Welcome to the Marketing Concepts lecture of VDIS10017the Consumer and the Designer. This lecture will examineMarketing theories as they apply to designers. It is importantthat designers understand these theories and practicesbecause in the most part designers are working directly with orfor marketing professionals.Marketing is the process of communicating the value of aproduct or service to customers. It is a critical business functionfor attracting customers. From a societal point ofview, marketing is the link between a society’s materialrequirements and its economic patterns of response.
Marketing satisfies these needs and wants through exchangeprocesses and building long term relationships. The process ofcommunicating the value of a product or service throughpositioning to customers. Marketing can be looked at as anorganisational function and a set of processes forcreating, delivering and communicating value tocustomers, and managing customer relationships in ways thatbenefit the organisation and its shareholders.Marketing chooses target markets through market analysis andmarket segmentation, understanding consumer buyingbehaviour and providing superior customer value.
There are five competing concepts under which organisationscan choose to operate their business; the production concept,the product concept, the selling concept, the marketingconcept, and the holistic marketing concept.The four components of holistic marketing are relationshipmarketing, internal marketing, integrated marketing, andsocially responsive marketing. Successful marketingmanagement includes, capturing marketing insights, connectingwith customers, building strong brands, shaping the marketofferings, delivering and communicating value, creating long-term growth, and developing marketing strategies and plans.
Customer Orientation: An organisation in the marketeconomy survives by producing goods and services thatpersons are willing and able to buy.Consequently, ascertaining consumer demand is vital for futureviability and even existence as a going concern. Manyorganisations today have a customer focus (or marketorientation). They focus their activities and products onconsumer demands with designers involved. There are threekey approaches to doing this; ie: consumer-driven, marketchange identification and/or product innovation.
In the consumer-driven approach, consumer wants are thedrivers of all strategic marketing decisions. No strategy ispursued until it passes the test of consumer research. Everyaspect of a market offering, including the nature of the productitself, is driven by the needs of potential consumers.The starting point is always the consumer. The rationale forthis approach is that there is no reason to spend on Researchand Development and design developing products that peoplewill not buy. History attests to many products that werecommercial failures in spite of being technologicalbreakthroughs.
Market change identification is an important task to undertakeconstantly through consumer research, as discussed in ourlecture; A Designers Guide to Research. Every aspect of amarket offering, can change regularly including the nature ofthe product and/or service required. This is always driven bythe needs of potential consumers.Product and service innovation is the area for Research andDevelopment and the Design professionals and in thepreceding lecture Emergent Design Methodologies and Ideaswe have discussed their processes in depth.
The Four Ps: A formal approach to this customer-focusedmarketing is known as SIVA(Solution, Information, Value, Access). This system is basicallythe four Ps renamed and reworded to provide a customerfocus. The SIVA Model provides a demand/customer-centricalternative to the well-known 4four Ps supply side model(product, promotion, price, placement) of marketingmanagement.Product Promotion Price Place (Distribution)→ → → →Solution Information Value Access
If any of the four Ps become problematic for an organisation orare not a marketing factor of the business, the business couldfind itself in trouble with competitors appearing in the marketplace, and its consumer demand on this product decreasing.In recent years service marketing has widened the domains tobe considered by marketers, increasing us to the seven Ps ofmarketing. The proposed additional three Ps of servicemarketing are: process, physical environment and people.Some consider there to simply be a fifth "P": positioning.
Organisational orientation: An organisations marketingdepartment is often seen as of prime importance within thefunctional level of that organisation. Information from anorganisations marketing department would be used to guidethe actions of other departments. As an example, a marketingdepartment could ascertain (via market research) thatconsumers desired a new type of product, or a new usage foran existing product. With this in mind, the marketingdepartment would brief the Research and Development (R&D)department and designers to create a design of a product orservice based on the consumers new desires.
The production department would then start to manufacturethe product, while the marketing department would focus onthe marketing; promotion, distribution, pricing, etc. of theproduct. Additionally, a organisations finance departmentwould be consulted, with respect to securing appropriatefunding for the development, production and promotion of theproduct.Often interdepartmental issues may arise: production mayoppose the installation, support and servicing of new capitalequipment and stock needed to manufacture a new product.Finance may oppose the required capital expenditure, since itcould undermine the cash flow of the organisation.
Herd Behaviour: Herd behaviour in marketing is used toexplain the dependencies of customers on mutual behaviour,relying on marketing mechanisms to increase impulse buyingand get people to buy more by playing on the herd instinct.People will buy more of products or services that are seen tobe popular, and several feedback mechanisms to get productpopularity information to consumers are known, includingsmart card technology, social media activity, mobile deviceconnectivity and the use of radio frequency identification tags.Online retailers often inform consumers of "which products arepopular with like-minded consumers” eg: Amazon, Ebay...
Market Research: As discussed in our lecture; A DesignersGuide to Research, market research, as a sub-set aspect ofmarketing activities, can be divided into the following parts:- Primary research (also known as field research), whichinvolves the conducting and compilation of research for aspecific purpose.- Secondary research (also referred to as deskresearch), initially conducted for one purpose, but oftenused to support another purpose or end goal.
By these definitions, an example of primary research would bemarket research conducted into health foods, which is usedsolely to ascertain the needs/wants of the target market forhealth foods. Secondary research in this case would beresearch about health foods, but used by a firm wishing todevelop an unrelated product into a similar market area.Primary research is often expensive to prepare, collect andinterpret from data to information. While secondary research isrelatively inexpensive, it often can become outdated andoutmoded quickly, given that it is used for a purpose other thanthe one for which it was intended.
Primary research can also be broken down into quantitativeresearch and qualitative research, which, as the termssuggest, relate to the numerical and non-numerical researchmethods and techniques used, respectively.The appropriateness of each mode of research depends onwhether data can be quantified (quantitative research), orwhether subjective, non-numeric or abstract concepts arerequired to be studied (qualitative research).
Other additional modes of marketing research are:- Exploratory research, research that investigates assumptions.- Descriptive research, which, as the term suggests, describes"what is”- Predictive research, meaning research conducted to predict afuture occurrence.- Conclusive research, for the purpose of deriving a conclusionvia a research process.
Market Segmentation: Market segmentation is the division ofa market of consumers into persons with similar needs andwants. For instance, Kelloggs cereals, Frosties are marketedto children. Crunchy Nut Cornflakes are marketed to adults.Above are two similar products which are marketed to twodistinct groups of people, both with similar needs, traits, andwants. In another example, Sun Microsystems can usemarket segmentation to classify its clients according to theirpromptness to adopt new products. Market segmentationallows for a better allocation of a firms finite resources.
Any organisation only possesses finite resources and mustmake choices (and incur the related costs) in servicingspecific segments of its consumers. In this way, thediversified tastes of contemporary consumers can be servedbetter.With growing diversity in the tastes of modernconsumers, organisations are taking note of the benefit ofservicing a multiplicity of segmented new markets. Marketsegmentation can be defined in terms of the STPacronym, meaning Segment, Target and Position.
Marketing Strategy: Marketing strategy considers the totalmarketing environment and its impacts on a company orproduct or service. The emphasis is on "an in depthunderstanding of the market environment, particularly thecompetitors and customers.”A given organisation may offer numerous products or servicesspanning numerous and sometimes wholly unrelatedmarketplaces. A marketing plan is required in order toeffectively serve the strategy, including weighing up how toutilize finite resources such a communicationsdesign, advertising (traditional and online) and directmarketing.
For example, a start-up car manufacturing firm would facelittle success should it attempt to rival Toyota, Ford, Nissan,Chevrolet, or any other large global car maker. Such ascenario would require a unique marketing strategy.A marketing strategy differs from a marketing tactic in that astrategy looks at the longer term view of the products, goods,or services being marketed. A tactic refers to a shorter termview. Mailing of a postcard or sales letter is a tactic, but acampaign considering retail locations, regular postcards,letters, internet advertising, editorial placement is a strategy.
Brand Management: Brand management is a communicationfunction that includes analysis and planning on how any givenbrand is positioned in the market place, which segment of thepublic the brand is targeted at, and maintaining a desiredreputation of the brand. Developing a good brand relationshipwith a market is essential for brand management.Tangible elements of brand include the product itself; the lookand feel, price, packaging. Intangible elements areexperiences that the consumer takes away from thebrand, and also the relationship that they have with the brandsuch as after sales service. A brand manager would overseeall of these things.
B2C Buying Behaviour: This behaviour concerns consumersand their purchase of a given product such as a pair ofsneakers, the desire for a pair of sneakers would be followedby an information search on available types/brands. This mayinclude perusing media outlets, and the internet and commonlyinformation from family and friends. Purchase decision is madethe consumer buys the product through an outlet or online.Following this stage, a post-purchase evaluation is oftenconducted, comprising an appraisal of the purchase. If thevalue/utility is high, then repeat purchases may occur whichcould develop consumer loyalty to the brand or organisation.
B2B Buying Behaviour: Relates to organisational/industrialprovider buying behaviour. Business buy either wholesale fromother businesses or directly from the manufacturer in contractsor agreements.B2B marketing involves one business marketing a product orservice to another business and often the strategies and planshave to same content but with different targeting.B2C and B2B behaviour are not precise terms, as similaritiesand differences exist between and within them.
Use of Technologies: Marketing relies on varioustechnologies. Computer-based information systems areemployed, aiding in better processing and storage of data.Most common of these are Customer RelationshipManagement systems (CRM), software for direct marketingand data collection.Marketing researchers within organisations use informationsystems, hardware and software components, to collect rawmarket data through enhanced data gathering methods. Thedata from information technology improves an organisationsmarketing decision-making process.
Information technology has typically progressed at a fastrate, leading to marketing managers needing to be aware ofthe latest technological developments. In recent years, thenotebook/laptop personal computer has gained significantmarket share, largely due to its more user-friendly size andportability.Smartphones resulted from a demand among consumers formore technologically advanced portable (mobile) andconvenient products. An organisation can lose out to itscompetitors if it ignores these innovations in its industry.
Technological advancements can lessen barriers betweencountries and regions. Using the internet, organisations canquickly dispatch information from one country to anotherwithout restrictions. Prior to the mass usage of theInternet, such transfers of information would have taken muchlonger.More recently, there has been a large emphasis on dataanalytics. Data can be mined from various sources such asonline forms, mobile phone applications, internet browsingand more recently, social media activity.
Services Marketing: Services marketing is the marketing ofservices, as opposed to tangible products. A service is typicallydefined as a purchase which is used and consumedsimultaneously. It does not have material form, and thereforerequires a considered, different approach to its marketing.The use of a service is inherently subjective, meaning thatseveral persons experiencing a service would each experienceit uniquely; ie: riding a train, viewing a movie or seeing aconsultant. Services can also be viewed as a spectrum; notpure goods or pure services; ie: a restaurant, where a waitersservice is intangible, but the food is tangible.
A Summary of Marketing Concepts: The purpose of thislecture is for you as a designer to consider how you will workwith those in the marketing discipline and how your productswill serve your customers as either the product itself or as thecommunication that promotes and positions the product orservice.Designers have a lead role to play in this business continuumand it is only by understanding the responsibilities andmethodologies of your business colleagues that you will beable to appreciate their skills and work with them a s a team.