Unit 4 Marketing

1. Unit 4Marketing

2. At the end of this unit, students will be able to: • Define the marketing mix • Explain each element within the marketing mix Unit 4

3. At the end of this unit, students will be able to: • Understand different pricing strategies that businesses use • Draw a product life cycle and identify in what stage a product lies Unit 4

4. Marketing Mix Also known as the 4Ps • Product • Price • Place • Promotion Unit 4

5. Product • Design • Usefulness • Quality Value • Packaging • Branding Unit 4

6. Price • When deciding on price it is important to know your market and to keep an eye on your rival’s prices • Pricing strategies • Price leadership • Price skimming • Penetration pricing • Loss leaders • Price discrimination • Destroyer pricing Unit 4

7. Pricing Strategies • The pricing strategy a business chooses will depend on: • Competitors prices • Suppliers prices • Customers purchasing power • If you set the price too low, consumers will believe that the product is poor quality • Conversely if the price is too high, consumers may purchase from competitors instead Unit 4

8. Penetration Pricing • Low pricing strategy • Price set to “penetrate” the market • Often used with mass market products, e.g. chocolate bars • Suitable for products with an anticipated long product life cycle • May also be useful when launching a new product Unit 4

9. High price strategy The organisation initially sets a high price and then slowly lowers the price to make the product available to a wider market Useful for products which will have low sales volumes Suitable for products that will have short product life cycles or will face competition in the future, e.g. when a patent runs out Examples include: digital technology, new mobile phones, new BluRay discs Price Skimming Unit 4

10. Price Leadership • High price strategy • Price set in accordance with customer perceptions about the value of the product • Examples include exclusive products, status products Unit 4

11. Loss Leader • Goods or services deliberately sold below cost • Often used in supermarkets to attract customers in the hope that they will buy other high-cost items • The purchase of these other items covers the loss on the item sold • Example: “free” mobile phone when taking a contract package with an operator Unit 4

12. Psychological Pricing • Plays on consumer’s perceptions • €/£9.99 instead of € /£10.00 • Consumer focuses on the lower price and feels that they are getting value for money Unit 4

13. Price Discrimination • The same good is priced differently in different markets • Examples include: hairdressers charging men and women different rates, Iarnrod Eireann charging different prices depending on the time of the week, e.g. prices tend to be higher at weekends Unit 4

14. Predatory (Destroyer) Pricing • Aims to force out the competition • Deliberate price cutting to force rivals out of the market or to prevent new entrants to the market • Anti-competitive Unit 4

15. Pricing Strategies Mind Map Unit 4

16. Place • The way in which goods and services get from the manufacturer to the consumer • The more places where the consumer can buy the product, the better it is for the business (and the consumer) • Efficient and effective distribution is important if the business is to meet its marketing objectives Unit 4

17. The producer sells directly to the consumer This gives the producer complete control over the product and how it is sold e.g. Dell computers or a factory outlet shop Producer Producer Consumer Consumer Unit 4

18. This channel only contains one intermediary, usually a retailer • Large retailers, e.g. Curry’s, Harvey Norman, DID Electrical, etc. buy directly from the manufacturer, e.g. Sony, JVC, Panasonic Producer Retailer Consumer Unit 4

19. A wholesaler buys in large quantities from several producers and then breaks bulk to supply retailers with smaller quantities • Small retailers with limited order quantities, it is necessary to use wholesalers • e.g. SuperValu and Centra buy from Musgrave wholesalers Producer Wholesaler Retailer Consumer Unit 4

20. Promotion • Strategies used to make consumers aware of the existence of a product or service • Advertising • Sales promotion • Personal selling • Public relations • Sponsorship Unit 4

21. The promotion mix will depend on: • Objectives of the business • The type of product • The target market for the product • Behaviour of competitors Unit 4

22. Personal Selling • Involves selling the product on a one-to-one basis • Can be either face to face or over the phone • Examples include: • Sales presentations • telemarketing Unit 4

23. Public Relations • Involves planting significant news about a product or business or by having favourable presentation of it in the media • Activities include: • Press releases • Videos • Websites • Annual reports Unit 4

24. Sales Promotion • Aims to increase short term sales • Tactics used include: • Loyalty cards, e.g. Dunnes Stores Value Club • Coupons • Buy one, get one free • 50% extra free Unit 4

25. Advertising • Objectives of advertising: • To remind • To promote • To compete • To inform • Advertising can be placed on TV, radio, newspaper, cinema, billboards, magazines Unit 4

26. Direct Marketing • Aims to create one-to-one relationships with the organisations target market • Can be in the form of post, email, telephone calls, mail order • The company usually contacts the person and promotes to them directly Unit 4

27. Sponsorship • Involves providing money to an event or person, e.g. Nike sponsor Rory McIlroy • In exchange the product or company is acknowledged for doing so • Sponsorship helps the business improve its image and public relations Unit 4

28. How can you promote your business? • If you don’t have a large marketing budget, how can you promote your business? • There are other methods of promoting a business without spending a lot of money Unit 4

29. Suggestions…. • Send a press release to the local newspaper each time your business hires someone, or adds a new product or service to those that are currently offered • Put your company name or logo or slogan on every email that you send. Create a signature for all e-mails which includes the business name, phone number and website. This will ensure that customers can find you quickly and easily • Give customers something unexpected, e.g. a free sample or 10% off their next purchase. This will be highly appreciated and will often lead to repeat purchases Unit 4

30. Product Life Cycle Unit 4

31. What is the product life cycle? • The product life cycle helps marketers to identify the different stages that sales and profits go through during the lifetime of a product • There are five stages in the product life cycle: • Introduction • Growth • Maturity • Saturation • Decline Unit 4

32. Source: Business 2000 Unit 4

33. All products go through a product life cycle • Some have a short life cycle, e.g. a CD single, while others have a very long life cycle, e.g. Coca Cola has been in existence since 1886, Guinness was invented in 1759 Unit 4

34. Stage 1: Introduction • Costs are high due to research and development • Sales are low as customers are not yet familiar with the product and/or the brand • Little or no competition • Consumers may have to be encouraged to try the product Unit 4

35. Stage 2: Growth • The market are beginning to accept the new product • Sales and profits increase • Customer base expands • Competition increases with copy-cat versions of the product • This competition can lead to a price reduction Unit 4

36. Stage 3: Maturity • Sales growth slows down during this phase • Increase in competition in the market • The company may concentrate on extending the brand, e.g. Diet Coke or on promotion offers to increase sales • This is the most critical stage of the PLC – if it is handled well the product may survive indefinitely Unit 4

37. Stage 4: Saturation • Sales slow down as the market becomes saturated • Profits decline • Businesses may invest in increased advertising to protect against competition Unit 4

38. Stage 5: Decline • Sales slow dramatically • Profits decline • The product may be phased out or dropped to make way for new brands Unit 4

39. Extending the Product Life Cycle • Extension strategies can lengthen the life of the product before it goes into decline • Businesses use marketing techniques to improve sales • Examples include: • Advertising: to gain a new audience or to remind the current audience • Price reduction: to increase demand • Adding value: adding new features to the product, e.g. video messaging on mobile phones • New markets: selling in more outlets or selling abroad Unit 4

40. Product Life Cycle Mind Map Unit 4