Understanding M/O - Possible Objectives
1) Market Share : maintain/increase
Ensuring competitors not threat + increase % of total market control
2) New Markets : target new markets or segemnts within existing
Market saturates -> sales decline -> company change target audience both home + overseas
3) Product Development : Develop new goods/services through market research/tech advances
= replenishing. Done b.c product reaching end of lifecycle or competition fierce
Influences on M/O - Internal
1) FINANCE : £ available / budget for marketing - size determines success:
higher budget = more profitable. IF sales + market share falling = more allocation, but if no £ then illogical
2) HR : Skills of workforce can limit what business is able to do. E.g. no use implementing tech advances if workforce lack skills. H/e workforce could be under-utilised resource --> could give competitive advantage over competitors.
3) OP ISSUES : quality + capacity considered. E.g. obj: intro new product to range but manufacturing capacity to be checked to cope with extra customer numbers.
+ objective of quality improvement incorporated into market planning.
Influences on M/O - External
1) Competitors Actions : current / future
- Assessment of their marketing mix, pricing, promotion, distribution, product policies + overall spending on marketing.
- Major promotion by one firm followed by rivals - price wars, supermarkets
2) Technological Change : computer-aided manufacturing = reduce labour costs + production time / may open new markets, ability to compete in low-cost market
- BUT product lifecycle shortened + product obsolete impacting marketing obj's.
3) Marketing Factors :
- Economic climate E.g. if marketing strategy is product dev + ec. climate in slowdown then products offering savings preferable to luxury products / HOW MUCH DISPOSABLE INCOME
- Social change - E.g. fair trade
- Consumers' needs e.g. children living in family homes changes housing type demand
- Legislation e.g. EU recycled packaging regulations - change in materials of packaging products
Analysing Markets + Marketing - Market Analysis
Definition: detailed examination of the features of a market such as market size + sales used to predict future sales.
Aspects analysed : size of market (value), growth, segments divided into
- Ensure good understanding of customers.
- Helps planning process b.c will enable bus to assess situation + carry out SWOT
Methods of analysing market
1. Moving Averages = technique for identifying underlying trend by smoothing out fluctuations in data.
2. Extrapolation = prediction of future trend based on an identified current trend.
Minus 1st trend from last, then divide by how many jumps = extrapolated = amount increased every time
Helps marketing function, distribution + promotional strategies, budget setting, workforce + production planning b.c have idea of future sales.
Helpful in slow-moving + stable markets. Difficult + misleading to predict in high-technology dynamic markets with rapid change + short product life cycles
3. Correlation = aparent statistical relation btwn 2 factors (variables) which can be +ve or -ve.
a) Positive (direct relationship, b) Negative (inverse relationship), c) No correlation (no link) 0
Helps identify most sig. factors affecting demand + sales, become part of marketing tactics to achieve M/O. To be treated with caution, not always accurate
Concept of correlation coefficient : how close a fit is the line to it
Difficulties in analysing marketing data
Marketing data : info a/b response to the marketing acitivites of bus.
- Shows no cause and effect
- Essential to know things that affect demand - price, fashion, advertising etc.
Use of information technology in analysing markets
Market research conducted through EPOS + online questionnaires & processed + presented through software packages. Business 'blogs' obtain feedback.
+ Info processed quickly, used for sales forecast - extrapolating, moving averages + correlation
+ Info can build electronic consumer buying behaviour database + detailed customer profiles to target products and promotions efficiently.
- Info overload = slow down decision-making, conclusions less only stream of data - potential opportunities missed exploited by competitors.
- Data available very quickly - risk of decision-makers overreacting, misinterpreting apparent trends = unfortunate decisions.
Selecting Marketing Strategies - Low Cost v. Diffr
Marketing Strategy : plan of how the marketing objectives are going to be achieved.
Low cost : offer products @ lower price than competitors - must reduce own costs, EOS (find low cost suppliers/moving operations to low-cost location) / Quality? Reduce long term costs?
Diffrentiation : make one product different + superior to others on the market. All marketing mix + patenting new invention, developing USP, building strong brand image. Pricing reflects exculsivity + superiority + distribution strictly controlled to maintain image.
Both apply to both niche and mass markets.
National or International?
- E-commerce allows medium-sized firms to attract customers from all around the world, attractive opportunities for large firms.
- Expansion of EU will encourage UK companies to think in int'l context
Ansoff's Competitive Strategies
Definition : way of classifying marketing strategies in terms of existing + new products in existing + new markets. Degree of risk involved in each strategy is an important element of analysis.
Suggests risk increases as strategy moves further away from present product, present market option.
Increase sales of current products to existing customers + attract new customers from competitors in market.
- Reducing prices to encourage customers to buy more / entice consumers from other brands
- Increase promotional spending - remind a/b product range
- Launching loyalty scheme
- Increasing activity of sales force
- Making small changes to products on offer
- Giving customers greater range of buying options, increasing places from where can be purchased.
Lowest risk b/c bus has experience of the market + know characteristics of customers.
HIGHER RISK - selling new products to existing customers.
New product line not minor changes to existing product
+ May allow bus to utilise excess production capacity
+ Respond to new product launch from competitor
+ Maintain reputation as innovator
+ Exploit new technology
+ Protect overall market share
Size of market noted - national/int'l?
Strategy involves attracting new customer groups to existing product
Increase sales of current product portfolio
- targeting diff geographical area - overseas market
- developing new sales channels - ecommerce, new audience
- targeting new consumer group with diff profile to existing customers
- Risky b.c company will have little/no knowledge a/b new market.
- The marketing costs could be high
- Time taken to achieve profit in new market potentially high
- Potential gains = attractive
- Helps spread risk - if one geo market suffering from poor ec. growth, another expanding rapidly - so impact of economic slowdown on business reduced.
- Firm moves into new market with new products - may or may not be related to existing products and markets.
- Little opportunity to use existing expertise products/markets
- related, forward, backward, horizontal integration (becomes involved in activities of customers/suppliers/competitors)
- unrelated - highest risk; no experience/detailed knowledge of key success factors in market although evidence that can lead to fastest growth
+ Risk spread, 'first mover advantage', in emerging market no company has expertise/EOS = competing on 'level playing field'
new tech dev by R+D dpt of bus or bought from inventor (risk reduction if evidence of potential)
buying existence business in different market - if acquisition successful, risk reduced.
targeting existing successful markets - business has strong brand, risk reduced.
Steps of Marketing Plan
1. Set marketing objectives
2. Gather Market data and Analyse it
3. Set the strategy
4. The Marketing Budget
5. Marketinng activities / Tactics
6. Review results (and change if needed)
Elements of Marketing Plan
Marketing Objectives, SWOT analysis, situation analysis (builds on SWOT), sales forecast, marketing strategies & tactics and budgets
Marketing Budget = quantificable financial target set by firm in relation to firms marketing acitvities. Size depends on:
- competitiors spending
- expected returns (success = higher marketing expenditure)
- current financial position of business
Sales forecast = back-data: successful marketing plans from past form basis of future plans + mistakes identified and eliminated - employees use expertise = confidence a.b success of MP
- current trends & future expectations - extrapolation, moving averages etc - predictions not exact, but valuable.