MNB102-E INTRODUCTION TO BUSINESS MANAGEMENT

MNB102-EMNB102-E

INTRODUCTION TO BUSINESS MANAGEMENTINTRODUCTION TO BUSINESS MANAGEMENT

Facilitator: Neels Bothma

Welcome to the Marketing Section of today’s First

Years lectures.

Structure of the class

1. Introduction to marketing2. Marketing research3. Customer behaviour4. Market segmentation5. The marketing mix6. The marketing strategy7. Public relations

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

The Evolution of Marketing as we know it

Factory ExistingProducts

Sellingand

Promoting

ProfitsthroughVolume

Market CustomerNeeds

IntegratedMarketing

Profitsthrough

Satisfaction

The Selling Concept

The Marketing Concept

StartingPoint

Focus Means Ends

Marketing & Sales Concepts Contrasted

What is Marketing?

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

The Marketing Process (see Fig 13.1)

Simply: Marketing management creates an offering

(product, price marketing communication, distribution)

The target market sacrifices money The target market consumes the offering Marketing management gets feedback through

research This all happens in a marketing environment Everybody satisfies their objectives (maximise

profitability in the long term, total need satisfaction)

Target Customers

IntendedPositioning

Price

Amount of moneythat consumers

have to pay to obtainthe product

Product

“Goods-and-service”combination that a company offers a

target market

Activities that persuade target

customers to buythe product

Promotion

Company activitiesthat make the

product available

Place

Marketing Mix- The Four P’s

WhyInformation

IsNeeded

MarketingEnvironment

StrategicPlanning

Customer Needs

Competition

The Importance of Information

Marketing ResearchWhy?Know the research processMarket forecasting 1. Define the problem to be investigated

2. Formulate hypotheses3. Investigate hypotheses4. Compile a questionnaire5. Test the questionnaire6. Select sample7. Train fieldworkers and do fieldwork8. Analyse data9. Interpret the results10. Compile the report11. Management studies report12. Management implements findings

Sales forecastingProfit forecasting

Consumer Buying Behavior

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

Study consumer behavior to answer: “How do consumers respond to

marketing efforts the company might use, why do they behave the way they do?”

Customer behaviour

Awareness of need Gathering information Evaluation Purchase action Post purchase evaluation

INDIVIDUAL FACTORS

MotivationAttitude

PerceptionLearning ability

PersonalityLifestyle

GROUP FACTORS

FamilyReference groupOpinion leadersCultural group

Groups

• Membership

• Reference Group

Family• Husband, wife, kids• Influencer, buyer, user

Cultural group

Group Factors

Factors Affecting Consumer Behavior: Group

Individual Factors

Motivation

Perception

Learning

Beliefs and Attitudes

PersonalityAnd

lifestyle

Factors Affecting Consumer Behavior: Individual

Esteem Needs(self-esteem, status)

Social Needs(sense of belonging, love)

Safety Needs(security, protection)

Physiological Needs(hunger, thirst)

Self Actualization

(Self-development)

Maslow’s Hierarchy of Needs

Awareness of need or problem

Information Search

Evaluation of Alternatives

Purchase Decision

Post-purchase Behavior

Consumer Decision Process

Market segmentationWhat is a market?Different types of markets:

• consumers• industrial• resellers• government

Approaches to the market – see fig 13.3

Requirements for successful segmentation:• Identifiable and measurable• Substantial• Accessible• Responsive

Company

ConsumerMarkets

InternationalMarkets

GovernmentMarkets

BusinessMarkets

ResellerMarkets

Customer Markets

• Size, purchasing power, profiles of segments can be measured.

• Segments must be effectively reached and served.

• Segments must be large or profitable enough to serve.

Measurable

Accessible

Substantial

Differential

Actionable

• Segments must respond differently to different marketing mix elements & actions.

• Must be able to attract and serve the segments.

Requirements for Effective Segmentation

Bases for segmentation

Demographic – Who they areGeographic – Where they arePsychographic – What they think they areBehavioural – How do they behave

All of the above determine the consumer profile – draw a picture

Targeting and positioning

Geographic

DemographicAge, gender, family size

and life cycle, or income

PsychographicSocial class, lifestyle, or personality

BehavioralOccasions, benefits, uses, or responses

Nations, states, regions or cities,

density

Bases for Segmenting Consumer Markets

Segment 1

Segment 2

Segment 3

Segment 1

Segment 2

Segment 3

CompanyMarketing

Mix

CompanyMarketing

Mix

CompanyMarketing Mix 1

CompanyMarketing Mix 2

CompanyMarketing Mix 3

Market

A. MARKET AGGREGATION

B. MULTI-SEGMENT APPROACH

C. SINGLE SEGMENT APPROACH

Market Coverage Strategies

Positioning for Positioning for Competitive AdvantageCompetitive Advantage

Product’s Position - the place the product occupies in consumers’ minds relative to competing products; i.e. Castle used to position on “the great South African beer”.

Then: “the friendship brew”

Then: SA’s finest

Now? Satisfies a South African Thirst

Marketers must:Marketers must:

Plan positions to give products the greatest advantage

Develop marketing mixes to create planned positions

1. Identify Basesfor Segmenting the Market

2. Develop Profilesof Resulting Segments

3. Develop Measuresof Segment Attractiveness

4. Select TargetSegment(s)

5. Develop Positioningfor Each Target Segment

6. Develop MarketingMix for Each Target Segment Market

Positioning

MarketTargeting

Market Segmentation

Steps in Segmentation, Targeting, and Positioning

Target Customers

IntendedPositioning

Price

Amount of moneythat consumers

have to pay to obtainthe product

Product

“Goods-and-service”combination that a company offers a

target market

Activities that persuade target

customers to buythe product

Promotion

Company activitiesthat make the

product available

Place

Marketing Mix- The Four P’s

The marketing instruments (mix)

1. Product

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

The marketing instruments – Product (cont.)

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

Shopping ProductsShopping Products

> Buy less frequently> Gather product information> Fewer purchase locations> Compare for:

• Suitability & Quality • Price & Style

Convenience ProductsConvenience Products

> Buy frequently & immediately> Low priced> Many purchase locations> Includes:

• Staple goods• Impulse goods• Emergency goods

Specialty ProductsSpecialty Products

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

Unsought ProductsUnsought Products

> New innovations> Products consumers don’t want to think about> Require much advertising & personal selling

Classification of ProductClassification of Product

The marketing instruments (mix)

2. Price

Types of prices cost price market price target price final price

Price adaptations skimming penetration market price leader price odd price bait price

The marketing instruments (mix)

3. Distribution

Type of channelChannel leadershipMarket coveragePhysical distribution

Refer to box on page 326

Direct

Indirect

M W W R C

M W R C

M R C

M C

Channel 1

Channel 2

Channel 3

Channel 4

Channel Level - A Layer of Intermediaries that Perform Some Work in Bringing the Product and it’s Ownership Closer to the Buyer.

Consumer Marketing Channels & Levels

InventoryWhen to order

How much to orderJust-in-time

CostsMinimize Costs ofAttaining Logistics

Objectives

WarehousingStorage

Distribution

Order ProcessingSubmittedProcessedShipped

Physical distributionFunctionsTransportation

Water, Truck, Rail,

Pipeline & Air

Physical distribution

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

The marketing instruments (mix)

4. Marketing communication

Advertising

Personal Selling

Any Paid Form of Nonpersonal Presentation by an Identified Sponsor.

Sales Promotion Short-term Incentives to Encourage Sales.

Public RelationsBuilding Good Relations with Various Publics by Obtaining Favorable Unpaid Publicity.

Direct Marketing Direct Communications With Individuals to Obtain an Immediate Response.

Personal Presentations by a Firm’s Sales Force.

The Marketing The Marketing Communications MixCommunications Mix

The Integrated Marketing Strategy

The marketing concept: Profitability Consumer orientation Social responsibility Organisational integration

Phases in the product life cycle: Introductory Growth Maturity Decline

Marketing warfare Attack Defense

Time

ProductDevelop-

ment

Introduction

Profits

Sales

Growth Maturity Decline

Losses/Investments ($)

Sales andProfits ($)

Sales and Profits Over the Product’s Life From Introduction to Decline

Product Life Cycle

Marketing Planning and Control

Planningo Strategic planningo Functional planning

Controlo Set objectiveso Measure performanceo Evaluate performanceo Take corrective action

Public Relations

A deliberate, planned and sustained process of communication between a

business and its internal and external publics. Its purpose is obtaining, maintaining and/or improving good relations and

understanding.

Developed from:ManipulationInformationMutual influence

What is Public Relations?

•Building good relations with the company’s various publics by obtaining favorable publicity, building up a good “corporate image” and handling or heading off unfavorable rumors, stories and events.

•Major functions are:– Press Relations

– Product Publicity

– Public Affairs

– Lobbying

– Investor Relations

–Development

SpecialEvents

Written Materials

Corporate Identity Materials Speeches

News

AudiovisualMaterials

Public Service

Activities

Web Site

Major Public Relations Tools

Public Relations Management

1. Planningo Scanning the environmento Setting objectives

2. OrganisingoOrganisational structureoOutside consultants

3. LeadingoEstablish corporate culture

4. Evaluation and control

Communication• Communication can be verbal and non-verbal

• Communication process – see fig 16.6

Basically: Sender encodes message which is transmitted to receiver via a medium.

The receiver decodes the message and interprets it in some way. This all happens despite noise in the environment.

• Types of communication media:

The spoken wordThe printed mediaSight and soundSpecial eventsThe Internet

Publicity• Methods of obtaining publicity:

Unique special events Unique communication messages News releases Sponsorships

• Social responsibility and business ethics

• Areas of social responsibility:

Consumers Suppliers Competitors Employees Owners and shareholders The community

The end!We encourage you to

study further in this exciting field!