Transcript The Marketing Mix - Product - Mymancosa .com mymancosa.com

Business Administration
2B
Table of Content
1. Welcome and Introduction
2. PART A:
 Managing the exchange process
 The marketing Environment
 Consumer Behaviour
 Market segmentation, targeting, positioning
 Marketing information and research
Table of Content
3. Part B: The marketing mix
 Product
 Pricing
 Promotion
 Place
 New product development
4. Assignment and Exams
5. Conclusion
PART A
Managing The Exchange Process
1. WHAT IS MARKETING?
2. EVOLUTION OF MARKETING
3. THE MARKETING CONCEPT
4. WHAT MARKETERS DO
1. Managing the exchange process - What is Marketing
“Marketing is a social and managerial process by which individuals and groups
obtain what they need and want through creating and exchanging products and
value with others.”
This definition speaks about “exchanging products and value with others”, which
leads us to understanding the exchange process.
The following conditions must exist for a marketing exchange to take place:
 Two or more people or organisations must be involved, and each must have
needs or wants to be satisfied. If you are totally self-sufficient, there is no need
for an exchange.
 The parties involved must do so voluntarily.
 Each party must have something of value to offer in the exchange, and each
must believe that it will benefit from the exchange.
 The parties must communicate with each other. The communication can take
many forms and may even be through a third party, but without awareness and
information there can be no exchange.
4. What Marketers Do
Marketing Management is responsible for handling specific aspects
of the marketing function.
In practice, these functions may appear in departments other than
the marketing department as such, but they are still marketing
functions since they directly address customer needs.
These aspects are collectively known as the marketing mix.
1960 – McCarthy – 4Ps (Product, Price, Promotion, Place)
1982 – Booms and Bitner (People, Process, Physical evidence)
The Marketing Environment
1. WHAT IS ENVIRONMENTAL MONITORING?
2. MACRO ENVIRONMENT
3. MICRO-ENVIRONMENT
1. What is environmental monitoring
According to Etzel et.al (2006:30) environmental monitoring
– also called environmental scanning – is the process of:
Gathering information regarding a company’s external
environment
Analysing it, and
Forecasting the impact of whatever trends the analysis
suggests
Why scan the environment?
•Environmental variables are constantly changing the
environment in which businesses operate
•The South African environment has changed significantly over
the past 20 years
•New opportunities and threats are emerging daily
•Management must adapt to these changes to ensure survival in a
competitive environment
•To do this, it is crucial to understand the composition of this
environment
Macro and Micro environments
Macro environment
Macro environmental forces affect all firms in the industry influencing
the marketing opportunities and activities. The External environment
can be audited using a PEST analysis.
Political Factors
Economic Factors
Sociocultural Factors
Technological Factors
Micro environment
The micro environment affects the organisation directly. It includes
competitors, suppliers, consumers and other local stakeholders.
Consumer Behaviour
1. WHAT IS CONSUMER BEHAVIOUR?
2. UNDERSTANDING CONSUMER BEHAVIOUR
3. THE STIMULUS RESPONSE MODEL
4. CONSUMER DECISION MAKING
5. THE FIVE STAGE MODEL OF THE CONSUMER BUYING PROCESS
What is Consumer Behaviour and understanding consumer behaviour
Consumer behaviour studies all the activities that influence people
to behave in particular ways when obtaining, consuming and disposing
of products and services.
Understanding the way people think, what motivates them, their
decision-making processes, and post-purchase behaviour are key
factors in ensuring successful marketing.
The marketers task is to understand what happens in the buyers
consciousness between the arrival of an outside stimuli and the buyers
purchase decisions. They must answer 2 important questions:
• How do the buyers characteristics – cultural, social, personal and
Psychological – affect buying behaviour?
• How does the buyer make purchasing decisions?
Market segmentation, targeting, positioning
1. WHAT IS MARKET SEGMENTATION?
2. WHAT IS TARGETING?
3. WHAT IS POSITIONING?
What is market segmentation?
The purpose of segmenting the market is to ensure that a company’s
limited resources are directed at those groups of people or
organisations likely to yield the best returns. Segmentation operates
at four levels:
• Mass marketing: This is based on the premise that one product
fits all. Example: Coca Cola’s one drink “Coke” for everybody. The
purpose behind this is to mass- produce large volumes at low cost.
• Segmented markets: A company seeks to identify substantial
groups of individuals with similar needs, and aims to satisfy those
needs.
• Niche Marketing: The focus is on small sub-groups within larger
segments. Niche products command a premium price. Example:
BMW’s 7 series targets a narrowly defined exclusive audience.
• Micro-marketing: This is customizing and tailoring products to suit
the individual needs of its customers. The advent of technology has
made micro-marketing on a mass scale possible.
Market Targeting, and positioning
According to Blythe (2006:200) Targeting is a process of choosing a
segment or segments, deciding on a tactical approach to marketing the
products to that segment, and developing the tactics into practical
actions.
Positioning refers to distinguishing the firm’s offering relative to the
competition, so that it occupies a distinctive position in the mind of the
consumer. There are generally eight generic factors, which are used in
positioning products:
Top of the range - Service - Value for money - Reliability - Attractiveness
- Country of origin - Brand name - Selectivity
Marketing information and research
1. WHAT IS MARKETING RESEARCH?
2. TYPES OF MARKETING RESEARCH
3. THE MARKETING RESEARCH PROCESS
4. TYPES OF DATA
5. ETHICS IN MARKETING
What is Marketing research?
Etzel et al (2005:175) define marketing research as the “development,
interpretation, and communication of decision-oriented information
to be used in all phases of the marketing process.
According to Kotler and Armstrong (2006:105) marketing research is
the systematic design, collection, analysis, and reporting of data
relevant to a specific marketing situation facing an organisation.
All business decisions involve an element of risk. The purpose of
marketing research is to minimize the risk.
Types of marketing research
Marketing research can be divided into six broad
groupings:
•
•
•
•
•
•
Customer research
Advertising research
Product research
Distribution research
Sales research
Marketing environment
The marketing research process
Define the Problem, the Decision Alternatives, and the
Research Objectives
Develop the Research Plan
Collect the Information
Analyse the Information
Present the Findings
Make the Decision
Types of Data
Primary Data:
Data collected from an original source for the specific purpose on hand (Focus groups,
surveys)
Secondary Data:
This refers to data that already exists somewhere, having been collected for another
purpose. Examples of secondary data include the company’s internal database, online
databases, external information sources such as commercial data services and
government sources. Primary and secondary data could be further classified as either
being qualitative or quantitative.
Quantitative Data: Data which can be expressed numerically. Effective for sales
forecasts
Qualitative Data: Data which cannot be expressed in numbers. This type of research is
effective for finding out why people behave in ways they do.
Ethics in Marketing
The following are some of the ethical issues arising in
marketing research:
Intrusion of privacy
Misuse of research findings
Competitive information gathering
Sugging (selling under the guise of marketing research)
PART B
The Marketing Mix
1.
2.
3.
4.
Product
Pricing
Promotion
Place
5. People
6. Processes
7. Physical evidence
The Marketing Mix - Product
A product is anything that can be offered to a market for
attention, acquisition, use or consumption that might satisfy a
want or need.
Products include physical objects, services, experiences, events,
persons, places, properties, organisations, information and
ideas.
The Marketing Mix - Product
Product managers need to think about their merchandise range on three levels:
Core products: The core products stand at the centre of the total product. In
Ritz- Carlton Hotels know that they offer their guests more than simply rooms
for rent – they provide “memorable travel experiences”.
Actual Product: Actual products may have as many as five characteristics:
A quality level – Features – Design - A brand name - Packaging
Augmented Products: The augmented product, offers additional customer
services and benefits. These may include the warranty on parts and
workmanship, instructions on how to use technical products, quick repair
services when required, toll free numbers for assistance etc.
The Marketing Mix – Product - BRANDS
A brand is a name, term, sign, symbol, or design, or a combination
of these intended to identify the goods or service of one seller or
group of sellers and to differentiate them from those of
competitors.
Brand Strategies - major brand strategy decisions involve brand
positioning, brand name selection, brand sponsorship, and brand
development.
The Marketing Mix – The Product life cycle
The Marketing Mix - Price
WHAT IS PRICE?
It is the amount of money a person is willing to pay for a product
or service taking into account its perceived value.
Both internal and external factors affect pricing decisions:
• Internal factors eg. Marketing objectives, marketing mix strategy,
costs and organizational considerations
• External factors include the nature of the market and demand,
competition, and other environmental elements
The Marketing Mix – Pricing Approaches
Pricing approaches can be divided into cost-based pricing, value based pricing and competition
based pricing.
Cost based pricing:
Cost-Plus pricing: This implies adding a standard mark-up to the cost of the product. For
example it cost a manufacturer R50 to manufacture a toaster. He decides to add 20% as a profit
mark-up on cost. He will then charge the customer R60 (R50 + R10) for the toaster.
Target profit pricing: Based on break-even pricing, which is, setting price to cover costs (break
even point) of making and marketing a product; or setting price to make a target profit.
Value-based Pricing: This is based on setting prices on buyers’ perceptions of value rather than
on seller’s cost.
Value pricing: Offering just the right combination of quality and good service at a fair price
Value added marketing: Here value is built at each stage of the marketing offer. Most
companies attach value-added services to differentiate their offers and thus support higher
margins.
Competition based pricing: Involves setting prices based on the prices that competitors charge
for similar products.
The Marketing Mix – Promotion
Promotion serves to inform, persuade, and remind the market of a
product and/or the organisation selling it in the hope of influencing
the recipients’ feelings, beliefs or behaviour.
Marketers must choose the specific blend of advertising, sales
promotion, public relations, personal selling, and direct-marketing
tools to pursue the company’s marketing objectives.
The Marketing Mix – Place
Place is the point at which an organisation offers its product or service
to its customers.
In order for a company to sell its product to its target
market, various channels, sometimes referred to as distribution
channels, middlemen, or even intermediaries, have to be used.
The Marketing Mix – Place
New Product development
1. WHAT IS A NEW PRODUCT?
2. NEW PRODUCT DEVELOPMENT PROCESS
3. SOURCES OF IDEAS
4. CRITERIA FOR ADOPTING NEW PRODUCTS
5. ORGANISING FOR INNOVATION IN NEW PRODUCT DEVELOPMENT
6. ADOPTION AND DIFFUSION OF INNOVATION
7. NEW PRODUCT PRICING STRATEGIES
New Product development Process
Organising for innovation in new product development
There are six broad types of innovation strategy:
Offensive: Firms take pride in being the first to enter the market and capture a
substantial portion of the market before competitors.
Defensive: This involves producing slightly improved copies of leaders’ products.
Only innovates in response to competition.
Imitative: Simply produces copies of other firms’ products with few (if any)
adaptations.
Dependent: Performed in response to customer-specified innovations.
Traditional: Not innovative at all – merely resurrects old-fashioned designs or
produces products which have been around for many years.
Opportunist: This company produces and markets its inventions. These inventions
generally fail, mainly because they tend to be technically driven rather than marketdriven.
Adoption and diffusion of innovation
Everett M. Rogers (1962) as cited in Blythe (2006:432) classified
consumers as follows:
Innovators : Those who like to be first to own the latest products.
Early adopters: Those who are open to new ideas, but like to wait a
while after the initial launch.
Early majority: Those who buy once the product is thoroughly tried
and tested.
Late majority: Those who are suspicious of new things, and wait until
others already have one.
Laggards : Those who only adopt new products when it becomes
absolutely necessary to do so.
New Product Pricing Strategies
Skimming – Initially set a high price, then “skim” off layer by layer
Penetration pricing – low initial price to gain a large market share
Product line pricing – when sales of one product is directly linked to
another – set one price low and other higher in order to even out
profits
Psychological pricing – High prices to indicate a quality product – set
prices at 5.99 or 5.95 as opposed to 6
Promotional pricing – Pricing below cost to capture high short term
sales
Assignment and Exam
1. Assignments - Tutorial Letter
2. Case studies / Past Exam Papers
3. Closure
THANK YOU