How much digital marketing is enough?

How much digital marketing is enough?

Could you be wasting time, money and effort on too much digital marketing? Let’s look at how you can establish how much digital is enough for your idea, start-up or small business.

With your digital strategy you need to decide how much of your valuable time & resources you are willing to dedicate. In order to do this, there are a series of questions which you need to ask yourself; spend some time thinking about this because the digital world is full of smoke and mirrors. It is suggested that you undertake some basic background research with your current or potential customers. You’ll be surprised how much you can find out. Here are some questions that you can ask:

1. What proportion of your target audience are using different digital platforms? Within this chapter the you will explore the most popular types of websites and social media. The point here is that if your customers prefer to use Twitter then there is little point in focusing on Facebook. So find out what your customers are using, by asking them.

2. Which content and promotions are your audience interested in? Once you know the preferred digital and social media choices of your customers, then review what they’re looking at and try to find out which promotions most interested them. TripAdvisor is an example of this; find current clients and follow the reviews that he or she is placed. This will give you an overview of what they like and what they dislike; similarly look to see if they review car hire or transfers, or whether their comments say they have used particular promotions. What are they sharing on Facebook? Which websites are they talking about on Twitter? You can build quite a detailed image of your customers’ online behaviour, which will help you plan for it.

3. How are competitors using the platforms – benchmark what’s working for them? You may have to become a mystery shopper! It goes without saying that as a small business you will sign up to the digital communications offered by your close competitors. So, how many followers do they have on Facebook and Twitter? What online marketing are they doing using their websites? What seems to be working well for them? Then you can emulate their success, adapt it and then improve it. So a quick audit of your competition is important.

4. Reviewing your own analytics, sales and customer insights. Within this chapter we will discuss online analytics and marketing research; digital marketing leaves a rich trail of data which can be used to analyse and evaluate the success of your campaigns. You need a critical mass of traffic to do this. If your digital approach generates one visitor per day, digital marketing may not be the right route to your customers, and you may prefer to use more traditional promotional methods. However, if you can grow your traffic to 10, 50, 100 or 1000 visitors per day, then you have data which can be used for analysis.

Keep it simple. If you post some interesting content and your traffic increases, then you know you got it right. If you put effort into writing material and there is no noticeable increase in traffic, then you need to change something. You need to deal with this at a basic level. There is a lot of hot air spoken when it comes to digital marketing and you need to be prepared with some basic knowledge to help you overcome the pitfalls. Unless you can justify a huge expense on digital marketing, do not do it! Start small, simple and proficient and go from there.

5. Setting broad goals and vision/mission for the organisation. If digital marketing is central to your business offering, then the online experience needs to have some broad goals and a central vision. So what is your vision? What will your business look like in five years’ time? You can change your vision as time rolls out, but you need a central purpose for your online business. So, what will it be?• Facebook’s mission is to give people the power to share and make the world more open and connected. (Facebook 2016)
• “Apple designs Macs, the best personal computers in the world, along with OS X, iLife, iWork and professional software. Apple leads the digital music revolution with its iPods and iTunes online store. Apple has reinvented the mobile phone with its revolutionary iPhone and App store, and is defining the future of mobile media and computing devices with iPad.” (Investopedia 2016)
• Coca Cola’s mission is to refresh the world in mind, body and spirit, to inspire moments of optimism and happiness through our brands and actions, and to create value and make a difference. (Coca Cola 2016)

6. Get more specific with SMART objectives (specific/measurable/achievable/realistic/timed). Finally, you need to translate your vision and purpose into SMART the objectives. For example:

• To increase traffic to 10,000 visitors per day within three years.
• To have 30,000 registered e-mail addresses in your opt-in mailing list within 24 months.
• To sell 10 items per day through your online store within six months.
• To achieve 5000 Twitter followers in a single year.

Let’s make sure that you are not doing too much social. It’s important to get as many bangs for your online buck as possible.

Long tail concept

The long tail concept

Let’s go over the concept of long tail and understand what it actually is. The concept was first applied to human behavior by George Kingsley Zipf, professor of linguistics at Harvard. Zipf’s law states that if a collection of items is ranked by popularity the second item will have around half the popularity of the first one and the third item will have about a third of the of the popularity of the first one and so on.

Nowadays, this concept is used to mainly describe niche marketing and the way it operates online. Let’s try and see how online retailers can benefit from this concept. As a rule long tail marketing puts an accent on less popular products, developing a business sales model based upon products in the “long tail.” It is more about inventory management than product promotion. Provision of a greater variety of inventory gives businesses a chance to reach more customers and generate more sales with no extra costs.

Long tail marketing is most effectively employed by online retailers such as Amazon, due to the supply-side considerations of managing such an inventory.  A brick-and-mortar bookstore only has a limited shelf space available, and must devote the biggest part of its shelf space to most popular and demanded products. Less popular items compete with each other for limited space, and of course greater variety increases costs in stocking. The Internet changes that. It allows people to find less popular items and subjects. It turns out that there’s profit in less popular products as well. For instance, Amazon stocks items in warehouses, while displaying them on its website. This surely results in a much lower cost for shelf maintenance. Web-page maintenance has its costs, but they are substantially lower than physically sorting, stocking, and maintaining shelves.

Social Media Audit

Social Media Audit

The social media audit is an important part of the digital marketing planning process. Social media is an opportunity for consumers to generate their own content, and many of the top-ranking results of an Internet search will result in social media content – in relation to companies, brands, and products and services. User Generated Content (UGC), for example Trip Advisor, is a reliable way of Informing consumers’ decision-making.

social-media-audit

Why do we need a social media audit?

So what a digital marketer needs is a tool to audit social media within the competitive environment, i.e. relative to competitors. The digital marketer will be trying to work out the best way to ‘feed’ the digital marketing funnel, and he or she will also need to monitor/measure any discussions about his or company. This is where a social media audit fits in.

It’s a systematic examination of social data to help marketers discover, categorize, and evaluate all the social talk about a brand. (Quesenberry 2015)

Keith Quesenberry developed a social Media auditing tool based upon the principle of the Five Ws, which is an approach used in journalism: who, where, what, when and why. If you add ‘How’ then your source is Rudyard Kipling’s poem, The Elephant’s Child:

I keep six honest serving-men
(They taught me all I knew);
Their names are What and Why and When
And How and Where and Who.

Let’s adapt the Five Ms to suit social media marketing, as does Quesenberry. This is Marketing Teacher’s adapted version.

1. Who is creating content using the digital medium? Is it you? Is it an influencer? Is it a competitor?
2. Where is the digital content? Which digital media platform is being used for content? Such as You Tube or Facebook.
3. What is the content on the social media platform? Is it textual content, and video, a photo, is it a story, etc? Does it use a ranking system? What is the feedback like?
4. When was the social media posted? How often does it get posted? What was its reach? Was it shared?
5. Why is the content generated? What was its purpose? Is it a campaign, a complaint or simply a user’s opinion?

The next step is to rank and prioritise your observations based upon these five criteria. How important is it to your social media marketing strategy? Here is Marketing Teacher’s adaptation of Quesenberry’s social media audit. For more detailed information, we recommend that you revisit the original article.

Here are some basic instructions for the social media audit:

1. Please print out the social media audit template from Marketing Teacher.
2. Complete there ‘who’ column. ‘You’ will be your business or your assignment organisation.
3. Then go through ‘where, what, when and why’ and insert the tick symbol (cut and paste the image) to select the appropriate element. You can tailor the audit to suit yourself with the ‘+’ symbol.
4. Finally rank or score the importance of each element using numbers 1-10, or Booz balls. That’s it! It’s time to do your own social media audit.

References

Quesenberry, K. A. (2015) Conducting a social media audit, Harvard Business Review, November 18th, 2015.

TOWS Analysis

What is TOWS Analysis?

TOWS analysis is a tool which is used to generate, compare and select strategies. Strictly speaking it is not the same as SWOT analysis, and it is certainly not a SWOT analysis which focuses on threats and opportunities. This is a popular misconception. TOWS may have similar roots. TOWS is a tool for strategy generation and selection; SWOT analysis is a tool for audit and analysis. One would use a SWOT at the beginning of the planning process, and a TOWS later as you decide upon ways forward.

There is a trade-off between internal and external factors. Strengths and weaknesses are internal factors and opportunities and threats are external factors. This is where our four potential strategies derive their importance. The four TOWS strategies are Strength/Opportunity (SO), Weakness/Opportunity (WO), Strength/Threat (ST) and Weakness/Threat (WT).

TOWS Analysis

Four TOWS strategies

Strength/Opportunity (SO). Here you would use your strengths to exploit opportunities.

Weakness/Opportunity (WO). Indicates that you would find options that overcome weaknesses, and then take advantage of opportunities. So, you mitigate weaknesses, to exploit opportunities.

Strength/Threat (ST). One would exploit strengths to overcome any potential threats.

Weakness/Threat (WT). The final option looks least appealing; after all, would relish using a weakness to overcome a threat? With Weakness/Threat (WT) strategies one is attempting to minimise any weaknesses to avoid possible threat.

TOWS Analysis – Simple Rules.

  1. Like many tools, models, concepts and frameworks, TOWS is subjective. It is only as robust as the data which you include within the model.
  2. Use other models and frameworks to support your strategic choices, such as Ansoff’s Matrix Porters’ Generic Strategies and others.
  3. Strategy will include internal development for growth, merger, acquisitions and joint-ventures.
  4. Be as specific as possible and avoid grey areas.
  5. Always rely on your gut feeling. If it doesn’t feel right, then maybe it isn’t right. Tak another look at simple rule 1 above.

 

What is Marketing? Marketing definitions.

Marketing definitions

There are many marketing definitions. The better definitions are focused upon market orientation and the satisfaction of customer needs.

Marketing is the social process by which individuals and organizations obtain what they need and want through creating and exchanging value with others.

Kotler and Armstrong (2010).

The definiton is based upon an a basic marketing exchange process, and recognises the importance of value to the customer.

The process by which companies create value for customers and build strong customer relationships in order to capture value from customers in return.

Kotler and Armstrong (2010).

Kotler and Armstrong develop their orginal definition to recognise the importance of the longer-term relationship with the customer. This is achieved by relationship marketing and Customer Relationship Management (CRM).

Marketing is the management process for identifying, anticipating and satisfying customer requirements profitably.

The Chartered Institute of Marketing (CIM). Accessed 2012.

The CIM definition looks not only at identifying customer needs, but also satisfying them (short-term) and anticipating them in the future (long-term retention). The definition also states the importance of a process of marketing, with marketing objectives and outcomes. CIM is recognised as being one of the most influential marketing
bodies in the world. It is the professional body for marketing in the United Kingdom.

Marketing is 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. (Approved October 2007)

American Marketing Association Board of Directors. Accessed 2012.

Again, in common with Kotler and Armstrong above, the AMA focuses its definition on value creation and delivery, and the longer-term retained customer.

The enigma of marketing is that it is one of man’s oldest activities and yet it is regarded as the most recent of business disciplines.

Baker (1976).

Baker introduces the elephant in the room. Marketing has always been part of business, and it is a myth that it is purely a contemporary idea.

Also see the Philosophy and Theory of Marketing

SMART Objectives

SMART Objectives

How do you make objectives SMART?

SMART objectives are simple and quick to learn. The objective is the starting point of the marketing plan. Once environmental analyses (such as SWOT, Five Forces Analysis, and PEST) and marketing audit have been conducted, their results will inform SMART objectives. SMART objectives should seek to answer the question ‘Where do we want to go?’. The purposes of SMART objectives include:

  • To enable a company to control its marketing plan.
  • To help to motivate individuals and teams to reach a common goal.
  • To provide an agreed, consistent focus for all functions of an organization.

All objectives should be SMART i.e. Specific, Measurable, Achievable, Realistic, and Timed.

  • Specific – Be precise about what you are going to achieve.
  • Measurable – Quantify your objectives.
  • Achievable – Are you attempting too much?
  • Realistic – Do you have the resources to make the objective happen (men, money, machines, materials, minutes)?
  • Timed – State when you will achieve the objective (within a month? By February 2018?)

Some examples of SMART objectives follow:

1. Profitability Objectives

To achieve a 20% return on capital employed by August 2019.

2. Market Share Objectives

To gain 25% of the market for sports shoes by September 2018

3. Promotional Objectives

To increase awareness of the dangers of AIDS in France from 12% to 25% by June 2017.

To increase trail of X washing powder from 2% to 5% of our target group by January 2019.

4. Objectives for Survival

To survive the current double-dip recession.

5. Objectives for Growth

To increase the size of our Brazilian operation from $200,000 in 2017 to $400,000 in 2018.

6. Objectives for Branding

To make Y brand of bottled beer the preferred brand of 21-28 year old females in North America by February 2017.

There are many examples of SMART objectives. Be careful not to confuse objectives with goals and aims. Goals and aims tend to be more vague and focus on the longer-term. They will not be SMART. However, many SMART objectives start off as aims or goals and therefore they are of equal importance.

 

Marketing mix


The marketing mix

The marketing mix is one of the most famous marketing terms. The marketing mix is the tactical or operational part of a marketing plan. The marketing mix is also called the 4Ps and the 7Ps. The 4Ps are price, place, product and promotion. The services marketing mix is also called the 7Ps and includes the addition of process, people and physical evidence.

The marketing mix is . . . The set of controllable tactical marketing tools – product, price, place, and promotion – that the firm blends to produce the response it wants in the target market.

Kotler and Armstrong (2010).

The concept is simple. Think about another common mix – a cake mix. All cakes contain eggs, milk, flour, and sugar. However, you can alter the final cake by altering the amounts of mix elements contained in it. So for a sweet cake add more sugar!

It is the same with the marketing mix. The offer you make to your customer can be altered by varying the mix elements. So for a high profile brand, increase the focus on promotion and desensitize the weight given to price.

Another way to think about the marketing mix is to use the image of an artist’s palette. The marketer mixes the prime colours (mix elements) in different quantities to deliver a particular final colour. Every hand painted picture is original in some way, as is every marketing mix. Let’s look at the elements of the marketing mix in more detail. Click on the links to go to the lesson on each element.

Price

Price is the amount the consumer must exchange to receive the offering .

Solomon et al (2009).

The company’s goal in terms of price is really to reduce costs through improving manufacturing and efficiency, and most importantly the marketer needs to increase the perceived value of the benefits of its products and services to the buyer or consumer.
There are many ways to price a product. Let’s have a look at some of them and try to understand the best policy/strategy in various
situations.

Place

Place includes company activities that make the product available to target consumers.

Kotler and Armstrong (2010).

Place is also known as channel, distribution, or intermediary. It is the mechanism through which goods and/or services are moved from the manufacturer/ service provider to the user or consumer.

 

Marketing Mix
The Marketing Mix

 

Product

Product means the goods-and-services combination the company offers to the target market.

Kotler and Armstrong (2010).

For many a product is simply the tangible, physical item that we buy or sell. You can also think of the product as intangible i.e. a service.

In order to actively explore the nature of a product further, let’s consider it as three different products – the CORE product, the ACTUAL product, and finally the AUGMENTED product.

The Product Life Cycle (PLC) is based upon the biological life cycle. For example, a seed is planted (introduction); it begins to sprout (growth); it shoots out leaves and puts down roots as it becomes an adult (maturity); after a long period as an adult the plant begins to shrink and die out (decline).

The Customer Life Cycle (CLC) has obvious similarities with the Product Life Cycle (PLC). However, CLC focuses upon the creation and delivery of lifetime value to the customer i.e. looks at the products or services that customers NEED throughout their lives.

Promotion

Promotion includes all of the activities marketers undertake to inform consumers about their products and to encourage potential customers to buy these products.

Solomon et al (2009).

Promotion includes all of the tools available to the marketer for marketing communication. As with Neil H. Borden’s marketing mix, marketing communications has its own promotions mix. Whilst there is no absolute agreement on the specific content of a marketing communications mix, there are many promotions elements that are often included such as sales, advertising, sales promotion, public relations, direct marketing, online communications and personal selling.

Physical Evidence

(Physical evidence is) . . . The environment in which the service is delivered, and where the firm and customer interact, and any tangible components that facilitate performance or communication of the service.

Zeithaml et al (2008)

Physical Evidence is the material part of a service. Strictly speaking there are no physical attributes to a service, so a consumer tends to rely on material cues. There are many examples of physical evidence, including some of the following buildings, equipment, signs and logos, annual accounts and business reports, brochures, your website, and even your business cards.

People

(People are) . . . All human actors who play a part in service delivery and thus influence the buyers’ perceptions; namely, the firm’s personnel, the customer, and other customers in the service environment.

Zeithaml et al (2008).

People are the most important element of any service or experience. Services tend to be produced and consumed at the same moment, and aspects of the customer experience are altered to meet the individual needs of the person consuming it.

Process

Process is) . . . The actual procedures, mechanisms, and flow of activities by which the service is delivered – this service delivery and operating systems.

Zeithaml et al (2008).

There are a number of perceptions of the concept of process within the business and marketing literature. Some see processes as a means to achieve an outcome, for example – to achieve a 30% market share a company implements a marketing planning process. However in reality it is more about the customer interface between the business and consumer and how they deal with each other in a series of steps in stages, i.e. throughout the process.

What is a customer?

What is a customer?

In marketing we tend to use the word customer / customers and consumer almost interchangeably. However our customer and the consumer are not strictly speaking the same. A customer is a person or company who purchases goods and services. A customer becomes a consumer when he or she uses the goods or services i.e. where there is some consumption.

Customers categorised

Customers can be categorised as B2C which stands for Business-to-Customer (B2C) for example where you buy sweets from a shop, Business-to-Business (B2B) where the shopkeeper uses the services of an accountant to write his tax return, C2B which is Customer-to-Business (C2B) for example where an individual sells his gold watch to a jewellery store and C2C or Customer-to-Customer (C2C) where customers sell goods to each other. A great example for C2C is eBay, where consumers sell goods to other consumers.

A Marketing Oriented Approach

A marketing orientation underpins our focus on the customer/consumer and their needs and wants. Our marketing orientation occurs as a result of all of the people from within our business from the managing director to the receptionist making the satisfaction of customer needs and wants their whole reason for being. Now let’s take a look at how we find information that will shed light on what our customers and consumers need and want. The benefits of a marketing orientation centre on the fact that customers can be grouped into segments and segments can deliver profits to the organisation. Customers also need information about products and services, and how to use them.

Therefore we can define a consumer as an individual who (buys and) uses a product or service. So the consumer could be the customer that goes into the shop to buy the sweets. However the final consumer may not always be the customer. For example, a parent goes into the sweet shop and buys some sweets. He or she does not eat them, and so they are not the consumer. The child would eat the sweets and be the consumer, although he or she did no buy the sweets and so they are not the initial customer.

The reason we need to know the difference between a consumer and the customer is that we will want to design communications and understand the consumer behaviour of the person that instigates and influences a buying decision as well as the final consumer. For example the child will influence the mother’s decision on which sweets to buy. However it can be much more subtle, for example a wife might influence the clothing choices of her husband, or a child might influence the family’s choice of a holiday destination.

Customer needs and wants.

Obviously the terms customer and consumer are often interchanged. So with a definition of marketing, we will aim to anticipate the needs and wants of consumers and/or customers. Needs and wants may differ. So let’s return to our mother and her child, since a mother may wish to feed her child nutritious food at mealtimes, the child may wish to eat sugary and less healthy food. The mother is the customer and she purchases based upon her need, whereas the child is the final consumer and he or she may focus on what they want. So needs and wants may differ between customers and consumers.

Three Levels of a Product


Three Levels of a Product.

Consumers often think that a product is simply the physical item that he or she buys. In order to actively explore the nature of a product further, let’s consider it as three different products – the CORE product, the ACTUAL product, and finally the AUGMENTED product. This concept is known as the Three Levels of a Product.

Three Levels of a Product
Three Levels of a Product

The CORE product is NOT the tangible physical product. You can’t touch it. That’s because the core product is the BENEFIT of the product that makes it valuable to you. So with the car example, the benefit is convenience i.e. the ease at which you can go where you like, when you want to. Another core benefit is speed since you can travel around relatively quickly.

The ACTUAL product is the tangible, physical product. You can get some use out of it. Again with the car, it is the vehicle that you test drive, buy and then collect. You can touch it. The actual product is what the average person would think of under the generic banner of product.

The AUGMENTED product is the non-physical part of the product. It usually consists of lots of added value, for which you may or may not pay a premium. So when you buy a car, part of the augmented product would be the warranty, the customer service support offered by the car’s manufacturer and any after-sales service. The augmented product is an important way to tailor the core or actual product to the needs of an individual customer. The features of augmented products can be converted in to benefits for individuals.

Features and benefits of products

Features and benefits of a product are also relevant to the three levels of the product. Products tend to have a whole series of features but only a small number of benefits to the actual consumer.

Let’s look at this another way, if you buy a Nintendo console it has many features; for example you can play games alone or you can play against another opponent or two or three opponents. You can also have access to the Internet. Avatars are adaptable so you can create yourself and your friends. These are all examples of features to the consumer. However a consumer may buy it because he or she wants to stay fit and will use software and peripherals to become healthier. Becoming healthier is the benefit to the consumer.

The consistent marketer will aim to discover the consumer’s preference for benefits and will match individual features to the preference. That is why professional salespeople for example, often ask many questions whereas a novice salesperson will just tell you the features of the product.

New Product Development (NPD)

New Product Development (NPD) will take in to account the consumer’s preference for benefits over features by considering research into their needs. NPD aims to satisfy and anticipate needs. NPD delivers products which offer benefits at the core, actual and augmented levels.

NPD might offer a replacement product for a current line, it could add products to the current line, it could discover new product lines and sometimes it delivers very innovative products which the world might not have seen before.

New products are launched for all sorts of reasons. As we know from our previous lesson on the business environment, legislation i.e. changes in the law can mean that companies have to design and develop new products. An example of this was when we moved from videotape recorders to digital and DVD recorders. So products need to be modified for changing target markets.

Sometimes the company will need to increase the volume that a production plant delivers, since maybe it is not running at full capacity. An example of this would be a food manufacturer of tinned soup that has a factory which can operate 24/7, designing different derivatives of the soup in order to lower the unit cost of production. So product lines are extended, in this case the reason being is to ease operational efficiency.

Intense competitive rivalry in the market will also lead to the need for NPD. Just think about your smart phone and how quickly such products go through their product life cycles, throughout your customer life-cycle.

Change in any element of the marketing mix would influence NPD, for example there is a movement to shop online and some products need to be distributed via online retailers, and the product is adapted to make it compact and simple to deliver. NPD can be driven by many influences from changing consumer tastes to the need to adapt products and services for local or international market.

Another marketing tool for evaluating PRODUCT is the Product Life Cycle (PLC). Also see the Customer Life Cycle (CLC).

Target

Targeting

Part of STP – Segment-Target-Postion

Targeting is the second stage of the SEGMENT “Target” POSITION (STP) process. After the market has been separated into its segments, the marketer will select a segment or series of segments and ‘target’ it/them. Resources and effort will be targeted at the segment.

Targeting

The first is the single segment with a single product. In other word, the marketer targets a single product offering at a single segment in a market with many segments. For example, British Airway’s Concorde is a high value product aimed specifically at business people and tourists willing to pay more for speed.

Targeting

Secondly the marketer could ignore the differences in the segments, and choose to aim a single product at all segments i.e. the whole market. This is typical in ‘mass marketing’ or where differentiation is less important than cost. An example of this is the approach taken by budget airlines such as Go/

Targeting

Finally there is a multi-segment approach. Here a marketer will target a variety of different segments with a series of differentiated products. This is typical in the motor industry. Here there are a variety of products such as diesel, four-wheel-drive, sports saloons, and so on.

Now have a look at the final stage, positioning.

Seven Cs

The Seven Cs

7 Cs Website design elements that drive customer traffic

Dr. Jill Novak, University of Phoenix, Texas A&M University

There are seven design elements – 7Cs – that should be considered when creating a website intended for commerce and sales. Customers shop online for several reasons; the most important are the convenience, cost, large selection and the allure of control over their purchases. Customers can easily shop around from anywhere they have an Internet connection; this gives companies an even greater imperative to create a website that will drive traffic to their website, appeal to their target markets, and create a lasting experience that will create return customers.

5. Create an explanation of your website that will include all of the design elements that drive customer experience. (you do not have to create an actual website)

6. Get out some paper and draw a map of what your destination site will look like and what amenities you will be including. What are some of the activities your visitors can partake in and how do these relate to your eco-mission?

  • Context : A website’s layout and overall visual design needs to be uncluttered, easy to read and navigate, the color scheme needs to be appropriate for the marketing design. Having some white space will also aid in the overall design and readability.
  • Commerce : If the website is intended for commercial transactions, then it has to be safe and the fact that is has been made safe must be communicated to the customer, most websites use a "lock" symbol in the corner to indicate that it has been encrypted.
  • Connection : Any links that lead the customer away from the website.
  • Communication : How the company talks to its customers ; this can be done through signing up for special offers, email newsletters, contests, surveys, live chat with company representatives, and company contact information.
  • Content : The text, graphics, sound, music, and/or videos that are presented.
  • Community : The website may allow interaction between customers through message boards and live chat.
  • Customization : Companies can allow customers to personalize aspects of the website or it may tailor itself to different users, for example having different colors and graphics for people who speak different languages.

Activity–Ecotourism and Attracting A Customer Base.

"[Ecotourism]…is environmentally responsible travel and visitation to relatively undisturbed natural areas, in order to enjoy and appreciate nature (and any accompanying cultural features – both past and present) that promotes conservation, has low negative visitor impact, and provides for beneficially active socio-economic involvement of local populations."

Activity.

Design your own Ecotourist Resort

1. Choose a destination. Where will your resort will be located? Why this place? How will your resort make as limited an impact as possible on the site? How will energy be provided for the site? What are some conservation measures your site will use?

2. Choose an animal you want to highlight at your destination. Perform research about your chosen animal, including their habitat, physical characteristics, and causes of death, as well as efforts to protect them.

3. Decide who is your target market (or markets), be as specific as possible!

4. How will the local community benefit from your resort?

Return On Investment (ROI)


Return On Investment (ROI)

No company can hope to remain viable or even grow, without closely monitoring the effectiveness of its advertising. In the current economy no corner of a company’s expenses is going without scrutiny, especially marketing and promotion costs.

The benefits of return on investment data works both ways, it may identify lost causes per strategy or locations. Conversely, the calculation might also highlight a strategy that deserves even more financial support.

The negative results of making expenditures which do not contribute to profits are obvious. A company’s inherent marketing goal is to direct its efforts toward activities which produce a desired outcome, usually sales but could also include interim steps toward a sale, attendance at events, subscriptions, sample downloads and other such activities by its prospects.

A popular method of measuring whether a firm is getting its money’s worth from promotions is by the calculation of Return On Investment (ROI). Return on Investment is a metric that measures profit associated with each investment. Although methods and approaches may vary the calculation below will yield a basic return on investment result:

Return on Investment % = Profit – Investment / Investment (result expressed as percentage)

Data needed to calculate Return On Investment (ROI):

Annual Profits (income minus expenses)

Annual Promotion Expenditures (costs per promotion measured)

Obviously many other variables can be added to the mix to support particular promotion expenditure, but utilization of the formula above will aid in making key budget decisions within the marketing category. For example, with available data a company may be able to use the formula to compare promotion methods such as newspaper advertising, radio or direct mail. They might also be able to gather return on investment based on specific stores or even regions depending on company size.

Sales Promotion

Sales Promotion

What is sales promotion?

Sales promotion is any initiative undertaken by an organisation to promote an increase in sales, usage or trial of a product or service (i.e. initiatives that are not covered by the other elements of the marketing communications or promotions mix). Sales promotions are varied.

(e) Free gifts e.g. Subway gave away a card with six spaces for stickers with each sandwich purchase. Once the card was full the consumer was given a free sandwich.

(f) Discounted prices e.g. Budget airline such as EasyJet and Ryanair, e-mail their customers with the latest low-price deals once new flights are released, or additional destinations are announced.

(g) Joint promotions between brands owned by a company, or with another company’s brands. For example fast food restaurants often run sales promotions where toys, relating to a specific movie release, are given away with promoted meals.

(h)  Free samples (aka. sampling) e.g. tasting of food and drink at sampling points in supermarkets. For example Red Bull (a caffeinated fizzy drink) was given away to potential consumers at supermarkets, in high streets and at petrol stations (by a promotions team).

(i) Vouchers and coupons, often seen in newspapers and magazines, on packs.

(j) Competitions and prize draws, in newspapers, magazines, on the TV and radio, on The Internet, and on packs.

(k) Cause-related and fair-trade products that raise money for charities, and the less well off farmers and producers, are becoming more popular.

(l) Finance deals – for example, 0% finance over 3 years on selected vehicles.

Many of the examples above are focused upon consumers. Don’t forget that promotions can be aimed at wholesales and distributors as well. These are known as Trade Sales Promotions. Examples here might include joint promotions between a manufacturer and a distributor, sales promotion leaflets and other materials (such as T-shirts), and incentives for distributor sales people and their retail clients.

Often they are original and creative, and hence a comprehensive list of all available techniques is virtually impossible (since original sales promotions are launched daily!). Here are some examples of popular sales promotions activities:

(a) Buy-One-Get-One-Free (BOGOF) – which is an example of a self-liquidating promotion. For example if a loaf of bread is priced at $1, and cost 10 cents to manufacture, if you sell two for $1, you are still in profit – especially if there is a corresponding increase in sales. This is known as a PREMIUM sales promotion tactic.

(b) Customer Relationship Management (CRM) incentives such as bonus points or money off coupons. There are many examples of CRM, from banks to supermarkets.

(c) New media – Websites and mobile phones that support a sales promotion. For example, in the United Kingdom, Nestle printed individual codes on KIT-KAT packaging, whereby a consumer would enter the code into a dynamic website to see if they had won a prize. Consumers could also text codes via their mobile phones to the same effect.

(d) Merchandising additions such as dump bins, point-of-sale materials and product demonstrations.

Public Relations (PR)

Public Relations (PR)

Public relations as part of the marketing communications mix

Public Relations (PR) is a single, broad concept. It is broad since it contains so many elements, many of which will be outlined in this lesson. Public Relations (PR) are any purposeful communications between an organisation and its publics that aim to generate goodwill.

Speeches, presentations and speech writing.

Key figures from within an organisation will write speeches to be delivered at corporate events, public awards and industry gatherings. PR company officials in liaison with company managers often write speeches and design corporate presentations. They are part of the planned and coherent strategy to build goodwill with publics. Presentations can be designed and pre-prepared by PR companies, ultimately to be delivered by company executives.

Corporate literature e.g. financial reports.

Corporate literature includes financial reports, in-house magazines, brochures, catalogues, price lists and any other piece of corporate derived literature. They communicate with a variety of publics. For example, financial reports will be of great interest to investors and the stock market, since they give all sorts of indicators of the health of a business. A company Chief Executive Officer CEO will often write the forward to an annual financial report where he or she has the opportunity to put a business case to the reader. This is all part of Public Relations.

Publics, put simply, are its stakeholders. PR is proactive and future orientated, and has the goal of building and maintaining a positive perception of an organisation in the mind of its publics. This is often referred to as goodwill.

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Yes it is difficult to see the difference between marketing communications and PR since there is a lot of crossover. This makes it a tricky concept to learn. Added to this is the fact that PR is often expensive, and not free, as some definitions would have you believe. PR agencies are not cheap. Below are some of the approaches that are often considered under the PR banner.

Interviews and photo-calls.

It is important that company executives are available to generate goodwill for their organisation. Many undertake training in how to deal with the media, and how to behave in front of a camera. There are many key industrial figures that proactively deal with the media in a positive way for example Bill Gates (Microsoft) or Richard Branson (Virgin). Interviews with the business or mass media often allow a company to put its own perspective on matters that could be misleading if simply left to dwell untended the public domain.

Public Relations (PR) Two

Public Relations (PR)

Public relations as part of the marketing communications mix

Organising events.

This has a direct business payoff. A more informal event could include a day at the races or a short-break abroad, where clients are wined and dined at the cost of a company, in order to generate goodwill. This has an indirect business payoff.

Sponsorship and charitable donations.

Sponsorship is where an organisation pays for their product or service to be associated with an activity or event. Organisations commonly sponsor sporting events and such as The Olympics, sporting stars and other celebrities, or medium, for example television programmes. The sponsors gain exposure, and also align their product or service with the attributes of the sport, celebrity or medium.

Many companies (often those in profit!) make donations to charities and good causes. When donations are publicised, again the benefits generate goodwill for the organisation. It should be noted here that Microsoft’s Bill Gates donates substantial amounts to good causes that are often not reported. This is true corporate philanthropy.

Corporate events are used to woo publics in both a formal and an informal manner. A formal corporate event could include a manufacturer inviting employees from all of its many distributors to visit its manufacturing plant for a training day.

Facility visits.

Visits to a factory, such as a chocolate factory, or a facility, such as a nuclear power plant also generate a positive perception of an organisation. In the case of a factory visit, loyal customers or other interested parties can experience for themselves what is behind a well-known product. In the case of a nuclear power plant, concerned or misinformed publics have the chance to see for themselves what really occurs behind locked doors. Here the organisation has the chance to deal with a delicate topic in a planned proactive manner. Public buildings such as parliament buildings or churches would be included under facility visits.

Publicity events and ‘stunts.’

Publicity events fall under the banner of guerrilla marketing. Here an organisation will take the opportunity to seize upon a particular moment to hijack public attention. Publicity events and stunts are practiced by both companies and private bodies (including pressure and political groups). A famous example of a publicity stunt was one conducted by Fathers For Justice (a British pressure group for divorced fathers), whereby individuals, dressed as Superheroes, invaded Buckingham Palace in London.

Promotion

Promotion

Promotion is the marketing term used to describe all marketing communications activities and includes personal selling, sales promotion, public relations, direct marketing, trade fairs and exhibitions, advertising and sponsorship. Promotion needs to be precisely coordinated and integrated into the businesses global communications message, and this is called Integrated Marketing Communications (IMC). IMC integrates the message through the available channels to deliver a consistent and clear message about your company’s brands, products and services. Any movement away from the single message confuses the consumer and undermines the brand.

The promotions mix (the marketing communications mix) is the specific blend of promotion tools that the company uses to persuasively communicate customer value and build customer relationships.

Kotler et al (2010).

Promotion is the element of the marketing mix which is entirely responsible for communicating the marketing proposition. Marketers work hard to create a unique marketing proposition for their product or service. McDonald’s is about community, food and enjoyment. Audi is about the driver experience and technology.

Think of it like a cake mix, the basic ingredients are always the same. However if you vary the amounts of one of the ingredients, the final outcome is different. It is the same with promotions. You can integrate different aspects of the promotions mix to deliver a unique campaign. Now let’s look at the different elements of the promotions mix.

The elements of the promotions mix are:

  • Personal Selling.
  • Sales Promotion.
  • Public Relations.
  • Direct Mail.
  • Trade Fairs and Exhibitions.
  • Advertising.
  • Sponsorship.

And also online promotions.

marketing communications process
marketing communications process

The elements of the promotions mix are integrated to form a coherent campaign. As with all forms of communication, the message from the marketer follows the ‘communications process’ as illustrated above. For example, a radio advert is made for a car manufacturer. The car manufacturer (sender) pays for a specific advert with contains a message specific to a target audience (encoding). It is transmitted during a set of commercials from a radio station (message/medium).

The message is decoded by a car radio (decoding) and the target consumer interprets the message (receiver). He or she might visit a dealership or seek further information from a web site (Response). The consumer might buy a car or express an interest or dislike (feedback). This information will inform future elements of an integrated promotional campaign. Perhaps a direct mail campaign would push the consumer to the point of purchase. Noise represents the thousands of marketing communications that a consumer is exposed to everyday, all competing for attention.

The Promotions Mix.

Let us look at the individual components of the promotions mix in more detail. Remember all of the elements are ‘integrated’ to form a specific communications campaign.

1. Personal Selling.

Personal Selling is an effective way to manage personal customer relationships. The sales person acts on behalf of the organization. They tend to be well trained in the approaches and techniques of personal selling. However sales people are very expensive and should only be used where there is a genuine return on investment. For example salesmen are often used to sell cars or home improvements where the margin is high.

2. Sales Promotion.

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Sales promotions tend to be thought of as being all promotions apart from advertising, personal selling, and public relations. For example the BOGOF promotion, or Buy One Get One Free. Others include couponing, money-off promotions, competitions, free accessories (such as free blades with a new razor), introductory offers (such as buy digital TV and get free installation), and so on. Each sales promotion should be carefully costed and compared with the next best alternative.

3. Public Relations (PR).

Public Relations is defined as ‘the deliberate, planned and sustained effort to establish and maintain mutual understanding between an organization and its publics’ (Institute of Public Relations). PR can be relatively cheap, but it is certainly not free. Successful strategies tend to be long-term and plan for all eventualities. All airlines exploit PR; just watch what happens when there is an incident. The pre-planned PR machine clicks in very quickly with a very effective rehearsed plan.

4. Direct Marketing.

Direct marketing is any marketing undertaken without a distributor or intermediary. In terms of promotion it means that the marketing company has direct communication with the customer. For example Nintendo distributes via retailers, although you can register directly with them for information which is often delivered by e-mail or mail.

Direct mail is very highly focussed upon targeting consumers based upon a database. As with all marketing, the potential consumer is targeted based upon a series of attributes and similarities. Creative agencies work with marketers to design a highly focussed communication in the form of a mailing. The mail is sent out to the potential consumers and responses are carefully monitored. For example, if you are marketing medical text books, you would use a database of doctors’ surgeries as the basis of your mail shot.

Similarly e-mail is a form of online direct marketing. You register, or opt in, to join a mailing list for your favourite website. You confirm that you have opted in, and then you will receive newsletters and e-mails based upon your favourite topics. You need to be able to unsubscribe at any time, or opt out. Mailing lists which generate sales are like gold dust to the online marketer. Make sure that you use a mailing list with integrity just as you would expect when you sign up. The mailing list needs to be kept up-to-date, and often forms the basis of online Customer Relationship Management (CRM).

5. Trade Fairs and Exhibitions.

Such approaches are very good for making new contacts and renewing old ones. Companies will seldom sell much at such events. The purpose is to increase awareness and to encourage trial. They offer the opportunity for companies to meet with both the trade and the consumer.

6. Advertising.

Advertising is a ‘paid for’ communication. It is used to develop attitudes, create awareness, and transmit information in order to gain a response from the target market. There are many advertising ‘media’ such as newspapers (local, national, free, trade), magazines and journals, television (local, national, terrestrial, satellite) cinema, outdoor advertising (such as posters, bus sides). There is much more about digital, online and Internet advertising further down this pages, as well as throughout Marketing Teacher and the Marketing Teacher Blog.

7. Sponsorship.

Sponsorship is where an organization pays to be associated with a particular event, cause or image. Companies will sponsor sports events such as the Olympics or Formula One. The attributes of the event are then associated with the sponsoring organization.

The elements of the promotional mix are then integrated to form a unique, but coherent campaign.

Online Promotions

Online promotions will include many of the promotions mix elements which we considered above. For example advertising exists online with pay per click advertising which is marketed by Google. You can sponsor are website for example. Online businesses regularly send out newsletters which are targeted using e-mail and mailing lists, which is a form of direct marketing. Indeed websites are premium vehicle in the public relations industry to communicate particular points of view to relevant publics.

The online promotions field is indeed emerging. The field will soon spread into Geo targeting of adverts to people in specific locations via smart phones. Another example would be how social media targets adverts to you whilst you socialising online. Take a look at Marketing Teacher’s Blog for more up-to-date examples of the emerging online promotions space.

Public Relations (PR) Three

Public Relations (PR)

Public relations as part of the marketing communications mix

Product placement in media.

This is an interesting and original use of PR. There are very many examples in movies and TV programmes that ‘place’ products.

Media conferences are called often at short notice to inform the media directly on a current event that has just happened, or that is about to happen. Media contact includes interviews with key personnel, and could include speeches, presentations and speech writing by the PR company. Finally entertaining the press, or media, is undertaken when trying to gain as much media space as possible. This could be for a product launch or to promote an acquisition.

Advertorials in newspapers, magazines or on websites.

Advertorials are paid for advertisements that are designed to appear like copy (i.e. normal reported text). Many countries insist that advertorials do contain a line of text to explain that they are sponsored or placed by an advertiser. Advertorials are often used to imply that some ground breaking treatment or solution has been uncovered.

Corporate promotional materials, websites, in-house magazines and customer magazines.

The market for promotional materials is large. Promotional materials include items such as pens, balloons, mouse mats, and so on. They tend to carry a company’s logo and contact details, and are another way to promote goodwill between and organisation and its publics. Websites are a vital marketing communications and public relations tool that can convey information to publics on how to contact an organisation, key personnel, products and services, corporate history, and financial reports, as well as any other targeted and planned information.

In-house magazines are used for internal marketing, communication and change management from within the organisation. In-house magazines are targeted at internal publics. Conversely, customer magazines help organisations to communicate with external publics (mainly customers) on all sorts of topics such as good news stories, product launches, customer clubs and many other subjects.

For example, a car manufacturer places a car in a movie and the hero drives it, or wears a watch that is looked at by the villain displaying the time, underscored by the manufacturer’s logo. Today, computer games include banners and posters during game-play as the action unfolds. Examples of product placement in games would include field sports with adverts placed alongside a pitch, or car racing games where you pass billboards displayed in a city.

Lobbying government bodies.

Lobbying is named after the ‘lobby’ area of the British Houses of Parliament where traditionally ‘lobbying’ would have occurred. Lobby in the past would have meant catching the eye of a Member of Parliament, in order to persuade him or her to take up a particular cause or argument. Today, lobbying firms are hired by organisations or individuals with a specific cause to promote. For example, a charity could lobby for a change in laws regarding pharmaceuticals or armaments. The charity would hire a lobbying firm to promote their cause with elected politicians.

Press or media releases, conferences, contact and entertainment.

Press or media releases, conferences, contact and entertainment are pivotal Public Relations strategies. In the past, the press were the original target (e.g. newspapers and magazines) but today the whole media industry forms the target (i.e. radio, websites, TV, New Media and so on). Media releases are drafted by a PR company, for example, to report financial information prior to the release of company reports.

Promoção

Promoção

Outro dos 4Ps é ‘promoção’

Este inclui todas as ferramentas disponíveis para o comerciante para a ‘comunicação de marketing’. Como na mistura de marketing de Neil H. Borden, comunicações de marketing têm suas próprias ‘mistura de promoções’. Pense nisso como uma mistura de bolo, os ingredientes básicos são sempre os mesmos. Apesar disso, se você varia a quantidade de um dos ingredientes, o resultado final será diferente. O mesmo ocorre com promoções. Você pode integrar diferentes aspectos da mistura de promoções para atingir uma campanha única.

Os elementos da mistura (composto) de promoções são:

  • Venda Pessoal.
  • Promoção de Vendas.
  • Relações Públicas.
  • Correspondência direta.
  • Feira de Comércio e Exibições.
  • Propaganda.
  • Patrocínio.Image

Os elementos da mistura (composto) de promoções são integradas para formar uma campanha coerente. Como todas as formas de comunicação. A mensagem do comerciante segue o ‘processo de comunicação’ como está ilustrado acima. Por exemplo, um anúncio de rádio é feito para um produto de carros. O produtor do carro (remetente) paga por um anúncio específico o qual contém uma mensagem específica para a audiência-alvo (codificação). Este é transmitido durante uma série de comerciais de uma estação de rádio (mensagem / mídia).

A mensagem é decodificada por um rádio de carro (decodificação) e o consuminidor-alvo interpreta a mensagem (recebedor). Ele ou ela podem visitar uma concessionária ou procurar por mais informação através de um web site (resposta). O consumidor pode comprar um carro ou expressar um interesse ou desinteresse (feedback). Esta informação informará futuros elementos de uma campanha promocional integrada. Possivelmente uma campanha de correspondência ‘direta’ influenciará o consumidor ao ponto da compra. Barulho representa as milhares de comunicações de marketing que o consumidor é exposto todos os dias, todos competindo por atenção.

A Mistura de Promoções.

Vamos olhar os componentes individuais da mistura (composto) de promoções em mais detalhes. Se lembre que todos os elementos são ‘integrados’ para formar uma campanha de comunicação específica.

1. Venda Pessoal.

Venda Pessoal é um meio eficaz para lidar com relacionamento pessoal com clientes. O vendedor atua em nome da organização. Ele tende a ser bem treinado na abordagem e técnicas de venda pessoal. Apesar disso, vendedores são muito caros e devem ser usados apenas onde existir um retorno sobre o investimento. Por exemplo: vendedores são muitas vezes usados para vender carros e casas onde a margem é alta.

2. Promoção de Vendas.

Promoção de vendas tende a ser vista como todos os tipos de promoção a não ser propaganda, venda pessoal e relações públicas. Por exemplo: uma promoção onde você compra um e ganha outro gratuitamente. Outros incluem cupons, descontos, competições, acessórios gratuitos (como uma lamina grátis com a compra de um barbeador), ofertas introdutórias (tais como: compre uma TV digital e ganhe a instalação gratuita), e muitos outros. Cada promoção de vendas deverá ser cuidadosamente avaliada e comparada com a segunda melhor alternativa.

3. Relações Públicas.

Relações Públicas é definida como ‘o deliberado, planejado e sustentável esforço para estabelecer e manter entendimento mutuou entre uma organização e seu público’ (Intuito de Relações Públicas). Relativamente barato, mas certamente não tão barato. Estratégias sucessivas tendem a serem de longo prazo e planejadas para todas eventualidades. Todas linhas aéreas exploram Relações Públicas; apenas veja o que acontece quando algum desastre acontece. Uma pré planejada ‘máquina’ de Relações Públicas atua rapidamente com um plano de reversão bem eficaz.

4. Correspondência Direta.

Correspondência direta é altamente focada em consumidores-alvo baseado em um banco de dados. Como com todo marketing, o potencial cliente é ‘definido’ baseado em uma série de atributos e similaridades. Agencias criativas trabalham com consumidores para desenhar uma comunicação altamente focada na forma de uma correspondência. A correspondência é enviada ao potencial cliente e respostas são cuidadosamente monitoradas. Por exemplo: se você estiver promovendo livros de medicina, você deverá usar um banco de dados contendo médicos (hospitais) como base para onde deverá enviar sua correspondência.

5. Feira de Comércio e Exibições.

Tais meios são excelentes para fazer novos contados e renovar contados antigos. Companhias raramente venderão muito em eventos como estes. A intenção é de tornar um produto ou serviço conhecido e encorajar a compra. Eles oferecem a oportunidade para companhias se reunirem com ambos o comércio e o comerciante. Expo recentemente finalizou na Alemanha com o próximo planejado para o Japão em 2005, apesar de uma recente diminuição de interesse em eventos como estes.

6. Propaganda.

Propaganda é um meio de comunicação ‘pago’. Ele é usado para desenvolver atitudes, criar conhecimento e transmitir informação para o ganho de uma resposta do mercado-alvo. Existem muitos meios de propaganda tais como jornais (locais, nacionais, gratuitos, comerciais), revistas, televisão (local, nacional, terrestre, satélite), cinema, promoção nas ruas (como pôsteres, anúncios em ônibus).

7. Patrocínio.

Patrocínio é onde uma organização paga para ser associada a um evento particular, causa ou imagem. Companhias patrocinarão eventos esportivos, tais como as Olimpíadas ou a Formula 1. Os atributos de um evento são associados à organização patrocinadora.

Os elementos da mistura (composto) promocional são integradas para formar uma campanha única mas coerente.

Profit and Loss Statement

Profit and Loss Statement

Profit and Loss Statement Lesson

The Profit and Loss statement is one of the main business financial statements. Among the various financial statements, a Profit and Loss statement most closely resembles what is referred to as "the bottom line". Since the purpose of a business is to earn a profit, both the business owner and outside entities such as bankers and investors have a keen interest in revenues.

The last stage in the development of a company’s Profit and Loss Statement is to outline a list of expenses associated with the ongoing operations of a company. Typical items displayed include utilities, rent and salaries. Just as income interest earned is reflected among income items, a company should also show display interest paid among its expenses. The sum of all expenses is obviously – Total Expenses.

The final step in the Profit and Loss Statement is the resulting of calculating the result of subtracting Total Expenses from Total Income, the result of which is called Net Income.

A Profit and Loss Statement provides a snapshot of a firms’ financial viability for a certain period of time, usually one year. Therefore, the "bottom line" reveals the company’s net earnings or losses. Net is a key term, because after the warm glow of sales income is felt, then comes the reality check of expenses and other costs which eat into profits.

Among the common components found in an income statement are net sales, the costs of goods sold, the costs of inventory if applicable, and regular expenses such as office rent, payroll, supplies, etc? When both negative and positive finances elements are revealed on an income statement, key components contributing to profit or loss for the period can be identified.

The structure of a Profit and Loss Statement begins by showing income received. Any financial impacts which reduce income, such as customer returns, must be are reflected.After all gross sales and negative financial impacts on those sales are taken into account; the company arrives at a Net Sales figure.

Of course, it costs a company to set up and prepare to provide products or services. These costs are reflected in the next section of the Profit and Loss Statement called the Cost of Goods Sold. Among typical costs outlined in this section are purchases for inventory or other costs associated with preparing a product to sell. The cost of Inventory (minus depreciation) value purchased but not yet utilized is subtracted before a sum total of Cost of Goods Sold is derived.

Once all costs are associated with product preparation are accounted for, the Profit and Loss Statement subtracts this figure to arrive at the Company’s Gross Profit. All cash flow coming into a company is not limited to that earned in actual sales transactions. The company may also experience increased income from the interest paid on its accounts.After all sources of income are included, the Profit and Loss Statement shows the company’s Total Income.

Pricing Strategies

 

In terms of the marketing mix some would say that pricing is the least attractive element. Marketing companies should really focus on generating as high a margin as possible. The argument is that the marketer should change product, place or promotion in some way before resorting to pricing reductions. However price is a versatile element of the mix as we will see.

marketing pricing
marketing pricing

Penetration Pricing.

The price charged for products and services is set artificially low in order to gain market share. Once this is achieved, the price is increased. This approach was used by France Telecom and Sky TV. These companies need to land grab large numbers of consumers to make it worth their while, so they offer free telephones or satellite dishes at discounted rates in order to get people to sign up for their services. Once there is a large number of subscribers prices gradually creep up. Taking Sky TV for example, or any cable or satellite company, when there is a premium movie or sporting event prices are at their highest – so they move from a penetration approach to more of a skimming/premium pricing approach.

Economy Pricing.

This is a no frills low price. The costs of marketing and promoting a product are kept to a minimum. Supermarkets often have economy brands for soups, spaghetti, etc. Budget airlines are famous for keeping their overheads as low as possible and then giving the consumer a relatively lower price to fill an aircraft. The first few seats are sold at a very cheap price (almost a promotional price) and the middle majority are economy seats, with the highest price being paid for the last few seats on a flight (which would be a premium pricing strategy). During times of recession economy pricing sees more sales. However it is not the same as a value pricing approach which we come to shortly.

Price Skimming.

Price skimming sees a company charge a higher price because it has a substantial competitive advantage. However, the advantage tends not to be sustainable. The high price attracts new competitors into the market, and the price inevitably falls due to increased supply.

Manufacturers of digital watches used a skimming approach in the 1970s. Once other manufacturers were tempted into the market and the watches were produced at a lower unit cost, other marketing strategies and pricing approaches are implemented. New products were developed and the market for watches gained a reputation for innovation.

 

The diagram depicts four key pricing strategies namely premium pricing, penetration pricing, economy pricing, and price skimming which are the four main pricing policies/strategies. They form the bases for the exercise. However there are other important approaches to pricing, and we cover them throughout the entirety of this lesson.

Psychological Pricing.

This approach is used when the marketer wants the consumer to respond on an emotional, rather than rational basis. For example Price Point Perspective (PPP) 0.99 Cents not 1 US Dollar. It’s strange how consumers use price as an indicator of all sorts of factors, especially when they are in unfamiliar markets. Consumers might practice a decision avoidance approach when buying products in an unfamiliar setting, an example being when buying ice cream. What would you like, an ice cream at $0.75, $1.25 or $2.00? The choice is yours. Maybe you’re entering an entirely new market. Let’s say that you’re buying a lawnmower for the first time and know nothing about garden equipment. Would you automatically by the cheapest? Would you buy the most expensive? Or, would you go for a lawnmower somewhere in the middle? Price therefore may be an indication of quality or benefits in unfamiliar markets.

Product Line Pricing.

Where there is a range of products or services the pricing reflects the benefits of parts of the range. For example car washes; a basic wash could be $2, a wash and wax $4 and the whole package for $6. Product line pricing seldom reflects the cost of making the product since it delivers a range of prices that a consumer perceives as being fair incrementally – over the range.

If you buy chocolate bars or potato chips (crisps) you expect to pay X for a single packet, although if you buy a family pack which is 5 times bigger, you expect to pay less than 5X the price. The cost of making and distributing large family packs of chocolate/chips could be far more expensive. It might benefit the manufacturer to sell them singly in terms of profit margin, although they price over the whole line. Profit is made on the range rather than single items.


Optional Product Pricing.

Companies will attempt to increase the amount customers spend once they start to buy. Optional ‘extras’ increase the overall price of the product or service. For example airlines will charge for optional extras such as guaranteeing a window seat or reserving a row of seats next to each other. Again budget airlines are prime users of this approach when they charge you extra for additional luggage or extra legroom.

Captive Product Pricing

Where products have complements, companies will charge a premium price since the consumer has no choice. For example a razor manufacturer will charge a low price for the first plastic razor and recoup its margin (and more) from the sale of the blades that fit the razor. Another example is where printer manufacturers will sell you an inkjet printer at a low price. In this instance the inkjet company knows that once you run out of the consumable ink you need to buy more, and this tends to be relatively expensive. Again the cartridges are not interchangeable and you have no choice.

Product Bundle Pricing.

Here sellers combine several products in the same package. This also serves to move old stock. Blu-ray and videogames are often sold using the bundle approach once they reach the end of their product life cycle. You might also see product bundle pricing with the sale of items at auction, where an attractive item may be included in a lot with a box of less interesting things so that you must bid for the entire lot. It’s a good way of moving slow selling products, and in a way is another form of promotional pricing.

Promotional Pricing.

Pricing to promote a product is a very common application. There are many examples of promotional pricing including approaches such as BOGOF (Buy One Get One Free), money off vouchers and discounts. Promotional pricing is often the subject of controversy. Many countries have laws which govern the amount of time that a product should be sold at its original higher price before it can be discounted. Sales are extravaganzas of promotional pricing!

Geographical Pricing.

Geographical pricing sees variations in price in different parts of the world. For example rarity value, or where shipping costs increase price. In some countries there is more tax on certain types of product which makes them more or less expensive, or legislation which limits how many products might be imported again raising price. Some countries tax inelastic goods such as alcohol or petrol in order to increase revenue, and it is noticeable when you do travel overseas that sometimes goods are much cheaper, or expensive of course.

Value Pricing.

This approach is used where external factors such as recession or increased competition force companies to provide value products and services to retain sales e.g. value meals at McDonalds and other fast-food restaurants. Value price means that you get great value for money i.e. the price that you pay makes you feel that you are getting a lot of product. In many ways it is similar to economy pricing. One must not make the mistake to think that there is added value in terms of the product or service. Reducing price does not generally increase value.

See also eMarketing Price and international Marketing price.

Our financial objectives in terms of price will be secured on how much money we intend to make from a product, how much we can sell, and what market share will get in relation to competitors. Objectives such as these and how a business generates profit in comparison to the cost of production, need to be taken into account when selecting the right pricing strategy for your mix. The marketer needs to be aware of its competitive position. The marketing mix should take into account what customers expect in terms of price.

There are many ways to price a product. Let’s have a look at some of them and try to understand the best policy/strategy in various situations.

Premium Pricing.

Use a high price where there is a unique brand. This approach is used where a substantial competitive advantage exists and the marketer is safe in the knowledge that they can charge a relatively higher price. Such high prices are charged for luxuries such as Cunard Cruises, Savoy Hotel rooms, and first class air travel.

Process – Marketing Mix

Process

Process as part of the marketing mix

Process is another element of the services marketing mix or 7Ps.There is a number of perceptions of the concept of process within the business and marketing literature. Some see processes as a means to achieve an outcome, for example – to achieve a 30% market share, a company implements a marketing planning process.

At each stage of the process, marketers:

  • Deliver value through all elements of the marketing mix. Process, physical evidence and people enhance services.
  • Feedback can be taken and the mix can be altered.
  • Customers are retained, and other services or products are extended and marked to them.
  • The process itself can be tailored to the needs of different individuals, experiencing a similar service at the same time.

Processes essentially have inputs, throughputs and outputs (or outcomes). Marketing adds value to each of the stages. Take a look at the lesson on value chain analysis to consider a series of processes at work.

There are a number of types of processes. Technological processes include the process of manufacturing goods and adapting them for the needs of clients. For example Rolls-Royce motor cars will build a Phantom which is adapted to the requirements of each individual client. There are also electronic processes which include things like Electronic Point-Of-Sale (EPOS), barcodes on products which are scanned on phones or by checkout people and other means such as loyalty cards.

Processes include direct activities and indirect activities. Direct activities add value at the customer interface as the consumer experiences the service. Many processes are supported by indirect activities, often known as back office activities, which support the service before, during and after it has been consumed.

Another view is that marketing has a number of processes that integrate together to create an overall marketing process, for example – telemarketing and Internet marketing can be integrated. A further view is that marketing processes are used to control the marketing mix, i.e. processes that measure the achievement of marketing objectives. All views are understandable, but not particularly customer focused.

For the purposes of the marketing mix, process is an element of service that sees the customer experiencing an organization’s offering. It’s best viewed as something that your customer participates in at different points in time. Here are some examples to help you build a picture of a marketing process, from the customer’s point of view.

Going on a cruise – from the moment that you arrive at the dockside, you are greeted; your baggage is taken to your room. You have two weeks of services from restaurants and evening entertainment, to casinos and shopping. Finally, you arrive at your destination, and your baggage is delivered to you. This is a highly focused marketing process, and is an example of the importance of process in enabling delivery of the customer proposition. Another way of looking at this example is that there is end to end service support, which has enabled transactions between the company and its customers. There are other ways in which the process supports the customer experience as we will see from the next section.

Product Life Cycle (PLC)


The Product Life Cycle (PLC)

The Product Life Cycle (PLC) is based upon the biological life cycle. For example, a seed is planted (introduction); it begins to sprout (growth); it shoots out leaves and puts down roots as it becomes an adult (maturity); after a long period as an adult the plant begins to shrink and die out (decline).

Decline.

At this point there is a downturn in the market. For example more innovative products are introduced or consumer tastes have changed. There is intense price-cutting and many more products are withdrawn from the market. Profits can be improved by reducing marketing spend and cost cutting.

Product Life Cycle

Problems with Product Life Cycle.

In reality very few products follow such a prescriptive cycle. The length of each stage varies enormously. The decisions of marketers can change the stage, for example from maturity to decline by price-cutting. Not all products go through each stage. Some go from introduction to decline. It is not easy to tell which stage the product is in. Remember that PLC is like all other tools. Use it to inform your gut feeling.

Another marketing tool for evaluating PRODUCT is the Three Levels of a Product.

In theory it’s the same for a product. After a period of development it is introduced or launched into the market; it gains more and more customers as it grows; eventually the market stabilises and the product becomes mature; then after a period of time the product is overtaken by development and the introduction of superior competitors, it goes into decline and is eventually withdrawn.

The Product Life Cycle (PLC) is based upon the biological life cycle. For example, a seed is planted (introduction); it begins to sprout (growth); it shoots out leaves and puts down roots as it becomes an adult (maturity); after a long period as an adult the plant begins to shrink and die out (decline).

In theory it’s the same for a product. After a period of development it is introduced or launched into the market; it gains more and more customers as it grows; eventually the market stabilises and the product becomes mature; then after a period of time the product is overtaken by development and the introduction of superior competitors, it goes into decline and is eventually withdrawn.

However, most products fail in the introduction phase. Others have very cyclical maturity phases where declines see the product promoted to regain customers.

Strategies for the differing stages of the Product Life Cycle.

Introduction.

The need for immediate profit is not a pressure. The product is promoted to create awareness. If the product has no or few competitors, a skimming price strategy is employed. Limited numbers of product are available in few channels of distribution.

Growth.

Competitors are attracted into the market with very similar offerings. Products become more profitable and companies form alliances, joint ventures and take each other over. Advertising spend is high and focuses upon building brand. Market share tends to stabilise.

Maturity.

Those products that survive the earlier stages tend to spend longest in this phase. Sales grow at a decreasing rate and then stabilise. Producers attempt to differentiate products and brands are key to this. Price wars and intense competition occur. At this point the market reaches saturation. Producers begin to leave the market due to poor margins. Promotion becomes more widespread and use a greater variety of media.

O Ciclo de Vida do Produto (CVP)

O Ciclo de Vida do Produto (CVP)

O Ciclo de Vida do Produto (CVP) é baseado no ciclo de vida biológico. Por exemplo: uma semente é plantada (introdução); ela começa a brotar (crescimento); dela nasce folhas e se enraíza ao se tornar adulta (maturidade); depois de um longo período como um adulto a planta começa a murchar e morre (declínio).

Declínio

Neste ponto ocorre uma diminuição no mercado. Por exemplo: produtos mais inovadores são introduzidos ou o gosto de consumidores está mudado. Há intenso corte de preços e muitos mais produtos são retirados do mercado. O lucro pode ser aumentado através de redução do dinheiro gasto com marketing e corte de custos.

Problemas com o Ciclo de Vida do Produto

Em realidade muito poucos produtos seguem um ciclo tão prescrito. O período de cada estágio varia enormemente. As decisões de comerciantes podem mudar o estágio, por exemplo: da maturidade ao declínio causado pela diminuição de preços. Nem todos os produtos passam por cada estágio. Alguns vão da introdução ao declínio. Não é fácil dizer em qual estágio o produto está. Se lembre que o CVP é como todas as outras ferramentas de análise. O use como uma forma de auxílio.

Outra ferramenta do marketing para avaliar um produto é o Três Níveis de um Produto

Teoricamente o mesmo acontece a um produto. Depois do período de desenvolvimento ele é introduzido ou lançado no mercado; ele ganha mais e mais clientes ao longo do tempo; eventualmente o mercado se estabiliza e o produto se torna maduro; então depois de um tempo o produto se torna ultrapassado pelo desenvolvimento e introdução de competidores superiores, ele encara sua fase de declínio e é eventualmente retirado do mercado. Apesar disso, muitos produtos falham na fase introdutória. Outros têm fases de maturidade muito cíclicas onde com o declínio têm o produto promovido para resgatar clientes.

PLC

Estratégicas para os estágios de diferenciação do Ciclo de Vida do Produto.

Introdução

A necessidade de lucro imediato não é uma pressão. O produto é promovido para que ele se torne conhecido. Se o produto não tem ou tem apenas alguns competidores, uma estratégia ´skimming´ de preço é aplicada, onde se deve concentrar em um grupo específico de clientes os quais não se importarão de pagar um preço mais alto ao produto. Um número limitado de produtos estão disponíveis em poucos canais de distribuição.

Crescimento

Competidores são atraídos ao mercado com ofertas muitos similares. Produtos se tornam mais lucrativos e companhias formam alianças, tomam riscos conjuntos e se tornam parte uma da outra. O gasto com propaganda é alto e se foca no crescimento da marca do produto. Market share (fatia do mercado) tende-se a estabilizar.

Maturidade

Os produtos que sobrevivem nos primeiros estágios tendem a gastar mais tempo nesta fase. O número de vendas alcançam uma taxa de crescimento e se estabiliza. A tentativa de produtores para diferenciar seus produtos e marcas é um ponto chave nesta fase. A guerra de preços e intensa competição ocorre. Neste ponto o mercado alcança saturação. Produtores começam a deixar o mercado por baixas margens de venda. Promoção se torna mais difundida e a midia é utilizada com mais variedade.

Marketing Place

Marketing Place

(A marketing channel is) . . . a set of interdependent organisations that help make a product or service available for use or consumption by the consumer or business user.

Kotler et al (2010)

A channel of distribution comprises a set of institutions which perform all of the activities utilised to move a product and its title from production to consumption.

Bucklin – Theory of Distribution Channel Structure (1966)

The Bucklin definition above albeit more than 50 years old still represents the basic concept of place in the marketing mix.

Marketing place has a number of names. Place is also known as channel, distribution or intermediary. It is the mechanism through which goods and/or services are moved from the manufacturer/ service provider to the user or consumer. So let’s take a look at some basic distribution or channel decisions, and how we decide on the best distribution channel for our product or service.

There are six basic ‘channel’ decisions:

  • Do we use direct or indirect channels? (e.g. ‘direct’ to a consumer, ‘indirect’ via a wholesaler).
  • Single or multiple channels.
  • Cumulative length of the multiple channels.
  • Types of intermediary (see later).
  • Number of intermediaries at each level (e.g. How many retailers in southern Spain?).
  • Which companies as intermediaries to avoid ‘intrachannel conflict’ (i.e. infighting between local distributors).

Selection Consideration – how do we decide upon a distributor?

  • Market segment – the distributor must be familiar with your target consumer and segment.
  • Changes during the Product Life Cycle – different channels can be exploited at different points in the PLC e.g. Foldaway scooters are now available everywhere. Once they were sold via a few specific stores.
  • Producer/distributor fit – Is there a match between their polices, strategies, image, and yours? Look for ‘synergy’.
  • Qualification assessment – establish the experience and track record of your intermediary.
  • How much training and support will your distributor require?

As you will be aware from your experiences as a consumer, producers rarely sell their goods or services directly to the person that consumes them. Marketing channels, or place in terms of the marketing mix, are the means by which interdependent organizations move products or services from the producer to the person that purchases or consumes the product. This is the basic role of distribution.

Different customers have different needs. Customers in different segments have different needs, for example a food distributor will sell flour in different ways when it sells to a hotel as opposed to when the sales to a wholesaler. A business customer will have different needs to a retail customer, for example a stationary distributor will sell printer paper in bulk directly to a large company but will sell a single ream (500 sheets) indirectly to the average householder via his local stationery store.

Types of Channel Intermediaries.

There are many types of intermediaries including wholesalers, agents, retailers, the Internet, licensing and franchising. The main modes of distribution will be looked at in more detail as follows:

Channel Intermediaries – Wholesalers

  • They break down ‘bulk’ into smaller packages for resale by a retailer.
  • They buy from producers and resell to retailers. They take ownership or ‘title’ to goods whereas agents do not (see below).
  • They provide storage facilities. For example, cheese manufacturers seldom wait for their product to mature. They sell on to a wholesaler that will store it and eventually resell to a retailer.
  • Wholesalers offen reduce the physical contact cost between the producer and consumer e.g. customer service costs, or sales force costs.
  • A wholesaler will often take on some of the marketing responsibilities. Many produce their own brochures and use their own telesales operations.

Channel Intermediaries – Agents

  • Agents are mainly used in international markets.
  • An agent will typically secure an order for a producer and will take a commission. They do not tend to take title to the goods. This means that capital is not tied up in goods. However, a ‘stockist agent’ will hold consignment stock (i.e. will store the stock, but the title will remain with the producer. This approach is used where goods need to get into a market soon after the order is placed e.g. foodstuffs).
  • Agents can be very expensive to train. They are difficult to keep control of due to the physical distances involved. They are difficult to motivate.

Channel Intermediaries – Retailers

  • Retailers will have a much stronger personal relationship with the consumer.
  • The retailer will hold several other brands and products. A consumer will expect to be exposed to many products.
  • Retailers will often offer credit to the customer e.g. electrical wholesalers, or travel agents.
  • Products and services are promoted and merchandised by the retailer.
  • The retailer will give the final selling price to the product.
  • Retailers often have a strong ‘brand’ themselves e.g. Ross and Wall-Mart in the USA, and Alisuper, Modelo, and Jumbo in Portugal.

Channel Intermediaries – Internet

  • The Internet has a geographically dispersed market.
  • The main benefit of the Internet is that niche products reach a wider audience e.g.
    Scottish salmon direct from an Inverness fishery.
  • There are low barriers to entry as set up costs are relatively small.
  • Use e-commerce technology (for payment, shopping software, etc)
  • There is a paradigm shift in commerce and consumption which benefits distribution via the Internet

There is a huge growth in online retailing. People buy physical products from companies such as Amazon or eBay, as well as a whole plethora of other smaller retailers marketing in a wide variety of small niches, also known as the long thin tail of marketing. There are many transaction related products such as theatre tickets and software upgrades that can be bought solely online. One way of segmenting Internet users was identified by McKinsey in 2000 and is summarised here as follows:

Simplifiers – experienced Internet users who seek convenience and low prices.

Surfers – an innovative minority who enjoy buying niche items and experiences based upon their own initiative.

Bargainers – price sensitive surfers looking for the best price.

Connectors – those new to the Internet who want to connect with others via Facebook and Twitter, with little knowledge to go much further.

Routiners – who have a small number of favourite sites which they visit often, such as online banking for example.

Sportsters – who spend most of their time looking at entertainment and sport.

Which of the above best represent you and your buyer behaviour when you are online?

Licensing and franchising

Some businesses are hothouses of ideas and innovation but they may lack expertise in terms of business and finance. In these situations licensing or franchising are an ideal option.

Licensing is essentially a contract which allows another business to manufacture or provide a service which conforms to your licence. Licensing is useful if the business wishes to quickly move into foreign countries, if manufacturing in a local market is too expensive then manufacturing could be undertaken overseas under licence, if shipping costs are too expensive or perhaps a market overseas would prefer a locally branded item. In return the licensee will get fees, will be able to penetrate a wide range of overseas markets, generally can control quality and production levels, and ultimately will be able to introduce new models as they arise.

Franchising is similar to licensing but tends to be used where there is a brand name or a particular format that a company owns. There are lots of familiar examples of franchising including KFC and many familiar high street and mall names – marketing everything from hamburgers to jewellery. Try to identify some franchises the next time that you go for a day out shopping.

Changing roles of logistics

Place also includes logistics. Logistics historically were largely about the physical distribution of goods from manufacturer to consumer by road and rail, sea and air. Logistics has undergone many changes since the 1970s. The cargo container was developed which reduced the amount of times the products needed loading on and off vehicles, and in and out of warehouses. More recently goods are loaded onto the container at the factory and products stay in the container until they are unloaded in at their final desination.

Supply chain management is now a focal discipline which takes logistics to the next level. Distribution is a central strategic management topic, and involves logistics professionals with highly technical information technology, resources and software.

The logistics manager integrates all elements of physical distribution and will optimise the flow of services and goods. There is a large amount of planning and organising in terms of the whole process, which includes selecting other agents and suppliers who are integrated into the process. Often logistics will integrate forwards with the supply chain of a large customer. An example of current thinking on logistics would include Just In Time Management (JIT) where components are delivered directly to manufacturing sites as the producers need them on the assembly line.

Let us consider the nature of distribution by looking at a very simple example of how it works in relation to our everyday experiences.

A basic example would be a tin of vegetable soup. The entire chain would begin with the seeds that the farmer sews and then plants. The farmer would sell the vegetables to the soup manufacturer, who would create soup from a recipe and then package the soup in a tin, and then bulk pack tins into a box and then those same boxes onto a pallet. The pallets would be driven by lorry or some other vehicle to a wholesaler. Independent retailers whilst visiting the wholesaler would break down a pallet and take a box of tinned soup. The retailer would return to his or her store and open the boxes of soup and place individual items onto a shelf next to similar products. The purchaser or customer would enter the store and buy a series of products including tinned soup. Having paid for the products the customer returned home and cooked soup for his or her family. The family eats the soup and they are the final consumers, as opposed to customers. This is an example of a very basic marketing channel in operation.


The case is that a manufacturer will attempt to maximise the accessibility of his product to as many consumers as possible. A prime example of this is Coca-Cola and their attempt to put a bottle of Coke within the arms reach of every consumer. For Coca-Cola this means a number of channels of distribution including manufacturing, transportation, bottling, wholesaling, retailing, vending machines and any other form of distribution you can think of. Coca-Cola maximises its accessibility.

Physical Evidence – Marketing Mix

Physical Evidence

Are you looking for physical marketing?

Physical evidence as part of the marketing mix

Services as we know are largely intangible when marketing. However customers tend to rely on physical cues to help them evaluate the product before they buy it. Therefore marketers develop what we call physical evidence to replace these physical cues in a service. The role of the marketer is to design and implement such tangible evidence. Physical evidence is the material part of a service.

Physical Environment

The physical environment is the space by which you are surrounded when you consume the service. So for a meal this is the restaurant and for a journey it is the aircraft that you travel inside. The physical environment is made up from its ambient conditions; spatial layout and functionality; and signs, symbols, and artefacts (Zeithaml 2000).

Ambience

The ambient conditions include temperature, colour, smell and sound, music and noise. The ambience is a package of these elements which consciously or subconsciously help you to experience the service. Ambience can be diverse. The ambience of a health spa is relaxing and calm, and the music and smells underpin this experience. The ambience of a nightclub will be loud noise and bright lights which enhance this customer experience, obviously in a different way. The marketer needs to match the ambience to the service that is being delivered.

Spatial Layout

The spatial layout and functionality are the way in which furniture is set up or machinery spaced out. Think about the spatial layout of your local cinema, or a church or temple that you have visited and how this affects your experience of the service. Functionality is more about how well suited the environment is to actually accomplish your needs. For example is the seat in the cinema comfortable, or can you reach your life jacket when on an aircraft?

Corporate branding (signs, symbols and artefacts)

Finally corporate image and identity are supported by signs, symbols and artefacts of the business itself. Examples of this would be the signage in Starbucks which reassures the consumer through branding. When you visit an airport there are signs which guide you around the facility smoothly, as well as statues and logos displayed throughout the complex. This is all important to the physical evidence as a fundamental element of the services marketing mix.

There are many examples of physical evidence, including some of the following:

  • The building itself (such as prestigious offices or scenic headquarters). This includes the design of the building itself, signage around the building, and parking at the building, how the building is landscaped and the environment that surrounds the building. This is part of what is known as the servicescape.
  • The interior of any service environment is important. This includes the interior design of the facility, how well it is equipped, internal signage, how well the internal environment is laid out, and aspects such as temperature and air conditioning. This is also part of the servicescape.
  • Packaging.
  • Internet/web pages.
  • Paperwork (such as invoices, tickets and dispatch notes).
  • Brochures.
  • Furnishings.
  • Signage (such as those on aircraft and vehicles).
  • Uniforms and employee dress.
  • Business cards.
  • Mailboxes.
  • Many others . . .

A sporting event is packed full of physical evidence. Your tickets have your team’s logos printed on them, and players are wearing uniforms (i.e. the team colors/colours and clothing). The stadium itself could be impressive and have an electrifying atmosphere. You travelled there and parked quickly nearby, and your seats are comfortable and close to restrooms and store. All you need now is for your team to win!

Some organizations depend heavily upon physical evidence as a means of marketing communications, for example tourism attractions and resorts (e.g. Disney World), parcel and mail services (e.g. UPS Courier Services), and large banks and insurance companies (e.g. Lloyds of London). This is important to their corporate image. Of course there are other examples with a slightly more tangible offering such as Rolls-Royce motor cars and P&O cruises.

Philosophy and Theory of Marketing

The Philosophy and Theory of Marketing

Marketing has many definitions, too many to considered here. Gibson et al (1993) found over 100 definitions and argued that no single definition of marketing should be aimed for since it might limit the future development of marketing as an academic discipline.

What matters is the state of mind of the producer/seller – their philosophy of business. If this philosophy includes a concern for customers’ needs and wants, an appreciation of the benefits and satisfactions which are looked for, a genuine effort to establish dialogue and build a long term relationship then this is a marketing philosophy irrespective of whether or not the organisation possesses any personnel or function designated as ‘marketing.’

Baker (2000 p19)

The nature of marketing theory, or whether marketing theory is actually possible, has been the topic of debate for more than 40 years (Saren 2000 ). Initially a scientific approach, along the lines of the social sciences underpinned the aforementioned debate (Bartels 1951, Alderson and Cox 1948). This was based largely on empiricism, and tended to ignore the human nature of marketing as marketing managers crafted it. So conversely, the marketing management school viewed marketing from a manager’s perspective and took an opposing view that rejected the positivist notion and its empirical roots. Ramond (1962) contrasted the wisdom of the manager with scientific knowledge, since business acumen recognizes the low probability that given combinations of phenomena can or will be repeated. In other words, a scientific approach to marketing sought a generic structure, which it is argued is not possible since no two situations are ever the same. Any test of theory would not see a simple unambiguous question posed, with findings that are replicable since by their very nature markets are diverse and not all competitors have access to the same information, and even if they did managers are unlikely to create identical marketing plans. The scientific school cannot verify a generic approach to marketing.

A relativist approach that saw no agreement or common ground between the opposing views was put forward by Anderson (1983). The relativist approach saw no meeting of the mind between scientists with different worldviews and persuasions (Kuhn 1962). According to Saren (2000), eventually Hunt moved to a realist position, that saw pure empiricism counterbalanced by an acceptance that perceptions may be illusions, and that some perceptions were more accurate than others. Hunt (1971) concluded that no single philosophy dominates marketing

The academic discipline of marketing has core schools of thought, where marketing is seen as either a philosophy or as a function. Where marketing is considered a philosophy, the marketing concept is embedded in management thought. With the alternative view, where marketing is a function within a business, marketing is seen as a department, in the same way as accounting or personnel.

The History of Marketing

The history of marketing can be divided into three stages when considering the development of the marketing concept namely the emergence of the mass market ca 1850, the articulation of the modern marketing concept ca 1960, and the transition from the emphasis upon the transaction to the relationship ca 1990 (Baker 2000 p10-11).

Marketing planning has its roots in the marketing management school of the 1950’s. Here, marketing managers followed a largely structured, formalised, positivist approach to marketing planning. However in summary the marketing management school was developed largely by American academics, and was based upon an analytical approach that tended to include analysis, objectives, strategies and control. It has no single dominating visionary, but is based upon contributions from Kotler (1967), McCarthy (1960), Borden (1964), and others. Marion (1993) is critical of the marketing management school and argues that there has been nothing new since the 1960’s or even well before. Other opinion leaders, considering marketing from a European perspective, echo his view. Gummesson (1993) strongly opposed the American perspective and reasoned that textbooks are based upon limited real world data and are prescribed approaches for consumer goods businesses. Most companies do not market consumer goods. Gronroos (1994) was critical of the view presented by largely American textbooks that marketing was founded in the 1960’s and was based largely upon the 4P’s/marketing mix. Kent (1986) regarded process considerations more important than the structure offered by the marketing management school. The usefulness of the 4P’s/marketing mix was criticised by some European academics (Gronroos 1989,1990,1994, and Dixon and Blois 1983).

PESTEL

PESTEL Model

This lesson is about PESTEL analysis. As we know from our lesson on the marketing environment the wider macroenvironment impacts upon how marketing managers make decisions. During this lesson we’re going to look at how we audit and evaluate our external business environment. There are a number of acronyms which are popular for doing this including PEST (Political/Economic/Sociocultural/Technological), PESTEL (Political/Economic/Sociocultural/Technological/Environmental/Legal), SLEPT (Societal/Legal/Economic/Political/Technological), STEP (Society/Technological/Economic/Political) and others which include LE-PEST-C and SPECTACLES. They are all pretty much the same. Below are details of how to complete a PESTEL analysis, supported by some examples.

Political

The political environment revolves around the current government in a particular country in which we manufacture or trade, and also laws/legislation operate within your home market as well as overseas. If your government is socialist then perhaps there is a policy to tax more and to invest in the public sector. On the other hand if you have a more conservative or Republican government then the free-market is left to take control, taxation is less and there is often a smaller public sector.

Economic

The economic environment is a direct influence on all businesses. Obviously if you are studying marketing there is a huge element of economics within the topic itself, and you should be no stranger to the principles of economics. As we saw from our lesson on the marketing environment there is a macroenvironment, and internal environment and the microenvironment.

More specifically you’ll be at looking elements such as where a business is in terms of the current business cycle, and whether or not you are trading in a recession.

Sociocultural

The sociocultural environment embodies everything which is social and cultural within a nation or society. There are plenty of examples of society and culture on the marketing teacher website, so we recommend that you go to our lesson store and look through some of the consumer behaviour pages. Some notable examples would include the influence of learning, memory, emotion and perception, motivation, lifestyle and attitude and consumer culture. Have a look at the six living generations in America, social environment and class, the impact of your birth order on how you behave as a consumer and take a look at the eight types of online shoppers.

In a more general sense consider influences such as the increase in life expectation of Western consumers, and demographics which is the study of populations.

Technological

Technological factors are a multifaceted influencer. Let’s just think about the sorts of technology that you come in touch with almost daily. Smart phones such as Android and iPhone are now common – all – garden, and we are used to being able to access information and communication technology instantly no matter where we are. During studies or at work we have access to information on quick PCs and over the Internet, with faster broadband connections arriving in many parts of the world.

Technology also surrounds business processes. As we saw from our lesson on the functions within an organisation all departments use information technology or technology in one form or another. Our manufacturing operations will use technology to produce goods and services. Our logistics and warehousing functions use forklifts and lorries as well as order tracking technology and software. The customer service department will use communication technology to talk to customers but will also have access to internal systems, such as technology to simplify credit control and stock control for example. There are many, many more examples of technology.

Environmental

Environmentalism and marketing connect where marketing may affect the environment when serving consumers with products and services. There is an environmental movement which puts pressure on businesses, governments and everyday people to be green. There are a number of examples of how companies can be greener internally and externally, from addressing manufacturing today, to designing a much more sustainable future. A manufacturer might reduce the amount of waste produced as a result of the manufacturing process or a restaurant might reduce the amount of packaging or food waste. An environmental approach is set in today’s tactics, but will eventually be embedded in the strategic vision of the business.

Legal

When marketing overseas your business will need to take into account laws in the local market. For example cars sold in mainland Europe and the United States tend to be left-hand drive, whilst cars which are marketed in Japan and the United Kingdom right-hand drive. This is a local requirement. Different countries have different laws in relation to maximum speed limits and safety ratings on vehicles, as well as many other bylaws and codes.

 

PEST Analysis

PEST Analysis

What is PEST Analysis?

It is very important that an organization considers its environment before beginning the marketing process. In fact, environmental analysis should be continuous and feed all aspects of planning.

Political Factors.

The political environment revolves around the current government in a particular country in which we manufacture or trade, and also laws/legislation operate within your home market as well as overseas. If your government is socialist then perhaps there is a policy to tax more and to invest in the public sector. On the other hand if you have a more conservative or Republican government then the free-market is left to take control, taxation is less and there is often a smaller public sector.

The political arena has a huge influence upon the regulation of businesses, and the spending power of consumers and other businesses. You must consider issues such as:

1.How stable is the political environment?

2.Will government policy influence laws that regulate or tax your business?

3.What is the government’s position on marketing ethics?

4. What is the government’s policy on the economy?

5. Does the government have a view on culture and religion?

6. Is the government involved in trading agreements such as EU, NAFTA, ASEAN, or others?

Economic Factors.

The economic environment is a direct influence on all businesses. Obviously if you are studying marketing there is a huge element of economics within the topic itself, and you should be no stranger to the principles of economics. As we saw from our lesson on the marketing environment there is a macroenvironment, and internal environment and the microenvironment.

More specifically you’ll be at looking elements such as where a business is in terms of the current business cycle, and whether or not you are trading in a recession.

Marketers need to consider the state of a trading economy in the short and long-terms. This is especially true when planning for international marketing. You need to look at:

1. Interest rates.

2. The level of inflation Employment level per capita.

3. Long-term prospects for the economy Gross Domestic Product (GDP) per capita, and so on.

PEST Analysis

Sociocultural Factors.

The sociocultural environment embodies everything which is social and cultural within a nation or society. There are plenty of examples of society and culture on the marketing teacher website, so we recommend that you go to our lesson store and look through some of the consumer behaviour pages. Some notable examples would include the influence of learning, memory, emotion and perception, motivation, lifestyle and attitude and consumer culture. Have a look at the six living generations in America, social environment and class, the impact of your birth order on how you behave as a consumer and take a look at the eight types of online shoppers.

In a more general sense consider influences such as the increase in life expectation of Western consumers, and demographics which is the study of populations.

The social and cultural influences on business vary from country to country. It is very important that such factors are considered. Factors include:

1.What is the dominant religion?

2.What are attitudes to foreign products and services?

3.Does language impact upon the diffusion of products onto markets?

4.How much time do consumers have for leisure?

5.What are the roles of men and women within society?

6.How long are the population living? Are the older generations wealthy?

7.Do the population have a strong/weak opinion on green issues?

Technological Factors.

Technological

Technological factors are a multifaceted influencer. Let’s just think about the sorts of technology that you come in touch with almost daily. Smart phones such as Android and iPhone are now common – all – garden, and we are used to being able to access information and communication technology instantly no matter where we are. During studies or at work we have access to information on quick PCs and over the Internet, with faster broadband connections arriving in many parts of the world.

Technology also surrounds business processes. As we saw from our lesson on the functions within an organisation all departments use information technology or technology in one form or another. Our manufacturing operations will use technology to produce goods and services. Our logistics and warehousing functions use forklifts and lorries as well as order tracking technology and software. The customer service department will use communication technology to talk to customers but will also have access to internal systems, such as technology to simplify credit control and stock control for example. There are many, many more examples of technology.

Technology is vital for competitive advantage, and is a major driver of globalization. Consider the following points:

1. Does technology allow for products and services to be made more cheaply and to a better standard of quality?

2.Do the technologies offer consumers and businesses more innovative products and services such as Internet banking, new generation mobile telephones, etc?

3.How is distribution changed by new technologies e.g. books via the Internet, flight tickets, auctions, etc?

4.Does technology offer companies a new way to communicate with consumers e.g. banners, Customer Relationship Management (CRM), etc?

The organization’s marketing environment is made up of:

  • 1. The internal environment e.g. staff (or internal customers), office technology, wages and finance, etc.
  • 2. The micro-environment e.g. our external customers, agents and distributors, suppliers, our competitors, etc.
  • 3. The macro-environment e.g. Political (and legal) forces, Economic forces, Sociocultural forces, and Technological forces. These are known as PEST factors.

 

Análise PEST

Análise PEST

O que é a Análise PEST?

É muito importante que uma empresa considere fatores ambientais antes de iniciar o processo de marketing. Em fato, análises ambientais devem ser contínuas e preencher todos os aspectos do planejamento.

As influencias sociais e culturais de uma empresa variam de país para país. É de estrema importância que estes fatores sejam considerados, incluindo:

1. Qual é a região dominante?

2. Qual é a aceitação à produtos ou serviços importados?

3. A lingual tem algum impacto sobre a difusão de produtos no mercado?

4. Quanto tempo disponível consumidores possuem para lazer?

5. Qual é o papel do homem e da mulher na sociedade?

6. Qual é o expectativa de vida da população? As gerações mais antigas são mais ricas?

7. Qual é a opinião da sociedade em relação a fatores ambientais?

Fatores Tecnológicos

Tecnologia é vital para atingir uma vantagem sobre a competição, e é um fator principal da globalização.

Considere os pontos à seguir:

1. A tecnologia facilita produtos e serviços serem fabricados por um preço mais baixo e melhor qualidade?

2. A tecnologia oferece a consumidores e empresas produtos e serviços mais inovadores como o Internet banking (acesso a contas bancárias online), nova geração de telefones celulares, etc?

3.Como tem mudado a distribuição de produtosserviços através de novas tecnologias, tais como: livros online, passagem aéreas, leilões, etc?

4. A tecnologia oferece a companhias uma nova forma de comunicação a seus consumidores, por exemplo: banners, Customer Relationship Management (CRM) (Gerenciamento do relacionamento com o cliente), etc?

Os fatores ambientais do marketing de uma empresa são:

1. Fatores ambientais internos, como: funcionários (ou clientes internos), tecnologia do escritório, salários e finanças, etc.

2. Fatores micro-ambientais, tais como: clientes externos, agentes e distribuidores, fornecedores, a competição, etc.

3. Fatores macro-ambientais, tais como: Poderes Políticos (e legais), poderes econômicos, Sociocultural, e Tecnológicos. Estes são conhecidos como fatores PEST.(Fatores Políticos, Econômicos, Socioculturais, Tecnológicos.

Análise PEST

Fatores Políticos

A área política representa enorme influência sobre as regras empresariais, e o poder de compra de clientes e outras empresas. Você sempre deve considerar fatores como:

1. Quanto estável é o ambiente político?

2. Poderão regras governamentais influenciar leis que regulam os impostos pagos por seu negócio?

3. Qual é o posicionamento do governo em relação à éticas de marketing?

4. Qual é a política governamental sobre a economia?

5. O governo tem alguma visão sobre a cultura e religião?

6. O governo está envolvido em negociações tais como o EU, NAFTA, ASEAN, entre outros?

Fatores Econômicos

Comerciantes precisam considerar o estado de uma economia de negócios no curto e longo prazo. Isto é especialmente real no planejamento de marketing internacional. Você deve considerar:

1. Margem de juro.

2. O nível de inflação, nível de emprego (per capita).

3. Prospecto ao longo prazo da empresa, Produto Interno Bruto (PIB) per capita.

Fatores Socioculturais

People – Marketing Mix

People

People as part of the marketing mix

People are the most important element of any service or experience. Services tend to be produced and consumed at the same moment, and aspects of the customer experience are altered to meet the individual needs of the person consuming it. Most of us can think of a situation where the personal service offered by individuals has made or tainted a tour, vacation or restaurant meal. Remember, people buy from people that they like, so the attitude, skills and appearance of all staff need to be first class. People have an important role in service delivery, they are relied upon to deliver and maintain transactional marketing and people play an important part in the customer relationship.

Personal Selling

There are different kinds of salesperson. There is the product delivery salesperson. His or her main task is to deliver the product, and selling is of less importance e.g. fast food, or mail. The second type is the order taker, and these may be either ‘internal’ or ‘external.’ The internal sales person would take an order by telephone, e-mail or over a counter. The external sales person would be working in the field. In both cases little selling is done.

The next sort of sales person is the missionary. Here, as with those missionaries that promote faith, the salesperson builds goodwill with customers with the longer-term aim of generating orders. Again, actually closing the sale is not of great importance at this early stage. The forth type is the technical salesperson, e.g. a technical sales engineer. Their in-depth knowledge supports them as they advise customers on the best purchase for their needs. Finally, there are creative sellers. Creative sellers work to persuade buyers to give them an order. This is tough selling, and tends to offer the biggest incentives. The skill is identifying the needs of a customer and persuading them that they need to satisfy their previously unidentified need by giving an order.

Customer Service

Many products, services and experiences are supported by customer services teams. Customer services provide expertise (e.g. on the selection of financial services), technical support (e.g. offering advice on IT and software) and coordinate the customer interface (e.g. controlling service engineers, or communicating with a salesman). The disposition and attitude of such people is vitally important to a company. The way in which a complaint is handled can mean the difference between retaining or losing a customer, or improving or ruining a company’s reputation. Today, customer service can be face-to-face, over the telephone or using the Internet. People tend to buy from people that they like, and so effective customer service is vital. Customer services can add value by offering customers technical support, expertise and advice.

People deliver services in all sorts of settings. It is an important element of the services marketing mix. If you go to an organized event such as the Olympics then everything about the experience is underpinned by people. Behind-the-scenes there are project managers and chefs, maitre d’ and accountants. The people deliver the service and this is the same for restaurants, hairdressers and auto mechanics.

People are the transactional interface between the company and its customers so people deliver the service and they collect money i.e. get paid on behalf the company for the service. So if you go to a restaurant the waiter will greet you, take your order and serve your food and finally he or she will take the money which completes the contractual transaction.

People underpin the customer relationship between the company and the consumer. Remember that people buy from people (as we always remind you on Marketing Teacher) and that the relationship between the person you are dealing with and yourself add much value to the transaction.

If you know you’re going to eat at your favorite restaurant, it a good idea to learn the waiter’s name and build a rapport. Think of other times such as when you were selling a property and an agent was a particularly reliable and polite person, or perhaps you bought a car because you trusted the salesperson and this advantage clinched the deal. Marketing today is based on Customer Relationship Management (CRM) and the relationship with people that you’re dealing with at the company can recruit you as a customer, retaining you as a customer and encourage you to remain a customer in the future. This is where people underpin the long-term customer relationship.

Here are some ways in which people add value to an experience as part of the marketing mix. Let’s consider training, personal selling and customer service.

Training.

All customer facing personnel need to be trained and developed to maintain a high quality of personal service. Training should begin as soon as the individual starts working for an organization during an induction. The induction will involve the person in the organization’s culture for the first time, as well as briefing him or her on day-to-day policies and procedures. At this very early stage the training needs of the individual are identified. A training and development plan is constructed for the individual which sets out personal goals that can be linked into future appraisals. In practice most training is either ‘on-the-job’ or ‘off-the-job.’ On-the-job training involves training whilst the job is being performed e.g. training of bar staff. Off-the-job training sees learning taking place at a college, training center or conference facility. Attention needs to be paid to Continuing Professional Development (CPD) where employees see their professional learning as a lifelong process of training and development.

O que é Marketing?

O que é Marketing?

Algumas definições básicas de marketing e seu conceito.

Definições de Marketing.

Existem muitas definições de marketing. As melhores definições são focadas na orientação e satisfação das necessidades do cliente.

A Filosofia de Marketing e seu Conceito

O conceito de marketing é uma filosofia. Faz o cliente, e a satisfação de suas necessidades, o ponto foco de todas as atividades empresariais. É movido pelos gerentes gerais, apaixonados pela satisfação de seus clientes.

Marketing não é apenas mais abrangente do que a venda, não é de nenhuma forma uma atividade especializada, marketing abrange uma área empresarial por completo. É o negócio completo visto de um ponto de vista do resultado final, isto é, do ponto de vista do cliente. O interesse e responsabilidade pelo marketing devem consequentemente difundir todas as áreas da empresa.

Drucker

Esta filosofia de foco ao cliente é conhecida como o ‘conceito de marketing’. O conceito de marketing é uma filosofia, não um sistema de marketing ou uma estrutura organizacional. É fundada na idéia que vendas rentáveis e retornos satisfatórios baseados no investimento apenas podem ser atingidos identificando, antecipando e satisfazendo necessidades e desejos do cliente.

Barwell

O êxito dos gols de uma corporação atingindo e sobressaindo necessidades do cliente melhor do que a competição.

Jobber

Implementação do conceito de marketing [nos anos 90] exige a atenção de três elementos básicos do conceito de marketing. Eles são: Orientação do cliente; Uma organização para implementar uma orientação ao cliente; Cliente de longo alcance e bem-estar social.

Cohen

Agora que você foi introduzido à algumas definições de marketing e o conceito de marketing, se lembre dos importantes elementos contidos a seguir:

Marketing foca na satisfação das necessidades, desejos e exigências do cliente.

  • A filosofia de marketing necessita de ser possuída por todos dentro da organização.
  • Necessidades futuras devem ser identificadas e antecipadas.
  • Há normalmente um foco sobre a rentabilidade, especialmente no setor corporacional. Entretanto, como organizações do setor público e organizações que não visam lucro adotam o conceito de marketing.
  • Definições mais recentes reconhecem a influencia do marketing sobre a sociedade.

Marketing é o processo social pelo qual indivíduos e grupos obtêm o que eles querem e precisam através da criação e troca de produtos e valores com outros

Kotler

Marketing é o gerenciamento de processos que define, antecipa e satisfaz as exigências do cliente lucrativamente –

The Chartered Institute of Marketing (CIM)

A definição do CIM (o mesmo que a definição do conceito de marketing de Barwell) não procura identificar as necessidades do consumidor, mas também em satisfazê-los (curto prazo) e antecipá-los no futuro (longo prazo de retenção).

O produto certo, no lugar certo, na hora certa, no preço certo –

Adcock

Esta é uma definição vigorosa e realista que usa os Quatro Ps de McCarthy.

Marketing é essencialmente sobre a união de recursos de uma organização de modo que alcancem as necessidades de mudança do cliente o qual a organização depende.

Palmer

Esta é uma definição mais recente e bastante realista que investiga a harmonização entre capacidades e necessidades.

Marketing é o processo por meio do qual a sociedade, para suprir as necessidades do consumo, evolui os sistemas de distribuição compostos de participantes, os quais, interagindo sob limitações – técnicas (economia) e éticas (social) – cria as transações ou os fluxos que resolvem as separações do mercado e resultam na troca e no consumo.

Bartles

Esta definição considera os aspectos econômicos e sociais de marketing.

Introduction to Marketing Research

Introduction to Marketing Research

Market research and marketing research are often confused. ‘Market’ research is simply research into a specific market. It is a very narrow concept. ‘Marketing’ research is much broader. It not only includes ‘market’ research, but also areas such as research into new products, or modes of distribution such as via the Internet. Here are a couple of definitions:



The Marketing research Process.

Marketing research is gathered using a systematic approach. An example of one follows:

1. Define the problem. Never conduct research for things that you would ‘like’ to know. Make sure that you really ‘need’ to know something. The problem then becomes the focus of the research. For example, why are sales falling in New Zealand?

2. How will you collect the data that you will analyze to solve your problem? Do we conduct a telephone survey, or do we arrange a focus group? The methods of data collection will be discussed in more detail later.

3. Select a sampling method. Do we us a random sample, stratified sample, or cluster sample?

4. How will we analyze any data collected? What software will we use? What degree of accuracy is required?

5. Decide upon a budget and a timeframe.

6. Go back and speak to the managers or clients requesting the research. Make sure that you agree on the problem! If you gain approval, then move on to step seven. 7. Go ahead and collect the data.

8. Conduct the analysis of the data.

9. Check for errors. It is not uncommon to find errors in sampling, data collection method, or analytic mistakes.

10. Write your final report. This will contain charts, tables, and diagrams that will communicate the results of the research, and hopefully lead to a solution to your problem. Watch out for errors in interpretation.


Sources of Data – Primary and Secondary

There are two main sources of data – primary and secondary. primary research is conducted from scratch. It is original and collected to solve the problem in hand. secondary research, also known as desk research, already exists since it has been collected for other purposes.

We have given a general introduction to marketing research. Marketing research is a huge topic area and has many processes, procedures, and terminologies that build upon the points above. (See also lesson on primary marketing research and secondary marketing research).

"Marketing research is the function that links the consumer, customer, and public to the marketer through information – information used to identify and define marketing opportunities and problems; generate, refine, and evaluate marketing actions; monitor marketing performance; and improve understanding of marketing as a process. Marketing research specifies the information required to address these issues, designs the methods for collecting information, manages and implements the data collection process, analyzes, and communicates the findings and their implications."

American Marketing Association (AMA) – Official Definition of Marketing Research

How do the professionals do marketing research?

Obviously, this is a very long and involved definition of marketing research.

"Marketing research is about researching the whole of a company’s marketing process."

Palmer (2000).

This explanation is far more straightforward i.e. marketing research into the elements of the marketing mix, competitors, markets, and everything to do with the customers.

Secondary Marketing Research

Secondary Marketing Research

Secondary marketing research, or desk research, already exist in one form or another. It is relatively cheap, and can be conducted quite quickly .However, it tends to have been collected for reasons other than for the problem or objective at hand. So it may be untargeted, and difficult to use to make comparisons (e.g. financial data gather on Australian pensions will be different to data on Italian pensions).

We have given a general introduction to marketing research. Marketing research is a huge topic area and has many processes, procedures, and terminologies that build upon the points above. (See also lesson on market research and primary marketing research)

There are a number of such sources available to the marketer, and the following list is by no means conclusive:

  • Trade associations
  • National and local press Industry magazines
  • National/international governments
  • Websites
  • Informal contacts
  • Trade directories
  • Published company accounts
  • Business libraries
  • Professional institutes and organisations
  • Omnibus surveys
  • Previously gathered marketing research
  • Census data
  • Public records

Microenvironment

Microenvironment

What is the microenvironment?

This lesson covers the microenvironment in greater detail. It considers the interface between a business and its microenvironment. Let’s just review what microenvironment is again based upon the earlier lesson on the marketing environment which contains the topic. Our microenvironment is the totality of people and other connected groups of people/organisations that are very close to the business, and which all have a direct and measurable impact upon the customer experience.

Distributors

Distributors are the intermediaries between the manufacturer and the consumer. Distributors are marketing companies too, and participate in the marketing process. Distributors are important channels since large manufacturing brands do not wish to distribute all the way to the final consumer. For example Coca-Cola cannot have a direct supplier relationship with every consumer (although it does have a strong brand relationship with consumers). Intermediaries perform this important distribution role.

There are a number of different levels of distribution. A window manufacturer might sell directly to the homeowner whereby there are no intermediaries. Often intermediaries would be a wholesaler, a retailer, or an agent. Each of these are covered in more detail in the lesson on place and the marketing mix.

Employees

Employees are those people that are employed to work for an organisation. Employees are an important because they drive value through customer satisfaction and embody the marketing concept. They are the vital interface between a brand and its customers. People buy from people and your employers build close customer relationships. Of course managing people and organizational behaviour/behavior are management disciplines in their own right. Employees would need to be recruited and trained, motivated and developed, all of which would support the functions and philosophy of marketing.

So as we said in our earlier lesson, examples of the influencers would include your company itself, your suppliers, any marketing or advertising agencies with whom you have a close working relationship, the segments and markets which you target and your competition.

Don’t forget to review your stakeholders which are those people and organisations that interconnect with your business that might not be paying for your products or services i.e. not your customers. Stakeholders are the publics with whom you interact for example your neighbours, and other interested parties. The key to the microenvironment is that it is relatively controllable and we have some influence over how things happen, whereas with the macroenvironment we have far less influence.

What are the elements of a business’s microenvironment?

Now let’s go on to consider the building blocks that make up our microenvironment. More specifically we are going to consider our customers, our stakeholders, our suppliers, our distributors, and our employees, all of whom make up our microenvironment.

Customers

Customers are vital to our business because without paying customers we have no business. When we define marketing we often talk about customer needs, how we identify needs, satisfy them and anticipate them into the future. Today when tend to focus less on products and services and more on customer i.e. customer orientation. We think less of the Product Life Cycle (PLC) and more about the Customer Life Cycle (CLC) whereby we attempt to recruit and retain customers, and then extend products and services to them throughout their lives. So know your customers well.

Stakeholders

Stakeholders are those members of the microenvironment that have a direct influence on your business although they are not generally paying customers. Employees (see below) are stakeholders in your business. The government or governments of countries in which you trade are all stakeholders. Your local community or neighbours are stakeholders, for example think of the local community’s influence when a car firm wants to build a new factory, or when an airport wants to build a new runway.

Competitors

Competitors influence your actions. If a competitor launches a new product for example, you will review your own marketing plan. Competitors, whom are part of your microenvironment and compete for your customers, might try to take your best employees and might distribute through the same channels as your company.

On some occasions you might collaborate with a competitor. There are examples of alliances and joint ventures in the car industry such as those between Toyota, Peugeot and Citroen in Europe.

Suppliers

Suppliers are those companies that supply your business with goods and services to which you add value through transformation. From a manufacturing point of view suppliers would supply raw materials and components which are transformed into finished goods. From a retail perspective suppliers would deliver produce which is broken down from bulk, packaged and merchandised in stores to attract customers and consumers. Today suppliers are a vital part of the supply chain, which sees valued-added at all stages from conception to consumption (and post-purchase evaluation).

Planos de Marketing

Planos de Marketing

Planos de marketing são vitais para o sucesso da campanha de marketing. Eles auxiliam a centrar a mente de companias e times no processo de marketing, por exemplo: o que será atingido e como nós pretendemos a fazer isso. Existem muitos métodos de planos de marketing. Marketing Teacher focalisa em cima estágios chave do plano. Este é contido no acrônomo polular chamado AOETC (AOSTC em inglês Analysis, Objetives, Strategies, Tactics, Controls).

Também veja as ferramentas abaixo para auditoria interna e externa:

Estágio 2 – Decida Objetivos de Marketing.

  • Específico – Seja preciso sobre oque você irá atingir.
  • Mensurável – Qualifique seus objetivos.
  • Atingível – Você não está tentando atingir demais?
  • Realístico – Você tem os recursos para tornar seus objetivos realidade (funcionários, dinheiro, equipamento, material, tempo)?
  • Programado – Decida quando você atingirá seu objetivo (Dentro de um mês? Em fevereiro de 2017?)

Se você nao usa as regras dos objetivos SMART, eles serão demasiadamente vagos e não serão realizados. Lembre-se de que o resto do plano depende do objetivo. Se ele não está correto, o plano poderá falhar.

Estágio 3 – ETRATÉGIAS – Descreva seu mercado-alvo

  • Qual é o seguimento? Como o segmento será alcançado? Como deveremos nos posicionar dentro do segmento?
  • Por que este segmento e não algum outro? (Isto de ajudará a focar).
  • Defina o segmento em termos demográfico e de acordo com o estilo de vida. Mostre como você pretende posicionar seu produto ou serviço dentro do segmento. Use outras ferramentas para assisti-lo em estratégias de marketing como Boston Matrix(Matris de Boston) , Ansoff’s Matrix (Matriz de Ansoff) , Bowmans Strategy Clock(Relógio Estratégico de Bowman), Porter’s Competitive Strategies(Estratégias de Competitividade de Porter), etc.

Estário 4 – Táticas de Marketing

Converta a estratégia para o composto de marketing (marketing mix, também conhecido como 4Ps). Abaixo estão as tátias de marketing.

  • Preço Seu custa mais, menos, ou é o mesmo da competição ou penatra o mercado?
  • Praça (ponto de venda) Sua campanha será direta, usará agents ou distribuidores etc?
  • Produto É vendido individualmente, parde de um pacote, em grandes volumes etc?
  • Promoção Qual midia vecê usará? Por exemplo: patrocínio, propaganda de rádio, equipe de vendas etc? Se lembre do composto de elementos como os ingredientes de uma receita de bolo. Você usará ovos, leite, mantega, farinha de trigo. No entanto, se você alterar a quantidade dos ingredientes, você influenciará o resultado final do bolo.

Estágio 5 – Controles de Marketing

Lembre-se que não existe planejamento sem controle. Controle é vital.

  • Custos iniciais.
  • Orçamentos mensais.
  • Cálculo de vendas.
  • Dados do Market share (fatia do Mercado).
  • Considere o cíclo do controle.

Finalmente, escreva um sumário sucinto (ou o sumário) que seja coloc na parte dianteira da planta. Isto ajudará outro a começ familiar com a planta sem ter que gastar a leitura do tempo ele todo. Coloc toda a informação de apoio em um apêndice na parte traseira da planta.

Finalmente, escreva um sumário sucinto (ou sinópse) que seja colocado na parte da frente do plano. Isto auxiliará outros a começar a se familializar com o plano sem ter de gartar muito tempo lendo todo o plano. Coloque toda informação de apoio em um apêndice no final do plano.

ANÁLISE

OBJETIVO.

ETRATÉGIAS.

TÁTICAS.

CONTROLES.

Estágio 1 – Análise da Situação (e Exame de Marketing).

  • Ambiente do Marketing.
  • Leis e regras.
  • Política.
  • O estágio atual da tecnologia.
  • Condições da economia.
  • Aspectos socioculturais.
  • Tendências da demanda.
  • Disponibilidade da mídia.
  • Interesse de futuros investidores.
  • Planos de marketing e campanhas dos competidores.
  • Fatores internos, como sua própria esperiência e disponibilidade de recursos.

Primary Marketing Research

 

Primary Marketing Research

 

1. Interviews

2. Mystery shopping

3. Focus groups

4. Projective techniques

5. Product tests

6. Diaries

7. Omnibus Studies

1.0 Interviews.

This is the technique most associated with marketing research. Interviews can be telephone, face-to-face, or over the Internet.

1.1 Telephone Interview.

Telephone ownership is very common in developed countries. It is ideal for collecting data from a geographically dispersed sample. The interviews tend to be very structured and tend to lack depth. Telephone interviews are cheaper to conduct than face-to-face interviews (on a per person basis).

Primary marketing research is collected for the first time. It is original and collected for a specific purpose, or to solve a specific problem. It is expensive, and time consuming, but is more focused than secondary research. There are many ways to conduct primary research. We consider some of them:

Advantages of telephone interviews

  • Can be geographically spread
  • Can be set up and conducted relatively cheaply
  • Random samples can be selected
  • Cheaper than face-to-face interviews

Disadvantages of telephone interviews

  • Respondents can simply hang up
  • Interviews tend to be a lot shorter
  • Visual aids cannot be used
  • Researchers cannot behavior or body language

1.2 Face-to-face Interviews.

Face-to face interviews are conducted between a market researcher and a respondent. Data is collected on a survey. Some surveys are very rigid or ‘structured’ and use closed questions. Data is easily compared. Other face-to-face interviews are more ‘in depth,’ and depend upon more open forms of questioning. The research will probe and develop points of interest.

Advantages of face-to-face interviews

  • They allow more ‘depth’
  • Physical prompts such as products and pictures can be used
  • Body language can emphasize responses
  • Respondents can be ‘observed’ at the same time

Disadvantages of face-to-face interviews

  • Interviews can be expensive
  • It can take a long period of time to arrange and conduct.
  • Some respondents will give biased responses when face-to-face with a researcher.

1.3 The Internet

The Internet can be used in a number of ways to collect primary data. Visitors to sites can be asked to complete electronic questionnaires. However responses will increase if an incentive is offered such as a free newsletter, or free membership. Other important data is collected when visitors sign up for membership.

Advantages of the Internet

  • Relatively inexpensive
  • Uses graphics and visual aids
  • Random samples can be selected
  • Visitors tend to be loyal to particular sites and are willing to give up time to complete the forms

Disadvantages of the Internet

  • Only surveys current, not potential customers.
  • Needs knowledge of software to set up questionnaires and methods of processing data
  • May deter visitors from your website.

1.4 Mail Survey

In many countries, the mail survey is the most appropriate way to gather primary data. Lists are collated, or purchased, and a predesigned questionnaire is mailed to a sample of respondents. Mail surveys do not tend to generate more than a 5-10% response rate. However, a second mailing to prompt or remind respondents tends to improve response rates. Mail surveys are less popular with the advent of technologies such as the Internet and telephones, especially call centers.

2.0 Mystery Shopping

Companies will set up mystery shopping campaigns on an organizations behalf. Often used in banking, retailing, travel, cafes and restaurants, and many other customer focused organizations, mystery shoppers will enter, posing as real customers. They collect data on customer service and the customer experience. Findings are reported back to the commissioning organization. There are many issues surrounding the ethics of such an approach to research.

3.0 Focus Groups.

Focus groups are made up from a number of selected respondents based together in the same room. Highly experienced researchers work with the focus group to gather in depth qualitative feedback. Groups tend to be made up from 10 to 18 participants. Discussion, opinion, and beliefs are encouraged, and the research will probe into specific areas that are of interest to the company commissioning the research.

Advantages of focus groups

  • Commissioning marketers often observe the group from behind a one-way screen
  • Visual aids and tangible products can be circulated and opinions taken
  • All participants and the researcher interact
  • Areas of specific interest can be covered in greater depth

Disadvantages of focus groups

  • Highly experienced researchers are needed. The are rare.
  • Complex to organize
  • Can be very expensive in comparison to other methods

4.0 Projective techniques.

Projective techniques are borrowed from the field of psychology. They will generate highly subjective qualitative data. There are many examples of such approaches including: Inkblot tests – look for images in a series of inkblots Cartoons – complete the ‘bubbles’ on a cartoon series Sentence or story completion Word association – depends on very quick (subconscious) responses to words Psychodrama – Imagine that you are a product and describe what it is like to be operated, warn, or used.

5.0 Product tests.

Product tests are often completed as part of the ‘test’ marketing process. Products are displayed in a mall of shopping center. Potential customers are asked to visit the store and their purchase behavior is observed. Observers will contemplate how the product is handled, how the packing is read, how much time the consumer spends with the product, and so on.

6.0 Diaries.

Diaries are used by a number of specially recruited consumers. They are asked to complete a diary that lists and records their purchasing behavior of a period of time (weeks, months, or years). It demands a substantial commitment on the part of the respondent. However, by collecting a series of diaries with a number of entries, the researcher has a reasonable picture of purchasing behavior.

7.0 Omnibus Studies.

An omnibus study is where an organisation purchases a single or a few questions on a ‘hybrid’ interview (either face-to-face or by telephone). The organisation will be one of many that simply want to a straightforward answer to a simple question. An omnibus survey could include questions from companies in sectors as diverse as heath care and tobacco. The research is far cheaper, and commit less time and effort than conducting your own research.

We have given a general introduction to marketing research. Marketing research is a huge topic area and has many processes, procedures, and terminologies that build upon the points above. (See also lesson on market research and secondary marketing research)

Informal Marketing Plans

Informal Marketing Plans

What is informal marketing planning?

Formal and informal approaches to marketing planning were investigated by Lyles (1993). This study found that neither had any relationship with business success. Over 60 studies into SME’s were collated by Shrader et al (1989). Their conclusion was that there are some benefits to informal marketing planning, especially in smaller firms.

The shift from formal to informal marketing planning tends to see the marketing planning process as something that is not linear but as something influenced by the behaviour of the marketer. The linear approach to planning ignores the human and organisational factors that impact upon the marketing planning process. Many organisations could find difficulty in closing the gap between the theory and practice of marketing planning. The reason for this is that a logical model of marketing planning is being superimposed upon an organisation. It ignores the behavioural and experiential inputs that the manager himself brings to the planning process (Piercy and Giles 1989). From this behavioural perspective, the plan is not a written document (Monroy 1985). The most recent manifestation of the inadequacy of the current literature was expressed by Greenley, Hooley and Saunders (2004).

Their criticism has resonance since it is based upon their dissatisfaction with the current focus upon ‘what’ decisions should be made, rather than ‘how’ they are made. They suggest two models of marketing planning, and propose directions for new research. The first model is the ‘direct effects’ model, and the second is the ‘moderator effects’ model. Whilst the call for new research into the topic of marketing planning is welcomed, the nature of the two models is informal, but more importantly the value of the individual marketing manager is omitted. Neither model refers to human behaviour, individual learning or experience.

The owner/manager tends to make business decisions based upon his or own experience and judgement. Once again there is disagreement regarding the link between such planning and decision-making in small businesses, with Robinson and Pearce (1993) finding that owners of small businesses did not link their decision-making process to formal planning. The formal nature of marketing planning is rejected by Piercy and Giles (1989).

There is recognition that the formal marketing planning process does not take into account the human realities of the planner. Marketing plans may in reality be driven from below by tactics rather than from above by strategies. These ideas are important since they not only see marketing planning taking place almost in reverse, but also because they offer informed criticism of the linear, formal planning process and begin to suggest that marketing planning in general is more informal than formal. It is also noticeable that Piercy and Giles (1989) do not see formal marketing planning as something adopted by large organisations with informal planning being practiced solely by small businesses or their owners. Informal marketing planning is also practiced by large organisations. Applying the same planning process to all organisations is like a doctor prescribing the same drug to all patients regardless of their ailment (McDonald 1986b). A series of criticisms of a written business plan were lodged by Monroy (1995).

A written business plan was rarely referred to after preparation, and there was little causality between business plan creation and business success. This view is supported by the earlier work of Bracker and Pearson (1986) in that the unstructured nature of planning was a process rather than a written document. If the process it not written and nor is it formal, what actually takes place? It is accepted that a written planning document is often the starting point (Kuratko 1995).

Formal Marketing Plans

Formal Marketing Plans

What are formal marketing plans?

Formal marketing planning is what is commonly thought of as marketing planning. It tends to be a systematic process that includes a series of stages. Few authors agree on the specifics of the process but it is common to see the marketing plan beginning with analysis, the development of strategy and the implementation of the marketing mix (Hooley et al 1996, Simkin 2000, Kotler 2001, Baker 2000, Dibb 2002).

Hence there is the use of a mission statement and corporate objectives. Such a strategic view is not common to all approaches. Commonly the organization’s size is ignored completely (Dibb 2002). Others place marketing planning after strategic planning (Kotler 2001, Wensley (in Baker 2003). There are many applications of marketing planning that create their own contradictions and confusions that simply underpin the fact that there is no straightforward, commonly accepted approach. There is often some overlap between the strategic and operational aspects of marketing planning (Varadarajan and Clark 1994)

Marketing planning is widespread (Dibb 2002) and has been adopted by a wide variety of organizations in almost every market and sector, such as the service sector (Greenley 1983), the manufacturing sector (Greenley 1982), cause relate marketing (Adkins 1999), arts marketing (Kerrigan et al 2004), as well as many others. The subject of marketing planning has generated a large number of papers, books and studies that have approached the subject in a number of ways. The earliest references to marketing planning were made in the 1960’s. Marketing planning for industrial products has been investigated (Ames 1960). Consumer manufacturing companies were scrutinized by Stasch and Lanktree in the 1980’s. Hopkins (1981) looked into 265 US companies of varying sizes. US grocery manufacturers from the top one-hundred spenders on advertising were examined in 1982 by Cosse and Swan. From a geographical point of view, the early research was done in the United States of America followed by research from British academics.

McDonald’s 1982 PhD thesis looked at the views of mainly directors and chief executives from UK companies, whilst Greenley (1982, 1983) investigated both manufacturing companies and service companies, all with varying turnovers and with differences in size. Therefore strategic versus tactical marketing planning may be an oversimplification. As can be seen from the short series of selected examples above, companies that adopt marketing planning come from a variety of market sectors, different countries and cultures, from companies with a range of turnovers.

Marketing plans, according to McDonald (2003), contain a series of steps that make up the marketing planning process. The steps are mission, corporate objectives, marketing audit, SWOT analysis, assumptions, marketing objectives and strategies, estimate expected results, identify alternative plans and mixes, budgets, and first year implementation programme. This is a typical formal marketing planning process. However McDonald tends to take a strategic perspective on marketing planning as opposed to a tactical/operational perspective, and this difference of perspective is one for which there are varying opinions in the marketing planning literature.

Strategic and Tactical – Marketing Planning Perspectives

The much emulated and generally highly regarded ‘McDonald’ approach to marketing planning contains a series of provisos or assumptions. It is strategic rather than tactical i.e. it is a corporate marketing plan. Definitions of strategic as opposed to tactical are cited below.

A strategic plan is a plan which covers a period beyond the next fiscal year. Usually this is for between three and five years.

(McDonald 2003 p31)

A tactical plan covers in quite a lot of detail about actions to be taken, by whom, during a short-term planning period. This is usually for one year or less.

(McDonald 2003 p31)

Marketing Plans and Consumer Behavior

Marketing Plans and Consumer Behavior

Nothing highlights the need for a cogent marketing plan like the doldrums of a slumping economy. That’s when small business owners observe radical changes in consumer behavior such as belt tightening, and the postponement of large purchases.

Among the many marketing plan elements that might be adjusted in reaction to a change in consumer behavior positioning may hold the most potential. Trout and Ries suggest a six-step question framework for successful positioning:

  • 1. What position do you currently own?
  • 2. What position do you want to own?
  • 3. Whom you have to defeat to own the position you want.
  • 4. Do you have the resources to do it?
  • 5. Can you persist until you get there?
  • 6. Are your tactics supporting the positioning objective you set?

Finally, a company’s adaptation to changes in consumer behavior might also be aided by using the following framework:

Psychological Inputs

Culture

Attitude

Learning

Perception

Purchase Decisions

Product

Location Choice

Brand Choice

Other Choices

A business is in a better position to weather an economic downturn when it is buttressed by a good marketing plan. A firms understanding of consumer behavior is enhanced if its marketing plan includes careful consideration of market segmentation, targeting and positioning.

Segmentation – is essentially the identification of subsets of buyers within a market who share similar needs and demonstrate similar buyer behavior. A company should evaluate each segment with regard to profit potential.

Targeting – Identifying a segment or series of segments of the market to concentrate on, i.e., to target.

Positioning – The term ‘positioning’ refers to your firm’s ability to influence the consumer’s perception of a product or service in relation to its competitors. You need to ask yourself, what is the position of our product in the mind of the consumer?

Behavioral Marketing Planning

Behavioral Marketing Planning

Marketing Planning and the Individual

Human and behavioral inputs are brought to marketing planning by the marketing manager himself or herself. The driver for the illogical approach of Piercy and Giles (1989) lies with the experience of managers. So where informal marketing planning recognized that there are different approaches to marketing planning, away from the structure and linear process of formal marketing planning, where the behavior of the manager influences the plan, a behavioral approach to marketing planning sees the individual at the center of the marketing plan.

Too much attention is given to the marketing audit, and the audit itself tends to ignore the organizational context of marketing planning i.e. the attitudes of individuals and groups to the process of planning (Martin 1987). The individuals and groups that shape the marketing plan, and their interaction, can affect the attainment of marketing objectives. Such a behavioral process will influence the efficiency and effectiveness of marketing planning. The nature of the marketing environment may also dictate the approach taken by the marketer when planning for marketing. In low change, low complexity situations marketing structure is the most important factor. However in high change, high complexity situations skilled managers secure better results (Bonomo and Crittenden cited in Wilson, Gilligan and Pearson 1992). There is recognition that moving away from structure to the skills of an individual may secure better results. The way in which the skills are applied is down to the behavior of the individual. How these skills are developed are down to the learning of the individual.

How these skills are developed are down to the learning of the individual. Learning and marketing planning begin to demonstrate some common traits. Dispensing with an oversimplified traditional formal marketing planning process sees the emergence of an iterative process (Piercy and Giles 1989). The marketer plans constantly and makes minor improvements as marketing occurs. An iterative marketing planning process is constantly reviewed and fine-tuned. The marketer reflects upon marketing planning and makes changes where necessary. Reflection is a key activity to behavioral marketing planning. Reflection is a key activity to experiential learning (Kolb 1984). There may be a relationship between behavioral marketing planning and individual learning.

The plan is driven by the individual and his human characteristics influence the plan. Such characteristics include the experience of the manager and the nature of his learning. The relationship between planning and human behavior is recognized in a number of ways. Culture is distinguished from planning techniques and specifications (King and Cleland 1978). Therefore corporate or national culture would influence, to an extent, the individual that plans for marketing. According to Martin (1987), they see that ‘human-based culture’ at both strategic and operational levels to be an antecedent of effective planning. Recognition of the human nature of marketing planning could dispel the mistaken beliefs that managers have (Piercy and Giles 1998). In contrast, a behavioral view of marketing planning sees fewer stages to the process itself. Strategies may evolve or emerge (Minzberg 1987). Culture influences the behavior of the planner (King and Cleland 1978). Analysis and planning are ongoing, and are not always deliberately written down as a formal ‘plan.’

Marketing Planning and the Size of the Organization

Marketing Planning and the Size of the Organization

Can any size of organization use marketing plans?

Marketing planning research has been based on organizations of various sizes. Most studies consider large corporations more specifically large multi-divisional companies (Ames 1968), companies selected from the top 100 US spenders on advertising (Cosse and Swan 1983), and companies with more than a £17 million turnover (Piercy and Thomas 1983). SME’s were investigated by Lancaster and Waddelow (1998).

Author(s)

Date

Medium

Co. Size

Subject

Lancaster and Waddelow

1998

Paper

SMEs

Use of learning logs as a means of marketing planning in SMEs

Hooley et al

1996

Paper

Various

Marketing Planning in Central/Eastern Europe

Greenley and Bayus

1996

Paper

UK and US companies of various sizes

Comparison of marketing planning decision making between UK and US companies

Piercy and Morgan

1994

Paper

Medium and Large Firms

Behavioral problems and analytical techniques in marketing plan credibility

Martin

1987

Paper

US companies of various sizes

Human element of marketing planning systems

Hooley, West and Lynch

1984

Study

UK companies of various sizes

Market orientation (including marketing planning)

McDonald

1984

Thesis

Directors and Senior Executives from a spectrum of UK organizations

Marketing planning in industrial companies

Piercy and Thomas

1983

Professional Magazine

£17 + turnover

Integration of long-term strategy with short-term budgets

Greenley

1983

Paper

Companies with various turnovers and sizes

Marketing Planning in UK Service Companies

Greenley

1982

Paper

Companies with various turnovers and sizes

Marketing Planning in UK Manufacturing Companies

Cosse and Swan

1982

Paper

Companies selected from ‘100 Leading National Advertisers’- Advertising Age

Strategic Marketing Planning by Product Managers

Stasch and Lanktree

1980

Paper

6 large US corporations

Longitudinal research into marketing planning effectiveness

Ames

1968

Paper

Large multi-divisional businesses listed in the Fortune 500

Marketing Planning for Industrial Products

A Summary of Marketing Planning Research by Company Size.

It demonstrates that size does not restrict the adoption of marketing planning. There is little evidence that large corporations always have marketing plans and the SME’s never have marketing plans. It is currently accepted that marketing is greatly underrepresented at board level in the United Kingdom, so how can it be that marketing planning only takes place at a strategic level in large corporations? Is it also fair to contend that SMEs do not plan for marketing simply because there is no evidence of a written formal marketing plan?

Companies of various sizes and turnovers were researched by Hooley, West and Lynch (1984) in the United Kingdom, and by Martin (1987) in the United States. Greenly and Bayus (1996) compared the marketing planning processes of both British and US companies of various sizes. Eastern European marketing planning processes of companies of various sizes were looked at by Hooley (1996). The size of organization varies between studies. The table below summarizes the different sizes of companies that plan for marketing.

Marketing Planning and the Marketing Manager

Marketing Planning and the Marketing Manager

The Relationship Between the Marketing Planning Process and the Marketing Manager

After considering the current management literature in depth, it has become apparent that there are four main categories of marketing planning based upon the relationship between the marketing planning process and the marketing manager. The four types of marketing planning are formal/functional, informal/functional, formal/individual and informal/individual.

Classification A: Formal/Functional

Kotler (1991) comprehensive, independent and periodic
McDonald (1984) logical model of planning
Lancaster and Massingham (1988) planning role of marketing management
Wesley (1994) activities a firm plans to take
Baker et al (1983), Ogunmokum (1990)
Robinson and Pearce (1984) positive relationship between planning and business success.
Hayes (1985) and Kallman and Shapiro (1978) planning nil/negative effect on performance
Kurato (1995) written planning document

Classification C: Formal/Individual

Shein (1987) planning ignores human and organizational factors
Martin (1987) human based culture a determining antecedent
Piercy and Thomas (1983) human nature of marketing planning

Classification B: Informal/Functional

Greenley, Hooley and Saunders (2004) how decisions are made
McDonald (1986b) different plans for different organizations
Monroy  (1995) objected to output of a business plan.
Bracker and Pearson (1986) unstructured nature of planning
Hannon and Atherton (1998) written plan not evidence of planning process
Piercy and Giles (1989) illogical sequence of activities

Classification D: Informal/Individual

Lancaster and Waddelow (1998) learning cycle advocated to SME marketing planners
Hill and McGowan (1998) use of learning diaries by marketing managers.
Revans (1978) Learning starts with the individual

The Relationship Between the Marketing Planning Process and the Marketing Manager


Classification C: Formal/Individual

There is an acceptance that planning ignores the human realities and organizational factors. The marketing manager influences the process of marketing planning. The human based culture and its regard for the individual influences the formal process of marketing planning (Shein (1987), Martin (1987) and Piercy and Thomas 1983)). Marketing planning is still a linear process with a series of steps. It is still logical and structured. However the impact of the plethora of attributes that the individual brings to the formal marketing plan are accepted.

Classification D: Informal/Individual

This is the behavioral classification. It recognizes the relationship between the individual, marketing planning and ELT. The process of marketing planning, albeit structured or illogical, is replaced by the individual’s own learning. The learning is generated through experience. It begins with the marketing manager since learning starts with the individual (Revans 1978). It need not take the form of a written plan. The plan is replaced by a written learning diary or by a recognition on the part of the individual marketing manager that learning through experience is taking place. Diaries assist individuals with reflection (Hill, McGowan and Maclaren 1999).The formal stages of the marketing planning process are removed, experiential learning has become an integrated part of the marketing planning process, and there is recognition of the importance of individual experiential learning.

The literature reviewed dates from the 1960’s to the current day. This allows for an overview of academic thought on the subject of marketing planning that allows for an up-to-date typology of marketing planning. The classifications are as follows:

Classification A: Formal/Functional

Marketing planning is a linear process with a series of prescribed steps. It is logical and structured. It spells out a series of activities that the plan needs to include in order to achieve its marketing objectives. It is recommended as an approach for all types and sizes of organization regardless of sector. It is a written, tangible document (McDonald (2003), Dibb (2002), Kotler (2001), Simkin (2000), Baker (2000), Hooley et al (1996)). This classification relates to the theory of marketing planning i.e. that a formalized marketing planning system will help a company to improve its performance. The marketing planner is seen as a role rather than an individual. Personal factors such as experience are not taken into account.

Classification B: Informal/Functional

There is a recognition that different organizations use different approaches to marketing planning. A formal written document is not the output of the marketing planning process, neither is it evidence that marketing planning has taken place. The nature of planning is unstructured. In fact the marketing planning process is not a series of prescribed steps but is an illogical series of activities (Greenley, Hooley and Saunders (2004), Lyle (1993) McDonald (1986b), Monroy (1995), Bracker and Pearson (1986), Hannon and Atherton (1998) and Piercy and Giles (1989)). The marketing planner is seen as a role rather than an individual. Human realities of the planner are not taken into account, and personal factors such as experience are ignored.

Marketing Planning and Performance

Marketing Planning and Performance

Will marketing planning improve performance?

Marketing as a discipline is not a precise science. However, the area of marketing planning does have its own theory, the validity of which is open to some criticism. The theory of marketing planning contends that a formalized marketing planning system will help a company to improve its performance (McDonald 1982). In other words a formal, systematic process of marketing planning assists an organization to improve business performance.

Nevertheless business success must be achievable in the absence of a written marketing plan since business success existed before written marketing plans. The level of formal or informal marketing planning, and whether or not a written document is evidence of marketing planning is returned to later in this chapter and on occasions throughout this thesis. Morgan et al (2000) found that the marketing dimension of a business benefited high business performance firms over low business performance firms. Here, firms were medium and large. No relationship between planning and business performance was found by Schwenk and Shrader (1993), and a nil or negative effect was found by Hayes (1985) and Kallman and Shapiro (1978). So the assertion that marketing planning and business success are related is open to some criticism. Marketing planning leads to business success for some organizations, may not in others, and may even have a negative effect on business success for others.

This is achieved by a ‘systematization’ of the process of marketing planning. It is this systematization that is core to the theory. The relationship between planning (i.e. planning in a general sense) and organizational performance has been the topic of much research. As with research into company size there is much dissimilarity between the subject matter of each study.

Firms employing formal marketing planning processes outperformed those that did not (Capon et al 1983). A positive relationship between marketing planning and business success was the finding of Baker (1983). The same positive relationship was found by Ogunmokum (1990) and Robinson and Pearce (1984) in small businesses. However untenable assumptions were made in these studies (Hannon and Atherton 1998). They consider the production of a paper-based marketing plan conclusive evidence that marketing planning has actually taken place. A written marketing plan is evidence of formal marketing planning. However, it may not necessarily follow that that producing a written document means business success. An assumption is made that implies that if no written marketing plan exists, then marketing planning does not take place.

Marketing Plans

Marketing Plans

Marketing plans are vital to marketing success. They help to focus the mind of companies and marketing teams on the process of marketing i.e. what is going to be achieved and how we intend to do it. There are many approaches to marketing plans. Marketing Teacher has focussed upon the key stages of the plan. It is contained under the popular acronym AOSTC.

Also see tools for internal/external audit:

Stage Two – Set marketing objectives.

SMART objectives.

  • Specific – Be precise about what you are going to achieve.
  • Measurable – Quantify you objectives.
  • Achievable – Are you attempting too much?
  • Realistic – Do you have the resource to make the objective happen (men, money, machines, materials, minutes)?
  • Timed – State when you will achieve the objective (within a month? By February 2010?).

If you don’t make your objective SMART, it will be too vague and will not be realized. Remember that the rest of the plan hinges on the objective. If it is not correct, the plan may fail.

Stage Three – Describe your target market

Stage Four – Marketing Tactics.

Convert the strategy into the marketing mix (also known as the 4Ps). These are your marketing tactics.

  • Price Will you cost plus, skim, match the competition or penetrate the market?
  • Place Will you market direct, use agents or distributors, etc?
  • Product Sold individually, as part of a bundle, in bulk, etc?
  • Promotion Which media will you use? e.g sponsorship, radio advertising, sales force, point-of-sale, etc? Think of the mix elements as the ingredients of a ‘cake mix’. You have eggs, milk, butter, and flour. However, if you alter the amount of each ingredient, you will influence the type of cake that you finish with.

Stage Five – Marketing Controls.

Remember that there is no planning without control. Control is vital.

  • Start-up costs.
  • Monthly budgets.
  • Sales figure.
  • Market share data.
  • Consider the cycle of control.

Finally, write a short summary (or synopsis) which is placed at the front of the plan. This will help others to get acquainted with the plan without having to spend time reading it all. Place all supporting information into an appendix at the back of the plan.

More lessons on Marketing Plans

ANALYSIS.

OBJECTIVES.

STRATEGIES.

TACTICS.

CONTROLS.

Stage One – Situation Analysis (and Marketing Audit).

  • Marketing environment.
  • Laws and regulations.
  • Politics.
  • The current state of technology.
  • Economic conditions.
  • Sociocultural aspects.
  • Demand trends.
  • Media availability.
  • Stakeholder interests.
  • Marketing plans and campaigns of competitors.
  • Internal factors such as your own experience and resource availability.

Marketing Planning (Advanced)

What is Marketing Planning?

Formal, Informal and Behavioral Approaches to Marketing Planning.

There is no commonly accepted definition or approach to marketing planning. This is because of a number of problems that pepper the marketing planning literature relating to the size of an organization, the market or sector in which it exists, its culture, and the human beings that work within it.

Author(s)

Date

Medium

Subject

Wensley et al

2002 ongoing

Study

The state of marketing knowledge and skills within UK organisations.

Lancaster and Waddelow

1998

Paper

Use of learning logs as a means of marketing planning in SMEs

Hooley et al

1996

Paper

Marketing Planning in Central/Eastern Europe

Greenley and Bayus

1996

Paper

Comparison of marketing planning decision making between UK and US companies

Piercy and Morgan

1994

Paper

Behavioral problems and analytical techniques in marketing plan credibility

McKee, Varadarajan and Vassar

1990

Paper

Recommended a taxonomy of marketing planning styles.

McDonald

1989

Paper

Barriers to marketing planning

Martin

1987

Paper

Human element of marketing planning systems

Carter

1985

Paper

Learning styles and learning environment of marketers (no LSI was used).

Hooley, West and Lynch

1984

Study

Market orientation (including marketing planning)

McDonald

1984

Thesis

Marketing planning in industrial companies

Piercy and Thomas

1983

Professional Magazine

Integration of long-term strategy with short-term budgets

Greenley

1983

Paper

Marketing Planning in UK Service Companies

Greenley

1982

Paper

Marketing Planning in UK Manufacturing Companies

McDonald

1982

Paper

International Marketing Planning.

Cosse and Swan

1982

Paper

Strategic Marketing Planning by Product Managers

Hopkins

1981

Paper

 

Stasch and Lanktree

1980

Paper

Improving Marketing Planning

Ames

1968

Paper

Marketing Planning for Industrial Products

A Summary of Marketing Planning Research (1968 – 2005) by study

There is a huge body of research that has considered marketing planning and its models, structures and processes, theory and typologies. The only one thing that is certain is that, after considering the findings of a number of studies and as the output of many informed views, there is no common agreement on a single definition or approach to marketing planning.

After considering the marketing planning literature in depth, it was concluded that marketing planning falls into three broad categories:

  • A. Formal marketing planning
  • B. Informal Marketing Planning
  • C. Behavioral marketing planning

By considering the array of perspectives and themes on the subject of the marketing planning process, the three aforementioned categorizes develop to form a contemporary typology of the marketing planning process that subcategorizes the marketing planning process as either formal or informal, and the marketing manager as a functional role or as an individual. See the table below for a summary of marketing planning research from 1968 until 2005.

Ambiente de Marketing

Ambiente de Marketing

O ambiente de marketing envolve e tem impacto sobre a organização. Existem três perspectivas fundamentais a respeito do ambiente e marketing, elas são: o ‘macro-ambiente’, o ‘micro-ambiente’ e o ‘ambiente interno’.

Essencialmente usamos abordagens de marketing para auxiliar a comunicação e gestão da mudança. O ambiente externo pode ser fiscalizado com mais detalhes usando outras abordagens, tais como: Análise SWOT, Cinco Forças de Michael Porter Análise ou Análise PEST.

O micro-ambiente

Este ambiente influencia diretamente a organização. Inclui fornecedores os quais lidam direto ou indiretamente, consumidores e clientes, e outros intervenientes locais. Micro normalmente está relacionado a algo pequeno, o que pode causar engano. Neste contexto, micro descreve o relacionamento entre empresas e as forças que controlam este relacionamento. É algo mais local, e a empresa pode exercer um nível de influência.

O macro-ambiente

Este inclui todos os fatores que podem influenciar a organização, mas são fatores estão diretamente fora de seu controle. Uma empresa geralmente não influencia nenhuma lei (apesar de que é aceitável que ela possa fazer parte de alguma organização ligada ao comércio). Isto muda constantemente, por isso as empresas precisam ser flexíveis para se adaptar. Pode haver uma competição acirrada e rivalidade no mercado. Globalização sugere que há sempre a ameaça de produtos substitutos e novos competidores. O ambiente em geral também está sempre mudando, e o comerciante precisa considerar as mudanças de cultura, política, economia e tecnologia.

 

SWOT Analysis

O ambiente interno

Todos os fatores que são internos à organização são conhecidos como "ambiente interno". Eles são geralmente controlados através da aplicação dos "Cinco Ms", que são homens (Men), dinheiro (Money), Máquinas, Materiais e Mercados. O ambiente interno é tão importante para a gestão da mudança como o externo. Como comerciantes chamamos o processo de gestão da mudança interna de "marketing interno".

Marketing Contexts

Marketing in Different Organizational Contexts

The marketing mix and the services marketing mix should be adapted for different organizational and business contexts. The examples below consider the contexts of FMCG, B2B, services marketing, voluntary and not-for-profit marketing and online marketing. Try to think of your own examples for each business context.

Service Organization

Service organizations are more likely to use the services marketing mix, which is also known as the 7Ps of marketing. So let’s consider a well-known service organization and evaluate how it adapts and modifies the marketing mix. For this example let’s look at Bupa which provide healthcare such as hospital care, health insurance, health assessments, care homes, dental care and other health services. Bupa also has some B2B services to businesses.

  • Bupa’s products are all private sector health related services.
  • Pricing is relatively expensive in comparison with the public sector which tends to be subsidised through taxation in many countries, for example Spain.
  • The services are delivered through healthcare professionals and privately owned hospitals and dental surgeries. Obviously place/distribution depends on which service you are consuming and where you are.
  • Bupa invests large sums in marketing communications in order to attract business from a number of profitable segments. So the business would use TV advertising, newspaper advertising and direct mail campaigns amongst others.
  • The process begins when you first have a health assessment and might end if you are unfortunate enough to need to use your healthcare insurance.
  • People would include the individuals that manage your healthcare as well as those that actually deliver the service such as nurses, dentists and doctors.
  • Physical evidence is the building in which the healthcare is delivered.

Voluntary and not-for-profit organizations

Voluntary and not-profit-organizations also apply the marketing mix in a slightly different way. Volunteering might include helping to clear land the good of the whole community or visiting elderly people in your area to care for them. Not-for-profit organizations will often run on donations or government funding, since they are not free but instead aim to breakeven. Examples include charities and local voluntary groups. For this example let’s consider the Olympic movement. Okay the Olympics is well-known for attracting huge investment from brands for sponsorship. However the Olympics depends on volunteers for many of its activities including media, editorial and press relations, international relations and all of the activities that go on at competition venues and Olympic villages – from laundry to restaurants.

  • The product would be the service that is provided free of charge by each individual.
  • The price would be the value to the person volunteering after having done some good for the wider community.
  • The place would be the location where the volunteering was delivered such as at an event at the Olympic village.
  • Promotion would be how the individual actually registered interest to volunteer (and in the case of London 2012 this was by Internet), although the Olympic movement is a huge exploiter of the public relations machine, as well as other media.
  • The people are the volunteers, the athletes and the public.
  • The process would be how the volunteer was recruited, trained and their experience of volunteering. Would they do it again?
  • The physical evidence is represented by the venues themselves and the city in which the games are located.
  • Online Businesses

    Finally let’s look at how an online business would adapt the marketing mix for its own target market. In fact as you are more than aware there are very many diverse online businesses, and they themselves cross between the various organizational types from voluntary organizations to FMCG companies as we have considered above. The post-dot-com era has seen many new types of businesses such as the auction site eBay and online retailer Amazon. There will also be emerging social media businesses and time will tell as to the level and nature of their success – if any.

    The example we will look at here is the online business ASOS which is a very successful online clothing and fashion retailer.

    • Their products are the latest fashions as seen on screen! They market a very wide range of products including sunglasses, men’s and women’s clothes, and footwear.
    • Pricing is comparatively reasonable in relation to competitors. The company markets products similar but not the same as much higher priced branded fashion.
    • The goods are sold online.
    • Much of ASOS’s original marketing was done online, although more recently the other elements of the marketing communications mix have been used.

    These are all examples of how the marketing mix can be adapted to suit different marketing contexts and business sectors.

    FMCG

    FMCG stands for Fast moving Consumer goods. Examples of FMCG products would include chocolate bars, toothpaste, newspapers, razors and similar items. In essence these are products that are regularly bought by consumers – hence fast moving. There is little in the way of a buyer decision process once a person is brand loyal, and decisions tend not to be made by teams or Decision-making Units (DMUs). Here’s an example of how the marketing mix is applied and adapted to FMCG products.

    Wrigley’s chewing gum is an example of an FMCG product.

    • The product has a number of varieties for example spearmint and peppermint.
    • It is priced at a relatively low amount to ensure that the product can be regularly consumed as a day to day item.
    • The chewing gum is sold in a wide variety of retail outlets including supermarkets, local stores, vending machines, petrol stations and others.
    • The branding is developed and its marketing communications mix applies many tools for example sales promotion and television advertising.

    B2B Organization

    A business-to-business organization is one which markets to organizations and companies rather to consumers. An example of a B2B organization is Oracle, the owner of Sun Microsystems.

    Oracle provides databases, middleware, applications, and server and storage systems for many large organizations. Their slogan is ‘Hardware and Software, Engineered to Work Together.’ In this instance Oracle also use the marketing mix, but in a different way to Wrigley’s chewing gum.

    • There are many products and core lines which are sold off the shelf or more likely they are adapted the needs of particular businesses that Oracle deals with. Oracle tailors its products to the individual needs of its business customers.
    • Pricing tends to be premium or skimming since there is a lot of added value through service and solutions.
    • Oracle’s products are marketed directly to large organizations or via a series of selected partners whom are able to deliver the same customer experience.
    • Oracle’s uses similar marketing communications channels as Wrigley’s, although it is more likely to employ relations sponsorship to maintain Oracle’s brand profile.

Marketing Environment

The Marketing Environment

The marketing environment surrounds and impacts upon the organization. There are three key elements to the marketing environment which are the internal environment, the microenvironment and the macroenvironment. Why are they important? Well marketers build both internal and external relationships. Marketers aim to deliver value to satisfied customers, so we need to assess and evaluate our internal business/corporate environment and our external environment which is subdivided into micro and macro.

Macroenvironment

The macroenvironment is less controllable. The macro environment consists of much larger all-encompassing influences (which impact the microenvironment) from the broader global society. Here we would consider culture, political issues, technology, the natural environment, economic issues and demographic factors amongst others.

Again for Walmart the wider global macro environment will certainly impact its business, and many of these factors are pretty much uncontrollable. Walmart trades mainly in the United States but also in international markets. For example in the United Kingdom Walmart trades as Asda. Walmart would need to take into account local customs and practices in the United Kingdom such as bank holidays and other local festivals. In the United Kingdom 2012 saw the 60th anniversary of Queen Elizabeth II’s reign which was a national celebration.

The United States and Europe experience different economic cycles, so trading in terms of interest rates needs to be considered. Also remember that Walmart can sell firearms in the United States which are illegal under local English law. There are many other macroeconomic influences such as governments and other publics, economic indicators such as inflation and exchange rates, and the level nature of the local technology in different countries. There are powerful influencers such as war (in Afghanistan for example) and natural disasters (such as the Japanese Fukushima Daiichi nuclear disaster) which inevitably would influence the business and would be out of its control.

To summarise, controllable factors tend to be included in your internal environment and your microenvironment. On the other hand less controllable factors tend to be in relation to your macro environment. Why not list your own controllable versus uncontrollable factors for a business of your choice?

Five Forces
SWOT Analysis
PEST

Internal Environment

The internal environment has already been touched upon by other lessons on marketing teacher. For example, the lessons on internal marketing and also on the functions within an organization give a good starting point to look at our internal environment. A useful tool for quickly auditing your internal environment is known as the Five Ms which are Men, Money, Machinery, Materials and Markets. Here is a really quick example using British Airways. Looking internally at men, British Airways employees pilots, engineers, cabin crew, marketing managers, etc. Money is invested in the business by shareholders and banks for example. Machinery would include its aircraft but also access to air bridges and buses to ferry passengers from the terminal to the aircraft. Materials for a service business like British Airways would be aircraft fuel called kerosene (although if we were making aircraft materials would include aluminium, wiring, glass, fabric, and so on). Finally markets which we know can be both internal and external. Some might include a sixth M, which is minutes, since time is a valuable internal resource.

Let’s look at an example of how the internal environment would impact a company such as Walmart. We are looking at the immediate local influences which might include its marketing plans, how it implements customer relationship management, the influence of other functions such as strategy from its top management, research and development into new logistics solutions, how it makes sure that it purchases high-quality product at the lowest possible price, that accounting is undertaken efficiently and effectively, and of course its local supply chain management and logistics for which Walmart is famous.

Microenvironment

The microenvironment is made from individuals and organizations that are close to the company and directly impact the customer experience. Examples would include the company itself, its suppliers, other marketing input from agencies, the markets and segments in which your business trades, your competition and also those around you (which public relations would call publics) who are not paying customers but still have an interest in your business. The Micro environment is relatively controllable since the actions of the business may influence such stakeholders.

Walmart’s Micro environment would be very much focused on immediate local issues. It would consider how to recruit, retain and extend products and services to customers. It would pay close attention to the actions and reactions of direct competitors. Walmart would build and nurture close relationships with key suppliers. The business would need to communicate and liaise with its publics such as neighbours which are close to its stores, or other road users. There will be other intermediaries as well including advertising agencies and trade unions amongst others.

Marketing Concept

Marketing Concept.

The marketing concept holds that achieving organisational goals depends on knowing the needs and wants of target markets and delivering the desired satisfaction better than competitors do.

Kotler and Armstrong (2010).

The marketing concept arrived after a series of other orientations that marketing companies underwent during the 20th Century. Initially there was production orientation where a company focused upon the science of manufacturing. Then there was a product orientation where a business is not only focused on the production processes but also upon the quality and desirability of a particular product. Then marketing companies progressed to a selling or sales orientation whereby products will proactively sold based upon features rather than the benefits to the individual customer and his or her needs. Hence the arrival of a market orientation which underpins our marketing concept, where needs and wants are satisfied through the delivery of value to satisfied customers. Below are some definitions of the marketing concept which demonstrate the breadth and scope of the term.

Marketing is not only much broader than selling, it is not a specialized activity at all. It encompasses the entire business. It is the whole business seen from the point of view of the final result, that is, from the customer’s point of view. Concern and responsibility for marketing must therefore permeate all areas of the enterprise.

Drucker (1955, 2007).

Implementation of the marketing concept [in the 1990’s] requires attention to three basic elements of the marketing concept. These are: customer orientation; an organization to implement a customer orientation; long-range customer and societal welfare.

Cohen (1991).

The marketing concept is a philosophy. It makes the customer and the satisfaction of his or her needs the focal point of all business activities. It is driven by senior managers, passionate about delighting their customers.

Now that you have been introduced to some definitions of marketing and the marketing concept, remember the important elements summarised as follows:

  • Contemporary marketing focuses on the satisfaction of customer needs, wants and requirements.
  • It’s about the delivery of value to satisfied customers, through an exchange process.
  • The philosophy of marketing needs to be owned by everyone from within the organization.
  • Future needs have to be identified and anticipated.
  • There is normally a focus upon profitability, especially in the corporate sector.
  • More recent definitions recognize the influence of marketing upon society.
  • There is a longer-term relationship with customers.

Marketing Audit

Marketing Audit

The marketing audit is a fundamental part of the marketing planning process. It is conducted not only at the beginning of the process, but also at a series of points during the implementation of the plan. The marketing audit considers both internal and external influences on marketing planning, as well as a review of the plan itself.

1.The Internal Marketing Environment.

What resources do we have at hand? (i.e. The FIVE ‘M’s):

  • MEN (Labor/Labour).
  • MONEY (Finances).
  • MACHINERY (Equipment).
  • MINUTES (Time).
  • MATERIALS (Factors of Production).
  • How is our marketing team organised?
  • How efficient is our marketing team?
  • How effective is our marketing team?
  • How does our marketing team interface with other organisations and internal functions?
  • How effective are we at Customer Relationship Management (CRM)?
  • What is the state of our marketing planning process?
  • Is our marketing planning information current and accurate?
  • What is the current state of New Product Development? (Product)
  • How profitable is our product portfolio? (Product)
  • Are we pricing in the right way? (Price)
  • How effective and efficient is distribution? (Place)
  • Are we getting our marketing communications right? (Promotion)
  • Do we have the right people facing our customers? (People)
  • How effective are our customer facing processes? (Process)
  • What is the state of our business’s physical evidence? (Physical Evidence)

2. The External Marketing Environment.

As a market orientated organisation, we must start by asking – What is the nature of our ‘customer?’ Such as:

What is the nature of competition in our target markets?

  • Our competitors’ level of profitability.
  • Their number/concentration.
  • The relative strengths and weaknesses of competition.
  • The marketing plans and strategies of our competition.

What is the cultural nature of the environment(s)?

  • Beliefs and religions.
  • The standards and average levels of education.
  • The evolving lifestyles of our target consumers.
  • The nature of consumerism in our target markets.

What is the demography of our consumers? Such as average age, levels of population, gender make up, and so on. How does technology play a part?

  • The level of adoption of mobile and Internet technologies.
  • The way in which goods are manufactured.
  • Information systems.
  • Marketing communications uses of technology and media.

What is the economic condition of our markets?

  • Levels of average disposable income.
  • Taxation policy in the target market.
  • Economic indicators such as inflation levels, interest rates, exchange rates and unemployment.

Is the political and legal landscape changing in any way?

  • Laws, for example, copyright and patents.
  • Levels of regulation such as quotas or tariffs.
  • Labour/labor laws such as minimum wage legislation.

3. A Review of Our Current Marketing Plan

  • What are our current objectives for marketing?
  • What are our current marketing strategies?
  • How do we apply the marketing mix? (Including factors covered above in (a))
  • Is the marketing process being controlled effectively?
  • Are we achieving our marketing budget?
  • Are we realising our SMART objectives?
  • Are our marketing team implementing the marketing plan effectively?
  • Levels of staffing.
  • Staff training and development.
  • Experience and learning.

What is our market share? (total sales/trends/sales by product or customer or channel) Are we achieving financial targets? (profit and margins/ liquidity and cash flow/ debt: equity ratio/ using financial ratio analysis)

There are a number of tools and audits that can be used, for example SWOT analysis for the internal environment, as well as the external environment. Other examples include PEST and Five Forces Analyses, which focus solely on the external environment.

In many ways the marketing audit clarifies opportunities and threats, and allows the marketing manager to make alterations to the plan if necessary.

This lesson considers the basics of the marketing audit, and introduces a marketing audit checklist. The checklist is designed to answer the question, what is the current marketing situation? Lets consider the marketing audit under three key headings:

  • The Internal Marketing Environment.
  • The External Marketing Environment.
  • A Review of Our Current Marketing Plan.

 

Marketing Budget

Marketing Budget

Failure to properly cost and budget your marketing plan could lead to problems. While insufficient funding for such items as equipment or staffing may immediately come to mind when budgeting for the whole business, it’s the lack of a properly constructed marketing budget that dooms many marketing plans and campaigns. A marketing budget is the marketing plan written in terms of costs.

Summary of the Marketing Budget

Marketing budgets ensure that your marketing plan or campaign is realistically costed. Some pre-budget research into your industry and market, your competitors and your business’s historical marketing metrics helps marketing managers make a more informed calculation. You should cost out all general marketing and marketing communications expenses. You could also work in conjunction with an accountant to make sure that the figures are complete and realistic.

Marketing Budget

A marketing budget is an estimate of projected costs to market your products or services. A typical marketing budget will take into account all marketing costs e.g. marketing communications, salaries for marketing managers, cost of office space etc. However much of the budget is concerned with marketing communications e.g. public relations, website, advertising, etc. Both are considered here.

The costs in a marketing budget will be allocated according to the campaign and the media to be utilized. Some prior research will be necessary for the cost estimates to be as realistic as possible. This is called advertising or marketing communications research.

Helpful Pre-budgeting Research

Knowledge of key industry and market factors must be taken into account when developing your marketing plan. Your plan will also be influenced by researching your competition. You will want to allot funding in a way that exploits the weaknesses of your competitors and emphasizes your strengths.

Other information that can guide your spending plan is found in your internal records. What advertising expenditures have proven successful for your business? For example, you can review internal records and determine the return on investment of your advertising dollars. A periodic examination of the performance of these records may lead you to drop certain media that have not proven fruitful.

Typical general marketing expenses:

  • Advertising agency commissions
  • Salaries for marketing managers
  • Salaries for marketing support e.g. marketing assistants.
  • Office space
  • Fixtures and fittings
  • Travel costs
  • Other direct and indirect marketing costs, including marketing communications costs (see below).

Typical marketing communications costs:

Introduction to Marketing Communications

Introduction to Marketing Communications

What are marketing communications?

Marketing communications is a subset of the overall subject area known as marketing. Marketing has a marketing mix that is made of price, place, promotion, product (know as the four P’s), that includes people, processes and physical evidence, when marketing services (known as the seven P’s).

Integrated marketing communications see the elements of the communications mix ‘integrated’ into a coherent whole. This is known as the marketing communications mix, and forms the basis of a marketing communications campaign.

How does marketing communications fit in? Marketing communications is ‘promotion’ from the marketing mix.

Why are marketing communications ‘integrated?’ Integrated means combine or amalgamate, or put simply the jigsaw pieces that together make a complete picture. This is so that a single message is conveyed by all marketing communications. Different messages confuse your customers and damage brands. So if a TV advert carries a particular logo, images and message, then all newspaper adverts and point-of-sale materials should carry the same logo, images or message, or one that fits the same theme. Coca-Cola uses its familiar red and white logos and retains themes of togetherness and enjoyment throughout its marketing communications.

Marketing communications has a mix. Elements of the mix are blended in different quantities in a campaign. The marketing communications mix includes many different elements, and the following list is by no means conclusive. It is recognised that there is some cross over between individual elements (e.g. Is donating computers to schools, by asking shoppers to collect vouchers, public relations or sales promotion?) Here are the key of the marketing communications mix.



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The Marketing Communications Mix.

Marketing and Functions

Marketing’s Relationship with other Functions

Functions within an organization

The marketing function within any organization does not exist in isolation. Therefore it’s important to see how marketing connects with and permeates other functions within the organization. In this next section let’s consider how marketing interacts with research and development, production/operations/logistics, human resources, IT and customer service. Obviously all functions within your organization should point towards the customer i.e. they are customer oriented from the warehouseman that packs the order to the customer service team member who answers any queries you might have. So let’s look at these other functions and their relationship with marketing.

Human resources

Human Resource Management (HRM) is the function within your organization which overlooks recruitment and selection, training, and the professional development of employees. Other related functional responsibilities include well-being, employee motivation, health and safety, performance management, and of course the function holds knowledge regarding the legal aspects of human resources.

So when you become a marketing manager you would use the HR department to help you recruit a marketing assistant for example. They would help you with scoping out the job, a person profile, a job description, and advertising the job. HR would help you to score and assess application forms, and will organise the interviews. They may offer to assist at interview and will support you as you make your job offer. You may also use HR to organise an induction for your new employee. Of course there is the other side of the coin, where HR sometimes has to get tough with underperforming employees. These are the operational roles of HR.

Your human resources Department also have a strategic role. Moving away from traditional personnel management, human resources sees people as a valuable asset to your organization. Say they will assist with a global approach to managing people and help to develop a workplace culture and environment which focuses on mission and values.

They also have an important communications role, and this is one aspect of their function which is most closely related to marketing. For example the HR department may run a staff development programme which needs a newsletter or a presence on your intranet. This is part of your internal marketing effort.

IT (websites, intranets and extranets)

If you’re reading this lesson right now you are already familiar with IT or Information Technology. To define it you need to consider elements such as computer software, information systems, computer hardware (such as the screen you are looking at), and programming languages. For our part is marketers we are concerned with how technology is used to treat information i.e. how we get information, how we process it, how we store the information, and then how we disseminate it again by voice, image or graphics. Obviously this is a huge field but for our part we need to recognise the importance of websites, intranets and extranets to the marketer. So here’s a quick intro.

A website is an electronic object which is placed onto the Internet. Often websites are used by businesses for a number of reasons such as to provide information to customers. So customers can interact with the product, customers can buy a product, more importantly customers begin to build a long-term relationship with the marketing company. Information Technology underpins and supports the basis of Customer Relationship Management (CRM), a term which is investigated in later lessons.

An intranet is an internal website. An intranet is an IT supported process which supplies up-to-date information to employees of the business and other key stakeholders. For example European train operators use an intranet to give up-to-date information about trains to people on the ground supporting customers.

An extranet is an internal website which is extended outside the organization, but it is not a public website. An extranet takes one stage further and provides information directly to customers/distributors/clients. Customers are able to check availability of stock and could check purchase prices for a particular product. For example a car supermarket could check availability of cars from a wholesaler.

Customer service provision

Customer service provision is very much integrated into marketing. As with earlier lessons on what is marketing?, the exchange process, customer satisfaction and the marketing concept, customer service takes the needs of the customer as the central driver. So our customer service function revolves around a series of activities which are designed to facilitate the exchange process by making sure that customers are satisfied.

Think about a time when you had a really good customer service experience. Why were you so impressed or delighted with the customer service? You might have experienced poor customer service. Why was it the case?

Today customer service provision can be located in a central office (in your home country or overseas) or actually in the field where the product is consumed. For example you may call a software manufacturer for some advice and assistance. You may have a billing enquiry. You might even wish to cancel a contract or make changes to it. The customer service provision might be automated, it could be done solely online, or you might speak to a real person especially if you have a complex or technical need. Customer service is supported by IT to make the process of customer support more efficient and effective, and to capture and process data on particular activities. So the marketer needs to make sure that he or she is working with the customer service provision since it is a vital customer interface. The customer service provision may also provide speedy and timely information about new or developing customer needs. For example if you have a promotion which has just been launched you can use the customer service functions to help you check for early signs of success.

Research and development

Research and development is the engine within an organization which generates new ideas, innovations and creative new products and services. For example cell phone/mobile phone manufacturers are in an industry that is ever changing and developing, and in order to survive manufacturers need to continually research and develop new software and hardware to compete in a very busy marketplace. Think about cell phones that were around three or four years ago which are now completely obsolete. The research and development process delivers new products and is continually innovating.

Innovative products and services usually result from a conscious and purposeful search for innovation opportunities which are found only within a few situations.

Peter Drucker (1999)

Research and development should be driven by the marketing concept. The needs of consumers or potential consumers should be central to any new research and development in order to deliver products that satisfy customer needs (or service of course). The practical research and development is undertaken in central research facilities belonging to companies, universities and sometimes to countries. Marketers would liaise with researchers and engineers in order to make sure that customer needs are represented. Manufacturing processes themselves could also be researched and developed based upon some aspects of the marketing mix. For example logistics (place/distribution/channel) could be researched in order to deliver products more efficiently and effectively to customers.

Production/operations/logistics

As with research and development, the operations, production and logistics functions within business need to work in cooperation with the marketing department.

Operations include many other activities such as warehousing, packaging and distribution. To an extent, operations also includes production and manufacturing, as well as logistics. Production is where goods and services are generated and made. For example an aircraft is manufactured in a factory which is in effect how it is produced i.e. production. Logistics is concerned with getting the product from production or warehousing, to retail or the consumer in the most effective and efficient way. Today logistics would include warehousing, trains, planes and lorries as well as technology used for real-time tracking.

Obviously marketers need to sell products and services that are currently in stock or can be made within a reasonable time limit. An unworkable scenario for a business is where marketers are attempting to increase sales of a product whereby the product cannot be supplied. Perhaps there is a warehouse full of other products that our marketing campaign is ignoring.

Marketing and Customer Relationships

Marketing and Customer Relationships

Marketing today is very much focused upon business relationships, especially in the B2B markets. Historically companies would manufacture products that would be promoted to customers. However as markets have become more competitive, marketing companies seek to attract customer by building strong relationships so that customers are ‘retained’ i.e. you keep hold of your customers. This is the basis for relationship marketing, which we consider here as marketing and the customer relationship.

The marketing concept, customer focus and relationship marketing.

At this point in our studies we can now identify a path which connects the marketing concept, customer focus and relationship marketing. The marketing concept centres all organisational activities upon the customer (which is our customer focus) and if we think in terms of the long-term we have now added relationship marketing. Marketing focuses everything on our customer and their recruitment, their retention into the long-term, and finally marketing aims to extend products and services to the same customers from other product categories. So historically marketers would ‘acquire’ or recruit customers whereas today we acquire customers and then we ‘retain’ them.

There are a couple of theoretical tools that we can use here. So in this next section we are going to take a look at the Pareto principle and the loyalty ladder, which both help us to understand how we move from customer acquisition to customer retention and the implications for marketing.

Think about the value-added, high quality airlines, such as Emirates. Companies such as these are specialists in building the customer relationship and it is obvious that they add value at each customer contact point. You are treated to high levels of customer service from the moment that you check-in, during your flight and even when you have finished using their service. For example, airlines have air miles promotions and upgrades which keep the customer flying with the company and ‘retains’ them as a customer.

The key to relationship marketing is the long-term customer relationship. So if you recall your introduction to marketing definitions, this is at opposite ends of the scale to be production or product orientation which is the basis for modern marketing. As a rule of thumb, relationship marketing tends to be practised well in the airline industry and in the travel industry. However branding is another way of maintaining the customer relationship, as is innovation and design. Nike and Apple may not deliver the same amount of face-to-face relationship building, but they do have very loyal long-term customers. Try to think of other examples of businesses that practice strong relationship marketing.

Loyalty Ladder

The Loyalty Ladder

Turning a prospect into an advocate

The loyalty ladder is a tool for marketing communicators. The idea is that consumers can be moved along a continuum of loyalty using a number of integrated marketing communications techniques (it is also referred to as a branding ladder).

Example – Tesco PLC.

In the United Kingdom Tesco plc is by far the most successful company in regard to relationship marketing. There are number of reasons for this which would include loyalty programmes, consistently adding value at every customer touch point, and making it difficult for customers to actually end the relationship. Let’s have a look at an example of each. The Tesco loyalty scheme or loyalty program is called the Tesco Clubcard. The card is scanned every time that there is a transaction. So data is ‘grabbed’ and recorded from each customer. Here we have a highly developed customer database. Customers are sent coupons which are strongly connected to their buying habits, based upon Tesco’s knowledge of other customers. As you leave the till after payment you are given money-off coupons for petrol so that you can fill your car when you leave for home. This consistently adds value to your experience as a customer. Since a British consumer now heads for a Tesco village to do his/her weekly shopping, it is difficult to swap to another store or to go back to shopping in smaller shops. The relationship is difficult to break.

Essentially, consumers become loyal to a brand which has meaning to them in relation to a product, service, solution or experience.

As with continuums of behaviour such as UACCAUnawareness, Awareness, Comprehension, Conviction, Action, or AIDAAwareness, Interest, Desire, Action, the loyalty ladder begins from a point where the consumer has Not Yet Purchased, then he or she buys the product for the first time (Trialist), if the trial has been a success he or she returns to buy again and again (Repeat Purchaser) and finally the consumer buys no other brand (Brand Insistent).

The Loyalty Ladder

At the Not Yet Purchased Stage the consumer is merely a Prospect. As he or she trials they become a Customer. The Repeat Purchaser is a Client since he or she is becoming loyal. Finally, the consumer becomes an Advocate (i.e. activist or campaigner) since he or she is Brand Insistent. At this point the brand is difficult to dislodge since it has so much meaning to the consumer. Great brands such as Nike, BMW, Rolls-Royce, and Apple are in this highly desirable position.

The idea is to move your prospect along the loyalty ladder to the point where there are partner. Marketing activities support relationships with external customers. So there will be directly indications and measurement of the results between the marketer and the customer as he or she moves along the loyalty ladder. Both the loyalty ladder and the Pareto principle are useful because they aid customer retention and loyalty.

Strategic Internal Marketing

Strategic Internal Marketing

Internal marketing is an important ‘implementation’ tool. It aids communication and helps us to overcome any resistance to change. It informs, and involves all staff in new initiatives and strategies. It is simple to construct, especially if you are familiar with traditional principles of marketing.

See also Internal Marketing

Let’s have a look a closer look at the practicalities of internal marketing.

Internal Marketing

At this stage internal marketing meets traditional ‘change management.’ Firstly you should identify your internal customers. As with your external customers, they will have their own buyer behavior/behaviour, or way of ‘buying into’ the changes which you are charged to implement. The similarities in differing groups of internal customers allows you to segment them. As Jobber (2009) explains, you can target three different segments namely ‘supporters,’ neutral,’ and finally ‘opposers.’ Each group requires a slightly different internal marketing mix in order that your internal marketing objectives can be achieved.

For example, if the change was that a company was to relocate closer to its market, you could target ‘supporters’ with a tailor-made relocation video explaining about the lower property prices in the new location; ‘neutral’ internal customers could be targeted with incentives such as pay increases; and ‘opposers’ could be coerced, or forced to accept the change regardless.

How do we plan for a change program?

  • Always make sure that you have thought through your approach before starting the implementation.
  • Make sure that you have created a cultural climate that is willing to accept change.
  • Appoint a change agent, or champion for change that will help to ease your changes through.
  • Audit the skills and capabilities of your team. Train and develop as necessary.
  • Your team must be built around you with the objective as the focus for you all.
  • The change must be correctly marketed to your target audience using an approach such as Jobber’s (above).
  • Decide what the change will be. Give it boundaries.
  • Decide upon the plan.
  • Work out a realistic budget and stick to it.
  • Try to anticipate the arguments against change, and decide how to counteract them positively.

If not, it would be valuable to spend some time considering marketing plans. Internal marketing obeys the same rules as, and has a similar structure to, external marketing. The main differences are that your customers are staff and colleagues from your own organization.

Internal Marketing

Managing the implementation of internal marketing (Jobber 2009)

In previous lessons, you will have seen that the process of marketing follows a familiar pattern for which we use the acronym AOSTC – Analysis, Objectives, Strategies, Tactics, and Control. In the diagram above, Jobber (2009) uses a similar approach as a structure for the implementation of internal marketing. The process is straightforward.

  • Set objectives for internal marketing e.g. to persuade 100 staff to join a new Performance Related Pay (PRP) scheme.
  • Your strategy is ‘internal marketing.’
  • Tactics would include an internal application of the marketing mix, and could include staff forums, presentations, an intranet, away days, videos, personal visits by company directors or newsletters.
  • Evaluation would consider the take up of PRP against your objectives, attendees at away days, visits to an intranet page, and so on.

Internal Marketing

Internal Marketing

Internal marketing is inward facing marketing. Internal marketing is used by marketers to motivate all functions to satisfy customers. With internal marketing the marketer is really extending and developing the foundations of marketing such as the marketing concept, the exchange process and customer satisfaction to internal customers.

Internal customers would be anybody involved in delivering value to the final customer. This will include internal functions within business with which marketing people interact including research and development, production/operations/Logistics, human resources, IT and customer services.

See also Strategic Internal Marketing.

There are many techniques that marketers can use to communicate with internal customers and functions. Firstly marketer would need to identify internal and external customers, including their different needs and wants. Secondly the marketing function will provide internal services such as intranets for human resources, internal recruitment, and companywide briefings and announcements. Finally the marketing team can provide extranet services for supporting activities in the supply chain. The supply chain connects internal and external manufacturers and producers, our internal business functions (as discussed above) and our final customer interface at wholesale, retail and ultimately at the consumption of our product and service.

Internal marketing is orienting a motivating customer contact employees and supporting service people to work as a team to provide customer satisfaction.

(Kotler and Armstrong 2010).

A marketing company would embed the basic principles of marketing such as company vision and mission, its overarching objectives, its business strategy, marketing tactics i.e. the marketing mix, and finally how we measure marketing success.


It’s important that a company recruits the right people. Marketing companies want people that are motivated by its products and services. Take Apple for example. If you visit an Apple store there is a purposefully designed customer experience, part of which is communicated by the Apple people. They are enthusiastic and very knowledgeable and actually uphold Apple principles and brand. They are purposely recruited, they are trained and retained, which is all part of human resource management and also a successful internal marketing program.

So with the Apple example above you can see that internal marketing ensures that internal staff now link with external customers in a customer relationship. Internal marketing meets external marketing. The basic chain links internally so the concept of the internal customer sees everybody within the organisation treating each other as customers. The Logistics manager would see a customer services function as his internal customers. The customer service function would see field engineers as their customers. The research and development team would see the manufacturing team as their customers. The relationship works in both directions, up and down the supply chain.

Four Banding Alternatives

Four Banding Alternatives

A Branding Strategy Based upon Brand Franchise Extension (Tauber 1981)

A marcoms tool that a marketer can employ for branding decision-making is the Four Banding Alternatives (Tauber 1981). Four Branding Alternatives is a strategic marketing communications technique.

References

Edward M. Tauber, ‘Brand Franchise Extension: New Product Benefits from Existing Brand Names,’ Business Horizons, vol. 24 (March-April 1981), p37.

It is a fun and creative approach that can add value to any class that likes to discuss brands and how they could be innovatively developed. It is used when an organization considers adding a product to its portfolio and its associated brand name. The two variables for this matrix are Product Category (Existing or New) and Band Category (Existing or New).

Four Branding Alternatives

  • New Product – a new product is developed with a series of new brand ideas and meanings to the consumer.
  • Flanker Brand – a new brand is introduced into a category where the organization already has established products.
  • Line Extension – a current brand name is introduced into a category where the organization already has established products.
  • Franchise Extension – a familiar brand is taken to a product category where it is unknown.

Here’s an example. Firstly let’s recall that Four Branding Alternatives is a strategic tool, so you need to base it upon a very large organisation which is likely to own a number of brands.

Examples would include car manufacturers, large IT companies, and conglomerates. You get the idea.

An example for the Japanese company, Sony Inc is as follows:

  • New Product – Sony enters the market for music downloads under a new sub-branding idea and concept.
  • Flanker Brand – Sony introduces the Sony Vaio laptops (as it indeed has).
  • Line Extension – Sony enter the market for digital HD TV’s (as it has).
  • Franchise Extension – Sony enters the market for innovative environmentally friendly small cars that run on solar power.

External Influences – Social Environment and Social Class

Consumer Behavior

External Influences – Social Environment and Social Class

Social Environment

Reference groups have an influence on purchasing behavior, but the level of influence will depend on where the product will be consumed—in public or in private—and whether the product is a want or a need.

PROFILE OF THE AMERICAN CLASS STRUCTURE

CLASS

% Pop

INCOME

EDUCATION LEVEL

OCCUPATION

DESCRIPTION

Upper-Upper

.3%

$5 million and up

Graduate Degree

CEO, Executives, Senator

Inherited wealth, aristocratic, fund charities, “old money”, participate in politics

Upper

1.2

$2 million

Graduate Degree

Executive, professional

Entrepreneurs, Sports Stars, Entertainers

Lower-Upper

12.5

$250,000

Graduate Degree, medical degree

Executive, Professional, Doctor

Education is important, involved in arts

Middle Class

32

$100,000

College Degree

Office workers, managers

Insecure due to economic fluctuations, live in the suburbs

Working Class

38

$50,000

High school

Teacher, plumber,

Skilled workers, may be in danger of falling into a lower class

Lower

9

$20,000

Some High School

Janitor, farmer

Poorly educated, low income, work as laborers

Lower-Lower

7

$9,000 and under

Grade School

Minimum wage or unemployed

Unskilled, may be unemployed for long periods of time, receive government support

GROUP INFLUENCE ON PRODUCT AND BRAND SELECTION

 

Need

Want

Public

Example: fast food lunch
A product used in public that you need
weak group influence for product selection, strong group influence for brand selection

Example: yacht
A product used in public that you want
strong group influence for product selection, strong group influence for brand selection

Private

Example: bed sheets
A product used in private that you need
weak group influence for product selection, weak group influence for brand selection

Example: hot tub
A product used in private that you want
strong group influence for product selection, weak group influence for brand selection

Social Class

Populations can be subdivided into groups who members share similar hobbies, opinions, and activities. Americans have two lifestyles—the one they are in and the one they strive to be in, which is usually better than their current situation. It is important for a marketer to understand the subdivisions of society in order to better choose target markets for their products and services.

External influences – Introduction

Consumer Behaviour

External influences – Introduction

What are external influences in consumer behavior?

a. What a consumer eats, wears, and believes are all learned and influenced by the culture they live in, their family, childhood and social environment. All of these are external factors that affect purchases.

Examples include: Religious, Political, Family, Friends, Co-workers, Clubs and Associations.

People are social and they want to belong to special groups. Group members share common interests, influence each other, and share rules and values. Primary groups are those with the most influence, such as family members; secondary groups have less interaction than the primary group, such as clubs and organizations. As children grow into teenagers, their parents become less of an influence and peer groups become more of an influence. All groups exert what is called social power; some groups have more power than others over consumers’ decisions.

  • Values
  • Community
  • Family Life Cycle
  • Type of Social Power

    Description

    Example

    Referent

    A person likes a group and acts like them so the group will accept them

    A teenager wants to join a popular group, so they begin to dress like them and listen to their groups’ chosen music

    Legitimate

    Membership comes with agreements and there will be consequences for nonconformity

    A boss has authority over his employees and can fire them if they don’t do an adequate job

    Expert

    Groups have knowledge that others want to gain

    Consumers who want to be members of The American Medical Association seek to gain their knowledge of health and wellness

    Reward

    Groups with power to give rewards to members

    A school soccer team can give trophies to their best players (members)

    Coercive

    A group can penalize members for not following the rules

    In the army, soldiers who do not report for duty on time can be forced to do manual labor or even get kicked out of the army


    c. External influences can also include situational influences, sometimes called atmospherics—sensory items in an environment that may change buying patterns, such as music, color, smell, and lighting. If a store plays loud rock music, they may attract young adults, but drive away older consumers. Color is a huge influence on behavior, but is also dependent on culture, since different cultures perceive colors differently. In the US white is a color worn at weddings, and in China, red is the color of choice for weddings. Many bakeries will pump the smell of their treats outside the store, so that passersby will be more likely to want to come in.

    d. Before making a purchase, consumers will go through an external information search. They will go through this search in order to evaluate the alternatives and narrow down their list of choices. It includes:

    • Personal experience—have they purchased this product before? How do they feel about it?
    • Websites/Internet search—researching the quality of the product
    • Knowledge—someone with little or no knowledge of the product will need lots of information!
    • Friends/reference groups—consumers ask friends, family and coworkers about their experiences with the product.
    • Advertising and promotions

    e. A purchase may be ultimately made due to Heuristics. This is a personal set of values that everyone has and it causes consumers to buy what they are comfortable buying, such as purchasing from specific countries of origin, or products that they are brand loyal to.

    Here is a list of the external influences that affect consumer behavior:

    • Age
    • Race
    • Gender
    • Education level
    • Cross-cultural influences
    • Sub-cultures (Hispanic-American)
    • Social status (upper, middle, lower)
    • Customs, Beliefs, Expectations, Traditions, Habits
    • Reference groups are groups that have shared beliefs, interests and behaviors and influence a consumer’s behavior:

    Family Life Cycle

    Consumer Behavior

    External Influences – Family Life Cycle (FLC)

    Family life cycle is defined as what type of family the target market consumer is in. DINKS are “double income no kids” and SINKS are “single income no kids”. Marketers love to target the DINKS and SINKS because they have lots of discretionary income and no children to spend it on, so they spend their extra money on themselves, their house, their pets and vacations.

    • Boomerang Kids (adult children who have moved back in with their parents)
    • Extended parents (grandparents raising their grandchildren)
    • Blended Families (stepchildren)
    • Cougar and Silver Fox
    • Recently divorced
    • Same-sex singles/couples
    • Retired – Wealthy or Medicare dependent

    The engaged couples and the recently divorced spend money on similar products, although for different reasons. Engaged couples are buying products to begin a life together and the recently divorced are buying products that they already had and now need to replace. Extended parents are grandparents taking care of their grandchildren. Same sex couples and singles are grouped together whether they have children or not, because of their lifestyle and interests. An empty nester is someone whose children are now grown adults and have moved out of the house. Boomerang kids are adult children who are living with their parents.

    Stages of the Family Life Cycle (FLC)

    • Young and single
    • Engaged couples
    • DINKS (Double Income No Kids)
    • SINKS (Single Income No Kids)
    • Married with children: Babies, Toddlers, Elementary School Age (5-7), Tweens (8-12), Teens (13-17), Older
    • Single parents
    • Empty nester

    External Influences – Consumer Culture

    Consumer Behaviour

    External Influences – Consumer Culture

    a. Culture includes knowledge, belief, art, law, morals, customs, and any other capabilities and habits acquired by humans as members of society.

    d. Factors that Define a Culture

    • i. Individual/Collective: The culture in the US is an individualistic society, where people generally look out for themselves; The Japanese culture focuses on the collective, and people work to better society as a whole.
    • ii. Extended/Limited Family: In the US, families move away from each other and generally don’t live together in the same house; In many Asian and European countries, parents, kids, grandparents and even aunts and uncles live together in the same house.
    • iii. Adult/Child: Different cultures will define when someone is an adult. In the US it is 18 years old, but in some South American countries it is 14 or 15 years old. In the Hebrew culture a boy becomes a man at 13 during his Bar Mitzvah ceremony. In the Hispanic culture a girl becomes an adult at 15th birthday party.
    • iv. Masculine/Feminine: Cultures define the roles of men and women differently, including their rank, and prestige in society.
    • v. Youth/Age: The value placed on Elders depends on the culture
    • vi. Cleanliness: In the US, cleanliness is very important, in fact most of the products advertised on American TV claim to improve cleaning; In other cultures showering on a daily basis is unnecessary.
    • vii. Tradition/Change: Some societies prefer traditions over making changes.
    • viii. Hard work/Leisure: In some cultures hard work is valued over leisure time.
    • ix. Postponed gratification/Immediate gratification: American culture is centered on immediate gratification “I want it now!”
    • x. Sensual gratification/Abstinence: The Netherlands is a society that openly talks about and advertises sexual activity; in Muslim societies those topics are taboo, and women who get pregnant before marriage are often shunned.

    b. How does culture affect consumer behavior? Whatever a person consumes will determine their level of acceptance in their society. If someone does not act consistently with cultural expectations, they risk not being accepted in society.

    c. What happens when a company ignores culture? McDonald’s is one of the most popular restaurants in the world. At their American based restaurants they serve beef hamburgers, but when they decided to open restaurants in India, they used lamb meat for their hamburgers, because the Indian people do not eat cow meat; if McDonald’s had ignored this cultural difference they would not have been successful in India! That was the problem when The Walt Disney Company opened EuroDisney outside Paris; it was almost a failure because Disney ignored the culture. The French people drink wine at very young ages and prefer sugar on their popcorn, not salt, like Americans. Disney did not accommodate their theme park until they realized that the French people were indeed their target market, so they changed the name of the park to Disneyland Paris and made modifications to their menus and also to the wait lines in the park.

    BehaviorMeaning in the USMeaning in other cultures
    Consuming wine and beerThose under the age of 21 are not allowed to drink alcoholIn European countries it is common for children to drink wine/beer at family meals; when in a bar in Korea you pour drinks for your friends and family first, then wait for them to pour your drink
    Drinking coffeeGenerally adults drink it in the morning because of the caffeine, and giving coffee to a child is not acceptedIn Turkey, coffee is a special drink that you serve to guests; in Italy coffee is enjoyed after a family meal; in China tea is the drink of choice
    Cooking pork ribsGrilled outside at a backyard partyJewish and Muslims do not eat pork
    KissingTo express romantic feelings about someoneIn many cultures kissing is acceptable when greeting a friend
    Using the number 7Lucky numberUnlucky number in Kenya, Singapore and Ghana

    External Influences – Family Influences (Birth Order)

    Consumer Behavior

    External Influences – Family Influences (Birth Order)

    Where a child places in the birth order can have an effect on how they see themselves, and therefore affects their consumer behavior. The middle child often seems to have the most negative impressions of his lot in life.

    Oldest Child

    • Is only child for period of time; used to being center of attention.
    • Believes must gain and hold superiority over other children.
    • Being right, controlling often important.
    • Strives to keep or regain parents’ attention through conformity.  If this failed, chooses to misbehave.
    • May develop competent, responsible behavior or become very discouraged.
    • Sometime strives to protect and help others.
    • Confident.
    • Determined.
    • Born Leader.
    • Organized.
    • Eager to Please.
    • Likes to Avoid Trouble.

    Second Oldest Child

    • Never has parents’ undivided attention.
    • Always has sibling ahead who’s more advanced.
    • Acts as if in race, trying to catch up or overtake first child. If first child is "good," second may become "bad." Develops abilities first child doesn’t exhibit. If first child successful, may feel uncertain of self and abilities.
    • May be rebel.
    • Often doesn’t like position.
    • Feels "squeezed" if third child is born.
    • May push down other siblings.

    Middle Child of Three Siblings

    • Has neither the rights of oldest nor privileges of youngest.
    • May feel like they don’t have place in family.
    • Becomes discouraged and "problem child" or elevates self by pushing down other siblings.
    • Is adaptable.
    • Learns to deal with both oldest and youngest sibling.

    Youngest Sibling

    • Feels every one bigger and more capable.
    • Expects others to do things, make decisions, take responsibility.
    • Becomes boss of family in getting service and own way.
    • Develops feelings of inferiority or becomes "speeder" and overtakes older siblings.
    • Remains "The Baby." Places others in service.
    • If youngest of three, often allies with oldest child against middle child.
    • Persistent
    • Affectionate
    • Crave the Spotlight

    Younger children always want to be able to do the things older siblings are allowed to do. And older siblings may feel that the younger siblings get away with things they were not able to when they were the same age. Here are the levels of birth order:

    • Only Child
    • Oldest Child
    • Second Oldest Sibling
    • Middle Child of Three Siblings
    • Youngest Sibling

    Only Child

    • Pampered and spoiled
    • Is center of attention; often enjoys position. May feel special.
    • Relies on service from others rather than own efforts.
    • Feels unfairly treated when doesn’t get own way.
    • Likelier to hold a professional position.
    • Concerned with meeting parents’ expectations.
    • Confident.
    • Pays Attention to Detail.
    • Good in School.
    • Overly Critical.

    Marketing Exchange Process

    Marketing as an Exchange Process

    At the beginning of any marketing course or programme it is important to appreciate how exchange processes work. An exchange process is simply when an individual or an organisation decides to satisfy a need or want by offering some money or goods or services in exchange. It’s that simple, and you enter into exchange relationships all the time.

    The exchange process extends into relationship marketing. With relationship marketing we purposefully look at the long-term relationship with our target audience, and aim to grow our business. By delivering value to our customers we consistently nurture the relationship with customers. Later in your studies you will come across relationship marketing and customer relationship management, which encompass the traits of a basic marketing exchange process and take it much further.

    Exchange is the act of obtaining a desired object from someone by offering something in return.

    (Armstrong et al 2009)

    For example you go into a restaurant and order your favourite meal. You eat the food and then you pay for it with your credit card. That’s a basic exchange relationship.

    You use your Android or iPhone to download an app and you pay for it using PayPal. Again you have gone through and completed an exchange
    process.

    You see a newspaper advertisement asking you to donate blood and you return a coupon to become a blood donor.

    You watch the news on TV and listen to the views of a political candidate, and on polling day you vote for that person.

    Can you think of any more examples of marketing as an exchange process? Write down three more examples in addition to those above.

    Marketing managers attempt to engender a response from a marketing stimulus. This is the exchange process as it begins. Let’s remember that marketing extends further than goods or services. It could be that a government is trying to persuade its population to stop smoking, or speeding. So marketing is a series of actions and plans that are designed to recruit, retain and extend goods and services to a target audience. This is the basic exchange process in marketing.

    Email Marketing Providers

    Email Marketing Providers

    There are plenty of e-mail marketing companies out there. One thing is sure that when your business grows you need to make your e-mail marketing solution as automatic as possible, so don’t think that you can manually enter details on your tablet or PC.

    E-mail marketing providers give you plenty of interactive functionality today. They will build lists for you, they will give you custom or bespoke e-mail forms and newsletters, you could integrate your mailing list with Facebook, and there are other features which will sync the mailing list with other customer databases or shopping carts, for example. You are often given multiple databases and lists within a single package and companies will bill you monthly or by the amount of mail you send e.g. monthly or 10,000 e-mails.

    The lists can be integrated with Google Analytics which is a powerful measuring and monitoring application that Google gives you for free! Analytics offers you all sorts of information about demographics and the location of your signups, their behaviour, the technology that they are using and other useful data.

    Another benefit of using a professional e-mail service provider is that they are better prepared to deal with the problems of actually getting your e-mail delivered to your recipient. Your recipients Internet Service Provider (ISP) is geared up to make sure that all spam is filtered out. An ISP essentially hosts your website for you and gives you your company’s e-mail accounts. Others e-mail providers would include popular free e-mail accounts such as Hotmail or Gmail, and they also filter out spam.

    Of course the ISP will want to filter malicious phishing e-mails (which might be after bank account or personal details, for example) and all e-mails that aim sell you illicit substances and so on. The ISP is doing us all a favour. Try to make sure that your e-mails do not look like spam. Your e-mail marketing company has a few useful devices up its sleeve, for example it will release e-mails a few at a time and not in bulk.

    There are many companies out there that will automate your e-mail marketing for you, and we suggest that this is what you should do. In fact many of them will do you automation for free until you hit a specific threshold of signups of around 2000 e-mail addresses. Such companies would include Mailchimp, Constant Contact, iContact and many, many others. You would start by registering online, and setting up payment details with your credit card. Then design your signup form which can be converted to HTML, and then pasted onto your website. You can alter the information that you want to collect such as e-mail addresses, names and locations. However don’t make your customers’ initial signup too onerous because you don’t want to scare potential customers away by asking them to do too much. The customer will then receive an e-mail which allows them to opt in, generally by clicking on a simple link. It must be simple for your recipient to unsubscribe or change their details as and when necessary. In fact this is the law in many parts of the world. You must also include a business or personal address to make your e-mails trustworthy and to reassure your signups that you are who you say you. This is an example of opt-in marketing or permission marketing.

    For more details about the law and e-mail marketing, we refer you to www.ftc.gov/spam (USA) or www.ico.gov.uk (UK) or refer to your national Government’s website.

    If you have the resources you might also consider software to run on your own server, which might be coded in PHP or ASPX, or similar dynamic code. This gives you the benefit of having your database more close at hand, although most e-mail marketing companies give you instant access to your database anyway.

    Email marketing campaigns

    Email marketing campaigns

    Let’s take a look at the best way for you to design your e-mail marketing campaign. As with most other types of marketing, e-mail marketing campaigns work best if they follow a marketing planning format.

    Based on marketing principles ask yourself who exactly are you targeting your e-mail at? Who are your customers and clients? Who is your target audience? There may be a number of segments that you are targeting, and in which case you would adapt or change your e-mail campaign.

    Keep the message short and succinct, and use constant and straightforward text. Your logo needs to be strongly placed at the top of the e-mail, and the first few sentences are your opportunity to make an impact, because if they don’t the recipient will not read on.

    Once the recipient has opened your e-mail you need to direct them through a text or image link to your website. Hence you need a landing page on your site that will take the recipient through to the next stage. This is also no as funnelling, where the following start wide and then directs the recipient to the point of purchase. Landing page needs to be consistent with your brand and also the e-mail. Key aspects of your offering need to be repeated on the landing page to reassure your recipient, and again include a call to action to move them towards the final stage purchase or signup (obviously it depends on what your purposes).

    Next you need to test your e-mail. This is really simple when you use one of the popular e-mail marketing services. Simply send an e-mail to yourself or to staff and colleagues, and ask them to respond with any necessary changes. This is also reassuring to you.

    The campaign must be measured and monitored, so that you can compare and contrast success of various strategies. You can measure of all sorts of indicators including how many e-mails were delivered, and many were opened, how many recipients on your link and began her journey through your funnel. You should be able to compare the amount of e-mails which you sent to your actual sales. Again some e-mail marketing providers allow you to measure the value of each individual client in your mailing list, and you can rank and prioritise them.

    This also allows you to remove people from your mailing list it don’t open your e-mails and will never become customers. Again this may reduce the cost of the mailing. The mailing list needs to be current – so if many of your emails bounce, remain unopened or induce the client to unsubscribe, then you need to refresh your list and/or change your approach.

    Keep trying new ideas. By comparing and contrasting your relative success you will make your campaigns more successful. By changing small details you may notice unexpected improvements.

    You need to set yourself smart objectives. For example, to inform my 100, 000 strong mailing list about a product range launch within seven days. You also would need to consider the finance needed to plan, write, implement and monitor the online campaign. Measuring your campaign is vital, and all e-mail marketing service providers give you a toolkit to control your plan, and there is always Google Analytics in addition.

    Having decided that you are going to prepare your campaign you will need to segment, target, and position your message not only for the entire email-shot, but also for each individual that you are communicating with. Your campaign should have meaning for everyone with whom you are in contact. Your purpose is to achieve a sale or call-to-action, and success is more often down to segmentation rather than creativity.

    To grab the attention of your reader you need to make sure that your subject line or title, jumps out and distinguishes itself from the other communications in your potential customer’s inbox. This will also help you overcome spam filters. Keep it relevant to your topic and include your website name where possible, for example Marketing Teacher Launches New Course, which would be of interest to our clients.

    Next – you need to get creative! As with all marketing communications it is important that you design an email structure or template which is strong enough to entice and retain customers. So here are a few tips to help you to construct engaging e-mails.

    Remember to give your respondent the opportunity to unsubscribe from your mailing list. It may be that they have changed jobs or have other interests and no longer require your services.

    Keep them keep the actual physical size of the e-mail small enough for your clients e-mail program or browser to be able to open it. If you pack it with Flash imagery many e-mail packages will not open anyway, and think about those people in countries where bandwidth is small where the Internet service will be much slower. Therefore it is also good advice to give readers the choice of HTML or text versions of your correspondence.

    Write in simple language so that readers can quickly scan through your message.

    The call-to-action should be prominent. This is what you want the respondent do as a result of reading your message.

    Direct Marketing

    Direct Marketing

    What is Direct Marketing?

    Direct marketing is a channel free approach to distribution and/or marketing communications. So a company may have a strategy of dealing with its customers ‘directly,’ for example banks (such as CityBank) or computer manufacturers (such as Dell). There are no channel intermediaries i.e. distributors, retailers or wholesalers. Therefore – ‘direct’ in the sense that the deal is done directly between the manufacturer and the customer.

    The Internet and New Media (e.g. mobile phones or PDA’s) are perfect for direct marketing. Consumers have never had so many sources of supply, and suppliers have never had access to so many markets. There is even room for niche marketers – for example Scottish salmon could ordered online, packed and chilled, and sent to customers in any part of the world by courier.

    Many companies use direct marketing, and a current example of its use, as part of a business model, is the way in which it is used by low-cost airlines. There is no intermediary or agent, customers book tickets directly with the airlines over The Internet. Airlines capture data that can be used for marketing research or a loyalty scheme. Information can be processed quickly, and then categorised into complex relational databases.

    Then, for example, special offers or new flights destinations can be communicated directly to customers using e-mail campaigns. Data is not only collected on markets and segments, but also on individuals and their individual buyer behaviour. Companies such as Amazon are wholesalers of books (i.e. they do not write or publish them) – so they use Customer Relationship Management and marketing communications targeted directly at individual customers – which is another, slightly different example of direct marketing.

     

    As mentioned above, ‘direct’ also in the sense that marketing communications are targeted at consumers by the manufacturers. For example, a brand that uses channels of distribution would target marketing communications at wholesalers/distributors, retailers, and consumers, or a blend of all three. On the other hand, a direct marketing company could focus upon communicating directly with its customers. Direct marketing and direct mail are often confused – although direct mail is a direct marketing tool.

    There are a number of direct marketing media other than direct mail. These include (and are by no means limited to):

    • Inserts in newspapers and magazines.
    • Customer care lines.
    • Catalogues.
    • Coupons.
    • Door drops.
    • TV and radio adverts with free phone numbers or per-minute-charging.
    • …and finally – and most importantly – The Internet and New Media.

    Direct and indirect costs

    Direct and Indirect Costs

    The allocation and identification of direct and indirect costs contributes to more accurate profit calculations. Not only is the clarification of costs important to business owners, it may be of particular interest to some prime contractors who may actually impose a specific accounting methodology in order to meet its own policy requirements. If your project is funded in full or in part by taxpayer financing, expect to meet specific guidelines for determining overhead.

    Overhead Rate         =   Indirect Costs / Direct Costs

    Methods may vary according to circumstances. As mentioned some prime contractors or even government entities may dictate the overhead calculation method according to their needs.

    Direct Costs

    These are costs that directly contribute to the development of a product or provision of a service. Examples include the following:

    • Salary
    • Wages
    • Materials

    N.B. Direct costs cannot be allocated to overhead.

    Indirect Costs

    Indirect Costs are those that are difficult to assign to a particular cost object, for example typical indirect costs might include the following:

    • Heat
    • Light
    • Taxes
    • Benefits

    Cost allocation assigns an indirect cost to one or more cost objects according to a formula. Industries where the accurate identification of direct and indirect cost is particularly important include the following:

    • Manufacturers
    • Service firms
    • Merchandisers
    • Manufacturers
    • Not for profit firms
    • Joint venture projects
    • Education

    Indirect Cost Calculation

    Overhead costs are calculated as a ratio – it is the percentage of a firms indirect cost, in relation to its direct costs.

    What is Consumer Behavior?

    How many times throughout the day do people make product decisions? If you stop to think about it, many product decisions are made every day, some without much thought. What should I wear? What should I eat? What am I going to do today? Many product decisions are answered routinely every day and they help move the economy of cities, countries and ultimately the world.

    • Provide value and customer satisfaction.
    • Effectively target customers.
    • Enhance the value of the company.
    • Improve products and services.
    • Create a competitive advantage
    • Understand how customers view their products versus their competitors’ products.
    • Expand the knowledge base in the field of marketing,
    • Apply marketing strategies toward a positive affect on society (encourage people to support charities, promote healthy habits, reduce drug use etc.)

    Product decisions also shape life for the consumer. How can simple decisions be so important? Why do marketers spend millions of dollars to uncover the reasons behind these decisions?

    To define consumer behavior: it is the study of consumers and the processes they use to choose, use (consume), and dispose of products and services. A more in depth definition will also include how that process impacts the world. Consumer behavior incorporates ideas from several sciences including psychology, biology, chemistry and economics.

    "All marketing decisions are based on assumptions and knowledge of consumer behavior," (Hawkins and Mothersbaugh, 2007). Researching consumer behavior is a complex process, but understanding consumer behavior is critical to marketers-they can use it to:

    Decision Making Unit

    Decision Making Unit (DMU)

    Individuals who make up the DMU

    The decision Making Unit (DMU) is a collection or team of individuals who participate in a buyer decision process. Generally DMU relates to business or organisational buying decisions rather than to those of a family for example. There are a number of key players in this process namely the initiators, the gatekeepers, the buyers, the deciders, the users and the influencers. Let’s consider these individually prior to applying the decision making unit to an example of organisational buying.

    Decision Making Unit

    Influencers

    Influencers are those who may have a persuasive role in relation to the deciders. They may be specialists who make recommendations based upon experience and their knowledge of products and services. Examples are consultants employed by businesses to help deciders make a final decision, or another example might be lawyers employed to offer legal advice. There are also informal influences such as family and friends, and people that you meet at trade associations or informal gatherings.

    The relationship amongst the key players will be different for every organisation and in every purchase situation. Individuals may influences as well as initiators, and therefore none of these categories is mutually exclusive i.e. stand alone, since there is much crossover and blurring around the edges of roles.

    Initiators

    Initiators are the players who recognise that there is a need to be satisfied or a problem to be solved. This might come from a drive for efficiency due to the fact that some equipment will need replacing. There could be many reasons which stimulate the initiation.

    Gatekeepers

    Gatekeepers are individuals who press the stop/go button in the process. Often gatekeepers will be proactive in searching for information and delivering recommendations for those decision-makers further up the line. On other occasions gatekeepers can be seen stalling the flow of the decision-making process.

    Buyers

    Buyers are the professional function within an organisation generally responsible for purchasing. They are given a brief with a series of criteria against which to judge potential products or services, and their suppliers. They tend to be responsible for sourcing and negotiation.

    Deciders

    Deciders in a large organisation certainly are responsible for making the final deal or decision. Their role carries the responsibility of placing the final order. They might be senior managers or agents acting on behalf of an organisation in the market. The deciders will review information provided from lower down the buyer decision process from the buyers, gatekeepers and the original initiators.

    Users

    Users are those who put the service or product into operation once the deal has been clinched. Their opinions will be important especially if they are using manufacturing equipment, flying aircraft, using software to improve customer satisfaction, and so on. Users will be heavily involved in the post-purchase evaluation phase of the buyer decision process.

    Customer Satisfaction

    Customer satisfaction

    So the purpose of marketing centres very much upon creation of value and a long-term customer relationship. Customer satisfaction is a central concept to this proposal. A marketing company aims to set a level of expectation at which customers are satisfied that value is delivered through an exchange process.

    Be careful not to set your satisfaction level too low because your customers will go to competitors. On the other hand try not to set your satisfaction level too high because if you don’t achieve that level, then your customers will also go to competitors. So the aim is to satisfy customers so that they come back and buy it again. This is fundamental to relationship marketing and customer relationship management.

    Companies today have strategies for recruiting, retaining and extending products and services to customers in order to develop customer loyalty and to retain customers for the long-term. Essentially we are looking at long-term customer relationship management, and relationship marketing. Companies may have in the past looked at satisfying the needs of large target groups or segments, today they look more at marketing to profitable individuals whom they aim to retain for as long as possible.

    Reflect for a moment and think of an example of when you were dissatisfied with the product or service. Why were you dissatisfied? Then think of an occasion when you are entirely satisfied or in fact delighted with a product or service. Why were you satisfied? This is the basis of customer satisfaction.

    . . the extent to which a product’s perceived performance matches buyers’ expectations.

    Kotler and Armstrong 2010.

    It’s all about perception. In the mind of the consumer perception is reality, often not reflecting the value that a product or service delivers. Customer satisfaction depends on how the consumer perceives their experience and this is a central job of marketing. Satisfied customers come back time and time again, so aim to deliver slightly more satisfaction than the customer might reasonably expect i.e. delighted them! A central goal of increasing customer satisfaction is paramount, but remember it’s not about dropping your price or promising too much since these would only increase costs to your business. Getting this right is the job of the marketer.

    Large organisations would have different levels of customer satisfaction for different customers. Take a business like car manufacturer Ford for example. Ford has products and services which are positioned in a series of segments. Each segment requires a different level of satisfaction, so a low-cost economical budget vehicle would be marketed in one way perhaps, pitched at a lower level of customer satisfaction, whilst a more expensive executive vehicle would have a higher level of customer satisfaction. A more expensive executive vehicle would have a higher margin of profit and therefore customer satisfaction would be costed in to the final price that the consumer pays. The purchaser of an economy product pays less and therefore expectations of customer satisfaction would be lower.

    Customer Relationship

    The Customer Relationship

    Think about some of the relationships that are important to you. You have parents and friends, and you have workmates and acquaintances. To a greater or lesser extent you have a relationship with all of these people. Say you have a number of roles, such as student, professional, son or daughter, teacher, employer, employee, partner and so on. The customer relationship works in a similar way.

    In the past there would have been a simple exchange process which would have seen the delivery of the customer value. However marketers want to retain you as loyal customers. They want to keep you satisfied. So there is a customer relationship which delivers goods and services with which you are satisfied between you and the marketing company. This is a basic customer relationship.

    There is sometimes a little confusion between relationship marketing and Customer Relationship Management (CRM). They are quite similar with the main difference being that CRM is an IT concept or strategy. CRM and relationship marketing together give the marketer customer information and data which can be used for long-term value delivery and an exchange process which satisfies customer needs.

    The relationship marketing approach can also be used not only for external customers, but also for internal customers or what is known as internal marketing. Essentially one focuses upon employees and work colleagues and building relationships.

    However there is a developing and more substantial field called relationship marketing. Let’s have a look at what relationship marketing is.

    The process of identifying and establishing, maintaining, enhancing, and when necessary terminating relationships with customers and other stakeholders, at a profit, so that the objectives of all parties involved are met, where this is done by a mutual giving and fulfilment of promises.

    Gronroos (2000).

    The Gronroos definition is quite strategic in many ways. When trying to learn about relationship marketing it looks a little complex at first glance. In fact relationship marketing can have both a very practical but also a deeply academic foundation. Let’s look at something a little more practical that we can put straight into use.

    The relationship marketing perspective is based on the notion that on top of the value of products and/or services that are exchanged, the existence of the relationship between the two parties creates additional value for the customer and also the supplier or service provider.

    Gronroos (2004).

    So this more straightforward definition reasons that relationship marketing is a perspective rather than a process, which is based upon some straightforward concepts i.e. the exchange process and the relationship between buyer and seller, and the value delivered to them both. The marketing mix is the bridge between buyer and seller.

    Customer Life Cycle (CLC) and CRM

    The Customer Life Cycle (CLC) and CRM

    The Customer Life Cycle (CLC) has obvious similarities with the Product Life Cycle (PLC). However, CLC focuses upon the creation of and delivery of lifetime value to the customer i.e. looks at the products or services that customers NEED throughout their lives.

    The customer reviews models and books a test-drive with her or his local dealer. He or she decides to buy the car and arranges finance. The car is then delivered from the factory, and returns every year for its annual service. Then after three years, the customer decides to trade in his or her car, and the cycle begins again. The longer-term life cycle is simply the shorter-term life cycles viewed consecutively.

    CRM is a term that is often referred to in marketing. However, there is no complete agreement upon a single definition. This is because CRM can be considered from a number of perspectives. In summary, the three perspectives are:

    Disclaimer:
    Our model is a hybrid of many other commonly cited models from a number of sources. If you are undertaking higher-level academic work you need to clarify with your tutor, the nature of his or her preferred model.

    It is marketing orientated rather than product orientated, and embodies the marketing concept. Essentially, CLC is a summary of the key stages in a customer’s relationship with an organisation. The problem here is that every organisation’s product offering is different, which makes it impossible to draw out a single Life Cycle that is the same for every organisation.

    Customer Life Cycle

    Let’s consider an example from the Banking sector. HSBC has a number of products that it aims at its customers throughout their lifetime relationship with the company. Here we apply a CLC. You can start young when you want to save money. 11-15 year olds are targeted with the Livecash Account, and 16-17 year olds with the Right Track Account. Then when (or if) you begin College or University there are Student Loans, and when you qualify there are Recent Graduate Accounts.

    When you begin work there are many types of current and savings account, and you may wish to buy property, and so take out a mortgage. You could take out a car loan, to buy a vehicle to get you to work. It would also be advisable to take out a pension. As you progress through your career you begin your own family, and save for your own children’s education. You embark upon a number of savings plans and schemes, and ultimately HSBC offer you pension planning (you may want to insure yourself for funeral expenses – although HSBC may not offer this!).

    This is how an organization such as HSBC, which is marketing orientated, can recruit and retain customers, and then extend additional products and services to them – throughout the individual’s life. This is an example of a Customer Life Cycle (CLC).

    Another important point is that a lifetime CLC is made up many shorter CLC’s. So, for example, Volkswagen Cars retains a customer for many years and one can predict the products that meet a customers needs throughout his or her family lifetime. However the purchase of each car, will in itself be a CLC with many Customer Touch Points. The consumer may need a bigger vehicle as his or her family expands – so they visit VW’s website and register.

    Customer database

    Customer database

    This session will consider how to create a customer database which can be used to store information which can be accessed by members of your organisation. If we gather information about specific traits or attributes of our customers, then we can look similarities and satisfy the needs of large groups of customers. Such information should be gathered at every touch point between customer and business, and all key employees should have access to the database to input or access information for marketing decision-making.

    The data contained in the database will build a pattern of how customers purchase. By understanding purchase habits, a company can increase sales of products and services. So returning to our bank example, if a junior saver takes out a student loan, then in three or four years’ time the bank will perhaps lend them money for their first flat or car as the student becomes an employee. With a database that contains many thousands of customers, the marketer can start to build a picture of why consumers purchase products of particular value, at particular point in their lives.

    In other lessons, Marketing Teacher has introduced to the marketing mix, product, price, place, process, people, physical evidence and promotion. There is a connection between a customer database and the marketing mix. Since we now have more information about a customer over long periods of time we can change and adapt our marketing mix so that we are more effective in marketing as a whole. A bank might swap to pay per click advertising if it notices that more people are using the Internet for communication as opposed to traditional direct marketing via the mail.

    As the customer database grows and consumers are retained, there is now quite an elaborate and developed picture of a consumer’s behaviour. The marketer can now begin to identify the factors that influence consumer’s decision-making processes. Does the consumer buy more products when there is an incentive? Does the consumer buy a more services during certain seasons e.g. Christmas? Do consumers behave on their own or in groups? Again this information can be used to alter the marketing mix in order to meet the needs and wants our customers.

    An example of a very detailed customer database belongs to Amazon.com. The database has sections on your orders, your preferred method of payment, your personal account settings, and also there is an opportunity for personalisation. This is an example of a complex Customer Relationship Management (CRM) system, and we are building these lessons to help us understand CRM. A robust initial starting point is a basic, typical database which is likely to contain the following:

    • your name
    • your address and other contact details, such as e-mail addresses and telephone numbers
    • your occupation, age, education, and other profile information
    • your order history which shows what you bought and when, how much money you spent and other relevant purchase history
    • how and when we responded to promotional codes, coupons, and other incentives

    What does this information give the marketer?

    The information generated by your customer database is of great value to the marketer. The business itself as it expands will need to make sure that the database is clean i.e. that any out of date or untargeted data is removed, that legal requirements are met (such as the data protection act in the UK), and that IT specialists are employed to make sure the data is secure and that the latest software is used to analyse it. The database is the starting point in managing the customer relationship, since you use the information to sell your client more products and services that they need and want. This in itself would generate more data, and the richness of the information means that you can retain your customer and sell them products over a long period of time. The value of the database is that it starts this relationship. Of course, the database helps you identify customer needs and wants.

    Let’s use the example of bank, which recruits customers as they start work or become students, or even before with junior bank accounts. By watching the behaviour of a new customer, the banks can sell other products such as mortgages, car loans or pensions.

    Customer Relationship Management (CRM)

    Customer Relationship Management (CRM)

    What is Customer Relationship Management?

    CRM is a term that is often referred to in marketing. However, there is no complete agreement upon a single definition. This is because CRM can be considered from a number of perspectives. In summary, the three perspectives are:

    What you cry? What does that mean? Let’s unpack the definition. The key to the definition is long-term mutually valuable relationship. This is based upon a definition of marketing that considers marketing as a mutually satisfying system of exchanges (for example Baker 2002). So CRM is the building and maintenance of long-term customer relationships. The relationship delivers value to customers, and profits to companies. The relationship is supported (but not driven) by cutting edge IT. The business strategy is based upon the recruitment, retention and extension of products, services, solutions or experiences to customers. This is the core of CRM.

    Disclaimer:
    Our model is a hybrid of many other commonly cited models from a number of sources. If you are undertaking higher-level academic work you need to clarify with your tutor, the nature of his or her preferred model.

    1. CRM from the Information Technology Perspective.

    From the technology perspective, companies often buy into software that will help to achieve their business goals. For many, CRM is far more than a new software package, the renaming of traditional customer services, or an IT-based customer management system to support sales people. However, IT is vital since it underpins CRM, and has the payoffs associated with modern technology, such as speed, ease of use, power and memory, and so on. Read more…

    2. CRM from the Customer Life Cycle (CLC) Perspective.

    The Customer Life Cycle (CLC) has obvious similarities with the Product Life Cycle (PLC). However, CLC focuses upon the creation of and delivery of lifetime value to the customer i.e. looks at the products of services that customers need throughout their lives. It is marketing orientated rather than product orientated. Essentially, CLC is a summary of the key stages in a customer’s relationship with an organisation. Read more…

    3. CRM from the Business Strategy Perspective.

    The Business Strategy perspective has most in common with many of the lessons and topics contained on this website, and indeed within the field of marketing itself. The diagram below shows the MarketingTeacher Model of CRM and Business Strategy. Our model contains three key phases – customer acquisition, customer retention and customer extention, and three contextual factors – marketing orientation, value creation and innovatove IT. Read more…

    CRM Model

    A commonly cited definition of CRM is that of CRM (UK) Ltd (2002), as follows:

    Customer Relationship Management is the establishment, development, maintenance and optimisation of long-term mutually valuable relationships between consumers and organisations.

    CRM and Information Technology

    CRM and Information Technology

    As we have discussed, CRM is more than just software. For the purposes of this introduction – Information Technology (IT) and CRM have three key elements, namely Customer Touch Points, Applications, and Data Stores. This section is based loosely upon Raisch (2001) The eMarketplace.

    *Data Mining is where an organisation evaluates large Data Stores for patterns, or relationships between groups or individuals (or segments). Applications present ‘patterns’ in a format that can be used for marketing decision-making.

    ** Permission Marketing is where a customer elects to accept (or ‘opt-in’ to) marketing material from an organisation e.g. where you buy insurance and the vendor asks if you wish to receive further details from them, or similar organisations. It is so called because marketers need your ‘permission’ to market to you. Permission marketing can occur at any of the Customer Touch Points.

    CRM is a term that is often referred to in marketing. However, there is no complete agreement upon a single definition. This is because CRM can be considered from a number of perspectives. In summary, the three perspectives are:

    Disclaimer:
    Our model is a hybrid of many other commonly cited models from a number of sources. If you are undertaking higher-level academic work you need to clarify with your tutor, the nature of his or her preferred model.

    Customer Touch Points are vital since your business has a marketing orientation and focuses upon the customer and his or her current and future needs. This is the interface between your organisation and its customers. For example you buy a new car from a dealership, and you enter a showroom.

    CRM Model IT

    The dealership is a contact point. You meet with a salesperson whom demonstrates the car. The salesperson is a contact point. You go home and look at the car manufacturer’s website, and then send the company an e-mail. Both are contact points. Other contact points include 3G telephone, video conferencing, Interactive TV, telephone, and letters.

    Applications are essentially the software and programmes that support the process. Incidentally, this is what some would call CRM – but we know better. Applications serve Marketing (e.g. data mining software* and permission marketing**), Sales (e.g. monitoring Customer Touch Points), and Service (e.g. customer care).

    Data Stores contain data on every aspect of the customer, and the Customer Life Cycle (CLC). For example, an organisation keeps data on the products you buy, when you buy them, and where they are sent. Data is also kept on the web pages that you visit and the products that you consider, but then do not buy. Leads are stored here. Data on the life time value of individual customers is stored here, as well as details of how and when the customer was recruited, how – and for how long – individuals have been retained, and details of any products that have been extended to individuals are also stored. The data is analysed using Applications.

    Business Strategy and CRM

    Business Strategy and CRM

    We now consider the Business Strategy Perspective on CRM. Here, we propose a model, which is a hybrid, and typical of many of the models and diagrams of CRM that you will find on The Internet and in popular books on the topic of eMarketing/eCommerce. The model has three key phases and three contextual factors:

    5. Value Creation – centres on the generation of shareholder value based upon the satisfaction of customer needs (as with marketing orientation) and the delivery of a sustainable competitive advantage.

    6. Innovative IT – is exactly that – Information Technology must be up-to-date. It should be efficient, speedy and focus upon the needs of customers. Whilst IT and/or software are not the entire story for CRM, it is vital to its success. CRM software collects data on consumers and their transactions. Huge databases store data on individuals and groups of individuals. In some ways, CRM means that an organisation is dealing with a segment of one person, since every consumer displays different purchasing habits and preferences. Organisations will track individuals, and try to market products and services to them based upon similar buyer behaviour seen in other individuals (e.g. When Amazon tells you that customers that viewed/bought the same product as you, also bought another product).

    CRM is a term that is often referred to in marketing. However, there is no complete agreement upon a single definition. This is because CRM can be considered from a number of perspectives. In summary, the three perspectives are:

    Disclaimer: Our model is a hybrid of many other commonly cited models from a number of sources. If you are undertaking higher-level academic work you need to clarify with your tutor, the nature of his or her preferred model on the topic

    CRM Model

    Three key phases:

    • 1. Customer Acquisition.
    • 2. Customer Retention.
    • 3. Customer Extension.

    Three contextual factors:

    • 4. Marketing Orientation.
    • 5. Value Creation.
    • 6. Innovative IT.

    1. Customer Acquisition – This is the process of attracting our customer for the first their first purchase. We have acquired our customer.

    Growth – Through market orientation, innovative IT and value creation we aim to increase the number of customers that purchase from us for the first time.

    2. Customer Retention – Our customer returns to us and buys for a second time. We keep them as a customer. This is most likely to be the purchase of a similar product or service, or the next level of product or service.

    Growth – Through market orientation, innovative IT and value creation we aim to increase the number of customers that purchase from us regularly.

    3. Customer Extension – Our customers are regularly returning to purchase from us. We introduce products and services to our loyal customers that may not wholly relate to their original purchase. These are additional, supplementary purchases. Of course once our loyal customers have purchased them, our goal is to retain them as customers for the extended products or services.

    Growth – Through market orientation, innovative IT and value creation we aim to increase the number of customers that purchase additional or supplementary products and services.

    4. Marketing Orientation – means that the wholes organisation is focused upon the needs of customers. Customer needs are addressed by the Three Levels of a Product whereby the organisations not only supplies the actual, tangible product, but also the core product and its benefit, and also the augmented product such as a warranty and customer service. Marketing orientation will focus upon the needs of consumers for all three levels of a product. (N.B. ‘market’ orientation and ‘marketing’ orientation are not the same).

    Core Competences

    Core Competences

    Marketing and Core Competences

    A core competence is the result of a specific unique set of skills or production techniques that deliver value to the customer. Such competences give an organization access to a wide variety of markets. Hamel and Prahalad (1990) refer to a number of organizations and their products to support their concept including NEC, Honda and Canon.

    When trying to identify a core competence, it is often easy to mistake them for scarce or unique resources i.e. resources rather than skills or production technologies. Also often skills and production technologies do not amount to a core competence or resource because they do not comply with one or more of the three tests. They are the thresholds that the organization must achieve to remain competitive. Threshold competences and scarce resources may not provide access to a variety of markets, may not be so significant to customers and may be less difficult to imitate.

    In summary there are core competences and scarce resources, and threshold competences and threshold resources.

    Core Competences

    In order to be competitive an organization needs material resources such as premises, a factory or offices – depending on the nature of business of course. Material resources tend to be the most straightforward to achieve. Then an organization needs to achieve the right balance between Human Resources, training and recruitment. This state is more difficult to achieve. Intangible resources, including core competences are the most difficult and challenging to achieve. This is depicted in the diagram above. In fact they drive competitive advantage.

    References.

    Prahalad, C.K. and Hamel, G (1990) The Core Competence of the Corporation, Harvard Business Review, May/June.

    Stalk, G, Evans, P and Shulman, L, Competing on Capabilities, Harvard Business Review, March/April.

    Core competences are interesting from a traditional marketing point of view since it could be argued that they take a product or production orientation rather than a market orientation. If you focus on production techniques and skills then aren’t you looking at your business from an internal point of view? The answer is yes. However, the core competences give a business a competitive advantage in a number of markets, markets where customers perceive a benefit from the product. So if needs are being met better than the competition, there is an argument that core competences are indeed market-oriented. There are at least three tests of a core competence.

    Three tests of core competence.

    • Provides potential access to a wide variety of markets.
    • Should make a significant contribution to the perceived customer benefits of the end product.
    • Should be difficult for competitors to imitate.

    Core Competences

    For example, Microsoft has expertise in many IT-based innovations and technologies. Customers perceive many benefits in relation to Microsoft’s products. For a variety of reasons including unique skills, it is difficult for competitors to imitate Microsoft’s core competences.

    Marketing Controls

    Marketing Controls

    Measuring and monitoring the marketing planning proces

    There is no planning without control. Marketing control is the process of monitoring the proposed plans as they proceed and adjusting where necessary. If an objective states where you want to be and the plan sets out a road map to your destination, then control tells you if you are on the right route or if you have arrived at your destination.

    Control involves measurement, evaluation, and monitoring. Resources are scarce and costly so it is important to control marketing plans. Control involves setting standards. The marketing manager will than compare actual progress against the standards. Corrective action (if any) is then taken. If corrective action is taken, an investigation will also need to be undertaken to establish precisely why the difference occurred.

    SWOT Analysis

    There are many approaches to control:

    • Market share analysis.
    • Sales analysis.
    • Quality controls.
    • Budgets.
    • Ratio analysis.
    • Marketing research.
    • Marketing information systems (MkIS).
    • Feedback from customers satisfaction surveys.
    • Cash flow statements.
    • Customer Relationship Management (CRM) systems.
    • Sales per thousand customers, per factory, by segment.
    • Location of buyers and potential buyers.
    • Activities of competitors to aspects of your plan.
    • Distributor support.
    • Performance of any promotional activities.
    • Market reaction/acceptance to pricing polices.
    • Service levels.

    …and many other methods of monitoring and measurement.

    Contribution Analysis

    Contribution Analysis

    Occasionally a company is confronted with unplanned events which call for the use of decision-making tools beyond those found in the basic accounting methods.

    Price – Variable Costs Per Unit = Contribution Margin Per Unit

    On an individual special order project a company’s product contribution to profit may also be calculated as shown below:

    Products Contribution to Profit = Contribution Margin Per Unit x Units Sold

    In today’s manufacturing context some companys are more and more likely to entertain the potential of spur of the moment opportunities and vehicles to achieve increased revenues. By the very nature of such decisions, they do not have the luxury of regular costing information and additional effort is needed to improve understanding of potential costs. A useful method which may improve the understanding of these costs is called contribution analysis.

    Contribution analysis addresses the problem of identifying soft, or overhead costs associated with varying production projects. Generally, contribution analysis  aids a company by accounting for all known fixed, direct and variable costs and then subtracting that amount from revenues. The remainder is viewed as the volume of other costs which, though hard to pin down, actually contribute to production.

    p

    To further hone in on these costs, some firms may even include some marketing costs; advertising, trade and consumer promotions, as direct costs. In this method , indirect costs consists of revenue minus direct costs. Contribution analysis is derived from other accounting priciples aimed at more correctly identifying costs such as Activity Based Costing(ABC).

    For example – a large firm might employ contribution analysis to help in decisions on pricing, or how to get the most profit from an individual project. Such information is valuable if a firm were to consider a contract offer for a special order. The aim of the contribution analysis is to be to base the company’s pricing on a contribution margin calculated as described below

    Contribution Margin Per Unit x Units Sold = Product’s Contribution to Profit

    And using those results to arrive at the desired price –

    Consumer Behavior 8 Types of Online Shoppers

    Consumer Behavior

    Situational influences and the 8 Traits of Online Shoppers

    i. Adventurous Explorers (30% of online spending) are a small segment that presents a large opportunity. They require little special attention by Internet vendors because they believe online shopping is fun. They are likely the opinion leaders for all things online. Retailers should nurture and cultivate them to be online community builders and shopping advocates.

    vi. Shopping Avoiders (3% of online spending) have an appealing income level, but their values make them a poor target for online retailers. They don’t like to wait for products to be shipped to them and they like seeing merchandise in person before buying. They have online shopping issues that retailers will not easily be able to overcome.

    vii. Technology Muddlers (3% of online spending) face large computer literacy hurdles. They spend less time than any other segment online and show little excitement about increasing their online comfort level. They are not an attractive market for online retailers.

    viii. Fun Seekers (2% of online spending) are the least wealthy and least educated market segment. They see entertainment value in the Internet, but buying things online frightens them. Although security and privacy issues might be overcome, the spending power of the segment suggests that only a marginal long-term payback would be possible.

    Click here for more on online shopping habits.

    ii. Shopping Lovers (24% of online spending) enjoy buying online and do so frequently. They are competent computer users and will likely continue their shopping habits. They also spread the word to others about joys of online shopping whenever they have the opportunity. They represent an ideal target for retailers.

    iii. Business Users (19% of online spending) are among the most computer literate. They use the Internet primarily for business purposes. They take a serious interest in what it can do for their professional life. They don’t view online shopping as novel and aren’t usually champions of the practice.

    iv. Suspicious Learners (15% of online spending) comprise another small segment with growth potential. Their reluctance to purchase online more often hinges on their lack of computer training, but they are open to new ways of doing things. In contrast to more fearful segments, they don’t have a problem giving a computer their credit card number. Further guidance and training would help coax them into online buying.

    v. Fearful Browsers (5% of online spending) are on the cusp of buying online. They are capable Internet and computer users, spending a good deal of time “window shopping.” They could become a significant buying group if their fears about credit card security, shipping charges and buying products sight unseen were overcome.

    Conducting Marketing Research

    Conducting Market Research

    How the professionals do marketing research

    The professionals use a market research process that generally incorporates five steps.

    1. Problem definition

    This step involves identifying an information gap and defining a research problem as specifically as possible.

    3. Conducting Fieldwork

    This step involves implementing the action plan. ‘Fieldwork’ is a generic term used to describe actions taken to gather the required data. It involves a planned approach and results in a body of information that can be analysed further. This information is usually stored as written documents, audio-visual recordings or on computer databases.

    4. Analysis

    Once the required data is collated, it can then be further analysed. Several steps are necessary to ensure this process produces accurate and reliable results.

    • Firstly, data must be screened to ensure no errors have been made by the researcher when gathering and collating data. Mistakes range from spelling errors and entering incorrect numerical data to misinterpreting the intention behind a participant’s responses. Quality measures need to be implemented. This may see other researchers providing a check of data, ensuring the data is from a reliable source and conducting ‘pilot’ testing of questionnaires and/ or discussion guides. Reliability and validity checking also need to occur. Reliability checking involves assessing whether the same or similar responses would have been received if a survey were conducted with a different group that share the same characteristics as the respondent group. Validity checking involves determining whether the data recorded actually reflects the intended responses of participants. A range of techniques exist to assess reliability and validity.
    • Once the researcher is confident that the data is error-free, reliable and valid, thought must be given to how it is to be further analysed. This requires an understanding of the client’s requirements as well as the time and budget constraints on the research project. Some common analysis techniques include:
    • For qualitative data: data are assessed for the primary ‘themes’ that they contain. This involves becoming well acquainted with the data and to apply techniques to that data, which compartmentalise it into relevant chunks. These are then presented along with some indicative quotes from the data.

      For quantitative data: a range of statistical techniques can be used to show differences between respondent groups, to show relationships between different phenomena and to count the number of instances of a particular type of response.

      5. Presenting Findings

      The final step in the market research process involves presenting the findings to the client or to the management team. This generally involves one or more of the following components:

      • Face-to-face presentation/ meeting. This involves presenting the pertinent results of the research. This can be a simple verbal report or a formal presentation involving a range of visual prompts.
      • Written reports. The style and length of written reports varies a great deal. Generally, a mix of text with charts, figures and/ or graphs fills the pages of market research reports. Care should be taken to ensure a professional look and feel.
      • Discussion of results over the phone. This is similar to a verbal, face-to-face presentation.
      • With improvements in technology, it is now possible to present findings using one or all of these methods regardless of geographic locations of research stakeholders.

        Bibliography

        Beall, A. (2008). Strategic Market Research: A Guide to Conducting Research that Drives Businesses. Bloomington, IN: iUniverse.

        McQuarrie, E. F. (2006). The Market Research Toolbox: A Concise Guide for Beginners (2 ed.). Thousand Oaks, CA: Sage Publications Inc.

        • Information gaps are best thought of as a lack of knowledge about a given topic area. They are usually recognised when a decision is about to be made that will affect the way an organisation conducts itself. Some examples of common information gaps include consumer buying habits, customer perceptions of new products and whether a market opportunity exists.
        • Information gaps need to be prioritised. This process sees each gap assessed for its potential contribution to achieving a desired outcome. For example, if a new product is to be launched, gauging the demand for that product is crucial. Prioritising information gaps allows an organisation’s resources to be allocated as efficiently as possible.
        • Once the primary information gaps are identified, they need to be defined as specifically as possible. For example, ‘determining the level of demand’ is a broad and somewhat ambiguous research problem. If this research problem is rephrased into several more focussed issues, it will streamline the research process and allow it to achieve a measurable outcome. Derivations of ‘demand’ include ‘who is demanding product x in geographic market a?’, ‘what features are group y most interested in?’, and ‘what is group y willing to pay for product x?’.

        2. Developing the Research Approach

        This step involves identifying the types of information to be gathered, their sources and an action plan.

        • The types of information to be gathered fit into two broad categories: primary and secondary data. Primary data includes data gathered for the first time for a specific purpose, e.g. interviews or surveys. Secondary data, on the other hand, is already gathered and has been used for another purpose, e.g. government reports, newspaper articles and databases.
        • Data sources are categorised as either qualitative or quantitative.Qualitative data is that which is difficult to measure. Often qualitative data provide a depth of information about the topic of interest. Qualitative data usually result from open-ended interviews and surveys (where respondents are allowed to say anything they like) with respondents or through the description of their behaviours and contexts. Other qualitative data result from secondary sources such as reports and articles from the press. Quantitative data is easily measurable. It usually is recorded in numerical form. Data is also gathered through similar sources to qualitative data, but is represented through numbers, i.e. respondents are forced to select a number that represents their answer.
        • To gather the required data, an action plan is necessary. This involves determining research objectives, deciding on resource and personnel allocations, the timing of data gathering activities and setting a research budget.

    Cash Flow Statement

    Cash Flow Statement

    Marketing and Cash Flow

    The main purpose of a Cash Flow Statement (CFS) is to help the business owner plan and control the flow of income in order to meet scheduled financial obligations. The information illustrated in the Cash Flow Statement also aids lenders and investors in determining a company’s financial health.

    Cash Flow Statement

    Fishbourne Marketing Cash Flow Statement

    January
    February
    March
    April
    May
    June
    Beginning Cash Balance

    15,000

    20,548

    22,296

    23,493

    24,191

    180,955
    Cash inflows:
    Accts. Rec. Collections
    180,955
    180,955
    182,455
    185,855
    181,455
    180,955
    Loans on proceeds
    Sales & receipts
    5,000
    0
    3,500
    0
    4,500
    6,000
    Other:
    Total Cash Inflows

    185,955


    180,955

    185,955

    185,955

    185,955

    186,955
    Available Cash Balance
    200,955
    201,503
    208,251
    209,448

    210,146
    212,244
    Cash Outflows (Expenses):
          
    Advertising
    300
    300
    300
    400
    400
    400
    Bank Service Charges
    45
    45
    45
    45
    45
    45
    Credit Card Fees
    35
    35
    35
    35
    35
    35
    Delivery
    Health Insurance
    478
    478
    478
    478
    478
    478
    Insurance
    200
    200
    200
    200
    200
    200
    Interest
    25
    25
    25
    25
    25
    25
    Inventory Purchases
    1,000
    1,000
    450
    750
    450
    1,000
    Miscellaneous
    300
    300
    300
    300
    300
    300
    Office
    1,000
    1,000
    1,000
    1,000
    1,000
    1,000
    Payroll
    83,300
    83,300
    83,300
    83,300
    83,300
    83,300
    Payroll Taxes
    7,300
    7,300
    7,300
    7,300
    7,300
    7,300
    Professional Fees
    250
    250
    250
    250
    250
    250
    Rent and Leases
    1,000
    1,000
    1,000
    1,000
    1,000
    1,000
    Subscriptions and Dues
    90
    90
    90
    90
    90
    90
    Supplies
    200
    200
    100
    200
    100
    200
    Taxes and Licenses
    44,629
    43,429
    44,629
    44,629
    44,629
    44,829
    Utilities and Telephone
    130
    130
    130
    130
    130
    130
    Other
    Subtotal

    140,282

    139,082

    139,632

    140,132


    139,732

    140,622
    Other Cash Out Flows:
    Capital Purchases
    Loan Principal
    125
    125
    125
    125
    125
    125
    Owner’s Draw
    40,000
    40,000
    45,000
    45,000
    45,000
    40,000
    Other:
    Subtotal

    40,125

    40,125


    45,125

    45,125

    45,125

    40,125
    Total Cash Outflows
    180,407

    179,207

    184,757

    185,257

    184,857

    189,747

    Ending Cash Balance
    20,548
    22,296
    23,493
    24,191
    25,289
    31,497

    Much like other financial statements; the Profit & Loss Statement or the Balance Sheet; the Cash Flow Statement cannot be composed without first employing a record keeping system. The more Cash Flow Figures are derived from records of actual cash sales receipts, and invoices the more accurate it will be. Keeping a record of income accounts and expense accounts will generate many of the figures for a Cash Flow Statement.

    Not all Cash Flow Statement Information is "actual" information. A statement will sometimes unavoidably contain educated guesses, estimates and projections. In fact, the Cash Flow Statement is the best way to forecast working capital needs.

    The Typical Structure of a Cash Flow Statement.

    A Cash Flow Statement is may be thought of as a budget that continuingly evolves as time goes by. The main work of structuring a Cash Flow Statement occurs in the first column. It starts with a snapshot of your beginning cash balance. Next, it itemizes the amount of each source of income on a line of its own. The beginning cash balance plus the sum total of all income sources is totaled for your Available Cash Balance.

    Next, simply make a grand total of all outgoing cash. Now, after subtracting the Total Cash Outflows from the Available Cash Balance you will arrive at the Ending Cash Balance for the first month. To see how the cash "flows", simply move the Ending Cash Balance to the top of the next months’ column and enter the figure as Beginning Cash Balance. Complete these steps, entering in the appropriate dollar amounts across from each source of income and expense and you will be in a position to monitor your cash flow.

    Cash Flow Statements may be depicted in several ways depending on the purpose of its use. A new start-up firm may show just six months or one year projections (showing column headings January through December) and later reduce it to a Quarterly Cash Flow Statement in year two. Lenders and investors like to see a five year Cash Flow Statement. It gives them an indication of a company’s continued viability over time and its ability to pay back a loan or provide a return on investments.

    The construction of a Cash Flow Statements forces a business owner to be aware of how future financial events may impact its ability to meet obligations. Below is a Cash Flow Statement showing a six month period:

    Buyer Decision Process

    Buyer Decision Process

    The stages of the Buyer Decision Process

    The buyer decision process represents a number of stages that the purchaser will go through before actually making the final purchase decision. The consumer buyer decision process and the business/organisational buyer decision process are similar to each other. Obviously core to this process is the fact that the purchase is generally of value in monetary terms and that the consumer/business will take time to actually assess alternatives. For FMCG (Fast Moving Consumer Goods) the purchase decision process tends to be shorter/quicker, and for habitual purchase behaviour or repeat purchases the decision process is short-circuited.

    Let’s look at an example based upon buying a new smart cellphone. The first stage is likely to be that you have a need for communication or access to the Internet, or problem because you cannot interact with friends using social media. The value added by products such as Android, iPhone or Windows phone and others should satisfy your need or solve your problem. So the second stage is where you speak to your friends and surf the Internet looking at alternatives, which represent stage two – or your information search. As a buyer you might visit a local cellphone store and speak to the sales staff to help you complete stage three, i.e. your evaluation of alternatives. Stage four is the selection of product and you go and make your final decision and buy your smartphone from a local store or using an e-commerce website. Stage five involves your post-purchase evaluation whereby you use the phone and have a positive, negative or mediocre experience of the product. If it doesn’t satisfy your needs you take action and more importantly you’ll tell others of your problems. If you’re pleased with the product, you will tell your friends and this will influence stage two (their information search) when they decide to buy a cellphone.

    Remember that organisations and businesses also go through this process and that teams of individuals contribute to the decision-making process. This is called a Decision-Making Unit (DMU).

    The stages of the buyer decision process are the recognition of the problem, the search for information, an evaluation of all available alternatives, the selection of the final product and its supplier (of course services are included) and then ultimately the post-purchase evaluation. Let’s have a look at each stage and offer a quick explanation of what it’s all about, and then let’s apply it to an organisation to help us work out what it’s all about.

    Stage One

    Stage one is the recognition of the particular problem or need and here the buyer has a need to satisfy or a problem that needs solving, and this is the beginning of the buyer decision process.


    Stage Two

    Stage two is where we begin to search for information about the product or service. Buyers here begin to look around to find out what’s out there in terms of choice and they start to work out what might be the best product or service for solving the problem or satisfying any need.

    Stage Three

    Stage three sees the evaluation of the available alternatives whereby the buyer decides upon a set of criteria by which to assess each alternative.

    Stage Four

    We buy or select a product/service/supplier at stage four. Individuals or teams of buyers make the final choice of what to buy and from whom to buy it.

    Stage Five

    Interestingly the process does not stop at the point of purchase because there is a stage five called the post-purchase evaluation. The process continues even when the product or service is being consumed by the individual or business. So if it doesn’t meet your needs or solve your problem you can take action to improve the product or service. Your actions at this point might inform other potential buyers who would be keen to hear about your experiences – good or bad.

    Collecting customer information

    Collecting customer information

    Collecting Information about customer needs.

    So we recognise that customers and consumers have needs and wants. We are now going to look at how we gather information about customer needs and want, since by satisfying these needs and wants is how we make profit. There are internal and external sources of information, and we tend to categorise basic information or data as either primary or secondary. Let’s have a look at these terms more closely in the following paragraphs.

    Secondary data could be out of date. An example might be that we are comparing the data on pensions in Central America. Each piece of research will be collected at a different time and have different ways of collecting the data, and you also should appreciate that the pension systems will be different in each country. Clikc here for more on marketing research.

    So what’s the difference between information and data? Data can be any fact or statistic, which then becomes information once we add some intelligence to it. For example if we have an average of 7 whilst this is a piece of data, once it becomes 7°C or kilometres per hour, it now has contextual meaning and becomes a piece of information. Often the words are interchangeable.

    Internal and External Sources

    Internal data is any data which relates to the inside of your business. There are going to be many examples of internal data which might include the number of employees which you have, diferent products which you have in stock or the state of the cash flow budget. Can you think of other examples of internal data? External data is any data from outside of your business. Here we are into the realms of marketing research, which is research for the purposes of marketing. An example might be competitor price research or looking at the nature of your competitors’ promotional activities. You could also look at specific market segments for demographics (which is the study populations) and you could include the income of your target group, or the average age of your defined consumer.

    Primary and Secondary Data.

    Your information or data is divided into primary and secondary. Primary data is data which is collected for the first time. Secondary data, or desk research, is data which already exists. Primary data is collected for your purposes only, and focuses on a particular problem which you have to solve. This might be why are low income households buying less baked beans? It is specific to your question or problem, although it does have some negative points. Primary data is notoriously expensive, and it takes time and commitment on the part of the business to see it through. Secondary data on the other hand is much cheaper and can be undertaken far more quickly. The downside of course is that the data may have been collected for the reasons other than for your specific problem, and it is often difficult to compare datasets that have been collected at different times and for different reasons.

    Business to Business Marketing

    Business-to-Business

    What is Business-to-Business Marketing?

    Business-to-Business (B2B) marketing involves the exchanges of goods and services that businesses purchase for purposes other than general consumption. Of course in consumer markets the focus of the marketer is upon the customer as a purchaser who is the consumer, or who will give the product or service to the consumer. Business-to-Business often sees companies selling on goods and services since they are part of the supply chain, or distribution channel. See Marketing Teacher’s lesson on place for more on distribution.

    Business purchasers tend to buy in much greater quantities. Business buyers tend to be concentrated in the same place. Consumers will consume chocolate bars in every geographical location whereas companies tend to be placed close to each other, for example in industrial cities where manufacturing takes place.

    There are many different types of business to business customers, which generally fall under the category of producers, resellers and government markets. From our previous example Dell would be a producer of computers (although it is a reseller of computer peripherals such as printer ink). Large retailers such as Walmart and the John Lewis Partnership are examples of resellers because they do not manufacture sugar/coffee/milk, they essentially buy from the producers and retail it. Government markets are large and lucrative, and often need a very precise marketing expertise in this field. Governments undertake large public works projects on behalf of their citizens. Purchases could include bridges, roads, hospitals, military equipment and educational supplies, and much more. Can you think of examples from your own country of different types of Business-to-Business customers?

    Business-to-Consumer (B2C)

    The Business-to-Consumer markets are those markets which we traditionally talk about when learning marketing. Buyers tend to be individuals and not groups. Buyers as consumers tend to be found in mass markets and they are not concentrated in single places as are organisational buyers. Consumers tend to buy in small quantities and not in bulk; therefore they pay a much higher price per unit in comparison to the companies. The marketing effort would change to recognise the nature of the consumer. For example segmentation could be based on demographics or lifestyle when dealing with consumers. Finally the marketing mix is very much focused on the customer as a consumer, and a marketing effort is about creating value and customer satisfaction for individuals.

    There are many examples of business to business marketing in operation. The general consumer might decide to buy some clothes, and so by wearing them the product has been consumed. There is a decision-making process on the part of the consumer, and there are similarities when it comes to a company or organization making buying decisions.

    Dell would buy components and then manufacture computers. Dell is the customer and the component manufacturer is the supplier. Dell would go through a decision-making process but it is not the final consumer of the product. Boeing and Airbus manufacture long haul aircraft. Cathay Pacific would buy an aircraft, but it would not consume the aircraft. Your local supermarket or store would go to a wholesaler to purchase well-known brands that it placed upon its shelves; you (the customer) would go into the store and purchase the product. Dell, Cathay Pacific and your local store are all participants or customers in Business-to-Business markets.

    Our marketing mix is the same and marketing principles remain largely unchanged when we consider Business-to-Business markets. However there are some differences. In Business-to-Business markets you are not selling to a single consumer since an organisation has many employees some of whom are involved in the decision to buy the final product. There are much fewer organisational buyers simply because there are more end-users or consumers and producers. A car manufacturer would be a large single purchaser of car tires/tyres, and there are fewer car manufacturers then there are car drivers in the world. This is also an example of derived demand, whereby the number of car tyres/tires sold increases with the number of cars sold and vice versa.

    Business Environment

    Business Environment

    What is the business environment?

    The business environment is made up from the microenvironment and the macroenvironment. Our previous lessons on the marketing environment summarises both topics. The business environment will now be considered in a more practical manner. There are forces in the business environment that will impact your business, which are out of your business’s control. You would undertake market scanning and some secondary research to help the business adapt to the influence of these external factors.

    Corporate annual reports and accounts.

    Local Chambers of Commerce and business groups.

    Professional and trade federations such as the American Marketing Association, and the Chartered Institute of Marketing.

    National and International Media such as the Nihon Keizai Shimbun (Japan), Financial Times (UK), The Wall Street Journal, IL Sole 24 Ore (Italy) Handelsblatt (Germany) and Poslovni dnevik (Serbia) – ordered by circulation.

    Websites belonging to these organizations are also really useful but you could also refer to Yahoo! Finance, CNN Money, Google Finance, MSN MoneyCentral, BusinessWeek, Bloomberg, Forbes, MarketWatch, BusinessInsider, CNBC, Motley Fool, The Street and Biz Journals.

    Governments are often sources of secondary data about all sorts of topics from housing to social trends. You can look at the website of a particular country or approach their local embassy.

    Market scanning is undertaken to assess the impact upon the customer and the organization from environmental factors that are largely out of its control. Here you scan the market in the same way that an X-ray machine scans a body or in the way that your computer scanner copies a document. Another way to think about market scanning is that you use an imaginary pair of binoculars; you hold them to your eyes and turn your head left and right to scan the horizontal to look for changes in the broader business environment.

    For example in the United Kingdom there is a movement from analogue television to digital television. This will render perfectly operational analogue TVs useless, but will create new opportunities for companies that manufacture digital TVs. By scanning the market businesses are able to flex to factors that are beyond its immediate control.

    Sources of secondary data.

    So you need to go and scan some sources of data. Data is subdivided into primary data and secondary data. Primary data is new data collected by you to solve a specific problem. Secondary data already exists. For the pros and cons of primary and secondary data, you will need to see the lesson on marketing research. For now let’s look at some useful sources of secondary data.

    Electronic databases include:

    • Market Research databases such as Business Insights (Datamonitor 360), eMarketer, Frost and Sullivan, Global Market Information Database (GMID Euromonitor), Key Note, and Mintel.
    • Company information such as FAME, Emerging Market Information Service (EMIS), Kompass Worldwide, Onesource, and ORBIS.
    • Business News and Journals such as Business Source Complete, ABI Inform Global, Business and Industry (Gale), Factiva and the Wall Street Journal.
    • Business and Economic sources such as CountryData (Economist Intelligence Unit) and the Economist Intelligence unit itself.

    Building and Developing Relationships

    Building and developing relationships

    Example – Dell- How networking skills lead to better co-ordination.

    Your staff develops networking skills in the supply chain. From the perspective of the previous lesson, we are concerned very much with internal and external customers, our customer relationships, loyalty and retention. So if we reconsider each term in relation to Dell we have a highly complex set of relationships which intertwine. Marketers and others develop interpersonal and networking skills to deal with the boundaries. As a result the boundaries can sometimes appear seamless, especially if good relations are enjoyed between individuals and groups within the ‘network.’

    There are many techniques that marketers can use to communicate with internal customers and functions. Firstly marketers would need to identify internal and external customers, including their different needs and wants. Secondly the marketing function will provide internal services such as intranets for human resources, internal recruitment, and companywide briefings and announcements. Finally the marketing team can provide extranet services for supporting activities in the supply chain. The supply chain connects internal and external manufacturers and producers, our internal business functions (as discussed above) and our final customer interface at wholesale, retail and ultimately at the consumption of our product and service.

    When is internal cooperation needed?

    Internal cooperation is needed to overcome problems between staff and colleagues, our internal customers. These problems occur in every organisation at some point in time. It is argued that a culture of internal marketing will help us overcome such problems. Let’s look at some examples:

    • Products and services not meeting quality standards
    • People leaving and going sick because of problems of low motivation
    • The inability to communicate between teams and departments, or to subordinates and superiors.
    • Being inefficient and slow
    • Personal and political battles which get in the way of a productive and proactive organisation
    • We could also include other HR issues such as absenteeism, bullying, lack of investment in training and development, poor management and others.
    • Try to think of some other problems that internal marketing helps to overcome.
    • Organisational objectives help to give direction.

      The acronym SMART is used when describing organisational objectives. So objectives must be specific, measurable, achievable, realistic and timed. If some reason they are not then you have similar internal problems since people have different targets or goals.

      If organisational objectives are clear and then people will commit to them. Commitment to organisational objectives will help to build and develop relationships both within the marketing function and across the organisation itself.

      Internal support for marketing initiatives

      To draw some of the new learning together we can use some of our skills to gain internal support for marketing initiatives. We now have knowledge of our marketing supply chain and we know how to use good working relationships to get the most out of colleagues both internally and externally. We know the reasons why internal cooperation is needed to achieve corporate goals, and we know the importance of commitment to organisational objectives. Internal marketing techniques are also valuable service when trying to gain internal support for our initiatives.

      Support is necessary from everybody within the organisation. We need support from our product designers, and from the manufacturing department. Once goods are produced we need the support of warehouse and logistics staff to get the product to customers. Within the marketing team itself we need coordination and teamwork from public relations, sales staff, promotion staff and everybody from within the marketing team. Let’s consider some of the other functions and departments from within the organisation that we for support. Again, in Unit 1 – What is Marketing? we have considered other functions and departments with whom we need relationships.

      Functions within an organization

      The marketing function within any organization does not exist in isolation. Therefore it’s important to see how marketing connects with and permeates other functions within the organization. In this next section let’s consider how marketing interacts with research and development, production/operations/logistics, human resources, IT and customer service. Obviously all functions within your organization should point towards the customer i.e. they are customer oriented from the warehouseman that packs the order to the customer service team member who answers any queries you might have. So let’s look at these other functions and their relationship with marketing.

      What are the benefits of being better co-ordinated?

      Good working relationships within the supply chain will pay dividends. There is less conflict and more cooperation, and creative solutions to problems are more likely to be generated. Here are some more examples:

      • There are improvements in quality since fewer mistakes are made.
      • Relationships become friendlier between suppliers and customers, and the whole process is more simple and clear.
      • Problems can be solved quickly and effectively.
      • New ideas are generated because the network is connected.
      • Performance generally improves.
      • Everyone is more reactive to changes in the business environment.
      • Successful negotiation in the supply chain

        Whilst there are a lot of benefits an extended network and a marketing supply chain, let’s not forget that different companies are linked together but they are not the same organisation. Each organisation has its own mission, strategy, tactics and motivations which do not always match those of your own. This can sometimes lead to the need for negotiation between different parties in the chain. Let’s take a quick look at some ways in which we can deal with negotiation.

        Some of your network contacts will have more power than others. Power is important that is the difference between getting things done, or not. If you are dependent on suppliers or buyers for any reason then you need to protect the value which you deliver by negotiating with your network.

        • Don’t be afraid to ask your buyers/suppliers if certain issues arise
        • Once you make an offer be prepared to wait for an answer, and never negotiate against yourself
        • If you make an agreement then make sure you get it in writing
        • Make sure that you are prepared for any negotiations and have your facts and figures ready
        • Make sure you know the size and level of power and authority before negotiating with others.
        • Know your bottom line. You’re in business to deliver value and to make profits.
        • Have a backup plan ready just in case things don’t turn out the way we planned.
        • Use listening skills and really try and hear what the other party is trying to say.
        • Discussion is your most important tool. Make sure you talk everything through.
        • To complete this section on building and developing relationships, you need to be able to describe approaches used to build and develop those relationships both within the marketing function and across the organisation as a whole. This was covered in previous lessons in Marketing Teacher’s Lessonstore.

    Brainstorming

    Brainstorming

    What is Brainstorming?

    Brainstorming is simply a means of getting a large number of ideas from a group of people in a short time. Brainstorming is great for marketers! Marketers can generate new creative ideas for products, services, solutions or concepts. Not only is brainstorming useful for creative thinking, but is can also be used for marketing problem solving and marketing decision making.

    Evaluating ideas

    1. Scrutinise all the ideas and pick out any that instantly jump out at you.

    2. Sort the remaining ideas into groups of a manageable size and examine using some predefined criteria e.g. profitability or relative competitive advantage.

    3. Subject ideas to reverse brainstorming. Ask the question ‘In how many ways can this idea fail?’

    Successful brainstorming depends upon four key rules:

    1. Suspend judgement.

    2. Let yourself go and freewheel.

    3. Go for quantity – quality implies evaluation (which means that you have not suspended judgement).

    4. Cross-fertilize – pick up someone else’s ideas and suggest others leading from it.

    Steps in Brainstorming.

    A. State the problem.

    B. Restate the problem.

    C. Select restatement.

    D. Warm-up.

    E. Brainstorm.

    Oiling the Wheels

    If brainstorming group dries up the leader can get the ideas flowing again by using any one of the following approaches:

    1. Silent review – let the group review silently the ideas already generated in order to stimulate their thinking.

    2. Quantity targets – encourage the group to go for 10, 50 or 100 ideas!

    3. The one idea – get the group to focus on one idea and use that as a stimulus.

    4. Select a restatement from the list the group produced earlier and brainstorm it.

    5. Wildest idea – let the group silently review the ideas already generated in order to use the wildest idea as a stimulus for more productive ideas.

    Introduction to Brands

    Introduction to Brands

    Brands and Branding

    Branding is a strategy that is used by marketers. Pickton and Broderick (2001) describe branding as Strategy to differentiate products and companies, and to build economic value for both the consumer and the brand owner.

    • A brand is an identity that includes all sorts of components; depending on the brand e.g. Body Shop International encapsulates ethics, environmentalism and political beliefs.
    • A brand is an image where the consumer perceives a brand as representing a particular reality e.g. Stella Artois Reassuring Expensive.
    • A brand is a relationship where the consumer reflects upon him or herself through the experience of consuming a product or service.

    Brand occupies space in the perception of the consumer, and is what results from the totality of what the consumer takes into consideration before making a purchase decision (Pickton and Broderick 2001).

    So branding is a strategy, and brand is what has meaning to the consumer.

    There are some other terms used in branding. Brand Equity is the addition of the brand’s attributes including reputation, symbols, associations and names. Then the financial expression of the elements of brand equity is called Brand Value.

    There are a number of interpretations of the term brand (De Chernatony 2003). They are summarized as follows:

    • A brand is simply a logo e.g. McDonald’s Golden Arches.
    • A brand is a legal instrument, existing in a similar way to a patent or copyright.
    • A brand is a company e.g. Coca-Cola.
    • A brand is shorthand – not as straightforward. Here a brand that is perceived as having benefits in the mind of the consumer is recognised and acts as a shortcut to circumvent large chunks of information. So when searching for a product or service in less familiar surroundings you will conduct an information search. A recognised brand will help you reach a decision more conveniently.
    • A brand is a risk reducer. The brand reassures you when in unfamiliar territory.
    • A brand is positioning. It is situated in relation to other brands in the mind of the consumer as better, worse, quicker, slower, etc.
    • A brand is a personality, beyond function e.g. Apple’s iPod versus just any MP3 player.
    • A brand is a cluster of values e.g. Google is reliable, ethical, invaluable, innovative and so on.
    • A brand is a vision. Here managers aspire to see a brand with a cluster of values. In this context vision is similar to goal or mission.
    • A brand is added value, where the consumer sees value in a brand over and above its competition e.g. Audi over Volkswagen, and Volkswagen over Skoda – despite similarities.

    Balance Sheet

    The Balance Sheet

    The Balance Sheet holds information of great interest to bankers and investors alike. The information represented on a Balance Sheet is very revealing to the keen eye, because it can forecast a company’s ability to pay its bills and discloses how much money has been invested.

    Shareholders Equity is composed of the amount of capital invested by the business owners and company profits that are reinvested into the firm. Profits reinvested are shown on the Balance Sheet as Retained Earnings. When Liabilities and Shareholder Equity are combined the result completes the second half of the Balance Sheet Equation.

    The Balance Sheet has two main purposes; (1) Listing the assets of your company and (2) Listing the liabilities of your company. A Balance Sheet is so named because the calculations reported should always lead to a balance between the dollar amount of Assets and the total of Liabilities and Shareholders Equity.

    Assets = Liabilities plus Shareholders Equity.

    An accurate Balance Sheet depends on a great deal on good record keeping. A journal of accounts will help provide the summary figures shown on a Balance Sheet. Construction of Balance Sheet details begins with a list of the firms’ Assets. There may be two types of Assets: Current and Fixed. Typical Current Assets include Cash on hand and Accounts Receivable and the value of Inventory (products purchased but not yet sold).

    A company might also possess Fixed Assets such as a garage or equipment and possibly land. Fixed Assets such as a manufacturing plant have a useful life of more than one year and are counted on to help the company generate profits. Depreciation is also shown under the Fixed Assets heading. When Current and Fixed Assets are combined, the result is Total Assets and one half of the Balance Sheet equation is complete.

    The second half of the Balance Sheet construction involves Liabilities and Shareholders Equity. Liabilities are so called because they represent amounts owed to others such as loan funds owed a bank. A Balanced Sheet may distinguish between Current and Long Term Liabilities; with Accounts Payable being an example of the former and a bank loan an example of the latter. Typical Accounts Payable items involve professional services fees such as money owed for ongoing accounting or legal services.

    Annual Reports for Marketers

    Annual Reports for Marketers

    An Annual Report is a statement prepared by companies that are traded publicly. The development of an Annual Report provides inherent value in the process of reviewing major financial and operational achievements that occurred during the past 12 months.

    An Annual Report does not have to be viewed as a staid document full of boring figures. In fact, an astute marketer can mine the basic elements for marketing gold. Just as promotion tactics are devised with marketing segments in mind, in like manner an Annual Report can be tailored to speak to the concerns of its audience.

    The contents of Annual Reports may vary by industry, but usually includes the following:

    • A Balance Sheet
    • An Income Statement
    • Company stock pricing trends
    • A Letter to Stockholders
    • An Individual Report from the Chief Executive Officer
    • An Individual Report from the Chief Financial Officer
    • Major Accomplishments during the past year

    In the United States, the contents of an Annual Report became more stringent after the passage of the Securities and Exchange Act of 1934. Prior to that act, some companies had been less than forthcoming or in some cases even deceitful in their reports. The financial aspects of an Annual Report are audited by a certified accountant.

    The more detailed disclosure was required in order to better inform potential stakeholders such as those outlined below:

    • Current Shareholders
    • Potential Shareholders
    • Current Donors (if applicable)
    • Future Donors (if Applicable)
    • Potential Business Partners
    • Employees
    • Customers
    • Applicable Government Entities

    Annual Accounts

    Annual Accounts

    Although the standard components of a basic annual report such as balance sheet, profit and loss statements and cash flow statements provide key financial information of interest to shareholders and others, there are occasions when more thorough information is desired. Some larger companys have subsidiaries, participate in joint ventures and operate in multiple geographic jurisdictions. The complexity of these operations demands the provision of the level of detail found in what is called Annual Accounts.

    Annual accounts information also differs in showing data for multiple years as well as principal exchange rates and changes in accounting policies from year-to-year. Different accounting policies may result in different figures, so a firm must provide an explanation where applicable, so that all groups of shareholders and interested parties may be fairly informed. In many cases Annual Accounts provide notes and disclosures in applicable details such as deferred taxation, interest on borrowings, assets and liabilities reflected.

    The composition of Annual Accounts is guided by applicable governmental bodies and legislation such as that found in the International Accounting Standards Board and American Securities Exchange Commission. In addition to substantially more detailed information, firms such as limited liability companys, insurance companies and savings banks, must also provide explanations for all applicable accounting policies utilized.

    The following are examples of additional accounts providing information beyond the basic annual report elements:

    • Profit & loss by job
    • Income by customer summary
    • Expenses by vendor detail
    • Income tax detail
    • Audit trail
    • Profit & loss budget vs. actual
    • A/R aging detail
    • Collections report
    • Unbilled costs by job
    • Sales by item detail
    • Sales by customer detai
    • Purchases by item detail
    • Job estimates vs. actuals detail

    Advertising

    Advertising

    Advertising is an important element of the marketing communications mix. Put simply, advertising directs a message at large numbers of people with a single communication. It is a mass medium.

    Planning for advertising

    Advertising agencies and their clients plan for advertising. Any plan should address the following stages:

    • Who is the potential TARGET AUDIENCE of the advert?
    • WHAT do I wish to communicate to this target audience?
    • Why is this message so IMPORTANT to them?
    • What is the BEST MEDIUM for this message to take (see some of the possible media above)?
    • What would be the most appropriate TIMING?
    • What RESOURCES will the advertising campaign need?
    • How do we CONTROL our advertising and monitor success?

    There are two key categories of advertising, namely ‘above-the-line’ and ‘below-the-line.’ The definitions owe a lot to the historical development of advertising agencies and how they charge for their services. In a nutshell, ‘above-the-line’ is any work done involving media where a commission is taken by an advertising agency, and ‘below-the-line’ is work done for a client where a standard charge replaces commission. So TV advertising is ‘above-the-line’ since an agency would book commercial time on behalf of a client, but placing an advert in a series of local newspapers is ‘below-the-line,’ because newspapers tend to apply their own costing approach where no commission is taken by the agency i.e. instead the agency charges the client a transparent fee. There are many facets and elements to advertising – too many to be covered in this short lesson. Try some of the other lessons to build your knowledge.

    Advertising has a number of benefits for the advertiser. The advertiser has control over the message. The advert and its message, to an extent, would be designed to the specifications of the advertiser. So the advertiser can focus its message at a huge number of potential consumers in a single hit, at a relatively low cost per head. Advertising is quick relative to other elements of the marketing communications mix (for example personal selling, where an entire sales force would need to be briefed – or even recruited). Therefore an advertiser has the opportunity to communicate with all (or many of) its target audience simultaneously.

    Advertising Media

    Outdoor (Posters or transport)

    New Media – Mobile devices

    New Media Internet – websites and search engines

    Newspapers (Local and National)

    Television

    Magazines

    Radio

    Cinema

    Others…

    Advertising Agencies

    What is an advertising agency?

    The Client Agency Relationship.

    An advertising agency handles part or all marketing communications activities on behalf of a client organization. The agencies themselves tend to vary in size from small, perhaps a handful of people, to vast – where many thousands of employees make up the company. A commission is generally taken by the agency which tends to be taken from the media purchases of the client organisation.

    Traffic and Production Team.

    The traffic and media team are in charge of the production of the physical and artistic output, i.e. the marketing communication. In the case of a TV advert, they would commission scripts, recruit a ctors (mainly via agents), film crews and supporting activities (such as costumes and catering). All ads are different and so the specifics will vary. In the case of print advertising, the traffic and production team would commission and sign-off all printed advertising material such as direct marketing materials, magazine ads or posters.

    Account Planning Team.

    The account planning team work on the ‘customer’s’ perspective, and take an outward look at the world. They support the creative teams by supplying data and opinion on what I actually occurring in the marketing in which advertising is to be placed. They tend to use secondary data to support decisions, and would rarely commission original research. However, with material supplied my organisations such as Mori, Datamonitor, ACORN, and other – the account planning team can build an image of segments to help the creatives.

    Media Team.

    The media team will organise the timing and scheduling of the marketing communications campaign. They will look at the range of media to be exploited, and then look at the best slots in which to run advertising. They will help a client to decide upon the duration of and individual slot, and how many of them to run. Here the expense and return to the client are key factors that influence decision-making. The two main skills of the media team are media planning and media buying. Today there is a wealth of data on which media buying can be based. There is software for planning and simulation.

    This is done rather like a theatrical agent would take a percentage of the income of an actor for whom employment had been found. The agency may also take payment from the media owners (i.e. sometimes take a discount and do not pass it on to the client). More transparent means of payment are becoming more popular, with some agencies being paid-by-results.

    There are many types of agency, but it is generally accepted that the main ones are include full-service agency, a la carte agency, or specialist agency. A full-service agency will take on the whole project or campaign. An a la carte agency will offer some aspects of a campaign such as media buying, rather like buying items from a menu. A specialist agency tends to be small and more focused on a specific aspect of marketing communications and/or a specific market such as Internet Marketing.

    A Full-Service Agency will offer:

    • Account management.
    • Creative.
    • Media.
    • Traffic and production.
    • Account planning.
    • Account management.

    Account managers work for an agency with the client (an agency’s customers are called ‘clients’). Very often they will spend a lot of time with the client working as part of their marketing team. This is one way in which an agency works closely with its client and why the ‘chemistry’ between a client and its agency needs to be right. The account manager makes sure that the correct information is passed from the client to the other members of the agency. He or she is a co-ordinator and time manager. The account planner will work on a brief that is fed back to the agency team.

    Creative Team

    The first internal agency team members to see the brief tend to be the creatives and the media planners. The brief contains a ‘proposition’ that the client wishes to communicate to the target audience. The creative team will transform the proposition into something exciting and attractive to the target audience. The creative team decide upon the ‘creative concept.’ This will be a motivational idea. The words used to express the creative concept are called ‘copy.’ The images, pictures and diagrams are created i.e. the ‘design’ or ‘layout.’ This is done by ‘designers’ and ‘copywriters.’ Beware some creatives! Creatives tend to be artistic and innovative. Hence their advice should be highly regarded and any criticism should be constructive.

    Adoption Process

    The Adoption Process.

    The Adoption Process (also known as the Diffusion of Innovation) is more than forty years old. It was first described by Bourne (1959), so it has stood the test of time and remained an important marketing tool ever since. It describes the behaviour of consumers as they purchase new products and services. The individual categories of innovator, early adoptor, early majority, late majority and laggards are described below.

    Finally, laggards tend to very late to take on board new products and include those that never actually adopt at all. Here there is little to be made from these consumers.

    There are a number of examples of products that have gone through the adoption process. They include Ipods or DVD players (or even video players and digital watches). Initially only a small group of younger or informed, well off people bought into these products. Opinion leaders, or the early adoptors then buy the product and tend to be a target for marketing companies wishing to gain an early foot hold. The early majority are slightly ahead of the average, and follow. Then the late majority buy into the product, followed by any laggards. New adoption process or curves begin all the time. Who knows what will happen with solid state technology or Internet purchases of media?

    Innovators are the first to adopt and display behaviour that demonstrates that they likely to want to be ahead, and to be the first to own new products, well before the average consumer. They are often not taken seriously by their peers. The often buy products that do not make it through the early stages of the Product Life Cycle (PLC).

     

    Early adopters are also quick to buy new products and services, and so are key opinion leaders with their neighbours and friends as they tend to be amongst the first to get hold of items or services.

    The early majority look to the innovators and early majority to see if a new product or idea works and begins to stand the test of time. They stand back and watch the experiences of others. Then there is a surge of mass purchases.

    The late majority tends to purchase the product later than the average person. They are slower to catch on to the popularity of new products, services, ideas, or solutions. There is still mass consumption, but it begins to end.

    Activity-Based Costing (ABC)

    Activity-Based Costing (ABC)

    A manufacturing company is uniquely positioned to benefit from activity-based costing. Activity-based Costing is a costing model that aids a company in determining the costs of certain activities involved in producing a product/service and distributing that product/service to a customer. The key steps include:

    The process demands the inclusion of all essential procedural steps so that a cost might be attributed to each and the baseline benefits of each might be established. The following exercise illustrates the utility and advantages of activity-based costing.

    • Identifying all essential activities necessary for production and distribution
    • Assigning a cost to each activity

    This approach differs from traditional accounting in that the traditional approach simply calculates costs based on the number of hours a machine is used. This basic method denotes a per-hours-of-use cost for a machine. Total production is calculated by spreading the rest of the (non machine costs) into a category called overhead.

    As overhead costs have grown over the years, more and expenses have escaped true scrutiny Company decision-making is enhanced using activity-based costing. Unlike the generalized approach, the more accurate information uncovered through activity based costing can guide decisions on:

    • Pricing
    • Sub-contracting
    • Manufacturing Procedures

    In most cases a company already has a baseline from which to start. It probably has an outline of its current manufacturing procedures. The natural first step is to calculate the cost of each step.

    Respostas – Análise SWOT

    Análise SWOT

    Highly Brill Leisure Center (Centro Esportivo Highly Brill)

    Análise SWOT

    Resposta: Como você pod ever a resposta do Marketing Teacher (Professor de Marketing) não é completamente compatível a sua. Isso simplismente significa que os resultados da sua análise sao representados de uma forma diferente. Os pontos 2 e 10 estão em lugares diferentes. O ponto 2 depende se a máquina de fazer ondas representa uma consideravel vantagem sobe uma piscina convencional. O ponto 10 é um ponto forte interno e uma oportunidade externa.

    Respostas – Análise PEST

    Análise PEST

    Malásia PEST

    Fatores Políticos

    • Controle na imigração.
    • Um novo país formado em 1957 (Malásia) e 1963 (Malay, Sabah, Sarawak, e Singapura).
    • Parlamento e regras hereditárias.
    • Boas linhas nacionais e internacionais.
    • Uma variedade de estações de TV e rádio.
    • Aeroportos disponíveis.

    Como você se saiu? Por que não tentar uma lição diferente? Vá para o arquivo de lições.

    Fatores Econômicos.

    • Recuperando de um uma severa recessão.
    • Alto gasto do governo.
    • Baixa inflação e desemprego.
    • Favorável previsão de crescimento na economia.
    • Falta de reforma da corporação (grande dívida da corporação e competição).

    Análise PEST

    Fatores Socio-culturais.

    • Mistura de Chineses, Indianos e Malasianos.
    • Variedades de religiões.
    • Baixo nível de analfabetismo entre mulheres.
    • Tecnológico.

    Respostas – Introdução para Pesquisa de Marketing


    Introdução para Pesquisa de Marketing

    Puerto Vallarta Autos

    Para: Doreteo Dominguez – Gerente de Vendas.

    De: Representante de Conta – Punta Mita Pesquisa de Marketing.

    O Processo da Pesquisa de Marketing

    A Pesquisa de Marketing é reunida usando uma abordagem sistemática. Segue exemplo:

    1. Defina o problema. Nunca conduza uma pesquisa pelo que você ‘gostaria’ de saber. Esteja certo sobre o que você realmente ‘precisa’ descobrir. O problema será o foco da sua pesquisa. Um exemplo: porque as vendas estão caindo em São Paulo?

    2. Como você coletará a informação, a qual será analisada, para resolução do seu problema? Precisaremos conduzir uma pesquisa por telefone, ou organizaremos uma ‘discussão de grupo’ (focus group – técnica para pesquisa de mercado qualitativa)? Os métodos para a coleta de informação serão discutidos com mais detalhes mais à frente.

    3. Selecione um método de amostra. Usaremos um random sample, stratified sample ou cluster sample (métodos de investigação)?

    4. Como analisaremos a informação coletada? Qual software usaremos? Qual é o nível de exatidão necessária?

    5. Decida qual será o orçamento e o calendário.

    6. Converse com os gerentes ou clientes os quais solicitaram a pesquisa. Esteja certo de que vocês concordam de qual é o problema! Se conseguir aprovação, então mova para a etapa 7.

    7. Colete a informação.

    8. Conduza a análise da informação.

    9. Cheque os erros. Não é incomum encontrar erros na metodologia, no método da coleta de informações, ou erros analíticos.

    10. Escreva seu relatório final. Este deverá conter gráficos, tabelas e diagramas que transmitirão os resultados da pesquisa e, esperançosamente o levará à uma solução para seu problema. Tome cuidado com erros de interpretação.

    Fontes de dados – Primárias e Secundárias

    Existem duas principais fontes de dados – primárias e secundárias. Pesquisa primária é conduzida a partir do zero. Dados precisarão ser coletados para a resolução do problema em questão. Pesquisa secundária, também conhecida como pesquisa documental, nesta são usados dados já disponíveis coletados por algum outro motivo. Uma introdução geral de pesquisa de marketing foi dada anteriormente. Este é um tópico muito vasto e tem muitos processos, procedimentos e terminologias que têm por base os pontos acima. (Veja também a lição em pesquisa de mercado, pesquisa primária de marketing e pesquisa secundária de marketing)

    Recomendações para a Metodologia da Pesquisa de Marketing.

    O método mais apropriado para a pesquisa de marketing é a entrevista por telefone. Esta tem as seguintes vantagens e desvantagens:

    Vantagens – podem ser geograficamente aplicadas, desta maneira poderemos contatar clientes de Guadalajara, México e mesmo os da América do Norte; ligações para Europa podem ter um alto custo. As entrevistas podem ser conduzidas de forma relativamente barata. Nós já possuímos uma equipe de tele-pesquisa. Random Samples podem ser utilizados. Compraremos um banco de dados do escritório de turismo local e selecionaremos um random sample. Mais barato do que entrevista pessoal.

    Desvantagens – As pessoas podem simplesmente não atender as ligações ou desligar. Neste, caso selecionaremos outra pessoa para nossa lista. Entrevistas tendem a ser muito curtas. Material visual não poderá ser utilizado. Apesar disso, estes não serão necessários para este tipo de pesquisa.

    Se a informação acima for de ajuda, por favor me contate para que possamos formular os questionários.

    Customer Relationships (Maintaining)

    Building and maintaining customer relationships

    This lesson will consider the internal and external customer, how marketing is used to build and nurture customer relationships, and will begin to build your knowledge on the customer loyalty.
    So let’s begin by looking at external customers and internal customers. For the purposes of an introduction to marketing, the more generic terms for the different types and characteristics of people with which an organisation develops relationships would include: customers, users, connected stakeholders, and other stakeholders. We will now look at how we differentiate between the internal and external customer.

    Internal Customers

    Internal customers are those colleagues and departments within your own organisation. Again in the previous module we looked at internal functions and how marketing can be used internally for the flow of internal services and communication. Sometimes you are the customer and sometimes you are the service provider. We considered how marketing connected internally with how marketing interacts with research and development, production/operations/logistics, human resources, IT and customer service. There are of course many other internal parts of the business.

    External Customers

    External customers are more likely to be customers, users, and stakeholders. As we said in previous lessons in this module, customers are those that exchange money for goods and services and consumers are those that actually use the product (and as we said they may or may not be the same person). So a user is the same as a consumer. According to Blythe (2011), stakeholders are people who are impacted by corporate activities. An obvious stakeholder might be a shareholder since they have voting rights at annual general meetings. A less obvious stakeholder would be the person that owns the land next to your factory, or the family that is supported by the father that works in your warehouse. So stakeholders would include ‘publics’ such as shareholders, customers, staff and the local community. A connected stakeholder is one with the direct association with your business, and this would be a supplier or a shareholder. Obviously other stakeholders would not have the same strength of connection, for example in the case of the local community.

    Example – Starbucks Coffee

    We going to look at Starbucks coffee as an example of a company that has both internal and external customers, and we should be able to apply some of the terminology that we introduced above. The internal customers will be the people that work within the business of Starbucks. The internal customers will be everyone from the Board of Directors of the company, to the supervisors and team members that serve coffee at the customer interface. So information and communication will flow from the board of directors to the people on the ground, and data and feedback from customers can flow from the people in the coffee shops back to the internal customers in the marketing department. External customers and consumers will be the everyday public that come in to the coffee shop and buy coffee for themselves and their friends. Of course the user will be the consumer of the product, whether that is the purchaser or not. The connected stakeholder would be the coffee suppliers from around the world, and the pension schemes that own shares in the business. Other stakeholders will include other businesses which are based around the Starbucks stores, as well as those impacted by the environment around coffee plantations (which is something that Starbucks is very keen to deal with since it has an ethical purchasing policy).

    Marketing and Customer Relationships

    Marketing today is very much focused upon business relationships, especially in the B2B markets. Historically companies would manufacture products that would be promoted to customers. However as markets have become more competitive, marketing companies seek to attract customer by building strong relationships so that customers are ‘retained’ i.e. you keep hold of your customers. This is the basis for relationship marketing, which we consider here as marketing and the customer relationship.
    Think about the value-added, high quality airlines, such as Emirates. Companies such as these are specialists in building the customer relationship and it is obvious that they add value at each customer contact point. You are treated to high levels of customer service from the moment that you check-in, during your flight and even when you have finished using their service. For example, airlines have air miles promotions and upgrades which keep the customer flying with the company and ‘retains’ them as a customer.

    The key to relationship marketing is the long-term customer relationship. So if you recall your introduction to marketing definitions, this is at opposite ends of the scale to be production or product orientation which is the basis for modern marketing. As a rule of thumb, relationship marketing tends to be practised well in the airline industry and in the travel industry. However branding is another way of maintaining the customer relationship, as is innovation and design. Nike and Apple may not deliver the same amount of face-to-face relationship building, but they do have very loyal long-term customers. Try to think of other examples of businesses that practice strong relationship marketing.

    The marketing concept, customer focus and relationship marketing.

    At this point in our studies we can now identify a path which connects the marketing concept, customer focus and relationship marketing. The marketing concept centres all organisational activities upon the customer (which is our customer focus) and if we think in terms of the long-term we have now added relationship marketing. Marketing focuses everything on our customer and their recruitment, their retention into the long-term, and finally marketing aims to extend products and services to the same customers from other product categories. So historically marketers would ‘acquire’ or recruit customers whereas today we acquire customers and then we ‘retain’ them.
    There are a couple of theoretical tools that we can use here. So in this next section we are going to take a look at the Pareto principle and the loyalty ladder, which both help us to understand how we move from customer acquisition to customer retention and the implications for marketing.

    SWOT Analysis – POWER SWOT

    SWOT Analysis – POWER SWOT

    Marketing Teacher’s Approach to SWOT Analysis.

    Why is there a need for an advanced approach to SWOT Analysis?

    SWOT analysis is a marketing audit that considers an organization’s strengths, weaknesses, opportunities and threats. Our introductory lesson gives you the basics of how to complete your SWOT as you begin to learn about marketing tools. As you learn more about SWOT analysis, you will become aware of a number of potential limitations with this popular tool. This lesson aims to help you overcome potential pitfalls.

    E = Emphasize detail.

    Detail, reasoning and justification are often omitted from the SWOT analysis. What one tends to find is that the analysis contains lists of single words. For example, under opportunities one might find the term ‘Technology.’ This single word does not tell a reader very much. What is really meant is:

    ‘Technology enables marketers to communicate via mobile devices close to the point of purchase. This provides the opportunity of a distinct competitive advantage for our company.’

    This will greatly assist you when deciding upon how best to score and weight each element.

    R = Rank and prioritize.

    Once detail has been added, and factors have been reviewed for weighting, you can then progress to give the SWOT analysis some strategic meaning i.e. you can begin to select those factors that will most greatly influence your marketing strategy albeit a mix of strengths, weaknesses, opportunities and threats. Essentially you rank them highest to lowest, and then prioritize those with the highest rank e.g. Where Opportunity C = 60%, Opportunity A = 25%, and Opportunity B = 10% – your marketing plan would address Opportunity C first, and Opportunity B last. It is important to address opportunities primarily since your business should be market oriented. Then match strengths to opportunities and look for a fit. Address any gaps between current strengths and future opportunities. Finally attempt to rephrase threats as opportunities (as with global warming and climate change above), and address weaknesses so that they become strengths. Gap analysis would be useful at this point i.e. where we are now, and where do we want to be? Strategies would bridge the gap between them.

    Some of the problems that you may encounter with SWOT are as a result of one of its key benefits i.e. its flexibility. Since SWOT analysis can be used in a variety of scenarios, it has to be flexible. However this can lead to a number of anomalies. Problems with basic SWOT analysis can be addressed using a more critical POWER SWOT. POWER is an acronym for Personal experience, Order, Weighting, Emphasize detail, and Rank and prioritize. This is how it works.

    P = Personal experience.

    How do you the marketing manger fit in relation with the SWOT analysis? You bring your experiences, skills, knowledge, attitudes and beliefs to the audit. Your perception or simple gut feeling will impact the SWOT.

    O = Order – strengths or weaknesses, opportunities or threats.

    Often marketing managers will inadvertently reverse opportunities and strengths, and threats and weaknesses. This is because the line between internal strengths and weaknesses, and external opportunities and threats is sometimes difficult to spot. For example, in relation to global warming and climate change, one could mistake environmentalism as a threat rather than a potential opportunity.

    W = Weighting.

    Too often elements of a SWOT analysis are not weighted. Naturally some points will be more controversial than others. So weight the factors. One way would be to use percentages e.g. Threat A = 10%, Threat B = 70%, and Threat C = 20% (they total 100%).

    Distribuição, canal ou intermediário

    Distribuição, canal ou intermediário

    Um canal de distribuição constitui-se de um número de instituições as quais performam todas as atividades utilisadas para mover um produto e sua marca da produção ao consumo.

    Bucklin – Theory of Distribution Channel Structure (1966) (Teoria da Estrutura do Canal de Distribuição)

    Outro elemento da Mistura de Marketing de Neil H.Borden é Praça (Ponto de Venda). Ele também é conhecido como canal, distribuição ou intermediário. Este é um mecanismo o qual produtos e serviços são movidos do produtor/ comerciante ao usuário ou consumidor.

    Existem seis básicas decisões relacionadas a ‘canais’:

    • Estamos usando canais diretos ou indiretos? (por exemplo: ‘direto’ ao consumidor, ‘indireto’ através do comerciante).
    • Canais simples ou múltiplos.
    • Tamanho cumulativo dos canais múltiplos.
    • Tipos de canais intermediários (veja mais a frente)
    • Número de intermeriários em cada nível (por exemplo: quantos distribuidores no sul da Espanha).
    • Quais companhias se apresentam como intermediárias para prevenir conflito de ‘intrachannel’ (por exemplo: conflito entre distribuidores locais).

    Van

    Consideração da Seleção – como decider a respeito de um distribuidor?

    • Seguimento do Mercado – o distribuidor deverá ser familiarizado a seu consumidor (grupo específico) e seguimento.
    • Mudanças durante o ciclo de vida do produto – diferentes canais podem ser explorados durante pontos diferentes no CVP, por exemplo: Scooters estão disponíveis a venda hoje em qualquer lugar. Uma vez que elas forem vendidas por algunhas lojas específicas.
    • Produtor – distribuidor adequado – Existe algunha ligação entre suas políticas de trabalho, estratégias, imagem, entre outros?
    • Avaliação de qualificação – constitua a experiência e mantenha registro de seu intermediário.
    • Quanto treinamento e suporte seu distribuidor necessitará?

    Tipos de Canais Intermediários.

    Existem muitos tipos de intermediários tanto como atacadistas, agentes, varegistas, a Internet, distribuidores internacionais, marketing direto (do produtor ao usuário, sem um intermediário), entre muitos outros. As formas principais de distribuição serão analisadas com mais detalhes.

    1. Canais Intermediários – Atacadistas

    • Estes diminuem a ‘massa’ em menores quantidades para revenda através do varegista.
    • Compram de produtores e revendem a varegistas. Eles tomam o direito de venda (se tornam propietários).
    • Providenciam locais de armazenamento. Por exemplo: produtores de queijo raramente aguardam que o queijo esteja curado. Eles vendem para um atacadista que armazenará e eventualmente venderá à um varegista.
    • Atacadistas oferecem redução de alguns custos físicos entre o produtor e o consumidor. Por exemplo: serviço ao consumidor, ou custo com equipe de vendas.
    • O Atacadista normalmente tomará resposibilidade do marketing. Muitos produzem seus própios catálogos e usam sua própria equipe de telesales (venda ao telefone).

    Man

    2. Canais Intermediários – Agentes

    • Agentes são na maioria das vezes usados em mercados internacionais.
    • Um agente normalmente garantirá o pedido de um produtor e cobrará uma comissão. Ele geralmente não tende a tomar a marca do produto. Isso siginifica que o capital não está preso à produtos. Apesar disso, um agente de estoque manterá consignação do stoque. (por exemplo: ele armazenará o estoque, mas a marca continuará pertencendo ao produtor. Esta estratégia é usada onde produtos precisam chegar a um mercado rapidamente após o pedido, por exemlo: produtos de gênero alimentício).
    • Agentes podem ser muito caros para serem treinados. Eles são difíceis de serem controlados por motivos de distância física e também são difíceis de serem motivados.

    3. Canais Intermediários – Varegistas

    • Varegistas terão um relacionamento mais forte com consumidores.
    • O varegista possuirá muitas outras marcas e produtos. O consumidor terá a espectativa de encontrar uma variedade de produtos.
    • Varegistas muitas vezes oferecerão crédito aos consumidores, por exemplo: agentes de viagens.
    • Produtos e serviços são promovidos e vendidos através do varegista.
    • O varegista dará o preço final ao produto.
    • Varegistas normalmente têm uma marca já conhecida, por exemplo: Wall-Mart nos Estados Unidos, ou Jumbo em Portugal e Carrefour no Brasil.

    4. Canais Intermediários – Internet

    • A Internet tem um mercado geograficamente disperso.
    • O principal benefício da Internet é que produtos são posicionados de forma que atingem uma vasta audiência.
    • Existem poucas barreiras de entrada, custos são consideravelmente baixos.
    • Use tecnologia de comércio eletrônico (e-commerce) (para pagamentos, programas de vendas on-line, etc).
    • Existe um aumento em comércio e consumo o qual beneficia a distribuição através da Internet.

    Positioning in marketing

    Positioning

    The third and final part of the SEGMENTTARGET – POSITION (STP) process is ‘positioning.’ Positioning is undoubtedly one of the simplest and most useful tools to marketers. After segmenting a market and then targeting a consumer, you would proceed to position a product within that market.

    The term ‘positioning’ refers to the consumer’s perception of a product or service in relation to its competitors. You need to ask yourself, what is the position of the product in the mind of the consumer?

    Remember this important point. It is all about ‘perception’. As perception differs from person to person, so do the results of the positioning map e.g what you perceive as quality, value for money, etc, is different to my perception. However, there will be similarities.

    Products or services are ‘mapped’ together on a ‘positioning map‘. This allows them to be compared and contrasted in relation to each other. This is the main strength of this tool. Marketers decide upon a competitive position which enables them to distinguish their own products from the offerings of their competition.

    Take a look at the basic positioning map template below.

    Positioning map
    Positioning map

    The marketer would draw out the map and decide upon a label for each axis. They could be price (variable one) and quality (variable two), or Comfort (variable one) and price (variable two). The individual products are then mapped out next to each other Any gaps could be regarded as possible areas for new products.

    Trout and Ries suggest a six-step question framework for successful positioning:

    1. What position do you currently own?

    2. What position do you want to own?

    3. Whom you have to defeat to own the position you want.

    4. Do you have the resources to do it?

    5. Can you persist until you get there?

    6. Are your tactics supporting the positioning objective you set?

    Look at the example below using the auto market.

    Product: Ferrari, BMW, Kia, Range Rover, Saab, Hyundai.

    Positioning
    Positioning map

    Positioning Map for Cars.

    The six products are plotted upon the positioning map. It can be concluded that products tend to bunch in the high price/low economy(fast) sector and also in the low price/high economy sector. There is an opportunity in the low price/ low economy (fast) sector. Maybe Hyundai or Kia could consider introducing a low cost sport saloon. However, remember that it is all down to the perception of the individual.

     

    Posicionamento

    Posicionamento

    Parte do STP – Seguimento – Meta – Posição

    A Terceira e última parte do processo de SEGUIMENTOMETA/ ALVO(TARGET)POSIÇÃO (STP) é ‘posicionamento’. Posicionamento é sem dúvida um das ferramentas mais simples e úteis para comerciantes. Depois de seguimentar um mercado e de decidir seu consumidor-alvo, é necessário posicionar o produto dentro do mercado.

    Lembre-se de um ponto importante. Posicionamento está inteiramente relacionado com ‘percepção’. Como percepção diferencia de pessoa para pessoa, procure fazer os resultados do mapa de posicionamento, por exemplo: o que você entende por qualidade, ou a percepção de que um produto é caro ou barato, e assim por diante, é diferente da minha percepção. Entretanto, haverá similariadades.

    Produtos ou serviços são colocados juntos em um ‘mapa de posicionamento’. Isto permite que eles sejam comparados e colocados em contraste em relação um ao outro. Esta é a característica mais importante desta ferramenta. Comerciantes decidem a respeito da posição de competividade, a qual os permite distinguir seus próprios produtos dos produtos oferecidos pela competição (este é o motivo do termo estratégia de posicionamento).

    Veja o básico molde do mapa de posicionamento abaixo.

    Posicionamento

    O comerciante poderá desenhar o mapa e decidir a respeito de um tema para cada quadrado. Estes poderão ser: preço (primeira variável) e qualidade (segunda variável), ou conforto (primeira variável) e preço (segunda variável). Os produtos são então, individualmente colocados em partes diferentes no mapa. Cada espaço vazio poderá ser visto como uma possível área para novos produtos.

    O termo ‘posicionamento’ refere-se à percepção do consumidor de um produto ou serviço em relação ao seus competidores. Você precisa perguntar a você mesmo: qual é a posição do produto na mente do consumidor?

    Trout e Ries sugestem uma estrutuda de seis-passos para um posicionamento bem sucedido:

    • 1. Qual é a sua posição no momento?
    • 2. Qual é a posição que você quer estar?
    • 3. Quem você tem de superar para tomar a posição que você deseja?
    • 4. Você tem os recursos para alcançar este objetivo?
    • 5. Você pode continuar persistindo até chegar onde você quer?
    • 6. Suas táticas suportam seus objetivos de posicionamento?

    Olhe o exemplo abaixo o qual usa o mercado automobilístico.

    Produto: Ferrari, BMW, Kia, Range Rover, Saab, Hyundai.

    Posicionamento

    Mapa de posicionamento para carros.

    Os seis produtos são traçados no mapa de posicionamento. Pode-se concluir que os produtos tentem a se ajuntar ao setor da economia (rápida) alto/baixo preço e também no setor econômico baixo/alto. Há uma oportunidade no setor de baixo preço/ baixa economia. Talvez Hyundai ou Kia poderiam considerar a introdução de carros de baixo custo. Entretanto, se sempre que tudo isso depende na percepção de cada indivíduo.

    Segmentation

    Segmentation

    This is the first of three lessons based upon segmentation, i.e. SEGMENT – TARGET – POSITION. To get a product or service to the right person or company, a marketer would firstly segment the market, then target a single segment or series of segments, and finally position within the segment(s).

    Segmentation is essentially the identification of subsets of buyers within a market that share similar needs and demonstrate similar buyer behavior. The world is made up of billions of buyers with their own sets of needs and behavior. Segmentation aims to match groups of purchasers with the same set of needs and buyer behavior. Such a group is known as a ‘segment’. Think of your market as an orange, with a series of connected but distinctive segments, each with their own profile.

    Segmentation
    Segmentation in marketing

    Of course you can segment by all sorts of variables. The diagram above depicts how segmentation information is often represented as a pie chart diagram – the segments are often named and/ or numbered in some way.

    Segmentation is a form of critical evaluation rather than a prescribed process or system, and hence no two markets are defined and segmented in the same way. However there are a number of underpinning criteria that assist us with segmentation:

    • Is the segment viable? Can we make a profit from it?
    • Is the segment accessible? How easy is it for us to get into the segment?
    • Is the segment measurable? Can we obtain realistic data to consider its potential?

    The are many ways that a segment can be considered. For example, the auto market could be segmented by: driver age, engine size, model type, cost, and so on. However the more general bases include:

    • by geography – such as where in the world was the product bought.
    • by psychographics – such as lifestyle or beliefs.
    • by socio-cultural factors – such as class.
    • by demography – such as age, sex, and so on.

    A company will evaluate each segment based upon potential business success. Opportunities will depend upon factors such as: the potential growth of the segment the state of competitive rivalry within the segment how much profit the segment will deliver how big the segment is how the segment fits with the current direction of the company and its vision.

    SEGMENT – TARGET – POSITION

     

    Preço

    Preço

    Existem várias maneiras de decidir o preço de um produto. Vamos olhar algumas destas maneiras e tentar entender a melhor forma/estratégia em diferentes situações.

    Preço Psicológico.

    Este método é usado quando um comerciante quer que o consumidor responda emocionalmente e não em uma base racional. Por exemplo: perspectiva de preço, 99 centavos e não um dólar.

    Linha de Preço do Produto.

    Onde existe uma extensão de produtos ou serviços, o preço reflete de acordo com o benefício. Por exemplo: Em um lava-jato, lavagem básica pode custar $2, para lavar e engraixar $4, e o pacote completo $6.

    Opicional – Fixação de Preço.

    Companhias tentarão aumentar a quantidade que clientes gastam uma vez que eles começarem a comprar. Opicionais ‘extras’ aumentam o preço total de um produto ou serviço. Por exemplo: companhias aéreas cobrarão uma taxa opicional extra para garantir um assento na janela ou para reservar uma linha de assentos ao lado do outro.

    Cativo – Fixaxão de Preço.

    Quando produtos tiverem complementos, companhias cobrarão um preço premium quando o consumidor for capiturado. Por exemplo: uma produtora de lâminas de barbear cobrará um preço baixo e recuperará sua margem (e mais) atravéz da venda de um único modelo de barbeadores que podem ser emcaixadas as lâminas.

    Pacote – Fixação de Preço.

    Aqui vendedores combinam muitos produtos em um pacote. Isto também pode ser usado para o uso de estoque antigo. Vídeos e CDs são na muitas vezes vendidos usando este método, também conhecido como ‘Bandle’.

    Promoção – Fixação de Preço.

    Fixando um preço para promover um produto é uma aplicação muito comum. Existem muitos exemplos de preços promocionais incluindo métodos como: Compre um e ganhe outro de graça.

    Preço Geográfico.

    Preço geográfico é evidente quando existe uma variação em preço em diferentes partes do mundo. Por exemplo: quando gastos com transporte aumentam o valor de um produto (produtos importados).

    Baixo Valor – Fixação de Preço.

    Este método é usado quando fatores externos tais como recessão ou aumento da competição forçam companhias a providenciar produtos e serviços de baixo valor para aumentar ventas. Por exemplo: Sandwiches em promoção no McDonalds.

    Preço Premium (Oferta Especial).

    Use um preço alto quando existir uma unicidade a respeito do produto ou serviço. Este método é usado quando existe uma vantagem substencial sobre a competição. Altos preços são cobrados por produtos/serviços de luxos em cruzeiros, hoteis, vôos aéreos etc.

    Image

    Penetração de Preço.

    O preço cobrado por produtos e serviços é marcado artificialmente baixo para o ganho de market share (fatia do mercado). Uma vez isto é atingido, o preço é almentado. Este método foi usado pela companhia de telecomunicação francesa France Telecom e também pela Sky TV.

    Preço Econômico.

    O custo de marketing e produção são mantidos ao mínimo. Supermercados muitas vezes têm marcas mais baratas para sabonetes, macarrão, arroz etc.

    Skimming – Exploração (direta/indireta) do Preço.

    Cobre um valor alto por ter uma substancial vantagem sobre a competição. Lembre -se que a vantagem não é sustentável. O preço alto tende a atrair novos competidores ao mercado, e o preço inevitavelmente cai devido ao aumento de fornecedores. Produtores de relógios digitais usaram um metodo ‘skimming’ nos anos 70. Uma vez que os fabricantes foram tentados a entrar no mercado e os relógios foram produzidos a preços por unidade mais baixos, outras estratégias de marketing e abordagem de preços foram implementadas.

    Preço Premium, penetração de preço, economia do preço e exploração do preço são as quatro principais estratégias de preços. Elas formam a base para o exercício. Apesar disso, existem outras importantes abordagens em relação ao preço.