Unit 3.1

marketing

segmentation

categorizing of customers based on certain characteristics

segmentation examples

• income

• age

• gender

• location

purpose of segmentation

• basis for product development

• targeting customers

• meeting specific needs/wants

target market

the main customers a business aims for

disposable income

how much a person has left after paying taxes, bills & needs

pros of segmentation

• recognizes different needs/wants of groups

• less expensive/wasteful than wider product marketing

• altering of product

• loyalty from specific needs being me

cons of segmentation

• risk of over generalization

• not all segments are mutually exclusive/difficulty in identifying

• requires more detailed research taking more time/costly

• segments may be too small for catering

primary research

gathering information for the first time

• field research, first hand

types of primary research

• observing consumer actions

• surveying first hand via phone, focus groups, door to door

• direct customer feedback

pros of primary research

• tailored to business

• up to date

• deeper insight

cons of primary research

• expensive

• misleading results if general group is incorrectly represented

• longer process

• requires expertise(good questions + avoiding bias)

secondary research

using data that already exists

• desk research, second hand

types of secondary research

• any form of existing documentation

• printed press/magazines

• census/government archives

• internet research

pros of secondary research

• gathered quickly & cheaply with many reliable sources

• info on larger sections of population

• useful starting point

• spotting broader patterns

cons of secondary research

• not tailored to businesses

• out of date with market needs

• varying quality due to wide range of sources

2 types of data

• qualitative(opinions)

• quantitative(#)

market research

process of gathering, analyzing & processing data relevant to marketing decisions

examples of info

• shopping patterns

• frequented locations

• competitor products(price/packaging)

• success of promotions

purpose of market research

measure:

demand

market share

competition

target market

demand

size & growth of market, different segments that exist within the market as a whole

competition

the number & size of competitors & their share of total market sales

market share

the percentage of sales in a particular market for a specific business

market share equation

business profits/ total market profit

market growth

the percentage growth in the size of the market, measured over a specific period

market growth equation

change in market size/ og market size * 100

market size

total volume of a given market

market size equation

measured by value/volume of sales

marketing mix (4Ps)

combination of product, price, place and promotion for each business venture

• they are all interrelated

product

function/appearance of goods/services

price

payment for the product

promotion

customers’ informed-ness of the product(persuade,remind,inform)

place

point where products are made available to customers

factors of marketing mix

• competition

• product

• target customer

• brand image

main features of a product

• quality

• image

• technology

• value for money

• reliability

• design

• packaging

factors of product development

• design

• durability

• demand

• development costs

• price

USP

m1- what makes a product special

m2- provide CSD such as special warranty

new products

product designed to fit change in customer needs

• high-risk element on brand rep + investment

  • alters existent model/introduces new product

product life cycle

the stages a product goes through from their initial launch to the point they are discontinued

product life cycle diagram

development

no sales = no value to company’s revenue

• needs suitable development time but is generally minimized

launch/introduction

sales are relatively low as visibility is low, resulting in heavy advertising

growth

rapid increase of sales as demand increase and become established

maturity

the market is established

• copycats may arise from rivalry USPs

  • market becomes flooded/saturated, leading to a fall in demand

decline

sales and profits fall, often leading to a product’s discontinuation

extension

company uses extension strategies to lengthen its product life cycle

extension strategy examples

• rebranding product

• updating the package

• finding larger market

• pricing strategy

brand

naming a product to differentiate it

• easily recognized

• builds an image

• higher pricing

  • loyalty booster

own brand

a product sold under a supermarket chain/other retailers, rather than that of a manufacturer

• cheaper as costs are lowered from collateral promotions

branding

involves the consistent range of color or logos

pros of the brand

• higher price

• loyalty

• successful names can link to a product

• purchasing complimentary products (shampoo, brush)

cons of the brand

• bad name if quality falls

• development cost

• can be copied/near copied

product portfolio

collective name for every product that a company produces

boston matrix

analyzes a product portfolio by categorizing into one of four areas.

• informs decisions of marketing strategies

• low/high market share/growth

boston matrix diagram

stars

high market growth + share

• potential for high revenue growth

• new products i.e. mcflurry when it first came out

cash cows

low market growth, high share

• maturity phase with positive cash flow

• low maintenance, high revenue

  • i.e. big mac, fries

?/problem child

high market growth, low share

• future potential, negative cash flow, development cost

dogs

low market growth + share

• negative cash flow, large sums of $ to support

limitations of the boston matrix

• no predictions of future

• no account of business environment

• inadequate measure of market attractiveness to a new business

• market share inequal profitability

• ignores sustainable competitive advantages/life cycle variations per product

cost plus

adding on a profit margin on top of the cost of production

penetration

a low price when entering a new market/as a less well-known company

skimming/premium

high price when things are new/exclusive

• opposite to penetration

competitor

having similar pricing to your competition(sometimes lower)

promotional

special offers of pricing to entice customers, i.e. discounts

psychological

making things appear cheaper i.e 99p to £1.00

differential

different prices for the same thing (train tickets for adults v kids)

loss leader

pricing below costs to attract customers buying products that correlate

• i.e. printers at a loss, cartilages at a profit

promotional mix

blend of promotional activities a marketing department uses to enable promotion achieving business goals

reasons to promote

• inform about the business

• persuade purchase

• reminds about product advantage

factors impacting promo

• finance

• cost

• nature of product/market

• competitiors

advertising

to communicate the product of a business via:

• telly ads, posters, etc

sales promotions

short term incentives to encourage customer purchases (i.e. discounts)

public relations

using media to communicate with customers

• press release, competitions, stories

sponsorship

paying to have the brand associated with something

• kpop groups, sports team, programme

after-sales service

help & advice at a later date that product purchase

• guaranteed refunds, check-ups

merchandising

producing associated products with the brand

• t-shirts, plushies, crockery

loyalty cards

rewards for purchasing with the same business more than once

• eg free gift

direct selling

having a sales person visit customer to sell

trades/fairs

a location where businesses or customers interested visit with intention of purchasing

distribution channel

how the ownership of a product passes from the producer to the final customer

wholesaler

buying in large quantities from a producer and selling to retailers

retailers

shops selling directly to customer

intermediary

a link in the distribution chain between producer and customer that results in a higher price

types of distribution channels

e-commerce

the act of buying/selling a product using electronic system such as the internet

m-commerce

the buying/selling of goods via a wireless handheld device

• e.g. smartphones

pros in e-commerce

• global everywhere

• open 24/7

• professional image at low cost

• wide product range

• price comparison is easier

cons of e-commerce

• worldwide competition

• delivery issues

• online security

• lack of personal contact/physical viewing of product

pros of m-commerce

• mobile devices increase = more accessibility

• easier to track data on mobile