Marketing

Sell me this pen - Jordan Belfort

Definition

Marketing is the management process for identifying, satisfying, and anticipating consumer requirements.

Marketing ensures to:

Identify Customer Needs
Satisfy Customer Needs
Maintain Customer Loyalty
Gain information on Customers
Anticipate changes in Customer Needs

Marketing objectives ensure:

Raise awareness of their product
Increase sales and revenue
Increase market share
Enter new markets
Improve existing products

Customer spending patterns may change due to change in:

Tastes and preferences
Technology (Outdated products become no longer wanted)
Income
Ageing population

Markets have become more competitive due to:

Globalization
Improvement in transportation
E-Commerce/Internet

Businesses can respond to changes in spending patterns by:

Maintaining good customer relationships
Keep improving existing products
Introduce new products
Keep costs low

Niche Market

pink and gold perfume bottle — Gucci products focus on the niche market of wealthy individuals

A smaller segment of a large market tailored to a specific target audience.

Advantages	Disadvantages
Can focus on customers easier.	Lack of economies of scale.
High price due to low competition.	Over-dependence on one product.
Firms can thrive in niche markets.	Little profit due to small customer base.

Mass Market

a man in an open market holding a paper bag — Agricultural produce are mass market products

The product is sold to the entire market, with no specific target audience.

Advantages	Disadvantages
Large number of sales.	More competition.
Opportunities for growth.	Prices may be lower due to competition.
Economies of scale (purchasing).	Difficult to survive if new.

Market Segmentation

The process of dividing the market into groups/segments based on characteristics such as age, location, gender, income, etc.

Increased opportunities for sales
Cost-effective, as focus is on a specific group

Product-Oriented Business

Firms produce the product first and then try to find a market for it, focusing on quality and price.

Market-Oriented Business

The firm conducts market research to see what consumers want and then produces accordingly, setting a marketing budget.

Market Research

The process of collecting, analyzing, and interpreting information about a market or product. It helps businesses understand customer preferences, pricing, and potential profits.

Market Research is needed because:

To know if the product will sell successfully
To know how to price the product
To know if the product will profit

💡

Market Research can be Quantitative, Numerical-Deals with Percentage, or Qualitative, Opinion/Judgement.

Primary Market Research

The collection of original, first-hand data directly from customers.

Method	Definition	Advantages	Disadvantages
Random Sample	People are selected randomly.	Everyone has an even chance of being chosen.	Unclear answers may be given.
Quota Sample	Selected based on certain characteristics.	More accurate information may be given.	Questions may be unclear if not detailed enough.
Questionnaires	Data collected face-to-face or online surveys.	Detailed information can be collected. Online Surveys are cheap. Customers opinion can be collected	Unclear questions can lead to unreliable answers. Time-Consuming. Expensive
Interviews	Ready-made questions for interviewees.	Explanation can be provided. Body language and detailed responses can allow an accurate conclusion to be formed.	The Interviewer could force the interviewee to answer in a specific way. Time-consuming, expensive.
Focus Groups	Group discussion about the product.	Detailed information provided.	Opinions can be influenced by others in the group. Also, it is time-consuming and expensive.
Observations	Can take the form of recording, watching, or auditing	Inexpensive.	Information collected might not be detailed enough

💡

Please scroll horizontally to see the full contents of the table. The table lists the method, definition, advantages, and disadvantages for each method.

Secondary Market Research

Data already available from internal or external sources, such as government statistics, newspapers, and the internet.

Marketing Mix (4 P's)

Refers to the different elements involved in the marketing of a product or service: Product, Price, Place, and Promotion.

Product

slice pinepple and earth bottle — Product

Product is the good or service being produced and sold in the market. These include:

Consumer Goods
Consumer Services
Producer Goods
Producer Services

A successful product satisfies customer needs, stands out, and is reasonably priced.

Brand image: An identity given to a product that differentiates it from competitors.

Importance of Brand Image

Helps Customers recognize firm’s products easier
Easier to launch if Brand Image is well-known
Can charge higher if Brand Image is well-known

Brand loyalty is when customers keep buying the same brand continuously instead of switching over to competitors’ products.

The process of developing a product
1. Brainstorm and generate ideas
2. Select best ideas
3. Decide if the market for the product is big enough for it to be a success.
4. Develop a Prototype (also known as a minimal viable product or MVP)
5. Test Launch to a small pool of beta users
6. Launch Product if successful

Advantages	Disadvantages
Increases potential for sales	Market Research is Expensive and Time-Consuming
Creates USP as an innovative product has been introduced	Investments can be expensive
Reduces risks due to market research

Importance of Packaging
- Protects the product
- Provide information about the product
- Helps customers recognize the product from the Brand Logo and Name.

Product life cycle

	Introduction	Growth	Maturity	Decline
Product	Only a basic model of the product is available	Changes might be made to the product as a result of feedback from consumers	Extension strategies might be used to maintain sales	The product and packaging is not altered
Price	Price skimming is unique new product; market penetration pricing otherwise	Pricing may be adjusted- lower prices to attract more sales or keep a high price to maintain brand image	Competitive pricing to maintain sales	The price might be reduced – promotional selling to maintain sales
Promotion	High advertising activity to boost customer awareness	Promotional activity still high to continue persuading customers	Promotional activities are aimed at reminding the customers that the products are still available	Advertise the products at a lower price
Place	The product may be offered for sale in specially selected outlets	The product is more widely available, which helps to increase sales	The product is available for purchase through a wide distribution network	The product is only available in profitable outlets

Extension strategies:
These are techniques used to keep products in the market. The ways in which this can be done are:
- By entering new markets
- Increasing advertising (although this is not sustainable in the long term)
- Redesign Product
- Introduce Improved Version

Price

The amount of money consumers are willing to spend, and producers are willing to sell for.

METHOD	DEFINITION	ADVANTAGES	DISADVANTAGES
Cost-Plus	Is the manufacturing cost plus a profit mark-up.	Quick to find the price of the product. Price covers all costs.	Price may still be higher than competitors.
Penetration	Price is set lower than competitors' price to enter new markets.	Attracts customers quicker. Increases market share quicker.	Low revenue Long time to recover development costs.
Price Skimming	Price is set high for a new product on the market.	Profit earned is high. Helps compensate for costs to develop and produce the product.	May backfire if competitors use competitive pricing.
Competitive	When the product is priced in line or just below competitors prices.	Business can compete with other businesses. Sales can increase.	Other methods of sales need to be found.
Dynamic	Price depends on demands and external factors.
Promotional	Product is sold at a low price for a short period of time.	Helps remove unwanted inventory. Can increase sales and market share for a short period of time.	Revenue is lower. Low profit.
Psychological	The price is set to attract the customers' attention and manipulate them. Below the whole number usually.	Can provide an image of high-quality. May make consumers think product cheaper	The competitors may do the same, so the effect is reduced.

Price ELASTIC: The product has many alternatives.
- Chocolate
- Cars
- Groceries

Price INELASTIC: The product has no alternatives.
- Electricity
- Water
- Natural Gas

Place (Distribution)

high-angle photography of grocery display gondola — Place

Refers to how a product reaches consumers. Factors include the type of product, location of customers, competitors, and frequency of purchase.

Distribution Channel	Explanation	Advantages	Disadvantages
Manufacturer to Consumer	The product is sold to the consumer straight from the manufacturer.	All profit is earned by the producer. Quickest method.	High Delivery Costs. All storage must be paid by the producer.
Manufacturer to Retailer to Consumer	The manufacturer will sell its products to a retailer who will hold large stocks to sell to the consumer.	The cost of holding the inventories is paid by the retailer. Retailers are conveniently located for consumers.	The retailer takes some of the profit. The producer must pay for the delivery costs of the products to the retailer.
Manufacturer to Wholesaler to Retailer to Consumer	The manufacturer will sell its products in bulk to the wholesaler and the retailer will buy in small quantities from the wholesaler which would then be sold to the consumer.	Wholesalers will advertise and promote the product to retailers. Wholesalers will pay for transport and storage costs.	An extra middleman is added so more profit is taken away. The producer loses more control of the marketing mix for the product.
Manufacturer to Agent to Wholesaler to Retailer to Consumer	The manufacturer will sell their products to an agent who specialises in foreign markets. The Agent will know the best wholesalers to sell to.	The agent has specialised knowledge of the market.	Another middleman is added so more profit is taken away.

Factors affecting where consumers buy products:

The Type of product it is.
The Location of the customer.
Where competitors are located.
How often is the product purchased?

Promotion

a close up of a sign in a store — Promotion

Activities to inform and persuade customers to buy a product. It can be informative or persuasive. Types of promotion include:

Advertising (TV, radio, newspapers, billboards)
Sales Promotions (BOGOF, free samples)
Point-Of-Sale Displays

E-Commerce

The use of the internet to sell and market goods online.

Advantages: Cheaper long-term, larger customer base, increased profits due to globalization.
Disadvantages: Increased competition, no personal communication, and online security issues.

Marketing Strategy

A plan that combines the four elements of the marketing mix to achieve marketing objectives and profits.

Legal Controls on Marketing

These controls protect consumers from being sold faulty goods, prevent exploitation, and ensure honest advertising.

Globalization in Marketing

Businesses globalize to increase sales, revenue, and profits, gain potential customers, and access cheaper raw materials. However, challenges include language and cultural differences, lack of market knowledge, and economic differences.