Business Chapter 13 Flashcards
Marketing management
Business organization
Can be described as an institution of the free-market system that attempts to satisfy the needs and wants of the community while making a profit
Marketing function
Is that aspect of the business involved in the marketing process, which is the transfer of products(or services) to the market
The marketing process consists of:
Environmental scanning
The development of a market offering
Environmental scanning
Environmental scanning (by means of market research) in order to collect information on which marketing management can base sound decisions
The development of a market offering
Consists of tangible products
and intangible services, offered at a specific price and convenient place, and about
which the consumer has received adequate information
The evolution of marketing thought
Operation-oriented management
Sales-oriented management
Marketing-oriented management
Consumer-oriented management
The strategic approach to marketing
Relationship marketing
Operation-oriented management
Initially, instead of focusing on the needs of the market, management focused on the
capabilities of the organisation. Operation-oriented organizations tried to increase the
number and variety of products they produced
A major disadvantage of operation-oriented
management was that management concentrated mainly on encouraging production in order to solve operation problems.
Sales-oriented management
Misleading advertisements and unethical sales methods were employed. The
objective was to sell the products at any cost. This gave rise to the idea that products needed to be marketed instead of merely sold.
Marketing-oriented management
Market-oriented management means that not only the sales message and price of the
product need to be considered, but also the quality of the product, the packaging, the
choice of distribution channels and the methods of informing potential consumers
about the market offering
Consumer-oriented management
As increasingly competitive consumer products became available and the financial position of consumers improved, consumer demands also started changing.
It became clear that consumers’ needs, demands and preferences needed to be considered when product-related decisions were made
The strategic approach to marketing
Continual changes in the
marketing environment, and the need to ensure the survival and growth of the
organization, meant that management had to concentrate on scanning the environment and on long-term issues
Relationship marketing
In order to survive in the changing environment, marketing management needed to establish long-term relationships with people and institutions in the environment in which the marketing task was to be performed. A long-term relationship with customers leads to loyalty and the repeated purchase of need-satisfying products. A long-term relationship with a supplier ensures the availability of the raw materials and
the inventory
The marketing concept
The marketing concept is a well-known concept and can be described as the philosophy by which the marketing task is performed. Four principles are contained in the marketing concept
The marketing concept directs all
marketing decisions about products, distribution methods, marketing communication and price determination.
Four principles of the marketing concept:
1.Profitability
2.Consumer orientation
3.Social responsibility
4.Organisational integration.
Profitability
The first principle of the marketing concept in a profit-seeking business is the long-term
maximisation of profitability. This is the primary objective of the business in a free market system. It is therefore also the main objective of marketing management. The principle of profitability is fundamental to the marketing concept. It emphasises
profitability instead of sales, which do not necessarily maximise profits.
Consumer orientation
The satisfaction of consumer needs, demands and preferences constitutes a consumer-oriented approach to marketing where emphasis is placed on what the consumer needs.
Consumer orientation also means that the consumer has to be supplied with adequate and correct information about the business’s market offering
Social responsibility
Besides its responsibility towards the consumers of its products, marketing
management also has a responsibility towards the community in which the marketing task is performed
The objective of these projects is to create a stable economic, social and political environment in which future profits can be optimised
If a business were to disregard the norms of society, consumer resistance could
result, thereby harming the primary objective of the business
Organisational integration
This principle expresses the need for close co-operation between all the functions of the business. All the functional decision-making activities should be co-ordinated in a way that will eventually lead to the successful marketing of the products of the business. Organisational integration entails close co-operation between the marketing,
operations, purchasing and all other functions of the business in pursuit of the
business’s mission and objectives
Merits of the marketing concept
The true marketer is proud of his or her product and of the way it satisfies the needs of consumers. The marketer jealously guards the product’s name, paying meticulous attention to complaints and criticism, even though his or her main purpose is continually to improve the profit position. The business is entitled to this profit to offset the risks involved in
developing products for the market
The four principles of the marketing concept, the philosophy according to which all marketing tasks are performed.
1)Organizational management, top management, marketing management, operations management, Financial management, human resource management, purchasing management, public relations management
2)Social responsibility
3)Consumer orientation
4)The primary objective: profit maximization in the long term
Defining marketing
Marketing consists of management tasks and decisions directed at successfully meeting opportunities and threats in a dynamic environment, by effectively developing and transferring a need-satisfying market offering to consumers in such a way that the objectives of the business, the consumer and society will be achieved
Decisions
Product distribution, marketing communication methods and price
Opportunities
Favorable circumstances in the marketing environment that must be utilized by marketing management
Threats
Unfavourable conditions that marketing management must endeavour to change into opportunities
Dynamic environment
Continually changing environmental variables that necessitate appropriate reaction from marketing management
Development
Creating a need-satisfying product or service
Transferring
Effectively bridging the gap between the producer and the consumer
Need-satisfying
Properties of a product based on what the consumer wants
Market offering
Product, price, distribution, marketing communication and service
Attainment of objectives:
The organisation
The consumer
Society
Maximisation of profitability in the long term
Need satisfaction within the limits of the resources and capabilities of the enterprise
Ensuring the well-being of society in the longer term
In marketing management, four variables (the four Ps) are used for decision-making:
1.The product itself
2.The place where it is offered for sale (distribution of the product)
3.The marketing communication methods used to inform consumers about the
product
4.The price, which reflects the product’s value to consumers.
Marketing management
Takes a decision regarding the market offering consisting of four variables:
A product with need-satisfying properties
Distribution, which delivers the product to the consumer at the correct place and time
Marketing communication messages, which inform consumers about the market offering and persuade them to purchase
A price that the consumer is willing to pay
Main objective: Maximization of profitability in the long term
Target market
Consists of consumers with certain needs for products and services ,and who are willing to sacrifice something(money) to satisfy needs
Objective: Total need satisfaction
Market research
Market research is used to gain relevant information about the market, competitors and other environmental changes.
Market research(the need for information)
In order to manage a business effectively, a manager needs information. All businesses
operate in an environment that is constantly changing
continuous scanning of the micro-environment, market environment and macro-environment is necessary to identify the strong and weak points of the organization. SWOT analysis
Information gathered by means of an environmental scan should include
information on the following:
*External environmental variables and internal resources in the form of records and reports about current prices;
*Sales figures and market trends;
*Technological changes;
*Changes in market share;
*Consumer preferences;
*New legislation;
*Production schedules; and
*Internal financial problems
To ensure that managers make good decisions, the information needs to:
*increase understanding of the relevant market segment and its consumers;
*be pertinent to planning and controlling; and
*help in decision-making once alternative sources of information have been
considered.
Problem-identification
Market-potential research
Market-share research
Image research
Market-characteristics research
Sales analysis research
Forecasting research
Business-trends research
Problem-solving research
Segmentation research
Product research
Pricing research
Promotion research
Distribution research
12 steps to follow when conducting a survey:
1: Define the research problem
2: Identify the research objectives/hypothesis
3: Investigate secondary resources
4: Compilation of a questionnaire
5: Pre-testing of the questionnaire
6: Selecting a sample to distribute the questionnaire to
7: Training of the fieldworkers
8: Statistical analysis of data collected from questionnaires
9: Interpretation of the information
10: Research report and recommendations
11: Management evaluation
12: Implementation of management’s decisions
Market forecasting
To be able to exploit an opportunity, its potential in terms of profit has to be
established. If the potential profit is negligible, then the opportunity may be deemed to
be not worth pursuing. Measuring the size of the opportunity entails forecasting future sales (sales forecasting) and forecasting the contribution to profit.
Sales forecasting
The following types of forecasting are often used:
*Forecasting done by a panel of experts from within the organization and from outside;
*Forecasting based on market-research results
*Forecasting based on consumers’ reactions in test marketing situations;
*Forecasting based on historical data
*Forecasting based on mathematical and statistical models
Forecasting of the profit contribution
The forecasting of the profit contribution of a marketing opportunity is normally done
for long-term periods.
It is usually done for the full payback period During the payback period, the sum of
money invested in utilizing an opportunity has to be recovered through the earnings
generated by sales. The payback amounts include the rate of return decided on at the
outset by top management.
Problem with sales forecasting
It is, however, extremely difficult to predict future sales as a number of factors can, and will, influence sales. It is nevertheless the task of marketing management to forecast not only future sales, but also to predict how uncontrollable environmental variables will influence the sales figures
Consumer behavior
to the behavior patterns of decision-making units (individuals or families) directly involved in the purchase and use of products, including
the decision making processes preceding and determining these behavior patterns
it is clear that consumer behavior consists of overt acts (that is, acts that can be observed by people).
consumer behavior also includes covert processes, which cannot be seen
consumer behavior can then be explained, influenced and predicted
Determinants of consumer behaviour
1.Individual factors peculiar to a particular person
2.Group factors.
