Brief Explanation of Important Marketing Concepts

Why Marketers view Product as a customer solution?

4 P’s are there in the marketing mix. The marketing mix is the set of requirements to be fulfilled by a firm to be involved in the business process. The 4 P’s are – Place, Product, Promotion and Price.

Product: it is a commodity or the goods which have a specific serving value which are sold in the markets for any consideration to fulfill the needs and wants of its customers.

Product is considered by the marketers as the customer solution or the benefit provided. This statement means better marketing of the products or the services can be achieved by focusing on:

·         Focused target market and the needs and wants of an active or a potential customer.

·         A focus on the improvements and modifications in the products to form or create better and innovative products to expand the market share as more emphasis shall be given on personal needs of the customers.

Pricing strategies fall into three main categories – customer value, cost and competition.

Good, customer value is, also known as the value -, based pricing.

The technique of value based pricing answers the question of “How can a marketer create an extra customer value of the product and also how he can increase the willingness of the customer to pay that much for his product even if there exists an intense competition?” Therefore, this is the technique of pricing that is most preferred by the marketers to set prices for their product in that competitive market.

Several factors are involved in increasing the value of a product. These can be the quality of the product the marketer may provide, the after sales services, the uniqueness of the product or the service that another marketer of a similar product may not be able o to provide. This may increase the willingness of the purchaser to pay that amount, set.

For example, there are a multiple brands for handbags in the global market. But the customers are willing to pay much higher prices for the brands like Gucci, Louis Vuitton even if there are similar stuff handbags of lower priced brands.

Comparison between cost or cost-plus pricing and customer value or vale based pricing

Cost-Based Pricing

This technique lets the cost of manufacturing the product; decide the price of the product for the customers. There are two prices set on the basis of the cost. These are the price floor and the price ceiling. The price of the product is set in between of these two minimum, and maximum prices set on the basis of the cost of the product.

Value-Based Pricing

It relies upon the price that the customer is willing to pay for that particular product, irrespective of what the cost of production of that product might be.

Focus –

Cost based – focus lies upon the condition and situation of the company.

Value based – focus lies upon the potential the product holds in the market.

Prices –

Cost based – the price floor and price ceiling determines the prices.

Value based – the willingness of the customers to pay for the product determines the prices.

The company and the cultural environment

Various departments are there in a company that forms the micro-environment of the company itself. These include the production, sales, operations, management, accounting, research & development and finance departments. All these departments are interrelated to each other. The mission o f the company their objectives along with the broad strategies and policies are set by the top management,. Marketing managers make decisions within the strategies and plans made by top management.

Macro-environment – the cultural environment

The cultural environment involves the people and the society and the impact of people on the society. It includes the basic environment that the society is made up of. These include the various beliefs, ethics, norms and values. The people in the society live according to these factors and the firms also cast an impact over the society and are similarly affected by the same.

There are certain cultural characteristics that can affect decision-making process of marketing.The most dynamic cultural characteristics among these are:

1). Determination of cultural values. The core beliefs of people and their values should have a high degree of determination. The important beliefs and values in children are passed on from their parents and then these beliefs are reinforced by business, schools, churches and government.

Secondary beliefs and values are comparatively more tolerant to change.

2). Due to the dynamic nature of the secondary beliefs and values there is always a change occurring in the society over these issues, that eventually affects the marketing decision making process.

Concepts of Reach, frequency and media

Reach, frequency and the media impact of the advertising choices recommended.

Reach is the total number of people to whom the advertisement of a product is viewed at least once. If a person is reviewed the advertisement twice then it does not increase the reach of an advertisement but the frequency. It is the masses or individual viewing of the advertisement and it is not based on the number of times that the public views it.

Frequency is the number of times an advertisement of a product is shown or reviewed to the same audience. It does not include the number of people but includes the number of times an ad is aired or communicated to the same audience through whatever medium, be it, media, television, radio, etc.

Media impact refers to the impact, affect or the aim of the advertisement on the viewer. It refers to the effect that an advertisement costs over its target market, whether it can convince the public towards the product or not. Today there is so much awareness, and the information, pros and cons are available on the internet for every product that it has been very difficult to convey what the company intends to convey to the public. In fact, the influential power of the advertisement is what the media impact is.

Growth Stage of the Product Life Cycle 

There are stages in the product life cycle; these are – introduction, growth, maturity and decline. The growth stage plays hold the most important place in the product lifecycle because it aims at developing, expanding the product sale in the market. It marks the position of the product in the market with a comparison with the other products. The research and development department of a company works in this stage to improve the quality and thereby the market share of the product. This stage aims at reducing the manufacturing cost and maximising the consumer satisfaction.

Challenges faced in the growth stage –

§  Increasing Competition: when the growth stage arises for a product then the competition rises at a very high point as there may be existing similar products that might be well established. So to emerge out to be unique and creating a name amongst them is a highly competitive task.

§  Lower Prices: in the market with high competition the companies in the growth stage may have to lower down their prices to compete with the established goods.

Marketing strategy –

Different Marketing Approach: the company may have to change their marketing strategies which it might have set in the introductory stage. These may include, lowering down their prices, improving the quality, better advertising and packaging.

EXAMPLE

The tablets like iPad mini, Google nexus 7, Asus tablets are still in the stage of growth with a vision to increase its size as compared to that of the smartphones but smaller than laptops and notebooks. High competitive market with different strategies is there to compete with each other.

Use of Perceptual maps and their importance

Perceptual maps are used by the firms to form a market position or strategies to position the goods or services provided by the firm. The perceptual maps show where the position of a product or service of a firm lies in the whole market. These maps, in a way, help the firms either to fill the gaps between different products available in the market or to compare and compete their products with the other existing products in the market.

Drawing Perceptual Maps –

There are two axis in a perceptual map – The x axis and the y axis. These two axis may be used by the market to represent any criteria, including, status, reliability, quality, features, price, etc.

Psychographic segmentation

Psychographic segmentation reflects an idea of dividing your market based on the personality traits of the consumers, their standards, attitudes, comfort and lifestyles. A cause and effect relationship exists between the needs and the wants of the customers and the various factors as mentioned above affecting the market segmentation.

Segmentation is done to divide the entire market into parts or segments of people that can be selected out of the whole to be targeted upon. In Psychographic segmentation lifestyle of people, their activities and interests along with their opinions to define a market segment is used.  Behavioural segmentation and Psychographic segmentation have a close similarity. But the consumer buying behaviour is also taken into account by the psychographic segmentation on the basis of its psychological aspects. These psychological aspects include the lifestyle of the consumer, the social standing of the consumer and may also include the consumer’s Activities, interests and opinions. (AIO)

Social class –  on the basis of the buying power of the consumers, different consumers can be grouped into different social classes. The purchasing power or the buying power may depend upon the family background, his income and expenditures and also his spending habits. Since there is a societal effect on the people, there are influential factors; the people tend to buy the goods to maintain or to develop their social class.

For example, brands like Prada, Armani, etc. target and focus on the sec A segments because they would be knowing that these people would be able to buy their products. Since the purchasing power of the rest of the segments would not be enough to purchase their products.

Lifestyle and the social class are both to be considered by these expensive brands before selecting their target market out of the segments made.

Lifestyle –  the lifestyle of the consumers affect the market segmentation. The quality of life, a person lives, would determine the products he might be able to purchase to maintain or develop the quality of life he has been living. On the other hand, the lifestyle of a small child, school students, college students, working class, the service man, businessman, professionals, would be totally different from each other. Thus, the manufacturers of a certain product will make decisions to target a particular lifestyle on the basis of the needs and wants of that particular segment of lifestyle classified groups.

Marketing channel decisions

Intensive strategies

• Market Penetration- it is to make a name or step into the market with all the other brands for the same product and making a place for the new product be introduced.

• Market Development- it refers to the expansion of the business. Supplying the product where it wasn’t in the initial stage.

• Product Development- enhancing the research and development department of a firm to modify the product with better technologies and innovations.

Selective strategies –

Selective marketing that is also known as selective advertising involves creating marketing initiatives so as to generate interest in a particular brand by aborting concentration on the category or class of the product. Distinct to traditional marketing campaigns that focus on pushing the product effectiveness to the consumers in general, the selective marketing campaigns focus on targeting some particular groups of customers that are based on the demographics of market, including gender, age and income.

1. Accentuation of Brand Personality

2. Pinpoint Target Marketing

Exclusive strategies –

An Exclusive Distribution system refers to a system where a company gives exclusive rights to a limited number of distributors or retailers on their products and services in a particular local area.

The features of this system are –

1. Single branding

2. Geographical expansion and territory rights

3. Better promotion techniques for the product

4. After sales services and customer care and services

All of these answers have been provided by marketing management assignment help experts. To get marketing assignment help from MakeMyAssignments.com, please fill up the order form.