Final Introduction to Marketing Concepts

8/8/2019 Final Introduction to Marketing Concepts

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INTRODUCTION TO MARKETING CONCEPTS

Traditionally, market refers a place where different buyers and sellers gather andexchange products and value. For instance, supermarket, shopping mall, etc.

But from the Marketers point of view, Industry build by sellers and Market build bybuyers. For instance, Software industry is constituted by all of the software relatedcompanies, not including the software buyers. And similarly, Software market isconstituted by all the software buyers, not includ ing the providers.

And Marketing is the decision making implementing process, how the marketershandle the market, regarding the marketing offers and distribution channels andprocess.

According to Philip kotler and Gary Armstrong , two ideal marketing theorists, Marketing is a social and managerial process by which individuals and groupsobtain what they need and want through creating and exchanging products andvalue with others.

What is marketing?

Marketing started with the slogan of telling and selling, but at present days, itbroadened the vision build loyal customer - with slogan satisfying customerneeds. Therefore, the study of customers becomes very important for themarketers.

Marketers first have to know who are their customers [in marketing terms calledTarget Market], then have to divide the customers in different categories and

groups [Segmentation] considering different attributes (e.g. age, sex, location,lifestyle etc.), have to made Research and Development for the products for eachsegment, made strategy to distribute and promote the product and then implementthe strategy. Here marketers have to find out the possible features they can add oredit to the product to make it best matches to the customers need and an effectiveand efficient way to promote the product, with a smooth distribution channel.

EVOLUTION OF MARKETING

The Production Concept

The p roduction conce p t prevailed from the time of the industrial revolution until theearly 1950's. The production concept was the idea that a firm should focus on thoseproducts that it could produce most efficiently and that the creation of a supply of low-cost products would in and of itself create the demand for the products. Thekey questions that a firm would ask before producing a product were:

y Can we produce the product?


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y Can we produce enough of it?

At the time, the production concept worked fairly well because the goods that wereproduced were largely those of basic necessity and there was a relatively high levelof unfulfilled demand. Virtually everything that could be produced was sold easilyby a sales team whose job it was simply to execute transactions at a pricedetermined by the cost of production. The production concept prevailed into thelate 1920's.

The Sales Concept

By the early 1960's however, mass production had become commonplace,competition had increased, and there was little unfulfilled demand. Around thistime, firms began to practice the sales conce p t (or selling conce p t ), under whichcompanies not only would produce the products, but also would try to convincecustomers to buy them through advertising and personal selling. Before producing aproduct, the key questions were:

y Can we sell the product?y Can we charge enough for it?

The sales concept paid little attention to whether the product actually was needed;the goal simply was to beat the competition to the sale with little regard tocustomer satisfaction. Marketing was a function that was performed after theproduct was developed and produced, and many people came to associatemarketing with hard selling. Even today, many people use the word "marketing"when they really mean sales.

The Product (orientation) concept

1970s till 1980s

Focus was the product and the effectiveness the development and research was atthe forth front because of changed needs it was important to produce the rightthings and to be innovative. that means that the best product wins, which meansgetting the most sales.

The Marketing Concept

After World War II, the variety of products increased and hard selling no longercould be relied upon to generate sales. With increased discretionary income,customers could afford to be selective and buy only those products that preciselymet their changing needs, and these needs were not immediately obvious. The keyquestions became:

y What do customers want?y Can we develop it while they still want it?


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y How can we keep our customers satisfied?

In response to these discerning customers, firms began to adopt the marketingconce p t , which involves:

y

Focusing on customer needs before developing the producty Aligning all functions of the company to focus on those needsy Realizing a profit by successfully satisfying customer needs over the long-

term

When firms first began to adopt the marketing concept, they typically set upseparate marketing departments whose objective it was to satisfy customer needs.Often these departments were sales departments with expanded responsibilities.While this expanded sales department structure can be found in some companiestoday, many firms have structured themselves into marketing organizations havinga company-wide customer focus. Since the entire organization exists to satisfycustomer needs, nobody can neglect a customer issue by declaring it a "marketingproblem" - everybody must be concerned with customer satisfaction.

The marketing concept relies upon marketing research to define market segments,their size, and their needs. To satisfy those needs, the marketing team makesdecisions about the controllable parameters of the marketing mix.

CUSTOMER ORIENTAITON

Getting the right book, the right service, the right piece of information ormultimedia item to the right person at the right time - this is the idea of customer orientation. Public library customers expect attractive offerings andinformation services for education and training, leisure and entertainment.Libraries have to develop effective strategies in order to contend with todaysand tomorrows demands. Marketing, strategic management, customerretention, personalized and value-added services are just some of thechallenges public libraries have to face.

Customer orientation definition : customer orientation is a set of activitiesundertaken by a company for the purpose of supporting beliefs in sales thatallow considering customer needs and satisfaction as the major priorities of thecompany. Read the customer orientation template to find out how to

undertake and maintain customer oriented processes in your organization.

1. Developing customer orientation strategy within your company.o The first thing you need to comprehend is that all processes within

your company (like producing, communicating, selling, delivering, etc.)should be organized and managed in a customer-oriented way. Thenyou can develop a customer orientation strategy a set of directives and guidelines as to attracting and treating customers as


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well as fostering customer oriented attitude for the purpose of gaining the best customer orientation ex p erience and turning yourcompany into a flourishing, customer oriented organization .

o A successful customer orientation strategy includes the followingprinciples:

Customer-driven quality: your company develops and usescustomer orientation approaches and ideas that contribute tocustomer satisfaction.

Leadership: leaders and managers in your company need toplay an active role in fostering customer oriented personsamong your employees. Executives should take care of runningand supporting customer oriented processes that contribute tostrengthening quality values.

Continuous improvement: your customer oriented companyneeds to commit to ongoing improvement by optimizingemployee performance and providing enhanced quality throughnew and improved customer oriented services and goods.

Immediate response: your customer oriented business needsto support a rapid-response-time improvement internally byreducing product/service introduction cycles and giving fasterreplies to customers.

Full participation: your company should have an effectivereward and recognition system which encourages full employeeparticipation in total customer management, including customeroriented selling wholesale and customer orientation in retail.

Long-run outlook: your company needs to plan policies andresource allocations that reflect perspective and long-termcommitment to customers, employees, stakeholders and

suppliers. Also the company should regularly review and assessits customer oriented jobs and occupations for the purpose of optimizing workload.

Using facts only: customer oriented account managers andexecutives in your company should use only facts and actualdata to illustrate current status of customer satisfaction andperformance goals.

Public responsibility: your customer oriented business shouldaddress general community concerns and interests. Forinstance, it should decrease the effect of product waste on theenvironment, improve the quality of products, and consideradverse contingencies, such as rejects or recalls.

2. Improving skills of executives and subordinates organizing customerorientation training .

o Customer orientation training is aimed at developing and retainingthe required customer oriented attitude , so your employees will beready to follow the strategy and treat customers as expected.

o Organize regular customer orientation training sessions, seminars andworkshops to let your employees improve their skills and customerorientation competency .


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o Integrate customer orientation games in the regular trainings they will help employees to comprehend and learn lessons easily andquickly.

o Customer orientation exercises and games should be based onactual examples and existing situations. Do not try to make up acustomer orientation example or situation, but use only facts.

o Consider organizing regular examinations to find out currentcustomer orientation skills level of employees.

3. Measuring customer orientation in your company.o Consider creating and applying measures of customer orientation

based on the following: Quality of products/services your company provides. Number of existing customers. Your company's image and reputation. Current quality level of support services.

o Here are some indicators and measures of customer orientation : Customer satisfaction index. The number of satisfied customers against the number of non-

satisfied ones. Customers' intentions to re-order your products/services.

4. Improving customer orientation in your companyo Regularly conduct internal reviews on the.....

MARKETING ENVIRONMENT

The marketing environment surrounds and impacts upon the organization. Thereare three key perspectives on the marketing environment, namely the 'macro-environment,' the 'micro-environment' and the 'internal environment'.


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The Micro-Environment

This environment influences the organization directly. It includes suppliers that dealdirectly or indirectly, consumers and customers, and other local stakeholders. Microtends to suggest small, but this can be misleading. In this context, micro describesthe relationship between firms and the driving forces that control this relationship.It is a more local relationship, and the firm may exercise a degree of influence.

The Macro-Environment

This includes all factors that can influence and organization, but that are out of theirdirect control. A company does not generally influence any laws (although it isaccepted that they could lobby or be part of a trade organization). It is continuouslychanging, and the company needs to be flexible to adapt. There may be aggressivecompetition and rivalry in a market. G lobalization means that there is always thethreat of substitute products and new entrants. The wider environment is also everchanging, and the marketer needs to compensate for changes in culture, politics,economics and technology.

The Internal Environment.

All factors that are internal to the organization are known as the 'internalenvironment'. They are generally audited by applying the 'Five Ms' which are Men,Money, Machinery, Materials and Markets. The internal environment is asimportant for managing change as the external. As marketers we call the process of managing internal change 'internal marketing.'


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Essentially we use marketing approaches to aid communication and changemanagement.

The external environment can be audited in more detail using other approachessuch as SWOT Analysis, Michael Porter's Five Forces Analysis or PEST Analysis.

EVALUATION OF MARKETING OPPORTUNITIES

Matching of a market opportunity to a firm's policies, resources, and strategies.

In analyzing your business ideas you must be able to pass them through a test todetermine if they truly are valid opportunities. All of your ideas must have ademonstrated need, ready market, and ability to provide a solid return oninvestment.

Is the idea feasible in the marketplace? Is there demand? Can it be done? Are youable to pull together the persons and resources to pull it off before the window of opportunity closes? These questions must be considered and answered.

Opportunity-focused entrepreneurs start with the customer and the market in mind.They analyze the market to determine industry issues, market structure, marketsize, growth rate, market capacity, attainable market share, cost structure, the coreeconomics, exit strategy issues, time to breakeven, opportunity costs, and barriersto entry. Below are two models that entrepreneurs use to evaluate their businessideas and plans.

MARKET RESEARCH

Various methods of market research are used to find out information aboutmarkets, target markets and their needs, competitors, market trends, customersatisfaction with products and services, etc. Businesses can learn a great deal aboutcustomers, their needs, how to meet those needs and how the business is doing tomeet those needs. Businesses need not to be experts at methods of researcheither.

Marketing research is the systematic gathering, recording, and analysis of dataabout issues relating to marketing products and services. The goal of marketing


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research is to identify and assess how changing elements of the marketing miximpacts customer behavior. The term is commonly interchanged with marketresearch ; however, expert practitioners may wish to draw a distinction, in thatmarket research is concerned specifically with markets, while marketing research isconcerned specifically about marketing processes.

Marketing research is often partitioned into two sets of categorical pairs, either bytarget market:

y Consumer marketing research, andy B usiness-to-business (B2B) marketing research

Or, alternatively, by methodological approach:

y Q ualitative marketing research, andy Q uantitative marketing research

Consumer marketing research is a form of applied sociology that concentrates onunderstanding the preferences, attitudes, and behaviors of consumers in a market-based economy, and it aims to understand the effects and comparative success of marketing campaigns.

Thus, marketing research may also be described as the systematic and objectiveidentification, collection, analysis, and dissemination of information for the purposeof assisting management in decision making related to the identification andsolution of problems and opportunities in marketing

Marketing research characteristics

First, marketing research is systematic. Thus systematic planning is required at allthe stages of the marketing research process. The procedures followed at eachstage are methodologically sound, well documented, and, as much as possible,planned in advance. Marketing research uses the scientific method in that data arecollected and analyzed to test prior notions or hypotheses.

Marketing research is objective. It attempts to provide accurate information thatreflects a true state of affairs. It should be conducted impartially. While research isalways influenced by the researcher's research philosophy, it should be free fromthe personal or political biases of the researcher or the management. Researchwhich is motivated by personal or political gain involves a breach of professional

standards. Such research is deliberately biased so as to result in predeterminedfindings. The motto of every researcher should be, "Find it and tell it like it is." Theobjective nature of marketing research underscores the importance of ethicalconsiderations, which are discussed later in the chapter.

Marketing research involves the identification, collection, analysis, anddissemination of information. Each phase of this process is important. We identifyor define the marketing research problem or opportunity and then determine what


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information is needed to investigate it., and inferences are drawn. Finally, thefindings, implications and recommendations are provided in a format that allowsthe information to be used for management decision making and to be acted upondirectly. It should be emphasized that marketing research is conducted to assistmanagement in decision making and is not: a means or an end in itself. The nextsection elaborates on this definition by classifying different types of marketingresearch.

MARKET INFORMATION SYSTEM

A marketing information system (MIS) is intended to bring together disparate itemsof data into a coherent body of information. An MIS is, as will shortly be seen, morethan raw data or information suitable for the purposes of decision making. An MISalso provides methods for interpreting the information the MIS provides. Moreover,as Kotler's 1 definition says, an MIS is more than a system of data collection or a setof information technologies:

"A marketing information system is a continuing and interacting structure of people,equipment and procedures to gather, sort, analyze, evaluate, and distributepertinent, timely and accurate information for use by marketing decision makers toimprove their marketing planning, implementation, and control".

The explanation of this model of an MIS begins with a description of each of its fourmain constituent parts: the internal reporting systems, marketing research system,marketing intelligence system and marketing models. It is suggested that whilst theMIS varies in its degree of sophistication - with many in the industrialized countriesbeing computerized and few in the developing countries being so - a fully fledgedMIS should have these components, the methods (and technologies) of collection,storing, retrieving and processing data notwithstanding.

Internal reporting systems: All enterprises which have been in operation for anyperiod of time nave a wealth of information. However, this information oftenremains under-utilized because it is compartmentalized, either in the form of anindividual entrepreneur or in the functional departments of larger businesses. Thatis, information is usually categorized according to its nature so that there are, forexample, financial, production, manpower, marketing, stockholding and logistical


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data. Often the entrepreneur, or various personnel working in the functionaldepartments holding these pieces of data, do not see how it could help decisionmakers in other functional areas. Similarly, decision makers can fail to appreciatehow information from other functional areas might help them and therefore do notrequest it.

The internal records that are of immediate value to marketing decisions are: ordersreceived, stockholdings and sales invoices. These are but a few of the internalrecords that can be used by marketing managers, but even this small set of recordsis capable of generating a great deal of information. Below, is a list of some of theinformation that can be derived from sales invoices.

Product type, size and pack type by territory Product type, size and pack type by type of account Product type, size and pack type by industry Product type, size and pack type by customer Average value and/or volume of sale by territory Average value and/or volume of sale by type of account Average value and/or volume of sale by industry Average value and/or volume of sale by sales person

By comparing orders received with invoices an enterprise can establish the extentto which it is providing an acceptable level of customer service. In the same way,comparing stockholding records with orders received helps an enterprise ascertainwhether its stocks are in line with current demand patterns.

Marketing research systems: The general topic of marketing research has been theprime ' subject of the textbook and only a little more needs to be added here.

Marketing research is a proactive search for information. That is, the enterprisewhich commissions these studies does so to solve a perceived marketing problem.In many cases, data is collected in a purposeful way to address a well-definedproblem (or a problem which can be defined and solved within the course of thestudy). The other form of marketing research centers not around a specificmarketing problem but is an attempt to continuously monitor the marketingenvironment. These monitoring or tracking exercises are continuous marketingresearch studies, often involving panels of farmers, consumers or distributors fromwhich the same data is collected at regular intervals. Whilst the ad hoc study andcontinuous marketing research differs in the orientation, yet they are bothproactive.

Marketing intelligence systems: Whereas marketing research is focused, marketintelligence is not. A marketing intelligence system is a set of procedures and datasources used by marketing managers to sift information from the environment thatthey can use in their decision making. This scanning of the economic and businessenvironment can be undertaken in a variety of ways, including 2

Unfocused The manager, by virtue of what he/she reads, hears and watches


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scanning exposes him/herself to information that may prove useful. Whilst thebehavior is unfocused and the manager has no specific purpose inmind, it is not unintentional

Semi-focusedscanning

Again, the manager is not in search of particular pieces of informationthat he/she is actively searching but does narrow the range of mediathat is scanned. For instance, the manager may focus more oneconomic and business publications, broadcasts etc. and pay lessattention to political, scientific or technological media.

Informalsearch

This describes the situation where a fairly limited and unstructuredattempt is made to obtain information for a specific purpose. Forexample, the marketing manager of a firm considering entering thebusiness of importing frozen fish from a neighboring country maymake informal inquiries as to prices and demand levels of frozen andfresh fish. There would be little structure to this search with themanager making inquiries with traders he/she happens to encounteras well as with other ad hoc contacts in ministries, international aidagencies, with trade associations, importers/exporters etc.

Formalsearch

This is a purposeful search after information in some systematic way.The information will be required to address a specific issue. Whilst thissort of activity may seem to share the characteristics of marketingresearch it is carried out by the manager him/herself rather than aprofessional researcher. Moreover, the scope of the search is likely tobe narrow in scope and far less intensive than marketing research

Marketing intelligence is the province of entrepreneurs and senior managers withinan agribusiness. It involves them in scanning newspaper trade magazines, business

journals and reports, economic forecasts and other media. In addition it involvesmanagement in talking to producers, suppliers and customers, as well as tocompetitors. Nonetheless, it is a largely informal process of observing andconversing.

Some enterprises will approach marketing intelligence gathering in a moredeliberate fashion and will train its sales force, after-sales personnel anddistrict/area managers to take cognizance of competitors' actions, customercomplaints and requests and distributor problems. Enterprises with vision will alsoencourage intermediaries, such as collectors, retailers, traders and othermiddlemen to be proactive in conveying market intelligence back to them.

Marketing models: Within the MIS there has to be the means of interpretinginformation in order to give direction to decision. These models may becomputerized or may not. Typical tools are:

Time series sales modes Brand switching models Linear programming Elasticity models (price, incomes, demand, supply, etc.)


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Regression and correlation models Analysis of Variance (A NOVA) models Sensitivity analysis Discounted cash flow Spreadsheet 'what if models

These and similar mathematical, statistical, econometric and financial models arethe analytical subsystem of the MIS. A relatively modest investment in a desktopcomputer is enough to allow an enterprise to automate the analysis of its data.Some of the models used are stochastic, i.e. those containing a probabilisticelement whereas others are deterministic models where chance plays no part.Brand switching models are stochastic since these express brand choices inprobabilities whereas linear programming is deterministic in that the relationshipsbetween variables are expressed in exact mathematical terms.

DEMAND FORECASTING

A demand forecast is the prediction of what will happen to your company'sexisting product sales. It would be best to determine the demand forecastusing a multi-functional approach. The inputs from sales and marketing,finance, and production should be considered. The final demand forecast isthe consensus of all participating managers. You may also want to put up aSales and Operations Planning group composed of representatives from thedifferent departments that will be tasked to prepare the demand forecast.Determination of the demand forecasts is done through the following steps:

Determine the use of the forecast Select the items to be forecast Determine the time horizon of the forecast Select the forecasting model(s)Gather the data

Make the forecast Validate and implement results

MARKET POTENTIAL ANALYSIS

Market analysis services from Mapping Analytics will provide the key intelligenceyou need to rank and prioritize markets. You will know:

y The top new geographic markets to target based on customer or revenuepotential

y Which markets where you currently do business have untapped potential

Gaining this market understanding is essential to growing and expanding yourbusiness. But it isn't enough on its own.

y What steps are you taking to gain market share where there ismarket potential?


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You need to act upon your new found market understanding by deploying sales andmarketing resources effectively.

This is where Mapping Analytics separates from other firms that might offer youanalytic services. We can help you choose higher-performing store or businesslocations, align your sales force more productively, and acquire prospect lists. All soyou can tap into the market opportunity we've helped you identify.

Market analysis services from Mapping Analytics help you know the economicopportunity available to you in any geographic market. Whether you sell toconsumers, to businesses, or both, market sizing provides intelligence you need todeploy sales and marketing resources effectively.

Benefits of Market Potential Analysis

y Understand market potential for a single store, network of stores or a new

markety Deploy resources effectively by ranking markets in priority ordery Forecast total opportunity in terms of number of customers and revenue

potentialy Estimate your market share

Market potential analysis is a primary analytic service performed byMapping Analytics. We have the people, experience, tools, and datarequired to perform sophisticated and accurate market sizing.

A market potential analysis from Mapping Analytics may include:

y A customer profile to understand where to find more like themy Market penetration and market share reports showing performance in

existing markets and expected performance in new marketsy Market ranking reports allowing you to prioritize resource deployment into

new marketsy A geographic view of market opportunity on detailed maps

CONSUMER B UYING PROCESS

What influences consumers to purchase products or services? The consumer buyingprocess is a complex matter as many internal and external factors have an impacton the buying decisions of the consumer.

When purchasing a product there several processes, which consumers go through.T hese will be discussed below.

Generally, the consumer passes through five distinct stages in taking a decision forpurchasing a particular commodity. These stages are: (i) need arousal, (ii)


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information search, (iii) evaluation behavior, (iv) purchase decision, and(v) post purchase feelings.

(i) Need Arousal: the buying process starts with need arousal. A need canbe activated through internal or external stimuli. A need can also bearoused by an external stimulus such as sight of a new thing in a shopwhile purchasing other things.

There is two-fold significance of need arousal stage to a marketing man.

1. First the marketer must identify the drive that might actually or potentiallyconnect to the product class or brand and make the buyer feel that theproduct can satisfy the drive, he feels, and

2. It also helps recognize that the need levels for the product fluctuate overtime and are triggered by different cues. The marketer can arrange cues toconform better to the natural rhythms and timing of need arousal.

(ii) Information search: after need arousal, the consumer tries to solveit and gathers the sources and information about the product.Depending upon the intensity of need, it produces two states of consumer becomes more receptive to the information regarding theitems he needs. If a consumer needs to purchase a television, he willpay more attention to TV ads and the remarks made by friends andassociates about TVs.

If need is more intense, the individual enters a state of active information searchand he tries to collect more information about the product, its key attributes,qualities of various brands and about the outlets where they are available. Theseare four consumer information sources.

- Personal sources

- Commercial sources

- Public sources

- Experiential sources

Identifying the information sources and their respective roles and importance callsfor interviewing consumers about the sources of information and can use thefindings to plan its advertisements.

(iii) Evaluation B ehavior: having collected the information, the consumerclarifies and evaluate the alternatives. There is unfortunately no simpleand single evaluation process used by all consumers or even by one


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consumer in all buying situations, the most current process of evaluation is to judge the product the product largely on a consciousand rational basis. Various considerations form the part of judgmentsuch as product attributes, importance, weights, brand image, utilityfunction for each attribute, and attitude etc. after evaluation of variousalternatives, he takes the decision to buy.

(iv) Purchase decision: Evaluation behavior leads the consumer to forma ranked set of preferences. Normally a consumer buys the article, heor she likes most but there are three more important consideration fortaking the buying decision:(a) attitude of other such as of wife,relatives, and friends, (b) anticipated situational factors as expectedfamily income, expected total cost of the product and the expectedbenefits of the product; (c) unanticipated situational factors as looks ormanner of the salesman or the way business is carried on.

The marketer must consider these factors and should try to provoke the feeling

of risk in the consumer and attempt to provide information and support that willhelp him.

(v) Post purchase feelings: after buying and trying the product, theconsumer will feel some level of satisfaction or dissatisfaction and levelof satisfaction depends very much on the expectation and theproducts perceived performance. If the product matches up to hisexpectations, the consumer is satisfied; if it exceeds, he is highlysatisfied; and if it falls short of expectations, he is dissatisfied.

Participants in buying process:

1. Initiator, 2. Influencer, 3.Decider, 4.Buyer, 5.User

ORGANISATIONAL B UYING BEHAVIOUR Organizational B uying B ehavior - the study of the motives and actions of,and the influences upon, organizations while engaged in purchasing goodsand services. Organizational Buying Behavior one understands the complexdecision-making process, by which organizations identify and betweenexisting alternatives select their needs for products, of which by themultiplicity participant persons with often different goals one does notfacilitate.The organizational purchase decision process differs from that of theconsumers particularly by a stronger formalizing and a very exact definitionof the needs. The following phases can be differentiated: Problemrecognition, specification, alternative and supplier search, obtainment of offers and selection of a supplier, specification of the order and negotiation of the conditions as well as evaluation.


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Factors of Influence of the Organizational Purchase Behavior

Environmental factors: They are difficult to identify and measure. Environmentalinfluences can be physically, technologically, economically, political as well ascultural. Influences are exerted by different institutions, like suppliers, competitorsand customers. The environmental conditions are v.a. relevantly where landspreading co-operation take place.

Examples of environmental factors: Investment behavior, consumer behavior,interest rate, technology, legislation, competition, politics, ecology,"

Organizational factors: Cause that individual differently with restraint as if italone or in another organization decisions meet. Organizational Buying Behaviorsteered by goals of the organization, which are determined again by financialmeans, technology as well as human resources.

Examples of Organizational factors: Goals, purchase tactics, organizationalstructure, hierarchy

Social one, Interpersonal factors: Group decisions, like it also in the Buyingcenter, pleases, by different factors are affected. Factors of influence are theindividual goals and character characteristics, the kind of the guidance of a group,the group structure and external influences (environment, organization).

Examples of social factors: G roup dynamics, authority,"

Individual factors of the persons involved: Individuals are coined/ shaped bycomplex combination between personal and organizational goals. Both cultural,organizational and social factors affect individuals. Individual factors affect thedecision-making process also due to ignorance, like e.g.: over availablealternatives, due to information gaps.

PILLARS OF MARKETING

The Four Pillars of Marketing

As you move through the four portals of the Market YourLawPractice.com website,you will also be guided through a series of modules as summarized here. Thesemodules are organized within PSM's Four Pillars of Marketing. In order to have awell balanced marketing plan to grow your practice, it is important to pursueactivities within each Pillar. The Four Pillars of Marketing for lawyers include:

Pillar #1: Retain and Grow Relationships with Existing ClientsPillar #2: Attract New Clients and Develop New BusinessPillar #3: Increase Name Recognition and AwarenessPillar #4: Create Targeted and Effective Communications


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Modules Organized by Pillar A well balanced marketing strategy requires a well balanced allocation of marketingactivities. We have organized the marketing modules under each of the Four Pillarsof Marketing:

Pillar 1

RETAIN AND GROW RELATIONSHIPS WITHEXISTING CLIENTS

y Client Satisfactiony Client Servicey Cross Marketing

Pillar 2

ATTRACT NEW CLIENTS AND DEVELOP NEWB USINESS

y Networkingy Targeted Business Developmenty Proposal Developmenty Market Researchy Trade and Professional Association Involvement

Pillar 3

INCREASE NAME RECOGNITION AND AWARENESS

y Advertisingy Brand and Identity Developmenty Public and Media Relationsy Trade Showsy Community Involvement

Pillar 4

CREATE TARGETED AND EFFECTIVECOMMUNICATIONS

y Strategic Communicationy Marketing Database and Information

Managementy Website Development


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y Event Planning

TARGET MARKETING POSITIONING

Positioning is your competitive strategy. What's the one thing you do best? What'sunique about your product or service? Identify your strongest strength and use it toposition your product.

Positioning is a process that focuses on conveying product value to buyers,resulting in a family of documents which drive all outbound communications. Yet inrecent years, it seems as if positioning has devolved into a document of vaguesuperlatives that convey nothing as they attempt to trick the customer into buyingthe product. The best positioning clearly states how the product will solve specificcustomer problems. Positioning is a perceptual location. It's where your product orservice fits into the marketplace. Effective positioning puts you first in line in theminds of potential customers.

As individuals, we continually position ourselves. The responsible older sibling, theclass clown, a number cruncher, a super genius are all examples of positioning.These identifiers help us define ourselves and distinguish our abilities as unique anddifferent from other people.

Positioning is a powerful tool that allows you to create an image. And image is theoutward representation of being who you want to be, doing what you want to do,and having what you want to have. Positioning yourself can lead to personalfulfillment. Being positioned by someone else restricts your choices and limits youropportunities.

That's why it's so important for entrepreneurs to transform their passion into amarket position. If you don't define your product or service, a competitor will do itfor you. Your position in the market place evolves from the defining characteristicsof your product.

The primary elements of positioning are:

y Pricing . Is your product a luxury item, somewhere in the middle, or cheap,cheap, cheap?

y Q uality . Total quality is a much used and abused phrase. But is your product

well produced? What controls are in place to assure consistency? Do youback your quality claim with customer-friendly guarantees, warranties, andreturn policies?

y Service . Do you offer the added value of customer service and support? Isyour product customized and personalized?

y Distribution . How do customers obtain your product? The channel ordistribution is part of positioning.

y Packaging . Packaging makes a strong statement. Make sure it's deliveringthe message you intend.


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MARKETING MIX

What is marketing? The definition that many marketers learn as they start out in

the industry is:

Putting the right product in the right place, at the right price, at the right time.

It's simple! You just need to create a product that a particularly group of peoplewant, put it on sale some place that those same people visit regularly, and price itat a level which matches the value they feel they get out of it; and do all that at atime they want to buy. Then you've got it made!

There's a lot of truth in this idea. However, a lot of hard work needs to go intofinding out what customers want, and identifying where they do their shopping.

Then you need to figure out how to produce the item at a price that representsvalue to them, and get it all to come together at the critical time.

But if you get just one element wrong, it can spell disaster. You could be leftpromoting a car with amazing fuel-economy in a country where fuel is very cheap;or publishing a textbook after the start of the new school year, or selling an item ata price that's too high or too low to attract the people you're targeting.

The marketing mix is a good place to start when you are thinking through yourplans for a product or service, and it helps you avoid these kinds of mistake.

Understanding the Tool

The marketing mix and the 4 Ps of marketing are often used as synonyms for eachother. In fact, they are not necessarily the same thing.

"Marketing mix" is a general phrase used to describe the different kinds of choicesorganizations have to make in the whole process of bringing a product or service tomarket. The 4 Ps is one way - probably the best-known way - of defining themarketing mix, and was first expressed in 1960 by E J Mc Carthy.

The 4Ps are:

y Product (or Service)y Placey Pricey Promotion

A good way to understand the 4 Ps is by the questions that you need to ask todefine you marketing mix. Here are some questions that will help you understandand define each of the four elements.


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PRODUCT

The product is the physical product/service offered to the consumer. In the case of physical products, it also refers to any services or conveniences that are part of theoffering.

Product decisions include aspects such as function, appearance, packaging, service,warranty, etc.

y What does the customer want from the product/service? What needs does itsatisfy?

y What features does it have to meet these needs?y Are there any features you've missed out?y Are you including costly features that the customer won't actually use?

y How and where will the customer use it?y What does it look like? How will customers experience it?y What size(s), color(s), and so on, should it be?y What is it to be called?y How is it branded?y How is it differentiated versus your competitors?y What is the most it can cost to provide, and still be sold sufficiently

profitably? (See also Price, below).

PRICE

Pricing decisions should take into account profit margins and the probable pricingresponse of competitors. Pricing includes not only the list price, but also discounts,financing, and other options such as leasing.

y Where do buyers look for your product or service?y If they look in a store, what kind? A specialist boutique or in a supermarket,

or both? Or online? Or direct, via a catalogue?y How can you access the right distribution channels?y Do you need to use a sales force? Or attend trade fairs? Or make online

submissions? Or send samples to catalogue companies?y What do you competitors do, and how can you learn from that and/or

differentiate?

PLACEPlace decisions are those associated with channels of distribution that serve as the

means for getting the product to the target customers. The distribution systemperforms transactional, logistical, and facilitating functions.

Distribution decisions include market coverage, channel member selection, logistics,and levels of service.


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y What is the value of the product or service to the buyer?y Are there established price points for products or services in this area?y Is the customer price sensitive? Will a small decrease in price gain you extra

market share? Or will a small increase be indiscernible, and so gain you extraprofit margin?

y What discounts should be offered to trade customers, or to other specificsegments of your market?

y How will your price compare with your competitors?

PROMOTION

Promotion decisions are those related to communicating and selling to potentialconsumers. Since these costs can be large in proportion to the product price, abreak- even analysis should be performed when making promotion decisions. It isuseful to know the value of a customer in order to determine whether additionalcustomers are worth the cost of acquiring them.

Promotion decisions involve advertising, public relations, media types, etc.

y Where and when can you get across your marketing messages to your targetmarket?

y Will you reach your audience by advertising in the press, or on TV, or radio,or on billboards? By using direct marketing mails hot? Through PR? On the

Internet?y When is the best time to promote? Is there seasonality in the market? Are

there any wider environmental issues that suggest or dictate the timing of your market launch, or the timing of subsequent promotions?

y How do your competitors do their promotions? And how does that influenceyour choice of promotional activity?

The 4Ps model is just one of many marketing mix lists that have been developedover the years. And, whilst the questions we have listed above are key, they are

just a subset of the detailed probing that may be required to optimize yourmarketing mix.

Amongst the other marketing mix models have been developed over the years isBoom and Bitner's 7Ps, sometimes called the extended marketing mix, whichinclude the first 4 Ps, plus people, processes and physical layout decisions.

Another marketing mix approach is Lauterborn's 4 Cs, which presents the elementsof the marketing mix from the buyer's, rather than the seller's, perspective. It ismade up of Customer needs and wants (the equivalent of product), Cost (price),Convenience (place) and Communication (promotion). In this article, we focus on


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the 4Ps model as it is the most well-recognized, and contains the core elements of a good marketing mix.

PRODUCT DECISIONS

Marketing starts with the product since it is what an organization has to offerits target market. As weve stressed many times in this tutorial,organizations attempt to provide solutions to a target markets problems.These solutions include tangible or intangible (or both) product offeringsmarketed by an organization.

In addition to satisfying the target markets needs, the product is importantbecause it is how organizations generate revenue. It is the thing that for-profit companies sell in order to realize profits and satisfy stakeholders andwhat non-profit organizations use to generate funds needed to sustain itself.Without a well-developed product strategy that includes input from the targetmarket, a marketing organization will not have long-term success.

Decisions regarding the product, price, promotion and distributionchannels are decisions on the elements of the "marketing mix". It canbe argued that product decisions are probably the most crucial as theproduct is the very epitome of marketing planning. Errors in product

decisions are legion. These can include the imposition of a globalstandardized product where it is inapplicable, for example large horsepowertractors may be totally unsuitable for areas where small scale farming existsand where incomes are low; devolving decisions to affiliated countries whichmay let quality slip; and the attempt to sell products into a country withoutcognizance of cultural adaptation needs. The decision whether to sell globallystandardized or adapted products is too simplistic for today's market place.Many product decisions lie between these two extremes. Cognizance has alsoto be taken of the stage in the international life cycle, the organization's ownproduct portfolio, its strengths and weaknesses and its global objectives.

Unfortunately, most developing countries are in no position to compete onthe world stage with many manufactured value-added products. Quality, orlack of it, is often the major letdown. As indicated earlier, most developingcountries are likely to be exporting raw materials or basic and high valueagricultural produce for some time to come. In decisions on producing or providing products and services in theinternational market it is essential that the production of the product or


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service is well planned and coordinated, both within and with other functionalarea of the firm, particularly marketing. For example, in horticulture, it isessential that any supplier or any of his "Outgrower" (sub-contractor) cansupply what he says he can. This is especially vital when contracts for supplyare finalized, as failure to supply could incur large penalties. The mainelements to consider are the production process itself, specifications, culture,the physical product, packaging, labeling, branding, warranty and service.

K ey Product Decisions

The actual product is designed to provide the core benefits sought by the targetmarket. The marketer offers these benefits through a combination of factors thatmake up the actual product.

Below we discuss in detail four key factors that together help shape the actual

product. These factors include:y Consumable Product Featuresy Brandingy Packagingy Labeling

C onsumable Product Features

Features are characteristics of a product that offer benefits to the customer. Inmost cases, the most important features are those associated with the consumable

product since they are the main reason a customer makes a purchase. For thistutorial we separate the benefits of consumable product features into two groups:

1 . Functional Benefits2. Psychological B enefits

Product Features and Functional Benefits

3. Customers derive functional benefits from features that are part theconsumable product. For instance, a plasma television includes such featuresand benefits as:

Feature Functional Benefitscreen size

screen resolution

surround sound

offers greater detail and allows for more distant viewing

viewing provides clear, more realistic picture

immerses all senses in the viewing experience


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remote control allows for greater comfort while viewing

4. These features are called functional because they result in a benefit the userdirectly associates with the consumable product. For marketers functionalbenefits are often the result of materials, design and production decisions.

How the product is built can lead to benefits such as effectiveness, durability,speed, ease-of-use, and cost savings to name just few.

Product Features and Psychological Benefits

For customers psychological benefits represent certain benefits they perceive toreceive when using the product though these may be difficult to measure and mayvary by customer. These benefits address needs such as status within a group, riskreduction, sense of independence, and happiness. Such benefits are developedthrough promotional efforts that target customers internal makeup (see discussionin Part 4: Consumer Buying Behavior).

In addition to determining the type of features to include in a product, the marketerfaces several other decisions related to features:

y Quantity & Quality vs. Cost - For the marketers an important decisionfocuses on the quantity and quality of features to include in a product. Inmost cases the more features included or the higher the quality level for aparticular feature, the more expensive the product is to produce and market.

y Is More Better? Even if added cost is not a major concern, the marketermust determine if more features help or hurt the target markets perceptionof the product. A product with too many features could be viewed as toodifficult to use. This was often the case when video cassette recorders (V CR)

were the principle device for taping television programs and watching rentedmovies. Many of the higher-level features introduced in the 1990s as theproduct matured, such as advanced television recording, proved too difficultfor the average consumer to master.

y Who Should Choose the Features? Historically marketers determined whatfeatures to include in a product. However, as we discussed in the TargetingMarkets Tutorial, technology, and especially the Internet, offer customers theopportunity to choose their own features to custom build a product. Forinstance, companies offering website hosting services allow website ownersto choose from a list of service options that best suits their needs. Also, fortraditional products, such as clothing, companies allow customers to stylize

their purchases with logos and other personalized options.y B randing involves decisions that establish an identity for a product with the

goal of distinguishing it from competitors offerings. In markets wherecompetition is fierce and where customers may select from among manycompetitive products, creating an identity through branding is essential. It isparticularly important in helping position the product (see discussion of product position) in the minds of the products target market.


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y While consumer products companies have long recognized the value of branding, it has only been within the last 10-15 years that organizationsselling component products in the business-to-business market have begunto focus on brand building strategies. The most well-known company tobrand components is Intel with its now famous "Intel Inside" slogan. Intelssuccess has led many other b-to-b companies and even non-profits toincorporate branding within their overall marketing strategy.

Packaging

Nearly all tangible products (i.e., goods) are sold to customers within a container orpackage that, as we will discuss, serves many purposes including protecting theproduct during shipment. In a few cases, such as with certain produce items, thefinal customer may purchase the product without a package but the producemarketer still faces packaging decisions when it comes to shipping to the store.Thus, for many products there are two packaging decisions:

1 . Final Customer Package2. Distribution Channel Package

Packaging: Final Customer Package

This relates to the package the final customer receives in exchange for theirpayment. When the final customer makes a purchase he or she is initially exposedto the Primary Package the outermost container that is seen and touched by thefinal customer. This primary package can be further divided into the following:

y First-Level Package - This is packaging that holds the actual product (e.g.,

Tylenol Bottle). In some cases this packaging is minimal since it only servesto protect the product. For instance, certain frozen food products are sold toconsumers in a cardboard box with the product itself contained in a plasticbag found inside the box. This plastic bag represents the first-level package.In other cases frozen food products are sold in the plastic bag that containsthe product. In these cases the plastic bag is both first-level package and theprimary package for convey product information.

y Second-Level Package In some cases the first-level package is surroundedby one or more outer packages (e.g., box holding the Tylenol Bottle). Thissecond-level package may act as the primary package for the product.

y Package Inserts - Marketers use a variety of other methods to communicatewith customers after they open the product package. These methods areoften inserted within, or sometimes on, the products package. Insertionsinclude information such as instruction manuals and warranty cards,promotional incentives such as coupons, and items that add value such asrecipes and software.

y Packaging: Distribution Channel Package


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This packaging is used to transport the customer package through the supplychain. It generally holds multiple customer packages and also offers a higherlevel of damage protection than that of customer packaging.

y Labeling

Labeling not only serves to express the contents of the product, but may bepromotional. This could be very demanding for producers, especially smallscale, ones where production techniques may not be standardized.Government labeling regulations vary from country to country. Translationcould be a problem with many words being translated with difficulty. Againlabeling is expensive, and in promotion terms non-standard labels are moreexpensive than standard ones. Requirements for crate labeling, etc. forinternational transportation will be dealt with later under documentation.

PRODUCT LIFE CYCLE

The Product Life Cycle (PLC) is based upon the biological life cycle. For example,a seed is planted (introduction); it begins to sprout (growth); it shoots out leavesand puts down roots as it becomes an adult (maturity); after a long period as anadult the plant begins to shrink and die out (decline).

In theory it's the same for a product. After a period of development it is introducedor launched into the market; it gains more and more customers as it grows;eventually the market stabilizes and the product becomes mature; then after aperiod of time the product is overtaken by development and the introduction of superior competitors, it goes into decline and is eventually withdrawn.

However, most products fail in the introduction phase. Others have very cyclicalmaturity phases where declines see the product promoted to regain customers.


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Strategies for the differing stages of the Product Life Cycle.

Introduction.

The need for immediate profit is not a pressure. The product is promoted to createawareness. If the product has no or few competitors, a skimming price strategy isemployed. Limited numbers of product are available in few channels of distribution.

Growth.

Competitors are attracted into the market with very similar offerings. Productsbecome more profitable and companies form alliances, joint ventures and take eachother over. Advertising spend is high and focuses upon building brand. Marketshare tends to stabilize.

Maturity.

Those products that survive the earlier stages tend to spend longest in this phase.Sales grow at a decreasing rate and then stabilize. Producers attempt todifferentiate products and brands are key to this. Price wars and intensecompetition occur. At this point the market reaches saturation. Producers begin toleave the market due to poor margins. Promotion becomes more widespread anduse a greater variety of media.

Decline.

At this point there is a downturn in the market. For example more innovative

products are introduced or consumer tastes have changed. There is intense price-cutting and many more products are withdrawn from the market. Profits can beimproved by reducing marketing spend and cost cutting.

Problems with Product Life Cycle.

In reality very few products follow such a prescriptive cycle. The length of eachstage varies enormously. The decisions of marketers can change the stage, for


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example from maturity to decline by price-cutting. Not all products go through eachstage. Some go from introduction to decline. It is not easy to tell which stage theproduct is in. Remember that PL C is like all other tools. Use it to inform your gutfeeling .

NEW PRODUCT DEVELOPMENT PROCESSImproving and updating product lines is crucial for the success for any organization.Failure for an organization to change could result in a decline in sales and withcompetitors racing ahead. The process of NPD is crucial within an organization.Products go through the stages of their lifecycle and will eventually have to bereplaced There are eight stages of new product development. These stages will bediscussed briefly below:

Stage 1 : Idea generation

New product ideas have to come from somewhere. But where do organizations gettheir ideas for NPD? Some sources include:

Within the company i.e. employeesCompetitors.

Customers Distributors, Supplies and others.

Stage 2: Idea Screening

This process involves shifting through the ideas generated above and selecting oneswhich are feasible and workable to develop. Pursing non feasible ideas can clearlybe costly for the company.

Stage 3: Concept Development and Testing

The organization may have come across what they believe to be a feasible idea,however, the idea needs to be taken to the target audience. What do they thinkabout the idea? Will it be practical and feasible? Will it offer the benefit that the

organization hopes it will? or have they overlooked certain issues? Note the ideaand concept is taken to the target audience not a working prototype at this stage.

Stage 4: Marketing Strategy and Development

How will the product/service idea be launched within the market? A proposedmarketing strategy will be written laying out the marketing mix strategy of the


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product, the segmentation, targeting and positioning strategy sales and profits thatare expected.

Stage 5: Business Analysis

The company has a great idea, the marketing strategy seems feasible, but will theproduct be financially worthwhile in the long run? The business analysis stage looksmore deeply into the cash flow the product could generate, what the cost will be,how much market shares the product may achieve and the expected life of theproduct.

Stage 6: Product Development

Finally it is at this stage that a prototype is finally produced. The prototype willclearly run through all the desired tests, and be presented to the target audience tosee if changes need to be made.

Stage 7: Test Marketing

Test marketing means testing the product within a specific area. The product will belaunched within a particular region so the marketing mix strategy can be monitoredand if needed, be modified before national launch.

Stage 8: Commercialization

If the test marketing stage has been successful then the product will go for nationallaunch. There are certain factors that need to be taken into consideration before aproduct is launched nationally. These are timing, how the product will be launched,

where the product will be launched, will there be a national roll out or will it beregion by region?

DISTRI B UTION DECISIONS- LOGISTICS & CHANNELDECISIONS

The commercial activity of transporting and selling goods from a producer to aconsumer. DISTRIBUTIO N DECISIO N Activities involved in making productsavailable to customers when and where they want to purchase them.

DISTRI BUTION ELEMENTS: > 1 ) INSTITUTIONAL AND 2) PHYSICAL

1) Institutional distribution- definition. The middleman between producer andend consumer who may take title and change the form of the producthandled. e.g. wholesaler, retailer, agents, distributors etc.


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2) Physical distribution definition. The logistics of the distribution systemincluding transport storage and order processing.

DISTRI B UTION is called third p (place) in marketing.

PURPOSE OF DISTRI B UTION DECISIONS:-1. Make availability of product in good no. & at the right time in the target

market.2. To decide the path or route for the goods & services3. Smooth movement of the product and ownership from manufacturer to the

customers.4. Cost effective and economic distribution.5. For control of intermediaries.6. It helps to avoid an expensive affair of direct marketing/distribution channel.7. Information communication from the producer to the consumer.

DISTRI B UTION CHANNEL SYSTEM

A channel is an institution through which goods and services are marketed.Channels give place and time utilities to consumers. In order to provide theseand other services, channels charge a margin. The longer the channel the moremargins are added.

A system where all distribution decisions, including the purchasing of rawmaterials and parts, as well as the movement of finished products, are takenglobally.

1 . Distribution Channelo Channel of distribution have a broad impact on the Marketing program of any

firm, because it is one of the most important component of Marketing-Mix. Theother components of marketing mix are Product, Price and Promotion.

o Definitiono The main objective of distribution strategy is getting the right goods to the

right place at the right time at the least possible cost. In other words we canalso define distribution channel as a way of moving goods from the point of production to the point of consumption.

o

It can also be defined as an organized network of agencies and institutions,which in combination perform all the activities required to link producers withend users and users with the producers to accomplish the Marketing task.

2. Characteristics of Channel of Distribution


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o Characteristics of distribution channel cannot be over emphasized by anystretch of our imagination because without distribution channel marketing taskwould have remained incomplete. Following are few main characteristics of distribution channel:

o Characteristicso It requires a minimum of buyer and a seller. Besides this it may include other

middleman.o A basic transaction in distribution channel is the exchange of ownership / title

of goods. Middlemen play an very important role in transfer of ownership / titleof goods.

o Distribution channel creates transactional efficiency.o A distribution channel may be simple or complex. (Handshake agreement or

large contracts)o Distribution channel may be long or short depending on the companys

marketing requirements as well as the product of the company.

LOGISTICS DECISIONS

Effective logistics management requires good decisions making is a wide varietyof areas. Because the scope of logistics is so broad across both the functionalareas of an organization and the temporal span of control and because of theinherent inter relationship between logistics decisions, logistics decision makersmust contend with a daunting array of issues and concerns .

1 . Major Logistics Functions

o Order Processingo It includes checking customers credit, checking of stock, order to

ship, bills to customers, update inventory records and sendproduction order for new stocks

o Warehousingo Owned / Rentedo Types/ Number of Warehouseso Location of Warehouseso Inventoryo

Inventory Management (Ordering cost and Carrying cost)o Just in time inventoryo Transportationo Railo Truckso Shipso Pipelineo Air


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2.Physical Distribution and Logistics Management

o Marketing logistics involves planning, implementing and controlling

the physical flow of materials, final goods and related informationfrom the point of origin to the point of consumption to meet thecustomer requirements at the profit.

o Logistics goal is to provide customer satisfaction and customerservice, speedy and flexible delivery system, presorting and pre-tagging of merchandise, order tracking information and willingnessto take back or replace defective goods.

o Main objective of logistics system is to provide customer satisfactionat the least cost.

MARKETING PROMOTIONAL DECISIONS

Products or services will not sell unless people are told about them. It is true thatfew companies from developing countries are global in operation, so much of thepromotion process is limited to either third party advertising (for example the Dutchadvertising Kenya grown flowers) or taking part in international exhibitions (forexample the Zimbabwe International Trade Fair in Bulawayo). As many primaryproducts of developing countries become the end products of developed countries,most promotion is limited to mentions of origin in developed country promotion.

Nonetheless, the rules still apply for effective promotion, whether it is of limited ormore extensive nature.

Most basic marketing textbooks cover the "ground" rules for effective advertisingand promotion and so the reader is referred to these rather than repeat these againhere. It is usual to distinguish between "advertising and "promotion". Advertisingis defined as:

"Any form of communication in the paid media. Promotion, on the other hand, isdefined as:

"An incentive, usually at the point of sale, intended to enhance the intrinsic value of a product or service".

Other expressions in common use are "above the line" and "below the line", the linebeing an imaginary one, defining the boundary between promotion from the retailerto consumer and the other from manufacturer to retailer.

Objectives


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Advertising must only be undertaken for a specific purpose(s) and this purposemust be translated into objectives. Whilst difficult to directly attribute toadvertising, persuasive advertising's ultimate objective is to obtain sales. Otherobjectives include building a favorable image, information giving, stimulatingdistributors or building confidence in a product. Whatever objective(s) are pursued,these must be related to the product life cycle and the stage the product is in.

B udgets

Budgets can be set in a variety of ways. Many budgets use a percentage of past orfuture sales, objective and task methods, or rule of thumb. "Scientific" methodsinclude sales response methods and linear programming.

Agency

Agencies can be used or not depending on the organizations own abilities,confidence in the market and market coverage. Many organizations, like Lintas andInterpublic, are worldwide and offer a wide range of expertise.

Message selection

Message selection is probably where the most care has to be taken. Decisions hingeon the standardization or adaptation of message decision, language nuances andthe development of global segments and customers. Message design has threeelements, illustration, layout and copy. Advertising appeals should be consistentwith tastes, wants and attitudes in the market. Coke and Pepsi have founduniversal appeal. With the "postmodern age" now affecting marketing, messagedesign is becoming particularly crucial. It is not just a question of selling, but of

crafting images. It is often the image, not the product, which is commercialized.Products do not project images, products fill the images which the communicationcampaign projects. Coke's "Life" theme is a classic in this regard.

In illustrations and artwork, some forms are universally understood. Coke, again,with its "life" theme is applicable anywhere. Cheese and beer adverts would go welltogether in Germany, but it would have to be cheese and wine in France.

Copy, or text, has been the subject of much debate. Effective translation requiresgood technical knowledge of the original and translated language, the product andthe objectives of the original copy. Care has to be taken that the meaning does not

get lost in translation.Media selection

There is a great difference in variety and availability of media across the world. Thechoice of media depends on its cost, coverage, availability, character (national orlocal or international) and its "atmosphere", for example in Zimbabwe postersversus adverts in the Financial Gazette.


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In advertising the choice is television, radio, press, magazines, cinema, posters,direct mail, transport and video promotion. In promotion the choice is widebetween money-off offers, discounts, extra quantities, and so on. Other forms of promotion include exhibitions, trade missions, public relations, and selling,packaging, branding and sponsored events. Governments can be a very powerfulpromotion source, both by providing organizations like Horticultural PromotionCouncils and by giving information and finance. GATT/U NCTAD Geneva provides apromotional service, giving information about products to interested parties. TradeFairs are popular both as a "flag flyer", and as a product display and competitiveinformation gathering facility. There are over 600 trade fairs worldwide; Theseinclude the Hanover Fair, Germany, the Royal Agricultural Show, UK for machineryand the Zimbabwe International Trade Fair for agricultural produce and other thingsin general. The criterion for participating in fairs is always cost versus effectiveness.

Campaign scheduling

Scheduling international campaigns is difficult, especially if handled alone ratherthan with an agency or third party. Scheduling decisions involve decisions on whento break the campaign, the use of media solely or in combination, and the specificdates and times for advertisements to appear in the media.

Evaluation

Advertising campaign evaluation is not very easy at the best of times. Whilst itwould be nice to say that "X" sales had resulted from " Y" advertising inputs, toomany intervening factors make the simple tie-up difficult. Evaluation takes place attwo levels - the effectiveness of the message and the effectiveness of the media.Few African developing countries, except Kenya, have any sophisticated methods

for campaign evaluation. Measures include message recall tests, diary completion,and brand recall.

Organization and control

Whilst companies like Nestle may have centrally organized and controlledadvertising campaigns, many are devolved to local subsidiaries or agencies. Thedegree of autonomy afforded to local subsidiaries depends on the philosophy of theorganization and the relative knowledge of the local market by the principal.

Integrated Marketing Communication

Integrated Marketing Communication is more than the coordination of a company'soutgoing message between different media and the consistency of the messagethroughout. It is an aggressive marketing plan that captures and uses an extensiveamount of customer information in setting and tracking marketing strategy. Stepsin an Integrated Marketing system are:


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1. Customer Databasean essential element to implementing Integrated Marketing that helps tosegment and analyze customer buying habits.

2. StrategiesInsight from analysis of customer data is used to shape marketing, sales,and communications strategies.

3. TacticsOnce the basic strategy is determined the appropriate marketing tactics canbe specified which best targets the specific markets.

4. Evaluate ResultsCustomer responses and new information about buying habits are collectedand analyzed to determine the effectiveness of the strategy and tactics.

5. Complete the loop

4 P's vs. 4 C's

y Not PRODUCT , but CONSUMER Understand what the consumer wants and needs. Times have changed andyou can no longer sell whatever you can make. The product characteristicsmust now match what someone specifically wants to buy. And part of whatthe consumer is buying is the personal "buying experience."

y Not PRICE , but COSTUnderstand the consumer's cost to satisfy the want or need. The productprice may be only one part of the consumer's cost structure. Often it's thecost of time to drive somewhere, the cost of conscience of what you eat, andthe cost of guilt for not treating the kids.

y Not PLACE , but CONVENIENCE As above, turns the standard logic around. Think convenience of the buying

experience and then relate that to a delivery mechanism. Consider allpossible definitions of "convenience" as it relates to satisfying the consumer'swants and needs. Convenience may include aspects of the physical or virtuallocation, access ease, transaction service time and hours of availability.

y Not PROMOTION , but COMMUNICATION Communicate, communicate, communicate. Many mediums working togetherto present a unified message with a feedback mechanism to make thecommunication two-way. And be sure to include an understanding of non-traditional mediums, such as word of mouth and how it can influence yourposition in the consumer's mind. How many ways can a customer hear (orsee) the same message through the course of the day, each messagereinforcing the earlier images?

COMMUNICATIONS TOOLS

y Communication is always one of the most important and vital strategic areasof an organization's success. You can have the best or most innovativeproducts or services, but if your internal and external communications areweak, then the demand for your products or services raises a personal flag of


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concern. When communicating the value of your products or services, youwant to focus on how they will benefit your clients.

y When planning your strategy for Integrated Marketing Communication orIMC, you want to have dialogue with your customers by inviting interactionthrough the coordinated efforts of content, timing and delivery of yourproducts or services. By ensuring direction, clarity, consistency, timing andappearance of your messages, conveyed to your targeted audience, thesefactors will help avoid any confusion about the benefits of your brand,through the connection of instant product recognition.

y When looking at your marketing mix, you're examining price, distribution,advertising and promotion, along with customer service. Integratedmarketing communication is part of that marketing mix included in yourmarketing plan. An IM C strategy define your target audience, establishesobjectives and budgets, analyzes any social, competitive, cultural ortechnological issues, and conducts research to evaluate the effectiveness of

your promotional strategies.y If companies are ethically planning, communicating, and following industry

guidelines, they will most likely earn the trust of their customers and targetaudience. There are five basic tools of integrated marketing communication:

y 1 . Advertising: This tool can get your messages to large audiences efficiently through suchavenues as radio, TV, Magazines, Newspapers (ROP), Internet, Billboards andother mobile technological communication devices. This method canefficiently reach a large number of consumers, although the costs may besomewhat expensive.

y 2. Sales Promotion: This tool is used through coupons, contests, samples, premiums,demonstrations, displays or incentives. It is used to accelerate short-termsales, by building brand awareness and encouraging repeat buying.

y 3. Public Relations: This integrated marketing communications tool is initiated through publicappearances, news/press releases or event sponsorships, to build trust andgoodwill by presenting the product, company or person in a positive light.

y 4. Direct Marketing: This tool will utilized email, mail, catalos, encourage direct responses to radioand TV, in order to reach targeted audiences to increase sales and test newproducts and alternate marketing tactics.

y 5. Personal Selling: Setting sales appointments and meetings, home parties, makingpresentations and any type of one-to-one communication, to reach your


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customers and strengthen your relationship with your clients, initiate thisIMC tool.

y Decisions linking the overall objectives and strategies during the marketingplanning phases help to evaluate and fine-tune the specific activities of integrated marketing communication. Before selecting an IM C tool,marketing, product and brand managers must look at social, competitive,legal, regulatory, ethics, cultural and technological considerations. One thingyou want to avoid when activating the tools of integrated marketingcommunication is reaching inappropriate audiences and causing controversy.That could be damaging when trying to build brand awareness andencourage consumer spending with your company. When marketingmanagers examine the beliefs, emotions and behaviour of their targetedaudience towards their brand, they can influence their beliefs to achieveproduct awareness, by attracting attention to their promotional campaigns

PERSONAL SELLING

Personal selling can be defined as follows:

P ersonal selling is oral communication with potential buyers of a p roduct with theintention of making a sale. T he personal selling may focus initially on develo p ing arelationshi p with the p otential buyer, but will always ultimately end with an attem p t to "close the sale"

Personal selling is one of the oldest forms of promotion. It involves the use of a

sales force to support a push strategy (encouraging intermediaries to buy theproduct) or a pull strategy (where the role of the sales force may be limited tosupporting retailers and providing after-sales service).

What are the main roles of the sales force?

Kotler describes six main activities of a sales force:

( 1 ) Prospecting - trying to find new customers

(2) Communicating - with existing and potential customers about the product

range(3) Selling - contact with the customer, answering questions and trying to closethe sale

(4) Servicing - providing support and service to the customer in the period up todelivery and also post-sale


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(5) Information gathering - obtaining information about the market to feedbackinto the marketing planning process

(6) Allocating - in times of product shortage, the sales force may have the power to decide how available stocks are allocated

What are the advantages of using personal selling as a means of promotion?

Personal selling is a face-to-face activity; customers therefore obtain a relativelyhigh degree of personal attention

The sales message can be customized to meet the needs of the customer

The two-way nature of the sales process allows the sales team to respond directlyand promptly to customer questions and concerns

Personal selling is a good way of getting across large amounts of technical orother complex product information

The face-to-face sales meeting gives the sales force chance to demonstrate theproduct

Frequent meetings between sales force and customer provide an opportunity tobuild good long-term relationships

G iven that there are many advantages to personal selling, why do more businessesnot maintain a direct sales force?

Main disadvantages of using personal selling

The main disadvantage of personal selling is the cost of employing a sales force.Sales people are expensive. In addition to the basic pay package, a business needsto provide incentives to achieve sales (typically this is based on commission and/orbonus arrangements) and the equipment to make sales calls (car, travel andsubsistence costs, mobile phone etc).

In addition, a sales person can only call on one customer at a time. This is not acost-effective way of reaching a large audience.

SALES MANAGEMENT

Sales management originally referred exclusively to the direction of sales forcepersonnel."Sales management" meant management of all marketing activities,


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including advertising, sales promotion, marketing research, physical distribution,pricing & product merchandising. Sales management is attainment of anorganization's sales goals in an effective & efficient manner through planning,staffing, training, leading & controlling organizational resources. Revenue, sales,and sources of funds fuel organizations and the management of that process is themost important function.

Systematic process involving:

(1) formulation of sales strategy through development of account managementpolicies, sales force compensation policies, sales revenue forecasts, and sales plan,

(2) Implementation of sales strategy through selecting, training, motivating, andsupporting the sales force, setting sales revenue targets, and

(3) sales force management through development and implementation of salesperformance, monitoring, and evaluation methods, and analysis of associatedbehavioral patterns and costs.

> Pricing Decisions

What do the following words have in common? Fare, dues, tuition, interest, rent, and fee.The answer is that each of these is a term used to describe what one must pay to acquirebenefits from another party. More commonly, most people simply use the word price toindicate what it costs to acquire a product.

The pricing decision is a critical one for most marketers, yet the amount of attention givento this key area is often much less than is given to other marketing decisions. One reasonfor the lack of attention is that many believe price setting is a mechanical process requiringthe marketer to utilize financial tools, such as spreadsheets, to build their case for settingprice levels. While financial tools are widely used to assist in setting price, marketers mustconsider many other factors when arriving at the price for which their product will sell.

Decisions faced by top management and marketing managers. How much to charge for aproduct or service depends on a multitude of factors such as competition, cost, advertising,and sales promotion. Economic theory suggests that the best price for a product or serviceis the one that maximizes the difference between total revenue and total costs. However, inreality, the price charged is usually some form of cost-plus, which is later adjusted for

market conditions and competition


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B indu presented

Chapter 5 : Consumer behavior and organizational behaviour

CHARACTERISTICS OR FACTOR AFFECTING CONSUMER BEHAVIOR

Cultural Factors

Consumer behavior is deeply influenced by cultural factors such as: buyer culture, subculture, and socialclass.

C ulture: Culture is the set of basic value, perception, wants and behaviors learned by a member of society from family and other institution. Culture is the most basic cause of a persons wants and

behavior. Every group or society has a cultural influence on buying behavior may vary greatly fromcountry to country, or even neighborhood to neighborhood.

For

Documents

Final Introduction to Marketing Concepts