Transcript Marketing - Frosty’s Business Studies Blog

Marketing
Marketing
• Marketing is the function that
involves identifying the needs of
consumers and developing a
product to fulfil and satisfy those
needs. What strategies will
generate sales, increase market
share and increase profits?
Key concepts in Marketing:
• Identifying the nature and
characteristics of the product or
service demanded by the customer.
• Anticipating the changing
expectations of consumers in order to
be ahead of the market, rather than
just following other businesses
competing in that market.
• Satisfying their customers which
involves offering value. The more
$ spent the higher the
expectation of the product.
• Ensuring profitability
Businesses must generate profits
in order to have funds to carry
out its various activities.
What is the ‘market’?
• A mechanism that allows people
to trade, which has three
characteristics: a product or
service for sale, willing buyers
and a location in which to buy.
The role of marketing
• Research the market, types
customers and needs.
• Segment the market, identifying a
target market.
• Develop product to satisfy needs.
• Package to differentiate product.
• Brand for loyalty and recognition.
Identifying the target market
• Identifying the target market is
crucial in determining the prime
function of a business. The total
market is often too wide and
complex to be treated as an
individual unit.
• Marketing managers divide the
market into segments in which
consumers have similar spending
patterns.
• Specific strategies are planned for
each segment the business seeks
to aim at. Products and services
are designed to meet the target
markets demands.
• Eg. 18-30 Year old females for a
particular cosmetic product.
Identification of target market
• Marketing managers segment the
market into homogenous (the same)
groups: Methods are listed below
–Demographic segmentation
–Geographic segmentation
–Psychographic segmentation
–Behaviouristic segmentation
Demographic segmentation
• Dividing the market according to
characteristics of population ie.
• Age, gender, ethnicity, income,
wealth, family structure, or
religion
Geographic segmentation
• Dividing market into regional
groups where consumers are
located.
• Nationally, state, surburban
loacation
• Includes climatic factors such as
rainfall and temperature
Psychographic segmentation
• Dividing market according to
personality traits of consumers.
• People’s attitudes and values
determine the choices they make
about lifestyle, image and how
they spend their money.
Behaviouristic segmentation
• Dividing market according to what
consumers do and how they use
products. Different behaviours by
consumers influence what
products they use their usage
rates and their customer loyalty
Activities
• Copy out Fig 10.4 on p.235
• Copy out Table 10.1
• Identify examples of how products
have been marketed according to
demographic, geographic,
psychographic and behaviouristic
segmentation.
• How would you go about identifying
the market for the car in Fig 10.6?
Targeting strategy
• Undifferentiated strategy: Targets
a mass market, ignores segments, one
marketing mix appeals to large no. of
consumers ie electricity and
newspapers
• Differentiated strategy: Biz
targets segments of market, varies
marketing mix for each ie soft drink
and car makers
• Concentrated strategy: Targets
one large recognisable segment of
market ie Bridal wear biz hiring out
clothing for weddings.
• Niche strategy: Targets small
segment of market where consumers
share unique need. eg Hot Rod
magazine
Overview of marketing mix
• The marketing mix is the
combination of the four P’s:
Product, price, promotion and
place. Businesses control these
elements and uses these to reach
its target market.
Product
Price
The Four P’s
Promotion
Position
Product
• The good or service
– Tangible attributes: shape, design,
appearance, features
– Intangible attributes: after sales
service, image, warranties
• The Product Line
– Similar products offered to appeal
to different segments of the market.
Product Line example: Coke
• Length: how many similar varieties of a
product are in the category. eg Coke has
over 10 different brands within the soft
drink category eg. Fanta, Lift, Mt Franklin,
Sprite,
• Width: number of different product lines
offered by the business. Eg Coke sell soft
drinks, but also sell snack foods.
• Depth: Slight variations made to one
product such as Coke, Diet Coke, Coke Zero,
Caffeine free and Vanilla Coke.
Other product strategies
• Size: eg. Larger volumes for
families.
• Branding: Brand name, logo or
symbol to increase recognition
and customer loyalty.
Customers are more likely to
buy a product from a known
and trusted brand.
Branding strategies
• Overall brand name for all products
– Campbell’s Soup, BMW
• Using individual brands for each product
– Unilever Washing detergents: Drive, Omo,
Surf etc.
• Unbranded products under generic names
sold in supermarkets. Coles “Smartbuy”
products.
• Packaging: Protect product from
damage and tampering, provides
necessary information, visibility
and differentiation, freshness.
• Colouring: Appeal to different
segments.
Price
• Choosing the correct price is a difficulty
for many businesses. 4 methods below:
• Cost Plus Margin: The cost of
production plus a % margin for profit.
• Market Price: Price according to the
interact between the quantity customers
want to purchase (Demand) and the
quantity producers are able to supply. Ie if
there is a shortage of the product, the
price will rise. If there is a surplus of the
product, the price will fall.
• Competitors Price: Choosing a
price that is either below, equal or
above that of competitors for
similar products.
• Discount Price: Reduce the
price of stock that is not selling to
stimulate demand.
Price Setting Strategies
• Penetration Pricing: Setting
price below competitors to try and
increase sales volume.
• Market Skimming: High prices for
product when little or no
competition. Decrease prices when
competition increases. Often used
with technology products.
• Loss Leader pricing: Selling
products below production costs in
order to attract customers to store
or other products.
• Price Points: Setting a price at a
particular level so it can be
compared with other products in
the market (in terms of perceived
quality).
Promotion
• Building awareness of the product
in the market.
• Advertising: (Above the line
promotion)
– Educates consumers about product and
its features.
– Above the line promotion: TV, radio,
internet, magazines, billboard posters,
signs, brochures, direct mail.
• Sales Promotion: (Below the line)
– Encourage customers to use product.
– Below the line Promotion: Coupons,
scratch and win, tokens, lucky numbers,
free samples, contests, trade displays,
in store demonstrations, POS displays,
BOGOF sales.
• Personal Selling: In store or
travelling with aim to persuade a
customer to purchase a product.
• Public Relations: Building trust
and publicising product.
– Press releases
– Educational kits
– Well known experts opinions about product
– Endorsement
– Sponsorship of events, organisations or
people. Develops a positive image (or
negative ie Cronulla Sharks)
Place
• The distribution network that a business
uses to make its product available to its
target market is the place strategy.
• Distribution depends on:
– The Business owner deciding how to transport
and store finished products.
– How many intermediaries (middle agents) to
involve in the distribution of the product.
(wholesalers and retailers).
Distribution can be carried out…
• Exclusively - Product only available from
the manufacturer or its stores eg. Ikea
• Selectively – Available from a few outlets
which have been permitted to sell it eg.
Sealy Mattresses.
• Intensively – Widely available. Being
sold in many outlets
Producer
Consumer
Producer
Retailer
Consumer
Producer
Wholesaler
Retailer
Consumer
Producer
Wholesaler
Agent
Retailer
Consumer