11: Strategies for products and markets Flashcards
Define marketing
The management process that identifies, anticipates and supplies customer requirements efficiently and profitably
How do we compete in the market?
Generic strategy (Differentiation/cost)
Product/market (New markets/product/refinements)
Orientation (Product, production, market, sales)
What is it needed to be done for marketing?
Market research, positioning, targeting, segmentation
Customer vs consumer
Customer - purchases and pays for goods, may be part of longer customer chain
Consumer - ultimate user of g&s
Explain four orientation approaches to marketing
Product orientation - business makes products they want for themselves and know will sell in market
Production orientation - products provided to an audience where its highly likely to sell regardless of marketing e.g. beans
Market orientation - Company conducts exhaustive research so it has ready made customers upon launch
Sales orientation - marketed aggressively, somet customers wouldn’t naturally seek to buy
What is market segmentation? How can it be done?
Division of the market into separately identifiable sub-units to help target the marketing effort. Can be split by:
-Mass/undifferentiated - no separate customer segments identified e.g. sugar
-Niche/concentrated - concentrate on one or market segments only
-Micro - products and services tailored to individual needs e.g. moonpig
What is the benefits of segmentation?
- Org can identify new marketing opportunites
- Specialists can be used for each of org’s major segments
- Marketing budget can be allocated proportionally to each segment, optimising ROI
- Org can try dominate particular segments through competitive advantage from a strategy
What are the bases for segmentation?
- Type of customer e.g. consumer/ business
- Location of customer
- Demographic factors e.g. age/gender
- Lifestyle of customer e.g. socially aware
- Behavioural needs-based e.g. tech savvy
- Contextual life changing event e.g. baby
Explain targeting and what it depends on
Selecting market segments with the most potential for a return. Attractiveness depends on it being:
- Measurable: ability to forecast sales/mareket potential
- Accessible: ability to make and distribute a product to a market
- Stable: likelihood that the segment will persist for sufficient time to enable a ROI of developing a marketing mix on it
- Substantial: profits available will give an adequate return on capital employed
- Defensible: barriers to entry to allow firm some dominance
Explain positioning
The overall location of a produt in a buyer’s mind in relation to other competing products/services/brands.
Position based on factors such as cost/value/quality
Can be used to represent the market and spot opportunities
Explain market research
the systematic gathering, recording and analysing of info about problems relating to the marketing of goods and services. Used to form the marketing mix
What are the areas for market research?
- Market itself: wants, needs, size
- Products: features, safety, durability
- Pricing: competitor prices, acceptable/target prices
- Promotion: methods, targeting data
- Distribution: onwards customer chain, determining margins against recommended retail prices
What are the stages involved in market research?
- Defining problems, setting objectives
- Developing hypotheses
- Research (Desk/field)
- Data collection
- Analysis and interpretation
- Conclusions and recommendations
What is desk research vs field research
Desk - gathering and analysing existing (secondary) data from internal and external sourecs
Field - collection of new (primary) information direct from respondents. E.G. Individual and group interviews, trial testing/focus groups, observation of processes, questionnaires.
What are three essential features of branding
Name - should be legally protected and memorable
Livery - design, trademark,symbols, visual/identifable features
Associations of personality - helps a brand distinguish their product from competing products in the eyes of the user.
What are brand policies an organisation can adopt?
Single company name - simple and builds on existing brand e.g. virgin
Different brand for each product e.g. unilever
Own branding - supermarkets own to create loyalty to store
Explain brand positioning
Quadrant map with a trade off between price and quality, refer to book p121
High p low q: Cowboy High p high q: premium
Low p low q: Economy Low P high q: Bargain
What is brand equity
An intangible asset that adds value to a business through positive associations made by consumer between brand and the benefits they enjoy
What is the marketing mix?
the set of controllable marketing variables that a firm blend to produce the response it wants in the target market .
7ps:
Product, place, promotion and price for products and services
People, processes and physical evidence for services marketing
Explain product
Good or service that customer buys and experiences. Made up of 3 elements:
- Basic product: e.g. car - the core of the product
- Actual product: e.g. BMW 5 Series - features/specific
- Augmented product: .g. BMW M5 with optional extras, GAP insurance, finance lease etc. Therefore G&S+ Extras
What is the product development strategy
Develop or create:
- Entire new products
- New product features through adapting existing features
- Different quality versions/models/sizes
What are the product classifications for global marketing?
Local products - only suitable in home market
International products - seen as having extension potential into other geographical markets
Multinational products - products adapted to the unique characteristics of national markets
Global products - worldwide without differentiation e.g. big mac same everywhere
Explain Place
Orgs must decide the best way to get their products to the customer through distribution strategy
Explain distribution channels
Direct distribution - directly from producer to consumer without use of intermediary e.g. online shopping, personal selling
Indirect distribution - systems of distribution which use an intermediary - can buy in bulk make most of EOS and better access to target market
What are the types of intermediary
Retailers - sell directly to consumers
Wholesalers - stock a range of products from competing manufacturers to sell to retailers
Distributers - contract to buy a manufacturers goods and sell them to customers
Agents - dont purchase the manufacturers goods but make commission on sales they make
Franchisees - independent orgs that are allowed to trade under name of another org for an inital fee and share of sales revenue
How can businesses sell and distribute in overseas markets?
- Can sell to a distributor who sells their products locally
- Sales agent who sells product on their behalf on a commission basis
- Joint venture with a local business
- Set up own local office
What is the promotion mix?
Consists of four elements
- Advertising
- Sales promotion
- Public relations
- Personal selling
Described in terms of push and pull effects
Explain push and pull effects
Pull effect is when consumers ask for brand by name
Push effect is targeted on getting the company’s goods into the distribution netowrk
What is above and below line promotional activities
Above line - promotional activity that customer sees e.g. advertising
Below line - non-media promotional e.g. displays, shows, exhibitions, incentive to intermediaries to stock up their product
Explain advertising and its objectives
Designed to influence customers favourably regarding a G/S
- Communicate info about a product
- Create awareness of new products
- Hihglight unique selling proposition
- Increase sales/profits
Advertising classed under 3 headings
How is advertising classed
Informative advertising - conveying information and raising consumer awareness of the product. Usually for introduction of product
Persuasive advertising - creating a desire for product and stimulating actual purchase. Growth/maturity stage for well-established products
Reminding advertising - reinforcing knowledge held by potential consumers, reminding existing consumers of the benefits of their product
Explains sales promotion
Stimulate consumer purchasing and dealer effectiveness
Explain public relations
Creation of positive attitudes regarding products/services/companies.
Explain personal selling
Sales force makes contact with potential customers on a one-to-one basis. also includes delivery, repair staff and call centre staff who have regular contact with the customer
What are the principles of pricing?
the pricing decision is presented as a balance between the Three c’s
- Costs: products need to recover their costs to make a profit
- Customers: the price that customers will bear to buy the product or service
- Competitors: a benchmark against which a product is judged
4th C = corporate objective - max profits, obtain ROI, target revenue/MS
PED
Responsiveness of QD to a change in price
%Change in QD / % Change in Price
Price discrimination
The setting of prices for a similar product in different parts of the market
What are the different methods of differential pricing?
Market segment: Priced to appeal to different market segments
Product version: Price changes depending on model/added extras
Place: price impacted by location or convenience
Time: Price impacted by time of day or season
Dynamic: Price varies according to levels of demand
List pricing decisions
Market skimming
Predatory pricing/dumping
Value pricing
Penetration pricing
Promotional pricing
Advantages of a cost-plus approach
- Simplicity of price setting
- Control of sales discounting
- Ease of budgeting
- Easy to state rates of mark-ups in contracts with the government so profits are deemed fair and not excessive
Disadvantages of a cost-plus approach
- Ignores the effect of volumes on cost
- Useless for very high fixed cost industries
- May not suit positioning of the product ( could be undersold or overpriced)
- Ignores competitive conditions
Explain people as one of 7ps
People are particularly important in the service industry as the service cannot be separated from the staff who deliver it.
Explain processes
It is more difficult to control the processes that will be employed in delivering the service. Processes need to be consistent to assure high quality of service to customers
Explain physical evidence
Evidence of the service so the customer has something to pay for
What is transaction marketing?
A marketing mix that gets customers to buy a product or service that satisfies their needs, perhaps in a single sale, without any sort of LT relationship with them.
What is relationship marketing
Management processes that seek to attract, maintain and enhance customer relationships by focusing on the whole satisfaction experiences by the customer. Creating a long-lasting relationship with customers.
Key characteristics:
- Customers are individuals
- Existing customers preferred over new ones
- Based on interactions and dialogues
How can relationship marketing be developed?
- Loyalty schemes: supermarket cards, company clubs etc
- Personalisation programmes: amazon recommending prodcuts to suit returning customers
- Structural ties: providing customers with computer equipment to managers orders e.g. just eat terminals to takeaways
Why has relationship marketing grown?
- Increasing cost of attracting new customers
- Marketing strategies based on product development: importance of selling more to existing customers
- Increased capabilities of information technology
Give some ethical concerns of marketing
- If people do not need the products marketed to them, their production wastes resources
- Companies may use pricing to be selective to whom they sell their products to
- Percieved benefits may be unrealistic or dishonest
