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MARKETING Topic 4 SUSIE ROBERTS 11/15 REV Definition of Marketing The “Bridge” between the producer and the consumer. The PROCESS of getting customers interested in a product; giving customers what they want or need in products (GOODS, SERVICES, IDEAS) The management task that links the business to the consumer by meeting the needs of the customers profitably; “getting the right product at the right price to the right place at the right time”. MARKET SIZE HOW IS MARKET SIZE Measured? Definition: the total level of sales of all producers within a market Two Ways: Volume and Value Market size can be measured by volume but is usually measured by VALUE. 4.2 Market Growth and Decline Market VS Product Orientation External Factors on GROWTH or DECLINE include: State of the Economy Technology Demographic and Social Change ________________________________________ Market Orientation vs Product Orientation Market-oriented: what customers want; an outward –looking approach basing product decisions on consumer demand as established by market research VS Product-the concerns and convenience of internal production Product oriented: an inward-looking approach that focuses on making products that can be made or have been made for a long time and then trying to sell them; companies quickly lose market share as customers move to product more tailored to customers’ needs. 4.1 MARKET SHARE Measures what proportion of the total market’s sales is held by one organization. Businesses can gain market share at the expense of competitors through a successful advertising campaign (example). 4.1 Goods, Services, Ideas-things that are marketed Goods: Tangible items that you can touch and hold Services: Intangible items that must be used and can’t be returned; they can’t be touched-think TIME, Accounting and Legal Advice and Athletic Trainers Ideas: “Litter and it will hurt”, “Friends don’t let friends drink and drive”, the pink ribbon. Non-profits often market for donations. 4.1 Marketing Plan and Objectives The Marketing Plan includes: Key Marketing Objectives Strategic Plans Specific Marketing Actions Marketing Budget 4.2P263 The Marketing Mix- the 4 P’s plus 4 “Marketing is a PROCESS” Product Price The 4 P’s Place Promotion _______________________________ People Physical Evidence Packaging Process “ONLY WHEN ALL THE ELEMENTs are combined in the correct way will the marketing objectives be met”. 4.2-P264 MARKET Segmentation-Refers to the process of dividing a market into smaller sub-groups. MASS Marketing: NICHE Marketing: Looking at the market as a Segmenting a market such whole, rather than segmenting it. Targeting: as by 1)Geographics, 2)Demographics, and 3)Psychographics The process of marketing to a specific market segment. Businesses try to identify 4.2-P267 key sub-groups in a market and aim to generate profit by meeting specific needs of those consumers. Consumer Profiles Businesses create consumer profiles which are detailed characteristics of the consumers of a particular product. DEMOGRAPHICS: Age Gender Income Social Group May also include: Profession, Education Level, Ethnicity PSYCHOGRAPHICS: Attitudes Beliefs GEOGRAPHICS: Location (Urban or Rural, Latitude, Country) 4.2-P266 What is the difference? Define: Compare and Contrast: Market Segment vs. Contrast Segmented Niche Market vs. (Differentiated) Marketing to Mass Marketing. Contrast Mass Marketing to Niche Marketing. Target Market 4.2P267 What is a Consumer/Customer Profile? Consists of information provided about the characteristics of consumers of a particular product in different markets. May include details of spending patterns in terms of the # and frequency of products bought by consumers. The TARGET MARKET: the market segment that a particular product is aimed at. Positioning Unique Selling Proposition USP’s Businesses analyze the USP’s are key in current state of the market. Using a Market or Position Map allows the business to see where existing brands are aimed and identify profitable niches in the market. protecting a niche once a business has identified it. Companies spend time and money ensuring that their product is differentiated in design and branding. PRODUCT The Marketing Mix (4 P’s) Marketing is a PROCESS; it is more than 1 activity. PRICE PLACE PROMOTION 4.2 PRODUCT Good, Service, or Idea that is offered in the market. Tangible-Something that can be touched or held. Intangible-Something that can be purchased but is not tangible (Dental work, accounting services). 4.2 PRODUCT The Product Mix: The Product Life Cycle: The complete range of 5 Stages of the Product products produced by a business including product lines and individual products. A product line is a group of products within the mix that are closely related to each other. Life Cycle: Development Introduction Growth Maturity Decline Product Life Cycles do not have a set duration. 4.5 Product (continued) Extension Strategies Product Diffusion Curve or Adopters Extending the life of This describes how quickly customers adopt a new product: existing products by updating to prevent it’s decline. Examples: Oreos, Monopoly, Lays chips, Uggs Innovators Early adopters Early majority Late majority Laggards PRICE -The amount that consumers are charged for the product. THIS INDICATES THE VALUE THAT CONSUMERS PERCEIVE A PRODUCT TO HAVE. PRICING STRATEGIES: 1)COST-BASED PRICING 2)COMPETITION-BASED PRICING 3)MARKET-BASED PRICING (PRICE PENETRATION AND PRICE SKIMMING) PRICE TO BE FAIR, TO BE COMPETITIVE, AND TO MAKE A PROFIT PROMOTION-Refers to the various ways in which consumers are informed about the persuaded to purchase a product. Above the Line Advertising: Above the Line: Direct Advertising through consumer channels. Persuasive advertising is aimed to convince consumers to buy a particular product. Informative advertising aims to make consumers aware of the features and characteristics of the product. Below the Line Advertising: Price Promotions/Price Deals Direct Marketing Direct Personal Selling Loyalty Cards Point of Sale Displays Public Relations Money-Off Coupons Buy One-Get One Free Contests/Games/Competitions Sponsorship Factors to Consider: Promotional Mix All the forms of promotion in the list will be effective for certain businesses in certain situations. Who is the product aimed at? Whole market or smaller segments? How much will it cost? How effective will my promotion be? Advertising-What you say about PROMOTIONAL MIX Advertising Publicity/Public Relations Selling Sales Promotion yourself Publicity-What others say about you Selling-Planned one-on-one communication Sales Promotion-Used to Inform, Persuade, or Remind consumers about products; Above the Line, Below the Line Other marketing techniques: Viral Marketing Guerilla Marketing The use of social Was invented as an networking sites or text messages to increase brand awareness or sell products. YouTube and other online outlets are commonly used. Also called “marketing buzz”. unconventional system of promotions that relies on time, energy and imagination rather than a big marketing budget. Typically, guerrilla marketing campaigns are unexpected and unconventional, potentially interactive, and consumers are targeted in unexpected places. Examples: Graffiti, sticker bombing, flash mobs. PLACE-Refers to the product’s location or channels of distribution. DISTRIBUTION CHANNELS: 1)MANUFACTURER TO CONSUMER 2)MANUFACTURER TO RETAILER TO CONSUMER 3)MANUFACTURER TO WHOLESALER TO RETAILER TO CONSUMER 4)AGENTS MAY ALSO EXIST, PARTICULARLY IN SERVICE INDUSTRIES 4.2 Distribution Channels BRANDING “BRANDS ARE WELL-KNOWN NAMES OF INDIVIDUAL COMPANIES OR PRODUCTS. THE MOST SUCCESSFUL BRANDS BECOME SYNONYMOUS WITH THE NAME OF THE PRODUCT ITSELF”. EXAMPLES: KLEENEX, Q-TIPS, ROLLERBLADE Branding A strong brand will allow a business to differentiate itself from its rivals. Brand Awareness-Ensuring that customers recognize the offerings, name, and products of a particular business. Brand Development- Trying to increase the power of the name or logo in order to increase the brand awareness and therefore gain higher sales. Brand Loyalty-The willingness of consumers to purchase the same brand repeatedly. Definitions Marketing Audit: looks at the cost and effectiveness of marketing activity on a periodic basis. SWOT: strengths and weaknesses are internal to a business; opportunities and threats consider the external environment Market Research: A collection of objective data about a market, competitors, and consumers; essential to creating a successful product and in marketing it effectively; Primary and Secondary. Primary and Secondary Research Data Primary is collected directly from consumers; first hand directly from the market i.e. focus groups, interviews, surveys, and observation. Secondary is data that has already been collected and then published; trade journals, gov’t reports, consumer groups, market analysis reports, media. General May not be current >Quantitative including random samples and cluster samples may be used to identify trends. >Qualitative looks in far more depth at the buying process. Potential for BIAS. TECHNOLOGY allows businesses to target customers. 4.4 Why do Market Research? To identify consumer needs and wants. To understand consumers’ satisfaction levels and purchasing behaviors. To make predictions about future business trends To reduce the risk of product failure by establishing likes and dislikes of consumers To measure the effectiveness of a marketing strategy by assessing or evaluating the effectiveness of the 4 P’s in specific target markets To keep current; to keep up to date for first=mover advantage 4.4 Quantitative VS Qualitative Quantitative Qualitative Involves collecting Involves collective data numerical data or measurable data Objective Key question-”How many?” Narrow and Focused 4.4 about opinions, attitudes, beliefs Subjective Key question-”Why?” Focus is complex and broad Sampling Sample-A group of people selected to represent the population or target market under research Sampling-The process of selecting an appropriate sample Types of Sampling: >Quota >Random >Stratified >Cluster >Snoballing >Convenience Read the EXAM TIP on page 289. Now Discuss the Advantages and Disadvantages of one type of sampling by table group and be able to explain to the class in 5 minutes. Assignment: Read the Safaricom Case Study on page 290 and answer the two EXAM style questions on a paper to turn in on Friday. Pages 287-289 4.4 The Product Portfolio Analysis The Boston Matrix (BCG) Growth Rate and Market Share Cash Cow Cash Cow-Low growth Star Question Mark or Problem Child Dog and high market share Star-High growth and high market share Question Mark-High growth and low market share Dog-Low growth and low market share 21st Century Marketing Issues International Marketing: must take into account how the marketing mix (4 P’s) needs to be adapted to fit the different cultural, political, legal, social, and economic issues of each new market. E-Commerce: Business to Business Commerce and Business to Consumer Commerce; The 4 P’s- Product can be customized and the “Longtail” affect; Price is more competitive; Promotion is a two-way process; Place is a low cost alternative to “brick and mortar”. HL What is the “Longtail”? SELLING A LARGE NUMBER OF UNIQUE ITEMS IN SMALL QUANTITIES, USUALLY IN ADDITION TO SELLING FEWER POPULAR ITEMS IN LARGE QUANTITIES. EXAMPLES: NETFLIX, AMAZON And…that’s a wrap! HERE’S THE CHALLENGE: CAN YOU GET A PRODUCT FROM THE PRODUCER TO THE CONSUMER (AND MAKE A PROFIT)?