Marketing PDF

Marketing -involves identifying, anticipating and satisfying customers’ wants and needs profitability -it begins with market research to find out what the customers want -the next stage is product development -the next stage is to develop a marketing strategy that will get the product to the mar...

Marketing -involves identifying, anticipating and satisfying customers’ wants and needs profitability -it begins with market research to find out what the customers want -the next stage is product development -the next stage is to develop a marketing strategy that will get the product to the market at a competitive and profitable price Marketing Plan -a strategy to identify customers' needs and ways of bringing together the resources required to satisfy those needs in such a way that the business earns a profit -the plan involves analysing the market, selecting a target market, researching the target market, and choosing the correct marketing mix -as part of a marketing plan, the business might use the marketing concept (Unit 5 Notes page 8) 7 Marketing Plan Benefits -sets objectives (it sets out the steps needed by a firm to achieve its objectives, management must choose the best way forward to achieve its objectives) -measure of success (business can measure its performance against the goals set in the marketing plan, thus helping to control the business, changes can be made if required) -anticipates problems (sets out the steps that the business must take in order to attract and keep customers, acts like a road map guiding the business towards increased sales and profits) -raising finance (existence of a marketing plan will impress potential investors, it will persuade them to provide the business with the capital it needs to develop and expand) (Unit 4 Notes page 2) -forms part of business plan (Unit 5 Notes page 45) Marketing Concept -involves recognising the needs and wants of the target market and developing products specially designed to satisfy these customer needs in a way that will be profitable and supplying the product or service more effectively than competitors -customer orientated approach -the idea that a firm should look at the needs of the customers first and make marketing decisions based on those needs to better satisfy customers' requirements -it means shifting the focus to looking at what customers want, not just what the business is able to do currently -based on the belief that the firm's goals are only achieved when the wants and needs of the market are identified and then producing and delivering such requirements profitably and more effectively than competitors -it involves profitably responding to a gap in the market of customer needs and wants more effectively than competitors -this should help increase sales as the product better matches consumer needs, and helps builds brand loyalty 8 Advantages of a Marketing Concept -business produces goods/services that meet customers’ needs, making it easier to generate sales -the firm focuses on what the customer actually needs and wants rather than attempting to get the customer to purchase what the firm has produced which results in less wastage through unsold stock and fewer returns which in turn reduces costs -improves brand reputation, customer loyalty and corporate image -it is a responsive approach to a market gap in customer needs and wants Marketing Strategy -the plan to achieve the marketing objectives (marketing objectives eg increase sales by 30% in European market) -it is the detailed planning process, which involves carrying out marketing research and then developing a marketing mix policy (product, price, promotion, place) to achieve the marketing objective -involves the application of the market research to the marketing mix principles to create a strategic marketing plan to achieve the marketing objectives through the implementation of a developed marketing mix -market research + marketing mix principles = marketing strategy => implemented by developed marketing mix = achieve market objectives Target Market -a particular market segment of likely possible customers of which goods or services will be sold to to satisfy the target customers’ needs or wants profitably Niche Market -small speciality market existing in a larger market that has its own specific unserved need or want -eg the shoe market has a niche market for bridal shoes 9 Implications of Operating in Niche Markets -little or no competition (unlike in general markets where competition is sting, niche markets face less competition as it deals with a specific market gap for a small market segment eg Apple initially had no competition in the smart phone market) -less start-up investment required (the small market segment means that a small range of limited goods is required to fulfil the needs of the niche market thus less initial capital may be required to set up a new business if it is entering a niche market, the scale of production would be smaller than for a large market, which might enable an entrepreneur to start out in a small market first, then expand eg Kanita Ramaxhiku started Brownie God in her own kitchen, requiring very little investment, and began by selling at local farmers' markets and trade fairs) -less risk (there may be fewer risks to the business as marketing and resources are more effectively used and focused on a very small market segment) -high cost per unit (lower sales volumes and the specialisation of products may mean more expensive raw materials, highly skilled staff and job or batch production methods rather than mass production, thus means each unit will cost more to produce and the company will not gain from economies of scale like competitors who sell mass-produced items eg cost of making a tailored suit is a lot more per unit than a ready-made suit from Marks & Spencer) (Unit 5 Notes page 39) -lower sales volume (if a business decides to primarily operate in a niche market, rather than the wider market, it will need to increase its profit per unit, as it is likely that the overall units sold will be lower as the target market is smaller eg if a shoe manufacturer decided to sell only wedding shoes, rather than a larger range, the amount of potential sales would drop dramatically) -entrance to bugger markets (niche markets form building blocks to new markets, operating in a niche market can be a useful way for a business to gain a good reputation and build a group of loyal customers, can then consider launching more products and expand into new market segments and will be easier as the brand name is now respected and recognised eg Amazon started out in 1995 as an online bookseller, then expanded to sell other products such as CDs, DVDs, electronics, etc and today it not only sells products but offers services such as video streaming and has its own brand of devices, including the Kindle) 10 Market Segmentation -dividing the market into identifiable sections of customers with common characteristics or similar needs and wants -geographic segmentation -demographic segmentation -psychographic segmentation -behavioural segmentation Geographic Segmentation -dividing a market according to national, states, cities, regions, neighbourhoods, climate, population density and population growth rates -eg the Kerry Man Newspaper producing a weekly urban paper for Tralee town as well as a countywide paper for the rural areas of Kerry -eg Walkers crips in Ireland and the UK are sold as Lays crisps in other countries Demographic Segmentation -dividing a market according to factors such as age, income or gender -eg certain markets target specific age groups such as different toothpastes for children and adults -eg certain children’s toys are pink to be stereotypically targeted towards girls or are blue to be stereotypically targeted towards boys Psychographic Segmentation -dividing a market according to factors such as likes, values, attitudes, personality traits, interests and lifestyles -eg Coca Cola Zero is targeted towards ‘health conscious’ consumers whilst Coca Cola Cherry is targeted towards youths with sweeter taste preferences -eg Starbucks offers 100% Fair Trade coffee, which attracts consumers who want to be more environmentally and socially responsible 11 Behavioural Segmentation -dividing a market according to factors such as how consumers react in certain situations or at different times of the year -business can use this data to target more impulse buying in certain places or at certain times or seasons -eg chewing gum appears in shops close to the till to encourage impulse buying -eg Cadbury’s target customers at Christmas with their tins of sweets Market Segmentation Advantages -allows a business to have a better understanding of customers’ needs, wants and demands and it allows the business to keep in touch and to respond quickly to changes demanded by their chosen segment -business can target its marketing campaign more accurately and match consumer categories to the product on offer and decide on the most appropriate marketing strategy and promotion mix to use for marketing the firms products eg business could seek out certain ages, genders and preferences on Instagram and through Facebook ads to better target the segment of the market that it wants -enables a more fine-tuned marketing concept that directly recognises and fulfils customers needs and wants profitably eg Tesco uses its 'Tesco Finest' range to aim for the customer segment that wants more luxury or premium versions of goods, while the ‘Tesco Value' range is cheaper to meet the needs of consumers who want to spend less and do not mind getting a lower quality good -allows the business to spot opportunities or if a segment is unhappy with an existing product or service -allows for more effective use of resources by avoiding markets that will not be profitable eg Coca-Cola trialled selling Coke Orange Vanilla in Canada in 2019 and, after success in cities and failure in rural Canada, it decided to launch to the main cities in the US market Marketing Mix -the combination of all tactics used by firm to implement marketing strategy for a product 12 -company must design a product to satisfy customers' wants, sell it at a competitive price, have it for sale in a place convenient to customers, and undertake promotion to communicate with the target market -the 4 Ps make up the marketing mix components -Unit 7 Notes page 26 Marketing Mix Components -product (Unit 5 Notes page 13) -price (Unit 5 Notes page 19) -promotion (Unit 5 Notes page 23) -place (Unit 5 Notes page 28) Product -essential element of the marketing mix -the physical product/service offered to the market for use or consumption to satisfy consumers’ needs or wants -involves the product/service -design -packaging -branding -must have a unique selling point USP to differentiate it from competitors -every product has a product life cycle (I Got My Shoes Dirty) Product Design -product must look good, do what it says, be easy to use, easy to transport, easy to store and have good after sales service -the product must have a USP to distinguish it form competitors and give it a competitive advantage, this USP could involve the product’s style, price, performance or presentation -firms frequently protect their design by patenting it, a patent is a licence that gives the firm the sole right to produce and sell the specific product for a specific time period, anyone else wishing to make the product must pay a fee to the patent holder 13 Product Design Decision Factors -cost (design of the product must be cost effective, it shout take account of all manufacturing and distribution costs, these costs have to be recovered together with a profit margin from the once charged to consumers) -legal requirements (this factor links into the main clauses of the Sale of Goods and Supply of Services Act 1980 which puts a legislative onus on producers to manufacture and sell goods that are of merchantable quality and fit for purpose, the product must also comply with all safety standards) (Unit 1 Notes page 19) -appearance (product must be aesthetically appealing in terms of shape, size, colour, style etc to appeal to customers eg Coca Cola was once green but was changed to look more aesthetically appealing) -target market (the product design must account for the product’s target market eg a children’s toothpaste should be mild in flavour and have bright colourful packaging, toothpaste targeted towards elderly consumers should have an easy to open cap with large font on the packaging) -competition (design should supersede competitors, USP may be applied to design to gain competitive advantage) -environmental and social considerations (firms must be environmentally aware and should embrace environmental, social and governance (ESG) concepts through the product design eg compostable packaging, impaired eyesight friendly design) Packaging -means of differentiation, adds value to the product and can be a source of competitive advantage to stand out from rival brands -increases sales = attractive and eye catching packaging gets customers attention and attracts them to the product, many customers judge a product by its appearance -product protection = protects the product during transportation by the manufacturer and storage by the retailer -provides information = informs the consumer about the product, including legal information that must be provided like ingredients, best before date, country of origin etc -promotion method = businesses can use packaging of existing products to promote new or upcoming products 14 -convenience = packaging offers ease of storage, displaying and handling for consumers and businesses eg biscuits are kept fresh from turning stale by their packaging Branding -a brand name is a distinguishing mark, feature or name that provides instant customer recognition -it consists of a distinctive name along with a distinctive symbol or design -customers are often willing to pay more for a particular brand -branding has benefits for the business and the customer -many businesses have developed their ‘own brand’ version of products to provide cheaper alternatives to customers Benefits of Branding for Businesses -marketing = having a brand name makes it easier to distinguish the product from competitor’s products, makes products instantly recognisable, can be used as a marketing tool for advertising purposes eg Kelloggs is well known and they have different promotions to keep it to the fore of consumer's minds. -new product launch = new products are easier to introduce if the brand name is already well known eg different products are released under the Kelloggs brand -pricing = a well-known brand name can allow for a premium price to be charged to customers eg Kellogg's brands command higher prices than own brand labels -sales increase = repeat brand purchases increase sales -customer loyalty = over time consumers become loyal to a particular brand and will not change, branding allows a company to differentiate themselves from the competition and, in the process, to bond with their customers to create loyalty, a position is created in the marketplace that is much more difficult for the competition to ‘poach’, a satisfied customer may leave, but a loyal one is much less likely to eg consumers tend to eat the same brand or cereal each day, consumers who have grown up with Kellogg's breakfast cereals will have strong associations of childhood and home -products become brand = some brands become so popular overtime that the product becomes the brand eg Hoover, Biro, GHD 15 Benefits of Branding for Customers -product identification = branding helps the buyer to identify a particular supplier's goods -quality guarantee = branding maintains consumer confidence in the performance of a brand and allows consumers to trust that a product from a certain brand will be of high quality and is worth the price eg opting to buy all your electronic items from Apple as you are highly satisfied with their quality and loyal to the brand -self expression = brands allows consumers to fulfil their needs for self expression and communicate their self image and influence how they want to be perceived by others eg a business woman may drive a Porsche to express her hard work and high income lifestyle -paradox of choice = a phenomenon where an abundance of options can make the ability to make a choice more difficult thus consumers may opt always for a known brand to remove the difficulty of making a decision between various options eg always opting for Nike runners rather than exploring brands like Reebok, Adidas, Hoka etc Own Brands -own label brands are sold by larger retailers and voluntary retailers with the retailer's own name or brand on them -these goods are produced by manufacturers to the retailers' precise specifications -they are usually sold at a lower price than the leading private brands eg Dunnes Simply Better range Own Brand Benefits -retailer can generally sell own brands at a cheaper price than the market leader and other brands, this offers consumers greater value for money -can lead to customer loyalty to the retail outlet/shop, rather than the product, thereby increasing other product sales eg Tesco sold over €200m in own brands products as part of its own label ranges in Ireland in 2011 -easily recognised and require very little advertising needed -large range of products can be sold under the own-brand label -can increase the profit margin businesses earn from products, due to lower costs through bypassing the wholesaler and economies of scale