Marketing Basics Essay Example

diversification, where the business sells new products to new markets. For instance, if a business primarily caters to families by selling food but wants to venture into selling cars to single men, it would be considered a diversification strategy. However, diversification poses a high level of risk as the business may lack familiarity with the product and the target market.

However, as it also has the potential to produce the highest rewards, many businesses are willing to take the risk. In conclusion, the matrix offers options for businesses regarding the markets and products they target. They can choose to stick with the markets and products they are familiar with (market penetration) or make a change in either the market (market extension) or the product (product development). For those who are willing to take on big risks for potentially greater rewards, diversification into new products and markets is an option.

Marketing Concepts Introduction

The idea of marketing has changed throughout the years.

In the past, certain businesses prioritized factors other than the customer, while today the customer is considered king in the business world. This article explores various factors that businesses might base their marketing strategy on, helping you identify when your strategy is centered around something other than the customer. One such approach is Production Orientation, where the business aims to lower costs by focusing on mass production. A business following this orientation believes that mass production will generate "economies of scale" to minimize costs and maximize profits.

In a production-focused business, it is crucial to avoid production efficiency processes that may harm the design and quality of the product. Sacrificing product design and

quality in favor of prioritizing production can reduce the appeal of the product to customers. On the other hand, a product-focused company believes that by providing a superior product with superb quality and functional features, customers will be naturally attracted to it.

The problem with this strategy is that having superiority alone does not guarantee sales. To achieve success, products must satisfy the desires and requirements of consumers. A company that adopts a sales orientation concentrates on producing a product and subsequently marketing it to the target market. This approach disregards conducting pertinent research to comprehend customer needs or preferences. However, we recognize that sales typically involve more intricacies than this simplistic view. A prosperous marketing strategy necessitates both market and marketing research prior to product development, along with an efficient promotion strategy.

A market-oriented company prioritizes the customer in its operations, making sure that all activities are focused on meeting their needs and wants. This company aims to comprehend customer preferences and applies market research to create and execute marketing strategies throughout the entire process, from product development to sales. Continuous research is carried out even after sales have begun in order to collect consumer feedback and pinpoint areas for product enhancement.

As markets constantly evolve, conducting market research and developing products is an ongoing process for companies with a market orientation. In today's competitive world, it is crucial to promptly implement a market strategy to stay ahead. If a company fails to provide customers with the desired product and customer service, they will opt for a competitor who can meet their needs.

BCC Growth Matrix

The Boston Consultancy Group (BCC) matrix categorizes

product lines into four groups according to their market share and market share growth rates.

The BCC growth matrix assists companies in determining the appropriate investment amount for a product line, taking into consideration the market share and its trend. Stars, classified as products with high relative market shares in a growing market, require investment to sustain their growth and dominant position. Despite requiring investment, they also generate revenue for the company and are therefore worth the financial commitment. The objective for the business is to transform stars into cash cows.

Question Mark/Problem Child

Although these products operate in high-growth markets, their market share remains low. The business must determine the reasons for this and identify any obstacles to growth. Investing a large sum of money in these products may not necessarily lead to increased growth rates, posing a potential risk. Nonetheless, addressing these issues could potentially yield profitable outcomes for the company. In contrast, Cash Cows experience slow growth despite possessing a high relative market share. However, they do generate substantial cash flow during the mature stage of their lifecycle.

To maintain the current market share amidst a slower growth rate, it is necessary to reduce investment. Implementing effective marketing mix strategies can help prevent potential decline in product sales. Another option for cost reduction is through price leadership strategies. In the maturity stage of its life cycle, a cash cow refers to a product that generates steady profits. Conversely, dogs are products with low market shares and growth rates, often resulting in minimal profits or losses while consuming valuable business resources.

If the dog is not adding any value to the company,

such as acting as a gateway to other product sales, it may be best to phase it out. Some businesses may choose to revitalize the dog by injecting new life into the product (see Heinz Case Study). A dog product is in the final stage of its life cycle. In conclusion, the BCC matrix is a useful tool for evaluating an existing product line and determining future strategies and budgets. It compares the market share to that of the industry's largest competitor. The BCC assists firms in analyzing future opportunities or challenges with their product lines.

Aid Communication Model

AID is a communication model utilized by firms to assist in selling their products. The initial objective is to attract attention when launching a product. Firms invest significant resources in devising strategies to capture attention for their products. The approach employed to achieve this will vary depending on the nature of the product. Options include sponsorship, hospitality events, and extensive promotional campaigns. If the product is a gadget or technology, a firm might opt to exhibit it at a technology event, such as the annual video game conference, which attracts journalists and professionals from the technology industry.

If the product is trendy and fashionable, the firm may ask for a celebrity endorsement to attract the target market. After getting attention, it is important to emphasize product features and communicate its benefits clearly in order to sustain interest. The goal at this point is to give customers information that will motivate them to move forward into the desire stage. In this stage, the aim is to utilize customers' knowledge and interest about the product to generate

a strong desire for it.

Having a unique characteristic can attract customers to choose your product over others. If your product becomes popular and the latest must-have item, buzz marketing can help generate strong interest in it. The main aim is to encourage customers to purchase your products, which can be achieved through an effective AID strategy. At this stage, the objective is to simplify the buying process as much as possible by offering various payment methods and channels, including credit card, cash, in-store purchases, and online transactions.

SOOT Analysts

The utilization of a SWOT analysis assists companies in identifying crucial factors for marketing and corporate strategy development. SWOT, an acronym for Strengths, Weaknesses, Opportunities, and Threats, classifies these factors. Strengths and Weaknesses are internal factors that the organization can manage, while Opportunities and Threats are external factors beyond the organization's control. Strength Factors encompass internal elements like employees, procedures, business assets, and products that contribute to the organization's success.

Internal strengths include the following examples:

• A strong brand name
• Market share
• Good reputation
• Expertise and skill

Weakness factors, similar to strengths, can pertain to employees, procedures, business assets, and products. Weakness factors refer to internal aspects that may hinder success. Examples of internal weaknesses include:

• Low or no market share
• No brand loyalty
• Lack of employee experience

Opportunity factors refer to inefficient company processes and procedures that a firm can potentially utilize to aid in its business growth. Examples of opportunities include factors external to the business.

• A growing market.

Increased consumer spending.

Society changes, such as an increase in birth rates, can pose threats to a business. Threats refer to external factors that can make trading conditions more difficult for a firm.

Examples of Threats Include

• Competitors
• Government policy such as a ban on some of the activities carried out by the firm
• Taxation rules which reduce the firm's or consumer income
• A change in consumer habits which makes the firm's products less appealing to the target rarest.

Conclusion

A SOOT analysis serves as a convenient method to promptly evaluate the favorable and unfavorable aspects concerning an organization on a specific date. Following the SOOT analysis, organizations should strategize on leveraging their strengths and capitalizing on opportunities. Additionally, they must evaluate the consequences of weaknesses to determine whether they should be eliminated or prevented from further development. As threats stem from external factors beyond an organization's control, the focus should be on devising plans to mitigate their impact on the business.

Service Marketing MIX (Extended Marketing MIX)

In the previous article, we discussed the characteristics of a service and how it differs from promoting products. Like the marketing mix for a product, the service marketing mix consists of Product, Price, Place, and Promotion. However, services being intangible require three additional elements in their marketing mix: People, Process, and Physical Evidence. People are essential in providing services; recruiting and training the right staff is crucial to gain a competitive advantage.

Customers form opinions about service provision and

delivery based on the individuals representing your organization. This is because people are one of the few components of the service that customers can observe and engage with. The commendation received by the volunteers (games makers) for the London 2012 Olympics and Paralytics exemplifies the significant impact individuals can have during service delivery. Employees need appropriate training. In the UK, numerous organizations seek the "Investors in People" Accreditation to demonstrate their commitment to training staff according to established standards and best practices.

The process is a crucial element of the marketing mix as it focuses on the delivery of the service. For example, if you go to Burger King and order a Whopper Meal, receiving it within 2 minutes showcases an efficient process. Similarly, banks that automatically send out new Credit Cards when the old ones expire also require an efficient process for identifying expiry dates and arranging renewals. A well-executed service that replaces outdated credit cards contributes to consumer loyalty and confidence in the company.

It is crucial to have well-defined and effective procedures to ensure that all individuals understand their responsibilities and how to fulfill them. This not only prevents confusion but also ensures consistent service. For retailers who operate brick-and-mortar stores, the environment in which they provide their service is of utmost importance. This distinguishes a company from its competitors and can justify higher prices, while simultaneously creating a positive customer experience.

All hotels provide a bed, but the condition of the room (physical evidence) affects the price charged. Customers will judge the organization based on the physical evidence. For instance, when entering a restaurant, customers expect a clean and friendly environment.

If the restaurant is smelly or dirty, customers are likely to leave, even before receiving service. In summary, the Service Marketing Mix includes Product, Price, Place, Promotion, People, Process, and Physical Evidence. Service-oriented businesses must ensure accuracy in each of these elements.

The marketing mix for a service includes additional elements compared to a product, as the characteristics of a service are different. The specific characteristics of a service are:

• Lack of ownership
• Intangibility
• Inseparability
• Permissibility
• Heterogeneity.

Managing services can be more complex than managing products because products can be standardized. However, it is more challenging to standardize a service because it can be influenced by external factors beyond the service provider's control.

Porter’s Five Forces Model (Industry Analysis Model)

Porter's fives forces model is a useful tool for analyzing a specific industry.

It examines the five key factors that influence a specific industry:

• Competitive rivalry
• Power of suppliers
• Threats of substitutes
• Threat of new entrants.

Understanding the factors that affect industry performance is important before entering or when assessing the struggles of your business industry. One key factor to consider is competitive rivalry, which serves as a useful starting point in analyzing a specific industry. If entry into the industry is effortless, it is probable that competitive rivalry will be intense.

The level of competitive rivalry depends on the viability of switching to substitute products, like from coke to water. High competitive rivalry occurs when competitors' products are not significantly different, competitors have similar size and

strategies, and exiting the industry is expensive (exit barriers). Suppliers are vital for an organization's success as they provide necessary resources for production of products and services.

Supplier power can arise from:

• If there is one or Just a few suppliers that can provide the resources a business needs. If it is expensive to move from one supplier to another (known also as switching cost)
• If there is no other substitute for the product provided by the supplier. Power of Buyers Buyers or customers can exert influence and control over an industry in certain circumstances.

This occurs when:

• There is little differentiation over the product and substitutes can be found easily by customers/buyers. Buyers/customers are sensitive to price fluctuations.
• Switching to another product is not costly for customers/buyers. Threat of Substitutes Are there alternative products that customers can purchase instead of yours?
• Alternative products that offer the same benefit as your products?

The threat from substitute (competitor) products is high when:

• The price of the substitute (competitor) product falls.
• It is easy for consumers to switch from one substitute product to another.
• Buyers are willing to substitute products from different competitors.

The threat of new entrants in an industry is high when it is easy for organizations to enter the industry, meaning that entry barriers are low.

When deciding whether to enter an industry, a new business will consider:

• How loyal customers are to existing products,
• How quickly it can achieve economy

of scales

The Porter's five forces model is a necessary tool for comprehending an industry.

The strength of an industry and the prices it can charge are influenced by all five of Porter's forces.

VIRAL MARKETING: is the process of generating contagious excitement about your product in such a way that people share information about it through emails, social networking sites, blogs, and other online networks.

BUZZ MARKETING

Buzz marketing, also known as viral advertising, is a strategy that aims to create buzz and excitement about a product by encouraging selected consumers to share information with their friends and family. The key target audience for this type of marketing are individuals referred to as "trend setters," who are usually well-informed about upcoming trends.

AMBUSH MARKETING

Ambush marketing entails giving the impression of having a connection with something when in reality, there is none. This tactic, as the name implies, involves initiating a sudden marketing campaign at precisely the opportune moment to achieve maximum impact. The objective of ambush marketing is to either promote your product with minimal expenses and/or to disrupt a rival's marketing effort.

Generic (Competitive) Strategies (Michael Porter)

According to Michael Porter, businesses can gain a lasting competitive advantage by implementing one of three generic strategies.

He also discovered a fourth strategy, called the "middle of the road" strategy, which is unlikely to provide a competitive advantage despite being implemented by some businesses. The following paragraphs will discuss each of the four

strategies. The first one is the Cost Leadership Strategy, where the organization focuses on being the lowest cost producer and/or provider in their industry. This involves reducing costs in all production aspects, including material sourcing and labor expenses. To attain cost leadership, businesses usually need to engage in large-scale production to benefit from economies of scale.

Large scale production requires appealing to a wide market segment, making a cost leadership strategy crucial. This type of strategy allows businesses to gain a competitive edge by either increasing profit margins through reduced production costs and higher prices, or by passing on the cost savings to customers, thereby increasing sales and market share. Some examples of low cost producers are Easy Group, Ryan Air, and Walter.

The differentiation strategy focuses on the importance of standing out from competitors. Organizations aim to have unique companies and product ranges that attract customers and provide a competitive advantage. According to Porter, businesses can differentiate themselves by offering distinct service features that appeal to customers, such as functionality, customer support, and product quality.

Promotion folding bicycles stand out from other folding bikes due to their compactness when folded. These bikes are popular among individuals who have limited storage space at home or when traveling. The compact size is a valuable feature that sets Promotion bicycles apart from competitors. This differentiation strategy, known as broad scope strategy, aims to attract a wide range of customers.

New concepts, capable of differentiation, can be safeguarded through patents and other intellectual property rights. However, patents have a limited lifespan, and organizations always risk the possibility of their advantageous idea being replicated in some way. A focus

strategy involves a business dedicating its efforts to a specific market segment with the objective of establishing a reputation for delivering products/services to that segment.

By catering to the specific needs and desires of their niche market, companies like Roll Royce, Bentley, and Saga create a competitive advantage. In order to pursue a cost leadership or differentiation strategy tailored to that segment, Porter suggests that once a company has chosen a market segment for their products. A focus strategy is considered a narrow scope strategy as it focuses on a specific segment of the market.

Being "stuck in the middle" refers to businesses that attempt to implement cost leadership, differentiation, and niche strategies all at once. They lack a clear business strategy and aim to cater to everyone, which can lead to increased operational costs and confusion. Meeting the demands of all market segments is a daunting task, causing these middle-of-the-road businesses to underperform in their industry. It is important for them to focus on their core strengths instead.

In conclusion, to gain a competitive advantage, businesses need to assess their strengths and select the most suitable strategy among cost leadership, differentiation, or focus. These strategies, also known as generic strategies, can be applied to any industry, but not every business will benefit from them. For instance, small businesses may struggle to achieve the economies of scale required for a broad scope cost leadership strategy, but they can leverage a smaller customer base to provide personalized services through a narrow scope focus strategy.

Conversely, a larger business may lack the ability to generate enough revenue through a focus strategy, but it may be able to

pursue aggressive broad scope cost leadership due to its size. Regardless of the strategy chosen, a business should avoid being average because it cannot excel in every aspect. According to the concept of the product life cycle, a product goes through four stages: introduction, growth, maturity, and decline.

During the product's life cycle, profitability varies and different strategies are required for success. The first stage, called the introductory stage, begins when the product is initially available for sale. In this stage, profits are minimal or absent due to expenses related to creating awareness through costly marketing campaigns. Additionally, funds must be assigned to promote the product to distributors and retailers.

During the growth stage, if the introductory stage has been successful, the product will progress. Retailers will start stocking the product, and consumers will start purchasing it. This stage sees a significant boost in sales, resulting in rapid sales growth. Additionally, profit increases as the manufacturing and promotion costs per unit sold decrease. The business's challenge is to prolong the growth stage for as long as possible, which may involve making reductions or expanding into new markets.

During the maturity stage, most products experience a slowdown in rapid sales growth. Businesses often employ strategies like price reductions and promotional campaigns to boost sales, although these tactics can be expensive and may lead to profit decreases. In the decline stage, both sales and profits start to decrease. To stimulate growth, organizations may contemplate changing their pricing strategy. However, if they want to revive the product's market performance, it will require either re-modification or replacement.