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MARKETING PRINCIPLES
DIPLOMA
COURSE OBJECTIVE:
The course is designed to help students learn modern marketing skills.
Managers in all functional areas should have a good understanding of marketing activities and strategies because they need to understand the decisions taken by marketing managers.
By the end of the unit student should be able to;
 Do market exploration for the products
 Prepare the products for the market
 Understand the principle of producing for market
MARKETING MANAGEMENT
INTRODUCTION
Today, Marketing is typically seen as the task of creating, promoting, and delivering goods and services to consumers and businesses. Marketers are skilled in stimulating demand for a company’s products, but this is too limited a view of the tasks marketers perform. Just as production and logistics professionals are responsible for supply management, marketers are responsible for demand management. Marketing managers seek to influence the level, timing, and composition of demand to meet the organization’s objectives.
You will note that marketing executives today are involved in marketing ten (10) types of entities which goods, services, experiences, events, persons, places, properties, organizations, information, and ideas. Goods and services contribute to the bulk of most countries’ production and marketing effort.
DEFINITION OF MARKETING
Marketing primarily refers to a total system of business activities designed to plan, price, promote and distribute goods and services to the present and potential customers. Thus, it covers the functions of product planning and development, pricing, advertising and distribution.
According to Kotler & Keller (2006), we can distinguish between a social and managerial definition of marketing as follows; a social definition shows the role marketing plays in society.
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One marketer said that marketing’s role is to “deliver a higher standard of living”. Here is a social definition that serves our purpose:
Marketing is a social process by which individuals and groups obtain what they need and want through creating, offering, and freely exchanging products and services of value with others.
For a managerial definition, marketing has often been described as “the art of selling products”, but people are often surprised when they hear that the most important part of marketing is not selling! Selling is only the marketing iceberg/hypothetical. Therefore, the aim of marketing is to know and understand the customer so well that the product or service fits him and sells itself. Ideally, marketing should result in having a customer who is ready to buy. All that should be needed is to make the product or service available.
Chartered Institute of Marketing; Marketing is the management process responsible for identifying, anticipating and satisfying customer requirements profitability. This means that understanding customers and anticipating their requirements is a core theme of effective marketing
Marketing can also be looked at in terms of managing business relationships that should be long-term and sustainable. Other scholars define marketing as a management process that identifies, anticipates, and satisfies customers’ needs profitably. Hence, business organizations cannot exist if there are no human needs and wants to satisfy.
There are many definitions of marketing, since it is not a pure science. However, certain core ingredients of the various definitions collectively indicate the basic priorities of marketing.
 Presence of needs, wants and demands;
 Satisfying customers
 Identifying/maximizing and marketing opportunities
 Targeting the “right” customers
 Facilitating exchange relationships
 Staying ahead in dynamic environments
 Endeavoring to beat or pre-empt competitors
 Utilizing resources/assets effectively
 Increasing market share
 Enhancing profitability
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 Presence of products (goods, services, ideas);
 Presence of value, costs and satisfaction;
 Presence of relationships and networks;
 Presence of markets (sets of actual and potential customers of the products; and
 Presence of marketers and prospects/potential buyers.
A business organization must take these core concepts into consideration in order to succeed in the dynamic and competitive marketing environment.
CORE CONCEPTS OF MARKETING
Need
A human need is a state of felt deprivation. These needs fall in different categories which ranges from basic needs such as food, clothing, and shelter to needs for survival, needs for belongingness and self-actualization needs.
Wants
These are objects that will satisfy the needs e.g. athirst person is deprived to drink, that is, water, tea, milk, etc.
Demand
They are wants backed by willingness and ability to pay for them. The marketing function does not consider how many people may want a given product but also how many will be able to buy.
Product
Anything that can be offered to a market to satisfy a need or want. It covers both physical products which are goods and non-physical products which are services and ideas. Goods and services are not determined for their own sake but because of benefits they provide to the consumer.
Service
This is an offer made that is essentially intangible and does not result in the ownership of anything. A service is characterized by;
 Non-ownership
 Inseparability with provider
 Highly perishable
 Variability according to service provider
Customer Value
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This is the difference between the values a customer gains from owning and using a product and the cost of obtaining the product.
Customer Satisfaction
This depends on a products perceived performance in delivering value relating to these perceptions to the buyer’s expectations. If the products performance falls short of customer expectations, the buyer is dissatisfied and vice versa.
Exchange
It is the act of obtaining a desired product from someone by offering something in return.
Transaction
It consists of trade of values between two or more parties one giving and one receiving.
Market
It is a collection of actual and potential buyers having similar needs and they share common wants.
Relationship marketing
It is an act of building, maintaining and enhancing value relationships between an organization and its stake holders (customers; common in service marketing and business to business).
Idea
A concept, philosophy, image or issue.
Marketing Management
It is a process of planning, organizing, implementing and controlling marketing activities to facilitate and expedite exchange effectively and efficiently.
Marketing Mix
The tactical “tool kit’’ of product, distribution, promotion, price and people that an organization can control in order to facilitate satisfying exchange.
MARKETING CONCEPTS/PHILOSOPHIES/THEORIES
There are various philosophies for which an organization can conduct their marketing activities. The business philosophies/concepts include the following:
 Production concept (mass output);
 Product concept (quality product);
 Selling concept (sales volume);
 Marketing concept (customer satisfaction);
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 Customer concept (individualized/customized service); and
 Societal marketing concept (society welfare).
The Production Concept
The production concept holds that consumers/customers will favor those products that are available and highly affordable. Thus, management should focus on improving production and distribution efficiency. This concept is one of the oldest philosophies that guided sellers. It was used in late 1800. The concept emphasizes mass production and low cost per unit.
The concept bases on economies of scale, with the assumption that if products are available everywhere and are cheap, their availability and cheapness will sell them. However, you should know that this does not always hold truth due to changes in the marketing environment. Nevertheless, the production concept can be useful in two ways:
(a). When demand for a product exceeds the supply, in which case, management uses the production concept to increase output to meet the excess demand.
(b). When product costs are too high, in which case, all the customers want is product availability and affordability.
An example is that of Mukwano soap industries, which follow the same philosophy; hence, the soap is available and cheap in almost all parts of Uganda, Nonetheless, this concept does not always apply, as some consumers do not base their purchases on product availability.
The Product Concept
Unlike the production concept that emphasizes mass output, the product concept holds that consumers will desire products that offer the best quality performance and innovative features. It emphasizes that business organizations should devote/dedicate their energy to making continuous product improvements. This concept was mainly used in early 1900s.
The product philosophy assumes that if the quality of the product is high, its quality will sell it. You will realize that this too is not always upheld as consumers/customers have other variables to consider such as the price. This concept can lead to marketing myopia/shortsightedness, as it tends to overlook some vital marketing variables such as life style.
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You will discover that some manufacturers think that if they can produce better quality products, all consumers will buy from them. However, many are sometimes shocked when they see nobody visit them. Consumers behave like this because they, in addition, need good packaging, fair prices, and conveniently placed and promoted products. The manufacturers should know that consumers do not buy products their quality per se, but rather for the solutions they expect from the products. This leads us to the third concept.
The Selling Concept
This concept holds that consumers will not buy enough of the organization’s products unless it undertakes a large-scale selling and promotion effort. It was used mainly between 1920s and 1950s. The philosophy assumes that if the organization carries out aggressive sales promotion activities, consumers will buy more of their products. This concept emphasizes sales’ volume regardless of customer satisfaction.
For example, the sellers of funeral plots or coffins use this concept, since nobody is satisfied with the death of a relative or friend. Another example of people who use this concept is that of the sellers of “Always pads” for ladies because they take advantage of biological nature. The concept is used to sell products regardless of their quality. Such organizations must be good at tracking down prospects and convincing them on product benefits.
You will note that the selling concept is also practiced in unprofitable areas like political party activities. For example, a political party will sell its candidate to the voters as a fantastic person for the job. The candidate’s flaws/faults/weaknesses will be hidden from the public because the aim is to have candidate acceptance, but not to worry about voters’ satisfaction afterwards.
The Marketing Concept
The marketing concept hold that achieving organizational goals depends on determining the needs and wants of the target markets, by delivering the desired satisfaction more efficiently and effectively than competitors do. The concept is one of the most followed at present.
The marketing concept emphasizes consumer satisfaction. This should however, be done at a profit though profit is not emphasized. The concept begins with finding consumer needs and wants, designing, producing and delivering products to satisfy the identified needs and wants. The concept assumes that once products are produced according to previously identified needs
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and wants, this alone will sell the products. If other environmental variables are held constant, this should hold truth for most organizations.
The marketers’ argument for the companies to embrace the marketing concept is simply as follows:
1. The company’s assets have little value without the existence of customers.
2. The key company task therefore is to attract and retain customers.
3. Customers are attracted through competitively superior offerings and retained through satisfaction.
4. Marketers’ task is to develop a superior offering and achieve customer satisfaction.
5. Customer satisfaction is affected by the performance of other departments.
6. Marketing needs to influence these other departments to cooperate in attaining customer satisfaction.
You will realize that the marketing concept emphasizes customer retention more than customer attraction as it usually costs more to attract new customers than to retain current ones. The concept does not mean that a company should try to give all customers everything they want. However, the company should try to balance between creating more value for customers against making profits for the company. Marketing briefly means, “meeting needs profitably”.
The Customer Concept
Today many companies are moving beyond the marketing Concept to the customer concept. Whereas companies practicing the marketing concept work at the level of customer segments, a growing number of today’s companies are now shaping separate offers, services, and messages to individual customers. Such companies collect information on each past customer’s transactions, demographics (age, sex, income, education etc.), psychographics (lifestyles, etc.), and media and distribution preferences. They hope to achieve profitable growth through capturing a larger share of each customer’s expenditures by building high customer loyalty and focusing on customer lifetime value.
The ability of the company to deal with customers one at a time has become practical as a result of advances in factory customization, computers, the Internet, and database marketing software. Yet the practicing of a one-to-one marketing concept is not for every company. The required investment in information collection, hardware, and software may exceed the payout. It works
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best for companies that normally collect a greater deal of individual customer information, carry a lot of products that can be cross-sold, carry products that need periodic replacement or upgrading and sell products of high value e.g.; Uganda Breweries Ltd.
The Societal Marketing Concept
Some people have questioned whether the marketing concept is an important philosophy in an age of environmental deterioration, resource shortages, explosive population growth, world hunger and poverty, and neglected social services. Are companies that do an excellent job of satisfying customer wants necessarily acting in the best long-run interests of consumers and society? The marketing concept sidesteps the potential conflicts among consumer wants, consumer interests, and long-run societal welfare.
Therefore, the societal concept holds that the organization should determine the needs, wants and interests of target markets, and then deliver the desired satisfaction more effectively and efficiently than the competitors to maintain or improve consumer and society well-being. This is one of the most recent marketing management philosophies that questions even the marketing concept. The societal concept emphasizes societal interests rather than consumer satisfaction alone. For example, the societal marketing concept questions the adequacy of the pure marketing concept in an age of environmental problems, resource shortages, rapid population growth, worldwide economic problems and neglected societal services. The pure marketing concept overlooks possible conflicts between short-run consumer wants and long-run consumer welfare. For example, Coca Cola has managed to produce fine soft drinks that satisfy consumer tastes.
However, certain consumers and environmental groups have voiced concerns that coke has little nutritional value, contains caffeine and adds to the litter problem with disposable bottles and cans. The societal marketing concept calls upon marketers to balance three considerations in setting their marketing concept policies:
 Company profits;
 Consumer wants; and
 Societal interests.
The Societal marketing concept has made many companies begin thinking of society’s interests when making their marketing decisions.
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14.2.8 Customer-Oriented Classification of Concepts
Concept
Emphasis
Production
Concept
- Mass output
- Product availability
- Product affordability
- No emphasis on quality
- Reasonably customer-oriented
Product
Concept
- Product quality for customers
- No emphasis on mass output
- Usually expensive product e.g. Benz
- Reasonably customer-oriented for the rich
Selling
Concept
- Sales volume
- No or little emphasis on Customer Satisfaction
- Not customer-oriented
Marketing
Concept
- Emphasizes Customer satisfaction
- Mostly Customer-oriented
Customer
Concept
- Individualized service
- Customer Needs and Wants
- One-to-one marketing
- Customer share, loyalty and Lifetime value
Societal Marketing
Concept
- Emphasizes Societal welfare
- Reasonably Customer-oriented
MARKETING CONTRIBUTIONS TO UGANDAN ECONOMY
 Marketing leads to equitable distribution of resources in the economy.
 It enables nationals and organizations to earn some money.
 It also enables government to earn revenue through taxation of marketing activities such as advertising and sales promotions.
 It ensures customer satisfaction through the exchange of goods and services for money.
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 Marketing enables government to offer services to its people including supply of money for use in the economy.
 It enables manufacturers to distribute their goods and services for money.
 It enables intermediaries/distributors to link manufacturers to customers for money.
 Marketing leads generally to better standards of living by receiving costs of exchange.
 It enables Ugandans to enjoy imports as well.
MARKETING CONTRIBUTIONS TO ORGANISATIONS
You know that the goal of marketing is to create customer satisfaction profitably by building value relationships with important customers. Hence, marketing must work closely with other departments/sections to create and deliver superior value and satisfaction.
Marketing is also seen as the most customer oriented functional area in an organization. It links customers to other departments/sections in the organization. Essentially, organizations exist to serve customers whose needs and wants must be known through the marketer. Thus, marketing coordinates the marketing mix elements with customers at the center of the organization.
You should note that marketing is perhaps the most important activity in a business because it has a direct effect on profitability and sales. Large organizations dedicate specific staff and departments for the purpose of marketing.
You know that any successful firm is an enemy/envy to all the competing firms. It is marketing that helps in clearing the way to reach the highest level of success. Looking at the central elements of a firm, i.e., customers, product and service delivery, the marketing function plays an important role in connecting the customers with the product and service delivery.
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MARKETING ENVIRONMENT
The marketing environment is the interface between the organization and the outside world and the company has to balance internal capabilities and resources with the opportunities offered externally.
Marketing environment consists of the factors and forces that affect a company’s capability to operate effectively in providing products and services to its customers.
Types of marketing environment
Internal Environment: this refers to all factors that are internal to the organization. They are called the five Ms, which are Men, money, machinery, materials and markets. These are important for managing change and we call the process of managing internal change internal marketing. These are:
i. Men: these are human resources of the company, both men & women, along with their different skills, experiences and capabilities.
ii. Money: these are financial resources/wealth of the company. It may include physical assets, cash in banks and bonds etc.
iii. Machinery: this includes the equipment that are used in the organization e.g. computers, tools etc. it can also be a combination of processes, systems.
iv. Materials: this refers to the inputs or raw materials to be used by the company so as to produce goods/services.
v. Markets: this refers to consumers/customers of the company’s products/services. These should be attractive to consumers in terms of value.
Micro-environment
This refers to influences that affect the company’s daily operation directly and tend to be specific to a company. Micro describes the relationship between companies and the driving forces that control this relationship. It is a more local relationship and the company may exercise a degree of control for example suppliers, stakeholders, consumers and customers, distributors, competitors.
Macro-Environment
This refers to the wider influences that affect the company and are outside the direct control of the company. For example, government laws, aggressive competition, technology, political
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activities threat of substitute products etc. This environment is continuously changing and the company needs to be flexible to adapt. This relates directly to the wider business environment.
These are external forces that directly or indirectly influence an organizations acquisition of inputs and generation of outputs.
All businesses operate within an environment which directly or indirectly affects the way in which they function, just as we consumer live in social and cultural environment which to a greater or lesser degree determines the way we behave as individuals.
The responsibility of identifying the significant changes in the environment is with the marketing department.
Marketing manager should understand the different elements in the environment and the nature of interrelationships of these elements and also the ways in which the environment is changing and how changes are likely to affect the marketing decisions or practices.
Macro – environmental factors (PELTS) include the following;
Political and regulatory environmental forces;
The political force of marketing environment has the potential to influence marketing decisions and strategies. Governments have a great influence on the character of the general business environment through their policies and the resultant legislation.
Company 5Ms
Micro- environment
Competitors
Customers
Distributors
Suppliers
Macro- Environment
Political /Legal
Technological
Social/cultural
Economic
Physical
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Marketing organizations need to maintain good relations with elected political officials for several reasons. When political officials are well disposed towards particular firms or industries, they are less likely to create or enforce laws and regulations unfavorable to these companies.
Political, legal and regulatory environmental forces affect marketing decisions in variety of ways as below;
 Legislative structure
 Political and government stabilities (change)
 Political ideologies
 Taxation policies
 Non-governmental regulatory forces like churches
 Regulatory forces like NEEMA
 Local authorities like KCC
 Foreign trade regulations
 Consumer protection laws
 Sales promotion and advertising policies/laws
 Pricing policies or laws
 Environmental protection laws
 Pressure groups e.g. trade unions
 Societal /green forces (social responsibility decisions)
 Interpreting laws
Technological forces
No organization can afford to ignore the technological environment and its trends. Even if your organization doesn’t have the inclination or resources to adapt new technology, understanding it is important because competitors will exploit it sooner or later with implications for your products and their markets.
Organizations must invest in research and development, recognizing that they will be left behind if they do not and they are optimistic that they will come up with something with unbeatable differentiated advantage that will be worthwhile.
The technological environment is a fast changing one, with far reaching effects on organizations and their products.
Technological advances can affect the materials, components and products and the processes by which products are made, administration and distribution systems, products marketing and the interface between the organization and the customers.
The Legal environment
All organizations operate under a government-controlled environment. This gives confidence to private and public sector entrepreneurs, so that they can use their management skills and capital
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to their best. However, sometimes there are conflicts between different laws and unnecessary restrictions that are detrimental to businesses. All organizations must conform to the country’s general legal principles and government policies so as to stay in business.
Economic, physical and competitive forces
Organizations and consumers feel the effects of the economic and competitive environment alike and it has a profound effect on their behavior. The economic environment provides the basis against which marketing activities take place. We consider issues of national interest such as the effects of government policy on commerce and business generally.
Marketing focuses on consumers but the organization cannot be successful unless consumers have got effective purchasing power so as to purchase whatever is produced. The purchasing power depends on consumer demand and spending behavior like;
 Taxation: taxes may be direct or indirect. Direct taxation such as income tax, NSSF, PAYE etc. reduce the amount of money or disposable income that households have available to spend on goods/services that organizations provide.
 Government spending: government like any other organizations are purchasers of goods & services but on a large scale. Governments invest in defense, road construction, civil engineering projects, social and health services and many other areas. Such large purchasing power can be used to stimulate or depress economic development, but if the government decide as a matter of policy to cut back on its spending, then marketing and business activities will be badly affected.
 Interest rates: government economic policy affects interest rates, which has an impact on both consumers and businesses. For many consumers, the most serious effect of a rise in interest rates is on their monthly loans and mortgages repayments.
 International trading blocs: government also negotiates membership of international/ regional trading blocs and the scope, terms and conditions of international trading agreements. Local companies that meet the trading requirements of these blocs can join and enjoy the benefits offered. E.g. COMESA, PTA, EAC etc.
 Market Structures: these affect or influence what sort of competition the organization is up against, what scope the organization has to manipulate the 4ps and how broad an impact the
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organization’s marketing activities could have on the market as a whole. Market structures include monopoly, oligopoly, monopolistic competition and perfect competition.
 Debts, Willingness to spend, spending patterns, Buying power, Income, Wealth, Comprehensive spending patterns, Product specific spending patterns etc.
The above influences both marketers and consumer’s decisions and activities.
Marketing manager should respond to physical environment, which includes the natural environment. Most societies are concerned about the use of natural resources.
The concern about interference with nature also affects marketing practices. This is because the products are made and their packages comes from the natural resources e.g. cotton clothes
The marketing manager also needs to assess competitive forces. Attention should be paid to firms marketing products that are similar to, or can be substituted for, a given business product in the same geographical area. Thus a textile manager views all other garments manufactures as competitors. This can be counteracted through competitor monitoring and crafting ideal strategies in order to develop a competitive advantage.
Socio - Cultural Environment
This refers to a set of rules, values, ideas and attitudes that are transmitted from one generation to next. The societies in which people grow shape their culture. Organizations must understand the socio- cultural environment since these factors influence the customer’s needs and wants. The basic differences in language, income levels, spending habits, culture, women’s role in society and religion are important. We consider the following:
Demographic factors: this includes the study of measurable aspects of the population structures and profiles which refers to factors such as age, gender, occupation, location, birthrate and life expectancy e.g. if the birth rate is falling in a particular geographic market, then the marketer might interpret this to mean that that people are having children later in life when they are better established economically. This also means that the parents have much more money to spend per child.
Socio-cultural influences: these factors involve much more qualitative assessment and can be harder to measure and interpret than demographic factors. Consumer lifestyle expectations
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evolve over time. Products that one time were considered luxuries such as TVs and fridges are now considered necessities. Turning a luxury into a necessity obviously broadens the potential market and widens the marketers scope for creating a variety of products and offerings to suit consumer’s income levels and usage needs e.g. in case of a television which comes in a variety of shapes, sizes, colors and prices.
Environmental issues: today consumers think critically about the origins, content and manufacturing processes of products they buy e.g. consumers want products made with the minimum of pollution
Cultural changes may provide opportunity or threats for market for example change in attitude in favor of cotton textiles, local art crafts mean more opportunity for market.
The demographic factor describes the characteristics of the population in terms of size, geographical location, age, sex, education levels.
The world population is showing an explosive trend. Population increase means growing needs or demand although it does not necessarily mean growing market.
The marketing manager should draw attention to the following;
I. Population age structure;
 Pre-school 0 -4 years
 School age 5 – 12 years
 Teens 13 – 19 years
 Young adults 20 – 34 years
 Middle age 35 – 55 years
 Older adults 56+ years
Age group enables the marketing managers to identify the needs of each category.
II. Ethnic groups
Countries vary in their ethnic make-up for example Uganda society ethnic groups maintain their tribal groups and each tribe has specific wants for example Baganda dress in Kanzu and Busuuti for important occasions, although changing; whereas Karamojong’s dress in wrappers mage out of silk and nylon cloth.
III. Educational groups
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For example, illiterates, school dropouts, graduates; provide marketers with some information on how to satisfy their needs. Graduates generally are keen on buying textiles i.e. they are fashion oriented than illiterates.
IV. House hold pattern e.g.
 Single parent home or family
 Family house hold
Each group has distinctive set of needs and buying habits e.g. single persons prefer fashionable dressed whereas illiterates are vice versa. The marketer must consider special needs for each category.
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INFORMATION FOR MARKETING DECISIONS [MARKETING RESEARCH]
Marketers must understand customers, competitors, market trends and aspects of marketing environment. To this, they require information and marketing intelligence.
Marketing research is the systematic design, collection, interpretation and reporting of information to help solve specific marketing problems or take advantage of marketing opportunities.
It is the process of gathering information not currently available to decision makers. Marketing research is conducted on special projects basis and research methods are adapted both to the problems being studied and to changes in the environment.
Classification of marketing research
Primary research- what you collect your self-characterized by;
 Firsthand information
 Expensive to collect, analyze and evaluate
 Can be highly focused with approach and methodology to ensure accuracy
 Types of question – closed-limited information gained; open- useful information but difficult to analyze
Secondary research
What others have collected for you from
 Company accounts
 Stock analysis
 Retail data
 Government statistics
 UN data base
 Trade publications
 Magazines surveys
 Research documents- publications
Types of marketing research
There are broadly two types of marketing research;
 Quantitative and
 Qualitative
Quantitative marketing research
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These are techniques or sample sizes that lead to the collection of data that can be statistically analyzed and whose results can be expressed numerically. It is based on numbers-56% of 18 year olds drink alcohol at least four times a week-does not tell you why, when, how
Characteristics of marketing research
 Data gathering is more structured
 Research involves larger samples
 Data gathered can provide quantitative behavior motivations and attitudes in population under study.
 Studies can be more easily replicated or compared with past researches
 Analysis is statistical in nature and thus can be done with the help of computer software
Examples of quantitative marketing research include;
 Interviews or face-face interviews; and results are recorded
 Street interviews; It is the most visible form of research; respondents describe their mixed feelings on seeing the smiling face of the interviewer approaching them.
 Executive interviewing (depth interview); it involves interviewing business people at their place of work. (B2B).
 Computer assisted personal interviews (CAPI); use of PC’s, Laptops, internet, websites, telephones, sms (mobile). Data entry is much simpler and analyses can be produced quickly.
 Telephone interviews; this involves interviewing respondents over the telephone.
 Surveys; It’s a collection of information by means of sampling and interviews with selecting individuals.
Qualitative marketing research
Alan Wilson (2003) defines qualitative research as “Research that is undertaken using an unstructured research approach with a small number of carefully selected individuals to produce non quantifiable insights into behavior motivations and attitudes”. It is more detailed – tells why, when and how!
Dibb (1997) defines qualitative research as “Research that deals with information too difficult or expensive to quantify, such as subjective opinions and value judgments, typically unearthed during interviews or discussion groups”
Characteristics of Qualitative marketing research
 Unquantifiable and not representative larger populations
 Data collection techniques are unstructured
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 Involves small samples of individuals or groups of people
 It seeks to reveal opinions, motivations and attitudes
 It’s a bout insight and depth of understanding
 It is subject to high degree of interpretation by skilled researchers
 Usually precedes quantitative work
Methods of qualitative research
 Focus groups or group discussions; These are interactions between respondents of 6-12 people and a lower number is used for specialist’s topic. They are managed by interviewer, usually called moderator hood at the beginning of research and thus can provide very useful information to explore through other methods
 Delphi method – discussion of experts
 In-depth interviews- these are prolonged discussions
Marketing research process
The differences between good and bad research depends on the quality of input, which includes effective control over the entire marketing research process. Basic steps of the marketing research process include;
 Defining and locating problems;
The first sign of a problem is usually a departure from some normal function such as; conflicts between or failures in attaining objectives; e.g. a company objective is to get 12% return on investment and actual is 6%, then there is need to investigate the discrepancy. Problems can be identified through Delphi technique or a collective brainstorming by all workers.
 Developing hypotheses
Determining the hypotheses to be used in collecting data. This is based on previous research and expected findings. A hypothesis is an informed guess or assumption about a certain problem or set of circumstances. It is based on the insight and knowledge available about the problem from previous research studies and other sources. At the end of research, a hypothesis can be accepted or rejected.
 Collecting data
Exploratory studies are carried out to discover the general nature of a problem and the factors that relate to it. The design is deliberately flexible. It involves questioning relevant people inside and outside the organization. These may yield new insights into a problem. Other studies like descriptive studies (accurate description of variables), causal studies (variable X causes variable Y), can be carried out. Collection of data can be on primary or secondary sources.
 Analysis and interpreting research findings;
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Tabulation of data, statistical interpretation, and carefully interpretation
 Reporting research findings
It is the process of reporting research findings. it is extremely doubtful that a study can provide everything needed to answer the research question. The report is usually formal or written one. It also involves recommendations for the action
Importance of marketing research
 It increases the chances of successful marketing. Many companies have failed because of lack of marketing research
 Research reduces uncertainty and risks about making future decisions. Information helps them to make later decisions
 It is essential in planning and developing marketing strategies. Information about target markets provides vital input in planning the marketing mix and controlling marketing activities
 Marketing concepts, philosophies and orientations can be well implemented better when adequate information about customers, competition and trends is got.
 Globalization makes market information valuable
 Helps focus attention on objectives
 Aids forecasting, planning and strategic development
 Reduces risk of new product development
Limitations
 Information only as good as the methodology
 Can be inaccurate and unreliable
 Results may not be what the business wants to hear
 May stifle initiative and gut feeling
 Always a problem that we may never know enough to be sure
 Product failures and low profits after research
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CONSUMER BEHAVIOUR
Consumer Buying Behavior is behavior that consumers display in searching for, purchasing, using, evaluating and disposing of products and services that they expect will satisfy their needs.
It’s the study of how individuals make decisions to spend their available resources i.e. money, time and effort on consumption of related items. It includes the study of what they buy, why they, how they buy, when they buy, where they buy and how often they buy.
It describes the different types of consumer buying stages and decision-making and the different categories of buying decisions.
Stages include: Need recognition, information search, evaluation of alternatives, purchase decisions, and post purchase decisions.
FACTORS INFLUENCING CONSUMER BEHAVIOUR
a) Personality factors
These are inner psychological characteristics that both determine and reflect how a person responds to his or her environment.
i. Age: people buy different goods and services over their lifetime. They eat baby food in the early years, most foods in the growing and mature years, and special diets in the later years. People’s taste in clothes, furniture and recreation are also age related.
ii. Life Cycle is also shaped by the stage of the family life cycle i.e. bachelor stage, newly married couples, full nest I, full nest II, full nest III, empty nest I, empty nest II, solitary survivor in labor force and solitary survivor retired. All these have related financial situations and typical product interests of each group. Marketers often choose life cycle groups as their target market. Marketers also pay close attention to changing life circumstances like divorce, widowhood, remarriage and their effect on consumption behavior.
iii. Occupation: a person’s occupation also influences his or her consumption pattern. A blue-collar worker will buy clothes, work shoes, lunch boxes and bowling recreation, a company president will but expensive suits, air travel, country club membership and a large sail boat. Marketers try to identify the occupational groups that have above average interest in their products and services.
iv. Economic circumstances: product choice is greatly affected by one’s economic circumstances. People’s economic circumstances consist of their spendable income its level, stability and time pattern, saving and assets, debts, borrowing power and attitude towards spending versus saving. Marketers of
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income sensitive goods pay constant attention to trends in personal income, savings and interest rates. If economic indicators point at a recession, marketers can take steps to redesign, reposition, and re-price their products so they continue to offer value to target customers.
v. Life styles: people coming from the same subculture, social class and occupation may lead quite different life styles. One can choose a belonging life style which is reflected in wearing conservative clothes, spending a lot of time with their families, or one would choose an achiever’s lifestyle marked by working long hours on major projects and playing hard when it comes to travel and sports.
vi. Personality and self-concept: each person has a distinct personality that will influence his buying behavior. It’s a characteristic that leads to relatively consistent and enduring responses to his or her environment.
b) Psychological factors: a person’s buying choices are influenced by motivation, perception, learning and beliefs and attitudes.
i. Motivation: a person has many needs at a given time. Some needs are biogenic that arise from physiological states of tension such as hunger, thirst and comfort, others are psychogenic that arise form psychological states of tension such as the need for recognition, esteem or belonging. A need becomes a motive when it is aroused to a sufficient level of intensity and a motive is a need that is sufficiently pressing to drive the person to act.
ii. Perception: it is the process by which an individual select, organizes and interprets information inputs to create a meaningful picture of the world. A motivated person is ready to act. How the motivated person actually acts is influenced by his or her perception of the situation? People apprehend a stimulus object through sensations that flow through our senses of hearing, smell, sight, touch and taste.
iii. Learning: when people act, they learn, learning describes changes in an individual’s behavior arising from experience. Most human behavior is learned. Learning is produced through interplay of drives, stimuli, cues and reinforcement.
iv. Beliefs: a belief is a descriptive thought that a person holds about something. Through doing and learning, people acquire beliefs and attitudes. These in turn influence their buying behavior
v. An attitude describes a person’s enduring favorable or unfavorable cognitive evaluations, emotional feelings, and action tendencies toward some object or idea. People have attitudes towards almost everything like religion, politics, clothes, music, and food. Attitudes put people into a frame of mind liking or disliking an object, moving toward or away from it.
c) Culture and sub culture influences
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Culture is one of the most basic influences on individual needs, wants and behavior
Its sum total of learned beliefs, values, symbols, norms and customs that serve to direct the behavior of members in a particular society.
d) Social factors
 Reference groups: it’s any group or person that serves as point of comparison for an individual in the formation of either general or specific values, attitudes or behavior.
 Family: the individuals who constitute a family might be described as members of the most basic group who live together and interact to satisfy their personal and mutual needs. The family has functions of knowing the economic wellbeing, emotional support, life style and member socialization.
 The family life cycle: it’s a progression of stages through which many families pass, starting with bachelor hood, moving to marriages, then to the family growth to family contraction and ending with the dissolution of the basic unit. At these stages, family members purchase different products.
SEGMENTATION, TARGETING AND POSITIONING (STP)
MARKET SEGMENTATION:
Consumers are different and the consumer behavior differs from one consumer to another. Many consumers prefer differentiated products that reflect their personal needs, personality, and lifestyles. To better satisfy the specialized needs of consumers, marketers adopt a strategy of segmentation.
It’s a process of dividing the potential market into distinct subsets or divisions of consumers selecting one or more segments as a target to be reached with a distinct marketing mix.
It is the process by which consumers are grouped together according to identifiable characteristics that are relevant to their purchase behavior, thereby allowing marketers to more effectively target one or more particular segments of the market.
OR It is the process by which customers in markets with some heterogeneity can be grouped into smaller, more similar or homogeneous segments. In so doing, a balance is sought between obtaining
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reasonably substantial groups and ensuring sufficient similarity to allow individuals to be offered a standard marketing mix
Benefits/Advantages of segmentation
• Improved profit contribution from each segment
• The organization faces the realities of the market place in relation to its offerings.
• The organization should be in a better position to spot new marketing opportunities.
• The organization can make finer adjustments to the product/service offerings and to marketing appeals used for each segment.
• The total marketing budget can be allocated taking into account the needs of each segment and likely profits from each segment. All companies have limited resources, to target the whole economy its usually unrealistic, and thus need for an organization to be focused on a particular segment.
• The organization can try to dominate particular segments and gain a competitive advantage it allows producers to avoid head on competition in the market place by differentiating their offering not on the basis of price only but through styling, packaging, promotional appeal, methods of distribution.
• The product range can more closely reflect customer need differences.
• Improved segmentation allows more highly targeted marketing activities and enhance an in-depth knowledge of the needs of a particular group of consumers.
• Enhances the development of strategic marketing planning. Dividing markets allows marketers to develop plans that give special consideration to the particular needs and requirements of customers in different segments.
• Competitor analysis. Companies understand the type of competition they face, main competitors, which segments are they targeting, etc. Answering above questions will shield a company against larger organizations with superior resources.
• Customer analysis. Segmenting markets allows a better understanding of customers’ needs wants and other characteristics to be achieved. In short, questions about how, why and what customers buy can be addressed.
BASES FOR SEGMENTATION
1. DEMOGRAPHIC VARIABLES/DESCRIPTORS
 Age e.g. children clothes
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 Gender: male and female
Female: Stay at home, Self-employed, Employed, Career oriented, Just for a job
 Occupation
 Income
 Education
 Race/Nationality (traditional dress)
 Religion {reverends, priests, nuns, Muslim garbs]
 Family (Household) life cycle
 Bachelorhood
 Honey couples - newly married couples
 Parenthood – full nest I – III + kids
 Post parenthood – empty nest
 Dissolution
2. GEOGRAPHIC VARIABLES/DESCRIPTORS
Basically different locations may vary in their;
• Sales potential
• Market growth rates
• Customer needs
• Cultures
• Climate
• Service needs
• Purchase rates
• Competitive structures
• Nations
• Regions
• Countries
• Cities
• Urban/rural
• Etc.
3. GEO-DEMOGRAPHIC VARIABLES
It is based on the belief that people who live close to one another within the same physical geographical area, share broad characteristics of;
• Financial means, Tastes, Life style, Purchasing habits, they can be clustered together (say on lifestyle) for some products
• A Classification of Residential Neighborhoods
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4. PSYCHOGRAPHIC VARIABLES/DESCRIPTORS
• Customers are grouped on the basis of:
 Social class
 Lifestyle
 Personality
People within the same demographic group may exhibit very different psycho graphic profiles
Social Class
It is common for human societies to show social groups that are:
 Relatively homogeneous
 Enduring groups in society
Members share similar: values, interests, behavior etc.
 The social class of a person is indicated by a number of variables: occupation, income, education, wealth, levels of satisfaction, value orientation etc.
Common Criteria for describing social classes are:
Upper class
 Middle class
 Working class (peasant class)
Life styles
It’s a person’s way of living in the world/or his environment as expressed in the person’s; activities, interests, values, personality and opinions.
How the whole person interacts with the environment?
In summary: It is how a person spends his time and money;
It gives a deeper insight into a person’s preferences for various products/services.
Indicates a relationship between the product and lifestyle
5. BEHAVIORAL VARIABLES/DESCRIPTORS
i) Benefit sought
• Classifying buyers according to the different benefits they seek from the product
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• Example: Tooth paste
– Benefit -Principle benefit
o Economy low price
o Medicinal preventing decay
o Cosmetic bright teeth
o Taste good breath/taste
ii) Occasions Buyers are grouped according to occasions:
– When they develop the need
– When they purchase a product
– When they use a product
• Regular occasions
 Special occasions
Segmentation effectiveness
Whatever variables are used, poor implementation can lead to ineffective market segmentation, missed opportunities and inappropriate investment. To avoid such difficulties, marketers should take note of the following criteria.
There must be real differences in the needs of consumers for the product or service.
Segment revealed must be:
 Measurable – easy to identify and measure. Some basis must be found for effectively separating individuals into groups or segments with relatively homogeneous product or service needs.
 Substantial – large enough to be sufficiently profitable to justify developing and maintaining a specific marketing mix.
 Accessible - easy to reach with the marketing mix developed. E.g. the promotional effort should target the relevant consumers.
 Stable - the question of segment stability overtime is not often addressed. If companies are to make strategic decisions on the basis of revealed segments, they need to be reasonably certain that those segments will be around long enough for action to be taken.
 Distinctive: any market has to be distinct. It must be different from any other segment. The basis of difference depends on the type of product/service or prevailing circumstances in the market at a time
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Information/data for segmentation
 The customers’ main intention of entering the market. Why buy?
 An understanding of how the market works (market forces like supply, demand, prices, quality)
 The size of the market and how this divides between the competing products and services.
 Characteristics that can be used to identify the different customers found within the market (customer profiles)
 The main products/service requirements, frequency and methods of purchase requirements from the customer’s point of view
 The benefits delivered by these requirements, also from the customers’ point of view
 The relative importance of these benefits to the different customers found within.
TARGET MARKETING
Once segments have been identified, decisions about which and how many customer groups to target can be made. You can concentrate on a single segment with one product and marketing program or offer one product and marketing program to a number of segments or target a different product and marketing program at each of a number of segments.
It is the decision about which segments a business decides to prioritize for its sales and marketing efforts. i.e. either on multi segments or concentration strategy.
Concentration strategy is a process by which an organization directs its marketing effort towards a single market segment. It allows specialization e.g. exclusive fashion designer.
Multi segment strategy is a strategy by which an organization directs its marketing efforts towards two or more market segments. E.g. a company can make underwear’s for women and men.
The three common target marketing strategies are:
(a) Undifferentiated Marketing
• Ignores any segment differences, design a single product and marketing programme to appeal to the largest number of consumers in the market, Focuses on the common needs of buyer’s Primary objective is to capture sufficient volume to gain economies of scale and cost
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advantages. However, it’s not the best – it is now rare for a brand to cater for all varieties of consumers.
(b) Differentiated Marketing
Design separate products/services and marketing programs for each segment. In most cases generates more total sales than undifferentiated marketing, the marketer exploits the differences between market segments by designing a specific marketing mix for each market segment. E.g. a clothing industry where designers cater for different sizes, ages.
c) Focused marketing: this is when a company develops a single marketing mix aimed at various target markets (niche) the identification of several segments doesn’t imply that the company should serve all of them. Some of them may be unattractive or out of line with business strength, this is good for small companies with limited resources.
Marketing mix
Whole market
Marketing mix
Segment 1
Segment 2
Segment 3
Marketing mix 1
Marketing mix 2
Marketing mix 3
Segment 1
Segment 2
Segment 3
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d) Customized marketing: this is common in services marketing where the marketer designs separate marketing mix for each customer. The service provider attends to each customer differently based on his/her individual demands. The service providers vary their offers on a customer-to-customer basis.
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They will discuss face to face with each customer their requirements and tailor their services accordingly.
Market Positioning
Companies must decide precisely how and where within the targeted segments to aim a product or brand. The needs and wants of targeted customers must be translated into a tangible mix of products or services, price, promotion and distribution.
The perception that targeted consumers have of a firm’s offering, and its image relative to competitors. Positioning takes place in the consumers’ minds.
Market positioning is arranging for a product to occupy a clear, distinct and desirable place relative to competing products in the minds of target consumers.
It is the process of creating an image for a product in the minds of target customers. The product is positioned in the minds of these customers and is given an image through e.g. product name, price, packaging, styling or channel of distribution.
 Product positioning refers to the way the product is defined by consumers based on product attributes such as quality, price, design, usage etc.
 Brand positioning is the as product positioning but it is meant for new brands e.g. in case of new soft drink, positioning can be done in terms of price, calories and vitamin contents or packaging. In this way distinctiveness is given to the new brand.
Marketing mix 1
Marketing mix 2
Marketing mix 3
Customer 1
Customer 2
Customer 3
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 Repositioning is the shifting of brand/products to a different market segment by changing the product’s quality, pricing, packaging, advertising etc. this happens when the product/brand is no longer positioned optimally and it is necessary to determine alternatives.
The product must be perceived by the selected target customers to have a distinct image and position vis-à-vis its competitors.
Positioning is based on customer’s perceptions and is therefore only partly within the control of marketers.
Consumers generally assign positions to a company or a product that is the market leader, challenger, cheap products, etc.
Positioning Strategies
Positioning by price and quality: companies position their products on the basis of product quality and value. They may use economy pricing, premium pricing, or market penetration pricing. Positioning by price and quality stresses high price as a symbol of quality or a low price as an indication of less quality and value.
Position by feature and benefit: companies frequently position products by stressing their features and benefits to the buyer. Products are often associated with a feature, attributes or customer benefits.
Positioning in relation to the competition: some businesses position their products to compete directly with the products of other companies. Positioning in relation to the competition is a common strategy that is used when a firm is trying to consolidate an advantage over another firm.
Positioning in relation to other product lines/types: individual products may be positioned in relation to other products in the same line/type e.g. in case of beer products like comparing bell beer and club beer.
Positioning Errors
1. Under positioning: this is when customers have a vague idea about a company and its products and don’t perceive anything distinct about them e.g. services offered by Air Uganda
2. Over positioning: this is when customers have too narrow an understanding of the company product or brands e.g. cheese products offered by Sameer Agriculture corporation.
3. Confused positioning: this is when frequent changes and contradictory messages confuse customers regarding the positioning of the brand e
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4. Doubtful positioning: this is when claims made for the product or brand are not regarded as credible by the customers e.g. telephone rates/charges offered by most telecommunications companies in Uganda.
THE MARKETING MIX
The marketing mix is the set of marketing tools the firm uses to pursue its marketing objectives in the target market. McCarthy classified these tools into four broad groups that he called the four Ps of marketing which include; Product, Price, Place and Promotion. The four P, s components of the marketing mix are indicated below;
The Four P Components of the Marketing Mix
Product
Product Variety Place
Quality Channels
Design Coverage
Features Price Promotion Assortments
Brand name List Price Sales Promotion Locations
Packaging Discounts Advertising Inventory
Sizes Allowances Sales Force Transport
Services Payment Period Public Relations
Warranties Credit Terms Direct Marketing
Returns
Marketing mix decisions must be made for influencing the trade channels, as well as the final consumers. You should also note that three (3) Ps have been added to the traditional four (4) Ps. These include People, Process and Physical evidence. So, we are now talking of seven (7) Ps. The last three Ps mainly apply to the service, because of its unique characteristics such as intangibility, variability and invisibility
Marketing mix
Target Market
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THE PRODUCT (GOODS, SERVICES AND IDEAS)
Definition of a product<b