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Fundamentals of Marketing - Notes from Lancaster University Business School., Exams of Marketing

Marketing channels, total product, customer value, gaps model, customer pyramids, zones of tolerance, service, symbol, customer retention, price elasticity of demand.

Typology: Exams

2019/2020

Uploaded on 12/29/2020

ryanpaul
ryanpaul 🇬🇧

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Week 7 Test Notes
Marketing
Performance of activities that seek to accomplish organisations’ objectives’ by anticipating customer
needs and creating satisfying goods or services.
Not just selling and advertising. There needs to be research into what a market wants or needs,
where they want it, how much they are willing to pay for it and analysing how competitors are
attempting to meet such needs.
Customers are at the core; not the product.
Marketing is not just about a business and customer; marketing is internal as well as external.
Therefore a firm must market its total product to its staff before staff can market interactively with
customers.
Marketing Domains
Where marketing takes place
Industry communicates total product through marketing. The market provides the industry
information via the industries market research. The market obtains goods/services in exchange for
money.
Consumer markets, B2B markets, non-for profit markets or government markets.
The ‘Total Product’
The substance – the ‘core’ product
The Service – interactive marketing, delivery, instillation, post purchase issues
The symbol – branding, external marketing
The price
Customer value – how much the total product benefits consumers over competition in relation to
cost. If a customer places more weight on the total product than the price, they will buy it.
Different values:
oPrice value – products cheaper than competitors thus influencing buying decision.
e.g. Ryanair, Aldi
oPerformance value – products better quality
e.g. Dyson
oEmotional value – differentiation, reputation, branding, nostalgia
e.g. designer brands, fairy liquid, coca cola
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Week 7 Test Notes Marketing Performance of activities that seek to accomplish organisations’ objectives’ by anticipating customer needs and creating satisfying goods or services. Not just selling and advertising. There needs to be research into what a market wants or needs, where they want it, how much they are willing to pay for it and analysing how competitors are attempting to meet such needs. Customers are at the core; not the product. Marketing is not just about a business and customer; marketing is internal as well as external. Therefore a firm must market its total product to its staff before staff can market interactively with customers. Marketing Domains Where marketing takes place Industry communicates total product through marketing. The market provides the industry information via the industries market research. The market obtains goods/services in exchange for money. Consumer markets, B2B markets, non-for profit markets or government markets. The ‘Total Product’ The substance – the ‘core’ product The Service – interactive marketing, delivery, instillation, post purchase issues The symbol – branding, external marketing The price Customer value – how much the total product benefits consumers over competition in relation to cost. If a customer places more weight on the total product than the price, they will buy it. Different values: o Price value – products cheaper than competitors thus influencing buying decision. e.g. Ryanair, Aldi o Performance value – products better quality e.g. Dyson o Emotional value – differentiation, reputation, branding, nostalgia e.g. designer brands, fairy liquid, coca cola

o Relational value – customers choose total product based on the service and relationship with company e.g. The AA Different customers or segments value different things. It is the role of the marketing department to determine what certain customer’s value. The gaps model Misconception Company’s perceptions of expectations -------------------- Customer expected total product Misunderstanding of what the customer expects Inadequate Resources Company’s perceptions of expectations ----------------------Total product designs and standards Production line misunderstanding company’s expectation Inadequate delivery Company’s perception of expectations ------------------------ Total product delivered Managers may understand customer’s expectations and supply adequate resources but fail to carry out internal marketing to staff that perform interactive marketing to customers. Exaggerated promise Total product delivered --------- Promises to customers/ consumers ---------- Expected total product Setting expectations too high, resulting in dissatisfaction. Customer gap Gap between perceived total product and expected total product Customer Retention The more satisfied a customer is, the more likely the customer will be retained.  Zone of deflection – customer dissatisfied or neither satisfied or dissatisfied  Zone of indifference – Customer satisfied  Zone of affection – Customer highly satisfied The ‘expected total product’ – word of mouth or past experience The ‘perceived total product’ – adverts or the symbol Making promises – keeping promises – enabling promises Transactional Marketing – focused on ‘winning’ customers Relationship marketing – focused on ‘keeping’ customers It is cheaper to retain customer than find new ones; why: Reduced operating costs Profit from increased usage Profit from different usage (cross selling) Profit from price premium

Because service is intangible, a challenge for the service provider is to use tangible clues as to the quality of the service via thing like the symbol, staff uniform, place and promotion adverts. Staff plays a key role in service industries therefore internal marketing is important. Persihability – if service is not gained today, it will not be available tomorrow Variability – It is difficult to reproduce same standard and consistency through services Intangible – cannot be patented, cannot be inventoried Heterogeneous – varied levels of quality based on a whole range of factors e.g. if it is busy service is likely to be weaker than at quiet times. However, most market offerings are a mixture of substance and service The ‘Substance’ The individual product

  • Quality: quality killers (reliability), enhancers (features) and drivers (performance)
  • Packaging and labelling
  • Augmentations – warranties, guarantees, additional servicing Product line
  • A group of products closely related because they are sold in a similar way, or they function similarly, have similar prices or be sold to the same people
  • Line stretching: adding products that are more up-market or down-market e.g. supermarkets
  • Line filling: adding more products within a line e.g. cars, clothes
  • Product mix: amount of lines Product development Ansoff’s matrix: Product development – existing market, new products Market penetration – existing market, existing products Market development – new market, same product Diversification – new market, new products Product replacements:
  • Newer models e.g. cars
  • 45% of all new product launches
  • Low risk Additions to existing lines:
  • Line stretching
  • 25% of all new product launches
  • Different colour, style, size e.g. Ipad New product lines:
  • Appeal to different consumers
  • Higher risk
  • 20% of all new product launches New-to-the-world:
  • Highest risk
  • 10% of all new product launches Product Life Cycle Introduction: o Sales typically low as awareness is low o Only innovators and early adopters will purchase during this stage (15%) o Losses incurred due to heavy development and initial promotions o Low price to attract custom Growth: o Market acceptance o Repeat purchase o Production increases resulting in economies of scale – lower unit cost o Emergence of new competitors Maturity: o Rely on brand loyalty o High profits o Increased advertising o Potential for extension strategy Decline: o Company must decide whether to penetrate the market or adopt other marketing strategies o Appeal to laggards (16%) late-comers o Low costs but low sales o Competition have moved on (probably) It is hard to determine which stage a product is in and when it moves to the next stage. ‘The Service’ Excess demand – too much demand not enough supply/capacity resulting in dissatisfaction, lost customers and over-working staff and production line. Excess capacity – too much capacity relative to demand = waste and inefficiency Optimum capacity – point beyond which quality declines as more customers are serviced. Channels Factors to take into account:
  • Do customers want to buy nearby or travel far
  • Do they want a breadth of choice or specialisation
  • Do they value add-on services
  • The more channels the higher the mark up Channel intermediaries – organisations that facilitate the distribution of products to customers