Marketing process

Macdonald (1995) suggests that several stages have to be completed in order to arrive at a strategic marketing plan. These are summarised in the diagram below:
The extent to which each part of the above process needs to be carried out depends on the size and complexity of the business.
In an un diversified business, where senior management have a strong knowledge and detailed understanding of the overall business, it may not be necessary to formalise the marketing planning process.
By contrast, in a highly diversified business, top level management will not have knowledge and expertise that matches subordinate management. In this situation, it makes sense to put formal marketing planning procedures in place throughout the organisation.

Marketing process

Macdonald (1995) suggests that several stages have to be completed in order to arrive at a strategic marketing plan. These are summarised in the diagram below:
The extent to which each part of the above process needs to be carried out depends on the size and complexity of the business.
In an un diversified business, where senior management have a strong knowledge and detailed understanding of the overall business, it may not be necessary to formalise the marketing planning process.
By contrast, in a highly diversified business, top level management will not have knowledge and expertise that matches subordinate management. In this situation, it makes sense to put formal marketing planning procedures in place throughout the organisation.

Marketing objectives

Objectives set out what the business is trying to achieve.
Objectives can be set at two levels:
(1) Corporate level
These are objectives that concern the business or organisation as a whole
Examples of “corporate objectives might include:
• We aim for a return on investment of at least 15%
• We aim to achieve an operating profit of over £10 million on sales of at least £100 million
• We aim to increase earnings per share by at least 10% every year for the foreseeable future
(2) Functional level
e.g. specific objectives for marketing activities
Examples of functional marketing objectives” might include:
• We aim to build customer database of at least 250,000 households within the next 12 months
• We aim to achieve a market share of 10%
• We aim to achieve 75% customer awareness of our brand in our target markets
Both corporate and functional objectives need to conform to the commonly used SMART criteria.
The SMART criteria (an important concept which you should try to remember and apply in exams) are summarised below:
Specific - the objective should state exactly what is to be achieved.
Measurable - an objective should be capable of measurement – so that it is possible to determine whether (or how far) it has been achieved
Achievable - the objective should be realistic given the circumstances in which it is set and the resources available to the business.
Relevant - objectives should be relevant to the people responsible for achieving themTime Bound - objectives should be set with a time-frame in mind. These deadlines also need to be realistic.

marketing planning

A strategic marketing plan starts with a clearly defined business mission.
Mintzberg defines a mission as follows:
“A mission describes the organisation’s basic function in society, in terms of the products and services it produces for its customers”.
A clear business mission should have each of the following elements:Taking each element of the above diagram in turn, what should a good mission contain?
(1) A Purpose
Why does the business exist? Is it to create wealth for shareholders? Does it exist to satisfy the needs of all stakeholders (including employees, and society at large?)
(2) A Strategy and Strategic Scope
A mission statement provides the commercial logic for the business and so defines two things:
- The products or services it offers (and therefore its competitive position)- The competences through which it tries to succeed and its method of competing
A business’ strategic scope defines the boundaries of its operations. These are set by management.
For example, these boundaries may be set in terms of geography, market, business method, product etc. The decisions management make about strategic scope define the nature of the business.
(3) Policies and Standards of Behaviour
A mission needs to be translated into everyday actions. For example, if the business mission includes delivering “outstanding customer service”, then policies and standards should be created and monitored that test delivery.
These might include monitoring the speed with which telephone calls are answered in the sales call centre, the number of complaints received from customers, or the extent of positive customer feedback via questionnaires.
(4) Values and Culture
The values of a business are the basic, often un-stated, beliefs of the people who work in the business. These would include:
• Business principles (e.g. social policy, commitments to customers)• Loyalty and commitment (e.g. are employees inspired to sacrifice their personal goals for the good of the business as a whole? And does the business demonstrate a high level of commitment and loyalty to its staff?)• Guidance on expected behaviour – a strong sense of mission helps create a work environment where there is a common purpose
What role does the mission statement play in marketing planning?
In practice, a strong mission statement can help in three main ways:• It provides an outline of how the marketing plan should seek to fulfil the mission• It provides a means of evaluating and screening the marketing plan; are marketing decisions consistent with the mission?• It provides an incentive to implement the marketing plan

Marketing planning

A plan is a way of achieving something. Your revision plan is a way of helping to achieve success in business studies exams. The Christmas present shopping list is a simpler example of a plan – a way of ensuring that no-one gets missed on 25 December.
In business, it is no different. If a business wants to achieve something, it is more likely to do so with a well-constructed and realistic plan.
What does planning involve? Planning involves:
• Setting objectives, quantifying targets for achievement, and communicating these targets to people responsible for achieving them• Selecting strategies, tactics, programmes etc for achieving the objectives.
The whole topic of planning brings with it some important terminology that it is worth spending time getting to know well. You will come across these terms many times in your study of marketing (and business studies in general):
Strategy
Strategy is the method chosen to achieve goals and objectives
Example: Our strategy is to grow sales and profits of our existing products and to broaden our business by introducing new products to our existing markets
Tactics
Tactics are the resources that are used in the agreed strategy
Example: We will use our widespread distribution via UK supermarkets to increase sales and existing products and introduce new products
Goals
Goals concern what you are trying to achieve. Goals provide the “intention” that influence the chosen actions
Example: Our goal is to achieve market leadership in our existing markets
Objectives
Objectives are goals that can be quantified
Examples:- We aim to achieve a market share of 20% in our existing markets- We aim to penetrate new markets by achieving a market share of at least 5% within 3 years- We aim to achieve sales of growth of 15% per annum with our existing products
Aims
Aims are goals that cannot be measured in a reliable way. However, they remain important as a means of providing direction and focus.Examples: We aim to delight our customers

what is marketing?

There are many different definitions of marketing. Consider some of the following alternative definitions:
“The all-embracing function that links the business with customer needs and wants in order to get the right product to the right place at the right time”
“The achievement of corporate goals through meeting and exceeding customer needs better than the competition”
“The management process that identifies, anticipates and supplies customer requirements efficiently and profitably”
“Marketing may be defined as a set of human activities directed at facilitating and consummating exchanges”
Which definition is right? In short, they all are. They all try to embody the essence of marketing: • Marketing is about meeting the needs and wants of customers;
• Marketing is a business-wide function – it is not something that operates alone from other business activities;
• Marketing is about understanding customers and finding ways to provide products or services which customers demand
To help put things into context, you may find it helpful to often refer to the following diagram which summarises the key elements of marketing and their relationships:

buyer behaviour

An important part of the marketing process is to understand why a customer or buyer makes a purchase.
Without such an understanding, businesses find it hard to respond to the customer’s needs and wants.
Marketing theory traditionally splits analysis of buyer or customer behaviour into two broad groups for analysis – Consumer Buyers and Industrial Buyers
Consumer buyers are those who purchase items for their personal consumption
Industrial buyers are those who purchase items on behalf of their business or organisation
Businesses now spend considerable sums trying to learn about what makes “customers tick”. The questions they try to understand are:
• Who buys?
• How do they buy?
• When do they buy?
• Where do they buy?
• Why do they buy?
For a marketing manager, the challenge is to understand how customers might respond to the different elements of the marketing mix that are presented to them.
If management can understand these customer responses better than the competition, then it is a potentially significant source of competitive advantage.

decision-making process

Buying decicion process
How do customers buy?
Research suggests that customers go through a five-stage decision-making process in any purchase. This is summarised in the diagram below:This model is important for anyone making marketing decisions. It forces the marketer to consider the whole buying process rather than just the purchase decision (when it may be too late for a business to influence the choice!)
The model implies that customers pass through all stages in every purchase. However, in more routine purchases, customers often skip or reverse some of the stages.
For example, a student buying a favourite hamburger would recognise the need (hunger) and go right to the purchase decision, skipping information search and evaluation. However, the model is very useful when it comes to understanding any purchase that requires some thought and deliberation.
The buying process starts with need recognition. At this stage, the buyer recognises a problem or need (e.g. I am hungry, we need a new sofa, I have a headache) or responds to a marketing stimulus (e.g. you pass Starbucks and are attracted by the aroma of coffee and chocolate muffins).
An “aroused” customer then needs to decide how much information (if any) is required. If the need is strong and there is a product or service that meets the need close to hand, then a purchase decision is likely to be made there and then. If not, then the process of information search begins.
A customer can obtain information from several sources:
• Personal sources: family, friends, neighbours etc
• Commercial sources: advertising; salespeople; retailers; dealers; packaging; point-of-sale displays
• Public sources: newspapers, radio, television, consumer organisations; specialist magazines
• Experiential sources: handling, examining, using the product
The usefulness and influence of these sources of information will vary by product and by customer. Research suggests that customers value and respect personal sources more than commercial sources (the influence of “word of mouth”). The challenge for the marketing team is to identify which information sources are most influential in their target markets.
In the evaluation stage, the customer must choose between the alternative brands, products and services.
How does the customer use the information obtained?
An important determinant of the extent of evaluation is whether the customer feels “involved” in the product. By involvement, we mean the degree of perceived relevance and personal importance that accompanies the choice.
Where a purchase is “highly involving”, the customer is likely to carry out extensive evaluation.
High-involvement purchases include those involving high expenditure or personal risk – for example buying a house, a car or making investments.
Low involvement purchases (e.g. buying a soft drink, choosing some breakfast cereals in the supermarket) have very simple evaluation processes.
Why should a marketer need to understand the customer evaluation process?
The answer lies in the kind of information that the marketing team needs to provide customers in different buying situations.
In high-involvement decisions, the marketer needs to provide a good deal of information about the positive consequences of buying. The sales force may need to stress the important attributes of the product, the advantages compared with the competition; and maybe even encourage “trial” or “sampling” of the product in the hope of securing the sale.
Post-purchase evaluation - Cognitive Dissonance
The final stage is the post-purchase evaluation of the decision. It is common for customers to experience concerns after making a purchase decision. This arises from a concept that is known as “cognitive dissonance”. The customer, having bought a product, may feel that an alternative would have been preferable. In these circumstances that customer will not repurchase immediately, but is likely to switch brands next time.
To manage the post-purchase stage, it is the job of the marketing team to persuade the potential customer that the product will satisfy his or her needs. Then after having made a purchase, the customer should be encouraged that he or she has made the right decision.

What is efficiency?

What is efficiency?
Producing at a lower cost or using fewer resources when making a product or providing a service. Also meeting the needs of consumers.
HOW TO BECOME EFFICIENT
• Use fewer raw materials
• Use fewer workers
• Have fewer managers
• Replace high cost labour with low cost technology
• Less waste, fewer reject goods
BENEFITS OF EFFICIENCY
• Lower costs
• Lower prices
• More sales (revenue)
• Greater profits
• Higher bonuses for workers / managers
• Greater returns for shareholders (limited company)
PROBLEMS OF GREATER EFFICIENCY
• Quality may suffer
• Low morale in the workplace as jobs are lost
• Stress as people have to work harder
• Redundancy payments to workers
• Initial cost of buying technology

Scare Resources

Scare Resources There are only a limited number of resources such as workers, machines, factories, raw materials etc. Yet there are a number of different ways in which they could be used.
Basic government spend




Basic money
Similarly people only have a limited amount of money. Yet they have lots of needs and wants to satisfy.




Basic water
Also the Government has a limited amount of money £440 billion !!!!. However, it is unable to satisfy all its wants.











THE BASIC ECONOMIC PROBLEM – the problem arises because resources are scarce, but human wants are unlimited.
What is the difference between needs and wants?

Scare Resources

Scare Resources There are only a limited number of resources such as workers, machines, factories, raw materials etc. Yet there are a number of different ways in which they could be used.
Basic government spend




Basic money
Similarly people only have a limited amount of money. Yet they have lots of needs and wants to satisfy.




Basic water
Also the Government has a limited amount of money £440 billion !!!!. However, it is unable to satisfy all its wants.











THE BASIC ECONOMIC PROBLEM – the problem arises because resources are scarce, but human wants are unlimited.
What is the difference between needs and wants?

New share issues

equity finance - new share issues to the public: introduction
Introduction
There are three main ways of raising equity finance:
- Retaining profits in the business (rather than distributing them to equity shareholders);
- Selling new shares to existing shareholders (a "rights issue")
- Selling new shares to the general public and investing institutions
This revision note outlines the process involved in the third method above.
How significant are new issues of shares in the UK?
Issues of new shares to the public account for around 10% of new equity finance in the UK.
Whilst not significant in the overall context of UK equity financing, when new issues do occur, they are often large in terms of the amount raised.
New issues are usually used at the time a business first obtains a listing on the Stock Exchange. This process is called an Initial Public Offering (“IPO”) or a “flotation”.
Methods
The process of a stock market flotation can apply both to private and nationalised share issues. There are also several methods that can be used. These methods are:
• An introduction
• Issue by tender
• Offer for sale
• Placing, and
• A public issue
In practice the “offer for sale” method is the most common method of flotation. There is no restriction on the amount of capital raised by this method.
The general procedures followed by the various methods of flotation are broadly the same. These include
- Advertising, e.g. in newspapers
- Following legal requirements, and Stock Exchange regulations in terms of the large volumes of information which must be provided. Great expense is incurred in providing this information, e.g. lawyers, accountants, other advisors.
Why issue new shares on a stock exchange?
The following are reasons why a company may seek a stock market listing:
(1) Access to a wider pool of finance
A stock market listing widens the number of potential investors. It may also improve the company's credit rating, making debt finance easier and cheaper to obtain.
(2) Improved marketability of shares
Shares that are traded on the stock market can be bought and sold in relatively small quantities at any time. Existing investors can easily realise a part of their holding.
(3) Transfer of capital to other uses
Founder owners may wish to liquidate the major part of their holding either for personal reasons or for investment in other new business opportunities.
(4) Enhancement of company image
Quoted companies are commonly believed to be more financially stable. A stock exchange listing may improve the image of the company with its customers and suppliers, allowing it to gain additional business and to improve its buying power.
(5) Facilitation of growth by acquisition
A listed company is in a better position to make a paper offer for a target company than an unlisted one.
However, the owners of a private company which becomes a listed plc (public company) must accept that the change is likely to involve a significant loss of control to a wider circle of investors. The risk of the company being taken over will also increase following listing.

Market supply

Supply is the quantity of a good or service that a producer is willing and able to supply onto the market at a given price in a given time period.
Normally as the market price of a commodity rises, producers will expand their supply onto the market.
There are three main reasons why supply curves for most products slope upwards from left to right giving a positive relationship between the market price and quantity supplied
When the market price rises (for example following an increase in consumer demand), it becomes more profitable for businesses to increase their output.
Higher prices send signals to firms that they can increase their profits by satisfying demand in the market. When output rises, a firm's costs may rise, therefore a higher price is needed to justify the extra output and cover these extra costs of production
Higher prices makes it more profitable for other firms to start producing that product so we may see new firms entering the market leading to an increase in supply available for consumers to buy For these reasons we find that more is supplied at a higher price than at a lower price.
The supply curve shows a relationship between the price of a good or service and the quantity a producer is willing and able to sell in the market.
What causes a shift in the supply curve?
i) Costs of production
A fall in the costs of production leads to an increase in the supply of a good because the supply curve shifts downwards and to the right. Lower costs mean that a business can supply more at each price. For example a firm might benefit from a reduction in the cost of imported raw materials.
If production costs increase, a business will not be able to supply as much at the same price - this will cause an inward shift of the supply curve. An example of this would be an inward shift of supply due to an increase in wage costs.
ii) Changes in production technology
Technology can change very quickly and in industries where the pace of technological change is rapid we expect to see increases in supply (and therefore lower prices for the consumer)
iii) Government taxes and subsidies
Government intervention in a market can have a major effect on supply. A tax on producers causes an increase in costs and will cause the supply curve to shift upwards. Less will be supplied after the tax is introduced.
A subsidy has the opposite effect as a tax cut. A subsidy will increase supply because a guaranteed payment from the Government reduces a firm's costs allowing them to produce more output at a given price. The supply curve shifts downwards and to the right depending on the size of the subsidy.
iv) Climatic conditions
For agricultural commodities such as coffee, fruit and wheat the climate can exert a great influence on supply. Favourable weather will produce a bumper harvest and will increase supply. Unfavourable weather conditions such as a drought will lead to a poor harvest and decrease supply. These unpredictable changes in climate can have a dramatic effect on market prices for many agricultural goods.
v) Change in the price of a substitute
A substitute in production is a product that could have been produced using the same resources. Take the example of barley. An increase in the price of wheat makes wheat growing more attractive. This may cause farmers to use land to grow wheat and less to grow barley. The supply of barley will shift to the left.
vi) The number of producers in the market
The number of sellers in a market will affect total market supply. When new firms enter a market, supply increases and causes downward pressure on the market price. Sometimes producers may decide to deliberately limit supply by controlling production through the use of quotas. This is designed to reduce market supply and force the price upwards.
The entry of new firms into a market causes an increase in market supply and normally leads to a fall in the market price paid by consumers. More firms increases market supply and expands the range of choice available.