Marketing Essay Research Paper Lecture 1 Introduction

Marketing Essay, Research Paper

Lecture 1: Introduction to Marketing

Marketing is the management process responsible for identifying, anticipating and satisfying customers requirements profitability.

Peter Drucker there is only one valid definition of business purpose: to create a customer . At its simplest, if you do not have any customers for the product or service your organization offers, then there is no reason for continuing existence.

Consumption is the sole end and purpose of all production and the interests of the product ought to be attended to only so far as it may be necessary for promoting those of the customer.

The operational functions of marketing: sales promotion, advertising, public relations, selling, financing, buying, forecasting, pricing, standardization, publicity, merchandising, market research, transporting, risk-taking, servicing and stockholding.

Elements over which organizations have control and which are used to try to influence customers to choose one particular organization in preference to another are generally termed the marketing mix. External factors in the original marketing mix: customer-buying behavior, trade behavior, competitors position and behavior, government regulations.

The 4 P s of Marketing.

Originally there are 12 P s of marketing but this list is not easy to remember and it should be obvious why Jerome McCarthy condensed the 12 items in Borden s original marketing mix, into 4 major categories popularized the 4 Ps . The internal variables are therefore loosely grouped together under the headings of: product, price, place (the offer mix), and promotion (the promotional mix).

While the 4 Ps is a useful framework, a vigorous debate has taken place over the last decade about the dangers of seeing marketing solely as the control of the 4 Ps . In fact it is a trap that tends to make suppliers forget the needs of customers as well as the importance of a mutually beneficial exchange. There is a suggestion of the addition of three other Ps: Probe (research), Partition (segmentation) and Position.

Lecture 2. The Marketing Macro Environment.

Both of the parties making an exchange are more likely to consider that the exchange has been beneficial when the exchange has been made within the context of what is known as an Open Market. This is a market which has all of the following characteristics: 1 Single homogeneous product, 2 Many buyers, 3 Many sellers, 4 Buyers and sellers have equal access to all available information relevant to the market.

All developed societies have similar regulations to regulate legal trade. It is therefore usual for manufacturing and trading organizations to have to comply with such regulations, which effectively constitute one aspect of the environment in which an exchange takes place. These factors are for this reason referred to as the environmental variables of marketing. These are usually labeled the Economic, Social, Technological and Political variables (STEP).

Political forces.

Companies should seek to demonstrate good corporate citizenship by upholding the letter and the spirit of the law, and generally behaving in a responsible and responsive manner. Some markets and trades have developed general voluntary codes of conduct and control, supported and monitored by a central membership body. Medicine for example has long been controlled by strict codes of professional behavior.

Governments have developed a body of legislation and enforcement frameworks in respect of industry and trade. In particular, the following areas of control are of direct concern to business. 1. Legislation in respect of monopoly and competition standards. In the UK it s done through the Office of Fair Trading and the Monopolies and Mergers Commission. As a full EC member, the UK is also subject to Community provisions in respect of issues: in particular Article 85 of the Treaty of Rome concerns practices hindering competition. 2. Measures to protect consumers, whether as groups, individuals, as users of certain products and services, or particularly as targets for business activities.

Relevant legislation has included the Trade Descriptions Act 1973, the Consumer Credit Act 1974, etc. Number of these statutes introduced measures directly relating to marketing practices such as pricing claims, warranties, product quality, etc.

Economic forces.

The economic environment is a complex network of international, domestic and regional influences and dependencies that shape the market potential facing companies. Company performance itself will depend critically on the quality of preparation and decision making is brought to bear on this potential. The significance of the economic data is that over time they will indicate major economic developments of direct interest to marketers. Such economy-watching may enable the vigilant company to respond in time to scenarios such as following:

1.Recession. A downturn in economic activity of variable intensity. Usual indicators will be a fall or leveling in GNP, GDP, household income, etc. Rises will be recorded in measures such as stock, unemployment and company bankruptcies.

2.Recovery. The opposite of the above. Marketers in some sectors will benefit from an early upturn in sales. Major upturns in economic activity may result in overheating with higher costs and prices.

3.Inflation. Rising prices may be associated with buoyant conditions, demand growth and shortages. Economic policies are likely in future to be more directly influenced by multilateral agencies and agreements (UN) and the expansion of common market blocs such as the EC.

Social forces.

Culture within any society id the complex of elements that reflect the society s beliefs and values, preferences and behavioral norms. For marketer it is necessary to understand that culture will vary within and between societies, so those cultural norms may vary between countries, regions and culture groups. Factors, which distinguish a society, change very slowly, as they are the products of family upbringing, the education system, national history and political development, religion, etc. Environmental awareness is an interesting reflection of how society-wide concerns have delivered a powerful message to governments and business leaders.

Technological forces.

Technology is the touchstone of economic progress, a leading source of competitive advantage commercially and an indispensable part of everyday lifestyle for the modern consumer. To illustrate the competitive force wielded by technology, it is worth observing that many manufactures have been affected by technology developments remote from their own field. Major sectors of the metalworking industry were obsolete by the developments of digital electronics. Eg typewriters. Technological developments decrease the price of production. Technologies have also enabled an increase in the variety of products available to customers.

The marketing environment comprises the playing field upon which competitive marketing takes place. Companies need to monitor and decide rational responses to changes in the environment in order to win their colors. There are three types of companies: those who make things happen; those who watch things happen; and those who wonder what happened.

Lecture 3: Markets and Market Segmentation.

1.A market is an aggregate of people who as individuals or organizations have needs for products in a particular product class and who have the ability, willingness and the authority to pay.

2.Types of markets.

- Consumer where purchasing is done by private or group of individuals.

- Industrial products and services are bought for one of 3 specific uses: 1- resale, 2- producing other products, 3- products used in general eg administration, computers.

3.Differentiated markets. Consumer needs are not the same: – homogenous, differentiated. Undifferentiated market all needs are the same

4.Criteria for effective segmentation – measurable, – economically variable.

Methods of Market Segmentation.

Geographic geographic position on the globe.

Demographic basis for the collection of many government statistics and the standard system used by the media industry. Includes age, sex, family cycle, and socioeconomic segmentation.

Family life cycle.


A single, B- young married, C- young married, children, D- older married, older children (full nest), E- old married, F- old single.

Socio economic segmentation

A and B upper/upper middle, C1- middle, C2- lower middle, D and E skilled/unskilled manual.

Life style reflection of the class, what people are interested in.

Psychographic lifestyle,

Personality eg BA flight. Staff has to be trained to deal with different personalities. 1 Apologetic. 2 nice guy. 3 Playboy. 4 Knawks (I paid for ticket, so serve me)

Behavioral benefit what are the benefits a product has? Eg toothpaste to clean teeth

User heavy or light users of the product eg mobile phone use.


1.Spatial distribution of key demographic variables

2.Acorn (a classification of residential neighborhoods) eg modern housing higher income 7.4%, urban local authority housing 20%.

Lecture 4. Market offerings.

Product is everything that consumer receives that is of value in terms of a perceived want, need or problem.


It is the practice of giving a distinctive identification usually a name, symbol or design to a product or range of products, and through usage and promotion establishing this identification in the marketplace. Brand names generally involve names which are: easy to remember, distinctive, easy to spell and easy to pronounce (ideally regardless of language). In choosing brand names and developing a branding strategy, manufactures may opt for:

1.Multiproduct brands, where the co. Uses one standard brand name, often the co. name for all its products

2.Multibrand products involve a manufacture assigning different brand names to different products. This practice is seen in consumer good sector such as cigarettes.

3.Retailer own brands predominately associated with consumer retail chains where own-label brands have proved a useful source of supplementary business of some manufacturers.

Product Classification.

Consumer products Industrial products Durables

Shopping goods Capital items

Specialty goods Accessories

Convenience goods Materials components Consumables

Services Supplier

Services Services

Fast moving consumer goods.

- Convenience goods frequently purchased eg newspapers

- Specialty goods purchased from specialist retailers eg prescription medicine.

Consumer Durables they are purchased for the benefit they provide in themselves.

Can be divided into the following 3 categories:

- Shopping goods products that are usually selected after shopping around to compare price, etc.

- Specialty goods product, which is only available from, limited number of outlets. Eg car spares.

- Emergency durable goods products which buyers are likely to need without delay. Eg replacement windscreens.

Industrial goods those bought by organizations manufacturing or supplying products or providing services.

- Capital plant and equipment includes those products which are required by an organization to carry out the objective for which it exists and which thereby increases the organization s revenue generating capacity.

- Accessories do not directly increase the capacity eg servicing airplane.

- Materials and components physical inputs to the production and delivery of the final product. Eg raw materials

- Supplies (consumables) products which are used in production such as lubricants, cleaning materials. Generally fall into categories based on usage such as maintenance.

Lecture 5. Product Policy.

The product life cycle. Products are finite; some have longer life cycle than others do.

A B C1 C2


Eg Single CD

A Introduction stage most critical time like all birth

B Growth stage rapid rise in sales

C1 Growth Maturity sales increasing but at slower rate

C2 Stable Maturity

C3 Decay Maturity

D Decay

Introduction A High profile high price high promotion. Innovative product is being introduced

B Selective penetration high price low promotion. The market segment must be relatively small. People are prepared to pay premium to have first. All products, which are pre-positional forever eg, watch.

C Pre-emptive low price high promotion. Aims at bringing about the highest rate of market penetration. Price sensitive products, must have a high price elasticity of demand. Some sold at loss.

D Low profiles low price low promotion. Market must be large. Market must be aware of the product. Market is price sensitive.

Growth Availability (PDM) Relative decline in promotion

Realization Saturation




- product re-launch product modification, market repositioning


1.Continuation strategy like a maturity

2.Milking strategy no advertising, no support, maximize revenue

3.Concentration strategy concentrates on those heavy users and targets the promotion on them.

Lecture 6: Advertising.

The commission system: ABOVE THE LINE payments of commission to agency.

BELOW THE LINE does not involve payments of commission eg direct mail. In the UK agency takes about 10% of cost of adv.

Advertising objectives.

Conative persuading people to do things. Affective concerned with getting people to fill certain emotions about the product. Cognitive concerned with making people believe something.

Corporate identity physical manifestations e.g. logo, design of letters, etc.

Corporate image mental manifestations, reputation.

Measuring effectiveness.

Changes in sales, brand awareness what proportion know about your brand, purchase intention, perception of the brand or company, recall not a worth while measure. What proportion of public seen the advert remembers it, but does not mean they will buy the product, repeat purchases.

The Shannon-weaver model

The elaboration-likelihood model:

Cognitive processing not the message leads to attitude change.

A. The central route. Recipient finds message interesting, important or personally relevant. Thus examines message carefully and evaluates strength/rationality of the arguments. If reactions are favorable, persuasion occurs.

B. The peripheral route. Recipient finds message uninteresting or uninvolving. No motivation to process the message carefully. Here the recipient responds to secondary cues, e.g. attractive models, beautiful background scenery, source credibility, status symbols, etc. No critical analysis but attitude change can still occur.

Therefore, if the arguments in favor of the brand are not very strong or if consumers are unlikely to be involved with the product, use catchy tunes, attractive models, etc. Use strong arguments for high involvement products because people are then motivated to process the message.

Models of advertising:

AIDA Attention (know about), Interest, Desire (what makes you want to buy), Action (you go and buy it).

DAGMAR Defining Advertising Goals for Measuring Advertising Results. Move the consumer through 4 levels of understanding, VIZ. 1.Awareness, 2.Comprehension (appreciate what the product is and what it can do for the consumer), 3.Conviction (want to try the brand), 4.Action.

Everett Rodgers expanded this model to include 6 stages, VIZ. Create awareness, elicit interest, produce evaluation, stimulate trial, create a sale, and cause repeat purchases.

The St James model (belief to attitude). The consumer is assumed to have preconceived idea of the brand. Thus Ad g should seek to alter the consumer s perception of either A. What he requires from the brand to fit in with the presumption, or B. What the brand is, so as to bring perceptions in line with consumer requirements. Eg full-time housewife, ought to be concerned with health of her children.

Criticisms of theoretical models:

They assume that consumers are logical and rational, that advertising works linearly (i.e. that consumer gather information, then experience emotions, then take action, etc.). Some people are impulsive and move from minimal awareness to a purchase decision. Different media constrain consumers to react in different ways (eg print ads allow concentration, with TV ads consumers often absorb information in clusters rather than step by step).

The models assume the purpose of advertising is to create a sale. In fact other objectives can be just as important, e.g. reputation building.

The work of Andrew Ehrenberg.

According to him there is no evidence that Ad g can act as a strong force in persuading people to change their behavior, feeling or beliefs. Ad g is a weak force. For established bran, Ad g refreshes awareness and nudges (constant remind) the consumer towards purchase. Thus, Ad g is a defensive activity. For new brands, Ad g can announce the brand and create awareness, but cannot alter feeling. Ad g works in the long term by keeping a brand in the consumer s mind.

Lecture 9: Pricing.

1.The role and perception of price.

Price the amount of money charged for a product or service, or sum of the values that consumers exchange for the benefits of having or using the product or service.

The buyer the value to which the buyer attaches to what ever is being exchanged. Functional, Quality, Operational, Personal.

The sellers perspective price provides the basis of recovering costs and creating profit. PROFIT = TOTAL REVENUE TOTAL COST. Marketers need to understand both the implications of cost and to have a knowledge of the customer and the external environment when assessing the impact of pricing decisions.

2.External influences on the pricing decision.

Customers and consumers. Different market segments react to different price levels. Prices need to be set so that costs are met at the bottom end and at the top end the market will tolerate the price. Consumers perception of products will affect pricing decisions.

Demand and Elasticity. Relates to economic theory. Important to estimate the demand for a product as this relates to price. Marketers can seek to influence the shape of the demand curve.




Q1 Q2 Quantity

Price elasticity of demand. Marketers need to have an understanding of the sensitivity of demand to price. This is reflective in the steepness of the demand curve.

Price elasticity = %change in quantity demanded / % change in price

Channels of distribution. Within a distribution chain each member will have a desired profit margin.

Competitors. Pricing decisions are made with a competitive context. Monopoly/oligopoly/Monopolistic competition/perfect competition.

Legal and Regulatory. EU, Monopolies and Mergers Commission (MMC).

1.Internal influences on pricing decisions.

Organisational objectives. Linked to corporate strategy. Based on satisfying customer needs and the aspirations of organization. As markets evolve organizational objectives change. Can be short term / long term.

Marketing objectives. Focused on specific target markets and the position desired of them. Important to integrate the marketing mix and not just price. Need to consider profile of products, product life cycles.

Costs. Price is related to what the customer is prepared to pay. Cost represents the costs relating to the development, manufacture and marketing of the product.

2.Setting prices.

- Pricing objectives organizational sales and marketing.

- Pricing policies and strategies New product, product mix, price changes.

- Setting the price range cost based, demand based competition based.

- Pricing tactics and adjustments discounts.


- Financial targets relate to profits or cash flow to run the day to day business and funds for reinvestment in R&D

- Profit in terms of Return on Investment (ROI).

Sales and Marketing Objectives.

- Sales Targets relates to a desired market share, position in the market.

- Volume sales targets related to market share objectives, but has a more operational focus e.g. batch and units of production.

- Maintaining the status quo

- Survival

PRICING POLICIES & STRATEGIES used as guide for pricing decisions and provide a framework for such decisions.

- New product pricing strategies need to decide if to enter the market at low price (Penetration) or high price (Skimming)

- Penetration Pricing aim to get a large market share in the shortest possible time. Price below existing competitors.

- Price Skimming prices are set high. Attempt to attract least price sensitive market segments.

- Product mix pricing strategies distinctions need to be made within the range.

MANAGING PRICE CHANGES prices rarely static. Competitive pressures force changes. Initiating price cuts risky as need to consider how much extra volume need to be sold to make up for the lost margin (profit). Usually a short term tactic.

Considered when there is: – Excess production capacity, – Market dominance

Responding to competitors price cuts: ignoring the decrease, undercutting, deflecting the cut.

Initiating price increases dependent on response of customers and competitors. Cost pressures Curbing demand.

Responding to competitor increases Matching competitor move Maintain price levels/differentiate the product.

Setting the price range.

Cost volume price relationship. Definitions of costs:

Fixed costs the cost which do not vary with output e.g salaries rent. Variable costs vary according to quantity produced e.g. raw materials. Marginal costs the change that occurs to total cost if one unit is added to total production additionally the marginal revenue is extra income derived from selling one extra unit. Total cost the total costs incurred by the organization.

Cost based pricing Focuses on customers and their responsiveness to different price levels.

- Psychological pricing: prestige pricing, odd even pricing.

- Pricing Lining a number of products are sold at specific price points.

- Bundle pricing a number of products are sold as single package e.g. computers and software

- Promotional pricing used to stimulate a market or perceptions of value in the short term.

Demand based pricing.

Time specific mark-downs e.g. End of season sales. Price differentiation different prices for different segments e.g. Airline travel.

Competition based pricing where product prices are determined by reference to the prices of competitive products

- Structure of the market i.e. the greater the number of competitors the closer the market comes to perfect competition. Price setting is somewhat dictated by the market.

- Perceived value in the market the more differentiated from competitors the more autonomy the organizations has in its pricing. Related to how consumer perceive the value of unique benefits.

Pricing tactics & adjustment prices can vary to reflect customer needs Pricing tactics and Adjustments are the step used to arrive at final price. Price structure give guidelines to sales reps in negotiating prices.

Special adjustments discounts reductions from the normal list price. Trade discounts, Quality discounts, Seasonal discounts, Cash discounts.

Lecture 10: Marketing information systems.

Marketing information.

Good information is a facilitator of successful marketing and indeed, seen in this light marketing management becomes first and foremost an information processing activity.

To implement the marketing concept, marketers need information about the characteristics, needs and wants of their target market.

Information is required to identify marketing problems and opportunities. Market research and the management of a systematic information system increases the profitability of successful marketing.

Marketing info systems.

Why manage information? Organizations are often faced with: information saturation or information starvation.

It needs to be structured and organized. A marketing info system (MKIS, MIS) is the framework by which info is gathered regularly from both inside and outside the organization, and is designed to disseminate a continuous flow of information to marketing managers to assist in their decision making process. It is a subsystem of the organizations management information system.

Market info system- consist of 4 subsets.

1.Internal records (data collection) sales orders, accounts payable, historical customer data.

2.Marketing intelligence system (data collection). Information gathered on the market place by managers on a day to day basis usually relevant to the developments in the marketing environment. Trade Journals, Government statistics, Newspapers. Professional bodies e.g. Knitting federation, Off the peg data e.g. AGB super panels.

3.Marketing decision support system (Analytical). Statistical decision support system of analyzing marketing data using statistical procedures and mathematical models.

4.Marketign research system. The systematic design, collection, analysis and reporting and finding relevant to a specific marketing situation. Ad hoc term used for marketing research split between primary and secondary research.

Marketing research data.

What is Marketing Research? Marketing Research assist in generating info which will assist the marketer in their decision making. It consist of the systematic design, collection and reporting of data relevant to specific situations facing the company marketing conducted on a special project basis.

What is market research? Is the systematic study of consumers attitudes, perceptions, preferences, motivations and buying activities.

Internal versus agency research.

In-House versus outside agency research. Make or buy decision costs, research expertise, product/service knowledge, objectivity, special equipment and confidentiality.

Marketing research data.

There are 2 sources of marketing research data: primary data (collection of new data), secondary data (data which has been previously collected).

Main sources of secondary data (desk research).

1.Internal sources data generated for the organization itself eg saleforce reports, accounting records, customer complaints records.

2.Data generated from outside the organization.

- published directories, newspapers, published research reports

- Types of published data available to the marketer include:

- Business monitors

- Census of the population

- Family expenditure survey

- Economic trends

- Monthly Digest of statistics and Annual Abstract of Statistics

- Commercial libraries e.g. chamber of commerce

- Internet

- Trade associations

- Independent research reports MINTEL published by Market intelligence, Keynote reports

- Trade directories the Times 1,000, Who owns whom (UK) published annually by Dunn and Bradstreet

- Extel cards provides details of company financial results, chairman s statement.

- DataStream computerized data base of company financial results available on line.

Primary research.

Postal research (quantitative).

- Questionnaires Postal, telephone, personal.

- Panel research a group of respondents who have agreed to provide information over a period of time. E.g. retail audits, consumer panels.

- Omnibus surveys organized by several clients by a research agency.

Personal interviews (qualitative) – Depth interviews and group discussions

Observational research (qualitative)

Viewing and listening to situations in buying behavior

1.Experiomentation e.g. Field experimentation is also known as test marketing, or laboratory experimentation where shopping environment is simulated.

Marketing info systems.

Factors which have facilitated the growth in info systems.

- Developments in computer technology data storage

- Growth in data banks and data warehousing include info on purchasing habits, customer characteristics (loyalty cards)

What can marketing info tell you?

Market and sales research cover: identification of market trends, obtain info about competitors, identification of market characteristics, segments, the estimation of size of new markets, info on potential customers and sales forecasting.

Marketing Communications: effectiveness of communication (advertising research), media selection, copy testing and sales territory packaging.

Product research: generating new product ideas, product concept testing, product testing, test marketing of products and investigation packaging.

Pricing the relationship between product/service price-demand.

Distribution warehouse location, retail outlet location.


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