MNB102-E INTRODUCTION TO BUSINESS MANAGEMENT

1. MNB102-E INTRODUCTION TO BUSINESS MANAGEMENT Facilitator: Neels Bothma

2. Welcome to the Marketing Section of today’s First Years lectures.

3. Structure of the class • Introduction to marketing • Marketing research • Customer behaviour • Market segmentation • The marketing mix • The marketing strategy • Public relations

4. The Evolution of Marketing as we know it • Operation/Product orientation • Sales orientation • Marketing oriented • Consumer oriented • Strategic approach • Relationship marketing

5. Marketing & Sales Concepts Contrasted Selling and Promoting Profits through Volume Factory Existing Products Integrated Marketing Profits through Satisfaction Market Customer Needs The Selling Concept Starting Point Focus Means Ends The Marketing Concept

6. What is Marketing? Marketing consists of management tasks and decisions directed at successfully meeting opportunities and threats in a dynamic environment, by effectively developing and transferring a need-satisfying market offering to consumers in such a way that the objectives of the business, the consumer and society will be achieved.

7. The Marketing Process (see Fig 13.1) • Simply: • Marketing management creates an offering (product, price marketing communication, distribution) • The target market sacrifices money • The target market consumes the offering • Marketing management gets feedback through research • This all happens in a marketing environment • Everybody satisfies their objectives (maximise profitability in the long term, total need satisfaction)

8. Marketing Mix- The Four P’s Product “Goods-and-service” combination that a company offers a target market Price Amount of money that consumers have to pay to obtain the product Target Customers Intended Positioning Activities that persuade target customers to buy the product Promotion Company activities that make the product available Place

9. The Importance of Information Marketing Environment Why Information Is Needed Competition Customer Needs Strategic Planning

10. Marketing Research Why? Know the research process Market forecasting Sales forecasting Profit forecasting 1. Define the problem to be investigated 2. Formulate hypotheses 3. Investigate hypotheses 4. Compile a questionnaire 5. Test the questionnaire 6. Select sample 7. Train fieldworkers and do fieldwork 8. Analyse data 9. Interpret the results 10. Compile the report 11. Management studies report 12. Management implements findings

11. Consumer Buying Behavior • Consumer Buying Behavior refers to the buying behavior patterns of decision making units (individuals & households) directly involved in the purchase and use of products, including the decision-making processes preceding and determining these behaviour patterns. Study consumer behavior to answer: • “How do consumers respond to marketing efforts the company might use, why do they behave the way they do?”

12. Customer behaviour INDIVIDUAL FACTORS Motivation Attitude Perception Learning ability Personality Lifestyle GROUP FACTORS Family Reference group Opinion leaders Cultural group • Awareness of need • Gathering information • Evaluation • Purchase action • Post purchase evaluation

13. Factors Affecting Consumer Behavior: Group • Groups • Membership • Reference Group • Family • Husband, wife, kids • Influencer, buyer, user Group Factors Cultural group

14. Factors Affecting Consumer Behavior: Individual Motivation Individual Factors Beliefs and Attitudes Perception Learning Personality And lifestyle

15. Maslow’s Hierarchy of Needs Self Actualization (Self-development) Esteem Needs (self-esteem, status) Social Needs (sense of belonging, love) Safety Needs (security, protection) Physiological Needs (hunger, thirst)

16. Awareness of need or problem Information Search Consumer Decision Process Evaluation of Alternatives Purchase Decision Post-purchase Behavior

17. Market segmentation • What is a market? • Different types of markets: • consumers • industrial • resellers • government Approaches to the market – see fig 13.3 • Requirements for successful segmentation: • Identifiable and measurable • Substantial • Accessible • Responsive

18. Customer Markets International Markets Consumer Markets Company Government Markets Business Markets Reseller Markets

19. Measurable Requirements for Effective Segmentation Accessible Substantial • Size, purchasing power, profiles • of segments can be measured. Differential • Segments must be effectively • reached and served. • Segments must be large or profitable enough to serve. Actionable • Segments must respond differently to different marketing mix elements & actions. • Must be able to attract and serve the segments.

20. Bases for segmentation Demographic – Who they are Geographic – Where they are Psychographic – What they think they are Behavioural – How do they behave All of the above determine the consumer profile – draw a picture Targeting and positioning

21. Bases for Segmenting Consumer Markets Geographic Nations, states, regions or cities, density Demographic Age, gender, family size and life cycle, or income Psychographic Social class, lifestyle, or personality Behavioral Occasions, benefits, uses, or responses

22. Market Coverage Strategies Market Company Marketing Mix Company Marketing Mix 1 Segment 1 Company Marketing Mix 2 Segment 2 A. MARKET AGGREGATION Segment 3 Company Marketing Mix 3 Segment 1 Company Marketing Mix Segment 2 B. MULTI-SEGMENT APPROACH Segment 3 C. SINGLE SEGMENT APPROACH

23. Positioning for Competitive Advantage • Product’s Position - the place the product occupies in consumers’ minds relative to competing products; i.e. Castle used to position on “the great South African beer”. • Then: “the friendship brew” • Then: SA’s finest • Now? Satisfies a South African Thirst

24. Marketers must: • Plan positions to give products the greatest advantage • Develop marketing mixes to create planned positions

25. Steps in Segmentation, Targeting, and Positioning 6. Develop Marketing Mix for Each Target Segment Market Positioning 5. Develop Positioning for Each Target Segment 4. Select Target Segment(s) Market Targeting 3. Develop Measures of Segment Attractiveness 2. Develop Profiles of Resulting Segments Market Segmentation 1. Identify Bases for Segmenting the Market

26. Marketing Mix- The Four P’s Product “Goods-and-service” combination that a company offers a target market Price Amount of money that consumers have to pay to obtain the product Target Customers Intended Positioning Activities that persuade target customers to buy the product Promotion Company activities that make the product available Place

27. The marketing instruments (mix) • 1. Product • Product concept • Product classification • Brand decisions • Packaging decisions • Differentiation • Obsolescence • Multi- product decisions • New product decisions

28. The marketing instruments – Product (cont.) • New Product Development Process • Develop new ideas • Screen ideas • Eliminate non viable ideas • Develop product • Develop strategy • Test marketing • Commercialisation

29. Classification of Product • Convenience Products • Buy frequently & immediately • Low priced • Many purchase locations • Includes: • Staple goods • Impulse goods • Emergency goods • Shopping Products • Buy less frequently • Gather product information • Fewer purchase locations • Compare for: • Suitability & Quality • Price & Style • Specialty Products • Special purchase efforts • Unique characteristics • Brand identification • Few purchase locations • Unsought Products • New innovations • Products consumers don’t • want to think about • Require much advertising & • personal selling

30. The marketing instruments (mix) Types of prices cost price market price target price final price Price adaptations skimming penetration market price leader price odd price bait price 2. Price

31. Type of channel Channel leadership Market coverage Physical distribution Refer to box on page 326 The marketing instruments (mix) 3. Distribution

32. Consumer Marketing Channels & Levels M C M R C ® M W R C ® ® M W W R C ® ® ® ® Channel Level - A Layer of Intermediaries that Perform Some Work in Bringing the Product and it’s Ownership Closer to the Buyer. Direct Indirect Channel 1 Channel 2 Channel 3 Channel 4

33. Physical distribution Order Processing Submitted Processed Shipped Costs Minimize Costs of Attaining Logistics Objectives Physical distribution Functions Warehousing Storage Distribution Transportation Water, Truck, Rail, Pipeline & Air Inventory When to order How much to order Just-in-time

34. The marketing instruments (mix) 4. Marketing communication • to inform, persuade and remind • advertising • personal selling • sales promotion • publicity

35. The Marketing Communications Mix Advertising Personal Selling Any Paid Form of Nonpersonal Presentation by an Identified Sponsor. Personal Presentations by a Firm’s Sales Force. Short-term Incentives to Encourage Sales. Sales Promotion Building Good Relations with Various Publics by Obtaining Favorable Unpaid Publicity. Public Relations Direct Communications With Individuals to Obtain an Immediate Response. Direct Marketing

36. The Integrated Marketing Strategy The marketing concept: • Profitability • Consumer orientation • Social responsibility • Organisational integration Phases in the product life cycle: • Introductory • Growth • Maturity • Decline • Marketing warfare • Attack • Defense

37. Product Life Cycle Sales and Profits Over the Product’s Life From Introduction to Decline Sales and Profits ($) Sales Profits Time Product Develop- ment Introduction Growth Maturity Decline Losses/ Investments ($)

38. Marketing Planning and Control • Planning • Strategic planning • Functional planning • Control • Set objectives • Measure performance • Evaluate performance • Take corrective action

39. Public Relations A deliberate, planned and sustained process of communication between a business and its internal and external publics. Its purpose is obtaining, maintaining and/or improving good relations and understanding. Developed from: Manipulation Information Mutual influence

40. What is Public Relations? • Building good relations with the company’s various publics by obtaining favorable publicity, building up a good “corporate image” and handling or heading off unfavorable rumors, stories and events. • Major functions are: • Press Relations • Product Publicity • Public Affairs • Lobbying • Investor Relations • Development

41. Major Public Relations Tools Web Site Public Service Activities News Corporate Identity Materials Speeches Special Events Audiovisual Materials Written Materials

42. Public Relations Management • 1. Planning • Scanning the environment • Setting objectives • 2. Organising • Organisational structure • Outside consultants • 3. Leading • Establish corporate culture • 4. Evaluation and control

43. Communication • Communication can be verbal and non-verbal • Communication process – see fig 16.6 • Basically: Sender encodes message which is transmitted to receiver via a medium. The receiver decodes the message and interprets it in some way. This all happens despite noise in the environment. • Types of communication media: • The spoken word • The printed media • Sight and sound • Special events • The Internet

44. Publicity • Methods of obtaining publicity: • Unique special events • Unique communication messages • News releases • Sponsorships • Social responsibility and business ethics • Areas of social responsibility: • Consumers • Suppliers • Competitors • Employees • Owners and shareholders • The community

45. The end! We encourage you to study further in this exciting field!