INSTRUCTOR'S MANUAL

1. INSTRUCTOR'S MANUAL Chapter12 INSTRUCTOR'S MANUAL MARKETING MANAGEMENT

2. Chapter content • Introduction • The evolution of marketing thought • The marketing concept • Defining marketing • The components of the marketing process • Market research • Consumer behaviour • Market segmentation • Target-market selection and positioning • The marketing instruments • Product decisions • Price decisions • Distribution decisions • Marketing communication decisions • Summary

3. Introduction • Marketing process is the transfer of products or services to the market • Market research to collect information • Development of market offering • Marketing management monitors competitors, develops strategies to use opportunities and counters threats • Correlates resources of market with demands of market • Management needs to know what happens in market before making decisions about production facilities, employing labour, purchasing raw materials and financing activities

4. The evolution of marketing thought • Operation-oriented management • Sales-oriented management • Marketing-oriented management • Consumer-oriented management • The strategic approach to marketing • Relationship marketing

5. OPERATION-ORIENTED MANAGEMENT • Instead of focusing on the needs of the market, management focused on the capabilities of the organisation • They tried to increase the number and variety of products they produced • Concentrated mainly on encouraging production in order to solve operation problems • Did not look at the needs of consumers • Did not market products to them

6. Sales-orientated management • 1930 – 1950 management became more sales orientated to try to sell the mass-produced consumer products with stocks accumulating • Misleading advertisements and unethical sales methods were employed • Objective was to sell products at any cost to get rid of over-produced stock • Led to excessive promotion, high advertising and sales costs

7. Marketing-orientated management • Means that not only the sales message and price of the product need to be considered, but also the quality of the product, the packaging, the choice of distribution,etc. • After 1950 advertising became increasingly important • Managers realised it was an effective way to transmit information to the mass market • Focused on the internal marketing function • Realised all departments have to work together to ensure successful marketing

8. Consumer-orientated management • Consumer demands started changing • Managers began to understand the importance of consumer needs and preferences • Management realised that there was no sense in producing a product if there is no demand for it

9. Strategic approach to marketing • To ensure long term survival of the organisation, management had to concentrate on scanning the environment and look at long-term issues • Had to identify environmental changes • Look at long-term marketing strategies

10. Relationship marketing • Managers needed to establish long-term relationships with people and institutions in the environment • Relationships with customers lead to loyalty and the repeated purchase of goods • Long-term relationships with suppliers ensure the availability of raw materials and inventory • Goodwill of society towards the operation must be fostered • The marketing task needs to be performed according to an ethical code or philosophy

11. THE MARKETING CONCEPT • The marketing concept is the ethical code according to which the marketing task is performed • Directs all marketing concept directs all marketing decisions about products, distribution, communication and price • Four principles: • Profitability • Consumer orientation • Social responsibility • Organisational integration

12. The marketing concept

13. Defining marketing • 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

14. The components of the marketing process

15. Components of the marketing process • Involves a transaction between at least two parties: a marketer and a consumer • Four P’s: • Product itself • Place where it is offered • Price of the product • Promotion • Study figure 12.2 page 367

16. Market research • Information is needed in order to manage a business effectively • Such information needs to: • Increase understanding of relevant market segments • Be pertinent to planning and controlling • Help in decision-making

17. Marketing-research methodology

18. Steps in conducting a survey • Description of the problem to be investigated • Formulation of probable explanations and causes for the defined problem • Investigation of all the hypothesis in order to eliminate the less likely ones and to find a solution to the problem • Compilation of a questionnaire • Testing of the questionnaire • Selection of the respondents to whom the questions will be put

19. Steps in conducting a survey… • Training of the fieldworkers • Analysis and a simulation of information collected from the questionnaires • Interpretation of information • Writing of the research report, and making of recommendations based on the conclusions • Management evaluation • Implementation of management’s decisions

20. Market forecasting • Sales forecasting • Various types of forecasting can be identified • Difficult to make reliable sales forecasts, because no one can see into the future • Forecasting of the profit contribution • Forecasting of profit contribution of a marketing opportunity is normally done for long-term periods • All consumers are unpredictable – important to study consumer behaviour

21. Consumer behaviour • Behaviour patterns of decision-making units directly involved in the purchase and use of products • Including the decision-making processes preceding and determining these behaviour patterns • Consumer behaviour consists of: • Overt acts • Covert processes

22. Determinants of consumer behaviour • Two main groups of factors determine consumer behaviour: • Individual factors • Group factors • Individual decision-making is usually straightforward • Decision-making in the group context is more complex

23. Individual factors • Motivation • Attitudes • Perceptions • Learning ability • Personality traits • Lifestyle

24. Group factors • The family • Reference groups • Opinion leaders • Cultural group

25. Determinants of consumer behaviour

26. Consumer decision-making • Phase 1: Awareness of an unsatisfied need or a problem • Phase 2: Gathering information on how best to solve the problem • Phase 3: Evaluation of all the possible solutions • Phase 4: Decision on a course of action • Phase 5: Post-purchase evaluation

27. Market segmentation • Total market in can be subdivided into: • The consumer market • The industrial market • The resale market • The government market • Steps to follow when segmenting a market: • Identify the needs • Group needs into homogenous subgroups • Select target markets • Position product within market segment

28. Approaches to market segmentation

29. Requirements for meaningful market segmentation • For segmentation to be meaningful: • Segment must be identifiable and measurable • Segment must be substantial and sustainable • Segment must be reachable • Segment must be responsive • Once requirements have been met by a segment, the segment can then be selected as a target market

30. Criteria for market segmentation • Geographic criteria • Region, density, climate • Demographic criteria • Age, gender, family size, income • Psychographic criteria • Lifestyle, personality, social class • Behavioural criteria • Purchase occasion, benefits sought, user status, loyalty status

31. Target-market selection and positioning • Once segmentation has taken place, the marketer must select the segment with the most promising target market • Abilities and expertise of the business have to be linked to the characteristics of the consumers in each segment • The competitive situation in each market/segment must be carefully considered

32. The marketing instruments: the key to the market

33. What is a product? • A composition of tangible and intangible need-satisfying utilities offered to consumers by a business, so that the consumers can take note of them, procure them, and use them • A consumer product consists of: • Core product • Formal product • Need-satisfying product • Product image • Total product

34. Consumer products

35. Classification of consumer products • Consumer products are intended for immediate use by households or consumers • Distinguish between durable and non-durable consumer products • Consumer products can be classified according to consumer buying habits: • Convenience products (milk, sweets) • Shopping products (clothes, furniture) • Specialty products (expensive cameras, luxury items)

36. Convenience products

37. Shopping products

38. Luxury cars

39. The meaning of brands • A brand is a mark that is unique to the product items or ranges produced and marketed by a particular business and that is chosen to distinguish them from similar competing products • Brand name is a word, a letter or a group of words (Nike or McDonald’s) • Brands offer many advantages from both the consumer and marketers perspective

40. Branding

41. Brand loyalty • Consumers show a loyalty to a certain brand • Consumer moves through three phases of loyalty: • Brand recognition • Brand preference • Brand insistence • Result of building and maintaining a long-term relationship with the customer

42. Manufacturer, dealer or generic brands

43. Packaging decisions • Group of activities concerned with the design, manufacturing and filling of a container or wrapper with product so it can be protected, stored, transported, identified, and marketed • Different kinds of packaging can be identified: • Family packaging • Specialty packaging • Reusable packaging • Decisions need to be made on the packaging design (type of material, the shape and size of the packaging)

44. Charter Club at Edgars

45. Family brands Individual brands