BSB126 Final Notes

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Queensland University of Technology
Management and Human Resources

Marketing - Revision Notes Topic One- Introduction to Marketing and the Marketing Concept The Marketing Concept: An organisation should strive to satisfy the needs of consumers while also trying to achieve the organisations goals - The marketing principles/The 4 p’s o Product – good/service/idea/product to satisfy the customer need o Price – what is exchanged for the product o Promotion – a means of communication between the seller and buyer o Place – a means of getting the product to the consumer Customer orientation: Creating an item which fulfils a pre-existing customer need Marketing vs. selling: Marketing is the process of developing, pricing, promoting and distributing Topic Two- Market Segmentation and Positioning Market segmentation: Aggregating prospective buyers into groups that have common needs and will respond similarly to marketing actions Product differentiation: using different marketing mix activities Targeting: Process of segmenting and targeting markets 1. Group potential buyers into segments 2. Group products to be sold into categories 3. Develop a market-product grid and estimate size of markets 4. Select size of markets 5. Take marketing actions to reach target markets Positioning: Altering the space in one’s mind on important features compared to competitors Market segmentation strategies: - Market aggregation: treat the total market as a single segment - Single-segment concentration: focus on one segment (a ‘niche’ market) - Multiple-segment concentration: select 2 or more segments Topic Three- Consumer Behaviour Purchase decision processes 1. Problem recognition: Perceiving a need 2. Information search: Seeking value 3. Alternative evaluation: Assessing value 4. Purchase decision: Buying value 5. Post purchase behaviour: Value in consumption or use Problem solving - Routine problem solving: Little effort, habitual purchase (eg. Milk, salt) - Limited problem solving: Need help deciding due to little time/effort to research (eg. kettle) - Extended problem solving: Customer decision process followed, high value (eg. Car) Internal and external influences - Situational influences: Purchase task, social & physical surroundings, temporal effects, accident states - Psychological influences - Marketing mix influences - Socio-cultural influences Learning behaviours - Behavioural learning o Stimulus generalisation: Use of brand names to promote new products o Stimulus discrimination: One’s ability to perceive differences among similar products o Cognitive learning: learning without direct experience (eg. Thinking, reasoning, general problem solving  Observing outcomes of other peoples behaviours  Firms recognise this with repetition of ads, ideas etc. o Brand loyalty: favourable attitude toward a specific brand or product over time Topic Four- Product Product types - Convenience product: Inexpensive, merits little shopping effort. Eg. Corn - Shopping product: Requires comparison, more expensive, found in fewer stores (eg. Clothes) - Specialty product: Researched, reluctant to accept substitutes, not price sensitive (eg. Car) - Unsought product: Unknown to the buyer, buyer does not actively seek New product development - Determining demand, revenue & expectations - Determining cost, volume & profit relationships - Selecting an appropriate price level - Set the list or quoted price - Make special adjustments to the list or quoted price Core, tangible and augmented products - Core: what the buyer is really buying Tangible: must have 5 characteristics: Quality level, features, styling, brand name, packaging Augmented: means extra, or bonus (eg. Warranty, customer service) Product item, line and mix - Product mix: number of product lines that a company owns (eg. Gucci Guilty fragrances) - Product line: Group of related products that satisfy a class of needs. Used together, sold to the same customer group, distributed through similar outlets, similar price range - Product item: Specific version of a product, distinct among an organisations products The product life-cycle concept - Intro: High fail rates, marketing & production costs, limited competition, distribution, negative profits, promo focuses on awareness & info - Growth: Increasing sale rates, competitors, profits, promo focuses on brand ads, prices fall as development is recovered – goal is wider distribution - Maturity: Decreasing prices & profits, extended product line with stylistic product changes, saturated markets & excess capability - Decline: Decreasing sales over the long-run, large amount of unsold goods, elimination of non- essential marketing expenses Strategies to combat decline Deletion: dropping the product item from the product line Harvesting: keep product item, reduce marketing costs Finding a new market: company seeks where the product may not be in the same stage of life cycle Managing the product life cycle - Modify the product: Alter product characteristic, quality, performance or appearance. Develop new features, packaging or scents - Modify the market: Find new users, ways to increase use, create new use situations - Reposition the product: React to a competitors position, reach a new market, catch a rising trend, change the value offered Brand personality: set of human characteristics associated with a brand name Brand equity: added value a brand name gives to a product beyond the functional benefits provided - Develop positive brand awareness and association with a certain product class - Establish the brand name meaning – what a brand stands for - Get consumer to develop proper responses to a brand’s identity and meaning - Maintain an active, loyalty relationship between consumer and brand Branding strategies - Manufacturer branding: producer determines brand name using multi-product or -brand approach - Multiproduct branding: one name for all products in a product line (eg. Nike) - Multi branding: each product in the product line has a distinct name (eg. Quicksilver) - Private branding: company manufactures product, sells under brand name of other retailer (eg. Coles) - Mixed branding: products sold with owner + reseller brand name due to separate segments attached Packaging - Communication benefits: Label information, directions, nutritional or dietary info, seals or symbols - Functional benefits: Features for convenience, protection or storage - Perceptual benefits: Perception created in the consumers mind, idea of status or product quality Topic Five- Pricing Policy Price: money or other considerations exchanged for the ownership or use of a good or service. Profit Equation: Profit = Total revenue – Total cost Pricing approaches: Demand-orientated approaches - Skimming: Setting the highest initial price that customers are prepared to pay - Penetration: setting a low initial price on a new product to appeal to mass-market - Prestige: setting a high price to attract status-conscious consumers - Odd-even: setting the price a few cents or dollars under an even number - Target: estimating the skimming price, and working backward through mark-ups taken by intermediaries to determine what price they can charge wholesalers for the product - Bundle: marketing 2 or more products in a single ‘package’ price - Yield management: charging different prices to maximise revenue for a set amount of capacity - Economic value: set based on the customer perception of value for money over the life of a product Cost-orientated approaches - Standard mark-up: adding a fixed % to the cost of all items in a specific product class - Cost-plus: summing the total unit cost of a good, then adding a specific amount to the cost to arrive at a price. Profit-orientated approaches - Target profit: setting an annual target of a specific dollar amount of profit - Target return on sales: setting prices that will profit that is a specified % of the sales volume - Target return on investment: setting prices to achieve a return-on-investment (ROI) target such as a % that is mandated by its board of directors. Competition-orientated approaches - Customary: where tradition, standardised distribution, competitive factors dictate price - Loss leader: setting a price well below its customary price to attract attention to it Demand Curve: Graph relating showing amount of units to be sold at given price. As price falls, more buy/unit sales increase. Other factors include consumer tastes & income, price/availability of similar product. Topic Six- Promotion Advertising Theory IMC (Integrated Marketing Communication): The concept which a company carefully integrates and coordinates its many communications channels to deliver a clear, consistent and compelling message about the organisation and its product. Synergising advertising & PR for one goal IMC Disciplines - Advertising: Reaches large audiences emotionally with colours, images, sounds. Easy to block ads (such as turning off the TV) - Sales promotion: Obvious around holidays eg. Christmas. Eg. Free things, discounts, anything persuading to buy over competition immediately. Ability to erode brand loyalty. - Direct marketing: Direct comm. With consumer. Ability to track results and measure effectiveness. - PR: Focused on consumer/company relationships. Often perceived as news - Personal selling: Not as easy to block as advertising Advertising: Paid, mediated form of communication from an identifiable source, designed to persuade the receiver to take action, now or in the future. No longer non personal, doesn't always use mass media. Pre-marketing era: From the start of product exchange in prehistoric times - 18th century Mass communication era: 16th century - 1950s Research era: 1960's - 1990's: Improved techniques for identifying and reaching targeted audiences Era of engagement (now): Advertising increasingly cluttered. Technology gives us blocking devices - remote controls, TiVo, DVDs skip ads. Consumers can find info online 24/7. Advertisers must engage. Marketplace changes - Mass production/mass marketing/mess advertising paradigm obsolete - Rise in database marketing, sales promotion and direct marketing - Proliferation and fragmentation of media Organisational structure changes - Increasing qualifications of client - Convergence of industries and technologies - Growth in outsourcing - Dramatic shift from product to service economy - Shift in marketplace power from manufacturer to retailer + in online environment, to the customer Communication changes - Shift from verbal to visual. Functional illiteracy - reduced need to read - Growth in the value and important of perception vs. the facts - Consumer as content-generator - Free media channels with world-wide reach. Eg. Youtube Role of advertising - Makes the prospect familiar and reminds of prospect the product - Brings news of new products - Adds values not intrinsic to the product - Reassures and helps retain customers - Increases the enthusiasm of those marketing the product Social and ethical issues - Advertising is an integral part of our economic system - Advertising delivers messages about society, describes life as we or would like to live it, demonstrates values/aspirations & aesthetics of people, borrows from the contemporary art and culture Structure of the advertising industry: Sender -> encoding -> channel -> noise -> receiver -> decoding -> feedback Topic Seven- Scanning the Marketing Environment Trends in the marketing environment External/Uncontrollable Forces - Macro trends: Demographics, Economic conditions, Culture, Laws, Technology - Micro trends: Customers, Retailers, Suppliers, The competitive environment: Brand, industry, form and generic competition Services: Intangible activities, benefits, or satisfactions that an organization provides to consumers in exchange for money or something else of value. Uniqueness of services - Intangibility: Cannot be touched, seen, tasted, heard or felt - Inconsistency: Less standardized - Inseparability: Produced and consumer simultaneously - Inventory: Characteristics of services that prevent them from being stored Topic Eight- Introduction to Marketing Growth Strategies and Planning Synergy: Teamwork will produce an overall better result than if each person within the group were working toward the same goal individually Competitive advantage: To achieve competitive advantage, firms should 1. identify segments of demand 2. target specific segments 3. develop specific marketing “mixes” for each targeted market segment. Ansoff Growth Matrix Topic Nine- Marketing Research Theory and principles of marketing research - Marketing research reduces guesswork but never eliminates the need for judgement - Misleading due to marketing objective & research problem definition issues, understanding results - Necessary due to changing markets, cost of strategic mistakes and changing customer expectation Limitations of MR: Consumer behaviour is difficult to predict. Discrepancies between what people say, and do Marketing Information Systems: Every company has mass info. Market research contributes to the big picture. Database: Info from internal & external courses that is organized, stored and updated in a computer Data Warehouse: Collection of internal and external data from millions of customers, suppliers, etc. Data Mining: Technique to search, inquire and update Data Warehouse Types of marketing information systems: internal records, marketing intelligence, marketing research and marketing decision support systems Marketing research approach 1. Define the problem, 2. Develop the research plan, 3. Collect relevant information, 4. Deliver the final report Methods: Probability sampling, non-probability sampling, observation research and focus groups. Focus group: Group of about 12 people who participate in a group discussion led by a moderator Topic Ten- Reaching Global Markets Dynamics of world trade Trend 1: Gradual decline of economic protectionism by individual countries - Protectionism: Shielding industries in country's economy from foreign competition through tariffs etc. - Tariff: Tax on goods entering a country. Tariffs increase price of imported products and gives a price advantage to domestic products competing in the same market - Quota: Restriction placed on the amount of a product allowed to enter or leave a country Trend 2: Formal economic integration and free trade among nations Trend 3: Global firms in global competition for global customers. Exists when firms market goods worldwide. Trend 4: Development of networked global marketspace International firms: Markets existing products and services the same way it does at home Multinational firms: Views the world as consisting of unique parts and markets to each part differently. Uses multidomestic marketing strategy. Transnational firms: Views the world as one market and emphasises universal consumer needs and wants more than differences among cultures. Global marketing strategy is used. Multi domestic marketing strategy: Vary pproduct, brand names and advertising for countries they work in. Global marketing strategy: Standardising mrkt activities for cultural similarities. Adapting when cultures differ. Environmental factors: social, economic, technological, cultural, political, competitive, and regulatory forces Exporting: Producing goods in one country and selling them in another country  Indirect exporting: Sells domestically produced goods in a foreign country through an intermediary. Ideal for companies with insufficient overseas contacts.  Direct exporting: Firm sells its domestically produced goods in a foreign country without intermediaries Licensing: Company offers the right to a trademark, patent, trade secret or other similarly valued items of intellectual property in return for a royalty or fee. Low risk and low cost strategy of entry.  Franchising: Company contracts with an individual to set up an operation to provide products or services under the company's established brand name. Fastest growing market-entry strategy. Joint venture: Foreign + local firm create local business. Companies share ownership, control & profits. Direct investment: Investing in/owning a foreign subsidiary/division. Big commitment, often following different entry strategy. Advantages include cost savings, better understanding of local market & less local restrictions. Product extension: Selling the same product in other countries Product adaption: Changing product to make it appropriate for a country's climate or consumer preferences. Product invention: Invention of new products designed to satisfy common needs across countries Communication adaption: Same product, adapt promotion Dual adaption: Adapt product, adapt promotion Distribution (Place) Strategy: Availability and quality of retailers and wholesalers as well as transportation, communication and warehousing facilities are often determined by a country's economic infrastructure Pricing Strategy: Must not price too low or too high  Dumping: Firm sells a product in a foreign country below its domestic price or below its actual cost  Grey market/parallel importing: Products are sold through unauthorised channels of distribution Topic 11- Public Relations Public Relations: A form of communication management that seeks to influence the feelings, opinions or beliefs held by customers. Systems theory: A way for PR practitioners to understand the relationship between an organization and its publics and the role of PR within an organization. PR helps achieve a balance (homeostasis) between the organization and its environment by maintaining interdependence among the organization and its publics and by monitoring the environment and alerting the organization of the need to adapt or respond. RACE process: Research, Action, Communication, Evaluation - Research: Defining PR problems - Action: Program planning - Communication: Execution - Evaluation: Evaluating the program Types of tactics to support the marketing approach  Develops new prospects for markets and provides 3rd party endorsements  Generate sales leads and paves the way for sales calls  Stretches the advertising and marketing budget through timely and supportive news releases  Establishes an organisation as an authoritative source of information  Helps sell minor products that don't have a large advertising or marketing budget Topic 12- Interactive Marketing & Corporate Social Responsibility Moore’s Law: The power of a computer processor chip will 2x every 18 months. Proved true since ’65. Interactive Marketing: 2-way buyer-seller electronic communications in a computer-mediated environment in which the buyer controls the kind and amount of info received from the seller. Interactive Marketing creates customer value. 40% of shoppers interact with retailers via social media. Traditional marketplace (f2f relationship) vs. the ‘marketspace’ (web environment & relationships) Smartphones changing consumer behaviour through price harmonization from price comparison tools, deeper customer relationships (share location for real time offers) and growing influence of social media in decisions. Why Consumers Shop and Buy Online  Convenience: No need to travel  Choice: Choice exists in the product selection offered to consumers. Choice assistance is also important  Customisation: Highly interactive & individualised info and exchange environment for shoppers Communication: Marketer-to-consumer, consumer-to-marketer, consumer-to-consumer  Cost: Pricing can be changed for products in real time to respond to supply and demand conditions  Control: Consumers are readily using the web to seek info, evaluate alternatives and make purchase decisions in their own time, terms and conditions Multichannel marketing: Blending of different communication & delivery channels that are mutually reinforcing in attracting, retaining and building relationships with consumers Ethics: Moral principles and values that govern the actions and decisions of an individual or
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