Introduction to Marketing (Unit 4.1)

Introduction to Marketing (Unit 4.1)

• Needs are human essentials for survival like water or food.
• Wants are human desires.
• Marketing addresses needs and wants to make customers buy a firm's products.
• Marketing involves identifying, anticipating, and understanding customer needs.

Market Orientation

• It helps in understanding what consumers need and want by outward looking.

Advantages of Market Orientation

• Greater flexibility in responding to market changes.
• Lower risk because tailoring the products meet consumer needs.

Disadvantages of Market Orientation

• Market research is expensive.
• Dynamic external environment may hinder the effectiveness.

Product Orientation

• This focuses on making products that they hope there is market demand by inward looking.

Advantages of Product Orientation

• Quality control can be assured.
• More control over operations.

Disadvantages of Product Orientation

• Market needs are often ignored.
• High risk strategy with high failure rate.
• High research and development costs.

Market Share

• Market share refers to an organization's share of the total sales value within a specific industry.
• Market share = Firm’s sales revenue / Industry sales revenue x 100
• Firms that have high market share can benefit from status, abilities to set prices, and less threat from competitors.

Ways to Increase Market Share

• Brand promotion.
• Product development.
• Motivating and training workforce.
• Establishing intellectual property rights.
• Efficient distribution channels.

Market Growth

• Market growth is the rate at which the size of a market increases.
• Market growth rate = (Current market size – Original market size) / Original market size x 100

Market Leadership

• Market leadership is the business with the largest market share.

Benefit of Being a Market Leader

• Premium pricing.
• Economies of scale.
• Longer product life cycles.
• Favorable distribution terms.
• Greater publicity and brand exposure.
• Easier recruitment.

Relationship Between Marketing and Other Business Functions

• Operations management works together to research, develop, and launch products meeting needs.
• Finance works together in setting appropriate budget that meets marketing and finance objectives.
• Human resource management ensures the right quantity and quality of workers to meet customer needs.

Marketing Planning (Unit 4.2)

The Role of Marketing Planning

• A marketing plan outlines a firm’s marketing objectives and strategies used to achieve them.
• It covers marketing budget, marketing mix, anticipated difficulties and solutions, competitors' analysis, objectives, and research methods.

The Purpose of Marketing Planning

• It creates marketing objectives and appropriate strategies.
• Typical steps: conduct audit, set objectives, plan strategies, monitor performance, and evaluation.

Advantages of Marketing Planning

• Improves chances of success.
• Provides clear objectives and constraints.
• Allows better management control and understanding.

Disadvantages of Marketing Planning

• Time cost.
• Money cost.
• Human resource cost.
• Plans being inflexible and outdated.

Segmentation, Targeting, and Positioning

Target Markets and Market Segments

• A market for a service consists of different customer segments.
• A market segment is a distinct customer group having similar needs.
• A target market is the segment a firm wishes to sell to.

Consumer Profiles

• Consumer profiles include similar characteristics such as demographic, geographic, and psychographic factors.

Demographic Factors

• Age.
• Gender.
• Race and ethnicity.
• Marital status.
• Religion.
• Language.

Geographic Factors

• Location.
• Climate.

Psychographic Factors

• Hobbies.
• Interests.
• Values.
• Culture.
• Status.

Behavioral Factors

• Purchasing behavior (frequency, volume, loyalty).
• Usage pattern.
• Brand loyalty.
• Attitude.

Economic Factors

• Economic conditions like price sensitivity, consumer spending, and employment status.

Technological Factors

• Access to technology.
• Online shopping habits.
• Social media influence.

Position Maps

• This reveals customer perceptions of a product or brand in relation to competitors.

Ways Business Refine Marketing Strategies Through Position Maps

• Targeting market segments based on perceptions.
• Repositioning brand to fix undesirable views.

Difference between Niche and Mass Market

Niche Market

• This focuses on specific, well-defined segments.
• Luxury yacht makers or Chanel are examples.

Advantages of Niche Market

• More marketing focus.
• High prices due to less competition.
• Specialized in meeting specific needs.

Disadvantages of Niche Market

• Limited customer base.
• Few economies of scale opportunities.
• Higher competition.

Mass Market

• Focuses on multiple segments to maximize sales.
• Nike, Microsoft, and Coca-Cola are examples.

Advantages of Mass Market

• Economies of scale.
• Single campaign to address the entire market.
• Large customer base.

Disadvantages of Mass Market

• High barriers to entry.
• Heavy competition.
• Lacks focus on individual needs.

The Importance of Having a USP

• USP is product aspect that makes it stand out from competitors.
• It explains why customers buy the product over rivals.

How to Differentiate Products From Competitors

• Differentiation is the act of distinguishing a business from rivals.
• Methods of differentiation revolve around the marketing mix.

Marketing Mix Components

• Product.
• Price.
• Place.
• Promotion.
• Physical evidence.
• Process.
• People.

Sales Forecasting (Unit 4.3)

Sales Forecasting

• It predicts a firm's sales levels over a time period using quantitative management.
• This is helpful for identifying problems and opportunities in advance.

Forecasting Techniques

• Extrapolation.
• Market research.
• Time series analysis.

Extrapolation

• Identifies a trend by using past data and extends the trend to predict future sales.

Market Research

• It forecasts customer buying habits.

Time Series Analysis

• It attempts to predict sales levels by identifying underlying trends from sales figures.

Main Elements in Time Series Analysis

• Seasonal Variations
• Random Variations
• Cyclical Variations from Economic Booms

Situations Where Sales Forecasting Might Be Inaccurate

• New businesses or start-ups.
• Subject to technological change.
• Highly sensitive to price and income.
• Fashion items.
• Changes in market share.

Benefits of Sales Forecasting

• Improved working capital and cash flow.
• Improved stock control.
• Improved productive efficiency.
• Helps secure external finance.
• Improved budgeting.

Drawbacks of Sales Forecasting

• Limited information.
• Inaccuracy.
• Garbage in meaning output will be out.
• External influences.

Market Research (Unit 4.4)

The Purpose of Market Research

• Market research discovers the opinions, beliefs, and preferences of customers.
• It provides current information.
• It helps tailor marketing mixes, to assess customer reactions or in understanding trends.

Primary Market Research Methods

• Surveys.
• Interviews.
• Focus groups.
• Observations.
• It involves gathering new data for a specific purpose.

Advantages of Primary Research

• Relevant data tailored.
• Meaningful and up-to-date information.
• Confidential and unique.

Disadvantages of Primary Research

• Time-consuming.
• Costly.
• Questionable validity.

Surveys

• Surveys use question series to collect data.
• This can be self-completed, personal, telephone, online, or postal.

Interviews

• Interviews involve discussions to investigate opinions.

Advantage of Interviews

• The attitudes and feeling can be examined.

Disadvantages of Interviews

• Qualitative Analysis might be hard to analyze.
• Time consuming.
• Scope for interviewer bias.

Focus Groups

• It involves small groups gaining insights into opinions.

Advantage of Focus Groups

• Detailed questions can be asked, with an increased engagement in the discussion.

Disadvantages of Focus Groups

• Dominated by extroverts.
• Have tendency to conform.
• Costly per participant.

Observations

• Involves watching behavior in different situations.
• Can be carried out through surveillance, evidence, or in person.

Advantage of Observations

• Actual behavior is recorded.

Disadvantage of Observations

• Does not show why people behave in the way they do.

Secondary Market Research Methods

• It involves collecting data and information that already exists.
• Market analysis, academic journals, government publications, media articles, and online content used.

Advantages of Secondary Research

• Data is available and faster to collect.
• Provides industry insights.
• Wide range of sources.
• Findings statistically valid.

Disadvantages of Secondary Research

• Data might be obsolete and irrelevant.
• The information is not tailored.
• Information widely available to competitors.

Market Analyses

• Market analyses reveal industry characteristics such as market size and share.
• It can measure performance verse is rival.
• Data can be found in market research firms or competitors.

Academic Journals

• Those are periodical publications.
• Harvard business review is an example.

Government Publications

• It publishes range of data.
• Population census is an example.

Media Articles

• Newspapers, magazines, books, websites, blogs, and social media are examples.

Online Content

• Search engines such as Google can be used to find online content.

Difference between Qualitative and Quantitative Research

Qualitative Research

• Involves non-numerical answers and opinions.
• Its purpose is to understand behaviors and attitudes.

Quantitative Research

• Involves factual, measurable information rather than opinions.

Advantages and Disadvantages of Qualitative Research

• It explores behaviors and attitudes.
• There is more flexibility in the process.
• Inexpensive for small samples
• Small samples may prevent truly representable findings from from population

Sampling Methods

Quota Sampling

• Quota sampling selects a certain number of people from different market segments.

Advantages of Quota Sampling

• Can be collected quickly with more reliable findings.

Disadvantages of Quota Sampling

• Not always presentable to entire population.

Random Sampling

• Gives everyone in population a equal chance of getting selected.

Advantages of Random Sampling

• Easy to select a sample.
• Minimizes bias.

Disadvantages of Random Sampling

• Indiscriminate, it selects people that are not applicable.

Convenience Sampling

• Uses subjects who are easy to reach.

Advantages of Convenience Sampling

• Availability and quickness of collection.

Disadvantages of Convenience Sampling

• Inadvertent exclusion may occur of a large portion, representing a skewed finding.

The Marketing Mix (Unit 4.5)

People

• Employee and customer relation matters.

The Provision of Services

• It relies on the goodwill of all employees.
• Service-oriented business require trust between their employees.

Cultural Variation in Customer Service

• It measures a cultural interaction.
• Non-contact requires space.
• Culture has to be handled diplomatically.

Processes

• Processes are how a service is provided or delivered.
• It includes services or waiting times.

Physical Evidence

• Tangible aspects of a service.
• It will depend on the service being provided.

Product

• Can be a good or service with needs and wants.
• Can be either tangible like smartphones or intangible like software.

Consumer Products

• Purchased by individuals for personal use.
• Examples can be perishable, specialty, durable, or fast-moving.

Producer Products

• Purchased to be used in the production process.

Product Life Cycle

• Shows different stages from initial design and launch to the decline.

Product Portfolio

• Products a business owns at a point.

Research and Development Stage

• There are no sales revenues because product not available for sale.
• There are high research costs.
• Prototypes and test markets can be used.

Launch Stage

• Products are introduced to the market.
• Sales increase slowly.
• It is the goal to move to growth stage quickly.
• Buyers are known as innovators.

Growth Stage

• Rapid increase in sales due to greater consumer awareness.

Maturity Stage

• Sales increase at a slower rate.
• Economies of scale are possible.
• Heavy promotion to differentiate brands.
• Buyers are known as the majority.

Decline Stage

• Sales and profits fall.
• Promotional spending stops, buyers are known as laggards.

Investment Expenditure and The PLC

• Research is basic.
• Launch is promotion.
• Growth is improvement.
• Decline is divestment.

Profit and the PLC

• Research has no profit.
• Launch has little profite.
• Growth profit is recovered, therefore achieved.
• Maturity makes the maximum profite.
• Decline has the profite disappearing.

Cash Flow and the PLC

• Research is highly negative.
• Launch is negative.
• Growth turns positive.
• Decline is positive.

Strategies for Extending maturity of PLC

• Reducing prices.
• Redesigning.
• Repackaging.
• Creating new markets.
• Promotional activities.

Aspects of Branding

• Awareness.
• Development.
• Loyalty.
• Value.

Branding

• A brand is a name identifiable with a business or product.
• A brand is a product differentiator and asset.

Aspects of A Brand

• sign.
• symbol.
• color scheme.
• font.
• design.

Brand Awareness

• This recognition by potential customers.

Brand Development

• It helps extend a product's life cycle.

Brand Loyalty

• Occurs when customers buy that brand.

Benefit of Brand Loyalty

• Maintaining market share.
• Ability to set premium pricing.
• Acts as entry barrier.

Brand Value

• What customers premium willing to pay.

Importance of Branding

• Benefits from risk reduction and premium price.

Place (Distribution in Marketing Mix)

• Refers to making the product available to consumers.

Channel of Distribution

• Refers to the means used by firms to get customers access.
• Done by selling directly.

Levels of Distribution

• Zero level.
• One level.
• Two level.

Wholesalers

• Buy product quantities to break bulk and resell to retailers.

Benefits of Wholesalers

• Wholesalers deal with distribution issues.

Limitation of Wholesalers

• Risk passes to the marketer.

Distributors

• Retailer also refers to the “shops” or “stores”.
• Trade only in a few manufactures.

Agents

• Negotiators who act of buyers and vendors.
• They charge commission.
• Real estate agents are example.

Retailers

• Final seller to the consumer.

Specialty Channels

• Indirect to distribution.

Benefits of Specialty Channels

• Greater control.
• Growing e-commerce.

Telemarketing

• Sell from telephone systems.

E-Commerce

• Trading from the internet.

Vending Machines

• Stock the product, especially cigarettes.

Mail Order

• A business promo ships with promotional material.

Factors Affecting Choice of Channels

• Products
• The markets
• The time
• Legal.

Pricing Strategies

Common Pricing Strategies

• Cost-plus.
• Penetration.
• Loss leader.
• Predatory.
• Premium.

Cost Plus Pricing

• Calculates production cost then adds markup to determine final price.

Advantages of Cost Plus

• Simple and quick to calculate.
• Profit is made.

Disadvantages of Cost Plus

• Market is ignored.
• Competitive pricing is ignored.

Penetration Pricing

• Sets a lower price for a new service.

Actions Made because of Penetration Pricing

• This attracts price-sensitive customers.
• Once enough there will be a raise in price.

Disadvantages of Penetration Pricing

• It can become not profitable

Loss Leader Pricing

• Charge price below average.

Advantages of Loss Leader

• Customers switch brands and turnover is minimized.

Disadvantages of Loss Leader

• Smaller rivals accusing business behavior.

Predatory Pricing

• Prices set so low, competitor's driven' out

Premium Pricing

• This is a high price making high markups.

Advantages of Premium pricing

• Brand that is exclusive value increases.

Disadvantages of Premium Pricing

• Raw Materials are required in components therefore production costs are high.

Dynamic Pricing (HL Only)

• A changing market is a price of elasticity and a reflection of pricing.

Advantages of Dynamic Pricing

• Gives control over method to maximize profits.

Disadvantage of Dynamic Pricing

• Not Knowing how high a Price is leading into Price wars therefore unsustainable in the Long Term

Competitive pricing

• Sets a level price.

Advantage of Competitive Pricing

• Cost is Easy to calculate.

Disadvantage of Competitive Pricing

• Firm must differentiate to compete non pricing.

Contribution Pricing

• Based on Setting A Product.

advantage Of Contribution Pricing

• Selling Price is High enough to cover the costs

Disadvantage of Contribution Pricing

• Subjective allocation of indirect costs between products.

Price Elasticity of Demand

• Price affects sales revenue. Products increase revenue when price increase with very few substitutes.

Promotion (Marketing Mix)

• Refer to Communicate market to intending to influence a business of good.

Communicate through

• Inform the market.
• Persuade others to switch
• Remind people.

Marketing Methods

• Above the line: paid promote

BTL

• Business allows direct control.

TTL

• Integrates approach

Through an effective channel that will:

• Attention to capture
• Interest to extend attention
• desire to create need
• action to get target to increase.

Above the Line

• Television ads.
• Radio ads.
• Cinema ads.
• Newspaper ads.
• Magazine ads.
• Outdoor.

Bellow The Line

• Mail/ marketing.
• Personal selling.
• Point of sale.
• Publicity.
• Sponsorship.
• Packaging.
• Word of mouth.
• Through The Line.

Through-the-Line Promotion

• Combination of ATL and BTL methods in marketing.
• SMM is creating contents encouraging sharing.

Factors to be considered along With promotion

• The Costs head method
• The Products of the channel
• the level of product
• Legal

Social Media Marketing Strategy

• Internet is gained on sites such as face book.

International Marketing (HL Only)

• Overseas is not simple, there is simple that is considered.

Entering and internationally

• Increase market overseas
• Saving cost
• Standardize marketing strategy
• Spread the world
• Extended marketing channel.

Social Threat

• The difference in economy and market

Economical Threat

• Competitive market of the trade internationally.

Political Threat

• Harder climate that takes risks.

Legal threat to be considered

• Advertising.
• Laws in the foreign advertising.

Consider

• How to interact in country and ethical language
• Be a cultural export.