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Chapter 16- Marketing
Definition: Marketing is the process of finding out what consumers want and then making a product that will satisfy their
needs and persuade them to buy the product.
Marketing concept; the customer is most important
This involves the collecting, analysing and reporting of information about marketing issues to enable managers to make effective marketing decisions.
Market Research
1. ObservationResearchers watch and learn from how customers behave and react in certain situations, usually without the customer knowing. Supervalu uses this to see what prompts customers to buy
certain products.
2. Consumer Panel (Focus Group)Groups who are regularly monitored to find out about their purchases and reactions. Might be asked to fill in diary. Superquinn holds weekly ones where it listens to its shoppers.
3. SurveyInterviewing by mail, phone, Internet etc. and fill in questionnaire.Produce qualitative data and quantitative data.
Field Research This is research never done before where new information is collected directly from consumers. It is more expensive and time- consuming than desk research.
Internal ReportsLook at past reports to see what was most popular product, which shop is most successful etc.
2. Government PublicationsIrish government publishes Census and Household Budget Survey from the Central Statistics Office.Enterprise Ireland has a huge amount of export trade information.
3. InternetOver 2 billion web pages on any topic.Can go to user groups or other businesses'
Desk ResearchThis uses information that someone else has found. It is inexpensiveand can be done from the business computer. However, sometimesthe information be out of date or not exist.
1. Save money in long run By finding out what customers want the business can avoid making
products that nobody will buy. E.g. coke cola didn’t for new coke and it failed.
2. Reduces risk of failure Business is more likely to succeed as it knows what consumers want. Spin 103.8 conducted research for target market and found that that more
young people wanted more music so the introduced ‘10 spin hits in a row ‘and are now the most popular in Dublin among young listeners.
3. Helps to improve advertising The business can find out what consumers think of their advertising
campaign.
4. Helps managers decide best price and packaging Businesses don’t want to charge too much or too little Also the way the product is presented is important.
Importance of Market Research
This involves dividing the overall market for a product into separate groups of consumers. The Irish Time aims at business and professional people.
Ways to divide- Demographic (NIVEA for Men) and Geographic (Tipp FM).
Segment Ratoath
Market Segmentation
1. Helps business establish a presence. Newstalk began in Dublin.
2. Helps to increase sales. NIVEA for men.
3. Helps lower marketing costs.
Advantages of Market Segmentation
This is the particular segment of the market that the business sets its sights on.
Target market for Lucozade Sport are people who play sport.
Target Market
A narrowly defined group of potential customers within a market for a product of service. The customers have different wants and are willing to pay more for them.
An example includes Couture garments.
Niche Market
Advantages 1. Increased profits as customer buys more.
2. Better reputation through word of mouth.
3. Fewer returns or repairs. Superquinn does this as they offer a huge range
of services such as free playareas and umbrella services.
Marketing ConceptThis states that the consumer is the most important person to the business.
Step 1- Investigate the Market The business most conduct a SWOT analysis to spot a gap in the market. Meteor conducted desk research and found that the mobile phone market
was experiencing massive growth
Step 2- Select a Target Market Thus business must segment the market and choose its target. Meteor decided to go for youth market due to SWOT.
Step 3- Develop a Marketing Mix Develop this to persuade target market to buy product. Meteor used tactic of emphasising its great value and sponsors the
Ireland Music Awards.
Marketing Plan/StrategyA written plan which sets out the marketing objectives and the means by which they will be achieved.
1. Sets out strategies needed to attract and keep customers.
2. Helps business to control its progress.
3. Impress potential investors.
Benefits of a Marketing Plan
product
price
place
promotion
Marketing mix 4P’s
Function of the product/Extra’s/USP
Brand Name 1. Business can charge higher price. 2. Business will increase sales due to
brand recognition. 3. Brand loyalty. 4. Easier to bring out new products. 5. Used as a bargaining tool with shops. Examples include Coca Cola or Sony
Product; Anything which can be offered to satisfy a need or want.
Packaging 1. Protects product 2. Gives an image to product 3. Used to make it convenient size 4. Gives information about the
product.
Product cont.
Product Life Cycle (must label correctly ) NB*
1. Introduction (advertise)
Sales usually grow slow at first. Business must spend a lot to promote
product. Use price skimming strategy and charge high
price to recoup money. 2. Growth (work on quality and production)
Sales begin to increase rapidly. Profits start to increase. New competition enters the market.
Stages in the product life cycle (can have very short life cycles or very long)
Maturity (special offers and update the product)
Rate of sales growth slows down and sales of product reach peak.
There’s is intense competition in the market.
Saturation (encourage people to switch to our product, develop new products)
Sales growth stops and sales remain at peak. Company will cut prices or bring out new or improved
versions Other businesses competing.
Decline (product harvesting)
Sales of product fall rapidly due to competition and advances in technology.
The product is withdrawn from the market.
Patent; legal protection for a product or process that has been invented. Gives exclusive rights for 20 years, can be franchised out for a royalty.
Trade mark; distinguishes one companies goods and services from anothers, can be a name, slogan, logo (, colour, or sound (intel).
Protecting your product (pg 290)
1. Cost of product Business must be charging at least breakeven
price. (remember how to do a breakeven chart)
2. competitors prices If the competitor has better product than the
business must charge lower.Dunnes trainers are cheaper than Nike.If it is inferior than business can charge
higher price. Freshly squeezed orange is more expensive
than concentrated.
PriceFactors that determine prices
3. Customers Perceptions of Prices Must be aware of what prices consumers
are willing to pay. Consumers not familiar with product
associate high prices with high quality and low prices with low quality.
4. Legal Regulations The government can set maximum or
minimum prices. In Ireland it was illegal to sell basic
foodstuffs below their cost price until 2006.
1. Price Skimming Strategy Business charges high price when it first comes
out to recoup money. The price than drops as competition enters the
markets. New mobile phones and games consoles are
expensive when they first come out.2. Penetration Pricing Strategy Business charge low price to get the
competitions customers to switch. Daily Mail charged only 30c a copy at the start get customers to switch.
Strategies for setting price. (Exam question, page 291)
3. Price Discrimination Strategy Charging different customers different prices. Most newspapers have discount for students
4.Loss Leader Selling one product below cost price to attract
customers to buy other products. Supermarkets often sell bottled beers below
cost.
5. Psychological Pricing Get customer to respond on emotional basis. Business often charge €299.99 for something.
This involves activities whereby the firm tried to influence the target market to purchase its product:
1.Advertising This is the paid, non- personal
communication of information about a product or service through various media.
Promotion
1. Reminder- Informing consumers that the product is still around and is used to maturity and decline stage of product life cycle e.g Coca Cola
2. Informative- Gives factual information about the product e.g Sale starts Tuesday.
3. Persuasive- Convincing consumers that they must have the product e.g most toiletries.
4. Generic- Advertises an entire industry e.g Buy Irish Campaigns
5. Comparative- Advertising by showing how well it compares to the competition e.g most supermarkets.
Types of Advertising
To provide information about the product. To remind the consumers it is still available. To persuade them to buy it. To increase sales and profits. To offset the competition’s advertising To be successful advertising must take a
consumer through: attention, interest, desire and action (AIDA).
Functions of Advertising
Advertising Media Television
Pro’s Con’s
Consumers can see the product in action.
It is watched by people all over the country.
The business can advertise to its target market.
The business can use pictures, sound and movement to appeal to senses.
It costs a lot.
Many people skip watching advertisements.
Radio
Pro’s Con’s
It costs a lot less than television.
The business can reach local people.
The business can reach its target market e.g Spin 103.8
The business has to rely on sound to get its message across.
Newspaper
Pro’s Con’s
Good at providing detailed information.
Costs a lot less than television.
Business can reach its target market.
Business can reach local people
The quality of pictures are not as good as television.
The ad will only be seen for one day if the paper is daily.
Magazines
Pro’s
Good for providing detailed information.
Pictures are in good quality and colour.
Longer life‐span than newspapers.
Cost a lot less than television.
Business can reach target market.
Billboards
Pro’s Con’s
Cost a lot less than television.
Longer life than most other media.
Business can reach target market.
Each billboard only contains one ad.
Hard to predict who will see the ad.
Business can’t give detailed information
Direct Mail
Pro’s Con’s
Business can personalise the ad making it more attractive.
The business can reach its target markets e.g Tesco ‘Baby and Toddler’ club.
Direct mail contains only one ad.
Direct mail is expensive.
Many people ignore ‘junk mail’.
Media Habits of Target Audience Business should advertise with media most likely to be seen by
target market. Pampers adverts are shown on TV when parents are likely to be
watching. Nature of Product The type of product determines the type of medium needed. Most washing powders are advertised on TV. The Message The message the business wants to get across. Car companies advertise in newspapers to convey a technical
message. The Cost The amount of money the business has to spend. It is very expensive to advertise on TV.
Selecting an Advertising Medium
Organisation set up by people in advertising to try and protect consumers from false, misleading of offensive advertising.
It has no legal powers but usually are listened to as media are members of ASAI.
Its code of standards states that all ads should: Be legal, decent, honest and truthful Be prepared with sense of responsibility. Obey the rules of fair competition. Any member of public can complain to ASAI, it will
investigate complaint and ask advertiser to take it down or change it.
L’oreal ran an ad for mascara saying it made Penelope Cruz’s lashes look 60% longer, but she was wearing false lashes.
Advertising Standards Authority for Ireland (ASAI)
1. Free Samples- The business offers a free trial of the product. Many food companies do this. This is expensive but effective.
2. Money- off Vouchers- The business gives coupons entitling them to discount off next purchase and may be found it newspaper ads or mailed directly. Tesco and Dunnes Stores do this.
3. Free Gifts- Offers free gift with every purchase e.g Mc Donald’s ‘Happy Meal Toy’
2 Sales PromotionIncentives that a business offers to consumers to encourage them to buy more of its product
4. Competitions- Business offers chance to win prizes if they buy product.
5. Loyalty Cards- Offers points with every purchase which can be cashed in after enough purchases. Tesco Clubcard is example
6.Merchandising- This means laying out the store in an attractive and eye-catching way to encourage impulse buying. Many stores put bread and milk at back to shop so consumers will have to walk by other tempting products along the way.
This involves presenting a good image of the business and obtaining favourable publicity. Many businesses employ a Public Relations Officer.
3. Public Relations
1. Attract publicity when launching new products- Richard Branson wearing a wedding dress to get publicity for Virgin Brides.
2. Target certain customers- Meteor sponsor Irish Music Awards.
3. Build an image that reflects well on the company- Mc Donald’s children's charities.
4. Defending products hit with bad publicity.
Functions of PR
1. Events- Roadshows and Open Days.
2. News Conferences and Press Releases-Used when a business is launching new product or creating new jobs and business gets on TV and in papers for free. McDonalds fighting off bad publicity after Supersize Me.
3. Public Service Activities- Tesco’s ‘computers for school’s’
4. Sponsorship- Football team sponsorship.
Techniques used in PR
Where a salesperson meets with customers face to face to give them information about a product and persuade them to buy it.
4. Personal Selling
Sponsors children’s charities which raises money. Evaluation- Very good as parents and children are target market of McDonalds.
Advertising using the slogan Justin Timberlake's ‘I’m loving it’. Evaluation- This is good as it ensures adverts are watched by target market and helps connect to young people.
Sales Promotions Happy Meal. Evaluation- Very effective as it attracts target market.
Evaluation of Mc Donalds’ PR
Channels of Distribution
This is network of firms that deliver goods from manufacturer to consumer.
Place
Traditional ChannelManufacturer- Wholesaler- Retailer- Consumer.i.e.Mars- Musgraves- Sweet shop- Consumer.
Alternative ChannelManufacturer- Retailer- Consumeri.e.Mars- Dunnes Stores- Consumer.
Direct ChannelManufacturer- Consumer.i.e.Dell- Consumer.
The more stages the more expensive it becomes. The wholesaler uses ‘breaking bulk’ as it buys in large quantities
and sells them on in smaller quantities to retailer.
Product In March 2000, they launched this and was
developed for older children. Target market is 8-14’s who don’t usually
consider Ribena ‘cool’.
Evaluation- Very good product as it is streetwise and cool and appeals to target market. Added re- sealable cap which is good.
Evaluation of a business Marketing Mix - Ribena Pouch Pack
The product is more expensive than many soft drinks.
Evaluation- This is good as children of that age have a fair amount of money to spend and also appeal to parents as they believe the higher price is worth paying for because Ribena is better for their children than drinks such as Coke.
Price
Advertises extensively on TV and features Ribena-berry cartoon.
Evaluation- Good as their target market watches a lot of TV and also the cartoon character appeals to children.
Promotion
The product is sold all over the country in supermarkets, garages etc.
Evaluation- This is good as it is well distributed and is available for its target market. Even if parents pull in to get petrol the Ribena pouch will be there
Place
