IB Business & Management Unit 4.2 Marketing Planning Lesson 1: The Marketing Mix pp. 455-464

IB Business & ManagementUnit 4.2 Marketing PlanningLesson 1: The Marketing Mix pp. 455-464What is the Marketing Mix?The marketing mix is the combination of elements needed to successfully market a productBusinesses need to make the right decisions about these elementsThe 4 Ps Jerome McCarthy 19604PsPriceProductPlacePromotionBernard Booms and Mary Bitner - 1981Suggested that the 4Ps were not really adequate. Particularly for the provision of services,They suggested 3 more Ps.PeopleProcessesPhysical Evidence/EnvironmentAnother P has been added too since..PackagingThis makes a total of 8Ps on your syllabusThe Marketing Mix 8PsPackagingProcessPeoplePhysicalevidencePlacePromotionPriceProductMarketingMixThe Marketing Mix- ProductA product can be a good or a serviceIt must meet the wants or needs of customers

Product design decisions include:FunctionFeaturesDesignQualityBranding

The Marketing Mix- PricePricing is one of the hardest decisions in the marketing mix. Why?What if the product is over-priced? (customer feels ripped off)What if the product is under-priced? (customer thinks product is of poor quality)Is there a balance? Economists define this as equilibrium price.This is where buyers and sellers agree on a price for the product.Buys want a price to reflect value for money and sellers want a price that exceeds their cost of production to earn PROFITSPricing Decisions depend on:Demand: the higher the demand, the higher the price will be.Supply: the lower the supply, the higher the price will be.Business objectives: charities / non-profits vs. profit seeking firms.Competition: high competition, similar pricing.Costs of production: higher the costs, higher the price tends to be.Corporate imageThe Marketing Mix- PlacePlace is about making the product available to customers in the right place and at the right time.Place decisions:Distribution channelsOpening timesLocationTransportation

The Marketing Mix - PromotionPromotion is all of the activities involved in informing customers about a product and in persuading them to buy itWhat could this involve?

The Marketing Mix - PeopleThe experience and quality of service that customers experience greatly depends on the aptitude and attitude of the staff: How can a business ensure that it gets this right?Competitive payRigorous recruitment and selection processTrainingNon financial motivation methodsThe Marketing Mix - ProcessesThe methods and procedures used to give customers the best possible experience.Getting this right can help to build customer loyalty.Process issues:SpeedConvenienceDeliveryCreditInformation sharingAfter sales service

The Marketing Mix Physical Evidence/EnvironmentThis refers to the image portrayed by the business by it tangible and observable features.In the service industry this is particularly important, especially where high prices are chargedDecisions:Prime LocationsDcorFurnitureStaff dress code/uniformCleanliness/Tidiness

The Marketing Mix - PackagingPackaging refers to the ways in which the product is presented to the customer.Can add significant value and also help to attract customers.

PackagingWhat considerations do businesses think about when designing packaging?

Packaging functions:DifferentiatesEnhance product imageProtectsProvides informationHelps distributionCan encourage impulse buyingCan advertise

However..Can be very expensive

IB Business & ManagementUnit 4.2 Marketing PlanningLesson 2: Marketing Objectives pp. 468-476Marketing PlanningIt is a process whereby devising marketing objectives, then using appropriate marketing strategies to achieve these goals.Requires the collection & analysis of information (market research) on existing and potential customers.Marketing Planning ProcessMarketing Audit - conduct market research.Marketing objectives - what is your goal or target? Marketing strategies - this is the plan and use of the marketing mix & ethics to achieve the objectives.Monitoring & review - continual process of checking and assessing. Did the plan work? Why or why not? How can we improve?Evaluation - examine the extent to which the firm had succeeded in achieve these objectives. ...

Marketing AuditIs a review of the strengths and weaknesses of a firm.Helps to identify the marketing opportunities and threats facing a business.What internal and external issues will the audit examine?the businesss marketing objective and strategiesexisting products and brands sold by the business.the effectiveness of the firms recent marketing activities.firms market sharecompetitor analysisupdate on the demographic profileGives an overview of the current marketing situation. Can also assist in creating a SWOT and a PEST Analysis.Marketing ObjectivesMarketing objectives should not be set in isolationThey should be compatible with the firms Corporate ObjectivesOften set by directors of the companyThey will also need to consult other departments (finance and production for example)CORPORATE OBJECTIVESMARKETING OBJECTIVESMARKETING STRATEGYWhat the firm as a whole is trying to achieveWhat the marketing function needs to do to fulfil the corporate objectiveHow will the marketing department meet these objectivesTypes of Marketing ObjectivesIncreasing sales (By volume, By value) Increasing market shareTo enhance the brand image To reposition the brands imageRaising brand awarenessIncreasing brand loyaltyImproving corporate image

Setting Marketing ObjectivesMarketing Objectives must be SMARTS martM easurableA greedR ealisticT imedE.g. To increase market share by 5% in the next 2 years

Marketing StrategyMarketing Strategy is the plan for how the Marketing Objectives are going to be achievedWill need to use the results of market research in order to plan strategy effectively Key features of effective marketing strategy:Identifying the correct target market and using this to tailor market research and advertisingMarket Segmentation producing a range of products to appeal to different customersA Market Orientated ApproachThe correct marketing mix (a coherent approach suitable for the brand image)Reasons why marketing objectives are not achievedInternal ConstraintsFinancialPersonnelUnrealistic objectives

External ConstraintsCompetitionThe economyTastes and fashions

IB Business & ManagementUnit 4.2 Marketing PlanningEthics of MarketingEthics of MarketingMoral principles that guide business behaviour.Unethical marketing behaviour exists when moral codes of practice are not adhered to.What are bait-and-switch marketing techniques?are techniques which are considered unethical.they are used to entice customers by advertising deals that are too good to be true.Once customers are hooked on the deal (the bait), they discover that it is no longer offered and change to purchase another more pricey alternative (the switch).So who uses these tactics?Airlines companiesMobile phone companiesReal Estate companiesOther dubious marketing tactics:Health fraudGet rich quick schemesTravel fraudProduct misrepresentationfear tactics - limited stock onlyunsubstantiated claims - 4/5 prefer our productsPester power - using children to pester parents into buying products.Confusion marketing - swamping customers with excessive price information.Bait and Switch MarketingEnticing customers by advertising a deal that is too good to be trueOnce the customers are hooked (bait) then extra charges are suddenly added, or the product becomes unavailable and a pricier alternative is offered.Often high pressure sales techniques are used

Examples..

Get Rich Quick SchemesSchemes that offer unrealistic opportunities

Health FraudWhen businesses make unsubstantiated claims about health cures/benefitsExamples

Travel FraudTravellers are given misleading information.Descriptions/pictures of hotel facilities are misleadingProduct MisrepresentationUsing brand names similar to well known trade marks to benefit from their branding

Unsubstantiated ClaimsUsing promotional declarations that can not be proved

IB Business & ManagementUnit 4.2 Marketing PlanningMarket SegmentationLearning ObjectivesTo understand what market segmentation isTo be able to state reasons why firms segment the marketTo be able to give examples of the ways a market can be segmentedTo understand the difference between mass and niche marketsMarket SegmentationMost businesses cant sell their products to everyoneInstead they break the market down into smaller pieces and then try and sell to these smaller groupsThe smaller groups are called market segmentsThey consist of customers who buy similar productsThese consumers are known as the target market for a product Market Segmentation - DefinitionThe process of splitting a market into distinct groups of buyers to better meet their needs. It is normally based on demographic, geographic and/or psychographic factorsDemographic FactorsDemography is the study of the characteristics of the human population. Demographic variables include:AgeGenderRace and EthnicityMarital statusReligionLanguageIncome and Socioeconomic class

Socio-Economic GroupingsGroup Description A Higher managerial, administrative or professional e.g.surgeon or company director B Intermediate managerial, administrative or professional e.g.teachers, solicitors C1 Skilled non-manual e.g. sales assistants, shop floorsupervisors C2 Skilled manual e.g. electrician, plumber D Semi skilled e.g. assembly line workers, cleaners E Unskilled, pensioners and unemployed Marketing termsMarketers have come up with many ACRONYMs for various demographic groupings.An example is DINKY Double Income No KidsHere are some more.. Can you guess what they are and think of what types of products that would be targeted at them?NILKNo Income Lots of KidsGLAMGreying Leisured, Affluent, Middle AgedOINKOne Income, No KidsYUPPIEYoung Urban ProfessionalGUPPIEGreen YuppieYAPPIESYoung Affluent ParentsSITCOMSingle Income, two children, outrageous mortgageRAPPIESRetired Affluent PeopleSINDISingle, Independent, DivorcedSINBADSingle Income, No Boyfriend And DesperateTweenagers7-12 year oldsKidultsAdults who buy kids productsGeographic FactorsGeographic factors can have a huge influence on demographic factors such as race, religion, language. Geographical factors include:LocationClimate

Psychographic factorsEmotions and LifestyleValuesStatusCultureHobbies and Interests

Consumer ProfileThe demographic/ psychographic details of the average user of a productBusinesses use this knowledge to help them to identify customers needs and identify new segments to target

TaskLook at the products on the following slides and see if you can identify who the target market is What do you think their Consumer profile would be?

How Customers DifferMarket segmentation is needed because customers are not all the same! They differ in their needs and wants. For example, customers differ in theBenefits they want from a productAmount they are able to or willing to payThe media they seeQuantities they buyTime and place that they buyExample- ShoesBenefits they want from a productAmount they are able to or willing to payThe media they seeQuantities they buyTime and place that they buyHow might the following customers differ?

Example - Kelloggs

Example - McDonalds

Example - SagaSaga is a company that offers many different products. All aimed at people aged over 50Benefits of SegmentationBusinesses are successful when they provide things that customers wantSegmentation allows businesses to develop products that more closely meet customer needsA range of products can be made to appeal to different market segmentsAlso allows promotional spending to be targeted more effectivelyE.g. adverts not put in the wrong kind of newspaper or magazineSales promotions (e.g. price discounts) not offered to customers who dont respond to them