Marketing Tools

Marketing tools 1. How to write a marketing report 2. The Kiss management strategies 3. The marketing mix 4. PESTEL analysis 5. Marketing control6. Direct Marketing mix 7. SWO T analysis 8. Perceptual Map 9. Two-way communications model 10. Product life cycle(s)11. Ansoffs matrix12. Boston Consulting group 13. The leaky bucket14. Porters’ 5 forces15. The environment and factors of change16. Independent & Dependent variables 17. The consumer buying- decision making process and its influencing factors 18. The family as a decision-making unit

How to write a marketing report

Title page: Contains, for example, report title; client; research company; date, references

Contents: Shows clearly the structure and content of the report and where in the report to find it.

Preface:Sets the background to the report defining the marketing problem; summarises the researchers’ interpretation of the original brief.

Executive Summary: Summarises the main points of the report, including conclusions and recommendations.

Research methods:Explains how the research was done and why, with respect to te objectives of the research.

Findings:Present and collates the data collected.

Conclusions:Interprets the data: draws out the key points

Recommendations:Identifies action and priorities arising from the conclusions and examines their implications.

Appendices: Contain the fine detail that is not needed for the main body of the report or that would clutter up the report too much, e.g. a copy of the questionnaire, raw data, primary and secondary sources.

Report writing and presentation

Crouch suggests that the key elements in a research report

are as follows.

1. Title page2. List of contents 3. Preface-outline of agreed brief, statement of

objectives, scope and methods of research4. Summary of conclusions and recommendations 5. Previous related research: how previous research

has had a bearing on this research.6. Research method7. Research findings 8. Conclusions 9. Appendices

Keep It Simple & Straight(for a banker)

Keep It Simple & Sexy(appealing for investors)

Keep It Sugar Sweet(maintain interest with facts)

PRICEPLACE

PROMOTION

PRODUCT

When marketing their products, firms need to create a successful mix of:

• The right product• Sold at the right price• In the right place• Using the most suitable promotion

Marketing Mix

PRODUCT

ExtensionsQualityDesignFeaturesBrand namePackagingSizesWarrantiesReturns

PRICE

List priceDiscounts

AllowancesPayment period

Credit terms

PROMOTION

Sales promotionAdvertisingSales force

Public RelationsDirect Marketing

PLACE

ChannelsCoverageAssortme

ntLocationsInventoryTransport

PRODUCT

PRICEPLACE

PROMOTION

PEOPLE

PHYSICAL EVIDENCE

PROCESSES

Marketing Mix (wider elements)

PARTNERSHIPS

Uncontrollableconstraints

Legal Legal

EnvironmentalEnvironmental

PoliticalPolitical

EconomicalEconomical

SocialSocial

TechnologicalTechnological

Competition Competition

• Ethnic groups: Malay and other indigenous 58%, Chinese 26%, Indian 7%, others 9%

• Religions: Islam, Buddhism, Daoism, Hinduism, Christianity, Sikhism; note - in addition, Shamanism is practiced in East Malaysia

• Languages: Bahasa Melayu (official), English, Chinese dialects (Cantonese, Mandarin, Hokkien, Hakka, Hainan, Foochow), Tamil, Telugu, Malayalam, Panjabi, Thai; note - in addition, in East Malaysia several indigenous languages are spoken, the largest of which are Iban and Kadazan

• Literacy: definition: age 15 and over can read and write total population: 83.5% male: 89.1% female: 78.1% (1995 est.)

• Telephones: main lines in use: 4.4 million (1998) Telephones - mobile cellular: 2.17 million (1998) Telephone system: international service good domestic: good intercity service provided on Peninsular Malaysia mainly by microwave radio relay; adequate intercity microwave radio relay network between Sabah and Sarawak via Brunei; domestic satellite system with 2 earth stations international: submarine cables to India, Hong Kong, and Singapore; satellite earth stations - 2 Intelsat (1 Indian Ocean and 1 Pacific Ocean)

• Radio broadcast stations: AM 56, FM 31 (plus 13 repeater stations), shortwave 5 (1999) Radios: 9.1 million (1997) Television broadcast stations: 27 (plus 15 high-power repeaters) (1999) Televisions: 3.6 million (1997) Internet Service Providers (ISPs): 8 (1999) Merchant marine: total: 361 ships (1,000 GRT or over) totaling 5,000,706 GRT/7,393,915 DWT ships by type: bulk 61, cargo 119, chemical tanker 34, container 55, liquified gas 19, livestock carrier 1, passenger 2, petroleum tanker 57, refrigerated cargo 1, roll-on/roll-off 6, specialized tanker 1, vehicle carrier 5 (1999 est.) Airports: 115 (1999 est.) Airports - with paved runways: total: 32 over 3,047 m: 5 2,438 to 3,047 m: 4 1,524 to 2,437 m: 11 914 to 1,523 m: 6 under 914 m: 6 (1999 est.)

Answer - Malaysia - PEST AnalysisAnswer - Malaysia - PEST Analysis

• Political Factors • Controls on immigration • A fairly new country formed in 1957 (Malaysia) and 1963 (Malay, Sabah, Sarawak,

and Singapore) • Parliament and hereditary rulers• Economic Factors • Recovering from a very severe recession • High government spending • Very low inflation and unemployment • Favorable prediction for growth in the economy • Lack of corporate reform (high corporate debt and competition) • Socio-cultural Factors • Mixture of Chinese, Indian, and Malaysian • Variety of religions • Low rates of literacy among women • Technological • Good national and international lines • A variety of TV and radio stations • ISPs and airports available

PEST Analysis – Exercise Source: www.odci.gov/ October 2000

Consider the following information and conduct a PEST analysis.• Government type: constitutional monarchy note: Malaya (what is now Peninsular

Malaysia) formed 31 August 1957; Federation of Malaysia (Malaya, Sabah, Sarawak, and Singapore) formed 9 July 1963 (Singapore left the federation on 9 August 1965); nominally headed by the paramount ruler and a bicameral Parliament consisting of a nonelected upper house and an elected lower house; Peninsular Malaysian states - hereditary rulers in all but Melaka, Penang, Sabah, and Sarawak, where governors are appointed by the Malaysian Government; powers of state governments are limited by the federal constitution; under terms of the federation, Sabah and Sarawak retain certain constitutional prerogatives (e.g., the right to maintain their own immigration controls); Sabah - holds 20 seats in House of Representatives, with foreign affairs, defense, internal security, and other powers delegated to federal government; Sarawak - holds 28 seats in House of Representatives, with foreign affairs, defense, internal security, and other powers delegated to federal government

• Economy - overview: Malaysia made a quick economic recovery in 1999 from its worst recession since independence in 1957. GDP grew 5%, responding to a dynamic export sector, which grew over 10% and fiscal stimulus from higher government spending. The large export surplus has enabled the country to build up its already substantial financial reserves, to $31 billion at yearend 1999. This stable macroeconomic environment, in which both inflation and unemployment stand at 3% or less, has made possible the relaxation of most of the capital controls imposed by the government in 1998 to counter the impact of the Asian financial crisis. Government and private forecasters expect Malaysia to continue this trend in 2000, predicting GDP to grow another 5% to 6%. While Malaysia's immediate economic horizon looks bright, its long-term prospects are clouded by the lack of reforms in the corporate sector, particularly those dealing with competitiveness and high corporate debt.

Marketing Plans

Actions

Outcome Goals

Compare outcomes with goals

Analyse deviations

Solve Problem Exploit success

Learn & revise

Marke

ting C

ontro

l sj

Direct M

arketing

Mix

Direct M

arketing

Mix

LIST 50%

Offer (10%)

Media (5%)

Customer service (10%)

Creative(5%)

Timing/sequence(20%)

OFFER> Product /service, price incentive other elements

CREATIVE> Copy & graphics, personalisation

CUSTOMERSERVICE> Develop a product into a service, build relationship

TIMING> One shot, campaign, seasonal, repetitive

MEDIA> Above/Below

SWOT analysis

Strengths Weaknesses

Opportunities Threats

What has contributed to the success of McDonalds?

Process Management 1. Quality 2. Service3. Value

4. Cleanliness

How to effectively use a SWOT analysis

S W

O T

1.Strengths & Weaknesses – where

are we now?2.Opportunities & Threats

– where do we want/not to be?

3.Only useful when specific and unique information used

SWOT Analysis - Exercise.Highly Brill Leisure Centre

Highly Brill Leisure Centre has hired you to help them with their marketing decision making.Perform a SWOTanalysis on Highly Brill Leisure Centre, based upon the following issues:

1) The Centre is located within a two-minute walk of the main bus station, and is a fifteen-minute ride away from the local railway station.

2) There is a competition standard swimming pool; although it has no wave machines or whirlpool equipment as do competing local facilities.

3) It is located next to one of the largest shopping centres in Britain.4) It is one of the oldest centres in the area and needs some cosmetic attention.5) Due to an increase in disposable income over the last six years, local residents have more money to spend on

leisure activities. 6) There has been a substantial decrease in the birth rate over the last ten years. 7) In general people are living longer and there are more local residents aged over fifty-five now than ever before. 8) After a heated argument with the manager of a competing leisure centre, the leader of a respected local scuba

club is looking for a new venue. 9) The local authority is considering privatizing all local leisure centres by the year 2000. 10) Press releases have just been issued to confirm that Highly Brill Leisure Centre is the first centre in the area to be

awarded quality assurance standard BS EN ISO 9002. 11) A private joke between staff states that if you want a day-off from work that you should order a curry from the

Centre's canteen, which has never made a profit. 12) The Centre has been offered the latest sporting craze. 13) Highly Brill Leisure Centre has received a grant to fit special ramps and changing rooms to accommodate the

local disabled. 14) It is widely acknowledged that Highly Brill has the best-trained and most respected staff of all of the centres in the

locality

Answer - Highly Brill Leisure Centre - SWOT Analysis

Answer: As you can seeMarketing Teacher'sanswer does notcompletely agreewith yours. This does notmean that you are wrong.It simply means that theresults of your analysisare represented in adifferent way. Points 2and 10 are difficult toplace. Point 2 depends onwhether or not wavemachines or a whirlpoolhave a distinctcompetitive advantageover a competitionstandard pool. Point 10 isan internal strength andan external opportunity.

Example of a SWOT analysis

West Coast Fish Products is a small fish processing company in Ireland, which smokes salmon, trout and mackerel, using a special blend of woods, herbs and spices to achieve a distinctive flavour. Although its main market is in Ireland, it is looking towards European markets, especially Germany and Switzerland. Even though it is a small company, it uses a formal approach to marketing planning, identifying priorities for marketing strategy development. Its SWOT analysis revealed the following issues:

1> Strengths

(a) Reputation fir quality in raw materials and processes(b) Value added products using herbs(c) Knowledge of the market and contacts in Germany, France & Switzerland(d) Good location for accessing raw material

2> Weaknesses

(a) No formal organisation for marketing(b) Emphasis on quality and production rather than on systematic market development(c) Buyers tend to initiate contact- company no proactive enough(d) Limited resources for intensive market development (e) Remote European location means higher transport costs and reduces shelf life of products by up to 7 days(f) Retail and catering trade dominated by a few large customers

3> Opportunities

(a) Increasing European consumption of smoked salmon(b) Fish seen as a healthy product, low in fat and cholesterol(c) Contract catering sector relatively underdeveloped(d) The rural, green image of Ireland reflects positively on Irish food products(e) Government aid programmes for small businesses in exporting(f) New potential in US and Japanese markets

4> Threats

(a) Seasonal demand, peaking at Christmas(b) Domestic Irish market relatively small(c) Smoked salmon regarded in Ireland as luxury speciality food (d) Pressure on prices in domestic market from retail & catering buyers(e) Low levels of supplier loyalty(f) Highly competitive European market (80 competitors in Ireland alone) with strong competition from Norway and Denmark in particular (g) Markey pressure to raise quality standards, especially with smoked salmon(h) Business vulnerable to impact of disease and pollution in sigh stocks(i) Tougher European legislation affecting processing, additives, handling, marketing (j) Variety of tastes and demands across different markets (colour, saltiness, dryness etc)

• SWOT Analysis - POWER SWOT.• Marketing Teacher's Approach to SWOT Analysis.• Why is there a need for an advanced approach to SWOT Analysis?• SWOT analysis is a marketing audit that considers an organization's strengths, weaknesses, opportunities and threats. Our

introductory lesson gives you the basics of how to complete your SWOT as you begin to learn about marketing tools. As you learn more about SWOT analysis, you will become aware of a number of potential limitations with this popular tool. This lesson aims to help you overcome potential pitfalls.

• Some of the problems that you may encounter with SWOT are as a result of one of its key benefits i.e. its flexibility. Since SWOT analysis can be used in a variety of scenarios, it has to be flexible. However this can lead to a number of anomalies. Problems with basic SWOT analysis can be addressed using a more critical POWER SWOT. POWER is an acronym for Personal experience, Order, Weighting, Emphasize detail, and Rank and prioritize. This is how it works.

• P = Personal experience.• How do you the marketing manger fit in relation with the SWOT analysis? You bring your experiences, skills, knowledge,

attitudes and beliefs to the audit. Your perception or simple gut feeling will impact the SWOT.• O = Order - strengths or weaknesses, opportunities or threats.• Often marketing managers will inadvertently reverse opportunities and strengths, and threats and weaknesses. This is because

the line between internal strengths and weaknesses, and external opportunities and threats is sometimes difficult to spot. For example, in relation to global warming and climate change, one could mistake environmentalism as a threat rather than a potential opportunity.

• W = Weighting.• Too often elements of a SWOT analysis are not weighted. Naturally some points will be more controversial than others. So

weight the factors. One way would be to use percentages e.g. Threat A = 10%, Threat B = 70%, and Threat C = 20% (they total 100%).

• E = Emphasize detail.• Detail, reasoning and justification are often omitted from the SWOT analysis. What one tends to find is that the analysis

contains lists of single words. For example, under opportunities one might find the term 'Technology.' This single word does not tell a reader very much. What is really meant is:

• 'Technology enables marketers to communicate via mobile devices close to the point of purchase. This provides the opportunity of a distinct competitive advantage for our company.'

• This will greatly assist you when deciding upon how best to score and weight each element.• R = Rank and prioritize.• Once detail has been added, and factors have been reviewed for weighting, you can then progress to give the SWOT analysis

some strategic meaning i.e. you can begin to select those factors that will most greatly influence your marketing strategy albeit a mix of strengths, weaknesses, opportunities and threats. Essentially you rank them highest to lowest, and then prioritize those with the highest rank e.g. Where Opportunity C = 60%, Opportunity A = 25%, and Opportunity B = 10% - your marketing plan would address Opportunity C first, and Opportunity B last. It is important to address opportunities primarily since your business should be market oriented. Then match strengths to opportunities and look for a fit. Address any gaps between current strengths and future opportunities. Finally attempt to rephrase threats as opportunities (as with global warming and climate change above), and address weaknesses so that they become strengths. Gap analysis would be useful at this point i.e. where we are now, and where do we want to be? Strategies would bridge the gap between them.

• In SWOT, strengths and weaknesses are internal factors. For example:A strength could be:• Your specialist marketing expertise. • A new, innovative product or service. • Location of your business. • Quality processes and procedures. • Any other aspect of your business that adds value to your product or service. • A weakness could be:• Lack of marketing expertise. • Undifferentiated products or services (i.e. in relation to your competitors). • Location of your business. • Poor quality goods or services. • Damaged reputation. • In SWOT, opportunities and threats are external factors. For example: An opportunity could be:• A developing market such as the Internet. • Mergers, joint ventures or strategic alliances. • Moving into new market segments that offer improved profits. • A new international market. • A market vacated by an ineffective competitor. • A threat could be:• A new competitor in your home market. • Price wars with competitors. • A competitor has a new, innovative product or service. • Competitors have superior access to channels of distribution. • Taxation is introduced on your product or service. • A word of caution, SWOT analysis can be very subjective. Do not rely on SWOT too much. Two people rarely come-up with the same final version of SWOT. TOWS analysis is extremely

similar. It simply looks at the negative factors first in order to turn them into positive factors. So use SWOT as guide and not a prescription.• Simple rules for successful SWOT analysis.• Be realistic about the strengths and weaknesses of your organization when conducting SWOT analysis. • SWOT analysis should distinguish between where your organization is today, and where it could be in the future. • SWOT should always be specific. Avoid grey areas. • Always apply SWOT in relation to your competition i.e. better than or worse than your competition. • Keep your SWOT short and simple. Avoid complexity and over analysis • SWOT is subjective.

• Once key issues have been identified with your SWOT analysis, they feed into marketing objectives. SWOT can be used in conjunction with other tools for audit and analysis, such as PEST analysis and Porter's Five-Forces analysis. So SWOT is a very popular tool with marketing students because it is quick and easy to learn. During the SWOT exercise, list factors in the relevant boxes. It's that simple. Below are some FREE examples of SWOT analysis - click to go straight to them

• Do you need a more advanced SWOT Analysis?• Some of the problems that you may encounter with SWOT are as a result of one of its key benefits i.e. its flexibility. Since SWOT analysis can be used in a

variety of scenarios, it has to be flexible. However this can lead to a number of anomalies. Problems with basic SWOT analysis can be addressed using a more critical POWER SWOT.

• SWOT Analysis Examples• A summary of FREE SWOT analyses case studies are outlined as follows (those in the table above are far more detailed and FREE!): • Example 1 - Wal-Mart SWOT Analysis. Strengths - Wal-Mart is a powerful retail brand. It has a reputation for value for money, convenience and a wide range of

products all in one store.Weaknesses - Wal-Mart is the World's largest grocery retailer and control of its empire, despite its IT advantages, could leave it weak in some areas due to the huge span of control.Opportunities - To take over, merge with, or form strategic alliances with other global retailers, focusing on specific markets such as Europe or the Greater China Region. Threats - Being number one means that you are the target of competition, locally and globally.

• Example 2 - Starbucks SWOT Analysis. Strengths - Starbucks Corporation is a very profitable organisation, earning in excess of $600 million in 2004.Weaknesses - Starbucks has a reputation for new product development and creativity. Opportunities - New products and services that can be retailed in their cafes, such as Fair Trade products. Threats - Starbucks are exposed to rises in the cost of coffee and dairy products.

• Example 3 - Nike SWOT Analysis. Strengths - Nike is a very competitive organisation. Phil Knight (Founder and CEO) is often quoted as saying that 'Business is war without bullets.'Weaknesses - The organisation does have a diversified range of sports products. Opportunities - Product development offers Nike many opportunities. Threats - Nike is exposed to the international nature of trade.

• Strengths.• Wal-Mart is a powerful retail brand. It has a reputation for value for money, convenience and a wide range of products all in one store. • Wal-Mart has grown substantially over recent years, and has experienced global expansion (for example its purchase of the United Kingdom based retailer

ASDA). • The company has a core competence involving its use of information technology to support its international logistics system. For example, it can see how

individual products are performing country-wide, store-by-store at a glance. IT also supports Wal-Mart's efficient procurement. • A focused strategy is in place for human resource management and development. People are key to Wal-Mart's business and it invests time and money in

training people, and retaining a developing them. • Weaknesses.• Wal-Mart is the World's largest grocery retailer and control of its empire, despite its IT advantages, could leave it weak in some areas due to the huge span of

control. • Since Wal-Mart sell products across many sectors (such as clothing, food, or stationary), it may not have the flexibility of some of its more focused competitors. • The company is global, but has has a presence in relatively few countries Worldwide. • Opportunities.• To take over, merge with, or form strategic alliances with other global retailers, focusing on specific markets such as Europe or the Greater China Region. • The stores are currently only trade in a relatively small number of countries. Therefore there are tremendous opportunities for future business in expanding

consumer markets, such as China and India. • New locations and store types offer Wal-Mart opportunities to exploit market development. They diversified from large super centres, to local and mall-based

sites. • Opportunities exist for Wal-Mart to continue with its current strategy of large, super centres. • Threats.• Being number one means that you are the target of competition, locally and globally. • Being a global retailer means that you are exposed to political problems in the countries that you operate in. • The cost of producing many consumer products tends to have fallen because of lower manufacturing costs. Manufacturing cost have fallen due to outsourcing to

low-cost regions of the World. This has lead to price competition, resulting in price deflation in some ranges. Intense price competition is a threat

'Wal-Mart Stores, Inc. is the world's largest retailer, with $256.3 billion in sales in the fiscal year ending Jan. 31, 2004. The company employs 1.6 million associates worldwide

through more than 3,600 facilities in the United States and more than 1,570 units . . .more? Go to Wal-Mart Facts

• Strengths.• Starbucks Corporation is a very profitable organization, earning in excess of $600 million in 2004.The company generated revenue of more than $5000

million in the same year. • It is a global coffee brand built upon a reputation for fine products and services. It has almost 9000 cafes in almost 40 countries. • Starbucks was one of the Fortune Top 100 Companies to Work For in 2005. The company is a respected employer that values its workforce. • The organization has strong ethical values and an ethical mission statement as follows, 'Starbucks is committed to a role of environmental leadership in

all facets of our business.' • Weaknesses.• Starbucks has a reputation for new product development and creativity. However, they remain vulnerable to the possibility that their innovation may falter

over time. • The organization has a strong presence in the United States of America with more than three quarters of their cafes located in the home market. It is often

argued that they need to look for a portfolio of countries, in order to spread business risk. • The organization is dependant on a main competitive advantage, the retail of coffee. This could make them slow to diversify into other sectors should the

need arise. • Opportunities.• Starbucks are very good at taking advantage of opportunties. • In 2004 the company created a CD-burning service in their Santa Monica (California USA) cafe with Hewlett Packard, where customers create their own

music CD. • New products and services that can be retailed in their cafes, such as Fair Trade products. • The company has the opportunity to expand its global operations. New markets for coffee such as India and the Pacific Rim nations are beginning to

emerge. • Co-branding with other manufacturers of food and drink, and brand franchising to manufacturers of other goods and services both have potential. • Threats.• Who knows if the market for coffee will grow and stay in favour with customers, or whether another type of beverage or leisure activity will replace coffee

in the future? • Starbucks are exposed to rises in the cost of coffee and dairy products. • Since its conception in Pike Place Market, Seattle in 1971, Starbucks' success has lead to the market entry of many competitors and copy cat brands that

pose potential threats. • 'Starbucks' mission statement is 'Establish Starbucks as the premier purveyor of the finest coffee in the world while maintaining our uncompromising

principles while we grow.' The following six guiding principles will help us measure the appropriateness of our decisions' more?

Nike • Strengths.• Nike is a very competitive organization. Phil Knight (Founder and CEO) is often quoted as saying

that 'Business is war without bullets.' Nike has a healthy dislike of is competitors. At the Atlanta Olympics, Reebok went to the expense of sponsoring the games. Nike did not. However Nike sponsored the top athletes and gained valuable coverage.

• Nike has no factories. It does not tie up cash in buildings and manufacturing workers. This makes a very lean organization. Nike is strong at research and development, as is evidenced by its evolving and innovative product range. They then manufacture wherever they can produce high quality product at the lowest possible price. If prices rise, and products can be made more cheaply elsewhere (to the same or better specification), Nike will move production.

• Nike is a global brand. It is the number one sports brand in the World. Its famous 'Swoosh' is instantly recognisable, and Phil Knight even has it tattooed on his ankle.

• Weaknesses.• The organization does have a diversified range of sports products. However, the income of the

business is still heavily dependent upon its share of the footwear market. This may leave it vulnerable if for any reason its market share erodes.

• The retail sector is very price sensitive. Nike does have its own retailer in Nike Town. However, most of its income is derived from selling into retailers. Retailers tend to offer a very similar experience to the consumer. Can you tell one sports retailer from another? So margins tend to get squeezed as retailers try to pass some of the low price competition pressure onto Nike.

• Opportunities.• Product development offers Nike many opportunities. The brand is fiercely defended by its owners whom truly believe

that Nike is not a fashion brand. However, like it or not, consumers that wear Nike product do not always buy it to participate in sport. Some would argue that in youth culture especially, Nike is a fashion brand. This creates its own opportunities, since product could become unfashionable before it wears out i.e. consumers need to replace shoes.

• There is also the opportunity to develop products such as sport wear, sunglasses and jewellery. Such high value items do tend to have associated with them, high profits.

• The business could also be developed internationally, building upon its strong global brand recognition. There are many markets that have the disposable income to spend on high value sports goods. For example, emerging markets such as China and India have a new richer generation of consumers. There are also global marketing events that can be utilised to support the brand such as the World Cup (soccer) and The Olympics.

• Threats.• Nike is exposed to the international nature of trade. It buys and sells in different currencies and so costs and margins

are not stable over long periods of time. Such an exposure could mean that Nike may be manufacturing and/or selling at a loss. This is an issue that faces all global brands.

• The market for sports shoes and garments is very competitive. The model developed by Phil Knight in his Stamford Business School days (high value branded product manufactured at a low cost) is now commonly used and to an extent is no longer a basis for sustainable competitive advantage. Competitors are developing alternative brands to take away Nike's market share.

• As discussed above in weaknesses, the retail sector is becoming price competitive. This ultimately means that consumers are shopping around for a better deal. So if one store charges a price for a pair of sports shoes, the consumer could go to the store along the street to compare prices for the exactly the same item, and buy the cheaper of the two. Such consumer price sensitivity is a potential external threat to Nike.

• 'If you have a body, you are an athlete' - Bill Bowerman said this a couple of decades ago. The guy was right. It defines how he viewed the world, and it defines how Nike pursues its destiny. Ours is a language of sports, a universally understood lexicon of passion and competition. A lot has happened at Nike in the 30 years.

‘High’ Price

‘Low’ Price

‘Low’quality

‘High’quality

Cowboybrands

PremiumBrands

EconomyBrands

Bargain brands

Receiver(customer)

Sender(company)

Noise factors outside senders control

Feedback

TheCustomer

Word of m

outh

Sale

s pro

mot

ion

Public relations

MerchandisingDirect marketing

Internal marketing

Corporate im

agePa

ckag

ingSponsorsh

ip

Advertising

Personal selling

Branding

Pro

moti

on

al in

flu

en

ces o

n t

he

cu

sto

mer

The Corporate identity mix

LogoLogo

Corporate I.D is a symbolic uniform that acts as a flag expressing everything about the organisation

‘Painting the lavatory door won’t cure the plumbing’. David Bernstein

Production Finance

Marketing H R

Production

Finance

H R

Marketing

MARKETING

Production

Fina

nceH

R

CUSTOMER

Production

Fina

nce

H R

Marketing

Premium strategy

Overpricing strategy

High Medium Low

PRICE

Product

qualityHigh

Medium

Low Hit and runstrategy

Penetration strategy

Average quality strategy

Shoddy goods strategy

Superbargain strategy

Bargain strategy

Cheap goods strategy

Kotler’s 3x3 matrix identifying different competitive positioning

strategies

Efficiency versus Effectiveness

Inefficient

Efficient

Ineffective Effective

Goes out ofBusiness quickly

Dies Slowly

Survives

Thrives

Customer

Marketing

Production

Fina

nceH

R

The customer as the controlling functionand marketing as the integrative function

Organisations do not make products which they then try to sell to customers, but that they research what customers want and then try to make and market a range of those wants. This is the crucial difference between:

product orientation

market orientation

Putting the product 1st

Putting the customer 1st

Growth Maturity Decline

Sale

s

sales

profit

Introduction

Time

Any company selling more than one product must achieve Continuous growth by introducing products in a well

timed way

The idea of a portfolio is to balance growth, cash flowand risk

Gap Analysis• Gap analysis is a very useful tool for helping marketing managers to decide upon marketing

strategies and tactics. Again, the simple tools are the most effective. There's a straightforward structure to follow. The first step is to decide upon how you are going to judge the gap over time. For example, by market share, by profit, by sales and so on. This will help you to write SMART objectives. Then you simply ask two questions - where are we now? and where do we want to be? The difference between the two is the GAP - this is how you are going to get there . Take a look at the diagram below. The lower line is where you'll be if you do nothing. The upper line is where you want to be.

• Your next step is to close the gap. Firstly decide whether you view from a strategic or an operational/tactical perspective. If you are writing strategy, you will go on to write tactics - see the lesson on marketing plans. The diagram below uses Ansoff's matrix to bridge the gap using strategies:

• You can close the gap by using tactical approaches. The marketing mix is ideal for this. So effectively, you modify the mix so that you get to where you want to be. That is to say you change price, or promotion to move from where you are today (or in fact any or all of the elements of the marketing mix).

This is how you close the gap by deciding upon strategies and tactics - and that's gap analysis.

Diffusion of innovation N

umbe

r of

new

ado

pter

s

Innovators

(2.5%)

Early adopters

(13.5%)

Early Majority

(34%)

Late majority

(34%)

Laggards

(16%)

Some people/companies are always prepared to buy new products, while others wait until things are tried and tested. All products and services have customers which fall into these categories.

Currentmarkets

Newmarkets

Current Newproducts products

Market Penetration • Here we market our existing products to our existing customers.

This means increasing our revenue by, for example, promoting the product, repositioning the brand, and so on. However, the product is not altered and we do not seek any new customers.

Market Development • Here we market our existing product range in a new market. This

means that the product remains the same, but it is marketed to a new audience. Exporting the product, or marketing it in a new region, are examples of market development.

Product Development • This is a new product to be marketed to our existing customers. Here we develop and innovate new product offerings to replace existing ones. Such products are then marketed to our existing customers. This often happens with the auto markets where existing models are updated or replaced and then marketed to existing customers.

Diversification • This is where we market completely new products to new customers. There are two types of diversification, namely related and unrelated diversification. Related diversification means that we remain in a market or industry with which we are familiar. For example, a soup manufacturer diversifies into cake manufacture (i.e. the food industry). Unrelated diversification is where we have no previous industry nor market experience. For example a soup manufacturer invests in the rail business.

Ansoff's Matrix Exercise

Colorado Ricardo Mountain Bikes.

Colorado Ricardo Mountain Bikes was founded by Ricardo Francisco in 1992. He was a keen cyclist who spent his weekends with many friends cycling and

having fun in the mountains of Colorado. He was very competitive and loved to take his bike off-road to test his strength and endurance. However he found that

the bikes themselves kept on breaking-down under the strain. So Ricardo designed and built a number of bikes to overcome this problem. Many failed but

eventually he came up with the ultimate in off-road bike, which he called the 'Colorado Ricardo'. People liked Ricardo's bike and he was asked to build and sell them to other cyclists in the Colorado region. It went so well that soon he was able to give up his own job as a DJ to focus on the construction of the

bikes. As the mountain bike sport took off, Ricardo's business grew to produce 10,000 units in 1996. However sales have fallen annually since then and forecasted sales for 2000 are only 4,000 units. Ricardo's company needs

strategies for growth before it is too late. Use Ansoff's matrix to examine the options for Colorado Ricardo.

Ansoff's Matrix AnswerColorado Ricardo Mountain Bikes.

As you can see there are many strategic options for Ricardo. As a marketer you now have to decide upon which strategy or strategies the company should actually implement. This is based upon a number of factors such as competitive activity, available resources, the good old 'gut feeling', and others.

CASH COWS

STARS PROBLEM CHILD

High

Low

Marketgrowth

High LowRelative Market share

Boston Consulting Group Matrix

DOGS

These products are market leaders within mature markets that are no longer as demanding in marketing terms. They therefore generate healthy cash reserves, in excess, in of the particular product’s resource requirements, whilst reducing the overall expenditure on these products, in essence the idea is to milk the cash cow and to limit spending.

If both the company's competitive position and the industry's attractiveness and growth rate are strong, then the company occupies a fortunate position and is known as a "star." Stars require constant grooming on their way to success. These products may generate major cash inflows through their market share. A star is the market leader in a high-growth market. A star does not necessarily produce a positive cash flow for the company. The most appropriate strategy for star companies is to exploit their competitive advantage and protect themselves against new competitors entering the industry.

Most new products start off as ‘problem children’, as the company tries to enter a high-growth market in which there is already a market leader. The business owners have important strategic decisions to make. Although there is strong future potential in the industry, the company's weak position means that it will have to make a significant investment to take advantage of the opportunity presented. In this case, it is particularly important for the business owner to understand his or her customers and competitors to determine whether it will be possible for the company to develop a competitive advantage.

Dogs are businesses that have weak market share in low growth markets. They typically generate low profits or losses. Dogs often consume more management time than they are worth. The potential for market growth is limited, and the company's future prospects in the industry do not appear promising. The most appropriate strategy for a dog company is to limit spending, generate as much cash as possible in the short term, and consider exiting the industry.

Problems with The Boston Matrix

1. There is an assumption that higher rates of profit are directly related to high rates of market share. This may not always be the case. When Boeing launch a new jet, it may gain a high market share quickly but it still has to cover very high development costs.

2. It is normally applied to Strategic Business Units (SBUs). These are areas of the business rather than products. For example, Ford own Landrover in the UK. This is an SBU not a single product.

3. There is another assumption that SBUs will cooperate. This is not always the case.

4. The main problem is that it oversimplifies a complex set of decision. Be careful. Use the Matrix as a planning tool and always rely on your gut feeling.

cash cow - The rather crude metaphor is based on the idea of 'milking' the returns from previous investments which established good distribution and market share for the product. Products in this quadrant need maintenance and protection activity, together with

good cost management, not growth effort, because there is little or no additional growth available.dog - This is any product or service of yours which has low market presence in a mature or stagnant market. There is no point in developing products or services in this quadrant. Many organizations discontinue products/services that they consider fall into this

category, in which case consider potential impact on overhead cost recovery. Businesses that have been starved or denied development find themselves with a high or entire proportion of their products or services in this quadrant, which is obviously not

very funny at all, except to the competitors.problem child - These are products which have a big and growing market potential, but existing low market share, normally

because they are new products, or the application has not been spotted and acted upon yet. New business development and project management principles are required here to ensure that these products' potential can be realised and disasters avoided. This is

likely to be an area of business that is quite competitive, where the pioneers take the risks in the hope of securing good early distribution arrangements, image, reputation and market share. Gross profit margins are likely to be high, but overheads, in the form

of costs of research, development, advertising, market education, and low economies of scale, are normally high, and can cause initial business development in this area to be loss-making until the product moves into the rising star category, which is by no

means assured - many problem children products remain as such.rising star - Or 'star' products, are those which have good market share in a strong and growing market. As a product moves into

this category it is commonly known as a 'rising star'. When a market is strong and still growing, competition is not yet fully established. Demand is strong; saturation or over-supply do not exists, and so pricing is relatively unhindered. This all means that

these products produce very good returns and profitability. The market is receptive and educated, which optimises selling efficiencies and margins. Production and manufacturing overheads are established and costs minimised due to high volumes and good economies of scale. These are great products and worthy of continuing investment provided good growth potential continues

to exist. When it does not these products are likely to move down to cash cow status, and the company needs to have the next rising stars developing from its problem children.

After considering your business in terms of the Ansoff matrix and Boston matrix (which are thinking aids as much as anything else, not a magic solution in themselves), on a more detailed level, and for many businesses just as significant as the Ansoff-type-options,

what is the significance of your major accounts - do they offer better opportunity for growth and development than your ordinary business? Do you have a high quality, specialised offering that delivers better business benefit on a large scale as opposed to small

scale? Are your selling costs and investment similar for large and small contracts? If so you might do better concentrating on developing large major accounts business, rather than taking a sophisticated product or service solution to smaller companies which

do not appreciate or require it, and cost you just as much to sell to as a large organization.

Boston Matrix ExerciseBoston Matrix Exercise

Manor Way Tools

Manor Way Tools began life as a small steel company at the end of the 19th Century. It was one of the first companies to put carbon into regular iron to create steel. It was strong and flexible. Their first products were fish hooks which were made from the flexible wire that they were able to produce. Over the years the product portfolio grew to include anything that their operation could turn its hand to such as javelins and railings. Today they focus their operations on the manufacture of tools for the professional, production, and the enthusiastic amateur. Core products include handsaws, drill bits, screwdriver, bowsaws etc.The tool trade is very complex and competitive. Manor Way's main competitor is Oliver Tools. They are the market leader in many similar areas of the market.

                                                                                               Analyze your product portfolio using the Boston Matrix.

The Boston Matrix - AnswerManor Way Tools

                                                                                        As you can see, each of the products is positioned upon the Matrix. You'll notice that the Javelins do not appear - they were thrown away long ago.

Bowman's Strategy ClockThe Strategy Clock: Bowman's Competitive Strategy Options

The 'Strategy Clock' is based upon the work of Cliff Bowman (see C. Bowman and D. Faulkner 'Competitive and Corporate Strategy - Irwin - 1996). It's another suitable way to analyze a company's competitive position in comparison to the offerings of competitors. As with Porter's Generic Strategies, Bowman considers competitive advantage in relation to cost advantage or differentiation advantage. There a 8 core strategic options:

Option one - low price/low added value likely to be segment specific Option two - low price risk of price war and low margins/need to be a 'cost leader'. Option three - Hybrid low cost base and reinvestment in low price and differentiation Option four - Differentiation(a) without a price premiumperceived added value by user, yielding market share benefits (b) with a price premiumperceived added value sufficient to to bear price premium Option five - focussed differentiationperceived added value to a 'particular segment' warranting a premium price Option six - increased price/standardhigher margins if competitors do not value follow/risk of losing market share. Option seven - increased price/low valuesonly feasible in a monopoly situation Option eight - low value/standard priceloss of market share

Value Chain AnalysisThe value chain is a systematic approach to examining the development of competitive advantage. It was created by M. E. Porter in his book, Competitive Advantage (1980). The chain consists of a series of activities that create and build value. They culminate in the total value delivered by an organisation. The 'margin' depicted in the diagram is the same as added value. The organisation is split into 'primary activities' and 'support activities.' Primary ActivitiesInbound LogisticsHere goods are received from a company's suppliers. They are stored until they are needed on the production/assembly line. Goods are moved around the organisation. OperationsThis is where goods are manufactured or assembled. Individual operations could include room service in an hotel, packing of books/videos/games by an online retailer, or the final tune for a new car's engine.Outbound LogisticsThe goods are now finished, and they need to be sent along the supply chain to wholesalers, retailers or the final consumer.Marketing and SalesIn true customer orientated fashion, at this stage the organisation prepares the offering to meet the needs of targeted customers. This area focuses strongly upon marketing communications and the promotions mix. ServiceThis includes all areas of service such as installation, after-sales service, complaints handling, training and so on.Support ActivitiesProcurementThis function is responsible for all purchasing of goods, services and materials. The aim is to secure the lowest possible price for purchases of the highest possible quality. They will be responsible for outsourcing (components or operations that would normally be done in-house are done by other organisations), and ePurchasing (using IT and web-based technologies to achieve procurement aims).Technology DevelopmentTechnology is an important source of competitive advantage. Companies need to innovate to reduce costs and to protect and sustain competitive advantage. This could include production technology, Internet marketing activities, lean manufacturing, Customer Relationship Management (CRM), and many other technological developments. Human Resource Management (HRM)Employees are an expensive and vital resource. An organisation would manage recruitment and selection, training and development, and rewards and remuneration. The mission and objectives of the organisation would be driving force behind the HRM strategy.

Firm InfrastructureThis activity includes and is driven by corporate or strategic planning. It includes the Management Information System (MIS), and other mechanisms for planning and control such as the accounting department.

LEAKY BUCKETAcquisitionAcquisition

RetentionRetention

De-selectionDe-selection StorageStorage

McKinsey’s Seven S’ model McKinsey’s Seven S’ model

1. Cost Leadership The low cost leader in any market gains competitive advantage from being able to many to produce at the lowest cost. Factories are built and maintained, labour is recruited and trained to deliver the lowest possible costs of production. ‘cost advantage’ is the focus. Costs are shaved off every element of the value chain. Products tend to be ‘no frills.’ However, low cost does not always lead to low price. Producers could price at competitive parity, exploiting the benefits of a bigger margin than competitors. Some organization, such as Toyota, are very good not only at producing high quality autos at a low price, but have the brand and marketing skills to use a premium pricing policy.

2. Differentiation Differentiated goods and services satisfy the needs of customers through a sustainable competitive advantage. This allows companies to desensitize prices and focus on value that generates a comparatively higher price and a better margin. The benefits of differentiation require producers to segment markets in order to target goods and services at specific segments, generating a higher than average price. For example, British Airways differentiates its service. The differentiating organization will incur additional costs in creating their competitive advantage. These costs must be offset by the increase in revenue generated by sales. Costs must be recovered. There is also the chance that any differentiation could be copied by competitors. Therefore there is always an incentive to innovated and continuously improve.

3. Focus or Niche strategy The focus strategy is also known as a ‘niche’ strategy. Where an organization canafford neither a wide scope cost leadership nor a wide scope differentiation strategy, aniche strategy could be more suitable. Here an organization focuses effort andresources on a narrow, defined segment of a market. Competitive advantage isgenerated specifically for the niche. A niche strategy is often used by smaller firms. Acompany could use either a cost focus or a differentiation focus. With a cost focus a firm aims at being the lowest cost producer in that niche or segment. With adifferentiation focus a firm creates competitive advantage through differentiation withinthe niche or segment. There are potentially problems with the niche approach. Small,specialist niches could disappear in the long term. Cost focus is unachievable with anindustry depending upon economies of scale e.g. telecommunications.

4. The danger of being ‘stuck in the middle.’ Make sure that you select one generic strategy. It is argued that if you select one or more approaches, and then fail to achieve them, that your organization gets stuck inthe middle without a competitive advantage.

INDUSTRY PROFITS

Threat of new entrant Threat of new entrant

Intensity ofCompetition

Rivalry

Power Of

Customers

Power Of

Suppliers

Threat ofSubstitutes

• Five Forces Analysis helps the marketer to contrast a competitive environment. It has similarities with other tools for environmental audit, such as PEST analysis, but tends to focus on the single, stand alone, business or SBU (Strategic Business Unit) rather than a single product or range of products. For example, Dell would analyse the market for Business Computers i.e. one of its SBUs.

• Five forces analsysis looks at five key areas namely the threat of entry, the power of buyers, the power of suppliers, the threat of substitutes, and competitive rivalry.• The threat of entry.• Economies of scale e.g. the benefits associated with bulk purchasing. • The high or low cost of entry e.g. how much will it cost for the latest technology? • Ease of access to distribution channels e.g. Do our competitors have the distribution channels sewn up? • Cost advantages not related to the size of the company e.g. personal contacts or knowledge that larger companies do not own or learning curve effects. • Will competitors retaliate? • Government action e.g. will new laws be introduced that will weaken our competitive position? • How important is differentiation? e.g. The Champagne brand cannot be copied. This desensitises the influence of the environment. • The power of buyers.• This is high where there a few, large players in a market e.g. the large grocery chains. • If there are a large number of undifferentiated, small suppliers e.g. small farming businesses supplying the large grocery chains. • The cost of switching between suppliers is low e.g. from one fleet supplier of trucks to another. • The power of suppliers.• The power of suppliers tends to be a reversal of the power of buyers.• Where the switching costs are high e.g. Switching from one software supplier to another. • Power is high where the brand is powerful e.g. Cadillac, Pizza Hut, Microsoft. • There is a possibility of the supplier integrating forward e.g. Brewers buying bars. • Customers are fragmented (not in clusters) so that they have little bargaining power e.g. Gas/Petrol stations in remote places. • The threat of substitutes• Where there is product-for-product substitution e.g. email for fax Where there is substitution of need e.g. better toothpaste reduces the need for dentists. • Where there is generic substitution (competing for the currency in your pocket) e.g. Video suppliers compete with travel companies. • We could always do without e.g. cigarettes. • Competitive Rivalry• This is most likely to be high where entry is likely; there is the threat of substitute products, and suppliers and buyers in the market attempt to control. This is why it is

always seen in the center of the diagram.

Analysing the environment - Five Forces Analysis - Exercise 'The market for on-line education'

Place the following eight points onto the five forces model

1. Start up costs are very low 2. Students have access to books, videos, and

paper-based distance learning packs 3. Companies, governments, and self funding

students invest huge amounts in their education

4. There are very few high quality web sites available.

5. Traditional colleges and universities are adapting their products for on-line learning.

6. Government legislation in the US and Europe encourages on-line learning.

7. The more innovative learning sites give lesson for free just for the love of it.

8. More people with access to the web every second.

• Start up costs are very low (threat of entry - low barriers to entry)• Students have access to books, videos, and paper-based

distance learning packs (product-for-product substitution) • Companies, governments, and self-funding students invest huge

amounts in education. (High bargaining power of suppliers) • There are very few high quality web sites available (high

bargaining power of suppliers) • Traditional colleges and universities are adapting their products

for on-line learning (threat of new entrants - learning curve effects)

• Government legislation in the US and Europe encourages on-line learning (threat of entry reduced - by legislation).

• The more innovative learning sites give lesson for free just for the love of it (threat of entry - differentiation)

• More people with access to the web every second (bargaining power of buyers)

Analysing the environment - Five Forces Analysis - Answer

High

Low

awareness interest conviction purchase post-purchase

The relative effectiveness of communications tools

PersonalSelling

Advertising

Sales Promotion

Technology

Market Conditions

Legal requirements

or restrictions

competition

Economic influences

Political environment

The environment and the factors of changeThe environment and the factors of change

Modify: PR & marketing

SOLE TRADER

PARTNERSHIP

PRIVATE LIMITED CO

PUBLIC LIMITED CO

CO-OPS

CHARITIES

BUILDING SOCIETIES

LOCAL AUTHORITY DIRECT LABOUR ORGS

QUANGOS

LOCAL AUTHORITIES

NATIONALISED INDS

GOVT DEPTS

CLASSIFICATION OF BUSINESS ORGANISATIONS

PUBLIC SECTORPRIVATE SECTOR

SMALL

LARGE

QUANGOs

• QUANGO’s• Quasi-Autonomous Non-Government Organisations• Established by acts of parliament • Operated be private individuals • Free from government interference, daily decisions made

by organisation. • E.g. Office of Fair Trading, the Arts Council • Generally designed to implement of further government

policy

‘‘Distribution is described as the process of delivering, storing, and selling goods so that they can be used by customers’’

There are 4 operators in the Distribution Sector:There are 4 operators in the Distribution Sector:

TRANSPORTING

WAREHOUSING WHOLESALING

RETAILERS

Competition

Leg

al r

equ

irem

ents

or r

estr

icti

ons

Market conditions

Technology

Economic influences

Pol

itic

alin

flu

ence

s

companycompany

Product

Pricing

Advertising

Sales

force

Mar

ket

rese

arch

SJ

Sales

promotions

The independent and the dependent variables

Individualinfluences

• personality• perception• motivation

• attitude

Groupinfluences

• social class

• culture/subculture• reference groups

• family

Decision-makingProcess

Problem Recognition

information search

information evaluation

decision

post-purchase evaluation

situational situational influencesinfluences

• sociocultural• technological• economic• political

Marketing Marketing MixMix

• product• price• place• promotion

The consumer buying- decision making process and its influencing factors The consumer buying- decision making process and its influencing factors

PurchasingPurchasingdecisiondecision

InitiatorInitiator

child asks for new toy

InfluencerInfluencer

mum thinks it wouldbe a good birthday

present

DeciderDecider

mum & dad agree to buy. Child chooses

the toy

PurchaserPurchaser

mum and dad buy the toy.Dad pays for it

End-userEnd-user

Child

Th

e fa

mi l

y a s

a d

ecis

ion

-mak

i ng

un

i tT

he

fam

i ly

a s a

de c

i si o

n- m

a ki n

g u

ni t

Case Studies

1. Harvard Referencing: a guide with examples

2. Research skills

3. Guideline for effective report writing

4. Good approaches for assignment planning

5. Presenting the information correctly

6. The learning styles questionnaire – Honey & Mumford

Test yourse

lf …push yourse

lf

Su

rind

er Ju

neja

Su

rind

er Ju

neja

(A) Define marketing(B) Draw the exchange process(C) Identify the 7 Ps(D) What are the uncontrollable constraints?(E) Name the four stages in the Product Life

Cycle?(F) What is the difference between a product

orientated and a market orientated company?

(G) What is AIDA? and where is it used?(H) What is segmentation? (I) Why is it necessary to divide subgroups into

segments?(J) What is Geographic segmentation?(K) What is Demographic segmentation?(L) How is social classes divided?(M) What is Psychographic segmentation?(N) What is Benefit segmentation?

(O) List three methods of positioning(P) Draw a perceptual map for Ford and BMW comparing price and quality of their motors).(Q) What does SPADE stand for?(R) What is ACORN and what can it be used for?(S) Draw the 2-way communication model(T) How does a marketer encode the message?(U) List the Communications Mix

QUICK REFERENCE GUIDE BY SURINDER JUNEJA 1996© SWOT ANALYSIS- Internal analysis (stren & Weaks)> Look at…*marketing *products *distribution *r&d * plant & equip *finance *employees *structure. External analysis (opps & threats)> Look at…*economic climate *demographic change *market *technology *competitive activity *channel pressure *politics. MARKETING OPPORUNTITY-a mkt opp exists whenever there is a gap, an unfilled demand e.g. drink drive laws in Europe led to increase in low alcoholic beers. (External Audit PEST) (Internal Audit SWOT), 4Ps & 5 ms. When looking at the Micro environment look at Porters 5 forces, when looking at Macro environment look at SLEPT. 5 M’s – (1)men+women (2)money (3) Materials-supply sources + products (4) Machines-production facilities, fixed assets, capacity (5)markets-reputation, position and market prospect PORTER 5 FORCES- (identifies 5 forces which influence the state of competition in an industry) (1)threat of new entrants to industry (2)threat of substitute products or services (3)bargaining power of customers (4)bargaining power of suppliers (5) rivalry amongst current competitors in industry. SEGMENTING> identification of individuals with common characteristics. Characteristics of individual customers are understood, then segments are created on basis of similar characteristic and then mkt mix is designed for target market. Psychographic segmenting> lifestyle-activities, interests and opinions, Personality- self expression, you are able to predict purchasing power e.g. Martini. Profile segmenting> Demographic variables- consumer profiled by common characteristics. Socio-economic variables-social class – education – income. Geographic variables-geography and taste, north vs south, geo-demographics, ACORN. Behavioural segmenting>-benefits sought, purchase behaviour, perceptions and beliefs, usage & purchase occasions. Requirements for effective market segment> (1)measurability- refers to what degree of info exits or is cost effectively obtainable on the particular buyer characteristic of interest. A car manufacturer may have access to info about location of a customer, however personality traits of buyers are more difficult to obtain. (2)Accessibility-refers to the degree to which the company can focus effectively on the chosen segments using marketing methods (3)substantiality-refers to the degree to which the segments are large enough to be worth considering for separate marketing development. Benefits> identification of new marketing opportunities as a result of better understanding of consumer needs in each of the segments. Specialists can be developed and appointed to each of the companies major segment. Operating practices then benefit from the expertise of staff with specialist knowledge of the segments business. The total marketing budget can be allocated more effectively, according to needs and the likely return from each segment. Specialist knowledge and extra effort may enable company to dominate particular segments and gain competitive advantage. Improved segmentation allows more highly targeted marketing activity. e.g. the sales team develops an in-depth knowledge of needs of a particular group of consumers and can get to know a network of potential buyers within the business. TARGETING>limited resources, competition and large markets make it ineffective and inappropriate for companies to sell to the entire market, that is, every market segment. They must select target markets. (1) Undifferentiated marketing- aims to produce a single product and get as many customers as possible to buy it, segmentation is ignored. (2)Concentrated marketing-attempts to produce the ideal product for a single segment of the market (e.g. Rolls- Royce, Mothercare) (3)Differentiated marketing- attempts to introduce several versions of a product, each aimed at a different market segment (e.g. the manufacture of several different brands of washing powder). POSITIONING> positioning by specific product features- on price and specific features. Ford advertise a combination of ABS, power steering, sunroof and all for $9,999 on the road! Positioning by benefits- problems, solutions or needs Crest toothpaste – cavity fighter. Positioning for specific usage- cognac on special occasions, Johnson’s baby shampoo everyday. Positioning for user category> 7-up’s FIDO DIDO. Positioning against another product> Avis no.2 (Hertz). Product class disassociation> lead-free vs lead free. Hybrid Basis>a positioning strategy may be founded on several of these alternatives, incorporating elements from more than one positioning base. Porsche use a combination of the product benefit and user characteristics. FAMILY LIFE CYCLE> ‘Family Decision Making Units’ represents a widely accepted classification of consumer ‘units’ which make buying decisions. (1)Bachelor Stage-young, single not living at home (2)Newly married couples-young, no children (3)Full nest 1- youngest child under 6 (4)Full nest 2-youngest child 6 or over (5)Full nest 3- older married couples with dependent children (6)Empty nest 1- older married couples, no children living with them, head of family still in labour force (7)Empty nest 2- older married couple, no children living at home, head of family retired (8)Solitary Survivor 1- in labour force (9)Solitary survivor 2- retired. Upward mobile ambitious> people seek a better, more affluent lifestyle, through better pay and more interesting work, prepared to try new products. Traditional & Sociable>complaince and conformity to group norms being social approval and reassurance to the individual. Purchasing patterns are traditional. Security and status seeking> ‘safety’ needs and ‘ego’-defensive needs are stressed. This lifestyle links status, income and security. Hedonistic preference>the emphasis is on ‘enjoy life now’ and the immediate satisfaction of wants and needs. Little consideration is given to the future. MARKETING CONTROL PROCESS> The control process is vital if management is to ensure that planning targets are achieved. Control info generated within the organisation is referred to as feedback. The control process involves 4 underlying components… 1> development of objectives- discuss, develop and decide upon marketing objectives 2>Establish performance measures and standards 3>Evaluate actual performance against established standards 4> Take corrective action as necessary. Performance should be measured by obtaining data about actual results for a direct comparison with the targets or standards set. MARKETING PLANNING PROCESS> Stage 1 analysis/assessment, Stage 2 opportunities, Stage 3 strategic implications, Stage 4 make a choice, Stage 5 Implementation, plans and controls to be used. In this process look at time duration you want to use. MARKETING AUDIT>examination of marketing groups’ objectives, strategies which looks at co’s past performance and evaluates how effectively the marketing organisation has performed to assigned function e.g. how each cost center performs in the marketing department, and whether or not performance rate needs to be changed. If the results are acceptable then continue, if not then re-assign new functions to all departments. It is conducted very regularly and is very precise, describes current activities and gathers as much environment influences as possible and it explores opportunities. MARKETING PLAN> Either SOSTAC…(1) Exec summary (2)objectives (SMART) + mission statement (3)product background (4)marketing analysis-where you are in the market compared to competitors (5)marketing strategies to be used-what target market? Brand positioning? (6)expected result (7)program for implementation (8)control &evaluation SEE ABOVE FOR MARKETING CONTROL PROCESS. (9) How will it be financed? (10)operational considerations-how product to be made and what resources to be allocated (11)Appendix. MARKETING STRATEGY>looks at specific target markets, and what types of competitive advantages to be developed. Involves evaluating the environment in which you are operating in (Porter’s 5 Forces). Efficiency and effectiveness are 2 fundamental ways of measuring performance. ‘Efficiency is concerned with doing things right…Effectiveness is doing the right thing’ Efficiency can be defined as the ration of output quantities to input resources. Efficiency and inefficiency are measures along the same scale, with ‘efficiency’ referring to a higher ration of output to input than the norm or standard and ‘inefficiency’ referring to a lower ratio. Effectiveness can be defined as success in producing a desired result. Generally an organisation is effective if it meets the needs of its chosen client groups and deploys its resources in the best possible way. ENVIRONMENTAL SCANNING & ANALYSIS> STAGE (1) collect info (2)assess and interpret (3) predict future (4)change is advancing. CENTRALISED>an organisation that has little delegation + major decisions are made by head office (big bosses) DECENTRALISED> more effective and speedier delegation. MARKET LED>a co. that is obsessed with mkt and gets continuous info on customers. PRODUCT LED> a co. that is continuously looking on how to improve their product (innovation). ‘’Myopia’’ forgotten the need for customers. SALES LED> sales dept dominates i.e. to increase sale of product, lets reduce the price. A good company would combine all 3 aspects. POST-TESTING>involves finding out how well people can recall an advertisement and the product it advertises, and whether attitudes to the product have changed since the advertising campaign. Post-testing would help to establish whether an organisation is succeeding in getting the corporate image it is trying to build up in the public mind. MARKET RESEARCH> primary methods-(all based around a questionnaire)…personal interview, postal & telephone interview, the panel, focus group. Secondary info- govern stats, internal company data, sales records, competitor analysis etc. Types of market research – exploratory, descriptive and causal. Sampling – random, stratified, cluster, convenience, judgment, ADVERTISING inform, reinforce, persuade, tripartite relationship exists with agencies, advertisers & media buyers. AIDA-attention, interest, desire and action. Push strategy-use of personal selling/Pull-use of advertising