BBPM2103 Bi PDF
BBPM2103 Bi PDF
BBPM2103 Bi PDF
BBPM2103
Marketing Management I
Answers 154
INTRODUCTION
BBPM2103 Marketing Management I is one of the courses offered by the Faculty
of Business and Management at Open University Malaysia (OUM). This course is
worth 3 credit hours and should be covered over a period of 15 weeks.
COURSE AUDIENCE
This course is offered to all students taking the Bachelor of Management, Bachelor
of Marketing, Bachelor of Business Administration, Bachelor of Tourism
Management and Bachelor of Human Resource Management programmes. This
module aims to impart the fundamentals of marketing management.
As an open and distance learner, you should be able to learn independently and
optimise the learning modes and environment available to you. Before you begin
this course, please ensure that you have the right course materials, understand
the course requirements, as well as know how the course is conducted.
STUDY SCHEDULE
It is a standard OUM practice that learners accumulate 40 study hours for every
credit hour. As such, for a three-credit hour course, you are expected to spend 120
study hours. Table 1 gives an estimation of how the 120 study hours could be
accumulated.
Study
Study Activities
Hours
Briefly go through the course content and participate in initial discussions 3
Study the module 60
Attend 3 to 5 tutorial sessions 10
Online participation 12
Revision 15
Assignment(s), Test(s) and Examination(s) 20
TOTAL STUDY HOURS 120
COURSE OUTCOMES
By the end of this course, you should be able to:
COURSE SYNOPSIS
This course is divided into 10 topics. The synopsis for each topic is presented
below:
Topic 4 invites you to identify and understand the formative process of strategic
marketing planning. Through this topic, you will be exposed to the concept of
strategic marketing management, beginning with identifying a business venture
and ending with the measures needed to control and evaluate the implementation
of marketing activities. Marketing plan, which is the main strategic planning
method in marketing management, will also be discussed.
Topic 6 discusses in detail each macro factor that affects the marketing
management process. Among the factors discussed are the demographic, social,
cultural, economical, political, legal and natural environment factors.
Learning Outcomes: This section refers to what you should achieve after you
have completely covered a topic. As you go through each topic, you should
frequently refer to these learning outcomes. By doing this, you can continuously
gauge your understanding of the topic.
Activity: Like Self-Check, the Activity component is also placed at various locations
or junctures throughout the module. This component may require you to solve
questions, explore short case studies, or conduct an observation or research. It may
even require you to evaluate a given scenario. When you come across an Activity,
you should try to reflect on what you have gathered from the module and apply it
to real situations. You should, at the same time, engage yourself in higher order
thinking where you might be required to analyse, synthesise and evaluate instead
of only having to recall and define.
Summary: You will find this component at the end of each topic. This component
helps you to recap the whole topic. By going through the summary, you should
be able to gauge your knowledge retention level. Should you find points in the
summary that you do not fully understand, it would be a good idea for you to
revisit the details in the module.
Key Terms: This component can be found at the end of each topic. You should go
through this component to remind yourself of important terms or jargon used
throughout the module. Should you find terms here that you are not able to
explain, you should look for the terms in the module.
PRIOR KNOWLEDGE
No prior knowledge is required.
ASSESSMENT METHOD
Please refer to myINSPIRE.
REFERENCES
Bagozzi, R. P., Rosa, J. A., Celly, K. S., & Coronel, F. (1998). Marketing
management. New Jersey: Prentice Hall.
Dalrymple, D. J., & Parsons, L. J. (1999). Marketing management: Text and cases,
(7th ed.). New York: John Wiley & Sons.
Kotler, P., & Armstrong, G., (2005). Principles of marketing (11th ed.). New
Jersey: Prentice Hall.
Kotler, P., Ang, S. H., Leong, S. M., & Tan, C. H. (2004). Marketing management:
Lamb, C. W., Hair, J. F., & McDaniel, C. (2001). Marketing (6th ed.). Canada:
South-Western Publishing.
Mowen, J. C., & Minor, M. (1997). Consumer behaviour (5th ed.). New Jersey:
Prentice Hall.
Shiffman, L. G., & Kanuk, L. L. (2003). Consumer behaviour (8th ed.). New Jersey:
Prentice Hall.
LEARNING OUTCOMES
INTRODUCTION
The role of marketing in enhancing the competitiveness and continuity of an
organisation in the market has been realised by many organisations. In order for an
organisation to form an efficient marketing management process, it not only needs
to understand the concept of marketing but also the conceptÊs development,
elements and scope.
In this topic, we will discuss marketing knowledge from the aspect of marketing
concept, marketing management and marketing management process.
The rise of sophisticated technology has caused competitors to use new strategies
and tactics in business. Therefore, marketers have been forced to also use the
latest business strategies and tactics brought about by technological
advancement. For example, besides airing commercials through the mass media,
marketers also need to create websites and interact readily with consumers
through online communication. For instance, Nestlé (Malaysia) Limited practises
online communication marketing through its website at www.nestle.com.my.
Similarly, Proton Berhad has its own website at www.proton.com.my and TV3
has its website at www.tv3.com.my.
SELF-CHECK 1.1
(a) Needs;
(b) Wants;
(c) Offer; and
(d) Transaction.
ACTIVITY 1.1
How do you relate profit, which is the most important factor to ensure
that an organisation remains in the market, to market orientation?
1.2.1 Needs
The most basic concept in marketing is human needs (Kotler & Armstrong, 2005).
A need is a situation or a feeling of inadequacy which is felt by an individual that
needs to be fulfilled. For example, the basic needs of human beings are food,
shelter and safety.
1.2.2 Wants
While needs refer to the most basic necessities, wants refer to a higher level of
needs. For example, a man who is hungry needs to eat food but wants to eat rice,
laksa or bread. Wants are needs translated into the form of products or services.
Humans have unlimited wants but limited resources. As a result, they have to
choose products or services that offer the most value for their money.
1.2.3 Offer
Offer refers to marketing mix, which reflects a marketerÊs strategies and tactics to
influence a transaction. Marketing mix includes product, pricing, distribution
(place) and promotion, better known as 4Ps. Refer to Figure 1.1.
After identifying the needs and wants of consumers, marketers have to provide
offers that are able to fulfil both needs and wants. Marketers have to:
Customers must be aware of the goodsÊ existence and feel that by buying and
using these, their needs and wants can be fulfilled.
(a) Product
Products are marketersÊ offers to be seen, tested and used for personal
purpose, household, reproduction or resale. Products are divided into two
main categories tangible and intangible. Tangible products are known as
goods while intangible products are called services.
(b) Pricing
Pricing refers to final price management which has been adopted by a
marketer. Pricing decisions are usually influenced by three main factors
costs, consumers and competitors.
(d) Promotion
Promotion is the element in the marketing mix that is used to inform,
persuade and remind consumers about the existence of a product. The
methods of promotion are advertisement, sale promotion, personal sale,
public relations and publicity, or better known as promotion mix, have to
be managed to ensure overall success to persuade the consumer.
While managing every element in the marketing mix, marketers must manage
each element in balance. Marketers should not assume that attention should be
given to only one element, for example, stressing only on product strategy and
tactic management while ignoring all other elements. This is called marketing
myopia. The concept of marketing myopia will be discussed later in this topic. In
order to create an offer that is able to fulfil the needs and wants of consumers,
marketers must manage all the elements of the marketing mix equally.
EXERCISE 1.1
2. How much do the concepts of needs and wants differ (based on the
marketing perspective)?
4. Which element of the marketing mix is the most important and can
be managed separately by marketers? Give your opinion.
(a) Production;
(b) Product;
(c) Sale; and
(d) Marketing.
All four concepts exist to fulfil environmental demands or current needs and are
the results of the failure of business concepts practised earlier. Although in terms
of history, the development of world business philosophy can be classified
according to period of years, and even though the decade of practising those
business philosophies have long gone, there are still some organisations which
still practise the concepts according to the trends or the history of the business
world.
1.3.1 Production
World business philosophy started when the world, more specifically Western
countries, underwent the Industrial Revolution at the end of the 18th century.
Since the world business is shaped by the growth of industries, most business
organisations practise the concept of production.
The concept presumes consumers tend to acquire low-priced products which are
easily obtained anywhere. Therefore, marketers focus on mass production at
lower cost. Mass production allows producers to enjoy the economy of scale
(higher number of products being produced means lower cost per unit). Besides
enjoying a relatively lower production cost, mass production allows producers to
offer their products at more locations closer to consumers.
1.3.2 Product
After the involvement of many nations in World War I and the recession of the
world economy in the 1920s, marketers were unable to market their products
because of abrupt decline in consumersÊ buying power. As a result, marketers
had to bear huge losses as they were unable to market as many products as
before. Hence, the idea to come up with high quality and attractive products
emerged.
This idea seemed practical as marketers assumed that even though a product was
expensive, consumers would still buy it because of its characteristics and quality.
This business philosophy is known as the concept of product. However, after the
world again went into recession in the 1930s, the concept also took a fall.
1.3.3 Sale
The decline of the concept of product forced marketers to come up with a new
concept which assumes that if left alone, consumers will not buy any marketed
products. Therefore, consumers have to be influenced to buy, through aggressive
marketing activities, namely, promotion and sales. This philosophy is known as
the concept of sale. However, this concept also took a fall when World War II
took place in the 1940s.
1.3.4 Marketing
In the three concepts mentioned previously, business orientations begin with
marketersÊ assumption of consumers (focused on the producer). Through the
fourth concept, all the business processes begin with consumers (focused on
consumers). This business philosophy is known as the concept of marketing. This
concept is very different from the earlier business concepts. Figure 1.2 explains
the differences between this concept and the other three concepts.
Based on Figure 1.2, marketers who hold on to the concept of marketing have to
get to know the consumers first, particularly their needs and wants. Every strategy
of the marketer must focus on the maximisation of consumer satisfaction.
The success of this concept made it popular among many organisations until
today. The concept of marketing not only stays firm in world development but
continues to undergo positive changes in line with changes in the world such as
green marketing, societal marketing, relationship marketing and borderless
marketing.
Even though the marketing concept has been proven to be the only competitive
business philosophy, there are still some marketers who practise the concepts of
production, product and sale even though they are no longer popular. These are
marketers who are narrow-minded, focus only on short-term profits or still enjoy
the monopolisation of certain markets.
Marketers who only pay attention to one element out of the four elements in
marketing mix, particularly products, are said to have marketing myopia.
ACTIVITY 1.2
Based on Figure 1.3, briefly explain how a marketing manager can handle
the processes of marketing management.
After planning and organising the marketing mix strategies, marketers have to
carry out each strategy and tactic. This requires a marketer to lead (instruct) all
human and non-human resources to reach his goals and objectives. While the
processes are being carried out, the marketer has to make sure that each strategy
and tactic that has been planned is carried out efficiently and effectively. This
requires the marketer to come up with a mechanism to control, oversee and
evaluate the whole process.
However, for services marketing, the marketing mix for business organisations is
known as 7Ps. This is because service marketers also need to support the services
marketing process by having:
EXERCISE 1.2
4. What does marketing myopia mean? How does it affect the ability of
marketers to be sustainable in the market of the new era?
The new era of marketing promises new challenges that need to be embraced
by every organisation.
Business Production
Dynamics Product
Marketing Pricing
Marketing mix Sale
Needs Transaction
Offer Wants
INTRODUCTION
These days, companies need new thinking on ways to operate and succeed in the
new economy. The new economy, which emerged in the last few decades,
requires a new marketing and business practice. The new economy also
encompasses some traits of the old economy. Marketers must know what is
meant by the new economy and the steps needed to make their organisations
sustainable in the new economy.
In this topic, the main drivers of the new economy will first be explained. Next,
we will discuss how business marketing and practice have changed. After that,
we will see how companies use the Internet, customer database and Customer
Relationship Management (CRM) to improve their marketing performance.
SELF-CHECK 2.1
There are many factors that shape and determine the new economy. This section
will discuss the four main drivers in shaping the new economy.
ACTIVITY 2.1
Even though some intermediators have lost their businesses, new intermediators
have emerged to supply Internet services for businesses and customers to make
modern business trade a success. These are the main drivers of the new economy.
ACTIVITY 2.2
To obtain more information on the Fuji and Kodak companies and learn
about their products and services, visit:
http://www.fujifilm.com
http://www.kodak.com
2.2.4 Stakeholders
The focus of the company management in the old economy is solely on the
benefits of the shareholders and views the cost of other stakeholders such as the
workers wages, goods distribution channelling cost and the supplier as a burden
that will only reduce the companyÊs profit. On the contrary, company
management in the new economy sees that these parties play important roles in
realising the companyÊs mission. They believe that the success of the company
depends on the performance of all the parties.
ACTIVITY 2.3
ACTIVITY 2.4
(b) Market mediators who are middle men that gather information regarding
products;
(c) Market makers, who are the third party that build the relationship among
marketers, sellers and buyers; and
(d) Customer commodities that allow information exchange between the buyer
and the supplier Ês products and services. The mechanism also allows a
more transparent price of goods and services. See Figure 2.2.
There are several types of pure-click companies in the market, namely, search
engines, Internet service providers, commercial websites, software sites and
enabler sites.
ACTIVITY 2.5
Banner ads are small squares or spaces that contain texts and pictures in a third-
party website. Interested users can click on banner ads to obtain information on
the products or services advertised. It is the most popular means of Internet
advertising. The company only needs to pay to advertise in this form and the cost
depends on the size of the website host. Hence, the company can choose the most
suitable banner ads for its advertising purposes.
The revenue of a dot-com company can come from various sources such as
advertisements, sponsorship, alliance income, membership and subscription,
profile income, product sales and services, fee and business commission, market
research fee or information and referral income.
ACTIVITY 2.6
There are three problems that may prevent companies from using database
marketing.
Firstly, the database needs a huge investment to build and operate in terms of
equipment and computer software, communication connectivity and skilled
workers. Thus, the use of customer database is neither suitable nor cost-effective
for these situations:
(a) The products will only be purchased once in a lifetime such as a piano;
(b) Customers who show the least loyalty to the company;
(c) Sales unit is very small, such as sweets; and
(d) The cost of gathering information is too high.
The second limitation is the fact that it is quite difficult for every worker to be
customer-oriented and use all the existing information in the customer database.
On the contrary, workers are more inclined to conduct traditional transactions
compared to customer relationship marketing (CRM).
The third obstacle is that not all customers wish for an intimate relationship with
a company. Some customers may not be comfortable when they find out that a
company is gathering their personal information. Therefore, it is important for
the marketer to obtain the views and attitudes of the customers towards the
privacy of their personal information.
ACTIVITY 2.7
What is the effect of the changes in marketing practice that you find in
your marketing environment?
EXERCISE 2.1
The four main drivers of the new economy are digitalisation and connectivity,
disintermediation and reintermediation, customisation, customerisation and
industry convergence.
The new economy has changed a few practices in the old economy. For
example, now marketing management is based on customer segment and
there is focus on customer lifetime value.
Adaption Digitalisation
Attractive website Disintermediation
Customisation Industry convergence
Customerisation Internet domain
Customer database New economy
Connectivity New hybrid
Customer relationship marketing Reintermediation
(CRM)
INTRODUCTION
Customer is the most important asset for a business organisation. Various
strategies and great efforts are needed to maximise customer satisfaction. Among
the factors that determine customer satisfaction are customer values, quality in
marketing, relationship marketing and customer retention.
There are some guidelines available to allow the marketer to measure customer
value but bear in mind that it is quite tough as customer perception is abstract.
The factor of quality will be stressed in this topic. Other than understanding the
concept of quality, marketers also need to understand the meaning and
application of total quality management and perceived quality to ensure that
consumers experience a high level of satisfaction.
Try to recall the main focus in the concept or definition of marketing. If you
observe carefully, marketing puts much emphasis on attaining customer
satisfaction. The success of marketers depends on their accomplishment in
maximising customer satisfaction. If you take a look at the marketing activities of
giant marketing organisations such as Toyota, Honda, Sony and 3M, you will see
that they strive to ensure each marketing strategy is able to maximise customer
satisfaction.
The steps of awarding ISO series quality certificates as well as certificates for total
quality management, zero customer feedback time, zero product improvement
time and others are practised wholeheartedly by these companies.
marketers do not have much choice but to do something to win the hearts of
customers. Marketers have to realise that customers are value- maximisers as
shown in Figure 3.1.
Customer value is the difference between the value attained by the customer
from owning and using their products and the cost that has to be paid to
acquire the product. The customer Ês total cost includes an amount of cost
that needs to be paid by the customer in order to acquire and use the product
(Kotler, 2003).
Based on Figure 3.2, customer value is determined by the difference between total
customer cost and total cost paid by the customer to own and use the product.
Customer value and part of the customer cost stated in Figure 3.2 are in reality
difficult for the marketer to estimate. This is because each customer value and
cost illustrated is influenced by the factor of customer perception, which is an
abstract factor, difficult to predict or estimate by marketers. Therefore, to exercise
the customer value concept as shown in the figure, marketers have to take into
account individual and group perception when estimating total value and
customer costs.
Even though different in terms of measurement, the result of both concepts is still
the same, which is customer action. Similar to measuring customer value,
marketers are also faced with the difficulty of measuring customer satisfaction
because of the influence of the individual and group perception. However,
measuring customer satisfaction is much easier because the act of purchasing or
not (making repeat purchase or not) is an indication of customer satisfaction.
There are a number of methods and tools that can be used to establish a
marketing process that is able to maximise customer satisfaction. The two most
famous methods and tools are the blueprint and value link.
Blueprint is a concept that is applied from scientific results. There are many
models that can be used to design a marketing process blueprint. All the
blueprint models are designed using the same basic steps, which are the initial
step (start), execution, decision making and end. For example, a blueprint for a
car wash centre covers entry of car into car wash centre, exterior wash, interior
wash (wiping and vacuuming), waxing, payment and exit (end).
Based on Figure 3.3, there are five main activities which are supported by four
supporting activities. Internal logistic activity refers to logistic activity that brings
the product (raw material) into the organisation. Operation refers to production
operation, while external logistic refers to the activity of carrying the product
(ready-made and half-ready) to the market. However, to acquire a market, the
organisation needs to perform marketing activity. During the process of
performing this activity, the organisation has to provide after-sales service to the
customers.
The success of performing the main activities mostly depends on the success of
managing the supporting activities. The organisation needs to create certain
facilities to implement the main activities. The organisation needs to create an
efficient process of human resource management as most of these activities are
performed by humans. All the organisational activities, including human
resource management, involve the use of technology. The process of production
(operation) depends a lot on the quality of the raw material purchased by the
purchasing officer. Thus, the activity of purchasing raw material directly
influences several activities, particularly the operation and internal logistics.
SELF-CHECK 3.1
We have been exposed to the concept of quality. What does the term „quality‰
actually mean? How is it measured? Is the quality measurement done by the
marketer and the user the same? How far is the concept of quality considered
important in business and marketing? All these questions need to be answered
before you are able to manage quality.
There are many definitions for the term „quality‰. However, in general, quality
may be defined as a comparison value between a subject and other subjects that
already exist or are experienced by certain individual or groups. This means
quality is an evaluation result and comparison between current and past results
(based on experience), comparison with a similar subject that is current, based on
unwritten or verbal standards and based on written certified standards.
You may assume a new product has more quality because the product has a
better performance from the product you previously purchased (based on your
experience) or you may find that the performance of the product is better than
the other product in the same category. You may assume a product has good
quality because it received praises from your friend (non-certified standard) or
you assume that all the products that have SIRIM mark or ISO9000 are of good
quality (based on certified standard).
Other than that, a marketer has to absorb higher costs for a new customer as not
all who are approached will turn into real customers. Marketers need to
approach many potential customers to gain one real customer. The number of
potential customers to be approached in order to gain a real customer differs
depending on the products and marketing environment. Often, marketers have
to approach at least two potential customers to gain one real customer.
EXERCISE 3.1
INTRODUCTION
Management process requires a well-planned and systematic work frame to
drive towards the execution of the steps. The first step in the management
process is planning. Usually, an organisation uses strategic planning to plan all
its actions. On the other hand, strategic marketing is a process that involves a few
steps that must be performed thoroughly and in orderly fashion.
Other than the component of planning, the strategic planning process involves
three other important components, which are environmental analysis, formation
of strategy and control. The development of the strategic planning process has to
The steps which need to be performed by the marketer while developing the
strategic planning processes are explained in the following sub-sections.
SELF-CHECK 4.1
(a) Vision
Vision is a statement of the target or genuine direction of an organisation.
Usually, vision requires the accomplishment of targets in the long term,
normally more than 10 years. Through the vision statement, the organisation
needs to clarify the target clearly and generally. The easiest way for you to
understand the concept of vision is by looking at Vision 2020.
Vision may be defined in general or specific terms. The next example may
explain the scope of general or specific business definition. TransCity Sdn
Bhd (TransCity) is a transportation company. If TransCity defines its
business as a transportation company, the company will concentrate on the
business of public transportation. However, if the company defines its
business as a goods transportation company, it will possess lorries and
coaches carrying goods only.
(b) Mission
Mission is a vision statement which is more specific. While through vision,
an organisation learns the business ventured in general, through mission,
the organisation must answer more specific questions such as the following:
Other than being different in terms of scope, vision and mission also vary in
terms of period. The period that is needed to realise a vision is relatively
longer than to realise a mission.
Kotler (2005) states that vision and mission must be founded on the
advantages of competition that the marketer has. The advantages of
competition can be categorised into six scopes as illustrated in Figure 4.2.
ACTIVITY 4.1
Based on the vision and mission scopes, what is your opinion about the
undertaking of these companies?
2. What is the business scope used by the companies Toys ÂRÊ Us and
Body Shop?
What do you understand about the terms used in SWOT analysis? SWOT is an
acronym for strengths (S), weaknesses (W), opportunities (O) and threats (T). If
you still remember, earlier in the topic, all four of the terms refer to the factors
resulting from two environment categories based on two perspectives, which are
the internal and external environment based on the positive and negative aspects.
Business unit refers to a product line or subsidiaries (allied companies) that can
be differentiated, particularly in terms of consumers and competitors. For
example, Nestlé Company owns unit sectors based on product lines such as
snack food, breakfast cereals, baby milk and chocolates. Nescafe, Milo, Maggi
and Neslac are some of the business units of Nestlé Company. Meanwhile, the
Hicom-DRB company is involved in many business sectors. Therefore, the
corporate bodies form certain subsidiaries to operate in specific business fields.
After you understand the concept of business unit, you also need to understand
the concept of strategic business unit (SBU) as this is related to portfolio analysis.
What is meant by SBU? It is a business unit that will be the main contributing
factor to the overall corporate revenue acquisition of the marketer. SBU income
increases will also increase the overall corporate income, and the decline or
deterioration of SBU revenue will have a significant effect on corporate decline.
Copyright © Open University Malaysia (OUM)
TOPIC 4 MARKET-ORIENTED STRATEGIC PLANNING 47
Other than being the main contributing factor in gaining corporate income, SBU
can be managed as a separate entity from the other business units. For example,
since the brand Maggi has a number of products and most of the products are
market leaders, the brand Maggi is made into the Nestlé companyÊs SBU.
The following are the most popular methods to analyse the market environment:
Both of the market factors are working on two perspectives, which are high
and low. The combination produces four situations (two factors X two
perspectives). Each situation has a distinct difference and brings implications
to the market in different ways, particularly in terms of marketing
investments and strategies. Figure 4.3 can help you to understand the BCG
Matrix.
Based on Figure 4.3, SBU, the market has relatively low market share
domination categorised as the dog and cash cow.
(i) For the dog situation, the SBU is lower compared to the competitor,
which means smaller market share domination as compared to the
competitorÊs domination of the market share. Therefore, the
corporation has two options, whether to increase its investment to
enhance the competitive SBU or remove the particular SBU from the
market (cease operation).
(ii) Meanwhile, the SBU in the cash cow situation is the SBU that enjoys
market leader position. This means the SBU market leader
successfully dominates the market and generates a relatively large
income, even though it is in a matured market or the one with a low
growth rate.
(iii) SBU in the market which are experiencing a high level of market
growth is divided into two, the star and the question mark.
(iv) SBU in the star situation is a successful SBU (having high competing
ability). Thus, to increase the corporate revenue and SBU strength, the
corporate needs to intensively invest in a selective way.
(v) Meanwhile the SBU in the question mark situation needs to redefine
its business definition, particularly in the aspect of improving the
competition level. This is because, even though it is in an attractive
market, the SBU has failed to dominate a large market share
compared to the competitor Ês market share domination. The increase
of investment and reconstruction of the market strategy is needed to
improve the ability of the SBU to compete in the market.
Through this portfolio analysis, the medium factor is taken into account. So,
the matrix has nine quadrants as compared to the BCG matrix that only has
four quadrants or situations. Just like the BCG matrix, the GE matrix is
founded on two major factors, which are market attraction and SBU
business strength. Both factors are evaluated based on three perspectives:
high, medium and low.
The combination of the three perspectives and the two factors generate nine
(three X three) situations. If we look at it closely, the GE matrix and the
BCG matrix are actually the same. The differences of the two portfolios are
only from the aspect of perspectives intensity, which in the case of BCG
matrix does not take into account medium factors. Figure 4.4 may assist you
to better understand the concept of portfolio analysis of the GE matrix.
Based on the figure, there are nine business situations that the SBU may
come to face. However, all the situations can be categorised into three main
situation groups. Situations 1, 2 and 3 are in the first group, situations 4, 5
and 6 in the second group and situations 7, 8 and 9 in the third group.
While deciding to use the GE or the BCG matrix to analyse the corporate
portfolio, the marketer has to choose whether to use the GE matrix or the
BCG matrix. This is because, based on the previous discussion, both matrix
are quite similar.
Through the strategy of product development, the marketer will take an action to
introduce a new product category in the existing market. For example, Proton
Berhad introduces racing bicycles in the Malaysian market. Racing bicycle is a
new product category compared to the existing product marketed previously by
Proton Berhad in Malaysia. However, the market growth strategy refers to the
action of the marketer in marketing an existing product to a new market.
If the marketer decides to introduce a new product category into a new market,
the action is known as the diversification strategy. If Proton Berhad produces
motorcycles (Proton Berhad has never produced motorcycles before) to be
marketed in Laos, which is a new market for Proton, then the action taken by
Proton Berhad can be classified as diversification strategy.
ACTIVITY 4.2
2. When do you apply the BCG matrix or the GE matrix to analyse the
market environment?
For instance, the company Restu Sdn Bhd sets the aim to increase its market
share up to 20 percent this year. This value is an increase of last year Ês 5 percent
market share domination. To ensure the target of 5 percent increase on market
share, the company has set a few objectives; such as to increase sales coverage for
every housing estate every week, to increase advertisement coverage for each city
every month, every market segment will experience half percent increase every
month and the increase of new customers as many as 800 people per month for
each product line.
Through this segmentation strategy, other than the need to identify the market
target or the market segment, the marketer also has to determine the product and
organisation positioning in the consumer Ês mind. For example, Proton Berhad
wishes to position the Proton Perdana cars as the ultimate luxury car in Malaysia.
However, for them to design the strategies, the marketer needs to differentiate
between the general strategy and the specific strategy. This step only requires the
marketer to design a general strategy, which are the product strategy, price, place
and marketing communication.
(b) Monitoring
The operation process of the marketing plan requires monitoring measure
to ensure all that has been performed is in line with what has been set in the
early stage of the marketing plan. Through monitoring, the organisation or
the manager oversees and supervises all the activities performed so that
they are in accordance to the early planning.
EXERCISE 4.1
However, for certain business organisations, specifically those that pay the most
attention to marketing orientation, the organisations prepare a long-term
marketing plan for each of their marketing plans, whether it is the organisation
direction or their products. For example, the Nestlé Company has prepared a
long-term marketing plan for their product Nescafe (instant coffee) since
venturing into the Malaysian market at the end of the 1960s until now.
However, if marketers have no desire to use the SWOT analysis, they may choose
any environmental analysis method such as the customer analysis, competitor
analysis, neutral environmental analysis, economy analysis and the rest in
combination. If the marketer wants to perform situation analysis on the SBU,
other that using the SWOT analysis, they need to use either the BCG matrix or
the GE matrix analysis and the Ansoff grid to accentuate the SBU analysis and
planning. Other than using the environmental analysis method for SBU (if
applicable), marketers need to use perceptual map method in order to identify
and plan the positioning of the marketer and the product.
(a) Pre-content;
(b) Content; and
(c) Reference list and attachment.
(a) Pre-content
This part provides a summary to the report, appreciation and the content
index. The appreciation page is prepared to express gratitude to certain
parties or individuals and it is found before the report summary. Report
summary or better known as the abstract or the executive summary
(executive summary is more popular) is the part that reports briefly all the
facts or important content of the marketing plan. Even though the executive
summary is written in the earlier section, it is the final part prepared in the
marketing plan report writing process.
Executive summary should be written with single spacing, not more than a
page long and use a smaller font size. Content index is usually in a separate
page after the executive summary. Numbering of the pre-content in type
using the Roman numbers (i, ii, iii⁄).
(b) Content
Content shows the result of all the steps of the strategic marketing planning
performed, beginning from the vision statement up to the marketing
control. However, the reporter should make some minor adjustment to the
report content of the marketing strategic plan appropriate to the target
audience and to add value as well as to grab the reader Ês attentions.
Reference list refers to the listing of all the reference made in preparing the
marketing plan report. Bibliography on the other hand, lists all the reference that
was used in the report and additional reference suggestion suitable as reading
materials or as reference to the readers (even though they are not referred to in
the preparation of the report content).
In brief, the marketing plan report formats that can be employed and are
illustrated in Table 4.2.
Section Content
Pre-content Executive Summary
Content Introduction
Environmental Analysis
Statement of Vision and Mission
Designed Strategies
Designed Tactics
Control
Conclusion
Attachment and Reference Reference List
Supporting Material Attachment
EXERCISE 4.2
1. List and explain all the main actions in the marketing plan report.
Planning can be divided into four important stages corporate plan, unit or
section, strategic business unit and product planning.
INTRODUCTION
The development of the marketing strategic planning process requires marketers
to obtain information comprehensively and systematically. Obtaining
information is the most important step in the marketing strategic planning
process. Other than employing several environmental analysis methods that have
been discussed in Topic 4, marketers also need to come up with a system of
information management that is known as Marketing Information Systems (MIS).
Based on the definition given, the marketing information system encompasses all
the resources and procedures owned by the organisation to obtain information
from the marketing environment. Subsequent to gaining information, the
components in the marketing information system will arrange, analyse, evaluate
and screen the marketing information. Figure 5.1 may assist you to understand
the concept of marketing information system and the benefit of the system to
marketers and marketing managers.
ACTIVITY 5.1
The information contained in the internal record is known by many names such
as financial record (ledgers, profit loss statement, income statement), sales record
(unit and RM), human resource record (staff numbers, staff background), order
report, inventory level and others.
Internal record can be classified according to the period of time they are
prepared, for example new (current month or year), medium term (more than a
year but less than three or five years) and old (more than five years).
ACTIVITY 5.2
Being current or daily is the most important character that differentiates the level
of marketing intelligence information with the existing information in the
internal records. For example, if the information regarding the competitorsÊ price
in the period of a month ago may be obtained from the internal records, the price
fixed by the competitor in the present day is only available with the marketing
intelligence.
Some examples of marketing decision support system are Statistical Package for
the Social Science (SPSS) and Statistical Analysis System (SAS).
Implemented by marketers;
By appointing outsiders; or
A combination of both.
EXERCISE 5.1
SELF-CHECK 5.1
After the research expenditure has been allocated, marketers need to decide the
implementation plan of the research. There are five decisions to be made by
marketers in this step, which are:
(i) Observation
Refers to the action of observing customer behaviour and variables of
certain environment.
(ii) Survey
The most popular approach and requires the use of survey forms. It is
used to study the level of customer Ês knowledge, trust, inclination
and satisfaction.
(iii) Experiment
Refers to the action of measuring cause-and-effect. Marketers need to
form two groups, which are the study group and the control group
(group in the normal situation).
(i) Survey
The survey includes a few sets of questions or measurement items.
The method is the most popular instrument as it is easy to use and
quite flexible. The survey can be divided into three stages, which are
designing the questions, conducting pilot study and finding inter-
relation (significance).
The pilot study is conducted to ensure the questions are suitable and
do not confuse the respondents. The results of the pilot test will
suggest modifications to improve the approach and questions.
The questions used in the survey can be categorised into two forms,
open and closed. Through open questions (Table 5.1), the researcher
invites respondents to give their own answers, while through closed
questions (Table 5.2), the researcher provides a few alternative answers
for respondents.
Type Detail
Example:
Was your purchasing decision influenced by the quality of the
product?
Word match Expose the respondent to a few words and ask to state the first word.
Example:
What is the word on your mind when you hear:
(i) Quality ___________
(ii) Brand ____________
Example:
I buy AVON products because _________ is cheap and _________ is
high.
Example:
Badrul went to an interview for a sales position. During the interview,
the interviewer gave him two types of detergent brand: one is in
powder form and the other in liquid form. Without mentioning a
particular brand, the interviewer then asked him to identify which
product has more quality.
Example:
Please fill in the blank dialogue.
Themed The respondent is given a picture and asked to come up with the story
storytelling based on the picture.
test
Example:
Write a short story based on the photograph that you see.
Type Detail
Dichotomous Questions that have only two choices of answer such as yes or no only.
Example:
Does quality affect your purchasing decision?
Yes
No
Likert Scale The question statement about the agreement is provided answer choice
according to certain level.
Example:
Every Nestlé product has the same level of quality.
1 Highly Disagree
2 Disagree
3 Not Sure
4 Agree
5 Highly Agree
Semantic A scale that incorporates two words that are the opposite to be matched
difference with the questions.
Example:
Give you opinion about the K Powder. Mark X in the appropriate
space.
Interest scale Almost similar to Likert scale but refers to question that provides
answer according to interest level.
Example:
1 _______ Very Important
2 _______ Important
3 _______ Least Important
4 _______ Not Important
Improvement The approach is similar to Likert scale and interest scale but is more
Scale general in character. It refers to quality, performance, satisfaction and
others.
Example:
The quality of the K powder is:
1 Excellent
2 Good
3 Average
4 Not Satisfactory
Probability Sample
Simple Random Every population member has the same chance of being selected.
Sample
Method Particulars
Mail The cheapest method but has the lowest level of respondent
cooperation and the highest respondent error rate compared to
other methods.
Telephone or the The method that is gaining popularity among researchers.
Internet However, this approach also has a high rate of respondent error.
Short Message The use of short message services (SMS) through mobile phones
Service (SMS) can be used by researchers. However, this method is believed to
have a high respondent error compared to the online method as
respondents have to cover a high cost to reply to the message.
Face-to-face The most expensive method and consumes a relatively longer
Approach time compared to other methods. However, this method is the
(Structured most popular since it has the lowest respondent error compared
Interview) to the other methods.
Combination The combination approach at present is practised more often as
it is able to produce research that has a low respondent error
compared to the structured interview method that is still the
preferred method in the method combination.
Among the costs that researchers have to bear are the wages of research
assistants, transportation claim, preparing survey forms and other miscellaneous
items. Besides that, researchers or research assistants have to face a range of
respondentsÊ characters that may sometimes be boring and test their patience.
To make it easier for you to understand the mechanism of execution for the
marketing research process, refer to Figure 5.2.
EXERCISE 5.2
3. Why canÊt marketers set the research goal or scope to be too specific
or general?
The need to predict the market is crucial, particularly when marketers implement
the segmentation strategy. If you refer to the discussion on market segmentation
strategy in Topic 10, marketers need to evaluate the attraction of each segment.
The evaluation on the segment is made in the market targeting phase. It requires
marketers to evaluate a few subjects such as the measurement of the current
market size and its potential, growth rate and profitability potential.
Based on the statement, we may conclude that market forecast is not a simple
effort. It involves several steps and specific skills, particularly in terms of
mathematic and statistics skills. The implementation of market forecasting
involves five steps, which are:
If you look at the dimension and perspective of all the three demand
measurement dimensions, marketers may use 90 types of market demand
measurements.
The numbers formulated are timed with every perspective as explained in the six
parts mentioned, which is six (product dimension) X five (space dimension) X
three (time dimension). For example, marketers may use the demand
measurement in five years period in the future (time stage), against passenger
transportation (product form) in ASEAN countries (international).
For certain products, there are certain limitations presented by the market. For
example, Mitsubishi sedan cars such as Lancer (Evolution VII) are not allowed to
enter the Malaysian market. Therefore, Mitsubishi should eliminate Malaysia
from its list of available markets.
After recognising the achievable market size, marketers have to measure the
qualified available market size. The qualified available market refers to markets
that have no limitation to obtain the products. For example, individuals below 18
years old are non-qualified available market for tobacco products (cigarettes).
After identifying the qualified available market, marketers have to decide on the
strategy of market targeting, which are the market segment to be approached.
There are four choices of market targeting they can choose from. Marketers may
approach:
The action whether to look at all or part of the segments is made based on the
segment attraction, the ability of marketers to approach the segment and based
on strategic consideration. For example, Matsushita approaches every segment in
the market while Zaiton Industries only approaches the Muslim consumer
market segment. This stage, which is the market target determination, is known
as the served market in the stage of defining the market.
Not all the consumers in a segment will be the customer of the marketers because
the consumer can choose whether to buy the marketerÊs product or his
competitorÊs product. Therefore, only part of the consumer in the market will be
the buyer of the marketer. The market size that includes every consumer that
buys the marketerÊs product is known as the penetrated market.
In short, the explanation of the entire concept related to market definition may be
explained through Figure 5.3.
After identifying the target market, the next thing the marketer should do is
understand the three concepts that relate to the definition of the market. All the
three concepts are:
Marketers have to refer to the market potential concept, which depicts the
maximum possibility of the current market demand abreast with the movement
of the market expenses nearing the infinity point for a specific environment
(Kotler, 2003). It means the market potential during economic growth will differ
from the potential market during economic recession.
ACTIVITY 5.3
Qi = SiQ
Where:
Qi = Company demand number-i
Si = Company market share number-i
Q = Market demand total
For example, say the market demand total is 1,000,000 units. The maximum
market share prediction that the company can dominate is 20 percent from
the total market. Therefore, the market demand is 200,000 units.
Q = npq
Where:
Q = Total market potential
n = The number of consumer for a specific product/market based on
certain assumption
q = Average purchase value of each consumer
p = Average price for every unit
For example, there are 1,000,000 new unit television buyers in Malaysia a
year. The average purchase for each consumer is two units and the average
price for a new television set is RM1,000. Therefore, the total market
potential for new television in Malaysia is RM2 billion a year (1,000,000 2
RM1,000).
There are three methods that can be used by marketers to make the
estimation. The three methods are:
The method is more of a comparison method. The effective mess of this method
is lower than that of the other two previous methods. However, this method is
easier to implement as there are more organisations (government and non-
governmental organisations such as manufacturers association) that produce
reports on industry sales and market share domination.
A detailed discussion of the test market methods can be found in the topic of new
product development. Marketers may implement by themselves the estimation of
the future market potential or appoint outsiders such as Nielsen Media Research
or Technology Park Malaysia.
EXERCISE 5.3
7. List and explain all the necessary steps a marketing manager needs
to carry out to perform a research on the acceptance of a new
product to be launched by a company.
Other than assisting marketers in developing the marketing mix strategy, the
information from the marketing information system can also be used to help
marketers to understand the market and the market demand better.
INTRODUCTION
When a company started its operation, it is not in a situation where the condition
is static and will not change. The company is in a greater environment. In this
environment, there are forces that will create opportunities as well as threats to
the companyÊs ability to continue its operation.
The environment refers to the factors that will have positive or negative effects
on the companyÊs ability to continue operating and growing while at the same
time, maintain its transaction with buyers and market consumers. Changes will
always occur in the environment, either gradually or abruptly. This can have a
great impact on the company especially the employees.
SELF-CHECK 6.1
What are the influences of the environment in our daily life? For
instance, does a change to the economy also affect your purchasing
power as a consumer? Does the change in technology also affect your
daily life?
The macro environment comprises all the elements outside the companyÊs micro
environment. All these elements create opportunities and threats to the company.
Although the elements are outside the control of the company, it still has to
monitor the development and changes that occur in the macro environment so
that it may help the company to plan appropriate responses. Figure 6.1 illustrates
the six elements of the macro environment.
6.1.1 Demography
Demography is closely related to population data such as size, density, location,
age, gender, race, occupation, population migration and other statistics that
relate to population. Demographic study and research of the environment is
important as the population makes the market. Demographical-factored statistics
are quite easy to obtain as they are the data collection of government and may be
used directly.
6.1.2 Economy
Economic environment is the factor that influences consumersÊ purchasing
power and expenses pattern. ConsumersÊ purchasing power depends on current
income, price, savings and credit. Marketers should monitor the main income
pattern and changes in consumer expenses pattern. Any positive or negative
changes in the economyÊs main variables such as the income pattern, living cost,
interest rate, saving and loan will affect the market.
ACTIVITY 6.1
6.1.3 Natural
Natural environment involves natural resources needed by marketers. Generally,
natural resources nowadays are diminishing while the costs to acquire them are
increasing. This is because resources such as fossil fuel take time to be reproduced,
while the demand for the resources keeps increasing as the population grows.
6.1.4 Technology
The changes in the technology nowadays are happening rapidly. There are many
new technologies invented to replace the old technology. With these changes and
innovations, there are more opportunities and more new markets to be built.
However, new technologies could also contribute to the increase of financial cost
for research and development (R&D) activities. This caused more effort on
making minor modifications on the existing products rather than inventing new
products as the cost related to technology is extremely high for new products.
Marketers should monitor changes in the technology sector and study the use of
technology to help fulfil human needs so that more innovative products can be
developed and accepted by the market.
6.1.5 Legal
This environment refers to the implementation and regulation of the laws by the
government, the influence of government agencies, as well as pressure groups
that are able to influence and limit the roles of individuals or organisations in the
market. Marketers need to monitor the environment related to the laws and
regulations so that the actions taken will not bring any legal complications.
6.1.6 Cultural
This environment consists of institutions and other influences that affect basic,
perception, priority as well as the behaviour of a community. Individuals raised
in a community develop their values and beliefs based on community norms.
The community has its own opinion on the issues of relationship between their
community and other community. Marketers have to be aware of the cultural
environment as it not only influences one individual but the community also.
EXERCISE 6.1
Figure 6.2 shows the five factors of a companyÊs micro environment. The micro
environment factors can be controlled by the company, directly or indirectly, to
achieve business and market objectives.
6.2.2 Suppliers
Suppliers consist of firms and individuals who provide resources to allow the
company to continue its operation of product or service production to the
targeted market. The supplies from the suppliers are mostly raw materials, semi-
ready industrial goods or ready-made products. Marketers have to be informed
about any progress in the industry and the credibility of their suppliers. This is
because supplies that do not meet the established time will affect the marketer Ês
operation and affect the companyÊs offers and its image in the market.
MarketersÊ awareness of what is going on in the industry may help them take the
appropriate measures to determine that the supplies arrive on the established
time.
Nowadays, there are various types of distribution firms that offer a range of
other services besides distributing marketersÊ products. For example, physical
distributor firms help a producing company to store stocks and later distribute
them to the final consumers.
6.2.4 Customers
Customers refer to end customers and organisational customers. Both groups
have different needs. The end customers buy products and services for
themselves or their families in a small quantity.
Every type of customers has its own traits that need to be studied by marketers.
6.2.5 Competitors
Competitors refer to the competitors of a manufacturer when offering product in
the target market. There are close competitors and distant competitors. The
existence of competitors is good as it may challenge the company to give only the
best to the market. However, there are competitors who always try to
outmanoeuvre their rivals through unethical means. Marketers therefore have to
be aware of competitorsÊ action so that any modification to the marketing
strategy can be done if the need arises. This is crucial in order to provide the best
offer in the target market.
6.2.6 Public
The public is a group that has certain concern or real interest that may be able to
affect the organisationÊs ability to achieve its objectives. The public consists of the
financial sector, media, government, public prosecutor, local public, general
public as well as the internal staff of a company.
ACTIVITY 6.2
State two approaches that a marketer may use to observe the actions of
his companyÊs competitors.
EXERCISE 6.2
After completing the topic, you will learn about the roles and influences of
the environment to the company.
There are direct and indirect effects that can create opportunities and threats,
to make or break a company, and these depend on the actions and
approaches taken by marketers.
The company needs to monitor any changes that occur in the elements. This
is because the factors are out of the companyÊs control.
All these factors have a direct effect on a company and most of the elements
are controllable by the company.
INTRODUCTION
As individual consumers, we are always involved in the buying decision-making
process and the purchase of products or services. The interesting fact is that there
are differences, significant or insignificant, among consumers in terms of their
purchasing behaviour. Marketers are attracted to end consumersÊ behaviour in
buying decision making, buying and post-purchase behaviour. Researchers see
these behaviours as a process in order to better understand how the whole
process occurs.
In this topic, we will learn the influences that shape consumers and the process
that consumers go through in buying decision-making.
SELF-CHECK 7.1
When we look at a person making a purchase, do we know the process that takes
place in the personÊs mind and what influences the buying decision? There are
many studies being conducted and it has been identified that for as long as he
lives, an individual will be influenced by several factors. The influencing factors
build the internal traits of the consumer.
7.1.1 Cultural
Cultural aspect consists of the institution or other influences that affect the basic
value, perception, priority and behaviour in a community. An individual raised
in a cluster of community will develop his values and beliefs based on the norms
of the community. The community has its own beliefs about the relationship
among the members of the community and the members of another community.
The cultural aspect can be divided into sub-cultures which provide detailed
identification that processes the socialisation of their members. For example,
generally Malays have the same taste for food, but there exist various sub-
cultures where for example, northern Malays prefer to eat curries while southern
Malays prefer the asam pedas style of cooking.
Another criterion that exists in the cultural aspect is social class or stratification of
community members based on community priority. Among the frequently used
basis to build social class are:
(a) Occupation;
(b) Education level;
(c) Location of stay; and
(d) Wealth.
Social class affects individuals and often the individuals will behave the same
way as the other members of their social class. For example, members from the
upper social class prefer to shop at places that reflect their social class status and
position. An individual from the lower class will shop in areas or stores
frequented by the same social class.
7.1.2 Social
Other than the cultural factor, consumers are also influenced by social factors
which consist of reference group, family, their roles and status.
The primary and secondary groups are also known as membership group. The
influences of the group can be seen in three ways, which are behaviour or
lifestyle, attitude, self-concept and the selection of products and brands. There
are also indirect influences from the groups outside the membership group.
Indirect positive influences are called aspiration group, while negative influences
that should be avoided from the outside group is called the dissociative group. In
the concept of membership group, the consumer can be part of the group, while
in the non-membership group, the consumer may not be part of the group.
7.1.3 Personal
The personality influencing factors can be detailed into several aspects which are:
(b) Occupation
Occupation influences consumersÊ purchases. Generally, the needs of a
white-collared worker is different from those of a blue-collared worker. A
white-collared worker will buy shirts and neck ties because these are an
occupational requirement while a blue-collared worker will buy clothes and
shoes that are durable and suitable for his occupation. This is not only
limited to clothes. A lot of products are related to work, such as recreation
sports and types of transportation.
(d) Lifestyle
Consumers from the same cultural group do not necessarily have the same
lifestyle. Lifestyle is defined as the life pattern of an individual reflected
through activities, interests and opinions. Activities include occupation,
hobbies, shopping, sports and social ceremonies. Interests refer to food,
fashion, family and recreation. Opinions refer to personal issues, social
issues, businesses and products.
(e) Personality
Personality is useful in studying consumer behaviour towards a product or
brand. Personality refers to defined psychological traits that give constant
and continuous response. It is usually connected to self-confidence and
traits such as socialisation, aggressiveness, dominance, autonomy and
defensiveness. For example, Ali sees himself as adventurous, active and
loving challenges. Therefore, he prefers a four-wheel-drive vehicle as it
portrays similar traits.
(f) Self-concept
Self-concept is closely related to personality. Self-concept or self-image is
how a person sees himself and makes a statement about his image or
identity to the public. To understand consumer behaviour, marketers need
to understand the relationship between consumersÊ self-concept and their
possessions.
7.1.4 Psychology
This is the closest and most basic in an individual. The selection of a product or
service by a consumer is influenced by these psychological elements:
Motivation;
Perception;
Learning;
Belief; and
Attitude.
(a) Motivation
Motivation is a biological or psychogenic need, which is the condition that
exists from a strained psychological state, such as the need to be
acknowledged or loved. As a result, a motive is born from the stimulation
that drives a person to act.
(b) Perception
A motivated consumer is ready to act. However, this action depends on the
consumerÊs perception of a situation. Perception is a process of selection,
arrangement and information input elaboration to create meaning about the
world. In the process, the individual will perform three other sub-
processes: focused selection, distorted selection and selection preservation.
Each sub-process causes perceptions to be formed in an individual which
are different from those in another individual. For example, consumers buy
local products because they believe these are also high in quality or avoid
buying local products because they believe the quality is very low.
(c) Learning
Learning involves changes in the behaviour of an individual from
experience as when a person acts, he will learn. Learning is a combination
of pressure, stimulation, indication, reaction and enforcement.
(d) Belief
Belief refers to a personÊs descriptive thought about something that may be
formed based on education, opinion or principles. The belief may be
formed based on emotional trait or otherwise. Beliefs that are formed in the
mind result in an image of a product in the consumersÊ mind.
(e) Attitude
Attitude refers to evaluation, emotion and reaction continuously towards
an object or idea in a good way or the opposite. The consumers behave
towards many matters in their life such as religion, politic and food.
Attitude causes the consumers to have a mind that is formed based on their
preferences or non-preferences on a matter. An attitude is difficult to
change and requires modification to the attitude. It is better for the
marketers to modify their product to match the attitude rather than change
the consumersÊ attitude.
EXERCISE 7.1
2. List and explain the influencing factors that you have learned.
However, if you study deeply, the role may be played by other parties. For
example when buying a car, we may say the men play the buying role but the
real situation maybe the opposite. Therefore, it is important for us to learn the
role played by every individual in the buying decision-making process.
(a) Nominator
The nominator is the person who comes up with the idea to buy a product
or a service.
(b) Influencer
Influencer meanwhile refers to individuals who have influence on the
decision to be made. The influence may have been in the form of
channelling or blocking information from reaching the members in the
buying centre.
(d) Buyer
Buyer refers to the person who will conduct the buying of the real product.
(e) Consumer
Consumer refers to the person who actually uses the product.
EXERCISE 7.2
1. List and elaborate the buying roles that you have learned.
Identifying the need does not necessarily result in a purchase. This is because
there are other factors that will contribute to the purchase, such as financial
situation and the time available to make the purchase.
EXERCISE 7.3
5. All individuals are the same as the main influencing factor is not
important.
A. False
B. True
6. Age, life-cycle stage and family are among the elements in the
main influencing factors of personality.
A. False
B. True
This topic discusses four main influencing factors in persuading the purchase
of a consumer; which are the factors of cultural, social, personality and
psychological.
Two individuals who are raised in the same area may have different
consumer behaviour because of the factors that influenced them.
In buying deals, the buying roles played by the consumers must be known to
marketers.
In a family unit, these roles are played by a different member. There may be
one family member who plays more than one role or more than one family
member who plays the same role.
The four types of identified behaviours are complex, dissonant, regular and
variety.
The obvious difference among all the four behaviours are the level of extra
information required, close alternative product, investment cost as well as the
risk involved.
The process involves the stages of identifying the problem, searching for
information, evaluating alternatives, buying decision and post-purchase
behaviour.
INTRODUCTION
Organisational market is different from the end consumer market as the purpose
of buying the product types as well as the purchase volume are vastly different.
The purpose of buying products by an organisation is to further process the
product to make it as a ready-made, half-ready product or to resell. The products
were not bought for their own use. The products purchase includes raw material
or half-ready products that require further processing. Ready-made products are
also purchased for the purpose of reselling and are usually bought in huge
quantities.
SELF-CHECK 8.1
Since the organisational market uses products that are raw materials up to ready-
made products, then the product classification is needed in order to facilitate the
process of understanding how it affects marketers. The classification may aid
marketers in their effort to approach their customers.
Derived demand;
Inelastic demand; and
Fluctuating demand.
However, the total money involved is much higher than the end consumer
market. This is because the organisational buyers often buy products in bulk.
Personal sales allow the salesperson to explain in detail about the product, while
the question and answer session will help potential buyers to make their buying
decision. Besides, the relationship that needs to be established between buyers
and sellers are easier done through the approach of personal sales. The
advertisement in business magazines and journals are also brought into
application as professional buyers will refer to these magazines or journals for
the latest development in their field or expertise. This makes the business
magazines or journals suitable as the advertisement of products and services.
Every member in the buying centre plays their roles as nominator, consumer,
influencer, buyer, decision maker and information controller.
8.3.1 Environment
Organisational purchase is very much influenced by environmental factors such
as:
8.3.2 Organisation
Every organisation has objectives, policies, procedures, organisational structures
and systems. These factors are known as the organisational factors and they
influence an organisation buying behaviour through a centralised buying policy
or its opposite, contract offering, purchase through the Internet, buying
technology, the roles played by other departments in the buying function, the
increasingly important and more strategic buying function as well as specialised
production.
All these factors influence the buying process ambience that includes decision
making process and the purchase itself. Organisational purchases take a
considerably longer time as discussions after discussions are conducted to reach
a buying decision. The organisationÊs guideline will always be taken into
consideration in each step of the process.
8.3.3 Interpersonal
A buying centre usually consists of several committee members who exhibit
interest, authority level, empathy and persuasion at different levels.
8.3.4 Individual
The individual factor refers to the organisation officers who have different
motivation level, perception and priority that differ because of the influences of
age, income level, position, personality, attitude towards risk and their culture.
For example, a company with officers from several different countries and the
companies that deal with foreign market have to be aware of the countryÊs
culture if it happens to affect the organisational purchase.
EXERCISE 8.1
The categorisation is based on whether the purchase has been done before or
otherwise. It involves the information searching if the product has never been
purchased before and modification must be done to the product specifications.
In this situation, the extra information required is very minimal and sometimes
not required at all. Generally, the purchasing officer will immediately order the
product when he needs new stocks.
ACTIVITY 8.1
List all the major differences between a modified rebuy and a straight
rebuy.
Figure 8.3 illustrates all the stages involved in the organisational market buying
process.
product has never been used, the information will be collected intensively to help
identify the specification of the product to be purchased.
Generally, the buyers can evaluate whether they have made the best purchase or
not.
Output from this stage will influence the next purchase process. For example, if
the buyer is satisfied, the buyer will normally purchase the same product in the
following purchase process. If the buyer is not satisfied, the specification
modification, product class or brand will be changed in order to ensure that the
purchase can give them a satisfactory output.
The nominator is the party who voices out the opinion to buy the product, who
may be other consumer or other parties in the organisation. The consumer is the
party that will use the product. He may or may not be on the same side as the
nominator. The consumers may be the lower ranked staff, while the nominators
are their head of departments. The consumers help in defining or describing the
needs of the product to be purchased.
The influencers are the people who have influence on the buying decision. They
too help define the product specification and provide relevant information to
consider product alternatives. The technical and engineering staff are usually the
influencers.
The decision maker is the officer who makes the real decision on the need or the
supplier selection. The approver on the other hand, is the person who gives
authority to take action on the suggestion made by the decision maker or the
buyer. The information keeper is the officer that has the power to prohibit or
allow information to reach the buying centre.
EXERCISE 8.2
3. Since the demand for rubber sheets are caused by the demand for
transport tyres, then it can be said that the demand for rubber is
derived.
A. True
B. False
In this topic, we have learnt the product and services categories for the
organisational market.
Since the products and services are used in the organisations include raw
materials up to ready-made products, the product and services classification
may help the comprehension of the product roles to the organisational
consumers.
Organisational market has its own traits, which are derived demand, inelastic
demand, fluctuating demand, informed buyers, a smaller market size but a
large purchase volume, personal sales promotion technique for a more
effective approach and the presence of buying centre.
There are three buying situations that occur in the organisational market,
which are the new task buying, modified rebuy and straight rebuy.
New task buying involves first time purchase, modified rebuy refers to
purchases that require additional information and straight rebuy refers to
purchases without any changes.
Organisational market buying process which goes through certain stages has
also been discussed.
LEARNING OUTCOMES
INTRODUCTION
In the new millennium, competitions faced by most organisations are getting
tougher. The situation is aggravated by the increasing number of competitors in
the market. Competitions are not only made up of local competitors but also
foreign competitors. The market has become broader and the boundary is now
indistinct.
In the old days, the consumers mostly focus on the local market but technology
development has contributed to expand the market for the consumer. Various
approaches to attract the consumers have been done by marketers because the
knowledge of the consumersÊ needs and wants alone is not enough for marketers.
Now, marketers have to always investigate the development and the movement
of their competitors in order to survive in the market.
(ii) Oligopoly
Oligopoly refers to a small number of sellers, usually in large size,
which market various products from the standard ones to the
common ones.
Other than high technology, the need for licenses and patents, resources
and limited locations as well as reputation are the obstacles of entry to the
industry. Similarly for withdrawal from an industry, sometimes the
regulations by the government or the industrial interest of the country or
the difficulty to sell obsolete machines of the company to other companies
can cause the company to continue operating just to survive in the industry.
9.2.1 Strategy
Analysis on strategy refers to the strategy that becomes the companyÊs main
attention and identifying other companies that practice the same strategy.
Generally, strategy is mostly related with the quality level offered to consumers.
If the company sets a high level of quality for its products, then the competitors
are the companies which have the strategy of offering the same high-quality
products to the consumers.
9.2.2 Objectives
After learning the closest competitorÊs strategy, the following analysis is on the
objectives of the competitorÊs company. What are the aims of the competitor for
the market from its strategy? In general, objectives consist of current profit,
market section growth, cash flow, leadership in technology or services. The
objectives of a company are influenced by many factors including size,
background, current management, financial situation and other factors. Other
than objectives, the company must also monitor the competitorsÊ development
plan.
Output from the information system may help the marketing managers to
arrange the strategy in choosing the competitors which should be attacked and
avoided.
The next step is to gather the identified type of data. Generally, the information
needed to be collected is scattered. The information may be in the form of written
documents or the result of an interview or indirect discussion with the middle-
person, customer, public parties and the Internet.
The collected information is then evaluated for its authenticity and value before it
is elaborated and organised. The analysed information will then be distributed to
the decision maker regularly or when there is any need to assist decision making.
EXERCISE 9.1
Generally, the market leader controls about 40% from the overall market.
Meanwhile market challenger controls 30%, market followers at 20% and the
market nicher at 10% of the market share.
To expand the market demand in total can be done by acquiring new customers,
improve usage of current product and increasing the usage rate. New usage such
as baby shampoo is encouraged to the families because of its softness. An example
of new usage is bicarbonate soda which is used for baking cakes, can also be kept
in refrigerators to absorb unpleasant odours in the fridge. Meanwhile, an example
of increasing usage of product would be shampoo. Here, the users are encouraged
to wash their hair twice in order to get the best result of clean hair.
Other than the effort to expand demand, market leaders also need to protect the
current market either by enforcing their current status, side attacks defense, pre-
emptive defense, counter-attack defense, moving defense and withdrawal.
Enforcing their current status can be done by continuous improvement of
product quality or decreasing production cost. Side attacks defense is to keep
monitoring competitors who offer close alternative products. While, pre-emptive
defense refers to the action taken before the competitors make any attack.
protect the market anymore. However, this withdrawal is a withdrawal that has
been considered for the pros and contras of the execution by the company.
Withdrawing from market that has a slow growth rate is better than maintaining
its position in the market.
Among the attack approaches that can be used are frontal assault, side assault,
surround assault, by-pass assault or guerrilla assault.
ACTIVITY 9.1
The general strategy commonly used by the market followers are cloning,
forging, imitating and modification. Cloning involves copying all the original
product traits with minor changes and are sold at a lower price. Forging copies
the original product without any changes to its traits and is illegally sold in the
market. Imitation on the other hand is original products copying and selling after
minor modification. Modification changes the original products with the
characteristics that is deemed suitable for the consumer and marketed as a new
version product to the market.
The most important key of focused market is specialisation. The following are the
roles that can be played by the niche marketers, which are as individual
consumer experts, market by geography experts, product traits experts, highly
priced products experts, service experts and distribution channels experts.
EXERCISE 9.2
Generally, market leaders are leaders in terms of market sectors and strategy
in the market.
Meanwhile, the challengers are companies with almost similar abilities with
the market leader and frequently challenge the position of the market leader.
Market followers are the companies which prefer to take advantage of the
market situation created by the market leaders and market challengers.
Niche marketers on the other hand focus their effort according to their
position or limited resources.
Even though competition strategies are the main focus of this topic, a balance
between the approaches of either consumer or competition orientation must
be achieved in order to gain competitive advantages in the market. This is
because a market consists of both the consumers and the competitors.
The actions and changes in the consumers and the competitors should be
monitored.
INTRODUCTION
A market is made up of individual consumers and organisational consumers
who want and are able to purchase a product. We also know that every
consumer has his own different needs and wants. The way the consumer
performs the purchase, products he buys, the place he shops and the conditions
that influenced his purchasing decision is different from one person to another.
Therefore, it is more effective if market behaviour is segregated into smaller
groups. Usually, these small groups are easier to be studied. This in turn assists
the company to generate and manage the marketing strategies that match the
needs and wants of the different groups.
Nowadays, it is a normal practice for a company to target its market where the
company will select certain groups to be their customers. Every marketing
activity and the companyÊs efforts will be formulated and focused based on the
needs and wants of a particular group.
These small groups are called market segment. Since the customers in a segment
have the same characteristics, we can assume that they also have the same needs,
wants and also purchasing behaviour.
In this case, normally the company will use a distribution system known as mass
distribution, as well as mass promotion, and will perform mass production to
market the one product.
The Coca-Cola Company once also had practiced this level of segmentation
where at the beginning of its business the company only offered Coca-cola drink
that tastes the same in a 6.5oz bottle only. Nowadays, it is quite hard for a
company to practice this level of segmentation as there are too many competitors
and that means the consumers also have more choices to be made.
Since only one segment is selected, then the segment should be the segment that
has a high purchasing power (willing to pay more), big enough for its size and
has a good growth rate.
ACTIVITY 10.1
late Princess Diana) and other boutiques provide specialised and specific services
to each of its customers.
use gender (male or female) as the basis to produce their products. Automobiles
companies, furniture companies, clothes manufacturing companies and service
companies like hotels and airlines usually produce and offer their products or
services based on the income of their customers, as well as their social class.
Lifestyle is the way a consumer lives his life and how he spends his money daily
(Figure 10.2). Each consumer must have their own lifestyle. Examples of lifestyle
are „adventurous‰ lifestyle (lifestyle that likes adventures or trying something
new), „me too generation‰ lifestyle (lifestyle that likes to copy others), „poverty
of time‰ lifestyle (a very busy lifestyle with very little time for rest), beauty
conscious lifestyle, comfort and health conscious lifestyle and various other
lifestyles.
For adventurous lifestyle, a company can come up with products such as extreme
sports equipment, four-wheel drive vehicle, mountain climbing bicycles, scuba
diving equipment and many more. Usually, the users who want to live this kind
of lifestyle are those users who have a high income, young, and possess a good
level of education. They like to try new things and are not afraid to take risk. If
the company produces a new product, this group will be the best initial market
target.
Personality on the other hand, explains characters of the consumers such as being
shy, aggressive, active, independent, conservative, confident and many more.
The companies that usually use this segmentation are manufactures of perfume,
clothes and also cosmetics. Clothes that are bright and colourful are usually
meant for consumers who are active and aggressive.
SELF-CHECK 10.1
Behavioural segmentation is also the most frequently used bases other than the
segment based on demography. Usually, consumer goods company will use this
basis, mostly because it produces a lot and different types of product. Among the
segmentation basis are as follows:
(i) Non-user;
(ii) Potential user;
(iii) First-time user; and
(iv) Loyal user or regular customer.
(e) Loyalty
Users are also segregated based on their loyalty level against certain brand
of product, which are as follows:
(i) Hard-core loyals. Users in this class usually only maintain one brand
and does not switch products;
(ii) The Split loyals are the users who use two or three brands. If the
favourite brand is not available, they will opt for brand number two
or three;
(iii) Shifting loyals are the group of consumers who like to change from
one brand to the other after using it for a few times; and
(iv) Switchers are consumers who are not loyal to any brand. Usually,
they will change to another brand according to their preferences.
For users who are disloyal, the company needs to make an attractive
promotion to get their attention and maintain the brand. Without an
effective promotion programme, the consumers will most definitely switch
to another product. Advertisements programme is very important to create
and build user loyalty. Without a good advertisement programme, the
consumer will not have any permanent memory or feeling for a certain
brand.
(ii) Conscious consumers, are the consumers who know that the product
already existed in the market. At this level, the users may be used to
hearing about the brand but are yet to buy or use the product;
(iii) Informed consumers group, who are the consumers who know some
information on the product. At this level, the consumers already has a
lot of information about the product but has no desire yet to purchase
it;
(iv) Interested user group, who are the consumers that already have the
information of the product and are also interested to purchase the
product compared to other product; and
With the description of these segmentation bases, hopefully you now understand
that a market can be segregated into many groups and there are several bases
that can be used for that purpose. Basically, the smaller groups and with defined
segregation, is easier to be understood. Understanding the consumers is the basis
of a good and effective marketing activities implementation (product production,
promotion programme and product distribution) as well as the basis to make a
business successful.
EXERCISE 10.1
(a) Measurable
The segment can be measured in terms of its size, purchasing power and
other traits of the segment.
(b) Accessibility
Every marketing programme and activities that will be performed can be
accessed by the selected market segment. Some of the segments available
are quite difficult to be accessed. For example, are the nurses in a particular
hospital working night shifts? This market segment is quite difficult to
provide information through promotion programme.
(c) Sustainability
The market segment chosen should be big enough to generate profitability
to the company or at least cover the production cost of the company
operation. The market size can be measured in terms of these factors:
(d) Actionability
All the marketing activities can be performed and fulfil the wants and
needs of the market segment.
However, the company will have a very high risk as it only relies on one
segment. If consumers in this segment change their interest and no longer
buy cars from the company, then the company will have no other products
that can be sold to the consumers.
Since the company only produces one product, then it has a good expertise
and the products produced usually have very good quality. The only
problem is when there are alternative products or when a new technology
replaces the needs for that product. For example, Kodak corporation
company has to seek other opportunities as the camera film has been
replaced with a new product the digital camera.
Usually the companies that use this type of market specialisation are global
companies that have businesses in many countries around the world. The
companies have good financial resources and are able to produce many
products for all segments in the market.
EXERCISE 10.2
1. List the four segmentation bases that can be used for the
individual consumer market.
A large market can be segregated into smaller groups that are easier to
understand.
There are many bases that can be used to segregate a market, for example the
basis of geography, demography, sought benefits and many more.
We also learned about the market targeting and the patterns of market focus.
Answers
TOPIC 1: MARKETING IN THE NEW ERA
Exercise 1.1
1. Marketing mix is a term that is used to refer to the main strategies that need
to be managed by an organisation. It is also known as the 4Ps (for general
product). All the four elements in the marketing mix strategy are product,
place, price and promotion. Based on the statement, it clearly proves that
marketing mix for a general product (goods) is different from marketing
mix for services. This is influenced by the unique traits of services.
2. Needs and wants are two important concepts in marketing. The term
„needs‰ refer to the most basic necessity that an individual will try to fulfil.
Meanwhile the term wants means a higher level of needs. For example, an
individual may get a pack of nasi lemak from a roadside hawker at the
price of 50 cent. Other individual may buy a plate of nasi lemak and a cup
of tea at a hotel at the price of RM25.
3. Marketing mix includes four main elements: product, place, price and
promotion. On the other hand, promotion mix refers to elements or
strategies that a marketer may choose; such as advertising, sales promotion,
individual sales, public relation and publicity.
4. A marketer should not have a belief that one element in the marketing mix
is more important than the other. If this happens, the marketing is said to
have been infected with ‰marketing myopia‰. Marketing myopia refers to
wrong market orientations and may lead to failure for the marketer.
Exercise 1.2
1. consumers
2. relationship marketing
3. The reason that business concepts which are not based on marketing fail is
because the failure of the concept to realise that the main deciding factor of
business in the market, is the customer. The customer is the main factor in
the market. If a company fails to identify and understand the customer,
then when any incident happens in the market, such as the recession and
world war, the business will fail unless it is a business that emphasise on
the customerÊs preference.
Exercise 2.1
1. New economy may be distinguished as an economy that has different
business practices from the business tradition practiced a long time ago. In
short, the differences of old economy and new economy can be summarised
by the table below:
measure customer satisfaction, and makes less promises and gives more in
their business deal.
(b) The company can shape each of its offers according to the order and
taste of a particular customer and thus increase sales.
(d) Allows the company to extend the period of close relationship with
the customer.
(e) Allows the company to improve their growth potential of each of the
customers by shared income, cross selling and upselling.
(g) Allows the company to pay more attention to customers with higher
values.
(b) It is difficult for all the workers to be customer oriented and use all the
information available in the customer database. On the contrary,
workers are more incline to perform the traditional transaction
compared to customer relationship marketing (CRM). If this is the
case, CRM will not be able to be fully used and truly benefit the
company.
(c) Not all the customers want close relationship with the company. They
will feel uncomfortable knowing the company is gathering their
private personal information. Therefore, privacy issues may be a
problem or pose a threat to the companies that use CRM.
Exercise 3.1
1. The action or effort to obtain certification from bodies or award of quality
such as the ISO9000 is to enhance customer Ês trust and positive perception
on the quality of the product and the ability of the product to fulfil their
needs and demands. This is as the customers are able to trust a product will
perform the way they want it to, if it has been awarded by the official
bodies or is well-known for its quality. Other than that, the need for
customer focus in the requirement of ISO9000 certification also plays a
positive role in the company operation, as the company will always strive
to maximise customer satisfaction and not only operates to gain profit.
Therefore, the companyÊs action of obtaining the ISO9000 certification is
correct.
Exercise 4.1
1. Business definition is the first step from the six important steps in strategic
planning. Defining the business is important because it will be the deciding
factor to the planning scope for the next steps in the strategic planning.
Therefore, business definition done by a company will definitely affect
other steps in its corporate strategic planning. It also means that the
environment analysis done later will focus mostly on the environment
defined by the company.
3. The SWOT analysis is derived from the acronym for Strengths, Weaknesses,
Opportunities and Threats. It means that the analysis is made based on the
marketing environment divisions, which are internal and external. Internal
environment is usually analysed based on its strengths and weaknesses,
while the external environment is analysed based on the opportunities and
threats it presented.
Exercise 4.2
1. Marketing plan reports have to use or be based on the steps in marketing
strategic planning process. It means, the marketing plan report should
begin with the introduction to the business (business definition),
environment analysis, the setting of the aims and objectives, the attempt to
design strategy and tactics and also the marketing control. However, in
order to prepare the best and most systematic report, you have to adhere to
the report preparation structure, which says the report must have pre-
content, introduction, the contents, closing and the reference list
(attachments). The pre-content section does not only consist of the content
index and the appreciation page but also have to begin with the executive
summary, which is the part that summarises the content of the report from
the first until the last page contained in the report.
4. The marketing plan report format can be divided into three main sections,
which are the pre-content, content and the references list and attachments.
Pre-content includes the appreciation page (if applicable), summary
executive and the content index. If there is any figure or table in the report,
then the figure and report index should be provided. The content will
proceed to report all the measures that have been taken in the marketing
strategic planning. Usually, the content is divided into three sections: the
introduction, content and the closing. The references list and attachment are
prepared to support the information reported in the content section.
Exercise 5.1
1. marketing intelligence system
4. You can choose three from these research methods to come up with the best
research:
Exercise 5.2
1. Likert
2. You are required to list and explain briefly all the steps as listed and
explained in the text on the marketing research process. It means, you need
to list and discuss all the steps (chronologically) such as to determine the
definition and the aim of the research, designing the research plan,
gathering the data, analysing data and distribution of the findings
(preparing report).
Exercise 5.3
1. focus group
2. able to qualify
3. The total market potential can be the maximum sales total achievable by all
marketers in an industry for a specific time period and based on the
industrial activities height and a specific marketing environment. The total
market potential can be calculated using the following formula.
Q = npq
Where:
Q = Total market potential
n = The number of consumer for a specific product/market based on
certain assumption
q = Average purchase value of each consumer
p = Average price for every unit
4. Other than the market-buildup method, there are two other methods that
can be used by marketers to measure market area potential, which are the
variable factors index method and the industry sales (market share). The
market build-up method differs from the other two methods from the
aspect of obtaining the value of the market area potential.
Through the market build-up method, marketers need to identify all the
potential buyers in every segment. Next, marketers have to estimate the
purchase value of each segment. Different from the market-buildup
method, through the variable factor index method, marketers are able to
obtain estimated value from various markers that are available in the
market. Meanwhile, through the industry sales or the market share method,
the marketer can acquire past information from sources such as
government agencies reports or manufacturers association about the
industry sales to make a prediction on the market area potential.
6. The components in the information system that will be used are the internal
record system and the market intelligence. This is because, in order to
obtain data regarding past sales performance (the last 18 months) you will
need to get it from the internal record system. Meanwhile, the information
on the price and promotion strategy that are currently practiced by the
competitors are daily or current information. This shows that you need to
refer to marketing intelligence as only this component provides such
information.
9. The Perodua company needs to identify consumers category from the total
market (Malaysian consumers), available market (geographic), qualified
available market and the market target before obtaining the penetrated
market value.
Exercise 6.1
1. C
2. C
3. B
4. B
Exercise 6.2
1. Environment refers to the factors that may positively or negatively affect
the companyÊs ability to continue its operation and growth while
maintaining the transactions with the buyers and the targeted consumers.
Exercise 7.1
1. Influencing factors refer to the major factors that influence a person in his
life and shape the characteristics in the individual consumer self.
(a) Culture
Consists of institution and other influence that effect as a whole value,
perception, priority and behaviour of the community. Culture will
generally affect how a consumer will behave through his buying
process.
(b) Social
Refers to influence from the consumer Ês direct and indirect
interaction with the family and the community in their life. It will
affect the process of buying decision making. Social factor consists of
reference group, family, roles and status.
(c) Personality
Refers to the personal trait of the consumer that may influence the rest
of the purchasing process such as the age and life-cycle stage,
occupation type, economic status, lifestyle, personality and self-
concept.
(d) Psychology
Refers to the basic on an individual himself such as motivation,
perception, learning, belief and attitude. The psychological basic
causes a consumer to be different from the other consumer.
Exercise 7.2
1. Nominator suggests the buy
Influencer influences whether the buy should be made or not
Decision maker the real authority to make the buying decision
Buyer will conduct the buying
User will use the product bought
Exercise 7.3
1.
2. B
3. B
4. A
5. B
6. A
Exercise 8.1
1. Demand type, informed buyers, market size, promotion techniques and
purchase centre.
2. Influencing factors:
Environment
Organisation
Inter-personal
Individuals
Exercise 8.2
1. First stage identifying product problem
Second stage identifying product specification
Third stage listing the suppliers
Fourth stage inviting offer from potential suppliers
Fifth stage post-purchase consumer evaluation
3. A
4. A
5. B
6. A
7. B
Exercise 9.1
1. The companyÊs competitors refer to the competitors that have the same
target market as the company. Nowadays, the competition consists of the
existing and potential competitors regardless whether locally or
internationally.
Exercise 9.2
1. B
2. A
3. B
4. A
5. A
Exercise 10.1
1. The four levels of segmentation are:
Mass marketing;
Segment marketing;
Niche marketing; and
Individual marketing.
Exercise 10.2
1. Individual consumer can be segmented into groups based on several
fundamentals such as:
(a) Measurable
Can be measured in terms of its size, number of population, or its
quantity.
(b) Accessibility
The consumers that we want to provide services or sell goods to can
be met and they can access all the marketing activities that were
performed including advertising activities.
(c) Sustainability
The market segment that has a large number of users and they have a
high purchasing power.
3. When the company wants to change its marketing concept from mass
marketing to segment marketing it has to perform several things, such as:
The company needs to segregate the large market into a smaller market
based on certain segments.
All the marketing activities that have been planned must be based on
the market segmentsÊ tastes that have been chosen by the company as
its consumer groups.
OR
Thank you.