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needed, revenue & profit should be highDecline – sales decline, extension strategies can beadopted or the product withdrawn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