MNB102-E

INTRODUCTION TO BUSINESS MANAGEMENT

Facilitator: Neels Bothma

Welcome to the Marketing Section of todays First Years lectures.

Structure of the class

1. Introduction to marketing 2. Marketing research 3. Customer behaviour 4. Market segmentation 5. The marketing mix 6. The marketing strategy 7. Public relations

The Evolution of Marketing as we know it

Operation/Product orientation Sales orientation Marketing oriented Consumer oriented Strategic approach Relationship marketing

Starting Point
Factory

Marketing & Sales Concepts Contrasted

Focus
Existing Products

Means
Selling and Promoting

Ends
Profits through Volume

The Selling Concept

Market

Customer Needs

Integrated Marketing

Profits through Satisfaction

The Marketing Concept

What is Marketing?
Marketing consists of management tasks and decisions directed at successfully meeting opportunities and threats in a dynamic environment, by effectively developing and transferring a need-satisfying market offering to consumers in such a way that the objectives of the business, the consumer and society will be achieved.

The Marketing Process

(see Fig 13.1)
Simply: Marketing management creates an offering (product, price marketing communication, distribution) The target market sacrifices money The target market consumes the offering Marketing management gets feedback through research This all happens in a marketing environment Everybody satisfies their objectives (maximise profitability in the long term, total need satisfaction)

Marketing Mix- The Four Ps

Product
Goods-and-service combination that a company offers a target market

Price
Amount of money that consumers have to pay to obtain the product

Target Customers Intended Positioning

Activities that persuade target customers to buy the product

Company activities that make the product available

Promotion

Place

The Importance of Information

Marketing Environment

Customer Needs

Why Information Is Needed

Strategic Planning

Competition

Marketing Research
Why? Know the research process Market forecasting

Sales forecasting Profit forecasting

1. Define the problem to be investigated 2. Formulate hypotheses 3. Investigate hypotheses 4. Compile a questionnaire 5. Test the questionnaire 6. Select sample 7. Train fieldworkers and do fieldwork 8. Analyse data 9. Interpret the results 10. Compile the report 11. Management studies report 12. Management implements findings

Consumer Buying Behavior

Consumer Buying Behavior refers to the buying behavior patterns of decision making units (individuals & households) directly involved in the purchase and use of products, including the decisionmaking processes preceding and determining these behaviour patterns.

Study consumer behavior to answer:

How do consumers respond to marketing efforts the company might use, why do they behave the way they do?

Customer behaviour
INDIVIDUAL FACTORS Motivation Attitude Perception Learning ability Personality Lifestyle GROUP FACTORS

Family Reference group Opinion leaders Cultural group

Awareness of need Gathering information Evaluation Purchase action Post purchase evaluation

Factors Affecting Consumer Behavior: Group

Groups
Membership Reference Group

Family Husband, wife, kids Influencer, buyer, user

Group Factors

Cultural group

Factors Affecting Consumer Behavior: Individual

Motivation

Beliefs and Attitudes

Individual Factors

Perception

Learning

Personality And lifestyle

Maslows Hierarchy of Needs

Self Actualization
(Self-development)

Esteem Needs (self-esteem, status)

Social Needs
(sense of belonging, love)

Safety Needs
(security, protection)

Physiological Needs
(hunger, thirst)

Consumer Decision Process

Awareness of need or problem Information Search Evaluation of Alternatives Purchase Decision Post-purchase Behavior

Market segmentation
What is a market? Different types of markets: consumers industrial Approaches to the resellers market see fig 13.3 government Requirements for successful segmentation: Identifiable and measurable Substantial Accessible Responsive

Customer Markets
International Markets Consumer Markets

Company
Government Markets Reseller Markets Business Markets

Requirements for Effective Segmentation

Measurable Accessible
Size, purchasing power, profiles of segments can be measured. Segments must be effectively reached and served.

Substantial Differential
Actionable

Segments must be large or profitable enough to serve.

Segments must respond differently to different marketing mix elements & actions. Must be able to attract and serve the segments.

Bases for segmentation

Demographic Who they are Geographic Where they are Psychographic What they think they are Behavioural How do they behave
All of the above determine the consumer profile draw a picture

Targeting and positioning

Bases for Segmenting Consumer Markets

Geographic
Nations, states, regions or cities, density

Demographic
Age, gender, family size and life cycle, or income

Psychographic
Social class, lifestyle, or personality

Behavioral
Occasions, benefits, uses, or responses

Market Coverage Strategies

Company Marketing Mix
A. MARKET AGGREGATION

Market

Company Marketing Mix 1 Company Marketing Mix 2 Company Marketing Mix 3

B. MULTI-SEGMENT APPROACH

Segment 1 Segment 2 Segment 3

Company Marketing Mix

Segment 1 Segment 2

Segment 3
C. SINGLE SEGMENT APPROACH

Positioning for Competitive Advantage

Products Position - the place the product occupies in consumers minds relative to competing products; i.e. Castle used to position on the great South African beer.
Then: the friendship brew Then: SAs finest

Now? Satisfies a South African Thirst

Marketers must:

Plan positions to give products the greatest advantage Develop marketing mixes to create planned positions

Steps in Segmentation, Targeting, and Positioning

6. Develop Marketing Mix for Each Target Segment

5. Develop Positioning for Each Target Segment

4. Select Target Segment(s)

Market Positioning Market Targeting

3. Develop Measures of Segment Attractiveness

2. Develop Profiles of Resulting Segments

1. Identify Bases for Segmenting the Market

Market Segmentation

Marketing Mix- The Four Ps

Product
Goods-and-service combination that a company offers a target market

Price
Amount of money that consumers have to pay to obtain the product

Target Customers Intended Positioning

Activities that persuade target customers to buy the product

Company activities that make the product available

Promotion

Place

The marketing instruments (mix)

1. Product

Product concept Product classification Brand decisions Packaging decisions Differentiation Obsolescence Multi- product decisions New product decisions

The marketing instruments Product (cont.)

New Product Development Process Develop new ideas Screen ideas Eliminate non viable ideas Develop product Develop strategy Test marketing Commercialisation

Classification of Product
Convenience Products
> Buy frequently & immediately > Low priced > Many purchase locations > Includes: Staple goods Impulse goods Emergency goods

Shopping Products
> Buy less frequently > Gather product information > Fewer purchase locations > Compare for: Suitability & Quality Price & Style

Specialty Products
> Special purchase efforts > Unique characteristics > Brand identification > Few purchase locations

Unsought Products
> New innovations > Products consumers dont want to think about > Require much advertising & personal selling

The marketing instruments (mix)

2. Price

Types of prices

Price adaptations

cost price market price target price final price

skimming penetration market price leader price odd price bait price

The marketing instruments (mix)

3. Distribution
Type

of channel Channel leadership Market coverage Physical distribution

Refer to box on page 326

Consumer Marketing Channels & Levels

Channel Level - A Layer of Intermediaries that Perform Some Work in Bringing the Product and its Ownership Closer to the Buyer.
Channel 1 M Channel 2 M Channel 3 M

Direct
C

Indirect
R

Channel 4
M W

Physical distribution
Costs
Minimize Costs of Attaining Logistics Objectives

Order Processing
Submitted Processed Shipped

Physical distribution

Transportation
Water, Truck, Rail, Pipeline & Air

Functions

Warehousing
Storage Distribution

Inventory
When to order How much to order Just-in-time

The marketing instruments (mix)

4. Marketing communication

to inform, persuade and remind advertising personal selling sales promotion publicity

The Marketing Communications Mix

Advertising
Any Paid Form of Nonpersonal Presentation by an Identified Sponsor.

Personal Selling

Personal Presentations by a Firms Sales Force.

Sales Promotion

Short-term Incentives to Encourage Sales. Building Good Relations with Various Publics by Obtaining Favorable Unpaid Publicity. Direct Communications With Individuals to Obtain an Immediate Response.

Public Relations

Direct Marketing

The Integrated Marketing Strategy

The marketing concept: Profitability Consumer orientation Social responsibility Organisational integration Phases in the product life cycle: Introductory Marketing warfare Growth Attack Maturity Defense Decline

Product Life Cycle

Sales and Profits Over the Products Life From Introduction to Decline
Sales and Profits ($) Sales

Profits

Time
Product Development Losses/ Investments ($) Introduction Growth Maturity Decline

Marketing Planning and Control

Planning
o Strategic planning o Functional planning

Control
o o o o Set objectives Measure performance Evaluate performance Take corrective action

Public Relations
A deliberate, planned and sustained process of communication between a business and its internal and external publics. Its purpose is obtaining, maintaining and/or improving good relations and understanding.

Developed from: Manipulation Information Mutual influence

What is Public Relations?

Building good relations with the companys various publics by obtaining favorable publicity, building up a good corporate image and handling or heading off unfavorable rumors, stories and events. Major functions are:
Press Relations
Product Publicity Public Affairs Lobbying

Investor Relations
Development

Major Public Relations Tools

Web Site Public Service Activities

News

Corporate Identity Materials

Speeches

Audiovisual Materials

Special Events

Written Materials

Public Relations Management

1. Planning o Scanning the environment o Setting objectives 2. Organising oOrganisational structure oOutside consultants 3. Leading oEstablish corporate culture

4. Evaluation and control

Communication
Communication can be verbal and non-verbal
Communication process see fig 16.6
Basically: Sender encodes message which is transmitted to receiver via a medium. The receiver decodes the message and interprets it in some way. This all happens despite noise in the environment. Types of communication media: The spoken word The printed media Sight and sound Special events The Internet

Publicity
Methods of obtaining publicity:
Unique special events Unique communication messages News releases Sponsorships

Social responsibility and business ethics Areas of social responsibility:

Consumers Suppliers Competitors Employees Owners and shareholders The community

The end!
We encourage you to study further in this exciting field!