Topic1:Definitionofmarketing,marketingmanagement,conceptsandprocess.

1.Introduction

Exchanginggoodsandservicesisoneoftheearliestactivitiesofhumansrelatingtootherhumans.Thisactivitybeganverysimply,byexchangingfood,butovertimeithaschangedagreatdeal,bothinhowweunderstanditandinhowitisdone.

Marketingisaparticularwaytoconceiveandperformtheexchangeofgoodsandservices,orinotherwords,trade.

Marketingisaspecificwaytocarryoutacommercialrelationship,andconsistsofidentifying,creating,developingandmeetingdemand;itisanorganisedprocessintendedtocreateandretaincustomers.

MarketingwasfirstusedintheUnitedStatesintheearly20thcenturybycompaniesproducingmassmarketproducts;itgraduallyspread,andtodaycanbefoundinmanydifferentspheres(services,non-profits,political,socialandpublicinstitutions,etc.).

Marketinghasbeenrevolutionisedinrecentyearswiththearrivalofnewtechnologies:digitalmarketing.Technologypavedthewayforamoreinnovative,participatoryandconnectedkindofmarketing,withthetraditionaltoolsnowsupplementedbynewones(theinternet,socialnetworks,mobileapps,dataanalysis,etc.).

2.Marketingmanagement

Managingthecommercialactivityofacompanyorinstitution,ifmarketingprinciplesareapplied,iscalledmarketingmanagement.

Thegoalofmarketingmanagementistoidentifyandsatisfycustomers’needsthroughmanagingstablerelationshipswiththem,anditsbasictaskistomeetthisgoalaseffectivelyaspossible.

Wedefinemarketingmanagementasthescienceofchoosingtargetmarketsandcreatingprofitablerelationships.

Todothis,marketingmanagementinvolves:

• Analysingthesituation(themarket,thecompetition,theenvironment,etc.).• Planningthegoalsthatyouhopetoreach.• Designingstrategiestoreachthecompany’sgoals.• Puttingthesestrategiesintopracticethroughplannedactions.

Topic 1 Definition of marketing, marketing management, concepts and process 1

• Organisingthehumanandmaterialresourcesavailabletoperformtheactions.• Monitoringtheresultsandmakingcoursecorrectionsifnecessary.

Theplanningandexecutionofanymarketingactivityisbasedonfourbasicelements:thefamous4Psofmarketing.

3.Themarketingprocess

Therearefivestagesinthemarketingprocess:

1. Understandingthemarketandcustomers’needs/wants2. Designingamarketingstrategyaimedatcreatingcustomervalue3. Creatingamarketingprogramme/planwhichprovidesbettervalue4. Retainingcustomers,buildingstable,profitablerelationshipswhichkeepthecustomer

happy5. Capturingcustomervaluetoearnprofits

Weanalyseeachoftheminmoredetailbelow.

3.1.Understandingthemarketandcustomers’needs

Themarketer’sfirststepistounderstandcustomers’wantsandneedsinthemarket.Let’slookatsomebasicconceptsofcustomersandthemarket.

3.1.1.Customers’needs,wantsanddemands

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Aneedisthefeelingoflackingsomething,aphysiologicalorpsychologicalstatecommontoallhumanbeings,regardlessofethnicityorculture.

Awantishowthedesiretomeetademandisexpressed,accordingtothepersonalcharacteristicsoftheindividual,cultural,socialandenvironmentalfactors,andmarketingstimuli.

Ademandiswhenawantbecomesrealitythankstotheresourcesavailabletotheindividual.

Needisunlimited,whileresourcesarelimited;forthisreason,thepurchaserwillallocatethemastheydeemmostappropriate.Thisiswheremarketingcomesin,becauseitaffectsdemand:itidentifies,createsanddevelopsdemand,makingitpossibleforwantstobecomeareality.

Companiesandmarketingprofessionalsengageinalengthyprocesstolearnaboutandunderstandcustomers’needs,wantsanddemands:

• Theystudythemarket• Theyanalysecustomerdata• Theyobservehowcustomersbuyandinteract,bothphysicallyandonline.

3.1.2.Offerings:products,servicesandexperiences

Needsandwantsaresatisfiedbyanoffering:agivencombinationofproducts,servicesand/orexperienceswhichthecompanyoffersonthemarkettosatisfyaneedorwant.

Acompany’sofferingsconsistofproducts:anymaterialgood,serviceorideathathasvalueforthecustomerandcansatisfyaneed.

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• Good:aphysicalobject.Itcanbeconsumable(e.g.,adrink)ordurable(e.g.,anappliance).

• Service:applicationofhumanormechanicalforcetopeople,animalsorobjects.Servicesareintangible,ephemeral,andcannotbestored(e.g.,bankservices,legalrepresentation,repairs,etc.).

• Idea:aconcept,philosophy,opinionorimage.Ideasareintangible(e.g.,givingblood,orapoliticalparty’smanifesto).

Marketing-orientedcompaniesfocusontheadvantagesandexperiencesofferedbytheirproductsorservices.

3.1.3.Customervalueandsatisfaction

Inanytypeofproductorservice,customershaveaverywiderangeofofferingsonthemarket:aplethoraofproductsandserviceswhichsatisfyagivenneed.Howcantheychoosefromsomanyofferings?

Customerscreateexpectationsaboutthevalueandsatisfactionofthevariousofferingsonthemarketandbuyaccordingtothem.

• Asatisfiedcustomer:willbuyagain• Anunsatisfiedcustomer:willbuyfromacompetitorandcriticisetheproduct

toothers

Therefore,marketingprofessionalsmustbeverycarefulwhenestablishingthelevelofexpectationfortheirproduct:

• Iftheydefineverylowexpectations,theymaysatisfythosewhoarealreadybuying,butwillnotattractnewcustomers.

• Iftheyraiseexpectationstoohigh,buyersmaybedisappointed.

Thevalueofaproductorserviceforthecustomer,andthesatisfactiontheygetfromit,arekeycomponentsindevelopingandmanagingthecustomerrelationship.

3.1.4.Exchangesandrelationships

Marketingprofessionalsaretryingtoelicitareactiontoagivenofferingonthemarket.Marketinghappenswhenpeopledecidetosatisfytheirneedsandwantsthroughanexchangerelationship–inotherwords,throughtheactofobtainingadesiredobjectand/orservicebyofferingsomethinginreturn.

Marketingconsistsofperformingactionstocreateandmaintainexchangerelationshipswithtargetaudiencesinrelationtoproducts,servicesorideas.

Goingfurtherthanattractingnewcustomers,thegoalistokeepthemandhavethemincreasetheirexchangeswiththecompany.

3.1.5.Markets

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Theexchangeconceptbringsustoanothernewconcept,themarket:thesetofcurrentandpotentialbuyersofaproductorservice.

Marketingmanagesthesemarketstocreatestablerelationshipswiththesecustomers.

3.2.Designingacustomer-orientedmarketingstrategyandplan

Whenmarketersknowandunderstandthecustomersinamarket,theycandesignacustomer-orientedstrategy.Todothistheymustanswertwofundamentalquestions:

• Whatcustomersarewegoingtocaterto?=Whatisourtargetmarket?• Whatisthebestwaytoservethosecustomers?=Whatisourvalueproposition?

First,thecompanymustdecidewhichcustomersitwillfocuson;itisnotpossibletoserveallitspotentialcustomerswelland,therefore,itmustselectthecustomersitcanattendtowellwhilealsomakingaprofit.Tomakethisselectionthemarketmustbedividedintogroups/typesofcustomer,knownasmarketsegmentation.

Meanwhile,thecompanymustdecidehowitwillserveitstargetcustomers-inotherwords,howitwilldifferentiateitselfandpositionitselfinthemarket.

Toestablishitsmarketposition,acompanymustdefineitsvalueproposition:thesetofbenefitsorvaluesitpromisestoprovideforitscustomerstomeettheirneeds.Thevaluepropositioniswhatdifferentiatesonebrandfromanother.

Aclear,strongvaluepropositionenablesacompanytogainacompetitiveadvantageinitsmarket,becauseitofferssomethingthatothersdonot,oroffersthesameproductorserviceinadifferentway.

Tosumup,acompany’smarketingstrategyconsistsofdefiningwhichcustomersitwillfocusonandhowitwillcreatevalueforthem.

3.3.Creatingamarketingplan

Afterdecidingontheirstrategy,marketingprofessionalswilldeveloptheirmarketingprogrammeorplan–inotherwords,turningtheirstrategyintoaction.

Tocarryoutthisplan,theyusethetoolswhichmakeupthemarketingmix.Thesetoolsarethefamous4Psofmarketing:

• Product:thegoodorservicebeingoffered.• Price:thevaluethecompanysetsfortheproduct.• Placement:thesystemusedtobringtheproducttothemarket.• Promotion: communicating the benefits of the product (advertising, personal

selling,pointofsalepromotion,etc.).

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Toconcretiseitsvalueproposition,acompanywillcreateanoffering(product)whichmeetsaneed;itwilldecidehowmuchtochargeforthatoffering(price),howtomaketheofferingavailabletoitstargetconsumers(placement)andhowtocommunicatetheofferingtoitstargetcustomersandconvincethemofitsbenefits(promotion).

3.4.Retainingcustomers,buildingstable,profitablerelationshipswhichkeepthecustomerhappy

Allthestepsinthemarketingprocessleadtothemostimportantelement:buildingprofitablerelationshipswiththecustomers.Forthispurpose,itisessentialtomanagecustomerrelations:customercapture,retentionanddevelopment.Thekeytocreatinglong-termrelationshipswithcustomersistocreatemorevalueandsatisfactionforthecustomer,becauseasatisfiedcustomerisaloyalone.Attractingandretainingcustomersisahardtask,becausetheyusuallyhavealargevarietytochoosefrom.Normally,theywillchoosetheofferingwiththegreatestperceivedvalue:customersassessthedifferencebetweenthecostandbenefitobtained,comparingitwithcompetitors’offerings.Consumersatisfactiondependsontheperceivedperformanceoftheproductinrelationtothebuyer’sexpectations.

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• Iftheproductperformsworsethanexpected,theconsumerwillbedissatisfied.• Iftheproductperformsaccordingtoexpectations,theconsumerwillbesatisfied.• Iftheproductexceedsexpectations,theconsumerwillbeverysatisfied.

Marketing-orientedcompaniesworktokeeptheircustomerssatisfied,becauseahighsatisfactionlevelcanleadtogreaterloyaltyandthusbetterreturnsforthecompany.3.5.Capturingcustomervaluetoearnprofits

Thefinalstageofthemarketingprocessconsistsofreceivingvalueinexchangefortheproductsuppliedorserviceprovidedtothecustomer.Thisvaluemaybeintheformofsales,marketshareorcurrentandfutureprofits.Creatingvalueenablescompaniestoretaincustomers,increasing:

• Customerlifetimevalue:thecustomer’sfuturepurchasesofaproductorservicethroughouttheirlife.

Goodcustomerrelationshipmanagementmeansensuringthecustomerisdelightedwithourproductsorservices,becausehappycustomersareloyal,andspeakwellofthecompanyanditsproductstothepeoplearoundthem.

Loyalcustomersspendmore,whilelosingacustomermeanslosingmoney.

• Customershare:acompany’sshareofallthepurchasesmadebyaconsumerinitsproductcategory.Companiescanimprovethissharewithvariousmarketingtechniques:cross-selling,awiderrangeofproducts,orimprovingsalessocustomersbuymoreproductsandservices.

• Customercapital:thetotaldiscountedvaluesthroughoutthelifeofallthecompany’scurrentandpotentialcustomers.Therefore,thisisameasurementofthefuturevalueofthecompany’scustomerbase.Themoreloyaltheprofitablecustomersofacompany,thegreateritscustomercapital.

Thefigurebelowillustratesthemarketingprocess.

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Topic 1 Definition of marketing, marketing management, concepts and process 8

Topic2:Analysingthemarketingenvironment

1.Presentation

Thischapterexplainsthefirstofthefivestagesofthemarketingprocess:analysingandunderstandingthemarketandcustomers’needsinanenvironmentwhichisoftencomplexandchangeable.

Apartfromthecustomer,therearemanyplayerswhomayworkfororagainstthecompany’sinterests(suppliers,competitors,intermediaries,etc.),aswellaselementsintheenvironmentwhichmaypresentopportunitiesorthreats(theseelementsmaybeeconomic,cultural,technological,demographic,etc.).

Alltheseaspectscanaffectthecompany’sabilitytoattractcustomersandbuildastablerelationshipwiththem.Therefore,inordertodevelopaneffectivemarketingstrategy,thecompanyfirstneedstounderstandtheenvironmentinwhichitoperates.

2.Themarketingenvironment

Theenvironmentinwhichacompanyfindsitselfcomprisesnon-marketingagentsandforceswhichinfluencetheabilityofmarketingmanagementtobuildandmaintainstablerelationshipswiththeirtargetcustomers.Forthisreason,thecompanymustbealerttonewdevelopmentsandchangesinitsenvironment,takethemintoaccount,adapttothem,andevenleadsuchchanges.

Withinthecompany,themarketermustmonitortrendsandchangesforthreatsandopportunities,withthehelpoftheappropriatetools(marketresearchandmarketingintelligence),andshouldalsospendmuchoftheirtimestudyingtheenvironmentoftheircompanyandtheircompetitors.

Bothfactorswillenablethemtoanticipatenewchallengesandopportunitiesinthemarketandbepreparedtoadapttheircompany’smarketingstrategy.

Themarketingenvironmentcomprisesthemicro-environmentandthemacro-environment.

2.1.Themicro-environment

Agentsclosetothecompanywhichinfluenceitsabilitytoserveitscustomers:thecompanyitself,suppliers,marketingintermediaries,consumermarkets,competitorsandstakeholders.

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Marketingwillbesuccessfulifitbuildseffectiverelationshipswiththeotherdepartmentsinthecompany,suppliers,andtheotheragentsinthemicro-environment,becauseallofthemmakeupthecompany’svalue-creatingnetwork.

Whendesigningthecompany’smarketingplan,themarketermusttakeintoaccounttherestofthedepartments,whichmakeuptheinternalenvironmentandinfluencetheirdecisions.

Suppliersareimportantagentsbecausetheyprovidethecompanywiththeresourcesitneedstoproduceitsgoodsandservices.Hence,anyproblemswiththesupplierscanaffectthecompany,especiallyitsmarketingdepartment.

Marketingintermediarieshelpthecompanypromote,sellanddistributeitsproductstocustomers;theyincludestorageandphysicaldistributioncompanies,aswellasmarketingservices(marketresearch,advertisingagencies,graphicdesignstudios,etc.).

Tobesuccessful,acompanymustofferitscustomersgreatervalueandsatisfactionthanitscompetitors.Therefore,aswellastakingintoaccountthecustomers’needs,themarketingprofessionalmustachieveastrategicadvantageoveritspeers.

Themarketingmicro-environmentisalsoinfluencedbystakeholders;bythiswemeananygroupwhichimpactsthecompany’sabilitytoreachitsfinancial,media,governmental,civil,internal,generalorlocalgoals.

Customersarethemostimportantgroupofagentsinthecompanymicro-environment,astheentireorganisationrevolvesaroundthemandthegoalofestablishingsuccessfulrelationshipswiththem.

Whileonthesubjectofcustomers,wemustalsorefertoabroaderconcept,whichwillbethecontextwithinwhichthemarketingdepartmentoperates:themarket.Weunderstand“themarket”tobethesetofpeople,individualsorinorganisations,who

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needagivenproductorservice,whowanttobuyitormaywanttointhefuture,andwhohavethefinancialandlegalcapacitytodoso.

Fromthemarketingperspective,werefertofivetypesofcustomermarkets:

• Consumermarkets:individualsandhouseholdswhoacquireproductsorservicesforpersonalconsumption.

• Industrialmarkets:buyinggoodsandservicesforuseintheirproductionprocess.

• Resellermarkets:buyinggoodsandservicestoresellforprofit.• Governmentmarkets:publicbodieswhichbuygoodsandservicestoproduce

publicservices.• Internationalmarkets:buyersinothercountries.

2.1.Themacro-environment

Thebroadersocialforceswhichaffectthemicro-environment:demographic,economic,natural,technological,politicalandculturalfactors.Thesefactorsmakeuptheopportunitiesandthreatswhichacompanymayface.Someofthemareunpredictableanduncontrollable,butotherscanbepredictedandhandledbyskilledmanagement.

Companieswhichcanpredict,understandandadapttotheirenvironmentcanremainsuccessful,butthosewhichcannotmayfindthemselvesindifficulties,eveninthecaseofmajorcorporations.

Demographicfactorsarerelevantformarketingprofessionalsbecausetheyrefertoindividualswhomakeupthemarkets.Therefore,theymustpayattentiontotrends,

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changesanddevelopmentswhichcouldaffecttheirbusiness:familystructure,migrations,ageingpopulation,etc.

Afunctioningmarketrequiresindividualswithpurchasingpower;thefactorsaffectingconsumers’purchasingpowerandspendingpatternsmakeuptheeconomicenvironment.Thesefactorshaveamajorimpactonbuyinghabitsandconsumerspending.

Naturalfactorsreferbothtothenaturalresourceswhichcompaniesneed(forexample,theiroperationcouldbeaffectedbyashortageofrawmaterials)andtounexpectednaturalphenomenawhichcanaffectthem,suchasnaturalorclimatedisasters.Thelatterareunpredictable,butcompaniesmustbereadytodealwiththemiftheyhappen,bothtoavoidproblemsandtorespondtoanywhichmightrepresentanopportunity.

Technologymightbetheforcewhichhashadthemostimpactoncompaniesandmarketinginrecentyears.Technologicalfactorsarebringingmajorchangesinthemarkets,enablingthedevelopmentofnewproductsandcreatingnewopportunities(creditcards,internet,mobilephones,telemedicine,onlinesales,smartphones,etc.)

Meanwhile,theimpactofnewtechnologieshasledtoanewwayofunderstandingmarketing:digitalmarketinginvolvestheuseofdigitaltoolsandresourcestoreachcustomersmoredirectlyandinamorepersonalisedway.

Inmanycompanies,marketingdecisionsareverymuchaffectedbychangesinsocio-politicalfactors.Thesefactorsincludelegislation,governmentorganisationsandpressuregroups.

Theyareparticularlyrelevantforcompaniesoperatinginregulatedmarkets(e.g.,pharmaceuticalproducts,telecommunications,etc.),andtoalesserextenttoallothercompanies,astheyareallsubjecttosomedegreetolegislation,newregulationsduetochangesofgovernment,changesduetounstablepoliticalsituations,etc.

Finally,companiesmaybeaffectedbyculturalfactors,meaningthebasicvalues,perceptions,preferencesandbehaviourofasociety.Everyonegrowsupinagivensocietywhichshapestheirbeliefsystem,basicvalues,needsandtastes,allcharacteristicswhichaffectdecision-makinginmarketing(forexample,differentfamilymodels,leisureactivitiesorfoodindifferentcountries).

3.Managingthemarketingenvironment

Thereisasignificantsayinginmarketingaboutcompaniesandhowtheymanagetheirenvironment:

“Therearethreetypesofcompany:thosethatmakethingshappen,thosethatwatchthemhappen,andthosethatwonderwhathappened.”

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Thefirsttypeisproactive:theydevelopstrategiesandtakeactiontochangetheirenvironment,organisemediaeventstogettheirmessagetothepublic,worktoencouragelegislationwhichletsthemoperate,etc.,inotherwords,thesecompaniesmanagetheinformationtheyhaveabouttheirenvironment,whichenablesthemtoanticipateeventsandadapttheenvironmenttosuittheirinterests.

Thesecompaniesandtheirproductsaretheonesthatusuallycreatenewindustriesandmarkets(Amazon,Google,Facebook,Cabify,etc.).

Meanwhile,theothertwoarereactive,merelywatchingandreactingwhenthingshavealreadyhappened,andintheworst-casescenariobythetimetheyrealisewhathashappenedtheyhavenovalidsolutions.

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Topic3:Managingmarketinginformation

1.Presentation

Todesignmarketingstrategies,weneedtoknowandunderstandthemarket,andtohaverelevantinformationonvitalelementsofit,suchasconsumers,productsandcompetitors.

Knowingtheseaspectsmeansobtainingdata.Therefore,wearenowgoingtoanalysehowcompaniescanobtainthisinformationand,moreimportantly,howtheymanageit–inotherwords,howtheygainknowledgeaboutthemarkettoenablethemtomaketherightdecisions.

2.Themarketinginformationsystem

Knowledgeofthemarketandconsumersisvitalformarketers,asitenablesthemtodesigngoodmarketingprogrammesandtomaketherightdecisions.

Informationhasnointrinsicvaluewithoutanalysis;thevalueisfoundintheknowledgeweextractfromitandhowmarketersuseitformakingdecisions.

Thesedaysitiseasytoobtainmarketinformation;thankstothenewtechnologies,companiescanobtaininformationfrommanysources.Consumersthemselvesgeneratetonnesofdatathroughtheirmobilephones,tablets,socialnetworks,apps,e-commerce,videos,geolocation,etc.

Infact,wehavegonefrommarketinformationbeinghardtofind,tohavingtoomuchofit.Therefore,nowthechallengeisknowinghowtoextractthemostrelevantinformationanduseittoproduceusefulknowledge.

Tomanagethisinformation,companiesusuallyhaveamarketinginformationsystem:peopleandprocedureswhichlookforinformationneeds,obtainthenecessaryinformationandtransformitintousefulinformationforthecompany’sdecision-makers.

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3.Theprocessofthemarketinginformationsystem

Thefirststepistoassessyourinformationneeds;itisimportanttomakeanhonestanalysisoftheseneedsinordertoavoidcastingyournettoowideandendingupwithaninformationoverload.

Onceyouhavedecidedwhatinformationyouneed,thesecondphasebegins:searchingforthatinformation.Marketerscanobtaindatafromvarioussources:

• Internaldatabases:electroniccollectionsofinformationoncustomersandmarketsobtainedfromsourcesofdataonthecompany’sownnetwork.

• Competitiveintelligence:systematicallymonitoring,gatheringandanalysinginformationinthepublicdomainonconsumers,competitorsandmarkettrends.Thiscanbedonebyfirst-handobservationofconsumers,interviewsinthesalesnetwork,comparativeanalysisofcompetitors’products,monitoringsocialnetworks,talkingtosuppliers,etc.

• Commercialresearch:thesystematicdesign,gathering,analysisandpresentationofinformationonaspecificmarketingsituation/problemfacinganorganisation.

Whenyouhavetheinformation,thenextphaseistoextractvaluefromit:informationanalysis.Toanalysetheinformation,marketerscanrelyontheirownexpertknowledgeoruseanalyticalmodelssuchasCRMorBigData.

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• CRM:softwarewhichintegratescustomerinformationobtainedfromthecustomer’spointsofcontactwiththecompany(purchases,salesstaff,customerservices,websites,etc.)

• BigData:toolswhichcanfindpatternsinlargeamountsofdata.

Alltheobtainedandanalysedinformationhasnovalueuntilitisusedfordecision-makingand,therefore,themarketinginformationsystemmustbringthisinformationtoexecutives,usuallyintheformofreports.

4.Commercialresearch

Aswellasinternalinformationanddataobtainedthroughin-houseresources,marketersusuallyneedformalstudiesofspecificsituationsanddecisions,whichiswherecommercialresearchcomesintoplay.

Commercialresearchisthesystematicandobjectivesearchforandanalysisofinformationofrelevanceforidentifyingandsolvingamarketingsituationorproblem.

Theinformationobtainedbymeansofcommercialresearchmustmeetseveralrequirements:

• Reducinguncertainty• Beingapotentialinfluenceondecision-making• Justifyingitscost

Somelargecompanieshavetheirowncommercialresearchdepartments,butitismoreusualtooutsourcethistasktospecialistresearchers.

Thecommercialresearchprocessconsistsofseveralphases:

1. Definingthegoalsoftheresearch:identifyingtheproblemandestablishingthedesiredgoalsoftheresearchatthestartoftheprocess.

2. Designingtheresearchplan:definingthespecificinformationtobesearchedfor,designingaplanforgatheringitefficiently,anddecidingonthesampleandresearchmethodologytobeused.

3. Obtainingtheinformation:selectingtheinformationsources,defininghowtheinformationwillbeobtained(inperson,bytelephone,online),andselectingthesample(itssizeandthesamplingprocedure).

4. Interpretingtheresults:theresearcherreviewstheinformationobtainedandthenanalysesandinterpretsthedatainordertodrawconclusions.

5. Draftingthereport:theresearchprocessisreflectedinareporttobepresentedtothecustomer.

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Commercialresearchinvolvestwotypesofanalyses:

• Quantitative:thisprovidesfiguresandstatisticsandisusedtoanswerquestionsaboutpotentialmarketdemand,salesquotas,pricesandsalesanalysis.Itisusuallyconductedthroughsurveysandpanels.Weusethismethodologywhenwewantananswertothequestion“HowmanypeopledoorthinkX?”

• Qualitative:usedinanalysisoftrends,attitudes,perceptionsandopinions.Themostfrequenttechniquesarein-personorphoneinterviewsandgroupmeetings.Weusethismethodologywhenwewantananswertothequestion“Whatdopeopledoorthink,andwhy?”

Theresearchmethodologyyouchoosedependsonwhetherrepresentativenessordepthisthepriority;inotherwords,choosingbetweengatheringdatawhichcanbeextrapolatedquantitativelytoaresearchpopulation,orfindingexplanationsforthosedata.

Marketingresearchusuallydrawsconclusionsonlargegroupsofcustomersbasedonthestudyofasmallgroup,thesample;thisisasegmentofthepopulationselectedtorepresenttheentirepopulationinthecontextofcommercialresearch.

Themostimportantfactorwhenselectingasampleisthatitshouldberepresentative.Therefore,youshouldaskthefollowingquestions:

• Thesamplingunit:whowillbeinterviewed?

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• Samplesize:howmanypeople?• Themethod:howwilltheindividualsinthesamplebeselected?

Commercialresearchcanbeusefulforawiderangeofapplications:

• General:marketstructure,marketpotential,marketsegmentation,consumerbehaviour,analysisofstrategicplans,analysisofcompetitors’strategies,markettests.

• Product:purchaseanduse,image,positioning,proofofconcept,producttesting,salesmodelfornewproducts.

• Price:pricingstructure,priceelasticityofdemand,buyer’spriceperception.• Distribution:selectionofdistributionchannels,locationofpointsofsale,

designanddecorationofpointsofsale.• Sales:performance,motivationandcompensationofsalesstaff;salesareas

andquotas.• Advertising:messagetesting,selectingmedia,effectivenessofadvertising,

companyimage.

5.Commercialresearchinsmallcompanies

Allcompanies,whetherlargeorsmall,needinformationoncustomersandmarketsinordertomakedecisions;theymaynotrequireamarketinginformationsystemorlarge-scaleresearch,buttherearemanyresearchtechniquesavailableforlowerbudgets:

• Observationatthepointofsale• Informalpollingofsmallsamples• Onlinesurveys• Searchingforinformationonline:analysingthewebsitesandsocialnetwork

presenceofcompetitors,productsandcustomers.

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Topic4:Customerbehaviour

1.Presentation

Thegoalofmarketingistoattractconsumers.Todothis,marketersmustunderstandcustomerbehaviourverywell.

Consumerbehaviourreferstothesetofactionstakenbyapersonororganisationfromtheemergenceofaneedtothepurchaseanduseoftheproduct,aswellasthefactorsinfluencingthoseactions.

Therefore,wewillfocusonthe“what,whenandhow”ofcustomerbuyingdecisions.

Understandingtheseaspectswillenableusto:

• Identifycurrentandfutureneedsmoreefficiently• Improveourabilitytocommunicatewiththecustomer• Earntheirtrustandensuretheirloyalty• Plancommercialactionsmoreeffectively

2.Theconsumerbehaviourmodel

Peoplemakemanybuyingdecisionsoverthecourseofaday.Influencingthesebuyingdecisionsisthemainfocusofmarketing.Tounderstandourcustomer’sbehaviourmodel,weneedtoanswerthefollowingquestions:

• Whatdotheybuy?• Whobuys?• Whydotheybuy?• Howdotheybuy?• Whendotheybuy?• Wheredotheybuy?• Howmuchdotheybuy?

Withtheanswersobtained,marketingprofessionalscandesignthemostappropriateactionstoattractcustomersandestablisharelationshipwiththem.

Therearemanydifferentfactorsinfluencingconsumerbehaviourandbuyingdecisions:

• Cultural:thesefactorshavethemostinfluence.Culturemeansbehaviourlearnedatabasiclevelwhichaffectstheindividual’sbehaviour.

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• Social:anindividual’sbehaviourisinfluencedbymanysmallgroups.Thegroupswhichdirectlyinfluenceaperson’sbehaviourarecalledgroupsofbelonging;thosewhichtheindividualreferstoandaspirestojoinarereferencegroups.Thefamilyisthemostimportantbuyingorganisationinsociety.Accordingly,marketingiscontinuallystudyingtherolesofeachmember.

• Personal:eachpersonisinfluencedbytheirowncharacteristics,suchastheirprofession,age,stageoflife,economicsituation,lifestyle,personalityandself-concept.

• Psychological:fourpsychologicalfactorsinfluencepeople’sbuyingdecisions:motivation,perception,learning,andbeliefsandattitudes.

Motivation:isthegeneralpredispositiondrivingbehaviourtoobtainwhatisdesired.

Perception:istheprocessofselectingandintegratingsensorystimuliintoameaningful,consistentimage.Perceptionisselective(weperceivewhatweareinterestedin);thesameproductmaybeperceiveddifferentlybydifferentpeople,dependingontheattributeswhichmostinterestthem.

Learning,beliefsandattitudes:learningreferstochangesinanindividual’sbehaviourcausedbyexperience.Throughlearning,peopleacquirebeliefs(thoughtsdescribingsomething)andattitudes(valuejudgements,feelingsandtendenciestowardssomething)whichalsoinfluencetheirbuyingbehaviour.

Buyingbehaviouralsovariesdependingonhowtherolesofbuyer,consumerandpayerareassociated,inwhichthefollowingsituationsarepossible:

ThethreefunctionsareperformedbythesamepersonEachfunctionisperformedbyoneperson

Onepersonisthebuyer/payerandanotheristheconsumerOnepersonisthebuyer/consumerandanotheristhepayerOnepersonisthebuyerandanotheristheconsumer/payer

3.Thebuyingdecision

Buyingbehaviourvariesagreatdealaccordingtotheproductorservicetobeacquired.Theprocessislongerforimportantpurchases,becomingshorterforlessimportantpurchasesorifthepurchaserhasgreaterexperienceoftheproductandawarenessofexistingbrands.

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Lowcomplexity HighcomplexityRepeatpurchases FirstpurchaseFrequentbuying OccasionalbuyingImpulsebuying Rationalbuying

Low-involvementbuying High-involvementbuyingLow-pricedproduct High-pricedproduct

Dependingonthebuyer’slevelofparticipationandthedifferencebetweenbrands,wecandistinguishthefollowingtypesofbuyingbehaviour:

• Complex:whenthebuyerisveryinvolvedinthepurchaseandperceivessignificantdifferencesbetweenbrands.Thisusuallyinvolvesathoughtfulbuyingchoice.

• Dissonance-reducing:whenthebuyerisveryinvolvedinthepurchasebutdoesnotseemuchdifferencebetweenbrands.Ashorterdecision-makingprocess.

• Habitualbuying:whenthebuyer’sparticipationislowandthedifferencesbetweenbrandsarenotsignificant.

• Variety-seeking:whenthebuyer’sparticipationislowbuttherearelargeperceiveddifferencesbetweenbrands.

4.Thebuyingdecisionprocess

Thebuyingprocessbeginswellbeforethepurchaseitselfandcontinuesforalongtimeafterwards.Therefore,marketingprofessionalsmustanalysethewholebuyingprocessandnotonlythebuyingdecision.

Therearefivestagesinthebuyingprocess,whicheveryonegoesthroughinadifferentway:theprocessmaybefastorslowandconsumersmayskipastageorchangetheirorder.

Topic 4 Customer behaviour 21

• Recognitionofaneed:thepersonrealisestheyhaveaneed,whichmaybetriggeredbyaninternalorexternalstimulus.

• Searchingforinformation:consumerscanobtainproductinformationfromawiderangeofsources:personal(family,friends,neighbours,acquaintances),commercial(advertising,salespeople,websites,shopwindows)andpublic(massmedia,consumerorganisations,internet).

• Assessingoptions:howconsumersprocesstheinformationtochoosebetweendifferentproductsandbrands,sometimesthoughtfully,andsometimesbuyingonimpulse.

• Buyingdecision:consumers’buyingdecisionsusuallyconsistofbuyingtheproductorbrandtheyprefer,buttwofactorsmaystillenterintoplaybetweentheintentiontobuyandthefinaldecision:theattitudesofotherpeopleandunexpectedcircumstances.

• Post-purchasebehaviour:aftertheacquisitionofaproducttheconsumerwillfeelsatisfiedordissatisfiedandwillbehaveinacertainwaydependingonthatfeeling.Thisbehaviourisdeterminedbytherelationshipbetweenconsumerexpectationsandtheperceivedproductperformance.Ø Iftheproductdoesnotfulfilexpectations,theconsumerwillfeel

dissatisfied.

Topic 4 Customer behaviour 22

Ø Iftheproductfulfilsexpectations,theconsumerwillfeelsatisfied.Ø Iftheproductexceedsexpectations,theconsumerwillbedelighted.

Thegreaterthedifferencebetweenexpectationsandperformance,themoredissatisfied/satisfiedtheconsumerwillbe.

Customersatisfactionisamarketingpriority,because:

• Asatisfiedconsumerwillbuyaproductagain,talksaboutitpositively,andpayslessattentiontomessagesfromcompetitors.

• Adissatisfiedconsumertalksnegativelyabouttheproduct,willnotbuyitagainandswitchestothecompetitors.

Negativepublicity“travels”muchfasterthanpositive.Hence,marketersmustassessthesatisfactionoftheircustomers,encouragingthemtosharetheircomplaints,whattheyvalueabouttheproductandwhatthecompanyisdoingwrong,andthenlookforsolutions.

5.Thebuyingdecisionprocessfornewproducts

Anewproductisagood,serviceorideawhichpotentialcustomersperceivetobesomethingnew.Fromthemarketingpointofview,itisimportanttoknowhowconsumersdiscoveraproductforthefirsttimeandhowtheydecidewhetherornottoadoptit.

Theadoptionprocessisthementalprocessanindividualgoesthroughfromfirsthearingaboutaninnovationtofinallyadoptingit.

Duringtheprocessofadoptinganewproduct,consumersgothroughseveralstages:

• Awareness:theydiscoverthatanewproductexistsbuthavenoinformationaboutit.

• Interest:theylookforinformationonthenewproduct.• Evaluation:theyassesswhetheritmakessensetoacquirethenewproduct.• Trial:theytrythenewproductonasmallscaletofurtherassessitsvalue.• Adoption:theydecidetousethenewproducthabitually.

Thepersonresponsibleformarketinganewproductmustthinkabouthowtheycanhelpconsumersgothroughthesestagesandadopttheproduct.

People’swillingnesstotrynewproductsvarieswidely.Wecandistinguishfivedifferenttypesofnewproduct“adopters”:

• Innovators:adventurousconsumerswhowillrisktryingnewideas.• Earlyadopters:theyadoptnewideasquicklybutcautiously,withsome

previousknowledge.Theyareopinionleadersintheircommunities.

Topic 4 Customer behaviour 23

• Earlymajority:theyadoptnewideaslaterthantheabove,butearlierthanaverage.

• Latemajority:theyarescepticalandadoptinnovationsonlywhentheyhavealreadybeentriedbythemajority.

• Laggards:theyrejectchangesandadoptinnovationsonlywhentheyhavealreadybecomecustomary.

Theadoptionrateforaveryhighpercentageofnewproductsorideasfollowsasimilarcurvetothisfigure:

Topic 4 Customer behaviour 24

Topic5:Customer-orientedmarketingstrategy

1.Presentation

Startingwiththistopic,wewillfocusonstudyingmarketingstrategy,tacticsandtools.

Wewillbeginbyanalysingfundamentalstrategicmarketingdecisions,whicharethebasisforallsubsequentworkbymarketers:segmentation,selectingtargetmarkets,differentiationandpositioning.

2.Marketingstrategy

Marketsaremadeupofheterogeneousindividualsandentities.Consequently,companies’potentialcustomersareverynumerous,dispersed,andwithverydifferentneedsandbuyingbehaviour.Forthisreason,companiesmustidentifythepartsofthemarkettheycanservebestandmostprofitably.

Meanwhile,thespectacularspreadofnewtechnologyhasgeneratedglobal,connectedmarketswhereinformationflowsconstantly,thankstowhich,companiescanobtainfirst-handinformationfromconsumers.

Forallthesereasons,mostcompanieshaveabandonedtraditionalmassmarketingapproachestofocusonsegmentmarketing:identifyingthemarketsegmentsofinteresttothecompany,selectingoneormoresegments,developingproductsorservicesandmarketingprogrammestosuiteachchosensegment.

Therearetwostagestodesigningasegmentmarketingstrategy:

• Thecompanychoosesthecustomersitwillmarketto,usingmarketsegmentationandtargetmarketselection.

• Thecompanydecideshowitwillcreatevalueforthetargetcustomers,usingdifferentiationandpositioning.

Topic 5 The customer oriented marketing strategy 25

2.1.Marketsegmentation

Inanymarketthereisahugevarietyofbuyers,withdifferentwants,resources,locations,buyingattitudes,etc.Usingmarketsegmentation,marketerscandividetheselarge,diversemarketsintosmallersegmentswhichcanbereachedmoreefficientlywithproductsandservicesthatmeettheparticularneedsofthatgroup.

Therearemanywaystosegmentamarket.Aseachmarketisunique,withdiversecharacteristics,segmentationshouldbebasedonthosespecificdifferences.Marketersshouldtrydifferentsegmentationvariablesuntiltheyfindthebestwaytoreflectthestructureoftheirtargetmarket.

Thevariableswhichcanbeusedtosegmentamarketinclude:

• Geography:dividingthemarketintodifferentgeographicalunits(countries,regions,AutonomousRegions,states,provinces,cities).

• Demographics:dividingthemarketintogroupsbasedonvariablessuchasage,gender,income,profession,familysize,familylifecycle,educationallevel,religion,raceorgeneration.Someofthesedemographicvariablesaremorerelevant:

• Ageandlifestage:dividingthemarketintodifferentagegroupsordifferentstagesinthelifecycleinordertoofferspecificproductsorusemarketingapproachesdesignedforthosegroups.

• Gender:thisformofsegmentationisusedagreatdealinthemarketsforclothing,cosmetics,personalhygiene,magazines,etc.

• Income:dividingthemarketintogroupsbasedonincome,astheresourcesavailabletocustomersclearlydictatetheirconsumptiontypeandlevel.

• Psychographics:dividingthemarketintogroupsaccordingtosocialclass,lifestyleorcharacteristicsofindividualpersonalities.

Topic 5 The customer oriented marketing strategy 26

• Behaviour:divisionaccordingtobehaviour,attitudes,andhowconsumersuseandrespondtoaproductorservice.

Marketersgenerallyusemorethanonevariableformarketsegmentation,inordertoformanaccuratepictureofwhotheircustomersare,whattheybuy,whentheybuyit,etc.

Inrecentyears,marketsegmentationhasdevelopedagreatdealthankstoe-commerceandsocialnetworks,toolswhichenablemarketerstoobtaininformationdirectlyfromconsumers,whichtheycanthenusetocreateprofilesandmarketsegments.

Foreffectivesegmentation:

• Usetherelevantvariablesineachmarket• Dividethemarketintousefulsegments–meaningtheyaremeasurable

(measuringsize,purchasingpowerorprofiles),substantial(largeenoughtobeprofitable),differentiable(theyreactdifferentlytomarketingstimuli)andactionable(effectivemarketingprogrammescanbedesignedtoattractandservethesegment).

2.2.Selectingtargetmarkets

Thegreatvalueofsegmentationisthat,bydividingmarketsintogroups,marketerscandiscoveropportunitieswhichtheywouldnotbeabletoseetakingthemarketasawhole.

Aftersegmentation,thecompanymustassesseachsegmentanddecidewhichonesitcanservebest.

Foraneffectiveassessmentofeachsegment,wemustevaluatethreefactors:

• Thesizeandgrowthofeachsegment• Thestructuralattractivenessofeachsegment• Thecompany’sgoalsandresources

Afterevaluatingthemarketsegments,thecompanymustdecidewhichsegmentsitwilladdress–whatwecallitstargetmarket:thesetofbuyerswiththesameneedsorcharacteristicswhichacompanycanserve.

Companiescanrelatetotheirtargetmarketswithdifferentmarketingapproaches:

• Undifferentiatedormassmarketingdisregardssegmentsandtheirdifferencesandpresentsasingleofferingtotheentiremarket.Thecompanyconsiderstheelementsthesegmentshaveincommontobestrongerthantheirdifferences.

Topic 5 The customer oriented marketing strategy 27

• Differentiatedorsegmentedmarketingfocusesonvariousmarketsegmentsanddesignsindividualofferingsforeachone.

• Concentratedornichemarketingaimstoobtainalargemarketshareinoneormoresmallsegments(niches).Thecompanywantstohaveastrongpositionandbeapointofreferenceinthesesmallsegments.

• Local,individualormicromarketingpersonalisesproductsandmarketingprogrammestosuittheinterestsofspecificindividuals(personalmarketing)orplaces(localmarketing).

Thechoiceofapproachwilldependonvariousfactors:thecompany’seconomicandhumanresources,productlifecycle,marketmaturity,etc.

Marketingapproachesarenotstatic,andpartofthejobofthemarketerisadjustingthestrategytowhatthecompanyneedsatthetime.Thus,acompanymaybeginwithaconcentratedmarketingapproach,andafterreachingastrongpositioninaniche,workonothernichesuntilithasalargermarket,andthenadoptadifferentiatedsegmentmarketingapproach,orevenanundifferentiatedapproach.

2.3.Positioninganddifferentiation

Whileanalysingthemarketsegmentsitwilladdress,companieshavetodecidewhattheirvaluepropositionwillbe:howtocreateadifferentiatedvalueforthetargetsegmentsandwhatpositiontheywanttooccupyinthosesegments.Inshort,theymustanswerthequestion“Howwillweservethesecustomers?”

Productpositioningistheplaceaproductoccupiesintheconsumer’smindcomparedtocompetingproductsandhowconsumersdefineit.Inotherwords,howconsumersseeourproduct.

Positioningisfundamentalbecauseitdefinesthestrengthofabrand:productsaremadeinfactories,butbrandsaremadeinthemindsofconsumers.

Positioningisasetofperceptions,impressionsandfeelingswhichconsumershaveaboutaproductcomparedtocompetitors’products.

Marketerscannotleavetochancethewayconsumerspositionaproductorbrandintheirminds;theymustanalysetheattributeswhichwouldpositiontheirproductbetterinthemarketanddesignamarketingmixtoreachthedesiredposition.

Toplanadifferentiationandpositioningstrategy,marketersuseapositioningmap:agraphwhichallowsthemtoanalysetheplaceabrandoccupiesinthemarketaccordingtoconsumerperceptioninrelationtootherbrandsoranidealbrand.

Topic 5 The customer oriented marketing strategy 28

Theaxesaretheattributesoftheproductwhichconsumersconsidermostimportant.Eachbrand’spositiononthemapindicatesthebrand’sperceivedpositioningalongtheaxes.

Topic 5 The customer oriented marketing strategy 29

Dependingonthemarkets,weoftenfindseveralcompaniesstrivingforsimilarpositioning;inthiscase,eachonewillhavetofindawaytodifferentiatethemselvesfromtheothers.Differentiationisthecreationofauniquesetofbenefitswhichattractsasubstantialgroupofconsumerswithinasegment.

Positioninganddifferentiationstrategiesarecreatedinthreestages:

• Identifyingasetofpossiblevaluedifferencesprovidingcompetitiveadvantageswhichpositioningcanbebasedon.

• Choosingtherightcompetitiveadvantages.Acompanymayoffergreatervalueinitsproduct,itsservices,itschosenchannel,itsemployeesoritsimage.

• Creatingapositioningstrategywithacombinationofthedifferentiatingelementsofthecompany/product/brandiswhatwecallthevalueproposition:thetotalsumofbenefitsdifferentiatingandpositioningabrand.Thegraphicbelowshowsthepossiblevaluepropositionsacompanycanusetopositionitsproducts.Winningvaluepropositionsareshowningreenandlosingonesinred.

2.4.Applicationandcommunicationofthechosenpositioning

Oncethepositioninghasbeendecided,thecompanyhastoconveyitsdesiredpositiontothetargetcustomers.

Thepositioningstrategyisnotonlycommunicationbutshouldbebackedupwithactions.Ifacompanyislookingfor“moreformore”positioning,ithastoproducehighqualityproducts,chargeahighprice,distributethroughexclusiveorhigh-qualitychannelsandadvertiseonqualitymedia.

Topic 5 The customer oriented marketing strategy 30

Topic 5 The customer oriented marketing strategy 31

Topic6:Product,serviceandbrand

1.Introduction

Wewillnowstudythemarketingmix,thetacticaltoolswhichmarketingprofessionalsusetoimplementtheirstrategies.

Letusbeginwiththebasicelement:productsandservices.

2.Product,serviceandoffering

Inthestrictsense,aproductisanythingwhichcanbeofferedonamarket,acquired,usedorconsumed,andwhichcansatisfyaneedorwant.

Morebroadly,itcanrefertoservices,events,peoples,ideas,places,organisations,oracombinationofanyoftheabove.Thisisthepointofviewofmarketing,whereaproductcanbeadrink,aholiday,oraFacebookprofile.

Duetotheirimportance,wewillalsofocusonservices,atypeofproductwhichconsistsofactionsperformedforsale.Servicesareintangibleandtheiracquisitiondoesnotleadtoanykindofownership.

Productsarethefundamentalelementsofacompany’soffering:thesetofproductsand/orserviceswhichacompanymakesavailabletoconsumers.Theofferingisthefoundationonwhichthecompanybuildsprofitablerelationshipswithitscustomers.

Acompany’sofferingmaybeproducts,services,orproductsandservices.

Productsandservicesareclassifiedintotwocategoriesdependingonwhobuysthem:consumerproductsandindustrialproducts.

Consumerproductsareproductsandservicesacquiredbytheendconsumerforpersonalconsumption.Dependingonhowconsumersusethem,theseproductsmaybe:

• Convenienceproducts:usuallyacquiredfrequentlyandimmediatelywithminimumbuyingeffortorcomparisonwithotherbrands(e.g.,shampoo,biscuits).

• Shoppingproducts:lessfrequentlypurchased,withdetailedcomparisonsofquality,priceorstyle(clothes,furniture).

• Specialityproducts:productswithuniquecharacteristicsorbrandidentificationforwhichasignificantgroupofconsumersiswillingtomakeaspecialpurchaseeffort(cars,luxuryproducts).

• Unsoughtproducts:productsthatconsumerseitherdonotknowaboutordonotconsiderbuying(innovations,insurance).

Topic 6 Product, service and brand 32

Industrialproductsarepurchasedforfurtherprocessingorforuseinconductingabusiness.

Thus,thedifferencebetweenconsumerproductsandindustrialproductsisbasedonthepurposeforwhichtheyareacquired.

Industrialproductsareclassifiedas:

• Materialsandparts:rawmaterials(flour,fish)andmanufacturedmaterials(engines,castings).

• Capitalitems:theseaidinthebuyer’sproductionoroperations,includinginstallations(factories,offices)andaccessoryequipment(tools,trucks).

• Suppliesandservices:theseincludeoperatingsupplies(paper,coal)andrepairandmaintenanceitems(nails,paint).

Topic 6 Product, service and brand 33

3.Productandservicedecisions

Marketershavetomakedecisionsaboutproductsandservicesinthreeareas:individualproducts,productlinesandtheproductmix.

3.1.Individualproductdecisions:

A.Productattributes:definingthebenefitsthatitwillofferthroughproductattributessuchasquality,features,styleanddesign.

Productqualityisoneofthemainpositioningtoolsavailabletothemarketer.

Aproductcanbeofferedwithdifferentfeaturesandoptions.Thestartingpointisabasicmodel.Basedonthis,thecompanymaydecidetocreateupgradedmodelswithaddedfeatures.

Anotherwaytoaddvalueforcustomersisbymakingtheproductstyleanddesigndifferenttotheusualproductorthecompetitors’products.

B.Brandcreation:Abrandisaname,term,sign,symbol,design,oracombinationoftheseelements,identifyingthemanufacturerorsellerofaproductorservice.Consumersconsiderbrandstobeanimportantpartofproducts,becausetheyaddtheirownmeaningsanddeveloprelationshipswiththebrands.

Thebrandnameisthebasisonwhichastorycanbebuiltaboutthequalitiesanddistinguishingfeaturesofaproduct.

Thebrandoffersthemanufacturer/vendoraseriesofadvantages,includingproductidentificationandlegalprotection(ifitisaregisteredtradename).

Abrandconsistsoftwoelements:thenameandthelogo.

Thenameisthepartofthebrandwhichcanbespoken.Choosingthenameisvital,sinceitcanhaveapositiveornegativeeffectonaproduct.Agoodnameshouldbeappropriate,nothaveanydoublemeanings,beeasytorecogniseandremember,andstraightforwardtopronounce.

Thelogoisthegraphicdesignwhichdistinguishesabrand,product,companyororganisation.Alogoaddspersonalitytothebrandandhelpsinitspositioning.

C.Packaging:theproductcontainerorwrapper.

D.Productsupportservices:mostcommonly,customerservices.Thesesupplementaryserviceshelptostrengthentheconsumer’sbrandexperience.

Topic 6 Product, service and brand 34

3.2.Productlinedecisions:

Aproductlineisagroupofproductswhicharecloselyrelatedtoeachotherbecausetheyworkinsimilarways,theyaresoldtothesamegroupofconsumersandaresoldinthesametypesofshopsorinthesamepriceband.

Themainproductlinedecisionconcernsitslength–inotherwords,thenumberofproductsinaline(ashortlinewithafewproductsoralonglinewithmany).

Acompanycanexpandaproductlineintwoways:

• Linefillingmeansaddingmoreitemswithinthepresentrangeoftheline.

• Linestretchingmeanslengtheningtheproductlinebeyondthecurrentrange,whichcanbedownward,upward,ortwo-waystretching.

3.3.Productportfolioorproductmixdecisions:

Theproductportfolioisthesetofallproductlinesanditemsthatacompanyoffersforsale.Thisisalsocalledtheproductmix.Acompany’sproductmixhasfourimportantdimensions:

• Width:thenumberofdifferentproductlinesthecompanycarries.• Length:thetotalnumberofitemsacompanycarrieswithintheproduct

lines.• Depth:thenumberofversionsofferedforeachproductintheproduct

line.• Consistency:howcloselyrelatedtheproductlinesareintermsofend

use,productionrequirementsordistributionchannels.

Thesedimensionshelpdefineacompany’sproductstrategy.Companiescanincreasetheirbusinessusingthemixinfourways:

• Addingnewproductlines,wideningtheproductmix.• Lengtheningtheexistingproductlinesforfullerlines.• Addingmoreversionsofeachproducttodeepentheproductmix.• Makingproductlinesmoreconsistent.

Companiesmayalsoneedtonarrowtheirproductmixbyremovinglow-performinglinesandstreamliningtheirstrategy.

4.Servicemarketing

Aserviceistheapplicationofhumanormechanicalforcetopeople,animalsorobjects.Servicesarealsoproducts,butintangible,andthuswithspecialmarketingrequirements.

Topic 6 Product, service and brand 35

Serviceshavegrowndramaticallyinrecentyearsandareestimatedtorepresentmorethan60%ofworldwideGDP.Serviceindustriesvarygreatly,bothintermsofproviders(companies,governmentsandnon-profitorganisations)andintype(banking,healthcare,insurance,travel,education,etc.).

However,allserviceshavecertainspecialcharacteristics:

• Intangibility:theycannotbeperceivedbythesensesandaredifficulttodefineorvisualise.

• Inseparability:servicescannotbeseparatedfromtheirproviders.Servicesarefirstsold,thenproducedandconsumedatexactlythesametime.Thus,serviceprovidersarepartoftheirproduct.

• Variabilityorheterogeneity:thequalityofservicescanvarygreatly,dependingonwhoprovidesthemandwhen,whereandhow.Thismakesthemmoredifficulttostandardisebutoffersmorepersonalisationoptions.

• Perishability:servicesexpireandcannotbestored.Ifnotusedwhenavailable,theycannotbekeptforlater.

Thesespecialcharacteristicsofservicesmakethemmoredifficulttomarketthangoodsandrequirethedesignofspecificmarketingstrategies.Servicemarketingrequiresinternalandexternalmarketing.

Internalmarketingmeansthatthecompanyguidesandmotivatesitsemployees(thoseincontactwiththecustomerandallotheremployees)toprovidecustomersatisfaction.

Externalmarketingusestheusualmarketingtoolstoreachthecustomer,butfocusesonthreefactors:

• Differentiatingtheservice:developinganoffering,provisionorimagewhichisverydifferentfromthecompany’scompetitors.

• Servicequality:consistentlyprovidingbetterqualitythanthecompetitors.• Serviceproductivity:givingemployeesbettertraining,motivation,ortechnologyto

helpthembemoreproductive.

Topic 6 Product, service and brand 36

5.Brandstrategy:creatingstrongbrands

Abrandisamongacompany’smostpowerfulassets.Itisthemainwaytoidentifyaproductanddifferentiateitfromothers,expressingitspersonality,thesetofvaluesweassociatewiththeproductorthecompany,andeverythingaproductorservicemeanstotheconsumer.

Apowerfulbrandhashighbrandequity:thepositivedifferentialeffectofbrandnamefamiliarityonthecustomer’sresponsetotheproductorservice,andthedegreetowhichthebrandcanearntheconsumer’spreferenceandloyalty.

Forthisreason,brandmanagementisoneofthemarketer’smostimportanttasks.Wewillnowanalysepossiblebrandstrategies:

• Singlebrand:thesamebrandisusedforallthecompany’sproducts.Advantages:thiscreatesanumbrellabrandwhichcoversalltheproducts,savingonpromotionalandmediabudgets,andhelpingtomarketnewproductswhichreachthemarketwithadegreeofbrandfamiliarity.

• Multi-brand:adifferentbrandisusedforeachofthecompany’sproducts.Advantages:thisallowsforgreatermarketsegmentationandthepossibilityofreachingmorebuyers.Itavoidscross-contaminationbetweenbrandsifoneofthemshouldhaveaproblem.

• Secondbrands:companieswithimportantbrandscreatesecond-levelbrands.Inordertosegmentandexpandtheirmarkettoreachnewcustomers,andtestproductsandservicesbeforeintroducingthemintheirusualmarkets.

• Brandalliances:agreementsbetweensupplementarybrandsinordertostrengthentheirimageorqualityperception.Inordertoprovideanimageofpositivequalitytoaless-knownbrandbyassociatingitwithamoreprestigiousone.Oneformofallianceisco-branding,usingtwodifferentbrands/productsatthesametimeonanewproductorservice.

Topic 6 Product, service and brand 37

• Distributorbrandsorownbrands:brandsthatadistributorappliestogoodsmadebyadifferentcompany.Inordertoimprovetheimageofthedistributorandgiveitmorecontroloveritsmarket,aswellascreatecustomerloyalty.

• Verticalbranding:brandswithpointsofsalesellingonlytheirownexclusiveproducts.Thisleadstoastrongidentificationoftheproductwiththeconcept/atmosphereoftheshopwhereitissold.

Withtherightbrandstrategy,marketerscancreateastrongbrand,withtheendgoalofclearlypositioningthebrandintheconsumer’smind.

Goodbrandmanagementinvolvesworkingonitcontinuously.Consumersmustbeconstantlyremindedofthebrand’spositioningtokeepittop-of-mind.Threeelementsmakealastingbrand:brandmemory,customercommitmentandthebrandexperience.

Topic 6 Product, service and brand 38

Topic7:Newproductdevelopment

1.Introduction

Newproductsareacompany’slifeblood:asproductsageanddie,companiesmustdevelopnewonestotaketheirplace.Hereweanalysehownewproductsaredevelopedandmanagedthroughthevariousstagesoftheirlifecycle.

2.Developinganewproduct

Bynewproductwemeanoriginalproducts,improvementstoproducts,modificationsandnewbrandswhichthecompanycreatesthroughitsownresearchanddevelopment.

Therearetwowaysacompanyobtainsnewproducts:

• Acquisition:buyingacompany,apatentoralicencetomakeathird-partyproduct.• Development:createdinthecompany’sownresearchanddevelopmentdepartment.

Wewillfocusonthedevelopmentofnewproducts.

Newproductsenrichandaddvarietytotheproductportfolio,offerconsumersnewsolutions,andareakeysourceofgrowthforthecompany.

However,successisnotguaranteed.Itisestimatedthat60%ofnewproductsonthemarketwillfail.

Todevelopnewproductswithsomeassuranceofsuccess,thecompanymustknowandunderstanditscustomers,itsmarketsanditscompetitors,anddevelopproductsforthosecustomersandmarketswhichoffergreatervaluethanthecompetition.

Therefore,thecompanymustanalyseandplanrigorously,andestablishanewproductdevelopmentprocessthroughthefollowingsteps:

Topic 7 New products development 39

1.Generatingideas:asystematicsearchfornewproductideas,goingtodifferentsourcesandusingavarietyofmethods.

Possiblesourcesofideasincludecurrentcustomers,employees,distributors,suppliers,scientistsorinventors,productionpersonnel,engineers,competitors,marketingconsultantsandtrendanalysts.

Methodsforobtainingideascanbeinformal(conversationswithsalespersonnel,callsormessagesfromcustomers)orformal.Formalmethodsincludebrainstorming,synectics,morphologicalanalysis,andmostrecently,crowdsourcing.

• Brainstorming:aspontaneous,unfilteredmeetingofallkindsofpeoplewhocontributeideastothetopic,withnocriticismbythosepresent,whicharegatheredforsubsequentexamination.

• Synectics:amorestructuredbrainstormingsessionusingtwopsychologicalmechanisms:“makingthestrangefamiliar”and“makingthefamiliarstrange”.

• Morphologicalanalysis:amethodforstimulatingcreativitywhichlooksforallthetheoreticalsolutionstoaproblemandliststheessentialelementsinallthesolutions.

• Crowdsourcing:invitingaverylargegroupofpeople(consumers,employees,researchers,thegeneralpublic)toparticipateintheproductinnovationprocess.

2.Screeningtheideas:aprocessofselectingthenewproductideasinordertoidentifythegoodonesanddiscardnon-viableorbadideas.Newproductdevelopmentisexpensiveand,therefore,companiesprefertofocusonideaswhichcaneasilybecomeproducts.Marketersusethreeconceptsforscreeningideas:

Real:Istherearealdesireorneedfortheproduct?Willconsumersbuyit?

Topic 7 New products development 40

Win:Willtheproductgivethecompanyarealcompetitiveadvantage?

Worth:Doestheproductofferenoughpotentialprofit?

3.Developingandtestingtheconcept:anattractiveideaisdevelopeduntilitbecomesaproductconcept–i.e.,adetaileddescriptionoftheproductidea,usuallyintermstheconsumercanunderstand.

Testingtheconceptinvolvesfindingouthowconsumersinterpretandevaluatetheproductconcept.Thisisnormallydoneinconsumerfocusgroups(qualitativeresearch).

4.Designingthemarketingstrategy:aftertheconceptistested,thenextstepistodevelopatentativestrategyfortheproduct.Tobeasrealisticaspossible,itshouldincludeelementslikeadescriptionofthetargetmarket,thedesiredpositioning,predictedsales,possiblemarketshare,profits,price,distributionandsuitablepromotionmethods.

Thisisafirststrategyproposalwhichwillbechangedasoftenasnecessarythroughouttheprocess.

5.Businessanalysis:assessingthebusinessattractivenessofthenewproductshouldincludeanestimationofsales,costsandpredictedprofitstoseewhetherthenewproductwillmeetthecompany’sgoals.

6.Productdevelopment:untilnowthecompanyhasonlyhadaverbaldescription,adrawingoramodelofthenewproduct;atthisstage,aprototypeorpreliminaryversionwillbeproduced.Thisenablestestingproductionviability,troubleshooting,estimatingcostsandtestingfunctions,sothecompanycandecideiftheinitialideacanbecomeaviableproduct.

Thereisoftenaproducttestbymeansofwhichprototypesaretestedbyaselectedgroupofconsumers.

7.Markettest:theprototypegoesontoamorerealisticmarketenvironment.Normallythenewproductgoesontothemarket,butonasmallscale.

Thisgivesarealisticestimateofhowtheproductwillbeacceptedbythemarket,andwhetheranychangesshouldbemadetotheplannedmarketingstrategy.

Themajordisadvantageisthatcompetitorswillbealertedtothecompany’splans.

8.Commercialise:ifthepreviousstepsweresatisfactory,thecompanywillsubjecttheprojecttoafinalcheckandlaunchtheproductonthemarket,whereitsrealmarketingwillbegin.

3.Theproductlifecycle

Allproductsgothroughaseriesofstagesfromtheirlaunchtotheirdisappearancefromthemarket,whichwecallthelifecycle.

Thelifecycleofaproductcanbetrackedthroughitssalesandprofits,whichusuallyincreaseatthebeginningandgraduallydecreaseattheend.

Topic 7 New products development 41

Thefigurebelowshowsatypicalproductlifecycle.

Throughoutitslife,aproductwillbeinfluencedbymarketbehaviour,environmentandcompetition.Consequently,themarketingstrategyandtoolswillvarydependingonthestageinthelifecycle.

Theproductlifecycleisdividedintoseveralphases:

• Introduction• Growth• Maturity• Decline

Thedurationofthesephaseswilldependontheproductitself,themarket,thecompetition,etc.

Thetablebelowsummarisesthemarketingcharacteristics,goalsandstrategiesateachstageoftheproductlifecycle.

Topic 7 New products development 42

Topic 7 New products development 43

Topic8:Promotion.Thecommunicationsmix.

1.Introduction

Aswehaveseen,theproductisthebasisofthecommercialstrategy,whilethemarketingtoolwhichhelpsuspresenttheproducttotheconsumerwithaclear,powerfulandattractivemessageispromotion.

Thistopicexaminesallthetoolsofintegratedmarketingcommunicationsandtheprocessofdevelopingeffectivecommunications.

2.Promotionorintegratedmarketingcommunications

Promotionisbasicallycommunication:thesellertransmitsinformationaboutaproduct,productrangeorcompanytothebuyer.

Promotionusesarangeofmediaanditsultimateaimistostimulatedemandfortheproduct.

Promotionhasthreegoals:

• Informpeopleoftheexistenceoftheproduct,itsfeaturesandbenefits.• Persuadepotentialbuyersoftheproduct’sbenefitsandstimulatebuying.• Remindcurrentcustomersoftheexistenceoftheproduct.

Thepromotionconceptincludesasetofcommunicationswiththetargetmarket.

• Personalselling• Advertising• Publicrelations• Salespromotion• Directmarketing• Onlinemarketing

3.Themarketingcommunicationsmix

Acompany’scommunicationsmixisthesetofadvertising,salespromotion,personalselling,directmarketinganddigitalmarketingtoolsthatthecompanyusestopersuadecustomersofthevalueofitsproductsandcreaterelationshipswiththem.

Dependingonthestateofthemarket,theconsumers,theproductandthecompany’sgoals,marketerswilluseoneormoreofthesetoolsintheirpromotionstrategy.

3.1.Advertising:thetransmissionofpaid,non-personalinformationthroughmassmediaintheformofadvertisementsorinserts,paidforbythevendor,withamessagecontrolledbytheadvertiser,inordertopresentandpromoteideas,productsandservices.Advertisementscan

Topic 8 Promotion. The communications mix 44

beplacedontheradio,TV,printmedia,billboardsandallthenewmediawhichhavearisenthankstotheinternet,etc.

3.2.Salespromotion:activitiesusingmaterialoreconomicincentivestodirectlyorimmediatelystimulateshort-termdemandforaproductorservice.Theseincludediscounts,coupons,pointofsaledisplays,productdemonstrations,etc.

3.3.Personalselling:in-personpresentationsgivenbymembersofthecompany’ssalesteamconveyinginformationdirectlytoaspecificpotentialcustomerandsimultaneouslyreceivingfeedback.Itspurposeistopresentandconvincethepotentialbuyerofthebenefitsoftheproductorservice.

3.4Publicrelations:creatingagoodrelationshipwiththecompany’sdifferentaudiencesandgainingfavourablepublicity,creatingagood“corporateimage”andresolvingoreliminatingrumours,unflatteringinformationorunfavourableevents.Publicrelationsactivitiesincludepressreleases,sponsorshipsandcompanyevents.

3.5Directmarketing:directcontactswithindividualcarefullyselectedcustomerstoelicitanimmediateresponseandcultivatelong-lastingcustomerrelationships.Therearetwotypesofdirectmarketingtools:

• Traditionalmedia• Onlinemarketing,whichusesalltypesofinternetinterface(websites,blogs,email,

onlinemedia),smartphones,tablets,socialnetworksandmobileapps.

4.Managingmarketingcommunications

Marketingcommunicationsweretraditionallyusedtoadvertisemassmarketproducts,sotheusualmodelusedmassmediatobringamessagetoamassivecustomerbase.

Inrecentdecades,severalfactorshavechangedcompanies’communicationstrategies.

Ononehand,newdigitaltechnologyisleadingtosurprisingchangesinthewaycompaniesandcustomerscommunicatewitheachother.

Ontheother,consumershavemoreandmoreaccesstoinformationandcancomparewhattheyaretoldbymarketingdepartmentswithotherinformationonlineorseereviewsbyotherconsumersonsocialnetworks.

Thesefactorshavecreatedanewmarketingcommunicationsmodelwhichismoresocial,morefocusedandmoreattractive,andopenupavastrangeofpossibilitieswhichmarketersmusttakeintoaccountintheircommunicationstrategyandmix.Theymustanalyseallcommunicationoptions(analogueanddigital)andcreatethebestmixfortheirneedsandgoals.Thedifficultpartisgroupingallthemediainanorganisedandeffectiveway.Todothis,companiesareadoptingtheintegratedmarketingcommunicationsconcept.

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Stagesofdevelopinganeffectiveintegratedcommunicationsprogramme.

1.Identifyingthetargetaudience:theymustanalyseverycarefullywhotheywanttheirmessagetoreach,asthemessage,channelsorsymbolstheyusewillvarydependingontheselectedaudience.Thetargetaudiencehasconsiderableinfluenceondecisionsaboutwhatwearegoingtosay,andhow,when,whereandtowhomwearegoingtosayit.

2.Definingthecommunicationsgoal:decidingwhatresponsetheywantfromtheaudience.Logically,theultimategoalofallcommunicationistoencouragebuyingtheproduct,buttheconsumermaycurrentlybeatdifferentstagesinthewillingness-to-buyprocess(awareness,knowledge,taste,preference,convictionandpurchase).Ourobjectivewilldependonwheretheaudienceisintheprocess.

3.Designingthemessage:communicatorsmustdevelopaneffectivemessagetoelicitthedesiredresponsefromtheaudience.Ideally,themessagewilldrawattention,retaininterest,createdesireandpromptaction(whichwecalltheAIDAmodel).Whenthemessageiscreated,themarketermustdecideonthecontent(whatitwillsay)andthestructureandformat(howitwillsayit).

4.Choosingmedia:preparingaproposalonthecommunicationchannelstobeused.Therearetwomaintypesofcommunicationchannel:

• Personal:whentwoormorepeoplecommunicatedirectlywitheachother.Theymaycommunicatefacetoface,orbyphone,post,email,mobilemessagingapps,etc.

• Impersonal:printmedia(newspapers,magazines),broadcastmedia(radio,television),displaymedia(billboards,posters,panels)andonlinemedia(email,socialnetworkswebsites).

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5.Selectingthemessagesource:theimpactofthemessageonthetargetaudiencewillbeaffectedbyhowtheaudienceperceivesthecommunicator.Messagestransmittedbycrediblesourcesaremorepersuasive.

6.Gatheringfeedback:assessingtheimpactonthetargetaudience.Thismeansaskingthereceiversofthemessageiftheyrememberit,howmanytimestheysawit,whattheyrememberaboutit,howtheyfeelaboutit,andtheirpastandpresentattitudestotheproductandthecompany.Wealsohavetomeasurethebehaviourcausedbythemessage:howmanypeopleboughttheproduct,visitedthewebsiteorshop,talkedtootherpeopleaboutit,etc.

Basedontheinformationobtained,themarketermaydecidetocontinuewiththecommunicationasitisormakechanges.

5.Advertising

Allformsofnon-personalcommunicationpaidforbyacompanytopresentorpromoteideas,productsandservices.

Companiesusuallyturntoadvertisingagenciesfortheiradvertisingcampaigns.Thesearemarketingservicecompanieswhichhelpmarketerstoplan,prepare,executeandassesstheiradvertisingprogrammes.Agenciesusuallycreatethemessage,designthematerialsandplanmediabuying.

Whendevelopinganadvertisingcampaign,weneedtotakefourimportantelementsintoaccount:

5.1.Thegoalsoftheadvertising:eachadvertisingcampaignhasaspecificgoalorcommunicationtaskandaimstoreachaspecifictargetaudienceinaspecifictimespan.Thegoaloftheadvertisingmaybe:

• Informative:communicatingvalueforthecustomer,creatingabrandimage,informingthemarketaboutanewproduct,explaininghowtheproductworks,reportingachangeinprice,describingtheavailableservices,correctingafalseimpression,etc.

• Persuasive:creatingapreferenceforthebrand,promotingaswitchtoabrand,changingtheperceptionoftheattributesofaproduct,persuadingcustomerstobuynow,etc.

• Reminder:remindingcustomersthattheymayneedaproduct,remindingthemwheretobuytheproduct,keepingthebrandtop-of-mind,etc.

5.2.Theadvertisingbudget:decidingonthemoneyandotherresourcestobeallocatedtotheadvertisingcampaign.

Thereisnospecificmethodfordecidingonabudget,butmostcompaniesareguidedbytheiroverallmarketingbudget.Inanycase,itisimportanttotakeintoaccountmarketelementswhendecidinghowmuchtospendadvertisingaproduct:

• Anewproductrequiresalargebudgettoraiseawarenessandgetconsumerstotrytheproduct.Meanwhile,amaturebranddoesnotneedalotofadvertising.

• Abrandinahighlycompetitivemarketneedsalargebudgettobenoticed.

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• Aproductwhichisnotdifferentiatedfromcompetingproductswillneedmoreadvertisingthanonewhichcanlaunchamessagewithacleardifferencegivingitacompetitiveadvantage.

5.3.Advertisingstrategy:howacompanytriestoreachitsadvertisinggoals.Thisconsistsoftwoelements:creatingthemessagesandchoosingtheadvertisingmedia.

5.3.1.Themessage:thecreationofanadvertisingmessagebeginswiththemarketercreatingthebriefanddeliveringittotheagency.Thisdocumentcontainsinformationontheproductandthemarket,thecampaigngoals,themessagetotransmit,thetargetaudience,theavailablebudget,anestimatedtimeline,andanyotherrelevantinformation.

Basedonthebrief,theagencycreatesthemessage:“what”thecampaignwillsay,thecombinationofwords,illustrations,images,signandsignalswhichwilltransmitoneormoreideas.Thewordsinthemessagearecalledcopy.Avitalpartofthemessageistheclaimorslogan:ashortphrasesummingupthemessage,likeaheadline.

Themessagewillbeexpressedonaspecificmediumwithaspecifiedsize,duration,typography,colours,arrangementofthetext,illustrations,images,etc:theadvertlayout.

5.3.2.Media:advertisingmediaarethecommunicationchannelsusedtotransmitamessage(radio,television,printmedia,digitalmedia).

Nomediumisintrinsicallybetterthananother.Themarketer’sjobistoselecttherightmediumormediaforthecampaign.Thisselectionisusuallydoneworkingwiththeadvertisingagencyormediaplanningcompany,companieswhichspecialiseinchoosingtherightmediaforeachcampaign.

Theeffectivenessofeachmediumismeasuredintermsofitsaudience:thenumberofpeopleexposedtothatmedium.Inotherwords,thesetofpeoplewhowatchaTVchannel,readanewspaper,visitadigitalmedium,etc.

Mediaplanningforacampaignmusttakeintoaccountthefollowingelements:

Coverage:thenumberofpeoplewhowillbereachedatleastoncebyanadvertonamedium.

Frequency:thenumberofexposureswhichwillbereceivedbythepeoplereachedbyanadvertonamedium.

Totalexposure:theresultofmultiplyingcoveragebyfrequency.Thesamenumberofexposurescanbeachievedwithdifferentcoveragesandfrequencies.

5.4.Evaluatingresults:strictlyspeaking,theeffectivenessofadvertisingshouldbemeasuredintermsofsalesorchangedbehaviour,butinpracticethisisimpossibleand,therefore,itismeasuredbasedontheextenttowhichthepreviouslydefinedgoalsaremet.

Marketerscanalsousecommercialresearchtomeasuretheeffectivenessofadvertisingthroughtwotools:

• Pre-testing:performedbeforethecampaigntotestwhetherthemessagehastherequiredpersuasivevalueandisunderstood.Thisisnormallydonewithfocusgroups.

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• Post-testing:checkinghowwellthecampaigngoalswereachieved,focusingonfindingouthowmanypeopleremembertheadvert,whetherthemessageisassociatedwiththebrand,orwhatbrandattitudewascreatedbytheadvert.Carriedoutbymeansofsurveys.

6.Publicrelations

Publicrelations(PR)aretheplannedapplicationoftechniquesdesignedtocreatereciprocalcommunication,knowledgeandunderstandingbetweenacompanyorinstitutionanditstargetaudience.

Publicrelationsinvolvecreatingnewsstoriesandpressreleases,holdingpressconferences,presentationsanddemonstrations,sponsoringeventsandsocialoccasions,holdingconferencesandotheractivitieswhichattracttheattentionofthemediaandtheiraudience,inordertoconveyfavourablemessagesabouttheproductorthecompany.

Publicrelationsusuallyincludeaspectsofthecorporateimageand,consequently,thetargetaudienceisbroader,includingshareholders,suppliers,creditors,employees,unions,associations,opinionleaders,etc.

Publicrelationsmaybe:

• Internal:forpeoplewhoworkwithintheorganisation.• External:forvariousaudiencesoutsidetheorganisation.

Thedifferentiatingcharacteristicsofpublicrelationsare:

• Seekingthetrustofthetargetaudience.• Addressingmanydifferentaudiences.• Non-repetitivecommunication.Infact,repetitionofthesamenewsitemcreates

mistrust.• Themessagemustbemoresubtlethaninotherformsofpromotion.• Themessageismorecredible,especiallyiftransmittedintheformofnews,reportsor

commentsbyimportantpeopleorinstitutionsnotconnectedtothecompany.

Therearemanydifferentpublicrelationsinstrumentsavailabletomarketers.Thefollowingarethemostimportant:

• Externalcommunicationsandrelationswiththemedia:thecompanygeneratesinformationtobedisseminatedviathemediaintheformofnews,reportage,comments,interviewsandreports.Themedium,notthecompany,controlsandcreatesthemessage,essentiallyprovidingfreepublicity,whichisalsohighlyeffectivegiventhecredibilityofthesource.

• Sponsorshipandpatronage:fundingandsupportingsocialandculturaleventsandinitiativesinordertocreateafavourableimageofthesponsoramongtheaudienceforthoseactivities.Patronagecentresonfundingartisticandculturalactivities.Itisrelativelyaltruistic,takingplaceoverthelongtermandimprovingtheperceptionofthecompany’svaluetosociety.Meanwhile,sponsorshipislinkedtoadvertisingpracticesforcommercialpurposesandtoobtainadirectbenefit.

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• Internalrelations:thenorms,customsandpeculiaritiesofeachcompanyformwhatwecallthecompanyculture.Thiscanappearspontaneously,butwhenacompanywantstointroduceacertaincultureitcanapplyPRtechniquesinitsrelationshipwithitsemployees.

7.Salespromotion

Asetofshort-termactivitiesusingfinancialormaterialincentivesorspecificactionstostimulateshort-termdemand.Salespromotionusesinstrumentssuchasseasonalsales,discounts,freesamples,coupons,gifts,prizes,competitions,pointofsaleadvertising,demonstrations,expositionsandtradefairs.

Salespromotionisusuallysupplementedbyadvertisingforgreatereffectivenessbypublicisingtheexistenceofthepromotionandstimulatingconsumerparticipation.

Whenplanningasalespromotion,marketerswillhavetodecidewhothetargetaudienceis,becausethisdeterminesthegoalsofthesalespromotion:

• Intermediaries:thepromotionisdesignedtomotivatethemtomakecertainsalesefforts,allocatemorespacetotheproduct,orincreasethenumberofpointsofsale.

• Salespersons:theycanbemotivatedbyapromotiontointensifytheireffortsandimprovetheirperformance.

• Consumers:stimulatingshort-termdemand,intheformofmorefrequentpurchasesorbyattractingnewconsumers.Thesemethodsshouldnotbeusedtoooftenastheycanhaveundesirableeffects,suchasreducingsubsequentsalesorencouragingconsumerstobuyonlyinpromotionalperiods.

Forasalespromotiontobesuccessfulitmustmeetasetofrequirements:

• Itmeetsspecificneedsorgoals• Short• Easy• Occasional• Well-publicised• Aimedataspecifictargetaudience• Inlinewiththeproductimage

8.Personalselling

Apersonalpresentationofacompany’sproductsbyitssalespeopleinordertocloseasaleandcreatearelationshipwithcustomers.

Personalsellingistheinterpersonalbranchofthecommunicationsmix,asitinvolvestwo-waycommunicationbetweenthesalespersonandindividualcustomers,whetherface-to-face,byphone,emailorvideoconference,orviaanyothermeans.Itcanbemoreeffectivethanadvertisingwhenanitemisdifficulttosell,becausethe

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salespeoplecanaskcustomersformoredetailsabouttheirproblems,needsandwantsandthenadjusttheirpresentationtosuitthem.

Acompany’ssalestakeplaceinthesalesnetwork,whichisthecompany’smainconnectiontoitscustomers,andhasadoublefunction:

• Representingthecompanytothecustomers• Representingthecustomerstothecompany

Thestructureofthesalesnetworkvariesfromcompanytocompany.Somecompaniesorganisetheirsalesnetworkterritorially,othersbyproductsorbycustomers.

Therearecompanieswithnosalesnetworkatall(suchasweb-onlybrands),butmosthaveasalesnetwork,whichwillvaryinsizeaccordingtotheproductrange.

9.Traditionalanddigitaldirectmarketing

Directmarketingisdirectcommunicationwithindividualconsumersandconsumercommunitiestoobtainanimmediateresponseandestablishlong-lastingrelationshipswithcustomers.Companiesusedirectmarketingtopersonalisetheirofferingsandcontentaccordingtotheneedsandinterestsofwell-definedmarketsegmentsorindividualbuyers.

Wewillnowexaminethetoolsoftraditionaldirectmarketing.

• Directmailmarketing:sendinganoffer,anadvertisement,areminderorothermessagestoapersonataspecifiedaddress.Directmailmarketingcompaniesusedatabasesformarketsegmentation.

• Cataloguemarketing:sendingprint,electronicorvideocataloguestoselectedcustomers.

• Telemarketing:usingthetelephonetoselldirectlytocustomers.

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Topic9:Digitalmarketing

1.Introduction

Thespreadoftheinternetandadvancesindigitaltechnologyhavegeneratedanewformofmarketingwhichisdevelopingrapidly:digitalmarketing.

Thisistheuseofdigitalmarketingtoolssuchaswebsites,socialnetworks,mobileappsandadverts,onlinevideos,emailandblogstoattractanywhere,anytime,throughtheirdigitaldevices(laptops,PCs,tablets,smartphones,internet-readyTVsandanyotherdigitaldevice).

Thesedayspeoplecangoonlinetofindinformation,researchbrandsandproducts,andcommunicatewithotherpeoplewhenevertheywant,wherevertheyare–thedigitalerahasrevolutionisedhowconsumersunderstandconvenience,speed,pricing,productinformation,servicesandinteractingwithbrands.Asaresult,marketersnowhaveatotallynewwaytocreatevalueforcustomers,attractconsumersandestablishrelationshipswiththem.

Digitalmarketingmaytakedifferentforms,showninthefigurebelow.Inthistopicwewillanalyseeachone.

Managingdigitalmarketingiscomplexandrequiresspecificexpertiseandexperience,hencecompaniesoftenhireexpertsinthedifferentdisciplinesandtools.

Digitalmarketing

Onlinemarketing Websites,onlineadvertising,email,onlinevideos,blogs

Socialmarketing MarketingonsocialnetworksMobilemarketing Marketingonmobiledevices

2.Onlinemarketing

Marketingwhichtakesplaceontheinternet,usingcompanywebsites,onlineadvertisingandvideos,emailandblogs.

Socialandmobilemarketingalsotakesplaceonlineandshouldbecoordinated,butasthetwohavespecialcharacteristicswewillstudythemseparately.

2.1.Websites:Thefirststepinonlinemarketingiscreatingacompanywebsite.Websitesvarywidelyaccordingtotheirpurposeandcontent,butthetwomaintypesare:

• Marketingwebsite:designedtoattractconsumersandguidethemdirectlytobuyortoanothermarketingoutcome.

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• Onlinebrandcommunity:designedtopresentbrandedcontentandcreateavirtualcommunitylinkedtothebrand.Theyusuallyhavealargevarietyofinformationonthebrand,videosandactivitiesforestablishingacloserrelationshipwithconsumers,creatingaconnectionbetweenthebrandandthecustomers,andamongthecustomersthemselves.

Oncethewebsitehasbeencreated,thegoalistogetpeopletovisitit.Therefore,wewillneedtodirecttraffictothewebsitewithadvertisementsinprintmedia,linksfromotherwebsites,andinterestingcontent.Intheonlineworldcontentisking–aswellasauser-friendlysite(visuallyattractiveandeasytouse),consumersarelookingforinterestinginformation.

2.2.Onlineadvertising:Onlineadvertisingappearswhenconsumersarebrowsingtheinternet,andincludesinteractivemultimediaadverts,searchengineadvertising,onlineclassifiedadverts,andotherforms.Letuslookatthetwomaintypesofonlineadvertising:

• Displayadvertising:thismayappearatanytimeonusers’screens,normallyrelatingtothecontenttheyareseeing(banners,etc.).

• Searchengineadvertising:alsocalledcontextualadvertising–thesearetextandimageadvertisementsappearingbeforeornexttosearchresultsinsearchengineslikeGoogle(e.g.,aGooglesearchforsunglasseswillbringupseveraladvertsinthelistofresults).

2.3.Emailmarketing

Sendinghighlypersonalisedemailsdirectedspecificallytotargetconsumers,withmarketingmessages.

Thiscanbeaveryadvantageousformofdirectmarketingbecauseitletsmarketerssendhighlypersonalisedorcustomisedmessagestowell-definedtargetconsumersandestablishsuccessfulrelationships.

Butemailalsohasadarksidewhichcompaniesmustbesuretoavoid:spam,unwantedandannoyingmarketingemailswhichclogupconsumers’emailaccounts.Forthisreason,wemustalwaysuseopt-inemailmarketing:sendingemailsonlytothecustomersorconsumerswhochoosetoreceivethem.

2.4.Onlinevideos

Placingvideosonlineoncompanywebsitesorsocialnetworks(YouTube,Facebook,etc).Thesemaybevideosofassemblyinstructions,publicrelationsitems,brandpromotionsorentertainmentrelatingtothebrand.

Agoodonlinevideocanattractthousandsofconsumers,andtheideaisforavideotogoviral.Viralmarketingisthedigitalversionof“wordofmouth”:creatingvideosthataresoattractivethattheconsumersthemselveschoosetosharethemwithfriendsandacquaintances.

2.3.Blogsandonlineforums

Blogsandforumsarewherepeopleandcompaniespublishtheirownthoughtsandothertypesofcontent,usuallyrelatingtoaspecificsubject,thusattractinggroupsofpeoplewithsharedinterests.

Topic 9 Digital marketing 53

Marketerscancreateablogtogenerateacommunityaroundthebrand-relatedcontenttheypublishorcanbeactiveonthird-partyblogsorforumsonsubjectsrelatingtoorofinteresttotheirproduct.

3.Socialmarketing

Socialmediaarecommercialandindependentsocialnetworkswherepeoplegathertosocialiseandsharemessages,photographs,videosandothercontent.Inrecentyearstheirgrowthhasbeenspectacular,anditisnowhardtofindanyonewhodoesnotuseFacebook,Twitter,YouTube,LinkedIn,Instagram,etc.

Wecanusesocialmediaintwoways:usingexistingmediaorcreatingourown.

Theformerismuchmorecommon,becauseitwouldbehardforaprivatenetworktobecomeaspopularasthelargersocialnetworks.Togiveyouanidea,1.6billionpeopleuseFacebookeverymonth,andYouTubehasoverabillionusers.

Usingsocialnetworksformarketinghasconsiderableadvantages:

• Immediateandtimely:itispossibletoreachconsumersanywhere,anytime,andtransmitrelevant,timelymarketingcontent.

• Efficient:manysocialnetworksarefreeorcheaptouse,whichmeansthatthereturnoninvestmentisveryhighcomparedwithtraditionalmedia.

• Capacityforattractionandparticipation:socialnetworksareidealforattractingconsumers,gettingtheminvolvedinbrandsandencouragingthemtosharecontent.

Buttherearealsodisadvantages:

• Management:usingsocialnetworkseffectivelyisnoteasyandrequiresexpertswithspecialistskillsandexperience,andmanycompaniesarefrustratedtofindthataftercreatingtheirownsocialnetworkpresencetheyarenotsurehowtousethem.

• Difficultaccesstoresults:beingabletoseetheresultsofasocialnetworkcampaignrequiresusingtoolslikeGoogleAnalytics,GoogleTagManager,Semrush,Weloveroi,etc.whicharenotpartofmarketers’usualskillset.

• Lackofcontrol:userscontroltheirownuseofsocialnetworks.Therefore,oncetheircontentislaunched,companieshavelittlecontroloverit,andacampaigncanbecomeaproblemifusersdonotrespondpositivelytoit.

4.Mobilemarketing

Messages,promotionsandothermarketingcontentsenttoconsumersviamobiledevices.

Thismethodisusedtoattractconsumersanywhereandanytimeduringthebuyingandrelationship-buildingprocesses.

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Theincreasinguseofmobiledevicesandinternetaccessviamobilephoneshasmademobilemarketingessentialformostcompanies.

Companiesusemobilemarketingfordifferentgoals:

• Stimulatinganimmediatepurchase• Makingiteasiertobuy• Enrichingthebrandexperience

Mobilemarketingcanofferconsumersinformation,incentivesandspecialoptionsassoonastheyexpressaninterest,orwhentheyareabouttomakeabuyingdecision.

Marketerscanproposethattheircompaniescreatewebsitesadaptedformobiledevices,orusefulandentertainingappswhichbringconsumersclosertothebrandandhelpthemmakebuyingdecisions.

Topic 9 Digital marketing 55