4.2 marketing planning

market share definition + formula

market share is the percentage of one firm’s share of the total sales in the market

• (firms sale / total sales in the market )x100

• increase in market share

  • successful against competitors

  • has adopted effective marketing strategies

Product

consumers require the right product. this might be an existing product , an adaptation of an existing product or a newly developed one

consumer products

sold to the end user (directly)

producer products/industrial products

sold to other businesses to further the production process, such as raw materials

Price

• too low = consumers lose confidence in product quality

• too high = unaffordable

Promotion

refers to the strategies used to attract customers to buy a firm’s products

place

• refers to how the product is distributed to the consumer

the most appropriate marketing mix decisions will be based on

1. marketing objectives that are achievable within the marketing budget

2. coordinated and consistent with each other

3. targeted at the appropriate consumers

Market segmentation

the process of dividing a market into distinct consumer groups (market segments) to better understand their needs

market segment

distinct group of customers with similar characteristics and similar needs and wants

reasons for market segmentation

1. no single product can satisfy everyone (segmentation makes marketing expenditure cost effective by meeting the needs of specific group of customers)

2. enjoy higher sales and profits because of cost effective marketing

3. to identify a market segment which does not have its needs fully met, offering opportunities to increase its sales

ways of segmentation

1. demographics factors

2. geographic factors

3. psychographic factors

demographic factors

based on characteristics of the population

1. age

2. gender

3. income

4. race/ethnicity

5. language

6. religion

geographic factors

1. location

2. climate

psychographic factors

• those that consider the emotions and lifestyle of customers

1. hobbies

2. values (morals/beliefs/principals)

3. status

Consumer profile

refers to the demographic and psychographic characteristics of consumers in different markets

• segmentation enables businesses to gain a better understanding of consumer profiles in each segment

advantages of market segmentation

1. help business identify existing gaps and new opportunities In local and international markets

2. designing products for a specific group of consumers can increase sales and profitability

3. minimise waste of resources by business through identifying the right consumer for their products

4. by differentiating their products, businesses could diversify and spread their risk in the market, increasing market share

disadvantages of market segmentation

1. expensive — research and development , marketing several different products

2. promotional costs are high — different promotions/adverts needed for different segments

3. excessive specialisation by focusing on one or two market segments can lead to problems if consumers in these segments change purchasing habits

target market

a group of consumers with common needs or want that a business decides to sell to

niche market defintion

defined as a group of customers with a distinctive set of traits who have unique needs or desires

niche markets characteristics

1. small and focused

2. have opportunities for high profit margins because premium prices are bring charged

3. allow small firms to operate profitably as large organisations do not cater for these markets due to limited opportunities to enjoy economics of scale (niche market cannot enjoy EOS)

4. few barriers to enter niche market —> high risk of new business entering market —> high competition

niche marketing defintion

a marketing strategy based on identifying and serving a relatively small market segment

advantages of niche marketing

1. better marketing focus as specific market segment is targeted (better quality)

2. less competition —> charge higher prices for unique products —> higher profit margin

disadvantages of niche marketing

1. small which limits number of potential customers in the market

2. fewer opportunities to exploit economies of scale due to limited market size , average costs tend to be higher (another reason for high prices)

mass markets defintion

those which provide goods and services that appeal to and extensive number of customers

mass markets characteristics

1. standardised products sold to large consumer markets , profit margins are lower on each unit sold (mass market highly competitive , competing just on price)

2. economies of scale by catering for many customers , increased sales (through bulk purchasing / technology )

mass marketing defintion

a marketing strategy aimed at all consumers in a market without trying to differentiate them into separate market segments

advantages of mass marketing

1. huge potential of economies of scale by supplying products in mass markets

2. no need to modify marketing strategies for different segments , saving time and resources (only 1 target market )

3. catering for larger masses —> bigger customer base —> more profits

disadvantages of mass marketing

1. not suitable for all businesses as there are high entry barriers for mass production (requires high capital )

2. marketing budgets must be substantial to remain competitive (to reach larger audience , eg through TV/radio etc)

3. lack of focus in mass marketing = wasteful as specific customers are not targeted

   1. eg : cannot please small group of customers , so some profits lost to them is considered the “waste'“

unique selling point definition

any aspect of a business s, brand or products that makes it distinctive from those offered by their competitors

why is USP important

1. competitive advantage + more customers

2. differentiates from competitors —> customer loyalty + retain current customers / reduce customer turnover rate—> increase sales

3. business with USP can focus on marketing the exclusive features of the product

4. reduce customer acquisition costs —> (a USP attracts qualified customers who understand the value immediately, resulting in less wasted ad spend and higher-quality conversions)

differentiation definition

process of distinguishing a product or business from competitors in the market or industry

ways to differentiate

1. product (same product but add new features/changing colours/different sizes)

2. place(eg : proving an online platform like apple both irl and online store )

3. price (different price for different segments : eg economy class vs business class)

4. promotion (use logos + slogans + branding make it easily identifiable for customers )

5. packaging (colours/material/character/eco friendly/ size of packaging)

advantages of differentiation

1. higher prices to be charged —> because product is unique

2. creates brand awareness/recognition /loyalty in long run : competitive advantage

3. distribution advantages —> more unique products = retail shops want to sell their products

disadvantages for differentiation

1. expensive (research and development + promotion) , only large companies have the resources to differentiate

2. difficult to reap economies of scale as products are not mass produced (lesser demand = no bulk buying= no EOS)

3. create confusion —> some individuals dont understand the benefit of the new product

   1. eg toothpaste, they might not understand the new product which could be diff coloured toothpaste as effects are still the same )