Unit 2
Promotion
• Internet
• Advantages and disadvantages of e-commerce
• QR codes
• Social Networks
• Deal of the Day
• Apps
• Text Messaging
• E-mail advertising
• On-line ratings
• YouTube
• Other Advertising methods
• Special offers
• Celebrity endorsement
• Ethical Marketing Market Research
• Field/Primary research
• Costs/benefits of field research
• Desk/Secondary research
• Costs/benefits of desk research Functional Activities
Customers
• Market Growth, Market Share, Market Leader • Market Segmentation • Target Market Product • Product Development • Risks involved • Product Mix • Product Lifecycle • Branding Price
• Factors affecting price
• Pricing Strategies Place
• Location Factors
• Distribution Channels
Functional
activities
ReturnFunctional
Activities of a
Business
Marketing
Operations
Human
Resources
(People)
Finance
There are four functional activities of a
business
What is
marketing
ReturnMarketing involves trying to meet the needs and
wants of customers by finding out what they want
and providing it at a price that can make a profit.
In large organisations, marketing will be done by
a the marketing department. In small
organisations it may be done by the owner, along
with many other tasks.
What is Marketing?
What is a Market?
Outdoor market
Shopping mall
High street shop
Ice-cream van Housing market Banks/mobile banks Through an app Mail order Dispensing machine
Door to door eg Avon
Telephone sales
TV shopping channels
Internet – e-commerce/e-business
A market is where buyers and sellers come together. How many different types of markets can you think of?
If people buy products/services in quantity, there is a market. A market requires buyers and sellers
•
It can attract new customers by letting them
know about the range of products the
business has
•
It can allow the business to enter new markets
(eg using the internet to sell a product on the
other side of the world
•
It can help the business grow
•
It can increase the amount of profit a business
makes
Why is Marketing Important?
Marketing can help a
business grow it’s number
of customers – Market
Growth.
This increases the
proportion of customers it
has from the market –
Market Share
If they have more
customers than all other
providers, they are
Market Leaders
Market Growth, Market Share, Market
Leader
UK
Supermarket
Market share
Sex/Gender – eg Male/Female – products directly produced for females or males
Age – eg Pampers, teenage magazines, SAGA holidays
Income/Social
class - eg people who can afford the latest gadgets when they first come onto the market (socio-economic groupings A, B, C1, C2, D and E)
Where they
live - eg garden centre who specialise in plants for the local area (weather/soil).
Religious or
cultural belief – eg Halal meat (speciality butcher for beliefs and religion)
Lifestyle – eg into sport/fitness
Occupation - eg - Stethoscope
Market Segments
Target market
A target market is the group of people that
a business thinks are the most likely to buy
their good or service. Consider:
Since you are not old enough to drive, you
are not the target market for car
manufacturers
You do phone a lot so you are a target
market for phone providers and
manufacturers
Why?
To make sure the product is suitable and meets
the specific needs of a customer group
Make sure it is sold where those people will see
and buy it
It is priced so that it reflects the target group
To use the correct advertising and marketing
strategy
How do we define or describe a target
market?
Marketing use different things to group
people. Often, the product will be targeted
towards a segment that is made up of
different types.
Marketing
mix
Product
This is the good or service which is sold on the marketThe product must be what the customer wants –
market research helps with this
Price
This is how much a business charges for the good or service.Different pricing
strategies can be used
The price must suit the customer. If competitors prices are lower, customers will buy from them. Price should reflect quality
Promotion
This is how customers are told that the productexists and are
encouraged to buy it
The product must be advertised so customers know about it. Promotion encourages customers to buy
Place
This is the way businesses make the product available and where it is soldThe product must be accessible often via different places eg
websites, shops, apps, TV
The Marketing Mix
Marketing
mix -
PRODUCT
ReturnTo succeed, all businesses must attempt to
be ahead of their competitors.
All businesses must be aware of:
developments in technology
development in their own market
changing needs and wants of the market
To do this they need to invest time and
resources in order to come up with new
ideas (ie to be innovative).
Billions are spent each year on product
development
Have a look at these videos of product
development …
dyson toothpaste transit mobility aid snowboard google food Burrs! Note – some of these products arecompletely new, others are changing/improving to remain competitive Return
Stages in Product Development and Research
Market Research Carried out to find out what the customer wants
Ideas developed, either from extensive scientific research, from identifying a market through market research or through ‘brainstorming’ sessions
Prototype or development
lab experiments or production of a model may be necessary, designs have to be shaped and altered and perhaps even some preliminary testing undertaken.
Test marketing stage where the product is tested on a representative sample of consumers. This results in useful feedback and hopefully reduces the risks of failure when the product is finally
launched
Changes Based on feedback received from testing the prototype Method of
production
Has to be decided, eg mass production? Price Price charged will have to be decided Place Decide where the product will be sold
http://www.mackies.co.uk/
video Mackie's Vision
is to be a global brand from the greenest
company in Britain created by people having
fun.
The main elements in our vision are
•to build our brand and increase export (which includes England and the rest of the world),
• to look after our environment and continually reduce our carbon footprint (leaving nothing behind except ice cream)
• to have fun.
•
Customers may not want to buy the product
(ie there is no demand for it)
•
The money invested in developing the product
would be wasted
•
The business reputation could be damaged if
nobody wants the product or if it is inferior
quality
•
External factors (eg the economy or
competitors) might impact upon the success of
the product.
Some Risks
Click for video
Many organisations produce a large range of products
This is done for a number of reasons, including
• To spread the risk and not be dependent on one single product
• To suit different types of customers
The Product Mix
Range of Procter and Gamble products
Once a product has been launched onto the market, it has a life cycle. The product life cycle shows the different stages of the product’s life. The four stages are:
Product Life Cycle
Research and
Development
Lots of market research and testing. The business is spending money but receiving no income from the product. At this stage, some products are abandoned if there is no prospect of selling.
Introduction
The product is introduced or launched onto the market. Lots ofpromotion and advertising to encourage sales but product is not really profitable
Growth
Once customers know about the product, sales begin to grow. Lotsof advertising. Later in this stage, the organisation starts to make profit. Other businesses may have developed similar products
Maturity
Everyone who wants the product has heard of it, they have a loyalcustomer base – sales are at their highest and other companies will enter the market selling similar products. Spend money developing new products
Decline
Sales begin to fall – product is getting older and newer versions are coming on the market – customers no longer want the product.Product Life Cycle Graph
When a product reaches decline stage, the organisation may take steps to extend its life. To do this, they will look at the marketing mix
Product – does the product have to be changed to attract new customers
Price – should the price be dropped, or should special offers be introduced to attract interest
Promotion – this may include preparing a new brand image for the product along with a fresh advertising campaign
Place - better offers and display materials to the shops stocking the products. Sell on-line to increase market
How organisations can extend the
product life cycle
Return to index
What is a brand
A brand can be a logo, symbol or name that
is given to a group (eg Cadbury) or type of
product (ipad). Branded products usually
have an easily identifiable logo and a slogan
Vorsprung durch Technik
•
It is
easily identifiable and is recognized
by customers
•
It is used to
differentiate from competitors
•
Encourages
customer loyalty and repeat
custom
•
It encourages people to
pay more
•
It is used to get customers to
try a new
product
– they already
know and trust
the
name
What are the Reasons for Developing a
Brand?
•
Very expensive and time consuming
process to develop a brand
•
One product getting a bad reputation
can damage the name of the brand
•
Some organisations try to copy
brands and produce low quality, fake
products
Drawbacks of Branding
Marketing
mix - PRICE
The stage in the
life cycle
Price charged by
competitors
How much it costs to
make
How much
profit
is wanted
How much of the product can be
supplied
The
market segment
that the product is aimed
at
The decision may depend on:
Life Cycle At the beginning of the life cycle, the product may be priced high as they are in high demand. They may also have incurred high costs in research and development. As demand begins to fall, the price may be reduced so they continue to sell
Competitors’ prices
If price is higher than competitors, they may lose customers to them
Manufacturing cost
A business must cover its costs in order to break even. It must calculate the cost of the product before it can set a realistic price
Profit required The more profit wanted, the higher the price that will have to be charged. Some organisations do not exist to make a profit so will set prices accordingly.
Rarity value Products made in small quantities may be priced higher eg high performance/value cars or limited edition prints
Market segment
Products aimed at people with high incomes may be priced higher (Waitrose) where products aimed at low income (eg Tesco value) are priced lower.
Some further information on Price
Return to index
High Price
Setting price higher than competitors – customers will think it is better quality eg branded goods like Tesco finestLow Price
Setting price lower than competitors – customerslooking for a bargain will buy the product “own brand” goods like Tesco value
Cost plus
pricing
The manufacturer calculates the cost of the product then usually adds on a % in order to make a profit. This ensures a profit is made eg building jobs
Penetration
pricing
Set the price low for a new product when there are already similar products in order to penetrate the market. Increase price as product is established eg new cereals/chocolate bars/crisp flavours
Pricing Strategies
Pricing Strategies (cont)
Price
Skimming
Charging a high price for a product that is new. Customers are happy to pay a high price – status eg new iPhone
Destroyer
Pricing
Setting price low to destroy the competition eg selling newspaper for 10p
Promotional
Pricing
Price charged is lower than normal for a short period, eg after Christmas prices lowered to get rid of excess stock
Psychological
Pricing
Price charged makes the customer think they are getting a bargain eg £1.00 99p
Marketing
mix - PLACE
Disneyland, Paris
Opened in 1992
An estimated 17
million people could
drive there within 2
hours
300 million could fly
there within a few
hours
Place - Braehead Shopping Centre
Why is Braehead located where it is?
Where the
customer is
Locate close to the people who will
buy the products
Premises
A business may have specific
requirements, eg kitchen or large
warehouse area
Parking
Customers need to be able to park
Infrastructure
Water, fuel, transport
Place - Many factors will be considered
when deciding where to locate:
Government
incentives
Sometimes the Government or
Local Authority will offer grants to
businesses setting up in the area
Market
segment
Being close to the market segment,
eg Soar – ski wear shops
Employee
availability
Employees needed to work. May
require particular skills eg
shipbuilding
Competition
May wish to be far away or close to
increase market share
Environmental
impact
Consider the impact on the
environment eg windfarms
Website
Mail Order Catalogue Retail Outlets
Catalogues
Newspaper and
magazines
Home shopping parties
Telephone ordering
Shops
E-commerce websites
Markets
Tv shopping channels
Vending machines
Place - Where the product is sold:
We have already considered this topic (What is a market – see early slides)
Place – Distribution Channels
MANUFACTURERSA B C D
CONSUMERS
Company
warehouse Wholesalers Eg Bookers
Company outlets eg Ikea Retailers eg Soroba Shop Retailers Eg Tesco direct eg from farmer to customer at farmers’ market Return
Place - Advantages and Disadvantages of
Different Channels
Channel Advantages Disadvantages Producer to
consumer
Cheaper – no middle man. Better quality
May have to collect
Manufacturer wastes time selling goods
Producer to retailer to customer
Cheaper than chain including wholesaler Retailers bear marketing costs
Retailer will have a mark-up so increasing the cost
Producer to wholesaler to
retailer to customer
Small retailers can obtain variety of goods
Goods more expensive as wholesaler and retailer will add to cost
Return to index
What are the different methods of
physically getting the product to the
customer.
Marketing
mix -
PROMOTION
ReturnProduct promotion involves persuading customers to buy the product using a variety of techniques, for example
competition entry, money-off vouchers, discounts,
BOGOF – customers think they are getting a good deal.
Advertising involves making customers aware of the
product. It also gives information about the product and tries to encourage customers to buy it.
Using Technology to raise awareness of
products
Lots of information about products can be made available using company websites. Websites can also be used to sell the company products – this is called e-commerce. Many people now do shopping online and look for
bargains
Internet websites
Click for video ReturnAdvantages of E-commerce to the business
Disadvantages of E-commerce to the business
Customers worldwide can be targeted Customers may not want to disclose personal details
Product information can be updated quickly
Can be expensive to make and maintain a website
Businesses may not have to pay for premises to display stock
Employees need training to maintain and update the website
More environmentally friendly than printing leaflets
Advantages of E-commerce to the customer
Disadvantages of E-commerce to the customer
Customers can buy online 24/7 The goods can’t be seen or handled before buying
Customers can usually buy cheaper than going into a store
There is no personal contact with the organisation
Stock availability can be checked instantly
Will have to wait for the product to be delivered
Products can often be personalised eg
Can be used to direct people to company websites
QR Codes
Facebook, Twitter, blogs, wikis are very
useful for raising awareness of
products
Social Networking
Deal-of-the-day (also called flash sales or one deal a day) is an ecommerce business model in which a website
offers a single product for sale for a period of 24 to 36 hours. Potential customers register as members of the deal-a-day websites and receive online offers and
invitations by email or social networks. Examples Groupon, itison
Deal of the Day
Apps which allow customers to browse
products and buy online are becoming
more popular eg the Amazon app
•
Can be used on the move
•
Can be used using wifi
However
•
Training would be needed by creator so
that app is easy to use
•
Depends on good internet connection
Apps
Text messaging is widely used by businesses to
communicate and promote products to customers. Specific customers can be targeted quickly with
information
• This is cheaper than some other methods of promotion
• Lots of customers can be targeted However
• Texts only include a small amount of information
• Customers may receive lots of text messages and start to feel annoyed!
Text Messaging
Many businesses use e-mail to send mailshots to customers. Customers can sign up to a mailing list and be e-mailed with detaails of special offers, new products and other promotions.
• E-mails can be sent at any time
• Message can be sent to many different people simultaneously
• Can be sent worldwide at little cost
• Environmentally friendly However
• Some e-mails can be filtered as spam
• Receiving lots of e-mails can be irritating to the customer
• Viruses can be spread through e-mails
E-mail Advertising
Can help customers to decide whether or not buy
a product based on information provided by other
customers
On-line Ratings
Companies can post videos of their products in
action and allows customers to view before they
buy the product
YouTube
Other Advertising Methods
Method Advantages Disadvantages
Television Reach millions Target audience
Expensive Cinema visual/sound impact target particular
films. captive audience
Expensive Leaflets and Junk
Cheap to produce Easy to ignore Newspapers/
magazines
Know their readers – can target Often read twice
Can be expensive
Radio Target audience, cheaper Smaller audience Poster/
billboard
High visual impact In place for long time
Can’t contain
much information Internet High visual impact
Can link to buy product
Product placement Manufacturers pay for products to be used in films/television productions Video clip
Choosing a Method of Advertising
Product
Method
Reason
Christmas function
in Royal Hotel Local newspaper – Oban Times Not too expensive Reaches target audience
New restaurant
opens in Oban Menus delivered to doors by postman Fairly inexpensive Customers keep info
Cadbury launch
new chocolate bar TV and cinema adverts Info must reach large audience Rock Concert to be
held in Hampden ? ?
Promotion – Special Offers
Method
Information
BOGOF (buy one
get one free) Eg Boots 3 for the price of 2. Customer usually buys more than required Free
gifts/samples Eg fast food restaurants. May be used to increase demand at quieter times of the year Loyalty cards Eg Tesco, Boots. Regular customers save points to
spend in store. Also used to monitor customer purchases
Discounts Encourage purchase of particular product. May be money off voucher
Competition Eg prize draw on wrapper of product if purchased Point of sale
advertising Special display cases in store
Sales Encourage people to visit shops they wouldn’t normally.
Promotion – Celebrity Endorsement
Celebrities are used to
raise awareness of a
product or encourage
customers to buy it
All marketing and advertising must be:
•
an accurate description of the product or service
•
legal
•
decent
•
truthful
•
honest
•
socially responsible (not encouraging illegal,
unsafe or anti-social behaviour)
Ethical Marketing/Advertising
Market
Research
Market Research is the the process where businesses find out information about their customers and the market. It involves finding out what customers want, but also
finding out about what other businesses are selling and for how much. This allows businesses to make key
decisions like
• Altering the price of the product
• Changing the product in some way
• Launching a new product
• Changing where the product will be sold
•
Primary or Field Research
•
Secondary or Desk Research
There are 2 main types of Market
Research
Field Research involves going out into the market
place and finding out
NEW
information for your
own business. This is called
primary information
.
PRIMARY/FIELD RESEARCH
Return to index
Method
Personal interview Face to face discussion where interviewer asks questions
• The interviewer can encourage the respondent to answer questions
• Points can be clarified
• Time consuming and expensive to carry out
• Interviewers will need training
Postal Survey Questions are sent out through the post
• Fairly cheap to send the survey
• Survey can be completed at own pace
• People may not go to the bother of completing survey
• No opportunity for clarification
Tel Survey People are contacted by phone to answer questions
• Large numbers can be contacted
• Less expensive than personal interviews
• Information obtained instantly
• People get annoyed about receiving phone calls
• Useful for short surveys only as people don’t want to spend time Online Survey Questions are displayed on a website
• Links can be set up for large numbers of people
• Inexpensive
• Relies on people having internet connection
• No personal contact
Methods of Field Research (1) - Surveys
Return to index
Focus Groups This is a discussion among a specially chosen group of people, eg BBC viewers • Feelings and views can be observed
• Points can be clarified and expanded upon
• Time consuming and expensive to carry out
• Info can be difficult to analyse
• May not be a representative group
Observations This involves watching and recording situations eg number of visitors to a shop or
children playing with a new type of toy
• Facts and figures are easy to analyse
• People being observed may not act naturally
• Those being observed are not usually asked for opinions
• Privacy and ethical issues
EPOS Electronic Point of Sale gathers information at the chechout
• Large quantities of information • Expensive to buy system
• No opinions sought from customers Social
Networking
FB and Twitter used to gather feedback from customers. Often used to interact with customers and find out their reactions and opinions
• 2-way interaction
• Large numbers can be contacted
• Information not usually private
• Not all customers join websites Hall Tests Product is given to customers to try and feedback sought
• Product is tried and feedback is based on experience
•
• Response may give the response they think the organisation wants to
Field Research (2) – Other Methods
Costs (Disadvantages) of Field Research
Benefits (Advantages) of Field Research
Expensive to carry out this type of research
This provides up-to-date and reliable information
Can be time consuming to carry out and find results
The Information has been
gathered for a specific purpose and is therefore relevant to the business
Costs and Benefits of Field Research
Desk Research involves finding out information
from
existing sources
, using information that has
already been gathered
for another purpose. This
is called
secondary information
.
SECONDARY/DESK RESEARCH
Government records The government publishes information from a variety of sources eg the census for population figures, import and export
figures
Printed information This could include books, journals, magazines and newspapers
Online research There is a vast amount of information
available from websites which can be used for market research. If using this data,
however, it is important to ensure that the websites being used are reliable and
contain accurate information.
Methods of Desk Research
Costs (Disadvantages) of Desk Research
Benefits (Advantages) of Desk Research
The information may not be exactly relevant to your needs
The information does not always cost money to obtain
The information may not be accurate or up-to-date – if it has been gathered by
someone else
The information is usually easy to obtain as the research has already been carried out
