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MarketingToday
Consumer and Industrial Markets
Definition of Marketing
Role of Marketing
Marketing Objectives
Marketing Activities
Factors leading to importance of
MarketingWhat is a market?
Any place
where buyers
and sellers
meetConsumer 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,
clothesIndustrial 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 equipmentWhat is Marketing
³Marketing is the management
process responsible for
identifying, anticipating &
satisfying consumer
requirements profitablyAbout Marketing
Marketing finds out consumers needs and what
products meet them Customer is king
Marketing is a business philosophy and an on-
going process
Marketing affects ALL aspects of business
Marketing is NOT just selling
Marketing and advertising are NOT the sameWhat 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/servicesMarketing Objectives
Target a new market or market segment
Achieve or maintain market share
Develop new range of products
Improve image of productMarketing Activities
Market Research
New Product Development
Selling
Pricing
Promotion and Advertising
Preparing Publicity InformationFactors 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 abroadRecap
Consumer and Industrial Markets
Definition of Marketing
Role of Marketing
Marketing Objectives
Marketing Activities
Factors leading to importance of
MarketingToday
Product Orientation
Market (Customer) Orientation
Advantages of Market Orientated
approachProduct Orientation
Production Manufacture Aggressive Customers
Capabilities Product Sales
Effort
Production Orientation is when a business
focuses on the production process and seeks
to make goods which are viewed as superiorBritish 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 Customers
Needs Market Products
Opportunities &
Services
Market Orientation starts with the consumer
and looks at consumer needs. It is customer
orientated.Sony Walkman
Designed due to
peoples needs for a
small tape recorder
Workers used
headphones to listen
to music and the
Walkman was bornHenry Ford and Model T
The Worlds First
Assembly Line churned
out the Model T Ford.
Henry Ford boasted
that it was available in
any colour as long as
its black!
Ford was customer orientated because the savings
made by the assembly line were passed down to the
customer by offering cheap automobilesAdvantages 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 successRecap
Product Orientation
Market (Customer) Orientation
Advantages of Market Orientated
approachToday
Marketing Environment
Market Share
Market Growth
Marketing MixThe Marketing EnvironmentConsumer trends and behaviour
Competition THE MARKET Political
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.
AnonymousMarket Share
Market Share is the percentage of customers who
buy/use a companys goods/services
S UFast Food Sales
s ' dl a n o D c M
31%
36% g ni K r e g r u B
s ' y d n e W
7% C F K
s r e ht O
19%7%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
increasesMarketing Mix
The 4Ps
Product
Price
Place
PromotionRecap
Marketing Environment
Market Share
Market Growth
Marketing MixToday
Product/Service
Core and Augmented Product
FMCGs
Tangible and Intangible
Marketing of Services
Product Line
Product MixProduct/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?Oh, I
Answers!!! 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 MixToday
Product Life Cycle
Stages in PLC
Extension Strategies
Effects of Extension Strategies
Boston BoxProduct Life CycleProduct 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 che-pows, p maralckeot.
Developing Styling Changes ± introducing
slightly different product ± football strips.Effects of Extension
StrategiesBoston Box (Product
Portfolio)
Market Share
High Low
High
Market
Growth
LowBoston 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 Divest
invest in stars, problem
childrenRecap
Product Life Cycle
Stages in PLC
Extension Strategies
Effects of Extension Strategies
Boston BoxToday
What is a New Product?
Facts about NPD
Adoption of Innovation
Stages of Development
Product Failure
Product Cannibalisation
Successful NPD
Japanese ApproachWhat is a New Product?
New to the world
New product lines
Additions to existing product lines
Improvements and Revisions to existing
products
Repositioned productsNPD: Facts
1 in 50 new products failAdoption of InnovationStages of New Product
Development
Generate Ideas
Analysis and Further Research
Are the Products Marketable?
Prototype
Test Marketing
Full LaunchProduct Failures
Investigate one of the following
New Coke
Sony Betamax VCR
McDonalds Arch Deluxe
Maxwell House Ready-to-drink coffee
Sinclair C5Sinclair C5Why 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 productsProduct 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 attractivenessJapanese 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 ApproachToday
Branding
Characteristics of Good Brands
Brand Equity
Corporate Branding
Benefits of Branding
Drawbacks of Branding
Own Brands
Advantage of Own BrandsBrand 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 USPs (unique
selling propositions) and ESPs (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,
Cadburys and Heinz are -allknown well
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.Worlds 10 Most Valuable Brands Investigate this years 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 competitionBrand 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 nameDrawbacks 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 BrandsToday
Price
Long Term Strategies
Short Term StrategiesPrice
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
Competitor pricesLong 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 StrategiesToday
Place
Wholesalers
Retailers
Agents
Choice of Distribution ChannelPlace
Producers
Producer to Wholesaler
Wholesalers Producer to Retailer
Direct Selling Two or more intermediaries
Retailers
ConsumersWholesalers
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 Franchises ± offer a new
common type and can be best business a chance to trade
illustrated as your local corner shop. using a successful formula,
Multiple chain stores ± a number of e.g. McDonalds.
outlets across the country with a well- Mail Order ± rather than
known name. E.g. Marks and having expensive shops to
Spencers run they issue catalogues to
Supermarkets ± offer a wide range consumers who can select
of groceries, clothing and electrical products in the comfort of
goods. E.g. Tesco, Sainsburys their own home. Successful
Department Stores ± offer a range due to the credit facilities
of goods within different departments. offerd. E.g. Freemans
Normally specialise in premium Door-to-door ± companies
brands. E.g. House of Fraser, like Avon take orders from
Debenhams peoples doorstep.Agents
an independent person or company appointed to handle
sales and distribution within a specified area. Agents income
comes from commission they make on each sale.
Agents carry out promotional activities to attract customers
and sell them the product. Car manufacturers 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 networkChoice 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 Levis 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 ChannelToday
Types of Promotion
What is Promotion?
Types of Advertising
Choice of Advertising Media
Types of Advertising MediaTypes of Promotion
Advertising
Sales Promotion
Direct
Merchandising Promotion
Mail
Exhibitions and Personal Selling
Public Relations
Trade FairsWhat is Promotion
Method used to pass on
information to consumers
an essential way of keeping
existing customers and
getting new onesAbove 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. Advertising
2. Sales promotion
3. Public relations
4. Merchandising
5. Packaging
6. Exhibitions and trade fairs
7. Direct mail
8. Personal sellingTypes 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
worlds 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 TourismAdvertising
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
consumers 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 StreetTypes 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 Advertisin: usgual to match competitors
Impact required: new product Æ wide variety of methods
The Law: tobacco and alcoholRecap
Types of Promotion
What is Promotion?
Types of Advertising
Choice of Advertising Media
Types of Advertising MediaToday
Sales Promotion ± Into the Pipeline
Sales Promotion ± Out of the Pipeline
Public Relations
Merchandising
Packaging
Personal Selling
Direct Mail
Trade Fairs and Exhibitions
SponsorshipsSales 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 creditSales 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 displaysPublic 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
th
On September 11 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 its 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 food. The smell
of coffee or baking can make customers hungrier.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 packagingPersonal 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
SponsorshipsToday
Target Markets
Undifferentiated Marketing
Differentiated Marketing
Concentrated (Niche) Marketing
Market Segmentation
Bases of Market SegmentationTarget 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 SegmentationUndifferentiated marketing
Firm
Market
Marketing mixDifferentiated marketing
Marketing mix 1 Segment 1
Firm Segment 2
Marketing mix 2 Segment 3
Marketing mix 3Concentrated marketing
Segment 1
Firm Segment 2
Marketing mix
Segment 3Methods of Market
Segmentation
Age Size of family
Race Income
Gender Work
Lifestyle LocationBluewater 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 WorldSocio-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
paidCONSUMER RESEARCH
Copy this table into your ter jot ikelyt to show the most land complete i
products market)of the variouspurchasers (and target
Detail Age Sex Socio-
group economic
group
Pint of beer in pub 18-30 M C
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
0RQWK¶VKROLGD\LQ
Portugal in JanuaryPsychographic Segmentation
Segments people according to lifestyle.
Lifestyle is a persons individual pattern
of behaviour.
Includes;
attitudes, beliefs, interests, hobbies,
habits, religionStages in Life
1 Bachelor stage: young, single, not living at home
2 Newly Weds: young, no children
3 Full nest 1 Youngest child under 6
4 Full nest 2 Youngest child 6 or over
5 Full nest 3 Older couples with dependent kids
6 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 retiredRecap
Target Markets
Undifferentiated Marketing
Differentiated Marketing
Concentrated (Niche) Marketing
Market Segmentation
Bases of Market SegmentationWhat 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 marketingToday
Niche Marketing
Advantages and Disadvantages
Positioning and Perceptual MappingNiche 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 Disadvantages
Niche market may be If successful, larger
overlooked competitors may
Gain competitive enter market
Niche markets are
advantage smaller and may
suffer more frequent
swings in consumer
spendingPositioning
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
DaewooRecap
Niche Marketing
Advantages and Disadvantages
Positioning and Perceptual MappingToday
What is Market Research
Market Researchs Role
Market Research Uses
Primary Research
Sampling
Secondary Research
Problems with Market ResearchMarket Research
What is Market Research?
The collection, collation, and
analysis of data, relating to the
marketing and consumption of
goods and servicesMarket 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 & promotionWhat 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 5. Observations
2. Personal 6. Technology e.g.
interviews loyalty cards
3. Telephone 7. Focus Groups
interviews 8. Customer panels
4. Postal surveys
Used to collect Primary dataSampling
Sampling is a way to find the views of the
population without asking everyone!
There are 2 main types:
Random Sampling
Quota SamplingRandom 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 methodPrimary Research +/-
-
+
Only firm that Expensive to collect
collects it has access Lengthy time
Can be involved, info could
controlled/verified be out of dateSecondary (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 Trendµ s
European Union ± publications by
EUROSTAT
Commercial publications:
e.g. Keynote, Verdictetc.Secondary (Desk) Research
+/-
+ -
Saves time Not specifically
Relatively related to
inexpensive project
undertaken
Cannot be
verifiedProblems with Market
Research
Human behaviour is
unpredictable
Sampling and bias
Other forms of bias e.g. leading
questionsRecap
What is Market Research
Market Researchs 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 marketings main
functional areas:
Market research
Product development
Pricing
Distribution
Promotion and advertising Describe the main objectives of
marketing. Explain why it is likely that product-
orientated 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
businesss choice of distribution. Identify the factors that will affect the
businesss 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.
Consumer and Industrial Markets
Definition of Marketing
Role of Marketing
Marketing Objectives
Marketing Activities
Factors leading to importance of
MarketingWhat is a market?
Any place
where buyers
and sellers
meetConsumer 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,
clothesIndustrial 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 equipmentWhat is Marketing
³Marketing is the management
process responsible for
identifying, anticipating &
satisfying consumer
requirements profitablyAbout Marketing
Marketing finds out consumers needs and what
products meet them Customer is king
Marketing is a business philosophy and an on-
going process
Marketing affects ALL aspects of business
Marketing is NOT just selling
Marketing and advertising are NOT the sameWhat 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/servicesMarketing Objectives
Target a new market or market segment
Achieve or maintain market share
Develop new range of products
Improve image of productMarketing Activities
Market Research
New Product Development
Selling
Pricing
Promotion and Advertising
Preparing Publicity InformationFactors 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 abroadRecap
Consumer and Industrial Markets
Definition of Marketing
Role of Marketing
Marketing Objectives
Marketing Activities
Factors leading to importance of
MarketingToday
Product Orientation
Market (Customer) Orientation
Advantages of Market Orientated
approachProduct Orientation
Production Manufacture Aggressive Customers
Capabilities Product Sales
Effort
Production Orientation is when a business
focuses on the production process and seeks
to make goods which are viewed as superiorBritish 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 Customers
Needs Market Products
Opportunities &
Services
Market Orientation starts with the consumer
and looks at consumer needs. It is customer
orientated.Sony Walkman
Designed due to
peoples needs for a
small tape recorder
Workers used
headphones to listen
to music and the
Walkman was bornHenry Ford and Model T
The Worlds First
Assembly Line churned
out the Model T Ford.
Henry Ford boasted
that it was available in
any colour as long as
its black!
Ford was customer orientated because the savings
made by the assembly line were passed down to the
customer by offering cheap automobilesAdvantages 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 successRecap
Product Orientation
Market (Customer) Orientation
Advantages of Market Orientated
approachToday
Marketing Environment
Market Share
Market Growth
Marketing MixThe Marketing EnvironmentConsumer trends and behaviour
Competition THE MARKET Political
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.
AnonymousMarket Share
Market Share is the percentage of customers who
buy/use a companys goods/services
S UFast Food Sales
s ' dl a n o D c M
31%
36% g ni K r e g r u B
s ' y d n e W
7% C F K
s r e ht O
19%7%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
increasesMarketing Mix
The 4Ps
Product
Price
Place
PromotionRecap
Marketing Environment
Market Share
Market Growth
Marketing MixToday
Product/Service
Core and Augmented Product
FMCGs
Tangible and Intangible
Marketing of Services
Product Line
Product MixProduct/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?Oh, I
Answers!!! 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 MixToday
Product Life Cycle
Stages in PLC
Extension Strategies
Effects of Extension Strategies
Boston BoxProduct Life CycleProduct 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 che-pows, p maralckeot.
Developing Styling Changes ± introducing
slightly different product ± football strips.Effects of Extension
StrategiesBoston Box (Product
Portfolio)
Market Share
High Low
High
Market
Growth
LowBoston 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 Divest
invest in stars, problem
childrenRecap
Product Life Cycle
Stages in PLC
Extension Strategies
Effects of Extension Strategies
Boston BoxToday
What is a New Product?
Facts about NPD
Adoption of Innovation
Stages of Development
Product Failure
Product Cannibalisation
Successful NPD
Japanese ApproachWhat is a New Product?
New to the world
New product lines
Additions to existing product lines
Improvements and Revisions to existing
products
Repositioned productsNPD: Facts
1 in 50 new products failAdoption of InnovationStages of New Product
Development
Generate Ideas
Analysis and Further Research
Are the Products Marketable?
Prototype
Test Marketing
Full LaunchProduct Failures
Investigate one of the following
New Coke
Sony Betamax VCR
McDonalds Arch Deluxe
Maxwell House Ready-to-drink coffee
Sinclair C5Sinclair C5Why 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 productsProduct 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 attractivenessJapanese 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 ApproachToday
Branding
Characteristics of Good Brands
Brand Equity
Corporate Branding
Benefits of Branding
Drawbacks of Branding
Own Brands
Advantage of Own BrandsBrand 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 USPs (unique
selling propositions) and ESPs (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,
Cadburys and Heinz are -allknown well
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.Worlds 10 Most Valuable Brands Investigate this years 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 competitionBrand 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 nameDrawbacks 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 BrandsToday
Price
Long Term Strategies
Short Term StrategiesPrice
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
Competitor pricesLong 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 StrategiesToday
Place
Wholesalers
Retailers
Agents
Choice of Distribution ChannelPlace
Producers
Producer to Wholesaler
Wholesalers Producer to Retailer
Direct Selling Two or more intermediaries
Retailers
ConsumersWholesalers
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 Franchises ± offer a new
common type and can be best business a chance to trade
illustrated as your local corner shop. using a successful formula,
Multiple chain stores ± a number of e.g. McDonalds.
outlets across the country with a well- Mail Order ± rather than
known name. E.g. Marks and having expensive shops to
Spencers run they issue catalogues to
Supermarkets ± offer a wide range consumers who can select
of groceries, clothing and electrical products in the comfort of
goods. E.g. Tesco, Sainsburys their own home. Successful
Department Stores ± offer a range due to the credit facilities
of goods within different departments. offerd. E.g. Freemans
Normally specialise in premium Door-to-door ± companies
brands. E.g. House of Fraser, like Avon take orders from
Debenhams peoples doorstep.Agents
an independent person or company appointed to handle
sales and distribution within a specified area. Agents income
comes from commission they make on each sale.
Agents carry out promotional activities to attract customers
and sell them the product. Car manufacturers 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 networkChoice 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 Levis 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 ChannelToday
Types of Promotion
What is Promotion?
Types of Advertising
Choice of Advertising Media
Types of Advertising MediaTypes of Promotion
Advertising
Sales Promotion
Direct
Merchandising Promotion
Exhibitions and Personal Selling
Public Relations
Trade FairsWhat is Promotion
Method used to pass on
information to consumers
an essential way of keeping
existing customers and
getting new onesAbove 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. Advertising
2. Sales promotion
3. Public relations
4. Merchandising
5. Packaging
6. Exhibitions and trade fairs
7. Direct mail
8. Personal sellingTypes 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
worlds 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 TourismAdvertising
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
consumers 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 StreetTypes 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 Advertisin: usgual to match competitors
Impact required: new product Æ wide variety of methods
The Law: tobacco and alcoholRecap
Types of Promotion
What is Promotion?
Types of Advertising
Choice of Advertising Media
Types of Advertising MediaToday
Sales Promotion ± Into the Pipeline
Sales Promotion ± Out of the Pipeline
Public Relations
Merchandising
Packaging
Personal Selling
Direct Mail
Trade Fairs and Exhibitions
SponsorshipsSales 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 creditSales 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 displaysPublic 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
th
On September 11 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 its 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 food. The smell
of coffee or baking can make customers hungrier.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 packagingPersonal 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
SponsorshipsToday
Target Markets
Undifferentiated Marketing
Differentiated Marketing
Concentrated (Niche) Marketing
Market Segmentation
Bases of Market SegmentationTarget 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 SegmentationUndifferentiated marketing
Firm
Market
Marketing mixDifferentiated marketing
Marketing mix 1 Segment 1
Firm Segment 2
Marketing mix 2 Segment 3
Marketing mix 3Concentrated marketing
Segment 1
Firm Segment 2
Marketing mix
Segment 3Methods of Market
Segmentation
Age Size of family
Race Income
Gender Work
Lifestyle LocationBluewater 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 WorldSocio-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
paidCONSUMER RESEARCH
Copy this table into your ter jot ikelyt to show the most land complete i
products market)of the variouspurchasers (and target
Detail Age Sex Socio-
group economic
group
Pint of beer in pub 18-30 M C
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
0RQWK¶VKROLGD\LQ
Portugal in JanuaryPsychographic Segmentation
Segments people according to lifestyle.
Lifestyle is a persons individual pattern
of behaviour.
Includes;
attitudes, beliefs, interests, hobbies,
habits, religionStages in Life
1 Bachelor stage: young, single, not living at home
2 Newly Weds: young, no children
3 Full nest 1 Youngest child under 6
4 Full nest 2 Youngest child 6 or over
5 Full nest 3 Older couples with dependent kids
6 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 retiredRecap
Target Markets
Undifferentiated Marketing
Differentiated Marketing
Concentrated (Niche) Marketing
Market Segmentation
Bases of Market SegmentationWhat 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 marketingToday
Niche Marketing
Advantages and Disadvantages
Positioning and Perceptual MappingNiche 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 Disadvantages
Niche market may be If successful, larger
overlooked competitors may
Gain competitive enter market
Niche markets are
advantage smaller and may
suffer more frequent
swings in consumer
spendingPositioning
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
DaewooRecap
Niche Marketing
Advantages and Disadvantages
Positioning and Perceptual MappingToday
What is Market Research
Market Researchs Role
Market Research Uses
Primary Research
Sampling
Secondary Research
Problems with Market ResearchMarket Research
What is Market Research?
The collection, collation, and
analysis of data, relating to the
marketing and consumption of
goods and servicesMarket 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 & promotionWhat 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 5. Observations
2. Personal 6. Technology e.g.
interviews loyalty cards
3. Telephone 7. Focus Groups
interviews 8. Customer panels
4. Postal surveys
Used to collect Primary dataSampling
Sampling is a way to find the views of the
population without asking everyone!
There are 2 main types:
Random Sampling
Quota SamplingRandom 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 methodPrimary Research +/-
-
+
Only firm that Expensive to collect
collects it has access Lengthy time
Can be involved, info could
controlled/verified be out of dateSecondary (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 Trendµ s
European Union ± publications by
EUROSTAT
Commercial publications:
e.g. Keynote, Verdictetc.Secondary (Desk) Research
+/-
+ -
Saves time Not specifically
Relatively related to
inexpensive project
undertaken
Cannot be
verifiedProblems with Market
Research
Human behaviour is
unpredictable
Sampling and bias
Other forms of bias e.g. leading
questionsRecap
What is Market Research
Market Researchs 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 marketings main
functional areas:
Market research
Product development
Pricing
Distribution
Promotion and advertising Describe the main objectives of
marketing. Explain why it is likely that product-
orientated 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
businesss choice of distribution. Identify the factors that will affect the
businesss 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.
