Topic 4: Marketing

4.1 The role of marketing

What is marketing all about?
● Informing and persuading customers
Definition: The management process of predicting, identifying and meeting the needs and wants
of customers in a profitable way.
Objectives:
● Ensure products fullfill the wants and needs of customers
● The the correct price
● Distribute the products conveniently
● Exure there is adequate promotion
Why do they need marketing?
Marketing affects this department by
This department affects marketing by
Operations managemen t
● Market research establishes what people want in a product from features, quality to the rate of
sales.
● Negotiating product features based on costs and capacity Also the rate of production needs to
keep up with demand.
Finance ● Marketing is a big
expense, most of which is spent before sales are made. Other sources of finance are needed.
● Setting budgets that affect the type of promotion used and quality of market research.
● Human
Keeping up to date with resource
customer’s changing managemen
needs may mean t
regularly changing staffing requirements.
● Recruiting and training suitable stuff. Customer service is becoming more and more important.
Different between products and services:
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Vocabulary Definition
Intangibility Service where there isn’t a tangible product that customer can
purchase, that can be seen, tasted or touched.
Whether the object is physical or not. Product - tangible Service - Intangible
Inseparabilit y
Take the product away from where it is produced Service - non inseparable
Heterogenei ty
Can the good be mass produced? Product - Yes Service - No, each service is unique
Perishability Can the good be stored?
Product - Yes but for different times Service - No
Product strategy
 Price strategy
Promotional strategy
Place strategy
Commercial marketing - uses marketing strategies to meet the needs and wants of consumers in a
profitable way. Large value free Social marketing is the planning and implementation of
programs designed to bring about social change using concepts from commercial advertising.
Market orientation
- A market approach adopted by a business that are outward looking by focusing on making
products that they can sell, rather than selling the products they can make. - Responsive to
customers and their needs. Product Orientation
- A marketing approach adopted by business that are inward looking. - They focus on selling
products they can make, rather than products they can
sell. - High tech companies. Market orientated
- Satisfied customers - More competitive - Greater flexibility - Awareness of customer needs -
Lower risk - Expensive market research - No guarantee it will work in the future Product
orientated
- Creative and innovative products - High quality leads to high prices - Control over operations -
Maintains original objectives - Producers are always unsure if the product will sell well
- High failure rate with product orientated business. - Costly research and development.
Marketing Characteristics A place or process whereby customers and suppliers trade. They can
be consumer or industrial/producer markets.
Characteristics of Markets
- Market Size 2vs- Value or Volume - Customer base - Seasonal characteristics - - Growth rate -
size of entire market, (change in size/original size)x 100 - Demographic characteristics - different
ages, gender, culture - Geographic characteristics- focused on location and area - Competition-
degree of rivalry, how many competitors, - Barriers to entry- how competitive a market is, how
difficult it is to set up a
business in the market, lots of brands, highly competitive Market Leader Definition: the
dominant firm with the highest level of sales in the market. Benefits:
● Economies of Scales
● Price setting ability
● Less threatened by competition
● More likely to receive investment Steps to become one
- Promotion of brands - Product development - Motivation - Property rights - Efficient channels
of distribution Market Share Refers to an organisation portion of the total value of sales revenue
within a specific industry Market Share%= (firms sales revenue/industry sales revenue)x 100
Market Concentration: measures the degree of competition in a market by calculating the market
share of the largest few firms in an industry. The sum of these market share is known as the
concentration ratio
E.g. an industry with a 3-firm concentration ratio 98% means that the top 3 firms have a
combined market share of 98% - hence this is NOT a competitive industry as all other firms only
have 2% of industry revenues. Pg.333-335
How businesses increase their market share?
- Promotion of brands - Product development, innovation - Motivation and training of the
workforce - Establishing property right e.g trademarks, patents - More efficient channels of
distribution. Marketing Considerations
Profit
- Increased sales revenue - Higher market share - Increased market leadership - Improved
product and brand awareness - Developing new products - Enhanced brand perception Non-
profit
- To build membership and connect with new donors - To generate awareness of the cause - TO
improve brand recognition - To create positive attention to the operations - To demonstrate the
value of the NPO to the local community and society
4.2 Marketing Planning
A marketing plan is a document outlining the firm's, marketing objectives, and the marketing
strategies to be used to achieve the objectives.
- SMART Marketing Objectives - Specific, Measurable, Achievable, Realistic, Time-Bound -
Methods of market research to be used - Strengths and weaknesses of competitors
- Outline of the marketing mix - Details of the marketing budget - Problems and strategies.
The systematic process of devising marketing objectives and appropriate marketing strategies to
achieve the goals.
Marketing Planning process typically involves:
● Marketing Audit: examination of current climate
● Marketing Objectives: set marketing goals and targets
● Marketing Strategies: the plan and use of marketing mix to achieve objectives
● Monitoring and review: continually check and monitor to see if targets are being met
● Evaluation: how well did the firm achieve its marketing objectives? Why is planning
marketing so important? Strengths
- Improves chances of success - Managers can identify and deal with potential problems - Other
functional areas will have a clearer idea of marketing objectives - Manager have better control of
the organisation Limitation
- Limited time, resources and expertise - Firms can end up being reactive instead of proactive -
Plans can outdate quickly - Plans can be inflexible Marketing Mix The combination of various
elements needed to successfully market a product. Also known as 4Ps. - Product, Price,
Promotion, Place
What makes an appropriate marketing mix?
- Be well coordinated so that the elements consistently complement each other. - Be clear,
focused and no abstract or ambiguous - Consider the market it is aiming to sell the product to -
Look into the degree of competition that the product faces - Target the right customer. Marketing
mix to meet objectives
Marketing objectives
- Market share - Market leadership - Product positioning - Consumer satisfaction - High market
standing Marketing strategies
- Marketing development - Product development - Diversification - Product innovation - People -
Physical environment - Process Constraints on achieving marketing objectives -Finance Costs of
production Size and status of the firm Social issues Time lags Actions and reactions of
competitors The state of the economy
Segmentation and Targeting. Ways a market can be segmented Demographic - Age - Gender -
Religion - Family characteristics - Ethnic grouping Geographic - Regions in a country - Climatic
conditions Psychographic - Social and economic status - Values Benefits of Segmentation
- Increase sales - Identify gaps - Growth opportunities - Supports product differentiation -
Developing brand loyalty - Minimizes waste - Can diversify and spread risks - Economies of
scale Problems with segmentation - Too much choice - Market cannibalization - Pressure on one
segment - Expensive research and development Targeting Niche Marketing – targets a specific
and well-defined market segment Segmented Marketing – Targets several groups each with their
own marketing mix Mass marketing – targets a large number of different market segments in
order to maximize sales
Use of perception maps
- Identify gaps in the product portfolio and market - They can be used for targeting strategies -
Establishes close competitors and threats - They can inform businesses of a need to reposition
their products
- A simple way of presenting sophisticated research data - Helps target specific segments How
can business differentiate? Types of USP
- Product:Quality, range - Price - Promotion - Place - Corporate image/CSR - Customer loyalty
programmes Benefits -Establishes a firm's competitiveness which attracts more customers
Customer loyalty as customer identify something special compared to rivals.
Porter’s Generic Strategies Quote him to get good marks
4.3 Sales Forecasting
Sales Forecasting is a quantitative management technique used to predict a firm's level of sales
over a given time period.
- Quantitative technique to estimate sales over a period of time - Essential for planning purposes
- Identify problems and opportunities Techniques
Extrapolation: a forecasting technique used to identify the trend by using past data and extending
this trend to predict future sales. Time series analysis: a sales forecasting technique that attempts
to predict sales levels by identifying the underlying trend from a sequence of actual sales figures.
- Seasonal variations - Cyclical variations - linked to economic cycle - Random variations - no
correlation Calculating Moving Averages 3 point moving average: add up 3 months data, and
divide by 3 E.g. Add up (Jan+Feb+Mar)/3 Then do the same for the next period =
(Mar+Apr+May)/3
4 point moving average follows the same pattern, but add up 4 months worth of data and divide
by 4. Benefits
- Cash Flow - Stock control - Operational productivity - Access to finance Disadvantages
- Assumes future will mirror the past - Trend line is based on averages - Quantitative - Time Lag
- Dependent on stage of product life cycle - GIGO- garbage in garbage out
4.4 Market Research
Ethics considerations of market research
- Note to access confidential data for personal gain - Use of photography/recordings- invasion of
privacy - Research needs to be unbiased - Conducted honestly, findings reflected honestly.
Ethical market research Investigators need to be reasonable, objective and accurate in their
planning, collecting, processing and reporting of research -Unethical market research 5Ds -
Damage- collection of research must not cause harm
- Deceptive - trustworthy in attempt to obtain data - Disclosure- Potential invasion of privacy and
breach of confidentiality - Detachment- need to be detached from personal bias and be objective
in work Qualitative Advantages
- Explores driving and restraining forces - RIch informations as a result of flexibility in the
process - Low respondents can reduce expense - One-to-one interviews can reduce chances of
conforming to others responses Disadvantages
- Small sample size - Time consuming to collect and interpret - Interviewing expertise is needed
- Interviewer bias -
4.5 The four Ps (product, price, promotion, place)
The Boston Matrix Market Share
Stars: Successful products Generate lots of cash Can be used to develop
Question marks: Inferior marketing Develop strategies to increase market share, use up lots of
cash WILD CARD - should they invest or not? Cash Cows: Mature markets Well established
products HIgh profits Risk of becoming so extension strategies are needed Dogs: Do not
generate much cash Extension strategies Dispose of products Liquidity problems
Product - Branding Use of colour - message that you want to give out Brand awareness- being
recognised Brand development- increasing power - activities Brand loyalty- choosing a brand
over another
Benefits of a strong brand Price advantages Recognition and loyalty Distribution advantages
Higher market share Higher barriers to entry
Company branding Types of brands Family branding Product branding Company branding Own-
label branding Manufacturer’s branding
Global branding Benefits
Costs savings from same advert
Mass manufacturing Celebrity endorsement can be linked across whole range
Drawbacks Can lose touch with customers Local businesses could appeal more to smaller groups
Packaging
Importance of Price
- The price of a product is instrumental in deciding the revenue of a company and
the image of a company - What other examples of products that use price as a differential can
you think of - What products don't? Why do you think this is? Pricing Strategies
4.5 Promotion
Above the line- any form of paid for promotional method through independent mass media
sources to promote a business, its brand or products Product placement, use of mass media, tv,
national radio, national newspaper, cinema, billboards and magazines. Below the line- Refers to
the use of non mass media promotional activities, allowing the business to have direct control.
No commission paid to external media agencies Relatively cheap in relation to ATL. Local
radios or newspapers, direct- flyers /phone calls, packagings, word of mouth and point of sales.
Promotional mix
Shadow QR code Differences between ATL and BTL Above the line
- Targeted at mass market audiences - Help to establish brand awareness - Success is relatively
difficult to measure - Method use external agencies and hence incur professional fees Below the
line
- Aimed at individuals - AIms to secure actual sales - Marketers can directly measure response
rates - Marketers have more control. Factors to consider when devising a promotional mix Cost:
which methods are more expensive/cheap? Product- certain products suit particular types of
promotion Product life cycle: what sort of promotion might happen at each stage? Legislation:
rules and regulations prevent some products being advertised in certain media.
AIDA to analyse Awareness Interest Desire Action
Viral Marketing Similar to word of mouth marketing except it relies on the electronic transfer
and spread of promotional messages Aka. P2P marketing
Social media marketing
- Practice of gaining internet traffic through social media websites - Creating marketing content
that attracts attention and encourages people to
share using own electronic methods Social networking
- Refers to any platform used mainly by individuals to build social relationships
between people, often because they are friends - Websites allow people to share information
Social media is the tool Social networking is the human interaction the tool encourages What is
guerrilla marketing? “Achieving conventional goals with unconventional methods”
- Sometimes known as stealth marketing - uses untraditional, unconventional
and perhaps unruly but creative and original forms of promotion, on a relatively low budget. - As
a promotional strategy - it is highly suitable for a tight budget - Shrewd tactics can achieve big
results
- Aims: to ambush or catch the attention of customers through unusual or
shocking techniques Advantages:
- No need to spend huge amounts of money - Can lead to viral marketing - In competitive
marketing, GM can promote creativity
- Innovative way to promote and sell a product - Can help understand the needs of the market -
Can help build relationship with customers, gain loyalty. Disadvantages
- Not always reach the right market - Can be intrusive and invasive - Sometimes controversial
and unethical methods used - Does not always work
4.5 Place
Direct Distribution:Producer --> Consumer - 1 - level:Producer ---> Retailer ---> Consumer 2-
level:Producer ---> Wholesaler ---> Retailer ---> Consumer 3- level:Producer --->Distributor
---> Retailer --->Consumer 4- level:Producer ---> Agent/Broker ---> Wholesaler or Distributor
--->Retailer --->Consumer
Functions SCM Stock control Quality control Supplier networks Transportation networks
Supply Chain Management Reasons for
- Prevents mistakes caused by long supply chains - Ensure appropriate stock levels - Helps
achieve lean production - Incentive to work together due to interdependence Problems with
- Conflicts with many partners around the world - Impact of one stage in the supply chain on
another due to interdependence
- Ethical implications of methods to increase efficiency
BVC
One advantage of the variety of distribution channels is having more places to buy the product as
different channels will have a reach to more intermediaries. This would lead to having a larger
range of customers who could purchase the product because of its convenience. This would then
lead to an increase in sales of the product.
However, one disadvantage of long distribution channels is that BVC can lose communication
between the channels therefore can cause misinterpretation of the product. The message of the
product might also not be conveyed and it would lead to miscommunication to the customers,
causing issues such as over exaggerating of the benefits of the product. This can result in the
customers being confused over the product and the loss of product importance.
10 Markers
- Introduction - defintions key terms - Proposal 1 and 2 - postive, negative ) linked to case study
and explaning phrases - Conclsuion - make a decision
4.7 International Marketing (HL)
The marketing of a firm's products or services in foreign countries
External factors and constraints Legislation Language Political systems State of the economy
Culture
Methods used to enter international markets Internal methods Exporting Direct Investment E-
commerce
External Methods
Join ventures Strategic alliances Franchising Licensing Mergers Acquisitions
Exporting Business in domestic country sells its products directly to an overseas buyer.
Eliminates the need to set up a business abroad.
Direct Investment
- A business setting up overseas production and/or distribution facilities
Opportunities and threats of international marketing What opportunities could it bring? -
Increased customer base - Economies of scale - Increased brand recognition - Spread risks -
Extend product life cycle - Gain more profit What threats could there be?
- Legal issues - Advertising laws, copyright patent or trademark laws - Consumer protection laws
- Political issues - different systems- what if coca cola tried to sell in North Korea? -
Social/Demographic - less or more affluent countries, expatriates or tourists in a
country, language, infrastructure - Pressure groups - Economic issues - international trade,
barriers
4.8 E-commerce
Electronic commerce
- Trading of goods and services via the internet, electronic systems and computer
networks. - Started in August 1991
Features of e-commerce
- Global reach
- 24/7 Accessbility - Access to information - Consumer reviews - Impersonal interaction -
Barrier to entry (lower, but some trust issues.) E-commerce and the Marketing mix Price
- Transparency/comparison websites - Cutting out intermediaries- reducing costs, postages and
shipping Product
- Easy information available about products - No need to display products physically - reduces
space for companies therefore
money - Packaging- considerations - Easy to update products - Online- no printed brochures
therefore better for the environment - Only suitable for certain products - non perishables items
Place
- Courier companies - Shorter channels of distributions - Convenience- for customers - No
testing for quality - prefer to be there to check Promotion
- Online marketing - cute costs - Embed video clips - Viral marketing - Mass emails - clients
provide email addresses - Promote own business- corporate mission and values Types of e-
commerce Business to Business
- E-commerce catered for the needs of other businesses
Consumer to Consumer (C2C)