HIGHER BUSINESS MANAGEMENT

MARKETING

MARKETING MIX For marketing to be successful, an organisation has to combine all the

marketing activities to create a combination of benefits considered to be the most suitable to meet the needs of a selected market. These factors can be split into the 4 Ps:

Each of these factors : influence on attracting the customer to the product

PRODUCT/SERVICEKey questions that must be answered in deciding on the product itself are:

What does the customer want from the product/service? What needs does it satisfy?What features does it have to meet these needs?

Are there any features you've missed out? Are you including costly features that the customer won't actually

use?What does it look like?

What size(s), color(s), and so on, should it be? Packaging?What is it to be called? How is it branded?How is it differentiated versus your competitors?

PRODUCT/SERVICE

Product Lines and Product Mixes

A product line is a range of products which are similar or go well together.

PRODUCT/SERVICE A product mix is a range of different types of products

Product lines and Product mixes

SCHOLAR Activity 12.1.1 Product

PRODUCT/SERVICEProduct Branding

Having a Name and/or Logo to identify your product from your competitorsAim to gain easy recognition of your business’s productsBig business – Nestle paid 2.3 billion pounds for Rowntree Mckintosh when it was only valued at 1 billion in order to secure ownership of the names like Kit Kat, Polo and Smarties.

http://www.logoquiz.net/ http://www.guessthelogo.com/?v=cars

PRODUCT/SERVICEProduct Life CycleProducts have a lifespan. They are introduced onto the market and go through various stages of life until they are withdrawn.

PRODUCT/SERVICE Development – Market research, design and production

Introduction - Product is launched. Sales Low as unfamiliar to consumers. Production costs and advertising costs are high

  Growth - Sales increase therefore production becomes more profitable. Development

costs can be recovered. The success of the product can lead to brand loyalty and repeat sales.

  Maturity The product reaches its Peak of sales and is at its most profitable point for the

company. However, Competitors have now entered the market so growth rate has slowed.

  Decline As new models and designs come out, or fashions change, a product may become

obsolete. Sales fall, as does revenue. It is no longer profitable to produce it. extending life cycles SCHOLAR Exercise 12.1.2 Product Life Cycle

PRICE

In determining a Price for your Product what Factors should you Consider? the cost of production how much profit the producer wishes to make the quality of the product the amount the consumer is willing to pay the amount being charged by competitors the stage of the product life cycle

What pricing strategies can a company use?

PRICING STRATEGIES Low Price price lower than that of similar products on

the market.    Used to project image of value.

Skimming Where a high price is set initially probably for a unique, technologically advanced product. The high price allows the company to make high profits initially. As competitors enter the market, the price will gradually fall.    

Promotional Prices lowered for a short period of time.

PRICING STRATEGIES High Price price higher than that of similar products on

the market. Used to project an image of quality.  

Penetration Where a low price is initially set to enter a market where there are a lot of competitors. Once the product is established, prices can be raised to match those of the competitors.  

  Demand-orientated The higher the demand for the product,

the higher the price. Limited supply and high demand enable the price to be increased.    

PRICING STRATEGIES

Market Price Where prices are broadly in line with those of your competitors.    

Destroyer An artificially low price is set to force competitors out of the market. Once they have stopped trading, prices can be raised.

Loss Leader – The product is making a loss but attracts customers who will hopefullly buy other products

PRICING STRATEGIES

SCHOLAR Activity 12.1.3 Pricing Strategies

Write down an example of an organisation or product where the following pricing tactics are used:Low, High, Market, Skimming, Promotional Penetration, Destroyer, Loss leader

PLACE/DISTRIBUTION

= route taken by a product as it passes from the producer to the consumer.

Producer – Consumer Producer – Retailer - Consumer Producer – Agent - Consumer Producer – Wholesaler – Retailer - Consumer

PLACE/DISTRIBUTION

Suggest reasons why each of the following 5 considerations might affect the choice of distribution channel. The productThe marketLegal requirementsBuying habitsThe business.

PLACE/DISTRIBUTION The product – E.g. perishable products may be best distributed

directly – bakery. The market – E.g. where there is a large market with a wide

geographical spread, wholesalers and retailers distribute efficiently. Legal requirements - some goods and services can only be sold

through licensed premises. Buying habits - where customers go to buy similar products and

where they expect to find the type of product being offered – E.g. Everything in Dubai is in a Shopping Mall or Hotel

The business - some organisations have their own distribution and transport systems.

SCHOLAR Activity 12.1.4

PROMOTIONAdvertising

Informative - used to pass on information about new or improved products, or to give information about a technical product. Also government may use it – e.g. to promote healthy lifestyles.

Persuasive Advertising – Often used in competitive markets. They use powerful images and language to try and get us emotionally involved. “9 out of 10 cats prefer Whiskas”. Charities often use persuasive adverts.

Corporate Advertising – like corporate branding, where the whole company is promoted not just individual products.

Generic Advertising – When rivals come together and sell not their individual products, but their market or industry as a whole. E.g. during the BSE crisis, British Beef advertised in unison to try and allay consumer’s fears.

MEDIUM ADVANTAGES DISADVANTAGES

Television Exposure on a national scale Expensive

The advert reaches all socio-economic groups Difficult to target specific segmentsSound, vision, movement and colour can all be used

Newspapers Exposure on a national scale Only read by particular groupsPeople tend to believe what is in the papers Can be expensive

They have high attention value

Market segments closely identified with readership

Local newspapers Readers tend to scrutinise local papers more closely than they do the nationals

Local papers do not have the authority of national papers

Greater density of readership on a local basis Newsprint is sometimes of poor qualityDirect mail Good for targeting market used with mailing

listsPoor strike rate if target if audience is not carefully selected

Good for exclusive products and particular interest groups

Many consumers view it as an ‘invasion of privacy’

Independent radio Less expensive than press and television Relies on messages being communicated by voice – high ‘noise’ factor

‘Captive’ audience Difficult to target specific segments

Listeners tend to ‘switch off’ when the adverts come on

Cinema Messages can combine voice, image and colour Limited market coverage Effective for targeting local markets and segments

Expensive to produce ‘quality’ adverts

Outdoor media High visual impact May go unnoticed – i.e. part of the scenery

PROMOTION“Into the pipeline”

promotions encourage wholesalers and retailers to purchase more stock.dealer loaders (6 boxes for the price of 5),

point-of-sale displays, competitions, training, sale or return and extended credit.

PROMOTION

“Out of the pipeline"

Promotions offered to consumers. free samples, trial packs, bonus packs, price

reductions, Buy-One-Get-One-Free, demonstrations, tasting and merchandising

SCHOLAR Activity 12.1.5