Marketing

Innovation and marketing

-Most innovational industry - highly competitive technology industry -Capacity for growth is immense

Market orientation

A business approach of first establishing consumer demand through market research before producing and selling a product

Product orientation

A business approach that focuses on marketing the product first before attempting to sell it

Market share

A company's product sales as a percentage of total sales for that industry

Viral marketing

A form of peer-to-peer communication where individuals are encouraged to pass on promotional messages within their social networks

Product

A good/service that is offered to the market with the aim of satisfying customer needs/wants

Perception map

A graphic technique used by marketers that visually displays how customers or potential customers perceive - typically the position of business is displayed relative to their competition.

Market segment

A sub-group of consumers with similar characteristics in a given market

Unique selling point

Any aspect of or characteristic of a product that differentiates it from the competition. Firms will often want to stress this in their marketing.

Cluster sampling

Appropriate when population is dispersed, will involve selecting a group from each region (cluster) and then taking a random sample from the clusters

BCG Matrix strategy - Building strategy

Centres on turning problem child into stars - money from cash cows could be invested in promoting/distributing the product so as to increase market share

Consumer profile

Characteristics of consumers of a particular product in different markets based on their gender, age & income levels - among other characteristics

Consumer profiles

Characteristics of customers and consumers in different markets.

Qualitative research

Collection, analysis and interpretation of data about consumer opinions, attitudes or beliefs

Quantitative research

Collection, analysis and interpretation of numerical data that can be measured

Packaging

Concerns the design and production of the physical contained/wrapper of a product - plays significant role in marketing, can help to distinguish one product from another

Mass market

Developing products and promotions to please large groups of people.

Advertising - Reassuring advertising

Focus is on existing customers, to remind them that they made right purchasing decision and that they should continue buying it

BCG Matrix strategy - Harvesting strategy

Focus is on making benefits of products with a positive cash flow - will be necessary to invest in other portfolio products

Below-the-line promotion

Form of communication that gives a business direct control over its promotional activities so its not dependent on the use of independent media

Target markets

Identified segments of the market that a business wants to have as their customers.

Product position/perception map

Visual representation of how consumers perceive a product in relation to other competing products - to gain a competitive advantage in the market

Brand loyalty

When consumers become committed to a firm's brand are willing to make repeat purchases over time - result of BRAND PREFERENCE

Market research

-A process of collecting, analysing and reporting data related to a particular market -Primary research - collection of first-hand information from the market - e.g. surveys, interviews, focus groups, observations -Secondary research - collection of second-hand data information from market - e.g. academic journals, media articles, government publications, market analysis

Limitations

-Accessibility problems - regions with no access to company internet poor internet connectivity will arise out on any ongoing promotional activities -Distractions - use of pop-ups in advertising can be viewed as time-wasting and annoying by customers who want to focus on other issues -Lurkers - individuals who "sit tight" and absorb info, may not be active in helping a firm products

Advertising - Persuasive advertising

-Aims at convincing customers to buy one firm's product instead of another firm's product -Persuades consumers to think that they really need the product - makes consumers make unplanned purchases (impulse buying) - enhances product's brand image

Extension strategies

-Attempt by firms to stop sales from falling by extending product's life cycle - done at maturity/saturation stage of product's life cycle -Important to long-term success of business as market becomes saturated and sales begin to drop - better to extend life of mature product before this decline in sales starts -Not easy to determine what stage a product is at - some businesses use sales forecasting (sales predictions - not accurate) -Unexpected external factors may strongly influence future sales (recession) -Spending money on a terminally declining product is a waste of resources Some common methods to extend product's life cycle: -Find new uses for product -Change product's packaging (design, appearance, colour) to stimulate consumer's interests and persuade them to buy product -Target different market segments (e.g. classes religions) -Develop new promotional strategies (e.g. new ad campaigns to encourage consumers to continue to use product to revive demand)

Competitive pricing

-Charging a price thats in line or just below the competitors' prices -Advantages - consumers benefit from low prices (especially in competitive markets), after using penetration pricing - leftover dominant firms could increase sales through higher prices -Disadvantages - predatory & destroyer pricing is a form of anti-competitive behaviour, is illegal in many countries as it is used to restrict competition

Price discrimination

-Charging different prices to different consumer groups for same product - only possible when they have different price sensitivities and elasticities of demand -Advantages - time-based price discrimination an benefit either consumer/producers -Disadvantages - businesses need to be certain about type of elasticity of demand with consumers

Loss leader

-Charging low price for a product (usually below average cost) to attract consumers to buy other high-priced products -Advantages - may attract many customers and benefit from higher overall profits, promotional strategy to encourage consumers to switch to their brand instead of buying the competitor's brands -Disadvantages - firms using this strategy of undercutting them by using unfair business prices

Promotion

-Concerned with communicating information about a firm's products to customers -Main aim - to obtain new customers, or to retain existing ones -Promotional activities should be communicated clearly to consumers & provide useful information to enable them to purchase a firm's products

The promotional mix - Factors to consider

-Cost - does that marketing budget support the use of a particular promotional method -Legal framework - has the law been taking into account when deciding on the various promotional methods to use -Target market - what specific segment of market is product aimed at -Stage in product life cycle - which promotional methods will be most appropriate at different product life cycle stages -Type of product - has promotional method considered nature of product and how it would be successfully sold to customers

Promotional objectives

-Creating awareness or informing consumers of a new/improved product -Convincing/persuading consumers to purchase a firm's products rather than competitive products -Remind consumers of existence of product to retain customers, or gain new ones for existing product -Enhancing brand image of product & corporate image of business

Marketing strategies evolve as a response to changes in customer preferences

-Due to several factors, customer's preferences have changed significantly in past 20 years and business responded in various ways to meet these new demands -Businesses will adapt their marketing strategies to improve its profitability by rebranding and penetrating new markets, or by diversifying -Marketing strategies (change in marketing methods or reconfiguration of marketing mix) can and must adapt to changing customer preferences

An appropriate marketing mix

-Ensures consumer's needs and wants are adequately met -Requires businesses to produce the right product, charged at the right price, available at the right place and communicated through the right promotion channels -If message of marketing mix is unclear - firm could risk potential loss in sales (long-term profitability)

Limitations of BCG

-Focuses on current market position on firm's products, with no info for future planning -May be active - consuming & complex exercise for businesses to define/classify products according to market share & growth -High market share does not equal high profits - sales revenue could be gained using competitive pricing, which may have a demand effect on a firm's profitability

Advertising - Informative advertising

-Focuses on providing information about a product's features, price, etc. to consumers -Increases consumers' awareness of product so they can make rational decisions about what to buy - useful when businesses want to introduce new product to market

Marketing objectives of for-profit and non-profit organisations

-For-profit - to identify, design and develop marketing strategies that are profitable to business -Non-profit - social marketing reasons, to attract funders, donators (financiers)

Cultural differences and marketing

-Have a heavy impact on marketing strategies used by businesses globally -Most common change in marketing practices - interact directly with consumers on a regular basis

Ethical considerations and marketing

-Have a major impact on how businesses brand themselves and their products -Shareholders are uncertain about long-term profitability because of fear of new legislation that would enormously increase the costs of production - adoption of new marketing strategies has largely helped to mitigate effects of such market uncertainties

Brand value

-How much a brand is worth in terms of its reputation, potential income and market value - the extra money a business can make from its products because of its brand name -High value brands are regarded as considerable assets to a business, because consumers are willing to pay high prices for such brands

Place

-How product reaches (is made available & distributed) to consumers - getting right product to right place at right time -Refers not only to location of business but also to location of customers - firms should therefore develop strategies to transport goods from present location to that of consumers -Enables businesses to come up with best ways to distribute their products efficiently & effectively to consumers -Use of intermediaries (e.g. wholesalers&retailers) helps businesses to store&market their products and enhance brand image -Growing global use of internet is making it easier for businesses to reach a wide range of consumers directly with products

Below-the-line promotion - Personal selling

-Involves sale of a firm's product through personal contact -Makes use of sale representatives (face-face/telephone), commonly used when selling expensive products -Customers need to be reassured they're making right decisions

Stage 2 - introduction

-Launch stage of product in to market - sales are low because most people are not yet aware of product's existence -Costs incurred in launch are high and its likely that product is not profitable - cash flow is negative as cash outflow is greater than cash inflow -Price skimming - setting a high price when introducing a new product to market. May be used for brand new tech products - when there are no/few competitors -Penetration pricing - setting low initial price for product with aim of attracting large number of customers quickly and gaining a high market share. Is used when there are many competitors -To increase awareness of product - info ads are used -Expensive products could be sold in restricted retail outlets targeting high-income consumers

Stage 5 - saturation

-Many competitors have entered market and saturated it -Sales are at highest point, beginning to fall - cash flow is still positive -Some businesses are forced out of market due to stiff competition -Prices have to be reduced - competitive pricing is used -Firms use extension strategies to stabilise market share and high levels of promotional activities such as aggressive advertising to maintain sales -Widest range of geographical distribution outlets has been established to get the products to consumers -Profits are high and mostly stable

Characteristics of a market in which an organisation operates

-Market size - total sales of all firms in a market -Market growth - percentage (%) change in the total market size over a period of time -Market share - percentage of 1 firm's share of the total sales in the market MARKET SHARE = (firm's sales / total sales in market) x100

Impact of new technology on promotional strategies

-Marketers are increasingly incorporating technology in their marketing strategy - these strategies include social media marketing which is a way of building relationships, driving repeat business and attracting new customers through social media sites -Also, viral marketing uses peer-to-peer communication where people pass on promotional messages within their social networks

Finance & marketing

-Marketing costs money, so the 2 departments have to cooperate in setting the appropriate budgets -Marketing dept. may want to spend more then in budget (to meet requirements) of a marketing plan - finance dept. may advise to stick to budget allocations - departmental conflict

HR & marketing

-Marketing info - more effective workforce planning in HRM department -Can influence demand & supply of labour in an organisation

4 Ps of Marketing mix

-Marketing mix - key elements of a marketing strategy that ensure the successful marketing of a product -Product - good/service offered in the market, should aim to satisfy needs & wants of consumers -Price - amount customers are charged for a product, indicates value consumers perceive product to have -Promotion - refers to various ways in which consumers are informed about/persuaded to purchase a product - communication methods are used to attract consumers to buy the product are very important here -Place - a product's location or channels of distribution used to get the product to the consumer - products can be purchased over the internet, in Intermediaries (wholesalers, retailers, agents) are also used to get products to where consumers need them

Elements of a marketing plan

-Marketing objectives - should be SMART (specific, measurable, achievable, realistic/relevant, time-specific) -Key strategic plans - steps that provide overview of how marketing objectives will be achieved (plans on how to sell new products in existing markets) -Detailed marketing actions - providing info on specific marketing activities that are used to carry out which e.g. pricing strategies will be used and how the products will be distributed -Marketing budget - including finance required to fund overall marketing strategy

Stage 3 - Growth

-Once product is well received by market, sales volume & revenues increase significantly - rising profits and possibilities of economies of scale & lowering unit costs -Cash flow is not positive -After successful launch (initially low prices - penetration prices), prices can be increased to maximise profits -Products that were initially low in price can reduce price due to increased competition -Advertising becomes persuasive to convince consumers to buy more products and establish brand loyalty -Larger number of distribution outlets are used to push product to different consumers in various locations -To main consumer demand, discussions begin on issues regarding product improvements & developments

Importance of branding

-One of most important tasks of marketers -Despite heavy initial investment required in ensuring that a brand is well-known, its essential for any type of business -Effective branding can enable a sense of personal identification and emotional connection among consumers

Above-the-line promotion

-Paid form of communication that uses independent mass media to promote a firm's products - includes advertising through TV, radio, newspapers to reach wide target audience -Control responsibility of advertising is passed onto another organisation

Distribution channels

-Path taken by product from producer to consumer -Some use intermediaries - middle people (e.g. wholesalers, agents, retailers) that lie in the products path from producers to consumers

Brand development

-Plan to improve/strengthen image of a product in the market -Way to enhance brand awareness of a product by increasing the power of its name, symbol or sign - leading to higher sales & market share

Price

-Plays significant role in marketing mix - only P that generates revenue for business, other aspects of marketing mix are associated with cost -To meet their marketing objectives, businesses need to set appropriate pricing strategies for new & existing products

BCG Matrix strategy - Divesting strategy

-Poor-performing dogs are sold off, resources freed up from this will need to be used well in boosting performance of other products in portfolio -Product portfolio that has enough cash cows & stars (finance generators) will be able to effectively sell in other high market growth products (e.g. problem children) -Too many dogs & problem children (and drain any positive cash flow from firm if it isn't checked)

Boston Consulting Group (BCG) matrix

-Product portfolio analysis - evaluates products making up a business -Business will want to invest more resources into its profitable products and phase out weaknesses -BCG is a growth-share matrix -Market growth rate - how attractive a product is in the market -Relative market share - how much of a market a product has captured (Strengths in market)

Operations management & marketing

-Production & marketing departments will need to work together to ensure that products developed meet customer's specifications -Market research will help marketers in determining the needs & wants of the consumers

Dogs

-Products that have low market share & growth -Operate in declining/not growing markets, generate little income for business -Offer low future prospects for firm and may need to be replaced -Businesses with many of these points may be faced with cash flow problems if they continue to sustain these

BCG - Stars

-Products with high market growth & share -Successful products in market - generate high amounts of income for business -Need high investment levels to sustain rapid market income growth & status (especially in fast-growing market where competitors can easily gain market share by attracting new customers) -With time, products mature, market growth slows down ---> cash cow

Problem children/question marks

-Products with high market growth and low market share -Are a concern to businesses due to large amount of money needed to increase market share -High market growth could mean that products are operating in very competitive market and need a good marketing strategy to succeed -Businesses should think thoroughly and be very selective about which problem child to develop into stars and which to eliminate

BCG - Cash cows

-Products with low market growth, high market share -Well-established products are in mature market end - businesses will invest less to hold on to market share -Product sales are high & profitable so they generate good amount of cash for the business -Products have strong presence in market, so businesses can charge slightly higher prices to increase profit margins

Functions of packaging in marketing

-Provides physical protection - from spoilt/damage (during transport) and provides cover from dust, light, heat -Offers convenience - makes it easy for consumers/distribution to handle product (dispose, recycle) -Provides information - labels on packages provide consumers with info (ingredients, how to use an item, legal requirements - cigs/alc) -Help reduce security risks - can help stop damage to product and to other people with use of product -Aids promotion - package should be eye-catching and appeal to consumer, colour & shape of packaging are key in projecting brand image of product and to differentiate a firm's product from its competitors

Cost-plus pricing

-Refers to adding a mark up to the average cost of producing a product -Mark up - % of profit a firm wishes to gain for every product it sells -Advantages - simple & quick way of calculating selling price of product, good way to ensure business covers its costs & makes profits -Disadvantages - fails to consider market needs/customer value when setting prices, since if competitors' prices are not considered a firm could lose sales if it sets a selling price thats higher than its competitors AVERAGE COST = cost per unit / number of products produced

Stage 4 - maturity

-Sales slowly continue to rise, product is well established with stable & significant market share - positive cash flow -Sales revenue is at peak - high profits, but with little growth as competitors have also entered market -Competitive/promotional pricing strategies used to keep competitors at bay -Promotion assumes reminding role to maintain sales growth and emphasise brand loyalty -Range of distribution outlets for product -Plans for product developments are at an advanced stage, with some firms introducing extension strategies to extend product life

Penetration pricing

-Selling low initial pricing with aim of attracting a large number of consumers quickly and gaining high market share -Used by businesses when introducing new product in an existing/old market - strategy in mass marketing -When firm gains market share - can start to raise prices -Advantages - as the prices are low, consumers are encouraged to buy the products - leads to high sales volume & market share -High sales volume - leads to decreases in the costs of production and increases in stock turnover -Disadvantages - high sales volume does not equal high profits (when prices are too low) -Customers may see product with low prices as bad quality, penetration pricing is only suitable for use in price sensitive markets - businesses who increase their pricing may risk losing potential customers who seek lower-priced products

Stage 6 - decline

-Steady drop in sales & profits of a product -Cash flow falls, still positive -Product could lose its appeal in customer's eyes - new models of product were introduced to replace old model -If sales are too low, product is withdrawn from market -Promotional activities are reduced and kept at minimum -Prices are mostly lowered to sell of existing stock -Unprofitable distribution outlets are closed

The promotional mix

-Successful promotional mix will involve a good balance of both above-the-line and below the line promotional methods -Could involve an appropriate mix of advertising, sales promotions, personal selling, direct marketing & public relations when communicating the advantages of product to customers

Two intermediary channel

-Two intermediaries (usually wholesalers&retailers) used by producers to sell product to consumers -Wholesalers are important in this channel and act as an additional intermediary between producer & consumer - useful channel when selling goods over long geographical distances

One intermediary channel

-Use of 1 intermediary (e.g. retailer/agents to sell products from producer to consumer -Mostly used where retailer is operating on a large scale or where the products are not expensive -Advantages - promotion & customer service are done by retailer, holding stock costs are incurred by retailers, retailer exists in selling product at convenient places o customer -Disadvantages - retailer's profit mark-up is included in selling price - product may be expensive for customer, producer may not be aware of promotional strategy used by retailer

Psychological pricing

-When firms consider how pricing affects consumers' perception of value of products -Advantages - psychological effect of selling at lower price can obtain large revenues for a firm selling in large quantities, looks at consumers' perceptions - suitable strategy for many market segments

Price skimming

-When firms set high prices when introducing new products to market - used to gain profits (to recoup high development/research costs) for short period, aimed at various market segments -Advantages - consumers associate high price with high quality of product - enhanced by brand image, firms can obtain high revenues to recover high development/research costs -Disadvantages - high prices may discourage consumers from buying products

Zero intermediary channel

-Where product is sold directly from producer to consumer (e.g. agricultural products) -Advantages - low cost, fast, ideal for perishable products, producer is key decision maker in distribution process -Disadvantages - promotion done by producer (could be time-consuming & expensive, producer incurs all storage & delivery costs

Benefits

-Wide reach - internet has enabled firms to reach out to consumer at a more personal/interactive level - large % of Internet's population uses social networking sites -Engagement - mostly customers & other key stakeholders are participating - naming a firm can find out what challenges, likes & dislikes consumers have about a firm's product offering -Ongoing dialogue can be more valuable than any paid market research -Cost-savings - social networking, SMM & viral marketing are relatively less-costly than traditional methods -Brand recognition - sharing & spreading of information can increase consumers' awareness of particular brands - leading brand loyalty/enhanced brand image -Speed - coupled with high internet speed, advertising can reach a wide audience much faster

Stage 1 of PLC - development (product is designed)

1. Generating ideas - brainstorming session where several stakeholders are consulted to come up with anything that may help satisfy needs/wants. Conducting market research also helps identifying any potential gaps that may exist in market 2. Screening ideas - deciding which ideas are poor (leave out) and which ones to research further - some products may be impractical/not sell 3. Creating a prototype - first/trial of product from which more are developed - allows visualisation/physical examination of product 4. Carrying out test marketing - after making necessary changes to product, samples are launched in a small but representative part of market to assess potential demand/sales of product. If it doesn't sell well - can be changed/removed without high costs for the firm 5. Commercialisation - after successful test marketing, full launch of product to market takes place. Will involve used of all elements of marketing mix. At this stage costs are high (research & development) as a lot of time, money and effort is invested in developing the product. No sales = no profit - cash flow is negative

Target market

A group of consumers with common needs/wants that a business decides to serve/sell to

Sampling methods - sample

A group of people selected to represent the population or target market under research

Mass market

A large/broad market that ignores specific market segments

Social networking service

A platform of social networks/relations (e.g. share, drive repeat businesses and attract new customers by individual sharing with other individuals)

Branding

A process of distinguishing one firm's products from another

Unique selling point/proposition (USP)

A product's feature that differentiates it from other competing products in market

Market leadership

A situation where a firm has the largest share of the market. Other companies will watch carefully the actions of the firm and follow them closely to ensure they are not left behind.

Brand

A symbol, sign or design that differentiates a firm's products from its competitors

Marketing plan

A written document that guides the marketing activities of the marketing manager.

Brand awareness

Ability of consumers to recognise the existence and availability of a firm's good/service

Below-the-line promotion - Direct marketing

Ensures product is aimed directly at consumers, eliminates use of intermediaries and thus saves business money (e.g. direct mail)

Random sampling

Every member of the population has an equal chance in being selected as part of the sample - eliminates bias

BCG Matrix strategy - Holding strategy

Focus is on products with high market share, to ensure this is maintained - some investment will be needed to ensure sustained consumer demand

Convenience sampling

Groups are selected based on their easy access and proximity to researcher

Market segments

Groups of consumers categorized by specific characteristics to create a target market.

Niche market

Identifies small but profitable market segments and designs or finds products for them, niche (environment).

Quota sampling

Involves segmenting a given population into a number of groups that share certain characteristics (e.g. age/gender) - targets are then set for the number of people who must be interviewed in each segment

Snow balling

Involves surveying first group or individual who then suggests other groups or individuals who could participate, and so on - snowball effect

Guerilla marketing

Lost cost unconventional marketing strategy with great innovative and significant promotional effect on a business

Commercial marketing

Marketing activities that determine consumer needs and wants before using appropriate strategies to market the product

Social marketing

Marketing approach aimed at influencing a positive change in individual behaviour and improvements in societal well-being

Social networks

Places where social interactions happen (sharing, discovering or advertising info)

Above-the-line promotion - Advertising

Plays central role in passing on info about a product to a particular target audience - choosing right media for advertising is important in ensuring a successful promotional campaign

Market segmentation

Process of diving the market into distinct groups of consumers so as to meet their desired needs & wants

Marketing planning

Process of formulating marketing objectives and deciding appropriate marketing strategies to meet those objectives

Targeting

Process of marketing to a specific market segment

Sampling

Process of selecting an appropriate sample

Below-the-line promotion - Public relations

Promotional activities aimed at enhancing image of business and its products - includes use of publicity or sponsorship

Below-the-line promotion - Sales promotions

Short-term incentives provided by a business with the aim of increasing/boosting its sales (e.g. money-off coupons, free offers/gifts, competitions, "buy one get one free"

Product life cycle

Shows course that a product takes from its development to its decline in the market

Stratified sampling

Target population is made up of many different groups who are subdivided into segments (strata) that share characteristics - members are then chosen from each stratum to form a representative sample

Social media

Technology that connects people - any medium where content is shared or where individuals chat

Marketing of goods

The use of the 4 Ps (Product, price, place, promotion) in marketing mix

Marketing of services

The use of the 7 Ps (product, price, place, promotion, process, people & physical evidence) in marketing mix

Social media marketing

Use of the internet through social networking websites to market a firm's product/service

Marketing

the management process of getting the right product to the right customer at the right price at the right time