Question No. 7 - Principles of Marketing BCOE - 141

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BCOE - 141 - Principles of Marketing

Question No. 7 

 Explain the process of new product development. 

The process of new product development involves 8 steps as described below: 

1. Idea generation – The New Product Development Process

The new product development process starts with idea generation. Idea generation refers to the systematic search for new-product ideas. Typically, a company generates hundreds of ideas, maybe even thousands, to find a handful of good ones in the end. Two sources of new ideas can be identified:

a. Internal idea sources: the company finds new ideas internally. That means R&D, but also contributions from employees.

b. External idea sources: the company finds new ideas externally. This refers to all kinds of external sources, e.g. distributors and suppliers, but also competitors. The most important external source are customers, because the new product development process should focus on creating customer value.

2. Idea screening – The New Product Development Process

The next step in the new product development process is idea screening. Idea screening means nothing else than filtering the ideas to pick out good ones. In other words, all ideas generated are screened to spot good ones and drop poor ones as soon as possible. While the purpose of idea generation was to create a large number of ideas, the purpose of the succeeding stages is to reduce that number. The reason is that product development costs rise greatly in later stages. Therefore, the company would like to go ahead only with those product ideas that will turn into profitable products. Dropping the poor ideas as soon as possible is, consequently, of crucial importance.

3. Concept development and Testing – The New Product Development Process

To go on in the new product development process, attractive ideas must be developed into a product concept. A product concept is a detailed version of the new-product idea stated in meaningful consumer terms. You should distinguish

A product idea -  an idea for a possible product

A product concept - a detailed version of the idea stated in meaningful consumer terms

A product image - the way consumers perceive an actual or potential product.

4. Marketing strategy development – The New Product Development Process

The next step in the new product development process is the marketing strategy development. When a promising concept has been developed and tested, it is time to design an initial marketing strategy for the new product based on the product concept for introducing this new product to the market. The marketing strategy statement consists of three parts and should be formulated carefully:

• A description of the target market, the planned value proposition, and the sales, market share and profit goals for the first few years 

• An outline of the product’s planned price, distribution and marketing budget for the first year 

• The planned long-term sales, profit goals and the marketing mix strategy.

5. Business analysis – The New Product Development Process

Once decided upon a product concept and marketing strategy, management can evaluate the business attractiveness of the proposed new product. The fifth step in the new product development process involves a review of the sales, costs and profit projections for the new product to find out whether these factors satisfy the company’s objectives. If they do, the product can be moved on to the product development stage. In order to estimate sales, the company could look at the sales history of similar products and conduct market surveys. Then, it should be able to estimate minimum and maximum sales to assess the range of risk. When the sales forecast is prepared, the firm can estimate the expected costs and profits for a product, including marketing, R&D, operations etc. All the sales and costs figures together can eventually be used to analyse the new product’s financial attractiveness.

6. Product development – The New Product Development Process

The new product development process goes on with the actual product development. Up to this point, for many new product concepts, there may exist only a word description, a drawing or perhaps a rough prototype. But if the product concept passes the business test, it must be developed into a physical product to ensure that the product idea can be turned into a workable market offering. The problem is, though, that at this stage, R&D and engineering costs cause a huge jump in investment.

The R&D department will develop and test one or more physical versions of the product concept. Developing a successful prototype, however, can take days, weeks, months or even years, depending on the product and prototype methods.

Also, products often undergo tests to make sure they perform safely and effectively. This can be done by the firm itself or outsourced.

In many cases, marketers involve actual customers in product testing. Consumers can evaluate prototypes and work with pre-release products. Their experiences may be very useful in the product development stage.

7. Test marketing – The New Product Development Process

The last stage before commercialisation in the new product development process is test marketing. In this stage of the new product development process, the product and its proposed marketing programme are tested in realistic market settings. Therefore, test marketing gives the marketer experience with marketing the product before going to the great expense of full introduction. In fact, it allows the company to test the product and its entire marketing programme, including targeting and positioning strategy, advertising, distributions, packaging etc. before the full investment is made.

8. Commercialisation

Test marketing has given management the information needed to make the final decision: launch or do not launch the new product. The final stage in the new product development process is commercialisation. Commercialisation means nothing else than introducing a new product into the market. At this point, the highest costs are incurred: the company may need to build or rent a manufacturing facility. Large amounts may be spent on advertising, sales promotion and other marketing efforts in the first year.

Question No. 6 - Principles of Marketing BCOE - 141

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BCOE - 141 - Principles of Marketing

Question No.  6

What do you mean by market segmentation? Explain the basis of market segmentation.

Market segmentation is a marketing concept which divides the complete market set up into smaller subsets comprising of consumers with a similar taste, demand and preference. A market segment is a small unit within a large market comprising of like minded individuals. One market segment is totally distinct from the other segment. A market segment comprises of individuals who think on the same lines and have similar interests. The individuals from the same segment respond in a similar way to the fluctuations in the market.

• Basis of Market Segmentation

1. Gender

The marketers divide the market into smaller segments based on gender. Both men and women have different interests and preferences, and thus the need for segmentation. Organisations need to have different marketing strategies for men which would obviously not work in case of females. A woman would not purchase a product meant for males and vice a versa. The segmentation of the market as per the gender is important in many industries like cosmetics, footwear, jewellery and apparel industries.

2. Age Group

Division on the basis of age group of the target audience is also one of the ways of market segmentation. The products and marketing strategies for teenagers would obviously be different than kids.

Age group (0 - 10 years) - Toys, Nappies, Baby Food, Prams

Age Group (10 - 20 years) - Toys, Apparels, Books, School Bags

Age group (20 years and above) - Cosmetics, Anti-Ageing Products, Magazines, apparels and so on

 

3. Income

Marketers divide the consumers into small segments as per their income. Individuals are classified into segments according to their monthly earnings.

The three categories are:

a. High income Group 

b. Mid Income Group

c. Low Income Group

Stores catering to the higher income group would have different range of products and strategies as compared to stores which target the lower income group. Pantaloon, Carrefour, Shopper’s stop target the high income group as compared to Vishal Retail, Reliance Retail or Big bazaar who cater to the individuals belonging to the lower income segment.

4. Marital Status

Market segmentation can also be as per the marital status of the individuals. Travel agencies would not have similar holiday packages for bachelors and married couples.

5. Occupation 

Office goers would have different needs as compared to school / college students. A beach house shirt or a funky T Shirt would have no takers in a Zodiac Store as it caters specifically to the professionals.

6. Usage

Product usage also acts as a segmenting basis. A user can be labelled as heavy, medium or light user of a product. The audience can also be segmented on the basis of their awareness of the product.

7. Lifestyle

Other than physical factors, marketers also segment the market on the basis of lifestyle. Lifestyle includes subsets like marital status, interests, hobbies, religion, values, and other psychographic factors which affect the decision making of an individual.

Question No. 5 - Principles of Marketing BCOE - 141

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BCOE - 141 - Principles of Marketing

Question No. 5

What do you mean by advertising? Explain the various media of advertising and compare their advantages and limitations.

Advertising is a means of communication with the users of a product or service. Advertisements are messages paid for by those who send them and are intended to inform or influence people who receive them, as defined by the Advertising Association of the UK.

Advertising is always present, though people may not be aware of it. In today's world, advertising uses every possible media to get its message through. It does this via television, print (newspapers, magazines, journals etc), radio, press, internet, direct selling, hoardings, mailers, contests, sponsorships, posters, clothes, events, colours, sounds, visuals and even people (endorsements).

• Different Types of Media

A. PRINT MEDIA

Here are the different types of print media along with the corresponding advantages and disadvantages of using them to communicate with customers:

1. Newspapers

News and other organisations create national, regional (local) or special interest newspapers and often distribute them daily. They disseminate an extensive amount of information at a low price to readers. Newspapers can include several ad types, such as classified ads, display ads and inserts.

• Advantages of newspapers

1. Large volume of readers: According to surveys conducted by the Pew Research Centre, the data from 2018 indicates that 16% of adults got their news from a daily newspaper.
2. High frequency: Most national and local newspaper organisations deliver daily.
3. Inexpensive: Newspapers are usually $3 or less, and you can receive a discount if you pay for a yearly subscription.
4. High level of reader engagement: Readers must decide to purchase a newspaper and when they read it, increasing their level of engagement with the content.
5. Geographic specificity: Ads can target a local or national audience.

• Disadvantages of newspapers

1. Possibility of becoming ruined: Printers use inexpensive, low-quality paper that becomes discoloured and brittle.
2. Inability to target specific demographics or lifestyles: Newspaper readers are a diverse population. Ads in newspapers cannot target specific genders, ages, hobbies or economic class.
3. Short period of relevance: Most newspapers contain daily events and news that lose relevance within a day or two.
4. Audience must be able to read: Newspapers are only available for those who can read and those who have access to shops or delivery.

2. Magazines

Magazines can be consumer-related or business-related. Consumer magazines include those focused on glamour, lifestyles, entertainment and special interests. Consumer magazines are often printed monthly. Business magazines share news, information, reviews and research related to a specific industry and can include trade journals and professional publications. Business magazines are typically printed on a monthly or quarterly basis.

• Advantages of magazines

1. Higher quality physical product: Magazine printers use glossy, higher quality paper than newsprint.
2. Targeted lifestyles and demographics: Because magazine readership is segmented by gender, interest or industry, advertisers can choose the most relevant publications.
3. Long period of relevance and usefulness: Magazines contain information and articles that can be useful for months or years, such as recipes, research and informational pieces.
4. High level of reader engagement: Readers are engaged in reading magazine articles, rather than being passive observers.

• Disadvantages of magazines

1. Low frequency: Magazine subscriptions often reach readers monthly. Other readers may purchase magazines inconsistently.
2. Expensive: Advertising in magazines can be more expensive than advertising in newspapers.
3. Competition: Many magazines have similar audiences, which leads to increased competition for reader attention and ad space.

3. Direct mail

Direct mail includes informational flyers or postcard promotions delivered via USPS to the home or business address of a specified list of customers.

• Advantages of direct mail

1. Highly specific audiences: Companies can pay for mailing lists filtered by zip code, income level, family size and more to reach individuals and families most likely to purchase products or services.
2. Convenient and free for consumers: Customers do not have to make any extra effort to see your content.
3. Opportunity for creativity: Direct mail provides an opportunity for advertisers to invoke creativity to gain readers' attention.
4. Personalisation: Advertisers can personalize mail with recipients' names.

• Disadvantages of direct mail

1. High cost of creation and demographic research: Direct mail can incur high costs if advertisers purchase extensive lists, send a large quantity or use nontraditional sizes or shapes.
2. Time requirement: Direct mail requires advanced planning for creation, printing, mailing and delivery.
3. Low response rate: Most direct mail recipients do not respond to mailers.

B. BROADCAST MEDIA

Here are the different types of broadcast media along with the corresponding advantages and disadvantages:

1. Television

Television provides audiences with audio and visual stimuli to deliver information and entertainment.

• Advantages of television

1. High viewership rates: Millions of viewers watch popular television shows or live events, like sports.
2. Ads appear automatically: Viewers see ads without making any extra effort.
3. Highly targeted to key demographics: Advertisers can use market research for time blocks, channel and type of program to target their desired audience.
4. Flexibility: Television advertising allows for creative, emotional or shocking methods for gaining viewer attention.

• Disadvantages of television

1. High cost: Television ads, especially those during popular shows and events, are expensive.
2. Channel changing or fast-forwarding: Viewers have the option to skip your ad.
3. Limited viewer attention: Viewers may experience distractions that prevent them from paying attention to your ad.
4. Short ad lifespan: Television ads are typically 15, 30 or 60 seconds long.

2. Radio

Radio offers listeners audio programming, including music, news and podcasts.

• Advantages of radio

1. Low cost: Radio advertisements are typically cheaper than television ads.
2. Flexibility: Advertisers can target listeners based on time, geographic location, channel and program.
3. Vast coverage: Radio programming has millions of listeners nationwide.
4. Ability to reach low-income audiences: Many populations that may not have access to other mediums usually have radio access.

• Disadvantages of radio

1. Channel changing or fast-forwarding: Listeners may not pay attention to your ad.
2. Short ad lifespan: Radio ads are typically 15, 30 or 60 seconds long.
3. Less retention due to multiple ads airing consecutively: Radio ads appear in blocks, which could detract from listener retention.
4. No visual elements: Relying only on audio content may diminish listener retention and response.

3. Movies

Movies provide opportunities for advertisers to incorporate their products outside of a traditional advertisement. The characters may mention or use a specific product due to an advertising deal between the movie studio and the company selling the product. For instance, many movies incorporate product placement of certain car or truck brands. Additionally, movie theaters often run ads just before showing a film.

• Advantages of movie advertising

1. Vast reach: Movie attendance, on average, includes over 1 billion viewers annually.
2. Engaged audience: Moviegoers expect to pay attention.
3. Capitalising on the experience: Going to the movies provides a unique collective, emotional experience that advertisers can take advantage of.
4. Limited distractions: Generally, movie theaters are free of loud noise, visual distractions and background interruptions.
5. Targeted geographic and age demographics: Advertisers can use market research to target audiences of certain movies of gender, age and interests.

• Disadvantages of movie advertising

1. Low recall of ads or products: When products are placed in movies—or ads during the pre-show—they may be harder to remember.
2. High cost: Movie cinema ads are expensive compared to print media ads.
3. Low frequency: Audiences may not see movies as frequently at a cinema due to increased costs and competition from streaming services.

C. INTERNET MEDIA

Internet media refers to audio and visual content transmitted online. It can include words, images, graphics and interactive elements. Here are some different types of internet media along with the corresponding advantages and disadvantages:

1. Email

Companies use email messages to reach customers quickly and directly.

• Advantages of email

1. Inexpensive: Sending and receiving a basic email is free.
2. Easy to create: You can write an email to customers with a few simple lines. Several email marketing programs provide email templates and free images.
3. Less research: Often, you won't need to do extensive research for customer email addresses as customers provide them frequently at points of sale.

• Disadvantages of email

1. Low click-through rates: While many people may open your email, far fewer will click links to visit your site.
2. Competition: Many companies use email marketing campaigns. Additionally, some email servers are identifying and filtering marketing emails.
3. May feel intrusive to consumers: Customers may not remember providing their email address to you or accepting an agreement to receive emails. Be sure your email includes a link to unsubscribe from future emails.

2. Social media

Social media is a crucial component of many companies' marketing plans because of its popularity and longevity.

• Advantages of social media

1. Large audience: Billions of people use social media worldwide.
2. Highly targeted ads: Companies can use the large amounts of data collected on users, like habits, purchase history and friends.
3. Can be inexpensive: Using social media organically to post and interact with customers can be free or very inexpensive.
4. Interactive: Social media posts can have interactive capabilities for viewers, increasing engagement.
5. Direct connection to consumers: Companies can use social media to speak directly to consumers in real time.
6. Large amount of performance evaluation data available: Advertisers can use a number of programs to monitor, track and report on social media ad performance.

• Disadvantages of social media

1. Competition: Other companies seeking to reach your same audience may compete for the same ad space.
2. User research can become expensive: The more in-depth your research, the more expensive it will be.
3. Can feel intrusive to consumers: Customers may feel a lack of privacy when viewing highly targeted ads.
4. Potential for negative comments: Open comments sections may include negative posts.
5. Time-consuming: Building a brand and using social media effectively requires frequency, consistency and a high level of responsiveness to gain followers.

D. OUT OF HOME MEDIA

Out-of-home (OOH) media reaches consumers where they spend their time outside, including city streets, highways and transit stations. The following are types of OOH media along with the corresponding advantages and disadvantages:

1. Billboards and outdoor signs

Billboards and outdoor signs may appear along busy streets, recreation centers, city sidewalks and retail centers.

• Advantages of billboards and outdoor signs

1. Wide reach: In high-density areas, hundreds or thousands of people may see your ads.
2. Inexpensive: Billboards and posters are cheaper than many other forms of advertising.
3. Frequency: People who travel the same route or frequent the same locations see your ads regularly.
4. Impactful messaging: Advertisers can use the small amount of space on a billboard or sign to create powerful statements that attract attention.

• Disadvantages of billboards and outdoor signs

1. Limited audience targeting: The audience for outdoor advertising is often less targeted, as advertisers cannot filter for demographics.
2. Low response rate: While billboards and posters can remind consumers of your brand, they may rarely lead to action.
3. Audience desensitisation: If consumers see your ads daily for months, they may become desensitised to the message.

2. Transit station ads

You can find OOH media in bus stations, subway stations, train stations and airports where there is always a lot of foot traffic. The advantages and disadvantages of these types of ads are similar to billboards and outdoor signs.

• Advantages of transit station ads

1. Wide reach
2. Inexpensive
3. Impactful messaging

• Disadvantages of transit station ads

1. Limited audience targeting
2. Low response rate
3. Performance difficult to measure

Question No. 4 - Principles of Marketing BCOE - 141

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BCOE - 141 - Principles of Marketing

Question No. 4

What is augmented and virtual reality? State its advantages and limitations. 

• Augmented reality 

Augmented reality (AR) is an enhanced version of the real physical world that is achieved through the use of digital visual elements, sound, or other sensory stimuli delivered via technology. It is a growing trend among companies involved in mobile computing and business applications in particular.

Amid the rise of data collection and analysis, one of augmented reality’s primary goals is to highlight specific features of the physical world, increase understanding of those features, and derive smart and accessible insight that can be applied to real-world applications. Such big data can help inform companies' decision-making and gain insight into consumer spending habits, among others.

Augmented reality continues to develop and become more pervasive among a wide range of applications. Since its conception, marketers and technology firms have had to battle the perception that augmented reality is little more than a marketing tool. However, there is evidence that consumers are beginning to derive tangible benefits from this functionality and expect it as part of their purchasing process.

For example, some early adopters in the retail sector have developed technologies that are designed to enhance the consumer shopping experience. By incorporating augmented reality into catalog apps, stores let consumers visualize how different products would look like in different environments. For furniture, shoppers point the camera at the appropriate room and the product appears in the foreground.

Elsewhere, augmented reality’s benefits could extend to the healthcare sector, where it could play a much bigger role. One way would be through apps that enable users to see highly detailed, 3D images of different body systems when they hover their mobile device over a target image. For example, augmented reality could be a powerful learning tool for medical professionals throughout their training.

• Benefits of AR:

1. The primary benefit of Augmented Reality is that it can be used by anyone including mentally and physically disabled individuals.
2. It blurs the line of difference between the virtual and real world, thus increasing its usability and effectiveness in the area of application.
3. It possesses a highly interactive nature which enable to assess several instances in advance.
4. Success or failure of an instance can be determined by using the computing power of AR, thus saving a ton of money.
5. It finds its heavy usage in the field of health, thus increasing the accuracy of diagnosis for diseases. Since now, it has saved lives of numerous patients.

• Drawbacks of AR:

1. One major drawback of AR based application is the lack of privacy
2. AR based applications or devices cannot be leveraged without appropriate training thus increase costs and time involved
3. There can be certain instances where such applications have recorded low performance, thus reducing the overall appeal of the package.
4. It can get extremely costly to develop and maintain an AR based device or an application.

• Virtual reality 

The definition of virtual reality comes, naturally, from the definitions for both ‘virtual’ and ‘reality’. The definition of ‘virtual’ is near and reality is what we experience as human beings. So the term ‘virtual reality’ basically means ‘near-reality’. This could, of course, mean anything but it usually refers to a specific type of reality emulation.

We know the world through our senses and perception systems. In school we all learned that we have five senses: taste, touch, smell, sight and hearing. These are however only our most obvious sense organs. The truth is that humans have many more senses than this, such as a sense of balance for example. These other sensory inputs, plus some special processing of sensory information by our brains ensures that we have a rich flow of information from the environment to our minds.

Everything that we know about our reality comes by way of our senses. In other words, our entire experience of reality is simply a combination of sensory information and our brains sense-making mechanisms for that information. It stands to reason then, that if you can present your senses with made-up information, your perception of reality would also change in response to it. You would be presented with a version of reality that isn’t really there, but from your perspective it would be perceived as real. Something we would refer to as a virtual reality.

So, in summary, virtual reality entails presenting our senses with a computer generated virtual environment that we can explore in some fashion.

• Advantages of Virtual Reality:

1) Virtual reality creates a realistic world

2) It enables user to explore places.

3) Through Virtual Reality user can experiment with an artificial environment.

4) Virtual Reality make the education more easily and comfort.

• Disadvantages of Virtual Reality

1) The quipments used in virtual reality are very expensive.

2) It consists of complex technology.

3) In virtual reality environment we cant move by our own like in the real world.

Question No. 3 - Principles of Marketing BCOE - 141

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BCOE - 141 - Principles of Marketing

Question No. 3

What do you understand by channel of distribution? Discuss the functions of channel of distribution.

Channels of Distribution or Distribution Channel can be defined as the path taken by the good or service when they move from manufacturer to the end consumers. The movement of the goods implies the physical distribution of the goods or the transfer of ownership.

It is the network of intermediaries such as wholesalers, retailers, distributors, agents, etc., who carry out a number of interrelated and coordinated functions in the flow of goods from its source to its destination. Additionally, it creates utility of time, place, form, and possession to the product by the quick and efficient performance of the function of physical distribution.

Have you ever wondered that product manufacturing units of various companies are set up at a particular location only, but the consumers of that product are everywhere across the globe, so how these goods are available to the people residing in a place distant from the place where the manufacturing unit is located? Well, it is the channels of distribution that act as an intermediary to make the goods available to the intended consumer.

Channels of Distribution implies the means through which the good or service need to pass to reach the intended consumer. Based on the number of intermediaries involved, the channel of distribution can be short or long. Further, it has a great impact on the company’s sales, as the higher the availability of the goods, the more will be its sales.

Depending on the type of the product, i.e. good or service, different marketing channels are employed by the companies.

• Functions of Channel of Distribution

The functions performed by the channels of distribution are divided into three main categories:

1. Transactional Functions: Functions like buying, selling, and risk-bearing which are relevant to a transaction are called transactional functions. Producers sell goods to intermediaries, who further sell them to the customers. In this way, the title of goods changes hands, and goods flow from producer to consumer. In the absence of any buying and selling, there won’t be any transaction.

2. Logistical Functions: It involves the physical exchange of the goods such as assembling, storage, sorting, grading, packing, and transportation. This is to make certain that goods must reach the marketplace at right time and sell to the consumers conveniently.

3. Facilitating Functions: Functions like post-purchase service, maintenance, financing, information dissemination, channel coordination, etc form part of facilitating functions.

Question No. 2 - Principles of Marketing BCOE - 141

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BCOE - 141 - Principles of Marketing

Question No. 2

What do you mean by consumer buying behaviour? Explain the factors influencing consumer buying behaviour. 

Consumer behavior is the study of consumers and the processes they use to choose, use (consume), and dispose of products and services, including consumers’ emotional, mental, and behavioral responses. Consumer behavior incorporates ideas from several sciences including psychology, biology, chemistry, and economics. 

Studying consumer behavior is important because it helps marketers understand what influences consumers’ buying decisions. By understanding how consumers decide on a product, they can fill in the gap in the market and identify the products that are needed and the products that are obsolete. Studying consumer behavior also helps marketers decide how to present their products in a way that generates a maximum impact on consumers. Understanding consumer buying behavior is the key secret to reaching and engaging your clients, and converting them to purchase from you.

Consumer behavior is often influenced by different factors. Marketers should study consumer purchase patterns and figure out buyer trends. In most cases, brands influence consumer behavior only with the things they can control; think about how IKEA seems to compel you to spend more than what you intended to every time you walk into the store.

• What affects consumer behavior?

Many things can affect consumer behavior, but the most frequent factors influencing consumer behavior are:

1. Marketing campaigns

Marketing campaigns influence purchasing decisions a lot. If done right and regularly, with the right marketing message, they can even persuade consumers to change brands or opt for more expensive alternatives. Marketing campaigns, such as Facebook ads for eCommerce, can even be used as reminders for products/services that need to be bought regularly but are not necessarily on customers’ top of mind (like an insurance for example). A good marketing message can influence impulse purchases.

2. Economic conditions

For expensive products especially (like houses or cars), economic conditions play a big part. A positive economic environment is known to make consumers more confident and willing to indulge in purchases irrespective of their financial liabilities. The consumer’s decision-making process is longer for expensive purchases and it can be influenced by more personal factors at the same time. 

3. Personal preferences

Consumer behavior can also be influenced by personal factors: likes, dislikes, priorities, morals, and values. In industries like fashion or food, personal opinions are especially powerful. Of course, advertisements can influence behavior but, at the end of the day, consumers’ choices are greatly influenced by their preferences. If you’re vegan, it doesn’t matter how many burger joint ads you see, you’re not gonna start eating meat because of that.

4. Group influence

Peer pressure also influences consumer behavior. What our family members, classmates, immediate relatives, neighbours, and acquaintances think or do can play a significant role in our decisions. Social psychology impacts consumer behaviour. Choosing fast food over home-cooked meals, for example, is just one of such situations. Education levels and social factors can have an impact.

5. Purchasing power

Last but not least, our purchasing power plays a significant role in influencing our behavior. Unless you are a billionaire, you will consider your budget before making a purchase decision.The product might be excellent, the marketing could be on point, but if you don’t have the money for it, you won’t buy it. Segmenting consumers based on their buying capacity will help marketers determine eligible consumers and achieve better results.

Question No. 1 - Principles of Marketing BCOE - 141

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BCOE - 141 - Principles of Marketing

Question No. 1 

What is marketing? Explain the different marketing concepts. 

Marketing refers to activities a company undertakes to promote the buying or selling of a product or service. Marketing includes advertising, selling, and delivering products to consumers or other businesses. Some marketing is done by affiliates on behalf of a company.

Professionals who work in a corporation's marketing and promotion departments seek to get the attention of key potential audiences through advertising. Promotions are targeted to certain audiences and may involve celebrity endorsements, catchy phrases or slogans, memorable packaging or graphic designs and overall media exposure.

Marketing as a discipline involves all the actions a company undertakes to draw in customers and maintain relationships with them. Networking with potential or past clients is part of the work too, and may include writing thank you emails, playing golf with prospective clients, returning calls and emails quickly, and meeting with clients for coffee or a meal.

At its most basic level, marketing seeks to match a company's products and services to customers who want access to those products. Matching products to customers ultimately ensures profitability.

Marketing is the process of “creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large,” according to the American Marketing Association. This process is done in a number of different ways; marketing professionals use one or more of the five concepts of marketing in order to earn consumer confidence and create profitable, long-term relationships with consumers. But not all the concepts are equally effective.

Robert Katai, an experienced marketing strategist, provides the definition of a marketing concept: “A strategy that companies and marketing agencies design and implement in order to satisfy customers’ needs, maximize profits, satisfy customer needs, and beat the competitors or outperform them.” The main five include the production, product, selling, marketing, and societal concepts, and they have been evolving for decades. Not every concept is beneficial to every business, so here is a timely and convenient opportunity to learn more about each one.

• The Production Concept

The production concept is focused on operations and is based on the assumption that customers will be more attracted to products that are readily available and can be purchased for less than competing products of the same kind. This concept came about as a result of the rise of early capitalism in the 1950s, at which time, companies were focused on efficiency in manufacturing to ensure maximum profits and scalability. 

This philosophy can be useful when a company markets in an industry experiencing tremendous growth, but it also carries a risk. Businesses that are overly focused on cheap production can easily lose touch with the needs of the customer and ultimately lose business despite its cheap and accessible goods.

• The Product Concept

The product concept is the opposite of the production concept in that it assumes that availability and price don’t have a role in customer buying habits and that people generally prefer quality, innovation, and performance over low cost. Thus, this marketing strategy focuses on continuous product improvement and innovation. 

Apple Inc. is a prime example of this concept in action. Its target audience always eagerly anticipates the company’s new releases. Even though there are off-brand products that perform many of the same functions for a lower price, many folks will not compromise just to save money. 

Working on this principle alone, however, a marketer could fail to attract those who are also motivated by availability and price. 

• The Selling Concept

Marketing on the selling concept entails a focus on getting the consumer to the actual transaction without regard for the customer’s needs or the product quality — a costly tactic. This concept frequently excludes customer satisfaction efforts and doesn’t usually lead to repeat purchases. 

The selling concept is centered on the belief that you must convince a customer to buy a product through aggressive marketing of the benefits of the product or service because it isn’t a necessity. An example is soda pop. Ever wonder why you continue to see ads for Coca Cola despite the prevalence of the brand? Everyone knows what Coke has to offer, but it’s widely known that soda lacks nutrients and is bad for your health. Coca Cola knows this, and that’s why they spend astonishing amounts of money pushing their product. 

• The Marketing Concept

The marketing concept is based on increasing a company’s ability to compete and achieve maximum profits by marketing the ways in which it offers better value to customers than its competitors. It’s all about knowing the target market, sensing its needs, and meeting them most effectively. Many refer to this as the “customer-first approach.”

Glossier is a recognizable example of this marketing concept. The company understands that many women are unhappy with the way that makeup affects the health of their skin. They also noticed that women are fed up with being told what makeup products to use. With this in mind, Glossier introduced a line of skincare and makeup products that not only nourish the skin but are also easy to use and promote individualism and personal expression with makeup.

• The Societal Concept

The societal marketing concept is an emerging one that emphasizes the welfare of society. It’s based on the idea that marketers have a moral responsibility to market conscientiously to promote what’s good for people over what people may want, regardless of a company’s sales goals. Employees of a company live in the societies they market to, and they should advertise with the best interests of their local community in mind. 

The fast-food industry is an example of what the societal concept aims to address. There’s a high societal demand for fast food, but this food is high in fat and sugar and contributes to excess waste. Even though the industry is answering the desires of the modern consumer, it’s hurting our health and detracting from our society’s goal of environmental sustainability.

BCOE 141 Principles of Marketing Assignments Solutions

Solutions to Assignments 

BCOE - 141 - Principles of Marketing

Section A