Introduction to marketing and people

Marketing

The term used to describe the range of activities that businesses use to try and create demand from consumers

What does market research do?

Helps understand consumer behaviour

Human resource departments take charge of what?

• recruitment of new staff

• selecting applicants

• training new and existing staff

Market

A market exists where buyers and sellers meet in order to exchange goods and services.

Market segment

A subsection of a larger market in which consumers share similar needs and wants

Niche market

A small segment of a larger markets

Benefits of mass marketing

• Huge potential number of customers

• Allows for the use of mass advertising

• Higher production levels allow economies of scale

Benefits of niche marketing

• Allows for higher prices as customer needs are more precisely hit

• Higher profit margins

• Easier to enter for firms with limited financial resources

Mass marketing

Aiming at the whole market

• Generic products similar in form and function

• Huge markets in which markets can operate successfuly even if they have a low market share

Characteristics of niche marketing

• Specialist product and services are required

• Changes in consumer preferences can be devastating to the market

• Differentation is more likely to be achieved

Dynamic markets

Markets changing all the time

How markets change

PESTLE

Political, economic, Social, technological, environmental

Political

• Governments living wage increasing, is good for employees but bad for employers in low wage industries

Economic

Recessions can lead to consumers switching to Aldi and Lidl

Social

Increased desire for convenience has driven online retailing

Technological

Apps didnt exist 15 years ago now they can turn markets onto their head

Legal

Growth in the market for e-cigarettes is being affected by new laws on who can buy them

Environmental

The car industry is facing major changes in order to try and minimise the damage done from exhaust fumes

Adapting to change

Changing products could include removing sugar, adding features, doing this earlier than competitors give you a massive advantage

How competition affects the market

• It causes shifts and pushes each company to develop better products, think of apple and samsung

Increased competition creates various pressures for a business

• The need to drive down costs

• The need to maintain competitive prices

• The need to develop innovative products and services

Difference between risk and uncertainty

• A risk is quantifiable

• The factors causing the risk is what is uncertainty

Product orientation

Product orientation is an approach to making decisions that considers internal factors before worrying about changes in the market

Market orientation

More likely to lead to marketing success than product orientation as it places the consumers views and decision making at the heart of decision making in the business

Primary research

New research conducted for a particular purpose

Secondary research

Uses pre-existing data thats been gathered for another purpose

Advantages of primary research

• Addresses the specific issues you’re interested in

• Data is up to date

• Helps understand consumer physcology

Advantages of secondary research

• Often free

• Provides a good market overview

• Usually based on large scale, reliable research

Disadvantages of secondary research

• Info may be out of date

• Not tailored to suit your needs

• Can be expensive to buy published research reports on markets

Disadvantages of primary research

• Expensive, costing thousands of pounds to do properly

• Risk of bias from questionnare and the answer

• May need to compare with other information to understand the meaning of findings

Secondary research methods

• The internet

• Trade press

• Government statistics

• Past internal sales figures

Primary research methods

• Surveys

• Retailer research

• Observation

• Group or individual discussions

Limitations to market research

• Sample size may be too small

• Sample bias

Use of ict to support market research

• Company websites can gather data on visitors such as their interests

• Social media can offer consumer attitudes to a product/service and can even build a relationship between the business and consumers

• Database technology, allows vast quantities of data to be trawled to show patterns in consumer behaviour

Market segmentation

Discovering useful ways to split up a market into different groups of consumers who share similar characteristics and neededs

Benefits of segmenting a market

• Products and services can be designed to suit specific customers

• Meeting customer needs more precisely allows higher prices to be charged

• Promotional activity is easier to target

Market positioning

Deciding exactly what image you are creating for your product relative to its rivals

Judgements required in successful market mapping

• Choosing the right variables to place on each axis

• Placing rival brands in the right place on the map, truly reflecting consumer perceptions of those brands

What can a market map show

Gaps in the market

• A business has to check that the gap can be filled profitably. In the car market you can’t make an affordable luxury car.

How to find a competitive advantage

• Be the lowest cost producer (e.g Ryanair)

• Find a sustainable point of differentiation

Producing a product more efficiently and thus more cheaply allows for lower prices for any other firm

Actual product differentiation

• Design

• Different function

• Taste

• Performance

Perceived product differentiation

• Branding

• Advertising

• Sponsorship

• Celebrity endorsement