Practice document: Marketing Management

The 5 Marketing Orientations:

1. Production Concept.
2. Product Concept.
3. Selling Concept.
4. Marketing Concept.
5. Societal Marketing Concept.

DIFFERENCES BETWEEN SALES AND MARKETING ORIENTATION

#1 The organization’s focus

Customer value – is the relationship between benefits and the sacrifices necessary to obtain those
benefits.
Customer satisfaction – customers’ evaluation of a good in terms of whether it meets their needs
and expectation
Building relationships – 1. Customer-oriented personnel, 2. Effective training programs, 3.
Employees with the authority to make decisions and solve problems.

Sales: Inward looking, focus on what firms make

Market: Outward looking, focus on what the market wants

#2 The firm’s business

Sales: focus on the product they offer
Market: focus on the benefit for the customer

• Advantages of knowing a firm’s business:

1. It ensures the firm's focus on customers

2. Encourages innovation and creativity
3. Stimulates awareness of change in customer preferences

#3 Those to whom the product is directed

Sales: aiming at the “average consumer”
Market: aiming at a specific group (market segmentation)

CUSTOMER RELATIONSHIP MANAGEMENT (CRM)

• Company-wide business strategy designed to optimize profitability, revenue, and customer
satisfaction
• By focusing on highly defined and precise customer groups
• On-demand marketing
• Delivering relevant experiences, integrated across both physical and virtual environments,
throughout the consumer’s decision and buying process
#4 The firm’s primary goal
Sales: seek to achieve profitability through sales volume
Market: make a profit by creating customer value, providing satisfaction, and building long-term
relationships

#5 The tools used to achieve goals

Sales: Sales volume through intensive promotional activities
Market: recognize that promotion is only ¼ of the marketing mix

MARKETING STRATEGY
• Marketing objective: what an organization hopes to achieve through their
marketing activities
• Marketing strategy: selecting a target market (or markets) and developing an
appropriate marketing mix i.e. Target (Market + Marketing mix)
• Marketing mix: 4P – product, place, promotion, and price

The 4 & 7p´s in the Marketing Mix

- Product
- Price
- Promotion
- Place
- People
- Physical evidence
- Process

The Marketing Environments

1. The demographic environment

• Different generational cohorts (Tweens; Generation Y, Baby Boomers)
• Changing family structures (boomerang)
• Geographic shifts in the population (rural/urban)
• A better-educated, whiter collar and more professional population

2. The economic environment

- Costumers’ income
- Purchasing power
- Inflation
- Recession

3. Social/Cultural environment
 - The cultural environment consists of the influence of religious, family, educational, and social
systems in the marketing system
- Marketers who intend to market their products overseas may be very sensitive to foreign
cultures.
4. Technological environment
- The technology element enables marketers to access data more accurately, allowing them to
plan marketing strategies better
- Management and operation of the company. Now, employees do not have to attend the
office to work. Instead, they can do work at home, if they are connected to the internet.

5. Political environment
• Business needs government regulation to protect innovators of new technology, the
interests of society, and consumers
• Government needs business in order to generate taxes

6. Competitive factors
- Selling similar products to similar consumers
- Differentiation can be the key to gaining a competitive advantage
- Market share and profits - Firms must work harder to maintain their profits

The promotional mix

1. Advertising – pay intermediates that promote the product through their own
channel
2. Personal selling – face-to-face interaction between seller and customer. Send out the
seller to interact with potential customers.
3. Direct marketing – Directly contacting customers with no intermediates. Using social
media, email, texts, or other direct channels and also to deliver new and valuable
information to current and potential customers.
4. Sales promotion – This can be used if the company has newer product they will
launch to sell out their old ones. Then coupons and discounts can be helpful to get rid
of the old products. Sales promotion is about short-term promoting one product to
generate sales.
5. Public relations – refers to the perception and attitudes people have towards the
product. In order for people to become aware and like the product you can set up
stands and visit public places to let the people interact with the product and
determine their perceptions about it.
Decision-making
Factors influencing consumer decision-making

 Social factors – Reference groups, Opinion leaders, and family

 Individual factors – Gender, age & family, life cycles stage, personality, self-
concept, and lifestyle
 Cultural factors – Culture and values, subculture, social class
 Psychological factors – Perception, motivation, learning, beliefs, and attitudes
CULTURAL INFLUENCES
• Culture and values: Set of values, norms, attitudes, and other meaningful symbols that
shape human behavior and the products of that behavior as they are transmitted from one
generation to the next
• Subculture: Homogeneous group of people who share elements of the overall culture as
well as cultural elements unique to their own group. E.g. hipsters
• Social class: Group of people in a society who are considered nearly equal in status or
community esteem, regularly socialize among themselves both formally and informally and
share behavioral norms e.g. millionaires

SOCIAL INFLUNECES
• Reference groups: a group to which an individual or another group is compared i.e. “in”
(cool) people
• Opinion leaders: Individuals who influence the opinions of others
Family: Socialization process: How cultural values and norms are passed down to children
Roles in families: Initiators, Influencers, Decision Makers, Purchasers & Consumers

INDIVIDUAL FACTORS
Gender, age & family, life cycles stage, personality, self-concept, and lifestyle

Gender: Advertised differently depending on gender.

Age: Advertising it differently e.g., mature, or VERY mature.
Lifestyle: The way you live your life and what is convenient for you.

PSYCHOLOGICAL INFLUENCES ON CONSUMER BUYING DECISIONS

Perception
 Process by which people select, organize, and interpret stimuli into a meaningful and
coherent picture
 Selective exposure: Process whereby a consumer notices certain stimuli and ignores
others
 Selective distortion and selective retention are related to selective exposure
HOW MARKETERS USE PERCEPTION

 Marketers use: Perception to identify important attributes

- Price
- Brand names
- Quality and reliability
The threshold level of perception or just-noticeable difference

 Changes in product or repositioning of a product

 Awareness of foreign consumers' perceptions is required when expanding to global
markets. How the name translate e.g.

Motivation
Motive: Driving force that causes a person to take action to satisfy specific needs
• Maslow’s hierarchy of needs: Method of classifying human needs and motivations into
five categories in ascending order of importance
- Physiological, safety, social, esteem, and self-actualization

Learning
 Creates changes in behavior through experience and practice
 Types:
- Experiential - Occurs when an experience changes behavior
- Conceptual - Not learned through direct experience but based upon reasoning
Stimulus generalization and stimulus discrimination are useful to marketing managers
Can tell two brands apart or you can carry over what you learn about one brand to another.
Based on that fact, the other one must be good. E.g., If Ajax create a new product and you
already like Ajax the new one must be good as well.
Know and explain each step:

1. Need recognition
The customer will need recognition about the product through things like an
advertisement, on social media, or by being personally approached.
Something to make him aware of the product
 2. Information search
After being aware of the product, the customer will research information
about the product on websites, stores, social media etc.

• Internal information search: Recalling past information stored in the memory. When you
know which brand to buy/ you prefer etc.
• External information search: Seeking information in the outside environment. Go to
google and read up, or ask a friend who knows about the brand etc.
- Nonmarketing-controlled information source - Product information source that is
not associated with promotion. Anybody, people around you that you see.
- Marketing-controlled information source - Product information source that
originates with marketers promoting a product. Advertising.

SO HOW MUCH INFORMATION DO WE SEARCH FOR?

Customers seek more information about a product when there is:
• More risk involved
• Less knowledge and less product experience
• High level of interest
• Lack of confidence in the decision taken

3. Evaluating alternatives
The customer will then evaluate what is important to them. And begin to
decide if they will purchase the product. The factors affecting can be:
demanding, the product quality, the service experience, competitors, and
customer wants and needs.
Consumer is ready to make a decision after creating an evoked set
- Evoked set: Group of brands resulting from an information search from which a
buyer can choose

Consumers evaluate and compare alternatives with the help of:

• Environment
•Internal information
•External information

4. Purchase
If the customer feels satisfied they will determine to purchase the product.
Consumer has to make the following decisions:
• Whether to buy
• When to buy
• What to buy (product type and brand)
• Where to buy (type of retailer, specific retailer, online or in store)
• How to pay

• Planned versus impulse purchase

- Partially planned purchase - Made by consumers when they know the product
category, they want to buy but wait until they get to the store or go online
- Unplanned purchase - Made by consumers on an impulse due to an emotional
connection
•Psychological ownership
- Consumers sometimes develop feelings of ownership without even owning the good,
service, or brand (known as the “endowment effect”)

5. Post-purchase behavior
When the customer has bought the product and evaluates is he is satisfied
or not.
COGNITIVE DISSONANCE
• Inner tension that a consumer experiences after recognizing an inconsistency between
behaviour and values or opinions
• Consumers reduce dissonance by:
- Seeking information that reinforces the purchase decision
- Avoiding information that contradicts the purchase decision
- Revoking the original decision by returning the product
Know that extensive is high and routine is low

The product life cycle – refers to the process where the product is introduced to the
market, until the time the product is not available or has extremely low demand. The
product life cycle differs between products and is based upon demand.
Stages
1. Introductory stage
When the product is “born” and introduced to the market. Sales and profit are low,
and costs are high as well as a high failure rate. Promotion focus is on creating
awareness and informing about the product.

2. Growth stage
Now the product has some recognition and sale and profit increased. Aggressive
promotional activity.

3. Maturity stage
The product has its highest peak due to high demand. Although sales increase at a
decreasing rate. This stage is the hardest to maintain, then managers need to
increase promotion even more and create competitive advantages to keep it going.

4. Decline stage
The stage where the product sales decrease. Not a lot of promotion anymore, and
demand is decreasing due to improved other products.
Groups:
An aspirational reference group - is a reference group that an individual wish to join.
Non-aspirational reference group - is a reference group that an individual wishes to detach
him or herself from
Primary reference group - a social group (as a family or circle of friends) characterized by a
high degree of affective interpersonal contact and exerting a strong influence on the social
attitudes and ideals of the individual.
Secondary reference group - those in which the relationship among members is relatively
impersonal and formalized, such as political parties, unions, occasional sports groups, etc.
The members of the secondary groups lack the intimacy of personal involvement.

Types of Business Products

Major equipment: Capital goods such as large or expensive machines, mainframe
computers, airplanes, and buildings
- Depreciates over time and often custom-designed
- Personal selling is an important marketing strategy
-
Accessory equipment: Less expensive and shorter-lived than major equipment
- Portable drills, power tools, microcomputers, and computer software
-
Raw materials: Unprocessed extractive or agricultural products, such as mineral ore, lumber,
wheat, corn, fruits, vegetables, and fish.

Component parts: Either finished items ready for assembly or that need very little
processing. There are two important markets: The OEM market and the replacement
market

Processed materials: Used directly in manufacturing other products and do not retain their
identity in final products.

Supplies: Consumable items that do not become part of the final product
- Fall into categories of maintenance, repair, or operating supplies (MRO)
Business services: Expense items that do not become part of the final product
- Includes janitorial, advertising, legal, management consulting, marketing research,
maintenance, and other services

Multiple-segment specialization is a marketing strategy that divides your target audience

into multiple groups, which comprise consumers with similar demographics and preferences.
This can allow you to create customized campaigns that target each segment.

In the context of marketing research projects, the research design specifies how and when
data will be gathered

A sample: a subset of the population

• Probability sample: everyone has a possibility to take part in the research e.g.
everyone taking Marketing Management (as a course) has the opportunity to take
part
• Non-probability sample: the research decides who would be the best people to
take part in the research e.g. convenience sample. It cannot be generalized to the
population.

Service characteristics
There are four characteristics of service: Intangibility, Inseparability, Variability, and
Perishability

The 5 Dimensions of Service Quality are:

1. Reliability - It is performing the service right the first time, provide services exactly,
on time, and credibly
2. Assurance - means creating trust and credibility for the customers. It depends on the
employee’s technical knowledge, practical communication skills, courtesy, credibility,
competency, and professionalism.
3. Tangibles - represent the physical facilities, employees’ appearance, equipment,
machines, and information system. It focuses on facilitating materials and physical
facilities. Empathy means focusing on the customers attentively to ensure caring and
distinguishing service
4. Empathy - means focusing on the customers attentively to ensure caring and
distinguishing service, process to satisfy customers psychologically and increase
confidence, trust, and loyalty.
5. Responsiveness - Responsiveness refers to the eagerness to assist customers with
respect and provide quick service to satisfy. This dimension focuses on the two
essential factors, including willingness and promptness

The gaps model of service quality

Gap 1: The knowledge gap

The knowledge gap is the difference between the customer’s expectations of the service and the
company’s provision of that service.

Gap 2: The policy gap

The policy gap is the difference between management’s understanding of the customer needs and
the quality specifications developed to provide service

Gap 3: The delivery gap

The gap between service quality specifications & the actual service provided. If gap 1 & 2 are closed,
and not gap 3, it depends on the inability of management and employees to do what should be done.
Prevent by training, skills, tools to perform the work.

Gap 4: The Communication Gap

The communication gap is the gap between what gets promised to customers through advertising
and what gets delivered. Prevent by: creating realistic expectations through honest, accurate, and
realistic communication

Gap 5: The customer gap

The gap between what the customers receive and what they wanted out of it. Differences in
expectations and perception. Both positive and negative. C:s maybe do not understand the service
done or misinterpret the service quality. As the gap shrinks  service quality improves.

Labeling
Persuasive labeling
• Focuses on a promotional theme or logo
• Consumer information is secondary
Informational labeling
• Helps consumers make proper product selections
• Lowers a consumer’s cognitive dissonance after the purchase

New-product development process

1. Idea generation

2. Idea screening
Screening: First filter in the product development process.
- Eliminates ideas that are inconsistent with the organization’s new product
strategy or are inappropriate for some other reason.
- Concept test: Test to evaluate a new-product idea, usually before any prototype
has been created.

3. Business Analysis
• Preliminary figures for demand, cost, sales, and profitability are calculated.
• The newness of the product, the size of the market, and the nature of the
competition all affect the accuracy of revenue projections.
• Analyzing overall economic trends and their impact on estimated sales is
 especially important in product categories that are sensitive to fluctuations in the
business cycle.

4. Development

5. Test marketing

6. Commercialization

Diffusions of innovation
Innovation: Perceived as new by potential adopters
Diffusion: the process by which the adoption of innovation spread

Innovators – Eager to try new ideas

Early adopters – Desire to earn respect of others
Early majority – important link in the process of diffusing new ideas, They are likely to collect
more information and evaluate more brands than early adopters
Late majority – depend on word of mouth rather than mass media, adopt to conform the
group norm
Laggards – some products may never be adopted by 100% by the population
Types of distribution
Intensive
- Penetrate the market
- As many outlets as possible
- No cap on stores or locations
Selective
- Specific Locations
- Limited number of stores
- Target consumers
Exclusive
- High-end and exclusive brands
- Limited outlets
- Particular locations

Writing questions

Competitive advantage