Marketing

The market Market research Marketing mix Price Product Place Promotion Niche V Mass

The Market

What is marketing?

Product orientatin

Market orientation

Market segmentation Age Gender Location Lifestyle Socio economic

The market

SWOT analysis Land availability Labour supply

Analysing the market

The Market
Analysing the Market
Analysing the market involves: Breaking down the market for particular goods or services into parts Review the supply of a product using a SWOT analysis Analysing the market allows the firm to: Target its advertising and promotion Make the products more attractive to each type of customer Maximise sales and cut costs through targeting Plan future business strategies Market segments This means dividing demand for a good or service into segments with specific characteristics. The firm can then target its product and marketing at that particular segment Segments can be divided by Age, Gender, ,Race and religion, Lifestyle Geography,Socio-economic groups

The Market
Niche markets These are very small, specialised markets for particular goods Target Market This is the section of the market that the firms want to aim their product at SWOT Analysis This is used by a firm to analyse its present market position and plan future strategies. Firms look at their strengths, weaknesses, opportunities and threats. Strengths and Weaknesses are internal factors over which they have some control e.g. customer care Opportunities and Threats are external factors over which the firm has no control e.g. government policies

Market Research
Primary or field research Interviews Questionnaires Panel Groups Observation Testing

What is market research?

Desk or secondary research

Market Research

Types of questions Closed Open Multiple choice Prefernce Scale

Sampling Random Quota Target

Market Research
Researching the Market What is market research? Market research is information collected by a firm about existing and potential markets. Desk research This will use secondary data (data which has already been collected). Sources include Past sales records Published accounts General market reports Official government data e.g. the census Advantages and disadvantages There is no way of knowing how reliable some of the data is The data maybe inexpensive to collect, but may be out of date It could be difficult to obtain the exact information needed

Market Research
Sampling It is impossible for a firm to interview everyone so a firm must decide on who to ask Random sample people are chosen at random to participate Quota sample involves segmenting the market and then picking a certain number of people from each segment Targeted sample a particular group is targeted Types of questions Open where no preset choices are given. Used for opinions Closed where choices are given normally yes or n. Easy to analyse Multiple-choice a number of choices are given Preference where preferences are shown, by numbering the options Scale where you place your answer on a scale

Market Research
Field research This is where research is conducted by the firm itself and takes several forms Face to face - questionnaires are conducted on the street Postal surveys detailed questionnaires which can be targeted at particular types of consumers but has low response rate Telephone surveys cheap and convenient to contact large numbers, but responses are normally limited One-to-one interviews are used for in-depth responses but takes time Panel or group interviews are used to generate discussion about new products or advertisements Observation involves watching shoppers as they walk around a supermarket Testing test peoples reactions to products

Marketing Mix
Place Product

Marketing Mix

Promotion

Price

Price
Pricing startegies Cost plus Contribution Penetration Skimming Discounting Parallel pricing Loss leaders Pscholoigical Price discimination Right price Cover costs

Level of revenue

Price
Level of profit

Price
Price How sensitive are customers to Setting the right price is importantchanges in price? because it determines How much the firm will sell The level of revenue Pricing strategies The amount of profit Cost-plus pricing the price is set by calculating costs and adding a When firms set their prices they mark-up for profit need to answer the following questions Will we cover our costs? What price do our competitors charge? Do we offer a special extra service?

Price
Contribution pricing where the price covers the variable cost of producing one unit and makes a contribution towards the fixed costs. Often used where there is a lot of competition or for a limited time Penetration pricing where a firm sets a low price in order to gain market share often used when at product launches Creaming/skimming when firms set a high price at a products launch and then reduce it later on, by doing this they maximise revenue. Used by firms who have a product that is perceived as new or different. These firms are price makers e.g. games console manufacturers

Price
Discounting this may be used to encourage bulk buying or to get rid of excess stock by sales Parallel/competition pricing where there is a lot of competition firms set their prices at the same level as rivals i.e. they are price takers (they set their price at the going rate)

Loss leaders products are sold at a loss to attract customers into a store
Psychological pricing used to make prices seem lower e.g. 0.99p Price discrimination charging different prices to different market segments e.g. OAP and student discounts

Product
Product Lifecycle Development Launch Growth Maturity Saturation Decline Product decisions Product mix

Product

Product differentiation Size,colour,shape Taste, ingredients Branding Packaging Extra features

Product extension

Branding

Product

Product decisions Businesses have to decide what Product differentiation product, or range of products, they are A firm needs to make products appear going to produce and sell. They have from those of its rivals in order to gain to decide on the name, how its to be sales. This can be achieved by packaged and whether to brand the changing the product Size, colour, name, shape Taste, ingredients The Product mix is the combination Branding, packaging, design of products that a firm sells e.g. Mars Extra features, services offered ice cream and chocolate bars

Product
Product extension When sales of a product slow down firms may look to extend the use of the product or service to bring in more revenue e.g. hotels expanding into conference hosting Branding A brand is a product that, in the eyes of customers is seen to be different from other similar products. Customers are able to recognise it from its name, logo, features, packaging or taste. Firms want customers to easily identify the product and so much of its advertising will be aimed at creating an image for the product, based on its name or particular characteristics.

Product Lifecycle
Product Life Cycle which pricing strategy to adopt. Growth - Sales normally increase Products have lifecycles in the same sharply, advertising expenditure is way as humans do. Launch is similar to normally reduced as the product birth and they die in a similar way. Their becomes popular. Prices are often life spans vary altered either to encourage sales or boost profits Development Product is designed and launched. It involves start-up costs such as equipment and market research Introduction Product is released Advertising costs are large and sales are small to start with. Firms choose on

Product Lifecycle
Maturity Sales peak and profits are greatest. Firms will often try to use extension strategies at this point such as special features or encouraging brand loyalty
Saturation The market has become very competitive and there are lots of similar versions of the product. The product may be out of date and there is no room for further sales growth Decline Sales fall rapidly as product becomes unpopular. Firms attempt to re-launch the product or introduce new products

Place
Choosing the right channel Channel of distribution/distribution chain

E-Business

Retailers

Place

Direct selling

Wholesalers

Place
Channel of distribution- this is the path products take from the producer to the consumer sometimes known as a distribution chain or channel Direct to retailers Large supermarkets are able to buy in bulk from the manufacturers and will arrange distribution to stores Through agents Agents act as intermediaries between producers and customers. They are often used when selling abroad

Choosing the right channel depends on several factors The nature of the product - e.g. if perishable it needs to be delivered quickly Direct to customers The nature of the market if the market is Where products are sold straight to customers large many wholesalers and retailers may be by factory shops, via phone, post or inter-net. needed This industry has grown with new technology Size - small companies often distribute their e.g. e-commerce own products whereas large companies often choose the channel according to the market Through wholesalers they work in Wholesalers buy in bulk from manufacturers and then break down the bulk to sell on to local stores e.g. cash and carry warehouses

Promotion
Advertising Advertising agencies

Choosing the right promotion depends on Product nature Budget Target customers Product lifecycle

Direct mail

Promotion
Personal selling

Sales techniques Special offers

Packaging

Promotion
When businesses decide how to promote their products they have to Advertising is the most well known weigh up the relative sot form of promotion and includes the of each form of promotion against following media types- T.V., radio, how best to posters, packaging, and newspapers. target potential customers. Firms use advertising to Firms use promotion to make sure Introduce new products customers are aware that Increase sales The product is for sale Compete with others They know what the product is Improve the company image They know how the product will satisfy their needs They are persuaded to buy the product Types of Promotion

Promotion

When choosing the right media firms have to consider The nature of the product The advertising budget The target customers and market size The position of the product in its lifecycle Firms often use advertising agencies to produce their promotions as they have greater knowledge and techniques in areas such as market research Firms use informative adverts to tell the customers details about the product and persuasive adverts to encourage purchases often using glamour, pets and personalities

Promotion
Direct mail This is where advertising leaflets are sent out via post or within free Sales techniques newspapers Free samples used to get the public Public relations to try new or altered products This is where companies deal with Money off coupons to encourage communications from the public and customers to make repeat purchases gets news of products into the media Free gifts giving something extra to Personal selling encourage customers This is where products are sold door to door or over the phone Packaging Firms use the colour and design of their packaging to reflect the image of the product and the company

Promotion
Competitions to encourage purchases by collecting to win Special offers to encourage sales during quiet times, get rid off excess stock, and beat off competition Consumer behaviour Everyday people make economic decisions i.e. when a person decides to do one thing they are deciding not to do something else. Economic decisions Decisions that affect resources Basic economic problem There are limited resources and unlimited wants Scarcity and choice Because of the basic economic problem there are not enough resources so people have to choose between them

The allocation of resources by the market is determined by the interaction of demand and supply

Promotion
Demand This is where consumers Income as income rises demand for wants are made effective i.e. backed products tends increases up by some form of currency Taste as consumers tastes change Supply What producers are willing to so will the demand for particular goods supply at a certain price Prices of other goods if the price of In general as the price of a product falls competitors products change so this more of the product is demanded by will affect demand. These products are consumers and as the price increases known as substitutes less of the product is demanded As the price of a product rises suppliers are more willing to supply more of the product Factors affecting demand Price see above

Promotion
Complimentary goods are bought to go with other goods. The price of compliment goods can affect demand. For example if PS2 s are made cheaper the demand for PS2 games will increase Population an increase in population can increase demand or a change in the structure of population i.e. more young people can increase demand for certain types of goods Seasons some products demand will be affect by the season e.g. more ice cream is sold in summer Factors affecting supply Costs If costs such as wages rise, production may become too expensive and firms stop producing the goods Availability Certain products may be affected by availability for example oil is a finite i.e. there is only so much available Technology technological improvements may increase productivity reducing costs and allowing suppliers to sell at a lower

Niche V Mass
Strategies Size of target market

Competition

Niche v Mass
Economies of scale

Specialization