Marketing:
n Marketing: 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.
n The underlined parts dictate the different activities marketing performs: deciding what products to offer, setting prices, developing sales promotions and advertising campaigns, and making products readily available to customers.
Marketing is required for Products, services or ideas.
n Products are tangible, which can be physically possessed. E.g. CD player or Soft drinks (Pran mango juice).
n Services are intangible products, which cannot be physically possessed. E.g. Hospitals offer health care services.
n Adhunik (Amra Dhumpan Nibaron Kori) offers an idea - quitting smoking, as a product.
n Ultimately the purpose of marketing activities is to bring about exchanges between buyers & sellers.
n Exchange consists of one party providing something of value to another party, who gives something in return.
n “Something is value” is not always a physical good, the “something in return” is not always money. Adhunik’s notion of quitting smoke to live a longer, healthier life is an intangible product, one that cannot be physically touched. For smokers who “buy” that idea, the price is the effort required to break a habit that they have found pleasurable.
Marketing Activities Add Value to Products:
n This value is known as utility. It is the ability of a product to satisfy a consumer’s need.
n There are four (4) types of utility:
n Form utility – This utility is created when a firm’s production function give way a product. (Being able to buy a product in some form / shape / size). For example, manufacturers produce readymade clothes by using threads, color, and labor.
n Another example, manufacturers produce gasoline from raw petroleum (by using equipments, labor).
n Time utility – Making products available when consumers need and want them. (Being able to buy a product at any time as wanted).
n Readymade clothes stores are open throughout the day; buyers can walk into the stores any time they want and buy clothes.
n Petrol pump /Gas stations are open during peak traffic times, with many open 24 hours a day.
n Place utility – Making products available where consumers need or want to obtain them. (Being able to buy a product at any place as wanted). E.g. readymade clothes stores are located in numerous convenient places for the shoppers.
n Gas stations are located in numerous places convenient to drivers.
n Possession utility – When the ownership of a product is transferred from seller to buyer (Being able to possess). E.g. Buyers fit themselves with dazzling clothes and pay the storeowners.
n Customer pump gasoline into their vehicles and pay for the gasoline, i.e. ownership of a product is transferred from seller to buyer.
Marketing Affects Everyone:
n Marketing is important to organizations and individuals alike. Marketing activities enable us to satisfy our needs and wants. (A need is something required for human survival, such as food, water, shelter, and clothing. A want is something desired but not necessary for basic survival). Without marketing, many needs and wants would go unsatisfied because exchanges would be much harder to accomplish.
How Marketing Evolved:
n In 19th Century, beginning with the Industrial Revolution, marketing was not a concept of satisfying consumer needs and wants. It was production oriented; goods were produce without considering consumer’s preference. Demand was so great that, after production, marketing consisted of taking orders and shipping products. (Production Orientation).
n In the mid 1920s by producing large quantity of goods pushed marketing people to emphasize advertising and sales. Companies started using sophisticated sales techniques to increase demand for existing products, but they still did not look at marketplace to ensure that consumers’ needs and wants were met. (Sales Orientation)
n In the 1950s, after World War II, firms began to be more careful about meeting consumer’s satisfaction. (Consumer orientation)
· These days, firms are also considering society’s welfare.
· The policy of customer satisfaction has become known as the marketing concept.
Developing Marketing Strategy:
n Marketing Strategy: A plan for selecting and analyzing a target market and developing and maintaining a marketing mix that will satisfy this target market.
n Firms developing a marketing strategy follow two basic steps:
l Select a target market; and
l Designing a marketing mix (a combination of product, price, promotion and distribution (place) that will satisfy the needs of the target market.
Selecting a Target Market:
What is a Market?
n A Market is a group of people who need and want a product and have the financial ability, willingness and authority to purchase it.
n Markets are divided into two broad categories:
l Consumer market: People who purchase products for personal use.
l Industrial market: Those who purchase products to use in production of other products or to resell.
n One firm may sell products to both types of markets. Coca Cola sells bottles / cans to you (consumer market) and syrups to fast food shops (industrial market).
n Businesses, rarely able to satisfy the needs of all customers in a market, divide a market into Market Segments. Then they decide which segment or segments to serve. (Target market)
n Market Segments: A group of individuals with one or more similar product needs.
n Target Market: A particular group to which a firm directs its marketing activities.
n Selecting a target market is crucial in developing an effective marketing strategy. To do this successfully, firms use either the i) undifferentiated approach or the ii) market segmentation approach.
n Undifferentiated Approach: The tactics of developing one marketing mix for the total market for a product. It offers one type of product with little or no variation, sets one price, establishes one distribution system, and conducts one promotional program. E.g. Producers commonly use this approach to sell staple food items (like salt, sugar, fruits or vegetables, flour etc.) that most customers regard as equal or similar offerings.
n Works only when the total market has the same need.
n A firm may turn to Product Differentiation (the use of advertising, packaging, or other product characteristics to establish the superiority of a product) to distinguish its products from others. The makers of Puff facial tissues, for example, advertise that Puffs are softer than other tissues.
n Market Segmentation Approach: Customers in a market may have many different needs that cannot be satisfied by a single marketing mix. Then firm divides the total market into segments and creates a marketing mix directed to one or more of the segments rather than the total market.
n Firms segment market in two ways:
n Concentration approach – targeting one particular group of consumers; without considering needs of various segments. E.g. Rolls Royce Motor cars target a specific group of consumers with their top-of-the-line luxury cars. A company using this method can compete with larger firms even with limited resources.
n Multi-segment approach – A firm with considerable resources may use a multi-segment approach, directing its marketing efforts at two or more groups by developing a marketing mix for each. Thus, an organization can reach more customers and increase sales in the total market. But it can also push up a company’s costs, since the firm must use more production processes, materials etc .e.g. General Motors or Toyota multi-segments consumers based on their requirement of sports cars, or economy compact cars or family cars (station wagons/ micro bus etc.)
n To divide the market in groups (i.e. to carry out market segmentation), marketers use segmentation bases to define characteristics of individuals or groups of customers.
n Segmentation Base – The individual or group characteristics that marketing managers use to divide the total market into segments. Marketers can segment consumer markets according to geographic, demographic, psychographic, or product- related bases.
n Geographic segmentation: Segmenting the target market or consumer groups based on - city, district, region as well as climate, terrain and population density. People living in Canada require air-heaters while people of Dhaka need Air-coolers.
n Demographic: Segmenting the target market by - personal characteristics such as age, income, education, occupation, sex, race, social class, marital status or family size. E.g. increasing number of women in work force has prompted growth in child care, elderly parent care, time-saving appliances, and home cleaning products.
n Psychographic: Segmenting the target market by - Person’s attitudes, personality, opinions, lifestyle, interests and motives. Such as, athletic footwear & clothing, and “light low-fat food” products have been developed for the health and fitness conscious consumers.
n Product-related: Segmenting the target market by - according to product use, including volume of use (heavy or light, frequent or infrequent) brand loyalty, expected benefits. Such as, bankers have segmented customers according to the benefits they are looking for. These are loan seekers, value seekers searching for no-charge checking accounts, investors looking for big-name institutions etc.
Designing Marketing MIX:
n Once a firm has selected a target market, it must decide how to satisfy the needs of the target through marketing mix.
n Marketing Mix: The combination of four elements- product, price, promotion and distribution (place) used to satisfy the needs of the target market. This is also called 4Ps.
n Product – products can be a good, a service, or on idea. Manufacturing a product (creating form utility) is a production function. But marketing managers have the responsibility to inform the production people about products consumers would find appealing and about existing products that need to be changed or that are no longer needed. Marketers also develop brand names, packaging, and warranties.
n Price – After developing a product, a firm must set a price. Pricing requires crucial decision since it is very visible to consumer and is closely tied to a company’s profit. Customers may reject a product due to its high price, or a firm may loose money by pricing a product too low.
n Distribution (Place) – Even a fantastic product, priced right, can fail if it is not available where and when the customers want it. Distribution involves decisions about transportation, storage and store selection.
n Promotion – Publicity, advertisement, informs or reminds the target market about a product and tries to persuade consumers to buy or adopt it.
The Marketing Environment:
n All the forces outside an organization that directly or indirectly influence its marketing activities. Such forces include - Economic Condition, Regulations, Politics, Society, Competition, Technology etc.
Understanding Buyer Behavior:
n Consumer Buying Behavior: The decisions and actions of individuals who purchase products for personal use. This can differ from buyer to buyer and product to product.
n Product cost and frequency of purchase influence consumer decisions:
l Routine decision making: low-cost & frequently used products require little though. Cigarette, blade, chewing gum, etc.
l Limited decision making: for products that are occasionally bought and require some consideration. Such as, jeans, sun-glass, fax, computers etc.
l Extensive decision making: expensive and infrequently purchased products require complex thought. Such as, car, home etc.
The Consumer buying process:
Cognitive Dissonance: The conflict or doubts buyers usually experience after making an expensive purchase. Often firms try to reduce buyer’s doubts through advertising or by providing follow-up information or service.
Factors those affect consumer buying decision:
n Several factors, some within individuals and some external, affect the buying decisions of consumers.
l Social factors: family members, peers
l Psychological factors: attitudes, personality
l Demographic factors: personal characteristics , age, education
l Situational factors: Specific conditions that exist at the time of purchase decision.
Industrial Buying Behavior:
n Industrial Buying Behavior: The decisions and actions of buyers in organizations. Buying decisions by organizations typically differ from consumer purchases in several ways –
l Organizational transactions are usually much larger and less frequent.
l Exact specifications must be met to secure an industrial buyer.
l Organizational buyers tend to be more concerned about quality and services offered by sellers.
l They usually seek more information and base decisions less on emotional factors than individual consumers do.
l In small companies, owners make the purchase decision; while in larger companies, the responsibility may rest with several people who make up the purchase department.
Marketing Research:
n The systematic gathering, recording, and analyzing of information for guiding marketing decisions. The study can be:
n Proactive – to prevent breakdowns (i.e. preventive or progressive).
n Reactive – to respond to the problem and try to fix it (i.e. to react).
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