Fundamentals of Marketing Notebook
Fundamentals of Marketing Notebook
Fundamentals of Marketing Notebook
WHAT IS MARKETING?
Marketing is the management process involved in identifying, anticipating and satisfying
consumer requirements profitably. – The Institute of Marketing
Another Definition
Marketing is the process of researching and identifying consumer needs and employing
appropriate price, product, place and promotion strategies in order to satisfy these needs
profitably.
This term marketing suggests that the marketing department must work towards satisfying all of
the following issues:
Products which the customer demands
Pricing which the customer can afford
Distribution to a place where the customer will purchase the product
Promotion to persuade the customer to purchase in a competitive market.
Collectively, these are known as the four Ps – Product, Price, Place (distribution) and Promotion.
Alternatively the four P’s can be collectively referred to as the marketing mix.
WHAT IS A MARKET?
Originally a market meant any place where buyers and sellers meet to arrange a sale/purchase.
The current use of the term is wider than this. It means ‘who the customers are’. So the market
for sports equipment is made up of all actual or potential consumers of these products.
“A market can be defined as all the potential customers that share common needs and
wants, and who have the ability and willingness to buy the product.”
Wants are the form taken by human needs as they are shaped by culture and individual
personality. A hungry person in the US might want a Big Mac, French fries, and a Coke. A
hungry person in Grenada might want mangoes. Wants are described in terms of objects that
will satisfy needs. People have almost unlimited wants but limited resources. Thus, they want to
choose products that provide the most valuable satisfaction for their money. When backed by
buying power, wants become demands. Marketers therefore go the extra mile to learn about and
understand customer’s needs, wants and demands.
Customer value is the difference between the values the customer gains from owning and using
a product and the costs of obtaining the product.
Customer satisfaction can be defined as the extent to which a product’s perceived performance
matches a buyer’s expectations. If a product’s performance fall short of customers expectations,
the buyer is dissatisfied. If performance matches expectations, the buyer is satisfied.
Outstanding marketing companies go out of their way to keep their customers satisfied. Satisfied
customers make repeat purchases, and they tell others their good experiences with the product.
ORGANIZATIONAL OBJECTIVES
Objectives are what we attempt or wish to achieve. Marketing objectives are marketing targets,
for products and markets, set by the business for a future time period. These objectives must fit
in with the overall aims and mission of the business. The marketing objectives should reflect the
aims of the whole organization and they should help to aid the achievement of these.
Failure to link these objectives with the overall aims of the business can lead to different
departments pulling in different directions. For instance, if the marketing team decides to
promote an existing product much more forcefully then:
The production department must gear up to increase output,
The human resources department may need to recruit additional production and sales
staff,
The finance department may need to increase short-term capital in order to finance higher
stock levels.
EXCHANGE TRANSACTIONS
Exchange is generally viewed as the core element of marketing. Exchange has been defined as
the “transfer of something tangible or intangible, actual or symbolic, between two or more social
actors.” Thus, the basic purpose of marketing is to get individuals or organizations to transfer
something of value (tangible or intangible, actual or symbolic to each other. The most familiar
type of exchange occurs when a customer exchanges money with a retail store for a product.
Marketing exchanges however are not confined to transactions of money for products.
Businesses engage in barter where they exchange their goods and services for the goods and
services of another firm. Nonprofit organizations, colleges and universities, politicians, and
many other “social actors” are also involved in exchanges. Volunteers and contributors to
nonprofit organizations, for example, exchange their time and money for the satisfaction derived
from helping a good cause. Or consider the tuition that students pay a university or college in
exchange for the education they receive. Even politics involves exchanges, with people trading
their votes for the promise of representation from a political candidate.
At a broader level marketing offers significant benefits to society. These benefits include: Developing
products that satisfy needs, including products that enhance society’s quality of life Creating a
competitive environment that helps lower product prices Developing product distribution systems that
offer access to products to a large number of customers and many geographic regions Building demand
for products that require organizations to expand their labor force Offering techniques that have the
ability to convey messages that change societal behavior in a positive way (e.g., anti-smoking
advertising).
Market Analysis
Managing the marketing function begins with a complete analysis of the company’s situation.
The company must analyze its markets and marketing environment to find attractive
opportunities and to avoid environmental threats. It must analyze company strengths and
weaknesses, as well as current and possible market actions, to determine which opportunities it
can best pursue.
Market Planning
Through strategic planning, the company decides what it wants to do with each business unit.
Marketing planning involves deciding on marketing strategies that will help the overall
strategic objectives. A detailed marketing plan is needed for each business, product, or brand.
The main components of a marketing plan are the executive summary, current market situation,
threats and opportunities, objectives and issues, marketing strategies, action programmes,
budgets, and controls.
Market Implementation
Planning good strategies is only a start towards successful marketing. A brilliant marketing
strategy counts for little if the company fails to implement it properly. Market implementation
is the process that turns marketing plans into marketing actions in order to accomplish
strategic-marketing objectives.
Marketing Control
Because many surprises occur during the implementation or marketing plans, the marketing
department must practice constant marketing control. Marketing control involves evaluating
the results of the marketing strategies and plans and taking corrective action to ensure that
objectives are attained.
Marketing Strategies
Strategies are broad statements on the action to be taken to achieve marketing objectives.
Strategies will be developed in relation to market segments to be targeted and the features of the
product’s marketing mix.
Large companies that produce many different products flowing into many different geographic
and customer markets usually employ some combination of the functional, geographic, product,
and market organization forms.
Defining the problem and research objectives is often the hardest step in the research process.
The manager may know that something is wrong, without knowing the specific causes. After the
problem has been defined carefully, the manager and researcher must set the research objectives.
A market research project might have one of three types of objectives. The objective of
exploratory research is to gather preliminary information that will help define the problem and
suggests hypotheses. The objective of descriptive research is to describe things, such as market
potential for the product or the demographics and attitudes of consumers who buy the product.
The objective of causal research is to test hypotheses about cause-and-effect relationships.
To meet the manager’s information needs, the research plan can call for gathering secondary
data, primary data, or both. Secondary data consists of information that already exists
somewhere, having been collected for another purpose. Primary data consists of information
collected for the specific purpose at hand.
Secondary Data – Researchers usually start by gathering secondary data. Examples include
Online Databases, the company’s internal database, government sources, trade press. The
researcher must evaluate secondary data carefully to make certain it is relevant, accurate, current,
and impartial.
Primary data collection – Research approaches for gathering primary data include observations,
surveys, and experiments.
Observational research involves gathering primary data by observing relevant people, actions,
and situations. (Best suited for exploratory research)
Survey research involves gathering of primary data by asking people about, their knowledge,
attitudes, preferences, and buying behavior. (Best suited for descriptive research)
Prepared by Dwain Gill
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Experimental research involves the gathering of primary data by selecting matched groups of
subjects, giving them different treatments, controlling related factors, and checking for
differences in group responses. (Best suited for gathering causal information)
Sampling Plan
Marketing researchers usually draw conclusions about large groups of consumers by studying a
small sample of the total consumer population. A sample is a segment of the population selected
to represent the population as a whole. Designing samples requires three decisions:
1. Who is to be surveyed (what sampling unit)?
2. How many people should be should be surveyed (what sample size)?
3. How should the people in the sample be chosen (what sampling procedure)?
The table below describes the different kinds of samples. Using probability samples,
each population member has a known chance of being included in the sample, and
researchers can calculate confidence limits for sampling error. But when probability
sampling costs too much or takes too much time, marketing researchers often take
nonprobability samples, even though their sampling error cannot be measured.
MARKET SEGMENTATION
Market segmentation is the process of dividing a market into groups, known as segments, of
customers with similar needs or characteristics who are likely to exhibit similar purchase
behaviour. In segmenting the market the business is acknowledging that different 'types' of
buyers may require different products or marketing approaches / marketing mixes.
Once these segments have been identified, a business can decide on which segments to focus on
– this is called targeting. Once target segments have been decided on then business will engage
in positioning which is the designing of appropriate marketing mixes for each segment being
targeted.
Whilst a mass marketing approach will treat the market as a whole providing one version of the
product and one marketing mix for all buyers in the market, market segmentation enables the
business to target different groups of buyers by adapting its product and marketing mix to best
suit each targeted segment. A good example of this approach can be seen in the mobile phone
industry.
Demographic Segmentation
Demographic segmentation divides the market into groups based on demographic variables
including age, gender, race, religion, occupation, family size, and life cycle (i.e. young single,
adult single, unmarried with child, married no children, etc).
Behavioural Segmentation
Behavioural segmentation divides the market into groups based on their knowledge, attitudes,
uses and responses to the product. The way people behave during and after purchasing is
continuing in importance to the rapid integration of social class attitudes. This has been caused
to a great extent by programmes or/and articles of the popular media that are now seen
worldwide, causing most people to constantly re-evaluate the way they behave. For instance, a
number of people from every social class may now drive the same make of car and wear the
same kind of clothes, possibly from the same national chain of clothing stores. Therefore buyer
behaviour is becoming more important.
Benefit Segmentation
A powerful form of segmentation is to group buyers according to the different benefits that they
seek from the product. Benefits segmentation requires finding the right benefits people look for
in the product class, the kinds of people who look for each benefit, and the major brands that
deliver each benefit. For example, one study of the benefits derived from travel uncovered three
main market segments: those who travel to get away and be with family, those who travel for
adventure or educational purposes, and people who enjoy the “gambling” and “fun” aspects of
travel.
Psychographic Segmentation
Psychographic segmentation divides buyers into different groups based on social class, lifestyle,
or personality characteristics. People in the same demographic group can have very different
psychographic makeups.
PRODUCT
A product can be defined as anything that can be offered to a market for attention, acquisition,
use, or consumption that might satisfy a want or need. Broadly defined products include
physical objects, services, persons, places, organizations, ideas, or mixes of these entities.
SERVICES
Services are a form of product that consists of activities, benefits, or satisfactions offered for sale
that are essentially intangible and does not result in the ownership of anything. Examples are
banking, hotel, tax preparation, and home repair services. Its production may or may not be tied
to a physical product. Major characteristics of services include:
Intangibility – They cannot be seen, tasted, felt, heard, or smelled before they are bought.
Inseparability – They are produced and consumed at the same time and cannot be
separated from their providers, whether the providers are people are machines.
Variability – Their quality may vary greatly, depending on who provides them and when,
where, and how.
Perishability – They cannot be stored for later sale or use.
Product Planning
Product planners need to think about products and services on three levels;
The core product - addresses the question: What is the buyer really buying?
The actual product – The planner must now build an actual product around the core
product. Actual products have as many as five characteristics: a quality level, features,
design, a brand name, and packaging.
An augmented product – Finally the product planner must build an augmented product
around the core and actual products by offering additional consumer services and
benefits.
The CORE product is NOT the tangible, physical product. You can't touch it. That's
because the core product is the BENEFIT of the product that makes it valuable to
you. So with the car example, the benefit is convenience i.e. the ease at which you
can go where you like, when you want to. Another core benefit is speed since you
can travel around relatively quickly.
The ACTUAL product is the tangible, physical product. You can get some use out
of it. Again with the car example, it is the vehicle that you test drive, buy and then
collect.
The AUGMENTED product is the non-physical part of the product. It usually
consists of lots of added value, for which you may or may not pay a premium. So
when you buy a car, part of the augmented product would be the warranty, the
customer service support offered by the car's manufacture, and any after-sales
service.
BRANDING
A brand is a name, term, sign, symbol, or design, or a combination of these, that identifies the
maker or seller of a product or service.
Branding helps buyers in many ways. Brand names help consumers identify products that might
benefit them. Brands also tell the buyer something about product quality. Buyers who buy the
same brand know that they will get the same features, benefits, and quality each time they buy.
Branding also gives the seller several advantages. The brand name becomes the basis on which
a whole story can be built about a product’s special qualities. The seller’s brand name and
trademark provide legal protection for unique product features that otherwise might be copied by
competitors.
Benefits of Branding
To consumers To the business
Reduces time to make choices – the branded Branded goods can often be sold at higher
goods can be quickly identified. prices than non-branded goods.
Quality standards are likely to be consistent as If quality and reputation remain high, then
business will not want the good name of the consumer loyalty will be achieved.
brand to be damaged by bad publicity.
Status may be conferred on the consumers of Effective branding – supported by packaging –
certain expensive branded products. allows a firm to clearly differentiate its
products from those of competitors.
Branding Strategies
Individual Branding A business may attempt to brand individual products with
individual brand names.
Family Branding This is where the business has a brand name which includes a
number of different products. It can sometimes mean including
the company name which then becomes a corporate brand.
Combination Branding A middle way between the two previous strategies. It involves
an emphasis being placed upon the family, corporate and
individual brand name.
PACKAGING
Packaging involves designing and producing the container or wrapper for a product. The
package includes a product’s primary container (the tube holding Colgate Total toothpaste). It
may also include a secondary package that is thrown away when the product is about to be used
(the cardboard box containing the tube of Colgate). Finally, it can include a shipping package
necessary to store, identify, and ship the product (a corrugated box carrying six dozen tubes of
Colgate). Labeling, printed information appearing on or with the package is also part of
packaging.
PRICE
The amount of money charged for a product or service, or the sum of the values that consumers
exchange for the benefits of having or using the product or service.
PRICING PROCESS
The pricing process involves deciding on the price to charge for a good or service. There are
some important factors that a marketing manager should consider when undertaking the pricing
process:
1. Objectives
The marketing objectives for the product will reflect the company’s overall objective. If the firm
has the aim of achieving high short-term profits, then this will be reflected in the marketing
objectives set for each product. The following are some major pricing objectives:
Pricing objectives
Profit-oriented Sales-oriented Status quo-oriented
To achieve a target return To increase sales volume To stabilize prices
To maximize profits To maintain or increase market share To meet competition
A figure that is less than 1 tells the business that demand for the product in price inelastic. This
means that the % change in quantity demanded is less than the % change in price. In other words
consumers do not change the quantity of a good they demanded proportionally more than any
price change.
A figure that is greater than 1 tells the business that demand for the product is relatively price
elastic. This means that the percentage change in quantity demanded is greater than the
percentage change in price. When demand is price elastic, consumers react to changes in price
by changing the quantity demanded by a greater proportion.
3. Price basis
This means the way in which the price is going to be calculated for each customer. Here are
some examples of different ‘pricing bases’:
Distance Taxi, rail and bus companies will use the distance travelled to calculate prices.
Weight Postal and parcel delivery businesses will not only consider distance but also the
weight of the item to be transported.
Quantity used Gas and electric companies will often charge a lower unit cost the greater the amount
of energy consumed – high energy users pay a lower tariff than low energy users.
Age Different tariffs are often offered to consumers depending on the age range they fall
into, e.g. discounts at the cinema or on buses for young and elderly customers.
4. List price
List price is the standard price that the firm intends to charge its customers. It is the price listed
in the firm’s catalogues and sales brochures. It can also be the price the end customer is
expected to pay as determined by the manufacturer; also referred to as the suggested retail price.
5. Price Adaptation
In many market situations, companies do not usually set one single list price. Instead they will
have a pricing structure that reflects differences between markets, market segments and
customers within market segments. In these cases it is quite common to find different customers
paying different prices for the same product. This can result from different costs in selling the
product in different markets, e.g. the additional transport and marketing costs of selling to export
markets.
The term used to describe most of these examples of price adaption is price discrimination.
Price discrimination exists when a business is able to separate distinct groups of consumers for
the same product or service and charge them different prices. Price discrimination takes place in
markets where it is possible to charge different groups of consumers different prices for the same
product. An example of this would be airline firms, who charge many different rates for the
same journey.
PRICING STRATEGIES
COST-PLUS PRICING.
This is where the cost of producing each unit is calculated, and then a percentage profit is added
to this unit cost to arrive at the selling price. The basic idea is that firms will assess their costs
per unit, and then add an amount on top of the calculated cost.
Mark-up pricing
This is where the business adds a profit mark-up to the direct cost for each unit in order to arrive
at the selling price. This profit mark-up will need to cover the fixed overheads and then
contribute towards profit.
A profit margin is used to express the profit as a percentage of the selling price. E.g. A business
has costs of $36 and places a mark-up of 33% on costs to arrive at the selling price. $36 x 1.33 =
$48
The margin is therefore is $12/48 (the percentage of the selling price which is profit) = 25%
COMPETITION-BASED PRICING
This method of pricing ignores both the costs of production and the level of customer demand.
Instead it bases the price level on the prices charged by the competitors in the industry – either
undercutting the competitors, charging a higher price, or charging the same price. ‘Going rate’
pricing is the term used to describe a business charging a similar price to competitors for a
similar product.
SKIMMING PRICING
This is a pricing strategy for a new product, designed to create an up-market, expensive image by
setting the price at a very high level. It is a strategy often used for new, innovative or high-tech.
products, or those which have high production costs which need recouping quickly.
PENETRATION PRICING
This is a pricing strategy for a new product, designed to undercut existing competitors and
discourage potential new rivals from entering the market. The price of the product is set at a low
level in order to build up a large market share and a high degree of brand loyalty. The price may
be raised over time, as the product builds up a strong brand-loyalty.
CONCEPT OF DISTRIBUTION
‘Getting the right product to the right consumer at the right time in a way which is most
convenient to the consumer’ is a good definition of distribution.
CHANNEL STRATEGY
Within the marketing mix, Place is the title given to all aspects of the approach taken to
distributing products into the market, so that customers can purchase them. Dependent on the
structure of the market, there are a number of different methods of distribution, which are
referred to as channels of distribution. The most common channels of distribution are
illustrated in figure 9.1.
Figure 9.1 : The channels of distribution
Within each channel of distribution there are a differing number of channel intermediaries,
namely wholesalers and retailers, which stand between the producer and the consumer. The
number of intermediaries in any particular channel is referred to as the length of the channel.
(a) This traditional channel of distribution has two intermediaries, the wholesaler and the
retailer. Often used by manufacturers of food, drugs, and hardware, the Wholesaler purchases
the product in large bulk quantities from the producer, and then breaks these bulk purchases
down into smaller quantities, which are then sold onto retailers, who then sell them to the
consumer, often individually.
(b) Producers of televisions, furniture, and major appliances, tend to sell their product to large
retailers such as Marks & Spencer and Dixons. Able to buy in the large quantities preferred by
the producer, the major retailers organize their own distribution of the product to their retail
outlets. By purchasing in large quantities they are able to negotiate discounts from the producer,
which more than cover the costs of providing their own distribution network.
(c) By selling directly to the consumer, producers can potentially offer their product at prices
lower than those of competitors, who supply through channel intermediaries - wholesalers and
retailers. Alternatively the profits that had been shared with channel intermediaries can be
retained by the producer, by selling directly to the consumer. Companies such as the computer
company Dell, sell their computers by mail-order or over the Internet, rather than through large
retailers such as PC World.
The structure and geography of the Market Scattered or difficult to reach markets
usually require the services of established wholesalers who will have the facilities and
expertise to deal effectively and efficiently with these types of market.
The complexity of the product. Technically complex products which require expert
advice and after sales service, are more efficiently distributed either directly from the
producer to consumer, or through expert retailers. The same will apply to individually
tailored products or services, which require a high level of communication between the
producer and consumer prior to production.
The quantity and price of a product. Producers who rely on selling large quantities of
a product at low prices, may look to reduce their overheads in terms of storage, and
distribution of the product into the market, by selling to wholesalers.
Marketing logistics involves outbound distribution (moving products from the factory to resellers
and ultimately to customers), inbound distribution (moving products and materials from
suppliers to the factory), and reverse distribution (moving broken, unwanted, or excess products
returned by consumers or resellers. The goal of marketing logistics should be to provide a
targeted level of customer service at least cost. Major logistics functions include: Warehousing,
inventory management, transportation, and logistics information.
Today, more and more companies are adopting the concept of integrated logistics
management. This concept recognizes that providing better customer service and trimming
distribution costs require teamwork, both inside the company and among all the marketing
channel organizations, to maximize the performance of the entire distribution system.
WHAT IS PROMOTION?
Promotion is the attempt to draw attention to a product or business in order to gain new
customers or to retain existing ones.
OBJECTIVES OF PROMOTION
To make consumers aware or increase awareness of a product.
To reach a target audience which might be geographically dispersed.
To remind customers about the product.
To show a product is better than that of a competitor.
To develop or improve the image of a business rather than a product.
To reassure consumers after the product has been purchased.
To support an existing product.
ADVERTISING
Advertising involves the use of paid media by a seller to inform, persuade, and remind about its
products or organization. There is a wide range of advertising media that firms can choose from
in order to make consumers aware of their products. Table 10.1 below looks at the advantages
and limitations of some of these.
Informative advertising These are adverts that give information to potential purchasers of a
product, rather than just trying to create a brand image. This information could include price,
technical specifications or main features and places where the product can be purchased. This
style of advertising could be particularly effective with promoting a new product that consumers
are unlikely to be aware of or when communicating a substantial change in price.
Persuasive advertising This is trying to create a distinct image or brand identity for the product
and it may not contain any details at all about materials or ingredients used, prices or places to
buy it. This form of advertising is very common, especially in those markets where there might
be little actual difference between products and where advertisers are trying to create a perceived
difference in the minds of consumers.
ADVERTISING
Advantages Possible Limitations
Wide coverage Cost
Advert content is controlled by the business. May be difficult to check on effectiveness.
Media can be selected which have greatest chance Advert may be seen by people who are not
of targeting the target market consumers. potential consumers – waste of resources.
Provides effective means of informing consumers May be accused of unethical practice if directed at
about new products. children.
SALES PROMOTION
Sales promotion consists of short-term incentives to encourage purchase or sales of a product or
service. Major sales promotion tools include samples, coupons, competitions, product
endorsements, and special credit terms.
SALES PROMOTION
Advantages Possible Limitations
Range of different strategies can be used for Can have a negative impact on perceived quality
different products and types of consumers. and exclusive brand images.
Effectiveness can often be judged, e.g. by return of Gross profit is often reduced – will sales increase
coupons or number of people who join loyalty enough to compensate for this.
scheme.
Often effective in building up loyalty and repeat May be directed at consumers who would have
sales. continued buying the product anyway – not cost
effective in this case.
PERSONAL SELLING
Personal selling occurs when a company’s sales team promotes a product through personal
contact. This can be done over the telephone, by setting up meetings, in retail outlets, or by
‘knocking on doors’. The main advantage of personal selling over other methods is that
individuals can be given personal attention. One disadvantage is that it can be expensive.
Another problem is the dislike of ‘callers’ by consumers.
PERSONAL SELLING
Advantages Possible Limitations
Directed at individual customers/consumers – can Cost of employing the sales force.
meet their needs and reply to their questions.
Can be very persuasive and effective. Incentives need to be provided to sales force to
‘perform’.
Helps to build long-term relationships between This may lead to excessive pressure put on
company and customers. customers to buy – may damage reputation of
business or long-term relationship.
Can only see one customer at a time – may not be
cost effective.
PUBLICITY
Publicity and public relations are the marketing functions that communicate with the general
public and not necessarily to specific target markets. It is the one activity that is not paid for by
the company but commensurately neither does the company control its content nor context.
Corporations most commonly use publicity to introduce a new product or advise the public about
a new process or procedure. It serves to stimulate primary demand. Publicity is an important
strategy for new ventures and small businesses when introducing new products.
Public relations is the activity of establishing and maintaining relationships with the company’s
publics. PR is an important part of marketing since it contributes to the corporate image of the
organization, its employees and management. A good corporate image assists in production
acceptance and is a part of the overall satisfaction customers have in using them. A poor
corporate image generates negative feelings and may backlash on company sales. (Blawatt)
PUBLICITY
Advantages Possible Limitations
Free. There are some costs – salaries of Public Relations
staff and show/exhibition costs.
Provides regular reminders to consumers about the The company is not in control of the final message.
company and its products.
Can be used to provide support for other Difficult to measure whether key messages are
promotional tools. being communicated to and received by the target
groups.
CONSUMER BEHAVIOUR
Market research can tell us what qualities people want in a new VCR, but it cannot tell us why
people buy VCRs. What desire are they fulfilling? Is there a psychological or sociological
explanation for why consumers purchase one product and not another? These questions and
many more others are addressed in the area of marketing known as consumer behaviour.
Consumer Behaviour consists of the activities people engage in when selecting, purchasing,
and using products so as to satisfy needs and desires.
Organizations as customers
The comparison between the consumer market and industrial market can provide an insight into
buyer behaviour. There is a distinction between the two.
The number of customers will be relatively small in the industrial market (i.e. thousands rather
than millions). This facilitates direct marketing techniques and a substantially greater role for
personal selling than is the case in most consumer markets.
In the industrial market the purchaser will be knowledgeable and will take a rational approach to
decision making. This means that the potential purchase will be evaluated in terms of price,
quality, performance and terms of supply. The buyer will not be swayed by advertising and
packaging. What advertising there is will tend to be informative and will be carried out through
specialist media.
Finally, the buying power of the purchaser results in a greater amount of negotiation over terms
than is the case when consumers buy goods. In essence there is a substantial difference between
the marketing mix used in industrial markets than used in consumer markets.
Social influencers – include family, opinion leaders (people whose opinions are sought
by others) and reference groups such as friends, co-workers, and sports figures.
Cultural influencers – include mainly culture, subculture (smaller groups, such as ethnic
groups, with shared values), and social class.
The Micro-environment consists of actors close to the company that affect its ability to serve its
customers. These include:
Company’s suppliers – These form an important link in the company’s overall customer
value delivery system. They provide the resources needed by the company to produce its
goods and services.
Marketing Intermediaries – These help the company promote, sell, and distribute its
goods to final buyers. They include resellers, physical distribution firms, marketing
services agencies, and financial intermediaries.
Customers – The Company needs to study five types of customer markets closely.
Consumer markets consist of individuals and households that buy goods and services
for personal consumption. Business markets buy goods and services for further
processing or for use in their production process, whereas reseller markets buy goods
and services to resell at a profit. Government markets are made up of government
agencies that buy goods and services to produce public services or transfer the goods and
services to others who need them. Finally, international markets consists of those
buyers in other countries, including consumers, producers, resellers, and governments.
Each market type has special characteristics that call for careful study by the seller.
The Macro-environment consists of the broad societal forces that shape every business and
nonprofit marketer. These forces shape opportunities and pose threats to the company. They
include the following:
Economic forces – The economic environment consists of factors that affect consumer
purchasing power and spending patterns. The various booms and busts in the economy
influence unemployment, inflation, and consumer spending and savings patterns, which
in turn influence marketing activity.
Natural Forces – The natural environment involves the natural resources that are needed
as inputs by marketers or that are affected by marketing activities. Marketers should be
aware of several trends in the marketing environment including the growing shortages of
raw materials, increased pollution, and increased government intervention in natural
resource management. Natural disasters can adversely affect can affect the demand of
goods and services.
Cultural forces – Every society has a culture that guides its everyday life. It is the
marketer’s job to “read” the social environment and reflect the surrounding culture’s
values and beliefs in a marketing strategy.