IB - Marketing revision notes

Advertising and sales promotion = for example discounts, to bring peoples attention.

Distribution = Making the product available by efficient distribution (spridning).

•  The Marketing Mix can be summarized as “the 4 Ps”:

 Product:  The product itself, e.g its design and quality, how it compares with competitors products and whether different models are to be made.

Price: The selling price, how the price compares to with competitors selling price

.Place:  Forms and channels of distribution, that are to be used to get the product into the market.

Promotion: How the product is to be advertised. Are any discounts offered? Which types of sales promotion are to be used.

MARKETS (marknader) AND SEGMENTATION (indelning I målgrupper)

• The”market” for a product can sometimes be broken down into different segment←(målgupper).
• For example, the car market← (bilmarknaden)  in the UK consists of a number of segments:

FAMILY CAR

COMPANY CAR

SECOND CAR-small car, cheap

LUXURY CARS

EKO CARS

• Rolls Royce is an example of a car manufacturer specializing in the luxury car segment:
• Each market segment←(marknadsmålgrupp) will have its own unique requirements and therefore will need a different, “specialized”, “mix” of marketing resources:

1. AGE – Ex. The style of clothes that a clothing manufacturer may decide to market.
2. POPULATION – Ex. Deciding where to advertise and how to distribute the products.
3. GROUPINGS – Religion, culture, family…
4. INCOME – “låginkomsttagare och höginkomsttagare”

MARKET RESEARCH

• Market research will provide the Marketing Department of a firm with information about the elements of the marketing mix.
• Market research will be into factors as the market itself, the likely demand for the product, the variety of models that customers appear to want, the best price to charge and how best to advertise and distribute the product.

METHODS OF MARKET RESEARCH

DESK RESEARCH (secondary search): existing sources of information to research into the market:

• Its own sales statistics  
• Investigate competitors products already on the market
• Government and other sources of statistics (ex. On population and on spending patterns) to asses trends taking place.
• Desk research 2 advantages over field research:

1. Less expensive
2. Information is already available→QUICKER

FIELD RESEARCH (Primary search): new information about the market by going “into the field” & asking people.

1. Questionnaires (interview) = designed specifically for the task, holding interviews.
2. Test marketing = where a potential product is marketed in one area of the country, study reactions
3. Using Consumer panels = selected people are given the product and asked to comment in detail on it.

• Field research Major advantage over desk research:

1. Done specifically for the new product in question.

PRICING DECISIONS

• Internal factors = cost of production.
• External factors = prices of competing products on the market.

HIGH-PRICE STRATEGY

• Skimming strategy = a firm launches a new and a unique product and decides to charge a high price to “skim” the market. Some people will buy the new product at this high price, because of its “status symbol” appeal. As the status appeal dies down, the firm reduces the price so that more are sold.

LOW-PRICE STRATEGY

• Penetration policy = a low price is set to enable the firm capture a large market share. Prices can be increased later, to earn profits.

PROMOTION

• 3 main elements:

1. Advertising: involves a sponsor paying for the non-personal presentation of a message. Advertising is therefore paid for, which distinguishes it from publicity which is not paid for.

2.Personal selling : provides the special, individual information and contact which advertising (being non-personal) cannot.

• Allows the firms message to be personally tailored (skräddarsydda) to the individual buyer. Can be an important supporting activity to advertising.
• Sales staff will have the responsibility of liaising (kontakt) with the customer. They will deliver the product to the customer and provide demonstrations.

3.Sales promotion: “pushes” a product through activities such as displays, exhibitions, demonstrations and shows.

 * Sales promotion is also used to support advertising in attracting customers.

1. Free samples
2. Price reductions
3. Premium offers (gifts)

Types of Promotion

2. 2 types:

1. Persuasive: Convince the customer that he or she needs and should buy the firm’s product.
2. Informative: Give full information, for example technical information, about the product.

Advertising

• Firms which advertise their goods and services may do so for a number of reasons:

1. To introduce new products onto the market.
2. To increase sales
3. To compete with others

ADVERTISING MEDIA

1. Commercial television and radio
2. Papers and periodicals
3. Other media: Posters, Cinemas, leaflets, viewdata and teletext.
4. Illuminated signs and printing on carrier bags.

Targeting segments (inriktning av målgrupper)

• Should the firm target a particular segment or attempt to sell to all categories of customer?
• 3 segmentation strategies:

1. Undifferentiated marketing = Compared to a shotgun. It ignores the existence of segments and offers a single mix to the market.
2. Concentrated marketing = A particular segment is targeted. The firm adopts a mix that it considers most effective and appropriate for that particular segment.
3. Differentiated marketing = A separate mix is developed for each segment of the market.

Consumer Behaviour

Opinion leaders = Early buyers that affect other people to buy. They are trendsetters.

Innovators = young, high status, high income

Laggards = Low income groups

Early adopters = influential within a local area, they are “influentials”

Early majority = taking time to decide

Late majority = below average incomes

THE PRODUCT LIFECYCLE

• A basic fact of business life is that all products and services pass through a number of phases from introduction to eventual elimination.

STAGES OF THE PRODUCT LIFE CYCLE:

 Research and development

1. High cost phase
2. Most ideas are rejected

Launch and introduction

1. Low sales
2. High price, if technical products

Growth

1. Purchased by Early adopters
2. Brand loyalty develops

Maturity

1. Purchased by Early majority
2. Sales revenue rising, but slowly

Saturation

1. Purchased by the Late majority
2. Price reductions are likely to maintain sales

Decline

1. Purchased by Laggards
2. Sales and profits falls

3. Death