Marketing

WEEK 1-2 SUMMARY - INTRO TO MARKETING

1. What is Marketing?

• Diverse Definitions of Marketing: Marketing is broad and applies to various business scenarios.

• General Definition: Marketing is understanding customer needs and wants and finding the best ways to satisfy them profitably.

According to the Chartered Institute of Marketing:

• Definition: "Marketing is the management process of identifying, anticipating and satisfying customer needs and wants efficiently and profitably."

• Characteristics of Marketing:   - A process   - A set of activities (such as research, advertising, selling, distribution, customer service)   - Involves creating value and relationships   - Encompasses more than just selling—mainly focuses on creating demand and satisfaction.

2. Analyzing Key Marketing Terms

Understanding marketing begins with grasping its core concepts.

2.1 Market

• Definition: The total group of individuals and organizations who:   - Currently buy a product, OR   - Have the potential to buy that product in the future.

2.2 Target Market

• Definition: A target market is the specific group of customers a company chooses to serve.

• Not all individuals are potential customers; businesses identify the most profitable or suitable group.

2.3 Market Offering

• Definition: A market offering is the complete package provided to customers.   - Includes: Product, Service, Experience, Brand reputation, After-sales support.

2.4 Needs vs Wants

• Needs: Basic requirements essential for survival, which are universal. Examples include:   - Food   - Water   - Shelter   - Clothing

• Wants: Needs shaped by external factors such as:   - Culture   - Personality   - Income   - Environment.

2.5 Value

• Definition: Value is the difference between the benefits received and the costs given.

• Customers often ask: "Is what I’m getting worth what I’m paying?"

2.6 Exchange

• Definition: Exchange is the act of obtaining something desired by offering something in return.

• Example: Customer gives money while the business gives a product/service.

• Marketing is impossible without exchange.

2.7 Satisfaction and Dissatisfaction

• Satisfaction: Occurs when performance meets or exceeds expectations.

• Dissatisfaction: Arises when performance falls below expectations.

2.8 Anticipating Needs

• Businesses must predict future customer needs.

• Example: Many Botswana retailers are anticipating eco-friendly preferences by offering reusable shopping bags.

2.9 Profitability

• Definition: Profit is calculated as:   - $ext{Profit} = ext{Revenue} - ext{Costs}$

3. The Evolution of Marketing Thought

• Marketing methodologies evolved over time beyond simply focusing on customers.

3.1 Production Concept/Era (Late 1800s – 1920s)

• Focus: "Produce more at lower cost — customers will buy."   - Emphasis on mass production, efficiency, and low pricing.

3.2 Product Concept/Era (1920s-1930s)

• Focus: Producing the best quality products that customers will favor.   - Emphasis on innovation and product improvement.

3.3 Sales Concept/Era (1930s – 1950s)

• Focus: "We must persuade customers to buy."   - Emphasis on aggressive selling tactics and advertising.

3.4 Marketing Era/Customer Era (1950s – 1990s)

• Focus: "Find out what customers want first."   - Emphasis on market research and customer satisfaction, along with segmentation and targeting.

3.5 Relationship/Societal Era (1990s – 2010s)

• Focus: "Build long-term relationships and care about society."   - Emphasis on loyalty programs, Corporate Social Responsibility (CSR), and environmental responsibility.

3.6 Digital/Human-Centered Era (2010s – Present)

• Focus: "Engage customers digitally and authentically."   - Emphasis on social media, personalization, AI & data analytics, influencer marketing, and purpose-driven branding.

3.7 Others

• Concept of Green Marketing: Marketing efforts focused on environmentally friendly products and practices.

4. The Marketing Environment

• Definition: The marketing environment consists of all internal and external factors affecting a company’s ability to serve its customers. It encompasses both controllable and uncontrollable factors.

Three Sub-Environment Types:

1. Micro Environment (Internal)    - Includes all factors within the business that management can control.    - Important components include:      - Mission Statement: Defines the purpose of the business, e.g., a university focusing on quality education and innovation.      - Marketing Objectives (SMART): Objectives should be Specific, Measurable, Achievable, Relevant, Time-bound, e.g., increasing student enrollment by 15% in 12 months.      - Resources, Skills and Abilities: Financial resources, employee skills, available facilities, and equipment.      - Marketing Mix (4Ps): Product, Price, Place, Promotion are all controllable tools at the business's disposal.

2. Macro Environment (External)    - Factors outside the business that cannot be controlled but must be adapted to.    - Summarized by using the acronym PESTEI:      - Political/Legal: Includes government stability, laws, tax policies, trade restrictions, and consumer protection laws.        - Example: The Botswana Qualifications Authority regulating tertiary institutions.      - Economic: Influences consumer buying power through factors like inflation, interest rates, exchange rates, GDP, unemployment, and income levels.        - Example: Rising unemployment in Botswana leads to decreased consumer spending.      - Socio-Cultural: Pertains to beliefs, values, culture, and lifestyle changes.        - Example: The increase in working women modifies household income levels and demand for more convenient products.      - Technological: Involves new innovations affecting business practices.        - Examples: Developments like e-commerce, mobile banking, and AI influence operational efficiency.      - Ecological: Addresses nature-related issues including climate change and sustainable practices.        - Example: Businesses focusing on sustainability due to climate change concerns.

3. Market Environment    - Refers to factors immediately outside the company which can be influenced.    - Includes consumers, competitors, suppliers, and intermediaries.    - Example: A competitor reducing prices may necessitate a business response.

5. SWOT Analysis

• Definition: SWOT Analysis helps businesses assess their internal and external environments.   - Components:     - Strengths (Internal): What the business does well.       - Examples: Good reputation, skilled employees, strong financial resources.     - Weaknesses (Internal): Areas of lacking competencies.       - Examples: Poor marketing efforts, limited funds, outdated equipment.     - Opportunities (External): Potential growth avenues.       - Examples: New technology, increasing demand, opening new market segments.     - Threats (External): External dangers impacting the business.       - Examples: New legislation, economic recession, intense competition.

Strategic Options from SWOT Analysis

• Match Strengths with Opportunities: Leverage internal strengths to capitalize on identified opportunities.

• Convert Weaknesses into Strengths: Address internal weaknesses to enhance overall business performance.

• Turn Threats into Opportunities: Develop strategies to mitigate threats while exploring potential opportunities.

6. THE MARKETING MIX

• Introduction to the Marketing Mix: The marketing mix serves as a strategic framework for businesses to successfully sell products/services by coordinating various elements.

• Often referred to as the "4 Ps": Product, Price, Place, and Promotion.   - Importance: Effective marketing requires strategic alignment of these four elements to attract customers and drive sales.

Example Scenario:

• A student selling assorted pies:   - Product: Assorted pies (tasty and filling).   - Price: E.g., P20 per pie to ensure affordability.   - Place: Selling near the university gate from the morning until late.   - Promotion: Advertising methods such as shouting "Fresh Pies!" or creating signs.

6.1 Product

• Definition: A product represents any item offered to customers to satisfy their wants or needs.

• It can be:   - A physical good (e.g., a bar of soap).   - A service (e.g., a haircut).

6.2 Goods vs Services

• Goods: Tangible items that can be physically touched (e.g., maize meal).

• Services: Intangible offerings that cannot be touched (e.g., taxi rides).

6.3 Brand

• Definition: A brand consists of a name, logo, or symbol that distinguishes products.

• Example: Coca-Cola vs. generic sodas—brand loyalty can drive choices despite similar taste profiles.

6.4 Product Features, Advantages, and Benefits (FAB)

• Features: Descriptive characteristics or specifications of the product.

• Advantages: Benefits derived from product features.

• Benefits: The value gained by the customer from purchasing the product, solving their problem or enhancing their life.

FAB Example Assignment

6.5 Levels of a Product (Total Product Concept)

• Total Product Layers:   - Core Product: The fundamental benefit the customer desires (e.g., transportation via a bicycle).   - Actual Product: The tangible item (e.g., a specific brand of bicycle).   - Augmented Product: Additional services/benefits (e.g., warranty or free pump).   - Potential Product: Future enhancements or upgrades (e.g., adding electric assistance to the bike).   - Product Image: Customer's perception of the overall product.

• Total Product Composition: $ext{Total Product} = ext{Core} + ext{Actual} + ext{Augmented} + ext{Potential} + ext{Image}$

6.6 Types of Consumer Products

• Convenience Products: Items purchased frequently with minimal thought (e.g., bread and milk).

• Shopping Products: Require comparison before purchase based on price, quality (e.g., clothing).

• Specialty Products: Unique items that consumers actively seek out (e.g., luxury watches).

• Unsought Products: Unplanned purchases, often in response to a need (e.g., funeral insurance).

6.7 Classification of Industrial/Business Products

• Components: Parts utilized in the production process.

• Capital Items: Major items that last long-term, essential for business operations (e.g., factories).

• Supplies: Goods used daily for operational purposes (e.g., office supplies).

• Business Services: Services procured under contract (e.g., advertising agencies).

6.8 Product Mix / Portfolio

• Definition: All products a company offers.

• Four Dimensions of Product Mix:   - Width: The number of product lines.     - Example: Choppies has lines for groceries, clothing, etc.   - Length: Total items across all lines.   - Depth: Variations within product lines.   - Consistency: The degree of relatedness among product lines.

6.9 Product Life Cycle (PLC)

• Phases of Product Life Cycle:   - Introduction: Launch phase, costs high, sales low.     - E.g., New data bundles heavily promoted to raise awareness.   - Growth: Sales increase rapidly, profit rises as product gains popularity.     - E.g., Rapid adoption of mobile money services.   - Maturity: Sales peak, competition increases, focus turns to maintaining market share.     - E.g., Popularity of Coca-Cola facing many substitutes.   - Decline: Sales fall off as newer technologies emerge.     - E.g., Traditional mobile phones are replaced by smartphones.

6.10 New Product Development

• Definition: New products are perceived as new to customers or the business.   - Ways to introduce new products:     - Acquisition: Buying existing products or firms.     - New Product Development: Creating internally.

• 8 Steps in New Product Development Process:   1. Idea Generation   2. Idea Screening   3. Concept Development & Testing   4. Marketing Strategy Development   5. Business Analysis   6. Product Development   7. Test Marketing   8. Commercialization

6.11 Reasons for Product Failure

• Common causes include:   - Incorrect market size estimation   - Poor design or positioning   - Bad timing or excessive pricing   - Ineffective promotion or strong competition

6.12 New Product Adoption Process

• Stages of Product Adoption:   1. Awareness   2. Interest   3. Evaluation   4. Trial   5. Adoption

• Risks involved include concerns over cost and functionality.

7. Branding

• Importance of Branding: Effective branding establishes a brand's identity and can significantly impact customer choices in the market.

• Considerations: Understanding what constitutes a strong brand within the context of the local market is vital (e.g., Orange vs. Mascom in Botswana).

8. Price

• Definition: Price indicates the money required by consumers to purchase a product. It is the sole element of the 4 Ps that generates revenue.

• Factors Affecting Pricing:   - Internal Factors: Production costs, marketing objectives, strategy, and product life cycle.   - External Factors: Market conditions, demand elasticity, competition, and customer perceptions of value.

Pricing Strategies

• Skimming: Start with a high price and reduce over time.

• Penetration: Launch at a low price to quickly build market share.

• Psychological: Price appears lower (e.g., P9.99 instead of P10).

• Discounts: Promotions such as seasonal sales.

Examples of Pricing Strategy Implementation:

• Netflix utilizes penetration pricing with exclusive content offerings.

• Luxury goods, such as Louis Vuitton bags, use high pricing to position the perceived quality.

9. Place (Distribution)

• Definition: Place involves ensuring the product reaches the customer efficiently at the right time and location.

• Distribution Channels:   - Direct: Selling directly to customers (e.g., farmer's market).   - Indirect: Involving intermediaries.

• Distribution Strategies:   - Intensive: Broad market coverage (e.g., Coca-Cola).   - Selective: Certain retail outlets (e.g., high-end furniture).   - Exclusive: Limited to specific retailers (e.g., Apple stores).

10. Promotion

• Definition: Promotion comprises all methods of communication utilized to inform and persuade customers.

• Elements of Promotion:   - Advertising (e.g., commercials, online ads)   - Personal Selling (direct engagement with potential buyers)   - Sales Promotion (temporary incentives)   - Public Relations (managing reputation)   - Direct Marketing (targeted communications)

Push vs. Pull Strategies

• Push: Promoting to retailers to get them to stock a product.

• Pull: Creating consumer demand through advertising.

• Budget Methods for Promotion: Organizations can allocate budgets based on affordability, sales percentage, or competitor matching.

11. Service Marketing & Customer Service

11.1 What is a Service?

• Definition: A service is an intangible act or performance that cannot be owned and exists only in context (e.g., a taxi ride).

• Examples of Services: Haircuts, bank management, mobile money transfer, medical consultations.

11.2 Key Differences Between Services and Goods

1. Intangibility: Services cannot be physically touched.

2. Inseparability: Production and consumption occur simultaneously (e.g., hairstyling).

3. Variability: Service quality can differ based on provider.

4. Perishability: Unsold services cannot be stored (e.g., empty café seats).

• Additional Ps in Service Marketing: People and Process emphasize quality interaction and efficiency in service delivery.

11.3 What is Customer Service?

• Definition: Customer service encompasses how a business interacts with customers during and post the purchasing process, affecting loyalty and word-of-mouth marketing.

• Examples of Good Customer Service:   - Personal assistance in stores, such as carrying groceries.   - Quick resolution of customer issues by support staff.

11.4 Examples of Poor Customer Service

• Situations like long queues in banks or unresponsive service staff can harm a business's image.

12. Consumer Buyer Behaviour

12.1 Definition

• Consumer Buyer Behaviour: Refers to the study of how individuals or groups select and use products/services to meet their wants and needs.

• Importance: Understanding consumer behavior aids in crafting the right marketing strategies across the 4 Ps.

12.2 Main Factors Influencing Consumer Purchases

1. Cultural Factors: Values and behaviors influenced by family, society, and cultural norms.    - Example: Family traditions influencing food purchases (e.g., buying braai packs for family gatherings).

2. Social Factors: Influence from peers and reference groups.    - Example: Peer preferences for brands (e.g., adopting mobile service based on friends’ diversity).

3. Personal Factors: Individual characteristics affecting buying behavior (age, income, lifestyle).

4. Psychological Factors: Internal emotions and thoughts influencing choices (e.g., perception of value).

12.3 The Consumer Buying Decision Process

• Stages:   1. Problem/Need Recognition: Identifying the need for a product.   2. Information Search: Seeking information to address the need.   3. Evaluation of Alternatives: Comparing different products based on criteria.   4. Purchase Decision: Making the actual purchase.   5. Post-Purchase Behaviour: Reflecting on satisfaction levels post-purchase and likelihood of repeat purchases.

13. Consumerism

13.1 Definition

• Consumerism: The advocacy protecting consumer rights against unethical business practices, fostering a fair market.

13.2 Key Consumer Rights

• Right to Safety, Right to be Informed, Right to Choose, Right to be Heard, Right to Satisfaction of Basic Needs, Right to Redress, Right to Consumer Education, Right to a Healthy Environment.

13.3 Impact of Consumerism in Botswana

• Examples of regulatory actions for consumer protection during emergencies and fostering local businesses gaining preferences among consumers.

14. SEGMENTATION, TARGETING & POSITIONING

14.1 Market Segmentation

• Definition: The segmentation process involves dividing a diverse market into smaller, more homogenous groups catering to specific needs.

• Rationale: It allows businesses to cater effectively by tailoring offers to specific segments.

14.2 Bases for Segmenting Consumer Markets

1. Geographic: Based on location.

2. Demographic: Age, gender, income, and education.

3. Psychographic: Lifestyle and personality factors.

4. Behavioral: Usage rates and purchasing behaviors.

14.3 Market Targeting

• Definition: This process involves evaluating the attractiveness of segments and selecting which to pursue.

• Targeting Strategies:   - Undifferentiated, Differentiated, Concentrated, Micro-marketing.

14.4 Positioning

• Definition: Crafting a product’s image through strategic marketing to occupy a defined place in consumers' minds.

• Positioning Methods: Emphasizing various features and benefits, comparisons against competitors, or specific use cases.

15. MARKETING RESEARCH AND INFORMATION SYSTEMS

15.1 Marketing Research

• Definition: The systematic collection and analysis of data to address marketing challenges or opportunities.

• Importance: It helps in organizing information, reducing risks, and optimally responding to market conditions.

15.2 The Marketing Research Process

1. Defining the Problem and Objectives.

2. Developing a Research Plan.

3. Implementing the Research Plan.

4. Interpreting and Reporting the Findings.

15.3 Types of Data Used in Research

• Secondary Data: Previously collected data representing existing information sources (e.g., reports, databases).

• Primary Data: Data gathered specifically for the current research objective (surveys, interviews, observations).