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CHAPTER NINE

Marketing

BUSINESS MANAGEMENT: A Malaysian Perspective (Second Edition)

Oxford Fajar Sdn. Bhd. (008974-T), 2012

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9 2

Learning Goals

1
2
3
4

What are the marketing concept and

relationship building?
How do managers create a marketing
strategy?
What is the marketing mix?
How do consumers and organizations
make buying decisions?

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Learning Goals

5
6
7

What are the five basic forms of

market segmentation?
How is marketing research used in
marketing decision making?
What are the trends in understanding
the consumer?

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WHAT IS MARKETING?
1. The process of discovering the needs and
wants of potential buyers and customers and
then providing goods and services that meet
or exceed their expectations.
2. Organizational function and a set of
processes for creating, communicating, and
delivering value to customers, and for
managing customer relationships in ways
that benefit the organization and its
stakeholders
BUSINESS MANAGEMENT: A Malaysian Perspective (Second Edition)
Oxford Fajar Sdn. Bhd. (008974-T), 2012

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9 5

Delivering Value

Value
relative comparison of a
products benefits versus
its costs

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CUSTOMER NEEDS,
WANTS AND DEMANDS

Human needs are basic part of human make-up.

Human wants are driven by culture and
individual personality.

Demand occurs when there is buying power;

wants will become demands.
Need
Utilitarian

Hedonic

Want
Need

BUSINESS MANAGEMENT: A Malaysian Perspective (Second Edition)

Oxford Fajar Sdn. Bhd. (008974-T), 2012

Knowledge
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9 7

The Marketing Concept

What are the marketing concept and

relationship building?

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The Marketing Concept

The marketing concept is oriented toward pleasing
consumers by offering value.

Focusing on customer wants so the organization can

distinguish its products from competitors offerings.
Integrating all of the organizations activities to satisfy
these wants.
Achieving long-term goals for the organization by
satisfying customer wants and needs legally and
responsibly.

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Production Orientation
Approach

Product

Production
Orientation

Production-cost

Sales-promotion

An approach in which a firm works to

production costs without a strong desire
to satisfy the needs of customers.

Firms have not always followed the marketing concept.

At the time of the Industrial Revolution (1860-1910), firms
had a production orientation, which meant that production
was the focus instead of meeting customer needs.
Organizations concentrated on mass production, efficiency
of operations, increasing output, and ensuring uniform
quality.
Production drove products.

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Customer Value

Customer
Customer
Value
Value

The
Theratio
ratioof
ofbenefits
benefitsto
tothe
thesacrifice
sacrifice
necessary
necessaryto
toobtain
obtainthose
thosebenefits,
benefits,
as
asdetermined
determinedby
bythe
thecustomer.
customer.

Customer
Customer
Satisfaction
Satisfaction

The
Thecustomers
customersfeeling
feelingthat
thataa
product
producthas
hasmet
metor
orexceeded
exceeded
expectations.
expectations.

Relationship
Relationship
Marketing
Marketing

AAstrategy
strategythat
thatfocuses
focuseson
onforging
forginglonglongterm
termpartnerships
partnershipswith
withcustomers
customersby
by
offering
offeringvalue
valueand
andproviding
providingcustomer
customer
satisfaction.
satisfaction.
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Creating a Marketing Strategy

How do managers create a marketing

strategy?

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Creating a
Marketing Strategy

1. Understanding the external environment

2. Defining the target market
3. Creating a competitive advantage
4. Developing a marketing mix
2

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The External
Environment
Environmental
Scanning

The process in which a firm continually

collects and evaluates information about
its external environment.

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The External Environment

Six categories of environmental data shape
marketing decisions

Social
Social Forces
Forces

values of potential customers and the

changing roles of families and women
working outside the home

Demographic
Demographic Forces
Forces

ages, birth and death rates, and locations

of various groups of people

Economic
Economic Forces
Forces

changing incomes, inflation, and recession

Technological
Technological Forces
Forces

advances in communication, and data

retrieval capabilities

Political
Political &
& Legal
Legal Forces
Forces

changes in laws and regulatory agency

activities

Competitive
Competitive Forces
Forces

from domestic and foreign-based firms

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The Target Market

Target Market

The specific group of consumers toward

which a firm directs its marketing efforts.

Identifying a target market helps a

company focus its marketing efforts
on those who are most likely to buy
its products or services.

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Competitive Advantage

Cost
Cost
Competitive
Competitive
Advantage
Advantage

AAfirms
firmsability
abilityto
toproduce
produceaa
product
productor
orservice
serviceat
at
aalower
lowercost
costthan
thanits
itscompetitors.
competitors.

Differential
Differential
Competitive
Competitive
Advantage
Advantage

AAfirms
firmsability
abilityto
toprovide
provideaaunique
unique
product
productor
orservice
servicethat
thatoffers
offerssomething
somethingof
of
value
valuebesides
besidesaa
lower
lowerprice.
price.

Niche
Niche
Competitive
Competitive
Advantage
Advantage

AAfirms
firmsability
abilityto
totarget
targetand
andeffectively
effectively
serve
serveaasingle
singlesegment
segmentof
ofthe
themarket
market
within
withinaalimited
limitedgeographic
geographicarea.
area.
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Developing a Marketing Mix

What is the marketing mix?

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The Marketing Mix

Marketing Mix

The blend of product offering, pricing,

promotional methods, and distribution
system that brings a specific group of
consumers superior value.

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The Marketing Mix

Product
Elements
Elements of
of
the
the
Marketing
Marketing Mix
Mix
The
The Four
Four Ps
Ps

Price
Promotion
Place

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Product Strategy

Brand name
Packaging
Colors
Warranty
Accessories
Service program

Marketing Strategy
typically starts
with the product.

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Pricing Strategy

Pricing is based on demand for the product and the cost of producing
it. Special considerations, such as special introductory prices, can
influence the price. Some firms enter with a low price strategy, others
with a high price strategy and lower them over time.
Skimming pricing (start with high price)
Penetration pricing (lower price)
Price nothing more than a tag price (psychological-RM2400 is a
starting point to start a bargain unique to Malaysia and Asian
country)
Inverse Kinked demand curve pricing (special luxury-e.g Gibson
guitar)
Demand for product
Cost of producing product
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Distribution Strategy

Creating the means by which products

flow from the producer to the
consumer
Deciding the number of stores
Deciding retailers/wholesalers who will handle the
product

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Promotion Strategy

Personal selling e.g credit card agent

Advertising what u see, what u hear
Public relations e.g sponsorship,

football
Sales promotion e.g coupon

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Buyer Behavior

How do consumers and organizations make

buying decisions?

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Buyer Behavior

Buyer Behavior

The actions people take in buying and

using goods and services.

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Consumer Decision-Making
Process
(1)
(1) Need
Need Recognition
Recognition -- smartphone
smartphone

Cultural,
Cultural, social,
social,
individual
individual and
and
psychological
psychological
factors
factors
affect
affect
all
all steps
steps

(2)
(2) Information
Information Search
Search collect
collect
(3)
(3) Evaluation
Evaluation of
ofAlternativesAlternativescompare
compare
(4)
(4) Purchase
Purchase -- decision
decision

(5)
(5) Post-purchase
Post-purchase BehaviorBehavior- respons
respons

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Influences on Consumer Decision

Making

Cultural
Cultural Factors
Factors

Culture is the set of values, ideas, attitudes,

and symbols created to shape human
behavior

Social
Social Factors
Factors

Consumers interact with reference groups,

opinion leaders, and family members to obtain
product information and decision approval

Individual
Individual Influences
Influences

Personal characteristics that are unique to

each individual, such as personality, gender,
and self-concept

Psychological
Psychological Influences
Influences

perception, beliefs, and attitudes

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Consumer Buying
Decisions

Routine
Routineresponse
response
behavior
behavior

Purchase
Purchaseof
oflow-cost,
low-cost,frequently
frequently
bought
boughtitems
itemswith
withlittle
littlesearch
searchor
or
decision
decisionmaking.
making.E.g
E.gColgate
Colgate

Limited
Limiteddecision
decision
making
making

Consumer
Consumerhas
hasprevious
previousproduct
product
experience
experiencebut
butis
isunfamiliar
unfamiliarwith
withthe
the
current
currentbrands
brandsavailable.
available.E.g
E.g
Toothpaste
Toothpasteunfamiliar
unfamiliarbrand
brandCNI
CNI

Extensive
Extensivedecision
decision
making
making

Purchasing
Purchasingan
anunfamiliar,
unfamiliar,
expensive,
expensive,infrequently
infrequently
bought
boughtitem.
item.E.g
E.gIllgear
Illgearlaptop
laptop
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Consumer Buying Decisions

Routine
Response
Behavior

Involvement
Decision Time
Cost
Information
Search
Alternative(s)

Low
Short
Low
Internal only
One

Limited
Decision
Making

Low-moderate
Short-moderate
Low-moderate
Mostly Internal
Few

Extensive
Decision
Making

High
Long
High
Internal/External
Many

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Business-to-Business
Purchase Decisions
Business buyer behavior and business markets are different from

consumer markets. Business markets include institutions, such as

hospitals and schools, manufacturers, wholesalers and retailers, and
various branches of government. The key difference between a
consumer product and a business product is the intended use.
Purchase volume: Business customers buy in much larger quantities
than consumers.
Number of customers: Business marketers usually have fewer
customers than consumer marketers.
Location of buyers: Business customers tend to be more
geographically concentrated than consumers.
Direct distribution: Business sales tend to be made directly to the
buyers because such sales frequently involve large quantities or
custom-made items

BUSINESS MANAGEMENT: A Malaysian Perspective (Second Edition)

Oxford Fajar Sdn. Bhd. (008974-T), 2012

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9 31

Business-to-Business
Purchase Decisions
Purchase
PurchaseVolume
Volume
Characteristics
Characteristics
of
ofthe
the
BusinessBusinessto-Business
to-Business
Market
Market

Number
Numberof
ofCustomers
Customers
Location
Locationof
ofBuyers
Buyers
Direct
DirectDistribution
Distribution

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Market Segmentation

What are the five basic forms of

market segmentation?

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Market Segmentation
The process of separating, identifying, and evaluating the layers
of a market in order to identify a target market.

Demographic
Demographic

Age,
Age, education,
education, gender,
gender,income,
income,
race,
race, social
social class,
class, household
household size
size

Geographic
Geographic

Regional
Regional location,
location, population
population density,
density,
city/county
city/county size,
size, climate
climate

Psychographic
Psychographic

Lifestyle,
Lifestyle, personality,
personality,interests,
interests,
values,
values, attitudes
attitudes

Benefit
Benefit

Benefits
Benefits provided
provided by
by the
the
good
good or
or service
service

Volume
Volume

Amount
Amount of
of use
use (light
(light versus
versus heavy)
heavy)
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An Example of Age Segmentation

Frito-Lay
Product

Demographic

Snack Niche

Frito

33-51 years
males

Hunger
satisfaction

Doritos

Teens
mostly males

Bold and daring

snacking

Tostitos

Upscale, born
from 1946-1964

Casual interaction,
social food

5
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Using Marketing Research

How is marketing research used in
marketing decision making?
Marketing research is the process of planning,
collecting, and analyzing data relevant to a marketing
decision.
The information collected through marketing research
includes the preferences of customers, the perceived
benefits of products, and consumer lifestyles.
Research helps companies make better use of their
marketing budgets.

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The Marketing Research Process

1.
1. Define
Define the
the marketing
marketing problem
problem
2.
2. Choose
Choose aa method
method of
of research
research
3.
3. Collect
Collect the
the data
data
4.
4. Analyze
Analyze the
the research
research data
data
5.
5. Make
Make recommendations
recommendations

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Define the Marketing Problem

Key
Key Questions:
Questions:

1. Why is the information being sought?

2. Does the information already exist?

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Choose a Method of Research

Survey
Survey
research
research

Data
Datais
isgathered
gatheredfrom
from
respondents
respondentsto
toobtain
obtainfacts,
facts,
opinions,
opinions,and
andattitudes.
attitudes.

Observation
Observation
research
research

An
Aninvestigator
investigatormonitors
monitors
respondents
respondentsactions
actionswithout
without
interacting
interactingdirectly
directlywith
with
respondents.
respondents.

Experiment
Experiment

An
Aninvestigator
investigatorchanges
changesone
oneor
or
more
morevariables
variableswhile
whileobserving
observing
the
theeffects
effectsof
ofthese
thesechanges
changeson
on
another
anothervariable.
variable.
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Collect the Data

Primary
Primarydata
data

Information
Informationcollected
collecteddirectly
directly
from
fromthe
theoriginal
originalsource
sourceto
to
solve
solveaaproblem.
problem.

Secondary
Secondarydata
data

Information
Informationthat
thathas
hasalready
alreadybeen
been
collected
collectedfor
foraaproject
projectother
otherthan
than
the
thecurrent
currentone,
one,but
butmay
maybe
beused
used
to
tosolve
solvethe
theproblem.
problem.

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Common Types of
Survey Research
Internet surveys
Executive surveys
Mall-intercept
surveys

Self-administered
questionnaires
One-time mail surveys
Mail panels

Central-location
telephone surveys

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