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THE MARKETING PROCESS

There are four key elements in Marketing:

1. Research
2. Strategy
3. Planning
4. Tactics

RESEARCH

Understanding your customers

Why is it necessary?
You need to understand your customers because you have competitors and customers have choice. Marketing is about understanding customer's needs and wants, and then crafting your product/service to be as close to those neeeds as possible, so your customers choose you over your competitors.

Meeting needs: customer viewpoint
The path of need is as follows:

• Existence of a need
• Realisation that the need exists
• Awareness that something must be done about it
• Search for information
• Evaluation of the information
• Selection of an offering

What is marketing Research?
Market research is the systematic collection of information on existing or potential future markets, for analysis and subsequent action.

Successful marketing is about finding out what is happening in your market: what people expect of suppliers and trends in demand. That is:

• Identify customers' needs and wants
• Understand the competition
• Analyse the market dynamics

Then use the information gathered to provide a package:

• To meet those needs
• That is better than the competitors
• Which is within the market parameters
• If possible is closely aligned to wants

Reasons for using Market Research

• To input into analysis and Subsequent decision making
• To find new markets
• To ascertain customers real needs
• To find out what your competitors are doing and why you are doing less well
• To minimise risk, focus efforts and maximise return

Objective of Marketing Research
Normally the objective of Market research is to establish in some details exactly what your customers - and potential customers for new market - want. You need to ask relevant questions that will provide you with sufficient information to focus your products on your target market and provide direct input into your marketing strategy, eg

• What do you like about the product?
• What don't you like?
• Why did you buy someone else' product last time?
• Should we make it bigger/smaller?
• Is the size right?
• What colour should we use?
• Do you want better quality at a higher price?
• Which features and benefits do you like/not like?
• Is the after service important?

The Sample

How Large?
The number of people questioned is very relevant to research as, logically, the larger the sample the more accurate the result should be.

Sample Segmentation
For research to be meaningful, you must be able to reply on the robustness of the results. It must, therefore, be conducted with the same type of people who display similar characteristics and who would respond in the same manner to the same questions. This is known as segmentation and could include:

• Age
• Sex
• Residential Neighbourhood
• Education levels
• Lifestyles
• Occupation
• Socio-economic group
• Religion
• Culture
• Regional

There are two types of questions - quantitative and qualitative.

Quantitative questions require a specific answer eg how many (number)?, Do you like yes/no?. The quantitative questionnaire does not allow you to capture subjective comments which often contain added value.

Qualitative questions allow people to describe feelings. They are, therefore, much harder to analyse, although probably more accurate and revealing.

Analysis: Measuring the answers
Your inputs (answer to questions) must be output (analysis) driven. Therefore, structure the questions in order to give the answers that, after analysis, will give you the data you need.

Timing
To maximise the use of your research, you must ensure that it delivered when you want it. Set deadline by working from when you need it. Typical stages are:

• Scoping to set the framework
• Set-up phase (hiring contractors, preparing questionnaire, samples, purchasing mailing lists)
• Desk Research
• Test Research (piloting) where you check the approach and questions
• Full research (more than one phase)
• Analysis (leave plenty of time for further research)
• Reporting

MARKET RESEARCH METHOD
Several Methods are available and the main ones are:

• Telephone Interview
• Written Questionnaire
• Street Interview
• Face to face Interview
• Product testing
• Consumer Panels
• Observation
• Focus groups
• Via Internet

STRATEGY

Overview
A strategy is a holistic view of the organisation's purpose. It is usually expressed in term of:

• Long-term objective
• Actions to achieve these
• Resource allocation necessary to support them

Vision
The vision should be simple and able to unite all staff by giving a clear and unambiguous message of what the organisation is about. It should also give the same clarity to other stakeholders.

Mission
The mission is a statement of what the organisation's objective are. It might be:

• To be the leading retail bank in the UK, as measure by market share, capital strength and profitability.
• How
  We will achieve this by increasing our telephone banking services and by reducing our branch network by: concentrating only on profitable customers; offering a personalised services; and offering 24-hour banking;
• The implication of this
  We will have excellent IT support; adequate training for staff; remuneration linked to performance etc

Marketing Framework
A marketing framework can be set at organisation level, business unit level or lower down. Wherever it is set, the strategy always comprises a co-ordinated set of decisions that establish a framework for marketing. Included are:

• Target market
• Marketing mix
• Expenditure
• Positioning of products/services

Target Market
Steps to Setting-up

1a. SWOT Analysis
The term stands for analysis of:

• Strengths
• Weaknesses
• Opportunities
• Threats

This is a pre-strategic analysis that must be undertaken. The information yielded allows the strategy to address the issues uncovered.

1b. Market Analysis
In analysing the market, considered:

• The market you currently serve and what you can do here
• The market you will be targeting and the implication
• The potential market and the implication
• The future market, ie taking a longer-time horizon

1c. Marketing Policy
Policy can be thought of as a set of general rules that govern the day-to-day execution of strategies and tactics. It is set usually at the highest level in an organisation and will normally consider intangible concept such as customer service.

This policy will cut across strategies and tactics, and affect how you carry out your operations. It is intended to establish the broad framework of how an organisation wishes to be positioned in the market - notwithstanding any short-term price/quality difference such as sales or undersells.

It support image that the company wants to convey in the market place. It would be surprising if goods bought at any of the quality stores were of shoddy quality.

2. Gap Analysis
This involves taking the internal analysis and comparing it with the external analysis (from your research) to see how your company measures up and what is missing if you are to meet your objectives.

Once this gap analysis has been carried out, you then need to take steps to close the gap. Selective benchmarking can often be use here. You only close the gaps where the action required will deliver substantial dividends, where it is cost-effective or where it is fundamental issue. The objective is o make your products acceptable in your segments and ideally, to make them more effective than your competitors.

3a. Developing new products/services
In establishing your strategy, you need to consider the risk/reward trade off. The matrix analyses 4 possible strategies and the consequent risk/return from their implementation.

Company A has three strategies:

• To launch a brand new product in its home market
• To expand its current product number one bestseller into new market
• To introduce a new product into a new market by plotting these on a matrix, you can see that:
• Product development - higher risk
• Market development - medium risk
• Diversification - very risky
• Market Penetration - Low risk

A much less risky strategy is to sell more of your goods in your current markets - know as penetration (gaining market share). The potential cost of each strategy and the likely return must be analysed to ensure that the benefits are realisable and quantifiable before entering into plan.

1. Planning
Having set your policy and within this framework, decide on your strategy (which may or may not require new product development) you need to plan how you are going to implement your strategy. The how rather than the what.

The Marketing Mix
The 4 Ps

• Product
• Price
• Place
• Promotion

In recent years the rapid development of the internet has altered the concept of place remarkably. It is now possible to book most services or purchase just about any product remotely - so place has metamorphosed dramatically to the extent where Delivery is much more important than location

The challenge of the marketing mix is to get the balance right. All firms have finite resources (human/financial) and they need to be allocated effectively.

While research will help you here, there is no right way to allocate resources. Instead, you go through an interactive process, starting with the theoretical marketing mix which is progressively refined in response to feedback from the marketing. The internet brings a new dimension to this challenge: either you accept a cannibalisation of existing channel or you radically alter the marketing mix.

Product
This is what you sell - be it cars, food, banking, clothes, insurance, or travel. Issues to consider include:

• Customer benefits
• Quality
• Design
• Technical Features
• Branding
• Packaging
• Service
• Training

Price
There is much more to pricing than choosing a number. Your price may be used by consumers as a measure of all benefits you offer. Than they decide if you offer good value or not. It is the most flexible of the four, and you can use short-term or long -term pricing to maximise opportunities.

Some things that you can do with pricing:

• Discounts
• Bundling items or pricing separately
• Lump sum or piece rate
• Rebate or loyalty schemes
• Undersell the competition

Pricing layers - The 4 Ps

Pretiges/snob - Highest level - feelings of exclusivity are paramount
Premium - High Level - Based on strong, inelasticity of demand
Parity - Ordinary level - no significant advantage
Pare away/discount - Sub-optimal - Weak players, bottoms level, loss leaders

Place
This is about getting your product in front of your customers. There are many methods of doing this - knows as distribution channels or supply chains. Different channel mixes involve different cost structures.

Customers have diverse needs and many players are involved in dealing with them, which have increased the complexity of distribution. It is difficult to maintain seamless, consistent distribution to them. This is vital, however, for your marketing to be effective.

Promotion
It is vital to tell your customers about your products or they will not know where to go to get them.
Some of the more common methods include:

• Advertising (TV, paper, posters, radio, cinema etc)
• Direct Mail
• Telephone Selling
• Brochures and Catalogue
• Exhibitions
• Sponsoring events
• Sales Force
• Internet Ads
• Emails

The 7 Ps
For services that are heavily people-based, and for which there is little or no evidence of products, couple with the increasing fragmentation of delivery, a further three Ps are now often used. These are Processes, People, and Physical evidence.

Physical Evidence
The Serious offered in financial services are tangible, eg insurance, overdraft or loans, so there is no physical product that a customer can touch. This makes it important to have instead some other evidence of the services. Know as physical evidence, this is often the only tangible attribute which the service consumer may use to assess a company.

Process
A process is mechanisms for making something happen, eg a mortgage application or buying an airline ticket. Delivery to customer is the end result of a process. Efficient processes have a major impact on the success of an organisation and shape the way in which people work. In today's today knowledge economy, people may well be a company's most important assets, but they cannot work effectively if the processes are inefficient. It is therefore, critical to ensure that all processes are both efficient: lean and mean and effective: doing the right thing in the right way.

People
Within most organisation staff usually have a functional specialism and sometimes a little knowledge of other areas. These are known as 'I-shape' (deep knowledge in one area) and 'T-shape' staff (deep knowledge in one area and a smattering of knowledge across the top). In order to offer enhanced services and to facilitate cross-selling and product penetration, staff need to acquire a broader and deeper set of skills and understanding of products and organisation capability (Y-shape').

For an organisation this will necessitate:

• Ensuring the right staff fill the roles
• Staff and relationship managers have the right training
• Product knowledge is sufficient
• Staff understand the breath of the organisation's capabilities
• Recruiting if necessary
• Changing remuneration levels and methods so that they drive and reward the new behaviours.

MARKETING PLANNING

Plan Overview
A written plan is vital to focus your marketing effort and to control it.

What is marketing plan?

• Statement of intent
• Attempt at qualifying the future
• Cohesive structure
• Signpost for action
• Base for evaluation and feedback
• Outcome of a logical process

What does planning involve?

• Management and executive time/input
• Commitment
• Cost
• Research
• Assumptions
• Review

What the plan contains

• Summary
  A stand-alone overview which will give readers a good idea of the contents of the plan, enabling then to investigate areas more fully within the main body of text.
• Marketing objective
  A statement of the objectives that the plan is attempting to achieve. A plan will be needed for each business unit, product or brand, depending on how you divide your organisation. Each will have its own objectives (enhance market share, defend, introduce products, increase profitability, etc). Smaller businesses will probably only produce one.
• Market characteristics
  This section will look at the current situation within the relevant market and consider the products, competition, brands, characteristic of the market, propensities to buy, types of buyers, trends and major channels of distribution. It should give readers a good grasp of the key points.
• Competition overview
  Details of the competition, its strengths, weaknesses and reactions - so you know what you're up against, and how to differentiate yourself.
• Product position
  This section outlines the strategy for positioning and communicating your products to your customers. It should be stated in terms that you customers understands.
• Distribution Mechanisms
  Explain how you will get your products to your customers. What will make the chosen mechanisms effective, what percentage of products will go each and how it will be measured?
• Selling plan
  Includes targets for salesmen, areas and offices; relationships with the distribution network; merchandising materials; sales control and information systems; roles and responsibilities of the sales force; and the billing procedures and accounting mechanism
• Communication plan
  This section is often sub-divided. It will detail:
  • How you will distribute the products
  • Pricing and discounting strategies
  • Promotional techniques to be used
  • The Unique Selling Proposition (USP) you will use to persuade customer to buy your products
• Timetable
  Gives details of timing and should include a time graph for ease of understanding
• Responsibilities
  A plan is nothing more than a piece of paper if action is not taken to make it happens.
• Budgets
  As well as looking at the cost of the intended action, the plan must also consider the financial outcomes of the plan as a whole - ie the return on expenditure in terms of market share, profit etc. An overall budget must therefore be prepared to include all costs: direct, indirect and labour. Variance analysis will be conducted against this during the year.

TACTICS AND TIPS

• Marketing is not a department - it is an ethos that pervades the whole organisation, so good training and internal marketing are crucial
• Always look at issues from the customers perspective
• Keeping customers is easier than winning new ones
• Prepare a plan, follow it and follow it up
• Get help where it adds value
• Make sure that you measure the effectiveness of your marketing using well-defined and meaningful measure

Internal Marketing

• You cannot expect your staff to understand marketing if they have no input into it; all staff from receptionist to MD should be marketing-led
• Keep people informed of new initiative, products and promotions
• Receptionists, secretaries and telephonists are often the first contacts with your organisation; they have a crucial role to play
• Ask people in the front line for their ideas and customer feedback
• Set up formal training and briefings on marketing issues and develop your skill base
• Make sure that your marketing meetings include all the disciplines in your firm (Production, R& D, packaging, as well as sales and finance etc)
• Use your intranet - it's a very simple, effective and cheap method of carrying out communication and internal marketing

Take customer perspective

• Look at things from the customer's viewpoint
• Talk to your customer and where appropriate visit to see how you can help
• Superficially, all customers want a better product, delivered yesterday and at a lower price; but, if talked to sensibly, customers will often you just what they do need
• Think of the relationship as a partnership rather then that of host and parasite; get the customer to sell your company as well
• A satisfied customer may well tell you - a dissatisfied customer will definitely tell everybody else.

Keeping Customers

• It is more cost-effective to keep customers than to continually win new ones. Keeping your 'lost customers' as low as possible is a strategic objective. You must meet their needs.
• Lost customer - this is the rate at which you lose customers and have to replace them just to maintain market share.
• Cross selling - you can improve the profitability of existing customers significantly by cross selling other products and services to them. They know you, you have an established relationship, and therefore sales costs are lower.

Using the plan
Marketing costs money. You must ensure cost-effectiveness and focus in your actions

• Preparing a plan will give direction to your marketing actions and enable you to use valuable, scare resources to maximise return
• Periodically, review your plan to measure its effectiveness - and revise/flex it as necessary
• Learn lessons from this year for future years

Remember the Customer Value Proposition (CVP)

Visible satisfaction to your customers
Analyse markets so you understand the dynamics
Look at you competitors and beat them
Understand the real needs of your customers
Equalise value/price equation

Outside Help
It is impossible to be an expert in everything. Even large companies do not have all the resources they require in-house or find them unavailable when needed. It makes sense to seek help when it is cost effective to do so or when it is for non-core skill.

Expert used by organisations typically include:

• Public relation firms who can place the right messages for you
• Advertising and design agencies for communications that stand out
• Market researchers who can obtain answers faster, more easily and cheaper then you can
• Management consultants who help with analysis, planning etc

Key Steps to Profitable Marketing

• Obtain initial customer base
• Keep current/minimise seepage
• Weed out unprofitable ones
• Win new ones
• Where appropriate, cross sell
• Stick to your CVP