Summary MNM2602 EXAM NOTES.

MNM2602 EXAM NOTES. MNM2602 - Essentials Of Marketing. Marketing Objectives  Profit: how much gross profit is the business aiming to make per line or item.  Customer Orientation: the business’s main focus is to satisfy the needs and wants of the consumer.  Survival and growth: keep up with changing demands by either developing new products or cutting products.  Sales and market share: increase market share through differentiation, adding new lines or spreading other geographic locations  Brand Extensions: add complementary items 4. Resources, Skills and abilities: Internal analysis: review the business’s strengths, weaknesses and capabilities of finances, facilities and product knowledge. The resources, skills and abilities of the organisation are controllable elements of the micro-environment and are employed to take advantage of external opportunities and to counter threats. The strategic use is the responsibility of management. These resources include capital and the skills needed in which employees are able to function to the best of their ability. They also include the marketing skills needed to compete successfully in the marketplace. An efficient marketing information system that supports decision making, as well as experience and intuitive foresight, are internal strengths that will put the organisation a step ahead of its competitors. 5. Marketing Instruments (4P’s) Product/Service: determine the quality and sizes available and level of service needs Distribution: how the product/service reaches the consumer through retailers, wholesalers, selected stores or mail orders. Price: decide which pricing strategy to use and how much the product/service will cost the consumer Marketing communication: decide which medium will be used to communicate the desired message to the consumer. The Marketing Mix The marketing instruments are under the direct control of marketing management. How these instruments are used depends on the target market and the expected impact of the macro-environmental factors on the organisation. The marketing instruments are also or the 4 Ps of marketing. These are as follows: 1. Product - Which product or products can be offered to meet the perceived needs of the consumer, given the resources and skills available in the company? 2. Price - The price of the product must reflect its value to the consumer, the relative price versus quality level against competing products. When setting the price, marketing management has to consider the economic climate, customers' willingness to pay a specific price, prices of competitors' products, and so forth. 3. Place - Customers' buying patterns will determine where a product should be available. Management must decide which outlets should carry the product, based on whether these outlets will reach the organization’s customers. 4. Promotion - concerns the marketing communication methods used to inform the target market of the product. This decision is made by the marketing manager and will be influenced by factors such as the target audience. Downloaded by: pmzozoyana | Distribution of this document is illegal S - The study-notes marketplace MNM2602 - EXAM Notes (Marketing) Study Unit 2: The Marketing Environment  Question 5 Discuss the market environmental variables in detail and provide an example of each variable (12) What is the Market environmental variables The market environmental variables refers to those elements/variables that may be influenced by the organisation but which cannot be controlled by the organisation and it is located outside the micro-environment. The Market environment consists of competitors, consumers and suppliers. 3 Variables in Market Environmental variables 1. Suppliers  Businesses/individuals who provide resources the business needs to produce goods & services  Having the right supplier may mean the difference between success and failure  Supply of materials & services is N.B: directly influences business' profit & price charged to the customer  A supplier is a business entity that supplies goods or services that are integral to the receiving business's production or delivery of goods and/or services.  The purchasing function is increasingly being managed as part of the overall supply chain.  The purchasing function is therefore regarded as part of the supply process. 2. Consumers  Consumers are the vocal point of the business, for without consumers the business has nothing.  A market can be defined as consisting of people with needs who have money to spend and the willingness to satisfy their needs. It is the responsibility of marketing management to analyses the consumer market in order to see how it functions. Businesses operate in 5 types of customer markets, which are as follows: 1. Consumer markets - are individuals and households who buy goods and services for personal consumption. 2. Industrial markets or business-to-business markets - are made up of organisations that buy goods and services for further processing or for use in their manufacturing process. 3. Reseller markets - buy goods and services, and resell them at a profit. 4. Government markets - are made up of government agencies that buy goods and services to produce public services or 5. International markets - are foreign buyers, including consumers, producers, resellers and governments. 3. Competitors  Competition refers to the contest between two or more businesses that are acting independently, striving to gain the same customer or market segment by overcoming rival businesses.  The more unique a product, the less competition it might experience and the more control the organisation may have over its selling price.  Competition also has positive aspects. It can help to keep excessive profits in check, stimulates higher profitability, promotes better service, and encourages technological innovation. Competitive Market Structures The number of businesses that sell a product may affect the strength of the competition. When many businesses sell a particular product, price considerations and product differences are more important than when only one business sells that product. 1. A monopoly - exists when a business is marketing a product with no real substitutes and essentially has complete control over the supply of the product. One Competitor. Example is Eskom. 2. An oligopoly - exists when there are relatively few businesses marketing a particular product, and they control much of its supply. Products in oligopolistic competition may be homogeneous (or similar), such as coal or steel or they may be differentiated (having real or perceived differences), such as cars or cigarettes. Example is Cellular Network Providers. 3. Monopolistic competition - is found when a large number of businesses are marketing the same or similar products. Each business attempts to differentiate its product to persuade consumers that its product is the one to buy. Example is Variety of breakfast cereals. 4. Perfect competition - is the ideal situation, but it does not exist. If it did, it would be a market with an unlimited number of sellers, not one of which could significantly influence the price or supply of the products. The closest example of perfect competition is the market for agricultural products, sold informally at roadside stalls or at farmers markets. Example is fresh produce goods. Downloaded by: pmzozoyana | Distribution of this document is illegal S - The study-notes marketplace MNM2602 - EXAM Notes (Marketing) Study Unit 2: The Marketing Environment  Question 6 Discuss the four competitive market structures and provide an example of each (8) Competitive Market Structure Example Monopoly: There are no competitors and there are no substitutes available. A Monopoly exist when a business is marketing a product that has no real substitutes. The company has complete control over the supply of the product. Eskom Oligopoly: There are a few competitors and there are a few differentiated products available. An Oligopoly exist when there are relatively few business marketing a particular product, and they control much of its supply. Cellular Network Providers MTN, Vodacom, Telkom, Cell C Monopolistic Competition: There are many competitors and there are many differentiated products. Monopolistic Competition is when a large number of businesses market the same or similar products. Each business aims to differentiate its products to convince consumers that its products are better compared to competitors. Variety of Breakfast Cereals Perfect competition: There are unlimited number of competitors and there are many products with little differentiation. The closest example for perfect competition is Agricultural products, sold informally at road stalls or at farmers’ markets. Fresh Produce Goods  Question 7 Explain what a SWOT analysis is (3) SWOT Analysis  A SWOT analysis is a useful instrument for helping managers to identify the internal strengths and weaknesses of a business, and the external opportunities and threats facing it.  A SWOT analysis is based on the assumption that an effective strategy maximizes the strengths and opportunities of a business, and minimizes its weaknesses and threats. Strengths should be matched to opportunities, and threats should be seen as challenges.  The aim is therefore to identify those critical factors that can have a major effect on the business.  The SWOT Analysis helps managers identify internal strengths and weaknesses as well as external opportunities and threats The components of SWOT analysis include: 1. Strength - A positive internal factor which helps an organisation to succeed or make progress by distinguishing it from competitors, and increasing its competitiveness in the marketplace. A strength is a resource, skill or other advantage relative to competitors and the needs of the market which the business serves, or expects to serve. It is a distinctive competence that gives the business a competitive advantage in the marketplace 2. Weakness - A weakness is an organization’s internal factor that is not strong or successful, and prevents the organisation from fully achieving its objectives. A weakness is a limitation or deficiency in resources, skills and capabilities that seriously impedes the effective performance of a business. 3. Opportunity - An opportunity is a favorable external factor in the organization’s environment that makes it possible for the organisation to improve its competitiveness and that can be exploited by management. 4. Threat - A threat is an unfavorable external event, trend or change that may currently or potentially cause damage, injury or harm to an organization’s ability to compete. Brand image can be sources of weaknesses. It is the responsibility of management to identify any such threats, real or potential, and to take the necessary steps to counteract them. Downloaded by: pmzozoyana | Distribution of this document is illegal S - The study-notes marketplace MNM2602 - EXAM Notes (Marketing) Study Unit 2: The Marketing Environment  Question 8 Conduct a SWOT analysis for Vodacom and provide practical application (12) Below is the Strengths, Weaknesses, Opportunities & Threats (SWOT) Analysis of Vodacom. The Vodacom Strengths are: 1. Best network, best value and best service 2. Business processes are more efficient 3. Stakeholder trust is unique 4. Efficient console and dispatch centers 5. It has a strong customer base of over 50 million people 6. The brand has its presence in South Africa, Tanzania, Mozambique and Lesotho 7. It has an expertise in voice, messaging, data and converged services The Vodacom Weaknesses are: 1. Alleged legal controversies have affected the brand 2. Intense competition from many players means limited market share growth The Opportunities of Vodacom are: 1. Expansion of the brand to newer geographies 2. More customised services for individuals and businesses 3. Advertising and branding exercises can boost business The Threats of Vodacom are: 1. Security and safety of customer information 2. Intense competition from communication services 3. Government regulations and increasing costs of operations And Below are the 3 main Vodacom Competitors : 1. Cell C, MTN and Telkom Environmental Scanning Measurement; projection and evaluation of change in different environmental variables Importance of environmental analysis: 1. Helps business capitalise on early opportunities 2. Early signal of impending problems or threats 3. Sensitises business to changing needs and wants of customers 4. Objective info about SWOT 5. Improves image of business by showing it is sensitive and responsive to environment Downloaded by: pmzozoyana | Distribution of this document is illegal S - The study-notes marketplace MNM2602 - EXAM Notes (Marketing) Study Unit 2: The Marketing Environment  Question 9 Discuss the importance of Environmental Scanning (10) Environmental Scanning (The Importance) Environmental scanning refers to the systematic monitoring of an organization’s marketing environment whereby information is gathered, analyzed and evaluated in order to detect early signals that indicate opportunities and threats, which may influence the organization’s current position or future course of action in terms of strategic decision making. The Importance of Environmental Scanning or analysis may be summed up as follows:  It helps the business to capitalize on early opportunities rather than lose to competitors, i.e. ‘first-mover’ advantage  It provides an early signal of impending problems or threats, which can be defused in advance.  It sensitizes a business to the changing needs and wants of its customers.  It provides a base of objective information about the internal strengths and weaknesses of a business that determine its ability to counter threats or use opportunities.  It improves the image of the business by showing that it is sensitive and responsive to its environment. Monitoring the internal environment is part of the strategic management process. It should take place while management keeps an eye on the external environment. It is importance that this exercise is undertaken regularly. It is very important to do a thorough internal analysis as it is only then that workable strategies can be developed and realistic objectives formulated. Environmental Scanning Measurement; projection and evaluation of change in different environmental variables Importance of environmental analysis: 1. Helps business capitalise on early opportunities 2. Early signal of impending problems or threats 3. Sensitises business to changing needs and wants of customers 4. Objective info about SWOT 5. Improves image of business by showing it is sensitive and responsive to environment Downloaded by: pmzozoyana | Distribution of this document is illegal S - The study-notes marketplace MNM2602 - EXAM Notes (Marketing) Study Unit 3: Marketing Research Definition of Marketing Research Marketing Research is the systematic and objective search for, and analysis of, information pertaining to the identification and solving of any problem or opportunity in the field of marketing.  Question 1 Explain the importance of Marketing Research in Decision Making (12) 1. Marketing Research adds Value to a Business 2. Marketing Research and the Marketing Mix 3. Marketing Research and the Macro Environment 4. Marketing Research Identifies and Defines Marketing Opportunities and Problems 5. Marketing Research Monitors Marketing Performances 6. Marketing Research improves understanding of the Marketing Process