Definitions of Marketing Research Essay

Needs, Wants & Demands Demands – Human wants that are backed by buying power. The Market Offering- products, services & experiences Exchange, Transactions & Relationships Exchange is the act of obtaining a desired object from someone by offering something in return.

Markets Concept of Marketing Means managing markets to bring about exchanges and relationships for the purpose of creating value and satisfying needs and wants. {draw:frame} Marketing Management Defined as an ‘art’ and ‘science’ that determines and chooses target markets and attempts to build profitable relationships with them. Marketing is about MANAGING: [1] Customer Demand -E. g.

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Promotional activities to increase demand, “Demarketing” to temporarily or permanently reduce demand, “Synchro”-marketing Different approaches to the marketing function {text:list-item} Marketing Management Philosophies The production concept: Focus on production and distribution, Production and assembly line refinement, Profits through production controls The product concept: Focus on quality, performance and innovation The selling concept: Undertakes large-scale selling and promotion efforts The marketing concept: Determining needs and wants of the target markets The Societal Marketing Concept: Determining needs, wants and interests of the target markets, Effective and efficient achieving desired satisfaction, Improves consumer’s and society’s well being Not always a Consumer Orientation! Distributors’ or Resellers’ Orientation – Control of the end market important for both manufacturers and distributors. Example: Food retailing – manufacturers for many years restricted the role of distributors to the physical task of distribution. Role was one of partners.

But now seeing a shift in power from suppliers to distributors ‘ e. g. supermarkets. Whilst suppliers would like distributors to be partners, retailers tend to see their relationship with suppliers in terms of competition Prescribers’ Orientation- other actors play important roles in advising, recommending or prescribing brands, companies, products or services to customers or distributors. Example: Pharmaceutical market ‘ The doctor exerts a key influence (intermediate customer). Example: In B2B markets, engineering companies, experts, consultants… recommend certain equipment, shortlist products meeting the necessary specifications.

Synchronising Marketing Strategies & Actions Process & Techniques – the Marketing Process- involves: [a] analysing market opportunities [b] selecting target markets [c] developing a marketing mix [d] managing the marketing effort Understanding the Wider Environments Key Concepts (overview): [2] The Macro and Micro Environments PEST analysis systematically examines the macro-environmental issues regarding Political, Economic, Social and Technological elements. Markets Successful organisations must be: Understand consumers in the marketplace: Analyse consumer needs and wants, Understand consumer behaviour, Providing value; i. e. delivering satisfaction.

Competitive Strategy A market nicher – is a firm that serves a specific smaller segment of the market that other firms ignore or overlook The Marketing Mix – Product, Price, Place, Promotion, People, Physical evidence, Processes Strategic Planning “The process of developing and maintaining a strategic fit between the organisation’s goals and capabilities and its changing marketing opportunities” Three Major Types of Plans: Planning Process: Analysis: Company situation, opportunities, environmental analysis. Planning: Decisions regarding business units, emphasis upon products and brands. Strategic Plan Outline: Establish overall objective and mission, Organisational audit, Competitor analysis, Macro-environmental analysis, SWOT analysis, Marketing plan covering different products and brands, Operational plans The Mission Strategic Objectives: Clearly defined objectives need to be formulated.

Objectives should be prioritised into a hierarchy of objectives. Objectives should be measurable -External Audit – reviews the macro-environment *The SWOT Analysis* – Situation analysis in which internal strengths and weaknesses of an organization, and external opportunities and threats faced by it are closely examined to chart a strategy. -Strengths and Weaknesses – List the most critical and grade them Business Portfolio Analysis – The collection of businesses and products that make up the company Portfolio analysis: {text:list-item} {text:list-item} Marketing Planning – Marketing plays a key role in the strategic planning process.

Marketing must work with other functions to develop a system of plans that will best accomplish the firm’s overall objectives and achieve customer satisfaction Marketing Environment – Actors and forces affecting management’s ability to develop and maintain successful relationships with its target customers. The Macro-environment: includes the larger societal forces, E. g. demographic, economic, natural, technological, political and cultural forces The buying behaviour of the final consumers, individuals and households who buy goods and services for personal consumption. The Stimulus-Organism-Response Model Considering the *Dimensions of Consumer *Behaviour Key = Obtaining an understanding as to how the consumer (the Organism) responds to stimuli.

Understanding how: [1] Buyer Characteristics influence what individuals perceive and how they react to stimuli. [2] The Buyer’s Decision Process influence behaviour. [1] Buyer’s Characteristics Cultural Factors: Culture (Human behaviour is predominantly learned behaviour from family and other important institutions, Basic cause of person’s wants and behaviour) Subculture (_nationalities, religions, racial groups_…) – Group sharing similar value systems based upon life experiences and situations Social class – Relatively permanent and ordered divisions in a society whose members share similar values interests and behaviour. Class systems differ in size and constituents. Lower social classes are more culture-bound.

Young people of all classes are less so Family: ‘Family of Orientation’ (parents, siblings…), ‘Family of Procreation’ (spouse, children…) 5 Consumer Buying Roles:- Influencer – gathers info; tries to persuade others Decider – authority or power to make decision Buyer – conducts the transaction Personal Factors: Age and life cycle phase, Psychological life cycles (Changing interests), Occupation, Economic circumstances (Savings and buying power), Lifestyle (Pattern of living expressed in activities, Psychographics is the technique of measuring lifestyles, Personality and self-concept The ‘traditionalist’ **18% – Influenced by culture and socio-economic history, specific to their country The ‘homebody’ **14% – Strong attachment to roots and childhood environment The ‘rationalist’ **23% – Ability to cope with complex environments, entrepreneurial, Personal fulfilment based on self-expression rather than financial reward The ‘pleasurist’ **17% – Emphasises sensual and emotional experiences The ‘striver’ **15% – Holds beliefs, attitudes and values that underlie change The ‘trend setter’ **13% – Favours non-hierarchical structure and spontaneity Perception: Selective attention ‘ screen out stimuli which are not meaningful or consistent with our experiences and beliefs, Selective distortion ‘ we interpret things within our on framework of beliefs, Information framing ‘ the way in which we present information to people.

Learning: Classical conditioning, attitude precedes trial, Operant conditioning, trial precedes attitude, Cognitive Learning, the promise of the reward motivates Beliefs & Attitudes: Beliefs – thoughts that a person holds about something frame of mind of liking/disliking. The Buyer Decision Process The Buying Decision Process: Recognising the problem: Size of the discrepancy between current and desired position; Relative importance of the problem; Need inhibitors Information Search: Internal sources (Memory, Personal experience), External sources: Personal (friends, family, work, etc. ), Commercial (adverts and sales staff, Third party ‘ e. g. Which reports), Directed personal experience (trial, demonstration, tasting, etc. Evaluation of Alternatives: Products as ‘bundles of product attributes’ Differing Importance given to each attribute Some attributes more salient than others Concept of Total utility (expected utility) Purchase Intention to Purchase Decision Influence of Product Characteristics on Rate of Adoption Relative advantage – Innovation superior to existing products Compatibility – Fit of values and experiences of potential consumers Complexity – Ease or difficulty in using the technology or innovation Divisibility – Innovation trialled on a limited basis Business/Organizational (Buyer) Behaviour Three Types of Buying Situations: New buy, modified buy, straight rebuy Participants in the Buying Process: Users, Deciders, Influencers, Buyers, Gatekeepers Stages in the Buying Process: Problem recognition General need description Product Specification Supplier search Proposal Solicitation Supplier selection Order routline specification Performance review Key Organizational Buying Criteria / Vendor Selection (Note weights for each criteria/vendor attributes): price, quality specification, delivery schedules, past performance, production facilities (capacity), warranty, technical capability Marketing Research Marketing Research- the gathering of data and information on the market.

The Marketing Information System The Marketing Information System (MIS) {draw:frame} A Marketing Information System Marketing environment (The company, Customers, Competitors, Suppliers, Distributors, Economic, Social, Legal, Technological, Physical forces)=> Marketing information system (Internal continuous data, Internal ad-hoc data, Environmental scanning, Marketing research)=>Marketing decision-making (Strategic-new products and markets, competitive strategy, Tactical-sales force monitoring, advertising copy) Marketing Research Step 1 Exploratory research – Gathering preliminary information that will help to better define problems and suggest hypotheses.

Descriptive research – Defining marketing problems, situations or markets, such as the market potential for a product or the demographics and attitudes of consumers. Marketing Research Step 2 Secondary data: information that already exists, having been collected for another purpose. Primary data: information collected for the specific purpose at hand. Marketing Research Step 3 {text:list-item} Outline of research construct, Summarised written proposal. Marketing Research Step 4 {text:list-item} Present the relevant data so that the information can be used to make meaningful decisions. Team effort between marketers and researchers and joint responsibility. The Big Picture! draw:frame} Types of Question {draw:frame} Comparing of different contact methods Questionnaire Use of open ended questions High Medium Low Low Ability to probe High Medium Low Low Use of visual aids High Poor High High Sensitive questions Medium Low High Low Resources Cost High Medium Low Low Sampling Widely dispersed populations Low Medium High High Response rates High Medium Low Low Experimental control High Medium Low Low Control of who completes High High Low Low/High Interviewer bias Possible Possible Low Low Demand Estimation Estimation of market demand is essential for effective marketing and as illustrated below, demand is measured on a number of levels. Defining the ‘Market’ An economist’s interpretation of the market is based upon all the buyers and sellers who transact over products and services, based upon the structure, conduct and performance of the market. The marketer defines a marketas a collection of all the potential and actual buyers of a product or service.

Defining the Market: A market is the set of buyers and the industry is the set of sellers. Types of Market: Measuring Market Demand The total market demand is: the _total volume of a product or service that would be bought by a defined consumer group in a defined geographic area, in a defined time period in a defined marketing environment under a defined level and mix of industry marketing effort_. Measuring Market Demand Estimating Market Demand Forecasting Future Demand: Environmental forecast: Inflation, Unemployment, Interest rates, Consumer spending and saving, Business investment, Government expenditure. Industry forecast: What is currently happening?

Company sales forecast: Buyers’ intentions, Composite of sales force opinions, Expert opinion, Test market method, Time series analysis, Leading indicators, Statistical demand analysis, Information analysis. Forecasting Future Demand: Research in SMEs & The NPE Sector Market Research Ethics Segmenting, Targeting & Positioning The Need for Segmentation: Cannot be all things to all people, all of the time! Buyers and markets are too complex and diverse for one simple marketing formula to adequately address the needs of all. Market segmentation is the process dividing up the market into smaller segments with similar needs that can be efficiently addressed.

Steps in market segmentation, targeting& positioning Market segmentation: 1. Identify bases for segmenting the market 2. Develop profiles of resulting segments Market targeting: 3. Develop measures of segment attractiveness, 4. Select the target segment Market positioning: 5. Develop positioning for each target segment, 6. Develop marketing mix for each target segment Levels of Market Segmentation: Mass marketing: Assumes market is homogenous and uses the same product, promotion and distribution to all consumers. Niche marketing: Adapting a company’s offerings to match the needs of one or more sub-segments more closely where there is little competition.

Segmenting consumer markets {draw:frame} Segmentation 1 Geographic segmentation: Dividing a market into different geographical units such as countries, states, regions, towns. Demographic segmentation:Age and life-cycle segmentation, Ethnic segmentation, Gender segmentation, Income segmentation. Geo-demographics: Study of relationship between geographical location and demographics. Segmentation 2 Psychographic segmentation: Social class, Lifestyle Segmentation 3 Segmenting Business Markets {draw:frame} {draw:frame} Recent study by Signode* Corporation * (industrial packaging division) Four types of buyers: Programmed buyers: View products as not very important to their business. Pay full price and accept little service. Highly profitable.

Relationship buyers: View products as moderately important. Small discounts and good profitability. Modest amount of service. Transaction buyers: View products as very important to their business. Large discounts for volume. Well informed on products and competitor products. Bargain hunters: Demand highest service and biggest discounts. Volume customers though not very profitable. Segmenting International Markets Multivariate segmentation Requirements for Effective Segmentation: Substantiality – Degree to which a market segment is sufficiently large or profitable. Market Targeting Having identified market segment opportunities the question is, ‘which segment to target? Measuring Segment Size – Key Principle – The 80/20 Principle Measuring Segment Size – Key Principle ‘ Cross Tabulation to Identify Segments Helps marketer get a better understanding of the wants / needs of buyers and targeting key segments Cross Tabulations Strategies Guiding Choice of Target Markets Undifferentiated (Mass) Marketing Differentiated Marketing Concentrated / One-to-One Marketing Undifferentiated Marketing All customers treated the same, regardless of actual differences “One product for everybody” Differentiated Marketing Firm aims at two or more different market segments, each of which has a different set of needs and uses a tailor made marketing plan for each segment “Two or more products to two or more groups” Concentrated Marketing Concentrate on one group with a distinct set of needs and uses a tailor made marketing plan to attract this group “One product to one market niche” Positioning Success requires a sustainable strategy that is different from rivals.

Positioning is the process of creating in the mind of consumers an image, reputation, or perception of the company and/or its products relative to competitors. Positioning helps customers understand what is unique about a company and its products. Positioning then, is the perceived fit between a particular product and the needs of the target market. Marketers strive for Competitive advantage defined as a comparative advantage over the competitor gained by offering greater value, either by lower prices or by offering higher quality benefits. Obtain an advantage often depends on industry types ‘ e. g. difficult in commodity markets. Generally, companies and their offerings can be differentiated along the lines of products, services, personnel or image.

Product differentiation: Features and benefits, Quality, Performance, Innovation, Consistency, Reliability, Style and design, Durability, Repairability Services differentiation: Delivery, Installation, Repair services, Customer training services, Consulting services, Speed of service Personnel differentiation: Hiring, Training, Customer focused Image differentiation: Images that reflect the ‘soul’ or ethos of the company Value positioning A range of positioning alternatives based on the value an offering delivers, its price, and its position relative to others. More for more Premium product and premium price, supported by a premium image. E. g.

Mont Blanc pens The same for less Value proposition e. g. Amazon. com Less for much less Trade off between luxury and necessity. E. g. Five star hotel versus a budget hotel. Lower performance for much lower cost. More for less No-name house brands versus the big brands. Search for a new unoccupied position that is valued by enough consumers and occupy that. De-position or re-position the competition. Competitive Strategy Understanding customers is not enough. The marketing environment continues to be increasingly competitive, both regionally and globally. The removal of international trade barriers has opened greater global trade opportunities than ever before.

Steps in analysing competitors Identifying the company`s competitors->Determining competitorsobjectives->Identifying competitors strategies->Assessing competitorsstrengths and weaknesses->Estimating competitors reaction patterns->Selecting competitors to attack and avoid Identifying the company’s competitors: Companies can define their competitors according to an industry perspective. It is the set of all sellers of a product or service. Companies must understand the competitive patterns and trends in the industry. Competition defined on a market basis. Defines its task competitors as companies attempting to satisfy the same customer need e. . the beer market ‘ Coors, Foster’s, Millers. Determining competitors’ objectives The more that one firm’s strategy resembles another firm’s strategy, the more they compete. A strategic group is a group of firms in an industry following the same or similar strategy. Companies need to know each other’s product quality, features, customer services, pricing policy etc. Assessing competitors’ strengths and weaknesses Resources and capabilities will determine whether an organisation will reach their goals. Benchmarking is an effective mechanism for gauging the strengths of the competition and to find ways to improve quality and performance.

Estimating competitors’ reactions Selecting competitors to attack and to avoid Strong or weak competitorsAssessment of competitor strengths and weaknesses through the customer value analysis. Close or distant competitors Most companies will compete with those that resemble them the most. A company needs and benefits from competitors. Competitors help increase total demand. They share costs of market and product development. Help legitimise technology. Competitive positions Michael Porter (1980) suggests four basic competitive positioning strategies: Overall cost leadership Lowest costs through greater efficiencies in distribution and production. Differentiation Creation of highly differentiated products and marketing programmes. Competitive positions…..

Competitive moves Most organisations today are market-centred. companies that pay attention to both customers and competitors in designing its marketing strategies. New Product Development The importance of new product development The reactive approach: Happy to respond to what others do; Avoids costly launch errors; Competitors will have built reputation and market share The proactive approach; Organisation sets out to find new ideas and commercialise them early, Requires a strong commitment to R, consumer research and market awareness Incorrectly positioned Incorrectly priced Competitors fight back more aggressively than expected. What influences new product success?

Development of a unique superior product (Better quality, new features and greater value), Clearly defined market and product concept, Meeting market needs, Senior management commitment, Relentless pursuit of innovation, New product planning, Systematic new product development process The new product development process: New product strategy-;Idea generation -; Idea screening -; Concept development and testing -; Marketing strategy -; Business analysis -; Product development -; Test marketing -; Commercialisation Gives direction to the new product team and focuses team effort. Helps to integrate functional and departmental efforts.

If understood, it allows tasks to be delegated to team members. Encourages a proactive attitude which increases the likelihood of a more thorough search for innovation opportunities. Sources of ideas: R, Employees, Customers, Competitors, Distributors, suppliers and others {text:list-item} {text:list-item} {text:list-item} {text:list-item} {text:list-item} Concept development and testing “A product concept is a detailed version of the idea stated in meaningful consumer terms. ” (Kotler et al 2005) Concept testing; “Testing new-product concepts with a group of target consumers to find out whether the concepts have strong consumer appeal. (Kotler et al 2005) Marketing strategy Business analysis “A review of the sales, costs and profit projections for a new product to find out whether these factors satisfy the company’s objectives. ” (Kotler et al 2005) Test marketing: “The stage of new-product development where the product and marketing programme are tested in more realistic market settings”. (Kotler et al 2005) Standard test markets Controlled test markets Simulated test markets Commercialisation Product life cycle Introduction Sales will begin to build slowly, profits may be small. Main aim is to generate awareness among target market. This stage is likely to make heavy demands on marketing resources. Growth Rapid increase in sales. Effects of repeat purchases are starting to be seen.

Emphasis on building brand preference and loyalty. Learn from experiences and build on strengths. Maturity Accelerated growth levels off. There are few new customers available. Heavy price competition likely. Important to retain customers. 4. Decline Almost impossible to stop this stage. May be as a result of environmental changes (e. g. technology, customer tastes). Marketing expenditure vs. milking the product. Product and Branding A Product is…“anything that can be offered to a market for attention, acquisition, use or consumption that might satisfy a want or need”, “it includes physical objects, services, persons, places, organisations and ideas”. Kotler et al 2005) When designing products, marketers must first define the core benefits that the product will provide to customers. Augmented product “Additional consumer services and benefits built around the core and actual products”. (Kotler et al 2005) A computer manufacturer may offer installation, user training and after-sales service to enhance the attractiveness of the product package. Additionally…the potential product Acknowledges the dynamic and strategic nature of the product. The first three layers have described the product as it is now, but the marketer also has to think about what the product could and should be in the future.

Consumer product classifications: Product based classification Non-durable goods, durable goods, service prducts Consumer product classifications: User-based, Convience products (Staples, Impulse goods, Emergency goods) Materials and parts {text:list-item} {text:list-item} Capital items Supplies and services {text:list-item} {text:list-item} {text:list-item} Other ‘marketable entities’… Organisations: To create, maintain or change stakeholders’ attitudes and behaviours toward an organisation. People: To create, maintain or change stakeholders’ attitudes and behaviours towards particular people. Places: To create, maintain or change stakeholders’ attitudes and behaviours towards particular places.

Ideas: To create, maintain or change stakeholders’ attitudes and behaviours towards particular ideas. The product range Product mix: The total sum of all the products and variants offered by an organisation. Product line: A group of products that are closely related to each other. Product item: Individual products or brands, each with its own features, benefits, price etc. The product range Product line length: The total number of items within the product line. Product line depth: The number of different variants of each item within a product line. Product mix width: The width of the product mix is defined by the number of product lines offered.

Individual product decisions:Product attributes, Branding, Packaging, Labelling, Product support services, Product line length, Product mix decisions Product attributes: Quality The ability of a product to perform its functions: Performance, Durability, Reliability and maintenance, Corporate name and reputation Product attributes Features Style and design Branding Name, term, symbol or design Differentiates from competitors Often not about physical attributes but a set of values, a philosophy that can be matched with the consumer’s own values and philosophy. Brand equity The value of a brand: Brand loyalty, Name awareness, Perceived quality, Strong brand associations, Assets such as patents and trademarks Benefits of branding: The consumer: easier product dentification, communicates features and benefits, helps product evaluation, establishes products position in the market, reduces risk in purchasing, creates interest/character for product The manufacturer: helps create loyality, defends against competiton, creates differential advantage, allows premium pricing, helps targeting/positioning, increases power over retailer The retailer: benefits from brand marketing support, attracts customers Types of brands Manufacturer brands: Brand awareness may increase the chance of recognition and selection at the point of sale. Retailer and wholesaler brands: Growth of own-label brands, Creates a physical reason for visiting that retailer and no other Branding strategy Selecting a brand name {text:list-item} {text:list-item} Acceptable: easily recognised, pronounced ad remembered (user-friendly). Available: can be registered and protected.

Product range brand policy {text:list-item} {text:list-item} {text:list-item} {text:list-item} {text:list-item} Developing a brand extension policy: Line extension, Brand extensions, Multibrands, New brands Packaging and labelling Functions of packaging: Functional, Promotional Labelling: Warnings, instructions, nutrition info, health and safety etc. Product line: length decisions Downward stretch, can build a larger base of sales if a lower priced product broadens the number of potential customers. Risk of cannibalisation. Upwards stretch: Could create a product with higher margins as well as enhancing the organisation’s image. Builds a staircase for the customer to climb. Product mix decisions Width: How many product lines? Length: Total number of items within product lines. Depth: Number of versions of each product in the line. Consistency: Between product lines.

Pricing The customer’s perspective: Price assessment-;functional, operational, personal, quality, financial The seller`s perspective: External influences on pricing decision: customers and consumers, legal and regulatory, channels of distribution, competitors, demand and price elasticity Factors influencing price sensitivity: The unique value effect The substitute awareness effect The difficult comparison effect The total expenditure effect The end benefit effect The shared cost effect The sunk investment effect The price-quality effect The inventory effect Channels of distribution The organisation must take into account the needs and expectations of other members of the distribution chain. They have to cover costs such as; transport, warehousing, insurance and retail display. Services have to cover premises, admin and staffing. Competitors Pure competition: a market in which many buyers and sellers trade in a uniform commodity ‘ no single buyer or seller has much effect on the going market price.

Monopolistic competition: a market which many buyers and sellers trade over a range of prices rather than a single market price. Oligopolistic competition: A market in which there are a few sellers that are highly sensitive to each other’s pricing and marketing strategies. Pure monopoly: a market in which there is a single seller ‘ it may be a government monopoly, a private regulated monopoly or a private non-regulated monopoly. Internal influences on the pricing decision: Organisational objectives: Marketing plans and objectives have to be set not only to satisfy the customer’s needs and wants but also reflect the aspirations of the organisation. The aims should not be incompatible!

Corporate strategy not just about quantifiable target setting, also concerned with the organisation’s relative position in the market compared with the competition. marketing objectives Marketing and organisational objectives are very closely interrelated and influence each other to a great extent. An organisation may have a portfolio of products serving different segments, each which requires a different approach to pricing. Pricing policies and strategies New product pricing strategies Price skimming:Setting a high price for a new product to skim maximum revenues layer by layer from the segments willing to pay the high price. Penetration pricing: Setting a low price for a new product in order to attract large numbers of buyers and a large market share.

Setting the price range: Mark-up:the retailer starts with the price paid to the supplier and adds a % to the retail price to the customer. Cost-plus pricing: adding a fixed % to production or construction costs. Experience curve pricing: over time, as an organisation produces more, its experience and learning lead to more efficiency. Competition-based pricing: Structure of the market, Perceived value. Do we price at the same level as the competition, or above or below them? Services Marketing A service is any activity or benefit that one party can offer to another which is essentially intangible and does not result in ownership of anything.

Categorising offerings along the service continuum: Pure tangible goods: toothpaste Tangible goods accompanied by one or more services: computer and warranty Hybrid offer consists of equal parts of goods and services: restaurants Service with accompanying minor goods: air travel Pure service: Haircut Characteristics of services: Lack of ownership: An insurance company agrees to provide certain benefits as long as the premiums are paid and the terms and conditions of the policy are met. A train seat can be reserved for a journey but it is not owned. Most service products involve some kind of ‘experience’ for the customer. Intangibility Products in a retail store can be examined, touched, tried on, sampled, smelt or listened to.

With services products, it is far more difficult to use the senses in the same way to help make a purchase decision. The actual service experience can only take place after the purchase decision has been made. Perishability Services are manufactured at the same time as they are consumed. If a hotel room is not occupied on a particular night then it is a completely lost opportunity. Inseparability Inseparability means that the customer often comes into direct contact with the service provider(s). The service delivery cannot be separated from the service providers Variability/heterogeneity Variability means that each service experience is likely to be different.

Factors leading to customer switching behaviour: Pricing, Inconvenience, Core service failure, Service encounter failures, Response to service failure, Competition, Ethical problems, Involuntary switching The service-profit chain: Internal service quality {text:list-item} Satisfied and productive service employees Greater service value Satisfied and loyal customers Healthy service ‘ profits and growth Three types of marketing in service: Internal marketing – Marketing conducted by a service firm to train and effectively motivate its customer contact employees and all the supporting service people to work as a team to provide customer satisfaction. External marketing ‘ the service marketing mix. The 4p`s (product, price, place, promotion) plus: People: service providers or customers who participate in the production and delivery of the service experience. Physical evidence: the tangible cues that support the main service product. These include facilities, the infrastructure and the products used to deliver the service.

Processes: the operating processes that take the customer through ordering to the manufacture and delivery of the service. The Gaps Model of Service Quality {draw:frame} {draw:frame} The gaps model positions the key concepts, strategies, and decisions in services marketing in a manner that begins with the customer and builds the organisation’s tasks around what is needed to close the gap between customer expectations and perceptions. Gap 1 – Difference between what consumers expect of a service and what management perceives consumers expect. {text:list-item} Gap 2 – Difference between what management perceives consumers expect and the quality specifications set for service delivery.

Gap 3 -Difference between the quality specifications set for service delivery and the actual quality of service delivery Gap 4 – Difference between the actual quality of service delivery and the quality of service delivery described in the firm’s external communications Characteristics of service organisations: Marketing Ethics, Corporate Social Responsibility and Social Marketing Marketing ethics: Moral principles and values that guide behaviour within the field of marketing and cover issues such as product safety, truthfulness in marketing communications, honesty in relationships with customers and distributors, pricing issues and the impact of marketing decisions on the environment and society.

Ethical issues in marketing: Marketing mix effects on consumers, Environmental issues, Societal issues, Political issues Responses to ethical issues in marketing: Business: Corporate social Responsibility (The ethical principle that an organization should be accountable for how its behaviour might affect society and the environment); Legal and regulatory: European and national laws and regulatory (EU competition laws and regulatory bodies, EU laws and regulatory bodies that aim to protect the rights of consumers, National laws covering consumer rights and protection, Competition regulation supported by government-backed regulatory bodies, Voluntary bodies set up by industries to create and enforce codes of practice); Societal: Consumerism, Environmenatlism (Social marketing is the application of commercial marketing technologies to the analysis, planning, execution and evaluation of programs designed to influence the voluntary behaviour of target audiences in order to improve their personal welfare and that of society). Channel management Distribution channel: A set of independent organisations involved in the process of making a product or service available for use or consumption by the consumer or industrial use Functions of the distribution channels: Information, Promotion, Contact, Negotiation, Physical distribution, Financing, Risk taking. Channel level; “A layer of intermediaries that performs some work in bringing the product and its ownership closer to the final buyer.

Direct marketing channel: Manufacturer-;Consumer Indirect marketing channels: Manufacturer-;Retailer-;Consumer Channel organisation: Conventional distribution channels: independent producers and retailers, seeking to maximise own profits at the expense of profits for the whole system Vertical marketing systems: unified system, one channel member owns the others, has contracts with them, or has so much power that they all co-operate Horizontal marketing systems: A channel arrangement in which two or more companies at one level join together to follow a new marketing opportunity Hybrid marketing systems: Multi-channel distribution,as when a single firm sets up two or more marketing channels to reach one or more customer segments Setting channel objectives: Segmentation ‘ Target markets’ needs Nature of the product Company policies, size and financial situation Marketing intermediaries Competitors External environment (PEST) Identyfing major alternatives: Types: Direct marketing: direct-response selling (printed, radio, tv) Sales force: own or sub-contract Intermediaries: wholesalers & retailers Wholesalers: a firm engaged in selling goods and services to those buying for resale or business use Wholesaler roles: Selling and promoting, buying and assortment building, bulk breaking, warehousing, transportation, financing, risk bearing, market info, management services and advice Retailers Non-store retailing: Direct mail, catalogues, Telephone, Home TV shopping Retailers-amount of service: Self-service retailers, Limited-service retailers, Full-service retailers Retailers-product line: Specialty store, department store, convience store, supermarkets, Hypermarkets Retail organisations: Independent, Corporate chains, Franchise organisations, Merchandising organisations Communication strategy Communication mix: advertising, personal selling, sales promotion and publicity, public relations and direct marketing. Sales promotion: Short-term incentives to encourage the purchase or sale of a product or service Public relations: Building good relations with the company’s various publics by obtaining favourable publicity, building up a good “corporate image” and handling or heading off unfavourable rumours, stories and events Direct marketing: Direct connections with carefully targeted individual consumers to both obtain an immediate response and cultivate lasting customer relationships.

Use of telephone, mail, fax, e-mail, the Internet Steps in developing effective communication: Identifying the target audience Determining the communication objectives (Awareness, Knowledge, Liking, Preference, Conviction, Purchase) Non-personal communication channels: print media, broadcast media, display media, online, events Collecting feedback Direct marketing Most mass marketing involves one way communication aimed at customers. Direct marketing involves two-way interactions with customers. Direct marketing is an interactive system of marketing which uses one or more advertising media to effect a measurable response at any location, forming a basis for creating and further developing an ongoing direct relationship between an organisation and its customers Benefits of direct marketing: Buyers benefits: Convenient, easy and private, product access, abundance of information, interactive and immediate Seller benefits: Consumer relationship building, reduces costs, increases speed and efficiency, provides flexibility.

Reasons for growth in direct marketing: Changing demographics and lifestyles, Increasing competition, Media fragmentation, Increasing media and sales costs, Increased customer confidence, New distribution channels, Contact and relationship building, More precise targeting, Cross-selling opportunities Database Marketing is the process of building, maintaining, and using customer databases and other databases for the purposes of contacting and transacting with customers. Used for: Identifying prospects, Deciding which customers should receive a particular offer, Deepening customer loyalty, Reactivating customer purchases. Techniques of direct marketing: Direct response advertising, mail orders/catalogues, face-to-face selling, e-communication and new media, telemarketing, direct mail. Face-to-face: The original and oldest form of direct marketing.

Popularity in B2B markets, Consumer companies Online Marketing Major forces shaping the Internet age: Digitalisation and connectivity (The flow of digital information requires connectivity), The Internet explosion, New types of intermediaries (Brick-and-mortar firms often face increasing competition from click-only competitors, The click-and-mortar business model has been highly successful), Customising goods Marketing strategy in the new digital age: E-business: Uses electronic means and platforms to conduct business E-commerce: Facilitates the sale of products and services by electronic means E-marketing: Includes efforts that inform, communicate, promote, and sell products over the Internet. B2C (Business to consumer): The online selling to final consumers Now more mainstream and diverse. Has created new targeting opportunities, Online behaviour differs by demographic characteristics Online consumers differ from traditional off-line consumers. They initiate and control the exchange process, Value information highly B2B (Business to business) B2B sales far exceed B2C sales Open trading networks.

Huge e-marketplaces bringing buyers and sellers together Private trading networks: Link sellers with their own trading partners C2C (Consumer to consumer) C2C websites help consumers exchange goods or information: eBay Auction sites facilitate the exchange process: By allowing access to a much larger audience Newsgroups / forums: Help consumers to find and share information C2B (consumer to business) Allows consumers to search out sellers, learn about offers, initiate purchase or dictate purchase terms: Priceline. com Some sites facilitate the feedback process between customers and companies: PlanetFeedback. om Relationship Marketing The process of creating, maintaining and enhancing strong relationships with customers and other stakeholders. Transactional Marketing Relationship marketing Orientation to single sales Orientation to consumer retention Discontinuous customer contact Continuous contact Focus on product features Focus on customer value Short time scale Long time scale Little emphasis on customer service High emphasis on customer service Limited commitment to meeting customer High commitment to meet customer expect. expectations Quality as the concern of production staff Quality as the concern of all staff Drivers promoting relational trategies High acquisition costs relative to retention costs, High exit barriers, Competitive advantage sustainable, Buoyant / expanding market, High risk, High emotion involved in exchange, Requirement for trust and commitment, Perceived need for closeness, Satisfaction beneficial to retention Shows Behavioral Commitment: buys from only one supplier, even though other options exist, increasingly buys more and more from a particular supplier, provides constructive feedback/suggestions Types of Relationship Marketing: Reactive – Sale of product with minimal support. Accountable** – Following sale of the product, the salesperson follows up and checks that all is going well. Customer suggests improvements that are acted upon.

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