Marketing Theory PDF

Table of content [[Definitions] 2](#definitions) [[History of marketing] 2](#history-of-marketing) [[Types of marketing] 3](#types-of-marketing) [[Needs, wants and marketing demand] 3](#needs-wants-and-marketing-demand) [[What does a marketer?] 3](#what-does-a-marketer) [[The marketing exchang...

Table of content [[Definitions] 2](#definitions) [[History of marketing] 2](#history-of-marketing) [[Types of marketing] 3](#types-of-marketing) [[Needs, wants and marketing demand] 3](#needs-wants-and-marketing-demand) [[What does a marketer?] 3](#what-does-a-marketer) [[The marketing exchanges] 4](#the-marketing-exchanges) [[Macro-environment] 4](#macro-environment) [[PESTEL -- macro environment analysis] 4](#pestel-macro-environment-analysis) [[Competitive analysis with Porter's 5 forces/strengths] 5](#competitive-analysis-with-porters-5-forcesstrengths) [[Competitive analysis] 6](#competitive-analysis) [[The market] 6](#the-market) [[The market from a demand perspective] 6](#the-market-from-a-demand-perspective) [[The different levels of a market] 7](#the-different-levels-of-a-market) [[Measuring the market] 7](#measuring-the-market) [[Market classes] 8](#market-classes) [[The FMCG market] 8](#the-fmcg-market) [[Competition] 9](#competition) [[Strategic marketing] 9](#strategic-marketing) [[Phases of strategic marketing:] 10](#section) [[Segmentation] 10](#segmentation) Definitions =========== - Marketing is a function and a set of methods within a company - **The goal of marketing is to meet the needs and desires of consumers in a more relevant way than competitors (other firms)** - **The Goal of marketing is to know and understand the consumer so precisely that the product fits perfectly and sell itself. (=\> personal branding)** - **Marketing can be defined as the analysis of consumer needs and all the processes used by organizations to influence their behavior.** - Marketing is the ability of a company to generate economies of scale (huge savings) by spreading advertising and marketing costs over a larger output (more product). =\> Reducing marketing costs by dividing them between a larger amount of product. - **Marketing creates value by satisfying the customer by offering him what he expresses and what he desires** - Marketing is not only for company to make more profit **Marketing is:** - **Action =\>** the conquest of the market - **Analysis =\>** understanding the market - **A system of thoughts =\>** a state of mind **Any marketing approach begins with an analysis phase.** It's very important to start with an analysis phase because without that it would surely go bankruptcy. It is also important to say that **everyone does marketing**, firms, NGO, states, political parties, goods, services, events, persons, places, properties, organization, ideas. History of marketing ==================== - It begins on WW1 when the USA declared war on Germany. At that time, the government start using propaganda to convince men to go on war. **The success of propaganda techniques opened the way of marketing. They thought they could do this to convince people in general life and not only in war time.** Then propaganda became public relations, the ancestor of marketing. - **Before people were buying only what they need because they didn't have access in more product because of the production who was low and not very varied. Once the production increased, buying became a desire and not only a need.** - in 1960, they were a lot of new company ("les 30 glorieuses"). Companies were producing way too much than what people could buy. So, they were faced with competition between them. In conclusion they were forced to find a way to stand out from other firms (now come marketing). - in 1981, companies introduce the concept of loyalty program (super card,...). American Airlines was the one who introduced the concept. Types of marketing ================== - **mass marketing** is aiming everyone. (newspaper and tv are also for segmented) - **segmented marketing** is trying to get a specific group of people - **one-to-one marketing**: its change by the person you trying to get (it would be different for Pierrot and for Lola) We can get segmented marketing in tv by choosing a specific hour to put the ad. In example, putting an advertising in the afternoon would be more aimed to stay-at-home moms and old people. Needs, wants and marketing demand ================================= - **Basics needs** are natural and necessary for our survival (clothes, food, water, shelter,) - **Desires/wants are shaped by our environment, our culture and society** (buying brands, phones,) - **The demand is when the need and desire can be fulfilled by a purchase or a consumption.** **In conclusion, Marketing does not create needs, but it influences the desire of consumers and pushes them to fulfilled them by buying the desired product or service.** What does a marketer? ===================== A marketer is someone who seeks a response -- attention, a purchase, a vote, a donation -- another party. They are skilled at stimulating demand for their products. They also seek to influence the level, timing and composition of demand to meet the organization's objectives. **The 5 levels of Maslow's Pyramid** The marketing exchanges ======================= In marketing, we can describe the market as a collection of buyer and sellers who negotiate transactions that involve a particular product. They are five basic markets: 1. Resources markets 2. Manufacturer markets 3. Intermediary markets 4. Consumer markets 5. Government markets To summary, manufacturers go to resources market to buy resources and turn them into goods and services then they sell them to the intermediary market who sells them to consumer. Consumers sell their labor and receive money to buy goods and services. The government collects tax revenues to buy goods from resources, manufacturer, and intermediary markets and uses these goods and services to provide public services. Macro-environment ================= Company needs to study their environment to understand it and to define their marketing strategy and the company's global strategy. To do that, it must: 1. Analyze the market to identify the **threats** and **opportunities** 2. Identify the important **actors/stakeholders**[^1^](#fn1){#fnref1.footnote-ref} and evaluate their **influence** 3. Define the **key success factors** that must be mastered To do that, the company can use two main tools: 1. **PESTEL** which is a **macro-environmental analysis** 2. **The Porter's 5 forces** matrix which is a **competitive analysis** PESTEL -- macro environment analysis ------------------------------------ **P**olitical (political context, price monitoring, free trade agreements, bribery, \...) **E**conomic (trends, crisis (2008, covid crisis), average and median salary[^2^](#fn2){#fnref2.footnote-ref}, economic outlook) **S**ocial- cultural (trends and habits, traditions, lifestyle, local particularities, \...) **T**echnological (materials, new processes, innovation...) **E**nvironmental (climate change, environmental footprint, resources scarcity, \...) **L**egal (laws, regulation, \...) The macro-environmental analysis must provide the company with **useful information on the current context in which it is evolving**, as well as on **the prospects for future changes in this environment. It also must allow to identify opportunities and threats. It is the starting point of any marketing strategy**. The difference between **L**egal and **P**olitical is that Legal is written on the laws and political is something which is on discuss that are not yet written on the laws. But before doing a PESTEL analysis, we need to get detailed and useful information[^3^](#fn3){#fnref3.footnote-ref} about company (like their sector, history, size, market). Gathering useful information is not enough to make an intelligent PESTEL analysis. Then we need to list the elements that have an influence on the sector under study. Next, we must identify the nature of the influence exerted by each factor; is it positive (opportunity) or negative (threats)? short, long or mid-term? *If you find elements of the external environment and you are unable to know whether they constitute a threat or an opportunity, then these elements have no place in a PESTEL analysis.* **The elements must impact (threat or opportunity) all companies in the sector under study, not just the company under study.** If an element only impacts the company under study, then it is probably an **internal element**, and therefore has no place in an external analysis. Competitive analysis with Porter's 5 forces/strengths ----------------------------------------------------- 1. **New entrants** (new companies in the sector: apple was new in the watch sector) 2. **Suppliers** 3. **Competition** 4. **Substitutes** (if a company do the same as you, they're competitor and not substitute) 5. **Customers** Bargaining power (pouvoir de négotiation) refers to the influence that customers or suppliers can exert over a company. High customers bargaining power typically leads to lower prices and better services. For instance, if customers have many options, they can negotiate for better deals. High supplier bargaining power can lead to higher costs for businesses. For instance, if there are few suppliers for a critical component, they can charge higher prices. Competitive analysis -------------------- We use the 5 Porter strengths to analyze the competitive intensity. It's important to analyze the competitive intensity before entering in a market, it helps to define the competitive intensity of a market. It is because competitive intensity is directly related to the profitability of a market. The market ========== "The place where supply and demand meet for the purpose of carrying out transactions. " - All companies operate in one or more markets, where other players are also present - They are physical or virtual, local or international market =\> internet and globalization tend to create globalized and virtual markets. - All markets have limits who must be specified, otherwise the competitive analysis of a market become endless and irrelevant. - A market can be saturated A market includes 5 main players: 1. Customers 2. Producers 3. Distributors 4. Influencers (stakeholders) 5. Regulators (legislator, public bodies) For example, weapons are a regulated market. The market from a demand perspective ------------------------------------  **Relative non consumers**: People who could buy it but don't **Absolute non consumers:** for car example; people who don't have a driving license are absolute non consumers of cars. The different levels of a market -------------------------------- - **Generic market**: what your product is used for. Car example: transport needs - **Main market**: This is the main market where the product competes. Car exemple: vehicle transports - **Substitute markets:** These are markets that fulfill the same need but with different products. Car example**:** remote work, e-commerce (now they don't need a tool transport) - **Complementary products:** These are products that are used together with the main product. Car example; gas oil or electricity as fuel for cars. Example: Description 4 markets for bottled water Generic Main Substitute Complementary ------------------- ------------------- ----------------------------- --------------- Hydration / drink Beverages/ drinks Tap Water, soft drinks, tea syrup Measuring the market -------------------- The size of the market depends on the level chosen and corresponds to the sales in value of all the companies present over a period. The **size of market** can be measured by considering the number of buyers and the quantities purchased per buyer. - **Q (quantities purchased by buyers) x N (number of buyers) =S (size of market)** The ***market growth rate*** is a marketing indicator used to measure the growth of a market from one year to the next. *Sn: size of market* The ***absolute market share*** is the company's share of the pie in relation to the total size of the pie. This is calculated in volume or in value. By analyzing the market share of the competitors present, we can identify the leader, the challenger (the one just behind the leader) and the followers. Volume: part of market in percentage =\> units Value: part of market in monetary value =\> turnover Turnover: chiffre d'affaires The ***penetration rate*** is the current market compared to the potential market. A low penetration rate means that there is high growth potential for all companies in the market. **Formula:** Market classes -------------- In market, there is 2 main ways to sell products: B2C & B2B. "**B2B (Business to Business) marketing,** also known as BtoB marketing, corresponds to the marketing techniques used in the context of a commercial activity between two companies. For example, a wholesaler of car parts addressing garages is in a B2B economic model. " « **B2C marketing (Business to Consumer),** or BtoC marketing, corresponds to marketing techniques intended for the general public and used within the framework of a commercial activity between a company and the consumers. For example, a honey seller that has an online store aimed at individual consumers. » **Marketing strategy is different for b2b and b2c.** B2C: advertising campaign, promotions B2B. TRADE SHOWS, events, visiting company to discuss their needs It is essential to know the needs of the target. Individuals are everywhere, even in B2B the relationship is at first P2P (person to person), so trust is essential (customer relationship). The FMCG market =============== FMGC means "Fast Moving Consumer goods". These are the products that have a high turnover in the supermarket shelves (high demand by consumers). Their main goal is to satisfy a primary need. Example: soft drinks, cleaning products, pasta. It's products you tend to buy often. - It generates low margins and profits: because there is a lot of competition (other substitutes products). - It also requires a large distribution network because if you don't find a product, consumers will go to a substitute product. Their main characteristics: - Short shelf-life - Frequency of purchase (high) - Low price - Fast consumption Competition ----------- To understand who is in a competitive situation, it is imperative to fully understand what needs are met by an offer. Therefore, we also must analyze the demand side and not only the supply side. They are two types of competitors: 1. Direct competitors 2. Indirect competitors Example: Direct competitors: Cola and Pepsi Indirect competitors: Iced tea and Cola To identify your direct and indirect competitors, you can: - Conduct research on the internet and social networks - Ask your customers - Ask experts - Watching advertisements in different media - Go to trade shows (salon professional) - Competitive analysis must be coupled with competitive intelligence, which consists of constantly monitoring competitors' strategies and the arrival of new entrants - Coupled with the PESTEL, this analysis should let you identify the opportunities and threats of your environment. (=\> SWOT) *Opportunities & threats: there are outside of you company always!!* *Weaknesses et strengths depends on what goes in your company!!* Strategic marketing =================== *"Strategic marketing refers to all the techniques used to achieve a given objective. It involves determining the marketing direction and strategic decisions in conjunction with the company's overall business strategy."* - To make strategic decisions, the company must master its external and internal environment. So, they can, on this basis, be able to define its SMART long-term objectives. - Strategic marketing and operational marketing are complementary. We can't use any of them without doing the other.  - Strategic marketing represents ***the phase of reflexion and long-term planning***. - Operational marketing is t***he short-term exaction of the defined strategies.*** Phases of strategic marketing: ------------------------------ **Phase 1: external and internal analysis (with PESTEL and Porter's 5 Forces)** **Phase 2: segmentation** **Phase 3: targeting** **Phase 4: positioning** **Phase 5: setting goals who need to be SMART** **Phase 6: define an action plan** Segmentation ------------ Segmentation consists in identifying distinct groups of customers who will react in the same way to the company's offer. - Doing that allow the company to address the customers more effectively and efficiently - The segmentation must be updated regularly, because the customers evolve with time. - For a segmentation to be effective, it must be measurable, of sufficient size, relevant and coherent. Risks of not doing a segmentation - Difficulty to create a differentiating and visible offer - Risk of consuming a lot of resources (time, money) for a weak result - Risk of not being able to build a strong image and brand based on specific characteristics - Risk of overestimating the market potential There are 3 steps in segmentation: 1. **Identify segments**: identify groups of customers with homogeneous needs and behaviors regarding a given product. 2. **Study/analyze the segments**: study the geographical, socio-demographic, psychological and behavioral characteristics of each segment. The defined segments must be measurable, sufficient size to justify the company's commitment to it, be relevant and be coherent in line with the company's strategy and objectives. 3. **Evaluate segments: evaluate** the value of each segments by defining the number of potential consumers in a given market, estimate the penetration rate, the number of purchase per year, estimate the potential turnover and the product life cycle. - Depending on the evaluation of the different segments, the company will decide which segment she wants to target. She can opt for different strategies: - **Targeting the global market: non differentiated marketing** - **Targeting several segments: differentiated marketing** - **Target a single segment: concentrated marketing** - **Targeting an individual: individualized marketing** - Watch out! Some customers do not want to be categorized. For instance, elderly people, people with disabilities, people from low-income and people of foreign nationality. Une image contenant texte, capture d'écran, origami, conception Description générée automatiquement **Product life cycle**  Target ------ After doing the segmentation, the company must target one or multiple segment. The logic consists of determining the target that: - Represents the highest potential - The company will be able to satisfy Understanding consumer behavior ------------------------------- It's very difficult to understand the consumer inner workings. Everyone is different, and each consumer is influenced by several factors. Main influencing factors: - Culture (country, continent, city) - Social class =\> cultural factors - Family, friends - Hobbies club - Jobs positions=\> social factors - Age - Economic position - Personality - Lifestyle =\> personal factors - These influencing factors make it possible to understand **the buying process** of consumers.  **The buying process** 1. Identification of a need/problem 2. Searching for solutions 3. Assessment of alternatives 4. Decision and purchase act 5. Post- purchase behavior Desk research: they are quickly accessible but provide limited knowledge of the customer. Field research: they are "tailored" to what the company wants to know but are time-consuming and expensive. They are either quantitative or qualitative. Une image contenant texte, capture d'écran, Police, document Description générée automatiquement Exercise 3/ Evaluate before targeting Number of young people aged 12 to 18: 2\'925\'000 Potential consumers: 292'500 30% = **87'750 subscriptions** (292'500 x 30%) 70%= **204'750 subscriptions** (292'500 x 70%) Potential Turnover: 2'189'362,50.- subscriptions for 12 months (87'750 x24,95) and 2'037'262, 50.-subscriptions for 24 months **= 4'226'625 chf** Position -------- *"Positioning is defined as the way the company wants current and potential customers to perceive its product or brand"* To be effective, it must be: - **Relevant** - **Coherent**; aligned with company's strategy - **Credible**: if you claim something, it needs to be true (ex: claiming to be the most powerful charger) - **Sustainable**: it means to last, so it needs to be the same years over years, if not it would not have a clear brand into customer's mind. - **Clear** - **Differentiating:** to stand out from what competitor are - The position is only internal to the company, it is not a slogan. But consumer should/could understand it, but the company will never reveal their positioning. **QCM** - Know how to apply the knowledge - Know the formulas (bring your calculator) - Understand the key ::: {.section.footnotes} ------------------------------------------------------------------------ 1. ::: {#fn1} Stakeholder is any individual, group or party who can have a power in a company environment (for apple it would be environment association like green peace)[↩](#fnref1){.footnote-back} ::: 2. ::: {#fn2} Expenditure structure is how people use their money (for instance in Switzerland we spent like 30 % on rent)[↩](#fnref2){.footnote-back} ::: 3. ::: {#fn3} A useful information is an information who's up to date, relevant and trustworthy[↩](#fnref3){.footnote-back} ::: :::