National 4/5 Business Management 2015-16 Marketing National 4/5 Business Management 2015-16

What is Marketing? Marketing is more than just advertising and selling. It involves identifying consumers’ needs and wants and meeting them in such a way that the producer makes a profit.

The Role of Marketing Help a business achieve increased market share – attract new customers. Ensure that the product, price, promotion and place for sale are correct and meet the customers’ needs. Increase sales and therefore maximise profits.

Market Research Field Research Desk Research CLIP In order to be successful, you need to know what your customers want. To find this out we use Market Research. There are 2 types of Market Research: Field Research Desk Research CLIP

Field Research This involves gathering primary information; this is first-hand information. We can find out this information through doing: Surveys/Questionnaires Interviews Focus Groups Test Marketing Observations

Surveys/Questionnaires These are questionnaires that are given to customers through 4 different methods: Postal Telephone Online Face to Face Surveys are relatively cheap to do and can be given to a large number of people However response rates to them are very low

Interview This is when a trained interviewer asks someone (one on one) a set of questions. Candidates can give detailed answers and follow up questions can be asked. This is an expensive method (trained interviewer) and time consuming to conduct.

Test Marketing This is when consumers are given products to trial and feedback their opinions. This allows effective feedback to be gathered and changes can be made to the product. However there is no guarantee the product will be a success.

Focus Group This is when a group of people get together to discuss a product/service. This allows for a wide variety of opinions to be gathered. People are often more honest. However some members can dominate the group.

Observation This is when a group of people are observed in a certain situation. This can be done overtly or covertly. It allows companies to gather information on people’s behaviours and attitudes. Often people do not want to take part in being observed by others.

Field Research Advantages it is specific to your needs it is accurate it is up-to-date Disadvantages time consuming to collect expensive to collect (training)

Desk Research This involves gathering secondary information, which is gathered from an external source. Information can be gained through: Newspapers the Internet eg competitors’ websites Government Statistics Market Research Agencies eg MORI

Desk Research Advantages less time consuming less expensive wide range of sources Disadvantages information is not specific to your needs cannot be sure about accuracy information may be out of date may not be objective

Market Segmentation A market is made up of different types of consumers each with their own needs and wants. They are grouped into segments, so that companies can tailor products for each group.

Why Target Marketing? Products can be made specific to the customers’ needs. The promotion, price and place can be tailored to the target market and increase their chances of sales.

Market Segmentation Groups gender religion area age education level social class political persuasion family structure

The Marketing Mix (4P’s) Product Price Promotion Place

Product – Product Development Idea – The idea has to be decided upon and worked through to see if it is viable. Analyse – Conduct Market Research to see if customers would be interested. Prototype – Develop a first draft of the product. Test – The product should go through significant testing in the company and with consumers. Launch – Once changes have been made the product can be launched on to the market.

Product Lifecycle Products pass through certain stages of development during their existence. This is called the Product Lifecycle. The length of a product’s lifecycle can vary depending on the product.

Product Lifecycle Maturity Decline Growth Introduction

Product Lifecycle - explained Introduction product is launched onto the market; advertising and promotion begin; sales are increasing slowly. Growth as product becomes well-known through word of mouth, sales increase rapidly. Maturity product is well-established, sales reach their peak and start to level off. Decline sales fall as demand decreases. Product may be withdrawn from the market.

Extension Strategies A company can extend the lifecycle of a product by injecting new life into it, using extension strategies. This can be done through altering one or more of the 4P’s: Product – altering packaging, new features Price – changing the price Promotion – new promotion, special offers Place – changing location sold e.g. Internet

Extension Strategy Extension Maturity Growth Introduction

Product - Branding Branding is an expensive process but it brings many tangible rewards if a business gets it right. It is a product that is seen in the eyes of the consumer as different from other similar products (unique).

Product - Branding Benefits Costs Can charge a premium price High awareness Perceived high quality Easier to launch new products Huge initial financial outlay High marketing costs Counterfeit goods Own Brands

Own Brands Established brands are under increasing pressure from cheaper ‘own brands’. Consumers are increasingly more aware of these brands. Supermarkets have seen an increasing growth in own brand sales.

Price Your price should appeal to consumers, however, consumers look at pricing in 2 ways: if it is too low, they think that the quality may be poor if it is too high, they will think it is not worth the money

What Price? The price for a product should be based on what the customer is prepared to pay: Competitors’ prices Position of product in the PLC Cost of manufacture Time of year Profit level expected Suppliers’ prices Point of sale State of the economy Government pressure

Promotion There are 3 main types of promotion: Advertising Sales Promotion Public Relations

Promotion - Advertising Advertising aims to be either: Informative or Persuasive

Promotion - Advertising Types of Advertising include: Print – Newspapers/magazines Broadcast – TV/Radio/Cinema Outdoor – Billboards

Promotion – Sales Promotions These are methods employed for a limited time to increase consumer demand: Buy one get one free (BOGOF) Discounts e.g. 10% off Competitions Free gifts Product trials Point of sale advertising eg posters displaying special offers

Promotion – Sales Promotions Direct Mail – This is in the form of mail delivered to your address, promoting a product or service. Often referred to as ‘Junk Mail’. Personal Selling – Involves salesmen coming to homes to sell a product. It may be something that requires demonstration or explanation

Promotion - Technology Technology has seen a huge rise in the different ways in which companies can promote: Website Email QR Codes Apps Text Messaging

Promotions – others Other types of promotion include: Product placement – products appear on TV/Film Product endorsement – a celebrity promotes it Sponsorship – of a sport or TV programme

Promotion – Ethical Marketing Companies must ensure that they promote their products in an ethical way. Promotions should be honest and not make false claims Vulnerable groups should not be targeted with inappropriate promotions e.g. children

Promotion – Public Relations (PR) The PR department will aim to enhance the organisation’s image. They will deal with the: Press Government Public Activities they take part in include: Press statements/press conference Charitable donations Customer care

Place This is where the product/service is available for sale.

Place – Factors affecting choice There are a number of factors which will determine how and where a company sells its products: Competition – where they are located and method of distribution used. Resources – how close are resources needed to produce products Cost of premises – in/out of town Government incentives – they may give grants for locating in a certain area Nature of the product - is it perishable; how quickly does it need to reach the customer?

Distribution Methods - Road Advantages Disadvantages Cheaper than other methods Customers receive products direct to their door Can’t transport many large products Delays due to weather, traffic, roadworks

Distribution Methods - Rail Advantages Disadvantages Can transport many large products Faster method of transport than others Will need to be transported from the train to the company

Distribution Methods - Air Advantages Disadvantages Fastest method from one country to another Large quantities of small products can be sent Most expensive method. Products need to be transported from the airport

Distribution Methods - Sea Advantages Disadvantages Huge quantities of large products can be transported Can be transported across the world Most time consuming method. Products need to be transported from the dock

Marketing & ICT Marketing has been significantly enhanced with the rapid rise in the use of ICT. It can be used to enhance marketing in a number of ways: Loyalty Cards E-Commerce Social Media

Marketing & ICT – Loyalty Cards Loyalty Cards have enabled companies to collect a vast amount of information on customers. They can gather information on what we buy, when we buy, and how much we spend. It is an excellent market research tool. Information will be stored on a computer database.

Marketing & ICT – E-commerce The surge in online shopping has been huge. A lot of businesses will either operate solely online or at least have an e-commerce facility for customers to purchase goods or services. Advantages Can buy products 24/7 from home Can compare, so possibly cheaper Cheaper for business to operate as less staff and space needed.

Marketing & ICT – Social Media One of the biggest technological rises has been in Social Media. Companies will ensure that they operate on various networking platforms to advertise to and keep in touch with consumers.