Principles of Marketing 1 Notes PDF

[Principles of Marketing 1 Notes] Target audience: The specific group of consumers most likely to want your product or service, and therefore, the group of people who should see your ad campaigns. Target audience may be dictated by age, gender, income, location, interests or a myriad of other facto...

[Principles of Marketing 1 Notes] Target audience: The specific group of consumers most likely to want your product or service, and therefore, the group of people who should see your ad campaigns. Target audience may be dictated by age, gender, income, location, interests or a myriad of other factors. Planned Expiry: a business strategy in which the expiration (the process of becoming obsolete) of a product is planned and built into it from its conception, by the manufacturer. Opt in and Opt out: Opt-in is giving explicit consent from an individual before engaging in any activity such as sending marketing emails. Whereas opt-out is the process of allowing individuals to decline or withdraw from participating in a certain activity such as receiving marketing communications. Definition of Marketing: (4 P's of Marketing) **Product Value (Goods and services) (Creating)** **Promotion (Selling and Advertising) (Communication)** **Price (Exchanging offerings and value)** **Place (Distribution) (Delivering)** Resources: Can be Money, Time, Skill/Talent Demand: The amount of customers willing to buy the product Definition of Marketing: Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large. Helps organisations achieve their goals. The Marketing Department helps the company identify, satisfy and retain their customers. Organisation is a group of people working together to achieve a common goal. Income: income is seen when all expenses incurred by a business are subtracted. Income represents the actual amount of money earned in a given time period Profit: Profit is seen when expenses from the revenue are taken out. Profit refers to the difference between how much money is spent and earned in a given time period Bartering: The exchange of goods and services without the use of money. Customer: The person who pays for the product e.g. Medicine for Children Consumer: The person who uses the product e.g. Taking the medicine. **USP: Unique Selling Proposition** (Something that is different from other products **[5 Marketing Concepts / Philosophies ]** (Different Beliefs of how Businesses should be Conducted) +-----------------------+-----------------------+-----------------------+ | Concept | Focus | Market Conditions | | | | | | | | (Demand and Supply) | | | | Referred to All | | | | Business Producing | | | | the Same Product | +=======================+=======================+=======================+ | Production | Increasing Production | D ↑ S ↓ | | | and Decreasing | | | | Production Costs | We: | | | | | | | Economies of Scale: | 10 Cars/day | | | The larger the | | | | quantity produced of | Competitors: | | | the same item, the | | | | lower the unit cost | 50 cars/Day | | | for Production | | | | | Supply: | | | | | | | | 60 Cars / Day | | | | | | | | Demand: The amount of | | | | customers willing to | | | | buy the product | | | | | | | | Demand: | | | | | | | | 200 Cars / Day | | | | | | | | Hence : 140 Looking | | | | for Cars | +-----------------------+-----------------------+-----------------------+ | Concept | Focus | Market Conditions | | | | | | | | (Demand and Supply) | | | | Referred to All | | | | Business Producing | | | | the Same Product | +-----------------------+-----------------------+-----------------------+ | Product | Making your product | D ↑ S ↑ including | | | different from other | steadily | | | companies (Stands | | | | out, recognize | We: | | | perceived as better. | | | | Branding is involved | 75 Cars/day | | | | | | | | Competitors: | | | | | | | | 100 cars/Day | | | | | | | | Supply:175 Cars / Day | | | | | | | | Demand: The amount of | | | | customers willing to | | | | buy the product | | | | | | | | Demand: | | | | | | | | 200 Cars / Day | | | | | | | | Hence : 25 Looking | | | | for Cars | +-----------------------+-----------------------+-----------------------+ | Concept | Focus | Market Conditions | | | | | | | | (Demand and Supply) | | | | Referred to All | | | | Business Producing | | | | the Same Product | +-----------------------+-----------------------+-----------------------+ | Selling | Actively Selling by | D ↓ S ↑ | | | convincing people to | | | | buy from you | We: | | | | | | | (Promotion) | 100 Cars/day | | | | | | | **Personal Selling:** | Competitors: | | | a person actively | | | | convincing people to | 300 cars/Day | | | buy | | | | | Supply: | | | **Hard Selling:** | | | | Representatives push | 400 Cars / Day | | | until the customers | | | | buys the product | Demand: The amount of | | | | customers willing to | | | | buy the product | | | | | | | | Demand: | | | | | | | | 225 Cars / Day | | | | | | | | Hence : 175 extra | | | | cars | +-----------------------+-----------------------+-----------------------+ | Concept | Focus | Market Conditions | | | | | | | | (Demand and Supply) | | | | Referred to All | | | | Business Producing | | | | the Same Product | +-----------------------+-----------------------+-----------------------+ | Marketing | Customer Satisfaction | D ↓ S ↑ | | | at a profit through | | | | needs and wants | We: | | | (Research) | | | | | 100 Cars/day | | | Customer Centric | | | | Approach | Competitors: | | | | | | | | 300 cars/Day | | | | | | | | Supply: | | | | | | | | 400 Cars / Day | | | | | | | | Demand: The amount of | | | | customers willing to | | | | buy the product | | | | | | | | Demand: | | | | | | | | 225 Cars / Day | | | | | | | | Hence : 175 Extra | | | | Cars | | | | | | | | Very High Supply and | | | | Demand | +-----------------------+-----------------------+-----------------------+ | Concept | Focus | Examples to Minimize | | | | Harmful Side effects | | | | in a Business or in a | | | | Country and to try to | | | | Minimize and/or | | | | compensate | +-----------------------+-----------------------+-----------------------+ | Societal and | Considering Harmful | Example of Adverts: | | Sustainable | Side effects of our | | | | Business and try to | Starbucks (Plastic | | | Minimize and/or | Cups) | | | compensate | | | | | Body Shop | | | | | | | | (Advert on using | | | | their products on | | | | Testing Animals) | | | | | | | | For Compensation, | | | | Donations can be used | +-----------------------+-----------------------+-----------------------+ Confessions of a Shopaholic (Film) [Segmentation] [Targeting] [Positioning] Known as STP is a **marketing Model that helps organizations fucus their resources (time, money and man power) to achieve the greatest possible effectiveness.** Segmentation is dividing a **large market** into **smaller distinct groups** based on **similar characteristics** (Variables), reflecting **similar needs and wants.** **[Basic Segmentation Variables]**: Demographic (Age, Sex, Income and Education) Geographic (Country, Population Density), Psychographics (Opinions, Interests, Activities), Behavioral (Benefits sought from product (*Why the customer is buying the product)*, Usage Rate, Usage Frequency and Loyalty) Psychotropics is the way people think and the Behaviour is how the people act. A Market is a group of people. [Targeting] is concentrating your efforts **on one or a few segments.** The First step of Targeting is the choosing of segments. The Second step of Targeting is to align with the 7 P's of Marketing. The biggest segment (quantity of people) needs to be chosen that has the largest profit. One need to choose the segment by analysing the profit, how many people buy from the business (demand), Competition, Costs, the price of the product and the quantity of people in the segment. [Choosing the right segment] Identifying -- when the business tries to imagine what the type of people will buy from the business Measurable -- Finding the total number of people in the segments. Reachable -- Being able to reach the people with the actual product and with the business's communication and promotion. Profit -- The formula for Profit is the Sales -- Total Costs (Fixed Costs and Variable Costs). Fixed Costs are the costs that stays the same and the Variable Costs are costs which change. Sales includes the quantity of customers buying from the business, the price and the frequency of the purchase. Hence to calculate Sales, multiply the quantity of customers,the price and the frequency together. To find the quantity of customers buying from the business is calculated by the number of competitors and the quantity of the people in the segment. In Targeting, B2B (Business to Business) and B2C (Business to Customer) are used. Once the segment is chosen, it is now a Target [4 Targeting Strategies ] Undifferentiated / **Mass Marketing** **Differentiated Marketing** Concentrated / **Niche Marketing** Consumer / Micro Marketing / **Personalization** After choosing the segment aligning with the 7 P's is the next step. Undifferentiated / **Mass Marketing** is the largest market, has only one segment and have a generic need and want to meet the target's needs and wants. The business has the whole market to gain profit. This type of Marketing has a disadvantage that are prone to competition but has an advantage that there are potential savings on production and Marketing Costs. **Differentiated Marketing** has more than one segment that the market needs to target for the audience. Products are designed for the particular segment. This type of strategy is more expensive than that of the Mass Marketing but they have potential better sales and Marketing Positioning. Concentrated / **Niche Marketing** has more than one segment but the business decides to select only one segment of a market and develop an offer in that particular segment. This type of strategy has a very strong positioning by the segments might be too small to gain profit Consumer / Micro Marketing / **Personalization** is that the business gives the product or service to only one customer. Hence the product or service is tailor-made to that particular customer. **[The 7Ps of marketing are product, price, place, promotion, people, process and physical evidence.]** If a business chooses a target, he may not need to consider the other targets and not actively spending the resources on the other targets **Positioning or Perception** is when a business establishes the image or identity of a brand or product, so that **consumers see it in a certain way**. The packaging influence has a big impact in positioning and perception People form a perception about a product by promotion, Word of Mouth by customers, own experiences and others experiences If a company knows that it delivers the food to the customers in 15mins the company tells the customers that the delivery will be delivered at average time of 20mins so that, the customer will be satisfied with the service Business delivers their promotion to customers by different means such as slogans. Different slogans will have different perceptions within the customers. A business can't have different slogans for different targets as the slogan needs to be the same. A Perceptual Map is a graph that involves the opinion of the customers of the business compared to other businesses. **USP: Unique Selling Proposition** (Something that is different from other businesses) [The Marketing Environment ] What can influence an Organisation's Performance? The Customer and Consumers The Consumer Trends and Perception Promotion The Business Size The Business Management The Supplies The Job Situation in Country The Employees The Profit - Resource Pandemic The Wars or conflict in a country The European Union ***Inflation*** ***Minimum Wage*** ***COLA (Cost of Living Adjustments)*** The Law of a Country The Use of Technology The Pressure of Society Inflation is the rate of increase in prices over a given period of time. Inflation is typically a broad measure, such as the overall increase in prices or the increase in the cost of living in a country. [The Three parts of the Marketing Environments are:] **The internal factors** (Factors which effect the company and are found within the organization such as the staff of the business, resources and profit) **Micro Factors** (Factors which are outside the business but they are still close to the business such as the Customers, Competitors and the Supplier) **Macro Factors** (Factors which are outside if the business and they are felt which are being very distant from the business such as the laws and the population Employment is people who are within the employment age who are able and willing to work   **SWOT Analysis** S -- Strength (Positive) W -- Weakness (Negative) O -- Opportunity (Positive) T -- Treath (Negative) **Advantages of a SWOT Analysis** Very Simple to do Fast to do Can be done by anyone Requires no Resources **Disadvantages of a SWOT Analysis** Very Superficial Very Subjective    Marketing Teacher.com (Resource for Marketing Videos) [SWOT Analysis at MCAST ] S W O T Personal SWOT Analysis S W O T [**Internal** Environment Factors] [5 M's]: Men, Money, Machinery, Materials and Minutes [Usage]: When doing an Environmental Internal Analysis, the company does not feel overwhelmed All 5M's affect each other and they also overlap with each other [Men]: Reference to the HR Factors with regards to how does the company treat its employees (people working in the company) such as training or appraisal [Money]: Reference to the Finance Department with regards to selling, allocation of resources and prioritization of finance [Machinery]: Reference to all the equipment in the company: whether it is the latest technology and the usage of equipment [Materials]: Reference to the raw materials in a company such as raw materials that the company needs to work with such as fuel. Once run out the company needs to order more raw materials from the supplier [Minutes]: Reference to the time allocation in a company meaning how does the company allocate time in a business For the Micro and Macro Factors since they are external factors, the company must look from external factors and sources such as the News [Micro environmental Factors] [Suppliers] (who are the suppliers and what products do they give to businesses) [Customers] (who are the customers, the unique selling proposition of the customers and the needs and wants of the customers) [Competition] (who are the competitors and whether it is a threat to the organization or not. This is the easiest type of external factor because companies promote themselves) [Task Environment] is an External type of environment of an organization which affects its ability to reach business goals.  [**Macro** External Factors] [PESTEL Analysis] : Political, Economic, Socio-Cultural, Technological, Environmental and Legal Factors P: [Political Factors] refers to how the government influences and interfere with the companies such as tax policies and political stability or instability (everything that makes predictability easier). These are not the country's laws. An example includes that two months before the country's budget, the companies postpone any major decisions as it creates instability to the company as nobody knows what will happen after. The Maximum level of instability was during the COVID pandemic. Some other factors also include corruption. These would be found in News Portals. E: [Economic Factors] refers to the economic growth, exchange rate, inflation rates, interest rates, disposable income of consumers (the availability of income that the consumers can spend from) and unemployment rates such as the minimum wage. This will influence the customers [purchasing power] and spending pattern. S: [Socio Cultural Factors] refers to society and the culture of that society (the routine of how people live in a particular country). This is made up of lifestyle, trends, culture, values, prejudice and beliefs. This type of factor affect the population growth rate, age distribution, income levels, careers, health, lifestyle and cultural barriers. Example of this type of factor include the routine of a particular country. T: [Technological Factors] refers to what type of technology the company is **not** using, and the company **wishes** to use that type of technology such as if a company is **not** using Artificial intelligence it should be included in the Macro Factors and not in the Internal Environment Factors. The technological environment includes innovation, research and development in technology. This type of factors includes the technology incentives, level of innovation, automation, Research and Development Activity and any technological change. This type of factor needs to be integrated in business, so that the business can implement more sales. E: [Environmental Factors] refers to the natural environment of where the business is situated in terms of location such as whether a company has parking space or not. This includes climate conditions, environmental change, accessibility to water and raw materials, natural disasters and pollution. L: [Legal Factors] refers to specific laws which has already been passed or that will be passed. This factor includes government policies, pressure groups and agencies which influence or limit the working of the industry and/or the business in society. This type of factor also includes discrimination laws, antitrust laws, employment laws, consumer protection laws, copyright laws and health laws. [Recession] is a significant, widespread, and prolonged downturn in economic activity. An example is if fuel will go scarce, every person that drives a car will buy fuel and there will be no fuel available. [Tendering] is a formal process where businesses are invited to bid for contracts from public or private sector organisations, which need specific skills for a project, or goods and services on an ongoing basis. An example of a tender is that Costa Coffee operates in the International Airport for a period of time or years. Since, the tender is given to few companies which can operate at the International Airport, Costa Coffee is generating a large amount of profit. For more information see video about PESTEL Analysis from the below link or scan QR Code on the right.