METO Revision Document - Marketing PDF

METO Revision Document -- Marketing =================================== Contents {#contents.TOCHeading} ======== [METO Revision Document -- Marketing 1](#meto-revision-document-marketing) [What is marketing? 1](#what-is-marketing) [Why is marketing important? 1](#why-is-marketing-important) [Pr...

METO Revision Document -- Marketing =================================== Contents {#contents.TOCHeading} ======== [METO Revision Document -- Marketing 1](#meto-revision-document-marketing) [What is marketing? 1](#what-is-marketing) [Why is marketing important? 1](#why-is-marketing-important) [Process of value creation 1](#process-of-value-creation) [Fundamental vocabulary 1](#fundamental-vocabulary) [Marketing management 1](#marketing-management) [Core concepts and practices 2](#core-concepts-and-practices) [The marketing environment 2](#the-marketing-environment) [Segmentation, targeting, positioning 3](#segmentation-targeting-positioning) [Market Research 5](#market-research) [The Marketing MIX 5](#the-marketing-mix) [Marketing Mix -- Extended version 7](#marketing-mix-extended-version) [Business Model Canvass (BMC) 7](#business-model-canvass-bmc) [Value Proposition (VP) 10](#value-proposition-vp) What is marketing? ------------------ Two levels of marketing: 1. Marketing as knowledge: Strategy 2. Marketing as practice: Tactics Marketing is the process by which organisation create value for customers, to receive value from them in return. Marketing is about identifying and meeting human and social needs. Why is marketing important? --------------------------- Financial success often depends on marketing ability Successful marketing builds demand for products and services, which in turn, creates jobs Marketing builds strong brands and a loyal customer base, intangible assets that contribute heavily to the value of a firm. Process of value creation ------------------------- 1. Choosing the value (segmentation, targeting and positioning) 2. Providing the value (4 Ps: product, price, place) 3. Communicating the value (4 Ps: promotion) Fundamental vocabulary ---------------------- Needs: the basic human requirements such as for air, food, water, clothing and shelter Wants: specific objects that might justify the need Demand: wants for specific products backed by ability to pay Value, satisfaction, quality Exchange, transactions, relationships Markets, marketing systems Marketing management -------------------- Art and science of choosing target markets and getting, keeping and growing customers through creating, delivering and communicating superior customer value. - Developing market strategies and plans - Captuing marketing insights - Connecting with customers - Building strong brand - Creating, delivering and communicating value - Creating successful long-term growth Core concepts and practices --------------------------- ### The marketing environment Understanding Opportunities and Threats: - Opportunities: Identifying new market trends, customer needs, and technological advancements that can be leveraged. - Threats: Recognizing potential challenges such as new competitors, regulatory changes, and economic downturns. Strategic Decision-Making: - Informed Decisions: Making strategic decisions based on a thorough understanding of the external environment. - Adaptability: Being able to adapt marketing strategies to changing environmental conditions. Competitive Advantage: - Proactive Approach: Staying ahead of competitors by anticipating changes and responding swiftly. - Customer Focus: Aligning marketing strategies with customer preferences and behaviors. How Can We Analyze the Marketing Environment? 1. PESTEL Analysis: 2. SWOT Analysis: 3. Porter\'s Five Forces: Recent Marketing Realities Digital Transformation: - E-commerce Growth: The rise of online shopping and digital marketplaces. - Social Media: Increasing importance of social media platforms for marketing and customer engagement. - Data Analytics: Use of big data and analytics to understand customer behavior and personalize marketing efforts. Consumer Behaviour Changes: - Health and Wellness: Growing focus on health, wellness, and sustainability. - Experience Economy: Shift towards valuing experiences over products. - Ethical Consumption: Increased demand for ethically produced and environmentally friendly products. Technological Advancements: - Artificial Intelligence: Use of AI for personalized marketing, chatbots, and customer service. - Augmented Reality (AR) and Virtual Reality (VR): Enhancing customer experiences through immersive technologies. - Internet of Things (IoT): Connecting products and services to the internet for better customer insights and experiences. ### Segmentation, targeting, positioning **Explanation of Market Segmentation** **Market Segmentation** is the process of dividing a broad consumer or business market into sub-groups of consumers (known as segments) based on shared characteristics. This allows companies to target specific groups more effectively and tailor their marketing strategies to meet the unique needs of each segment. **Methods for Segmentation with Examples** **1. Demographic Segmentation:** - **Definition**: Dividing the market based on demographic variables such as age, gender, income, education, occupation, and family size. - **Example**: A clothing retailer targeting different age groups with specific product lines (e.g., children\'s clothing, teen fashion, adult workwear). **2. Geographic Segmentation:** - **Definition**: Dividing the market based on geographic areas such as countries, regions, cities, or neighborhoods. - **Example**: A fast-food chain offering region-specific menu items to cater to local tastes (e.g., McDonald\'s offering different menu items in different countries). **3. Psychographic Segmentation:** - **Definition**: Dividing the market based on lifestyle, personality traits, values, opinions, and interests. - **Example**: A fitness brand targeting health-conscious consumers who prioritize an active lifestyle. **4. Behavioral Segmentation:** - **Definition**: Dividing the market based on consumer behaviors such as purchase history, brand loyalty, usage rate, and benefits sought. - **Example**: A software company offering different subscription plans based on usage levels (e.g., basic, premium, enterprise). **Examining and Selecting Market Segments** **1. Identifying Segments:** - **Research**: Conduct market research to identify potential segments based on the chosen segmentation criteria. - **Data Analysis**: Analyze data to understand the characteristics and needs of each segment. **2. Evaluating Segments:** - **Size and Growth**: Assess the size and growth potential of each segment. - **Profitability**: Evaluate the potential profitability of targeting each segment. - **Accessibility**: Determine how easily the segment can be reached and served. - **Compatibility**: Ensure the segment aligns with the company\'s objectives and resources. **3. Selecting Segments:** - **Targeting Strategy**: Choose a targeting strategy (e.g., undifferentiated, differentiated, concentrated, or micromarketing) based on the evaluation. - **Positioning**: Develop a positioning strategy to differentiate the product or service in the selected segments. **Examples of Market Segments** - **Age Groups**: Children, teenagers, young adults, middle-aged adults, seniors. - **Income Levels**: Low-income, middle-income, high-income. - **Geographic Areas**: Urban, suburban, rural. - **Lifestyle**: Health-conscious, environmentally conscious, tech-savvy, luxury seekers. - **Usage Rate**: Light users, medium users, heavy users. **Characteristics of Good Segments** **Measurable:** - The size, purchasing power, and characteristics of the segment can be measured. **Accessible:** - The segment can be effectively reached and served through marketing and distribution channels. **Substantial:** - The segment is large and profitable enough to warrant targeted marketing efforts. **Differentiable:** - The segment is distinct and responds differently to different marketing strategies. **Actionable:** - The company can develop effective marketing programs to attract and serve the segment. ### ### Market Research Any organised effort to gather information about target markets or customers. - Provides information to identify and analyse the market need, size & competition, segmentation & marketing mix - Important component of business strategy & maintaining competitiveness - Should be a key component of the marketing budget Methods 1. Primary data (gathered for specific purpose) a. Qualitative techniques (focus group, interviews, \...) b. Quantitative techniques (customer surveys, \...) 2. Secondary data (readily available) ### The Marketing MIX #### 1. Product: - **Definition**: The goods or services offered by a business to meet customer needs and wants. **Types of Products:** - **Non-Durable Goods**: Products consumed quickly and need to be purchased frequently. - **Example**: Food items, beverages, toiletries. - **Durable Goods**: Products that last for a long time and do not need to be purchased frequently. - **Example**: Appliances, cars, furniture. - **Services**: Intangible products that cannot be stored and are consumed at the point of delivery. - **Example**: Haircuts, legal advice, education. **Servitisation:** - **Definition**: The process of adding services to traditional product offerings to create additional value. - **Example**: A company selling machinery also offering maintenance and repair services. **Product Decisions:** - **Product Design**: Creating products that meet customer needs and preferences. - **Branding**: Developing a strong brand identity to differentiate products. - **Packaging**: Designing packaging that protects the product and attracts customers. - **Product Lifecycle**: Managing the stages a product goes through from introduction to decline. #### 2. Price: - **Definition**: The amount of money customers must pay to acquire a product or service. **Pricing Mechanisms:** - **Cost-Plus Pricing**: Adding a markup to the cost of producing the product. - **Value-Based Pricing**: Setting prices based on the perceived value to the customer. - **Competition-Based Pricing**: Setting prices based on competitors\' pricing strategies. - **Dynamic Pricing**: Adjusting prices based on real-time demand and supply conditions. **Setting a Pricing Policy:** - **Objectives**: Defining pricing objectives such as maximizing profit, increasing market share, or achieving a target return on investment. - **Factors to Consider**: Costs, customer demand, competition, and legal regulations. - **Strategies**: Penetration pricing (low initial price to gain market share), skimming pricing (high initial price to maximize profit from early adopters), and psychological pricing (pricing that considers the psychological impact on customers). #### 3. Place: - **Definition**: The distribution channels used to deliver the product to customers. **Marketing Channels:** - **Direct Channels**: Selling directly to customers without intermediaries. - **Example**: Online stores, company-owned retail outlets. - **Indirect Channels**: Using intermediaries such as wholesalers, distributors, and retailers to reach customers. - **Example**: Supermarkets, department stores. - **Multi-Channel Distribution**: Combining direct and indirect channels to reach a wider audience. - **Example**: A company selling products both online and through retail partners. **Place Decisions:** - **Channel Selection**: Choosing the most effective channels to reach target customers. - **Distribution Intensity**: Deciding on the level of distribution coverage (intensive, selective, or exclusive). - **Logistics**: Managing the transportation, warehousing, and inventory of products. #### 4. Promotion: - **Definition**: The activities used to communicate the product\'s value and persuade customers to purchase. **Developing Effective Communications:** - **Integrated Marketing Communications (IMC)**: Coordinating various promotional tools to deliver a consistent message. - **Promotional Mix**: Combining different promotional tools such as advertising, sales promotion, public relations, personal selling, and direct marketing. - **Advertising**: Using paid media to reach a large audience. - **Example**: TV commercials, online ads. - **Sales Promotion**: Short-term incentives to encourage purchases. - **Example**: Discounts, coupons, contests. - **Public Relations**: Building a positive image and managing relationships with the public. - **Example**: Press releases, sponsorships. - **Personal Selling**: Direct interaction between sales representatives and customers. - **Example**: Sales presentations, trade shows. - **Direct Marketing**: Communicating directly with targeted customers to generate a response. - **Example**: Email marketing, telemarketing. ### Marketing Mix -- Extended version Added 4 extra Ps for: 1. People 2. Process 3. Physical Evidence 4. Productivity Business Model Canvass (BMC) ---------------------------- The Business Model Canvas is a strategic management tool that allows you to visualize and develop your business model. It consists of nine building blocks: A screenshot of a computer Description automatically generated **1. Customer Segments:** - **Definition**: The different groups of people or organizations a business aims to reach and serve. - **Prompts**: - Who are our most important customers? - What are the characteristics of each customer segment? - What are their needs and preferences? **2. Value Propositions:** - **Definition**: The unique value a business offers to its customers, solving a problem or fulfilling a need. - **Prompts**: - What value do we deliver to the customer? - Which customer problems are we solving? - What bundles of products and services are we offering? **3. Channels:** - **Definition**: The means by which a company delivers its value proposition to its customer segments. - **Prompts**: - Through which channels do our customers want to be reached? - How are we reaching them now? - How are our channels integrated? **4. Customer Relationships:** - **Definition**: The types of relationships a company establishes with its customer segments. - **Prompts**: - What type of relationship does each customer segment expect? - How are these relationships integrated with the rest of our business model? - How costly are these relationships? **5. Revenue Streams:** - **Definition**: The ways a company generates income from each customer segment. - **Prompts**: - For what value are our customers really willing to pay? - How are they currently paying? - How would they prefer to pay? **6. Key Resources:** - **Definition**: The most important assets required to make a business model work. - **Prompts**: - What key resources do our value propositions require? - What resources are needed for our distribution channels, customer relationships, and revenue streams? **7. Key Activities:** - **Definition**: The most important actions a company must take to operate successfully. - **Prompts**: - What key activities do our value propositions require? - What activities are needed for our distribution channels, customer relationships, and revenue streams? **8. Key Partnerships:** - **Definition**: The network of suppliers and partners that help the business model function. - **Prompts**: - Who are our key partners? - Who are our key suppliers? - Which key resources are we acquiring from partners? **9. Cost Structure:** - **Definition**: The major costs involved in operating a business model. - **Prompts**: - What are the most important costs inherent in our business model? - Which key resources and activities are the most expensive? **BMW Business Model Canvas** **1. Customer Segments:** - High-income individuals seeking luxury and performance vehicles. - Environmentally conscious consumers interested in electric and hybrid models. - Corporate clients requiring fleet vehicles. **2. Value Propositions:** - High-quality, luxury vehicles with advanced technology and performance. - Innovative electric and hybrid vehicles for sustainable driving. - Customization options for a personalized driving experience. **3. Channels:** - BMW dealerships and showrooms. - Online sales and virtual showrooms. - Authorized service centers and workshops. **4. Customer Relationships:** - Personalized customer service and support. - Loyalty programs and exclusive events for BMW owners. - Online communities and social media engagement. **5. Revenue Streams:** - Vehicle sales (new and pre-owned). - Leasing and financing options. - After-sales services, including maintenance and repairs. **6. Key Resources:** - Advanced manufacturing facilities and technology. - Skilled workforce and R&D teams. - Strong brand and marketing capabilities. **7. Key Activities:** - Vehicle design, manufacturing, and assembly. - Research and development for new technologies. - Marketing and sales activities. **8. Key Partnerships:** - Suppliers of automotive parts and components. - Technology partners for advanced vehicle features. - Dealership networks and service providers. **9. Cost Structure:** - Manufacturing and production costs. - R&D expenses for new vehicle models and technologies. - Marketing and distribution costs. Value Proposition (VP) ---------------------- Value proposition sentence format: - To the (customer) - Who wants to (problem faced) - XYZ is the only company that can (solution) - Through our (offering/identity) - Because (competitive advantage/differentiation) **Example: BMW** - **To the** discerning, high-income individuals - **Who want to** experience luxury, performance, and cutting-edge technology in their vehicles - **BMW is the only company that can** deliver a seamless blend of high-performance engineering and luxurious comfort - **Through our** innovative vehicle designs and premium craftsmanship - **Because** of our commitment to excellence, advanced technology, and a legacy of automotive innovation **Tips for Creating a Value Proposition** - **Identify Your Target Customer**: Clearly define who your product or service is for. - **Understand Their Problem**: Know the specific problem or need your target customer faces. - **Highlight Your Unique Solution**: Explain how your product or service uniquely solves the problem. - **Showcase Your Offering**: Describe what you offer and how it addresses the customer's needs. - **Emphasize Your Differentiation**: Highlight what sets you apart from competitors and why customers should choose you.