Principle of Marketing overview revision Flashcards
Marketing Orientation
Customer focus, integrated effort and goal achievement = creating customer value and satisfaction
Perceived benefits - perceived sacrifices =
perceived value
The 4 Business Orientations
Production Orientated: Develops products based on what it is good at making or doing. Focus on building hight quality product rather than customer needs.
Product orientated: Emphasises the quality, features, and benefits of a product over everything else.
Sales oriented and Marketing Orientated
Sales Orientated
A sales orientated approach to business positions the company’s sales team and marketing promotion ahead of customer needs and market research. Sales orientated companies rely on their sales department to promote products and close sales.
Marketing Orientated
Business approach that prioritises identifying the needs and desires of consumers and creating products that satisfy them.
What are 4 characteristics which affect consumer behaviour?
Cultural, social, personal, psychological
What are 5 stages of decision making process
Problem Recognition: The consumer identifies a need or a problem. For example, realizing their current phone is outdated and needs an upgrade.
Information Search: The consumer looks for information about possible solutions. This can include online research, reviews, and asking friends. For instance, comparing smartphone brands and features online.
Evaluation of Alternatives: Consumers assess the options available based on factors like price, features, and reviews. For example, choosing between an iPhone and a Samsung Galaxy based on camera quality and battery life.
Purchase Decision: The consumer decides which product to buy and completes the purchase. External factors like promotions or stock availability can influence this stage.
Post-Purchase Behavior: After buying, the consumer evaluates their satisfaction with the product. A positive experience can lead to brand loyalty, while dissatisfaction may result in returns or negative reviews.
what are the 2 levels of involvement
high involvement purchases
Low involvement purchases
Qualitative research
small numbers of people, spending lots of time
quantative research
big numbers, not as deep
marketing segmentation
dividing into groups eg gender, income
Stages of NPD
- Idea Generation
What happens? Generating new product ideas through brainstorming, customer feedback, competitor analysis, market trends, and internal sources.
Key focus: Quantity over quality at this stage—gathering as many ideas as possible.
Sources of ideas:
Customers
Employees
Competitors
R&D teams - Idea Screening
What happens? Evaluating and filtering the ideas to eliminate those that are unfeasible or do not align with the company’s goals.
Key focus: Narrowing down the ideas to select the most promising ones.
Criteria for screening:
Market potential
Feasibility (technical, financial, and operational)
Alignment with company strategy - Concept Development and Testing
What happens? Developing detailed product concepts and testing them with a target audience to understand their reactions and preferences.
Key focus: Refining the product idea and validating its appeal.
Steps involved:
Developing a detailed product concept (including features, benefits, and positioning).
Conducting focus groups or surveys to gather customer feedback. - Business Analysis
What happens? Assessing the commercial viability of the product idea by analyzing costs, sales projections, and profit potential.
Key focus: Determining if the product is financially feasible.
Key considerations:
Production costs
Pricing strategy
Break-even analysis
Return on investment (ROI) - Product Development
What happens? Developing a prototype or a minimum viable product (MVP) to test the functionality and design.
Key focus: Turning the concept into a tangible product.
Activities:
Engineering and design.
Testing for performance, safety, and durability.
Refining the prototype based on feedback. - Market Testing
What happens? Launching the product in a limited or controlled market to assess its performance before a full-scale launch.
Key focus: Understanding customer acceptance and identifying potential issues.
Approaches:
Test marketing in specific regions or demographics.
Gathering customer feedback and making adjustments. - Commercialization (Launch)
What happens? Rolling out the product to the broader market with a full-scale marketing and distribution plan.
Key focus: Ensuring a successful launch and generating sales.
Activities:
Finalizing marketing campaigns.
Scaling up production and distribution.
Monitoring initial customer reactions and sales performance.
What is the diffusion on innovations
Key Adopter Categories
Innovators (2.5%)
Who are they?
The first individuals to adopt an innovation.
Risk-takers, highly educated, and financially capable.
Characteristics:
Love experimenting with new ideas or technologies.
Have strong connections to other innovators and external networks.
Early Adopters (13.5%)
Who are they?
Influential individuals within a social system, often opinion leaders.
Characteristics:
More cautious than innovators but quick to recognize the value of an innovation.
Play a critical role in spreading awareness and building momentum for adoption.
Early Majority (34%)
Who are they?
Pragmatic individuals who adopt the innovation after seeing proven benefits.
Characteristics:
Deliberate decision-makers who rely on recommendations and evidence of success.
Adoption begins to reach a tipping point during this phase.
Late Majority (34%)
Who are they?
Skeptical individuals who adopt an innovation after most others have.
Characteristics:
Motivated by peer pressure or economic necessity.
Tend to wait until the innovation is well-established and widely available.
Laggards (16%)
Who are they?
The last group to adopt an innovation, often resistant to change.
Characteristics:
Prefer tradition and are highly skeptical of new ideas.
May adopt only when the innovation becomes unavoidable or obsolete.
Communications model
A communication model in business refers to a framework that outlines the process of exchanging information between individuals or groups to achieve a business goal. Effective communication is critical for decision-making, teamwork, customer relations, and organizational success. The basic communication model consists of essential elements that help explain how information is transmitted and received.
Key Elements of the Business Communication Model
Sender (Communicator)
The person or entity initiating the communication.
Responsible for creating and encoding the message.
Example: A manager sending an email to the team about a project deadline.
Message
The information, idea, or concept being communicated.
Can be verbal (spoken or written) or non-verbal (body language, tone, visuals).
Example: The content of a proposal, an announcement, or feedback.
Encoding
The process of converting thoughts or ideas into a form that can be communicated.
The sender chooses the right words, tone, and medium to convey the message effectively.
Example: Drafting a report, designing a presentation, or crafting a marketing campaign.
Channel (Medium)
The method or medium used to deliver the message.
Can be formal or informal, and include:
Written (emails, reports, memos).
Verbal (meetings, phone calls, presentations).
Digital (social media, video conferencing, chat apps).
Non-verbal (gestures, facial expressions).
Example: Sending an email versus holding a face-to-face meeting.
Receiver (Audience)
The person or group for whom the message is intended.
Responsible for decoding the message and understanding its meaning.
Example: Employees, customers, stakeholders, or colleagues.
Decoding
The process by which the receiver interprets and understands the message.
Influenced by the receiver’s knowledge, background, and context.
Example: A team interpreting a manager’s email instructions.
Feedback
The response from the receiver that indicates whether the message was understood.
Feedback can be verbal (questions, comments) or non-verbal (nods, expressions).
Example: A customer replying to an email or a colleague asking for clarification.
Noise
Any interference or barrier that distorts or disrupts the communication process.
Types of noise:
Physical (background noise, poor internet connection).
Psychological (bias, stress, emotions).
Semantic (language barriers, jargon, unclear wording).
Example: Miscommunication during a video call due to technical issues.
Context
The environment or situation in which communication occurs.
Includes physical settings, cultural norms, organizational structure, and timing.
Example: A formal business meeting versus a casual conversation.
What are rational ads
Rational ads are advertisements that appeal to the audience’s logic, reason, and intellect by emphasizing facts, features, benefits, and value. These ads aim to convince consumers to make purchasing decisions based on practical considerations rather than emotional or aesthetic appeal.
What is a media class
eg newspaper, print media, Digital media
In the context of marketing, advertising, or communications, a media class refers to a category of media platforms or channels used to deliver advertising or promotional messages to a target audience. It groups similar types of media under one classification based on their characteristics or mode of delivery.
Media vehicle
eg radio clyde, instagram
A media vehicle is a specific platform, publication, or channel within a media class that advertisers use to deliver their message to a target audience. It is the specific instance of a media class where the advertisement appears.
Cost based pricing
working out all costs,
Cost-based pricing is a pricing strategy where the price of a product or service is determined by adding a fixed markup to the cost of producing it. The markup is typically calculated based on the cost of production (including materials, labor, overhead, and other expenses) and ensures that the company makes a profit over and above its costs.
Value Based pricing
work out how much consumer value it. Charge what they are willing to pay.
what are intermediaries
Intermediaries in business are entities or individuals that act as a link between the producer of a product or service and the end consumer. They help distribute products, facilitate transactions, and ensure goods and services reach the target market. Intermediaries are often classified based on their roles in the distribution process.
Types of intermediaries
Retailers
Distributors
Role: Specialize in distributing products from manufacturers to retailers or directly to customers. They often play a key role in specific industries (e.g., electronics, automotive
Agents and Brokers
Role: Act as intermediaries who facilitate transactions between buyers and sellers without taking ownership of the goods.
franchisees
Role: Operate businesses under the branding and business model of a larger franchisor
Wholesaler-Retailers
Role: Act as both wholesalers and retailers. They purchase products in bulk from manufacturers and sell them directly to the end consumer.
Why do businesses go international?
Businesses go international for several strategic reasons, typically with the aim of expanding their reach, increasing revenue, and gaining a competitive advantage. Expanding into international markets offers businesses access to new opportunities and resources, but it also comes with risks and challenges. Here are some of the primary reasons businesses choose to go international:
- Market Expansion
Access to New Customers: By entering new international markets, businesses can tap into a larger customer base. This is particularly appealing if domestic markets are saturated or experiencing slow growth.
Diversification of Revenue Streams: Expanding globally helps reduce reliance on a single market, spreading risk and increasing revenue opportunities.
Example: A tech company in the U.S. might expand to Europe or Asia to gain new users and diversify its market risk. - Economies of Scale
Lower Costs per Unit: Expanding production to international markets allows businesses to produce at higher volumes, reducing the cost per unit and improving profitability.
Optimizing Production: Manufacturing goods for multiple regions may allow businesses to achieve economies of scale in production, distribution, and marketing.
Example: A clothing manufacturer producing at scale for both North America and Europe can lower per-unit production costs. - Competitive Advantage
Global Presence: Operating in multiple international markets can give a business a stronger brand presence and improve its competitive edge, making it harder for competitors to dominate.
First-Mover Advantage: Entering a new international market early can allow a business to become an industry leader in that region before competitors have a chance to establish themselves.
Example: A software company entering a high-demand market like India can capitalize on being one of the first players in that market. - Access to New Resources and Talent
Resource Acquisition: Expanding internationally can allow businesses to access natural resources, cheaper labor, or raw materials that may not be available in the domestic market.
Skilled Labor and Innovation: Businesses may also seek to take advantage of talent pools in foreign markets, especially in regions with advanced technological capabilities or specific industry expertise.
Example: Many tech companies expand to countries with a strong pool of engineers or manufacturing expertise to lower costs and increase innovation. - Diversification of Risk
Geographic Risk Diversification: Operating in multiple countries spreads risk across different economies. This helps reduce the impact of domestic economic downturns, political instability, or regulatory changes.
Currency and Market Fluctuations: By doing business in several countries, companies can hedge against currency fluctuations or instability in their home country.
Example: A food company with operations in both North America and Asia can continue thriving even if one region experiences an economic slump. - Profit Maximization
Access to New Markets with Higher Margins: Some international markets may offer higher profit margins due to less competition, higher demand, or a willingness to pay premium prices for quality products.
Leveraging Brand Equity: International consumers may pay a premium for brands that have strong reputations or perceived prestige in their home markets.
Example: Luxury fashion brands like Louis Vuitton or Rolex see higher margins in certain international markets due to perceived exclusivity and demand.
Ways to enter a foreign Market?
There are several strategies businesses can use to enter a foreign market, each with its own advantages and risks. The choice of entry method depends on factors like the company’s resources, goals, risk tolerance, and the characteristics of the target market. Below are the main ways to enter a foreign market in marketing:
- Exporting
Description: Selling products or services directly to customers in another country.
Types of Exporting:
Direct Exporting: The business handles the export process directly, often through its own sales team or agents in the foreign market.
Indirect Exporting: The business uses intermediaries like export agents or trading companies to sell the product.
Advantages:
Low risk and minimal investment.
Allows companies to test the waters in a new market.
Challenges:
Potential for high shipping costs.
Limited control over branding and distribution in the foreign market.
Example: A small local craft company may sell its products online to international customers via platforms like Etsy. - Licensing
Description: A business allows a foreign company to produce its products or use its intellectual property (like trademarks, patents, or technology) in exchange for royalties or fees.
Advantages:
Lower investment and risk compared to direct investment.
Provides access to local knowledge and distribution networks.
Challenges:
Limited control over quality, production, and marketing.
Risk of creating a future competitor as the licensee becomes familiar with the brand.
Example: A U.S. toy company licenses its brand and designs to a foreign manufacturer, who produces and sells the toys in local markets. - Franchising
Description: A business (the franchisor) grants the right to use its brand, business model, and operational methods to a local franchisee in exchange for franchise fees and royalties.
Advantages:
Rapid expansion with relatively low financial risk for the franchisor.
Franchisees are often highly motivated to succeed.
Challenges:
Control over local operations can be more difficult.
It may be hard to maintain consistent quality and brand image across multiple franchises.
Example: Fast-food brands like McDonald’s and Subway have successfully franchised their operations worldwide. - Joint Ventures
Description: A partnership between a business and a local company in the target country to form a new entity. Both parties share resources, risks, and profits.
Advantages:
Local partners provide valuable market knowledge, expertise, and access to established distribution channels.
Shared risk and investment.
Challenges:
Potential for conflicts over management and decision-making.
Cultural and operational differences can lead to inefficiencies.
Example: Starbucks entered the Chinese market through a joint venture with a local company to better understand consumer preferences and distribution networks. - Strategic Alliances
Description: A less formal partnership between two businesses, where both parties collaborate on specific objectives but retain their independence.
Advantages:
Flexible and less risky than a joint venture.
Can be focused on specific areas like marketing, technology sharing, or product distribution.
Challenges:
Alliances can be difficult to manage if objectives and strategies are not aligned.
May not always result in a strong long-term partnership.
Example: A tech company forms a strategic alliance with a local retailer in a foreign market to promote its products. - Direct Investment (Foreign Direct Investment - FDI)
Description: A business invests directly in facilities, infrastructure, or operations in the foreign market, such as opening a subsidiary or building a manufacturing plant.
Advantages:
Full control over operations, branding, and distribution.
Potentially high returns and deeper market penetration.
Challenges:
High investment and risk (political, economic, or cultural).
Complexities in navigating foreign regulations, labor laws, and operational challenges.
Example: Toyota built manufacturing plants in the U.S. to cater to the local market and minimize import tariffs. - E-Commerce and Online Platforms
Description: Using digital channels like e-commerce websites, social media, and online marketplaces (Amazon, eBay, Alibaba) to sell directly to foreign consumers.
Advantages:
Low initial investment compared to physical stores.
Global reach and easy scalability.
Challenges:
Need to adapt to local consumer preferences and payment methods.
Logistical challenges in shipping and handling returns.
Example: A fashion brand may sell its products directly to customers in foreign markets through its own website or international online platforms. - Piggybacking
Description: A smaller company uses the distribution network of a larger company to sell its products in a foreign market.
Advantages:
Low risk and cost-effective entry strategy.
Access to an established distribution network and customer base.
Challenges:
Limited control over branding and customer relationships.
Reliance on the larger company’s success and reputation.
Example: A small electronics brand partners with a larger company to sell its products in a foreign market through the partner’s retail channels. - Export Agents or Trading Companies
Description: A company hires local export agents or trading firms that specialize in distributing products internationally. These intermediaries act on behalf of the business to sell goods abroad.
Advantages:
Lower upfront investment and responsibility for logistics.
Agents or trading companies handle distribution, marketing, and customer relationships.
Challenges:
Less control over the brand image and customer experience.
Potential reliance on third-party agents for success.
Example: A manufacturer of specialty chemicals partners with an export agent to distribute products in foreign markets.
Factors to Consider When Choosing an Entry Method
Market Research: Understanding the target market’s demand, culture, competition, and legal environment.
Level of Control: Determining how much control the business wants over marketing, branding, and operations in the new market.
Risk Tolerance: Some methods, like direct investment, carry higher risk, while others, like licensing, have lower financial exposure.
Investment Resources: Considering the company’s available resources, including capital, expertise, and time.
Long-Term Strategy: Deciding whether the international expansion is a short-term experiment or a long-term commitment.
Marketing Mix: Standardisation VS adaptation
Standardization is more cost-effective and ensures brand consistency across international markets, but it may not meet all local market needs.
Adaptation allows businesses to cater to local tastes and requirements, but it can increase costs and complexity.
Many companies use a hybrid approach, blending standardization and adaptation to optimize efficiency and relevance across global markets.
