Unit 4: Marketing

Marketing

The right products that appeal to customers at the right prices to attract customers, effective promotion to entice customers, and convenient and efficient distribution for ease of purchase

Market Orientation

Focuses on meeting specific demands of customers and potential customers.

Advantages of Market Orientation

• New product launches more successful (based on market research — more likely to be accepted by target market)

• Reducing financial risks involved in product development by focusing on the changing needs and wants

• Ability to predict and anticipate market change and trends = business is in a stronger position to handle threats of new entrants

• Market research findings = latest information

Disadvantages of Market Orientation

• Gathering meaningful information can be very expensive for the organization — negative impact on finances

• Market research data — accessible to rival firms = no competitive advantage

• Limitations to how research is conducted (e.g. researcher bias, outdated info, unrepresentative results, etc.)

Product Orientation

Focuses on making products a business knows how to make well rather than concentrating on the needs and desires of potential customers

Advantages of Product Orientation

• USP advantage — more innovative and competitive

• Help build a positive corporate image = strengthen customer loyalty

• Focusing on R&D = harder for competitors to copy the products created by the firm

  • Should patent the technology to give them a competitive advantage

Disadvantages of Product Orientation

• Highly skilled and costly staff needed to create innovative ideas

• Risky to ignore changing demands of the market if competitors are market orientated

• No guarantee customers will like the product despite investments in R&D

Market Share + Formula

sales revenue that an organization accounts for within a given market or industry, the firm with the largest market share in the industry is called the market leader

Market size

Total number of individual customers or the total value of sales revenue in a certain market (potential buyers in the market)

How can we measure market size?

• Potential number of customers in a market for a particular good/service

• Sales volume (Q of products sold to customers)
  Sales value/revenue

• Number of competitors in the market

Market Growth + Formula

Increase in the size of the market, measured by the rise in total sales revenue of the market or industry (common business objective).

• increase in sales revenue and profit

What benefits does market leadership bring to a business?

• Future strategy — shape the industry while competitors follow the trends set

• Positive corporate reputation can attract more investors and higher quality employees

• Enjoys brand loyalty = consumers willing to pay higher prices

• EOS — unit COP are lower = higher profit margins

• Retailers + other distributers more likely to hold their products in their inventory

• Barrier to entry for any new firms wanting to enter the industry

Marketing Planning

Structured process of formulating marketing objectives and appropriate marketing strategies to achieve these goals — Market Plan

Advantages of marketing plans

• Help managers formulate more effective marketing strategies to meet the needs and wants of the firms customers

• Enables a better sense of direction and purpose + improve employee motivation and labour productivity

• Helps identify problems and plan appropriate solutions

• Align marketing plans and strategies with the rest of the organization — improves overall change of success

• Improves financial decision-making — marketing budget ensures that resources are used in the most cost-effective way

Disadvantages of marketing plans

• Time and money required to ensure marketing plans are prepared in a comprehensive way (opportunity cost)

• Marketing planning = not realistic for smaller firms from limited market budgets

• Only used as a guide, can become outdated quickly and unlikely to be followed rigidly due to unforeseen opportunities and external threats

STP

Segmentation, targeting, positioning

Segmentation

• Demographic — age, gender, family size, religion, ethnicity

• Geographic — location

• Psychographic — personal interests, lifestyle choices, personal values

• Socio-Economic — consumer or household income levels

Targeting

• Mass markets — catering for broad range of target markets

• Niche markets — supply highly specialized products to cater for a small and select target market

Identifiable group of customers the organization focuses its marketing efforts on

Positioning + Draw one

Product Position Map

• Premium — high quality and high price

• Cowboy — low quality and high price

• Bargain — high quality low price

• Economy — low quality and low price

Reasons for high prices in niche markets

• Limited competition

• Customer loyalty is high — customer relationships are stronger in niche markets

• Lack of substitutes = premium pricing is justifiable for high profit margins

• Few opportunities for EOS

USP

Unique selling point — any exclusive feature or aspect of a business that makes it distinct from others in the same industry (makes it competitive)

Benefits of a USP

• The product can stand out from the competition in the market

• Greater customer loyalty — customers identify something distinctive and superior compared to rival products

• Determines if their new project or idea is likely to succeed by offering customers something different than what is available in the market

• *adds value to customers and is difficult for rivals to replicate

Drawbacks to USP

• Substantial investments in R&D, manufacturing, technology, that affects the business’ profits

• Might not attract a larger market — limits organizational growth

• Competitors may simply tweak the USP that can weaken the advantage of the business and lead to price wars

• the specific USP can become outdated or preferences can change

• Ongoing innovation needed to stay up to date

• If changes are made to the USP, customers may be disappointed damaging customer loyalty

How do organizations differentiate themselves

• Product — innovative products and special features

• Price — different pricing strategies to appeal to different market segments and target markets

• Place —broaden distribution channels to attract more customers

• Promotion — Differencing products through packaging, trademarks, slogans, and brands

Advantages of Differentiation

• Enables businesses to charge higher prices due to distinctive features

• Creates brand awareness and helps retain customer loyalty

• Improves product placement as more distributors choose to sell the product

• Adds value to the good for service — creating better value for money from the perspective of the customers

• Can prevent new entrants in the market — maintaining the market share

Disadvantages of differentiation

• USP — highly expensive, and easily copied by rivals

• Cheaper for firms to make mass produced goods rather than focusing on niche markets (EOS) — less cost-saving benefits

• Create unnecessary or wasteful competition — excessive packaging, market clutter

• Anti-competitive — limits choice and price competition for customers in the market

Market Research

Range of marketing activities designed to determine opinions, beliefs, and feelings of existing and potential customers (PRIMARY and SECONDARY)

Why do organizations carry out market research?

• Gather customer tastes and preferences

• Discover patters in customer purchasing behavior

• Determine the likelihood of customers buying certain products (innovation)

• Gauge customer reactions to price changes

• Learning about new market trends

• Improve marketing mix and strategies

• Discover strengths, opportunities, and weaknesses

• Reduces risk of product failures — better marketing strategies (more informed)

• Measure effectiveness

Primary Market Research (list all)

Gathering of new data and information (do not currently exist)

• Field research, interviews, surveys, focus groups, observations

Secondary Market Research (list all)

Collection of data and information collected from another sources

• Market analysis, academic journals, government publications, media articles

Surveys + Advantages

Research about individuals or their opinions through standardized questions (most reliable to represent the larger population)

• large amounts of data gathered quickly

• Cheap to collect and collate data

• Less expensive and time consuming

• Can be used for a broad range of research purposes

Disadvantages of using surveys

• (face-to-face) — often time consuming when trying to get a large sample representative of a target market

• Suffer from selection or interviewer bias = unrepresentative results

• Questions are poorly worded — inaccurate results or misleading

• Sometimes time-consuming — participants reluctant to fill it out

  • May do so in a hurry, providing unrepresentative responses

• Closed questions may not represent how participants actually feel and not be entirely truthful in their responses

Interviews + Advantages

Dialogue between the interviewer and interviewee

• Specifically designed to meet the needs of the individual organization

• Helps the business gain qualitative data

• Clarification of questions and responses to resolve potential biases (not possible in surveys)

Disadvantages of interviews

• Small number of representatives (findings not representative of opinions in the market)

• Interviewer bias — distorting the findings or analysis of the responses

• Often time consuming and a costly method of market research

Differences between focus groups and consumer panels

• Used for new perspectives and insights

• Limited sessions with small groups of participants

• Discussions facilitated by market researcher

• Qualitative insights exploring attitudes and behaviours

• Typically uses small groups

• High degree of interaction

• Ongoing feedback and insights

• Ongoing sessions with panelists

• Uses surveys, journals, and online platforms

• Quantitative and qualitative insights over time

• Includes larger groups to gain a representative sample

• Limited degree of interaction

Advantages of focus groups/consumer panels

• Helps the business identify desires and preferences of the difficult segments of the market

• Enable market researchers to gather their opinions and attitudes of the customers.

Disadvantages of Focus Groups

• Time consuming and expensive, participants often paid for their time

• Views and feedback are not always representative of the entire market — few people who dominate the discussion

• Peer pressure and courtesy may force participants to give more polite answers

Observations + Advantages

Involves researchers watching, monitoring, and recording how customers behave or interact to certain situations

• Not reliant on the willingness of people to participate

• Likely to be accurate, realiistic, and representative

Disadvantages of observations

• Highly time consuming, interpretation of the findings = labour intensive

• Research subjects may act differently if they know they are being monitored

Secondary Research + List all

Collection of data previously collected by another source (data already exists)

• Market analysis

• Academic journals

• Government publications

• Media Articles

• Online content

Market Analysis + Advantages

Data and information about a particular product market or industry (market size/growth + information on other competitors)

• Generally cheaper and less time-consuming than primary research

• Data already gathered and available

• Detailed information is provided about various aspects of a product, market, or industry

• Specializing in producing market analysis

• Specialize in producing market analysis — detailed market intelligence reports

Disadvantages of market analysis

• Often expensive (paid for)

• Data is not exclusive to any organization — rivals can purchase these reports

• Can become outdated unless your source provides regular updates

Academic journals + Advantages/Disadvantages

Publications that contain the latest educational research and academic theory

• Contain the most up to date research in an academic discipline

• Data and information is likely to be reliable (produced by scholars in a systemic way)

• Information is not always relevant to a business — findings are often contested

• Universities and establishments only allow paying subscribers to access academic journals

Government Publications + Advantages/Disdvantagse

Official documents released by governments and government agencies

• Data and statistics from the government are often comprehensive, reliable, and up-to-date.

• Large volume of G.P covering a wide range of topics — provides researchers with an abundance of information

• Identifying and locating government publications is difficult due to the vast amount of information available

• Not all data and information are readily available or only obtainable for free

Media Articles + Advantages/Disadvantages

Professional documents or articles in print or online media by well-trained journalists and authors

• Online versions are readily available to users every day

• News media articles are released extremely frequently

• Often updated regularly

• Some sources don’t require users to take out a subscription to access their websites

• News articles can be easily spread through social media

• Potential bias from the journalists and authors

• Articles can become out of date and irrelevant quickly

• Magazines require a subscription for users to access their resource

Online content + Advantages

Gathering of data and information from the internet

• Provides researchers with access to a large and broad range of data and information

• Info is generally available quickly and at a relatively low cost — free of charge

• Official company websites provide up-to-date news on current matters related to the organization

Disadvantages of online content

• Abundance of information = challenging to find the best sources with accurate information

• Anyone (biased/inaccurate) can post information online and can be outdated quickly

• Access to online content is costly — subscription charges

Qualitative research vs Quantitative research

Opinions, perceptions, views, and preferences of research participants

Numerical data and figures to determine trends and patterns

Quota sampling

Researchers select a number of candidates from different market segments them group them according to various characteristics

Advantages of Quota sampling

• Gathers representative data from sub-groups

• Suitable when researchers want to detect possible relationships

• Enables researchers to investigate particular traits

• Researcher has control of who is included in the sample

• Findings usually more reliable than those collected from random sampling

Disadvantages of quota sampling

• Researchers need time to determine the characteristics on which they will base the quota sample to generate representative results

• Selection is not random = researcher bias + sampling errors (not statistically representative

Random Sampling + Advantages

Selecting anyone in the population for market research

• Results are random, everyone has an equal chance of being selected for research

• Free from researcher bias and sampling errors (accurate and representative)

• Quick and simple method of sampling (participants are available)

Random Sampling disadvantages

• Only works well if participants have similar characteristics/views

• Not necessarily representative of the population (skewed)

• Time consuming and costly to implement to have results and opinions of the population (large sample size required)

Convenience Sampling + Advantages/Disadvantages

Using people that are within easy reach (unplanned) to conduct market research

• Created using research subjects easily and readily available

• Quickest, easiest, and cheapest method

• Least representative method of sampling, results may be biased and atypical (findings may be limited of use)

• Unlikely the convenience sample will accurately represent the views of the wider target population