Marketing Process

THE MARKETING PROCESS

Under the marketing concepts, the firm must find ways to discover unfulfilled customer needs & bring to market products that satisfy those needs. The process of doing so can be modeled in a sequence of steps; the situation is analyzed to identify opportunities, the strategy is formulated for a value proposition, tactical decisions are made, the plan is implemented & the results are monitored.


The Marketing Process

1. Situational Analysis
2. Marketing Strategy
3. Marketing Mix Decisions
4. Implementation & control

1. Situational Analysis:

A through analysis of the situation in which the firm finds it serves as the basis for identifying opportunities to satisfy unfulfilled customer needs. In addition to identifying customer needs, the firm must understand its own capabilities & the environment in which it is operating. The situational analysis thus can be viewed in terms an analysis of the external environment & an internal analysis of firm itself. The external environment can be described in terms of macro-environmental factors that broadly affect many firms, & macro –environmental factors closely related to the specific situation of the firm. The situation analysis should include past , present & future aspects. It should include a history outlining how the situation evolved to its present state , & an analysis of the trends in order to forecast where it is going. Good forecasting can reduce the chance of spending a year bringing a product to market only to find that the need no longer exists. If the situation analysis reveals the gap between what customer want &what is offered to them , then there may be opportunities to introduce the products to better satisfy those customers. Hence the situation analysis should yield a summary of problems & opportunities. From this ,the firm can match its capabilities with the opportunities in order to satisfy customer needs better than the competitors. There several framework that can be used to add structure to situation analysis: 5 C Analysis – company, customers, competitors collaborators, climate. PEST analysis – for macro-environmental, societal, political, economical and technological factors. A PEST analysis can be used as the climate portion of the 5C analysis.
SWOT Analysis -strengths, weakness, opportunities & threats – for the internal & external situation. A SWOT analysis can be used to condense the situation analysis in to a listing of the most relevant problems & opportunities & to asses how well the firm is equipped to deal with them.


2. Marketing Strategy

Once the best opportunity to satisfy unfulfilled customer need is identified, a strategic plan for perusing the opportunity can be developed. Market research will provide specific market information that will permit the firm to select the target market segment& optimally position the offering within that segment. The result is a value proposition to the target market .The marketing strategy then involves -

• Segmentation,
• Targeting (target market selection)
• Positioning the product within the target market
• Value proposition to the target market.

3. Marketing Mix Decisions

Detailed tactical decisions then are made for the controllable parameters of marketing mix. The action items includes -

• Product development- specifying , designing & producing the first units of product.
• Pricing Decisions
• Distribution contracts
• Promotional campaign development

4. Implementation & control

At this point in the process, the marketing plan has been developed & the product has been launched. Given that few environments are static, the result the marketing effort should be monitored closely.
As the market changes the marketing mix can be adjusted to accommodate the changes. Often small changes in consumer wants can be addressed by changing the advertising message.
As the change become more significant, a product design or an entirely new product may be needed. The marketing process does not end with implementation – continual monitoring & adaptation is needed to fulfill customer needs consistently over the long time.

Situational Analysis

In order to profitably satisfy customer needs , the firm must understand its external & internal situation , including customer , the market environment ,& the firm own capabilities . Further more it needs to forecast trends in the dynamic environment in which it operates. A useful framework for performing situation analysis is 5C analysis. The 5C analysis is an environmental scan on five key areas applicable to marketing decisions. It covers the internal, micro-environmental, macro-environmental situation. The 5C analysis is an extension of the 3C analysis (company, customers and competitors), to which some marketers add 4th C of collaborators The further addition of a macro-environmental analysis results in a 5Canalysis, some aspect of which are outlined below –

• Company
• Product line
• Image in the market
• Technology & experience
• Culture
• Goals

Collaborators-

• Distributors
• Suppliers
• Alliance

Customers-

• Market size & growth
• Market segment
• Benefits that customer is seeking , tangible & intangible
• Motivation behind purchase, value drivers, benefits v/s costs
• Decision maker or decision making unit
• Retail channel –where does the consumer actually purchase he product ?
• Consumer information sources- where does the consumer obtain information about the product ?
• Buying process-impulse or careful comparison.
• Frequency of purchase, seasonal factors
• Quantity purchased at a time
• Trends – how consumer needs & preference change over time.

Competitors-

• Actual or potential
• Direct or indirect
• Products
• Positioning
• Market share
• Strengths &weakness of competitors

Climate (or context)- The climate or micro environmental factors are -

• Political or regulatory environment – government policies & regulations that affect the market.
• Economic environment –business cycle,inflation rate & other macroeconomic issues .
• Social / cultural environment- society’s trends & fashions
• Technological environment – new knowledge that makes possible new ways of satisfying needs; the impact of technology on the demand for existing products.
• The analysis of these four external climate factors often is referred as PEST analysis.

Information Sources- Customer & competitor’s information specifically oriented towards marketing decisions can be found in market research reports, which provide a market analysis for a particular industry. For foreign markets, country reports can be used as a general information source for micro- environment . By combining the regional & market analysis with knowledge of firm’s own capabilities & partnerships, the firm can identify & select the more favorable opportunities to provide value to the customers. Target Market Selection segmentation. Target marketing contrasts with mass marketing, which offers a single product to the entire market.
Two important factors to consider when selecting a target market segment are the attractiveness of the segment & the fit between the segment & the firm’s objectives , resources & capabilities


Attractiveness of a market segment

The following are some examples of aspects that should be considered when evaluating the attractiveness of a market segment:

• Size of the segment (number of customers and / or number of units)
• Growth rate of the segment.
• Competition in the segment.
• Brand loyalty of existing customers in the segment.
• Attainable market share given promotional budget and competitor’s expenditure.
• Required market share to break even.
• Sales potential for the firm in the segment.
• Expected profit margins in the segment.

Market research & analysis is instrumental in obtaining this information. For example , buyer intentions, sales force estimates, test marketing& statistical demand analysis are useful in determining the sales potential. The impact of applicable micro – environment & macro –environmental variables on the market segments should be considered.

Note that larger segments are not necessarily the most profitable to target since they likely will have more competition. It may be more profitable to serve one or more smaller segments that have little competition. On the other hand, if the firm develops a competitive advantage, for example via patent protection, it may find it profitable to peruse larger market segment


Suitability of Market Segments to the firm

Market segments also should be evaluated according to how they fit the firm’s objectives, resources & capabilities .Some aspects includes -

• Whether the firm can offer superior value to the customer in the segment.
• The impact of the serving the segment on the firm’s image.
• Access to the distribution channels required to serve the segments.
• The firm’s resources v/s capital investments required to serve the segment.
• The better the firms fit to a market segment , & the more attractive the market segments, the greater the profitable potential to the firm.

Target Market Strategies –

There are several different target market strategies that may be followed . Targeting strategies usually can be categorized as one of the following-

• Single segment strategy- also known as concentrated strategy. One market segment (not the entire market) is served with one marketing mix. A single- segment approach often is strategy of choice for smaller companies with limited resources.

• Selective specialization- this is an multi segment strategy also known as differentiated strategy. Different marketing mixes are offered to different segments .The product may or may be different – in many cases only the promotional message or distribution channels vary.

• Product specialization – the firm specializes in a particular product & tailors it to different market segments.

• Market specialization – the firm specializes in serving a particular market segment & offers that segment an array of different products.

• Full market coverage – the firm attempts to serve the entire market. This coverage can be achieved by means of either market strategy a single undifferentiated marketing mix is offered to the entire market, or by a differentiated strategy in which a separate marketing mix is offered to each segment.

The following diagrams show the examples of the five market selection patterns given three market segments S1, S2, & S3 & the three different products P1, P2&P3.







A firm that is seeking to enter a market & grow should first target the most attractive segments that match its capabilities. Once it gains a foothold, it can expand by perusing a product specialization strategy, tailoring the product for different segments, or by a market specialization strategy & offering new products to its existing market segments.
Another strategy whose use is increasing, in which the marketing mix is tailored on an individual basis. While in the past impractical, individual marketing is becoming more viable thanks to advances in technology.
The Marketing Mix – Marketing decisions generally fall into the following four controllable categories

• Product
• Price
• Place (distribution)
• Promotions

The term marketing mix became popular after Neil Borden published his article ‘the concepts of the marketing mix’ The ingredients in Borden’s marketing mix included product planning, pricing, branding, distribution channels, personal selling, advertising, promotions, packaging, displays, serving, physical handling & fact finding & analysis. E. Jerome McCarthy later grouped these ingredients into the four categories that today are known as 4P’s of marketing.

• Product
• Price
• Place
• Promotions

These four P’s are parameters that the marketing manager can control, subject to internal & external constraints of the marketing environment. The goal is to make decisions that center the four 4P’s on the customers in the target market in order to create perceived value & generate a positive response


1. Product Decisions

The term product refers to tangible, physical product, as well as services. Here are some examples of the product decisions to be made-

• Brand name
• Function ability
• Styling
• Quality
• Safety
• Packaging
• Repairs & support
• Warranty
• Accessories & services

2. Price Decisions

Some examples of pricing decisions to be made are –

• Pricing strategy( skim, penetration, etc.)
• Suggested retail price
• Volume discounts & whole price
• Cash & early payments discounts
• Seasonal pricing
• Bundling
• Price flexibility
• Price discrimination

3. Distribution ( place) decisions –

Distribution is about getting the products to the customers. Some examples of distribution decisions include-

• Distribution channels
• Market coverage ( inclusive ,selective, or exclusive distribution)
• Specific channel
• Inventory management
• Warehousing
• Distribution center
• Order processing
• Transportation
• Reverse logistics

4. Promotions Decisions –

In the context of marketing mix , promotions represents the various aspects of marketing communications , that is , the communication of information about the product with the goal of generating a positive customer response . Marketing communications decisions includes

• Promotional strategy (push or pull )
• Advertising
• Personal selling & sales force
• Sales promotions
• Public relations & publicity
• Marketing communications budget

Limitations of the Marketing Mix Frameworks

The marketing mix framework was particularly useful in early days of the marketing concepts when physical product represented a larger portion of the economy.

Today with marketing more integrated into organization& with a wider variety of products & markets some authors have attempted to extend its usefulness by proposing 5th P , such as packaging, people, ,process etc,.

Today marketing mix mostly commonly remains based on the 4P’s. Despite its limitations & because of its simplicity, the use of this framework remains strong & many marketing text books have been organized around it.