WHAT IS MARKETING? Construct a simple flow diagram highligh5ng the key steps in the cogni5ve, emo5ve and prac5cal decision making process.

Transcription

1 WHAT IS MARKETING? Ac5vity 1: You are in a supermarket. You wish to buy a bo4le of wine. How do you make your decision / choice? Is this ra=onal? Indeed, what is ra=onal? Construct a simple flow diagram highligh5ng the key steps in the cogni5ve, emo5ve and prac5cal decision making process. h?p://en.wikipedia.org/wiki/marke5ng In a compe**ve world, as clients or consumers, we usually have choice. Indeed, o8en, there are so many op*ons that you are confronted with what I refer to as a tyranny of choice, which is some*mes welcomed, but o8en*mes not! Markets are the actual places and spaces from which you can actually transact a purchase or a sale. Markets can be physical or increasingly virtual. Marke5ng is the means by which you aim to inform poten*al buyers of your existence, and persuade them that you are able to provide them with products and services that sa*sfy their needs, wants or desires. 1

2 MARKETING ORIENTATION Ac5vity 2: Are you supply or market oriented, or indeed, both. Briefly explain. Yellow Boxes Useful web- based informa*on You can cut and paste the URLs into a browser to use. h?p:// _jgriqq h?p:// h?p:// Supply or provider orienta5on is where you provide goods and services in a way that you determine and dictate, perhaps not having to take into account the needs, wants and desires of customers or clients. Marke5ng orienta5on is where you design your products and services in accordance with your knowledge and understanding of your chosen market, and where you seek to gain compe**ve advantage through offering a range of goods or services in a way that will akract these buyers. Remember, you cannot sell all things to all people, all of the =me you must operate within defined resource constraints Prof C J Birch, University Greenwich Business School

3 MARKETING MIX Ac5vity 3: As a consumer, what factors do you take into account when making a buyer decision? Can these be ranked in terms of priority and importance? If so, is the ranking the same for all poten=al transac=ons? Make a list of the key factors that you take into account, and think about their rela=ve importance. Tip: Google any of the header =tles on each slide there are excellent addi=onal support materials on the web, including YouTube. Examples below: h?p:// h?p://en.wikipedia.org/wiki/marke5ng_mix h?p:// The so- called marke5ng mix comprises a range of variables that you control, to a greater or lesser extent, and which you need to consider when planning who your market is, why they would choose to buy from you. The following slides provide you with a basket of marke*ng variables which will help you to structure decisions. Tradi*onally, these begin with the leker P and are therefore referred to as the x P s of Marke*ng. I use x because in most text books, 4 are commonly used. I am going to use more than this to reflect the ever- evolving economic, social and technological environment. This, I hope, gives a value- added to studying this module of work! That is a term that we will return to later. 3

4 DISTINCTIVENESS Ac5vity 4: Before we move on, quickly list, in rank order, what you think your USPs are. Addi=onally, and we will come back to this what are the key characteris=cs of your market? Again, list these down. Are they constant, or changing? h?p://en.wikipedia.org/wiki/unique_selling_proposi5on Perhaps the most important thing that you need to remember is WHY YOU? We live in a society where choice is o8en expected, but as consumers, we then need to narrow choice down applying criteria that are important to US. In order to do this, you need clear and explicit differen5ators that make you stand out from the crowd. In marke*ng terms, we refer to these as UNIQUE SELLING PROPOSITIONS or USPs. Another marke*ng fundamental is that the overall market is too big for one person / company to target unless you are Google! So, you have to narrow things down and your USPs will enable you to do this more effec*vely. 4

5 MARKETING P s Ac5vity 5: Think through a few things that you have purchased recently. On hindsight, did you act calculatedly, spontaneously or indeed whimsically? Can you recollect your emo=ons / feelings at the =me? On hindsight, would you do the same again? What factors influenced you? Remember, you might think about very small purchases as well as larger ones! Make a few notes on this. h?p:// The following slides are going to take you on a personal journey though a number of what I regard as cri*cal marke*ng variables. To get the most out of this, could I ask you to simultaneously wear two hats as both a provider and consumer of goods and services. Marke5ng is both art and science. Marke*ng ac*vity needs to be founded on both qualita*ve and quan*ta*ve assump*ons. Human beings act ra*onally and irra*onally, and indeed, this in itself is subjec*ve! We can act predictably and unpredictably, consistently, or inconsistently, and whimsically or planned. Effec*ve marke*ng needs to be cognisant of this. 5

6 1: PRODUCT Ac5vity 6: Take your cell phones as a case study. What led you to select the one that you have? If you renewed your contract tomorrow, what would impact on your selec=on? Also, ask yourself what are you buying now with a cell PHONE? I capitalise deliberately. Read Ted Levi4 s seminal work Marke=ng Myopia you will find via Google. Very informa=ve and 50 years old! The product the thing that you are trying to sell has to be at the heart of the marke*ng proposi*on. This could be tangible, intangible or indeed a service. Indeed, it could be a combina*on of all of these. It is very important to consider this though Buyers do not buy products nor services per se, they buy the BENEFITS that they bring. Features and func*ons of themselves mean likle it is how they help the buyer that makers. And remember the tyranny of choice too many features and func*ons can confuse and complicate LESS can very much be MORE! It is also worth thinking about the AUGMENTED product (next slide) such as a8er sales care, design etc. These are VALUE- ADDED s which differen*ate beyond the direct product. 6

7 1a: AUGMENTED PRODUCT Example of whole product AUGMENTED PRODUCT Hardware USP poten5al Sohware Support follow- up warranty brand ACTUAL PRODUCT CORE PRODUCT core benefits delivery convenience Ac5vity 7: What is your augmented product? Are you and your customers clear about this? Does your value proposi=on reflect this? features installa5on Prof C J Birch, University Greenwich Business School hkp:// product.asp#axzz1oia8mgrg

8 2: PRICE Pricing is important and there are many things to consider in senng this compe*tors prices, local trading condi*ons, availability of subs*tute products etc. When comparing with others, be sure to compare like with like, taking into account the augmented product value- added s. Ac5vity 8: How do you set prices? Perhaps more related to retail lines than prescrip=ons Clearly price has to relate to cost, so it is essen*al that you understand your cost base fixed (overhead) costs and direct (variable) costs. Price will be made up of direct cost + overhead alloca*on + profit. Combina*ons of pricing tac*cs can be used: However, there is more to pricing than simply taking a cost+ approach Psychological pricing (e.g. 2.99) Perishable pricing (near sell by dates) Discounted prices (volume, or good customers) Value- added pricing (based on addi*onal augmented benefits) Marginal pricing based on absorbing under- used capacity to spread overheads 8

9 3: PLACE Ac5vity 9: How do customers / clients access your products? What are your distribu=on outlets? How much thought goes into how you use space? Are you clear on the income generated from the range of ac=vi=es that you provide? Do you have an online presence informa=on or transac=onal? Could this be useful? Place refers to where your products / services can be bought from. This could be a retail unit, a mobile unit, a partnership arrangement or increasingly, online. Choosing the right distribu*on channels is cri*cal in terms of your route to market, and it takes much thought, planning, and poten*ally, investment. Aligned to place will be packaging, presenta*on, display etc, all of which are cri*cal in the buyer decision process. Remember that space is valuable, and a significant overhead, and therefore needs to be op*mised to generate income streams. Supermarkets know the income derived hourly from specific shelf space! 9

10 4: PROMOTION We have discussed what, how much and where? You then need to consider how you communicate with exis*ng and poten*al customers in a *mely, affordable and sustainable way. There are a range of marke5ng communica5ons *ps and techniques available to help you promote your business. The next two slides highlight the main communica*ons channels, and you need to consider what, at which *me, and why, is most appropriate to your client communica*on plan. There is rarely a one size fits all solu*on. The AIDA model provides a good theore*cal founda*on around which to base your plan. Tradi*onally, there have been 5 primary channels of MARCOMS, but SOCIAL MEDIA has now added a cri*cal sixth. This links in to par*cipa*on, personalisa*on and percep*on P s which will be discussed later. Ac5vity 10: What marke=ng communica=ons do you use in your business environment? Are these effec=ve? How do you know? h?p:// 10

11 MARKETING COMMUNICATIONS Awareness Interest Desire Ac*on Channel Sender Message Receiver 11

12 MARKETING COMMUNICATIONS Awareness Interest Desire Ac*on Channel Sender Message Receiver 12

13 5: PROCESS Business processes are opera*onal hygiene factors. Customers o8en don t no*ce them when they are there, and working well, but they they soon let you know if they are not. Most people don t like queuing or wai*ng, so any means to reduce this is worthy of considera*on. The important thing is to recognise poten*al issues and to have con*ngency plans in place for when they are needed, based on clear PRIORITISATION of resource. In terms of transac*onal websites, there must be a means and process to make contact, to pay, to post comments etc. Well designed and func*oning processes can provide great customer sa*sfac*on, and provide a source of loyalty, repeat purchases and good word- of mouth recommenda*ons. And conversely.!! Ac5vity 11: Think through a purchase that you have made where the experience / process was (a) good (b) bad what was the immediate and longer term impact? In the context of your environment, are your business processes cost efficient but also, customer effec=ve? 13

14 6: PHYSICAL Ac5vity 12: Think though how large supermarkets layout their stores. They make space management as much of a science as an art. Do you pay as much a4en=on to detail as them? Do you collect data in a way that can guide your decision process, and track changes that may be taking place? Physical assets represent significant fixed cost, and a substan*al investment. Space is expensive and valuable! It is therefore cri*cal to commercial success that you op*mise this based on volumes, margins and safety / security. The psychology of buyer behaviour, in the context of a marke*ng orienta*on, is an essen*al variable and you need to understand your customers, their habits and other behavioural nuances. It is essen*al to know the value that you get back from specific ac*vi*es on a s per m2 basis if you can and also remember that some*mes, to change things around can provide a s*mulus / catalyst to changing behaviours. 14

15 7: PEOPLE From a marke=ng perspec=ve, see people as your essen=al customer- facing asset. This is a durable source of compe==ve advantage that is very hard for compe=tors to copy. Ac5vity 13: Are you making the most of your people talent from a marke=ng perspec=ve? How be4er might you do this? It has been said that the most enduring source of compe**ve advantage is your people and talent. Hotels put some of their most able staff on Recep*on, which is the hub of customer contact. In terms of new product, process and market develop, it is usually talented, visionary, crea*ve and innova*ve people that design new ideas and see through effec*ve implementa*on. People also represent a huge cost investment. On that basis, as with physical resources, it is mission cri*cal that you find ways to extract maximum value from them and I would suggest in general, carrots are beker than s*cks! Marke5ng is a human ac5vity never forget that. 15

16 8: PARTICIPATION Ac5vity 14: How has Trip Advisor changed the decision process of the Hotel Industry? Can you think of ways that you can be4er engage with your supply chains, exis=ng and poten=al customers using a variety of channels? There is an old saying that you can sell anything once. Winning new customers is more difficult and expensive than keeping old ones. REPEAT business based upon customer loyalty and trust is literally worth its weight in gold. Yet so many businesses take exis*ng customers for granted key *p don t! There are many ways of rewarding exis*ng customers see augmented product but one modern way is on- going engagement through ac*ve par*cipa*on. Increasingly, this is through clever use of social media. And this can be a double edged sword, so take great care BUT ignore at your peril! Customers now expect to be involved at a level that suits them! Word- of- mouth now has virtual poten5al! 16

17 9: PERSONALISATION Ac5vity 15: Do you provide personalised goods and services to your clients and customers? If so, list these and consider the cost- benefit of this, and the value- added that it provides. Think of this in the context of the augmented product. As an example, think through how mobile phone tariffs have changed over the last ten years what is a common feature? Bog- standard used to be, and some*mes s*ll is, what supply oriented providers offer. We now live not only in a world of greater choice, but one of heightened expecta*ons and one where we like to be seen as an INDIVIDUAL, with op*ons and choices that fit our specific needs. The words BESPOKE and UNIQUE, are commonplace now, implying that mass produced, one- size fits all is out, and personalised, tailored solu*ons in! A plethora of new processes and technologies have made individualisa*on more commercially feasible, and this is now o8en a client expecta*on non- nego*able! 17

18 10: PERCEPTION Ac5vity 16: Make notes on how you perceive that your customers perceive you! Then cleverly try to test this by asking them! This direct customer research might be the most useful thing that you have done, and underpin so many marke=ng decisions that you need to consider. If nothing else, marke*ng is as much about crea*ng the right percep*on as the reality itself as customers o8en buy first *me especially on perceived benefits. Of course, to get a repeat sale, you must DELIGHT them and make the percep5on an absolute reality. On that basis, you need to be aware of how the company, brand, product and service are perceived by both exis*ng and poten*al buyers Is this percep*on what you want? If so, fine, you can build upon it, if not, you need to have a plan in place to change it. Never under- es*mate the power of percep*on, recognise that it can and will change, and that you can PRO- ACTIVELY influence and manipulate. 18

19 11: PROJECTION Ac5vity 17: Consider the data that you (a) use and (b) could use to help you make commercial decisions demographic (local, regional, na=onal, planning (housing) applica=ons, compliance and regulatory, changing lifestyles, expecta=ons and aspira=ons etc. Do you record / track customer ac=vity (through a customer rela=onship management process, for example)? More fundamentally, do you make data and informa=on based decisions and if not, is this wise? Thinking ahead The marke*ng environment is incredibly dynamic and fast moving. Tastes, fashions and choices change frequently. And of course, marke*ng some*mes drives this dynamic! What is important, in this context, is that you do try to crystal ball gaze, to an*cipate what opportuni*es and threats the future might bring. We can never totally control our own des*ny in our complex world, but we can influence and prepare, based on knowledge, informa*on and feelings that you may have. We can then be pro- ac*ve and try to exercise a likle more control over what, when and how we do things. Investment and con*ngency planning are now vital survival tools. Collect, collate and analyse data to enable informa*on- based decisions. 19

20 12: PRESENTATION Ac5vity 18: In the retail environment, presenta=on is cri=cal, in terms of op=mising space u=lisa=on and a4rac=ng a4en=on. How much =me, effort and imagina=on goes into this? Who does it? what is the decision process? Extend physical presenta=on to virtual are you presen=ng yourself to as wide an audience as possible, using technology enhanced solu=ons? Does this fit into your brand iden=ty and sit comfortably with your brand values? We live in an increasingly visual age. Percep*on is very much influenced by how you present yourselves, and thought needs to be given to this. To start with, you need to be clear on how you want to be seen the image that you want customers to have of you having worked that out, you can then DESIGN solu*ons in that bring presenta*onal benefits that complement and add value to your business. This can include colours, layout, feel etc. One VERY important thing People operate around 5 senses SIGHT, SMELL, SOUND, TOUCH and TASTE. Any effec*ve presenta*on will take account of these at the design stage. 20

21 13: PSYCHOLOGY Ac5vity 19: Do you recognise customers as individuals, and if so, do you tailor your approaches to them? How do they respond to this? Is there anything that you can do using impulse purchases to increase foocall and throughput? Try to get into the mindset of a customer. An*cipate what they are thinking, feeling and experiencing. Many will behave differently in a given situa*on, and if this can be recognised, then the way they are handled can materially influence and support them in making the right and best choice. The following two slides illustrate through two simple models the process that a buyer might go through, dependent on the level of risk that they perceive in the decision. Your sales and marke*ng approach and tac5cs should materially be influenced through recogni*on of the buyer decision process. 21

22 A SIMPLE MODEL OF BUYER BEHAVIOUR NEEDS / WANTS / DESIRES An*cipate BLACK BOX Informa*on ACTION Choice FEEDBACK LOOP Engagement Marke*ng ac*on at each stage to support and influence the buyer choice h?p:// 22

23 Post purchase behaviour Purchase decision Evaluate op*ons Informa*on search Need recogni*on 23

24 LEVELS OF INVOLVEMENT Improve differentials Hi involvement Hi value Information Lo involvement Lo value Impulse Increase engagement The level of perceived risk and interest determines the approach that a poten*al buyer takes prior to purchase. The higher the involvement, the more informa*on that is required, and the more important augmented benefits are, such as a8er- sales care and supplier reputa*on. Impulse buys tend to be lower value, and engagement is influenced by SENSES. The smell of a bakery, for example! 24

25 Many differen*als Few differen*als Hi- Involvement COMPLEX BUYER BEHAVIOUR (INFORMATION) DISSONANCE REDUCING BUYER BEHAVIOUR (VALUE- ADDED) Lo- Involvement VARIETY SEEKING BUYER BEHAVIOUR (NOVELTY) HABITUAL BUYER BEHAVIOUR (PRICE) MODEL OF INVOLVEMENT Prof C J Birch, University Greenwich Business School

26 14: PROMISE a brand is a promise a broken promise is a broken brand 26

27 BRAND Ac5vity 20: Do you have a brand? If not, why not? If so, quickly map out your brand promise and underlying values. h?p://en.wikipedia.org/wiki/brand Large companies spend a fortune on developing their brand, with a clear promise and underpinned by values akuned to their market segments. Marcoms are used to build brand awareness and ins*l the values into the sub- consciousness. Ul*mately, the value of the business lies in the brand. O8en, smaller companies don t think about brand at all too expensive BUT they should, and it doesn t need to be costly. Having been through this module, you should now be in a posi*on to develop and nurture a brand for yourselves which adds value in terms of profit, cashflow and company value. The intangible value of brand should never be under- es*mated. 27

28 MARKETING RESEARCH Ac5vity 21: Have you systema=cally collected marke=ng data before If so, was it worthwhile? Is there an occasion that you wished you had done this before doing something? Find out what your customers think about a specific aspect of your business, and work out an approach by which you can gather the data. h?p://en.wikipedia.org/wiki/marke5ng_research You need to do the right things, and then do them right! It is all too easy to think you know what you are doing, and why, but for this not to be based in evidence or reality. So, before moving ahead, stand back and do a bit of inves*ga*on finding out tes*ng ideas on would- be buyers and evalua*ng their reac*ons and comments. This does not need to be expensive and it does not need to take forever. At the very least, it will quickly iden*fy really bad ideas and the sooner you find out, the beker in terms of *me, energy and money! Data collec*on can be quan*ta*ve and / or qualita*ve, and there are many methodologies that can be deployed. The important thing here is to ask the ques*on do I know enough to progress?! 28

29 SEGMENTATION, TARGETING and POSITIONING (STP) You cannot sell all things to all people all of the *me. The global market is just too big and diverse to make this economically viable or desirable. Therefore, you need to choose who you want to target your customers, and by what criteria. Almost all businesses do SEGMENT their market break them down, and then TARGET specific groups / individuals within that segment. Through use of the marke*ng mix, they try to find a compe**ve place in the market to whom their augmented products or services are valued. This is NICHE marke*ng. Markets can be segmented by: Geography Demographics Lifestyle Socio/Cultural User Behaviour Or a combina*on of these h?p://en.wikipedia.org/wiki/market_segment Ac5vity 22: Who are your compe=tors, and how do you choose your market? 29

30 SUMMARY OF MARKETING MIX PROMISE psychology planning percep5on projec5on presenta5on physical people par5cipa5on personalise product price place promo5on process Prof C J Birch, University Greenwich Business School

31 CREATING YOUR MARKETING PLAN Ac5vity 23: Using the knowledge and insights that you have gained from this, and possibly other units of work, I would now like you to drah an outline marke5ng plan for your business. A useful framework to do this might be: 1. Overview of your business and the business environment in which you operate (poli*cal, economic, social, technological, environmental) 2. Your strengths, weaknesses, opportuni*es, threats, key risks 3. Your Marke*ng mix (by component) 4. Your Marke*ng Communica*ons mix 5. Your brand and brand values 6. Where you would like to be in 24/36/48/60 months *me 7. What you intend to do to make this happen 31

32 Mul5- choice test (5ck the best response) 1. Marke*ng orienta*on infers 1. You decide what you want to supply to the market 2. You provide what your customers want 3. You sell from a great loca*on 4. You develop new markets 2. The marke*ng mix is 1. A mixture of markets 2. A mixture of customers 3. A set of variables that marketers use to plan 4. A variety of products that you sell 3. A market is 1. A square in an old town 2. A place that links poten*al buyers and sellers 3. A supermarket 4. An informa*on system Prof C J Birch, University Greenwich Business School

33 4. The augmented product is 1. Addi*onal features that add value to the core product 2. A subs*tute or alterna*ve product 3. A second rate product 4. A product life cycle extension 5. Personalisa*on infers 1. Being nice to people 2. Focusing on benefits 3. Giving added- value 4. Tailoring a product or service to user needs 6. Market Segmenta*on is 1. Comparing yourself to compe*tors 2. Dividing a product into its component parts 3. Defining a group through specific characteris*cs 4. Global marke*ng Prof C J Birch, University Greenwich Business School

34 7. Market posi*oning is 1. Crea*ng niche markets 2. Where you locate your shop 3. The opposite of market segmenta*on 4. Where you place yourselves in rela*on to compe*tors 8. A USP is 1. An ultra sensory percep*on 2. An un*mely specified problem 3. A unique selling proposi*on 4. A useless specialist product 9. The Marke*ng Black Box is 1. A marke*ng safety device 2. The process through which buyers make decisions 3. A special device kept in the marke*ng department 4. A marke*ng game 10. Marketers see brand as 1. A pain 2. Expensive 3. A promise 4. A principle Prof C J Birch, University Greenwich Business School

35 Deeper ques5ons: 1. Define the term marke*ng mix. 2. What is marke*ng orienta*on? 3. Briefly outline your compe**ve environment. 4. List the most important 10 marke*ng mix P s to your business 5. What is your business promise? 6. What are your key and core brand values? 7. What is STP? Briefly explain referring to your environment. 8. Explain what your understand by MARCOMS, and give examples that you use. 9. What is the buyer black box? How in psychological terms might less be more? 10. How can you encourage impulse purchases in the context of your environment? Should you? 11. Describe how you might apply these marke*ng concepts to your future business planning process. Prof C J Birch, University Greenwich Business School