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Marketing Int 2 Marketing Int 2 Presentation Transcript

  • Marketing
  • What is a market?
    • Any place where buyers and sellers meet
  • What is Marketing
    • “ Marketing is the management process responsible for identifying , anticipating & satisfying consumer requirements profitably”
  • What is the Role of Marketing
    • To identify, anticipate and satisfy customers needs
    • Providing customers with desired goods/services = profits
    • To ensure customer awareness or goods/services
  • Marketing Objectives
    • Target a new market or market segment
    • Achieve or maintain market share
    • Develop new range of products
    • Improve image of product
  • Marketing Activities
    • Market Research
    • New Product Development
    • Selling
    • Pricing
    • Promotion and Advertising
    • Preparing Publicity Information
  • Product Orientation Production Capabilities Manufacture Product Aggressive Sales Effort Customers Production Orientation is when a business focuses on the production process and seeks to make goods which are viewed as superior
  • British Motorcycle Industry
    • Britain ruled the world of bikes in 30s and 40s.
    • BSA, Norton & Triumph neglected consumer tastes as sleeker models arrived
    • Suzuki, Kawasaki and Honda catered for this. Look at what happened!
  • Market Orientation Customer Needs Potential Market Opportunities Marketing Products & Services Customers Market Orientation starts with the consumer and looks at consumer needs. It is customer orientated.
  • Sony Walkman
    • Designed due to people’s needs for a small tape recorder
    • Workers used headphones to listen to music and the Walkman was born
  • Henry Ford and Model T
    • The World’s First Assembly Line churned out the Model T Ford.
    • Henry Ford ‘boasted’ that “it was available in any colour… as long as it’s black!”
    Ford was customer orientated because the savings made by the assembly line were passed down to the customer by offering cheap automobiles
  • Advantages of Market Orientated approach
    • Respond quicker to changes in market due to market research
    • Stronger position to meet new competitors
    • Can anticipate market changes
    • More chance of new product success
  • Market Share
    • Market Share is the percentage of customers who buy/use a company’s goods/services
  • Market Growth
    • Increasing market share means a business increases sales at the expense of competitors.
    • However, firms can also increase sales if the whole market grows.
    • Market growth occurs when the number of people buying/using the good/service increases
  • Marketing Mix
    • The 4Ps
    • Product
    • Price
    • Place
    • Promotion
  • Product/Service
    • The good or service which the business is trying to sell. Most important element a it determines what the price will be (Price), how it is promoted(Promotion) and where it is sold (Place).
    • Core Product provides a basic need
    • Augmented Product is made more attractive to the customer by having additional features.
    Product
  • Product Life Cycle Products have a natural ‘lifespan’. Some are very short others are around for decades. The file of a product can be prolonged by using extension strategies. However all products go through a number of distinct phases.
  • Stages in Cycle Development Stage – many products will never progress past this stage. Development of new products is essential but can be very costly. Before launching it may be test-marketed. Modifications can then be made based on feedback. Introduction Stage – heavy advertising at this stage to make consumers aware of the product. Sales are slow and costs are high. Growth Stage – consumers more aware of the product and sales start to grow rapidly. It is during this stage that the product begins to become profitable.
  • Stages in Cycle Maturity Stage – sales reach their peak. Advertising costs are lower and development costs should have been repaid. The product is at its most profitable. The business will work to keep the product in this stage for as long as possible. This can be done by using extension strategies . Decline Stage – Sales and profits start to fall. Mobile phone sales are beginning to decline if firms wish to stay in business they will have to create new phones or new demand for phones.
  • Product Life Cycle
  • Extension Strategies Reducing Price Therefore Promoting More Frequent Use of Product – reduce cost of texting to mobile phones. Developing New Markets for Existing Product – Computer were originally manufactured for the business market, moved into home market. Finding New Uses for Existing Products – fire lighters now used for barbeques.
  • Extension Strategies Develop a Wider Range of Products – new versions of same product can produce new interest from consumers. Irn Bru – range of can and bottle sizes, fruit chews, ‘alco-pop’ market. Developing Styling Changes – introducing slightly different product – football strips.
  • Effects of Extension Strategies
  • Branding Branding is used to create USP’s (unique selling propositions) and ESP’s (emotional selling propositions) The business chooses a word or symbol, or both, then registers them so that they can only be used on its products. Baxter’s, Oxo, Cadbury’s and Heinz are all well-known brand names.
  • Benefits of Branding Instant recognition of the product by the customer. Brand loyalty – repeat purchases Higher prices can be charged Quality is associated with it Easier to launch new products Good after sales service May lead to purchases of other products with same brand name
  • Drawbacks of Branding Time is taken to establish a brand Promotion costs will be high Bad publicity for one product can affect the whole range of same-brand products Fake products may appear. These imitators are very difficult to stop. (Burberry, Rolex and Calvin Klein who can charge premium prices for their products suffer most at the ands of the forgers.)
  • Own Brands Most of the supermarket chains, and large retailers such as Boots, offer a wide range of products under their own brand names. These can be produced by the supermarket or by a manufacturer who is contracted to produce goods for the supermarket.  
  • Advantages of Own Brands Own brands will attract more customers and more sales within the store. Producer will have guaranteed sales Products are cheaper Disadvantages of Own Brands Some customers believe ‘own brands’ are of lower value than established brand names (although this is not necessarily true).
  • Price Consumers will only pay what they can afford and what they think is a reasonable price for the product. Consumers use price as a measure of quality. When setting a price for a product you need to consider: Costs of production Profit mark-up Competitor prices
  • Long Term Pricing Strategies Low Price - Charge lower than competitors. Only appropriate where there is a little brand loyalty and competition in the market is high. Market Price - Setting price at a similar price to competitors. Homogeneous product means that price competition is not of benefit. They compete in other areas – service etc. High Price - High quality products, premium goods and services where image is important, such as perfumes.
  • Short Term Pricing Strategies Skimming Using a high price initially for a new product where there is little competition. Penetration Pricing Used to introduce a product to an established market. Allows the business to achieve sales and gain market share very quickly. Usually set a low price to attract customers. Once product is established price can increase.
  • Short Term Pricing Strategies Destroyer Pricing Setting a very low price to destroy the competition. Product probably being sold at a loss, however once competition is destroyed the price will return to market price. Promotional Pricing Used to boost sales and create interest in a product by lowering the price. Supermarkets use this for some of their sales lines, as loss leaders. Demand-orientated Pricing Price varies with the demand, ie crops, trains, phones etc.
  • Place Producers Wholesalers Retailers Consumers Direct Selling Producer to Wholesaler Two or more intermediaries Producer to Retailer
  • Choice of Distribution Channel The Product – perishable, unique The Market – size – Mars Bars Legal Requirements – alcohol, drugs Buying Habits – expectations of customers The Business – own distribution network
  • Manufacturer Wholesaler Retailer Consumer A Distribution Channel
  • Direct Channel
    • This is from manufacturer to the consumer
    • It is the fastest way (perishable goods?)
    • And cheapest for consumer (no costs added on by each part of the chain)
  • Manufacturers A B C D E Company warehouse Wholesalers Company outlets Retailers Retailers E-tailers C o n s u m e r s
  • Key Terms
    • Manufacturer – firm that makes goods
    • Wholesaler – company stores goods in bulk before selling them on in smaller batches
    • Retailer – firm who sells goods to end-users
    • Consumer – person who uses final good/service
  • Types of Promotion Promotion Advertising Sales Promotion Direct Mail Personal Selling Public Relations Exhibitions and Trade Fairs Merchandising
  • What is Promotion
    • method used to pass on information to consumers
    • an essential way of keeping existing customers and getting new ones
  • Methods of Promotion
    • Advertising
    • Sales promotion
    • Public relations
    • Merchandising
    • Packaging
    • Exhibitions and trade fairs
    • Direct mail
    • Personal selling
  • Types of Advertising Informative : Health Education Board for Scotland – smoking, drugs, alcohol etc Persuasive : used in very competitive markets, use powerful images and language – ‘Probably the world’s favourite lager.’ Corporate : promoting the whole company not a single product – BP adverts focus on their ‘green image’ not on the product (petrol) Generic : the whole industry come together to promote the whole industry – Scottish Beef, Scottish Tourism
  • Choice of Advertising Media
    • How and where an organisation carries out its advertising will depend on how it can best reach its existing and potential customers.
      • Young audience: teen magazines, Hollyoaks
      • Older people: Sunday newspapers, daytime TV
      • Whole market: Coronation Street
  • Types of Advertising Media
    • Print : newspapers and magazines
    • Broadcast : TV, radio, Internet
    • Outdoor : billboards, buses, round football grounds etc
    • Which one is chosen depends on:
    • Cost : TV expensive but memorable
    • Target audience : choice of programme, newspaper
    • Competitors’ Advertising : usual to match competitors
    • Impact required : new product  wide variety of methods
    • The Law : tobacco and alcohol
  • Sales Promotion – Into the Pipeline
    • Dealer Loaders: 6 boxes for the price of 5
    • Point-of-sale displays, posters, videos etc
    • Dealer competitions
    • Staff training for the shops
    • Sale or return
    • Extended credit
  • Sales Promotion – Out of the Pipeline
    • Free samples
    • Bonus packs: 50% free
    • Price reduction: 50p off offer
    • Premium offers: one product is free when you buy another
    • In-store demonstrations and tasting
    • Merchandising: in-store displays
  • Public Relations
    • The way an organisation communicates at a corporate level with: the public, the press, the government and shareholders
    • Will involve : press statements, making charitable donations, sponsoring events, arranging product endorsement
    • Publicity : internal through press releases or external through news reports or consumer programmes. Not usually paid for, can become advertising if it is good publicity.
  • Merchandising
    • An attempt to encourage the customer to buy at the point-of-sale by using window displays, posters,etc
    • Layout of products: popular items at the back of the store to make customers walk passed less popular items.
    • Related items together ie soap powder
    • Products at eye level are the best position to achieve sales
    • Well stocked shelves, the right atmosphere ie bright lighting can create a feeling of cleanliness near fresh food. The smell of coffee or baking can make customers hungrier.
  • Packaging
    • Good packaging can increase sales of a product . Factors that
    • should be considered:
    • Shape and weigh : can affect distribution costs
    • Protection : product must not be damaged in transit or be affected by heat, light or dust
    • Convenience : easy for the customer to handle
    • Design : eye-catching to distinguish from competitors
    • Information : legal requirements (food labelling), technical requirements (wattage on bulbs)
    • Environmental factors : public concern about recyclable materials and excess packaging
  • Target Markets
    • Undifferentiated or Mass Marketing
    • When a product is sold to the entire market
    • Differentiated Marketing
    • When a product is offered to a group or groups within the total market
    • This is done by Market Segmentation
  • Undifferentiated marketing Firm Market Marketing mix
  • Differentiated marketing Firm Segment 1 Segment 2 Segment 3 Marketing mix 1 Marketing mix 2 Marketing mix 3
  • Concentrated marketing Firm Segment 1 Segment 2 Segment 3 Marketing mix
  • Methods of Market Segmentation
    • Age
    • Race
    • Gender
    • Lifestyle
    • Size of family
    • Income
    • Work
    • Location
  • Socio-Economic Group
    • A. Higher managerial, administrative or professional
    • Intermediate, clerical, administrative or
    • professional
    • C1. Supervisory, clerical, junior administrative or professional
    • C2. Skilled manual
    • D. Semiskilled and unskilled
    • E. State pensioners, widows, casual and lowest paid
  •  
    • Segments people according to lifestyle.
    • Lifestyle is a person’s individual pattern of behaviour.
    • Includes;
    • attitudes, beliefs, interests, hobbies, habits, religion
    Psychographic Segmentation
  • Market Research
    • What is Market Research?
    • “ The collection, collation, and analysis of data, relating to the marketing and consumption of goods and services”
  • Market Research Provides Information About
    • Size and nature of market
    • Age, sex, income & preferences of market
    • Effectiveness of selling methods
    • What customers think and feel about product
    • Effectiveness of advertising & promotion
  • What can businesses use market research for?
    • Descriptive reasons:
    • What is happening in a market?
    • Predictive reasons:
    • What will happen in the future?
    • Explanatory reasons:
    • Why is something happening? E.g. Why is our product only popular in one region?
    • Exploratory reasons:
    • E.g. Could this new product work?
  • Primary (Field) Research
    • Questionnaires
    • Personal interviews
    • Telephone interviews
    • Postal surveys
    • Observations
    • Technology e.g. loyalty cards
    • Focus Groups
    • Customer panels
    Used to collect Primary data
  • Primary Research +/-
    • +
    • Only firm that collects it has access
    • Can be controlled/verified
    • -
    • Expensive to collect
    • Lengthy time involved, info could be out of date
  • Secondary (Desk) Research
    • Used to collect secondary data.
    • Examples:
    • Sales figures
    • Annual Reports and data
    • Internet data (other businesses websites for example)
  • Secondary (Desk) Research
    • Government publications:
    • e.g. ‘ Social Trends’
    • European Union – publications by ‘EUROSTAT’
    • Commercial publications:
    • e.g. ‘Keynote’ , ‘Verdict’ etc.
  • Secondary (Desk) Research +/-
    • +
    • Saves time
    • Relatively inexpensive
    • -
    • Not specifically related to project undertaken
    • Cannot be verified
  • Problems with Market Research
    • Human behaviour is unpredictable
    • Sampling and bias
    • Other forms of bias e.g. leading questions