CHAPTER TWO

MARKETING

Ayotola AREMU Ph.D. and Kehinde OLANIPEKUN Ph.D.

Learning objectives

By the end of this chapter, students should be able to:

·         explain the principle of marketing;

·         examine the importance of a marketing plan;

·         explain the marketing mix; and

·         explain how the marketing mix can be applied to businesses.

Introduction

This chapter explained the principles of marketing and the need for market planning. Ithighlights the steps needed for a successful market plan and the cause of failure of market plan. It explained the market mix, the 4Ps, how the 4Ps was modified to 7Ps and the application of marketing mix to different businesses. It also differentiates the differences between traditional and online marketing as well as their benefits using a case study to give it better understanding.

Contents

NIVEA brand is a very popular skin and beauty brand in the world. The cream was first introduced in 1991 and presently, they have 14 different products worldwide among which are suncare, facial moisturiser, deodorants and shower products. One of their products that brought the organisation to limelight is NIVEA FOR MEN which was launched in 1980. It broke the ground for them with its after shave balm product which is zero percent alcohol since majority of the aftershave balm in the market contains alcohol which can irritate the skin. In 1993, NIVEA FOR MEN developed different male skincare products. Figure 2.1 shows that the corporation researched into the skincare market and deduced from the research what men wanted and what they were willing to spend on.

Fig.2.1.   Nivea market research

To increase the UK skincare market, NIVEA FOR MEN re-launched their products and developed a market plan and activities to achieve their aims and objectives by carrying out the following steps in figure 2.2

Fig. 2.2. Nivea market plan

Several key indicators were used to assess the success of the NIVEA FOR MEN market in the UK. (See figure 2.3)

Fig. 2.3. Indicators of assessment of the success of NIVEA FOR MEN

      Market share - Did the re-launch accelerate this growth and help to achieve its market share objectives? NIVEA FOR MEN is a market leader in many countries and is consistently gaining additional market share.

      Overall sales - Was this in line with the objectives? Internationally, NIVEA FOR MEN skincare products grew by almost 20%. Its sales in the UK market at retail in 2008 were nearly £30 million and in line with expectations.

      Brand image ratings - NIVEA FOR MEN was the Best Skincare Range winner in the

FHM Grooming Award 2008 for the fifth year running. They got this award through the votes from consumers. It illustrates that NIVEA FOR MEN has an extremely positive brand image with consumers compared to other brands.

      Product innovation - In response to consumer feedback and following extensive product innovation and development, the NIVEA FOR MEN range has been expanded and the existing formulations have been improved.

These results show that in the UK, the NIVEA FOR MEN re-launch met its overall targets, which was a significant achievement, considering the difficult economic climate. The marketing plan for the re-launch used past performance and forecast data to create a new marketing strategy. This built on the brand and company’s strengths to take advantage of the increasing change of male attitudes to using skincare products.

Marketing

Marketing can be defined as the anticipation and identification of customer needs and requirements so as to be able to meet them, make a profit or meet other key organisational objectives.

There are many definitions of marketing. Kotler (1991) defines it as a social process by which individuals and groups obtain what they want and need through creating, offering and exchanging products of value with others. Chartered Institute of Management (CIM) (2015) defines marketing as the management process that identifies, anticipates and satisfies customer requirements’ profitability.

The principle of marketing involves a lot of processes which include communicating your value proposition to your target market. It also entails finding out the demand of the consumers and ensuring its availability to them. In the example of NIVEA, the company also explored the market to know the requirements of their consumers.

The issue of a market plan has brought about a lot of controversy. Some say having a market plan and strategy adds to the success of marketing while some do not see the need for it. Berkowitz defines the marketing plan as a written declaration identifying target markets, specifying the marketing objectives by individual products, grouping earnings and profits according to strategic business units, and containing scheduling and budget elements of the marketing mix, which together create the marketing programme.          

Reasons for marketing plan

Marketing planning has lots of advantages in that it outlines the specific actions to be carried out that would interest potential customers and clients in the product and services and would persuade them to buy the products and or services offered. Some of the reasons or benefits of market planning include:

(i) It ensures the marketing objectives are aligned with the business goals and strategy. The objectives will enable the organisation to achieve its business goals and help the business achieve its mission and become successful.

(ii) It formalises ideas and concepts: There will be no need to keep marketing ideas offhand; a well-documented marketing plan will yield more success. Writing and researching for your marketing plan gives you the chance to:

• identify your target market and understand how your product or service meets their needs;
• identify your competitors and what your target customers think about your competitors' strengths and weaknesses;
• position your brand, products and services so that your target market sees your business as better than, or different from, the competition;
• set specific, measurable goals and time frame for your marketing activities; and
• map out a strategy to reach your target audience, including the messages, channels and tools you will use.

(iii) It keeps one focused: There are so many marketing tools and technology available today, if care is not taken, one may lose sight of one’s intended business goals. Having a well-written marketing plan will keep one focused on what needs to be done and one will not waste time on non-essential factors.

(iv) It also ensures that the business’s products and services meet the needs of the target market and help the customers understand why the product or service is better than, or different from, the competitors.

(v) It helps in establishing tasks and timelines: Sometimes, marketing a business can be very tasking, but with a good marketing plan that states clearly definite objectives, one will be able to identify the various tasks that need to be attended to easily and also identify the timeline needed to complete each task.

(vi) It enables one obtain funding more easily: For any business or organisation to get financial aid, there must be a well-documented business plan. A business plan will give the lender more confidence in you who have a marketing plan than someone with no plan at all.

(vii) A good marketing plan can help in reaching your target audience, boost your customer base and increase your bottom line.

Many small scale business owners do not have a marketing plan. They often see it as a big task that involves spending a lot of money and organising advertising campaigns. However, marketing is much more than advertising and sales. Other reasons given by some business owners for not having a market plan are:

(i) Size of their business: Some small scale business owners are of the opinion that it is only a big and well established enterprise that can have a business plan and that a business plan is not for owners of small scale enterprises.

(ii) Time factor: Some business owners see the time taken to draft a marketing plan as a waste of time, that if such time were invested into their business, it would yield more.

(iii) Flexibility of business: Due to the flexible nature of their businesses, some business owners do not see the need of a market plan for their business.

Requirements for a marketing plan

The following are the essential requirements when putting together a market plan:

• a good level of internal and external communication among all subjects involved in the process of implementing the marketing plan. This was done in the case study above when they embarked on SWOT analysis.

• precise market research that determines customer needs and the quality of services in comparison with the competition. NIVEA, as seen above, carried out a survey in assessing their objectives. Part of what was done was to know the products being produced by their major competitor and to look for means of making their own products better in terms of quality in order to ensure higher demands from customers.

• internal marketing for the support of external marketing activities.

Failure of the marketing plan

Berkowitz listed the factors below as the most frequent reasons for the failure of a marketing plan. These factors include:

1. not taking account of external factors,

2. not monitoring client needs but being motivated merely on the basis of economic challenges,

3. over-extension of the marketing plan. NIVEA had a marketing plan between 3-5 years which is not too long. This was achieved using the SMART formula.

4. Non-familiarisation of each employee with the marketing plan. In the case of NIVEA, it was not only the management team that determined the marketing plan; other employees were also involved in implementing it. 

He stated further that it is not only the elaborator who is responsible for fulfilling the marketing plan, but also all who are involved in its creation.

The marketing mix

Marketing mix is an organisational framework that helps marketers to consider all aspects needed to satisfy customer needs. It can be defined as the "set of marketing tools that a firm or a business enterprise uses to pursue its marketing objectives in the target market. It is about putting the right product or a combination thereof in the right place, at the right time, and at the right price. It is also used to determine the proper strategy for a product. The most commonly used marketing framework is usually referred to as the 4Ps (Figure 4) namely:

(a)    Product

(b)   Price

(c)    Promotion

(d)   Place

Fig. 2.4.Marketing mix 4Ps

Jerome McCarthy (a marketing expert) provided a framework explaining the market mix 4P’s as shown below in Table 1. McCarthy's marketing mix framework was generally embraced and has since become one of the most enduring and widely accepted frameworks in marketing.

Table 2.1. McCarthy’s marketing mix

Product: This refers to what a firm or an enterprise has to offer for sale and this may include products or services. Product decisions may include the "quality, style, design, branding, packaging, services, warranties, guarantees, life cycles, investments and returns”. The following questions need to be put into consideration in developing the right product:

-          What does the client want from the service or product?

-          How will the customer use it?

-          Where will the client use it?

-          What features must the product have to meet the client’s needs?

-          Are there any necessary features that you missed out?

-          Are you creating features that are not needed by the client?

-          What’s the name of the product?

-          Does it have a catchy name?

-          What are the sizes or colours available?

-          How is the product different from the products of your competitors?

-          What does the product look like?

Price: This is the value that is put on a product depending on the cost of production, segment targeted, ability of the market to pay, supply - demand among others. These are decisions indicating "listing, discount and special offer in pricing, terms of payment whether credit or otherwise". Price also refers to the total cost a customer needs to acquire a product which may involve both monetary and psychological costs such as the time and effort expended in its acquisition. When setting the product price, marketers should consider the perceived value that the product offers. There are three major pricing strategies and these are:

-          market penetration pricing,

-          market skimming pricing, and

-          neutral pricing.

The following important questions should be asked when setting the product price:

-          How much did it cost you to produce the product?

-          What is the customers’ perceived product value?

-          Do you think that the slight price decrease could significantly increase your market share?

-          Can the current price of the product keep up with the price of the product’s competitors?

Place: This is the direct or indirect channel to marketing (point of sales). This can be the geographical distribution, territorial coverage, retail outlet, market location, catalogues and logistics among others. Place can be the physical location where a firm transacts business or the distribution channels used to reach markets. Place can mean a retail outlet; but mostly, it refers to virtual stores such as a mail order catalogue, a telephone call centre or a website. Some of the questions that should be looked into in developing your distribution strategy are:

-          Where do your clients look for your service or product?

-          What kind of stores do potential clients go to? Do they shop in a mall, in a regular brick and mortar store, in the supermarket or online?

-          How do you access the different distribution channels?

-          How is your distribution strategy different from your competitors?

-          Do you need a strong sales force?

-          Do you need to attend trade fairs?

-          Do you need to sell in an online store?

Promotion: This is the marketing communication used to make various offers that are available known to potential customers and to persuade or encourage them to investigate it further. Means of promotion include advertising, public relations, direct selling and sales promotions, word of mouth, press reports, incentives, commissions and awards to the trade. It can also include consumer schemes, direct marketing, contests and prizes. The following questions will be considered in order to create an effective product promotion strategy:

-          How can you send marketing messages to your potential buyers?

-          When is the best time to promote your product?

-          Will you reach your potential audience and buyers through television ads?

-          Is it best to use the social media in promoting the product?

-          What is the promotion strategy of your competitors?

Due to the limitations of the 4Ps concept, the 4Ps was later modified to a framework of a 7Ps (figure 5) concept comprising the original 4Ps and process, people and physical environment. The modified 7Ps concept is shown below in Table 2.

Fig. 4.5. The 4Ps modified to 7Ps

Table 2.2. Outline of the modified and expanded marketing mix

People: They are very important in the marketing of any product or service. There are situations where people are not producers, but the products themselves. An example of such is in the professional, financial or hospitality service industry where the people are the product.  They depict the public opinion of their organisation as much as any tangible consumer goods would have represented.

Process: These are various activities that bring about the delivery of the product benefits.  It can be a step by step action taken by different employees while attempting to complete a task. Some people are responsible for managing multiple tasks at a time. A typical example is the case of a restaurant manager who should be able to monitor the performance of employees, ensuring that processes are followed as well as supervise while customers are promptly greeted, seated, fed and led out so that the next customer can be attended to promptly.

Physical environment: This is the proof that the service has taken place. When buying a physical product, the physical evidence is the product itself. Booms and Bitner's framework states that "physical evidence is the service that is delivered and any tangible goods that facilitate the performance and communication of the service. Physical evidence is very important to consumers of any product because the tangible goods are the proof that the business owner has (or has not) met the customer’s expectations. The more inviting and conducive the physical environment that surrounds a product when it is sold, the more people are willing to pay or invest for such goods or service. A typical example is a 5-star hotel built in a serene and quiet environment and a hotel built in a slum area, people will prefer and be willing to pay more for the 5-star hotel because they are sure of the safety of their lives and property than to pay a token and stay in the slum area.

The 4Cs marketing model

The 4Cs marketing model is an extension of the marketing mix definition developed by Robert F. Lauterborn in 1990, namely: Cost, Consumer’s wants and needs, Communication and Convenience. Lauterborn states that:

• Cost-price is not the only cost incurred when purchasing a product. The cost of conscience or opportunity cost is also part of the cost of product ownership.
• Consumer Wants and Needs – A company should only sell a product that addresses consumer demand. So, marketers and business researchers should carefully study the consumer wants and needs.
• Communication – “promotion” is manipulative while communication is “cooperative”. Marketers should aim to create an open dialogue with potential clients based on their needs and wants.
• Convenience – The product should be readily available to the consumers. Marketers should strategically place the products in several visible distribution points.

Traditional versus online marketing

Case study

Tolu and Tobi decided to start a business. They both had great ideas about the business they wanted to establish; they went their separate ways to start their businesses. Tolu decided to start a brick and mortar store to sell his products. He rented a nice building at a nice location; he hired a number of sales persons, printed fliers and advertised in the newspaper. Within a few weeks, Tolu started getting sales and a lot of local customers. He was very excited. At the end of the day, he had a very high overhead but a very low profit margin. So he decided to weigh the season growth.

 Tobi on the other hand decided to start an online store to sell his products. He designed a good looking website with an attractive name “WELCOME TO TOBBY ONLINE SHOPPING; BROWSE PRODUCTS”. He invested in online marketing, advertised and paid for the website. Within a few weeks, Tobi started getting sales and a lot of customers from all over the country. Tobi was excited since he had very low overhead but a very high profit margin and he could not wait to see some growth. As years passed, Tolu was still in the same building with the same set of sales people and the same marketing strategy and the same local customers. His overhead was still very high and his profit margin was still very low. Meanwhile, Tobi had moved to a new office and hired more people and he kept getting lots of new customers from all over the country. Tobi decided to expand his business by starting another online store with a different product entirely.

                        After some years, Tolu and Tobi met again; Tobi told Tolu about his market strategy and Tolu realised his mistake which was that “traditional marketing can only take you so far, but thinking local and acting global will take you farther”. So, this time around, Tolu went back and fired his rusty sales people and fired the ‘old school’ personnel that handled fliers and adverts. He hired a good web designer and had all his marketing strategy online. Within a few weeks, Tolu was a happy man again, seeing increased profit and low overhead. He embraced Tobi and thanked him for his role in putting him in the right direction.

Marketing can be classified into two categories and these are basically traditional and online marketing. Online marketing can also be referred to as digital or internet marketing respectively. While the two are used in creating awareness about one’s organisation or what the organisation has to offer its customers, they also have some basic differences in their characteristics as shown below:

Table 3.3: Differences in the characteristics of traditional marketing and online marketing

Traditional marketing methods involve using:

(i) printed Media:– newspaper and magazine advertisements, leaflets, posters, guest articles, and catalogues

(ii) traditional Digital Media: Television and radio programme and sponsorship, bill boards and

(iii) tele-marketing.

However, online marketing method involves using:

(i) websites: ecommerce websites, blogs, banner advertisements, listing websites, online market places.

(ii) social media: post advertisement, personality sponsorship, product company pages

(iii) Search engine: SEO, search engine advertisement

Benefits of online marketing methods over traditional marketing methods

1. Inequality in playing:  Any organisation with a solid digital marketing strategy can compete with any of their counterparts, regardless of size. Tobi’s business with its online marketing expanded quickly, leaving Tolu to lag behind with his traditional way of marketing.

2. Reduced cost of publicising: With very little cost, any business can develop its online marketing strategy and replace its costly advertising medium such as Yellow Pages, television, radio and magazine. Tolu was paying repeatedly for fliers, media coverage and press which were adding to his overhead cost while Tobi just needed to update his website and other social media which added little to his overhead.

3. Easy monitoring: it is easier to assess what is or is not working for your business online and make quick moves to improve your results. For example, Google Analytics can be used to measure the traffic on your site so as to assess the specific goals you want to achieve for your website or blog. Tolu cannot determine how many people read or watch his adverts while Tobi can estimate the people streaming into his social media.

4. Instant results: there is no need to await responses to your business transactions like you would have to wait for a fax or form to be returned, rather, response will be got almost immediately. The number of people viewing your site, subscribing to a particular issue, responding to your adverts will be visible to you immediately. Tolu will need to wait for posts or telegraphs to get a response or make a trip before a particular task can be accomplished while Tobi will get instant responses which will determine the next line of action to be taken.

5. Modifying your strategy: Online marketing gives you the opportunity to refine your strategy anytime you see the need for it. Tobi can update and modify anything on his marketing strategy at any time while Tolu will take a longer time in making any alteration in his strategies.

6. Brand development: A solid digital marketing strategy, well-maintained website and personalised email marketing will provide significant value and lead to general opportunities. 

7. Greater exposure: As one marketing campaign with minimised cost, online marketing will give increased visibility to any business anywhere in the world. Tobi was able to expand his business easily, when within a short time, people were streaming in from all over the country, demanding for his products while Tolu was still at the same point of barely having any turn over.

8. Popularisation of the business: Using online mediums such as social media share buttons on your website, email, Facebook and other social media channels like twitter, whatsapp, hang on to mention a few, enables your message to be shared very quickly. A typical example is the effectiveness of sharing breaking news. 

9. Not intrusive: With online marketing, the viewers can monitor what they watch, can delete unwanted messages and pick the ones they are interested in.

10. Greater involvement: With digital marketing, clients can be encouraged to take actions like make a comment, like or share your page, read about your products and services, rate them, buy them and provide feedback which is visible to your market. This involvement will increase the track on your site and also boost and enhance the business.

It is glaring from the above example that Tolu was practising traditional marketing while Tobi was practising online marketing. Tolu’s business transaction was limited to its immediate environment or local community while Tobi’s had a wider coverage and was expanding rapidly. Therefore, to make good progress in any business, “THINK THE LOCAL WAY, BUT ACT GLOBAL”.

Summary

Marketing plan plays a very vital role in determining the success or failure of any business whether small, medium or large scale. Some of the reasons for having a market plan for any business are: it keeps one focused, it formalises one’s idea and concept and also makes sure one’s plan is in line with the market target and meets consumer’s needs.

Marketing mix assists the business owners in ensuring the satisfaction their customer needs in all areas. The most commonly used framework in market mixing is the 4Ps, namely: product, price, place and promotion. It was later modified into 7Ps which include the 4Ps and process, people and physical environment. An extension of the market mix was developed and was classed as the 4Cs (cost, consumer’s wants and needs, communication and convenience).

The method of marketing was classified into two namely: traditional and online marketing. Traditional marketing is the normal way of publicising one’s business through media like television, radio, billboards to mention a few while the online marketing is the modern way of publicising which include creation of website, Facebook, email and other social media. The advantages of online marketing over traditional marketing include lower cost, more publicity at a time and instant response.

Whatever the market plan you have for your business - the market mix (whether 4Ps, 7Ps or 4Cs), the market method (whether traditional or online marketing or a combination of both), the most important thing is to ensure that the following factors are integrated into your plan: profit, customer satisfaction, brand recognition and constant availability of your products.

Evaluation         

PART A

1.      Marketing mix is an organisational framework that

a.       helps marketers to satisfy customers

b.       helps marketers to satisfy marketers

c.        helps marketers to satisfy their managers

d.       helps marketers to satisfy competitors

2.      The following are the essential requirements of a marketing plan except

a.       market research

b.      proper communication

c.       consumer needs analysis

d.      economic development analysis

3.      A marketing plan is essential for

a.       formalising ideas and concepts

b.      contrasting business goals with marketing objectives

c.       producing goods not needed by customers

d.      losing customers

4.      The following are components of the marketing mix except

a.       place

b.      price

c.       progress

d.      promotion

5.      Traditional marketing methods are

a.       less expensive

b.      more expensive

c.       easier and faster to execute

d.      better at evoking immediate action from the audience

6.      What is marketing?

7.      State 5 reasons why marketing plan is important.

8.      Write short notes on the 4Ps of marketing mix.

9.      Explain the 3 points making up the modified 7Ps apart from the 4Ps of marketing.

10.  What are the extended 4Cs of the marketing mix?

PART B

Mary, after graduation from school, decided to go into cosmetics production. She focused on developing a detergent business that would be superior in quality. She added mild perfume that would stay on a cloth for a long period and also added a foaming agent that ensured it foamed well. She was well aware that the market was monopolised by big multinationals that produced different types of detergents that were available at an average price range. She therefore prepared her own marketing plan thus:

(i) the detergent would be available in different colours;

(ii) the price would be lower than those of the leading brand;

(iii) test marketing would be carried out in her neighbourhood and vicinity;

(iv) sales agents and distributors would be employed to promote marketing; and

(v) after a period of 6 months, she would introduce liquid soap and soap cake (solid soap) into her market.

a. How feasible is her market plan?

b. What guideline would you suggest for her plan to succeed?

c. What is your feeling about the future plan?

REFERENCES

Booms, B. H. and Bitner, M. J. 1981.Marketing Strategies and Organization Structures for Service Firms.Marketing of Services. American Marketing Association: 47–51.

Chartered Institute of Marketing. 2015. Marketing and the 7Ps: a brief summary of marketing and how it works. 1-12. https://www.cim.co.uk/files/7ps.pdfaccessed 13^thfeb. 2017.

Kotler, P. Marketing management, (Millennium Edition), Custom Edition for University of Pheonix, Prentice Hall, 2000, p. 9, marketing pundit.com

Kotler, Philip 2012. Marketing Management. Pearson Education.Northwestern

University, Kevin Lane Keller, Tuck School of Business, Dartmouth College p. 25

McCarthy, J. E. 1964. Basic Marketing: A Managerial Approach. Published by Richard D, Irwin,Homewood, IL: Irwin.

Web Search

businesscasestudies.co.uk .Developing a market plan- NIVEA case study.Browsed 13^th February 2017.

www.ices-study.org .Case Study NIVEA : Developing a Marketing plan. THE TIMES 100.www.thetimes100.co.uk, p105-108.Browsed 13^th February 2017.