Marketing Management notes Final PDF

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N12412: Marketing Management Lecture 1: Introduction to the module: Marketing:  It is important to note that marketing does not create needs, rather it disguises in the mind of consumers what they want and stimulates desires  Marketing is not only for products – marketing is essentially used for e...

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N12412: Marketing Management Lecture 1: Introduction to the module: Marketing:  It is important to note that marketing does not create needs, rather it disguises in the mind of consumers what they want and stimulates desires  Marketing is not only for products – marketing is essentially used for everything Point 1: What is marketing?  CIM, (2001) define marketing as: “The management process of anticipating, identifying and satisfying customer requirements profitably”  AMA (2007) define marketing as: “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”  Lendrevie, Levy and Lindon, (2006), define marketing as: “The endeavour of adapting organisations to their competitive markets in order to influence, in their favour, the behaviour of their publics, with an offer whose perceived value is durably superior to that of the competition” Point 2: Defining the Marketing Concept:  Marketing concept: it is a phrase that helps to bring the definition of marketing  The marketing concept is the philosophy that firms should analyze the needs of their customers and then make decisions to satisfy those needs, better than the competition. Today most firms have adopted the marketing concept, but this has not always been the case.  Management philosophy according to which a firm’s goal can be best achieved through identification and satification of the customers stated and unstated needs and wants  Marketing concept: a philosophy of which type of marketing tools are used by a company  There are 5 main types of marketing concepts:  Production Concept: Consumers want products that are easily accessible and inexpensive. Thrives on the ability to increase output and decrease costs. E.g. firms that manufacture their goods offshore can keep manufacturing costs down and thus charge a lower price  Product concept: consumers keep on looking at the best product available / best quality. Looking for innovative options. E.g. Apple and Tech firms  Selling Concept – Consumers will buy products only if the company aggressively promotes or sells these products. Off course, in this era of marketing, we know that selling is not the only tactic to sell your product.  Marketing Concept – Focuses on needs/wants of target markets & delivering value better than competitors. The marketing concept believes in the pull strategy and says that you need to make your brand so strong that customers themselves prefer your brand over every other competitor. This can be achieved through marketing.  Societal Marketing concept – Focuses on needs / wants of target markets & delivering value better than competitors that preserves the consumer’s and society’s well-being. Point 3: How did the marketing concept develop?  It is important to note that marketing practices have occurred since the beginning of time

Strategy Production method

Sales method Marketing method

Message to consumer Production & assembly line refinement

Profit motive

Additional

Example

Profits through production control

This is the exchange of goods – Ancient Times

Push! Sell as much as you can Integrated customer focus

Short term gains in addition profit Long run profits through customer satification

This is the modern technique we use

Mouse trap – make a better product and the world will come to it. This is my product take it or not Mouse trap 2 – tries to entice you Free cheese with every trap Mousetrap 3 – supersonic so mice don’t come near. Desire

The method we use today

Point 4: The purpose of marketing:  The marketing concept shows throughout time how firms used to try and sell goods  Initially for exchanges: a. Retailers – offer customers service – payment a retail price for offering – customer b. Manufacture – goods, credit facilities, distribution agreements – payment – retailer c. The fire service – protection and emergency planning – public funds – the public  The purpose of marketing is to create want and desires for consumers  Now:  Build awareness  Fit consumer’s desires and wants  Engage with target audience  Drive traffic and lead sales  Prove industry expertise What is market orientation?  An organisational state of mind  The firm is outward facing  The firm knows and nurtures its customers  The firm understands the value of brand and product  The firm understand competition  The firm knows limits The Three components of market orientation:  The three components of market orientation  Consumer orientation - Customer orientation is defined as an approach to sales and customer-relations in which staff focus on helping customers to meet their long-term needs and wants. Here, management and employees align their individual and team objectives around satisfying and retaining customers.  Competitor orientation- when a business is competitively oriented, it constant reassesses its strengths and weaknesses relative to its competitors. A performance evaluation may include production efficiency, pricing, delivery times, customer satisfaction, innovation, employee retention and market share.  Intefunctional coordination - Interfunctional coordination can be defined as the cooperation of the various internal business functions to achieve the overall goals of the firm and insure its responsiveness to environmental changes.  Kotler: Marketing is too important to be left to marketers alone

Point 5: How is marketing conducted – basics: The 7 P’s:  Once you've developed your marketing strategy, there is a "Seven P Formula" you should use to continually evaluate and reevaluate your business activities. These seven are: product, price, promotion, place, packaging, positioning and people  Marketing is a continually evolving discipline and as such can be one that companies find themselves left very much behind the competition if they stand still for too long. One example of this evolution has been the fundamental changes to the basic Marketing mix. Where once there were 4 P’s to explain the mix, nowadays it is more commonly accepted that a more developed 7 P’s adds a much needed additional layer of depth to the Marketing Mix with some theorists going even going further. The original 4 P’s of marketing: 

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Product - The Product should fit the task consumers want it for, it should work and it should be what the consumers are expecting to get. Place – The product should be available from where your target consumer finds it easiest to shop. Price – The Product should always be seen as representing good value for money. This does not necessarily mean it should be the cheapest available; one of the main tenets of the marketing concept is that customers are usually happy to pay a little more for something that works really well for them. Promotion – Advertising, PR, Sales Promotion, Personal Selling and, in more recent times, Social Media are all key communication tools for an organization. These tools should be used to put across the organization’s message to the correct audiences in the manner they would most like to hear, whether it be informative or appealing to their emotions.

The extended P’s:  People – All companies are reliant on the people who run them from front line Sales staff to the Managing Director. Having the right people is essential  Processes –The delivery of your service is usually done with the customer present so how the service is delivered is once again part of what the consumer is paying for.  Physical Evidence – Almost all services include some physical elements even if the bulk of what the consumer is paying for is intangible. The 8th P:  In some spheres of thinking, there are 8 P’s in the Marketing Mix. The final P is Productivity and Productivity & Quality - This P asks “is what you’re offering your customer a good deal?”  This is less about you as a business improving your own productivity for cost management, and more about how your company passes this onto its customers.

Lecture 2: Marketing Research, Customer Insights and the Market Environment: Point 1: What is the difference between market research and marketing research?  Market research: is conducted to understand markets i.e. customers, competitors and industries. Market research is conducted to understand things outside of the company  Marketing research: determines the impact of marketing strategies and tactics, in addition to collecting information on customers, competitors and industries. Marketing research does everything market research does but also detects strategy and impacts Market research:  Market research uses secondary data  It is useful if you want to understand the market  Helps to find out about consumer habits Point 2: Customer insights:  ‘Customer insight is knowledge about customers which meet the criteria of an organisational strength; that is, it is valuable, rare and difficult to imitate and which the organisation is aligned to make use of’  Typical questions:  What type of relationship does my customer want with the brand?  What features do my customer value?  How do they use my product?  Customer insights help to relate organisations strengths, which ultimately lead to secure the market in a better way Point 3: Different ways of marketing research The marketing research process: Stage 1: Define the problem Stage 2: Decide the research plan Stage 3: Undertake the data collection Stage 4: Undertake the data analysis/ interpretation Stage 5: Write a report and deliver the presentation Sources of Secondary Data:  Government sources  The internet  Company internal records  Professional bodies and trade associations  Market research companies Ethical issues to consider:  There are a variety of ethical issues to consider  Informed consent  Be truthful and transparent  Respect confidentiality  Respect the rights of individuals  Ensure nobody is harmed when conducting research

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Balance the needs of individuals

Point 4: Understanding the Market Environment:  It is important to understand the difference between  Marco environment  Micro environment  Internal environment 1. The marketing/ macro environment

PESTEL Analysis: Issues to consider: Political / Legal Economic Business cycles and Monopolies GDP Trends legislation Advertising Interest rates restrictions Price controls Inflation Unemployment Disclosure requirements Taxation policy Level of Wealth European legislation Trade legislation Environmental legislation 

Disposable income Distribution of income

Sociocultural Population demographics Attitudes to corporate

Techn Gover research spending Trends in ‘new media’

Social responsibility Lifestyle changes

New discoveries New development

Attitudes to work and leisure Consumerism

Speed of technology development Rate of obsolescence

Education ethics

This should identify the relevant demand forces, determine their relation to the market, and predict how they might change in the future

2. The Micro Environment:  The performance environment consists of those organisations that either directly or indirectly influence an organisations operational performance  Those companies that compete against the organisation in pursuit of its objectives  Those companies that have the potential to indirectly influence the performance of the organization in the pursuit of its objectives. These organisations often supply services such as consultancy, financial services or market research of communication agencies Porter’s 5 forces:  Porter’s 5 forces include:  Threat of New Entrants  Bargaining power of buyers  Threat of substitutes  Bargaining power of suppliers  Rivalry among competitors LOOK AT STRATEGIC MANAGEMENT LECTURE

Good situation for firms Rivalry is limited High barriers to entry Low competition for substitutes Suppliers have no bargaining power Customers have no bargaining power

Bad situation for firms Vigorous rivalry Low barriers to entry High competition from substitutes Suppliers have bargaining power Customers have considerable bargaining power

BCG Growth Share Matrix:  The BCG Growth-Share Matrix is a portfolio planning model developed by Bruce Henderson of the Boston Consulting Group in the early 1970’s. It is based on the observation that a company’s business units can be classified into four categories based on contributions of market growth and market share relative to the largest competitor.  Market growth serves as a proxy for industry attractiveness, and relative market share serves as a proxy for industry attractiveness, and relative market share serves as a proxy for competitive advantage.  This framework assumes that an increase in relative market share will result in an increase in the generation of cash. This assumption is often true because of the experience curve; increased relative market share implies that the firm is moving forward on the experience curve relative to its competitions, thus developing a cost advantage. A second assumption is that a growing market requires investment in assets to increase capacity and therefore results in the consumption of cash. Thus the position of a business on growth-share matrix provides an indication of its cash and its cash consumption  The four categories are:  Dogs: dogs have low market share and growth rate and thus neither generate nor consume large amounts of cash. However, dogs are cash traps because of the money tied up in business that has little potential  Question marks: are growing rapidly and thus consume large amounts of cash, but because they have low market shares they do not generate much cash. This results in a large net cash consumption. A question mark has the potential to gain market share and become a star, and eventually a cash cow. If the question mark doe not succeed in becoming the market leader, then after perhaps years of cash consumption it will degenerate into a dog, when the market growth declines.  Stars: generate large amounts of cash because of their strong market share, but also consume large amounts of cash because of their high growth rate; therefore, the cash in each direction approximately nets out. If a star can maintain its large market share, it will become a cash cow when the market growth rate declines. The portfolio of a diversed company always should have stars that will become the next cash cows and ensure future cash for generations  Cash cows: exhibit a return on asset that is greater than the market growth rate, and thus generate more cash than they consume. Such business units should be ‘milked’, extracting the profits and investing as little cash as possible. They provide the cash required to turn? into market leaders, to cover the administrative costs of the company, to fund r&d, to pay dividends.

Lecture 3: Consumer Buying Behaviour

Point 1: Motivation:  Motivation refers to the processes that cause people to behave as they do.  It occurs when a need is aroused (when there is a discrepancy between a desired and an actual state) that the consumer wishes to satisfy.  The implication of Maslow’s hierarchy is that one must first satisfy basic needs before progressing up the ladder (e.g. a starving man is not interested in status symbols or self-fulfillment) Criticisms:  Criticisms include: being too simplistic and ignoring individual and cultural differences - this order does not necessarily apply to every individual, culture, or context. The same product may satisfy different needs in the ladder  In the wealthier countries, where basic survival needs have long been taken for, what drives consumers is often emotion and aesthetic needs – consumers look for things which hare pleasurable and fun  Sometime, our need for excitement and pleasure overrides our need for security and survival The consumer proposition acquisition process:  Key questions to ask:  How do you decide?  What goes through your mind while deciding whether or not to buy something and how do you choose?  The process of persuading a consumer to purchase a company’s good or services. The cost associated with the important customer acquisition process is an important measure for a business to evaluate in combination with how much value having each customer typically brings to the business  Understanding this is important for marketers, so that they can better adjust their offerings to consumers’ needs and wants, and communicate them in meaningful ways to consumers  Consumers go through a stages before making a decision

1. Motive development:  Something (as a need or desire) that causes a person to act  E.g. Fabreez advert: 2. Information gathering:  The gathering of relevant and up-todate information is a key business process. Information consists of organised facts and figures that have meaning within the context that the information is intended to be interpreted by people. Information is thus a valuable business commodity, and frequently businesses pay money for up-to-date and relevant information.  Consumers look for alternative ways of solving their problems

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Active (overt search) or passive Internal and external search E.g. looking at a variety of estate agents when looking to buy a house

3. Proposition Evaluation:  The consumer evaluates the offering that he/she identified as potentially capable of solving the problem that initiated the acquisition process  The criteria to evaluate might be rational (e.g. cost) or more emotionally driven (e.g. desire)  Evoked set is the specific brand (or models) a consumer considers in making a purchase within a particular category  In some cases, consumers use careful calculations and logical thinking. At other times, they do little or no evaluation, reduce time and effort (impulse buying) 4. Proposition Selection:  In most cases, we select the offering we evaluate as fitting our needs/ wants best and that’s the one we will acquire  Sometimes we need to re-evaluate our options (e.g. the house we wanted to rent is no longer available) 5.    

Acquisition/ purchase: Different approaches to proposition acquisition might exist Routine versus infrequent purchases Where, how and when to buy Other factors (e.g. promotional offers, queues, long procedures)

6. Re-evaluation:  This part focuses on whether the consumer is satisfied or dissatisfied with a purchase  A person’s overall feelings about the product after they buy it affect customer satisfaction/dissatisfaction.  Many factors impact on our satisfaction (e.g. mood, performance, perceived quality)  Evaluation both in terms of utilitarian dimensions (how the product/service functions) and hedonic dimensions (how it makes one feel)  Importantly, our degree of satisfaction often depends on the extent to which a product’s performance is consistent with our prior expectations of how well it will function. Importance of expectation: Expectancy disconfirmation model:  If performance = expectations = consumer   If performance > expectation = consumer   If performance < expectation = consumer  Point 3: Cognitive dissonance:  Almost all major purchases result in cognitive dissonance, or discomfort caused by postpurchase conflict.  Psychological tension resulting from perceived inconsistencies in cognitions (Festinger, 1957; Evans et al., 2006)

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The theory of cognitive dissonance claims that the individual— the consumer— strives toward consistency within him/herself. (Kassarjian and Cohen, 1965) The feeling of dissonance may be particularly acute in high involvement purchases (e.g. a car or a house) Factors to reduce cognitive dissonance:  Selectively forgetting information  Minimising the issue  Reversing the purchase decision

Point 4: Is Consumer buying behaviour rational or emotional?  Consumers decisions are not purely “rational”!  Consumers...