MARKETING

OBJECTIVES OF THIS UNITThe following topics will be covered in this chapter. What is Marketing? Marketing Management The Marketing Strategy The Marketing Mix Product Price Place Promotion Evaluation of the Marketing Mix Break-even Analysis

WHAT IS MARKETING

“Marketing is the management process responsible for identifying, anticipating and satisfying customer requirements profitability”

MARKETING PROCESS This is the process that takes the product

through the different stages, from the potential customer to the satisfied customer.

MARKETING MANAGEMENTFunctions of the Marketing Manager1. To carry out market research to learn the

exact requirements of consumers.2. To prepare sales forecasts.3. To identify the different markets for the

firms’ products.4. To decide on the selling price of new

products.5. To ensure that goods are attractively

packaged for shop display.6. To plan the marketing campaign for both

new and existing products.

MARKETING STRATEGY“A plan to achieve marketing objectives”

Stages in developing a marketing strategy or plan:1. Opportunity analysis – investigate the market to

identify new business opportunities.2. Market segmentation – divide the market into

categories.3. Target market selection – decide which segments

of the market to serve.4. Market research – carry out research into the

needs and demands of the selected target market.5. Marketing mix – formulate a marketing mix relating

to the four P’s: product, price, place, promotion.

MARKET SEGMENTATION Dividing the market into consumers with

similar characteristics e.g. Age, income, location.

http://www.ford.ie/Cars

Markets can be segmented by Geographical location Demographic segmentation Psychographic segmentation

Social class, lifestyles, personality or attitudes etc

MARKETING BLUNDERS Electrolux: Scandinavian vacuum manufacturer

Electrolux sold products successfully in the United Kingdom using the slogan "Nothing sucks like an Electrolux". The slang disparagement "sucks" is an example of Americanism, so many Americans think this is an example of such a blunder.

Pepsi: Pepsi allegedly introduced their slogan into the Chinese market "Come alive with the Pepsi Generation" translated into Chinese it read "Pepsi brings your ancestors back from the grave".[2]

The Chevrolet Nova automobile sold poorly in Latin America, as "no va" means "won't go" in Spanish.

MARKETING BLUNDERS Lancia Dedra: this car sold poorly outside Italy,

particularly in English-speaking markets, where research showed that people associated it with danger (apparently affected by the name's similarity to the word "dead")

McDonald's: In January 2005, McDonald's published banners proclaiming Double cheeseburger? I'd Hit It. In this obvious blunder, the copywriters mistook the strictly sexual slang expression for a term of general approval.

Kentucky Fried Chicken: An advertising campaign in China attempting to translate the slogan Finger lickin' good! into Chinese failed miserably, proclaiming Eat your fingers off.

MARKETING BLUNDERS When people chuckled at General Motors’

Chevy Nova in Latin America, the automotive giant was perplexed. Until, that is, someone pointed out that ‘Nova’ means ‘It doesn’t go’ in Spanish.

Toyota’s Fiera car proved controversial in Puerto Rico, where ‘fiera’ translates to ‘ugly old woman’.

The Brand ‘Irish Mist’ didn’t go down to well in the German market, where it translated as…

TARGET MARKET The market in which a firm is planning to sell

its goods.

NICHE MARKET A small speciality market in which there is a

specific or unserved need.

MARKETING MIX

1. PRODUCTWhat makes a successful product? It must satisfy consumer requirements. It must meet the quality standards required

by consumers. It must have a competitive selling price. Design must be attractive. If relevant, an after-sales service must be

provided. The image of the manufacturer is very

important.

1. PRODUCT

1. PRODUCT What are the most valuable brands in the world?

Benefits of Branding:a) Branding helps to remind consumers about a

product.b) Branded goods are more likely to be accepted

by consumers than non-branded goods.c) Branded goods are easily identified on display

stands, so selection is easy for consumers.d) Manufacturers promoting branded goods find it

easier to introduce new products into the range.

Development

Saturation

1. PRODUCT LIFE CYCLE

A. DEVELOPMENT Research and development costs are high. Focus is on the product. Communication is vital. More cash outflows than inflows.

B. INTRODUCTION Launch of new product. Price place and promotion are important. Advertising costs are high. Initially sales are low so outflows are more

than inflows.

C. GROWTH Sales start to rise. Production is increased. Competitors come on stream. Competitive advertising intensifies. Price may have to be lowered. However there should be more inflows than

outflows.

D. MATURITY Sales peak. Attracting new customers is difficult. New features may be added. Aggressive advertising. A lot of cash inflows.

E. SATURATION Everybody has the product. Sales start to slow down. Less cash inflows.

F. DECLINE Sales start to fall. Short term gimmicks used to try to boost

sales. Less cash inflows.

HOW CAN THE PRODUCT LIFE CYCLE BE EXTENDED? Reduce prices to increase sales. Target a new market segment. Introduce a new sales promotion scheme. Launch a new advertising campaign. Find a new use for the product.

2. PRICEPrice is the most flexible element of the marketing mix. If the price is too high, sales will be lost to competitors.

Factors that determine the selling price: The selling price of the competitors products. The production and distribution costs. The target market for the product. The advertising spend. The brand name of the product. Is the product aimed at a new customers? Government legislation. The products current position in the product life cycle.

2. PRICEFunctions: To raise revenue for the business. To influence demand.

Note: There are many methods of pricing a product.

PRICING POLICIES1. Cost Plus Pricing The cost of making the product is

calculated and a % profit is added. The average household good has a margin of

at least 25%

2. Tactical/Discount Pricing Discounts given for:

bulk buying, cash payment. moving slow stock, attract customers

PRICING POLICIES

3. Loss Leader Charge a price at below cost on a popular

product. Customers while in the shop may purchase other

expensive items. Eg. Bread, milk, Lotto http://www.tesco.ie/press/Petrol.html

4. Competitive Pricing Charging a little less than rivals.

PRICING POLICIES5. Premium Pricing With high-quality items, consumers expect to

pay high prices for such products.

6. Destroyer pricing Charging a lot less than competitors to put

them out of business. E.g. Ryanair v’s Aer Arann

PRICING POLICIES7. Price Skimming Charge a lot when the product is new and

popular. E.g. iPhone4Gs launches at $499. Price falls to

zero plus contract after a few months.

8. Break Even Charge a price at which you neither make a

profit nor a loss.

BREAK EVEN ANALYSIS The break even point is where income and

costs are equal. That is when the firm is just covering its costs, neither making a profit not a loss.

Income Expenditure

BREAK-EVEN CHART

COSTS Fixed Costs

These are costs that remain constant regardless of the levels of output. Eg. Rent, insurance, salaries.

Variable Costs These are costs that vary directly with the level of

production. Eg. Raw materials and labour Total variable costs = variable cost per unit x

number of units produced

Total Cost = Fixed costs + total variable costs

REVENUE Revenue is the money received by a firm

from the sale of its goods and services.

Total Revenue = Quantity Sold x Selling Price

CONTRIBUTION This is a measure of the amount of money

that each unit sold contributes towards the fixed costs of a business.

Contribution per Unit = Selling Price per unit – Variable Costs per Unit

BREAK EVEN CHART QUESTION Illustrate by means of a break-even chart the

following information: Fixed costs: €20,000 Sales price per unit: €10 Estimated output: 14,000 Variable cost per unit: €8

3. PROMOTION

PROMOTION Promotion consists of all communication used

by a business to let customers know about the products on offer and to get them interested in buying them

Methods of promotion are: Advertising Sales promotion Public relations Personal selling

Promotion Mix

ADVERTISING Advertising is the communication of

information to persuade customers to buy a particular product or service

Functions of advertising:1. Provide information2. Persuade consumers3. Remind consumers4. Distinguishes products from competitors5. Increase sales and profits

ADVERTISING EXAMPLESIn relation to the advertising examples, answer the following questions.

1. What is the target market for this advertisement?

2. What message is this advertisement trying to get across?

3. What type of advertisement is this?4. In your opinion, is this advertisement

effective?

VIDEO

VIDEO

ADVERTISING MEDIA Television Newspapers Magazines and journals Radio Cinemas Online Billboards Public transport

ADVERTISING MEDIAThe medium used will depend on

Cost Budget Product Duration of the campaign The proportion of the target market that can be

reached by the medium

SALES PROMOTION This consists of short-term incentives to

encourage customers to purchase the product or service.

It is used in addition to normal advertising It is ideal for promoting a new product

EXAMPLES Free samples/gifts Money off coupons/vouchers Competitions Loyalty cards B1G1F Merchandising (shop window displays) In-store demonstrations.

PUBLIC RELATIONSPublic Relations is concerned with creating and maintaining a good public image in relation to a company and its products and services.

It aims to generate favourable publicity It helps build up good relations and goodwill. Aims to promote the good name and image

of a firm. Ensure public awareness of its existence, and

products.

FUNCTIONS OF A PUBLIC RELATIONS OFFICER (PRO) Media relations through

press releases and press conferences.

Customer relations Local community

relations The generation of

favourable publicity for firm.

DEVELOPING PUBLIC RELATIONSMethods of developing public relations include: Press conferences and press

releases. Sponsorship Donations to communities,

sports clubs etc. Open days – allowing the

general public to see the company site

PERSONAL SELLING This is the use of personal contact

to persuade customers to purchase the product or service.

Used mainly for specialised or expensive goods. Door-to-door salespeople Car sales Products requiring individual

customisation

4. PLACE This is the process of getting the product to

the consumer The term ‘Channels of Distribution’ refer to

the movement of goods from manufacturer to wholesaler to retailer to consumer

Channels of Distribution are: Direct – e.g. Farmers market Modern – Large retailers buying directly from

manufacturer Traditional – smaller shops, buying from

wholesalers

CHANNELS OF DISTRIBUTION

MARKETING ASSIGNMENT