business management hl unit 4- marketing

marketing

the process of delivering the right product at the right place to the right customer at the right time

the process of identifying anticipating and fulfilling customer’s needsa and wants in a profitable manner

product oriented businesses

• makes. the product first before marketing it

• believes that supply creates its own demand

• strong emphasis on research and development

market oriented business

• does market research before creating hte product

• wants to create a product which satisfies customers needs and wants - target customer base

• wants to first establish demand for a product before making it

market oritend adv

• well versed with the market- regualr feedback from customer makes them equipt to deal with new competitiors

• they can anticipate and respond to changes in the market quickly

• they know their customer base

• larger probability that the product will sell as demand was already established

market oriented dis

• market research is expsnive

• many customers have different tastes that cant all be fulfilled

• can divert time and resources from product development

• may be hard to predict the future of certian markets so research can be futile

product oriented adv

• good quality product reputation

• first mover advantage

• good for businesses who operate in markets where the speed of change is slow and the businesses’ reputation is already establisehd

product oriented dis

• if no market resaerch is done, the product can literally fail and the business can fail bc all themoney is wasted if there is no established audience for hte proudct

• the r&d costs are high if the prodcut isnt even wanted

importance of market share

higher market share- higher sales which may translate to higher revenues/ profits.

business is bigger- economies of scale where the per unit costs decrease for the business and they can make higher profit margin

more profit margin— better promotional strategies more promotional strategies which further increases the market share further - capture competitors customers

market leader adv

• the firm with the highest market share in the market

• they can make pricing decisions and product rollouts

• they also have economies of scale for purchasing, finance, tehnical etc etc — more promo strategies can roll out

• have access to the highest quality suppliers/ people in business

• increased sales means that they may be more profitable

• they can capture their competitors market share

market leader disadvantages

• market share does not translate into profits

• they can incur many costs if they get too big too soon- research and development, training, infrastrcuture, storage and they may not be able to manage the costs

• diseconomies of scale and worse communication less efficient

• antiTRUST LAWS- GOVERNMENT INTERVENES- govs dont like monopolies so they may place restrictions on the business

market planning

the process of developing strategies to achieve specific marketing related objectives - smart goals i guess

adv of market planning

• the workforce is well coordinated and there is better communication between all departments — more motivation for the employees — more efficient

• are able to identify problems and solve them but also capitalise on opportunities

• improves chance of success i guess

market segment

• a subgroup of customers in a market who share similar traits

market segmentation

the process of dividing the market into subgroups of individuals to meet their specific needs and wants

advantages of market segmentation

• identify opportunities and gaps for specific markets

• target their products bettter- better chance that products will sell

• high knowledge of customers - better chcance selling products

• less wastage

• differentiating products can help diversify the risks and increase market sahre

target market

a group of customers with similar wnats and needs that a business aims to sell and serve to

mass markets

• ignores differences in the traits of a market

• sells to the entire market

• aim is to sell as mucha s possible to max out sales

niceh market

• targets a smaller, medium sized market

• takes advantage of smaller market segements that competitiors didnt

• few competitors

• take advantage of opportunities in a smaller segment

perception map

• how customers perceive a business

advantages for a perception map

• bsuienss can see where they stand relative to their comeptitiors

• how their customers perceive their products

• exist gaps in sepcific markets (cost people or quality)

• identify opportunities

• can help devise competitive strategies

• can help identify threads but also opportunities

• can help try to make new products/product research to suit a specific segment

USP

a feature of a product which differentiates it from its competitiors - is unique to that specific business or product

adv of usp

• the usp can be the promo strategy- can be used to promote the product itself.

• can lead to higher revenues - people pay premium prices for higher quality things

• helps differentiate the brand frmo its competitors- provides something its competitors cant

• the product is easier to sell and market as it is unique

• attract more customers from competitors

• customer loyalty

how organisations can differentiate themselves from competitiors

• product differentiation

• service differentiation

• price differentiation

• distribution differentiation

• relationship differentiation

• image relationship differentiation

product differentiation

• can be differed by product - reliability, durability, performance

• bc its tangible easiest to differ

• BUT— competitors can like copy you especially if you dont patent

distribution channel

• retail outlets, immeidate access to expertise, technical service

• also influences how availale the product. is

price differentiation

• each customer is willing to pay a different price for everything

• differentiation the price according to the segment of the market you are targetting to maximise sales and revenues - poor place make the prices lower

relationship differentiation

• relationship with customers, customer service, day to day communications, email how close the business stays with you

• if the business is known to keep in touch with customers after the product is bought (producta fter care like i like to say )

image reptuation differentiation

• a brands usp can just be its reputation that can make any person choose it over competitors

• it makes new entrants have a hard time to establish themselves bc the ones with the brand image usually have higher market share

saljes forecasting

• the process of predicting future sales of the business

• sales forecast advantages

• alighment with org strategy —- resource allocation right time

• cash flow problems are excluded— better liquidity position— after looking at cyclical and seasonal fluctuations

• better market planning and segementation based on seasonal fluctuations — market to specific segements

• better hr resource allocation

• production knows how much of each item to produce and how much stock would be required for. thefuture

• hr- how much staff will be required etc etc

• limitations of sales forecasting

• it ignores many other factors that can impact sales which cannot be considered in a model

• economic, environmental, social political factors cannot be considered which can affect sales

• entry/ threat of competitors cannot be precisely accounted for

• is also based on present technology which can become obsolete unnecessary

stages of the PLC

• development

• introduction

• growht

• maturity

• saturation

• decline

development

• r and d costs are highest

• here where ideas are proposd, screened, test markets

• investment is HIGHEST

• cash flow is negative

• no profit earned yet

introduction/launch stage

• cash flow is still negative

• profit is not there

• people arent aware about the product yet

• use price skimming- for high end products to enter a market and gain sales

• price penetration- for a cheaper product to attract customers from competitors when there are many competitors - charge low prices initially

• informative advertising is used and also restricted retial for expensive prodcuts

growth stage

• product has been well received by the market — sales start increasing

• profits increase small amounts

• cash flow just got positive ho

• investment done in promotion

• advertising is persuasive— trying to spread the products as much as possible.—- BRAND LOYALTY SHOULD BE ESTABLISHED

• maybe eos and costs are reduced

• products that were penetration- have to raise their prices bc they want to max profits and not lose money

• products that were expensive - reducing prices as a promotational tactic to ensure competitors dont steal their customers.

maturity stage

• profit is maximum

• cash flow is positive

• lower promo costs/investment

• promotion is done to remind people of the product’s existince and also keep brand loyalty

• distribution all over

saturation

• profit is at its peak and stable

• cash flow is positive

• investment is lower- more focused on ext strategies

• promotional pricing is used to sell off excess product that is remaining

• aggressive advertising to maintain sales

declien stage

• cash flow is postiive but decreasing

• profit is decreasing

• investment very low on promo

• prices are hella reduced to get rid of the product LOL

• most dist channels clsoe down

extension strategy

strategy used to attempt to maintain/ increase sales of a product that is in the decline stage by extending the PLC

sometimes it should be inacted when a product is in the maturity stage

EXTENSION STRAT EXAMPLES

• finding new uses for the device

• selling existing product to new customers

• develop new promo strat- aggressive marketing. advertising

• target different market segements

• change the packaging

BCG MATRIX

ANALYSIS OF A FIRM’S PRODUCT PORTFOLIO BASED ON ITS PRODUCTS’ MARKET SHARE AND GROWTH

STARS

• HIGH MARKET SHARE, HIGH. MARKET GROWTH

• make a lot of profit and cash

• however, require very high investment to keep them profitable —- competition is realy high —- a lot of marketing needed to make sure she stays perf

• turn into cash ows as they mature

CASH COWS

low market growth HIGH SHARE

• favourite child of the family

• they generate tons of profit/ sales revenue

• dont require lot of investment to maintain—- not much competition

problem children/ question marks

• high market growht, low market share

• this is bc they still require hefty investment to keep up bc theyre in a market with high share

• can be hard bc it’ll be a waste

• can either be a star or a doggggg

• rproblem children require a fierce marketing strategy

down dogs

• flops

• lwo market share low market gorwth

• no scope to market this product, is losing money being on the market

• cost of keeping and maintaing the product> sales generated

• need to be replaced lollll loserrror discontinued altogether. They drain resources without providing a return.

strateiges

holding - high market share (stars and cash cow )

demand will be sustained through investments in promotion to keep customers aware of it

building

building question marks to stars

using some cash from the cash cow to invest into promotional activities for the quesiton mark to stimulate demand for it

harvesting

miliking the hell out of the cash cow and trying to generate as much money as possible

• for the products with a positive cash flow — cash can be used for tbe uilding strategies

divesting

• phase out the down dogs and poor performing things

• the resources tied up in aintaing these shits will be used for other things

limitations of the BCG MATRIX

• only focuses on the present rather than the future of the products

• can be time consuming and complicated to class products based on market share and growth — subjective

• market share not equal to profit- things that have high market share becasue of their promotional pricing strategy may not have high sales revenue

• furthermore, maintaing a high market sahre requires hella investment which can build up the costs and result in negative profits

brand

a name symbol sign or design that differentiates a firms products from its competitiors

branding

the process of differentiating a business’s products from its competitors while adding value to the product

brand awareness

the ability of customers to recognise the existence of a firm’s good or service.

this hes disntinguish the brand from tbe customers and form brand loyalty —- repeat customers and higher sales revenue.

higher brand awareness- higher sales- higher market share

brandy loyalty

when a brand has customers who are willing and able to make repeat purchases from them

customers will choose the firm over all their competitors.

• can use premium pricing

brand development

the process of enhancing a business’ brand by adding power to its anme, design, logo or symbol.

• requires a lot of investment in promotional strategies and marketing campaigns

• ultimate goal is higher market share and better sales

the importance of branding

• a brand is how a customer perceives a business

• strong brand- strong immediately customer perception

• strong perception- ability to charge higher prices and use premium pricing

• prem pricing—- higher revelues and sales —— greater reputation of having quality products ——- more profit

• brand can provide legal protection from products

• ^ can allow a brand to estbalish ownership for its products

• differentiates a business from its competitiors

a brand dictates customers imemdiate associationa nd perception of the business

if the perception is good, then the business can charge premium pricing for loyal customers who will pay it because they pay for the brand name, which adds value to the business. they can charge higher prices- higher revenues and profit margins- higher market share. better reputation as well and thought of as a quality brand- perception product perception map

also can differentiate a business from its competitiors and take compei=titors customers

serves as legal protection for the bradn - take ownership of their products - cnt be replicated

good impression- larger ability to have repeat customers

price

• the money that customres pay/ willing abd able to pay/ give up for a product

cost plus pricing

• adds a markup to the average cost of producing a product

• takes average ost of the product, and adds a percentage

• eg. avg cost product = $2. markup = 50%. new cost = 2+1= $3

advantages of cos plus pricing

• simple and easy to calculate

• ensures that costs of production are covered and business still makes a profit

dis of cost plus pricing

• doenst consider market needs (willingness and ability to pay for a product)—- if its too high for a poor community

• customer value not considered

• doesnt consider competitor prices —- if its too low competitors making higher profits. too high— competitors will capture customers

penetration pricing

when a business sets a low initial price for their product when initially entering a market

used by:

• businesses entering a new market with a new product

• business entering the same market with a new product

• entering a new market with the same product

• good for mass marketing

wants to get as many sales as possible —- take customers from competitors —— establish market share early on

adv penetration pricing

• customers may mvoe from competitors to the firm

• — higher market share early on

• low prices—- many sales—— lots of sales revenue and volume ———-

• expand fast—- low per unit costs —— economices of scale

disadv penetration pricing

• may not actualy generate profit —— if the product’s price doesnt cover the costs to make it —— losing money

• for price sensitive markets —- customers may get used to the low price and then get mad when you increase

• creates the perception that the product (new) is low quality, which may affect hte overall perception of the new business to be low qual as well

• the customers can go to rivals if the prices rise later on

loss leader

• when a business prices a specific product VERY LOW, like below the cost to actually produce it

• in order to entice customers to buy a lot of the product and also check out their other PROFITABLE ITEMS while theyre at it

• to generate customer demand and attract AS MANY PEOPLE AS POSSIBLE

loss leader advantages

• CAN generate a lot of sales- a lot of demand

• many people may actually become loyal/repeat customers of the actually profitable items

• improves stock turnover of the loss leader items

• can take customers from rival firms— higher market share

• higher overall profits if large sales volume

los sleader disadvantage

• unfair business practice undercutting by underpricing

• can lead to sever losses if people do not end up buyin hte more expensive stuff- costs of production arent even covered

predatory pricing

• when a firm deliberately sets a really low price for a product with the aim of driving customers out of the market

• their financially challenge competitors wont be able to meet the rate and hence will be kicked out of the market

predatory pricing pros

• fewer competitors- higher market share

• higher sales in the short term— higher sales volume —- can result in economie of scale in the short tierm

• take customers of the competitors who left

predatory pricing cons

• antiturhs, anticompetitive, banned in many countries so manynot even be an option for businesses

• can get caught up in government regulations

• hard in the long term— they will have to bring their prices back up eventually and that can drive customers away

premium pricing

• when a business sets a really high price for a product

• higher than its competitors

• to be perceived as superior in quality and in image to their competitiors

premium pricing advantages

• higher profit margins if it works

• customer perceive the company to be of higher quality— better brand value and image

• customesr are willing to pay a premium for the brand name —- no need to waste time on promotional strategies —- cash can be spent on improving product and r&d

• customers do not try to negotiate the price of the product

• attracts a specific exclusive marget segment

premium pricing disadvantages

• they miss out on price conscious customers who cannot afford their stuff

• its a niche market so their audience is less

• will have to spend a lot of money and time creating “brand value” high value image for the brand for customres to believe it is exclusive

• can only work for certian products, not others which face fierce competition.

dyanmic pricing

• charges different prices for different products depending on which customers are buying and when they are buying it

dynamic pricing pros

• can ensure higher profit margins and sales —- if customer is poor—- price lowe rhigher sales

• more flexibility- when demand is higher price is higher

• capitalise on opportunities and appeal to multiple market segments

• beat its competition by adjustment to customres needs—- if competitor charges high price, reduce it.

• better stock management—- discounts for stocks that need to be sold off and inc price of goods hihg in demand

competitive pricing

• when a firm adjusts/determines their prices based on those of thier ceomptitiors

• requires a lot of research and constant monitoring

competitive pricing advantages

• can make sure that theyre ahead of their comp

• dont lose cus to their comp

• business is stable and growht

• competitors have been in hte market for long- is good bc then they know what theyre diong

• can be usd in tandem with another strategy u feell me

• ceomptitive pricing disadvantages

• requires a lot of research

• competitors may suddently change their prices based on their internal strategies/ to respond to internal changes whihc dont apply to ur business

• competitors prices may not cover ur personal overhead costs and production costs

• if pricing strategy is same- you cant differentiate yourself from them then.

dynamic prices disadvantages

• customers wil be mad if they find out that someone else is getting charged less

• they will go to competitors who are charging less

• can lead to price wars— a firm realises you priced something low, theyll go high vice versa. you go low they go lower they think they the shhh or something liek that

• customers will feel bad— ruin brand perception

• they can go online and literally look up comparisons lolllll

contribution pricing

uses the contribution per unit and total contribution to calcualte what the things should be priced at

contribution pricing advantages

how mcuh profit it will make for each unit sold after the firm has broken even

ensures that main costs are covered

• determine price for a special order

cont pricing dis

• doesnt take into consideration competitors which can affect sales and other stuff for a busines

• the price they set might not be competitive

promotion

to create awareness and communciation information about a firms product to consumers. its objective is to retain and obtain new customers

prmotion objectives

create awareness about an improvement or a new product

convine ppl to buy their product over a customers

remind customers about their product when its reaching it’s like saturation stage

enhance the brand image of the product and the firm

above the line promotion

involved paying independent mass media to promote a firms products to reach a wide target audience .

advertisement, tv, newspaper, radio

advertising

• globvally pass on information about a prodcut to people

• informative advert- for new products

• persuasive- to convince to buy over competition

• reassurance- remind customers

belwo the line promotion

where the business has complete control over its promotional activiites- it is not dependent on external media

direct promotion belwo the line

• eliminates the use of intermediates

• info delivered directly

• through mail or through email

LIM-

MOST PEOPLE THINK ITS JUNK AND ARE BOREDDD

personal selling

• busienss can hire someone to personally sell their goods face to face or on telephone— for more expensive things—- customer face to face

LIM

IT’S EXPENSIVE to get a whole retail team/ train a team and is time confusing

most people are annoyed by this i know i am

public relations

promotional activities which enhance the imag of th ebusiness and products through pulicity or spnosorships

sales promotions - bTL

• short term incentives for the business to increase their sales

• B1G1F-

• MONTE OFF COUPOUNS

• POINT OF SALES DISPLAYS

• FREE OFFERS

• COMPETITIONS

eliminates excess stock as well. attracts customers, encourage impulse buying— increased sales

through the line

integration onf above the line and below the line marketing

360 degree

digital marketing

choosing a promotional method

• what type of product

• what stage in the cycle is it in

• cost

• the legality

• target market

SMM

is when social networking apps like instagram facebok tiktok are used to promote a product for a business

its main aim is to build relationships fo rhte business, drive repeat orders and customers, and attract new customers

advatnages of smm

wide reach- most people use and access social media everyday. there is a chance it can capture multiple audiences an inform, persuade and remind them of the product.

engagement- smm has a lot of engagement, the business can leanr about challenges, feedback from customers and interact with them building a community and a loyal customer base- which can drive erepeat customers bc the customer feels like the business is lsitening to them and understanding their needs

also they can find out what issues people have with prdocuts

market research- find out trends, data, buying habits, opinions onine about their target customer base/ their current market and general opinion for free. whereas other research costs a lot more money to do. this can help them reshape their production and market planning and help them make better business decisions

it is also much cheapter than doing abvoe the line advertising liek newspaper adverts and billboards as social media generally is free and the online sponsorship costs are much lower than above the line marketing and not noly have interaction but also engagement so you know how people actively feel about what you are putting out

speed- you can go viral on social media overnight so there is no specific time limit or restriction and reach a wide audience. you can also target your specific market using hashtags and targetted advertisng but also appeal to a mass market

brand recognition- giong viral can give the bran exposure

lim of ssm

• not great for areas and regions where there are no computers or not many people use the interner. not great for an audience who doesnt really use social media that much either

• all brands now are on social media so it is getting hypercompetitive so it shouldnt only be the main strategy as the social medi abrand space becomes saturated

• people dont always interact

choosing a promo method

• cost

• legality

• type of prodcution

• what stage in the production cycle it is in

• target marget

• size of target margek