Marketing v3a

8/8/2019 Marketing v3a

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Marketing


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What is a market?

Any place

where buyersand sellersmeet


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Consumer Markets

Consumer markets - are made up ofindividuals who purchase goods/servicesfor personal or domestic use.

Consumable goods - eg, food, cosmetics,magazines

Durable goods - eg, cars, televisions,clothes


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Industrial markets - organisations which

purchase goods and services to use in theproduction ofother goods and services.

Consumable goods - eg, raw materials

Durable goods - eg, machinery and equipment

Industrial Markets


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What is Marketing

Marketing is the management

process responsible foridentifying, anticipating &satisfying consumerrequirements profitably


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About Marketing

Marketing finds out consumers needs and what

products meet t

hem

Customer is king

Marketing is a business philosophy and an on-going process

Marketing affects ALL aspects ofbusiness

Marketing is NOT just selling

Marketing and advertising are NOT the same


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Marketing Objectives

Target a new marketor market segment

Achieve or maintain market share

Devel

op new range

ofpr

oducts

Improve image ofproduct


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Marketing Activities

Market Research

New Product Development Selling

Pricing

Promotion and Advertising Preparing Publicity Information


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Factors leading to

Importance ofMarketing

Economic Growth booms = more disposableincome. Marketing is needed to gain marketshare

Fashion Marketing attempts to anticipatetrends and/or changes in tastes, lifestyle

Technology New product innovation isessential for firms to keep up with competitors

Competition rivals may come from overseas.Firms have to be aware of the marketenvironment both athome and abroad


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Product Orientati

on

Production

Capabilities

Manufacture

Product

Aggressive

Sales

Effort

Customers

Production Orientationis when a businessfocuses on the production process and seeks

to make goods which are viewed as superior


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British

Motorcycle Industry

Britain ruled the world ofbikes in 30s and 40s.

BSA, Norton & Triumphneglected consumer tastesas sleeker models arrived

Suzuki, Kawasaki and

Honda catered for this.Look at whathappened!


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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.


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Sony

Walkman

Designed due to

peoples needs for asmall tape recorder

Workers usedh

eadpho

nes to

listento music and theWalkman was born


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Henry Ford and M

odel T

The Worlds FirstAssembly Line churned

out the Model T Ford.

Henry Ford boastedthat it was available inany colour as long as

its black!

Ford was customer orientated because the savings

made by the assembly line were passed down to the

customer by offering cheap automobiles


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Advantages ofMarket

Orientated approach

Respond quicker to changes in market

due to market research Stronger position to meet new

competitors

Can anticipate market changes More chance ofnew product success


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The Marketing Environment

THE MARKET

Consumer trends and behaviour

Technology

PoliticalCompetition

The EconomySocial


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It is useless to tell a river to stop

running; the best thing is to learn how toswim in the direction it is flowing.

Anonymous


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Market Share

US Fast Food Sales

36%

19%7%

7%

31%

McDonald's

Burger King

Wendy's

KFC

Others

Market Share is the percentage of customers whobuy/use a companys goods/services


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Market Growt

h

Increasing market share means a

business increases sales at the expenseof competitors.

However, firms can also increase sales ifthe whole market grows.

Market growth occurs when the numberofpeople buying/using the good/serviceincreases


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Marketing Mix

The 4Ps Product

Price

Place

Promotion


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Product/Service

The good or service which the business is trying

to sell. Most important element a it determineswhat the price will be (Price), how it ispromoted(Promotion) and where it is sold(Place).

Core Product provides a basic need

Augmented Product is made more attractiveto the customer by having additional features.

Product


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Fast Moving Consumer

Goods Some goods sell more

quickly than others and in

greater quantities. Thesetypes ofgoods havedifferent marketing mixescompared to say apremium brand. They are

called FMCGs. Coffee, cereals, chocolate,

hair care and detergentsare examples ofFMCGs.


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Marketing of

Services Think of two rival cinemas. They usually offer the

same films, but whichone do you prefer?

Process how does the customer go through theexperience? Queues? Long periods ofwaiting?

People what are the staff like? Friendly?

Helpful?

Physical Environment are the surroundings eyecatching? Beautiful?


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Product Line

Many businesses producea range ofproducts with

similar uses and similarcharacteristics.

For example, the iPod

and the iPod mini areboth variations of the

same product solution.


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Product Mix

The product mix is the product range ordifferent types ofproduct a business

manufactures and sells.

So Apple, as well as having the iPod, the alsohave

Applebooks and the Apple Mac computer.


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Product Li

feCycle


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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.


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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.


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Extension Strategies

Develop a WiderRange 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 introducingslightly different product football strips.


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Effects ofExtension

Strategies


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What is a New Product?

New to the world

New product lines

Additions to existing product lines

Improvements and Revisions to existingproducts

Repositioned products

5 out of every 6 new products fail!


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ProductFailures

Investigate one of the following

New Coke

Sony Betamax VCR

McDonalds Arch Deluxe

Maxwell House Ready-to-drink coffee

Sinclair C5


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Reasons for Failure

Poor Market ResearchIntense Competition

Weak or No USP

ProductCannibalisation


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Why dofirms spend vast sums of

money on product innovation?

To achieve high profits

To enhance public image

Wider share ofmarket can become marketleader

To compete with rivals

To

spread risk

some existing pr

oducts may beentering decline stage

Obtain customer loyalty encourage moredemand for their products


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Japanese Approach

In Japan they use the trial and error approach.

They do not worry about market research.

Japanese firms release hundreds ofproducts inhope ofgetting one or twohits.

They aim to get new products to market quicklyand at low R&D costs.

Failures can be modified and released again.

This approach is called ExpeditionaryMarketing.


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Branding

Branding is used to create USPs (unique

selling propositions) and ESPs (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. Baxters, Oxo,

Cadburys and Heinz are all well-known

brand names.


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Characteristics ofGood

Brands legally protectable

easy to pronounce, remember and recognise

attract attention

suggest product benefits (eg.:Easy off) orsuggest usage

suggest the c

ompany

or pr

oduct image distinguish the product's positioning relative to

the competition


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Brand Equity

is the value built-up in a brand. It can be positive ornegative. Positive brand equity is created by a history ofeffective promotion and consistently meeting or exceeding

customer expectations. Negative brand equity is usuallythe resultofbad management.

The value ofa company's brand equity can be calculated bycomparing the expected future revenue from the brandedproduct with the expected future revenue from anequivalent non-branded product. This calculation is at bestan approximation.

Positive brand equity can allow family branding, which makesnew product introductions less risky and less expensive.


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Corporate Branding

refers to the practice ofusing your company's name as aproduct brand name. Disney, for example, includes the

word 'Disney' in t

h

e nameof

manyof

its products. S

odo IBM, Pepsi, and Coca-Cola.

One advertising campaign can be used for severalproducts. It alsohelps new products being introducedbecause customers are already familiar with the name.

A corporate branding strategy should only be used ifthe company is already well known by the targetmarket and alsohas a very positive image in theirminds.


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Corporate Branding (Contd.)

Ifcorporate branding is done well, the corporatename can become synonymous with a productcategory (e.g.: Kleenex). Even purchasers ofCharmin will refer to the product as Kleenex.

The main disadvantage with corporate branding

is the pr

oducts are n

ot treated as individuals;hence there is not adequate focus on the

products' unique characteristics.


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Drawbacks ofBranding

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 arevery difficult to stop. (Burberry, Rolex and Calvin

Klein who can charge premium prices for their

products suffer most at the ands of the forgers.)


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Long Term Pricing Strategies

Low Price - Charge lower than competitors. Only appropriatewhere there is a little brand loyalty and competition in themarket is high.

Market Price - Setting price at a similar price to competitors.Homogeneous product means that price competition is notofbenefit. They compete in other areas service etc.

High Price - High quality products, premium goods andservices where image is important, such as perfumes.


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Short Term Pricing Strategies

Destroyer Pricing - Setting a very low price to destroy thecompetition. 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 createinterest in a product by lowering the price. Supermarketsuse this for some of their sales lines, as loss leaders.

Demand-orientated Pricing - Price varies with thedemand, ie crops, trains, phones etc.


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Place

Producers

Wholesalers

Retailers

Consumers

Direct Selling

Producer to Wholesaler

Two or more intermediaries

Producer to Retailer


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Importer/Exporters

play a similar role to theagent buton an

international scale. Theywill have superiorknowledge of the worldmarkets, and can createsales through their own

promotional campaigns.Sometimes act as retailerstoo.


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Choice ofDistribution

Channel

The Product perishable, unique

The Market size Mars Bars

Legal Requirements alcohol, drugs

Buying Habits expectations of customers

The Business own distribution network


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Channel The Product Perishable products whichhave a limited shelf-life

should select a direct channel. However, some perishables like fish,fruit and vegetables sometimes go through specialist wholesalerswho buy from small producers in order to make up the bulk neededfro retailers. Premium brands are selective where they are sold, andbothCalvin Klein and Levis have prevented Tesco selling them intheir stores.

The Market if the market is nationwide, then to save in

distribution costs, then using wholesalers and retailers are moreefficient. If the market is small and local, direct selling is more apt.

Legal requirements some goods can only be sold throughlicensed premises such as chemists, pubs and off-licenses.


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Channel Buying habits consumers influence where products

are distributed. The emergence ofout-of town retail parkshave seen identikit sites

open up nati

onwide. Eac

honecontains supermarkets, carpet stores, furniture stores,

DIY stores, Garden centres etc. People now expect thesetype of stores to be located in such places.

The business some firms have their own distributionprocess with their own wholesalers and retailers. Oncecommon among large organisations, mostof thesefunctions have been outsourced.


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What is Promotion

Method used to pass on

information to consumers

an essential way ofkeepingexisting customers andgetting new ones


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Above and Below the line

Above the line promotion: advertisingthrough consumer media such as TV,

magazines, newspapers and radio.

Below the line promotion:

promotions used other than main mediasuch as pointof sale, sales promotionsetc.


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Methods ofPromotion

1. Advertising

2. Sales promotion

3. Public relations

4. Merchandising

5. Packaging

6. Exhibitions and trade fairs

7. Direct mail

8. Personal selling


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Advertising

is a 'paid for' communication. It isused to develop attitudes, createawareness, and transmit

information in order to gain aresponse from the target market.

There are many advertising 'media'such as newspapers (local, national,

free, trade), magazines andjournals, television (local, national,terrestrial, satellite) cinema,outdoors advertising (such asposters, bus sides).


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Persuasive Advertising

ahardsell by manufacturerstogetusto buy theirproducts.Oftenusedincompetitive

marketswhere there are fewUSPsbetweenproducts. Theyuse powerful imagesandlanguage totry andgetusemotionally involved.

E.g. Leviuse distinctive advertstopersuade usthey are cool towear.


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Generic Advertising

When rivals come togetherand sell not theirindividual products, buttheir marketor industryas a whole.

A recent example would beduring the BSE crisis,

BritishBee

fadvertised inunison to try and allay

consumers fears.

The Milk Board is anothersuch example.


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Choice ofAdvertising Media

How and where an organisation carries out

its advertising will depend on how it can

best reach its existing and potentialcustomers.

Young audience: teen magazines, HollyoaksOlder people: Sunday newspapers, daytime

TV

Whole market: Coronation Street


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Types ofAdvertising Media

Print: newspapers and magazines

Broadcast: TV, radio, Internet

Outdoor:

billboards, buses, round football grounds etcWhich 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


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Public Relations

is defined as 'the deliberate,planned and sustained effort toestablish and maintain mutual

understanding between anorganization and its publics'(Institute ofPublic Relations). Itis relatively cheap, but certainlynot easy. Successful strategiestend to be long-term and plan

for all eventualities. All airlinesexploit PR; just watch whathappens when there is adisaster.The pre-planned PRmachine clicks in very quicklywith a very effective rehearsed

plan.


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Public Relations

The way an organisation communicates at acorporate level with: the public, the press, the

government and shareholders

Will involve: press statements, making charitabledonations, sponsoring events, arranging productendorsement

Publicity: internal through press releases or externalthrough news reports or consumer programmes. Notusually paid for, can become advertising if it is goodpublicity.


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Packaging

Good packaging can increase sales of a product. Factorsthat

should be considered:

Shape and weigh: can affect distribution costs

Protection: product must not be damaged in transitor beaffected by heat, lightor dust

Convenience: easy for the customer tohandle

Design: eye-catching to distinguishfrom competitors

Information: legal requirements (food labelling), technicalrequirements (wattage on bulbs)

Environmental factors: public concern about recyclablematerials and excess packaging


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Direct mail

is very highly focused upon targetingconsumers based upon a database. Aswith all marketing, the potentialconsumer is 'defined' based upon aseries ofattributes and similarities.

Creative agencies work with marketers todesign a highly focussed communicationin the form ofa mailing. The mail is sentout to the potential consumers andresponses are carefully monitored.

For example, if you were marketingmedical textbooks, you would use adatabase ofdoctors' surgeries as thebasis ofyour mail shot.


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Sponsorship

is where an organizationpays to be associatedwith a particular event,cause or image.

Companies will sponsorsports events such asthe Olympics or FormulaOne. The attributes ofthe event are thenassociated with thesponsoring organization.


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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


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Differentiated marketing

Firm

Segment 1

Segment 2

Segment 3

Marketing mix 1

Marketing mix 2

Marketing mix 3


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Concentrated marketing

Firm

Segment 1

Segment 2

Segment 3Marketing mix

M h d f M k


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Methods ofMarket

Segmentation Age

Race Gender

Lifestyle

Size offamily

Income Work

Location


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Socio-Economic Group

A. Higher managerial, administrative orprofessional

B. Intermediate, clerical, administrative orprofessional

C1. Supervisory, clerical, junior administrative orprofessional

C2. Skilled manualD. Semiskilled and unskilledE. State pensioners, widows, casual and lowest

paid


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C NSUMERRESEARCHCopy this table into your jotter and complete it to sho the most likely

purchasers (and target market)o the various products

Detail Age

group

Sex Socio-

economic

group

Pint of beer in pub 18-30 M C

The Financial Times

Cardigan from Next

Tommy Hilfiger Sweater

Jeans from Gap

Porshe sports car

Can of Irn Bru

New talking Action man

New style roller blades

Months holiday in

Portugal in January


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Segments people according to lifestyle.

Lifestyle is a persons individual patternofbehaviour.

Includes;

attitudes, beliefs, interests, hobbies,habits, religion

Psychographic Segmentation


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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 over5 Full nest 3 Older couples with dependent kids

6 Empty nest 1 Older married couples, no kidsliving with them, head of house in

employment7 Empty nest 2 Older married, no children living athome, head of house retired

8 Solitary survivor in employment

9 Solitary survivor retired


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What form of marketing is this?


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Answers

A

Diff

erentiated marketing

B Undifferentiated marketing

C Niche marketing


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Niche Marketing

Niche Marketing is when a businesstargets a product at a small segmentof

a market

Tie Rack is an example ofa Niche Market

GolfTourism in Scotland is another.


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Position these cars by Price


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Position these cars by Price

and Economy (Fast/Slow) Ferrari

Cougar

BMW

Hyundai

Proton

Cougar

Daewoo


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Market Research Provides


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Market Research Provides

Info

rmation Ab

out

Size and nature ofmarket

Age, sex, income & preferences of

market Effectiveness of selling methods

What customers think and feel about

product Effectiveness ofadvertising & promotion

What can businesses use


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What can businesses use

market researchfo

r?1. Descriptive reasons:

What is happening in a market?

2. Predictive reasons:What will happen in the future?

3. Explanatory reasons:

Why is something happening? E.g. Why isour productonly popular in one region?

4. Exploratory reasons:

E.g.Could this new product work?


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Primary (Field) Research

1. Questionnaires

2. Personalinterviews

3. Telephoneinterviews

4. Postal surveys

5. Observations

6. Technology e.g.loyalty cards

7. Focus Groups

8. Customer panels

Used to collect Primary data


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Sampling

Sampling is a way tofind the views of thepopulation without asking everyone!

There are 2 main types:

Random Sampling

Quota Sampling


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Random and Quota Sampling

Random Sampling a randomly generated listof individuals free ofbias, but not targeted at anymarket segment. Names can be taken from

telephone directory or electoral register.

Quota Sampling a group selected to reflect aproportion or characteristics (age, sex, marital

status etc.) of the whole population. Cheaperthan random sampling but can be lessrepresentative than the random method


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Primary Research +/-

+ Only firm that

collects ithas access

Can becontrolled/verified

-

Expensive to collect

Lengthy timeinvolved, info couldbe outofdate


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Secondary (Desk) Research

Used to collectsecondary data.

Examples:

Sales figures

Annual Reports and data

Internet data (

ot

her businesses websitesfor example)


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Government publications:

e.g. Social Trends

European Union publications byEUROSTAT

Commercial publications:

e.g. Keynote, Verdict etc.



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+/-+

Saves timeRelatively

inexpensive

-

Not speci

ficallyrelated to

projectundertaken

Cannot beverified

Problems with Market


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Problems with Market

Research

Human behaviour is

unpredictable Sampling and bias

Other forms ofbias e.g. leadingquestions

Marketing v3a

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