Business Management Return to Business Studies Department

Unit 3 Marketing

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LEARNING INTENTIONS OF UNIT 3

Describe the methods of

market research and outline

their costs and benefits Outline how

small businesses use

market research

Outline the stages of the product life

cycle

Describe the elements of the marketing mix

Describe the different

promotional activities used

by small business

Outline ways ICT can be used

to effectively market a product

Outline the importance of

customer satisfaction

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UNIT 3 – We are learning about  …

1. What is Marketing?

2. Market Research

What is a market? Market segmentation Methods of Market Research Costs and Benefits of Market Research How do businesses use Market Research? Product-led v Market-led

3. The Marketing Mix

Product

Stages of Product Development Product Mix/Portfolio Branding Packaging Product Life Cycle Extension Strategies

Price

Low/market/high pricing strategies Pricing Tactics

Place

Transportation Location Channels of distributions

Promotion

Advertising Sales promotions Use of IT in Marketing

Customer Service

Advantages and disadvantages

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WHAT IS MARKETING? Marketing is a management process which involves finding out what consumers want and satisfying those wants profitably. This is done by: Carrying out research to find out what products customers want Researching and developing products for the market Deciding on suitable packaging for the products Deciding where to sell the products Setting a suitable price for the products so a profit can be made, and Advertising, promoting and selling the products WHERE DO BUSINESSES 'SELL' THEIR GOODS OR SERVICES? A market is where buyers and sellers come together to buy and sell goods and services.

Goods and services can be sold in a local market (Inverness Farmers Market), a national market (the market for telephones in the UK) and on an international market (the oil market). A market can be anywhere, where goods and services can be bought and sold:

catalogues telesales internet shops car boot sales auction etc

Buyers use money to purchase goods and services

THE MARKETSellers offer goods and

services at a price

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HOW DO BUSINESSES TARGET CUSTOMERS? A business will fail unless it has a good understanding of its target market:

The needs and wants of customers, and how these differ The buying behaviour of customers – why, what and how they buy The ways in which a market is split up into different parts to meet different customer

needs – these are known as market segments The nature of demand in the market – how are prices decided? The size of the market The proportion of market that they have – their market share

Businesses study the market and attempt to place consumers into categories or segments. For example, a firm may target particular age-groups or consumers living in certain areas as their most likely customers. Breaking the market into sub-sections is known as market segmentation. Markets can be broken down according to: education level age socio-economic group religion/race/ethnic group location gender income lifestyle HOW DO BUSINESSES FIND OUT WHAT PEOPLE WANT? In order to collect information to make decisions about marketing, firms carry out Market Research to find out:

Customers wants regarding existing products What  makes  consumers  buy  a  firm’s products Consumer reaction to new products What competitors are up to What changes are taking place externally And  lots  more  …

Market segment = group of consumers with similar characteristics

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MARKET RESEARCH

The process of researching the market can be done either by field research or desk research. FIELD RESEARCH This involves obtaining information first-hand - information gained in this way is known as primary data.

Definition: Research gathered by the organisation itself or by a paid market research agency

Advantages: Specific  to  the  organisation’s  needs Not easily available to competitors Up-to-date Can verify the source

Disadvantages: Time consuming to gather/collate Expensive to gather as researchers need trained and paid

for their t ime

Types of field research Field research may involve one or more of the following:

Questionnaires Postal Survey Online survey Personal Interview Telephone Interview Test Marketing Consumer Panel Observation

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QUESTIONNAIRES

Definition: A list of questions designed to obtain information from

respondents. These may form the basis of a postal survey, online survey, personal interview or telephone interview

Advantages: Ensures all respondents answer the same questions Can find out specific information Can allow respondent to go into depth about their answer

Disadvantages: May be ambiguous Time taken to gather responses/analyse May not get al l data needed and have to do more research

POSTAL SURVEY

Definition: Questionnaires sent out by post for people to complete and

return. Free gifts or entry to prize draws are often included to encourage people to reply

Advantages:

No need for trained interviewer Cheap Wide geographical area can be covered No interviewer bias

Disadvantages:

Questionnaire cannot be as comprehensive as that used for a personal interview – the questions must be easy for people to understand as there is no interviewer to explain them

Response rate is low (less than 10%)

PERSONAL INTERVIEW Definition: Interview in which information is obtained face to face

Advantages:

Allows two-way communication between researcher and respondent

Can find out specific information Interviewer can encourage respondent to answer Questions can be explained by interviewer if misunderstood Allows interviewees to give detailed responses Follow-up to answers given is possible

Disadvantages:

Interviews may be time consuming and it is difficult to find people willing to give up their time

Expensive – interviewers have to be trained and paid Takes time to find respondents who have the desired

characteristics – age, sex, income bracket, occupation, etc

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Personal interviews can vary enormous ly. A questionnaire in the s treet is less friendly and detailed than an interview in the home and each wil l gain different results . A street interview wil l be brief and involve a broad sample group of consumers , whereas a home discussion can be exactly the oppos ite – detailed, personal and us ing a tightly defined sample group. The interviewer, rather than the interviewee, wil l fi l l out the questionnaire. TELEPHONE INTERVIEW

Definition: Interview where questions are asked over the telephone

Advantages: Cheaper than face-to-face interviews/questionnaires Immediate response Wider geographical area can be covered

Disadvantages:

Many people find it an invasion of privacy and so negative or hostile responses are received

Only short questions may be asked as detailed questioning is impossible

TEST MARKETING

Definition: Sell ing a product in a small section of the market eg a l imited geographical area, to assess consumer reaction before a full launch

Advantages: Modifications can be made to the product before the full launch

Disadvantages: The correct market for the product may not be chosen for the test

CONSUMER PANEL/AUDIT

Definition:

A group of people consulted on their reactions to a product Valuable information can be gained by allowing a group of people to

try a product and write down/comment on the product – this is usually done in one sitting or over a long period of time eg one month

Advantages: Can establish how consumer reaction changes o ver t ime

Disadvantages: Difficult and expensive to choose and keep a panel for a long

period of t ime – people get t ired of filling in the diary Diary entries may be inaccurate or incomplete

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DESK RESEARCH Desk research involves using secondary data, ie information which is already available in a useful form - either within the firm or from other firms or organisations.

Definition: Research gathered by one organisation for their specific

purpose and then reused (by someone else) for a different purpose

Advantages: Cheaper to collect than field research Less t ime involved in the collection of data

Disadvantages:

May be out-of-date and contain irrelevant information May need to adapt for your own purpose May contain bias May contain too much information and therefore key data

is lost (not concise) May need to perform further research as data gathered

may be insufficient

Types of Desk Research Internal sources: Sales figures Stock figures Accounting records Exis ting  customers’  comments and complaints kept

on fi le Sales  representatives’  reports Market research data gathered earl ier External sources: Government and official publications eg Population Census figures Competitors ’  information  eg  Annual  Reports ,  Promotional  Material s, Prices Trade directories and journals eg Market research organisations eg Mintel Newspapers and magazines International publications Retail audits eg Top 40 Mus ic Charts

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External data could come from a variety of sources. Government publications provide useful data - eg details included in the 10-yearly population census, economic data contained on the Office of National Statistics Website. The following data about Scotland comes from the 2011 Census: Population The populat ion of Scotland on census day in 2011 was est imated to be 5,295,400 - the highest ever. There were more women (2,728,000 or 51.5 per cent) than men (2,567,400 or 48.5 per cent) in Scotland. This was the case for all council areas except for Shetland Islands. Age structure In 2011, 17 per cent of the populat ion were aged 65 and over. This percentage ranges from 14 per cent in West Lothian to 22 per cent in Argyll & Bute. Age comparisons with 10 years ago Since 2001, the number of children aged under 5 years in Scotland has increased by 6 per cent. This change has not been uniform throughout the country. In the City of Edinburgh the increase was 18 per cent whilst there was a reduction of 11 per cent in Argyll & Bute. The number of people aged 80 and over has increased by 19 per cent since 2001. All council areas have seen rises but this ranges from a 3 per cent increase in Glasgow City to a 44 per cent increase in East Dunbartonshire. Information can also be collected from the media - newspaper reports, specialised magazines, radio and television. There are specialised Trade Associations (eg the British Medical Institute) for most modern industries and these publish statistics and data relevant to their specialised area. Special reports are often commissioned by organisations that will employ a market research organisation such as MORI. The Scottish Government spends a substantial amount of money on market research every year,  eg  they  spent  £8000  asking  1000  members  of  the  public  “Would  you  like  to  see  a  reduction in the drink drive alcohol limits?”

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HOW DO SMALL BUSINESSES USE MARKET RESEARCH? Carrying out detailed market research is the first step in any effective marketing campaign. Market research provides information which managers’ base decisions on. Firms generally start by looking at information already available within their company eg sales records. These can show: which products are most profitable sales patterns by product, customer, area or time of year which customer accounts are most profitable The next step for firms is to consult other sources of information which have already been published such as government publications, media reports, newspapers and journals. These can show: whether the total market for a particular product or service is growing, staying the same

or declining what changes are taking place in the market who the main competitors are If desk research does not provide all the information required, the firm can then decide to use field research. WHAT DO BUSINESSES WANT TO FIND OUT? Where do potential customers live? What price are they prepared to pay? How often will they buy the product? Where do they expect to buy the product? What qualities/features do they want the product to have? What similar products are they buying now, and why? What age and gender are they? What lifestyle and interests do they have?

If a business can find out exactly what its customers want, it can then design, price and promote the product so that customers will buy it.

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WHAT MARKETING ISSUES HAVE TO BE CONSIDERED? Knowing about the market is only one of the marketing issues which businesses consider. Marketing is about more than just selling goods and services. There are a number of things which a business has to get right if it wants its product/service to be successful.

For example, if the product is product-led or consumer-led: Product-led Businesses will design and make a product and then try to convince consumers to buy it eg electronics companies and pharmaceutical companies - produce products then advertise. These businesses focus on the quality of the product. Consumer-led Businesses will find out what consumers want before making the product. This reduces the risk involved in developing a new product and it failing eg manufacturers of sweets, soap powders and soup.

THE MARKETING MIX

There must be enough customers who demand the product the price of the product must be acceptable to customers the product must be promoted to the customer so they are aware of it and the customer must be able to buy it in a suitable place

4 things are essential in marketing. These are known as the 4Ps or the Marketing Mix.

Product led Consumer led

Product Price Place Promotion

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GETTING THE RIGHT MARKETING MIX When  marketing  a  product,   any  business  needs  to  create  the  ‘right’  mix:

PRODUCT the actual item for sale (good or service)

PRICE the amount of money that the customer has to pay for the product

PLACE where the product is sold

PROMOTION methods used to persuade customers to buy the product

In order to get the perfect marketing mix in a business: the product has to have the right features - appearance, function, durability the price must be right - consumers need to be able and willing to buy the product must be in the right place at the right time – accessible to the market the promotion must target the market segment and make them aware of the product

and persuade them to buy Product The product is the most important part of the marketing mix. All products must meet consumer needs. There is no point in spending large sums of money producing, promoting and selling a product, unless people want to buy it. Product Benefits are the advantages gained by customers from the goods/services they buy eg on a hot day you benefit from a long cool drink; when you switch on your laptop you benefit from the internet being fast and available from your broadband provider.

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PRODUCT RESEARCH & DEVELOPMENT Once demand for the product has been established, the next stage is product research. This involves experimenting with materials, size of product and prototypes. A prototype is a model of a product, made for test purposes. Sometimes, the product is test marketed on a representative sample of consumers. This provides feedback and reduces the risk of failure when the product is finally launched. The product can then be developed. The following stages outline product development: 1 Generating ideas – market research 2 Analyse ideas 3 Develop prototype 4 Product tested 5 Product adapted 6 Test marketing 7 Product named, priced and placed 8 Advertising and launch of product

BRANDING A brand is the name, design, symbol or feature which  identifies  one  seller’s  product  from  another. (The term originates from farmers branding their cattle with different marks so they could identify their cattle from another farmer’s.)

KEY FEATURES OF A GOOD BRAND NAME The brand name, symbol etc should be distinctive

and unique The brand name should suggest quality It should be easy to remember It should be transferable to new products, eg

Baxters – on  soups,  oatcakes,  jams…

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DOES BRANDING APPLY TO SMALL ORGANISATIONS? Brands are usually associated with large organisations but the principles of branding can still be applied to smaller organisations. Choosing the right name is just as important to a smaller organisation as this becomes its brand and so should take the key features of a good brand name into consideration. A catchy and appropriate name will mean that customers will remember them. What are the advantages of branding products? Products easily recognisable to consumers Creates brand loyalty/repeat purchases Differentiates product from others in the market Can signal quality to consumers A higher price can be charged (premium price) Can give organisation a competitive edge Can reduce advertising costs Brand can be extended to new products The brand itself can become valuable, eg BMW wanted the Mini brand name Brand can become a status symbol thus increasing sales What are the disadvantages of branding products? Maintaining a strong brand image can be expensive Establishing a brand can take a long time As brands can be high profile, bad publicity can be bad news What is brand loyalty? Brand loyalty is when consumers repurchase and continue to use a product with a brand name. This can happen because: consumers believe it is a quality product there is a lack of alternative products on the market consumers trust the brand consumers feel that the brand provides value for money consumers  feel  comfortable  with  the  brand  and  don’t  

want to try another

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WHAT IS OWN BRANDING?

Many supermarkets offer own branded products alongside big brand names, which allows them to gain the benefits of branding. These own-brand products can offer the consumer excellent value for money. Within some stores there may be different levels of branding eg from Tesco Value to Tesco Finest.

Small to medium-sized organisations can also brand themselves. Below are links to websites which give examples of ways in which smaller organisations can do this. http://www.garrreynolds.com/Branding/brandyou.html http://www.optionsltd.co.uk/ What is brand extension? This is when a company decides to introduce more brands into an existing category. Kellogg’s,  for  example, have a number of brands in the cereal and cereal bar markets. Multibranding can allow an organisation to maximise profits, but a company needs to be careful over their own brands competing with each other for market share.

When an organisation has a successful brand it is easier for them to introduce new products under that brand. The organisation does not have to establish a new brand name at a high cost. The extended product line builds on the success of the original brand. There are drawbacks, for example if one product in the line gains a bad reputation, this can damage sales across the range.

PRODUCT MIX Most businesses do not produce just one product. They produce several products – this is to reduce the risk of failure. If they produced just one product, and that product failed, then they have no back-up and severe problems occur. However, if they produce several products, even if one fails, the business will not face the same problems due to having other products in their Product Mix doing well. This is called diversification and allows a firm to spread the risk. Look at the range of products by Unilver below:

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PACKAGING Packaging is the way that goods and services are presented to the customer. An attractive design, protection during transport, use of recycled materials, etc can give added benefits to a product. Packaging should ensure that the product arrives:

Fresh Undamaged Secure

Effective packaging should be:

• informative • promote the brand • attractively designed • colourful/eye-catching • stackable • functional • cost effective to produce • sustainable

Packaging can also add considerably to the cost of production. Heavy, bulky packaging will add to transport costs. In the case of perfumes, the packaging costs more to produce than the actual perfume. The more packaging that is used, the more material that is required and there will als o be the environmental problem of disposing of the packaging. Firms, therefore, need to think very carefully about the advantages and disadvantages of packaging and the ability for consumers to recycle the materials (eg bottle banks).

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PRODUCT LIFE CYCLE Products have a marketing life-cycle of research and development, introduction, growth, maturity (saturation), and decline. It is normally only in the maturity stage of the cycle that total costs of production start to be covered. At each stage of production, there is a close relationship between sales and profits.

The Product Life Cycle

Stage 1 Introduction Stage

At this stage, the product is introduced onto the market. Sales will be slow at start, but should start increasing quite quickly due to intensive promotion strategies. Costs of advertising are high in this stage.

Stage 2 Growth Stage

At this stage, sales are increasing quickly as more people are becoming aware of the product.

Stage 3 Maturity Stage

At this stage, sales start to level off as customer loyalty is established. Little advertising tends to be done as the product is established.

Stage 4 Decline Stage

Sales start to decline as consumer tastes change or they try other products brought out by competitors.

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As products enter the decline stage businesses are faced with a dilemma: Do they let the product die or do they inject new life (and a lot of money) into the product to try to extend its life? Businesses can change one or more elements of the Marketing Mix to extend the life of a product. EXTENSION STRATEGIES

PRO

DUCT

CHA

NG

ES

Improve the Product - produce new improved or longer lasting versions of their product Appeal to a different Market – changing design/logo/colour of packaging to appeal to new market segments Change the Name – changing the name to appeal to a wider market Product Line Extensions – producing new flavours and organic or sugar free/low fat versions Change the Use of the Product – marketing a new use of the product to make it more appealing eg Lucozade used to be seen as a drink of the sick – now  it’s  a  sports  drink. Finding a new use for the product – mobile phones are now used to surf the net, facetime, email, take pictures

PRIC

E CH

ANG

E Change Product Prices – changing prices according to competitor’s prices or to encourage more sales, or to put a competitor out of business.

PRO

MO

TIO

N C

HAN

GE

Changes in Advertising Media – changing where you advertise the product Changes in Promotion Strategies – offering special offers, getting celebrities to endorse the product etc to encourage more sales

PLAC

E CH

ANG

ES

Alter the Channels of Distribution – Changing where the product is sold to attract more customers eg selling on the Internet has become a huge potential market for businesses

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PRICE Charging the right price is a very important part of the marketing mix. In setting a price for your product, a business needs to cover costs and make a profit in the long run. The price  charged  will  depend  on  the  organisation’s  objectives:    profit maximisation, growth, increase market share? Does a business charge:- a low price in order to attract sales – high volume at a low average cost an average (market) price - by charging the market price you have to

compete by other means eg advertising, quality etc a higher price/premium price - if a product is seen as better quality than

others on the market a firm can charge a higher price PRICING STRATEGIES Cost plus pricing - firm calculates how much it costs to do a particular job and then add on a percentage mark up. eg a small repair job on a car including parts, labour, use of premises and equipment, etc is £100. The business works on the basis of making a 20% return on all work that it does so it would charge its customer £120 for the job. Hour-based pricing - many small businesses are able to work out what their typical costs are for every hour of work they do eg gardening. The customer will be charged at a standard charge per hour. Penetration pricing - when a firm brings out a new product into a new or existing market it may want to make a lot of sales quickly in order to establish itself. It will initially sell the product at a low price and when market penetration has been achieved, prices are raised. Price Skimming - when a business introduces a new product to the market at a high price and consumers, who want to be the first to buy your product, are willing to pay. This may be due to the prestige of owning it e.g. new technological goods normally enter the market at a high price. Next season, the price could be lowered making it accessible to a lower income group of customers. In the future it could be mass produced so that it is available at a low price to the mass market. The danger of pricing products too highly is that sales may be lost.

COST + MARK UP (PROFIT) = PRICE

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Destroyer pricing - selling products at a very low price to destroy new or existing competitors eg  the  newspaper  price  war  of  the  mid  1990’s  resulted  in  the  ‘Today’  newspaper going out of business in November 1995 Promotional pricing - a tactic used to inject fresh life into an existing product or to create interest in a new product. Prices are lowered for a short period of time in the hope consumers will purchase increased quantities of the product. In the DIY market, Homebase regularly advertise periods where all the goods in their stores are reduced by 20% in an attempt to promote brand loyalty for Homebase at the expense of competitors such as B&Q and Wickes. Another form of promotional pricing is the use of loss-leaders. Supermarkets frequently use loss-leaders to boost sales. A loss-leader is a product whose price is substantially reduced by the supermarket so that it is probably contributing no profit at all. Only a small number of items sold by the supermarket are loss-leaders. The aim of selling them cheap is to give the impression that all items in the store are cheap. A shopper, seeing that Kit-Kats are 10p per packet cheaper in one supermarket, may wrongly expect all prices to be cheaper in that store. The business makes money on the other goods that the consumer buys when in the store. What Affects The Price Of A Good Or Service?

COSTS - The company will want to cover their costs and make a profit

DEMAND & SUPPLY – If a product is in short supply then price will rise. If there is little demand for a product the price will fall

COMPETITION – How similar are the products of our competitors? What price are

they charging?

ECONOMICS – A booming economy can lead to high prices. During a recession prices will fall

LIFE CYCLE – The price is more likely to increase in the growth phase and fall in

decline

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PLACE There are 3 main aspects to distribution transport - how the product physically arrives at its destination (road, sea, air, rail) location - the place where the product is actually sold to the consumer channel - how the product gets to the consumer (manufacturer, wholesaler, retailer) All 3 require careful planning and organisation as they affect the efficiency of the business.

TRANSPORT Distribution (delivery) makes products available to customers where and when they want them. Freight charges take up approximately 20% of the total production cost of a product - they are the costs of transporting:

raw materials producers finished goods consumers

ROAD

advantages disadvantages

door-to-door delivery available allows firms to use their own fleet of

vehicles relatively cheaply

road travel can be subject to delays/breakdowns

drivers are only allowed to drive their vehicles for a set number of hours per day

RAIL

advantages disadvantages

relatively quick and cheap over long distances, particularly

between major towns/cities guaranteed speedy delivery

not good for reaching out of way destinations

can be costly

AIR

advantages disadvantages

fast between countries (so long as destination is not too far away from major cities)

air is generally used for carrying important, perishable, urgent, valuable and relatively light loads

Expensive

SEA

advantages disadvantages

cheap way of carrying heavy and bulky loads

Slow method of transport

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LOCATION When identifying possible locations for a business, owners have to consider the factors below: Competition - Affects the location decision as many businesses will want to locate away from their competitors in order to encourage customers to visit their premises rather than the competition. However, there are times when being close to competitors may bring advantages eg retail parks and shopping malls. Availability of raw materials - Businesses which depend on bulky raw materials tend to set up close to the source of raw materials to avoid high transportation costs. These businesses tend to process these bulky raw materials into products which are often smaller - these are known as bulk-reducing industries.

Where the product is perishable, but processed, the business will also often locate near the source of its raw materials eg frozen vegetables, tinned fruit, cut flowers etc.

Distance to the market - Customer orientated businesses which offer a service to certain types of people/businesses tend to locate close to their consumers eg butchers, garages, fast food outlets etc will locate close to residential areas. Producers of perishable fresh products that must be sold within days of production must locate near their customers, although improvements in production and transport have allowed businesses to locate further away from the market. Businesses which deal in products that increase in volume will locate near to their customers to reduce transportation costs. By doing so, they can keep their prices competitive - these are known as bulk-increasing industries.

Transport costs - Transport costs depend on the distance to the market, the type of transport being used, and the bulkiness of the product being transported.

Availability of labour - All businesses will want to locate where they can employ workers with the skills they require. Since labour costs are high, few businesses will want to invest in retraining.

Availability/Cost of land and premises - The  size  of  a  business’s  premises  and  its  location  depends upon the nature of the business. Premises in cities are more expensive than those of a similar size in the country.

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Infrastructure - This is the term given to the basic physical and organisational facilities that are needed for an organisation to operate in an area. Workers will need accommodation in the area, utilities (water and electricity), services (hospitals) and good communication links (roads etc).

Local Council grants and regulations - In an effort to attract businesses into an area, Local Councils may offer reduced business rates, or provide grants for building premises. Planning permission regulations and availability of industrial estates are also key factors.

Central Government - Grants and loans are offered by Central Government to help businesses train staff and purchase premises and machinery. These are offered to businesses which are prepared to locate in areas of high unemployment. EU Incentives - The  UK’s  membership   of  the  EU  brings  a  range  of  benefits  to  businesses.    Businesses locating in areas of high unemployment or which have a poor infrastructure are able to apply for special support from the EU. Footloose businesses - More and more businesses are operating in the service sector and are able to locate to where they wish. They do not need to locate near a source of raw materials nor near a populated town. For this reason, some businesses tend to be found outside towns in large business parks. Many internet businesses can be run from anywhere! CHANNELS OF DISTRIBUTION The means by which an organisation and its customers are brought together at a particular place and time for the purpose of buying and selling goods eg shop, office, television shopping, internet (via a computer link) etc. The organisations involved in the distribution chain are: manufacturer - the firms that make products wholesalers - firms who purchase from manufacturers, store goods in bulk before

selling on to retailers retailers - firms that sell goods to final consumers There are a number of different types of channel of distribution between the manufacturer and the final consumer. SEE DIAGRAM ON NEXT PAGE

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Channel A Manufacturer sells direct to consumer by mail order/online eg Laura Ashley, Next have their own mail order/online networks. Channel B Manufacturer distributes direct to its own warehouses and company shops which then sell to consumers. Most major supermarkets use this channel. Channel C - traditional channel of distribution Manufacturer makes goods; wholesaler buys a lot of different goods from several manufacturers in bulk; wholesaler sells on to retailers who in turn sell to consumers. The manufacturer, wholesaler and retailer are all independent organisations. This was the pattern  for  most  goods  in  the  UK  in  the  1960’s. Channel D Retailers buy directly from manufacturers. This is easiest when retailers have a large storage area or when goods can be bought in bulk.

Company Warehouse

Company Outlets

Wholesalers

Retailers Retailers

MANUFACTURERS

A B C D

CONSUMERS

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PROMOTION Advertising and Publicity The promotion aspect of the mix is to inform and persuade. Some people believe that advertising is often persuasive but rarely informative. However, we must remember that one of the biggest spenders on advertising in the UK is the Government. Advertising is a large and influential industry itself and can influence the success of new products and maintain sales of established products. It can also be very expensive!! Advertising can be done in many places: TV Radio Local and National newspapers Magazines Billboards Leaflets Cinema Direct Mail Online Mobile phones

It is important to know the difference between sales and marketing.

SalesPersuading potential consumers that your product is what they

want and getting them to purchase

MarketingIdentifying,

anticipating and predicting what

consumers want and need and fulfilling that need

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Sales promotion covers the various ways that a business will encourage customers to buy a good or service - discounts, free samples, competitions, exhibitions and so on. How can the customer be protected from unfair/inaccurate advertising? Customers expect that whatever good or service they have purchased, will be of an acceptable standard. Information is now more likely to be included with the product. The ASA (Advertising Standards Authority) exits to ensure that advertising in all media is legal, decent, honest and truthful, to the benefit of consumers, business and society. The  Advertising  Standards  Authority   is  the  UK’s  independent   regulator  of  advertising  across  all media. They act on complaints and proactively check the media to take action against misleading, harmful or offensive advertisements.

Other Forms of Promotion Advertising is only one form of promotion. There are several others: Sponsorship Special Offers eg 2 ’4’  1, BOGOF (Buy One Get One Free), 10% extra etc Free gifts/samples Competitions Celebrity Endorsements Public Relations exercise eg Press Conference ICT AND MARKET RESEARCH The way in which marketing information is collected has changed as a result of information communication technology. There are sources of information available to organisations such as : DATABASES compiled by market research agencies such as Mintel ELECTRONIC POINT OF SALE (EPOS) information is collected

when customers make a purchase eg a shop ti l l can record how many of a particular product l ine are sold in a day and at what time and to whom! Bar coding has made this eas ier

SUPERMARKET LOYALTY CARDS can match the products being

purchased against information already held about the card holder – age, where they l ive, etc

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DATA MINING TOOLS are used by bus inesses to gather

information  about  the  customer’s  brows ing  sessions  and  their  Internet Protocol (IP) address . The bus inesses then push relevant adverts to that IP address . For example, on the right hand s ide of an individual’s  Facebook  page  adverts  for  bus inesses that you have viewed before wil l appear

E-COMMERCE is the term used for online sell ing. When you buy products

online you have to provide personal details such as name, address and email. Bus inesses use this va luable data to profi le their customers and can contact them for market research. Think about the number of times you may have been asked to answer questions when brows ing a s ite.

Increas ingly, organisations use computers to l ink s tock records with consumer demand and purchas ing habits. Software des igned for s tock control purposes can also be used to provide a great deal of information. Mail-order companies , for example, can breakdown the purchase s of their customers , what they bought, how much of it, the s izes , colours and qualities. This data can be analysed in terms of the area of the country, the age of the customers and, with other information, the income group to which they are sell ing. This enables organisations to determine more exactly the di fferent segments of the market and plan their advertis ing and promotion accordingly. SOCIAL MEDIA MARKETING Social networking websites allow individuals to interact with one another and build relationships. When companies join these sites, people can interact with the company and their products. This interaction feels personal to users because of their experiences with social networking. Social networking sites and blogs allow  individual  followers  to  “retweet”  or  “repost”  comments made about the product being promoted. By repeating the message, all of the user’s  connections  are able to see the message, therefore reaching more people. Social networking sites act as word of mouth. Through social networking sites, products/companies can have conversations and interactions with individual followers. This personal interaction can instill a feeling of loyalty into followers and potential customers. Also, by choosing whom to follow on these sites, businesses can reach a very narrow target audience with their products.

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Twitter Twitter is a real-time information (information that is delivered as soon as it is collected) network used by approximately 200 million active users. Twitter connects you to the latest stories, ideas, opinions and news about what you find interesting. It is constantly being up-dated. At the heart of Twitter are small bursts of information called Tweets. Each Tweet is 140 characters long (approximately the size of a standard text message). You can see photos, videos and conversations directly in Tweets to get the whole story at a glance, and all in one place. Twitter connects businesses to customers and these businesses use Twitter to quickly share information with people interested in their products and services, gather real-time market intelligence and feedback, and build relationships with customers. Advertisers use market segmentation to target Twitter accounts and Tweets by: Interest Geography Gender Similarity to existing followers Twitter allows companies to promote their products on an individual level. The use of a product can be explained in short messages that followers are more likely to read. These messages  appear  on  followers’  home pages.  Messages  can  link  to  the  product’s  website,  Facebook profile, photos, videos, etc. This link provides followers the opportunity to spend more time interacting with the product online. This interaction can create a loyal connection between product and individual and can also lead to larger advertising opportunities. Case Study The British Heart Foundation (@TheBHF)  is  the  UK’s  largest  heart  charity. It has been a pioneer in cardiovascular disease research, patient care and education for over 50 years. It is not widely known that cardiopulmonary resuscitation (CPR) can also be effective using a hands-only technique. @TheBHF wanted to educate people about administering this CPR technique in situations where they felt uncomfortable with mouth-to-mouth resuscitation. The organization needed a way to capture the public’s  attention  and  ensure  that  their  message  made  an  impact. To educate the public, @TheBHF created  the  “Hard  and  Fast”  campaign,  featuring  actor  Vinnie Jones in a humorous but effective video about performing hands-only CPR to the rhythm   of  the  Bee  Gee’s  tune  Stayin’  Alive. Instead of launching the campaign on television first, @TheBHF used Promoted Tweets to drive viewership of the video online.

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Facebook Facebook profiles allow a business to provide videos, photos, and longer descriptions. Videos can show when a product can be used as well as how to use it. These include testimonials as other followers can comment on the product pages for others to see. Facebook creates word of mouth advertising and people feel involved with the advertising as it is related to them and their “friends”. Purchasing a product becomes a social decision by enabling people to show what they like and have purchased, both online and in the physical world. On Facebook, you can create viral promotional events, publicise offers or run deals. Every time someone RSVPs, clicks, or checks-in, that action gets shared with all of their friends. This combination of word of mouth advertising and the ability to engage with your customers is incredibly powerful at increasing sales. It is easy to set up and many small businesses make use of it. Case Study In 2010 Ford altered their promotion techniques as they began gearing their campaigns towards social media outlets, and they really pushed the boundaries with innovative ideas. They released information in small amounts leading up to a Facebook event unveiling the 2011 Ford Explorer. The campaign was the first time a car company has ever used a website to reveal their new model as opposed to a car show. Smartphones

The internet is mobile. Smartphones like Apple’s  iPhone  have made access to the internet on the move a reality. Many content-based websites now design websites for smartphones. Smartphone users who visit bbc.co.uk are automatically referred to the mobile version of the website. One of the greatest uses of smartphones used to be for social networking use, especially amongst the young. Now with technology changing rapidly, smartphones are being used as HD camcorders, cameras, sat navs and portable games machine.

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‘Apps’  are  available  for  just  about  anything,  from  checking your mobile phone balance to tuning your bagpipes! Banks have taken advantage of this and provide apps for online banking. As smartphones become more intelligent, and as users spend more time using their phones as a mobile PC, we are now seeing a real shift towards advertising to mobile devices and this trend will continue to grow. Case Study Slim-Fast commissioned an advert to show the range of flavours of the Slim-Fast shake, as well as generate brand awareness for the new Slim-Fast bottles. Given the health-conscious attitude of their target market they also incorporated the nutritional information for each flavour, into the ad. This ad ran on iPhone and Android phones, across mobile and in-app inventory. This  ad  was  unique  in  that  it  used  the  iPhone’s  ability  to  be  shaken  to  control the content within the ad. By shaking the iPhone, users were able to view different flavours of Slim-Fast shakes. THE BENEFITS OF EFFECTIVE CUSTOMER SERVICE TO THE ORGANISATION A key component in the success of an organisation is to ensure that its customers are satisfied with the product it provides. This is often one of the objectives set by a business and should mean that an organisation will: retain existing customers (loyalty) gain new customers as the organisation's good

reputation grows have fewer complaints to deal with keep ahead of the competition survive

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To ensure customer satisfaction businesses can carry out a number of measures including: market research – to find out what their customers want and/or find out what they think

of their existing products

considering the 4Ps and getting the right mix for price, product, place and promotion ensuring that the product is of the highest quality – businesses should have effective

quality assurance procedures in place employing excellent staff – staff should be well trained and well informed about the

business and the product; staff play a key role in ensuring good customer service and satisfaction

ensuring that they maintain a customer-focused/market led approach to their business The features of customer satisfaction/customer service: good-quality product value for money well-trained/well-informed helpful staff good after-sales service guarantees complaints dealt with efficiently and effectively 'taking the extra step', eg if a customer asks where to find a product, rather than just

telling them lead them to the product (this can be applied to different circumstances) added extras, eg discounts on future purchases. The consequences of poor customer satisfaction/service: decline in market share/loss of customers decrease in profits low staff morale bad reputation – word of mouth, reports in the media high number of complaints to deal with ultimately could lead to closure of the business