Marketing
Customer
Market led strategy
Market-led businesses find out what the customers want through intensive market research and then creates a product that satisfies these wants.
Market led organisations are:
very customer focused
more responsive to changes in the market
reliant on market research to inform their product development
often in competitive markets such as make-up and clothing
Product led strategy
Product-led businesses develop a product first and then try to sell it to the customer through intensive advertising. Little or no market research is carried out before production begins, instead time and money is spent on researching and developing the product. Product-led businesses often operate:
in high tech industries
with little competition
Consumer Behaviour
Businesses look at consumer behaviour to better understand:
the decisions behind why customers purchase certain products
what influences them to make those purchasing decisions
Businesses want to understand the decision-making process of the customer, so they can better tailor the companies marketing strategy to meet their needs
Different types of consumer behaviour
Routine/Habitual -
Routine purchases require little involvement by the customer. Routine purchases are made automatically for items such as:
cereal
washing powder
toiletries
Sales promotions such as money off vouchers or BOGOF can be used to influence routine purchasing
Informed -
Informed consumers behaviour is when the buyer takes time to investigate the product. They will consider different products that are on offer and the specifics of the product they are interested in
This behaviour is usually when a customer is buying expensive long-term goods such as:
a car
an expensive item of technology
Impulsive -
Impulse purchases happen without any prior planning or thought. Impulse purchasing often happens because a product has caught a customers eye such as a bar of chocolate at the checkout
Effective point of sale displays can influence impulse purchasing
Market Research
What is market research
Market research provides information about:
the market itself (size and make up - ie age, gender income etc)
customer feedback
promotional methods
sales data
competitors
effect of price on market
Businesses use the information they gather to design new products and modify existing ones. This approach helps to maximise the potential success of products and services
There are two main types of market research:
field research
desk research
Field Research
This is first hand primary information. It is collected by the business for a specific purpose
Advantages
only firm that collects data has access to it
collected for a specific reason so data will be up to date and applies to the company
Disadvantages
expensive to collect
time consuming
Methods of collecting field research include:
face to face interview
postal survey
focus groups
hall tests
telephone interview
online survey
observation
Advantages of face to face interview
two way communication
researcher can encourage respondents to answer
mistakes and misunderstandings can be cleared up right away
Disadvantages of face to face interview
personal interviews can be expensive
researchers have to be selected and trained
home interviews unpopular with consumers
Advantages of postal survey
Inexpensive
no interviewer training needed
Disadvantages of postal survey
questions must be simple and easy to answer
response rate very low, incentives sometimes needed
Advantages of focus groups
qualitative information provided in the form of opinions, feelings and attitudes
topics can be explored in some depth
Disadvantages of focus groups
can be difficult to analyse qualitative information
expensive
Advantages of a hall tests
qualitative information provided in the form of tasting or demonstrating
Disadvantages of a hall test
respondants mat be too positive as they feel obliged to give favourable opinion
Advantages of telephone interview
can reach a large geographical area
inexpensive
Disadvantages of telephone interview
response rate may be low as people may view it as spam call
Advantages of online survey
large sample sizes
inexpensive
Disadvantages of online survey
limited to people with internet access
Advantages of observation
quantitative information gathered
real life and behaviours in action
Disadvantages of observation
samples are often random and not representative of all customers
only shows actions, does not explain attitude and feelings
Desk Research
Methods of collecting desk research include:
sales figures
newspapers
websites
government publications e.g. social trends
commercial publications
Advantages of desk research
saves time
relatively inexpensive
widely available
Disadvantages of desk research
not specifically gathered for the business
may be out of date
may contain bias
Sampling (random and quotes)
Sampling is the process of creating a small unbiased population to be used in a test or experiment. The sample removes the impractical idea of surveying everyone in a market or a population
Random sampling
Random sampling is when a sample is created by chance. It is the luck of the draw
Random sampling does not target a specific market segment therefore the people included in the sample are generated at random.
Advantages of random sampling
less chance of bias as respondents are chosen at random
simple and quick to select sample
Disadvantages of random sampling
the sample may not truly reflect the target market
it can be expensive as a large sample is required
Quota sampling
This is a sample that has been created to mimic the characteristics of a market. The researcher will choose the characteristics they wish the respondents to have, e.g. only sampling males over 50
Advantages of quota sampling
cheaper as less respondents are required
Disadvantages of quota sampling
harder to eliminate bias in the selection process
Elements of marketing mix
product - a business can adjust the features, appearance and packaging of a product to create competitive advantage
price - production costs, competition and demand can all affect a businesses pricing strategy
place - a business needs to decide where best to distribute a product
promotion - business use promotion methods to make customers aware of their products and services
people - any member of staff who is in contact with the customers of a business
process - the system and procedures that are put in place to deliver a product or service to the customer
physical evidence - the physical environment by the customer
Importance of marketing mix
Each element supports the other
Firms modify each element in the marketing mix to establish
an overall brand image
unique selling point that makes their products stand out from the competition
Product
Product life cycle is divided into 5 stages
Research and development
product is not on the market yet
research and development and testing take place
prototypes are built and modified before a product is ready for launch
no sales are made
development costs will need to be recovered later
Introduction
product is launched on the market
advertising costs will be high in order for the product to get noticed
Growth
sales begin to rise
advertising costs are still too high
a profit may be made, if all research and development and advertising costs have been recouped
a profit may be made, if all research and development and advertising costs have been recouped
Maturity and saturation
sales are at their peak
advertising can be reduced as product is now well known
Decline
sales begin to fall
trends, technology or imitators overtake
profit begins to fall and business new replacement products will be in the growth stage
at this point the product should be withdrawn from the market