Principles of Marketing
The marketing process plays an important role in the success of organizations. This is because it creates awareness among members of the public about the products and services offered by firms. There are various key principles applied in marketing. Understanding these principles and how they are applied in the marketing process is vital for marketing executives. In order to understand the marketing process, it is necessary to look at the definition of marketing as a concept and elements associated with the marketing process. In addition, it is also necessary to discuss the key principles applied in marketing.
Marketing and Elements of the marketing process
There are various definitions in relation to the concept of marketing. This is due to the complex nature of marketing. According to Pride (2013), marketing is a process that involves the creation, distribution, promotion and pricing of ideas, goods and services. Marketing plays an important role for a business. It maintains and develops relationships which are favorable with stakeholders in a changing environment and facilitates satisfying relationship exchange (Pride 2013). There are various elements of the marketing process.
The first element is marketing objective. A marketing objective is the quantification of an organization’s market and its products (McDonald & Wilson 2011). Coming up with marketing objectives is a process that involves moving from broad issues to specific ones. The mission statement of a business is the starting point followed by objectives which are broad and translating these objectives into key result areas such as the rate of growth sales and penetration of markets (McDonald & Wilson 2011). The final process of creating market objectives is coming up with sub objectives through which broader objectives can be achieved. These broader objectives include extension of product line, geographical expansion and goals of product sales volume.
Marketing audit is important in order to ensure the effectiveness with which marketing has been carried out. It is a comprehensive evaluation and review of an organization’s marketing function which include financial and human resources, strategies, goals, environment, performance, organizational structure and philosophy (Vashisht 2005). Marketing audit can play an important role for an organization such as identifying the weakness for programs related to marketing, ineffective strategies and goals which are weak. In addition the marketing environment changes and organizations need to consider this as they come up with marketing strategies. The marketing environment needs to be analyzed in order for marketing to strategies to be applied with caution. Environmental analysis involves looking at aspects of environment which affect marketing program of a company. These include political, natural, economic, technological, demographic and technological environments (Vashisht 2005).
SWOT analysis is another important element in the marketing process. SWOT is an abbreviation of Strengths, weaknesses, opportunities and Threats. It is one of the ways used to audit an organizations internal environment in relation to marketing (Wale 2009). The importance of SWOT analysis lies in its ability to evaluate the weaknesses and strengths of a service or product as far as marketing mix is concerned.
The marketing process also involves marketing mix. It is a model used in marketing. It is also an important tool for marketers. It involves a product, price, promotion and place. Coming up with a product which is right and selling at an appropriate price at the right place and using effective promotional methods are some of the activities involved in product mix. A target market is a category of organizations or people for whom a marketing mix is designed by a business so that their needs can be satisfied (Pride 2013).
Benefits and cost of marketing orientation
Market orientation is an important concept in the marketing process. It is a philosophy based on the assumption that a sale relies on the decision of customers to buy a product but not a sales force that is aggressive (Lamb, Hair & McDaniel 2009). Marketing orientation comes with a number of benefits and costs especially for an organization such as Coach which sells various types of bags.
One of the benefits of market orientation is that it enables information to be obtained. Such information can be obtained from the market, competitors and customers. This is evident from some of the measures undertaken by an organization such as Coach. At least 10,000 customers are interviewed by Coach annually so that perceptions about the brand can be tracked (Lamb, Hair & McDaniel 2009). By focusing on the views of their customers about product Coach can be able to make improvements to their product so that its customers can get value for their money. In addition, market orientation enables organizations to sample a market before a product is finally released. Six months before a product is released, Coach tests it in a few stores (Lamb, Hair & McDaniel 2009). Testing the reception of a product by the public is an important strategy aimed at ensuring only the best and valued products find their way to the market.
Market orientation is beneficial in creating a long lasting relationship with customers. Most of the times, customers who are loyal to a particular company are the ones who feel that they are valued. Coach has been able to do this in terms of the services it offers. Customers can be able to bring their Coach bags for free repair in the course of the bags’ natural lives and this has seen 1,000 bags being repaired annually (Lamb, Hair & McDaniel 2009). Such a move has the potential to create long lasting customers. Such frequent interaction creates loyal customers.
There are a number of costs which come with market orientation. One such cost involves payment of sales people. Compensation offered to sales people representing full line of products and high overhead attributed to additional layers of management result into increased costs of operation (Anderson, Mehta & Babin 2008). Focus on market is a costly affair that requires spending a lot of money on activities aimed at satisfying customers and creating value for them. This is evident for an organization such as Coach whose costs involve hiring sales people, carrying out surveys and repairing bags.
Another cost comes due to covering of a particular geographical area. Coverage of territorial sales overlaps due to Market orientation especially when geographical dispersion of customers exists (Anderson, Mehta & Babin 2008). This situation leads to further addition of costs in the process of sales.
Macro and micro environmental factors which influence marketing decisions
There are various macro and micro environmental factors which can influence Iceland’s marketing decisions. The marketing environment which Iceland supermarket needs to monitor and scan includes these macro and micro environmental factors. Micro environmental factors are forces which affect a company’s ability to serve its customers and include competitors, customer markets, the company itself and marketing channels (Young & Pagoso 2008). However, micro environmental factors have a larger effect on business in general. They influence they have affects all businesses. Large forces in the society which affect the micro environment constitute the micro environment. These include political, natural, technological, demographic, cultural and economic forces (Young & Pagoso 2008, p. 53). It’s important to look at how these environmental elements will influence Iceland supermarket’s marketing decisions.
Macro environmental factors vary. Demographic forces can affect Iceland’s marketing decisions. It is the statistical study of population and the characteristics which accompany its distribution (Young 2008). These include education gender and number of children. The economic environment is another important consideration. The demand for various services and products is influenced by the state of the economy. The other force is technological environment. Technological risks are evident especially if a firm needs to survive in a technological environment that is rapidly changing (Young & Pagoso 2008). The political environment is another macro environmental force. It consists of a set of laws that interact and their purpose is to supervise and manage the day to day operations of a locality, region and nation (Young et al 2008).
The environmental factors also affect marketing decisions that Iceland may have to consider. One of these factors involves the marketing intermediaries. They help companies to distribute sell and promote products (Young & Pagoso 2008). The customers are another important force in the micro environment. Customers constitute the market and there is intense competition to capture their attention. Competitors also constitute the micro environment. Companies that offer the same service and products and in the process customers’ choices become unlimited are competitors (Young & Pagoso 2008).
The environmental elements identified can influence Iceland’s marketing decisions in a number of ways. Iceland deals with food as its major products. These include vegetable and meat products. When it comes to demography, there are places where people are mostly either vegetarian or prefer meat. Iceland can focus it marketing activities for either its products depending on this. When it comes to economic factor, Iceland’s marketing strategies should be aimed at providing discounted prices or other price mechanisms which will encourage people to purchase. Due to changing technology, Iceland will have to use current technology to market products. This includes online marketing. The political factor also has an effect. Iceland’s marketing strategies can only be according to the restrictions of the law.
Segmentation criteria for products
Segmentation is an important process in marketing. It involves analyzing the composition and nature of a market so as to categorize potential buyers according to behavior, characteristics and needs (Desmond 2007). The process through which Iceland supermarket can segment its market should start with looking at how the market for its products operates. This involves mapping the market. The organization should then analyze transactions and customers involved. This stage comprises looking at who buys, the products which are bought and the people who buy specific products. The final stage involves market segmentation itself. This involves finding out the needs of customers, combining customers who are similar and doing a reality check (McDonald 2011).
Segments can be effective based on their ability to be accessible. Accessibility is being able to reach segments through distribution and promotion (Bose 2010). This ensures that marketing medium reaches its intended market. Substantiality is a situation in which size of segments are big enough to be targets which are profitable (Bose 2010). Such a feature will ensure marketing activities are profitable. Measurability is an aspect of segments purchasing power and size can be measured and identified (Bose 2010). This ensures ease of applying measures aimed at sales promotion.
Choosing a targeting strategy
Targeting the market ensures that an organization is focused in its promotional strategies. Targeting the market is categorizing of people or organizations and designing a marketing mix so that their needs can be met. There are various strategies used in the process of targeting a market. These include undifferentiated strategy, concentrated strategy and differentiated strategy (Pride & Ferrell 2007).
One of the products which Iceland supermarket sells is fish. The targeting strategy which is appropriate for fish is the undifferentiated strategy. This is a process through which a particular product’s entire market is defined and a singe marketing mix is designed and directed to this market (Pride & Ferrell 2007). This is a target strategy that is appropriate for customers with similar needs.
Buyer behavior and buying situations
Buyer behavior is the reaction potential customers in the process of choosing between which brands of product to buy. There are various types of buyer behavior which correspond to different buying situations and these different interactions affect marketing activities. The first buying situation is straight rebuy. It is a purchase decision that recurs whereby a product is reordered by a customer (Boone & Kurtz 2012). The reason is that the product previously satisfied it needs. This situation corresponds to complex buying behavior. This involves a buyer who is able to detect substantial difference among brands (Panda 2007). Marketing strategies will not be so aggressive in this case. The other situation is modified rebuy. This is where a buyer reevaluates options available for repurchasing (Boone & Kurtz 2012). This corresponds to involvement behavior in which consumer is involved and brand difference is significant. Marketing strategies in this case will be aggressive in order for brands to be unique.
Positioning of product
Identifying a new positioning for a new product requires Iceland supermarket to adhere to the positioning process. Positioning is a process of differentiating the products offered by firms from those which competitors produce (Reid & Bujanic). The organization can begin by coming up with a mix that is ideal for customers. Secondly, it is necessary to collect information with regard to perception of consumer about the new product. This can be done by offering samples to the public. The next process should involve determining gaps in relation to coverage and selecting a position which is desired. The organization should thereafter develop a strategy through which they can obtain a position which is desired.
New Product development and competitive advantage
There are various product development processes. However, Iceland supermarket should be able to utilize a process which is strategic and therefore competitive. This should start with creation of a portfolio for product development and setting targets for the process (Brody 2000). By doing this, product concepts which are attractive, within organization’s ability and can deliver long and short term can be collected. The organization should thereafter do a situational and opportunity analysis. Situational analysis involves identifying environmental variables and elements which are strategic while opportunity analysis involves understanding market structure and delineation of market gaps to be filled (Brody 2000). This should be followed by identification of potential options for new products that fit geographies defined. The organization should then establish a criteria for threshold through which performance targets can be formulated. Finally, the organization should create a portfolio which will operationalize the strategy which has been formulated in the previous stages.
Distribution channel for customer convenience
A distribution channels is the path followed by services or goods as they move from the producer to the consumer. The products which Iceland supermarket deals in will require it to set up a distribution channel that will give rise to customer convenience. The best way for Iceland to do this is to use intensive distribution. This involves the use of every outlet available so as to distribute products (Pride & Ferrell 2013). Iceland supermarket needs to avail its products in places such as filling stations so that its products can be easily available to customers. Such a move can reduce the time and cost required to get access to such products.
Iceland’s pricing strategies
Price is the monetary value for which a service or product is acquired. The pricing strategy used by Iceland enable is a reflection of is objectives and marketing conditions. Market conditions are the characteristics of a market such as the level of competition, competitors and the rate with which a particular market grows when a new product is introduced. The head of Iceland’s marketing, Canning revealed introduction of a pricing strategy that is clear cut (Quilter 2009). The effect of this was the rounding off of prices to figures such as 2, 2.5 or 3 pounds. This move reflects Iceland’s objectives and the marketing conditions for its products. According to Canning, the move is meant to get products to customers at competitive prices and in a store that simplifies shopping activities (Quilter 2009). Based on this, it is evident that the pricing strategy reflects Iceland’s aim to give a wonderful shopping experience and to compete through such a pricing strategy.
Promotional activity and marketing objectives
Promotional activities are the methods used in communication of ideas to potential customers in relation to a service or product. There are different types of promotional activities available for Iceland supermarket. One of these is discounts. A discount involves reduction of prices on products or offering additional products on top of products whose price is a minimum. The other one is offering free gifts and it involves giving out free products on top of what customers come to buy. Media advertising is another form of promotional activity. The various forms of media include online media and traditional forms such as television. Others include product launches and exhibition displays. Various forms of promotional activities can be combined to achieve the best effects. According to Lindsay (2003), the outcomes of a promotional activity, type of product, targeted audience and product distribution affect the type of promotion to be used. These promotional activities can be combined to ensure that they achieve as many outcomes as possible such as introduction of new product and increased awareness of a brand.
Extended marketing mix
Marketing mix is an important element when it comes to marketing activities. Marketing mix are tools which are available to organizations and which shape their products which they offer to customers (Palmer 2004). These tools include promotion, place, price and products. Additional elements of the extended marketing mix include process, people, customer service and physical evidence. The importance of extending the marketing mix lies on these additional elements. The people involved in offering services, the process involved, customer service and physical evidence provide important roles. Through extended marketing mix a service offering is split down into constituent parts so that strategic decisions can be made.
Planning market mixes
Various consumer market segments require a combination of marketing mix so that the marketing process can be effective. Product and promotion can be an ideal combination of marketing mix which can be applied to two different market segments. These market segments include teenagers and old people. These are two segments in the consumer market which are completely different in relation to clothing products. While teenagers needs in relation to clothes reflect emerging styles and trends, old people seek for clothes that reflect status and the need for respect. In addition, the promotional strategies used in relation to the two have to be different based on their perception to information as to how a product is depicted to them.
The clothing products in relation to these two market segments need to reflect their age. Teenagers need fashionable products while old people need clothes based on convenience and benefits. The promotional strategies used to market clothes for teenagers should reflect current styles and trends. One such strategy could be using social media and celebrity endorsements because it is such means which will appeal more to teenagers. For old people, the use of sales people could be an effective promotional strategy.
Marketing to consumers and businesses
The manner in which products and services are marketed to businesses differs from how it is done for consumers. While marketing products to business is based on consultative selling and relationships which are personal, for consumers, marketing is based on advertising. Based on these approaches a brand’s identity is created. Marketing products to Consumers comes with a lot of influencing customers based on their emotions but for businesses it requires understanding their budgets and needs.
When it comes to services, marketing to a business is complex and requires an involving process due to the complexity of selling a product to a business. Marketing to Consumers is more simplified is simple because of a simpler sales process. Marketing services to businesses also requires convincing them that they need the service being marketed but for consumers, it requires influencing them that they need.
Domestic and international marketing
Domestic and international marketing are two aspects of marketing that are defined by the geographical limit in which they operate. Domestic marketing is the application of strategies that are aimed at markets that are within the boundaries of a country (Pride & Ferrell 2012). On the other hand, international marketing is not restricted by a particular region. According to AMA (as cited in Vasudeva 2006), It is a process that is international and involves, distribution, promotion, and pricing services and goods for the purpose of creating exchanges that satisfy organizational and individual objectives. The technical processes in relation to these two categories of marketing are the same. These include brand, product, cost and price. The basic principles in relation to these variables are applicable all over the universe (Vasudeva 2006)
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