Assessment 1 Context
Market Environment and Research
Defining Marketing
Marketing is generally described as "the process of creating, distributing, promoting, and
pricing goods, services, and ideas to facilitate satisfying exchange relationships with
customers in a dynamic environment" (Pride & Ferrell, 2000). Examine the Consumer Position
diagram. This is a classic diagram of the positioning of the consumer, elements of the
marketing mix, and the marketing environment.
The marketing mix lies at the core
of a marketing strategy.
Understanding and tracking the
marketing environment is a
critical marketing function,
focusing on the customer as the
center of the organization's
attention. The organization can,
and usually does, adjust its
products, pricing, promotion, and
place (distribution) to meet
consumer needs and to react to
external forces.
Product, pricing, promotion, and
place are commonly referred to
as "the four Ps."
1. Product: The product
variable deals with the
development of products
and services that address
consumer needs and
wants. This includes
product names, brand
decisions, warranties, and
other services associated
with the product.
2. Place: Products and services must be made available to consumers when and where
they need them. Marketing decisions in this area include inventory levels, distribution
methods, retail outlet decisions, and wholesaler agreements.
3. Price: Marketing decisions regarding the pricing of products and services include an
evaluation of the value the consumer receives in exchange for money, discount
promotions, and overall pricing objectives and positioning.
4. Promotion: Promotion includes sales activity, advertising, public relations, training
materials, and other communication tools for the marketer.
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Panache: Some consider panache to be the fifth "P." Panache is that creative element
derived from a truly integrated marketing plan that really sets an idea apart. For example, the
introduction of Legg's Panty Hose a number of years ago had such successful panache that it
forever changed the way products of this kind are marketed. Legg's introduced new packaging
(the egg container), new place (in grocery stores where women shopped every week, as
opposed to department stores), new low pricing, and terrific promotion. Another innovative
example is the Dell Computers direct-to-consumer model. The introduction of this distribution
model also set a new standard that others have had to follow.
Given the competitive nature of virtually every market these days, the successful marketing
plan must truly be an integrated one; one in which each element supports the message being
communicated by the other. For example, it is difficult to charge a high price for a product and
then channel it through non-exclusive distribution that will ultimately diminish its value in the
customer's mind. For this reason, Mont Blanc pens, priced at about $100, are sold in few retail
outlets. Coca-Cola, on the other hand, attempts to make its product available in practically
every corner of the Earth, in some form or another (vending, grocery, convenience,
restaurants, and so forth.). The Coca-Cola company is not as concerned about price as Mont
Blanc is.
Conducting Market Research
Market research is defined as the process of systematically and objectively gathering
information to aid in making marketing (and other) decisions. The process includes specifying
which information is required, designing the method of collection, managing collection,
analyzing the data, and effectively communicating the findings and their implications.
Numerous tools are available for each business to make the marketing research process
simple and easy. For example, registration cards, customer mailing lists, Web sites, and email newsletters can all help an organization stay connected to its customer base.
All organizations practice the market research process; some are just more formal about it
than others. The owner of a small sole proprietorship may pay close attention to what his or
her customers are saying every day and use that to make adjustments in how business is
done. A consumer-products giant like Proctor and Gamble may spend millions to identify new
products or new markets that will allow it to maintain sales growth and, in some instances,
market dominance. Proctor and Gamble has a number of entries in the clothing detergent
market and is always looking for ways to improve that position.
There are two types of market research: secondary data research and primary data research.
Secondary data are data that you can locate in previous studies or other published sources,
while primary data include interviews, mail surveys, phone surveys, and focus groups
(discussion groups of between 10 and 12 participants, each led by a moderator). Marketers
typically prefer having the opportunity to communicate directly with customers through primary
research.
Each of these two methodologies has its advantages and disadvantages. Telephone
interviews, focus groups, mall interviews, mail surveys, and Internet surveys can all provide
the necessary information for research. The key to any successful research effort will be to
choose the method that best and most cost-effectively meets the research objectives.
Telephone interviews are fast and inexpensive. The biggest problem researchers face is
customer willingness to answer calls and participate in the survey for a few minutes. Most
consumers have become very skeptical about this process, suspecting that we are trying to be
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sold something over the telephone. This kind of survey works well with simple questions and
answers that provide the customers' perspective in a clear and concise manner.
Focus groups, on the other hand, provide a lot of leeway in probing into customers' mindsets
and attitudes. In this setting, customers will interact with each other as well as the moderator,
uncovering thoughts and beliefs in the discussions. Focus groups are expensive to set up,
and it can be difficult to get the right consumer mix, but they provide very valuable insights.
In-depth interviews also provide excellent insight into the issues being addressed. These are
also difficult to set up. Mall-intercept interviews generate a lot of data that can, in turn, be
comprehensive, yet tough to interpret. For certain market segments, the target market may be
impossible to reach with this kind of method. Trade shows are often used to reach specific
populations (such as physicians) and will even entice them with a gift of some kind. With the
right kind of survey, the information provided might well be worth the cost of a small gift.
Mail and Internet surveys are fast and easy. The marketer, however, loses control over who
responds. For homogeneous groups, such as a student population or members of an
association, these are excellent tools that provide timely information. For large groups, the
expectation lies in the response rate of the group being polled; only a small percentage will
take the time to complete the survey. If the number meets what is needed for statistical
validity, the sample can be of enormous value.
Internet surveys have the advantage of being very fast and easy for the consumer to execute.
This format is expected to represent the future of market research, with the marketers' primary
effort focused on getting the respondent to the survey site. The data provided then becomes
instantly accessible and easy to collate.
Reference
Pride, W., & Ferrell, O. (2000). Marketing: Concepts and strategies. New York, NY:
Houghton/Mifflin.
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BUSINESS PLANS VERSUS MARKETING PLANS
Some of the Web sites and other research resources you might visit in this course refer to a business plan,
rather than a marketing plan. Although those two types of plans are related, and both are very important to
growing a business, they are not one in the same. It is important for you to understand the function of each
type of plan, so you can focus on the proper aspects for your assessments in this course.
The Business Plan
A business plan outlines and defines a business, and identifies the goals and objectives for the organization.
Think of it as providing the big picture, or the overall scope of the company. It includes all aspects of the
organization, including the objectives and strategies set for use in a specific timeframe. An overall business
plan includes several sections, such as the:
•
Executive Summary.
•
Business Description.
•
Market Strategies.
•
Competitive Analysis.
•
Design and Development Plan.
•
Operations and Management Plans.
•
Financial Components.
The Marketing Plan
By contrast, a marketing plan is a subset of the overall business plan. It focuses specifically on how the
organization will seek new customers. It outlines the detailed marketing activities for the organization.
Marketing plans include explanations of how the company will get customers to buy its products and
services. Marketing plans also present methods for getting the message out to the organization’s target
market. Some sections commonly appearing in a marketing plan include:
•
Products and Services, and Your Unique Selling Proposition.
•
Pricing Strategy Sales or Distribution Plan.
•
Advertising and Promotions Plan.
In this course, we will look specifically at the marketing plan portion of the overall business plan. Please
keep this in mind and look specifically for the marketing sections of the plans you study throughout this
course, including the plans provided to you as examples, the plans from the recommended Web site
resources, and plans you research on your own. Be careful to limit your focus in order to address the proper
content for this course.
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REI CASE STUDY – RESEARCH GUIDE
This research guide can be used as a starting point for investigating REI's marketing practices.
Explore the Recreational Equipment Incorporated (REI) Web site for an overview of the company philosophy,
products, and services. Check out the content of the About REI section of the Web site. Note: The following
company background information was formerly presented on the Web site.
REI's thriving spirit was born in the 1930s when Pacific Northwest mountaineer Lloyd Anderson began his
search for an ice axe. Lloyd wanted a reliable tool at a reasonable price but had no success in finding one
locally. He eventually found a high-quality model in an Austrian alpine gear catalog for a mere $3.50,
shipping included. Word about his find quickly spread among Seattle's climbing community, which led Lloyd
and his wife, Mary, to convene with 21 fellow climbers to establish an outdoor gear co-op in 1938 (REI,
2007).
You might find it interesting to compare this historical outline with the content currently featured on the
About REI page.
In this course, you will also be required to use secondary research resources. Explore and review the
marketing research resources of the organizations below:
• National Sporting Goods Association.
• Sports and Fitness Industry Association.
Use the Internet Archive tool, the WayBack Machine, to search for REI.com and you will find historical
versions of REI Web site pages. Select a few pages and compare REI’s former prices and product offerings
with the current online catalog.
Secondary research resources can also be found through organizations affiliated with REI. Entre Prises USA,
Inc., the organization that built the first climbing wall in the REI flagship store, provided the following
secondary research information about REI:
• “REI opened the doors to its flagship store in Seattle, in 1996.
• This large retail store is located adjacent to Interstate 5 in downtown Seattle.
• Up to 250,000 people drive by the store every day. It was important to REI to capture their
attention.
• REI looked to Entre Prises to build a 65 ft. freestanding structure that would be the central focus
of the store.
• After ten months of construction, 4 miles of rebar, and 120 tons of concrete, the ICON for REI
was sculpted. REI has received unparalleled media response from the climbing wall. People wait
hours to climb the Entre Prises Pinnacle and in the first year over 10,000 people climbed it, and
the interest continues to grow!" (Entre Prises USA, Inc., 2007).
References
Entre Prises USA, Inc. (n.d.). REI flagship store: Entre prises creates a masterpiece! Retrieved from
http://www.epusa.com/featured_project.php?otype=i&id=13
Entre Prises USA, Inc. (2013). Entre Prises: Climbing walls. Retrieved from http://www.epusa.com
Internet Archive. (2013). Wayback machine. Retrieved from http://archive.org/web/web.php
National Sporting Goods Association. (2013). NSGA. Retrieved from
http://www.nsga.org/i4a/pages/index.cfm?pageid=1
REI, Inc. (2007). The REI story. Retrieved from http://www.rei.com/jobs/story.jsp
REI. (2013). Retrieved from http://www.rei.com
Sports and Fitness Industry Association. (2013). SFIA. Retrieved from http://www.sfia.org
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