an introduction to marketing shad memorial 2008. what is marketing? / “a total system of business...
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An Introduction to Marketing
An Introduction to Marketing
SHAD Memorial 2008SHAD Memorial 2008
What is Marketing?What is Marketing?
“A total system of business activities designed to plan, price, promote and distribute need satisfying products or services to target markets in order to achieve organizational objectives”
“A total system of business activities designed to plan, price, promote and distribute need satisfying products or services to target markets in order to achieve organizational objectives”
So in other words…So in other words…
Marketing is designed to meet the needs of customers through its marketing mix
In fact, a market is defined as having a group of individuals with needs to satisfy, money to spend and a willingness to spend it
Marketing is designed to meet the needs of customers through its marketing mix
In fact, a market is defined as having a group of individuals with needs to satisfy, money to spend and a willingness to spend it
The Marketing What?The Marketing What?
The traditional marketing mix is composed of: Product Price Place (distribution) Promotion
The traditional marketing mix is composed of: Product Price Place (distribution) Promotion
Evolution of Marketing Thinking
Evolution of Marketing Thinking
Product => Sales => Customer interest => Customer Service => Customer Relationship
Firms are beginning to realize that customer satisfaction is very important for repeat business, thus they wish to develop relationships with their customers
Product => Sales => Customer interest => Customer Service => Customer Relationship
Firms are beginning to realize that customer satisfaction is very important for repeat business, thus they wish to develop relationships with their customers
Implications?Implications? This has led to a “value” driven mentality,
whereby firms must be concerned with their value proposition
In sync with the evolution of marketing thinking, delivering exceptional value means exceeding customer expectations
Only through the ongoing provision of value to its customers can a company achieve high levels of customer satisfaction, retention and loyalty
This has led to a “value” driven mentality, whereby firms must be concerned with their value proposition
In sync with the evolution of marketing thinking, delivering exceptional value means exceeding customer expectations
Only through the ongoing provision of value to its customers can a company achieve high levels of customer satisfaction, retention and loyalty
The Four R’sThe Four R’s
This marks the birth of the four R’s: Retention Relationships Referrals Recovery
This marks the birth of the four R’s: Retention Relationships Referrals Recovery
Environmental InfluencesEnvironmental Influences
The operational environment influences the organization’s operations
External Macro-environment External Micro-environment Internal non-marketing
Environmental Scanning / SWOT Analysis
The operational environment influences the organization’s operations
External Macro-environment External Micro-environment Internal non-marketing
Environmental Scanning / SWOT Analysis
Buying - Decision ProcessBuying - Decision Process
1. Need Recognition2. Choice of Involvement Level3. Identification of alternatives4. Evaluation of alternatives5. Purchase and related decisions6. Post-purchase behaviour
1. Need Recognition2. Choice of Involvement Level3. Identification of alternatives4. Evaluation of alternatives5. Purchase and related decisions6. Post-purchase behaviour
The firm must work to reduce / eliminate the cognitive dissonance felt by a consumer after buying a product.
This serves as part of CRM - Customer Relationship Management
You continue to look after the customer even after the transaction
The firm must work to reduce / eliminate the cognitive dissonance felt by a consumer after buying a product.
This serves as part of CRM - Customer Relationship Management
You continue to look after the customer even after the transaction
Selecting a Target MarketSelecting a Target Market A company has to aim its marketing
efforts at someone / some group This means you have to consider the
characteristics of various market segments, and their potential
Rough segmentation may be done based on demographics, geographics, psychographics or the behaviour towards the product or service
A company has to aim its marketing efforts at someone / some group This means you have to consider the
characteristics of various market segments, and their potential
Rough segmentation may be done based on demographics, geographics, psychographics or the behaviour towards the product or service
ProfilingProfiling
This involves developing a profile of your target segments The more detail the better as the
more you know about your customers, the better you can hope to meet / exceed their needs and expectations
This involves developing a profile of your target segments The more detail the better as the
more you know about your customers, the better you can hope to meet / exceed their needs and expectations
PositioningPositioning
This is the place your company / product occupies in the mind of your consumers
This is the place your company / product occupies in the mind of your consumers
You can’t be all things to all people…
You can’t be all things to all people…
Marketers must determine who their target market is: Three main approaches:
Market Aggregation Single - segment strategy Multiple - segment strategy
Marketers must determine who their target market is: Three main approaches:
Market Aggregation Single - segment strategy Multiple - segment strategy
B2C / B2BB2C / B2B
Selling to a personal consumer differs from selling to a business Characteristics of B2B:
Companies are making less and buying more Firms are under intense quality and time pressure To get what they need, firms are concentrating
their purchases with fewer suppliers and developing long-term “partnering” relationships
Selling to a personal consumer differs from selling to a business Characteristics of B2B:
Companies are making less and buying more Firms are under intense quality and time pressure To get what they need, firms are concentrating
their purchases with fewer suppliers and developing long-term “partnering” relationships
Market ResearchMarket Research The process of specifying, assembling
and analysing information used to identify and define marketing opportunities and problems
Approaches: Qualitative Quantitative Observational Experimental
The process of specifying, assembling and analysing information used to identify and define marketing opportunities and problems
Approaches: Qualitative Quantitative Observational Experimental
Qualitative ResearchQualitative Research Used when research is intended to probe
more deeply into opinions and attitudes Use of:
Individual depth interviews Focus group interviews
While no quantifiable results are gathered, valuable insight is gained into how consumers feel about certain concepts and why they make the decisions they do
Used when research is intended to probe more deeply into opinions and attitudes Use of:
Individual depth interviews Focus group interviews
While no quantifiable results are gathered, valuable insight is gained into how consumers feel about certain concepts and why they make the decisions they do
Quantitative ResearchQuantitative Research
Involves measurement of concepts using standard numeric measures
Quantitative research has the advantage of using numbers that allow for statistical calculations and comparisons (benchmark)
Generally use surveys to gather data
Involves measurement of concepts using standard numeric measures
Quantitative research has the advantage of using numbers that allow for statistical calculations and comparisons (benchmark)
Generally use surveys to gather data
Observational MethodObservational Method
Data are collected by observing some action of the respondent Personal Observation
Ex. Mystery shopper Mechanical Observation
Ex. Electric cord on highway
Data are collected by observing some action of the respondent Personal Observation
Ex. Mystery shopper Mechanical Observation
Ex. Electric cord on highway
Experimental MethodExperimental Method
Researcher may view results of changing one variable while holding all else constant Testing may occur in a loboratory or
field (test marketing)
Researcher may view results of changing one variable while holding all else constant Testing may occur in a loboratory or
field (test marketing)
Conducting Market ResearchConducting Market Research
1. Define research objectives2. Conducting a situation analysis3. Conduct an informal investigation4. Plan and conduct a formal
investigation5. Data analysis and reporting6. Following up
1. Define research objectives2. Conducting a situation analysis3. Conduct an informal investigation4. Plan and conduct a formal
investigation5. Data analysis and reporting6. Following up
Consumer vs Business Product
Consumer vs Business Product
Consumer Product: A product intended for use by household consumers for non-business purposes
Business Product: A product intended for purchase and use in producing other products or in rendering services in a business
Consumer Product: A product intended for use by household consumers for non-business purposes
Business Product: A product intended for purchase and use in producing other products or in rendering services in a business
Criteria for new products…Criteria for new products…1. There must be adequate market demand2. The product must satisfy key financial
criteria1. Is adequate financing available?2. Will the new item reduce seasonal and cyclical
fluctuations in the company’s sales?3. Can we make sufficient profit with the product?
3. The product must be compatible with environmental standards
4. The product must fit into the company’s present marketing structure
1. There must be adequate market demand2. The product must satisfy key financial
criteria1. Is adequate financing available?2. Will the new item reduce seasonal and cyclical
fluctuations in the company’s sales?3. Can we make sufficient profit with the product?
3. The product must be compatible with environmental standards
4. The product must fit into the company’s present marketing structure
Importance of ServicesImportance of Services
North America has become a true service economy In 2001, 74.4% of the Canadian labour
force, and over 70% of the country’s GDP were accounted for by services
Growth in number and variety of both personal and business services
North America has become a true service economy In 2001, 74.4% of the Canadian labour
force, and over 70% of the country’s GDP were accounted for by services
Growth in number and variety of both personal and business services
Characteristics of ServicesCharacteristics of Services Intangibility
Impossible to sample a service before buying it, as a result there is a degree of risk involved with the decision
Inseparability We cannot separate service production from
consumption
Intangibility Impossible to sample a service before
buying it, as a result there is a degree of risk involved with the decision
Inseparability We cannot separate service production from
consumption
Characteristics of ServicesCharacteristics of Services
Heterogeneity It is impossible for a service company
to standardize output
Perishability and Fluctuating Demand Services cannot be stored, and their
market fluctuates considerably
Heterogeneity It is impossible for a service company
to standardize output
Perishability and Fluctuating Demand Services cannot be stored, and their
market fluctuates considerably
Value Proposition of ServicesValue Proposition of Services
1. Core Service2. Customer Service3. Support Service
1. Core Service2. Customer Service3. Support Service
Service Failure and RecoveryService Failure and Recovery
No matter how diligent a company’s employees and how well designed its service processes, service failure is inevitable
An important issue relating to customer satisfaction is how a company responds when service fails. The process or dealing with service failure to make amends with customers is called service recovery
No matter how diligent a company’s employees and how well designed its service processes, service failure is inevitable
An important issue relating to customer satisfaction is how a company responds when service fails. The process or dealing with service failure to make amends with customers is called service recovery
The Importance of BrandingThe Importance of Branding Brand Equity: The value a brand adds to a
product Brand Loyalty: The situation in which a
customer buys a certain brand on a regular basis because of its performance and appeal
A brand can add value to a product in the mind of the consumer, hence it can provide differential advantage or serve as a barrier to entry
Brand Equity: The value a brand adds to a product
Brand Loyalty: The situation in which a customer buys a certain brand on a regular basis because of its performance and appeal
A brand can add value to a product in the mind of the consumer, hence it can provide differential advantage or serve as a barrier to entry
Selecting a good brandSelecting a good brand5 Desirable Brand Characteristics:
1. Suggest something about the product’s characteristics (it’s benefits, use, or action)
2. Be easy to pronounce, spell and remember3. Be distinctive4. Be adaptable to new products that may be
added to the product line5. Be capable of being registered and legally
protected under the Trade-marks Act and other statutory or common laws
5 Desirable Brand Characteristics:1. Suggest something about the product’s
characteristics (it’s benefits, use, or action)2. Be easy to pronounce, spell and remember3. Be distinctive4. Be adaptable to new products that may be
added to the product line5. Be capable of being registered and legally
protected under the Trade-marks Act and other statutory or common laws
Marketing CommunicationsMarketing Communications
Marketing communications serves three essential roles: it informs, persuades, and reminds prospective customers about a company and its products
Marketing communications serves three essential roles: it informs, persuades, and reminds prospective customers about a company and its products
Marketing Communications Methods
Marketing Communications Methods
Personal selling selling using sales reps
Advertising non-personal, mass communication
Sales promotion demand stimulating activity
Public relations efforts to contribute to generally favorable attitudes
and opinions toward an organization Publicity
creating news stories, editorials or announcements about an organization
Personal selling selling using sales reps
Advertising non-personal, mass communication
Sales promotion demand stimulating activity
Public relations efforts to contribute to generally favorable attitudes
and opinions toward an organization Publicity
creating news stories, editorials or announcements about an organization
Factors Influencing the Marketing Communications
Mix
Factors Influencing the Marketing Communications
Mix1. The Target Market2. The objective of the communications
effort3. The nature of the product or service
being promoted4. The stage in the life cycle of the product5. The amount of money available for
marketing communications
1. The Target Market2. The objective of the communications
effort3. The nature of the product or service
being promoted4. The stage in the life cycle of the product5. The amount of money available for
marketing communications
Choosing a push or pull strategy
Choosing a push or pull strategy
Push: The product is pushed through the channel of distribution. Producer => Wholesaler => Retailer =>
Consumer
Pull: Marketing communications are directed at the end-user, usually the public. Consumers will then ask retailers for the product and so on
Push: The product is pushed through the channel of distribution. Producer => Wholesaler => Retailer =>
Consumer
Pull: Marketing communications are directed at the end-user, usually the public. Consumers will then ask retailers for the product and so on
Marketing Communications Budget
Marketing Communications Budget
Percentage of sales All available funds Follow the competition Task or objective
Percentage of sales All available funds Follow the competition Task or objective
Developing an Advertising Campaign
Developing an Advertising Campaign
Defining Objectives Establishing a budget Creating a message Selecting Media Evaluating the advertising effort
Defining Objectives Establishing a budget Creating a message Selecting Media Evaluating the advertising effort
Channel of Distribution / Supply Chain
Channel of Distribution / Supply Chain
Direct Distribution: A channel consisting only of producer and final customer, with no intermediaries providing assistance
Indirect Distribution: A channel consisting of producer, final customer and at least one level of intermediary
Direct Distribution: A channel consisting only of producer and final customer, with no intermediaries providing assistance
Indirect Distribution: A channel consisting of producer, final customer and at least one level of intermediary
Choice of ChannelChoice of Channel
Depends upon: Market considerations Product considerations Channel member considerations Company considerations
Depends upon: Market considerations Product considerations Channel member considerations Company considerations
Price and ValuePrice and Value
Price: The amount of money and/or other resources needed to acquire some combination of a product and its accompanying services
Value: The ratio of perceived benefits of a product/service to perceived costs, including price and other incurred costs
Price: The amount of money and/or other resources needed to acquire some combination of a product and its accompanying services
Value: The ratio of perceived benefits of a product/service to perceived costs, including price and other incurred costs
The Importance of PriceThe Importance of Price
Price epitomizes and makes tangible the notion of value
Price sensitivity: Extent to which the market or a segment, will respond to price changes
Price epitomizes and makes tangible the notion of value
Price sensitivity: Extent to which the market or a segment, will respond to price changes
Pricing ObjectivesPricing Objectives Profit oriented
Achieve a target return Maximize profit
Market oriented Achieve an image or position Increase sales volume Maintain / Increase market share
Status quo oriented Stabilize prices To meet competition
Profit oriented Achieve a target return Maximize profit
Market oriented Achieve an image or position Increase sales volume Maintain / Increase market share
Status quo oriented Stabilize prices To meet competition
Break-Even AnalysisBreak-Even Analysis
TFC / Unit contribution to overhead TFC / (selling price - AVC)
TFC / Unit contribution to overhead TFC / (selling price - AVC)
Market Skimming / Penetration PricingMarket Skimming / Penetration Pricing
Skimming: A pricing strategy in which the initial price is set high in the target market’s range of expected prices
Penetration: A pricing strategy in which a low initial price is set to reach the mass market immediately
Skimming: A pricing strategy in which the initial price is set high in the target market’s range of expected prices
Penetration: A pricing strategy in which a low initial price is set to reach the mass market immediately
