STUDY MATERIAL FOR SPECIALIST OFFICER MARKETING :Marketing Definitions & Marketing Environment

WHAT IS MARKETING?

The term marketing has evolved over time, today marketing is based around providing continual benefits to the customer following a transactional exchange. The Chartered Institute of Marketing define marketing as 'The management process responsible for identifying , anticipating and satisfying customer requirements profitably'
Marketing Definitions

Philip Kotler defines marketing as 'satisfying needs and wants through an exchange process'

Customers will only undertake the exchange, if they feel that their needs are being satisfied, clearly the transactional value can not be more than the amount customers are prepared to pay to satisfy their need.

P.Tailor of www.learnmarketing.net suggests that 'Marketing is not about providing products or services it is essentially about providing changing benefits to the changing needs and demands of the customer (P.Tailor 7/00)'
Marketing is the job of the marketing department?

If we look at CIM's definition in more detail Marketing is a management responsibility and should not be left to a specific department or person. In fact everyone that works for or represents a company are responsible for marketing, as their actions contribute towards the company's reputation.
What does marketing involve?

Marketing requires co-ordination, planning, implementation of campaigns and employees with the appropriate skills to ensure marketing success. Marketing objectives, goals and targets have to be monitored and met, competitor strategies analysed, anticipated and exceeded. Through effective use of market and marketing research an organisation should be able to identify the needs and wants of the customer and try to deliver benefits that will enhance or add to the customers lifestyle, while at the same time ensuring that the satisfaction of these needs results in a healthy turnover for the organisation.


MARKETING CONCEPTS

Introduction

The concept of marketing has evolved over time. Whilst in today’s business world "the customer is king". In the past this was not the case, some businesses put factors other than the customer first. This article examines factors that businesses may orientate their marketing around, so that you can recognise when your marketing strategy is orientated around something other than the customer.

Production Orientation

The focus for the business is to reduce costs through mass production. A business orientated around production believes that the "economies of scale" generated by mass production will reduce costs and maximise profits. A production orientated business needs to avoid production efficiency processes which affect product design and quality. Compromising product design and quality for the sake of production is likely to reduce the product's appeal to customers.

Product Orientation

A product orientated company believes that its product's high quality and functional features make it a superior product. Such a company believes that if they have a superior product customers will automatically like it as well. The problem with this approach is that superiority alone does not sell products; superior products will not sell unless they satisfy consumer wants and needs.

Sales Orientation

A sales orientated company's focus is simple; make the product, and then sell it to the target market. This type of orientation involves the organisation making what they think the customer needs or likes without relevant research. However as we know sales usually aren't this simple. An effective marketing strategy requires market and marketing research, prior to product development and finally an effective promotion strategy.
Market Orientation

A market orientated company puts the customer at the "heart" of the business; all activities in the organisation are based around the customer. The customer is truly king!. A market orientated organisation endeavours to understand customer needs and wants, then implements marketing strategy based on their market research; from product development through to product sales. Once sales have begun further research will be conducted to find out what consumers think about the product and whether product improvements are required. As markets continuously change, market research and product development is an ongoing process for a market orientation company.

Conclusion

In today’s competitive world, it is more important than ever to implement a market orientated strategy. In this digital age customers are able to research the products available on the market fairly quickly. If an organisation does not offer customers what they are looking for (product and customer service) they will buy from a competitor that does.





THE MARKETING ENVIRONMENT

Introduction

Firms are affected by lots of different things; a firm's marketing environment is made up of all of the things that affect the way it operates. Some of the factor's in a firm's marketing environment can be controlled by the firm but some are uncontrollable. Firms need to understand their marketing environment so that they can make the most of positive factors and manage the impact of negative factors. A firm's marketing environment can be spilt into three parts: internal environment, macro environment and micro environment.
Internal Environment

The internal environment is made up of factors within the firm itself. Examples include employees, company policy, capital assets, the firm's structure and the firm's products (materials). These factors can be controlled by the firm.
Micro Environment

The micro environment is made up of factors that are close to the firm and affect it on a 'day to day' basis; usually these factors interract with the firm or are involved in the same industry. Micro environment examples include customers, banks and trade unions as they all interract with the firm. Competitors are also part of the micro environment because they are selling competing products, their activity could have a direct impact on the firm's daily business. Some of the factors within the micro environment can be controlled whilst other's can not. For more information about the micro environment and how to analyse a firm's micro environment through a stakeholder analysis, click here.
Macro Environment

The macro environment is made up of factors that affect the firm on a long term basis. In general macro environment factors are not close to the firm. Micro environment factors could be national or global measures and affect many industries and groups. Macro environment examples include legislation, the economy (e.g. recession, inflation, VAT changes), and technological change such as the internet. Macro environment factors are uncontrollabe factors but still influence company strategy. For more information about the macro environment including how to analyse a firm's macro environment through a PEST Analysis, click here.
Conclusion

One factor can be part of a firm's micro environment and macro environment. The media can be used to illustrate this:

- A one off media story about the firm may affect daily operations and will therefore be part of the firm's micro environment;

- Whilst a general desire to avoid a negative media story may influence a firm's long term business operations and therefore make up the firm's macro environment.

Firms should not concern themselves too much about which of the three categories a factor fits into. Instead firms should ensure that they have correctly identified all of the factors which make up their marketing environment and plan how to manage them for the firm's benefit.




THE MACRO ENVIRONMENT & PEST ANALYSIS

Micro environment factors, are factors close to a business that have a direct impact on its business operations and success. Before deciding corporate strategy businesses should carry out a full analysis of their micro environment. In this article we discuss common micro environment factors.
Customers

As all businesses need customers, they should be Centred (Orientated) around customers. The firm's marketing plan should aim to attract and retain customers through products that meets their "wants and needs" and excellent customer service.
Employees

Employing staff with relevant skills and experience is essential. This process begins at recruitment stage and continues throughout an employee's employment via ongoing training and promotion opportunities. Training and development play a critical role in achieving a competitive edge; especially in Service Sector Marketing. If a business employs staff without motivation, skills or experience it will affect customer service and ultimately sales.
Suppliers

Suppliers provide businesses with the materials they need to carry out their business activities. A supplier's behaviour will directly impact the business it supplies. For example if a supplier provides a poor service this could increase timescales or product quality. An increase in raw material prices will affect an organisation's Marketing Mix strategy and may even force price increases. Close supplier relationships are an effective way to remain competitive and secure quality products.
Shareholders

As organisations require investment to grow, they may decide to raise money by floating on the stock market i.e. move from private to public ownership. The introduction of public shareholders brings new pressures as public shareholders want a return from the money they have invested in the company. Shareholder pressure to increase profits will affect organisational strategy. Relationships with shareholders need to be managed carefully as rapid short term increases in profit could detrimentally affect the long term success of the business. 
Media

Positive media attention can “make” an organisation (or its products) and negative media attention can “break” an organisation. Organisations need to mange the media so that the media help promote the positive things about the organisation and reduce the impact of a negative event on their reputation. Some organisations will even employ public relations (PR) consultants to help them manage a particular event or incident.

Consumer television programmes with a wide and more direct audience can also have a very powerful impact on the success of an organisation. Some businesses recognise this and will change their reaction when consumers mention that they are going to contact a consumer television programme or the newspapers about the business.
Competitors

The name of the game in marketing is differentiation. Can the organisation offer benefits that are better than those offered by competitors? Does the business have a unique selling point (USP)? Competitor analysis and monitoring is crucial if an organisation is to maintain or improve its position within the market. If a business is unaware of its competitor's activities they will find it very difficult to “beat” their competitors. The market can move very quickly for example through a change in trading conditions, consumer behaviour or technological developments. As a business it is important to examine competitors' responses to these changes so that you can maximise the impact of your response.
Conclusion

Businesses can not always control micro environment factors but they should endeavour to manage them along with Macro Environment and Internal Environment factors.




COMPETITOR ANALYSIS

WHAT COMPETITOR INFORMATION SHOULD BE ANALYSED

Any organisation that wishes to succeed in their market, needs to analyse their competitor's strategies. Competitor analysis is a vital part of the marketing planning process. A strong competitor can hinder business success, even lead to business failure. Competitor analysis helps firms to anticipate their competitor's actions and exploit competitor's weaknesses. It also helps firms to identify their firm's unique selling points, so that these can be promoted in marketing campaigns. Competitor analysis is an ongoing task, as successful competitors will continuously develop their marketing strategies, in response to changes in the market place.
Market Entry

A new business or a firm entering into a new market should gather information to help answer the following questions about their competitors:

Who are your competitors?

The firm should decide on which competitors are likely to impact on their business and which businesses the firm will be able to compete with. This will depend on the size of the business and whether it is a national or local business. For example a local shop will not be able to compete with a national supermarket but they may need to take a local store of a supermarket into account if it is located near to the shop. There are a number of models which can be used to identify competitors including Porters Five Forces model.

What is their size and dominance within the market?

An understanding of the market share each competitor has, will help you identify their size and dominance. It will also reveal whether there is market share available for your business.

What customer base do competitors have?

This will help you identify if a firm is a competitor. If a firm is aimed at a different customer base to yours they may not be a competitor. However if their success is due to their customer base should your firm reconsider your customer base? Or would you like to compete directly with the competitor?

What is their positioning strategy within the market?

This question is about the perceptions customers have about your competitor's products. Are they quality products? cheap products or luxury products? Think about how each competitor's positioning strategy is the same or different to yours?

What objectives does each competitor have?

This includes future growth plans and company values. For example are they about to embark on an aggressive growth programme? Or do they believe in recycling and saving the planet. To gather information about competitor objectives and plans look at their websites, company reports, press releases and marketing material. It is important to analyse competitor objectives so that you get an idea of their values and likely strategy.

What are their strengths and weaknesses?

A SWOT analysis may help you to identify and record the answers to this question. Each competitor will have strengths that give them a competitive advantage. They are also likely to have weaknesses that may give you or other competitors an advantage. Once you know a competitor's strengths you can think about how to minimise their impact on your business. Conversly if a competitor has a weakness your marketing plan should look at how to exploit it and benefit your firm.

Information from an array of sources can be collected on your competitors. Examples of data sources include:

    Competitor's websites.
    Annual reports produced by competitors.
    Observing competitor activity.
    News about competitors on the TV or in newspapers and magazines.
    Asking people using competitor products and services for their views about the competitor
    Mystery shopper and covert operations such as pretending to be a customer at your competitor's store, or phoning their telephone sales line.

In 1997 Davidson suggested that the sources of competition information could be placed into three groups.

1. Recorded data. This is data on competitors that has been published. This data could be produced by the organisation itself (internal) e.g. annual reports or by an outside body (external) e.g. newspaper articles or magazine reviews of competitor products.

2. Observable data. This is data collected through observing competitor activities. This could include analysing competitor marketing mix strategy, product launches and service offerings.

3. Opportunistic data. This type of data is collected through talking to bodies that have/have had contact with competitors such as their suppliers, their customers, and their former and/or current employees. Some firms take this a step further and employ employees who have worked for competitors.
Conclusion

Competitor analysis is crucial if the firm wants to stay ahead. Competitor analysis may give a firm new ideas and help formulate new business strategies for growth and profit. Competitor analysis should stimulate innovation, beneficial for both the firm and the customer.





ETHICAL MARKETING

Introduction

Ethical marketing is about making marketing decisions that are morally right. The morality of the marketing decision can encompass any part of marketing including sourcing of raw materials, staff employment and product advertising and pricing. Each person's view of morality is different, it is based on personal values and experiences. This creates a challenge for companies who want to pursue ethical marketing in a manner that will appeal to customers.
Examples of marketing decisions that involve ethics

Does the firm exaggerate the benefits of its products on its packaging? Are claims overstated? Many firms make bold claims to help sell their products. Are such claims morally wrong or merely "advertising puff".

Is it morally wrong to adopt high pressurised selling techniques or focus on customer groups that are vulnerable e.g. pensioners? Vulnerable customer groups have needs? Can you get customer's to buy without pressurised selling?

Firms need to make profits, a reduction in production costs increases profit margins. Is it morally wrong to negotiate tough contracts with suppliers to reduce production costs when it will reduce the supplier's profit margin?

Is it morally wrong to disregard the impact of business activities on the environment. To find out more about environmental marketing click here.
Why do businesses want to adopt ethical marketing?

Some businesses are set up because the founders feel strongly about an issue and they would like to deal with issue through the business. Whilst other businesses pursue ethical marketing because they feel that is what customers expect from them. Some consumers buying products and services because they feel that the products, services (or organisations responsible for them) are ethical. In response to this consumer demand organisations have increased their focus on ethical marketing. The UK Co-operative bank is good example of an organisation that tries to follow a ethical principal, based on what their customers feel strongly about.
How do companies begin the ethical marketing process?
After a company has decided to implement ethical marketing it will need to make the following decisions:

1. Define what is ethical.
2. Decide which branch of ethics it will subscribe to.
3. How will the ethical approach to marketing be implemented.
4. In which areas of the firm’s operations will ethical marketing be implemented e.g. employees, suppliers, consumers/clients, production techniques, distribution or the whole value chain.
5. Complete an analysis of how much ethical marketing will cost and compare this against the likely benefits of ethical marketing. This will help them decide whether they would like to pursue ethical marketing.
Challenges of Ethical Marketing

Ethical marketing requires marketing strategies that are ethical and reflect consumer and market expectations. It is not easy to define the term ethical or identify which ethical decisions cater to market expectations. An individual’s view of ethics and morality is influenced by a variety of things including their culture, background, experience, upbringing/family, peers, community, religion and country.

Balancing ethics and remaining competitive can be difficult. If ethical marketing involves considering the needs and welfare of suppliers, employees and customers it could add to business costs. For example Fair trade products provide producers with a minimum price. When business costs increase profit margins reduce or the costs are passed onto customers through price increases. However if firms can adopt ethical marketing which reflect market expectations, it may make them more appealing to customers and therefore create a competitive edge.
Conclusion

Ethics can form one element of a firm's marketing strategy or the whole strategy can be based around ethical marketing. It all depends on what the business is trying to achieve and what they feel is expected by the public, customers, legislation, shareholders and the target market. Ethical marketing can increase business costs or create a competitive edge.






ENVIRONMENTAL MARKETING MIX
Introduction

An increased focus on environmental issues, has contributed to a rise in the demand for environment friendly products and services . The spotlight on sustaining the environment has created terminology such as “carbon footprint” and “offsetting”. Many organisations have adapted their marketing strategies to capitalise on the consumer appetite for environment friendly products and services. Environment friendly marketing strategy takes into account additional factors which are not usually part of the marketing mix. Such a deviation from the academic acceptance of the “marketing mix” components has led Learnmarketing to develop the ‘environmental marketing mix.’
Environmental Product Strategies

There are a large number of environmental issues impacting on the production of goods and products, for example:

    - What is the impact of production, sourcing of materials and packaging on the environment?

    - Can minimum levels of packaging and environment friendly packaging be achieved without compromising product quality or appeal?

    - Supplier practices i.e. are they at least as environmentally friendly as the organisation they are supplying?

Environmentally friendly products can increase and decrease production costs; environmentally friendly production may increase costs for organisations and their suppliers but this may be offset by lower fuel bills through energy efficiency measures or an increase in sales caused by a positive product image. An organisation may able to pass increases in production costs (caused by Environment Friendly products) to consumers. However this will depend on the level of increase, type of consumer, competitor prices and the strength of the economy. For example during times of recession consumers will place price above many of the other factors making up the marketing mix.
Environmental Place Strategies

All organisations need to “carefully” time when their product reaches consumers; exact time of distribution will depend on the product or service being distributed. Such timing may have an environmental implication.

Some products will need to reach the consumer shortly after production for example fresh food in order to retain freshness, taste or nutritional value. The fastest method of distribution may damage the environment. Conversely a more environmentally friendly method e.g. via canals may impact on speed of distribution and consequently quality of the product. A method of distribution that combines speed with “environmentally friendliness” may increase distribution costs as some of these processes are still under development e.g. electric vehicles.

In addition to the type of transport used for distribution, an organisation will need to review distribution techniques; For example timing deliveries so that they occur during off peak hours and do not contribute to congestion. Some organisations attempt to make fewer deliveries, whilst others promote concentrated products (e.g. fabric conditioner) as they increase the number of products that can carried in each delivery vehicle.

Even if “environment friendly distribution” is not at the top of an organisation’s list of priorities, government policies may elevate it to the top. Congestion charging and low emission zones have been introduced in the London. Apart from the obvious increase in costs involved in following such policies, a failure to observe environment friendly rules and regulations will lead to fines, sanctions and negative publicity.

After reviewing internal distribution methods an organisation will need to review supplier and subcontractor distribution as consumers and the media expect organisations claiming environmental credentials to work with other environment friendly organisations.. For example do subcontractors use Bio-fuel? Are subcontractors actively managing their “carbon footprint” and energy use?
Environmental Promotion Strategies

Due to the consumer, celebrity and government appetite for protecting the “environment” environment friendly practices are used as promotional tools. For example the award of ISO 14001 (which certifies that an organisation has certain environmental standards, as certified by an independent external auditing organisation) is often quoted in marketing literature.

Product packaging that can be recycled will have a message on the packaging clearly stating the recycling properties for the packaging. Similarly organic products will be labelled, not only on the packaging but also around the shelving displaying the organic produce.

Some organisations have sought to reduce costs through the promotion of environmentally friendly strategies. The use of carrier bags has changed dramatically in the UK over the last five years. Retailers actively promote the benefit of reusable bags as they have many benefits:

- Lower costs for the retailer
- Consumers “feel good” as they believe that the use of a reusable bag is helping the environment
- Fewer carrier bags go to landfill

Another example is hotels offering guests the opportunity to accept fewer linen and towel changes. Such strategy is environmentally friendly as it reduces the use of detergents and energy and it also reduces costs for the hotel and improves corporate image.

Some organisations providing products and services which may harm the environment have added “off setting” methods to their portfolios and marketing literature. The idea behind “off setting” is that the consumer is offered the opportunity to indirectly engage in an activity (such as tree planting) that benefits the environment and therefore balances/evens out the damage they caused for example through flying. Such schemes attempt to ease the consumer’s conscience and retain a positive image for the organisation providing the environmentally unfriendly product or service.

Environmental Pricing Strategies

Throughout this article we have discussed how environmentally friendly strategies can either increase or decrease organisational costs. The ideal marketing mix is a reduction in costs or an increase in costs which exceeded by an increase in profits.

Pricing must reflect the demand for the product, an incorrectly priced product will reduce demand; this is now further complicated by the impact environmental issues have on pricing. If an organisation is paying more for raw materials because the supplier is “environmentally friendly” it may decide to “pass on” this price increase to the consumer, the ideal price will be dictated by the target market.

On the other hand companies cutting costs and increasing profits at the expense of the environment are risking negative publicity, fines, sanctions or may simply lose out to organisations actively promoting their environmentally friendly practices even if such competitors offer more expensive products and services.
Summary

The environmental marketing mix is becoming extremely important in today’s business world. Firms will have to carefully manage this mix if they are to successfully operate in a world which is becoming increasingly aware of climatic changes.


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SPECIALIST OFFICER MARKETING SYLLABUS

Concept, Nature, Scope and Importance of Marketing, Meaning, Functions and Importance of Marketing Management, Marketing Organization, Marketing Process & Marketing Planning, Marketing Program, Marketing Decision, Marketing Research, Marketing Segmentation, Consumer/Buyer Behaviour & Motivation, Sales Forecasting & Sales Budget, Product, Product Planning and Development, Branding, Packaging, Labeling, Standardization & Grading, Pricing Decision, Channels of Distribution and Physical Distribution, Wholesale and Retail Trade, Advertisement, Sales Promotion & Personal Selling, Sales Management, Rural Marketing, Bank Marketing, Insurance Marketing, Marketing Environment, International Marketing, Social Responsibility & Marketing Ethics, Consumer Protection in India, Marketing of Services etc.


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