Marketing

Marketing can be defined as the process of planning and executing the conception, pricing, promotion and distribution of ideas, goods and services to create exchanges that satisfy individual and organisational objectives. The key steps to be pursued include:

The Marketing Concept
This is a philosophy that places the consumer at the centre of the company’s activities. The business aims to produce what the consumer wants to buy at a profit. Marketing, therefore is the management activity that organises and directs all business activities involved in converting customer purchasing power into effective demand for a specific product or service. This integrated organisational approach aims to satisfy consumer demand at a profit to the company. A business must continue to alter and adapt products/services to keep pace with consumers’ changing demands

Marketing Strategy
A marketing strategy can be defined as a plan of action for the development, distribution, promotion and pricing products that meet the wants of specific consumers. In order to develop and manage marketing strategies, business must focus on selecting a target market, develop a marketing mix, evaluate environmental forces and finally co-ordinate marketing efforts effectively. Strategic marketing management is a continous process requiring strategic decisions to be formulated and implemented on an ongoing basis. As a consequence, information must be constantly supplied on:

The Marketing Mix
The marketing mix is comprised of four marketing activities; product, price, promotion and place
(distribution)(4P’s). The firm tries to integrate these activities so as to satisfy precisely the needs of consumers. This necessitates the constant gathering of up-to-date information on the changing nature of consumers needs and preferences. The essential ingredient for success is the integration of the four P’s to match the needs of consumers on a continous basis.

Product
Decisions concerning the product element would include; branding, packaging, labelling, warranty and servicing. Product planning concerns activities in the development of products/services that match the needs of consumers.
Product planning converts market research data, in the light of technical cost and profit considerations, into acceptable saleable products. Decisions made in this area are vital as they are involved directly with creating products that satisfy consumer needs.

Pricing
In the context of pricing, consideration must be made of costs, customers and competitors. Price is often used as a competitive tool. Consumers view price as a value for money issue. A price for a product should reflect the cost to make the product at different levels of activity. The price should also take the demand function into consideration with regard to how much consumers are willing to pay. Finally the profit objective of the firm must be analysed when setting a price.

Promotion
Promotion aims to bring consumers from unawareness to action. It is also used to maintain interest in an established product/service. Promotion can be used in a persuasive or an informative fashion. The main elements of promotion include; advertising, personal selling, sales promotion, publicity and public relations. It is vital to have a good understanding of one’s audience and to integrate the above elements effectively. A constraining factor for many firms in this sphere would be a limited budget.

Place
Goods to be of value have to be distributed to places where they are wanted, at the right time, in the right quantities and in the right condition. The choice of distribution channel is vital in implementing the marketing plan of the firm. The main consideration is to ensure that the product is available at the time and place of greatest convenience to the customer.

Market Segmentation
Careful selection and accurate identification of target markets are pre-requisites for the development of an effective marketing mix. Market segmentation is the process by which customers are divided into homogenous groupings. Once the segment has been identified, a marketing mix can be developed which will ensure best use of marketing resources. There are two main types of market for consideration:

(a) Consumer markets consist of buyers/individuals in their households who intend to consume or benefit from the purchased product and do not buy products for the sake of profit.
(b) Industrial markets are composed of institutions, government agencies, producers or resellers that purchase a specific type of product for resale, direct use in manufacturing other products or use in general daily operations.
Two main approaches stand out in target market strategy: the undifferentiated(mass market) and the market segmentation approach.

The Undifferentiated approach
In adopting this strategy the market is treated as a whole. Management will adopt a single marketing mix to reach as many consumers as possible. This type of approach tends to be pursued when a large group of consumers in the total market are perceived to have the same want-satisfying benefits for a product e.g. sugar, petrol, salt.

The market segmentation approach
This is a customer orientated approach embodying the marketing concept. It is a process by which customers in markets with some heterogeneity can be grouped into smaller, more similar or homogenous segments. It takes account of submarkets. One does not develop a marketing mix for the whole market but rather separate mixes for different segments of the market. The total market is viewed as being too diverse.

Concentrated and Differentiated Segmentation
These are the two main segmentation strategies. A Concentrated strategy involves pursuing a single segment of the total market. It is often referred to as a niche strategy. Economies can be derived from this specialist approach. This narrow focus may also mean leaving one’s eggs in one basket. Dominance of the segment is essential for success. Baily’s have been extremely successful in the adoption of this approach.

A Differentiated strategy involves targeting two or more segments of consumers. It is also known as a multi-segment strategy. A separate marketing mix would be developed to target each segment. Kellogg’s use this strategy to great effect where they have developed a range of products to cater for different segments of the cereal market.

Advantages of Market Segmentation
1. Allows for a better understanding of customer needs and wants.
2. More effective use of marketing resources.
3. Better able to understand market demand.
4. More realistic as targeting the whole market could prove difficult.

Bases for Consumer Segmentation
The market may be segmented according to:
(a) Geographic: include climate, terrain, natural resources population density
(b) Demographic: include age, sex, family, religion and race.
(c) Socio-economic: include occupation, income, education and social class.
(d) Psychographic: include motives and lifestyle.
(c) Product Related: include usage and benefit desired.

The Marketing Planning Cycle

1. Development or revision of marketing objectives relative to performance
2. Assessment of marketing opportunities and resources
3. Formulation of marketing strategy
4. Development of plan for implementation and control 
5. Implementation of marketing plan
Steps of the marketing planning process

1. Analysis

     - Analysis of customers needs and perceptions 
     - Analysis of marketing environment and trends
     - Analysis of competitor strategies
     - Analysis of market opportunities
     - Analysis of own firm’s SWOT

2. Strategy

     - Identification of target market
     - Basis for competitive advantage
     - Ideal product positioning

3. Implementation

     - Set clear sales targets
     - Detailed marketing mix involving:
               - products
               - promotion 
               - distribution
               - pricing
               - service levels

Contents of Business Plan

1 Executive Summary

2 Promoters and Company background information

3 Outline of proposed business venture
    - overview of proposed business venture
    - business history
    - expected sales increase
    - objectives and strategy
    - industry analysis
    - profit level increase
    - return on investment

4 Market Research and Analysis
    - target market selection and customer profile
    - primary and secondary research
    - market positioning
    - market size and share
    - nature of competition

5 Marketing Plan
    - Sales Plan
    - Distribution Strategy
    - Promotion Strategy
    - Pricing Strategy

6 Production
    - Products
    - Required capacity
    - Level of capital expenditure required
    - Production Plan and Costings
    - Labour Force and training requirements
    - Quality issues
    - Suppliers and sourcing of materials

7 Venture Team
    - Outline of prospective shareholders
    - The management team
    - Nature of responsibilities and organisation structure
    - List of external bodies used such as accountants, solicitors, consultants, state agencies etc.

8 Financial Plan
    - Sources of Funding
    - Profit and Loss projections
    - Projected Balance Sheet
    - Cash Flow projections
    - Sales Forecasts

9 Schedule of events to be undertaken

10 Appendices