MARKETING Marketing MARKETING Learning Intentions To introduce marketing

MARKETING Marketing

MARKETING Learning Intentions: To introduce marketing and its significance in modern business practices. Success Criteria: You should be able to: • Describe what marketing means to you • Describe consumer and industrial markets • Describe and understand identifying, anticipating and satisfying consumer requirements BM Unit 2 - LO 2 2

MARKETING Marketing – What it means to me? BM Unit 2 - LO 2 3

MARKETING What is a market? Any place where buyers and sellers meet.

MARKETING Consumer markets - are made up of individuals who purchase goods/services for personal or domestic use. Consumable goods, eg food, cosmetics, magazines Durable goods, eg cars, televisions, clothes

MARKETING Identifying Consumers’ Requirements What do they want? Consumers must buy products and continue to do so Fierce competition and consumers’ expectations mean that products must be constantly updated and altered to suit Other factors - price, quality, prompt delivery, attractive packaging and aftersales service Advertising and promotion play a big part BM Unit 2 - LO 2 6

MARKETING Industrial markets - organisations that purchase goods and services to use in the production of other goods and services. Consumable goods, eg raw materials Durable goods, eg machinery and equipment

MARKETING What is marketing? ‘Marketing is the management process responsible for identifying, anticipating and satisfying consumer requirements profitably. ’

MARKETING Anticipating Consumers’ Requirements What do they want today? What do they want in the future? Trends must be considered to anticipate future needs Volatile markets - fashion, toys, technology (mobile phones, computers, etc) BM Unit 2 - LO 2 9

MARKETING Satisfying Consumers’ Requirements “The customer is king!” Businesses No must be customer-focused customers no business Must offer - good service, quality products, value for money, prompt delivery, good after-sales service (eg returns), well presented and packaged goods, at the right price and available at the right place BM Unit 2 - LO 2 10

MARKETING Marketing objectives To target a new market or market segment. To achieve or maintain market share. To develop a new range of products. To improve the image of the product.

MARKETING Marketing activities Market research New product development Selling Pricing Promotion and advertising Preparing publicity information

MARKETING Assessment (looking) of the Market Where are the consumers of the product? How many consumers are there? What are their attitudes and preferences? How effective are the distribution methods? What are the strengths and weaknesses of competitors? BM Unit 2 - LO 2 13

MARKETING Factors leading to the importance of marketing Economic growth and booms – with more disposable income, marketing is needed to gain market share. Fashion – marketing attempts to anticipate trends and/or changes in tastes, lifestyle. Technology – new product innovation is essential for firms to keep up with competitors. Competition – rivals may come from overseas. Firms have to be aware of the market environment both at home and abroad.

MARKETING Learning Intentions: To introduce marketing casualties and success stories. Success Criteria: You should be able to: • Identify and describe marketing casualties in both the UK and World-wide markets • Identify and describe marketing success stories in both the UK and World-wide markets • To describe product and market orientation BM Unit 2 - LO 2 15

MARKETING The casualties of not adapting to the market The American car industry The British motor cycle industry In pairs have a discussion to see if you can think of any others. BM Unit 2 - LO 2 16

MARKETING Product/Marketing failures Ford Edsel New Coke Sony Betamax VCR Mc. Donald’s Arch Deluxe Sinclair C 5 De. Lorean motor car http: //www. bbc. co. uk/news/magazine 11517129

MARKETING Marketing Successes Swatch Starbucks Easyjet and Ryanair In pairs have a discussion to see if you can think of any others. BM Unit 2 - LO 2 18

MARKETING Product orientation Production capabilities Manufacture product Aggressive sales effort Customers Production orientation is when a business focuses on the production process and seeks to make goods that are viewed as superior.

MARKETING Product-led Product Orientated and Production Orientated BM Unit 2 - LO 2 Putting a product on the market without prior market research Assumption of best available and no real competition Often new inventions like Dyson vacuum cleaners or Playstation 2 A risky approach which can fail British motor bikes Making as many products as possible at the lowest price 20

MARKETING Market orientation Customer needs Potential market opportunities Marketing product and services Customers Market orientation starts with the consumer and looks at consumer needs. It is customer orientated.

MARKETING Market-led Customer Orientated and Sales Orientated Considering what the customers want before putting a product on to the market Competition has led to companies focusing on the needs of the customer Also looks at the influences on purchasing decisions Pressure to sell to the public BM Unit 2 - LO 2 22

MARKETING Advantages of market-orientated approach Can respond more quickly to changes in market due to market research. Increased chance of new product success. Stronger position to combat new competitors/entrants. Can anticipate market changes.

MARKETING Review of learning What are the 2 types of orientation a product uses in the market. What are the features of each type. Give examples.

MARKETING Learning Intentions: To introduce marketing environment and how it links to PESTEC Success Criteria: You should be able to: • Describe how the market adapts to PESTEC (external factors – that we have previously covered) BM Unit 2 - LO 2 25

MARKETING The marketing environment The market

MARKETING The marketing environment Social - Consumer trends and behaviour Competition The economy Political The market Technology

Learning Intentions: MARKETING To introduce market share Success Criteria: You should be able to: • Identify and describe market share giving examples of UK supermarkets and business organisations • Describe the benefits of a high market share BM Unit 2 - LO 2 28

MARKETING Market share and market growth Market share is the percentage of customers who buy/use a company’s goods/services. Market growth is the volume of new sales or customers within a market.

Power MARKETING bulk to buy raw materials in Special components – can make themselves Research and development – profits reinvested Economies of scale Having a High Market Share 30

MARKETING Supermarket share Learning and Teaching Scotland

MARKETING Soft drink market share Learning and Teaching Scotland

MARKETING Coca cola world wide share Learning and Teaching Scotland

MARKETING Online book retailers Learning and Teaching Scotland

MARKETING Learning Intentions: To introduce MARKET RESEARCH and MARKET SEGMENTATION. Success Criteria: To enable pupils to: 1. To introduce pupils to market research and techniques, linking to marketing mix from previous lessons. 2. To introduce ICT and how it links to Market research 3. How linking MKT RES and Market segmentation creates a common goal – to aim product or service at particular group. 4. To be able to summarise marketing topic. BM Unit 2 - LO 2 35

MARKETING Target markets Undifferentiated or mass marketing When a product is sold to the entire market. Differentiated marketing When a product is offered to a group or groups within the total market. This is done by market segmentation. Click for clip

MARKETING Market Segmentation “Breaking down of markets into sub-groups that can be targeted with a specific marketing mix. ” Advantages Seller can meet buyers’ requirements Advertising can be focused - less wasteful Expertise developed for a specific market Higher sales Increased profits BM Unit 2 - LO 2 37

MARKETING Methods of Segmentation Age Gender Socio-economic Education grouping level Income Religion Residential area Lifestyle preferences - hobbies, politics BM Unit 2 - LO 2 38

aiming products and services at the population as a whole without producing different products for different market segments MARKETING Involves eg Heinz Beans * 39

MARKETING Undifferentiated marketing Firm Marketing mix

MARKETING Involves providing different products and services for particular segments * 41

MARKETING Differentiated marketing Segment 1 Marketing mix 1 Segment 2 Firm Marketing mix 2 Marketing mix 3 Segment 3

MARKETING Concentrated marketing Segment 1 Segment 2 Firm Marketing mix Segment 3

MARKETING Market Segmentation - Similar to a Cake! BM Unit 2 - LO 2 44

MARKETING Socio-economic group A Higher managerial, administrative or professional B Intermediate, clerical, administrative or professional C 1 Supervisory, clerical, junior administrative or professional C 2 Skilled manual D Semiskilled and unskilled E State pensioners, widows, casual and lowest paid

MARKETING Psychographic segmentation Segments people according to lifestyle. Lifestyle is a person’s individual pattern of behaviour, including attitudes, beliefs, interests, hobbies, habits, religion.

MARKETING Answer a question Describe six methods that an organisation could use to segment their market. (6 marks) 2009 12 minutes

Solution MARKETING Age – segments the market by different age groupings, such as young or old, under 12, 13– 19, 20 – 35, over 35. Occupation – segments the market by different types of occupation. Education – segments the market by the level of education attained. Socio-economic – segments the market by grouping customers into different economic classifications. Geographical – segments the market by the area they live in. Cultural/religious background – segments the market by religion or ethnicity. Family lifestyle – segments the market by customers being either married or single.

Learning Intentions: MARKETING To introduce Success Criteria: You should be able to: BM Unit 2 - LO 2 49

MARKETING Niche marketing A niche market is when a firm concentrates on selling to a specific market segment. Niche markets are normally very small, but can be highly profitable. Niche markets normally know their customers’ needs very well. Click for clip

MARKETING Niche marketing Advantages Niche market may be overlooked Gain competitive advantage Disadvantages If successful, larger competitors may enter market Niche markets are smaller and may suffer more frequent swings in consumer spending

Learning Intentions: MARKETING Introducing market research Success Criteria: You should be able to: • Describe marketing research and what it means to business • Describe field research and give examples • Describe desk research and give examples BM Unit 2 - LO 2 52

MARKETING Market research What is market research? ‘The collection, collation, and analysis of data relating to the marketing and consumption of goods and services. ’ Click for clip

MARKETING Market research is used to find information about: the market itself (size and make-up – age, gender, income, tastes) promotional methods customer feedback (opinions, usage and attitudes) sales data (best sellers, best stores, best sales staff) influence and impact of competitors effect of price on market.

MARKETING Primary (field) research Questionnair es 2. Personal interviews 3. Telephone interviews 4. Postal surveys 1. Used to collect primary data Observations 6. Technology, eg loyalty cards/EPOS/social networking 7. Focus groups 8. Customer panels/audit 9. Test marketing 10. Hall test 5.

MARKETING Primary research Positives Only firm that collects data has access Can be controlled/verified Negatives Expensive to collect Lengthy time involved, information could be out of date

MARKETING Secondary (desk) research Used to collect secondary data. government Examples: publications, eg sales figures Social Trends annual reports and data commercial publications, eg internet data (eg other Keynote, Mintel. businesses’ websites)

MARKETING Secondary (desk) research Positives Saves time Relatively inexpensive Negatives Not specifically related to project undertaken Cannot be verified

MARKETING Sampling is a way to find out the views of the population without asking everyone! Random sampling – A randomly generated list of individuals. Free of bias, but not targeted at any market segment. Stratified random sampling - this makes a random group more representative of the population as a whole by dividing up segments. Quota sampling – A group selected to reflect a proportion of the whole population. Cheaper than random sampling but can be less representative than the random method.

MARKETING Problems with market research • Human behaviour is unpredictable. • Sampling and bias. • Other forms of bias, eg leading questions.

MARKETING Answer a question Describe four methods of field research. (8 marks), 2009 15 minutes

Solution MARKETING Personal interview: this is a face-to-face interview, conducted in the street or at a person’s home, where an interviewer asks a respondent questions. Focus group: a small group of selected individuals are involved in discussions about an organisation’s product or service, led by a facilitator to provide qualitative information. Telephone survey: individuals are telephoned at their home and asked specific questions by an interviewer. Postal survey: questionnaires are sent through the post to selected individuals, but the response rate is very poor.

Solution MARKETING Consumer audit: continuous market research is carried out with a selected group of consumers who record their purchases in a diary. This is then analysed for trends by marketers. Hall test: individuals are invited to try out a product and then give their opinion on it. These are collated analysed. Observation: customers’ actions and purchasing patterns are observed by trained staff, who look for consumer behavioural trends. Test marketing: product is launched on a small area to gauge the consumers response. If successful the product can be mass produced.

MARKETING Product Physical environment Promotion Price Place People The Marketing Mix Process

MARKETING The Marketing Mix Product People Price Physical Environment Promotion Process Place Now the 7 p’s not the 4 p’s BM Unit 2 - LO 2 65

Learning Intentions: MARKETING To introduce product as one of the 7 p’s Success Criteria: You should be able to: • Describe core, actual and augmented products - giving examples • Describe the boston box principle of categorises success against market share of products • Describe and identify the product life cycle BM Unit 2 - LO 2 66

MARKETING Product/service Product – the good or item to be made for sale to customers. From the product everything else follows in the marketing mix (product, price, place, promotion).

MARKETING Levels of a product Core – the basic product. Actual – the product on sale to the public. Augmented – a product with additional features to boost its USP. Let’s try the worksheet

MARKETING Product lifecycle The product lifecycle is a theory that has some assumptions: • Products have a lifespan. • All products pass through the stages described. http: //news. bbc. co. uk/1/hi/uk/7814502. stm • All products decline. Click for Clip http: //www. bbc. co. uk/news/uk-wales 20413234

MARKETING Stages in cycle Development – In this costly stage, money is spent on research to create a viable prototype. Introduction – The product is launched onto the market but normally sales are low due to competition and lack of awareness from the public. Growth – Sales rise sharply as awareness increases. This is the first stage where the company starts making a profit.

MARKETING Stages in cycle Maturity – The product is now a market leader and ways to expand sales become more difficult. When there is an overkill of supply, this is the saturation point. Decline – Sales begin to fall, and the product begins a slow death as trends, technology or imitators overtake it.

MARKETING Sales • Sales are low • Product is being designed • Profits will be negative increasing rapidly • Sales reach its highest point • Similar products enter the market • Profits will reach their highest at the end of this stage • Rate of growth Slows • Price lowered • Product may be unknown Development Introduction Growth • Sales falling • Profits continue to fall • Competitors enter • Some the market businesses may be forced out of the market Maturity Saturation Decline Time

MARKETING Extension strategies Change the name of the product – JIF to CIF, Marathon to Snickers Improve/Change the product – have additional features or upgrade the product. Or alter the use of the product. Change the price – lower prices to make it more appealing to non-users/buyers. Raise the price to make it appear exclusive Change the place/channel of distribution – look to more outlets or go online to widen market opportunities.

Extension strategies MARKETING Change the promotion method – introduce sales promotional campaigns, such as BOGOF. Change the packaging – to make it more eyecatching to customers. Product line extensions – add extra features to the product eg coca-cola and diet coke, cherry coke Find a new market – same product but different market Encourage more frequent use – health benefits of gyms, vitamins, water.

MARKETING Effects of extension strategies

MARKETING Extension of life cycle - LUCOZADE From this To this:

MARKETING The Product Mix Very few companies have only one product Some companies have a range of related products eg Proctor & Gamble

Product mix/portfolio MARKETING http: //www. pg. com/en_UK/brands. shtml Some companies have totally unrelated products in their product portfolios eg Imperial Group It is important that you have new products being launched to replace products going into decline in your “Product Mix”

MARKETING Boston box Market share High Market growth Low

MARKETING Boston box – strategies Stars Build sales/market share Invest to turn into cash cow Cash cows Hold sales/market share Use excess cash to invest in stars, problem children Problem children Build selectively Harvest or divest rest Dogs Harvest or divest

MARKETING Answer a question Changing the packaging of products can make them more appealing and eye-catching to consumers. Explain five other methods of extending the product lifecycle. (5 marks) 2008 10 minutes

Solution MARKETING Improve the product by adding new or additional features customers will want, eg cameras on mobiles. Alter price, either lower or increase price to attract customers. Change the method of advertising, move the message, eg from TV to radio. Change the use of the product, eg Lucozade once was used to reenergise ill people, now used as a sports drink. Introduce line extensions to the product, create new flavours, different sizes or even alter the format like the PSP. Change the name of the product, eg Opal Fruits to Starburst, Marathon to Snickers. Alter the place the product is sold, offer products online to reach a wider customer base.

MARKETING Identify and describe 3 stages of the product life cycle. 6 marks Development − product is planned, developed and tested before being introduced onto the market. Introduction − product is launched onto the market. Growth − sales of the product are rising as consumers become more aware of it. Maturity − product is well known in the market and growth is slowing down. Competition increases and the price of the product falls. Saturation − competition is very fierce and prices fall significantly. Decline − sales and profits fall as new and more advanced products enter the market. Death − product withdrawn from the market. 1 mark per stage − max 3 1 mark per description − max 3 (6)

Learning Intentions: MARKETING To introduce new product development Success Criteria: You should be able to: • Describe the key stages within new product development BM Unit 2 - LO 2 84

MARKETING What is a new product? New to the world New product lines Additions to existing product lines Improvements and revisions to existing products Repositioned products Click for clip

MARKETING Product Innovation –step by step process Generating an idea Analysing/market Producing Test research of the idea a prototype market Adapt product to solve problems Launch the product Next: Product innovation by diagram

MARKETING

MARKETING New product development stages Generate ideas – Brainstorming session to come up with ideas. Quantity rather than quality is needed before refining the idea to something realistic. Analysis and further research – Time and money spent on discovering what is possible and what is not. Can existing technologies be used? Or will something totally new be created? Are the products marketable? – Will customers buy the product? Potential customers may be surveyed at this stage.

MARKETING New product development stages (contd. ) Prototype – A working model is developed. Test marketing – Potential customers may test several versions (or generations) of the product, and feedback will be used to modify the prototype. Full launch – If satisfactory, the product will be put into full production and a marketing campaign will be put in place to raise awareness of the product, emphasising the benefits it brings to customers.

MARKETING Successful NPD Does the product have a USP? Is there a specific market segment to target? Is the market large enough and will there be a return on investment? Are R&D and marketing communicating? Was NPD process handled well?

Learning Intentions: MARKETING To introduce pupils to branding and own branding Success Criteria: You should be able to: 1. Describe the benefits of branding to an organisation 2. Describe the benefits of own branding to an organisation BM Unit 2 - LO 2 91

MARKETING Branding A brand is a registered trademark of a company, including the name or logo that can only be used by that company. Branding helps create USPs (unique selling points), and via advertising and creating a positive, desirable image, build brand loyalty. Brands promote an image of high quality, which means a premium price can be charged.

MARKETING Unique Selling Point (USP) Try to identify the USP of each of the products listed opposite Think of how they are presented to you in the advertising you see daily on TV, in newspapers and magazines Coca Cola Nike Kit Kat Skoda Cars Mercedes Cars Baxter’s Soups Fairy Liquid Finish (dishwasher tablets)

MARKETING Branding distinguishes a product from its competitors Instantly recognisable by consumers Often linked to quality and reliability – or “snob” value Can command a premium price

MARKETING Advantages of branding • Easily identifiable. • Brand loyalty – repeat purchases. • Premium pricing can occur. • High quality is associated with brands. • Can create a family of branded products.

MARKETING Disadvantages of branding • Brands take time to establish reputation and quality. • Advertising and promotion costs will be expensive. • Negative press can tarnish entire family of products. • Cheap imitations may flood the market.

MARKETING Own brands are goods made by a producer who sells them to a well-known retailer such as Tesco or Sainsbury’s, who repackage them and sell them at a low price under their own brand label. What are the own brands for the major supermarkets?

MARKETING Own Brands Products branded with the name of the store selling them Most of the big supermarkets (Tesco) and chain stores (Boots) have their own brands Often cheaper alternatives to branded goods Make a list of as many “own brands” you can think of. Indicate which branded product they are designed to rival

MARKETING Advantages of own brands • Own brands will attract more customers and more sales within the store. • Producer will have guaranteed sales. • Products are cheaper. Disadvantages of own brands Some customers believe own brands are of lower quality than established brand names (although this is not necessarily true).

MARKETING Answer a question Discuss the effects on an organisation of branding their products. (6 marks) 2009 12 minutes

Solution MARKETING Products in the brand range are instantly recognisable and are uniquely different from other products. Brand loyalty can be built up, which can lead to repeat purchases. Brand is perceived to be of high quality, which can mean premium prices can be charged. Makes it easier to launch new products onto the market as there is already a brand family of products. Brand names can be expensive to build up as it takes time to achieve their reputation. Bad publicity can affect the whole brand, which can ruin the brand’s reputation overnight. Imitator and fake products are common, which can damage sales in the long run.

MARKETING Answer a question Discuss the advantages and disadvantages of selling own brands. (4 marks) 2008 8 minutes

Solution MARKETING Own labels require very little advertising as customers will be normally be regular shoppers. The retailer does not need to produce the own-brand products as they can buy them from manufacturers and re -label them. A range of products with own labels can be sold because a brand family is established. Some own brands can be seen as value for money and a quality product when customers look for good deals. Own labels are cheaper to customers as the price is always lower than that of regular brands. Whole brands can be tarnished over one product’s failure or problem. This can ruin reputation overnight. Run the risk of imitator brands, which can damage sales.

MARKETING Learning Intentions: To introduce PRICE. Price being one of the factors linking into the MARKETING MIX. Success Criteria: You should be able to: • describe pricing objectives • identify how businesses use pricing strategies to price products and services • describe short-term pricing tactics and give current examples • be able to describe pricing methods and elasticity of demand BM Unit 2 - LO 2 104

MARKETING BBC Price Clip BM Unit 2 - LO 2 http: //www. tutor 2 u. net/blog/in dex. php/businessstudies/comments/pricing-inuk-supermarkets/ 105

MARKETING Price has to be set appropriately or else customers will not purchase the product. High quality and high price normally go together and vice versa. In determining price firms have to consider: • production costs of materials • profit mark-up • the market price (what competitors charge).

MARKETING Long-term pricing strategies Low price – Price lower than competitors. Only appropriate where there is a little brand loyalty and competition in the market is high. Market price – Setting price at a similar price to competitors. Homogeneous product means that price competition is not of benefit. They compete in other areas, eg service. High price – High-quality products, premium goods and services where image is important, such as perfumes.

MARKETING Short-term pricing strategies Market skimming – In a new market a high price is set and then once the first customers have bought, the price is lowered to continue to skim the cream of the market layer by layer. Penetration pricing – A low price used to enter a new highly competitive market.

MARKETING Short-term pricing strategies Destroyer pricing – An illegal pricing tactic used to eliminate competition where a ridiculously low price is charged (sometimes at a loss) to smash competitors. Once market share is achieved, prices soar. Promotional pricing – A short-term strategy to gain media attention and renew consumer interest, eg BOGOF or loss-leader tactics. Demand-oriented pricing – When different prices are charged at different times for the same good/service based on high demand or lack of demand.

MARKETING Answer a question Describe three pricing tactics that could be used when an organisation attempts to break into a new market. (6 marks) 2009 12 minutes

Solution price – price is set higher than competitors to give the image of quality and exclusiveness. MARKETING High Low price – price is set lower than competitors to attract customers to their product/service. Skimming – price is set high initially, when no competition exists. When competitors enter the market, price is lowered to market price. Market/competitive pricing – price is set at the same level as competitors, normally used for products that are identical.

MARKETING Solution (cont’d) Penetration pricing – price is set slightly lower than competitors to attract customers; once a customer base is established, the price is slowly increased to same as competitors Promotional pricing – a low price is set for a short period of time to boost sales in the short term, possibly even making a loss on the product. This is often used by supermarkets to attract customers. Destroyer pricing – price is set very low compared to competitors and once there is no competition in the market the price is then put back up to the previous level or higher. This is mainly used by larger organisations to destroy competition, as you must have large reserves to sustain this tactic over any length of time. Cost-plus pricing – is the cost of buying in the materials with a mark-up added on.

MARKETING Learning Intentions: To introduce place as part of the marketing mix Success Criteria: You should be able to: Describe place and how it links to the other parts of the marketing mix Describe the various methods that a product can get from manufacturer/producer to the consumer Describe the role of the wholesaler and the retailer function BM Unit 2 - LO 2 113

MARKETING A distribution channel Manufacturer Wholesaler Retailer Consumer

MARKETING Place Producers Producer to wholesaler Producer to retailer Wholesalers Direct selling Two or more intermediaries Retailers Consumers

Manufacturers B MARKETING A C C Company D E Wholesalers warehouse Company Retailers outlets o n s u m e r s E-tailers

MARKETING Choice of distribution channel Projected level of demand Geographical spread Optimum methods of stock control Seasonal trends Costs of distribution Speed of distribution Legal restrictions Changes in buying habits and life style Existing buying habits

MARKETING Direct channel This is from manufacturer to consumer. Fastest way (perishable goods? ). Cheapest for consumer (no costs added on by each part of the chain).

MARKETING The Wholesaler Function Buys in bulk from producers (low transport costs) and sells to retailers in smaller quantities Bears stock-holding risk Offers a wide variety of goods in small quantities Packages and labels goods Offers advice to both producers and retailers as to which goods are selling well BM Unit 2 - LO 2 119

MARKETING Advantages of using wholesalers Buy in bulk, saving manufacturers the delivery costs of many small runs. They bear the risk of holding stock. Break down the bulk supplies and sort into quantities retailers will buy. Give advice to manufacturers, knowing what goods will sell well.

MARKETING The Retailer Function Breaks down bulk to quantities consumers wish to buy and store at home Provides information to consumers through advertising, displays and trained staff Stores a variety of goods, displays them and marks on prices Offers range of related services credit, HP, after-sales service and delivery BM Unit 2 - LO 2 121

MARKETING Types of Retailer Independent - convenience stores, corner shops Multiple Chains - M&S, Dixons, Boots Supermarkets - Tesco, Asda, Safeway, etc Co-operatives Department Stores - Jenners, Harrods, Selfridges Franchises - Benetton, Body Shop, Mc. Donald’s Others - mail-order, internet, direct-response advertising, telephone and TV shopping channel BM Unit 2 - LO 2 122

MARKETING Key terms Manufacturer – firm that makes goods. Wholesaler – company that stores goods in bulk before selling them on in smaller batches. Retailer – firm that sells goods to end-users. Consumer – person who uses final good/service.

MARKETING Answer a question Discuss the advantages and disadvantages to a manufacturer of using a wholesaler. (5 marks) 2008 10 minutes

MARKETING Solution Advantages Saves on a number of smaller deliveries as retailers will buy in bulk. Less money tied up in stock as the wholesaler stores the materials. Wholesalers may label the product for the retailer, saving costs. Wholesalers break product down into smaller more saleable sizes that can be packaged and sold by the retailer. Wholesalers can give market research direct to manufacturer, which may affect future buying decisions. Disadvantages Loss of control of how the product is presented because it is normally packaged already. Lower profits as wholesaler, as intermediaries, take their cut.

MARKETING Learning Intentions: To introduce PROMOTION. Promotion being one of the factors linking into the MARKETING MIX. Success Criteria: You should be able to: • describe types of promotional activities • identify how businesses use promotional techniques to sell products and services • describe types of advertising and give current examples • describe the role of Public Relations (PR) within promotional activity. BM Unit 2 - LO 2 126

MARKETING Types of promotion Merchandising Advertising Sales promotion Direct mail Promotion Exhibitions and trade fairs Public relations Personal selling

MARKETING What is promotion? Promotion is the way firms inform customers of their products and try to generate sales.

MARKETING Methods of promotion • • Advertising Sales promotion Public relations Merchandising Packaging Exhibitions and trade fairs Direct mail Personal selling

MARKETING Advertising Decisions The effect on Sales? The target market? Why do the consumers NOT buy the product? Which use? is the best medium to BM Unit 2 - LO 2 130

MARKETING Types of advertising Informative: Health Education Board for Scotland – smoking, drugs, alcohol etc Persuasive: used in very competitive markets, uses powerful images and language – ‘Probably the world’s favourite lager’. Corporate: promoting the whole company not a single product – BP adverts focus on their ‘green image’ not on the product (petrol) Generic: the whole industry comes together to promote the whole industry – Scottish beef, Scottish tourism Some classic adverts

MARKETING Types of advertising media Print: newspapers and magazines Broadcast: TV, radio, internet Outdoor: billboards, buses, round football grounds etc Which one is chosen depends on: • cost: TV expensive but memorable • target audience: choice of programme, newspaper • competitors’ advertising: match to competitors • impact required: new product wide variety of methods • the law: tobacco and alcohol

MARKETING Sales promotion – out of the pipeline and into the pipeline Into the pipeline targets retailers to purchase from suppliers. It also includes materials to help them sell to customers, eg merchandising display and posters. Out of the pipeline targets customers and end users, eg trial packs and BOGOF.

MARKETING Main Types of Sales Promotion Into the pipeline Out of the pipeline Enhancing Helping sales to trade outlets retailers to sell to their customers eg displays, posters, videos, etc to persuade customers to buy from retailers Helping BM Unit 2 - LO 2 Providing free samples, a percentage extra free, 2 for 1 offers, money-off coupons, etc 134

MARKETING Merchandising • Merchandising involves making sure a firm’s products are laid out in the most enticing or attractive way possible to customers. • Special displays, stands or posters may be given to retailers to help point-of-sale advertising. • ‘Eye level is buy level’, for example when a new DVD comes into the local supermarket expect giant posters and cardboard cut-outs of the characters to be emblazoned around the store!

MARKETING Packaging The ‘cover’ or packaging of the product can also generate sales. Design – the colour scheme should help make the product stand out from rivals. Protection – is the packaging appropriate to ensure it doesn’t get damaged during distribution or when being taken home by the customer? Information – most products sold in supermarkets have to carry labels with information on their content or to indicate if they pass the BSI quality standard.

MARKETING Public relations (PR) This is when an organisation tries to communicate with customers, shareholders, employees and the government – all of whom form the organisation’s ‘public’. The aim of public relations is to improve the image of an organisation’s products and the image of the organisation itself.

MARKETING The role of PR Provides public with information about the organisation. Builds confidence/reputation of the organisation and awareness of its products. Develops goodwill in the community. Presents the organisation in a positive way. Supports and enhances other areas of the promotional mix, such as advertising and selling.

MARKETING PR activities Opening a new store Charitable donations Event sponsorship Celebrity product endorsement Press conferences and press releases It is important to remember that PR is always conducted with ‘spin’ involved. In other words it always tries to have the firm viewed in the best possible light.

MARKETING Answer a question Describe and justify four different methods of direct selling that could be used by an organisation. (8 marks) 2010 15 minutes

Solution MARKETING Personal selling – Products are sold by experienced sales personnel. Direct contact can be made with the retailer or consumer. Can be tailor-made to customer requirements. Demonstrations of the product or service can be shown. Mail order – Goods sold via catalogues. Offers credit facilities. No need for high-street stores. Internet selling – making use of websites to sell products. Consumers can order online from offices or homes. Is available worldwide. Can be accessed 24/7. Specialist magazines – Used to describe and sell specialised products or services. Customers who are sent or purchase the magazine are directly interested. Consumers can phone in orders or speak to specialists.

MARKETING Describe and justify 4 methods of direct selling that could be used by an organisation. (A different justification must be used to support each description. ) Personal selling – products are sold by experienced sales personnel • Direct contact can be made to the retailer or consumer • Can be tailor-made to customer requirements • Demonstrations of the product or service can be shown Mail order – goods sold via catalogues • Offers credit facilities • No need for High Street stores Internet selling – making use of websites to sell products • Consumers can order online from offices or homes • Is available worldwide • Can be accessed 24/7 Specialist magazines – used to describe and sell specialised products or services • Customers who are sent or purchase the magazine are directly interested • Consumers can phone in orders or speak to specialists Max of 4 description marks Watch for repetition (No ID marks are given. A description of the method must be given to be awarded a mark. ) (8) Accept TV − shopping channels (description) Phone/Door-to-door/Personal Selling = max 1 Learning and Teaching Scotland

Learning Intentions: MARKETING To introduce the extended marketing mix Success Criteria: You should be able to: Describe people, physical and the process part of the 7 p’s Describe what is meant by ethical advertising Describe what is meant by the use of technology in business BM Unit 2 - LO 2 143

MARKETING The Extended Marketing Mix – The 7 P’s People - the employees who work for the company and their skills and knowledge Physical – is in the form of the service and the atmosphere that is created Process – the different elements to making a product or service eg sourcing raw materials and how customers are handled from the beginning to the end

People are an essential part of a business whether it be the customers or the employees. • It is vital that organisations have the correct service provisions in place with regards to staff of the organisations. • Organisations must recruit and hire the right employees to ensure they provide an adequate product/service. • Employees need to have specific skills and qualities as well as the appropriate knowledge to provide the best advice and service to the customer. MARKETING •

MARKETING Process The process looks at how to service is provided, from the minute an order is taken to being delivered. For example think of the process taken when in Mc. Donalds and you order a Big Mac meal and it is provided in 2 minutes or the process of self-service at any of the major supermarkets. An efficient service well ensure customer satisfaction and loyalty and therefore increased sales and profits. To ensure this all companies must have procedures and processes in place.

MARKETING Physical The physical element is with regards to where the service is being delivered from. With greater emphasis relating to retailers operating out of shops. The physical element will help organisations set them apart from competitors. It focuses on providing clean facilities, point of sale displays, logo, payment systems, uniform, seating areas, free wireless, a relaxing ambiance as well as access to an organisations website. Customers will make judgments based on their first impression when they walk into a retailer, if they are clean and friendly environment they are likely to stay. If a restaurant is smelly and dirty they are likely to walk out before even trying the food.

MARKETING Ethical Advertising Businesses want to be seen as being socially responsible. It is about behaving in such a way that does not harm society. It is about behaving in a way that people find acceptable.

MARKETING Ethical Advertising • • • Businesses therefore need to be seen in a positive way in order to develop positive customer relations. Businesses must consider carbon foot print, food miles used and their corporate responsibility. They often announce changes in their operations when promoting new products to inform their customer. It is vital that businesses are honest when advertising so that customers can trust the business. Businesses must focus on the behaviour and culture of their customer. Good customer service skills are a vital part of the service.

MARKETING Ethical Advertising must: Not be misleading Do ‘what it says on the tin’ Not be offensive or obscene Not offend consumer beliefs (or try not to offend beliefs) https: //www. youtube. com/watch? v=z. R 2 Ox 4 HWa XM https: //www. youtube. com/watch? v=nn. Tq 0 tyt. Q 10 https: //www. youtube. com/watch? v=8 o. S 3 X 0 Kj. LV M

MARKETING ICT and Market Research Databases compiled by research Electronic point of sale information agencies (EPOS) Supermarket loyalty cards Stock control software gives sales breakdown Web sites - customers can e-mail comments back to the company BM Unit 2 - LO 2 151

MARKETING Technology in Marketing Technology is playing a major part in the business world and can be used for market research, advertising and sales.

MARKETING EPOS Electronic point of Sale (EPOS) can be used for market research as it allows the business to identify what is being purchased in different parts of the country and in different stores. This will allow the business to adapt their marketing techniques and promotions to suit a particular country or store.

MARKETING Market Research Market research is conducted online via online surveys e. g. survey monkey. This allows businesses to gather vast amounts of information. Using online surveys makes it easier for the business to analysis the information using online software.

MARKETING The Internet The internet is now being used significantly for advertising whether it is through email, pop up’s or social networking sites. It is a good way to reach a large audience quickly. It can allows businesses to target specific markets and send different promotional offers to different customers, with recommendations

MARKETING The Internet Business are also now using the internet to sell their products/ services. • This means that they can reach consumers in many different countries and that consumer can shop form the comfort of their own homes. • Businesses tend to sell products/services cheaper online as they are cutting out the middleman. •