Fundamentals of Marketing - Lecture notes - Lecture 5, 6 PDF

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Lecture 1 : The Micro Environment: The Competition

Porter’s 5 forces – Important model

Example of Baby Dream Machine : The manufacturer was very passionate but missed out on key points in the Marketing scenario. Priced his product too high imagining the audience wanted it as much as him, which shows that such assumptions regarding demand are wrong. The branding wasn’t strong enough either. https://www.youtube.com/watch?v=TLOiN44g0pI

Generic Competitive Strategies:

Competitor analysis: 1. Who are our competitors? We must analyze people who are directly in competition with us (same product/service type) or indirect competition which is related to our line of business. 2.

What are their strengths and weaknesses? We must do a SWOT analysis of their company.

3.

What are their strategic objectives and thrusts

4.

What are their strategies?

5.

What are their response patterns?

Challenge to understand concept better: Identify a product or service. Consider each of Porters 5 forces in turn. Discuss to what extent each force is applicable. Prepare to present your findings in your groups in a short (10 mins) presentation.

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What marketing isn’t –

Advertising

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Selling rocket science

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Definition: Marketing is the management process responsible for identifying, anticipating and satisfying customer requirements profitably (cim)

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Jargon –

Sustainable competitive advantage

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Experiential consumption: This can be particularly related to services as they can only be simultaneously evaluated with consumption. This is used for example by bakeries as ‘olfactory marketing’ where they entice customers on the street with the smell of confectionary and sweets which leads them to enter their store for an experience of eating the food.

Marketing history and business orientations: •

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1800’s to 1940’s – Manufacturing Era –

Mass production as seen in Fordism

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Low cost

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“any colour you want so long as it is black”

1940’s to 1960’s – Product Era –

Quality focus

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Aspirational consumers

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“catching up with the Jones’

1950’s to 1960’s – Sales Era –

Aggressive sales leading to quick turnover

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“how about an extra ….”

1970’s to 2000’s – Marketing Era –

Identify what customers want in advance

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Integrated marketing where different media are fused to ensure consistency in communication and enhance the message being sent to consumers.

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“lets find out if they want it in black and if they are willing to pay more for it”

2000’s onwards – Societal Marketing Era –

Make sure it isn’t going to be harmful

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What is the disposable cost

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Beware of the power of the consumer (Rise of a social movement called Consumerism where the consumers demand complete information regarding the product/service and this has led to ingredients of products being displayed on packaging, etc. to protect their interests further.

Like a doctor needs to understand their patient, every marketer needs to understand their market. The following processes are most commonly used (consciously or otherwise) by competent marketers to analyse and undestand the prevailing forces affecting the markets they are working in. •

The PEST analysis

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Industry analysis

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Competitor analysis

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Market analysis

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Political – This includes the values and compliance of politicians, their take on economic policies to facilitate trade, etc.

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Economic – These refer to the economic situations; booms, recession, inflation rate, etc.

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Sociological – These refer to the

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Technological

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Legal

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Environmental

PESTLE Analysis

Political Factors Politics plays an important role in business. This is because there is a balance between systems of control and free markets. As global economics supersedes domestic economies, companies must consider numerous opportunities and threats before expanding into new regions. It also applies to firms identifying optimal areas for production or sales. Political factors may even help determine the location of corporate headquarters. Some of the political factors you need to watch are: 

Tax policies

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Stability of government

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Entry mode regulations

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Social policies (e.g. social welfare etc.)

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Trade regulations (e.g. the EU & NAFTA)

Economic Factors Economic factors are metrics that measure the health of any economic region. The economic state will change a lot of times during the firm’s lifetime. You have to compare the current levels of inflation, unemployment, economic growth, and international trade. This way, you can carry out your strategic plan better. Some examples of economic factors you can judge are: 

Disposable income of buyers

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Credit accessibility

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Unemployment rates

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Interest rates

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Inflation

Social Factors

Social factors assess the mentality of the individuals or consumers in a given market. These are also known as demographic factors. Social indicators like exchange rates, GDP and inflation are critical to management. They can tell when it is a good time to borrow. These factors help find out how an economy might react to certain changes. The following are some social factors to focus on: 

Population demographics: (e.g. aging population)

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Distribution of Wealth

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Changes in lifestyles and trends

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Educational levels

Technological Factors This step entails recognizing the potential technologies that are available. Technological advancements can optimize internal efficiency and help a product or service from becoming technologically obsolete. Role of technology in business is increasing each year. This trend will continue because R&D drives new innovations. Recognizing evolving technologies to optimize internal efficiency is a great asset in management. But, there are few threats. Disruptive innovations such as Netflix affect business for CD-players. The best strategy is to adapt according to the changes. Your strategies should sidestep threats and embrace opportunities. This is a large challenge for management. Below is a list of common technological factors: 

New discoveries and innovations

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Rate of technological advances and innovations

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Rate of technological obsolescence

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New technological platforms (e.g. VHS and DVD)

Environmental Factors Both consumers and governments penalize firms for having adverse effect on the environment. Governments levy huge fines upon companies for polluting. Companies are also rewarded for having positive impact on the environment. The consumers are willing to switch brands if they find a business is ignoring its environmental duties. Impact on the environment is a rising concern. Note that the environment benefits the company too. Running water for a hydro-power plant is an example. Few common environmental factors are: 

Waste disposal laws

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Environmental protection laws

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Energy consumption regulation

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Popular attitude towards the environment

Legal Factors This step involves learning about the laws and regulations in your region. It is critical for avoiding unnecessary legal costs. This is the last factor in PESTEL. These factors overview the legal elements. Often, start-ups link these elements to the political framework. Many legal issues can affect a company that does not act responsibly. This step helps to avoid legal pitfalls. You should always remain within the confines of established regulations. Common legal factors that companies focus on include: 

Employment regulations

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Competitive regulations

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Health and safety regulations

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Product regulations

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Antitrust laws

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Patent infringements

It is common to conduct a PESTEL analysis before serious decisions. Managers might conduct it before any large projects are undertaken. Understanding all the influencing factors is the first step to addressing them. Remember, there are many factors other than these which can have an effect on business success. The evaluation is a one-to-one process. Each company should do it for themselves and find the key drivers of change. You must identify the factors which have strategic and competitive consequences. Analyzing the total macro-environment is an extensive task. Even though, it is complex, understanding the framework of basic influences will allow you to maintain an organized and strategic approach. These will isolate each opportunity or threat. After conducting a PESTEL analysis, company managers can create strategies. The macro environmental factors will shape the strategies. I am sure that the thinking process will be as sensitive as current and future environmental factors.

The consumer decision-making process and level of purchase involvement

Influences on consumer purchasing behavior Personal influences •

information processing

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motivation

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beliefs and attitudes – a company can sometimes position itself according to its values. Example – Body Shop is a company based on values that oppose animal abuse, support the making of organic cosmetics, etc.

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Personality – Many times people choose brands that reflect them and therefore it is essential for the brands to segment themselves according to the target market.

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Lifestyle – this is heavily dependent on location, influences of upbringing, generation, urban-rural distinctions, social movements, etc.

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lifecycle

Social influences •

culture – Example: L’Oreal segments its products based on geographical and cultural differences. It takes a note on differences in perceptions of hygiene, beauty standards, etc.

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social class – Elasticity of expenditure, etc.

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geo-demographics

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reference groups - This plays a major role as people have a need to fit and be accepted by their friends and family, and thereby only make purchases that makes them feel congruent with their social circle.

The Decision- Making Unit Buyers Have the authority to execute the contractual arrangements Deciders (Decision Makers) have the authority to select the supplier and/or product.

Users actually use the product. They may be the one who initiates the purchase process and may develop the product specification. Influencers supply information and advice. Outsiders such as consultants sometimes perform the role.

Initiators begin the purchase process. Gatekeepers control the flow of information to the buying centre. Purchasing department staff frequently fill the role but it could be any member of the organisation.

Marketing segmentation definition: The identification of individuals or organisations with similar characteristics that have significant implications for the determination of marketing strategy. (Jobber, 2010)

Target market definition: “The choice of which market segment(s) to serve with a tailored marketing mix.” (Jobber, 2010)

Target marketing strategies: •

Undifferentiated marketing.

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Differentiated marketing.

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Focused marketing.

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Customised marketing

Services “…..Acts, efforts or performances exchanged from producer to user without ownership rights” Solomon et al (2013)

Characteristics: •

Intangibility - Can not be touched, -Difficult assess/evaluate -use tangible cues/clues

E.g. Location, Appearance, Additional Swan lake – at the Alhambra in Bradford but also seen in Liverpool – booked via the web and most theatres are similar. Not judging on the physical location really.

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Perishability - Consumption cannot be stored -Match supply and demand -Use of part-time staff/ multi-skilling -Participation by consumers -Differential pricing -Stimulation of off-peak demand -Comfortable waiting area -Reservation system Variability-Standardisation difficult -Selection, training and rewarding of staff -Evaluation systems -Use of reliable equipment -Standardisation of the show but also the augmented product in this case which is the theatre. Inseparability - This I would say is critical – the dancers, costumers, make up people, choreographer all vital in producing a fantastic show whoever is playing which parts! Consistency via rehearsals, training, direction etc. etc. -Simultaneous production and consumption -Importance of service provider -Selection, training and rewarding of staff -Avoid inter-customer conflict

From 4 P’s to 7P’s Product Price Place Promotion Processes Physical Evidence People With my example the processes were about ticket sales for me on line, the physical evidence of the theatre was marginal it was the physical evidence of the show that was important – and of course the ballet dancers themselves were critical.

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1. 2. 3.

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SERVQUAL – a measuring technique used to measure the effectiveness of services Gap 1 – Consumer expectations & management perception Gap 2 – Management perception and service quality specification Gap 3 - Service quality and service delivery Gap 4 – Service delivery and service communications Gap 5 - Expected service and experience

Key aspects of managing services: Managing customer relationships. Managing service quality. Managing service productivity – Technology. Customer involvement in production. Balancing supply and demand. Managing service staff – empowering employees, etc.

Report Writing

A report must be: •

Concise

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Convincing

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Clear

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Title Page

e.g. “A Critical Review of Marks & Spencer's Leading Ladies Marketing Campaign ” Include on this page : a)Name of group members c) Date of final report •

Table of Contents Separate list of tables and figures

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Executive Summary Think of it as an abstract........ Keep to 1 page if possible Introduction –

Explains the outline of your investigation

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Gives a clear idea about the central issues you looked at

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Overview of the company and the product or service which forms the focus of the campaign

Review of the Marketing Campaign –

Identification of the target market for the campaign

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Details of all the marketing tools used in the campaign

Critical Evaluation of the Campaign –

Basically asks and answers “How well did the various elements of the chosen campaign reach the target market (or not)?” and “Were the objectives of the campaign met?”

Three Suggestions for Improvement

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Put forward suggestions based on the outcomes of your critical evaluation and justify your suggestions OR

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Suggest additional campaign activity...