1. Misconceptions – Marketing, it’s not just advertising
What is Marketing?
Misconceptions – Marketing, it’s not just advertising

2. LI - To understand key functional areas of a business
Businesses aim to make a profit
To this they must sell their products or services
The idea behind marketing is that similar people buy similar things
Therefore marketing can be defined as:
Selling the right product, in the right place, at the right time, at the right price

3. From studying this business area you will be able to:
Understand that businesses have different views on how to market their products.
Explain how the market for many products is split into different parts called ‘market segments’.
Understand how businesses analyse different parts of the population, called ‘socio-economic groups’, to help them market their products or services.
Explain how different types of market, mass, niche and test are used by businesses.

4. A business must decide whether to concentrate upon: Providing products that consumers want. This is known as Market Orientation e.g. Mobile Phones now have cameras because customers indicated that they wanted them. Providing products because they know how to produce them. This is known as Product Orientation e.g. Dyson produced their product because they knew how to make bag less vacuum cleaners, rather than because consumers had said they wanted one.

5. People normally make four types of Purchase.
ROUTINE PURCHASES
Every day purchases which require no thought
LIMITED DECISION PURCHASES
Less routine involving a little more thought
EXTENSIVE DECISIONS
Purchases requiring a lot of thought
IMPULSE PURCHASES
Purchases made on the spur of the moment

6. Market Segmentation
Most businesses cannot sell their products to everyone
Instead they break the market into smaller pieces – and then they try to sell to these smaller groups
These smaller groups are called SEGMENTS
This contains consumers who buy similar products
These consumers then become the TARGET MARKET for the firm
Can you think of any ways of segmenting the market?

7. Methods of Segmentation
There are a number of ways in which this can be done:
Age
Gender
Income
Geographical/Regional
Interests/Hobbies

8. Methods of Research
Primary research: is new research, carried out to answer specific issues or questions. It can involve questionnaires, surveys or interviews with individuals or small groups.
Primary market research is tailored to a company’s particular needs and is conducted either by you or by a company that you pay to do the research for you.
Focus groups, surveys, field tests, interviews, and observation are examples of primary market research.
Primary market research lets you investigate an issue of specific interest to your business for example:
get feedback about your website
assess demand for a proposed service
gauge response to various packaging options
find out how much consumers will pay for a new product.
In addition, primary research is usually based on statistical methodologies that involve sampling a percent of a target market. This sample can give an accurate representation of a particular market.
The downside of professionally conducted primary market research is that it can be expensive

9. Methods of Research Secondary Market Research
Secondary research is based on information from studies previously performed by government agencies, chambers of commerce, trade associations, and other organizations. For example,
researching the internet
Newspapers
company reports.
Secondary market research is easy to find, and much of it is free or low-cost. For instance, you can find secondary market research online at government or industry websites, at your local library, on business websites, and in magazines and newspapers.
The downside of secondary market research is that it is not customized to your needs, so it may not be as useful as primary market research. For example, secondary research will tell you how much money teenagers spent last year on trainers, but not how much they’re willing to pay for the particular shoe design your company has in mind.

10. Socio-Economic Groups
A method of dividing consumers.
Groups are based upon the occupation of the head of the household.
Occupation held has an impact on earnings and hence the way in which businesses target products.
Higher the socio-economic group the more the disposable income

11. SOCIO – ECONOMIC GROUPS
A B C1 C2 D E
Higher managerial, professional Administrative, Intermediate managerial Supervisory/ clerical Skilled manual Semi-skilled and unskilled manual Casual labourers, unemployed, pensioners

12. Disposable income is the part of a person’s income that is available to spend as they wish.
This is the income that is left after they have paid for essential things, such as tax, mortgage and bills.
Complete the activity on socio-economic groups
Disposable Income

13. Can be defined as a product/service, or produced for consumption in large numbers, especially when sold in supermarkets, in drugstores, and at newsstands
Can you think of any such products?
Mass Marketing

14. The area of a target market where a company or product is particularly strong. This specialization often results in super high quality by the specialist company and elimination of competition because of the uniqueness.
Aimed at a small amount of people with a particular interest
Normally more expensive reflects specialist nature
Niche Marketing

15. Marketing activity
In groups you are going to market a new product, this could be things like: A new type of drink A new piece of sports equipment A new computer game A new type of scooter / car The first part of your task is to choose a product. Next you must decide who your product is aimed at (Market segment). Explain your methods of segmentation and how it will help your research. You should also explain what methods of research you will conduct and why.

16. The marketing mix The marketing mix or 4 Ps of marketing: Price
Product
Promotion
Place
Decisions about these are based on the results of market research

17. 4Ps - Price The main pricing strategies are Penetration pricing
Price skimming
Mark up
Psychological pricing

18. Penetration pricing
In penetration pricing the product’s price is set significantly lower than any competitors’ prices. This pricing strategy may be used where the objective is to enter or capture a larger share of the market, but may yield a low profit or even a loss in the short run. The price is usually raised later

19. Price skimming
Where a new product is likely to generate a high volume of initial sales (because it is a new product) a high price may be charged in order to maximise profits. The price will be reduced when the initial high demand has subsided.

20. Mark up/ Cost plus pricing
This is the simplest pricing strategy and is aimed at ensuring the business covers its costs and makes an acceptable profit. The total costs of producing one unit of the product are calculated to which is added the required profit margin. This gives the selling price

21. Psychological pricing
Psychological pricing (also price ending, charm pricing)
is a pricing/marketing strategy based on the theory that certain prices have a psychological impact.
Retail prices are often expressed as "oddprices": a little less than a round number, e.g. £19.99 or £2.98.

22. Other strategies - Quick task
See what you can find out about the following strategies and write up a definition in your own words:
Price discrimination
Destroyer pricing
Competitive pricing

23. practice of setting a different price for the same product in different segments to the market. For example, this can be for different classes, such as ages, or for different opening times
aggressive pricing (also known as "undercutting"), intended to drive out competitors from a market. It is illegal in some countries
Setting the price of a product or service based on what the competition is charging. Competitive pricing is used more often by businesses selling similar products, since services can vary from business to business while the attributes of a product remain similar.

24. 4Ps - Product

25. A product is defined as
The process by which companies distinguish their product offerings from the competition is called branding.
For most companies, brands are not developed in isolation - they are part of a product group.
A product group (or product line) is a group of brands that are closely related in terms of their functions and the benefits they provide (e.g. Dell's range of personal computers or Sony's range of televisions).

26. 4Ps - Place
Place is about ensuring that supplies of a product are available on the market for potential purchasers to buy.
Distribution is vital in order to make sure that this happens.
It is likely that a producer will use one of three models to distribute their product on to the market- what will yours be??

27. Place

28. Place Model A is the traditional model of distribution.
In this model a wholesaler buys in bulk from a producer, and then sells (and often delivers) smaller quantities to retailers, who in turn sell even small quantities to customers.
This process of breaking up large, bulk purchases from producers into smaller quantities for resale to retailers is known as BREAK BULK.
Place

29. Model B is typically used by large retailers (e. g
Model B is typically used by large retailers (e.g. Tesco, ASDA, J Sainsbury).
Because they are so large, they are able to take on the role of the wholesaler.
Such companies have Regional Distribution Centres (RDC) to which producers can deliver in bulk, and from where smaller quantities can be sent to retail stores in the area served by the RDC.
Place

30. Model C is known as DIRECT MARKETING and is generally used by producers or suppliers (e.g. Computer manufacturers, Insurance Companies) who wish to target a niche or specialist market.
This is often done through:
Direct Mail to chosen customers (e.g. Car insurance to members of the AA or RAC)
Mail Order Catalogues (e.g. Book Clubs)
Advertisements in specialist publications (e.g. Computer magazines)
Telesales (e.g. Double glazing)
Teleshopping (e.g. QVC)
Place

31. Promotion

32. Promotion The main objectives of promotion are
To inform prospective customers of the product and the business
To show the benefits of the product
To persuade potential customers to buy the product
To present a good image
Promotion

33. Promotion Your businesses objectives may include
To increase market share
To enter a new market or market segment
To extend the life of a product
To launch a new product into a market
The success of a promotional campaign must be measured against these objectives
Promotion

34. Price reductions, special offers and free gifts persuade new customers to try a product and can give a boost to sales and that lasts longer than the promotion
Free samples can increase awareness of a new product
Competitions attract customers to new and existing products
Methods of promotion 1

35. Brochures and catalogues inform customers about a product and present an image of the business
Point of sale promotion such as in-store displays encourage impulse buying
Internet based using a web site and depends on customers knowing where to look and providing an address
After sales involves providing service backup and information as well as warranties and guarantees
Methods of promotion 2

36. Methods of promotion 3 Advertising should be targeted using
Television: expensive and wide coverage
Radio: cheaper and smaller audience; no visual stimulus
Cinema: local audience
Newspapers and magazines: can be expensive but more specialised; if kept can be long lasting
Posters: cheaper; have impact but may be ignored; little opportunity for targeting
Leaflets: delivered to peoples homes or distributed in the street; cheap but little opportunity for targeting
Methods of promotion 3

37. Methods of promotion 4 Public relations
Press releases and news stories released to the press can provide cheap promotion that can be targeted by using trade press
Sponsorship of events and television programmes bring the product or business to peoples’ awareness but can be expensive
Endorsement by celebrities associates the product with the celebrity
Methods of promotion 4

38. affecting the marketing mix
Other factors
affecting the marketing mix

39. Factors affecting the choice of marketing mix
Costs
All marketing activity costs money and the availability of finance may restrict methods used
Changes in price affect profitability and the ability to cover costs
The cost of a marketing campaign must be less than additional revenue generated
Factors affecting the choice of marketing mix

40. Marketing activity - part 2
Now you need to research and find out what competition there is of similar products.
(secondary research)
You should make a record of the products you find and other information such as.
Does the company include any services as well as the product?
How much are they?
Did the company use a particular pricing strategy?
What methods are used to promote the product?
How are the products distributed? (4Ps)
Make a questionnaire to help you determine the price of your product. (primary research)

41. Success Criteria – Questionnaire
Name in a header
Has a title
Explains what the product is
Uses closed / multiple choice questions
Explain how the answer should be completed e.g. circle / tick
Questions are directly related to the product or price