M.

Raashid, Chemical Engineering

1
Economics
 What is Marketing ?
We use the word Marketing to describe
such things as
• analyzing the needs of the people
• trying to guess what types of products
they want
• estimate how much they will buy
• predict when they will want to buy
• determine where they go to buy the stuff
M.Raashid, Chemical Engineering
2
Economics
 What is Marketing ?
…. And,
• figure out the best price to sell it at - and can you still
make a profit selling it at that price
• decide on promotional things to create awareness about
the product
• look at the competition to see what they are doing with
pricing, features etc.

M.Raashid, Chemical Engineering

3
Economics
American Marketing Association Definition

Marketing is the process of planning and

executing the conception, pricing, promotion,
and distribution of ideas, goods, and services
to create exchanges that satisfy individual
and organizational goals.

M.Raashid, Chemical Engineering

4
Economics
 The Concept of Exchange
At Least Two
Parties Something of
Value

Ability to
Necessary Conditions for Communicate
Exchange
Offer

Freedom to Accept
or Reject
Desire to Deal With
Other Party
Note: Meeting all conditions may or may not lead to exchange. Marketing can occur even without exchange
M.Raashid, Chemical Engineering
Economics 5
 Importance of Customer

• Marketing is concerned with anticipating

customer demand and directing the flow
of goods from producers to consumers.

• Marketing has to do with matching

producer’s outputs to consumer’s
activities (wants, needs)

M.Raashid, Chemical Engineering

6
Economics
Serving the needs of customers is what
business should be all about …

Marketing is the business function that

interprets customer needs to the rest of
the organization.

Marketing should begin with the customer

needs - NOT with the production process.
Marketing should anticipate needs.
M.Raashid, Chemical Engineering
7
Economics
 Why Study Marketing?
• Marketing is a core business discipline.
• 1/4th to 1/3rd of the entire civilian
workforce in the U.S. performs marketing
activities.
• In some cases, the COST of marketing a
product makes it very expensive (reaching
50% of cost), so, if you know where to buy
it without the marketing costs included (i.e.
Wholesale) you can save a lot of money
M.Raashid, Chemical Engineering
8
Economics
 Marketing – Job Prospects
• Marketing people in a company bring in
the money i.e. LINE Personnel (instead
of Staff Personnel)- so their jobs are
important, so they get paid a lot.
If you get involved in the marketing side,
you are a LINE Personnel and your job
is very critical (i.e. - hard to fire you or
lay you off)
• Many CEOs come from Marketing side.
M.Raashid, Chemical Engineering
9
Economics
 Marketing – Job Prospects
• Personal selling
• Advertising
• Package Design
• Transportation
• Storage
• Marketing Research
• Product Development
• Wholesaling
• Retailing

M.Raashid, Chemical Engineering

10
Economics
 Roles of marketing
main roles:
advertising (advertising and promotion managers)
selling (sales representatives/sales force)

Also: product development

(brand and product managers)

packaging
(packaging designers)

pricing
(pricing specialists)

distribution
(sales personnel)

M.Raashid, Chemical Engineering

11
Economics
 Marketing Process

Three elements:
1. Market analysis
(Who will buy?)

2. Marketing-mix planning
(What? Where? How much? How?)

3. Marketing control
(Have we been successful?)
M.Raashid, Chemical Engineering
12
Economics
 1. Market analysis (STP)

a) Segmentation
niche segment

individuals

b) Targeting: Who are my customers?

c) Positioning: What is my main selling point?

M.Raashid, Chemical Engineering
13
Economics
 Market segmentation
• Categorising overall market for products or
services
• Consumer market segments
• Industrial/commercial market segments
• HOW do we categorise?
• WHAT are the key features of the segments?

M.Raashid, Chemical Engineering

14
Economics
 Consumer markets (1)
• Demographic variables (Who?)
– Age
– Gender
– Family size
– Stage in family life cycle
– Social class (A, B, C1, C2, D, E)
– Weight and size
– Income
– etc!
M.Raashid, Chemical Engineering
15
Economics
 Consumer markets (2)
• Geodemographic (Where?)
– Residential neighbourhoods
– ACORN (6 Categories, 18 Groups and 62 Types
in UK )
– Pan-European: Moderns, go-betweens,
traditionals

M.Raashid, Chemical Engineering

16
Economics
 Consumer markets (3)
• Psychographic (Why?)
– Activities
– Interests
– Personality Traits, Attitudes, beliefs, values &
opinions
– Education (Terminal Education Age)

M.Raashid, Chemical Engineering

17
Economics
 Consumer markets (4)
• Behaviour segmentation (When/ How
much? i.e. Buying Patterns)
– Benefits sought
– End use (Occasion?)
– Loyalty status (Hard-core, soft-core, shifters,
switchers)
– Usage rate
– Buyer readiness (AIDA Model: Awareness,
Interest, Desire, Action)
M.Raashid, Chemical Engineering
18
Economics
 Consumer markets (5)
• Geographical
• Religious
• Cultural

M.Raashid, Chemical Engineering

19
Economics
M.Raashid, Chemical Engineering
20
Economics
 Consumer markets (5)
• Geographical
• Religious
• Cultural

M.Raashid, Chemical Engineering

21
Economics
And all this information comes
from Market Research (and
Market Survey).

M.Raashid, Chemical Engineering

22
Economics
 Market Research
The process of gathering, analyzing and interpreting
information about a market, about a product or
service to be offered for sale in that market, and
about the past, present and potential customers for
the product or service; research into the
characteristics, spending habits, location and needs
of your business's target market, the industry as a
whole, and the particular competitors you face

M.Raashid, Chemical Engineering

23
Economics
 Market Research: Primary
(Original Sources)
• Surveys
• Face-to-face interviews
• Focus groups
• Customer feedback
• Questionnaires

M.Raashid, Chemical Engineering

24
Economics
 Market Research: Secondary
• Bureau of Statistics
• Industry and trade publications (Chamber of
Commerce & Industry)
• Social media and websites
• Marketing and consumer lists
• Newspapers, Magazines, Journals and media
• IBISWorld/ ICIS database

M.Raashid, Chemical Engineering

25
Economics
 Investigations By Market Research
• Market information: Commodity Prices, Supply
and Demand
• Market segmentation
• Market trends: Movement of market principally,
the change in supply and demand
• SWOT analysis: SWOT is a written analysis of the
Strength, Weaknesses, Opportunities and Threats

M.Raashid, Chemical Engineering

26
Economics
M.Raashid, Chemical Engineering
27
Economics
 Equilibrium of
Price of
Supply and Demand
Ice-Cream
Cone
Supply
$3.00

2.50 Equilibrium

2.00

1.50

1.00

0.50 Demand
Quantity of
0 1 2 3 4 5 6 7Chemical
M.Raashid, 8 Engineering
9 10 11 12 Ice-Cream28
Economics
Cones
 How an Increase in Demand Affects the
Equilibrium
Price of 1. Hot weather increases
Ice-Cream the demand for ice cream...
Cone

Supply

$2.50 New equilibrium

2.00
2. ...resulting Initial
in a higher equilibrium
price...
D2

D1
0 7 10 Quantity of
3. ...and a higher Ice-Cream Cones
quantity sold.
 How a Decrease in Supply Affects the
Equilibrium
Price of
Ice-Cream 1. An earthquake reduces
Cone the supply of ice cream...
S2
S1

New
$2.50 equilibrium

2.00 Initial equilibrium

2. ...resulting
in a higher
price...
Demand

0 1 2 3 4 7 8 9 10 11 12 13 Quantity of
3. ...and a lower Ice-Cream Cones
quantity sold.
M.Raashid, Chemical Engineering
31
Economics
• Strengths and Weaknesses are within (Internal Environment).
• Opportunities and Threats come from External Environment,
and are recognized by market research.
• Combining strengths and opportunities gives the leading edge.
M.Raashid, Chemical Engineering
32
Economics
2. Marketing mix planning (4 P)

a)Product
Elements:
b)Price
c) Place
d)Promotion

M.Raashid, Chemical Engineering

33
Economics
 a) Product
Includes physical unit, package, warranty, service, brand, image, and value

Product development

➢ traditional economies: same things

produced and consumed

➢ nowadays:
- products have a life cycle
- product range is constantly expanded
- find out what target market desires
M.Raashid, Chemical Engineering
34
Economics
Packaging

Branding

create clear message

create credibility
involve emotionally
motivate
invite user loyalty

M.Raashid, Chemical Engineering

35
Economics
back
 b) Price
Pricing strategies:
1. Market determines
the price

2. Price as an expression
of quality

3. Price as a method of
gaining market share

M.Raashid, Chemical Engineering

36
Economics
back
 c) Place (distribution)
Production site Warehouse Wholesaler

- factory outlet
- mail order house
- internet
- TV shopping
- door-to-door selling

consumer Retailer
M.Raashid, Chemical Engineering
37
Economics
back
 D) Promotion

Aims:
➢ communicate with customers

➢ influence customers

4 major tools:
1. Sales force
2. Advertising
3. Sales promotion
4. Public relations

M.Raashid, Chemical Engineering

38
Economics
back
1. Sales force
Representatives who advertise for and sell products

➢ they personalize the promotion process

effective at selling complex goods

most expensive promotion

M.Raashid, Chemical Engineering

39
Economics
back
 2. Advertising
Presents a reason to buy a product/service

Media:

M.Raashid, Chemical Engineering

40
Economics
back
 3. Sales promotion
➢ is a short-term incentive
(Anreiz) to buy a product/service

Techniques:

1 price reduction

2. loyalty reward points

3. two for one

➢ attracts brand switchers

M.Raashid, Chemical Engineering
41
Economics
back
 4. Public relations

Does not aim to increase sales directly but tries to boost the
image of the company

Techniques:

- press conferences
- contests
- community events
- charitable events
- ecological projects
- foundations

M.Raashid, Chemical Engineering

42
Economics
back
 3. Evaluation and control
= looking back at the entire process to find out
whether or not it was successful

Why control?
• planning is no guarantee for profit
• markets change constantly
• strategies not always effective

Tools:
a) Annual-plan control
b) Profitability control
c) Efficiency control
d) Strategic control

M.Raashid, Chemical Engineering

43
Economics
 a) Annual-plan control

Tools:
1. Sales analysis
(Did we sell as much as we planned?)
2. Market-share analysis
(Have we lost or gained market share?)
3. Marketing expense-to-sales analysis
(Did the marketing efforts pay?)

M.Raashid, Chemical Engineering

44
Economics
back
 b) Profitability control
Do we have more earnings than expenditures?

Strategies:

few expensive products and few customers

many cheap products and many customers

Aim:
Which of my products is the most profitable?

M.Raashid, Chemical Engineering

45
Economics
back
 c) Efficiency control

Are my marketing methods profitable?

Example: Avon Lady (sales representative)

➢ how many doors in what time?
➢ how many products sold?
M.Raashid, Chemical Engineering
46
Economics
back
 d) Strategic control
Is my marketing program effective
over a long period of time?

➢ marketing philosophy

Positioning USA: “big and powerful”

after few years: Is this positioning still OK?

➢ information policy
- enough advertisement?
- enough promotion?

M.Raashid, Chemical Engineering

47
Economics
back
M.Raashid, Chemical Engineering
48
Economics