UNIT 4: Marketing

Marketing

Marketing

All of the processes involved in identifying and satisfying customer needs

Product Orientation

when a business prioritizes research and development of high quality, specialized products, rather than prioritizing market research. Can lead companies to Unique Selling Point but is expensive to produce.

Market Orientation

when the sole focus of a business is on the needs and wants of a market segment. Has a low risk, but no USP and needs to be done right to suceed.

Market Share

The value of a single company's sales compared with the sales of all businesses in a market.

Market Growth

The increase in sales revenues in an individual market over time.

Market Leader

The product or brand with the highest market share. PROS - Can increase brand recognition, have economies of scale, and price leadership. CONS - can lead to diseconomies of scale and increase competition.

Market Planning

a document that outlines a company’s entire marketing processes.

INCLUDES:

• the marketing objective,

• budget,

• segmentation and the target market,

• market research strategies (7 P’s) and control tools

Market segmentation

The process of dividing a broad market group into various segments. Allows businesses to develop marketing strategies to meet the needs of diverse groups. Such as – geographic (dividing customer based on location), demographic (based on age, gender...) and psychographic segmentation (lifestyle and interests).

Product Positioning

Distinguishing a brand from its competitors.

Niche Markets

a small part of a large market

Mass Markets

goods that are produced in very large quantities

Unique Selling Point

A feature of the product that distinguishes it from its competitors.

Tool: Porter's Generic Strategies

identifies cost and differentiation strategies for a business looking to gain a competitive advantage.

The 7Ps of the Marketing Mix

Product, Price, Promotion, Place, People, Process, Physical Evidence

Product

the good or service designed to satisfy a need or want in a market.

• Product Life Cycle: Research and development (R&D), Introduction, Growth, Maturity, Decline

Branding

Part of Product.

• Brand awareness: The degree to which consumers recognise a product by its name and special characteristics.

  See entire glossary

• Brand Loyalty: When customers continue to buy a particular brand, even where alternatives exist.

• Brand Value: How much a brand is worth as an intangible asset, a form of goodwill; recorded on the statement of financial position.

Price

The amount of money that a business charges for its product or service.

Pricing Methods:

• Cost-plus (markup): The price charged for the product reflects a markup added to the direct and indirect costs of production.

• Penetration: the business sets a very low price on a new product or service to encourage customers to buy it; later the price is increased.

• Loss Leader: A product that is sold at a loss to attract customers.

• Predatory: a business sells a product or service at such a low price that other businesses cannot compete and are forced to leave the market

• Premium: a business sets the price of its products higher to create the impression that the products are higher quality or value than their lower-cost equivalents.

• Others: Dynamic, competitive and contribution pricing

Promotion

the advertising, sponsorships, sales promotion, or other tactics to inform and persuade customers to buy a product. 3 different types of promotions:

• Above the line: Promotion aimed at mass audiences, television and radio advertising, print advertising

• Below the line: Promotion aimed at specific segments and do not rely on mass market techniques, merch, loyalty cards after-sales service, and exhibitions and trade fairs

• Through the line: An integrated marketing approach that includes both above the line and below the line elements. 360 degree marketing: A marketing campaign that reaches customers at all possible points of contact.

Effective promotion will increase product and brand awareness, as well as image.

Place

the physical distribution of products. ex: wholesalers, retailers, distributors.

People

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

Process

the activities needed in the interaction between the customer and the business.

Processes include:

• placing and paying for orders

• delivery systems

• customer feedback

• after-sales service

Physical Evidence

An element of the marketing mix related to all the sensory elements that the customer sees, smells, hears and touches when interacting with a business.

Tool: BCG Matrix

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

The market growth rate is the y-axis and The market share is the x-axis.

• Stars: High market share. High market growth. Requires significant investment to sustain growth, but revenues grow strongly.

• Cash Cows: High market share. Low market growth. Successful products in slower growing markets. Less money is needed for marketing.

• Problem Childs: Low market share. High market growth. Likely to have a negative cash flow

• Dogs: Low market share. Low market growth. These products may be at the end of their product life cycle, or they are niche products competing in mature low-growth markets.

Sales Forecasting

The process of predicting the future sales of a firm

Tool: Simple Linear Regression

1. Creating scatter diagrams to plot data from two variables.

2. Sketching a line of best fit.

3. Extrapolating the data to make predictions.

International Marketing

The marketing of goods and services across national boundaries

Methods: Direct Exporting Joint Ventures with Local Organizations Licensing Agreements Franchising Foreign Subsidiaries Online Marketing

Primary market research

involves creating new information, gathered by the business through surveys, interviews, observations,  focus groups or other methods. Primary research aims to answer a specific research question.

Secondary market research

uses information gathered by others. This means that it can be carried out rapidly and can give a quick overview of a market. A business can use secondary research to learn general information about its target market and the external environment (STEEPLE factors)

Qualitative and quantitative research

Quantitative research: refers to collecting numerical data or information that can be counted

Qualitative research involves collecting non-numerical data, such as opinions.