Marketing Issues

Introduction To Marketing

Marketing is "trying to have what the consumer wants" or put another way, "Selling focuses on the needs of the seller, marketing on the needs of the buyer." Today's economy is market-driven. Marketing begins with identifying a need or desire by a consumer segment for a product or service. It then encompasses: the design of a product or service to meet those needs; pricing to reflect costs, competition and the customer's ability to pay; making the product or service available at customer-oriented times and places; and communicating information to prospective buyers (promoting). In short, this is the marketing mix: product; price; distribution; and promotion.

Key Marketing Issues

Product

Research & Information Sources

Price

Adjusting to Market Demand

Distribution

Target Markets

Promotion

 

Product

People purchase products to satisfy a need. There are many types of needs that consumers may have and different consumers have different needs. Food and clothing are two basic needs which mean very different things to different people. A doctor does not have the same clothing needs that a machinist does just as the food needs of a vegetarian do not necessarily meet the needs of someone with food allergies. There are many other needs that today's North American consumers have. These include a wide range of consumer goods, social and health services, education and others.

Key Product Issues

Product Life Cycle

Product Timing Window

Marketing Myopia

Consumer Service Requirements

Consumer Goods

 

Product Life Cycle

Products go through what is known as the "product life cycle" which is comprised of introduction, growth, maturity and decline phases. Products in different stages of the produce life cycle have different marketing needs in order to continue to be viable. The introduction stage necessitates stimulating demand for the new product by providing information about its features. The growth phase of a product reaps the benefits of a successful earlier promotional campaign but also attracts competition. In the maturity stage, sales continue to grow at first but reach a plateau as the customers settle into a regular buying pattern. At the same time, competition is greater and profits start to decrease. At this point, the easiest strategy to maintain or increase market share is to lower prices but this is also the easiest strategy for competitors to duplicate, thus reducing everyone's revenues. The decline stage is when shifting consumer preferences or new innovations cause an absolute decline in total industry sales.

Product life cycles vary in length and can be prolonged by adding new uses, packaging or innovations to the product. At the same time, realize that the decline stage of one product is the growth stage for a different one.

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Marketing Myopia

"Marketing myopia" is a term which is used to describe the failure of management to recognize the scope of its business. This tends to occur when management focuses on the product and processes involved rather than on the customer. Organizational goals need to be broadly defined and focused on consumer needs. An example of marketing myopia is the railway industry with its failure to recognize that it was in the transportation industry and therefore was not aware of the trucking industry as a competitor. Koala Springs is one example of a company that has defined itself broadly (as serving the beverage industry rather than the bottled water industry) with accompanying success.

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Consumer Goods

Convenience Goods

Convenience goods are goods that a consumer wants to purchase frequently, quickly and often. They are often staple items such as bread, milk and gasoline. They are usually branded and are low priced. The purchase is made with little conscious deliberation and is often made through habit when supply is low. Convenience is the key word and the burden falls on the manufacturer or producer to make sure that the good is easily available since the consumer will not go out of his way to locate it.

Shopping Goods

Shopping goods are goods that a consumer makes comparisons on and is willing to forego consumption of for a period in order to evaluate product offerings. Shopping goods are generally more expensive than convenience goods and are not as widely available since consumers are more willing to spend the time necessary to locate these products. Examples of shopping goods are footwear, furniture and household appliances.

Specialty Goods

Specialty goods possess some unique characteristics that cause the consumer to prize that particular brand. The buyer is well informed and is unwilling to accept substitutes. Specialty goods are typically high priced and available in relatively few locations since consumers are willing to expend considerable energy in buying the product. Examples are specialty wines such as champagne, designer clothing and Jaguars.

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Product Timing Window

Another important factor influencing marketing opportunities is sometimes called the "product timing window". The "product timing window" concept is that there is a limited time period when the market has a particular need. General Motors is a current example of a company which failed to take advantage until the mature stage of the life cycle in the case of the 1980's mini-van market. Timing the product introduction to coincide with the market demand entails first anticipating these market needs, including when the need will exist and how big the market will be; evaluating the business resources; and developing or producing the right product to fill these needs. Manufacturers have to go through this process and the time frame for each introduction is long and the investment is large. In some cases, a producer can use what is known as "product line extension". This is when anew use or appeal is found for a product and it has the advantage of a less expensive marketing effort to promote and educate the buying public to the new product.

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Consumer Service Requirements

Management must be aware of who their consumers are before they can hope to address them. In order to market products effectively, it may be argued that all the participants in the marketing chain have needs which must be met. Specific needs which apply to the participants in the marketing chain are for:

  1. Consistency
  2. Quality
  3. Supply / Availability
  4. Communication
  5. Honesty

Consistency has been identified by buyers as a real need which is sometimes difficult to meet. This is where the infrastructure of the distribution system is extremely important. Buyers who are confronted by short loads, inconsistent quality and unpredictable pricing, soon find another supplier. At the very least, they will be much tougher in price negotiations than before.

Consistency of supply is as important as quality according to buyers and this is the responsibility of the producer as well as the other participants in the marketing chain. The producer needs to make sure that production technologies are adequate and appropriate and the other participants need to make sure the manufacturing, processing, storing and transportation methods are appropriate. Sales people are responsible for understanding what the supply conditions are and communicating this to the customer. At the same time, the sales people have a responsibility to the producer or processor to get the best possible price while offering the customer consistent supply.

Producer-customer relationships do not just happen, they are true relationships and need to be sustained throughout the year, not just during the sales visit. It is more enjoyable, cheaper and less stressful to periodically "chew the fat" and discuss the weather with existing customers compared to putting on a suit and making a presentation to an impassive audience of buyers, investors or other arms-length people. A casual visit generally yields much in terms of information exchange and good relations. The general rule is that it takes five times the money and energy to attract a new customer as it does to retain an old customer.

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Price

Price depends on a number of factors including: market demand for a particular product; supply of that product; competition and competitor's pricing strategies; and availability and price of substitutes.

A price-taker is one who is in a large market with many other sellers or one in a market in which another seller is dominant. Conversely, a price setter one producer who dominates the market. Opportunities to become a price-setter exist through targeting niche markets, differentiating product based on quality, creating and maintaining a brand standard to attract customer loyalty.

There are a number of factors which affect price which the producer can influence or even control. These include site selection, targeting production goals to specific quality standards, customer purchasing patterns, modifying or changing the distribution channel.

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Distribution

The distribution channel performs a valuable marketing function by moving products from the manufacturer to the end consumer. Market information can be obtained through the distribution channel and communicated back to the producers.

The distribution channel may be a choice of or combination of direct marketing, processor, marketing agent, broker, wholesaler, retailer. A company with adequate resources can elect to bypass some or all of the intermediaries but it must be cautioned that the potential increase in the price to the manufacturer prices may be offset by additional costs of distribution.

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Promotion

Promotion of a product informs, persuades and influences a consumer's purchasing decision. It targets a selected group of potential consumers. The promotion strategy may contain a number of elements including personal selling (e.g. in-store demonstrations), advertising, sales promotion, publicity and public relations. Communication between the marketing chain levels can facilitate faster market response to new labels and blends or improved supplier response to market changes. It is very important that management work to build a solid relationship with the other participants in the distribution channel in facilitating promotional strategies.

Promotion is an integral part of the marketing plan and it is important that management or their appointed sales agent have a cohesive, well-thought-out promotional strategy which addresses the market's and the supplier’s needs.

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Research & Information Sources

Market research fuels the successful marketing plan and is probably the most confusing and complex but important factor in determining a business's success. In today's economy, the customer drives the market. Gone are the days of Henry Ford and "You can have any colour you want, as long as it is black." Without knowing what the market wants or is willing to pay, there is little sense in producing a product. At the same time, those who can access timely and accurate market information stand poised to cash in on the opportunities available. The difficulty is knowing what is meaningful and accurate market information. There are no tried and true solutions to this problem but experienced market researchers will agree that the more numerous and reliable your sources, the more likely that you will receive valuable information.

In order to compile a successful marketing plan, it is necessary to obtain information on a vast number of market characteristics. The market information that management should be aware of include: who the markets are, what market structure and competition exists, what the markets are willing to pay, how big the markets are, what market needs are developing, market trends in lifestyle, purchasing habits, family sizes, the retail trends, economic downturns and upswings.

Information on these and related subjects is available through a number of sources. Industry salespeople and buyers can be invaluable sources but other business people, suppliers and industry associations are often just as valuable. Other sources include not only industry periodicals but also newspapers, news magazines and trade shows.

Managers should train themselves to make a quick scan of virtually every periodical they come in contact with to see if it contains anything relevant to their information needs. Market information is vital to the continued success of the business!

The following is a list of common and easily accessible information sources:

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Adjusting To Market Demand

Market demand is not static but changes and develops over time. Markets can become saturated and products can lose their appeal. Adjusting to market demand requires that a manager be aware of these changes and the operation have enough flexibility in its plans to adapt to the new conditions. The key is to anticipate and recognize these changes and develop strategies to deal with them as early as possible. It may not be possible to stimulate demand for a product which is losing its appeal but sometimes it can be re-packaged, differently processed or otherwise modified to suit the changing market. Warning signs that market demand is changing are usually directly related to your pocketbook. Examples are: increased difficulty selling a particular product; strong demand for a new product; lowering prices to generate more demand has a limited effect; raising prices to slow demand has limited effect.

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Target Markets


The first step in preparing the marketing plan is to identify your target market. That is, who will purchase your goods and services. It is vital to know as much as possible about your industry's markets in order to target your products and services to meet specific demands. Information on the types of products and services being consumed and the associated trends over the next 5 to 10 years are important factors in helping you identify opportunities and target market demands. Along with this, you will need to assess your businesses capacity to produce the quality and volume to meet your target markets.

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