Transcript Marketing - Business

MARKETING
OBJECTIVES OF THIS UNIT
The following topics will be covered in this chapter.
 What is Marketing?
 Marketing Management
 The Marketing Strategy
 The Marketing Mix
 Product
 Price
 Place
 Promotion
 Evaluation of the Marketing Mix
 Break-even Analysis
WHAT IS MARKETING
“Marketing is the management process responsible
for identifying, anticipating and satisfying
customer requirements profitability”
MARKETING PROCESS
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This is the process that takes the product
through the different stages, from the potential
customer to the satisfied customer.
MARKETING MANAGEMENT
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’
products.
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.
MARKETING STRATEGY
“A plan to achieve marketing objectives”
Stages in developing a marketing strategy or plan:
1.
Opportunity analysis – investigate the market to
identify new business opportunities.
2.
Market segmentation – divide the market into
categories.
3.
Target market selection – decide which segments of
the market to serve.
4.
Market research – carry out research into the needs
and demands of the selected target market.
5.
Marketing mix – formulate a marketing mix
relating to the four P’s: product, price, place,
promotion.
MARKET SEGMENTATION
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Dividing the market into consumers with similar
characteristics e.g. Age, income, location.

http://www.ford.ie/Cars
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Markets can be segmented by
Geographical location
 Demographic segmentation
 Psychographic segmentation
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Social class, lifestyles, personality or attitudes etc
MARKETING BLUNDERS
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
blunder.
 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
grave".[2]
 The Chevrolet Nova automobile sold poorly in
Latin America, as "no va" means "won't go" in
Spanish.
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MARKETING BLUNDERS
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.
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MARKETING BLUNDERS
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…
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TARGET MARKET

The market in which a firm is planning to sell its
goods.
NICHE MARKET

A small speciality market in which there is a
specific or unserved need.
MARKETING MIX
1. PRODUCT
What makes a successful product?
 It must satisfy consumer requirements.
 It must meet the quality standards required by
consumers.
 It must have a competitive selling price.
 Design must be attractive.
 If relevant, an after-sales service must be
provided.
 The image of the manufacturer is very important.
1. PRODUCT
1. PRODUCT

What are the most valuable brands in the world?
Benefits of Branding:
a) Branding helps to remind consumers about a
product.
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.
Saturation
Development
1. PRODUCT LIFE CYCLE
A.
DEVELOPMENT
Research and development costs are high.
 Focus is on the product.
 Communication is vital.
 More cash outflows than inflows.
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B. INTRODUCTION
Launch of new product.
 Price place and promotion are important.
 Advertising costs are high.
 Initially sales are low so outflows are more than
inflows.
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C.
GROWTH
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
outflows.
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D.
MATURITY
Sales peak.
 Attracting new customers is difficult.
 New features may be added.
 Aggressive advertising.
 A lot of cash inflows.
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E.
SATURATION
Everybody has the product.
 Sales start to slow down.
 Less cash inflows.

F.
DECLINE
Sales start to fall.
 Short term gimmicks used to try to boost sales.
 Less cash inflows.
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HOW CAN THE PRODUCT LIFE CYCLE BE
EXTENDED?
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.
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2. PRICE
Price is the most flexible element of the marketing mix.
If the price is too high, sales will be lost to competitors.
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Factors that determine the selling price:
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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?
Government legislation.
The products current position in the product life cycle.
2. PRICE
Functions:
 To raise revenue for the business.
 To influence demand.
Note:
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There are many methods of pricing a product.
PRICING POLICIES
1. Cost Plus Pricing

The cost of making the product is calculated
and a % profit is added.
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The average household good has a margin of at
least 25%
2. Tactical/Discount Pricing
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Discounts given for:
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bulk buying, cash payment.
moving slow stock, attract customers
PRICING POLICIES
3. Loss Leader
 Charge a price at below cost on a popular product.
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Customers while in the shop may purchase other
expensive items.
Eg. Bread, milk, Lotto
 http://www.tesco.ie/press/Petrol.html
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4. Competitive Pricing
 Charging a little less than rivals.
PRICING POLICIES
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.
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E.g. Ryanair v’s Aer Arann
PRICING POLICIES
7. Price Skimming
 Charge a lot when the product is new and
popular.
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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
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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.
Income
Expenditure
BREAK-EVEN CHART
COSTS
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Fixed Costs
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Variable Costs
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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
units produced
Total Cost = Fixed costs + total variable costs
REVENUE
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Revenue is the money received by a firm from the
sale of its goods and services.
Total Revenue = Quantity Sold x Selling Price
CONTRIBUTION

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
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Illustrate by means of a break-even chart the
following information:
Fixed costs: €20,000
 Sales price per unit: €10
 Estimated output: 14,000
 Variable cost per unit: €8
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3. PROMOTION
PROMOTION
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Promotion consists of all communication used by
a business to let customers know about the
products on offer and to get them interested in
buying them
Methods of promotion are:
Advertising
 Sales promotion
 Public relations
 Personal selling
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Promotion Mix
ADVERTISING
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Advertising is the communication of information
to persuade customers to buy a particular
product or service
Functions of advertising:
1.
2.
3.
4.
5.
Provide information
Persuade consumers
Remind consumers
Distinguishes products from competitors
Increase sales and profits
ADVERTISING EXAMPLES
In relation to the advertising examples, answer the
following questions.
1.
2.
3.
4.
What is the target market for this
advertisement?
What message is this advertisement trying to
get across?
What type of advertisement is this?
In your opinion, is this advertisement effective?
VIDEO
VIDEO
ADVERTISING MEDIA
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Television
Newspapers
Magazines and journals
Radio
Cinemas
Online
Billboards
Public transport
ADVERTISING MEDIA
The medium used will depend on
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Cost
Budget
Product
Duration of the campaign
The proportion of the target market that can be
reached by the medium
SALES PROMOTION
This consists of short-term incentives to
encourage customers to purchase the product or
service.
 It is used in addition to normal advertising
 It is ideal for promoting a new product
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EXAMPLES
Free samples/gifts
 Money off coupons/vouchers
 Competitions
 Loyalty cards
 B1G1F
 Merchandising (shop window displays)
 In-store demonstrations.
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PUBLIC RELATIONS
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
firm.
 Ensure public awareness of its existence, and
products.
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FUNCTIONS OF A PUBLIC RELATIONS
OFFICER (PRO)
Media relations through
press releases and press
conferences.
 Customer relations
 Local community relations
 The generation of
favourable publicity for
firm.
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DEVELOPING PUBLIC RELATIONS
Methods of developing public
relations include:
 Press conferences and press
releases.
 Sponsorship
 Donations to communities,
sports clubs etc.
 Open days – allowing the
general public to see the
company site
PERSONAL SELLING
This is the use of personal contact to
persuade customers to purchase the
product or service.
 Used mainly for specialised or
expensive goods.
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Door-to-door salespeople
 Car sales
 Products requiring individual
customisation
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4. PLACE
This is the process of getting the product to the
consumer
 The term ‘Channels of Distribution’ refer to the
movement of goods from manufacturer to
wholesaler to retailer to consumer
 Channels of Distribution are:
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Direct – e.g. Farmers market
 Modern – Large retailers buying directly from
manufacturer
 Traditional – smaller shops, buying from wholesalers
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CHANNELS OF DISTRIBUTION
MARKETING ASSIGNMENT