Marketing involves identifying and satisfying customer needs in order to generate profits. It includes activities like market research, product development, pricing, promotion, and distribution. A key aspect is understanding different types of markets, including consumer markets of individuals and industrial markets of organizations. Marketing aims to be customer-oriented by anticipating trends and responding to changes in order to gain a competitive advantage.

1. Marketing

2. What is a market? Any place where buyers and sellers meet

3. Consumer Markets Consumer markets - are made up of individuals who purchase goods/services for personal or domestic use. Consumable goods - eg, food, cosmetics, magazines Durable goods - eg, cars, televisions, clothes

4. Industrial markets - organisations which purchase goods and services to use in the production of other goods and services. Consumable goods - eg, raw materials Durable goods - eg, machinery and equipment Industrial Markets

5. What is Marketing “ Marketing is the management process responsible for identifying , anticipating & satisfying consumer requirements profitably”

6. About Marketing Marketing finds out consumers needs and what products meet them “Customer is king” Marketing is a business philosophy and an on-going process Marketing affects ALL aspects of business Marketing is NOT just selling Marketing and advertising are NOT the same

7. 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

8. Marketing Objectives Target a new market or market segment Achieve or maintain market share Develop new range of products Improve image of product

9. Marketing Activities Market Research New Product Development Selling Pricing Promotion and Advertising Preparing Publicity Information

10. Factors leading to Importance of Marketing Economic Growth – booms = more disposable income. Marketing is needed to gain market share Fashion – Marketing attempts to anticipate trends and/or changes in tastes, lifestyle Technology – New product innovation is essential for firms to keep up with competitors Competition – rivals may come from overseas. Firms have to be aware of the market environment both at home and abroad

11. 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

12. 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!

13. 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.

14. 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

15. 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

16. 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

17. The Marketing Environment THE MARKET Consumer trends and behaviour Technology Political Competition The Economy Social

18. “ It is useless to tell a river to stop running; the best thing is to learn how to swim in the direction it is flowing.” Anonymous

19. Market Share Market Share is the percentage of customers who buy/use a company’s goods/services

20. 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

21. Marketing Mix The 4Ps Product Price Place Promotion

22. 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

23. Boston Box Market Share Market Growth High High Low Low

24. Boston Box - Strategies Dogs Harvest or Divest Cash Cows Hold sales/market share Use excess cash to invest in stars, problem children Problem Children Build selectively Harvest or divest rest Stars Build sales/market share Invest to turn into cash cow

25. 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.

26. 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.

27. 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.

28. Product Life Cycle

29. 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.

30. 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.

31. Effects of Extension Strategies

32. What is a New Product? New to the world New product lines Additions to existing product lines Improvements and Revisions to existing products Repositioned products

33. NPD: Facts 1 in 50 new products fail

34. Stages of New Product Development Generate Ideas Analysis and Further Research Are the Products Marketable? Prototype Test Marketing Full Launch

35. Product Failures New Coke Sony Betamax VCR McDonald’s Arch Deluxe Maxwell House Ready-to-drink coffee Sinclair C5

36. Sinclair C5

37. Successful NPD Unique, superior product Well defined customer target market Close links between R&D and Marketing Well executed stages of NPD Market attractiveness

38. Japanese Approach In Japan they use the trial and error approach. They do not worry about market research. Japanese firms release hundreds of products in hope of getting one or two hits. They aim to get new products to market quickly and at low R&D costs. Failures can be modified and released again. This approach is called Expeditionary Marketing .

39. 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.

40. 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

41. 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.)

42. 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.

43. 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).

44. 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

45. 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.

46. 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.

47. 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.

48. Place Producers Wholesalers Retailers Consumers Direct Selling Producer to Wholesaler Two or more intermediaries Producer to Retailer

49. 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

50. Manufacturer Wholesaler Retailer Consumer A Distribution Channel

51. 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)

52. Manufacturers A B C D E Company warehouse Wholesalers Company outlets Retailers Retailers E-tailers C o n s u m e r s

53. 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

54. Types of Promotion Promotion Advertising Sales Promotion Direct Mail Personal Selling Public Relations Exhibitions and Trade Fairs Merchandising

55. What is Promotion method used to pass on information to consumers an essential way of keeping existing customers and getting new ones

56. Methods of Promotion Advertising Sales promotion Public relations Merchandising Packaging Exhibitions and trade fairs Direct mail Personal selling

57. 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

58. 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

59. 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

60. 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

61. 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

62. 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.

63. 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.

64. 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

65. 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

66. Undifferentiated marketing Firm Market Marketing mix

67. Differentiated marketing Firm Segment 1 Segment 2 Segment 3 Marketing mix 1 Marketing mix 2 Marketing mix 3

68. Concentrated marketing Firm Segment 1 Segment 2 Segment 3 Marketing mix

69. Methods of Market Segmentation Age Race Gender Lifestyle Size of family Income Work Location

70. 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

72. Segments people according to lifestyle. Lifestyle is a person’s individual pattern of behaviour. Includes; attitudes, beliefs, interests, hobbies, habits, religion Psychographic Segmentation

73. Stages in Life 1 Bachelor stage: young, single, not living at home 2 Newly Weds: young, no children 3 Full nest 1 Youngest child under 6 4 Full nest 2 Youngest child 6 or over 5 Full nest 3 Older couples with dependent kids 6 Empty nest 1 Older married couples, no kids living with them, head of house in employment 7 Empty nest 2 Older married, no children living at home, head of house retired 8 Solitary survivor in employment 9 Solitary survivor retired

74. Niche Marketing Niche Marketing is when a business targets a product at a small segment of a market Tie Rack is an example of a Niche Market

75. Niche Marketing Advantages Niche market may be overlooked Gain competitive advantage Disadvantages If successful, larger competitors may enter market Niche markets are smaller and may suffer more frequent swings in consumer spending

76. Market Research What is Market Research? “ The collection, collation, and analysis of data, relating to the marketing and consumption of goods and services”

77. 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

78. 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?

79. 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

80. Sampling Sampling is a way to find the views of the population without asking everyone! Random Sampling – a randomly generated list of individuals free of bias, but not targeted at any market segment Quota Sampling – a group selected to reflect a proportion of the whole population. Cheaper than random sampling but can be less representative than the random method

81. 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

82. Secondary (Desk) Research Used to collect secondary data. Examples: Sales figures Annual Reports and data Internet data (other businesses websites for example)

83. Secondary (Desk) Research Government publications: e.g. ‘ Social Trends’ European Union – publications by ‘EUROSTAT’ Commercial publications: e.g. ‘Keynote’ , ‘Verdict’ etc.

84. Secondary (Desk) Research +/- + Saves time Relatively inexpensive - Not specifically related to project undertaken Cannot be verified

85. Problems with Market Research Human behaviour is unpredictable Sampling and bias Other forms of bias e.g. leading questions