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Marketing

Marketing. Marketing Planning. Content. Marketing Mix: Product Price Place Promotion Elasticity of demand Marketing budget Sales Forecasting. Marketing Mix. The marketing mix or the 4Ps are the key elements of a businesses marketing plan The marketing mix refers to: Product Price

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Marketing

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  1. Marketing Marketing Planning

  2. Content • Marketing Mix: • Product • Price • Place • Promotion • Elasticity of demand • Marketing budget • Sales Forecasting

  3. Marketing Mix • The marketing mix or the 4Ps are the key elements of a businesses marketing plan • The marketing mix refers to: • Product • Price • Place • Promotion

  4. Product • Product refers to what the business sells • This could be a good – tangible or a service – intangible • Products are composed of different features which help consumers identify them e.g. their size, their colour • Products need to be developed to meet customer needs and wants

  5. Price • Price refers to how much consumers are charged for a product • There are different strategies for different types of products: • Price skimming (new products) Price is initially high due to type of product (usually electrical, luxury, innovative) • Price penetration (new products) Price starts at a lower price to gain market share

  6. Price • Pricing strategies for existing products: • Price leader – dominant firms in the market are able to set the price for the rest of the market • Price taker – these firms accept the price that the price leaders set • Predator – predatory pricing is where businesses undercut competitors to drive them out of the market and gain market share

  7. Pricing methods • Cost based – businesses work out how much products will cost to make, they then add a profit margin on to this to calculate price • Contribution – Prices are calculated by looking at how much they contribute to variable costs • Discriminatory – Where businesses can charge different prices to different consumers for the same product e.g. peak and off peak travel

  8. Pricing Tactics • Loss leader – Businesses have products priced at a low level where they will make a profit, this encourages customers into the business where they will buy additional products • Psychological – Where businesses use prices such as £9.99 as they seem to be cheaper

  9. Place • Place refers to physical location and channels of distribution • Channels of distribution – how a product gets from the producer to the consumer • There are four main channels of distribution: • 1. Producer – consumer – this is generally used for small businesses e.g. farm shop

  10. Channels of Distribution cont.. • 2. Producer – Wholesaler – Consumer – Here the wholesaler acts as an intermediary for the producer and is able to carry a number of different producers products e.g. furniture • 3. Producer – Wholesaler – Retailer – Consumer- This is common for clothes • 4. Producer – Retailer – Consumer – this is often used for electrical products

  11. Channels of Distribution • Each link in the chain of distribution adds costs onto the final product and makes it more expensive for the end consumer • Wholesalers and retailers can provide important functions for producers especially as they grow larger • By using wholesalers and retailers businesses can loose control over the promotion of their products

  12. Location • Businesses need to consider a number of factors when considering their location including: • Historical factors • Cost of premises • Space and land • Transport links • Proximity to suppliers / customers

  13. Promotion • Promotion is the way of communicating what the product is to the consumers • It aims to persuade customers to buy the product • Above the line promotion – Advertising that uses independent media • Below the line promotion – Sponsorship, Public Relations, Direct Mail, Special offers

  14. Advertising • Advertising can be done using a variety of media including: • TV – local, national, sky, digital • Radio – local, national • Press – newspapers, magazines, local, national, specialist press • Type of advertising media is dependent on: • Cost • Target Audience

  15. Sponsorship • Individuals, events or teams are sponsored by organisations to increase company recognition and sales • Businesses often choose individuals / teams / events that have a similar target audience and similar ethos to themselves • E.g. David Beckham and police sunglasses, 3 day eventing and land rover

  16. Sales promotions • These are ways to boost sales e.g. BOGOF – buy one get one free, 20% extra free • These are used to boost short term sales

  17. Public relations • Where businesses have contact with the media to send out specific messages about the firm / its product • This is free advertising • Sometimes public relations can backfire for a business

  18. Personal Selling • This is where a product is being promoted in a face-to-face situation • The product is promoted by a salesperson whose aim is to increase sales of the product • This often happens in the financial services industry

  19. Direct mail • This is where mailshots are sent directly to customers • These can be sent via mail, text or email • As customer profiling techniques become more sophisticated mail shots are increasingly targeted • E.g. Tesco club card send vouchers to their customers based on their purchasing patterns and segmentation analysis

  20. Elasticity • Elasticity measures how responsive demand is to a change in price / income • PED = % change in quantity demanded / % change in price • YED = % change in quantity demanded / % change in income • Inelastic – less responsive to a change in price / income • Elastic – more responsive to a change in price / income

  21. Elasticity • If YED / PED is greater than 1 it is elastic • If YED / PED is less than 1 it is inelastic • If YED / PED is 1 it is neither elastic or inelastic • To increase revenue for elastic goods you decrease price • To increase revenue for inelastic goods you increase price

  22. Elasticity • Elastic goods tend to be: • Luxuries • Many substitutes • Take up a large % of income • Inelastic goods tend to be: • Necessities • Few substitutes • Take up a small % of income • Goods with strong brands

  23. Marketing Budget • A marketing budget sets out the costs and revenues that are allocated to the marketing department • The marketing budget will influence the promotional tools that a business is able to utilise

  24. Sales forecasting • Sales forecasting – looks at what they expect their sales to be • Can use market research to forecast expected sales • Past sales figures are a good prediction of new figures

  25. Summary • Marketing Mix looks at the 4Ps • Product – refers to the good / service the business sells, it is made up of a number of features • Price – how much you charge for the product, can use different strategies depending on type and age of product and company size • Place – location of business and channels of distribution – how the product gets to the consumer • Promotion – how customers find out about the product – there are two types above and below the line • Elasticity – measures responsiveness of demand to a change in price / income • Market budget – sets financial targets for the marketing department • Sales forecasting – aims to predict sales and therefore revenues for a new product

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