PRINCIPLES OF

MARKETING

COBM1201
1
2

The
foundations of
Marketing
3 What is marketing?
According to Kotler: “Marketing is the science and art of
exploring, creating, and delivering value to satisfy the
needs of a target market at a profit. Marketing identifies
unfulfilled needs and desires”
According to American management association:
“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 objectives”.
Thus marketing may be defined as those as those business
functions which are most directly and primarily concerned
with three activities
 The recognition of the demand,
 The stimulation of demand
 The satisfaction of demand
4
Key terms of marketing

 Social process – marketing involves interactions of human beings during the exchange
 Managerial – it involves fundamentals of management which include planning,
organising, leading, implementation and control
 Process – ongoing activity, never ending, not sporadic
 Individuals and groups – marketing activities take place involving parties either as
individuals or groups
 Needs – state of felt deprivation, drive which propels action towards achieving a
certain objective, a need is usually expressed in a general mode
 Wants – a want is expressed in a more specific way and usually in a luxurious mode
 Value – refers to how something is worthy usually expressed in monetary terms. It also
refers to the amount of benefits that accrue to the parties less expenses incurred in
obtaining such benefits.
5 Role of marketing

 Identifying customer needs and wants

 Providing market information on product
development projects
 Providing interface between the organisation and
the market
 Gathering information about market dynamics
(competitor activities)
 Distribution of products from where they are
produced to places convenient for the consumers
6 Main concepts of marketing:

 Studies reveal that different organizations have different

perception of marketing and these different perception have led to
the formation of different concepts of marketing, studies also
reveal that at least five distinct concepts of marketing have
guided and are still guiding business firms.
1. Production Concept -
2. Product Concept -
3. Selling Concept -
4. Marketing Concept -
5. Societal Marketing Concept -
7
1.Production Concept:

 Those companies who believe in this philosophy think that if the

goods/services are cheap and they can be made available at many
places, there cannot be any problem regarding sale.
 Keeping in mind the same philosophy these companies put in all
their marketing efforts in reducing the cost of production and
strengthening their distribution system.
 In order to reduce the cost of production and to bring it down to
the minimum level, these companies indulge in large scale
production.
8 2.Product Concept:

 Those companies who believe in this philosophy are of the

opinion that if the quality of goods or services is of good
standard, the customers can be easily attracted.
 The basis of this thinking is that the customers get attracted
towards the products of good quality.
 On the basis of this philosophy or idea these companies direct
their marketing efforts to increasing the quality of their product.
9 3.Selling Concept:

 Those companies who believe in this concept think that leaving

alone the customers will not help.
 Instead there is a need to attract the customers towards them.
 They think that goods are not bought but they have to be sold.
10 4.Marketing Concept:

 Those companies who believe in this concept are of the opinion

that success can be achieved only through consumer satisfaction.
 The basis of this thinking is that only those goods/service should
be made available which the consumers want or desire and not
the things which you can do.
11 5.Societal Marketing Concept:

 This concept stresses not only the customer satisfaction but also
gives importance to Consumer Welfare/Societal Welfare.
 This concept is almost a step further than the marketing concept.
 Under this concept, it is believed that mere satisfaction of the
consumers would not help and the welfare of the whole society
has to be kept in mind.
12

Marketing
environmental
analysis
13 The market environment

 Companies interact with two types of environment: the

‘microenvironment’ and the ‘macro environment’.
 The microenvironment comprises the company’s suppliers,
customers, marketing intermediaries and competitors etc.
 The macro environment is made up of wider forces which affect
demand for a company’s goods. These forces include
demographics, economics, nature, technology, politics and culture
(PESTEL)
 14 The market environment cont…
 Environmental analysis is a strategic tool. It is a process to
identify all the external and internal elements, which can affect
the organization’s performance.
 The analysis entails assessing the level of threat or opportunity
the factors might present. These evaluations are later
translated into the decision-making process.
 There are many strategic analysis tools that a firm can use, but
some are more common. The most used detailed analysis of
the environment is the PESTLE analysis and SWOT analysis.
 Managers and strategy builders use this analysis to find where
their market is currently. It also helps foresee where the
organization will be in the future.
15 Environmental scanning 

 Environmental scanning is a process of gathering, analyzing,

and dispensing information for tactical or strategic purposes.
16 SWOT Analysis

 SWOT stands for Strengths,

Weaknesses, Opportunities and
Threats
 Identification of the threats and opportunities in the external
environment and strengths and weaknesses in the internal
environment of the firms are the cornerstone of business policy
formulation.
 It is the SWOT analysis which determines the course of action to
ensure the growth / survival of the firm.
17 Strengths

Strengths: internal to the business; are a business resources and

capabilities that can be used as a basis for developing a
competitive advantage; strength should be realistic and not
modest.
Examples: good reputation among customers, resources, assets,
people, : experience, knowledge, data, capabilities
 Think in terms of: capabilities; competitive advantages;
resources, assets, people
 (experience, knowledge); marketing; quality; location;
accreditations
 qualifications, certifications; processes/systems
18 Weaknesses

Weaknesses—internal force that could serve as a barrier to

maintain or achieve a competitive advantage; a limitation,
fault or defect of the business. It should be truthful so that
they may be overcome as quickly as possible
 Examples: gaps in capabilities, financial, deadlines, morale
lack of competitive
19
Opportunities

Opportunities—any favorable
situation present now or in the
future in the external environment.
 Examples: unfulfilled customer need,
arrival of new technologies, loosening
of regulations, global influences,
economic boom, demographic shift
20 Threats

External force that could inhibit the maintenance

or attainment of a competitive advantage; any
unfavorable situation in the external environment
that is potentially damaging now or in the future.
 Examples: shifts in consumer tastes, new regulations,
political or legislative effects, environmental effects,
new technology, loss of key staff, economic
downturn, demographic shifts, competitor intent;
market demands; sustaining internal capability;
insurmountable weaknesses; financial backing
21 Pest Analysis

 It is very important that an organization considers its environment

before beginning the marketing process.
 In fact, environmental analysis should be continuous and feed all
aspects of planning.
 The macro-environment consists of e.g. Political (and legal)
forces, Economic forces, Sociocultural forces, and Technological
forces. These are known as PEST factors.
22 PESTEL
23

The marketing
mix elements
(7Ps)
24 The marketing mix elements
(7Ps)
25
Definition of a marketing mix

According to Kotler (2010) marketing mix is

the set of controllable variables that the firm
can use to influence the buyer’s response.
 The controllable variables in this context refer
to the 4Ps (product, place, price, promotion).
 These variables can create highest level of
consumer satisfaction and the same time meet
organisational objectives or targets.
26 Product

Definition
 Anything that can be offered to a market for attention,
acquisition, use or consumption that might satisfy a want or need
 A product can also be known as a service.
 The Product should fit the task consumers want it for, it should
work and it should be what the consumers are expecting to get.
27 Product levels
 28 Product levels
Formal product
 Refers to a physical object or service offered to the
market place e.g a motor car, educational programme.
 All formal products are characterised by certain
technical attributes, material composition, packaging,
trade marks
Core product
 Refers to the actual essential benefit or need
satisfaction that consumer get from using a product.
 A lady who buys Black Opal products is actually
JULY-
"SUCCESS IS NOT FINAL; FAILURE IS NOT FATAL: IT IS THE COURAGE TO CONTINUE THAT COUNTS"
DECEMBE
WINSTON S. CHURCHILL
R 2019
29 Product levels cont…

Augmented product
Includes all the benefits that consumers receive experience
in perceiving, utilising , obtaining and applying the formal
product
All after sale services such as, customer advice, delivery ,
warehousing, installations, warranties, guarantee.
Expected product
What a product is capable of satisfying in the
future.Capable of modification.
Capable of modification
30 Classifications of a product

Products can be classified broadly into consumer products and industrial

products.
Consumer products
 Refer to products or services bought by final consumers for personal
usage
 Can be classified as convenience, shopping, speciality and unsought
goods
Industrial products
 Products which are purchased for further processing or use by
organisations to produce other products.
 Distinction between consumer products and industrial products is on the
purpose for which the product is bought.
31 Product life cycle (PLC)

 The product life cycle has 4 very clearly defined stages, each
with its own characteristics that mean different things for
business that are trying to manage the life cycle of their particular
products.
32 Product life cycle (PLC)
33 Introduction stage

 This stage of the cycle could be the most expensive for a

company launching a new product. The size of the market for the
product is small, which means sales are low, although they will
be increasing.
 On the other hand, the cost of things like research and
development, consumer testing, and the marketing needed to
launch the product can be very high, especially if it’s a
competitive sector.
34 Growth stage

 The growth stage is typically characterized by a strong growth in

sales and profits, and because the company can start to benefit
from economies of scale in production, the profit margins, as well
as the overall amount of profit, will increase.
 This makes it possible for businesses to invest more money in the
promotional activity to maximize the potential of this growth
stage.
35 Maturity stage

 During the maturity stage, the product is established and the aim
for the manufacturer is now to maintain the market share they
have built up.
 This is probably the most competitive time for most products and
businesses need to invest wisely in any marketing they undertake.
 They also need to consider any product modifications or
improvements to the production process which might give them a
competitive advantage.
36 Decline stage

 Eventually, the market for a product will start to shrink, and this
is what’s known as the decline stage.
 This shrinkage could be due to the market becoming saturated
(i.e. all the customers who will buy the product have already
purchased it), or because the consumers are switching to a
different type of product.
 While this decline may be inevitable, it may still be possible for
companies to make some profit by switching to less-expensive
production methods and cheaper markets.
37 Significance of PLC

 PLC analysis, if done properly, can alert

 

a company as to the health of the

product in relation to the market it
serves.
 PLC also forces a continuous scan of the
market and allows the company to take
corrective action faster. But the process
is rarely easy.
38 Services

A service can be viewed as the action of doing something for someone

Characteristics
Lack of ownership- You cannot own and store a service like you can a product.
Services are used or hired for a period of time.
Intangibility- You cannot hold or touch a service unlike a product.
Inseparability- Services cannot be separated from the service providers. a service is
produced at or near the point of purchase.
Perishability- Services last a specific time and cannot be stored like a product for
later use. If travelling by train the service will only last the duration of the
journey.
Heterogeneity- It is very difficult to make each service experience identical. If
travelling by plane the service quality may differ from the first time you
travelled by that airline to the second, because the airhostess is more or less
experienced.
39 Place

Definition
 Place/ distribution is how a business
gets its products to the customers
 To make products available in the
right place at the right time in the
right quantities is the objective of
distribution
40 Channels of distribution

 A distribution channel is defined as all

organizations through which a product
must pass between its point of production
and consumption. These channels include
 Wholesalers
 Distributors
 Retailers
41 Channels of distribution

 A distribution channel is defined as all

organizations through which a product
must pass between its point of production
and consumption. These channels include
 Wholesalers
 Distributors
 Retailers
42
43 Channel of distribution 1

 This channel Involves

 Manufacturers/ producers
&
 Consumers/ end users
The manufacturers sells directly to the consumers (Food product like
Bread)
It is known as a direct distribution channel
Producer Consumer
44 Channel of distribution 2

 It involves 3 players which are the manufacturers, retailer and

consumer.
 The manufacturers sells the product the retailer then the retailer
sell it to the consumers (Furniture)


Producer Retailer Consumer
 45 Channel of distribution 3

 It involves Manufacturers, Wholesaler, Retailer and Consumers.

 The manufacturers sells the product the wholesaler then the
product goes to the retailer then the retailer sell it to the consumers
(Food Products)

Wholesal
Producer Retailer Consumer
er
46 Factors affecting channel
distribution
 Perishability of product
 Technical aspects of a product
 Stage of product in the PLC
 Size of product
 Legal aspect
 Costs
 Geographical consideration
47 Price

Definition:
 The amount of money charged for a product or
service, or the sum of the values that
consumers exchange for the benefits of having
or using the product or service.
Objectives of pricing include to:
 Survival
 Maximum current profit,
 Maximum market share,
 Product-quality leadership.
48
Factors Affecting Price Decisions

 Marketing objectives
 Marketing mix strategy
 Costs
 Competition
 Nature of the market and demand
 Other environmental factors(economy, resellers, government)
49 Types of pricing methods

Penetration Pricing
 Price set to ‘penetrate the market’. ‘Low’ price to secure high
volumes
 Suitable for products with long anticipated life cycles and may be
useful if launching into a new market
Price skimming
 High price, skim the profit from the market
 Suitable for products that have short life cycles or which will face
competition at some point in the future (e.g. jewellery)
50 Types of pricing methods

Psychological Pricing
 Used to play on consumer perceptions. Classic example - $9.99 instead
of $10.00. Links with value pricing – high value goods priced according
to what consumers THINK should be the price
Destroyer/Predatory Pricing
 Deliberate price cutting or offer of ‘free gifts/products’ to force rivals
(normally smaller and weaker) out of business or prevent new entrants
Price Discrimination
 Charging a different price for the same good/service in different markets
 Requires each market to be impenetrable
 Requires different price elasticity of demand in each market
51 Promotion

Definition

 Promotion is any form of communication a business uses to

inform, persuade, or remind people about products and to
improve its image
52 Promotional mix elements

Some elements of the promotion mix include the following:

 Advertising
 Personal selling
 Sales promotions
 Direct selling
 Public relations
 Internet
 Exhibitions
 Word of mouth
 Sponsorships

JULY-
"SUCCESS IS NOT FINAL; FAILURE IS NOT FATAL: IT IS THE COURAGE TO CONTINUE THAT COUNTS"
DECEMBE
WINSTON S. CHURCHILL
R 2019
53 Purposes of Promotion

 Convince potential customers to buy

 Explain features/benefits of products
 Tell where products are sold
 Advertise sales on products
 Answer customers’ questions
 Introduce new products
 Create a favorable image of the company or product
54 Promotional mix elements
Advertising
It is the non-personal presentation of ideas
and products by an identified sponsor.
Informative advertising- it tries to inform
customers the products or services they
are offering. It therefore builds primary
demand.
Persuasive advertising- It builds selective
demand. It also persuades customers to
purchase products.
Comparison advertising- Compares one
brand to another
Reminder advertising- Keeps consumers
thinking about a product
Media Types used to advertise:
Newspapers
 Advantages: Flexibility, timeliness; good
local market coverage; broad acceptance,
high believability
 Limitations: Short life; poor reproduction
quality; small pass-along audience
Television
 Advantages: Combines sight, sound,
motion; high attention; high reach;
appealing to senses
 Limitations: High absolute costs; high
clutter; fleeting exposure; less audience
selectivity
Radio
 Advantages: Mass use; high geographic
and demographic selectivity; low cost
 Limitations: Audio only; fleeting
exposure; lower attention; non standardized
rates; fragmented audiences
55 Promotional mix elements
The selling process
When a marketer is to make a sale there are steps that need
Personal selling to be taken. These include the following:
Definition 1. Prospecting -developing a list of potential buyers 
2. The Pre-approach -initial pre-approach letter, telephone
Personal selling is defined as the
call, making sure shelves are fully stocked, etc.
presentation of a product 3. Theor Approach initial face-to-face contact with the
company to one or more prospect during which first impressions are formed 
potential buyers 4. The Presentation presentation/demonstration of how the
product fills a need or solves a problem for the prospect 
Why personal selling? 5. Answering Questions and Overcoming Objections
 When there is need to present a provides feedback and salesperson attempts to
prospect
product. further tailor the presentation for the prospect's needs 
6. The Close - salesperson asks the prospect to buy. Buying
 When selling a technical product
signals – things the customer says or does that indicate
 When budget is not flexible s/he is ready to buy. (facial expressions, body language,
comments)
 To create strong relationships
7. Assurance and Follow-up -customer is assured s/he has
with customers made a wise purchase (delivery, customer service,
referrals)
56 Promotional mix elements

Public relations Functions of Public Relations

 Media relations
Definition:
 Planning
 According to the PRSA,  Counseling
public relations helps an  Research
organization and its  Publicity
publics adapt mutually to  Marketing Communications
each other. Public  Community relations
relations is an  Consumer relations
organization’s efforts to  Employee relations
win the cooperation of  Government affairs
groups of people.
57 Promotional mix elements

Sales promotion Forms of promotion

Sales promotion is the process of  Bulk discounts
persuading a potential customer to  Free materials
buy.  Display windows
SP is of two types which are:  Lucky draws
 Trade-Liquidating heavy  Redistribution incentives
inventories, Persuade retailers to  Shop salesmen incentives
carry stock, carry more than usual
 Free samples
stock, promote brand franchise
 Free gifts
 Consumer- Stimulate purchase,
 Coupons
Induce trial, Create new users,
Increase repurchase from  Price-offs
occasional customers, Reward  Sweepstakes
loyal customers  Bundling offers
58 The 3 soft Ps
People
 An essential ingredient to any service
provision is the use of appropriate staff
and people.
 Service is about the people –
maximizing the power of people to
provide customers with a great
experience
 Recruiting the right staff and training
them appropriately in the delivery of
their service is essential if the
organisation wants to obtain a form of
competitive advantage.
 Consumers make judgments and
deliver perceptions of the service based
on the employees they interact with .
Process
 Refers to the systems used to assist the organization
in delivering the service
 Think of the process that allows you to obtain an
efficient service delivery
 An efficient service will foster consumer loyalty
and confidence in the company
Physical Evidence
 Where is the service being delivered? Physical
Evidence is the element of the service mix which
allows the consumer again to make judgments on
the organization.
 If you walk into a restaurant your expectations are
of a clean, friendly environment.
 Physical evidence is an essential ingredient of the
service mix, consumers will make perceptions
based on their sight of the service provision which
will have an impact on the organizations perceptual
plan of the service.
 Ambiance
59

Market
research and
analysis
60 Market research

Definition
1. Market research is an organized effort to gather information
about target markets or customers. It is a very important
component of business strategy.
2. 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
Source – ICC/ESOMAR International Code on Market and Social
Research
61
Types of Market Research: Market
Research Methods and Examples
 There are different types of market research, that
covers varied areas of study. Whether an
organization or business wishes to know
purchase behavior of consumers or the likelihood
of consumers paying a certain cost for a product,
market research helps in drawing meaningful
conclusions.
 Depending on the methods and tools required,
following are the types:
62 1. Primary Market Research

 (A combination of both Qualitative and Quantitative Research): Primary

market research is a process, where organizations or businesses get in
touch with the end consumers or employ a third party to carry out relevant
studies to collect data. The data collected can be qualitative data (non-
numerical data) or quantitative data (numerical or statistical data).
 While conducting primary market research, one can gather two types of
information:
 Exploratory and Specific.
 Exploratory research is open ended, where a problem is explored by
asking open ended questions in a detailed interview format usually with a
small group of people also known as sample.
 Specific research, on the other hand, is more pinpointed and is used to
solve the problems that are identified by exploratory research.
63 Primary Market Research
cont…
  Qualitative market research study involves semi-structured or unstructured data collected through some of the commonly used
qualitative research methods like:
Focus groups: 
 Focus group is one of the commonly used qualitative research methods.
 Focus group is a small group of people (6-10) who typically respond to online surveys sent to them.
 The best part about focus group is the information can be collected remotely, can be done without personally interacting with
the group members.
 However, this is a more expensive method as it is used to collect complex information.
One-to-one interview: 
 As the name suggests this method involves personal interaction in the form of an interview, where the researcher asks a series of
questions to collect information or data from the respondents.
 The questions are mostly open ended questions and asked in a way to facilitate responses.
 This method is heavily dependent on the ability and experience of the interviewer to ask questions that evoke responses.
Ethnographic research:
 This type of in-depth research is conducted in the natural settings of the respondents.
 This method requires the interviewer to adapt himself/herself to the natural environment of the respondents which could be a
city or a remote village.
 Geographical constraints can be a hindering factor in conducting this kind of research. Ethnographic research can last from a
few days to a few years.
64 Primary Market Research
cont…
What is Quantitative Market Research?
 Quantitative Market Research is a technique to ask questions to
the target audience in an organized manner using surveys, polls or
questionnaires.
 Received responses can be analyzed to make well-thought
decisions for improving products and services, that will in turn
help increase respondent satisfaction levels.
 Well-founded results can be achieved in case a large sample size
that represents a population is surveyed.
65 2. Secondary Market Research: 

  Secondary research uses information that is organized by outside source like

government agencies, media, chambers of commerce etc.
 This information is published in newspaper, magazines, books, company website,
free government and nongovernment agencies and so on. Secondary source makes
use of the following:
 Public sources: Public sources like library are an awesome way of gathering free
information. Government libraries usually offer services free of cost and a researcher
can document available information.
 Commercial sources: Commercial source although reliable are expensive. Local
newspapers, magazines, journal, television media are great commercial sources to
collect information.
 Educational Institutions: Although not a very popular source of collecting
information, most universities and educational institutions are a rich source of
information as many research projects are carried out there than any business sector.
66
Why is Market Research Important?

 With economy being competitive with each passing day it is important for
businesses to know and understand preferences of their consumers.
 Conducting market research is one of the best ways of achieving customer
satisfaction, reduce customer churn and elevate business.
 Here are the reasons why market research is important and should
not be ignored:
1. It provides information and opportunities about the value of existing
and new products, thus, helping businesses plan and strategize
accordingly.
2. It helps in determining what the customers need and want. Marketing is
customer-centric and knowing the customers and their needs will help
businesses design product or services that best suit them.
3. By understanding the needs of customers, businesses can also forecast
their production and sales. One of the most difficult aspects forJULY-
a
production manager is to keep inventory stacked. What is the
DECEMBE
R 2019
requirement and how much should be produced to fulfill the needs of
 The Market Research Process
67
1. Defining the 2. Developing 3. Collecting 4. Analysing 5. Presenting
problem and the research the the the findings
objectives plan information information

Steps
Distinguish between Decide on Information is Statistical Overall conclusions
the research type - budget collected manipulation of to be presented
needed e.g. - data sources according to the data rather than
the plan (N.B. collected (e.g. overwhelming
- exploratory - research
approaches it is often done regression) or statistical
- descriptive subjective
- research by external methodologies
- causal instruments analysis of focus
firms)
- sampling plan groups
- contact methods

Comments
If a problem is The plan needs This phase is Significant Can take various
vaguely defined, to be decided the most costly difference in forms:
the results can upfront but and the most type of analysis - oral presentation
have little flexible enough liable to error according to
- written conclusions
bearing on the to incorporate whether market supported by analysis
key issues changes/ research is
iterations quantitative or - data tables
qualitative
68

Consumer
behaviour
69
Definition

 The behavior that consumers display in searching for, purchasing, using, evaluating, and
disposing of products and services that they expect will satisfy their needs.

 Consumer behaviour is the study of individuals, groups, or organizations and all the
activities associated with the purchase, use and disposal of goods and services, including the
consumer's emotional, mental and behavioural responses that precede or follow these
activities.
 Consumer behaviour emerged in the 1940s and 50s as a distinct sub-discipline in the
marketing area.
 Consumer behaviour is an inter-disciplinary social science that blends elements
from psychology, sociology, social marketing and economics, especially behavioural
economics.
 It examines how emotions, attitudes and preferences affect buying behaviour.
 Characteristics of individual consumers such as demographics, personality lifestyles and
behavioural variables such as usage rates, usage occasion, loyalty, brand advocacy,
willingness to provide referrals, in an attempt to understand people's wants and consumption
are all investigated in formal studies of consumer behaviour.
70

 The study of consumer behaviour also investigates the influences, on

the consumer, from groups such as family, friends, sports, reference
groups, and society in general.
 The study of consumer behaviour is concerned with all aspects of
purchasing behaviour – from pre-purchase activities through to post-
purchase consumption, evaluation and disposal activities.
 It is also concerned with all persons involved, either directly or
indirectly, in purchasing decisions and consumption activities
including brand-influencers and opinion leaders.
 Research has shown that consumer behaviour is difficult to predict,
even for experts in the field. However, new research methods such as
ethnography and consumer neuroscience are shedding new light on
how consumers make decisions.
Consumer Decision Making Process
71

Problem Recognition

Information Search

Cultural, Social,
Individual and
Psychological Evaluation
Factors of Alternatives
affect
all steps
Purchase

Postpurchase
"SUCCESS IS NOT FINAL; FAILURE IS NOT FATAL: IT IS THE COURAGE TO CONTINUE THAT COUNTS"
JULY-
WINSTON S. CHURCHILL Behavior DECEMBE
R 2019
72 1. Problem/need-recognition

 Problem/Need-recognition is the first and most important step in

the buying decision.
 Without the recognition of the need, a purchase cannot take place.
 The need can be triggered by internal stimuli (e.g. hunger, thirst)
or external stimuli (e.g. advertising).
  The problem must be the products or services available. It's how
the problem must be recognized.
73 2. Information search

 The information search stage is the next step that the customers may take after
they have recognized the problem or need in order to find out what they feel is
the best solution.
 This is the buyer's effort at searching the internal and external business
environments to identify and observe sources of information related to the focal
buying decision.
 The field of information has come a long way in the last forty years, and has
enabled easier and faster information discovery.
  Consumers can rely on print, visual, and/or voice media for getting information.
 Internal Search – recalling past information stored in memory
 External Search – seeking information in the outside environment
74 3. Evaluation of alternatives

 At this stage, consumers evaluate different products/brands on the

basis of varying product attributes, and whether these can deliver
the benefits that the customers are seeking.
 This stage is heavily influenced by one's attitude, as "attitude puts
one in a frame of mind: liking or disliking an object, moving
towards or away from it
 Another factor that influences the evaluation process is the degree
of involvement. For example, if the customer involvement is
high, then he/she will evaluate a number of brands; whereas if it
is low, only one brand will be evaluated.
75 4. Purchase decision

 This is the fourth stage, where the purchase takes place.

 According to Kotler, Keller, Koshy and Jha (2009), the final
purchase decision can be disrupted by two factors: negative
feedback from other customers and the level of motivation to
comply or accept the feedback.
 For example, after going through the above three stages, a customer
chooses to buy a Nikon D80 DSLR camera.
 However, because his good friend, who is also a photographer, gives
him negative feedback, he will then be bound to change his
preference.
 Secondly, the decision may be disrupted due to unanticipated
situations such as a sudden job loss or the closing of a retail store.
76
5.Post-purchase behavior

 In short, customers compare products with their expectations and are either
satisfied or dissatisfied.
 This can then greatly affect the decision process for a similar purchase from the
same company in the future, mainly at the information search stage and
evaluation of alternatives stage. If customers are satisfied, this results in brand
loyalty, and the information search and evaluation of alternative stages are often
fast-tracked or skipped completely. As a result, brand loyalty is the ultimate aim
of many companies.
 On the basis of either being satisfied or dissatisfied, a customer will spread either
positive or negative feedback about the product. At this stage, companies should
carefully create positive post-purchase communication to engage the customers. 
 Also, cognitive dissonance (consumer confusion in marketing terms) is common
at this stage; customers often go through the feelings of post-purchase
psychological tension or anxiety. Questions include: "Have I made the right
decision?", "Is it a good choice?", etc.
77

Market
Segmentation,
Targeting and
Positioning (STP)
78

Segmentation
79 Concept of segmentation

Definition
 Van Der Walt (1996) defines market segmentation as a process of dividing a
heterogeneous market into fairly homogeneous subsets of customers. Each
segment is assumed to have homogeneous needs and will respond in a similar
fashion to the marketing strategy.
Example
Delta beverages market can be segmented into the following segments:-
 Lager segment
 Carbonated soft drink segment
 Sorghum or Chibuku segment
NB above segments can still be subdivided into small subsets e.g the lager
segment can be subdivided into premier lager market (bohlingers, Pilsener,
Zambezi, etc.) and low cost lagers (Eagle, Lion, Castle, Black label)
80 Concept of segmentation cont…

Benefits of segmenting the market

 Allows marketers to focus more accurately on customer needs
 A greater degree of customer satisfaction can be realised
 Easy to identify opportunities in the market
 Allows for customisation of the market offering
 Facilitates resource allocation
 Choice of promotional tools is facilitated
Demerits of segmenting markets
 Developing products for each segment and separate marketing strategies becomes expensive
 Limited market coverage
 Excessive differentiation may lead to proliferation of products and services resulting in
cannibalisation (This is a situation where one product takes away the market share for
another existing product of the same firm.)
81 Types of segmentation
1.Geographic segmentation
The market is divided according to geographic
variables such as nations, regions, states
countries or locations. This is important
because consumers in different locations
exhibit different needs and wants. For
instance consumers in hot countries
require motor vehicles with cooling
system while those in hot countries require
vehicles with warm facilities. With
segmentation marketers can customize the
marketing mix and marketing strategies.
 Size of the city or town (under 10 000, 10
000-20 000, under 1000000, 1000 000 etc)
 Density (urban, rural, suburban)
 Climate summer rainfall, winter rainfall,
very hot, humid, very hot and dry
2.Demographic segmentation
Market is divided on the basis of variables
such as age, sex, gender, family size,
income, occupation, education, religion,
race, generation, and nationality. These
variables are believed to be the most
popular variables employed by marketers
in segmenting consumer markets.
 Gender (female/males)
 Age (youth, teenagers, middle aged,
elderly, etc)
 Family size (under five children, above 5
and below 10, ten plus)
 Family life cycle (young, married, without
children, young married with children,
older married with children , empty nest)
82 Types of segmentation
3. Psychographic
segmentation
 In psychographics
segmentation, buyers are
divided into different groups
on the basis of their social
class life style and or
personality characteristics.
 People with in the same
demographic groups can
exhibit very different
 Psychological profiles.
4. Behavioral segmentation
 In behavioral segmentations
buyers are divide into groups
on the basis of their
knowledge attitude use and
response to a products many
marketers believe that
behavioral are best starting
point for constructing market
segments. A). Occasions: -
B). Benefits: - C). User
status: - D). Usage rate: - E).
Loyalty status:
83

Targeting
84 Targeting

Definition
 It is the actual selection of the segment you want to serve.
 The target market is the group of people or organisations whose
needs a product is specifically designed to satisfy.
Approaches to target marketing
 There are basically 3 broad approaches namely concentrated,
differentiated and undifferentiated marketing:
85
Approaches to target marketing
Undifferentiated marketing/mass
marketing
 A firm disregards differences on the
market and targets the whole market
with one offer
 Strategy focuses on what is common
rather than on what is different
 Firm develops a product and
strategies that will appeal to the
majority
 A firm may have problems in
competing with firms that focuses
on particulars segments with
specific marketing mix strategy
Differentiated marketing
 Enterprise selects two or more segments
developing separate strategies for each
segment
 Allows the firm to cater for specific
diverse needs of the different segments
 General Motors follows this strategy and
is developing cars for each ‘purse,
personality and purpose’
 Expensive strategy since the firm has to
develop separate strategy for each
segment
 (production costs, admin costs,
promotion costs, inventory costs since a
greater variety of products have to be
maintained.)
86 Concentrated marketing / Niche marketing

 Most suitable when a company has limited resources

 Concentrating one offering to the segment or niche(s)
 Greater knowledge of consumer needs
 A company targets one or few segments which it can fully serve in terms of
customising products, and other marketing mix variables
 This is predominantly a strategy followed by smaller firms
 Firm can achieve greater customer satisfaction
 The challenge is that a firm’s eggs are all in one basket
 The strategy leads to greater expertise in production, distribution and promotion
 Risk of product failure is high
 If competitors enter that market the market can finds itself in the cold
Q. Identify a company in Zimbabwe that pursues niche or concentrated marketing
strategy and discuss the merits and demerits of this strategy
87

Positioning
88 Positioning

 Positioning is the act of designing the company’s offering and

image to occupy a distinctive place in the target market’s mind.
 Refers to the way consumers perceive a product in terms of its
characteristics relative to competition
 It has to do with competitive differentiation
 It involves implanting the brand’s unique image, benefits and
differentiation in the minds of consumers
89 Types of positioning

 Attribute positioning: A company positions itself on an attribute, such as size or number of years in
existence. Disneyland can advertise itself as the largest theme park in the world.
 Benefit positioning: The product is positioned as the leader in a certain benefit. Kott’s Berry Farm
may try to position itself as a theme park that delivers a fantasy experience, such as living in the old
west.
 Use or application positioning: Positioning the product as best for some use or application.
Japanese Deer Park can position itself for the tourist who has only an hour to catch some quick
entertainment.
 User positioning: Positioning the product as best for some user group. Magic Mountain can
advertise itself as best for “thrill seekers”.
 Competitor positioning: The product claims to be better in some way then a named competitor. For
example, Lion Country safari can advertise having a great variety of animals than Japanese deer park.
 Product category positioning: The product is positioned as the leader in a certain product category.
Mainland of the pacific can position itself not as a “recreational theme park” but as an “educational
institution.
 Quality or price positioning: The product is positioned as offering the best value. Busch Gardens
can position itself as offering the “best value” for the money.
90

The Marketing
process/ Plan
91 What is a Marketing Process?

 A marketing process is:

 “A series of steps that allow organizations to identify customer
problems, analyse market opportunities, and create marketing
materials to reach the desired audience.”
 Under the marketing concept, the firm must find a way to
discover unfulfilled customer needs and bring to market products
that satisfy those needs.
 The process of doing so can be modelled in a sequence of steps:
the situation is analysed to identify opportunities, the strategy is
formulated for a value proposition, tactical decisions are made,
the plan is implemented and the results are monitored
92 I. Situation Analysis

 A thorough analysis of the situation in which the firm finds itself serves
as the basis for identifying opportunities to satisfy unfulfilled customer
needs.
 In addition to identifying the customer needs, the firm must understand
its own capabilities and the environment in which it is operating.
 The situation analysis thus can be viewed in terms an analysis of the
external environment and an internal analysis of the firm itself.
 The external environment can be described in terms of macro-
environmental factors that broadly affect many firms, and micro-
environmental factors closely related to the specific situation of the firm.
 The situation analysis should include past, present, and future aspects. It
should include a history outlining how the situation evolved to its present
state, and an analysis of trends in order to forecast where it is going.
93
Situation Analysis cont…

 Good forecasting can reduce the chance of spending a year

bringing a product to market only to find that the need no longer
exists.
 If the situation analysis reveals gaps between what consumers
want and what currently is offered to them, then there may be
opportunities to introduce products to better satisfy those
consumers.
 Hence, the situation analysis should yield a summary of problems
and opportunities. From this summary, the firm can match its own
capabilities with the opportunities in order to satisfy customer
needs better than the competition.
94 Situation Analysis cont…

 There are several frameworks that can be used to add

structure to the situation analysis:
 PEST analysis - for macro-environmental political, economic,
societal, and technological factors. A PEST analysis can be used
as the "climate" portion of the 5 C framework.
 SWOT analysis - strengths, weaknesses, opportunities, and
threats - for the internal and external situation. A SWOT analysis
can be used to condense the situation analysis into a listing of the
most relevant problems and opportunities and to assess how well
the firm is equipped to deal with them
95 II. Marketing Strategy

 Once the best opportunity to satisfy unfulfilled customer needs is

identified, a strategic plan for pursuing the opportunity can be
developed.
 Market research will provide specific market information that will
permit the firm to select the target market segment and optimally
position the offering within that segment.
 The result is a value proposition to the target market.
 The marketing strategy then involves:
 Segmentation
 Targeting (target market selection)
 Positioning the product within the target market
96 III. Marketing Mix Decisions

 Detailed tactical decisions then are made for the controllable

parameters of the marketing mix. The action items include:
 Product development - specifying, designing, and producing the
first units of the product.
 Pricing decisions
 Distribution contracts
 Promotional campaign development
97 IV. Implementation and Control

 At this point in the process, the marketing plan has been developed and the
product has been launched.
 Given that few environments are static, the results of the marketing effort
should be monitored closely.
 As the market changes, the marketing mix can be adjusted to accommodate
the changes.
 Often, small changes in consumer wants can addressed by changing the
advertising message.
 As the changes become more significant, a product redesign or an entirely
new product may be needed.
 The marketing process does not end with implementation - continual
monitoring and adaptation is needed to fulfil customer needs consistently
over the long-term.