Assignment on Marketing Principles

Introduction:

In a business organization there are few departments and marketing is one of them. Marketing introduces organizational products and services to customers. The sales and profit of an organization largely depends on the activities of marketing. Dynamic marketing team can ensure higher sales and profitability. Normally big organizations spend a lot of money in marketing activities and this assignment represents the business report of Boots consisting of marketing strategy options and marketing environment.  

Task 1: Marketing concept and process

1.1:  Marketing and the elements of the marketing process

Marketing:

Many theorists define marketing in different ways. Jon Jantsch stated that “Marketing is getting someone who has a need to know, like and trust you”. According to Philip Kotler “Marketing is the social process by which individuals and groups obtain what they need and want through creating and exchanging products and value with others.”

The Marketing Process:

Marketing process consists of several steps and these steps are analyzing below:

1.      Analyzing marketing opportunities: Boots generally finds out its market opportunities by analyzing current and future market trends, current resources and capabilities, and internal and external environment.

2.      Selecting the target Market: the next element is choosing of target customers for their products and services. Boots segments the whole market in different parts based on different aspects and select the best one for their products and services. 

3.      Marketing Strategy: Boots develops marketing strategy after selecting the target market and marketing strategy consists of value proposal, targeting, segmenting and positioning of services and goods.

4.      Marketing Mix Decisions: The next stage is determining marketing mix for organizational products and services. Marketing mix should cover pricing decision, promotional marketing campaign growth, distribution agreements and product growth.

5.      Implementation and Control: the last stage of marketing process is implementation and control where strategies are implemented and monitored. During this time if management thinks that the current marketing mix and advertising is not appropriate, they change those. 

 

1.2: The benefits and costs of a marketing orientation for Boots.

Business organization can develop products based on either product oriented approach or a marketing oriented approach. The marketing oriented approach means organization reacts to what customers want. Here organization makes decision based on customers’ needs and wants rather than what the organization thinks is right for the customers. Generally successful organizations follow market-oriented approach. Market oriented approach bring some benefits and costs to Boosts. The benefits of market oriented approaches are:

1.      Customer centric: This process is customer centric and Boots gives importance on the customers’ demands and needs. 

2.      Addressing demand: Boots reacts with customer demand

3.      Making customer benefit: This process helps Boots to create buyer value that increase customer loyalty and frequent shopping.

4.      Reasonably competitive advantage: As Boots develops products and services based on customers’ demands and needs; it ensures the full use of products and services that gives competitiveness over its competitors. 

The disadvantages of customer orientations are:

1.      Comprehensive and costly research: It is really cost ineffective and Boots spends a lot of money in marketing research which is not possible to perform by small organizations. 

2.      Increasing benefit increases price tag: As consumers are getting their desired products they have to pay higher price.

3.      Deficiency of predictability: In market orientation product development is really tough because different customers have diverse choices.

Task 2: Segmentation, targeting and positioning

2.1: Macro and Micro environmental factors which influence marketing decisions of Boots

Business organizations run their operation in a business environment and business environment is classified as macro and micro environment which have great influence on marketing decisions.

                       

Micro environmental factors:

These environmental factors are very close to business and having significant impact on the success and operation of Boots. Micro environmental factors are competitors, media, employees, shareholders, customers and suppliers and these factors determine organizational resources and capabilities.  

Customers: customers are the key focusing substance of an organization and Boots attracts and retains customers by providing excellent products and services.

Employees: The employees of Boots are skilled, motivated and knowledgeable and they play significant role in the success of the Boots and the betterment of sales and customer services. 

Suppliers: Another important factor is suppliers and if organization has good supply chain it is able to achieve competitiveness and to provide quality products to end users. 

Shareholders: to expand a business shareholders are needed and good relationship among shareholders ensures long term success and higher profit.

Media: It can play an important role and it should promote positive matters of the Boots to draw more customers’ attractions.

Competitors: Boots has many competitors and it must aware of the activities and products of its competitors. It should use modern technology in its production and understand the trading condition and customer behavior (Scribd, 2012). 

Macro environmental factors:

These factors are not closely related to the organization but it has long lasting and devastative impact on the organization. Macro environmental factors determine the threats and opportunities of the organization. Macro environmental factors are cultural, demographic, political, economic, technological and natural. 

Demographic factors: it includes customers’ occupation, age, sex, density, location and so on and these factors change very steadily.

Economic environment: it covers buyers’ buying and spending capabilities.

Natural environment:  It consists of environmental pollutions, government interventions and natural resources like raw materials and these factors have immense impact on organization.

The technological environment: it includes modern technological systems, process and machineries.

Political environments: It covers local and national governments laws, regulations, and political parties.

Cultural environment: This consists of people beliefs, behaviors and values (Scribd, 2012).

2.2: Segmentation criteria to be used for products in different markets.

Boots has wide range of products and it develops different products for different customers. First of all it segments the whole market in different parts based on different aspects. Boots may segments its market based on the following aspects:  

Geographic Variable: Boots can segment market on basis of population, size and atmosphere of a region or a geographical area.

Demographic Variable: Boots can segment its market based on sex, race, age, status, sexual orientation, education, income of the people.

Psychographic Variable: Boots can segment the market on basis of customers’ thoughts, feelings, beliefs, interests, values, lifestyles, social status and class, personality and so on.

Behavioural Variable: here Boots can segment the total market based on customers’ purchasing behavior like readiness to buy, loyalty to the organization, users status and occasions.

By considering the above factors Boots segmented its whole market in different parts namely pharmacy & health, Beauty, Fragrance, Mother & baby, Toiletries, Men, Electrical, Photo, Opticians, Toys, Gift and Food. Top ten segments of Boots are given below:

Health and beauty category	2006 value £bn	% Change 06-11
Over-the-counter medicines	2.1	12%
Babycare	2.0	8%
Skincare	1.8	36%
Other	1.7	7%
Paper products	1.7	12%
Haircare	1.4	8%
Bathroom toiletries	1.3	5%
Perfumes	1.1	20%
Men's Toiletries	1.9	33%
Dental Care	0.7	20%

2.3: Targeting strategy for a selected product.

Generally organizations produces different products and services for certain group of people or customers. Organizations may follow different targeting strategies like differentiated or selected marketing, niche/ concentration marketing and mass/ undifferentiated marketing. In niche marketing organization chooses certain group of people as its customers from all people. Organizations have moderately minor overhead and less bargains with customers. Generally specialist organizations of various products and services follow this targeting strategy. Economic recession has negative impact on niche marketing. Organizations conduct their marketing only for their target groups. Generally big organizations follow mass marketing strategy where they produce goods and services for whole market. According to this strategy, organizations have to produce goods and services in huge volume and sell goods in reasonable prices and do little profit per product. Huge sales will turn out huge profit. Generally organizations conduct marketing for all segments of the market. In differentiated marketing strategy, organizations concerned with targeting each segment with a product with its own marketing mix designed to match the needs of the customers within the segment. In this process organizations can increase customer satisfaction and customer loyalty and allow organizations to spread risks.   Generally Boots follow mass marketing strategy; for example, it produces different products for all segments. It sells various health and beauty products and services to all customers including men, women, and kids and so on. It produces goods in large volume and sell those products in reasonable prices.    

2.4: Buyer behaviour affects marketing activities in different buying situations

Batra and Kazmi (2004) stated that “Consumer buying behavior is the mental and emotional processes and the observable behavior of consumers during searching purchasing and post consumption of a product and service”. Organizational marketing activities largely depend on the buying behavior of the customers. Customers may become highly involved or lowly involved with organizational products and services and it depends on tangible and intangible value of the products. Generally we see four kinds of buying behaviors and these are:

1.      Complex buying behavior: Here customers are highly involved and they spend a lot of time before buying the products and services. Generally these products are precious and customers ask others or expertise before buying products. These products has significant impact on customers; for example, buying a car or diamond or getting admitted in a university.

2.      Variety seeking behavior: here customers have low involvements and there are a lot of options for same kind of product. Customer may check those products. For example, there are lots of fragrances in the market and people may buy different fragrances in different times only for variety. Manufacturers have to give different offers to customers to sell their products and to attain competitiveness. 

3.      Dissonance buying behavior: customers are highly involved here but there are only few products options in the market like floor tiles.

4.      Habitual buying behavior: here customers have low involvement and there are lot of same quality products available in the market but those products are very essential for our everyday life like rice, meat, breads and so on.

 

2.5: Propose new positioning for a selected product/service.

Business organizations should give importance on product positioning because it helps to generate business loyalty. "Product positioning is a marketing technique intended to present products in the best possible light to different target audiences”. Market segmentation and product position is correlated and organization establishes product positioning according to the product segmentation. In positioning, organization creates message regarding its products and deliver the message to target customer through different mediums such as leaflet, magazines, television, radio, etc. The message includes manipulation and symbol and the success of product positioning largely depends on the technical experts, expert advice, fast service, creative ideas, high quality, caring attitudes, immediate results, low price and emotional supports. Recently Boots dropped its long running ‘Here comes the girls’ ads and introduced a new brand positioning in its Christmas advertising campaign. This new ads bring a message to customers like “Let’s feel good. Let’s give gifts that keep on giving”. The new campaign resonated will all ages and families, not just women. This Christmas ads are set to the track “Are you ready for love”. Proper and effective positioning may ensure higher sales and created emotional support.

3.1: How products are developed to sustain competitive advantage.

Nowadays companies are applying different techniques to achieve competitive advantage. Boots is competing with Superdrug, Tesco, Body Shop, Sainsbury’s, Asda, Morrison, M&S and Debenhams. Product development is one of the key strategies to get sustainable competitive advantage. Organization can develop its existing products or it can introduce new products to customers. Product development has physical and insubstantial benefits. Product development conducted in two parallel paths: one path is related to market research and analysis and another path is related to idea generation, product design and detail engineering. It is very essential to conduct product development regularly otherwise it is really tough to get competitiveness. Product development has some steps:   

-         Generating ideas which is often called as “fuzzy front end” of the product development process

-         Idea screening

-         Concept development and testing

-         Business analysis

-         Beta testing and market testing

-         Technical implementation

-         Commercialization

-         New product pricing    

Boots follows the above mentioned process in its product development. Sometimes Boots conducts several steps at a time to produce its own products and services.

3.2: How distribution is arranged to provide customer convenience.

Boots has its own products and it sells other products as well. Generally there are three types of distribution channels and Boots uses two types of distribution channels. First of all it produces its own products and services which it sells to customers directly. It has its own brand products which it sells to customers directly. It uses second distribution channel as well where they act as a retailer. It buys products from different manufactures and sells products to customers. Generally Boots sells quality products of different brands like Boss, Calvin Klein, CHANEL, DIOR,  Diesel, ARMANI, Gucci, Lssey Miyake, Jean Paul Gaultier, Marc Jacobs, Jimmy Choo, Thierry Mugler, TOM FORD etc. It has around 2500 stores from local community pharmacies to large destination health and beauty stores. 90% of the UK population is estimated to be within a 10 min drive a Boots store. It develops multi-format strategy to give services to customers in right place by friendly and professional people. There are different types of Boots’ shops like Boots health and beauty stores offer destination shopping with lot of products including all Boots leading brands. Boots flagship stores offer beauty halls with premium cosmetics and beauty consultants. Boots travel stores meet the demands and needs of the travellers. Most of their shops are situated in densely populated and prime areas like railways and bus stations and nearby areas of community, supermarkets, and shopping malls and so on.

3.3: How prices are set to reflect an organisation’s objectives and market conditions.

Pricing strategies are of different types like penetration pricing, focused based pricing, price skimming, product life cycle pricing and discount pricing.

Penetration pricing: Organization keeps the price low than competitors to penetrate the market. Here organization arises awareness regarding products among customers and insists people to try the products. 

Price skimming: here organizations tend to keep price high. The prices fall following the normal laws of demand and supply.

Premium pricing: here organization provides quality products with higher price. Prices are charged as “extra” for the quality supplied by the organization. This is good when organization enter a new market.   

Economy pricing: here quality of the products and services are low; prices are kept low too. This pricing is also called minimum pricing.

Boots follows two pricing strategies like premium and penetration pricing strategy. When they introduce new products to customers generally they follow premium pricing strategy. Rest of the time Boots follow penetration pricing strategy. The product and service quality of Boots is high and the costs of its products are relatively lower than other competitors. Boots is able to do that by controlling the cost of raw materials, components, labor and some other inputs. The objective and goals of Boots are selling quality goods and providing quality services to customers with reasonable price. The pricing strategy of Boots change with market condition.    

3.4: How promotional activity is integrated to achieve marketing objectives.

Promotion is one of the elements of marketing mix and there are different kinds of promotional activities like advertising, public relations, personal selling and sales promotions. If marketing department wants to achieve its marketing objectives it should integrated its promotional activities. Other promotional strategies are coordination, repetition, consistency and reach. Organizations have to spend a lot of money in marketing. Marketing department spends money in advertising to reach its messages to customers. Most common advertising mediums are television, radio, websites, city transports, magazines, newspapers, social media, etc. Personal selling is another effective promotional activity and some common forms of personal selling are individual gathering, correspondence, telemarketing and message. Organizations sometimes offer different sales promotions to customers and Boots offers some promotions like the Boots advantage card, the Boots bonus machine, double and triple points weekends and other deals. In public relations, organizations are pushing an item or administration in a casual sense.  

3.5: The additional elements of the extended marketing mix and their significance:

The first four elements of marketing mix are product, price, place and promotion. Later another three elements are added: people, process and physical evidence.

·        People: management and employee are responsible for marketing activities and they expose organizational culture to customers and outsiders through their services and marketing rapport. HRM is responsible for hiring dynamic employees for all departments especially for marketing. Dynamic employees can effectively promote organizational products and services to customers and deliver services. HRM will facilitate different training, coaching, mentoring to increase the skills, knowledge and efficiency of the employees.

·        Process: Marketing activities are conducted by following some process or systems like uniformity of offering, service delivery and service consumption. Marketing management should concern about the effectiveness and difficulty of these processes otherwise marketing message should not reach to desired customers.  

·        Physical evidence: it includes service deliver, infrastructures and facilities. Service should be delivered in friendly and quick ways. Physical appearances of stores should be tidy, nice, safe and healthy. Facilities should be dynamic and modern. 

4.1: Marketing mixes for two different segments in consumer markets.

From the previous we know that marketing mix has seven elements: product, price, promotion, place, process, people and physical evidence. Generally organization segments its market based on customer behavior, physiographic, demographically and geographically. Boots is operating in 21 countries. The products for Qatar and the UK have some differences because of climate and the prices in Qatar are higher than the UK. Products vary with geography. The marketing process and physical evidences are almost same in the UK and Qatar but people, promotion, price, product and places are different. Product quality, price and promotional offers are not same. People of management and employees are not same for those two countries. The products for men and women are different and prices are different for those products. The heath care and beauty services for kids & women and men are different. Boots has different products and services for different demographic segments.   

4.2: Illustrate differences in marketing products and services to businesses rather than consumers

Different business organizations have different kinds of products. Organizations develop products and services according to market demand. The number of customers in the market is almost same. In a market there are wide ranges of products. Products are divided in different sectors. For example, Boots provides health and beauty services and products to customers. Similarly other organizations like Superdrug, Tesco, Body Shop, Sainsbury’s, Asda, Morrison, M&S and Debenhams also provide health and beauty services and products to customers. Marketing activities of those companies are not same. They do different activities for promoting their products but their targeting customers are almost same. The targeting customer of Boots and Superdrug will be same but there will be slight difference. The product price of Superdrug is higher than Boots. It is clear that difference in marketing products and services to business rather than customers. Superdrug, Boots, Tesco concentrate on their product most rather than customers as all those companies target the same customers and customer will buy product which has more loyalty and marketing activities.

4.3: How and why international marketing differs from domestic marketing.

There are some differences between international marketing and domestic marketing and these are:

-         Scope: International marketing has more scope than domestic marketing.

-         Obstructions: International marketing has to face more obstructions than local marketing. They have to compete with other manufacturers in overseas and to follow the rules and regulations of operating countries.  

-         Profits: Generally profit margin of international marketing is higher than domestic marketing.

-         Offering of engineering: Though both marketing use modern innovation but international marketing use most recent innovations.

-         Political relations: domestic marketing has nothing to do with political relations but international marketing organization should have good political relation   

Conclusion:

Marketing is very important for an organization and the success of an organization largely depends on the dynamicity of marketing activities. Boots is one of the leading retailers which provide different products and services to customers which ranges from health and beauty to skincare. It has been doing profitable business since 1849 because of it provides quality products to customers and it has dynamic marketing team. Marketing team conducts market analysis and informs R&D team to develop products according to the customers’ needs and demands. It does proper market segmentation, targeting, position and pricing for its products which facilitate higher brand loyalty and profit.  

References

Ankit, (2011), McDonald’s and Subway Services Marketing 2011, [online] 2011, Available from: http://www.scribd.com/doc/100666475/13/PRICING-STRATEGY [Accessed: 7/4/2014]

Kokemuller, N., (2012) Advantages & Disadvantages of Having a Marketing Orientation in an organization [online], Available from http://yourbusiness.azcentral.com/advantages-disadvantages-having-marketing-orientation-organization-1510.html [Accessed: 7/4/2014]

Learnmarketing, (2012) Service Marketing Mix (Extended Marketing Mix) [Online], Available from: http://www.learnmarketing.net/servicemarketingmix.htm [Accessed: 7/4/2014]

Laura (2011), Market segmentation in foodservice operations,[online] 13-10-2011, Available from: http://hotelmule.com/wiki/Market-segmentation-in-foodservice-operations  [Accessed: 7/4/2014]

Muthumani, S., (2010), International Trade 2010 [online], 07/12/2010, Available from: http://www.scribd.com/doc/34200662/3/International-Marketing-vs-Domestic-Marketing [Accessed: 7/4/2014]  

Scribd, Marketing environment [online], 2012, Available from http://www.scribd.com/doc/22543929/Marketing-Micro-and-Macro-Environment [Accessed: 7/4/2014]

Shma (2012), 4 types of consumer buying behavior [online], Available from: http://managementation.com/4-types-of-consumer-buying-behavior/ [Accessed: 7/4/2014]

Thimmesch, M., (2010) What is Marketing? How 10 Experts Define It.[Online] August 08, 2010, Available from: http://www.skylinetradeshowtips.com/what-is-marketing-how-10-experts-define-it/ [Accessed: 7/4/2014]

ZeePedia (2013), Principle of Marketing [online], Available from: http://www.zeepedia.com/read.php?marketing_process_analyzing_marketing_opportunities_contents_of_marketing_plan_principles_of_marketing&b=39&c=8 [Accessed: 7/4/2014]