Transcript File - Business Studies at Campbeltown Grammar School

Higher Business Management
Marketing
BM Unit 2 - LO2
1
Marketing
“The process involved in identifying,
anticipating and satisfying consumer needs.”
The marketing department of an
organisation helps the organisation achieve
it’s strategic objectives.
Public sector – increase public use
of facilities
Private sector – maximise profits,
become market leader or increase
market share etc
Voluntary sector – increase
donations
2
What tasks would a
Marketing Manager
or Assistant do?
3
Marketing Manager Required!
Here is your chance to influence the spending
habits of a discerning sector of the population
and manage a word-famous cosmetics company.
Reporting to Senior Management, you will
develop and implement a marketing strategy for a
range of brands. You will have responsibility for
market research, promotion and advertising,
direct mail and preparation of publicity material.
Additional responsibility will be for new product
development and branding in order to expand
our market base.
BM Unit 2 - LO2
4
What is a market?
n
A market is a meeting place for buyers and
sellers
u
u
u
u
u
u
u
Shop
Restaurant
Telephone
Internet
Apps
Catalogue
Car boot sale etc etc!
5
Identifying Consumers’
Requirements
n
n
n
n
What do they want? Consumers must buy
products and continue to do so
Fierce competition and consumers’ expectations
mean that products must be constantly updated
and altered to suit
Other factors - price, quality, prompt delivery,
attractive packaging and after-sales service
Advertising and promotion play a big part
6
Anticipating Consumers’
Requirements
n
What do they want today?
n
What do they want in the future?
n
n
Trends must be considered to anticipate
future needs
Volatile markets - fashion, toys,
technology (mobile phones, computers,
etc)
7
Satisfying Consumers’
Requirements
“The customer is king!”
n
Businesses must be customer-focused
n
No customers
n
no business
Must offer - good service, quality products,
value for money, prompt delivery, good aftersales service (eg returns), well presented and
packaged goods, at the right price and
available at the right place
8
Role of Marketing
n





Raise awareness of products/services
Raise organisation’s profile
Encourage customers to purchase
Target new customers (and retain existing
ones)
To find out what customers want
Assist with monitoring changing tastes and
trends
IDENTIFY > ANTICIPATE > SATISFY
9
Marketing Activities
1 and 2
10
Market Research Definitions
“Market research is the
“Market research is
systematic gathering,
the means by which
recording and analysing of those who provide
data about problems
goods and services
relating to the marketing of keep themselves in
goods and services.”
touch with the
needs and wants of
those who buy these
goods and services.”
11
The Need for
Market Research
Predict changes
required in its
product/service
Identify what is selling
Identify who is buying
the product/service
Explain what is
happening in the
market
Investigate possible
courses of action
Identify the size of
the market
Discover what consumers
think of the product
Discover what consumers
are willing to pay
Discover if a promotion is
appropriate
Discover if the packaging
is appropriate
Identify what competition
exists - now and in the
future
12
Market Research
Field Research
Desk Research
13
Market Research Desk (secondary info)
Internal Sources
Sales figures
Stock figures
Accounting records
Customer comments
Sales reps reports
Market research data
gathered previously
External Sources
Government publications social and economic trends,
annual statistics, population
census
Competitors’ data - annual
reports, promotions, price
lists, web sites
Newspapers, trade
magazines, Mintel (research
org), etc
14
Methods of Research Field
Primary data is gathered by field research
By observation or asking people questions
Up-to-date
Collected for the exact purpose of the
organisation
Not easily available to competitors
Time-consuming
Expensive
15
Types of field research
Personal interview
Focus groups/Group Discussion
Telephone survey
Postal survey
Electronic survey
Customer audit
Hall test
EPOS
Observation
Test Marketing
16
Sampling
It is often more feasible just to collect a sample of
respondents for market research. Different types include:
Random Sampling – pre-selected from a list. Expensive!
Stratified Random Sampling – random group more
representative of population. Divided in segments.
Quota Sampling – researcher interviews number of people fit
by their characteristics (eg age, sex, income, marital status etc).
Cheaper than random sampling
17
ICT and Market Research
Databases compiled by research agencies
Electronic point of sale information
(EPOS)
Supermarket loyalty cards
Stock control software gives sales
breakdown
Web sites - customers can e-mail
comments back to the company
18
Problems with
Market Research
Sampling Bias - small sample
can give a wrong impression
Human Behaviour - opinions
change rapidly
Interviewer Bias - leading
questions may be asked
19
Structure of a Questionnaire
Should be short, simple and easy to understand in
order to obtain meaningful answers.
It should:
State its purpose clearly
Have an easy to use layout
Avoid jargon
Only include relevant questions
20
Task – Questionnaire or Survey
Using suitable software (create a survey or
questionnaire) for your class to complete
The aim of the research is to find out what pupils
think of the current school building, what could be
improved and what should be changed for the
NEW SCHOOL
Collate the results and analyse
21
Market Research
Activities
22
Is Data and
Information the
same thing?
23
What is Information?
Data
Collections of facts or quantities which
have been assembled in some formal
manner
Information
Data that has been processed into a form
that will assist in decision-making and
planning
24
Gathering Information can be
split into categories
These are:
Primary and Secondary
and
Internal and External
25
Sources of Information
Primary - gathered first-hand (i.e. interview)
Secondary – gathered second-hand (i.e.
government statistics)
Internal - within the firm (i.e. accounts)
External - outwith the firm (i.e. competition)
26
Technology:
Electronic Point Of Sale (EPOS)
Electronic checkout
Controlled by computer
Scans barcodes
Balances stock
Touch screens
Gather market research
Updated quickly
27
What type of
information that
Boots Plc will use
BM Unit 1 - LO2
28
Create a Table , share your ideas
and complete the table
Source of Definition Examples Strengths
Information
for Boots
Plc
Weaknesses
Primary
Secondary
Internal
External
BM Unit 1 - LO2
29
Formats/Types of Information
Written - text (can be
difficult to interpret)
Oral - the spoken word
(misunderstandings!)
Pictorial - ‘a picture speaks a
1,000 words’
Graphical - pie charts, etc
Numerical - the actual figures
30
Quantitative – information that can be
measured. Normally expressed in
numerical form.
Qualitative – information that is expressed
in words and is descriptive. Usually
involves judgement or opinions.
Watch BBC Lunch Lessons – Market Research
31
Product-led Product Orientated
Putting a product on the market
without prior market research
Assumption of best available and no
real competition
Often new inventions like Dyson
vacuum cleaners or Playstation 2
A risky approach which can fail British motor bikes
32
Market-led Customer Orientated
Considering what the customers
want before putting a product on
to the market
Competition has led to companies
focusing on the needs of the
customer
Also looks at the influences on
purchasing decisions
33
Advantages of Market Led
More likely to produce products that customers
want
More able to anticipate and meet changes in
customer demands
Able to make changes to its products or develop
new products easily
34
The casualties of not
adapting to the market
The American car
industry
The British motor cycle
industry
Task
35
Marketing Successes
Swatch
Easyjet and Ryanair
36
Product Led vs Market Led
Activity – Read the story of Swatch and the
American car industry.
Why did Swatch succeed in business and the car
industry fail? Summarise their stories.
37
The Marketing Environment
Consumer trends and behaviour
Competition
Government
THE MARKET
The economy
Apply to a
product/service?
Activity 4
Technology
38
Marketing a Strategic Activity
Inception/design
Price
Distribution
Selling and promotion
After-sales services
39
Assessment of the Market
Where are the consumers of the product?
How many consumers are there?
What are their attitudes and preferences?
How effective are the distribution methods?
What are the strengths and weaknesses of
competitors?
40
Marketing Products and Services
Consumer markets – individuals who
purchase goods/services for their own
personal use
Industrial goods (capital goods) –
organisations that purchase goods/services
from other organisations to help them
produce their own organisations.
Services (intangible)
41
Why would a manufacturer sell to a
retailer rather than to customer direct?
Fewer deliveries required – lower costs and less time taken.
Retailers often have an established customer base.
Reduces stock holding by the manufacturer as goods will be
delivered in larger amounts to retailers than to individual
customers.
Retailers have trained sales staff who are knowledgeable
about the products.
Retailers can attract customers by offering credit facilities.
Retailers can offer appropriate after sales services closer to
the customer.
Products are displayed attractively by the retailer to attract
customers.
42
The Marketing Mix
Product
Price
Promotion
Place
43
Marketing Mix - Product
If a business develops and
manufactures a quality product,
it will find it easier to satisfy
customer demands, meet safety
standards and legal
requirements.
What quality
systems can
businesses use?
HINT: P86
Businesses can charge a
PREMIUM price tag.
44
Market Segmentation
“Breaking down of markets into sub-groups that can
be targeted with a specific marketing mix.”
Advantages
 Seller can meet buyers’ requirements (4p’s)
 Advertising can be focused - less wasteful
 Expertise developed for a specific market
 Higher sales and increased profits if done
correctly
45
Methods of Segmentation
o
o
o
o
o
o
o
o
Age
Gender
Socio-economic grouping (p55 leckie +
leckie)
Education level
Income
Religion
Residential area
Lifestyle preferences - hobbies, politics
Think of an example of a product or
service that would be targeted to a
segment above.
46
Niche Marketing
Companies sometimes identify a gap (niche) in a
certain market and aim their product/service at a
small market segment. For example, The Whisky
Shop, Saga and Aston Martin
Niche marketing allows businesses to:
Build up expertise
Avoid competition
However they do attract competition and high risk
of failure!
47
Differentiated marketing involved providing
different products and services for particular
market segments. Eg the Ford Ka is aimed at
young, single, cost-conscious consumers whereas
the Ford Focus is aimed at consumers aged 25-40
who may have a young family.
Undifferentiated marketing involves aiming
products/services at the population as a whole
without producing different products for different
market segments Eg Heinz
48
Branding
Branding distinguishes a
product from its
competitors
Instantly recognisable by
consumers
Often linked to quality and
reliability
Can command a premium
price
49
BM Unit 2 - LO2
50
Own Brands
Products branded with the
name of the store selling
them
Most of the big
supermarkets (Tesco) and
chain stores (Boots) have
their own brands
Make a list of as
many “own brands”
you can think of.
Indicate which
branded product
they are designed
to rival
Eg “Wheat Bisks”
by Safeway to rival
“Weetabix”
Often cheaper alternatives
to branded goods
51
Unique Selling Point (USP)
Coca Cola
Try to identify the Nike
USP of each of the Kit Kat
products listed
Mercedes Cars
opposite
Think of how they Baxter’s Soups
Fairy Liquid
are presented to
you in the
Crème Eggs
advertising you see
daily on TV, in
newspapers and
magazines
52
The Product Mix
Very few companies have only one product
Some companies have a range of related
products eg Proctor & Gamble
Some companies have totally unrelated products
in their product portfolios eg Imperial Group
It is important that you have new products
being launched to replace products going into
decline in your “Product Mix”
53
The Product Life Cycle
Shows the different stages a new
product passes through over time.
£000
Costs/Sales
Saturation
Maturity
Decline
Growth
Introduction
Research and
Development
Time
54
Product Life Cycle
Think of an example of a product
at each stage of the Product Life
Cycle –
Research and Development
Introduction
Growth
Maturity
Saturation
Decline
55
The Product Life Cycle
The length of product life cycle depends on the
product.
Car models
Clothes fashions
CD singles
56
Extension Strategies
Product Life Cycle
Changing the product - size, colour, taste
Re-brand the name of the product
Providing variants/line extensions - Mars: funsized, yoghurt, ice cream, mini-sized, giant-sized
Altering the packaging for different market
segments
Altering the channels of distribution
Changing the price £
Special promotions - offers, gifts, competitions
57
58
Product Innovation
Generating an idea
Analysing the idea
Producing a prototype
Test market
Adapt product to solve problems
Launch the product
Can you think of some new
inventions?
Check out the Time inventions of the
year
59
Product/Service
Actual
The way the product is presented design, brand name, packaging, etc
(Colgate toothpaste - red packaging)
Core
The basic product - eg toothpaste
cleans teeth
Augmented
Additional features - protection against
decay, fresh breath, attracting the
opposite sex, etc
60
Pricing Strategies
Low-price strategy
in a market with strong competition
Market-price strategy (Competitive
Pricing)
petrol – matching competitors
High-price strategy
up-market, exclusive image
61
The Price of a Product?
Too low
a price could give the impression of
poor quality and too high a price may not
give the feeling of value for money
Price is influenced by:the product being new,
what competitors are charging,
the product’s stage in its life-cycle,
the selling location,
the market segment and many other factors
62
Short-term Pricing Tactics
Skimming – high initial price for max profit
Penetration – low initial price for new product
Destroyer – extreme low prices eliminating the
competition
Promotional – lowering prices for a period to
‘promote’ more sales and achieve customer loyalty
Demand-oriented – charging different prices
according to the level of demand
Premium pricing – High prices for
exclusivity/quality eg designer labels
Loss leaders – Selling products at unprofitable
prices to entice customers in to their store (milk,
bread etc)
63
Short-term Pricing Tactics
Promotional –
Demand-oriented –
Premium pricing –
Loss leaders –
Skimming –
Penetration –
Destroyer –
64
Cost-plus Pricing
Simple method to set prices
Calculate the cost of making/buying the product
then add on a set percentage %
Cost of making birthday cake:
20% mark-up:
Selling price:
£4.00
£0.80
£4.80
65
p65
Contribution Pricing
Calculate the direct costs of making/buying a
product (wages and raw materials). A
CONTRIBUTION towards fixed costs of the
business eg rent, loans etc are added.
Cost of making birthday cake:
20% mark-up:
Contribution to rent:
Selling price:
£4.00
£0.80
£1.00
£5.80
66
Place - Distribution Channels
Producer 1
Producer 2
Producer 3
Consumer
Retailer
Wholesaler
Consumer
Retailer
Consumer
67
The Wholesaler Function
Buys in bulk from producers (low transport costs) and
sells to retailers in smaller quantities
Bears stock-holding risk
Offers a wide variety of goods in small quantities
Packages and labels goods
Offers advice to both producers and retailers as to
which goods are selling well
68
The Retailer Function
Breaks down bulk to quantities consumers wish
to buy and store at home
Provides information to consumers through
advertising, displays and trained staff
Stores a variety of goods, displays them and
marks on prices
Offers range of related services - credit, HP,
after-sales service and delivery
69
Types of Retailer
Independent - convenience stores, corner shops
Multiple Chains - M&S, Dixons, Boots
Supermarkets - Tesco, Asda, Safeway, etc
Department Stores - Jenners, Harrods,
Selfridges, John Lewis, Debenhams etc
Franchises - Body Shop, McDonald’s
Co-operatives
Others - mail-order, internet, direct-response
advertising, telephone and TV shopping channel
70
Two Main Types of Promotion
Above The Line
TV and newspapers to reach
mass audience
A lot of waste
Below The Line
Directly controlled by the business
Sales promotion, direct mail, trade fairs targeted consumers who may be interested
71
Sales Promotions
Into the pipeline - offered by
manufacturers to retailers
to encourage them to stock
their products
Point of sale displays
Dealer loaders
Sale or return
Dealer competitions
Staff training
Credit facilities
Out of the pipeline – offered by
the retailer to the customer to
encourage purchases
Free samples
Credit facilities
Demonstrations
Competitions
BOGOF
Bonus packs
Free offers
72
Coupons and vouchers
Promotional Strategies
Three main aims:
Persuading - to purchase the
products
Informing - telling consumers
about the product
Reminding - that the product
still exists
73
Advertising
Informative adverts are used to increase
awareness of a product or service eg Yellow
Pages
Persuasive adverts aim to persuade a
customer to buy a product by stressing it is
very desirable to have
Product endorsement – famous celebrity
paid to wear a particular product eg DB –
Adidas
Product Placement – involves a firm paying
for products to be in films or TV
74
Advertising Decisions
The effect on Sales?
The target market?
Why do the consumers NOT buy the product?
Which is the best medium to use?
BM Unit 2 - LO2
75
Types of Advertising Media
Print – national daily and Sunday newspapers, local
newspapers and magazines
Broadcast - TV, radio and cinema
Outdoor - billboards, posters, outdoor media etc
Online – Internet adverts, banners, pop-ups etc
Look at advantages/disadvantages on P70-71
76
Internet Advertising
Global audience
Target directly at customers to browsing history
Recommendations based on previous buying
1.
Give examples on how social media can be used
to advertise and promote products or services
77
Adverts
In groups, choose adverts from print or online to
make a collage/poster
You might want to choose a ‘theme’
Label them with marketing, promotion and
advertising terms that you know of eg celebrity
endorsement, informative, persuasive etc
78
Celebrity Endorsement
Can you research at least 5
products that are endorsed by
celebrities?
How much were the celebrities
paid?
Beyonce was paid $50 million to
endorse Pepsi in their ‘Live for Now’
campaign
79
The Pepsi Challenge
What is the Pepsi Challenge? Could you do it?
80
The choice of media depends on:
Advertising Standards
Agency (ASA) monitors
adverts, sales and promotions.
If it is found to be offensive or
untruthful the organisation
may have to withdraw or
amend advert.
Product
Market segment
Type of coverage required
Advertising budget
Trades Description Act
How competitors advertise The
1968 states that a product
must be advertised in an
How technical product is
honest way and does not
Size of organisation
mislead consumers
Legal restrictions (i.e. tobacco, alcohol etc)
81
Internet Task
Log on to www.asa.org.uk
Research the role of the ASA and write an
outline of their role in your jotter.
How many complaints did the ASA receive last
year about adverts?
Identify 5 TV adverts that were banned in the
last 4 years by the ASA and explain why action
was taken against them.
Identify the ‘most complained about’ adverts
either on the TV or Internet in the past year.
82
Public Relations (PR)
Improving the image of the product and
organisation
Supporting and promoting a charity
Sponsoring sporting or cultural events
Product endorsement by celebrities
Press conferences and press releases in times
of difficulty or when good publicity can be
obtained
83
Summary – Role of Marketing
Raise awareness of products/services
Raise organisation’s profile
Encourage customers to purchase
Target new customers (and retain existing ones)
To find out what customers want
Assist with monitoring changing tastes and
trends
84