9. Marketing objectives and strategy Flashcards
Marketing objectives:
- Increase market share
- Increase revenue
- Build a brand
The product life cycle:
- Introduction
- growth
- Maturity and saturation
- Decline
Introduction (Product life cycle)
- At the start of the stage, the product will be launched and sales will be low as it is new to the market
- Costs are incurred when the product is launched
- It may be necessary to build a new production line or plant
- A business is also likely to spend in promotion to make consumers aware of the new product
Growth (Product life cycle)
- Once the product is established and consumers are aware of it, sale may begin to grow rapidly
- Unit costs may fall as production increases so the produc becomes more profitabile.
- If it a new product and there is a rapid growth in sales, competitors will launch there own versions, therefore leading to a slowdown of the rise in sales.
Maturity and saturation (Prooduct life cycle)
- Growth in sales will end and the product has become established with a stable market share.
- Sales will have reached the maximum point and competitors will have entered the market to take advantage of profits.
- Some firms will be forced out of the market as there are too many firms compeating for consumers.
- Many business use extension strategies to extend the life of their product.
Decline (Prodcut life cycle)
- For the majority of the products, sales will eventually decline, usually due to a change in in consumers taste, new technology or the introduction of new products.
- Profit is still possible if a high price can be charged and there are low costs in promotion or other costs.
Extension strategies:
Product adjustments and Promotion
Product adjustment (extension strategies)
- Updating the product (new car models)
- Making improvements (computers are faster and more memory)
- Extend product range (crisps having new flavours)
- Changing the packaging to give the impression the product has changed
Promotion (extension strategies)
- Advertise many uses
- Finding new markets such as serve in another region or country
- Investment in advertising can boost sales
- Encourage more frequent use of the product
Advantages of product life cycle
- Give managers the ability to forecast product direction and plan for timely execution of relative competitive moves
- Helps to formulate marketing mix decisions
- Explanatory tool
- Determine when it’s reasonable to eliminate declining products
Disadvantages of product life cycle
- Difficult to foresee transitions
- Difficult to determine what stage the porduct is in
- Not all products go through every stage
- Product may remain in stage for a long time
Product portfolio
Made up of product lines (grouped of similar products gouped together)
Product development process
- Generate ideas
- Analysis
- Development
- Test marketing
- Launch
Product desing mix
- Function
- Economic manufacture
- Aesthetics
Design mix & social trends
- Waste Minimisation
- Design for Re-Use
- Recycling
- Ethical sourcing
Social trend adaption benefits
- Less Wastage & higher EOS
- Products are more likely to be popular
- Social Trend USP
- Good corporate citizen
What is promotion?
Use of Advertising, Personal Selling, Sales Promotion, Direct Mail and Sponsorship to Inform & Persuade Consumers to Buy Products.
Above the line promotion:
- Television
- Newspapers and magazines
- Cinema
- Radio
- Posters and billboards
- Internet
Below the line promotion
- Sales promotion: Incentives used to encourage people to buy products
- Public relations: to increase sales by improving image of business
- Merchandising and packaging: Eye-catching and likely to encourage sales
Types of promotion using technology
- Online Targeted advertising
- Viral Advertising
- Social Media
- E-Newsletters
Choosing promotional Method Factors
- Cost
- Market/Audience Size
- Market profile
- Form of message being communicated
- Legal/ Geographical Constraints
- Other Aspects of Marketing mix
Branding
Differentiating products by creating an identifiable image and clear expectations about a product
Factors for setting price
- Cost of production
- Price elasticity of demand
- Competitors Prices
- Stage in Product life cycle
Factors Determining Price elasticity
- Necessary product
- Number of similar products
- Consumer Loyalty
- Price in proportion of consumers incomes
- Time
Elastic
A change in price will change the quantity demanded
Inelastic
There is little to no change of the quantity demanded even when the price changes
Examples of elastic goods:
- Soft drinks
- Cereal
- Clothing
- Electronics
- Cars
Examples of inelastic goods
-Life-saving medication
- Gas
- Electricity
- Cigarettes
- Post-secondary education
What is distribution?
Distribution is the delivery of goods from the producer to the consumer.
If businesses can’t get products in the right place at the right time, they’re not likely to be successful.
Distribution channels
Producer –> Wholesaler –> Retailer –> Consumer
Wholesaler
Buy in bulk from producers and redistribute these in smaller quantities to retailers or consumers
Retailers
Are business that buy goods from wholesalers or consumers and sell them to costumers
Two stage distribution
Some manufacturers can use direct selling which can take a number of forms
Advantage of direct selling
Intermediaries aren’t required, so producers are able to make more profit. Producers can also reach customers who don’t like going to shops
Disadvantage of direct selling
People cannot physically see the products until they have been purchased. Also, some people may object to direct mail, door to door salespeople and unwanted telephone calls
Agents or brokers
Some producers usen 4 or 3 staged distribution channels use agents or brokers
Choice of channel
- Type of industry
- Nature of the product
- Geography
- Finance
- Consumer expectations
- Technology
Changes in distribution methods
- Online shopping
- Growth of shopping centre
- B2B
- Extension of retail hours and products
- B2C
The Boston matrix
- Stars (a product with high market growth and a relatively high market share, the product will be in a stron position in its market)
- Cash cows (a product with high market share, therefore weel positioned in the market but it will have a weak growth)
- Question marks (relatively low market share in a fast-growing market)
- Dogs (products with a relatively low market share in a market with low growth, dogs have poor prospects for future sales and profits)
Boston matrix
a 2x2 matrix model that analyses a product portfolio according to the growth rate of the market and the relative market share of products within the market
Extension strategies
Methods used to prolong the life of a product
Marketing mix
The mix of marketing elements used by a company, which are usually known as the 4P’s: Product, price, place and promotion
