Marketing
Adapted from http://www.bbc.co.uk/schools/gcsebitesize/business/marketing/
Types of markets
Considering the customer's point of view, there are four major market groups:
consumer (1), business (2), institutional (3) and distributors (4).
End users' markets
Non-end users' markets
1 BUSINESS TO CONSUMER (Retailing)
sale of all products and services to consumers
2 BUSINESS TO BUSINESS
sale of all products and services used by enterprises
3 BUSINESS TO INSTITUTIONS
sale of all products and services to the public
administration
and other political, financial and educational
institutions
4 BUSINESS TO DISTRIBUTORS (Wholesaling)
A distributor is a middleman between the manufacturer
and retailer
Branding and packaging
Branding and packaging
The basic function of packaging has always been to protect and contain a product. In a
competitive market, branding and packaging are important and have become an integral part
of the product. We instantly recognise products by the size, shape and colour of packaging.
The marketing department give a product a unique look and decide on the package design.
This will incorporate the brand name and will differentiate the product from competitors. This
is known as a unique selling point.
Package design
The shape, size and colour are important factors when
packaging a product. The marketing department will want to
make the packaging attractive and distinctive. Coke's
packaging is dominated by red. This helps consumers to
recognise a product instantly, when they are in a shop. The
same applies to the shape of the packaging. Deodorants and
shampoos, for example, come in all shapes and sizes.
Remember that the actual product is inside the container, so
the packaging and advertising are all that will attract us to try
a product in the first place.
Brand name and logo
Large manufacturers understand the importance of their brand
name. Kellogg's, Adidas and Microsoft are all household names
which we associate with quality. As a result, we are likely to
buy one of their products when we go shopping rather than an
untried or unknown one even if it is say, a supermarket's own brand. This is why it is
important for their brand name or a striking logo to be prominent on packaging.
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Product differentiation
The main aim of product differentiation is to give a product a
distinctive image which will differentiate it from similar
products. An expensive perfume or aftershave might be sold
in an elegantly designed bottle. This sort of packaging
suggests quality and would be targeted at a person with taste.
Even if the product itself was not very good, the packaging
alone could give the impression that it was.
Question
Fizz, a soft drinks company, is bringing out a new product, which is a mixture of lime,
apple juice and lemonade. They want to target it at school children. Give two factors
that they should consider in their packaging, and explain your reasons.
Answer 1
Surj wrote: Fizz should make sure their name is clearly shown on the packaging.
Anyone who has tried their products before and liked them would be likely to buy this
new one. As they want to sell to schoolchildren it would be a good idea to use bright
colours on the packaging.
Examiner's note
Surj's answer shows that he only understands the basics of packaging. There is very
little detail, and he has also only given one reason. This answer would probably get an
'E' grade.
Answer 2
Saf wrote: Fizz should make sure their name is clearly shown on the packaging to
make sure their product stands out. Anyone who has tried their products before and
liked them would be likely to buy this new one as opposed to another similar product.
As they want to sell to schoolchildren it could also be a good idea to use bright colours
on their packaging as this has been a very successful way of attracting children in the
past.
Examiner's note
Saf's answer shows that she understands packaging quite well as she gives good
reasons. She could, however, have been a little more detailed and used business terms.
This answer would probably get a 'C' grade.
Answer 3
Marlon's answer: Fizz should make sure their brand name and logo are clearly shown
on the packaging to help the consumer recognise their brand and to differentiate the
product. This would allow Fizz to take advantage of brand loyalty. Anyone who has tried
their products before and liked them would be likely to buy this new one as opposed to
another similar product. As their target market is schoolchildren it could also be a good
idea to use bright colours on their packaging and perhaps even a cartoon character, as
these have been very successful ways of attracting children in the past.
2
Examiner's note
Marlon's answer is very thorough. He gives good reasons for his suggestions and uses
the correct business terms, like 'brand loyalty' and 'differentiate the product'. This
answer would probably get an 'A' grade.
Packaging
Branding
Imballaggio, confezione
Politica di marca
Branding loyalty
unique selling point
own brand
Marchio commerciale
striking
Fedeltà alla marca
Proposta unica di
vendita
Evidente, manifesto
Target
Design
Mirare
Progettare , creare, disegnare
Person with taste
stand out
Persona raffinata
distinguersi
Branding and packaging - Test Bite
http://www.bbc.co.uk/apps/ifl/schools/gcsebitesize/business/quizengine?quiz=brandingandpackaging;templateStyle=b
usiness
1. The name given to a product is called its brand name.
true
false
2. Brand names and logos are the only important design features in packaging.
true
false
3. McDonalds' golden 'M' is an example of a company logo.
true
false
4. Consumers buying different brands are an example of brand loyalty.
true
false
5. Using similar packaging to other brands helps differentiate your own product.
true
false
6. Tesco's Cola is an example of an own brand product.
true
false
7. Impulse buying can be affected by distinctive packaging.
true
false
3
Branding and brand names - © BBC | British Council 2004
Worksheet 1
Skim read the following text
The name is the most important element of a successful brand. Packaging changes, advertising
changes, products even change but brand names never change.
Where do great brand names come from? All different sources, they may come from family
names or perhaps the inventor’s favorite color or animal or sometimes the names are just
completely made up. For example, McDonald’s is a family name, Adidas was created from the
inventors name Adi Dassler, Volvo means “to roll” in Latin and KODAK was completely made
up by the inventor George Eastman because he thought it was unusual and different
Worksheet 2
Discuss the following questions in pairs:
1. Why are brand names important?
2. Name three different sources of brand names.
3. Do you think brands are important? Why?
4. Do you have a favorite brand? What is it and why do you like it?
Worksheet 3
Can you guess where the following brand names came from?
Match the brands in the box with the correct text below.
1. Toyota
4. Reebok
2. Chanel no.5.
5. Nike
3. Rolls Royce
6. Nivea
a) From the Latin word meaning, ‘snow-white’.
b) This was the fifth perfume made by the same company.
c) Named after the Greek Goddess of Victory
d) Originally a Japanese family name Toyoda. The inventors changed one letter
to make it easier to pronounce overseas.
e) Named after an African Gazelle
f) The family names of two men, one a motor enthusiast and the other an
engineering genius.
Worksheet 4
Rank your favorite brands from 1-10 (1 = like the most, 10 =like the least)
1
2
3
4
5
6
7
8
9
10
4
Worksheet 5
TASK
In pairs invent a new product and give it a name.
Think about the following points:
• What is special or unusual about your product?
• Why would people want to use or buy it?
• How does the name relate to the product?
Once you have chosen the name for your product prepare a short oral
presentation to give to the rest of the class. In your presentation you should
describe your product and explain how and why you chose its name. Both of you
should speak in the presentation.
Here are some useful phrases that may help you with your presentation:
We would like to introduce our new invention…
We chose the name … because…
You can use it to…
If
1.
2.
3.
4.
5.
6.
7.
you can’t think of any ideas for a new product use one of these ideas.
A thick slimy (vischioso) green jelly (gelatina) soda drink
A flying schoolbag that you can control by remote control (telecomando)
An alarm clock (telecomando) that switches off when you shout at it
A television computer
A digital watch with a built in mobile phone and mini computer…
A new digital homework personal organizer
A new high speed flying carpet
The marketing mix
The 4Ps and the marketing mix
The 4Ps are the ideas to consider when marketing a product. They form the basis of the
marketing mix. Getting this mix right is critical in order to successfully market a product. The
4Ps are:
1.
2.
3.
4.
Product
Price
Promotion
Place
If market research is carried out effectively, a company can plan a promotion for the right
product, at the right price, and to get it to their chosen market, in the right place.
Now look at the 4Ps in more detail.
Product
A product can be either a good or a service that is sold either to a commercial customer or
an end consumer. A customer buys a product, and a consumer uses it. Sometimes these are
one and the same, as an industrial firm can also be a customer and a consumer. For example,
British Airways might buy aeroplanes from British Aerospace, so it is a customer. It won't sell
5
on the planes to another buyer, as BA needs the planes to provide its service, so it is also a
consumer. Sometimes a wide product range covers both (Mercedes produce lorries for
haulage companies, and cars for domestic use).
More commonly, there will be a number of sellers forming a chain of distribution. For
example, a gold mine may sell gold to a jewellery manufacturer, who in turn will sell on rings
to wholesalers and retailers, before we get to buy them in the high street. Each is a customer,
but only the final user is the end consumer. A marketing manager will identify who his/her
target market is, what they want, and sell it to them at each stage in the chain.
Price
No matter how good the product is, it is unlikely to succeed unless the price is right. This does
not just mean being cheaper than competitors. Most people associate a higher price with
quality, so you would expect to pay more for a Rolls Royce than for a Lada. On the other hand,
is one cola worth more than another, and if so, how much?
As a rule, a producer of luxury or medical products will use skim pricing or premium pricing
initially, in order to maximize its profits. This is useful, as it helps them to recover expensive
research and development costs quickly.
For fast moving consumable goods (fmcg's) like colas, penetration pricing is usually used.
The firm will want a large share of the market, so will settle for a small profit on each item. In
the long term, they hope that the turnover, and therefore their profits, will be high.
The simplest method of all is cost plus pricing, where a firm adds a profit mark-up to the
unit cost.
Promotion
The main aims of promotion are to persuade, inform and make people more aware of a brand,
as well as improving sales figures. Advertising is the most widely used form of promotion,
and can be through the media of TV, radio, journals, cinema or outdoors (billboards, posters).
The specific sections of society (market segments) being targeted will affect the types of
media chosen, as will the cost. If you were a toy manufacturer, you might want an advertising
spot during children's TV. If you ran a local restaurant, you might choose a local paper or
radio.
A small or local business would not usually advertise on TV, because it is very expensive.
Sales promotion is designed to encourage new and repeat sales. Loyalty cards, free gifts,
competitions and voucher schemes are the most popular.
Companies use sponsorship and public relations to improve their image, notably through
financing sports, the arts and public information services.
Place
Distribution channels are the key to this area. A firm has to find the most cost-effective way to
get the product to the consumer. Direct marketing through catalogues, via a TV shopping
channel and through the Internet have become popular, because the consumer can shop from
home.
For the firm, they can cut out the middleman in the process, and can therefore make more
profit. Going through wholesalers and high-street retailers, however, is the most popular form
of distribution, as that is still where most people shop.
The most important thing about marketing is to identify what the consumers' needs
are, and then try to meet them. This is called consumer-orientation. To find out what
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these needs are, a firm's marketing department or a specialist research organisation
carry out extensive market research.
The marketing process
A firm will gather information about the marketplace (eg whether house prices are rising or
falling), and then research consumers' needs. From this, it will identify who its market is, and
then put together a marketing plan based on the findings. The marketing mix will be central
to this, and finding the right balance in each of the 4Ps is very important. The firm can then
review and adapt their plan when they need to. You should remember the following points:


Although marketing is consumer-orientated, the main aim is still to be profitable.
A good marketing manager will try to differentiate their product (ie make their product
stand out against similar competitive brands).
 Whatever pricing decision is made, the most important factor is to break even.
 Making it as easy as possible for the customer to buy the product will help sales to
increase.
Question
Kendal Footwear is a small manufacturing company situated near the Lake District in
Cumbria. They are launching a new, good quality walking boot to add to their product
range. As their marketing manager, what two promotional activities might you use?
Explain your reasons.
Answer 1
Teresa wrote: I would advertise in the local newspaper, and on the radio. It would be
cheap, and most of the consumers would be local. I would also use sales promotion.
Examiner's note
Teresa has the right idea, but the question asks for two examples, and requires two
reasons. She has given two examples but only given one set of reasons and this will
lose her marks. She also needs to give far more explanation, eg why she would use a
sales promotion.
Exam questions are usually based on case studies. The examiner will want to see that
you understand the principles of marketing, and can apply them to a real-life situation.
Answer 2
Gary wrote: I would advertise in the local newspaper, as it is cheaper than other forms
of advertising, and most of the market would live locally. I would also use a discount
voucher scheme as sales promotion to increase the sales of our boot and other
products.
Examiner's note
Gary has answered the question quite well, and given good reasons. He would get a
much better grade, however, if he gave more detail, and used business terms (see
Gillian's answer).
Exam questions are usually based on case studies. The examiner will want to see that
you understand the principles of marketing, and can apply them to a real-life situation.
Answer 3
Gillian wrote: I would advertise in the local newspaper, as it is cheaper than other
forms of advertising, and would reach my intended target market, most of which would
probably be local. I would also use a discount voucher scheme as a form of sales
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promotion. It would give a 10% discount to our customers on any future purchases of
our products. This should lead to increased sales of the rest of our product range, as
well as making our boot more attractive to consumers in terms of value for money.
Examiner's note
Gillian's answer would probably get an A grade. She has answered the question
thoroughly, given good detailed explanations, and shown that she can use business
terms, like target market, product range and value for money.
Exam questions are usually based on case studies. The examiner will want to see that
you understand the principles of marketing, and can apply them to a real-life situation.
carry out
product
range
target
market
penetration
pricing
Mark-up
billboard
voucher
scheme
Eseguire, attuare
Gamma di prodotti
Mercato obiettivo
effectively
haulage
company
skim
pricing
Efficacemente
Società di trasporti
sponsorship
sponsorizzazione.
Middleman
High-street
Intermediario
strada commerciale
fissazione di prezzo
di penetrazione.
prezzi bassi per
acquisire quote di
mercato, soprattutto in
fase di lancio
aumento; rialzo.
Cartellone
pubblicitario
Buoni di acquisto
MARKETING ESSENTIALS exercises
Prezzi scrematura.
prezzi elevati per attribuire al prodotto un
particolare valore in termini di immagine, qualità,
prestigio; successivamente il prezzo diminuirà
rivolgendo il prodotto ad altri segmenti di mercato
Il sovvenzionamento, a scopo pubblicitario, di un
evento sportivo, artistico, sociale, ecc. da parte di
un'impresa. Il fatto che l'evento sia trasmesso in
televisione e che sia riferito dai giornali fa sì che il
nome o il prodotto dell'impresa sia portato
all'attenzione di vari milioni di persone.
destinata a negozi al dettaglio e altri esercizi
commerciali.
© Macmillan Publishers Ltd 2004
You are attending a marketing training seminar in English. The following practice is based upon
your notes from the workshop.
1. Underline the appropriate idea to complete this basic description of marketing.
In the past marketing was (customer-driven/ product-driven) where business emphasized the
product first and (considered/ confronted) the customer last. Nowadays the reverse strategy is
the key to successful marketing. Products and services are created (to mean/ to meet)
customer needs. Moreover, marketing must make use of its four basic components to be
effective:
• Sales
• Promotion
• Advertising
• (Public Relations/Possible Requirements) or PR
In each aspect marketing aims for a solid customer base and increased (turnaround
/turnover). Improving marketing performance is essential to be ahead of the (competition/
concentration).
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2 Circle the words that can be combined with ‘market’.
overseas service leader survey upscale country developing competence potential business
share.
Write the possible combinations, before or after ‘market’.
.......................
.......................
.......................
.......................
.......................
.......................
.......................
market.....................
market.....................
market.....................
market.....................
market.....................
market.....................
market.....................
3. Match the marketing components to the right description.
The ‘Marketing Mix’ consists of the 4 P’s:
Product
Promotion
Price
Place
-
where the customers can buy it
one that meets the customer need
to encourage the customer to buy it
one that makes company profit and keeps the customer satisfied
4. Place the following words and phrases under the right marketing heading. Some
of the ideas might belong to more than one category.
media
to announce
press release
special offer
billboards
discounts
banners
to call on (customers)
to sponsor
free samples
reputation
coupons campaign
to display
negotiation
internet
follow-up(Sollecito)
to bargain
press conference
to endorse (es. tennista che usa esclusivamente racchette X)
commercials(spot televisivi)
Sales
Promotion
Advertising
PR
................... .................... ...................... ......................
................... .................... ...................... ......................
.................. .................... ...................... ......................
.................. .................... ...................... ......................
.................. ................... ...................... ......................
Complete these sentences to describe the marketing categories.
•
•
•
•
The sales department handles _______________________________________.
Promotion involves_______________________________________________.
Advertising includes______________________________________________.
PR deals with ___________________________________________________.
5. Finish the sentence pairs/ groups using the noun form of the highlighted
corresponding verb.
*We will announce our marketing plans at the meeting tomorrow.
We will make an _____________________ about our marketing plans at the
meeting tomorrow.
9
*He wants to bargain with the customer.
He wants to offer a ______________ to the customer.
* Rolex sponsors the Wimbledon Tennis Tournament.
Rolex is a ____________ of Wimbledon.
Every year Rolex gives its _________________ to Wimbledon.
* Shops can display new products.
Shops can set up special ____________ for new products.
* Famous sports stars often endorse sports clothing and accessories.
________________ from famous sports stars helps to sell sports clothing and accessories
Marketplace
Break-even
Turnaround
Upscale
billboard
Handle
il mercato al quale si
rivolge un'impresa o
un paese
Punto di pareggio
(costi=ricavi)
Inversione di
tendenza
Lusso
cartellone pubblicitario
Trattare, organizzare
Findings
Risultati della ricerca
value for money
turnover
buon rapporto
qualità-prezzo
Giro d’affari, fatturato
commercials
Call on
Bargain
spot televisivi
Andare a visitare
Mercanteggiare, accordo
Marketing mix - Test Bite
http://www.bbc.co.uk/apps/ifl/schools/gcsebitesize/business/quizengine?quiz=marketingmix;templateStyle=business
1. What is the basis of marketing?
Advertising
Selling
Meeting customer needs
2. The most important aspect of marketing research is to find out
How much consumers earn
What consumers’ needs are
How much consumers spend
3. The most important pricing decision ensures
Maximising profit
Being cheaper than competitors
Breaking-even
(coprire i costi fissi e variabili con i ricavi delle vendite)
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4. A manufacturer offering discount vouchers is an example of
Advertising
Sales promotion
Sponsorship
5. Getting the product to the consumer should be
As quick as possible
As cheap as possible
As convenient
(comodo)
as possible
6. Why might Kendal Footwear try to differentiate their boot?
So it stands out from their competitors
So it is better than their competitors
So it can be sold at a higher price
7. What would be the most appropriate journal for Kendal Footwear to advertise in at
first?
A Sunday newspaper
A national daily newspaper
A local newspaper
Market research
Types of research
Market research is the collection of information or data to better understand what is happening
in the market place. A firm's marketing department needs to know about economic trends, as
well as consumers' views. Based on this information, they can put together a marketing plan,
which will meet their own needs as well as those of their consumers.
There are two general types of research:


Primary or field research
Secondary or desk research
Primary or field research
Primary research provides new data for a specific purpose
Obtaining new data for a specific purpose.
The marketing department of a firm or a specialist research
organisation can provide this. Typically, the data is gathered in face-to-face interviews, by
telephone, by post or via the internet, using questionnaires. This is called a survey.
Sometimes potential consumers are asked to test products, and their responses are recorded.
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Field research has the advantage that the firm itself has control over the whole process. The
disadvantages are that it takes longer and is more expensive.
Secondary or desk research
This is the use of existing data that has already been collected.
It can be anything from a company's own sales statistics to Department of Trade and Industry
reports. Other secondary sources of information include journals, company reports,
government statistics, and surveys published by research organisations. Traditionally, these
have been paper-based, but more and more information is now available on CD-ROM or online through the Internet.
Desk research has the advantages of being cheaper and quicker than field research. The
disadvantages are not knowing if the findings are accurate, or how relevant they will be to
your product.
The research process
Marketing departments need to have information so they can get their marketing mix right.
For example, they will want to know what similar products already exist and how much they
cost. They will also want to know whether consumers will want to buy their new product, and
what they think about it. The process for doing this is as follows:
1.
Identify the problem
2.
Set objectives
3.
Gather data
4.
Analyse data
Now have a look at the process in more detail. If you were a marketing manager, you might
do the following things:
Identify the problem
Make sure you know what you are trying to find out, and how it will help you. This is
something that people sometimes forget. There is an endless amount of information available,
so it is important to be focused.
Set objectives
You have to decide which are going to be the best ways to gather this information. Choose the
most appropriate reports and journals. Depending on how much time you have, choose what
field research you can do. Designing questionnaires and testing products on consumers can
take a long time. You also have to decide whether you have the necessary skills, or whether
you need to use a specialist research organisation. This is a more expensive option.
Gather data
You would usually do desk research first, because it is cheaper and quicker. Then supplement
this with field research, so that you don't duplicate your findings. Designing the questionnaires
and conducting the surveys takes place during this phase.
Analyse data
Now that you have the findings, you have to work out what they are telling you. If you
identified your objectives before you started, this should not be too difficult. You must look for
trends and patterns. Then you should see how this affects your marketing mix. For example,
if you were thinking of setting a price for your product of £10 per unit, and 70% of the sample
12
group think this is too high, then you may need to consider reducing the price. If you don't,
you may find that few consumers will buy it. But remember: no survey is perfect. There is
always a margin of error.
Question
In market research, what is the difference between desk research and field research?
Give two examples of each.
Answer 1
Dionne wrote: Desk research is finding information that already exists, and field
research is finding new information. Journals are one type of desk research, and
questionnaires are one type of field research.
Examiner's note
Dionne's answer was basically correct, but lacked detail. It also looks as if she didn't
read the question properly as she only gave one example of each type of research. If
the question asks for two reasons then you will have to give two to get full marks.
Answer 2
Garth wrote: Desk research is finding information from sources that already exist,
such as journals and reports. Field research is finding out new information that you
specifically need. This could be through questionnaires or consumers trying out your
product.
Examiner's note
Garth's answer showed he understood the terms, and his examples were appropriate.
He could have included more detail, and would have gained more marks by using
business terms in his answer (see Heather's answer).
Answer 3
Heather wrote: Desk research is getting data from existing secondary sources, such
as journals and reports. Field research is finding out new information about your
consumer's needs. This could be through a survey using questionnaires, or getting
them to try out your products and recording their opinions.
Examiner's note
Heather's answer was very detailed, and she used the correct business terms. She
showed that she understood the subject very well. She would get a very good mark.
Further things to do
Look at different types of adverts (on TV, in journals and on billboards) for one company's
range of products. Work out what message they are trying to give about their products and to
which group of people they are trying to sell (eg business/private users).
Market research - Test Bite
http://www.bbc.co.uk/apps/ifl/schools/gcsebitesize/business/quizengine?quiz=marketresearch;templateStyle=busines
s
1. Research is essential to identify consumer needs.
true
false
13
2. Desk research is more expensive than field research.
true
false
3. Field research is less valuable than desk research.
true
false
4. Secondary data is totally reliable.
true
false
5. The first step in the research process is gathering data.
true
false
6. Referring to your own firm's sales records is an example of primary research.
true
false
Survey
Ricerca
Gather
Raccolgliere
Findings
Risultati
Sample group
Campione
Trend
Tendenza
Affect
Influire su
Market segmentation
Market segments
Just as you can divide an orange up into segments you can divide the population as a whole
into different groups of people or segments that have something in common. Segmenting the
market makes it easier to identify groups of people with the same consumer needs and wants.
Marketers therefore look for categories they can use to divide up the population.
There are five commonly used categories:





Age
Gender
Culture
Income
Lifestyle
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Age
Different products are targeted at children and the over 60s
The population can be divided by age in years (eg 0-16,
17-25) or by the stage of life reached (eg schoolchild,
teenager). For example, a pensioner will have similar needs
to those of other pensioners but different needs from those
of a teenager.
Gender
Products may be targeted
at a specific gender group.
For instance, cosmetics
have been traditionally
targeted at women while
DIY has been targeted at
men.
Culture
People's needs and wants as consumers will vary according
to their religion, language, social customs, dietary habits
and ethnic background. In the UK businesses provide for a
wide range of different cultures. For example, there are
magazines and newspapers in many different languages
and Halal butchers in areas with large Muslim populations.
Income
The population can be segmented according to annual
salary (eg £15,000, £30,000 etc.), or type of job and social
class. Establishing a group's disposable income is important
so that products can be targeted to the relevant income
group. This is called a socio-economic segment. The
socio-economic groups A, B, C1, C2, D and E describe how much the head of the household
earns.
Lifestyle
People are grouped according to the way they lead their
lives and the attitudes they share. For example, young
professionals may drive a sports car because of the image
they want to project. Married parents might want the same
things, but have to provide for their children, which is a
large extra cost. They will need a family car to suit their
lifestyle.
Market segmentation
Marketing departments use segmentation so they can target their products more accurately. It
affects each of the 4Ps in their marketing mix:
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



Product
Price
Promotion
Place
If the product is effectively segmented a company will be able to promote the right product, at
the right price and use the right distribution to reach the place where the consumers are.
Now look at the way the 4Ps are used in market segmentation.
Product
Firms have a range of products that will be targeted at
different groups or segments. For example, a car manufacturer
will often have a range that includes a family model, an
executive model and a sports model. Lifestyle segmentation
will be used to develop their product line and to target their
products.
Price
Price and quality are obviously linked but not everyone can afford to buy the most expensive
goods. There is a large range of televisions on the market, for example, each with slightly
different features. Within this range of products, there will also be a range of prices to cater for
varying disposable incomes.
Promotion
Studying how a product is advertised can reveal its target market . A mobile phone company
recently used advertising campaigns that varied for men and women. The male phone was
pictured in black and white, and all its features and business applications described. The
female phone was in bright colours, and was pictured as a matching accessory to go with a
woman's lipstick and handbag. You may not agree with this stereotyping, but it is a good
example of gender segmentation.
Place
A firm needs to know where its target market is. For example, a producer of Kosher food
needs to identify areas where Jewish people live. The firm would have to consider how best to
get its product to these areas. This is an example of cultural segmentation
Question
Planet Airlines has three types of seat on its planes: First Class, Business Class and
Economy Class. The service you receive in each is different, as is the price you pay.
Give one example, for each 'Class', of whom they hope to sell to, stating your reasons.
(3 marks)
Answer 1
Mandy wrote: Planet Airlines would want to sell their First Class seats to rich people.
Business Class would probably be sold to business people and Economy Class to poorer
people.
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Examiner's note
Mandy's answer was very basic. She has shown some understanding of the subject, but
should have given far more detailed reasons. This answer would probably get an 'E'
grade.
Answer 2
Jamie wrote: Planet Airlines would want to sell their First Class seats to rich people,
because they can afford to spend more money. Business Class would probably be sold
to business people, because they need more space to work on the plane. Economy
Class would probably be aimed at people who cannot afford expensive tickets, for
example, a family.
Examiner's note
Jamie's answer showed he understood the subject, and his explanations were good. He
could have included more detail and used business terms. This answer would probably
get a 'C' grade.
Answer 3
Craig wrote: Planet Airlines would want to sell their First Class seats to people in the
highest socio-economic groups. Many of these will be in high managerial jobs with a
large disposable income, and can afford to spend more money on luxuries. Business
Class would probably be targeted at business people, because they need space to work
on the plane, as well as being fresh for meetings on arrival. Economy Class would
probably be aimed at tourists and people who cannot afford expensive seats, for
example, an average family, belonging to soci-economic groups C1 or C2, white collar
(office) and blue collar (factory) workers. These are examples of income and lifestyle
segmentation.
Examiner's note
Craig's answer was very detailed, and he used the correct business terms like
'disposable income' and 'lifestyle segmentation'. He showed that he understood the
subject very well indeed. This answer would probably get an 'A' grade.
Market segmentation - Test Bite
http://www.bbc.co.uk/apps/ifl/schools/gcsebitesize/business/quizengine?quiz=marketsegmentation;templateStyle=bu
siness
1. A market segment is a group that has been identified as having the same needs or
wants.
true
false
2. A target market is a specific segment that you are trying to sell to.
true
false
3. Targeting football boots at men is an example of cultural segmentation.
true
false
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4. Disposable income describes the amount of money you spend.
true
false
5. A company would target a sports car at a family group.
true
false
6. Targeting kosher food at Jewish communities is an example of cultural
segmentation.
true
false
Segmentation
Segmentazione
Gender
Genere (M/F)
Income
Reddito
Marketer
Esperti di marketing
Target
Bersaglio, mirare
Target market
Mercato obiettivo
Executive
Dirigente
Feature
Caratteristica
Suit
Essere adatto a
Butcher
Macellaio
Reach
Raggiungere
Cater
Provvedere cibo
Disposable income
Reddito disponibile
Product lifecycle
The product life-cycle
When we buy a product we need to know how long it will last. Perishable goods, like fruit and
vegetables, have a short lifespan. Durables like a car have a longer lifespan. Different products
last for different lengths of time but their life-cycles have elements in common and follow this
curve:
The product life-cycle
Introduction
The product is tested and developed before it is launched. Initial sales will be low until the
consumer starts buying. At this point, production costs are much higher than the revenue from
sales.
18
Growth
As sales increase production becomes more profitable. The early development costs can be
recovered. The success of the product can lead to brand loyalty and repeat sales.
Maturity
The product reaches its peak of sale and is at its most profitable point for the company.
Competitors have now entered the market which may reach saturation point.
Decline
As new models and designs come out, or fashions change, a product may become obsolete.
Sales fall, as does revenue. It is no longer profitable to produce it.
Applying the product life cycle to the marketing mix
Marketing teams watch for changes in the business environment and react to them. They
respond to consumer needs, the actions of competitors or government and use the following
strategies during each stage of the product life cycle.
Introduction
To make the target market aware of the new product it is important to heavily promote it. A
special introductory price may help push the product.
Growth
As sales and profitability increase, the selling price may be reduced to make the product more
attractive. Continued advertising around the brand name will help to sustain sales. The
marketing team may consider expanding its distribution, to reach more consumers.
Maturity
Competitors will usually have entered the market at this stage. If their products are as good
but cheaper the company may lose some of its market share. The pricing strategy must be
reviewed. Marketers may also put added value onto their product, by offering accessories or
insurance, for example.
Decline
Marketing cannot save a product at this stage, but targeting a different and smaller segment
can prolong its life.
Question
Hard PC, a computer engineering company, has developed a new processor that is ten
times more powerful than existing ones. Their product has sold very well, but is now
passing from its growth stage into its maturity stage. Competitors have already entered
the market. As a member of their marketing team, suggest two promotional activities
Hard PC might use. Give your reasons.
Answer 1
Jill wrote: We need to promote our product. I would suggest that we offer free
accessories to increase sales. We could also try advertising our new promotion.
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Examiner's note
Jill's answer shows the right kind of promotional activities for this situation but not the
reasons for them. This kind of promotion would not necessarily be used to 'increase
sales'. She has also only given one reason. This answer would probably get an 'E'
grade.
Answer 2
Luke wrote: There is a lot of competition so we need to promote our product. I would
suggest that we offer free accessories. This would make our product more attractive
than our competitors' products. We could also try advertising to remind consumers
about our brand and the new promotion we have on offer. This might encourage more
sales.
Examiner's note
Luke's answer showed he understood the subject, and his reasons were good. He could
have been more thorough, and used business terms. This answer would probably get a
'C' grade.
Answer 3
Tess wrote: The market will soon reach saturation point because of competition. We
therefore need to promote our product to lengthen its life. I would suggest that we try
to add value to our product by offering free accessories. This is because we want
consumers to find our product more attractive than our competitors' products. We could
also try advertising to remind consumers about the existence of our brand and the new
promotion we will have on offer. We may already have developed some brand loyalty
amongst our customers so this might encourage repeat sales.
Examiner's note
Tess's answer was very detailed, and she was able to apply her knowledge of business
to the case study. She was able to use the correct terms, like saturation point, add
value, brand loyalty. This answer would probably get an 'A' grade.
Product lifecycle - Test Bite
http://www.bbc.co.uk/apps/ifl/schools/gcsebitesize/business/quizengine?quiz=productlifecycle;templateStyle=busines
s
1. There are four main stages to the product life-cycle.
true
false
2. Competitors enter the market during the decline stage of a product's life.
true
false
3. New consumers buying your product is an example of brand loyalty.
true
false
4. Saturation point is reached during the growth stage of the product life-cycle.
true
false
20
5. A product that has been replaced by newer models is considered obsolete.
true
false
6. Marketers add value to their products to make them more attractive than their
competitors' products.
true
false
21