Professional, Practical, Proven

Academy 2019/20

Business ManagementLecture 21

Marketing Revision

1) Understanding the concept and evolution of marketing2) Characteristics of a marketing-orientated organisation

3) Essential elements of marketing

Contents

2

Introduction to Marketing

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• “the science and art of exploring, creating and delivering value to satisfy the needs of a target market at a profit” Kotler

Marketing defined

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Evolution of Marketing Function

Production Concept 

ProductConcept 

SellingConcept 

MarketingConcept 

Societal MarketingConcept 

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Marketing-Orientated Organisation

Customer Driven Quality focused before, during and after sales

Centred on satisfying customer needs

Profit‐driven

Capable of change Responsive to society'swell‐being

Responsive to customer needs

It should have a competitive advantage

• The customer is the reason the business exists

• Happy customers keep coming back

• Repeat business = profitability

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Marketing Management: The STP Process

• Select the most profitable and viable customers to serve

• Reach them with an offering that has a competitive advantage

• Communicate a position that is clearly perceived

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• Mass Marketing• Mass production, mass promotion, mass distribution

• Segment marketing• Broad segments isolated and needs matched

• Niche Marketing• Small section of a large market

• Micro Marketing• Focus on individuals and locations, one-to-one marketing

Levels of segmentation

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Segmentation Variables (needs to be SMART)Demographic Age, gender, income, social class

Geographic Nations, states, regions, counties, cities, towns

Psychographic Consumer lifestyles, activities, interests, and opinions

Behavioural Relationship between the customerand the productGift buying, usage rates, loyalty,

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• Evaluating each segment and selecting which segments to enter

Market Targeting

Levels of competition Growth opportunities

Substitute products Buyer behaviour

Market size Political orientation

Supplier power Firm’s resources

Market tastes New product introduction

Competitor strategies

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Market Targeting Strategies

Undifferentiated - full market coverage

Differentiated - separate marketing mix for different segments

Concentrated – more specific or niche strategy. Trying to capture a large share of one or a few sub-markets

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Market Positioning

The perception that customers have of a particular product or company

Marketers create an image or identity in the minds of consumers

Strongly linked to branding

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The process of distinguishing a product/service from others thus making it more attractive for customers to buy. Can be based on

PRODUCT, SERVICES,CHANNELS,PEOPLE

Differentiation

Less for much less

More for More

Same for less

More for the same

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Ansoff’s Growth Matrix

Market Penetration

Product Development

Market Development

Product/Market Diversification

Existing Markets

New Markets

Existing Products

New Products

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• Market Penetration

• Focuses on further exploiting existing products

• Promotions, pricing etc., to attract more customers and wider distribution

Ansoff’s Growth Matrix

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• Product Development

• New products are introduced into existing markets

• Modify existing products, (appearance, efficiency, effectiveness, “new” or “improved”)

Ansoff’s Growth Matrix

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• Market Development

• Market extension, new geographic markets, new distribution channels, new packaging, different pricing

Ansoff’s Growth Matrix

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• Diversification

• New products to new markets

• Related diversification – same industry• Unrelated diversification – different industry

Ansoff’s Growth Matrix

Marketing in Business

1) Describe the service organisation2) Managing Products, PLC, NPD3) The role of pricing4) The role of promotions5) The role of distribution6) The sales function7) The role of marketing communications

Contents

20

Introduction to Marketing

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• A service is essentially intangible and does not result in the ownership of anything.

• It may or may not be tied to a physical product

INTANGIBLEINSEPARABLE

VARIABLEPERISHABLE

The Service Organisation

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Elements of the Marketing Mix

the set of controllable tactical marketing tools - product, price, place, promotion – that the firm blends to produce the response it wants in the target market”.

(Kotler, 2007)

PRODUCTPRICEPLACE PROMOTION

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Product

A physical good, idea, person, or place that is capable of offering tangible and intangible attributes that consumers are willing to exchange money/value for

Variety of factors to consider – size, features, quality, branding, benefits, packaging and presentation, positioning

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The Product Life Cycle (PLC)

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The Product Life CyclePhase Characteristic

Introduction Newly introduced (awareness)

Low salesHigh costsPurchased by innovatorsLimited competition

GrowthBecoming more popular with early adopters

Rising salesCosts decliningGrowing competitorsIncreasing market share

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The Product Life Cycle (PLC)

Phase Characteristics

MaturityApproaching its peak sales and profits (middle majority)

Intense competitionMaximising profitsMaintain market shareCost per customer is low

DeclinePast its best (purchased by laggards)

Sales declineProfits declineCompetition is reducedReplacement is an option

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BrandingThe marketing practice of creating a name, symbol or design that identifies and differentiates a product from others products

Distinctiveness

Memorability

Relevance

Flexibility

Benefits• Aids product identification• Communicates benfits/risks• Creates interest• Creates loyalty• Defends against competition• Helps positioning• Allows premium pricing• Increases power over

retailers• Transfers to successor

product

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Developing New Products

Solomon (2013) suggests a success rate for new product ideas of 3% approx.Why?

Over estimating the market size

Poor Positioning

Poor Pricing

Heavy Competition

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The New Product Development Process

1 Idea Generation Seek new ideas to help achieve objectives

2 Screen Ideas Evaluate and shortlist

3 Concept Testing Potential buyer responses

4 Business Analysis Sales, costs profit potential

5 ProductDevelopment

Technical and financial feasibility and prototype

6 Test Marketing Launch in a chosen area representative of the wider market

7 Commercialisation Full‐ scale manufacturing and selling

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The amount of money charged for a product or service. What can realistically be charged?What are customers willing to pay?

Gaining revenue or gaining market share?

Considerations- Fixed and variable costs, competitionPrice controls, willingness to pay

Price

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• The mechanism through which goods/services are exchanged between the manufacturer/service provider and the buyer/consumer• Direct channels – no intermediaries• Indirect channels – numerous intermediaries

• Distribution Strategies • Intensive -FMCGs• Selective -Household appliances• Exclusive –Luxury goods

Place (distribution)

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• The process of communicating with customers• Tries to influence the perceptions, understanding and actions of

the target audience

• The marketing communications mix• Advertising• Sales Promotion• Direct Marketing and Personal selling• Publicity/Public Relations• Selling and Sales Management

Promotion

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Promotion

Advertising Paid, non‐ personal communication, informs

Sales Promotions Short‐term incentives, encourage purchase/sale

Publicity and Public Relations Publicity = Not paid, non‐ personalPR = management of communication to create and maintain a positive  image

Selling and Sales Management Planning, organising, controlling, and evaluating sales force activities

Direct Marketing/Personal Selling

Face‐to‐face

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• The fastest growing sector in Ireland

• Technology• Need or product support• Globalisation

• Tax benefits• Cost effectiveness• Emerging markets• Wider margins

• Competitive factors• Multi lateral trade• New innovations

Services Marketing

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• The marketing mix is extended for services

Services Marketing – The 7 Ps

People Interaction between peopleImportant influencer of service quality

Process Procedures by which the service is acquiredDirect involvement of consumers in service production

Physical Evidence  Environment in which the service is offered and consumedInfluences consumer  understanding, perceptions, enjoymentExperiential

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• Intangibility – offer tangible evidence e.g. brochures, tickets, symbols, prices

• Inseparability – “educate” the consumer about their role in service production

• Perishability – Synchronize supply and demand

• Heterogeneity/Variability – standardise procedures, recruitment requirements

Characteristics of Services

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High versus Low Involvement Purchases

High Involvement Low Involvement

Risk for the consumer  is highe.g. expensive purchases  such as houses or cars

Consumer will actively search for information about the product/service

Risk for consumer is relatively lowe.g. inexpensive, disposable s such as FMCGs

Consumer is less likely to actively search for information relating to the product/service

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• Strategic in nature and works in an integrated fashion with marketing, production, finance, and HRM

• Determining sales objectives• Selection, recruitment, training• Motivating the sales force• Design and Planning• Evaluation and control of sales force• Forecasting and budgeting• Organising the sales force size and territories

The Nature and Role of Sales Management

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Functions of Sales ManagementPlanning In the context of overall organisational strategy 

Organising To match customer requirements, personnel required, workloads

Recruitment Key traits?

Training What needs to be taught?

Motivation Financial rewards, recognition, work/life balance

Control Accurate and timely information, compare actual performance with pre‐set standards

Monitoring Effective communication, feedback, allow for  quick decisions where changes might be required

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• “Make it simple. Make it memorable. Make it inviting to look at. Make it fun to read.” (Leo Burnett, Pioneering American Advertising Executive

• Success requires the ability to communicate benefits in innovative, creative and very appealing ways.

• Advertising• Sales Promotions• Direct Marketing• Sales and Sales Management • Publicity and Public Relations

The Role of Marketing Communications

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• Any paid form of non-personal communication• Key purpose is to inform and persuade• Choice of media depends on

• Cost• Target market• Reach• Flexibility• Advertising objectives• Engagement with audience• Geographic coverage• Public perception• Type of product/service

Advertising

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Advertising

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Advertising

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Advertising

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Advertising

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Advertising

Newspapers

Benefits Limitations• Priority for local ads• Excellent location for coupons

and special response features• High credibility• Strong audience interest• Longer copy/message possible• Flexibility

• Major clutter• Short life-span• Poor colour quality• Limited audience

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Advertising

Internet

Benefits Limitations• High reach• Very targeted• Easier to evaluate• Potentially lower cost• Link to corporate website• interactive

• Clutter• Excludes people who are not

connected• May be hard to target older

audiences• Intrusive• Security concerns

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The Full Service Advertising Agency

Account Management/ClientService

Liaison between agency and client

Creative Department Ideas for communicating the message

Media Department Co-ordinate different media ,media buying and scheduling

Planning Department Analyse market information to assist creative department

Traffic and Production Department

Art work and film scripts for the ads

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• Initiatives by the marketer to further sales of a product or service.

• Sampling, door-drops, direct mail, on-pack sampling, loyalty cards, buy one get one free, premiums, sponsored events, coupons, competitions, cash refunds, bonus packs

Sales Promotions

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• Extra incentive to purchase• Appeal to price sensitive consumers• Can measure their impact• Short term pushing

Benefits of Sales Promotions

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• Become too reliant on short term promotion• Often don’t establish or reinforce the brand• Consumer might become too reliant on promotions

Limitations of Sales Promotions

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• Looking after your reputation

• Planned and sustained effort to maintain goodwill and mutual understanding

Publicity/Public Relations

Benefits Limitations

• Credibility of publicity

• Low cost• News value

generates Word of Mouth discussion

• Lack of Control• Can be negative as

well as positive

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The publics with which a company may have to communicate

Competitors

Media

Financial Institutions

Local community

Pressure groups

Government

Distributors

Suppliers

Customers

Prospective customers

Lapsed customers

General public

Investors

Shareholder

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• Selling = making the sales

• Sales Management = more complex• Customer retention• Database/knowledge management• Customer relationship management

Selling and Sales Management

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• The promotion and sale of goods through direct contact with prospective customers

• Message delivered direct to the consumer at the place where the decision will be made

• Suits organisation who find traditional advertising expensive and partially counterproductive

• Televised infomercials• Door-to-door selling• Newspaper inserts• Emails, Telemarketing, mobile marketing • Catalogue marketing, coupons, social media

Direct Marketing

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• Carried out online• Social Media Marketing• Search Engine Optimisation• Search Engine Marketing• Content Marketing• Email Marketing• SMS Marketing• Video marketing/video infographics

Digital Marketing

You are the newly appointed marketing executive in a group with a chain of hotels throughout the country. You have been requested to prepare a briefing paper on service marketing.

You are required to

(a) Explain the FOUR features which typically distinguish services from products. 10 Marks

(b) Briefly explain FIVE of the seven factors which make up the extended marketing mix for services. In developing your explanation you should outline how each factor might be applied in the hotel services sector. 15 Marks

MAY 2015

(a) Describe what is meant by the term “Market Segmentation”. Explain FOUR categories of variables which are commonly used to segment markets, giving examples in support of your answer in each case. 10 Marks

(b) Explain how the market for outward bound foreign holidays might be segmented, highlighting THREE different types of holiday maker that may be identified and explain how this information might be used in tailoring marketing effort.

10 Marks

(c) “Product Packaging has a purely functional protective role”. Do you agree? Give reasons in support of your answer. 5 Marks Total 25 Marks

MAY 2015

(a) List any THREE (3) of the FIVE (5) main stages through which marketing has evolved. 5 Marks

(b) ‘Ansoff’s growth matrix assists organisations in analysing alternative growth strategies for their products and markets’. Using the matrix as an illustration, outline any TWO (2) of the FOUR (4) strategies available to an organisation. 12 Marks

(c) Write a short explanatory note on any TWO (2) of the following; 8 Marks

i. Social Media marketing. ii. Search Engine Optimization (SEO): iii. Search Engine Marketing (SEM): iv. Content marketing. v. Email marketing. vi. SMS marketing. vii. Video marketing/video infographics. Total 25 Marks

MAY 2016,

(a) Describe any TWO (2) of the following key marketing activities in a business;

‘Market Segmentation’, ‘Market Targeting’ andMarket positioning’. (16 Marks)

MAY 2017

(a) Explain what you understand by the concept of Marketing .

(9 Marks)

MAY 2018

(b) Describe in detail, the typical Product Life Cycle of a product. Use an illustrative diagram to support your answer. (9 Marks)

MAY 2018

(a) OutlineFOUR (4) stages of the product life cycle. 8 Marks

(b) You are required to explain the additional THREE (3) ‘P’ elements that make up the extended marketing mix for services. Use examples to support your explanation where appropriate. 17 MarksTotal: 25 Marks

MAY 2019

DisclaimerCare has been taken to ensure that all data and information in Academy lectures is factual and that numerical values are accurate. To the best of our knowledge, all information in the Academy lectures is accurate at the time of publication. Accounting Technicians Ireland and its lecturers assume no responsibility for errors or misinterpretation of the information contained in these lectures or in its use.