There is renewed interest by many governments to encourage investment in research and development and develop technology that will give their country the competitive edge. The pace of technological change is so fast that in the computer industry the average life of a computer chip is approximately 6 months. In the name of progression technology will continue to evolve organsiations that continue to ignore this will face extinction.
SWOT Analysis
A tool used by organisations to help the firm establish its Strengths, Weaknesses, Opportunities and Threats (SWOT). A SWOT analysis is used as a framework to help the firm develop its overall corporate, marketing, or product strategies. Note:Strengths and Weaknesses are internal factors which are controllable by the organisation. Opportunities & threats are external factors which are uncontrollable by the organisation.
Strenght examples could include:
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A strong brand name.
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Market share.
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Good reputation.
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Expertise and skill.
Weaknesses could include:
- Low or no market share.
- No brand loyalty.
- Lack of experience.
Opportunities could include:
- A growing market.
- Increased consumer spending.
- Selling internationally.
- Changes in society beneficial to your company.
Threats could include:
- Competitors
- Government policy eg taxation, laws.
- Changes in society not beneficial to your company.
A SWOT analysis is an excellent tool to use if the organisation wants to take a step back and assess the situation they are in. Issues raised from the analysis are then used to assist the organisation in developing their marketing mix strategy. A SWOT analysis must form the part of any prudent marketing strategy.
Product Lifecycle
The lifecycle concept suggests that a product passes through four stages of evolution. Introduction, growth, maturity and decline. As a product evolves and passes through theses four stages profit is affected, and different strategies have to be employed to ensure that the product is a success within its market.
Product lifecycle stages.
Introduction:
As a new product much time will be spent by the organisation to create awareness of it presence amongst its target market. Profits are negative or low because of this reason.
Growth:
If consumer clearly feel that this product will benefit them in some ways and they accept it, the organisation will see a period of rapid sales growth.
Maturity
Rapid sales growth cannot last forever. Sales slow down as the product sales reach peak as it has been accepted by most buyers.
Decline.
Sales and profits start to decline, the organisation may try to change their pricing strategy to stimulate growth, however the product will either have to be re-modified, or replaced within the market.
Ansoffs Matrix
A common tool used within marketing was developed by Igor Ansoff in 1957. His model gives organisation five strategic business options.
1. Market Penetration: This involves increasing sales of an existing product and penetrating the market further by either promoting the product heavily or reducing prices to increase sales.
2. Product Development: The organisation develops new products to aim within their existing market, in the hope that they will gain more custom and market share. For Example Sony launching the Playstation 2 to replace their existing model..
3. Market Development: The organisation here adopts a strategy of selling existing products to new markets. This can be done either by a better understanding of segmentation, i.e who else can possibly purchase the product or selling the product to new markets overseas.
4. Diversification: Moving away from what you are selling (your core activities) to providing something new eg Moving over from selling foods to selling cars.
5. Consolidation: Where the organisation adopts a strategy of withdrawing from particular markets, scaling back on operations and concentrating on its existing products in existing markets.
What is Marketing?
The term marketing has changed and evolved over a period of time, today marketing is based around providing continual benefits to the customer, these benefits will be provided and a transactional exchange will take place.
The Chartered Institute of Marketing define marketing as ‘The management process responsible for identifying , anticipating and satisfying customer requirements profitability’
If we look at this definition in more detail Marketing is a management responsibility and should not be solely left to junior members of staff. Marketing requires co-ordination, planning, implementation of campaigns and a competent manager(s) with the appropriate skills to ensure success.
Marketing objectives, goals and targets have to be monitored and met, competitor strategies analysed, anticipated and exceeded. Through effective use of market and marketing research an organisation should be able to identify the needs and wants of the customer and try to delivers benefits that will enhance or add to the customers lifestyle, while at the same time ensuring that the satisfaction of these needs results in a healthy turnover for the organisation.
Philip Kotler defines marketing as ‘satisfying needs and wants through an exchange process’
Within this exchange transaction customers will only exchange what they value (money) if they feel that their needs are being fully satisfied, clearly the greater the benefit provided the higher transactional value an organisation can charge.
Marketing Research
Research is the only tool an organisation has to keep in contact with its external operating environment. Inorder to be proactive and change with the environment simple questions need to be asked:
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How are customer needs changing? Can you meet these changing needs? What do your customers think about existing products or services?
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How are competitors operating within the environment? Are their strategies exceeding or influencing yours? What should you do?
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How are macro and micro environmental factors influencing your organisation? Again how will you react?
As witnessed with the UK retail clothing group C&A , failure to react to the changing needs of its customers within its environment has resulted in C&A closing all their UK retail stores. Marks and Spencers also faces an uncertain future. Research tells them that customers feel that the stores and clothes are outdated. M&S are now rushing out new lines and experimenting with new concept stores to retain existing and attract potential new customers. In the world of credit it is just recently that M&S are excepting credit cards!
Market Research and Marketing Research a difference.
A common mistake by many students, lecturers and textbooks is that there is no understanding of the clear distinction between market research and marketing research.
Market Research: Involves researching specific industry’s or markets. Researching the computer industry to discover the number of competitors and their market share will be an example of market research.
Marketing Research: Marketing Research goes further. Marketing Research analyses a given marketing opportunity or problem, defines the research and data collection methods required to deal with the problem or take advantage of the opportunity, through to the implementation of the project. In essence marketing research aims to discover the root cause for a specific problem within an organisation ( eg declining sales) and put forward solutions to that problem.
Data Types
There are two types of data to be collected:
Qualitative Data: Focuses on people’s opinions and attitudes towards a product or service.
Quantitative Data: Focuses on collecting data for numerical analysis.
Research Types
Internal Research
Internally an organisation has access to a wealth of information, which can be a useful tool for decision making for managers. Information available may assist the organisation in discovering why sales are decreasing, why customers are not satisfied, customer usage rates and so on. Sources of internal research may include:
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National product sales.
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Regional product sales.
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Customer usage rates.
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Guarantee cards.
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Customer comments or complaints.
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Sales people, research and development staff.
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Past research conducted.
Clearly as this information can be generated internally the only cost implication will be of staff time obtaining the data.
Secondary Research
Is research already published, and is the cheapest form of research because the data already exists for your acquisition. Sources of secondary data include:
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Periodicals.
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Specialist marketing reports i.e Mintel
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Industry magazines.
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Chamber of commerce.
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Government statistics.
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Internet.
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Professional bodies.
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Trade associations.
It is important that the validity of the data is checked and it is not out of date!
Market Segmentation
An organisation cannot satisfy the needs and wants of all consumers. To do so may result in a massive drain in company resources. Segmentation is simply the process of dividing a particular market into sections, which display similar characteristics or behaviour. There are a number of segmentation variables that allow an organisation to divide their market into homogenous groups. These variables will be discussed briefly below
Demographic Segmentation
Demographics originates from the word ‘demography’ which means a ‘study of population’. The population can be divided into age, gender, income, and family lifecycle amongst other variables.
As people age their needs and wants change, some organisations develop specific products aimed at particular age groups for example nappies for babies, toys for children, clothes for teenagers and so on. Gender segmentation is commonly used within the cosmetics, clothing and magazine industry. All Bar One within the UK have developed their bars to attract the female audience, taking opportunity of the rise in the number of women who now enjoy ‘social drinking’. In the UK we have also seen the introduction of Maxim, (www.maxim-magazine.co.uk) a male lifestyle magazine covering male fashion, films, cars, sports and technology. We have also seen the introduction of unisex cosmetic products like CK1 which works on the similarities between the two genders.
Income segmentation is another strategy used by many organisations. Stores like Harrods, Harvey Nicohals are predominantly aimed at the affluent market. Daewoo aim their vehicles at price sensitive buyers who require a bundle of benefits for the price. In today's globally competitive environment brands are specifically developed and positioned within particular income segments inorder to maximise turnover.
Products and services are also aimed at different lifecycle segments. Holidays are developed for families, the 18-30's singles, and for those in their 50's.
Pyschographics Segmentation
Although demographic segmentation is useful, marketers can use alternative segmentation variables which aim to develop more accurate profiles of their target segments. Pyschrographics segmentation can be broken down into lifestyle, social class, and personality characteristics.
Lifestyles segmentation
The Oxford English dictionary defines a lifestyle 'as a way of life' and lifestyle segmentation aims to examine the way people live.
Our lifestyle, our every days activities, our interest, opinions and beliefs on certain issues dictates who we are. Marketers refer to these as AIO’s (Activities, Interest and Opinions), and our AIO’s dictate our everyday behaviour from where we shop to what we buy. Marketers develop and aim products/services at particular lifestyle groups and develop lifestyle profiles on their target market. If we understand the lifestyle of a particular group we can sell them a product/services on the basis that it will enhance their lifestyle. A lifestyle group is a particular segment defined by the organisation that is marketing a product or service. This lifestyle segment is labeled because individual within it display similar characteristics. For example in the early 1980s within the UK as the economy was booming the City of London were increasingly employing young independent staff on very high salaries. The media termed this group as YUPPIES, they were young upwardly mobile professionals, associated with mobile phones, money, expensive cars, and prestigious city jobs.
Third agers are another group termed and identified by the marketing industry. They are people in their 50’s retired from a profession, and have a high disposable income with time on the hand.
Many of these third-agers are adventurous and experimenters, as they have spent their past lives working hard and they seek enjoyment from their remaining years and have the income to spend on luxury items. In the United States there are 70 million third-agers who are the fastest growing users of the internet, spending more time on the internet then their younger counterpart. has a hit rate of 500,000 per month.
Lifestyle groups
Personality Characteristics.
Products and brands can also be aimed at particular personalities. Pigaio motorcycles are aimed at young 18-25 outgoing, independent persons. Often marketers try to develop personalities for their brands and products that mimic that of their target market. Ask yourself if Nike or Levi’s was a person, what type of person would they be?
Social Class Segmentation
Divides society into 6 distinct groups based solely on occupation.
A Professional staff
B Middle management
C1 Junior management
C2 Skilled manual
D Semi-skilled and unskilled workers.
E Those dependent on the state.
Social class segmentation works on the assumption that the higher your profession the more you will earn. Thus the more affluent lifestyle you will lead. Marketers use this type of information to sell products and services based on lifestyle behaviour, and your profession does have an impact on the way you behave.
Behavioural Segmentation
Refers to why people purchase a product or service. Behavioural segmentation can be broken down into the benefit a consumer seeks from purchasing a product. How will the product enhance their overall lifestyle. When purchasing a computer the benefit sought maybe of ‘ease of use’ to the ‘need for speed’. Occasion is another variable. When should a product be purchased? The demand for turkeys increases during Christmas, flowers and chocolates on mothers day and so on. Occasion segmentation aims to increase the ‘reason to buy factor’ and thus increase sales. Usage rate divides customers into light, medium and heavy users. Heavy users obviously contribute more to turnover then light or medium users, the objective of an organisation should be to attract heavy users who will make a greater contribution to company sales.
Targeting
After the process of segmentation the next step is for the organisation to decide how it is going to target these particular group(s). There are three targeting options an organisation can adopt.
Option 1.
Undifferentiated marketing - Sometimes referred to as mass marketing the firm may decide to aim its resources at the entire market with one particular product. Coca Colas original marketing strategy was based on this form. One product aimed at the mass market in the hope that a sufficient amount of buyers would be attracted., although there are now changes in their product line to cater for growing dietary and caffeine free needs of consumers.
Option 2
Differentiated marketing strategy - Where the firm decides to target several segments and develops distinct products/services with separate marketing mix strategies aimed at the varying groups. An example of this would be airline companies offering first, business (segment 1) or economy class tickets (segment 2) , with separate marketing programmes to attract the different groups.
Option 3
Concentrated Marketing: Where the organisation concentrates its marketing effort on one particular segment. The firm will develop a product that caters for the needs of that particular group. For example Rolls Royce cars aim its vehicles at the premium segment, same as Harrods within the UK.
Marketing Plans
What is it?
A marketing plan aims to help organise the strategy for a company, its products or services. Planning is essential in all organisations and company plans should be documented.
A marketing plan is not a unique document within an organisation. Production would have a Production Plan, Human Resources a Human Resources plan and so on.
However, all good plans must support the overall corporate objectives of the organisation, the corporate objectives maybe to be global leader in the next five years, all individual plans must support this.
Lets look at what an outline of a marketing plan may look like.
A common method used to help plan a marketing plan is an acronym called AOSTC. It simply stands for
1. Analysis – Of environment.
2. Objectives – Setting yourself SMART objectives.
3. Strategies – For segmentation and growth, targeting and positioning.
4. Tactics – Used i.e. marketing mix
5. Control. – How you will monitor that you are achieving objectives.
Structure of a typical Marketing Plan.
1. Situational Analysis – Where are we now?
Every good marketing plans needs to analyse the current business situation and ask a simple question, where is the business now? This involves the business firstly conducting an internal audit.
An internal audit will look at:
- Past objectives and success rates.
- Past marketing mix strategies.
- Past budgets.
- Past segmentation, targeting and positioning strategies.
The internal audit aims to look at what you did in the past, was it successful, if not why not, if so, why so? Simple hey!
After the internal audit the next stage is for you to conduct an external audit. The external audit will involve:
- Conducting a analysis, and discussing the impact of this on your strategy.
- Researching the industry you operate in. What are the trends within the industry you operate in?
- Competitor analysis. What are your competitors up to?
- A analysis to help establish your current strengths, opportunities, weaknesses and threats.
2. Set your objectives – Where are we going?
Set yourself SMART objectives so you know where you are heading. Remember SMART stands for:
Specific – Clearly state what you want to achieve.
Measurable – Is it easy to measure the objectives you set by monitoring sales, market share figures?
Achievable – Set yourself attainable objectives.
Realistic – Can you really achieve them with the current resources you have?
Timed – Set a realistic time scale for the objectives.
An option is to use Ansoffs model to help you set your objectives,
3. What tactics or methods will you use to get there? How will you get there?
- Define your target market. Select your your strategy and strategy.
- How will you use the marketing mix to assist you. What will be your , , or strategy?
4. How do I evaluate the strategy? Are we getting there?
Are you achieving the objectives you set for yourself? To evaluate your plan some benchmarks may include:
- Market share data.
- Sales data.
- Consumer feedback.
- Feedback from staff.
- Feedback from retailers.
