Download Marketing - Knox Academy

Marketing
National 4/5 Business
Management
2012-13
What is Marketing?
 Marketing
is more than just advertising
and selling. It involves identifying
consumer's needs and wants and
meeting them in such a way that the
producer makes a profit.
Product Led v Market Led
Can you think of more examples?
Product Led
 This
is when a firm invents a product
without finding out if it is what consumers
want.
 Successful
products usually come from
new inventions and technologies
 Some
product led companies struggle to
do well.
Market Led
 This
is when firms use market research to
find out what consumers want, then they
make it.
 This
product is usually useful and
successful as they have listened to what
their customers want.
Market Research
 In
order to be successful, you need to
know what your customers want.
 To
find this out we use Market Research
 There
are 2 types of Market Research:
Field
Research
Desk Research
CLIP
Field Research

This involves gathering primary information;
this is first-hand information.

We can find out this information through
doing:






Surveys
Observations
Consumer Panels
Focus Groups
Test Marketing
Interviews
Field Research
Advantages
Disadvantages
 it
 time
is specific to your
needs
 it is accurate
 it is up-to-date
consuming to
collect
 expensive to
collect (training)
Desk Research

This involves gathering secondary information,
which is gathered from an external source

Information can be gained through:




Newspapers
the Internet eg competitors’ websites
Government Statistics
Market Research Agencies eg MORI
Desk Research
Advantages
Disadvantages
 less
 information
time
consuming
 less expensive
 Wide range of
sources
is not
specific to your needs
 cannot be sure about
accuracy
 information may be
out of date
 may not be objective
Market Segmentation
A
market is made up of different types of
consumers each with their own needs
and wants.
 They
are grouped into segments, so that
companies can tailor products for each
group.
Why Target Marketing?
 Products
can be made specific to the
customers’ needs.
 The
promotion, price and place can be
tailored to the target market and increase
their chances of sales.
Market Segmentation Groups
 gender
 education
 religion
 social
 area
 political
 age
 family
level
class
persuasion
structure
The Marketing Mix (4P’s)
•
•
•
•
Product
Price
Promotion
Place
Product – Product Development
There are various areas designers need to be
aware of when designing a product:

Function



What is the purpose
of the product?
Design

What level of quality
will the product be?
Packaging


What should it look
like, any added
features?
Quality


Branding


Should it be functional,
or eye catching?
Is the product to be
unique or part of a
range?
After Sales

Will there be customer
service, offers,
guarantees?
Product - Branding
Branding is an expensive process but it
brings many tangible rewards if a business
gets it right.
It is a product that is seen in the eyes of the
consumer as different from other similar
products (unique).
Product - Branding
Benefits

Can charge a
premium price

High awareness

Perceived high quality

Easier to launch new
products
Costs

Huge initial financial
outlay

High marketing costs

Counterfeit goods

Own Brands
Own Brands

Established brands are under increasing pressure from
cheaper ‘own brands’.

Consumers are increasingly more aware of these
brands.

Supermarkets have seen an increasing growth in own
brand sales.
Product Lifecycle
 Products
pass through certain stages of
development during their existence.
 This
 The
is called the Product Lifecycle.
length of a product’s lifecycle can
vary depending on the product.
Product Lifecycle
Product Lifecycle - explained

Introduction


Growth


as product becomes well-known through word of
mouth, sales increase rapidly.
Maturity


product is launched onto the market; advertising and
promotion begin; sales are increasing slowly.
sales reach their peak and start to level off.
Decline

sales fall as demand decreases.
Extension Strategies

A company can extend the lifecycle of a
product by injecting new life into it, using
extension strategies.

This can be done through the 4P’s:




Product – altering packaging, new features
Price – changing the price
Promotion – new promotion, special offers
Place – changing location sold e.g. Internet
Extension Strategy
Price
 Your
price should appeal to consumers,
however, consumers look at pricing in 2
ways:

if it is too low, they think that the quality
may be poor

if it is too high, they will think it is not worth
the money
Price - strategies
Long Term

High (Premium) price


Market Price


Price set above competition to give an impression of
high quality
Price set at the same as competition and they
compete on other factors
Low Price

Price set below competition to offer customers value
for money
Price - strategies
Short Term

Penetration


Skimming


Price set high initially while no competition exists. Price gradually
dropped as competition enter the market.
Destroyer


Price set below competition initially. Once customer base has
been established price is then raised.
Large companies set price artificially low (loss leader) to
eliminate competition and gain more market share. Once
competition is gone the price can be raised.
Cost Plus

This is simply calculated by working out the cost per item and
then adding on a percentage for profit.
Promotion
 There
are 3 main types of Promotion:

Advertising

Sales Promotion

Public Relations
Promotion - Advertising
 Advertising

aims to be either:
Informative
or

Persuasive
Promotion - Advertising
Types of Advertising include:
 Print
– Newspapers/magazines
 Broadcast – TV/Radio/Cinema
 Outdoor – Billboards
Promotion – Sales Promotions
These are methods employed for a limited
time to increase consumer demand:
 Buy
one get one free (BOGOF)
 Discounts e.g. 10% off
 Competitions
 Free gifts
 Product trials
 Point of sale advertising eg posters
displaying special offers
Promotion – Sales Promotions
 Direct
Mail – This is in the form of mail
delivered to your address, promoting a
product or service. Often referred to as
‘Junk Mail’.
 Personal
Selling – Involves salesmen
coming to homes to sell a product. It may
be something that requires demonstration
or explanation
Promotions – others
Other types of promotion include:
 Product
placement – products appear on TV/Film
 Product endorsement – a celebrity promotes it
 Sponsorship – of a sport or TV programme
Promotion – Public Relations (PR)
The PR department will aim to enhance the
organisations image.
They will deal with the:



Press
Government
Public
Activities they take part in include:



Press statements
Charitable donations
Customer care
Place
 This
is where the product service is
available for sale.
Place – channels of distribution
Closer
relationship with
customer; price
can be
reduced
Wholesaler will buy
in bulk; will finish off
packaging;
customer discounts
Price highest for
customer;
benefits from
wholesaler and
retailer
Retailer has close
customer
relationship;
advertise products;
accurate feedback
Place – Factors affecting choice

There are a number of factors which will determine
how and where a company sells its products:

Competition – where they are located and method of
distribution used.

Resources – how close are resources needed to
produce products

Cost of premises – in/out of town

Government incentives – they may give grants for
locating in a certain area

Nature of the product - is it perishable how quickly does it
need to reach the customer
Marketing & ICT
 Marketing
has been significantly
enhanced with the rapid rise in the use of
ICT. It can be used to enhance marketing
in a number of ways:



Loyalty Cards
E-Commerce
Social Media
Marketing & ICT – Loyalty Cards

Loyalty Cards have enabled companies to
collect a vast amount of information on
customers.

They can gather information on what we buy,
when we buy, and how much we spend.

It is an excellent market research tool.

Information will be stored on a computer
database.
Marketing & ICT – E-commerce

The surge in online shopping has been huge.

A lot of businesses will either operate solely online
or at least have an e-commerce facility for
customers to purchase goods or services.

Advantages



Can buy products 24/7 from home
Can compare, so possibly cheaper
Cheaper for business to operate as less staff and
space needed.
Marketing & ICT – Social Media
 One
of the biggest technological rises has
been in Social Media.
 Companies
will ensure that they operate
on various networking platforms to
advertise to and keep in touch with
consumers.