marketing definition
Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.
Marketing and exchange
Marketing and exchange
Basic, simple marketing cycle
• Difference between selling and marketing concepts
○ In marketing
Start with the customer, get customer insights
Get customer insights through integrated marketing, how do you promote it? What do they want? What are they looing for?
By delivering what the customer wants you create profits through delivering satisfaction

○ In sales
Start with the product
“Shout about it and someone will come and get it”
About shouting about products not
Profits through Sales Volume

Difference between Consumer/Market driven businesses and sales/internally orientated businesses
•Customer concern throughout business V •Convenience comes first
•Know customer choice criteria and match with marketing mix V •Assume price and product performance are the key to most sales
•Segment by customer differences V •Segment by product
•Invest in market research and track market changes •Rely on anecdotes and received wisdom
•Welcome change V •Cherish the status quo
•Try to understand competition V •Ignore competition
•Market spend regarded as an investment V •Marketing spend regarded as luxury
•Reward innovation V •Innovation punished
•Search for latent markets V •Stick with the same
•Being fast V •Why rush?
•Strive for competitive advantage •Happy to be me-too
Marketing involves Individuals and Organisations
• What is involved in marketing?
○ As an organisation you market at
To do that, you have to know about consumer behaviour
○ Marketing towards buyers within companies
Business to business
Industrial companies (massive units to buy cars, or all the equiptment for the oil industry)
Institutions (hospitals, universities)
Profit organisastions vs Non-profit organisations
What are we marketing?
○ Products
Tangible that you can see or buy off a shelf
FMCG: fast moving consumer goods, small scale, don’t cost a lot of money for the end consumer
Durables: washing machines, freezers, televisions
○ Services
○ Ideas
The Church
○ Products or services?
Marketing Occurs in a Dynamic Environment
○ First step for launching a new product is understanding your environment
○ Can be done at a strategic level for an organization as a whole, or on a product level
What’s happening in gov’t? What’s happening at the gov’t level that could influence your market?
□ Recissions? Credit Crunch? Deflation?
□ What are we doing different now that we didn’t ten years ago?
□ What are the new trends?
□ Are people using apps? Should we be getting into apps? Etc.
○ Understanding the customers needs and wants within this environment
Needs to be constant and dynamic
Create value for customers and build customer relationships
□ Understand the marketplace and customer needs and wants
□ Design a customer-driven marketing strateegy
□ Constuct an integrate dmarketing program that delivers superior value
□ Build profitable relationships and create customer delight and loyalty
Create value from customers in return
□ Capture value from customers to create profits and customer equity
-Long term benefit and trust from the customer in you
• What's happening in marketing and where is it going?
• What’s happening in marketing and where is it going?
How do we maintain profit for our shareholders and company but still remain ethical and sustainable?
○ Building relationships
○ Building relationships
Transactional becomes relational
□ Importance of relationships
□ Changing environment
Ethical challenges in marketing
• False wants and too much materialism
-Social commentators have said that marketing urges too much interest in material possessions.
People are judged by what they own and not who they are.
– issues of trust, responsibility
• Too few social goods
-Overselling private goods at the expense of public goods.
• Too much political power
-Businesses lobby politicians to support their interests above the public interest.
Possible influences on the consumer buying process
Possible influences on the consumer buying process
○ Top part is consumer influences
○ Bottom part is how the combination of influences creates a decision making process
influences that make up buyer
Pyschological inflences
Cultural: major influence. Where you have grown up. Includes morals, language
•Culture is the most basic cause of a person’s wants and behavior.
“..that complex whole which includes knowledge, beliefs, art, morals, custom and any other capabilities and habits acquired by man as a member of society” E.B. Taylor 187
Cultural issues: don’t want to offend or stereotype- have to be sensitive to cultural differences.
HSBC do It well: saying they are global and local: depending on which culture you grew up in will see rug differently.
Within culture are sub-cultures: youth
Roles and family: the toothpaste your family has bought for years likely to influence what you buy
•2 or more people, related by birth, marriage or adoption
•Roles: -Gatekeeper, buyer, decider, user, influencer….
-Family decision making, sibling influence, “family identity bundles” Epp A & Price L (2008) ”
Family identity: A framework of identity interplay in consumption practices” Journal of Consumer Research Vol 35, Commuri & Gentry (2000)
Reference groups and social networks….
• normative-.
• comparative- may compare yourself with others
• aspirational- Aspire to luxury brands.
• opinion leaders/co-creation- personalization of what consumer wants
Age- can you buy alc?,
economic situation,
lifestyle (and changes),
hight self asteem or low,
Psychological Influences
Personality – unique psychological characteristics (openness, conscientiousness, extraversion, agreeableness, neuroticism) – big 5 scale used to measure personality
Perception and attitudes – brand – Burberry brand almost destroyed by chavs wearing iconic pattern.
Ability & Knowledge
Maslow's Hierarchy of Needs- physcological
Maslow’s Hierarchy of Needs- physcological
○ Basic needs at the bottom, least necessary needs at the top
Need to first satisfy basic needs: hunger.
Move up the hierarchy:
Marketing trying to help achieve these needs: e.g. phone for safety or for social needs: social media, or esteem needs: liking photos. Most successful products satisfying needs.
Types of consumer buying behaviour
Types of consumer buying behaviour
3 types of buying behaviour
routine: always buy colgate toothpaste because mum did. Difficult to break
limited: hungry: go into shop and pick snack spontaneously- branding is important
extensive: structure of decision process
The consumer buying decision process
The consumer buying decision process
E.g. problem recognition: man needs to buy more family friendly car.
Info search: need to find out about safety of cars etc. collecting info via car magazines, word of mouth etc
Evaluation of alternatives: look at different options. Can be informal or formal.
Important for marketers: need to know whats important for consumers and where they are finding info.
Purchase: sales assistant not very helpful so may deter you from buying
Post-purchase evaluation: how you feel socially/financially after purchase. Do you feel comfortable. Company may send flowers: makes you feel better- what is going to make consumer happy. Develops on going relationship.

At each stage of decision process marketer needs to know about influences.

Select customers to serve
Breaks down audience into segments that want your product.
Segmentation: divide total market into smaller segments.
Targeting: select segment to enter- which one most cost effective.

Decide on a value proposition
Differentiation: differentiate the market offering to create superior customer value.
Positioning: position the market offering in the minds of target customers.

“A market segment is a group of individuals, groups or organisations that share one or more similar characteristics which make them have relatively similar product needs.”
Need to make sure segmemts are discreet and reachable

The process of market segmentation and target marketing
The process of market segmentation and target marketing
Bases for Segmenting Consumer Markets
• Geographic variables
– Urban or rural area
• Demographic variables
sex – dove targets men and women v differently
– age
– stage in the family life cycle- face creams
• Socio-economic variables
– education/social class
•Psychographic variables – more difficult to target
•Product -related variables
– Users v. non-users- tesco clubcard- knows what you have bought and can see what incentives e.g. discounts change your behaviour.
-loyalty patterns
benefits sought
attitude to product
The marketing mix
– analysed target market
○ Anything received in an exchange
○ Favourable and unfavourable ways to be perceived
Combination of tangible and intangible attributes, including functional, social and
psychological utilities or benefits

○ Can be an idea, a service, a good, or any combination
Anything that can be offered to a market for attention, acquisition, use or consumption
that might satisfy a want or need
Two classifications of products
□ Annoying products
□ House insurance, car insurance, taxes

Raw materials
Major equipment
Accessory equipment
Component parts
Process materials
Consumable supplies
Business services

Product and Service Decisions
○ Product attributes
What attributes are my consumers look for
In supermarkets, where you position your price
What is the product made up of, expecctation, how do we make our product different
What the customer thinks about you
The way the design, logo, colours look
Identifies product wihtin market
Signifies quality, style, story
Way it looks and also legal requirements
Food labeling
Calorific value, etc.
What are we offering the ustomer over and above the product
Reinforcing differentiation within market place
Levels of products and services
Levels of products and services
The extended service mix
○People: NOT CUSTOMERS; the appearance and behaviour of service dleiverers; staff
and representatives
○ Processes: how the service is actually delivered; back up systems
○ Physical Evidence: layout, furniture, brochures, signs, etc, certificates, photos
○ Idea generation
NPD: New Product Development; backwards and forwards through various stages to ensure
customer satisfaction
○ New product planning
○ Idea generation
○ Screening and evaluation
○ Technical development
○ Market appraisal
○ Launch
• PLC: Product Life-Cycle Concept
• PLC: Product Life-Cycle Concept
As a product moves through its life
Faces different marketing conditions
Different marketing objectives become important
Different marketing strategies become applicable
Marketing Objectives and strategies at different stages of the PLC
Introduction -Create product awareness and trial
Growth -Maximise market share
Maturity -Maximise profit while defending market share
Decline -Reduce expenditure and milk the brand
Diffusion of Innovation
Diffusion of Innovation
Branding a product or service
Branding a product or service
The power of a brand lies in what customers have learned, felt, seen and heard about the brand over time. In other words, the power of a brand resides in the minds of customers
○ Four product brand strategies
The nature and importance of price.
To the seller
• Represents the costs involved in producing the product.
• The revenue that can be generated from the sale of the product.
• The profits and longterm survival of the firm.
• The ability to respond quickly to market conditions.
The nature and importance of price.
To the buyer
• Represents the value placed on what is exchanged.
• Also represents the cost to the customer.
• It can signify the quality of the product or provider.
• It is affected by buying power.
Factors influencing general pricing decisions
○ Organisational objectives
○ Pricing objectives
○ Costs
○ Channel member expectations
Supply chain to the customer
○ Buyer’s perceptions
○ Competition
○ Legal and regulator issues
○ Other marketing mix variables
Pricing Objectives
•Profit oriented:
-Target return objective – sets a specific level of profit, usually stated as a % of sales
or investment. Also called the ROI.
-Profit maximisation –
• seeks to achieve as much profit as possible. ‘To charge what the market will bear’
•Sales oriented:
-Sales growth objective – seeks some level of unit sales, pound sterling/dollar sales or
share of market without referring to profit.
•Market share objective:
-gain some specific share (%) of a market or market share leadership.
•Status Quo oriented:
-Price stability – to meet the competition or even avoid competition.
-Non-price competition – aggressive action on one or more of the Ps other than price.
8 stages of price setting
• development of pricing objectives
• assessment of target market’s ability to purchase and
evaluation of price
• determination of demand
• analysis of demand, cost and profit relationships
• evaluation of competitors’ prices
• selection of a pricing policy
• development of a pricing method
• determining a specific price
Value based pricing
Value based pricing
Features of price based competition
• Emphasises price as an issue.
• Attempts to match or beat competitors’ prices.
• The firm needs to be a low cost producer to compete on price.
• It is particularly evident in industries where product differentiation is difficult.
• It enables the firm to react quickly to competition.
• Can encourage customers to become price sensitive.
Features of value based Competition
• Competition focuses not on price but on some
distinctive features of the product or service.
• Firms need to be able to distinguish products
or brands, obtain a unique brand image.
• Distinctive features must be of value to the
• Works well when customers are less price
• Enables the firm to build customer loyalty.
Pricing Policies for New Products price skimming
• Charging an initial high price
• Appeals to those who can afford and most desire the
• Generates much needed cash flow.
• Covers large R&D spend.
• Helps keep demand consistent with production capabilities.
• Competition may be attracted by high price.
Pricing Policies for New Products penetration pricing
• Initial price set below competing brands.
• Useful when demand is elastic.
• Useful for low cost producers.
• Less flexible than skimming
• Can be useful if threat of entrants is high.
• Can deter some competitors due to low unit profit.
Pricing tactics within the marketing mix
•Product line pricing
•Optional-product pricing
•Captive product pricing
•By-product pricing
•Product-bundle pricing
Tactical: Product adjustment strategies
Price summary
• Despite the increased role of non-price factors in
the modern marketing process, price remains an
important element of the marketing mix both
strategically and tactically
•Many internal and external factors influence
pricing decisions
• Decisions on price can affect sales but can also
adversely affect brand and long term future
•In the end, the consumer decides whether the
company has set the right price and they may
differ in the values they assign to different
product features
Distribution/Marketing Channel:
The groups of individuals and organisations which direct the flow of products from producers to consumers
Key terms
• Distribution (or “Place”): Activities that make the product availbale to target consumers
• Distribution Channel: the means by which products are moved from producer to end consumer
•Channel Intermediaries: someone who’s helping you achieve the goal of delivering goods to end
•Wholesaler: will buy in bulk from one producer and then sell on to another part of the business,
don’t come in contact with consumers, wine wholesaler buys from france then distributes to
wine shops
• Retailer: deal directly with the end consumer
• Facilitators perform some other function in the distribution of products, make it run smoothly
• Many ways a marketing channel can be built:
Purpose of distribution channel =
closing the gap between functions
Types of marketing channel...
Types of marketing channel…
Factors Influencing Distribution Channel strategy
○Organisational resources and objectives: what can you afford what are you trying to achieve
○Product features: some need more experts and specialists, so impacts whether you go direct or not
○ Market characteristics
○ Consumer behaviour: what are your consumers doing?, use of the internet for example
○ Environmental forces: pestle analysis
Functions of a distribution channel: closing the gaps
○ Information gap: fulfills the information gap beetween what do people need/want
○ Promotion gap: advertising
○ Negotiation gap: negotiating with bulk buyers
○ Ordering gap: efficiency in ordering
○ Financing gap: take on responsibility for financing
○ Risk-taking gap: utilizing experts on risk taking in your area
○ Physical possession gap: chain becomes more fluid an cash is easier to come buy
○ Payment gap: physical possession goes on, payment down the chain is smoother and quicker
Functions of Intermediaries
Sorting= classifying different supplies into groups of similar products.
Accumulating= developing a stock of similar products
Allocating= Breaking down stock into smaller units
Assorting= Combining products into collections required by customers
Why use intermediaries
If you have a trusted intermediary then you can deliver once to them and then they distribute,
which is cost effective so long as they are experts
Channels with no intermediaries
Producer to consumer is more common, a channel with no intermediaries

Farm shops
Distribution via sales representatives or party plan
Internet sales direct from producer or service provider

Channel with one intermediary
provides the services interface to end consumer
Producer -> retailer -> consumer
White goods
Channel with two intermediaries,
wholesalers take delivery of many limited, high volume lines, resell to retailers in mixed assortments convenient to end consumers
• Producer -> wholesaler -> retailer -> consumer
Channel with three intermediaries, agent acts on behalf of producer or wholesaler o make sale
Producer -> agent -> wholesaler -> retailer -> consumer
Channel with three intermediaries, agent acts on behalf of producer or wholesaler to make sale
Agricultural products
Relative advantages to producers of short and long channels?
more direct customer feedback
greater quality control
greater price control
greater geographical coverage
greater efficiency
more professionalism
The shape of logistics networks
The shape of logistics networks
○ All about how you maximize the efficiency, minimize the costs, etc.
• Levels of Distribution Intensity
Using all possible outlets (e.g. Coke) Want all the possible outlets, want to be well placed, seen as the brand of choice, convenient and impulsive
Benefits = convenience, impulse
Using proportion of outlets (e.g. make up)
-Chanel, debenhams, harvey nichs: about being selective, may want to limitdistribution
– Want to go somewhere where the sales staff can talk with the consumer
-Resource efficiency, quality control, strategic positioning
Benefits = resource efficient, quality control,
Strategic positioning.
Using very restricted outlets (e.g. Ducati)
– Experience going there
Benefits = resource efficient, quality control,
premium image
Channel Integration
In conventional marketing channels, intermediaries are autonomous firms
– Producer -> wholesaler -> retailer -> consumer
Advantages = specialisation, professionalism
Producers risk losing control/end customer contact
Conflicts happen between channel members…
…adversarial negotiations over price (Bertini and Gourville, 2012)
… retailers add new lines, restricting space for original lines
…prdrs/wlrs/rtlrs disagree over responsibilities

To retain advantages of long channels but overcome these problems, firms adopt channel integration activities… corporate, contractual and administered vertical marketing systems

Vertical integration options
Where one firm in the channel owns or acquires other channel members
E.g. Shell owns extraction, processing, storage, transport,
retail functions
Advantages = total channel control (with all benefits of price control, quality control)
Risks = over-extension of expertise
Contractual vertical marketing systems
Where one firm in the channel contracts other channel members to perform their activities according to specified terms and conditions, in return for technical/marketing
E.g. licensing – Coca Cola contracts local enterprises to make up, bottle and distribute its soft drinks to retailers
E.g. franchising – McDonalds/Ford contract local restaurateurs/car dealers to offer sales/services to end customers
Advantages = Licensors/franchisors control terms with downstream intermediaries, L/Frs gain local knowledge/entrepreneurship
Risks = over-supply, customer response issues
Administered vertical marketing systems
Where the size and power of one firm in the channel commands cooperation from other channel members e.g. large multiple grocery retailers
Advantages = de facto control of channel members (without having to bear investment costs of acquisition or
management costs of contracts)
Risks = bad publicity and legal actions e.g. relating to
employee welfare, supplier relations…
Reflections on channel integration
Channel integration can bring cost, management and
marketing advantages to firms (lower costs by
agreeing terms of deal with channel members,
eases management by allowing more control over
what other members do, and can bring upstream
firms closer to end consumers)
BUT can also generate risks…
Over-extension of channel members’ expertise
Transparency and customer response issues
Accusations of market distorting behaviour
summary place
Place – the silent, less sexy yet crucial element of the
marketing mix !
Today we considered marketing/distribution channel
selection, intensity and integration demonstrating the
complex nature of channel management which must
support customer requirements and marketing objectives
in an increasingly complex and global world – not easy!
aims of promotion
Communication with target audiences. – □ Have a clear target audience. □ Understand as much as possible about them in order to communicate
To inform and educate.
To persuade and influence decisions. – Why my product over others
To remind and stimulate repeat buying.
To reassure before, during and after buying decisions.
• Promotion is the fourth P but promotion (sales)
can also be a tool.
• Therefore to avoid confusion, I will refer to
Promotion – the P – as Marketing
Communications….(which is often used in text
Traditional model outlining marketing
communication objectives
Traditional model outlining marketing
communication objectives
Marketing Communications
Marketing Communications Decisions
• Objectives (e.g. awareness, purchase etc)
• Target group – Which group(s) of customers?
• Message – What are you trying to say/ how are you going to say it: rational or emotional themes?
Integrated marketing communications mix
Integrated marketing communications mix
The areas that are creatively manipulated with to get your message across
incorporating the new
•Advertising: TV, press, radio, cinema, outdoor versus video blog,
Youtube, viral
•Personal selling: Personal versus online
•Sales promotion: BOGOFF versus online vouchers, ItsOn sites
•Direct marketing: Post/flyers versus online, email, mobile
•Public relations: Press release versus twitter, memes, viral, WOM,
•Difference is CONTROL: marketer versus customer …
The need for integrated marketing communications
•Need to maximise budget, resources and reach by giving
the target audience consistent, consistent and clear
messages about the brand in an increasingly complex
NB: Fundamentally you must start by understanding your brand, understanding your target audience(s) and comms objectives
Setting the IMC budget and mix
•Four common methods used to set the total budget for promotion:
-Affordable method (increasingly new media usage)
-Percentage-of-sales method
-Competitive-parity method- supermarkets
-Objective-and-task method- Objective to create awareness, make a case for target audience, but it in
front of board
-Other product-specific factors
summary promotion
• You should have a clearer understanding of the
role of Promotion (P) – or Marketing
Communications – within the marketing mix
• Importantly the role of INTEGRATING
marketing communications to maximise
consistency, clarity and build the desired
BRAND image through all media.
Market research
Market research definition
“The process of gathering, interpreting and
reporting information to help marketers solve
specific problems or to take advantage of
marketing opportunities”
Often referred to as
‘Consumer Insight’
Research required throughout the marketing mix
• Understand environmental trends (PESTLE)
• Understand customer requirements/trends
• Understand internal influences
• Understand competitive position
• Understand all elements of marketing mix – P’s
• Pre-testing, tracking, post launch/campaign evaluations – planning, implementation and evaluation
The Process of Marketing Research
• Defining problem (or opportunity) and outline the research objectives.
• Plan data collection methods and collect the data
– primary or secondary data?
– qualitative or quantitative?
• Analyse the data and interpret the findings
• Report research findings to marketing decisionmakers and implement changes….monitor and improve with further research…
Approaches to collecting data
Approaches to collecting data
Collection and analysis of data: Secondary research
Secondary research: Questions for marketer….
– Accuracy/dependency of the data?
– Qualitative v quantitative?
– When was it collected?
– Purpose of the study?
– Content of the data?
Primary Data collection: Qualitative versus Quantitative Research
• Qualitative research
– research that deals with information too difficult or expensive to quantify, such as subjective opinions and value judgements, typically uncovered during interviews or discussion groups.
Quantitative research
Research aimed at producing data that can be
statistically analysed and results that can be
expressed numerically with a big enough sample
(or census?) to statistically account for
populations’ behaviours, choices, trends etc.
Primary Data Collection: A Comparison of Survey Methods
Primary Data Collection: A Comparison of Survey Methods
Recent changes: Internet research
– Advantages -inexpensive, fast turnaround, automated data collection, no interviewer bias, international co ordination
– Disadvantages – respondents ‘universe’. Sampling issues, self completion self selecting bias, technical difficulties
– Advantages – slightly faster than traditional focus groups, avoids dominant personalities, client control, illustrate concepts or web sites, recruitment advantages, international.
– Disadvantages – lose non-verbal aspects, less useful for emotive issues, on-line moderation requires new skills, typing speeds vary, technical problems, sampling issues
New trends in market research…
• Big Data: customising versus privacy balance
• Netnography
• Co-creation
market research summary
• Don’t under-estimate the importance of market research and customer insight in all aspects of the marketing mix: planning, implementation and evaluation!
• Research fundamental part of the cycle or marketing process
• Its not the fact that you do the research that it is important, it is how you interpret and use it.
Rationale for International Marketing
• Small or saturated domestic markets
• Demand
• Economies of scale
• International production
• Customer relationships
• Market diversification
• International competitiveness
Differences between International
and Domestic Marketing
• Strategic and implementation
-Need a broad strategy that takes into differences and difficulties of an internationalaudience
-The costs for going international
• Cultural differences
• Market Segmentation
-How your segmenting, who decisiion makers are, reflect into strategy
• Monitoring and control
-More difficult to control and monitor what’s going on, understanding the differences in delivering and regulatory demands in different countries
• Physical distribution and place decisions
-Getting your stuff to where it needs to go
-Centralized, urban, how people shop, understand the local area where you sell
Market entry considerations
HOW TO ENTER MARKET? (commitment, risk, control, profit)
-Exporting goods
-Join together with another company that has a foot in the international market
Internationalisation and the 7-P Framework
• Product – cultural, climatic, technical and economic issues affect product design.
• Place – cost, distribution systems vary internationally
• Promotion – affected by cultural issues (i.e. humour,
religious and cultural norms).
• Price – exchange-rate fluctuations.
• People – foreign sales staff can give rise to motivational
• Processes – processes do not necessarily cross national
• Physical Evidence – can be affected by trading practices
and cultural norms.
Factors to Consider in International Marketing
• Demographic
• Geographic
• Political and legal factors
• Economic factors
• Sociocultural
Political environment
•Ethical concerns
•Political system
•Co-operation versus conflict
Economic Environment
•Economic development/climate
•Consumer spending patterns
•Income changes
Socio-cultural implications
□ Culture affect the way people behavie in a given society
□ Values beliefs attitudes perceptiions
□ KitKat different tastes and flavours
Impact of globalization
• Increased economies of scale
• Convergence of consumer tastes
• Improved telecommunications and transport systems
• Increased political acceptance of global trading
• Continuing growth of large firms
Global Segmentation
• Geographic segmentation (by country)
• Trans-national segmentation (by consumer characteristics)
International Market Entry Strategies
• Keep product and promotion the same world-wide
• Adapt promotion only
• Adapt product only
• Adapt both product and promotion
• Invent new products
Barriers to International Marketing
• Psychological Barriers
• Operational Barriers
• Organisational Barriers
• Product/Market Barriers
international marketing summary
• The gains can be much greater but it is much harder to manage a brand and market internationally
• Key is understanding both your new market and new customers – can be very different
• Local expertise and experience is helpful.