Every business has to decide what product or what product range they are going to sell. A further decision is what quality of product they would like to make and sell how it is to be packaged and what name to give the product. They also have to decide whether to attempt to brand the product.
Branding
With branding a product the product appears different from its competitors. A good example is the one of Cola. There are Coca-Cola, Virgin Cola, Pepsi Cola and Classic Cola, encourage brand loyalty, to ensure that consumers will continue to purchase it in preference to competitors’ brands
Methods of product differentiation are used to convince consumers that a product is different from those of its competitors. The methods used are:
1. Attractive packaging
A company may use unique colours, containers and/or designs to ensure that its product will be easily recognised by the consumer.
2. Branding
Branding is the way a product is given a unique name and image, for example, Levi Strauss and Nike. Think of some other brand names that you know.
3. Advertising
Advertising will remind the consumer of the product's benefits. Advertising campaigns aim to highlight the differentiation, such as tastier, more fun, better service.
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.
Definitions of market research:
Research that gathers and analyzes information about the moving of good or services from producer to consumer
Research is split into two types:
Field Research - service, value-added custom research firm founded in 1945 by Mervin Field. We offer expertise in questionnaire design, survey data collection and specialized capabilities such as analysis for legal cases, expert testimony in court, and Hispanic and Asian-language interviewing.
Desk research - refers to the identification and analysis of information that has
already been compiled and published in some form or other. This type of information
is known as “secondary” because it already exists as opposed to “primary” which
would require a survey or research study to produce new data. Typically, examining
what is already available is the first step in any marketing research process and has
obvious economic benefits.
Marketing desk research is usually undertaken for the following two reasons:
• To examine a market into which a business is considering entering;
• To continuously monitor the markets in which a business is already operating.
Whatever the reason, it will be necessary to:
• understand the current state of the industry or product
• examine and identify actual and potential markets
• identify and monitor competitors and customers
• explore promotional methods
(Source:www.bournemouth.ac.uk/academicsupport/documents/Library/MarkDeskResearch.pdf)
Market Segmentation
Market Segmentation – identification of portion of the market that are different from one another. Segmentation allows the firm to better satisfy the needs of its potentials customers.
Types of Segments
Just as you can divide an orange up into segments you can divide the population as a whole into many different groups of people or segments that have something in common. Segmenting the market makes it easier to identify groups of people with the same consumer needs and wants. Marketers therefore look for categories they can use to divide up the population.
There are five commonly used categories:
- Age
- Gender
- Culture
- Income
- Lifestyle
Age: The population can be divided by age in years (e.g. 0-16, 17-25) or by the stage of life reached (e.g. schoolchild, teenager). For example, a pensioner will have similar needs to those of other pensioners but different needs from those of a teenager.
Gender: Products may be targeted at a specific gender group. For instance, cosmetics have been traditionally targeted at women while DIY has been targeted at men.
Culture: People's needs and wants as consumers will vary according to their religion, language, social customs, dietary habits and ethnic background. In the UK businesses provide for a wide range of different cultures. There are magazines and newspapers in many different languages and Halal butchers in areas with large Muslim populations.
Income: The population can be segmented according to annual salary (e.g. £15,000, £30,000 etc.), or type of job and social class. Establishing a group's disposable income is important so that products can be targeted to the relevant income group. This is called a socio-economic segment. The socio-economic groups A, B, C1, C2, D and E describe how much the head of the household earns.
Lifestyle: People are grouped according to the way they lead their lives and the attitudes they share. For example, young professionals may drive a sports car because of the image they want to project. Married parents might want the same things, but have to provide for their children, which is a large extra cost. They will need a family car to suit their lifestyle.
(Source:www.bbc.co.uk/schools/gcsebitesize/business/marketing/marketsegmentationrev2.shtml)
Market research - The process of systematic gathering, recording and analyzing of data about customers, competitors and the market. Market research can help create a business plan, launch a new product or service, fine tune existing products and services, expand into new markets etc. It can be used to determine which portion of the population will purchase the product/service, based on variables like age, gender, location and income level. It can be found out what market characteristics your target market has. With market research, companies can learn more about current and potential customers.
(Source: )
There are four main categories that you need to find out about:
(Source: Mr. Sood and internet)
The other method and the most usual method of market segmentation is done through the socio- economic grouping. The population is been divided by this method accorded to their occupation (i.e. Job) or of the household’s head’s occupation (such as the father or mother of the family). The table below illustrates this method.
Source Anderton
Lifestyle
Secondary research - when a project requires a summary or collection of existing data. Other secondary research available includes:
- Telephone directories
- Yellow pages
- Internet
- Newspapers and
- Magazines
- Trade magazines and trade journals
- Statistical reports including census reports
Market Research
This means to find out the information for the following;
Source: GCSE Business Studies for Edexel
Secondary Research
A big deal of research for the consumer is done through the reports in the libraries, trade associations and university research bodies. It sometimes involves irrational dislikes, likes and preferences of your “end-users.”
Other secondary search is shown as follows;
- Telephone directories, E.g. Yellow pages Etc.
- House reports from the company
- Internet
- Magazines
- Rations reports of the businesses
These are available from the reference of the business which comes from the sections of the major libraries which should be quickly assessed.
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 includes a list of questionnaire for the customers to fill in for the help of improvement of your business. This can be carried out in the streets, can be carried out in relatives, by post or by email.
Interviews
This is done to know what the customer wants which is part of the primary research. For example if the public wants 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 interviewer, many of which will be open questions to allow them to express their own opinion which will help the interviewer make the interview easier.
Advantages and disadvantages of interviews
Source taken from GCSE Business Studies for Edexel
Observation
It means when market researchers watch and react to the organization’s service of the product.
Advantages and disadvantages of Observation
Hypothesis
I am going to carry out a piece of research which is called field research. This means a questionnaire, which I am going to give out in the public to people who are happy to respond. The public is a part of the social economic group. It won’t really to have the same number of female and male to respond to my questionnaire. It will help me more to create my marketing plan according to the responds.
According to my questionnaire, I think that I will probably get most of the following results:
- The people I am going to ask, they would be in the age range of 18-25. That I because they have a new license and want to buy a car
- Students earn money, so they would pay me enough money for a car.
The most of the people who responded to my questionnaire was males.
Most of the people I asked, they had a driving license of 3-8 years.
The age range of most of the people was 17-25. This is as I predicted
Sports cars are most liked by the people I asked. So I will try to keep most of the cars sports.
Most of the people preferred automatic gearbox. Probably the ones who want to buy a family car. I will try also keep cars with and automatic gearbox.
Mercedes-Benz is being preferred by most of the people. It is a German car. I will try to keep most of the cars in my showroom which are made in Germany.
Most of the people saw their last car advert on the T.V. It is expensive to do, but it will help me creating my marketing plan.
Almost all of them had the same choice.
33% of 100% are ready to spend £5,000-7,999. This is the same as I expected
Most of the people I asked, they earn £10,000+ per annum. This will give me an advantage as they would be ready to spend £5,000-7,999 on a car.
As I expected, 66 percent of a hundred want to have air conditioner as their internal extra. This will help me to plan what cars most people would like E.g. With air conditioner obviously.
Most of the people would like to have Alloy wheels as their external extra. It is the same as I predicted
Cheap car insurance is something everyone wants. So I would try to offer that kind of service. But they would have to agree to the policy.
Most of the people like to read The guardian. I will try to advertise in that.
Most of the people, 60 percent bought their last car from a showroom. This is an advantage for me as I am going to open a car showroom.
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.
BOGOFs (Buy one, get one free) with smaller products that I will sell in my shop E.g. steering cover and a perfume tree etc.
The Threats of my business are that because of the leaflets I am going to produce, people might Throw them on the streets. That could be a big disadvantage because this can cause more pollution which can lead to higher council taxes. That is because the council would have to have more workers to clean the streets which means they have to pay more money to the workers. If the council increases the taxes, then I would have less money to spend on my marketing campaign which would have a link to global warming because I will not be sure whether my leaflets are comfortably recycled or not. And if the customers throw my leaflets on the streets without looking at them, I would have to pa y more tax and I would have to pay more money making new leaflets for my adverts. If I advertise on The Guardian I won’t be sure whether the people will buy the Guardian or not, but according to the questionnaire, most of the people chose Guardian so let’s hope for the best.
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.
Leaflets
This method is going to be easy and cheap. This is very helpful because almost everybody gets to see it.
The followings are the details of a firm that will print leaflets for my business.
Best Printing Limited
2nd Floor
145-157 St. John Street
London
EC1V 4PY
The following are the prices listed offered to me to print leaflets.
Source: http://www.bestprinting.co.uk/
I chose this company because it gave me a wide range of options of what type of leaflets I want to print. It also is cheap as I have a small business. Another benefit is that I can order leaflets online.
I will be ordering 5,000 leaflets for my business as I think it should be enough to cover the whole area. This will cost me £115,00 for the leaflets as you can see above. These leaflets will be in the size of A5.
I have to use attractive colour in my leaflets, so that it will catch the reader’s eye. I will also put offers on the leaflets. For example “The first 5 buyers will get £500 free tuning on their new car.”
The Guardian
Details of contacting The Guardian:
119 Farmingdon Road, London
0208 585 343 467
I will also advertise in a newspaper. To help myself on which newspaper to advertise in, I asked the following question in my questionnaire “What local newspaper do you read?” As you can see at right, most of the people like to read The Guardian. That is why I will be advertising in this newspaper.
I will be planning to advertise on one whole page including 4 offer and description lines, and I will include one picture of a Mercedes-Benz. The prices for advertising in The Guardian are:
One picture: £25
One line: £12
This will cost me:
£25+(£12*4)= £73
This price is for one advertisement
Trade description Act 1968
It was accomplished in 1968, which makes it a criminal offence for traders to make false statements about the goods they sell. This means, for example, that it is illegal to say that goods can do something they cannot, such as say that a black and white printer can print good colour printouts. Also, it is illegal to say that goods include ingredients that they do not
So I will have to be careful with what I sell and what the thing does. Otherwise if I make a false statement of a product I sell. This act has offered protection to consumers and legitimate traders for over three decades. It is an extremely versatile piece of legislation which has been used to tackle all manner of different forms of unfair trading e.g.:
- a insurance policy been explained correctly
- Make sure the customer understands everything of a product or policy of something
- The terms and conditions not explained correctly.
If I would do something like this, judiciary will be charged against me.
Sex discrimination act 1975.
This is a another legal constraint, but this relates to the gender. This act in 1975 and 1986 has been made to protect men and women to be discriminated on the grounds of the gender. According to this law I will not be allowed to have one gender privileging with any fields of service, prices or anything else like that.
Effects on Environment and Society
Producing leaflets will be a bad point of my advertising. If people throw them on the streets, the council will increase the taxes and will have to keep workers to clean them thus it will cost money. 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:
