Fundamentals of marketing

What is marketing?
Marketing is a process by which companies create value for customers and build strong
customer relationships in order to capture value from customers in return.

Creating value => Attracting new customers by promising superior value

Building strong relationship => Keeping the current basis of customers by delivering
satisfaction because a sustainable business implies repeat customers
Capturing value => a return on investment
Nonprofits (colleges, hospitals, churches, etc.) also must perform marketing.

The marketing process: creating and capturing customer value:

1  Using market research
2  Where we’re going ? Marketing strategy : Segmenting the market, targeting a specific
market, and positioning the brand accordingly
3  How we’re going there ? Implementing the strategy : 4P
4  Sustainable business implies loyal customers : Keeping a customer is cheaper that
attracting new ones
5  Did we meet our objectives ? Controlling the effectiveness of marketing

Needs => state of deprivation (feeling)

Wants => specific thing you desire
Demands => the resources that allows you to get it.

Market offerings are combination of products, services, information, or experiences offered to

a market to satisfy a need or want.
Marketing myopia is focusing only on existing wants and losing sight of underlying consumer
needs.

Societal Marketing Concept

Societal Marketing is discovering and satisfying consumer needs in a way that also provides for
societal well-being. By the end of the 1980s, the focus towards more subtle needs—‘the good
life’. Organisations with this philosophy focus their whole effort on developing long-range plans
to meet the long-term needs of consumers and the wider society.

The 4Ps of marketing

Product – a good, service, or idea to satisfy a customer’s needs.
Price – the amount being charged for the good, service, or idea.
Place – the means of getting the good, service, or idea to the customer.
Promotion – the means of communication with the customer.
The 7Ps of marketing (adding to the 4Ps)
People – the human actors who provide goods, services, and ideas to the customer.
Physical evidence – the tangible elements in the place that the good or service is sold.
Process – the flow of activities involved in providing goods, services, and ideas to the customer.

Building customer relationships

Each group requires a different relationship management strategy.

True friends are both profitable and loyal.
Butterflies are potentially profitable but not loyal.
Strangers show low potential profitability and little projected loyalty.
Barnacles (= types of crustaceans that attach themselves to boats, rocks or whales and never
move) are highly loyal but not very profitable.

Marketing management

The process:
- Analysis -> identify external factors impacting the brand.
- Planning -> develop strategic plans.
- Implementation -> carrying out the plan.
- Control -> measure results.

Product/ service marketing plan:

Brand identity
a brand should establish who they are and why they do what they do. This is at the core of
everything a company does. A company’s clarity on this part will help in the determination of
which future tactical decisions line up with the brand identity.
Target market/ product-service/ situation analysis
Target Market
Describe the customer and their needs. From this analysis, you can also develop a buyer
persona.

Product / Service
Create a general overview of the (current) product or service, and how it lines up with what the
customer needs.

Situation analysis
What is happening in the immediate environment? Are there any key players that might affect
future company strategy?
What is happening in the external environment? Look through the external forces for relevant
trends and drivers of change.
• Political
• Economic
• Social
• Technological
• Legal
• Environmental (Natural)

Product /market objectives

create objectives for the product / service within a specific timeframe. These will be the some
of the goals by which you will measure success.

Positioning statement
A guide to internal strategy
Ties together top and bottom halves of the marketing plan
Point at which the plan moves from a strategic analysis
to a tactical plan

The marketing tools

To create an effective plan, marketers must decide how to use their marketing tools, or the 7
Ps, to address what they’ve found out in the earlier half
of the marketing plan

Customer response assessment plan

Once a plan is completed, how does the marketer know if it is successful?
The marketer develops a plan to gauge whether or not the plan is successful or if changes are
needed.

Designing the business portfolio: analyzing the current portfolio

Growth =-share matrix- is a portfolio-planninig method that evaluates a company’s SBUs in
terms of: (market growth rate) and (relative market share)
 • Cash cows are businesses that have a high market share (and are therefore generating
lots of cash given a leadership position) but low growth prospects (and therefore a low
need for cash due to no prospect for development). They are often in mature industries.
• Stars have high growth prospects and a high market share.
• Question marks have high growth prospects but a comparatively low market share.
• Dogs are low on both growth prospects and market share.

Companywide strategic planning:

- Market penetration is a growth strategy increasing sales to current market segments
without changing the product.
- Market development is a growth strategy identifying and developing new market
segments for current products
- Product development is a growth strategy through offering new or modified products to
current market segments.
- Diversification is a growth strategy through starting up or acquiring businesses outside
the company’s current products and markets.
- Downsizing is the reducing of the business portfolio by eliminating products or business
units that are not profitable or that no longer fit the company’s overall strategy.
Measuring and managing return on marketing investment:
 Net return from a marketing investment divided by the costs of the marketing
investment

 What does the Marketing ROI measure?

 The profits generated by investments in marketing activities
 < 1 (or 100%) = 1dhs spent brought less than 1 dhs
 = 1 (or 100%) = 1dhs spent is 1 dhs earned
 > 1 (or 100%) = 1dhs spent brings more than 1 dhs

Analyzing the marketing environment:

The company’s microenvironment

- The company
- Suppliiers
- Marketing intermediaries
- Competitors
- Publics
- Customers

The company’s macroenvironment

- Demographic environment - The study of human populations in terms of size, density,
location, age, gender, race, occupation, and other statistics.
- Economic environment - Factors that affect consumer buying power and spending
patterns.
- Socio-cultural environment - Institutions and other forces that affect society’s basic
values, perceptions, preferences and behaviors.
- Political/legal environment - Laws, government agencies, and pressure groups that
influence and limit various organizations and individuals in a given society.
- Technological environment - Forces that create new technologies, create new product
and market opportunities.
- Natural environment - Natural resources that are needed as inputs by marketers or are
affected by marketing activities.
Creating competitive advantage:

Competitive advantage
- An advantage over competitors gained by offering consumers greater value than
competitors do.
- To understand competitive advantage then, you cannot just look internally at your own
company – you need to look at your competitors and what they are doing.

Competitive positions
Market leader is the firm with the largest market share.
Market challengers are firms fighting to increase market share.
Market followers are firms that want to hold on to their market share.
Market nichers are firms that serve small market segments not being pursued by other firms.

Competitive strategies
Expanding total demand
• New users
• New uses
• More usage of its products
Protecting market share
• Fixing or preventing weaknesses that provide opportunities to competitors
• Maintaining consistent prices that provide value
• Keeping strong customer relationships
• Continuous innovation
Expanding market share
• Increasing profitability with increasing market share in served markets
• Producing high-quality products
• Creating good service experiences
• Building close relationships
Market challenger strategies
• Challenge the leader with an aggressive bid for more market share.
• Play along with competitors and not rock the boat.
Market follower strategies
• A follower can gain many advantages.
• It can learn from the leader’s experience.
• It can copy or improve on the leader’s products and programs, usually with much less
investment.
Market nicher strategies
Ideal market niche is big enough to be profitable with high growth potential and has little
interest from competitors
The Key to market niching is specialization.
• Market
• Customer
 • Product
• Marketing mix

Basic competitive strategies

Lower cost differentiation

Cost Leadership Differentiation

Broad = become low-cost = be unique along some
target producer in industry dimensions that are
valued by buyers

Cost Focus Differentiation Focus

= become low-cost = be unique in a segment
Narrow
producer in a segment or or group of segments
target
group of segments

Industry analysis – porter’s 5 forces

Strategic planning – SWOT analysis

Internal = strengths, weaknesses

External = opportunities, threats

Market research

Different types of research performed by marketers using various methods depending on their
need for information.

Gaining customer insight – Regular market research gives marketers a competitive edge.

Exploratory research - Useful in gaining insights and ideas and is often used to funnel broad
research questions into more precise ones.

Descriptive research - Focuses on determining how often something occurs.

Casual research - Focuses on discovering the cause-and-effect relationship between variables.

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Market research data
Secondary data - information that has previously been collected or published.
Primary data - information specifically collected to solve a current problem.

Information management
When faced with a business problem and need information to assist in decision-making.

Research is either quantitative or qualitative

Qualitative research
Qualitative research is the systematic use of interpretive techniques to come to terms with the
meaning, not the frequency, of social phenomena.

– Seeks in-depth, open-ended responses - not yes or no answers

– Examples of qualitative methods:
– Personal in-depth interviews - Involves talking with your subject one-to-one,
face-to-face where the interviewer guides the interview with open questions

– Focus groups - Involves a small group (usually 6 to 12 people) in a discussion for

about an hour. A facilitator (interviewer) unobtrusively guides discussion and
group interaction stimulates thinking and reactions

– Projective techniques - Projective techniques are an indirect form of questioning

that encourages respondents to project their underlying beliefs, attitudes or
feelings regarding the issues of concern.

– Observation and ethnography - Researchers try to see or record what subjects

do naturally, and avoid influencing a subject’s behavior.

– Ethnography - A form of observational research that involves sending trained

observers to watch and interact with consumers in their natural habitat

Quantitative research
Quantitative research is the systematic empirical investigation of social phenomena via
statistical techniques
– Seeks structured responses that can be summarised in numbers
– Ex: percentages, averages or other statistics
 – Methods include:
– Surveys - to ask (many people) a question or a series of questions in order to
gather information about what most people do or think about something

– Observation

– experimentation - Researchers compare the responses of two or more groups

that are similar except on the characteristic being tested

Sampling plan
Sample is a segment of the population selected for marketing research to represent the
population as a whole.

Consumer behavior

Culture is the set of basic values, perceptions, wants, and behaviors learned by a member of
society from family and other important institutions.
Subcultures are groups of people within a culture with shared value systems based on common
life experiences and situations.
Social classes are society’s relatively permanent and ordered divisions whose members share
similar values, interests, and behaviors. (Measured as a combination of occupation, income,
education, wealth, and other variables)
Personality is usually described in terms of traits such as self-confidence, dominance,
sociability, autonomy, defensiveness, adaptability, and aggressiveness. Personality can be
useful in analyzing consumer behavior for certain product or brand choices.

Needs analysis

- functional needs: relate to practical, rational functions. Ex:transport=car

- Symbolic needs: relate to the desire to project a self-concept. Ex: personality=manga
- Emotional needs: relate to the desire to feel positive and avoid negative emotions. Ex:
power=big cars
- Social needs: relate to the desire to bond with others. Ex: freedom relate to people =
anime

The consumer decision process

- The first stage is Problem Recognition. Analysis of this stage involves understanding
when, where, and how consumers need arise and the situational, social or marketing
triggers that cause consumers to realize they have a problem that needs to be solved.
- The second stage is information search. Analysis of this stage involves understanding the
sources of information consumers use to learn more about the available options.
Understanding social influences is crucial at this stage.
- The third stage is Evaluation of Alternatives. How do consumers make decisions? What
evaluative criteria do they use?
- The fourth stage is the Purchase Decision itself. Where do consumers go to purchase?
What happens in the store?
- The final stage is Post Purchase Evaluation. How do consumers assess whether they
have purchased the right product? How do they evaluate satisfaction? Do they
experience any regrets or doubts?

Information search
External Sources
• Advertising and Promotion
 (Sales staff, In-store information, Television, Newspapers, Magazines, Internet, Radio,
Cinema, Outdoor, Direct mail, Mobile, etc.)
• Referent Others
(Friends, Family, Colleagues, Celebrities, Internet users, Newspaper articles,
Magazine articles, Television shows, independent reports, etc.)
• Experiential
Internal Sources
• Long-term memory
(Learning, past experience, past searches, ongoing search)

Ongoing and prepurchase search

Most scholars differentiate between prepurchase search and ongoing search
When information is acquired on a regular basis regardless of a purchase need, we call this
ongoing search
Prepurchase search is often tedious and stressful, whereas ongoing search is generally
enjoyable
The more involved with the product category the greater the likelihood of ongoing search
The term information search is a broader term often used to discuss both prepurchase and
ongoing searches

Store choice & purchase: outlet choice Vs. product choice

1. Brand first, outlet second
For some purchases (frequently high involvement ones) we determine what we want
to buy, then choose the store with the lowest price (or best location, or store image,
etc.)
1. Outlet first, brand second
For many product categories, stores rather than brands form the evoked set
(clothing is a good example)
1. Brand and outlet simultaneously
The consumer evaluates the pros and cons of both the store and the brand
simultaneously (that store has much better service, but I won’t find my favourite brand
there)
For most low-cost goods outlet comes first, and brand comes second. However, if you have
brand loyalty your choice of brand will determine the store.

Segmentation targeting and positioning

Understanding Markets
• Segmentation: involves identifying and understanding the needs of particular groups of
customers.
• A market: is a group of potential customers with similar needs, who are willing to
exchange something of value for various need-satisfying goods or services.
What is segmentation, targeting and positioning?
• 1. SEGMENTATION
• Dividing a market into distinct groups of buyers who have different needs,
characteristics, or behaviors
• 2. TARGETING
• Evaluating each market segment’s needs and attractiveness, and selecting one or more
segments
• 3. POSITIONING
- Differentiating the brand from the competitors
- Associating the brand with a distinct/clear image

Market segmentation

Geographic dimensions describe the market in different geographical units such as nations,
regions, states, counties, cities, or even neighborhoods.
Demographic dimensions describe the market based on variables such as age, life-cycle stage,
gender, income, occupation, education, religion, ethnicity, and generation
Psychographic dimensions describe the market based on different lifestyle and personality
characteristics.
Behavioural dimensions describe the market based on behavioural and situation related
characteristics related to the product category and decision

Targeting: Target Marketing Approaches

Single target market approach (concentrated)

Select one homogeneous segment as the target
Multiple target market approach (differentiated)
Select two or more target segments
Develop a different marketing mix for each segment
Combined target market approach
Combine submarkets into a single target market
Develop one marketing mix for the combined target

Differentiation and positioning

Product position is the way the product is defined by consumers on important attributes—the
place the product occupies in consumers’ minds relative to competing products.
• Perceptions
• Impressions
• Feelings