Marketing and Communication

Marketing and CommunicationDr: EL ILAM SI MOHAMEDDefinitions of marketingMarketing is the management process that identifies, anticipates and satisfies customer requirements profitably

The Chartered Institute of MarketingThe right product, in the right place, at the right time, and at the right price Adcock et al Marketing is the human activity directed at satisfying human needs and wants through an exchange process

Kotler 1980

Marketing is a social and managerial process by which individuals and groups obtain what they want and need through creating, offering and exchanging products of value with othersKotler 1991

Implications of marketingWho are our existing / potential customers?What are their current / future needs?How can we satisfy these needs?Can we offer a product/ service that the customer would value?Can we communicate with our customers?Can we deliver a competitive product of service?Why should customers buy from us?The marketing conceptchoosing and targeting appropriate customerspositioning your offeringinteracting with those customerscontrolling the marketing effortcontinuity of performance

Successful marketing requires:ProfitableOffensive (rather than defensive)IntegratedStrategic (is future orientated)Effective (gets results) Hugh Davidson 1972Marketing management processAnalysis/Audit - where are we now?Objectives - where do we want to be?Strategies - which way is best?Tactics - how do we get there?(Implementation - Getting there!)Control - Ensuring arrivalWhy is marketing planning necessary?Systematic futuristic thinking by managementbetter co-ordination of a companys effortsdevelopment of performance standards for controlsharpening of objectives and policiesbetter prepare for sudden developmentsCriticisms of marketing planningFormal plans can be quickly overtaken by eventsElements of the plan my be kept secret for no reasongulf between senior managers and implementing managersthe plan needs a sub-scheme of actionsObjectives of the marketing planActs as a roadmapassist in management control and monitoring the implementation of strategyinforms new participants in the plan of their role and functionto obtain resources for implementationto stimulate thinking and make better use of resources

Assignment of responsibilities, tasks and timingAwareness of problems, opportunities and threatsEssential marketing information may have been missingif implementation is not carefully controlled by managers, the plan is worthless! The contents and structure of the marketing planThe executive summarytable of contentssituational analysis and target marketmarketing objectivesmarketing strategies marketing tacticsschedules and budgetsfinancial data and controlCautionary notes for effective planningDont blindly rely on mathematical and statistical calculations. Use your judgement as wellDont ever assume that past trends can be exploited into the future foreverif drawing conclusions from statistical data, make sure the sample size is sufficiently largeBehavioural planning problemsPlanning recalcitrance: resistance and non-co-operation by managers in planningfear of uncertainty in planning: a lack of comfort in planning activitiespolitical interests in planning activities:resource bargaining, padding of requirements, and avoidance of consensusplanning avoidance: compliance rather than commitment to planningStandard Planning FrameworkAnalysis - where are we now?Objectives - where do we want to be?Strategies - which way is best?Tactics - how do we ensure arrival?Control - are we on the right track?Marketing Information SystemsMarketing ResearchWhat is Marketing Research?ProcessTerminologyTechniquesMKIS - Marketing Information Systems What is MKISComponents of an electronic MKISMarketing Researchthe systematic gathering, recording and analysing of data about problems relating to the marketing of goods and services

American Marketing AssociationThe Marketing Research ProcessSet objectivesDefine research ProblemAssess the value of the researchConstruct a research proposalSpecify data collection methodSpecify techniques of measurementSelect the sampleData collectionAnalysis of resultsPresent in a final reportTerminology of Marketing ResearchPrimary data - collected firsthandSecondary data - already exists, desk researchQuantitative research - statistical basisQualitative research - subjective and personalsampling - studying part of a population to learn about the wholeMarketing Research TechniquesInterviewsface-to-facetelephonepostal questionnaireAttitude measurementcognitive component (know/believe about an act/object)affective component (feel about an act/object)conative component (behave towards an object or act)Likert scalestrongly agreeagreeneither agree nor disagreedisagreestrongly disagreeSemantic differential scales - differences between words e.g. practical v impractical Projective techniquessentence completionpsychodrama (yourself as a product)friendly martian (what someone else might do)Group discussion and focus groupPostal research questionnairesDiary panels - sources of continuous dataIn-home scanning - hand-held light pen to scan barcodesTelephone researchObservationhome auditdirect observationIn-store testingWhat is MKIS?MKIS (MIS) is a set of procedures and methods for the regular, planned collection, analysis and presentation of information for use in marketing decisions

American Marketing AssociationThe components of a computerised MKISModel BankData BankStatisticalBankMKISDisplay unitMarketingManagerThe components of a computerised MKISData bank - raw data e.g historical sales data, secondary dataStatistical bank - programmes to carry-out sales forecasts, spending projectionsA model bank - stores marketing models e.g Ansoffs matrix, Boston MatrixDisplay unit - VDU and keyboardThe Marketing Environment and Competitor AnalysisSWOT analysisPEST analysisFive forces analysisSWOT analysisStrengths (internal)Weaknesses (internal)Opportunities (external)Threats (external)

PEST analysisPolitical factorsEconomic factorsSocio-cultural factorsTechnological factorsPolitical/legalMonopolies legislationEnvironmental protection lawsTaxation policyEmployment lawsGovernment policyLegislationOthers?

Economic FactorsInflationEmploymentDisposable incomeBusiness cyclesEnergy availability and costOthers?Sociocultural factorsDemographicsDistribution of incomeSocial mobilityLifestyle changesConsumerismLevels of educationOthers?TechnologicalNew discoveries and innovationsSpeed of technology transferRates of obsolescenceInternetInformation technologyOthers?Source: Adapted from M. E. Porter, Competitive Strategy, Free Press, 1980, p. 4. Threat ofsubstitutesPotentialentrants

Threat ofentrants

Suppliers

Bargaining power

Substitutes

Buyers

Bargaining power

COMPETITIVE RIVALRY

Five forces analysisFive Forces Analysis: Key Questions and ImplicationsWhat are the key forces at work in the competitive environment?Are there underlying forces driving competitive forces?Will competitive forces change?What are the strengths and weaknesses of competitors in relation to the competitive forces?Can competitive strategy influence competitive forces (eg by building barriers to entry or reducing competitive rivalry)?Buyer BehaviourDominant Family Purchase - Cozenza 1985Demographic FactorsThe Consumer Buying ProcessMaslows hierarchy of needsUK socioeconomic classification schemeTypes of buyer behaviourThe Buying Decision ProcessOrganisational Buyer BehaviourDominant Family Purchase - Cozenza 1985

Demographic FactorsAgeStage in family life cycleOccupationEconomic circumstancesLifestylesocial influence variablesfamily backgroundreference groupsroles and statusThe Consumer Buying ProcessConsumerPurchase DecisionsProduct ChoiceLocation ChoiceBrand ChoiceOther ChoicesPsychological InputsCultureAttitudeLearningPerceptionBased on Cohen (1991)Marketing InputsProductPricePromotionPlaceMaslows Hierarchy of NeedsPhysiologicalSafetySocialEsteemSelf ActualisationUK socioeconomic classification scheme

Types of buyer behaviourComplex buyer behaviour e.g. Intel Pentium ProcessorDissonance-reducing behaviour (brand reduces after-sales discomfort)Habitual buying behaviour e.g. salt - little differencevariety seeking behaviour - significant brand differences e.g soap powderThe Buying Decision Processrecognition of the need e.g a new PCchoice of involvement level (time and effort justified) e.g. two week endsidentification of alternatives e.g. Dell, PC Worldevaluation of alternatives I.e. price, customer service, software support, printer/scanner packagedecision - choice made e.g Epsom action e.g buy Epsom model from Cometpost-purchase behaviour I.e. use, breakdowns, etcOrganisational Buyer BehaviourThe decision-making process by which formal organisations establish the need for purchased products and services, and identify, evaluate, and choose among alternative brands and suppliers

Kotler and Armstrong 1989Characteristics of organisational buyer behaviourOrganisation purpose - Goodyear TyresDerived demand - follows cars and lorriesConcentrated purchasing - stockholdings of rubberDirect dealings - large purchaser of basic rubber - no intermediariesSpecialist activities - learns about the productMultiple purchase influences - DMU - Decision making unitStrategic DevelopmentProduct Life Cycle (Revisited in Product)Bowmans Competitive Strategy OptionsNew Product Development (NPD)

Five stages of the PLCProduct development - sales are zero, investment costs are highIntroduction - profits do not exist, heavy expense of product introductionGrowth - rapid market acceptance and increasing profitsMaturity - slowdown in sales growth. Profits level-off. Increase outlay to competeDecline - sales fall-off and profits dropPLC exerciseThe Ford Escort The Mini CooperThe Internet PhoneCadburys FuseThe Boeing 747The Millennium DomeKIT KATSource: Based on the work of Cliff Bowman. See C.Bowman and D.Faulkner. Competitive and Corporate Strategy, Irwin, 1996.

Bowmans Strategy Clock1 Low price/low added valueLikely to be segment specific

2 Low priceRisk of price war and low margins/need to be cost leader

3 HybridLow cost base and reinvestment in low price and differentiation

4 Differentiation (a) Without price premiumPerceived added value by user,yielding market share benefits (b) With price premiumPerceived added value sufficient tobear price premium

The Strategy Clock: Bowmans Competitive Strategy Options 5 Focused differentiationPerceived added value to a particular segment, warranting price premium

6 Increased price/standardHigher margins if competitors do not value follow/risk of losing market share

7 Increased price/low value Only feasible in monopoly situation

8 Low value/standard priceLoss of market shareNew- Product Development ProcessNew product strategyIdea generationIdea screeningConcept development and testingMarketing strategyBusiness analysisProduct developmentTest Marketing CommercialisationProducts DecisionsProduct and Service Classification SystemThe Product Life CycleIntroduction to product matricesBoston Matrix (Growth/Share)Ansoffs Matrix (Product Market)Product and Service Classification SystemConvenience goods - little effort, relatively inexpensiveShopping goods - e.g white goods, DIY equipment, more expensive, infrequentSpeciality goods - extensive search e.g Jewellery, gourmet foodUnsought goods - e.g. double glazing, Industrial goodsInstallations - speciality goods of industrial markets - plant and machineryAccessories - maintenance and office equipmentRaw materialscomponents Business to business e.g. consultants, accountantsFew:Few: trial of trial of early earlyadoptersadoptersGrowing adopters:Growing adopters: trial of trial of product/service product/service Entry of Entry of competitorscompetitorsGrowing selectivityGrowing selectivity of purchase of purchaseMay be manyMay be manySaturation ofSaturation of users usersRepeat purchaseRepeat purchase reliance relianceFight to maintainFight to maintain share shareDrop-offDrop-offin usagein usageExit of someExit of somecompetitorscompetitorsDevelopmentDevelopmentGrowthGrowthMaturityMaturityDeclineDeclineThe life product cycle modelMarket ShareMarketGrowthHighLowHighLow1. Stars3. QuestionMark (ProblemChild)2. Cash Cows4. DogsThe Boston Matrix (Growth/Share Matrix)Market ShareMarketGrowthHighLowHighLowFUSEMaverickMiniature HeroesKIT KATMARS BARTOPICBOUNTYThe Boston Matrix - Chocolate BarsDiversificationMarket PenetrationMarket DevelopmentProduct DevelopmentExisting MarketsNew MarketsExisting ProductsNew ProductsAnsoffs Matrix (Product/Market Matrix)Diversification -related or unrelatedE.g. Realignments of the marketing mixE.g. Geographical expansionSame outlets and sales strategy - new productExisting MarketsNew MarketsExisting ProductsNew ProductsAnsoffs Matrix (Product/Market Matrix)Products DecisionsProduct and Service Classification System?The Product Life Cycle stages?Growth/Share?Product Market?Pricing DecisionsPricing strategiesPricing exerciseTen ways to increase prices without increasing price - WinklerLowHighLowHighEconomyStrategye.g. Tesco spaghettiPenetratione.g. Telewest cable phonesSkimminge.g. New film or albumPremiume.g. BA first class

PriceQualityPricing strategiesPremium pricingUses a high price, but gives a good product/service exchange e.g. Concorde, The Ritz HotelPenetration pricingoffers low price to gain market share - then increases pricee.g. France Telecom - to attract new corporate clients (or Telewest cable)Economy pricingplaced at no frills, low pricee.g. Soups, spaghetti, beans - economy brandsPrice skimmingwhere prices are high - usually during introductione.g new albums or films on releaseultimately prices will reduce to the parityPsychological pricingto get a customer to respond on an emotional, rather than rational basis .e.g 99p not 1.01 price point perspectiveProduct line pricingrationale of a product rangee.g. MARS 32p, Four-pack 99p, Bite-size 1.29Pricing variations off-peak pricing, early booking discounts,etce.g Grundig offers a cash back incentive for expensive goodsOptional product-pricinge.g. optional extras - BMW famously under-equippedCaptive product pricingproducts that complement otherse.g Gillette razors (low price) and blades (high price)Product-bundle pricingsellers combine several products at the same pricee.g software, books, CDs.Promotional pricingBOGOF e.g. toothpaste, soups, etcGeographical pricingdifferent prices for customers in different parts of the worlde.g.Include shipping costs, or place onPLCValue pricingusually during difficult economic conditionse.g. Value menus at McDonalds

Ten ways to increase prices without increasing price - WinklerRevise the discount structureChange the minimum order sizeCharge for delivery and special servicesInvoice for repairs on serviced equipmentCharge for engineering, installationCharge for overtime on rushed ordersCollect interest on overdue accountsProduce less of the lower margin models in the lineWrite penalty clauses into contractsChange the physical characteristics of the productChannel and Distribution TacticsBucklins definition of distributionTodays system of exchangeChannel intermediariesSix basic channel decisionsSelection considerationPotential Influence Strategies - Frazier and Sheth (1989)Frequencies of use of influence strategies - Frazier and Summers (1984)A channel of distribution comprises a set of institutions which perform all of the activities utilised to move a product and its title from production to consumption

Bucklin - Theory of Distribution Channel Structure (1966)NegotiationPromotionContactTransporting and storingFinancingPackagingMoneyGoodsTodays system of exchange

ProducersUsersChannel intermediaries - WholesalersBreak down bulkbuys from producers and sell small quantities to retailersProvides storage facilitiesreduces contact cost between producer and consumerWholesaler takes some of the marketing responsibility e.g sales force, promotions

Channel intermediaries - AgentsMainly used in international marketsCommission agent - does not take title of the goods. Secures orders.Stockist agent - hold consignment stockControl is difficult due to cultural differencesTraining, motivation, etc are expensiveChannel intermediaries - RetailerMuch stronger personal relationship with the consumerHold a variety of productsOffer consumers creditPromote and merchandise productsPrice the final productBuild retailer brand in the high street

Channel intermediaries - InternetSell to a geographically disperse marketAble to target and focus on specific segmentsRelatively low set-up costsUse of e-commerce technology (for payment, shopping software, etc)Paradigm shift in commerce and consumptionSix basic channel decisionsDirect or indirect channelsSingle or multiple channelsLength of channelTypes of intermediariesNumber of intermediaries at each levelWhich intermediaries? Avoid intrachannel conflictSelection considerationMarket segment - must know the specific segment and target customerChanges during plc - different channels are exploited at various stages of plcProducer-distributor fit - their policies, strategies and imageQualification assessment - experience and track record must be establishedDistributor training and supportPotential Influence Strategies-Frazier and Sheth (1989)Indirect influence strategies - information is merely exchanged with channel member personnelDirect unmediated strategies - consequences of a poor response from the market are stressedReward and punishment strategies - given to channel members and their firmsDirect unweighted strategy or request - producers wishes are communicated . No consequences are applied or mentionedDirect mediated strategies - specific action is requested and consequences of rejection are stressede.g.1 control of retail pricinge.g.2 minimum order sizee.g.3 salesperson traininge.g.4 physical layout of storee.g. 5 territorial and customer restrictions

Frazier and Summers (1984)Frequencies of use of Influence StrategiesPromotions DecisionsElements in the communication processPromotions mixThe promotions messageExecutions styleMedia choice?Promotional objectivesMediaMessageSenderEncodingResponseFeedbackNoiseDecodingReceiverElements in the Communication ProcessSender - party sending the messageEncoding - message in symbolic formMessage - word, pictures and symbols that the sender transmitsMedia - the communication channel e.g radioDecoding - receiver assigns meaning to symbols encoded by the sender

Response - reaction of the receiver after being exposed to the to the messageFeedback - the part of the receivers response after being communicated to the senderNoise - unplanned static or distortion during the communication process e.g. competitor action (Creature Comforts?)Promotions MixPersonal sellingTelemarketingDirect mailTrade fairs and exhibitionsCommercial televisionNewspapers and magazinesRadioCinemaPoint of sale displaysPackagingThe Promotional MessageGrabATTENTIONExciteINTERESTCreateDESIREPromptACTIONAIDAExecution stylesSlice of life e.g. OXOLifestylee.g. After Eight mintsFantasye.g .Turkish DelightMood or imagee.g. Timotei shampooMusicale.g .GapPersonality symbole.g. Richard BransonTechnical expertisee.g.Vorsprung durch Technik - AudiScientific evidencee.g. WhiskersTestimonial evidence e.g. Ian Botham

Media choice?Marketing objectivesDefinition of problem e.g falling awarenessEvaluation of different toolschoice of optimum mix of promotional methodsIntegration into overall marketing communication programmeExercise - What beliefs and expectations do you have about the following brands? How far are these due to promotion as opposed to personal experience?Fairy liquidPersil washing powderMidland BankVirgin RadioNissanTescoPromotional objectivesTo support sales increasesTo encourage trialTo create awarenessTo inform about a feature or benefitTo remindTo reassureTo create an imageTo modify attitudesImplementationThe implementation processAn action checklistTotal quality and marketingManaging the organisation/stakeholder interfaceActivities to establish and build customer relationshipsRelationship marketingMcKinsey 7-S frameworkMarketingStrategyTactical DecisionsImplementing theMarketing MixMonitoring ResultsInternal FactorsExternal FactorsAdaptation of strategy/tacticsThe Marketing Implementation ProcessBerman and Evans 1985Implementation problemsInternal problems e.g change of managementExternal problems e.g. changing competitionPoor planning e.g. Hoovers flight ticketsPoor intelligence e.g. 1985 Coca-ColaPoor execution Implementing a programme - an action checklistAgree the implementation strategyAgree a timeframeDraw up detailed implementation plansSet up a team of stakeholdersEstablish good project managementPersonalise the case for changeEnsure participationCreate a sense of purpose and urgency to tackle real problems which have prevented progress in the pastmotivatebe prepared for conflictBe willing to negotiateAnticipate stressBuild skillsBuild in the capacity for learningMonitor and evaluateTotal Quality and MarketingQuality is what customers say it is.Juran and TQMzero defectsright first timecontinuous improvementStatistical process control (SPC)New relationships with suppliers (JIT)Quality Assurance e.g BS EN ISO 9000Managing the organisation/stakeholder interfaceExternal and internal relationshipsAccountability of managersMarketer projects an image and styleEthical responsibilities towards consumersSocial responsibilitydangerous products e.g. cigarettesdishonest marketing and promotionthe abuse of powerthe availability of information

Activities to establish and build customer relationshipsNeed for long term relationshipsUACCA - expensive in promotional termsBuild sales to existing customersImproving service qualityAuditing the fulfilment of customer needsCause a cultural change to a marketing orientation - Marketing Myopia Levitt (1960)Relationship marketingThe consistent application of up-to-date knowledge of individual customers to product and service design . . . . In order to develop a continuous and long-term relationship CramNot mass marketing. Aimed at individual.Customer retention not attractionLong term, ongoing relationshipsRegular customer contactSpirit of trust

Mckinsey 7-S frameworkStrategyStructureSystemsShare valuesStyleSkillsStaffPRODUCTDOMINANT DECISION

MAKERTYPICAL DECISION

Womens casual clothingWifePrice, style

VacationsSyncratic (both)Whether to go, where

Mens casual clothingHusbandType, price, style

Life insuranceHusbandCompany, coverage

Homeowners insuranceHusbandCompany, coverage

Household appliancesWifeStyle, brand, price

Class nameSocial statusOccupation of head of household% of population

AUpper middleHigher managerial, administrative or professional3

BMiddleIntermediate managerial, administrative or professional14

C1Lower middleSupervisors or clerical, junior managerial, administrative or professional27

C2Skilled workingSkilled manual workers25

DWorkingSemiskilled and unskilled workers19

EThose at lowest levels of subsistencePensioners, widows, casual or lower-grade workers12

Mean useMost frequently usedTied for most frequently usedNever used

Information exchange49%62%6%8%

Requests2713711

Recommendations198723

Promises154937

Threats101553

Legalistic pleas60359