Introduction to Business Management

MNB102-E

INTRODUCTION TO BUSINESS MANAGEMENT

Facilitator: Neels Bothma

Welcome to the Marketing Section of today’s First Years lectures.

Structure of the class 1. Introduction to marketing 2. Marketing research 3. Customer behaviour 4. Market segmentation 5. The marketing mix 6. The marketing strategy 7. Public relations

The Evolution of Marketing as we know it • • • • • •

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

Marketing & Sales Concepts Contrasted

Starting Point

Focus

Factory

Existing Products

Means

Ends

Selling and Promoting

Profits through Volume

The Selling Concept

Market

Customer Needs

Integrated Marketing

Profits through Satisfaction

The Marketing Concept

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

The Marketing Process (see Fig 13.1) Simply:  Marketing management creates an offering (product, price marketing communication, distribution)  The target market sacrifices money  The target market consumes the offering  Marketing management gets feedback through research  This all happens in a marketing environment  Everybody satisfies their objectives (maximise profitability in the long term, total need satisfaction)

Marketing Mix- The Four P’s Product

Price

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

Amount of money that consumers have to pay to obtain the product

Activities that persuade target customers to buy the product

Promotion

Target Customers Intended Positioning

Company activities that make the product available

Place

The Importance of Information Marketing Environment

Customer Needs

Why Information Is Needed Strategic Planning

Competition

Marketing Research Why? Know the research process Market forecasting

Sales forecasting Profit forecasting

1. Define the problem to be investigated 2. Formulate hypotheses 3. Investigate hypotheses 4. Compile a questionnaire 5. Test the questionnaire 6. Select sample 7. Train fieldworkers and do fieldwork 8. Analyse data 9. Interpret the results 10. Compile the report 11. Management studies report 12. Management implements findings

Consumer Buying Behavior 

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

Study consumer behavior to answer: 

“How do consumers respond to marketing efforts the company might use, why do they behave the way they do?”

Customer behaviour INDIVIDUAL FACTORS

GROUP FACTORS

Motivation Attitude Perception Learning ability Personality Lifestyle

Family Reference group Opinion leaders Cultural group

    

Awareness of need Gathering information Evaluation Purchase action Post purchase evaluation

Factors Affecting Consumer Behavior: Group Groups •Membership •Reference Group

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

Cultural group

Group Factors

Factors Affecting Consumer Behavior: Individual Motivation

Beliefs and Attitudes

Individual Factors

Learning

Perception

Personality And lifestyle

Maslow’s Hierarchy of Needs Self Actualization (Self-development)

Esteem Needs (self-esteem, status)

Social Needs (sense of belonging, love)

Safety Needs (security, protection)

Physiological Needs (hunger, thirst)

Consumer Decision Process Awareness of need or problem Information Search Evaluation of Alternatives Purchase Decision Post-purchase Behavior

Market segmentation What is a market? Different types of markets: • consumers • industrial Approaches to the • resellers market – see fig 13.3 • government Requirements for successful segmentation: • Identifiable and measurable • Substantial • Accessible • Responsive

Customer Markets International Markets

Consumer Markets

Company Government Markets

Business Markets Reseller Markets

Requirements for Effective Segmentation Measurable Accessible

• Size, purchasing power, profiles of segments can be measured. • Segments must be effectively reached and served.

Substantial

• Segments must be large or profitable enough to serve.

Differential

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

Actionable

• Must be able to attract and serve the segments.

Bases for segmentation Demographic – Who they are Geographic – Where they are Psychographic – What they think they are Behavioural – How do they behave All of the above determine the consumer profile – draw a picture

Targeting and positioning

Bases for Segmenting Consumer Markets Geographic Nations, states, regions or cities, density

Demographic Age, gender, family size and life cycle, or income

Psychographic Social class, lifestyle, or personality

Behavioral Occasions, benefits, uses, or responses

Market Coverage Strategies Company Marketing Mix

Market

A. MARKET AGGREGATION

Company Marketing Mix 1 Company Marketing Mix 2 Company Marketing Mix 3

Segment 1 Segment 2 Segment 3

B. MULTI-SEGMENT APPROACH

Company Marketing Mix

Segment 1 Segment 2

Segment 3 C. SINGLE SEGMENT APPROACH

Positioning for Competitive Advantage 



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

Now? Satisfies a South African Thirst

Marketers must:



Plan positions to give products the greatest advantage  Develop marketing mixes to create planned positions

Steps in Segmentation, Targeting, and Positioning 6. Develop Marketing Mix for Each Target Segment

5. Develop Positioning for Each Target Segment 4. Select Target Segment(s)

3. Develop Measures of Segment Attractiveness

Market Positioning Market Targeting

2. Develop Profiles of Resulting Segments

1. Identify Bases for Segmenting the Market

Market Segmentation

Marketing Mix- The Four P’s Product “Goods-and-service” combination that a company offers a target market

Activities that persuade target customers to buy the product

Promotion

Price

Target Customers Intended Positioning

Amount of money that consumers have to pay to obtain the product

Company activities that make the product available

Place

The marketing instruments (mix) 1. Product

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

The marketing instruments – Product (cont.) 

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

Classification of Product Convenience Products

Shopping Products

> Buy frequently & immediately > Low priced > Many purchase locations > Includes: • Staple goods • Impulse goods • Emergency goods

> Buy less frequently > Gather product information > Fewer purchase locations > Compare for: • Suitability & Quality • Price & Style

Specialty Products

Unsought Products

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

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

The marketing instruments (mix) 2. Price 

Types of prices    

cost price market price target price final price



Price adaptations      

skimming penetration market price leader price odd price bait price

The marketing instruments (mix) 3. Distribution  Type

of channel  Channel leadership  Market coverage  Physical distribution

Refer to box on page 326

Consumer Marketing Channels & Levels Channel Level - A Layer of Intermediaries that Perform Some Work in Bringing the Product and it’s Ownership Closer to the Buyer. Channel 1

Direct

M

C

Indirect

Channel 2 M

R



C

R



C

R



C

Channel 3 M



W

Channel 4 M



W



W



Physical distribution Costs

Order Processing

Minimize Costs of Attaining Logistics Objectives

Submitted Processed Shipped

Physical distribution

Transportation

Functions

Warehousing Storage Distribution

Water, Truck, Rail, Pipeline & Air

Inventory When to order How much to order Just-in-time

The marketing instruments (mix) 4. Marketing communication 

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

The Marketing Communications Mix Advertising

Any Paid Form of Nonpersonal Presentation by an Identified Sponsor.

Personal Selling

Personal Presentations by a Firm’s Sales Force.

Sales Promotion

Short-term Incentives to Encourage Sales.

Public Relations

Direct Marketing

Building Good Relations with Various Publics by Obtaining Favorable Unpaid Publicity. Direct Communications With Individuals to Obtain an Immediate Response.

The Integrated Marketing Strategy The marketing concept:  Profitability  Consumer orientation  Social responsibility  Organisational integration Phases in the product life cycle:  Introductory Marketing warfare  Growth  Attack  Maturity  Defense  Decline

Product Life Cycle Sales and Profits Over the Product’s Life From Introduction to Decline Sales and Profits ($) Sales

Profits

Time Product Development Losses/ Investments ($)

Introduction

Growth

Maturity

Decline

Marketing Planning and Control Planning o Strategic planning o Functional planning

Control o o o o

Set objectives Measure performance Evaluate performance Take corrective action

Public Relations A deliberate, planned and sustained process of communication between a business and its internal and external publics. Its purpose is obtaining, maintaining and/or improving good relations and understanding.

Developed from: Manipulation Information Mutual influence

What is Public Relations? •Building good relations with the company’s various publics by obtaining favorable publicity, building up a good “corporate image” and handling or heading off unfavorable rumors, stories and events. •Major functions are: – Press Relations – Product Publicity – Public Affairs – Lobbying

– Investor Relations –Development

Major Public Relations Tools Web Site Public Service Activities

News

Corporate Identity Materials

Speeches

Special Events

Audiovisual Materials

Written Materials

Public Relations Management 1. Planning o Scanning the environment o Setting objectives 2. Organising oOrganisational structure oOutside consultants 3. Leading oEstablish corporate culture

4. Evaluation and control

Communication • Communication can be verbal and non-verbal • Communication process – see fig 16.6 Basically: Sender encodes message which is transmitted to receiver via a medium. The receiver decodes the message and interprets it in some way. This all happens despite noise in the environment. • Types of communication media: The spoken word The printed media Sight and sound Special events The Internet

Publicity • Methods of obtaining publicity:    

Unique special events Unique communication messages News releases Sponsorships

• Social responsibility and business ethics • Areas of social responsibility:      

Consumers Suppliers Competitors Employees Owners and shareholders The community

The end! We encourage you to study further in this exciting field!