Marketing Revision Notes

Marketing National 4/5 Revision Summary

Checklist Overview

• Market Segments: Understanding and targeting different customer groups.
• Market Research: Methods, types, costs, and benefits.
• Product Life Cycle: Stages from introduction to decline.
• Price: Factors to consider and strategies.
• Advertising & Special Offers: Promotional techniques.
• Promotion: Various strategies.
• Place: Location and distribution channels.
• Ethical Marketing: Marketing responsibly.
• Technology: Role of technology in marketing.
• Branding: Creating and maintaining brand identity.
• Target Markets: Identifying specific customer groups.

Marketing Fundamentals

• Definition: Meeting customer needs and wants by identifying them and providing products/services at a profitable price.
• Four Big Questions:
  • What to produce?
  • What price to charge?
  • Where to sell?
  • How to persuade people to buy?

What is a Market?

• A place where buyers (customers) and sellers (suppliers) trade goods and services.
• Types:
  • Physical places (shops, malls).
  • Virtual or “distance selling” (online shopping, apps, phone selling).

Market Share

• Definition: The proportion of sales that each business has in a market.
• Market Leader: The business or brand with the highest market share.

Market Segmentation

• Understanding varying customer needs and wants.
• Identifying different customer groups and targeting them with specific products.
• Target Market: Aiming products towards a specific market segment.

Methods of Market Segmentation

• Gender
• Age
• Geographical location
• Occupation
• Religious belief
• Lifestyle
• Income/social class
• Household structure

Differentiated vs. Undifferentiated Marketing

• Differentiated Marketing: Targeting a specific market.
• Undifferentiated Marketing: Targeting many different markets.

Niche Marketing (Differentiated)

• Identifying a gap in a particular market.
• Aiming a product at a small, specific market segment.
• Carefully targeted marketing efforts.
• Examples: The Whisky Shop, Aston Martin, Golf Tourism, and Haggis in Scotland.

Mass Marketing (Undifferentiated)

• Selling one product or service to the entire market.
• Products with broad appeal.
• Examples: Milk, tomato ketchup, Sky TV.

Market Research

• Primary Data (Field Research): Gathered by the business for a specific purpose.

  • Surveys
  • Observations
  • Loyalty cards

• Secondary Data (Desk Research): Information that already exists and is re-used.

  • Internet
  • Trade magazines
  • Government statistics
  • Other reports

Desk Research: Advantages & Disadvantages

• Advantages:
  • Cheaper
  • Quick and easy
  • Enables faster decision-making
• Disadvantages:
  • Reliability of data is questionable
  • Might not provide specific information needed
  • Available to competitors
  • Often historic/out of date

Secondary Data - Risks

• Different conclusions to the same question.
• Data might not precisely answer the question.
• Data might not be current/up to date.
• Source reliability.
• Uncertainty about original data gathering methods.

Primary/Field Research: Advantages & Disadvantages

• Advantages:
  • Collected for the exact purpose required
  • Not available to competitors
  • Up to date
• Disadvantages:
  • Time-consuming
  • Expensive
  • Difficult to get responses

Types of Field/Primary Research

• Surveys:
  • Postal
  • Online
  • Telephone
  • Street
• Observation: Watching consumer behavior and reactions.
• Loyalty Cards: Using data from Electronic Points of Sale (EPOS) to track purchase patterns.
• Focus Groups: In-depth discussions with customers to understand their views or preferences.

The Research Process

1. Identify & define the information needed.
2. Decide on the best research method.
3. Design your survey.
4. Gather your data.
5. Analyse the results.

The Marketing Mix

• Involves meeting customer needs and wants by identifying (or anticipating) what they want and then providing products or services at a price that makes a profit.
• Four Big Questions:
  • What to produce?
  • What price to charge?
  • Where to sell it?
  • How to persuade people to buy it?

Marketing Mix / The 4 P’s

• Product
• Price
• Place
• Promotion

Product

• Product design
• Quality
• Ingredients
• Branding
• Packaging

Price

• Retail price
• Competitors price
• Payment plans
• Discounts

Promotion

• Encouraging a purchase
• Advertising
• Public relations
• Selling methods

Place

• Where to sell your product/service
• Retail location
• Download
• Methods of delivery

Market Segment

• Gender
• Age
• Social classification
• Income

Product Development

• Developing New Products can take months or years.

• Stages:

  1. Generate idea
  2. Analyse idea
  3. Produce prototype
  4. Test product
  5. Alter product
  6. Produce product

Product Life Cycle

• All products and services have a natural life cycle.
• Some are measured in months, others in centuries.

Introduction

• Product is first launched on the market.
• High advertising and promotion costs.
• Business invests time and money in creating consumer awareness.
• Few competitors if the product is unique, commanding a high price.
• Low sales and non-existent profits.

Growth

• Sales increase steadily as consumer knowledge grows.
• Competitors launch their versions.
• Profits increase in line with sales.

Maturity

• Product becomes commonplace.
• Sales growth slows as competition increases.
• Market becomes saturated, competition fierce, prices tumble.
• Profits reach highest point then fall.
• Example: DVD players.

Decline

• Consumer tastes change, technology advances, new products launch.
• Consumers stop purchasing the product.
• Sales fall, prices become very low.
• Product withdrawn from the market as it is no longer profitable.
• Examples: Video tapes and video recorders.

What is a Brand?

• A name, logo, symbol, design, or combination of these.
• Given to a product to identify the goods.
• Sets it apart from rival products.
• Gives the product a positive image.
• Once established, the business must work hard to maintain its high public profile.

Company Brand or Product Brand?

• Brand names are given to specific products, but companies themselves are also branded.

Product Mix

• Companies own a wide range of different and distinct product brands.
• A large company that owns a wide range of brands is called a conglomerate.

Why is a Successful Brand So Important?

• Higher prices can be charged.
• Makes a product recognizable.
• Helps it stand out from competitors.
• Brands are marketed to develop a reputation or generate a perception (Quality, Value, Best in market, Environmentally friendly).
• Strong association between brand and product quality.
• Brand loyalty.
• Helps increase sales/market share.
• Aspirational brands (“snob value”!).

Value of a Successful Brand

• The premium consumers pay for Coca-Cola products is £1.69 for every bottle.
• Example: Premium consumers pay {2.10 - 0.41 = 1.69 for Coca-Cola products.

Drawbacks of Branding

• Takes a very long time to establish.
• Costly to promote and keep visible/relevant.
• Bad publicity can ruin brand reputation quickly.
• Imitators and fakes.

Own Labels

• Own-label brands were aimed at those on a low income but are now popular with everyone due to economic changes.
• Discounters such as Lidl & Aldi have been successful by focusing on own-brand products.

Advantages of Own Brands

• Don't require much advertising, so it is cost-saving.
• Manufactured by another company, but the organization retains control over the production process.

Disadvantages of Own Brands

• Can be perceived as being poorer quality.
• Often viewed as a copy or imitation of a brand.

Purpose of Packaging

• Protects a product from damage.
• Keeps a product safe (or fresh).
• Makes transportation and display easier.
• Carries the product or brand name and design.
• Attracts buyers (target market) and makes it distinctive.
• Labels contain essential information (ingredients, bar-code, size).
• Gives the competitive edge.

Environmentally Friendly Packaging

• Increasing pressure on companies to reduce packaging and ensure it is recyclable.
• Brands that do not, risk damaging their reputation.
• Example: Sainsbury's removing single-use plastic bags from bakery aisles and loose produce sections, removing 489 tonnes of plastic.
• Goal: Making all plastic packaging recyclable, reusable, or compostable by 2023.

Place

• Where a business sells its products or services is very important to its success.
• Products/Services must be readily available for customers to buy easily.
• If a product is difficult to get a hold of, it is likely that customers will seek and buy an alternative.
• Products/Services must be available in places most appropriate to their target audience.
• For example- discount cleaning products are unlikely to be sold in a luxury department store.
• Products/Services must be available in similar places to their competition.
• If their product isn’t on the shelf- customers will buy their competitors!

Factors to Consider When Choosing a Location

• Where the customers are
• Is it an impulse or considered purchase
• Transport links
• Location of competitors
• Availability and cost of employees/workers
• Availability and cost of land
• Location of materials
• Government support

Methods of Distribution

• How you transport your products to the market is another consideration under “place.”

• Distribution depends on size, value, destination, and speed requirements.

• Factors of each distribution method:

  • Cost
  • Speed
  • Reliability
  • Road
  • Air
  • Rail
  • Sea

Promotion

• Promotion is the way that the business communicates with the customer.

• Objectives:

  • To inform customers that the product exists
  • To tell customers what the product is and what it does
  • To persuade customers to buy it
  • To convince customers why the product is better than competitors

Advertising

• The method of advertising chosen depends on:

  • Target audience
  • Cost
  • The law
  • Impact required
  • Competitors’ advertising

• Goal: Raise awareness and get as many target customers to see it as possible.

Advertising Mediums

• Cinema:

  • Captive audience
  • “Immersive” and engaging
  • Expensive

• TV:

  • Advertising slots available to appeal to target audience
  • Reach a very large audience
  • Very expensive

• Newspapers:

  • Wide audience
  • Less expensive than moving image
  • Difficult to make ads stand out

• Magazines:

  • Good for reaching specialist audiences

• Billboards:

  • Relatively cheap
  • People might not notice (blend into the background)

• Social media:

  • Economical way to reach a wide audience with engaging content
  • Viral ads can be very popular
  • Can often target advertising precisely

Sales Promotions

• Incentives to encourage customers to try a product.

• Types:

  • Discounts
  • Special offers
  • Volume promotions (33% extra free)
  • BOGOF (Buy One Get One Free)
  • Coupons
  • Competitions

• Retailers hope that once a sales promotion ends, you will stick with that product.

• Promotions tend to be short-term; otherwise, they can reduce sales revenue.

Ethics of Marketing

• Businesses are required by law to market their products and services in an ethical way.
• Failure risks advertising withdrawal, fines, and negative publicity.
• Legal, Decent, Honest & Truthful.

The Fundamentals of Price

• Price affects buying decisions, so it’s important to set the right price at the right time.
• Consumers will only pay what they can afford, so a product must be in the price range of target customers.
• Consumers will only pay what they think is a reasonable price.
• Consumers often use price as a measure of quality.

Factors to Consider When Deciding on a Retail Price

• Cost of manufacture
• Profit required
• Affordability for target market
• Competitor consoles price
• Product appeal: “New-ness”, Best in market
• How price will relate to sales
• “Must-have” Christmas gift
• Other external factors

Pricing Strategies

• Low price: Charge lower than competitors.
  • Customers buy because it is cheaper.
• High price: Charge higher than competitors.
  • Customers may think it is higher quality, resulting in a higher profit margin.
• Promotional pricing: Charge lower than normal for a short period.
  • Attracts customers with special offers.
• Cost-plus pricing: Calculate the cost of making the product, then add a % for profit.
  • Ensures costs are covered and a reasonable profit is made.
• Psychological pricing: Charge a price that makes the customer think the product is cheaper.
  • Customers perceive the product as cheaper and buy it.