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Chapter 5: The Marketing Environment - the sum of all the internal and external forces that affect the way a firm operates, particularly its ability to build and maintain relationships with its target customers. Internal forces are referred to as the microenvironment Ex...

Chapter 5: The Marketing Environment - the sum of all the internal and external forces that affect the way a firm operates, particularly its ability to build and maintain relationships with its target customers. Internal forces are referred to as the microenvironment External forces are called the macroenvironment. - To be effective, an organization must proactively monitor these forces and their changing trends to adapt to changes, keep up with the competition, and develop strategies to fulfill consumers' present and future needs. microenvironment Five Components of Microenvironment 1. The organization itself - consists of the owners, investors, and employees who are all considered members of the organization. - The company's top management has the duty to develop the company's mission, vision, goals, and policies which set the stage for the company's marketing plans. - Top management provides the direction and lays out the strategies and plans. - composed of different departments with specialized functions, and these should all work together to achieve the company's objectives. Marketing managers work hand in hand with these departments to ensure superior value to customers. 2. Suppliers - provide the resources the organization needs to produce goods and services. - A good relationship with suppliers enables the organization to ensure the availability of supplies for prompt operations. 3. Customers - are the people who are willing and able to buy the organization's products and services. - They are considered the lifeblood of the business, for without them the organization will cease to exist. - determines the demand for products and services. - Their needs and wants vary and may change over time, therefore, marketers should exert efforts to monitor these needs and wants in order to continually satisfy them. 4. Marketing intermediaries - are entities that assist in the distribution and selling of goods to customers. - They help in the free flow of goods from organizations to the different markets. - They create marketing utilities of place, time, and possession for organizations by ensuring that goods are accessible and will reach the final customers promptly four types of marketing intermediaries: a. Wholesalers i. are entities that buy goods from manufacturers or producers and resell them to retailers and other organizations.  ii. Full-service wholesalers take charge of storage, order processing, and delivery of goods, while iii. limited-service wholesalers do not usually carry all the functions of full-service wholesalers, but package and ship the goods after receiving the customer's order details from the retailers. b. Distributors i. are entities selected by manufacturers to buy goods for resale to retailers. ii. They usually hold a narrower range of goods than wholesalers and cover a specific geographic area. c. Retailers i. carry a wide range of goods which are bought from wholesalers or distributors and then sold directly to consumers. ii. They have different brands of goods manufactured or produced by competing organizations. d. Agents and brokers i. sell products for a certain commission or percentage of sales. ii. Agents are authorized by their respective companies to act and decide on their behalf. iii. Examples are real estate agents and insurance agents. 5. Competitors - are rival firms that offer similar goods or services as the organization. - Competitors can be either direct or indirect. - Direct competitors are brands competing in the same industry, offering essentially the same goods or services. - Indirect competitors offer products or services that differ slightly, but with the same benefits. Macroenvironment - The macroenvironment of a firm consists of the various factors which affect not only the firm itself, but also the entire industry of the region or country. - These factors are broader in nature than those of the microenvironment, and are out of the firm's control. Factors of the Macroenvironment 1. Demographics a. refer to characteristics of a population such as age, gender, religion, educational attainment, civil status, geographic location, lifestyle, race, and others. b. Organizations can understand their target customers better by studying their demographics. 2. Economics a. refers to the influence of the purchasing power of the peso on spending patterns, in the context of inflation and other economic forces that may affect the economy. b. A high inflation rate affects both producers and consumers.  c. An increase in the prices of raw materials will mean that either the producers' profit margins will decrease, or they must raise selling prices to compensate. d. As prices increase, purchasing power decreases, meaning that if income remains the same, consumers can purchase fewer goods and services than they were able to prior to inflation. 3. The socio-cultural aspect a. refers to the beliefs, practices, norms, customs, and traditions that may affect business operations. b. Culture has a big impact on how goods and services may be marketed. c. Brands which found success in the Philippines are known to use traditional Filipino values such as hospitality, generosity, and religion in their promotional campaigns. 4. The technological factor a. refers to developments in technology which may affect consumers, businesses, and the society at large. b. For example, banks have made it more convenient to withdraw, pay bills, and check current balances through ATMs, (automated teller machines) and online banking, and these made telegraphic transfers obsolete. c. The Internet has made communication and access to information faster and more efficient, and expanded the ways in which brands can reach out to consumers 5. Political forces a. refer to groups of people or parties which may influence the stability of a country and affect the production, distribution, promotion, and selling of goods and services. b. Legal forces refer to limitations and restrictions that arise from the implementation of legislations and laws which may affect the conduct of business activities. c. There are certain regulations which are enforced upon companies in the conduct of their business. d. Copyright and patent laws enable individuals and entities to protect their ideas and inventions and prevent others from making, using, or selling goods or services based on these ideas and inventions without their consent. e. The government sees to it that products and services undergo quality control to ensure that they meet certain standards. f. It also requires organizations to acquire operational permits, and abide by certain rules and regulations in the treatment of their workers. g. Taxes may place restrictions on certain goods and services and discourage certain behavior. 6. The ecological factors a. refer to all the processes or activities necessary to protect the natural environment while maintaining efficiency of business operations. b. Organizations should ensure that the scale and methods of sourcing their raw materials are sustainable.  c. Rapid expansion puts not only the future of the organization, but also the future of the natural environment at risk. d. Organizations should also properly monitor their operations to ensure that these are conducted properly, safely, and in an environmentally- friendly manner-while minimizing damage done to the environment. e. Governments may encourage such practices by implementing laws and guidelines to protect the natural environment-providing incentives to those who abide by them, and imposing heavy sanctions on violators. f. Among environmentally-conscious consumers, adherence to environmental laws can be used as a selling point, and has even spawned its own movement: eco-capitalism.. 5. Political forces - refer to groups of people or parties which may influence the stability of a country and affect the production, distribution, promotion, and selling of goods and services. - Legal forces refer to limitations and restrictions that arise from the implementation of legislations and laws which may affect the conduct of business activities. - There are certain regulations which are enforced upon companies in the conduct of their business. - Copyright and patent laws enable individuals and entities to protect their ideas and inventions and prevent others from making, using, or selling goods or services based on these ideas and inventions without their consent. - The government sees to it that products and services undergo quality control to ensure that they meet certain standards. - It also requires organizations to acquire operational permits, and abide by certain rules and regulations in the treatment of their workers. - Taxes may place restrictions on certain goods and services and discourage certain behavior. 6. The ecological factors - refer to all the processes or activities necessary to protect the natural environment while maintaining efficiency of business operations. - Organizations should ensure that the scale and methods of sourcing their raw materials are sustainable. - Rapid expansion puts not only the future of the organization, but also the future of the natural environment at risk. - Organizations should also properly monitor their operations to ensure that these are conducted properly, safely, and in an environmentally- friendly manner-while minimizing damage done to the environment. - Governments may encourage such practices by implementing laws and guidelines to protect the natural environment-providing incentives to those who abide by them, and imposing heavy sanctions on violators. - Among environmentally-conscious consumers, adherence to environmental laws can be used as a selling point, and has even spawned its own movement: eco-capitalism..  CHAPTER 6: MARKETING RESEARCH Marketing Research - Collecting and analyzing data to address a specific problem in marketing. Marketing Problem - regarding of products, sales, promotions, [ricing, packaging, etc. - Help reduce risk in decision making to avoid potential loss - Can help update regarding competitors activitiesand strategies through comparative strategies - Help determine the aspects of the business that needs to be changed or improved. PROCESS OF MARKETING RESEARCH 1. State the Objectives 2. Determine the Research Methodology a. May be adapted to the: i. Manner of gathering information: 1. Primary Research 2. Secondary Research ii. Type of Information Gathered 1. Quantitative Research 2. Qualitative Research iii. Type of study 1. Exploratory Research - reaching better understanding 2. Descriptive research - describes 3. Causal Research - Cause and effect 3. Gather Data 4. Interpret the results 5. Present the Results  CHAPTER 7: CONSUMER AND BUSINESS MARKETS Consumer Markets - Composed of individuals purchasing goods and services for personal consumption. - Decisions are influenced by style, colour, variant, and scent, among other factors. Five Stages in Consumer Purchase Decision Process: 1. Recognizing a Need: a. Consumers identify products or brands to satisfy their needs or wants. 2. Searching for Information: a. about a product / service - Information gathered from advertisements, friends, family, and word-of-mouth. 3. Evaluating Available Products / services available a. Consumers review their options based on information and independent judgement. 4. Making the Final Purchase Decision: a. Final decision based on product evaluation but may change due to external factors. 5. After-Purchase Evaluation: a. Consumers evaluate satisfaction, influencing repeat purchases. Factors Influencing Consumer Behaviour: 1. Cultural Factors: a. Beliefs, traditions, and values learned from society. 2. Social Factors: a. Influenced by i. reference groups, ii. Consumer’s social roles, iii. One’s social status 3. Personal Factors: a. Age, lifestyle, occupation, religion, and personality impact choices. 4. Psychological Factors: a. Motivation- the reason that guides one's behavior b. Perception- an individual's unique way of viewing an object or phenomenon. c. Learning- the change in the consumer's behavior and perception of the product or service after availing of it. d. Beliefs or attitudes- the assumptions that a consumer has regarding a product or service. 4. Types of Consumer Buying Behavior: 1. Variety-Seeking Behaviour: a. Low involvement, trying new products or cheaper options. 2. Habitual Buying Behaviour: a. Minimal involvement for routine products like sugar. 3. Dissonance-Reducing Behaviour: a. Involvement after purchase when consumers question their decision. 4. Complex Buying Behavior:  a. High involvement for expensive or significant purchases (e.g., luxury cars). Business Markets - Composed of firms buying goods/raw materials for operations or resale. - Decision-making involves multiple employees due to high costs or complexity. Characteristics of Business Markets: 1. Derived Demand:Driven by consumer demand, leading to increased raw material Purchases. 2. Complexity of Buying Decisions: High financial involvement; formal contracts used for transactions. 3. Professional Purchasing Agents: Experts handle negotiations due to the complexity and risk involved. Business Buying Decision Process: 1. Recognition of a Need: Businesses identify needs and consider launching new products. 2. Determining Product Specifications:Technical experts determine features, size, and production rates. 3. Listing Possible Suppliers: Agents create a list of suppliers based on product specifications. 4. Selection of Supplier: The supplier that meets specifications and offers a reasonable price is chosen. 5. Periodic Review: Regular evaluation of the purchased products' quality and performance. Types of Business Buying Situations: 1. Straight Rebuy: Regular reordering from a supplier with no changes to the specifications. 2. Modified Rebuy: Adjustments to specifications due to issues with previous purchases. 3. New Buy: Extensive research to select a new supplier for a new product or Service. Participants in the Business Buying Process: 1. Users: Determine what products or services are needed. 2. Influencers: Provide expertise on product specifications. 3. Buyers: Professional purchasing agents who negotiate and make decisions. 4. Deciders: Top management with the authority to approve purchases. 5. Gatekeepers: Control the flow of information between the company and suppliers.  CHAPTER 8: TARGET MARKETING TARGET MARKET - a group of people to whom a company intends to sell its products and services. - the primary recipient of the company's marketing efforts. - Identifying the target market helps the company maximize its marketing resources and efforts to attract and retain a loyal group of customers. This is why companies usually spend time, effort, and money to identify their target market. Stages in Target Marketing - Companies and firms undergo three stages in target marketing. 1. market segmentation a. process of dividing consumer markets into smaller groups of consumers. Marketers aim to focus on the specific needs of these consumer groups, and make sure that their products or brands respond to these needs. 2. market targeting a. companies and firms actually select their target markets based on a number of factors, including the resources of the company or firm, the strategies of competitors, and the profitability expected from this specific market. 3. market positioning or product positioning a. companies and firms develop ways to promote and position their brands effectively to their selected segments or target markets. b. Through marketing campaigns, organizations show the uniqueness of their products or brands to consumers. Market Segmentation - During market segmentation, a company or firm essentially breaks down a larger target market into a smaller group of consumers who all share specific characteristics and interests. - Market segmentation is based on a number of factors or variables which are analyzed by companies and firms to understand the needs of their consumers and ensure that their products or brands respond to these needs. Variables in Market Segmentation 1. Demographic variables a. When companies or firms perform market segmentation according to demographic variables, they look at the basic statistical characteristics of consumers. i. Age. ii. Life cycle stage. iii. Gender. iv. Income. v. Religion, race, and nationality.  2. Geographic a. used for dividing consumer markets according to the physical features of a certain area and other related characteristics. i. Climate ii. Population size 3. Psychographic a. include lifestyle patterns, hobbies and interests, beliefs, and personalities of consumers. i. Lifestyle patterns 1. refer to the way of life of customers as influenced by social status, educational background, and culture.Hobbies and interests are also considered in the segmentation of consumer markets. ii. Opinions and beliefs of consumers 1. regarding certain issues and principles are also factors to consider. iii. Personality. 1. marketers create brand personalities to make consumers realize that buying their brand corresponds to the "purchase" of a set of traits associated with it. 4. Behavioristi a. used for dividing consumer markets according to the product usage of consumers and their attitude towards the brand. i. Loyalty 1. When customers are loyal to a brand, this means that they patronize or regularly purchase this single brand. 2. There are three types of consumers based on loyalty: a. hard core loyals, who regularly buy the brand b. soft core loyals, who sometimes patronize another brand c. switchers, who refuse to be loyal to a specific brand and will buy whichever is available. ii. Special occasions iii. Benefits Market Targeting - Once a company has identified possible target segments, the company or firm further examines its potential as an actual target market. The company also deliberates whether it has the resources to cater to that market segment. - This process is known as market targeting. Like market segmentation, market targeting also requires a great amount of resources. Thus, companies make sure that the market segment they will choose by the end of market targeting has the greatest potential for a high rate of sales. Types of Market Targeting Strategies  1. Undifferentiated marketing/mass marketing a. Most companies or firms who perform marketing strategies take note of the segments in consumer markets. b. However, there are also those who deliberately choose not to focus on just one segment. c. These companies perform undifferentiated marketing where they tend to sell a wide variety of products with highly generalized features. d. This strategy, however, makes it difficult for companies to cater to consumers with highly specific needs. e. A company that practices undifferentiated marketing is SM Malls and Supermarkets. SM is known for catering to a wide range of customers. Hence, it sells a wide variety of products, ranging from clothes to food. The prices of these products also vary in terms of prices in order to cater to all income brackets. 2. Differentiated marketing/segment marketing a. Companies who perform differentiated marketing strategies make sure that their products cater to the needs of particular segments in consumer markets. Their products tend to have highly specific features. b. For instance, Cream Silk, one of the brands under Unilever, has variants which are particularly used for certain hair types (e.g., frizzy hair, fine hair, and dry hair). Another example is Nescafe, which has variants tailored for specific types of coffee consumer. For example, three-in-one variants are sold to consumers with fast-paced lives, while the brewed coffee variants cater to those who seek an authentic flavor in their coffee. 3. Concentrated marketing/niche marketing a. Like differentiated marketing, products or services sold through concentrated marketing often have highly specific features. b. However, in concentrated marketing, a company or firm tailors its products or services to only one specific segment. c. This specific segment is called a niche. d. For instance, companies selling luxury cars are not focused on the general automobile consumer market/s. Rather, they sell their products exclusively to car buyers in the upper-income brackets. Market Positioning - After a company or firm has identified its actual target market/s, its products or services must now create a favorable impression on the consumers' minds. This process is called market or product positioning. Companies or firms may perform market positioning based on a number of factors, such as the usability of the product or service, or its features that distinguish it from other brands. Types of Market Positioning Strategies 1. features-based positioning a. marketers sell their brands on the basis of their features. b. For example, 3M Sticky note pads are advertised for their special adhesive feature, which makes them stick to a surface for a long time. 2. use-based positioning a. marketers sell their products or services based on their possible uses or the types of circumstances when they can be used. b. For instance, the advertisements for seasoning brand Magic Sarap focus on how it can be used for various types of dishes. 3. user-based positioning a. marketers advertise their products based on the type of consumer who can benefit from the product. b. For instance, Head and Shoulders shampoo is being marketed as a product for young consumers wanting to have dandruff-free hair. 4. Head-on competitive positioning a. used by market challengers or the "number two" brands in the market. b. For example, Surf is regarded as the number two detergent brand according to the 2016 report by Kantar World panel, an international market research company. Unilever has since used the head-on competitive positioning strategy in marketing Surf. In the advertisements for the product, Surf is positioned as a more effective and cheaper detergent brand compared to the market leader, Tide. 5. lifestyle positioning a. marketers sell their products or services according to the cultural practices or values that their target market/s subscribe to. b. For instance, one of the well-known aspects of Filipino culture is the importance of relationships. This facet of Filipino culture has been highlighted in advertisements for certain brands, such as Coca-Cola. It has been positioned as a brand with products that help strengthen relationships among people.