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STUDY UNIT 1: THE WORLD OF MARKETING

DEFINING MARKETING – EXAM TIP “Marketing is a combination of management tasks and decisions aimed at meeting opportunities & threats in a dynamics environment in such a way that its market offerings lead to the satisfaction of consumers’ needs and wants so that the objectives of the enterprise, consumer and society are achieved.”

explain the nature of marketing in a paragraph

Marketing is a process where an organisation, in its drive to meet its organisational goals, focusses on meeting customers’ needs and wants, by means of offering the right product, at the right price, at the right place and by using the right marketing communication channels and which, in this process, strives to establish relationships with customers and to develop and grow these relationships with relevant stakeholders in an ever-changing environment.

explain the conditions for exchange

Exchange is all the activities associated with people giving up something to receive something they would rather have.Exchange does not necessarily require money.

The 5 conditions required for exchange: At least 2 parties must be involved, one giving & one receiving. Each party must have something of value that the other party wants. Must be some form of communicate between the parties to deliver the goods or services Each party must be free to accept or reject the other’s offer. Each party must want to deal with the other party.

explain the marketing gaps and how marketing fills them (bridges the gaps)

Products are not consumed where they are produced – causing gaps in marketing process.

During exchange, certain gaps are created.

Space gap: Where a geographical distance exists between the manufacturer and the consumer.Eg. Farmer to market – must transport to where customer will buy

Time gap: Distribution of seasonal products.Eg. Bananas, tropical fruit – only grow & harvested in summer; therefore distributors store & freeze so that they are available year-round

Information gap: Inform consumers with the correct information regarding a product.Eg. Launch of new cellphone – customers need to be made aware via advertising or publicity

Ownership gap: The buyer becomes the owner of the product.Eg. Buying a new house – consumer only becomes owner when house is registered in his name – consumer may require finance to make the purchase possible.

Value gap: The seller and the buyer must agree on an acceptable exchange rate. The value the buyer attaches to a product must be the same as the value attached by the seller.

Intermediaries

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Activities intended to bridge the gap between the buyer and the seller usually involve intermediaries. The 3 types are:

Middlemen: These are enterprises directly involved in taking title of products which are later sold to others.

Eg. Companies such as Pep Stores, Edgars, Spar, Shoprite Checkers

Sales intermediaries: These are agents who do not take title of products they sell. They provide services to facilitate the sales process and are paid for these services.

Eg. Financial Advisor – he helps his clients to invest their money at other companies eg. Allan Gray

Auxiliary enterprises: These are not directly involved in the transfer of title but provide support services to facilitate the selling process. They include self-supporting services of the institution that exist to furnish a service to customers, staff or departments.

Eg. Travel agencies, HR departments,

discuss the different marketing orientations – EXAM TIP

4 MARKETING ORIENTATIONS:

1. PRODUCTION-ORIENTATION

Management assesses its capabilities/resources and asks questions

Gives no thought to how company can satisfy needs of customer

Consumers favour products that are readily available & highly affordable

2. SALES-ORIENTATION

Companies focus on sales alone

Use aggressive selling techniques to ensure high profits

No infinite lifespan as they don’t consider what customers need

3. MARKETING ORIENTATION

Is based on an understanding that a sale does not depend on an aggressive sales force, but on a customer’s decision to purchase a product.

Consumer/Customer-orientation: All marketing actions should be aimed at satisfying consumer needs, demands and preferences. Customer is the dictator & company must aim to delight the customer. Requirements of customer come first. Provide after sales support & maintain contact with customers – providing quality, ensuring satisfaction & retaining customers.

Profit-orientation: All marketing actions should be aimed at maximising profit. By providing products that satisfy customer needs, the company will be able to achieve its own goals (profits).

Eg. Harley Davidson – customers are fiercely loyal & brand has a reputation for quality allows company to set pricing based on desired profit margin rather than relying on sales volume or matching competitor pricing.

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Systems (Organisational) integration: “The sum of all the parts is larger than the whole” – the system is integrated as a whole. All depts. should work together to achieve successful marketing of market offering (to satisfy customer needs & wants).

4. SOCIETAL MARKETING-ORIENTATION

Social responsibility of marketing. It is the obligation of the marketing organization to do no harm to the social environment, and to use resources to enhance the environment.

Considerations: marketers should strike a balance between what customers need & want & their long term best interests, society’s long-term best interests and the long-term financial goals of the business.

Green Marketing (concept related to the societal orientation): Promotion of products & services based on environmental factors & awareness. Companies make an effort to inform customers that their products are environmentally friendly, biodegradable and recyclable.

Labels on products indicate that package is environmentally friendly

Sponsoring of campaigns like “Save the Seals”, National Tree or Planting Day

Inc. Connection advertises that they recycles empty cartridges

Mondi collects paper & plastic from residents & corporates for recycling

discuss the different marketing activities

Marketing activities are used to transfer the market offering to the buyer.

Primary marketing activity: Transport (to deliver the product to the consumer in the quickest, safest way)

Can include physical (land, water, air traffic and pipelines) or electronic delivery which is instantaneous

Auxiliary marketing activities:

Sourcing and supplying information – The seller must know who and where potential buyers are (conduct market research) and then seller can supply information to potential buyers using marketing communication methods eg advertising & personal selling.

Standardisation and grading – Products must be designed to conform to specific standards. This facilitates buying process making it easier for buyer to distinguish between varieties of products available.

Eg. Agricultural products must conform to certain qualities (meat grading).

Storage – Closes the time gap. Seasonal products can be stored to ensure regular year-round supply.

Eg . Mealies stored in silos for delivery to milling companies for distribution of pulverised products to wholesalers and retailers.

Financing – Costs are incurred in the transfer or products and services from seller to buyer. These costs must be financed (banks or financial institutions). All participants in exchange process must try keep costs down so product can be made available to consumer at a viable price.

Risk-taking – The owner of the products is exposed to the risk of loss or damage. The risk is carried by both the seller (before exchange) and buyer (after exchange). Owner can take insurance as means of protections against risk & theft.

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Exchange marketing activities: ensures that the customer receives what they paid for – it is the buying and selling. Ownership is transferred from one person to the other.

Buying : not regarded as marketing task but rather as responsibility of purchasing dept.

Selling : very NB task of marketing dept. of any organisation and is influenced by prevailing marketing orientation of the time.

discuss relationship marketing and how it has changed traditional marketing principles

Relationship marketing places its main focus on the maintenance of long term relationships between the organization, the government, the public, the suppliers of raw materials, the organization's employees, and current and potential customers

Company strives to build long-term relationships through developing & maintaining trust with its customers by providing consistent satisfaction & in the process, meeting companies’ objectives ensures long-term profitability.

Loyalty: customer will keep coming back to a business or will buy the business’s products no matter what the competition offers. A customer does not only choose to go back because of reliable products, but also because of excellent quality service. Companies may build relationships with their customers through loyalty programmes.

A long-term relationship with customers is one of the most important ways to ensure longevity of a company. It acknowledges that different marketing strategies must be used for consumer acquisition and retention.

Two P’s must be added to the fours P’s of marketing (product, place, promotion, price) to be considered adequate in relationship marketing:

◦ People: employees should be well-trained in customer service

◦ Processes: production (ensures quality), administration & marketing (customer service) functions – together provide full customer satisfaction. (Functioning in “synergy” – the whole is more than the sum of its parts – reinforcing quality image of product).

◦ TQM: total quality management – striving towards total customer satisfaction (ideal of perfection)

This concept differs from traditional segmentation in the following three ways:

1. Consumers are more knowledgeable and their expectations are continually rising. Because of the ease with which consumers can gather information from the internet, they are forcing companies to become more diligent in the way they present their market offerings.

2. Technology has changed dramatically. New technology such as blogs and relationship or social networks (eg Facebook and Twitter) are some of the factors that need to be considered, because these applications give companies a platform to communicate with their customers at a personal level. This can also help to understand customer preferences and give prompt feedback on enquiries.

3. Competition between vendors is increasing. People can now compare products with the “click of a button”, which means that companies must constantly strive to stay ahead of their competition.

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Employees can have a huge impact on a customer’s service experience and in future also influence their decision to stay with a specific company/bank/retailer or service provider or move to another.

Relationship marketing differs from traditional, segment-based marketing in that it wants to build a sustainable relationship with each individual consumer to ensure repeat purchases.

Relationship marketing acknowledges that different marketing strategies must be used for consumer acquisition and retention.

Extended market: various smaller groupings all with a greater/lesser influence on the marketing effort. Maintaining close relationships, esp wrt NB groupings, is NB. The following groups can be identified;

Current customers : loyalty programmes are used to retain these

Potential customers : lured to shops with sales, promotions, events, free trails & samples

Suppliers : must deliver quality raw materials & spares to fully satisfy needs of consumers

Potential employees: careful selection according to abilities & attitude towards customer service

Reference groups: people that can influence decision making (friends, word of mouth advertising)

The influencers: government, international affairs & new competition can influence marketing efforts

Current employees: are part of the company’s internal market. Internal marketing efforts are used to motivate employees (bonuses, gifts, points system with rewards for achievement and public recognition). Management must train, motivate & remunerate employees & persuade employees to support marketing decisions & strategies.

explain the marketing process in your own words

A process of analysing marketing opportunities, selecting appropriate targets markets, developing the most suitable marketing mix for these segments and managing the marketing efforts through implementation and control activities.

Marketing departments must perform activities associated with marketing in such a way that the company will derive the maximum benefit from them.

Key areas/variables which marketing management must take decisions about are the four P’s:

o Product itself

o Place where it will be sold

o Promotion (marketing communication methods)

o Price of the product – should reflect its value to the consumer

These four variables combine in a market offering which the consumer may decide to buy if it satisfies their needs.

Decisions regarding the four marketing instruments combine to form an integrated marketing strategy (or marketing plan).

This strategy is directed at a group of consumers (target market) in a specific environment.

If anything changes in a specific environment, the market offering and market strategy should also change accordingly.

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Members of each of these groups (market segment) have similar characteristics, needs and product preferences. Marketing management selects from many market segments a specific target market/s.

Market offering is changed on some way or another to meet the preferences of different target markets (eg. Different brand names).

Consumers select and keep purchasing, the brand names that afford them the greatest need-satisfaction in terms of sacrifice they must make (often not only in monetary terms; sometimes consumers are willing to suffer inconvenience to obtain a desired brand name product).

STUDY UNIT 2: COMPONENTS OF THE MARKETING ENVIRONMENT discuss the variables of the micro-environment in your own words – EXAM QUESTION & TIPMICRO-ENVIRONMENTRefers to company’s internal factors which it can largely control & which have an effect on its ability to serve its customers.

Management has full control over these eg. building a strong workforce to achieve goals and objectives All functional depts. have an influence on marketing decision. Synergy of all departments is essential to

Variables/Components Elements & Description1. Marketing Strategy : Encompasses all elements that will determine the strategic direction of the business

Mission Statement (simple and concise written declaration of the core purpose of the business)o Statement of scope and purpose; is the direction the company is going, it directs its actions and activities

& defines the business Marketing objectives : specific targets that the company aims to achieve in order to address the mission

statemento Business / Long-term:

Market standing – which products to sell & who it wants to sell to & share of target market it aims to capture

Productivity – inputs vs outputs; improvements such as work methods, machinery & equipment advance & increased worker efficiency

Innovation – plan new products to remain competitive Physical & financial resources – how are these to be generated & used Profitability – eg. 21% return on investment during next financial yr Manager performance & development Worker performance & attitude – output/employee, quality of product / service Public social responsibility – initiatives to address these issues

o Functional / Short-term: Profit - To realise a specific profit per square metre floor space, profit (gross or net) per line or item Customer orientation - Satisfy customer needs and wants Survival and growth - To develop new products or scale down on range of products Sales and market share - To expand the geographic area, add new lines, differentiate product and

service offering Brand extension - To add new complementary items to existing range

Target Market Selection : Size - total market, one selected segment: must be big enough for company to meet its stated

objectives and ensure long-term survival and growth of the business Characteristics - race, age, gender, income, hobbies: marketer must be aware of these in order to

develop a marketing strategy to secure highest possible return.

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2. Resources, Skills and Abilities : Are controllable elements of the micro-env & can be used to take advantage of external opportunities & to counter threats. Strategic use of these is NB & is management’s responsibility. Human capital, skills & abilities - Product knowledge, sales & marketing skills, customer support

Continuous training & development necessary for ops existence Resources - Finances, facilities

3. Marketing Mix – The 4 P’s : Will determine whether consumer buys marketing offer or not. Business must ensure it has the right product, at the right price, at the right place & time & that it is promoted by informing the target market. Product (or service) - Items available, level of service, range of sizes and quality (what can be offered to meet the

perceived needs of the consumer?) Price - Same as competitors’ or lower, or higher. Must reflect its value to consumer. Consider economic climate,

customer willingness and competitor products. Place (Distribution) - Selected outlets, mail order, retailers or wholesalers; customer buying patterns determine

place. Promotion (Marketing communication) - Advertising, personal selling, publicity, sales promotion; frequency,

target audience, cost.

discuss the VARIABLES IN THE MARKET ENVIRONMENT in detail – EXAM QUESTION & TIP

MARKET-ENVIRONMENT

Refers to the variables that may be influenced by the organisation but which cannot be controlled by the organisation - limited control by management. It always has a supply side (suppliers & competitors) & a demand side (consumers).The marketer purchases raw merchandise from its suppliers and sells it to consumers.Variables:

1. Suppliers An important link in the organisation’s overall customer value delivery system – must be reliable &

deliver quality products/materials to meet customer obligations The purchasing function is managed as part of the overall supply chain Directly affects the price of product/service and therefore profit

2. Competitors : often determines price of product Positive aspects

o Keep excessive profits in checko Stimulates higher profitabilityo Promotes better serviceo Encourages technological innovation

3. Consumers : people with needs, money to spend & willingness to spend money Five types of customer markets

o Consumer markets – individuals & households - used for personal consumptiono Industrial markets – used for further processing or for use in their manufacturing processo Reseller markets – used for reselling at a profito Government markets – Gov agencies who buy goods/services to provide public services or to

transfer to those in needo International markets – foreign buyers, including all of the above

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discuss the variables in the macro-environment in detail – EXAM TIPMACRO-ENVIRONMENT

Refers to variables in the environment over which the individual business has no control and on which it has little effect.Variables:

1. Political and legal environment Political stability/uncertainty in a country (affect investments/tourists & will have ripple effect on inflation,

higher interest rates, lower credit ratings) International (affects trade agreements), national & provincial laws and regulations (affects business – BBE,

enviro laws, ISO, import levies etc)

2. International Global village due to Internet, e-commerce & comm. Technology (emails/skype) Instant communication, easier to source suppliers – don’t have to be local anymore Beware of laws & regulations and cultural difference (Saudi – no alcohol)

3. Physical Availability of natural resources (limited natural resources mean rising costs)

4. Technological Experiences change on a daily basis (medicines, laser surgery, cell phones, production lines) Also impacts on social-cultural and economic environments Expands people’s capacity Has an influence on economic environment (new inventions) & social changes (facebook) Process of innovation & change is continuously repeated

5. Economic Includes: inflation; interest rates; unemployment; consumer income; exchange rate; monetary policy (fiscal/tax

policy), business cycle (during a downturn, less disposable income available to buy stock) Economic changes cause change in consumer spending patterns (in hard times, consumers have less disposable

income) Politics is a major influencer Economic changes will influence both market & micro-environments

6. Socio-cultural Strongly influenced by technology and economy (“Women in business”, BEE, types of advs) Includes: demographics; lifestyles, cultural values and subcultural influences Social trends affect marketing strategies (help to determine consumer needs) eg. Outgoing lifestyles, health-

conscious lifestyle, liberal/conservative Cultural values = beliefs shared by a large number of people in a society that lead to common patterns of

behaviour Subcultural influences involve values and behaviour that distinguish subcultures from society (eg. Increase in

male cosmetics, increase in female video games (Kim Kardashian)

discuss how each of these variables (in all three environments) influence marketing management

For a business to succeed, management must be aware of the effect these variables have on the enterprise and must also have sufficient knowledge to steer the business in the right direction. It should therefore not only look inward at its micro-environment to identify internal environmental variables, but also look outward at the external variables that impact the business. It should realise the effect of these variables on decision making and should conduct a SWOT analysis to identify internal strengths and weaknesses and external opportunities and threats.

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Micro environment; internal variables that can be controlled by marketing management as well as other functional areas of business; staff to be appointed, funds to be used, mission statement & marketing objectives

Market-environment; forces outside the business, such as consumers, competitors and suppliers. This environment can be influenced or partially controlled.

Macro- factors; external forces which business cannot influence, but which directly or indirectly influence the business, such as economic, political and technological factors.

explain a SWOT analysis – EXAM TIPThe acronym, SWOT, stands for strengths, weaknesses, opportunities and threats. SW applies to internal and OT to external elements.

Businesses can use a SWOT analysis to survive the turbulent business environment.

A weakness can be turned into a strength and a threat into an opportunity.

The environment can be analysed by keeping abreast of the occurrences in the business environment. Gathering information from internal and external sources will provide marketing management with the information necessary to set goals and objectives and counter potential threats facing the organisation.

A SWOT analysis is a useful instrument for helping managers to identify internal strengths and weakness and external opportunities and threats facing it. It is based on assumption that an effective strategy maximises the strengths and opportunities of a business and minimises weaknesses and threats.

Internal factors: Strengths and weaknesses

External factors: Opportunities and threats

Strengths: Areas in which a business does particularly well, that set it apart from competitors

Financial resources, image, market leadership, buyer/supplier relationships, expertise, skills, intuitive knowledge, superior service

Weaknesses: Areas which a business needs to improve, should it not want its competitors to gain the competitive advantage; limitations or deficiencies in resources, skills and capabilities that seriously impede effective performance

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Facilities, financial resources, management capabilities, marketing skills & brand image

Opportunities: circumstances that can benefit the business; favourable elements within a business that can be exploited

Identification of a previously overlooked market segment, changes in competitive or regulatory circumstances, technical changes, and improved buyer or supplier relationships

Threats: Factors that pose a risk or can harm the business; management must identify threats (real or potential) and take necessary steps to counteract them

Changes in the consumer market, and unexpected increase in competition, problems with suppliers, punitive legislation, recession or an unfavourable rate of exchange

Environmental Scanning

Definition: The measurement, projection and evaluation of change in the different environmental variables

It helps the business to capitalise on early opportunities

It provides an early signal of impending problems or threats

It sensitise a business to the changing needs and wants of its customers

It provides a basis of objective information about the internal strengths and weaknesses

It improves the image of the business by showing that it is sensitive and responsive to its environment

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STUDY UNIT 3: CONSUMER BEHAVIOUR discuss individual factors that influence consumer behaviour in detail – EXAM TIP

Individual Factors - Inherent In Human Behaviour1. Motivation : is what moves people to action.

Needs: are the basic sources of buyer behaviour, but they have to be stimulated before the consumer is driven to action. When a person wishes to satisfy a need we call it motivation. There is a close relationship between needs and motives. Needs lead to motives and a motive is a need sufficiently stimulated to move an individual to seek satisfaction.

Motives can be classified in various ways but the two most relevant to the marketer include:

Maslow’s Hierarchy Of Needs (EXAM TIP)

The most basic needs start from bottom to top (5 1) and must be be reasonably satisfied before Higher-order motives emerge.

5. Physiological needs: First and most basic level of human needs eg. food, water, sleep, clothing, shelter

4. Safety needs: Not only physical safety but also, order, stability, routine, control over one’s life, mental security, eg. Health insurance, RA’s.

3. Social needs (need to belong): relates to fundamental need for love and affiliation. Expressed in buying gifts, goods and participating in group activities (sports), family, friends, and approval - a sense of being loved.

2. Esteem needs (ego): inwardly directed – self-acceptance, self-esteem, success, independence, a job well done. Outwardly directed – need for prestige, reputation, recognition from others and status.

1. Self-actualisation An individual’s desire to fulfil his or her potential and become everything they are capable of becoming. Personal growth, new experiences. The process or act of becoming oneself, developing one’s potential, achieving an awareness of one’s identity, and fulfilling oneself.

Economic And Emotional Classification Of Motives

Consumers are not always motivated by physiological needs in decision making.

Customers also purchase products taking price, quality, performance and reliability into consideration. This is known as economic motives.

Emotional motives represent those motives that involve emotions and correspond with Maslow’s social and esteem motives.

Self-

actualisation Esteem

Social

Safety

Physiological

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2. Perception : Perception is influenced by what we have learned. The way in which we perceive things is influenced by what we know about them.

The Perceptual Process

1. Exposure: occurs when the stimuli come in range of one of the five primary receptions (vision, hearing, taste, smell and touch). Most of the stimuli to which an individual is exposed is deliberately selected. This is known as selective exposure.

2. Attention: is activated when one or more of the sensory receptors are stimulated and the resulting sensations are processed in the brain. Because the individual is exposed to more stimuli than he/she can process, the individual is selective in attending to marketing and other messages – selective attention.

3. Interpretation: the meaning that people assign to sensory stimuli. Consumers usually interpret information on the basis of their own attitudes, beliefs, motives and experiences, known as selective interpretation.

4. Recall (memory): Consumers do not remember all the information they hear, see or read and tend to forget the marketing message – selective recall.

3. Learning Ability : Any facet of a person’s behaviour is dependent on what he or she learns and remembers about objects and situations.

Elements of learning – EXAM TIP 1.

Stimulus: anything that inspires and encourages interest in a person – this is the 1 st requirement of learning. The consumer can either be stimulated by physical things like products and brands or intangibles such as service and quality. Once a stimulus has been perceived, he must be motivated to seek the object before learning occurs. The stronger the motivation, the quicker the consumer learns.

2. Response : is any action, reaction or state of mind which results from a particular stimulus or cue.

3. Reinforcement : increases the likelihood that a particular response will occur in the future as the result of particular cues or stimuli. Two important aspects of reinforcement are: Repetition and Participation.

4. Repetition : the act of repeating past actions or experiences and thus enhancing learning

Exposure Attention Interpretation Memory

Stimulus Response Reinforcement Repitition

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5. Attitudes : A learned preposition to behave in a consistently favourable way toward market-related objects, events or situations.

Components of attitudes

Cognitive component: refers to a person’s knowledge and perceptions that may be acquired by direct experience with the product and other sources of information.

Affective component: the consumer’s feelings or emotions with respect to the focus of the attitude.

Behavioural component: the outcome of the cognitive and affective components – to buy or not to buy.

Attitude change

The marketer can influence consumer attitudes by:

Changing consumer beliefs of a brand (by associating brand with positive attributes)

Changing consumers’ behaviour towards a product (get them to start using, they will likely continue if satisfied – use price discount to entice them to switch brand)

Adding new beliefs (add improvements such as newer applications or uses for product)

Strengthening beliefs (focus on current + beliefs / attributes that consumers have of brand & compare to competitors brand – can enhance attitude)

6. Personality : inner psychological characteristics that determine and reflect how a person responds to his/her environment.

Characteristics of personality

Personality reflects individual differences. Personality is consistent and enduring. Personality is conceived as a complete actualisation of oneself in an environment. Personality can change.

The value of personality to marketers

Knowledge of personality is essential for the marketer because consumers tend to buy products that reflect, enhance or defend their personalities. It also assists marketers in designing appropriate advertisements that will appeal to groups of similar personalities.

6. Lifestyle

Lifestyle refers to the way of living of individuals or families and is related to ones values. It includes how people spend their time, what they find interesting and important and how they view themselves and the world around them

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discuss each of the group factors that influence consumer behaviour in detail – EXAM TIP

Group Factors that influence Consumer BehaviourConsumer behaviour is strongly influenced by family, culture, social class, reference groups and opinion leaders.

1. Family

Family has a major influence on the consumer behaviour of its members. There are two levels of family: the Nuclear family comprising a husband, wife and children and the extended family which includes grandparents or other relatives who live under the same roof as the nuclear family.

Family Roles

Initiator: first to suggest that a specific product should be bought & collects the info

Influencer: the person that influences the final decision (their wishes & suggestions are reflected in the decision)Decision maker: takes the actual decision and makes the final choice between alternatives

Purchaser: person that buys the product; some are forced to carry out decision, others have authority to choose according to their own preference

User: person that uses the product at the endFamily Types:

Families are usually classified in terms of the dominant member – the person who makes or influences the decision:

Husband-dominant familiesWife-dominant familiesNuclear/Syncratic families: decisions are made jointly by husband and wifeChild-dominant families: kids have major say in purchase decisions

2. Cultural group

Culture refers to the pattern of behaviour common to members of a society; such behaviour is learned and handed down from one generation to the next.

A consumer’s culture further determines his or her overall priorities in respect of different activities and products.

A product that provides benefits consistent with those desired by members of a culture has a better chance of being accepted in the market.

3. Social class

Enjoy more or less the same prestige and status in society

Social class strongly influences consumer lifestyles and is a good indicator of the type of product that the consumers would be interested in.

Consumers also buy products to demonstrate their membership to a particular social class and to advance their social standing in society.

Marketing implications of social class

Media usage: better educated individuals spend more time reading magazines etc. and spend less time watching television than the less well educated.Collection of information: lower social groups tend to collect less information than the other groups. Access to information is limited.Store choice: lower-class people tend to do shopping downtown, especially at discount stores.

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Leisure pursuits: high-status occupational groups prefer more active leisure pursuits.

4. Reference groups

A reference group involves one or more people that a consumer uses as a basis for comparison or “point of reference” in forming responses and performing behaviours.

Types of reference groups that influence consumer behaviour:

Membership groups: group to which the person has obtained membership e.g. social club

Automatic groups: group to which a person belongs as a result of age, gender or occupation.

Negative groups: group which a person does not wish to be associated e.g. drinkers

Associative groups: group which a person aspires to belong e.g. a group with higher status or acceptance level among peers.

5. Opinion leader

A reference group can also be a reference person, an individual to whom others will look in forming opinions and taking consumer decisions, this reference person can be regarded as an opinion leader.

explain the consumer decision-making process – EXAM TIP

Types of decision making Real decision making: this is a complex process and involves extensive problem solving e.g. the decision to buy a

new car. Impulse decision making: refers to unplanned action on the spur of the moment e.g. while standing in the

queue, you buy a chocolate displayed in the checkout aisles. Habitual decision making: occurs when a consumer is loyal and buys a certain product (e.g. a large tin of Ricoffy)

automatically without considering competitors.

PHASES IN CONSUMER DECISION MAKING

1. Need recognition: consumer becomes aware of a need.

2. Search for information: consumer searches for information about product.

3. Evaluation: consumer compares and evaluates the attributes and benefits of various alternatives.

4. Purchase decision: when the best alternative has been identified, the consumer makes a decision.

5. Post-purchase decision: the consumer re-evaluates his/her decision, decides if they made the right decision, and if the product fulfils all expectations, this can lead to brand loyalty.

Need / Problem recognition Search for info Evaluation of

alternatives Buying Post-buying evaluation

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STUDY UNIT 4 Study unit 4 is based on chapter 5 of your prescribed book.

Discuss (in your own words) why information is important for marketing decision-makingSuccess of business is largely dependent on information – must be timely, accurate & relevant. In order to develop & sustain a competitive advantage & achieve success with its marketing actions & decisions, the marketing manager needs to be informed of happenings in the environment and how they impact on the business.

The connection between the organisation & marketing dept is established through information. Without relevant marketing information, market decision making is nothing for than intuitive guessing – which can lead to major mistakes and even the demise of the company. Marketing management thus needs timely, accurate, valid and reliable info for decision making and planning.

Thus – managers need information for to reduce risk of incorrect or risky decision making. Marketing planning, implementation & control cannot be carried out without accurate, valid, and reliable information.

briefly explain the functioning of a marketing information system

A marketing information system is a collection of predefined methods that will allow information about an organisation’s products, customers and competition to be gathered, examined and assessed, allowing for effective information management, resulting in successful decision making.

A marketing information system is the collection of predefined methods & procedures that allows for effective information management.

It is a typical input-output system where information sources are the input and relevant, timely and accurate information the output.

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discuss each of the steps in the marketing research process in detail. NB!! Study the steps in the textbook on page 128 and not in the study guide – EXAM TIP

STEPS IN THE MARKETING RESEARCH PROCESS

The marketing research is conducted because of the existence of a marketing problem (“Who buy’s it? What is bought? Where is it bought? When is it bought? How is it bought? And Why is it bought?”).

Marketing problem refers to a situation which might present real problems to marketing decision makers – should be seen as marketing opportunities where possible.

The marketing research process can be defined as a series of steps designed to collect marketing data and information. The

THE MARKETING RESEARCH PROCESS:

STEPS IN THE MARKETING RESEARCH PROCESS

Step 1: Describe the research problem and objectives

The marketing problem should be clearly defined and formulated to ensure that the results are relevant. A weak diagnosis will lead to an inefficient solution. State the basic research problem as a hierarchy of questions which include:

Management questions (are there changes in consumer preferences?)

Research questions (what are the reasons for changes in consumer preferences?)

Investigative questions (enable researcher to answer research q’s: can changes in income patterns cause changing preferences?)

Measurement questions: (would appear on actual questionnaire/data collection instrument: what is your annual income/what is your occupation)

A situation analysis is important part of the problem formulation.

Reporting the research results

Processing, tabulation and analysis

Fieldwork

Preparing the research design

Deciding on a suitable research design

Description of the research problem and objectives

Step 6

Step 5

Step 4

Step 3

Step 2

Step 1

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◦ Situation Analysis Secondary data analysis Macro-environment The product markets Customer markets and buyer behaviour Marketing strategies Resources and constraints Technological skills

Step 2: Selecting the research design

This refers to a plan in order to answer the research question, specifying the methods and procedures to be used when collecting data. The definition of the problem and requirements of the research objectives will determine the design.

The designs types are:

Exploratory research (provides direction, ideas & insights when faced with unclear research problems): literature, reviews, experience, surveys & focus groups)

Descriptive research: anwers q’s: Who, what, where, when, why (personal interviews, postal questionnaires, telephone interviews & observation)

Qualitative research: (to get in-depth open-ended responses) - focus groups to get better understanding of attitudes of non-users

Quantitative research: seek structured & quantifiable responses; give numbers, figures/stats: demographic profiling of specific market segment

Ad hoc: attempts to investigate variables & predictors of future happenings in market environment (perception method of company’s service quality)

Ex post facto: “after the fact” – post mortem; evaluating expected loss/gain after an event has taken place or issue has been resolved

Causal: cause and effect relationships – increased advertising expenditure (cause) and increase in sales (effect)

Predictive: forecast future values: sales income, market share & retail orders

Longitudinal: obtaining info over a long period of time: identifies trends & tendencies (seasonal sales of flu meds)

Step 3: Preparing the research design

The following activities are involved in preparing the research design:

Determine the source of data, this will either be primary (data used to exclusively solve the research query at hand) or secondary (data that has been gathered previously)

Determine the data collection approach. There are three main approaches to collecting data.

o Observation, survey and experimentation approaches.

Determine the data collection instruments. The questionnaire or electronic equipment

Determine the data collection methods. Personal interviews, telephone interviews, self-administered surveys

Design the sampling plan. Valuable information is obtained from a sample that represents the total population.

Step1: Define the population of interest Step2: Choose a data collection method Step 3: Choose a sampling frame

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Step4: Select a sampling method Probability sampling – systematic; stratified; cluster; simple random Non-probability sampling – convenience; snowball; judgement; quota

Step5: Determine the sample size (units included in reasearch Step6: Develop and specify operational plan for selecting sample elements Step7: Execute operational sampling plan

Step 4: Field Work

The process of collecting the data, using a data collection instrument. It is important to prevent bias, the sources of bias include:

the respondent

situational factors

the fieldworker

data collection instrument

Step 5: Processing, Tabulation and Analysis

After the data has been collected, processing has to be done. This involves data preparation, entry and analysis.

data editing to detect errors, omissions and correction if needed

Conversion of the information gathered to a medium that is suitable for viewing and manipulation

To summarise findings in a table or some type of graphical presentation

Step 6: Reporting the Research Results

This involves interpreting and evaluating the marketing information within the decision making context. There are certain criteria to evaluate the quality of the research report which include, understandability, relevancy, clarity, conciseness, organisation, accuracy and comprehensiveness.

Research results must then be reported to the marketing decision maker.

STUDY UNIT 5Study unit 5 is based on chapter 12 of your prescribed book.

explain the concept of value proposition in your own words

The value proposition refers to the benefits that the company offers to the customer when purchasing goods and services. It is a statement that clearly identifies the value that will be received by the customer and the value that the customer will experience.

Components: Product; Service Experience; branding; format/environment (physical distribution, location) and relationship interaction (what value provided when interacting with clients?).

explain the concept of consumer satisfaction in your own words

Customer satisfaction refers to the degree to which the product offering met/exceeded the customers’ expectations.

Leads to customer loyalty

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EXAM TIP - 5 Factors that influence customer satisfaction :

1. Product and service features: are used by customer to help establish satisfaction or dissatisfaction level (must establish what NB features the customer is looking for & the measure customer perceptions of these as well as overall satisfaction)

2. Customer emotions: customer’s emotional position as she interacts with the p/s can affect the evaluation

3. Cause for service failure and success: When + or – surprised by a service encounter (ie bad ADT service) they will try to find reasons for it – which will influence their satisfaction (esp. if out of service provider’s control).

Often customer’s satisfaction will be determined by the way a company responds to a service failure not by the failure itself.

4. Perception of fairness: customers are constantly evaluating whether a business is treating them fairly or not (esp. after a service failure has occurred; ie. Re-charging for re-fixing a just-serviced car)

5. Other people: customer’s experience with p/s is not only consideration, other consumers, family members or co-workers may influence whether you see yourself as satisfied or not.

Delighting customers : implies more than customer satisfaction; has a measure of surprise and joy in interaction with company

discuss consumer retention in your own words

Customer retention: the number of customers doing business with an organisation at the end of a financial year, shown as a percentage of those who were active customers at the beginning of the year.

The assessment of the amount of loyal customers who make purchases from a store on a regular basis within a period of time.

STUDY UNIT 6Study unit 6 is based on chapter 4 of your prescribed book.

explain market segmentation in your own words

The problem lies in the fact that there are numerous needs that the marketer can satisfy, therefore marketers must divide the total market into segments of consumers with common needs or characteristics. A process known as market segmentation.

It is the process of dividing a market into smaller groups with distinct needs, characteristics or behaviours that might require separate products or marketing mixes.

discuss the advantages and disadvantages of market segmentation

Benefits of market segmentation

Compels marketers to focus more accurately on customer needs. A greater degree of customer satisfaction can be achieved.

Leads to the identification of excellent new opportunities if research reveals an unexplored segment.

Provides guidelines for the development of separate market offerings and strategies for various market segments.

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It can help guide the proper allocation of marketing resources.

Disadvantages of market segmentation

The development and marketing of separate models and offerings is very expensive.

Limited market coverage is achieved

Cannibalisation can occur, this happens when one product takes away market share from another product of the same organisation.

discuss the FOUR BASES OF MARKET SEGMENTATION in detail - EXAM TIP

1. Geographic segmentation

This involves dividing the total market into different geographical areas, such as countries or regions. Variations such as the size of the city or town or population density may also be appropriate bases. The business can then decide to target only one or a limited number of geographic areas.

2. Demographic segmentation

This involves dividing the market according to age, gender, income, family life cycle stage, ethnicity or occupation or any combination of these factors.

Demographic features are probably the most common base for segmenting consumer markets due to the following reasons:

Consumer’s wants or product use are often related to one or more demographic variables.

Most demographic factors are measurable, accessible and large enough to serve as a basis for operational market segments.

3. Psychographic segmentation

Psychographic segmentation examines how a person thinks, feels and behaves, using personality, lifestyle and values as segmenting variables. This enables marketers to develop richer and more complete descriptions of segments.

4. Behavioural (Benefit) Segmentation

Benefit segmentation begins by determining the principal benefits that customers seek in a product, the kind of people who look for each benefit as well as the benefits delivered by each brand & buying behaviour. It includes:

Purchase occasions : Some buyers may use the product regularly while others may use it only on special occasions.

Benefit sought : Some market segments may be very specific in the benefits they seek when buying a product. Some may seek economy, while others may want convenience or prestige.

User status : Consumers can be segmented into groups consisting of non-users, ex-users, potential users or regular users.

Usage rate : Consumers can be segmented according to how frequently they buy their products.

Loyalty status : Consumers vary in their loyalty towards the organisation. Hard-core loyal customers are those who are very loyal buyers and should be retained.

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Buyer readiness stage : Different marketing approaches have to followed, depending on the customers readiness to buy.

Attitude towards the product : Market segments that are negative or hostile towards a product can be avoided, while those who are positive can be encouraged to support the product in future.

discuss the 4 criteria for the SELECTING EFFECTIVE TARGET MARKET segments (what targets must conform to in order to be effective) (p.98) - EXAM QUESTION & TIP1. Identifiable : market segments should be easily identifiable. Eg. Demographic or geographic

2. Sufficiency : potential market must be worthwhile (big enough & sufficient to be profitable).

3. Stability : stable market that has increasing needs over time.

4. Accessibility : target market must be economically accessible – marketers must be able to reach targeted market effectively at an affordable cost with correct application of media (radio, tv, newspaper magazines)

discuss the 5 criteria for effective targeting of market segments (criteria for evaluating of target market) (p.99)

1. Target market size and growth potential : a target market doesn't necessarily need to be big. A small one can often be more profitable.

2. Attractiveness and potential profitability : the attractiveness of a target market lies not only in its size and growth possibilities but also in the promise of long-term profitability.

3. The resources and skills of the organisation : A segment can only be chosen as a target market if marketing management is fully committed to serving this market better than any other competitor can.

4. Compatibility with the organisation’s objectives : If it is found that the objectives of the organisation cannot be fulfilled by the choice of a particular market segment , it should be disregarded.

5. Cost of reaching the target market : if the cost of reaching a target market is too high, it should not be considered.

5 different APPROACHES TO TARGET MARKETING (p.105-106) EXAM QUESTION May/June 2015

1. Undifferentiated marketing (or market aggregation). Businesses choose to ignore market segment differences and target the whole market with one basic market offering.

2. Differentiated marketing (multiple segment strategy). The business targets two or more market segments and designs separate, unique strategies for each.

(Caters for diverse needs but is costly).

3. Concentrated marketing (single segment concentration strategy). Concentrates the market offering on one specific target market that can lead to greater expertise in production, distribution and marketing communications.

4. Niche segment strategies . Businesses carve out a niche within a segment and further customise its marketing effort on the group of customers in that niche.

(Offers a certain amount of security to smaller firms who try and compete against larger or multinational organisations.)

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5. Mass customisation . Refers to products that are personalised and “custom-made”, tailored to the unique needs of a customer who is seen as a potential unique segment.

(Combines the advantages of a niche segment strategy while retaining the opportunities available with differentiated marketing.

explain PRODUCT POSITIONING in your own words EXAM QUESTION Product positioning refers to the way consumers perceive the product in the best possible way in terms of its characteristics, advantages and its competitive positioning.

discuss the product POSITIONING METHODS EXAM QUESTION

Positioning methods

1. Attribute positioning : the organisation positions itself in terms of one or more outstanding attributes.

Eg. Castle light – its beer positions its beer as the leading premium ‘cold’ beer

2. Benefit positioning : emphasises the unique benefits that the organisation or product offering offers its customers.

Eg. Vanish – effective stain removal

3. Use / application positioning : an organisation can position itself or its products in terms of the product use or application.

Graca Wine – a wine to be enjoyed at all kinds of fun occasions

4. User positioning : the organization may position its products with the users in mind

Marketers of skydiving position their market offering to thrill-seekers

5. Competitor positioning : some products can best be positioned against competitive offerings.

BMW positions its cars directly against its closest rival in SA - Mercedes-Benz

6. Product category positioning : an organization can position itself in a product category not traditionally associated with it, thereby expanding its business opportunities.

Eg. Museum – traditionally regarded as educational institution, now positions itself as a tourist attraction

7. Quality / price positioning : the organization may claim that its product is of exceptional quality, or the lowest price.

Eg. Woolworths is known for high-quality clothing while Mr P is known for unbeatable prices.

discuss the product positioning errors EXAM QUESTION

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Under positioning occurs when customers have only a vague idea of a particular brand.

Over positioning occurs when buyers may have a narrow image of a brand.

Confused positioning occurs when the marketer changes the positioning of the brand too frequently.

Doubtful positioning occurs when the claims made about the brand are hard to believe or too good to be true.

STUDY UNIT 7Study unit 7 is based on chapters 6 and 7 of your prescribed book.

Stages of product life cycle

Introduction Stage – most expensive stage for a company launching a new product. The size of the market for the product is small, which means sales are low, although they will be increasing. On the other hand, the cost of things like research and development, consumer testing, and the marketing needed to launch the product can be very high, especially if it‘s a competitive sector.

Growth Stage – characterized by a strong growth in sales and profits, and because the company can start to benefit from economies of scale in production, the profit margins, as well as the overall amount of profit, will increase. This makes it possible for businesses to invest more money in the promotional activity to maximize the potential of this growth stage.

Maturity Stage – product is established and the aim for the manufacturer is now to maintain the market share they have built up. This is probably the most competitive time for most products and businesses need to invest wisely in any marketing they undertake. They also need to consider any product modifications or improvements to the production process which might give them a competitive advantage.

Decline Stage – Eventually, the market for a product will start to shrink = decline stage. This shrinkage could be due to the market becoming saturated (i.e. all the customers who will buy the product have already purchased it), or because the consumers are switching to a different type of product. While this decline may be inevitable, it may still be possible for companies to make some profit by switching to less-expensive production methods and cheaper markets.

explain the different LAYERS IN THE PRODUCT CONCEPT – EXAM QUESTION

1. Core product – Product benefitHeart of the product; main reason for products existence. Essential benefit or need satisfaction consumer expects to obtain from the product. Product benefit is what the consumer receives from owing or using the product.

o Standard bank – speed of serviceo FNB – ease of use of serviceso Ferrari – excitement to life & status symbolo Unisa – education

2. Tangible product – Physical object.Design, quality, branding, product features. The attributes are those elements of the product which have physical components which the customer can discern.

o Cars come with different features to meet wants & needs of various customer segments. Some have large roomy interiors, others want smaller economical engines.

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o To attract ppl to showrooms, manufacturers offer a vast array of features; high quality stereo systems, reclining seats, large luggage space, ashtrays, cup holders.

3. Augmented product – a physical product/attributes + consumer services and benefits (add to product’s value). Additional services don’t affect product itself but will affect satisfaction & benefits the buyer gets from the purchase.

o Includes product guarantees, installation of the product, delivery of the product etc.o Eg. Delivery of new couch; setting up of spinning bike; itunes customer support

4. Potential product – Possible evolution - development/adjustments (eg competitive differentiation).Added value which. (What might be done with the product in the future). When successful, company has created a competitive or differential advantage. Sustainable differential advantages are necessary to outperform competition & ensure long-term growth & success.

o Eg. Singapore airlines were 1st to offer seat that convert into beds in 1st classo Pick n Pay: follows a pricing strategy of discounting – consistent low prices low margins, high returns;

specials are always offered to create interest.

5. Product image – How product is perceived by customers. Encompasses all previous layers and refers to how product is perceived by customers. It is the total product concept, as perceived by customers, created by all the product attributes and the effect of the other marketing instruments (place, price, promotion – ie. Marketing communication).

o Eg. Vodacom spent R200m on rebranding from blue to red; “to have a simpler offering in a complex world”; focusing more on basic need from convenience.

discuss product classification

Consumer products: convenience products, shopping products, specialty products and unsought products.

Examples of consumer goods are juice, bread rolls, ice-cream, shoes and so forth.Industrial products: include materials and parts, capital items and supplies and services.

Examples of industrial goods are printing machines, lathes, earth-moving graders and so on.

explain product line and product mix decisions in your own words

Product line:

A group of products that are closely related because they function in a similar manner, are sold to the same customer groups, are marketed through the same types of outlets, or fall within given price ranges.Trading down: company may add a low-end product to plug a market hole that would otherwise attract a new competitor, or it may be attacked at the high end and respond by invading the low end.Trading up: Companies at the lower end of the market may want to enter the higher end.

Trading both ways: Companies may decide to stretch their lines in both directions.

Product Mix:

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The set of all product lines that a particular company offers for sale.

Breadth of product mix: Number of lines on offer by the company. Depth of product mix: Number of different units in the product line.

o Deep – large number of items

o Shallow- number is limited

Consistency: How closely related the various product lines are.

discuss the benefits of branding

A brand: A name, term, design, symbol, or any other feature that identifies your product as different from those of competitors.

Benefits of branding:

Consumer perspective:

Easier product identification Communicated features and benefits Help product evaluation Reduces risk in purchasing Creates interest/ character for product image

The manufacturer perspective: Helps create loyalty Creates differential advantage Allows premium pricing Facilitates product diversification

Retailer perspective: Attracts customers Benefits from brand- marketing support by the manufacturer

discuss the BRANDING STRATEGIES – PAST EXAM1. Generic products: Companies decide to sell their products without any investment in branding. Basic label with no

branding, the company spends very little money to promote or advertise the product -usually cheaper than branded products. (highest rate of sales growth).

2. Manufacturer / National brands: Produced and promoted by the manufacturer. Example: Coca-cola, Samsung, Nokia.

3. Private / Store brands: Successful distributor, usually a retailer may buy in bulk from the manufacturer and then put its own name or logo on the product.

4. Family brands: Common brand name that is used for several related product, this type of branding is known as umbrella branding.

5. Individual brands: Promoted independently, rather than being bundled under a company name or family brand. Cost of promoting is higher than any other type of brand. Ex: Castle Lager.

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discuss the different types and functions of packaging

Functions of packaging pg. 189• Protective : protects & facilitates handling, ensures product is not damaged

• Storage : must make it easy to store & utilise space effectively

• Loading & Transport: products can be packaged so that they can easily be lifted, moved, set down

• Sales : should promote sales (attractive boxes that are eyecatching)

• Promotional : intended to attract potential purchaser’s attention & have positive impact on buying decision

• Service : assists in supplying info on the product eg uses and composition

• Guarentee : undamaged packages & unblemished goods signify undamaged product

• Reusability : packaging can be reused for other purposes (buckets storage containers)

• Communication/sales : comm. details about product, product image is comm. thru packaging’s cover

• Market segmentation: designed to suite market segment

• Differentiation : allows it to be different from competitors

Types of packaging: pg 188/189• Family or individual packaging : used for all products / unique for each product item

• Special packaging : gives exclusive image; unique bottles (popular for gifts); Ferro Rocher

• Reusable packaging : made from durable materials that can be reused; Weetbix / Glen tea containers; leads to repeat buying but may also prompt cons to stop buying when they have a full collection so new packaging lines must be developed

• Multiple packaging : placing several units of a product in one container, to increase sales; razor blades + razors; toothpaste + toothbrush – useful when introducing new product or special price offers

• Kaleidoscopic packaging : regularly altering certain details on package: eg soccer stars on coca cola tins; creates demand for product by creating demand for packaging

discuss the different types of new products – PAST EXAM

New-to-the-world products: product innovations that create entirely new product categories. Eg. The first cell phone, first microwave.

New-to-the-marketer products: new to marketer, but already offered in marketplace by other competitors. (Diversification of business’s product range to include a particular product).

Line extensions: a product that applies the marketer’s brand to new products that supplement a firm’s established product lines (eg. New package size, a new flavour)

Repositioned products: product is marketed in a new way to change it position in the marketplace. Existing products targeted at new segments/new markets. (eg. Johnson & Johnson baby powder targeted to adults).

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Improved products: improved version of existing product which provides better performance or greater perceived value (eg. Microsoft office new versions)

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explain the NEW PRODUCT DEVELOPMENT PROCESS in detail – EXAM TIP

1. Idea generation: generate as many idea as possible so that no potential opportunity is overlooked

2. Idea screening : filter out those that do not fit the organisation’s goal- keep those likely to be successful

3. Concept testing : when idea approved - process of utilising research methods to evaluate consumer response to a product idea before is it actually introduced to market.

4. Business Analysis : operation, marketing + financial projections are made for product concept – determine feasibility

5. Product development: all theory work done - product manufactured - testing product - Functional tests (safe & effective performance?) & consumer testing (testing marketing elements; brand identity, packaging, labelling)

6. Test marketing : offered 4 sale in a limited geographic area for a specified time and sale and costs are measured 2 establish if consumers will buy product - trial run

7. Commercialisation : serves as bridge linking invention to innovation-serves as overriding guide for product development efforts, ensuring that the evolving product is aligned with the intended product positioning strategy-customer value proposition, manufacturing, marketing, target market requirements +competitors +intellectual property constraints and considerations – 2 launching types: Immediate national launch, rolling launch

8. Review of market performance

1. Idea generation

2.Idea screening

3.Concept testing

4.Business Analysis

5.Product

development

6.Test marketing

7.Commercialisation

8.Review of market

performance

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explain the consumer adoption process – EXAM TIP

CONSUMER ADOPTION PROCESS (OF INNOVATION)

Refers to the mental processes through which an individual moves from first hearing about an innovation through to final adoption. The adoption process focuses on the stages through which an individual consumer passes in arriving at a decision to try or not to try, to continue using or to discontinue using a new product.

1. Awareness: potential consumer has some knowledge of the product but does not have all the information. At this stage, the consumer may not know how the product works or what it can do. The consumer becomes aware of the product via communication channels (radio, tv, mags – gives picture of new product but consumer doesn’t yet know exactly what it does or how it works. Consumers are exposed to the product innovation.

2. Interest: The consumer knows about the product but lacks information. If consumers become interested they will try to obtain information on the product from secondary sources (You mag article/write up or speaking to store assistant). As the consumer becomes more interested in the product, he/she searches for more information about it.

3. Evaluation: Consumers evaluate the product on the basis of their past experiences. When using a product, consumers use their intellect to evaluate it in terms of its benefits. Consumers draw conclusions about the innovation and determine if more information is required. If the evaluation is satisfactory then the consumer will try the product.

4. Trial: At this stage, the consumer may buy the product to determine if it meets his or her needs. It is important for marketers, especially those who market fast consumable products to have samples available for consumers - consumers use the product on a limited bases.

5. Decision: Once the product has been tested, the consumer decides to adopt or reject the new product. Consumers adopt a new product if they are satisfied with it and value its benefits and may become regular users.

6. Confirmation: The consumer searches for more information pertaining to the product they have purchased. This may be done by speaking to other consumers, reading magazines and articles to get a clear understanding of the use & benefits. After experience with the product, the consumer conducts a post-purchase evaluation & decides if they will purchase it again.

different categories of people adopting a new product at different points in time – PAST EXAM

CONSUMER ADOPTOR CATEGORIES (INNOVATIONS)

It is important for marketers to understand how consumers differ from each other in terms of the rate at which they adopt an innovation or a new product and how they perceive attributes of innovation. If marketers understand this, it will assist them in developing targeted strategies to communicate the new idea to consumers.

1. Innovators: first group of consumers to adopt a new product - “enthusiasts”. Want advanced technology and performance, willing to take risks, enthusiastic about purchasing new product. Venturesome, tend to be younger, better educated, make extensive use of the media and eager to try new ideas at some risk.

Awareness Interest Evaluation Trial Decision Confirmation

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2. Early adopters: “visionaries” - spread the message by word of mouth. Are opinion-making leaders and an important group for marketers to take into account as they are held in high esteem by others who follow, accept & adopt their opinions & recommendations. They determine whether consumers will have a positive or negative attitude towards a product. Well educated and successful, willing to take a calculated risk on an innovation but are concerned with failure.

3. Early majority: prefer products that have been tried and tested, since they avoid risks (psychological, financial and performance). Pragmatists who want solutions and convenience from the products they purchase. Cautious and will adopt after the innovation has proven successful with others. Adopt new ideas before the average person, though they are rarely the leaders

4. Late majority: pessimistic consumers who do not seek anyone’s opinion and only use the product once they have been reassured of its benefits and values. This may be due to the fact that they are less educated, older, financially more stable and conservative than the previously mentioned group.

5. Late adopters, laggards or non-adopters. “Sceptics”, since they do not believe in new ideas. Are suspicious and prefer things to be done as in the past. React to new product or service and its benefits at a slow rate - more traditional and have limited social interaction. They are the last people to adopt an innovation. Tradition bound.

STUDY UNIT 8Study unit 8 is based on chapter 8 of the prescribed book.

explain what price is and why it is important to organisations

Price is the exchange value in a product or service.

It is directly linked to the benefits and value that a product or service gives.

Price decides the demand for the product and services, as well as the profit levels.

Organisation has to decide on prices to sell their products and services.

Without prices no sale can take place.

Prices must be set in order to exist and survive.

Prices are critical for organisations that use low prices to differentiate themselves from competition.

Two types of organisations:

discuss the factors that affect price setting

Organisations pricing decisions are affected by an organisations internal and external environment.

Internal Factorso Marketing goalso Organisational costso Other decisions an organisation makes

External Factorso The nature of the market demando Consumer Behaviour

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o Competitiono Supplier activitieso Authority and Government activitieso Economic conditions

explain the main pricing strategies that are used by marketers

Basic pricing strategies

Marketers rely on a few basic strategies to set prices. Difficult to set prices and marketers do not have all the information about demand, cost and competitors.

Basic strategies for setting prices consider some or all of the following: Cost, Profit, Value and Competition.

Types of basic pricing strategies:1. Strategies based on COST: Cost-plus pricing: organisation decides prices by adding the set profit it wants to its cost. Mark-up pricing: organisation sets prices by calculating product costs per unit and then deciding the mark-up

percentage that it needs to cover selling costs and profits. Target pricing: organisation sets prices to get a specific rate of return on investment for a set amount of the

product Break-even analysis: works out amt of sales required so that total income is the same as total costs

2. Strategy based on VALUE: Demand-minus pricing: they work out highest costs the can accept for products Chain-mark-up pricing: members can’t set their own prices, organisation looks at final selling price, looks at

mark-ups for each channel member and then works out highest costs that each member will accept. Price discrimination: setting 2 or more prices for a product (to appeal to different final consumer segments)

3. Strategies based on COMPETITION: Going-rate pricing: what’s the going rate (competitors?) Leadership pricing: org sets price and others in industry follow

Pricing by competitive bidding: (for Gov / Industrial consumers “tendering”)

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PRICING STRATEGIES FOR NEW PRODUCTS – EXAM QUESTION & TIP!!! - NB!!!

Pricing strategies usually change as the product passes through its life cycle. Organisations bring out new products and have a challenge of setting prices for the first time.Two main strategies:

1. Price-Skimming Strategy: Setting high prices for the highest possible profits; a short-term strategy

DSTV new to market – price was so high that only high income could afford it

Ideal market conditions: possible consumers approach about product leaders in industry mainly use prices to segment market product is only of its kind & is new on market demand for product is price inelastic (can change price without affecting demand) legal factors (patents) protect benefit that differentiates the products organisation has few competitors organisation keeps demand low on purpose bec it is not yet producing as much as they can

2. Marketing-Penetration Strategy: Setting low prices to discourage competitors thereby taking large part of possible market from them; Involves using low prices; needs long-term planning

When Virgin launched, they offered free smses to penetrate the market.

Ideal market conditions: there is a great deal of possible competition in market demand for product is price elastic (change price will greatly affecting demand – higher price will = less

sales) market is not willing to pay high prices organisation can supply the demand for the product org. can save on productions costs by producing a lot of it org can use lower price to keep possible competitors out of the market

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STUDY UNIT 9Study unit 9 is based on chapter 9 of the prescribed book.

discuss the different participants in a distribution channel

Producer/manufacturer to consumer

Producer to retailer to consumer

Producer to wholesaler to retailer to consumer

Producer to wholesaler agent to retailer to wholesaler to consumer

Distribution channel participants perform the following key functions:

• Gather information and disseminate communications

• Set prices and terms to transfer ownership

• Place orders with manufacturers

• Acquire funds to finance inventory

• Assume risks

• Provide storage

• Oversee transfer of ownership

discuss the elements of channel design

•Producer/manufacturer to consumer

•Producer to retailer to consumer

•Producer to wholesaler to retailer to consumer

•Producer to wholesaler agent to retailer to wholesaler to consumer

discuss channel management in detail

Direct channel. An enterprise may decide to use a direct channel of distribution, which means that it distributes directly to its final consumers. An example is a commercial farmer selling vegetables directly to his final customers.

Indirect channel. The manufacturer may decide to distribute goods through retailers. An example is a retail store like Pick n Pay.

discuss the TYPES OF MARKET DISTRIBUTION (DISTRIBUTION STRUCTURE DECISIONS) – EXAM TIP

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There are three basic types of market distribution, namely intensive, selective and exclusive distribution.

1. Intensive distribution is the maximum exposure that the manufacturer may require for goods and services. Products such as bread and milk require intensive distribution. Products are sold through as many suitable wholesalers or retailers who will stock and/or sell the product. Products are placed in as many locations as possible.

2. Selective distribution involves a few outlets. Selective distribution would be used for shopping goods such as clothes, furniture and appliances. It involves selling through only those middlemen who will give it special attention; products are placed in a more limited number of locations. "Sell it where it sells best".

3. Exclusive distribution : involves only selected outlets. Products such as designer clothes, investment cars and works of art would be distributed through exclusive outlets. This limits availability of product to a very small number of locations. (Used to enhance a product's image or when considerable reseller support is required.)

Retailing (types, services, the retail mix, 7 Rs of retailing etc.)

Retailers can be classified according to ownership, prominent strategy and shopping centre.

Ownership: independent (not owned by any other organisation); leased department retailers (own stock but lease floor space from another retailer); chain store (group of 2 or more stores of similar type, centrally owned & operated); corporate chain – 11 or more stores, ownership group – organisation made up of various stores or small chains, each with own identity.

Prominent strategy, one can look at in-store retailing and non-store retailing. In-store retailing is an actual store with 4 walls and a roof, where non-store retailing is the selling of goods and services outside the confines of a retail facility. It is a generic term describing retailing taking place outside of shops and stores (that is, off the premises of fixed retail locations and of markets stands).

Shopping centre

Convenience centre Neighbourhood centre Community centre Power centre Area centre Speciality centre Theme centre

The importance of retailing as a distribution channel member can be summarised by the seven ‗Rs‘ of retailing.

7 R’s of retailing:

1. Right Product: You must have the right product for your store and for your customer. It needs to fit your niche and carry the quality you feel your customers require.

2. Right quantities: Retailers have to stock enough of the merchandise to cover existing and future demand, while minimising the risk of being unable to sell the merchandise or merchandise aging or deteriorating in quality.

3. Right place: The right geographical location and the correct placement of merchandise inside the store enable the retailer to accommodate different consumer patterns, tastes and needs.

4. Right time: Storage facilities and longer trading hours enable retailers to provide products and services after hours and outside the production season.

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5. Right person: The product must satisfy the right customer. You must know what the customer expects from you and carry products that reflect the needs and tastes of the customer.

6. Right promotion: Well-planned promotions that are in line with your products are important.

7. Right price: Your products need to reflect the best price. You need to focus on the mix of your selection as well as the promotion price.

STUDY UNIT 10: based on chapter 10 of your prescribed book.

discuss all elements of the marketing communication mix in detail

The marketing communication mix

The marketing communication mix refers to specific methods used to promote the business or its products to targeted customers. The Marketing Communications Mix is the specific mix of advertising, personal selling, sales promotion, public relations, sponsorships, direct marketing and digital marketing a company uses to pursue its advertising and marketing objectives

1. Advertising

Advertising is often the most prominent element of the communication mix. In fact, marketing and advertising are often misconstrued as the same thing. Advertising includes all messages a business pays to deliver through a medium to reach a targeted audience. Since it involves the majority of paid messages, companies often allocate significant amounts of the marketing budget to the advertising function. While it can be costly, the advertiser has ultimate control over the message delivered, since it pays the television or radio station, print publication or website for placement.

2. Personal selling

Personal selling is a PERSON-TO-PERSON communication where the seller can identify the buyer‘s needs, address any queries immediately and (hopefully) make a sale. Personal selling is sometimes integrated with the direct marketing element. However, many companies make such extensive use of a sales force that it is important to consider this component distinctly. Distribution channel suppliers use salespeople to promote products for resale to trade buyers. Retail salespeople promote the value of goods and services to consumers in retail businesses. Selling is more emphasized by companies that sell higher-end products and services that require more assertive efforts to persuade customers to buy.

3. Sales promotion

Is an activity designed to boost the sales of a product or service. It may include a free-sample campaign, offering free gifts or trading stamps, arranging demonstrations, setting up competitions with attractive prizes, temporary price reductions. Sales promotions or discounts are similar to advertising in that they are often promoted through paid communication. However, sales promotions actually involve offering a discounted price to a buyer. This may include coupons, percent-off deals and rebates. Along with ads to promote deals and coupon mailers, companies use exterior signs and in-store signage to call customer attention to the discounts. Goals of this communication tool include increasing revenue and cash flow, attracting new customers and clearing out extra inventory.

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4. Public relations

Public relations is the methods and activities employed to establish and promote a favourable relationship with the public. Public relations is sometimes somewhat similar to advertising in that much of it involves messages communicated through mass media. The major difference is you don't pay for the time or space for the message. A television or newspaper feature story mentioning a business, for instance, isn't paid for and can provide brand exposure. The downside of PR is that you don't always control the messages. You can try to influence them through press releases and invites for media coverage, but the media could put a negative spin on the story.

5. Sponsorships

Event sponsorship is the element sometimes left out of communication mix. Many models include it within advertising. Event sponsorship occurs with a company pays to have a presence at a sports, entertainment, nonprofit or community events. The sponsorship may include a mix of benefits including booth representation during the event to hand out samples, gifts and literature, name mention during the event and ad spots connected to the event.

6. Direct marketing

Direct marketing is the practice of delivering communication messages directly to potential customers on an individual basis as opposed to through a mass medium. Direct marketing includes some aspects of both sales promotions and personal selling. It is interactive communication with customers where the company's message seeks or implores a response from targeted customers. E-mail and direct mail are common formats. These messages are sent to customers with special offers or calls to action, often promoting limited-time deals or new product launches. Mail-order clubs, online or print surveys and infomercials are other examples of direct marketing communication.

7. Digital marketing

The promotion of products or brands via one or more forms of electronic media. For example, advertising mediums that might be used as part of the digital marketing strategy of a business could include promotional efforts made via the Internet, social media, mobile phones and electronic billboards.

discuss digital media marketing in detail – this section is not in your study guide but it is important for the exam

(see above section)

Advantages of digital media marketing

1. Speed: quick to reach, inform & engage with customers

2. Narrowcasting: messages reach small target markets

3. Individualisation: customise, tailor made messages

4. Interactivity: can engage in two-way conversation

5. Immediate feedback

6. Personalisation – focussed messages that are customer orientated

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7. Relationship building

8. Effective word-of-mouth – user can pass message on at the click of the mouse

9. Cost effective, more focused, less wastage

10. Can involve customer in product development, design & improvement

STUDY UNIT 11 based on chapter 13 of your prescribed book.

discuss how people and processes fit into the marketing mix in your own words

Knowledgeable workers, employees and management add significant value to the total product or service offering, as organisations depend on people and their interaction with clients and customers for successful transactions. Consumers make judgements and deliver perceptions of the service based on the employees they interact with. Process (sixth p) is essential in ensuring efficient, effective and quality service delivery. All the systems, procedures, steps and activities associated with delivering a service form part of the process.

discuss the characteristics of a service and services marketing – EXAM QUESTIONThere are several characteristics which differentiate a service from a product.

1. Inseparable 2. Intangible 3. Perishable 4. Variability 5. Right of ownership

1. Inseparable

A key distinguishing feature of a service is that the service provider is inseparable from the consumer. For example, we cannot take a hotel room home for consumption; we must ―consume this service at the point of provision. Similarly, the hairdresser needs to be physically present for this service to be consumed.

2. Intangible

Physical products in the store are widely displayed for customers to see, feel, touch, weigh or sniff at before deciding whether or not to buy. Comparing this with the choice of a service such as an insurance policy. You cannot touch, see or smell the products before choosing, although clearly you can make some assessment based on past experience, word of mouth, or even the location and decor of the insurance office.

3. Perishable

Perhaps of all the suggested special characteristics of service products or classification of services, this is one of the most difficult to appreciate. Services are highly perishable compared to physical products. But how could, for example, the services of an airline be considered to be more perishable than fresh food and vegetable products? The reason is that unlike most physical products, many services cannot be stored. For example, if an airline does not sell all the seats on a

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particular flight, then those seats or rather the sales revenue of filling of them would have carried, has immediately and irreversibly gone.

4. Variability

In the production and marketing of physical products, companies have increasingly paid special attention to ensuring consistency in quality, feature, packaging, and so on. More often than not all customers can be sure that every bottle of Coke he/she buys, even in a life-time of purchases, will not vary. The provision of services, however, invariably includes a large measure of the ―human element‖. Indeed, with many services, we are purchasing nothing else but the skills of the suppliers. Because of this, it is often very difficult for both supplier and consumer to ensure a consistent ―product‖ or quality of service.5. Right of ownership

The final distinguishing feature of a service is that, unlike a physical product, the consumer does not secure ownership of the service. Rather the customer pays only to secure access to or use of the service. Again the hotel room is a good example. Similarly, with banking services, although the customer may be given credit cards, they serve only to allow the customer to make use of what he or she is actually buying, namely, bank services.

describe the physical evidence that accompanies a service offering in detail

Services as we know are largely intangible when marketing. However customers tend to rely on physical cues to help them evaluate the product before they buy it. Therefore marketers develop what we call physical evidence to replace these physical cues in a service. The role of the marketer is to design and implement such tangible evidence. Physical evidence is the material part of a service.

Physical evidence that accompanies a service offering:

•Atmospherics

•Design and layout

•Communication: has some tangible elements such as letterheads, loyalty cards, sales promotion social media

discuss the different atmospheric elements outlined in the prescribed textbook – PAST EXAMThe ambient conditions include temperature, colour, smell and sound, music and noise. The ambience is a package of these elements which consciously or subconsciously help you to experience the service. Ambience can be diverse. The ambience of a health spa is relaxing and calm, and the music and smells underpin this experience. The ambience of a nightclub will be loud noise and bright lights which enhance this customer experience, obviously in a different way. The marketer needs to match the ambience to the service that is being delivered.

The spatial layout and functionality are the way in which furniture is set up or machinery spaced out. Think about the spatial layout of your local cinema, or a church or temple that you have visited and how this affects your experience of the service. Functionality is more about how well suited the environment is to actually accomplish your needs. For example is the seat in the cinema comfortable, or can you reach your life jacket when on an aircraft?

Discuss 5 atmospheric elements that Truworths can use in their stores to stimulate customers. 10 marks theory, 5 marks (1 x 5) for egs.

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1. Sight appeal/visual stimuli: Size - communicates relative importance, success, strength or security Shape - evokes certain emotions in buyers Colours - first impression on a person looking at an object

2. Sound appeal: can enhance / detract from a buying atmosphere Avoid undesirable, obtrusive sounds that distract customers and interrupt buying process. Disruptive sounds

can be irritating when buying decision requires thorough consideration Create desirable sounds that set a mood, attract attention and provide information. Music can relax,

promote a buying atmosphere, create a theme or remind customers of special holidays & provide a pleasant backdrop.

3. Scent appeal: can have a + or – impact on the buying atmosphere. Pleasant scents create a buying atmosphere (fresh baked bread, flowers, perfumes) Nature of business will determine importance of pleasant scents

4. Touch appeal: buying attention increases after a person has held and inspected a product. Fitting rooms to try clothes on

5. Taste appeal: for some retailers, allowing customer to taste product samples is essential. Meat samples, cheese, bakery product (woollies samplings)

6. Theme appeal: a specific theme provides a focus for planning physical facilities. Five sensory

STUDY UNIT 12 - chapter 11 of your prescribed book. Section 12.8.1 refers to the advantages and disadvantages of e-commerce. The advantages and

disadvantages are mentioned in the study guide and at various points in chapter 11 of your prescribed book.

discuss the marketing benefits offered by digital media –EXAM TIPBecause social media appeared so quickly, it has developed a reputation by some for being a passing marketing interest, and therefore, an unprofitable one. The statistics, however, illustrate a different picture. This demonstrates a huge potential for social media marketing to increase sales, but a lack of understanding on how to achieve those results.

Every opportunity you have to syndicate your content and increase your visibility is valuable. Your social media networks are just new channels for your brand‘s voice and content. This is important because it simultaneously makes you easier and more accessible for new customers, and makes you more familiar and recognizable for existing customers. For example, a frequent Twitter user could hear about your company for the first time only after stumbling upon it in a newsfeed.

A strategic and open social media plan could prove influential in morphing consumers into being brand loyal.

Social networks are a cost-effective way to get your brand in front of fans and prospective customers. It doesn‘t cost you anything to tweet a message, pin a product photo to Pinterest, or promote a discount on Facebook, so there‘s no cost outside of your own time spent.

When it comes to impacting your website‘s position in search engines, you need to create optimized and compelling content if you want your domain to appear high up on the search results page.

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Social media is a great way to display your business‘ personality, as well as behind-the-scenes information about you, your employees, your workspace, and more. When you humanize your brand in this way, it makes it easier for consumers to connect with you and develop loyalty.

The marketing benefits of digital media include the following: EXAM TIP

6 I’S

1. Interactivity – The customer initiates contact and actively seeks information. The marketer has the customer’s full attention while viewing the website. The business can gather and store responses and can focus on the customers’ individual needs.

2. Intelligence – The internet allows the marketer to collect information at a low cost3. Individualisation – Marketing messages can be shaped for each individual at relatively low cost.4. Integration - Internet marketing can be easily integrated with all other marketing efforts. The role of the

internet in communicating with customers can be considered from 2 perspectives: a. Outbound internet based communications – Online marketing efforts should complement other

marketing channels in order to generate new leads and retain existing customersb. Inbound Internet based communications – This focuses on ‘being found’ by the customers and so

the marketer earns his way in, by posting on blogs for example. 5. Industry Restructuring - The dynamic nature of the internet results in re-intermediation and disintermediation.

The middle man is cut out and the marketer deals directly with the customer. 6. Independence of location – The company’s reach in increased significantly and a company can now sell to both

international and local markets.

briefly discuss the marketing of a company website

The website should offer:

o Attractiveness

o Stickiness

o Reason to return

Search engine optimisation (SEO)

o Build a ‘search engine-friendly’ website

o Identify relevant keywords

o Build keywords into the website

o Submit the website address (URL) to search engines

o Link your website to others

o Tweak the site

Submitting your site to search engines and directories

o Crawler-based search engines

o Human-powered directories

Establish in-bound links

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o Negotiate cross-links with other sites

o Buy links from other sites

discuss other internet marketing media such as e-mail and rss feeds

discuss the social media environment and the benefits of social media for marketers

•Facebook

•Blogging

•Twitter

•Linkedin

•YouTube

•MXit

•E-mail

•Social Bookmarking

BENEFITS of social media

◦ Unparalleled access to information

◦ Enhanced brand awareness and perception

◦ Better engagement with customers, employees and business partners

◦ Collaboration

◦ Richer user experience

◦ Improved Web metrics

◦ Increased control over the company’s marketplace message

◦ Enhanced conversation possibilities

◦ Social media enhances the effects of other media

The unique characteristics of social media

•Authenticity

•Transparency

•Immediacy

•Participation

•Connectedness

•Accountability

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Name & discuss 5 different forms of online advertising. Provide a practical example for two of these forms, based on the Perfect Balance case study. 10 marks for theory & 1 mark for each example. (pg 395) – EXAM QUESTION

1. Horizontal banners: graphics that appear on a web page, usually hyperlinked to the advertiser’s website. Formats include JPG, GIF, Flash, HTML, Java and more. This is the most common online advertisement.

2. Skyscrapers: vertical banners, much taller than it is wide. Often used in columns of webpages where there is a lot of unused vertical space but limited horizontal space.

3. Buttons: smaller than a banner & usually placed in parts of a webpage where space is limited, such as in narrow columns on the left or right of a webpage.

4. Pop-ups: this is automatically displayed in a second smaller browser window when you load or unload a normal web page. Pop-up ads tend to cost advertisers more since they are considered intrusive.

5. Pop-unders: automatically displays in a second smaller browser window behind the current window when you load / unload a normal web page. Considered less annoying than pop-ups.

6. Ad features: is a cost-effective way to gain presence on a news website or a specific section within such a website.

7. Rich media: technology that includes richer graphics, audio or video within the ad. Unlike static or animated GIF banner ads, rich media ads often enable users to interact with the banner without leaving the pag eon which it appears.

8. Sponsorships: an advertiser pays to sponsor a section of a website. May take form of the typical banner and/or text that states “this section is sponsored by…”

A company’s website can be used as a communication tool. Discuss three communication uses of company websites. (3 marks). (Pg 394) – EXAM QUESTION

1. Online news: excellent way to communicate with customers & cultivate a long-terms relationship. Cheap to manage and easy to update. Company news can be posted any time of day or night, making it a true source of current news.

2. Community Building: refers to a virtual community sharing a join interest through an online forum. Community members can post their comments on the current topic and participate by means of an internet chat room. Online communities can be set up by any business with a website.

3. Online research: online surveys are a great tool for determining needs of corporate or trade clients. Online polls within a specific focus on the individual user, customer or client.

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(Past exam Question)

Can reach a very large number of potential buyers from all over the world

Ads can be updated at any times at minimal cost

Online ads are often cheaper than tv or radio or print ads

Can use a combination of multimedia facilities such as graphics, animation, text & audio

Since many internet users are cream of the crop, ads will be exposed to well educated, high income potential customers – therefore logical to these ppl are a very desirable target audience

Use of internet is growing rapidly daily – so this is a huge potential global market

STUDY UNIT 13 based on chapter 14 of your prescribed book.

discuss the marketing planning process in detail – EXAM TIP

Step 1: Historic appraisal (Evaluation of the past)

Identify long-term trends and short-term changes in the market

o General market data (Sales and market shares)

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o Market activity information (Advertising and pricing history as well as historical cost and profit data)

o Facts related to changes in technology, regulations, or any other general environmental conditions

Step 2: Situation Analysis (Environmental Analysis)

Issues to be included include:

o Internal environment

Short, medium, long-term objectives, type & number of resources, culture in org & how org is structured

o Customer environment

Understanding of who the customers are, what they buy, how they buy, when they buy & why others don’t buy

o External environment

Must now impact of economic environment on business, social cultural changes taking place, impact of technology, legal & political issues, physical environment & state of competition on business

Use SWOT analysis to analyze the environment

Internal factors may include: 4 marketing instruments, personnel, finance etc

External: legislation, changes in technology (may be a threat to some & create opportunities for others)

Step 3: Planning assumptions

Make assumptions about a variety of planning factors: market potential of product, market & brand forecasts, exogenous factors (material’s or labour)

Step 4: Marketing objectives

Marketing goals must be clearly defined; include what the org wants to achieve through marketing during time frame of the plan. First look at mission statement:

Organisational mission: statement of why org exists, who it serves and what it stands for – must expresses the central reason for its existence today, as well as its direction tomorrow.

NB while doing environmental scanning bec it determines which variables must be monitored.

Requirements of objectives:

Be quantifiable and measureable

Be as specific as possible

Have a specified time limit

Be reachable and reasonable

Ranked in order of importance

Primarily four secondary market and market objectives pursued:

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A high rate of return on investment

An increase in sales

An increase in market share

Continued growth

Step 5: Formulating marketing strategies

Marketing objectives need to be transferred into a marketing strategy. Answers questions of exactly what will be done, when it will be done, and by whom.

Strategic competitive positions:

o Market leader (has the greatest share of the market & leads the way by finding new opportunities & adjusting to foreseen trends)

o Market challenger (has large market share; looks for small unmet needs and it can fill & attempts to find new and creative channels of providing the product)

o Market follower (also has significant market share but less than 2 above – aims to hold or increase market share by offering lower cost alternatives)

o Market specialist (Nicher) – reach & responds better to smaller, more fine-tunes market segment; is quick & flexible in reacting to trends)

Step 6: Rest of the plan

• Setting the budget for the marketing plan.

• Establishing monitoring and control methods.

• Making provision for contingency plans.

Reasons for the failure of marketing plans:

Poor or non-existent research (based on assumptions which were not tested)

Plan forecasts unrealistically high sales

Plan is too detailed or too theoretical – too difficult to decide what to do next

Plan not accepted by some or all of affected parties, no buy-in or not communicated to all

No systems are planned or are in place to measure success/failure/change

Is isolated from external factors which affect it

Is unrealistic in its resource requirement

No short-term improvement is planned for so plan withers bec nothing seems to have changed

Is based on what the company wants or needs, not what the requires

NO action list with names and dates identified so most of actions are never done

Is simply not implemented

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Step 7: Review plans

• Changes in the environment mean that forecasts have to change regularly, which may lead to plans changing.

Benefits if plan is done correctly and strategically:

• Consistency: decisions of managers become consistent and actions better coordinated

• Environmental scanning: planning encourages to review impact of environmental forces on organisation

• Organisational adaptation: ensures that businesses adapt to their environments & foresee possible changes

• Achievement : focusses managers attention on objectives, strategies & organisational achievement by helping staff to think about objectives that require good levels of performance

• Resource allocation: resources are allocated to allow strategy to be implemented effectively

• Competitive advantages: plans are fundamentally

5 ADVANTAGES OF PLANNING FOR ANY BUSINESS: - EXAM TIP1. Encourages systematic thinking

2. Improves conditions between departments & management

3. Provides performance standards for measuring results

4. Provides a logical basis for decisionmaking

5. Helps improve organisational ability

explain the market growth-market share planning model in detail – EXAM TIP – NB!!!

Four different product classes are distinguished:

1. Star – are relatively new products in the market-growth phase of their life cycle. Has star (product) has attained a relatively high market share and has growth potential.

High mg- high ms

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2. Cash Cows – well established in respect of market share, but few prospects exist for further market growth. Require much cash to keep them in this profitable position. These products generate cash.

Low mg-high ms

3. Problem Children – relatively small market share and require continuous marketing effort to retain market share.

High mg-low ms (ie sell 1 this month, 2 next month = 100% growth)

4. Dogs – low market share and market growth possibilities are limited or do not exist at all. As prospects are poor, cash flow to these products is limited – can be sold to other organisations or withdrawn from market

Low mg-low ms

discuss the steps in the evaluation and control process in detail – EXAM TIP

Step 1: Establishing performance criteria

Input standards

• Specified norms, usually quantified in money value and/or manpower application. Input standards quantified in money value usually appear in the budget.

Output standards

• Norms used in the evaluation of the marketing results (sales measured in income of physical units; market share/size; organisation’s growth & profitability; brand recognition; brand preference; speed or order delivery etc)

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Efficiency standards

• Determined by expressing closely and rationally associated inputs and outputs as a relationship. Expressed as a ratio to indicate relative efficiency with which certain tasks are performed (turnover of stock; average cost per visit of sales reps; no. of visit per day of sales reps)

Step 2: Conduct performance projections: ie to increase sales by 40%

Step 3: Develop (create) a marketing organisation: capable of implementing marketing strategies

Step 4: Develop a marketing plan (strategy) – as described above

Step 5: Evaluate (asses) marketing performance: crucial for it to identify errors & better future performance & determine what resources are needed for better performance

Step 6: Take corrective action: can be taken in 1 of 3 areas: Territory Decisions, Product Decisions, Customer and Order-Size Decisions: eg low sales, start intensive marketing campaign; unpopular product sizes or colours can be eliminated; channels of distribution changed