Summary MNM1503 Notes. VERIFIED AND LATEST.

MNM1503 NOTES CHAPTER 1 INTRODUCTION TO MARKETING OVERVIEW OF MARKETING When one talks about promotion, many people assume that it is all about advertising. However, marketing includes market research, targeting, sales promotion, personal selling, social media and broadcast, customer relationship management, public relations, publicity, sponsorship, networking and direct marketing. Marketing has to match the right message to the right person. Thus, marketing is used by organisations to create value. Companies have to ensure that there is alignment between the company’s offering and the value for which the consumers pay a price. In other words, the company must give the consumer value for money. This is where the concept of exchange comes in – the consumers need a product or service with good value, and must be willing to spend money in exchange for receiving the desired product/service. It is crucial that to understand that marketing is one of the main functions of a business, and companies need the marketing function to ensure that the products and/or services produced reach the end-consumer. Marketing comprises four key elements: price, promotion, place and product. Marketing attracts consumers, designs desirable experiences for consumers, creates an offering aimed at satisfying the needs and wants of consumers, ensures that the products produced by the company reach consumers, assists companies in selling their products and maximising their profitability, and so on. “Marketing is a process where an organisation, in its drive to meet its organisational goals, focusses on meeting customers’ needs and wants, by means of offering the right product, at the right price, at the right place, and by using the right marketing communication channels and which, in this process, strives to establish relationships with customers and to develop and grow these relationships with relevant stakeholders in an ever-changing environment”. • Advertising. In an organisation, advertising involves designing written, verbal or digital messages to reach the target market. The aim of advertising is to arouse consumer interest through the selected medium and stimulate the target market to purchase the products and services of the company. The advertising department is responsible for branding; radio and television, written media, word of mouth and internet advertisements; and all other advertisements desired by the organisation. • Market research. This refers to an ongoing investigation into the needs/wants of targeted prospective and current consumers. The role of market research is to enable the organisation to investigate changing consumer demands and inform the organisation accordingly in order to produce product or render services that are relevant to the consumer. This department also informs the organisation about the fierce and changing competition in the market. • Product management. After the market research has been conducted, this department ensures that the right product is produced to suit consumer needs. It is the responsibility of every business to ensure that the right product of the right value, quality and standard is produced in an attempt to satisfy the needs/wants of consumers. Packaging also plays a role, as some companies use packaging as a source of branding. • Promotions. Although some companies combine promotions and advertising, large companies prefer them as separate departments. The promotions department deals with marketing the “end-product”, which has already gone through the production process, to consumers. Promotion techniques that are regularly used by companies include sales promotions, personal selling, sampling, contests, rebates, usable benefits, coupons, product combinations, quantity gifts, refunds and discounts. Companies use sales promotion techniques to attract more consumers to purchase products and often stimulate consumer loyalty through these programmes. • Sales. This department is responsible for ensuring that the necessary systems are put in place to enable the company to sell its products to the end-consumer. Selling products (sales) differs from one company to the next and includes pricing, presentations of products, displaying, merchandising, closing deals and pitching to new clients. Sales are a very important component of a business, as it ensures that the business sells its products and revenue is created. • Relationship marketing. Every organisation needs to build real and life-long relationships with all the stakeholders. This includes customers, the public/community, suppliers, shareholders, employees, investors and everyone involved with the company at large. When strong relationships are built, organisations have to ensure that consumers are treated as gold and given priority, which means satisfied consumers. When consumers are satisfied with the products/services they receive from a company, it is easy for them to be loyal to the organization. Marketing mix (4Ps) Product (or a service in the case of service companies). This is a product that a company has manufactured to meet the needs and demands of customers. Price. This refers to the amount that the consumer is anticipated to pay when purchasing a particular product (or service). The price of a product normally affects how the product sells in the market. Promotion. This involves all the marketing techniques and strategies the company uses to sell the produced products. It includes samples, personal selling, contests, rebates, usable benefits, coupons, product combinations, quantity gifts, refunds, discounts, advertising, public relations and special offers. Place. This refers to how the product is made available to the end-consumer. Distribution plays a major role in how the product is transported from the production phase to the end-consumer. Exchange and marketing Exchange is defined as all the actions/undertakings when people give up something in exchange for something else. For an exchange to take place in the business world, the customer gives up money to receive a product/ service. In the past, before money was created to simplify the exchange process, people exchanged products for products (bartering). Money has value; people have to work to earn money and then use the money to purchase products and services to satisfy their needs and wants. Exchange can happen under many circumstances, in different places and at any time. However, the following conditions must exist for an exchange to take place: • A minimum of two individuals/parties must be involved. • Each individual must have a valuable item or something of value in which the other party is interested. • The two parties must be willing and able to communicate with each other, and the one party must be able to deliver the products exchanged to the other party. • There must be freedom for any of the parties to either accept or reject the other party’s offer. • Both parties must be willing to deal with the counterpart. Gaps between production and consumption There are five common types of gaps in marketing: • Time gap. This refers to the difference between the period when the product is produced and the period when the product is consumed by the customer. Companies that produce seasonal products have to ensure that proper systems are in place to supply their products to consumers whenever the need arises. A good example of the time gap is South African farmers who produce vegetables and fruits and then distribute them to wholesalers, retailers and consumers. The farmers have to ensure that the fruits and vegetables that can only be produced at certain times of the year are available to consumers throughout the year. These farmers use special refrigeration to store perishable products so that they can be distributed to consumers throughout the year. • Space gap. This refers to the geographical/physical distance between the producers and consumers that could affect the delivery of products to the end-consumers. In the case of jewellery shops situated in Bloemfontein (Free State), the diamonds are mined and produced in Kimberly (Northern Cape) and gold is sourced from Gauteng. Companies that mine diamonds in Kimberly and gold in Gauteng will have to put systems in place to transport the diamonds and gold to Bloemfontein so that the jewellery shops can, for example, manufacture wedding rings. Furthermore, after the jewellery shops in Bloemfontein have produced the wedding rings, they can distribute them to them clients all over South Africa and export them to other countries. • Information gap. It is crucial that prior to a purchase, consumers have sufficient information about the product or service they intend to buy. Companies have to make the information available to consumers to help them decide to purchase a particular product. Such information may include the details of the product, specifications, terms and conditions, prices and so on. For example, a Mashonisa (loan shark) that borrows money to the residents of Port Elizabeth has to ensure that information is