Marketing is the process of identifying, anticipating, and satisfying customer needs profitably. It involves the promotion and distribution of products and services to the right people at the right time.
17.2 The Role of Marketing
Marketing plays several key roles in business:
Market Research: Gathering data about customer needs and preferences.
Product Development: Developing products that meet market demands.
Branding: Building a strong identity for the business and its products.
Promotion: Communicating with customers to encourage sales.
17.3 The Marketing Mix (4 Ps)
The marketing mix consists of four key elements:
Product: The goods or services offered to customers.
Price: The amount customers pay for the product.
Promotion: Methods used to communicate with customers, such as advertising and sales promotions.
Place: The channels used to get the product to customers, including physical stores or online platforms.
17.4 Market Orientation vs. Product Orientation
Market Orientation: Focusing on customer needs and desires when developing products.
Product Orientation: Focusing on the development of the product itself, assuming that customers will want what is produced.
Chapter 18 : Market Research
18.1 Purpose of Market Research
Market research involves gathering and analyzing data about consumer preferences, competitors, and market conditions. It helps businesses make informed decisions about product development, pricing, and marketing strategies.
18.2 Types of Market Research
Primary Research (Field Research):
Involves collecting original data directly from consumers or the market. Examples include surveys, interviews, and focus groups.
Advantages: Provides specific and relevant data for the business.
Disadvantages: Expensive and time-consuming to collect.
Secondary Research (Desk Research):
Involves gathering existing data from external sources such as reports, studies, and public records.
Advantages: Less expensive and faster to obtain.
Disadvantages: Data may be outdated or not entirely relevant to the business.
18.3 Sampling Methods
Random Sampling: Every individual in the target population has an equal chance of being selected.
Stratified Sampling: Dividing the population into subgroups and selecting a random sample from each group.
Quota Sampling: Selecting individuals based on specific characteristics to ensure the sample reflects the population’s demographics.
18.4 Market Segmentation
Market segmentation involves dividing the market into distinct groups of consumers who have different needs or characteristics. Segments can be based on factors like:
Demographics: Age, gender, income, etc.
Geographic location: Where customers live.
Psychographics: Lifestyle, values, interests.
Chapter 19 : The Marketing mix - Product and Price
19.1 Product
The product is a key element in the marketing mix. It refers to anything offered by a business to meet customer needs and wants. Products can be tangible goods (physical items) or intangible services.
Product Decisions:
Product Design and Features: These need to be carefully considered to match the needs of the target market. A well-designed product can differentiate itself from competitors.
Product Quality: Quality can affect customer satisfaction and brand loyalty. Businesses need to decide on the quality levels they wish to offer.
Branding: A brand is more than just a product name; it creates an identity that helps to differentiate a product from others. Strong branding leads to customer loyalty.
Product Range (Product Portfolio): Companies may offer a range of products. This can help to target different market segments and spread risk across a portfolio.
Product Life Cycle:
The product life cycle describes the stages a product goes through from its introduction to its withdrawal from the market. The stages are:
Introduction: The product is launched. Sales are typically low, and marketing costs are high.
Growth: Sales increase rapidly as the product gains market acceptance. Competitors may enter the market.
Maturity: Sales peak and stabilize. Profits are maximized, but competition is intense.
Decline: Sales fall as the market becomes saturated, or customer preferences change.
Product Extension Strategies: To prevent a product from declining, businesses use strategies like product modifications, price reductions, new markets, or increased promotion.
Product Development:
Developing new products is essential for maintaining competitiveness and growth. Businesses must engage in:
Research and Development (R&D): Innovating new products to meet changing customer preferences.
Test Marketing: Releasing a product on a limited scale to assess customer reactions before a full launch.
19.2 Price
Pricing is one of the most important factors that affect sales revenue and customer perception. It must reflect the value customers place on the product, competition, and production costs.
Pricing Strategies:
Cost-Plus Pricing: Adding a fixed percentage to the production cost of a product to determine its price. This ensures that all costs are covered, plus a profit margin.
Penetration Pricing: Setting a low initial price to gain market share quickly. Once the product becomes established, the price may be increased.
Price Skimming: Charging a high price when a product is first introduced to take advantage of consumers willing to pay more for new innovations. Prices are lowered over time as competition enters the market.
Competitive Pricing: Setting prices based on what competitors are charging. Businesses may set prices lower, at the same level, or slightly higher, depending on their strategy.
Psychological Pricing: Setting prices that make the product seem more attractive (e.g., $9.99 instead of $10).
Factors Influencing Pricing:
Costs: A business must cover production costs to ensure profitability.
Market Conditions: The level of competition and demand in the market can influence price decisions.
Customer Perception: If a product is seen as high quality, businesses can charge premium prices.
Elasticity of Demand: If demand is elastic, small changes in price can lead to large changes in demand.
Chapter 20 : The Marketing mix - Promotion and Place
20.1 Promotion
Promotion is the process of communicating with customers and encouraging them to purchase a product or service. It creates awareness, stimulates interest, and builds loyalty.
Types of Promotion:
Advertising: Paid communication through mass media such as television, radio, social media, and print. It can be persuasive or informative.
Persuasive Advertising: Aims to convince customers to choose a particular brand over competitors.
Informative Advertising: Provides factual information about the product (e.g., new features or benefits).
Public Relations (PR): Managing the public image of a business through media relations, sponsorships, and corporate social responsibility (CSR) activities.
Personal Selling: Direct interaction between a sales representative and a potential buyer. It is common in B2B transactions and for complex or high-value products.
Direct Marketing: Communicating directly with customers through methods like emails, catalogs, and telemarketing.
Promotional Objectives:
Increase Brand Awareness: Making potential customers aware of the product’s existence.
Encourage Brand Loyalty: Retaining existing customers through loyalty programs and consistent quality.
Boost Sales: Stimulating immediate purchases through sales promotions.
Promotional Mix:
A business must decide on the right mix of promotional methods based on its target audience, product, and budget. For example, a luxury brand may focus more on PR and exclusive events, while a new product might rely on advertising and sales promotions.
20.2 Place (Distribution)
Place refers to how the product is distributed and made available to consumers. It involves selecting the most appropriate distribution channels to ensure that products reach customers in a timely and cost-effective manner.
Distribution Channels:
Direct Distribution: Selling directly to consumers, bypassing intermediaries (e.g., through company websites or branded stores).
Indirect Distribution: Involves the use of intermediaries, such as wholesalers, retailers, or agents.
Wholesalers: Buy products in bulk from manufacturers and sell them to retailers.
Retailers: Sell products directly to consumers (e.g., supermarkets, department stores, online platforms).
Factors Affecting Distribution Decisions:
Nature of the Product: Perishable goods often require short distribution channels, while non-perishable items can afford longer ones.
Target Market: Products aimed at mass markets may require extensive distribution networks, while niche products might be sold directly to customers.
Cost of Distribution: Businesses must consider the costs associated with each channel, including storage and transportation.
E-commerce and Digital Distribution:
The rise of the internet has revolutionized distribution by enabling businesses to sell directly to customers online, reducing the need for physical stores and intermediaries.