Topic 1: Definition of marketing, marketing management ......Topic 1: Definition of marketing,...

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Topic 1: Definition of marketing, marketing management, concepts and process. 1. Introduction Exchanging goods and services is one of the earliest activities of humans relating to other humans. This activity began very simply, by exchanging food, but over time it has changed a great deal, both in how we understand it and in how it is done. Marketing is a particular way to conceive and perform the exchange of goods and services, or in other words, trade. Marketing is a specific way to carry out a commercial relationship, and consists of identifying, creating, developing and meeting demand; it is an organised process intended to create and retain customers. Marketing was first used in the United States in the early 20th century by companies producing mass market products; it gradually spread, and today can be found in many different spheres (services, non-profits, political, social and public institutions, etc.). Marketing has been revolutionised in recent years with the arrival of new technologies: digital marketing. Technology paved the way for a more innovative, participatory and connected kind of marketing, with the traditional tools now supplemented by new ones (the internet, social networks, mobile apps, data analysis, etc.). 2. Marketing management Managing the commercial activity of a company or institution, if marketing principles are applied, is called marketing management. The goal of marketing management is to identify and satisfy customers’ needs through managing stable relationships with them, and its basic task is to meet this goal as effectively as possible. We define marketing management as the science of choosing target markets and creating profitable relationships. To do this, marketing management involves: • Analysing the situation (the market, the competition, the environment, etc.). • Planning the goals that you hope to reach. • Designing strategies to reach the company’s goals. • Putting these strategies into practice through planned actions. Topic 1 Definition of marketing, marketing management, concepts and process 1

Transcript of Topic 1: Definition of marketing, marketing management ......Topic 1: Definition of marketing,...

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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.

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• 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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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.

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• 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.

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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.

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• Earlymajority:theyadoptnewideaslaterthantheabove,butearlierthanaverage.

• Latemajority:theyarescepticalandadoptinnovationsonlywhentheyhavealreadybeentriedbythemajority.

• Laggards:theyrejectchangesandadoptinnovationsonlywhentheyhavealreadybecomecustomary.

Theadoptionrateforaveryhighpercentageofnewproductsorideasfollowsasimilarcurvetothisfigure:

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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.

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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.

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• 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.

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• 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.

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Theaxesaretheattributesoftheproductwhichconsumersconsidermostimportant.Eachbrand’spositiononthemapindicatesthebrand’sperceivedpositioningalongtheaxes.

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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.

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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).

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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).

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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.

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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.

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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.

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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.

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• Distributorbrandsorownbrands:brandsthatadistributorappliestogoodsmadebyadifferentcompany.Inordertoimprovetheimageofthedistributorandgiveitmorecontroloveritsmarket,aswellascreatecustomerloyalty.

• Verticalbranding:brandswithpointsofsalesellingonlytheirownexclusiveproducts.Thisleadstoastrongidentificationoftheproductwiththeconcept/atmosphereoftheshopwhereitissold.

Withtherightbrandstrategy,marketerscancreateastrongbrand,withtheendgoalofclearlypositioningthebrandintheconsumer’smind.

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

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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:

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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?

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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.

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Thefigurebelowshowsatypicalproductlifecycle.

Throughoutitslife,aproductwillbeinfluencedbymarketbehaviour,environmentandcompetition.Consequently,themarketingstrategyandtoolswillvarydependingonthestageinthelifecycle.

Theproductlifecycleisdividedintoseveralphases:

• Introduction• Growth• Maturity• Decline

Thedurationofthesephaseswilldependontheproductitself,themarket,thecompetition,etc.

Thetablebelowsummarisesthemarketingcharacteristics,goalsandstrategiesateachstageoftheproductlifecycle.

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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

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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.

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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.

Topic 9 Digital marketing 54

Page 55: Topic 1: Definition of marketing, marketing management ......Topic 1: Definition of marketing, marketing management, concepts and process. 1. Introduction Exchanging goods and services

Theincreasinguseofmobiledevicesandinternetaccessviamobilephoneshasmademobilemarketingessentialformostcompanies.

Companiesusemobilemarketingfordifferentgoals:

• Stimulatinganimmediatepurchase• Makingiteasiertobuy• Enrichingthebrandexperience

Mobilemarketingcanofferconsumersinformation,incentivesandspecialoptionsassoonastheyexpressaninterest,orwhentheyareabouttomakeabuyingdecision.

Marketerscanproposethattheircompaniescreatewebsitesadaptedformobiledevices,orusefulandentertainingappswhichbringconsumersclosertothebrandandhelpthemmakebuyingdecisions.

Topic 9 Digital marketing 55


Topic 1 - Definition of Accounting

Topic 1 - Definition of Accounting

Key terminology Definition Topic: Context Revision ...

Key terminology Definition Topic: Context Revision ...

Marketing management topic 3

Marketing management topic 3

Marketing - Definition & Importance, Concepts & Marketing Management Tasks

Marketing - Definition & Importance, Concepts & Marketing Management Tasks

Stakeholder marketing: a definition and conceptual …e-businessethics.com/.../Stakeholder-marketing-a-definition.pdf · Stakeholder marketing: a definition and conceptual framework

Stakeholder marketing: a definition and conceptual …e-businessethics.com/.../Stakeholder-marketing-a-definition.pdf · Stakeholder marketing: a definition and conceptual framework

Topic 1 - Definition & Scope

Topic 1 - Definition & Scope

Marketing Activities - Definition & features

Marketing Activities - Definition & features

Introduction to marketing management and definition of marketing

Introduction to marketing management and definition of marketing

CHAPTER SIX ROLE OF MARKETING Topic 2 Marketing. .

CHAPTER SIX ROLE OF MARKETING Topic 2 Marketing. .

Integrated Marketing Definition Communication Strategy marketing... · 02.01.2013 1 Integrated Marketing Communication Strategy 15- 1 Definition The Marketing Communications Mix The

Integrated Marketing Definition Communication Strategy marketing... · 02.01.2013 1 Integrated Marketing Communication Strategy 15- 1 Definition The Marketing Communications Mix The

Strategic Marketing and Marketing: Domain, Definition ...

Strategic Marketing and Marketing: Domain, Definition ...

Definition of Marketing..docx

Definition of Marketing..docx

Definition of marketing strategy

Definition of marketing strategy

Branding & Marketing Essentials and Definition

Branding & Marketing Essentials and Definition

Marketing Definition

Marketing Definition

Topic 2 - Marketing

Topic 2 - Marketing

marketing mgmt Topic 7

marketing mgmt Topic 7

Change Topic: User Range Accuracy (URA) Definition Change Topic: User Range Accuracy (URA) Definition Change Topic: User Range Accuracy (URA) Definition This change package accommodates

Change Topic: User Range Accuracy (URA) Definition Change Topic: User Range Accuracy (URA) Definition Change Topic: User Range Accuracy (URA) Definition This change package accommodates

Topic 11:Market Definition

Topic 11:Market Definition

Video Marketing Definition

Video Marketing Definition