Revision

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Revision Summary

• Marketing for Engineers
• ELE 31MEL ELE 41EMT

Revision 3 June, 2005
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General Comments

• The profession of Engineering is not limited to
  the aspects of planning, design, construction,
  testing, operation, and maintenance of physical
  systems.
• The functions and responsibilities of engineers
  go well beyond the technical aspects of products
  and services.
• This subject was intended to provide an
  introduction and awareness to the students of
  engineering and computer science.

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Please Note

• The exam is not limited to the materials
  presented in this revision lecture.
• Students are advised to go through all the
  lecture notes and past exam papers.

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The lectures covered

• The Nature of Marketing
• Strategic Marketing
• Environmental Forces
• Global Information Systems Marketing Research
• Consumer Behaviour
• Business Market Organisational Buying

• Market Segmentation
• Integrated Marketing Communications
• Pricing Concepts
• Pricing Strategies Tactics
• Marketing Arithmetic for Business Analysis
• Marketing of Services

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A Definition of Marketing
Marketing is the process of planning and
executing the conception, pricing, promotion, and
distribution of ideas, goods, and services to
create exchanges that will satisfy individual and
organisational objectives. The American
Marketing Association
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The Marketing Mix

• Product
• Place
• Promotion
• Price

The Four Ps
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Successful Marketing

• Understanding consumers needs
• Understanding consumer behaviour
• Good marketing research
• Realistic sales forecast
• Market segmentation
• Pricing strategy

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InformationThe Basis of Effective Marketing

• Marketing decision making requires analysis and
  evaluation of information about the
  organisations customers, environment, and
  marketing activities.
• Effective marketing requires
• Understanding past events,
• Identifying what is occurring now, and
• Predicting what might occur in the future.

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Data Information

• Data - Facts and recorded measures of phenomena.
• Information - Data in a format useful to decision
  makers.
• Primary Data - Data gathered and assembled
  specifically for the project at hand.
• Secondary Data - Data previously collected and
  assembled for some purpose other than the one at
  hand.

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Sales Forecasting

• Marketing Managers need information about the
  future to make decisions today.
• They need to ask
• What will be the size of the market next year?
• How large a share of the market will we have in
  five years?
• What changes in the market can we anticipate?

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Forecasting Options

• Executive Opinion
• Sales Force Composite
• Survey of Customers
• Projection of Trends
• Analysis of Market Factors

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Executive Opinion

• Based on years of experience in the industry and
  well informed opinion of Executives.
• Non-Scientific technique, based on the biased
  opinion of an Executive, being consciously or
  unconsciously.
• It can be overly pessimistic or overly
  optimistic.
• Should not be used in isolation but in
  conjunction with other methods.

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Sales Force Composite

• Sales representatives project their own sales for
  the upcoming period then combing the result.
• Based on the logic that sales representatives are
  most familiar with the local market and
  competitive activities.
• May yield subjective predictions which can be too
  limited.

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Survey of Customers

• Basically asking customers how many units they
  intend to buy.
• Best for established products.
• For new products, customers expectations may not
  indicate their actual behaviour.

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Projection of Trends

• Based on identifying trends and extrapolating
  past performance into the future.
• It suggests that if sales increased by 10 every
  year for the past five years, then next years
  sale should also increase by 10.
• Works well in mature markets that do not
  experience dynamic changes.

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Analysis of Market Factors

• Used when there is association between sales and
  an other variable, called a factor.
• Population is a general market factor that is
  linked to consumption.
• Other examples of factors are income and retail
  sales.
• A number of factors are combined into a market
  index.

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Market Segmentation

• Market segmentation is one of marketings most
  powerful tools.
• Whatever set of variables they use, effective
  marketers try to identify Meaningful Target
  Segments so they can develop customer-satisfying
  Marketing Mix.

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The Term Market Redefined
A market is a group of individuals or
organisations that may want the good or service
being offered for sale and that meet these three
additional criteria
1. The purchasing power to be able to buy the
product being offered. 2. The willingness to
spend money or exchange other resources to obtain
the product. 3. The authority to make such
expenditure.
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Assumptions

• 1. Not all buyers are alike.
• 2. Subgroup of people with similar behaviour,
  values, and background may be identified.
• 3. The subgroups will be smaller and more
  homogenous than the market as a whole.
• 4. It should be easier to satisfy smaller groups
  of similar customers than large groups of
  dissimilar customers.

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The Market
C1
C13
C9
C10
C5
C20
C12
C2
C11
C91
C4
C6
C15
C17
C7
C14
C3
C18
C8
C16
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is broken down
C1
C13
C9
C10
C5
C20
C12
C2
C11
C91
C4
C6
C15
C17
C7
C14
C3
C18
C8
C16
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and grouped into meaningful market segments
C7
C11
C1
C15
C18
C4
C12
C8
C5
C2
C19
C16
C13
C9
C6
C20
C3
C17
C14
C10
1
3
2
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so that a TARGET MARKET can be chosen
C15
C18

• Product
• Price
• Place
• Promotion

C19
C16
C20
C17
3
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Meaningful Market Segment
Is the market potential of adequate size?
Is the segment accessible?
Is there a characteristic that distinguishes the
segment?
Yes
Yes
Yes
No
No
No
The market segment is not meaningful.
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Cont.
Consider choosing this meaningful market segment
as a Target Market.
Will the market segment respond favourably to a
specialised Marketing Mix?
Yes
No
The market segment is not meaningful.
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Basis for Segmentation

• Demographic
• Socioeconomic
• Life Style/Psychographic
• Geographic
• Behaviour patterns
• Consumption patterns
• Consumer predisposition

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Target Marketing Strategies

• 1. Undifferentiated Marketing
• 2. Concentrated Marketing
• 3. Differentiated Marketing
• 4. Custom Marketing

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Relationship Marketing

• Relationship marketing (management) activities
  are aimed at building long-term relationships
  with parties that contribute to the companys
  success, especially customers.
• Marketing is an activity involved in getting and
  keeping customers.

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What is a Marketing Strategy

• A marketing strategy is a plan identifying
• What marketing Goals and Objectives will be
  pursued, and
• How will they be achieved within the time
  available.
• Tactics are specific actions that are intended
  for implement strategies.

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The Timing Factor

• Timing is a very crucial factor for the success
  of any marketing effort.
• Get your products/services to market before your
  competitors,
• Release the products/services at the right time
  when it is required by the market (customers),
• Consider the life of the product/service,
• Timing must fit with the overall business
  strategic plan.

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The Strategic Marketing Process
PLANNING STAGES 1. Identify and evaluate
opportunities 2. Analysing market segments and
selecting target markets 3. Planning a market
position and developing a marketing mix
strategy 4. Preparing a formal marketing plan
5. Executing the plan.
6. Controlling efforts and evaluating the results.
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Situation Analysis
Organisations internal Strengths Weaknesses
Conduct situation analysis in light
of organisational goals
Threats Opportunities in the environment
Consider a Situation Analysis for companies you
are familiar with e.g. QANTAS, TELSTRA.
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Matching Opportunities to Organisations
Organisations desired position
Plans
Evaluate strategic gap
Organisations actual position
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SWOT
Key Opportunities
Key Threats
Key Strengths
Most Likely
Possible
Key Weaknesses
Possible
Unlikely
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Market/Product Mix
Markets
Existing
New
Market Penetration
Market Development
Existing
products
Diversification
Product Development
New
Consider QANTAS/Jetstar and TELSTRA/Fairfax
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Environment Types
Environment (Domestic, Foreign, World)
Macro- environment
Micro- environment
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Macroenvironment

• The broad social forces that shape every business
  and non-profit marketer.
• Components of the Macroenvironment
• Physical environment,
• Sociocultural forces,
• Demographic forces,
• Economic forces,
• Scientific knowledge and technology, and
• political and legal forces.

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Macroenvironmental Influence
Physical Environment
Sociocultural Forces
Demographic Forces
Marketing Mix
Economic Competitive Forces
Science Technology
Political Legal Forces
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Microenvironment

• Consists of the more immediate environmental
  forces that directly influence a company, such as
  
• Customers
• Competitors
• Suppliers
• Labour Market
• Government Agencies regulators, tax office

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Promotion
Communication with a Purpose
Informs
1
Persuades
2
Reminds
3
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The Promotion Mix

• Personal Selling
• Advertising
• Publicity / Public Relations
• Sales Promotions

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Push Strategy
Promotional
Promotional
Promotional
Manufacturer
Wholesaler
Retailer
Consumer
Product Flow
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Pull Strategy
Promotional
Manufacturer
Wholesaler
Retailer
Consumer
Product Flow
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Pricing Decisions
Company Objectives
Marketing Objectives
Product Objectives
Pricing Strategies and Policies
Distribution Objectives
Promotion Objectives
Price Objectives
List Prices, Discounts, etc.
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Establishing The Exact Price

• Markup on Selling Price Markup on Cost
• The Cost-Plus Method
• The Average-Cost Method
• Target Return Pricing
• Break-Even Analysis

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Marketing Arithmetic for Business Analysis

• Performance Ratios
• Return on Investment
• Break-Even Calculations
• Price Elasticity
• Economic Order Quantity

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Performance Ratios

• The gross margin percentage
• The net profit percentage
• The operating expenses ratio
• The stock turnover ratio

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Improving Net Profit

• Increasing prices
• Pricing objectives
• Supply v demand, etc.
• Reducing cost of goods sold
• Alternative sources
• Make or buy, etc.
• Reducing operating expenses
• Efficient use of resources
• Management policies, etc.

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Costs of operating a business(For ELE41 EMT
students, refer EIB lecture8 Costing of
Business)

• Trading
• Finance
• Premises
• Employees
• Selling
• Administration

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Example Break-Even Calculation
Suppose the following Selling price
10 Variable cost 5 Fixed cost 50,000
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Break-Even Analysis
Revenue
Area of profit
Loss Profit
Revenue and cost
Cost
Break-even point
Area of loss
Quantity of units produced and sold
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What is a Service ?
A service is an instrumental activity performed
for a consumer or a consummatory activity
involving consumer participation in, but not
ownership of, an organisations products or
facilities.
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The Characteristics of Services
Intangibility
1
Perishability
2
Inseparability
3
Variability
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Determinants of Service Quality

• Access
• Communication
• Competence
• Courtesy
• Reliability
• Credibility

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Wishing you all the best and good luck