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Choice
In order to gain a competitive advantage, a business will differentiate its
products from similar products in the marketplace, through price, quality,
features and service.
Standard of living:
To provide consumers with better products and allow business to develop
their income streams, businesses constantly improve the features of their
products.
Millions spent each year developing products that will allow consumers to
maintain a healthy life style, e.g. basic necessities such as milk and bread.
Brand awareness:
Strong brand awareness allows a product to remain in the mind of
consumers, this influences purchasing decisions.
Brand awareness refers to the extent to which consumers are aware of
a particular product, its features, price and possible places of purchase.
Market share:
Market share refers to the percentage of total sales a business has compared
with its competitors in a particular market.
Increased market share = Increased profit.
Promotion
Promotion
Selling
Selling
Telemarketing
Marketing
Marketing
Types of markets
Resource markets:
Where the sale of raw materials occur, provide inputs for the manufacturing
process, such as aluminum for cans.
Industrial Markets:
Involved with the manufacture of products, business in the industrial market
transform raw materials provided by the resource market, which are then sold
as intermediate goods to other manufacturers or as finished products to
retailers.
Intermediate markets:
Commonly referred to as wholesalers, they sell products to retail businesses,
wholesalers generally do not sell products to consumers.
Consumer markets:
Where business sell their products directly to consumers. It is made up of all
the individuals and households who buy goods and services for personal use.
The mass market:
Products here are aimed at all consumers, irrespective of their age, gender,
residential location or income, these products have appeal to all consumers,
examples include electricity and water.
Niche market:
A market segment is one area of a particular market. A niche market is a
smaller section of a larger market segment, business targeting a niche
market would focus on a select group of customers, they have a very narrow
customer base. Goods are usually higher-priced in this market.
Influences on marketing
Psychological:
Personal characteristics of individuals that influence their behavior. The
psychological factors that influence the goods we buy are:
- Motivation!
People have different needs at different stages of their life,
though they will always ensure their basic needs are met before seeking
other desires.
- Perception !
The opinion that a customer has about a product. It is
important that businesses develop a marketing campaign that provides
positive images of the product. Some believe the quality of a product is
reflected in its price.
- Learning !!
Past experiences with products, they will decide whether to
purchase the product again or to continue to purchase the same products.
- Beliefs and attitudes !!
A consumers attitude towards a particular
product is clearly influenced by his or her broader beliefs and attitudes, such
as religious beliefs or attitudes towards social issues.
- Lifestyle ! !
Leisure preferences, interests, attitudes and gender
influence a persons lifestyle.
- Personality and self-concept ! !
The way we view ourselves and how
we respond other peoples perception of us will influence the types of goods
and services we purchase.
Sociocultural:
These influences are those that come from ones society and culture, this can
be defined as ones values, beliefs and customs. Business often cater to
sociocultural needs.
Economic:
A persons socioeconomic status is determined by their level of income,
occupation and level of educational attainment. The higher ones income, the
greater their ability to purchase goods of superior quality. !
!
Government:
Influences consumer purchasing through regulation of economy, achieved
through fiscal and monetary policies. Microeconomic reform also encourages
greater competition in specific markets, providing consumers with greater
product choice and lower prices.
Consumer laws
Deceptive and misleading advertising:
- Giving misleading information about features, content or place of
manufacture.
- Overstating the benefits of a product.
- Offering discounts and offers that do not exist.
- Using bait and switch advertising (promote a product which a low stock of
exists in the store, and suggestive sell more profitable alternatives)
Price discrimination:
- The act of charging different customers a different price for an identical
product.
- Manufacturer cannot refuse to sell goods to a retailer who decides not to
sell the good at the price that it is suggested by the manufacturer.
Implied conditions and warranties:
- Consumers expect that a business will fulfill its legal obligation to provide a
good or service that is consistent with the description given in full working
order.
- Regardless of warranty, a business must by law, either refund a clients
money, or offer an exchange of the good, if the good is faulty at the time of
leaving the store.
- All products have implied warranty
Sugging
Extra notes on sugging:
- Selling under the guise of research.
- Unethical as consumers do not know they are being encouraged to buy a
product.
- Consumer information may be sold to there market research companies.
Marketing plan
All businesses, no matter what size, activity or legal structure need to
develop a marketing plan, which is a formal document that identifies all
the businesss marketing objectives and the strategies it intends to use
to achieve these objectives.
The elements of a marketing plan are:
Executive summary
Situational analysis
Market research
Establishing marketing objectives
Identifying the target market
Developing marketing strategies
Implementation, monitoring and controlling
Executive summary:
The executive summary provides a brief description of current issues
facing the business.
Situation analysis:
Provides a firm with an opportunity to examine its current position within
the marketing, including:
- Market share of a product.
- Future trends within the market.
- Strategies used by competitors.
- Changing consumers tastes and preferences.
- The two components of situational analysis are SWOT and product
lifestyle.
Swot analysis
A SWOT analysis is used to examine the strengths and weaknesses with a
businesses and the opportunities and threats presented by the external
environment.
Strengths and weaknesses:
The strengths and weaknesses of any business are things that are controlled
from inside the business. includes:
- Business reputation
- Staffing
- Financial stability
Opportunities and threats:
Opportunities and threats arise from the external business environment, a
business has limited control over these. These include:
- Competition
- Business vulnerability to external changes such as interest rates, the
economy, wage growth and industry assistance.
- Changing tastes and preferences.
Market research
Market research is a system of collecting data and analyzing information to
help make marketing decisions.
Marketing information could include:
- Characteristics of the market
- Effects of price changes on sales
- Potential success of new products
- Market share and competition
- Economic and business trends
- Success of promotional activities
There are two types of data, primary and secondary.
Primary data is collected for the specific purpose which it will be used.
Methods of collecting primary data include:
- Observational research - gathering data by observing a relevant group of
people, their actions and their responses to situations.
- Surveys - gathered by asking a number of people the same questions.
- Experimental research - Changing a factor to see how it alters people, how
people react to products and features.
- Focus groups - Small groups of people with characteristics matching target
share opinions and show behavior to products, advertising and packaging.
Primary data is expensive and often takes a long time to analyze and collect
so businesses often use secondary sources.
Market objectives
Objectives of a business should guide the activities of the business, they
should be flexible. Should follow SMART Approach:
S - Specific
M - Measurable
A - Achievable
R - Realistic
T - Time
Increase sales / growth in market share:
- Focused on increased revenues by maximizing sales.
Expand into new geographic markets:
- Focused on expanding the areas where their goods and services are
distributed to increase sales and product awareness.
Expansion into new markets:
- Seeks to make a product available by using innovative means, such as
technology and things like vending machines.
Product diversification:
- May allow the business to target new markets in order to attract consumers.
Increased customer satisfaction:
- Increase customer loyalty by giving them more of what they want.
Marketing strategies
Market segmentation
Market segmentation involves dividing the total market into segments, with
one segment becoming the target market, often with a specific marketing mix
to meet the needs of the group.
Market segmentation aims to increase sales, market share and profits.
Common variables for segmenting customer markets:
Geographic segmentation:
The process of dividing a market or customer group into smaller markets
based on different geographic locations. This includes differentiating
customers based on region, climate, city size/type and nearby landforms.
Demographic segmentation:
Involves the dividing of a market into smaller markets based on particular
features of the population, including: age, gender, income, family size and
level of education.
Psychographic segmentation:
Groups people according to how they spend their time, activities, interests,
opinions and attitudes.
Behavioral segmentation:
Behavioral segmentation is the process of dividing the total market according
to the customers relationship to the product. Includes thing such as purchase
occasion, benefits sought, loyalty, usage rate and price sensitivity.
Branding
Refers to the reputation that a business or product has developed over a
time.
It includes a name, term, symbol, design or any combination of these
that identifies a specific product and distinguishes it from competition.
Branding provides:
- Easy identification of products.
- Indication of quality
- Reassurance, prestige/status.
Branding helps a business to:
- Gain repeat sales
- Introduce new products
- Encourage customer loyalty
- Promote products
Brand names/symbol can be protected by a registered trademark, this
provides a business with an exclusive right of use.
Packaging
Packaging refers to the physical appearance of the good.
Packaging:
- Preserves the product
- Attracts consumers attention
- Divides the product into convenient quantities
- Helps to display the product
- Aids transportation and storage
Price
Pricing methods
Cost plus pricing:
Considers the total cost to the business of manufacturing or providing a good
or service to the consumer then adds an additional amount (mark-up) to allow
for a profit margin, to determine price.
Competition based pricing:
Covers the sots of production and is comparable to the competitors price.
Market based pricing
Is a method of setting prices according to the interaction between the levels
of supply and demand.
Pricing strategies
Pricing strategies are used once prices have been set, to fine-tune the set
prices.
Factors to consider between choosing a pricing strategy is:
- The level of competition
- Government regulations
- Product life cycle stage
- Economic state
Price skimming:
Where a new product is priced relatively high in order to achieve maximum
returns before entry of competitors.
Penetration pricing:
Where prices are set at the lowest possible price to gain market share.
Loss leader:
This pricing strategy involves providing a limited number of goods at a price
at or below cost to encourage consumers to purchase goods from the
business.
Price points:
Normally used when a businesses has a number of products in a particular
product line, where a number of key prices are offered within the range.
Promotion
Promotion describes the methods used by a business to inform, persuade
and remind a target market about its products.
Promotion aims to:
- Attract new customers
- Increase brand loyalty
- Encourage existing customer to increase their product purchase
- Provide information
- Encourage the purchase of new products
A business uses various promotional methods, the promotional mix to
formulate their promotional campaign.
The promotional mix is made up of:
- Advertising
- Personal selling and relationship marketing
- Sales promotions
- Publicity and public relations
Advertising
Advertising is a paid, non-personal message communicated through a mass
medium. It aims to inform, persuade and remind a target market of a product.
Advantages:
- Reach a wide audience.
- Different media for different target markets.
Disadvantages:
- Risks
- So many ads (Hard to stand out)
Personal selling
Personal selling involves the activities of a sales representative directed to a
customer in an attempt to make a sale.
Advantages:
- Individual advice and assistance is provided, which can lead to repeat
sales.
- The sales consultant can provide after sales service.
Disadvantage:
- Takes skill
Promotion
Relationship marketing
Relationship marketing involves the process of building and maintaining long
term relationships with customers. The aim is to create customer loyalty by
meeting the needs of a customer on an individual basis.
The establishment of a regular client base, allows businesses to offer special
packages, discounts and promotional events.
Advantages:
- Increase positive word of mouth.
- Increase feedback (for future implement)
Sales promotion
Sales promotion is the use of activities or materials as direct inducements to
customers. Aims to entice new customers, encourage trial purchase of a new
product, Increase sales to existing customers and repeat purchasers.
Short term reductions, e.g. discounts, cash back offers, 2 for 1 deals.
Publicity and public relations
Publicity is any free news story about a businesss products.
The aim of publicity is to enhance the image of a product, raise awareness of
a product, highlight favorable features, or counteract any negative image
related to the business.
Public relations are those activities aimed at creating and maintaining
favorable relations between a business and its customers, for example: a
donation, or an attention seeking gesture.
This can increase sales by promoting a positive image, communicating a
message, crisis management, identifying market trends,.
The communication process:
Any method used to convey a message.
Opinion leaders:
Celebrities used to promote product through endorsement.
ADV: Opinion come from the company, Early adopters are trusted/ believed.
Word of mouth:
Word of mouth communication occurs when people influence each other
during conversations.
DIS: Hard to control, negative opinions difficult to control.
Place / Distribution
Place or distribution are the activities that make products available to
customers when and where they want them.
Distribution channels are the routes taken to get the product from the factory
to the customer.
Commonly used channels of distribution include:
The producer to consumer distribution channel, where the good or service is
produced by an individual/organization then passed directly onto the
consumer.
ADV: Allows the producer to maintain control over all areas of the product.
ADV: Provides the producer with a direct point of contact with consumers.
Producer to retailer to customer, is where a retailer is used as an intermediary
to access the good from the producer and then sell it to the consumer.
ADV: Allows the producer to concentrate on the manufacturing component of
the businesss operations.
ADV: The use of a retailer encourages greater distribution and access to the
good.
Producer to wholesaler to retailer to consumer distribution channel, is where
the wholesaler takes responsibility for distributing the producer to the retailer.
ADV: The use of a wholesaler allows the producer to hold lesser amounts of
idle stock.
ADV: Marketing and sales tend to be the responsibility of the retailer, not
producer.
E-marketing
This is the practice of using the internet to perform marketing activities.
It allows a business with online operations to reach a global audience with
relatively low costs.
E-marketing is the fastest growing sales medium in Australia with about 21%
of consumers regularly using the internet to shop.
Social media advertising (SMA) is a form of online advertising using social
media, it is inexpensive in comparison to traditional advertising methods.
Global marketing
Many transnational corporations (TNCs) adopt a marketing approach where
standardized marketing mix is applied globally.
Global branding is the worldwide use of a name, term, symbol or logo to
identify the sellers products. A brand has the same meaning in any language,
providing global recognition, e.g. successful brands such as Coca-cola &
McDonalds.
Standardization
A standardized approach is a global marketing strategy that assu,es the way
that the product is used and the needs that it satisfies are the same over the
world. E.g., fast food and mobile phones.
Customization
A customized or local approach is a global marketing strategy that assumes
the way the product is used and the needs it satisfies are different between
countries. For example, McDonalds uses a standardized name, logo, but has
variety in production methods in some geographic locations, such as
Philippines where noodles are included.
Global pricing is how the businesses coordinate their pricing policy across
different countries.
- Customized pricing (different prices in different countries.)
- Market customized pricing (prices are set according to local market
conditions)
- Standard worldwide price (charged same price for a product across the
world.
Competitive positioning relates to how a business will differentiate its
products.
To remain competitive, a business must develop:
- Product leadership - refers to the enhancement of brands through
innovation and quality.
- Operational excellence - refers to the ability of a business to be run
efficiently as a means of producing a low-cost operation.
- Building positive customer relationships - allows a business to develop a
long term association with the customer, through understanding their buying
behavior.