Principles of Marketing - Managing the Marketing Effort

Managing the Marketing Effort

Objectives

  • Explain the relationship between market analysis and planning.
  • Analyze the company’s situation, markets, and environment (the marketing audit and SWOT analysis).
  • Identify target market and positioning.
  • Explain the significance of the marketing mix to motivate the potential market to buy the product or service (the marketing plan).

Market Analysis

  • A process of identifying your target market based on the possible market potentials.
  • This includes analyzing customers’ needs and wants, market trends, competitors, and the environment.
  • Industry trends are also important factors to consider in analyzing market.
  • Marketing plans can’t be put together without some form of analysis through:
    • Finding and measuring business opportunities
    • Targeting and dividing market into niches
    • Suggesting product placement and position in the mind of consumer

Market Analysis Fundamentals

  • In analyzing target market, marketers need to understand these fundamentals:
    • Situation Analysis
    • STP (Segmentation, Targeting, Positioning)
    • Marketing Mix
    • Implementations in the Marketplace

Situation Analysis

  • The process of analyzing:
    • Consumer characteristics & trends
    • Current and potential Collaborators
    • Resources of the Company
    • The Context or environmental factors
    • Current and potential Competitors

PESTEL Analysis

  • Another way to analyze potential market is through the use of PESTEL analysis.
  • A PESTEL analysis is composed of Political, Economic Factors, Environment, Societal Trends, Technological Developments, and Legal factors.

Political Factors

  • Determines the extent to which the government may influence on certain industry.
  • For instance:
    • Government impose new taxes, tax policies
    • Fiscal policy
    • Trade tariff etc.

Economic Factors

  • Determines the economy’s performance that can directly affect the performance of the industry.
  • For instance:
    • Inflation rate
    • Foreign Direct Investment
    • Economic growth

Social Factors

  • These factors analyze the effect of social environment of the market.
  • For example:
    • Cultural trends
    • Demographics
    • Populations etc.

Technological Factors

  • These factors pertain to innovations in technology that may affect the operations of the business.
  • Examples are:
    • Automation
    • Research and development
    • Technological awareness

Legal Factors

  • These factors have both internal and external sides of the business.
  • For example, are laws that affect the operations of the business.
  • Examples:
    • Consumer laws
    • Safety standards
    • Labor laws

Environmental Factors

  • These factors include all those that influence by the surrounding environment.
  • Factors of business environment are:
    • Climate
    • Geographical locations
    • Global changes in climate etc.

SWOT Analysis

  • In a SWOT analysis (or a situation assessment), you are going to identify your company’s Strengths, Weaknesses, Opportunities, and Threats.
  • Such an analysis is very important to the preparation of your plan and to the success of your operation because it helps you focus on key issues.
  • A SWOT analysis is a good auditing tool to demonstrate whether a particular plan is working and to gauge the current market environment.

SWOT Components

  • STRENGTHS – areas where the operation excels. Example: well-trained staff, good location, well-kept and clean facilities, strong marketing abilities, high food quality, and service that exceeds customer’s expectations.
  • WEAKNESSES - barriers to success. Example: boring menu, dirty premises, poor quality products, poor service, high staff turnover, poor reputation, limited abilities or resources for marketing.
  • OPPORTUNITIES – chances to increase revenue or decrease costs. Example: ineffective competitor, volume discount with a reputable supplier, a new business opening in your area, an increased number of tourist attractions.
  • THREATS – refers to the barriers that could prevent the company from reaching its objectives. Example: increased number of competitors, a price war with a competitor, increased taxes, poor economic conditions, or road construction that disrupts current traffic patterns.

SWOT Examples

  • STRENGTHS: Good Reputation, Knowledge and experience, Quality Product, Affordable Price and Good Locations.
  • WEAKNESSES: Damage Reputations, New in the market, Undifferentiated product, Brand Name and Poor Quality.
  • OPPORTUNITIES: Company Expansions, Additional product line, Buy out competition, More brand recognition, Products growing demand, Expand new market.
  • THREATS: Potential Entrants, Competitors, Government Restrictions, Economic Situation, Inflation Rate and Changing taste and preferences of customer.

Marketing Strategy

  • It consists of the major decisions you must make about the segments of a market, which one or ones you can profit by addressing, how to position your products and services in that market, and why that market should buy your products and services.
  • Involves the allocation of resources to develop and sell products or services that consumers will perceive to provide more value than competitive goods.
  • Marketing requires a great deal of information about consumer needs.
  • Marketing research gives the marketing manager data needed to make decisions.
  • Required because managers are often hundreds or thousands of miles distant from end users.
  • Market analysis is the only way firms can stay in touch with customers and their needs.

Developing a Marketing Strategy

  1. Select target market.
  2. Determine product positioning.
  3. Prepare value proposition.

Target Markets

  • Avoiding Mass marketing, which means treating everyone in the market as having the same needs and wants.
  • Target Marketing – treats people as different from each other and tries to make a focused appeal to a distinct portion of customers called “target customers or target market.”

About Target Markets

  • If a company selects the wrong target market, all other marketing decisions are likely to be in vain.
  • Careful and accurate target market selection is crucial to productive marketing efforts.

Narrowing the Field for Target Markets

  1. Potential customers – those who may have an interest in your products and services.
  2. Customers who can afford your product. – The wealthy people, businesses, etc
  3. Customers to target – the specific target market or markets you plan to address.

Selecting Target Markets: Key Factors

  • When you select target markets, you must consider two factors: the potential profitability of the target market and your ability to address their needs and wants.
  • In terms of the market segment’s profitability, a segment makes a good target market for you when it has most of the following characteristics:
    1. Large enough
    2. Steady or growing in numbers, not declining
    3. Not saturated with competitors
    4. Able to be attracted with the promotion budget you can expend
    5. Profitable enough, given the costs you must incur and the revenues you can obtain.
  • In terms of your capability, a market makes a good target market for you when it has the most of the following characteristics:
    1. You have the capability to offer more value than competitors can offer: better food, better drink, or better service.
    2. Addressing this market fits in with your operation’s image or brand identity.
    3. You have the means to reach the market segment with promotions.
    4. You have the capital and other resources to enter, serve, and survive in the market segment.

Strategies for Target Marketing

  1. CONCENTRATE ON ONE MARKET SEGMENT – this strategy enables you to supply a more limited set of products and services (with the related limited facilities, equipment, and production requirements) and use a limited variety of promotional methods.
  2. SERVE MULTIPLE MARKETS WITH THE SAME PRODUCTS AND SERVICES – This strategy implies that you are supposed to provide the same things to different target markets but use different promotional messages. National restaurant chains use this strategy.
  3. SPECIALIZE IN ONE THING – This means that you must only pick one thing and do it very well.
  4. SERVE ONE MARKET SEGMENT WITH SEVERAL PRODUCTS – Using wealthy people as an example target market serve more than just French haute cuisine; also serve Russian and Italian cuisine of the very best quality.

Positioning Products and Services in the Market

  • Market Positioning refers to how a company ensures its target market notices and considers its products or services. This involves simplifying the message and emphasizing the unique qualities of the product. Branding also plays a role in positioning, with a strong product name helping to communicate key qualities.

Value Proposition

  • Value Proposition is the statement of the value customers will receive from a product, answering the question: “Are the benefits worth the cost?” Customers assess products based on the benefits versus the price, time, and convenience required.
  • Example: Magnolia’s dressed chicken became a bestseller by using clean, plastic packaging with the Magnolia brand, ensuring freshness and trust.
  • Positioning Maps help businesses understand how consumers perceive their brands compared to competitors based on important buying factors.

Market Planning

  • Market: It is the set of all actual and potential buyers of a product. In its’ original meaning, market was a physical place where buyers and sellers gathered to exchange goods and services. To an economist, a market is all the buyers and sellers who transact for a good or service.

Evolution of Marketing Philosophy

  • Sellers have not always practiced through this philosophy. Their thinking passed through three (3) stages:
    1. Mass Marketing – the seller mass produces, mass distributes, and mass promotes one product to all buyers. At one time, McDonalds produced only one size of hamburger for the entire market, hoping it would appeal to everyone. The argument for mass marketing is that it should lead to the lower costs and prices and create the largest potential market.
    2. Product-variety Marketing – the seller produces two or more products that have different features, styles, quality, and sizes and so on. Today, McDonalds offers regular hamburgers, Big Macs and quarter pounders. The product line is designed to offer variety to buyers rather than to appeal to different market segments. The argument for product-variety marketing is that consumers have different tastes that vary over time. Consumers seek variety and change.
    3. Target Marketing – the seller identifies market segments, selects one or more, and develops products and marketing mixes tailored to each selected segment. Example: McDonalds developed salad line to meet the needs of diet conscious diners.

The Marketing Plan

  • A marketing plan is a document or a blueprint of company’s marketing strategy for the next years. It establishes business activities that Supports Company’s marketing objectives within the specified time frame.
  • According to Philip Kotler (2003, pp. 115-116), marketing plans are developed for individual products, lines, brands, channels, or customer groups. The marketing plan is one of the most important outputs of the marketing process.

Purpose of a Marketing Plan

  1. Serves as a road map for all marketing activities of the firm for the next year.
  2. Ensures that marketing activities are in agreement with the corporate strategic plan.
  3. Forces marketing managers to review and think through objectively all steps in the marketing process.
  4. Assists in the budgeting process to match resources with marketing objectives.
  • IMPORTANT NOTE: Marketing planning involves choosing marketing strategies that will help the company attain its overall strategic objectives.

Elements of a Marketing Plan

  • Executive Summary - is a short document or segment of a paper, created for business commitments, that reviews a longer report or proposal or a group of related reports in such a way that prospective readers can rapidly become accustomed with a huge body of material without having to read it all.
Tips for Writing the Executive Summary
  1. Write it for top executives.
  2. Limit the number of pages to between two and four.
  3. Use short sentences and short paragraphs.
  4. Organize the summary as follows:
    • Describe next year’s objectives in quantitative terms.
    • Briefly describe marketing strategies to meet goals and objectives.
    • Identify the costs necessary as well as key resources needed
  5. Read and reread before final submission.
  • Current Marketing Situation - In this section, you describe your existing and potential markets – the people who are in your market area. Some considerations include the number of existing customers, why they are in your market area, a description of your returning customers, and a description of new customers you hope to attract.
    • Target markets – these are based upon the type of restaurant and restaurant concept you have selected.
    • Market trends – it refers to the long-term increases or decreases in some factor outside your operation, for example an increase or decrease in population, economy, competition, costs or prices, wages or popularity of particular products. You must pay attention to those trends that might affect your operation.
  • Market growth – determine whether the target market is in a growth mode or a decline mode. If a market is in a growth mode, you can aggressively market to this population and try to increase your customer base. If a market is in decline, you may want to target your resources toward another area that has more potential.
  • Opportunity and issue analysis: An overall analysis of the firm’s internal and external environment. This section discuss the firm Strengths, Weaknesses, Opportunities and Threats commonly called as SWOT analysis.
  • Objectives - Listing of what you want to attain in your marketing plan. Your marketing plan objectives should deal with number of customers (probably by segment), total revenue, percentage of market to capture, and average check, to name a few. Your marketing objectives should be in writing because written objectives enable you to focus your energies on specific areas of your business. Your marketing objectives should be reasonable, measurable and have a time frame.
  • Marketing strategy - Shape and reshape the company's businesses and products so that they yield target profits and growth.
  • Action programs - A detailed program design to make the marketing strategy become feasible. It list down programs intended to meet the marketing objectives.
  • Financial projections - A detailed financial assumptions of the company using the recommended strategy. Usually express in a five year comprehensive financial projections.