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Marketing, Competition and the Customer The Marketing Department WordBank 1. 2. 3. 4. Market Share – Perventage of total market sales held by one brand or business Mass Market – this is where there is a very large number of sales of a product Niche Market – is a small, usually specialized, segment of a much larger market Market Segment – is an identifiable sub-group of a whole market in which consumers have similar characteristics or preferences. An example graph: Sales Regional Sales Manager Market Research Regional Sales Manager Marketing Director Promotion Adverising Distribution Promotion A bigger company means more people are employed in the marketing department. Creates these sections: The Sales Dep. – Responsible of sales of the product. Separate sections for each diff. region. Might also have an export department. Market Research Dep. – Finds out customer needs, market changes, and impact of competitors’ actions. Reports to the Marketing Director and the info will be used to make decisions about research and development of new products, pricing levels, sales strategies, and promotion strategies. Promotion Dep. – Organizes advertising for products. Arranges the advertisements, type, and uses a budget for the most effective way to advertise. Distribution dep. – Transports the product to the public. Role of Marketing Identify customer needs – Finding out what they want, how much they can pay, and where the want the goods or services. Satisfy cutomer needs - customers want the right product at the right place at the right time at the right price. Maintain customer loyalty – builds relationships. Helps to gather more information by keeping them close and talking trustworthily. Gain information about the customers – get this from doing ^. Helps to meet their changing needs and wants, find out why they buy the things they do, and improve marketing overall from knowing this. Anticipate changes in customer needs – by identifying new trends in demand or gaps businesses can produce goods or services aren’t already available. Success in the above means one of these may have happened: Raised customer awareness of a product or service of the business Increased sales revenue and profitability Increased or maintained market share Maintained or improved the image of products or a business Targeted a new market or market segment Entered new markets at home or abroad Developed new products or improved existing products Understanding Market Changes Things don’t stay the same. Some markets change faster than others. Why customer / consumer spending patterns change Consumer tastes and fashion change Changes in technology – new products means old ones/alternatives will not sell as much anymore Change in incomes – if an exonomy has high unemployment than many consumers will buy cheaper products. If it then grows then many consumers will buy more expensive products. Ageing populations – age structure is changing to a greater percentage of old people. Changes the products which are in demand. The power and importance of changing customer needs Businesses that are successful efficiently respond to customers changing wants and needs. Why have some markets become more competitive? Globalization of markets means that products are being sold all over the world Transportation improvements mean that it is easier to get products from one part of the world to another Internet/e-commerce means consumers can search for products and buy from overseas markets. How can businesses respond to changing spending patterns and increased competition? Maintain good customer relationships Keep improving its existing product Bring out new products to keep customers’ interest Keep costs low to maintain competitiveness What is meant by market? A market for aparticular good or service is made up of the total number of customers and potential customers as well as sellers for that particular good or service. It can be measured by the total number of sales & value of sales for that good or service by all suppliers to that particular good or service. These markets can be either mass markets or niche markets. Mass Marketing Selling of products/services to a large market with similar preferences/needs/wants. Advantages : Sales are very large Firm can benefit from economies of scale Risks can be spread, since there can be many variations in this type of market for your product or service, and if one fails others can still sell well. Opportunities for the growth of the business due to large potential sales Disadvantages High levels of competition between firms High costs for advertising Standardizes products or services are produced and so may not meet the specific needs of all customers or potential customers, therefore leading to lost sales. Niche Marketing Advantages: Small firms can sell to niche markets as large firms might not have identified them; This helps avoid competition from larger businesses Needs of consumers can be focused on and targeted by the firs. Gives an advantage over large firms because they aim for the mass market, while these aim for the specific needs of the consumers. Disadvantages Niche markets are small and therefore have a limited number of sales, which means only small businesses, can operate in these markets. If growth is needed they must look out from their tiny markets to new waters. Often they only specialize in one product. If that product is no longer wanted, then they will not earn. They should have more than one type of product to lessen this risk. Market Segments Can help a business to make marketing expenditure cost effective by producing aproduct which closely meets the needs of these customers and only targeting its marketing efforts on this segment enjoy higher sales and profits for the business, because of the cost-effective marketing identify a market segment which is not having its needs fully met, and therefore their opportunities are increased Ways of segmenting a market - Socio-economic group – can be determined by how much people are paid. By age – products bought by separate age groups are different. By region/location – people in diff. regions buy diff. products. If a product is exported the packaging and appeal of it might have to be changed. By gender By use of the product – ex. : cars bought for domestic or business uses are different from each other. By lifestyle – think, same salary: one is married and has three kids = spends differently from a single person earning the same. Decide the most effective efficient method of advertising A marketing manager has to take all of the factors into account when deciding which segments might buy new products or improved products. Potential benefits of segmentation to a business Market segmentation can be used to sell more products. Different brands of a product are made and then aimed at different market segments. A business can identify a segment whose needs are not being met by finding out about the different segments in a market in general. Summary: >Markets can be segments by< Gender Age Region Location Use of Product Lifestyle Income/social group