Marketing Unit 4

market segment

a subgroup of individuals with similar characteristics

market segmentation

dividing a market into subgroups based on certain factors;

• demographic

• psychographic

• geographic

psychographic segmentation

segmentation according to interests and lifestyles

demographic segmentation

why is pricing an important aspect of marketing

because if the price is too low, the organization may not profit, if the price is too high customers may buy from competitors.

maturity in the product life cycle

• high and steady revenues

• market may be oversaturated

• business will attempt to gain customer loyalty

• marketing budgets are cut

why would marketing budgets be cut during the stage of maturity in the product life cycle

because the company is no longer trying to increase sales from new customers.

growth in the product life-cycle

• increase in sales

• company is trying to gain the attention of new target markets

describe how a company will try to reach new target markets in the growth stage;

adapting aspects of the marketing mix:

promotion strategies; catering to a different demographic

pricing strategy; offering discounts

examples of a mass market products

• smartphones

• soft drinks

• household products

define mass market

a large and diverse group of customers who share specific needs and wants for a particular product or service.

features of a mass market product

• less expensive

• standardized

• appeal to wide range of customers

explain disadvantages of operating in a mass market

intense competition, as is more difficult to differentiate products,

high costs; to reach a large number of customers the business has to use more expensive above the line promotion

explain disadvantages of operating in niche markets

higher cost per unit; businesses experience less sales and therefore may not experience economies of scale

little growth potential; the market is specialized, therefore the company will have trouble attracting new customers and expanding into new markets.

explain the advantages of operating in a niche market

less competition; focusing on a specialized niche allows business to differentiate itself from competitors and increase prices, leading to higher profit margins

suitable for small businesses; as they may not have the resources to operate in a mass market.

explain the advantages of operating in a mass market

marketing costs are saved through the focus on one aspect of the marketing mix and economies of scale

potentially high revenues due to a large target market

USP

a characteristic of a business’ goods/services that differentiates it from its competitors.

differentiation

The process of highlighting the differences between a product and its rivals.

geographic segmentation

A way of dividing potential customers based on their geographic location.

marketing plan

A document that outlines a company's entire marketing process.

what are the components of a marketing plan

• objectives

• strategies

• marketing budget

• segmentation and target market

• market research

• control tools

role of a marketing objective

provide direction for marketing business function

budget

the amount of money that has been allocated to a task.

Is set by the finance team

targeting

Selecting the most appropriate market segment for a marketing campaign.

Marketing mix

The elements that play a role in making marketing decisions in a business, regarding its product, price, promotion, place, people, processes and physical evidence.

product portfolio

all goods and services that a business offers

dog product BCG

• low market share + low market growth

• is likely in the declining stage of its product life cycle

star product BCG

• high market share + high market growth

• requires significant investment in operations and expansion to sustain growth; therefore cashflow may be negative.

• marketing focuses on sustaining growth; attracting new customers

Cash cow product BCG

• high market share + low market growth

• customer loyalty is high

• less money needed for marketing

problem child product BCG

• low market share + high market growth

• recently launched products in competitive market

• high investment required for market growth

people

Those who are involved in offering a service; an element of the marketing mix.

place

relates to the distribution of the product

intermediary

a business or person that acts as a link between distribution channels

types of intermed

wholesaler

• buy large quantities of stock from producers and sell to retailers at a discounted price

• reduces distribution costs

retailers

• purchase goods from wholesalers and producers

• products are sold for direct consumption of the individual.

• producers often select retailers to distribute their goods that are closest to the target market

agent

promote and sell products on behalf of a producer

direct distribution

A type of distribution channel in which the producer deals directly with the customers.

advantage of direct distribution

• do not have to pay commission to agents or fees to wholesalers

• close contact with customers

indirect distribution

the use of one or more intermediaries between producer and buyer

advantage of indirect distribution

• Indirect distribution helps producers to focus on their core activities because they do not have to worry about distribution.

producer - wholesaler - retailer (advantages)

• reduced storage costs

• gives producer possibility of entering new markets

• wholesalers will advertise to retailer (reduced costs)

producer - retailer (advantages)

• easy distribution of the product- producer can distribute its product to many more places.

• customers can try the product- producers can increase their sales.

advantage of Agents/brokers

Agents have specific knowledge of the legal aspects of each country, which is needed in order to introduce new products successfully.

advantages of direct distribution

• eliminates intermediary expenses; all profit is earned by producer

• increases direct contact with customers; opportunity for market research

• provides direct control over marketing mix of product.

disadvantages of indirect distribution

extra costs; commission, fees, reduction in profit

loss of control over products/ marketing mix

how can a business provide good customer service

by selecting good staff and making sure they receive induction training

brand awareness

The degree to which consumers recognise a product by its name and special characteristics.

brand development

Building brand awareness by cultivating the business's values and consumer perceptions of the product.

what are the different roles of packaging

• protect the product

• communicate information

• promote the product and communicate its USP

after-sales-service

The maintenance, help and information a business provides to the customer after they purchase a product.

BCG

A matrix that classifies the products of a business into high and low market share and market growth categories.

promotion

Part of the marketing mix related to advertising, sponsorships, sales promotion, or other tactics to inform and persuade customers to buy a product.

ATL promotion

Promotion aimed at mass audiences, generally not targeted.

BTL promotion

Promotion aimed at specific segments and do not rely on mass market techniques.

TTL promotion

An integrated marketing approach that includes both above the line and below the line elements.

what kind of segmentation do magazines allow

psychographic

advantages of magazine advertising

• color and imagery can be effective

• durability

• reach through online versions

limitation of magazine advertising

isn’t as effective as television advertising. static images

benefits of TV advertising

• High visual impact

• national global reach

limitations of TV advertising

expensive

consumers choose other media

benefit of Radio advertising

local, allows for geographic segmentation for small local businesses

limitations of radio advertising

• low visual impact

• less effective; distractions

benefit newspaper advertising

• segmentation is possible

• more information can be included

• reach through online option

360 degree marketing

allows business to reach target audience in a holistic way

importance of 360 marketing

• It allows businesses to reach as broad or defined an audience as they want.

• It allows businesses to customise the message according to the profile of their target market.

• It makes it possible to increase brand exposure and, at the same time, generate sales.

what are some primary research methods

• focus groups

• interviews

• surveys

mass flow production

The production of large amounts of standardised products on an assembly line.