Marketing 1 A Chapter 1 – 3 IEB

Conditions for exchange
> At least two parties
> Something of value
> Able to communication
>Freedom to accept or reject
>Desire to deal with the other party.
(May not take place even if all conditions are met)
Marketing gaps
>Space gap
>Time gap
>Information gap
>Ownership gap
>Value gap
Space gap
Geographical space (distance) between manufacturer and consumer
Space gap overcome by
Transport
Time gap
Time difference between when something is made available.
e.g
(bananas are grown in summer)
and when it is demanded
e.g
(people want bananas all year round)
Time gap overcome by
Storage and warehouses
Information gap
gap between the product and the consumers knowledge of the product
Information gap overcome by
>Research and development
>Advertising
Ownership gap
The gap between the consumer and buying the product
Ownership gap overcome by
>Banks
>Credit Cards
>Shopping accounts
Value gap
Difference between the value held by the seller and the value held by the consumer
Value gap overcome by
Matching the price held by both parties
Bridging the gap
These gaps are bridged by intermediaries

>Middlemen – Take title for later resale (wholesalers, retailers, resales)
> Sales intermediaries – Do not take title of the products they sell (estate agents)
>Auxiliary enterprises – Aid in the purchase of the products/ No direct involvement (Banks, lawyers)

perceived value
Not necessary the monetary value, also includes the factors
>time cost – time spent in order to acquire the product
>emotional cost – emotional exertion the consumer would go through to obtain the product
Marketing activities
Primary marketing activity Transport (overcomes the space gap)

Auxiliary marketing activities
1.Sourcing and supplying information
2.Standardization and grading
3.Storage
4.Financing
5.Risk-taking

Sourcing and supplying information
>Seller must know where to sell their products which can be done through market research, advertising and personal selling (closing the information gap)
Standardization and grading
>Makes products confirm to a specific norms
>Facilitates the buying process
Storage
Overcomes the time gap
>warehouses
Finance
Costs such as transport and storage need to be financed by
>Banks
>Financial institutions
Consumers need finance to buy products
>Banks
>Accounts
(overcoming the ownership gap)
Risk-taking
Risk of damage and loss to the product held by the owner before sale and customer after sale
Marketing orientations
>Production-orientation
>Sales-Orientation
>Marketing-orientation (pure marketing concept)
>Societal marketing-orientation
Production-orientation
Focuses on the internal capabilities of the firm rather than on the desires and needs of the marketplace. Management assesses its resources.
Sales-orientation
emphasizes sales volume rather than profit, TARGET VOLUME (establish prices to sell a certain number of items) VOLUME MAXIMIZATION (establish prices to sell a maximum number of items)
Marketing-orientation
3 basic principles
1.Consumer-orientation
2.Profit-orientation
3.Organisation intergration
1.Consumer-orientation
>emphasis on satisfying consumer needs
>Also achieving profitability
Companies evaluated on profit, market cap, customer value
2.Profit-orientation
>Maximizing profit is the primary activity
>Companies want to achieve specific rate of return on products
3.Organisation intergration
>Synergy
>TQM – total quality management
>Organisation must work together
Societal marketing-orientation
>Obligation to enhance the environment whilst looking to maintain profitability and consumer satisfaction
>Managing the environment – society – company
Relationship marketing
A strategy that focuses on keeping and improving relationships with current customers – extending a offer to the market
>Less time
>Less effort
>Continuous revenue
Market offering
Companies must maintain existing customers through not only the 4 p’s (product, place, promotion, price) but also two additional p’s (People and Process)

>Employees must be well trained in customer service
>Working together for the increased satisfaction of the company as a whole

An extended market
Companies must have a wider view of the market to include
>Current customers (loyalty)
>Potential customers (unexploited market)
>Suppliers (contribute to timeliness and quality supply of products and services
>Potential employees (identifying ability and attitude)
>Reference groups (Word of mouth advertising)
>Influences (government)
>Current employees (internal market, motivation, training, remuneration)
Micro-segmentation
This has been adopted by companies due to

>Consumers are knowledgeable and sophisticated
>Technology has changed
>Increasing competition

Defining marketing
Combination of management tasks and decisions aimed to meet opportunities and threats to result in the best outcome for the companies profitability, consumer satisfaction and societal needs
Key things to remember in defining marketing
>Decisions – 4 P’s
>Opportunities – favorable circumstances
>Threats – unfavorable circumstances
>Dynamic environment – constantly changing
>Needs-satisfaction – what the consumer wants
>Market offering – 7 P’s
Attaining an objective – maximize profit
– consumer satisfaction
– Well being of society
Marketing process
Market management decides on the market offering which consists of the following variables

>A product with needs satisfying properties
>Distribution (when and where)
>Communication (advertising)
> Correct price

This is offered to the target market (market offering) which in return results is spending by the target market for the product. The target market also provides feedback to the company.

The main objectives for the company is profit!
The main objective for the consumer is total needs satisfaction
The environment sits between these as a middle ground objective for both consumers and companies

Marketing functions of an organisation
Departments must work together to realize the objectives of the company
Management task in marketing
Planning
>Identifying opportunities and threats
>Set goals and objectives
>Decide marketing instrument and secure HR

Implementation
>Coordinate activities
>Provide leadership and strategies

Control
>Evaluate
>Corrections

Components of the marketing environment
The marketing environment consists of the

>Marco-environment
>Market-environment
>Micro-environment

variables of the micro-environment
>Mission of the business
>Selection of target market
>Marketing objectives
>Resources, skills and abilities
>Marketing instruments
Long term and Short term objectives
Business objectives (Long term)
>Market share
>Productivity
>Innovation
>Physical and financial resources
>profitability
>Manager performance and development
>Workers performance and development
>Public and social responsibility

Functional objectives
>Profit
>Customer orientation
>Survival and growth
>Increase in sales
>Efficiency
>Marketing instrument objective

Consumer markets
>Consumer market
>Industrial market
>Re-seller market
>Government market
>International market
Needs competition vs Product competition
Needs competition
The competition between any and all products and services for your money. When you have the means to satisfy a need i.e mola baby!! every company is wanting you to spend its money on it’s products and services
Product competition
The competition between products or services that offer the same needs satisfaction. PlayStation and Xbox both compete for your money in the gaming consoles market where as Nike and Adidas compete in the clothing market
Variables of the macro-economy
Political
Economic
Social
Technology
Environment
International
Consumer behaviour
The process individuals or groups go through to select, purchase, and use goods, services, ideas, or experiences to satisfy their needs and desires.
Individual factors
>Motivation
>Perception
>Learning ability
>Attitude
>Personality
>Lifestyle
Motivation
Maslows hierarchic of needs
Perception
Perception process
>Exposure – Stimuli of the 5 sensors (selective exposure)
>Attention – Something that attracts your attention (selective attention)
>Interpretation – Happens based on individuals different experiences, knowledge and beliefs
>Recall – Memory (selective recall)
Learning ability
Elements of learning
>Stimulus
>Response – Reaction to the stimulus (purchase)
>Reinforcement – Secures future purchases (positive and negative)
>Repetition – Purchasing the same product again due to the past experiences
Attitude
Components of attitude
>cognitive component (thoughts and knowledge)
>Affective component (feeling and emotions towards a product)
>Behavioral (Cognitive) component (outcome of cognitive and affective components – will the consumer by the product based on his/her knowledge and feeling)
Personality
>Reflects personal differences
>Personalities are consistent and enduring
Lifestyle
Psycho-graphics
>Activities
>Interests
>Opinions
Group factors
>The family
>Cultural groups
>Social groups
>Reference groups – member groups, negative groups
>Opinion leaders
Consumer decision making
Types of decision making
>Real decision making – Complex (buying a car)
>Impulse decision making – instant (Chocolate)
Habitual decision making – matter of habit (brand loyalty)
Phases of consumer decision making
1.Need Recognition
2.Search for Information (internal and external)
3.Evaluation of Alternatives
4.Purchase Decision
5.Post-consumption Evaluation
Adoption of new products
Five stages when considering whether or not to adopt a new product
1.Awareness – exposure to the new idea
2.Interest – seeks more information
3.Evaluation – based on information gathered (mental trial)
4.Trial
5.Adoption or rejection
Innovation adoption characteristics
>Innovators
>Early adopters
>Early majority
>Late majority
>Laggards