MarketingMarketing

MarketingMarketing

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

Key concepts in Key concepts in MarketingMarketing::

•IdentifyingIdentifying the nature and the nature and characteristics of the product or characteristics of the product or service demanded by the customer.service demanded by the customer.

•AnticipatingAnticipating the changing the changing expectations of consumers in order expectations of consumers in order to be ahead of the market, rather to be ahead of the market, rather than just following other businesses than just following other businesses competing in that market.competing in that market.

•SatisfyingSatisfying their customers their customers which involves offering value. which involves offering value. The more $ spent the higher the The more $ spent the higher the expectation of the product.expectation of the product.

•Ensuring profitability Ensuring profitability Businesses must generate Businesses must generate profits in order to have funds to profits in order to have funds to carry out its various activities.carry out its various activities.

What is the ‘market’?What is the ‘market’?

•A mechanism that allows A mechanism that allows people to trade, which has people to trade, which has three characteristics: a three characteristics: a product or service for sale, product or service for sale, willing buyers and a location willing buyers and a location in which to buy.in which to buy.

The role of marketingThe role of marketing

•Research the market, types Research the market, types customers and needs.customers and needs.

•Segment the market, identifying a Segment the market, identifying a target market.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 Identifying the target marketmarket

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

•Marketing managersMarketing managers divide divide the market into segments in the market into segments in which consumers have similar which consumers have similar spending patterns.spending patterns.

•Specific strategies are planned Specific strategies are planned for each segment the business for each segment the business seeks to aim at. Products and seeks to aim at. Products and services are designed to meet services are designed to meet the target markets demands. the target markets demands.

•Eg. 18-30 Year old females for Eg. 18-30 Year old females for a particular cosmetic product.a particular cosmetic product.

Identification of target Identification of target marketmarket

•Marketing managers segment the Marketing managers segment the market into homogenous (the market into homogenous (the same) groups: Methods are listed same) groups: Methods are listed belowbelow– Demographic segmentationDemographic segmentation– Geographic segmentationGeographic segmentation– Psychographic segmentationPsychographic segmentation– Behaviouristic segmentationBehaviouristic segmentation

Demographic Demographic segmentationsegmentation

•Dividing the market Dividing the market according to characteristics of according to characteristics of population ie.population ie.

•Age, gender, ethnicity, Age, gender, ethnicity, income, wealth, family income, wealth, family structure, or religionstructure, or religion

Geographic Geographic segmentationsegmentation

•Dividing market into regional Dividing market into regional groups where consumers are groups where consumers are located.located.

•Nationally, state, surburban Nationally, state, surburban loacationloacation

•Includes climatic factors such as Includes climatic factors such as rainfall and temperaturerainfall and temperature

Psychographic Psychographic segmentationsegmentation

•Dividing market according to Dividing market according to personality traits of consumers.personality traits of consumers.

•People’s attitudes and values People’s attitudes and values determine the choices they make determine the choices they make about lifestyle, image and how about lifestyle, image and how they spend their moneythey spend their money..

Behaviouristic Behaviouristic segmentationsegmentation

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

ActivitiesActivities•Copy out Fig 10.4 on p.235Copy out Fig 10.4 on p.235

•Copy out Table 10.1Copy out Table 10.1

• Identify examples of how products Identify examples of how products have been marketed according to have been marketed according to demographic, geographic, demographic, geographic, psychographic and behaviouristic psychographic and behaviouristic segmentation.segmentation.

•How would you go about identifying the How would you go about identifying the market for the car in Fig 10.6?market for the car in Fig 10.6?

Targeting strategyTargeting strategy

•Undifferentiated strategyUndifferentiated strategy: : Targets a mass market, ignores Targets a mass market, ignores segments, one marketing mix segments, one marketing mix appeals to large no. of consumers appeals to large no. of consumers ie electricity and newspapersie electricity and newspapers

•Differentiated strategyDifferentiated strategy: Biz : Biz targets segments of market, targets segments of market, varies marketing mix for each ie varies marketing mix for each ie soft drink and car makerssoft drink and car makers

•Concentrated strategyConcentrated strategy: : Targets one large recognisable Targets one large recognisable segment of market ie Bridal wear segment of market ie Bridal wear biz hiring out clothing for biz hiring out clothing for weddings.weddings.

•Niche strategyNiche strategy: Targets small : Targets small segment of market where segment of market where consumers share unique need. consumers share unique need. eg Hot Rod magazineeg Hot Rod magazine

Overview of marketing mixOverview of marketing mix

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

The Four P’sThe Four P’s

ProducProductt

PositionPositionPromotioPromotionn

PricePrice

ProductProduct•The good or service The good or service

– Tangible attributes: shape, Tangible attributes: shape, design, appearance, featuresdesign, appearance, features

– Intangible attributes: after Intangible attributes: after sales service, image, warrantiessales service, image, warranties

• The Product LineThe Product Line– Similar products offered to Similar products offered to

appeal to different segments of appeal to different segments of the market.the market.

Product Line example: Product Line example: CokeCoke

• LengthLength: how many similar varieties of a : how many similar varieties of a product are in the category. eg Coke has product are in the category. eg Coke has over 10 different brands within the soft drink over 10 different brands within the soft drink category eg. Fanta, Lift, Mt Franklin, Sprite, category eg. Fanta, Lift, Mt Franklin, Sprite,

• WidthWidth: number of different product lines : number of different product lines offered by the business. Eg Coke sell soft offered by the business. Eg Coke sell soft drinks, but also sell snack foods.drinks, but also sell snack foods.

• DepthDepth: Slight variations made to one : Slight variations made to one product such as Coke, Diet Coke, Coke Zero, product such as Coke, Diet Coke, Coke Zero, Caffeine free and Vanilla Coke.Caffeine free and Vanilla Coke.

Other product strategiesOther product strategies

•Size: eg. Larger volumes for Size: eg. Larger volumes for families.families.

•Branding: Brand name, logo Branding: Brand name, logo or symbol to increase or symbol to increase recognition and customer recognition and customer loyalty. Customers are more loyalty. Customers are more likely to buy a product from a likely to buy a product from a known and trusted brand.known and trusted brand.

Branding strategiesBranding strategies

• Overall brand name for all productsOverall brand name for all products– Campbell’s Soup, BMWCampbell’s Soup, BMW

• Using individual brands for each Using individual brands for each productproduct– Unilever Washing detergents: Drive, Unilever Washing detergents: Drive,

Omo, Surf etc.Omo, Surf etc.

• Unbranded products under generic Unbranded products under generic names sold in supermarkets. Coles names sold in supermarkets. Coles “Smartbuy” products.“Smartbuy” products.

•Packaging: Protect product Packaging: Protect product from damage and tampering, from damage and tampering, provides necessary provides necessary information, visibility and information, visibility and differentiation, freshness.differentiation, freshness.

•Colouring: Appeal to different Colouring: Appeal to different segments.segments.

PricePrice• Choosing the correct price is a difficulty for Choosing the correct price is a difficulty for

many businesses. 4 methods below:many businesses. 4 methods below:• Cost Plus MarginCost Plus Margin: The cost of production : The cost of production

plus a % margin for profit.plus a % margin for profit.• Market PriceMarket Price: Price according to the : Price according to the

interact between the quantity customers interact between the quantity customers want to purchase (Demand) and the want to purchase (Demand) and the quantity producers are able to supply. Ie if quantity producers are able to supply. Ie if there is a shortage of the product, the there is a shortage of the product, the price will rise. If there is a surplus of the price will rise. If there is a surplus of the product, the price will fall.product, the price will fall.

•Competitors Price: Competitors Price: Choosing a price that is either Choosing a price that is either below, equal or above that of below, equal or above that of competitors for similar competitors for similar products.products.

•Discount PriceDiscount Price: Reduce the : Reduce the price of stock that is not price of stock that is not selling to stimulate demand.selling to stimulate demand.

Price Setting Price Setting StrategiesStrategies•Penetration PricingPenetration Pricing: Setting : Setting

price below competitors to try and price below competitors to try and increase sales volume.increase sales volume.

•Market SkimmingMarket Skimming: High prices : High prices for product when little or no for product when little or no competition. Decrease prices competition. Decrease prices when competition increases. Often when competition increases. Often used with technology products.used with technology products.

•Loss Leader pricingLoss Leader pricing: Selling : Selling products below production products below production costs in order to attract costs in order to attract customers to store or other customers to store or other products.products.

•Price PointsPrice Points: Setting a price : Setting a price at a particular level so it can be at a particular level so it can be compared with other products compared with other products in the market (in terms of in the market (in terms of perceived quality).perceived quality).

PromotionPromotion•Building awarenessBuilding awareness of the of the

product in the market.product in the market.

•AdvertisingAdvertising: (Above the line : (Above the line promotion)promotion)– Educates consumers about product Educates consumers about product

and its features.and its features.– Above the line promotion: TV, radio, Above the line promotion: TV, radio,

internet, magazines, billboard internet, magazines, billboard posters, signs, brochures, direct mail.posters, signs, brochures, direct mail.

•Sales PromotionSales Promotion: (Below the line): (Below the line)– Encourage customers to use product.Encourage customers to use product.– Below the line Promotion: Coupons, Below the line Promotion: Coupons,

scratch and win, tokens, lucky scratch and win, tokens, lucky numbers, free samples, contests, numbers, free samples, contests, trade displays, in store trade displays, in store demonstrations, POS displays, BOGOF demonstrations, POS displays, BOGOF sales.sales.

•Personal SellingPersonal Selling: In store or : In store or travelling with aim to persuade a travelling with aim to persuade a customer to purchase a product.customer to purchase a product.

•Public RelationsPublic Relations: Building : Building trust and publicising product.trust and publicising product.– Press releasesPress releases– Educational kitsEducational kits– Well known experts opinions about Well known experts opinions about

productproduct– EndorsementEndorsement– Sponsorship of events, organisations or Sponsorship of events, organisations or

people. Develops a positive image (or people. Develops a positive image (or negative ie Cronulla Sharks)negative ie Cronulla Sharks)

PlacePlace

• The distribution network that a The distribution network that a business uses to make its product business uses to make its product available to its target market is the available to its target market is the place strategy.place strategy.

• Distribution depends on: Distribution depends on: – The Business owner deciding how to The Business owner deciding how to

transport and store finished products.transport and store finished products.– How many intermediaries (middle agents) How many intermediaries (middle agents)

to involve in the distribution of the product. to involve in the distribution of the product. (wholesalers and retailers). (wholesalers and retailers).

Distribution can be carried Distribution can be carried out…out…

• ExclusivelyExclusively - Product only available - Product only available from the manufacturer or its stores from the manufacturer or its stores eg. Ikeaeg. Ikea

• SelectivelySelectively – Available from a few – Available from a few outlets which have been permitted to outlets which have been permitted to sell it eg. Sealy Mattresses.sell it eg. Sealy Mattresses.

• IntensivelyIntensively – Widely available. – Widely available. Being sold in many outletsBeing sold in many outlets

ProducerProducer

ProducerProducer

ProducerProducer

ProducerProducer

ConsumerConsumer

RetailerRetailer

WholesalerWholesaler

WholesalerWholesaler

ConsumerConsumer

RetailerRetailer

AgentAgent

ConsumerConsumer

RetailerRetailer ConsumeConsumerr