Marketing is to identify the wants, desires of the consumers, both now and in the future, and to provide the right goods or services to satisfy the consumers and to make a profit for the firm.
Marketing Marketing is to identify the wants, desires of the consumers, both now and in the future, and to provide the right goods or services to satisfy the consumers and to make a profit for the firm. The business I am studying is in tertiary sector, which is a small fast food restaurant called “Cottage Chicken”. It’s a new restaurant and its near Enfield town centre on Lancaster road. However, there is a competition with similar businesses that already exist in that area such as “Dixy Chicken”. Therefore the business is planning to advertise using different types of media that are also cheap and appeal to customers in order to overcome the competition. The following media is going to be used by the business: Media Typical rates Advantages Disadvantages Radio (local) £300 per 30 seconds. Can use sound & music. Relatively cheap to produce and audiences can be targeted. Non-visual. Message usually short lived. Listeners may switch or ignore adverts. Local newspapers- per Column line. • Front page • Back page • Other • Full page (34cms x 9 columns) • ½ page (17cms x 9 columns) • ¼ page (17cms x 5 columns) • ¼ page (17cms x 4 columns) £7.60 £6.30 £5.30 £800 £600 £450 £350 Adverts can be linked to local conditions. Can be used for test marketing before national launch. Reproduction and layout can be poor. Adds often unread Leaflets £200 per 2000 coloured. Low cost. Colour available. Junk mail thrown away. Mail shots often inaccurately targeted. Before the business could advertise they had to think about taking out a loan, which can be easily paid back because they did not have enough money of their own. So they took out a short term loan of I year in order to pay less interest, which is the charge of borrowing £3000 from a bank. In addition, the bank offered them a variety of loans such as business starter loans and small firm guarantee scheme. The business spends £600 on radio for 1 minute. £200 for 2000 colour leaflets. £800 for full page (34cms x 9 columns). The total cost for all these medias is £1,600. £500 was saved in bank was saved in bank for future use. The rest of the money that is left is explained later on how it was used. The business have use this media plan to persuade people to come to their restaurant. The business is also planning to advertise on the Internet in the near future to help the business to build its reputation more because it is very popular nowadays. Also they are going to take out a market research to find what consumers want, why they prefer one thing to another and what makes them buy in order to meet their objectives, which is to maximise their sales and to continuously change update their products in order to build a good reputation. The business thinks this will help them to make more profit and to overcome the competition against their rivals. The business is planning to do a street interview, which is a primary research and also known as field research. It is quite expensive but it is valuable than secondary research because the data already exists, which can be 3-5 years old. The business spends £700 of the money that was left on this because it employed a specialist local market research organisation that is experienced in questionnaires designing and sampling. On the next page is a questionnaire they asked to 20 people on the streets. Questionnaire 1. Age: under 15 0 15 – 30 0 30 – 45 0 45+ 0 The results show that there were 45% of
the people who were aged 15-30, as teenagers go more go more often than people aged 30-45. So they’re target market will be at people aged 15-30. 2. Which fast foods restaurant do you prefer: Cottage Chicken 0 Dixy Chicken 0 Euro Pizza 0 Others …………………….. The graph shows that there are more people who prefer Cottage chicken and then Dixy chicken rather than Euro pizza because the products they both sell are popular fast foods, which means a strong competition between these two. Also few local people said they prefer to go to others such as KFC but they ...
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the people who were aged 15-30, as teenagers go more go more often than people aged 30-45. So they’re target market will be at people aged 15-30. 2. Which fast foods restaurant do you prefer: Cottage Chicken 0 Dixy Chicken 0 Euro Pizza 0 Others …………………….. The graph shows that there are more people who prefer Cottage chicken and then Dixy chicken rather than Euro pizza because the products they both sell are popular fast foods, which means a strong competition between these two. Also few local people said they prefer to go to others such as KFC but they are a bit far for them. 3. How often do you go to fast foods restaurant: Everyday 0 Weekends 0 Once a week 0 Once in 2 weeks 0 The previous graph shows that there are more people coming on weekends as more people are off their jobs rather then on weekdays. Also quite a lot of people still come once a week. 4. How much money do you spend: £3-6 0 £6-9 0 £9-12 0 Other …………………… This graph shows that 35% of the people spend £6-9, as most of them are couples where as 30% of the people spend £3-6 mainly on good deals e.g. meal of the day. Also 20% of the people spend less than £3-6 who were mostly teenagers. 5. What is important for you when you go to a fast food restaurant: Good quality food 0 Fast service 0 Cost 0 Nice and clean environment 0 The most important aspect for consumers in a fast restaurant is cost, which means they will have to charge a reasonable price, which is a bit less than their competitors. Also the second aspect for them is good quality food, which is also their objective to continuously change and update their products. In addition the business will be doing another kind of marketing in the near future called point of sale promotion. They have chosen this method because it is designed to encourage people to buy when they are in the shop and it can be very effective. At the point of sale, the aim is to persuade the customer to take the step from wanting a product or service to actually buying it. The more closely the product matches, the easier this will be. They will going to include: Posters in shop windows and walls. Free samples in order to persuade people to buy. They spend £200 of the money that was left to buy all the materials. So now they still have £500 in the bank. However the business have a problem with its location because its quiet far away from town centre that means it losses some of its customers, which effects the business quiet a lot. Also influences such as government effects the business in many ways such as taxation policy to maintain the town and employment policy to protect employers. The effect of advertising on the market will help the business promote a product to the public in order to encourage sales. One of the best form of advertising is the product its self. The more money they will spend on designing a persuasive advert for the right audience, the more the consumers will going to buy their products and the business will have a good reputation. The business I am studying is a sole trader, which means it is easy to set up because les capital is required and less paper work. The owner can keep all the profit. On the other hand it has limited sources of finance, unlimited liability e.g. can loose personal assets and the owner has no one to share ideas with. So I think the best legal organisation for this business could be franchising, this is because business can cover a geographic area more quickly, it will receive continuous loyalty payments and managers get more motivated as they the franchise. To do this business will have to advertise first. THE COTTAGE CHICKEN FRANCHISE ADVERTISEMENT. The other issues that also effect the business are the laws such as advertising standard authority (ASA). The advertisements have to be: Legal Decent Honest Truthful A persuasive selling message, like the one above, is the one that promises a desirable and believable benefit to the people to whom it is addressed. The business also did a secondary research because it’s cheaper, quicker and easier to obtain to research market. They got the information of government statistics (census data) about Enfield. It shows information such as where people live, their age, unemployment, full time earnings etc. but the problem with the data is that its 5 years old and a full census is carried out every 10 years. A copy of this is shown on the next page. I gathered the information and presented it on graphs. The data is divided into segments according to facts about them as members of the population. This is called segmentation by demographics. There is another market segmentation that they could use, which is psychographics segmentation. In this people are divided according to their life styles, made up of their attitudes, beliefs and habits. After they done all the research they wanted to know about consumer behaviour, what makes people buy? For this they identify the types of purchases that people make which involve different levels of decision making such as: Routine purchase – these are every day purchases, which do not require much thought e.g. bread, milk for to use in breakfast. This business comes under limited – decision purchases because it’s a new business. These purchase are less routine and involve more careful thought, because it’s a new business and has new products, a purchaser will carry out a limited amount of research before deciding whether or not to buy it. Once they are familiar with the product, it may then become a routine purchase. So to the product a routine purchase, when planning their advertising, its important for business to know who has most influence over the buying decision, as well as who actually makes the purchase. Next, they will need to create the right mix. When marketing their products, the business will need to create a successful mix of: The right product Sold at the right price In the right place Using the most suitable promotion. • Product – for this business there is no point spending a fortune on promotion or charging a competitive price unless people want to buy it. Before launching a product, it must meet an identified consumer need. They should have all the right • Features, such as it must look attractive, appropriate and work well, and then it could become a brand. The uniqueness of brand comes from its physical characteristics e.g. the taste and unique ingredients, plus its image (logo), which usually created through advertising and packaging. Goods must be presented in an attractive packaging, which must protect goods during transport and have ease of access. However, packaging can also add considerably to the cost of production. Also the more packaging you create, the greater the environmental costs of disposing of it. • Price – when setting price for their products they will almost certainly want to cover their costs and make a profit as well. So the business chooses to charge a low price in order to attract sales. This makes it possible to sell large quantities at low average costs. After a while when the business is well known in the market, it can charge an average price, in which you will need to compete with your rivals e.g. by having a better quality product or better promotion. I think the best pricing strategy for the business is the penetration pricing, which is quite a low price but it will allow my business to enter a new market. So for example, the business may charge £9,99 instead of £10, as the former seems a lower price to the customer, when market penetration has been achieved, prices can be raised. There is another alternative strategy that they could use, which is destroyer pricing. This involves selling goods at a very low price in order to destroy existing competitors. • Place – in marketing terms, the place is where the final exchange occurs between the seller and the consumer. An important marketing decision was to be made my business is to where this exchange should take place and how. They used the idea of the channel of distribution, by which an organisation and its customers are brought together at a particular place and time for the purpose of buying and selling goods. In this case it’s in a shop. The organisations that are involved in the distribution chain are: a. Manufacturers – the firm that makes products. b. Wholesalers – the firm that store goods in bulk which they purchase from manufacturers before selling them on to retailers. c. Retailers – the firm that sell goods to final consumer. Middle organisations A traditional distribution channel. The business then had to think about protecting their consumers and meeting their standards. Some of these standards are laid down in law and others are set by individual businesses. A business supplies goods for consumers in return for payment. So the sale of Goods Act 1979 says that goods must be: • “Of merchantable quality” – i.e. free from significant faults, except defects which are drawn to your attention by the seller. • “Fit for the purpose” – i.e. include any particular purpose mentioned by you to the seller. • “As described” – i.e. the description of the good your selling should be on the package, e.g. suitable for vegetarians. For my business if things go wrong with the product the customers will have to tell the seller as soon as possible. When customers do take faulty goods back they may be offered a replacement or given a credit note (coupon) and if they refuse to accept them then they are fully entitled to have their money back even if they have lose their receipt (buyers right). But if they accepted a replacement or taken a credit note, in law they have accepted the good and will not usually be able to exchange it for cash later on. After that they had to worry about is the life cycle of their products. The life of the product is the period over which it appeals to consumers. As my business s new in the market and have introduced new products to the market, the sales performance of it will rise. But eventually the market will mature and the product will move towards decline and so their profitability will decrease. To overcome this problem the business is going to inject new life into the growth period of the product by adjusting the ingredients of its marketing mix. It will change and modify the products to keep ahead of the competition. Also one of their objectives is to keep introducing new products to sell range of products in order to attract customers. Another way to inject life is by promoting the product through methods such as advertising, special offers etc. Sales Maturity Growth Decline Growth Growth Intro Time Injections of new life Another alternative of a distribution channel they could have is: This route is becoming more common. It’s faster than dealing with retailers through wholesalers, and manufactures get better consumer feedback about the products, where as the problem in traditional channel is that goods can take a long time to get from manufacture to consumers. And manufacturers may not get enough feedback from consumers. However in this channel of distribution it’s harder for small retailers to avoid having to hold lots of stocks. Where as in traditional channel the retailer benefits from dealing with a wholesaler as they reduce the risk by allowing retailers to buy in small amounts, and giving them a wide choice of goods. So I think the traditional distribution channel for my small business is better. The business is also considering budgeting. A budget is a plan for the firm’s income and spending. It is based up on the firm’s prediction for the future. It can help the firm to know whether it is likely to make a profit or a loss. My business uses budgeting to give people target to work towards. However if the targets are unrealistic it can de-motivate the staff. Budgeting can help my business monitor its performance by comparing actual figures with the plan in the budget. Cottage Chicken – Budget for December 2000 forecast Actual Variance Sales revenue 15,000 14,600 -400 Unfavourable Raw materials Wages Telephone Petrol Electricity 3.000 5,000 200 360 120 3,200 4,900 160 390 160 200 -100 -40 30 40 Unfavourable Favourable Favourable Unfavourable Unfavourable This is called variance analysis. Items that are better than planned are called favourable variances, and items that are worse are called unfavourable variances. From this the owner will be able to decide why it is spending more on raw materials, petrol and electricity. Conclusion My new business, which opened in my area, is getting successful as the owner took out a small campaign. By investigating different types of media, which they could afford as a new business like local newspapers, leaflets they have attracted more customers. As they took out a 1-year short-term loan of £3000 from a bank they also did a primary research and a secondary research in order to identify the wants, desires of the consumers, both now and in the future. This was very helpful for them as this increase their sales, which means more profit and build a good reputation. Sp by meeting this objective they are over coming the competition against their rivals. They also used different pricing strategies such as destroyer pricing in order to beat their rivals and enter a new market as well as promotional strategies like point of sale promotion and keep upgrading their products, which attracted and make the customer buy the goods. However there are some problems like their place, which is a bit far from town centre that means loss of customers. Also environmental effects as they created more packaging, the more the environmental cost they had to pay for disposing of it. I think they could improve their business by selling franchises in order to cover a geographic area more quickly. As they will receive continuous royalty payments they can buy advance technology like computer to keep ahead in today’s market. This will help them in many ways like sending e-mails to customers all over the country through Internet, which is cheap and quick rather than sending mails through post. But all this needs very careful planning. Bibliography