chinhoyi university of technology school of business sciences and management department of...

CHINHOYI UNIVERSITY OF TECHNOLOGYCHINHOYI UNIVERSITY OF TECHNOLOGYSCHOOL OF BUSINESS SCIENCES AND MANAGEMENTSCHOOL OF BUSINESS SCIENCES AND MANAGEMENT

DEPARTMENT OF INTERNATIONAL MARKETINGDEPARTMENT OF INTERNATIONAL MARKETING

PRINCIPLES OF MARKETINGPRINCIPLES OF MARKETING

BYBY

DR GERALD MUNYORODR GERALD MUNYORO

COURSE OUTLINE1.1. IntroductionIntroduction

2.2. The significance of information and research in The significance of information and research in marketingmarketing

3.3. Consumer behaviour Consumer behaviour

4.4. Market segmentationMarket segmentation

5.5. ProductProduct

6.6. PricePrice

7.7. PlacePlace

8.8. PromotionPromotion

Definitions of MarketingDefinitions of Marketing

‘‘Marketing is the management process that identifies, Marketing is the management process that identifies, anticipates and satisfies customer requirements anticipates and satisfies customer requirements profitably’profitably’

The Chartered Institute of MarketingThe Chartered Institute of Marketing

Marketing is the activity, set of institutions, and Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, processes for creating, communicating, delivering, and exchanging offerings that have value for and exchanging offerings that have value for customers, clients, partners, and society at large customers, clients, partners, and society at large

American Marketing AssociationAmerican Marketing Association

Definitions of MarketingDefinitions of Marketing

‘ ‘Marketing is a social and managerial process by Marketing is a social and managerial process by which individuals and groups obtain what they want which individuals and groups obtain what they want and need through creating, offering and exchanging and need through creating, offering and exchanging products of value with others’ products of value with others’ Kotler et al (2010) Kotler et al (2010)

‘‘The right product, in the right place, at the right time, The right product, in the right place, at the right time, and at the right price’ and at the right price’

Adcock et al (2001)Adcock et al (2001)

The Marketing conceptThe Marketing concept

Choosing and targeting appropriate Choosing and targeting appropriate customerscustomers

Positioning your offeringPositioning your offering Interacting with those customersInteracting with those customers Controlling the marketing effortControlling the marketing effort Continuity of performanceContinuity of performance

The Marketing conceptThe Marketing concept Customer focus, profits, and integration of Customer focus, profits, and integration of

organizational efforts.organizational efforts.• Customer orientationCustomer orientation

Satisfying its customers at a profit…Satisfying its customers at a profit… Determining the needs and wants of target Determining the needs and wants of target

markets…markets… Discovering the wants of a target audience and then Discovering the wants of a target audience and then

creating the goods and services to satisfy themcreating the goods and services to satisfy them

The Marketing conceptThe Marketing concept

According to Levitt (1960), According to Levitt (1960), "the organization must "the organization must learn to think of itself not as producing goods or learn to think of itself not as producing goods or services but as buying customers, as doing the things services but as buying customers, as doing the things that will make people want to do business with it." that will make people want to do business with it."

Since its publication, corporate leaders have moved Since its publication, corporate leaders have moved from product-orientation toward market-orientation. from product-orientation toward market-orientation.

Firms overemphasize the satisfaction of customer Firms overemphasize the satisfaction of customer wants and needs and as a result wants and needs and as a result ignore competitionignore competition. .

The Marketing conceptThe Marketing concept Profitable Profitable Offensive (rather than defensive) Offensive (rather than defensive) Integrated Integrated Strategic (is future orientated) Strategic (is future orientated) Effective (gets results) Effective (gets results)

Davidson (1972)Davidson (1972)

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MARKETING MANAGEMENT PHILOSOPHIESMARKETING MANAGEMENT PHILOSOPHIES The role that marketing plays within a company The role that marketing plays within a company

varies according to the overall strategy and varies according to the overall strategy and philosophy of each firm. philosophy of each firm.

There are five alternative concepts under which There are five alternative concepts under which organizations conduct their marketing activities: organizations conduct their marketing activities: • Production conceptProduction concept• Product concept Product concept • Selling conceptSelling concept• Marketing conceptMarketing concept• Societal marketing concepts Societal marketing concepts

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Marketing ManagementMarketing Management

Production Concept

Product Concept

Selling Concept

Marketing Concept

Societal Marketing Concept

Management Orientations

Production ConceptProduction Concept

Product ConceptProduct Concept

Selling ConceptSelling Concept

Marketing ConceptMarketing Concept

Consumers prefer products that are widely available and inexpensive

Consumers favor products that

offer the most quality, performance,

or innovative featuresConsumers will buy products only if

the company aggressivelypromotes/sells these products

Focuses on needs/ wants of target

markets & delivering value better than competitors

Company Orientations Towards the Company Orientations Towards the MarketplaceMarketplace

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The marketing management The marketing management philosophy that holds that achieving philosophy that holds that achieving organizational goals depends on organizational goals depends on determining the needs and wants of determining the needs and wants of target markets and delivering the target markets and delivering the desired satisfactions more effectively desired satisfactions more effectively and efficiently than competitors do. and efficiently than competitors do.

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The key to achieving its organizational goals The key to achieving its organizational goals consists of the company being more effective consists of the company being more effective than competitors in creating, delivering, and than competitors in creating, delivering, and communicating superior customer value to its communicating superior customer value to its chosen target markets.chosen target markets.

Slogans: Slogans: 麥當勞都是為您麥當勞都是為您 , , 以客為尊以客為尊 , , 顧客永遠是對顧客永遠是對的的 , We do it all for you (Toyota)., We do it all for you (Toyota).

Four pillars: target market, customer needs, Four pillars: target market, customer needs, integrated marketing and profitability.integrated marketing and profitability.

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Societal Marketing ConceptSocietal Marketing Concept

The idea that the organization should determine the needs, The idea that the organization should determine the needs, wants, and interests of target markets and deliver the desired wants, and interests of target markets and deliver the desired satisfactions more effectively and efficiently than competitors in satisfactions more effectively and efficiently than competitors in a way that maintains or improves the consumer’s and society’s a way that maintains or improves the consumer’s and society’s well – being. well – being. Company’s negative effects on society Company’s negative effects on society

Conflict between consumer wants and long-term social welfare Conflict between consumer wants and long-term social welfare Marketing managers should be concerned with Marketing managers should be concerned with social social

responsibilityresponsibility Company’s task is to determine needs and wants of target Company’s task is to determine needs and wants of target

markets & to satisfy them more effectively and efficiently than markets & to satisfy them more effectively and efficiently than competitors --in a way that preserves or enhances the competitors --in a way that preserves or enhances the consumer’s and society’s well-being. consumer’s and society’s well-being.

Societal Marketing ConceptSocietal Marketing Concept

Societal Marketing

Concept

Company(Profits)

Consumers(Want Satisfaction)

Society(Human Welfare)

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The philosophy that consumers will favour products The philosophy that consumers will favour products that are available and highly affordable and that that are available and highly affordable and that management should therefore focus on improving management should therefore focus on improving production and distribution efficiency.production and distribution efficiency.

Consumers will favor those products that are widely Consumers will favor those products that are widely available and low in costavailable and low in cost. .

Managers concentrate on achieving Managers concentrate on achieving high production high production efficiency efficiency andand wide distribution. wide distribution.

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Consumers will prefer products that are Consumers will prefer products that are widely available and inexpensive.widely available and inexpensive.

Focus: achieving high production Focus: achieving high production efficiency, low costs, and mass efficiency, low costs, and mass distribution.distribution.

It is useful when (1) the demand for a It is useful when (1) the demand for a product exceeds the supply; (2) the product exceeds the supply; (2) the product’s cost is too high.product’s cost is too high.

Examples: Standard Raw Materials and Examples: Standard Raw Materials and Components, CD, LCD.Components, CD, LCD.

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The philosophy that consumers will favour The philosophy that consumers will favour products that offer the most quality, products that offer the most quality, performance, and innovative features.performance, and innovative features. Consumers Consumers will favor those products that offer the will favor those products that offer the most most quality, performance or innovative featuresquality, performance or innovative features. .

Managers in product-oriented organizations Managers in product-oriented organizations concentrate on making concentrate on making superior productssuperior products and and improving them over time. improving them over time.

The assumption ğ the customers will admire well-The assumption ğ the customers will admire well-made products and can evaluate product quality made products and can evaluate product quality and performance and performance

This concept may lead to This concept may lead to marketing myopiamarketing myopia

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Consumers will favor those products that offer Consumers will favor those products that offer the most quality, performance, or innovative the most quality, performance, or innovative features.features.

Focus: making superior products and Focus: making superior products and improving them over time.improving them over time.

Examples: Digital Camera, CPU.Examples: Digital Camera, CPU. Better Mousetrap FallacyBetter Mousetrap Fallacy Marketing Myopia. (Theodoes Levitt, 1965)Marketing Myopia. (Theodoes Levitt, 1965)

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Selling ConceptSelling Concept The idea that consumers will not buy enough of the organization’s The idea that consumers will not buy enough of the organization’s

products unless the organization undertakes a large – scale selling and products unless the organization undertakes a large – scale selling and promotion effort. promotion effort. Agressive selling and promotionAgressive selling and promotion

Assumptions are; Assumptions are;

• Consumers must be Consumers must be convinced of buyingconvinced of buying company products company products

• Company is powerful in generating effective selling and promotion to Company is powerful in generating effective selling and promotion to stimulate more buying stimulate more buying

This concept is mostly used by firms which have overcapacity. This concept is mostly used by firms which have overcapacity. The aim is “The aim is “to sell what they maketo sell what they make” rather than “make what the market ” rather than “make what the market

wants.” wants.” Short-term profitsShort-term profits are more important (customer dissatisfaction may are more important (customer dissatisfaction may

occur) occur)

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Selling ConceptSelling Concept Consumers and businesses, if left Consumers and businesses, if left

alone, will ordinarily not buy enough alone, will ordinarily not buy enough of organization’s products.of organization’s products.

Focus: undertake an aggressive Focus: undertake an aggressive selling and promotion effort.selling and promotion effort.

Examples: unsought goods: Examples: unsought goods: encyclopedias, funeral plots, encyclopedias, funeral plots, foundations.foundations.

Marketing management processMarketing management process

Analysis/Audit - where are we now?Analysis/Audit - where are we now? Objectives - where do we want to be?Objectives - where do we want to be? Strategies - which way is best?Strategies - which way is best? Tactics - how do we get there?Tactics - how do we get there? (Implementation - Getting there!)(Implementation - Getting there!) Control - Ensuring arrivalControl - Ensuring arrival

Marketing planningMarketing planning

Systematic futuristic thinking by managementSystematic futuristic thinking by management better co-ordination of a company’s effortsbetter co-ordination of a company’s efforts development of performance standards for development of performance standards for

controlcontrol sharpening of objectives and policiessharpening of objectives and policies better prepare for sudden developmentsbetter prepare for sudden developments

Building relationships with consumersBuilding relationships with consumers

Firms that embrace the marketing concept seek ways to build a long-term Firms that embrace the marketing concept seek ways to build a long-term relationship with each customer. This is an important idea. Even the most relationship with each customer. This is an important idea. Even the most innovative firm faces competition sooner or later. And trying to get new innovative firm faces competition sooner or later. And trying to get new customers by taking them away from a competitor is usually more costly customers by taking them away from a competitor is usually more costly than retaining current customers by really satisfying their needs. Satisfied than retaining current customers by really satisfying their needs. Satisfied customers buy again and again. This makes their buying job easier, and it customers buy again and again. This makes their buying job easier, and it also increases the selling firm’s profits. Building mutually beneficial also increases the selling firm’s profits. Building mutually beneficial relationships with customers requires that everyone in an organization relationships with customers requires that everyone in an organization work together to provide customer value before and after each purchase. If work together to provide customer value before and after each purchase. If there is a problem with a customer’s bill, the accounting people can’t just there is a problem with a customer’s bill, the accounting people can’t just leave it to the salesperson to straighten it out or, even worse, act like it’s leave it to the salesperson to straighten it out or, even worse, act like it’s “the customer’s problem.” Rather, it’s the firm’s problem.“the customer’s problem.” Rather, it’s the firm’s problem.

Marketing’s role in non profit organisationsMarketing’s role in non profit organisations

The marketing concept is as important for nonprofit organizations as it is The marketing concept is as important for nonprofit organizations as it is for business firms. However, prior to 1970 few people in nonprofits paid for business firms. However, prior to 1970 few people in nonprofits paid attention to the role of marketing. Now marketing is widely recognized as attention to the role of marketing. Now marketing is widely recognized as applicable to all sorts of public and private nonprofit organizations applicable to all sorts of public and private nonprofit organizations Ñranging from government agencies, health care organizations, Ñranging from government agencies, health care organizations, educational institutions, and religious groups to charities, political parties, educational institutions, and religious groups to charities, political parties, and fine arts organizations. Some nonprofit organizations operate just like and fine arts organizations. Some nonprofit organizations operate just like a business. For example, there may be no practical difference between a business. For example, there may be no practical difference between thegift shop at a museum and a for-profit shop located across the street. thegift shop at a museum and a for-profit shop located across the street. On the other hand, some nonprofits differ from business firms in a variety On the other hand, some nonprofits differ from business firms in a variety of ways. As with any business firm, a nonprofit organization needs of ways. As with any business firm, a nonprofit organization needs resources and support to survive and achieve its objectives. Yet support resources and support to survive and achieve its objectives. Yet support often does not come directly from those who receive the benefits the often does not come directly from those who receive the benefits the organization produces.organization produces.

Marketing ResearchMarketing Research Marketing research is the systematic gathering, recording and analyzing of Marketing research is the systematic gathering, recording and analyzing of

data about problems relating to the marketing of goods and services.data about problems relating to the marketing of goods and services. A systematic inquiry whose objective is to provide information to solve A systematic inquiry whose objective is to provide information to solve

managerial problemsmanagerial problems.. Marketing research is the function that links the consumer, customer, and Marketing research is the function that links the consumer, customer, and

public to the marketer through information--information used to identify public to the marketer through information--information used to identify and define marketing opportunities and problems; generate, refine, and and define marketing opportunities and problems; generate, refine, and evaluate marketing actions; monitor marketing performance; and improve evaluate marketing actions; monitor marketing performance; and improve understanding of marketing as a process. Marketing research specifies the understanding of marketing as a process. Marketing research specifies the information required to address these issues, designs the method for information required to address these issues, designs the method for collecting information, manages and implements the data collection collecting information, manages and implements the data collection process, analyzes the results, and communicates the findings and their process, analyzes the results, and communicates the findings and their implications. implications.

American Marketing AssociationAmerican Marketing Association

Marketing ResearchMarketing Research Market research will give you the data you need to identify and reach your Market research will give you the data you need to identify and reach your

target market at a price customers are willing to pay.target market at a price customers are willing to pay. Research provides you with the knowledge and skills needed for the fast-Research provides you with the knowledge and skills needed for the fast-

paced decision-making environment. paced decision-making environment. Applied ResearchApplied Research

• Emphasis on solving practical (specific) problemsEmphasis on solving practical (specific) problems

• It could be exploring opportunities alsoIt could be exploring opportunities also Rectifying an inventory system that is resulting into lost salesRectifying an inventory system that is resulting into lost sales Opportunity to increase stockholder wealth by acquiring another Opportunity to increase stockholder wealth by acquiring another

firmfirm Pure Research/Basic ResearchPure Research/Basic Research

• Emphasis on problem solving but of a general nature (not specific)Emphasis on problem solving but of a general nature (not specific) Effect of Effect of couponcoupon as against as against rebaterebate to stimulate demand to stimulate demand

Consumer behaviourConsumer behaviour Those activities directly involved in obtaining , consuming Those activities directly involved in obtaining , consuming

and disposing of products and services, including the decision and disposing of products and services, including the decision processes that precede and follow these actions processes that precede and follow these actions

‘‘You cannot take the consumer for granted any more’You cannot take the consumer for granted any more’

Therefore a sound understanding of consumer behaviour is Therefore a sound understanding of consumer behaviour is essential for the long run success of any marketing programessential for the long run success of any marketing program

Logical PositivismLogical Positivism Understanding and predicting consumer behaviour Understanding and predicting consumer behaviour Cause and effect relationships that govern persuasion and/or Cause and effect relationships that govern persuasion and/or

educationeducation Post Modern – to understand consumption behaviour without Post Modern – to understand consumption behaviour without

any attempt to influence itany attempt to influence it

Consumer behaviourConsumer behaviour ““MEET THE NEW CONSUMERMEET THE NEW CONSUMER

and smile when you do because she is your boss. It may not and smile when you do because she is your boss. It may not be the person you thought you knew. Instead of choosing be the person you thought you knew. Instead of choosing from what you have to offer, she tells you what she wants. from what you have to offer, she tells you what she wants. You figure it out how to give it to her.”You figure it out how to give it to her.”-Fortune Editor-Fortune Editor

A new product must satisfy consumer needs, not the needs and A new product must satisfy consumer needs, not the needs and expectations of managementexpectations of management

Understanding and adapting to consumer motivation and Understanding and adapting to consumer motivation and behaviour is not an option – it becomes a necessity for behaviour is not an option – it becomes a necessity for competitive survivalcompetitive survival

Consumer behaviourConsumer behaviour Consumer sovereignty presents a formidable Consumer sovereignty presents a formidable

challenge but skilful marketing can affect both challenge but skilful marketing can affect both motivation and behaviour if the product or motivation and behaviour if the product or service offered is designed to meet consumer service offered is designed to meet consumer needs and expectations.needs and expectations.

A sales success occurs because demand either A sales success occurs because demand either exists already or is latent and awaiting exists already or is latent and awaiting activation by the right marketing offering.activation by the right marketing offering.

Consumer behaviourConsumer behaviour

Dominant forces shaping Consumer Dominant forces shaping Consumer ResearchResearch

Factors that move an economy from Factors that move an economy from Production-driven to Market-drivenProduction-driven to Market-driven

Level of sophistication with which Level of sophistication with which human behaviour is understood in human behaviour is understood in psychology and other behavioural psychology and other behavioural sciencessciences


Motivational ResearchMotivational Research It seeks to learn what motivates people in It seeks to learn what motivates people in

making choices. The techniques are such as to making choices. The techniques are such as to delve into the conscious, subconscious and the delve into the conscious, subconscious and the unconscious.unconscious.

‘‘women don’t buy cosmetics, they buy hope.’women don’t buy cosmetics, they buy hope.’ ‘‘women bake cakes out of the unconscious women bake cakes out of the unconscious

desire to give birthdesire to give birth’’


The advice to footwear salesmen should be ‘Don’t sell shoes – The advice to footwear salesmen should be ‘Don’t sell shoes – sell lovely feet’sell lovely feet’

Marketers must contend with small changing segments of Marketers must contend with small changing segments of highly selective buyers intent on receiving genuine value at highly selective buyers intent on receiving genuine value at the lowest pricethe lowest price

All managers must become astute analysts of Consumer All managers must become astute analysts of Consumer motivation and Behaviourmotivation and Behaviour

Three foundations for marketing decisionsThree foundations for marketing decisions ExperienceExperience IntuitionIntuition ResearchResearch


Enhancing Consumer Value-addedEnhancing Consumer Value-added Marketers have to constantly innovate after understanding Marketers have to constantly innovate after understanding

their consumers to strip out costs permanently by focusing on their consumers to strip out costs permanently by focusing on what adds value for the customer and eliminating what what adds value for the customer and eliminating what doesn’t.doesn’t.

Individualised MarketingIndividualised Marketing A very personal form of marketing that recognises, A very personal form of marketing that recognises,

acknowledges, appreciates and serves individuals who become acknowledges, appreciates and serves individuals who become or are known to the marketer.or are known to the marketer.

Data – based marketing; DMData – based marketing; DM Customized marketingCustomized marketing


Variables involved in understanding Variables involved in understanding consumer behaviourconsumer behaviour

Stimulus – ads, products, hungerpangs Stimulus – ads, products, hungerpangs Response – physical/mental reaction to the Response – physical/mental reaction to the

stimulusstimulus Intervening variables – mood, knowledge, Intervening variables – mood, knowledge,

attitude, values, situations, etcattitude, values, situations, etc

Overall Model of Consumer BehaviourOverall Model of Consumer Behaviour

Self-Concept&

Learning

Decision ProcessesExternal Influences

Internal Influences

CultureSubcultureDemographics

Social statusReference groups

FamilyMarketing Activities

PerceptionLearningMemory

MotivesPersonalityEmotions

Attitudes

Problem Recognition

Information Search

Alt Eval & Selection

Outlet select & Purchase

Postpurchase Processes

Marketing EnvironmentMarketing Environment

A company’s A company’s marketing environment marketing environment consists of the actors and forces consists of the actors and forces outside marketing that affect marketing management’s ability to develop outside marketing that affect marketing management’s ability to develop and maintain successful relationships with its target customers.and maintain successful relationships with its target customers.

1). Being successful means being able to adapt the marketing mix to trends 1). Being successful means being able to adapt the marketing mix to trends and changes this environment.and changes this environment.

2). Changes in the marketing environment are often quick and 2). Changes in the marketing environment are often quick and unpredictable.unpredictable.

3). The marketing environment offers both opportunities and threats.3). The marketing environment offers both opportunities and threats.

4). The company must use its marketing research and marketing 4). The company must use its marketing research and marketing intelligence systems to monitor the changing environment.intelligence systems to monitor the changing environment.

5). Systematic environmental scanning helps marketers to revise and adapt 5). Systematic environmental scanning helps marketers to revise and adapt marketing strategies to meet new challenges and opportunities in the marketing strategies to meet new challenges and opportunities in the marketplace. marketplace.


Includes:Includes:• Micro environment: actors close to the company Micro environment: actors close to the company

that affect its ability to serve its customers.that affect its ability to serve its customers.• Macro environment: larger societal forces that Macro environment: larger societal forces that

affect the microenvironment.affect the microenvironment. Considered to be beyond the control of the Considered to be beyond the control of the

organization.organization.


1. 1. Micro EnvironmentalMicro Environmental

The microenvironment consists of five components. The microenvironment consists of five components. The first is the organization’s internal environment—its The first is the organization’s internal environment—its

several departments and management levels—as it affects several departments and management levels—as it affects marketing management's decision making. marketing management's decision making.

The second component includes the marketing channel firms The second component includes the marketing channel firms that cooperate to create value: the suppliers and marketing that cooperate to create value: the suppliers and marketing intermediaries (middlemen, physical distribution firms, intermediaries (middlemen, physical distribution firms, marketing-service agencies, financial intermediaries). marketing-service agencies, financial intermediaries).

The third component consists of the five types of markets in The third component consists of the five types of markets in which the organization can sell: the consumer, producer, which the organization can sell: the consumer, producer, reseller, government, and international markets. reseller, government, and international markets.

Marketing EnvironmentMarketing Environment The fourth component consists of the competitors facing the organization. The fourth component consists of the competitors facing the organization. The fifth component consists of all the publics that have an actual or The fifth component consists of all the publics that have an actual or

potential interest in or impact on the organization’s ability to achieve its potential interest in or impact on the organization’s ability to achieve its objectives: financial, media, government, citizen action, and local, general, objectives: financial, media, government, citizen action, and local, general, and internal publics.and internal publics.

- - SoSo the microenvironment consists of six forces close to the company that affect its the microenvironment consists of six forces close to the company that affect its ability to serve its customers:ability to serve its customers:

a. The company itself (including departments). a. The company itself (including departments). 1). Top management is responsible for setting the company’s mission, objectives, 1). Top management is responsible for setting the company’s mission, objectives,

broad strategies, and policies. 2). Marketing managers must make decisions within broad strategies, and policies. 2). Marketing managers must make decisions within the parameters established by top management. 3). Marketing managers must also the parameters established by top management. 3). Marketing managers must also work closely with other company departments. Areas such as finance, R & D, work closely with other company departments. Areas such as finance, R & D, purchasing, manufacturing, and accounting all produce better results when aligned purchasing, manufacturing, and accounting all produce better results when aligned by common objectives and goals. 4). All departments must “think consumer” if the by common objectives and goals. 4). All departments must “think consumer” if the firm is to be successful. The goal is to provide superior customer value and firm is to be successful. The goal is to provide superior customer value and satisfaction.satisfaction.

..


b. Suppliers. b. Suppliers. Suppliers are firms and individuals that provide the Suppliers are firms and individuals that provide the

resources needed by the company and its competitors resources needed by the company and its competitors to produce goods and services. They are an important to produce goods and services. They are an important link in the company’s overall customer “value link in the company’s overall customer “value delivery system.”delivery system.”

1). One consideration is to watch supply availability 1). One consideration is to watch supply availability (such as supply shortages).(such as supply shortages).

2). Another point of concern is the monitoring of 2). Another point of concern is the monitoring of price trends of key inputs. Rising supply costs must price trends of key inputs. Rising supply costs must be carefully monitored.be carefully monitored.


c. c. Marketing channel firms (intermediaries).Marketing channel firms (intermediaries). Marketing intermediaries are firms that help the company to promote, sell, and distribute its Marketing intermediaries are firms that help the company to promote, sell, and distribute its

goods to final buyers.goods to final buyers.

1). 1). ResellersResellers

are distribution channel firms that help the company find customers or make sales to them.are distribution channel firms that help the company find customers or make sales to them.

2). These include wholesalers and retailers who buy and resell merchandise.2). These include wholesalers and retailers who buy and resell merchandise.

3). Resellers often perform important functions more cheaply than the company can perform 3). Resellers often perform important functions more cheaply than the company can perform itself. However, seeking and working with resellers is not easy because of the power that some itself. However, seeking and working with resellers is not easy because of the power that some demand and use.demand and use.

Physical distribution firmsPhysical distribution firms help the company to stock and move goods from their points of origin to their destinations. help the company to stock and move goods from their points of origin to their destinations.

Examples would be warehouses (that store and protect goods before they move to the next Examples would be warehouses (that store and protect goods before they move to the next destination).destination).

Marketing service agenciesMarketing service agencies (such as marketing research firms, advertising agencies, media firms, etc.) help the company (such as marketing research firms, advertising agencies, media firms, etc.) help the company

target and promote its products.target and promote its products. Financial intermediariesFinancial intermediaries (such as banks, credit companies, insurance companies, etc.) help finance transactions and (such as banks, credit companies, insurance companies, etc.) help finance transactions and

insure against risks.insure against risks.


dd. Customer markets'. Competitors'. Publics. Customer markets'. Competitors'. Publics.. The company must study its customer markets closely since each market has its The company must study its customer markets closely since each market has its

own special characteristics. These markets normally include:own special characteristics. These markets normally include: 1). 1). Consumer marketsConsumer markets (individuals and households that buy goods and services for personal consumption).(individuals and households that buy goods and services for personal consumption). 2). 2). Business marketsBusiness markets (buy goods and services for further processing or for use in their production (buy goods and services for further processing or for use in their production

process). process). 3). 3). Reseller marketsReseller markets (buy goods and services in order to resell them at a profit).(buy goods and services in order to resell them at a profit). 4). 4). Government marketsGovernment markets (agencies that buy goods and services in order to produce public services or transfer (agencies that buy goods and services in order to produce public services or transfer

them to those that need them).them to those that need them). 5). 5). International marketsInternational markets (buyers of all types in foreign countries).(buyers of all types in foreign countries).


e. Competitors.e. Competitors. Every company faces a wide range of competitors. A Every company faces a wide range of competitors. A

company must secure a strategic advantage over company must secure a strategic advantage over competitors by positioning their offerings to be competitors by positioning their offerings to be successful in the marketplace. No single competitive successful in the marketplace. No single competitive strategy is best for all companies.strategy is best for all companies.


f. Publicsf. Publics A A public public is any group that has an actual or potential interest in or impact on an is any group that has an actual or potential interest in or impact on an

organization’s ability to achieve its objectives. A company should prepare a organization’s ability to achieve its objectives. A company should prepare a marketing plan for all of their major publics as well as their customer markets. marketing plan for all of their major publics as well as their customer markets. Generally, publics can be identified as being:Generally, publics can be identified as being:

1). Financial publics--influence the company’s ability to obtain funds.1). Financial publics--influence the company’s ability to obtain funds. 2). Media publics--carry news, features, and editorial opinion.2). Media publics--carry news, features, and editorial opinion. 3). Government publics--take developments into account.3). Government publics--take developments into account. 4). Citizen-action publics--a company’s decisions are often questioned by 4). Citizen-action publics--a company’s decisions are often questioned by

consumer organizations.consumer organizations. 5). Local publics--includes neighbourhood residents and community organizations.5). Local publics--includes neighbourhood residents and community organizations. 6). General publics--a company must be concerned about the general public’s 6). General publics--a company must be concerned about the general public’s

attitude toward its products and services.attitude toward its products and services. 7). Internal publics--workers, managers, volunteers, and the board of directors.7). Internal publics--workers, managers, volunteers, and the board of directors.


2. 2. MACRO ENVIRONMENTMACRO ENVIRONMENT The Company’s Macro environmentThe Company’s Macro environment The company and all of the other actors operate in a larger macro The company and all of the other actors operate in a larger macro

environment of forces that shape opportunities and pose threats environment of forces that shape opportunities and pose threats to the company.to the company.

The company and all of the other actors operate in a larger macro environment of The company and all of the other actors operate in a larger macro environment of forces that’s have opportunities and pose threats to the company. There are six forces that’s have opportunities and pose threats to the company. There are six major forces (outlined below)in the company’s macro environment. There are six major forces (outlined below)in the company’s macro environment. There are six major forces (outlined below) in the company’s macro environment.major forces (outlined below) in the company’s macro environment.

a. Demographic. a. Demographic. b. Economic.b. Economic. c. Natural.c. Natural. d. Technological.d. Technological. e. Political.e. Political. f. Cultural.f. Cultural.


a. a. Demographic EnvironmentDemographic Environment

DemographyDemography is the study of human populations in terms of size, density, location, age, sex, race, occupation, and other is the study of human populations in terms of size, density, location, age, sex, race, occupation, and other

statistics. It is of major interest to marketers because it involves people and people make up markets. statistics. It is of major interest to marketers because it involves people and people make up markets. Demographic trends are constantly changing. Some more interesting ones are.1). The world’s population Demographic trends are constantly changing. Some more interesting ones are.1). The world’s population (though not all countries) rate is growing at an explosive rate that will soon exceed food supply and ability (though not all countries) rate is growing at an explosive rate that will soon exceed food supply and ability to adequately service the population. The greatest danger is in the poorest countries where poverty to adequately service the population. The greatest danger is in the poorest countries where poverty contributes to the difficulties. Emerging markets such as China are receiving increased attention from contributes to the difficulties. Emerging markets such as China are receiving increased attention from global marketers.2). The most important trend is the changing age structure of the population. The global marketers.2). The most important trend is the changing age structure of the population. The population is aging because of a slowdown in the birth rate (in this country) and life expectancy is population is aging because of a slowdown in the birth rate (in this country) and life expectancy is increasing.increasing.

The The baby boomersbaby boomers

following World War II have produced a huge “bulge” in our population's age distribution. The new prime following World War II have produced a huge “bulge” in our population's age distribution. The new prime market is the middle age group (in the future it will be the senior citizen group). There are many market is the middle age group (in the future it will be the senior citizen group). There are many subdivisions of this group.subdivisions of this group.

a). Generation X--this group lies in the shadow of the boomers and lack obvious distinguishing a). Generation X--this group lies in the shadow of the boomers and lack obvious distinguishing characteristics. They are a very cynical group because of all the difficulties that have surrounded and characteristics. They are a very cynical group because of all the difficulties that have surrounded and impacted their group. b). impacted their group. b). Echo boomersEcho boomers

(baby boom lets) are the large growing kid and teen market. This group is used to affluence on the part of (baby boom lets) are the large growing kid and teen market. This group is used to affluence on the part of their parents (as different from the Gen Xers). One distinguishing characteristic is their utter fluency and their parents (as different from the Gen Xers). One distinguishing characteristic is their utter fluency and comfort with computer, digital, and Internet technology(sometimes called Net-Gens).comfort with computer, digital, and Internet technology(sometimes called Net-Gens).


c). Generational marketing is possible, however, caution must be used to c). Generational marketing is possible, however, caution must be used to avoid generational alienation. Many in the modern family now avoid generational alienation. Many in the modern family now “telecommute”--work at home or in a remote office and conduct their “telecommute”--work at home or in a remote office and conduct their business using fax, cell phones, modem, or the Internet. In general, the business using fax, cell phones, modem, or the Internet. In general, the population is becoming better educated. The work force is becoming more population is becoming better educated. The work force is becoming more white-collar. Products such as books and education services appeal to white-collar. Products such as books and education services appeal to groups following this trend. Technical skills (such as in computers) will be groups following this trend. Technical skills (such as in computers) will be a must in the future. The final demographic trend is the increasing ethnic a must in the future. The final demographic trend is the increasing ethnic and racial diversity of the population. Diversity is a force that must be and racial diversity of the population. Diversity is a force that must be recognized in the next decade. However, companies must recognize that recognized in the next decade. However, companies must recognize that diversity goes beyond ethnic heritage. One of the important markets of the diversity goes beyond ethnic heritage. One of the important markets of the future are that disabled people (a market larger any of our ethnic minority future are that disabled people (a market larger any of our ethnic minority groups).groups).

Marketing EnvironmentMarketing Environment b. Economic Environmentb. Economic Environment The The economic environment -economic environment -includes those factors that affect consumer purchasing includes those factors that affect consumer purchasing

power and spending patterns. Major economic trends in the United States include:power and spending patterns. Major economic trends in the United States include:

1). 1). Personal consumption Personal consumption (along with personal debt) has gone up (1980s) and the (along with personal debt) has gone up (1980s) and the early 1990s brought recession that has caused adjustments both personally and early 1990s brought recession that has caused adjustments both personally and corporately in this country. Today, consumers are more careful shoppers.corporately in this country. Today, consumers are more careful shoppers.

2). 2). Value marketingValue marketing

(trying to offer the consumer greater value for their dollar) is a very serious strategy (trying to offer the consumer greater value for their dollar) is a very serious strategy in the 1990s. Real income is on the rise again but is being carefully guarded by a in the 1990s. Real income is on the rise again but is being carefully guarded by a value-conscious consumer.value-conscious consumer.

3). 3). Income distributionIncome distribution

is still very skewed in the U. S. and all classes have not shared in prosperity. In is still very skewed in the U. S. and all classes have not shared in prosperity. In addition, spending patterns show that food, housing, and transportation still account addition, spending patterns show that food, housing, and transportation still account for the majority of consumer dollars. It is also of note that distribution of income for the majority of consumer dollars. It is also of note that distribution of income has created a “two-tiered market” where there are those that are affluent and less has created a “two-tiered market” where there are those that are affluent and less affluent. Marketers must carefully monitor economic changes so they will be able affluent. Marketers must carefully monitor economic changes so they will be able to prosper with the trend, not suffer from it.to prosper with the trend, not suffer from it.


c. Natural Environmentc. Natural Environment The The natural environment -natural environment -involves natural resources that are needed as inputs by involves natural resources that are needed as inputs by

marketers or that are affected by marketing activities. During the past two decades marketers or that are affected by marketing activities. During the past two decades environmental concerns have steadily grown. Some trend analysts labelled the environmental concerns have steadily grown. Some trend analysts labelled the specific areas of concern were:specific areas of concern were:

1). 1). Shortages of raw materials.Shortages of raw materials.

Staples such as air, water, and wood products have been seriously damaged and Staples such as air, water, and wood products have been seriously damaged and non-renewable such as oil, coal, and various minerals have been seriously depleted non-renewable such as oil, coal, and various minerals have been seriously depleted during industrial expansion.during industrial expansion.

2). 2). Increased pollutionIncreased pollution

is a worldwide problem. Industrial damage to the environment is very serious. Far-is a worldwide problem. Industrial damage to the environment is very serious. Far-sighted companies are becoming “environmentally friendly” and are producing sighted companies are becoming “environmentally friendly” and are producing environmentally safe and recyclable or biodegradable goods. The public response environmentally safe and recyclable or biodegradable goods. The public response to these companies is encouraging. However, lack of adequate funding, especially to these companies is encouraging. However, lack of adequate funding, especially in third world countries, is a major barrier.in third world countries, is a major barrier.


3). 3). Government interventionGovernment intervention

In natural resource management has caused environmental concerns to be In natural resource management has caused environmental concerns to be more practical and necessary in business and industry. Leadership, not more practical and necessary in business and industry. Leadership, not punishment, seems to be the best policy for long-term results. Instead of punishment, seems to be the best policy for long-term results. Instead of opposing regulation, marketers should help develop solutions to the opposing regulation, marketers should help develop solutions to the material and energy problems facing the world.material and energy problems facing the world.

4). 4). Environmentally sustainable strategies.Environmentally sustainable strategies.

The so-called green movement has encouraged or even demanded that The so-called green movement has encouraged or even demanded that firms produce strategies that are not only environmentally friendly but are firms produce strategies that are not only environmentally friendly but are also environmentally proactive. Firms are beginning to recognize the link also environmentally proactive. Firms are beginning to recognize the link between a healthy economy and a healthy environment.between a healthy economy and a healthy environment.

Marketing EnvironmentMarketing Environment d. Technological Environmentd. Technological Environment The The technological environment -technological environment -includes forces that create new technologies, includes forces that create new technologies,

creating new product and market opportunities.creating new product and market opportunities.

1). Technology is perhaps the most dramatic force shaping our destiny.1). Technology is perhaps the most dramatic force shaping our destiny.

2). New technologies create new markets and opportunities.3). The following trends 2). New technologies create new markets and opportunities.3). The following trends are worth watching are worth watching

a). Faster pace of technological change. Products are being technologically outdated a). Faster pace of technological change. Products are being technologically outdated at a rapid pace.at a rapid pace.

b). There seems to be almost unlimited opportunities being developed daily. b). There seems to be almost unlimited opportunities being developed daily. Consider the expanding fields of health care, the space shuttle, robotics, and Consider the expanding fields of health care, the space shuttle, robotics, and biogenetic industries.biogenetic industries.

c). The challenge is not only technical but also commercial--to make practical, c). The challenge is not only technical but also commercial--to make practical, affordable versions of products.affordable versions of products.

d). Increased regulation. Marketers should be aware of the regulations concerning d). Increased regulation. Marketers should be aware of the regulations concerning product safety, individual privacy, and other areas that affect technological product safety, individual privacy, and other areas that affect technological changes. They must also be alert to any possible negative aspects of an innovation changes. They must also be alert to any possible negative aspects of an innovation that might harm users or arouse opposition.that might harm users or arouse opposition.


e. Political Environmente. Political Environment The The political environment political environment

includes laws, government agencies, and pressure groups that influence includes laws, government agencies, and pressure groups that influence and limit various organizations and individuals in a given society. Various and limit various organizations and individuals in a given society. Various forms of legislation regulate business.forms of legislation regulate business.

1). Governments develop1). Governments develop public policy public policy to guide commerce--sets of laws and to guide commerce--sets of laws and regulations limiting business for the good of society as a whole.regulations limiting business for the good of society as a whole.

2). Almost every marketing activity is subject to a wide range of laws and 2). Almost every marketing activity is subject to a wide range of laws and regulations. Some trends in the political environment include:regulations. Some trends in the political environment include:

- Increasing legislation to:- Increasing legislation to:

a). a). Protect companies Protect companies from each other.from each other.

b). b). Protecting consumers Protecting consumers from unfair business practices.from unfair business practices.

c). c). Protecting interests of society Protecting interests of society against unrestrained business against unrestrained business behaviour.behaviour.


-Changing government agency enforcement. New laws and their -Changing government agency enforcement. New laws and their enforcement will continue or increase.enforcement will continue or increase.

3). Increased emphasis on ethics and socially responsible actions. Socially 3). Increased emphasis on ethics and socially responsible actions. Socially responsible firms actively seek out ways to protect the long-run interests of responsible firms actively seek out ways to protect the long-run interests of their consumers and the environment.their consumers and the environment.

a). Enlightened companies encourage their managers to look beyond a). Enlightened companies encourage their managers to look beyond regulation and “do the right thing.”regulation and “do the right thing.”

b). Recent scandals have increased concern about ethics and social b). Recent scandals have increased concern about ethics and social responsibility.responsibility.

c). The boom in e-commerce and Internet marketing has created a new set c). The boom in e-commerce and Internet marketing has created a new set of social and ethical issues. Concerns are Privacy, Security, Access by of social and ethical issues. Concerns are Privacy, Security, Access by vulnerable or unauthorized groups.vulnerable or unauthorized groups.


f. Cultural Environmentf. Cultural Environment

The The cultural environment cultural environment is made up of institutions and other forces that affect society’s basic values, perceptions, is made up of institutions and other forces that affect society’s basic values, perceptions,

preferences, and behaviours. Certain cultural characteristics can affect marketing decision-preferences, and behaviours. Certain cultural characteristics can affect marketing decision-making. Among the most dynamic cultural characteristics are:making. Among the most dynamic cultural characteristics are:

1). Persistence of cultural values. People’s core beliefs and values have a high degree of 1). Persistence of cultural values. People’s core beliefs and values have a high degree of persistence.persistence.

Core Core beliefs and values are passed on from parents to children and are reinforced by schools, beliefs and values are passed on from parents to children and are reinforced by schools, churches, business, and government. churches, business, and government. Secondary Secondary beliefs and values are more open to change.beliefs and values are more open to change.

2). Shifts in secondary cultural values. Since secondary cultural values and beliefs are open to 2). Shifts in secondary cultural values. Since secondary cultural values and beliefs are open to change, marketers want to spot them and be able to capitalize on the change potential. change, marketers want to spot them and be able to capitalize on the change potential. Society’s major cultural views are expressed in:Society’s major cultural views are expressed in:

a). a). People’s views of themselves. People’s views of themselves. People vary in their emphasis on serving themselves versus People vary in their emphasis on serving themselves versus serving others. In the 1980s, personal ambition and materialism increased dramatically, with serving others. In the 1980s, personal ambition and materialism increased dramatically, with significant implications for marketing. The leisure industry was a chief beneficiary.significant implications for marketing. The leisure industry was a chief beneficiary.

b). b). People’s views of others. People’s views of others. Observers have noted a shift from a “me-society” to a “we-Observers have noted a shift from a “me-society” to a “we-society.” Consumers are spending more on products and services that will improve their lives society.” Consumers are spending more on products and services that will improve their lives rather than their imagerather than their image..

Marketing EnvironmentMarketing Environment c). c). People’s views of organizations.People’s views of organizations. People are willing to work for large organizations but expect them to become People are willing to work for large organizations but expect them to become

increasingly socially responsible. Many companies are linking themselves to increasingly socially responsible. Many companies are linking themselves to worthwhile causes. Honesty in appeals is a must.worthwhile causes. Honesty in appeals is a must.

d). d). People’s views of society.People’s views of society. This orientation influences consumption patterns. “Buy American” versus buying This orientation influences consumption patterns. “Buy American” versus buying

abroad is an issue that will continue into the next decade.abroad is an issue that will continue into the next decade. e). e). People’s view of nature.People’s view of nature. There is a growing trend toward people’s feeling of mastery over nature through There is a growing trend toward people’s feeling of mastery over nature through

technology and the belief that nature is bountiful. However, nature is finite. Love of technology and the belief that nature is bountiful. However, nature is finite. Love of nature and sports associated with nature are expected to be significant trends in the nature and sports associated with nature are expected to be significant trends in the next several years.next several years.

f). f). People’s views of the universe.People’s views of the universe. Studies of the origin of man, religion, and thought-provoking ad campaigns are on Studies of the origin of man, religion, and thought-provoking ad campaigns are on

the rise. Currently, Americans are on a spiritual journey. This will probably take the rise. Currently, Americans are on a spiritual journey. This will probably take the form of “spiritual individualism.”the form of “spiritual individualism.”

Market SegmentationMarket Segmentation Market segmentationMarket segmentation is a is a marketing strategy involves dividing a broad involves dividing a broad

target market into subsets of into subsets of consumers, , businesses, or , or countries who have who have common needs and priorities, and then designing and implementing common needs and priorities, and then designing and implementing strategies to target them. Market segmentation strategies may be used to strategies to target them. Market segmentation strategies may be used to identify the target customers, and provide supporting data for identify the target customers, and provide supporting data for positioning to achieve a marketing plan objective. Businesses may develop product to achieve a marketing plan objective. Businesses may develop product differentiation strategies, or an undifferentiated approach, involving differentiation strategies, or an undifferentiated approach, involving specific products or product lines depending on the specific demand and specific products or product lines depending on the specific demand and attributes of the target segment.attributes of the target segment.

A marketing term referring to the aggregating of prospective buyers into A marketing term referring to the aggregating of prospective buyers into groups (segments) that have common needs and will respond similarly to a groups (segments) that have common needs and will respond similarly to a marketing action. Market segmentation enables companies to target marketing action. Market segmentation enables companies to target different categories of consumers who perceive the full value of certain different categories of consumers who perceive the full value of certain products and services differently from one another.products and services differently from one another.

Types of Market SegmentationTypes of Market Segmentation The following are the most common forms of market segmentation practices:The following are the most common forms of market segmentation practices: Geographic SegmentationGeographic Segmentation

Marketers can segment according to geographic criteria—nations, states, Marketers can segment according to geographic criteria—nations, states, regions, countries, cities, neighborhoods, or postal codes.The geo-cluster regions, countries, cities, neighborhoods, or postal codes.The geo-cluster approach combines demographic data with geographic data to create a approach combines demographic data with geographic data to create a more accurate or specific profile.more accurate or specific profile.[1][1] With respect to region, in rainy regions With respect to region, in rainy regions merchants can sell things like raincoats, umbrellas and gumboots. In hot merchants can sell things like raincoats, umbrellas and gumboots. In hot regions, one can sell summer clothing. A small business commodity store regions, one can sell summer clothing. A small business commodity store may target only customers from the local neighborhood, while a larger may target only customers from the local neighborhood, while a larger department store can target its marketing towards several neighborhoods in department store can target its marketing towards several neighborhoods in a larger city or area, while ignoring customers in other continents. a larger city or area, while ignoring customers in other continents. Geographic Segmentation is important and may be considered the first step Geographic Segmentation is important and may be considered the first step to international marketing, followed by demographic and psychographic to international marketing, followed by demographic and psychographic segmentation. The use of national borders is the institutional use of segmentation. The use of national borders is the institutional use of geographic segmentation, although geographic segments may be classified geographic segmentation, although geographic segments may be classified by identified geological regions.by identified geological regions.

Types of Market SegmentationTypes of Market Segmentation

Demographic SegmentationDemographic Segmentation

Segmentation according to demography is based on variables such as age, Segmentation according to demography is based on variables such as age, gender, occupation and education level gender, occupation and education level [2][2] or according to perceived or according to perceived benefits which a product/service may provide. Benefits may be perceived benefits which a product/service may provide. Benefits may be perceived differently depending on a consumer's stage in the life cycle. Demographic differently depending on a consumer's stage in the life cycle. Demographic segmentation divides markets into different life stage groups and allows segmentation divides markets into different life stage groups and allows for messages to be tailored accordingly.for messages to be tailored accordingly.

Behavioral SegmentationBehavioral Segmentation

Behavioral segmentation divides consumers into groups according to their Behavioral segmentation divides consumers into groups according to their knowledge of, attitude towards, usage rate, response,knowledge of, attitude towards, usage rate, response,[4][4] loyalty status, and loyalty status, and readiness stagereadiness stage to a product. There is an extra connectivity with all other to a product. There is an extra connectivity with all other market related sources.market related sources.


Psychographic SegmentationPsychographic Segmentation

Psychographic segmentation, which is sometimes called Lifestyle. This is Psychographic segmentation, which is sometimes called Lifestyle. This is measured by studying the activities, interests, and opinions (AIOs) of measured by studying the activities, interests, and opinions (AIOs) of customers. It considers how people spend their leisure,customers. It considers how people spend their leisure,[6][6] and which and which external influences they are most responsive to and influenced by. external influences they are most responsive to and influenced by. Psychographic is highly important to segmentation, because it identifies Psychographic is highly important to segmentation, because it identifies the personal activities and targeted lifestyle the target subject endures, or the personal activities and targeted lifestyle the target subject endures, or the image they are attempting to project. Mass Media has a predominant the image they are attempting to project. Mass Media has a predominant influence and effect on Psychographic segmentation. Lifestyle products influence and effect on Psychographic segmentation. Lifestyle products may pertain to high involvement products and purchase decisions, to may pertain to high involvement products and purchase decisions, to speciality or luxury products and purchase decisions.speciality or luxury products and purchase decisions.


Cultural SegmentationCultural Segmentation

Cultural SegmentationCultural Segmentation[7][7] is used to classify markets according to cultural origin. is used to classify markets according to cultural origin.

Culture is a strong dimension of consumer behaviour and is used to enhance Culture is a strong dimension of consumer behaviour and is used to enhance customer insight and as a component of predictive models. Cultural segmentation customer insight and as a component of predictive models. Cultural segmentation enables appropriate communications to be crafted to particular cultural enables appropriate communications to be crafted to particular cultural communities, which is important for message engagement in a wide range of communities, which is important for message engagement in a wide range of organisations, including businesses, government and community groups. Cultural organisations, including businesses, government and community groups. Cultural Segmentation can be applied to existing customer data to measure market Segmentation can be applied to existing customer data to measure market penetration in key cultural segments by product, brand, channel as well as penetration in key cultural segments by product, brand, channel as well as traditional measures of recency, frequency and monetary value. These benchmarks traditional measures of recency, frequency and monetary value. These benchmarks form an important evidence-base to guide strategic direction and tactical campaign form an important evidence-base to guide strategic direction and tactical campaign activity, allowing engagement trends to be monitored over time.activity, allowing engagement trends to be monitored over time.

Cultural Segmentation can also be mapped according to state, region, suburb and Cultural Segmentation can also be mapped according to state, region, suburb and neighbourhood. This provides a geographical market view of population neighbourhood. This provides a geographical market view of population proportions and may be of benefit in selecting appropriately located premises, proportions and may be of benefit in selecting appropriately located premises, determining territory boundaries and local marketing activities.determining territory boundaries and local marketing activities.

The Benefits of Segmentation The Benefits of Segmentation While there may be theoretically 'ideal' While there may be theoretically 'ideal' market segmentsmarket segments, in reality, every , in reality, every

organization engaged in a market will develop different ways of imagining market organization engaged in a market will develop different ways of imagining market segmentssegments, and create , and create productproduct differentiationdifferentiation strategiesstrategies to exploit these segments. to exploit these segments. The market segmentation and corresponding The market segmentation and corresponding product differentiationproduct differentiation strategy can strategy can give a firm a temporary commercial advantage. Most market segmentations are the give a firm a temporary commercial advantage. Most market segmentations are the techniques used to attract the right customer.techniques used to attract the right customer.

In essence, the In essence, the marketingmarketing objectivesobjectives of segmentation of segmentation analysisanalysis are: are: To reduce risk in deciding where, when, how, and to whom a product, To reduce risk in deciding where, when, how, and to whom a product, serviceservice, or , or

brandbrand will be marketed will be marketed To increase marketing efficiency by directing effort specifically toward the To increase marketing efficiency by directing effort specifically toward the

designated segment in a manner consistent with that segment's characteristics designated segment in a manner consistent with that segment's characteristics Market segmentation is a twofold Market segmentation is a twofold processprocess that includes: that includes: Identifying and classifying people into Identifying and classifying people into homogeneoushomogeneous groupings, called segments groupings, called segments Determining which of these segments are Determining which of these segments are viableviable targettarget markets. markets.

The Benefits of Segmentation The Benefits of Segmentation

There are several advantages of segmentation.There are several advantages of segmentation.

1) Focus of the Company: 1) Focus of the Company: Segmentation is an effective method to Segmentation is an effective method to

increase the focus of a firm on market segments. If you have better focus, increase the focus of a firm on market segments. If you have better focus, obviously you will have better returns. Numerous automobile companies have obviously you will have better returns. Numerous automobile companies have started focusing on small car segments. This is nothing else but a company started focusing on small car segments. This is nothing else but a company changing its focus for better returns. Thus companies base their strategy completely changing its focus for better returns. Thus companies base their strategy completely on a new segment which increases its focus and profitability.on a new segment which increases its focus and profitability.

2) 2) Increase in competitiveness:Increase in competitiveness: Naturally, once your focus Naturally, once your focus increases, your competitiveness in that market segment will increase. If increases, your competitiveness in that market segment will increase. If you are focusing on youngsters, your brand recall and equity with you are focusing on youngsters, your brand recall and equity with youngsters will be very high. Your market share might increase and the youngsters will be very high. Your market share might increase and the chances of a new competitor entering might be low. The brand loyalty will chances of a new competitor entering might be low. The brand loyalty will definitely increase. Thus market segmentation also increases definitely increase. Thus market segmentation also increases competitiveness of a firm from a holistic view.competitiveness of a firm from a holistic view.

The Benefits of Segmentation The Benefits of Segmentation

3) Market expansion: 3) Market expansion: Geographic segmentation is one type of Geographic segmentation is one type of segmentation where expansion is immediately possible. If you have your segmentation where expansion is immediately possible. If you have your market strategy on the basis of grography, then once you are catering to a market strategy on the basis of grography, then once you are catering to a particular territory, you can immediately expand to a nearby territory. In particular territory, you can immediately expand to a nearby territory. In the same way, if you are targeting customers based on their demography the same way, if you are targeting customers based on their demography (Ex – reebok targets fitness enthusiasts) then you can expand in similar (Ex – reebok targets fitness enthusiasts) then you can expand in similar products (Ex – reebok expanding with its fitness range of clothes and products (Ex – reebok expanding with its fitness range of clothes and accessories). Segmentation plays a crucial role in expansion. You cannot accessories). Segmentation plays a crucial role in expansion. You cannot expand in a territory when you have no idea of which segment of expand in a territory when you have no idea of which segment of customers you will be meeting.customers you will be meeting.

4) Increases profitability:4) Increases profitability: Segmentation increases competitiveness, Segmentation increases competitiveness, brand recall, brand equity, customer retention, communications. Thus if it is brand recall, brand equity, customer retention, communications. Thus if it is affecting so many factors of your business, then definitely it affects the profitability affecting so many factors of your business, then definitely it affects the profitability of the firm. Do you ever see people negotiating in a Nike, Gucci or BMW of the firm. Do you ever see people negotiating in a Nike, Gucci or BMW showrooms? You wont. One of the USP’s of these brand is their segmentation. showrooms? You wont. One of the USP’s of these brand is their segmentation. They are in fact targeting segments which have no need of bargaining or They are in fact targeting segments which have no need of bargaining or negotiation. Thus their profitability is high.negotiation. Thus their profitability is high.

Publicity StrategyPublicity Strategy

1.1. TypesTypes

A. Press releaseA. Press release

B. Feature articleB. Feature article

C. Captioned photographC. Captioned photograph

D. Press conferenceD. Press conference

E. Letters to editor/editorialsE. Letters to editor/editorials

F. Films/tapes/videosF. Films/tapes/videos

2.2. RequirementsRequirements

3.3. LimitationsLimitations

Public RelationsPublic Relations• Public relations - a public organization’s Public relations - a public organization’s

communications and relationships with its various communications and relationships with its various audiences.audiences.

– Helps a firm establish awareness of goods and Helps a firm establish awareness of goods and services and builds a positive image of them.services and builds a positive image of them.

• Publicity - stimulation of demand for a good, Publicity - stimulation of demand for a good, service, place, idea, person, or organization by service, place, idea, person, or organization by disseminating news or obtaining favorable unpaid disseminating news or obtaining favorable unpaid media presentations.media presentations.

– Good publicity can promote a firm’s positive image.Good publicity can promote a firm’s positive image.

– Negative publicity can cause problems.Negative publicity can cause problems.

The Benefits of Public RelationsThe Benefits of Public Relations CredibilityCredibility Let’s face it– consumers today are more cautious when spending. That’s why Let’s face it– consumers today are more cautious when spending. That’s why

having credibility is so essential to a successful business. Because PR and having credibility is so essential to a successful business. Because PR and advertising are very different things, consumers are likely to give credibility to your advertising are very different things, consumers are likely to give credibility to your business when they see it mentioned in the media (uncompensated!) compared to business when they see it mentioned in the media (uncompensated!) compared to when they see your ads or billboards. Studies show that PR has 7 times more when they see your ads or billboards. Studies show that PR has 7 times more credibility among consumers than advertising!credibility among consumers than advertising!

2. 2. Target MarketTarget Market With PR, it’s much easier to aim and fire on that target market you are hoping to With PR, it’s much easier to aim and fire on that target market you are hoping to

reach. Media sources can place the information that is right up the consumers alley reach. Media sources can place the information that is right up the consumers alley and give them the required information they need. If you are an accountant hoping and give them the required information they need. If you are an accountant hoping to generate some new clientele, placing an ad in a teen magazine likely won’t help to generate some new clientele, placing an ad in a teen magazine likely won’t help you. But a well written article smack dab in the middle of the finance section will you. But a well written article smack dab in the middle of the finance section will probably lead you right where you want to be. These target markets are especially probably lead you right where you want to be. These target markets are especially vital in businesses that only appeal to a small target market.vital in businesses that only appeal to a small target market.

3. 3. CostCost While it’s true that PR can be costly if you hire the wrong firm, considering the While it’s true that PR can be costly if you hire the wrong firm, considering the

cost of other promotional advertising, it is on the cheap end of the scale. When you cost of other promotional advertising, it is on the cheap end of the scale. When you step back and look at the cost of PR considering the possible leads when reaching step back and look at the cost of PR considering the possible leads when reaching the right market, you’ll find that the cost is very beneficial.the right market, you’ll find that the cost is very beneficial.

4. 4. Lead GenerationLead Generation The media placement that you receive from PR is long lasting. You’ll likely have The media placement that you receive from PR is long lasting. You’ll likely have

an initial flood of leads, and then as time wheres on, you’ll notice that there is still an initial flood of leads, and then as time wheres on, you’ll notice that there is still the possibility of lead generation from just one good media mention. As people and the possibility of lead generation from just one good media mention. As people and businesses stumble on the PR, it will still be effective at generating leads (thus businesses stumble on the PR, it will still be effective at generating leads (thus leading back to our #3 point: cost).leading back to our #3 point: cost).

5. 5. ImageImage PR isn’t just promoting an item or a special. PR takes your entire business and puts PR isn’t just promoting an item or a special. PR takes your entire business and puts

it in the lights. This helps create an image of your company and creates the it in the lights. This helps create an image of your company and creates the possibility of a more well rounded patronage. Effective PR leaves your company possibility of a more well rounded patronage. Effective PR leaves your company with a positive image, which is always helpful in the future.with a positive image, which is always helpful in the future.

The Disadvantages of PRThe Disadvantages of PR

The major The major disadvantagedisadvantage of PR is the potential for not completing of PR is the potential for not completing communication process. While PR messages can break through the communication process. While PR messages can break through the clutter of commercials, the receiver may not make the connection to clutter of commercials, the receiver may not make the connection to the source. Many firms’ PR efforts are never associated with their the source. Many firms’ PR efforts are never associated with their sponsors in the public mind.sponsors in the public mind.

PR may also mis-fire through mis management and a lack of co-PR may also mis-fire through mis management and a lack of co-ordination with the marketing department. When the marketing and ordination with the marketing department. When the marketing and PR department operate independently, there is a danger of PR department operate independently, there is a danger of inconsistence communication, redundancies in efforts and so on. inconsistence communication, redundancies in efforts and so on.

The key to effective PR is to establish a good program, worthy of The key to effective PR is to establish a good program, worthy of public interest and manage it properly. To determine if this program public interest and manage it properly. To determine if this program is working, the firm must measure the effectiveness of the PR is working, the firm must measure the effectiveness of the PR effort.effort.

RECOMMENEND TEXTBOOKSRECOMMENEND TEXTBOOKS

Kotler, P,. Armstrong, G,. Wong, V and Saunders, J Kotler, P,. Armstrong, G,. Wong, V and Saunders, J (2010) Principles of Marketing: Pearson Education (2010) Principles of Marketing: Pearson Education Limited: Harlow, Engand, UKLimited: Harlow, Engand, UK

Armstrong, G,. Kotler, P,. Harker, M and Brennan, R Armstrong, G,. Kotler, P,. Harker, M and Brennan, R (2012) Marketing: A Introduction: Pearson Education (2012) Marketing: A Introduction: Pearson Education Limited: Harlow, Engand, UKLimited: Harlow, Engand, UK

Kotler, P,. Keller, K,. L,. Brady,. M,. Goodman, M Kotler, P,. Keller, K,. L,. Brady,. M,. Goodman, M and Hansen, T (2009) Marketing Management: and Hansen, T (2009) Marketing Management: Pearson Education Limited: Harlow, Engand, UKPearson Education Limited: Harlow, Engand, UK

Pride, W,. M and Ferrell, O,. C (2012) Foundations of Pride, W,. M and Ferrell, O,. C (2012) Foundations of Marketing: Cengage Learning: South-Western: USAMarketing: Cengage Learning: South-Western: USA

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Jobber, D (2004) Principles and Practice of Jobber, D (2004) Principles and Practice of Marketing: McGraw-Hill International (UK) LimitedMarketing: McGraw-Hill International (UK) Limited

Brassington, F and Pettitt, S (2006) Principles of Brassington, F and Pettitt, S (2006) Principles of Marketing: Pearson Education Limited: Harlow, Marketing: Pearson Education Limited: Harlow, Engand, UKEngand, UK

Adcock, D,. Halborg, A,. L,. Ross, C (2001) Adcock, D,. Halborg, A,. L,. Ross, C (2001) Marketing: Principles and Practice: Pearson Marketing: Principles and Practice: Pearson Education Limited: Harlow, Engand, UKEducation Limited: Harlow, Engand, UK

Perreault, J,. R,. Cannon, J and McCarthy, E,. J Perreault, J,. R,. Cannon, J and McCarthy, E,. J (2011) Essentials of Marketing: McGraw-Hill (2011) Essentials of Marketing: McGraw-Hill International (UK) LimitedInternational (UK) Limited