BS Marketing SB

Marketing invloves selling the right products that people want, at the right price, in the right places. It involves all aspects of the sale of the product.

Identify- creating a product that consumers will want to buy. Market research is key to creating a product that the customer wants. It is not about what you want, its about what the consumer wants.

Anticipate- it is important to estimate or forecast the level of demand accurately, to get enough supplies for production, but at the same time, not overestimating which could result in too much stock.

Satisfy- most businesses rely on repeat custom. Customer satisfaction is essential. You can persuade someone to buy your product with advertising or good sales technique, but if your customer isn't satisfied they will not come back to buy again.

Market research involves collecting, interpreting and analysing information from both your potential customers and customers from competitors in order to help make business decisions.

Benefits of market research:

• Establish the best area to set up the business.
• To find an idea that customers will want in the area.
• To find out what type of products, features that customers would want.
• Keep up to date with changing trends in the market.
• To find out the best way of advertising which would appeal to customers.
• Research number of competitors, their product range and there prices.
• Establish the best price for the product.

Primary Research- research that is collected first hand, and is done personally, meaning it didn't previously exist. It is also referred to as 'field research'.

Benefits of Primary Research:

• Reliable as long as you knwo what you're doing.
• 100% specific to your needs.
• Up to date research.
• Competitors don't have access to it.

Diadvantages of Primary Research:

• Time consuming- Opportunity Cost
• Expensive, may have to employ someone to help out or do it for you.
• Slower method of research.
• It may be unreliable- sample size.

Examples include: surveys/questionnaires (can be done postal, online, phone). Footfall. Market mapping. Interviews (face to face survey). Focus Groups. Observations.

Secondary Research- this is second hand research that has already been collected for another purpose, therefore it already exists. It is also referred to as 'desk research'.

Benefits of Secondary Research:

• Quicker and Easier to obtain.
• Can be done online.
• It is cheaper and often free.
• It can be trustworthy if it is from a reliable source.

Disadvantages of Secondary Research:

• Many unreliable sources.
• Everyone has access to it, meaning there is no advantage against other competitors.
• Not 100% specific to your needs.
• Often quite outdated.

Examples include: Internet. Books/magazines/newspapers. TV/Radio. Past Company Records. Competitor reports. Latest Census/ ONS. Government statisitics.

Sample- the group of people out of your target population who have been chosen to take part in the research. It represents the target population.

Sample Size- number of people taking part in the study.

Benefits:

It works if the sample size is big enough and you ensure there is no bias, giving you an accurate representation of the target population.

Problems:

May not be representative of everyone else. Sometimes you can get biased results.

Open Questions:

• Allows a respondent to say anything they want.
• Gets true responses and finds out real preferences.

Closed Questions:

• These are questions with a set number of answers that the person has to choose from.
• Useful with numerical data as it makes it easy to collect and analyse.

Quantative Research:

• Involves collection of numerical data using closed questions on things like surveys/footfalls.
• Helps obtain information on price, location, product range.

Qualiative Research:

• Uses open questions on things like interviews and focus groups.
• Helps obtain reasons for choices, possible ideas and collecting feedback.

Questionnaires via:

Face to Face- physically going out and ask the person questions relating to your market.

Advantages:

• Able to assess respondent's reaction.
• More likely to respond.
• Able to look at market's customers.
• Easy to obtain quantitative data.

Disadvantages:

• Respondent's reaction may be false.
• Some may be biased.
• Only allowed to ask closed questions.
• Can be time consuming.

Questionnaires via:

Telephone- where you ask the person over the phone with a set of questions. (estate agents)

Advantages:

• Ability to ask open questions.
• Qualitative Research collected.
• Know the competitors.
• Quick, cheap and easy.

Disadvantages:

• Doesn't give indication of price or the market.
• Intrusive, can be annoying to respondents.

Questionnaires via:

Postal- where you ask the person over a letter recieved.

Advantages:

• Allows time for respondent to respond.
• Ability to advertise the 'pre-business' name.
• Ability to know the surrounding market.
• Ability to have both open and closed questions.

Disadvantages:

• Some respondents ignore postal questionnaires.
• Respondents have to post back which cost money.
• Could be a waste of money if respondents do not post back.

Questionnaires via:

Online- where you ask the person your questions over the internet or social media

Advantages:

• More people recieve it.
• Able to recieve quantative data.
• Easy to to set up.
• Don't need to pay anything.

Disadvantages:

• Inability to ask open questions.
• People won't spend time for questionnaires.
• Cannot analyse respondent's body language.

Focus Groups- where you ask a group of people to represent the whole of the market.

Advantages:

• Gives you an estimate of the whole market's views.
• Quicker and Easier.
• Ability to collect opinions.
• Ability to gain new ideas.

Disadvantages:

• Might not be reliable because it can change.
• Inability to ask open questions.
• Exisiting customers of a competitor might be biased.

One-One interviews- where you have a one to one interview asking either closed/open questions.

Advantages:

• Honest opinion from the respondent.
• Ability to ask either open or closed questions.
• Can gain qualitative or quantative.

Disadvantages:

• Only one person.
• Time consuming- opportunity cost.
• Doesn't represent the whole market.

Footfall Survey- where you complete a survey of how many people are in a specific area.

Advantages:

• Able to tell the number of people in a given location.
• Shows which area is a popular market.

Disadvantages:

• No indication about the type of product and price.

Market Segmentation- invloves splitting/dividing up the market into different groups of customers according to certain categories.

Possible categories:

• Gender- (clothing)
• Age- (clothing, toys, holidays)
• Income- (supermarket, value ranges).
• Region- (North/South divide, Washing machnes).

Advantages:

• Helps business understand the different types of needs that customers have.
• Enables them to produce varied products that meets these different needs.
• Lead to more sales revenue, profit, market share etc.

Product- Any good/service that is capable of satisfying customer needs.

Importance:

• Price depends on the products' quality.
• Promotional methods depend on product design and features.

Requirements:

• Meet the needs of target market.
• Fulfill a gap in the market.
• Different from competitor products.
• Ensure customer satisfaction.

Product Differentiation- Essential to make the product stand out from competitor products.

Can differentiate in design, features, quality, perfomance, branding, packaging.

USP- The 'ultimate' form of differentiation and involves something that is truly different from that of competitor's products and really makes your product stand out.

To establish a USP it is important to listen to the customer and use the feedback to find out the standout features on your product.

Branding

Brand- to create a brand, a business often uses logos, slogans, advertising and specific packaging

Advantages:

• Creates image of the product in the customer's eyes.
• Helps raise awareness and recognition for the product.
• Adds value to the selling price.

Methods used: Logo, Name, Slogan, Product Range, Advertising, Packaging.

Packaging

Advantages:

• Protects the products.
• Differentiate from other products.
• Information- it tells you what the product is.
• Promotion of brand.
• Opportunity to show your brand and make it stand out.

Ideal Packaging:

• Informative
• Distinctive
• Legal
• Protective.

Too High Price: fail to get customers, no sales revenue and no profit. Can also make a loss.

Too Low Price: damage image of the brand (poor quality). Fail to establish enough sales revenue.

Factors influencing price:

• Competitor pricing.
• Location and number of competitors.
• Target Market.
• Quality of Product/USP?
• Brand awareness/power.
• Quantity Sold.
• Supply & Demand.
• Land/Rent.
• Transport costs.
• Labour costs.
• Luxury or necessity product.
• State of Economy.

Demand- the quantity of a good consumers are willing and able to buy at a certain price and time.

Rule: Higher price = lower demand. Lower price = higher demand.

Reasons: Income effect/Wealth affordable. Substitution effect/Gaining customers.

Factors:

• Price of the product.
• Price of related product.
• Income.
• Seasonal Demands.
• Competitor prices.
• Quality of product.

Supply- the quantity of a good that manufacturers are willing to produce at a certain price and time.

Rule: Higher Price = Higher Supply. Lower Price = Lower Supply.

Reason: Profit motive.

Profit motive- when the price increases it makes the product more profitable so manufacturers have a clear incentive to produce more to maximise profit chances.

Factors:

• Cost of raw materials.
• Cost of production.
• Cost of machinery.
• Climatic conditions.
• Labour cost.

Equilibrium- a state of balance where demand = supply. This determines the price of the good will be sold at and the quantity of the good that will be bought and sold.

Above Equilibrium: there would be excess supply. Supply is greater than demand.

Below Equilibrium: Excess demand occurs as Demand is greater than supply.

Rise in Demand = Increased price because substitute product price goes up, or rising incomes.

Fall in Demand = Decreased price because of falling incomes, or substitute product price falls.

Rise in Supply = Increased price because of low cost of production or product is 'in season' .

Fall in Supply = Decreased Price because of product is not in seasonal demand anymore.

Increase in Price = Decrease in Demand. Decrease in Price = Increase in Demand.

Price elasticity- measures how demand reponds to a change in price of the product.

Elastic Demand

Elastic Demand- Demand changes a lot following a price change.

Reasons:

• Large number of good substitue products available.
• The product is a luxury, they cut out what people can't afford, they want more when affordable.

Price Increase = large loss of customers = loss of sales revenue & profit, because the large loss of sales is not compensated by the higher price paid.

Price Decrease = large increase in demand = increased sales revenue & profit.

Elastic Demand Strategy: reduce price.Large sales increase compensates the lower price paid.

Inelastic Demand

Inelastic Demand- demand is quite unresponsive following a price change.

Reasons:

• Product is a necessity.
• People still need to buy it when the price rises.
• Few good substitutes.

Increased Price = Small Decrease in Demand = Increase of revenue & profit, because higher price compensates for losing a few customers.

Decreased Price = Small Increase in Demand = Lower Revenue & Profit, because small customer increase doesn't compensate for lower price.

Inelastic Demand Strategy: Increase Price.

Promotion- the methods a business uses to communicate information about their products to customers,in order to increase demand and establish sales.

Four main areas:

• Advertising
• Sales Promotion
• Direct Selling
• Public Relations.

Advertising

Above the line: Use of mass media - TV, Radio, National Newspapers

Below the line: Use of smaller media - billboards, posters, leaflets, business cards.

Common methods:

• Below the line methods- flyers/leaflets.
• Business cards, local newspapers.
• Website.

3 main aims:

• Raise awareness of the product.
• Inform customers about the benefits and uses of the product.
• To persuade customers to buy it.;

Advertising Standards Authority (ASA)- an organisation to monitor the content of adverts to ensure that they meet government guidelines and don't break the law. They can ban/edit adverts.

Advertising Things to do:

• Stand Out.
• Positivity about the product.
• Information about the product.
• Benefits and Uses of the product.
• Include possible USP in product.
• Recognisable features.

Advertising Things not to do:

• Do not provide misleading information about the product.
• No negative things about the product.
• Cannot make false claims.
• Do not offend anyone.

Sales Promotions- short-term methods/strategies designed to persuade people to buy the product.

Examples: Vouchers/Coupons. Deals. Money off. Loyalty Cards. Free Gifts.

Benefits:

• Exisiting Customers buy more of the product due to the offers.
• New customers from competitors increasing market share.
• Can get rid of excess stock.

Problems:

• Loss of profit margin- free gifts etc.
• Excessive use damages image of the brand.
• People won't be prepared to pay full price when the offer ends.

Sales promotions are only effective if you get people to increase their usage of the product.

Public Relations- involves use of the media and other methods to communicate with customers but it is NOT advertising. More common for larger businesses. Aims to create a good public image.

How Small businesses use it:

• Place stories/articles in local newspaper/radio.
• Sponsor a local sports team.
• Host a launch party or tasting session.

Direct Selling- involves the manufacturer selling to the final consumer without use of 'middlemen'

How Small Businesses use it:

• In shops where they make the product.
• Keeping a database of your customers.
• Allows you to send offers, new products, vouchers etc.
• Gets repeat custom not new customers.

Channels of Distribution: how the product gets from the manufacturer to the customer. It involves the various stages of getting the product from the manufacturer to the final customer.

Direct Selling- Manufacturer sells directly to the customer.

Advantages:

• Higher Profit Margin- get full selling price.
• No transport costs.
• Opportunity to interact with customers.
• Keep control of the image of the brand.
• Having a USP.

Disadvantages:

• Often lacks enough exposure to generate enough sales.
• Not convenient for customers.
• Cost of setting up and staffing the shop.

Retailer Selling- Manufacturer sells to a retailer who sells it to the customer.

Advantages:

• Product is more exposed and raises awareness.
• Higher brand power.
• Allows you to focus on production.
• More convenient for customers.
• Effective if a well chosen retailer.

Disadvantages:

• Lower Profit Margins.
• Face more competition with other brands.
• Badly chosen retailer can damage the brand.

Wholesale Selling- Manufacturer sells to a wholesaler who sells to a retailer then the customer.

Advantages:

• Greater exposure and more sales.
• Allows you to sell in massive batches to wholesalers.
• Saves time and effort.

Disadvantages:

• Even Lower Profit Margins- wholesaler expects a bulk discount.
• No control over who to sell the product.

Selling via agents/brokers:

When operating in a new market where you lack experience, don't have contacts, and possible language barriers, you may need agents to set up meetings with wholesalers and retailers.

Distribution Channel factors:

• Type of Product.
• Target Market.
• Cost.
• Size of Business.
• Growth of market.
• Profit margins involved.

E-Commerce- Sales and purchase of goods and services on the internet.

Advantages for Buyer:

• Saves time, quicker, easier and don't have to leave the house.
• Easier to compare prices through comparison websites.
• Filter searches make it easier to find what you need.
• Order 24/7, convenient for the customer.
• Detailed product information and customer reviews.

Disadvantages for Buyer:

• Delivery costs.
• Can't test the product before hand- cost and inconvenience of return.
• Inconvenience of missed delivery.
• Sometimes can be difficult when things go wrong.

Advantages for Seller:

• Repeat Custom.
• Make sales from different locations.
• Widens customer base.
• 24/7 Sales.
• No need for store or staff.
• Customer reviews and feedback.

Disadvantages for Seller:

• Transport/Delivery Costs.
• Cost of storage and transport.
• Increasing pressure for free delivery.
• Bad reviews online are very damaging.
• High cost to maintain a website.
• Must have secure payment method.
• Dealing with returns- may have to pay, wasteage costs.