Title: Higher Business Management
1Higher Business Management
- Unit 2
- Learning Outcome 2
- Marketing
2Marketing
- The process involved in identifying,
anticipating and satisfying consumer requirements
profitably.
3Identifying Consumers Requirements
- What do they want? Consumers must buy products
and continue to do so - Fierce competition and consumers expectations
mean that products must be constantly updated and
altered to suit - Other factors - price, quality, prompt delivery,
attractive packaging and after-sales service - Advertising and promotion play a big part
4Anticipating Consumers Requirements
- What do they want today?
- What do they want in the future?
- Trends must be considered to anticipate future
needs - Volatile markets - fashion, toys, technology
(mobile phones, computers, etc)
5Satisfying Consumers Requirements
- The customer is king!
- Businesses must be customer-focused
- No customers no business
- Must offer - good service, quality products,
value for money, prompt delivery, good
after-sales service (eg returns), well presented
and packaged goods, at the right price and
available at the right place
6The casualties of not adapting to the market
- The American car industry
- The British motor cycle industry
7Marketing Successes
- Swatch
- Easyjet and Ryanair
8Marketing - a Strategic Activity
- Inception/design
- Price
- Distribution
- Selling and promotion
- After-sales services
9Assessment of the Market
- Where are the consumers of the product?
- How many consumers are there?
- What are their attitudes and preferences?
- How effective are the distribution methods?
- What are the strengths and weaknesses of
competitors?
10Product-led - Product Orientated
- Putting a product on the market without prior
market research - Assumption of best available and no real
competition - Often new inventions like Dyson vacuum cleaners
or Playstation 2 - A risky approach which can fail - British motor
bikes
11Market-led - Customer Orientated
- Considering what the customers want before
putting a product on to the market - Competition has led to companies focusing on the
needs of the customer - Also looks at the influences on purchasing
decisions
12Marketing Products and Services
- Consumer goods
- Industrial goods (capital goods)
- Services (intangible)
13The Marketing Environment
Consumer trends and behaviour
Government
Competition
THE MARKET
Technology
The economy
14Branding
- Branding distinguishes a product from its
competitors - Instantly recognisable by consumers
- Often linked to quality and reliability
- Can command a premium price
15Unique Selling Point (USP)
- Try to identify the USP of each of the products
listed opposite - Think of how they are presented to you in the
advertising you see daily on TV, in newspapers
and magazines
- Coca Cola
- Nike
- Kit Kat
- Sunny D
- Skoda Cars
- Mercedes Cars
- Baxters Soups
- Fairy Liquid
- Finish
- (dishwasher tablets)
16Own Brands
- Products branded with the name of the store
selling them - Most of the big supermarkets (Tesco) and chain
stores (Boots) have their own brands - Often cheaper alternatives to branded goods
- Make a list of as many own brands you can think
of. Indicate which branded product they are
designed to rival - Eg Wheat Bisks by Safeway to rival Weetabix
17The Marketing Mix
Product Price Promotion Place
18Product/Service
- The basic product - eg toothpaste cleans teeth
- The way the product is presented - design, brand
name, packaging, etc (Colgate toothpaste - red
packaging) - Additional features - protection against decay,
fresh breath, attracting the opposite sex, etc
19The Product Life Cycle
000 Costs/Sales
New Product
Maturity (Saturation)
Growth
Decline
Idea
Youth
Death
Launch
Time
20The Product Mix
- Very few companies have only one product
- Some companies have a range of related products
eg Proctor Gamble - Some companies have totally unrelated products in
their product portfolios eg Imperial Group - It is important that you have new products being
launched to replace products going into decline
in your Product Mix
21Product Innovation
- Generating an idea
- Analysing the idea
- Producing a prototype
- Test market
- Adapt product to solve problems
- Launch the product
22Pricing Strategies
- Low-price strategy
- in a market with strong competition
- Market-price strategy
- petrol matching competitors
- High-price strategy
- up-market, exclusive image
23The Price of a Product?
- The price of a product is one of the main factors
in buying that product. Too low a price could
give the impression of poor quality and too high
a price may not give the feeling of value for
money - Price is influenced by- the product being new,
what competitors are charging, the products
stage in its life-cycle, the selling location,
the market segment and many other factors
24Short-term Pricing Tactics
- Skimming high initial price for max profit
- Penetration low initial price for new product
- Destroyer eliminating the competition (Go and
EasyJet/Ryanair) - Promotional lowering prices for a period to
promote more sales - Demand-oriented charging different prices
according to the level of demand eg cross-channel
ferry fares in summer
25Place - Distribution Channels
Producer 1
Producer 2
Producer 3
Consumer
Retailer
Wholesaler
Retailer
Consumer
Consumer
26The Wholesaler Function
- Buys in bulk from producers (low transport costs)
and sells to retailers in smaller quantities - Bears stock-holding risk
- Offers a wide variety of goods in small
quantities - Packages and labels goods
- Offers advice to both producers and retailers as
to which goods are selling well
27The Retailer Function
- Breaks down bulk to quantities consumers wish to
buy and store at home - Provides information to consumers through
advertising, displays and trained staff - Stores a variety of goods, displays them and
marks on prices - Offers range of related services - credit, HP,
after-sales service and delivery
28Types of Retailer
- Independent - convenience stores, corner shops
- Multiple Chains - MS, Dixons, Boots
- Supermarkets - Tesco, Asda, Safeway, etc
- Co-operatives
- Department Stores - Jenners, Harrods, Selfridges
- Franchises - Benetton, Body Shop, McDonalds
- Others - mail-order, internet, direct-response
advertising, telephone and TV shopping channel
29Promotional Strategies
- Three main aims
- Persuading - to purchase the products
- Informing - telling consumers about the product
- Reminding - that the product still exists
30Two Main Types of Promotion
- Above The Line
- TV and newspapers to reach mass audience
- A lot of waste
- Below The Line
- Directly controlled by the business
- Sales promotion, direct mail, trade fairs -
targeted consumers who may be interested
31Advertising Decisions
- The effect on Sales?
- The target market?
- Why do the consumers NOT buy the product?
- Which is the best medium to use?
32Types of Advertising Media
- Print - newspapers and magazines
- Broadcast - TV, radio and cinema
- Outdoor - billboards, posters, etc
33Two Main Types of Sales Promotion
- Into the pipeline
- Enhancing sales to trade outlets
- Helping retailers to sell to their customers eg
displays, posters, videos, etc
- Out of the pipeline
- Helping to persuade customers to buy from
retailers - Providing free samples, a percentage extra free,
2 for 1 offers, money-off coupons, etc
34Public Relations (PR)
- Improving the image of the product and
organisation - Supporting and promoting a charity
- Sponsoring sporting or cultural events
- Product endorsement by celebrities
- Press conferences and press releases in times of
difficulty or when good publicity can be obtained
35Extending the Product Life Cycle
- Changing the product - size, colour, taste
- Providing variants - Mars fun-sized, yoghurt,
ice cream, mini-sized, giant-sized - Altering the packaging for different market
segments - Altering the channels of distribution
- Changing the price
- Special promotions - offers, gifts, competitions
36Market Segmentation
Breaking down of markets into sub-groups that
can be targeted with a specific marketing mix.
- Advantages
- Seller can meet buyers requirements
- Advertising can be focused - less wasteful
- Expertise developed for a specific market
- Higher sales
- Increased profits
37Methods of Segmentation
- Age
- Gender
- Socio-economic grouping
- Education level
- Income
- Religion
- Residential area
- Lifestyle preferences - hobbies, politics
38Market Research -Definitions
- Market research is the systematic gathering,
recording and analysing of data about problems
relating to the marketing of goods and services.
- Market research is the means by which those who
provide goods and services keep themselves in
touch with the needs and wants of those who buy
these goods and services.
39The Need for Market Research
- Predict changes required in its product/service
- Identify what is selling
- Identify who is buying the product/service
- Explain what is happening in the market
- Investigate possible courses of action
- Identify the size of the market
- Discover what consumers think of the product
- Discover what consumers are willing to pay
- Discover if a promotion is appropriate
- Discover if the packaging is appropriate
- Identify what competition exists - now and in the
future
40Methods of Research -Primary
Primary data is gathered by field research
- By observation or asking people questions
- Up-to-date
- Collected for the exact purpose of the
organisation - Not easily available to competitors
- Time-consuming
- Expensive
41Market Research - Secondary
External Sources
Internal Sources
- Sales figures
- Stock figures
- Accounting records
- Customer comments
- Sales reps reports
- Market research data gathered previously
- Government publications - social and economic
trends, annual statistics, population census - Competitors data - annual reports, promotions,
price lists, web sites - Newspapers, trade magazines, Mintel (research
org), etc
42ICT and Market Research
- Databases compiled by research agencies
- Electronic point of sale information (EPOS)
- Supermarket loyalty cards
- Stock control software gives sales breakdown
- Web sites - customers can e-mail comments back to
the company
43Problems with Market Research
- Sampling Bias - small sample can give a wrong
impression - Human Behaviour - opinions change rapidly
- Interviewer Bias - leading questions may be asked
44The Marketing Topic
- This is probably the most important topic in
Higher Business Management. Do as much reading
on it as you can and arm yourself with as many
up-to-date examples of marketing as you can!