Understand the concept and principals of marketing and their application in the business environment.

BTEC National in Business

P2- Introduction to marketing

Darren Case

Introduction

Much thought goes into advertising a product and having a successful product, most people don’t realise how much effort and time needs to be put into advertising a product. The main point’s businesses use in creating and advertising a product is the four P’s, product, price, place and promotion.

Place

Placement is very important in marketing because you need to know what type of distribution will work best for your company. Placement is the part of the market that deals with distributing products to customers. A business should make the right choice of placement to get their product to customers. If the business doesn’t do this then they’re not going to make the best possible amount of sales and there’s no reason for advertising if customers are unable to find the product in the right place. Placement includes where Poppets are sold and these are called outlets. The best-known places where Poppets are sold are ASDA, Londis, Morrison’s, Sainsbury, Tesco, WH Smith, Wilkinson’s and Woolworths.

The second part of placement is the method of distribution to the customer. If your business chooses the wrong method of distribution then your product may not make enough sales or they may not make any sales at all. These are the three ways to distribute your product to customers.

Producer

Wholesaler

Retailer

Consumer

Distribution method 1 is when customers buy the product direct from the business rather than buying it through a retailer. The advantages of this method of distribution are that its quick and the customer can buy in big bulks if they want to. The disadvantages of this method are that it’s a long process to buy the product and you will have to go to the factory where the product is produced and buy it direct from there. Poppets don’t use this method of distribution because the product is fast moving and need to sell in high quantity very quickly. The evidence of this point is that on Fox’s website it has a list of the retailers where Poppets are sold. This method of distribution is not good for Poppets because the sell in bulks and they want to sell their product very quickly.

Distribution method 2 is when the business sells their product to a retailer who then sells the product to the consumer. The advantages of this method is that the business can sell their product reasonably quick, also if you want to sell your product in very small bulks then you can sell straight to a retailer who will sell your product to the consumer. The disadvantages of this method of distribution are the business can’t sell in big bulks because retailers can’t break up bulks, and big businesses need to sell their products quickly and this method is too slow to do that. Poppets don’t use this method of distribution because they sell their product in bulks and retailers don’t buy bulks, they buy it of the retailer when the bulk is broken up.

Distribution method 3 is when a business sells in bulks to a wholesaler, who then breaks up the bulk and sells it to the retailer who then sells it to the consumer. The advantage of this method of distribution is that a big business can sell their products in bulks and distribute them quickly to make the most sales, which is what wholesalers are used for. The disadvantage of this method is that the product will take longer to get to the consumer. Poppets do use this method because they sell in bulks to a wholesaler. This method of distribution ...

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Price

Price in marketing is so important because the price that the business set must match what the target market is willing to pay. If the price of the product is too high, then demand for the product will fall. And if you put the price of the product is cheap, then the business is not going to make profit. Most products have a set Recommended retailer price which is a price set by the business that owns the product, but some retailers don’t follow the Recommended retailer price and they don’t have to because the price set by the owners of the business is only a suggestion for the retailer to say how much they should sell the product for. Poppets set a recommended retailer price. Their price is 35p but most retailers sell them for a higher price.

There are two main pricing methods that Poppets use:

-Competitor pricing

-Recommended retailer pricing.

There are many pricing methods that Poppets don’t use such as:

-Cost plus pricing

-Promotional pricing

-Psychological pricing

-Differential pricing

-Skimming

Competitor pricing is when the price of the product is set similar to its main competitors. Poppets use this type of pricing because they make their price similar to all of their competitors. This method suits Poppets because they know that people are considering their product over their main competitors.

Cost plus pricing is when the cost of the product is taken into account and a mark up is added to set the price, for example 20% added to the cost of the product being made. Businesses that use this are Newsagents and much more. There is no evidence to support the fact that Poppets use this but when they sell the product to the retailers then they add a percentage to the cost of the product being made to make profit. This type of pricing is good for Poppets because they are making profit off the product when they sell it.

Promotional pricing is giving special offers to customers like ‘buy one get one free’ and price reduction e.g. 50% off. Retailers often do this type of pricing to get rid of old stock. They usually do this after Christmas. I don’t believe Poppets use this type of pricing because they have no need to. Promotional pricing would not suit Poppets because they have no control over their retailer’s prices and.

Companies use psychological pricing mostly all the time. Psychological pricing is when businesses price their product in a way that seems much cheaper. Most prices around now usually have 99p instead of £1. This is psychological pricing and it’s used to make the product seem a whole lot cheaper. Poppets use this pricing method because their product’s regulated retailer price is 40p and they could make it 39p to make the customer feel they’re getting more for their money.

Differential pricing is charging different prices to different people for the same product. This use of pricing is normally used for student discounts or off/on peak. There is no evidence that shows Poppets use this method of pricing but they don’t have o because their product is cheap enough and if they gave a 20% student discount on Poppets then their product will still only be 30p rather than 35p which is not really much difference. This method of pricing doesn’t suit Poppets because they have no need to give a student discount because their product is already cheap enough.

Penetration pricing is when the price of a product is set low when it is first launched to gain interest. When the product is later into the product life cycle then they will make the price of the product low again to keep interest of the product. Poppets do use this type of pricing because they sometimes make their product cheap to keep the target market interested in the product. It suits Poppets because they will need to keep appealing to their target market and by giving them the product for cheaper than usual it keeps them wanting the product and also other people who haven’t had Poppets may try them because they’re cheaper than their competitors.

Skimming is when a product is set high when its launched and then the price drops bit by bit as the product becomes obsolete. Poppets don’t use this pricing method because their product needs to be set at the same price as their competitors or a bit cheaper to help them make sales. This method of pricing doesn’t suit Poppets because if they set their price high then they will make no sales and no profit.

Promotion

Promotion is a method by which a business communicates a message to their target market. The purpose of promotion is to inform customers that the business has a product to sell, and make customers feel that they need to buy the product. Promotion is not just about advertising it has three other methods. These methods are Sales promotion, Public relations and Sponsorship.

Poppets have three sales promotion methods available to them. They are:

-Free samples

-Added value

-Competitions

Free samples are when the business will give their product to the customers for free, so the customer will try their product and it may influence them to buy it. Added value is when you can give a percentage extra free on your product without the price of the product increasing; this draws the attention of a consumer. Competitions can be used to boost sales, where customers are entered for monthly draws, offering prizes. There are many more promotion methods such as Price reduction, Loss leaders, Gifts, Points of sale and Merchandising. The methods of promotion that Poppets currently use are very good as they are currently doing competitions to boost their sales, they are making bigger packages on their product by making bags with Poppets in. Poppets have recently started giving free samples out to consumers outside Supermarkets to attract consumers to buy the product.

There are many methods of advertising for example: magazines, billboards and adverts. The methods of advertising that Poppets use are Television, Radio and Cinema. Television is expensive to advertise and so this method of advertising wouldn’t be good for Poppets because they are not a huge company. Poppets would more suit advertising on the radio and at cinema because, it’s cheap to advertise on the radio and cinema. Also lots of teenagers go cinema and listen to radio so they are guaranteed to attract their target market. Poppets did use Television as advertising but in my opinion it didn’t work well and they just wasted lots of money by doing it.

Public relation is about communicating a positive image to the general public. This can be done by charitable donations. Poppets do currently use Public relations so they can gain good publicity through giving charitable donations. The public like to see companies giving charitable donations so by doing this, Poppets are getting good publicity and consumers may want to buy their product. Poppets also sponsored a Samba party in towns to interest people living locally. People would usually go to carnivals because they are interesting and fun. They gave free samples of their product to consumers. They also got free publicity because journalists would turn up and write about the event. By doing this Poppets would be in the newspaper and they are getting free publicity from it.

Sponsorship is when a business sponsors something such as Football teams or an event. Poppets are currently using Sponsorship because they are sponsoring a karaoke event to boost publicity. A professional football team does not sponsor poppets because they are not a big enough company and so they can’t afford to pay for a football team.

Poppets TV adverts have a theme for teenagers because they describe them as being for crazy people who are different. The slogan used in the advert is “It’s a Poppets thing”. The slogan used in the adverts is not very effective because it is dull and unusual. The adverts appeal to teenagers and young adults. The adverts don’t appeal to pensioners and middle-aged people. Overall the adverts are very badly made and don’t appeal to the target market at all.

The Poppets radio advert is themed on a crazy theme explaining that Poppets are for teenagers who are all stereotyped as being hyper and crazy. The slogan is “The ultimate chocolate experience.” The slogan for the radio advert is appealing because it seems to interest the consumer. The adverts appeal to teenagers and young adults. The adverts don’t appeal to elderly people and adult. Poppet’s radio adverts are appealing to consumers because they encourage people to want to buy them. Also a radio advert is not very expensive so they are able to do this rather than advertising on Television.

Price

Pricing is one of the most important things businesses need to look for when creating and selling a new product as it determines how well he product will do and what type of target market it will have. For example ‘Thornton’s’ chocolates are set at a relatively high price, meaning their target market is for middle class or special occasions.

Pricing is an important strategic issue because it is related to product positioning. Furthermore, pricing affects other marketing mix elements such as product features, channel decisions, and promotion.

While there is no single recipe to determine pricing, the following is a general sequence of steps that might be followed for developing the pricing of a new product:

Develop marketing strategy - perform marketing analysis, segmentation, targeting, and positioning.
Make marketing mix decisions - define the product, distribution, and promotional tactics.
Estimate the demand curve - understand how quantity demanded varies with price.
Calculate cost - include fixed and variable costs associated with the product.
Understand environmental factors - evaluate likely competitor actions, understand legal constraints, etc.
Set pricing objectives - for example, profit maximization, revenue maximization, or price stabilization.
Determine pricing - using information collected in the above steps, select a pricing method, develop the pricing structure, and define discounts.

These steps are interrelated and are not necessarily performed in the above order. Nonetheless, the above list serves to present a starting framework.

Poppets have a relatively higher regulated retailer price for their products as they feel that their product is a higher quality than their competitors. The price for their product is 69p but some retailers will sell it at a higher or lower price. The two pricing methods Poppets use are psychological pricing and cost-plus pricing.

Poppets have good pricing methods because it allows them to be a little bit unique from its competitors and this allows them to make the profit they need. Even though they don’t have a huge part of the market share they still make plenty of sales every annum.