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24 Cards in this Set
- Front
- Back
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The definition of marketing
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It includes the conception, pricing, communicating anddistribution of ideas, products or services to encourage mutually beneficial exchangesaimed at satisfying individual needs.
It was also mentioned that marketing is about notonly selling products, but also a whole process that must have the end result: to satisfythe needs of the consumer by creating value. |
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Exchange and marketing Conditions: |
Exchange can be described as one person giving something in order to receive somethingelse.
The following conditions forexchange entail: - At least two parties must be involved.
- Each party must have something that the other party values. - Each party must be able to communicate with the other party and deliver the goods or services sought by the other trading party. - Each party must be free to accept or reject the other’s offer. - Each party must want to deal with the other party. |
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Gaps between production and consumption
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(1) Space gap.
A geographical space (distance) exists between the manufacturer andthe consumer. This is also evident among farmers who need to transport their freshproduce to the market. They have to transport it to locations where customers willbuy their products, such as the local greengrocer, retailer or fresh produce market. (2) Time gap. Bananas are a tropical fruit that can be grown and harvested only in summer.Thus, in order for bananas to be available the whole year round, distributors have tostore and freeze large numbers of them to be distributed throughout the year. (3) Information gap. www.hippo.co.za is an apt example of a company that closes theinformation gap. This company affords its customers the opportunity to comparedifferent insurance companies and choose the one most applicable to their situation. (4) Ownership gap. When a new house is purchased, the consumer becomes the owneronly when it is registered in his or her name. The consumer requires finance from abank to make the purchase possible. (5) Value gap. The seller and buyer must agree on an acceptable exchange rate (priceof the product). If the buyer regards a price of R200 for a pair of jeans as acceptable,he or she will purchase the jeans. This means that the value the buyer attaches tothe product is the same as the value attached by the seller. |
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Gaps can be reduced or bridged by involving intermediaries in the selling process. There are three kinds of intermediaries: |
(1) Middlemen. Middlemen are companies such as Pep Stores, Edgars, Spar and ShopriteCheckers.
(2) Sales intermediaries. An example of a sales intermediary is a financial advisor. He helpshis clients to invest their money at other companies such as Allan Gray or Momentum.To render this service, this financial advisor does not have to be an employee of thesecompanies. (3) Auxiliary enterprises. These enterprises are not directly involved in the transfer of titlebut provide support services to facilitate the selling process. Examples are Spoornet,advertising agencies and commercial banks. |
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Marketing Activities |
Three different marketing activities are discussed namely, primary, auxiliaryand exchange activities.
Primary activities have to do with transportation. These days,companies use a combination of land, water, air traffic and pipelines to transport goods. Exchange activities ensure that the customer receives what he or she paid for. |
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Auxiliary Activities |
Sourcing and supplying information.
Standardisation and grading. Storage. Finance. Risk taking. |
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Identify 4 areas of marketing oreintation |
production, sales, marketing and societal orientation.
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Production orientation. |
In this orientation, the company would only look at its capabilities,be it to produce products or provide services.
This orientation gives no thought to howthe company can satisfy the needs of its customers. The product or service it offerscould be precisely what the market wants and the company could prosper, but if it isa product or service that the market does not require, the company would probablyonly achieve short-term success. |
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Sales orientation |
Sales-oriented companies focus only on selling as many of theirproducts as possible. They use aggressive selling techniques to ensure high profits. This is also an orientation that does not have an infinite life span, because even thoughthe company is selling a great product, it will not have looked at what consumerswant and need and will therefore battle to persuade people to buy products theydo not want. |
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Marketing Orientation |
The marketing orientation is based on the understanding that asale does not only depend on an aggressive sales force, but instead on the customer’sdecision to purchase. This orientation has shown the rise of companies that began tosee the necessity for producing products that customers want. They began to look atpackaging, distribution and marketing messages. They realised that perceived valuewas far more important than what the company can produce. The marketing orientation has also led to the concept of pure marketing. |
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Pure marketing principles |
This entails three principles, namely consumer orientation, long-term maximisation of profitability and integration of all business activities directed at profitability and the satisfaction of consumer needs. |
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Societal orientation |
This orientation refers to a company’s obligation to ensure thatit does not harm the physical or social environment, but must do anything it can touplift the environment. This means that a company should ensure that it does not doanything to pollute or destroy any part of the physical environment it influences andthe communities affected by its operations are uplifted to ensure a sustainable future. Note that Green marketing is also a concept related to the societal orientation. |
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Green Marketing |
This is where companies make an effort to inform their customers that their products are environmentally friendly, biodegradable and recyclable.
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Relationship marketing
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Relationship marketing involves a company striving to build long-term relationships withits customers to ensure long-term profitability.
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Loyalty
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Loyalty means that a customer will keep coming back to a business or will buy the business’sproducts no matter what the competition offers.
A customer does not only choose to goback because of reliable products, but also because of excellent quality service. |
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Synergy
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Means the whole is more than the sumof its parts, which means that when every department works together, the quality ofthe product will be so much higher.
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The market includes groups like: |
Current customers. loyalty programmes are used to retaincurrent customers. Other companies that make use of loyalty programmes are BritishAirways Executive Club, Exclusive Books Fanatics Club, Southern Sun Frequent Guestand AgriBonus.
Potential customers. Potential customers are lured to shops with sales, promotions,events and free trials and samples. Suppliers. Look at websites such as www.Alibaba.com and www.fastmoving.co.za.These are but two websites where you can find suppliers of raw materials in SouthAfrica. Note that companies buy products from around the world. That is why theyhave to make sure that they can trust their suppliers Potential employees. Currently, acquiring new employees is a complex process. TheHuman resource department usually handles this, but it is also common practice forcompanies to outsource this function. Have a look at www.drgoutsourcing.co.za andwww.human-resources.co.za to see how their services work. Reference groups. Reference groups are people that can influence your decision-making. For example, a friend tells you about a new chocolate from Cadbury, andafter talking to her, you are convinced that you would be satisfied purchasing thenew chocolate. Influencers. The government, international affairs and new competition can influencethe marketing efforts of a company. Current employees. Internal marketing efforts are put in place to motivate employees.These efforts may include financial bonuses, gifts, a point system with rewards forachievement and public recognition. |
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Microsegmentation differs from traditional segmentation in the following three ways: |
(1) Consumers are more knowledgeable and their expectations are continually rising.Because of the ease with which consumers can gather information from the internet,they are forcing companies to become more diligent in the way they present theirmarket offerings.
(2) Technology has changed dramatically. New technology such as blogs and relationshipor social networks (eg Facebook and Twitter) are some of the factors that need to beconsidered, because these applications give companies a platform to communicatewith their customers at a personal level. This can also help to understand customerpreferences and give prompt feedback on enquiries. (3) Competition between vendors is increasing. A possible reason for this is that peoplecan now compare products with the “click of a button”, which means that companiesmust constantly strive to stay ahead of their competition. |
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The following four variables are included in marketing activities:
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(1) product – the product itself
(2) place – where the product will be distributed (3) price – the price reflects the value to the customer (4) promotion – how the product will be marketed (this includes marketing communication methods such as print and television advertisements, billboards, radio and the internet) |
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Functions of the eight departments: |
(1) Operations. The operations department is responsible for the processes involved inmanufacturing products from raw materials.
(2) Human resources. This department is responsible for acquiring, training and retainingpersonnel. (3) Finance. This department is responsible for ensuring that the business is runningoptimally with regard to finances. (4) Purchasing. This department ensures that the company has all the materials neededfor production. (5) Public relations. The employees in this department ensure that the market has a positiveview of the company. They are responsible for press releases and communicationwith the public. (6) Information. This function ensures that internal information is available for planningand control. (7) Marketing. This department ensures income from sales and manages the wholemarketing process. (8) General management. This comprises top, middle and lower management, whichare responsible for ensuring that all operations in the organisation run smoothly.Synergy between management will ensure long-term profitability. |
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The Marketing management |
According to the American Marketing Association, marketing management is an ongoingprocess of setting goals, planning and performing activities to meet the goals andmeasurement.
Management tasks range from identifying opportunities and threats tocompiling marketing data and choosing target markets and distribution channels. |
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The Marketing management tasks |
(1) Planning. Planning forms part of strategic decisionmaking and helps to examine waysof utilising marketing opportunities and countering threats. It also helps to identifyinternal strengths and weaknesses. Contingency planning is necessary when theoriginal plan cannot be used because of unforeseen events, and an alternative planhas to be devised. (2) Implementation. The main goal is to achieve marketing objectives – hence the needfor putting the best organisational structure in place. Cooperation is essential, whichmeans that the interests of all parties must be involved in the implementation process. (3) Control. The main function of control is to ensure the company is still on track. Thismeans that the company must continue to work towards achieving its goals. Controlalso helps to measure marketing performance, determine the differences betweenactual performance and standards and introduce corrective measures for futureperformance. You need to be aware of the implications of marketing managementnot performing its tasks properly. |
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Strategic business units |
A strategic business unit (SBU) is a product that is directed at a specific market with itsown strategic plan on how it will be distributed and communicated to the public.
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SUMMARY |
In this study unit we have learnt what marketing is and how it has evolved.We saw that marketing involves far more than only producing a product andselling it to the public.
It is a far more complex process of first finding outwhat the consumers want and then developing a strategy. The strategy willencompass decisions about what the product should be and what it shouldlook like. It should state how the product will be distributed to the market,and what the price should be. It is important to set a price that indicatesvalue for consumer. Lastly, the strategy will indicate what mix of media willbe used to communicate the marketing message. We also discussed the importance of relationship marketing. We concluded that it ismore profitable to retain consumers than to attain them. This is why it is necessary to addadditional variables to the marketing mix, namely people and processes, which shows thatthe employees and the production process also play a vital role in retaining customers. Synergy between those two variables will result in high-quality products with excellentservice, making it a complete market offering. At the end of this study unit, we discussed the definition of marketing and the marketingprocess as part of an organisation. Management tasks such as planning, implementationand control were discussed to give insight into the importance of ensuring that thisprocess runs smoothly. Lastly, we discussed the essential role of strategic marketing management and howmultiproduct companies can market a variety of products to different markets. Thesemarkets are called SBU. In the next study unit we will look at the environment in whichthe marketer operates. |
