4. Marketing

Market research

Process of collecting, presenting and analysing information about the consumption of goods and services

Advantages of Market research

• Identify and understand the needs and wants of customers

• Identify gaps in the market

• Reduces risk of failing

Primary research

Gathers info that does not exist

Advantage and Disadvantage- Primary research

• Advantage- Original and specific

• Disadvantage- Time consuming and expensive

Types of primary research

• Questionnaires

• Focus groups

• Observation

• Text marketing

Secondary research

Gathering info that already exists

Advantage and disadvantage- Secondary research

• Advantage- Cheap and quick

• Disadvantage- Outdated and non-specific

Types of secondary research

• Business website

• Government publication

• Internal data

• Media

Market

Place where buyers and seller communicate and exchange goods for money

Marketing

Process involving identifying the needs and wants of customers

Importance of marketing

• Improves sales

• Creates customer loyalty

Marketing process

1. Identify needs and wants

2. Developing the product

3. Understanding competitiors

4. Communicating the product

5. Charging right amount

6. Promotion

Product orientation

Focusing on quality and design of the product

Advantage and Disadvantage- Product orientation

• Advantage- Saves costs on market research

• Disadvantage- Might not satisfy the customer’s needs

Market orientation

Businesses focus on the consumer

Advantage and disadvantage- Market orientation

• Advantage - Risk of failure is reduced

• Disadvantage- Need to keep up with changes in trends

Quantitative data

Expressed in numbers and can be measured- Easy to analyse but to reasoning

Qualitative data

Information about the attitudes, beliefs and intentions of consumer- More detailed and can be misinterpreted

Sample size

Taking a small part of the population to carry out market research

Problems of market research data

• It may be biased

• Human behaviour is unpredictable

• Poor research techniques

Solutions to improve market research data

• Sample size must be adequate

• Combine different forms of research

Mass market

A large market where standard products are sold to all customers without segmentation

• Large customer base

• Economies of scale

• Lots of competition

• Low profit margins

Niche market

A small part of a large market where customers have specific needs

• Small customer base

• Less competition

• Personal services

• Can charge higher prices

Market segmentation

Part of a small group where a particular customer group has similar characteristics

Methods of market segmentation

• Geographical segmentation

• Demographic segmentation

• Psychographic segmentation

Geographical segmentation

Based off where people live

Demographic segmentation

based off gender, age, income, social class, ethnic origin or religion

Psychographic segmentation

based off people’s lifestyle

Benefits off market segmentation

• Can increase sales or revenue

• Customer loyalty will increase

• Won’t waste time and money targeting people who won’t use their product

Limitations of market segmentation

• Potential loss of economies of scale

• Consumer characteristics may change over time

• Companies may miss out on potential customers

The Marketing mix

The use of the 4Ps; Product, Price, Place, and Promotion.

Marketing strategy

the use of the four Ps to achieve the marketing objective

Product development process

1. Generating ideas

2. Analyse the ideas

3. Developing the product

4. Test marketing

5. Launching the product

Importance of packaging

• Protects the product

• Provides information on the product

• Advertising- Attracts customers

Factors to consider when choosing packaging

• Cost

• Environmental impact

• Convenience

Branding

the perception customers have about a business

Product life cycle

describes the stages a product goes through from when it was thought of until it's off the market

• Development

• Introduction

• Growth

• Maturity

• Decline

Extension strategies

Methods used to lengthen the life of a product

Types of extension strategies

• Find new uses

• Change packaging

• Find a new market

• Develop a new product range

Benefits of the product life cycle

• Monitors product sales across the stages

• Helps allocate resources, e.g. budget

Drawbacks of the product life cycle

• Relies on accurate sales data

• Does not take external factors into account

Product portfolio

range of products a business is currently marketing

Boston/BCG matrix

analysing a company product in terms of their market share and growth potential

Star

• growth stage of the life cycle

• High market share high market growth

Question mark

• Introduction stage of the life cycle

• low market share high market growth

Cash cow

• Maturity stage of the life cycle

• high market share low market growth

Dog

• end of life cycle

• low market share low market growth

Factors that affect price

• Demand

• Costs

• Objective

• Competition

Pricing strategy

various methods companies is used to price their product or service based off their marketing objectives

Cost plus/cost based pricing

adding a percentage (mark up) to the cost of production

Advantages of cost plus pricing

• ensures that all costs are covered

• easy to apply

Disadvantages of cost plus pricing

• Does not consider competition

• Difficult to use for a variety of products

Penetration pricing

setting a low price to establish the product and later increasing the price

Advantages of penetration pricing

• Increase market share

• Attract new customer customers

Disadvantages of penetration pricing

• Low revenue at first

• Product cost is not recovered quickly

Price skimming

setting a high price for a unique product before lowering the price

Advantages of price skimming

• High profit

• Production cost is covered quickly

Disadvantages of price skimming

profit is only for a short amount of time due to competitors

Competition based pricing

setting the price based off rivals

Advantage of competition based pricing

avoids price war

Disadvantage of competition based pricing

low profit margins

Promotional pricing strategy

reducing the price for a short amount of time to attract customers

• Expiration

• To get rid of excess

• Low selling items

psychological pricing

setting prices below whole numbers to create a perception of a better value

Loss leader

selling products at a loss to attract customers

Place

the location where goods and services are exchanged for money

Channels of distribution

the different roots the product will take to get from the manufacturer to the customers

Product to customer

direct selling

• The Internet

• Door to door

• Telephone calling

Wholesalers

buy goods in bulk from manufacturers and sell to retailers

Agents

the link between buyers and sellers they are used in airlines estate insurance, etc

E-commerce

the use of electronic systems to sell goods and services

Advantages of business to customers

• Can shop 24/7

• Can shop from any location?

Disadvantages of business to customers

• Poor quality

• Technological breakdown

Advantages of business to business

• Lower costs

• Wider customer base

Disadvantages of business to business

• Competition

• Online fraud

Factors to consider when choosing business channels

• Type of product

• Cost

• Control

• The market

Promotion

the means through which business businesses informed and persuade consumers to buy products and services

Above the line promotion

placing adverts in the media e.g. television, radio, Internet

Below the line promotion

does not involve the media, e.g. mail

Public relations

communication between a business and consumers

Press release

product information on newspapers

Sponsorship

when a business space event for publicity

Press conference

information is presented verbally by answering questions

Donations

contributing to charities to improve brand image/reputation

Online targeted advertising

using consumer data or browser history to target specific people

Social media

the use of social media to promote products

Viral advertising

when businesses use ongoing trends on the Internet for publicity

E newsletter

when businesses send documents electronically to specific customers (past customers) to provide information about the product or discounts