Craft & Design1 Craft & Design higher Int 2 Factors that Influence Design Consumer Demand & Marketing

Craft & Design2 MASLOWS HIERACHY OF NEEDS THEORY Basic physiological needs e.g. food and water Safety security protection, shelter, warmth Social acceptance, need to belong love, respect, friendship Status self respect, responsibility, achievement Fulfilling potential, creativity PHYSICAL NEEDS SAFETY NEEDS SOCIAL NEEDS ESTEEM NEEDS SELF- FULFILLMENT

Craft & Design3 Marketing “The process involved in identifying, anticipating and satisfying consumer requirements profitably”.

Craft & Design4 Identifying Consumers’ Requirements n What do they want? Consumers must buy products and continue to do so n Fierce competition and consumers’ expectations mean that products must be constantly updated and altered to suit n Other factors - price, quality, prompt delivery, attractive packaging and after- sales service n Advertising and promotion play a big part

Craft & Design5 Anticipating Consumers’ Requirements n What do they want today? n What do they want in the future? n Trends must be considered to anticipate future needs n Volatile markets - fashion, toys, technology (mobile phones, computers, etc)

Craft & Design6 Satisfying Consumers’ Requirements “The customer is king!” n Businesses must be customer-focused n No customers no business n Must offer - good service, quality products, value for money, prompt delivery, good after-sales service (eg returns), well presented and packaged goods, at the right price and available at the right place

Craft & Design7 The casualties of not adapting to the market n The American car industry n The British motor cycle industry

Craft & Design8 Marketing Successes n Swatch n Easyjet and Ryanair

Craft & Design9 Marketing - a Strategic Activity n Inception/design n Price n Distribution n Selling and promotion n After-sales services

Craft & Design10 Assessment of the Market n Where are the consumers of the product? n How many consumers are there? n What are their attitudes and preferences? n How effective are the distribution methods? n What are the strengths and weaknesses of competitors?

Craft & Design11 Product-led - Product Orientated n Putting a product on the market without prior market research n Assumption of best available and no real competition n Often new inventions like Dyson vacuum cleaners or Playstation 2 n A risky approach which can fail - British motor bikes

Craft & Design12 Market-led - Customer Orientated n Considering what the customers want before putting a product on to the market n Competition has led to companies focusing on the needs of the customer n Also looks at the influences on purchasing decisions

Craft & Design13 Marketing Products and Services n Consumer goods n Industrial goods (capital goods) n Services (intangible)

Craft & Design14 The Marketing Environment THE MARKET Consumer trends and behaviour Technology GovernmentCompetition The economy

Craft & Design15 Branding n Branding distinguishes a product from its competitors n Instantly recognisable by consumers n Often linked to quality and reliability n Can command a premium price

Craft & Design16 Unique Selling Point (USP) n Try to identify the USP of each of the products listed opposite n Think of how they are presented to you in the advertising you see daily on TV, in newspapers and magazines n Coca Cola n Nike n Kit Kat n Sunny D n Skoda Cars n Mercedes Cars n Baxter’s Soups n Fairy Liquid n Finish (dishwasher tablets)

Craft & Design17 Own Brands n Products branded with the name of the store selling them n Most of the big supermarkets (Tesco) and chain stores (Boots) have their own brands n Often cheaper alternatives to branded goods n Make a list of as many “own brands” you can think of. Indicate which branded product they are designed to rival n Eg “Wheat Bisks” by Safeway to rival “Weetabix”

Craft & Design18 The Marketing Mix Product Price Promotion Place

Craft & Design19 Product/Service n Core n Actual n Augmented n The basic product - eg toothpaste cleans teeth n The way the product is presented - design, brand name, packaging, etc (Colgate toothpaste - red packaging) n Additional features - protection against decay, fresh breath, attracting the opposite sex, etc

Craft & Design20 The Product Life Cycle Time £000 Costs/Sales Idea New Product Launch Youth GrowthDecline Maturity (Saturation) Death

Craft & Design21 The Product Mix n Very few companies have only one product n Some companies have a range of related products eg Proctor & Gamble n Some companies have totally unrelated products in their product portfolios eg Imperial Group n It is important that you have new products being launched to replace products going into decline in your “Product Mix”

Craft & Design22 Product Innovation n Generating an idea n Analysing the idea n Producing a prototype n Test market n Adapt product to solve problems n Launch the product

Craft & Design23 Pricing Strategies n Low-price strategy in a market with strong competition n Market-price strategy petrol – matching competitors n High-price strategy up-market, exclusive image

Craft & Design24 The Price of a Product? n The price of a product is one of the main factors in buying that product. Too low a price could give the impression of poor quality and too high a price may not give the feeling of value for money n Price is influenced by:- the product being new, what competitors are charging, the product’s stage in its life- cycle, the selling location, the market segment and many other factors

Craft & Design25 Short-term Pricing Tactics n Skimming – high initial price for max profit n Penetration – low initial price for new product n Destroyer – eliminating the competition (‘Go’ and ‘EasyJet’/’Ryanair’) n Promotional – lowering prices for a period to ‘promote’ more sales n Demand-oriented – charging different prices according to the level of demand eg cross-channel ferry fares in summer

Craft & Design26 Place - Distribution Channels Producer 1Producer 2Producer 3 ConsumerRetailerWholesaler RetailerConsumer

Craft & Design27 The Wholesaler Function n Buys in bulk from producers (low transport costs) and sells to retailers in smaller quantities n Bears stock-holding risk n Offers a wide variety of goods in small quantities n Packages and labels goods n Offers advice to both producers and retailers as to which goods are selling well

Craft & Design28 The Retailer Function n Breaks down bulk to quantities consumers wish to buy and store at home n Provides information to consumers through advertising, displays and trained staff n Stores a variety of goods, displays them and marks on prices n Offers range of related services - credit, HP, after-sales service and delivery

Craft & Design29 Types of Retailer n Independent - convenience stores, corner shops n Multiple Chains - M&S, Dixons, Boots n Supermarkets - Tesco, Asda, Safeway, etc n Co-operatives n Department Stores - Jenners, Harrods, Selfridges n Franchises - Benetton, Body Shop, McDonald’s n Others - mail-order, internet, direct-response advertising, telephone and TV shopping channel

Craft & Design30 Promotional Strategies Three main aims: n Persuading - to purchase the products n Informing - telling consumers about the product n Reminding - that the product still exists

Craft & Design31 Two Main Types of Promotion Above The Line n TV and newspapers to reach mass audience n A lot of waste Below The Line n Directly controlled by the business n Sales promotion, direct mail, trade fairs - targeted consumers who may be interested

Craft & Design32 Advertising Decisions n The effect on Sales? n The target market? n Why do the consumers NOT buy the product? n Which is the best medium to use?

Craft & Design33 Types of Advertising Media n Print - newspapers and magazines n Broadcast - TV, radio and cinema n Outdoor - billboards, posters, etc

Craft & Design34 Two Main Types of Sales Promotion Into the pipeline n Enhancing sales to trade outlets n Helping retailers to sell to their customers eg displays, posters, videos, etc Out of the pipeline n Helping to persuade customers to buy from retailers n Providing free samples, a percentage extra free, 2 for 1 offers, money-off coupons, etc

Craft & Design35 Public Relations (PR) n Improving the image of the product and organisation n Supporting and promoting a charity n Sponsoring sporting or cultural events n Product endorsement by celebrities n Press conferences and press releases in times of difficulty or when good publicity can be obtained

Craft & Design36 Extending the Product Life Cycle n Changing the product - size, colour, taste n Providing variants - Mars: fun-sized, yoghurt, ice cream, mini-sized, giant-sized n Altering the packaging for different market segments n Altering the channels of distribution n Changing the price n Special promotions - offers, gifts, competitions

Craft & Design37 Market Segmentation Advantages n Seller can meet buyers’ requirements n Advertising can be focused - less wasteful n Expertise developed for a specific market n Higher sales n Increased profits “Breaking down of markets into sub-groups that can be targeted with a specific marketing mix.”

Craft & Design38 Methods of Segmentation n Age n Gender n Socio-economic grouping n Education level n Income n Religion n Residential area n Lifestyle preferences - hobbies, politics

Craft & Design39 Market Research - Definitions “Market research is the systematic gathering, recording and analysing of data about problems relating to the marketing of goods and services.” “Market research is the means by which those who provide goods and services keep themselves in touch with the needs and wants of those who buy these goods and services.”

Craft & Design40 The Need for Market Research n Predict changes required in its product/service n Identify what is selling n Identify who is buying the product/service n Explain what is happening in the market n Investigate possible courses of action n Identify the size of the market n Discover what consumers think of the product n Discover what consumers are willing to pay n Discover if a promotion is appropriate n Discover if the packaging is appropriate n Identify what competition exists - now and in the future

Craft & Design41 Methods of Research - Primary n By observation or asking people questions n Up-to-date n Collected for the exact purpose of the organisation n Not easily available to competitors n Time-consuming n Expensive Primary data is gathered by field research

Craft & Design42 Market Research - Secondary n Sales figures n Stock figures n Accounting records n Customer comments n Sales reps reports n Market research data gathered previously n Government publications - social and economic trends, annual statistics, population census n Competitors’ data - annual reports, promotions, price lists, web sites n Newspapers, trade magazines, Mintel (research org), etc External SourcesInternal Sources

Craft & Design43 ICT and Market Research n Databases compiled by research agencies n Electronic point of sale information (EPOS) n Supermarket loyalty cards n Stock control software gives sales breakdown n Web sites - customers can comments back to the company

Craft & Design44 Problems with Market Research n Sampling Bias - small sample can give a wrong impression n Human Behaviour - opinions change rapidly n Interviewer Bias - leading questions may be asked n Lies Dammed Lies and Statistics

Craft & Design45 The Marketing Topic In last years exam 2003 product life cycle and consumer demand appeared the correct answer being worth 10 marks be aware, this is an important topic