Principles and Practice of Marketing Management - Assignment Example

Topic: Lecturer: Presentation: Overview The business environment is very competitive and to gain competitive advantage, a firm needs to formulate an effective marketing plan and formulate strategies to enable achievement of marketing plan goals. These strategies include; determining the best marketing mix and assessing the environment using PEST analysis to establish future opportunities and threats. Determining the best marketing mix ensures the firm is able to satisfy various target market segments (Lamb et al. 2009). A marketing audit to evaluate their effectiveness of strategies in accomplishing objectives is essential. The marketing mix components; product, place, promotion and pricing are influenced by environmental factors thus before choosing a strategy, PEST analysis is important. None of these components acts in isolation and therefore a marketer determines the best combination that can lead to marketing success. First, the marketing division establishes the kind of product to sell. Such aspects as; type of product whether it is for consumption or business use, packaging, branding and size, is considered. Political factors such as government regulations on packaging and labelling, environmental regulations and protection are considered to ensure compliance (Stone, 2001). Social factors such as lifestyle, age and income distribution can help in segmenting the market hence provide the right products for the target market. Technological factors determine production methods and new product inventions. For example, advancements in the mobile technology enable use of wide range of services to satisfy the customers. After developing the product, the marketing division determines how well to mix place, price and promotion strategies to achieve success. Depending on where the customers are located, the channel of distribution is selected as the product has to be made available to the customer at the right place and right time (Lamb et al. 2009). The division also promotes the products and sets the right prices depending on the target market. The quality of product, cost of promotion and channel of distribution all play a part in determining price. PEST factors are useful in determining the marketing mix. For example, economic trends such as interest rates, inflation and exchange rates determine the consumption hence pricing of the product. Technology is important in promotion especially use of the internet to promote the organization and brands (Stone, 2001).Social factors determine distribution, pricing and promotional activities. Marketing audit is then carried out to assess the effectiveness of the marketing strategies and if not effective, the marketers formulate better strategies (Blythe, 2009). Word Count: 400 References Blythe, Jim (2009) Key Concepts in Marketing. London: Sage. Lamb, C., Hair, J., McDaniel, C (2009). The Essentials of Marketing. 6ed. USA: Cengage Learning. Stone, Phil (2001) Make Marketing Work For You: Boost Your Profits with Proven Marketing Techniques. UK: How to Books Ltd. Marketing Factors The marketing division ensures that effective marketing strategies are in place so as to ensure business success. To achieve this, it needs to carry out market research to determine customer needs and make appropriate decisions. It thus evaluates the internal and external environment by collecting useful information regarding customer satisfaction, quality of products, the behaviour of buyers, the effectiveness of the marketing mix in place (Boone et al. 2010). This information can be obtained from sales reports, published reports, experimentation and marketing information systems. The information is then analysed and used in making marketing decisions. The marketing information systems are more effective as they continuously assess internal and external data and are easy to access. The information gained through market research is useful in segmenting the market and formulating marketing strategies that target each segment. Consumers have different buying behaviours depending on their income, lifestyle, age and it would be unwise to provide mass products without taking their needs into consideration. The marketers thus segment the market based on demographic, geographic, psychographic and product –related factors. According to Weinstein (2004), the segment must be large enough to give profits, match marketing capabilities, have measurable purchasing power and size and promotional methods are available for it to be successful. The marketing strategies are then targeted at each market segment based on the needs of each segment. Each target market is unique and requires a particular type of product. This ensures the firm gains competitive advantage and the needs of different consumers are satisfied. It also enables the firm to utilize its resources efficiently (Weinstein, 2004). For example, the advertising costs are minimised for the marketer is aware of the needs of each target market. One product may be needed in one geographical area and delivering it to another area where it is not need leads to unnecessary costs of distribution and loss of sales. Target marketing thus ensures marketing success. Every firm needs to be unique and thus should use the information gained during market research especially from the marketing information systems to segment and target the market thus position itself in the market. Positioning according to Gilligan & Wilson (2009) creates an impression of a product in consumers mind and helps the firm to differentiate its products from the other competitors. It can decide to be a leader in quality, price or other attributes that make it unique hence promoting brand loyalty. Word Count: 402 References Boone, L., Kurtz, D., Mackenzie, H., Snow, Kim (2010) Contemporary Marketing. 2 ed. USA: Nelson Education Ltd. Gilligan, C & Wilson, R (2009) Strategic Marketing Planning. 2ed. UK: Butterworth-Heinemann. Weinstein, Art (2004) Handbook of Market Segmentation: Strategic Targeting of Business and Technology Firms, 3ed. NY: Harworth Press. Product Firms innovate new products to satisfy customer demands and to differentiate it from other competitors. Market segmentation is crucial while developing new products as marketers need to understand the consumers in various target markets and satisfy their needs. For a new product to be successful, it undergoes various stages which include; introduction, growth, maturity and decline. The product is also undergoes an adoption process due to difference in consumer characteristics. The introduction stage of the product lifecycle involves stimulating demand for a new product. Market segmentation helps to divide the market according to consumer needs hence making it easier to develop and promote a product. The product is new and thus requires extensive promotion and determining effective distribution channels (Kurtz, 2011). It is the stage where the product begins to be accepted by the innovators and early adopters, who have high incomes, are risk takers and enjoy status and recognition associated with new products. These early adopters and innovators are very important in determining success and failure of the product hence market segmentation helps to understand them and influence them to achieve success (Lancaster & Withey, 2007). The growth stage is reflected by increased sales as early majority who are influenced by innovators and early adopters. Make purchases. The customers make purchases and if they are satisfied they make more purchases and help in promotion by spreading a word of mouth to others (Kurtz, 2011). The marketers also encourage trial purchases and carry out mass advertisements to attract more customers. The maturity stage involves entry of competitors in the market to take advantage of the profits. The profits thus decline and heavy promotions are required to attract customers. Marketing segmentation and targeting is essential at this stage to differentiate and position the product in the market. Effective marketing mix strategies can help in achieving success. At this stage, the late majority who adopt a product due to its acceptability will have entered the market to boost sales (Wright, 2006). The last stage is characterised by decline in sales due to shift in consumer preference and innovation of new products. The laggards are mostly found in this stage and the company can attract them to increase sales. The firm can also find new uses for the product or change the quality and packaging to attract new customers (Kurtz, 2011). Pricing is important as laggard are of low socio-economic background. Word Count: 398 References Kurtz, David (2011) Contemporary Marketing. USA: South-Western. Lancaster, G., Withey, F (2007) Marketing Fundamentals. UK: Elsevier. Wright, Ray (2006) Consumer Behaviour. London: Thomson Learning. Price A marketing division formulates effective pricing strategies in order to boost sales and attract and retain customers. The law of demand stipulates that the higher the price, the lower the quantity demanded and vice versa hence rational consumers obey this law. However, the price elasticity of demand which reflects the magnitude of change of quantity demanded in response to price changes varies. It is measured as a percentage change in quantity demanded over percentage change in price and is always positive. It is related to the slope of the demand curve; a gently sloping demand curve indicates that a little change in price leads to a greater change in quantity demanded and steep sloping demand curve indicates a change in price prompts a little change in quantity demanded (Cachon & Terwiesch, 2008 ). If price elasticity of demand is greater than 1, the demand is elastic; if equal to 1, unit elasticity is achieved but if less than 1 the demand for a product is inelastic. The price elasticity of demand is determined by various factors. If a product has close substitutes, the demand is more elastic thus a small change in price in this case leads to larger change in quantity demanded (Baumol & Blinder, 2009). For example, an increase in price of coke leads to a decrease in quantity demanded as consumer substitute it with drinks like Pepsi. Necessities have inelastic demand as changes in price have little or no effect on quantity demanded. Luxuries on the other hand, have elastic demand. An increase in price of a luxury good leads to decrease in quantity demanded as consumers seek cheaper goods. Products also have more elastic demand over long run. The share of consumer budget also has effect on how consumers respond to price changes. If a consumer has larger budget share, demand will be inelastic but if a small budget the consumer will be more responsive to price changes hence elastic demand. (Mankiw, 2009). When lowering or raising prices, the marketers need to consider the price elasticity of demand. If demand is elastic, then careful consideration is required as a raise in price may drive the customers to competitors leading to decreased sales and revenue. Lowering the price below that of competitors attracts customers hence increased sales. For products with inelastic demand, increasing price will have small impact in quantity demanded thus revenue also increases (Mankiw, 2009). Word Count: 400 References Baumol, W & Blinder, A (2009) Economics: Principles and Policy. USA: Cengage. Cachon, G. & Terwiesch C. (2008) Matching Supply with Demand: An Introduction to Operations Management. McGraw Hill. Mankiw, N (2009) Principles of Economics. USA: Cengage. Promotion A company carries out promotional activities to create awareness, boost sales and position itself in the market. Various promotional strategies are used to accomplish this goal which include; advertising, trade promotion, personal selling, database marketing, customer relations and sponsorship programs (Kitchen & Pelsmacker, 2004). It advertises through various mediums such as television, newspapers, and internet aimed at persuading customers to buy products by creating a good corporate image and brand management. Social initiatives are also used as a promotional strategy through provision of benefits to the community at large. The various promotional strategies communicate different messages to the consumers hence an integrated marketing communication is essential in enhancing a clear and consistent message regarding the product despite the medium used in promotion (Schultz et al. 1993). Integrated marketing communications (ICM) are consumer driven and therefore able to receive a greater impact than product driven communication. A program is developed to evaluate the strategic roles of different communications and integrate them to provide maximum communication impact at minimum cost (Schultz et al. 1993). This due to the fact that customers process the information they get from different sources and if different message is communicated for same product, it is conflicting for them and may not be able to make purchases. This integration has been enabled by information technology, internet, globalization and need to improve organizational learning as well as effective use of resources. Kitchen & Pelsmacker (2004) argue that encouraging data-driven dialogue with customers leads to successful promotion. ICM ensures that results are achieved and hence advertising agencies are made accountable. Integrating corporate social responsibility with corporate strategies like marketing enhances good corporate image and brand loyalty hence competitive advantage and positioning (Kotler & Lee, 2005). Corporations promote their brands through social initiatives such as cause-related marketing whereby they donate a percentage of revenue resulting from sale of a product for specific cause. They also sponsor promotions and their products in the process, contribute to charity; carry out discretionally business practices and corporate social marketing. All these initiatives are aimed at persuading customers to buy their brands as they prefer to buy them for a worthy cause. Corporate social responsibility and integrated marketing communications serve to increase market share by maximising the impact of consumers at minimum cost. Corporate social responsibility acts as a promotional strategy hence minimising costs and doing good to the society at the same time. Word Count: 398 References Kotler, P & Lee, N (2005) Corporate Social Responsibility: Doing the Most Good for Your Company and Your Cause. New Jersey: John Wiley & Sons, Inc. Schultz, D., Tannenbau, S., Lauterborn, R (1993) Integrated Marketing Communications: Pulling it Together and Making it Work. USA: NTC Kitchen, P & Pelsmacker, P (2004) Integrated Marketing Communications: A Primer. Oxfordshire: Routledge. Place Marketers ensure products are available to potential customers when needed at a convenience place. While deciding on the channel of distribution the marketer first determines the target market and does research on the buying behaviour of the customers in the target market so as to satisfy their needs. Formulation of a retail strategy is thus essential in ensuring the firm positions itself in the market. The strategy involves setting mission and objectives, situation analysis to evaluate internal and external variables, developing marketing and positioning strategies as well as retail mixing strategies and finally implementation and control (Randhawa, 2008). By formulating a retail strategy, the retail is able to deal with customers, competitors and other stakeholders. However, the main objective of the strategy is to provide value to the customers hence decisions on target customers are inevitable. The retailer needs to design the store in an appealing manner and according to the characteristics of the customers he intends to attract. For example, trendy designs to attract wealthy individuals and budget friendly store to attract low class customers. If the customers prefer to shop on-line, then he should apply internet marketing. If customers buy in person, design a store which is convenient to them. For example, some products require a large warehouse while others small store (Ander & Stern, 2004). The retailer should also sell the goods in convenient quantities and offer additional services. He should also keep customer profile to track changing trends and adjust accordingly. Decisions on whether to keep existing customers or get new ones are also important. The level of involvement of customers depends on consumer’s stage in the purchasing process and determines the type of retail strategies to use. Randhawa (2008) argues that involvement is determined by; product characteristics, personal characteristics, past experience with the product and situational factors. Low involvement products involve shopping as a routine task for efficiency and the customers use past experience and mental perceptions to choose the store where to shop. The retailer in this case should position the store to make it appealing and offer various products from different manufacturers under one roof. High involvement products are one time purchases and the customers does a lot of research and chooses the best alternative (Ander & Stern, 2004).The retailer should provide enough information to the customers and research on what competitors are doing so as to differentiate his products to attract the customers. Word Count: 401 References Ander, W & Stern, N (2004) Winning at Retail: Developing a Sustained Model for Retail Success. New Jersey: John Wiley & Sons Randhawa, Sajal (2008) Retail Management. New Delhi: Atlantic. Read More