Abu Bashar, Lecturer of Management (abu.bashars@gmail.com)
Marketing:
Meaning: The term developed from an original meaning which referred literally to going to a market to buy or sell goods or services.
The Chartered Institute of Marketing defines marketing as "the management process responsible for identifying, anticipating and satisfying customer requirements profitably.
Philip Kotler defines marketing as 'satisfying needs and wants through an exchange process'
Product –Oriented Definition:
According to American Marketing Association, “ Marketing is the performance of business activities that direct the flow of goods and services through producers to consumers or users.”
Customer –Oriented Definition:
According to Cundiff and Still, “Marketing is the business process by which products are matched with the markets and through which transfers of ownership are effected.”
Marketing concept :
It is a fundamental idea of marketing that organisations survive and prosper through meeting the needs and wants of customers. This important perspective is commonly known as the marketing concept.
In 1776 in The Wealth of Nations, Adam Smith wrote that the needs of producers should be considered only with regard to meeting the needs of consumers. While this philosophy is consistent with the marketing concept, it would not be adopted widely until nearly 200 years later.
To better understand the marketing concept, it is worthwhile to put it in perspective by eviewing other philosophies that once were predominant. While these alternative concepts prevailed during different historical time frames, they are not restricted to those periods and are still practiced by some firms today.
The Production Concept
The production concept prevailed from the time of the industrial revolution until the early 1920's. The production concept was the idea that a firm should focus on those products that it could produce most efficiently and that the creation of a supply of low-cost products would in and of itself create the demand for the products. The key questions that a firm would ask before producing a product were:
ü Can we produce the product?
ü Can we produce enough of it?
At that time, the production concept worked fairly well because the goods produced were largely those of basic necessity and there was a relatively high level of unfulfilled demand. Virtually everything that could be produced was sold easily by a sales team whose job was simply to execute transactions at a price determined by the cost of production. The production concept prevailed into the late 1920's.
The Sales Concept:
By the early 1930's however, mass production had become commonplace, competition had increased, and there was little unfulfilled demand. At that time, firms began to practice the sales concept (or selling concept), under which companies not only would produce the products, but also would try to convince customers to buy them through advertising and personal selling. Before producing a product, the key questions were:
ü Can we sell the product?
ü Can we charge enough for it?
The sales concept paid little attention to whether the product actually was needed; the goal simply was to beat the competition to the sale with little regard to customer satisfaction. Marketing was a function that was performed after the product was developed and produced, and many people came to associate marketing with hard selling. Even today, many people use the word "marketing" when they really mean sales.
Product Concept:
Organization working with product concept fully concentrates on product quality, design and features. Organization praise this concept believes that higher quality, maximum number of features and best design will attract large number of customer to opt the product at best price. The concept is truly applicable in some niches such as electronics and mobile handsets.
Most of the time organization falls too much in love with their product that they forgot about other product development, competition and other external factors result in marketing myopia. Thus companies need to take innovations and features seriously and provide only those which the customer needs. The customer needs should be given priority.The Marketing Concept:
After World War II, the variety of products increased and hard selling no longer could be relied upon to generate sales. With increased discretionary (unrestricted, flexible) income, customers could afford to be selective and buy only those products that precisely met their changing needs, and these needs were not immediately obvious. The key questions became:
ü What do customers want?
ü Can we develop it while they still want it?
ü How can we keep our customers satisfied?
In response to these discerning (perceptive, sensitive, judicious) customers, firms began to adopt the marketing concept, which involves:
ü Focusing on customer needs before developing the product
ü Aligning all functions of the company to focus on those needs
ü Realizing a profit by successfully satisfying customer needs over the long-term
When firms first began to adopt the marketing concept, they typically set up separate marketing departments whose objective it was to satisfy customer needs. Often these departments were sales departments with expanded responsibilities.
While this expanded sales department structure can be found in some companies today, many firms have structured themselves into marketing organizations having a company-wide customer focus. Since the entire organization exists to satisfy customer needs, nobody can neglect a customer issue by declaring it a "marketing problem" - everybody must be concerned with customer satisfaction.
The marketing concept relies upon marketing research to define market segments, their size, and their needs. To satisfy those needs, the marketing team makes decisions about the controllable parameters of the marketing mix.
Holistic Marketing Concept:- This concept includes everything under the umbrella of marketing . It helps in development, Designing and Implementation of all marketing programs. It consists of four marketing components. Those are Relationship Marketing , Internal Marketing, Integrated Marketing and Social Responsibility Marketing. So from these we can make sure that it contains the whole internal and External marketing environment for the Marketing . The Marketing can be, By building internal or External Relationship or from the 4P's of market. So, By changing Internal and External Environment of a company's Marketing plan can help the company to fight in the competitive environment. So this concept contains all components under the marketing Umbrella by which the companies can sustain and get profits in a dense of competitive market.
Four Pillars of Marketing concept:
The marketing concept rests on four pillars: target market, customer needs, integrated marketing, and profitability.
No company can operate in every market and satisfy every need. Nor can it always do a good job within one broad market.
Marketing is about meeting needs of target markets profitably.
The key to professional marketing is to understand their customers’ real needs and meet them better than any competitor can.
Some marketers draw a distinction between responsive marketing and creative marketing. A responsive marketer finds a stated need and fills it. A creative marketer discovers and produces solutions that customer did not ask for but to which they enthusiastically respond.
When all the company’s department’s work together to serve the customer’s interests, the result is integrated marketing.
Integrated marketing takes on two levels. First, the various marketing functions-sales force, advertising, product management, marketing research, and so on – must work together.
Second must be well coordinated with other company departments.
The ultimate purpose of the marketing concept is to help organizations to achieve their goals. In the case of private firms, the major goal is profit. Marketing managers have to provide value to the customer and profits to the organization. Marketing managers have to evaluate the profitability of all alternative marketing strategies and decisions and choose most profitable decisions for long-term survival and growth of the firm.
Objectives of Marketing Management:
The basic purpose of Marketing is to achieve the objective of business. A business aims at earning a reasonable profit by satisfying the needs of customers. In the light of this statement, we can highlight the following objectives of marketing management:
1) To Create of Demand: The first objective of marketing management is to create demand of through various means. Goods and services are produced to satisfy the needs of the customers. Demand is also created by informing the customers about the utilities of various goods and services.
2) To satisfy the customers: Modern marketing begins and ends with customer. A marketer tries to offer the goods or services that is most suitable and matched with his/her needs and satisfy the customer.
3) To increase market share: Every business aims at increasing its market share. For this, they adopt innovative advertising, innovative packaging, sales promotion activities and other marketing strategies to increase market share.
4) To generate profit: Marketing department makes all possible efforts to help sales team to increase sales volume to generate more and more profit. If the firm is not earning the profit, it will not be able to survive in the market. Moreover, Profits are also needed for the growth and diversification of the firm.
5) To create goodwill and corporate image: The marketing department provides quality products to customers at reasonable prices. It helps to create positive brand image in the minds of the customers. A marketing manager also tries to increase goodwill of the business by initiating image building activities such as sales promotion, publicity and advertisement, high quality product at reasonable price, and covinient distribution outlets etc.
Functions of marketing:
The general functions of marketing are:
1) Market Information: To identify the needs, wants and demands of the consumers and then analyzing the identified information to arrive at various decisions for the successful marketing of a firm’s products and services is one of the most important functions of marketing. The analysis involves judging the internal weaknesses and strengths of the organization as well politico-legal, social and demographic data of the target market. This information is further used in market segmentations.
2) Market Planning: Market-planning aims at achieving a firm’s marketing objectives. These objectives may involve increasing market presence, dominate the market or increase market share. The market planning function covers aspects of production levels, promotions and other action programmes.
3) Exchange Functions: The buying and selling are the exchange functions of marketing. They ensure that a firm’s offerings are available in sufficient quantities to meet customer demands. The exchange functions are supported by advertising, personal selling and sales promotions.
4) Product Designing and development: The product design helps in making the prodyct attractive to the target market. In today’s competitive market environment not only cost atters but also the product design, suitability, shape, style etc. matter a lot in taking production decisions.
5) Physical Distribution: The physical distribution functions of marketing involve transporting and storing. The transporting function involve moving products from their points of production to locations convenient for purchasers and storing function involve the warehousing products until needed for sale.
6) Standardization and Grading: Standardization involves producing goods at predetermined specifications. Standardization ensures that product offerings meet established quality and quantity. It helps in achieving uniformity and consistency in the output product. Grading is classification of goods in various groups based upon certain predetermined characteristics. It involves the control standards of size, weight etc. Grading helps in pricing decisions also. The higher quality goods and services attract higher prices.
7) Financing : The financing functions of marketing involve providing credit for channel members or consumers.
8) Risk Taking: Risk taking is one of the important marketing functions. Risk taking in marketing refers to uncertainty about consumer purchases resulting from creation and marketing of goods and services that consumers may purchase in future.
9) Packaging, labeling and branding: packaging involves designing package for the products, labeling means putting information required / specified on a product’s covering. Packaging and labeling serve as promotional tools now a days, Branding distinguishes the generic commodity name to a brand name. For example, Wheat Flour is a generic name of a commodity while “Ashirvad Aata” is a brand name. In service industry, also branding matters a lot.
10) Customer Support: Customer support is a very important function of marketing. It involves pre sales counseling, after sales service, handling the customer complaints and adjustments, credit services, maintenance services, technical services and consumer information. For example, water purifier comes with an onsite service warranty of 7 years helps in marketing and is an important marketing function as well.
| Advertising Definition: The term, 'advertising' has been derived from the Latin word Adverto which means to drive the attention towards something.Advertising involves the preparation of written or oral messages and their dissemination through paid media without personal contacts fro the purpose of making people aware of and inclined towards the use of a particular product of that firm or company. “Any paid form of non-personal presentation and promotion of ideas, goods or services through mass media such as newspapers, magazines, television or radio by an identified sponsor.” (Principles of Marketing : Kotler, Armstrong, Saunders and Wong) According to American Marketing Association (AMA) "Advertisements are paid form non personal presentation and promotion of idea, god and services by an identified sponsor" According to Encyclopedia Britannica "Advertising are techniques and practices used to bring products, services, opinions to public notice for the purpose of persuading the public to respond in certain ways" According to Bobby, "Advertisements are non personal communication of paid information, persuasive about products and services by identified sponsor through various media" Types of Advertisement copy: Advertising copy contains a number of elements. All advertisement copies may not contain all the elements. Different advertisement copies may have different elements and some may include all the elements. The ultimate objective is increasing sales turnover to maximize the profit. So different advertisements are designed incorporating required elements too meet different problem in reaching the maximum profit. There are various types of copy. One advertisement may contain more than one of these kinds of copy. Burton and Kreer list five kinds of copy. They are:- 1. Straight line copy : In this the body text begins to develop the headline. 2. Narrative Copy : In this type a story is established or a specific situation which ultimately leads to discussion. 3. Dialogue and Monologue copy : In this kind the characters in the advertisement do the selling in their own words. 4. Picture and Caption Copy : In this kind the story or specific situation is described by a number of illustrations and captions. In other words copy block alone is not used. 5. Gimmick copy : In this effects are not classified. Humour, exaggeration and other trick devices are employed to capture attention. 6. Scientific Copy : This copy is meant to meet a target audience because it contains jargon, technical and scientific. For instance, advertising copy relating to fertilizers, pesticides, drugs and pharmaceuticals. 7. Descriptive copy : A type of copy which describes briefly and clearly and generally used for consumer products. 8. Celebrity Endorsement copy :Pictures of some person who already enjoy publicity are used to convey the message. For instance, a message is supported by a sportsman, cinema star, political leader. 9. Reason why copy : A kind of copy designed to meet a different problem. It gives a solution to the problem to encourage people to purchase a product. For instance, a scooter advertisement. 10. Questioning copy : Why a particular product has to be purchased. This attracts consumers. Instances of this are Colgate paste, face powder etc. Features of advertising The main characteristics of advertisements are as follows: · Advertising is a non-personal from or presentation because there is no face to face contact with the consumers of the product. · It is a paid form of communication as the advertiser has to pay for the space or time hired by him for the purpose of advertising. · It is done by an identified sponsor. It is always done on or for the behalf of somebody called sponsor. · It can be oral, written or visual. · The basic function of advertising to is to raise the demand for the particular product. · Advertising is a basic form of mass communication as the advertisements are aimed at the large number of people. · Advertising id different from publicity as it takes place throughout the life time of a firm or the product. |
Objective of Advertising:
1) Trial : The purpose of the trial objective is to encourage customers to make an initial purchase of a new product. Companies will typically employ creative advertising strategies in order to cut through other competing advertisements. The reason is simple: Without that first trial of a product by customers, there will not be any repeat purchases.
2) Continuity Continuity advertising is a strategy to keep current customers using a particular product. Existing customers are targeted and are usually provided new and different information about a product that is designed to build consumer loyalty.
3) Brand Switching Companies adopt brand switching as an objective when they want customers to switch from competitors’ brands to their brands. A common strategy is for a company to compare product price or quality in order to convince customers to switch to its product brand.
4) Switchback Companies subscribe to this advertising objective when they want to get back former users of their product brand. A company might highlight new product features, price reductions, or other important product information in order to get former customers of its product to switchback.
5) Inform :Informative advertising, seeks to tell the market about the product, explain how the product works, provide information on pricing, and build awareness of both the product and the company. Such objectives are normally pursued at the launch of a new product, or re-launch / up-date of an existing product.
6) Persuade: Here objectives are to encourage the target audience to switch brands, make the purchase, and create a preference in the market for the product as opposed to its competition. Advertising of this nature is required in highly competitive markets, where a range of products compete directly with each other. In such circumstances businesses often seek to differentiate their product through Comparison Advertising – either directly or indirectly comparing its product to that of its competitors.
7) Remind:Reminder Advertising, is used to maintain interest and awareness of a well established product in the market, often in the latter stages of its product life cycle. It is often used at the Point-of-Purchase to remind consumers of the Brand. Such advertising is used by the likes of Coca-Cola and other leading brands, to maintain their position in the market.
Functions of advertising
1) Differentiate the product from their competitors :
An important function of advertising is the identification function, that is, to identify a product and differentiate it from others; this creates an awareness of the product and provides a basis for consumers to choose the advertised product over other products this creates an awareness of the product and provides a basis for consumers to choose the advertised product over other products.
The identification function of advertising includes the ability of advertising to differentiate a product so that it has its own unique identity or personality.
shampoo available in the shelf. The bottle of the shampoo is unique from all others.
Example: apple laptops make them different from others as the WHITE color and logo of APPLE on back of the screen
2) Communicate product information
Another function of advertising is to communicate information about the product, its attributes, and its location of sale; this is the information function. Product information communicated to the customers in manner that meets their information needs. Most consumers tend to discount the information in advertising because they understand that the purpose of the advertising is to persuade. Making an advertising message believable is not easy; though often it is sufficient to make the consumer curious enough to try the product. Such curiosity is often referred to as interested disbelief. Advertisers use a variety of devices to increase the believability of their advertising: celebrities or experts who are the spokespersons for the product, user testimonials, product demonstrations, research results, and endorsements.
3) Urge of product used
The third function of advertising is to induce consumers to try new products and to suggest reuse of the product as well as new uses; this is the persuasion function.
The basic function of advertising is to provide constant reminders and reinforcements to generate the desired behavior the advertiser wants from them. This is a particularly effective function in the long run as reminders and reinforcements register in the consumers' minds, becoming the base on which they shape their future decisions. Sampling in the way to urge the product using.
Example:
Fair and lovely as we know that it will make a girl look fair and prettier in 4 weeks.
4) Helps to expand the product distribution
When the consumer comes to know about the particular product from the advertisement he/she wants to try that new product. They go to shops to buy the product; if the new product is not available in a shop then the shopkeeper consults the distributor to make that product available in his shop. It is basically to provide the product all over market. It is necessary to make sure that product should be accessible to everyone. Availability of product effect the distribution.
Example:
Wateen telecom and Motorola Partner to Expand Distribution of Videoconferencing Product Line in Pakistan. So as many people are getting to know about this facility they are running towards the franchises to avail it. So for that Wateen should expand their distribution all around the cities.
5) It increases brand preference and loyalty
Marketing is a moving thing. As your needs are changed your preferences are changed. When the product delivers the promised quality, service and value, it creates satisfied customers who become instrumental in spreading a favorable word-of-mouth. Satisfied customers also develop brand preference; each product features and uses are written on the product.
Example: 99% girls who are not married will not look at the ad of pampers or any milk powder for children but when they will get married their interest will automatically move towards such ad'
Brand loyalty
Brand loyalty is a long-term customer preference for a particular product or service. Brand loyalty can be produced by factors such as customer satisfaction with the performance or price of a specific product or service, or through identifying with a brand image. It can be encouraged by advertising.
People often make purchasing decisions based on how a brand makes them feel emotionally rather than based on quality or other objective evaluations. If "Just Do it" strikes a chord with an athlete, he'll buy Nike; the decision may have little to do with quality.
Example: For instance, when one buys a tube of Colgate toothpaste and finds it ok, one will not have to spend any valuable time on looking for other toothpaste brands.
6) It major role to reduce overall sales cost
When a product is selling you have to teach the people about the product.
Like if we would advertise through newspapers, TV, broachers and internet, it would cater huge sum of masses and if you do individually it would be more costly and time consuming.
Example: Coke targets their consumers on a very large scale through mass media whereas Makka cola advertise on smaller scale or go door to door to advertise their product.
7) Creates new demands
Advertising have to create new demands they should educate the people about more and more new things coming up in the market. Each year new products, including line extensions and new brands are introduced into groceries and drugstores.
Example: Wateen telecom is offering wireless internet chips, video conferencing and WIMAX services as they are introducing new services in market its creating new demands.
8) CUTS COSTS – Advertising may be instrumental in cutting down production and selling costs. Increasing unit sales decrease unit costs. Selling costs also may decrease because there could be fewer wasted calls and less strain on sales people.
9) LOWERS PRICES – In any market based and competitive economy, when unit cost of a product goes down, there are external and internal pressures which compel companies to lower prices to the advantage of consumers. This often leads to deeper market penetration.
10) COMPETITIVE WEAPON – Advertising by itself and coupled with other promotion mix elements, may prove to be an extremely potent weapon to counter competitive moves. Advertising has an established role in creating brand personality and image. It helps differentiate a company’s offer in a manner that the product may be considered as something with unique value having a definite identity of its own .
Advantages/Benefits of Advertising:
Benefits of advertisements for the business:
Meeting competition: Since, today a number of products on the same need of the consumers are available in the market, it is obvious that no company can make profits for a long time if the consumers keep on changing their brands. Hence, advertisements attract the consumers towards a particular product and urges them to stick to that brand.
Steady demand: There are certain products that have only a seasonal demand. For example, umbrellas can be used only in rainy season but the advertising ask us to use it in summer to prevent ourselves from the direct rays of the sun. Hence, the firms does not need to close itself during the off-season.
Higher sales volume: Advertisements help the producers to reach out to the consumers quickly and improve their sales. If we are influenced by products, we buy the products which we do not need at that instant. Obviously, we are also influenced by the timely offers that the producers advertise.If the offers last only for a certain time, we show our hurry to buy that product as soon as possible.
Introduction of new products: The producers find it very easy to communicate the release of new products to the consumers in a very efficient and cost-effective way through advertisements. It simplifies the work of a salesman and also allows the customers to reach out to other products.
Economies of scale: Advertisements also allow the producers to increase the volume of production which in turn increases the benefits they get from production in large scale. It is a fact that if we buy th things in bulk, we get it a cheaper rate. The same thing is also applicable in production process. We can also eliminate middleman such as wholesalers that reduces the cost for the consumers by reducing the profit margin. Commercial Banks also grant loans to such firms whose products are advertised.
Goodwill: If a particular cosmetic company uses an actress or actor to advertise the products of its brand, it shall definitely develop a reliability for its products. The public shall trust that company and its products which in turn shall increase the valuation of the goodwill and the image of the firm. It helps the firm to face strict competition during the business conditions of depression when all the consumers develop a mistrust against a particular product.
Employee morale:When the employees know that the products if a firm are advertised and have developed sufficient trust in the public, they shall be assured that their jobs are safe and they shall receive bonuses on account of profits made by the firm. It also enhance the qualities of a good salesman.
Benefits of advertisements to the consumers
Convenience : When we know that we have to buy the product of a particular brand name, we shall not waste our time in searching out for the best one. We can make a choice even before we go to the market.
Education of the consumers: Advertisements help us to become aware of the uses of a new product ad the functioning of the electronic items. If there are no advertisements, we shall never be able to know about the new companies that enter the market or the introduction of new and better products in the market.
Fair prices: Advertisements reduces the cost of the product by providing the firms with the advantages of economies of scale and the elimination of the middleman .As a result, customers get goods at lower prices.< Many expensive products of yesteryears have come within the reach of the common masses due to continuous advertising and consequent reduction in prices. Prices of widely advertised products tend to be stable during adverse business conditions such as depression.
Better quality: As said earlier, the producers always try to retain their old consumers and make new ones by introducing some special changes in their product to make them differentiable from the others.Manufacturers are forced to maintain better standards of the commodity to retain consumers.
Contact between producers and consumers: Advertisements provide links or contact numbers of the product or th service so that the consumers can report their grievances against the use of certain products so that the quality can be bettered. Hence, it brings the consumers and the producers closer to each other.
Benefits of advertisements for the society
Generates employment:Advertisements provide employment to the people all round the world who are concerned in every field. Since, through advertisements producers increases the sales and reach out to the consumers quickly, it increases the employment level in the country as more labor will now be required to boost up the production.
Standard of living: Advertisements help in improving the quality of the products and allows the firms to introduce variable and different types of products with some special features. Hence, it improves the standard of living of people by allowing them to purchase goods relating to the current standards.
Sustains the press:We all get the newspapers at a nominal cost of Rs.2 to Rs.4 but there are so many costs involved in its production. Hence, to make it affordable for the lower class people, newspapers sustain themselves by publishing advertisements on every page. Similarly, many of us write articles in this site as we all get paid through advertisements displayed by Google.
Stimulates research and developments : If you have seen the cost sheet of any firm, you will notice that huge amount of money is spent on the research and development of the product. Every firm try to convince its old consumers and make new customers by developing some new types of products or improvement in the existing product.
Promote art and culture: Advertisements have promoted the art of our country by showing the customs and traditions of old tribal and rural people. It also act as a source of entertainment for the people, not all the ads perform this work but a few such as the Zoo-Zoo ads of the Vodafone.
Criticism against advertising
1.Increased price of the product :- Advertising increases the cost of the product as the expenses on it form the part of the total cost of the product. The increased prices are borne by the consumers. But it can't be denied that advertising leads to large scale production which considerably reduces the total and per unit cost of production. The consumer may pay less rather than higher.
7. Unethical: Many advertisements are highly objectionable because they undermine values and ethics. Vulgar advertisements like that of Axe offend public decency and encourage materialism in the society. It is also shocking that the television ministers allow such advertisements to be published. It is definitely an example of Corruption in India. We should thank god that soon the Jan Lokpal bill will come into force.
8. Artificial living: Advertising amplifies the need of people ad encourages wasteful consumption. It persuades people to buy which they do0 not need or cannot afford. People are even encouraged to buy products that are harmful for their health like cigarettes, alcohols etc.
Advertising media
The selection of a proper advertising media is not an easy task as it involves careful consideration of many factors by manufacturer. So have a look on following considerations -
| Definition of Market Research |
Market Research is a systematic, objective collection and analysis of data about a particular target market, competition, and/or environment. It always incorporates some form of data collection whether it be secondary research (often referred to as desk research) or primary research which is collected direct from a respondent.
Green and Tull1 have defined marketing research as follows:
"Marketing research is the systematic and objective search for, and analysis of, information relevant to the identification and solution of any problem in the field of marketing.
Objective of Marketing Research:
The type of information sought from market research will determine how much time and effort a business should invest in it. The objectives of market research may include:
- Market Attractiveness Evaluation:
- Market sizing - estimating the size of a total market, how much is accessible by the business, and/or what market share ambitions would be realistic.
- Competitive presence and customer preference.
- Customer spending patterns, budget cycles, and intent.
- Channel trends, preferences, and allegiances.
- Customer Insight: Specific customer needs, aspirations, buying behaviors, usage patterns, decision models, preferences, favourability, intentions, etc
- Competitive Forces: Current and potential basis of competition in a market.
- Communications Planning: What information sources do prospective customers pay attention to, how to reach them, opportunities / vehicles for influencing target customers and which are most effective.
- Product Testing: Evaluation of product improvements, alternatives, packaging etc.
- Concept Testing: Evaluation of potential products and solutions, clarification of needs, wants, and preferences.
- Advert Testing: Evaluation of alternative brand promises, impact / cut through ability, persuasiveness, strength of call to action, out-take versus intent, etc.
- Customer Satisfaction: Measurement of quality of customer experience, perceptions, reaction, loyalty, intent, etc.
- Pricing: Testing of price / feature / quality / packaging / positioning combinations, price points, promotions, loyalty schemes, terms and conditions, etc.
- List Building: Compilation of information about prospective customers for direct marketing purposes (NB may not be compatible with ethical guidelines followed by many market research practitioners).
The Purpose of Market Research...
There's not that much competition online. I know this is a bold statement and I am going to prove it to you in a step-by-step fashion.
If you don't research a market before diving into it you're crazy. You will waste an incredible amount of time, money and metal resources if you jump into a market blindly without following a process to:
- Determine the profitability of the market
- Determine what customers want and need in the market
- Determine if there are already products available that are popular in the market
- Determine how the top rated websites in the market are selling the hot products that you find.
- Back engineer the selling strategies of the most profitable websites in the market
- Determine which websites dominate your market and why
- Determine how the most popular websites in the market make money
- Determine profit potential in the market
Importance of market Research:
- Finding where your products are most likely to sell
- Identifying market segments and niches
- Determining both domestic and international competitors
- Discovering how to overcome barriers to market entry
- Understanding customers' needs
- Identifying new trends
- Establishing fair market prices for your products
- Communicate effectively
- Identify and understand opportunities
- Pinpoint obstacles or problems
- Benchmark and evaluate you success
Other Importance are :
- To Make Marketing Decisions: Marketing research helps the marketers to make a decision about the product or service. Sometimes a marketer might believe that the new product or service is useful for the customers. However, research may show that customers do not need a product or are meeting their needs with a certain competitor product and so on. Similarly good marketing research strives to provide options for the successful introduction of new products and services. This makes the market entry of a new product or service less risky.
Survive the Competition: Marketing research helps in ascertaining and understanding competitor information such as their identity, marketing network, customer focus and scale of operations. This helps in surviving and in certain cases, even leaving behind the competition. Moreover, with market research you can also help understand the under-served consumer segments and consumer needs that have not been met.
Helps to Decide Target Markets: Research helps provide customer information in terms of their location, age, buying behavior and gender. This helps the marketers zero in on the target markets and customers for their products and services.
Maximize Profits: Apart from profit maximizing steps such as item optimization, customer profitability analysis, and price elasticity, marketing research allows you to find out methods that can help you maximize profits. For example, a product's price elasticity research can help you ascertain the impact of an increased price on the sales and the profits of a product. This emphasis on profitability also helps the company's focus to shift from maximizing sales to increasing the profits of a company. This helps the company survive in the long run and maximize its profits.
Increasing the Sales: Increasing the sales of your products or services helps a company in maximizing its profits. By understanding the customer's needs, wants and attitude towards the products and determining whether your products fit the bill, marketers can increase their sales. This helps in not only increasing the sales to the target customers and people already using the product but also converting the non users into customers for the product.
Limitations of Marketing Research
Following are the main limitations of Marketing Research:
1) Marketing research offers suggestions and not decisions:- Marketing research is not substitute for decision making process. It only offers possible suggestion to marketing problem. It actually acts as a tool which facilitates decision making process. It guides marketing managers in taking balanced, result oriented and rational decisions. The suggestions offered by marketing researchers are usually possible solution but not the exact solution.
In fact marketing research by itself is not an exact science. MR offers predication but they are not necessarily accurate or perfect. Such predictions should be taken in the right sprit by the management. It offers information and guidance to marketing manager but not the final decisions which are to be taken by manager themselves.
MR does not provide readymade solution to marketing problem. It only provides indicators. The effectiveness of MR depends on the skill of the decision maker. MR aids managerial decision making but it control replace judgement and experience of marketing managers.
10) Changing behaviour of consumers: Consumer is a focal point in the market research. However, his buying motives are difficult to judge precisely and accurately. This brings some sort of uncertainty in the conclusion drawn from the research activity. The findings of the research work may not prove to be accurate.
The Marketing research Process.
Marketing research is gathered using a systematic approach. An example of one follows:
1. Define the problem. Never conduct research for things that you would 'like' to know. Make sure that you really 'need' to know something. The problem then becomes the focus of the research. For example, why are sales falling in New Zealand?
2. How will you collect the data that you will analyze to solve your problem? Do we conduct a telephone survey, or do we arrange a focus group? The methods of data collection will be discussed in more detail later.
3. Select a sampling method. Do we us a random sample, stratified sample, or cluster sample?
4. How will we analyze any data collected? What software will we use? What degree of accuracy is required?
5. Decide upon a budget and a timeframe.
6. Go back and speak to the managers or clients requesting the research. Make sure that you agree on the problem! If you gain approval, then move on to step seven. 7. Go ahead and collect the data.
8. Conduct the analysis of the data.
9. Check for errors. It is not uncommon to find errors in sampling, data collection method, or analytic mistakes.
10. Write your final report. This will contain charts, tables, and diagrams that will communicate the results of the research, and hopefully lead to a solution to your problem. Watch out for errors in interpretation.
Methods of Data Collection:
There are two main sources of data - primary and secondary.
Primary Data:
Primary marketing research is collected for the first time. It is original and collected for a specific purpose, or to solve a specific problem. It is expensive, and time consuming, but is more focused than secondary research. There are many ways to conduct primary research. We consider some of them:
1. Interviews
2. Mystery shopping
3. Focus groups
4. Projective techniques
5. Product tests
6. Diaries
7. Omnibus Studies
1.0 Interviews.
This is the technique most associated with marketing research. Interviews can be telephone, face-to-face, or over the Internet.
1.1 Telephone Interview.
Telephone ownership is very common in developed countries. It is ideal for collecting data from a geographically dispersed sample. The interviews tend to be very structured and tend to lack depth. Telephone interviews are cheaper to conduct than face-to-face interviews (on a per person basis).
Advantages of telephone interviews
- Can be geographically spread
- Can be set up and conducted relatively cheaply
- Random samples can be selected
- Cheaper than face-to-face interviews
Disadvantages of telephone interviews
- Respondents can simply hang up
- Interviews tend to be a lot shorter
- Visual aids cannot be used
- Researchers cannot behavior or body language
1.2 Face-to-face Interviews.
Face-to face interviews are conducted between a market researcher and a respondent. Data is collected on a survey. Some surveys are very rigid or 'structured' and use closed questions. Data is easily compared. Other face-to-face interviews are more 'in depth,' and depend upon more open forms of questioning. The research will probe and develop points of interest.
Advantages of face-to-face interviews
- They allow more 'depth'
- Physical prompts such as products and pictures can be used
- Body language can emphasize responses
- Respondents can be 'observed' at the same time
Disadvantages of face-to-face interviews
- Interviews can be expensive
- It can take a long period of time to arrange and conduct.
- Some respondents will give biased responses when face-to-face with a researcher.
1.3 The Internet
The Internet can be used in a number of ways to collect primary data. Visitors to sites can be asked to complete electronic questionnaires. However responses will increase if an incentive is offered such as a free newsletter, or free membership. Other important data is collected when visitors sign up for membership.
Advantages of the Internet
- Relatively inexpensive
- Uses graphics and visual aids
- Random samples can be selected
- Visitors tend to be loyal to particular sites and are willing to give up time to complete the forms
Disadvantages of the Internet
- Only surveys current, not potential customers.
- Needs knowledge of software to set up questionnaires and methods of processing data
- May deter visitors from your website.
1.4 Mail Survey
In many countries, the mail survey is the most appropriate way to gather primary data. Lists are collated, or purchased, and a predesigned questionnaire is mailed to a sample of respondents. Mail surveys do not tend to generate more than a 5-10% response rate. However, a second mailing to prompt or remind respondents tends to improve response rates. Mail surveys are less popular with the advent of technologies such as the Internet and telephones, especially call centers.
2.0 Mystery Shopping
Companies will set up mystery shopping campaigns on an organizations behalf. Often used in banking, retailing, travel, cafes and restaurants, and many other customer focused organizations, mystery shoppers will enter, posing as real customers. They collect data on customer service and the customer experience. Findings are reported back to the commissioning organization. There are many issues surrounding the ethics of such an approach to research.
3.0 Focus Groups.
Focus groups are made up from a number of selected respondents based together in the same room. Highly experienced researchers work with the focus group to gather in depth qualitative feedback. Groups tend to be made up from 10 to 18 participants. Discussion, opinion, and beliefs are encouraged, and the research will probe into specific areas that are of interest to the company commissioning the research.
Advantages of focus groups
- Commissioning marketers often observe the group from behind a one-way screen
- Visual aids and tangible products can be circulated and opinions taken
- All participants and the research interact
- Areas of specific interest can be covered in greater depth
Disadvantages of focus groups
- Highly experienced researchers are needed. The are rare.
- Complex to organize
- Can be very expensive in comparison to other methods
4.0 Projective techniques.
Projective techniques are borrowed from the field of psychology. They will generate highly subjective qualitative data. There are many examples of such approaches including: Inkblot tests - look for images in a series of inkblots Cartoons - complete the 'bubbles' on a cartoon series Sentence or story completion Word association - depends on very quick (subconscious) responses to words Psychodrama - Imagine that you are a product and describe what it is like to be operated, warn, or used.
5.0 Product tests.
Product tests are often completed as part of the 'test' marketing process. Products are displayed in a mall of shopping center. Potential customers are asked to visit the store and their purchase behavior is observed. Observers will contemplate how the product is handled, how the packing is read, how much time the consumer spends with the product, and so on.
6.0 Diaries.
Diaries are used by a number of specially recruited consumers. They are asked to complete a diary that lists and records their purchasing behavior of a period of time (weeks, months, or years). It demands a substantial commitment on the part of the respondent. However, by collecting a series of diaries with a number of entries, the researcher has a reasonable picture of purchasing behavior.
7.0 Omnibus Studies.
An omnibus study is where an organisation purchases a single or a few questions on a 'hybrid' interview (either face-to-face or by telephone). The organisation will be one of many that simply want to a straightforward answer to a simple question. An omnibus survey could include questions from companies in sectors as diverse as heath care and tobacco. The research is far cheaper, and commit less time and effort than conducting your own research.
Secondary Data:
Secondary marketing research, or desk research, already exist in one form or another. It is relatively cheap, and can be conducted quite quickly .However, it tends to have been collected for reasons other than for the problem or objective at hand. So it may be untargeted, and difficult to use to make comparisons (e.g. financial data gather on Australian pensions will be different to data on Italian pensions). There are a number of such sources available to the marketer, and the following list is by no means conclusive:
- Trade associations
- National and local press Industry magazines
- National/international governments
- Websites
- Informal contacts
- Trade directories
- Published company accounts
- Business libraries
- Professional institutes and organisations
- Omnibus surveys
- Previously gathered marketing research
- Census data
- Public records
The research proposal
Having received the research brief, the researcher responds with a research proposal. This is a document which develops after having given careful consideration to the contents of the research brief. The research proposal sets out the research design and the procedures to be followed. The eight steps are set out in figure 1.2. These are only briefly discussed here since the remainder of this textbook consists of a detailed explanation of each step.
Figure 1.2 The research design
The point has already been made that the decision-maker should clearly communicate the purpose of the research to the marketing researcher but it is often the case that the objectives are not fully explained to the individual carrying out the study. Decision-makers seldom work out their objectives fully or, if they have, they are not willing to fully disclose them. In theory, responsibility for ensuring that the research proceeds along clearly defined lines rests with the decision-maker. In many instances the researcher has to take the initiative.
In situations, in which the researcher senses that the decision-maker is either unwilling or unable to fully articulate the objectives then he/she will have to pursue an indirect line of questioning. One approach is to take the problem statement supplied by the decision-maker and to break this down into key components and/or terms and to explore these with the decision-maker. For example, the decision-maker could be asked what he has in mind when he uses the term market potential. This is a legitimate question since the researcher is charged with the responsibility to develop a research design which will provide the right kind of information. Another approach is to focus the discussions with the person commissioning the research on the decisions which would be made given alternative findings which the study might come up with. This process frequently proves of great value to the decision-maker in that it helps him think through the objectives and perhaps select the most important of the objectives.
Whilst seeking to clarify the objectives of the research it is usually worthwhile having discussions with other levels of management who have some understanding of the marketing problem and/or the surrounding issues. Other helpful procedures include brainstorming, reviews of research on related problems and researching secondary sources of information as well as studying competitive products. Kerlinger2 suggests that a well-defined marketing research problem tends to have three common characteristics as shown in figure 1.3.
Whilst it is true that the purpose of research is to address some question, nonetheless one does not test research questions directly. For example, there may be interest in answering the question: "Does a person's level of education have any bearing upon whether or not he/she adopts new products?" Or, "Does a person's age bear any relation to brand loyalty behaviour?". Research questions are too broad to be directly testable. Instead, the question is reduced to one or more hypotheses implied by these questions.
Figure 1.3 Characteristics of a sound definition of the research problem
A hypothesis is a conjectural statement regarding the relation between two or more variables. There are two key characteristics which all hypotheses must have: they must be statements of the relationship between variables and they must carry clear implications for testing the stated relations. These characteristics imply that it is relationships, rather than variables, which are tested; the hypotheses specify how the variables are related and that these are measurable or potentially measurable. Statements lacking any or all of these characteristics are not research hypotheses. For example, consider the following hypothesis:
"Red meat consumption increases as real disposable incomes increase."
This is a relation stated between one variable, "red meat consumption", and another variable, "disposable incomes". Moreover, both variables are potentially measurable. The criteria have been met. However for the purposes of statistical testing it is more usual to find hypotheses stated in the so-called null form, e.g.
"There is no relationship between red meat consumption and the level of disposable incomes."
Consider a second hypothesis:
"There is no relationship between a farmer's educational level and his degree of innovativeness with respect to new farming technologies."
Again there is a clear statement of the relationship being investigated but there are question marks over the measurability with respect to at least one of the variables i.e. "...a farmer's degree of innovativeness." We may also encounter difficulties in agreeing an appropriate measure of the other variable, i.e. "level of education". If these problems can be resolved then we may indeed have a hypothesis.
Hypotheses are central to progress in research. They will direct the researcher's efforts by forcing him/her to concentrate on gathering the facts which will enable the hypotheses to be tested. The point has been made that it is all too easy when conducting research to collect "interesting data" as opposed to "important data". Data and questions which enable researchers to test explicit hypotheses are important. The rest are merely interesting.
There is a second advantage of stating hypotheses, namely that implicit notions or explanations for events become explicit and this often leads to modifications of these explanations, even before data is collected.
On occasion a given hypotheses may be too broad to be tested. However, other testable hypotheses may be deduced from it. A problem really cannot be solved unless it is reduced to hypothesis form, because a problem is a question, usually of a broad nature, and is not directly testable.
Marketing research can be carried out on one of three levels: exploratory, descriptive or causal.
Exploratory research: The chief purpose of exploratory research is to reach a better understanding of the research problem. This includes helping to identify the variables which should be measured within the study. When there is little understanding of the topic it is impossible to formulate hypotheses without some exploratory studies. For example, crop residues such a straw are high in lignin (a wood-like substance) and low in nutrients. This makes them a poor animal feed since the lignin acts against digestibility and the low nutrient content means poor food value. However, if treated in a strong alkali, plus a little heat, the lignin breaks down and the nutrient content increases. A company was established to exploit this technology and did so successfully for 4 seasons. After this period sales began to slow down. Three other manufacturers had entered the market by this time. The company, Animal Feed Systems, did not know whether the whole industry had slowed down or if only their product was suffering. Nor did they know if the problem was temporary in that perhaps the market comprised of "early adopters" had been saturated but it was only a matter of time before other farmers began to buy their systems when they saw how well they worked. It was also possible that if a problem did exist it could lie in any one of a number of areas: animal populations might be declining, distributors may not be promoting the product aggressively, customers may be experiencing difficulties in getting the chemicals, and so on and on.
This is a good example of a situation where insufficient knowledge prevented the development of clear objectives, since the problem could not be articulated with any precision and therefore research of an exploratory nature was required. Such research can take the form of literature searches, informal personal interviews with distributors and users/non-users of the product and/or focus group interviews with farmers and/or distributors.
Exploratory research is intended to help researchers formulate a problem in such a way that it can be researched and suggest testable hypotheses.
Descriptive research: As the name suggests, descriptive research is concerned with describing market characteristics and/or marketing mix characteristics. Typically, a descriptive study specifies the number and size of market segments, the alternative ways in which products are currently distributed, listing and comparison of the attributes and features of competitive products, etc.
This type of study can involve the description of the extent of association between variables. For example, the researcher may observe that there is an association between the geographical location of consumers and their tendency to consume red meat. Note that the researcher is able to describe the relationship rather than explain it. Nonetheless if the relationship between the two is fairly stable this descriptive information may be sufficient for the purposes of prediction. The researcher may, for example, be able to predict how fast the per capita consumption of red meat is likely to rise over a given time period.
The principal difference between exploratory and descriptive research is that, in the case of the latter, specific research questions have been formulated before the research is undertaken. When descriptive research is conducted the researcher must already know a great deal about the research problem, perhaps because of a prior exploratory study, and is in a position to clearly define what he/she wants to measure and how to do it.
Causal research: Causal research deals with the "why" questions. That is, there are occasions when the researcher will want to know why a change in one variable brings about a change in another. If he/she can understand the causes of the effects observed then our ability to predict and control such events is increased.
In summary then there are three distinct types of marketing research study: exploratory, descriptive and causal. The purpose of each is summarised in figure 1.4. In some cases, a research programme will be of one kind or another, but in other instances these three typologies will represent phases within a single marketing research investigation.
The next set of decisions concerns the method(s) of data gathering to be employed. The main methods of data collection are secondary data searches, observation, the survey, experimentation and consumer panels. Each of these topics is dealt with later on, so they are simply noted here.
Those new to marketing research often intuitively believe that decisions about the techniques of analysis to be used can be left until after the data has been collected. Such an approach is ill-advised. Before interviews are conducted the following checklist should be applied:
· Is it known how each and every question is to be analysed? (e.g. which univariate or bivariate descriptive statistics, tests of association, parametric or nonparametric hypotheses tests, or multivariate methods are to be used?)
· Does the researcher have a sufficiently sound grasp of these techniques to apply them with confidence and to explain them to the decision-maker who commissioned the study?
· Does the researcher have the means to perform these calculations? (e.g. access to a computer which has an analysis program which he/she is familiar with? Or, if the calculations have to be performed manually, is there sufficient time to complete them and then to check them?)
· If a computer program is to be used at the data analysis stage, have the questions been properly coded?
· Have the questions been scaled correctly for the chosen statistical technique? (e.g. a t-test cannot be used on data which is only ranked)
There is little point in spending time and money on collecting data which subsequently is not or cannot be analysed. Therefore consideration has to be given to issues such as these before the fieldwork is undertaken.
At this stage the researcher is ready to go into the field and collect data. The various issues relating to data collection constitute the main body of the text and therefore, are not dwelt upon here.
The word 'analysis' has two component parts, the prefix 'ana' meaning 'above' and the Greek root 'lysis' meaning 'to break up or dissolve'. Thus data analysis can be described as:
"...a process of resolving data into its constituent components, to reveal its characteristic elements and structure."
Where the data is quantitative there are three determinants of the appropriate statistical tools for the purposes of analysis. These are the number of samples to be compared, whether the samples being compared are independent of one another and the level of data measurement.
Suppose a fruit juice processor wishes to test the acceptability of a new drink based on a novel combination of tropical fruit juices. There are several alternative research designs which might be employed, each involving different numbers of samples.
| Test A | Comparing sales in a test market and the market share of the product it is targeted to replace. | Number of samples = 1 |
| Test B | Comparing the responses of a sample of regular drinkers of fruit juices to those of a sample of non-fruit juice drinkers to a trial formulation. | Number of samples = 2 |
| Test C | Comparing the responses of samples of heavy, moderate and infrequent fruit juice drinkers to a trial formulation. | Number of samples = 3 |
The next consideration is whether the samples being compared are dependent (i.e. related) or independent of one another (i.e. unrelated). Samples are said to be dependent, or related, when the measurement taken from one sample in no way affects the measurement taken from another sample. Take for example the outline of test B above. The measurement of the responses of fruit juice drinkers to the trial formulation in no way affects or influences the responses of the sample of non-fruit juice drinkers. Therefore, the samples are independent of one another. Suppose however a sample were given two formulations of fruit juice to taste. That is, the same individuals are asked first to taste formulation X and then to taste formulation Y. The researcher would have two sets of sample results, i.e. responses to product X and responses to product Y. In this case, the samples would be considered dependent or related to one another. This is because the individual will make a comparison of the two products and his/her response to one formulation is likely to affect his/her reaction or evaluation of the other product.
The third factor to be considered is the levels of measurement of the data being used. Data can be nominal, ordinal, interval or ratio scaled. Table 1.1 summarises the mathematical properties of each of these levels of measurement.
Once the marketing researcher knows how many samples are to be compared, whether these samples are related or unrelated to one another and the level of measurement then the selection of the appropriate statistical test is easily made. To illustrate the importance of understanding these connections consider the following simple, but common, question in marketing research. In many instances the age of respondents will be of interest. This question might be asked in either of the two following ways:
Please indicate to which of the following age categories you belong
(a)
15-21 years ___
22 - 30 years ___
Over 30 years ___
(b)
How old are you? ___ Years
Table 1.1 Levels of measurement
| Measurement scale | Measurement Level | Examples | Mathematical properties |
| Nominal | Frequency counts | Producing grading categories | Confined to a small number of tests using the mode and frequency |
| Ordinal | Ranking of items | Placing brands of cooking oil in order of preference | Wide range of nonparametric tests which test for order |
| Interval | Relative differences of magnitude between items | Scoring products on a 10 point scale of like/dislike | Wide range of parametric tests |
| Ratio | Absolute differences of magnitude | Stating how much better one product is than another in absolute terms. | All arithmetic operations |
Choosing format (a) would give rise to nominal (or categorical) data and format (b) would yield ratio scaled data. These are at opposite ends of the hierarchy of levels of measurement. If by accident or design format (a) were chosen then the analyst would have only a very small set of statistical tests that could be applied and these are not very powerful in the sense that they are limited to showing association between variables and could not be used to establish cause-and-effect. Format (b), on the other hand, since it gives the analyst ratio data, allows all statistical tests to be used including the more powerful parametric tests whereby cause-and-effect can be established, where it exists. Thus a simple change in the wording of a question can have a fundamental effect upon the nature of the data generated. Figure 1.6 provides a useful guide to making that final selection.
The individual responsible for commissioning the research may be unfamiliar with the technicalities of statistical tests but he/she should at least be aware that the number of samples, their dependence or independence and the levels of measurement does affect how the data can be analysed. Those who submit marketing research proposals involving quantitative data should demonstrate an awareness of the factors that determine the mode of analysis and a capability to undertake such analysis.
Marketing researchers have to plan ahead for the analysis stage. It often happens that data processing begins whilst the data gathering is still underway. Whether the data is to be analysed manually or through the use of a computer program, data can be coded, cleaned (i.e. errors removed) and the proposed analytical tests tried out to ensure that they are effective before all of the data has been collected.
Another important aspect relates to logistics planning. This includes ensuring that once the task of preparing the data for analysis has begun there is a steady and uninterrupted flow of completed data forms or questionnaires back from the field interviewers to the data processors. Otherwise the whole exercise becomes increasingly inefficient. A second logistical issue concerns any plan to build up a picture of the pattern of responses as the data comes flowing in. This may require careful planning of the sequencing of fieldwork. For instance, suppose that research was being undertaken within a particular agricultural region with a view to establishing the size, number and type of milling enterprises which had established themselves in rural areas following market liberalisation. It may be that the West of the district under study mainly wheat is grown whilst in the East it is maize which is the major crop. It would make sense to coordinate the fieldwork with data analysis so that the interim picture was of either wheat or maize milling since the two are likely to differ in terms of the type of mill used (e.g. hammer versus plate mills) as well as screen sizes and end use (e.g. the proportions prepared for animal versus human food).
The final chapter of this textbook is devoted to the topic of report writing. However, it is perhaps worth noting that the end products of marketing research are conclusions and recommendations. With respect to the marketing planning function, marketing research helps to identify potential threats and opportunities, generates alternative courses of action, provides information to enable marketing managers to evaluate those alternatives and advises on the implementation of the alternatives.
Too often marketing research reports chiefly comprise a lengthy series of tables of statistics accompanied by a few brief comments which verbally describe what is already self-evident from the tables. Without interpretation, data remains of potential, as opposed to actual use. When conclusions are drawn from raw data and when recommendations are made then data is converted into information. It is information which management needs to reduce the inherent risks and uncertainties in management decision making.
Customer oriented marketing researchers will have noted from the outset of the research which topics and issues are of particular importance to the person(s) who initiated the research and will weight the content of their reports accordingly. That is, the researcher should determine what the marketing manager's priorities are with respect to the research study. In particular he/she should distinguish between what the manager:
· must know
· should know
· could know
This means that there will be information that is essential in order for the marketing manager to make the particular decision with which he/she is faced (must know), information that would be useful to have if time and resources within the budget allocation permit (should know) and there will be information that it would be nice to have but is not at all directly related to the decision at hand (could know). In writing a research proposal, experienced researchers would be careful to limit the information which they firmly promise to obtain, in the course of the study, to that which is considered 'must know' information. Moreover, within their final report, experienced researchers will ensure that the greater part of the report focuses upon 'must know' type information.
Marketing Mix
The marketing mix principles (also known as the 4 p’s.) are used by business as tools to assist them in pursuing their objectives. The marketing mix principles are controllable variables, which have to be carefully managed and must meet the needs of the defined target group. The marketing mix is apart of the organisations planning process and consists of analysing the defined:
- How will you design, package and add value to the product. Product strategies.
- What pricing strategy is appropiate to use Price strategies.
- Where will the firm locate? Place strategies.
- How will the firm promote its product Promotion strategies.
Please click on the above links to learn more about the marketing mix
Introducing the marketing mix
When marketing their products firms need to create a successful mix of:
1) The right product
2) Sold at the right price
3) In the right place
4) Using the most suitable promotion.
To create the right marketing mix, businesses have to meet the following conditions:
The Product:
The product has to have the right features - for example, it must look good and work well.
- The price must be right. Consumer will need to buy in large numbers to produce a healthy profit.
- The goods must be in the right place at the right time. Making sure that the goods arrive when and where they are wanted is an important operation.
- The target group needs to be made aware of the existence and availability of the product through promotion.
- The appearance of the product - in line with the requirements of the market
- The function of the product - products must address the needs of customers as identified through market research.
The price
Of all the aspects of the marketing mix, price is the one, which creates sales revenue - all the others are costs. The price of an item is clearly an important determinant of the value of sales made. In theory, price is really determined by the discovery of what customers perceive is the value of the item on sale. Researching consumers' opinions about pricing is important as it indicates how they value what they are looking for as well as what they want to pay. An organisation's pricing policy will vary according to time and circumstances. Crudely speaking, the value of water in the Lake District will be considerably different from the value of water in the desert.
The place
Although figures vary widely from product to product, roughly a fifth of the cost of a product goes on getting it to the customer. 'Place' is concerned with various methods of transporting and storing goods, and then making them available for the customer. Getting the right product to the right place at the right time involves the distribution system. The choice of distribution method will depend on a variety of circumstances. It will be more convenient for some manufacturers to
sell to wholesalers who then sell to retailers, while others will prefer to sell directly to retailers or customers.
The promotion
Promotion is the business of communicating with customers. It will provide information that will assist them in making a decision to purchase a product or service. The razzmatazz, pace and creativity of some promotional activities are almost alien to normal business activities.
The cost associated with promotion or advertising goods and services often represents a sizeable proportion of the overall cost of producing an item. However, successful promotion increases sales so that advertising and other costs are spread over a larger output. Though increased promotional activity is often a sign of a response to a problem such as competitive activity, it enables an organization to develop and build up a succession of messages and can be extremely cost-effective.
People
An essential ingredient to any service provision is the use of appropriate staff and people. Recruiting the right staff and training them appropriately in the delivery of their service is essential if the organisation wants to obtain a form of competitive advantage. Consumers make judgments and deliver perceptions of the service based on the employees they interact with. Staff should have the appropriate interpersonal skills, aptititude, and service knowledge to provide the service that consumers are paying for. Many British organisations aim to apply for the Investors In People accreditation, which tells consumers that staff are taken care off by the company and they are trained to certain standards.
Process
Refers to the systems used to assist the organisation in delivering the service. Imagine you walk into Burger King and you 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.
Physical Evidence
Where is the service being delivered? Physical Evidence is the element of the service mix which allows the consumer again to make judgments on the organisation. If you walk into a restaurant your expectations are of a clean, friendly environment. On an aircraft if you travel first class you expect enough room to be able to lay down!
Physical evidence is an essential ingredient of the service mix, consumers will make perceptions based on their sight of the service provision which will have an impact on the organisations perceptual plan of the service.
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