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Higher Business Management

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Title: Higher Business Management Author: Davidson Last modified by: Christie Created Date: 9/30/2001 6:17:29 PM Document presentation format: On-screen Show – PowerPoint PPT presentation

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Title: Higher Business Management


1
Higher Business Management
  • Unit 2
  • Learning Outcome 2
  • Marketing

2
Marketing
  • The process involved in identifying,
    anticipating and satisfying consumer requirements
    profitably.

3
Identifying 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

4
Anticipating 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)

5
Satisfying 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

6
The casualties of not adapting to the market
  • The American car industry
  • The British motor cycle industry

7
Marketing Successes
  • Swatch
  • Easyjet and Ryanair

8
Marketing - a Strategic Activity
  • Inception/design
  • Price
  • Distribution
  • Selling and promotion
  • After-sales services

9
Assessment 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?

10
Product-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

11
Market-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

12
Marketing Products and Services
  • Consumer goods
  • Industrial goods (capital goods)
  • Services (intangible)

13
The Marketing Environment
Consumer trends and behaviour
Government
Competition
THE MARKET
Technology
The economy
14
Branding
  • Branding distinguishes a product from its
    competitors
  • Instantly recognisable by consumers
  • Often linked to quality and reliability
  • Can command a premium price

15
Unique 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)

16
Own 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

17
The Marketing Mix
Product Price Promotion Place
18
Product/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
  • Core
  • Actual
  • Augmented

19
The Product Life Cycle
000 Costs/Sales
New Product
Maturity (Saturation)
Growth
Decline
Idea
Youth
Death
Launch
Time
20
The 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

21
Product Innovation
  • Generating an idea
  • Analysing the idea
  • Producing a prototype
  • Test market
  • Adapt product to solve problems
  • Launch the product

22
Pricing Strategies
  • Low-price strategy
  • in a market with strong competition
  • Market-price strategy
  • petrol matching competitors
  • High-price strategy
  • up-market, exclusive image

23
The 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

24
Short-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

25
Place - Distribution Channels
Producer 1
Producer 2
Producer 3
Consumer
Retailer
Wholesaler
Retailer
Consumer
Consumer
26
The 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

27
The 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

28
Types 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

29
Promotional Strategies
  • Three main aims
  • Persuading - to purchase the products
  • Informing - telling consumers about the product
  • Reminding - that the product still exists

30
Two 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

31
Advertising Decisions
  • The effect on Sales?
  • The target market?
  • Why do the consumers NOT buy the product?
  • Which is the best medium to use?

32
Types of Advertising Media
  • Print - newspapers and magazines
  • Broadcast - TV, radio and cinema
  • Outdoor - billboards, posters, etc

33
Two 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

34
Public 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

35
Extending 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

36
Market 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

37
Methods of Segmentation
  • Age
  • Gender
  • Socio-economic grouping
  • Education level
  • Income
  • Religion
  • Residential area
  • Lifestyle preferences - hobbies, politics

38
Market 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.

39
The 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

40
Methods 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

41
Market 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

42
ICT 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

43
Problems with Market Research
  • Sampling Bias - small sample can give a wrong
    impression
  • Human Behaviour - opinions change rapidly
  • Interviewer Bias - leading questions may be asked

44
The 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!
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