MARKETING: Brief, brief, brief revision notes

A selection of definitions, truisms, clichs, witticisms and useful quotes Hugh Davidson defined marketing as the total approach to business, which places the consumer at the centre of things. McGraw Hill (US Advertising Agency) Advertisement: I I I I I I dont dont dont dont dont dont know know know know know know who you are your company your companys products what your company stands for. your companys record. your companys reputation.

NOW What was it you wanted to sell me ? Cuddling up to the customer There have been a lot of battles on the way but there can be little doubt that, overall, marketing has won the day as the main player in many corporations. What has happened is that marketing has become the all pervading mission of everyone in an organisation Segmentation If youre not thinking segments, youre not thinking marketing. Ted Levitt - the consumers in a market, any market, have different needs which can be satisfied by different products or different positionings of similar (or even identical) products e.g. by age, by social status, by attitude, by lifestyle by any combination of these and a hundred other things! Contemporary marketing has seen the move away from segmentation by social class to segmentation by life style (are you a money and brains , a young influential or a pool and patio person ?). Theres no middle class anymore, so dont try and cater to it: youll go out of business. The Product Life Cycle: You know, of course, that this is based on the sensible and realistic idea that every product goes through:

a) a period of development (high costs, low revenue, and low profit) b) a period of growth (rapidly rising sales and profits)
IB Business & Management Marketing Revision Notes (Brief ones)

c) a period of maturity (highest sales but declining profit margin as competitors come in and

prices fall) and finally d) a period of decline (consumers shift to new products, competition intensifies, sales and profits drop right away). You will also know, but have been too polite to point out, that it seems nobody told Coca Cola about it. Or Heinz. Or Nescafe. Or a number of other marketing-centred companies that know the value of powerful brands. Products certainly have a life-cycle. Brands neednt have. Even the seemingly boring can be renewed and repositioned. For example Lucozade from being the old fashioned bedside tonic for individuals, when I was a child, has become, with the help of Olympic competitiors, the energy drink, now used to help super fit young sportsmen and women win victory ! Positioning If brand values are the sum total of the physical and psychological attributes of a product, positioning is the word for how the brand is focused against the marketplace and its competitors. Products in different markets can have different positions, though many global marketeers seek to avoid this. As markets evolve or change in nature, a product can be repositioned. It may be just as difficult to re-position a product downwards as upwards ! Interesting examples to discuss Dr. Martens shoes, Red Bull energy drink, Tesco supermarkets, Woolworths, Porsche, Jaguar and Skoda cars. Portfolio Planning Seemingly a more sophisticated marketing tool than the product life cycle, the most famous example being the Boston Matrix, which is not a wrestling hold but a system invented by the Boston Consulting Group which allows products, businesses, or brands to be plotted against the twin axes of market growth and relative market share and helped make the Boston Consulting Group lots of money. Market Research. Quantitative - (From the Latin quanto meaning by how much?). This usually involves counting observations amongst large samples of people and is usually expressed via percentages. A typical quantitative finding might be 19% of teenagers like surfboarding. Qualitative - (From the Latin qualis meaning of what kind, sort or nature?). This method seeks not to measure rigorously but rather to explore attitudes and motivations in depth
IB Business & Management Marketing Revision Notes (Brief ones)

among small samples of people. A typical qualitative finding might be surfboard users are outward looking social adventurers. At its best qualitative research is about tomorrow. It is thought-provoking, relevant and extremely difficult to disprove. By contrast, quantitative research has traditionally been about yesterday. What did people do yesterday (or last month or last year)? But with new technology things are changing fast and computer programmers are quite prepared to use quantitative research to make predictions and identify trends. -e.g. putting together a computer model (modelling) of how a particular group of people behave and asking endless what if questions. Direct Marketing Another useful computer application is ultra fine targeting for direct selling of any form. New technology enables marketeers to locate not just the towns and district in which the target market is likely to live but also individual streets. This is a major development. It is leading to the demassification of the mass market the market is splintering into thousands of niches. Marketeers are able to access public data bases and buy into private data basses. They can then use computers to select and target potential customers usually based on lifestyle and postal address e.g. money and brains pools and patios lager and crisps. You are where you live. These are often known as cluster types In the USA each citizen can expect to receive thousands of postal and electronic junk mail deliveries each year and these will not be random e.g. you will receive specific ones on your eighteenth birthday or as retirement approaches. Arthur Miller has referred to from the womb to the tomb marketing. Marketeers agree that the most likely person to buy a product is the person who bought it before i.e. consumer behaviour is predictable if enough data is available, but this can raise question about encroachment of civil liberties. Continuous surveys are the major studies clients buy on a regular basis in order to measure markets, retailer purchases, consumer sales and changes in consumer attitudes. Consumer panels allow marketeers to explore consumer dynamics It is proverbial amongst marketing people that new products are a companys lifeblood. But only 1 in 20 new products succeed, which means that 19 out of 20 new products and their marketing managers fail. Famous new product failures include the Sinclair C5, the ford Edsel, new smoking materials. 3 Ts of Innovation: Twinkles - major breakthroughs; high risk and high return e.g. CD roms Twists - clever marketing slight of hand which results in paying more for the same thing e.g. Pepsi Max which repositioned artificially sweetened drinks as drinks for men rather than as diet drinks Tweaks - e.g. new flavours for existing products

IB Business & Management Marketing Revision Notes (Brief ones)

Branding Branding establishing an identity for your product that distinguishes it from the competition successful branding adds value to an item and ensures brand loyalty. Remember that companies may make products, but consumers buy brands. There is a world of difference between a product and a brand; between ordinary denims and Levi 501s, between coffee and Nescafe, between a pair of trainers and Nike. Brand values are a mixture of functional factors like price, performance and taste and the emotional values conotated by the brand name, the style of its advertising and the properties of the package. The reason why marketeers take branding so seriously is that branding is about the security of future profits. It is relatively easy getting a single sale, it is far more efficient to create a pattern of loyalty somewhat resembling inertia selling. Branding brings other benefits too. Having created a distinctive image with consumers, brands can be extended within their area of authority. New brands are hard to create which explains why companies are willing to spend a lot of money buying old brands. Indeed, American companies are moving to including brand name along with goodwill and patents as an intangible fixed asset on their balance sheets. How do accountants calculate its value ?????? Promotion Jargon Brand leader the brand with the highest share of a specific market or segment. Brand loyalty exists when consumers repeat-purchase your product on a regular basis. Such customers are unlikely to be price sensitive; therefore your products price elasticity will be low. This enables you to increase the price level without much effect upon brand. Brand loyalty can be active or passive. Brand mapping see positioning (above) Brand standing a measure (in effect an audit) of where one firms brand stands in consumer affections compared with its rivals. This is monitored regularly by the use of market research into the images, attitudes and usage of those within the target market. BOGOF - Buy One and Get One Free Competitions - the lifeblood of sales promotions

IB Business & Management Marketing Revision Notes (Brief ones)

Extra product - 33% moreFREE! Collector devices - to encourage you to buy more Collaborative cross-product offers - two manufacturers liaising together themed Happy meals. e.g. Disney

Price reductions - short-term sales boost but may damage brand personality and image. Unique Selling Proposition (Proposal) provides competitive advantage: different about your product? General Jargon: Brand equity the value of the brand to the business Brand stretching or extension when the brand name is used for new products in related markets Bundling - putting two products together to persuade the public theyre getting a better deal. Cannibalisation - increasing sales of one product by taking them from another of your own brands, rather than from the competitions. E.g. That new Starbucks. Contribution after marketing - financial jargon for what a brand actually makes after marketing costs are deducted. Core competencies - what youre good at. Culture - term to explain how things are done in a company. Often used as a reason why something cant be done, as in It goes against the grain of the culture here. Four Ps - the four essentials of the marketing mix: product, price, place and promotion. You cant ignore them so dont bother to try. Seven Ps 4 plus People, Process and Physical Evidence used in IB for service industries Gap analysis - what you have to do to spot the gaps in the market. Inertia selling - the process by which business book clubs make more money out of you than you do out of them. Matrix - the lego brick of marketing thinking. Do not confuse with Dot Matrix, whoever she is.
IB Business & Management Marketing Revision Notes (Brief ones)

What is

IB Business & Management Marketing Revision Notes (Brief ones)

Gurus Tom Peters Originally employed by the McKinsey Consulting Group; long since gone global on the back of several best selling books on excellence (the first two written with Robert Waterman). Remembered for saying - having made a fortune out of excellence - that there are no excellent companies. Igor Ansoff Ansoff is the author of Corporate Strategy. His diversification matrix differentiates between existing products and new products; and between existing markets and new markets. Theodore Levitt Professor at Harvard Business School - author of Marketing Myopia (1960) and The Globalisation of Marketing (1983) Marketing Myopia originated from Levitts analysis of the decline and fall of the great American railroads. These suffered from myopia because they saw themselves as being in the railway business rather than the transportation business and so let all manner of new competitors steal their customers. The implication is that businesses should constantly ask themselves what business are we in? - try it with banking. Michael Porter. Another Harvard man reinforcing their dominant share in the marketing guru business. Porter is a specialist in analysing competitive forces. Author of Competitive Strategy (1980) Competitive Advantage (1985) and The Competitive Advantage of Nations.

IB Business & Management Marketing Revision Notes (Brief ones)