Marketing Mr Poole Business. What is marketing? It is the management process responsible...

MarketingMarketing

Mr Poole Business

What is marketing?• It is the management process

responsible identifying, anticipating, and satisfying for the needs of customers profitability.

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What are the benefits of marketing?

• Anticipate customers needs & wants.

• Produces goods that customers want.

• See & respond to changes in the market & environment.

• Less waste & reduced costs.

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What is the marketing concept?

• Thinking of customers needs first.• Understanding the needs of

customers.• Satisfying customers needs more

effectively than competitors.

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Benefits of the marketing concept

• Business will be able to compete.• Good reputation & public image.• Business will be able to produce

what consumers want.• Will not have to try and convince

customers to buy what they have made.

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Marketing strategy/plan

• Outlines the product, price, promotion and place.

• In order to achieve the firms overall objectives.

• A swot analysis is carried out before drawing up the plan.

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How does the marketing strategy plan aids business?• Sets targets to be achieved.• Sets priorities for management.• Provides a framework for m’ment.• Assigns responsibilities to dept’s.• Anticipates problems.• Forms part of business plan.

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Evaluate the marketing strategy of a business

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1. SWOT analysis• Strengths• Market domination for over 30’s.• Weaknesses• Under 30’s not interested• Opportunities• Market for new drink for 28 to 30’s• Threats• Smoking ban, alcopops.

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2. Objectives• To increase the market share.• To highlight unique selling point

(usp).• Target 18 to 30 year olds.

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3. Product• Add new product features.• Eg. Draught Guinness now can be

bought in cans.

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4. Price• Cost plus 20% mark-up

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5. Promotion• Increase the promotion budget to

enable sponsorship of the GAA.

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6. Place• Sell in supermarkets & off-

licences.

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7. Evaluation• I think that this plan has been

extremely successful because of the GAA championship,

• Guinness have increased their mkt. share.

• The drink is now more popular with 18 to 30 yr olds.

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Market Segmentation• Dividing a market into groups of

consumers according to some characteristic that affects their willingness to buy.

• Eg Age, gender, income, religion.

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Why are markets divided into segments?• Know where to advertise & sell.• Reduces costs.• Fill a niche eg. Nivea for men.• Helps business to establish itself• Eg. Nintendo = childen (santa)

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Target market• Is the segment of the market that

the product will be aimed at.• Eg. HB Icepops = children Magnum = adults

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Niche market• Is a specialist market which is

especially suitable for the marketing of a particular type of product or service .

• Eg. The sock shop – novelty gifts

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Marketing mix/tacticsThe 4 p’s of marketing

• Is the combination of the 4 components which help sell a firms products.

1. Product2. Price3. Promotion4. Place

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1. Product Functions:• To satisfy customer needs.• To make a profit taking into account • (a) Design, (b) packaging, (c) Branding, (d) Product Life Cycle.

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(a) Design

• Must• Look good• Do what it says• Be easy to use• Be easy to transport & store

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(b) Packaging• Must• Attract customers• Keep the product safe• Preserve the quality• Provide information• Bring products to new markets

(cans)

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(c) Branding• Can be a name, symbol, logo or

design.• Makes product easily recognisable.• Increases customer loyalty.• Enables co. to charge a higher

price.• Increases sales and profits.

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(d) Product Life Cycle• The level of unit sales of products

change over time.• A firm makes decisions based on

where each product is on the stages of the product life cycle.

• Computers = 3 month life cycle• Cars = ???

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5 Stages in the Product Life Cycle

1. Development2. Introduction3. Growth4. Maturity5. Saturation6. Decline

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Development

Saturation

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1. Development• Research and development costs

are high.• Focus is on the product.• Communication is vital.• More cash outflows than inflows.

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2. Introduction• Launch of new product.• Price place and promotion are

important.• Advertising costs re high.• Initially sales are low so still

outflows are more than inflows.

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3. Growth• Sales start to rise.• Production is increased.• Competitors come on stream.• Competitive advertising intensifies.• Price may have to be lowered.• However there should be more

inflows than outflows.

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4. Maturity• Sales peak.• Attracting new customers is

difficult.• New features may be added.• Aggressive advertising.• A lot of cash inflows.

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5. Saturation• Everybody has the product.• Sales start to slow down. • Less cash inflows.

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6. Decline• Sales start to fall.• Short term gimmicks used to try to

boost sales.• Less cash inflows.

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Product Harvesting• Look up yourself!

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How can the Product Life Cycle be extended?

• Reduce prices to increase sales.• Target a new market segment.• Introduce a new sales promotion

scheme.• Launch a new advertising

campaign.• Find a new use for the product.

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2. PriceFunctions:• To raise revenue for the business.• To influence demand.Note:• There are many methods of

pricing a product.

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Pricing Policies1. Cost Plus Pricing• The cost o making the product is

calculated and a % profit is added.2. Tactical/Discount Pricing• Discounts given for:• bulk buying, cash payment.• move slow stock, attract customers

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3. Loss Leader• Charge a price at below cost on a

popular product.• Customers while in the shop may

purchase other expensive items. • Eg. Bread, milk.

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4. Competitive Pricing• Charging a little less than rivals.

5. Destroyer pricing• Charging a lot less than competitors

to put them out of business.

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6. Price Skimming• Charge a lot when the product is

new and popular.• Eg. Pringles were €1.80 now they

re only €1.30.

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8. Break Even• Charge a price at which you

neither make a profit nor a loss.

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Factors that influence price

1. Costs• The higher cost such a wages, raw

materials, the higher the price.

2. Competitors Prices• Firms have to keep an eye on

what competitors are charging.

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3. State of the Economy• On a boom demand is higher and

prices may be higher.• During a recession demand is

lower and prices may be lower to attract customers.

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4. Tax• Different tax rates cause prices to

be different,• Eg. children’s shoes have no VAT

therefore they are cheaper.

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5. Type of consumer • Older consumers may be willing to

pay more for products as they may be in a better financial position.

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3. Promotion Mix• Includes all the ways used by a firm to

communicate with the public about their product in order to increase sales.

• They are:• (a) Advertising, (b) Sales Promotion• (c) Public Relations, (d) Personal Selling

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The type of promotion depends on

1. Type of Product• Low cost item eg. Crisps =

advertising • Expensive item eg. Tractor =

personal selling

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2. Stage in the Product Life Cycle

• Start = Sales Promotion• End = Advertising

3. Target MarketConsumers = Advertising….Industry = Personal Selling

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4. Budget• Small = Advertise with flyers• Large = Advertise on TV

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(a) Advertising• Is indirect and long term.• It is the communication of

information about a product or service in order to initiate, maintain or increase sales.

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Functions/importance of advertising

• Sell products• Appeal to segments or target

market• Inform consumers• Remind consumers• Distinguishes products from

competitors

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The type of advertising depends on

1. Stage in the product lifecycle• At the start = informative• At the end = reminder

2. Types of product• Luxury = persuasive• Necessity = informative

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3. Type of industry• Lots of suppliers = competitive• Few suppliers =

persuasive/informative

4. Budget• Small = informative leaflets• Large = persuasive/competitive

campaigns

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Types of Advertising1. Informative• Is factual.• It supplies information.• Eg. Drink driving

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2. Persuasive• Used to sell non essential/luxury

items.• Eg. Hair products.

After Before

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3. Competitive Advertising• Used when there is a large

number of similar products on the market.

• Eg. Fairy last twice as long as the next leading brand!

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4. Generic Advertising• Promotes the product rather than

the brand.• Eg. Drink milk it is good for you!

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5. Reminder Advertising

• Keeps the public aware of the product.

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Methods of AdvertisingAdvertising Media

1. TV• Has sound, colour, large audience.• Expensive

2. Radio• Has sound and large audience.• Inexpensive.• Lacks visual impact.

Continue with the rest from your test book page

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The choice of advertising media

depends on• Cost• Budget• Product• Duration of the campaign• The proportion of the target market

that can be reached by the medium

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(b) Sales Promotion• Is direct and short term.• It is all forms of promoting a

product other than advertising or personal selling.

• AKA “under the line advertising.”

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Examples• Free samples/gifts• Money off coupons/vouchers• Competitions• Loyalty cards• B1G1F• Merchandising (shop window

displays)

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(c) Public Relations• Involves presenting a public image.• It helps build up good relations and• Goodwill.• All about obtaining publicity and a

good reputation.

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Functions of a Public Relations Officer (PRO) • Look up text book page

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Techniques used in PR• Exhibitions/Special events • Press releases• News conferences• Public service activity eg. Tesco

computers for schools• Sponsorship eg. Guinness & GAA

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Personal Selling• Use of personal contact to

persuade customers.• Used mainly for specialised or very

expensive goods.• Eg. School books. Specialised machinery.

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4. Place• Is how the goods will be distributed to

customers and where the goods will be sold.• AKA “The Channels of Distribution.”• It will depend on the type of product.• Eg. Ice-cream = refrigerated trucks.• It will depend on the type of target market.• Eg. Alcohol = Pubs, off-licences

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Channels of Distribution

Manufacturer

Consumer

Manufacturer

Retailer

Consumer

Manufacturer

Wholesaler

Retailer

Consumer

Supplier

Internet

Consumer

Eg. Grad Dress

Eg.•Newspapers•Perishable groceries

Eg. •Non-perishable groceries

Eg. •Dell Computers•Airline TicketsMr Poole Business

Wholesaler• Buys in bulk from the manufacturer.• Sells in large quantities to retailers.• Gives retailers advice.• Provides a delivery service.• Provides a variety of goods.• Eg. Mangans Cash & Carry

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Retailer• Buys in large quantities form

wholesalers.• Sells in smaller quantities to

consumers.• Provides variety & in some cases a

delivery service.• Eg. Tescos

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However• Not all goods go through all the

channels of distribution.• If they don’t then the goods are

cheaper as not as many people have to make a profit at each stage.

• Also some goods need to be sold quickly eg. bread, newspapers so they are sold directly to retailers & then on to customers.

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Franchising• Is a business arrangement whereby

the franchiser sells the right to use his/her name & idea/product.

• The franchisee pays a fee and a percentage of profits.

• They must obey rules & conditions set down by the franchiser.

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Voluntary Retail Group• Eg. Centra• A group of grocery shop owners

come together to buy in bulk from a wholesaler.

• Goods will be cheaper so they can compete with large supermarkets.

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Distinguish between • Wholesaler

• Retailer

• Look up yourself!

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