BETA Sem 1 Notes

Business environment

Microenvironmental factors(internal):

• Customers
• What happens if customers change their preference for the products/ services they use to buy?
• Companies
• What happens if your organisation launches the next revolutionary product?
• Suppliers
• What happens if the supplier increases the prices of raw materials?

• Competitors
• What happens if more competitors decide to enter the market?

• Marketing Intermediaries
• What happens when the intermediaries need to stop work due to a logistical crisis?

Characteristics:

1. Close proximity to the company
2. Factors directly impact one another

Macro environmental factors(external):

• Legal/Political
• Economical
• Social/Cultural
• Environmental
• Demographical
• Technological

SWOT Analysis:

Internal(Micro):

1. Strengths (what is working well?)
2. Weaknesses (what needs improvement or change?)

External(Macro):

1. Opportunities (what opportunities are around us?)
2. Threats (what obstacles may we face?)

Intro to marketing

Marketing: the process by which companies create value for customers and build strong customer relationships to capture value from customers in return.

5 core concepts of marketing:

1. Needs, Wants & Demands

• Needs: States of felt deprivation

-physical needs (food, clothing, warmth, safety)

-social needs (sense of belonging and affection)

• Wants: the form human needs take as shaped by culture and individual personality
• Demand: human wants that are backed by buying power

Needs & Wants + Buying Power = Demands

• What is it that our target customers want?
• How much should we price our products or services so that our target customers will buy?

1. Marketing Offers

• Fulfills needs and wants through:

-Products (persons, places, information, ideas)

-Services (Activity or benefit offered for sale that is essentially intangible and does not result in ownership.)

-Experiences (Customer or User Experience)

1. Value and Satisfaction

• Value = (Tangible+Intangible)

Tangible benefits(

Intangible benefits(

Tangible costs(

Intagible costs(

-Total Benefits > Total Costs=Good Value

-Total Benefits < Total Costs=Poor Value

• Satisfaction
• Actual performance>Expectation=Satisfaction
• Actual performance<Expectation=Dissatisfaction

1. Exchange and Relationships

• How to foster relationship with customers?
• How to make the experience better for customers?

1. Markets:

-Platforms in which Exchanges and Relationships are formed

• Physical
• Virtual
• Local
• Regional/Global

Segmentation and Targeting

Market Segmentation:

Why must we segment the market?

• Differing needs, wants and demands.
• Marketers can better assess the attractiveness of the markets in which they intend to serve.
• Marketers can better match the needs, wants and demands of consumers to optimise value and satisfaction in consumers.

1. Demographic

• Marketers will collect and analyse information according to the population characteristics of their customers
• Characteristics of the population are often expressed statistically involving attributes such as age, gender, income level, educational level, birth rate, average household size, etc.

1. Geographic

• Marketers will collect and analyse information according to the

the physical location of their customers

1. Psychographic

• involves the study of personalities, values, opinions, attitudes, interests and lifestyles.

-sometimes known as IAO variables

1. Behavioural

• dividing the market into groups based on their uses and responses to products and services.

Occasion, benefits sought, usage rate

Targeting Strategies(Market Coverage Strategies):

1. Undifferentiated(Mass)

• Attempts to go for the whole market
• Ignores segment differences and assumes market tastes are similar
• Targets whole market with one offer
• Mass production, distribution, and promo, to reach customers with the same product
• Achieve economies of scale resulting in Potential savings on production/market costs

1. Differentiated(Segmented)

• Target several market segments
• Design a separate marketing mix for each segment
• Identify distinct differences between each segment
• Higher cost/investment compared to undifferentiated.
• This may lead to potential cannibalisation (of own market share)

1. Concentrated(Niche)

• Targets large share in 1 or 2 segments
• By better meeting the needs of a narrowly defined segment
• To achieve a strong presence in that segment
• For firms with limited resources
• Allows small firms to compete with big firms

1. Micro-marketing

• Customised offers to individual customers
• Utilises customer info to build long-term, personalised and profitable relationships.
• See the individual in every customer and not vice versa.

Positioning and Value Proposition

Positioning → strategic process that helps businesses differentiate themselves and create a unique identity

→ act of designing the firm’s market offering so that:

• sets products or services apart from competitors
• occupies a distinct and valued place in the minds of target customers

Factors of positioning:

1. Functional

• Solve customer’s problems; provide genuine benefits

1. Symbolic

• Self-image enhancement, ego identification, belongingness, social meaningfulness and affective fulfilment

1. Experience

• Focus on emotional connection with the customers with the brand

Perceptual positioning maps:

• Shows consumer perceptions of brand(s) vs competition on important attributes. A brand’s positioning must serve the needs and preferences of well-defined target markets.

Therefore, positioning helps businesses differentiate themselves from competitors and create a unique identity

Positioning maps provide a visual representation that helps us analyse and compare how brands are perceived by consumers based on specific attributes or dimensions

Product and Placing Strategies

Levels of a product:

1. Augmented

• How the product differs from competitors and what we provide better for customers.(After-sales service, product support)

1. Actual

• What exactly customers are paying for.

(The product, branding, packaging, design, features, quality level)

1. Core

• What the customers are actually buying.

(core values; convenience, accessibility)

Types of consumer goods:

1. Convenience

• Low priced, frequently purchased, little comparison usually due to routine purchase.(groceries, haircut)

1. Shopping

• Bought less frequently than convenience, high price, higher tendency to look at reviews and compare prices(Apparel, tech, furniture)

1. Specialty

• Low purchase frequency, high price/emotional attachment, unique features, special effort needed to purchase(luxury brand goods)

1. Unsought

• Passive purchase, consumers do not think about it until a need for it arises(funeral services, charity)

Marketing channels:

• Pipeline of organisations involved in the process of making a product or service available for use or consumption by consumers or businesses.

1. Manufacturer(Apple, Samsung, Google)
2. Retailers(Challenger, Amazon, Singtel)
3. Consumers(Shoppers)

Marketing channels exist to provide greater efficiency in making goods available to target markets.

Channel strategy:

Channel members:

1. Online platforms(Lazada, Shopee, Amazon)
2. Agents(Influencers)
3. Brick and mortar(Malls, Boutiques, Farms)

How intense?

1. Exclusive distribution

• Limited no. of distributors, exclusive rights to distribute

1. Selective distribution

• Use of more than one but not all, to carry company products.

1. Intensive distribution

• Many outlets

Pricing decisions

Internal factors:

1. Marketing objectives

• Survival
• Problems faced: excess capacity, heavy competition, changing consumer wants
• Charge cheaper to induce demand
• Price to cover at least variable costs
• Ignore long term performance market share or growth
• Current Profit Maximisation
• Work out prices that customers can bear; generally to charge high price to maximise profit
• Market Share Leadership
• Assume that company with largest market share will enjoy lowest costs and highest long run profit
• Product Quality Leadership
• Providing high quality products or services and charging high prices for such offers

A company usually adopts one main objective. The only time different objectives are adopted could be for different product lines.

1. Marketing Mix Strategy

• Pricing decision
• must be coordinated with 3Ps(Product, Placing, Promo) to form a consistent and effective marketing mix.
• Companies use price as a product positioning factor and the other 3Ps will be adjusted accordingly to match/compliment the other Ps based on price they want to charge.

1. Costs

• Fixed cost
• Costs that do not change with an increase or decrease in amount of goods and services produced
• Expenses paid by a company, independent of business activity
• Variable costs
• Costs that vary depending on a company’s production volume; rise when production increases, falls when production decreases
• Costs set the floor for price

1. Organisational Considerations

• Who sets prices?
• Small companies usually by top management
• Large companies typically decentralised to divisional or product line managers

External factors;

1. Nature of market and demand

• Perfect competition
• occurs when all companies sell identical products, market share does not influence price, companies are able to enter or exit without barriers, buyers have perfect or full information, and companies cannot determine prices.
• Monopolistic competition
• many companies offer competing products or services that are similar, but not perfect, substitutes.
• Oligopolistic
• a market structure that consists of a small number of firms, who together have substantial influence over a certain industry or market.
• Pure monopoly
• market structure where one company is the single source for a product and there are no close substitutes for the product available
• Demand for product depends on consumer perceptions of price and value

1. Competitors’ Costs, Prices and Offers

• Company’s pricing decision must take into consideration the nature of competition it faces

1. External Environmental Factors

• Tariffs on certain goods and services can affect costs. Alcohol & Cigarette are dutiable goods

Example: Duties range from $48 per litre for beer to $70 for hard liquor and up to $347 per kg for tobacco related products.

• Changing Social Trend and Concerns/Changing Culture about smoking, alcohol and unhealthy food can affect demand for many businesses.

Example: Increase demand for organic products, which also cost more

Pricing Strategies and Product Life Cycle

Product Life Cycle:

1. Introductory

• Slow sales growth, profit non-existent due to heavy expense

1. Growth

• Rapid market acceptance, increased profits

1. Maturity

• Slow down in sales growth, profit drops

1. Decline

• Sales fall off, profit drops

Pricing Strategies:

1. Market Skimming

• Start with a high price and slowly adjust price of products downwards.

1. Market Penetration

• Start with a low price and slowly adjust price of products upwards.

1. Product Line Pricing

• Have different prices for different lines of product offerings.

1. Optional Pricing

• Have a base price for product/service offering. Add-ons will come with additional prices.

1. Product Bundle Pricing

• Have a base price for product/service offering. Add-ons will come with additional prices.

1. Captive Pricing

• Price a base product low (i.e. getting a low margin) and its refills or replenishments at a higher price (i.e. getting a higher margin).

1. Psychological Pricing

• Price a product/service at a specific price point that creates a psychological effect of a bargain. (Example: $199, $2, $5, etc.)

Promotional strategies(1)

3 Goals in marketing(promotion):

1. Informing

• Increase new brand awareness, product type and attribute
• Explain how product works
• Suggest new uses of product

1. Persuading

• Encourage brand switching
• Change customer perception of product attribute
• Influence customers to “buy now”

1. Reminding

• Remind consumers that they might need the product in the near future
• Remind where to buy
• Maintain consumer awareness

Promotion Mix:

1. Advertising

• Any paid form of non-personal presentation and promotion of ideas, goods or services by an identified sponsor.

1. Sales promo

• Provides short term incentives to encourage purchase or sales of a product/service

1. Public relations

• Focus on building relations with the company’s various publics by obtaining favourable publicity, building good corporate image, and handling or heading off unfavourable rumours, stories and events.

1. Direct marketing

• Establishes direct communication with selected target consumers to obtain: immediate response, cultivating lasting relationships with customers

1. Personal selling

• Involves a process where personal presentation by the sales force encourage sales and build customer relationships

Promotional Strategies(2)

Marketing Funnel:

AIDA Framework:

TOFU

1. Awareness

• Are customers aware of needs and solutions provided to them?

MOFU

1. Interest

• Are customers interested in the solutions offered

1. Desire

• Is there a desire for customers to obtain those solutions

BOFU

1. Action

• Are customers buying the offerings?

Common mistakes in TOFU, MOFU and BOFU:

TOFU:

1. Selling

• Trying to sell product prematurely when customers have no interest

1. Info overload

• Bombarding potential customers with info

1. Too much ‘effort’

• Developing marketing messages that potential customers take ‘effort’ to process

MOFU:

1. Limited info

• Lack of information available for potential customers about product/service

1. No comparison

• Lack of comparison available for potential customers

1. No interest

• Lack of assurance given to customers

BOFU:

1. Out of stock

• Product and services unavailable

1. Poor interface

• Poor UI resulting in potential customers giving up on purchase intention

1. Insufficient incentives

• Insufficient incentives to get potential customers to act

Types of digital media:

1. Owned

• Your digital real estate; website, content created(postings, videos, etc)

1. Earned

• Reviews, shares circulated on social media

1. Paid

• Advertising, spaces paid for in digital mall, sponsorship for influencers to promote product/services

Components of online marketing strategy:

1. Search marketing

• Gaining online presence and traffic through usually through paid strategies

1. Search engine optimisation

• Organic strategy to optimise the visibility of a site or online content through the use of keywords

1. Social media

• A digital platform that allows users to create and share posts.

1. Video

• A recording of moving visual-audio medium that can be broadcasted and playback