Communication Mix
October 24, 2007
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Communication Mix
The communication mix blends together several different elements to create the overall strategy for marketing communications. The elements of this mix may include advertising, personal selling, sales promotion and publicity. They can use categories to personal selling and non-personal selling.
If the product is new, the effort will probably rely heavily on advertising and sales promotion. If the product is more established but the objective is to stabilize sales during weak season, the mix will most likely contain sales promotion.
If the product is technical and it needs a lot of explanation the mix will be personal selling.
The strategies for communication mix are:
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Advertising
Advertising is paid non-personal communication through various media by organizations that are in some way identified in the advertising message and who hope to inform and/or persuade members of a particular audience.
When deciding how advertising fits into the communication mix, marketers consider such issues as budgets and which media to use.
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Personal selling
Personal selling can take place face to face, by phone, by video, by fax or comp. personal selling provide immediate feedback to the seller, which allows the seller to adjust communication to meet the needs of the situation, personal selling costs more.
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Sales Promotion
Sales promotion provides the quickest rise on sales. Sales promotion is a media and non-media marketing pressure applied for a predetermined limited period at the level of consumer, retailer or wholesaler, in-order to stimulate trial, increase consumer demand or improve product availability.
Sales promotion can’t be conducted continuously coz they become ineffective eventually.
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Publicity
This is a non-paid for communication of information about the company or product, generally in some media form. Publicity can come in news, stories, reviews, broadcasts e.t.c.
The downside of publicity is that the marketer has little or no control over what is said and also there is no way to target an audience.
The public may favor the product since they know that the marketer is not controlling the story thus its likely to be true.
The Role and Development of Market Research
October 24, 2007
The Role and Development of Market research:
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Before the industrial revolution there was no need for market research. Markets were small, local and customers were few. With industrialization all that changed improve transport and communications made it possible and desirable to expand markets. In order to sell in new markets business needed to understand these markets and customers better.Market research is about providing useful data to managers so that they can make good decisions which will enable the organization to reap reward of many years of product development.
Philip Kottler defines market research as “systematic problem analysis, model building, and fact finding for the purpose of improved decision making and control in the marketing of goods and services”. While the British marketing Research Society defines it as ‘the modus used by those who provide goods and services to keep themselves in touch with the needs and wants of those who buy and use these goods and services.
While the American Marketing Association defines it as ‘the systematic gathering, recording and analyzing of data about problems relating to the marketing of goods and services.
History of Market Research:
The earliest application of Market research occurred in 1879 by an American advertising agency NKL Ayer & Son 1879. They carried out a survey into grain production across the US to develop an advertising schedule for agricultural machinery.
In 1895 & 1897 Prof Gale used mail questionnaires in an opinion survey on advertising.
Market research then grew on. The basic purpose of Market Research is to try and understand and predict human behaviour. It basically focuses on human and organizational behaviour and consumption habits.
Divisions of Market Research:
Market Research basically is divided into:
a) Product Research:
This is concerned with the design, development and testing of new products.
- Improvement on existing products
- Forecasting of likely trends in consumer preferences related to styling, product performance, quality of materials etc.
Global competition among business are becoming stiff thus organizations need to meet the ever demanding expectations of their customers. As this happens design has become more important factor in winning customers.
b) Sales & Distribution Research:
Sales research involves a thorough examination of the selling activities of the company. This is accomplished by looking at the sales outlets and/or sales territories and formulating the data so that direct comparisons can be made. Distribution research involves evaluating all of an organizations selling arrangements along with looking at alternative methods of distribution.
c) Customer Research
This research studies the social, economic and psychological influences affecting purchase decisions. It looks into the behaviour of buyers. The research may include customer surveys to study the opinions and behaviour of ultimate users of the products.
d) Pricing Research:
Pricing is a critical factor when it comes to gaining competitive advantage, competitor may also bring in substitute products thus an organization might want to carry out a research on what price their products are favorable to consumers. Determination of a pricing strategy must always take into account Market Research.
d) Promotion Research:
This is concerned with testing and evaluating the effectiveness of the various methods of promoting an organization product or services.
f) Services Research:
Market Research should be used to design, develop and distribute specific services. Most organization are now shifting into the services industry and its important for them to have useful information before making critical decisions.
Designing and Developing a Market Research: Methodologies of Market Research:
For a Market Research to be useful one needs to carry out the research in a systematic and organized manner, there should be a framework for the entire research process.
There are basically 3 types of research design, these are
(a) Exploratory Design
This design attempts to study what it is you will ultimately research ie. the real nature of research problems.
(b) Descriptive Studies:
This seeks specific information. It is done when one has substantial knowledge about the marketing problem. E.g census, public opinions etc. These are basically descriptive reports eg customer profile, market demand etc
(c) Casual Studies:
Attempts to identify factors which underlie market behaviour and evaluate other relationships and interactions.
There are basically 2 categories of research.
Reactive: Where data originates from interaction with investigators and respondents as in interviews, questionnaires or experiments.
Normactive : (non-reactive): This relates to surveys involving observation or library research, where there is no dependence on respondents directly.
One should use a variety of reactive and normative research testing to provide the widest range of data collection.
a) Exploratory Research:
This design method is used for generating hypothesis and identifying areas to study further. In exploratory research one gathers information from various sources which are likely to provide useful insights. The researcher is less concerned with carrying out probability sampling, he is more concerned with allowing use to communicate or provide their ideas.
b) Descriptive Research: This seeks specific information. It is done when one has substantial knowledge about the marketing problem. E.g census, public opinions etc. These are basically descriptive reports eg customer profile, market demand etc
c) Casual Research: Attempts to identify factors which underlie market behaviour and evaluate other relationships and interactions.
Collecting Data: This may involve a variety of activities thus it requires a large number of personnel. The researcher must decide what type of data to use either primary data, secondary data or some combination of the two.
Secondary data: is the use of data that had been collected earlier for some other purpose – secondary data is cheaper and easier to gather. If a researcher goes or chooses to use primary data then he can use various techniques to collect this data.
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Observation: Involves monitors and recording actions of customers and events in the market place according to Gilbert A. Churchill Jr. observation can be useful for learning about competitors and their products.
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Surveys: this is another technique. It is the collection of data through questionnaires. The researcher can conduct survey through mail, telephone or the person. Survey are useful to the marketer, they are volatile and can generate important information.
(d) Analyzing and Interpreting data
The research examines the data collected through questionnaires or observation. The researcher the codes (-assigns human symbols to the answers) and then he tabulates the data. (counting number of cases that fall into each category of response).
The tabulated data is then used as a basis of carrying out statistical analysis. The researcher then evaluates the results so as to uncover situations where the researcher can provide more helpful information by modifying the research design.
(e) Preparing the research report
The researcher then puts information generated by the analysis into a report. The research report should contain:
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Summary of what was the problem or TOR
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Information that describe the research in great details
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Methods used, statistical information and sample forms.
Market Research
October 24, 2007
Market Research
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The American Marketing Association defines marketing resource as the function that links the consumer, customer and public to the marketer through info.The info is used to identify and define marketing opportunities and problems:
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Generate, refine and evaluate marketing actions
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Monitor marketing performance.
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Improve understanding of marketing.
Market research helps the marketer to anticipate or respond to customer needs. It helps them to know about their current and prospective customer and helps them to know about the success of their own practices.
Sources of information
Information for market research can care from various sources, these can be categorized as:
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Internal sources
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External sources
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Internal sources
A marketer can get information or data from within the organization itself. Records like sales records can show which products bring in the most profit. Inventory records can show which goods are moving off the shelf quickly.
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External sources
A marketer needs to know what is happening outside another organization. How customers view the organization: how their products are perceived by the consumer, they also need to know about technological developments, legal environment e.t.c.
They can get this info from:
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Business and industry publications
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Research services
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Trade groups
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Customers surveys
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Computer databases
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Government reports
According to Gilbert A. Churchill jnr, Marketing : creating value for customers one can collect data specifically for a particular investigation i.e. primary data or one can collect data for some purpose other than the immediate study at hand.
In primary data, one can use various methods to achieve results or to be able to make a decision.
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Statistical Inference
This is one method of drawing a conclusion about data by using a sample of the collected data to draw conclusions about an entire population. This method is used instead of carrying out a survey of the entire population since a survey will be a big task to do and the possibility of errors are high.
The marketer here questions or carries out a survey on a sample of the population, then uses statistics to read conclusions based on the data gathered about the sample.
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Sampling
This involves selecting research subjects in such a way that each member of the population has a known chance of being selected because the subjects are selected randomly. One can use probability sampling. The larger the random sample, the more representative of the total population it will be.
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Benchmarking
This involves “identifying organizations that excel at carrying out a function and using their practices as a springboard for improvement” according to Gilbert A. Churchill, jnr.
One identifies one or more organizations that excel and use their practices as a source of ideas for improvement. Benchmarking can be done through such activities as:
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Reading about the organization
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Visiting them or calling them
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Taking a past competing products to see where they are made
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Benchmarking generates ideas for improving marketing and other activities.It is most useful for learning about existing products, business practices and ways of satisfying customers.
Market Research Process
According to Gilbert A. Churchill, marketing research process involves several steps. These are:
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formulating the problem to be solved.
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determine a research design
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collect the data.
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analyse and interpret the data
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prepare the research report.
Formulating the problem
This is the process that is done first in MR. MR starts when someone in the organization sees a need for information, thus they need to formulate the problem to be solved and then find ways to improve the situation or solve the problem
Determining a research design
Research design is the plan on how to collect and analyze the data. The marketer defines the kinds of information needed and the researcher design the research. The researcher can use one or more basic research design like exploratory, descriptive and casual research.
Marketing research
Market research can be defined as a formal organized effort to acquire specific information for a specific purpose.According to Warren J. Reagan “Global Marketing Practise Hall 1995“ there are two ways of conducting a market research.
There are various tools used for market research. These are;
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Survey Research:
This involves interviewing a target group to obtain desired information. A questionnaire is normally used to ensure a successful survey.A good questionnaire should have three characteristics:
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It’s simple
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It’s easy for respondents to answer.
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It’s easier for interviewer to record.
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It keeps the interview to the point.
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It obtains the desired information.
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Sampling
This is the selection of a subset or group from a population that is representative of the entire population.According to Warren J. Reagan, the two basic sampling methods in use today are;
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Probabilistic
In this method each unit chosen has a chance of being included in the sampling. The results of probabilistic sampling can be extended (projected) to the entire population with statistical reliability. Random sample is used in this method and it produces results of statistically measureable accuracy.
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Non-probabilstic.
The results of this method cannot be projected with statistical reliability. A method used in non-probabilstic is using quota sampling i.e. selecting units which do not have equal or known chance of being selected.
According to Warren J. Reagan, a mathematical formular for selecting a sample size to be used as representative of the population is;
N = (t2)(s2)
e2
where n=sample size
t=confidence limit expressed in standard errors = 99% confidence
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Non-probabilistic : The results of these methods cannot be projected with statistical reliability. A method used in non probabilistic is using quota sampling i.e. selecting units which do not have equal or known chance of being selected.
According to Warren J. Keegan a mathematical formula for selecting a sample size to be used as representative of the population is
N = (t2) (S)
e2
Where n = sample size
t = confidence limit expressed in standard errors = 99% confidence
s = standard deviation
e = error limit
There are various Analytical tools used in market research, these are
Demand Pattern Analysis
Industrial growth patterns provide an insight into demand. Production patterns are also used to assess market opportunities because they generally reveal consumption patterns.
As demand rises a marketer can basically look at opportunities for his organization and can also quickly gather information about what the users need.
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Cluster Analysis
This analysis groups variables into clusters maximize group similarities and also maximize group differences. Different regions have different requirements or needs, thus a marketer can use cluster analysis to group those users who have similar needs together.
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Regression Analysis
A researcher can use multiple regression tactics according to Warren J. Kegan. This tool uses independent or predictor variables to estimate a dependent variable.
Consumer behaviour
October 24, 2007
Consumer Behavior
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A consumer is someone who buys goods and services for his or her own household or use. Consumer behavior is the way in which external and internal forces shape peoples exchange activities.
A consumer’s buying behaviour is influenced by cultural, social, personal and psychological factors.
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Cultural factors, sub-cultural and social factors.
Cultural factors exert the broadest and deepest influence. Culture, subculture and social class are important in buying behaviour. Culture involves having a set of values, perceptions, preferences and behaviour acquired through ones family and other institutions like tribe, religion e.t.c.
Each culture consists of smaller subcultures that provide more specific identification and socialization for their members. Subculture includes nationalities, religions, social groups and geographic regions.
A particular component in culture is its core values, the ones that are pervasive and enduring. Example Muslims don’t eat pork thus a marketer if he has researched well will find the marketer for pork in a Muslim area is very low and hence he will find another market.
Sub-cultural factors
A subculture is a segment within culture that shares value and patterns of behaviour that distinguish it from those of the overall culture. When subcultures grow large and affluent, then a marketer might find it easier to meet the needs of the subculture than the overall culture.
Social factors
This consists of all the groups that have a direct (face to face) or indirect influence on a person’s attitudes or behaviour. These groups are called membership groups. Some membership groups are primary groups such as family, friends, neighbors, co-workers with whom the person interacts.
Secondary groups such as religion, professional and trade union tend to be more formal and require less continuous interaction.
These groups tend to influence a buyer to buy specific products or brands choices. People are influenced by groups which they hope to join these are called aspiration groups or groups whose value they reject dissociate groups.
Marketers of products where these groups (social groups) are strong must determine how to reach and influence opinion leaders of these groups.
E.g. the hottest trends in teenage music, fashion start with teenagers in middleclass areas.
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Family influences.
Family influences ones purchase decision and marketers basically look at a family as a basic unit of measuring consumption. Marketers should know who makes purchasing decisions in the family and which family members influence these purchases.
If the purchaser is a wife, then the marketer will make or create a different marketing mix than if the typical purchaser is the husband.
A marketer should be able to segment or identify the different segments of the family cycle so that he may be able to produce the right marketing mix that will influence the buyer of the product.
The life cycle helps to identify the needs and the ways in which these roles change as the family matures e.g. a family with young children will spend more in buying food for their kids, clothing e.t.c.
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Personal factors
A buyer’s decision may also be influenced by personal characteristics. These include a buyer’s age, occupation, economic circumstances, and lifestyle e.t.c.
Occupation may influence consumption patterns in that a blue collar worker may spend more on work clothes, lunch boxes, feeding the family while a chief executive will spend more on expensive vacations, country club membership e.t.c.
E.g. computer software companies try to develop different s/w for different occupation e.g. one for brand managers, CAD for architects, engineers’ physicians’ e.t.c.
Lifestyle is a person’s pattern of living. This is expressed in activities, interests and opinions. This may influence the buyer to buy particular products. E.g. having a ipods a while back was considered a status symbol so many people with a high lifestyle who wanted to show off bought ipods.
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Psychological factors.
A person’s buying choice is influenced by aspects of psychological factors i.e. motivation, perception, learning and beliefs/attitudes.
Motivation: A motive is a need that is sufficiently pressing to drive a person to act. Some needs are biogenic i.e. they arise from psychological states of tension e.g. hunger, trust, discomfort, others are psychogenic they cause from psychological states of tension such as the need for recognition, esteem, belonging.
The theories of motivation help a marketer to understand how various products fit into the plans, goals and lives of consumers.
Perception: Perception is the process by which a person selects, organizes and interprets information inputs to create a meaningful picture of the world. A person’s perception towards a product may lead him to purchase it or reject it. Thus a marketer needs to improve the product’s physical appearance and means or mode of advertisement to improve the product’s perceptions.
Learning involves changing an individual’s behaviour arising from experience. Learning theory teaches marketer that they can build up a demand for a product by associating it with strong drives, using motivation cues and positive reinforcement.
Beliefs and attitude: A belief is a descriptive thought that a person holds about something. People’s beliefs influence their buying decisions. An attitude is a person’s enduring favorable or unfavorable evaluations, emotional feelings and action tendencies towards some object or idea.
Global Marketing
October 24, 2007
Global Marketing
Global marketing refers to marketing of goods and services across political boundaries i.e. in another country.
To succeed in global marketing, one has to understand the macro-environmental factors operating within that country, the principle difference between domestic and foreign marketing is the environment under which the two operate, although the 4Ps factors are generally the same all over the world the macro-environmental factors are unique to a country.
These macro-environmental factors are:
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Economic environment
This is the level of economic development a country is in. This affects the purchasing power of products i.e. in the poor countries like Zimbabwe the expensive products like Luxury cars, microwaves ovens are not bought in large quantities unlike in countries like US.
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Political environment
The political environment in a country may favorably or unfavorably influence international marketing e.g. issues like trade restrictions and tariffs, quotas, embargo or exchange controls affect international or global marketing.
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Social-cultural environment
The term culture can be said to be behaviour and ideals handed down from generation to generation as determinants of human behaviour. These are national culture, language, aesthetics, education, religion, attitudes and values and socialization.
Thus for an organization wishing to carry out international business need to consider various things like:
Deciding whether to go abroad
Most organizations prefer to stay domestic, if their domestic markets are large enough. The benefits of going abroad are:
The possibility of obtaining higher profits in foreign markets.
The possibility of obtaining higher sales volume with the consequent reduction in cost per unit.
The possibility of lengthening the product life cycle when the product is introduced into foreign markets.
The possibility “evening out” seasonal fluctuations in demand since some markets may buy the products during one period of the year while others will buy the same during another period of year.
The possibility of spreading the risk inherent in any business. The possibility of selling obsolete products in foreign markets.
Although going abroad has many benefits, it also has several risks.
The organization might end up dealing with volatile currencies in unstable country.
Managers may need to learn a new language, learn a new market and thus takes time and is costly.
The organization may face political and legal uncertainties.
The organization may end up redesigning their products to suit different customer needs in their countries.
Deciding which markets to enter
The organizations wishing to go abroad must have rational mechanism for ranking various foreign markets and deciding which one is the best to enter.
Organizations can rank them using size, growth, cost of doing business, competitive advantage and risk level and techniques such as IRR.
Deciding how to enter the markets
Once the marketer has decided or selected which markets he thinks have attractive opportunities, he must decide how to enter them. This may be through:
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Indirect or direct exploring
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Licensing
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Joint ventures
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Direct investment
Indirect or direct exploring
This refers to the process of selling abroad products which are manufactured in the seller’s home country. It can be carried out indirectly i.e. an organization’s products are sold abroad through independent intermediaries and not the organization itself.
Exporting can also be sold directly i.e. the organization is itself involved in the exporting activity rather than having intermediaries.
Joint ventures
This means the foreign organization can join up with local investors (nationals) to set up a production and marketing facilities in which they share ownership and control.
Direct investment
In this form, the international organization directly owns foreign based assembly or manufacturing facilities. If the market is large enough, foreign direct investment offers distinct advantages since the firm secures cost economics in the form of cheap labour or raw materials, foreign government investment incentives and shipping or freight savings. It also strengthens its image in the host country since it creates jobs. The main disadvantage is that the firm exposes large instruments to risks such as blocked or devalued currencies worsening markets.
Licensing
It is just like joint ventures but in this mode, the international organization licensing a company in the host country to use a manufacturing process trademark, patient, trade secret or other value for a fee or royalty. The foreign organization gain entry at little risk. The licensee will also gain in that he gets production experience; the licensor has less control e.t.c.
Deciding on an appropriate marketing mix.
Orgs that contemplate going abroad must decide to what extent they will adopt and the marketing mix to local environments one can use the 4Ps and for the promotion one must decide which strategy to use whether straight expansion, communication adaptation, product adaptation, dual adaptation or product invention.
Product Lifecycle
October 21, 2007
Product Lifecycle
Product Lifecycle is the process through which a product goes through. To say a product has a lifecycle is to assert 4 things:
a) Products have limited life
b) Product sales pass through distinct stages each passing different challenges, opportunities and problems to the seller.
c) Profits rise and fall at different stages of the product life cycle.
d) Products require different marketing, financial, manufacturing/purchasing and human resource strategies in each life cycle.
Product lifecycle helps interpret product and market dynamics. It can be used for planning and control, although its less useful tool in forecasting.
PLC concept can be used to analyze a:
a) A product category (liquor)
b) A product form (white liquor)
c) A product (vodka)
d) A brand (Smirnoff)
There are four types of PLC. These are:
a) Growth-Slump-Maturity Pattern
This is characteristic of small kitchen appliances. This is applied when electric kitchen knives were introduced, they grew rapidly and then the demand fell to an alarming level. This alarming (petrified) level was sustained by late adopters and early adopters replacing the product.
b) Cycle-recycle pattern
This is common to new drugs. The pharmaceutical company aggressively promotes its new drug and this produces the 1st cycle later the sales of the drug declined and the company gives another promotional push which produces 2nd cycle.
c) Scalloped PLC
In this pattern the product passes through a succession of lifecycles based on the discovery of the product characteristics, uses or users. E.g. Nylon sales, because of new uses of Nylon i.e. parachutes, carpets, sturts, boat sails, automobile tyres e.t.c.
d) Belly shaped PLC
This pattern has four stages, these are:
i. Introduction
This is the period when the product is introduced in the market. This is the period of slow growth. Sales growth is slow due to:
- Delay in expansion of product capacity
- Delay in establishing adequate distribution through retail outlets.
- Customer reluctance
- Technical problems
- Promotion costs are highiest ratio to sales. This is due to:
à Inducing product trials
à Informing customers
à Securing distribution retail outlets.
ii. Growth
This is marked with rapid growth in sales. This is caused by early adopters liking the product and new additional customers buying the product, new competitors enter, attracted by the opportunities they introduce new product features and expand distribution.
Prices remain where they are or fall slightly due to reduce production costs and economics of sale during production.
Companies maintain their promotional expenditures at the same or slightly increased level to meet competition and continue to educate the market.
Sales rise faster than promotional expenditures, causing a welcome decline in the promotion sales ratio.
During this stage, a firm may use several strategies to sustain rapid market growth.
à It improves product quality and adds new product features
à It enters new market segment
à It shifts from product awareness advertising to product preference advertising.
à It leaves prices to attract new price sensitive customers.
à It increases its distribution coverage and enters new distribution customers
à Adds new models
A firm at this stage faces a trade off between high market share and high current profit. It should spend more on product improvement, promotion and distribution so as to capture the market.
iii. Maturity stage
This stage lasts longer than previous stages. In this stage sales growth will slow. In this stage there are three phases:
a) Growth Phase: In this stage the growth rates starts to decline, there are no new
Distribution channels to fill.
b) Stable: In this phase, sales flatten due to market saturation. Future sales are governed by population growth and replacement demand.
c) Decaying: In this phase, the absolute levels of sales start to decline and customers begin to switch to other products.
Sales slow down create over capacity which leads to competition, thus leads to weaker competitors being knocked out and the market belongs to the cost leader, service leader and quality leader together with other market niches.
One should strive to become the “big three” so as to survive by producing products in large volumes and at lower costs. They should also abandon weaker products.
Several strategies can be used e.g.
§ Prices strategy
§ Sales promotion
§ Advertising
§ Personal selling
§ Distribution
§ Services i.e. can the organization speed up delivery e.t.c.
§ Quality improvement
§ Image/style improvement
iv. Decline stage
Sales may decline for a number of reasons e.g. technological advances, shifts in consumer tastes, increased competition, and price cutting e.t.c. As sales decline, some firms withdraw from the market.
If the cost barrier is low, the easy it is for a firm to leave the market.
One should not carry a weak product coz its very costly to the firm in terms of consuming management’s time, frequent price and inventory adjustments, expensive set up, advertising costs e.t.c.
Failing to eliminate a product, delays the aggressive search for replacement products.
