An Introduction to Marketing

An Introduction to Marketing

SHAD Memorial 2011SHAD Memorial 2011

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 the 4 P’s: Product Price Place (distribution) Promotion

The traditional marketing mix is composed of the 4 P’s: Product Price Place (distribution) Promotion

Evolution of Marketing Thinking

Evolution of Marketing Thinking

Product => Sales => Customer interest => Customer Service => Customer Relationship

Firms now 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 now 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 (PESTEL) Internal non-marketing

Environmental Scanning / SWOT Analysis

The operational environment influences the organization’s operations

External Macro-environment (PESTEL) 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 analyzing information used to identify and define marketing opportunities and problems

Approaches: Qualitative Quantitative Observational Experimental

The process of specifying, assembling and analyzing 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 Marketing Research

Conducting Marketing Research

Define research objectives

Conduct an investigation

Analyze data

Report data (did you meet your objectives)

Define research objectives

Conduct an investigation

Analyze data

Report data (did you meet your objectives)

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 from 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 from 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

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

Reach & Frequency!

Marketing communications serves three essential roles: it informs, persuades, and reminds prospective customers about a company and its products

Reach & Frequency!

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

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

Want to achieve desired reach and frequency!

Defining Objectives Establishing a budget Creating a message Selecting Media Evaluating the advertising effort

Want to achieve desired reach and frequency!

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

HERE IS HOW MARKETING IS CHANGING…HERE IS HOW MARKETING IS CHANGING…

Now that you think you know it all….Now that you think you know it all….

Web 2.0Web 2.0

More options – need to be relevant Social networking is changing things E-marketing on the rise…

E-mail Search advertising Banner ads Product placement

More options – need to be relevant Social networking is changing things E-marketing on the rise…

E-mail Search advertising Banner ads Product placement

How do your customers want to communicate?

How do your customers want to communicate?

Messaging Preferences by Age Group (% of Age Group)

Age Instant Messaging

SMS(Texting)

Email

15-17 16% 42% 27%18-24 19 34 3425-34 8 21 5835-44 5 10 7845-54 5 6 8055-64 2 3 8765+ 0 0 88

Source: ExactTarget, October 2008

Disconnect in Media Consumption vs Spend

Disconnect in Media Consumption vs Spend

Forrester Research 2008

$50

$20

$8.5

$0

$20

$40

$60

$80

Direct mail Email Online display ads Yellow Pages Search

Source: Piper Jaffray: “The New eCommerce Decade: The Age of Micro Targeting,” Oct 2006

Approximate Customer Acquisition Cost Across Various Channels

$70

$60

Basic Blog StatsBasic Blog Stats January 2004 - 1 million blogs January 2005 – 8 million blogs January 2006 – 30 million

blogs July 2006 – 50 million blogs

40,000 new blogs per day Even if 99.9% are off point –

40 new ones per day could be talking about your business

January 2004 - 1 million blogs January 2005 – 8 million blogs January 2006 – 30 million

blogs July 2006 – 50 million blogs

40,000 new blogs per day Even if 99.9% are off point –

40 new ones per day could be talking about your business

THE FUTURE (eMarketer 2008) Blog Readers

2007: 94.1 million (50%) 2012: 145.3 million (67%)

Bloggers 2007: 22.6 million (12%) 2012: 34.7 million (16%)

Blog Advertising 2007: $283 million 2012: $746 million

THE FUTURE (eMarketer 2008) Blog Readers

2007: 94.1 million (50%) 2012: 145.3 million (67%)

Bloggers 2007: 22.6 million (12%) 2012: 34.7 million (16%)

Blog Advertising 2007: $283 million 2012: $746 million

Social Media RevolutionSocial Media Revolution Facebook: 750m users Twitter: 200m users LinkedIn: 119m users Google +: 10m users (in 2 weeks) Foursquare: 10m users

Facebook: 750m users Twitter: 200m users LinkedIn: 119m users Google +: 10m users (in 2 weeks) Foursquare: 10m users

http://www.youtube.com/watch?v=QzZyUaQvpdc

The next generationThe next generation Tweens (8-12)

5% access the internet from their mobile phones each month

41% while commuting or traveling (to school for example)

26% while at friends house 17% while at social events

35% have a mobile phone 20% use text messaging 58% of those who download or watch TV on mobile do

so at homeNeilson Media 2007

Tweens (8-12) 5% access the internet from their mobile phones each

month 41% while commuting or traveling (to school for

example) 26% while at friends house 17% while at social events

35% have a mobile phone 20% use text messaging 58% of those who download or watch TV on mobile do

so at homeNeilson Media 2007

ResourcesResources

http://www.unb.ca/jhsc/resourcectr/TME_courses/tme3113/marketing/

http://www.unb.ca/jhsc/resourcectr/TME_courses/tme3113/marketing/

What’s needed for the plan…What’s needed for the plan…

Product description – USP (PRODUCT) ID Target Markets Enviro Scan and SWOT Description of key competitors Analysis of competitive position Pricing Strategy (PRICE) Promotion Strategy (PROMOTION) Distribution Strategy (PLACE)

Product description – USP (PRODUCT) ID Target Markets Enviro Scan and SWOT Description of key competitors Analysis of competitive position Pricing Strategy (PRICE) Promotion Strategy (PROMOTION) Distribution Strategy (PLACE)

The Problem…The Problem… Help Vibrant Communities, a community driven

effort to reduce poverty in Canada Their finances have taken a hit Its public profile is low

You need to develop a fundraiser to help bankroll its operations and increase public awareness of the cause Determine the 4 P’s for your event, and share with

the group

Help Vibrant Communities, a community driven effort to reduce poverty in Canada Their finances have taken a hit Its public profile is low

You need to develop a fundraiser to help bankroll its operations and increase public awareness of the cause Determine the 4 P’s for your event, and share with

the group