Marketing & The Competitive Enviornment
- Created by: Chantelle
- Created on: 26-05-13 21:41
Marketing
the anticipating and satisfying of customers wants in a way that delights the customer and also meets the needs of the organisation
Product - Price - Place - Promotion
Types of marketing objectives
- size - measured by sales and market
- market positioning
- innovation/increase in product range
- creation of brand loyalty
- security/survival
Marketing
Business-to-business marketing (B2B) - where a firm sells it product to another business
Main features of B2B marketing
- larger transactions
- specialist buyers and seller
- quality
- informative advertising
- pricing
- buyers and sellers relationship
Business-to-consumer marketing (B2C) - where a firm targets individual consumers with its products
Niche Marketing
targeting a product or service at a small segment of a large market
Advantages
- less competition
- costs
- small scale production
- tailor made products (USP)
- targeting customers
Disadvantages
- lower profits
- changes in demand
- market entry
Mass Marketing
aiming a product at all (or most) of the market
Advantages
- larger scale production
- high revenues
- barriers to entry
- research and development
- brand awareness
Disadvantages
- fixed capital
- changes in demand
- effects of standardisation
- competition
- adding value
Product Differentiation
the degree to which consumers see a particular brand as being different from other brands
Benefits
- increased sales volume
- greater scope for changing a higher price
Marketing Mix
those elements of a business's approach to marketing that enable it to satisfy and delight its customers
Influences
- Finance - cash flow, discounts, the marketing budget and cost of promotion
- Technology - advanced products, lower costs, online selling
- Market Research - level of competition, availability of substitutes, consumers opinions, niche or mass marketing, the market segment
- Other Factors - power of buyers and sellers, quality of the promotion, elasticity of demand, reputation of business, convenience of the location
Product
the good or service provided by a business
Product Design - deciding on the make-up of a product so that it works well, looks good and can be produced economically
- Reliability
- Safety
- Convenience of use
- Fashion
- Durability
- Legal Requirements
Product Development - when a firm creates a new or improved good or service for release into an existing market
1.Generation of idea - 2. Analysis of idea - 3. Product development - 4. Test marketing - 5. Launch
Product
Influence on the development of new goods or services
- Technology
- Competitors actions
- Entrepreneurial skills of managers and owners
- Other factors - Market research, Idea's from other countries, Personal experiences, Personal need and inventiveness, Environmental awareness
Unique Selling Point (USP) - a feature of a product or service that allows it to be differentiated from other products
Product Portoflio
the range of products or brands provided by a business
Product Portfolio Analysis - the study of the range of products with a view to deciding whether new products should be added to the portfolio and whether any existing products should no longer be provided
Boston Matrix - a tool of product portfolio analysis that classifies products according to the market share of the product and the rate of growth of the market in which the product is sold
Stars - high market share, high market growth
Cash Cows - low market growth, high market share
Problem Child - high market growth, low market share
Dogs - low market growth, low market share
Product Life Cycle
the stages that a product passes through during its lifetime - development, introduction, growth, maturity and decline
Extension strategies - methods used to lengthen the life cycle of a product by preventing or delaying it from reaching the decline stage of the product life cycle
Types of extension strategies
- attracting new market segments
- increasing usage among existing customers
- modifying the product
- change the image
- targeting new markets
- promotions, advertising and price offers
Promotion
the process of communicating with customers or potential customers
AIDA - Attention, Interest, Desire, Action
Promotional Mix - the coordination of the various methods of promotional mix in order to achieve overall marketing targets
Public Relations (PR) - gaining favourable publicity through the media
Branding - the process of differentiating a product or service from its competitors through the name, sign, symbol, design or slogan linked to the product or service
Merchandising - attempts to persuade consumers to take action at the 'point of sale' or 'point of purchase'
Sales Promotion - short term incentives used to persuade consumers to buy a particular product
Direct Selling - communicating directly to the individual consumers through an appropriate form of communication e.g. postal system or telephone etc
Promotional Mix
Advertising - communicating with customers or potential customers through specific media
Sponsorship - giving financial assistance to an individual, event or organisation
Influences on the choice of promotional mix
- objectives of the campaign
- costs and budgets
- the target market
- the balance of promotions in a campaign
- legal factors
- external factors
Pricing
Pricing strategies - approaches adopted in order to achieve marketing objectives
Price Skimming - a strategy in which a high price is set to yield a high profit margin
Penetration Pricing - a strategy in which low prices are set to break into a market or to achieve a sudden sprint in market share
Price Leadership - a strategy in which a large company (price leader) sets a market price that smaller firms will tend to follow
Price Taking - a strategy in which small firms follows the price set by a price leader
Predator Pricing - a strategy in which a firm sets very low prices in order to drive other firms out of the market
Pricing Tactics
pricing approach or techniques used in the short term to achieve specific objectives
Loss Leadership - a tactic in which a firm sets a low price for its products in order to encourage consumers to buy other products that provide profit for the firm
Psychological Pricing - a tactic intended to give the impression of value e.g. selling a good for £9.99 rather than £10
Pricing
Influences on the pricing decisions
- the cost of production - a business should ensure that they make profit, the price of the product should be high enough to cover costs
- Mark-up - is the percentage added onto the average costs
- Price elasticity of demand - the responsiveness of a change in the quantity demanded of a good or service to change in price
% change in quantity demanded / % change in price X 100
Elastic Demand - percentage change in price leads to a greater percentage change in quantity demanded
Inelastic Demand - percentage change in price leads to a smaller percentage change in quantity demanded - price raises, quantity demand falls
Unit Elasticity - change in price / original price X 100
Price Elasticity of Demand
Factors influencing the price elasticity of demand
- necessity
- habit
- availability of substitutes
- brand loyalty
- proportion of income spent on a product
- income of consumers
Difficulties in calculating elasticity of demand
- competitors reactions
- consumers reactions
- market research
Place
Importance of location
- convenience
- accessibility
- costs of access
- reputation
- localisation
Measures to increase the number of outlets stocking their products
- promotional campaigns
- providing extra facilities or attractive displays
- offering high profit margins to retailers
- paying generous commission to sales staff
- increasing brand loyalty
- investigating alternative outlets
Place
Distribution Channels - channels or routes through which a product passes in moving from the manufacturer to the consumer
Distributors - businesses involved in the process of making a product available to the end customers or consumers
Retailers - businesses who buy form wholesalers or direct from producers for sale to the public in shops or retail outlets
Wholesalers - businesses who buy large quantities of goods from producers for a resale in smaller quantities to retailers
Traditional - producer - wholesalers - retailers - consumers
Modern - producer - retailer - consumer
Direct - producer - consumer
Place
Factors influencing the method of distribution
- the size of the retailer
- the type of product
- technology
- the geography of the market
- the degree of control desired by the manufacturer
- the complexity of the product
Marketing & Competitiveness
Competitiveness - the ability of businesses to sell their products successfully in the market in which they are based
Monopoly - in theory, a single producer in a market but in practice a firm with a market share of 25% or more, has control over prices and supply
Oligopoly - a market dominated by a small number of large businesses, they sell similar products that have some control over price
- Cartel - a group of firms that come together to agree price and output levels in an industry
Monopolistic Competition - where a large number of firms are competing in a market, each having enough product differentiation to achieve a degree of monopoly power and therefore some control over the price they charge
Perfect Competition - where many firms sell an identical product that have no control over price
Marketing & Competitiveness
Factors determining competitiveness
- the effectiveness of the marketing mix
- incentive schemes for staff
- improvements to operational procedures
- quality procedures
- financial planning and control
Methods of improving competitiveness
- marketing
- reducing costs
- improving quality
- staff training
Porters's 5 Forces Model
This model is used to understand the factors effecting the industry within which firm operates
- bargaining power of suppliers
- bargaining power of buyers (customers)
- threat of substitutes (rival products/services)
- threat of new entrants (barriers to entry)
- degree of rivalry (intensity of competition)
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