Basic Marketing Concepts and Fundamentals

What is Marketing?

"Marketing consists of all the activities of individuals and organizations designed to identify, anticipate, and mutually satisfy the needs of all parties involved in the exchange."

Marketing Utilities

Four(4) marketing utilities, which are the capacities of the product offering to satisfy the needs of a customer, are enhanced when exchange occurs.

These include:

1.    Form Utility - The product is produced, or modified for the customer. An example of this might be a car manufacturer designing their car so that a driver will be able to plug in his I-pod or other devices.

2.    Time Utility - The consumers ability to buy the product when he or she wants to buy the product. A grocer may store certain amounts of certain foods until the prime season they are bought. It is ensuring customers will have access to the food when they most desire them.

3.    Place Utility - This describes when a consumer is able to buy the product at a location that is convenient to him or her. The best example of this is online sales. Home is the most convenient location for a consumer.

4.    Possession Utility - Ownership of the product is transferred from the marketer to the buyer. An example is a getting a loan and then buying a car. This is concerned with the ease of transfer-ability for the consumer.

The Marketing Management Concepts

There are four marketing management concepts that companies will utilize in their marketing objectives. All of these aim to achieve profits and objectives, but the focus and means by which they do so will differ. They will typically follow one of these four major concepts:

1.    Product Concept - This management orientation says that if you build a quality product and set a reasonable price, very little marketing effort is needed to sell it. The product generates the demand "build it, and they will come"

2.    Selling Concept - This management orientation says that consumers will not normally buy enough of a product unless it is aggressively promoted to them.

3.    Marketing Concept - This management orientation says the major purpose of an organization is to identify consumer needs and then adapt the organization in a way that will satisfy the customers needs more effectively and efficiently than competition. (i.e. Chain restaurants may alter their menu in different countries)

4.    Societal Concept - This management orientation focuses on satisfying consumers needs and demonstrating long run concern for societal welfare in order to achieve company objectives and attend to its responsibilities for society. The idea is to find a balance between social welfare, consumer needs, and company profits.

Concept	Focus	Means	Ends
1. Product	Products	Quality product, reasonable price, little marketing effort	Achieve profits or objectives by products generating consumer demand
2. Selling	Products	Aggressive advertising and selling efforts	Achieve profits or objectives by generating sales volume
3. Marketing	Customer needs	Integrated marketing	Achieve profits or objectives through customer satisfaction
4. Societal-Marketing	Customer satisfaction and long run public welfare	Constant search for better products in terms of appeal and benefit	Satisfy organizational goals and responsibilities for society

Traditional vs. Integrated Marketing

To understand the fundamentals of marketing, it is important to understand two different approaches used when a company chooses to introduce a new product. Here we see traditional and integrated marketing.

There are typically 5 different departments directly involved with the product during creation and launch: Development, Engineering, Production, Marketing, and Distribution.

If a company opts to use a traditional approach, all of these departments work as separate entities. For example, development will draw up a product and then pass it along to engineering to create it. Engineering will then pass it along to production mass produce it. They will afterwards pass it to marketing, who will eventually move the product to distribution for a product launch.

If a firm opts to utilize an integratedmarketing approach, all of the departments work together as a single unit. Engineering will not begin a product without ensuring that production has the capabilities to produce it. Development will check with marketing to ensure the product is line with the company image and approach. Basically, every department will at some point integrate their work with all other departments in the process.

Clearly, integrated marketing is the better approach. While it may take longer to launch a product, the likelihood of success is greater. The traditional approach leaves much room for interdepartmental conflicting interest and is therefore regarded as an outdated approach in marketing. It all too often ignores the consumers needs. The integrated marketing approach helps a business work collectively as one unit.

Perceived Value and Satisfaction

A customers perceived value is equal to the benefits derived divided by the costs.

Value = Benefits/Costs

Further, benefits can include functional and emotional benefits. Costs may include monetary costs, time costs, energy costs, and psychic costs.

So,

Value =

Functional benefits + emotional benefits / monetary cost + time cost + energy cost + psychic costs

Satisfaction is a person's feelings of pleasure or disappointment resulting from comparing a products performance in relation to the person's expectations of performance.

Most expectations are derived from past buying experiences, friends, the marketer, peers, competitors, and promises of performance.

It is also important to keep in mind that a person is twice as likely to tell others about a negative product or experience than they are about a good product or positive experience. Dissatisfied customers can also have a negative impact on employee morale.

The Marketing Mix - The Four P's

There are four marketing mix variables that are associated with a product. These must be taken into consideration when making any decisions regarding marketing activities. These are often known as the "Four P's" in marketing. Note that these should only be identified after a target market is selected. All marketing mix variables are controllable, internal factors. These include:

1.    Product - This variable described all factors relating to the actual product visible to the consumer. These may include things such as quality, features, options, style, packaging, brand, sizes, labels, variety, and warranties.

2.    Price - The price variable includes not only the list price, but all other pricing factors associated with a product. These may include discounts, allowances, payment options and periods, and credit terms. All of these are related to the final, whole price of the product.

3.    Place - Place deals with all distribution and location aspects of a product. How and what are the products available to consumers? These may include assortments, channels, coverage areas, locations, and inventories.

4.    Promotion - Promotion is any and all efforts by a company to make publicize a product and make the consumer aware of it. Efforts might include advertising, personal selling, sales, public relations, or internet activities.

The marketing mix should only be determined after a target market is determined.

Target market = The group or groups of customers for which the marketer will direct attention. This group is determined after thorough segmentation and analysis of the market. (more to come)

External Factors

While the marketing mix consists of factors that are controllable by a company, there are numerous external factors that must be taken into consideration when scanning the environment the product or service is marketed in. The company can do nothing about these in the long run, but can react to them in the short run. They will certainly impact what the marketer can do.

External Factors (Uncontrollable)

·         Demographic environment - The features of a country that can be statistically described

·         Economic environment - The financial and economic conditions in a country will determine demand for any and all products.

·         Competitive environment - The intensity of competition in the market the business is in cannot be controlled.

·         Physical environment - Availability, use, and disposal of natural resources

·         Technological environment - Determines how the marketing should be done. What medium should be used?

·         Political and legal environment - Laws and restrictions may be set by various government agencies in regard to competition, consumer protection, or societal welfare.

·         Social/Cultural environment - What is acceptable in what culture may not be acceptable in another.

·         Company related environment - Goals and objectives of top Gethsemane and company as a whole.

Read More

THE BENEFITS OF IMC.

The benefits of integrated marketingcommunications, (IMC), include brand reinforcement, competitive advantage,reduced marketing and advertising costs and greater reach. 

 Integrated marketing communications is a marketing strategy that standardizes marketing messages and branding imagery across all forms of communications with customers, from television ads to direct mail campaigns.

When the same message is delivered through all marketing channels, the company's brand becomes more recognizable and consistent. This increases the brand's competitive advantage because consumers rely on familiar companies and brands when they need to make a purchase.

Integrated marketing communications has become even more relevant with the advent of digital advertising avenues. Companies who use IMC focus on crafting a consistent message across all channels, which reduces the average marketing costs. Since a different campaign does not need to be developed for each channel, the messages and imagery are reused over and over.

Additionally, this type of marketing strategy reaches a greater audience because of its diversity. Consumers who only consume advertising through digital media, for example, are exposed to the same messages as consumers whose only brand exposure comes from print, television or radio advertising.

In some cases, integrated marketing communications also involves the crafting of advertising strategies that appeal to a specific customer based on demographics and other data.

Read More

PERSONAL SELLING

Personal selling is the process of communicating with a potential buyer (or buyers) face-to-face with the

purpose of selling a product or service. The main thing that sets personal selling apart from other methods of selling is that the salesperson conducts business with the customer in person. Though personal selling is more likely to be effective with certain types of products or services, it has important applications for nearly all kinds of small businesses. In fact, most of history's successful entrepreneurs have been skilled salespeople, able to represent and promote their companies and products in the marketplace.

Personal selling is one part of a company's promotion mix, along with advertising, sales promotion, and public relations. Advertising is any form of paid sales presentation that is not done face-to-face. Television and radio commercials, newspaper and magazine advertisements, and direct mail inserts are well-known forms of advertising. Sales promotion is the use of incentives—such as coupons, discounts, rebates, contests, or special displays—to entice a customer to buy a product or service. Public relations is the act of building up a company's image in the eyes of the community in the hopes of translating the feelings of goodwill into sales. An example of public relations might include a company sponsoring a charity event.

Personal selling offers entrepreneurs both advantages and disadvantages in comparison with the other elements of the promotion mix. On the positive side, personal selling allows the salesperson to target the message specifically to the audience and receive immediate feedback. In this way, it is more precise than other forms of promotion and often has a greater persuasive impact. Conversely, personal selling cannot reach as many potential customers as advertising, plus the cost of each contact is much higher. Another advantage is that personal selling can be an important source of marketing information. Salespeople may learn about competitors' products, for example, or about emerging customer needs that may lead to the development of a new product. If the sales force is well trained—acting as problem solvers and advisors for customers rather than using hard-sell tactics—personal selling may help a small business build loyal, long-term relationships with customers.

A small business may choose to use any or all of the promotion mix elements in selling its products. Deciding how to allocate resources for each component involves a number of factors. Some of the things entrepreneurs should consider when deciding on the ideal promotion mix include the type of product or service, the value of the product or service, and the budget allotted for marketing.

WHEN TO USE PERSONAL SELLING

In general, if a product has a high unit value and requires a demonstration of its benefits, it is well suited for personal sales. For example, an iPhone is a high-priced item and most people do not feel they need one. After a demonstration, however, most people agree it would be a useful item to have. Therefore, iPhone are well suited to a promotion mix that emphasizes personal selling. Highly technical products, such as computers and copiers, are also primarily sold through personal sales methods. Products that involve a trade-in, like automobiles, are usually handled through personal selling to help facilitate the trade-in process. Finally, a company that cannot afford a mass-advertising campaign might consider personal selling as an alternative to advertising. Since sales force compensation is largely based on actual sales, personal selling may require less money up front than other parts of the promotion mix.

STEPS IN COMPLETING A SALE

The many different types of salespeople all go through the same basic steps when making a sale: prospecting and qualifying, preapproach, approach, presentation and demonstration, handling objections, closing, and follow-up. Although training for personal sales forces may vary from one organization to another, the majority of the training will include some version of these steps.

Prospecting and qualifying involve locating potential customers and finding out if they are in a position to buy. Prospecting, or lead-generation, can be as simple as asking current customers for names of acquaintances who may also be interested, or as sophisticated as using a database or mailing list.

The preapproach step involves researching the prospective customer—often another company. The salesperson may read up on the company, talk to other vendors, or study the overall industry. At this stage, the salesperson will also try to determine the best time to make the sales call and establish sales call objectives

Once the approach has been made, the salesperson should be ready to launch into the demonstration or presentation. Depending on the company and the product or service, there are generally three types of presentations. The prepared or "canned" approach involves a tightly scripted talk that is either memorized or read. The formula approach is less rigid. Depending on the buyer's response to some carefully asked questions, the seller will go to a formula presentation that he or she hopes will meet the customer's needs.

Presentations and demonstrations may involve any number of visual aids, such as flip-charts, or samples of the products themselves. One of the keys to a successful presentation is product knowledge.

Handling objections is the next phase of selling. Almost every customer will present objections to making a purchase. A good salesperson is not flustered by these objections and handles them in a positive, confident manner. One approach to handling objections, used frequently with canned presentations, is simply to acknowledge the objection then continue with the presentation

The next step in the process of completing a sale—closing, or asking the buyer to make a purchase—is often identified by salespeople as the toughest step. In fact, some new salespeople are so reluctant to be perceived as aggressive that they never try to close the sale. Consequently, the customer may become annoyed and decide not to purchase just for that reason. Customers must be given the opportunity to purchase. Salespeople need to learn to look for signals that a closing is appropriate.

The last step in completing a sale—following up—is often neglected, but is important for many reasons. The follow-up, which can be done in person or by telephone, gives the customer the chance to ask questions and reinforce his or her buying decision. The salesperson can review how to use the product, go over instructions and payment arrangements, and make sure the product has arrived in proper working order.

IMPROVING THE REPUTATION OF PERSONAL SELLING

Personal selling involves specific steps, requires training and experience, and employs some highly talented people. Unfortunately, personal selling is also commo

nly perceived as being a less than reputable field of work. Unethical salespeople, aggressive or hard sell tactics, and misleading sales pitches have made many buyers wary of personal sellers. Fortunately, much has been done to address this issue. Selling associations such as the Direct Selling Association have adopted codes of ethics that dictate standards of behavior that all members are to follow. Most organizations with personal sales forces also adopt their own codes of ethics that provide guidelines regarding the type of sales pitch that can be made, and the hours during which a sales call may be made. Many companies also prohibit the use of misleading information or pressure tactics to make a sale.

Read More