IB Business and Management SL Mr. Jackson TOPIC IV: MARK TI!

" The emphasis in this topic is on the formulation of marketing strategies to achieve organizational objectives, and in response to the changing environment. Throughout this topic the focus should be on interpretation rather than calculation. Topic 4 should be studied in a way that encourages integration with other parts of the syllabus, for example, Topic 3, ccounting and !inance. The impact of new technologies should be integrated into each element of the marketing module. Content #.$ T%e Ro&e o' Marketing "efinition and nature of marketing Learning Outcomes (e'ine marketing and descri)e its re&ations%i* +it% ot%er )usiness acti,ities. The chartered institute of marketing gives this as a definition$ "Marketing is the management process of identifying, anticipating, and satisfying customer requirements profitably" #arketing contains many processes including$ % &elling products % dvertising 'not the same as #arketing( % #arket research % )reating desire % *roduct development+*roduct #anagement % )onsumer ,ehavior % )ommunications % *ublic -elations .ach process contains a series of actions which produce a change or development. #arketing is essential for every business. !actors that have affected the marketing of businesses and the rise in the importance of marketing$ % % % #arket and product orientation % .conomic growth !ashion Technology )ompetition

(escri)e t%e di''erence )et+een market and *roduct orientation. #any businesses in the past, and some today, could be described as *roduct oriented. This means that the business focuses on the production process and the product itself. market oriented business is one which continually identifies, reviews, and analyses consumers/ needs. 0t is led by the market. market oriented business will have several advantages over one which is product oriented$

o 0t can respond more 1uickly to changes in the market because off its use of market information. o 0t will be in a stronger position to meet the challenge of new competition entering the market. o 0t will be more able to anticipate market changes. o 0t will be more confident that the launch of a new product will be a success. -*&ain t%e di''erence )et+een t%e marketing o' goods and ser,ices. (See discussion Marketing Mix additional Ps) -amine t%e c%aracteristics o' t%e market in +%ic% t%e 'irm is immersed. hat is a Market! market is anywhere that buyers and sellers communicate to exchange goods or services. They can range from street markets, to markets for cars in many countries around the world, to goods and services bought over the 0nternet. #arkets might be classified in a number of ways depending on their characteristics$ o o o o o #arket size 2eographically ,uyer 3 consumer market + industrial 'commercial( market 0ndustry &ize

#arketing of goods and services

The market

Market Si.e / the size of the market can be estimated or calculated by the total sales of all businesses in the market. #arkets differ in their size. The market for fast food is huge and there is room for growth, especially in overseas markets. The market for horse saddles is much smaller. #arket size can be measured in a number of ways$ 4. )ustomer base 5. ,arriers to entry 3. 6ocation #arkets can grow either rapidly or slowly, or they might contract and get smaller. hat factors are likely to influence "hether a market gets bigger or becomes smaller and the rate of gro"th and decline! 4. .conomic changes 5. &ocial changes 3. Technological changes 4. "emographics changes 7. )hanges in legislation. Ca&cu&ate market s%are 'rom gi,en in'ormation. Market s%are / the term used to describe the proportion of a particular market that is held by a business, a product, a brand or a number of businesses or products. #arket share is shown as a percentage. The market share of a business can be calculated as$
Sa&es o' t%e )usiness 000000000000000000 1 $22 Tota& sa&es in t%e market

o #arket growth

o #arket share

.x$ 0f sales revenue for a business are 8499 million in an industry that is worth a total of 8499 million, the firm/s market share is 57:. hy might the measurement of market share be important! 0t might indicate a business that is a market leader. This could influence other companies to follow the leader or influence the leader to maintaining its position. 0t might influence the strategy or objectives of a business. business that has a small market share may set a target of increasing its share by 7: over a period of time. 0t may also be an indication of the success or failure of a business or its strategy. ;ence, a common objective of established firms is to increase their market share. ;ow< *romotion of brands *roduct development, improvements and innovations #otivation and training of the workforce to deliver better customer service .stablishment of property rights through the use of copyright and patents =se of more efficient channels of distribution #arketing in non% profit organizations Ana&3se t%e marketing tec%ni4ues o' non5*ro'it organi.ations. 0t>s important that these organizations understand that marketing is more than just the old sense of making a sale or obtaining a donation. #arketing is a way to satisfying the consumer and donor needs, but where does the nonprofit organization start< 4. &ocial 'cause( marketing 3 associate your product or service with a cause. 5. )atchphrases 'slogans( 3. "e%marketing 3 the use of marketing to reduce the demand for socially undesirable products, such as tobacco. 4. *ublic relations 3 fundraising events, sponsorships 7. )elebrity and hero endorsements ?. 0nternet technologies @. 0ncrease distribution channels (escri)e t%e e&ements o' a marketing *&an Marketing *&an / a detailed account of the company/s marketing at present, what it wants it to be in future and how it intends to change it. The marketing plan is concerned with a number of 1uestions$ here is the business at present! '&ABT analysis( here does the business "ish to be in future! 'setting objectives( #o" "ill a business achie$e its ob%ecti$es! 'marketing strategies(

marketing plan

#.6 Marketing P&anning #arketing mix 5 *roduct % *lace 'distribution( % *rice % *romotion % *eople % *rocess % *hysical evidence % *ackaging

A**&3 t%e e&ements o' t%e marketing mi- to gi,en situations. Marketing *&anning 3 a systematic process concerned with devising marketing objectives and appropriate marketing strategies to achieve these goals. 0t re1uires the collection and analysis of information about a particular market, such as market research data on existing and potential customers. The marketing mix is the balance of marketing techni1ues re1uired for selling the product. 0ts components are often known as the four *s$

Price % the price of the product % particularly the price compared to your competitors % is a vital part of marketing. There are two possible pricing techni1ues$ o #arket skimming % pricing high but selling fewer o #arket penetration % pricing lower to secure a higher volume of sales Product % targeting the market and making the product appropriate to the market segment you are trying to sell into Promotion % this may take the form of point of sale promotion, advertising, sponsorship or other promotions. P&ace (Distribution) % this part of the marketing mix is all about how the product is distributed. )urrent trends are towards shortening the chain of distribution.

There are those that now refer to another 4*s bringing the total to CD The other four are people, physical environment, process, and packaging.

Peo*&e % this stresses the importance of people in the marketing processE often the first point of contact with any business is a human being % the impressions given by this initial contact may be very important. 0n addition, the role of human beings in developing customer relations is seen as increasingly important especially in a knowledge driven economy. P%3sica& n,ironment (Evidence) % this refers to the importance in making the physical environment related to the product or service as welcoming and as reflective of the business as possible % for example, look at the showrooms of car dealers % many are very well lit, stylish in terms of furniture and decoration and include seating areas, coffee making facilities, newspapers and children>s play areas. Process % the process by which the product is either manufactured or passed on to the final user. This might include the extended use of 0)T facilities to speed up ordering, delivery, etc. Packaging 3 a product/s packaging is important in its overall marketing. This is because consumers often link the 1uality and design of a product/s packaging with the 1uality of the product itself. =nsuitable packaging may affect sales. The following factors should be considered$ weight and shape, protection, convenience, design, information, and environmental factors.

The business plan will need details of all of these. Ahat will your price be and why< ;ow will you distribute the good or service< ;ow will you promote the product< Ahat is the uni1ue selling point '=&*( of your product< ll these 1uestions need to be answered

in the business plan.

(iscuss t%e e''ecti,eness o' a se&ected marketing mi- in ac%ie,ing marketing o)7ecti,es. Fo marketing plan can work without all four elements of the marketing mix. This is because the four */s are interdependent. high price for a low%1uality product without any promotion and with limited distribution networks is a recipe for failure. Construct an a**ro*riate marketing mi- 'or a *articu&ar *roduct or 'irm.

.thics of marketing

(iscuss t%e et%ica& issues o' +%at is marketed and %o+ it is marketed: nationa&&38 internationa&&38 and across cu&tures.
.T;0) 6 0&&=.& 0F # -G.T0F2 #0H .6.#.FT& 0&&=. ) T.2B-I .H #*6.& *-B"=)T !ailing to disclose risks associated with a product !ailing to disclose information about a product/s function, value, or use. !ailing to disclose information about changes in the nature, 1uality, or size of a product. "0&T-0,=T0BF *-B#BT0BF !ailing to live up to the rights and responsibilities associated with specific intermediary roles. #anipulating product availability =sing coercion to force other intermediaries to behave in a certain way !alse or misleading advertising =sing manipulative or deceptive sales promotion, tactics, and publicity o Bait and s+itc% o 9ea&t% 'raud o :"et ric% 4uick; sc%emes o Tra,e& 'raud o Product misre*resentation o Scare tactics o <nsu)stantiated c&aims =# out o' >?@ o Pester *o+er o Con'usion marketing Bffering or accepting bribes in personal selling situations *rice fixing *redatory pricing !ailing to disclose the full price of a purchase

*-0)0F2

&everal areas of concern in marketing ethics$

<!AAIR OR ( C PTIV MARK TI!" PRACTIC S #arketing practices are deceptive if customers believe they will get more value from a product or service than they actually receive. "eception, which can take the form of a misrepresentation, omission, or misleading practice, can occur when working with any element of the marketing mix. ,ecause consumers are exposed to great 1uantities of information about products and firms,

they often become skeptical of marketing claims and selling messages and act to protect themselves from being deceived. Thus, when a product or service does not provide expected value, customers will often seek a different source. "eceptive pricing practices cause customers to believe that the price they pay for some unit of value in a product or service is lower than it really is. The deception might take the form of making false price comparisons, providing misleading suggested selling prices, omitting important conditions of the sale, or making very low price offers available only when other items are purchased as well. *romotion practices are deceptive when the seller intentionally misstates how a product is constructed or performs, fails to disclose information regarding pyramid sales 'a sales techni1ue in which a person is recruited into a plan and then expects to make money by recruiting other people(, or employs bait%and%switch selling techni1ues 'a techni1ue in which a business offers to sell a product or service, often at a lower price, in order to attract customers who are then encouraged to purchase a more expensive item(. !alse or greatly exaggerated product or service claims are also deceptive. Ahen packages are intentionally mislabeled as to contents, size, weight, or use information, that constitutes deceptive packaging. &elling hazardous or defective products without disclosing the dangers, failing to perform promised services, and not honoring warranty obligations are also considered deception. OAA !SIV MAT RIALS A!( OBJ CTIO!ABL MARK TI!" PRACTIC S #arketers control what they say to customers as well as and how and where they say it. Ahen events, television or radio programming, or publications sponsored by a marketer, in addition to products or promotional materials, are perceived as offensive, they often create strong negative reactions. !or example, some people find advertising for all products promoting sexual potency to be offensive. Bthers may be offended when a promotion employs stereotypical images or uses sex as an appeal. This is particularly true when a product is being marketed in other countries, where words and images may carry different meanings than they do in the host country. Ahen people feel that products or appeals are offensive, they may pressure vendors to stop carrying the product. Thus, all promotional messages must be carefully screened and tested, and communication media, programming, and editorial content selected to match the tastes and interests of targeted customers. ,eyond the target audience, however, marketers should understand that there are others who are not customers who might receive their appeals and see their images and be offended. "irect marketing is also undergoing closer examination. Bbjectionable practices range from minor irritants, such as the timing and fre1uency of sales letters or commercials, to those that are offensive or even illegal. mong examples of practices that may raise ethical 1uestions are persistent and high%pressure selling, annoying telemarketing calls, and television commercials that are too long or run too fre1uently. #arketing appeals created to take advantage of young or inexperienced consumers or senior citizensJ including advertisements, sales appeals disguised as contests, junk mail 'including electronic mail(, and the use and exchange of mailing listsJ may also pose ethical 1uestions. 0n addition to being subject to consumer%protection laws and regulations, the "irect #arketing ssociation provides a list of voluntary ethical guidelines for companies engaged in direct marketing. T9ICAL PRO(<CT A!( (ISTRIB<TIO! PRACTIC S &everal product%related issues raise 1uestions about ethics in marketing, most often concerning the 1uality of products and services provided. mong the most fre1uently voiced complaints are ones about products that are unsafe, that are of poor 1uality in construction or content, that do not contain what is promoted, or that go out of style or become obsolete before they actually need replacing. n organization that markets poor%1uality or unsafe products is taking the chance that it will develop a reputation for poor products or service. 0n addition, it may be putting itself in jeopardy for product claims or legal action. &ometimes, however, fre1uent changes in product

features or performance, such as those that often occur in the computer industry, make previous models of products obsolete. &uch changes can be misinterpreted as planned obsolescence. .thical 1uestions may also arise in the distribution process. ,ecause sales performance is the most common way in which marketing representatives and sales personnel are evaluated, performance pressures exist that may lead to ethical dilemmas. !or example, pressuring vendors to buy more than they need and pushing items that will result in higher commissions are temptations. .xerting influence to cause vendors to reduce display space for competitors> products, promising shipment when knowing delivery is not possible by the promised date, or paying vendors to carry a firm>s product rather than one of its competitors are also unethical. -esearch is another area in which ethical is sues may arise. 0nformation gathered from research can be important to the successful marketing of products or services. )onsumers, however, may view organizations> efforts to gather data from them as invading their privacy. They are resistant to give out personal information that might cause them to become a marketing target or to receive product or sales information. Ahen data about products or consumers are exaggerated to make a selling point, or research 1uestions are written to obtain a specific result, consumers are misled. Aithout self%imposed ethical standards in the research process, management will likely make decisions based on inaccurate information. (O S MARK TI!" OV RAOC<S O! MAT RIALISMB )onsumers develop an identity in the market place that is shaped both by who they are and by what they see themselves as becoming. There is evidence that the way consumers view themselves influences their purchasing behavior. This identity is often reflected in the brands or products they consume or the way in which they lead their lives. The proliferation of information about products and services complicates decision making. &ometimes consumer desires to achieve or maintain a certain lifestyle or image results in their purchasing more than they need or can afford. "oes marketing create these wants< )learly, appeals exist that are designed to cause people to purchase more than they need or can afford. =nsolicited offers of credit cards with high limits or high interest rates, advertising appeals touting the psychological benefits of conspicuous consumption, and promotions that seek to stimulate unrecognized needs are often cited as examples of these excesses. SP CIAL T9ICAL ISS< S I! MARK TI!" TO C9IL(R ! )hildren are an important marketing target for certain products. ,ecause their knowledge about products, the media, and selling strategies is usually not as well developed as that of adults, children are likely to be more vulnerable to psychological appeals and strong images. Thus, ethical 1uestions sometimes arise when they are exposed to 1uestionable marketing tactics and messages. !or example, studies linking relationships between tobacco and alcohol marketing with youth consumption resulted in increased public pressure directly leading to the regulation of marketing for those products. The proliferation of direct marketing and use of the 0nternet to market to children also raises ethical issues. &ometimes a few unscrupulous marketers design sites so that children are able to bypass adult supervision or controlE sometimes they present objectionable materials to underage consumers or pressure them to buy items or provide credit card numbers. Ahen this happens, it is likely that social pressure and subse1uent regulation will result. 6ikewise, programming for children and youth in the mass media has been under scrutiny for many years. 0n the =nited &tates, marketing to children is closely controlled. !ederal regulations place limits

on the types of marketing that can be directed to children, and marketing activities are monitored by the ,etter ,usiness ,ureau, the !ederal Trade )ommission, consumer and parental groups, and the broadcast networks. These guidelines provide clear direction to marketers. T9ICAL ISS< S I! MARK TI!" TO MI!ORITI S The =nited &tates is a society of ever%increasing diversity. #arkets are broken into segments in which people share some similar characteristics. .thical issues arise when marketing tactics are designed specifically to exploit or manipulate a minority market segment. Bffensive practices may take the form of negative or stereotypical representations of minorities, associating the consumption of harmful or 1uestionable products with a particular minority segment, and demeaning portrayals of a race or group. .thical 1uestions may also arise when high%pressure selling is directed at a group, when higher prices are charged for products sold to minorities, or even when stores provide poorer service in neighborhoods with a high population of minority customers. &uch practices will likely result in a bad public image and lost sales for the marketer. =nlike the legal protections in place to protect children from harmful practices, there have been few efforts to protect minority customers. Ahen targeting minorities, firms must evaluate whether the targeted population is susceptible to appeals because of their minority status. The firm must assess marketing efforts to determine whether ethical behavior would cause them to change their marketing practices. T9ICAL ISS< S S<RRO<!(I!" T9 PORTRACAL OA DOM ! I! MARK TI!" AAORTS s society changes, so do the images of and roles assumed by people, regardless of race, sex, or occupation. Aomen have been portrayed in a variety of ways over the years. Ahen marketers present those images as overly conventional, formulaic, or oversimplified, people may view them as stereotypical and offensive. .xamples of demeaning stereotypes include those in which women are presented as less intelligent, submissive to or obsessed with men, unable to assume leadership roles or make decisions, or skimpily dressed in order to appeal to the sexual interests of males. ;armful stereotypes include those portraying women as obsessed with their appearance or conforming to some ideal of size, weight, or beauty. Ahen images are considered demeaning or harmful, they will work to the detriment of the organization. dvertisements, in particular, should be evaluated to be sure that the images projected are not offensive.

#arketing audit

-*&ain t%e ,a&ue o' a marketing audit as a )usiness too&. Marketing audit 3 an analysis of the internal organization and procedures of the business and the external factors which affect its marketing decisions. 0t will help identify the strengths, weaknesses, opportunities, and threats faced by the business. '&ABT analysis(.

#arketing objectives

-amine %o+ a**ro*riate t%e marketing o)7ecti,es are in ac%ie,ing t%e goa&s o' an organi.ation.

Marketing o)7ecti,es are the targets that the marketing department wishes to achieve. These objectives should be compatible with the firm/s overall objectives. They may include, amongst many others, and combination of the following$ #aintain+increase marketing share #arket leadership *roduct positioning )onsumer satisfaction "iversification #arket development Few product development *roduct innovation ;igh market standing

&onstraints'limitations on achie$ing marketing ob%ecti$es$ finance, costs of production, size and status of the firm, social issues, time lags, competition, state of economy, political and legal environment. #arket research o -ole of market research Ana&3se t%e ro&e o' market researc%. Market or Marketing Researc% 3 refers to marketing activities to discover the opinions, beliefs, and feelings of potential and existing customers, i.e. it serves to identify and anticipate the wants and needs of customers. d hoc market research 3 Kas and when necessary/ basis. )ontinuous research % on a regular and ongoing basis.

n essential part of the business planning process is market research. This may include$ 6ooking at the market % how big is the market< Ahat type of consumers are we aiming to attract< Ahat is the spending pattern of the target consumers< re there any other market segments we could adapt the product to meet< !or example, putting orange juice into mini%cartons to tap into the packed lunch market. 6ooking at the product % this may mean some test marketing on a focus group or representative group of consumers and seeing what their reaction is. )ompetitors % who are the key competitors< ;ow can we differentiate our product from theirs< Ahere are they located< ;ow have their sales been changing recently< Ahat prices do they charge< Ahere do they sell their products or services< *rice % we may need to test how sensitive consumers are to price changes 'how elastic is the price<(. "istribution % what are the most appropriate shops or outlets to sell the product

in< Ahat are their price expectations< *romotions % if you are proposing any promotions or other advertising then it may be worth research to see what the reaction of consumers will be to these promotions.

,a&uate di''erent met%ods o' market researc%. o *rimary and secondary research There are two main types of market research. These are field research 'primary research( and desk research 'or secondary research(. Primar3 ='ie&d@ researc% 5 market research that involves gathering data first%hand for a specific study. !or example, if an organization wanted to know how staff felt about their working environment, primary research would be used. *rimary research is often used by firms to gather data and information directly from customers to identify their buying patterns and to anticipate changes in their behavior. o Luestionnaires o Bbservations o .xperimentation o Bnline surveys (d$antages of primary research$ up%to date, relevance, confidential and uni1ue, objectivity. )isad$antages of primary research$ time consuming, costly, validity issues. Secondar3 =desk@ researc% / involves the collection of second%hand data and information, i.e. the data or information already exists in anther form. This means that the data and information, such as reports in a newspaper or magazine, have been gathered by others. (d$antages of secondary research* cheaper and faster to collect, huge range of sources, insight into whole industry. )isad$antages of secondary research$ may be outdated, may be inappropriate format, may provide partial information, different purpose, available to competition. 0n addition to primary and secondary research, market research can also be classified as being 4ua&itati,e 3 getting non%numerical answers and opinions from respondents 'focus groups, in%depth interviews( and 4uantitati,e / factual and measurable results 'closed 1uestions, ranking and sliding scales(. #arket segmentation and consumer profile Ana&3se t%e use'u&ness o' market segmentation and consumer *ro'i&es. There are various ways to segment your market. These may include$

(emogra*%ica&&3 % according to the age structure of the population "eogra*%ica&&3 % by country or region or area Be%a,iouristica&&3 % according to the nature of the purchase, the use the product is put to, the loyalty to the brand and so on Bene'it % according to the use and satisfaction gained by the consumer

Socio5economica&&3 % according to social class and income levels

&egmentation analysis is a way of dividing up a market to identify trends in it. &egmentation analysis is used to create a profile of the target market.

The following can be taken into account when segmenting a market$ (ge, +ender, ,e$el of -ducation'.ccupation, Social &lass, /ncome, 0eligion, -thnic +rouping, 1amily &haracteristics, Political 2oting Preference, +eographical 0egion, Personality and ,ifestyle, 3y Purchases4 This information can help the company a lot with its marketing efforts. 0t can be used to set 1uotas on a market research exercise or be used to decide what promotional method is most appropriate for the market. In genera&8 t%e 'o&&o+ing are ad,antages o' segmentation: #ore efficient use is made of marketing resources % less waste. competitive advantage can be gained in a particular part of a market. 0t>s beneficial for small firms as uses less resources. *roducts can be modified to be exactly what the consumer wants. #arketing mix can be more targeted. T%e 'o&&o+ing are disad,antages o' segmentation: 0ncreased costs to develop variations of the product. ;igher stock holding costs. ;igher advertising and other costs. Consumer Pro'i&es. business might make use of consumer profiles to target the market. This is information which tells a business about consumers of a particular product and their characteristics. 0t might include where they live, how old they are, whether they are male or female, how much they earn or their lifestyle. Targeting Identi'3 *ossi)&e target markets. Targeting means that each distinctive market segment can have its own marketing mix. Target Market / the consumers which businesses choose to concentrate their selling efforts on. A**&3 an a**ro*riate marketing mi- to t%e target market=s@. #ass #arketing / the marketing of a product to all possible consumers in the same way. -x* )oca%)ola, Fokia, Fike, pple and #icrosoft all use this strategy to target all market segments in the same way. 2overnments also use this strategy when communicating public announcements such as anti drunk%driving campaigns. Fiche #arketing 3 the marketing of products to a particular small segment of the market. -x* ,usinesses that cater for minority sports, such as horse riding and Tae Gwon "o. ,usinesses that provide specialty goods 'such as 6ouis Muitton handbags, rmani

suits, !errari cars and )artier watches( also operate in niche markets, catering consumers interested in high%end luxury goods.

*ositioning o )orporate image o *osition+perception maps o =ni1ue selling point+proposition '=&*(

(iscuss %o+ organi.ations can di''erentiate t%emse&,es and t%eir *roducts 'rom com*etitors. Market *ositioning % an analytical tool that ranks different products, services or firms in relation to others in the market according to the views of the general public. .x$ in the cosmetics industry. )hanel is seen to be of higher 1uality and price compared to -immel. &imilarly, most customers perceive .vian and *errier as superior brands of bottled water. 3 stages to positioning$ % /dentify the competitive advantages of the product. % )ecide on which aspects of these strengths should be marketed. % /mplement the desired positioning by using an appropriate marketing mix. Cor*orate image plays a vital part in the success of businesses. poor image will not only drive customers away, but it can also impose damage that is irrevocable. <SP =<ni4ue Se&&ing Point@ / any aspect of a product that makes it stand out from those offered by competitors. The =&* explains why customers buy the product over rival brands. !or example, its appealing packaging. 3 basic competitive strategies for businesses to achieve positioning success$ Cost &eaders%i* refers to businesses that aim to excel as low cost suppliers of particular products. (i''erentiation refers to businesses that produce distinct products buying methods such as branding to differentiate their products from those supplied by rivals firms. Aocus refers to businesses that pay close attention to a particular market segment. Construct a *osition ma* 'rom gi,en in'ormation. *osition =*erce*tion@ ma* is a visual tool which shows the customers/ perception of a product or brand in relation to others in the market. The two%dimensional diagram plots customer perceptions using variables such as price and 1uality. % Premium )rands products that are high 1uality and high price. .xamples include brands such as 6exus, #ercedes%,enz and ,#A. % % conom3 )rands products that are low 1uality but appropriately priced. &upermarkets often supply Kno frills/ products to lure price sensitive customers. Bargain )rands those that are of high 1uality but with low prices. This is not

sustainable and the approach is only used as a short%term tactic to boost sales. % Co+)o3 )rands products that are of poor 1uality but highly priced. These products are positioned to deceive customers and are therefore only used as a short%term tactic to gain revenue.

Eua&it3

9ig% *remium brands ,argain brands

Lo+

9ig%

Lo+ )owboy brands

.conomy brands

Price

=ses of position maps o *osition maps allow a business to identify any gaps in its product portfolio. o They can be used for targeting strategies. o They can also inform businesses of a need for reposition their products % as markets and consumers/ tastes change a business may try to -.*B&0T0BF its products. This can involve changing the image of the product, its features or its target market. "evelopment of marketing strategies and tactics (esign or e,a&uate marketing strategies 'or gi,en situations. #arketing strategies are the 'long%term plans( taken by a business to help it achieve its marketing objectives. business can have a N of marketing different strategies$ 4. )ompetitive strategies 5. 2rowth strategies 3. #arket positioning 0n developing a marketing strategy, marketing managers may choose from an array of tools, such as$ perception mapping, nsoff matrix, ,oston matrix, &ABT analysis, !orce field analysis.

A**&3 an a**ro*riate marketing mi- to t%e strateg3. &uccessful marketing tactics and strategies are carefully planned out in order to achieve the organization/s marketing objectives. The marketing strategy is implemented through an appropriate marketing mix. &uccessful marketing strategy entails examining the marketing mix from the perspective of consumers. This is called the 4 )/s of marketing$ customer solution 'product(, cost to the customer 'price(, communication 'promotion(, and convenience 'place(. .xecution of the marketing strategy should be done in a cost% effective way without the organization having to overspend its budget.

#.F Product )lassification of products

C&assi'3 *roducts )3 &ine8 mi-8 and range. Product Line 3 a variety of the same product that a business produces for customers of a particular market. .x$ &amsung produces different television sets such as 6)" and plasma televisions. 0ts product line will include all the different sizes and types of televisions that &amsung manufacture. )risps 'potato chip snacks( made by manufacturers such as Aalkers come in different flavors to meet the needs of different customer tastes within the same market. *roducts in a product line typically differ in color, size, price or 1uality so that there is a greater chance that each product meets the needs of different customers. #ost businesses will change their product line due to changes in the market. &ome products will be entering their decline phase in the product life cycle, and will therefore be discontinued, whilst other products will be introduced in new markets and hence be a new addition to a firm/s product line. Product Mi- 3 'also known as product assortment( describes the variety of the different product lines that a business produces. ;onda produces automobiles and motor bikes. =nilever produces food, beverages, personal care and cleaning products. 0ts brands include xe, Maseline, *ersil, )if, !lora, ,en O Perry/s, 6ipton, *2 Tips, *ot Foodle, #armite and &lim !ast. 0kea/s product mix includes sofas, beds, desks, indoor and outdoor plants, carpets and food. ,y having a wide product mix, sometimes referred to as the product portfolio, businesses should be able to increase overall sales as a variety of products are sold to a larger customer base. didas, for instance, can sell its sports shoes to one group of customers and sell its clothing or sports e1uipment to other groups of customers. 0n addition, a wide product mix allows a business to spread risksE a downturn in one particular product line may be offset by increased sales in other product lines. Product Range

The product range of an organization refers to all product lines of a firm/s product mix, i.e. all the products sold by the business. !or example, pple #acintosh sells different types of computers 'product line( and laptops, accessories and i*ods. These collectively form pple/s product mixE all the range of pple computers, laptops, i*ods and so forth form the company/s product range. 0f there are two firms with the same product mix, such as &ony and &amsung, the business with more products in each product line 'the firm with a wider product range( is likely to have higher risk bearing.

Few product design and development

(escri)e t%e im*ortance o' inno,ation in an era o' ra*id tec%no&ogica& c%ange and discuss t%e *ro)&ems o' 'inancing researc% and de,e&o*ment. !e+ Product (e,e&o*ment =Stages@: 4. #arket research 5. *roduct development and testing 3 *rotot3*es8 test marketing. 3. !easibility study 3 is it marketable! ,egal! ($ailable technology! Patents! 4. 6aunch &ources of new product development$ #arket research *roduct extensions -O" K#e too/ developments

Research and Development

To remain competitive products have to evolve and improve. This doesn>t happen on its own % money needs to spend on -esearch and "evelopment to ensure it. Bne of the problems with - and " is that there is often a very long payback period for the money. The money has to be spent at the earliest stage of the product life cycle, but the product often takes a long time to develop. Bnce developed the market then often takes time to grow. The return from the money spent on - and " can often be a long time coming. This is particularly true with aerospace industries, including ballooning. This is because technical developments take a long time and the products are often highly complex re1uiring several developments to take place before the full product can be developed. 0n highly competitive markets businesses find that their profit margins are s1ueezed. This means that financial and human resources are often not available to develop new products. n example of this is in the market for budget fashion clothing. ,usinesses in this market tend to copy products developed for designed labels. *roduct 6ife )ycle Ana&3se t%e re&ations%i* )et+een t%e *roduct &i'e c3c&e and t%e marketing mi-8 and determine a**ro*riate e-tension strategies.

o .xtension strategies o -elationship with investment, profit and cash flow

Product Life Cycle To be able to market its product properly, a firm must be aware of the product life cycle of its product. The standard product life cycle tends to have five or six phases$ 4. 5. 3. 4. 7. ?. (e,e&o*ment Introduction '6aunch( "ro+t% Maturit3 Saturation (ec&ine

Product Life Cycle 0t can also be shown graphically. The graph often has two lines % one to show the level of profit, and one to show the level of sales$

The product life cycle shows the sales of a product over time and consists of four main stages a product can be at during its life$ Introduction: This contains new products that have just been launched % they are advertised heavily. "ro+t%: The product is still new % discounts are still being offered and people are still purchasing the product as not many people may have one. There may be few competitors. Maturit3 and saturation: This is the first stage when sales stop increasing so rapidly. There may be more competition or other products which are preferred. (ec&ine: &ales begin to rapidly drop. The product may have become out of date or out of fashion. !irms will often try to use e-tension strategies. These are techni1ues to try to delay the decline stage of the product life cycle. The maturity stage is a good stage for the company in terms of generating cash. The costs of developing the product and

establishing it in the market are paid and it tends to then be at a profitable stage. The longer the company can extend this stage the better it will be for them. .xtension strategies are used during the saturation and decline stage to try and extend the product>s life cycle. These may include *rice reductions and other s*ecia& o''ers. &ometimes companies may decide to target a ne+ segment of the market as an extension strategy or develop an entirely ne+ *roduct. The product life cycle is shown as a line graph and is useful to decide what marketing needs to be carried out for the product at different stages. 0t must be remembered that different products will spend different amounts of time at each stage of the life cycle.

Ana&3se t%e re&ations%i* )et+een t%e *roduct &i'e c3c&e8 in,estment8 *ro'it8 and cas% '&o+. The life cycle of a product will therefore have varying effects on a firm/s level of investment, profits and cash flow. PLC stage R&D Launch Growth $aturity (aturatio n Decline Investment level Very high (R&D) Very high (marketing) High (per ua i!e) Le (mainly remin%ing) )*ten ion trategie Little, if any Profit None Little, if any "e , ri ing High& 'ut little or no growth High, ta'le "e , 'ut failing Cash Flow Highly # # # #, 'ut falling

*roduct portfolio analysis ,oston consulting group ',)2( matrix

A**&3 t%e BC" matri- to a gi,en situation.

Product portfolio means the range of products owned by a business.

Product *ort'o&io ana&3sis allows businesses to decide which products should receive more or less investment. !or example, products that do not have high market share may be withdrawn or remarketed. The analysis allows a business to develop growth strategies by adding new products to an existing or new range.

Boston Consulting Group Matrix (Boston Matrix)

Firms need to make sure that their product mix does not contain too many products within one category why? Problem Children - These are products with a low share of a high growth market. They consume resources and generate little in return. They absorb most money as you attempt to increase market share.

Stars - These are products that are in high growth markets with a relatively high share of that market. Stars tend to generate high amounts of income. eep and build your stars. Cash Cows - These are products with a high share of a slow growth market. !ash !ows generate more than is invested in them. So keep them in your portfolio of products for the time being. Dogs - These are products with a low share of a low growth market. These are the canine version of "real turkeys#$. They do not generate cash for the company% they tend to absorb it. &et rid of these products. The 'oston (atrix is a common tool in marketing. !riticisms of this model include )verly focused on increasing market share rather than consolidating it% *ays in which products support each other.

,randing o ,rand awareness o ,rand development o ,rand loyalty

(iscuss t%e im*ortance and ro&e o' )randing. Branding 3 form of differentiating a firm/s product from those of its competitors. ,rand management is the application of marketing techni1ues to a specific product, product line, or brand. 0t seeks to increase the product>s percei$ed $alue to the customer and thereby increase brand franchise and brand e+uity. #arketers see a brand as an implied promise that the level of +uality people have come to expect from a brand will continue with present and future purchases of the same product. This may increase sales by making a comparison with competing products more favorable. 0t may also enable the manufacturer to charge more for the product. The value of the brand is determined by the amount of profit it generates for the manufacturer. This results from a combination of increased sales and increased price. hat is a 3rand! )rand is a name, term, sign, symbol, design or any other 'eature that allows consumers to identify the goods+services of businesses and to differentiate them from those of competitors. .x$ K#c/ 3 #c"onald/s%nameE Fike 3 swoosh 3logo, 3 stripes design 3 didas, others$ colour+slogan+tune, etc. Aell known brands are important to a business. 0t is argued that brands add ,a&ue to a product. business will hope that its products$ o will be known by large amounts of consumers 3 they will have )rand a+areness or recognition. o will be bought rather thn those of others 3 )rand *re'erence. o will be bought by customers over and over again 3 )rand &o3a&t3. ".M.6B*0F2 ,- F" There is a N of important features in developing and maintaining a successful brand for a business. 4( ,eing the first or filling a gap. 5( )hoosing the right brand name. 3( !inding a =&* '=ni1ue &elling *oint(

4( *ositioning the brand 7( ,rand protection 'copyrights+trademarks( 56P-S .1 30(7)$ #anufacturer brands, own label 'private( 'distributor( brands, generic brands. 30(7)/7+ S50(5-+/-S* 4. 0ndividual 5. !amily 3. )ombination 4. ,rand extensions+stretching.

Reasons 'or Branding There is a N of reasons why businesses use branding$ % To create brand loyalty. % To differentiate the product. % To gain flexibility when making pricing decisions. % To help recognition % To develop a brand image

*roblems with ,randing ,randing might not always be a successful strategy for some businesses for N of reasons$ &ome products are generic Fot all markets are suited to brands 0t can be expensive to promote and maintain a brand. #.# Price *ricing &trategies hat factors influence the price a business sets for its product! 4. )ompetition 5. Bbjectives 3. The #arketing #ix 4. )osts 7. )onsumer perceptions and expectations ?. #arket segment @. 6egal constraints Ana&3se t%e a**ro*riateness o' eac% *ricing strateg3. Cost5)ased *ricing ll businesses are influenced by their costs when determining prices with costs acting as a Qbottom lineR when choosing a price. ,ut some use )B&T%, &." *-0)0F2 as their strategy for price setting. ,usinesses using cost5)ased *ricing are those where the influence of cost is more important than other factors such as market conditions or competitors/ pricing. Cost *&us *ricing / involves setting a price by calculating the average cost of producing goods and adding a # -G%=* for profit. .x$ 0f a business produces 49,999 goods costing S79,999, the average cost would be S7.99. mark up of 59 per cent would mean goods would cost an extra S4.99 and the

o )ost%based % )ost%plus

price would be S?.99 per product. -etailers often use this method of pricing. &ay that a department store buys a colour TM from wholesalers for S599 and its mark%up to allow for a profit is 499 per cent. The retail price to consumers will be S499. 3enefits* 4. Luick and simple way of setting a selling price. 5. .nsures that sales revenue will cover total costs and generate profit. &riticisms* 4. fixed mark%up does not allow a business to take market needs into account when setting prices. 5. Fo attempt is made to allocate indirect costs to particular products. This means they do not reflect the resources being allocated by the business to that particular product or product range. o )ompetition%based % price leadership Com*etition )ased *ricing Aith )B#*.T0T0BF , &." *-0)0F2 it is the prices charged by competitors which are the major influence on a producer/s price. 0t is used mostly by businesses which face fierce and direct competition. s a rule, the more competitive the market and the more homogeneous the products competing in that market, the greater the pressure for competition based pricing. Price &eaders%i* / in some markets, often controlled by a small number of large companies, there is an accepted price leader. They will decide first to increase or lower prices, knowing that other companies will soon follow.
-x$ Ahen a petrol company changes the prices of a gallon of petrol or when banks change rates.

o #arket%based % *enetration % &kimming

Market5)ased *ricing # -G.T , &." *-0)0F2 methods are those which are based upon an analysis of the conditions in the market at which a product is aimed. s such, they are much better suited to market oriented businesses. Penetration *ricing 3 used by businesses seeking to gain a foothold in a market, either with new products or with established products being placed in new markets. 0t involves pricing a product at a low level so that retailers and consumers are encouraged to purchase the product in large 1uantities. 5 -easons why businesses use penetration pricing$ 4. )onsumers are encouraged to develop the habit of buying the product, so that when prices eventually begin to rise they will continue to purchase it. 5. -etailers and wholesalers are likely to purchase large 1uantities of the product. This should mean that they will not buy from other suppliers until they have sold most of their stock. ,usinesses can thus gain a significant slice of the market. *enetration pricing, because of its high cost, is often used by large firms operating in mass markets, such as those selling biscuits, sweets, washing powder and canned drinks. 0t is also a policy used by new businesses or established businesses in other areas to

break into a new market. 0t is not a policy that is suitable for products with short life cycles. There is usually not enough time to recover the cost of lost revenue from the initially low price. Market skimming 3 involves charging a high price for a new product for a limited period. The aim is to gain as much profit as possible for a new product while it remains uni1ue in the market. 0t usually means selling a product to the most profitable segment of the market before it is sold to a wider market at a lower price. 5 -easons why businesses adopt market skimming$ 4. To maximise revenue before competitors come into the market with a similar product. -x* new fashions, new toys, new inventions, and new versions of products. 5. To generate revenue in a short period of time so that further investment in the product can be made. )ompanies in the electronics and pharmaceutical industries often use skimming for this reason. (istinguis% )et+een t%e di''erent t3*es o' *romotion. Promotion refers to methods of communicating messages to the market with the intention of selling a firm/s products. There are 3 key objectives to any promotional campaign$ to inform, to persuade, and to remind the market about the firm/s product's(. There are two main types of promotion and these are$

#.> Promotion Types of promotion o bove the line o ,elow the line

A)o,e t%e &ine *romotion % refers to the use of mass media sources 'such as television, magazines and radio( to promote or to establish a favourable long%term image of a business, its brands or its products. -efers to any form of paid%for promotional techni1ue through independent consumer media. -xamples* o Television o -adio o )inema o Fewspaper o #agazines o Butdoor advertising 3 billboards, banners, posters

Be&o+ t%e &ine *romotion 3 the use of non mass media promotional activities. =nlike T6, this means no commission has been paid to external media agencies. 0nstead, the business has direct control over the production of all its advertisements. -xamples* o ,randing o &logans o 6ogos o *ackaging o Aord%of%mouth promotion

o o o o o o o o

Miral marketing "irect marketing 3 telemarketing "irect mail &ales promotions *ersonal selling *oint%of%sales promotion *ublicity &ponsorship

Ana&3se t%e ,arious *romotiona& too&s and discuss t%eir e''ecti,eness. The choice of promotional techni1ues is likely to be heavily dependent on the sort of marketing budget that is available, and a business start%up is unlikely to looking as much at above the line promotion in its early days.

"enera& ad,antages o' a)o,e5t%e5&ine *romotion inc&ude: "ue to potentially large audience figures, T6 promotion can reach a huge number of customers. -esearch has suggested that customers tend to take more notice of T6 promotion because they are more interesting and appealing. "enera& disad,antages o' a)o,e5t%e5&ine *romotion inc&ude: *romotion and advertising through the mass media may not appeal to the right segments or potential consumers. #any advertisements are simply ignored because people switch channels during television and radio commercial breaksE readers often take no notice of advertising placed in magazines and people complain about the number of pop%up advertisements appearing on the internet. They only cater for one%way communication and hence there is no easy way to determine the effectiveness of such promotional activities. ,elow the line tend to be cheaper than T6. mix *romotional Pre*are an a**ro*riate *romotiona& mi-. 0n deciding on a promotional mix, marketers often consider the marketing acronym 0" $ Attention, Interest, (esire, Action The choice of which medium you use is likely to be down to a number of factors, and these might include$

)ost ;ow well the method reaches the target market The product/s position in its life cycle The behavior of competitors 6egal restrictions

;ow well the medium enables you to reach your desired marketing mix The effectiveness of the medium and the impact it has

.ach method of promotion has its advantages and limitations. The important thing is to select the mixture of promotional activities that best suits the business/s particular needs. The )hartered 0nstitute of #arketing puts forward four key elements to make up a promotional mix. These consist of$ 4. dvertising 5. *ersonal selling 3. *ublic relations 4. &ales promotion.

#.G P&ace =distri)ution@ )hannels of distribution "istribution strategy

(iscuss t%e e''ecti,eness o' di''erent t3*es o' distri)ution c%anne&s. (istri)ution is about one of the 4 */s of the marketing mix 3 PLAC . business must get the product to the right place, at the right time. product which is effectively priced and promoted may not be a success unless the consumer is able to purchase it easily. c%anne& o' distri)ution 3 the route taken by a product as it passes from the producer to the consumer. 'Intermediaries / firms which act as a link between products and consumers in a channel of distribution.( producer can sell its products$ 4( (irect&3 to the consumer 5( through a retai& outlet 3( through a +%o&esa&er 4( using an agent. *lace decides where the product is to be sold. There are 3 main distribution channels to choose from$ Traditiona& % selling the product to wholesalers who will then sell the product on to retail outlets. Modern % producers selling the product directly to the retail outlet. (irect % the producer selling directly to the consumer such as door to door sales or over the internet. T%e c%oice o' (istri)ution C%anne&B n efficient and cost%effective distribution strategy enables a business to make products conveniently available to potential consumers. This will therefore raise the likelihood of customers purchasing the products. There are several factors that can affect the distribution decision of a business. These issues include$ )ost and benefits *roduct #arket Time 6egal constraints

#.H Internationa& ,a&uate t%e o**ortunities and t%reats *osed )3 entr3 into internationa& markets. marketing .ntry into international markets$ .ntry into international markets Bnce a business has decided to market its product overseas, there are various strategies that it can use$ 4. .xporting 5. "irect investment 3. .%commerce 4. Point venture 7. &trategic alliances ?. !ranchising @. #ergers C. c1uisitions+Takeovers

Bpportunities and ,enefits of 0nternational #arketing ,usinesses may aim to market their products to an international audience for several reasons$ )apture a wider customer base .conomies of scale 0ncrease brand recognition &pread risk .xtend the product life cycle 2ain more profit Ana&3se gi,en situations considering t%e cu&tura&8 &ega&8 *o&itica&8 socia& and economic issues o' entering internationa& markets. 0ssues and problems in entering international markets$ Cu&tura& issues 3 cultural exports, local preferences, language, ethics, business eti1uette. Lega& issues 3 copyright and patent, pricing, monopoly, restrictive trade practices, consumer protection laws. Po&itica& issues 3 international trade barriers$ 1uotas, tariffs, embargoes, administrative barriers, subsidies. Socia& and demogra*%ic issues 3 socioeconomic and demographic conditions, pressure groups. conomic issues 3 competition, transportation costs, exchange rate fluctuations, interest rates and communication costs. #.I 5commerce (iscuss t%e costs and )ene'its o' e5commerce to 'irms and consumers. .%commerce 5commerce is business activity conducted through some electronic medium. This is becoming an increasingly important method for business to be involved in and many businesses will have taken the opportunity of setting up a Aeb site as a means of

establishing a presence % electronically.

Types of e-commerce

,usiness%to% business ',5,( ,usiness%to% customers ',5)(

There is a certain amount of jargon associated with e%commerce that it will be useful to know.

B6C % This refers to businesses engaged in servicing consumer demand directly % this could be a firm like "ixons, who now have an 0nternet presence, or it could be a small village cafT. ,5) refers to J)usiness to consumerJ. .ven small businesses will have to think about some element of e%commerce because they might have to think about using credit and debit card services which use electronic means of funds transfer. B6B % This refers to businesses that service the re1uirements of other businesses. They will be suppliers of machinery, e1uipment, spare parts and other services such as payroll, insurance, banking services and maintenance.

The dvantages of .%)ommerce .%commerce provides another source of revenue for many organizations. The 0nternet gives businesses another channel of distribution. .%commerce also represents an opportunity for organizations to respond to competitors more 1uickly. .xcessive packaging can be reduced. -etail outlets tend to have higher overhead costs. )ustomers have more choice and convenience. &peedy completion of transactions is possible. The "isadvantages of .%)ommerce &et%up costs !inance charges imposed by )redit card companies for using their services &pam Fot highly suitable for some businesses. #ore web pages than people in the world. -eliant on advanced technology. 0nternet is volatile as is prone to hackers and breakdowns. &hift to e%commerce trading from traditional methods used in retail outlets may result in job losses. Ana&3se t%e e''ect o' e5commerce on t%e marketing mi-. Read **. G2F / G2H 5commerce and t%e Marketing Mi-