Mkc1200 hd exam notes - Perfect for exam revison. PDF

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MKC1200 Revision Notes Week 1 Introduction to Marketing………………………………………………………………………………..……. Week 2 Marketing Environment…………………..………………..………………..………………..………………. Week 3 Marketing Information………………………………..………………..………………..………………..…... Week 4 Buyer Behaviour………………..………………..………………..………………..…………….………………. W...

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MKC1200 Revision Notes Week 1 Introduction to Marketing………………………………………………………………………………..……..1 Week 2 Marketing Environment…………………..………………..………………..………………..………………..3 Week 3 Marketing Information………………………………..………………..………………..………………..…....4 Week 4 Buyer Behaviour………………..………………..………………..………………..…………….………………..5 Week 5 Segmentation, Targeting and Positioning………………..………………..………………..…………..8 Week 6 Product………………..………………..………………..………………..………………..………………..………10 Week 7 Price………………..………………..………………..………………………………..………………..…………....12 Week 8 Promotion………………..………………..………………..………………..……………………………………..14 Week 9 Distribution (Place) ………………..………………..………………..………………………………….……..17 Week 10 Services………………..………………..………………..………………………………………..………………..21

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Week 1 Introduction to Marketing 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. Evolution of marketing • Trade – exchange of goods • Production concept – focuses on production efficiencies – affordable and available to customers. Not necessarily focusing on the needs and wants of customers, e.g. toilet paper • Sales orientation – focuses on aggressive promotion or selling • Market orientation – focuses on customers’ needs and wants, delivering desire and satisfaction • Societal market orientation – target market and potential customers, only if it benefits the society at large • Service-dominant logic – involving customers in the marketing process in order to provide service The marketing process The marketing process involves understanding, creating, communicating and delivering an offering for exchange of value. • Understand – needs and wants of target market • Create – offerings our target market wants to buy • Communicate – tell our target market we have offerings to sell • Deliver – products or services in store and online and how do customers know how the offerings will get to them Value exchange To be considered a successful marketing exchange, the transaction must satisfy the following conditions: • Two or more parties must participate, each with something of value desired by the other party • All parties must benefit from the transaction • The exchange must meet both parties’ expectations (e.g. quality, price) Functional/instrumental value is concerned with the extent to which a product has desired characteristics, is useful, or performs a desired function. Does the product do what I want it to do? Experiential/hedonic value is concerned with the extent to which a product creates appropriate experiences, feelings and emotions for the customer. How does the product/service make you feel?

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Symbolic/expressive value is concerned with the extent to which customers attach or associate psychological meaning to a product. The value the product gives you is how others see you. Cost/sacrifice value is concerned with transaction costs, such as price and convenience. People involved in the exchange: • The market – actual and potential customers with similar needs and wants • Customers/clients – purchaser of products and services • Partners – external parties involved in the marketing process, e.g. advertising agency, delivery companies • Society – members of the community The marketing mix Marketing mix is the term given to a set of variables that a marketer can exercise control over in creating an offering for exchange. • Product – anything offered to a market, can be physical goods or services • Price – the amount of money a business demands in exchange for its offerings, also other sort of psychological costs • Place/distribution – the means of making the offering available to the customer at the right time in the right place • Promotion – marketing activities that make potential customers, partners and society aware of and attracted to the business’s offering. For service businesses: • People – any person coming in to contact with customers, who can affect value for customers. • Process – the systems used to create, communicate, deliver and exchange an offering. • Physical evidence – the tangible cues, including the physical environment that customers use to evaluate products, particularly services. Week 2 Marketing Environment The marketing environment refers to all of the internal and external forces that affect a marketer’s ability to create, communicate, deliver and exchange offerings of value. Environmental analysis is an analytical approach that involves breaking the marketing environment into smaller parts to better understand it. The internal environment The internal environment refers to the parts of the organisation, the people and the processes used to create, communicate, deliver and exchange offerings that have value. Directly controllable by the organisation. Senior manager, middle manager, functional departments, employees, external vendors (outsourcing) such as call centres. The external environment

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The external environment is concerned with things that are outside of the organisation. Cannot control, but can only seek to influence. The micro environment consists of customers, clients, partners (logistics firms, financiers, advertising agencies, retailers, wholesalers, suppliers) and competitors. Not directly controllable by the organisation. The macro environment encompasses the factors outside the industry that influence the survival of the organisation. No direct control, but can somehow influence. Affects the whole industry. PESTEL • Political forces – influence of politics on marketing decisions. E.g. stability of the political environment, influence of government policy, laws and regulations , government trade agreements, taxation and government rebate policies. • Economic factor – affect how much money people and organisations can spend and how they choose to spend it. E.g. interest rates, income levels, level of inflation, exchange rates • Sociocultural factor – social and cultural factors that affect people’s attitudes, beliefs, behaviours, preferences, customs and lifestyles. E.g. religion, ethnicity and health • Technological factor – used for competitive advantage. E.g. offerings being made more cheaper, technology can be used to innovate, distribution and communication can be improved through technology • Environmental factor – the environmental forces that affect individuals, companies and societies. E.g. natural disasters, weather impacting tourism or farming industry, environmentally friendly • Legal factor – intimately tied to politics. Govern what marketing organisations can and cannot legally do. SWOT analysis involves identifying the current opportunities that are available in the market, the main threats the business is facing and may face in the future, the strengths that the business can rely on and any weaknesses that may affect the business performance. Week 3 Marketing Information A marketing information system (MIS) is the structure put in place to manage information gathered during the usual operations of the organisation. identifying a gap, collect data. Can collect data from internal records (secondary data) such as sales records, marketing intelligence (secondary data) such as ABS, and market research (collection of primary data). Market research is a business activity that discovers information of use in making marketing decisions. 1. Define the research problem - Difference between a problem and a symptom: symptom is a result of a problem. 2. Design the research methodology – exploratory, descriptive and causal research 3. Collect data in accordance with the research design (include a research question or hypothesis for testing and a description of the types of research to be used)

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4. Analyse data and draw conclusions 5. Present the results and make recommendations Types of research • Exploratory research is research intended to gather more information about a loosely defined problem. Used when management is uncertain about what actions should be taken and has little knowledge about the research problem. • Descriptive research is used to solve a particular and well-defined problem by clarifying the characteristics of certain phenomena. Used when management is aware of the problem but lacks some important piece of knowledge. • Causal research assumes that a particular variable causes a specific outcome and then by holding everything else constant, tests whether the variable does indeed affect that outcome. A hypothesis is generated. Types of data • Secondary data comprises information originally gathered or recorded for some purpose other than to address the current market research problem. Readily available and cheap. E.g. MIS, databases, media, industry bodies • Primary data are data observed or collected directly from respondents as part of the current market research project. Specific for the project but expensive. E.g. responses given on a questionnaire Research methods Quantitative research focuses on collecting data that can be represented numerically and analysed statistically. Usually used for descriptive or causal research. Useful for assessing market size, identifying market segments, predicting the success of proposed marketing campaigns and finding out about customer perceptions of existing products. E.g. data from questions about ‘how much’ ‘how many’ and ‘how often’, usually via phone, online, mail or in-person surveys. • Experiments are manipulation of variables of interest while holding everything else constant in a bid to determine just what and how particular things affect behaviour. • Observations involve studying people’s behaviour and the circumstances surrounding it. • Biometrics involves determining a participant’s physiological response to certain stimuli e.g. heart rate, muscle activity Qualitative research focuses on obtaining rich, deep and detailed information through techniques such as interviews and focus groups. Usually used for exploratory research. Useful to investigate the reasons behind behaviour, such as understanding customer needs, evaluating potential new products, testing promotional campaigns. • Depth interview is researcher-driven, with questions to guide the interview • Focus group is where a group of respondents are brought together, introduced to an idea, concept or product, and their interactions observed. • Observation are recorded notes describing actual events. Week 4 Buyer Behaviour

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Consumer behaviour is the term used to describe the analysis of the behaviour of individuals and households who buy goods and services for personal consumption. Factors influencing buyer behaviour Situational factors – the circumstances consumers find themselves in when they are making purchasing decisions and/or consuming the product • Physical – the characteristics of the location in which the purchase decision is made • Social – the interactions with others at the time the purchase decision is made • Time – the time available for a purchase decision • Motivational – the reasons for the purchase • Mood – the mood of a person at the time of the purchase decision Group factors – social factors and cultural factors. Cultural factors – the influence of the values, beliefs and customs of the person’s community. • Culture – the system of knowledge, beliefs, values, rituals and artefacts by which a society or other large group defines itself • Subculture – a group of individuals who differ on some influential dimensions from the broader culture in which they are immersed • Social class – individuals of similar social rank within the hierarchy Social factors – group influences the behaviour of its individual members, typically through group pressures on the individual to conform with group norms. • Reference group – any group to which an individual looks for guidance as to which are appropriate values, attitudes or behaviours • Family – depending on the stages through which most families pass • Roles and status – shape the expectations of group members, which influences the buyer’s final decision e.g. a person always chooses what to watch depending on the role of the person in the family Individual factors influence the consumer’s behaviour and operate independently of social circumstances. Personal characteristics and psychological characteristics. Personal characteristics – constitute an individual’s identity and are objective and relatively stable in the short term. • Demographic factors – the general makeup of the population in terms of existing objective, measurable characteristics that are either assumed or demonstrated to be related to the purchase or consumption of products, e.g. age, occupation, income • Lifestyle – how people spend their time and how they interact with others. Driven by the difference between the actual lifestyle and the desired lifestyle • Personality – set of unique psychological characteristics and behavioural tendencies that characterise an individual. Psychological characteristics – internal factors that shape the thinking.

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Motivation – the individual’s internal drive to act to satisfy unfulfilled needs or achieve unmet goals Perception – the psychological process that filters, organises and attributes meaning to external stimuli Beliefs and attitudes – the descriptive or evaluative thoughts that an individual holds regarding their knowledge or assessment of a person, idea, product and so on , and an individual’s relatively stable and consistent thoughts, feelings and behavioural intentions towards an object or idea. The ‘mental map’ a consumer relies upon Learning – acquiring knowledge about new products, ideas or problems that have some potential application to fulfilling a need or want

Types of buying decision behaviour – involvement Impulse purchases are made with little involvement, and arguably, no planning or even forethought. Usually driven by low prices and ready availability. Habitual decision making involves little involvement with the purchase. No thoughts. E.g. supermarket purchases minimise search and shopping efforts Limited decision making involves seeking limited information to evaluate options for infrequent purchases within familiar product categories. Some thoughts. E.g. clothing, book, restaurants Extended decision making involves a high level of involvement with the purchase decision in a protracted, deliberate and detailed way. More thoughts due to high price or high level of risk. E.g. cars Consumer decision making process The consumer decision making process is the process of need/want recognition, information search, evaluation of options, purchase and post-purchase evaluation that are common to most consumer buying decisions. 1. Need/want recognition – consumer is aware of unsatisfied needs or wants 2. Information search – seek information from known, trusted sources or conventional sources to satisfy the need/want 3. Evaluation of options – develop evaluation criteria (price, style, image, feelings about a product), rank alternatives, consider not purchasing/other uses of money 4. Purchase – choose product and brand, decide to purchase (or not purchase), purchase 5. Post-purchase evaluation – continue to evaluate product, deal with post-purchase cognitive dissonance (second thoughts or doubts about the wisdom of the purchase), assess attitude towards product, brand and seller in relation to future purchases Types of business markets Business markets are individuals or organisations that purchase products for resale, use in the production of other products, or for use in their daily business operations. • Reseller market is the market of retailers, wholesalers and other intermediaries that buy products in order to sell or lease them to another party for profit.

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Producer markets are the markets in which business organisations and professionals purchase products for use in the production of other products, or in their daily business operations. Government markets refer to the market for selling products to national (Commonwealth), state (provincial) and local (municipal) governments for use in providing services for citizens. Institutional markets are business markets in which non-public, not-for-profit organisation buy and sell products. E.g. charities, religious organisations, clubs

Marketing to business customers Differences between marketing to consumers and marketing to business customers: • High value/high volume purchases (discounts may also be negotiated) • Price competition and negotiation • Number of buyers and sellers – far fewer in the business markets • Formal assessment of purchase alternatives – use information about product features, specifications, along with price, distribution and promotional factors to compare the relative strengths and weaknesses of alternatives. Also care about the image and reputation of business brands when making decisions. • Ongoing relationships • Demand characteristics ➢ Derived demand – demand in business markets due to long-run demand in consumer markets ➢ Joint demand – interdependent demand for products that are used together in the production of another product. Buy things as a group ➢ Pricing and demand – inelastic demand as they can pass on the cost to their customers or seek alternative substitute products Week 5 Segmentation, Targeting and Positioning Three market strategies • Mass marketing – see buyers as having common wants, needs and demands. Undifferentiated approach to marketing. Producing in large volumes and at a low cost (economies of scale) E.g. salt, government services • One-to-one marketing – appeal to customer by providing a unique, customised offering for individual needs, higher unit costs and a more restricted market. E.g. hairdresser, interior design, tailors • Target marketing – an approach to marketing based on identifying, understanding and developing an offering for those segments of the total market that the organisation can best serve. Higher costs and higher profits. Differentiated targeting strategy (developing different marketing mix for each target market segment) The target marketing process Target segmentation: identifying variables that can be used to define meaningful market segments and profiling the market segments so they can be assessed in the second stage of the target marketing process. 8

Segmentation variables are characteristics that buyers have in common and that might be closely related to their purchasing behaviour. • Geographic segmentation – based on variables related to geography, such as climate and region • Demographic segmentation – based on demographic variables, which are the vital and social characteristics of populations, such as age, education, income, ethnicity, household composition, gender, occupation • Psychographic segmentation – based on the psychographic variables of lifestyle, motives and personality attributes, activities, interests, opinions • Behavioural segmentation – based on actual purchase and/or consumption behaviours, such as benefit expectations, brand loyalty, occasion, price sensitivity, volume usage Segmenting business markets – due to a small number of buyers, ‘customised’ or ‘one-toone’ marketing may be used. Use the same segmentation variables as the consumer market. E.g. geographic, benefits sought, user status, user rate, loyalty status, readiness state and attitude Effective segmentation criteria • Measurability – accurate and comprehensive measurement of the segment • Accessibility – clearly identified, reached and served through distribution and communication channels • Substantiality – sufficient of size and purchasing power • Practicability – marketing programs can be formulated to identify, communicate with and service the market segments. A market segment profile is a description of the typical potential customer in the market segment; that is, a description of the common variables shared by members of market segments and how the variables differ between market segments. Market targeting involves a systematic examination of the range of possible market segments, their potential sales, volume and revenues and the relative ability of the orga...