Business Management

Marketing Unit

Marketing

Identifying and satisfying customer needs in a mutually beneficial process

Marketing Objectives

Marketing target for the business, setting out what it wants to achieve and when

Marketing Orientation

Outwards looking approach where a business focuses on conducting market research to understand consumer needs before making the product

(+) Customer satisfaction and loyalty

(-) Resource intensive

Product Orientation

Inwards looking approach where a business focuses on developing innovative products before attempting to sell them

(+) Focus on quality and innovation

(-) Potential for market myopia

Market Share

Percentage of total industry sales that a business controls

Market Leader

Business with the highest market share

(+) First movers advantage

(+) Economies of scale

Marketing Plan

Document that sets strategies to achieve the marketing objectives.

Includes: SMART goals, strategic plans, budgets

(+) improves coordination and organization

(-) resource intensive

Market segmentation

Dividing the market into smaller groups of consumers to meet their needs and wants

(+) enables product differentiation tailored to consumers

Target Market

Particular market segment a business focuses on.

Targeting

1. Mass Marketing

(+) Economies of Scale

(-) High production costs

2. Niche Marketing

(+) Lower resource requirements

(-) Limited sales

Unique Selling Proposition

A product’s feature that differentiates it from other competing products.

(+) lead to customer loyalty as customers identify something special about the product

Ways organizations differentiate themselves

1. Product Differentiation

(+) USP

(-) Easily duplicated

2. Service Differentiation

(+) enhance customer experience through support

(-) bare minimum business component

3. Distribution Differentiation

(+) provides consumer with immediate access to products

(-) relying on intermediate channels is risky

Market Research

Process of gathering, analyzing and producing data relevant to the marketing process

Qualitative research

Collection and interpretation of data about consumer beliefs or attitudes

Quantitative research

Collection and interpretation of numerical data that can be measured

Primary Research

Gathering new data

1. Survey

(+) large amounts of data and cheap

(-) rushed and biased results

2. Interviews

(+) Detailed Responses

(-) Expensive and time consuming

3. Observations

(+) Records actual behaviour

(-) people may behave differently if being watched

Secondary Research

Uses data that already exists

1. Market Analysis Report

(+) Trends (-) Outdated informations

2. Academic Journals

(+) Reliable (-) Too complex

3. Government publications

(+) Free (-) Unrelated information

4. Media Articles

(+) Current market information (-) bias

5. Online Source

(+) Quick information (-) unreliable

Sampling

A group selected to represent the population as a whole

1. Quota - same characteristics

(+) quick and cheap (-) unrepresented of entire population

2. Random - equal chance of selection

(+) reduce bias (-) may have smaller sample size

3. Convenience - easy access

(+) quick and cheap (-) may produce bias results

Marketing Mix

Combination of elements that influence a customer’s decision on buying a product

7Ps: Product, Price, Promotion, Place, People, Process, Physical Evidence

Product Life Cycle

Stages: Development, Introduction, Growth, Maturity, Saturation, Decline

Extension Strategies

• Increase and expand usage per occasion

• Reduce price

• Newer version of products with promotional offers

Brand Awareness

Extent to which people can remember a brand

Brand Loyalty

Extent to which customers return to buy the brand

Brand Value

How much the brand is worth in terms of reputation and income

Pricing Strategies

1. Cost plus pricing

- Adding a mark up to the average cost of a product

(+) costs are covered (-) ignores competitor pricing

2. The loss leader

- Charging a low price for a product

(+) attracts customer (-) unfair business practices

3.Premium Pricing

- Setting a higher price than competitors for its products

(+) maximize profit margins (-) excludes price conscious consumers

4. Dynamic Pricing

- Charging different prices for products depending on the customers demand

(+) beat competition (-) customer dissatisfaction

5. Competitive Pricing

- Setting the price relative to its competitors

(+) low risk strategy (-) unsustainable for profit making

Price Elasticity of Demand

Sensitivity of demand to a change in price

Promotional Mix

Combinations of ways a business communicates its products

Above the Line Promotions

Paid to a third party for mass marketing

1) Information advertising

- Sharing key details about a new product

2) Persuasive advertising

- Convince customers to buy a product instead of a competitor

3) Reassuring advertising

- Remind existing customers they made the right purchasing decision

Below the Line Promotions

Business itself has direct control over promotional activities

1) Direct Advertising

- Saves money since there is no intermediary

2) Personal Selling

- Face to face or telephone calls to sell expensive items

3) Public Relation

- Promotional activities (sponsorships) enhancing the image of the business

4) Sales Promotion

- Short term incentives to boost sales

Through the Line Promotion

Combination of ATL and BTL

360 Degree marketing

- Supplementing TV ads with pamphlets of the advertisement

Social Media Marketing

(+) genuine, wide reach, speed

(-) accessibility problems, lurkers

Place

A distribution system that gets the right product to the right place at the right time

Distribution Channel

The path a product takes from producer to consumer

1) Zero intermediary channel

(+) Low cost and fast

(-) Promotion is done by the producer which is time consuming

2) One intermediary Channel

(+) Promotion and customer service done by retailers

(-) Retailers have a profit markup that is more expensive for consumers

3) Two intermediary Channel

(+) Wholesalers pay for storage cost and breaks the bulk for the retailer

(-) Two profit markups can lead to more expensive prices for consumer

People

• Staff must be trained to deliver good service

• Each customer needs a unique experience

• A motivated workforce will strengthen employee customer relationship

Process

• Relating to the customer experience

• Procedures, policies, and delivery of an organization’s products

• Providing varied payment methods, technical support, and speedy deliveries

Physical Evidence

Enables customers to “see” what is being offered prior to purchasing

Benefits of operating internationally

• economies of scale

• benefitting from different laws and regulations

• benefitting from government incentives

• lower costs of operating

Threats of operating internationally

• governments protecting domestic businesses

• difference in customers buying patterns

• language differences

• social and cultural differences

Hofstede’s cultural dimensions

Situational tool used by managers to understand the aspects of culture within organizations. 

1. Power Distance - extent to which a culture accepts authority

2. Individualism vs Collectivism - extent to which people feel independent

3. Uncertainty Avoidance - extent to which society feels threatened towards ambiguity

4. Short vs Long Term Orientation - extent to which cultures prioritize the present

5. Indulgence vs Restraint - extent to which a society allows gratification

Advantages of Hofstede’s six Cultural Dimensions

• Useful for international cooperation with customers and governments

• Enables businesses to modify their products based on preferences

Limitations of Hofstede’s six Cultural Dimensions

• Cultural shifts have changed

• Technology has progressed and made us think differently

10 Mark Question Format

1 - relevance of question to case study, define 2 concepts, signpost + thesis

2,3 - Concept Point, Example, Analysis (pros and cons), Link

4 - Summarize pros, cons, limitations, weigh pros, cons and come to a conclusion

5- Summarize main points of all paragraphs, restate conclusion answering Q