Transcript Positioning Market mapping. - Business Economics and ICT

MARKETING
EFFECTIVE MARKETING
MARKETING (Definition): the business function that aims to identify, influence and
then satisfy consumer wants profitably.
It is not just about advertising!
IDENTIFYING A MARKET
*Business creates new market
*Aims at anyone who can afford
*Target market comes later
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SEGMENT MARKET
*Not all consumers are identical
*Product ranges created to suit different consumers needs
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COHERENT BRAND IMAGE
*Business uses 4 P's (Marketing mix - next) in successful and integrated way
*Above creates coherent and attractive brand name that appeals to target market
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MARKET ORIENTATED MARKET
*Create product based around market needs
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Also known as the 4 P's:
MARKETING MIX
Price
Place
Product
Promotion
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Before the company can use the marketing mix in an effective way they must first
understand the market – this is done by researching (trends, products place in the
market, market segments, target market, customer views on the product, reasons
for possible success/failure and an understanding of competitors products/activity)
and planning.
Product
Successful products are purchased for more than one reason e.g. consumers buy
the iPod because they are physically benefiting (being able to take their music with
them anywhere - except underwater) and are benefiting psychologically –
consumers have bought in to a brand with a cool image.
<< They'll try sell anything these
days...
Product (continued)
Companies aim to differentiate their products from their competitors
and create a UNIQUE SELLING POINT (U.S.P.). These products
usually have unique features such as how they look, taste or what
they can do.
There are two types of differentiation:
Actual differentiation: product genuinely advantages in the
consumer in some way e.g. unique taste, function, design or
superior performance (such as a new Dyson Vac with Cyclone
technology – proven to pick up dust better than a bag Vac)
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Imagined differentiation: where the differences are created in the
consumers minds e.g. branding – a consumer buys a pair of Nike
trainers over a pair of generic non-branded trainers simply because
of the name
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Product Life Cycle
The idea is that this tool predicts in theory the
stages of a products life. If the product goes
unmodified the last two stages are inevitable.
Although the first PlayStation was successful even
it couldn't survive the last two stages due to new
innovations one of which being the PSone (smaller
design). Changes in demand as customers
included better graphics and faster loading games
and the PS2 was an extension strategy to extended
the PS's life cycle.
Product Portfolio Analysis
This is done by using a Boston Matrix. It is a tool used to analyse the product
portfolio of a company and helps when making decisions as to possible long term
marketing strategies.
Stars:
* products experience high growth
* experience high market share
* potentially high revenue
* potentially high profit
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Cash Cows:
* high market share
* low growth (at maturity in Product Life
Cycle)
* high cash revenue
* established product – low cost
Problem Child:
* new products – need money spent on to
Dogs:
grow
* low growth
* low market share
* low/declining market share
* high growth
* associated with negative cash flow * Can be associate with negative cash flow
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Promotion
General term which is used to describe all activity conducted by a business to
let potential customers know about a product and tries to persuade them to
purchase it. It is not just advertising!
Long Term Promo:
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Branding – process of differentiating a product/service from its
competitors though the name, sign, symbol, design or slogan link to that
product/service
Persuasive Advertising – Used to create a distinctive brand image e.g.
Logos. mottos
Public relations – gaining favourable publicity through the media which
is also free so this is the most cost effective type of promotion
Short term Promo:
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Sales Promotions – BOGOF (Buy one get one free), 3 for 2 etc
Direct selling – door to door, cold calling
Merchandising – impulse buys at point of sale (checkouts) in a store
Advertising – TV/Radio adverts
Direct Marketing – flyers/leaflets through doors (also known as Junk mail)
Public Relations – features in the media
Promotion (Continued)
Above The Line Promotion
*Sales Promotion
 Price reduction
 Competitions
 Point of Sale Displays (e.g. chewing gum, sweets, magazines at checkouts)
 Demonstrations
 Free Samples
 Gifts (e.g. body lotions with perfumes in gift boxes)
*Personal Selling
*Public relations
*Customer Service
 Providing Info
 Giving advice
 Exchagining goods
 Free delivery of goods
 Providing credit
Below The Line Promotion
*Types of advertising
 Persuasive
 Informative
*Media used
 Internet
 TV
 Radio
 Magazines
Price
Tactics (Short term):
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Loss Leader – firm sets a low price for it's product(s) in order to encourage
consumers to buy other products that provide a profit for the firm e.g. customer buys
Smart Price butter and Asda breaks even on the product but the consumer buys
bread (a complimentary product) on which Asda make money.
Psychological Pricing – gives the impression of value e.g. selling a product for
£9.99 rather than £10
Strategies (Long term):
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Predator/Destroyer Pricing – firm sets a low price to drive other firms out of the
market
Price Skimming – a high price is set to yield a high profit margin
Price Penetration – low prices are set to break in to a market or achieve an
increase in market share
Price Taker – a small firm follows the price set by a price leader
Price Leader – a big firm sets a market price that smaller firms tend to follow
Price (Continued)
Factors which make affect pricing decisions:
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Target market (and their Personal Disposable Income Levels)
Competition (and their prices)
Cost of production
Break even point
Quality (associated with a higher price e.g. Marks and Spencers clothing)
Price Elasticity of Demand (and how sensitive the products demand is to price)
Demand increases as price decreases and
vice versa in most cases
Price (Continued)
Competitors
Amount of competitors can affect price. Consumers in competitive
markets have more choice so price becomes an important factor when
deciding where to buy goods. Although in a monopoly situation
businesses are able to charge higher prices.
Consumers are more price concious if the product is readily
available.
Monopoly (Definition): In theory, a single producer in
a market, but in practise a firm with a market share
larger than 25%
Oligopoly (Definition): A market dominated by a small
number of large businesses
Price (Continued)
Price Elasticity of Demand
This is a way of measuring the responsiveness of demand to change in
price. This can be done using the following formula;
PED = % Change in quantity demanded
% Change in price
P = Price
Q = Quantity
D = Demand
Place
This is not just concerned with the place of the business but also the
distribution channel (how the product gets to the customer) and the
point of sale (where the customer can purchase the product).
Distribution Channels (Definition): channels/routes which a product takes
when transferring from the producer to the consumer
Distribution Targets (Definition): objectives given to firms staff (usually
sales force) to encourage them to gain as much space in outlets as possible
Point Of Sale (P.O.S.) (Definition): place where sales are made i.e.
store/corner shop
Placement Within The P.O.S. (Definition): where the product is displayed
inside the store
Place (Continued)
Distribution Channel types:
TRADITIONAL
Producer ---> Wholesaler ---> Retailer ---> Consumer
MODERN
Producer ---> Retailer ---> Consumer
DIRECT
Producer ---> Consumer