Marketing
Marketing
Marketing is...
‘The management process responsible for identifying,
anticipating and satisfying customer requirements
profitably’
Chartered Institute of Marketing
Market segmentation
Splitting up the market into groups of people with similar needs and characteristics
Products and marketing activities can be tailored to the needs the segments
Markets can be segmented by age, gender, lifestyle, income and geography
Market research
Market research is the process of collecting data about
customers and competitors.
There are two types of market research:Primary research – gathering first hand data e.g.
through questionnaires and focus groupsSecondary research – gathering existing data
e.g. through trade journals and government statistics
Marketing Mix
The marketing mix
The marketing mix is also known as the 4Ps:ProductPricePlacePromotion
Product
Product
‘Product’ refers to the functions and features of a good or service
Should satisfy the needs of the customerMay have a Unique Selling Proposition (USP)‘Product’ also includes a range of factors such as
packaging, quality, warranties, after-sales service and branding
Products and brands may suggest certain images e.g. sporty, sophisticated, value
Product lifecycle
The product lifecycle looks at the sales of a product
over time
Stages of the product lifecycle
Development – high costs but no salesLaunch – high expenditure on promotion andproduct development, low salesGrowth – sales increase and product should breakevenMaturity – sales stabilise, less expenditure onpromotion needed, revenue & profit should be highDecline – sales decline, extension strategies can beadopted or the product withdrawn
Extension strategies
Extension strategies should maintain or increase sales.
They include:Modifying the productReducing the priceAdding a featurePromoting to a
different market sector
Extension strategiesExtension strategies
Price
Price
The price of a product will depend on:The cost to make itThe amount of profit desiredThe price competitors chargeThe objectives of the businessThe price customers are willing to pay
Is there a high demand? Is demand sensitive to changes in price?
Pricing strategies and tactics
Skimming Launching with a high price when there is little competition, then reducing the price later. Often used with technology.
Penetration A low price is charged initially to penetrate the market and build brand loyalty. The price is then increased e.g. introductory offers on magazines.
Competitive A similar price is charged to that of competitors’ products.
Loss leader Products may be sold at a price lower than the cost to produce it. Often used by supermarkets to encourage people into the store where it is hoped they will buy other products.
Pricing strategies and tactics
Psychological A price is set which customers perceive as lower than it is e.g. $39.99 instead of $40.
Differential Different prices are charged for the same product e.g. bus fares for children are cheaper than adult prices.
Cost plus pricing
An additional ‘mark-up’ is added to the cost of producing a good or service.
Strategic pricing
Price is set to position an exclusive product or brand to make it more desirable for consumers, generate demand or demonstrate value
Place
Place
Products should be conveniently available for customers to buy
‘Places’ include: Stores Mail order Telesales Internet
The use of e-commerce
(promoting and selling on the internet) has
grown massively over the last few years
The use of e-commerce
(promoting and selling on the internet) has
grown massively over the last few years
Channels of distribution
Manufacturer
Wholesaler
Retailer
Consumer
Promotion
Promotion
The aims of promotion are to:Raise awarenessEncourage salesCreate or change a brand imageMaintain or increase market share
Types of promotion
Above-the-line promotionThis uses mass media advertising over which a firmhas no direct control e.g. television, radio andnewspapers
Below-the-line promotionThis uses promotional media which the firm cancontrol e.g. direct mail, sales promotions,
sponsorshipand social media
Promotional activities
Advertising e.g. TV, billboards and internet.Sales promotions e.g. loyalty cards, BOGOF,
discounts & free giftsSponsorship – a business pays to be
associated with another firm, event or causeDirect mailing – promotional material is
sent to potential customers by post/emailPublic relations – building the relationship
between the firm and the public by enhancing its reputation
Promotional mix
Most businesses use a combination of differentpromotional activities.
The chosen promotional mix will depend on:CostTarget marketProductCompetitors
AIDA
Promotional campaigns often take into account the
AIDA model:
Awareness - raising awareness of a product
Interest – exciting interest in the product
Desire – creating desire for the product
Action – encouraging a purchase