Marketing - Business
Marketing - Business
OBJECTIVES OF THIS UNIT
The following topics will be covered in this chapter.
What is Marketing?
The Marketing Strategy
The Marketing Mix
Evaluation of the Marketing Mix
WHAT IS MARKETING
“Marketing is the management process responsible
for identifying, anticipating and satisfying
customer requirements profitability”
This is the process that takes the product
through the different stages, from the potential
customer to the satisfied customer.
Functions of the Marketing Manager
1. To carry out market research to learn the exact
requirements of consumers.
2. To prepare sales forecasts.
3. To identify the different markets for the firms’
4. To decide on the selling price of new products.
5. To ensure that goods are attractively packaged
for shop display.
6. To plan the marketing campaign for both new
and existing products.
“A plan to achieve marketing objectives”
Stages in developing a marketing strategy or plan:
Opportunity analysis – investigate the market to
identify new business opportunities.
Market segmentation – divide the market into
Target market selection – decide which segments of
the market to serve.
Market research – carry out research into the needs
and demands of the selected target market.
Marketing mix – formulate a marketing mix
relating to the four P’s: product, price, place,
Dividing the market into consumers with similar
characteristics e.g. Age, income, location.
Markets can be segmented by
Social class, lifestyles, personality or attitudes etc
Electrolux: Scandinavian vacuum manufacturer
Electrolux sold products successfully in the
United Kingdom using the slogan "Nothing sucks
like an Electrolux". The slang disparagement
"sucks" is an example of Americanism, so many
Americans think this is an example of such a
Pepsi: Pepsi allegedly introduced their slogan
into the Chinese market "Come alive with the
Pepsi Generation" translated into Chinese it read
"Pepsi brings your ancestors back from the
The Chevrolet Nova automobile sold poorly in
Latin America, as "no va" means "won't go" in
Lancia Dedra: this car sold poorly outside Italy,
particularly in English-speaking markets, where
research showed that people associated it with
danger (apparently affected by the name's
similarity to the word "dead")
McDonald's: In January 2005, McDonald's
published banners proclaiming Double
cheeseburger? I'd Hit It. In this obvious blunder,
the copywriters mistook the strictly sexual slang
expression for a term of general approval.
Kentucky Fried Chicken: An advertising
campaign in China attempting to translate the
slogan Finger lickin' good! into Chinese failed
miserably, proclaiming Eat your fingers off.
When people chuckled at General Motors’ Chevy
Nova in Latin America, the automotive giant was
perplexed. Until, that is, someone pointed out
that ‘Nova’ means ‘It doesn’t go’ in Spanish.
Toyota’s Fiera car proved controversial in Puerto
Rico, where ‘fiera’ translates to ‘ugly old woman’.
The Brand ‘Irish Mist’ didn’t go down to well in
the German market, where it translated as…
The market in which a firm is planning to sell its
A small speciality market in which there is a
specific or unserved need.
What makes a successful product?
It must satisfy consumer requirements.
It must meet the quality standards required by
It must have a competitive selling price.
Design must be attractive.
If relevant, an after-sales service must be
The image of the manufacturer is very important.
What are the most valuable brands in the world?
Benefits of Branding:
a) Branding helps to remind consumers about a
b) Branded goods are more likely to be accepted by
consumers than non-branded goods.
c) Branded goods are easily identified on display
stands, so selection is easy for consumers.
d) Manufacturers promoting branded goods find it
easier to introduce new products into the range.
1. PRODUCT LIFE CYCLE
Research and development costs are high.
Focus is on the product.
Communication is vital.
More cash outflows than inflows.
Launch of new product.
Price place and promotion are important.
Advertising costs are high.
Initially sales are low so outflows are more than
Sales start to rise.
Production is increased.
Competitors come on stream.
Competitive advertising intensifies.
Price may have to be lowered.
However there should be more inflows than
Attracting new customers is difficult.
New features may be added.
A lot of cash inflows.
Everybody has the product.
Sales start to slow down.
Less cash inflows.
Sales start to fall.
Short term gimmicks used to try to boost sales.
Less cash inflows.
HOW CAN THE PRODUCT LIFE CYCLE BE
Reduce prices to increase sales.
Target a new market segment.
Introduce a new sales promotion scheme.
Launch a new advertising campaign.
Find a new use for the product.
Price is the most flexible element of the marketing mix.
If the price is too high, sales will be lost to competitors.
Factors that determine the selling price:
The selling price of the competitors products.
The production and distribution costs.
The target market for the product.
The advertising spend.
The brand name of the product.
Is the product aimed at a new customers?
The products current position in the product life cycle.
To raise revenue for the business.
To influence demand.
There are many methods of pricing a product.
1. Cost Plus Pricing
The cost of making the product is calculated
and a % profit is added.
The average household good has a margin of at
2. Tactical/Discount Pricing
Discounts given for:
bulk buying, cash payment.
moving slow stock, attract customers
3. Loss Leader
Charge a price at below cost on a popular product.
Customers while in the shop may purchase other
Eg. Bread, milk, Lotto
4. Competitive Pricing
Charging a little less than rivals.
5. Premium Pricing
With high-quality items, consumers expect to pay
high prices for such products.
6. Destroyer pricing
Charging a lot less than competitors to put them
out of business.
E.g. Ryanair v’s Aer Arann
7. Price Skimming
Charge a lot when the product is new and
E.g. iPhone4Gs launches at $499. Price falls to zero
plus contract after a few months.
8. Break Even
Charge a price at which you neither make a
profit nor a loss.
BREAK EVEN ANALYSIS
The break even point is where income and costs
are equal. That is when the firm is just covering
its costs, neither making a profit not a loss.
These are costs that remain constant regardless of the
levels of output. Eg. Rent, insurance, salaries.
These are costs that vary directly with the level of
production. Eg. Raw materials and labour
Total variable costs = variable cost per unit x number of
Total Cost = Fixed costs + total variable costs
Revenue is the money received by a firm from the
sale of its goods and services.
Total Revenue = Quantity Sold x Selling Price
This is a measure of the amount of money that
each unit sold contributes towards the fixed costs
of a business.
Contribution per Unit = Selling Price per unit – Variable Costs per Unit
BREAK EVEN CHART QUESTION
Illustrate by means of a break-even chart the
Fixed costs: €20,000
Sales price per unit: €10
Estimated output: 14,000
Variable cost per unit: €8
Promotion consists of all communication used by
a business to let customers know about the
products on offer and to get them interested in
Methods of promotion are:
Advertising is the communication of information
to persuade customers to buy a particular
product or service
Functions of advertising:
Distinguishes products from competitors
Increase sales and profits
In relation to the advertising examples, answer the
What is the target market for this
What message is this advertisement trying to
What type of advertisement is this?
In your opinion, is this advertisement effective?
Magazines and journals
The medium used will depend on
Duration of the campaign
The proportion of the target market that can be
reached by the medium
This consists of short-term incentives to
encourage customers to purchase the product or
It is used in addition to normal advertising
It is ideal for promoting a new product
Money off coupons/vouchers
Merchandising (shop window displays)
Public Relations is concerned with creating and
maintaining a good public image in relation to a
company and its products and services.
It aims to generate favourable publicity
It helps build up good relations and goodwill.
Aims to promote the good name and image of a
Ensure public awareness of its existence, and
FUNCTIONS OF A PUBLIC RELATIONS
Media relations through
press releases and press
Local community relations
The generation of
favourable publicity for
DEVELOPING PUBLIC RELATIONS
Methods of developing public
Press conferences and press
Donations to communities,
sports clubs etc.
Open days – allowing the
general public to see the
This is the use of personal contact to
persuade customers to purchase the
product or service.
Used mainly for specialised or
Products requiring individual
This is the process of getting the product to the
The term ‘Channels of Distribution’ refer to the
movement of goods from manufacturer to
wholesaler to retailer to consumer
Channels of Distribution are:
Direct – e.g. Farmers market
Modern – Large retailers buying directly from
Traditional – smaller shops, buying from wholesalers
CHANNELS OF DISTRIBUTION