An Introduction to Marketing

1. An Introduction to Marketing SHAD Memorial 2011

2. What is Marketing? • “A total system of business activities designed to plan, price, promote and distribute need satisfying products or services to target markets in order to achieve organizational objectives”

3. So in other words… • Marketing is designed to meet the needs of customers through its marketing mix • In fact, a market is defined as having a group of individuals with needs to satisfy, money to spend and a willingness to spend it

4. The Marketing What? • The traditional marketing mix is composed of the 4 P’s: • Product • Price • Place (distribution) • Promotion

5. Evolution of Marketing Thinking • Product => Sales => Customer interest => Customer Service => Customer Relationship • Firms now realize that customer satisfaction is very important for repeat business, thus they wish to develop relationships with their customers

6. Implications? • This has led to a “value” driven mentality, whereby firms must be concerned with their value proposition • In sync with the evolution of marketing thinking, delivering exceptional value means exceeding customer expectations • Only through the ongoing provision of value to its customers can a company achieve high levels of customer satisfaction, retention and loyalty

7. The Four R’s • This marks the birth of the four R’s: • Retention • Relationships • Referrals • Recovery

8. Environmental Influences • The operational environment influences the organization’s operations • External Macro-environment (PESTEL) • Internal non-marketing • Environmental Scanning / SWOT Analysis

9. Buying - Decision Process • Need Recognition • Choice of Involvement Level • Identification of alternatives • Evaluation of alternatives • Purchase and related decisions • Post-purchase behaviour

10. The firm must work to reduce / eliminate the cognitive dissonance felt by a consumer after buying a product. • This serves as part of CRM - Customer Relationship Management • You continue to look after the customer even after the transaction

11. Selecting a Target Market • A company has to aim its marketing efforts at someone / some group • This means you have to consider the characteristics of various market segments, and their potential • Rough segmentation may be done based on demographics, geographics, psychographics or the behaviour towards the product or service

12. Profiling • This involves developing a profile of your target segments • The more detail the better as the more you know about your customers, the better you can hope to meet / exceed their needs and expectations

13. Positioning • This is the place your company / product occupies in the mind of your consumers

14. You can’t be all things to all people… • Marketers must determine who their target market is: • Three main approaches: • Market Aggregation • Single - segment strategy • Multiple - segment strategy

15. B2C / B2B • Selling to a personal consumer differs from selling to a business • Characteristics of B2B: • Companies are making less and buying more • Firms are under intense quality and time pressure • To get what they need, firms are concentrating their purchases with fewer suppliers and developing long-term “partnering” relationships

16. Market Research • The process of specifying, assembling and analyzing information used to identify and define marketing opportunities and problems • Approaches: • Qualitative • Quantitative • Observational • Experimental

17. Qualitative Research • Used when research is intended to probe more deeply into opinions and attitudes • Use of: • Individual depth interviews • Focus group interviews • While no quantifiable results are gathered, valuable insight is gained into how consumers feel about certain concepts and why they make the decisions they do

18. Quantitative Research • Involves measurement of concepts using standard numeric measures • Quantitative research has the advantage of using numbers that allow for statistical calculations and comparisons (benchmark) • Generally use surveys to gather data

19. Observational Method • Data are collected by observing some action of the respondent • Personal Observation • Ex. Mystery shopper • Mechanical Observation • Ex. Electric cord on highway

20. Experimental Method • Researcher may view results of changing one variable while holding all else constant • Testing may occur in a loboratory or field (test marketing)

21. Conducting Marketing Research Define research objectives Conduct an investigation Analyze data Report data (did you meet your objectives)

22. Consumer vs Business Product • Consumer Product: A product intended for use by household consumers for non-business purposes • Business Product: A product intended for purchase and use in producing other products or in rendering services in a business

23. Criteria for new products… • There must be adequate market demand • The product must satisfy key financial criteria • Is adequate financing available? • Will the new item reduce seasonal and cyclical fluctuations in the company’s sales? • Can we make sufficient profit from the product? • The product must be compatible with environmental standards • The product must fit into the company’s present marketing structure

24. Importance of Services • North America has become a true service economy • In 2001, 74.4% of the Canadian labour force, and over 70% of the country’s GDP were accounted for by services • Growth in number and variety of both personal and business services

25. Characteristics of Services • Intangibility • Impossible to sample a service before buying it, as a result there is a degree of risk involved with the decision • Inseparability • We cannot separate service production from consumption

26. Characteristics of Services • Heterogeneity • It is impossible for a service company to standardize output • Perishability and Fluctuating Demand • Services cannot be stored, and their market fluctuates considerably

27. Service Failure and Recovery • No matter how diligent a company’s employees and how well designed its service processes, service failure is inevitable • An important issue relating to customer satisfaction is how a company responds when service fails. The process or dealing with service failure to make amends with customers is called service recovery

28. The Importance of Branding • Brand Equity: The value a brand adds to a product • Brand Loyalty: The situation in which a customer buys a certain brand on a regular basis because of its performance and appeal • A brand can add value to a product in the mind of the consumer, hence it can provide differential advantage or serve as a barrier to entry

29. Selecting a good brand 5 Desirable Brand Characteristics: • Suggest something about the product’s characteristics (it’s benefits, use, or action) • Be easy to pronounce, spell and remember • Be distinctive • Be adaptable to new products that may be added to the product line • Be capable of being registered and legally protected under the Trade-marks Act and other statutory or common laws

30. Marketing Communications • Marketing communications serves three essential roles: it informs, persuades, and reminds prospective customers about a company and its products • Reach & Frequency!

31. Marketing Communications Methods • Personal selling • selling using sales reps • Advertising • non-personal, mass communication • Sales promotion • demand stimulating activity • Public relations • efforts to contribute to generally favorable attitudes and opinions toward an organization • Publicity • creating news stories, editorials or announcements about an organization

32. Factors Influencing the Marketing Communications Mix • The Target Market • The objective of the communications effort • The nature of the product or service being promoted • The stage in the life cycle of the product • The amount of money available for marketing communications

33. Marketing Communications Budget • Percentage of sales • All available funds • Follow the competition • Task or objective

34. Developing an Advertising Campaign • Defining Objectives • Establishing a budget • Creating a message • Selecting Media • Evaluating the advertising effort • Want to achieve desired reach and frequency!

35. Channel of Distribution / Supply Chain • Direct Distribution: A channel consisting only of producer and final customer, with no intermediaries providing assistance • Indirect Distribution: A channel consisting of producer, final customer and at least one level of intermediary

36. Choice of Channel • Depends upon: • Market considerations • Product considerations • Channel member considerations • Company considerations

37. Price and Value • Price: The amount of money and/or other resources needed to acquire some combination of a product and its accompanying services • Value: The ratio of perceived benefits of a product/service to perceived costs, including price and other incurred costs

38. The Importance of Price • Price epitomizes and makes tangible the notion of value • Price sensitivity: Extent to which the market or a segment, will respond to price changes

39. Pricing Objectives • Profit oriented • Achieve a target return • Maximize profit • Market oriented • Achieve an image or position • Increase sales volume • Maintain / Increase market share • Status quo oriented • Stabilize prices • To meet competition

40. Break-Even Analysis • TFC / Unit contribution to overhead • TFC / (selling price - AVC)

41. Market Skimming / Penetration Pricing • Skimming: A pricing strategy in which the initial price is set high in the target market’s range of expected prices • Penetration: A pricing strategy in which a low initial price is set to reach the mass market immediately

42. Now that you think you know it all…. HERE IS HOW MARKETING IS CHANGING…

43. Web 2.0 • More options – need to be relevant • Social networking is changing things • E-marketing on the rise… • E-mail • Search advertising • Banner ads • Product placement

44. How do your customers want to communicate?

45. Disconnect in Media Consumption vs Spend Forrester Research 2008

46. Approximate Customer Acquisition Cost Across Various Channels $80 $70 $60 $60 $50 $40 $20 $20 $8.5 $0 Direct mail Email Online display ads Yellow Pages Search Source: Piper Jaffray: “The New eCommerce Decade: The Age of Micro Targeting,” Oct 2006

47. Basic Blog Stats • January 2004 - 1 million blogs • January 2005 – 8 million blogs • January 2006 – 30 million blogs • July 2006 – 50 million blogs • 40,000 new blogs per day • Even if 99.9% are off point – 40 new ones per day could be talking about your business • THE FUTURE (eMarketer 2008) • Blog Readers • 2007: 94.1 million (50%) • 2012: 145.3 million (67%) • Bloggers • 2007: 22.6 million (12%) • 2012: 34.7 million (16%) • Blog Advertising • 2007: $283 million • 2012: $746 million

48. Social Media Revolution • Facebook: 750m users • Twitter: 200m users • LinkedIn: 119m users • Google +: 10m users (in 2 weeks) • Foursquare: 10m users http://www.youtube.com/watch?v=QzZyUaQvpdc

49. The next generation • Tweens (8-12) • 5% access the internet from their mobile phones each month • 41% while commuting or traveling (to school for example) • 26% while at friends house • 17% while at social events • 35% have a mobile phone • 20% use text messaging • 58% of those who download or watch TV on mobile do so at home Neilson Media 2007

50. Resources • http://www.unb.ca/jhsc/resourcectr/TME_courses/tme3113/marketing/