What is Marketing?...2. Using your applying skills copy each sentence into your jotter and match the correct term to each sentence. 4 marks At this stage in the product lifecycle the

Duncanrig Secondary School

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What is Marketing?

Discussion Point

“Marketing is the most important thing for business success” (Steve Wozniak, Co-founder of Apple)

In your groups discuss why marketing is said to be the most important department in an organisation.

Why is Marketing important?

It can attract new customers by letting them know about the range of products

and/or services the business has to offer

Persuades potential customers to buy your product; this can lead to increased sales and increased profits

It can allow the business to enter new markets by using technology to reach a wider audience

It can help the business grow by being able to target a larger audience

A business carries out market research to find out what customers need and want.

By carrying out market researchthe business can sell products and/or provide services which meet customers’ needs and wants.

This results in the business meeting their objectives for example, making a profit or satisfying customers.

Marketing involves trying to meet the needs and wants of customers by selling products and/or providing services to make a profit.


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It can help the business survive by continually raising awareness of the business Questions

1. Using your remembering skills write in your own words what is meant by marketing?

1 mark 2. Using your understanding skills write in your own words two reasons why marketing

is important to a business. 2 marks INDIVIDUAL TASK In your jotter copy out the following table filling in the left hand column with items you have bought recently and in the right hand column with what attracted you to buy this item.

Product Why did you buy this product?

Your teacher will now show you a video clip about why it is important for a business to

have the correct marketing strategy.

http://www.bbc.co.uk/education/clips/zmjw6sg








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Market Segmentation

The market for a good or service can be divided into groups of people who have common characteristics. Businesses focus

their products/services towards specific groups of people. This is known as their target market or market segment. It is

important for a business to know who their customers are and what their buying habits are, so the business knows how to

get their attention.

The main ways in which the market can be segmented are described below.

Gender Market a product towards a specific gender eg deodorants could be designed in two variations: one for men and one for women.

Age Market a product towards people of a certain age group eg Match football magazine aimed at the younger supporter and 4-4-2 for the more mature supporter 4-4-2.

Income Market a product towards people who have a certain level of income eg a Porsche 911 aimed at people with a high income and Vauxhall Corsa aimed at people with a lower income.

Geographical Location Market a product towards people who live in a particular location. The climate and temperature in a country will determine the type of clothing sold eg warmer clothing for colder countries.


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THINK-PAIR-SHARE Think of other products which are obviously segmented by gender, age, income, geographical location, family structure and social class. Make a list in you jotter and be prepared to share your thoughts with the class. Advantages of Market Segmentation/Target Marketing

When products are developed for a particular segment they are appropriate to the customer and this allows products to be tailored to suit customers’ needs and wants better – this leads to increased sales

Prices are appropriate for the customers in the segment the business is targeting which ensures customers are willing and able to pay the price – eg Match is priced for at £2.25 making it affordable for young children paying with their pocket money

Appropriate promotions are offered to the target customers which prevents products being promoted to the wrong type of customer (if a business promoted a product or service to would result in resources being wasted and could possibly lead to a loss in sales and profit)

Products are sold in the appropriate places for the target customer. This means that potential customers will have more access to products which will increase sales.

Family Structure Market a product towards the size of a household eg meals for one for people who live on their own and family size packs for families.

Social Class Market a product towards people who belong to a particular social class eg Morrison’s savers range and Morrison’s signature range.


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Questions

1. Using your remembering skills write in your own words what is meant by market segmentation? 1 mark

2. Using your remembering skills identify 3 market segments. 3 marks 3. Using your understanding skills describe why is it important for a business to know

who their target market is. 1 mark

The Marketing Mix – the 4 ‘P’s

Product The actual item (product or service) the business produces and sells or provides. Consumers will not buy a product or pay for a service they neither need nor want so it is important that the organisation carries out market research in order to provide a product/service demanded by consumers. An organisation must ensure it is producing a quality product if customers are to buy the product and continue to do so!

Product

The actual item (good or service) the business

produces/sells/provides.

Price

The actual amount charged for the product/service.

Place

The way a business makes the product/service

available to the customer and where the product is

sold.

Promotion

How the customers are told that the product exists and are encouraged to but it.


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Product Life Cycle

Once a product is launched onto the market, it has a life cycle. Every product goes through various stages in its life. The four stages are:

Introduction

Growth

Maturity

Decline

The stages can be shown as follows:

Intr

od

uct

ion

The product is launched onto the market.

Costs are high due to lots of advertising to encourage sales and sales are low as the product is not yet well known.

Gro

wth

Sales of the product are increasing as more customers know it exists.

Costs are still high at this stage as lots of advertising must still be carried out.

Mat

uri

tySales of the product reach their highest as the product becomes well known.

Because sales are at their higher, this is the most profitable stage.

De

clin

e

Sales of the product begin to fall as up-to-date versions are coming onto the market.

The product is eventually withdrawn from the market as customers no longer want it.


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Some products will take a long time to progress through the Product Life Cycle while others will go through each stage quickly. It depends on the product - fashion items will reach the end of the Product Life Cycle quickly, whereas, products such as Coca Cola, Irn Bru, Heinz Baked Beans, etc, appear to never reach the decline stage. Questions

1. Using your remembering skills write in your own words the definition of each of the

following terms. 4 marks

Product

Price

Promotion

Place 2. Using your applying skills copy each sentence into your jotter and match the

correct term to each sentence. 4 marks At this stage in the product lifecycle the product is launched onto the market.

o Decline o Introduction o Maturity

At this stage in the product lifecycle sales of the product begin to fall as up-to-date

versions are coming onto the market. o Growth o Introduction o Decline

At this stage in the product lifecycle sales of the product reach their highest as the

product becomes well known. o Introduction o Maturity o Growth

At this stage in the product lifecycle sales of the product are increasing as more customers know it exists. o Growth o Decline o Maturity

Your teacher will show you pictures of a variety

of products. Identify the stage each product is at

in the Product Life Cycle.

http://www.educationscotland.gov.uk/video/s/video_tcm4487075.asp





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Advantages

If a consumer buys a product and likes it they will buy more and tell others about it –

this is known as brand loyalty.

Consumers often associate brands with quality and will therefore purchase the

product.

Brands are easily recognised, helping to distinguish them from similar competitor’s

products.

New products can often be introduced successfully if the brand name is already

known.

Higher prices can be charged by the organisation - customers are willing to pay this price as they associate the brand with

quality.

Disadvantages

Poor brands can have serious consequences for the business as customers may associate the whole product range with poor quality

and not buy these products.

Brands can be copied and fake products can be produced.

It is time-consuming and expensive for a business to establish a brand.

JIGSAW

In your home groups apply your knowledge of the Product Life Cycle - draw a diagram of the Product Life Cycle and label each stage. Your teacher will then assign each group member a number. You will move into a group with others who have the same number and become an expert group on a specific stage. In your expert groups define the stage of the Product Life Cycle you have been assigned and use the internet to find out as much information about this stage and products which are currently in this stage. You will then go back to your home groups and each person will teach their stage of the Product Life Cycle to the rest of the group. Branding A brand is the name, symbol or logo given to a product (or group of products). A business has a brand to make their product stand out from the other products on the market for example, to give them a competitive edge. Most people can identify a brand instantly by viewing the products logo, advert, packaging or hearing the products tag line. This is known as brand recognition. Advantages and Disadvantages of Branding


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Questions

1. Using your remembering skills write in your own words the definition of a brand. 1 mark

2. Using your remembering skills write in your own words 2 advantages and 2 disadvantages of branding. 4 marks

3. Using your understanding skills list 5 brands you know. 5 marks BRAND RECOGNITION TASK Use your analytical skills to see how many brands you recognise. Follow the pathway - RM Shared Documents\Business Education\Business Education Student Resources\Business Education Read Area\S3 Business 2016-2017 Open the PowerPoint Brand Recognition Task. Copy the following table into your jotter.

Brand Name

1.

2.

3.

4.

5.

6.

7.

8.

9.

10.


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Own Brands These are products branded with the same name of the store selling them. Most of the big supermarkets and chain stores have their own brands. They are often a cheaper alternative to branded goods. Here are some of Morrison’s own brand products. Supermarkets now provide a variety of own-brand products aimed at different market segments. Morrisons, for example, have Morrison’s Savers range, Morrisons Signature range and NU ME range.

Advantages

They may attract customers into the store eg George at Asda.

They offer a cheaper alternative which would suit lower income consumers.

Own labels require little advertising (reducing costs).

Disadvantages

Own brands tend to be regarded as inferior/poor quality products which may discourage some

customers.

Whole brands can be tarnished over one products failure or problem.


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Questions

1. Using your remembering skills write in your own words the definition of an own

brand. 1 mark 2. Using your understanding skills suggest which segment of the market Morrisons are

aiming the savers ranges at. 1 mark CLASS TASK – CONSUMER PANEL You are going to take part in a business’s field research to find out if branded products are better quality than supermarket own brands. You will taste a range of products your teacher has provided for the class. Using your analytical skills you are going to tick which one you think is the best quality. We will then analyse the results. In your jotter copy out the following table:

Tick the product you think is better quality ()

Product Crisps Juice Chocolate Sweets

A

B

Your teacher will now show you a video clip about the role and importance of branding.

http://www.bbc.co.uk/education/clips/zfsngk7







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Pricing Strategy

Low Price

High Price

Promotional Pricing

Cost-plus Pricing

Description

Lower than the price charged by competitiors

Higher than the price charged by competitors

Prices are reduced for a short period of time

The price is set at a % above what it cost to make

the product

Why use this

strategy?

As the price is cheaper than competitors

customers will be attracted to the business

As the price is higher than competitors customers

think it is of a better quality which will attract

them to the business

To encourage customers to purchase the product and

to reduce stock levels quickly

To ensure the cost of making the product is covered and a profit is

made

Price

The actual amount a business charges the customer for a product/service. A business must get the price right – if the price is set too low consumers will associate the product with low quality and not purchase the product but if the price is set too high consumers will buy a similar product from a competitor at a cheaper price.

Pricing Strategies A business will decide on the price of its products depending on the price strategy that it has chosen.


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Questions

1. Using your understanding skills write in your own words why it is important to get the price right. 2 marks

2. Using your analytical skills look at the following products and identify the pricing strategy used for each. Justify your choice by stating why you think this type of pricing strategy has been chosen. 4 marks

1 2

3

4


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Promotion

This is how customers are told that the product exists and are encouraged in different ways to buy it. Promotion is more than just advertising. The aims of promotion are:

informing consumers about a product/service

reminding consumers that the product/service still exists

persuading consumers to buy a product/service Advertising Advertising is a method of promotion. It is used to tell consumers about a product/service – whether the product is new onto the market or if it has been available for a long time. Advertising is important as it helps to increase sales by making customers aware the product exists. Advertisements need to catch people’s attention – they should be bright, colourful or have a catchy theme or slogan. For example, Coca-Cola’s Christmas advert.

Your teacher will now show you Coco-Cola’s Christmas advert.

https://www.youtube.com/watch?v=ccNzBhTcehs






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A business can choose to advertise in different ways.

Television Advertising in this way (like Coca Cola at Christmas) allows businesses to reach a large audience and products can be made to look very appealing in the advert. However, advertising on the television can be very expensive.

Magazines When advertising in a magazine it is always better to make sure the advert is in colour. This has a much better effect. People will also keep magazines, so they will see the advert time after time. However, it is also expensive to advertise in this way.

Billboard Adverts on a billboard will be seen frequently by passers-by. They are often placed in busy locations so they will attract the attention of a huge audience. However they can deteriorate due to weather.

Internet websites By advertising online customers from all over the globe can be persuaded to buy the product. Customers can buy the product 24/7 from the comfort of their own home which could mean additional sales for the business. Customers are often given a discount when buying online, although they should be aware of delivery charges! Some people are wary of buying over the Internet as they may be concerned with disclosing their personal details and/or credit/debit card information. However, most organisations offer a secure payment system.


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Special Offers

•BOGOF (buy one get one free) - when the customers pay the usual price for a product but receives more of the product than they normally would

•% Discount - when the customer receives a percentage of the price off a product to encourage them to return to the business

•Other examples - Bonus Packs, 50% extra free, student discount

Free Samples

•Businesses give out free tasters or samples of products - this allows customers to try before they buy in the hope that they will return to purchase the product

•Example - some women's magazines attach a free sample of perfume which advertises the product and allows customers to see if they like the smell of the perfume before they buy it

Celebrity Endorsement

•A celebrity is used to promote the business and its products by wearing/using the product or promoting it through social media

•Consumers will associate the product with the celebrity which will encourage the customer to purchase the product

Questions

1. Using your understanding skills identify the main aims of promotion. 3 marks 2. Using your understanding skills write in your own words why advertising is important

to a business. 1 mark 3. Using your remembering skills identify and describe 3 methods of advertising.

6 marks Other Promotional Methods

Promotion is not just about advertising, it is also about encouraging people to buy a product. Other methods include:


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Advantages and Disadvantages of Celebrity Endorsement

Questions

1. Using your remembering skills describe the 3 other methods of promotion. 6 marks

2. Using your remembering skills write in your own words 2 advantages and 2

disadvantages of celebrity endorsement. 4 marks

CELEBRITY ENDORSEMENT TASK

Use your analytical skills to identify the business or the product being endorsed and the celebrity. Follow the pathway - RM Shared Documents\Business Education\Business Education Student Resources\Business Education Read Area\S3 Business 2016-2017 Open the PowerPoint Celebrity Endorsement Task. Copy the following table into your jotter.

Business/Product Celebrity

1.

2.

3.

4.

5.

6.

7.

8.

9.

10.

Advantages

People often want to buy products associated with a celebrity.

If the celebrity is successful and high profile, sales will increase.

Promotes a good image/name for the business.

Disadvantages

Very expensive to get a high profile celebrity to use your product.

Must ensure that the celebrity matches the image required for the product.

Any negative publicity about the celebrity can affect the sales of the products.


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EXTENSION TASK

Place Businesses have to decide:

where to open their shop/premises

where the product is sold - the way in which the business gets the product to the customer, this is also known as channels of distribution

Where the product is sold Customers need to be able to easily access products and/or services. Businesses need to ensure that they are selling their products and providing services in a place where the majority of customers can actually access and buy the products and/or services. Common places to sell products include:

supermarkets e.g. Asda

department stores e.g. Debenhams

independent retailer e.g. corner shops

internet selling

mail order e.g. Next directory

telephone selling

television selling e.g. QVC

Use the Internet to answer the following questions on Rory McIlroy’s endorsement of Nike. a. What age is Rory McIlroy? b. How much is the deal believed to be worth? c. Why did Nike chose Rory McIlroy? d. What does being sponsored by Nike mean for Rory McIlroy? e. Name another 2 sports star who have been sponsored by Nike. f. What are the risks to Nike of sponsoring sports stars?










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Distribution Methods A business has to decide how to physically get the product to the customer. The four main methods of distribution are:

Road• Advantages

• Often cheaper than other methods

• Delivery is often quick

• Customer receives the product direct to their door

• Disadvantages

• It is difficult to transport large products

• Not as environmentally friendly as other methods

• Roadworks might cause delays

Rail• Advantages

• Large products can be transported

• Large quantities can be transported

• Disadvantages

• There isn’t a train station in every location or even a rail line

• Not a door-to-door service

Air• Advantages

• Products can be transported across the world more quickly than by sea

• Large amounts of small products can be transported


• Disadvantages

• Large items cannot be transported

• Products need to be taken to an airport

Road• Advantages

• Larger products can be transported

• Products can be transported across the world

• Disadvantages

• It is time consuming to transport products across the world



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Internet Websites

• Organisations may have their own websites with products, prices etc from which potential customers can purchase

• Special Offers etc can be placed on the website

• They may also advertise on other business’ websites

• Research competitor’s latest offers

Social Networking

• Organisations can use Twitter to quickly share information about their products and services. It also allows a ‘conversation’ between the follower and the business about a product/service which can then be ‘retweeted’ to many more potential customers

• Facebook/Bebo/MySpace are social networking services that let you connect with friends, co-workers, and others who share similar interests or who have common backgrounds. Businesses use these services as it gives them direct access to customers and potential customers

Microsoft Office - word processing/DTP/PowerPoint

• To prepare advertising materials

• To prepare a ‘pitch’ to Board of Directors

E-mail

• Mailing lists could be created. Subscribers to a mailing list will receive e-mails containing relevant information on a regular basis – many businesses use this to send e-newsletters, announce any sales promotions etc.

Use of ICT in Marketing

Technology is used in all departments within a business. The Marketing department can use internet websites, social networking, Microsoft office applications and e-mail facilities to enhance their performance.


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Questions

1. Using your remembering skills identify 3 common places to sell products. 3 marks 2. Using your remembering skills identify 4 ways products can be delivered to

customers. 4 marks CHECK YOUR PROGRESS You are now at the end of the Marketing unit. Use your evaluating skills to check your progress. Follow the pathway - RM Shared Documents\Business Education\Business Education Student Resources\Business Education Read Area\S3 Business 2016-2017 Copy the Spreadsheet Marketing – Check your progress into your documents.

Check your progress

HELP NEEDED

GETTING THERE

CONFIDENT COMMENTS

What is marketing

Why is marketing important?

Market segmentation

The marketing mix

Product life cycle

Branding

Own brands

Pricing strategies

Advertising

Other promotional methods

Where products are sold

Distribution methods

Use of ICT in marketing

Insert an x into the column which is most appropriate for each section of the Marketing unit. For example, if you do not know what marketing is then you should put an x in the HELP NEEDED cell for “What is marketing”.

Check your progress

HELP NEEDED

GETTING THERE

CONFIDENT COMMENTS

What is marketing x

Once you are finished insert your name in the footer and print out in landscape and showing gridlines. You will use this checklist to help you revise for your assessment.