macro environment TB par. 4.2.3
Environmental change may alter appeal of marketing strategy to consumers = never-ending need for info
Macro environmental information is of particular importance to marketing management in decision making
Components of macro environment: - Social - Cultural - Economic - Political - Technological
Marketing research in
decision making
Value of marketing
information Marketing research & marketing
mix
Marketing research &
macro environment Marketing research
identifies & defines marketing
opportunities & problems
Marketing research monitors marketing
performance
Marketing research improves
understanding of marketing process
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4. Marketing research identifies and defines marketing opportunities and problems TB par. 4.2.4 Before developing a strategy a company needs to be sure of the direction in which it wants to go – in order to strategize and identify opportunities/ problems market research is required 5. Marketing research monitors marketing performance TB par. 4.2.5
To maintain control over the success of a new product or service continuous monitoring of the marketing strategy is required.
Marketing research provides feedback to the control system allowing management to compare actual performance with desired performance.
6. Marketing research improves understanding of the marketing process TB par. 4.2.6
Basic research = marketing research conducted to expand basic knowledge of marketing
Basic research attempts to expand knowledge and is not aimed at solving a specific problem
Most marketing research is conducted to improve understanding of the marketplace = applied research
Marketing research is not the only source of info available to decision makers – it can also be supplied by other components of the MIS
THE MARKETING INFORMATION SYSTEM [MIS] TB par. 4.3
Define: A SYSTEM FOR GENERATING & MANAGING A FLOW OF INFORMATION FOR MARKETING DECISION MAKING
1. Characteristics of valuable information TB par. 4.3.1
2. Information management TB par. 4.3.2
Information is data that has been converted into a useful form for decision making.
Information is relevant, timely, accurate and cost effective.
Marketers must consider cost of collecting and converting data into information
MIS N.B. for internal use for decision making and can also be used by external partners for decision making
MIS is part of the company's overall information network
The purpose of the MIS is to help marketing managers make better decisions 3. Components of a marketing information system TB par. 4.3.3
Marketing information systems differ according to the type of company and industry
A small company has a SIMPLE MIS: p78 Fig 4.1
A large company has an EXTENSIVE MIS:
Relevance
•How pertinent is the data to the situation?
Data Quality
•To what degree does data represent true situation?
Information Completeness
•Is there enough correct info in order to make decisions?
Timely Information
•Is the data current enough to still be relevant?
Data Components
Routine Data
Internal Environ External Environ
Specific-Purpose Data
Ineternal Marketing Research
External Marketing Research
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a) The internal reporting Subsystem TB par. 4.3.3.1
Internal reports containing historical performance results assist in identifying opportunities and threats
Internal databases are cheaper and easier to access but do present some challenges: o Data ages quickly, keeping data relevant and up to date takes a lot of effort o Databases may be incomplete and incorrect o Highly sophisticated equipment and techniques are required to manage large amounts of data
b) The marketing intelligence subsystem TB par. 4.3.3.2
Procedures and sources whereby management obtains information concerning current and relevant occurrences in the marketing environment
Intelligence systems focus on happenings in the marketing environment
The marketing intelligence subsystem includes formal and informal information gathering procedures
Competitive marketing intelligence collects & analyses info about consumers, competitors & developments
in the market place
Competitive marketing intelligence improves strategic decision making by: 1. Gaining insight into consumer environment 2. Assessing and tracking competitors 3. Providing early signals of opportunities and threats
c) The statistical subsystem TB par. 4.3.3.3
Composition of a statistical database & the application of advanced statistical procedures and techniques
Purpose: create projections, scenario's, models to provide better grasp of alternatives for decision making E.g. A model can illustrate the probable effect of a change in package design on sales
d) The marketing research subsystem TB par. 4.3.3.4
Gathers information not collected by other MIS components subsystems
Marketing research studies conducted for specific situations – also referred to as projects / ad hoc studies
Marketing research is not continuous MARKETING RESEARCH TB par. 4.4
WHY MARKETING RESEARCH NEEDS TO BE CONDUCTED: 1. Top management wants marketing to investigate possibility of an attractive marketing opportunity 2. Marketing management must develop a strategy for a new product 3. Decline in demand – marketing management must determine the cause and recommend remedial action
STEPS IN THE MARKETING RESEARCH PROCESS: TB par. 4.4.1
INTERNAL REPORTING SUBSYSTEM
Marketing Intelligence Subsystem
Statistical Subsystem
Marketing Research
Subsystem
Formal Info gathering activities
Conducted by staff members assigned to specific task
Informal Info gathering activities
Scanning newspapers
Scanning magazines
Scanning trade publications
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Step 1 – Identify & define problem / opportunity
Provide clear definition of the nature and extent of the problem/opportunity
Once problem is identified marketing researcher is approached
Researcher to work with marketing manager to define problem precisely
Problems can be difficult to define - Factors that influence the complexity of the process can be: TB p 85
Easier When: Harder When:
Situation is recurring/routine Situation appears new
Dramatic change occurs Change(s) in situation are subtle
Symptoms are isolated Symptoms are scattered
Symptoms are consistent Symptoms are ambiguous
Step 2 – Formulate Hypothesis
Specific factors are identified as influencing factors or the cause of the opportunity/problem is identified
The perceived most important factors are then investigated further – this is called a hypothesis
HYPOTHESIS = tentative actions/solutions for the opportunity/problem
HYPOTHESIS – a theory that has to be tested or proved to confirm the assumption
Confirming or rejecting the hypothesis is a crucial phase of the research project
Step 3 – Determine the research objectives
Research objectives: stated in terms of the precise info necessary & desired to solve the marketing problem
Objectives must be as specific and unambiguous as possible
In general a research investigation will have 1 of 4 basic objectives, to:
1. Identify and define problem or opportunity
2. Formulate hypothesis
3. Determine research objective
4. Determine data needs
5. Select method of collecting information
6. Design form for collecting information
7. Determine extent of formal investigation
8. Select, train and control interviewers
9. Field work
10. Data processing
11. Communicate information to decision makers
Explore
•Identify alternative courses of action
•Conduct exploratory research when more info is needed about problem
•Informal Research
Describe
•When knowledge about the market/marketing aspect is vague
•Provide answers to – who/what/where/when/where/how
Test Hypotheses
•Causal Research
•Test relationship between independent & dependent variables
Predict
•Forecast future values Eg. Sales/market share
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Internal Sources
Company records
Research Reports
In-house experts and experienced sales staff
External Sources
Trade Associations
Government departments
Agencies
Consultants
Syndicate Reports
STEP 4 – Determine data needs
Research objectives are translated into specific data needs
What information is required and where will you get it from?
Researchers distinguish between primary and secondary data see Table 4.1 p91
Primary Data: Secondary Data:
Observed/collected directly from first-hand experience
Already exists, gathered by someone else for some other purpose but which may be relevant to problem at hand
Relates specifically to research problem at hand Researchers must always consider relevance, accuracy, credibility, timeliness
Expensive & requires a lot of time Usually cheaper & requires less time
Internal/external sources. Major internal source is company personnel. External = retailers, wholesalers, customers, competitors
Internal/external sources. Major internal source is company records. External = library, trade associations, government publications
Internal and external sources of information
The Internet – Using the internet for marketing research:
Advantages Disadvantages
Large range of information provided Questionable accuracy
Rapid access Anonymous author
Info easy to obtain Info missed if wrong keywords used
Low cost Information overload
Time consuming
Organisations sensitive to provide info
STEP 5 – Select Method of Collecting Information
PRIMARY DATA COLLECTION
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STEP 6 – Design the Form for Collecting Information
Questionnaires are the most common method of gathering primary data
The first important aspect of a questionnaire is question content and phrasing o Keep wording simple, clear and concise o Avoid “leading” questions
Another important aspect is the sequence of questions o Use funnel approach – simple to more involved questions
Question format is also important o Use open ended and closed questions (see table 4.2 p 99)
Validity and reliability should always be considered in questionnaire design
Validity: degree to which study accurately reflects/assesses specific concept researcher is attempting to measure
Reliability: accuracy of the actual measuring instrument/procedure.
Pretesting of the questionnaire is essential to perform desired function. Test on small sample of respondents to identify/eliminate potential problems / reveal errors
Various contact methods include – mail, email, telephone, in person – see table 4.3 p101
STEP 7 – Determine the extent of formal investigation
This focuses on the design of the sampling plan
Sampling involves selecting representative units from a population
Population/universe – the group the marketer is interested in
Sample – A subset of a population; representing the population of interest
Sample frame – selecting respondents who will represent the population of interest
Sample size – how many respondents should be incorporated in the study
Types of Samples: see TB p103 – 104 for details
Observation
• Systematically recording behavioural patterns
• Disadvantage: the cost of waiting & difficulty measuring phenomenon in natural setting
Experimentation
• Testing something in a controlled environment
Focus Groups
• Simultaneous involvement of small number of research participants
• Small groups mean the operation of group dynamics
• TB page 96 for example
questions
Surveys
• Gathering of primary data from respondents by mail, telephone or in person
• Structured or unstructured
• Types: Factual, Opinion, Motivational (why)
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Step 8 – Select, train and control Interviewers
Before selecting interviewers establish selection criteria
Interviewers need training to ensure they all administer the questionnaire in the same manner so that data can be collected uniformly
Control of interviewers should be exercised continuously Step 9 – Field Work Various problems may occur during the interviewing process
Non response error: results differ from what it would have been if all respondents participated in research Respondent bias: respondents pre-empt interviewer, providing answers they think interviewer is looking for Interviewer bias: can take forms like: voice, age, gender, completing questionnaires themselves etc.
Step 10 – Data Processing
Data processing entails editing & coding data: o Editing involves setting up categories for data in accordance with research design
Data analysis is done next o process of editing & reducing accumulated data to manageable size, developing summaries, looking
for patterns and applying statistical techniques
Step 11 – Communicate info to decision maker The written research report is the document that management will use as its information source in making a decision. MARKET POTENTIAL AND SALES FORECAST TB par. 4.5
Org. observes new market trend (through MIS/Research) N.B. to determine size & potential of the market
Successful implementation of plans depends on: o Managers ability to set and implement strategies o More NB – Managers ability to predict market accurately o Market potential: focuses on current size & characteristics of market;
Sales forecasting: looks at the future market situation 1. Levels of market Measurement TB par. 4.5.1
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Build up
method
Census (Detailed
Consideration)
Survey (Purchase Intentions)
Secondary Data (Historical)
2. Relevant markets for measurement TB par. 4.5.2
3. Define Market and Sales Potential TB par. 4.5.3 Market potential: max possible sales of specific product in specific market over specific period for all industry sellers. Sales potential: upper limit of sales that org. could possibly reach for specific product in specific market over specific time period. 4. Estimating Market and sales potential TB par. 4.5.4
•Demand measurement specific in terms of time of purchase
•Market divided into geographical segments and demand measured in geographical terms
•Consumer demand for a specific brand / number of buyers for each product type
•Number of final consumers in different market segments
Consumer Level
Product Level
Time Level Geographic
Level
Total Market / Market Potential
•Actual/potential buyers of a product; available for purchase; consumers have ability to buy
Available Market
•Actual/potential buyers of a product who have interest, income & ability to purchase at particular point in time
Target Market
•Part of the available market the company has chosen to direct its marketing activities
Penetrated Market
•Consumers who have already bought the product
Markets for measurement
Breakdown Methods
Total Market Measuremen
t (long series of data)
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5. Market and Sales Forecasting TB par. 4.5.5 Market forecast: estimate expected sales of specific product in specific market over specific period for all sellers in the industry Sales forecast: estimate of number of units company expects to reach for specific product in specific market over a specific time period 6. Forecasting characteristics
Based on historical information
Look forward over specific clearly defined time
Make specified assumptions 7. Forecasting Methods TB par. 4.5.6
ANALYSING AND USING MARKETING INFORMATION TB par. 4.6
Customer Relationship Marketing (CRM) o Managing detailed info of individual customers & managing touch points to max customer loyalty o CRM uses sophisticated software and analytical tools that integrate information, conduct in-depth
analysis and uses results to build stronger customer relationships
Distribution and use of marketing information o MIS must make info readily available when it is needed otherwise it will not have value and cannot
be used to gain customer insight and make marketing decisions INTERNATIONAL MARKETING RESEARCH TB par. 4.7 When defining potential export markets, take the following factors into consideration: 1. Geography: distance required to deliver goods & method of delivery 2. Economic Zones/Trading Blocs: developed or BRICS countries 3. Political Conditions: unstable/stable This makes international marketing research a more complex process and increases uncertainty THE IMPACT OF THE INTERNET ON MARKETING RESEARCH TB par. 4.8 1. Reasons for success of Internet Marketing Research
Sales force Surveys
•Sales reps provide forecasts on customers, dealers etc
Expert Surveys
•Participation from external people with specialised knowledge and market experience
Time series analysis
•Using historical data to predict future
•Trends, Cycles, Seasonality, random factors
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2. Advantages of Internet surveys
• Rapid development – real time reporting • Reduced Cost • Personalisation • Respondent Participation • Wider Reach
3. The role of customer generated media (CGM) in marketing
CGM is media that consumers generate themselves eg. Blogs, message boards, twitter, facebook, youtube
Cannot be controlled by marketers, therefore more trusted than traditional forms of marketing & advertising
Companies should focus on specific issues and concerns generated by CGM 4. Behavioural Targeting
Behavioural targeting started as a simple process with cookies placed on browsers to track website visits
Today Behavioural Targeting combines a consumers online activity with psychographic and demographic profiles
Post from myUnisa 2015-02-20:
These terms are all very close to each other and it is easy to get confused between them. I have highlighted the key difference between each one for your below in blue, purple and yellow respectively.
Problem -> Hypothesis - > Objectives
In research your problem is the reason you want to conduct the research. It is your main purpose of your study. Your problem is
usually formulated in the form off a problem statement and will clearly indicate the core issue to be investigated, the specific context of the study and who is involved in the study.
For example we want to find out why students do not make use of myunisa discussion boards
The hypothesis is what you think the possible solution will be in your research. It’s a guess. This is the theory you will test when
you conduct the research. For example you think students do not use myunisa discussion boards because they do not have the time. This is your educated guess. Your hypothesis will then be:
H1: There is a negative relationship between students’ use of myunisa discussion boards and the time they have available.
Objective is the precise information needed to solve the problem at hand. It can be seen as the promises you make in your
research study. For example: To determine whether time is a reason students do not use myunisa discussion boards.You will have multiple objectives in one research study and at the end of the research you will need to have "answers" to these objectives.
Business intelligence can be accessed easily = better and faster decision making
Improve company’s ability to respond
Decrease time and cost spent
on research
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Study Unit 4 – Consumer Behaviour SU 4 pg. 27-37; par 4.1-4.5 & TB Ch. 5 pg. 120-145; par. 5.1-5.4
INDIVIDUAL FACTORS THAT INFLUENCE CONSUMER BEHAVIOUR TB par. 5.1; 5.2
1. Motivation
Need (imbalance between consumer's actual & desired states) is one thing but to do something about it is another. Person's wish/inner state to do something about a need = motivation
Two classifications of motives that are important to marketers: a) Maslow’s Hierarchy of needs TB pg. 125-126
o Human needs classified in a hierarchy of importance. Once a basic need is satisfied a person moves on to a “higher” need
b) Economical and emotional classification of Motives o Economic motives: rational in nature expressed in quantifiable terms (cost/performance criteria) o Emotional motives involves emotions and correspond with Maslow’s social and esteem needs
2. Perception
"process by which people select, organise, interpret info to form meaningful picture of world using 5 senses"
Individual Factors
Motivation
Why consumers
do what they do
Perception
Interpretation of information
Learning Ability
Change of behaviour as a
result of experience
Attitude
A learned predisposition
towards product /service
Personality
Characteristics that
determine response to
environment
Lifestyle
The way in which you
live
Self Actualisation
•Self Development: e.g. hobbies travel education
Esteem
•Recognition/Status: e.g. Cars, jewellery, furniture
Social / Belongingness
•Sense of belonging: e.g. Clothing, drinks, cosmetics
Safety
•Safety/health/security: e.g. Medical aid, alarm systems
Physiological
•Basic needs: e.g. Food/water/shelter/clothes
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The perception process – 4 steps:
3. Learning Ability
"learning in marketing context: immediate/expected changes in consumer behaviour as result of experience"
Four elements of learning:
4. Attitudes
"learned predisposition to behave in a consistently (un)favourable way towards market-related obj./events"
Components of Attitudes (tend to produce related changes in each other): o Affective Component: Feelings & Emotions (consumer's assessment) o Cognitive Component: Knowledge & Perception (direct experience / other info sources) o Behavioural (conative)Component: Outcome of cognitive & affective components – buy / not to buy
Ways in which a marketer can influence consumer attitude:
5. Personality
"inner psychological characteristics that both determine & reflect how a person responds to environment"
Requires in-depth qualitative research
Characteristics of personality: o Reflects individual differences (unique combination of factors; group according to trait(s)) o Consistent & enduring (attempt to appeal to relevant traits)
Value to marketers: Consumers buy products that will reflect/enhance/defend their personalities. Product image relate to personality. Marketers design adverts that appeal to certain personalities.
- Remember info.
- Selective recall: fact that consumers tend to
forget marketing message.
- marketers use point of purchase
promotions as reminders
Recall / Memory
- Meaning assigned to the sensory stimuli.
- Selective interpretation: basis of own attitudes, beliefs, motives, experience
Interpretation
- Activate when stimulus sensation processed in
brain.
- normally when person is interested in stimulus
- physical characteristics influence
Attention
- Stimuli comes within range of 1 of the
receptions nl. See, taste, hear, smell,
touch.
- Selective exposure: certain stimuli sought
out
Exposure
Must motivate consumer to seek
object before learning can occur
Action / reaction / state of mind that
resulting from stimulus
Increase the likelihood that a
response will occur in the
future as a result of the stimuli
Repeating past experiences. Learning is enhanced by
performing the same action several
times
Increase/change strength or believe
rating of a brand on an important attribute
Change consumer perception of the
importance / value of a specific attribute
Adding a new attribute to the attitude
formation process
Changing perceptions of belief ratings of a
competing brand
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6. Lifestyle
A persons' set of values plays a very important role in consumption activities – many products are purchased because people believe these products will help them to attain a value related goal.
GROUP FACTORS THAT INFLUENCE CONSUMER BEHAVIOUR TB par. 5.3
1. Family
Nuclear family (husband, wife, children); Extended family (grandparents, other relatives)
There are five roles in the family decision making process
Family Types
o Husband-Dominant Families o Wife-Dominant Families o Syncratic Families (joint decisions by husband and wife) o Child-Dominant Families
2. Culture
"Pattern of behaviour common to members of a society; such behaviour is learned and handed down from one generation to the next."
Cultural norms/values/symbols are created by people and handed down from one generation to the next
SA society is fragmented into different cultural groups, marketing managers must be aware of this and not use symbols in adverts that can be interpreted incorrectly/differently by different cultural groups
3. Social class
Social classes are groups who enjoy more or less the same prestige/status in society
Social class is a function of e.g. Income/occupation/education
Social class structure consists of: Upper, Middle & Lower Class
Strongly influence consumer lifestyle & is an indicator of the type of product a consumer will be interested in
Marketing Implications of social class are the following behaviours:
Consumer behaviour
(Group)
Family
Cultural Group
Social Class
Reference Group
•First person to suggest product
•Collects info
Initiator
•Influence final decision (suggestions & wishes reflected in family’s decision)
Influencer •Actual decision
•Makes final choice between alternatives
Decision-maker
•Person who buys product
Purchaser •Person who actually uses the product
The User
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4. Reference Groups & Opinion Leaders
Involves one/more people that a consumer uses as basis/point of reference in forming responses and performing behaviours.
Types of reference groups that influence consumer behaviour patterns: o Membership groups: person has obtained membership e.g. friends, social club o Automatic groups: as a result of age, gender, occupation o Negative groups: intentionally avoids association with certain groups e.g. drinkers o Associative groups: person aspires to belong to such a group e.g. models, celebrity
CONSUMER DECISION-MAKING PROCESS TB par. 5.4
1. Types of Decision Making
Real Decision-making: Extensive problem solving
Impulse Decision-making: Unplanned action / spur of the moment
Habitual Decision-making: Brand loyal consumer; doesn’t even consider any other product 2. Phases in consumer decision making
3. Adoption of New Products
Adoption process focuses on stage through which individual consumer passes in arriving at decision to try or not, to continue or discontinue using a new product.
New/unknown products – certain degree of risk – adopted only gradually as part of learning process
Perceived risk: financial (waste money), functional (not perform as desired), social (not "in"), physical (harm)
Five stages in arriving at decision to purchase/adoption or reject a new product:
What type of media you consume
Lower social classes collect less info and
also have less access to info
Lower class people do
shopping at discount stores
High social class = more
leisure pursuits/
brand status symbol
1. Need Recognition
•Consumer becomes aware of a need
2. Search for information
•Search for information about the product
3. Evaluation
•Appraisal of attributes/benefits of alternatives
4. Purchase Decision / Decision-making
•Identify best alternative and decide to buy
5. Purchasing Action
• e.g. applying & registering
6. Post Purchase Evaluation
•Does purchased product fulfil expections (Cognitive dissonance)
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Characteristics of people who adopt an innovation at different points in time (Adopters):
CONSUMER DECISION-MAKING vs. BUSINESS DECISION-MAKING SG par. 4.4
More organisational/business buying than consumer buying
Organisational transactions: o large number of, (hide dealer tanner manufacturer wholesaler retail customer), o less frequent negotiations though lengthy, o involve more than one person/department in purchasing organisation o require consultation o greater interdependency between buyer & seller (long-term relationships) o better informed, more likely to seek info o formal request & sheet detailing product features & technical specifications
CONSUMER DECISION-MAKING SCENARIOS SG par. 4.5
Number & nature of buying decision organisation buyer faces depends on buying situation. Four buying decisions:
1. Buying Centre SG par. 4.5.1
Buying centre = decision-making unit of a buying organisation
Not necessarily fixed entity with each transaction
Look at allocation of role in functional area & member seniority
Comparison of Buying centres in consumer markets & organisational markets:
Role Consumer Example Organisation Example
User/Initiator Child pester parents for new bike Child = initiates & is user
Machine breaks down: operator reports = initiate process. Operator asked to help with replacement specs = user
1. Awareness (exposed)
2. Interest (more info)
3. Evaluation ('mental trail')
4. Trail (limited use)
5. Adoption / Rejection
•Venturesome, eager to try new ideas
•Younger, better educated, extensive media usage Innovators
•Successful, well educated
•Willing to take risks but concerned with failure Early Adopters
•Cautious and will only adopt after innovation is proven successful Early Majority
•Sceptical and older
•Adopt in response to social pressure Late Majority
•Traditional, suspicious of anything new
•Limited social interaction, oriented towards the past Laggards
New-task buying
• Buy completely new / never before used by org.
Straight Rebuy
• Simply reordering stock of bestselling item
Modified Rebuy
• Reorder but with different specs.
Systems Buying
• Purchasing complete system from one vendor
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Influencer Child's mother considers: "he has outgrown the other…"
User may be influencer / R&D staff, accountant, supplier, sales reps.
Decision-Maker Child's father agrees; go to store where child makes final decision subject to parent's credit limit
Decider: senior manager with active / passive role in whole process or buyer and/or influencer
Purchaser Parents pay the bill Buyer handles search for & negotiations with supplier
Gatekeeper Parents restrict time child can spend on internet looking at diff. bikes
Secretarial staff may prevent influencers reaching the decision-maker; R&D staff could withhold info
2. Buying Decisions SG par. 4.5.2
Different buying centre participants may be involved at different stages of the process.
Organisational buying process consists of eight stages:
i. Problem recognition: org. recognises problem/need that can be met by acquiring a product/service.
(Marketing research, sales)
ii. General need recognition: company describes general characteristics & quantity of an item it needs.
iii. Product specification: decide on & specify characteristics of best technical product for required item.
(Design & production engineers)
iv. Supplier search: try to find best supplier. (Purchasing department)
v. Proposal solicitation: buyer invites qualified suppliers to submit proposals. Visit suppliers & assess
facilities, capacity, quality control, financial status - discard any supplier below par in requirements.
(Purchasing & engineering personnel)
vi. Supplier selection: buyer reviews proposals & selects supplier(s). Use quality, price, delivery and
technical capability as key buying criteria to select supplier(s) (multiple sourcing).
vii. Order routine specification: buyer writes final order/contract for selected supplier(s), listing technical
specs, quantity needed, expected time of delivery, return policies, warranties, etc.
viii. Performance review: buyer rates satisfaction with suppliers; decide to continue, modify terms or
discard them. (Evaluate using formal vendor rating system & notify suppliers)
Note: 8 stages would operate in a new-task buying situation. Modified/straight rebuy situation, some stages
may be compressed/bypassed.
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Study Unit 5 – Market Segmentation SU 5 pg. 39-44; par 5.1-5.5 & TB Ch. 6 pg. 149-151, 153-165; par. 6.2-6.4, 6.7, 6.8
SEGMENTATION DEFINED TB par. 6.2
Categorising customers into groups (segments) & identifying the characteristics of each group
To achieve maximum customer satisfaction marketers divide the heterogeneous market into fairly homogeneous (similar) subsets of customers
THE ADVANTAGES OF SEGMENTATION TB par. 6.3
I. Focusing company/marketer on needs of chosen segment II. Designing responsive products to meet the needs of the marketplace (better fulfil needs)
III. Maintaining effective relationships with customers IV. Retaining existing customers and attracting new ones V. Reducing expenses on marketing activities, increasing market share which results in higher profits
VI. Better allocation of Funds (more funds to growing market; less to shrinking market)
Targeting •Process of deciding which segment to pursue
Positioning •Decision concerning the competitive advantage to be achieved
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THE DISADVANTAGES OF MARKET SEGMENTATION TB par. 6.4
PREREQUISITES FOR MARKET SEGMENTATION TB par. 6.7 - Criteria to ensure effective segmentation
BASES FOR SEGMENTING CONSUMER MARKETS TB par. 6.8 – Examples Table 6.2
1. Demographic Segmentation
Probably most common base for segmenting consumer markets (ease to apply / needs strongly associated)
Examples of demographic bases: o Age Gender o Race Cultural Group o Religion Income o Profession Sexual Category o Family Life Cycle Cohorts (generations sharing same experiences)
SEE LMS (Living Standards Measure) DESCRIPTION p157 Textbook Table 6.4 2. Geographic Segmentation - Marketer divides the total market into geographical areas
2 Reasons why people living in the same area might have similar characteristics o Property prices indicate socio economic status – people with similar socio economic characteristics may
cluster together o They have similar transport and shopping options
Definitions of geographic variables
Geographic Variable Definition Example
Market Density Number of possible consumers in specific area More surfboard products in Durban vs. Joburg
Geo-demographic Segmentation
Market is segmented into smaller groups based on the way they live & demographics in their specific neighbourhood
Security Company in an area with high crime rate
Micro Marketing Focussing specific marketing efforts on undersized Hospital plans
COST/EXPENSIVE
•Development and marketing of separate models and market offerings is very expensive
•Cheaper to develop one product for one segment
LIMITED COVERAGE
•Marketing strategies are directed at specific market segments only
RISK OF CANNIBALISATION
•Excessive differentiation = proliferation of models / variations & eventually cannibalisation = Sales
•"when one product takes over the market of another product from the same company"
•measure size, purchasing power, potential profit & profile of the segment in order to compare it with other segments / allocate scarce resources
Measurable
•Segment must be largest homogeneous group worth pursuing with a tailored marketing offering to be profitable
Large Enough
•Marketers must be able to reach the segment with the marketing message and strategy. Accessible
•It must be possible to develop different market offerings for different segments. They must have sufficient resources for this
Actionable
•The needs, wants and desires of the various segments must be distinctly different Differentiable
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geographic markets
3. Psychographic Segmentation
Segmentation by means of categories such as o Social class o Personality o Lifestyle
Nielsen Socio-monitor value groups' survey is the most authoritative psychographic profile of its kind in SA.
Market is divided into 5 value groups that help marketers understand what motivates customers and hence how to best appeal to them
The 5 Value Groups:
4. Behaviouristic Segmentations
This segmentation may take the form of the following (Commonly involving some aspect of product use):
•Conform to value systems such as culture, religion and family hierarchy
•Want to live harmoniously with all cultures, tolerant and sympathetic to emotions of others
•Not at ease with new product offerings
•Practical in buying behaviour
Conformists
•Values are group based – eg UBUNTU
•Proud of own accomplishments but want others to see it
•Price awareness + realism most important in decision making
•Group oriented for own group but does not easily accept people from other cultural groups
Transitionalists
•Need self growth and synchronisation to get meaning from group and give back to group
•Always want to improve themselves
•Health and family is important to them
•Money orientated and boast about accomplishments
•At ease with latest technology but embrace traditional and religious norms
Progressives
•Reject group orientated, social and conventional principles
•Easily accepting of new technological offerings
•Not money orientated and avoid owning luxury goods to empress others
•Choice of goods purchased based on relevance to their lives and technological improvement
•Confident and spontaneous individuals who do not go out of their way to improve outward appearance
Non Conformists
•Purposefully refuse to be part of anything similar to group standards.
•Eccentric and purchase based on brand and price
•Always looking for action/thrill and thrive on adrenaline Alcohol/Drugs/Sex to thrill and as distraction
•Little self confidence as individuals and need reinforcement from peers
•Out of touch with latest technology and tend to focus on past
Today-ers
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Important Factors when segmenting a market
BASES FOR SEGMENTING INDUSTRIAL MARKETS SG par. 5.5
Purchase Occasion When and for what occasion a product is used (regular/special occasions)
Benefit Sought What benefit does the buyer want from the product (e.g. economic/speedy vehicle)
User Status Non-users / ex-users / potential users / regular users
Usage rate How frequently buyers buy products (e.g. frequent-flier programmes to heavy users)
Loyalty Status Consumers vary in degree of loyalty to product/brand eg. Lead/Iron/Gold/Platinum Status
Buyer readiness Stage
Different marketing approaches followed depending on consumer readiness to buy.
Attitude Toward Product
Different strategies for different segments depending on attitude eg. Political parties avoid hostile voters, remind positive voters to vote but focus on indifferent voters to try and persuade them
•Eg there is a strong relationship between income, occupation and education Mutual relationship may exist between different
bases
•Use more than one segment base when developing a marketing strategy for a segment eg. Target males between the ages of 18 -25 who are students with an energy drink not just males.
Needs seldom relate to 1 segment base only
•Different industries can have different bases. Number of possible segmentation bases is determined by creativity of marketing manager
Market Segmentation Bases are infinite
Demographic Variables
Operating Variables
Purchasing Approaches
Situational Factors
Personal Characteristics
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Study Unit 6 – Market Targeting SU 6 pg. 46-50; par 6.1-62 & TB Ch. 6 pg. 167-172; par. 6.11-6.11.2
After segmenting the market decide which segments to target "Process of segment selection" / "selection of segment(s) on which to focus org.'s marketing offering."
EVALUATING MARKET SEGMENTS TB par. 6.11
All Criteria to be met for Selecting Potential Target Markets
Steps in evaluation of a potential Market
MARKET TARGETING APPROACHES TB par. 6.11.2
Target Strategy Advantages Disadvantages
Undifferentiated Targeting (mass-market; 1 marketing mix; no individual segments)
Possible saving of manufacturing & marketing cost
Org. vulnerable to competitors
Product offering may be unoriginal & derivative
Concentrated Targeting (market niche; specialised marketing mix; single segment)
Spend resources on single defined market segment
Needs can be better met
Smaller firms within market can compete with more established
Org.'s can establish strong position within market
Market segments are narrow / may be constantly shifting
Larger & more established org.'s may be able to communicate to the narrow market more successfully
Multi-Segment Targeting / Differentiated (2+ segments; distinct marketing mix for each )
May result in increased profits
Production & marketing outputs may increase
Highly expensive strategy as resources are stretched across various market segments
Sales may cut into sales of
Size & Growth Possibilities
•Target market does not have to be big as long there is prospect for growth – segment must be sustainable
Attractiveness & Profitability
•Attractiveness of market also lies in the promise of long term profitability
Org.'s Resources & Skills
•Segment opportunities can only be utilised if it fits long term objectives of management & scarce resources
Compatibility org.'s Objectives
•Choice of target market must take into consideration the compatibility with enterprise objectives
Cost of Reaching Target Market
•If cost to reach potential target is too high –target market should not be considered.
Decide on criteria to measure attractiveness & competitive position
Weigh attractiveness & competitive position to reflect their relative importance
Asses current position of each potential target market on each of the factors
Project anticipated future position of each market base on expected changes
Evaluate implication of possible future changes for business strategies & resource requirements
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High quality
High Price
Low quality
High Price
High quality
Low Price
Low quality
Low Price
existing products
Study Unit 7 – Product Positioning SU 7 pg. 52-57; par 7.1-7.4 & TB Ch. 6 pg. 172-177; par. 6.12-6.13
PRODUCT POSITIONING TB 6.12 • Way customer perceives a product in terms of its characteristics, advantages and competitive positioning. • For positioning to be effective, marketers must understand customer buying criteria and recognise the
performance of each competitor on each of the evaluation criteria • Key aspects of product positioning:
o Products have both objective and subjective attributes o Purchasers use these attributes when making a buying decision in a specific segment o The attribute rating of each product/brand is done on an individual basis in the consumers mind
PRODUCT POSITIONING (PERCEPTUAL) MAPS AID DECISION MAKINGTB 6.12.1 & SG par. 7.2
Tools used by marketers to represent their products & competing products according to a number of dimensions in a visual representation.
Assist marketers to develop focused marketing mixes/strategies.
Help assess advantage of organisation's marketing programme.
Normally, units must stay within its price/quality product class.
Many other variables/determinants can be used to compile similar maps but identify the most relevant/determinant dimensions that encapsulate consumers' perception of the product
Competitive Gaps: a gap on the positioning map where a competitor can enter the market THE POSITIONING PROCESS TB 6.12.2
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POSITIONING METHODS TB 6.12.3
Attribute: product is associated with an attribute, product feature, customer benefit. (e.g. VW Polo positioned as young and exiting)
Price & Quality: high prices signal quality vs. emphasis that lower-priced goods indicate low value. (e.g. VW Polo is positioned as affordable yet high quality)
Use or Application: Stressing uses or application can be an effective means of positioning.
Product User: focus on personality or type of user (e.g. VW Polo focusses on young vibrant market)
Product Class: to position product as being associated/dissociated with a particular category of products. (e.g. VW Polo is positioned as an entry level luxury hatch)
Competitor: How is the Polo positioned against the Ford Figo / competitors etc.
Emotions: How does the Polo make customers feel.
POSITIONING ERRORS TB 6.12.4
Under positioning: customer having only a vague idea of particular brand / not sensing anything special.
Over positioning: buyers have narrow image of brand. May result in consumers not even considering brand.
Confused positioning: brand changes positioning too frequently/too many claims are made. Unsure what to expect
Select positioning strategies
Selected position must reflect customer preferences taking into consideration the competition and VW’s own capabilities
Determine customers most preferred combination of attributes
Which combination of attributes is most important to consumers e.g. Low price + exciting (use surveys)
Analyse brand’s current position
How strongly does consumers associate brand with identified variables compared to other brands (positioning map)
Analyse intensity of brand's current position
How aware is target market of VW Polo & its attributes . Grow brand awareness e.g. using highly prized variable
Determine consumers perception
Establish how consumers perceive the different brands in terms of variables identified in previous step
Identify relevant determinant or differentiation variable (determinant variables)
VW Polo is communicated as “well priced, low maintenance, young, exciting (see p 174 for differentiation variables) Four dimensions: personnel, product, image or services. [P.I.P.S]
Identify relevant set of competitive brands
Which brands compete against VW Polo. What is the strengths & weaknesses of the Polo compared to the others?
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Doubtful positioning: claims made about brand are hard to believe/too good to be true. Consumers reluctant to buy
REPOSITIONING TB 6.13 SG 7.3.1 Refers to changing/significantly altering a brand's (mostly undesirable) position in the market in the hope that the new positioning will improve the brand's appeal among consumers
Study Unit 8 – The Marketing Mix SU 8 pg. 60-68; par 8.1-8.5 & TB Ch. 7 pg. 198-202; par. 7.10.1-7.10.4
THE 4 P’S OF MARKETING TB 7.10.1
After deciding on the target market, marketers develop the "product offering" to present to the consumer. Product /market offering: more than just physical product; seen as a bundle of need-satisfying benefits The marketing mix is a set of tools that the business makes use of to implement its marketing strategy. These marketing tools are also known as the 4 P’s:
Product: goods-and-service combination offered to targeted customers
Price: product's value in monetary terms which customer is willing to pay; amount of money to exchange
Place: activities needed to make the product available to customers
Promotion: activities used to communicate benefits to target market; persuade to purchase product
•Company maintains unchanged face to market over long period. Poor communication results in customers not knowing what company stands for
•New strategic position with new opportunities not yet identified by competitors
•Growing gap between brand offering & market wants leads management to think about strategic change
•Planned and continuous adaptation to changing market
Gradual Radical
Zero Innovative
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Product Decisions
Key component of marketing offering
Product Mix – range of products/
services company offers
Physical & Psychological attributes &
characteristics of product
Product Range: extend (diversification), reduce
(specialisation) standardise or differentiate
Product and package design
Physical dimensions contribute to
intangible benefits
Branding, raising awareness
Pricing Decision
Price makes revenue possible
Establish market price
sensitivity
Environmen-tal effect on
pricing
Technology has an effect on pricing
Take into account costs,
demand for product and competitor
pricing
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Distribution (place) decisions
Effective Distribution channel
What intensity of distribution is needed to meet market needs and
establish it
Distribution intensities include intensive;
selective; exclusive
What type of distribution channel should be used
eg. Direct / intermediaries (retailers, agents etc.)
Environmental effect e.g. internet
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Study Unit 9 – The Marketing Strategy SU 9 pg. 70-75; par 9.1-9.4 & TB Ch. 8 pg. 206-216
STRATEGIC MARKETING MANGEMENT SG 9.1 & TB 8.2
Strategic marketing occurs in strategic context. An organisation has a long term vision with goals. And marketing objectives is incorporated into the organisational objectives. The marketing department must base decisions on long term growth while aiming to survive in the competitive environment
Promotion Decisions
Marketing Communication: Inform, Convince,
Reinforce
Marketing Activities
Marketing Communication
tools: advertising, sales promotion,
publicity
What Channel, Messasge, Media,
Budget size & support activities
Communicate decisions to
employees also
Coordinate, apply & evaluate these
decisions
Monitor Media trends,
advertising-campaign impact,
environment
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The Nature of Planning TB 8.3
Scope/breadth: Long-term, broad, far reaching vs. more specific, shorter term Strategic: determining primary objectives & course of action, long-term direction to base other decisions on Tactical: complements strategic planning by guiding implementation of activities in the near future Marketing plan: vitally N.B. as it contains guidelines for org.'s marketing activities over a specific period. Planning always begins with information gathering Do SWOT analysis to identify organisations capabilities, limitations and possible opportunities There are several advantages to planning
o Encourage systematic thinking o Leads to improved coordination between different departments & management levels o Establish performance standards for measuring results o Provide logical basis for decision making o Improve organisations capability to cope with change o Enable organisation to succeed in changing environment o Enhancing organisations ability to identify marketing opportunities
Reasons for organisation failure: o Market segment size o Competitor action o Customer preferences
Strategic marketing plans are designed to meet current and future challenges in the environment Strategic and marketing plans are turned into actions aimed at achieving objectives through implementation Results of plans must be measured and controlled in order to determine success of implementation Take corrective action if not successful Marketing analysis provides organisation with info and controls needed for marketing activities Planning is dependant of results of preceding analysis, it does not always have to be first in the process and it
does not necessarily end before other marketing activities start THE MARKETING PLANNING PROCESS SG 9.2 & TB 8.3.2
Components of strategic marketing
Planning
Developing strategic plans
Planning models
Implementation
Organisational Structure
Leadership
Organisational Culture
Managerial Processes
Control
Measure Results
Evaluate Results
Take corrective action
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Marketing planning can occur in the short, medium and long term
o Short term forecast = relatively easy to make accurate forecasts o Medium term forecast = difficult to make accurate forecasts o Long term forecast = risky and uncertain
Planning is essential over all 3 periods to ensure survival Environmental scanning the SWOT analysis
IMPLEMENTATION OF THE MARKETING STRATEGY SG 9.3 & TB 8.4 Planning is useless in any organisation without having an implementation strategy in place
The importance of implementation: o Can determine the success or failure of the marketing strategy o Marketing strategies seldom turn out as planned – organisations deal with 2 kinds of strategy, intended
and realised strategy o Course of implementation can be compared to a cascade – goals and decisions flow down the organisation
hierarchy o Strategic plans are developed at first level of organisation and communicated down where they are
implemented and turned into actions o Organisations design and management is critical for successful strategy implementation
Consistency – consistent with corporate and other functional plans
Responsibility – each person knows their responsibilities and can be monitored
Communication – Everyone involved in implementing the plan is aware of objectives and assumptions behind them
Commitment – involvement and agreeing on the plan stimulate group commitment
Benefits of using a marketing plan
Strengths
•Activities organisation performs well
•Set apart from competitors
Weaknesses
•Activities that organisation must
improve in to keep competitors from gaining advantage
Opportunities
•Situations in marketing
environment that organisation can take
advantage of
Threats
•Situations that pose a threat to organisations
profitability
Internal: Org. has certain level of control over factors
External: Org. cannot control these situations
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o Successful strategies consists of similar factors – strategy formulation; organisational structure; culture; people; communication; control and outcomes
CONTROL (also known as EVALUATION PHASE) SG 9.4 & TB 8.5 Difference between control and monitoring:
o Control – Periodic process of assessment for the purpose of learning o Monitoring – Ongoing process of data capture and analysis for the purpose of control
The purpose of control and monitoring: o Ensuring project performance o Demonstrating accountability through transparency o Promoting learning through testing development hypothesis and capturing lessons learned
Evaluation is N.B. – evaluate actions to determine if they are on target or not before they can be controlled Corrective action is taken to ensure the achievement of marketing objectives and success over competitors. Control has two dimensions –
o Corporate/Strategic Business Unit Dimension – keep components of strategic marketing plan on target o Product Dimension – keep the marketing plan on target
Steps in the evaluation and control process
Drivers of Strategy Implementation
Organisational Structure
Functional Multi Product Matrix
Product Oriented Geographic
Leadership
Delegating Authority Coordination Communication Motivation
Corporate Culture Managerial Process
Resource Allocation Reward Systems
Barriers to Strategy Implementation
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Step 1
•Establish performance criteria
•Eg. 5000 clicks on online advert per month
•Criteria can be qualitative or quantitative
Step 2
•Develop performance projections
•Establish a budget including cost and revenue estimates
•Eg 5000 clicks will cost R 50 000 and will generate R 500 000
Step 3
•Develop a marketing organisation
•Develop a marketing organisation that will be capable of implementing and controlling the strategy
•Eg. line managers whose sole responsibility is to mange customer complaints
Step 4
•Develop the marketing plan
•Corporate culture conducive to harmony in the organisation is a critical requirement for the marketing plan
•Eg. Employ counsellors to help customer service staff deal with complaints
Step 5
•Control marketing performance
•measure if actual performance is up to set performance standards
•Did the organisation get 5000 clicks per month
Step 6 •Take corrective action
• If organisation do not get 5000 clicks, change design of campaign, change sites where advert is posted etc.