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IB Business & Management 4.2 Marketing Planning Pg. 456-495. 1. Think about it . “You generally hear that what a man doesn’t know doesn’t hurt him, but in business what a man doesn’t know does hurt” - E. St. Elmo Lewis (1872-1948) What does this quote mean to you ?. 2. Focus Questions.
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IB Business & Management 4.2 Marketing Planning Pg. 456-495
1. Think about it ... • “You generally hear that what a man doesn’t know doesn’t hurt him, but in business what a man doesn’t know does hurt” - E. St. Elmo Lewis (1872-1948) • What does this quote mean to you?
2. Focus Questions • What is marketing planning? • What is the marketing mix? • Are there any ethics in marketing? Should there be? Why or Why not? • What is a marketing audit? What do they examine? ...
3a. Marketing Planning • What is marketing planning? • It is a process whereby devising marketing objectives, while using appropriate marketing strategies to achieve these goals. • Requires the collection & analysis of information (market research) on existing and potential customers. • So, how does one achieve a marketing objective? Can you name some marketing objectives? • Increase sales 25%, 10 new listings a month, "to have one Starbucks for every 3,000 people in every city and town.”
3a. Marketing Planning • Sales growth? How would you achieve this objective? • This is the role of the marketing planning. The Marketing Department. • Here is a typical marketing planning process: • Marketing Audit - conduct market research. Why? • Marketing objectives - what is your goal or target? The audit will tell you. • Marketing strategies - this is the plan and use of the marketing mix (4P’s) & ethics to achieve the objectives. • Monitoring & review - continual process of checking and assessing. Did the plan work? Why or why not? How can we improve? • Evaluation - examine the extent to which the firm had succeeded in achieving these objectives.
4a. The Marketing Mix • What is the marketing mix? • It is the heart of marketing planning. • Combination of elements needed to successfully market any product. • Used to review and develop marketing strategy. • Also known as the FOUR P’s • Product: the good or service being marketed to meet the NEEDS and WANTS of a customer. • Price: how much the customer is charged. • Place: where the product is sold. • Promotion: process of informing, reminding, and persuading customers to BUY your product.
4b. The Marketing Mix- Product • 1. A product can be a physical good or an intangible service. • Can you name some examples? • What is the one purpose products serve? • to fulfil the NEEDS or WANTS of the customer. • What differentiates one product from another? • the customer benefits of purchasing that product. • Why do you go to McDonald’s to purchase a hamburger? • What are the benefits for you to go to McDonald’s and eat a meal there? • Why do you buy Nike Air? (brand image? packaging? functions, after-sales service?)
4b. The Marketing Mix- Product • Several kinds of products; two major kinds are: • Producer products: raw materials, machinery, and components. Sell to other businesses. • Consumer products: sold to end-user...YOU • Convenience products – food • Consumer durables – furniture • Specialty products - diamonds • Most businesses sell a collection of related products – Product line • EX: Honda sells Civics, Accord, SUVs • Some businesses produce more than one type of product – Product mix • EX: Samsung makes cell phones, tvs, cameras
4c. The Marketing Mix- Price • 2. Pricing is one of the hardest decisions in the marketing mix. Why? • What if the product is over-priced? (customer feels ripped off) • What if the product is under-priced? (customer thinks product is of poor quality) • Is there a balance? Yes, economists define this as equilibrium price. • This is where buyers and sellers agree on a price for the product. • Buyers want a price to reflect value for money and sellers want a price that exceeds their cost of production to earn a profit. • Pricing decisions depend on many factors: • Demand: the higher the demand, the higher the price will be. • Supply: the lower the supply, the higher the price will be. • Business objectives: charities / NPO’s vs. profit seeking firms. • Competition: high competition, similar pricing. • Costs of production: higher the costs, higher the price tends to be. • Corporate image: Lamborghini vs Ford cars
4d. The Marketing Mix- Place • 3. Place is used to describe the ways of distributing products to customers. • Can also refer to channels of distribution, retail stores or other intermediaries used to get a firm’s products to the consumer EX: Coca-Cola uses wholesalers and vending machines • The channels start at the factory, who sells to the wholesalers. • The wholesalers buy in bulk and sell to the retailers. • The retailers sell the product to the customers. • Obviously the fewer intermediaries, the lower the price. Factory Wholesalers Retailers Consumers
4e. The Marketing Mix- Promotion • 4. Promotion refers to the strategies used to attract customers to a firm’s products. • Branding – helps differentiate a product from its rivals • Can be above the line or below the line. What does this mean? • Above the line: promotional activities that use TV, newspaper, and radio. • Below the line: uses packaging, sponsorship, and direct mail. • All business will use a combination of above and below the line when promoting their products. • Think of some examples of where you have seen your favorite product being advertised.
4e. The Marketing Mix- People • Marketing of Services - Extra 3 P’s: • 1. People: • Attitude/aptitude of the employee determines experience and quality of service for customer. • Chinese saying “A man without a smiling face must not open a shop.” • highly motivated and competent staff is likely to deliver good customer service. • Happy customers are more likely to remain loyal. Can also spread marketing through word-of-mouth promotion • CRM-Customer Relations Management – training staff to deliver good service. • Emphasizes customer lifetime value • Cheaper to keep existing customers than to find new ones
4e. The Marketing Mix- Process • 2. Process: • methods and procedures used to give clients the best customer service. • Must keep promises to customers and handle complaints • Can help build customer loyalty by fulfilling needs/wants • Customers want improved convenience • EX: Amazon, IKEA
4e. The Marketing Mix- Physical evidence • 3. Physical evidence: • the image portrayed by a business. (tangible) • Looks do count when marketing a product. • Banks, hotels, schools, restaurants • A welcoming reception area, well-groomed staff portray good quality • Looks count when it comes to marketing a product
4f. The Marketing Mix- Packaging • Packaging: refers to the ways a product is presented to the customer. • A form of product differentiation. • Important if product’s design, functions, or features are not easily differentiated from others • How are you going to make your product look unique? Desirable? • People’s moods are affected by things such as: • color • texture • appearances • Businesses use these factors to entice customers • Wrapping services
4f. The Marketing Mix- Packaging • What are the various functions that packaging can have on the marketing mix? • Has an impact on customer perceptions of a product or brand. • acts as a form of differentiation - free gift wrapping • protects against damage during transportation. • labeling informs your customer of the contents. • makes distribution easier. • can encourage impulse buying – eye catching • used to advertise the brand or the business. • One major drawback to packaging is the COST
4g. The Marketing Mix- 8 P’s? Product Packaging Price Process Marketing Mix Promotion People Place Physical evidence
5a. Ethics of Marketing • Moral principles that guide business behavior. • Marketing ethics refers to the moral aspects of a firm’s marketing strategies • Unethical marketing behavior exists when moral codes of practice are not adhered to and their actions offend the public. • Bait-and-switchmarketing techniques? • are techniques which are considered unethical. • they are used to entice customers by advertising deals that are too good to be true. • Once customers are hooked on the deal (the bait), they discover that it is no longer offered and change to purchase another more pricey alternative (the switch). • Who uses bait-and-switch? • Airlines companies • Mobile phone companies • Real Estate companies
5a. Ethics of Marketing • British newspaper reported that $2 billion was spent by customers on the bait-and-switch • Other dubious marketing tactics: • Health fraud • Get rich quick schemes • Travel fraud • Product misrepresentation • fear tactics - limited stock only • unsubstantiated claims - 4/5 prefer our products • Pester power - using children to pester parents into buying products. • Confusion marketing - swamping customers with excessive price information.
5a. Ethics of Marketing • Ethics are rather subjective – what is offensive to one person may not be offensive to another • Cigarettes advertising is banned in America • Use of unethical marketing is a high-risk strategy • These strategies can backfire and make customers boycott the products • Because of this most business will follow the rules of ethical marketing • These rules are called ethical codes of practice • 3 functions: • Identify acceptable business practices • Encourage internal management and control • Avoid confusion regarding what is and is not acceptable • Most countries monitor marketing activities of businesses through various practices
6. Marketing Audit • Is a review of the strengths and weaknesses of a firm. • Helps to identify the marketing opportunities and threats facing a business. • What internal and external issues will the audit examine? • the business’s marketing objective and strategies • existing products and brands sold by the business. • the effectiveness of the firm’s recent marketing activities. • firm’s market share • competitor analysis • update on the demographic profile • Gives an overview of your current marketing situation. • Can also assist in creating a SWOT and a PEST Analysis.
7a. Marketing Objectives • These are the targets that the marketing department wants to achieve. • These objectives should be in-line with the firm’s overall objectives. • Marketing guru Philip Kotler states, “the objective of marketing is to create customer satisfaction in a profitable way”. • These targets can: • provide a sense of purpose. • allow progress to be monitored. • assist in the planning and development of market strategies.
7b. Marketing Objectives increase market share high market standing market leadership product innovation Marketing Objectives Include product positioning new product development consumer satisfaction market development diversification
7c. Marketing Objectives Constraints finance legal environment costs of production political environment Marketing Objectives Constraints size and status of the firm state of the economy social issues competitors time lags
8a. The Role of Market Research • Market research is used to gather the opinions, beliefs, and feelings of potential customers. • It serves to identify the NEEDS and WANTS of customers. • There are two major categories of market research: • Ad hoc market research: focuses on specific marketing problems or issues. • Continuous research: takes place on a regular ongoing basis. • The Role of Market Research: • gives business up-to-date information • see if current products meet the needs of the customers • to improve a firm’s marketing • assesses potential customer reactions • provides information about the competition • gives an idea of the future; future trends • Market research is usually carried out when a firm launches a new product. • Effective market research helps reduce risks of failure. • Drawbacks of market research: • Garbage in, garbage out (GIGO): unreliable or inaccurate data generates poor quality information. • Biased information can be unreliable. • Costs of good market research is very high.
8b. Primary Research • Primary research is new data gathered from first-hand sources. • Also know as field research, information directly collected from customers to identify their buying patterns and changes in behaviour. • What are the several methods of conducting primary research? • Questionnaires: • Self-completed questionnaires • Personal questionnaires • Postal questionnaires • Telephone questionnaires • Good questionnaires avoid bias, avoid jargon, include closed and open-ended questions. • Observations: watching how people behave and respond to different situations. • Experimentation: introduces marketing activities to a group of people to measure their responses and reactions. • Online surveys: using email or software programs
8d. Secondary Research • Secondary research is also known as desk research, which involves collecting second hand data and information. • This means that the data has been gathered by others. • Tends to be cheaper and faster to collect.
8e. Qualitative Research • Market research can also be classified as qualitative or quantitative. • Qualitative market research involves getting non-numerical answers and opinions from respondents. • Used mostly in primary research. • main purpose is to understand the behaviour, attitudes, and perceptions of customers. • Two main types of qualitative research: focus groups and in-depth interviews. • Focus groups: • involve small discussion groups who share similar customer profile. • main goal is to get everyone to generate insightful information. • a drawback may be that only extroverts tend to take part in these groups. • another limitation is that participants want to get paid, so it can be costly. • another variation is called consumer panel. • small group within a business’s target market and are specialists rather than random people.
8f. Qualitative Research • The second type of qualitative market research is in-depth interviews. • involve an interviewer and a customer having a one-on-one interview to find out more about the customer’s personal situation and opinions. • can be conducted face-to-face or over the phone. • these interviews can also include a range of non-quantifiable information, which prove to be difficult to analyze.
8g. Quantitative Research • This research relies on a much larger sampling base. • It requires the gathering of factual and measurable data rather than people’s opinions. • Will involve the use of surveys and questionnaires to gather such data. • Closed question - allow respondents to choose from a given list of options. • Ranking or sliding scales - rank your favourite soft drink; strongly agree to strongly disagree. • Can also supply data such as market share, sales figures, and changes in consumer income. • Advantages for using this research is it is easier to analyze, but this method is not as flexible as using qualitative methods, as questions are all fixed.
9a. Market Segmentation • Can be defined as the process of splitting a market into distinct groups of buyers in order to better meet their needs. • For example: Can you name the different markets that exist to meet YOUR needs and wants? • A segment refers to a group of customers with similar characteristics. • Such as age, gender, similar wants and needs. • Targeting means that each distinctive market segment can have its own marketing mix. • Consumer profile: • are the characteristics of customers and consumers in different market such as: • age • gender • income • purchasing habits • Main methods of market segmentation are based on: • demographic factors • geographic factors • psychographic factors
9b. Segmentation by Demographics Income Socio- econ. Age groupings Language Gender Segment by demographics Race and Ethnicity Religion Marital status
9c. Segmentation by Geographic & Psychographic Factors • They come in two broad categories: • 1. Location: different areas and regions of a country may have different cultures and attitudes. • 2. Climate: the weather in an area can have a large impact on business activities. • Segmentation by Psychographic Factors: • are considered to be the emotions and lifestyle of customers, such as habits, hobbies, interests, and values. • Status • Values • Culture • Hobbies and interests • Advantages of Segmentation: • better understanding of customers • increase sales • growth opportunities • gives support to product differentiation • How to ensure successful segmentation? Use DAMAS: • Differential: must be unique • Actionable: suitable products to cater to each segment • Measurable: size and purchasing power of each segment must be quantifiable • Accessible: reach customers in a cost effective way • Substantial: each segment must be large enough to generate profits
10a. Targeting • Once markets have been segments, the next stage is targeting. • Targeting refers to: • the market segment that a business wishes to sell to. • there are three main targeting strategies that a business can use: • 1. niche marketing • 2. Mass marketing (undifferentiated marketing) • 3. Mass marketing (differentiated marketing) • Niche Marketing: • Also know as concentrated marketing. • targets a very specific and well-defined market segment. • Can you name some of these well-defined market segments?
10c. Targeting • Undifferentiated Marketing: • also know as mass marketing or market aggregation. • this strategy ignores targeting individual market segments. • a large number of different market segments are targeted to maximize sales volume.
10d. Targeting • Differentiated Marketing: • also know as selective marketing or multi-segment marketing. • this strategy tailors a marketing mix to each market segment. • will use positioning maps (p. 488) to identify how customers think and feel.
11a. Positioning • Marketing positioning: • is a tool that ranks different products, services, or firms in relation to others in the market. • Three stages of positioning: • 1. Identify - the competitive advantages of the product. • 2. Decide - which aspects of these strengths should be marketed. • 3. Implement - desired positioning by using the right marketing mix. • Corporate Image: • plays a vital part in the success of a business. • Can improve corporate image through CSR (Unit 1.3) • Seek a unique selling point (USP) or a unique selling proposition, how your product stands out from those of your competitors. • Three competitive strategies: • 1. Cost leadership - aim to excel as low cost suppliers of products. • 2. Differentiation - produce distinct products by rival firms. • 3. Focus - pay close attention to a specific market segment.
Price High Low 11b. Positioning • Position (perception) Maps: • is a visual tool that shows the customers’ perception of a product or brand in relation to others. • Customers perceptions using price and quality: • Premium brands - high quality products, high priced; BMW... • Economy brands - low quality, reasonably priced; Ford... • Bargain brands - high quality, reasonably priced... • Cowboy brands - poor quality, highly priced... • Use of position maps: • used to identify gaps in a firm’s product portfolio. • used for targeting strategies. • can inform a business of a need for reposition their products.
12a. Development of Marketing Strategies & Tactics • So what are all these tactics and strategies? • Marketing tactics are short term plans and strategies are medium to long-term plans. • Marketing tactics include: • Promotional tactics • High-pressure sales tactics • Dubious marketing tactics • Bargain brands • Short-term price reductions • Marketing tactics are used to achieve the marketing strategies: • Market research • Product planning • Implementation • In developing a marketing strategy, marketing managers may choose from the following: • Perception mapping (Unit 4.2) • Porter’s five forces analysis (Unit 4.2) • Porter’s generic strategies (Unit 4.2) • Ansoff matrix (Unit 1.7) • Boston matrix (Unit 4.3) • SWOT analysis and Force field analysis (Unit 1.8)
12b. Development of Marketing Strategies & Tactics • Remember a market strategy is carried out through an appropriate marketing mix. • Some argue that the marketing mix (the 4 P’s) should be examined through the eyes of the consumer. • Called the 4 C’s of marketing :) • Customer solution (PRODUCT) • Cost to the customer (PRICE) • Communication (PROMOTION) • Convenience (PLACE) • Execution of the marketing strategy should be done in a cost-effective way without overspending your budget.