Marketing

Today

 Consumer and Industrial Markets

 Definition of Marketing
 Role of Marketing
 Marketing Objectives
 Marketing Activities
 Factors leading to importance of
Marketing
What is a market?

 Any place
where
buyers and
sellers meet
 Consumer Markets

 Consumer markets - are made up of

individuals who purchase
goods/services for personal or domestic
use.

 Consumable goods - eg, food,

cosmetics, magazines

 Durable goods - eg, cars, televisions,

clothes
 Industrial Markets

 Industrial markets - organisations which

purchase goods and services to use in the
production of other goods and services.

 Consumable goods - eg, raw materials

 Durable goods - eg, machinery and equipment

 What is Marketing

 “Marketing is the
management process
responsible for identifying,
anticipating & satisfying
consumer requirements
profitably”
 About Marketing

 Marketing finds out consumers needs and what

products meet them “Customer is king”
 Marketing is a business philosophy and an on-
going process
 Marketing affects ALL aspects of business
 Marketing is NOT just selling
 Marketing and advertising are NOT the same
 What is the Role of
Marketing
 To identify, anticipate and satisfy
customers needs
 Providing customers with desired
goods/services = profits
 To ensure customer awareness or
goods/services
 Marketing Objectives

 Target a new market or market

segment

 Achieve or maintain market share

 Develop new range of products

 Improve image of product

 Marketing Activities

 Market Research
 New Product Development
 Selling
 Pricing
 Promotion and Advertising
 Preparing Publicity Information
 Factors leading to
Importance of Marketing
 Economic Growth – booms = more disposable income.
Marketing is needed to gain market share
 Fashion – Marketing attempts to anticipate trends and/or
changes in tastes, lifestyle
 Technology – New product innovation is essential for firms
to keep up with competitors
 Competition – rivals may come from overseas. Firms have
to be aware of the market environment both at home and
abroad
 Recap

 Consumer and Industrial Markets

 Definition of Marketing
 Role of Marketing
 Marketing Objectives
 Marketing Activities
 Factors leading to importance of
Marketing
 Today

 Product Orientation
 Market (Customer) Orientation
 Advantages of Market Orientated
approach
 Product Orientation

Production Manufacture Aggressive Customers

Capabilities Product Sales
Effort

Production Orientation is when a business

focuses on the production process and seeks
to make goods which are viewed as superior
British Motorcycle
Industry
 Britain ruled the world
of bikes in 30s and 40s.
 BSA, Norton & Triumph
neglected consumer
tastes as sleeker
models arrived
 Suzuki, Kawasaki and
Honda catered for this.
Look at what happened!
 Market Orientation

Customer Potential Marketing Customers

Market Products
Needs
Opportunities
&
Services

Market Orientation starts with the

consumer and looks at consumer needs. It is
customer orientated.
Sony Walkman

 Designed due to
people’s needs for a
small tape recorder
 Workers used
headphones to listen
to music and the
Walkman was born
 Henry Ford and Model T

 The World’s First

Assembly Line
churned out the
Model T Ford.
 Henry Ford ‘boasted’
that “it was available
in any colour… as
long as it’s black!”

Ford was customer orientated because the savings made

by the assembly line were passed down to the customer
by offering cheap automobiles
 Advantages of Market
Orientated approach
 Respond quicker to changes in
market due to market research
 Stronger position to meet new
competitors
 Can anticipate market changes
 More chance of new product
success
 Recap

 Product Orientation
 Market (Customer) Orientation
 Advantages of Market Orientated
approach
 Today

 Marketing Environment
 Market Share
 Market Growth
 Marketing Mix
 The Marketing Environment

Consumer trends and behaviour

Competition Political

THE MARKET

The Economy Technology

Social
 “It is useless to tell a river to stop
running; the best thing is to learn
how to swim in the direction it is
flowing.”

 Anonymous
 Market Share
US Fast Food Sales

McDonald's
31%
36% Burger King
Wendy's
7% KFC
Others
7% 19%

Market Share is the percentage of customers

who buy/use a company’s goods/services
 Market Growth

 Increasing market share means a

business increases sales at the
expense of competitors.
 However, firms can also increase
sales if the whole market grows.
 Market growth occurs when the
number of people buying/using the
good/service increases
 Marketing Mix

The 4Ps
 Product
 Price
 Place
 Promotion
 Recap

 Marketing Environment
 Market Share
 Market Growth
 Marketing Mix
 Today

 Product/Service
 Core and Augmented Product
 FMCGs
 Tangible and Intangible
 Marketing of Services
 Product Line
 Product Mix
 Product/Service
Product
The good or service which the business is
trying to sell. Most important element a it
determines what the price will be (Price), how
it is promoted(Promotion) and where it is sold
(Place).
Core Product provides a basic need
Augmented Product is made more
attractive to the customer by having
additional features.
Fast Moving Consumer
Goods
 Some goods sell more
quickly than others and in
greater quantities. These
types of goods have
different marketing mixes
compared to say a premium
brand. They are called
FMCGs.
 Coffee, cereals, chocolate,
hair care and detergents
are examples of FMCGs.
 Some lies and exaggerations!

 Coca-Cola told a few

early porkies.

 Can you have a guess

what they said it could
do?
 Oh, I
Answers!!! say!

 It could cure hangovers!

 It could cure other ills of
the upper body
 It was even hinted at
being an aphrodisiac!
 Tangible and Intangible
 Products are tangible, in that we can
touch and feel them.
 Services are intangible, for you cannot
touch or feel the act of being transported.
It is performed for you. Therefore we
cannot compare the physical
characteristics of the service.
 What we do is we compare the process,
people and physical environment of the
service.
 Marketing of
Services
 Think of two rival cinemas. They usually offer
the same films, but which one do you prefer?
 Process – how does the customer go through the
experience? Queues? Long periods of waiting?

 People – what are the staff like? Friendly?

Helpful?

 Physical Environment – are the surroundings eye

catching? Beautiful?
Product Line

 Many businesses
produce a range of
products with similar
uses and similar
characteristics.

 For example, the iPod

and the iPod mini are
both variations of the
same product solution.
 Product Mix
 The product mix is the product
range or different types of product
a business manufactures and sells.

So Apple, as well as having the iPod, the also have

Applebooks and the Apple Mac computer.
 Recap

 Product/Service
 Core and Augmented Product
 FMCGs
 Tangible and Intangible
 Product Line
 Product Mix
 Today

 Product Life Cycle

 Stages in PLC
 Extension Strategies
 Effects of Extension Strategies
 Boston Box
Product Life Cycle
 Product Life Cycle

Products have a natural ‘lifespan’.

Some are very short others are around
for decades.
The life of a product can be prolonged
by using extension strategies. However
all products go through a number of
distinct phases.
 Stages in Cycle
Development Stage – many products will never
progress past this stage. Development of new
products is essential but can be very costly. Before
launching it may be test-marketed. Modifications can
then be made based on feedback.
Introduction Stage – heavy advertising at this stage to
make consumers aware of the product. Sales are slow
and costs are high.
Growth Stage – consumers more aware of the product
and sales start to grow rapidly. It is during this stage
that the product begins to become profitable.
 Stages in Cycle

Maturity Stage – sales reach their peak. Advertising

costs are lower and development costs should have
been repaid. The product is at its most profitable.
The business will work to keep the product in this
stage for as long as possible. This can be done by
using extension strategies.
Decline Stage – Sales and profits start to fall. Mobile
phone sales are beginning to decline if firms wish to
stay in business they will have to create new phones
or new demand for phones.
 Extension Strategies

Reducing Price Therefore Promoting More

Frequent Use of Product – reduce cost of
texting to mobile phones.
Developing New Markets for Existing Product
– Computers were originally manufactured for the
business market, moved into home market.
Finding New Uses for Existing Products – fire
lighters now used for barbeques.
 Extension Strategies

Develop a Wider Range of Products – new

versions of same product can produce new
interest from consumers. Irn Bru – range of can
and bottle sizes, fruit chews, ‘alco-pop’ market.
Developing Styling Changes – introducing
slightly different product – football strips.
Effects of Extension
Strategies
 Boston Box (Product
Portfolio)
Market Share
High Low

High

Market
Growth
Low
 Boston Box - Strategies
Stars Problem Children
Build sales/market share Build selectively
Invest to turn into cash Harvest or divest rest
cow
Cash Cows Dogs
Hold sales/market share Harvest or
Use excess cash to invest Divest
in stars, problem children
 Recap

 Product Life Cycle

 Stages in PLC
 Extension Strategies
 Effects of Extension Strategies
 Boston Box
 Today
 What is a New Product?
 Facts about NPD
 Adoption of Innovation
 Stages of Development
 Product Failure
 Product Cannibalisation
 Successful NPD
 Japanese Approach
 What is a New Product?

 New to the world

 New product lines
 Additions to existing product lines
 Improvements and Revisions to
existing products
 Repositioned products
 NPD: Facts

 1 in 50 new products fail

Adoption of Innovation
 Stages of New Product
Development
 Generate Ideas
 Analysis and Further Research
 Are the Products Marketable?
 Prototype
 Test Marketing
 Full Launch
 Product Failures

 Investigate one of the following…

 New Coke
 Sony Betamax VCR
 McDonald’s Arch Deluxe
 Maxwell House Ready-to-drink coffee
 Sinclair C5
Sinclair C5
 Why do firms spend vast sums
of money on product
innovation?
 To achieve high profits
 To enhance public image
 Wider share of market – can become market
leader
 To compete with rivals
 To spread risk – some existing products may
be entering decline stage
 Obtain customer loyalty – encourage more
demand for their products
 Product Cannibalisation
 When launching a new product companies must
be aware of the potential for the product to eat
into the sales of one of their existing products.
 When Kit Kat released Kit Kat Chunky, sales
were good, but overall sales for the Kit Kat
family of brands were down.
 Successful NPD

 Unique, superior product

 Well defined customer target
market
 Close links between R&D and
Marketing
 Well executed stages of NPD
 Market attractiveness
 Japanese Approach

 In Japan they use the trial and error approach.

 They do not worry about market research.
 Japanese firms release hundreds of products in
hope of getting one or two hits.
 They aim to get new products to market quickly
and at low R&D costs.
 Failures can be modified and released again.
 This approach is called Expeditionary
Marketing.
 Recap
 What is a New Product?
 Facts about NPD
 Adoption of Innovation
 Stages of Development
 Product Failure
 Product Cannibalisation
 Successful NPD
 Japanese Approach
 Today

 Branding
 Characteristics of Good Brands
 Brand Equity
 Corporate Branding
 Benefits of Branding
 Drawbacks of Branding
 Own Brands
 Advantage of Own Brands
 Brand Logo Quiz

 You will be issued with a sheet asking you

about Brand logos.

 How many can you get?

 Some are easy, some difficult!

 Branding

Branding is used to create USP’s (unique

selling propositions) and ESP’s (emotional
selling propositions)
The business chooses a word or symbol, or
both, then registers them so that they can
only be used on its products. Baxter’s,
Oxo, Cadbury’s and Heinz are all well-
known brand names.
 Brands

 Brands are the personality attributed to

products and/or services.

 Without the brand, Coca-Cola is little more

than sugared water; Domestos is just
another detergent, and Chiquita is a banana
just like another.
World’s 10 Most Valuable
Brands
 Investigate this year’s Top 10 Valuable
Brands to see if there has been a change.

 If there has been, can you think of some

reasons why they have went up or down in
the rankings?
 Characteristics of Good
Brands
• legally protectable
• easy to pronounce, remember and
recognise
• attract attention
• suggest product benefits (eg.:Easy off) or
suggest usage
• suggest the company or product image
• distinguish the product's positioning
relative to the competition
 Brand Equity…
is the value built-up in a brand. It can be positive or negative. Positive
brand equity is created by a history of effective promotion and
consistently meeting or exceeding customer expectations. Negative
brand equity is usually the result of bad management.
The value of a company's brand equity can be calculated by
comparing the expected future revenue from the branded product
with the expected future revenue from an equivalent non-branded
product. This calculation is at best an approximation.
Positive brand equity can allow family branding, which makes new
product introductions less risky and less expensive.
 Corporate Branding…
refers to the practice of using your company's name as
a product brand name. Disney, for example, includes
the word 'Disney' in the name of many of its
products. So do IBM, Pepsi, and Coca-Cola.
One advertising campaign can be used for several
products. It also helps new products being introduced
because customers are already familiar with the
name. A corporate branding strategy should only be
used if the company is already well known by the
target market and also has a very positive image in
their minds.
 Corporate Branding
(Contd.)
If corporate branding is done well, the corporate name can
become synonymous with a product category (e.g.:
Kleenex). Even purchasers of Charmin will refer to the
product as Kleenex.
The main disadvantage with corporate branding is the
products are not treated as individuals; hence there is not
adequate focus on the products' unique characteristics.
 Benefits of Branding
Instant recognition of the product by the
customer.
Brand loyalty – repeat purchases
Higher prices can be charged
Quality is associated with it
Easier to launch new products
Good after sales service
May lead to purchases of other products
with same brand name
 Drawbacks of Branding

Time is taken to establish a brand

Promotion costs will be high
Bad publicity for one product can affect the
whole range of same-brand products
Fake products may appear. These imitators are
very difficult to stop. (Burberry, Rolex and Calvin
Klein who can charge premium prices for their
products suffer most at the ands of the forgers.)
 Own Brands

Most of the supermarket chains, and large

retailers such as Boots, offer a wide range of
products under their own brand names.
These can be produced by the supermarket or
by a manufacturer who is contracted to
produce goods for the supermarket.
 Advantages of Own
Brands
Own brands will attract more customers and
more sales within the store.
Producer will have guaranteed sales
Products are cheaper

Disadvantages of Own Brands

Some customers believe ‘own brands’ are of lower
value than established brand names (although this is
not necessarily true).
 Recap

 Branding
 Characteristics of Good Brands
 Brand Equity
 Corporate Branding
 Benefits of Branding
 Drawbacks of Branding
 Own Brands
 Advantage of Own Brands
 Today

 Price
 Long Term Strategies
 Short Term Strategies
 Price
Consumers will only pay what they can
afford and what they think is a reasonable
price for the product.
Consumers use price as a measure of
quality.
When setting a price for a product you need
to consider:
Costs of production
Profit mark-up
 Long Term Pricing
Strategies
Low Price - Charge lower than competitors. Only
appropriate where there is a little brand loyalty and
competition in the market is high.
Market Price - Setting price at a similar price to
competitors. Homogeneous product means that price
competition is not of benefit. They compete in other
areas – service etc.
High Price - High quality products, premium goods
and services where image is important, such as
perfumes.
 Short Term Pricing
Strategies
Skimming -using a high price initially for a
new product where there is little
competition.
Penetration Pricing - used to introduce a
product to an established market. Allows
the business to achieve sales and gain
market share very quickly. Usually set a low
price to attract customers. Once product is
established price can increase.
 Short Term Pricing
Strategies
Destroyer Pricing - Setting a very low price to
destroy the competition. Product probably being
sold at a loss, however once competition is
destroyed the price will return to market price.
Promotional Pricing - Used to boost sales and
create interest in a product by lowering the price.
Supermarkets use this for some of their sales lines,
as loss leaders.
Demand-orientated Pricing - Price varies with the
demand, ie crops, trains, phones etc.
 Recap

 Price
 Long Term Strategies
 Short Term Strategies
 Today

 Place
 Wholesalers
 Retailers
 Agents
 Choice of Distribution Channel
 Place

Producers

Producer to Wholesaler

Producer to Retailer
Wholesalers
Two or more intermediaries
Direct Selling
Retailers

Consumers
Wholesalers…

 they buy large quantities of

product from suppliers and
sell them on in smaller
volumes to retailers or
business users. The
wholesaler provides a link
between the producer and
the retailer, saving the
producer time and money
in delivering direct to the
retailer.
 Retailers…

the shop which sells goods to the general

public. Retailers offer a variety of goods and
services from a variety of producers.
Goods are stored on their premises and are
prepared for sale and display them for sale.
 Types of Retailers
 Independent retailers – most common  Franchises – offer a new
type and can be best illustrated as your local business a chance to trade
corner shop. using a successful formula,
 Multiple chain stores – a number of e.g. McDonald’s.
outlets across the country with a well-known
name. E.g. Marks and Spencers  Mail Order – rather than
 Supermarkets – offer a wide range of
having expensive shops to run
groceries, clothing and electrical goods. E.g. they issue catalogues to
Tesco, Sainsbury’s consumers who can select
 Department Stores – offer a range of products in the comfort of
goods within different departments. their own home. Successful
Normally specialise in premium brands. E.g. due to the credit facilities
House of Fraser, Debenhams offerd. E.g. Freeman’s
 Door-to-door – companies
like Avon take orders from
people’s doorstep.
 Agents…

 an independent person or company appointed to handle

sales and distribution within a specified area. Agent’s income
comes from commission they make on each sale.
  Agents carry out promotional activities to attract customers
and sell them the product. Car manufacturer’s use agents to
sell to local markets because they should have better
knowledge of the market.
 One drawback is that if an agent sells many different
products, yours might not be given the attention needed.
Importer/Exporters…

play a similar role to

the agent but on an
international scale.
They will have superior
knowledge of the world
markets, and can
create sales through
their own promotional
campaigns. Sometimes
act as retailers too.
 Choice of Distribution
Channel
The Product – perishable, unique
The Market – size – Mars Bars
Legal Requirements – alcohol, drugs
Buying Habits – expectations of
customers
The Business – own distribution
network
 Choice of Distribution
Channel
 The Product – Perishable products which have a limited shelf-life should
select a direct channel. However, some perishables like fish, fruit and
vegetables sometimes go through specialist wholesalers who buy from
small producers in order to make up the bulk needed fro retailers.
Premium brands are selective where they are sold, and both Calvin Klein
and Levi’s have prevented Tesco selling them in their stores. 
 The Market – if the market is nationwide, then to save in distribution
costs, then using wholesalers and retailers are more efficient. If the
market is small and local, direct selling is more apt.
 Legal requirements – some goods can only be sold through licensed
premises such as chemists, pubs and off-licenses.
 Choice of Distribution
Channel
 Buying habits – consumers influence where products
are distributed. The emergence of out-of town retail
parks have seen identikit sites open up nationwide. Each
one contains supermarkets, carpet stores, furniture
stores, DIY stores, Garden centres etc. People now
expect these type of stores to be located in such places.

 The business – some firms have their own distribution

process with their own wholesalers and retailers. Once
common among large organisations, most of these
functions have been outsourced.
 Recap

 Place
 Wholesalers
 Retailers
 Agents
 Choice of Distribution Channel
 Today

 Types of Promotion
 What is Promotion?
 Types of Advertising
 Choice of Advertising Media
 Types of Advertising Media
 Types of Promotion

Advertising
Sales Promotion

Direct
Merchandising Promotion Mail

Exhibitions and Personal Selling

Public Relations
Trade Fairs
What is Promotion

Method used to pass on

information to
consumers
an essential way of keeping
existing customers and
getting new ones
 Above and Below the line

 Above the line promotion:

advertising through consumer media
such as TV, magazines, newspapers
and radio.

 Below the line promotion:

promotions used other than main
media such as point of sale, sales
promotions etc.
Methods of Promotion

1. Advertising
2. Sales promotion
3. Public relations
4. Merchandising
5. Packaging
6. Exhibitions and trade fairs
7. Direct mail
8. Personal selling
 Types of Advertising
Informative: Health Education Board for Scotland
– smoking, drugs, alcohol etc
Persuasive: used in very competitive markets,
use powerful images and language – ‘Probably the
world’s favourite lager.’
Corporate: promoting the whole company not a
single product – BP adverts focus on their ‘green
image’ not on the product (petrol)
Generic: the whole industry come together to
promote the whole industry – Scottish Beef,
Scottish Tourism
 Advertising
is a 'paid for' communication. It is
used to develop attitudes, create
awareness, and transmit information
in order to gain a response from the
target market.
There are many advertising 'media'
such as newspapers (local, national,
free, trade), magazines and journals,
television (local, national,
terrestrial, satellite) cinema,
outdoors advertising (such as
posters, bus sides).
 Informative Advertising

used to pass on information

about new or improved
products, or to give
information about a
technical product. The
government uses
informative advertising in
the media. E.g. HEBS
regularly run ads to
change Scottish unhealthy
lifestyles and eating
habits.
 Persuasive Advertising

…a hard sell by manufacturers

to get us to buy their
products. Often used in
competitive markets where
there are few USPs between
products. They use powerful
images and language to try
and get us emotionally
involved.

E.g. Levi use distinctive adverts

to persuade us they are cool
to wear.
 Corporate Advertising…

like corporate
branding, where
the whole
company is
promoted not just
individual
products.
Generic Advertising
When rivals come together and
sell not their individual
products, but their market or
industry as a whole.
A recent example would be
during the BSE crisis, British
Beef advertised in unison to
try and allay consumer’s
fears.
The Milk Board is another such
example.
 Choice of Advertising
Media
How and where an organisation carries out
its advertising will depend on how it can
best reach its existing and potential
customers.

–Young audience: teen magazines, Hollyoaks

–Older people: Sunday newspapers, daytime
TV
–Whole market: Coronation Street
 Types of Advertising
Media
Print: newspapers and magazines
Broadcast: TV, radio, Internet
Outdoor: billboards, buses, round football grounds etc
Which one is chosen depends on:
•Cost: TV expensive but memorable
•Target audience: choice of programme, newspaper
•Competitors’ Advertising: usual to match competitors
•Impact required: new product  wide variety of methods
•The Law: tobacco and alcohol
 Recap

 Types of Promotion
 What is Promotion?
 Types of Advertising
 Choice of Advertising Media
 Types of Advertising Media
 Today
 Sales Promotion – Into the Pipeline
 Sales Promotion – Out of the Pipeline
 Public Relations
 Merchandising
 Packaging
 Personal Selling
 Direct Mail
 Trade Fairs and Exhibitions
 Sponsorships
 Sales Promotion…
tends to be thought of as being all
promotions apart from advertising,
personal selling, and public relations.
For example the BOGOF promotion,
or Buy One Get One Free. Others
include couponing, money-off
promotions, competitions, free
accessories (such as free blades with
a new razor), introductory offers
(such as buy digital TV and get free
installation), and so on. Each sales
promotion should be carefully costed
and compared with the next best
alternative.
 Sales Promotion – Into the
Pipeline

•Dealer Loaders: 6 boxes for the price of 5

•Point-of-sale displays, posters, videos etc
•Dealer competitions
•Staff training for the shops
•Sale or return
•Extended credit
 Sales Promotion – Out of the
Pipeline

•Free samples
•Bonus packs: 50% free
•Price reduction: 50p off offer
•Premium offers: one product is free
when you buy another
•In-store demonstrations and tasting
•Merchandising: in-store displays
Public Relations…

is defined as 'the deliberate, planned and

sustained effort to establish and maintain
mutual understanding between an
organization and its publics' (Institute of
Public Relations). It is relatively cheap,
but certainly not easy. Successful
strategies tend to be long-term and plan
for all eventualities. All airlines exploit
PR; just watch what happens when there
is a disaster.The pre-planned PR machine
clicks in very quickly with a very effective
rehearsed plan.
 PR Faux Pas
 On September 11th 2001, a Government aide, Jo
Moore decided in an email to say that it would be a
good day to “bury bad news”. The email was leaked
and she was out of a job.
 April 1991. Gerald Ratner was speaking at an AGM
and was asked how he could sell jewellery at such a
low price. “Because it’s total crap” he replied.
Ratner shares and sales plummeted overnight and
almost folded the company.
 Public Relations

•The way an organisation communicates at a

corporate level with: the public, the press, the
government and shareholders
•Will involve: press statements, making charitable
donations, sponsoring events, arranging product
endorsement
•Publicity: internal through press releases or external
through news reports or consumer programmes. Not
usually paid for, can become advertising if it is good
publicity.
Merchandising
is an attempt to create an
atmosphere or mood to attract
customers into stores via
elaborate displays, posters etc.
Layout of stores are designed for
customers to follow routes
whereby to get to the popular
selling products they have to
pass less popular ones, in the
hope of making a sale.

Similar products are stacked

together for customer ease.
Prices for shelf space vary, the
most expensive for producers to
get is at eye-level. Products at
eye-level out perform other,
similar products.
 Merchandising
•An attempt to encourage the customer to buy at the
point-of-sale by using window displays, posters,etc

•Layout of products: popular items at the back of the

store to make customers walk passed less popular
items.

•Related items together ie soap powder

•Products at eye level are the best position to achieve

sales

•Well stocked shelves, the right atmosphere ie bright

lighting can create a feeling of cleanliness near fresh
 Packaging
Good packaging can increase sales of a product.
Factors that
should be considered:
Shape and weigh: can affect distribution costs
•Protection: product must not be damaged in transit
or be affected by heat, light or dust
•Convenience: easy for the customer to handle
•Design: eye-catching to distinguish from competitors
•Information: legal requirements (food labelling),
technical requirements (wattage on bulbs)
•Environmental factors: public concern about
recyclable materials and excess packaging
 Personal Selling…
is an effective way to manage personal
customer relationships. The sales
person acts on behalf of the
organization. They tend to be well
trained in the approaches and
techniques of personal selling.
However sales people are very
expensive and should only be used
where there is a genuine return on
investment.
For example salesmen are often used
to sell cars or home improvements
where the margin is high.
 Direct mail
is very highly focused upon targeting
consumers based upon a database.
As with all marketing, the potential
consumer is 'defined' based upon a
series of attributes and similarities.

Creative agencies work with

marketers to design a highly
focussed communication in the
form of a mailing. The mail is sent
out to the potential consumers and
responses are carefully monitored.

For example, if you were marketing

medical textbooks, you would use a
database of doctors' surgeries as
the basis of your mail shot.
 Trade Fairs and
Exhibitions
Such approaches are very good for
making new contacts and renewing
old ones. Companies will seldom sell
much at such events. The purpose is
to increase awareness and to
encourage trial. They offer the
opportunity for companies to meet
with both the trade and the consumer.

Expo has recently finish in Germany with

the next one planned for Japan in
2005, despite a recent decline in
interest in such events.
Sponsorship…

is where an organization pays

to be associated with a
particular event, cause or
image.
Companies will sponsor sports
events such as the
Olympics or Formula One.
The attributes of the event
are then associated with
the sponsoring
organization.
 Recap
 Sales Promotion – Into the Pipeline
 Sales Promotion – Out of the Pipeline
 Public Relations
 Merchandising
 Packaging
 Personal Selling
 Direct Mail
 Trade Fairs and Exhibitions
 Sponsorships
 Today

 Target Markets
 Undifferentiated Marketing
 Differentiated Marketing
 Concentrated (Niche) Marketing
 Market Segmentation
 Bases of Market Segmentation
 Target Markets

 Undifferentiated or Mass Marketing

 When a product is sold to the entire
market

 Differentiated Marketing
 When a product is offered to a group or
groups within the total market
 This is done by Market Segmentation
 Undifferentiated
marketing

Firm Market

Marketing mix
 Differentiated marketing

Segment 1
Marketing mix 1
Firm Segment 2

Marketing mix 2
Segment 3

Marketing mix 3
 Concentrated marketing

Segment 1

Firm Segment 2

Marketing mix Segment 3

 Methods of Market
Segmentation
• Age • Size of family
• Race • Income
• Gender • Work
• Lifestyle • Location
Bluewater Retail Park
 Investigate this
famous
shopping centre.
 It has names for
its different
target
customers.
 Find out what
they are!
 Question!

 Which famous British sci-fi author coined

the term spending spree in 1956?

 Aldous Huxley, writer of Brave New World

 Socio-Economic Group

A. Higher managerial, administrative or

professional
B. Intermediate, clerical, administrative or
professional
C1. Supervisory, clerical, junior
administrative or professional
C2. Skilled manual
D. Semiskilled and unskilled
E. State pensioners, widows, casual and
lowest paid
CONSUMER RESEARCH
Copy this table into your jotter and complete it to show the most likely
purchasers (and target market)of the various products

Detail Age Sex Socio-

group economic
group
Pint of beer in pub 18-30 M C
The Financial Times
Cardigan from Next
Tommy Hilfiger Sweater
Jeans from Gap
Porshe sports car
Can of Irn Bru
New talking Action man
New style roller blades
Month’s holiday in
Portugal in January
 Psychographic
Segmentation
• Segments people according to
lifestyle.

• Lifestyle is a person’s individual

pattern of behaviour.
• Includes;
• attitudes, beliefs, interests, hobbies,
habits, religion
 Stages in Life
1 Bachelor stage: young, single, not living at home
2 Newly Weds: young, no children
3 Full nest 1 Youngest child under 6
4 Full nest 2 Youngest child 6 or over
5 Full nest 3 Older couples with dependent kids
6 Empty nest 1 Older married couples, no kids living
with them, head of house in employment
7 Empty nest 2 Older married, no children living at
home, head of house retired
8 Solitary survivor in employment
9 Solitary survivor retired
 Recap

 Target Markets
 Undifferentiated Marketing
 Differentiated Marketing
 Concentrated (Niche) Marketing
 Market Segmentation
 Bases of Market Segmentation
What form of marketing is this?
What form of marketing is this?
What form of marketing is this?
 Answers…

 A – Differentiated marketing

 B – Undifferentiated marketing

 C – Niche marketing
 Today

 Niche Marketing
 Advantages and Disadvantages
 Positioning and Perceptual Mapping
 Niche Marketing

 Niche Marketing is when a business

targets a product at a small segment
of a market

 Tie Rack is an example of a Niche

Market

 Golf Tourism in Scotland is another.

 Niche Marketing

 Advantages  Disadvantages
 Niche market may  If successful, larger
competitors may
be overlooked enter market
 Gain competitive  Niche markets are
advantage smaller and may
suffer more
frequent swings in
consumer spending
 Positioning

 Products are then ‘positioned’ by firms to

fit a particular segment. This means how
customers feel about a product. Their
perceptions about a product.
 The two most common values judged are
price and quality.

 Here is an example of a positioning grid

(sometimes called a Perceptual Map)
 Position these cars by
Price and Economy
(Fast/Slow)
 Ferrari
 Cougar
 BMW
 Hyundai
 Proton
 Cougar
 Daewoo
 Recap

 Niche Marketing
 Advantages and Disadvantages
 Positioning and Perceptual Mapping
 Today

 What is Market Research

 Market Research’s Role
 Market Research Uses
 Primary Research
 Sampling
 Secondary Research
 Problems with Market Research
 Market Research

What is Market Research?

“The collection, collation, and
analysis of data, relating to
the marketing and
consumption of goods and
services”
 Market Research
Provides Information
About
 Size and nature of market
 Age, sex, income & preferences of
market
 Effectiveness of selling methods
 What customers think and feel about
product
 Effectiveness of advertising &
promotion
 What can businesses use
market research for?
1. Descriptive reasons:
What is happening in a market?
2. Predictive reasons:
What will happen in the future?
3. Explanatory reasons:
Why is something happening? E.g. Why is
our product only popular in one region?
4. Exploratory reasons:
E.g.Could this new product work?
 Primary (Field) Research

1. Questionnaires 5. Observations
2. Personal 6. Technology e.g.
loyalty cards
interviews
7. Focus Groups
3. Telephone
8. Customer panels
interviews
4. Postal surveys

Used to collect Primary data

 Sampling
 Sampling is a way to find the views of the
population without asking everyone!

 There are 2 main types:

 Random Sampling
 Quota Sampling
 Random and Quota
Sampling
 Random Sampling – a randomly generated list of
individuals free of bias, but not targeted at any
market segment. Names can be taken from
telephone directory or electoral register.

 Quota Sampling – a group selected to reflect a

proportion or characteristics (age, sex, marital status
etc.) of the whole population. Cheaper than random
sampling but can be less representative than the
random method
 Primary Research +/-

+ -
 Only firm that  Expensive to
collects it has collect
access  Lengthy time
 Can be involved, info
controlled/verified could be out of
date
 Secondary (Desk)
Research
Used to collect secondary data.
Examples:
 Sales figures
 Annual Reports and data
 Internet data (other businesses
websites for example)
 Secondary (Desk)
Research
 Government publications:
e.g. ‘Social Trends’
 European Union – publications by
‘EUROSTAT’
 Commercial publications:
e.g. ‘Keynote’, ‘Verdict’ etc.
 Secondary (Desk)
Research +/-
+ -
 Saves time  Not specifically
related to
 Relatively project
inexpensive undertaken
 Cannot be
verified
 Problems with Market
Research
• Human behaviour is
unpredictable
• Sampling and bias
• Other forms of bias e.g.
leading questions
 Recap

 What is Market Research

 Market Research’s Role
 Market Research Uses
 Primary Research
 Sampling
 Secondary Research
 Problems with Market Research
 Why is marketing important to
organisations?
 Describe how the information on the tea
industry (p. 137) highlights marketing’s
main functional areas:
 Market research
 Product development
 Pricing
 Distribution
 Promotion and advertising
 Describe the main objectives of
marketing.
 Explain why it is likely that product-
orientated organisations are likely
to be less successful in modern
markets?
 Describe the difference between
goods and services, giving
examples of each.
 Explain what you understand by the
terms market share and market
growth.
 Describe the government
constraints placed on marketing.
 What do the terms unique selling
proposition and emotional selling
proposition mean?
 What are the main factors that
affect the buying decisions of
consumers?
 Describe how differentiated
marketing can be more effective
than undifferentiated marketing.
 Describe the difference between
core and augmented product,
giving examples.
 Describe the benefits for a business
of having a range of products.
 Describe the product life cycle
referring to costs, sales and profits
at each stage.
 Identify the life cycle extension
strategies available to an
organisation.
 What are the advantages to an
organisation of creating a
successful brand?
 Describe the various pricing
strategies that a business could
use.
 Identify the factors that will affect a
business’s choice of distribution.
 Identify the factors that will affect
the business’s choice of advertising.
 Identify the different types of
promotions into and out of the
pipeline.
 Describe the differences between
Public Relations and Publicity.
 Explain why packaging is important
in marketing.
 Describe the differences between
random and quota sampling.
 Describe how interviews can be
used to gather market research.