WHAT IS MARKETING?Definition of Marketing:
1. ‘Marketing’ is meeting customers’ needs and wants by having the right product, at the right price, in the right place, at the right time.
2. ‘Marketing’ is about making sure your product or services meet your customers’ needs at prices they are willing to pay.
3. ‘Marketing’ is about making sure your potential customers know about your products and services, and can find them when and where they need them.
THE MAIN ACTIVITIES OF MARKETING:
Marketing involves the following activities:
Market Research and Assessment:
Finding out who your customers are, what their needs are, whether
they will buy your product etc.
Product Design:
Changing your product or service to ensure that it meets customer needs.
Pricing:
Setting the price according to what your customers will be prepared to pay.
Distribution:
Finding the right locations for selling your product – placing your products in locations which are convenient for your customers.
Promotion:
Getting your message across to your customers – making them aware of what you have to offer (eg: through advertising, point of sale information, well informed sales persons, brochures etc). Making your ‘potential’ customers aware of what you have to offer, and where they can purchase your products.
MARKET RESEARCH AND ASSESSMENTBefore starting a business you must find out as much about the market as possible. This is called ‘market assessment’ or ‘market research’ .
WHO ARE YOUR CUSTOMERS?The starting point of market research is to identify who your customers will be. What can market research tell you about your Customers?
If you can identify your likely customers you can then target all of your marketing efforts at them.
SEGMENTING THE MARKET“Segmenting the market involves dividing the overall market for a product or service into groups of common characteristics”. WHO ARE YOUR COMPETITORS?What can Market Research tell you about your Competitors? Consider factors such as:1. Advertising & Promotion
What means of advertising and promotion do they use? Is it effective? What can you do to market your product more effectively?
2. Talking to competitors customers’
Talk to individuals or groups and find out how satisfied they are with your competitors. Find out exactly what they want and whether their needs are being met by your competitors.
3. Observing the competitor(s)
If possible, see first hand what your competitors are offering and how they operate. See what they are doing that you are not. COMPETITIVE PRICINGYou must consider your competitors prices when deciding what prices you will be charging. Remember, you are unlikely to succeed unless your prices are similar to those charged by your competitors for similar goods and services.
ASSESSING MARKET SUPPLYAn important part of Market Research is to assess the market supply.
This means looking at the current market for your product or service and asking:
• “IS THERE ROOM FOR ME?”
• “ARE THERE ALREADY ENOUGH SUPPLIERS IN THE MARKET?”
• “IS THE MARKET SATURATED”
HOW BIG IS YOUR MARKET?You have identified promising consumer segments for your product. The next step is to ask:
• How big is each segment?
Example: Ngere might want to know how many back-packers come to her town each year.
• How much of my product will they use?
Example: How many nights do backpacker tourists stay in Ngere’s town.
FINDING INFORMATION ON THE SIZE OF MARKET SEGMENTS
Secondary Research:
Secondary research covers information that has already been gathered and published.
Primary Research:
Once the secondary research is looked at primary research can then be obtained. “Primary research covers the process of gathering information yourself “. Examples may include:
FINDING INFORMATION ON CUSTOMERS BUYING HABITSOther questions to ask once you have identified consumer segments is:
• How often will consumers buy my product?
• How much can I expect to sell?
• At what time of the day, etc? SUMMARY:In summary, we are trying to estimate the size of the potential market for your product. Do not forget however that you will have to share this market with your competitors. Therefore be careful not to over-estimate your ability to sell your product. THE MARKETING MIXWhen marketing a product or service it is important that to consider the “Four P’s” or “Marketing Mix”. These are your:
1. Product: What it is you are selling.
2. Price: The price for your product.
3. Place: Where you are selling your product (location).
4. Promotion: Means of advertising your product. PRODUCTRemember that whatever you offer should fill REAL customer needs. You may find after market research that you need to change your product slightly because it doesn’t meet REAL customer needs.
Market Research along with customer feedback will help you keep up with changes in sales trends, and shifts in customer needs.
QUESTIONS TO ASK:
• Do I have the right location?
• Does my distribution system really meet my needs?
• Am I reaching all my potential customers
• Is my location more convenient than other competitors?
We have already briefly discussed the importance of making sure you get your product or service to your customers, wherever they may be. To succeed in business, you must find ways of placing your product or service in a location which is convenient to your customers. The Distribution ChainDistribution is about getting goods from the manufacturer (producer) to the final customer. Typically, products pass through many hands before they reach the final consumer. They pass along a “DISTRIBUTION CHAIN” which may be long or short depending on the nature of the product.
A typical ‘distribution chain’ looks like this:
Distribution Chains can be much longer than this, particularly if importing and exporting is involved. They can also be shorter, for example the ‘manufacturer’ (producer) may sell directly to the ‘consumer’ (customer) such as when a bakery sells its own products through its own shop.
You have to decide what will be the most appropriate distribution network for your product.
Below are factors to consider when deciding on your distribution chain: 1 Nature of your BusinessDistribution problems are different for a service company, a retailer or a manufacturer. If you are in a service sector (ie: a Plumber) distribution may be reduced to making sure your business is well promoted so that customers know where to phone to get your service. If you own a retail shop, your location is vital to the success of your business. Customers must be able to find you without too much inconvenience. Manufacturers will be looking for an inexpensive site, located either close to their sources of raw material, or close to their market (or both if possible) 2. EfficiencyIt is often more efficient to use existing distribution networks than to hire your own sales force. However each approach has it’s own advantages and disadvantages eg:
USE OF WHOLESALERS
DIRECT SELLING
(Eliminating Wholesalers)
Advantage
Distribution network is already in place – they already have contacts with a wide range or retailers handling your type of product, and they already have a sales force and transportation.
You do not have to share the profits on your products with the wholesaler, and you will have sales people who are more motivated to sell your product.
Dis-advantage
Wholesalers may also be selling your competitors goods or services.
You may have problems reaching all your customers without the help of wholesalers and their networks. 3. Transportation and Shipping
Is it better to have your own transport , hire transport, or use a common carrier? You need to think carefully about the costs of different ways of transporting your goods to the market
4. Nature of the Product
If you were trying to market a mass-produced item which customers use frequently (ie: toothpaste) you have to make sure your product is widely available in outlets your customers would expect to find them eg: supermarkets, pharmacies, general stores, hotel shops etc.
To achieve this wide distribution network you would have to work closely with wholesalers and other middlemen who supply all of those outlets.
This is what is called an intensive distribution strategy – you are trying to get your product into as many outlets as possible. Such a strategy would be suitable for all kinds of mass-produced items which people use frequently.
An exclusive distribution strategy, on the other hand, uses only a small network of specialist outlets. Expensive items like computers, musical instruments would be distributed through specialist shops and dealers, where customers would expect to find them, and where they could get advice from trained sales staff. The exclusive strategy is used for items which we buy infrequently and which have a quality image.
PROMOTIONTHE PROMOTIONAL MIX
The promotional mix is a combination of advertising, personal selling, sales promotions, merchandising and public relations in order to meet promotional objectives. These are briefly explained below:
Advertising:
“Any paid form of non-personal presentation and promotion of a product or service including Television, Newspapers, Magazines etc.”
Advantages: - Reaches a massive audience
- Is repetitive – constantly reminds
- Expressive (ie; written or visual)
Disadvantages: - Expensive
- No personal contact
- No immediate feed-back
- Longer lead time and longer to work
Personal Selling“Interpersonal contact where one person makes a sales presentation to another person, or group of potential buyers”.
Advantages: - Personal
- More of a chance to persuade
- Two way communication between buyer and seller
- Opportunity to demonstrate
Disadvantages: - Personality comes into it
- Can be expensive
- Training involved to get staff up to scratch
Sales Promotions“Promotional activities and events including coupons, special sales, etc which give customers a short-term inducement to make an immediate purchase”.
Advantages: - Quick Response
- Strong Response
Disadvantages: - Expensive
- Effect not long lasting
- Can create wrong impressions
Merchandising
“Point of ‘sale’ advertising which includes materials such as menus, tent cards, signs, posters, displays etc”.
Advantage: - Opportunity for up-selling
Disadvantage: - No personal contact Public Relations“Non-paid communication of information about a businesses services to maintain or improve its relationship with other businesses or individuals”.
Advantages: - Less Expensive
- Reaches people who don’t get other forms of promotion (ie: personal selling, sales promotions)
Disadvantages: - Can be misunderstood
- Can be Harmful
GLOSSARYAdvertising: Any paid form of non-personal presentation or promotion of a product or service, including television, newspaper, magazines etc.
Distribution Chain: Identifies the flow of goods or services from the producer to the consumer.
Exclusive Distribution: Policy in which a firm grants exclusive rights to a wholesaler or retailer to sell their product. Expensive items like computers are distributed this way through specialist shops and dealers where customers would expect to find them, and where they can get advice from trained sales staff.
Exclusive distribution is used for items which we buy infrequently and which have a quality image.
Intensive Distribution: A distribution strategy used for mass-produced items (ie: toothpaste) where a business tries to get its product into as many outlets as possible (ie: supermarkets, shops etc).
Marketing: Marketing is about making sure your product or service meets your customers’ needs at prices they are willing to pay.
Marketing Mix: The four P’s which are: Product, Price, Promotion and Place.
Market Research: The gathering of information that will be useful for making marketing decisions and guiding the development of a marketing plan.
Merchandising: Point of sale advertising, which includes materials such as menus, tent cards, signs posters displays etc
Monopoly: When there is only one provider in the market of a particular service or product.
Monopolistic Competition: When there are a few to many providers of a product or service in the market.
Oligopoly: When there are only a few providers of a product or service in the market.
Personal Selling: Interpersonal contact where one person makes a sales presentation to another person or group of potential buyers.
Price: The sum of the values consumers’ exchange for the benefits of having or using a product or service.
Primary Research: Information you will gather first hand when you conduct a market assessment.
Product: Bundle of physical, service and symbolic attributes designed to enhance buyer’s want-satisfaction.
Promotion: Function of informing, persuading, and influencing the consumers purchase decision.
Promotion Mix: Combination of advertising, personal selling, sales promotions, merchandising and public relations in an attempt to meet promotional objectives.
Sales Promotions: Promotional activities and events including coupons, special sales etc which give customers a short-term inducement to make an immediate purchase.
Segmentation: Dividing the overall market for a product
or service into groups of common characteristics.
Secondary Research: Information that has already been gathered and published. It includes government statistics, magazines, local banks etc.
Target Market: Group of people towards whom a firm markets its goods or services.
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