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
- Identify & define the information needed.
- Decide on the best research method.
- Design your survey.
- Gather your data.
- 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:
- Generate idea
- Analyse idea
- Produce prototype
- Test product
- Alter product
- 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.