MKTG100 - Lecture notes 1-12 PDF

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Lecture 1 What is marketing? definition. Understanding (not just consumers, but possibly businesses) needs wants. Creating providing solutions to the Needs wants. (provide a way to satisfy customers) Do it better than competitors, whether its goods or service. Need to convince customers that what we...

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Lecture 1 What is marketing? - Lecturer’s definition.  Understanding customers’ (not just consumers, but possibly businesses) needs & wants.  Creating & providing solutions to the Needs & wants. (provide a way to satisfy customers)  Do it better than competitors, whether its goods or service. Need to convince customers that what we do is the best to solve their needs & wants to the point they’re loyal to us (give us business) & not ditch for another competitor. How does marketing operationalize itself within an organization? (Business, charity etc.) - Usually have a marketing department in larger companies that are specifically made for handling promotions etc. Though, as a marketer, must take in mind how can customers’ needs & wants be met, not by just persuasive communication but by possibly creating brand new products etc. - Marketing is a management process that needs investments for promoting products - Identifying customers’ needs & wants (according to definition) - Customers should be satisfied with your products etc. Otherwise, a competitor can & will. - If new product etc. cannot meet the customers’ needs & wants. Will not be successful. Even if it is essential but nobody wants, will not be successful. However, with the right amount of hype (marketing), can get an average product (quality & design) that’s not essential to be successful by associating (marketing) the product with certain kinds of influencers (using it) whom may allow customers to feel accepted into the group/society (hype) by purchasing that certain product or service. (e.g Beats by Dre). - Marketers use these factors (influencers like artists & celebrities) to promote a certain item. E.g. Dr Dre promoting headphones by featuring it on artists & in music videos. Thus, influencing customers’ that this item is a want or need, so they create a solution by producing & selling the headphones. 6 Main tasks of a marketer:  Identify customers' needs & wants  Design goods/services to meet the N & W.  Communicate information about those goods/services to potential buyers.  Convenience - Make goods/services available at times & places that meet customers’ N & W  Price goods/services to reflect costs, competition & consumers’ ability to buy. Don’t just look at production costs, but what are customers able & willing to spend. (e.g. Beats by Dre).  Provide necessary service & follow up care to ensure customer satisfaction (doesn’t have to be happy) after purchase. Customers post purchase may affect the business by word of mouth etc. Non-Profit Marketing: Charities etc. (e.g. NZ cancer foundation) - Same rules apply of a marketer, even in nonprofit. (Identify & find a solution to the N & W.) - Marketing is important for these organizations as:  Allow customers to feel good about themselves (giving back to society, satisfying their greed as people are inherently greedy) by making goods/service to do so. Marketing themselves to sponsors/philanthropists via fund raising for them to donate.  Managing public opinion (make sure society doesn’t turn against the company, accusing of fraud etc)  Events marketing (e.g. fund raising events) are used to bring people together to support the company as they do not have the funds for big media promotions. Person Marketing – promote yourself to a wide audience that uses principles underpinning that personality:

- People (celebrities, athletes, politicians) are marketing commodities (E.g Michael Jordan with Nike) that are used to promote the goods/service to the audience (e.g music, fashion, cosmetics). - Significant people’s personality will affect association with brands. (e.g tiger woods adultery with his endorsements). - Can even apply to politics. Most people vote for the candidate as a person rather than his policies he wants to bring in etc. (Donald trump or Obama) Marketing Value (Utility): - Not just about what can make lives better. Marketing creates utility (benefits or value gained by users of a product/service) - Types of utility:  FORM Utility – Goods/service is supposed to be as it is, value in the essential function. (e.g. Car, used to take from point A to B, fuel efficient, reliable).  PLACE Utility – Convenience (is it easy access to buy?).  TIME Utility – Is G/S quick (instant)? Does it take long for the transaction? Quick responses. (the quicker, the more likely customers will buy). Create time value.  POSSESION Utility – G/S has a significant value to it (sentimental, rare or expensive), not because of its unique function but its exclusivity. (e.g. Art, jewelry)  Experiential Utility – G/S is useful because of the experience with it, not because of any other factors but by the fact that by using or doing this “thing”, it created a certain experience to be able to be told as an anecdote. (e.g. bungee jumping). Another scheme/way to create utility is to prove the anecdote, companies (e.g. bungee) will offer pictures/DVDs of you jumping. Evolution of Marketing:  Production orientation – “if we make it, they’ll buy it”. Used to improve production efficiency & distribution efficiency by possibly improving product features.  Selling orientation – Increasing sales techniques (doesn’t even have to be true), increasing spending on promotion, short term view. Looking to just sell the G/S without understanding the customers’ N/W, doesn’t even have to be a truthful promotion, thus short term view (likely won’t have the loyal customers)  Marketing Orientation – If we make what they want, they will buy it (focusing on long term). This focuses on customers’ N/W. Thus, will likely to have long term success.  Social marketing orientation – If we make what they want in a socially responsible manner, they’ll buy it (allow customers to feel like they’re doing the right thing). Focuses on customers’ N/W, (e.g. promoting something as a premium product, price it at a premium price), achieving organization’s goals (e.g. If it’s a fair-trade company, make every product fair trade), try to maintain & improve society.  The relationship Marketing Orientation – build relationship with customers so that we can have their loyalty. Focuses on connecting to customers through personalization, customization & interaction to earn their loyalty. Also, focus shifts from customers alone to include suppliers & possibly competitors (build connection with all). Though this orientation is more appropriate to only some organizations e.g sports teams etc, fast food chains don’t need this. Marketing is the whole business; shows us final results in the perspective of the customers’:  what to produce,  how to create value for customers  finances (how much money is there to be made). - Thus, business success is NOT determined by the producer, but by the consumer. Customers are the central focus of the marketing organization.

- Every organization needs to be market-focused (thus guided by the market) as marketing is the link between producers & buyers. Need to be aware of economy, technology, social media etc. Lecture 2 – Marketing Planning:  Assess the Environment – Find outside & inside the business environment (economically, politically).  Develop Objectives and Market Strategy – Goals (e.g. level of capital gain from product launch), this requires a good understanding of environment to set good objectives (SMART goals used after assessing the situation e.g. expansion, retrenching to maintain firm).  Select Target Segments and Position – How to find & select the target customers’.  Develop Marketing Programme  Implement Marketing Programme – many variables as circumstances with plans might change over time, making implementing complex. This requires good management & negotiating skills when implementing plan & need to be able to adapt to change.  Measure Results – How well has the business succeeded? Related to making Measureable objectives (e.g. increasing awareness of the brand by 23% for next year).  Evaluate Progress – Evaluate if the objective has been reached, if it hasn’t, reflect on what needs to be improved on. If it has, set new goals & keep results as measure to possibly help gain further funding for the next campaign. Relation between environmental analysis & marketing strategy: - Environmental analysis is used to understand how the business & marketing world operates that will impact the organization. - Company strategy: what direction should the organization head in, objective for the next 5, 10, 20 years? - Product/Service: What & how to offer it to the market, how to generate solutions (Definition of MKTG). What are people demanding? Trends changing so must keep up. - STP – Finding where the right people are (location), how to reach them, motivate them to purchase. Need to know environment analysis to identify customers. Outcomes of an Environmental Assessment: - At the end of environmental assessment, should use SWOT analysis that summarizes & categorizes the knowledge that we already have. - Opportunities & Threats are anticipating & recognizing potential things that can impact the organization:  What can make the organization stronger in the future as a result of the opportunities? Understanding your competitive advantage to competition.  What can negatively impact the organization in the future? How can we alter our strategy to avoid/minimize it? Understand the issues that need to be dealt with. 2 areas to assess & understand environmental analysis: - External – relating to things beyond (outside) the organization’s direct control. Though, possible to influence external environments, especially if big company, but if no direct control, its external. (PESTE analysis). - Internal – Being able to have a firmer control over, much more influence:  Industry, Competitors, Market, Customers, Firm, Products/Service offered. External environment details: Focusing on factors beyond organizations control that impacts it: - PESTE analysis:

Political/Legal Factors – any influence place upon the organization from government, politics. (e.g. pharmaceutical industry has price ceilings, ministry of health or Tax).  Economic Factors – economy (not driven from political factors e.g. trade tariffs), if there’s a recession etc. But due to trade tariffs the increase in sales with other countries is economic.  Socio-Cultural Factors – changes in culture, society & beliefs (e.g. fashion, trends). I.e. education demand increased in NZ, thus more people going to university compared to years ago  Technological Factors – any changes in technology that might affect the firm. E.g. new upgrades in tech causing firm’s tech to be outdated or not savvy, need to upgrade.  Environmental Factors – the natural environment, changes that might affect the firm, some companies may be more affected than others (e.g. farms > banks). No control over weather. - PESTE analysis needs fuller analysis; e.g companies being taxed extra 5% thus, less profit margin. May need to increase price of products, which might decrease the customers’ desire for the product leading to a drop in overall sales. Need to know effect of all factors & look from your perspective. - Looking from other companies, if they can afford to not increase price & dip into their reserve funds, can increase the customers’ desire for the product as price is lower than others, leading to increase in overall sales. - More examples in slide 7. Note to look at the “flip” side of a factor, look at both perspective of who is impacted. - Porter’s 5 Forces:  Designed to assess competition WITHIN the direct industry (should the firm stay in or get out?). Likely to have many factors affect the firm at this level (suitable environment to be in?).  Threat of substitutes: Is there an easy alternative for your product? If so, will be an unattractive industry (also think about loyalty, people to Adidas/nike).  Buyer power: How much do customers’ influence have over the organization, if 1 person willing to buy product & several suppliers, then buyer gets to dictate the terms (price) & vice versa.  Barriers to entry: how costly in terms of price, difficulty, time it takes to enter the industry. If it is easy to enter the industry by emulating others & profit; it has lower barriers, leading to unattractive industry increase competition, exploiting the market. Also vice versa.  Supplier power: how much power does the people supplying raw materials have in terms of price, availability. E.g. if there’s a low number of suppliers, they can dictate terms & vice versa. Higher the number of supplier, more competition, less attractive industry.  Industry rivalry: is it friendly or fierce? Making counter campaigns against competitors. - Example. High threats to substitutes, high buyer power, low barriers to entry, high supplier, fierce industry = bad industry. We want the opposite. 

At competitor level: Note Industry rivalry. Direct level  Who are our key competitors? Can be direct (same product, different brand) or indirect (e.g. not competing with another brand of the same product, but a different product).  How intense is the competition in our market? As soon as a new thing happens, does competition increase?  How does competition affect market evolution and structure? Burger king, maccas back then had no competition, but subway later came about Healthy & fast food = competition. New products needed to be formed by BK & Maccas e.g. salads to compete, even though they say it’s to benefit the consumers, thus can try accommodate everyone.  How do competitive actions affect our marketing decisions? Does the firm need to change strategy due to competitors decisions? Usually depends on rivalry intensity, if high, then yes.

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How do firms get and keep their competitive advantage? Refers to the unique trait the firm has over competition e.g. producing product more efficiently or more creative or brand image. (e.g. Apple).

At the market level: Indirect level.  How big is the market? How many can & want to purchase the products? Small number of buyers = large buyer power. If large number, how to get more customers?  Are there ‘Sub markets’? Are there others using our products for different reasons (e.g. others using cars for commuting, showing off, promoting brands, couriers etc).  Is market driven by primary or derived demand? Primary is the end user who uses our product for their own use. Derived is selling the raw product to develop it or alter it to resell. - NZ is driven by derived – producing dairy products (milk, powder etc), wool that gets shipped overseas. Thus, if demands for dairy products/wool around the world goes down, we get affected bad. Summary characteristics of intense competition:  There are many competitors  Competitors have similar strategies  When there is not much differentiation between competitor’s products, resulting in much price competition  Low market growth rates  Barriers to exit are high Internal Environmental Details: Factors that the firm has control over. - Assesses your organisation’s ‘health’:  Financial resources – cash, assets, liabilities  Human resources – employees, educated, age, motivated. This can be asset or liability.  Physical resources – equipment’s, factories, is it well maintained = asset or liability if bad equipment  Soft resources (software, systems, knowledge) – intangible things like being well known, good image  Your market offer – how good is your product at solving customers N/W (refer to definition)  Plus, resource changes – are employees old (retiring), equipment outdated, factories lease, tax breaks/plan financial change. Assessing your offer: Does it meet firm goals & customers’ N/W - How it fits relative to customer expectations – are they satisfied? If not, can we accommodate their change (they want basketball, we made rugby ball. Can we change that?). - What sets it apart from the competitors – do we have any advantages in terms of price, convenience. - The returns generated (or anticipated) - Core Competencies – what do you do well that other companies cannot emulate (innovative, creative, original). Other analytic tools: - Cost analysis – using rolling spreadsheets to conduct a ‘What if’ assessment (e.g. what if sales go down by 10%? Do we have the capacity to run the business to generate profit still?) Used for better understanding of marketing plan. - Market growth/share matrix – Used to analyze where your product & market offer is in terms of costs, contribution, performance & fit:

BCG Matrix (Share/Growth) – Boston consulting group matrix is used to compare how many customers’ you have relative to competitors & how is the market growing (how big is the profit?)  Market growth = Is there many customers wanting that product/ in that industry.  High market share = depends on the firms influence in that industry (small = low) - Another matrix is called the GE Matrix (attractiveness/position):  How much money do firms want to invest in different organizations based on business strength and attractive points (looking at both internal & external strengths)  I = Invest, D = Divest (no strength, no profit), M = Manage (high business strength but not much profit) Once situation has been assessed: - Develop SMART Goals: Specific, measureable, attainable, relevant, time bound. - e.g. growth Expansion (market penetration or development) - Retrenching – used to maintain firm size & attempt to avoid threats like recession. - Holding patter – do nothing. 

By doing an environmental analysis – better position to understand the potential changes in both external & internal environment. Also, to exploit various opportunities & threats (SWOT) or GE matrix. If market player within an industry & see changes in HR or financial resource that might influence the firm in good/bad (invest/divest) Lecture 3 – Segmentation, Targeting & positioning - What is a market? People or institutions with sufficient purchasing power, authority & willingness to buy. - Market segment (finding out who the target groups are)– a group of buyers with similar n/w & responds in a similar way to marketing actions. Must abide to these two rules or they’re not part of market segment. - Target (focusing on a particular segment) – the segments you want to reach out to in the market. - Targeting strategies: after segmentation, has been done  Undifferentiated (Mass) Marketing – targeting everyone & not caring who or what type of customers, everyone is the same (homogenous) in market.  Differentiated Marketing – focusing on particular segments in the market to satisfy different customers n/w. Can be multiple types of segments (e.g. Toyota ranging from luxury to economy).  Focused – focus on only ONE segment in market. (e.g. particular sporting brands for particular sport).  Customised – making it bespoke for a customer, very focus on 1 to 1. (e.g. bespoke suits). - Why segment the market? Rather than mass (undifferentiated)  Buyers have increasingly varied and sophisticated needs, expectations, etc. Different customers have different n/w that needs to be satisfied, thus segmentation helps satisfy customers n/w more effectively. Also, to be better than competition, competitors may have more focused products too that might attract your customers.  New technology allows: o Customisation of the offer o Marketers to reach customers more efficiently and effectively  Helps design and focus marketing programmes – focus on the segment that’s most interested & able to purchase rather than the whole market (less % of people interested).  Helps determine resource allocation – focus of segments that are going to make the most money rather than mass market, more efficient use of time & resources.

Common Segmentation Bases (B2C) how to segment customers: because though everyone has ability to buy, doesn’t mean they will: - Geographic – location of targets within the market. (e.g. convenience stores offer G/S at convenience) or where the product is made can give customers a perception Italy > China. - Demographic - anything measurable, easy to measure; age, gender, income, occupation, education, household size, family lifecycle. This will change over time & just because they’re similar in one category, doesn’t mean they’re part of the same segment. - Psychographic – Needs, values, lifestyles, attitudes, o...