Introduction to Principles of Marketing
Different organizations follow various principles of marketing that can help them to survive in the competitive market. The present report carries out a study of WEDO Ltd. which is the fastest growing online retailer in UK (Gundlach and Wilkie, 2009). It is currently covering six areas under UK. It is a online retail store offering customers with different types of facilities, products and services. This report is going to study the different definitions and elements of marketing and their utility in process.
It discusses various benefits and costs that are associated with a customer orientation approach of the small firm. This report is also emphasizing on the various macro and micro environmental factors that are likely to affect the organization in making decisions related to marketing including PESTLE analysis too (Graa and Dani-elKebir, 2011). Further, it makes out segmentation criteria adopted by WEDO for introducing a new product. Final part of the report carries out an analysis of the buyer’s behaviour and activities that are likely to impact marketing decisions of the company.
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TASK A: Concept and Process of Marketing
1.1 & 1.2 Elements of a Marketing Concept
According to the Charted Institute of Marketing (CIM), definition of marketing can be explained as a management process that involves identifying customers and their needs, foreseeing their demands and satisfying them along with achieving profitability at the same time (Marketing and the 7Ps, 2009). Similarly the American Marketing Association (AMA) defined marketing as an organizational process that is meant for creating value for its customers and thus communicate and deliver them that would benefit the organizations and its related stakeholders by better customer relationships management (Henley, Raffin and Caemmerer, 2011). There are some other famous authors too that contributed in developing definition of marketing. Philip Kotler has termed marketing as a social and managerial process that involves satisfying individuals’ needs and wants by offering and creating services and products that includes exchange of values (Kotler, 2012). Another author named Peter Drucker explained his views upon marketing stating that marketing involves understanding the needs of customers and satisfying them by the product or service that is suitable for him. All these definitions makes concept of marketing clear stating the fact that involves focusing on customer satisfaction and profits in exchange of offering some product or services.
The elements of a marketing concept can be the factors that need to be considered in any type of marketing decision. These involve:
Customer orientation involves that marketing must firstly be focussed on customers and their needs and wants (Ferrell and Hartline, 2011). Every product and service must have their first focus on the customers, their expectations, needs and demands. Company must aims at fulfilling wants and demands of its customers.
Market driven approach: Marketing must include an orientation and approach towards the market and its conditions that includes competition also. There are many competitors for WEDO such as Younger than Yesterday Ltd, Held4u Ltd, etc
Value based: Marketing must be based on achieving some value in exchange of satisfying customer’s demands. Company expect raised profits in return of selling their products and services. Basic concept of marketing stands upon exchange of value (Bradley, 2002).
Integrated focus: The focus needs to be on customers’ satisfaction as well as increasing profitability of company. While company needs to develop such products that are aimed at satisfying customer’s expectations, they must also in return get revenues out of the selling being done. Same is with WEDO that focuses on customers as well as profits as integrated approach of its marketing.
Orientation towards goal: Company must have a focus on achievement of goals in taking its marketing decisions. Every company has an identified mission and vision and so it needs to keep a constant eye on them while marketing (Dibb andSimkin, 2013).
There are numerous costs and benefits associated with the company in its marketing orientation approach. WEDO Ltd. has always been focussed on developing products and services that the customers expect which are based on their demands and not on what company thinks as profitable. Benefits of this approach are:
Increased customer satisfaction: As company is focussed towards customers, their needs and demands, they are highly successful in achieving their satisfaction.
Increased levels of profits: As customers are criteria of achieving goals, so more growth and market share can be gained by focussing on them (Leonidou and et. al., 2010). This also enables the company in creating larger profits.
Enhanced competition: This is best approach for marketing and could help WEDO in achieving an improved level of competitive advantage for the company.
Customer loyalty: As WEDO is aimed at achieving customer’s expectations so it is therefore easy to retain and gain more customers in market and at the same time achieve loyal customers that would be permanent as their needs and demands are being focused by the company (Buckley, 2002).
There are some costs also that are associated with WEDO in customer oriented approach:
Increasing expectations: As company always focus on their loyal customers, gradually the demands and expectations of those customers tends to increase up to a certain level.
Training and development needs: In order to carry out this orientation approach, there is a requirement of training and development of employees who need to understand this approach (Havaldar, 2010).
Funds to fulfil requirements of skills and technology: For WEDO to meet customer’s changing wants and demands, and moving with the latest trends and technology, there is requirement of finance and funds that can help in developing latest technologies and trends of the market.
TASK B: Concepts of Segmenting Targeting and Positioning
2.1: Macro and Micro environmental factors
Micro and macro environments are used to understand behaviour of company with respect to market conditions. The Macro environment consists of several factors that are not under control. These help in the analysis of factors that provide information of past as well as foresee future possible conditions (Weinstein, 2013). WEDO can relate these factors as to:
Political: The laws and regulations of UK as well as European Union have a significant impact on other retail stores. One of them may be Food Standards Act 1999 that was based on maintaining the people’s health with the supply chain and production of food. But there is no so much impact because it is a small size firm and still finding its place in the UK market.
Economical: The economy of whole world is constantly changing that makes it difficult to estimate future possibilities. The recession in UK largely affects all industry including retail industry and WEDO too (Svahn and Westerlund, 2009).
Social: The customers and society as a whole is focus of WEDO towards the product development. It is therefore necessary to determine the changing demands and behaviours of customers, faith in brand, education etc that may affect customers and their behaviour towards this small size company.
Technological: Company needs to keep itself updated with these factors. It can adopt facilities of promotions and discounts to promote its products and facilitating change to its customers (Perry and Kyriakaki, 2014). It is one of the fastest growing online retailer in the country has also been involved in online selling that has made them upgraded all the time and meeting customers’ expectations.
The micro environmental factors are those that can be controlled by efforts of company. These include analyzing various stakeholders and competitors of the company that can directly or indirectly affect the company. These include:
Customers: Due to increased quality consciousness of customers in online trading, they have been demanding knowledge of the source from where these products are manufactured. This has made online retail stores to care about their demands and requirements (Hassan and Craft, 2005).
Suppliers: They expect WEDO to follow trading standards and pay them fair wages. They are also required to maintain better relationship with them for long term business.
Employees: Every employee must feel respected and their interests must be valued as they have to build a successful carrier with the company.
Shareholders: Every shareholder expects a good return of profit share from its company and so does those of WEDO (Wedel and Kamakura, 2000). The company also utilizes potential of its shareholders in making them invest in the company that would in turn help it to fulfil its objectives.
Corporate culture and structure: The culture of this small firm is sales driven and that follows an formal organizational structure (Kardes, Cronley and Cline, 2010). Presently they have to work harder to come in the parallel positions with the big retailing giants such as Tesco, Sainsbury etc.
The porter’s five force model can be applied on the company stating effect of competitive environment on it.
- Bargaining power of suppliers: As the business is small hence they have lower buying power so suppliers have higher bargaining power.
- Bargaining power of buyers: As there are more online retail stores in the industry so the buyer shave a comparatively higher bargaining power as they are easy to switch to other alternative (Lantos, 2010).
- Threat of substitutes: As there are a number of other stores which can provide almost same quality product in lower prices, so again threat of substitutes is low.
- Threat of new entrants: As the policies and regulations restrict easy entry of a new retail chain due to permissions and licensing etc., so threat to new entry is lower.
- Extent of competitor rivalry: Competitor rivalry is very high in the retail sector and particularly for WEDO as they are still in their developing stage (Foxall, 2002).
TASK C Targeting the Brand
2.2 & 2.3: Segmentation criteria to be used
The steps of segmentation of the market are:
- Defining the market includes defining the prospects for product for which company is planning and to identify its requirements according to the market conditions.
- Identify and create market segments will involve identifying to which customers the product will best suit.
- Analyze each segment involves researching the segmented market, its customers and their expectations. This involves understanding the customer’s attitude, values, beliefs, culture etc (Aljukhadar and Senecal, 2011).
- Evaluate market opportunities would include evaluating the company’s market opportunities that are suitable for achieving its goals and objectives.
- Select target segments- After proper analysing, research and evaluation, it needs to identify target segments upon which WEDO need to apply its marketing strategies.
Further there are different bases of segmentation that the company can use in order to segment and target their market. These are:
Geographical: These are based on region and locality of the customers. For example people living in south may have different tastes and preferences as compared to that of north (Zhuang and et. al., 2006).
Demographic: These are one of the most important criteria of defining segments that involves analysing age, gender, income, family size, race and religion etc.
Socio graphic: These factors include social groups, references and culture that influence buying behaviour and the social class.
Behavioural: These include identifying the rate of usage of product, status of customers that is potential user, first time user etc, and understanding buying motives of the customers.
The company can plan for introducing a clothing brand for its customers. The segmentation criteria for the clothing would be Geographical and demographical that would include most of parts of London and UK and cover different age groups young age and older age people (Ferrell and Hartline, 2011). Also it would define criteria for its clothing sector on basis of geographic and behavioural that again focuses on mainly the UK market and considers it in areas and people according to usage.
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For targeting the clothing brand, there are different approaches like differentiated, undifferentiated and focus target marketing strategy. The Company must use Differentiated targeting that involves targeting each segment designed to meets its own customer demands and requirements. By developing products that are more customers oriented the company is more likely to achieve better satisfaction among the customers (Ingram, 2014). For introducing this clothing brand the company must focus on its customer’s expectations and tastes, by developing a fashion or trend for young as well old age people that is suitable to them. Also by this strategy it can target and analyze specific and potential customers that would help it in earning profits.
TASK D Business Buying Behaviour
2.4 & 2.5: How does buyer behaviour affects marketing activities
According to CIM, the buyer behaviour can be understood as a motive that makes the consumers to buy a particular product or services. It is the process of understanding consumer’s nature and ways that he uses to select products and services to satisfy his needs. It is therefore necessary to understand their behaviour in order to make out what type of product can be developed (Rhodes, 2011). There are different behaviours exhibited by the business and customer as buyers. Understanding Business Buying behaviour (B2B):
Identifying a need involves reviewing the advertisements for buying products.
Developing product specification: Business in this need to specify its requirements by referring to numerous sources like press releases, exhibitions, industrial seminars etc.
Searching products and suppliers: Now when the business is clear with its product demand it needs to search appropriate products and suppliers. It can refer to exhibitions too and require determining efficient pricing decisions also.
Evaluating the products and suppliers: Here WEDO would have an opportunity to demonstrate its products to existing customers, and visit various plants etc for its promotions (Friesner, 2014).
Ready to place an order: Here business will move for contacting the supplier personally to finalise the deal.
Evaluating the product and supplier performance: This buying of the business is highly influential as it may affect whole organization, so business requires more assurance of the reliability of product (Hassan and Craft, 2005).
Continuous purchase: If product quality suits the business consumers, they must keep on continuous buying relationship with supplier.
Understanding Consumer Buying behaviour:
Need identification by customer: Customer might be influenced by a reference group or a third person using a product.
Look around for information: When customer is interested in buying a product, he is also more interested in knowing about it and getting its more and more information. At this time, WEDO does can get involved in advertising its products so as to make consumers aware about products (Graa and Dani-elKebir, 2011).
Checking out substitutes and other suppliers: When the customers get a choice he involves in evaluating the various available alternatives and choices by factors like prices, promotions, quality and availability.
Purchasing decision: Here this firm can involve in promotions and convince the customer in purchasing its products.
Use of product: After selling the product to customer and making him feel that his decision was right, company needs to offer best after sales customer service.
This model clearly explains the behaviour of a customer towards purchasing a product. It explains that there is a black box in customer’s mind that is responsible for making purchasing decision. The Four Ps of marketing and other factors like Economic, political, social and technological factors greatly influence buyer’s mind to purchase a product (Bradley, 2002). This model is based on interaction of stimuli, characteristics of customer, his decision process and responses. It is relevant with the theory of Behaviourism that is focussed on relation with the stimuli and response of the customers. The different companies therefore determine these behaviours by this model and plan marketing mix accordingly. Similarly other social factors help in determining economical, political and cultural circumstances.
Buyer’s response can be considered as a process of rational decision making in which consumer deeply analyzes the various factors of a product by searching for its information. It involves consumer to develop a perception about a particular product and take purchasing decision.
Considering the black box or stimulus response model, there are certain factors and behaviours that have been identified that buyer generate and that may influence the marketing activities (Weinstein, 2013). It consists of numerous internal and external factors that make WEDO to develop its policies and strategies accordingly in order to promote their product and to sustain its own market position. These factors include:
Routine response: This is related to the response or behaviour customers show for particular product. Their perception about product that makes them to buy it.
Marketing mix: Small firm needs to clearly define marketing mix for the clothing that should suit the demands of the customers, i.e. affordable price, better quality product, availability at places where there is demand and promoting it effectively to create its awareness.
Decision making: Before buying the product the consumer undergoes different reviews and results of it in order to finalise the decision of buying it.
Internal factors like personal, psychological and social: There may be some personal experiences or perceptions of an individual that may affect his decision to purchase the new clothing brand introduced by the WEDO (Riley, 2012).
Culture and life style: The culture, status and life style of people may affect their perception about product and buying decision.
Social and reference groups: There are certain reference groups and people that help in identifying products specifications and that may influence the decision of buying the product (Gundlach and Wilkie, 2009).
The undertaken report is based on studying WEDO and their marketing elements. This involves understanding various factors macro and micro environmental factors that have influenced the company’s marketing strategy. This report carries out a brief study of the various steps involved in segmentation and criteria involved (Buckley, 2002). In this report company focuses on introducing an new clothing brand in their online selling and determine the various segmentation and targeting strategy used for that. They can add clothing to their range of products successfully but through focussing on many critical factors such as existence, stability, competition etc. Still it is a small size firm and its new product will require lot of promotion and marketing to gain the position in the market.
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