Marketing

Marketing Marketing is the function that involves identifying the needs of consumers and developing a product to fulfil and satisfy those needs. What strategies will generate sales, increase market share and increase profits? Marketing is the function that involves identifying the needs of consumers and developing a product to fulfil and satisfy those needs. What strategies will generate sales, increase market share and increase profits?

Key concepts in Marketing: Identifying the nature and characteristics of the product or service demanded by the customer. Identifying the nature and characteristics of the product or service demanded by the customer. Anticipating the changing expectations of consumers in order to be ahead of the market, rather than just following other businesses competing in that market. Anticipating the changing expectations of consumers in order to be ahead of the market, rather than just following other businesses competing in that market.

Satisfying their customers which involves offering value. The more $ spent the higher the expectation of the product. Satisfying their customers which involves offering value. The more $ spent the higher the expectation of the product. Ensuring profitability Businesses must generate profits in order to have funds to carry out its various activities. Ensuring profitability Businesses must generate profits in order to have funds to carry out its various activities.

What is the ‘market’? A mechanism that allows people to trade, which has three characteristics: a product or service for sale, willing buyers and a location in which to buy. A mechanism that allows people to trade, which has three characteristics: a product or service for sale, willing buyers and a location in which to buy.

The role of marketing Research the market, types customers and needs. Research the market, types customers and needs. Segment the market, identifying a target market. Segment the market, identifying a target market. Develop product to satisfy needs. Develop product to satisfy needs. Package to differentiate product. Package to differentiate product. Brand for loyalty and recognition. Brand for loyalty and recognition.

Identifying the target market Identifying the target market is crucial in determining the prime function of a business. The total market is often too wide and complex to be treated as an individual unit. Identifying the target market is crucial in determining the prime function of a business. The total market is often too wide and complex to be treated as an individual unit.

Marketing managers divide the market into segments in which consumers have similar spending patterns. Marketing managers divide the market into segments in which consumers have similar spending patterns. Specific strategies are planned for each segment the business seeks to aim at. Products and services are designed to meet the target markets demands. Specific strategies are planned for each segment the business seeks to aim at. Products and services are designed to meet the target markets demands. Eg Year old females for a particular cosmetic product. Eg Year old females for a particular cosmetic product.

Identification of target market Marketing managers segment the market into homogenous (the same) groups: Methods are listed below Marketing managers segment the market into homogenous (the same) groups: Methods are listed below –Demographic segmentation –Geographic segmentation –Psychographic segmentation –Behaviouristic segmentation

Demographic segmentation Dividing the market according to characteristics of population ie. Dividing the market according to characteristics of population ie. Age, gender, ethnicity, income, wealth, family structure, or religion Age, gender, ethnicity, income, wealth, family structure, or religion

Geographic segmentation Dividing market into regional groups where consumers are located. Dividing market into regional groups where consumers are located. Nationally, state, surburban loacation Nationally, state, surburban loacation Includes climatic factors such as rainfall and temperature Includes climatic factors such as rainfall and temperature

Psychographic segmentation Dividing market according to personality traits of consumers. Dividing market according to personality traits of consumers. People’s attitudes and values determine the choices they make about lifestyle, image and how they spend their money. People’s attitudes and values determine the choices they make about lifestyle, image and how they spend their money.

Behaviouristic segmentation Dividing market according to what consumers do and how they use products. Different behaviours by consumers influence what products they use their usage rates and their customer loyalty Dividing market according to what consumers do and how they use products. Different behaviours by consumers influence what products they use their usage rates and their customer loyalty

Activities Copy out Fig 10.4 on p.235 Copy out Fig 10.4 on p.235 Copy out Table 10.1 Copy out Table 10.1 Identify examples of how products have been marketed according to demographic, geographic, psychographic and behaviouristic segmentation. Identify examples of how products have been marketed according to demographic, geographic, psychographic and behaviouristic segmentation. How would you go about identifying the market for the car in Fig 10.6? How would you go about identifying the market for the car in Fig 10.6?

Targeting strategy Undifferentiated strategy: Targets a mass market, ignores segments, one marketing mix appeals to large no. of consumers ie electricity and newspapers Undifferentiated strategy: Targets a mass market, ignores segments, one marketing mix appeals to large no. of consumers ie electricity and newspapers Differentiated strategy: Biz targets segments of market, varies marketing mix for each ie soft drink and car makers Differentiated strategy: Biz targets segments of market, varies marketing mix for each ie soft drink and car makers

Concentrated strategy: Targets one large recognisable segment of market ie Bridal wear biz hiring out clothing for weddings. Concentrated strategy: Targets one large recognisable segment of market ie Bridal wear biz hiring out clothing for weddings. Niche strategy: Targets small segment of market where consumers share unique need. eg Hot Rod magazine Niche strategy: Targets small segment of market where consumers share unique need. eg Hot Rod magazine

Overview of marketing mix The marketing mix is the combination of the four P’s: Product, price, promotion and place. Businesses control these elements and uses these to reach its target market. The marketing mix is the combination of the four P’s: Product, price, promotion and place. Businesses control these elements and uses these to reach its target market.

The Four P’s Product PositionPromotion Price

Product The good or service The good or service – Tangible attributes: shape, design, appearance, features – Intangible attributes: after sales service, image, warranties The Product Line The Product Line – Similar products offered to appeal to different segments of the market.

Product Line example: Coke Length: how many similar varieties of a product are in the category. eg Coke has over 10 different brands within the soft drink category eg. Fanta, Lift, Mt Franklin, Sprite, Length: how many similar varieties of a product are in the category. eg Coke has over 10 different brands within the soft drink category eg. Fanta, Lift, Mt Franklin, Sprite, Width: number of different product lines offered by the business. Eg Coke sell soft drinks, but also sell snack foods. Width: number of different product lines offered by the business. Eg Coke sell soft drinks, but also sell snack foods. Depth: Slight variations made to one product such as Coke, Diet Coke, Coke Zero, Caffeine free and Vanilla Coke. Depth: Slight variations made to one product such as Coke, Diet Coke, Coke Zero, Caffeine free and Vanilla Coke.

Other product strategies Size: eg. Larger volumes for families. Size: eg. Larger volumes for families. Branding: Brand name, logo or symbol to increase recognition and customer loyalty. Customers are more likely to buy a product from a known and trusted brand. Branding: Brand name, logo or symbol to increase recognition and customer loyalty. Customers are more likely to buy a product from a known and trusted brand.

Branding strategies Overall brand name for all products Overall brand name for all products –Campbell’s Soup, BMW Using individual brands for each product Using individual brands for each product –Unilever Washing detergents: Drive, Omo, Surf etc. Unbranded products under generic names sold in supermarkets. Coles “Smartbuy” products. Unbranded products under generic names sold in supermarkets. Coles “Smartbuy” products.

Packaging: Protect product from damage and tampering, provides necessary information, visibility and differentiation, freshness. Packaging: Protect product from damage and tampering, provides necessary information, visibility and differentiation, freshness. Colouring: Appeal to different segments. Colouring: Appeal to different segments.

Price Choosing the correct price is a difficulty for many businesses. 4 methods below: Choosing the correct price is a difficulty for many businesses. 4 methods below: Cost Plus Margin: The cost of production plus a % margin for profit. Cost Plus Margin: The cost of production plus a % margin for profit. Market Price: Price according to the interact between the quantity customers want to purchase (Demand) and the quantity producers are able to supply. Ie if there is a shortage of the product, the price will rise. If there is a surplus of the product, the price will fall. Market Price: Price according to the interact between the quantity customers want to purchase (Demand) and the quantity producers are able to supply. Ie if there is a shortage of the product, the price will rise. If there is a surplus of the product, the price will fall.

Competitors Price: Choosing a price that is either below, equal or above that of competitors for similar products. Competitors Price: Choosing a price that is either below, equal or above that of competitors for similar products. Discount Price: Reduce the price of stock that is not selling to stimulate demand. Discount Price: Reduce the price of stock that is not selling to stimulate demand.

Price Setting Strategies Penetration Pricing: Setting price below competitors to try and increase sales volume. Penetration Pricing: Setting price below competitors to try and increase sales volume. Market Skimming: High prices for product when little or no competition. Decrease prices when competition increases. Often used with technology products. Market Skimming: High prices for product when little or no competition. Decrease prices when competition increases. Often used with technology products.

Loss Leader pricing: Selling products below production costs in order to attract customers to store or other products. Loss Leader pricing: Selling products below production costs in order to attract customers to store or other products. Price Points: Setting a price at a particular level so it can be compared with other products in the market (in terms of perceived quality). Price Points: Setting a price at a particular level so it can be compared with other products in the market (in terms of perceived quality).

Promotion Building awareness of the product in the market. Building awareness of the product in the market. Advertising: (Above the line promotion) Advertising: (Above the line promotion) –Educates consumers about product and its features. –Above the line promotion: TV, radio, internet, magazines, billboard posters, signs, brochures, direct mail.

Sales Promotion: (Below the line) Sales Promotion: (Below the line) –Encourage customers to use product. –Below the line Promotion: Coupons, scratch and win, tokens, lucky numbers, free samples, contests, trade displays, in store demonstrations, POS displays, BOGOF sales. Personal Selling: In store or travelling with aim to persuade a customer to purchase a product. Personal Selling: In store or travelling with aim to persuade a customer to purchase a product.

Public Relations: Building trust and publicising product. Public Relations: Building trust and publicising product. –Press releases –Educational kits –Well known experts opinions about product –Endorsement –Sponsorship of events, organisations or people. Develops a positive image (or negative ie Cronulla Sharks)

Place The distribution network that a business uses to make its product available to its target market is the place strategy. The distribution network that a business uses to make its product available to its target market is the place strategy. Distribution depends on: Distribution depends on: –The Business owner deciding how to transport and store finished products. –How many intermediaries (middle agents) to involve in the distribution of the product. (wholesalers and retailers).

Distribution can be carried out… Exclusively - Product only available from the manufacturer or its stores eg. Ikea Exclusively - Product only available from the manufacturer or its stores eg. Ikea Selectively – Available from a few outlets which have been permitted to sell it eg. Sealy Mattresses. Selectively – Available from a few outlets which have been permitted to sell it eg. Sealy Mattresses. Intensively – Widely available. Being sold in many outlets Intensively – Widely available. Being sold in many outlets

ProducerProducerProducerProducerConsumerRetailerWholesalerWholesaler ConsumerRetailerAgent ConsumerRetailer Consumer