Chapter 16-Marketing

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Definition: Marketing is the process of finding out what consumers
want and then making a product that will satisfy their needs and
persuade them to buy the product.
Marketing concept; the customer is most important
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This involves the collecting, analysing and
reporting of information about marketing
issues to enable managers to make effective
marketing decisions.
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1. Observation
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Supervalu uses this to see what prompts customers to buy
certain products.
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2. Consumer Panel (Focus Group)
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Superquinn holds weekly ones where it listens to its shoppers.
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3. Survey
Researchers watch and learn from how customers behave and react
in certain situations, usually without the customer knowing.
Groups who are regularly monitored to find out about their
purchases and reactions. Might be asked to fill in diary.
Interviewing by mail, phone, Internet etc. and fill in questionnaire.
Produce qualitative data and quantitative data.
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Internal Reports
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2. Government Publications
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3. Internet
Look at past reports to see what was most popular
product, which shop is most successful etc.
Irish government publishes Census and Household
Budget Survey from the Central Statistics Office.
Enterprise Ireland has a huge amount of export
trade information.
Over 2 billion web pages on any topic.
Can go to user groups or other businesses'
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1. Save money in long run
By finding out what customers want the business can avoid making
products that nobody will buy. E.g. coke cola didn’t for new coke and it
failed.
2. Reduces risk of failure
Business is more likely to succeed as it knows what consumers want.
Spin 103.8 conducted research for target market and found that that
more young people wanted more music so the introduced ‘10 spin hits
in a row ‘and are now the most popular in Dublin among young
listeners.
3. Helps to improve advertising
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The business can find out what consumers think of their advertising
campaign.
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4. Helps managers decide best price and packaging
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Businesses don’t want to charge too much or too little
Also the way the product is presented is important.
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This involves dividing the overall market for a
product into separate groups of consumers.
The Irish Time aims at business and
professional people.
Ways to divide-Demographic (NIVEA for Men)
and Geographic (Tipp FM).
Segment Ratoath
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1. Helps business establish a presence.
Newstalk began in Dublin.
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2. Helps to increase sales. NIVEA for men.
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3. Helps lower marketing costs.
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This is the particular segment of the market
that the business sets its sights on.
Target market for Lucozade Sport are people
who play sport.
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A narrowly defined group of potential
customers within a market for a product of
service. The customers have different wants
and are willing to pay more for them.
An example includes Couture garments.
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Advantages
1. Increased profits as customer buys more.
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2. Better reputation through word of mouth.
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3. Fewer returns or repairs.
Superquinn does this as they offer a huge
range of services such as free playareas and
umbrella services.
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Step 1-Investigate the Market
The business most conduct a SWOT analysis to spot a gap in the market.
Meteor conducted desk research and found that the mobile phone
market was experiencing massive growth
Step 2-Select a Target Market
Thus business must segment the market and choose its target.
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Meteor decided to go for youth market due to SWOT.
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Step 3-Develop a Marketing Mix
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Develop this to persuade target market to buy product.
Meteor used tactic of emphasising its great value and sponsors the
Ireland Music Awards.
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1. Sets out strategies needed to attract and
keep customers.
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2. Helps business to control its progress.
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3. Impress potential investors.
product
price
place
promotion
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Function of the product/Extra’s/USP
Brand Name
1. Business can charge higher price.
2. Business will increase sales due to brand
recognition.
3. Brand loyalty.
4. Easier to bring out new products.
5. Used as a bargaining tool with shops.
Examples include Coca Cola or Sony
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Packaging
1. Protects product
2. Gives an image to product
3. Used to make it convenient size
4. Gives information about the product.
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1. Introduction (advertise)
Sales usually grow slow at first.
Business must spend a lot to promote product.
Use price skimming strategy and charge high
price to recoup money.
2. Growth (work on quality and production)
Sales begin to increase rapidly.
Profits start to increase.
New competition enters the market.
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Maturity (special offers and update the product)
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Rate of sales growth slows down and sales of
product reach peak.
There’s is intense competition in the market.
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Saturation (encourage people to switch to our product,
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develop new products)
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Sales growth stops and sales remain at peak.
Company will cut prices or bring out new or
improved versions
Other businesses competing.
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Decline (product harvesting)
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Sales of product fall rapidly due to competition
and advances in technology.
The product is withdrawn from the market.
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Patent; legal protection for a product or
process that has been invented. Gives
exclusive rights for 20 years, can be
franchised out for a royalty.
Trade mark; distinguishes one companies
goods and services from anothers, can be a
name, slogan, logo (, colour, or sound (intel).
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Quiz
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1. Cost of product
Business must be charging at least breakeven
price. (remember how to do a breakeven chart)
2. competitors prices
If the competitor has better product than the
business must charge lower.
Dunnes trainers are cheaper than Nike.
If it is inferior than business can charge
higher price.
Freshly squeezed orange is more expensive
than concentrated.
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3. Customers Perceptions of Prices
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Must be aware of what prices consumers are
willing to pay.
Consumers not familiar with product
associate high prices with high quality and
low prices with low quality.
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4. Legal Regulations
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The government can set maximum or
minimum prices.
In Ireland it was illegal to sell basic foodstuffs
below their cost price until 2006.
1. Price Skimming Strategy
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Business charges high price when it first comes
out to recoup money.
The price than drops as competition enters the
markets.
New mobile phones and games consoles are
expensive when they first come out.
2. Penetration Pricing Strategy
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Business charge low price to get the
competitions customers to switch. Daily Mail
charged only 30c a copy at the start get
customers to switch.
3. Price Discrimination Strategy
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Charging different customers different prices.
Most newspapers have discount for students
4.Loss Leader
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Selling one product below cost price to attract
customers to buy other products.
Supermarkets often sell bottled beers below cost.
5. Psychological Pricing
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Get customer to respond on emotional basis.
Business often charge €299.99 for something.
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This involves activities whereby the firm tried
to influence the target market to purchase its
product:
1.Advertising
 This is the paid, non-personal
communication of information about a
product or service through various media.
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1. Reminder-Informing consumers that the product is
still around and is used to maturity and decline stage
of product life cycle e.g Coca Cola
2. Informative-Gives factual information about the
product e.g Sale starts Tuesday.
3. Persuasive-Convincing consumers that they must
have the product e.g most toiletries.
4. Generic-Advertises an entire industry e.g Buy Irish
Campaigns
5. Comparative-Advertising by showing how well it
compares to the competition e.g most supermarkets.
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To provide information about the product.
To remind the consumers it is still available.
To persuade them to buy it.
To increase sales and profits.
To offset the competition’s advertising
To be successful advertising must take a
consumer through: attention, interest,
desire and action (AIDA).
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Consumers can see the
product in action.
It is watched by people
all over the country.
The business can
advertise to its target
market.
The business can use
pictures, sound and
movement to appeal to
senses.
Pro’s
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It costs a lot.
Many people skip
watching
advertisements.
Con’s
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It costs a lot less than
television.
The business can reach
local people.
The business can reach
its target market e.g
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The business has to
rely on sound to get its
message across.
Spin 103.8
Pro’s
Con’s
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Good at providing
detailed information.
Costs a lot less than
television.
Business can reach its
target market.
Business can reach
local people
Pro’s
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The quality of pictures
are not as good as
television.
The ad will only be
seen for one day if the
paper is daily.
Con’s
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Good for providing
detailed information.
Pictures are in good
quality and colour.
Longer life‐span than
newspapers.
Cost a lot less than
television.
Business can reach
target market.
Pro’s
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Cost a lot less than
television.
Longer life than most
other media.
Business can reach
target market.
Each billboard only
contains one ad.
Pro’s
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Hard to predict who
will see the ad.
Business can’t give
detailed information
Con’s
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Business can
personalise the ad
making it more
attractive.
The business can reach
its target markets e.g
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Direct mail is
expensive.
Many people ignore
‘junk mail’.
Tesco ‘Baby and
Toddler’ club.
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Direct mail contains
only one ad.
Pro’s
Con’s
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Media Habits of Target Audience
Business should advertise with media most likely to be seen by
target market.
Pampers adverts are shown on TV when parents are likely to be
watching.
Nature of Product
The type of product determines the type of medium needed.
Most washing powders are advertised on TV.
The Message
The message the business wants to get across.
Car companies advertise in newspapers to convey a technical
message.
The Cost
The amount of money the business has to spend.
It is very expensive to advertise on TV.
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Organisation set up by people in advertising to try and
protect consumers from false, misleading of offensive
advertising.
It has no legal powers but usually are listened to as
media are members of ASAI.
Its code of standards states that all ads should:
Be legal, decent, honest and truthful
Be prepared with sense of responsibility.
Obey the rules of fair competition.
Any member of public can complain to ASAI, it will
investigate complaint and ask advertiser to take it down
or change it.
L’oreal ran an ad for mascara saying it made Penelope
Cruz’s lashes look 60% longer, but she was wearing false
lashes.
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1. Free Samples-The business offers a free trial
of the product. Many food companies do this.
This is expensive but effective.
2. Money-off Vouchers-The business gives
coupons entitling them to discount off next
purchase and may be found it newspaper ads or
mailed directly. Tesco and Dunnes Stores do
this.
3. Free Gifts-Offers free gift with every purchase
e.g Mc Donald’s ‘Happy Meal Toy’
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4. Competitions-Business offers chance to
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5. Loyalty Cards-Offers points with every
win prizes if they buy product.
purchase which can be cashed in after
enough purchases. Tesco Clubcard is
example
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6.Merchandising-This means laying out the
store in an attractive and eye-catching way to
encourage impulse buying. Many stores put
bread and milk at back to shop so consumers
will have to walk by other tempting products
along the way.
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This involves presenting a good image of the
business and obtaining favourable publicity.
Many businesses employ a Public Relations
Officer.
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1. Attract publicity when launching new
products-Richard Branson wearing a wedding
dress to get publicity for Virgin Brides.
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2. Target certain customers-Meteor sponsor
Irish Music Awards.
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3. Build an image that reflects well on the
company- Mc Donald’s children's charities.
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4. Defending products hit with bad publicity.
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1. Events-Roadshows and Open Days.
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2. News Conferences and Press Releases-Used
when a business is launching new product or
creating new jobs and business gets on TV and in
papers for free. McDonalds fighting off bad
publicity after Supersize Me.
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3. Public Service Activities-Tesco’s ‘computers
for school’s’
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4. Sponsorship-Football team sponsorship.
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Where a salesperson meets with customers
face to face to give them information about a
product and persuade them to buy it.
Sponsors children’s charities which raises money.
Evaluation-Very good as parents and children are
target market of McDonalds.
Advertising using the slogan Justin Timberlake's ‘I’m
loving it’. Evaluation-This is good as it ensures
adverts are watched by target market and helps
connect to young people.
Sales Promotions Happy Meal. Evaluation-Very
effective as it attracts target market.
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Channels of Distribution
This is network of firms that deliver goods
from manufacturer to consumer.
Traditional Channel
Manufacturer-Wholesaler-Retailer-Consumer.
i.e.Mars-Musgraves-Sweet shop-Consumer.
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Alternative Channel
Manufacturer-Retailer-Consumer
i.e.Mars-Dunnes Stores-Consumer.
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Direct Channel
Manufacturer-Consumer.
i.e.Dell-Consumer.
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The more stages the more expensive it becomes.
The wholesaler uses ‘breaking bulk’ as it buys in large quantities
and sells them on in smaller quantities to retailer.
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Product
In March 2000, they launched this and was
developed for older children.
Target market is 8-14’s who don’t usually
consider Ribena ‘cool’.
Evaluation-Very good product as it is streetwise
and cool and appeals to target market. Added
re-sealable cap which is good.
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The product is more expensive than many
soft drinks.
Evaluation-This is good as children of that
age have a fair amount of money to spend
and also appeal to parents as they believe the
higher price is worth paying for because
Ribena is better for their children than drinks
such as Coke.
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Advertises extensively on TV and features
Ribena-berry cartoon.
Evaluation-Good as their target market
watches a lot of TV and also the cartoon
character appeals to children.
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The product is sold all over the country in
supermarkets, garages etc.
Evaluation-This is good as it is well
distributed and is available for its target
market. Even if parents pull in to get petrol
the Ribena pouch will be there
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