Name: Course: Marketing Principles 2 Date of submission: 24th match 2013 Word count: 3933

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Contents Introduction ..................................................................................................................................... 3 Elements of the marketing process for ACL................................................................................... 4 The costs and benefits of the marketing orientation for ACL ........................................................ 6 Macro and Micro environmental factors......................................................................................... 7 Applying targeting strategies to find appropriate solution ........................................................... 10 Segmentation Criteria for ACL products in different markets ..................................................... 10 Targeting strategy for ACLS estate agency cleaning service ...................................................... 12 Buyer behavior impact on ACLs marketing activities in different buying situations ................. 13 Different product strategies used by ACLs competitors ............................................................. 15 New positioning strategy .............................................................................................................. 17 Distribution ................................................................................................................................... 18 Pricing ........................................................................................................................................... 18 Promotion...................................................................................................................................... 20 The extended marketing mix ........................................................................................................ 20 Marketing mix for two different segments of ACL ...................................................................... 21 Differences in marketing products and services to businesses and consumers ............................ 22 Findings......................................................................................................................................... 23 Differences in international and domestic marketing of ACL ...................................................... 24 Surname 2

Limitations of the recommended marketing mix .......................................................................... 25 Planning managing and organizing the work................................................................................ 25 Justification of plan ....................................................................................................................... 26 References ..................................................................................................................................... 26

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Introduction This paper aims at discussing the main elements of marketing principles. Moreover, it presents a real life scenario of the ABC Cleaning Limited (ACL), a leading cleaning service company in the UK. In light of this, the company has been used as a reference point for discussing marketing principles. In a nutshell, the main objectives of this paper are as follows;

Objectives

Elements of the marketing process Targeting and positioning strategies Costs and benefits of the marketing orientation Macro and micro factors that influence marketing decisions

Objectives

Segmentation Impact of buyer behavior on marketing activities New product development Distribution Pricing Promotion The extended marketing mix Product strategies Differences between business and consumer markets Differences between international and domestic marketing

Objectives

Elements of the marketing process for ACL ACLs marketing process like any other company consists of the following elements; situational analysis, planning, implementation and control (Armstrong, Kotler, Saunders& Wong, 2008) as illustrated in the table below.

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Elements of the marketing process Situational analysis

What it entails A marketing audit that involves obtaining information from the marketing mix. An analysis of the marketing environment i.e. the external and internal marketing environment. A PESTLE and SWOT analysis.

Planning

Formulating the mission of the company, the corporate and marketing goals and objectives. Setting marketing strategies to achieve the set objectives Planning the marketing mix

Implementation

Putting into effect the marketing strategies which ultimately lead to achieving the set marketing objectives.

Control

Analyzing and evaluating the outcome of the entire marketing process and providing measures to gauge performance and contingency plans. Rectifying the deficiencies of an unsuccessful marketing process

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The costs and benefits of the marketing orientation for ACL The marketing concept holds that the key to a successful and profitable organization lies in identifying and anticipating the needs and wants of customers and producing products that will satisfy them. In addition, developing superior products compared to their competitors (Kotler, 1980). The costs and benefits of the marketing orientation for ACL are illustrated below.

Costs Extensive costs are likely to be incurred when researching the market in search of customer needs and preferences. In addition, production costs can also take a toll on the company. ACL may be required to train its salespeople a fresh which is costly in terms of time and money.

Benefits ACL will be able to correctly identify feasible segments which make the companys marketing effort more efficient and economical. Sustainable customer relationships because ACL will provide as per the markets needs and wants as a result, the company will gain the customers loyalty.

The employees may be reluctant in accepting the marketing concept since it is a paradigm shift from what they are accustomed to.

Fostering teamwork among the companys different departments because the marketing concept requires a team effort from say the R and D department, the quality, marketing, production departments to produce a wholesome product for the market.

The marketing orientation is not ideal for ACL

The company will be profitable in the long

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if it is seeking immediate sales and profits.

term as a result of customer satisfaction which leads to goodwill from the customers who may spread the good word about ACL hence increasing its customer base.

The markets are subject to new entrants hence ACL will have to invest heavily in promotion and distribution costs to sustain its competitive advantage.

ACL will stand out as a competitor to reckon with.

Macro and Micro environmental factors Macro environmental factors are those external forces that an organization has little or no control over and they directly or indirectly affect the organizations marketing decisions. On the other hand, micro environmental factors are those that are within the organizations task environment; those that it has control over and directly affect its marketing decisions (Palmer & Worthington, 1992). ACL like any company has macro and micro environmental factors that influence its marketing decisions. These factors are illustrated below. Macro Environmental Factors Demographic factors The size and growth rate of the population is important to ACL when selecting and targeting and marketing to Micro Environmental Factors Company ACLs departments; R and D, manufacturing, purchasing and accounting work together Surname 7

segments.

to arrive at comprehensive marketing decisions.

Economic factors

This relates to the state of the economy; economic patterns such as a recession would affect ACLs marketing decisions. Other factors such as the markets income levels and spending patterns are factors that ACL needs to be aware of before formulating marketing strategies.

Competitors

The companys competitors pose as threats and opportunities that influence its marketing decisions. ACLs competitors include; YBC Commercial cleaning services and Peartree Cleaning services.

Political factors

These consist of laws, the government and advocacy groups; human rights activists. The current legislative frameworks are bound to influence ACLs marketing decisions, for instance laws set on standardizing prices will influence how the company

Customers

Their wants and needs influence ACLs marketing mix decisions and marketing strategies.

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sets its prices. Technological factors Technological changes pose opportunities and threats for ACL which means that it needs to be aware of them as they influence marketing decisions especially the marketing mix. Environmental factors These relate to the natural resources that are needed by ACL as inputs. If for instance there is a shortage in raw materials the company will be prompted to make an adjustment in its marketing decisions to ensure that the markets needs are met. Socio-cultural factors The markets norms, sets of beliefs, basic values, perceptions and social forces influence the type of products produced by ACL. Publics These are groups that have potential interests in ACL and impact its ability to achieve its objectives. Distributors The type, length and complexity of the distribution channel determine when, where and how the consumers access ACLs products and services. Suppliers ACL should invest in suppliers who are efficient and available because they ultimately influence when production starts.

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Applying targeting strategies to find appropriate solution

This section requires identifying a problem that can be solved by applying targeting strategies. Targeting involves deciding on the segment to aim at (Moehlman, 2010). ACL may face a predicament of targeting a segment that matches its objectives and resources. This problem can be solved by selecting suitable targeting strategies in this case, concentrated marketing and selective specialization.

Concentrated marketing
ACL will select only a single segment to concentrate on.

How it solves the problem; It is appropriate for companies that are seeking an equilibrium between their resources and objectives and a segment's requirements It is suitable if the company has limited resources The segment might be a niche market that has no competition It is a stepping stone to further segmentation

Selective specialization
ACL will objectively select a number of segments that have growth potential and match its objectives and resources.

How it solves the problem; The firm only selects those segments that match its resources Promotion costs are lowered due to similar marketing programs across the segments. The company is bound to increase its customer base which leads to increased profits. It may result in synergetic effects because two segments can be inter-related in terms of cost and performance for them to be more effective and profitable.

Segmentation Criteria for ACL products in different markets

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Market segmentation involves identifying sub-sets of buyers within a market who share similar wants and needs and display similar buying patterns (Frank, Massey & Wind, 1972). There four bases for segmenting markets namely; geographic, demographic, psychographic and behavioral segmentation. In light of this ACL can use these bases to segment its various products that include; domestic cleaning, one-off and spring cleaning, end of tenancy cleaning, after builders cleaning, after party cleaning, carpet cleaning, upholstery cleaning, office cleaning, estate agency and industrial cleaning as illustrated below.

Segmentation Criteria Geographic segmentation comprises dividing the market into distinct

Product End of tenancy cleaning for consumers moving out of their homes to other regions, office

geographical units (nations, states, regions or cleaning for offices located in different regions in cities). It is ideal for ACL marketers seeking to position their products on the basis on their consumers geographical location. Demographic segmentation consists of sub dividing the market based on demographic variables such as age, gender, family life Domestic cleaning because it targets residential homes and apartments for consumers of different ages, gender, different stages in the family life the UK and industrial cleaning.

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cycle and income.

cycle and income levels. Upholstery and carpet cleaning can be offered simultaneously with domestic cleaning as a full package.

Psychographic segmentation. Here consumers are divided into groups divided into groups based on variables such as social class, personality, lifestyle and attitudes. Behavioral segmentation. Consumers are divided on the basis of their, behavior, knowledge of a product, use and response to a product. In addition, the occasional benefits sought from the products, usage rates and loyalty to products.

After party cleaning for the party lovers (lifestyle and personality) and estate agency cleaning for property owners who prefer customized services (social class and attitudes). One-off and spring cleaning for consumers who do not require regular cleaning services and those who seek the benefits of spring cleaning services. After builders cleaning for occasions after construction. Upholstery and carpet cleaning for the occasional sofa and furniture cleaning.

Targeting strategy for ACLS estate agency cleaning service

The estate agency cleaning service targets letting agencies which require cleaning services for new tenants and often request for customized services. According to Wedel & Kamakura (2000), the main targeting strategies include; selective specialization, differentiated marketing, concentrated marketing, product specialization and undifferentiated marketing. Therefore, ACL has a wide range of targeting strategies to choose from however, since it has to choose one the

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most appropriate strategy for the estate agency cleaning service would be concentrated marketing.

Components of concentrated marketing Market structure; selects only one segment to concentrate on.

Advantages

Disadvantages

Greater knowledge of the segment needs which gives the company a strong market position and a special reputation.

The segment may turn sour due to the changing needs of consumers.

Focus; the companys objectives and resources match to the segments needs. Design; the product is designed to appeal only to the consumers in the segment. Reliance; it relies on product specialization, mass promotion and distribution.

High profits

The threat of new entrants in the market is high.

Operative economics through product specialization, mass promotion and distribution within the segment. The company gains customer loyalty.

Buyer behavior impact on ACLs marketing activities in different buying situations

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Buyer behavior is the action that a person takes in purchasing and using products and services. Moreover, it consists of the mental and social processes that precede these actions (Shaughnessy, 1992). In light of this, there are two types of buyer behavior; consumer and organizational buying behavior (Horton, 1984). Similarly, the two different buying situations are consumer and organizational purchasing. Buyer behavior has a profound impact on a companys marketing activities because it gives the company the direction it should follow in terms of its marketing decisions. This also applies to ACL. The table below demonstrates this.

Buyer Behavior Organizational

Buying situation

Effect on ACL marketing activities

Purchasing officer evaluating

ACL needs to ensure that it has a competitive advantage over the other companies. This means formulating

alternative vendors strategies that will put it ahead in the market for instance, for office cleaning affordable prices quality office cleaning services, a skilled sales task force because organizational buyers prefer a more personal and direct relationship with the seller and effective promotional campaigns. Consumer A consumer interested in the domestic cleaning service ACL is faced with the task of ensuring that its domestic cleaning service is the best in the market. This calls for proper positioning and differentiating strategies for the service as well as an effective sales promotion and

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advertising campaign to encourage the consumer to purchase the package. Consumers are easily convinced by an attractive package hence ACL should ensure that the service package is appealing.

Different product strategies used by ACLs competitors

Earlier, two of ACLs competitors were identified namely; YBC Commercial cleaning services and Peartree cleaning services. In general, companies use the following product strategies when developing their products to gain and sustain a competitive advantage within the market; product design, product quality, product features and product branding (Hake, 1971). YBC Commercial cleaning services was founded in 1996 and has largely grown through recommendation and referral. YBC is famously known for providing quality cleaning services and facilities throughout the South-East and has a customer retention rate of over 85%. Similarly, Peartree cleaning services is a huge competitor of ACL in the office cleaning segment. The company was founded in 1986 and delivers office cleaning and support services to high profile corporate organizations in the City of London, the South-East and the UK. The company has an annual sales turnover in excess of 9m. YBC Commercial cleaning services Product design: a high quality product that is geared towards customer Peartree cleaning services Product design: a high quality product that is tailored according to their clients specifications. In addition, the

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satisfaction.

product is compliant with the safety and health regulations.

Product quality: efficient, high quality and technological advanced products.

Product quality: the company offers a high quality product to high profile corporate organizations and invests in highly trained and qualified operatives in both cleaning and other specialist areas.

Product features: Daily office and kitchen cleaning daily hygiene and washroom cleaning, daily classroom cleaning, Periodic kitchen cleaning security, caretaking, janitorial supplies, waste management and laundry. Product branding: the company brands its services by stating their attributes, benefits and values(sustainability)

Product features: office, retail cleaning, waste management, manufacturing, front of house, stone ,marble and terrazzo, IT cleaning, recycling, preventive pest control, plant and landscaping washroom and hygiene supplies.

Product branding: the company brands itself as independent, innovative and one that has reputation for excellence and competiveness in terms of the product and services it provides.

The strategies used by these two companies have proven to be effective for instance as earlier stated YBC has customer retention rate of over 85%, while Peartree cleaning services has an annual sales turnover in excess of 9m showing that both companies are doing exceptionally well in the cleaning service market. .

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New positioning strategy Positioning is a strategy used by a company to design its products with distinct characteristics or features that distinguish them from its competitors in order to give it a competitive advantage in the market (Trout & Ries, 2001). This section proposes a new positioning strategy for the office cleaning service. Since the market for this service is almost saturated, ACL may consider adopting the competitor positioning strategy which comprises claiming that their service is better than their competitors. In addition, to claiming that, ACL should add more features to the service (for instance carpet cleaning at half price as part of the office cleaning package) if it wants to gain a competitive advantage. Developing a new product and sustaining its competitive advantage ACL is developing a new vacuum cleaner and plans on sustaining the products competitive advantage within the market. For this to happen ACL needs to consider the following factors as it develops the new product; relative advantages of the product, compatibility, ease of use, price and existing standards and values (Porter, 2008). Factors for sustaining competitive advantage Relative advantage ACLs new vacuum cleaner should be of high quality and posses additional features that stand out from competitors. Compatibility The vacuum cleaner should be compatible with modern technology hence acceptable to the market. Ease of use Consumers should have an easy time using it. If so, the product will be competitive and marketable.

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Price

The price of the vacuum cleaner should be reasonable and affordable.

Existing standards and values

The product should be environmental friendly.

Distribution Distribution is arranged to provide customer convenience by considering certain distribution elements. These include; selection of the distribution channel, level of customer service and the terms and conditions of distribution (Rolnicki, 1998)

Selection of the distribution channel i.e. determining the type of distribution channel to use; extensive or intensive distribution.

Level of customer service; delivery periods and methods of transportation.

Terms and conditions of distribution with the distributors.

Pricing

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Companies often price their products and services according to their marketing objectives and the market conditions (Alpert, 1971). ACLs Marketing Objectives Survival: to survive in the market when plagued with over capacity and intense competition. Low Price elasticity: the degree to which consumers are price sensitive or price insensitive. Maximum current profit and revenue: to maximize sales profits. High Competitors prices: they affect how ACL prices its products and services. Maximum sales growth: to penetrate the market Initial price is usually low but is increased later on. Market Skimming: to skim the market. High Government Laws set to regulate pricing by companies. The economy A boom in the economy means setting high prices while a recession means the opposite. The prices should not exceed what is stipulated in the law. High or low depending on how the competitors have set their prices. Low and high respectively. Price Market Conditions Price

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Promotion For a companys promotional efforts to be successful, it is important to integrate them with the companys marketing objectives (Sandhusen, 2000). ACL Marketing objectives Build long lasting customer relations. Customer Loyalty Product awareness and securing a large market share Customer satisfaction Personal selling and direct marketing; It is interpersonal enabling Promotional activity Public relations because it involves building and maintaining mutually beneficial relationships between a company and its publics. Advertising; it reaches the masses at low costs.

Quality services to customers a comprehensive presentation of a product to a client. Follow up sales Increasing sales and profits Sales promotions; they serve as short-term incentives to encourage increase in purchases.

The extended marketing mix The extended marketing mix consists of; people, process and physical evidence (Kotler, 1980). Below is an analysis of the extended marketing mix for the vacuum cleaner.

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The extended marketing mix People Process Physical evidence

People These are ACL's salespeople. They should be presentable, courteous and resourceful to customers purchasing or inquiring about the vacuum cleaner

Process The process of handling customer complaints on the vacuum cleaner, identifying their needs and the processes of handling orders placed for the vacuum cleaner

Physical evidence This is the physical location of ACL. Consumers have high expectations when visiting the company that produces their vacuum cleaners

Marketing mix for two different segments of ACL

This section requires designing marketing mixes for two different segments in consumers markets. The two different segments include; psychographic and geographic segments. The psychographic segment marketing mix Product After party cleaning service. This product is suitable for customers who are out going and portray this kind of a lifestyle. The product features; dish and glass washing, dusting and polishing furniture and all surfaces, sanitizing bathroom and toilet facilities, vacuuming carpets, washing floors and rubbish removal

. Place The company will directly supply the service by sending its cleaners to the clients

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residence. Price The charge is 15 per hour per person

Promotion Television advertising, sales promotion and direct marketing.

The geographical segment marketing mix Product Office cleaning service (for offices all over the UK) This product is also suitable to consumers who prefer regular office cleaning. Place The company will directly supply the service by sending its cleaners to the clients residence Price Regular weekly office cleaning at 12.50 per hour.

Promotion Television advertising, sales promotion and direct marketing.

Differences in marketing products and services to businesses and consumers

Businesses markets Small in size: company invests in personal selling and relative advertising. Direct and shorter lines of distribution.

Consumer markets Large: company invests in intensive mass promotion. Distribution channels may be direct or indirect and often long consisting of two or more

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intermediaries. The buyers are sophisticated and highly trained in purchasing. Buyers are easily convinced about a product if the advertising campaign is catchy and educative enough.

Involves a complex buying process. Consists of parties that influence the purchase decision.

Involves a simplistic buying process. Individual purchase decision.

Consists of complex products for instance; computer programs.

Products are not complex; clothes.

Findings

The findings of this presentation are as follows; the psychographic and the geographical segment marketing mix have been designed and are ready for implementation; the price, product, place and appropriate promotion techniques have been presented. Second, the differences between marketing to businesses and consumers have been discussed and pointed out that, business markets are smaller compared to consumer markets which requires different marketing strategies; that business markets require more direct and shorter distribution channels; that the buying process by business markets is complex which is not the case for consumer markets; that Surname 23

there are multiple buying influences in business markets, while in consumer markets, consumers make individual purchase decisions; that products in business markets products are more complex when compared to those in consumer markets.

Differences in international and domestic marketing of ACL

International Marketing Involves producing, selling promoting and distributing of ACLs products and services in a global market. ACL will have a wider scope of endless opportunities if it ventures into international marketing. It is more profitable.

Domestic Marketing Involves producing, selling promoting and distributing of ACLs products and services in a local market. The domestic market may become too saturated because of high competition from similar companies, causing ACL to incur losses. It is not as profitable as international marketing especially due if the domestic market becomes saturated.

Cultural, currency and language barriers that may be present. Is risky for the company because its products and services may not be well received Huge financial costs Different consumers who possess different kinds of tastes and preferences.

In domestic marketing ACL will not face any cultural or language barriers. Is less risky because ACL has an existing customer base Requires less financial resources The company deals with only one set of consumers.

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Limitations of the recommended marketing mix

Psychographic segmentation is limited sue to the fact that is doe not account for motivation among consumers and the value structures which guides people behavior. Thus, for factor such as attitudes it will be difficult to segment due to their relatively diverse nature. In this segmentation, it is difficult to differentiate the segment. This is because of the attribute such as attitudes. The marketing mix element price is different and this makes it difficult to segment the market. When it comes to promotion, it is also very difficult to segment since capturing the consumers is difficult. For example, advertising may not reach the intended audience since they have different attributes. Geographical segment is also limited in place of distribution. Consumers are scattered which increases the costs of transporting goods to them. This also increases prices which may discourage consumers. Possibility of consumer s moving from one region to another is high. It may impact negatively on segments profitability. Segments in different regions may need customized promotion. This means travelling to their locations. This increases costs and make it unprofitable.

Planning managing and organizing the work

Studying the assignment's requirments

Commencing on the work by refering to the course work and through research in the library

After completion, joining a group for the required presentation in class

Organizing and practicing individual presentation parts.

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Justification of plan

The marketing mix plan was formulated after carefully investigating the products offered by ACL and placing them in suitable segments. The psychographic segment marketing consists of the after-party cleaning service because it seeks to attract consumers who have an outgoing personality and lifestyle. On the other hand, the geographical segment marketing mix seeks to attract customers from all over the UK who require office cleaning in their companies and corporate organizations. In light of this, the distribution channel that was selected for both mixes is the direct channel one because it is a service and cannot be separated from its provider (inseparability). The prices set are trial prices to test how the products will perform in the segments, while the promotion techniques i.e. television advertising, sales promotions and direct marketing are the most effective if the company wants to reach the entire market. On the other hand, the limitations of the recommended marketing mix can be solved by adding more products in both segments for instance in the geographic marketing mix, industrial cleaning can be added to make the segment synergetic. Moreover, the marketing mix should include the effect of the products life cycle and rate of adoption on the products performance in the market. In addition, the heavy promotional costs are an investment for long-term sales and profitability. Finally the marketing mix should account for the factors influencing the prices set for instance; the companys marketing objectives or the prevailing market conditions.

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Bibliography Alpert, M. (1971) Pricing decisions. N.C: Foresman Publishers Frank, R.E., Massey, W.F. & Wind, Y. (1972) Market Segmentation: Prentice-Hall International Series In Management. N.J: Prentice-Hall Publishers. Hake, B. (1971). New-Product Strategy: Innovation and Diversification Techniques. London: Pitman Publishers. Kotler, P. (1980) Marketing Management. 4th Ed. Englewood Cliffs, N.J: Prentice-Hall Publishers. Kotler, P., Armstrong, G., Wong, J., & Saunders, J.A. (2008) Principles of Marketing 2nd Ed. N.J: Pearson Education Prentice Hall Publishers. Moehlman, M. (2010) Target Market.N.C: BeWrite Books LLC Publishers Palmer, A. & Worthington, I. (1992).The Business and Marketing Environment McGraw-Hill Book Publishers. Porter, M. E. (2008). Competitive Advantage: Creating and Sustaining Superior Performance.UK: Simon and Schuster Publishers. Rolnicki, K. (1998). Managing Channels of Distribution USA: AMACOM Div American Management Assn Publishers Sandhusen, L.R. (2000) Marketing 3rd Ed. N.Y: Educational Series. Shaughnessy, J. (1992). Explaining Buyer Behavior USA: Oxford University Press Publishers

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Trout, J., Ries, A. (2001). Positioning: The Battle for your Mind McGraw Hill Professional

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