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Marketing
Marketing
Marketing is...
‘The management process responsible for identifying,
anticipating and satisfying customer requirements
profitably’
Chartered Institute of Marketing
Market segmentation
 Splitting up the market into groups of people with
similar needs and characteristics
 Products and marketing activities can be tailored to
the needs the segments
 Markets can be segmented by age, gender, lifestyle,
income and geography
Market research
Market research is the process of collecting data about
customers and competitors.
There are two types of market research:
 Primary research – gathering first hand data e.g.
through questionnaires and focus groups
 Secondary research – gathering existing data e.g.
through trade journals and government statistics
Marketing Mix
The marketing mix
The marketing mix is also known as the 4Ps:
 Product
 Price
 Place
 Promotion
Product
Product
 ‘Product’ refers to the functions and features of a good
or service
 Should satisfy the needs of the customer
 May have a Unique Selling Proposition (USP)
 ‘Product’ also includes a range of factors such as
packaging, quality, warranties, after-sales service
and branding
 Products and brands may suggest certain images e.g.
sporty, sophisticated, value
Product lifecycle
The product lifecycle looks at the sales of a product
over time
Stages of the product lifecycle
Development – high costs but no sales
Launch – high expenditure on promotion and
product development, low sales
Growth – sales increase and product should break
even
Maturity – sales stabilise, less expenditure on
promotion needed, revenue & profit should be high
Decline – sales decline, extension strategies can be
adopted or the product withdrawn
Extension strategies
Extension strategies should maintain or increase sales.
They include:
 Modifying the product
 Reducing the price
 Adding a feature
Extension strategies
 Promoting to a
different market
sector
Price
Price
The price of a product will depend on:
 The cost to make it
 The amount of profit desired
 The price competitors charge
 The objectives of the business
 The price customers are willing to pay
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Is there a high demand?
Is demand sensitive to changes in price?
Pricing strategies and tactics
Skimming
Launching with a high price when there is little
competition, then reducing the price later. Often
used with technology.
Penetration
A low price is charged initially to penetrate the
market and build brand loyalty. The price is then
increased e.g. introductory offers on magazines.
Competitive
A similar price is charged to that of competitors’
products.
Loss leader
Products may be sold at a price lower than the
cost to produce it. Often used by supermarkets to
encourage people into the store where it is hoped
they will buy other products.
Pricing strategies and tactics
Psychological
A price is set which customers perceive as
lower than it is e.g. $39.99 instead of $40.
Differential
Different prices are charged for the same
product e.g. bus fares for children are cheaper
than adult prices.
Cost plus
pricing
An additional ‘mark-up’ is added to the cost of
producing a good or service.
Strategic
pricing
Price is set to position an exclusive product or
brand to make it more desirable for consumers,
generate demand or demonstrate value
Place
Place
 Products should be conveniently available for
customers to buy
 ‘Places’ include:
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Stores
Mail order
Telesales
Internet
The use of
e-commerce (promoting
and selling on the internet)
has grown massively over
the last few years
Channels of distribution
Manufacturer
Wholesaler
Retailer
Consumer
Promotion
Promotion
The aims of promotion are to:
 Raise awareness
 Encourage sales
 Create or change a brand image
 Maintain or increase market share
Types of promotion
Above-the-line promotion
This uses mass media advertising over which a firm
has no direct control e.g. television, radio and
newspapers
Below-the-line promotion
This uses promotional media which the firm can
control e.g. direct mail, sales promotions, sponsorship
and social media
Promotional activities
 Advertising e.g. TV, billboards and internet.
 Sales promotions e.g. loyalty cards, BOGOF,
discounts & free gifts
 Sponsorship – a business pays to be associated
with another firm, event or cause
 Direct mailing – promotional material is sent to
potential customers by post/email
 Public relations – building the relationship
between the firm and the public by enhancing its
reputation
Promotional mix
Most businesses use a combination of different
promotional activities.
The chosen promotional mix will depend on:
 Cost
 Target market
 Product
 Competitors
AIDA
Promotional campaigns often take into account the
AIDA model:
 Awareness - raising awareness of a product
 Interest – exciting interest in the product
 Desire – creating desire for the product
 Action – encouraging a purchase