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Principles of marketingJanuary exam revision notesTerm 1 – 2016/The definitions of marketing explored Consists of activities aimed to facilitate and expedite exchange (the provision of transfer of goods, services or an ideas in return for something of value)Marketing process - analysis of market con...

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Principles of marketing January exam revision notes Term 1 – 2016/2017

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MARKETING Chapter 1 Introduction Week 1 Management process responsible for identifying, anticipating and satisfying customer requirements profitably. team of managers inside an organization responsible for surveying customers, communicating and managing advertising and developing campaigns. However it is much broad ● - understanding and developing markets ● - being eyes and ears ● Tracking competition ● Shaping strategy ● Target market decisions and competitive positioning ● Managing and compelling product value ● Attract new customers ● Retain existing customers ● Managing customers experience in order to maximize revenue Marketing orientation Understanding of customer’s needs, buying behaviour, issues influencing the purchasing choices. Reflecting external drivers - competitors, external marketing environment and forces. Understanding of these factors and issues - identifying and predicting its evolution in order to reflect current market requirements and future market conditions. This orientation is especially useful in terms of preparing for external market developments, threats and opportunities. Marketing environment - external changing forces within trading environment Marketing depends on the successful analysis of customers, the marketing environment, competition, internal capabilities and performance. With good understanding of these aspects, company should develop a marketing strategy. It needs to identify groups of customer - target group to whom they want to sell the products. As organizations have limited resources restricting the number of segments they can be focused on. Thus, organization has to be clear about its brand positioning and target group to serve them as much as they can. Once marketing strategy is devised, company needs to focus on marketing mix tactical actions to implement the desired marketing strategy by attracting, engaging and continuing to serve targeted customers. 3

The definitions of marketing explored Consists of activities aimed to facilitate and expedite exchange (the provision of transfer of goods, services or an ideas in return for something of value) Marketing process - analysis of market conditions, the creation of an appropriate marketing strategy, the development of marketing programmes designed to action the agreed strategy and the implementation and control of the marketing strategy and its associated marketing programmes. Marketing concept Providing products to satisfy customer needs through coordinated set of activities that allows organization to achieve its goals. It stressed the importance of customers and emphasizes that marketing activities begin and end with them. Not a definition it is a way of thinking. Evolution - The production era - The sales era - The marketing era - The relationship marketing era - The digital era - Growth of C2C in digital era Social marketing Using of tools and techniques to encourage positive behavioural changes. Digital marketing Usage of computers, tv, social media to build relationship with customers Critical marketing Challenging orthodox views that are central to the core principles of the discipline. Connected with the growing area of critical management. Marketing mix 4 P plus People. Deciding which type of each component to use and in what amounts. Develop a marketing mix that precisely matches the needs of the people in the target market. Before that collect in-depth up-to-date information about those needs. Product - researching consumer’s product wants and designing the product with those characteristics. Place - must be available at the right time and convenient location Promotion - communication activities used to inform target groups about an organization and its products. Price - activities associated with establishing pricing policies and product prices. People - level of customer service, advice, sales support, after-sales back-up…

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Marketing management - process of planning, organizing, implementing and controlling marketing activities to facilitate and expedite exchanges effectively and efficiently. Marketing planning- systematic process of assessing opportunities and resources, determining marketing objectives, developing marketing strategy and constructing plans for implementation. How and when marketing activities will be performed.

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Chapter 10 Product decisions Week 2 Product Any good, service, idea. When buyers purchase the product, they are really buying the benefits and satisfaction they think the product will provide. -

Consumer products - items purchased to satisfy personal or family needs. Common characteristics - Convenience - inexpensive, frequently purchased and rapidly consumed where buyers extend minimal effort of purchasing. Little time planning to purchase. Marketed through many retail chains. Producers - Little promotional effort at the retail level thus they have to provide their own through advertising, sales promotion and packaging. - Shopping - chosen more carefully than convenience. Expected to last long time. Buyers expend effort in planning and purchasing. Large sums might be required to advertise shopping products and even larger proportion of resources is likely to be used for personal selling. Indeed, the quality of those services might be a factor in buyer’s choice - Speciality - possess one or more unique characteristics and which a significant group of buyers is willing to expend considerable effort to obtain a product. Plan the purchase carefully. Buyers do not compare alternatives - concerned with finding one outlet that has pre-selected products available. Distributed through a limited number of retailers. - Unsought - purchased when a sudden problem arises.Consumers do not expect to buy these products regularly Single product can fit into more than one category. Three levels of product - Core product - must have perceived or real core benefit or service - Actual product - features and capabilities, quality and durability, design and styling, packaging and brand name - Augmented product - support aspects such as customer service, warranty, delivery and credit, personnel, installation and after-sale support Satisfaction depends on the product’s actual performance as well as service aspects given of the augmented product. Must understand the relationship between organization’s products if they are to coordinate their marketing Product line - specific version of a product than can be designed as a distinct offering among a business’s products 6

Product line - group of closely related product items that are considered a unit Product mix - group of products that company makes available to customers. The depth of product mix is measured by the number of different products offered in each product line. The width of product mix is measured by the number of product lines a company offers. Product life cycle Different marketing strategies are appropriate at each life cycle level. Fundamental to product management - understanding a product’s current position. 1. Introduction a. Product’s first appearance b. Sales are zero and profits are negative (development costs, expenses relating introduction, promotion and distribution) c. Many attempt fail 2. Growth a. Sales rise rapidly b. Profits reach its peak and start to decline c. Critical to product’s survival due to competitive reactions d. Profits decline later in growth stage as many competitors enter the market driving prices down e. Brand loyalty, sales promotion in order to keep up f. Company tries to strengthen its market share and develop competitive position by emphasizing benefits 3. Maturity a. Sales curve peak and starts to decline b. Profits continue to decline c. Severe competition with many brands in the market d. Competition emphasizing improvements and differences e. Remaining producers must refresh promotional and distribution efforts f. Brand visibility must be maintained g. Consumers of products are no longer unexperienced generalist but rather experienced specialists. 4. Decline a. Sales fall rapidly b. New technology or trend may cause sales to take a sharp downturn c. Markets must cut promotion efforts, eliminate marginal distributions and plan to phase out the product Failure vs success Failure rate - 60-90%. Consumer products are more likely to fail compared to products directed at business markets. Reasons - failure to match product’s offerings to customer needs. Lack of demanded features. Thus, important to identify customer’s value proposition. Technical or

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design problem, poor timing, overestimation of market size ineffective promotion and inefficient distribution. - Absolute failure - company loses money on a new product beauce it is unable to recover development, production and marketing costs. - Relative failure - return profit but does not meet a company’s profit or market share objectives. Success - product’s ability to provide a significant and perceivable benefit to a sizeable number of customers. Quality - major dimension is durability. How much quality build into a product is crucial for marketers. - Higher quality - better materials, expensive processing, increased production costs and product’s price Supportive product-related services Type of guarantee can be crucial for buyers especially in case of expensive products. Guarantee - specifies what the producer or supplier will do if the product malfunctions. Effective guarantee - Unconditional - Easy to understand and communicate - Meaningful - Easy to invoke and easy to act on Beneficial as they generate feedback and help build customer loyalty and sales Credit services - financial burden however beneficial. Enables a larger number people to buy the product thus enlarging the market for the item.

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Chapter 11 Branding and packaging Week 2 Brands enable customers to readily identify their favoured products. Effectively creating a well-differentiated and memorable image for the brand is core requirement for a marketing-oriented organization. Brand equity - brand awareness, loyalty, perceived quality and associations Effective brand - brand strengths - define brand attributes, values and personality - Brands are part of tangible features, helping customers identify the products they want and influence their purchasing decisions.

Branding Need to differentiate. - Brand - name, term, design, symbol or any other feature that identifies one seller’s good or service as distinct from those of other sellers - Brand name - part that can be spoken or depicted. Product’s only distinguishing characteristics. Fundamental as product itself. Establishing a distinctive remembered and recognized by customers is one of the primary activities of effective marketing management. - Brand mark - element of brand that cannot be spoken, often a symbol or design. - Trademark - legal designation indicating that the owner has exclusive use of brand or a part of brand and that the others are prohibited by law from using it. - Trade name - full and legal name of an organization Benefits of branding Buyers - Identify specific products - Evaluate the quality especially when unable to judge its characteristics - Reduce buyer’s perceived risk of purchase - Psychological reward coming from owning a branding symbolizing status (rolex, rolls-royce) Sellers - Brand identify its products - Introducing new product carrying the existing known name - Facilitates promotional efforts because the promotion of each branded product indirectly promotes all other products that are similarly branded

Brand loyalty 9

Strongly motivated and long-standing decision to purchase a particular product or service. Loyal customers are highly desirable and much marketing activity is aimed at reassuring existing customers and canvassing their ongoing support and interest. Loyalty - company’s market share for that product achieves a certain level of stability. Argued to be declining. As a result of increasing emergence of C2C and e-word-ofmouth Brand community Group of consumers and observers focused on a particular brand, often based on social media, centered on a set of social relations and interactions among admirers of the brand. Blog communities Spokesperson for a brand share their views in blogs, permitting tailored communication with members and between members of the digital brand community Dynamic branding Rapid communication and sharing of brand information and almost instant take-up by the brand’s followers. Core to build loyalty and create brand advocacy. Brand advocacy Consumers are encouraged to share their positive feelings towards a brand with other consumers, whether word-of-mouth, online or other social media. More important than tracking customer satisfaction Brand advocate Supporter of a brand, actively promotes the brand and is also emotionally attached to the brand. Silence detractors, help build a positive customer experience and share exemplars of the brand ‘going that extra mile’ Three degrees of level loyalty 1. Brand recognition - customer’s awareness that a brand exists and is an alternative to purchase. Mildest from brand loyalty 2. Brand preference - stronger degree of brand loyalty in which a customer definitely prefers one brand over competitive offerings and will purchase this brand if available. Not available - will accept substitute 3. Brand insistence - customer strongly prefers a specific brand, will accept no substitutes and is willing to spend a great deal of time and effort to purchase that brand. Not available - seeks the brand elsewhere.

Brand equity Well managed brand - asset to an organization. Marketing and financial value associated with a brand’s strength in a market, which is a function of the goodwill 10

and positive brand recognition built up over time, underpinning the brand’s sales volumes and financial returns. Represents the value of a brand to an organization. - Name awareness - leads to brand familiarity, comfort with the brand - Brand loyalty - reduces brand’s vulnerability to competitor’s actions. Keep existing customers and avoid spending time gaining new ones. - Perceived brand quality - support premium price, avoid severe price competition. - Brand associations - connecting lifestyle with particular brand. Brand identity A unique set of brand associations reflecting what a brand stands for and the intended promise to the customer as a relationship is forged. Brand identities to ensure they reflect target segment expectations and the nature of the competitive challenge. Brand attributes Bullet-point selling-type features listed in brochures or in an advertisement - specific benefits to the customer from purchasing or using the brand Brand values Help differentiate a brand and build its appeal to target audiences, particularly those within an organization. Emotional benefits and less tangible identifiers attached to the brand, creating a sense of identity and purpose within the organization proving reassurance and credibility for employers and indirectly to targeted customers. Foster a collegiality around the brand and ultimately will manifest itself to customers and suppliers. Brand personality The psychological cues and less tangible desirable facets of a well-known presented brand. Provide the emotion for brand’s messaging. Types of brand ● Manufacturer brand - initiated by producers and ensure that they are identified with their products at the point of purchase. Producer involved in distribution, promotion and pricing decisions. ● Own label brands - initiated and owned by resellers. Manufacturers are not identified on the product. Give retailers and wholesalers freedom to purchase products of a specified quality at the lowest price without disclosing the identity of the manufacturer ● Generic brands - a brand that indicates only the product category and does not include the company name or other identifying terms. Branding policies Decide whether to brand its products at all. 11

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Individual branding - naming each product differently (positive effect - if company introduces poor product, the negative image will not affect all the other products). Facilitating market segmentation when entering many segments of the same market Overall family branding - all of company’s product with the same name, or at least part of the name. The promotion of one item with the family brand promotes the company’s other products too Line family branding - using family branding only for products within a single line. All products in the line carry the same name. Brand extension branding - a company’s use of one existing brand names as part of an improved or new product, usually in the same product category as the existing brand.

Corporate branding Applying the principles of product branding at the corporate level. It is reflected in visible manifestation such as the company’s name, logo, visual presentation and underlying and guiding values.

Chapter 16 An overview of marketing communications 12

Week 3 The role of promotion Radically altered in last years. Some ideas - they provide people with only certain selected information, unnecessary and wasteful, resulting in higher prices. Positive ideas - potential to communicate, powerful economic force. The role is to communicate with individuals, groups or organizations, with the aim of directly or indirectly facilitating exchanges by informing and persuading one or more of the audiences to accept the product. Communicate with selected audiences. Ensuring that information is targeted at appropriate individuals or groups. Cause related marketing - links the purchase of a product to philanthropic efforts for a particular ‘good’ cause. Helps boost sales and generate goodwill. Company can direct a single type of communication however it is more usual to focus precisely in a specific group. To gain maximum benefit - integrated marketing communication helps to harmonize and coordinate organization’s promotional activities The communication process Sharing of meaning through the transmission of information Marketing communication - transmission of persuasive information about a product targeted at key stakeholders and consumers within the target segment. Begins with source (person, group or an organization that has an intended meaning at attempts to share with an audience) Receiver (decodes the coded message) Receiving audiences (two or more receivers decoding the message) intended receivers Coding process (the process of converting meaning into a series of signs that represents ideas or concepts) Use signs that consumers will be able to decode. Knowing the target market. Should avoid signs that have multiple meanings for an audience. A medium of transmission (tool used to carry the coded message from the source to the receiver) Must reach intended audiences. Decoding process (signs are converted into concepts and ideas) Feedback (receiver’s response to the message) directed towards original source. Mass communication, feedback is hard to obtain. Face to face - instant feedback and adjusting the messages more quickly to improve effectiveness Communication channel - how information is communicated to customer

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Channel capacity - the limit on the volume of information that a particular communication channel can handle effectively Promotion and the product adoption process Purpose of promotion is to influence and encourage buyers to accept or adopt goods services and ideas. Product adoption process 1. Awareness (mas) - individual become aware of the product but have little information 2. Interest (mass) - motivated to obtain more information 3. Evaluation (per) - consider whether it will satisfy their needs 4. Trial (per) - use or experience the product for the first time, little quantity or sample or borrowing 5. Adoption (per)- choosing the specific product when they need a product of that general type Rejection may occur at any stage. People respond to different sources in different stages (mass, per) Product adopters - Innovators - first to adopt a new prod...