Understanding Marketing: Strategies, Research, and Product Lifecycles

1. Marketing National 4/5 Business Management 2012-13

2. What is Marketing? • Marketing is more than just advertising and selling. It involves identifying consumer's needs and wants and meeting them in such a way that the producer makes a profit.

3. Product Led v Market Led Can you think of more examples?

4. Product Led • This is when a firm invents a product without finding out if it is what consumers want. • Successful products usually come from new inventions and technologies • Some product led companies struggle to do well.

5. Market Led • This is when firms use market research to find out what consumers want, then they make it. • This product is usually useful and successful as they have listened to what their customers want.

6. Market Research • In order to be successful, you need to know what your customers want. • To find this out we use Market Research • There are 2types of Market Research: • Field Research • Desk Research CLIP

7. Field Research • This involves gathering primary information; this is first-hand information. • We can find out this information through doing: • Surveys • Observations • Consumer Panels • Focus Groups • Test Marketing • Interviews

8. Field Research Advantages • it is specific to your needs • it is accurate • it is up-to-date Disadvantages • time consuming to collect • expensive to collect (training)

9. Desk Research • This involves gathering secondary information, which is gathered from an external source • Information can be gained through: • Newspapers • the Internet eg competitors’ websites • Government Statistics • Market Research Agencies eg MORI

10. Desk Research Advantages • less time consuming • less expensive • Wide range of sources Disadvantages • information is not specific to your needs • cannot be sure about accuracy • information may be out of date • may not be objective

11. Market Segmentation • A market is made up of different types of consumers each with their own needs and wants. • They are grouped into segments, so that companies can tailor products for each group.

12. Why Target Marketing? • Products can be made specific to the customers’ needs. • The promotion, price and place can be tailored to the target market and increase their chances of sales.

13. Market Segmentation Groups • gender • religion • area • age • education level • social class • political persuasion • family structure

14. The Marketing Mix (4P’s) Product Price Promotion Place

15. Product – Product Development There are various areas designers need to be aware of when designing a product: Packaging Should it be functional, or eye catching? Branding Is the product to be unique or part of a range? After Sales Will there be customer service, offers, guarantees? • Function • What is the purpose of the product? • Design • What should it look like, any added features? • Quality • What level of quality will the product be?

16. Product - Branding Branding is an expensive process but it brings many tangible rewards if a business gets it right. It is a product that is seen in the eyes of the consumer as different from other similar products (unique).

17. Product - Branding Benefits Costs Huge initial financial outlay High marketing costs Counterfeit goods Own Brands • Can charge a premium price • High awareness • Perceived high quality • Easier to launch new products

18. Own Brands • Established brands are under increasing pressure from cheaper ‘own brands’. • Consumers are increasingly more aware of these brands. • Supermarkets have seen an increasing growth in own brand sales.

19. Product Lifecycle • Products pass through certain stages of development during their existence. • This is called the Product Lifecycle. • The length of a product’s lifecycle can vary depending on the product.

20. Product Lifecycle Maturity Decline Growth Introduction

21. Product Lifecycle - explained • Introduction • product is launched onto the market; advertising and promotion begin; sales are increasing slowly. • Growth • as product becomes well-known through word of mouth, sales increase rapidly. • Maturity • sales reach their peak and start to level off. • Decline • sales fall as demand decreases.

22. Extension Strategies • A company can extend the lifecycle of a product by injecting new life into it, using extension strategies. • This can be done through the 4P’s: • Product – altering packaging, new features • Price – changing the price • Promotion – new promotion, special offers • Place – changing location sold e.g. Internet

23. Extension Strategy Extension Maturity Growth Introduction

24. Price • Your price should appeal to consumers, however, consumers look at pricing in 2 ways: • if it is too low, they think that the quality may be poor • if it is too high, they will think it is not worth the money

25. Price - strategies Long Term • High (Premium) price • Price set above competition to give an impression of high quality • Market Price • Price set at the same as competition and they compete on other factors • Low Price • Price set below competition to offer customers value for money

26. Price - strategies Short Term • Penetration • Price set below competition initially. Once customer base has been established price is then raised. • Skimming • Price set high initially while no competition exists. Price gradually dropped as competition enter the market. • Destroyer • Large companies set price artificially low (loss leader) to eliminate competition and gain more market share. Once competition is gone the price can be raised. • Cost Plus • This is simply calculated by working out the cost per item and then adding on a percentage for profit.

27. Promotion • There are 3 main types of Promotion: • Advertising • Sales Promotion • Public Relations

28. Promotion - Advertising • Advertising aims to be either: • Informative or • Persuasive

29. Promotion - Advertising Types of Advertising include: • Print – Newspapers/magazines • Broadcast – TV/Radio/Cinema • Outdoor – Billboards

30. Promotion – Sales Promotions These are methods employed for a limited time to increase consumer demand: • Buy one get one free (BOGOF) • Discounts e.g. 10% off • Competitions • Free gifts • Product trials • Point of sale advertising egposters displaying special offers

31. Promotion – Sales Promotions • Direct Mail – This is in the form of mail delivered to your address, promoting a product or service. Often referred to as ‘Junk Mail’. • Personal Selling – Involves salesmen coming to homes to sell a product. It may be something that requires demonstration or explanation

32. Promotions – others Other types of promotion include: • Product placement – products appear on TV/Film • Product endorsement – a celebrity promotes it • Sponsorship – of a sport or TV programme

33. Promotion – Public Relations (PR) The PR department will aim to enhance the organisations image. They will deal with the: • Press • Government • Public Activities they take part in include: • Press statements • Charitable donations • Customer care

34. Place • This is where the product service is available for sale.

35. Place – channels of distribution Manufacturer Manufacturer Manufacturer Manufacturer Wholesaler Wholesaler Retailer Retailer Customer Customer Customer Customer Wholesaler will buy in bulk; will finish off packaging; customer discounts Closer relationship with customer; price can be reduced Price highest for customer; benefits from wholesaler and retailer Retailer has close customer relationship; advertise products; accurate feedback

36. Place – Factors affecting choice • There are a number of factors which will determine how and where a company sells its products: • Competition – where they are located and method of distribution used. • Resources – how close are resources needed to produce products • Cost of premises – in/out of town • Government incentives – they may give grants for locating in a certain area • Nature of the product - is it perishable how quickly does it need to reach the customer

37. Marketing & ICT • Marketing has been significantly enhanced with the rapid rise in the use of ICT. It can be used to enhance marketing in a number of ways: • Loyalty Cards • E-Commerce • Social Media

38. Marketing & ICT – Loyalty Cards • Loyalty Cards have enabled companies to collect a vast amount of information on customers. • They can gather information on what we buy, when we buy, and how much we spend. • It is an excellent market research tool. • Information will be stored on a computer database.

39. Marketing & ICT – E-commerce • The surge in online shopping has been huge. • A lot of businesses will either operate solely online or at least have an e-commerce facility for customers to purchase goods or services. • Advantages • Can buy products 24/7 from home • Can compare, so possibly cheaper • Cheaper for business to operate as less staff and space needed.

40. Marketing & ICT – Social Media • One of the biggest technological rises has been in Social Media. • Companies will ensure that they operate on various networking platforms to advertise to and keep in touch with consumers.