Principles of Marketing PDF

11/19/2024 PRINCIPLES OF MARKETING Prepared by: Dr. Mahmood Aldobali WHAT IS MARKETING? The process of identifying, anticipating, and satisfying customer needs and wants through...

11/19/2024 PRINCIPLES OF MARKETING Prepared by: Dr. Mahmood Aldobali WHAT IS MARKETING? The process of identifying, anticipating, and satisfying customer needs and wants through the creation, promotion, and distribution of goods and services. 1  11/19/2024 WHAT IS MARKETING? Marketing is managing profitable customer relationships — Attracting new customers — Retaining and growing current customers “Marketing” is NOT synonymous with “sales "or “advertising” KEY ELEMENTS OF MARKETING 1 2 3 Identification Anticipation Satisfaction Understanding who Predicting future Delivering products the potential customer needs based and services that customers are and on market trends. meet or exceed what they need. customer expectations. 2  11/19/2024 COURSE OBJECTIVES By the end of this course, students will be able to: 1. Understand fundamental marketing concepts and principles. 2. Analyze consumer behavior and market dynamics. 3. Conduct market research and interpret findings. 4. Develop effective marketing strategies and plans. 5. Apply the marketing mix to real-world scenarios. 6. Understand the ethical considerations in marketing. THE MARKETING PROCESS 3  11/19/2024 The marketing process 1. Understanding the marketplace and consumer needs 4  11/19/2024 Core Customer and Marketplace Concepts Needs, Wants, and Demands Marketing Offers Value and Satisfaction Exchange, Transactions, and Relationships Markets 5  11/19/2024 Needs, Wants, and Demands Needs A state of felt deprivation. The basic human requirements. Wants The form taken by a human needs is shaped by culture and individual personality. Wants are described in terms of objects that will satisfy needs. Demands Human wants that are backed by buying power Needs, Wants, and Demands People need food, air, water, clothing, and shelter to survive. People have strong needs for creation, education, and entertainment. The above needs become wants when they are directed to specific objects that might satisfy the need. An American needs food but may want a hamburger, French fries, and a soft drink. A person in Mauritius needs food but may want a mango, rice, lentils, and beans. Wants are shaped by one's society and are described in terms of objects that will satisfy needs. Demands are wanted for specific products backed by an ability to pay. Many people want a Mercedes; only a few are willing and able to buy one. 6  11/19/2024 Marketing Offers Some combination of products, services, information, or experiences offered to a market to satisfy a need or want. Marketing offers also include persons, places, organizations, and ideas. Marketing Myopia? Focus only on existing wants and lose sight of underlying customer needs. Forgetting the fact that the product is only the tool to solve a consumer problem. Customer Value and Satisfaction Key building blocks for developing and managing customer relationships Customer Value is the difference between the values the customer gains from owning and using the product and the costs of obtaining the product Customer Satisfaction is the extent to which a product’s perceived performance matches a buyer’s expectation 7  11/19/2024 Markets “The set of all actual and potential buyers of a product or service.” Types of Market: Pure competition: Many buyers and many seller trading in a uniform commodity e.g. wheat, vegetables etc. Monopolistic competition: Many buyers and sellers who trade over a range of prices. Oligopolistic competition: Few sellers who are highly sensitive to each other pricing and marketing strategies. Pure Monopoly: Market consist of one seller. Exchange, Transactions, and Relationships Exchange The act of obtaining a desired object from someone by offering something in return. Transactions A trade of values between two parties 8  11/19/2024 2. Designing a Customer Driven Marketing Strategy Targeting: Selecting the segment or segments to enter. Positioning: Differentiating and positioning the market offering in the minds of target customers. Value Proposition: Defining the benefits or values that the company promises to deliver to customers to satisfy their needs. 9  11/19/2024 3. Constructing an Integrated Marketing Program Marketing Mix (4 Ps) Product: Creating a product that meets the needs of the target market. Price: Setting a price that reflects the value of the product and is acceptable to the target market. Place (Distribution): Making the product available to customers in a convenient way. Promotion: Communicating the value of the product to the target market through advertising, sales promotion, public relations, and personal selling. 10  11/19/2024 4. Building Profitable Customer Relationships Customer Relationship Management (CRM) Using data to understand customers better and to create tailored interactions that build strong, long-term relationships. Customer Satisfaction and Loyalty: Ensuring that customers are satisfied with their purchase experience and become loyal advocates for the brand. 11  11/19/2024 5. Capturing Value from Customers Capturing Value from Customers Customer Lifetime Value: Estimating the total value a customer brings to the company over their lifetime. Customer Equity: The total combined customer lifetime values of all the company’s customers. 12 11/19/2024 13  11/19/2024 Unit 2: Strategic Marketing and Planning Prepared by: Dr. Mahmood Aldobali In this unit, we will explore the strategic aspects of marketing and how organizations Overview of plan their marketing activities to achieve their business objectives. Topics include Unit 2 marketing environment analysis, SWOT analysis, strategic planning, marketing planning, and the development of mission statements and objectives. 14  11/19/2024 Marketing Internal Environment Company’s resources, capabilities, and performance. Environment Analysis External Environment Economic, social, technological, competitive, and regulatory factors. Marketing Environment Analysis involves assessing Microenvironment both the internal and Customers, competitors, suppliers, intermediaries, and external factors that affect publics. marketing decisions. Macroenvironment This includes: Demographic, economic, natural, technological, political, and cultural forces. SWOT Analysis S - STRENGTHS W - WEAKNESSES Internal attributes that are Internal attributes that are helpful to achieving the harmful to achieving the objective. objective. O - OPPORTUNITIES T - THREATS External factors that the External factors that could organization can exploit to its cause trouble for the advantage. organization. 15  11/19/2024 SWOT Analysis Defining the Company Mission 1 Strategic Planning and This sentence contains information related What is our business? Who is the customer? What do to the title consumers value?. Marketing Planning Setting Company Objectives and Goals Strategic Planning involves 2 What do we want to accomplish? developing a long-term vision This sentence contains information related and objectives for the to the title organization, while Marketing Designing the Business Portfolio Planning focuses on creating 3 Which businesses to enter, exit, or invest in. detailed marketing plans to achieve these objectives. This Planning sentence contains Marketing and Otherinformation related Functional Strategies Steps include: 4 to the title Developing marketing plans to support strategic objectives. 16  11/19/2024 Mission Statements and Objectives Mission Statements define the organization's purpose and direction. Effective mission statements are: Market-Oriented: Focused on satisfying basic customer needs. Realistic: Achievable given the company’s resources and environment. Specific: Provide direction and clear objectives. Motivating: Inspire employees and stakeholders. Objectives should be SMART: 17  11/19/2024 Summary of Unit 2 In this unit, we covered: ❑ Marketing Environment Analysis: Assessing internal and external factors. ❑ SWOT Analysis: Identifying strengths, weaknesses, opportunities, and threats. ❑ Strategic Planning: Developing long-term vision and objectives. ❑ Marketing Planning: Creating detailed marketing plans. ❑ Mission Statements and Objectives: Defining purpose and setting achievable goals. Unit 3 Market Research Prepared by: Dr. Mahmood Aldobali 18  11/19/2024 In this unit, we will delve into the role and importance of market research in Overview of marketing. Topics include the research Unit 3 process, various research methods, data collection techniques, and how to analyze and interpret data to make informed marketing decisions. Role of Market 01 Identify market opportunities and threats. Research 02 Make informed marketing decisions. Market research is essential for understanding 03 Develop effective marketing consumer needs, preferences, and behavior. It strategies. helps businesses: 04 Monitor market trends and competition. 05 Reduce risks and uncertainties. 19  11/19/2024 PROCESS OF MARKETING RESEARCH Research methods Exploratory Research Descriptive Research Causal Research To describe To determine To explore new characteristics of a cause-and-effect ideas and insights. market or relationships. phenomenon. 20  11/19/2024 Data Collection Techniques Data collection can be done using qualitative and quantitative techniques: Qualitative Data Collection: Focus Groups: In-depth discussions with a small group of people. Interviews: One-on-one conversations to gather detailed information. Observations: Watching and recording consumer behavior. Quantitative Data Collection: Surveys: Structured questionnaires with closed-ended questions. Experiments: Controlled tests to determine cause-and-effect. Secondary Data: Existing data from external sources like reports, studies, and databases. Analyzing and Interpreting Data 21  11/19/2024 Analyzing and Interpreting Data Data analysis involves examining raw data to find patterns and draw conclusions. Key steps include: Data Cleaning: Remove errors and inconsistencies. Data Coding: Categorize and label data. Data Analysis: Use statistical methods to analyze data. Data Interpretation: Make sense of the data and extract insights. Tools and techniques used in data analysis: Statistical Software: SPSS, SAS, R, etc. Data Visualization: Charts, graphs, and dashboards. Multivariate Analysis: Techniques like regression, factor analysis, and cluster analysis. Summary of Unit 3 In this unit, we covered: ❑ The role and importance of market research. ❑ The research process and different research methods. ❑ Qualitative and quantitative data collection techniques. ❑ Analyzing and interpreting data to make informed marketing decisions. 22  11/19/2024 Unit 4: Consumer Behavior Prepared by: Dr. Mahmood Aldobali In this unit, we will delve into the psychology behind consumer behavior and Overview of the various factors that influence consumers' purchasing decisions. Topics Unit 4 include understanding consumer behavior, factors influencing consumer behavior, the consumer decision-making process, and psychological and social influences on consumer behavior. 23  11/19/2024 The global success of Lenovo is rooted in its deep and sound understanding of customers and its ability to build profitable relationships. The business model is thus built on customer satisfaction, innovation, and operational efficiency Understanding Motivation The drive behind consumer actions, such as needs and Consumer desires. Behavior Perception How consumers interpret information and form opinions. Consumer behavior refers to the actions and decision- Learning making processes of Changes in behavior based on experience. consumers as they purchase goods and services. Attitudes and Beliefs Key aspects include: Pre-existing opinions that influence buying decisions. 24  11/19/2024 Factors Influencing Consumer Behavior Various factors influence consumer behavior, including: Cultural Factors: Culture, subculture, and social class. Social Factors: Family, roles, status, and reference groups. Personal Factors: Age, occupation, lifestyle, economic situation, and personality. Psychological Factors: Motivation, perception, learning, beliefs, and attitudes. Consumer Decision-Making Process The consumer decision-making process involves several stages: 1. Need Recognition: Identifying a need or problem. 2. Information Search: Gathering information about potential solutions. 3. Evaluation of Alternatives: Comparing different products or services. 4. Purchase Decision: Deciding on the product to buy. 5. Post-Purchase Behavior: Reflecting on the purchase decision and its outcomes. 25  11/19/2024 Model of consumer buying behavior Psychological Influences PSYCHOLOGICAL INFLUENCES play a crucial role in shaping consumer behavior. These include: Perception: How consumers perceive information and form opinions. Motivation: The internal drive that pushes consumers toward certain actions. Learning: The process of acquiring knowledge and experience. Beliefs and Attitudes: Established thoughts and feelings toward products or brands. 26  11/19/2024 Social Influences SOCIAL INFLUENCES also significantly impact consumer behavior. Key social influences include: These include: Family: Family members play a vital role in influencing purchasing decisions. Reference Groups: Groups of people that consumers look to for guidance or approval. Roles and Status: The role a person plays in society and their status within groups. The Hierarchy of Needs According to Maslow, human needs are arranged in a hierarchy. Starving people will take little interest in the latest happenings in the art world. 27  11/19/2024 Key Concepts PERCEPTION COMPLEX BUYING BEHAVIOR The process by which people select, organize, and interpret Consumer buying behavior in situations characterized by information to form a meaningful picture of the world. high consumer involvement in a purchase and significant perceived differences among brands. LEARNING Changes in an individual’s behavior arising from experience. DISSONANCE-REDUCING BUYING BEHAVIOR Consumer buying behavior in situations characterized by high involvement but few perceived differences among BELIEF brands. A descriptive thought that a person holds about something. HABITUAL BUYING BEHAVIOR ATTITUDE Consumer buying behavior in situations characterized by A person’s consistently favorable or unfavorable evaluations, low consumer involvement and few significant feelings, and tendencies toward an object or idea. perceived brand differences. Summary of Unit 4 In this unit, we covered: ❑ Understanding Consumer Behavior: Key concepts and theories. ❑ Factors Influencing Consumer Behavior: Cultural, social, personal, and psychological influences. ❑ Consumer Decision-Making Process: Stages in the buying process. ❑ Psychological and Social Influences: How these factors shape consumer behavior. 28  11/19/2024 Unit 5: Market Segmentation, Targeting, and Positioning (STP) Prepared by: Dr. Mahmood Aldobali In this unit, we will explore how businesses divide their market into segments, select Overview of which segments to target, and position their products or services to appeal to Unit 5 those segments. The STP process is essential for creating marketing strategies that effectively meet the needs of specific consumer groups. 29  11/19/2024 Market Geographic Segmentation Dividing the market based on location, such as region, Segmentation city, or climate. Demographic Segmentation Market Segmentation is the process Dividing the market based on age, gender, income, of dividing a market into distinct education, or family size. groups of buyers with different needs, characteristics, or behaviors. Segmentation allows Psychographic Segmentation companies to target specific Dividing the market based on lifestyle, values, or personality traits. groups more effectively. Behavioral Segmentation The main segmentation bases Dividing the market based on consumer behavior, such include: as usage rate, brand loyalty, or benefits sought. Evaluating Market Segments Segment Size and Growth Is the segment large and growing? After identifying potential market segments, businesses must Segment Structural Attractiveness evaluate each segment’s Are there strong competitors, powerful suppliers, or attractiveness. substitute products? Key criteria include: Company Objectives and Resources Does the segment align with the company’s objectives, and does the company have the resources to serve it effectively? 30  11/19/2024 Target Market ❑ Undifferentiated Marketing: Ignoring segment differences and targeting the whole Selection market with one offer. ❑ Differentiated Marketing: Target Market Selection involves Targeting several market segments with a different choosing one or more segments to offer for each. serve. ❑ Concentrated Marketing Focusing on a large share of one or a few smaller The main strategies include: segments. ❑ Micromarketing: Tailoring products and marketing programs to suit the tastes of specific individuals or locations. Positioning ❑ Product Attributes: Highlighting the features of the product. Strategies ❑ Benefits Offered: Focusing on the benefits or solutions provided by the Positioning is the process of product. arranging for a product to occupy a ❑ Usage Occasions: clear, distinctive, and desirable Associating the product with specific occasions or uses. place in the minds of target consumers. ❑ User Category: Positioning the product as best suited for a particular type of user. Effective positioning strategies include: ❑ Against Competitors: Positioning the product as superior to competitors. 31  11/19/2024 Differentiation Product Differentiation Offering superior features, performance, or style. Strategies Service Differentiation Providing superior customer service or convenience. Differentiation is about creating a unique offering that stands out from Channel Differentiation competitors. Offering unique distribution channels or partnerships. Key differentiation strategies include: Image Differentiation Building a strong brand image or reputation. Summary of Unit 5 In this unit, we covered: ❑ Market Segmentation: Dividing the market into distinct groups. ❑ Evaluating Market Segments: Assessing the attractiveness of each segment. ❑ Target Market Selection: Choosing which segments to target. ❑ Positioning Strategies: Establishing a unique position in the market. ❑ Differentiation Strategies: Creating a distinctive offering that stands out. 32  11/19/2024 THANK YOU Unit 6: Product and Brand Management Prepared by: Dr. Mahmood Aldobali 33  11/19/2024 Understand the stages of the Product Life Cycle (PLC). Learning Explore the new product development process. Objectives of Learn about branding strategies and brand Unit6: equity. Understand product portfolio management using the BCG matrix. Definition: A product can be a good, service, or experience offered to the market. Product Levels: Introduction Core product: The primary benefit (e.g., a to Product smartphone allows communication). Actual product: The tangible aspects (e.g., design, Management features). Augmented product: Additional benefits (e.g., warranty, customer service). 34  11/19/2024 Stages: Introduction: Launch of the product, low Product Life sales, high marketing costs. Growth: Rapid market acceptance, Cycle (PLC) increasing profits. Maturity: Sales peak, competition increases. Decline: Sales decline, product may be discontinued. Product Life Cycle (PLC) 35  11/19/2024 Introduction: Heavy promotion, Marketing focus on awareness. Growth: Enhance distribution, Strategies at improve product features. Each PLC Maturity: Differentiation, price competition. Stage Decline: Cut costs, consider product discontinuation. Idea Generation: Brainstorming new product ideas. Screening: Evaluating ideas for feasibility. Concept Development and Testing: Refining and New Product testing product concepts. Market Strategy: Defining target market and Development marketing mix. Product Development: Prototyping and technical Process development. Commercialization: Launching the product into the market. 36  11/19/2024 Family Branding: One name for multiple Branding products (e.g., Apple). Individual Branding: Unique brand names Strategies for each product (e.g., P&G’s Tide, Pampers). Brand Extensions: Expanding the brand into new categories (e.g., Dove's deodorants and soaps). Brand Equity Components: Brand Awareness: Consumers recognize and recall the brand. Brand Equity Perceived Quality: The customer’s perception of product quality. Brand Loyalty: Commitment to repurchasing the brand. Brand Associations: Mental connections with the brand. Example: Apple has high brand equity through innovation, loyalty, and premium positioning. 37  11/19/2024 BCG Matrix: A tool for managing a company’s product portfolio. Stars: High growth, high market share (e.g., iPhone). Cash Cows: Low growth, high market share (e.g., Coca- Product Cola). Question Marks: High growth, low market share (e.g., Portfolio new product launches). Dogs: Low growth, low market share (e.g., outdated Management products). Product Portfolio Management 38  11/19/2024 Boston Consulting Group (BCG) Matrix Overview The BCG Matrix is a strategic tool used to analyze a company’s portfolio of products or business units. It was developed by the Boston Consulting Group to help companies decide where to allocate resources by categorizing products based on market growth and relative market share. The matrix divides products into four categories: Product 1. Stars: High growth, high market share. o These products are leaders in a fast-growing market. They generate significant revenue and require investment to maintain or grow market leadership. Portfolio 2. Cash Cows: Low growth, high market share. These products are leaders in a slow-growing market. They generate stable and substantial Management o cash flows with little need for investment. 3. Question Marks (Problem Child): High growth, low market share. o These products operate in high-growth markets but with low market share. They require significant investment to grow market share, but their future is uncertain. 4. Dogs: Low growth, low market share. o These products are in declining markets and hold little market share. They often generate low profits and may eventually be divested. How to Use the BCG Matrix Horizontal Axis (Market Share): Reflects the relative market share of the product or business unit compared Product to competitors. Portfolio Vertical Axis (Market Growth Rate): Indicates the growth potential of the market. Management Companies use this matrix to: Identify which products or units to invest in (Stars and Question Marks), Maintain or "milk" (Cash Cows), Divest or discontinue (Dogs). 39  11/19/2024 In this unit, we covered: The stages of the Product Life Cycle Summary of (PLC). Unit 6: The new product development process. Branding strategies and brand equity. Product portfolio management using the BCG matrix. All the best 40