6 Marketing Caribbean Business Chapter Six Caribbean Business
6 Marketing Caribbean Business Chapter Six Caribbean Business for CSEC® Principles of Business © OUP 2010
6 Marketing 6. 1 6. 2 6. 3 6. 4 6. 5 6. 6 6. 7 Markets and marketing Market activities, marketing mix Consumer behaviour Market research Product Packaging Branding 6. 8 6. 9 6. 10 6. 11 6. 12 Intellectual property Promotion Pricing Market structure Placing, distribution and retailing 6. 13 Consumer rights 6. 14 Transport Caribbean Business for CSEC® Principles of Business © OUP 2010
6 Marketing 6. 1 Markets and marketing Caribbean Business Chapter Six Marketing Caribbean Business for CSEC® Principles of Business © OUP 2010
6 Marketing Markets and marketing Market can mean 1 The demand for a particular product or service, often measured by sales during a specified period. (Oxford DBM) 2 A place or institution in which buyers and sellers of a good or asset meet. A market was originally a physical location and still is for some goods, for example cattle or fish markets, and some services … In other cases the market is a network of dealers linked by telephone and computer …(Oxford DE) 3 An arena in which buyers and sellers exchange goods and services, usually for money. It does not have to have a physical location. (Oxford DBM) 4 Marketing: The process of getting customers to buy a firm’s products. This involves making arrangements for distribution and advertising current products. It also covers market research to discover likely customer reaction to potential new products, and whether possible modifications to existing products would improve their appeal. (Oxford DE) Caribbean Business for CSEC® Principles of Business © OUP 2010
6 Marketing Local, national and world markets ● A supermarket serves the local market in its neighbourhood and surrounding districts. ● A daily newspaper is sold on the national market. ● Alumina is exported to the world market. Which other businesses sell to: ● The local or neighbourhood market? ● The national market? ● The world market? Caribbean Business for CSEC® Principles of Business © OUP 2010
6 Marketing 6. 2 Market activities, marketing mix Caribbean Business Chapter Six Marketing Caribbean Business for CSEC® Principles of Business © OUP 2010
6 Marketing The marketing mix ● ● Product – the right product for the market Promotion – advertising, public relations, displays etc. Price – high enough for profit, low enough to stimulate demand Place – where and how the product is sold Caribbean Business for CSEC® Principles of Business © OUP 2010
6 Marketing Product, place, price, promotion Which of these are shown here? Caribbean Business for CSEC® Principles of Business © OUP 2010
6 Marketing activities ● ● ● ● Market research Pricing Packaging Branding Sales promotion Advertising Distribution Caribbean Business for CSEC® Principles of Business © OUP 2010
6 Marketing 6. 3 Consumer behaviour Caribbean Business Chapter Six Marketing Caribbean Business for CSEC® Principles of Business © OUP 2010
6 Marketing Consumer decisions ● ● ● Save money or spend it? Which goods and services to buy? Which brand to choose? How much to buy – large pack or small? When to buy – now or later? Caribbean Business for CSEC® Principles of Business © OUP 2010
6 Marketing Consumers are influenced by… ● ● ● ● Income and affordability Spending patterns – what comes first? Price of substitutes. Rice or flour? Quality Taste and preference (not just for foods) Tradition Brand loyalty Caribbean Business for CSEC® Principles of Business © OUP 2010
6 Marketing Market segments Many products are aimed at a well-defined market segment or niche. This may be: ● High, middle or low-income consumers. ● An age group, such as children aged 10 -14. ● People with a particular interest, such as cars, music or sports. A market segment is sometimes called a demographic group, from the Greek word ‘demos’, meaning ‘people’. Caribbean Business for CSEC® Principles of Business © OUP 2010
6 Marketing What is a likely target market for… ● ● ● ● Luxury cars? Computer games? Scuba-diving equipment? Air travel to New York? A daily newspaper? A new multiplex cinema? Flour? Caribbean Business for CSEC® Principles of Business © OUP 2010
6 Marketing What influences her choice? Caribbean Business for CSEC® Principles of Business © OUP 2010
6 Marketing Discussion points ● ● Are consumer incomes rising or falling? What are your spending priorities now? What will they be in ten years’ time? Have you ever stopped buying a product because of a price increase? What indicates high quality for… ● Cars? ● Non-alcoholic drinks? Caribbean Business for CSEC® Principles of Business © OUP 2010
6 Marketing 6. 4 Market research Caribbean Business Chapter Six Marketing Caribbean Business for CSEC® Principles of Business © OUP 2010
6 Marketing Why market research? Market research helps answer these questions ● How big is the market? ● What are your main competitors? ● Do the consumers like your product? ● What are its strong and weak points? ● What price should you charge? ● How should you advertise your product? Caribbean Business for CSEC® Principles of Business © OUP 2010
6 Marketing Market research may use… Primary data Secondary data ● Your own company’s sales data ● Direct observation of customers in a supermarket or shopping mall ● Qualitative analysis with focus groups ● Quantitative analysis with sample surveys ● Published census and economic reports ● Information about competing companies, their products and marketing ● Secondary data may be used for information analysis Caribbean Business for CSEC® Principles of Business © OUP 2010
6 Marketing Information analysis Information about retail sales in Trinidad and Tobago is collected by the Central Statistical Office, and published by the Central Bank. ● What happened to retail sales in December each year? ● What was the overall trend from 2006 to 2008? ● What happened to consumer demand in 2009? How could this information be used by: ● A supermarket? ● An entrepreneur planning a new store selling consumer electronics? Caribbean Business for CSEC® Principles of Business © OUP 2010
6 Marketing Qualitative research ● Assesses emotive or ‘soft’ aspects of consumer decisions. ● Often uses a focus group of up to ten people, meeting for an hour or more. Caribbean Business for CSEC® Principles of Business © OUP 2010
6 Marketing Quantitative research ● Measures behaviour and attitudes. ● Often uses questionnaire surveys. ● People interviewed are a sample of the target market or demographic group. ● Many surveys aim at 500 interviews. ● Interviews are followed by editing, data entry and analysis. ● The client is given a clear and lively report. Caribbean Business for CSEC® Principles of Business © OUP 2010
6 Marketing What market segment does the interviewee represent? Caribbean Business for CSEC® Principles of Business © OUP 2010
6 Marketing 6. 5 Product Caribbean Business Chapter Six Marketing Caribbean Business for CSEC® Principles of Business © OUP 2010
6 Marketing Find the right focus Product focus Consumer focus ● The product is fixed. ● A marketing strategy is needed to sell it. ● Local distributors need product focus when selling imported goods designed for the world market. ● Starts with consumer needs and preferences. ● The product is developed and adjusted to satisfy consumers. ● Local manufacturers and service industries may use consumer focus to develop products. Caribbean Business for CSEC® Principles of Business © OUP 2010
6 Marketing strategies are needed for… ● ● Capital goods and services, sold to other businesses. Consumer durables, such as cars, computers and refrigerators. Consumer non-durables, such as foods and drinks. Consumer services, such as air travel, hotels and entertainment. Caribbean Business for CSEC® Principles of Business © OUP 2010
6 Marketing The product life cycle ● ● ● ● Pre-launch Launch Introduction Growth Break-even Maturity Decline Re-launch or Death Caribbean Business for CSEC® Principles of Business © OUP 2010
6 Marketing What is the life-cycle stage for these products? ● ● ● ● DVD players Candles Incandescent light bulbs Energy-saving bulbs Kerosene lamps Video cassette recorder Newspapers Kinect for Xbox ● ● ● ● Video downloads Ice cream 4 G cellular telephones 3 D television LCD screen television Cathode tube television Facebook Air travel Caribbean Business for CSEC® Principles of Business © OUP 2010
6 Marketing 6. 6 Packaging Caribbean Business Chapter Six Marketing Caribbean Business for CSEC® Principles of Business © OUP 2010
6 Marketing Packaging provides… Protection ● Keeps goods fresh ● Protects from damage Design ● Attractive to the buyer ● Displays the brand name Convenience ● Easy to store and display for sale ● Easy to take home and use Information ● There may be legal requirements Caribbean Business for CSEC® Principles of Business © OUP 2010
6 Marketing Packaging information may include… Brand name Product description Bar code Total contents, weight or volume Ingredients and health information Storage instructions Safety precautions Directions for safe disposal Caribbean Business for CSEC® Principles of Business © OUP 2010
6 Marketing Label House A packaging company • • • Why is packaging an important industry? How do exports benefit the economy? What are business-to-business sales? What is a one-stop shop? How has Label House used new technology? How has mechanization and automation affected: • Productivity? • Staff skills? • Staff earnings? • Customer? Caribbean Business for CSEC® Principles of Business © OUP 2010
6 Marketing Recycling can provide a business opportunity ● What problems are caused by improper disposal of packaging? ● Which company recycles glass? ● How have Paul Bynoe and B’s Recycling developed a business from waste disposal? Caribbean Business for CSEC® Principles of Business © OUP 2010
6 Marketing 6. 7 Branding Caribbean Business Chapter Six Marketing Caribbean Business for CSEC® Principles of Business © OUP 2010
6 Marketing Brand: A trade name used to identify a specific product, manufacturer or distributor. … Manufacturers believe that if they invest in the quality of their brands, they will build up a brand image, to which consumers will respond by asking for their goods by their brand names, and by being willing to pay a premium for them. …(Oxford DBM) Brand loyalty: Support by consumers for a particular brand or product. Brand loyalty is usually the result of continued satisfaction with a product or its price and is reinforced by effective and heavy advertising. … (Oxford DBM) Caribbean Business for CSEC® Principles of Business © OUP 2010
6 Marketing Branding Advantages Disadvantages For the consumer ● Reliable product quality ● Brand loyalty may discourage consumers from trying new products. ● Consumers may pay a high price for branded products. For the business ● Brand loyalty helps hold and retain a market. ● The business should maintain a good standard to protect its brand. ● Establishing a brand requires major marketing costs. ● A bad product can cause brand damage. Caribbean Business for CSEC® Principles of Business © OUP 2010
6 Marketing Abovegroup A web design and branding agency ● What is meant by the phrase ‘challenger brands’? ● What are the links between art, business and technology? ● What is meant by the phrase ‘form and function go together’? ● Besides a name, what is needed to create a successful brand? ● What approach should a creative business take to financial management? Caribbean Business for CSEC® Principles of Business © OUP 2010
6 Marketing 6. 8 Intellectual property Caribbean Business Chapter Six Marketing Caribbean Business for CSEC® Principles of Business © OUP 2010
6 Marketing Forms of intellectual property ● ● ● ● ● Copyright – books, music and creative works Patents – inventions and innovations Trademarks – distinctive brand symbols Service marks – brand symbols for services Geographic indications – from a particular place Industrial designs – for products or packaging Trade secrets – such as secret recipes Plant varieties – such as new types of orchid Integrated circuits Caribbean Business for CSEC® Principles of Business © OUP 2010
6 Marketing Organizations and agreements ● TRIPS agreement – Trade Related aspects of Intellectual Property Rights ● Barbados, Belize, Trinidad and Tobago were TRIPS compliant by 2009. ● World Intellectual Property Organization is a UN agency based in Geneva, Switzerland. ● In most countries, a government agency protects intellectual property rights. Caribbean Business for CSEC® Principles of Business © OUP 2010
6 Marketing Discussion points ● Should pharmaceutical companies have an exclusive right to new medicines? ● Should you be allowed to download music and movies from the internet, and share them with your friends? Caribbean Business for CSEC® Principles of Business © OUP 2010
6 Marketing 6. 9 Promotion Caribbean Business Chapter Six Marketing Caribbean Business for CSEC® Principles of Business © OUP 2010
6 Marketing Sales promotion: An activity designed to boost the sales of a product or service. It may include an advertising campaign, increased public relations activity, a free sample campaign, offering free gifts or trading stamps, arranging demonstrations of exhibitions, setting up competitions with attractive prizes, temporary price reductions, door-to-door calling, telephone selling, personal letters etc. (Oxford DBM) Caribbean Business for CSEC® Principles of Business © OUP 2010
6 Marketing Above and below the line Above-the-line Below-the-line Advertising through ● Television ● Radio ● Billboards ● Newspapers ● Other print media ● Internet and new media Promotion at point of sale through ● Correct placing within store ● Displays ● Special offers ● Give-aways Caribbean Business for CSEC® Principles of Business © OUP 2010
6 Marketing Advertising Promotes brand awareness and image May be: ● Informative – gives factual information ● Persuasive – conveys a favourable impression ● Competitive – “Come to Sandy Cove hotel” ● Collective or generic – “Visit the Caribbean” Caribbean Business for CSEC® Principles of Business © OUP 2010
6 Marketing The advertising industry Clients Advertising agencies ● Account service department ● Creative department ● Media department Media (television, print, new media etc) Advertising should be truthful, accurate and maintain ethical standards. Caribbean Business for CSEC® Principles of Business © OUP 2010
6 Marketing Motor vehicle sales ● ● Mainly product focus Each brand aims at a target market Manufacturers provide marketing guidelines Dealers and advertising agencies develop a concept for the local market ● Most sales are in the mid-market segment ● After-sales customer service is important Caribbean Business for CSEC® Principles of Business © OUP 2010
6 Marketing Below the line promotion ● The marketing department works closely with retailers and other sales outlets. ● Merchandisers place products on shelves. ● Correct placing within the store is important. ● Special promotions include: ● Two-for-one ● Banded offers ● Loss leaders Caribbean Business for CSEC® Principles of Business © OUP 2010
6 Marketing Other marketing activities… ● Direct sales to customers – for example with life assurance ● After-sales service – maintains customer loyalty and encourages repeat business ● Corporate customer relations – when the focus is on a few large business customers Caribbean Business for CSEC® Principles of Business © OUP 2010
6 Marketing Public relations ● Presents the activities of a business in a favourable light. ● Often handled by corporate communications department. ● Tries to reach all stakeholders, including customers, employees, shareholders, the government and the wider community. Caribbean Business for CSEC® Principles of Business © OUP 2010
6 Marketing Public relations activities ● Events sponsorship ● Social programmes ● Media relations Caribbean Business for CSEC® Principles of Business © OUP 2010
6 Marketing Public relations is important for… ● ● ● Major companies Government ministries and public sector organizations Charities and voluntary organizations Umbrella organizations, such as chambers of commerce Trade unions Caribbean Business for CSEC® Principles of Business © OUP 2010
6 Marketing 6. 10 Pricing Caribbean Business Chapter Six Marketing Caribbean Business for CSEC® Principles of Business © OUP 2010
6 Marketing Demand, supply and the market price Pricing: The setting of selling prices for products and services … (Oxford DBM) Demand: The desire and ability to acquire a good or service. The quantity of a good or service that economic agents are willing to buy at a given price. (Oxford DE) Supply: The amount of a good or service offered for sale… (Oxford DE) Equilibrium price: A price at which the quantity of a good supplied is equal to the quantity demanded… (Oxford DE) Caribbean Business for CSEC® Principles of Business © OUP 2010
6 Marketing The equilibrium price (1) Caribbean Business for CSEC® Principles of Business © OUP 2010
6 Marketing The equilibrium price (2) Caribbean Business for CSEC® Principles of Business © OUP 2010
6 Marketing Changes in supply Supply may increase, for example if… ● New technology reduces costs ● Weather increases agricultural output ● Lower input prices reduce costs. When supply increases… ● The equilibrium price falls ● More goods are sold at a lower price. Caribbean Business for CSEC® Principles of Business © OUP 2010
6 Marketing Changes in demand Demand may increase, for example if… ● Consumer incomes are higher ● A product comes into fashion ● The price of substitutes increases. When demand increases… ● The equilibrium price rises ● More goods are sold at a higher price. Caribbean Business for CSEC® Principles of Business © OUP 2010
6 Marketing Pricing strategies ● ● ● ● Cost-plus – a percentage ‘mark-up’ Price skimming – high price for a new product Promotional pricing – low initial price to attract business Predatory pricing – to drive competitors out of business Differential pricing – for each market segment Branding – higher price for a premium brand Dumping – pricing below cost in export markets Caribbean Business for CSEC® Principles of Business © OUP 2010
6 Marketing Terms of sale ● ● ● Cash – immediate payment by any method Credit – often 30, 90 or 180 days for business-to-business Cash discounts – lower price for cash sales Trade discounts – for business customers Other discounts – for staff, or for bulk orders Hire purchase – payment by installments. Caribbean Business for CSEC® Principles of Business © OUP 2010
6 Marketing 6. 11 Market structure Caribbean Business Chapter Six Marketing Caribbean Business for CSEC® Principles of Business © OUP 2010
6 Marketing Perfect competition ● ● ● Many buyers and sellers. No barriers to entry of new buyers and sellers. No player can influence the market price. Goods are identical in type and quality. Demand supply set the equilibrium price. Everyone knows the trading price. Caribbean Business for CSEC® Principles of Business © OUP 2010
6 Marketing Perfect competition? Caribbean Business for CSEC® Principles of Business © OUP 2010
6 Marketing Monopoly ● ● ● ● Only one seller No competition Barriers prevent entry of new sellers Seller can charge a high price No incentive to improve service No need to invest in new technology Regulators may attempt to protect consumers Caribbean Business for CSEC® Principles of Business © OUP 2010
6 Marketing Monopolistic competition ● Many competing businesses ● Each tries to differentiate its product ● Branding and advertising used for product differentiation and identity ● A premium brand can set a higher price Caribbean Business for CSEC® Principles of Business © OUP 2010
6 Marketing Brands promote a distinct identity Caribbean Business for CSEC® Principles of Business © OUP 2010
6 Marketing Oligopoly ● ● ● A few businesses supply the market Each promotes a distinctive brand Brands aim at individual market segments High spending on advertising and promotion Competition in product quality and customer service Companies try to introduce new technology Caribbean Business for CSEC® Principles of Business © OUP 2010
6 Marketing 6. 12 Placing, distribution and retailing Caribbean Business Chapter Six Marketing Caribbean Business for CSEC® Principles of Business © OUP 2010
6 Marketing The chain of distribution Manufacturer Wholesaler Retailer Consumer Caribbean Business for CSEC® Principles of Business © OUP 2010
6 Marketing The chain of distribution Caribbean Business for CSEC® Principles of Business © OUP 2010
6 Marketing Retailing may be through… ● ● ● ● ● Supermarkets Specialist stores Shopping malls Small shops Department stores E-commerce Telemarketing Mail order Vending machines Caribbean Business for CSEC® Principles of Business © OUP 2010
6 Marketing Distributors… ● ● ● Represent international companies on the local market Import goods and store in a warehouse Work with advertising agencies to promote the product Transport goods to retailers Employ merchandisers to place goods in supermarkets and other outlets. Caribbean Business for CSEC® Principles of Business © OUP 2010
6 Marketing AMCO’s warehouse and head office Why is this a good location for a distributor? Caribbean Business for CSEC® Principles of Business © OUP 2010
6 Marketing 6. 13 Consumer rights Caribbean Business Chapter Six Marketing Caribbean Business for CSEC® Principles of Business © OUP 2010
6 Marketing Consumer protection ● ● ‘Caveat emptor’ means ‘let the buyer beware’. The 1895 Sale of Goods Act gave rights to consumers. Caribbean countries have updated consumer protection laws. Government bodies such as Barbados Fair Trading Commission protect consumer rights. Caribbean Business for CSEC® Principles of Business © OUP 2010
6 Marketing Barbados Fair Trading Commission ● ● ● Promotes public awareness. Investigates consumer complaints. Monitors promotional material. Promotes competition and consumer choice. Investigates anti-competitive practices. Regulates telecommunications and electricity supply companies. Caribbean Business for CSEC® Principles of Business © OUP 2010
6 Marketing Consumer protection agencies in Trinidad and Tobago Agency Responsible for… Advertising Standards Authority Advertising standards Regulated Industries Commission Most public utilities Telecommunications Authority Telecommunications Bureau of Standards for most goods Consumer Affairs Division Consumer advice and complaints Pharmacy Board Quality of pharmaceuticals Ombudsman Complaints about the public service Caribbean Business for CSEC® Principles of Business © OUP 2010
6 Marketing Regulations on… Food and drug standards Price controls ● Food products must be clearly labelled. ● Weights and measures must be accurate. ● Pharmaceuticals must be officially approved. ● People handling food must have certificate. ● Many countries have rules on pesticide residues. ● Prices charged by electricity companies and many utilities are regulated. ● There is price control for gasoline in Barbados, Trinidad and Tobago and some other countries. ● Price controls were common in the 1970 s. Caribbean Business for CSEC® Principles of Business © OUP 2010
6 Marketing Hire purchase ● Supplier retains ownership until full price is paid. ● Purchaser is known as the hirer. ● Hirer must be given a written contract. ● Contract must state ● Cash and hire purchase price ● Number of instalments ● Hirer can terminate agreement, but must pay for any damage. ● Owner can repossess goods if hirer falls behind with payments. ● Until a fixed proportion of price is paid, no court order is needed for repossession. ● Hirer must be given notice of repossession. Caribbean Business for CSEC® Principles of Business © OUP 2010
6 Marketing Rights and responsibilities Rights Responsibilities ● Right of redress. ● Repair, replacement or refund for faulty items. ● The retailer is responsible for faulty products, not the manufacturer. ● ‘No exchange, no refund’ signs are illegal. ● Shop around before you buy. You cannot demand a refund just because you change your mind. ● Never sign a contract without reading it. ● Always keep receipts, warranties, estimates, contracts and instructions. Caribbean Business for CSEC® Principles of Business © OUP 2010
6 Marketing 6. 14 Transport Caribbean Business Chapter Six Marketing Caribbean Business for CSEC® Principles of Business © OUP 2010
6 Marketing Transport is important in: ● Domestic trade ● Regional trade ● Intercontinental trade Transport-based businesses include: ● Trucking companies ● Shipping companies ● Ports ● Airports ● Airlines ● Courier services Caribbean Business for CSEC® Principles of Business © OUP 2010
6 Marketing Forms of transport The main forms of transport Sea transport includes ● ● ● Road Rail Air Pipeline River transport Sea transport ● Containers ● Break-bulk ● Bulk transport of commodities such as sugar ● Tankers for liquid cargo such as oil or methanol ● Roll-on roll-off for vehicles ● Cruise ships ● Inter-island ferries Caribbean Business for CSEC® Principles of Business © OUP 2010
6 Marketing Ports in Jamaica ● Kingston Wharves Limited – all types of cargo ● Kingston Container Terminal - containers ● Montego Bay – cruise ships and cargo ● Ocho Rios – cruise ships ● Rio Bueno – cement, timber, steel ● Port Kaiser, Port Esquivel, Rocky Point, Port Rhoades – bauxite, alumina Caribbean Business for CSEC® Principles of Business © OUP 2010
6 Marketing Kingston Wharves shipping terminal Caribbean Business for CSEC® Principles of Business © OUP 2010
6 Marketing Problems with transport systems Problem Possible solutions Delays: late arrival disrupts business. Invest in roads, ports and airports. Spoilage: goods damaged in transit. Use adequate packaging, containers. Insure goods against damage. Misdirection: goods or passenger baggage at wrong destination. Careful management. Use of BAPLIE software. Inadequate warehousing Build new warehouses or relocate port. Reduce time to clear goods from port. Lack of security – theft, terrorism, smuggling, guns or narcotics. Ship goods in secure containers. Security at port and perimeter. Use X-ray equipment. Industrial unrest Maintain good labour relations. Natural hazards – hurricanes, floods, etc. Design facilities to minimise damage. Caribbean Business for CSEC® Principles of Business © OUP 2010
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