Explain Marketing Principles.
Marketing is a management process which involves the transfer of goods and services from the manufacturers to the ultimate consumers through different intermediaries like whole seller, retailers, jobbers’ etc. This study is based on the STP concept of marketing and an initiative has been taken to analyze that how an organization is able to achieve success by implementing this concept. It also includes the marketing mix and market orientation and their role in marketing.
Creating awareness about product and services.
Build corporate image of the organization.
Create effective promotional strategies.
Follow a well developed distribution channel.
Attract consumers and persuade them.
Ensuring good quality of product and services.
In this study an organization from the service sector industry has been selected as they provide both products and services. The name of the selected organization is “Barclay’s Bank” (Barclays.co.uk, 2015). It is a very famous bank at the United Kingdom. The bank has two segments namely Global Retail and Commercial Banking (GRCB), and Investment Banking and Investment Management (IBIM). This organization provides convenience to the consumers and attracts them by giving quality service.
The old concept of marketing has changed over times. Now the marketing activities are more focused on the customer satisfaction. So the orientation of activities is not bounded into a single area. Marketing orientation consists of production orientation, product orientation, sales orientation, market orientation and customer orientation.
As this company is mainly concerned with the financial services so here the production orientation is given on the valuable services. The cost associated with this orientation program is the cost of training employees, the cost of maintaining several branches etc. the benefit derived from the orientation is that the bank can able to provide services at a low cost so they have a huge customer base.
The branches of the bank are strategically located which is easily accessible by the customers. They have both options i.e. consumers can get their product from online or through direct selling. The cost for this orientation programme is website maintenance cost and cost of direct selling program. The benefit derived from this is the faster service and it also leads to the environmental safety as it reduces the paperwork.
To penetrate the local market Barclay’s introduces new products at a lower cost. They also provide services at a discounted price. Barclay’s organizes several customer’s social events like football games, customer dinners etc. They handle customer service very promptly. The cost required for this is the cost of making marketing strategies, cost of organizing events etc. the benefit derived from this is obviously the expansion of the business and greater revenue generation.
Product- Barclay’s bank adopts their product strategies as per the consumer’s demand. Almost regularly they are launching new products. They have established new ATM centers and provide guarantee of their services and products.
Price – Barclay’s pricing is applied with relation to its competitor’s prices in order to win the market share. They have prices specific to different market segments. They have segregated their market on the basis of age, region, income and offer different products to different market segment.
Place- All the branches of the bank are located centrally. They have efficient and adequate ATM networks which serve the cash need of the consumers. Barclays open co brand activities with different supermarkets to capture new market share.
Promotion- They uses different communication medium like T.V, Radio and Newspaper to reach the customers. They use sales promotion techniques for increase the sale of several products like credit cards, personal loans etc. Each of its branches has product catalogues for all the products offered. The company sometimes outsources advertisement and marketing services as a part of their promotional strategies (Goi, 2009).
The three additional P’s for service marketing is people, process and physical environment which are discussed in brief as follows (Principles of service MARKETING and management., 2014); (Services Marketing, 7/e, 2015)
People- people strategies of a company are nothing but its HR policies. As per the customer opinion Barclay’s staffs are highly professional and the company invests more towards their motivation and makes them happy. They are giving good rewards to their employees and have implemented the decentralized system where the middle and lower level employees can participate in the decision making.
Process- Barclay’s process strategies include maintaining all the confidential data about the consumers. They have extended their banking hours. They provide quality service on time. They have introduced some automated service like cheque printing facilities.
Physical environment-The physical environment strategies include user friendly product catalogues for handicapped customers. Queues in the branches are well managed by the staffs. The ambiance and furnishing of their branches are very modern compared to their competitors so that their clients can enjoy a comfortable transaction experience
Market segmentation means segregating the whole market into small parts on the basis of different criteria. Criteria can be based on demographic, psychographic, geographic etc. Demographic segmentation is related with the size and nature of the population for example some products are suitable for children like chocolates, toys etc. for that type of product the segmentation will be based on the age of the population.
Psychographic segmentation is based on the psychology of the consumers. For example the recent evolution of mobile industry is the introduction of I phones. Now this type of products is mostly preferred by the young stars and office goers but old aged people generally feel uncomfortable to use these products. This is mainly due to the psychology of the consumers. So any company when they are giving advertisement regarding this type of products will be more focused on young consumers. Psychographic division can also be based on the status of the consumers. The psychology of a person belonging to the high income group is different from the psychology of the lower income group people.
Geographic segmentation as the name suggests implies the segmentation of the market on the basis of area. Here more concentration is given on the area wise performance and area wise target.
Here we can take the example of Samsung which have done their segmentation in the following way (Samsung.com, 2015)-
Geographic- Samsung sells their products especially smart phones into 61 different countries all over the world.
Demographic- Target mainly middle class of high class income levels and age level is between 19-29 years.
Psychographic- teenagers or individuals belonging to the mid 30 group who like new technologies and innovated product features.
Usage rate segmentation- Samsung products are highly convenient and there are a large percentage of heavy users who uses Samsung products.
When a firm identified its market segments it wants to target then it is essential for the firm to develop some targeting strategies for those segments. The strategies can be of different in nature.
Here we again take the example of Samsung and their targeting strategies-
They have customer focused design which they developed by analyzing the local culture, industry trend and lifestyle of the people.
They have adopted winning targeting strategies where Technological leadership and customer focus design together makes an innovative change. Samsung is the first company which produces World First Full HD LED TV.
They have some premium brands seeker target group who belonging to a very high income category.
Positioning means to create a positive image about the company in such a way so that it can survive and able to get a market place in the competitive environment. Positioning strategies are the most important marketing strategy because the success or failure of a business is depends on the basis of this effective strategy. For example Daewoo in the UK positioned them successfully as family value model. Volkswagen had a negative image before it purchased Skoda and it was known as the cheap car in UK, but the important point is that they repositioned their brand image and now known as good and each and every year they wins car of the year awards.
For effective positioning of the brand the first thing that a marketing manager needs to do is the marketing research. This is important because the consumers’ world is very dynamic. Their taste and preferences are always changing so it is the duty of the firms to know what the need of the customer is, so that they can able to serve their needs. As per the responses collected from the consumers the company needs to add some product features or can eliminate some features if it is not necessary. By the new positioning strategy the target market can be changed. For example initially when the smart phones were introduced it was too costly and only affordable to the higher income groups, but at the passage of time various companies are adding new features and the price is become very cheap so that it can be easily affordable by all segments. In this way their target market is getting changed.
The consumer buying behavior is a complex decision making process and several internal and external factors have some effects on these decisions. Consumers generally does not spent too much time in thinking if the product is having very low value but when the purchase decision involves a huge investment then it is a matter of concern for the customers (Samli, 2013). The consumer buying behavior involved a particular process which is followed by each and every individual. This process is as follows-
As I have already stated that buying behavior is depend on the internal and external factors. This can affect the marketing strategy of a business. It can help the business to formulate a better marketing strategy by creating marketing mix of different types of ads and promotional techniques. Consumer behavior can affect the demand and supply of the products that is prevailing in the market .sometimes we are get some programmed response from the consumers for certain types of products. Generally these type of products are not too expensive and consumers may bought it frequently. For example a specific brand of soft drinks. These types of products do not require extensive research. Another type of buying behavior affects the marketing activities which are known as the complex buying behavior. These are for the highly expensive products or services and so the consumers can make a detail research before purchasing the product. Beside these there are also some internal factors that affect the activities like personal, psychological and social factor.
There is some difference between the consumer buying behavior and business buying behavior.
In consumer buying behavior the buying is made for the consumption purpose but in business buying process it is done for resell purpose.
Consumer buying processes involve one or two consumers but businesses buying process include several intermediaries.
Consumer buying behavior is influenced by basic needs and psychological factors where as business buying behavior is influenced by the environmental and organizational factors.
Here we can use the example of HSBC which belongs to the financial sector. They provide additional banking hours, customer orientation programmes, ensure less error, service recovery and understand the need of their consumers. For implementing all these they have also initiated some training programs for their employees so that they can provide good quality service to the clients.
The two potential segments serving by an organization should be B2B and B2C organizations. In B2B an organization passes its product and services to the intermediaries who in turn sell the products to the consumers. On the other hand in B2C the company sells its products or services ultimately to the consumers. So for both these segments there are different strategies for creating marketing mix (Constantinides, 2006).
Business to consumer marketing mix should be done through-
Political
At the present scenario the changing global environment is challenge as well as opportunity for Sainsbury’s. As the numbers of competitors are increasing so the company is forced to maintain best quality for its products and services.
Sainsbury is one of the top four retailers in UK, but an investigation was going on regarding the price fixing of the company which may create a negative impression in the minds of the consumers. The corporate tax rate is reduced by the UK government from 30% to 28% which help the company because they can now able to save a huge amount of money.
Economical
Due to the food crisis in the global market both the production price and the marketing price of the company has increased. As a result of which consumers decreases their spend on luxury products and the supply chain of the company is getting affected.
Social
In today’s world consumers are more health conscious and there is a trend of eating fresh foods. So Sainsbury’s introduce new recipes which are easy to cook and also healthy.
Technological
The spent on internet purchase is increased globally as there is a rapid increase in the ecommerce industry. So Sainsbury’s must take the advantage of the growing market.
Environmental
The ethical issues are now growing to a large extent. With these issues companies has to sell organic foods and has to treat animals in a good way. So for maintaining these compliances Sainsbury’s is now recently engaged in green activities.
As per the law on food and drinks Sainsbury’s has to maintain packaging and labeling accordingly. They have engaged in banking business also so they have to comply with the risk management policies.
Micro environment
Porter’s five force model
Competition- Tesco, Morrison’s and Asda are the three big competitors of the Sainsbury’s. It has a market share of 14.9% in 2007 which is now increasing but still it is lagging behind the market leader TESCO.
Barriers for entry- Barriers to entry are very high in the food retail market because they have to maintain different factors. In UK retail is in the advance stage so there is less chance for new entrants to enter into the market.
Threat from substitute- This threat is less in food retail as people use these products as their necessities. The threat for substitute in Sainsbury’s is basically an internal industry threat where the business of one super market is suppressed by others.
Bargaining power- Here the consumer’s bargaining powers are more as the retailers sell same types of the product. It is only the loyalty factor of the consumers which give an impact on the bargaining power.
Supplier power- In food retail sector there is always a threat of supplier’s power. As in the supermarkets several big brands are available like P&G, Cadbury who can maintain their own chain. So if the retail stores are unable to sell their own products there will always be a threat.
International market is always differs from the domestic market. The main reason behind this is in the domestic market the culture and the taste and preference of the consumers are almost same but when a company dealing with the international market then it has to be accustomed with different cultures of different countries. International marketing is more complex than the domestic marketing. There are some influences of economical, legal and environmental factors also. Sainsbury is now operating almost 12 countries in the world. So they need to adopt different marketing strategies like implementation of wireless networking, compliances with the laws, rules and regulations of the respective governments, understanding of domestic cultures etc. in domestic market also the company has to give focus on these factors but the difference is that in domestic market all these factors are familiar (J-sainsbury.co.uk, 2015).
Conclusion
From the above discussion it can be concluded that for establishing a new business or for maintaining the existing business it is essential to build up an effective marketing strategy. In the given examples above it is already shown how different companies formulating new strategies and by implementing those they are achieving success. So the promotional and marketing strategies are like the heart of the organization without which it does not exist.
References
Barclays.co.uk, (2015). Barclays | Personal Banking. [online] Available at: https://www.barclays.co.uk [Accessed 10 Jul. 2015].
Constantinides, E. (2006). The MARKETING Mix Revisited: Towards the 21st Century MARKETING. Journal of Marketing Management, 22(3-4), pp.407-438.
Goi, C. (2009). A Review of Marketing Mix: 4Ps or More?. IJMS, 1(1).
J-sainsbury.co.uk, (2015). J Sainsbury plc / About us. [online] Available at: https://www.j-sainsbury.co.uk/about-us/ [Accessed 10 Jul. 2015].
Mooradian, T., Matzler, K. and Ring, L. (2012). Strategic marketing. Boston, MA: Pearson Prentice Hall.
Pride, W. and Ferrell, O. (2010). Marketing. Australia: South Western Cengage Learning.
Principles of service MARKETING and management. (2014).
Samli, A. (2013). International consumer behavior in the 21st Century. New York, NY: Springer.
Samsung.com, (2015). SAMSUNG UK – Home Electronics | Home Appliances | Mobile | Computing. [online] Available at: https://www.samsung.com/uk/home [Accessed 10 Jul. 2015].
Services Marketing, 7/e. (2015). .
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