Analyzing The Marketing Environment PDF

/Analyzing the Marketing Environment Marketing environment - consists of the actors and forces outside marketing that affect marketing management’s ability to develop and maintain successful relationships with its target customers. MICROENVIRONMENT - consists of the actors close to the...

/Analyzing the Marketing Environment Marketing environment - consists of the actors and forces outside marketing that affect marketing management’s ability to develop and maintain successful relationships with its target customers. MICROENVIRONMENT - consists of the actors close to the company that affect its ability to serve its customers, the company, suppliers, marketing intermediaries, customer markets, competitors, and publics. MACROENVIRONMENT - consists of larger societal forces that affect the microenvironment. MICROENVIRONMENT The Company’s microenvironment Actors in the Microenvironment 1. The Company 2. Suppliers - Provide the resources to produce goods and services. - Treat as partners to provide customer value. 3. Marketing Intermediaries - help the company to promote, sell and distribute its products to final buyers. 4. Customers 5 types of markets that purchase a company’s goods and services. 5. Competitors - Firms must gain strategic advantage by positioning their offerings against competitor’s offerings. 6. Publics - Any group that has an actual or potential interest in or impact on an organization’s ability to achieve its objectives. MACROENVIRONMENT Societal Forces Environment 1. Demographic Environment - The study of human populations size, density, location, age, gender, race, occupation and other statistics. 2. Economic Environment - factors that affect consumer purchasing power and spending patterns. 3. Natural Environment - Natural resources that are needed as inputs by marketers or that are affected by marketing activities. 4. Technological Environment - Forces that create new technologies, creating new product and market opportunities. 5. Political Environment - Laws, government agencies, and pressure groups that influence or limit various organizations and individuals in a given society. 6. Cultural Environment - Consists of institutions and other forces that affect a society’s basic values, perceptions, and behaviors. Analysing the buying Behavior of the Consumer Market Buying Behavior of Consumer Market Consumer Buying Behavior Consumer buying behavior delves into the perception of a buyer undertaking a decision and action to fulfill a need or a want. This includes the behavior and reasons of a buyer before and after purchasing a product or a service, which influenced by various factors. Consumer Market A set of individuals, groups, communities, etc. that undergoes the event of buying products and services for consumption. Four types of Buyers 1. Analytical Buyer - These buyers decides based on facts and logical Information. 2. Amiable Buyer - These buyers are known as warm and friendly, their desire is to make everyone to be happy. 3. Driver Buyer - These buyers are result - based people. They are more concerned with how others view them. 4. Expressive Buyer - This buyer is highly assertive and highly responsive. They are impulsive buyers. Marketing Stimuli Product Price Place Promotion Environmental Stimuli Economic Factors Legal/Political Factors Technological and Cultural Factors These factors influenced the purchasing power of a buyer base on the condition of a country's economy, and the legal/political decisions. (e.g. inflation) Buyers Characteristics: Types of Consumer Buying Behavior 1. Complex Buying Behavior - It occurs when a buyer make a significant or expensive purchase (e.g. buying a car.) 2. Variety Seeking Buying Behavior - it's a matter of brand switching for the sake of variety 3. Dissonance Reducing Buying Behavior - It occurs when a buyer is highly involved in a purchase but see little difference among brands. 4. Habitual Buying Behavior - It occurs when a buyer repeatedly purchase the same brand and does not perceive any brand differentation. Factors that Influence Consumer Buying Behavior 1. Cultural factors 2. Social factors 3. Personal factors 4. Personal factors 5. Psychological factors 6. Situational factors Cultural factors 1. Culture group or a particular community with a set of values, ideologies and attitudes that are learned and shared among members. (e.g. family) 2. Sub - culture group of people who shares the same values. (e.g. racial groups.) A member would incorporate their reference to how the group express the shared value. 3. Gender This became a controversial as gender-based product obliterates the exploration of each gender products. 4. Social Class All people in all different social classes tends to surpass or maintain their disposable income as they are attempting to reflect themselves to the income they make. Social factors 1. Family Generally, it is believe that most people went through two families: a family of orientation and a family of procreation. These two families influence the buying behavior as time pass by. 2. Role and status All people are accustomed to have role and status depending on the groups, family, or organization to which they belong. Their buying behavior varies to the financial status they have and the role they put themselves in. 3. Reference Groups These are groups of people that a person would likely to associate with e.g A group of friends. A person's preferences will most likely change as the person mingle with the group Personal factors 1. Age Age influence the buying behavior as needs and wants change over the course of time. 2. Personality/Self-concept Personality is what makes every person unique. Their expression of their uniqueness influence their buying behavior. 3. 4Life cycle stage This influence the buying behavior particularly the life cycle of a person's day to day routine. 4. Lifestyle Lifestyle reflects an individual's attitude and values. This influence the buyer's behavior in order to fulfill the means for their ideal lifestyle. 5. Economic situation This refer to a person's income, influence their buying behavior as their income limits their purchasing power. 6. Occupation A person tend to change their buying behavior based on their occupation because they purchase thing related to their profession. Psychological factors 1. Motivation - It is the driving force behind every actions. This processes the initiatives, guides, and maintain goal-oriented behavior. e.g Maslow's Hierarchy of Needs 2. Perception - Is what our sensory provides such as vision, touch, smell, taste, etc. Buyer behavior are influence because of three perceptual processes: selective attention, selective distortion, and selective retention. 3. Learning - Determine whether a buyer should purchase the same brand or not based on the buyer's previous experience- Law of Effect 4. Consumer attitudes - Are composite of beliefs, feeling, and behavioral intentions toward a product or service Situational factors 1. Environmental factors Spatial factors play a role in buyer's decision. An interesting product display may seen desirable together with how the buyer perceive the ambiance 2. Economic Situation One common factor that influence the buying behavior is how the economic condition of a certain place. A buyer may experience a sudden fluctuate of prices leading to less purchasing power 3. Mood Influence the buyer's willingness to purchase. A buyer may feeling stressed out and wanted to reward or the other way that goes completely limit the spending because of stress 4. Timing Timing can drastically change a buyer's decision as they may put in a tight place or showered with discounts and bundles for a short period of time 5. Occupation A shopping with yourself is different compared to a shopping with a friend or a spouse. Considering your companion alters the price range you're willing to pay Buyer Decision-Making Process 1. Need recognition Recognizing a problem becoming aware of what product or service to purchase 2. Information search This is for products with complex details which deals with effectivity, legitimacy, a need for procedure, etc 3. Evaluation of alternatives A buyer that consider price, quality, and quantity alternative goes through this process 4. 5Purchase Decision The process of actually buying the chosen product or service 5. Post-Purchase Evaluation An important process where buyer reflects on the product or service experience and use the information for the next purchase Buyer responses 1. Product/Brand Choice A buyer response for a product or brand chosen would be by the range of satisfaction 2. Purchase timing This holds a fair advantage to the buyer and the product itself for it secure a repeat-buyer while a satisfied buyer who enjoys the luxury of timing 3. Purchase amount Purchase amount may determine with the satisfaction and worthiness of the product acquired or service received 4. Purchase frequency A response of a buyer whether it will buy the same brand or not for it holds the experience of either satisfied or not. /MEASURING MARKET DEMAND INTRODUCTION Understanding market demand is crucial for businesses aiming to tailor their products or services to meet consumer needs effectively. Measuring market demand involves analyzing various factors to predict future sales and make informed strategic decisions. This report explores methods and tools used to measure market demand and their implications for marketing strategies. DEFINITION OF MARKET DEMAND Market demand refers to the total quantity of a product or service that consumers are willing and able to purchase at various price levels over a specific period. It is influenced by factors such as consumer preferences, income levels. and overall economic conditions. METHODS OF MEASURING MARKET DEMAND A. Quantitative Methods Surveys and Questionnaires Market demand refers to the total quantity of a product or service that consumers are willing and able to purchase al various price levels over a specific period. It is influenced by factors such as consumer preferences, income levels, and overall economic conditions. Sales Data Analysis Historical sales data provides insights into past demand patterns. Analyzing trends over time helps in forecasting future demand and identifying seasonality effects. Market Experiment Conducting controlled experiments, such as test marketing, allows businesses to observe consumer responses to new products or changes in pricing. B. Qualitative Methods Focus Group These discussions with small groups of target consumers provide in-depth insights into their attitudes, preferences, and perceptions. They are useful for exploring new product ideas or marketing strategies. Interviews One-on-one interviews with key stakeholders, including experts, offer detailed customers and industry qualitative insights that can complement quantitative data. TOOLS AND TECHNIQUES - Demand Forecasting Models: Statistical models, such as time series analysis and regression analysis, predict future demand based on historical data and other relevant variables. - Market Segmentation Analysis: Identifying and analyzing different consumer segments helps businesses tailor their offerings to specific groups, improving demand accuracy. - Competitive Analysis: Understanding competitors' market positions and strategies provides context for estimating demand and identifying potential market gaps. CHALLENGES IN MEASURING MARKET DEMAND DATA ACCURACY - Inaccurate or incomplete data can lead to incorrect demand forecasts. Ensuring high-quality data collection and analysis is crucial. CHANGING CONSUMER PREFERENCES - Rapid shifts in consumer preferences and market conditions can make it challenging to predict demand accurately. ECONOMIC FACTORS - Fluctuations in the economy, such as inflation or recession, can impact consumer purchasing behavior and demand patterns. MICROECONOMIC FACTORS - In microeconomics, competition is influenced by five factors: product features, the number of sellers, barriers to entry, information availability, and location. Each factor hinges on the availability or attractiveness of substitute, and most markets lie somewhere between perfect competition and monopoly. IMPLICATIONS FOR MARKETING STRATEGIES PRODUCT DEVELOPMENT Accurate demand management helps in designing products that meet consumer needs and preferences, leading to higher market acceptance. PRICING STRATEGIES Understanding demand elasticity enables business to set optimal prices that maximize revenue and market share. PROMOTIONAL ACTIVITIES Effective demand measurement informs targeted marketing campaigns and promotional activities, enhancing their impact and efficiency. CONCLUSION Measuring market demand is a multifaceted process that involves both quantitative and qualitative methods. By leveraging various tools and techniques, businesses can gain valuable insights into consumer behavior and make informed decisions to optimize their marketing strategies. Despite the challenges, accurate demand measurement is essential for developing products, setting prices, and implementing effective promotional strategies that align with market needs. RECOMMENDATIONS 1. INVEST IN DATA QUALITY Ensure the accuracy and reliability of data collected through surveys, sales analysis, and other methods. 2. UTILIZE ADVANCED ANALYTICS Employ sophisticated forecasting models and market segmentation techniques to enhance demand predictions. 3. MONITOR MARKET TRENDS Continuously track changes in consumer preferences and economic conditions to adapt strategies accordingly. 4. INCORPORATE FEEDBACK MECHANISMS Use qualitative insights from focus groups and interviews to complement quantitative data and refine marketing strategies. ANALYZING THE BUYING BEHAVIOR OF THE BUSINESS MARKET INTRODUCTION Business organizations do not only sell. They also buy vast quantities of raw materials, manufactured components, plant and equipment, supplies and business services. There are large numbers of buying organizations in Ethiopia. Sellers need to understand these organizations' needs, resources, policies and buying procedures. A MARKET CONSISTS OF TWO PARTS 1. CONSUMER MARKET - Companies manufacture products for consumer market but business market is equally large and strong. - is a market when individuals purchase products or services for their own personal use, as opposed to buying it to sell themselves. 2. BUSINESS MARKET - In a business market, organizations buy goods and services for production of goods and services. In terms of overall value business market is bigger than the consumer market. - Typical business markets consist of manufacturing plants, machinery, industrial equipments, etc. MAJOR INFLUENCES IN BUSINESS MARKETS 1. ENVIRONMENTAL FACTORS - Business marketers can do little to stimulate total demand in this environment. They can only fight harder to increase or maintain their share of demand. 2. ORGANIZATIONAL FACTOS - Business marketers need to be aware of the following organizational trends in the purchasing area. 3. INTERPERSONAL FACTORS - Buying centers usually include several participants with differing interests, authority, status, empathy and persuasiveness. 4. INDIVIDUAL FACTORS - Each buyer carries personal motivations, perceptions and preferences as influenced by the buyer’s age, income, education, job position, personality, attitudes towards risk, and culture. 5. CULTURAL FACTORS - Buying factors vary form one country to another. SYSTEM BUYING AND SELLING System buying A single provider provides the total package for the buyer's needs May involve turnkey solutions (is a type of project that is constructed so that it could be sold to any buyer as a completed product) System Selling Manufacturers sell entire systems Supplier provides all MRO items (maintenance, repair, operating) THREE COMPANY PURCHASING ORIENTATION 1. BUYING ORIENTATION - The purchaser’s focus in short term and tactical 2. PROCUREMENT ORIENTATION - Buyers simultaneously seek quality improvement and cost reduction 3. SUPPLY CHAIN MANAGEMENT ORIENTATION - Purchasing’s role is further broadened to become a more strategic, value-adding operation PARTICIPANTS IN THE BUSINESS BUYING PROCESS (THE BUYING CENTER) 1. INITIATORS - Those who request that something be purchased. - These people who "initiate" or start the buying process are called initiators. 2. USERS - People in the organization who actually use the product or service. 3. INFLUENCERS - affect the buying decision, usually by helping define the specifications for what is bought. 4. DECIDERS - have the formal authority and responsibility to select the supplier and negotiate the terms of the contract. 5. APPROVERS - People who authorize the proposed actions of deciders or buyers are approvers. 6. BUYERS - They play a very important role in selecting vendors and negotiating and sometimes help to shape the product specifications. 7. GATEKEEPERS - A gatekeeper is like a filter of information. He is the one the marketer has to pass through before he reaches the decision makers. STAGES IN THE PROCESS 1. PROBLEM RECOGNITION - The buying process beings when someone in the company recognizes a problem or need that can be met by acquiring a good or service. 2. GENERAL NEED DESCRIPTION - the buyer determines the needed item’s general characteristics and required quantity. 3. PRODUCT SPECIFICATION - The buying organization now develops the items technical specifications. Often, the company will assign a product value-analysis (PVA) 4. SUPPLIER SEARCH - The buyer now tries to identify the most appropriate suppliers. 5. PROPOSAL SOLICITATION - The buyer will now invite qualified suppliers to submit proposals. Where the item is complex or expensive the buyer will require a defiled written proposal from each qualified supplier. 6. SUPPLIER SELECTION - Before selecting a supplier, the buying center will specify desired supplier attributes and indicate their relative importance. 7. ORDER-ROUTINE SPECIFICATION - After selecting the suppliers, the buyer negotiates the final order, listing the technical specifications, the quality needed, the expected time of delivery, return policies, warranties and so on. 8. PERFORMANCE REVIEW - The buyer periodically reviews the performance of the chosen supplier(s). ORGANIZATIONAL BUYING BEHAVIOR Organizational buying is the decision making process by which formal organizations establish the need for purchased products and services and identify, evaluate and choose among alternative brands and supplies. Target Marketing What is target market - A group of people that have been identified as the most likely potential customer for a product because of their shared characteristics such as age income lifestyle Market segmentation Market - segmentation is a way of aggregating prospective buyers into groups or segments. Target market define - A target market is a specific group of people with shared characteristics that a business markets its products or services to. Target Market and Product Sales - Identifying the target market is an essential part of a product development plan, along with manufacturing, distribution, price, and promotion planning What Is the Purpose of a Target Market? - A target market defines a product as well as vice versa. Once a target market is identified, it can influence a product's design, packaging, price, promotion, and distribution What Is Market Segmentation? - Market segmentation is a way of aggregating prospective buyers into groups or segments Geographic - is a marketing strategy used to target products or services at people who live in, or shop at, a particular location. It works on the principle that people in that location have similar needs, wants, and cultural considerations. Demographic - To sell a product or service effectively, you must understand who you are trying to reach. One method of understanding customers is by defining your business' target demographic Psychographic - The psychographics of your target market are those personality traits and attitudes that your consumers base their buying decisions on. Behaviour - A target market can be translated into a profile of the consumer to whom a product is most likely to appeal POSITIONING STRATEGIES What is Positioning strategy? - Positioning strategy refers to how a company or brand positions itself in the market relative to its competitors. It involves creating a unique image and identity for the product or service in the minds of the target customers. This strategy aims to differentiate the brand from competitors and highlight its unique value proposition. - A positioning strategy is like the way a brand wants to be known and remembered by its customers. It’s about telling people why a product or company is better or different from others. 6 POSITIONING STRATEGIES 1. MARKET POSITIONING STRATEGY - Effective market positioning strategy defines how your brand is perceived within a specific market or industry. It involves tailoring your products, services, and marketing efforts to cater to the needs, preferences, and behaviors of a particular segment of the market. 2. PRODUCT POSITIONING STRATEGY - Product positioning focuses on highlighting the distinct features, benefits, and value that your product offers in comparison to others in the market. It’s about creating a clear and compelling image of your product in the minds of consumers. 3. BRAND POSITIONING STRATEGY - Brand positioning goes beyond individual products or services; it’s about shaping the overall perception and reputation of your brand in the minds of consumers. It encompasses the emotional connection and values associated with your brand. 4. PRICE POSITIONING STRATEGY - Correct Pricing strategy is about how your product’s price is positioned relative to its quality and the perceived value it provides. It involves deciding where your product stands on the price spectrum within your market. 5. QUALITY POSITIONING STRATEGY - Quality positioning centers on highlighting your product or service’s superior quality, reliability, and performance. It aims to position your brand as a leader when it comes to quality within your industry. This strategy is often used in industries where quality is a critical factor, such as luxury cars, high-end electronics, or gourmet food products. 6. COMPETITION POSITIONING STRATEGY - Competition positioning means showing why your brand is better than others. You talk about what makes your brand special compared to your competition. To do this, you need to know what your competitors are good at and where they’re not so good.