module 3.03
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AS3 Marketing. MODULE 3.03. MARKETING STRATEGY AND PRODUCT. The Marketing Mix. - PowerPoint PPT PresentationTRANSCRIPT
MODULE 3.03
MARKETING STRATEGYAND PRODUCT
AS3 Marketing
The marketing mix forms the basis of the marketing plan which is set to achieve both marketing and corporate objectives of the business. Whenever the objectives of business change or if the external environment changes, it is likely that the business will have to alter its marketing mix.
The marketing mix forms the basis of the marketing plan which is set to achieve both marketing and corporate objectives of the business. Whenever the objectives of business change or if the external environment changes, it is likely that the business will have to alter its marketing mix.
The Marketing Mix
The 4 P’s of the basic marketing mix are:
1. Product
2. Price
3. Place
4. Promotion
The 4 P’s of the basic marketing mix are:
1. Product
2. Price
3. Place
4. Promotion
The Marketing Mix
Dividing the market into segments with similar needs and wants and common characteristics, and tailoring the marketing mix to meet the needs of a particular segment.
Dividing the market into segments with similar needs and wants and common characteristics, and tailoring the marketing mix to meet the needs of a particular segment.
Market Segmentation
Methods
Demographic/Socio-Economic Demographic/Socio-Economic
GeographicGeographic
lifestyle lifestyle
Geo-demographicGeo-demographic
Methods
GeographicGeographic
Countries, regions, neighbourhoods.Countries, regions, neighbourhoods.
Methods
Demographic/socio-economic Demographic/socio-economic
Age, gender, income, education, occupation, religion, race, marital status, family life cycle.
SEG Social Class Type ofOccupation
Examples UK%
A Upper / upper– middle
High managerial,administrative,professional
chief executive of largecompany, surgeon, judge.
3-5
B Middle Middle manager,administrative,professional
bank manager, head-teacher, doctor, solicitor,architect.
12-13
C1 Lower middle Junior manager /administrative,clerical
Teacher, nurse, estateagent, journalist,policeman, senior shopassistant, bank clerk.
22
C2 Skilledworking
Skilled manuallabour
Electrician, butcher, miner,tailor, train driver.
32-33
D Working Semi-skilled &unskilled
Driver, postman, waiter,road sweeper.
19-20
E Lowest paid Casual workers,unemployed
Casual farm labourer,pensioner, unemployed,student.
10
Socio-Economic Groupings
• Classification of small geographical areas according to age, race, social class – links purchasing power with how people live and where people live.
Methods
Geo-demographic Geo-demographic
• Lifestyles - activities, interests,opinions.
YUPPIES – young upwardly progressing professional
DINKY-double income no kids household
Methods
Lifestyle/Psychographic Lifestyle/Psychographic
• Personality • Personality
TrendsetterEnvironmentalistRisk-taker
Methods
Eg
3 main strategies3 main strategies
Strategies for Marketing a product
1.Undifferentiated marketing
2.Differentiated marketing
3.Concentrated marketing
1.Undifferentiated marketing
2.Differentiated marketing
3.Concentrated marketing
Undifferentiated
This is a single marketing mix offered to the total market after market research has been carried out
MARKET FIRM
market research
marketing mix
This involves dividing the market into different segments and, as a result of market research, having separate marketing mixes for each segment.
This involves dividing the market into different segments and, as a result of market research, having separate marketing mixes for each segment.
Differentiated
FIRM
SEGMENT 1
SEGMENT 2
SEGMENT 3
mix 1
mix 2
mix 3
market research
market research
market research
This is choosing one segment of the market and developing the best marketing mix for this segment only. It is often the best strategy for the smaller firm and is also known as niche marketing.
This is choosing one segment of the market and developing the best marketing mix for this segment only. It is often the best strategy for the smaller firm and is also known as niche marketing.
Concentrated
SEGMENT 2 FIRM
market research
marketing mix 2
A corporate strategy which focuses on identifying and satisfying a relatively small segment of the market.
A corporate strategy which focuses on identifying and satisfying a relatively small segment of the market.
Niche Marketing
Often used by smaller firms unable to compete with larger.Often used by smaller firms unable to compete with larger.
Niche Marketing
A corporate strategy which focuses on identifying and satisfying a relatively small segment of the market.
A corporate strategy which focuses on identifying and satisfying a relatively small segment of the market.
BenefitsBenefits LimitationsLimitations
Niche Marketing
• Fewer resources.
• Can enable smaller firms to operate in markets dominated by larger.
Niche Marketing
BenefitsBenefits LimitationsLimitations
• Lack of economies of scale - prices / profit.
• Vulnerable to market changes.
• Large business in several niches - requires flexible production.
Niche Marketing
BenefitsBenefits LimitationsLimitations
A strategy which involves firms aiming products or services at whole markets rather than particular market segments.
A strategy which involves firms aiming products or services at whole markets rather than particular market segments.
Mass Marketing
Mass Marketing
BenefitsBenefits LimitationsLimitations
• Less vulnerable – spreading risk
• Economies of scale
•Greater sales and profits
Mass Marketing
BenefitsBenefits LimitationsLimitations
• Greater investment - mass production.
• Greater competition likely.
• Greater investment - mass production.
• Greater competition likely.
Mass Marketing
BenefitsBenefits LimitationsLimitations
Product Positioning
Firms position themselves in their market with regard, for eg,
•Price
•Quality
•Reliability
And use a positioning map to show this. The map can help identify gaps in the market where new products/services can be provided
Firms position themselves in their market with regard, for eg,
•Price
•Quality
•Reliability
And use a positioning map to show this. The map can help identify gaps in the market where new products/services can be provided
High Alcohol Content
Low Alcohol Content
High Price
Low Price
Portfolio Analysis
Relevant Terms
Product LineProduct Line
Group of products with similar characteristics or uses or sold to the same type of customer. Eg Ormo bakery produces a line of white loaves – thin, medium, thick cut
Group of products with similar characteristics or uses or sold to the same type of customer. Eg Ormo bakery produces a line of white loaves – thin, medium, thick cut
Portfolio Analysis
Relevant Terms
Product Mix/Product PortfolioProduct Mix/Product Portfolio
The combination of all a firm’s product lines. Eg Ormo bakery produces a wide variety of breads (loaf, soda, wheaten etc) and cakes/buns. This is known as its product mix/portfolio
The combination of all a firm’s product lines. Eg Ormo bakery produces a wide variety of breads (loaf, soda, wheaten etc) and cakes/buns. This is known as its product mix/portfolio
1. Likely to meet a defined need?
2. To what segment(s)?
3. What position in the market place?
4. Fit in with objectives?
5. Improve or diminish image / reputation?
6. Cost?/has business resources
1. Likely to meet a defined need?
2. To what segment(s)?
3. What position in the market place?
4. Fit in with objectives?
5. Improve or diminish image / reputation?
6. Cost?/has business resources
Deciding upon Product Mix
Product Life Cycle
The different stages through which a product passes and the levels of sales experienced at each stage.
The different stages through which a product passes and the levels of sales experienced at each stage.
Like humans, products have a life cycle:Like humans, products have a life cycle:
1. Development (conception -pregnancy)
2. launch / introduction (birth).
3. growth (childhood - adolescence).
4. Maturity & saturation (adulthood).
5. Decline (old age).
Product Life Cycle
Stages of development shown in relation to sales over time:Stages of development shown in relation to sales over time:
SALES
Time
Developm
ent
Introduction
Maturity
Grow
th Saturation
Decline
Extension strategies
Product Life Cycle
No 2 products identical. Depends on:
• nature of product
• marketing
• customer tastes & income
• competition
• technology.
No 2 products identical. Depends on:
• nature of product
• marketing
• customer tastes & income
• competition
• technology.
Product Life Cycle
Ideas investigated, designed, tested & selected.Ideas investigated, designed, tested & selected. Involves:
:a) product research.
b) customer research.
Marketing plan prepared. High costs, no sales, cash, profit. The more novel the longer the development.
Marketing plan prepared. High costs, no sales, cash, profit. The more novel the longer the development.
The Stages Involved
Development
Product launched into market place.Product launched into market place.
• Price - high / low depending on uniqueness.
• Promotion - informative to educate.
• Profit - unlikely as sales low, promotion costs high.
• Price - high / low depending on uniqueness.
• Promotion - informative to educate.
• Profit - unlikely as sales low, promotion costs high.
Introduction
The Stages Involved
Introduction
The Stages Involved
Many go no further.Many go no further.
More & more customers aware of product.More & more customers aware of product.
Growth
The Stages Involved
• Sales & Profits - rapidly rise.
• Profits - attract customers.
• Competitors - enter the market.
• Sales & Profits - rapidly rise.
• Profits - attract customers.
• Competitors - enter the market.
Changes required to marketing strategy:Changes required to marketing strategy:
• Price - rises or falls. High to recover costs / maximise profits; low to discourage competition.
• Promotion - persuasive - special offers to build loyalty.
• Price - rises or falls. High to recover costs / maximise profits; low to discourage competition.
• Promotion - persuasive - special offers to build loyalty.
Growth
The Stages Involved
MaturityMaturity
• Sales - rise but rate slows, level off due to competition.
• Promotion - defensive - emphasis on branding & packaging.
• Extension strategies - planned.
• Sales - rise but rate slows, level off due to competition.
• Promotion - defensive - emphasis on branding & packaging.
• Extension strategies - planned.
Maturity & Saturation
The Stages Involved
SaturationSaturation
• Competition - too many firms competing for customers.
• Sales - level off.
• Competition - too many firms competing for customers.
• Sales - level off.
Maturity & Saturation
The Stages Involved
• Sales & Profits - rapidly decline.
• Can be a lucrative stage if marketing effort withdrawn.
• Product withdrawn if damaging company’s image.
• Sales & Profits - rapidly decline.
• Can be a lucrative stage if marketing effort withdrawn.
• Product withdrawn if damaging company’s image.
Decline
The Stages Involved
Methods to extend the life of a product.Methods to extend the life of a product.
Implemented during maturity or early decline.
Extension Strategies
Definition
Extension Strategies
Examples Examples
• Change design, image, appearance, packaging.
• Increase frequency of product’s use.
• Attract new users / target new markets.
• Change design, image, appearance, packaging.
• Increase frequency of product’s use.
• Attract new users / target new markets.
Extension Strategies
Examples Examples
• Develop alternative / new uses.
• Introduce additional models / wider range.
• Extend products into other formats.
• Develop alternative / new uses.
• Introduce additional models / wider range.
• Extend products into other formats.
Extension Strategies
NB
Advertising and sales promotion alone not extension strategies: can be used to boost sales at any stage.
NB
Advertising and sales promotion alone not extension strategies: can be used to boost sales at any stage.
Use of the product life cycle
Can help a firm to:Can help a firm to:
• analyse present position.
• Identify action to fulfil objectives.
• analyse present position.
• Identify action to fulfil objectives.
Use
and make decisions regarding...and make decisions regarding...
• promotion & price
• extension strategies
• when / how to withdraw a product
• promotion & price
• extension strategies
• when / how to withdraw a product
Potential Problems / Limitations
Knowledge of what is currently happening - not guarantee success:Knowledge of what is currently happening - not guarantee success:
marketing manager still needs to select the right strategies and implement them successfully.
marketing manager still needs to select the right strategies and implement them successfully.
Product Portfolio Analysis
Boston Matrix
• Allows firms to analyse their product mix / portfolio.
• Visual means of showing route new product might take in terms of market growth and share.
• Allows firms to analyse their product mix / portfolio.
• Visual means of showing route new product might take in terms of market growth and share.
Portfolio Analysis
Boston Matrix
• Products placed into 4 categories, usually move from problem children to stars to cash cows.
• Products placed into 4 categories, usually move from problem children to stars to cash cows.
1. STAR-
Growth stage
2. QUESTION
MARK-intro stage
3. CASH COW-
maturity stage
4. DOG-
Decline stageLow
High
High Low
Market GrowthMarket Growth
Market ShareMarket Share
Portfolio Analysis
Boston Matrix
Portfolio Analysis
Boston Matrix
2. Star/Prospect (Growth Stage)2. Star/Prospect (Growth Stage)
• Large share of high growth market.
• Generate lots of cash but probably require lots of cash to maintain dominant position.
• Large share of high growth market.
• Generate lots of cash but probably require lots of cash to maintain dominant position.
Portfolio Analysis
Boston Matrix
2. Question Mark – Intro stage2. Question Mark – Intro stage
• Low share of rapidly growing market.
• Need high investment to gain market share.
• Low share of rapidly growing market.
• Need high investment to gain market share.
Portfolio Analysis
Boston Matrix
contdcontd
• New products but also those previously strong.
• Hope - becomes stars or cash cows, most become dogs.
• New products but also those previously strong.
• Hope - becomes stars or cash cows, most become dogs.
Portfolio Analysis
Boston Matrix
3. Cash Cow/Yielder (Maturity Stage)3. Cash Cow/Yielder (Maturity Stage)
• Considerable share in low growth market.
• Need little investment, excellent cash generators.
• Considerable share in low growth market.
• Need little investment, excellent cash generators.
Portfolio Analysis
Boston Matrix
Cash Cow/Yielder contdCash Cow/Yielder contd
• Resemble products in mature stage of life cycle.
• Part of profit they make often used to finance new products.
• Resemble products in mature stage of life cycle.
• Part of profit they make often used to finance new products.
Portfolio Analysis
Boston Matrix
4. Dog (Decline Stage)4. Dog (Decline Stage)
• Small share of low growth market.
• Resemble products in decline.
• Should be dropped unless essential part of product range.
• Small share of low growth market.
• Resemble products in decline.
• Should be dropped unless essential part of product range.
Portfolio Analysis
Boston Matrix
Firms don’t want lots of dogs, need to avoid lots of stars (drain resources). Balance with cash cows:
R & D costs probably recovered + promotion cost low relative to sales.
Firms don’t want lots of dogs, need to avoid lots of stars (drain resources). Balance with cash cows:
R & D costs probably recovered + promotion cost low relative to sales.
Ansoff’s Matrix – strategies for growth
Ansoff’s matrix shows the 4 options a business can choose if it wants to grow:
1. Market Penetration 2. Market Development3. Product Development4. Diversification Explained in diagram overleaf.
Ansoff’s matrix shows the 4 options a business can choose if it wants to grow:
1. Market Penetration 2. Market Development3. Product Development4. Diversification Explained in diagram overleaf.
Market penetrationopps – try
selling more of present products
in present markets
Product development
opps- try bringing out new products in
present market
Market development
opps- try looking for new
markets for present products
Diversification opps- try looking
at completely new products
and new markets
new
present
present New
MarketsMarkets
ProductsProducts
Ansoff’s Matrix – strategies for growth
Adding Value through Branding
A strategy used by businesses to differentiate its products from others in the market place and influence customer purchasing patterns.
A strategy used by businesses to differentiate its products from others in the market place and influence customer purchasing patterns.
Branding
Adding Value through Branding
Brand
Any distinctive name, term,symbol, image, design or packaging given to a product (or group of products) which enable it to be easily recognised and differentiates it from other products.
Any distinctive name, term,symbol, image, design or packaging given to a product (or group of products) which enable it to be easily recognised and differentiates it from other products.
Adding Value through Branding
Brand
Significant advertising often required to build positive image.
Largely depends on packaging.
Significant advertising often required to build positive image.
Largely depends on packaging.
Adding Value through Branding
Types
• Family• Family
• Line• Line• Individual• Individual
• Company name• Company name
• Own Brand / Own Label• Own Brand / Own Label
• Sub-brands• Sub-brands
• Repeat purchase - Brand loyalty• Repeat purchase - Brand loyalty
• Recognition• Recognition• Differentiation• Differentiation
• Brand promotion• Brand promotion
• Intangible fixed asset-adds value to business worth
• Intangible fixed asset-adds value to business worth
• Pricing flexibility• Pricing flexibility
Adding Value through Branding
Purpose & Benefits
Only successful if product lives up to customers expectations & image built through advertising.
Only successful if product lives up to customers expectations & image built through advertising.
Can have adverse affects - bad press with one branded product can negatively affect another.
Can have adverse affects - bad press with one branded product can negatively affect another.
Adding Value through Branding
Purpose & Benefits
• Suggests benefits.
• Suggests use or special feature.
• Easy to pronounce, spell, remember, recognise.
• Suggests benefits.
• Suggests use or special feature.
• Easy to pronounce, spell, remember, recognise.
Adding Value through Branding
Qualities of a Good Brand
Adding Value through Branding
Qualities of a Good Brand
• Distinctive.
• Versatile (apply to new products).
• Capable of legal protection.
• Does not break the law!
Adding Value through Branding
Qualities of a Good Brand
Really successful brand names become generic, eg
Biro (ballpoint pen).
Hoover (vacuum cleaner).
Really successful brand names become generic, eg
Biro (ballpoint pen).
Hoover (vacuum cleaner).
•FMCG’s – fast moving consumer goods bought by consumer for immediate consumption eg food, petrol,
•Consumer durables- goods bought for intention of keeping and using for a considerable period of time eg cooker, fridge, car, carpet etc
•FMCG’s – fast moving consumer goods bought by consumer for immediate consumption eg food, petrol,
•Consumer durables- goods bought for intention of keeping and using for a considerable period of time eg cooker, fridge, car, carpet etc
Consumer Goods
Classification of Products
•Industrial consumables – raw materials that business buys in and uses daily
•Capital goods- these goods will last for a considerable period of time eg machines, computers, vehicles etc
•Industrial consumables – raw materials that business buys in and uses daily
•Capital goods- these goods will last for a considerable period of time eg machines, computers, vehicles etc
Industrial goods
Classification of Products
Services
Things other people do for you eg cutting your hair, looking after your money, prescribing treatment. They are intangible, ie cannot be seen or touched.
Things other people do for you eg cutting your hair, looking after your money, prescribing treatment. They are intangible, ie cannot be seen or touched.
Services
• Trade.
• Services to trade.
• Direct Services.
• Trade.
• Services to trade.
• Direct Services.
Services
NB Not just a good or service:NB Not just a good or service:
• a place eg holiday destination.
• a person eg popstar.
• a place eg holiday destination.
• a person eg popstar.
• Inadequate market/product research.
• Product defects.
• Greater costs than expected
• Poor pricing policy/strategy
• Inadequate marketing effort eg promotion
• Inadequate salesforce.
• Weaknesses in distribution.• Too much Competition
• Inadequate market/product research.
• Product defects.
• Greater costs than expected
• Poor pricing policy/strategy
• Inadequate marketing effort eg promotion
• Inadequate salesforce.
• Weaknesses in distribution.• Too much Competition
Common Reasons for Failure of product/service
- END -
MARKETING STRATEGY
AS Marketing