Marketing*Fundamentals! Topic 1 - Introduction to Marketing Fundamentals Marketing* Marketing is a social & managerial process by which individuals & groups obtain what they need and want through creating, offering & exchanging products of value with others. Micro marketing is how an individual organisation directs its marketing activities and allocates its resources to benefits customers. Macro marketing is the study of the aggregate flow of a nations G&S to benefit society. In a business context, Marketing is process by which firms create value for customers & build strong customer relationships in order to capture value from customers in return. Utilities refer to the customer value received by users of the product:! Place accessibility to potential customers (convenience)! Time product available when needed (convenience)! Possession created when ownership is transferred to the buyer! Image the emotional value that the customer attaches to a brand or product! Information created by informing prospective buyers that a product exists The*Marketing*Process*1*Overview* 1. Understand the Marketplace, what are the customer s needs, wants & demands? 2. Design a Customer Driven Marketing Strategy meet customer needs 3. Construct an Integrated Marketing Program that delivers superior value (perceive sell to the mind ) convey information 4. Build Profitable Relationships & create Customer Satisfaction 5. Capture Value from customers to create profits & customer equity (potential future revenue over a lifetime) 1.*Understanding*The*Marketplace*1*Needs,*Wants*And*Demands* Needs, Wants & Demands - Marketers use focus groups, customer clinics (qualitative), quantitative research (large scale), feedback, interviews etc. to gain and understanding of their targeted customers.! Needs Not formed by society/marketers. Needed to live. A state of felt deprivation of some basic satisfaction.! Wants Desires for specific satisfiers of the deeper needs. Constantly shaped & reshaped by social forces! Demands Wants for specific products that are backed by the ability & willingness to buy Market Offering A Market Offering is a combination of products, services, information or experiences offered to a market to satisfy a need/want. Products,*Value*And*Satisfaction* Customers are value maximisers; their satisfaction is linked to value. Satisfaction leads to increased loyalty & positive word of mouth which ensures repeat/new customers. Competitors will try to alter customer value perceptions! Product anything that can be offered to satisfy a need or want! Value perceived benefits gained from having or using the product LESS the cost of obtaining it! Satisfaction the level of a person s felt state, due to comparing a products perceived performance & expectation
Exchange,*Transactions*And*Relationships* Exchange is a way to obtain desired goods & services by offering something in return. Exchange creates value as each party willingly accepts the offer (they see value in doing the exchange). Repeat transactions are brought about by delivering superior value which can create long term relationships & loyalty. Conditions required for exchange include:! There must be 2 parties! Each must have something to offer! Each must be willing to deal & free to decide! Each must be able to communicate & deliver 2.*Designing*a*Customer*Driven*Marketing*Strategy* Marketing*Management* Marketing Management is the 'art & science of choosing target markets & building profitable relationships with them. The aim is to find, attract, keep & grow target customers by creating, delivering & communicating superior value. Marketing management also involves managing demand (customers). Losing a customer is equal to losing a lifetime stream of purchases. What customers will we serve (segmentation & targeting) & how can we best serve targeted customers (differentiation & positioning) The 5 Marketing Philosophies/Concepts* 1. Production Widely available & low cost G&S, useful when D exceeds S, or when general product costs are high (cars) 2. Product emphasis on high quality, innovative, and high performance goods & services. Still need to price, place effectively, hence this philosophy is flawed. 3. Selling emphasis on aggressive selling/promotion efforts. Consumers under buy without a serious selling effort. Very useful for marketing unsought goods e.g. blood donations 4. Marketing Organisational success depends on determining needs, wants & interests of target market & delivering the desired satisfactions more effectively & efficient than competitors.! 4 Pillars target market, customer needs, coordinated marketing & profitability 5. Societal Marketing Organisational success depends on determine needs, wants & interests of target market. Than deliver the desired satisfactions more effectively & efficient than competitors to enhance the consumers & society s well being. E.g. J&J would rather take a loss than ship a bad batch of product.! 3 Pillars company profit, customer need/want satisfaction & public interest 3.*Preparing*an*Integrated*Marketing*Plan* To deliver on a value proposition a firm must:! Product (Differentiation) Develop a need/want satisfying market offering (quality /design/sizes/features/packaging)! Price How much to charge (strategies, methods, discounts, list prices)! Promotion How to communicate to & persuade the target market to buy (advertising/personal selling/direct)! Place How to distribute to make the product available to the target market (logistics, channel & demand chain mgmt)! People Developing relationships via good service! Process Possibly involve customers in the process of creating & enjoying experience (e.g. custom made)! Physical Evidence
4.*Building*Customer*Relationships* Customer Relationship Management (CRM) is is the process of building & maintaining profitable customer relationships by delivering superior value & profitable satisfaction [4]. CRM involves acquiring initial customers, keeping them (milk a lifetime value stream) & obtaining new customers.! Customer Perceived Value - Customers evaluation of the difference between perceived benefits & all costs of the offering, relative to those competing offers! Customer Satisfaction - The extent to which a products perceived performance compares to the buyer s expectations! Relationship Level - Targeting fewer, more profitable customers selective relationship management! Transactions --> Repeated Transactions --> Long Term Relationships --> Buyer-Seller Partnerships --> Strategic Alliances --> Network Organisations --> Vertical Integration.! Basic Relationship Low Margin, High Volume Strategy! Deep Relationship High Margin Strategy Selective Relationship Management is when companies relate with more carefully selected customers in a deeper & more interactive way to enhance profitability [5]. Loyalty can grow from special offerings, or by becoming more interactive via direct marketing. Customer Managed Relationships are relationships in which customers empowered by technologies/methods interact (involve themselves) with firms to shape their relationships with brands [6]. Partner Relationship Management is working with partners both inside & outside the firm to deliver superior value to the customer. 6x cheaper to retain customer than to attract a new one. [7] 5.*Capturing*Value*From*Customers* Firms must create customer loyalty to ensure a growing share of customer (share of purchases in a product category - i.e. market share) leading to higher customer equity (combined customer lifetime value), provided, the firm builds the right relationships with the right customers (efficient, effective & higher long term profitability). It is important to remember that if a firm loses a customer it loses the lifetime customer value. Marketing*Challenges*and*Changes*Of*Today*! Challenges! Uncertain Economy Balance brand s value proposition with current times while enhancing long term equity. Must not damage brand image & LT R/Ships. Current emphasis on value for money, practicality & durability! Globalisation Required to adapt to different environments, acquire a global view of competitors! Technological Dependence New range of communication & relationship building tools! Sustainable Marketing Consumerism/Environmentalism movements, must deliver value in a responsible way! Ethics, environmental issues! Non Profit Marketing, Changing Landscape! New Goals Maximise Quality of Life, Choice, Consumption & Satisfaction! Perceived Bad Aspects Wasteful, Materialism, Deception, Planned Obsolescence, Invasion of Privacy
! Who it will serve (segmentation & targeting) &! How (differentiation & positioning). Guided by a marketing strategy, a marketing mix can be created product, price, promotion, place, people, physical evidence & process. To determine the best marketing mix, marketing analysis, planning, implementation & control is used. Marketing*Segmentation* Market Segmentation is the process of dividing a market up into distinct groups of buyers who have different needs, characteristics or behaviours, and who might require separate products or marketing programs. A Segment is a group of consumers who respond in similar way to a given set of marketing efforts.! Demographic, Psychographic (Attitudes), Behavioural Factors Market*Targeting*1*Who* Market Targeting is the process of evaluating each market segment s attractiveness & selecting one or more segments to enter (where is can generate the greatest customer value & sustain it over time). Niche s may be targeted specialise in serving a segment if a company has limited resources &/or larger competitors overlook the segment. After entering a single segment (e.g. Nike Running), successful companies seek full market coverage via offering a range of products to meet the needs of each segment. Market*Differentiation*and*Positioning* *How*To*Create*Customer*Value* After entering a segment, it must differentiate its product. Positioning is arranging for a product to occupy a clear, distinctive & desirable place relative to competing products in the minds of consumers. Why a shopper will pay more for your brand. E.g. The Burgers are better at Hungry Jacks or Lowest Prices are Just the Beginning. In positioning a product, the firm must identify customer value differences. It can create customer value by offering lower prices or offering more benefits to justify higher prices. Differentiation is actually differentiating the firm s market offerings to create more value for consumers & is essential for Positioning. Developing*An*Integrated*Marketing*Mix* A Marketing Mix is the set of controllable tactical marketing tools that the firm blends to produce the response it wants in the target market.! Product The good/service combination offered by the company + optional! Price How much is charged! Placement Logistics Company activities that make the product available to target customers! Promotion Activities that communicate the merits of the product in order to persuade target customers to buy it.! People Additional training for staff (internal marketing for service based firms)! Process Experience of buying & the servicing of any product! Physical Evidence What we can see Managing*the*Marketing*Effort:*Analysis,*Planning,*Implementation*and*Control* Management of the marketing process requires 4 functions analysis, planning, implementation & control. Strategic plans are developed 1st which guide SBU marketing plans for each product. Implementation turns these plans into actions. Control consists of measuring & evaluating the results of marketing activities & taking corrective action when needed. Analysis provides inputs to all other functions.! Marketing Analysis of the marketing organisation s situation - SWOT & PESTLE + Competitor/Customer Review! Marketing Planning Deciding on marketing strategies to attain overall strategic objectives. Brand/product focused! Marketing Plan - Executive Summary, Situational Analysis, SWOT, Brand Objectives, Marketing Strategy, Action Programs, Budgeting & Control.
! Marketing Implementation Process of converting marketing strategies in to market actions to accomplish strategic marketing objectives (who, where, when & how). Marketing Departments (see below)! Marketing Control The process of (2) measuring & evaluating results (3) of marketing strategies & plans & taking corrective action (4) to ensure that objectives (1) are achieved.! Operating Control check ongoing performance against an annual plan & take corrective action if necessary! Strategic Control checking if strategies are well matched to opportunities, may need to reassess approach Marketing Departments can be organised in various ways:! Functionally, marketing activities are headed by a functional specialist sales manager, advertising manager! Geographically, sales & marketing teams assigned to regions.! Product, the product manager implements a strategy & marketing program for the specific product! Customer Management or Market, one product sold to many markets that have different needs (segments)! Combination, for large companies Measuring*And*Managing*Return*on*Marketing*Investment:*Marketing*ROI* * Accountability* Marketing ROI - The net return from a marketing investment divided by the costs of the marketing investment. It is difficult to work out the benefits/gains from marketing. Other performance measures (Marketing Dashboard) include:! Brand Awareness! Sales! Market Share! Customer Acquisition, Retention, Life Time Value & Equity - Capture future performance (based on strong r/ships) Topic 2 (Part 2) - The Marketing Environment Definitions* The Micro Environment refers to the actors close to the organisation that affect its ability to serve its customers, whilst the Macro Environment is the larger societal forces that affect the organisation s whole environment. Micro* *Environment* Marketing management success depends relationship building with actors in the micro-environment - value delivery network. The*Company - Top management, finance, operations, accounting, R&D, purchasing departments! Marketing management must account for/consider these internal groups.! Top mgmt set missions, objectives & broad strategy marketing strategies/plans must be within these bounds! Marketing Concept all departments must think consumer, must understand & deliver value to customers Suppliers - Partner Relationship Management is importatnt. Aus Study found that strong supplier relationships contributed significantly to business performance! Important role in the external value delivery network, vital to the firm in producing goods & services to satisfy customers! Marketing managers must watch supply availability & costs