What is Marketing ?© Oxford Fajar Sdn. Bhd. (008974-T), 2012
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Marketing
BUSINESS MANAGEMENT: A Malaysian Perspective (Second Edition) © Oxford Fajar Sdn. Bhd. (008974-T), 2012
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How do managers create a marketing strategy?
What is the marketing mix?
How do consumers and organizations make buying decisions?
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What are the trends in understanding the consumer?
Learning Goals
© Oxford Fajar Sdn. Bhd. (008974-T), 2012
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WHAT IS MARKETING?
The process of discovering the needs and wants of potential buyers and customers and then providing goods and services that meet or exceed their expectations.
Organizational function and a set of processes for creating, communicating, and delivering value to customers, and for managing customer relationships in ways that benefit the organization and its stakeholders
BUSINESS MANAGEMENT: A Malaysian Perspective (Second Edition) © Oxford Fajar Sdn. Bhd. (008974-T), 2012
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relative comparison of a product’s benefits versus its costs
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© Oxford Fajar Sdn. Bhd. (008974-T), 2012
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Human wants are driven by culture and individual personality.
Demand occurs when there is buying power; wants will become demands.
Need
Want
Utilitarian
Hedonic
Need
Knowledge
BUSINESS MANAGEMENT: A Malaysian Perspective (Second Edition) © Oxford Fajar Sdn. Bhd. (008974-T), 2012
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relationship building?
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The marketing concept is oriented toward pleasing consumers by offering value.
Focusing on customer wants so the organization can distinguish its products from competitors’ offerings.
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The best organizations have adopted the marketing concept, which involves identifying consumer needs and then producing the goods or services that will satisfy them while making a profit.
The marketing concept is oriented toward pleasing consumers by offering value. Specifically, the market concept involves the strategies shown on this slide.
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Production
Orientation
An approach in which a firm works to production costs without a strong desire to satisfy the needs of customers.
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Firms have not always followed the marketing concept.
At the time of the Industrial Revolution (1860-1910), firms had a production orientation, which meant that production was the focus instead of meeting customer needs.
Organizations concentrated on mass production, efficiency of operations, increasing output, and ensuring uniform quality.
Production drove products.
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Firms have not always followed the marketing concept. At the time of the Industrial Revolution (1860-1910), firms had a production orientation, which meant that production was the focus instead of meeting customer needs. Organizations concentrated on mass production, efficiency of operations, increasing output, and ensuring uniform quality. Production drove products.
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Customer
Value
necessary to obtain those benefits,
as determined by the customer.
Relationship
Marketing
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Creating customer value is a core business strategy of many successful firms. It is rooted in the belief that price is not the only thing that matters.
The automobile industry illustrates the importance of creating customer value. Lexus stresses customer service, along with product quality.
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Environmental Scanning
The process in which a firm continually collects and evaluates information about its external environment.
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Environmental scanning is the process in which a firm continually collects and evaluates information about its external environment. The purpose is to identify future market opportunities and threats.
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Six categories of environmental data shape marketing decisions
values of potential customers and the changing roles of families and women working outside the home
ages, birth and death rates, and locations of various groups of people
changing incomes, inflation, and recession
advances in communication, and data retrieval capabilities
changes in laws and regulatory agency activities
from domestic and foreign-based firms
Demographic Forces
Economic Forces
Technological Forces
Six categories of environmental data shape marketing decisions:
Social forces: values of potential customers and the changing roles of families and women working outside the home.
Demographic forces: ages, birth and death rates, and locations of various groups of people.
Economic forces: changing incomes, inflation, and recession.
Technological forces: advances in communication, and data retrieval capabilities.
Political and legal forces: changes in laws and regulatory agency activities.
Competitive forces: from domestic and foreign-based firms.
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Target Market
The specific group of consumers toward which a firm directs its marketing efforts.
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The Target Market
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Identifying a target market helps a company focus its marketing efforts on those who are most likely to buy its products or services.
For an example of target market strategy, refer to Exhibit 12.1. This shows Marriott International’s hotel chains, price range, and target market.
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Advantage
A firm’s ability to provide a unique product or service that offers something of value besides a
lower price.
product or service at
Niche
Competitive
Advantage
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Competitive advantage is a set of unique features of a company and its products that are perceived by the target market as significant and superior to those of the competition. Competitive advantage is the factor that causes customers to patronize a firm and not the competition.
There are three types of competitive advantage: cost, product/service differential, and niche.
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The blend of product offering, pricing, promotional methods, and distribution system that brings a specific group of consumers superior value.
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Once a firm has defined its target market and identified its competitive advantage, it can create the marketing mix.
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The marketing mix is the blend of product offering, pricing, promotional methods, and distribution system that brings a specific group of consumers superior value. The marketing mix is often called the “four Ps”--product, price, promotion, and place.
Every target market requires a unique marketing mix to satisfy the needs of the target consumers and meet the firm’s goals. The marketing mix is only as good as its weakest part.
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Marketing strategy starts with the product. Creating a product strategy involves choosing a brand name, packaging, colors, a warranty, accessories, and a service program.
In addition to the product itself, marketers consider the brand name and the company image. We buy things not only for what they do, but also for what they mean.
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Pricing is based on demand for the product and the cost of producing it. Special considerations, such as special introductory prices, can influence the price. Some firms enter with a low price strategy, others with a high price strategy and lower them over time.
Skimming pricing (start with high price)
Penetration pricing (lower price)
Price nothing more than a tag price (psychological-RM2400 is a starting point to start a bargain – unique to Malaysia and Asian country)
Inverse Kinked demand curve pricing (special luxury-e.g Gibson guitar)
Demand for product
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Pricing is based on demand for the product and the cost of producing it. Special considerations, such as special introductory prices, can influence the price. Some firms enter with a low price strategy, others with a high price strategy and lower them over time.
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Creating the means by which products flow from the producer to the consumer
Deciding the number of stores
Deciding retailers/wholesalers who will handle the product
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Advertising – what u see, what u hear
Public relations – e.g sponsorship, football
Sales promotion – e.g coupon
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Buyer Behavior
The actions people take in buying and using goods and services.
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An organization cannot reach its goals without understanding buyer behavior. Marketers who understand buyer behavior, such as how a price increase will affect a product’s sales, can create a more effective marketing mix.
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Buyer behavior is the actions people take in buying and using goods and services. The consumer decision-making process is shown here. It is affected by cultural, social, individual, and psychological factors, which are described on the next slide.
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Culture is the set of values, ideas, attitudes, and symbols created to shape human behavior
Consumers interact with reference groups, opinion leaders, and family members to obtain product information and decision approval
Personal characteristics that are unique to each individual, such as personality, gender, and self-concept
perception, beliefs, and attitudes
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Culture is the set of values, ideas, attitudes, and symbols created to shape human behavior.
Social factors: consumers interact with reference groups, opinion leaders, and family members to obtain product information and decision approval.
Individual influences are personal characteristics that are unique to each individual, such as personality, gender, and self-concept.
Psychological influences include perception, beliefs, and attitudes.
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making
Consumer has previous product experience but is unfamiliar with the current brands available. E.g Toothpaste – unfamiliar brand CNI
Routine response
behavior
Purchase of low-cost, frequently bought items with little search or decision making. E.g Colgate
Extensive decision
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All consumer buying decisions generally fall along a continuum of three broad categories: routine response behavior, limited decision making, and extensive decision making.
Routine response behavior: frequently purchased, low-cost goods and services
Limited decision making: previous product experience, but unfamiliar with current available brands.
Extensive decision making: unfamiliar, expensive products or an infrequently bough t item. Most complex type of consumer buying decision.
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Goods and services in the three categories can best be described in terms of five factors:
Level of consumer involvement
Cost of good or service
Degree of information search
Exhibit 12.3 compares these factors for the category continuum.
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Purchase Decisions
Business buyer behavior and business markets are different from consumer markets. Business markets include institutions, such as hospitals and schools, manufacturers, wholesalers and retailers, and various branches of government. The key difference between a consumer product and a business product is the intended use.
Purchase volume: Business customers buy in much larger quantities than consumers.
Number of customers: Business marketers usually have fewer customers than consumer marketers.
Location of buyers: Business customers tend to be more geographically concentrated than consumers.
Direct distribution: Business sales tend to be made directly to the buyers because such sales frequently involve large quantities or custom-made items
BUSINESS MANAGEMENT: A Malaysian Perspective (Second Edition)
© Oxford Fajar Sdn. Bhd. (008974-T), 2012
9– *
BUSINESS MANAGEMENT: A Malaysian Perspective (Second Edition) © Oxford Fajar Sdn. Bhd. (008974-T), 2012
All Rights Reserved
Business buyer behavior and business markets are different from consumer markets. Business markets include institutions, such as hospitals and schools, manufacturers, wholesalers and retailers, and various branches of government.
The key difference between a consumer product and a business product is the intended use. The main differences are listed on this slide.
Purchase volume: Business customers buy in much larger quantities than consumers.
Number of customers: Business marketers usually have fewer customers than consumer marketers.
Location of buyers: Business customers tend to be more geographically concentrated than consumers.
Direct distribution: Business sales tend to be made directly to the buyers because such sales frequently involve large quantities or custom-made items.
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market segmentation?
Market Segmentation
The process of separating, identifying, and evaluating the layers of a market in order to identify a target market.
Volume
Benefit
Psychographic
Geographic
Demographic
Benefits provided by the
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Market segmentation is the process of separating, identifying, and evaluating the layers of a market in order to identify a target market.
The five forms of consumer market segmentation are demographic, geographic, psychographic, benefit, and volume.
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Frito-Lay
Product
Demographic
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Demographic segmentation includes categories such as age, education, gender, income, and household size to differentiate among markets. This form of market segmentation is the most common.
An example of how Frito-Lay targets various age groups for three of its most popular products is shown here.
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Using Marketing Research
Marketing research is the process of planning, collecting, and analyzing data relevant to a marketing decision.
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1. Define the marketing problem
4. Analyze the research data
5. Make recommendations
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Marketing research is the process of planning, collecting, and analyzing data relevant to a marketing decision. The information collected through marketing research includes the preferences of customers, the perceived benefits of products, and consumer lifestyles. Research helps companies make better use of their marketing budgets.
The marketing research process consists of the steps shown on this slide.
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Does the information already exist?
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The most critical step in the marketing research process is defining the marketing problem.
The key questions to ask are:
Why is the information being sought?
Does the information already exist?
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Observation
research
Experiment
An investigator changes one or more variables while observing the effects of these changes on another variable.
Survey
research
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After the problem is defined, a research method is chosen. The three basic research methods are survey, observation, and experiment.
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Secondary data
Information that has already been collected for a project other than the current one, but may be used to solve the problem.
Primary data
solve a problem.
Two types of data are used in marketing research:
primary data, which are collected directly from the original source to solve a problem;
and secondary, which is information that has already been collected for a project other than the current one but it may be used to help solve it.
Primary data are usually gathered through some form of survey research, which often relies on interviews.
Sources of secondary data include government agencies, trade associations, research bureaus, universities, the internet, commercial publications, and internal data records. Company records include sales invoices, accounting records, data from previous research studies, and historical sales data.
Once the data have been collected, the next step is data analysis. The purpose of this analysis is to interpret and draw conclusions. Many software statistical programs such as SAS and SPSS are available to make this task easier.
The last step is to prepare the report and communicate the conclusions and recommendations to management.
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