Nottingham Trent University Lecture Notes in Principles of Marketing PDF

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First Year for Business Management and Marketing ...

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Lecture 1 – What is Marketing ? Lecture 1 What is Marketing?  Marketing is a process responsible for identifying, anticipating and satisfy customer requirements as well as being profitable.  About exchanging of goods and services  Identifies and anticipates customers’ needs and wants  Fulfils customers needs profitably with performance value, emotional value and rationale value Needs, Wants and Demand Needs Þ Must have and cannot live without basic requirements Þ Water, shelter, education, clothing, food Wants Þ Not a must to have and can live without Þ Shaped by society Demands Þ Specific objects that’s a want and can be satisfied by the ability to pay for it. Business Orientation 1. Production Orientation : What? – Focuses on manufacturing and production. How? - Producing in Large volume the production costs are reduced or new technology of producing the product. Advantage? – economies of scale Disadvantage? - The business priority is the product first then the customers so therefore there is less focus on customer needs. If new technology is introduced, then employees will be laid off. For example: - The busiest McDonald restaurant in the world was not in USA but in Russia because Russian diners accustomed that expensive restaurants had bad service and bad food quality. Therefore, McDonald introduced a different experience: consistently producing food and fast service at an affordable price. McDonald was popular, Russian diners would wait hours in the cold to buy a big mac. Primark 2. The Product Orientation – focuses on product development. aims at improving an existing products’ functions and quality which makes the business competitive in the market. The product is the first priority to the business the customers. The limitation is that, there is less focus on the customer’s needs. 3. The Selling Orientation - Focuses on to push sales in order for customers to buy a product. the selling company needs to be an aggressive force to increase sales. For the company to push sales it needs to use promotional tools such as persuading to buy the product and influence because the company should aim to sell what they make not what the market wants. Advantage: due so much persuading and influence on selling the product, such a focused view is likely to sell many products which will lead to high turnover. Disadvantage: customers may not trust your judgement or sale, it has little market audience and often despite the persuasive manner and personality of the sales person it fails to convince the buyer to fit the mood or motive to make a sale

4. The Marketing Orientation – Focuses on identifying the needs and wants for customers and consumers. The business has to conduct research first and then produce goods and services to satisfy the needs and wants for the customers. Advantage: due to consistently understanding and delivering what the customers wants leads to long term profitability. Companies may attract new customers which are turned to repeat customers and a goal of developing many loyal customers. The business is more like to be successful because business responds to customers’ needs and wants as well as design products accordingly. Disadvantage: Challenges of quickly responding to market changes, due to markets changing it impacts the business’ market orientation strategy and this is either new business entering or existing and an ever changing of raw materials of which failing to take an act into consideration can put a business at a disadvantage. For example: coca cola is market oriented because they have different variety of drinks because they did market research to find out what people liked. They commercials are targeting a younger generation as well increase sales and to do so they innovated by putting names on coke cans to attract young people to buy. Contrasting the selling and Marketing orientation

The Marketing Approach The MARKETING CONCEPT means that we PUT THE CUSTOMER FIRST, so we must KNOW OUR CUSTOMERS in order to SATISFY THEIR NEEDS AND WANTS through OFFERING THE CORRECT MARKETING MIX but at the same time CONSIDERING OUR WIDER ENVIROMENTAL RESPOSIBILITY Marketing Mix Þ Product- what need does it satisfy Þ Price- what does it cost? Þ Place- where is it available? Þ Promotion – how is it communicated? Lecture 2 Who are the Customers? Þ A group of people who, are consumers or part of organizations, need and have the ability, willingness and authority to purchase product. Steps in Market Segmentations, Targeting and Positioning. For a business to be successful, it needs to follow these steps: 1. Segmentation – identify and describe segments by grouping customers together with similar needs because not all customers are the same or have the same needs. 2. Targeting- evaluate segments and decide which one to serve because businesses need to know which segment is best to target with their product or service. 3. Positioning- design a product or service to satisfy and meet a segment’s needs and develop a marketing mix that will create a competitive advantage in the minds of customers (selected target market). Have to follow these steps to be successful. Consumer-Driven Marketing Strategy

Þ Technique used by businesses not only for profit but also have an edge against competitors Þ It’s all about the business’ customer preferences Þ So, the will have to segmentation, targeting, positioning and differentiation (the market offering to create superior customer value) Þ Targeting the market, meeting the need and building the relationship Þ Customer is always right Segmentation Þ Process of grouping customers into small group Benefits of Segmentation: Þ Enables marketers to develop product or service benefit to appropriate to the segment Þ Products and Brands Designed to appeal to particular target segment Þ Supported by appropriate promotional campaign, customer service, pricing, place (distribution strategies) Types of Segmentation 1. Geographic: Dividing a market into different geographical units. E.g. nations, states, regions, countries, cities) 2. Demographic: Dividing a market into segments based on variables. E.g. age, life-cycle, stage, gender, income, occupation, education, religion, generation 3. Geo-demographic: Combination of geographic and demographic 4. Psychographic: Social class, personality 5. Behavioural: Occasions, benefits, user status, usage rate, Loyalty status Demographic Segmentation Age and Life cycle segmentation Dividing a market into different age and life cycle groups Gender Segmentation Dividing a market into different segments based on gender Social Class Upper, Middle, Skilled working, unemployed Income Segmentation Dividing a market in to different income segments Psychographic Segmentation Marketers segment their market using variables such as : -Consumer lifestyle -Consumer personality - Products people buy reflect their lifestyles Behavioural Segmentation Occasion segmentation: segments divided according to occasions when the buyers: -Get the idea to buy -Make their purchase -Use the purchased item - Benefit segmentation: segments divided according to the different benefits that consumers seek from the product - User status: Markets can be segmented into light, medium and heavy users - Loyalty status: consumers can be loyal to brands , stores and companies Multiple Segmentation Bases Þ Segmentation bases help companies to: Identify smaller, better defined target groups

Identify and understand the key customer segments Reach customers more efficiently by tailoring, making market offerings and messages to customers specific needs Þ Segmentation system help marketers’ segments people and locations into marketable groups like-minded consumers Criteria for Successful Segmentation Þ Effective: Customers within the segment are homogeneous but different from other segments Þ Measurable: The traits that define a segments (e.g. age, gender)Must be relatively easy to identify Þ Accessible: It must be clear the types of marketing strategies that could work for each segment Þ Actionable: The company must have resources to serve those segments and design campaigns targeting them Þ Profitable: It must be financially worth serving those segments Targeting Marketing Targeting Þ Evaluating the various segments and deciding how many and which segments the business can serve best § Evaluating the various segments based on: Segments size and growth Segments structural attractiveness Company objectives and resources § Selecting target market segments § Target Market: Set of buyers sharing the common needs or characteristics that the company decides to serve 4 Target Market Strategies 1. Undifferentiated Marketing: Marketing mix -> Whole market 2. Differentiated Marketing: Marketing Mix 1 -> Segment 1 Marketing Mix 2 -> Segment 2 Marketing Mix 3 -> Segment 3 3. Focused Marketing Marketing Mix 1 Segment 1 Segment 2 Segment 3 4. Customized Marketing Marketing Mix 1 -> Customer 1 Marketing Mix 2 -> Customer 2 Marketing Mix 3 -> Customer 3 Undifferentiated Strategy Þ A strategy that focuses on an entire market for a particular product rather than a segment. Þ The organization designs a single marketing mix meaning, one place, one price, one product and one promotion to reach the maximum number of consumers in that target market Þ Assumers all customers have similar wants and needs Organization (royal mail) -> Marketing Mix-> Target Market( Everybody)

-Product -Place -Price -Promotion Differentiated Strategy Þ An organization direct its marketing efforts towards two or more market segments. Þ It’s an approach that a business takes to develop a unique product or service that customers will find better than or in another way to differentiate from products or services offered by competitors. Þ Develops a marketing mix for each segment Þ Can be a natural progression from ‘concentrated strategy’( a strategy is targeted to one specific market segments ) Focused Strategy Þ An organization directs marketing efforts towards single market segment Þ Creates and maintains one marketing mix Þ Allows organizations to specialize Þ Focus on wants and needs of a distinct customer group Organization (cement manufacturers) -> Marketing Mix -> Builders Customised Strategy Þ An organisation directs its marketing efforts towards two or more customers Þ Develops a marketing mix for each customer

Positioning Market positioning Þ It is not what is done to the product , it is what is created in the minds of the target customers Þ An effort to influence consumers perception of a brand or product relative to the perception of competing brand or product. Þ Its objective is to occupy a clear, unique and advantageous position in the consumers mind Þ The process of creating an image for a product in the minds of target customers Key to Successful Positioning

Lecture 2- Who are the Customers ? Lecture 2 Who are the Customers?  A group of people who, are consumers or part of organizations, need and have the ability, willingness and authority to purchase product. Steps in Market Segmentations, Targeting and Positioning. For a business to be successful, it needs to follow these steps: 1. Segmentation – identify and describe segments by grouping customers together with similar needs because not all customers are the same or have the same needs. 2. Targeting- evaluate segments and decide which one to serve because businesses need to know which segment is best to target with their product or service.

3. Positioning- design a product or service to satisfy and meet a segment’s needs and develop a marketing mix that will create a competitive advantage in the minds of customers (selected target market). Have to follow these steps to be successful. Consumer-Driven Marketing Strategy  Technique used by businesses not only for profit but also have an edge against competitors  It’s all about the business’ customer preferences  So, the will have to segmentation, targeting, positioning and differentiation (the market offering to create superior customer value)  Targeting the market, meeting the need and building the relationship  Customer is always right Segmentation  Process of grouping customers into small group Benefits of Segmentation:  Enables marketers to develop product or service benefit to appropriate to the segment  Products and Brands Designed to appeal to particular target segment  Supported by appropriate promotional campaign, customer service, pricing, place (distribution strategies) Types of Segmentation 1.Geographic: Dividing a market into different geographical units. E.g. nations, states, regions, countries, cities) 2.Demographic: Dividing a market into segments based on variables. E.g. age, life-cycle, stage, gender, income, occupation, education, religion, generation 3.Geo-demographic: Combination of geographic and demographic 4.Psychographic: Social class, personality 5.Behavioral: Occasions, benefits, user status, usage rate , Loyalty status Demographic Segmentation Age and Life cycle segmentation Dividing a market into different age and life cycle groups Gender Segmentation Dividing a market into different segments based on gender Social Class Upper, Middle, Skilled working, unemployed Income Segmentation Dividing a market in to different income segments Psychographic Segmentation Marketers segment their market using variables such as : -Consumer lifestyle -Consumer personality - Products people buy reflect their lifestyles Behavioural Segmentation  Occasion segmentation: segments divided according to occasions when the buyers:

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Get the idea to buy Make their purchase Use the purchased item Benefit segmentation: segments divided according to the different benefits that consumers seek from the product User status: Markets can be segmented into light, medium and heavy users Loyalty status: consumers can be loyal to brands , stores and companies

Multiple Segmentation Bases  Segmentation bases help companies to:  Identify smaller, better defined target groups  Identify and understand the key customer segments  Reach customers more efficiently by tailoring, making market offerings and messages to customers specific needs  Segmentation system help marketers’ segments people and locations into marketable groups like-minded consumers Criteria for Successful Segmentation  Effective: Customers within the segment are homogeneous but different from other segments  Measurable: The traits that define a segments (e.g. age, gender)Must be relatively easy to identify  Accessible: It must be clear the types of marketing strategies that could work for each segment  Actionable: The company must have resources to serve those segments and design campaigns targeting them  Profitable: It must be financially worth serving those segments Targeting Marketing Targeting  Evaluating the various segments and deciding how many and which segments the business can serve best  Evaluating the various segments based on:  Segments size and growth  Segments structural attractiveness  Company objectives and resources  Selecting target market segments  Target Market: Set of buyers sharing the common needs or characteristics that the company decides to serve 4 Target Market Strategies 1. Undifferentiated Marketing: Marketing mix -> Whole market 2. Differentiated Marketing: Marketing Mix 1 -> Segment 1 Marketing Mix 2 -> Segment 2 Marketing Mix 3 -> Segment 3 3. Focused Marketing

Marketing Mix 1 --------->Segment 1 Segment 2 Segment 3 4. Customized Marketing Marketing Mix 1 -> Customer 1 Marketing Mix 2 -> Customer 2 Marketing Mix 3 -> Customer 3 Undifferentiated Strategy  A strategy that focuses on an entire market for a particular product rather than a segment.  The organization designs a single marketing mix meaning, one place, one price, one product and one promotion to reach the maximum number of consumers in that target market  Assumers all customers have similar wants and needs Organization (royal mail) -> Marketing Mix-> Target Market( Everybody) -Product -Place -Price -Promotion Differentiated Strategy  An organization direct its marketing efforts towards two or more market segments.  It’s an approach that a business takes to develop a unique product or service that customers will find better than or in another way to differentiate from products or services offered by competitors.  Develops a marketing mix for each segment  Can be a natural progression from ‘concentrated strategy’( a strategy is targeted to one specific market segments ) Focused Strategy  An organization directs marketing efforts towards single market segment  Creates and maintains one marketing mix  Allows organizations to specialize  Focus on wants and needs of a distinct customer group Organization (cement manufacturers) -> Marketing Mix -> Builders Customised Strategy  An organisation directs its marketing efforts towards two or more customers  Develops a marketing mix for each customer

Positioning Market positioning  It is not what is done to the product , it is what is created in the minds of the target customers  An effort to influence consumers perception of a brand or product relative to the perception of competing brand or product.

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Its objective is to occupy a clear, unique and advantageous position in the consumers mind The process of creating an image for a product in the minds of target customers

Key to Successful Positioning

Lecture 3 – Product Learning Objectives  Define and classify products and the key terms associated with them  Understand how a product evolves over time  Understand the difference between a product and brand  Appreciate the role of packaging

What is Product ?  Anything that can be offered to a market for attention, acquisition, use or consumption that might satisfy a need or desire .  A product can be tangible , intangible , an experience , an organisation, a person , a place and ideas. What is a product for the consumer?  To consumers the product means more than just the sum of its physical characteristics .  The customers look for the benefits and the unique selling point( USP) Aspects of P for Product o Unique features/ unique selling point o Extensive product range o Fissionability o Packaging o Good in store- environment o Good after-sales service o Product quality o Brand name Product vs Brand  They are not the same Product  Tangible or intangible  Satisfy needs by providing a benefit or value Brand  Identity  Distinguish offerings  Value and perceptions

The Anatomy of a product 

The anatomy of product is an analysis of product according to the different benefits it offers.

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The core product is not tangible physical product. You can't touch it. That's because the core product is the benefit of the product that makes it valuable to you. For example, a car, the benefit is convenience like the ease at which you can go where you like, when you want to . Another core benefit is speed since you can travel round relatively quickly. The actual product is the tangible, physical product. You can get some use out of it. For example, the car, it is the vehicle that you test drive, buy and the collect. You can touch it. The actual product is what the average person would think of under generic banner of product . The Augmented Product is the non-physical part of the product . It usually consists of lots of added value, for which you may not pay a premium. For example, when you buy a car, a part augmented product would be the warranty, the customer service offered by the car's manufacturer and any after-sales service. The augmented product is an important way to tailor the core or actual product to the needs of an individual customer. The features of augmented products can be converted in to benefits for individuals.

Customer User-based Classification 1. Convenience Products are consumer products and services that the customer usually buys frequently immediately, and with a minimum comparison and buying effort . Such as: fast food, candy, soft drinks, laundry detergent. The products are convenience product which are usually low pr...