A market-focused, or customer-focused, organization first determines what its potential customers desire, and then builds the product or service. Marketing theory and practice is justified in the belief that customers use a product/service because they have a need, or because a product/service provides a perceived benefit.
"The right Product, at the right Place, at the right Time, and at the right Price"
Two major factors of marketing are the recruitment of new customers (acquisition) and the retention and expansion of relationships with existing customers (base management).
Once a marketer has converted the prospective buyer, base management marketing takes over. The process for base management shifts the marketer to building a relationship, nurturing the links, enhancing the benefits that sold the buyer in the first place, and improving the product/service continuously to protect the business from competitive encroachments.
Marketing methods are informed by many of the social sciences, particularly psychology, sociology, and economics. Anthropology is also a small, but growing, influence. Market research underpins these activities. Through advertising, it is also related to many of the creative arts.
For a marketing plan to be successful, the mix of the four "Ps" must reflect the wants and desires of the consumers in the target market. Trying to convince a market segment to buy something they don't want is extremely expensive and seldom successful. Marketers depend on marketing research, both formal and informal, to determine what consumers want and what they are willing to pay for it. Marketers hope that this process will give them a sustainable competitive advantage. Marketing management is the practical application of this process. The offer is also an important addition to the 4P's theory.
Within most organizations, the activities encompassed by the marketing function are led by a Vice President or Director of Marketing. A growing number of organizations, especially large US companies, have a Chief Marketing Officer position, reporting to the Chief Executive Officer.
The American Marketing Association (AMA) states, “Marketing is the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational objectives".
he original 4Ps concept idea was developed to help marketers manage the four most important aspect of marketing. With the Internet and the Web 2.0, marketers need to adapt a new perspective on these elements that is encompassing and strategic, not narrow and tactical. Author and consultant Idris Mootee came up with the concept of “New 4Ps” model in 2001 in his book High Intensity Marketing (SA Press 2001) to supplement the traditional marketing 4Ps. They are Personalization, Participation, Peer-to-Peer and Predictive Modeling. Today,these are the directions that cutting edge marketing is advancing.
The first “P” is the simple idea of “Personalization” which now takes on a whole new meaning. The author refers to customization of products and services through the use of the Internet. Early examples include Dell on-line and Amazon.com, but this concept is further extended with emerging social media and advanced algorithms. Emerging technologies will continue to push this idea forward.
The second “P” is the concept of “Participation”, it is to allow customer to participate in what the brand should stand for; what should be the product directions and even which ads to run. This concept is laying the foundation for disruptive change that we have yet to see the full impact with the degree of democratization brought about by this idea. By enabling each of us to create and publish our own stories, the power of deciding what we read; listen and watch has spread from a handful of media companies to anyone with a camera, a connection and a computer.
The third “P” is “Peer-to-Peer” which refers to customer networks and communities where advocacy happens. The historical problem with marketing is that it is "interruptive" in nature, trying to impose their brand on the customer. This is most apparent in TV advertising, which pushes out its own idea of what the brand is without engaging the customers. These "passive customer bases" will ultimately be replaced by the "active customer communities". Brand engagement happens within those conversations. P2P is now being referred as Social Computing and will likely to be the most disruptive force in the future of marketing.
The last “P” is “Predictive Modeling” which refers to neural network algorithms that are being successfully applied in marketing problems (both a regression as well as a classification problem).
Choice
- Consumer goods -- comprising convenience, select and speciality goods.
- Industrial goods -- used in the manufacturing process to produce other goods.
- Services -- usually personal.
Scope
- Breadth -- number of product lines in a range.
- Depth -- number of product items in a product line.
Steps in product design
- Design and development of product ideas.
- Selection of and sifting through product ideas.
- Design and testing of product concept.
- Analysis of profitability of product concept.
- Design and testing of physical product.
- Test marketing.
Requirements of good packaging
- Appropriately designed for target market
- Eye-catching
- Suitable to product
- Compliant with retailers' requirements
- Promotes image of enterprise
- Distinguishable from competitors' products
- Strong, convenient, well-designed
[edit] Forms of packaging
- Speciality packaging -- emphasises the elegant character of the product
- Packaging for double-use
- Combination packaging -- two or more products packaged in the same container
- Kaleidoscopic packaging -- packaging changes continually to reflect a series or particular theme
- Packaging for immediate consumption -- to be thrown away after use
- Packaging for resale -- packed, into appropriate quantities, for the retailer or wholesaler
[edit] Significance of a trademark
- Distinguishes one company's goods from those of another
- Serves as advertisement for quality
- Protects both consumers and manufacturers
- Used in displays and advertising campaigns
- Used to market new products
[edit] Requirements of a good trademark
- Reflects products' advantages
- Good, simple language
- Easily pronounced and remembered
- Distinct from names of other products
- Easily added to an existing range
- Easily registered for legal protection
[edit] Pricing
Pricing refers to the amount of money exchanged for a product. This value is determined by utility to the consumer in terms of money and/or sacrifice that he is prepared to give for it.
[edit] Objectives
- Definite sales volume
- Achieve profit
- Larger market share
- Maintain market share
- Eliminate competition
- Advantages of mass production
- Satisfactory return on capital
[edit] Factors influencing price-determination
- Production and distribution costs
- Substitute goods available
- Normal trade practices
- Fixed prices
- Reaction of distributors
- Reaction of consumers
- Nature of demand:
- Elastic
- Inelastic
- Form of market:
- Perfect competition
- Monopolistic competition
- Monopoly
- Oligopoly
[edit] Steps to determine price
- Determine market share to be captured
- Set up price strategy
- Estimate demand
- Evaluate competitors' reactions
[edit] Distribution
[edit] Channels
- Manufacturer to consumer (most direct)
- Manufacturer to wholesaler to retailer to consumer (traditional)
- Manufacturer to agent to wholesaler to retailer to consumer
[edit] Manufacturers
[edit] Reasons for direct selling methods
- Manufacturer wants to demonstrate goods.
- Wholesalers, retailers and agents not actively selling.
- Manufacturer unable to convince wholesalers or retailers to stock product.
- High profit margin added to goods by wholesalers and retailers.
- Middlemen unable to transport.
[edit] Reasons for indirect selling methods
- Manufacturer does not have the financial resources to distribute goods.
- Distribution channels already established.
- Manufacturer has no knowledge of efficient distribution.
- Manufacturer wishes to use capital for further production.
- Too many consumers in a large area; difficult to reach.
- Manufacturer does not have a wide assortment of goods to enable efficient marketing.
[edit] Wholesalers
[edit] Reasons for using wholesalers
- Bear risk of selling goods to retailer or consumer
- Storage space
- Decrease transport costs
- Grant credit to retailers
- Able to sell for the manufacturers
- Give advice to manufacturers
- Break down products into smaller quantities
[edit] Reasons for bypassing wholesalers
- Limited storage facilities
- Retailers' preferences
- Wholesaler cannot promote products successfully
- Development of wholesalers' own brands
- Desire for closer market contact
- Position of power
- Cost of wholesalers' services
- Price stabilisation
- Need for rapid distribution
[edit] Ways of bypassing wholesalers
- Sales offices or branches
- Mail orders
- Direct sales to retailers
- Travelling agents
[edit] Agents
- Commission agents work for anyone who needs their services. They do not acquire ownership of goods but receive del credere commission.
- Selling agents act on an extended contractual basis, selling all of the products of the manufacturer. They have full authority regarding price and terms of sale.
- Buying agents buy goods on behalf of producers and retailers. They have an expert knowledge of the purchasing function.
- Brokers specialise in the sale of one specific product. They receive a brokerage.
- Factory representatives represent more than one manufacturer. They operate within a specific area and sell related lines of goods but have limited authority regarding price and sales terms.
[edit] Marketing communications
[edit] Advertising
- Paid form of public presentation and expressive promotion of ideas
- Aimed at masses
- Manufacturer may determine what goes into advertisement
- Pervasive and impersonal medium
[edit] Functions and advantages of successful advertising
- Task of the salesman made easier
- Forces manufacturer to live up to conveyed image
- Protects and warns customers against false claims and inferior products
- Enables manufacturer to mass-produce product
- Continuous reminder
- Uninterrupted production a possibility
- Increases goodwill
- Raises standards of living (or perceptions thereof)
- Prices decrease with increased popularity
- Educates manufacturer and wholesaler about competitors' offerings as well as shortcomings in their own.
[edit] Objectives
- Maintain demand for well-known goods
- Introduce new and unknown goods
- Increase demand for well-known goods
[edit] Requirements of a good advertisement
- Attract attention
- Stimulate interest
- Create a desire
- Bring about action
[edit] Seven steps in an advertising campaign
- Market research
- Setting out aims
- Budgeting
- Choice of media
- Design and wording
- Coordination
- Test results
[edit] Unethical advertising
- False or deceptive claims
- Deceptive names
- Offering second-hand or rebuilt goods as new ones
- False statements about competitors
[edit] Personal sales
Oral presentation given by a salesman who approaches individuals or a group of potential customers:
- Live, interactive relationship
- Personal interest
- Attention and response
[edit] Sales promotion
Short-term incentives to encourage buying of products:
- Instant appeal
- Anxiety to sell
[edit] Publicity
- Stimulation of demand through press release giving a favourable report to a product
- Higher degree of credibility
- Effectively news
- Boosts enterprise's image
[edit] Beyond the 4 Ps
[edit] Resources, Relationships, Offerings and Business Models
Marketing in the past focused mainly on basic concepts like the 4 Ps, and primarily on the psychological and sociological aspects of marketing. Competitive advantage was created by directly appealing to the needs, wants and behaviors of customers, better than the competition. Successful marketing was based on who could create the better brand or the lowest price or the most hype. Marketing in the future will be based on a more strategic approach to competitive marketing success.[2] Marketers will consciously build and allocate resources, relationships, offerings and business models that other companies find hard to match. This does not mean the four P approach is dead, simply that it has been expanded upon.
[edit] Resources
Companies with a greater number of resources than their competitors will have an easier time competing in the marketplace. Resources include: financial (cash and cash reserves), physical (plant and equipment), human (knowledge and skill), legal (trademarks and patents), organizational (structure, competencies, policies), and informational (knowledge of consumers and competitors). Small companies usually have a harder time competing with larger corporations because of their disadvantage in resource allocation.
[edit] Relationships
Success in business, as in life, is based on the relationships you have with people. Marketers must aggressively build relationships with consumers, customers, distributors, partners and even competitors if they want to have success in today's competitive marketplace. There are four type of relationships (1)win-win (2)win-lose (3)lose-lose (4)lose-win.(customer-vendor)
[edit] Business Models
The concept of product vs. product in competitive marketing is dying. It's slowly becoming business model vs. business model. Business model innovation can make the competition's product superiority irrelevant. Business model innovation allows a marketer to change the game instead of competing on a level playing field.
[edit] Customer focus
Many companies today have a customer focus (or customer orientation). This implies that the company focuses its activities and products on consumer demands. Generally there are three ways of doing this: the customer-driven approach, the sense of identifying market changes and the product innovation approach.
In the consumer-driven approach, consumer wants are the drivers of all strategic marketing decisions. No strategy is pursued until it passes the test of consumer research. Every aspect of a market offering, including the nature of the product itself, is driven by the needs of potential consumers. The starting point is always the consumer. The rationale for this approach is that there is no point spending R&D funds developing products that people will not buy. History attests to many products that were commercial failures in spite of being technological breakthroughs.[3]
A formal approach to this customer-focused marketing is known as SIVA[4] (Solution, Information, Value, Access). This system is basically the four Ps renamed and reworded to provide a customer focus.
The SIVA Model provides a demand/customer centric version alternative to the well-known 4Ps supply side model (product, price, place, promotion) of marketing management.
Product -> Solution
Promotion -> Information
Price -> Value
The four elements of the SIVA model are:
- Solution: How appropriate is the solution to the customers problem/need
- Information: Does the customer know about the solution, and if so how, who from, do they know enough to let them make a buying decision
- Value: Does the customer know the value of the transaction, what it will cost, what are the benefits, what might they have to sacrifice, what will be their reward?
- Access: Where can the customer find the solution. How easily/locally/remotely can they buy it and take delivery.
This model was proposed by Chekitan Dev and Don Schultz in the Marketing Management Journal of the American Marketing Association, and presented by them in Market Leader - the journal of the Marketing Society in the UK.
The model focuses heavily on the customer and how they view the transaction.
