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QMIP 8

The Evolution of the Marketing Concept

Production era Sales era Marketing era Relationship marketing era

Dibb, Simkin, Pride and Ferrell

Marketing Defined
Chartered Institute of Marketing: Marketing is the management process responsible for identifying, anticipating and satisfying customer requirements profitably

Dibb, Simkin, Pride and Ferrell

Marketing Defined
Dibb, Simkin, Pride and Ferrell: Marketing consists of individual and organisational activities that facilitate and expedite satisfying exchange relationships in a dynamic environment through the creation, distribution, promotion and pricing of goods, services and ideas.

Dibb, Simkin, Pride and Ferrell

Marketing Defined
Kotler: Marketing is a societal process by which individuals and groups obtain what they need and want through creating, offering, and freely exchanging products and services of value with others. Drucker: the aim of marketing is to make selling superfluous.
Kotler

The Marketing Process

Marketing analysis
Customers Competition Trends/marketing environment Internal capabilities Marketing segment identification Target market priorities Brand positioning Basis fo competing Marketing objectives Products Pricing Place /distribution Promotion People, processes, physical environment Budgets and schedules Personnel and resposibilies Bentchmarking and monitoring progress

Marketing strategy

Implementation marketing programmes

Controls

Dibb, Simkin, Pride and Ferrell

The Relationship Marketing Ladder of Customer Loyalty

The CustomerDevelopment Process

Griffin: Customer Loyalty: How to Earn it. How to keep it. (Kotler) 1. 2. 3. 4. Suspects: Who might by your product Prospects: Most likely suspects First-time customers Repeat customers: First time customers who are hoped to be converted into repeat customers Clients: People whom company treats very specially and knowledgeably Members: Clients who enter a membership program offering them benefits Advocates: Enthusiastically recommend your company, and its products and services Partners

Suspects

Prospects

Disqualified prospects

First-time
customers

Repeat Customers

5.

Clients
Inactive or excustomers

6.

Members

7.

Advocates

8.

Partners

Partnership Marketing
The company works continuously with its large customers to help improve their performance. (General Electric, for example, has stationed engineers at large utilities to help them produce more power.)

Kotler

The Macro Marketing Environment

Broader forces
Political forces: Elected political officials create and enforce laws, that may influence marketers efforts. Marketers can try to influence them before. Legal forces: There are laws to preserve competition and to protect consumers. Regulatory forces: People appointed to political offices and/or civil cervants in regulatory agencies are also involved in enforcing laws and regulations. Societal/Green forces: Press marketers to to provide high living standards and enjoyable lifestyles through socially responsible decisions and activities. Society expects high standard of living, general quality of life. Leisure time, less pollution. Technological forces: Marketers must be aware of new developments in technology and their possible effects because technology does affect marketing activities in many different ways. Economic and competitive forces: Influence both marketers and customers decisions and activities. General economic conditions, buying power, willingness to spend, spending patterns, types of competitive structure, competitive tools ..
Dibb, Simkin, Pride and Ferrell

The Micro Marketing Environment

These forces are more company-specific
The Business: Marketers need to be aware of the internal environment. Their efforts must be consistent with the goals and resources of the whole company. Suppliers: Cooperation needed to secure the supply of raw materials etc. Marketing intermediaries: Most companies need a network to organize the availability of their products to the end-users. Buyers: Customers are the most important force. Their needs etc. (must be understood by marketers) are changing. Competitors: Marketers must differentiate their products etc. from competitors marketing mixes. There are direct and subsititute rivals. Resources to compete are different for each company. Publics: Any group that can impact businesss ability to perform. Banks, media, consumer groups etc.
Dibb, Simkin, Pride and Ferrell

Business Cycle
Fluctuations in the economy:
Prosperity: A period during which unemployment is low and total income is relatively high. Recession: A period during which unemployment rises and total buying power declines. Depression: A period during which unemployment is extremely high, wages are very low, total disposable income is a minimum and consumers lack confidence in the economy. Recovery: The stage of the business cycle in which the economy moves from depression or recession to prosperity.
Dibb, Simkin, Pride and Ferrell

Types of Competitive Structure

Monopoly: A market structure that exists when a company turns out a product that has no close substitutes Oligopoly: A market structure that exists when a few sellers control the supply of a large proportion of a product Monopolistic competition: A market structure that exists when a business with many potential competitors attempt to develop a differential marketing strategy to establish its own market share Perfect competition: A market structure that entails a large number of sellers, not one of which could significantly influence price or supply

Dibb, Simkin, Pride and Ferrell

13

Competition Roles
Market leader:
the biggest company in the industry or on the market the innovative leader of marketing highly valued brands, good image may be slow and old-fashioned

Challenger:
visible, aggressive marketing aggressive, stimulates competition low prices, offers new products

Follower:
slow, inflexible cannot respond to competition poor product ranges, often expensive no originality

Nicher:
original operations invests in quality and service wide product range, precise segments

Lahtinen and Isoviita

Types of Consumer Buying Behaviour

Routine response behaviour: Behaviour that occurs when buying frequently purchased, low-cost, low-risk items that need little search and decision effort Limited decision-making: Behaviour that occurs when buying products purchased only occasionally, for which a moderate amount of information gathering and deliberation is needed Extensive decision-making: The most complex decision-making behaviour occurs when buying unfamiliar, expensive, high-risk or infrequently bought products, for which the buyer spends much time seeking information and comparing brands before deciding on the purchase. Impulse buying: Behaviour that involves no conscious planning but res ults from a powerful, persistent urge to buy something immediately

Dibb, Simkin, Pride and Ferrell

Consumer Buying Decision Process

1. 2. 3. 4. 5. Problem recognition Information search Evaluation of alternatives Purchase Post-purchase evaluation

Dibb, Simkin, Pride and Ferrell

Personal Influences
Factors unique to a particular individual Demographic factors: Individual charasteristics such as age, sex, race, ethnic origin, income, family life cycle and occupation Situational factors: External circumstances or conditions that exists when a consumer is making a purchase decision Level of involvement: The level of interest, emotional commitment and time spent searching for a product in a particular situation
Dibb, Simkin, Pride and Ferrell

Situational Factors
Can influence the buyer at any stage of the consumer buying decision process May cause the individual to shorten, lenghten or terminate the process Some products in short supply, accident, sickness Time available to purchase

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Levels of Involvement
Enduring involvement: An ongoing interest in a product class because of personal relevance
E.g. products accosiated with leisure activities.

Situational involvement: A result of the particular circumstance or environment.

E.g. searching for an engagement ring

Low consumer involvement: Buying is almost automatic. The information search and evaluation of alternatives are extremely limited
E.g. the purchase of floor cleaner
Dibb, Simkin, Pride and Ferrell

Psychological Influences 1
Perception: The process of selecting, organizing and interpreting information inputs to produce meaning Motive: An internal, energygiving force that directs a persons activities towards satisfying a need or achieving a goal Learning: Changes in a persons behaviour caused by information and experience

Psychological Influences 2
Attitude: An individuals enduring evaluation, feelings and behavioral tendencies towards an object or acitivity Personality: All the internal traits and behaviours that make a person unique

Dibb, Simkin, Pride and Ferrell

Social Influences 1
Roles and family:
Role: A set of actions and activities that a person in a particular position is supposed to perform, based on the expectations of both the individual and surrounding people Family: Family roles relate directly to purchase decisions (male, female, children)

Reference group: A group with which an individual identifies so much that he or she takes on many of the values, attitudes or behaviour of groups members
Dibb, Simkin, Pride and Ferrell

Social Influences 2
Social class: An open group of individuals who have similar social rank Culture and sub-cultures:
Culture: All the things around us that are made by human beings: tangible items, such as food, furniture, buildings, clothing and tools; and intangible concepts, such as education, the legal system, healthcare and religion; plus values and behaviours Sub-cultures: Sub-division of culture according to geographic regions or human charasteristics, such as age or ethnic background
Dibb, Simkin, Pride and Ferell

Maslows Hierarchy of Needs

Self-actualiszation needs Esteem needs Social needs Safety needs Physiological needs

Lahtinen and Isoviita

Family Life Cycle

Bachelor stage
A household of one preson, single Money spent on studies and leisure time Temporary or permanent stage A childless couple Double income no kids, dinks Money is spent on studies, home entertainment and saving A couple with children under school age Money is spent on food, clothing, buying a house and decorating A couple with school-age children Money is spent on family hobbies and vacations A couple whose chilren have left home Money is spent on childrens studies, grandchildren and own hobbies A retired couple or widowed spouse Money is spent on travelling, recreation, and redecorating the home

Newlyweds

Full nester I

Full nester II Empty nester I Empty nester II

Lahtinen and Isoviita

Market Segmentation
The process of grouping customers in markets with some heterogeneity into smaller, more similar or homogeneous segments. The identification of target customer groups in which customers are aggregated into groups with similar requirements and buying characteristics.

Dibb, Simkin, Pride and Ferrell

Market segment
A group of individuals, groups or organisations sharing one or more similar characteristics that cause them to have relatively similar product needs and buying characteristics.

Dibb, Simkin, Pride and Ferrell

Undifferentiated (or total market) approach

An aproach which assumes that all customers have similar needs and wants, and can be served with a single marketing mix

Dibb, Simkin, Pride and Ferrell

Segmentation Variables or Bases

The dimensions or charasteristics of individuals, groups or businesses that are used for dividing a total market into segments

Dibb, Simkin, Pride and Ferrell

Basic Elements of Segmentation

Segmentation
Consider variables for segmenting market Look at profile of emerging strategy Validate segments emerging

Targeting
Decide on targeting strategy Decide which and how many segments should be targeted

Positioning
Understand consumer perceptions Position products in the mind of the consumer by communicating the desired positioning Design appropriate marketing mix
Dibb, Simkin, Pride and Ferrell

Selecting Appropriate Variables

One-to-one marketing: Involves developing longterm relationships with individual customers in order to understand and satisfy their needs Single variable segmentation: Segmentation achieved by using only one variable, the simplest type of segmentation to perform Multivariable segmentation: Segmentation using more than one charasteristic to divide a total market
Dibb,Simkin,Pride and Ferrell

Targeting Strategies
Undifferentiated Strategy: An organization defines an entire market for a particular product as its target market, designs a single marketing mix, and directs it at that market Concentration Strategy: A process by which a business directs its marketing effort towards a single market segment through one marketing mix Differentiated strategy: A strategy by which a business directs its marketing efforts towards two or more market segments by developing a marketing mix for each
Dibb, Simkin, Pride and ferrell

Segmentation Effectiveness 1/2

The segments must be:
measurable - easy to identify and measure; some basis must be found for effectively separating individuals into groups or segments with relatively homogenous product or service needs substantial - large enough to be sufficiently profitable to justify developing and maintaining a specific marketing mix accessible - easy to reach with the marketing mix developed for example, the promotional effort should target the relevant consumers
Dibb, Simkin, Pride and Ferrell

Segmentation Effectiveness 2/2

The segments must be:
stable the question of segment stability over time is not often addressed; if companies are to make strategic decisions on the basis of revealed segments, they need to be reasonably certain that those segments will be around long enough for action to be taken useful the selected segments must be meaningful to the managers tasked with operationalising them and be likely to enable the company to better satisfy its target market
Dibb, Simkin, Pride and Ferrell

Positioning
The process of creating an image for a product in the minds of target customers

Dibb, Simkin, Pride and Ferrell

Product
Everything, both favourable and unfavourable, tangible and intangible, received in an exchange of an idea, service or good.

Dibb, Simkin, Pride and Ferrell

Product
Good Service Ideas Consumer products Industrial or business products

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The Three Levels of Product

Core product: The level of a product that provides the perceived or real core benefit or service Actual product: A composite of the features and capabilities offered in a product, quality and durability, design and product styling, packaging and brand name Augmented product: support aspects of a product, including customer service, warranty, delivery and credit, personnel, installation and after-sales support
Dibb, Simkin, Pride and ferrell

Product Line and Product Mix

Product line: A group of closely related product items that are considered a unit because of marketing, technical or end-use considerations Product mix: The composite group of products that a company makes available to customers

Dibb, Simkin, Pride and Ferrell

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