What is Marketing?
The term marketing has changed and evolved over a period of time, today marketing is based around providing continual benefits to the customer, these benefits will be provided and a transactional exchange will take place.
The Chartered Institute of Marketing define marketing as ‘The management process responsible for identifying , anticipating and satisfying customer requirements profitability’
Philip Kotler defines marketing as ‘satisfying needs and wants through an exchange process’
SMART – business objectives
All businesses need to set objectives for themselves or for the products or services they are launching. What does your company, product or service hope to achieve?
Setting objectives are important., it focuses the company on specific aims over a period of time and can motivate staff to meet the objectives set.
A simple acronym used to set objectives is called SMART objectives. SMART stands for:
1. Specific – Objectives should specify what they want to achieve.
2. Measurable – You should be able to measure whether you are meeting the objectives or not.
3. Achievable - Are the objectives you set, achievable and attainable?
4. Realistic – Can you realistically achieve the objectives with the resources you have?
5. Time – When do you want to achieve the set objectives?
A tool used by organisations to help the firm establish its Strengths, Weaknesses, Opportunities and Threats (SWOT). A SWOT analysis is used as a framework to help the firm develop its overall corporate, marketing, or product strategies. Note:Strengths and Weaknesses are internal factors which are controllable by the organisation. Opportunities & threats are external factors which are uncontrollable by the organisation.
Strength examples could include:
• A strong brand name.
• Market share.
• Good reputation.
• Expertise and skill.
Weaknesses could include:
• Low or no market share.
• No brand loyalty.
• Lack of experience.
Opportunities could include:
• A growing market.
• Increased consumer spending.
• Selling internationally.
• Changes in society beneficial to your company.
Threats could include:
• Government policy eg taxation, laws.
• Changes in society not beneficial to your company.
A SWOT analysis is an excellent tool to use if the organisation wants to take a step back and assess the situation they are in. Issues raised from the analysis are then used to assist the organisation in developing their marketing mix strategy. A SWOT analysis must form the part of any prudent marketing strategy.
A successful product or service means nothing unless the benefit of such a service can be communicated clearly to the target market. An organisations promotional strategy can consist of:
Is any non personal paid form of communication using any form of mass media.
Involves developing positive relationships with the organisation media public. The art of good public relations is not only to obtain favorable publicity within the media, but it is also involves being able to handle successfully negative attention.
Commonly used to obtain an increase in sales short term. Could involve using money off coupons or special offers.
Selling a product service one to one.
Is the sending of publicity material to a named person within an organisation. There has been a massive growth in direct mail campaigns over the last 5 years. Spending on direct mail now amounts to £18 bn a year representing 11.8% of advertising expenditure ( Source: Royal Mail 2000). Organisations can pay thousands of pounds for databases, which contain names and addresses of potential customers.
Direct mail allows an organisation to use their resources more effectively by allowing them to send publicity material to a named person within their target segment. By personalising advertising, response rates increase thus increasing the chance of improving sales. Listed below are links to organisation who's business involves
Above a pull strategy (left) push strategy (right).
Communication by the manufacturer is not only directed towards consumers to create demand. A push strategy is where the manufacturer concentrates some of their marketing effort on promoting their product to retailers to convince them to stock the product. A combination of promotional mix strategies are used at this stage aimed at the retailer including personal selling, and direct mail. The product is pushed onto the retailer, hence the name. A pull strategy is based around the manufacturer promoting their product amongst the target market to create demand.
Consumers pull the product through the distribution channel forcing the wholesaler and retailer to stock it, hence the name pull strategy. Organisations tend to use both push and pull strategies to create Communication Model - AIDA
is a communication model which can be used by firms to aid them in selling their product or services. AIDA is an Acronym for Attention, Interest, Desire, Action.. When a product is launched the first goal is to grab attention. Think, how can an organisation use it skills to do this? Use well-known personalities to sell products? Once you grab attention how can you hold Interest, through promoting features, clearly stating the benefit the product has to offer? The third stage is desire, how can you make the product desirable to the consumer? By demonstrating it? The final stage is the purchase action, if the company has been successful with its strategy then the target customer should purchase the product.
Pricing is one of the most important elements of the marketing mix, as it is the only mix, which generates a turnover for the organisation. The remaining 3p’s are the variable cost for the organisation. It costs to produce and design a product, it costs to distribute a product and costs to promote it. Price must support these elements of the mix. Pricing is difficult and must reflect supply and demand relationship. Pricing a product too high or too low could mean a loss of sales for the organisation.
Pricing should take into account the following factors
Fixed and variable costs.
Proposed positioning strategies.
Target group and willingness to pay.
An organisation can adopt a number of pricing strategies. The pricing strategies are based much on what objectives the company has set itself to achieve.
Where the organisation sets a low price to increase sales and market share.
The organisation sets an initial high price and then slowly lowers the price to make the product available to a wider market. The objective is to skim profits of the market layer by layer.
Setting a price in comparison with competitors.
Product Line Pricing:
Pricing different products within the same product range at different price points. An example would be a video manufacturer offering different video recorders with different features at different prices. The greater the features and the benefit obtained the greater the consumer will pay. This form of price discrimination assists the company in maximising turnover and profits.
The organisation bundles a group of products at a reduced price.
Psychological pricing: The seller here will consider the psychology of price and the positioning of price within the market place. The seller will therefore charge 99p instead £1 or $199 instead of $200
The price set is high to reflect the exclusiveness of the product. An example of products using this strategy would be Harrods, first class airline services, porsche etc.
The organisation sells optional extras along with the product to maximise its turnover. This strategy is used commonly within the car industry.
PEST & Micro environmental Factors
The following type of forces influence an organisation’s operating environment:
• Pest Factors – These are external forces which the organisation does not have direct control over these factors. PEST is an acronym and each letter represents a type of factor (Political, Economical Social and Technological).
• Micro environmental factors – These are internal factors, which the organisation can control.
PEST & PESTLE analysis
A PEST analysis is used to identify the external forces affecting an organisation .This is a simple analysis of an organisation’s Political, Economical, Social and Technological environment. A PEST analysis incorporating legal and environmental factors is called a PESTLE analysis.
The first element of a PEST analysis is a study of political factors. Political factors influence organisations in many ways. Political factors can create advantages and opportunities for organisations. Conversely they can place obligations and duties on organisations. Political factors include the following types of instrument:
- Legislation such as the minimum wage or anti discrimination laws.
- Voluntary codes and practices
- Market regulations
- Trade agreements, tariffs or restrictions
- Tax levies and tax breaks
- Type of government regime eg communist, democratic, dictatorship
Non conformance with legislative obligations can lead to sanctions such as fines, adverse publicity and imprisonment. Ineffective voluntary codes and practices will often lead to governments introducing legislation to regulate the activities covered by the codes and practices.
The second element of a PEST analysis involves a study of economic factors.
All businesses are affected by national and global economic factors. National and global interest rate and fiscal policy will be set around economic conditions. The climate of the economy dictates how consumers, suppliers and other organisational stakeholders such as suppliers and creditors behave within society.
An economy undergoing recession will have high unemployment, low spending power and low stakeholder confidence. Conversely a “booming” or growing economy will have low unemployment, high spending power and high stakeholder confidence.
A successful organisation will respond to economic conditions and stakeholder behaviour. Furthermore organisations will need to review the impact economic conditions are having on their competitors and respond accordingly.
In this global business world organisations are affected by economies throughout the world and not just the countries in which they are based or operate from. For example: a global credit crunch originating in the USA contributed towards the credit crunch in the UK in 2007/08.
Cheaper labour in developing countries affects the competitiveness of products from developed countries. An increase in interest rates in the USA will affect the share price of UK stocks or adverse weather conditions in India may affect the price of tea bought in an English café.
A truly global player has to be aware of economic conditions across all borders and needs to ensure that it employs strategies that protect and promote its business through economic conditions throughout the world.
The third aspect of PEST focuses its attention on forces within society such as family, friends, colleagues, neighbours and the media. Social forces affect our attitudes, interest s and opinions. These forces shape who we are as people, the way we behave and ultimately what we purchase. For example within the UK peoples attitudes are changing towards their diet and health. As a result the UK is seeing an increase in the number of people joining fitness clubs and a massive growth for the demand of organic food. Products such as Wii Fit attempt to deal with society’s concern, about children’s lack of exercise.
Population changes also have a direct impact on organisations. Changes in the structure of a population will affect the supply and demand of goods and services within an economy. Falling birth rates will result in decreased demand and greater competition as the number of consumers fall. Conversely an increase in the global population and world food shortage predictions are currently leading to calls for greater investment in food production. Due to food shortages African countries such as Uganda are now reconsidering their rejection of genetically modified foods.
In summary organisations must be able to offer products and services that aim to complement and benefit people’s lifestyle and behaviour. If organisations do not respond to changes in society they will lose market share and demand for their product or service.
Unsurprisingly the fourth element of PEST is technology, as you are probably aware technological advances have greatly changed the manner in which businesses operate.
Organisations use technology in many ways, they have
1. Technology infrastructure such as the internet and other information exchange systems including telephone
2. Technology systems incorporating a multitude of software which help them manage their business.
3. Technology hardware such as mobile phones, Blackberrys, laptops, desktops, Bluetooth devices, photocopiers and fax machines which transmit and record information.
Technology has created a society which expects instant results. This technological revolution has increased the rate at which information is exchanged between stakeholders. A faster exchange of information can benefit businesses as they are able to react quickly to changes within their operating environment.
However an ability to react quickly also creates extra pressure as businesses are expected to deliver on their promises within ever decreasing timescales..
For example the Internet is having a profound impact on the marketing mix strategy of organisations. Consumers can now shop 24 hours a day from their homes, work, Internet café’s and via 3G phones and 3G cards. Some employees have instant access to e-mails through Blackberrys but this can be a double edged sword, as studies have shown that this access can cause work to encroach on their personal time outside work.
The pace of technological change is so fast that the average life of a computer chip is approximately 6 months. Technology is utilised by all age groups, children are exposed to technology from birth and a new generation of technology savvy pensioners known as “silver surfers” have emerged. Technology will continue to evolve and impact on consumer habits and expectations, organisations that ignore this fact face extinction.
A PEST analysis is sometimes expanded to incorporate legal and environmental factors; this is known as a pestle analysis. There are many statutes books containing company law as almost every aspect of an organisation’s operation is controlled through legislation from treatment of employees through to health and safety. Legal factors are important as organisations have to work within legislative frameworks. Legislation can hinder business by placing onerous obligations on organisations. On the other hand legislation can create market conditions that benefit business.
PEST analysis and the marketing mix.
Levels of a product
Core Product. What is the core benefit your product offers?. Customers who purchase a camera are buying more then just a camera they are purchasing memories.
Actual Product: All cameras capture memories. The aim is to ensure that your potential customers purchase your one. The strategy at this level involves organisations branding, adding features and benefits to ensure that their product offers a differential advantage from their competitors.
Augmented product: What additional non-tangible benefits can you offer? Competition at this level is based around after sales service, warranties, delivery and so on. John Lewis a retail departmental store offers free five year guarantee on purchases of their Television sets, this gives their `customers the additional benefit of ‘piece of mind’ over the five years should their purchase develop a fault.
Digital copying – copiere digitala
Potential market – piata potentiala
Market segmentation – segmentare a pietei
Consumer – consumator, client
Unanimously – in unanimitate
To overprice - a fixa un pret prea mare
Affordable price – pret pe care iti poti permite sa-l platesti
To go up slightly – a creste usor
To make a product profitable – a face un produs profitabil
Marketing mix – mix de marketing
Promotion – promovare
To be in progress - a fi in plina desfasurare
To meet a deadline – a respecta un termen limita
Brand name – marca
Distribution system – sistem de distributie
Points of sale – puncte de vanzare
To work under pressure – a lucra sub presiune
Production function – functie a productiei
To be incorporated – a fi inclus
To survive – a supravietui
Sample – esantion
Market trends – tendinte ale pietei
Advertising campaign – campanie publicitara
Basic principle – principiu de baza
Fair competition – competitie cinstita
Advertiser – producator de reclame
1. Este putin probabil ca produsul sa fie acceptat fara sa fie testat in prealabil.
It’s unlikely that the product will be accepted without being tested in advance.
2. Nu se poate exclude posibilitatea de aretrage produsul de pe piata.
One can’t exclude the possibility of withdrawing the product from the market.
3. Probabil vom schimba structura departamentului.
We would probably change the structure of the department.
4. Marketing research consist in collecting information about people’s needs, interpreting it and drawing conclusions on the basis of the material collected. But each stage has some specific steps.
Cercetarea pietei consta in strangerea informatiilor despre nevoile oamenilor, pe interpretarea lor si desprinderea concluziilor pe baza materialului adunat. Dar fiecare etapa presupune parcurgerea catorva pasi.
5. Questionnaires and public opinion polls are used in order to get market information.
Chestionarele si parerile opiniei publice sunt folosite pentru a obtine informatii despre piata.
6. Do you have your own idea for these advertisements or will you leave it entirely to us?
Aveti propria dumneavoastra idee in ceea ce priveste aceste reclame sau lasati totul in seama noastra?
7. Please note that on all orders for the advertised product sent to us by 15 June 2001, we will give an 8% trade discount for orders of at least 100 pieces.
Va rugam sa retineti ca pentru toate comenzile pe care le vom primi pentru produsul din reclama pana la data de 15 iunie 2001, acordam un rabat comercialde 8% pentru comenzi de cel putin 100 de bucati.
8. The marketing manager is going to contact an advertising company for promoting the new product.
Managerul va contacta o companie de publicitate pentru promovarea noului produs.
9. If you want to take up advertising, you will have to use creativity to the maximum. Advertising is an atractive and profitable field, but competition is also strong here. Advertisers have to take into account the clients’ objectives as well as the message the latter wants to send to the target audience.
Daca vei dori sa te apuci de reclama, va trebui sa-ti folosesti creativitatea la maximum. Reclama este un domeniu atragator si profitabil, dar concurenta este si ea puternica aici. Producatorii de reclame trebuie sa tina seama de obiectivele clientului si de mesajul pe care acesta din urma doreste sa-l transmita publicului tinta.