4. Promotion
The company may ask consumers to collect a certain number of labels of the product to qualify for a prize, or to qualify for a competition. Promotion includes competitions, collecting tokens and special events; they create hype and excitement around a product.
Price is the money paid when goods and services are exchanged. Businesses have to decide the price of their product.
There are different ways in which businesses price their products. Here are the five ways.
Competition Based Pricing
In this way firms base their prices according to the prices changed by their competitors.
Cost Plus Pricing
This is where a price is fixed by adding a per cent profit margin to the cost of production. For instance a CD costs £6 to produce and add a 100% mark up to sell it at £12.
Creaming or Skimming
Creaming or Skimming is where selling a product initially at a high price, sacrificing high sales in order to earn high profits. This way is often used by electrical products such as DVD players or video recorders. E.g. Recordable DVD Players at the moment are selling for £1000 plus. This will fall as demand increases.
Prestige pricing
This way refers to the practice of setting a high price for a product. This is done in order to evoke perceptions of prestige and quality with the product or service.
Penetration Pricing
This is the opposite of price skimming and occurs when a business sets a low price in order to gain a good market share quickly. It is used when a new product is brought onto the market or when a manufacturer is trying to break into an existing or an established market. Once market share has been won, the price can be increased to gain larger profits.
The place is that part where goods are going to be sold. It depends on the nature of the goods. Most goods are sold to the general public either in showrooms or in shops.
But there are also some other places where goods can be sold. Some examples are
- Wholesalers
- Direct Sales
- The Internet
- Mail Order
- Telephone Sales
- Door-to-Door Selling through Agents (Avon Cosmetics)
- Exhibitions (e.g. Ideal Home Exhibition, Motor Shows)
Promotion is the part of the marketing mix where the decision is made how a product should be marketed and sold. Promotion is itself a mix of lots of methods. The main methods are:
- Advertising on TV, Radio, Internet or posters
- Sales Promotion-Discounts, Free Offers, Competitions, Demonstrations Coupons and Displays
- Direct Marketing – through personally addressed mailing, telephone sales, teletext and email.
- Sponsorship- Person or an Event
- Personal Selling- through Sales Representatives (who are mainly used for selling to business) also trade fairs, exhibitions and party sales.
- After Sales service and customer care-designed to build up customers loyalty so that they keep coming up.
- Public Relations (PR)- Promotion of a positive image about a product or a business through giving information about the product to the general public, other businesses or to the press.
Advantages And Disadvantages
Of Various Methods Of Advertising
Source: Mr. Sood (my business studies teacher)
Market Segmentation
Businesses have to decide what to make and sell, to carry out any market research. This involves finding who the likely customers of the business are (e.g. age, rich/poor…)
Businesses are more likely to succeed than those who have little knowledge of their market, by finding out this sort of information.
Businesses breakdown the market for a product into different groups or types of consumer, in order to identify customers. This is known as Market Segmentation. Each group will have different wants.
The market can be segmented in several ways. The most common ones are:
Source: GCSE Business Studies for Edexel
Other ways are:
- Social economics
- Ethnic, cultural and religious groups
- Repeat customers
- Impulse Buying
- One-time customers
- Planned Buying
- Brand Loyality
- Occupation
- Education
- Religion
- Nationality
Socio-economic groupings
Another method and probably the most common method of segmenting a market is through socio-economic grouping. This method divides the population up according to their occupation (i.e. Job) or the occupation of the head of the household (such as the mother or father in the family). This table illustrates this method:
Source: GCSE Business Studies for Edexel
The Socio-Economic-Grouping is another way and probably the most common way of Marketing Segmentation. The following table illustrates this.
Source: Anderton
Market Research
Market Research is simply “Finding Out”
There are four main categories you need to find out
Source: GCSE Business Studies for Edexel
Secondary Research
A great deal of consumer research is available through reports at libraries, trade associations and university research bodies. It sometimes involves irrational likes, dislikes and preferences of your "end – users". Rather than asking you to conduct consumer testing, it is suggested that you tap into these invaluable resources.
Other secondary research available includes:
- Internet
- Telephone directiories, yellow pages, etc.
- Trade magazines and trade journals
- Newspapers and lifestyle magazines
- Statistical reports including census reports
- Mintel reports
- Business ration reports
- Companies’ house reports
All of these are available from the business reference sections of major libraries and should be accessed as soon as possible.
Advantages and Disadvantages of Secondary Research
Source: GCSE Business Studies for Edexel
Primary Research
When you have found out all you can through internal and secondary research you will need to prepare to find the missing information.
Primary research can be carried out face to face, over the telephone or by post or over the Internet.
Surveys
To use a questionnaire is the most common form of survey. A questionnaire consists of a list of questions which are carefully planned to find out what customers think and want. This can be carried out in the street, by telephone, by post, by e-mail or through a newspaper.
Advantages and disadvantages of questionnaires
Source: GCSE Business Studies for Edexel
Interviews
Interviews can be used for primary research, for example to find out whether the public would like a product, such as soap powder, that had been placed in their home for them to try out. The interviewer has a set of ready-prepared questions to ask the interviewee, many of which will be open questions to allow them to express their own opinions.
Advantages and disadvantages of interviews
Source: GCSE Business Studies for Edexel
Observation
When market researchers watch how people use and react to an organisation’s products of services.
Advantages and disadvantages of observation
Having looked at the various methods I have decided to use a Survey, which is a questionnaire, for my coursework.
Hypothesis
I am carrying out one piece of field research, which will be a questionnaire, that I will hand out to the public, who are apart of the socio economic group. I want to ask the same number of male and female people. The questions I am going to ask are relevant to my business and will help me to decide upon how to conduct my marketing plan.
What I think my findings will be from my questionnaire:
- As I will hand out my questionnaire to people, I will expect that most people will be in the age range of 25-35 years, because most people in this range have a car or want to buy one.
- I think these people will earn much money and thus they will be ready to pay more than £ 5,000.
Explaining the results
The major people I asked were over 25. This suggests, I should target this age group.
The major people I asked drive family cars. This suggests that my business should sell more family cars.
The major people I asked preferred automatic cars. This suggests I should sell more automatic cars.
The major people I asked drive a Volkswagen. This suggests I should sell many cars of this make.
The major people I asked were adverted last by the Internet. This suggests I should use the Internet for advertisement of my business most.
The major people I asked chose this make of car because of advertisement. This suggests that I should advertise them as well as possible.
The major people I asked were willing to pay between £2,000 and £9,999. This suggests I should buy many cars of this a price to sell at my business.
All people I asked wanted an Air Conditioning as an internal extra. This suggests that I should try to buy only cars with an Air Conditioning.
As an external extra the major people I asked wanted Alloy wheels. This suggests that cars with Alloy wheels should be sold at my business.
The major people I asked wanted a breakdown service as an after car service. This suggests that I should arrange for this service.
The major people I asked read the Advertiser most as a local newspaper. This suggests that advertisement in this newspaper would be best for my business.
The major people I asked bought their last car from the Internet. This suggests that advertisement on the internet would be best for my business.
The major people I asked liked silver cars most. This suggests that I should arrange for silver cars.
The major people I asked wanted cars with 5 seats. This suggests that I should sell many cars with this amount of seats and less of 2 or 7 seats.
The major people I asked wanted horsepower between 70 and 109. This suggests that I should arrange for cars with this horsepower.
Evaluation
In this section I will determine whether my marketing plan and research meet specified criteria such as effectiveness.
The Strengths of my business were to create a survey with the suitable questions and to find people that were suited to answer the questionnaire. Most of the results I got from the questionnaire were like I predicted. An example would be the question ‘What local newspaper do you read?’ which was answered with 40% for the Guardian (s. right).
The Weaknesses of my business were that I used some questions in my questionnaire that were irrelevant and useless. An example for this is the question ‘What internal extras do you look for?’ (s. right) which was not a well asked question because the results show that everyone I asked gave the same answer that was ‘Air Conditioning’. An explanation for this is that I did not have enough time to do my survey, because I had to proceed with my marketing plan.
The Opportunities of my business are that if my business successes in the future I will be able to increase the products and services I can offer. in the future I can also sell products like Alloy Wheels or Air Conditioning systems because these products were most preferred by the people I asked (s. right). I can also offer BOGOFs (Buy one, get one free) with smaller products that I will sell in my shop.
The Threats of my business are that because of the leaflets I am going to produce, people might through them on the streets. That could be a big disadvantage because this can produce more pollution. This could also lead to higher council taxes because the council would have to arrange more people for cleaning the roads and thus they would have to pay more money to them. If the council raises the taxes I would have less money to spend on my marketing campaign. This could also have an effect on global warming because it is not guaranteed that the material of the leaflets will be recycled.
Marketing Plan
I will come up with a marketing plan for my car showroom, based on the research I have carried out.
I need to know my target market, which is very important in deciding upon my marketing Plan. For this I created the research to get a successful marketing plan.
With the result I got from my research I know what product I am going to sell, which will be Volkswagen and Vauxhall cars (s. chart right) and that I will target on people aged 25-35 who are in socio-economic class A and B.
Advertising my business
To find the best place, where I should advertise my business, I asked in my questionnaire “Where did you buy your last car from?” The outcome was that about 40% of the people I asked bought their last car from the Internet. This result is telling me clearly that I should use the Internet for advertisement to get the most effective and successful advertising. I would create my own website for my business to sell my cars. This has also other benefits like, that they can contact me easier by e-mailing.
After the Internet I could also use magazines for advertising, because 25% of the people I asked bought their last car from a magazine or local newspaper. To advertise in a local newspaper I first need to find out, what local newspapers are read most. In my questionnaire I asked this question. The result was (as shown on the left), that the most frequently read newspaper is the Guardian. This result tells me clearly that advertising in the Guardian would be the most effective and successful way apart from the Internet.
The Guardian
Details of contacts:
119 Farmingdon Road, London
0208 585 343 467
The price for advertising in the Guardian is £18.99 fro every line for one week. The number of lines I have decided to use for my advertising is 8. This means that the total cost of my advertising in the Guardian will be:
8* £18.99 = £151.92
Leaflets
Another method I will use in promoting about my business is by using leaflets. The reason I have decided to use leaflets is not based on my questionnaire. The reason is that the other types of advertising, which would be Radio and billboard, would be too expensive for my small business.
The followings are the details of a firm that will print leaflets for my business.
Azimuth Print Ltd.
Bowling Hill Business Park
Chipping Sodbury
Bristol BS37 6JL
www.azimuthprint.co.uk
0145 431 9676
This is the price rate of the company that will print leaflets for my business.
I chose this company because I can order leaflets online and because this company had the most beneficial price-rates. For my advertising I have decided to order 5,000 leaflets from this company in A5 side. I chose this size and amount because I think 5,000 leaflets are enough for the area my business will be located in.
This amount of leaflets would cost me only 159 because the firm features free UK delivery.
The fact is, that I am yet a small business and cannot spend so much money on advertisement. In the future I hope I will be able to choose the more expensive and effective types of advertising like a radio station or Billboards, if my business increases and if it successes.
For the production of my leaflets I will need to design an attractive and good-looking leaflet. I will also include some below the line promotional methods on the leaflets, which could be for instance ‘The first 10 people who buy a car will get free extras’. This can help my business to be famous and more people would like to be under the ‘first 10’ and thus they would try to buy a car immediately.
There are some issues that I have to consider when launching this marketing campaign. These include Legal Constraints and The Effect on Environment and Society.
Legal Constraints
The Trade Description Act 1968 is an Act which prevents manufacturers, retailers or service industry providers from misleading consumers as to what they are spending their money on.
It restricts me from giving false description or making false statements about the prices of my goods and services. If I did that in the advertisement about my business, my business could be punished by the judiciary. For example according to this law I am not allowed to advertise the car as a second-hand car whereas it is actually third, or fourth-handed
There is another legal constraint, which relates to the gender. The Sex Discrimination Act 1975 and 1986 are to protect men and women to be discriminated on the grounds of gender. According to this law I am not allowed to privilege one gender from the other in fields of service, prices or anything else.
Effects on Environment and Society
A disadvantage or bad point to my campaign could be the producing of leaflets. If people decide to throw the leaflets given out by my business on the roads, the council would have to clean the roads. To do this they would have to employ more workers or pay them more money, which finally could result in higher council taxes. This could be a possible effect that my marketing campaign would have on the environment and society.
Bibliography
The following are the Sources, which include the Internet, references and books that helped me with my coursework.
- Mr Sood (my teacher)
- A-Z GCSE Business Studies Handbook by Arthur Jenkins
- GCSE Business for Edexcel by Alpin & Co
- Tutor2u.com
-
Anderton 2nd edition
Websites I used for price comparison for advertising through leaflets:
Glossaries and other websites I used for definitions:
