Presentation on theme: "PRINCIPLES OF MARKETING BY DR GERALD MUNYORO"— Presentation transcript:
1 PRINCIPLES OF MARKETING BY DR GERALD MUNYORO CHINHOYI UNIVERSITY OF TECHNOLOGY SCHOOL OF BUSINESS SCIENCES AND MANAGEMENT DEPARTMENT OF INTERNATIONAL MARKETINGPRINCIPLES OF MARKETINGBYDR GERALD MUNYORO
2 COURSE OUTLINE Introduction The significance of information and research in marketingConsumer behaviourMarket segmentationProductPricePlacePromotion
3 Definitions of Marketing ‘Marketing is the management process that identifies, anticipates and satisfies customer requirements profitably’The Chartered Institute of MarketingMarketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at largeAmerican Marketing Association
4 Definitions of Marketing ‘Marketing is a social and managerial process by which individuals and groups obtain what they want and need through creating, offering and exchanging products of value with others’ Kotler et al (2010)‘The right product, in the right place, at the right time, and at the right price’Adcock et al (2001)
5 The Marketing concept Choosing and targeting appropriate customers Positioning your offeringInteracting with those customersControlling the marketing effortContinuity of performance
6 The Marketing conceptCustomer focus, profits, and integration of organizational efforts.Customer orientationSatisfying its customers at a profit…Determining the needs and wants of target markets…Discovering the wants of a target audience and then creating the goods and services to satisfy them
7 The Marketing conceptAccording to Levitt (1960), "the organization must learn to think of itself not as producing goods or services but as buying customers, as doing the things that will make people want to do business with it."Since its publication, corporate leaders have moved from product-orientation toward market-orientation.Firms overemphasize the satisfaction of customer wants and needs and as a result ignore competition.
8 The Marketing concept Profitable Offensive (rather than defensive) IntegratedStrategic (is future orientated)Effective (gets results)Davidson (1972)
9 MARKETING MANAGEMENT PHILOSOPHIES The role that marketing plays within a company varies according to the overall strategy and philosophy of each firm.There are five alternative concepts under which organizations conduct their marketing activities:Production conceptProduct conceptSelling conceptMarketing conceptSocietal marketing concepts
11 Company Orientations Towards the Marketplace Consumers prefer products that arewidely available and inexpensiveProduction ConceptConsumers favor products thatoffer the most quality, performance,or innovative featuresProduct ConceptConsumers will buy products only ifthe company aggressivelypromotes/sells these productsSelling ConceptFocuses on needs/ wants of targetmarkets & delivering valuebetter than competitorsMarketing Concept
12 Marketing ConceptThe marketing management philosophy that holds that achieving organizational goals depends on determining the needs and wants of target markets and delivering the desired satisfactions more effectively and efficiently than competitors do.
13 Marketing ConceptThe key to achieving its organizational goals consists of the company being more effective than competitors in creating, delivering, and communicating superior customer value to its chosen target markets.Slogans: 麥當勞都是為您, 以客為尊, 顧客永遠是對的, We do it all for you (Toyota).Four pillars: target market, customer needs, integrated marketing and profitability.
14 Societal Marketing Concept The idea that the organization should determine the needs, wants, and interests of target markets and deliver the desired satisfactions more effectively and efficiently than competitors in a way that maintains or improves the consumer’s and society’s well – being. Company’s negative effects on societyConflict between consumer wants and long-term social welfareMarketing managers should be concerned with social responsibilityCompany’s task is to determine needs and wants of target markets & to satisfy them more effectively and efficiently than competitors --in a way that preserves or enhances the consumer’s and society’s well-being.
16 Production ConceptThe philosophy that consumers will favour products that are available and highly affordable and that management should therefore focus on improving production and distribution efficiency.Consumers will favor those products that are widely available and low in cost.Managers concentrate on achieving high production efficiency and wide distribution.
17 Production ConceptConsumers will prefer products that are widely available and inexpensive.Focus: achieving high production efficiency, low costs, and mass distribution.It is useful when (1) the demand for a product exceeds the supply; (2) the product’s cost is too high.Examples: Standard Raw Materials and Components, CD, LCD.
18 Product ConceptThe philosophy that consumers will favour products that offer the most quality, performance, and innovative features. Consumers will favor those products that offer the most quality, performance or innovative features.Managers in product-oriented organizations concentrate on making superior products and improving them over time.The assumption ğ the customers will admire well-made products and can evaluate product quality and performanceThis concept may lead to marketing myopia
19 Product ConceptConsumers will favor those products that offer the most quality, performance, or innovative features.Focus: making superior products and improving them over time.Examples: Digital Camera, CPU.Better Mousetrap FallacyMarketing Myopia. (Theodoes Levitt, 1965)
20 Selling ConceptThe idea that consumers will not buy enough of the organization’s products unless the organization undertakes a large – scale selling and promotion effort. Agressive selling and promotionAssumptions are;Consumers must be convinced of buying company productsCompany is powerful in generating effective selling and promotion to stimulate more buyingThis concept is mostly used by firms which have overcapacity.The aim is “to sell what they make” rather than “make what the market wants.”Short-term profits are more important (customer dissatisfaction may occur)
21 Selling ConceptConsumers and businesses, if left alone, will ordinarily not buy enough of organization’s products.Focus: undertake an aggressive selling and promotion effort.Examples: unsought goods: encyclopedias, funeral plots, foundations.
22 Marketing management process Analysis/Audit - where are we now?Objectives - where do we want to be?Strategies - which way is best?Tactics - how do we get there?(Implementation - Getting there!)Control - Ensuring arrival
23 Marketing planning Systematic futuristic thinking by management better co-ordination of a company’s effortsdevelopment of performance standards for controlsharpening of objectives and policiesbetter prepare for sudden developments
24 Building relationships with consumers Firms that embrace the marketing concept seek ways to build a long-term relationship with each customer. This is an important idea. Even the most innovative firm faces competition sooner or later. And trying to get new customers by taking them away from a competitor is usually more costly than retaining current customers by really satisfying their needs. Satisfied customers buy again and again. This makes their buying job easier, and it also increases the selling firm’s profits. Building mutually beneficial relationships with customers requires that everyone in an organization work together to provide customer value before and after each purchase. If there is a problem with a customer’s bill, the accounting people can’t just leave it to the salesperson to straighten it out or, even worse, act like it’s “the customer’s problem.” Rather, it’s the firm’s problem.
25 Marketing’s role in non profit organisations The marketing concept is as important for nonprofit organizations as it is for business firms. However, prior to 1970 few people in nonprofits paid attention to the role of marketing. Now marketing is widely recognized as applicable to all sorts of public and private nonprofit organizations Ñranging from government agencies, health care organizations, educational institutions, and religious groups to charities, political parties, and fine arts organizations. Some nonprofit organizations operate just like a business. For example, there may be no practical difference between thegift shop at a museum and a for-profit shop located across the street. On the other hand, some nonprofits differ from business firms in a variety of ways. As with any business firm, a nonprofit organization needs resources and support to survive and achieve its objectives. Yet support often does not come directly from those who receive the benefits the organization produces.
26 Marketing ResearchMarketing research is the systematic gathering, recording and analyzing of data about problems relating to the marketing of goods and services.A systematic inquiry whose objective is to provide information to solve managerial problems.Marketing research is the function that links the consumer, customer, and public to the marketer through information--information used to identify and define marketing opportunities and problems; generate, refine, and evaluate marketing actions; monitor marketing performance; and improve understanding of marketing as a process. Marketing research specifies the information required to address these issues, designs the method for collecting information, manages and implements the data collection process, analyzes the results, and communicates the findings and their implications.American Marketing Association
27 Marketing ResearchMarket research will give you the data you need to identify and reach your target market at a price customers are willing to pay.Research provides you with the knowledge and skills needed for the fast-paced decision-making environment.Applied ResearchEmphasis on solving practical (specific) problemsIt could be exploring opportunities alsoRectifying an inventory system that is resulting into lost salesOpportunity to increase stockholder wealth by acquiring another firmPure Research/Basic ResearchEmphasis on problem solving but of a general nature (not specific)Effect of coupon as against rebate to stimulate demand
28 Consumer behaviourThose activities directly involved in obtaining , consuming and disposing of products and services, including the decision processes that precede and follow these actions‘You cannot take the consumer for granted any more’Therefore a sound understanding of consumer behaviour is essential for the long run success of any marketing programLogical PositivismUnderstanding and predicting consumer behaviourCause and effect relationships that govern persuasion and/or educationPost Modern – to understand consumption behaviour without any attempt to influence it
29 Consumer behaviour“MEET THE NEW CONSUMER and smile when you do because she is your boss. It may not be the person you thought you knew. Instead of choosing from what you have to offer, she tells you what she wants. You figure it out how to give it to her.” -Fortune EditorA new product must satisfy consumer needs, not the needs and expectations of managementUnderstanding and adapting to consumer motivation and behaviour is not an option – it becomes a necessity for competitive survival
30 Consumer behaviourConsumer sovereignty presents a formidable challenge but skilful marketing can affect both motivation and behaviour if the product or service offered is designed to meet consumer needs and expectations.A sales success occurs because demand either exists already or is latent and awaiting activation by the right marketing offering.
31 Consumer behaviour Dominant forces shaping Consumer Research Factors that move an economy from Production-driven to Market-drivenLevel of sophistication with which human behaviour is understood in psychology and other behavioural sciences
32 Consumer behaviour Motivational Research It seeks to learn what motivates people in making choices. The techniques are such as to delve into the conscious, subconscious and the unconscious.‘women don’t buy cosmetics, they buy hope.’‘women bake cakes out of the unconscious desire to give birth’
33 Consumer behaviourThe advice to footwear salesmen should be ‘Don’t sell shoes – sell lovely feet’Marketers must contend with small changing segments of highly selective buyers intent on receiving genuine value at the lowest priceAll managers must become astute analysts of Consumer motivation and BehaviourThree foundations for marketing decisionsExperienceIntuitionResearch
34 Consumer behaviour Enhancing Consumer Value-added Marketers have to constantly innovate after understanding their consumers to strip out costs permanently by focusing on what adds value for the customer and eliminating what doesn’t.Individualised MarketingA very personal form of marketing that recognises, acknowledges, appreciates and serves individuals who become or are known to the marketer.Data – based marketing; DMCustomized marketing
35 Consumer behaviourVariables involved in understanding consumer behaviourStimulus – ads, products, hungerpangsResponse – physical/mental reaction to the stimulusIntervening variables – mood, knowledge, attitude, values, situations, etc
37 Marketing Environment A company’s marketing environment consists of the actors and forces outside marketing that affect marketing management’s ability to develop and maintain successful relationships with its target customers. 1). Being successful means being able to adapt the marketing mix to trends and changes this environment. 2). Changes in the marketing environment are often quick and unpredictable. 3). The marketing environment offers both opportunities and threats. 4). The company must use its marketing research and marketing intelligence systems to monitor the changing environment. 5). Systematic environmental scanning helps marketers to revise and adapt marketing strategies to meet new challenges and opportunities in the marketplace.
38 Marketing Environment Includes:Micro environment: actors close to the company that affect its ability to serve its customers.Macro environment: larger societal forces that affect the microenvironment.Considered to be beyond the control of the organization.
39 Marketing Environment 1. Micro EnvironmentalThe microenvironment consists of five components.The first is the organization’s internal environment—its several departments and management levels—as it affects marketing management's decision making.The second component includes the marketing channel firms that cooperate to create value: the suppliers and marketing intermediaries (middlemen, physical distribution firms, marketing-service agencies, financial intermediaries).The third component consists of the five types of markets in which the organization can sell: the consumer, producer, reseller, government, and international markets.
40 Marketing Environment The fourth component consists of the competitors facing the organization.The fifth component consists of all the publics that have an actual or potential interest in or impact on the organization’s ability to achieve its objectives: financial, media, government, citizen action, and local, general, and internal publics.- So the microenvironment consists of six forces close to the company that affect its ability to serve its customers:a. The company itself (including departments).1). Top management is responsible for setting the company’s mission, objectives, broad strategies, and policies. 2). Marketing managers must make decisions within the parameters established by top management. 3). Marketing managers must also work closely with other company departments. Areas such as finance, R & D, purchasing, manufacturing, and accounting all produce better results when aligned by common objectives and goals. 4). All departments must “think consumer” if the firm is to be successful. The goal is to provide superior customer value and satisfaction..
41 Marketing Environment b. Suppliers.Suppliers are firms and individuals that provide the resources needed by the company and its competitors to produce goods and services. They are an important link in the company’s overall customer “value delivery system.”1). One consideration is to watch supply availability (such as supply shortages).2). Another point of concern is the monitoring of price trends of key inputs. Rising supply costs must be carefully monitored.
42 Marketing Environment c. Marketing channel firms (intermediaries).Marketing intermediaries are firms that help the company to promote, sell, and distribute its goods to final buyers.1). Resellersare distribution channel firms that help the company find customers or make sales to them.2). These include wholesalers and retailers who buy and resell merchandise.3). Resellers often perform important functions more cheaply than the company can perform itself. However, seeking and working with resellers is not easy because of the power that some demand and use.Physical distribution firmshelp the company to stock and move goods from their points of origin to their destinations. Examples would be warehouses (that store and protect goods before they move to the next destination).Marketing service agencies(such as marketing research firms, advertising agencies, media firms, etc.) help the company target and promote its products.Financial intermediaries(such as banks, credit companies, insurance companies, etc.) help finance transactions and insure against risks.
43 Marketing Environment d. Customer markets'. Competitors'. Publics.The company must study its customer markets closely since each market has its own special characteristics. These markets normally include:1). Consumer markets(individuals and households that buy goods and services for personal consumption).2). Business markets(buy goods and services for further processing or for use in their production process).3). Reseller markets(buy goods and services in order to resell them at a profit).4). Government markets(agencies that buy goods and services in order to produce public services or transfer them to those that need them).5). International markets(buyers of all types in foreign countries).
44 Marketing Environment e. Competitors.Every company faces a wide range of competitors. A company must secure a strategic advantage over competitors by positioning their offerings to be successful in the marketplace. No single competitive strategy is best for all companies.
45 Marketing Environment f. PublicsA public is any group that has an actual or potential interest in or impact on an organization’s ability to achieve its objectives. A company should prepare a marketing plan for all of their major publics as well as their customer markets. Generally, publics can be identified as being:1). Financial publics--influence the company’s ability to obtain funds.2). Media publics--carry news, features, and editorial opinion.3). Government publics--take developments into account.4). Citizen-action publics--a company’s decisions are often questioned by consumer organizations.5). Local publics--includes neighbourhood residents and community organizations.6). General publics--a company must be concerned about the general public’s attitude toward its products and services.7). Internal publics--workers, managers, volunteers, and the board of directors.
46 Marketing Environment 2. MACRO ENVIRONMENTThe Company’s Macro environmentThe company and all of the other actors operate in a larger macro environment of forces that shape opportunities and pose threats to the company.The company and all of the other actors operate in a larger macro environment of forces that’s have opportunities and pose threats to the company. There are six major forces (outlined below)in the company’s macro environment. There are six major forces (outlined below) in the company’s macro environment.a. Demographic.b. Economic.c. Natural.d. Technological.e. Political.f. Cultural.
47 Marketing Environment a. Demographic EnvironmentDemographyis the study of human populations in terms of size, density, location, age, sex, race, occupation, and other statistics. It is of major interest to marketers because it involves people and people make up markets. Demographic trends are constantly changing. Some more interesting ones are.1). The world’s population (though not all countries) rate is growing at an explosive rate that will soon exceed food supply and ability to adequately service the population. The greatest danger is in the poorest countries where poverty contributes to the difficulties. Emerging markets such as China are receiving increased attention from global marketers.2). The most important trend is the changing age structure of the population. The population is aging because of a slowdown in the birth rate (in this country) and life expectancy is increasing.The baby boomersfollowing World War II have produced a huge “bulge” in our population's age distribution. The new prime market is the middle age group (in the future it will be the senior citizen group). There are many subdivisions of this group.a). Generation X--this group lies in the shadow of the boomers and lack obvious distinguishing characteristics. They are a very cynical group because of all the difficulties that have surrounded and impacted their group. b). Echo boomers(baby boom lets) are the large growing kid and teen market. This group is used to affluence on the part of their parents (as different from the Gen Xers). One distinguishing characteristic is their utter fluency and comfort with computer, digital, and Internet technology(sometimes called Net-Gens).
48 Marketing Environment c). Generational marketing is possible, however, caution must be used to avoid generational alienation. Many in the modern family now “telecommute”--work at home or in a remote office and conduct their business using fax, cell phones, modem, or the Internet. In general, the population is becoming better educated. The work force is becoming more white-collar. Products such as books and education services appeal to groups following this trend. Technical skills (such as in computers) will be a must in the future. The final demographic trend is the increasing ethnic and racial diversity of the population. Diversity is a force that must be recognized in the next decade. However, companies must recognize that diversity goes beyond ethnic heritage. One of the important markets of the future are that disabled people (a market larger any of our ethnic minority groups).
49 Marketing Environment b. Economic EnvironmentThe economic environment -includes those factors that affect consumer purchasing power and spending patterns. Major economic trends in the United States include:1). Personal consumption (along with personal debt) has gone up (1980s) and the early 1990s brought recession that has caused adjustments both personally and corporately in this country. Today, consumers are more careful shoppers.2). Value marketing(trying to offer the consumer greater value for their dollar) is a very serious strategy in the 1990s. Real income is on the rise again but is being carefully guarded by a value-conscious consumer.3). Income distributionis still very skewed in the U. S. and all classes have not shared in prosperity. In addition, spending patterns show that food, housing, and transportation still account for the majority of consumer dollars. It is also of note that distribution of income has created a “two-tiered market” where there are those that are affluent and less affluent. Marketers must carefully monitor economic changes so they will be able to prosper with the trend, not suffer from it.
50 Marketing Environment c. Natural EnvironmentThe natural environment -involves natural resources that are needed as inputs by marketers or that are affected by marketing activities. During the past two decades environmental concerns have steadily grown. Some trend analysts labelled the specific areas of concern were:1). Shortages of raw materials.Staples such as air, water, and wood products have been seriously damaged and non-renewable such as oil, coal, and various minerals have been seriously depleted during industrial expansion.2). Increased pollutionis a worldwide problem. Industrial damage to the environment is very serious. Far-sighted companies are becoming “environmentally friendly” and are producing environmentally safe and recyclable or biodegradable goods. The public response to these companies is encouraging. However, lack of adequate funding, especially in third world countries, is a major barrier.
51 Marketing Environment 3). Government interventionIn natural resource management has caused environmental concerns to be more practical and necessary in business and industry. Leadership, not punishment, seems to be the best policy for long-term results. Instead of opposing regulation, marketers should help develop solutions to the material and energy problems facing the world.4). Environmentally sustainable strategies.The so-called green movement has encouraged or even demanded that firms produce strategies that are not only environmentally friendly but are also environmentally proactive. Firms are beginning to recognize the link between a healthy economy and a healthy environment.
52 Marketing Environment d. Technological EnvironmentThe technological environment -includes forces that create new technologies, creating new product and market opportunities.1). Technology is perhaps the most dramatic force shaping our destiny.2). New technologies create new markets and opportunities.3). The following trends are worth watchinga). Faster pace of technological change. Products are being technologically outdated at a rapid pace.b). There seems to be almost unlimited opportunities being developed daily. Consider the expanding fields of health care, the space shuttle, robotics, and biogenetic industries.c). The challenge is not only technical but also commercial--to make practical, affordable versions of products.d). Increased regulation. Marketers should be aware of the regulations concerning product safety, individual privacy, and other areas that affect technological changes. They must also be alert to any possible negative aspects of an innovation that might harm users or arouse opposition.
53 Marketing Environment e. Political EnvironmentThe political environmentincludes laws, government agencies, and pressure groups that influence and limit various organizations and individuals in a given society. Various forms of legislation regulate business.1). Governments develop public policy to guide commerce--sets of laws and regulations limiting business for the good of society as a whole.2). Almost every marketing activity is subject to a wide range of laws and regulations. Some trends in the political environment include:- Increasing legislation to:a). Protect companies from each other.b). Protecting consumers from unfair business practices.c). Protecting interests of society against unrestrained business behaviour.
54 Marketing Environment -Changing government agency enforcement. New laws and their enforcement will continue or increase. 3). Increased emphasis on ethics and socially responsible actions. Socially responsible firms actively seek out ways to protect the long-run interests of their consumers and the environment. a). Enlightened companies encourage their managers to look beyond regulation and “do the right thing.” b). Recent scandals have increased concern about ethics and social responsibility. c). The boom in e-commerce and Internet marketing has created a new set of social and ethical issues. Concerns are Privacy, Security, Access by vulnerable or unauthorized groups.
55 Marketing Environment f. Cultural EnvironmentThe cultural environmentis made up of institutions and other forces that affect society’s basic values, perceptions, preferences, and behaviours. Certain cultural characteristics can affect marketing decision-making. Among the most dynamic cultural characteristics are:1). Persistence of cultural values. People’s core beliefs and values have a high degree of persistence.Core beliefs and values are passed on from parents to children and are reinforced by schools, churches, business, and government. Secondary beliefs and values are more open to change.2). Shifts in secondary cultural values. Since secondary cultural values and beliefs are open to change, marketers want to spot them and be able to capitalize on the change potential. Society’s major cultural views are expressed in:a). People’s views of themselves. People vary in their emphasis on serving themselves versus serving others. In the 1980s, personal ambition and materialism increased dramatically, with significant implications for marketing. The leisure industry was a chief beneficiary.b). People’s views of others. Observers have noted a shift from a “me-society” to a “we-society.” Consumers are spending more on products and services that will improve their lives rather than their image.
56 Marketing Environment c). People’s views of organizations.People are willing to work for large organizations but expect them to become increasingly socially responsible. Many companies are linking themselves to worthwhile causes. Honesty in appeals is a must.d). People’s views of society.This orientation influences consumption patterns. “Buy American” versus buying abroad is an issue that will continue into the next decade.e). People’s view of nature.There is a growing trend toward people’s feeling of mastery over nature through technology and the belief that nature is bountiful. However, nature is finite. Love of nature and sports associated with nature are expected to be significant trends in the next several years.f). People’s views of the universe.Studies of the origin of man, religion, and thought-provoking ad campaigns are on the rise. Currently, Americans are on a spiritual journey. This will probably take the form of “spiritual individualism.”
57 Market SegmentationMarket segmentation is a marketing strategy involves dividing a broad target market into subsets of consumers, businesses, or countries who have common needs and priorities, and then designing and implementing strategies to target them. Market segmentation strategies may be used to identify the target customers, and provide supporting data for positioning to achieve a marketing plan objective. Businesses may develop product differentiation strategies, or an undifferentiated approach, involving specific products or product lines depending on the specific demand and attributes of the target segment.A marketing term referring to the aggregating of prospective buyers into groups (segments) that have common needs and will respond similarly to a marketing action. Market segmentation enables companies to target different categories of consumers who perceive the full value of certain products and services differently from one another.
58 Types of Market Segmentation The following are the most common forms of market segmentation practices:Geographic SegmentationMarketers can segment according to geographic criteria—nations, states, regions, countries, cities, neighborhoods, or postal codes.The geo-cluster approach combines demographic data with geographic data to create a more accurate or specific profile. With respect to region, in rainy regions merchants can sell things like raincoats, umbrellas and gumboots. In hot regions, one can sell summer clothing. A small business commodity store may target only customers from the local neighborhood, while a larger department store can target its marketing towards several neighborhoods in a larger city or area, while ignoring customers in other continents. Geographic Segmentation is important and may be considered the first step to international marketing, followed by demographic and psychographic segmentation. The use of national borders is the institutional use of geographic segmentation, although geographic segments may be classified by identified geological regions.
59 Types of Market Segmentation Demographic SegmentationSegmentation according to demography is based on variables such as age, gender, occupation and education level  or according to perceived benefits which a product/service may provide. Benefits may be perceived differently depending on a consumer's stage in the life cycle. Demographic segmentation divides markets into different life stage groups and allows for messages to be tailored accordingly.Behavioral SegmentationBehavioral segmentation divides consumers into groups according to their knowledge of, attitude towards, usage rate, response, loyalty status, and readiness stage to a product. There is an extra connectivity with all other market related sources.
60 Types of Market Segmentation Psychographic SegmentationPsychographic segmentation, which is sometimes called Lifestyle. This is measured by studying the activities, interests, and opinions (AIOs) of customers. It considers how people spend their leisure, and which external influences they are most responsive to and influenced by. Psychographic is highly important to segmentation, because it identifies the personal activities and targeted lifestyle the target subject endures, or the image they are attempting to project. Mass Media has a predominant influence and effect on Psychographic segmentation. Lifestyle products may pertain to high involvement products and purchase decisions, to speciality or luxury products and purchase decisions.
61 Types of Market Segmentation Cultural SegmentationCultural Segmentation is used to classify markets according to cultural origin. Culture is a strong dimension of consumer behaviour and is used to enhance customer insight and as a component of predictive models. Cultural segmentation enables appropriate communications to be crafted to particular cultural communities, which is important for message engagement in a wide range of organisations, including businesses, government and community groups. Cultural Segmentation can be applied to existing customer data to measure market penetration in key cultural segments by product, brand, channel as well as traditional measures of recency, frequency and monetary value. These benchmarks form an important evidence-base to guide strategic direction and tactical campaign activity, allowing engagement trends to be monitored over time.Cultural Segmentation can also be mapped according to state, region, suburb and neighbourhood. This provides a geographical market view of population proportions and may be of benefit in selecting appropriately located premises, determining territory boundaries and local marketing activities.
62 The Benefits of Segmentation While there may be theoretically 'ideal' market segments, in reality, every organization engaged in a market will develop different ways of imagining market segments, and create product differentiation strategies to exploit these segments. The market segmentation and corresponding product differentiation strategy can give a firm a temporary commercial advantage. Most market segmentations are the techniques used to attract the right customer.In essence, the marketing objectives of segmentation analysis are:To reduce risk in deciding where, when, how, and to whom a product, service, or brand will be marketedTo increase marketing efficiency by directing effort specifically toward the designated segment in a manner consistent with that segment's characteristicsMarket segmentation is a twofold process that includes:Identifying and classifying people into homogeneous groupings, called segmentsDetermining which of these segments are viable target markets.
63 The Benefits of Segmentation There are several advantages of segmentation.1) Focus of the Company: Segmentation is an effective method to increase the focus of a firm on market segments. If you have better focus, obviously you will have better returns. Numerous automobile companies have started focusing on small car segments. This is nothing else but a company changing its focus for better returns. Thus companies base their strategy completely on a new segment which increases its focus and profitability.2) Increase in competitiveness: Naturally, once your focus increases, your competitiveness in that market segment will increase. If you are focusing on youngsters, your brand recall and equity with youngsters will be very high. Your market share might increase and the chances of a new competitor entering might be low. The brand loyalty will definitely increase. Thus market segmentation also increases competitiveness of a firm from a holistic view.
64 The Benefits of Segmentation 3) Market expansion: Geographic segmentation is one type of segmentation where expansion is immediately possible. If you have your market strategy on the basis of grography, then once you are catering to a particular territory, you can immediately expand to a nearby territory. In the same way, if you are targeting customers based on their demography (Ex – reebok targets fitness enthusiasts) then you can expand in similar products (Ex – reebok expanding with its fitness range of clothes and accessories). Segmentation plays a crucial role in expansion. You cannot expand in a territory when you have no idea of which segment of customers you will be meeting.4) Increases profitability: Segmentation increases competitiveness, brand recall, brand equity, customer retention, communications. Thus if it is affecting so many factors of your business, then definitely it affects the profitability of the firm. Do you ever see people negotiating in a Nike, Gucci or BMW showrooms? You wont. One of the USP’s of these brand is their segmentation. They are in fact targeting segments which have no need of bargaining or negotiation. Thus their profitability is high.
65 Publicity Strategy 1. Types A. Press release B. Feature article C. Captioned photographD. Press conferenceE. Letters to editor/editorialsF. Films/tapes/videos2. Requirements3. Limitations
66 Public RelationsPublic relations - a public organization’s communications and relationships with its various audiences.Helps a firm establish awareness of goods and services and builds a positive image of them.Publicity - stimulation of demand for a good, service, place, idea, person, or organization by disseminating news or obtaining favorable unpaid media presentations.Good publicity can promote a firm’s positive image.Negative publicity can cause problems.
67 The Benefits of Public Relations CredibilityLet’s face it– consumers today are more cautious when spending. That’s why having credibility is so essential to a successful business. Because PR and advertising are very different things, consumers are likely to give credibility to your business when they see it mentioned in the media (uncompensated!) compared to when they see your ads or billboards. Studies show that PR has 7 times more credibility among consumers than advertising!2. Target MarketWith PR, it’s much easier to aim and fire on that target market you are hoping to reach. Media sources can place the information that is right up the consumers alley and give them the required information they need. If you are an accountant hoping to generate some new clientele, placing an ad in a teen magazine likely won’t help you. But a well written article smack dab in the middle of the finance section will probably lead you right where you want to be. These target markets are especially vital in businesses that only appeal to a small target market.
68 3. CostWhile it’s true that PR can be costly if you hire the wrong firm, considering the cost of other promotional advertising, it is on the cheap end of the scale. When you step back and look at the cost of PR considering the possible leads when reaching the right market, you’ll find that the cost is very beneficial.4. Lead GenerationThe media placement that you receive from PR is long lasting. You’ll likely have an initial flood of leads, and then as time wheres on, you’ll notice that there is still the possibility of lead generation from just one good media mention. As people and businesses stumble on the PR, it will still be effective at generating leads (thus leading back to our #3 point: cost).5. ImagePR isn’t just promoting an item or a special. PR takes your entire business and puts it in the lights. This helps create an image of your company and creates the possibility of a more well rounded patronage. Effective PR leaves your company with a positive image, which is always helpful in the future.
69 The Disadvantages of PR The major disadvantage of PR is the potential for not completing communication process. While PR messages can break through the clutter of commercials, the receiver may not make the connection to the source. Many firms’ PR efforts are never associated with their sponsors in the public mind.PR may also mis-fire through mis management and a lack of co-ordination with the marketing department. When the marketing and PR department operate independently, there is a danger of inconsistence communication, redundancies in efforts and so on.The key to effective PR is to establish a good program, worthy of public interest and manage it properly. To determine if this program is working, the firm must measure the effectiveness of the PR effort.
70 RECOMMENEND TEXTBOOKS Kotler, P,. Armstrong, G,. Wong, V and Saunders, J (2010) Principles of Marketing: Pearson Education Limited: Harlow, Engand, UKArmstrong, G,. Kotler, P,. Harker, M and Brennan, R (2012) Marketing: A Introduction: Pearson Education Limited: Harlow, Engand, UKKotler, P,. Keller, K,. L,. Brady,. M,. Goodman, M and Hansen, T (2009) Marketing Management: Pearson Education Limited: Harlow, Engand, UKPride, W,. M and Ferrell, O,. C (2012) Foundations of Marketing: Cengage Learning: South-Western: USA
71 RECOMMENEND TEXTBOOKS Jobber, D (2004) Principles and Practice of Marketing: McGraw-Hill International (UK) LimitedBrassington, F and Pettitt, S (2006) Principles of Marketing: Pearson Education Limited: Harlow, Engand, UKAdcock, D,. Halborg, A,. L,. Ross, C (2001) Marketing: Principles and Practice: Pearson Education Limited: Harlow, Engand, UKPerreault, J,. R,. Cannon, J and McCarthy, E,. J (2011) Essentials of Marketing: McGraw-Hill International (UK) Limited