Marketing management Flashcards
Definition of marketing
Management tasks and decisions directed at successfully meeting opportunities and threats in a dynamic environment
What does the definition of marketing recognize
- Organizations must focus on meeting customer needs
- The external marketing environment is ever-changing
- Both the community and society must be considered in marketing objectives
Evolution of market thought
Organizations have changed the way they think about marketing over time:
- Operation-orientated management
(post Industrial Revolution) - Sales-oriented management (1930 – 1950)
- Marketing-oriented management
- Consumer-oriented management
- Strategic approach to marketing
- Relationship marketing
Operation-orientated management
(post Industrial Revolution)
Organizations focused on the capabilities of themselves rather than on the needs of the market
Sales-oriented management (1930 – 1950)
- Mass production of consumer goods
- Focus was on selling rather than on marketing
Marketing-oriented management
- Need to understand market needs
- Functional departments working together in an integrated way to meet market needs
Consumer-oriented management
- Firms orientated to changing customer needs
- Market research becomes more important
- Involved branding, packaging, product positioning
The strategic approach to marketing
- Monitoring the dynamic external environment
- Increased competition due to customers being better informed
Relationship marketing
- Establishing long-term relationships with people and institutions
- Cooperative marketing alliances
- Customer relationship marketing
Four principles of the marketing concept
- The principle of profitability
- The principle of consumer orientation
- The principle of social responsibility
- The principle of organizational integration
The marketing concept
The philosophy by which the marketing task is performed
It directs all marketing decisions about:
- Products
- Distribution methods
- Marketing communication
- Price determination
The principle of profitability
The long-run maximization of profitability rather than sales
The principle of consumer orientation
Focus is on the satisfaction of customer needs within the constraints of the resources of the business
The principle of social responsibility
Responsibility of the firm to the community within which marketing takes place e.g. job creation projects
The principle of organizational integration
Organizational functions need to work together in an integrated way to achieve marketing objectives
Definition of market research
Information that is needed to manage a business effectively and to make good strategic marketing decisions
Why is market research important
All the activities and decisions of marketing management are focused on the demands of the market
What is the role of market research
Information needs to:
- Increase understanding of relevant market segments
- Be relevant to planning and controlling
- Help in decision-making.
Types of markets
- The consumer market
- The business market
- The resale market
- The government market
The consumer market
- B2C marketing
- Advertising an important marketing tool
- CRM technologies increasingly used
The business market
- B2B marketing
- Personal selling an important marketing tool
- Development of personal relationships with business buyers
The resale market
- Marketing to re-sellers such as retailers
The government market
- State Institutions
- State-Owned-Enterprises (SOEs)
- Purchasing a tender-based process
Steps to follow when segmenting a market
- Identify the needs
- Group needs into homogenous subgroups
- Select target markets
- Position the product / service for the selected target market
Step 1 : Identify the needs
What needs does the buying of a product or service meet?
Step 2 : Group the needs into homogenous subgroups
Identify the needs of specific consumer groups
Step 3 : Select target markets
Choose which of these homogenous groups will be targeted.
Step 4 : Position the product/service for the selected target market
Various instruments in the marketing mix are used to position the product or service for the selected target market.
Market segmentation requirements
- Market segment must be identifiable and measurable
- Market segment must be substantial and sustainable
- Market segment must be reachable
- Market segment must be responsive
- Market segment must be identifiable and measurable
Is it possible to identify the segment and measure its size?
- Market segment must be substantial and sustainable
Is the segment large enough to make targeting it profitable?
Will the segment last long enough to justify developing a separate marketing mix to target it?
- Market segment must be reachable
Is it possible to develop marketing communications that reach the segment?
- Market segment must be responsive
Will the segment respond to a separate marketing mix?
Marketing mix instruments
- product
- pricing
- place
- promotion
Marketing segmentation criteria
- demographic, e.g. age
- geographic, e.g. region
- psychographic, e.g. lifestyle
- behavioral, e.g. benefits sought
Product decisions
A product is a mix of physical and non-physical benefits that help meet consumer needs,
Consumer products can be categorized based on how people buy them:
- Convenience products: Products within easy reach of consumer
- Shopping products: Time for consumer to compare products
- Specialty products: Products for which special purchasing effort is required
Branding
A brand is a mark that is unique to the product items and marketed by a particular business to distinguish them from similar products
Branding advantages:
- Facilitate identification of products by consumers
- Assure consumers about the quality of products
- Facilitate consumer decision-making
Product differentiation
Business distinguishes its product physically or psychologically from identical competing products, so that it can be regarded as different by consumers
Different types of differentiation:
Differentiation by means of packaging and brand
Differentiation by advertising appeals
Differentiation on the basis of price
Differentiation on the basis of distribution outlet
Price decisions
Definition of price:
Value of a product or service that is determined by its perceived benefit to the consumer and the sacrifice required to obtain the product.
Pricing strategies
- Skimming pricing
- Market-penetration pricing
- Leader pricing
Skimming pricing
- High initial price for innovations
- Recovery of development costs
- Price comes down with economies of scale
Market penetration pricing
- Lower initial price to penetrate the market
- Achieves economies of scale in production and distribution sooner
- Less attractive for competitors
Leader pricing
- Prices set lower than current market prices for limited period
- Used by retailers to attract customers
- Bait-and-switch pricing sometimes used
Distributions decisions
- How the will the product/service be delivered to consumers at the right place, at the right time:
Activities that have to be carried out to direct the flow of products and services from the business to the consumer - Choice of distribution channel:
decision-making about the type of distribution method that will be used - Which intermediaries will be used? Or will the products / services be marketed directly to the consumer?
Channel leadership / channel captain
A business that controls the distribution channel
Manufacturer:
Consumer demand for the product is created by the manufacturer through advertising – “pull strategy”
Or through point-of-sale promotions – “push strategy”
Branding is critical to manufacturer power in the channel
Retailer:
Retailers need to decide whether they will implement centralized vs decentralized distribution system.
A centralized distribution system can increase their power of the retailer in the distribution channel
Effective customer relationship management (CRM) programs can significantly increase the power of the retailer in the distribution channel
Advertising
Controlled and paid for marketing communication directed by a marketer and aimed at a specific target audience
Marketing communications decisions
(promotions)
Marketing communication is the process of informing, persuading and reminding the consumer about a product or service
Includes the following elements:
- Advertising
- Personal selling
- Direct marketing
- Publicity
- Sales promotion
Personal selling
Verbal presentation of a product, service or idea to one or more potential buyers in order to conclude a transaction
Sales representatives are used to inform buyers about products and to persuade buyers to buy the products
Remuneration: Usually a commission incentive offered to sales representatives
Direct marketing
Uses advertising media to communicate information of a product or service to customers, who can then respond by purchasing the product or service via email, telephone or the internet
Focus of direct marketing is to obtain an immediate response
Publicity
Effort to attract attention to a business and its products through newsworthy information by sharing interesting updates or stories with the media to gain positive coverage without having to pay for advertising
