Marketing

What is marketing?

it is about understanding customers and finding ways to provide products or services which customers demand

What is the purpose of marketing?

-identifying and understanding the needs of customers, done through market research

-informing customers about products and services the business provides e.g advertising online

-to increase sales for the business, can use a number of different methods including promotional offers and increased sales and advertising

Why carry out market research?

-identify if the demand exists

-to know what customers want/customer preferences

-can be the basis for a product launch

-to investigate competitor range, prices, location and buying habits

what is primary market research?

-Gathering fresh information

includes:

-product trials: a temporary offering to test the success of a new product to get feedback

-questionnaires: questioning current and potential customers

-interviews: speaking to customers 1:1

-focus groups: speaking to a group of customers, asking for opinions

-Others include observations, surveys, foot count

it is costly and time consuming however it suits what you want to find out

what is secondary market research?

-Gathering information which is already available

includes:

-census

-websites

-internal data: company records and accounts

-newspapers and magazines

-others: books, internet, business reports - keynote/mintel

what is quantitative research?

Gives facts and figures and is numerical - comes from closed questions

What is qualitative research?

opinion based, comes from open questions

What are the advantages of questionnaires?

-cheap

-can target particular customers

-can sample a large geographic area

-easy to compare

What are the disadvantages of questionnaires?

-Difficult to predict how many completed questionnaires will be available

-The people filling in the forms may not understand the questions being asked

What are the advantages of interviews?

-interviewer can explain questions if there is a misunderstanding

-customers can be targeted e.g picking out certain age groups

good rate of response

What are the disadvantages of interviews?

-can be expensive - interviewer has to be paid

-customers may feel uncomfortable being interviewed if they are randomly selected

What are the advantages of trials?

-As trials are conducted on a small scale, money can be saved in case the customers don’t like the product

-reduces the risk of mistakes

What are the disadvantages of trials?

-Costly to set up

-Area chosen must reflect target market of business

-Competitors could get an idea of what they are doing

What are the advantages of focus groups?

-Because focus groups are chosen to represent the target market for the business so the data from them is usually accurate

-Faster than individually surveying people

What are the disadvantages of focus groups?

-expensive

-selection of people time consuming

-quieter people don’t get their opinion heard

What are the advantages of Census?

-can be viewed easily

-includes a wide range of data

-cheaper, easier and quicker to get as it’s done by someone else

What are the disadvantages of census?

can be outdated

what are the advantages of websites?

-Huge amounts of information available on the Internet

-cheap, easy and quick to get

What are the disadvantages of websites?

may not be in a form the business can analyse easily

what are the advantages of internal danger?

-specific to the business

-easily accessed

-quicker, cheaper, easier to collect

what are the disadvantages of internal data?

may not be what the business needs

what are the advantages of newspapers/magazines?

-can include information on customer trends and interests

-quicker, easier, cheaper to collect

what are the disadvantages of newspapers/magazines?

-can be inaccurate

-can be outdated

What are the benefits of market segmentation?

-better matching of customer needs

-enhanced profits for business

-better opportunities for growth

-retain more customers

-target marketing communications

-gain share of the market segment

-enables businesses to understand and meet the needs of their customers more effectively

define market segmentation

dividing up the market or potential customers into groups

What are the ways the market can be segmented?

-age

-income

-gender

-location

-lifestyle

What is the purpose of segmenting the market?

to allow the business to focus on a certain customer and adapt the marketing to suit the target market

what are the drawbacks for market segmentation?

increased costs linked to research and product development

-potential for the brand to lose its identity and less able to exploit economies of scale

-additional marketing for a wider audience

What is cost plus pricing?

adding % profit to the actual cost

what are the advantages of cost plus pricing?

-ensures a profit is made

-easy to calculate

what are the disadvantages of cost plus pricing?

-may be too expensive and customers won’t buy the product

What is competitive pricing?

charging a price similar to competitors

What are the advantages of competitive pricing?

price will be competitive

what are the disadvantages of competitive pricing?

price may not be profitable

What is penetration pricing?

-start with a low price to attract customers

-mostly used for new products

What are the advantages of penetration pricing?

encourages people to try the product

what are the disadvantages of penetration pricing?

cannot last long

usually unprofitable

what is skimming pricing?

start with a high price for a unique product usually with no competition

what are the advantages of skimming pricing?

allows extra profits to be made

what are the disadvantages of skimming pricing?

only lasts while there is no competition

What is promotional pricing?

special price for a limited time

what are the advantages of promotional pricing?

useful to get rid of old stock

what are the disadvantages of promotional pricing?

only useful for a limited time

what is premium pricing?

high prices for perceived high quality products

what are the advantages of premium pricing?

only certain customers can afford it so maintains image

high profits

what are the disadvantages of premium pricing?

lots of potential sales lost

define marketing mix

the combination of factors which help the business to take into account customer needs when selling a product

What is important for a product?

different features have different levels of importance depending on the product or service

e.g

-design

-technology

-usefulness

-convenience

-value

-quality

-warranties

-packaging

-branding

what are the stages of the product life cycle?

-research and development

-introduction

-growth

-maturity

-decline

what does the product life cycle look like?

why is it important to have a ‘spread’ of products throughout the life cycle?

all products decline so they need to introduce new products to replace the cash cows when they start to decline

Why are maturity products so important?

they are the products that bring in the most money so they can cover the cost of the products in research and development

what options are there for a business with a very saturated market?

they can update or improve the product (the extension strategy) to try and extend the maturity phase

why might a business try to keep a declining product alive?

-if it was a cash cow and there isn’t another product to replace it

-if it is targeted at a specific group of people that are repeat customers

why might a business discontinue a product?

if it’s costing more to produce than the profit it’s bringing to the business, in this situation they could sell it on promotional pricing to get rid of the rest of the stock

why might a business invest in r&d even though it is expensive?

because a spred of products is needed, and new products are needed to replace declining products

what is the role of branding?

-about giving a product or service an identity

-a strong brand can be recognised by just a logo, slogan or colour

-a strong brand is linked with repeat custom

what are the benefits of branding?

-can charge a higher price if the brand is associated with quality

-likely to get repeat custom as customers are loyal to brands

-brands can be recognised anywhere around the world so it widens the customer base

-branding attracts investment from external partners

what are channels of distribution?

how the product gets to the consumer

what are the different channels of distribution?

-Producer→wholesaler (can also be distribution centres)→Retailers→consumer

retailers are usually small e.g corner shops

-product → retailer → consumer

-producer → consumer (also used for digital distribution: e.g music and films, good because quick to download and available to buy 24/7 + save business rent and physical costs, but relies on IT + some customers might be put off + goods are easily copied)

what are regional distribution centres used for?

Supermarkets have their own regional distribution centres (RDC) rather than wholesalers. They are very large, as they have to hold stock for multiple supermarkets in the same chain. They are built near roads to make transporting the goods easier for the lorries carrying the goods from the RDC to the supermarket

what helps the business decide on the channel?

-nature of the producer: technical/complex/customised/perishable/fragile

-the business: size and scope, does it already have an established distribution/network?

-the market: is it geographically spread? does it supply overseas?

-legal issues: are there limitations on the sale

What is the role of promotion?

-about informing the customer and persuading them to buy the product or service

what are the two types of promotion?

-point of sale promotion: something that will persuade a consumer at the point of sale (at the till) to make an extra or unexpected purchase e.g price reductions, loss leaders, competitions, free samples

-advertising: methods selected to advertise a product to potential customers, careful consideration goes into content, place and timing e.g TV, radio, newspaper

what is the role of loss leaders?

-loss making products

-targeted to impulse shoppers

-used in the hope that the customer will be attracted to the shop by the price reductions, but they will also buy normal price products

what is the role of competitions?

-customers are entered into a monthly prize draw offering a variety of prizes

-used in the hope that they will boost sales

what is the role of free samples?

-often used in cosmetics and other businesses to let the customer try the product

-used in the hope that, by providing a small sample they would potentially buy the full size

what is the role of price reductions?

-reducing the price of old stock that a shop no longer wants to keep

-used in the hope that this would boost sales at a time when the products don’t normally sell

what are the advantages of social media?

easy to target customers, ideal way of reaching a wide audience with any advertising and messages

what are the disadvantages of social media?

not all people, especially elderly people use it

what are the advantages of websites?

can impress the potential buyer, presents the business’ image

what are the disadvantages of websites?

setting up and maintaining a complex website can be expensive

what are the advantages of printed media?

-includes newspapers, magazines and leaflets

-can be low cost

-can reach a specific market

what are the disadvantages of printed media?

some magazines and newspapers (Daily Mail and Daily Mirror) can be expensive

no way of knowing if they have been read

what are the advantages of TV?

-reaches a very wide audience

-customers can be targeted based on the programme

what are the disadvantages of TV?

high costs

what are the advantages of radio?

cheaper than TV

portable - can get through anywhere

what are the disadvantages of radio?

the product can’t be seen