Transcript CHAP 16: Marketing 1

CHAP 16: Marketing
1
Chapter topics
1.
2.
3.
4.
5.
6.
7.
8.
What is a marketing strategy?
How can a business identify its target market?
What is the marketing mix?
In the marketing mix, what is meant by product?
How should a product be designed?
What is meant by branding?
What pricing strategies should a firm follow?
What is a break even analysis?
1. What is a marketing strategy?
A marketing strategy
“Is a plan of setting out how a business
achieves its marketing objectives”
This can be done through a combination of
identifying its target market, developing its
product and the actual tactic of selling.
2. How can a business identify its
target market?
They can identify a target market through
detailed market research into customers
available to the business.
Market segmentation can now be used to
divide these potential customers into groups.
Groups are picked according to age, race,
sex, job, income, interests etc.
The most common way of identifying a market
would be through
a)
DEMOGRAPHIC SEGMENTATION – This
categorises age, income, sex, status.
(Lucozade Sport geared towards sports
people)
b) PSYCHOLOGICAL SEGMENTATION – this
identifies potential customers on the basis
tastes, attitude.
(Baileys Crème Liquor drinks is focused on
sophisticated females)
What is a market niche?
A market niche is a specific gap in the market for a
particular product or service?
What is a target market?
This is a particular customer group that
product/service is aimed at.
(ADIDAS - Predator boot geared towards football
players)
Product
Place
3 .MARKETING
MIX
Promotion
Price
4. In the marketing mix, what is
meant by product?
A product is a good/service that is developed to
satisfy customer needs.
The following is a diagram of a product life
cycle. This shows the various stages a
product goes through.
Product life cycle- the stages
sales
MATURITY
GROWTH
SATURATION
DECLINE
LAUNCH
Time
What is product portfolio?
This is where a business has a range of
products that are available to be sold. If a
business is to reliant on one particular product
it will reach the decline stage and then come
into difficulties.
EXAMPLES OF PRODUCT PORTFOLIO’S
BUDWEISER- Bud Light
BULMERS CIDER- Bulmer's Pear Cider
PEPSI – Diet Pepsi- Pepsi Max
ADIDAS- 6 stud football boot
- multi stud boot
- predator boot
- blades
VOLKSWAGEN – Beatle
- Pass at
- Golf
- Bora
5. How should a product be designed?
The design of the product should address
1.
After sales service – this recognises that
customer may need knowledge on the particular
good/service after the time of sale.
Example – Toyota offer a 3 year guarantee on every
new car sold.
2. Packaging – The product purchased must protect
the goods from any handling damage, tampering
damage etc. It should be designed for easy
storage and display and where appropriate with
bar code for ease of scanning.
3. Aesthetics – this deals with how the product
looks, smells, tastes, sounds. The product
should appeal to the customer needs. This
will greatly affect the influence of a sale. Eye
catching designs live long in the memory of
shoppers.
4. Social Responsibility – This deals with the impacts
of the product on the various stakeholders. Green
products TRY to minimise their impact on the natural
environment. Over the past 10 years in this country
there has been a improved awareness amongst
stakeholders to be eco – friendly. Certain eco-friendly
businesses are gaining a loyal customer base on the
basis of their greener attitude towards product
development, packaging, transport, disposal etc.
EXAMPLE
= use of biodegradable bags instead of plastic
= recycling of paper, bottles
6. What is meant by branding?
Branding means
“creating an identity for a product that clearly
distinguishes it from the competition”
EXAMPLES – Pepsi, Nike, Levi's, Mercedes.
A brand leader is the brand with the biggest share of
a particular market.
EXAMPLES –
Lyons tea – largest in Irish tea market
Goodfella’s pizza – leader in Irish pizza market
What are own label brands?
“Own label” brands are sold by the larger
retailers with the retailers own name/own
brand on them. They are goods that are
usually sold at a lower price than leading
brands.
Example –
Homestead, Euro shopper, St Bernard
What does GI (guaranteed Irish) symbol on
packaging mean?
This GI symbol is used to make goods that are
manufactured in Ireland easily identifiable to
Irish consumers.
Its main purpose is to encourage Irish
customers to buy Irish products
7.What pricing strategies should
a firm follow?
There are a number of pricing strategies used
by businesses.
MARK UP: this means adding a standard
percentage to the direct cost of the product.
The mark up helps to pay for the overheads
of running the business with a profit to also
be added.
Example: Buy at £10, Sell at £14 – 40% mark up
High price strategies
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Price leadership – Firms can deliberately
charge a higher price to create an impression
of superiority.
Price skimming – this is done in the launch
stage. Company will increase the price of a
product to cover development costs.
Profit maximising pricing – setting a high
price to deliberately make as much profit as
soon as possible.
Psychological Pricing – This means setting
a price based on customer expectations.
Low price strategies
Penetration Pricing – a business sets a low price
to push other companies out of the market. They
are looking for largest market share from an early
stage.
Discriminatory Pricing – different prices are
charged to different groupings for the same
product. This is to do with age, status etc.
Example – Bus Eireann charge students less than
the full time employees.
Predatory pricing- This is where a company
will greatly reduce prices in order to push
competitors out.
Example – Aer Lingus adopted this approach
with Ryanair on the cheaper flights route
Price War – this is where competing firms
continously cut prices to retaliate against rival
firms. Customer benefits greatly if this
situation continues for a long period of time
Loss Leader – This is a where a business that
sets a particularly low price on products can
greatly benefit from the bond developed. This
improves the chances of future repeat
purchases and the business will profit as a
result.
8. What is Break Even Analysis