IB business management unit 4

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marketing goods and service

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75 Terms

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marketing goods and service

  • Promotion- to build brand recognition, awareness and trust

    use physical environment

    make it easy to visualise service quality

    branding, logos, celebrity endorsement, slogans

  • Product strategy - a tangible good or intangible services that satisfies the needs and wants of a customer (attracts more customers)

  • Price strategy- The amount paid for a particular good or service that should entice customer yet allow the firm to be profitable

    source of value to customer- used to price product

  • Place strategy- Distribution channels that enable customers to conveniently buy the product

    online

    customers would not go to inconvenient and remote location

<ul><li><p><strong>Promotion</strong>- to build brand recognition, awareness and trust</p><p>use physical environment</p><p>make it easy to visualise service quality</p><p>branding, logos, celebrity endorsement, slogans</p></li><li><p><strong>Product strategy</strong> - a tangible good or intangible services that satisfies the needs and wants of a customer (attracts more customers)</p></li><li><p><strong>Price strategy</strong>- The amount paid for a particular good or service that should entice customer yet allow the firm to be profitable </p><p>source of value to customer- used to price product</p></li><li><p><strong>Place strategy</strong>- <span>Distribution channels that enable customers to conveniently buy the product</span></p><p>online</p><p>customers would not go to inconvenient and remote location</p></li></ul>
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marketing goods vs service

Goods: Use of the 4Ps (place, price, product, promotion)
- Services: Use of the 7Ps (place, price, product, promotion, process, people, physical evidence)

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Market research

  • Market research is essential in helping businesses to identify products/services they can develop in response to the needs and wants that their customers have
     

  • Market research is the process of systematically gathering data from consumers which can be used to influence the business decisions

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Market orientation

An approach to marketing that focuses on the needs of a customer and uses this information to design products that meet customer needs

Market orientation aims to develop products to meet consumer needs identified during the market research process

  • The result of market orientation is that the firm will benefit from increased demand, increased profits, and a valued brand image as its products become more desirable 

  • However market research (needed for the process) is expensive and does not guarantee success

<p>An approach to marketing that <strong>focuses on the needs of a customer </strong>and uses this information to design products that meet customer needs</p><p><strong><em>Market orientation aims to develop products to meet consumer needs identified during the market research process</em></strong></p><ul><li><p>The result of market orientation is that the firm will benefit from increased demand, increased profits, and <strong>a valued brand image</strong> as its products become more desirable&nbsp;</p></li><li><p>However market research (needed for the process) is<strong> expensive</strong> and <strong>does not guarantee success</strong></p></li></ul>
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Product orientation

  • An approach to marketing that focuses on the characteristics of the product rather than the needs of the consumer

<ul><li><p>An approach to marketing that <strong>focuses</strong> <strong>on</strong> the <strong>characteristics of the product </strong>rather than the needs of the consumer</p></li></ul>
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marketing plan

  • The process of formulating the marketing strategies and tactics that will help a business to achieve its marketing objectives

  • Three tools of marketing planning include

    • Market segmentation

    • Market mapping

    • Market positioning

  • marketing audit- review of current position of an organisation’s marketing- once completed marketing plan is prepared

Marketing objectives

  • These are specific SMART (specific, measurable, achievable, relevant, time bound)

Research

  • Marketing research identifies the factors expected to impact upon the marketing plan such as

    • Market size and growth

    • Market segments

    • Competitor positioning- SWOT

    • Customer tastes, preferences and views

    • The nature of distribution channels

The marketing mix

  • This involves planning the medium- and short-term marketing activities the business intends to undertake

    • Pricing strategies and tactics

    • Promotional activity

    • Distribution and logistical plans

    • Product specifications, features and packaging

    • Physical evidence such as branding

    • How people and process are developed to support delivery of the rest of the marketing mix

<ul><li><p> The process of formulating the <strong>marketing strategies and tactics</strong> that will help a business <strong>to achieve its marketing objectives</strong></p></li><li><p>Three tools of marketing planning include</p><ul><li><p><strong><span style="color: var(--bs-link-color)">Market segmentation</span></strong></p></li><li><p><strong><span style="color: var(--bs-link-color)">Market mapping</span></strong></p></li><li><p><strong><span style="color: var(--bs-link-color)">Market positioning</span></strong></p></li></ul></li><li><p><strong>marketing audit</strong>- review of current position of an organisation’s marketing- once completed marketing plan is prepared </p></li></ul><h3 style="text-align: start" collapsed="false"><strong>Marketing objectives</strong></h3><ul><li><p>These are specific SMART (<strong>s</strong>pecific, <strong>m</strong>easurable, achievable, <strong>r</strong>elevant,<strong> t</strong>ime <strong>b</strong>ound) </p></li></ul><h3 style="text-align: start" collapsed="false"><strong>Research</strong></h3><ul><li><p>Marketing research identifies the <strong>factors expected to impact </strong>upon the marketing plan such as</p><ul><li><p>Market size and growth</p></li><li><p><strong><span style="color: var(--bs-link-color)">Market segments</span></strong></p></li><li><p>Competitor positioning- SWOT </p></li><li><p>Customer tastes, preferences and views</p></li><li><p>The nature of distribution channels</p></li></ul></li></ul><h3 style="text-align: start" collapsed="false"><strong>The marketing mix</strong></h3><ul><li><p>This involves planning the <strong>medium- and short-term marketing activities</strong> the business intends to undertake </p><ul><li><p><strong>Pricing </strong>strategies and tactics</p></li><li><p><strong>Promotional </strong>activity</p></li><li><p><strong>Distribution</strong> and logistical plans</p></li><li><p><strong>Product specifications</strong>, features and packaging</p></li><li><p><strong>Physical evidence</strong> such as branding</p></li><li><p>How <strong>people</strong> and process are developed to support delivery of the rest of the marketing mix</p></li></ul></li></ul>
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advantage and disadvantages of market planning

advantages-

  • improves chances of success

  • clearer idea of objectives

disadvantages-

  • no time

  • inflexible

  • Quickly outdated

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Marketing objectives

  • Targets the marketing departments aims to achieve

  • These are specific SMART (specific, measurable, achievable, relevant, time bound)

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Market strategies

Market development-

  • selling existing products in new markets

  • e-commerce- selling over the internet

  • internationally

Product development-

  • new products in existing markets

Diversification-

  • new products in new markets

  • high risk

  • stable businesses looking for growth

Product innovation-

  • original or new product launch

  • first mover advantage

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Unique selling point

  • A unique selling point (USP) is a distinguishing factor or characteristic of a product, service or brand that sets it apart from its competitors

  • The USP helps a business to differentiate itself and give customers a reason to choose one product or service over others because it offers something distinct and valuable

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There are a range of reasons why businesses develop a USP which can include

  • Developing a brand identity

  • Achieving a competitive advantage over rivals

  • Effective communication with customers

  • The attraction and retention of customers

  • Achieving power over pricing

  • Encouraging innovation and adaption

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Differentiation

  • Product differentiation is an attempt by a business to distinguish its products from those of competitors

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reasons for differentiation

  • Strong product differentiation helps the firm to develop its competitive advantage

  • The development of product differentiation often helps a firm to create a unique selling point for its product which can be used in marketing

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Common methods used by businesses to differentiate products include

  • Marketing and branding activities

  • Eye-catching packaging

  • Attractive functions and features

  • Product customisation

  • Excellent customer service

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Commercial marketing

  • marking strategies that focus on meeting the demands of customers in a profitable way

  • the main purpose is to generate benefits for the owners of the business

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Social marketing

  • marketing activities that aim to influence or change people’s attitudes and behaviour for the good of society as a whole, rather than primarily to make a profit

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Market share (%)

(firm's sales)/(total sales in the market) x 100

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Importance of market share and leadership

Benefits
- Increased sales ---> higher profits
- Economies of scale
- Branding

Limitations
- Market share calculations must be looked at carefully

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Elements of a marketing plan

- Marketing objectives
- Key strategic plans
- Detailed marketing actions
- Marketing budget

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Four P's of marketing mix

Marketing mix: Key elements of a marketing strategy that ensure the successful marketing of a product

  • Product: a tangible good or intangible services that satisfies the needs and wants of a customer

  • Price: The amount paid for a particular good or service that should entice customer yet allow the firm to be profitable

  • Promotion: communicating relevant products information to inform and persuade customers to buy the good or service

  • Place: distribution channels that enable the customers to conveniently buy the product

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Bargain products

  • Goods or services that are perceived by customers to be high quality but sold at a low price

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customer profiles

  • the demographic and psychographic characteristics of consumers in different market segments

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cowboy products

  • goods or services that are perceived by customers to be of low quality

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Market segment

  • A distinct group of customers with similar characteristics, tastes, preference

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Targeting

  • Targeting is the marketing practice of creating and using an appropriate marketing mix and marketing strategies to cater for different marketing segments

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Target market

  • The group of customers that an organisation focuses on selling its product to

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Niche market

  • marketing approach that focuses on supplying highly specialised products to cater to a small and select target market

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Mass market

  • industries that buy and sell mass market products, catering for a broad range of target markets

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non-profit organisation (NPO)

  • a business that does not primarily aim to earn a profit but to serve a purpose beyond the organisation itself, the betterment of society as a whole

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people

  • the employees who deliver the customer service element of the extended marketing mix

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physical evidence

  • the observable and tangible aspects of a service

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premium products

goods or services that are perceived by customers to be of high quality and high price

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Product position map

  • A map showing how consumers perceive a business, its products, and/or its brand in comparison to other businesses in the industry

<ul><li><p> A map showing how consumers perceive a business, its products, and/or its brand in comparison to other businesses in the industry </p></li></ul>
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psychographic segmentation

  • segmentation that involves characterising consumers according to people’s lifestyle choices and personal values

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Sales forecasting

  • A quantitative technique used to predict a firm’s level of sales revenue over a given period of time

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Terminology of sales forecasting

- Sales trend: Underlying movement or pattern of the data presented, either in months of years (can be used to determine future sales)

- Seasonal/cyclical variations: When the trends vary in seasons, there are seasonal variations. When trends vary over years, there are cyclical variations

- Random variations: Some times there are one off events which affect data

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Methods of primary research

- Surveys
- Interviews
- Focus groups
- Observations

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Methods of secondary research

- Market analysis
- Academic journals
- Government publications
- Media articles

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Qualitative and quantitative research

Quantitative: A category of market research based on the opinions of participants. it creates detailed and non-numerical information

Qualitative: A category of market research based on gathering facts and numerical information

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sampling methods

  • quota sampling- select a number of candidates from different market segments

  • random sampling - selects anyone in the population for market research

  • snowballing- relies on participants referring or recommending further subjects to take part in the market research

  • stratified sampling - segmented into various strata

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Product

- Any good or service that is offered to the market with the aim of satisfying consumer needs or wants

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Product life cycle

- Shows the course that a product takes from its developments to its decline in its market

Stages:
1- Development (market research, innovation, prototypes, commercialisation)
2- Introduction (launch of product into market)
3- Growth (revenue increases after repreated sales)
4- Maturity (slow growth)
5- Saturation (saturation of market)
6- Decline (Steady drop in sales)

Each stage has different use/effect on marketing mix, investment, profit and cash flow

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Extension strategies

- Plans by firms to stop sales from falling by lengthening product life cycle (repackaging, new markets, reposition of product, promotion)

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BCG matrix

Visual marketing management tool used to analyse a firm’s product portfolio

  • Stars: High market growth and high market share

  • Cash cows: Low market growth and high market share

  • Question mark: High market growth and low market share

  • Dogs: Low market share and low market growth

<p>Visual marketing management tool used to analyse a firm’s product portfolio </p><ul><li><p><strong>Stars</strong>: High market growth and high market share</p></li><li><p><strong>Cash cows</strong>: Low market growth and high market share </p></li><li><p><strong>Question mark:</strong> High market growth and low market share </p></li><li><p><strong>Dogs</strong>: Low market share and low market growth</p></li></ul>
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Branding

- The process of distinguishing one firm's product from another

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Brand awareness

  • The ability of consumers to recognise the existence and availability of a firm's good or service

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Brand development

  • part of a firm’s marketing strategy in communicating the value of a brand and what the brand stands for

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Brand loyalty

  • When consumers become devoted to a brand

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Brand value

  • The expected earning potential of a brand

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Cost plus pricing

  • Adding a percentage or predetermined amount (markup) to average cost per unit to set the selling price

  • Ensures a product will produce contribution

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competition based pricing

  • price leadership

    • Set by the market leader and other firms simply follow

  • Predatory pricing

    • Temporary reduction in price to drive away competition

  • Going-rate pricing

    • Simply pricing at about the average price level of most products in the market

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market led pricing

  • Penetration pricing

  • Price/market skimming

  • Price discrimination

  • Loss leadership

  • psychological pricing

  • promotional pricing

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Penetration pricing

  • Newcomers set their prices low to entice people to buy

  • Price changes from low to high

  • Risk: lower prices = lower reputation

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Price skimming

  • understand what the market is like, set the price high, then as you understand the market better your prices will slowly decrease

  • Prices changes from high to low

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price discrimination

  • The price of a product varies per country, which depends on the market; however, the products should not be easily traded

  • Results to the government applying taxes/tariffs

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loss leadership

  • Products are sold at a loss, but regain their losses through their other products

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Psychological pricing

  • Some numbers are more appealing

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promotional pricing

  • Offer discounts, rebates, promotions, etc.

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types of promotion

  • Above the line (ATL)

    • Use of mass media for promotions

    • Very wide reach, but also very expensive

    • e.g. TV, radio, newspaper, magazine, outdoor, cinema, etc.

  • Below the line (BTL)

    • Use of non-mass media promotional activities focused at target market

    • e.g. price deals, money-off coupons, direct Marketing/direct selling, sponsorship

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Promotional mix

  • Promotional mix is the combination of promotional techniques that communicate benefits from a product

  • Elements

    • Advertising – information and persuasion

    • Public relations – image building and goodwill

    • Sales promotions – stimulate sales and activities

    • Personal selling – sales forces and agents

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Guerilla marketing

  • Use of unconventional, and memorable interactions in order to promote a product

  • Generally used by smaller businesses

  • Uses smaller teams of promoters in a specific area, rather than through mass media campaigns

  • Benefits

    • Relatively low in cost and risk

    • Helps engage in networking with not only customers, but even other potential business partners as well

  • Limitations

    • Success depends highly on market research

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Distribution channels

  • The different ways the product reaches the customers

  • Zero level distribution- manufacturer sells directly to consumers

  • Two channel distribution- involves the use of two intermediaries usually wholesalers and retailers

  • Three channel distribution channel- three intermediaries-wholesalers sell to retailers on behalf of the producers

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wholesalers

  • buy products from a manufacturer and sells these in smaller quantities to retailers

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direct agents

  • independent businesses w/ exclusive right to trade a product in a territory

  • agents may act on behalf of buyer or seller

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retailers

  • outlets that sell directly to customers

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International marketing

  • Sale and marketing of a firm’s products in a foreign country

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Methods of entry into intl. markets

  • internet

  • Exporting

  • Direct investment

  • Joint venture

  • International franchising

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Opportunities and intl. markets

  • Expand marketing operations into growing and emerging markets

  • Spreading overall risk between more markets, each at different stages within the economic cycle

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Threats

  • High-barriers of entry

  • Strong competition from the well-established local industry

  • Differing consumer demands

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Globalisation

Globalisation

  • Adopting a differentiated marketing mix that meets national and regional tastes and cultures

advantages

  • Caters to local tastes

  • More products (diversification)

  • Spreads risks

  • Cater to wider market

Disadvantages

  • More costly

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E-commerce

- The buying and selling of goods and services through the internet

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types of e-commerce

  • B2B – Business to business

    • Caters to needs of business, transactions and distribution

  • B2C – Business to consumer

    • Sells directly to customers and provides other necessary services

  • C2C – Consumer to consumer

    • Customers trade with each other for either good and/or services

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E-commerce and the marketing mix

  • Product: Higher customisation and broader product range to suit wide variety of individual

  • Price: direct selling approach

  • Promotion: Quicker and cheaper communication

  • Place: 24/7 accessibility and global reach

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Costs of e-commerce

- Internet security
- Vulnerable to competition
- Starting website may be expensive

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Benefits of e-commerce to consumers

  • Convenient and accessible

  • Relatively inexpensive when considering the total size of the potential market reach

  • cost benefit

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