U5 Ch.20 Marketing Flashcards
Marketing Concept
Philosophy that ensures that business always focuses on needs of consumers first before it develops g / s
Marketing Strategy
Examines overall business objectives and develops marketing activities to help business achieve them
Marketing Plan
Implements firm’s marketing strategy
should include:
-SWOT
-Market Segmentation
-Research Target Market
-Marketing Mix
Role of marketing plan
- Focus on business goals
- Persuade investors by showing in-depth analysis
- Benchmarking
Market segmentation
Dividing up market into clearly identifiable sections which have common characteristics. Allows firm to identify their target market and implement strategies to meet their needs and wants.
Types of segmentation
- Demographic
- Geographic
- Psychological
- Behavioural
Demographic Segmentation
Analyses according to characteristics like age, gender, income, occupation. One of the best for mass marketing since everyone has an age, gender and income. E.g. business often have different products for different age groups. Netflix has shows for adults and kids
Geographic Segmentation
Analyses consumers according to location. By using segments such as urban vs rural business can design strategy to satisfy chosen target market. E.g. Car manufacturers developing different products for people in very warm climates than those in cold climates
Behavioural Segmentation
Analyses consumers according to knowledge and attitudes towards use of / response to a product. People Impulse buying, getting value for money products or seasonal treats
Psychological Segmentation
Analyses consumers according to lifestyle, social status and personality.
Attitudes - Organic goods /Environment concerns
Lifestyle - Health conscious (sugar free goods)
Tastes - snacking while watching tv
Benefits of market segmentation
- Sales (ensures products meet needs)
- Market Share (easier to enter market when focused on small section)
- Low costs (doesn’t waste time trying to sell to different markets just focuses on smaller ones)
Target Market
Specific group of consumers who have common needs and wants that business aims its g + s at
Niche Market
small segment of a larger market who have different needs from the majority of consumers. It is a specialised market for specific products and services with only a few suppliers.
E.g. First-communion dresses / specialist transport wheelchairs
Implications of Niche Market
- Little to no competition (small market unlike general market where competition is stiff)
- HIgh cost base (specialization requires more expensive materials, skilled staff and personal service)
- HIgher price g/s (since production costs are higher for business)
- No economies of scale
- Less investment required (produce limited goods for a small market)
- Expansion potential (can establish name, build loyalty before expanding into different segments)
Product Positioning
Creates a positive image for product in consumers’ minds. E.g. could emphasise that it saves money / makes life easier
Marketing Mix
4P’s
1. Product
2. Price
3. Place
4. Promotion
Product Portfolio
Range of products sold by business
4P’s: Product
good/service being sold to satisfy customer needs and wants relating to how it is designed, branded, packaged and its lifecycle
Product Design
should consider:
1. Function (how it will be used, feasible to produce and function correctly)
2. Cost of Production (materials, equipment, labour allows adequate profit margins)
3. Target Market (appeal + satisfy n+w + will pay?)
4. Competition (too similar? Is there a USP?)
5. Legal Requirements (consumer and safety E.g. SGSS Act)
Patent
Gives exclusive legal ownership rights to inventor of product or process. No other business/individual can use without agreement of patent owner
Brand Name
Distinctive name given to a busness and g + s it develops.
Importance of strong branding
- Brand loyalty (good quality/consistency develops loyal consumers who are averse to other brands/ E.g. apple)
- Can charge higher prices (if associated with high quality, it allows higher prices than competitors E.g. apple > samsung)
- Brand Recognition (strong brand easy to identify against competitors e.g. apple)
- Easier to launch new products (under existing name, allows build up market share e.g. iPad)
- Helps advertising (Strong brand can be advertsied in various formats
Own-Brand Products
Products sold by retailer under own name and logo. E.g. tesco value and tesco finest. Can be sold at lower prices and is aided by retailer brand but may be perceived as lower quality
Packaging
Should protect from damage and persuade consumers to buy product. Should provide useful info and be attractive and recognisable
Product Life Cycle
Level of sales a product goes through from inception to end of market viability. Tracks the sales growth of a product over a specific period of time divided into 5 sections:
1. Introduction
2. Growth
3. Maturity
4. Saturation
5. Decline
PLC Introduction
product launched into market. Sales may be low and marketing will be needed. Aims to create product awareness and there will be little or no profit. Heavy drain on cash flow
PLC Growth
Customer awareness increases and sales grow rapidly. Aims to increase market share and profits should rise. Cash flow improves
PLC Maturity
Sales at peak and product is commonplace in market. Market share is defended and profits are maximised. Cash flow is excellent
PLC Saturation
Sales level off as markets have been fully exploited. Planning needs to happen to prevent decline and extend life cycle. Profits are steady
PLC Decline
Decline in sales as many competitors and new products are in market. May have to cut prices or phase out weak products. Profits will be in decline and business may be making a loss.
Extending Product Life Cycle
- Product (new features / design / rebrand to alter image / extend line e.g. new flavours)
- Price (reduce, attract new consumers who couldn’t afford)
- Place (change channel of distribution e.g. sell online for worldwide audience)
- Promotion (New advertising campaign or sales promotion like vouchers/loyalty points)
4P’s: Price
amount of money consumers pay for product service. Business must ensure price charged will earn profit so looks at pricing strategies
Low Price Strategies
- Penetration Pricing (lower than competitors to gain greater market share)
- Predatory Pricing (lower than competitors to push them out of market)
- Loss leader / below-cost selling (selling below cost price in hopes that customers will purchase more items)
High Price Strategies
- Premium Pricing (higher price than competitors to give impression of superior quality)
- Price Skimming (high price at launch to maximize profit during high demand phase before competitors enter)
Other Price Strategies
- Psychological Pricing (certain prices have more impact e.g. 3. 99 vs 4.00)
- Mark-up pricing (adds profit percentage to production cost)
- Tiered Pricing (different prices for different budgets e.g. netflix)
- Price Discrimination (different prices for different segments e.g. irish rail)
- Bundle Pricing (multiple items for lower price)
Factors that influence price
- Production Cost e.g. adding a percentage to cost
- Target market (income levels) e.g. lambroughini for rich
- Competition (their prices) e.g. prime vs gatorade
- Economic conditions (good = higher prices) e.g. hotels during celtic tiger
- Product image e.g. premium image of apple
- Demand e.g. prime
4P’s: Place
where consumers buy g+s sold by business. Business must choose most appropriate
Wholesaler
buy in large quantities from producers and sell in smaller quantities to retailers e.g. musgraves
Agents
Sell producer’s g + s in a particular area and recieves a commission based on sales
Channels of distribution
- Prod - Wholesaler - Retailer - Consumer
- Prod - Retailer - Consumer
- Prod - Agent - Consumer
- Prod - Consumer
Selling direct has better profit margins but retailers often allow business to reach a larger market
Factors affecting channel of distribution
- Cost (should be cheapest but most effective maximises profits)
- Nature of product (short shelf life should reach customers fast)
- Target Market (reached)
- Market Size
Promotion
methods to increase customer awareness of product or service. May involve Advertising, Sales Promotion, Public Relations and Direct Selling. Type used depends on product type, budget available, target market and stage of Product Life Cycle
Advertising
Communications info about g + s to consumers. Aims to remind, inform and persuade
Advertising Types
- Informative (explains what does w/ factual info)
- Reminder (reminds consumers about brand)
- Persuasive (entice consumer that they need. Conveys value product brings to life)
- Generic (prompt consumer to think about specific g / s rather than a particular brand often by state organisations)
- Comparative (superior to others)
Advertising mediums
- TV (detailed info can be shown but expensive)
- Radio (cheaper than tv)
- Newspaper (cheaper than tv and radio but less popular)
- Social Media (large market)
- Website (relatively cheap)
Sales Promotion
Short-term gimmicks used by the business to attract consumers to buy g + s
1. Loyalty Cards
2. Special Offers
3. Discount Codes
4. Merchandising
5. Free Samples
PR
Public Relations. Marketing technique to create a positive public image for a business and products or services it sells. Aims to generate positive publicity for firm with stakeholders. Includes defending business against criticism and building positive reputation in long run
PR methods
- Sponsorship (money to individual/group to display brand name. Can take place at events with name in stadiums)
- Endorsements (celebrities paid to promote. May be in ad campaigns, event appearances or social media)
- Charitable work (fundraising events to highlight charity and make significant contribution)
- Press communication (issue a press release to communicate info for product launch)
Direct Selling
Staff meet consumers face to face, provide info and persuade to purchase. In stores sales staff promote product through appearance, knowledge and customer service
ASAI
Advertising Standards Authority for Ireland.
Organisation set up and financed by advertising industry. Aims to ensure advertising in Ireland is legal, decent, honest and truthful. Public can make a complaint about advertisements to be investigates by ASAI. Members of ASAI agree not to breach ASAI code of standards
Marketing Mix Application
- Product: Lindt uses high quality ingredients with strong packaging to protect chocolate and uses bright colours to make it stand out
- Price: premium indicates superior quality
- Place: primarly use 1(Pro-Who-Ret-Con) reaches large number of consumers
- Promotion: TV and magazine advertising. Free samples in shops and discounts (2 bars for €2). Uses endorsements with tennis player Roger Federer as a brand ambassador
