Telephone surveys, consumer panel and personal interviewers-
Different types of questions can be used during surveys such as:
Open Questions- A question that gains information, usually beginning with who, what, why, where, when, how.
Closed Questions- A question which has a limited number of logical answers (e.g. 'yes' and 'no'), as opposed to an open or open-ended question
To find out my target market I will use a questionnaire to see who likes my product the most and to see how I could improve it even more for the people who don’t like my product so my target market will expand as more people will like my product. With my observation I hope to find out the gender, age, income and ethnicity of my target market. This will help me to see how much the retail price has to be because if it’s to high my target market won’t be able to afford it.
This graphs shows that the people who mainly brought from my competitors are mainly 15 to 25, which tells us that younger adults will buy my products more instead of older people between 45 and over. So overall this graph tells me the target market the younger people. So overall this has helped me to see how my new product has to look like.
This graph tells me the people who brought from my competitors are male, this could be they are more active so they need something to cool them down which will help me to think of a product for them. I could also get more female people by having different colour schemes so my target market will expand and hopefully it will bring in more net profit.
This shows as that the highest percentage of the people who brought from my competitors is likely to earn the least amount of money, for example 0 to 10,000 & 10,000 to 20,000, which is over half amount of people who brought from my competitors. The graph also says the higher the income the less likely they will buy my product.
I chose this question because different people from different regions have different types of flavour. This graph shows me that mostly English and Indian people brought from my competitors. This will help me to do unique flavours for example, white chocolate ice-cream instead of the normal chocolate which Viennetta do now.
Conclusion
Overall the graphs have helped me by chosen my target market as the graphs have told me that it has to be younger people instead of older people and its mainly male who will buy my product this is because they are more active so they need something to cool themselves down. Another thing i have found out is people who earn higher income will less likely to buy my product which tells me they don’t have enough time to have my product or its not fashionable for posse people also its mostly lower income people which is telling me that they might be children.
From my market research I have found out my target market are mainly families/friends or people with median to high income, this means I will have to choose a type of sampling so I get a precise questionnaire as I want my target market to answer.
Sampling- Products offered to consumers usually for free to introduce a new product. The different types of sampling are:
Cluster Sampling
Units in the population can often be found in certain geographic groups or "clusters" e.g. school children in Ilford. A random sample of clusters is taken, and then all units within the cluster are examined.
Convenience Sampling
Uses people who are willing to volunteer.
Judgement Sampling
A deliberate choice of a sample - the opposite of random.
Quota Sampling
Aim is to obtain a sample that is "representative" of the overall population; the population is divided by the most important variables e.g. income, age, location and a required quota sample is drawn from each one.
Systematic Sampling
After randomly selecting a starting point from the population, between 1 and "n", every nth unit is selected, where n equals the population size divided by the sample size.
Is selected so that every possible sample has an equal chance of being selected from the population.
The one I am going to use for my questionnaire will be judgement sampling, as this will give me more precise results because, all the people who will be doing my questionnaire will be my target market. The process I’m going to choose is far better than all the other ways for example random sampling won’t be as successful because it will have a mixture of people who will have different choices to my target market.
Packaging is a very important marketing strategy to glamorize your product in order to attract the consumer’s attention. Sometimes packaging is so important that it cost more than the product itself in order to lure the consumers to buy it. Also packaging is crucial in order to get the first time buyers to buy your products. The reason for this is Most of the consumers judge a product by its packaging before buying.
A unique name is important as it sets you apart from your competitors and makes you easily recognisable; another point is it enables people to ask for your product by a brand name, for example “Hover” (vacuum cleaner), “Flymo” (hovering lawn mower), these are two successful companies which people ask to buy their brand name instead of the product by name.
The purpose of the questionnaire was to help me to see what my target market would like the most for my new product, for example the flavours they would want, so I know what flavours they like so my target market will be happy.
My Questionnaire
As you can see my first question I ask to my audience was “How would you like the packaging?” I chose this question, because it tells me how they want me to glamorize the outside of my product, this is very important, as most people just buy a product because they like the packaging.
I was expecting that the “Box with a see through window” would get the highest votes of eleven, as people can actually see what they are buying because of the Acetate part which is transparent. You can also see my target market like to have a well protected packaging, as the bag has only got 17% and the tub got 27%. This shows I gathered extra information from this question, because it tells you they would like their item well protected, this means they would expect their item to be a high quality product. This tells me they have a median to high income because they can afford it all the time.
My second question I ask to my audience was “where would you like it to be sold?” I chose this question because it tells me what type of production my product will be, for example you would have batch production for ice cream vans and mass production for the supermarkets and cinemas.
I was expecting that the “Ice Cream Van” or the “sweetshop” was going to get the highest votes because I thought mainly children will buy my product as they always like having an ice cream. As you can see the supermarket got the highest votes by having ten, this most likely tells you families like buying it so they wouldn’t want anything cheap for their treats, it also tells you again those families or friends are going to buy this product as the second highest vote was cinema which got eight votes.
My third question I ask to my auidence was “How would you like it to be advertise?”I chose this question to see which scource would be the best cost effective for my advertisement and will hopfully bring the most people in to buy my product. I chose this answers,as they have different amount of people for example more people would watch the tv instead of the raido or a certain magzine.
I was expecting that the internet would get the highest vote but it only got seven, I thought this would get the highest vote because billons of people go on the internet each day, but the TV got the highest vote of ten when tells me its family’s as they would like to see the adverts when they are watching their program’s. I wasn’t surprise that the radio got the lowest vote because not so many people would be listening to it, and you cannot see my product like you can with the TV or the internet etc.
My fourth question I ask to my audience was “How much should each product cost?” this is very important as if I don’t get the ideal price I won’t get my maximum sales volume from my target market, this is because if my price is to low my volume will be high but there is a likelihood my net profit will be low and if it’s to high my volume will be low and possibility my net profit will be low to. At first I have to see my prices I asked my audience are not to low so I won’t go in breakeven or run at a loss.
I was expecting everyone to choose the lowest price to be on the answer column on my questionnaire as everyone wants everything as cheap as possible, but this time I was shock as my audience choose the middle answer which has given me extra information as I know what price they want it, and they want a good product for their money.
My fifth question was to see what new flavours would my target market like so I ask them “what flavour ice cream would you like?”I ask them this question as I don’t know what my target market likes so this gives me a certain idea. This helps me as I might produce a product which my target market won’t like, so I’ve given them unique flavours to choose from.
I was expecting my target market to have the “Cucumber and mint ice cream with thin flakes of dark chocolate?”If they are going to have something after their dinner they would like something refreshing, instead “coffee flavoured ice cream with thin flakes of almond flavoured white chocolate” got the highest votes this tells me they like high levels of flavour.
My sixth question I asked my audience was “what size would you like the product to be?” I ask this question because you can have this product in different styles as I don’t know which style my target market would like the most, for example a lolly or a tub or ice cream.
I was expecting my audience to have the Viennetta in a different way for example “ice cream on a stick” instead of a tub because its quick and easy to eat and normally lollies are cheaper so some children might buy it but the “750ml tub” got the highest vote of 40% so they liked how the Viennetta was made before in a big box.
My Product Life Cycle
As you can see my first stage is the Introduction, this is when the product is introduced; sales will be low until customers become aware of the product. Advertising costs typically are high during this stage in order to rapidly increase customer awareness of the product. These higher cost, plus with a low sales volume usually make the introduction stage a period of negative profits.
My second stage is the Growth; this is a period of rapid revenue growth. Sales increase as more customers become aware of the product. Once this product has been proven a success and customers begin asking for it, sales will increase further as more retailers become interested in my product.
My third stage is the Maturity; this will be my most profitable stage. While sales continue to increase into this stage but at a slower pace. This might be because competition may result in decreased prices.
My final stage is the Decline, this is when the sale begins to fall as the market becomes saturated, and the customers taste change. Unit costs may increase with the declining production volumes and eventually no more profit can be made.
The questionnaire was really crucial, as it helped me to see what my new product is going to look like, for example it’s going to be in a “750 tub” with “coffee flavoured ice cream with thin flakes of almond flavoured white chocolate”. This really helped me as this is what my target market wants as I didn’t know before.
Pricing is a very important part of my business as I have to get it right, or I will be making a lost. This is because if I have my product to low at retail price, its more unlikely I will be making a profit at first as I will have to sell more to break even and maybe if I sell it to low I won’t be making a profit on my product at all. If my product is price to high, my target market might not buy it so not as many people will buy my product. This shows I have to get my price just right so I get the maximum profit and customers. There are different types of pricing strategies for example;
Competition based pricing
This is where the firm has to charge similar prices to other firms. It happens when there is lots of choice and not much product differentiation for example petrol.
Market orientated pricing
This is when consumer’s response to various price points in a range of prices is analyzed to arrive at the highest acceptable price.
Discounts, Special Offers and sales
This is where a firm would make the product cheaper, but still making a profit, they do this to bring in more people so when they put it back their profits will be higher.
Price discrimination
This is where firms charge different prices to different consumers for the same product, for example cheaper rail travel.
Cost based pricing
Cost-based pricing is a method of pricing where the firm adds a percentage mark-up to its costs to determine the price they are going to charge.
When a product is first launched two types of pricing can be used:
Price skimming
Firms charge a high price to begin with this helps make the product desirable to people with large incomes. When the product has become established the firm will lower the price to help it become a mass-market product.
Penetration pricing
Is where a firm charges a very low price when the product is new to get lots of people interested init. When this low price is below cost it’s called loss leading. Once the product has become established the film will increase the price.
Cost is important because it is the total spent for goods or services including money and time and labour. There are two different types of cost for example:
Fixed cost
Cost that does not vary depending on production or sales levels, such as rent, property tax, insurance, etc. My fixed cost will be;
Variable cost
A cost of production that is directly proportional to the number of units produced. My variable cost will be;
As you can see this is how much my fixed cost and my variable cost will be, if I want to break even I would have to sell 58,780 units which isn’t much once I get going but my final price would be expensive as its more then £10 for a unit.
To help me decide the final price of my product, I have looked back at the field and desk research that I’ve completed so that I can look at my competitors pricing and see what price for my product should be. The pricing from my competitors are;
Häagen-Dazs-£3.99
Ben & Jerry's-£3.50
Unilever-£3.99
This shows you my competitor’s average price is around £4 which is a decent price, they are also trying to make the costumers think it’s cheaper as they make it £3.99 instead of £4, people think it’s cheap as they read the ‘3’ instead of all of it. From my field research I found out that my target market would like to pay around £4.99 which is higher than my competitors prices, this worries me if my product is too expensive and people won’t buy it. This might be my price as this is what my target market wants and as well I’ve got pricing strategies, for example I’m going to do skimming at first so the price will be high and this helps make the product desirable to people with large income. Once the product has become established I will lower the price and do competition pricing, so my product will be similar priced to my competitors.
The saturation stage is seen as the first sign of product decline. At this point, the product has no future for profits because there are too many competitors or the product is no longer popular. Decline stage is seen as the sales begin to fall as the market becomes saturated, and the customers taste change. This is bad as my Unit costs may increase with the declining production volumes and eventually no more profit can be made. To avoid decline I will adopt and include an extension strategy. Extension strategy is when a firm might try to extend the
life of a product by making changes to the design or offering discounts. My extension strategy will be offering different discounts, i.e. 10% off the product and I will do more advertisement with the discount pull back my target market.
My mark up is how much the price of a product is above the cost of producing and distributing the product. It can be expressed as a fixed amount or as a percentage
This shows my mark up will be 430%, so I’m making a lot of profit in 1 unit so my breakeven will be lower. Breakeven is the point at which cost or expenses and revenue are equal: there is no net loss or gain. I work it out by doing;
Fixed costs/ contribution per unit
This has helped me as I will have to sell more than ‘131571’ to breakeven and not make a lost. As I have a high break even I have to use my marketing money effectively for example use it in television adverts or well known magazines instead of local newspapers which won’t bring as many people.
Once I hopefully reach my breakeven point I will lower the prices so more people will buy my product more and get more profit this will help me not get closer to decline as i will get more people buying my product
Business Studies – Task 6 – Promotion
Promotion is another part of Marketing Mix. Promotion is when any message about your product or itself that the firm had paid for. People advertise for four reasons;
- To make the consumers aware of new products.
- To remind consumers about existing products.
- To persuade consumers to switch from rival products
- To improve the image of the business
This makes promotion important as this will make companies sell more products but advertisement is expensive. Where I will advertise depends on three things;
- My target audience.
- Size of my market.
- The size of my advertising budget.
Advertising can be informative or persuasive. Informative adverts simply describe the product and its features. They leave the consumer free to make up their own minds about my product. Persuasive adverts try to convince the consumer that they cannot survive without my product. This will play on people’s fears, and create desires where none existed before.
There are also two categories of promotion that I could use to advertise. "Above the line" and "below the line" promotion. The promotional activities carried out through mass media like television, radio, newspaper etc. is above the line promotion. The terms 'below-the-line' promotion refers to forms of non-media communication. Below-the-line promotions are becoming increasingly important within the communications mix of many companies.
Some of the ways by which I could do BTL (below the line) promotions are by exhibitions, sponsorship activities, public relations and sales promotions like giving freebies with goods, trade discounts given to dealers and customers, reduced price offers on my products, giving coupons which can be redeemed later etc. Below the line sales promotions are short-term incentives. The disadvantages are it won’t get the same amount of audience as above the line but is cheaper.
Direct mail is another advertisement I could use, this is when a form of advertising in which the published matter. Print media messages are delivered through the printed word, usually in newspapers or magazines, while broadcast media messages are delivered through the airwaves, on television or radio. In direct mail, advertising and other types of messages are delivered through the mail. Direct mail is a particularly attractive option for small business owners, as it can communicate complete information about a product or service and reach almost any conceivable target group, all for a relatively low cost. Direct mail can provide the basis for a business, or it can be used to supplement a company's traditional sales efforts. For example, a small business could use direct mail to inform potential customers about its offerings, and then follow up with a phone call or a visit from a salesperson.
Advantages and disadvantages of “Below the line” Promotions
Personal selling is another good way of selling more of your products. Delivery of a specially designed message to a prospect by a seller, usually in the form of face-to-face communication, personal correspondence, or a personal telephone conversation. Unlike advertising, a personal sales message can be more specifically targeted to individual prospects and easily altered if the desired behaviour does not occur. Personal selling, however, is far more costly than advertising and is generally used only when its high expenditure can be justified. For example, the marketing of a sophisticated computer system may require the use of personal selling, while the introduction of a new product to millions of consumers would not. Two other forms of personal selling that are not used
with high-end products are door-to-door selling and home demonstration parties. These two personal selling methods are primarily used for personal care products, cosmetics, cookware, books, toys, food, and other items of special interest to homemakers. Ideally, personal selling should be supported by advertising to strengthen its impact.
Sales promotion can be classified based on the primary target audience to whom the promotion is directed. These include:
Consumer Market Directed - are those intended to appeal to the final consumer.
Trade Market Directed – Marketers use sales promotions to target all customers including partners within their channel of distribution.
For my product I have decided that my advertising budget will be £600,000 this will cover the cost of advertising my product. The reason my marketing is so high is because I I’m going to use “Above the line" promotion and have television adverts and a couple of magazine adverts, I chose this way as it gives me a higher amount of audience as it will bring the whole country instead of having a local newspaper which only tells the local town.
An approximate break down of total cost in Advertising
Television £ 500,000
Magazine £ 100,000
£ 600,000
As you can see mainly televisions adverts are going to be my main source of advertisement as it pulls the highest amount of audience, this is the best as it will show it to everyone and not in certain locations i.e. a local newspaper. The problem I’m going to have is television adverts are extremely expensive so i won’t have many. I also got magazine adverts which will hopefully show my product to different people so more of my target market will buy my product.
There are many legal constraints on how I can promote my product. These laws help to provide a fair advert which won’t make it unfair for other companies, when they have their advert. The reason they have laws is, for example companies might say their prices is lower or their food is better than their competitors etc.
Some of the laws I will have to look so I can advertise my product are:
The Trade Description Act 1968
The Consumer Credit Act 1974
Sales of Goods Act 1979 and the Supply of Goods and Services Act 1982
The Sale and Supply of Goods Act 1994
Advertising Standards Authority