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What is Marketing about?
Getting your message across to customers.
Businesses need to identify a business opportunity
Makes sure consumers get the product they want
How does a business increase sales?
Excelling in something over competitors eg.
-Greater convenience
-Faster speed
-Greater reliability
-Better quality or features
-Style and fashion (keeping up with trends)
Only works if customers willing to pay for benefits
What are the 5Ps of marketing?
Price- eg. a premium price makes people feel special, value for money
Product- Need a unique selling point (USP), fulfill needs or wants
Place- Where it’s sold eg. worldwide through e-commerce, convenience
Promotion- Advertising so aware it exists
Packaging- shows off the brand and product, reflect price point
What is the marketing mix?
All activities influencing whether or not a customer buys a product
Elements can be analysed using the 5Ps
Why do businesses need to understand their customers?
Getting any element of the mix wrong can be costly:
-Products need to be withdrawn
-Elements of the product may need to be ammended
-Prices may need to be reduced
-Brand name damaged
How is a business competitive?
Ability to offer better value for money than competitors
Done by understanding customers better
Helps develop marketing activities more effectively which leads to more customers
Define segmentation
Segmentation- When a market is divided into groups of needs and wants eg. the Car Market
Benefits of Segmentation
Develop product to fit customer needs closely- raises sales
Target customers precisely (Target market)- know where and when to promote
Set the price appropriately- Increases sales
Marketing more cost-efficient, focused and successful
What are the ways of segmenting the market
Gender- eg. aftershave for men, perfume for men
Age- eg. theme parks with different rides
Location- eg. Restaurants changing name based on country
Income- eg. businesses selling products at diff. price points (phones)
Lifestyle or life cycle- eg. properties
What is targetting and the factors affecting it?
When a business identifies segments, it needs to decide which to focus on
Factors:
-Make a high enough return- some segments too small
-Compete effectively with rivals
-Covers opportunity cost
What is market research and its purposes
Market Research- Process of gathering, analysing and processing relevant data to making decisions. Can be qualitatative or quantitative data
Purpose:
Understand the market and its conditions
Identify opportunities in markets- eg. demand
Weigh up different options- eg. ways to promote
Assess effectiveness of actions taken- eg. success
Advantages and disadvantages of Secondary market research (existing info.)
+ Gathered quickly and cheaply
+Provides info. on large sections of population. General trends
- May not be exactly what the business wants
- May be out of date, some markets change rapidly
What are the different ways of gathering primary data?
Observing- Watching and taking note of people’s behaviours
Experimenting- Trying out new form of advertising and measuring response, test product in a test market, samples
Surveying- Interviewing people who buy your product to understand motives and reviews
Advantages and disadvantages of Primary market research
Telephone survey: +Can call whenever convenient -Can’t see how people respond, -People may not answer
Door-to-door: +Can see how people react -Time-consuming
Focus groups: +In-depth responses, -May not reflect all target customers
Internet research: +Cheap, quick -May not find views of customers that are offline
Define globalisation
Globalisation- Turning a global brand into local brand such as changing the name eg. Walkers → Lays
process by which businesses develop international influence and start operating on an international scale
What are the steps involved in making a new product
1. Generate an idea
2. Check the idea
3. Develop product
4. Trial it (eg. samples)
5. Launch it
What are the different parts of the Boston Matrix?
1. Stars- High market share, high growth. Increases revenue but increases competition, outflows may exceed inflows at first
2. Cash cows- High market share, low growth. In established markets with less competition and cheap promotion costs, Generates revenue to support other
3. Question mark- Low market share, high growth. Potential to become stars and cash cows (with high investment) Potential for sales increase as market is growing
4. Dogs- Low market share, low growth. Most likely to be withdrawn, Not withdrawn as may hold small market share in very large market (still valuable)
Define Product Life cycle
Product life cycle- How sales of a product may change overtime
What is Price skimming
Price skimming- setting a high price for a product when it first enters the market
Short term- when it first enters market
Long term- When a firm wants to create an illusion of quality
Why is price skimming used?
If there’s high demand, people will still buy, maximising profit
Buyers may not be sensitive to pricing (the wealthy)
Helps business obtain money to repay development costs
What is penetrative pricing and loss leader?
Penetrative pricing- launching a new product at a low price to achieve first sales
Loss leaders- Product sold at a loss so customers will buy other items where they make a profit
Why is penetrative pricing used?
Gains market share
Works with price sensitive customers
Price increased once product is established
What are the different types of pricing?
Competitive pricing- matching prices that competitors charge
Cost Plus pricing- Products priced by covering production cost and adding a % on top
Predatory pricing- A very low price to attract customers from competitors and drive them out of business
Factors influencing price of a product
Costs- must cover production cost
Competitors/Nature of market- Firms selling similar products have similar prices
Objectives- eg. to gain market share, lower price needed
Demand- low demand, lower price (trends)
Stage of product’s life cycle- eg. iphones
Rest of the marketing mix- exclusive products high cost
Define The distribution channel
Distribution channel- how ownership of a product passes from producer to final customer.
eg. Producer → wholesaler → retailer → consumer
As you reduce intermediaries, cost of product becomes cheaper
Advantages and disadvantages of e-commerce and M-commerce
+ Customers can order at anytime
+ Customers can order from home
+ Customers can order from anywhere in the world
- Must be able to distribute to more destinations, logistical and cost issues
- Need to be able to handle returned goods (customers can’t try on items)
- Need to ensure security of site and protect customer’s data, cost issues can raise price and impact competitiveness
Examples of different types of promotion
Local newspaper advertisements
Word-of-mouth recommendation
Leaflets or mail in local area
Personal selling of the product
Website
Banners, pop-ups and ads on other websites eg. social media
Factors influencing the promotional mix
Target audience- promote based on what target market most exposed to
Finance- some forms of promotion more expensive
Nature of market- Factors such as size, amount spent in market and where customers are based
Nature of the product- brand image and type of product
Competitor’s actions- Business adopt similar promotional methods
Why do businesses promote?
To inform about product and it’s advantages
Create or change image of product
To remind
To persuade customers
Create or increase sales
