Name:

Course: Marketing Principles 2

Date of submission: 24th match 2013

Word count: 3933

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Contents

Introduction......................................................................................................................................3

Elements of the marketing process for ACL...................................................................................4

The costs and benefits of the marketing orientation for ACL.........................................................5

Macro and Micro environmental factors.........................................................................................6

Applying targeting strategies to find appropriate solution..............................................................7

Segmentation Criteria for ACL products in different markets........................................................8

Targeting strategy for ACL’S estate agency cleaning service.........................................................9

Buyer behavior impact on ACL’s marketing activities in different buying situations..................10

Different product strategies used by ACL’s competitors..............................................................11

New positioning strategy...............................................................................................................13

Distribution....................................................................................................................................14

Pricing............................................................................................................................................14

Promotion......................................................................................................................................15

The extended marketing mix.........................................................................................................15

Marketing mix for two different segments of ACL.......................................................................16

Differences in marketing products and services to businesses and consumers.............................17

Findings.........................................................................................................................................17

Differences in international and domestic marketing of ACL.......................................................18

Limitations of the recommended marketing mix...........................................................................18

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Planning managing and organizing the work................................................................................19

Justification of plan........................................................................................................................19

References......................................................................................................................................20

Introduction

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This paper aims at discussing the main elements of marketing principles. Moreover, it presents a

real life scenario of the ABC Cleaning Limited (ACL), a leading cleaning service company in the

UK. In light of this, the company has been used as a reference point for discussing marketing

principles. In a nutshell, the main objectives of this paper are as follows;

Elements of the marketing process for ACL

ACL’s marketing process like any other company consists of the following elements; situational

analysis, planning, implementation and control (Armstrong, Kotler, Saunders& Wong, 2008) as

illustrated in the table below.

Elements of the marketing process What it entails

Situational analysis A marketing audit that involves obtaining

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Objectives

Elements of the marketing processTargeting and positioning strategiesCosts and benefits of the marketing orientationMacro and micro factors that influence marketing decisions

ObjectivesSegmentationImpact of buyer behavior on marketing activitiesNew product developmentDistributionPricing

ObjectivesPromotionThe extended marketing mixProduct strategiesDifferences between business and consumer marketsDifferences between international and domestic marketing

information from the marketing mix.

An analysis of the marketing environment i.e.

the external and internal marketing

environment.

A PESTLE and SWOT analysis.

Planning Formulating the mission of the company, the

corporate and marketing goals and objectives.

Setting marketing strategies to achieve the set

objectives

Planning the marketing mix

Implementation Putting into effect the marketing strategies

which ultimately lead to achieving the set

marketing objectives.

Control Analyzing and evaluating the outcome of the

entire marketing process and providing

measures to gauge performance and

contingency plans.

Rectifying the deficiencies of an unsuccessful

marketing process

The costs and benefits of the marketing orientation for ACL

The marketing concept holds that the key to a successful and profitable organization lies in

identifying and anticipating the needs and wants of customers and producing products that will

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satisfy them. In addition, developing superior products compared to their competitors (Kotler,

1980). The costs and benefits of the marketing orientation for ACL are illustrated below.

Costs Benefits

Extensive costs are likely to be incurred when

researching the market in search of customer

needs and preferences. In addition, production

costs can also take a toll on the company.

ACL will be able to correctly identify feasible

segments which make the company’s

marketing effort more efficient and

economical.

ACL may be required to train its salespeople a

fresh which is costly in terms of time and

money.

Sustainable customer relationships because

ACL will provide as per the market’s needs

and wants as a result, the company will gain

the customer’s loyalty.

The employees may be reluctant in accepting

the marketing concept since it is a paradigm

shift from what they are accustomed to.

Fostering teamwork among the company’s

different departments because the marketing

concept requires a team effort from say the R

and D department, the quality, marketing,

production departments to produce a

wholesome product for the market.

The marketing orientation is not ideal for ACL

if it is seeking immediate sales and profits.

The company will be profitable in the long

term as a result of customer satisfaction which

leads to goodwill from the customers who may

spread the good word about ACL hence

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increasing its customer base.

The markets are subject to new entrants hence

ACL will have to invest heavily in promotion

and distribution costs to sustain its competitive

advantage.

ACL will stand out as a competitor to reckon

with.

Macro and Micro environmental factors

Macro environmental factors are those external forces that an organization has little or no control

over and they directly or indirectly affect the organization’s marketing decisions. On the other

hand, micro environmental factors are those that are within the organization’s task environment;

those that it has control over and directly affect its marketing decisions (Palmer & Worthington,

1992). ACL like any company has macro and micro environmental factors that influence its

marketing decisions. These factors are illustrated below.

Macro

Environmental

Factors

Micro

Environmental

Factors

Demographic

factors

The size and growth rate of

the population is important to

ACL when selecting and

targeting and marketing to

segments.

Company ACL’s departments; R

and D, manufacturing,

purchasing and

accounting work together

to arrive at

comprehensive marketing

decisions.

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Economic

factors

This relates to the state of the

economy; economic patterns

such as a recession would

affect ACL’s marketing

decisions. Other factors such

as the market’s income levels

and spending patterns are

factors that ACL needs to be

aware of before formulating

marketing strategies.

Competitors The company’s

competitors pose as

threats and opportunities

that influence its

marketing decisions.

ACL’s competitors

include; YBC

Commercial cleaning

services and Peartree

Cleaning services.

Political factors These consist of laws, the

government and advocacy

groups; human rights

activists. The current

legislative frameworks are

bound to influence ACL’s

marketing decisions, for

instance laws set on

standardizing prices will

influence how the company

sets its prices.

Customers Their wants and needs

influence ACL’s

marketing mix decisions

and marketing strategies.

Technological

factors

Technological changes pose

opportunities and threats for

Suppliers ACL should invest in

suppliers who are

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ACL which means that it

needs to be aware of them as

they influence marketing

decisions especially the

marketing mix.

efficient and available

because they ultimately

influence when

production starts.

Environmental

factors

These relate to the natural

resources that are needed by

ACL as inputs. If for instance

there is a shortage in raw

materials the company will be

prompted to make an

adjustment in its marketing

decisions to ensure that the

markets needs are met.

Distributors The type, length and

complexity of the

distribution channel

determine when, where

and how the consumers

access ACL’s products

and services.

Socio-cultural

factors

The market’s norms, sets of

beliefs, basic values,

perceptions and social forces

influence the type of products

produced by ACL.

Publics These are groups that

have potential interests in

ACL and impact its

ability to achieve its

objectives.

Applying targeting strategies to find appropriate solution

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This section requires identifying a problem that can be solved by applying targeting strategies.

Targeting involves deciding on the segment to aim at (Moehlman, 2010). ACL may face a

predicament of targeting a segment that matches its objectives and resources. This problem can

be solved by selecting suitable targeting strategies in this case, concentrated marketing and

selective specialization.

Segmentation Criteria for ACL products in different markets

Market segmentation involves identifying sub-sets of buyers within a market who share similar

wants and needs and display similar buying patterns (Frank, Massey & Wind, 1972). There four

bases for segmenting markets namely; geographic, demographic, psychographic and behavioral

segmentation. In light of this ACL can use these bases to segment its various products that

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Concentrated marketingACL will select only a single segment to concentrate on.

How it solves the problem;It is appropriate for companies that are seeking an equilibrium between their resources and objectives and a segment's requirementsIt is suitable if the company has limited resourcesThe segment might be a niche market that has no competitionIt is a stepping stone to further segmentation

Selective specializationACL will objectively select a

number of segments that have growth potential and match its

objectives and resources.

How it solves the problem;The firm only selects those segments that match its resourcesPromotion costs are lowered due to similar marketing programs across the segments.The company is bound to increase its customer base which leads to increased profits.It may result in synergetic effects because two segments can be inter-related in terms of cost and performance for them to be more effective and profitable.

include; domestic cleaning, one-off and spring cleaning, end of tenancy cleaning, after builders

cleaning, after party cleaning, carpet cleaning, upholstery cleaning, office cleaning, estate agency

and industrial cleaning as illustrated below.

Segmentation Criteria Product

Geographic segmentation comprises

dividing the market into distinct

geographical units (nations, states, regions or

cities). It is ideal for ACL marketers seeking

to position their products on the basis on

their consumers’ geographical location.

End of tenancy cleaning for consumers moving

out of their homes to other regions, office

cleaning for offices located in different regions in

the UK and industrial cleaning.

Demographic segmentation consists of sub

dividing the market based on demographic

variables such as age, gender, family life

cycle and income.

Domestic cleaning because it targets residential

homes and apartments for consumers of different

ages, gender, different stages in the family life

cycle and income levels. Upholstery and carpet

cleaning can be offered simultaneously with

domestic cleaning as a full package.

Psychographic segmentation. Here

consumers are divided into groups divided

After party cleaning for the party lovers (lifestyle

and personality) and estate agency cleaning for

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into groups based on variables such as social

class, personality, lifestyle and attitudes.

property owners who prefer customized services

(social class and attitudes).

Behavioral segmentation. Consumers are

divided on the basis of their, behavior,

knowledge of a product, use and response to

a product. In addition, the occasional

benefits sought from the products, usage

rates and loyalty to products.

One-off and spring cleaning for consumers who

do not require regular cleaning services and those

who seek the benefits of spring cleaning services.

After builders cleaning for occasions after

construction.

Upholstery and carpet cleaning for the occasional

sofa and furniture cleaning.

Targeting strategy for ACL’S estate agency cleaning service

The estate agency cleaning service targets letting agencies which require cleaning services for

new tenants and often request for customized services. According to Wedel & Kamakura (2000),

the main targeting strategies include; selective specialization, differentiated marketing,

concentrated marketing, product specialization and undifferentiated marketing. Therefore, ACL

has a wide range of targeting strategies to choose from however, since it has to choose one the

most appropriate strategy for the estate agency cleaning service would be concentrated

marketing.

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Components of

concentrated marketing

Advantages Disadvantages

Market structure; selects

only one segment to

concentrate on.

Greater knowledge of the segment

needs which gives the company a

strong market position and a special

reputation.

The segment may turn

sour due to the changing

needs of consumers.

Focus; the company’s

objectives and resources

match to the segment’s

needs.

High profits The threat of new entrants

in the market is high.

Design; the product is

designed to appeal only to

the consumers in the

segment.

Operative economics through

product specialization, mass

promotion and distribution within

the segment.

Reliance; it relies on

product specialization, mass

promotion and distribution.

The company gains customer

loyalty.

Buyer behavior impact on ACL’s marketing activities in different buying situations

Buyer behavior is the action that a person takes in purchasing and using products and services.

Moreover, it consists of the mental and social processes that precede these actions (Shaughnessy,

1992). In light of this, there are two types of buyer behavior; consumer and organizational

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buying behavior (Horton, 1984). Similarly, the two different buying situations are consumer and

organizational purchasing. Buyer behavior has a profound impact on a company’s marketing

activities because it gives the company the direction it should follow in terms of its marketing

decisions. This also applies to ACL. The table below demonstrates this.

Buyer

Behavior

Buying situation Effect on ACL marketing activities

Organizational Purchasing officer

evaluating

alternative vendors

for office cleaning

ACL needs to ensure that it has a competitive advantage

over the other companies. This means formulating

strategies that will put it ahead in the market for instance,

affordable prices quality office cleaning services, a skilled

sales task force because organizational buyers prefer a

more personal and direct relationship with the seller and

effective promotional campaigns.

Consumer A consumer

interested in the

domestic cleaning

service

ACL is faced with the task of ensuring that its domestic

cleaning service is the best in the market. This calls for

proper positioning and differentiating strategies for the

service as well as an effective sales promotion and

advertising campaign to encourage the consumer to

purchase the package. Consumers are easily convinced by

an attractive package hence ACL should ensure that the

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service package is appealing.

Different product strategies used by ACL’s competitors

Earlier, two of ACL’s competitors were identified namely; YBC Commercial cleaning services

and Peartree cleaning services. In general, companies use the following product strategies when

developing their products to gain and sustain a competitive advantage within the market; product

design, product quality, product features and product branding (Hake, 1971). YBC Commercial

cleaning services was founded in 1996 and has largely grown through recommendation and

referral. YBC is famously known for providing quality cleaning services and facilities

throughout the South-East and has a customer retention rate of over 85%. Similarly, Peartree

cleaning services is a huge competitor of ACL in the office cleaning segment. The company was

founded in 1986 and delivers office cleaning and support services to high profile corporate

organizations in the City of London, the South-East and the UK. The company has an annual

sales turnover in excess of £9m.

YBC Commercial cleaning services Peartree cleaning services

Product design: a high quality product

that is geared towards customer

satisfaction.

Product design: a high quality product that is tailored

according to their clients specifications. In addition, the

product is compliant with the safety and health

regulations.

Product quality: efficient, high quality

and technological advanced products.

Product quality: the company offers a high quality

product to high profile corporate organizations and

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invests in highly trained and qualified operatives in

both cleaning and other specialist areas.

Product features: Daily office and

kitchen cleaning

daily hygiene and washroom cleaning,

daily classroom cleaning,

Periodic kitchen cleaning security,

caretaking, janitorial supplies, waste

management and laundry.

Product features: office, retail cleaning, waste

management, manufacturing, front of house,

stone ,marble and terrazzo, IT cleaning, recycling,

preventive pest control, plant and landscaping

washroom and hygiene supplies.

Product branding: the company brands

its services by stating their attributes,

benefits and values(sustainability)

Product branding: the company brands itself as

independent, innovative and one that has reputation for

excellence and competiveness in terms of the product

and services it provides.

The strategies used by these two companies have proven to be effective for instance as earlier

stated YBC has customer retention rate of over 85%, while Peartree cleaning services has an

annual sales turnover in excess of £9m showing that both companies are doing exceptionally

well in the cleaning service market. .

New positioning strategy

Positioning is a strategy used by a company to design its products with distinct characteristics or

features that distinguish them from its competitors in order to give it a competitive advantage in

the market (Trout & Ries, 2001). This section proposes a new positioning strategy for the office

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cleaning service. Since the market for this service is almost saturated, ACL may consider

adopting the competitor positioning strategy which comprises claiming that their service is better

than their competitors. In addition, to claiming that, ACL should add more features to the service

(for instance carpet cleaning at half price as part of the office cleaning package) if it wants to

gain a competitive advantage.

Developing a new product and sustaining its competitive advantage

ACL is developing a new vacuum cleaner and plans on sustaining the product’s competitive

advantage within the market. For this to happen ACL needs to consider the following factors as

it develops the new product; relative advantages of the product, compatibility, ease of use, price

and existing standards and values (Porter, 2008).

Factors for sustaining

competitive advantage

Relative advantage ACL’s new vacuum cleaner should be of high quality and

posses additional features that stand out from competitors.

Compatibility The vacuum cleaner should be compatible with modern

technology hence acceptable to the market.

Ease of use Consumers should have an easy time using it. If so, the product

will be competitive and marketable.

Price The price of the vacuum cleaner should be reasonable and

affordable.

Existing standards and values The product should be environmental friendly.

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Distribution

Distribution is arranged to provide customer convenience by considering certain distribution

elements. These include; selection of the distribution channel, level of customer service and the

terms and conditions of distribution (Rolnicki, 1998)

Pricing

Companies often price their products and services according to their marketing objectives and

the market conditions (Alpert, 1971).

ACL’s Marketing

Objectives

Price Market Conditions Price

Survival: to survive in

the market when plagued

Low Price elasticity: the

degree to which

Low and high

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Selection of the distribution channel i.e. determining the type

of distribution channel to use; extensive or intensive distribution.

Level of customer service; delivery periods and methods of

transportation.

Terms and conditions of distribution with the distributors.

with over capacity and

intense competition.

consumers are price

sensitive or price

insensitive.

respectively.

Maximum current profit

and revenue: to

maximize sales profits.

High Competitors’ prices:

they affect how ACL

prices its products and

services.

High or low depending

on how the competitors

have set their prices.

Maximum sales growth:

to penetrate the market

Initial price is

usually low but

is increased

later on.

The economy A boom in the economy

means setting high

prices while a recession

means the opposite.

Market Skimming: to

skim the market.

High Government Laws set to

regulate pricing by

companies.

The prices should not

exceed what is

stipulated in the law.

Promotion

For a company’s promotional efforts to be successful, it is important to integrate them with the

company’s marketing objectives (Sandhusen, 2000).

ACL Marketing objectives Promotional activity

Build long lasting customer

relations.

Customer Loyalty

Public relations because it involves building and maintaining

mutually beneficial relationships between a company and its

publics.

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Product awareness and

securing a large market share

Advertising; it reaches the masses at low costs.

Customer satisfaction

Quality services to customers

Follow up sales

Personal selling and direct marketing; It is interpersonal enabling

a comprehensive presentation of a product to a client.

Increasing sales and profits Sales promotions; they serve as short-term incentives to

encourage increase in purchases.

The extended marketing mix

The extended marketing mix consists of; people, process and physical evidence (Kotler, 1980).

Below is an analysis of the extended marketing mix for the vacuum cleaner.

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The extended marketing mix

PeopleProcess

Physical evidence

PeopleThese are ACL's

salespeople.They should be

presentable, courteous and resourceful to

customers purchasing or

inquiring about the vacuum cleaner Process

The process of handling customer complaints on the vacuum cleaner, identifying their needs and the processes of

handling orders placed for the

vacuum cleaner

Physical evidenceThis is the physical

location of ACL. Consumers have high expectations when visiting the

company that produces their

vacuum cleaners

Marketing mix for two different segments of ACL

This section requires designing marketing mixes for two different segments in consumers

markets. The two different segments include; psychographic and geographic segments.

The psychographic segment marketing mix

Product After party cleaning service. This product is suitable for customers who are out

going and portray this kind of a lifestyle. The product features; dish and glass

washing, dusting and polishing furniture and all surfaces, sanitizing bathroom and

toilet facilities, vacuuming carpets, washing floors and rubbish removal

.

Place The company will directly supply the service by sending its cleaners to the clients’

residence.

Price The charge is £ 15 per hour per person

Promotio

n

Television advertising, sales promotion and direct marketing.

The geographical segment marketing mix

Product Office cleaning service (for offices all over the UK) This product is also suitable to

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consumers who prefer regular office cleaning.

Place The company will directly supply the service by sending its cleaners to the clients’

residence

Price Regular weekly office cleaning at £ 12.50 per hour.

Promotio

n

Television advertising, sales promotion and direct marketing.

Differences in marketing products and services to businesses and consumers

Businesses markets Consumer markets

Small in size: company invests in personal

selling and relative advertising.

Large: company invests in intensive mass

promotion.

Direct and shorter lines of distribution. Distribution channels may be direct or indirect

and often long consisting of two or more

intermediaries.

The buyers are sophisticated and highly trained

in purchasing.

Buyers are easily convinced about a product if

the advertising campaign is catchy and

educative enough.

Involves a complex buying process. Involves a simplistic buying process.

Consists of parties that influence the purchase

decision.

Individual purchase decision.

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Consists of complex products for instance;

computer programs.

Products are not complex; clothes.

Findings

The findings of this presentation are as follows; the psychographic and the geographical segment

marketing mix have been designed and are ready for implementation; the price, product, place

and appropriate promotion techniques have been presented. Second, the differences between

marketing to businesses and consumers have been discussed and pointed out that, business

markets are smaller compared to consumer markets which requires different marketing

strategies; that business markets require more direct and shorter distribution channels; that the

buying process by business markets is complex which is not the case for consumer markets; that

there are multiple buying influences in business markets, while in consumer markets, consumers

make individual purchase decisions; that products in business markets products are more

complex when compared to those in consumer markets.

Differences in international and domestic marketing of ACL

International Marketing Domestic Marketing

Involves producing, selling promoting and

distributing of ACL’s products and services

Involves producing, selling promoting and

distributing of ACL’s products and services in a

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in a global market. local market.

ACL will have a wider scope of endless

opportunities if it ventures into international

marketing.

The domestic market may become too saturated

because of high competition from similar companies,

causing ACL to incur losses.

It is more profitable. It is not as profitable as international marketing

especially due if the domestic market becomes

saturated.

Cultural, currency and language barriers that

may be present.

In domestic marketing ACL will not face any

cultural or language barriers.

Is risky for the company because its products

and services may not be well received

Is less risky because ACL has an existing customer

base

Huge financial costs Requires less financial resources

Different consumers who possess different

kinds of tastes and preferences.

The company deals with only one set of consumers.

Limitations of the recommended marketing mix

Psychographic segmentation is limited sue to the fact that is doe not account for motivation among consumers and the value structures which guides people behavior. Thus, for factor such as attitudes it will be difficult to segment due to their relatively diverse nature.

In this segmentation, it is difficult to differentiate the segment. This is because of the attribute such as attitudes. The marketing mix element price is different and this makes it difficult to segment the market. When it comes to promotion, it is also very difficult to segment since capturing the consumers is difficult. For example, advertising may not reach the intended audience since they have different attributes.

Geographical segment is also limited in place of distribution. Consumers are scattered which increases the costs of transporting goods to them. This also increases prices which may discourage consumers.

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Possibility of consumer s moving from one region to another is high. It may impact negatively on segments profitability. Segments in different regions may need customized promotion. This means travelling to their locations. This increases costs and make it unprofitable.

Planning managing and organizing the work

Justification of plan

The marketing mix plan was formulated after carefully investigating the products offered by

ACL and placing them in suitable segments. The psychographic segment marketing consists of

the after-party cleaning service because it seeks to attract consumers who have an outgoing

personality and lifestyle. On the other hand, the geographical segment marketing mix seeks to

attract customers from all over the UK who require office cleaning in their companies and

corporate organizations. In light of this, the distribution channel that was selected for both mixes

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Studying the assignment's requirments

Commencing on the work by refering to the course work and through research in the library

After completion, joining a group for the required presentation in class

Organizing and practicing individual presentation parts.

is the direct channel one because it is a service and cannot be separated from its provider

(inseparability). The prices set are trial prices to test how the products will perform in the

segments, while the promotion techniques i.e. television advertising, sales promotions and direct

marketing are the most effective if the company wants to reach the entire market. On the other

hand, the limitations of the recommended marketing mix can be solved by adding more products

in both segments for instance in the geographic marketing mix, industrial cleaning can be added

to make the segment synergetic. Moreover, the marketing mix should include the effect of the

product’s life cycle and rate of adoption on the product’s performance in the market. In addition,

the heavy promotional costs are an investment for long-term sales and profitability. Finally the

marketing mix should account for the factors influencing the prices set for instance; the

company’s marketing objectives or the prevailing market conditions.

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