JUN JUHAIZI BINTI JUHARI 1
JUN JUHAIZI BINTI JUHARI 2 CONTENTS CHAPTER 1:.....................................................................................................................................................3 An Overview of Marketing.............................................................................................................................3 CHAPTER 2:...................................................................................................................................................24 Managing the Marketing Process................................................................................................................24 CHAPTER 3:...................................................................................................................................................35 Marketing Environment...............................................................................................................................35 CHAPTER 4:...................................................................................................................................................48 Consumer Market and Buyer Behaviour.....................................................................................................48 CHAPTER 5:...................................................................................................................................................65 Segmentation, Targeting and Positioning ...................................................................................................65 CHAPTER 6:...................................................................................................................................................82 Products........................................................................................................................................................82 CHAPTER 7:.................................................................................................................................................102 Pricing .........................................................................................................................................................102 CHAPTER 8:.................................................................................................................................................115 Place............................................................................................................................................................115 CHAPTER 9:.................................................................................................................................................127 Promotion...................................................................................................................................................127
JUN JUHAIZI BINTI JUHARI 3 CHAPTER 1: An Overview of Marketing LEARNING OBJECTIVES: 1) Define marketing. 2) Explain the core marketing concepts. 3) Describe the different types of marketing philosophies. 4) Discuss the elements of 4P’s and 7Ps of marketing. MARKETING DEFINITIONS ❖ The American Marketing Association (AMA) states that marketing is “the activity, set of institutions, and processes for creating, capturing, communicating, delivering and exchanging offerings that have value for customers, clients, partners and society at large”. ❖ Marketing is “a social and managerial process whereby individuals and groups obtain what they need and want through creating and exchanging products and values with others”. (Kotler & Armstrong, 2016). ❖ “It is the process by which companies create value for customers and build strong customer relationships in order to capture value from customer in return”. (Kotler & Armstrong, 2016). ❖ “It is the management process responsible for identifying, anticipating, and satisfying customer requirements profitably”. (CIM)
JUN JUHAIZI BINTI JUHARI 4 CORE MARKETING CONCEPTS To explain this definition, the following important core marketing concepts will be examined: 1) Needs, Wants and Demands 2) Marketing Offers (Products, Services and Experiences) 3) Value and Satisfaction, 4) Exchanges, Transactions and Relationships 5) Markets 1) Needs, Wants and Demand Needs ❖ A state of felt deprivation. ❖ The most basic concept underlying marketing is that of human needs. ❖ Human needs are states of lacking something necessary in a person. ❖ It is a basic part of human makeup. ❖ They include: ❖ Basic Physical needs – food, clothing, warmth, and safety. ❖ Social needs for belonging and affection. ❖ Individuals needs for knowledge and self-expression. Wants. ❖ The form taken by human needs as they are shaped by culture and individual personality. ❖ Wants are shaped by one’s society and are described in term of objects that will satisfy needs. ❖ A hungry person in the United State might want a Big Mac, but a hungry person in Malaysia might want Nasi Goreng
JUN JUHAIZI BINTI JUHARI 5 Demands. ❖ Human wants that are backed by buying power. ❖ People have almost unlimited wants but limited resources. ❖ Thus, they want to choose products that provide the most value and satisfaction for their money. ❖ When backed by buying power, wants become demands. ❖ Consumers view products as bundles of benefits and choose products that give them the best bundle for their money. ❖ For example, A Honda Civic means basic transportation, affordable price and fuel economy. Given their wants and resources, people demand products with the benefits that add up to the most satisfaction. 2) Products, Services and Experiences ❖ People satisfy their needs and wants with products and services. ❖ Product - anything that can be offered to a market for attention, acquisition, use or consumption that might satisfy a want or need. It includes physical object, services, persons, places, organization and ideas. The concept of product is not limited to physical objects. Anything capable of satisfying a need can be called a product. In addition to tangible goods, products include services. ❖ Service – Any activity or benefit that one party can offer to another that is essentially intangible and does not result in the ownership of anything.e.g. Banking, airline, hotel, air conditioner services, etc. ❖ Broadly defined, products also include other entities such as experiences, persons, places, organizations, activities and ideas. For example, consumers decide which entertainers to watch on television, which places to visit on vacation, which organizations to support through contributions and which ideas to adopt.
JUN JUHAIZI BINTI JUHARI 6 3) Value, Satisfaction and Quality ❖ Consumers usually face a broad array of products and services that might satisfy a given need. How do they choose among these many products and services? Consumers make buying choices based on their perceptions of the value that various products and services deliver. ❖ Customer value – The differences between the values the customer gains from owning and using a product and the costs of obtaining the product. ❖ For example, FedEx customers gain a number of benefits. The most obvious being fast and reliable package delivery. However, when using FedEx, customers also may receive some status and image values. Using FedEx usually makes both the package sender and the receiver feel more important. ❖ Customers do not often judge products’ values and costs accurately or objectively, but they act on perceived value. ❖ Customer Satisfaction is the extent to which a product’s perceived performance in delivering value matches a buyer’s expectation. If the product’s performance falls short of the customer’s expectation, the buyer is dissatisfied. If the performance matches expectation, the buyer is satisfied. If performance exceeds expectations, the buyer is delighted. Customer expectation Customer satisfaction Below expectation Dissatisfied Match expectation Satisfied Exceed expectation Delight ❖ Outstanding marketing companies go out of their way to keep their customers satisfied. Satisfied customers make repeat purchase, and they tell others about their good experience with the product. The key is to match customer expectations with companies’ performance. Smart companies aim to delight
JUN JUHAIZI BINTI JUHARI 7 customers by promising only what they can deliver, then delivering more than they promise. ❖ Satisfaction is the difference between products’ perceived performance in delivery value relative to buyer’s expectations before a product. ❖ Quality - Quality can be defined as “freedom from defects”. Quality has a direct impact on product or service performance. This is closely linked to customer value and satisfaction. ❖ Customer satisfaction link to quality, lead the company adopted Total Quality Management programs, designed to constantly improve the quality of their products services and marketing processes. Quality has a direct impact on product performance and hence on customer satisfaction. 4) Exchanges, transactions, and relationships ❖ Exchange – The act of obtaining a desired object from someone by offering something in return. For example, hungry people could find food by hunting, fishing, or gathering fruits. They could beg for food or take food from someone else. Or they could offer money or others in return for food. ❖ Transaction – A trade between two parties that involves at least two things of value, agreed upon conditions, a time of agreement and a place of agreement. One party gives X to another party and gets Y in return. For example, you pay RM2000 for a television set. ❖ Relationship marketing – The process of creating, maintaining, and enhancing strong, value-laden relationships with customers and other stakeholders. Beyond creating short term transaction, marketers need to build long term relationship with valued customers, distributors, dealers and suppliers.
JUN JUHAIZI BINTI JUHARI 8 5) Markets ❖ Markets - The set of all actual and potential buyers of a product or services. These buyers share a particular need or want that can be satisfied through exchanges and relationships. The term market also stood for the place where buyers and sellers gathered to exchange their goods such as village square. ❖ Size of markets depends on: 1) Number of people who exhibit the need 2) Have resources to engage in exchange 3) Willing to offer these resources in exchange for what they want MARKETING MANAGEMENT PHILOSOPHIES We define marketing management as the analysis, planning, implementation, and control of program designed to create, build and maintain beneficial exchanges with target buyers for the purpose of achieving organizational objectives. So, what philosophy should guide these marketing efforts? There are five orientations (philosophical concepts to the marketplace have guided and continue to guide organizational activities): 1. The Production Concept 2. The Product Concept 3. The Selling Concept 4. The Marketing Concept 5. The Societal Marketing Concept
JUN JUHAIZI BINTI JUHARI 9 1) The Production Concept ❖ Around the turn of the 20th century, most forms were production oriented and believed that a good product would sell itself. ❖ The philosophy that consumers will favor products that are available and highly affordable, and that management should therefore focus on improving production and distribution efficiency. ❖ This concept is the oldest of the concepts in business. ❖ It holds that consumers will prefer products that are widely available and inexpensive. ❖ Managers focusing on this concept concentrate on achieving high production efficiency, low costs, and mass distribution. ❖ They assume that consumers are primarily interested in product availability and low prices. ❖ This orientation makes sense in developing countries, where consumers are more interested in obtaining the product than in its features. ❖ For example, Henry Ford’s whole philosophy was to perfect the production of the Model T so that its cost could be reduced, and more people could afford it. Customers can have any colour they want as long as it’s black. 2) The Product Concept. ❖ This orientation holds that consumers will favor those products that offer the most quality, performance, or innovative features that organization should therefore devote its energy to making continuous product improvements. ❖ Managers focusing on this concept concentrate on making superior products and improving them over time. ❖ They assume that buyers admire well-made products and can appraise quality and performance.
JUN JUHAIZI BINTI JUHARI 10 ❖ However, these managers are sometimes caught up in a love affair with their product and do not realize what the market needs. ❖ Management might commit the “better-mousetrap” fallacy, believing that a better mousetrap will lead people to beat a path to its door. ❖ For example, Samsung came out with some innovative products for Samsung’s folding phone - otherwise known as the Galaxy X. 3) The Selling Concept. ❖ Between 1920 and 1950, production and distribution techniques became more sophisticated. Manufacturers had the capacity to produce more than customers really wanted or were able to buy. Firms found an answer to their overproduction in becoming sales oriented. ❖ The idea that consumers will not buy enough of the organization’s products unless the organization undertakes a large scale selling and promotion efforts. ❖ This is another common business orientation. It holds that consumers and businesses, if left alone, will ordinarily not buy enough of the selling company’s products. ❖ The organization must, therefore, undertake an aggressive selling and promotion effort. ❖ This concept assumes that consumers typically show buying inertia or resistance and must be coaxed into buying. ❖ It also assumes that the company has a whole battery of effective selling and promotional tools to stimulate more buying. ❖ Most firms practice the selling concept when they have overcapacity. ❖ Their aim is to sell what they make rather than make what the market wants. ❖ For example, blood donations and insurance policies fall in the category of sale concept, where the marketer thinks that their job is done after completing the transaction.
JUN JUHAIZI BINTI JUHARI 11 4) The Marketing Concept. ❖ Manufacturers and retailers thus began to focus on what consumers wanted and needed before they designed, made, or attempted to sell their products and services. ❖ The marketing management philosophy that holds achieving organizational goals depends on determining the needs and wants of target market and delivering the desired satisfaction more effectively and efficiently than competitors do. ❖ This is a business philosophy that challenges the above three business orientations. Its central tenets crystallized in the 1950s. ❖ It holds that the key to achieving its organizational goals (goals of the selling company) consists of the company being more effective than competitors in creating, delivering, and communicating customer value to its selected target customers. ❖ The marketing concept rests on four pillars: target market, customer needs, integrated marketing and profitability. ❖ Lets take an example of 2 eternal rivals – Pepsi and Coke – Both of these companies have similar products. However the value proposition presented by both is different. These companies thrive on the marketing concept. Where Pepsi focuses on youngsters, Coke delivers on a holistic approach. Also the value proposition by Coke has been better over ages as compared to Pepsi which shows that coke especially thrives on the marketing concept, i.e it delivers a better value proposition as compared to its competitor.
JUN JUHAIZI BINTI JUHARI 12 ❖ The comparison of the main features of selling and marketing concept are as follow: (https://keydifferences.com/difference-between-marketing-and-selling-concept.html)
JUN JUHAIZI BINTI JUHARI 13 5) The Societal Marketing Concept. ❖ This concept holds that the organization’s task is to determine the needs, wants, and interests of target markets and to deliver the desired satisfactions more effectively and efficiently than competitors (this is the original Marketing Concept). Additionally, it holds that this all must be done in a way that preserves or enhances the consumer’s and the society’s well-being. ❖ The purpose of the social marketing concept is also to satisfy the needs and requirements of customers before making any profit. But the emphasis of this concept is to make the company fulfill social responsibilities for the sustainable future in the long term. The marketing strategy of businesses and companies should include both customers and society as well. ❖ The idea of the social marketing concept is that the businesses should satisfy the needs and wants of customers, but this target should be aligned with the long-term interest of society. ❖ This orientation arose as some questioned whether the Marketing Concept is an appropriate philosophy in an age of environmental deterioration, resource shortages, explosive population growth, world hunger and poverty, and neglected social services. ❖ For example, Adidas is one of the top leading sportswear companies in the world. When it comes to the environment, Adidas is committed to manufacture its products that could be reused repeatedly. ❖ A very good example of an organization following societal marketing concept is the Body Shop: Body Shop is a cosmetic company founded by Anita Roddick in 1976.The company uses only natural, vegetable-based materials as ingredients for its products.
JUN JUHAIZI BINTI JUHARI 14 ELEMENTS OF 4PS AND 7PS IN MARKETING ❖ 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. ❖ Here we will discuss each marketing mix element in detail. 1) Product ❖ “Product means the goods-services combination the company offers to the target market”. (Philip Kotler and Gray Armstrong, 8th Edition). ❖ A product is anything that is offered to a market to stratify the wants and needs of a target group of people. The product may be tangible or intangible, services, organizations, and places. ❖ You must keep in mind the nature of a product, for example, there are three different types of products – Core product, Actual product and the third one is augmented product. ❖ The product you offer must be in accordance with the demand of the market. ❖ The product isn’t limited to a tangible offering. It can also be an intangible offering or a service like air travel, massage, etc.
JUN JUHAIZI BINTI JUHARI 15 ❖ The customer doesn’t pay for the tangible or intangible product, but for the benefit it provides. For example, customers pay for shoes because they look for comfort and style. They pay for ice cream because it’s tasty and provides relief on a hot summer day. They pay their internet bills because it lets them access the world wide web at the browsing speed decided. ❖ Hence, a product can also be defined as the bundle of benefits offered to the customer at a price. (https://www.feedough.com/marketing-mix-4ps-7ps-of-marketing/) 2) Price ❖ “Price is the amount of money customers must pay to obtain the product”. (Philip and Armstrong). ❖ Price is an important component of marketing mix and marketing plan. It directly affects the firm’s sustainability and profitability. Product price adjustment greatly influences the overall marketing strategy, sales, and demand for the product. ❖ Various factors influence the price of the offering. They include its demand, total cost incurred by the customer (including monetary and non-monetary cost), customer’s ability to pay, prices charged by competitors, government policies and restrictions, etc.
JUN JUHAIZI BINTI JUHARI 16 ❖ Price has a significant effect on the entire marketing mix and determines the business’s sustainability in the market. Besides this, it also influences: 1) Product’s demand 2) Brand positioning 3) Buyer’s perception 4) Business’s profitability ❖ Businesses usually use one of these pricing strategies to price their offerings – 1) Cost-Based Pricing: adds a set percentage of profits above the production cost of the product. 2) Value-Based Pricing: sets the price based on the buyer’s perception of value rather than the actual costs. 3) Competitive Pricing: sets the price based on prices charged by the competing businesses. 4) Going-Rate Pricing: sets the price based on the going rate in the market. It is used where the business has little or no control over market rates. ❖ A company has just started its operation, it is new in the market and has no reputation associated with its products and services, it will be difficult to charge high prices from the target market. ❖ A company product price and cost are interrelated. The company goal is to reduce product costs by embracing technological advancement in manufacturing. Pricing is a source of creating a perception of products and services in the consumers’ minds. ❖ Most of the time, low prices mean inferior goods while high prices mean superior goods in the consumers’ minds as compared to competitors pricing. When a marketer sets product prices, he must consider the perceived value of the product. ❖ These are the pricing strategies when setting the prices: ➢ Pricing at premium ➢ Market penetrating pricing ➢ Market skimming pricing
JUN JUHAIZI BINTI JUHARI 17 ➢ Bundle pricing ➢ Economy and psychological pricing (https://www.feedough.com/marketing-mix-4ps-7ps-of-marketing/) 3) Place ❖ “Place includes company activities that make the product available to target consumers”. (Principles of Marketing 9th Edition). ❖ Place is an integral part of the marketing mix definition. When marketers position and distribute the product must choose a place that is accessible to target customers. ❖ Placement is also known as intermediary or distribution. Placement is a process through which products and services are moved from manufacturers to consumers. ❖ The more you understand the target market the more you will better place your products and services. Another advantage of understanding your target market is to better select positioning and distribution channels that suit your market. ❖ For example, if you are dealing in consumer products you will opt for wide distribution but if you have premium products to distribute, you will need selective distribution to find potential customers. ❖ Usually, businesses choose any of the three prevalent distribution strategies. These are: 1) Intensive Distribution: where the business try to distribute its offering to all the vendors who are ready to sell the offering. This strategy helps in covering as much market as possible. For example, surf products, soft drinks, etc. 2) Selective Distribution: where the business us a limited number of outlets in a geographical area to sell its offerings. For example, Zara, Adidas, etc. 3) Exclusive Distribution: where only one distributor is used in a specific geographical area. For example, Lamborghini.
JUN JUHAIZI BINTI JUHARI 18 ❖ A business can also decide between direct and indirect distribution: 1) Direct Distribution: When the business sells directly to the customers without involving any intermediaries. 2) Indirect Distribution: When the business involves intermediaries in their distribution strategy. (https://www.feedough.com/marketing-mix-4ps-7ps-of-marketing/) 4) Promotion ❖ Promotion is a very important component of marketing strategy in terms of increasing sales and brand recognition. ❖ Promotion is the process of informing, persuading, and influencing a customer to buy the business’s offering. ❖ A promotion mix means allocation of resources within five primary elements: 1) Advertising ➢ Advertising is a paid communication strategy. This mix is used to create awareness and convey your message to the target market. There are different sources to transmit information like television, radio, newspaper, magazines and journals, outdoor advertising and online advertisement like website, emails etc.
JUN JUHAIZI BINTI JUHARI 19 2) Public Relation and Publicity ➢ Public relations are mostly not paid communication. PR is marketing planned efforts to establish harmony and understanding between company or public. This strategy includes press releases, social events, conferences etc. 3) Sales Promotion ➢ Sales promotions are short-term incentives to encourage people to buy a product or service. Examples include coupons, rebates or games and contests that the public can participate in. ➢ The marketing promotional strategy means making special offers to attract the customer to buy the products and services. 4) Direct Marketing ➢ Direct marketing doesn’t involve any distributors and intermediaries. The company directly communicates with customers. ➢ This strategy is a more personal approach, targeting customers directly through in-person promotions, catalogs, e-mail, telephone calls or mai
JUN JUHAIZI BINTI JUHARI 20 5) Personal Selling ➢ Personal selling is another effective way in which the salesperson acts on behalf of the company. Mostly they are well trained and know all the techniques of personal selling. 5) People ▪ In the 7P’s, people refer to the staff of the organization. ▪ People refer to anyone who encounters your customer, even indirectly, so make sure you're recruiting the best talent at all levels—not just in customer service and sales force. ▪ People include: ➢ Human resource responsible for service delivery, ➢ Personnel who represent the company’s value and conveys the brand message to the customers, ➢ Every other brand personnel who encounters the target customers. ▪ People are an essential ingredient in service provision; recruiting and training the right staff is required to create a competitive advantage. ▪ Customers make judgments about service provision and delivery based on the people representing your organisation. ▪ This is because people are one of the few elements of the service that customers can see and interact with. Staff require appropriate interpersonal skills, aptitude, and service knowledge in order to deliver a quality service. ▪ There are staff that will directly deal with customers – either in a sales role or in a customer service role. Think about a restaurant as an example, where the quality of service and interaction is important to the overall experience.
JUN JUHAIZI BINTI JUHARI 21 ▪ Consequently, customer service training for staff has become a top priority for many organizations today. (Source from https://www.learnmarketing.net/) 6) Process ▪ This element of the marketing mix looks at the systems used to deliver the service. ▪ It is the series of actions involved in delivering the offering to the customer. ▪ In simple terms, the process is the route the offering takes from the business to the customer. It includes the holistic customer experience that starts when the customer discovers the business and its offering and lasts through purchase and even beyond. ▪ The process can be a sequential order of tasks an employee takes or a mixture of related or unrelated activities divided among the employees and the customers, resulting in the transfer of ownership from the business to the customer. ▪ Imagine you walk into Burger King and order a Whopper Meal and you get it delivered within 2 minutes. What was the process that allowed you to obtain an efficient service delivery? ▪ Banks that send out Credit Cards automatically when their customers old one has expired again require an efficient process to identify expiry dates and renewal. An efficient service that replaces old credit cards will foster consumer loyalty and confidence in the company. ▪ All services need to be underpinned by clearly defined and efficient processes. This will avoid confusion and promote a consistent service. ▪ In other words, processes mean that everybody knows what to do and how to do it. ▪ In marketing, process refers to the steps that the consumer needs to go through to acquire the product. ▪ A good example here is going to a hotel – where the process includes: booking the hotel, front desk interaction and check in, getting keys, using credit, transfer of luggage, finding
JUN JUHAIZI BINTI JUHARI 22 the room and so on. (Source from https://www.learnmarketing.net/) 7) Physical evidence ▪ Physical evidence is about where the service is being delivered from. ▪ It is the tangible elements surrounding the product and the physical environment where the product or service is provided to the customers. ▪ It includes all the non-human elements of the marketing experience developed to transfer the ownership of the offering from the business to the customer. ▪ This includes: ➢ The touch points where customers interact with the business. ➢ Tangible branding elements like POPs, packaging, bills, carrybags, etc. ➢ Visual merchandising ➢ Every other non-human element that the customer sees, hears, and even smells in relation to the offering. ▪ It is particularly relevant to retailers operating out of shops. ▪ This element of the marketing mix will distinguish a company from its competitors. ▪ Physical evidence can be used to charge a premium price for a service and establish a positive experience. ▪ For example all hotels provide a bed to sleep on but one of the things affecting the price charged, is the condition of the room (physical evidence) holding the bed. Customers will make judgments about the organisation based on the physical evidence. ▪ For example if you walk into a restaurant you expect a clean and friendly environment, if the restaurant is smelly or dirty, customers are likely to walk out. This is before they have
JUN JUHAIZI BINTI JUHARI 23 even received the service. ▪ Physical evidence includes any components of the firm that communicates information about the quality of its offering. ▪ Pieces of physical evidence include signage, business cards, brochures, equipment, building and retail design, staff uniform, website, advertising, and so on. ▪ For example, many hair salons have well designed waiting areas, often with magazines and plush sofas for patrons to read and relax while they await their turn. Similarly, restaurants invest heavily in their interior design and decorations to offer a tangible and unique experience to their guests. (Source from https://www.marketing91.com/)
JUN JUHAIZI BINTI JUHARI 24 CHAPTER 2: Managing the Marketing Process LEARNING OBJECTIVES: 1) Discuss SWOT Analysis 2) Explain the marketing planning. 3) Explain the marketing implementation. 4) Describe the marketing control. INTRODUCTION ❖ Managing the marketing process requires the four marketing management functions: 1) Analysis 2) Planning 3) Implementation 4) Control. ❖ In addition to being good at marketing in marketing management, companies also need to pay attention to the management. ❖ Managing the marketing process requires the four marketing management functions such as analysis, planning, implementation, and control. (Refer to the above figure).
JUN JUHAIZI BINTI JUHARI 25 ❖ The company first develops company-wide strategic plans and then translates them into marketing and other plans for each division, product, and brand. ❖ Through implementation, the company turns the plans into action. ❖ Control consists of measuring and evaluating the results of marketing activities and taking corrective action where needed. ❖ Finally, marketing analysis provides information and evaluation needed for all the other marketing activities."(Kotler & Armstrong, 2012: p.53) 1. Marketing Analysis 2. Marketing Planning 3. Marketing Implementation 4. Marketing Control
JUN JUHAIZI BINTI JUHARI 26 MARKETING ANALYSIS ❖ Managing the marketing function begins with a complete analysis of the company's situation in the marketing environment. ❖ Marketing analysis offers accurate and complete information to each other marketing management functions: planning, implementation, and control. ❖ A market analysis is a thorough assessment of a market within a specific industry. ❖ With this analysis, you will study the dynamics of your market, such as volume and value, potential customer segments, buying patterns, competition, and other important factors. ❖ A thorough marketing analysis should answer the following questions: ➢ Who are my potential customers? ➢ What are my customers’ buying habits? ➢ How large is my target market? ➢ How much are customers willing to pay for my product? ➢ Who are my main competitors? ➢ What are my competitors’ strengths and weaknesses? ❖ The companies usually conduct a SWOT analysis, by which companies evaluate their overall strengths(S), weaknesses(W), opportunities(O), and threats(T). SWOT
JUN JUHAIZI BINTI JUHARI 27 SWOT ANALYSIS ❖ SWOT Analysis is a strategic planning method used to evaluate the Strengths, Weaknesses, Opportunities and Threats involved in a project or in a business venture. ❖ SWOT analysis is a tool for auditing an organization and its environment. It is the first stage of planning and helps marketers to focus on key issues. ❖ SWOT stands for strengths, weaknesses, opportunities, and threats. Strengths and weaknesses are internal factors. Strengths ❖ "Strengths include internal capabilities, resources, and positive situation factors that may help the company serve its customers and achieve its objectives. ❖ Example: ✓ 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. Weaknesses ❖ Weaknesses include internal limitations and negative situation factors that may interfere with the company's performance. ❖ For example: ✓ 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.
JUN JUHAIZI BINTI JUHARI 28 Opportunities ❖ Opportunities are favorable factors or trends in the external environment that the company may be able to exploit to its advantage. ❖ For example: ✓ 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. Threats ❖ Threats are unfavorable external factors or trends that may present challenges to performances." (Kotler & Armstrong, 2012: p.53-4) ❖ For example: ✓ 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.
JUN JUHAIZI BINTI JUHARI 29 MARKETING PLANNING ❖ It involves deciding on marketing strategies that business will help the company attain its overall strategic objectives. ❖ Marketing planning involves choosing marketing strategies that will help the company attain its overall strategic objectives. ❖ A detailed marketing plan is needed for each business unit, product, and brand. ❖ A typical product or brand marketing plan begins with an executive summary that quickly reviews major assessments, goals, and recommendations. ❖ The main section of the plan presents a detailed SWOT analysis of the current marketing situation as well as potential opportunities and threats. ❖ The plan next states major objectives for the brand and outlines the specifics of a marketing strategy for achieving them. (A marketing strategy consists of specific strategics for target markets, positioning, the marketing mix, and marketing expenditure levels. ❖ It outlines how the company intends to create value for target customers in order to capture value in return. And it also explains how each strategy responds to the threats, opportunities, and critical issues spelled out earlier in the plan.) ❖ In addition, the marketing plan should lay out an action program for implementing the marketing strategy along with the details of a supporting marketing budget. ❖ The last section outlines the controls that will be used to monitor progress, measure return on marketing investment, and take corrective action."(Kotler & Armstrong, 2012: p.54)
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JUN JUHAIZI BINTI JUHARI 31 Criteria of a good objective Example of SMART Objective: To develop 70% customer confidence of Milo Cube of customer by making sales promotion and advertisement in social network within 3 months from April to July 2022 Marketing Strategy Presents the broad marketing approach that will be used to achieve the plan’s objectives.
JUN JUHAIZI BINTI JUHARI 32 MARKETING IMPLEMENTATION ❖ The process that turns marketing strategies and plans into marketing actions to accomplish strategic marketing objectives. ❖ Successful marketing implementation depends on how well the company blends its people, organization structure, decision and reward system and company culture into a cohesive action program that support its strategies. ❖ A brilliant marketing strategy counts for little if the company fails to implement it properly. ❖ Marketing implementation is the process that turns marketing plans into marketing actions to accomplish strategic marketing objectives. Whereas marketing planning addresses the what and why of marketing activities, implementation addresses the who, where, when, and how." (Kotler & Armstrong, 2012: p.54) ❖ Both "Do things right" (implementation) and "do the right things" (strategy) are critical companies' success. ❖ Companies can gain competitive advantages through effective implementation because one firm can have the same strategy as another firm but win in the marketplace through faster or better execution.
JUN JUHAIZI BINTI JUHARI 33 MARKETING CONTROL ❖ Due to many unexpected "surprises may occur during the implementation of marketing plans, marketers must practice constant marketing control--measuring and evaluating the results of marketing strategies and plans and taking corrective action to ensure that the objectives are achieved."(Kotler & Armstrong, 2012: p.56) ❖ There are four steps in marketing control: 1. Set specific marketing goal 2. Measuring results 3. Diagnosing or evaluating the results of marketing strategies and plans 4. Taking corrective actions Types of marketing control 1) Annual-plan control: ➢ Annual-plan control is a very essential tool to determine the effectiveness of marketing efforts undertaken by the organization. ➢ It mainly aims at sales and profitability. Mostly top level and medium level managements are involved in this type of control. ➢ It comprises of five tools that are sales analysis, market share analysis, expense to sales analysis, financial analysis and customer satisfaction. 2) Profitability control: ➢ Profitability control demonstrates the relative profit-earning capacity of a company’s different products and consumer group.
JUN JUHAIZI BINTI JUHARI 34 3) Efficiency control: ➢ Efficiency control involves micro-level analysis of the various elements of the marketing mix. For example: sales force, advertising, sales promotion, and distribution. 4) Strategic control: ➢ Strategic control helps managers to evaluate a company’s marketing program from a critical long-term perspective. ➢ This represents a detailed and objective analysis of an organization. ➢ It also helps to understand an organization’s ability to maximize its strengths and market opportunities.
JUN JUHAIZI BINTI JUHARI 35 CHAPTER 3: Marketing Environment LEARNING OBJECTIVES: 1) Define microenvironment and macro environmental factors. 2) Discuss the microenvironmental factors that can affect the marketing environment. 3) Analyze the macroenvironmental factors that can affect the marketing environment. INTRODUCTION ❖ Marketing Environment - The actors and forces outside marketing that affect marketing management’s ability to develop and maintain successful transactions with its target customers. ❖ The marketing environment offers both opportunities and threats. Successful companies know the vital importance of constantly watching and adapting to the changing environment. ❖ A company’s marketers take the major responsibility for identifying significant changes in the environment. MICROENVIRONMENT ❖ Company’s Microenvironment - The forces close to the company that affect its ability to serve its customers – The company, suppliers, marketing channel firms, customer markets, competitors and publics. ❖ Marketing management ‘s job is to attract and build relationships with customers by creating customer
JUN JUHAIZI BINTI JUHARI 36 value and satisfaction. However, marketing managers cannot accomplish this task alone. Their success will depend on other actors in the company’s microenvironment. 1) The Company ❖ In designing Marketing Plans, marketing management takes other company groups into account such as top management, finance, research and development, purchasing, manufacturing and accounting. ❖ Example: Marketing managers must also work closely with other departments in the organization. The finance department is concerned with finding and using funds to carry out the marketing plan. R&D focuses on the problem of designing safe and effective products, as well as the processes used. Purchasing concerns, it with getting supplies and materials and manufacturing is responsible for producing the desired number of cartons of finished product. ❖ These interrelated groups form the internal environment. 1 Top management Set company mission, objectives, broad strategies and policies 2 Finance Concern with finding and using funds to carry out the marketing plan 3 R&D Focuses on designing safe and attractive product. 4 Purchasing Worries about getting supplies and materials 5 Manufacturing Responsible for producing the desired product quality and quantities of the product 6 Accounting Measure revenues and cost to help marketing know how well it is achieving its objectives ▪ The marketing manager must work closely with other company departments. ▪ All the functions must think consumer and they should work in harmony to provide superior customer value and satisfaction.
JUN JUHAIZI BINTI JUHARI 37 2) Suppliers ❖ Suppliers are an important link in the company’s overall customer ‘value delivery system’. They provide resources needed by the company to produce its goods and services. ❖ Supplier developments can seriously affect marketing. Marketing managers must watch supply availability – supply shortages or delays, labor strikes, and other events can cost sales in the short run and damage customer satisfaction in long run. ❖ Marketing managers also monitor the price trends in their key inputs. Rising supply costs may force price increases that can harm the company’s sales volume. 3) Marketing Intermediaries ❖ Marketing intermediaries are firms that help the company to promote, sell, and distribute its goods to final buyers. ❖ They include resellers, physical distribution firms, marketing service agencies, and financial intermediaries. a) Resellers. i) Resellers are distribution channel firms that help the company find customers or make sales to them. ii) Include Wholesaler and retailers who buy and resell merchandise. iii) Selecting and working with wholesalers is not easy. No longer do manufacturers have many small, independent resellers from which to choose. iv) They now face large and growing reseller organizations. These organizations frequently have enough power to dictate terms. b) Physical distribution Firms. i) Physical Distribution firms help the company to stock and move goods from their points of origin to their destinations. ii) Working with warehouse and transportation firms, a company must determine the best ways to store and ship goods, balancing factors such as cost, delivery, speed and safety. e.g. warehouse, transportation firm.
JUN JUHAIZI BINTI JUHARI 38 c) Marketing Services Agencies i) Marketing Services Agencies are the marketing research firms, advertising agencies, media firms and marketing consulting firms that help the company target and promote its products to the right markets. ii) When the company decides to use one of these agencies, it must choose carefully because these firms vary in creativity, quality, service and price. d) Financial Intermediaries. i) Financial Intermediaries include banks, credit companies, insurance companies, and other businesses that that help finance transactions or insure against the risk associated with the buying and selling of goods. ii) Most firms and customers depend on financial intermediaries to finance their transactions. iii) Like suppliers, marketing intermediaries form an important component of the company’s overall value delivery system. 4) Customers There are 5 types of customers. The company needs to study its markets closely. Each market has special characteristics that call for careful study by the seller. a) Consumer market – consists of individuals and household that buy goods and services for personal consumption. b) Business Market - buy goods and services for further processing or for use in their production process c) Reseller Markets – buy product and services to resell at a profit d) Government market – made up of government agencies that buy goods and services to produce public services or transfer the goods and services to other who need them e) International Market – consist of this buyer in other countries including consumers, producers, resellers and government.
JUN JUHAIZI BINTI JUHARI 39 5) Competitors ❖ The marketing concepts states that to be successful, a company must provide greater customer value and satisfaction than its competitors. Thus, marketers must do more than simply adapt to the needs of target consumers. ❖ They must also gain strategic advantage by positioning their offerings strongly against competitors’ offerings in the minds of consumers. No single competitive marketing strategy is best for all companies. ❖ Each firm should consider its own size and industry position compared to those of its competitor. Large firms with dominant positions in an industry can use certain strategies that smaller firms cannot afford. Small firms can develop strategies that give them better rates of return than large firms enjoy. 6) Publics ❖ Publics - Any group that has an actual or potential interest in or impact on an organization’s ability to achieve its objectives. 1 Financial Publics - Influence the company’s ability to obtain funds. - Banks, investment house, and stockholders are the major financial publics 2 Media publics - Carry news, features and editorial opinion. - Newspapers, magazines and radio and television stations. 3 Government Public - Management must take government development into account. - Marketer must often consult the company’s lawyers on issues of product safety, truth in advertising and other matters 4 Citizen Action Publics - A company’s marketing decisions may be questioned by consumers organizations, environmental groups, minority groups and others - Public relations Department can help it stay in touch with consumers and citizen groups.
JUN JUHAIZI BINTI JUHARI 40 5 Local Publics - Neighborhood residents and community organizations. - Appoint a community relations officer to deal with the community, attend meeting, answers questions and contribute to worthwhile causes 6 General Public - A company needs to be concerned about the general public’s attitude toward its product and activities. - The public’s image of the company affects its buying. 7 Internal Publics - Include workers. Managers, volunteers and the board of director. - When employees feel good about their company, the positive attitude spills over to external publics MACROENVIRONMENT ❖ Company’s Macroenvironment - The larger societal forces that affect the microenvironment – demographic, economic, natural, technological, political, and cultural forces. ❖ The company and all actors operate in a larger macroenvironment of forces that shape opportunities and pose threats to the company. ❖ The Macro environment is the uncontrollable factor of the company. For this reason, it has to structure its policies in the limits set by these factors. ❖ Macro-environment on the whole deals the following factors: 1) Political environment 2) Economic environment 3) Social and cultural environment 4) Demographic environment 5) Technological environment 6) Natural environment
JUN JUHAIZI BINTI JUHARI 41 1) Political Environment ❖ It refers to Laws, government agencies, and pressure groups that influence and limit various organizations and individuals in a given society. ❖ Political factors are government regulations that influence business operation positively and negatively. Managers must keep a bird’s eye view over political factors. These factors may be current and impending legislation, political stability and changes, freedom of speech, protection and discrimination laws are factors affecting business operation and activities. ❖ Marketing decisions are strongly affected by developments in the political environment. The political environment consists of: 1) Laws - it’s a system of rules that are created and enforced through social or governmental institutions to regulate behavior. (Refer www.agc.gov.my for all the acts in Malaysia) 2) Government Agencies - is a permanent or semi-permanent organization in the machinery of government that is responsible for the oversight and administration of specific functions. (Refer www.psz.utm.my/govt.htm) 3) Pressure groups - organized group that does not put-up candidates for election, but seeks to influence government policy or legislation (Refer www.mycen.com.my/malaysia/ngo.html) What Political Factors Affect Business Environment? ❖ With a change in administration policies, there arise political factors that can change the entire business scenario. These changes can be economic, legal or social and can include the following factors: 1. Tax and economic policies: Increasing or decreasing the rate of taxes is a good example of a political component. Government regulations may raise the tax rate for some businesses and can lower the same for others due to specific reasons. This decision will directly impact businesses. Therefore, maintaining a strategy which can deal with such situations is very important.
JUN JUHAIZI BINTI JUHARI 42 2. Political stability: Lack of political stability within a country can significantly impact the operations of a business. This can especially be true for businesses that are operating on the global scale. For instance, a hostile takeover can take over a government. Eventually, such a situation will lead to looting, riots and general disorder within the environment. Such situations can disrupt business operations and activities which can have a major impact on its bottom line. 3. Foreign Trade Regulations: Every business has a need to expand business operation to other countries. However, political background of a country can influences the desire for a business to expand its operations. Tax policies that are particularly controlled by the government can induce a particular business to expand operations in different regions whereas other tax policies can hinder the process of business expansion for some industries. Government initiatives, which have been designed to support local businesses, might work against international companies when the question is of their competitiveness in a foreign region. 4. Employment Laws: Employment laws are made to protect the rights of employees and include every aspect of employer/employee relationship. Employment law is an aspect that is very complex and involves several pitfalls as well. When businesses’ are in touch with the latest developments in this law, they can manage to take their business in the right direction however, those who get it wrong needs to be completely prepared for the expensive results it will generate. It involves laws that covering the issue of: ✓ Competition ✓ Fair trade practice ✓ Environmental protection ✓ Product safety ✓ Truth in advertising ✓ Reasons of enacting business legislation: ✓ Protect companies from each other – such as prevent unfair competition.
JUN JUHAIZI BINTI JUHARI 43 ✓ Protect consumers from unfair business practiced. ✓ Protect the interest of society against unrestrained business behavior. 2) Economic Environment ❖ Economics is the factor that affects consumer buying power and spending patterns. ❖ Nations vary greatly in their levels and distribution of income. Some countries have subsistence economies. a) Subsistence Economies – Country population that consume most of their own agricultural and industrial output – this country offers few markets opportunities b) Industrial Economies – Constitute rich markets for many kinds of goods. ❖ Changes in major economic variables such as income, cost of living, interest rates and savings and borrowing patterns have a large impact on the marketplace. ❖ Economic components are general monetary value, investment rates, exchange rates, inflation rate, fiscal strategies, balance of payments and so forth. An organization can effectively offer its products just when individuals have enough cash to spend. ❖ The financial environment influences a customer’s buying behavior either by expanding his disposable income or by decreasing it. Eg: During inflation, the money value decreases. Thus, it is troublesome for them to buy more products. ❖ The income of the customer should likewise be considered. Eg: In a business sector where both wife & husband work, their acquiring power will be more. Consequently, organizations may offer their products effortlessly.
JUN JUHAIZI BINTI JUHARI 44 3) Social & Cultural Environment ❖ The cultural environment is made up of institutions and other forces that affect a society’s basic values, perceptions, preferences and behaviours. ❖ Within Malaysian society there is a Malay culture, a Chinese culture, an Indian culture, a Eurasian culture, along with the cultures of the indigenous groups of the peninsula and north Borneo. ❖ A unified Malaysian culture is something only emerging in the country. ❖ The vast majority of us buy in light of the impact of cultural & social elements. ❖ The lifestyle, qualities, convictions, and so on is dead set besides everything else by the society in which we live. ❖ Every society has its own culture. Culture is a blend of different variables which are exchanged from more established eras & which are gained. Our conduct is guided by our way of life, family, instructive foundations, dialects, and so on. ❖ Social components are the cultural and social viewpoints, which incorporate health cognizance, the growth rate of population, age distribution, career approach and the importance of security. ❖ The society is a mix of different groups with diverse cultures & subcultures. Every society has its conduct. ❖ The marketing manager of a company must study the society in which he works. Eg: In Malaysia, it has distinctive cultural groups like Malay, Chinese, Indian, and so forth. The manager of marketing of a company ought to observe these distinctions before finalizing the marketing schemes.
JUN JUHAIZI BINTI JUHARI 45 4) Demographic Environment ❖ Demography is the study of human populations in terms of size, density, location, age, gender, race, occupation, and other statistics. ❖ The explosive world population growth means growing to human needs to satisfy – growing market opportunities. ❖ Marketers keep close track of demographic trends and developments in their markets both at home and abroad which includes family structures, changing age, geographic population shifts, educational characteristics and population diversity. ❖ Malaysia's population comprises twenty-three million people, and throughout its history the territory has been sparsely populated relative to its land area. ❖ The government aims to increase the national population to seventy million by the year 2100. Eighty percent of the population lives on the peninsula. ❖ The most important Malaysian demographic statistics are of ethnicity: 60 percent are classified as Malay, 25 percent as of Chinese descent, 10 percent of Indian descent, and 5 percent as others. ❖ These population figures have an important place in peninsular history, because Malaysia as a country was created with demography in mind. ❖ Malay leaders in the 1930s and 1940s organized their community around the issue of curbing immigration. ❖ After independence, Malaysia was created when the Borneo territories with their substantial indigenous populations were added to Malaya as a means of exceeding the great number of Chinese and Indians in the country.
JUN JUHAIZI BINTI JUHARI 46 5) Technological Environment ❖ The technological environment is perhaps the most dramatic force now shaping our world. ❖ It is forces that create new technologies, creating new technologies, creating new product and market opportunities. ❖ Technology released wonders such as antibiotics, organ transplant, notebook computers and internet. Technology also released horror such as nuclear missiles, chemical weapons and assault rifles. ❖ It has released mixed blessings such as the automobile, television and credit cards. The technological environment changes rapidly. Think of all today’s common products that were not available 100 years ago, or even 30 years ago. ❖ Our attitudes toward technology depends on whether we are more impressed with its wonder or its blunder. New technologies create new markets and opportunity, however, every new technology replace an older technology ❖ The business related to the old technology will decline, so the marketer should watch the technological environment closely. The challenge in technology not only technical but also commercial – practical and affordable. Marketer should be aware of all regulation when applying new technologies and developing new products. ❖ As products and technology become more complex, the public’s needs to know that they are safe. Thus, government agencies investigate and ban potentially unsafe product. Marketers should be aware of these regulations when applying new technologies and developing new product.
JUN JUHAIZI BINTI JUHARI 47 6) Natural Environment ❖ Natural environment consists of natural resources, which are needed as raw materials to manufacture products by the organization. Marketing activities affect these natural resources, such as depletion of ozone layer due to the use of chemicals. The corrosion of the natural environment is increasing day-by-day and is becoming a global problem. ❖ Following natural factors affect the marketing activities of an organization in a great way: a. Natural Resources: ➢ It serves as raw material for manufacturing various products. ➢ Every organization consumes natural resources for the production of its products. ➢ Organizations are realizing the problem of depletion of resources and trying their best to use these resources judiciously. Thus, some organizations have indulged in de-marketing their products. For example, Indian Oil Corporation (IOC) tries to reduce the demand for its products by promoting advertisements, such as Save Oil, Save India. b. Weather: ➢ It leads to opportunities or threats for the organizations. ➢ For example, in summer, demand for water coolers, air conditioners, cotton clothes, and water increases while in winter, the demand for woolen clothes and room heaters rises. The marketing environment is greatly influenced by the weather conditions of a country. c. Pollution: ➢ It includes air, water, and noise pollution, which lead to environmental degradation. ➢ Now-a-days, organizations tend to promote environment friendly products through its marketing activities. For example, the organizations promote the usage of jute and paper bags instead of plastic bags.
JUN JUHAIZI BINTI JUHARI 48 CHAPTER 4: Consumer Market and Buyer Behaviour LEARNING OBJECTIVES: 1) Define consumer market and consumer buying behavior. 2) Describe the five stages of the consumer decision making process. 3) Discuss the factors that affects the consumer behaviour DEFINITION OF CONSUMER MARKET AND CONSUMER BUYER BEHAVIOUR ❖ Consumers make many buying decisions every day. Most large companies research consumer buying decisions in great detail to answer questions about: what consumers buy, where they buy, how and how much they buy, when they buy and why they buy. ❖ A firm needs to analyze buying behavior for: ➢ Buyers’ reactions to a firms marketing strategy has a great impact on the firms success. ➢ The marketing concept stresses that a firm should create a Marketing Mix (MM) that satisfies (gives utility to) customers, therefore need to analyze the what, where, when and how consumers buy. ➢ Marketers can better predict how consumers will respond to marketing strategies. ❖ Consumer market – Refer to all the individuals and households who buy or acquire goods and services for personal consumptions. ❖ Consumer buyer behaviour – is the buying behaviour of final consumers: individuals and households who buy goods and services for personal consumption. ❖ Need to understand: 1) why consumers make the purchases that they make? 2) what factors influence consumer purchases? 3) the changing factors in our society.
JUN JUHAIZI BINTI JUHARI 49 CONSUMER DECISION MAKING PROCESS Marketers need to focus on the entire buying process rather than on just the purchase decision. It consists of 5 stages: need recognition, information search, evaluation of alternatives, purchase decision and post-purchase behavior. The Buyer Decision Process How do consumers make buying decisions? Need Recognition: ❖ The first stage of the buyer decision process, in which the consumer recognizes a problem or need. The need can be triggered by internal stimuli when one of the person’s normal needs – hunger, thirst, sex- rises to a level high enough to become a drive. ❖ At this stage, the marketer should research consumers to find out what kinds of needs or problem arise, what brought them about, and how they led the consumer to this particular product. ❖ This is the first stage of the buying process. A consumer will not initiate a purchase without the recognition of the needs or wants. When a consumer feels the need to buy a particular product, he will go for a purchase decision. There is an unmet need or there is a problem which can be solved by buying a particular product. ❖ Needs arise as there is a problem. For example, you broke your table that you were regular ling using for your business. And due to this problem, you now have to buy a new table. ❖ Wants arise either because you have need a product or just because you are influenced by external factors. For example, you see your friends using a laptop for their project work. You might also have seen numerous advertisements about how a laptop can help you in your project work. Due to this influence, you feel you want
JUN JUHAIZI BINTI JUHARI 50 to upgrade to a laptop though you may already have a desktop. In this stage, the marketer should identify the needs of the consumers and offer the products based on the desire. 1) Information Search: ❖ The stage of the buyer decision process in which the consumer is aroused to search for more information; the consumer may simply have heightened attention or may go into active information search. ❖ Example: farhana may actively look for reading materials, phone friends and gather information in other ways to buy a new computer. ❖ At this stage, the consumer can obtain information from any several sources. These include personal sources (family, friends, neighbors), commercial sources ( advertising, salespeople,dealers,packaging, displays), public sources ( mass media, consumer rating organizations) and experiential sources (handling, examining, using the product). ❖ At this stage, the consumer is aware of his need or want. He also knows that he wants to buy a product that can relive his problem. Therefore, he wants to know more about the product that can relive of his problem. This leads to the information search stage. ❖ The consumer will try to find out the options available and the best solution for his problem. The buyer will look for information in internal and external business environments. A consumer may look into advertisements, print, videos, online and even might ask his friends and family. ❖ When consumers want to buy a laptop, they look for a laptop, its features, price, discounts, warranty, after sales service, insurance, and a lot of other important features. ❖ Here, a marketer must offer a lot of information about the product in the form of informative videos, demos, blog, how-to-do videos, and celebrity interviews.