MARKETING FOUNDATION LECTURES

Transcription

1 MARKETING FOUNDATION LECTURES LECTURE 1 INTRODUCTION TO MARKETING & MARKETING ENVIRONMENT LO1: OVERVIEW OF MARKETING & THE MARKETING PROCESS Marketing: the activity, set of institutions and processes for creating, communicating, delivering and exchanging offerings that have value for customers, clients, partners and society at large. It is used by large and small business, profit & non-profits, and the government. The activity, set of institutions & processes Way of doing business that puts the market at the heart of decisions For creating, communicating, delivering Developing a product that is promoted & distributed at the right place, time and at the right price. And exchanging offerings that have value for A mutually beneficial exchange. customers, clients, partners, and society at large. Marketing is conducted in a way that is mutually beneficial for customers/clients, partners in the supply chain, society, and the business. The marketing process Marketing is a new discipline, beginning in the 1960s. It has evolved since through the following stages: 1. Trade: throughout history, people have exchanged what they have for what they want. Core marketing ideas somewhat existed e.g. mutually beneficial exchange, but no formal marketing definitions existed as of yet. 2. Production orientation: The early 1900s technology and infrastructure grew. This meant that there was an increase in product range and volume, and demand for product was strong. Marketing was product orientated- marketer s offerings were largely determined by what could be made i.e. what was available. 3. Sales orientation: in the 1930s there was an increase in competition. This led to a market that had a sales orientation, which focused on increasing profits through advertisements and one-to-one selling. 4. Market orientation: the 1950s to late 1990s saw a substantial increase in product choices for customers. There were many similar products to choose from. Thus, the marketing approach changed from sales orientation to market orientation, where businesses analysed what potential customers wanted and then made their products according to the market s demands. 5. Social market orientation: businesses today face well informed customers who have a significant amount of choices when it comes to products. Thus, businesses now view the market not just as customers, but as society. This is shown through the effort and length that businesses go to incorporate sustainability into their operations and products. The marketing approach to business Marketing approach: an approach to business that puts the environment, society, customer/clients, & partners at the heart of all business decisions. Rather than which product to sell, businesses now ask which products will our customers value or like us to offer? Thus, marketers need to learn what customers, clients, their partners, and society wants. This is an ongoing process, as preferences continuously change. Therefore, marketers must use market research information to maintain their understanding. Marketers must be creative to develop new ideas- the best ones are able to offer something unique or special to customers. The marketing process The marketing process involves: 1. Understanding: understanding the market to create, communicate and deliver an offering for exchange. Businesses must understand: a) The market they re operating in, b) Their customers c) How they are currently situated. This involves undertaking market research, reviewing sales data, analysing current market environment, consumer, and business buying behaviour. 2. Create: once marketer understands the situation, he/she can determine what to create. 3. Communicate: once creation and testing is complete, marketer needs to communicate this offering to the market through mass media advertising, point-of-sale campaigns, etc. 4. Deliver: ensuring that the product is delivered and available, and quality of the product is being controlled. Deliver Understand Communicate Create

2 LO2: MARKETING EXCHANGE OF VALUE The aim of marketing is to develop mutually beneficial exchange. Exchange: the mutually beneficial transfer of offerings of value between buyer and seller. A successful marketing exchange involves: 1. Two or more parties, each with something of value that s desired by the other party 2. All parties must benefit from transaction 3. The exchange must meet both party s expectations in terms of quality, price, etc. Like exchange, value is a core marketing concept. Value: a customer s overall assessment of the utility of an offering based on perceptions of what is received and what is given. Value evolves continually and is unique for each individual. Value = Quality Price Value refers to the total offering. This includes all aspects of the business, such as: a) Reputation of organisation b) Employees c) Features of the product d) After sales services e) Quality f) Price The market Market: a group of customers with heterogeneous wants/needs e.g. geographic markets, product markets, demographic. There are different types of customers, and marketing is focused differently for each. a) Customers: people who purchase G&S for their own or other people s use b) Consumers: people who use the G&S e.g. children using shampoo. They didn t actually purchase the shampoo. c) Clients: customers of the products of not-for-profit organisations or social marketers e.g. customers of Medicare, Centrelink, public hospitals, law firms, and hair dressers. d) Partners: all organisations or individuals who are involved in the activities of the exchange process e.g. flat screen manufacturer is a partner to the supplier of flat screen TVs. e) Society: a body of individuals living as members of a community. LO3: ETHICS & CORPORATE SOCIAL RESPONSIBILITY Ethics Ethics: a set of moral principles that guide attitudes and behaviour. Ethics is subjective and depends on social, cultural and individual factors. Responsible businesses implement their own codes of conduct/ethics to help govern their actions and guide the decisions of those who work in the business. Law In addition to ethics, an organisation s conduct is governed by law. Law is society s attempt to ensure that organisations act in a way that is beneficial to society or at least acceptable. Business conduct is governed by the Competition & Consumer Act (Trade Practices Act), Privacy Act. Regulatory bodies include Offices of Fair Trading, Australian Competition and Consumer Commission (ACCC). Corporate social responsibility (CSR) Corporate social responsibility: the concept that businesses have an obligation to act in the interests of the societies that sustain them. This responsibility affects all business operations and involves all stakeholders, such as: a) Owners: business must generate long term wealth by acting profitably and sustainably. b) Employees: businesses provide jobs, ensure that wealth is shared, as well as reasonable working conditions. c) Customers and clients: businesses must attract and retain customers by offering products of value. d) Partners: businesses must act in a way that their partners can achieve their own business aims and meet their own CSR. e) Government: businesses must abide by laws and regulations. LO4: THE MARKETING MIX Marketing mix: the term given to a set of variables that a marketer can exercise control over in creating an offering of value for exchange. Various frameworks of the marketing mix have evolved, including: a) The 4Ps: product, price, promotion, and place/distribution b) The 5Ps: the 4Ps, and people c) The 6Ps: the 4Ps, people and processes d) The 7Ps: the 4Ps, people, processes, and physical evidence

3 Product Product: a good, service or idea offered to the market for exchange. Some products are branded. A brand is a collection of symbols such as name, logo, slogan or design intended to create an image in a customer s mind in order to differentiate a business from its competitors. Products are best understood as a bundle of attributes i.e. features and functions of a product that benefit the customer. Marketers understand that customers have needs and wants. When a customer has the purchasing power to buy what they want, the want is said to be a demand. Products can be categorised as goods, services or ideas. Price Price: the amount of money a business demands in exchange for its offerings. Price is a complex marketing decision, and must account for many factors including: a) Production, communication, and distribution costs b) Required profitability c) Partner s requirements d) Competitor s prices e) Customers willingness to pay Marketers must understand price and quantity to understand value from a customer s point of view i.e. their willingness to pay is what they re prepared to give in exchange for what they get. Promotion Promotion: the marketing activities that make potential customers, partners, and society aware of and attracted to the business s offerings. The product might be already established, new, modified, or informational/educational. Promotion is not just advertising. Many other organisations use different methods to promote e.g. loyalty schemes, trial products, and public relations campaigns. Place (Distribution) Distribution: the means of making the offering available to customers at the right place and at the right time. This is largely a logistics function. Logistics is the part of the marketing process concerned with supply and transport. Marketers need to understand how logistics impact their ability to deliver a product at the time and place that suits customers. Logistics: the science in ensuring products are in the right place at the right time in the right quantity. Supply chain: the various partners that contribute to the process of providing raw materials and services that go into delivering a product to the market. Businesses can sell products directly though catalogue, shop front, websites, etc. Distribution usually involves partners such as wholesalers and retailers. LO5: DESCRIBE THE MARKETING ENVIRONMENT Marketing environment: refers to all of the internal and external forces that affect a marketer s ability to create, communicate, deliver and exchange offerings of value. Factors and forces within the marketing environment can be classified into: a) Internal environment: refers to the organisation itself and the factors directly controllable by the organisation i.e. the organisation, people, and processes. b) External environment: refers to forces outside of the company that are not directly controllable by the company i.e. a business s micro environment and macro environment. Environmental analysis: process that involves breaking the marketing environment into smaller parts to better understand it. Internal environment Internal environment: the environment within an organisation that creates, communicates, delivers, and exchanges offerings of value, which is directly controllable by the organisation. The internal environment consists of: 1. The organisation 2. People 3. Processes Strength and weaknesses: internal factors that positively & negatively affect an organisation s ability to compete in the market. The internal environment is affected by personal and political natures of people who make it up, including senior management, middle managers, functional department e.g. marketing, sales, R&D, customer service, distribution/logistics, finance, employees, external vendors. External environment External environment: people and processes outside of the organisation and cannot be directly controlled. Marketers can only seek to influence their external environment. It consists of the micro environment and macro environments of a company. The process of outsourcing has blurred the lines between the internal and external environments. Opportunities and threats: external factors that positively and negatively impacts an organisation s ability to serve their market. Businesses seek to minimise threats and maximise opportunities.

4 1) Micro environment: forces within an organisation s industry that affect its ability to serve its customers and clients. An organisation s micro environment consists of: a) Customers & clients: marketers must understand the current & future needs & wants of their target market. They must: i) Understand what their customers value now ii) Be able to anticipate and identify changes in customer preferences, needs, and wants iii) Be willing and able to respond to changes iv) Be able to influence customer preferences b) Partners: marketers need to understand how their partners processes work, their missions and strategies, cost structure, and how they promote their offerings. Sometimes the balance of power is skewed. Partners include logistic firms, retailers, financiers, wholesalers, advertisement agencies, suppliers, etc. c) Competitors: marketers must ensure their offerings provide their target market with greater value than their competitor s. Therefore, they must seek to understand their competitor s marketing mix, sales volume, sales trends, market share, staffing, sales per employee, and employment trends. Types of competitive markets include: Competitive Market Type Attributes 1. Pure competition - Numerous competitors offering the same products - Products offered are undifferentiated - No buyer/seller can exercise market power - E.g. agricultural goods 2. Monopolistic competition - Numerous competitors offer similar products - Products offered are differentiated - E.g. laptops and computers 3. Oligopoly - Small number of competitors offering similar products - Products are somewhat differentiated - Significant barriers exist to new competitors entering the market - E.g. Australian supermarket industry 4. Monopoly - Only 1 supplier offering a product - Substantial, potentially insurmountable barriers to new entrants - E.g. government services such as roads and rail 5. Monopsony - Only 1 buyer - E.g. government is the only buyer of fighter jets in Australia 2. Macro environment: macro environmental factors include: a) Political: the influence of political forces on marketing decisions. Politics is directly relevant because: i) Businesses can lobby for favourable treatment at the hands of the government ii) Businesses can lobby for a light touch approach to regulation iii) Government and the bureaucracy make up a very large market iv) The ability of political issues to affect business s efforts at international marketing level. b) Economic forces: Factors that affect how much individuals & organisations can spend and how they choose to spend it, including income, prices, level of savings, level of debt and availability of credit e.g. currency fluctuations that affect the prices of exports. c) Sociocultural factors: the social and cultural factors that affect people s attitudes, beliefs, behaviours, preferences, customers, and lifestyles. They influence the value people place on products. One of the sociocultural themes to become a key issue for marketing today is sustainability. Demographics describe statistics about a population e.g. age, race, gender, ethnicity, education, marital status, and parental status. d) Technological forces: technology allows a better way of doing things. It changes the expectations and behaviours of customers and clients, and have a huge effect on how suppliers work e.g. efficiency brought by electronic payment. e) Law: law is legislation enacted by elected officials. Regulations are rules made under authority delegated by legislation. Internal People External Micro 1. Customers 2. Competitors 3. Industry 4. Parners Processes Organisation Macro 1. Technological 2. Sociocultural 3. Law 4. Politics 5. Economic

5 LO6: SITUATIONAL ANALYSIS Before marketers can create offerings for exchange, the must understand their current situation. Situational analysis: process involving the assessment of a business s current situation in order to clearly state where the company currently is. Together with Situational analysis combined with organisational objectives can be used to develop marketing planning. Marketing planning: the ongoing process of combining situational analysis with organisational objectives to develop and maintain a marketing plan that moves an organisation from where it is to where it wants to be. Situational analysis Where the company is Organisational objectives Where senior management thinks company should be Marketing plan Plan on how to get there Situational analysis Situational analysis includes the analysis of four areas: 1. Company analysis 2. Market analysis 3. Environmental analysis 4. Competitive analysis Company analysis Firm's goals and objectives Market share Service quality Positioning Operations and resources Marketing mix strategies HR policies and procedures Financial status Environmental analysis Political Economic Social Technological Legal/regulatory Situational analysis Market analysis Size Growth Customer segments Customer needs Buyer's behaviour Intermediates Competitive analysis Major competitors' goals and objectives Market place behaviour Market share Growth Service quality Positioning Operations and resources Marketing mix strategies Indirect competitors Marketing plan 1. Executive summary: brief overview of marketing plan. Outlines main features that ll help an organisation achieve its purpose. 2. Introduction: brief details on internal environment of an organisation e.g. history and size. 3. Situational analysis: more detailed section of plan. It includes an analysis of micro and macro environmental factors, synthesised to SWOT analysis. 4. Objectives: organisation s overall objectives and mission statement. 5. Target market: description of target market. 6. Marketing mix strategy 7. Budget 8. Implementation: how the plan will be put to practice 9. Evaluation: specific metrics used to evaluate success 10. Conclusion/future recommendations: summary of report and recommendations

6 Marketing metrics Marketing metrics: measurements to assess marketing performances. Measurements include: a) Return on investment b) Customer satisfaction c) Market share d) Brand equity SWOT analysis SWOT analysis identifies a business s: 1) Strength: attributes of an organisation that helps achieve its objectives. It is a company s competitive advantage and core competencies. Strength is internal and thus can be controlled by the company. It raises questions such as: What does your company do well in? What do your customers compliment you on? What makes your company stand out from competitors i.e. its competitive advantage? 2) Weaknesses: attributes that hinder the business s objectives. Weaknesses can be controlled by company, and is therefore an internal attribute. It raises questions such as: What doesn t your company do well in? What are the complaints from customers? What are the unmet needs of the sales force? What are the disadvantages faced by the company? 3) Opportunities: factors that could potentially be helpful to a company s objectives. They are external factors and cannot be controlled directly by the company. Examples of opportunities include: Emerging trends that fit company trends Customer/client preference changes Competitors don t do well in certain areas 4) Threats: factors that are potentially harmful to a company s objectives. Examples of threats include: What do your competitors do better than you in? Emerging trends that threaten the business LECTURE 2 MARKET RESEARCH LO1: IMPORTANCE OF MARKET RESEARCH IN THE MARKETING DECISION MAKING Market research: a business activity that discovers information of use in making marketing decisions. MR is essential in understanding the market and market research is only valuable IF the information it discovers can contribute to improving a company s performance. MR is not only about the micro environment, but the macro environment too. Market research informs many different types of marketing decisions, including: a) Market segmentation: what does the segment value? Segment s profile? b) Sales performance: why did we fail to meet sales target? How to improve? c) Product: product features, packaging, brand, product positioning d) Place: type of retailer, geographic region, online, partner s requirements e) Promotion: how much is needed to spend on ads? Which media should the company use? When should it advertise? f) Price: what is the price that should be charged? What are competitor s prices? g) Attitudes and behaviours: customer/client thoughts? What do they buy? When do they buy? Understand Because the business environment is dynamic and ever changing, the marketing model is a continuous cycle. It is always evolving in order to improve product. Therefore, market research is also an ongoing process. Marketing information systems (MIS): MIS are structures put in place to manage information gathered during the usual operations of a business. It is comprised of: a) Market intelligence e.g. sales representative reports, b) Customer service reports c) Customer complaints and compliments d) Competitor s actions e) Market research f) Internal reports e.g. accounting reports and sales reports. All of these information are communicated to marketing managers via decision support systems. In turn, marketing managers can access answers to their queries via the decision support systems. As a result, marketing managers plan strategies/decisions which equal the outcome. Deliver Communicate Create Figure 1: Market research sits in the understanding part of the marketing model

7 In order to ensure that the information gathered from market research is appropriate, these factors need to be considered before the company decides to undertake MR: 1. Relevance: MR must be able to address the problem at hand because it is expensive. Is there even a problem at hand? 2. Timing: MR is only useful if the information it generates can be analysed ahead of the time at which the marketing decisions need to be made. Therefore, company must consider when the information is needed by. 3. Availability of resources: MR should only be undertaken if it can provide reliable and valid results, which can only happen if adequate resources are devoted to it. 4. Need for new information: MR should not be conducted if the information needed is already available or the decision to be made does not need/require/will not benefit from the type of information MR can provide. 5. Cost-benefit analysis: cost of MR should be assessed against the benefits of its results. Market researchers have an ethical responsibility to their clients, employers, and those who participate in the research. Market research involves five major components: 1. Defining the research problem. 2. Designing the research problem i.e. research design 3. Collecting data in accordance with the research design 4. Analysing data and drawing conclusions 5. Presenting results and making recommendations. LO2: DEFINING A RESEARCH PROBLEM AND PREPARING A RESEARCH BRIEF Research problem: the question that the market research project is intended to answer. A clearly specified research problem will actually answer the question asked of it, while a poorly defined one will lead to research that does not generate the information required to make marketing decisions. As the research proceeds, the question may be redefined. Market research brief: outlines the research problem and describes the specific information required from the project. It specifies a timeframe, budget, and other conditions of the project. The brief will not necessarily propose a methodology/approach to the research question, but it will communicate the marketer s needs to the market researcher. LO2: OUTLINE RESEARCH DESIGN ISSUES Research design: the detailed methodology created to guide research project and answer the research question. RD must include a hypothesis (a tentative explanation that can be tested), or a research question and a description of the type(s) of research to be used. The three types of research include: 1. Exploratory research: research intended to gather more info about a loosely defined problem. This is used when management is uncertain about what actions should be taken and has little knowledge about the research problem. Exploratory research thus generates ideas and increases information e.g. focus groups. 2. Descriptive research: research solves a particular and well-defined research problem by describing the characteristics of the target e.g. 80% of customers like our product. Note that descriptive research provides statistics, but does not explain the why behind the statistic e.g. it does not explain why 80% of customers like our product. 3. Causal research: assumes that a particular variable causes a specific outcome, and then, by holding everything else constant, tests whether the variable does indeed affect the outcome. The different types of research are not mutually exclusive, and the best projects usually use a combination of research types. Researchers should be careful between descriptive and causal e.g. just because 80% of customers like our product, doesn t mean that this causes them to actually buy the product. Data There are 2 types of data: 1. Secondary data: data originally gathered/recorded or another purpose other than to address the current market research problem. It is cheaper and more quickly available and accessible. Marketers should always assess whether their question can use secondary data or not. 2. Primary data: data collected specifically for the current market research project. Data mining: processing large data sets to identify patterns and trends not obvious or even discernable by observation. Text mining goes through words found through the media to observe what customers think of our product, brand, opinions, etc. There are 2 main types of research: 1. Quantitative research: research that collects numeric data and can be analysed statistically. Quantitative research is usually used for descriptive or causal research. It is useful in: a) Assessing market size b) Identifying market segments c) Predicting the success of a proposed marketing campaign d) Finding out about customer perceptions of existing products. Quantitative market research approaches include experimentation, observation, neuroscience, surveys.

8 2. Qualitative research: research intended to obtain rich, deep, and detailed info about the attitudes and emotions underlying the behaviours that quantitative research identifies. Although it gives a deeper understanding, it is harder to measure. It is useful for investigating reasons behind behaviours, and is used in exploratory research. It is useful in: a) Understanding customer needs and wants b) Evaluating new/potential products, or promotional campaigns c) Investigating attitudes and emotions behind behaviour Techniques include observations, interviews, and focus groups (needs wavers and incentives). In addition to deciding on a method, we must decide on participation through sampling e.g. are we going to use probability sampling where every member of the population has an equal chance of being selected in the sample (stratified sampling, random sampling) or are we going to use non-probability sampling where there is no way of knowing the change of a particular member of population being selected (quota sampling, convenience sampling). Sampling error is the extent to which results from our sample differ from the results of the population. LO4: KEY PRINCIPLES OF DATA COLLECTION, ANALYSIS AND REPORTING Data collection Data must be collected according to the methods specified in research design. Collection process can be in-house or outsourced Time and financial resources are limited. Therefore, budgeting and scheduling need to be planned and managed in order to ensure that the most benefit is derived from the research investment. Tools exist to help project managers maintain control of projects e.g. Gantt charts and critical path method. A Gantt chart is a visual representation of who is doing what and when. Data analysis, drawing conclusions & making recommendations Data analysis: filtering and reporting the collected data. Depending on how data was collected, quality control may be necessary in order to eliminate invalid data. Once cleaned, data can be analysed. Quantitative analysis: converts numerical data into knowledge that can be used to inform decision making. Qualitative analysis: reduction and coding are available to interpret and organise qualitative data to allow meaning conclusions to be drawn. a) Reducing: reducing qualitative data categorises concepts and key variables according to their properties or dimensions. b) Coding: developing a series of propositions about the relationships between key concepts identified. Conclusion: should state what the data has shown in terms of original research question. Recommendation: will suggest one or more courses of future action. Recommendations are drawn upon the conclusions made. Reporting Presenting research findings to enable decision makers to use the information. Written reports should include a cover page, executive summary, contents, introduction/background, methodology and findings, statement of limitations, conclusions and recommendations, and an appendix.