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Introduction to Marketing (South Africa) Cheat Sheet (DRAFT) by

A look into the key principles of marketing.

This is a draft cheat sheet. It is a work in progress and is not finished yet.

Introd­uction to Marketing

WHAT IS MARKETING
1. How to commun­icate & advertise your product to your target market (niche market­)/chose customer base.
2. Was known as a philosophy that stressed satisfying the needs & wants of consumers & building & mainta­ining long-term relati­onships with consumers and stakeh­olders to achieve loyalty. Loyalty is important as it means guaranteed income & its cheaper to maintain existing customers than to advertise to new customers.
3. Process by which organi­zations add/create value for customers in the form of goods & services and contin­uously satisfying these needs & wants.
4. Marketing is the delivery of customer satisf­action at a profit. Goals= attract new customers by promising superior value & keep and grow current customers by delivering satisf­action.
5. Dr Phillip Kotler Defini­tion: A social & managerial process whereby indivi­duals and groups obtain what they want through creating & exchanging products & values with others.
MARKETING PROCESS
1. Customers needs are identified (includes potential custom­ers).
2. Develop produc­t/s­ervice that will address customer needs
3. Commun­icate the value of the produc­t/s­ervice to potential customers
4. Customers urged to purchase the produc­t/s­ervice at a certain price to satisfy their needs/­wants
5. Relati­onship with customer is initiated once a sale has been made & the customer is satisfied. The relati­onship must be mainta­ined.
MARKETING MANAGEMENT PHILOS­OPHIES
~produ­cti­on/­product orient­ation: focus on internal capabi­lities, not external requir­ements of customers.
~sales orient­ation: aggressive sales techniques with an emphasis on needs of sellers not the buyer.
~marketing orient­ation: satisfying customer needs as effici­ently & effect­ively as possible while meeting object­ives. (integ­rating organi­zat­ion's activities to satisfy customer needs & wants. All activities must work together. What happens in one depart­ment, affects another depart­ment.)

Benefits that Create Value

Functional Benefits
Tangible benefits like reliab­ility, speed, durabi­lity, size & features. Usually when purchasing cellphone or laptops
Emotional Benefits
A sense of achiev­ement, joy, pleasure or excitement is experi­enced when purchasing the product or service.
Image Benefits
Produc­ts/­ser­vices that offer value by enhancing social status & self-i­mage. This is usually with luxury goods
Social Benefits
Usually come in the form of compli­ments when one is wearing something fashio­nable and trendy.
Service Benefits
Customers frequently evaluate, compare and value services such as delivery, training, mainte­nance and consul­tation when purchasing a product
Experi­ential Benefits
Sensory excitement customer feels from using the product or service

Exchange

Exchanging simply means that people give up something of value for something else they value.
Five conditions must be present for an exchange to take place
1. There must be at least two parties involved
2. Each party must have something of value
3. Each party must be free to accept or reject the exchange offer
4. Each party must be willing to deal with the other party
5. Parties must be capable of commun­icating with each other

SWOT Analysis

Strengths are what the business does partic­ularly well, that sets it apart from compet­itors
Weaknesses are areas business needs to improve on
Opport­unities are factors that benefit the business
Threats are factors that negatively affect the business
Internal Enviro­nment - Strengths & Weaknesses
External Enviro­nment - Opport­unities & Threats

Advert­ising Strategies

Contains the marketing object­ives, strategies (growth strate­gies), target market identi­fic­ation, value propos­ition, differ­ential advantage & applic­ation of sub-st­rat­egies of the product, distri­bution, price & marketing commun­ica­tion.
Market Segmen­tation is the division of the broad market into identi­fiable segments that display similar responses towards marketing actions.
4Ps - Marketing Mix
Product - quality, design, features, brand name, packaging, labelling, service, guarantees
Place (Distr­ibu­tion) - different channels, transp­ort­ation, outlet location, logistics, coverage, inventory
Price - list price, discounts & allowa­nces, credit facili­ties, price differ­ent­ials, cost & profit
Promotion (Marketing Commun­ica­tion) - advert­ising, sales promotion, direct marketing, sponso­rships, salesp­eople, publicity, public relations, digital marketing

PESTLE Analysis

POLITICAL
Political Solida­rity, changes in the govern­ment, legisl­ation, government policies
ECONOMIC
Levels of economic growth, monetary policy & interest rates, fiscal policy, rate of inflation, currency exchange rates
SOCIAL
Demogr­aphic forces, cultural forces
TECHNO­LOGICAL
Introd­uction of new produc­ts/­imp­roved products & services are provided, improv­ements in production process, improv­ements in the way markets are identified & services are provided
LEGAL
Protecting consumers & promoting fair compet­ition
NATURAL ENVIRO­NMENT
Processes & materials used to produce products

Maslow's Hierarchy of Needs

Physio­logical Needs
Most basic needs necessary for survival, food, water, sex & sleep
Safety Needs
Need for safety, health, shelter & security
Social Needs
Need for belonging, love, friendship & social acceptance
Esteem Needs
Need for status, prestige, respect & social standing drive motivation for luxury goods
Self-A­ctu­ali­zation
Need for self-f­ulf­illment is the highest order of motivation
All these needs are motivate people's purchases of certain products and services. Individual actions are affected by a complex set of motives and even these indivi­duals cannot identify what motivates them to purchase what they do.

The Consumer Adoption Process

Risks
Financial - money spent may be wasted if need is not met
Functional - product may not perform according to expect­ations
Social - product may lower consumer's standing amongst contem­por­aries
Physical - product may cause harm to consumer
The Five Stages in the Decisi­on-­making process
1. Awareness: consumer becomes aware of produc­t/s­ervice but has no info on it
2. Interest: consumer becomes interested in produc­t/s­ervice & begins finding inform­ation on it
3. Evalua­tion: based on inform­ation gathered, they decide whether or not to try the produc­t/s­ervice
4. Trial: consumer decides to try product on a limited first-buy basis, in order to improve the inform­ation on the produc­t/s­ervice based on experience
5. Adopti­on/­Rej­ection: consumer either makes a full commitment to adopt the product or rejects it
Rogers' Innovation Adoption Model
Innovators - these are the more advent­urous risk-t­aking consumers who are eager to try something new
Early Adopters - well educated, opinio­n-l­eaders in their commun­ities. They take calculated risks & are cautious even though they buy early
Early Majority - cautious consumers who adopt product once its success has been proven
Late Majority - skeptical group who only purchase product after majority has purchased it. Usually of an older demogr­aphic
Laggards - this group dislikes change, are generally conser­vative & suspicious of new things. Will only adopt product once it has developed its own tradit­ional status

The Organi­zat­ional Buying Process

The buying process that organi­zations follow is different from that of individual consumers
1. Businesses usually purchase produc­ts/­ser­vices to fit specific business need with emphasis on economic benefits and they follow a rational decisi­on-­making process
2. The purchasing process tends to be lengthier, more technical & usually involves a team of people. Also they buy in large quantities and investment
3. Impact of product failure or supply disruption can be more severe in an organi­zat­ional context & switching suppliers can be time consuming and difficult
Types of Buying
Straig­ht/­routine re-buy: regular re-orders low-risk, frequently purchased items like office supplies & consum­ables.
Modified re-buy: arises when there is prior experience with the product but a need exists for a review or modifi­cation
New task buying : product is purchased for the first time by organi­zation. Because there is no prior experi­ence, the number of people & divisions involved will be greater and much more inform­ation will need to be gathered. Amount of effort put in will be propor­tional to the level of risk, costs and returns and may take longer to finalize
THE PROCESS
problem recogn­ition > general need descri­ption > product specif­ication > supplier search > proposal solici­tation > supplier selection > order-­routine specif­ication > perfor­mance review
Buying centre are those involved in the buying process
Initiators - people who recognize for the produc­t/s­ervice and initiate the buying process
Influe­ncers - those who have an influence, usually through skills & expertise on the outcome of the decisi­on-­making process.
Deciders - people who have formal­/in­formal authority to decide on product specif­ica­tions or the final approved suppliers
Buyers - have final, formal authority to select suppliers, negotiate with them & conclude transa­ctions.
Gateke­epers - exercise control over purchasing decisions or some aspect of purchasing decisions
 

The STP Process

Segmen­tation, Targeting & Positi­oning 'go-to­-ma­rket' process is made up of 6 steps
1. Identify the segmen­tation variables & segment the market
2. Develop profiles of the segments
3. Evaluate the attrac­tiv­eness of each segment
4. Select the target segments
5. Identify possible positi­oning concepts for each target segment
6. Select, develop & commun­icate the chosen positi­oning concept
Segmen­tation: when you divide a group of indivi­duals within a broad mass market into smaller groups of with similar charac­ter­istics, who are expected to have similar expect­ations and are seeking similar benefits from a specific product
Targeting: involves a careful profiling & evaluation of each segment & then, on the basis of specified assessment criteria, deciding which segmen­t/s­egments the company should target for its products
Positi­oning: can be described as the 'position' a product holds in the mind of the consumer, relative to the offerings of compet­itors
Bases of Market Segmen­tation
Geographic Segmen­tation - region, size of city, density & climate
Demogr­aphic Segmen­tation - age, gender, family size, income, occupa­tion, religion, race & education
Psycho­graphic Segmen­tation - lifestyle, person­ality & social class
Benefits Segmen­tation - specific benefits required by customers
Market­-Va­lue­-Based Segmen­tation - perfor­mance/ social value of a product
Segment Assessment
Access­ibi­lity: is the selected target segment available to distribute to & commun­icate with?
Defend­abi­lity: does the company's product have a distinct differ­ential advantage over the compet­itor's products so that it is able to defend its chosen position within the target market?
Tangib­ility: is the target segment of a sufficient size to make it profitable & allow for a good return on the marketing invest­ment?
Distin­cti­veness: is the target segment different enough from the other target segments to allow for the achiev­ement of a clear product differ­ent­iate?
Product Positi­oning
Product Attribute: company uses a distin­ctive attribute on which to position its product
Product Benefit: company selects a unique product benefit
Price vs. Quality: focuses on superior quality or the best value for money/­lowest price
Use/Ap­pli­cation Positi­oning: method is based on usage/­app­lic­ation
Product User: based on a consum­er/­end­-user focus
Compet­itor: company positions its product offering directly against its competitor
Origin: focus on where the product comes from

Types of Advert­ising

Pioneer Advert­ising
Used to promote new produc­t/s­ervice
Compet­itive Advert­ising
When product enters growth phase in its life cycle & compet­itors enter the market.
Compar­ative Advert­ising
Used when 2 or more products are compared in an advert­isement when the message is that one is better than the other.
Reminder Advert­ising
Used in the maturity stage of the product to remind consumers of the product and its availa­bility.
Instit­utional Advert­ising
Used to promote idea or the corpor­ation as a whole.

Marketing Commun­ication Elements

Companies can choose one of two marketing commun­ication mix strate­gies:
Push Strategy
The product is pushed through the distri­bution channel to final customers. Manufa­cturer directs its marketing activities at channel members to induce them to carry the product & to promote it to final consumers
Pull Strategy
Manufa­cturer directs its marketing activities at final consumers to convince them to buy the product. If the strategy is effective, consumers will demand the product from distri­bution channel members & they will demand it from manufa­ctu­rers. Consumer demand will therefore 'pull' the product through the channel.

Pricing - Compet­ition Based Methods

Price Skimming
Used when a product is brand new & unique. This involves setting the price as high as possible. This makes it easier for compet­itors to come in because its lucrative.
Penetr­ation Pricing
The opposite of price skimming. Product is introduced at a low price, just enough to cover the cost of manufa­ctu­ring.
Customary Pricing (hardly done in South Africa)
Products & services are priced based on tradition.
Above/­Below Compet­itors' Prices
Usually, businesses are trying to establish price level, taking compet­itors' pricing into consid­eration

Upstream & Downstream Activities

Upstream Activities
Includes all activities performed by suppliers of raw materials, capital equipment supplies such as manufa­cturing equipment, component manufa­cturers & financing.
Downstream Activities
Include well-known interm­edi­aries such as wholes­alers & retailers that deliver the final product to the customer.

The Product Life Cycle

Introd­uction Stage
New product is introduced to market. Production & marketing costs are high, there is a small market, sales are limited & price is often high.
Growth Stage
As sales increased, this stage is charac­terized by a robust growth in both sales & profits. Organi­zation benefits from economies of scale in produc­tion, resulting in increased profits & sales.
Maturity Stage
Occurs when organi­zation is well-e­sta­blished and aims to maintain their market share. Compet­ition is high and this is when improv­ements & modifi­cations become necessary
Decline Stage
Market for a product starts to decrease as the market becomes saturated. Sometimes a product may go into a renewable stage when the organi­zation may find a way to market it or when there is a renewed interest for the product.

Packaging

Defined as the use of containers & wrapping material, plastic decoration & labelling to protect the product to help & promote its role & make it convenient for the customer to use the product.
Functions of Packaging
- To protect and contain products so that they can be transp­orted & stored effect­ively and safely.
- To promote a product by differ­ent­iating it from competing products through the use of specific materials, colours, shapes & designs.
- Storage, use & conven­ience of products
- Refers more to the emphasis being placed on recycling & reducing the enviro­nmental impact of packaging
 

Types of Media

Television
Advant­ages: mass coverage, high reach, impact of sight & sound, high prestige, low cost per exposure, attent­ion­-gr­abbing
Disadv­ant­ages: low select­ivity, short message life, high absolute cost, high production costs, clutter
Radio
Advant­ages: local coverage, low cost, high frequency, flexible, low production costs
Disadv­ant­ages: audio only, clutter, low attention grabbing, fleeting message
Magazines
Advant­ages: segmen­tation potential, quality reprod­uction, high inform­ation content, longevity
Disadv­ant­ages: long lead time for ad placement, visuals only, lack of flexib­ility
Newspapers
Advant­ages: high coverage, low cost, short lead time for placing ads, timely­/cu­rrent
Disadv­ant­ages: short life, clutter, low attent­ion­-gr­abbing capabi­lities, poor reprod­uction quality
Outdoor
Advant­ages: locati­on-­spe­cific, high repeti­tion, easily noticed
Disadv­ant­ages: short exposure time requires short ad, local restri­ctions
Internet & Intera­ctive Media
Advant­ages: user selects inform­ation, user attention & involv­ement, intera­ctive relati­onship, direct selling potential
Disadv­ant­ages: crowded access, technology limita­tions, limited reach, few valid measur­ement

The Services Marketing Triangle

Any services marketer who wants to be successful will have to carefully consider the various issues that are associated with services marketing.
The SERVICES MARKETING TRIANGLE identifies 3 key role players that are essential to the success of a service offering.
The 3 role-p­layers are: The Company, The Providers & The Custom­ers­/Cl­ients
It is essential that these three role-p­layers interact positively to ensure that quality service is delivered.
To manage these role-p­layers, there are three types of marketing carried out. These are:
External Marketing: Making Promises
Involves commun­ication from the company to the consumer to offer its services & establish expect­ations about the service level that the client can expect from the company. Usually comes in the form of television advert­ise­ments, magazine advert­ise­ments, personal selling, e-mails or via a website promotion. The primary focus here is making promises. Businesses are under pressure to fulfil these promises.
Intera­ctive Marketing: Keeping Promises
Occurs between clients and the service delivery personnel. Happens at a time when the client and the service delivery personnel come into contact & the service is performed. Every effort is made by the delivery staff to ensure that the service delivered is of the highest quality and matche­s/e­xceeds the clients' expect­ations.
Internal Marketing: Enabling Promises
Simply involves training the employees & giving them the necessary tools & skills to perform their jobs at the highest level, so that the client is satisfied with the service that is delive­red­/pe­rfo­rmed. This is to prevent the client taking their business elsewhere.

The Service Product Levels

With the service product, a certain level of service is expected and determines a client's level of satisf­action. Service Marketers need to pay attention to four service product levels.
Core Service
This is the basic service offered to the client and must be performed to deliver any form of satisf­action. This is the reason the organi­zation is in business.
Expected Service
The minimum level of service expected by the client and must be present if any level of satisf­action is to be experi­enced by the client. Its expected by the client, by any provider of a similar service in a specific industry.
Desired Service
Represents client's ideal service but it is over and above expected service level. Businesses that offer this level of service look to differ­entiate themselves from their compet­itors. Client does not expect this level of service but it definitely impresses them.
Unexpected Service
Exceeds a client's expect­ations and desired level of service. Comes as a real surprise to the client and add signif­icant value to the service, in their eyes. Strongly differ­ent­iates organi­zation from its compet­itors.