Marketing V4

Marketing

Today  Consumer and Industrial Markets  Definition of Marketing  Role of Marketing  Marketing Objectives  Marketing Activities  Factors leading to importance of Marketing

What is a market?  Any place where buyers and sellers meet

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

Industrial Markets  Industrial markets - organisations which 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

What is Marketing  “Marketing

is the management process responsible for identifying, anticipating & satisfying consumer requirements profitably”

About Marketing  Marketing finds out consumers needs and what products meet them “Customer is king”  Marketing is a business philosophy and an ongoing process  Marketing affects ALL aspects of business  Marketing is NOT just selling  Marketing and advertising are NOT the same

What is the Role of Marketing  To identify, anticipate and satisfy customers needs  Providing customers with desired goods/services = profits  To ensure customer awareness or goods/services

Marketing Objectives  Target a new market or market segment  Achieve or maintain market share  Develop new range of products  Improve image of product

Marketing Activities  Market Research  New Product Development  Selling  Pricing  Promotion and Advertising  Preparing Publicity Information

Factors leading to Importance of Marketing  Economic Growth – booms = 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

Recap  Consumer and Industrial Markets  Definition of Marketing  Role of Marketing  Marketing Objectives  Marketing Activities  Factors leading to importance of Marketing

Today  Product Orientation  Market (Customer) Orientation  Advantages of Market Orientated approach

Product Orientation Production

Manufacture

Aggressive

Capabilities

Product

Sales

Customers

Effort

Production Orientation is when a business focuses on the production process and seeks to make goods which are viewed as superior

British Motorcycle Industry  Britain ruled the world of bikes in 30s and 40s.  BSA, Norton & Triumph neglected consumer tastes as sleeker models arrived  Suzuki, Kawasaki and Honda catered for this. Look at what happened!

Market Orientation Customer

Potential

Marketing

Needs

Market

Products

Opportunities

Customers

& Services

Market Orientation starts with the consumer and looks at consumer needs. It is customer orientated.

Sony Walkman  Designed due to people’s needs for a small tape recorder  Workers used headphones to listen to music and the Walkman was born

Henry Ford and Model T  The World’s First Assembly Line churned out the Model T Ford.  Henry Ford ‘boasted’ that “it was available in any colour… as long as it’s black!” Ford was customer orientated because the savings made by the assembly line were passed down to the customer by offering cheap automobiles

Advantages of Market Orientated approach  Respond quicker to changes in market due to market research  Stronger position to meet new competitors  Can anticipate market changes  More chance of new product success

Recap  Product Orientation  Market (Customer) Orientation  Advantages of Market Orientated approach

Today  Marketing Environment  Market Share  Market Growth  Marketing Mix

The Marketing Environment Consumer trends and behaviour Competition

Political

THE MARKET The Economy

Social

Technology

 “It is useless to tell a river to stop running; the best thing is to learn how to swim in the direction it is flowing.”  Anonymous

Market Share US Fast Food Sales

McDonald's

31%

36%

Burger King Wendy's KFC

7% 7%

19%

Others

Market Share is the percentage of customers who buy/use a company’s goods/services

Market Growth  Increasing market share means a business increases sales at the expense of competitors.  However, firms can also increase sales if the whole market grows.  Market growth occurs when the number of people buying/using the good/service increases

Marketing Mix

The 4Ps  Product  Price  Place  Promotion

Recap  Marketing Environment  Market Share  Market Growth  Marketing Mix

Today  Product/Service  Core and Augmented Product  FMCGs  Tangible and Intangible  Marketing of Services  Product Line  Product Mix

Product/Service Product The good or service which the business is trying to sell. Most important element a it determines what the price will be (Price), how it is promoted(Promotion) and where it is sold (Place). Core Product provides a basic need Augmented Product is made more attractive to the customer by having additional features.

Fast Moving Consumer Goods  Some goods sell more quickly than others and in greater quantities. These types of goods have different marketing mixes compared to say a premium brand. They are called FMCGs.  Coffee, cereals, chocolate, hair care and detergents are examples of FMCGs.

Some lies and exaggerations!  Coca-Cola told a few early porkies.  Can you have a guess what they said it could do?

Answers!!!

Oh, I say!

 It could cure hangovers!  It could cure other ills of the upper body  It was even hinted at being an aphrodisiac!

Tangible and Intangible  Products are tangible, in that we can touch and feel them.  Services are intangible, for you cannot touch or feel the act of being transported. It is performed for you. Therefore we cannot compare the physical characteristics of the service.  What we do is we compare the process, people and physical environment of the service.

Marketing of Services  Think of two rival cinemas. They usually offer the same films, but which one do you prefer?  Process – how does the customer go through the experience? Queues? Long periods of waiting?  People – what are the staff like? Friendly? Helpful?  Physical Environment – are the surroundings eye catching? Beautiful?

Product Line  Many businesses produce a range of products with similar uses and similar characteristics.  For example, the iPod and the iPod mini are both variations of the same product solution.

Product Mix  The product mix is the product range or different types of product a business manufactures and sells.

So Apple, as well as having the iPod, the also have Applebooks and the Apple Mac computer.

Recap  Product/Service  Core and Augmented Product  FMCGs  Tangible and Intangible  Product Line  Product Mix

Today  Product Life Cycle  Stages in PLC  Extension Strategies  Effects of Extension Strategies  Boston Box

Product Life Cycle

Product Life Cycle Products have a natural ‘lifespan’. Some are very short others are around for decades. The life of a product can be prolonged by using extension strategies. However all products go through a number of distinct phases.

Stages in Cycle Development Stage – many products will never progress past this stage. Development of new products is essential but can be very costly. Before launching it may be test-marketed. Modifications can then be made based on feedback. Introduction Stage – heavy advertising at this stage to make consumers aware of the product. Sales are slow and costs are high. Growth Stage – consumers more aware of the product and sales start to grow rapidly. It is during this stage that the product begins to become profitable.

Stages in Cycle Maturity Stage – sales reach their peak. Advertising costs are lower and development costs should have been repaid. The product is at its most profitable. The business will work to keep the product in this stage for as long as possible. This can be done by using extension strategies. Decline Stage – Sales and profits start to fall. Mobile phone sales are beginning to decline if firms wish to stay in business they will have to create new phones or new demand for phones.

Extension Strategies Reducing Price Therefore Promoting More Frequent Use of Product – reduce cost of texting to mobile phones. Developing New Markets for Existing Product – Computers were originally manufactured for the business market, moved into home market. Finding New Uses for Existing Products – fire lighters now used for barbeques.

Extension Strategies Develop a Wider Range of Products – new versions of same product can produce new interest from consumers. Irn Bru – range of can and bottle sizes, fruit chews, ‘alco-pop’ market. Developing Styling Changes – introducing slightly different product – football strips.

Effects of Extension Strategies

Boston Box (Product Portfolio) Market Share High High

Market Growth Low

Low

Boston Box - Strategies Stars Problem Children Build sales/market share Build selectively Invest to turn into cash Harvest or divest rest cow Cash Cows Dogs Hold sales/market share Harvest or Use excess cash to invest Divest in stars, problem children

Recap  Product Life Cycle  Stages in PLC  Extension Strategies  Effects of Extension Strategies  Boston Box

Today  What is a New Product?  Facts about NPD  Adoption of Innovation  Stages of Development  Product Failure  Product Cannibalisation  Successful NPD  Japanese Approach

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

NPD: Facts  1 in 50 new products fail

Adoption of Innovation

Stages of New Product Development  Generate Ideas  Analysis and Further Research  Are the Products Marketable?  Prototype  Test Marketing  Full Launch

Product Failures  Investigate one of the following…  New Coke  Sony Betamax VCR  McDonald’s Arch Deluxe  Maxwell House Ready-to-drink coffee  Sinclair C5

Sinclair C5

Why do firms spend vast sums of money on product innovation?  To achieve high profits  To enhance public image  Wider share of market – can become market leader  To compete with rivals  To spread risk – some existing products may be entering decline stage  Obtain customer loyalty – encourage more demand for their products

Product Cannibalisation  When launching a new product companies must be aware of the potential for the product to eat into the sales of one of their existing products.  When Kit Kat released Kit Kat Chunky, sales were good, but overall sales for the Kit Kat family of brands were down.

Successful NPD  Unique, superior product  Well defined customer target market  Close links between R&D and Marketing  Well executed stages of NPD  Market attractiveness

Japanese Approach  In Japan they use the trial and error approach.  They do not worry about market research.  Japanese firms release hundreds of products in hope of getting one or two hits.  They aim to get new products to market quickly and at low R&D costs.  Failures can be modified and released again.  This approach is called Expeditionary Marketing.

Recap  What is a New Product?  Facts about NPD  Adoption of Innovation  Stages of Development  Product Failure  Product Cannibalisation  Successful NPD  Japanese Approach

Today        

Branding Characteristics of Good Brands Brand Equity Corporate Branding Benefits of Branding Drawbacks of Branding Own Brands Advantage of Own Brands

Brand Logo Quiz  You will be issued with a sheet asking you about Brand logos.  How many can you get?  Some are easy, some difficult!

Branding Branding is used to create USP’s (unique selling propositions) and ESP’s (emotional selling propositions) The business chooses a word or symbol, or both, then registers them so that they can only be used on its products. Baxter’s, Oxo, Cadbury’s and Heinz are all wellknown brand names.

Brands  Brands are the personality attributed to products and/or services.  Without the brand, Coca-Cola is little more than sugared water; Domestos is just another detergent, and Chiquita is a banana just like another.

World’s 10 Most Valuable Brands

 Investigate this year’s Top 10 Valuable Brands to see if there has been a change.  If there has been, can you think of some reasons why they have went up or down in the rankings?

Characteristics of Good Brands • legally protectable • easy to pronounce, remember and recognise • attract attention • suggest product benefits (eg.:Easy off) or suggest usage • suggest the company or product image • distinguish the product's positioning relative to the competition

Brand Equity… is the value built-up in a brand. It can be positive or negative. Positive brand equity is created by a history of effective promotion and consistently meeting or exceeding customer expectations. Negative brand equity is usually the result of bad management. The value of a company's brand equity can be calculated by comparing the expected future revenue from the branded product with the expected future revenue from an equivalent non-branded product. This calculation is at best an approximation. Positive brand equity can allow family branding, which makes new product introductions less risky and less expensive.

Corporate Branding… refers to the practice of using your company's name as a product brand name. Disney, for example, includes the word 'Disney' in the name of many of its products. So do IBM, Pepsi, and Coca-Cola. One advertising campaign can be used for several products. It also helps new products being introduced because customers are already familiar with the name. A corporate branding strategy should only be used if the company is already well known by the target market and also has a very positive image in their minds.

Corporate Branding (Contd.) If corporate branding is done well, the corporate name can become synonymous with a product category (e.g.: Kleenex). Even purchasers of Charmin will refer to the product as Kleenex. The main disadvantage with corporate branding is the products are not treated as individuals; hence there is not adequate focus on the products' unique characteristics.

Benefits of Branding Instant recognition of the product by the customer. Brand loyalty – repeat purchases Higher prices can be charged Quality is associated with it Easier to launch new products Good after sales service May lead to purchases of other products with same brand name

Drawbacks of Branding Time is taken to establish a brand Promotion costs will be high Bad publicity for one product can affect the whole range of same-brand products Fake products may appear. These imitators are very difficult to stop. (Burberry, Rolex and Calvin Klein who can charge premium prices for their products suffer most at the ands of the forgers.)

Own Brands Most of the supermarket chains, and large retailers such as Boots, offer a wide range of products under their own brand names. These can be produced by the supermarket or by a manufacturer who is contracted to produce goods for the supermarket.

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 value than established brand names (although this is not necessarily true).

Recap        

Branding Characteristics of Good Brands Brand Equity Corporate Branding Benefits of Branding Drawbacks of Branding Own Brands Advantage of Own Brands

Today  Price  Long Term Strategies  Short Term Strategies

Price Consumers will only pay what they can afford and what they think is a reasonable price for the product. Consumers use price as a measure of quality. When setting a price for a product you need to consider: Costs of production Profit mark-up

Long Term Pricing Strategies Low Price - Charge 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 – service etc. High Price - High quality products, premium goods and services where image is important, such as perfumes.

Short Term Pricing Strategies Skimming -using a high price initially for a new product where there is little competition. Penetration Pricing - used to introduce a product to an established market. Allows the business to achieve sales and gain market share very quickly. Usually set a low price to attract customers. Once product is established price can increase.

Short Term Pricing Strategies Destroyer Pricing - Setting a very low price to destroy the competition. Product probably being sold at a loss, however once competition is destroyed the price will return to market price. Promotional Pricing - Used to boost sales and create interest in a product by lowering the price. Supermarkets use this for some of their sales lines, as loss leaders. Demand-orientated Pricing - Price varies with the demand, ie crops, trains, phones etc.

Recap  Price  Long Term Strategies  Short Term Strategies

Today  Place  Wholesalers  Retailers  Agents  Choice of Distribution Channel

Place Producers Producer to Wholesaler Producer to Retailer

Wholesalers Direct Selling

Two or more intermediaries

Retailers

Consumers

Wholesalers…  they buy large quantities of product from suppliers and sell them on in smaller volumes to retailers or business users. The wholesaler provides a link between the producer and the retailer, saving the producer time and money in delivering direct to the retailer.

Retailers…

the shop which sells goods to the general public. Retailers offer a variety of goods and services from a variety of producers. Goods are stored on their premises and are prepared for sale and display them for sale.

Types of Retailers  Independent retailers – most common  Franchises – offer a new type and can be best illustrated as your local business a chance to trade corner shop. using a successful formula,  Multiple chain stores – a number of e.g. McDonald’s. outlets across the country with a well-known  Mail Order – rather than name. E.g. Marks and Spencers having expensive shops to run  Supermarkets – offer a wide range of they issue catalogues to groceries, clothing and electrical goods. E.g. consumers who can select Tesco, Sainsbury’s products in the comfort of  Department Stores – offer a range of their own home. Successful goods within different departments. due to the credit facilities Normally specialise in premium brands. E.g. House of Fraser, Debenhams offerd. E.g. Freeman’s

 Door-to-door – companies like Avon take orders from people’s doorstep.

Agents…  an independent person or company appointed to handle sales and distribution within a specified area. Agent’s income comes from commission they make on each sale.   Agents carry out promotional activities to attract customers and sell them the product. Car manufacturer’s use agents to sell to local markets because they should have better knowledge of the market.  One drawback is that if an agent sells many different products, yours might not be given the attention needed.

Importer/Exporters… play a similar role to the agent but on an international scale. They will have superior knowledge of the world markets, and can create sales through their own promotional campaigns. Sometimes act as retailers too.

Choice of Distribution Channel The Product – perishable, unique The Market – size – Mars Bars Legal Requirements – alcohol, drugs Buying Habits – expectations of customers The Business – own distribution network

Choice of Distribution Channel  The Product – Perishable products which have a limited shelf-life should select a direct channel. However, some perishables like fish, fruit and vegetables sometimes go through specialist wholesalers who buy from small producers in order to make up the bulk needed fro retailers. Premium brands are selective where they are sold, and both Calvin Klein and Levi’s have prevented Tesco selling them in their stores.   The Market – if the market is nationwide, then to save in distribution costs, then using wholesalers and retailers are more efficient. If the market is small and local, direct selling is more apt.  Legal requirements – some goods can only be sold through licensed premises such as chemists, pubs and off-licenses.

Choice of Distribution Channel  Buying habits – consumers influence where products are distributed. The emergence of out-of town retail parks have seen identikit sites open up nationwide. Each one contains supermarkets, carpet stores, furniture stores, DIY stores, Garden centres etc. People now expect these type of stores to be located in such places.  The business – some firms have their own distribution process with their own wholesalers and retailers. Once common among large organisations, most of these functions have been outsourced.

Recap  Place  Wholesalers  Retailers  Agents  Choice of Distribution Channel

Today  Types of Promotion  What is Promotion?  Types of Advertising  Choice of Advertising Media  Types of Advertising Media

Types of Promotion Advertising Sales Promotion

Merchandising

Exhibitions and Trade Fairs

Promotion

Public Relations

Direct Mail

Personal Selling

What is Promotion Method used to pass on information to consumers an essential way of keeping existing customers and getting new ones

Above and Below the line  Above the line promotion: advertising through consumer media such as TV, magazines, newspapers and radio.  Below the line promotion: promotions used other than main media such as point of sale, sales promotions etc.

Methods of Promotion 1. 2. 3. 4. 5. 6. 7. 8.

Advertising Sales promotion Public relations Merchandising Packaging Exhibitions and trade fairs Direct mail Personal selling

Types of Advertising Informative: Health Education Board for Scotland – smoking, drugs, alcohol etc Persuasive: used in very competitive markets, use powerful images and language – ‘Probably the world’s favourite lager.’ Corporate: promoting the whole company not a single product – BP adverts focus on their ‘green image’ not on the product (petrol) Generic: the whole industry come together to promote the whole industry – Scottish Beef, Scottish Tourism

Advertising is a 'paid for' communication. It is used to develop attitudes, create awareness, and transmit information in order to gain a response from the target market. There are many advertising 'media' such as newspapers (local, national, free, trade), magazines and journals, television (local, national, terrestrial, satellite) cinema, outdoors advertising (such as posters, bus sides).

Informative Advertising used to pass on information about new or improved products, or to give information about a technical product. The government uses informative advertising in the media. E.g. HEBS regularly run ads to change Scottish unhealthy lifestyles and eating habits.

Persuasive Advertising …a hard sell by manufacturers to get us to buy their products. Often used in competitive markets where there are few USPs between products. They use powerful images and language to try and get us emotionally involved. E.g. Levi use distinctive adverts to persuade us they are cool to wear.

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. A recent example would be during the BSE crisis, British Beef advertised in unison to try and allay consumer’s fears. The Milk Board is another such example.

Choice of Advertising Media How and where an organisation carries out its advertising will depend on how it can best reach its existing and potential customers. –Young audience: teen magazines, Hollyoaks –Older people: Sunday newspapers, daytime TV –Whole market: Coronation Street

Types of Advertising Media Print: newspapers and magazines Broadcast: TV, radio, Internet Outdoor: billboards, buses, round football grounds etc Which one is chosen depends on: •Cost: TV expensive but memorable •Target audience: choice of programme, newspaper •Competitors’ Advertising: usual to match competitors •Impact required: new product  wide variety of methods •The Law: tobacco and alcohol

Recap  Types of Promotion  What is Promotion?  Types of Advertising  Choice of Advertising Media  Types of Advertising Media

Today         

Sales Promotion – Into the Pipeline Sales Promotion – Out of the Pipeline Public Relations Merchandising Packaging Personal Selling Direct Mail Trade Fairs and Exhibitions Sponsorships

Sales Promotion… tends to be thought of as being all promotions apart from advertising, personal selling, and public relations. For example the BOGOF promotion, or Buy One Get One Free. Others include couponing, money-off promotions, competitions, free accessories (such as free blades with a new razor), introductory offers (such as buy digital TV and get free installation), and so on. Each sales promotion should be carefully costed and compared with the next best alternative.

Sales Promotion – Into the Pipeline •Dealer Loaders: 6 boxes for the price of 5 •Point-of-sale displays, posters, videos etc •Dealer competitions •Staff training for the shops •Sale or return •Extended credit

Sales Promotion – Out of the Pipeline •Free samples •Bonus packs: 50% free •Price reduction: 50p off offer •Premium offers: one product is free when you buy another •In-store demonstrations and tasting •Merchandising: in-store displays

Public Relations… is defined as 'the deliberate, planned and sustained effort to establish and maintain mutual understanding between an organization and its publics' (Institute of Public Relations). It is relatively cheap, but certainly not easy. Successful strategies tend to be long-term and plan for all eventualities. All airlines exploit PR; just watch what happens when there is a disaster.The pre-planned PR machine clicks in very quickly with a very effective rehearsed plan.

PR Faux Pas  On September 11th 2001, a Government aide, Jo Moore decided in an email to say that it would be a good day to “bury bad news”. The email was leaked and she was out of a job.  April 1991. Gerald Ratner was speaking at an AGM and was asked how he could sell jewellery at such a low price. “Because it’s total crap” he replied. Ratner shares and sales plummeted overnight and almost folded the company.

Public Relations •The way an organisation communicates at a corporate level with: the public, the press, the government and shareholders •Will involve: press statements, making charitable donations, sponsoring events, arranging product endorsement •Publicity: internal through press releases or external through news reports or consumer programmes. Not usually paid for, can become advertising if it is good publicity.

Merchandising

is an attempt to create an atmosphere or mood to attract customers into stores via elaborate displays, posters etc. Layout of stores are designed for customers to follow routes whereby to get to the popular selling products they have to pass less popular ones, in the hope of making a sale. Similar products are stacked together for customer ease. Prices for shelf space vary, the most expensive for producers to get is at eye-level. Products at eye-level out perform other, similar products.

Merchandising •An attempt to encourage the customer to buy at the point-of-sale by using window displays, posters,etc •Layout of products: popular items at the back of the store to make customers walk passed less popular items. •Related items together ie soap powder •Products at eye level are the best position to achieve sales •Well stocked shelves, the right atmosphere ie bright lighting can create a feeling of cleanliness near fresh

Packaging Good packaging can increase sales of a product. Factors that should be considered: Shape and weigh: can affect distribution costs •Protection: product must not be damaged in transit or be affected by heat, light or dust •Convenience: easy for the customer to handle •Design: eye-catching to distinguish from competitors •Information: legal requirements (food labelling), technical requirements (wattage on bulbs) •Environmental factors: public concern about recyclable materials and excess packaging

Personal Selling… is an effective way to manage personal customer relationships. The sales person acts on behalf of the organization. They tend to be well trained in the approaches and techniques of personal selling. However sales people are very expensive and should only be used where there is a genuine return on investment. For example salesmen are often used to sell cars or home improvements where the margin is high.

Direct mail is very highly focused upon targeting consumers based upon a database. As with all marketing, the potential consumer is 'defined' based upon a series of attributes and similarities. Creative agencies work with marketers to design a highly focussed communication in the form of a mailing. The mail is sent out to the potential consumers and responses are carefully monitored. For example, if you were marketing medical textbooks, you would use a database of doctors' surgeries as the basis of your mail shot.

Trade Fairs and Exhibitions Such approaches are very good for making new contacts and renewing old ones. Companies will seldom sell much at such events. The purpose is to increase awareness and to encourage trial. They offer the opportunity for companies to meet with both the trade and the consumer. Expo has recently finish in Germany with the next one planned for Japan in 2005, despite a recent decline in interest in such events.

Sponsorship… is where an organization pays to be associated with a particular event, cause or image. Companies will sponsor sports events such as the Olympics or Formula One. The attributes of the event are then associated with the sponsoring organization.

Recap         

Sales Promotion – Into the Pipeline Sales Promotion – Out of the Pipeline Public Relations Merchandising Packaging Personal Selling Direct Mail Trade Fairs and Exhibitions Sponsorships

Today  Target Markets  Undifferentiated Marketing  Differentiated Marketing  Concentrated (Niche) Marketing  Market Segmentation  Bases of Market Segmentation

Target Markets  Undifferentiated or Mass Marketing  When a product is sold to the entire market  Differentiated Marketing  When a product is offered to a group or groups within the total market  This is done by Market Segmentation

Undifferentiated marketing

Firm

Market Marketing mix

Differentiated marketing Segment 1 Marketing mix 1 Segment 2

Firm Marketing mix 2

Marketing mix 3

Segment 3

Concentrated marketing Segment 1 Segment 2

Firm Marketing mix

Segment 3

Methods of Market Segmentation • Age • Race • Gender • Lifestyle

• Size of family • Income • Work • Location

Bluewater Retail Park  Investigate this famous shopping centre.  It has names for its different target customers.  Find out what they are!

Question!  Which famous British sci-fi author coined the term spending spree in 1956?  Aldous Huxley, writer of Brave New World

Socio-Economic Group A.

Higher managerial, administrative or professional B. Intermediate, clerical, administrative or professional C1. Supervisory, clerical, junior administrative or professional C2. Skilled manual D. Semiskilled and unskilled E. State pensioners, widows, casual and lowest paid

CONSUMER RESEARCH Copy this table into your jotter and complete it to show the most likely purchasers (and target market)of the various products Detail

Age group

Sex

Pint of beer in pub

18-30

M

The Financial Times Cardigan from Next Tommy Hilfiger Sweater Jeans from Gap Porshe sports car Can of

Irn Bru

New talking Action man New style roller blades Month’s holiday in Portugal in January

Socioeconomic group C

Psychographic Segmentation • Segments people according to lifestyle. • Lifestyle is a person’s individual pattern of behaviour. • Includes; • attitudes, beliefs, interests, hobbies, habits, religion

Stages in Life 1 2 3 4 5 6

Bachelor stage: young, single, not living at home Newly Weds: young, no children Full nest 1 Youngest child under 6 Full nest 2 Youngest child 6 or over Full nest 3 Older couples with dependent kids Empty nest 1 Older married couples, no kids living with them, head of house in employment 7 Empty nest 2 Older married, no children living at home, head of house retired 8 Solitary survivor in employment 9 Solitary survivor retired

Recap  Target Markets  Undifferentiated Marketing  Differentiated Marketing  Concentrated (Niche) Marketing  Market Segmentation  Bases of Market Segmentation

What form of marketing is this?

What form of marketing is this?

What form of marketing is this?

Answers…  A – Differentiated marketing  B – Undifferentiated marketing  C – Niche marketing

Today  Niche Marketing  Advantages and Disadvantages  Positioning and Perceptual Mapping

Niche Marketing  Niche Marketing is when a business targets a product at a small segment of a market  Tie Rack is an example of a Niche Market  Golf Tourism in Scotland is another.

Niche Marketing  Advantages  Niche market may be overlooked  Gain competitive advantage

 Disadvantages  If successful, larger competitors may enter market  Niche markets are smaller and may suffer more frequent swings in consumer spending

Positioning  Products are then ‘positioned’ by firms to fit a particular segment. This means how customers feel about a product. Their perceptions about a product.  The two most common values judged are price and quality.  Here is an example of a positioning grid (sometimes called a Perceptual Map)

Position these cars by Price and Economy (Fast/Slow)  Ferrari  Cougar  BMW  Hyundai  Proton  Cougar  Daewoo

Recap  Niche Marketing  Advantages and Disadvantages  Positioning and Perceptual Mapping

Today  What is Market Research  Market Research’s Role  Market Research Uses  Primary Research  Sampling  Secondary Research  Problems with Market Research

Market Research What is Market Research? “The collection, collation, and analysis of data, relating to the marketing and consumption of goods and services”

Market Research Provides Information About  Size and nature of market  Age, sex, income & preferences of market  Effectiveness of selling methods  What customers think and feel about product  Effectiveness of advertising & promotion

What can businesses use market research for? 1. Descriptive reasons: What is happening in a market? 2. Predictive reasons: What will happen in the future? 3. Explanatory reasons: Why is something happening? E.g. Why is our product only popular in one region? 4. Exploratory reasons: E.g.Could this new product work?

Primary (Field) Research 1. Questionnaires 2. Personal interviews 3. Telephone interviews 4. Postal surveys

5. Observations 6. Technology e.g. loyalty cards 7. Focus Groups 8. Customer panels

Used to collect Primary data

Sampling  Sampling is a way to find the views of the population without asking everyone!  There are 2 main types:  Random Sampling  Quota Sampling

Random and Quota Sampling  Random Sampling – a randomly generated list of individuals free of bias, but not targeted at any market segment. Names can be taken from telephone directory or electoral register.  Quota Sampling – a group selected to reflect a proportion or characteristics (age, sex, marital status etc.) of the whole population. Cheaper than random sampling but can be less representative than the random method

Primary Research +/+  Only firm that collects it has access  Can be controlled/verified

 Expensive to collect  Lengthy time involved, info could be out of date

Secondary (Desk) Research Used to collect secondary data. Examples:  Sales figures  Annual Reports and data  Internet data (other businesses websites for example)

Secondary (Desk) Research  Government publications: e.g. ‘Social Trends’  European Union – publications by ‘EUROSTAT’  Commercial publications: e.g. ‘Keynote’, ‘Verdict’ etc.

Secondary (Desk) Research +/+  Saves time  Relatively inexpensive

 Not specifically related to project undertaken  Cannot be verified

Problems with Market Research • Human behaviour is unpredictable • Sampling and bias • Other forms of bias e.g. leading questions

Recap  What is Market Research  Market Research’s Role  Market Research Uses  Primary Research  Sampling  Secondary Research  Problems with Market Research

 Why is marketing important to organisations?

 Describe how the information on the tea industry (p. 137) highlights marketing’s main functional areas:  Market research  Product development  Pricing  Distribution  Promotion and advertising

 Describe the main objectives of marketing.

 Explain why it is likely that productorientated organisations are likely to be less successful in modern markets?

 Describe the difference between goods and services, giving examples of each.

 Explain what you understand by the terms market share and market growth.

 Describe the government constraints placed on marketing.

 What do the terms unique selling proposition and emotional selling proposition mean?

 What are the main factors that affect the buying decisions of consumers?

 Describe how differentiated marketing can be more effective than undifferentiated marketing.

 Describe the difference between core and augmented product, giving examples.

 Describe the benefits for a business of having a range of products.

 Describe the product life cycle referring to costs, sales and profits at each stage.

 Identify the life cycle extension strategies available to an organisation.

 What are the advantages to an organisation of creating a successful brand?

 Describe the various pricing strategies that a business could use.

 Identify the factors that will affect a business’s choice of distribution.

 Identify the factors that will affect the business’s choice of advertising.

 Identify the different types of promotions into and out of the pipeline.

 Describe the differences between Public Relations and Publicity.

 Explain why packaging is important in marketing.

 Describe the differences between random and quota sampling.

 Describe how interviews can be used to gather market research.