Business - Marketing

what is a market?

* where customers (the buyers) and sellers (the supplier) come together
* goods and services are supplied to a customer
* can be on websites, in shops, over the phone, and through the internet

what is marketing?

* involves trying to meet the needs and wants of customers by finding out what they want and providing this at a price which makes a profit
* one of the functional activities of a business
* might have its own department within a company
* more than just advertising and selling a product
* it is about linking what to produce to what is consumed in order to make sure the needs and wants of customers are met

what is the purpose of the marketing department?

* help achieve organisation’s objectives
* raise awareness of products
* increase the number of customers (increasing market share)
* inform customers about products and services
* anticipate what customers want

why is marketing important?

* can attract new customers by letting them know about the products and services available
* can allow the business to enter new markets e.g. online allows them to reach customers further afield
* can help grow the business by entering new markets
* can increase the amount of profit a business makes

what is the role of the marketing department?

* can help the business increase the number of customers buying from the business (market growth)
* this will help them increase the proportion of customers it has from the whole market (market share)
* and if they have the most customers compared to other businesses in the same market (market leader)
* identify current goods and services that customers want
* anticipate the goods and services customers will want in the future
* create products to satisfy these current and future wants at a profit

customer and market segments

* customers are important stakeholders as they buy goods and services from a business
* businesses often focus their products towards their target market or a specific market segment

target markets

* involves breaking a market into segments and then concentrating marketing efforts on one or a few key segments
* can be key to attracting new business and making your small business a success

benefits of target marketing/market segmentation

* improved customer satisfaction as specific wants are being met
* improved customer loyalty as customers will want to come back and buy the products they want
* new sales opportunities as the business can focus on a new market segment
* increase in market share as customers are buying from the business and not its competitors
* tailoring products towards a specific group of consumers means sales will increase
* selling products in the most appropriate places to reach their chosen market will maximise sales
* setting prices that reflect how much the target market will pay for a product or service will maximise profits
* tailoring the marketing or advertisement of your product or service to your target market will prevent money being wasted on ineffective marketing

market segmentation

* involves using market research information to split the consumers in your market into groups of similar characteristics

market segment - gender

* segmenting by gender means to market a product towards a specific gender
* a perfume could be designed in two variations: one for men, one for women

market segment - age

* segmenting by age means to market a product towards people of a certain age group
* a holiday could be designed for people who are 18-30 years old

market segment - occupation

* segmenting by occupation means to market a product towards people who do a particular job
* a stethoscope is designed for doctors, nurse, and other healthcare professionals

market segment - religious/cultural belief

* segmenting by religious or cultural belief means to market a product towards people who follow a specific religion or cultural faith
* halal meat for people who are muslim

market segment - income/social class

* segmenting by income or social class means to market a product towards people who have a certain level of income or belong to a particular social group e.g. working class
* supermarket own brands are aimed at people with a low income whereas brand names are aimed at people with a higher income

market segment - geographic location

* segmenting by geographical location means to market a product towards people who live in a particular location
* the climate and temperature in a country will determine the type of clothing sold

market segment - lifestyle

* segmenting by lifestyle means to market a product towards people who lead a particular life, e.g. whether they are into sport and fitness
* lucozade sports drinks are aimed at people taking part in exercise to provide them with energy

differentiated marketing

* occurs when a company creates campaigns that appeal to two or more different target markets/market segments
* several campaigns for each target market
* specific and concentrated campaigns

undifferentiated marketing

* occurs when a company creates one campaign for its entire audience, with all segments seeing the same message
* one campaign for all target markets
* unspecific and unconcentrated campaigns

examples of differentiation

* if you live in an area that has a major sports team franchise there is most likely a bank in the area who offers a credit card with the sport team’s logo on it. the credit card is the same as all the other standard credit cards, but the sport team’s logo help differentiate it from other cards. it gives a ‘hook’ for the bank to use in advertising and marketing.

examples of niche marketing

* the Ritz-Carlton Rewards Credit Card comes with a yearly fee of $400, but if you stay in that hotel chain it offers excellent rewards. this product is certainly geared to a niche market. the company would never advertise this card alongside general consumer-level credit cards.

niche marketing

* the business of promoting and selling a product or service to a specialised segment of a market

examples of undifferentiated

* Coca-Cola uses the same bottle design, the same ads and the same distribution channels to sell its iconic soda and, with just a few exceptions, has used the approach for most of its history

market-led

* businesses that find out what the customer wants through intensive market research and then creates a product that will satisfy those wants
* very customer focussed
* more responsive to changes in the market
* reliant on market research to inform their product development
* often in competitive markets such as make-up and fashion

product-led

* develop a product first and then try to sell it to the customer through intensive advertising
* little or no market research is carried out before production begins, instead time and money is spent on researching and developing the product
* in high tech industries with little competition
* apple and tesla

customer behaviour

* businesses look at consumer behaviour
* want to understand the decision behind why customers purchase certain products and what influences them to make those purchasing decisions
* want to understand the decision-making process of the customer, so they can better tailor the company’s marketing strategy to meet their needs
* routine/habitual, informed, impulse

routine/habitual behaviour/purchasing

* require little involvement by the customer
* purchases that are made automatically
* cereal, washing powder, toiletries
* sales promotions can be used to influence this type of purchasing

informed behaviour/purchasing

* when the buyer takes time to investigate the product
* will consider different products that are on offer and the specifics of the product they are interested in
* usually when a customer is buying expensive, long-term goods
* cars, laptops

impulsive behaviour/purchasing

* purchases that happen without any prior planning or thought
* often happens because a product has caught a customer’s eye
* a bar of chocolate at the checkout
* effective point of sales displays can influence this type of purchasing

electronic point of sale (EPOS)

* customer behaviour sale system that can gather information about consumer behaviour that the organisation can attempt to analyse and understand
* when people make purchases in a shop, the system is collecting data about them and their buying habits
* promotions, offers, and mail shots can then be designed specifically for them
* tesco clubcard, boots advantage card, etc

market growth

* the overall potential for sales that the market has as a whole
* an increase in the demand for a particular product or service over time
* growth can be slow if consumers do not adopt a high demand
* growth can be rapid if consumers find the product or service useful for the price level

market share

* the percentage of sales in the market a product makes
* in the USA, the coca cola company held a market share of 42.5% in the soft drink segment as of 2015

market leader

* the company with the biggest market share in a specific market

market research

* essential in order to anticipate and identify customers needs and wants, especially for market-led businesses
* the action or activity of gathering information about customers’ needs and wants in a particular market
* two main types, desk and field

desk/secondary research

* involves researching and analysing information that has already been gathered
* second-hand information
* web pages, trade magazines, government publications, financial statements, and sales figures

advantages of desk research

* quick to gather as the information already exists
* doesn’t require trained and paid interviewers or research companies, therefore it is significantly cheaper to gather than field research
* the information already exists, is available instantly, and is more accessible than field research
* volume of information is much larger than field research

disadvantages of desk research

* information could be biased
* may not be fit for the exact purpose your business needs
* may not be concise
* can be out of date information
* other companies/competitors have access to the same information

desk research methods

* the internet
* trade associations
* market research companies
* government reports/statistics
* books/periodicals

desk research methods - internet advantages

* very easy and quick to access
* vast amounts of information available at little to no cost
* it may help the organisation identify instances where peer pressure or social expectations influence consumers

desk research methods - internet disadvantages

* websites can become very out of date very quickly
* some websites are more reliable than others
* any information gathered on the internet is also freely available to competitors

desk research methods - trade associations advantages

* likely to be up to date
* the information gathered is likely to be in great depth and very accurate

desk research methods - trade associations disadvantages

* information is very industry specific so only of real use to organisations operating within that industry
* information may be freely available to members but is likely to be expensive to access for non-members

desk research methods - market research companies advantages

* information is likely to be highly detailed and informative
* information is likely to be available on a wide range of topics

desk research methods - market research companies disadvantages

* it can be extremely expensive to purchase this information
* information will be either quite general or focussed on the research requirements of another company

desk research methods - government reports/statistics advantages

* generally regarded as reliable and complete sources of information
* free to access, minimising company costs

desk research methods - government reports/statistics disadvantages

* information contained tends to be more general
* government reports are only updated at certain points

desk research methods - books/periodicals advantages

* can be used without the risk of technology issues
* can be seen as more reliable than some internet resources

desk research methods - books/periodicals disadvantages

* not as up to date as the internet
* less convenient to use than the internet

field/primary research

* involves gathering brand new information suitable specifically for the business’ exact needs
* first hand information
* postal surveys, online surveys, personal interviews, hall tests, focus groups, consumer audits, test marketing, and electronic point of sale (EPOS)

advantages of field research

* the information is complete
* the information is up to date and available when required
* fit for the purpose it is needed for
* information is accurate
* information can be kept private by a business
* it is relevant and specific to the needs of the business
* gives the company an advantage over its competitors

disadvantages of field research

* requires trained and paid interviewers or expensive research companies therefore it is more expensive than desk research
* time consuming to gather
* relies on participation as people may be too busy or simply not want to take part

field research methods

* hall tests
* focus groups
* consumer audit
* test marketing
* electronic point of sale (EPOS)
* telephone survey
* postal survey
* online survey
* personal interview

field research methods - hall test advantages

* good quality feedback can be gathered based on the product trial can allow changes to be made
* inexpensive
* easy to do

field research methods - hall test disadvantages

* customers might feel they need to give a positive response as they have been given a free product

field research methods - focus groups advantages

* customers have agreed to participate so considered responses are more likely

field research methods - focus groups disadvantages

* strong personalities within the group may sway discussions and opinion

field research methods - consumer audit advantages

* as the information is gathered over a period of time, customer trends can be identified

field research methods - consumer audit disadvantages

* participants receive payment so this method can be expensive

field research methods - test marketing advantages

* changes can be made to products before they are launched into a wider market

field research methods - test marketing disadvantages

* customers in one area may have tastes that are not representative of a wider society

field research methods - electronic point of sale advantages

* gathers vital information about consumer behaviour which can allow an effective marketing mix to be formed and stock ordered accordingly

field research methods - electronic point of sale disadvantages

* can be very expensive and time consuming to set up
* when used with loyalty schemes, reward points lead to money off vouchers which lower potential profits for the business

field research methods - telephone survey advantages

* easy to target specific customers
* information obtained immediately can can be clarified

field research methods - telephone survey disadvantages

* customers can feel that these are intrusive and may not wish to respond
* only short surveys can be carried out

field research methods - postal survey advantages

* easy to target specific customers through their postcodes

field research methods - postal survey disadvantages

* customers often view these surveys as junk mail and will consequently ignore them

field research methods - online survey advantages

* customers can be surveyed across a large area
* online software can be used to collate and analyse results easily

field research methods - online survey disadvantages

* the responses may be too brief to be meaningful, as clarification cannot be gained
* access to the internet must be available

field research methods - personal interview advantages

* the interviewer can respond to the customer’s body language, tone of voice, and facial expressions to encourage fuller responses

field research methods - personal interview disadvantages

* can take lots of time

the 7ps

* **promotion** (how people are informed about the product)
* **product** (what is actually being offered for sale)
* **price** (how much the product/service is sold for)
* **place** (where the product/service is being provided/sold)
* **people** (those involved in providing the service to customers)
* **process** (systems and processes used to make the product)
* **physical evidence** (the location of where the product/service is being offered and what it looks like)

branding

* distinguishes a product from its competitors (USP)
* it is instantly recognisable for consumers and is often linked to quality and reliability
* premium prices can be used for branded goods

advantages of branding

* instant recognition for the customer
* brand loyalty means stable levels of demand
* customers trust in the product makes it difficult for competitors to tempt customers away
* can charge premium prices
* associated with quality
* good after sales service
* easier to launch new products

disadvantages of branding

* takes time to establish a brand
* bad publicity on one product can affect the whole brand
* fake products/imitations could appear
* may suffer if trends change
* promotion costs will be high

own brands

* products branded with the name of the store selling them
* most big supermarkets and chain stores have their own brands
* often cheaper alternatives to branded goods
* can be seen as inferior to branded items

advantages of own brands

* will attract more customers and more sales within the store
* producer will have guaranteed sales
* cheaper products

disadvantages of own brands

* may be perceived as lower quality than branded products

the 7ps - product

* the most important p in the marketing mix
* all products go through a lifecycle
* branding is made to make a product stand out from competitors
* the actual good or service being sold
* important as customers will not buy something they don’t want
* can be changed, adapted, or replaced

product life cycle

* describes the stages a product goes through from when it was first thought of until it is finally removed from the market
* has 6 stages
* development, introduction, growth, maturity, saturation, and decline

reasons why some products never reach the decline stage of the product life cycle

* constant brand promotion
* established strong brand loyalty
* no close rivals
* established a high status in the market
* successful extension strategies

product life cycle extension strategies

* improve the product
* alter the price
* change advertising
* change product name
* change the product use
* alter the place the product is being sold
* change packaging
* change promotional activities
* introduce line extensions to the product

product life cycle stages - development

* the product is being researched and developed
* prototypes will be made and tested
* there are no sales yet as the product is still being developed
* the product will actually be making a loss due to the costs of development and zero income from sales

product life cycle stages - introduction

* the product is launched
* usually coincides with introductory promotional activities to create hype for a product
* sales are slow to begin with as customers are unsure of the product
* customers may also have to be persuaded to move from competitors products
* the product begins to cut into the losses from development but high promotional costs still result in a loss being made overall

product life cycle stages - growth

* the product has been on the market for some time, customers are fully aware of the product
* sales start to rise rapidly, which can be the result of slightly falling prices, lack of competition, and consumer confidence in the product
* profits are starting to be made and losses from development and promotions d- uring the initial stages are recouped

product life cycle stages - maturity

* the product has been on the market for some time
* competition enters the market
* sales growth peaks and levels out
* many sales can still be made for a long time at this stage
* profits can still be healthy but start to fall
* the competition in the market can take sales away and thus profits fall

product life cycle stages - saturation

* the product suffers from too many competitors being on the market
* sales begin to fall as customers flock to competitors’ products
* profits fall rapidly, especially if prices are slashed to encourage sales

product life cycle stages - decline

* the product’s life is nearing the end
* the product will stop being produced
* sales fall rapidly and eventually the product should be withdrawn from the market
* profits continue to fall
* eventually products may be sold at a unit cost just to break even

product life cycle extension strategies - improve the product

* a new version or generation of the product may be introduced
* may have better features or changes in the packaging
* iPod > iPod Mini > iPod Nano > iPod Shuffle > iTouch > iPhone

product life cycle extension strategies - alter the price

* increasing or decreasing the price

product life cycle extension strategies - change advertising method

* from radio to TV etc

product life cycle extension strategies - change product name

* Opal Fruits > Starbursts
* Marathon > Snickers

product life cycle extension strategies - change product use

* Lucozade as a drink to re-energise ill people > Lucozade as a sports drink

product life cycle extension strategies - alter place product is sold

* selling in a store > selling through e-commerce

product life cycle extension strategies - change packaging

* to appeal to a different market segment

product life cycle extension strategies - change promotional activities

* money off vouchers
* free competitions
* sales

product life cycle extension strategies - introduce line extensions

* different flavours, sizes, and formats
* Coca Cola > Diet Coke > Cherry Coke > Coke Zero > Caffeine-Free Coke

product portfolios

* product line portfolios
* diversified product portfolios

product line portfolios

* when one products success is then used to introduce spin off products or closely related
* these tend to be in the same market e.g. clothing, Disney’s Frozen

diversified product portfolios

* allows organisations to “test the water” in other markets that are separate from their core original business
* Virgin, Tesco, etc

advantages of product line portfolios

* risk of failure is spread across products
* market share can be increased as different products will appeal to different market segment
* customers will already know the existing product lines and therefore new ones can be introduced quickly

disadvantages of product line portfolios

* if there is a problem with one product it can affect the reputation of all products in the line
* will continually have to train staff to produce new products in the product line
* may have to invest heavily in machinery and equipment to make a range of different product lines