Leadstar College of

Management and Leadership

Faculty of Business and Leadership

Project Work on
Marketing Management
Prepared by:-
Haftom Beyene
Email: Haftombeyene714@gmail.com
Phone no: 0920434424
Submitted to: universityleadstar@gmail.com

June, 2017

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1. Assess the marketing philosophy of Commercial Bank of Ethiopia. Which
of the philosophies discussed, do you think, is adopted by the bank.
Substantiate your arguments with clear evidences. What should the company
do to appeal to the customers?

The Commercial Bank of Ethiopia (CBE) is the largest commercial bank in Ethiopia The bank
is pioneer to introduce modern banking to Ethiopia and credited for playing a catalytic role in the
economic progress and development of the country. It is also the first bank in Ethiopia to
introduce ATM service for local users. Through CBE's Internet Banking, many transactions can
be carried out from the comfort of your home or office. The online services include:

 Making fund transfers between customers’s own current accounts and savings accounts.
 Effecting payments to third parties, including bill payments to predefined CBE customers
within Ethiopia.
 Viewing and downloading current and saving account statements.
 Requesting for Stop Payments on cheques, etc.
 Applying for a Letter of Credit.
 Viewing account balances and transactions

It is important to explain and discussion on the objectives of Bank Marketing. The basic
objectives of marketing are applicable in the case of bank marketing in CBE. These are:

 Maximizing the profitability

 Providing high return to investors
 Development of an image and reputation
 Developing new products to meet emerging customer requirements.
The achievement of these objectives necessitates that the marketing department should
undertake the following functions:
1. analysis of the customer behavior, attitudes and market segmentation.
2. Market research to collect, investigate analyze and interpret customers’ attitudes and market
developments to contribute to the maximum attainment of objectives.
3. Development of new products and/or services
4. Advertising, publicity and promotion
5. Pricing
6. Defining strategies, administering and controlling the marketing programmed
7. Forecasting changing customer profiles and consequent product changes.

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Bank marketing is the aggregate of functions directed at providing services to satisfy customers’
financial needs and wants more efficiently and effectively than the competitors in consonance
with the organizational objectives. In a true sense, it is the application of marketing techniques in
the banking services. Application of marketing techniques in banking, in simple terms, means a
coordinated organizational effort to reach the customer to fulfill his specific needs for getting his
patronage, through utilization of people, products or services, price, promotion, branch outlets
and distribution policies for maximizing customer satisfaction. In a competitive situation banks
sell their services through branch counters throughout the entire country through the employees
who act as salesmen recruited by the management.

Marketing management philosophies – Five marketing concept

The marketing concept and philosophy is one of the simplest ideas in marketing, and at the same
time, it is also one of the most important marketing philosophies. At its very core are the
customer and his or her satisfaction. The marketing concept and philosophy states that the
organization should strive to satisfy its customer’s wants and needs while meeting the
organization's goals. In simple terms, "the customer is king”. Marketing, according to Kotler, is
“the science and art of exploring, creating, and delivering value to satisfy the needs of a target
market at a profit”. Marketing concepts (or marketing management philosophies) are the
philosophies used by the businesses to guide their marketing efforts.
Basically, marketing concepts relate to the philosophy a business use to identify and fulfill the
needs of its customers, benefiting both the customer and the company. Same philosophy cannot
result in a gain to every business, hence different businesses use different marketing concepts
(also called marketing management philosophies). Marketing concepts are driven by clear
objectives like cost efficiency, product quality, customer’s need fulfillment etc.

Marketing Management Philosophies

There are five marketing concepts. A company should choose the right one according to their
and their customers’ needs.

1. Production Concept
2. Product Concept
3. Selling Concept
4. Marketing Concept
5. Social Marketing Concept

1. Production Concept
This concept works on an assumption that consumers prefer a product which is inexpensive
and widely available. This view point was encapsulated in Says Law which states ‘Supply
creates its own demand. Hence companies focus on producing more of the product and
making sure that it is available to the customer everywhere easily. Increase in the production
of the product makes the companies get advantage of economies of scale. This decreased
production cost makes the product inexpensive and more attractive to the customer. Low
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price may attract new customers, but focus is just on production and not on the product
quality. This may result in decrease in sales if the product is not up to the standards.
This philosophy only works when the demand is more than the supply. Moreover, a customer
not always prefers an inexpensive product over others. There are many other factors which
influence his purchase decision. The production concept holds that consumers will favor
products that are widely available and low in cost. Managers of production-oriented
organization concentrate on achieving high production efficiency and wide distribution.

Examples of Production Concept of Marketing Management Philosophies

 Companies whose product market is spread all over the world may use this approach.
 Companies having an advantage of monopoly.
 Any other company whose product’s demand is more than its supply.

2. Product Concept
This concept works on an assumption that customers prefer products of ‘greater quality’ and
‘price and availability’ doesn’t influence their purchase decision. Hence company devotes most
of its time in developing a product of greater quality which usually turns out to be expensive.
Since the main focus of the marketers is the product quality, they often lose or fail to appeal to
customers whose demands are driven by other factors like price, availability, usability; the
product concept holds that consumers will favor those products that offer the most quality,
performance or innovative features. Managers in product oriented organization focus their
energy on making superior products and improving them over time.

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Examples of Product Concept of Marketing Management Philosophies

 Companies in technology industry.

 Companies having an advantage of monopoly.

3. Selling Concept
Production and product concept both focus on production but selling concept focuses on making
an actual sale of the product. Selling Concept focuses on making every possible sale of the
product, regardless of the quality of the product or the need of the customer. The main focus is to
make money. This philosophy doesn’t include building relations with the customers. Hence
repeated sales are very less. Companies following this concept may even try to deceive the
customers to make them buy their product. Companies which follow this philosophy have a short
sighted approach as they ‘try to sell what they make rather than what market wants’. The selling
concept holds that consumers, if left alone, will ordinarily not buy enough of the organization
product. The organization must therefore undertake an aggressive selling and promotion effort.

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Examples of Selling Concept of Marketing Management Philosophies

 Companies with short sighted profit goals. This often leads to marketing myopia.
 Fraudulent companies.

4. Societal Marketing Concept

Adding to the marketing concept, this philosophy focuses on society’s well-being as well.
Business focus on how to fulfill the needs of the customer without effecting the environment,
natural resources and focusing on society’s wellbeing’s. This philosophy believes that the
business is a part of the society and hence should take part in social services like elimination of
poverty, illiteracy, and controlling explosive population growth etc. The societal marketing
concept holds that the organization’s task is to determine the needs, want, and interests of target
markets and to deliver the desired satisfactions more effectively and efficiently than competitors
in a way that preserves or enhances the consumers and the society’s wellbeing.

5. Marketing Concept
Selling Concept cannot let a company last long in the market. It’s a consumers market after all.
To succeed in the 21st century, one has to produce a product to fulfill the needs of their
customers. Hence, emerged the marketing concepts. This concept works on an assumption that
consumers buy products which fulfill their needs. Businesses following the marketing concept
conduct researches to know about customers’ needs and wants and come out with products to
fulfill the same better than the competitors. By doing so, the business makes a relation with the
customer and generates profits in the long run. However this isn’t the only philosophy which
should be followed. Many businesses still follow other concepts and make profits. It totally
depends on the demand and supply and the needs of the parties involved.

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Examples of Marketing Concept of Marketing Management Philosophies

 Companies in perfect competition.

 Companies who want to stay in the market for long time

The marketing concept is a business philosophy holds that the key to achieving organizational
goals consists of being more effective than competitors in integrating marketing activities toward
determining and satisfying the needs and wants of target markets. This marketing concept is
adopted by commercial bank of Ethiopia. The marketing concept rests on four pillars:
Targeting market, customer needs, integrated marketing & profitability. As the commercial bank
it is follows Customer oriented thinking requires the company to define customer needs from the
customer’s point of view.
The bank responds well the five types of needs.
 Stated Needs (the customer wants for example an ATM machine in his office)
Real Needs (the customers wants the bank to serve on rest day like Sunday)

 Unstated Needs (the customer expects goods service from the bank)
 Delight Needs (the customer saves money and receive lottery ticket for prizing)
 Secret Needs (the customer wants to be seen by friends as a value oriented consumer)
In general, the bank can respond to customers request by giving customers what they want, or
what they need, or what they really need. The key to professional marketing is to understand
their customer real needs and meet them better than any other competitor can.
If your customers are highly satisfied they will:
 stays loyal longer
 Become more interactive as the company introduces new services and upgrades existing
producers.
 talks favorably about the company and its services
 pays less attention to competing other banks and advertising and is less sensitive to price
 Offers constructive ideas to the company as nowadays the bank is working with the social
welfare Association like ‘Ekob’ so as to serve on Sunday based on the request of those
customers.
 Costs less to serve than new customers because transactions are frequently made.

That’s why the bank is successfully control the market following the marketing concept. As of
June 2013, it had about 195.4 billion Birr in assets and held approximately 63.5% of deposits and
about 38% of all bank loans in the country. The bank has around 22,000 employees, who staff its
headquarters and its over 900 branches positioned in the main cities and regional towns. The
latter include 120 branches in the national capital Addis Ababa. With the opening of a branch in
the Gechi in the Illubabor Zone of the Oromia Region, CBE's banking network has reached
online 783 branches. The bank has reached 1014 branches as of February 12, 2016.
The Banking professionals’ excellence in blending these marketing-mixes gives the best result to
appeal to customers and profit to the organization. The concept of the marketing mix as the
combination of the major tools of marketing was developed by Borden in the 1950s (Bordon,
1964), and the mnemonic `4Ps` (product, price, promotion, place) describing those tools was
coined by McCarthy (1960). The marketing mix creates an offering for customer.

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Product
Since banks have customers from different walks of life, a single product specification will not
be attractive for all. Service/product of an optimal mix of core andperipheral dimensions will
raise the attraction of the product. Generally bankingproducts are grouped under three different
heads: Core products, Formal productsand augmented products/Peripheral services. Core
products are those products inwhich a banker is engaged in business. For a bank, core products
are savingsbanks, term deposits, current accounts, cash credits, overdrafts, term loans and soon.
Formal products are made up of a combination of two or more core productsand they have a
strong marketing content to meet some customer needs. UnfixedDeposit scheme of Citi Bank is
an example for this. The Augmented product is aFormal product with some ancillary benefits or
peripheral services attached to it.
For example the Ethiopian commercial banks when one opens a savings bank account he
gets an ATM Card or Credit Card. The different services of a bank form the product
mixof the bank. The formulation of a sound product mix is very essential to survive and
compete in the market.

Price
Price is the interest, fees and commission charged and paid by the bank. Price will determine the
profitability of the banks. Banks have flexibility in their pricing policy. Thus, liberalization has
brought in almost complete freedom to the banks to decide the price according to market
situations.

Place
This ‘P’ signifies placing or distribution of services to the ultimatecustomers. The service mix of
banks moves through different distributionchannels, such as, the branches, the bank has reached
1014 branches as of February 12, 2016. A suitable location/point for the establishment of a bank
branch is very important. It should giveconveniences and comfort to the customers. As far as
possible, services shouldreach the doorsteps of the customers. The behavioral profile and
efficiency of the bank personnel is also equally important. No gap in the distribution process
would occur that will hinder smooth flow of services since inconveniences to customers would
act as a demotivation tool that will result in deserting a bank.

Promotion
The fourth ‘P’, promotion plays an important role in promoting banking business. It
communicates with the customers/prospective customers on almost all the aspects of the
marketing mix like advantages of different products, details of how it is delivered, details on the
interest and commission paid and charged by the bank etc. Simultaneously, it persuades the
prospective customers to bank’s products. Thus marketing promotion has two basic objectives –
first one to inform the prospective customers and second one to persuade them. This could be in
various shapes like advertisement, personal interaction and sales campaign. Or this could be a
combination of various promotional instruments.

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Process

The organizational activities or processes of a typical banking concern were mostly designed
during the traditional banking period. In the present scenario of reforms basic changes in banking
systems and procedures are necessary for achieving customer satisfaction. The need of the hour
is more customer-friendly and marketing-oriented processes that will give uniqueness to the
product. For this the work-flow in a bank branch should be customer-oriented so as to give
maximum convenience to the customers. Similarly, the present reporting system of sending too
many reports/statements should be abolished to reduce the workload of the bank staff. The
Ethiopian commercial bank has already taken this issue in to consideration while introducing
information and communication technology based systems and procedures.

People
People are an important component of bank marketing strategy as human factor is very
influential in services marketing. As the inseparability principle is applicable in bank marketing,
the services and service providers are not separable in banks. So the quality of service provided
by a bank depends on the quality of people available to the bank. Only quality people can
generate efficiency and improve productivity. A fair synchronization of dedicated and committed
team of efficient professionals and new information technology could perform fantastically to
produce the best result as in some foreign banks and private banks. Human resource
development is the way for the formation of human capital. Since the banking services are
intended for customer satisfaction, it is imperative that the top executives at the apex level should
give due consideration for their human capital and the people at the counter.

Physical Evidence
Like all service products, banking products are also intangible. Making it tangible is a major duty
of the banker and for that he uses the instrument of physical evidence in different forms in banks.
Proper upkeep of branch premises and interior decoration of branches are originally part of place
strategy but which have relevance from the standpoint of physical evidence also. Another area of
physical evidence is the stationery items like cheque book, pass book supplied to customers and
other stationery materials in use. These items may be redesigned to look attractive, clear and
convenient tocustomers. An attractively designed product brochure, a catchy brand name for
aproduct, timely supply of statement of account etc. will make the products tangible. And also
other factors are available to appeal to customers and profits to the organization are

 Socio Culture Environmental Factors

 Demographic Changes
 Covers the Customer from all Walk of Life
 Covering Status Preference through Pricing
 Free Eye Tests
 Contributing towards reducing unemployment
 Technological Environmental
 Successful Online Retailer

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  Use of Modern Technology
 Self Service Check out, Club Cards etc
 Economical Environment
 Less effect of Economic Downturn
 Reduction in the VAT
 Operation in less recession affected areas of World
 Economic downturn creates unemployment
 Political/Legal Environment
 New Government Policies
 Entering into new markets
 Reduction of Corporate Tax
The bottom-line is that the object of the marketing mix is to satisfy the customer. What Tesco
must do is to basically know the needs of the customer in their target country. However, the
company should not centre on merely knowing the needs of the consumers. It also has to extend
a good relationship with them by ensuring a competent provision of its product and services.
Along with these is the provision of a suitable customer care service to reinforce their
satisfaction

2. Identify and briefly describe four trends in the macro/market environment

that will have or recently had an influence on the selected industry. For each
of the trends you have to:

A) Briefly explain the trend

Introduction to Macro Environment and The macro marketing environment in the clothing
industry. The macro environment consists of all external factors which are uncontrollable and
which effect the business`s development and also influence its planning and decision making.
Every business is affected by macro environmental forces. They can increase or decrease the
need for your product, or create entirely new product needs. Raw material costs might be driven
up or down. New target markets might be created or old ones changed. What’s important for a
company is to identify those macro environmental forces that directly affect their business,
which means understanding the nature of those forces and how to identify and analyze them.
Although the environment consists of a whole wide variety of factors and influences, it is
possible to group them under broad heading, these elements can be divided into four main
grouping, known by the acronym STEP; Socio culture, Technological, Economical and
Political and legal environment

This marketing environment is made up of the Macro and Micro environments. Marketers should
consider both internal and external environment for understand the whole market which they
want to sale their products or services.

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Socio Culture Environment
 Demographics
 Culture
 Attitude
 Current issues
The socio culture environment is of particular concern to marketers as it has a direct effect on
their understanding of customers and what drive them. Not only does it address the demographic
structure of markets, but it also look at the way in which attitude and opinion are being formed
and how they are evolving.

Technological Environment
 Product
 Materials/components
 Processes
 Distribution
 Marketing/administration
Technological innovation and technological improvement have had a profound effect in all areas
of marketing. Computer technology, for instance, have revolutionized product design, equality
control, materials and inventory management, the production of advertising and other
promotional materials, and the management and analysis of customer information. The rise in
direct marketing as a communication technique, owes a lot to the availability of cheap and
powerful computerized database management. Technology also effects the development of new
processes and materials, as well as the invention of completely new products or application

Economical Environment
 Market Structure
 Government Policy
 Trading blocs
 Taxation
 Interest rates
The economic and competitive environment covers both macro and micro-economic conditions
which effect the structure of competition in a market, the cost and availability of money for
marketing investment in a stock and new products, for example, and the economic conditions
affecting a customer`s propensity to buy. The global recession of late 1990s and in the current
situation for instance, caused a significant increase in the unemployment at all social levels, and
thus affected consumer`s willingness and ability to buy may kinds of product.

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Political/Legal Environment
 National Government
 Local Government
 Regulatory bodies
 Trade association
The political and legal environment covers the external forces controlled by the government both
national and European (if we talking about UK political/legal environment), local authorities, or
other trade or activity oriented regulatory bodies. Some of the rules and regulation developed and
implemented by the bodies under this heading have the force law, while others are voluntary,
such as adverting code of practice.
Macro Environment Factors that have an influence on the Clothing Industry are;
Macro environmental factors affecting the clothing industry are those which lie outside small companies
and their competitors. Business owners have less control of these external factors, and their impact in
changing them is minimal. Instead, small companies must adapt to these macro environmental factors,
which include consumer characteristics/social factors, technology, government influence and the
economy. The way small companies adapt to macro environmental factors determines both their ability to
differentiate themselves from key competitors and overall success.

SOCIAL FACTORS
Consumer micro environmental factors include cultures, norms, lifestyle, demographics and
population changes. These factors affect the clothing industry in different ways. For example, a
small clothing manufacturer needs to create styles that appeal to those of different cultures,
especially if those cultural groups represent large enough segments of its market. Contrarily,
clothing manufacturers, wholesalers and retailers avoid creating too many clothing items that fall
outside the norms of society.
The forces within society such as families, friends, colleagues, neighbors and the Medias. Social
forces affect our attitudes, interests and opinions. If organizations do not respond to changes in
society they will lose market share and demand for their products and services.
TECHNOLOGICAL FACTORS
Technological macro environmental factors affecting the clothing industry include availability of
resources, demand and production. For example, the scarcity of certain materials, such as leather,
may force retail and wholesale clothing companies to sell more faux or substitute leather
products. Retailers may increase the prices of cotton clothing if they encounter shortages of this
raw material, as they must pay their manufacturers more. The introduction of new clothing styles
by a competitor can shift demand away from older fashions. Hence, a small clothing
manufacturer may need to discontinue certain clothing lines and produce new ones that meet the
needs of consumers. Moreover, clothing companies may add more advanced equipment in their
plants like robots, which may force companies to fire some workers.
The skills and knowledge applied to the production, and the technology and materials needed for
production of products and services can also impact the smooth running of the business and must
be considered.
Today, the pace of technological change constantly provides opportunities for new products.

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LEGAL AND POLITICAL FORCES
A number of legal and political macro environmental factors affect small businesses in the
clothing industry. The industry has repeatedly been affected by issues such as workers' rights and
child labor laws. Union workers in clothing manufacturing plants may picket their employers,
especially if their wages or medical benefits are less favorable than workers in comparable
industries. Workers picketing their clothing employers impacts production. This can cause delays
for retailers in getting spring or fall fashions on time.
Political factors can create advantages and opportunities for organizations. Conversely they can
place obligations and duties on organizations. Political factors include the following types of
instrument:

 Legislation such as the minimum wage or anti-discrimination laws

 Voluntary codes and practices
 Market regulations
 Trade agreements, tariffs or restrictions
 Tax levies and tax breaks
 Type of government regime e.g. communist, democratic, dictatorship

Nonconformance with legislative obligations can lead to sanctions such as fines, adverse
publicity and imprisonment. Ineffective voluntary codes and practices will often lead to
governments introducing legislation to regulate the activities covered by the codes and practices.

ECONOMIC FACTORS

Economic factors can have both positive and negative impacts on the clothing industry. During
economic boom periods, people have more disposable income. Hence, they may buy more
clothing, increasing sales for clothing manufacturers, wholesalers and retailers. However,
recessions have the opposite effect. Sales for these various clothing entities may be significantly
lower. Consequently, retailers may be stuck with large amounts of inventory. And they may have
to sell the clothing at substantially reduced prices. Clothing manufacturers and retailers may also
need to sell lower-priced clothing brands to compete with more generic brands. Consumers often
shop for cheaper brands when they have less disposable income.

The economic environment can impact both the organization’s production and the consumer’s
decision making process. The second element of a PEST analysis involves a study of economic
factors. All businesses are affected by national and global economic factors. National (and
global) interest rates and fiscal policy is set around economic conditions. The climate of the
economy dictates how consumers, suppliers and other organizational stakeholders such as
suppliers and creditors behave within society. An economy undergoing recession will have high
unemployment, low spending power and low stakeholder confidence. Conversely a “booming”
or growing economy will have low unemployment, high spending power and high stakeholder
confidence.
A truly global player has to be aware of economic conditions across all borders and needs to
ensure that it employs strategies that protect and promote its business through economic
conditions throughout the world.

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B) The impact of the macro environmental factors on clothing industry

There are many factors in the macro-environment that will affect the decisions of the managers
of any organization in this whole world. Tax changes, new laws, trade barriers, demographic
change and government policy, political changes are all examples of macro change. To analyze
these factors managers can categories them using the PESTEL model. The idea is to consider
each of these factors in turn and the changes that are taking place in these environments and to
determine whether, and to what extent, the business that we are assessing will be affected by the
changes.

ECONOMICAL

Economic factors: This includes interest rates, taxation changes, economic growth, inflation and
exchange rates. For example: Economic environment could be included by following elements:
Wage inflation - in the recession, the wage of labor might not be increased, it is depending on the
decisions are decided to cut the wage or increase the wage by manager.
Therefore, hotel manager should pay more attention to income distribution as well as average
income. Price inflation - because the recession, if economic decline, the commodity price will
rise. It will influence the decision customer make to travel or not. Gross domestic product per
capita - the most important economical element are the customer purchasing power and spending
patterns, GDP can Indicate these elements, because total purchasing power depend on current
income, price, savings, and credit, hotel manager must be aware of major economic trends in
income and changing consumer spending patterns.Exchange rates - because the UK economic is
fall down, the exchange from a pound to Euro is decrease, therefore, customers might chose
domestic tourism for their holidays.

TECHNOLOGICALS

New technology creates new products and new processes. Technology can reduce costs; improve
quality and leads to innovation. These developments can benefit consumers as well as the
organizations which providing the products .Nowadays, technology has significant affected the
clothing industry in many ways. Moreover, customers can book their accommodation or check-in
by Internet, or get the information which are required by customers on new Platform, such as
Facebook or Twitter, these and other technological advances will help companies to be more
effective in the marketplace.

POLITICAL

The degree of intervention in the economy? What goods and services a government wants to
provide? Up To what extent does it believe in subsidizing firms? What are its major priorities in
terms of business support? Political decisions can impact on many vital areas of business such as
the education of the workforce, the health of the nation and the quality of the infrastructure of the
economy such as the road and rail system. According to Kotler (1996), the political environment
is strongly affect clothing industry, political environment is made up of laws, government
agencies and pressure groups influence and limit the activities of various organizations and
individuals in society.

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SOCIAL
Changes in social trends can impact on the demand for a firm's products and the availability and
willingness of employees to work. Environmental factor includes the weather and climate
change. Changes in temperature can impact on many industries which include farming, tourism
and insurance. With major climate changes occurring due to global warming and with greater
environmental awareness these external factors are becoming a significant issue for firms to
consider. The growing desire to protect the environment is having an impact on many industries
like the travel and transportation industries (For example: more taxes being placed on air travel
and the success of hybrid cars.) and the general move towards more environmental friendly
products and processes is affecting demand patterns and creating business opportunities.

C) The implications that the macro environment factors on the marketers in

the Clothing industry.

 Firm to identify opportunities and getting the first mover advantage:

 Early identification of opportunities helps an enterprise to be the first to catch them
instead of losing them to competitors.
 Firm to identify threats and early warning signals:
 Opting with rapid changes: All sizes and all types of industries are facing increasingly
dynamic environment. In order to effectively cope with these significant changes,
managers must understand and examine the environment and develop suitable courses of
action.
 Improving performance: The enterprises that continuously monitor their environment
and adopt suitable business practices are the ones which not only improve their present
performance but also continue to succeed in the market for a longer period of time.

THE ORGANISATIONAL EXTERNAL BUSINESS STRATEGY

By using the PESTEL framework a manager can analyze the many different factors in a firm's
macro environment. However, it is important not to just list PESTEL factors since this does not
in it tell managers very much. What managers need to do is to think about which factors are most
likely to change and which will have the greatest impact on them i.e. each firm must identify the
key factors in their own environment. Managers must decide on the relative importance of
various factors and one way of doing this is to rank and score the likelihood of a change
occurring and also rate the impact if it did The higher the likelihood of a change occurring and
the greater the impact of any change the more beneficial this factor will be to the firm's planning.

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External Strategies of different organization

 Economic factors:-
 Social factors:-
 Political-legal factors:-
 Technological factors:-
 Environmental factors:-

 Potential Competitors This threat is high when industry barrier to entry is low.
Established firms hold their position and discourage firms from entering their market
through price and margin reductions. This threat is low when firms have established best
practices in marketing, Management, production, and administration. High brand loyalty
enables firms to mitigate this risk.
 Competitiveness among Industry Incumbents This threat is high when the industry
growth rate has slowed down. It is low if the environment is liberal, seen especially in
growing markets. Firms avoid direct competition in mature markets.
 Buyers’ Influence Is a threat when buyers’ buying power and influence on the firm are
high? Buyers’ influence comes in the form of price discounts, demand for better quality
and level of service, especially after-sales service. Buyers could switch to other products
and services quite easily when switching costs are low.
 Suppliers’ Influence The threat from suppliers is high when they can charge higher
prices for raw materials and finished goods. Threat arises when few suppliers can provide
customized goods with access to unique raw materials, technology, and other relevant
resources. Threat is high when suppliers can control the quality and price of raw
materials. When the supplier has higher influence, incumbent firms have no choice but to
accept or switch suppliers, which is difficult when only a few suppliers exist.
 Substitute Products Fads, trends, and consumer buying behavior influence markets to
pursue alternative products. Substitute products are considered when markets are exposed
to threats—for example health related and so-forth.
 Use of Modern Technology

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3. Assume you are producing and selling Ethiopian cultural clothes.
Customers complain the lack of creativity and quality in your product.

A) Explain how you segment, target the market and position the product.

1. Segmentation

Segmentation, targeting, and positioning together comprise a three stage process for selling of
good cultural clothes. We first (1) determine which kinds of customers exist, then (2) select
which ones we are best off trying to serve and, finally, (3) implement our segmentation by
optimizing our products/services for that segment and communicating that we have made the
choice to distinguish ourselves.

Suppose you have an idea for a great new offering you hope will become a hot seller. Before you
quit your day job, you’ll need to ask yourself, “Does my idea satisfy consumers’ needs and
add value to existing cultural clothes?” “Who’s going to buy my product?” and “Will there
be enough of these people to make it worth my while?”
Certain people will be more interested in what you plan to offer than others. Not everyone needs
homeowners’ insurance, not everyone needs physical therapy services, and not every
organization and people’s needs to purchase cultural clothes. Among those that do, some will
buy a few, and a few will buy many. In terms of potential buyers, not all of them are “created
equal.” Some customers are more equal than others, however. A number of people might be
interested in your product idea if it satisfies a need, adds value, is priced right, or if they are
aware when your product exists in the marketplace.
Your goal is to figure out which people and an organization are interested in your product ideas
and accepts customers complain, that our product cultural clothes are fit to customers need. To
do this you will need to divide or segment the people and organizations into different groups of
potential buyers with similar characteristics. This process is called market segmentation

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Market segmentation is the process of dividing consumers into different categories based on
distinguishing characteristics. The impetus behind market segmentation is that it helps retailers
identify customers who are most likely to buy their products. Small clothing retailers,
wholesalers and manufacturers primarily focus on demographics, personalities and needs when
segmenting their markets. This allows them to better reach non-buying consumers and customers
through advertising and other marketing efforts. These companies can also further differentiate
their clothing products from key competitors. There are several types of key market segments
used in retail clothing markets.
There are four types of product and market opportunities which can be pursued

(1) Market penetration: increasing the percentage of sales in present markets by taking sales
from competitors (2) Product development: offering newer, improved products to current
markets, through the expansion of the product range (3) Market development: selling existing
products to new markets by finding new applications (4) Diversification: moving into new
markets by offering new products

How Markets Are Segmented

Sellers can choose to pursue consumer markets, business-to-business (B2B) markets, or both.
Consequently, one obvious way to begin the segmentation process is to segment markets into
these two types of groups. According to Harrison, Hague, and Hague, the behavioral, or needs-
based, segments in B2B markets include the following:

 A price-focused segment is composed of small companies that have low profit margins
and regard the good or service being sold as not being strategically important to their
operations.
 A quality and brand-focused segment is composed of firms that want the best possible
products and are prepared to pay for them.
 A service-focused segment is composed of firms that demand high-quality products and
have top-notch delivery and service requirements.
 A partnership-focused segment is composed of firms that seek trust and reliability on
the part of their suppliers and see them as strategic partners

Types of Segmentation Bases

Shows some of the different types of buyer characteristics used to segment markets.
Notice that the characteristics fall into one of four segmentation
categories: behavioral, demographic, geographic, or psychographic.

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1. Behavioral segmentation.
Behavioral segmentation divides people and organization into groups according to how they
behave with or act toward products. Benefits segmentation—segmenting buyers by the benefits
they want from products—is very common. Behavior-Related Segments are Consumers' choices
in products, including apparel, may also be behavior-related. For example, customers may
purchase a small manufacturer's clothing line for prestige. They may also shop at certain clothing
stores for better quality, service or other factors that are immensely important to them. Small
clothing marketers and retailers may also appeal to the behavior-related segment with holiday-
related products. For example, clothing retailers may sell the popular colors of White Ethiopian
cultural closes during the holiday season. What benefits do customers want, and how do they use our
product?

2. Demographic segmentation.
Segmenting buyers by personal characteristics such as age, income, ethnicity and nationality,
education, occupation, religion, social class, and family size is called demographic segmentation.
Demographics are commonly utilized to segment markets because demographic information is
publicly available in databases around the world.
How do the ages, races, and ethnic backgrounds of our customers affect what they buy?
 Age
At this point in your life, you are probably more likely to buy cultural clothes Marketing
professionals know this. That’s why they try to segment consumers by their ages. You’re
probably familiar with some of the age groups most commonly segmented
Age-Related Segments; Age is another distinguishing factor or demographic that helps clothing
producers determine their buying audiences. Many clothing manufacturers target teenage girls
with their trendy new fashion lines, including jeans, blouses and other apparel. They often
promote these clothing lines in late July and August, before the school year commences
especially in ‘ashenda’ cultural holiday. The entire children's sector represents another viable
buying group in apparel sales, according to MarketResearch.com. Children's clothing producers
may also sell related items that appeal to children and their parents. Infants and toddlers
represent additional age-related segments. Some small manufacturers and wholesalers may
exclusively focus on the infant and toddler markets, as this segment is significant enough in size.
 Income
Income is used as a segmentation variable because it indicates a group’s buying power and may
partially reflect their education levels, occupation, and social classes. Higher education levels
usually result in higher paying jobs and greater social status.

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  Gender

Gender is another way to segment consumers. Men and women have different needs and also
shop differently. Consequently, the two groups are often, but not always, segmented and targeted
differently. Marketing professionals don’t stop there, though. For example, because women
make many of the purchases for their households and clothes Gender-Related Segments; Small
clothing retailers make frequent use of gender segments. For example, small, independent
department stores may sell clothing lines for both men and women. These clothing lines may
include casual and business attire for both genders. The clothing items the department store
features is usually contingent upon the season. Men's shorts, for example, would primarily be
sold in the spring and summer. A small clothing store may also specialize in a specific gender,
selling men's cultural suits or ladies' cultural lingerie.
 Family Life Cycle
Family life cycle refers to the stages families go through over time and how it affects people’s
buying behavior. Lifestyle Segmentation; Lifestyle represents another market segment in
which small clothing retailers and manufacturers base their product selections. For example,
clothing manufacturers that produce clothing for hunters or military personnel sell camouflage
and military fatigues, respectively, to meet their clients' lifestyle needs. Opinions may also play a
role in what consumers purchase in this particular segment. For example, a coat manufacturer
may need to produce faux fur coats instead of fur ones for those who are more sensitive to
animal welfare.
 Ethnicity
People’s ethnic backgrounds have a big impact on what they buy.

3. Geographic segmentation.
Where are our customers located, and how can we reach them? What products do they buy based
on their locations? Geographic Segments; Savvy marketers and producers know that customer
clothing preferences vary in different regions or geographical areas. One determining factor is
weather. People living in warmer climates wear shorts and swimwear for longer periods, for
example. Contrarily, the market for coats and jackets is greater in colder parts of the country.
Clothing trends may also vary by geographic region.

4. Psychographic segmentation.
What do our customers think about and value? How do they live their lives?

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Common Ways of Segmenting Buyers

By Behavior By Demographics By Geography By Psychographics

 Benefits
sought from
the product
 How often the
product is
 Age/generation
used (usage
 Income  Region
rate)
 Gender (continent,
 Usage  Activities
 Family life cycle country, state,
situation  Interests
 Ethnicity neighborhood)
(daily use,  Opinions
 Family size  Size of city or
holiday use,  Values
 Occupation town
etc.)  Attitudes
 Education  Population
 Buyer’s status  Lifestyles
 Nationality density
and loyalty to
 Religion  Climate
product
 Social class
(nonuser,
potential user,
first-time
users, regular
user)

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2. Market Targeting

The segment(s) or group(s) of people and organizations you decide to sell to is called a target
market. Targeted marketing, or differentiated marketing, means that you may differentiate some
aspect of marketing (offering, promotion, and price) for different groups of customers selected.
After creating the different market segments, it’s time for a company to target the audience and
analyze which segments it will cater to and how. For this, a business must essentially look at the
following approach:

 Selecting Target Markets

Selecting target market segments – A business can either target the buyers broadly or in
narrow fashion. Based on this concept, one might create mass marketing strategies,
differentiated, concentrated or micromarketing strategies. After you segment buyers and develop
a measure of consumer insight about them, you can begin to see those that have more potential.
An attractive market has the following characteristics: A market worth targeting has the
following characteristics:

 It is sizeable (large) enough to be profitable given your operating cost. “

It is growing.
 It is not already swamped by competitors, or you have found a way to stand out in a
crowd
 Either it is accessible or you can find a way to reach it
 The company has the resources to compete in it.
 It “fits in” with your firm’s mission and objectives.

 Target-Market Strategies: Choosing the Number of Markets to Target

Choosing a Targeting Strategy – Based on the product life-cycle stage, company resources,
market variability and competitors’ strategies, businesses can choose a targeting strategy with lot
of consideration. In today’s competitive age, companies must see to it that they involve the
consumers in all phases of product development and buying process. It’s imperative to reach out
to them and understand their preferences before adopting a targeting strategy.

 Multi segment Marketing

A multi segment marketing strategy can allow a company to respond to demographic and other
changes in markets, including economic downturns.
Most firms tailor their offerings in one way or another to meet the needs of different segments of
customers. Because these organizations don’t have all their eggs in one basket, they are less
vulnerable to competition. A multi segment marketing strategy can allow firms to respond to
demographic changes and other trends in markets. A multi segment strategy can also help
companies weather an economic downturn by allowing customers to trade up or down among

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brands and products. A multi segment strategy can also help companies deal with the product life
cycle issues. If one brand or product is “dying out,” the company has others to compete.

 Concentrated Marketing

Concentrated marketing involves targeting a very select group of customers. Some firms—
especially smaller ones with limited resources—engage in concentrated marketing. Concentrated
marketing involves targeting a very select group of customers. Concentrated marketing can be a
risky strategy because companies really do have all their eggs in one basket.

 Targeting Global Markets

Firms that compete in the global marketplace can use any combination of the segmenting strategies or
none at all

 Evaluate market segments –

Companies must find out the segment size, growth pattern, segment attractiveness, competitors
operating in that segment and company objectives etc. One needs to decide whether or not the
segment has the ability to provide a long-term attractiveness and the platform for growth.

 Socially responsible market targeting –

While creating a market targeting plan, ensure that it is in line with the social and legal policies
and sensitivity of the markets. For example, producers of this cultural close in religious and
cultural holidays like wedding have got much market than at any working day. Market targeting
helps businesses come up with tailor-made products and marketing campaigns to address the
needs of the different market groups, but companies need to factor in the current market
environment, buyer preferences, competitor actions etc. to launch their targeting plan.

Benefits of Segmenting and Targeting Markets

More specifically, the process can help you do the following:

 Avoid head-on competition with other firms trying to capture the same customers.
 Develop new offerings and expand profitable brands and products lines.
 Remarket older, less-profitable products and brands.
 Identify early adopters.
 Redistribute money and sales efforts to focus on your most profitable customers.
 Retain “at-risk” customers in danger of defecting to your competitors.

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3. Positioning
Positioning involves implementing our targeting. Why should buyers purchase your offering
versus another? If your product faces competition, you will need to think about how to “position”
it in the marketplace relative to competing products. After all you don’t want the product to be
just another “face in the crowd” in the minds of consumers. Positioning is how consumers
perceive a product relative to the competition. Companies want to have a distinctive image and
offering that stands out from the competition in the minds of consumers. Positioning is all about
creating an impression in the minds of the consumer. It is the way in which the end-user will
define your product or service in comparison to your competitors’ offerings. For example, what
you call it ‘telfi’ is positioned as a powerful it is unique Ethiopian traditional close everyone in
the world recognizes easily. Businesses must first create a positioning map based on customer
perceptions of their brands with respect to an existing competitor’s brands.Depending on the
price and orientation, they can find out the brand’s relative share in the market, based on which
the positioning can be developed. Creating a unique set of benefits is crucial to a brand’s success.
There are several factors that can help companies choose the right positioning strategy such as:

 Identifying value differences – Businesses must understand what the buyer values more
while purchasing a product. Say for example, the user gives more importance to quality
instead of price; then you must cater to that need not just by creating an attractive tagline
but also delivering on quality.
 Choosing competitive advantages – Upon market research and evaluating segments,
businesses may come across several potential differentiations that may provide
competitive advantages with regard to other players. But it is essential to choose the
advantages properly before diving into all of them. Create a USP for your brand and
communicate the benefits and unique offerings to your consumers. Also, remember that
some differences may not be good to promote. In such a case, you need to factor in the
importance, profitability and superiority of that difference before promoting it.
 Selecting Positioning Strategy – Once a business has decided on the differences to
promote and its brand USP, it must develop an overall positioning strategy, which is also
called value proposition. The positioning statement must be clear and provide the
following information: which market segment is being catered, what is your brand
concept, and what is the competitive advantage of choosing your product.

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B) Develop the marketing mix strategies (include product, pricing, place, and
promotion strategy)

The marketing mix in marketing strategy: Product, price, place and promotion

The marketing mix is the set of controllable, tactical marketing tools that a company uses to
produce a desired response from its target market. It consists of everything that a company can
do to influence demand for its product. It is also a tool to help marketing planning and execution.

The four Ps of marketing: product, price, place and promotion

The marketing mix can be divided into four groups of variables commonly known as the four Ps:

1. Product: The goods and/or services offered by a company to its customers.

2. Price: The amount of money paid by customers to purchase the product.
3. Place (distribution): The activities that make the product available to consumers.
4. Promotion: The activities that communicate the product’s features and benefits and
persuade customers to purchase the product.

Marketing tools
Each of the four Ps has its own tools to contribute to the marketing mix:

 Product: variety, quality, design, features, brand name, packaging, services

 Price: list price, discounts, allowance, payment period, credit terms
 Place: channels, coverage, assortments, locations, inventory, transportation,
logistics
 Promotion: advertising, personal selling, sales promotion, public relations

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Marketing strategy
An effective marketing strategy combines the 4 Ps of the marketing mix. It is designed to meet
the company’s marketing objectives by providing its customers with value. The 4 Ps of the
marketing mix are related, and combine to establish the product’s position within its target
markets.

Weaknesses of the marketing mix

The four Ps of the marketing mix have a number of weaknesses in that they omit or
underemphasize some important marketing activities. For example, services are not explicitly
mentioned, although they can be categorized as products (that is, service products). As well,
other important marketing activities (such as packaging) are not specifically addressed but are
placed within one of the four P groups.

Another key problem is that the four Ps focus on the seller’s view of the market. The buyer’s
view should be marketing’s main concern.

The four Ps as the four Cs

The four Ps of the marketing mix can be reinterpreted as the four Cs. They put the customer’s
interests (the buyer) ahead of the marketer’s interests (the seller).

 Customer solutions, not products: Customers want to buy value or a solution to

their problems.
 Customer cost, not price: Customers want to know the total cost of acquiring, using
and disposing of a product.
 Convenience, not place: Customers want products and services to be as convenient
to purchase as possible.
 Communication, not promotion: Customers want two-way communication with the
companies that make the product.

Marketing mix (Price, Place, Promotion, Product)

 When marketing their products firms need to create a successful mix of:
 The right product
 Sold at the right price
 In the right place
 Using the most suitable promotion.
 To create the right marketing mix, businesses have to meet the following conditions:
 The product has to have the right features - for example, it must look good and work
well.
 The price must be right. Consumer will need to buy in large numbers to produce a
healthy profit.
 The goods must be in the right place at the right time. Making sure that the goods arrive
when and where they are wanted is an important operation.

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The target group needs to be made aware of the existence and availability of the product through
promotion. Successful promotion helps a firm to spread costs over a larger output.

 The appearance of the product - in line with the requirements of the market
The function of the product - products must address the needs of customers as identified through
market research.
The product range and how it is used is a function of the marketing mix. The range may be
broadened or a brand may be extended for tactical reasons, such as matching competition or
catering for seasonal fluctuations. Alternatively, a product may be repositioned to make it more
acceptable for a new group of consumers as part of a long-term plan.

The price

Of all the aspects of the marketing mix, price is the one, which creates sales revenue - all the
others are costs. The price of an item is clearly an important determinant of the value of sales
made. In theory, price is really determined by the discovery of what customers perceive is the
value of the item on sale. An organization’s pricing policy will vary according to time and
circumstances.

The place

Although figures vary widely from product to product, roughly a fifth of the cost of a product
goes on getting it to the customer. 'Place' is concerned with various methods of transporting and
storing goods, and then making them available for the customer. Getting the right product to the
right place at the right time involves the distribution system.

The promotion

Promotion is the business of communicating with customers. It will provide information that will
assist them in making a decision to purchase a product or service. The cost associated with
promotion or advertising goods and services often represents a sizeable proportion of the overall
cost of producing an item. However, successful promotion increases sales so that advertising and
other costs are spread over a larger output. Though increased promotional activity is often a sign
of a response to a problem such as competitive activity, it enables an organization to develop and
build up a succession of messages and can be extremely cost-effective.

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How to Develop a Marketing Strategy & Marketing Mix for a Product

A marketing strategy is simply a clear statement on how a marketing professional intends to

present a product to the public, taking into account the target audience, product benefits and
marketing methods. A marketing mix combines the four Ps of marketing (product, price, place,
promotion) into a single statement. Combining the elements of the marketing strategy and the
marketing mix provides you with a clear focus for marketing a product and for satisfying the
objectives a company has for the product

1. Define the Unique Selling Proposition (USP) for the company. Describe the stated benefit that
a product has for the customer. Outline, using the USP, the claim you are making about the
product: why a customer should purchase it and what value the customer will receive from it.
Describe a USP for each product to help narrow down your marketing focus for that product.
2. Describe the targeted audience for the product. Narrow the focus of the product by identifying
who will be buying. Shape the marketing campaign around that description. Picture the expected
customer in your mind and on paper (or in a word processing program). Reach out to that
customer specifically.
3. Define the product in detail. Take the time to describe the specific value and qualities of the
product. Go beyond the obvious. Look for the unique features that the product has to offer.
Showcase these in a marketing campaign.
4. Create a pricing strategy for the product. Indicate how similar products are selling in the
marketplace, using the market research that you have collected. Gather this market research and
study it to ensure that you do not overprice & the product. Reach the company stated sales and
profit objectives for that product, using the pricing strategy.
5. Identify the place where the product will be marketed. Recognize that place goes beyond
geographic location. Look more closely at the type of venue where the product will be featured.
Note whether the product will be marketed in grocery stores, department stores or small boutique
shops.
6. Define the promotional techniques that you will use for the product. Explain how you will use
the standard promotional techniques, such as advertising, sales and promotional events, person-
to-person selling, and public relations campaigns. Create a promotional strategy that features the
product qualities as effectively as possible.

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