MARKETING DEFINITION LEARNING UNIT 3

the sum of activities involved in directing the flow

of goods and services from producers to consumers. MARKETING RESEARCH

EVOLUTION OF MARKETING - information needed to manage a business effectively

- information needs to:
•Operation-oriented management -> increase understanding of relevant market segments
•Sales-oriented management -> be pertinent to planning and controlling
-> help in decision-making
•Marketing-oriented management
•Consumer-oriented management
•The strategic approach to marketing MARKETING-RESEARCH METHODOLOGY
•Relationship marketing
Market forecasting:
MARKETING CONCEPT •Sales forecasting
•Forecasting of the profit contribution
•Ethical code to which marketing task is performed
•Directs all marketing decisions about products,
distribution methods, marketing communication and
price determination

Four principles of the marketing concept (PCSO)

• The principle of profitability
• The principle of consumer orientation
• The principle of social responsibility
• The principle of organisational integration

CONSUMER BEHAVIOUR & DETERMINANTS

Consumer behaviour determinants:

MARKETING PROCESS

•Behaviour patterns of decision-making units directly involved in

the purchase and use of products
•includes the decision-making processes preceding and
determining these behaviour patterns

Consumer behaviour consists of:

• Overt acts
• Covert processes

Two main groups of factors determine consumer behaviour:

• Individual factors
• Group factors
 Determinants of consumer behaviour MARKET SEGMENTATION

Two main groups of factors determine consumer Total market can be subdivided into:
behaviour: • The consumer market
• Individual factors • The industrial market
• Group factor • The resale market
• The government market.
Individual decision-making is usually straightforward
• Decision-making in the group context is more Steps to follow when segmenting a market:
complex. • Identify the needs
• Group needs into homogenous subgroups
Consumer decision-making • Select target markets
• Position product within market segment
Four influences in any organisational buying decision:
• The environment
• The organisation itself
• The buying group
• The individual buyer

The decision-making process moves through five

phases:
Phase 1: Awareness of an unsatisfied need or a
problem
Phase 2: Gathering of information on how best to
solve the problem
Phase 3: Evaluation of the possible solutions
Phase 4: Decision on a course of action or purchase
Phase 5: Post-purchase evaluation

Requirements for meaningful market segmentation

TARGET MARKET SELECTION AND POSITIONING

• Segment must be identifiable and measurable • segmentation takes place, the marketer selects the segment
• Segment must be substantial and sustainable with the most promising target market
• Segment must be reachable • abilities and expertise of the business have to be linked to
• Segment must be responsive. the consumers characteristic in each segment
• competitive situation in each market/segment carefully
Once requirements have been met by a segment, the considered
segment can then be selected as a target market.
MARKETING INSTRUMENTS

•Product
•Distribution
•Marketing communication
•Pricing
PRICE DECISIONS
DISTRIBUTION DECISION
Price → exchange value of a product or service,
Distribution → activities that have to be carried out to direct the flow of
and is closely linked to benefit and value
products and services from the business to the consumer.
→ value of a product or service determined
→ to satisfy the primary objective of the business and meet
by its benefit to the consumer,
the needs of the consumer.
→ sacrifice required in terms of money and
effort to obtain the product.
DISTRIBUTION CHANNEL EVALUATION
The price determination process:
decision-making about the type of distribution channel to be utilised and
the degree of market coverage require
Phase 1: Determination of the cost price
Phase 2: Determination of the market price
Phase 3: Determination of the target price
Phase 4: Determination of the final price

Adaptations of the final price [SMM LOB]:

•Skimming prices
•Market-penetration prices
•Market-price level
•Leader prices
•Odd prices
•Bait prices.

CHANNEL LEADERSHIP CONCEPT

Typically a business that controls or dominates the channel (channel

captain)
Channel captain is either:
• Manufacturer or
• Retailer

WHAT IS A PRODUCT? Market coverage Number of intermediaries in the

channel:
Product → composition of tangible and intangible need-satisfying utilities •Intensive market coverage
offered to consumers, •Exclusive market coverage
→ consumers can take note of them, procure them, and use them. •Selective market coverage

A consumer product consists of: Physical distribution

• Core product Activities that take place to ensure the product is
• Formal product available to the final consumer.
• Need-satisfying product Three main components of physical distribution:
• Product image • Selecting warehouses
• Total product • Selecting the most suitable mode of transport
• Selecting optimal inventory holding levels.
Classification of consumer products
•Consumer products are intended for immediate use by households or Most effective performance of physical
consumers distribution activities ensures:
•Distinguish between durable and non-durable consumer products • Timeous and reliable delivery of orders
• Adequate inventory
Consumer products can be classified according to consumer buying • Careful handling of stock to eliminate damage
habits:
• Convenience products (milk, sweets)
• Shopping products (clothes, furniture)
• Specialty products (expensive cameras, luxury items)
 PRODUCT OBSOLESCENCE

• a situation where a product may intentionally be made technically and/or

psychologically obsolete in order to compel the consumer to make repeat purchases
MEANING OF BRANDS • For example, the cellular telephone industry

Brand → mark that is unique to the PRODUCT LIFE CYCLE

product items or ranges produced
→ marketed by a particular
business and that is chosen to
distinguish them from similar
competing products.
•Brand name is a word, a letter, or a
group of words (Nike or McDonald’s)
• brands offer advantages to both the
consumers and marketers

Classification of consumer products

Consumer products are intended for
immediate use by households or
consumers

Distinguished
• between durable and non-durable
shows the curve of a product’s sales/profits over a period of time
consumer products
Four phases can be identified: [IGMD]
Consumer products classified • Introductory phase
according to consumer buying • Growth phase
habits: • Maturity phase
• Declining phase
• Convenience products (milk, sweets)
• Shopping products (clothes, • each phase of product life cycle has specific implications for the product
furniture) and the marketing of that product
• Specialty products (expensive
• integrated marketing strategy needs to be adapted to adjust to the
cameras, luxury items).
changing conditions at each phase
• that not all products have identical life cycles
Marketers must also make
decisions about the composition of
New product decision:
the product offering.
•Phase 1: Development of product ideas
•The product offering usually
•Phase 2: Screening of product ideas according to financial criteria
consists of a product range or a
•Phase 3: Elimination of product ideas that do not appear to be viable
diversified variety of product items
(profitable)
and ranges
•Phase 4: Physical product development by the production division during
•Multi-product items in total
which a prototype is manufactured
product offering reduce risk of
•Phase 5: Development of the marketing strategy
failure and financial loss
•Phase 6: Test marketing in a specific small segment of the market
•Phase 7: Introduction into the market
Brand loyalty
→ occurs when consumers show a
loyalty to a certain brand.

Consumer moves through three

phases of loyalty:
• Brand recognition
• Brand preference
• Brand insistence
 Publicity
MARKETING COMMUNICATION DECISION
• non-personal stimulation of the demand for a
product or service of a business
•Marketing communication is the process of
• makes current news value available to the mass
informing, persuading and reminding the consumer
media to obtain a favourable and ‘free’ media review
of the business and its product
MARKETING COMMUNICATION ELEMENTS
Public relations
• Advertising
• entails decision-making to help an organisation’s
• Personal selling
ability to listen to, appreciate and respond
• Direct marketing
appropriately to those persons or groups whose
• Sales promotion
mutually beneficial relationships the organisation
• Publicity
needs to foster as it strives to achieve its mission and
• Public relations
vision.

Advertising
Elements of public relations
•Controlled and paid-for non-personal marketing
•Deliberate activity
communication related to a needs-satisfying product
•Planned activity
and directed by a marketer at a specific target
•Sustained activity
audience
•Communication process
includes: • Television • Big screen or movie theaters
•Deals with publics – both internal and external.
Personal selling
The public-relations media
•Verbal presentation of a product, service or idea to
•The spoken word
potential buyers to conclude a transaction
•The printed media
•Sales representatives inform buyers about products
•Sight and sound
and to persuade buyers, through face-to-face
•Special events
communication to buy the products
•The internet.

Direct marketing
• use advertising media to communicate information
of a product or service to customers
• can then respond by purchasing the product or
service via email, telephone or internet
• focus of direct marketing is to obtain an immediate
response.

Sales promotion
• marketing communication methods that are not
normally classified as advertising, personal selling,
direct marketing or publicity
• complement the other elements in trying to
influence consumer behaviour
• short-term, such as to introduce a new product to
the market