Chapter topics 1. What is a marketing strategy? 2. How can a business identify its target market? 3. What is the marketing mix? 4. In the marketing mix, what is meant by product? 5. How should a product be designed? 6. What is meant by branding? 7. What pricing strategies should a firm follow? 8. What is a break even analysis?
1. What is a marketing strategy? A marketing strategy “Is a plan of setting out how a business achieves its marketing objectives” This can be done through a combination of identifying its target market, developing its product and the actual tactic of selling.
2. How can a business identify its target market? They can identify a target market through detailed market research into customers available to the business. Market segmentation can now be used to divide these potential customers into groups. Groups are picked according to age, race, sex, job, income, interests etc.
The most common way of identifying a market would be through a) DEMOGRAPHIC SEGMENTATION – This categorises age, income, sex, status. (Lucozade Sport geared towards sports people) b) PSYCHOLOGICAL SEGMENTATION – this identifies potential customers on the basis tastes, attitude. (Baileys Crème Liquor drinks is focused on sophisticated females)
What is a market niche? A market niche is a specific gap in the market for a particular product or service? What is a target market? This is a particular customer group that product/service is aimed at. (ADIDAS - Predator boot geared towards football players)
4. In the marketing mix, what is meant by product? A product is a good/service that is developed to satisfy customer needs. The following is a diagram of a product life cycle. This shows the various stages a product goes through.
Product life cycle- the stages LAUNCH GROWTH MATURITY SATURATION DECLINE sales Time
What is product portfolio? This is where a business has a range of products that are available to be sold. If a business is to reliant on one particular product it will reach the decline stage and then come into difficulties. EXAMPLES OF PRODUCT PORTFOLIO’S BUDWEISER-Bud Light BULMERS CIDER- Bulmer's Pear Cider PEPSI – Diet Pepsi- Pepsi Max
ADIDAS- 6 stud football boot - multi stud boot - predator boot - blades VOLKSWAGEN – Beatle - Pass at - Golf - Bora
5. How should a product be designed? The design of the product should address 1. After sales service – this recognises that customer may need knowledge on the particular good/service after the time of sale. Example – Toyota offer a 3 year guarantee on every new car sold. 2. Packaging – The product purchased must protect the goods from any handling damage, tampering damage etc. It should be designed for easy storage and display and where appropriate with bar code for ease of scanning.
3. Aesthetics – this deals with how the product looks, smells, tastes, sounds. The product should appeal to the customer needs. This will greatly affect the influence of a sale. Eye catching designs live long in the memory of shoppers.
4. Social Responsibility – This deals with the impacts of the product on the various stakeholders. Green products TRY to minimise their impact on the natural environment. Over the past 10 years in this country there has been a improved awareness amongst stakeholders to be eco – friendly. Certain eco-friendly businesses are gaining a loyal customer base on the basis of their greener attitude towards product development, packaging, transport, disposal etc. EXAMPLE = use of biodegradable bags instead of plastic = recycling of paper, bottles
6. What is meant by branding? Branding means “creating an identity for a product that clearly distinguishes it from the competition” EXAMPLES – Pepsi, Nike, Levi's, Mercedes. A brand leader is the brand with the biggest share of a particular market. EXAMPLES – Lyons tea – largest in Irish tea market Goodfella’s pizza – leader in Irish pizza market
What are own label brands? “Own label” brands are sold by the larger retailers with the retailers own name/own brand on them. They are goods that are usually sold at a lower price than leading brands. Example – Homestead, Euro shopper, St Bernard
What does GI (guaranteed Irish) symbol on packaging mean? This GI symbol is used to make goods that are manufactured in Ireland easily identifiable to Irish consumers. Its main purpose is to encourage Irish customers to buy Irish products
7.What pricing strategies should a firm follow? There are a number of pricing strategies used by businesses. MARK UP: this means adding a standard percentage to the direct cost of the product. The mark up helps to pay for the overheads of running the business with a profit to also be added. Example: Buy at £10, Sell at £14 – 40% mark up
High price strategies Price leadership – Firms can deliberately charge a higher price to create an impression of superiority. Price skimming – this is done in the launch stage. Company will increase the price of a product to cover development costs. Profit maximising pricing – setting a high price to deliberately make as much profit as soon as possible.
Psychological Pricing – This means setting a price based on customer expectations.
Low price strategies Penetration Pricing – a business sets a low price to push other companies out of the market. They are looking for largest market share from an early stage. Discriminatory Pricing – different prices are charged to different groupings for the same product. This is to do with age, status etc. Example – Bus Eireann charge students less than the full time employees.
Predatory pricing- This is where a company will greatly reduce prices in order to push competitors out. Example – Aer Lingus adopted this approach with Ryanair on the cheaper flights route Price War – this is where competing firms continously cut prices to retaliate against rival firms. Customer benefits greatly if this situation continues for a long period of time
Loss Leader – This is a where a business that sets a particularly low price on products can greatly benefit from the bond developed. This improves the chances of future repeat purchases and the business will profit as a result.