Marketing

1. Marketing

2. What is a market? • Any place where buyers and sellers meet.

3. Consumer markets Consumer markets - are made up of individuals who purchase goods/services for personal or domestic use. • Consumable goods, eg food, cosmetics, magazines • Durable goods, eg cars, televisions, clothes

4. Industrial markets Industrial markets - organisations that purchase goods and services to use in the production of other goods and services. • Consumable goods, eg raw materials • Durable goods, eg machinery and equipment

5. What is marketing? • ‘Marketing is the management process responsible for identifying, anticipating and satisfying consumer requirements profitably.’

6. What is the role of marketing? • To identify, anticipate and satisfy customer needs. • To provide customers with desired goods/services = profits. • To ensure customer awareness of goods/services.

7. Marketing objectives • To target a new market or market segment. • To achieve or maintain market share. • To develop a new range of products. • To improve the image of the product.

8. Marketing activities • Market research • New product development • Selling • Pricing • Promotion and advertising • Preparing publicity information

9. Factors leading to the importance of marketing • Economic growth and booms – with more disposable income, marketing is needed to gain market share. • Fashion – marketing attempts to anticipate trends and/or changes in tastes, lifestyle. • Technology – new product innovation is essential for firms to keep up with competitors. • Competition – rivals may come from overseas. Firms have to be aware of the market environment both at home and abroad.

10. Product orientation Manufactureproduct Production capabilities Aggressive sales effort Customers Production orientation is when a business focuses on the production process and seeks to make goods that are viewed as superior.

11. Market orientation Marketing product and services Potential market opportunities Customer needs Customers Market orientation starts with the consumer and looks at consumer needs. It is customer orientated.

12. Advantages of market-orientated approach • Can respond more quickly to changes in market due to market research. • Increased chance of new product success. • Stronger position to combat new competitors/entrants. • Can anticipate market changes.

13. The marketing environment Consumer trends and behaviour Competition Political The market The economy Technology Social

14. Market share and market growth Market share is the percentage of customers who buy/use a company’s goods/services. Market growth is the volume of new sales or customers within a market.

15. Marketing mix The 4Ps • Product • Price • Place • Promotion Click for clip

16. Product/service Product –the good or item to be made for sale to customers. From the product everything else follows in the marketing mix (product, price, place, promotion). Now watch Steve Jobs’ iPod launch… Click for Clip

17. Levels of a product • Core – the basic product. • Actual – the product on sale to the public. • Augmented – a product with additional features to boost its USP.

18. Boston box Click for clip Market share High Low High Market growth Low

19. Boston box – strategies

20. Product lifecycle • The product lifecycle is a theory that has some assumptions: • Products have a lifespan. • All products pass through the stages described. • All products decline. Click for Clip

21. Stages in cycle Development – In this costly stage, money is spent on research to create a viable prototype. Introduction – The product is launched onto the market but normally sales are low due to competition and lack of awareness from the public. Growth – Sales rise sharply as awareness increases. This is the first stage where the company starts making a profit.

22. Stages in cycle • Maturity – The product is now a market leader and ways to expand sales become more difficult. When there is an overkill of supply, this is the saturation point. • Decline – Sales begin to fall, and the product begins a slow death as trends, technology or imitators overtake it.

23. Product lifecycle

24. Extension strategies Change the product – have additional features or upgrade the product. Change the price – lower prices to make it more appealing to non-users/buyers. Change the place/channel of distribution – look to more outlets or go online to widen market opportunities.

25. Extension strategies • Change the promotion method –introduce sales promotional campaigns, such as BOGOF. • Change the packaging – to make it more eye-catching to customers.

26. Effects of extension strategies

27. Answer a question • Changing the packaging of products can make them more appealing and eye-catching to consumers. • Explain five other methods of extending the product lifecycle. (5 marks) 2008 • 10 minutes

28. Peer marking • You are going to swap answers. • Has your partner answered well? • Does the answer make sense? • Is it worth a mark?

29. Solution • Improve the product by adding new or additional features customers will want, eg cameras on mobiles. • Alter price, either lower or increase price to attract customers. • Change the method of advertising, move the message, eg from TV to radio. • Change the use of the product, eg Lucozade once was used to reenergise ill people, now used as a sports drink. • Introduce line extensions to the product, create new flavours, different sizes or even alter the format like the PSP. • Change the name of the product, eg Opal Fruits to Starburst, Marathon to Snickers. • Alter the place the product is sold, offer products online to reach a wider customer base.

30. What is a new product? • New to the world • New product lines • Additions to existing product lines • Improvements and revisions to existing products • Repositioned products Click for clip

31. New product development stages • Generate ideas – Brainstorming session to come up with ideas. Quantity rather than quality is needed before refining the idea to something realistic. • Analysis and further research – Time and money spent on discovering what is possible and what is not. Can existing technologies be used? Or will something totally new be created? • Are the products marketable? – Will customers buy the product? Potential customers may be surveyed at this stage.

32. New product development stages (contd.) • Prototype – A working model is developed. • Test marketing – Potential customers may test several versions (or generations) of the product, and feedback will be used to modify the prototype. • Full launch – If satisfactory, the product will be put into full production and a marketing campaign will be put in place to raise awareness of the product, emphasising the benefits it brings to customers.

33. Product failures • Ford Edsel • New Coke • Sony Betamax VCR • McDonald’s Arch Deluxe • Sinclair C5 • DeLorean motor car

34. Successful NPD • Does the product have a USP? • Is there a specific market segment to target? • Is the market large enough and will there be a return on investment? • Are R&D and marketing communicating? • Was NPD process handled well?

35. Branding A brand is a registered trademark of a company, including the name or logo that can only be used by that company. Branding helps create USPs (unique selling points), and via advertising and creating a positive, desirable image, build brand loyalty. Brands promote an image of high quality, which means a premium price can be charged.

36. Advantages of branding • Easily identifiable. • Brand loyalty – repeat purchases. • Premium pricing can occur. • High quality is associated with brands. • Can create a family of branded products.

37. Disadvantages of branding • Brands take time to establish reputation and quality. • Advertising and promotion costs will be expensive. • Negative press can tarnish entire family of products. • Cheap imitations may flood the market.

38. Answer a question • Discuss the effects on an organisation of branding their products. (6 marks) 2009 • 12 minutes

39. Peer marking • You are going to swap answers. • Has your partner answered well? • Does the answer make sense? • Is it worth a mark?

40. Solution • Products in the brand range are instantly recognisable and are uniquely different from other products. • Brand loyalty can be built up, which can lead to repeat purchases. • Brand is perceived to be of high quality, which can mean premium prices can be charged. • Makes it easier to launch new products onto the market as there is already a brand family of products. • Brand names can be expensive to build up as it takes time to achieve their reputation. • Bad publicity can affect the whole brand, which can ruin the brand’s reputation overnight. • Imitator and fake products are common, which can damage sales in the long run.

41. Own brands Own brands are goods made by a producer who sells them to a well-known retailer such as Tesco or Sainsbury’s, who repackage them and sell them at a low price under their own brand label. What are the own brands for the major supermarkets?

42. Advantages of own brands • Own brands will attract more customers and more sales within the store. • Producer will have guaranteed sales. • Products are cheaper. Disadvantages of own brands Some customers believe own brands are of lower quality than established brand names (although this is not necessarily true).

43. Answer a question • Discuss the advantages and disadvantages of selling own brands. (4 marks) 2008 • 8 minutes

44. Self-marking • You are going to answer on your own! • Have you answered well? • Does the answer make sense? • Is it worth a mark?

45. Solution • Own labels require very little advertising as customers will be normally be regular shoppers. • The retailer does not need to produce the own-brand products as they can buy them from manufacturers and re-label them. • A range of products with own labels can be sold because a brand family is established. • Some own brands can be seen as value for money and a quality product when customers look for good deals. • Own labels are cheaper to customers as the price is always lower than that of regular brands. • Whole brands can be tarnished over one product’s failure or problem. This can ruin reputation overnight. • Run the risk of imitator brands, which can damage sales.

46. Price • Price has to be set appropriately or else customers will not purchase the product. High quality and high price normally go together and vice versa. • In determining price firms have to consider: • production costs of materials • profit mark-up • the market price (what competitors charge). Click for clip

47. Long-term pricing strategies Low price – Price lower than competitors. Only appropriate where there is a little brand loyalty and competition in the market is high. Market price –Setting price at a similar price to competitors. Homogeneous product means that price competition is not of benefit. They compete in other areas, eg service. High price –High-quality products, premium goods and services where image is important, such as perfumes.

48. Short-term pricing strategies Market skimming – In a new market a high price is set and then once the first customers have bought, the price is lowered to continue to skim the cream of the market layer by layer. Penetration pricing – A low price used to enter a new highly competitive market.

49. Short-term pricing strategies Destroyer pricing – An illegal pricing tactic used to eliminate competition where a ridiculously low price is charged (sometimes at a loss) to smash competitors. Once market share is achieved, prices soar. Promotional pricing – A short-term strategy to gain media attention and renew consumer interest, eg BOGOF or loss-leader tactics. Demand-oriented pricing – When different prices are charged at different times for the same good/service based on high demand or lack of demand.

50. Answer a question • Describe three pricing tactics that could be used when an organisation attempts to break into a new market. (6 marks) 2009 • 12 mimutes