Chapter 12 Summary - Business Management Marketing: The link between producers and providers of goods and services, and the consumers of these. This can be extended to goods, services, experiences, events and personalities. Brand: a powerful business asset that is essentially a makers mark; it creates and brings with it awareness, desirability and power. Marketing concept: the business focuses on satisfying the needs of the customer/consumer rather than just selling a product or service. Market-oriented approach: a business strategy that focuses on the needs and wants of consumers and develops products to meet them. Customer base: The group of customers who repeatedly purchase the goods or services of a business and are the main source of revenue for the business. Business objectives: - Profit - Customers - Market share - Customer base - Expansion (shop, products) The pareto principle states that 80% of business comes from 20% of customers. As a result the main focus of marketing is the retention of customers. This has lead to the four essential aspects of marketing. - Customer satisfaction. - A totally integrated effort from the business. - Realistic business objectives, (profit, locations, sales, markets) - Key performance indicators (K.P.I’s) , need to show whether they have been met. (Growth in revenue, Net profit margin, operational cash flow) Brand identity builds a relationship with customers. This involves the essence, identity, positioning and attributes of the company. To protect the brand the business should register a trademark so it can’t be stolen. It also makes the brand more recognisable. Technology can heavily impact a brand. This involves the use of social media, giving a new level of communication to the public, allowing customers to communicate about a business. A businesses perception on social media affects their overall perception of the business. The Australian securities and investment commission acts as a ‘corporate watchdog’ to ensure customers aren't being misled. Consumer mistreatment can have a negative effect on a business and its brand. Businesses know that with 4 generations of age groups are in the workforce, they need to take a diverse approach to marketing. Marketing research is an analysis of the current market to help a business make decisions to satisfy existing or potential customers. This is used to find answers to questions about market size, consumer likes and dislikes, product positives and negatives, promotion and packaging effectiveness, degree of threat from competitors and distribution. Marketing consultant: a professional who provides advice on marketing related issues. A systematic approach to market research Step 1, Define the problem and establish research objectives. Defining the issues within a business is an important step into having a successful and thriving business. Usually market objectives relate to the potential demand for a product or service, the marketing environment or a businesses competition. Step 2, Determine the research design. Exploratory research: Collecting information in an unstructured and informal matter. This could involve reading a magazine or article, using a particular product or service, and gaining an impression and feeling about the product or service. Descriptive research: Research that incorporates consumers attributes, intentions and behaviour. Related the image of a product or service. Information is usually obtained through consumers behaviour. Causal research: Research that involves finding the cause and effect of certain actions. Changing one variable at a time, such as the price of a product could be changed to observe the impact this has on the product sales. Step 3, Identify and assess information types and sources. Primary data: information gathered firsthand by the business owners or market researchers to service the current research objectives. - surveys/questionnaires - both telephone and direct mail. - Interviews - door-to-door or shopping center. - Direct observation - personal or electronic. - Small group discussions; e.g focus groups. - Experiments - laboratory tests, field tests. - Online bulletin boards - Email blasts - mass emails to family, friends, business associates. Secondary data: Information that has been previously collected. This can come from internal records of the business or sources external to the business. - Company records - Financial statements - Annual reports - Periodicals and trade/professional magazines - Internet searches - Computerised databases - Index services - Libraries - Advertising agencies - Government agencies - Private market research firms. - Radio and television stations - Trade associations Step 4, Design data collection approaches, forms and sample size. Sample: a proportion or subset of the total population being studied. Population: entire group understudy as defined by the research objectives. Target market: the market at which a product or service in primarily aimed. It can be necessary to study a sample, which will be a small proportion of the population of interest or target market. The group is randomly selected to provide a broad range of opinions or interests. This can be through questionnaires, observations and focus groups. Quantitative research: market research based on structured, closed questions aims to gather responses that can be summarised in figures. Qualitative research: research based on in-depth, open-ended responses that focus on emotional or motivational aspects of consumer behaviour. Step 5, Collect and analyse data. Data can be collected by trained interviews working for market research companies. These are usually conducted over the phone and are scripted. Once collected, the raw data needs to be tabulated, tested and analysed to form meaningful information. Computer software, such as statistical Package for Social Science (SPSS), is used by marketing professionals to tabulate and perform statistical tests. Step 6, Prepare and present final report. Findings are communicated to the business owner in the form of a report, including how it was collected. Computer graphics are added to present findings clearly and make them understandable, such as graphs and charts, to show patterns and trends. Market attributes Market: The group of potential customers with similar needs who are willing to exchange something of value with sellers offering various need-satisfying goods or services. Four basic types of markets are acknowledged: - Consumers - involves businesses selling mass consumer goods; for example, soft drinks, food and household products to consumers. Businesses - where the purchases are other business personnel who are often well-trained and well-informed professional buyers. Global - businesses that decide to export their product. Non-for-profit and government markets - organisations that are formed to provide assistance to, or infrastructure for, society. Market dimensions Determining the attributes of the target market is important for effective marketing. Mass marketing: an attempt to appeal to an entire market with one basic marketing strategy utilising mass distribution and mass media; also called undifferentiated marketing. Adopting the strategy of mass marketing can be costly and does not usually work well since it is unlikely that consumers and customers all have the same needs. For marketing to become more effective the mass market is broken into segments. Once the segments are formed, a business reviews them to find their target market. Within which it is possible to discover a niche market whose needs can be more precisely met. Niche market: concentrating all marketing efforts on a small but specific and well-defines a segment of the population. Market segmentation Marketers try to identify and profile distinct groups of buyers who might prefer or require varying products and marketing mix. Marketing mix: the seven variables that are used when undertaking marketing strategies: product, price, place, promotion, people, physical evidence and process. Consumer markets are typically segmented by the four dimensions: Target Market Identifying a target market requires a narrowing-down process from a broad or generic market to focus on the specific type of customer. Generic market: a market where broadly similar needs of customers are met by sellers offering a variety and often diverse range of products. Product market: when a consumer is looking for a particular item; for example, a particular type of drink or car. The ideal niche market has the following attributes: - The customers have a distinct set of needs. - The customer will often pay a premium to the business that satisfies their needs. - The business usually has no competitors - It permits a degree of specialisation in the product or service required. - It is generally one that will allow for profit and market growth. Operating in a niche market can be beneficial to businesses due to the reduced amount of competition. Consumer Behaviour Consumer behaviour: the study of individuals and groups, and the processes they use to select, secure, use and dispose of products, services, experiences or ideas to satisfy their needs. Five factors influencing customer behaviour: - Cultural factors - inherent values and beliefs are developed through parental and environmental influences. Such as nationality, religion or ethnic background. - Social factors - people are influenced in their actions and beliefs by those with whom they associate. Such as family, peers, sports, church or other community groups. - Personal factors - these are differences due to age, stage of life, occupation, economic situation, lifestyle and personality. - Psychological factors - this incorporates the notion of what is motivating the consumer to purchase this particular product or service. - Situational factors - it is important to know when, where and how consumers make their purchases. Consumer trends - Buying online Buying consumables One-stop shopping Ready- to-eat E-commerce Consumers have now become 24/7 in their purchasing. Consumers being treated as individuals Consumers are more health conscious. Nostalgia The emergence of a consumer group known as ‘tweens’
