N5 Bus Man – 2.1: Marketing © BEST Ltd 1

Management of Marketing and Operations2.1 – Marketing

Business Management (National 5)

N5 Bus Man – 2.1: Marketing © BEST Ltd 2

What is a market? MARKETS exist when buyers and sellers are in

contact with each other and can buy and sell.

Markets can be:

◦ DIRECT◦ INDIRECT

Markets can be the following sizes:

◦ LOCAL◦ NATIONAL◦ GLOBAL

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What is Marketing all about?

The role of MARKETING in a business is to:

◦ IDENTIFY products CURRENTLY demanded◦ ANTICIPATE what FUTURE products will be◦ SATISFY these current and future wants

Benefits of effective marketing include the following:

◦ NECESSARY FOR SURVIVAL◦ POSITIVE IMAGE◦ INCREASED SATISFACTION AND SALES◦ INCREASED PROFITS AND SECURITY

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Market Research MARKET RESEARCH involves finding out the following

information to help make better marketing decisions.

◦ CONSUMERS NEEDS AND OPINIONS◦ COMPETITORS PERFORMANCE

Market Research can be carried out as:

◦ DESK RESEARCH Internal Sources External Sources ICT Sources

◦ FIELD RESEARCH Personal Interview Comment Cards Personal Survey

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Market Research (continued) The decision about which method of research to use depends

on the following factors.

◦ NATURE OF MARKET◦ NATURE OF PRODUCT◦ RESOURCES AVAILABLE◦ DETAIL REQUIRED

The quality of the information provided by market research should be measured against the following characteristics.

◦ ACCURATE◦ RELEVANT◦ COMPLETE◦ TIMELY◦ CONCISE◦ COST EFFECTIVE

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Market Segmentation MARKET SEGMENTATION involves splitting the

buyers in a market into different SEGMENTS (groups) based on the following:

◦ GENDER◦ RELIGION◦ GEOGRAPHICAL LOCATION◦ TYPE OF JOB◦ LEVEL OF INCOME◦ LEVEL OF EDUCATION◦ FAMILY STRUCTURE

Market Segmentation is important as it allows the business to use TARGET MARKETING (different marketing for different segments) to increase satisfaction and sales.

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The Marketing Mix The MARKETING MIX is the overall

combination of the individual decisions about Price, Product, Placement and Promotion (THE 4 P’s) for an item.

The Marketing Mix is important because the overall marketing for an item as well as each individual element alone must be good. This is because otherwise poor marketing decisions for some of the 4 P’s could outweigh any good ones and the item will fail.

The marketing mix should be DYNAMIC and change to account for internal and external factors which affect marketing.

P R I C E

PLACEMENT

PROMOTION

PRODUCT

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Product – Product Development Every business will have to be ENTERPRISING and so

INNOVATE to prevent failure from having no goods or services to satisfy the market.

The process of innovation is often also known as RESEARCH AND DEVELOPMENT main steps involved in it are usually as follows.

◦ NEW IDEAS (from enterprise or market research)◦ DECISION ABOUT WHAT IS THE BEST IDEA TO TRY◦ CREATION OF USPs FOR THE PRODUCT ◦ CREATION OF A PRODUCT PROTOTYPE◦ TESTING OF PROTOTYPE◦ IDENTIFY CHANGES IN LIGHT OF TESTING◦ CHANGE PROTOTYPE IN LIGHT OF TESTING◦ REGISTERING PATENTS ◦ REGISTERING COPYRIGHTS ◦ LAUNCH OF FINAL PRODUCT

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Product – Branding BRANDING is a USP which creates an IDENTITY for a product

through the use of the following.

◦ CATCHY AND MEMORABLE NAMES ◦ SPECIFIC SLOGANS OR JINGLES ◦ SPECIFIC DESIGNS◦ SPECIFIC SYMBOLS OR LOGOS

BENEFITS of branding include the following.

◦ QUALITY IMAGE◦ CONSUMER LOYALTY◦ HIGHER PRICES◦ EASIER PRODUCT LAUNCHES

DRAWBACKS of branding include the following.

◦ HIGH MAINTENANCE COSTS◦ DAMAGE TO BRAND FROM SINGLE PRODUCTS◦ LOSS OF LOYALTY IF SIMPLY PAYING FOR A “NAME”

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Product – Product Lifecycle The PRODUCT LIFECYCLE is a series of

stages that a product goes through from when a business first creates and sells it until the time nobody wants it any more.

Knowing the lifecycle for products is useful for a business because it helps it to avoid wasting money trying to provide products that consumers no longer want.

0

£

Time

DeclineMaturityGrowthIntroduction

SALES

PROFITS

The Product Lifecycle

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Price Decisions Marketing must make decisions about which

PRICE the business should sell its’ products for.

The price for a products can be:

◦ PREMIUM (HIGH) PRICE◦ MARKET PRICE◦ LOW PRICE

The price set will depend on the following.

◦ BUSINESS OBJECTIVES◦ PRODUCT MARKET◦ NATURE OF THE PRODUCT

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Place – Business Location A business has to make decisions about where to

LOCATE (open and run) its premises.

A “GOOD” location will help a business through:

◦ HIGHER SALES due to: high demand for the product lack of competition quality premises

◦ LOWER COSTS due to: cheaper premises low transport costs low labour costs

◦ HIGHER PROFITS/USAGE

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Place – Business Location (continued)

The following are common factors which affect where a business will locate:

◦ BUSINESS TYPE◦ MARKET DEMAND◦ COMPETITORS◦ RAW MATERIALS (perishable/bulk reducing)◦ RESOURCE AVAILABILITY◦ RESOURCE COSTS◦ PRODUCT TYPE (perishable/bulk increasing)◦ INFRASTRUCTURE◦ GOVERNMENT LEGISLATION◦ REGIONAL POLICY◦ INFORMATION TECHNOLOGY

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Place – Method of Distribution The main METHODS OF DISTRIBUTION (ways to

transport products) are:

◦ ROAD ◦ RAIL◦ AIR ◦ SEA◦ PIPELINE

The decisions about which methods to use will depend on the following.

◦ MARKET STRUCTURE◦ PRODUCT TYPE◦ COST◦ INFRASTRUCTURE

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Promotion – Advertising ADVERTISING is undertaken for the following reasons.

◦ TO INFORM◦ TO PERSUADE AND REMIND

The main methods of advertising are as follows.

◦ BROADCAST MEDIA◦ PRINTED MEDIA◦ OUTDOOR MEDIA◦ ELECTRONIC MEDIA

Advertising will be ETHICALLY regulated by:

◦ ADVERTISING STANDARDS AUTHORITY (ASA)◦ OFFICE OF COMMUNICATIONS (OFCOM)

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Promotion – Promotional Activities The aim of the PROMOTIONAL ACTIVITIES is to

ENCOURAGE consumers to buy or use the products of a business by giving them a special offer.

The main methods of promotion that a business can use are:

◦ BUY ONE GET ONE FREE (also known as BOGOF)◦ SPECIAL OFFERS (eg one child free for each adult)◦ DISCOUNTS (money off – eg ½ price sale)◦ MONEY OFF VOUCHERS ◦ FREE GIFTS◦ COMPETITIONS◦ FREE SAMPLES/TASTINGS

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Which factors affect the work of Marketing?

The effectiveness of Marketing activities undertaken by a business will be affected by the following factors.

◦ INTERNAL FACTORS Finance Human Resources Capital

◦ EXTERNAL FACTORS

Political Factors Economic Factors Social Factors Technological Factors Environmental Factors Competitive Factors