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BASICS OF MARKETING
MARKETING Definition
Marketing is the management process for identifying,
anticipating and satisfying customer requirements profitably.
Source - The Chartered Institute of Marketing (CIM). Accessed
2012.
The CIM definition looks not only at identifying customer needs,
but also satisfying them (short-term) and anticipating them in
the future (long-term retention). The definition also states the
importance of a process of marketing, with marketing
objectives and outcomes. CIM is recognised as being one of the
most influential marketing
bodies in the world. It is the professional body for marketing in
the United Kingdom.
MARKETING Strategy
In order for businesses to win market share and stay relevant
they need to consider many types of marketing strategies. Each
marketing strategy can communicate to a target market the
benefits and features of a product.
Marketing strategies can also communicate an overall value to
their customers. In many cases, this is the core of building
equity or good will in your target markets. Apple, for example,
has invested in creating commercials for television, billboards,
and magazines that showcase their products in such a way that
their customers feel an affinity towards Apples products.
MARKETING MIX Definition
The marketing mix is one of the most famous marketing terms.
The marketing mix is the tactical or operational part of a
marketing plan. The marketing mix is also called the 4Ps and
the 7Ps. The 4Ps are price, place, product and promotion.
The services marketing mix is also called the 7Ps and includes
the addition of process, people and physical evidence.
The marketing mix is . . . The set of controllable tactical
marketing tools product, price, place, and promotion that
the firm blends to produce the response it wants in
the target market.
Source - Kotler and Armstrong (2010).
The concept is simple. Think about another common mix a
cake mix. All cakes contain eggs, milk, flour, and sugar.
However, you can alter the final cake by altering the amounts
of mix elements contained in it. So for a sweet cake add more
sugar!
It is the same with the marketing mix. The offer you make to
your customer can be altered by varying the mix elements. So
for a high profile brand, increase the focus on promotion and
desensitize the weight given to price.
The product life cycle has 4 very clearly defined stages, each
with its own characteristics that mean different things for
business that are trying to manage the life cycle of their
particular products.
Introduction Stage This stage of the cycle could be the
most expensive for a company launching a new product. The
size of the market for the product is small, which means sales
are low, although they will be increasing. On the other hand,
the cost of things like research and development, consumer
testing, and the marketing needed to launch the product can be
very high, especially if its a competitive sector.
Growth Stage The growth stage is typically characterized by
a strong growth in sales and profits, and because the company
can start to benefit from economies of scale in production, the
profit margins, as well as the overall amount of profit, will
increase. This makes it possible for businesses to invest more
money in the promotional activity to maximize the potential of
this growth stage.
Maturity Stage During the maturity stage, the product is
established and the aim for the manufacturer is now to
maintain the market share they have built up. This is probably
the most competitive time for most products and businesses
need to invest wisely in any marketing they undertake. They
also need to consider any product modifications or
improvements to the production process which might give them
a competitive advantage.
Decline Stage Eventually, the market for a product will start
to shrink, and this is whats known as the decline stage. This
shrinkage could be due to the market becoming saturated (i.e.
all the customers who will buy the product have already
purchased it), or because the consumers are switching to a
different type of product. While this decline may be inevitable,
it may still be possible for companies to make some profit by
switching to less-expensive production methods and cheaper
markets.
Product Life Cycle Examples
Its possible to provide examples of various products to
illustrate the different stages of the product life cycle more
clearly. Here is the example of watching recorded television and
the various stages of each method:
1. Introduction 3D TVs
2. Growth Blue ray discs/DVR
3. Maturity DVD
4. Decline Video cassette
The idea of the product life cycle has been around for some
time, and it is an important principle manufacturers need to
understand in order to make a profit and stay in business.
However, the key to successful manufacturing is not just
understanding this life cycle, but also proactively managing
products throughout their lifetime, applying the appropriate
resources and sales and marketing strategies, depending on
what stage products are at in the cycle.
4. Tiered Pricing
Does your product have options that vary in value? Compare
the experience to buying a new car: Can your customers
choose between standard and fully loaded? If so, you should
consider adding a tiered pricing structure. Tiered pricing
appeals to customers because it allows them to choose the
price level that best fits their budget. If your product(s) can be
differentiated through additional features, price them at points
that reflect their individual values. Try using a pricing structure
that offers good, better, and best options for products or
services that have increasing levels of value. Applying this
strategy can help you capture a larger portion of the market by
offering multiple options for a range of shoppers.
5. Odd Number Pricing
After considering all of the above pricing factors, the exact
price comes down to a matter of cents. Why does iTunes sell
songs at 99 cents instead of $1? In the eyes of a consumer, a
few cents can mean the difference between purchasing or
passing. A pricing strategy thats been around for decades
suggests that a product retailing at $39.99 is much more
appealing than one at $40. Although this difference may seem
arbitrary, studies have shown that this pricing strategy is
successful for the majority of product categories. Once you
know that youre competitively priced and covering your costs,
test out single-digit strategies to find which best fits your target
audience.
Identification
Types
Function
Considerations
MARKET RESEARCH
The systematic gathering, recording and analysis of data
about problems relating to the marketing of goods and
services The American Marketing Association.
TYPES OF RESEARCH
Most research can be divided into three different
categories; exploratory, descriptive and causal. Each serves a
different end purpose and can only be used in certain ways. In
the online survey world, mastery of all three can lead to
sounder insights and greater quality information. Over the next
couple weeks well be taking a look into all these forms of
research and how you can incorporate each in your
organizations strategies for improvement and growth as well
as measuring your companys level of success. Today, lets do a
quick overview of all three types of research, and how they fit
in a research plan.
Exploratory Research
Exploratory research is an important part of any marketing or
business strategy. Its focus is on the discovery of ideas and
insights as opposed to collecting statistically accurate data.
That is why exploratory research is best suited as the beginning
of your total research plan. It is most commonly used for
further defining company issues, areas for potential growth,
alternative courses of action, and prioritizing areas that require
statistical research.
When it comes to online surveys, the most common example of
exploratory research takes place in the form of open-ended
questions. Think of the exploratory questions in your survey as
expanding your understanding of the people you are surveying.
Text responses may not be statistically measureable, but they
will give you richer quality information that can lead to the
discovery of new initiatives or problems that should be
addressed.
Descriptive Research
Descriptive research takes up the bulk of online surveying and
is considered conclusive in nature due to its quantitative
nature. Unlike exploratory research, descriptive research is
preplanned and structured in design so the information
collected can be statistically inferred on a population.
The main idea behind using this type of research is to better
define an opinion, attitude, or behaviour held by a group of
people on a given subject. Consider your everyday multiple
choice question. Since there are predefined categories a
respondent must choose from, it is considered descriptive
research. These questions will not give the unique insights on
the issues like exploratory research would. Instead, grouping
the responses into predetermined choices will provide
statistically inferable data. This allows you to measure the
significance of your results on the overall population you are
studying, as well as the changes of your respondents opinions,
attitudes, and behaviours over time.
Causal Research
Like descriptive research, causal research is quantitative in
nature as well as preplanned and structured in design. For this
reason, it is also considered conclusive research. Causal
research differs in its attempt to explain the cause and effect
relationship between variables. This is opposed to the
observational style of descriptive research, because it attempts
to decipher whether a relationship is causal through
experimentation. In the end, causal research will have two
objectives: 1) To understand which variables are the cause and
which variables are the effect, and 2) to determine the nature
of the relationship between the causal variables and the effect
to be predicted.
For example, a cereal brand owner wants to learn if they will
receive more sales with their new cereal box design. Instead of
conducting descriptive research by asking people whether they
would be more likely to buy their cereal in its new box, they
would set up an experiment in two separate stores. One will sell
the cereal in only its original box and the other with the new
box. Taking care to avoid any outside sources of bias, they
would then measure the difference between sales based on the
cereal packaging. Did the new packaging have any effect on
the cereal sales? What was that effect?
BRAND
A brand is a product, service, or concept that is publicly
distinguished from other products, services, or concepts so that
it can be easily communicated and usually marketed. A brand
name is the name of the distinctive product, service, or
concept. Branding is the process of creating and disseminating
the brand name. Branding can be applied to the entire
corporate identity as well as to individual product and service
names.
Brands are usually protected from use by others by securing a
trademark or service mark from an authorized agency, usually
a government agency. Before applying for a trademark or
service mark, you need to establish that someone else hasn't
already obtained one for your name.
Although you can do the searching yourself, it is common to
hire a law firm that specializes in doing trademark searches and
managing the application process, which, in the United States,
takes about a year. Once you've learned that no one else is
using it, you can begin to use your brand name as a trademark
simply by stating it is a trademark (using the "TM" where it first
appears in a publication or Web site). After you receive the
trademark, you can use the registered symbol after your
trademark.
Brands are often expressed in the form of logos, graphic
representations of the brand. In computers, a recent example
of widespread brand application was the "Intel Inside" label
provided to manufacturers that use Intel's microchips.
A company's brands and the public's awareness of them is
often used as a factor in evaluating a company. Corporations
sometimes hire market research firms to study public
recognition of brand names as well as attitudes toward the
brands.
Here is David Ogilvy's definition of a brand:
The intangible sum of a product's attributes: its name,
packaging, and price, its history, its reputation, and the way it's
advertised.
BRAND IMAGE
Brand image is the current view of the customers about a
brand. It can be defined as a unique bundle of associations
within the minds of target customers. It signifies what the
brand presently stands for. It is a set of beliefs held about a
specific brand. In short, it is nothing but the consumers
perception about the product. It is the manner in which a
specific brand is positioned in the market. Brand image conveys
emotional value and not just a mental image. Brand image is
nothing but an organizations character. It is an accumulation of
contact and observation by people external to an organization.
It should highlight an organizations mission and vision to all.
The main elements of positive brand image are- unique logo
reflecting organizations image, slogan describing
organizations business in brief and brand identifier supporting
the key values.
BRAND IDENTITY
Brand identity stems from an organization, i.e., an
organization is responsible for creating a distinguished product
with unique characteristics. It is how an organization seeks to
identify itself. It represents how an organization wants to be
perceived in the market. An organization communicates its
identity to the consumers through its branding and marketing
strategies. A brand is unique due to its identity. Brand identity
includes following elements - Brand vision, brand culture,
positioning, personality, relationships, and presentations.
BRAND PERSONALITY
Brand personality is the way a brand speaks and behaves. It
means assigning human personality traits/characteristics to a
brand so as to achieve differentiation. These characteristics
signify brand behaviour through both individuals representing
the brand (i.e. its employees) as well as through advertising,
packaging, etc. When brand image or brand identity is
expressed in terms of human traits, it is called brand
personality. For instance - Allen Solley brand speaks the
personality and makes the individual who wears it stand apart
from the crowd. Infosys represents uniqueness, value, and
intellectualism.
BRAND EQUITY
Brand image is the current view of the customers about a
brand. It can be defined as a unique bundle of associations
within the minds of target customers. It signifies what the
brand presently stands for. It is a set of beliefs held about a
specific brand. In short, it is nothing but the consumers
perception about the product. It is the manner in which a
specific brand is positioned in the market. Brand image conveys
emotional value and not just a mental image. Brand image is
nothing but an organizations character. It is an accumulation of
contact and observation by people external to an organization.
It should highlight an organizations mission and vision to all.
The main elements of positive brand image are- unique logo
reflecting organizations image, slogan describing
organizations business in brief and brand identifier supporting
the key values.
SAMPLING
Sampling is a process used in statistical analysis in which a
predetermined number of observations are taken from a larger
population. The methodology used to sample from a larger
population depends on the type of analysis being performed,
but may include simple random sampling or systematic
sampling.
TYPES OF SAMPLING
Sampling takes on two forms in statistics: probability sampling
and non-probability sampling:
Probability sampling uses random sampling techniques to
create a sample.
use non-random processes like
Sampling techniques
researcher judgment or convenience sampling.
Probability sampling is based on the fact that every member of
a population has a known and equal chance of being selected.
For example, if you had a population of 100 people, each
person would have odds of 1 out of 100 of being chosen. With
non-probability sampling, those odds are not equal. For
example, a person might have a better chance of being chosen
if they live close to the researcher or have access to a
computer. Probability sampling gives you the best chance to
create a sample that is truly representative of the population.
Using probability sampling for finding sample sizes means that
you can employ statistical techniques like confidence
intervals and margins of error to validate your results.
Types of Probability Sampling
Simple random sampling is a completely random
method of selecting subjects. These can include assigning
numbers to all subjects and then using a random number
generator to choose random numbers. Classic ball and urn
experiments are another example of this process
(assuming the balls are sufficiently mixed). The members
whose numbers are chosen are included in the sample.
Stratified Random Sampling involves splitting subjects
into mutually exclusive groups and then using simple
random sampling to choose members from groups.
Systematic Sampling means that you choose every
nth participant from a complete list. For example, you
could choose every 10th person listed.
Cluster Random Sampling is a way to randomly select
participants from a list that is too large for simple random
sampling. For example, if you wanted to choose 1000
participants from the entire population of the U.S., it is
likely impossible to get a complete list of everyone.
Instead, the researcher randomly selects areas (i.e. cities
or counties) and randomly selects from within those
boundaries.
Multi-Stage Random sampling uses a combination of
techniques.
Interval
Interval scales are numeric scales in which we know not only
the order, but also the exact differences between the values.
The classic example of an interval scale is Celsius temperature
because the difference between each value is the same. For
example, the difference between 60 and 50 degrees is a
measurable 10 degrees, as is the difference between 80 and 70
degrees. Time is another good example of an interval scale in
which the increments are known, consistent, and measurable.
Interval scales are nice because the realm of statistical analysis
on these data sets opens up. For example, central
tendency can be measured by mode, median, or mean;
standard deviation can also be calculated.
Like the others, you can remember the key points of an
interval scale pretty easily. Interval itself means space in
between, which is the important thing to rememberinterval
scales not only tell us about order, but also about the value
between each item.
Heres the problem with interval scales: they dont have a true
zero. For example, there is no such thing as no temperature.
Without a true zero, it is impossible to compute ratios. With
interval data, we can add and subtract, but cannot multiply or
divide. Confused? Ok, consider this: 10 degrees + 10 degrees
= 20 degrees. No problem there. 20 degrees is not twice as
hot as 10 degrees, however, because there is no such thing as
no temperature when it comes to the Celsius scale. I hope
that makes sense. Bottom line, interval scales are great, but
we cannot calculate ratios, which brings us to our last
measurement scale
Ratio
Ratio scales are the ultimate nirvana when it comes to
measurement scales because they tell us about the order, they
tell us the exact value between units, AND they also have an
absolute zerowhich allows for a wide range of both descriptive
and inferential statistics to be applied. At the risk of repeating
myself, everything above about interval data applies to ratio
scales + ratio scales have a clear definition of zero. Good
examples of ratio variables include height and weight.
Ratio scales provide a wealth of possibilities when it comes to
statistical analysis. These variables can be meaningfully
added, subtracted, multiplied, divided (ratios). Central
tendency can be measured by mode, median, or mean;
measures of dispersion, such as standard deviation and
coefficient of variation can also be calculated from ratio scales.
4. Image Differentiation
A person responds differently to company
and brand images. Identity comprises the ways that a
company aims to identify or position itself or its product,
whereas image is the way the public perceives the company or
its products. Image is affected by many factors beyond the
companys control.
For example, Nike mainstream popularity turns off 12-to-24-
years-olds, who prefers Airwalk and other alternative brands
that convey more extreme sports image. Hence Image
differentiation is important for a company or product. An
effective image establishes the products character and value
proposition, it conveys this character in a distinctive way and it
delivers emotional power beyond a mental image. For image
differentiation to work, it must be conveyed through every
available communication vehicle and brand contact, including
logos, media and special events.
5. Channel Differentiation
Companies can achieve competitive advantage through the
way the design their distribution channels coverage, expertise
and performance. For example, Maruti Udyog Ltd. makes its
cars available to customers through several distribution
channels. The company realised that there is huge market for
second hand cars and this market is dominated by unorganised
players. To cater to this situation, MUL established a separate
distribution channel by opening True Value outlets which act
as intermediaries between buyers and sellers.