Business Management

Session 2

Marketing

Online Revision Bridging Course

1) Understanding the concept and evolution of marketing

2) Characteristics of a marketing-orientated organisation

3) Essential elements of marketing

Contents

2

Introduction to Marketing

4

• “the science and art of exploring, creating and delivering value to satisfy the needs of a target market at a profit” Kotler

Marketing defined

5

Evolution of Marketing Function

Production Concept

ProductConcept

SellingConcept

MarketingConcept

Societal MarketingConcept

6

Marketing-Orientated Organisation

Customer Driven Quality focused before, during and after sales

Centred on satisfying customer needs

Profit-driven

Capable of change Responsive to society'swell-being

Responsive to customer needs

It should have a competitive advantage

• The customer is the

reason the business

exists

• Happy customers keep

coming back

• Repeat business =

profitability

7

Marketing Management: The STP Process

• Select the most profitable and viable customers to serve

• Reach them with an offering that has a competitive advantage

• Communicate a position that is clearly perceived

8

• Mass Marketing

• Mass production, mass promotion, mass distribution

• Segment marketing

• Broad segments isolated and needs matched

• Niche Marketing

• Small section of a large market

• Micro Marketing

• Focus on individuals and locations, one-to-one marketing

Levels of segmentation

9

Segmentation Variables (needs to be SMART)

Demographic Age, gender, income, social class

Geographic Nations, states, regions, counties, cities, towns

Psychographic Consumer lifestyles, activities, interests, and opinions

Behavioural Relationship between the customerand the productGift buying, usage rates, loyalty,

10

• Evaluating each segment and selecting which segments to enter

Market Targeting

Levels of competition Growth opportunities

Substitute products Buyer behaviour

Market size Political orientation

Supplier power Firm’s resources

Market tastes New product introduction

Competitor strategies

11

Market Targeting Strategies

Undifferentiated - full market coverage

Differentiated - separate marketing mix for different segments

Concentrated – more specific or niche strategy. Trying to capture a

large share of one or a few sub-markets

12

Market Positioning

The perception that customers have of a particular product or

company

Marketers create an image or identity in the minds of consumers

Strongly linked to branding

13

The process of distinguishing a product/service from others thus making it more attractive for customers to buy. Can be based on

PRODUCT, SERVICES,CHANNELS,PEOPLE

Differentiation

Less for much less

More for More

Same for less

More for the same

14

Ansoff’s Growth Matrix

Market Penetration

Product Development

Market Development

Product/Market Diversification

Existing

Markets

New

Markets

Existing

ProductsNew

Products

15

• Market Penetration

• Focuses on further exploiting existing products

• Promotions, pricing etc., to attract more customers and wider distribution

Ansoff’s Growth Matrix

16

• Product Development

• New products are introduced into existing markets

• Modify existing products, (appearance, efficiency, effectiveness, “new” or “improved”)

Ansoff’s Growth Matrix

17

• Market Development

• Market extension, new geographic markets, new distribution channels, new packaging, different pricing

Ansoff’s Growth Matrix

18

• Diversification

• New products to new markets

• Related diversification – same industry

• Unrelated diversification – different industry

Ansoff’s Growth Matrix

Marketing in Business

1) Describe the service organisation

2) Managing Products, PLC, NPD

3) The role of pricing

4) The role of promotions

5) The role of distribution

6) The sales function

7) The role of marketing communications

Contents

20

21

• A service is essentially intangible and does not result in the ownership of anything.

• It may or may not be tied to a physical product

INTANGIBLE

INSEPARABLE

VARIABLE

PERISHABLE

The Service Organisation

22

Elements of the Marketing Mix

the set of controllable tactical marketing tools - product,

price, place, promotion – that the firm blends to produce the

response it wants in the target market”.

(Kotler, 2007)

PRODUCT

PRICE

PLACE

PROMOTION

23

Product

A physical good, idea, person, or place that is capable of offering tangible

and intangible attributes that consumers are willing to exchange

money/value for

Variety of factors to consider – size, features, quality, branding, benefits,

packaging and presentation, positioning

24

The Product Life Cycle (PLC)

25

The Product Life Cycle

Phase Characteristic

Introduction Newly introduced (awareness)

Low salesHigh costsPurchased by innovatorsLimited competition

GrowthBecoming more popular with early adopters

Rising salesCosts decliningGrowing competitorsIncreasing market share

26

The Product Life Cycle (PLC)

Phase Characteristics

MaturityApproaching its peak sales and profits (middle majority)

Intense competitionMaximising profitsMaintain market shareCost per customer is low

DeclinePast its best (purchased by laggards)

Sales declineProfits declineCompetition is reducedReplacement is an option

27

Branding

The marketing practice of creating a name, symbol or design that

identifies and differentiates a product from others products

Distinctiveness

Memorability

Relevance

Flexibility

Benefits

• Aids product identification

• Communicates benfits/risks

• Creates interest

• Creates loyalty

• Defends against competition

• Helps positioning

• Allows premium pricing

• Increases power over

retailers

• Transfers to successor

product

28

Developing New Products

Solomon (2013) suggests a success rate for new product ideas of 3% approx.Why?

Over estimating the market size

Poor Positioning

Poor Pricing

Heavy Competition

29

The New Product Development Process

1 Idea Generation Seek new ideas to help achieve objectives

2 Screen Ideas Evaluate and shortlist

3 Concept Testing Potential buyer responses

4 Business Analysis Sales, costs profit potential

5 ProductDevelopment

Technical and financial feasibility and prototype

6 Test Marketing Launch in a chosen area representative of the wider market

7 Commercialisation Full- scale manufacturing and selling

30

The amount of money charged for a product or service.

What can realistically be charged?

What are customers willing to pay?

Gaining revenue or gaining market share?

Considerations- Fixed and variable costs, competition

Price controls, willingness to pay

Price

31

• The mechanism through which goods/services are exchanged between the manufacturer/service provider and the buyer/consumer

• Direct channels – no intermediaries

• Indirect channels – numerous intermediaries

• Distribution Strategies

• Intensive -FMCGs

• Selective -Household appliances

• Exclusive –Luxury goods

Place (distribution)

32

• The process of communicating with customers

• Tries to influence the perceptions, understanding and actions of the target audience

• The marketing communications mix

• Advertising

• Sales Promotion

• Direct Marketing and Personal selling

• Publicity/Public Relations

• Selling and Sales Management

Promotion

33

Promotion

Advertising Paid, non- personal communication, informs

Sales Promotions Short-term incentives, encourage purchase/sale

Publicity and Public Relations Publicity = Not paid, non- personalPR = management of communication to create and maintain a positive image

Selling and Sales Management Planning, organising, controlling, and evaluating sales force activities

Direct Marketing/Personal Selling

Face-to-face

34

• The fastest growing sector in Ireland

• Technology

• Need or product support

• Globalisation

• Tax benefits

• Cost effectiveness

• Emerging markets

• Wider margins

• Competitive factors

• Multi lateral trade

• New innovations

Services Marketing

35

• The marketing mix is extended for services

Services Marketing – The 7 Ps

People Interaction between peopleImportant influencer of service quality

Process Procedures by which the service is acquiredDirect involvement of consumers in service production

Physical Evidence Environment in which the service is offered and consumedInfluences consumer understanding, perceptions, enjoymentExperiential

36

• Intangibility – offer tangible evidence e.g. brochures, tickets, symbols, prices

• Inseparability – “educate” the consumer about their role in service production

• Perishability – Synchronize supply and demand

• Heterogeneity/Variability – standardise procedures, recruitment requirements

Characteristics of Services

37

High versus Low Involvement Purchases

High Involvement Low Involvement

Risk for the consumer is highe.g. expensive purchases such as houses or cars

Consumer will actively search for information about the product/service

Risk for consumer is relatively lowe.g. inexpensive, disposable s such as FMCGs

Consumer is less likely to actively search for information relating to the product/service

38

• Strategic in nature and works in an integrated fashion with marketing, production, finance, and HRM

• Determining sales objectives

• Selection, recruitment, training

• Motivating the sales force

• Design and Planning

• Evaluation and control of sales force

• Forecasting and budgeting

• Organising the sales force size and territories

The Nature and Role of Sales Management

39

Functions of Sales Management

Planning In the context of overall organisational strategy

Organising To match customer requirements, personnel required, workloads

Recruitment Key traits?

Training What needs to be taught?

Motivation Financial rewards, recognition, work/life balance

Control Accurate and timely information, compare actual performance with pre-set standards

Monitoring Effective communication, feedback, allow for quick decisions where changes might be required

40

• “Make it simple. Make it memorable. Make it inviting to look at. Make it fun to read.” (Leo Burnett, Pioneering American Advertising Executive

• Success requires the ability to communicate benefits in innovative, creative and very appealing ways.

• Advertising

• Sales Promotions

• Direct Marketing

• Sales and Sales Management

• Publicity and Public Relations

The Role of Marketing Communications

41

• Any paid form of non-personal communication

• Key purpose is to inform and persuade

• Choice of media depends on

• Cost

• Target market

• Reach

• Flexibility

• Advertising objectives

• Engagement with audience

• Geographic coverage

• Public perception

• Type of product/service

Advertising

42

Advertising

43

Advertising

44

Advertising

45

Advertising

46

Advertising

Newspapers

Benefits Limitations

• Priority for local ads• Excellent location for coupons

and special response features• High credibility• Strong audience interest• Longer copy/message possible• Flexibility

• Major clutter• Short life-span• Poor colour quality• Limited audience

47

Advertising

Internet

Benefits Limitations

• High reach• Very targeted• Easier to evaluate• Potentially lower cost• Link to corporate website• interactive

• Clutter• Excludes people who are not

connected• May be hard to target older

audiences• Intrusive• Security concerns

48

The Full Service Advertising Agency

Account Management/ClientService

Liaison between agency and client

Creative Department Ideas for communicating the message

Media Department Co-ordinate different media ,media buying and scheduling

Planning Department Analyse market information to assist creative department

Traffic and Production Department

Art work and film scripts for the ads

49

• Initiatives by the marketer to further sales of a product or service.

• Sampling, door-drops, direct mail, on-pack sampling, loyalty cards, buy one get one free, premiums, sponsored events, coupons, competitions, cash refunds, bonus packs

Sales Promotions

50

• Extra incentive to purchase

• Appeal to price sensitive consumers

• Can measure their impact

• Short term pushing

Benefits of Sales Promotions

51

• Become too reliant on short term promotion

• Often don’t establish or reinforce the brand

• Consumer might become too reliant on promotions

Limitations of Sales Promotions

52

• Looking after your reputation

• Planned and sustained effort to maintain goodwill and mutual understanding

Publicity/Public Relations

Benefits Limitations

• Credibility of publicity

• Low cost• News value

generates Word of Mouth discussion

• Lack of Control• Can be negative as

well as positive

53

The publics with which a company may have to communicate

Competitors

Media

Financial Institutions

Local community

Pressure groups

Government

Distributors

Suppliers

Customers

Prospective customers

Lapsed customers

General public

Investors

Shareholder

54

• Selling = making the sales

• Sales Management = more complex

• Customer retention

• Database/knowledge management

• Customer relationship management

Selling and Sales Management

55

• The promotion and sale of goods through direct contact with prospective customers

• Message delivered direct to the consumer at the place where the decision will be made

• Suits organisation who find traditional advertising expensive and partially counterproductive

• Televised infomercials

• Door-to-door selling

• Newspaper inserts

• Emails, Telemarketing, mobile marketing

• Catalogue marketing, coupons, social media

Direct Marketing

56

• Carried out online

• Social Media Marketing

• Search Engine Optimisation

• Search Engine Marketing

• Content Marketing

• Email Marketing

• SMS Marketing

• Video marketing/video infographics

Digital Marketing

57

• 77% of people interact with brands on Facebook

• 17% share news and experiences with others about the brand

• 13% post updates about brands they have connected with

• 56% said they would recommend a brand after becoming a fan on Facebook

• 34% of digital marketers have generated leads from Twitter

• 43% of all consumers who are internet connected use social media

How Digital Marketing Helps Business

Strong on-line presence

DisclaimerCare has been taken to ensure that all data and information in Academy lectures is factual and that numerical values are accurate. To the best of our knowledge, all information in the Academy lectures is accurate at the time of publication. Accounting Technicians Ireland and its lecturers assume no responsibility for errors or misinterpretation of the information contained in these lectures or in its use.

Copyright

This material is issued by Accounting Technicians Ireland to itsstudents, affiliates, members and fellows. It may not be used inwhole, or in part, for any course of study and/or examination of anyother body whatsoever without prior permission in writing fromAccounting Technicians Ireland.

This material, or any part thereof, may not be made available in anylibrary, and it may not be reproduced, in whole or in part, stored in aretrieval system or transmitted in any form or by any means –photocopying, electronic, electrostatic, magnetic, pdf, mechanical,recording or otherwise, without prior permission in writing fromAccounting Technicians Ireland, 47-49 Pearse Street, Dublin 2.