Topic 4 Marketing Marketing Planning

Learning Objectives Discuss the effectiveness of a marketing mix in achieving marketing objectives Examine the appropriateness of marketing objectives Analyse the role of market research Evaluate the different methods of market research Understand segmentation and targeting Discuss how organisations differentiate themselves and their products

Marketing Objectives & Corporate objectives Marketing objectives – goals for the marketing department – Examples Increase market share Increase brand awareness Develop new markets Marketing strategy – long term plan established for achieving marketing objectives

Marketing Objectives & Corporate objectives To be effective, marketing objectives should – Fit in with the overall aims and mission of the business – Be determined by senior management – Be motivating and SMART

Why are marketing objectives important? Provide a sense of direction Progress can be monitored against the targets Can be broken down into regional Form the basis of the marketing strategy

Market research The process of collecting, recording and analysing data about customers, competitors and the market Result of market research can have a great impact on decisions made in all areas – Reduce the risk associated with new product development (NPD) – Predict future demand changes – Explain patterns in sales of existing products and market trends – Assess the most favoured designs, flavours, styles, promotions and packages for a product

NPD The NPD ProcessThe market research process Identify consumers needs and tastes Primary and secondary research into consumer needs and competitors Product idea and packaging design Testing or product and packaging with consumer groups Brand positioning and advertising testing Pre-testing of the product image and adverts Product launch and after launch period Monitoring of sales and consumer response

Market research Can be used to discover information about – Market size and consumer tastes and trends – The product and its perceived strengths and weaknesses – The promotion used and its effectiveness – Competitors and their claimed USP’s – Distribution methods most preferred by consumers – Consumers’ preferences for packaging the product

Why do businesses need Market research? Descriptive: To identify what’s happening in the market. Predictive: To predict what’s likely to happen in the future. Exploratory: To investigate new possibilities in a market.

Sources of market research data Primary research (Field) Collection of first hand data that are directly related to a firm’s needs Divided into two types, quantitative and qualitative Secondary research (Desk) Collection of data from second hand sources Examples include – Government publications – Local libraries and local government offices – Trade organisations – Market intelligence reports – Newspaper reports and specialist publications – Internal company records – The internet

Secondary Research Advantages Usually quite cheap Identifies nature of the market and assists with the planning of primary research Easy access Allows comparisons with data from different sources Disadvantages May not be as up to date as required May not be entirely suitable Accuracy may be questioned May not be available for completely new product developments

Primary research Qualitative Focus Groups – a group of people who are asked about their attitude towards a product, service, advertisement or new style of packaging Quantitative 1.Test Marketing - marketing a new product in a geographical region before a full-scale launch 2.Consumer Surveys – Directly asking consumers for their opinions and preferences. This can be used for both qualitative and quantitative purposes

Quantitative v Qualitative Quantitative Research Qualitative Research Based on opinions, attitudes, beliefs and intentions Answers questions such as “why”? “Would?”, or “how?” Aims to understand why customers behave in a certain way or how they may respond to a new product or service Focus groups and interviews are common methods used to collect qualitative data Concerned with data and addresses question such as “how many?”, “how often”, “who?”, “when?” and “where?” Based on larger samples and is, therefore, more statistically valid The main methods of obtaining quantitative data are the various forms of survey – i.e. telephone, postal, face-to- face and online.

Consumer surveys 4 important issues for market researchers to consider – Who to ask? – What to ask? – How to ask? – How accurate is it?

Sampling It is not possible to survey every possible customer, so market research needs to take a sample of the population. Random sampling Quota sampling Stratified sampling Cluster sampling Snowball sampling

Random sampling Each member of the sample is selected at random… like out of a hat… but today it uses ICT! Methods: Pick every 50 th off the electoral list Send interviewer to their house Return twice if they are out! What are the benefits and problems? What are the benefits and problems?

Quota sampling This segments the population into groups that share specific characteristics Interviews are then asked to interview a set number within each segment E.G. interview 20% under 16’s; 15% 17 – 25; 25% 26 – 50 etc… What are the benefits and problems? What are the benefits and problems?

Stratified sampling To only select those with key characteristics to suit the focus of the products. To interview Swimmers for new swimwear What are the benefits and problems? What are the benefits and problems?

Cluster sampling To send interviews into a few geographical areas E.g. To a few seaside resorts to research swimwear What are the benefits and problems? What are the benefits and problems?

Snowball sampling Using friends of current samples E.g. Asking someone who is doing a sample to ask their brothers and sisters to do it too What are the benefits and problems? What are the benefits and problems?

Sampling – Main Methods Random sample A random sample gives each member of a population an equal chance of being chosen. The main advantage of this is that bias is not introduced when the sample is chosen. However, a random sample also assumes that all members of the population are the same, which is rarely the case! The main drawback of random sampling for a start-up is the cost of the required sample size. Random sampling needs large sample sizes in order to achieve acceptable confidence levels. Quota sample Quota sampling involves the population being segmented (broken up) into groups that share specific characteristics. The research then focuses on a specific sample size (quota) chosen for each group. Quota sampling can help market research focus more closely on the target customers or market segments. However, it takes more time than random sampling and is the sampling method most likely to result in bias. Stratified sample Stratified samples are used when the research wants to provide insights into specific market segments or customer groups. Once the target group is selected the sample is chosen at random from that group. A stratified sample still has the benefit of being random (i.e. low bias) and is not as expensive or difficult to obtain as a full random sample.

Factors affecting sample size Finance and cost Important. Market research should be low cost, or even better, free! Type of product If the start-up is offering an existing product or service, there may be lots of secondary research already available. By contrast, a new product is less likely to have secondary data available Level of riskThe newer the product and the greater the investment prior to launch – the greater the risk. If the start-up is investing significantly upfront and there is a high chance of failure, this increases the need for effective primary research. In such a situation, there is a case for choosing a random sample, backed up by additional quota or stratified samples. Target market If the start-up’s product is targeted at a specific segment (e.g. geographical, income) then it is easier to target primary research. If the business can identify the target customers, then it is usually more appropriate to conduct research using a stratified sample.

Reliability of research. Human behaviour – in answers given & a true understanding of their reasons behind their actions. Sampling & bias – are the interviewees representative? Questions used in questionnaires. Response rate Methods of collecting answers – face to face V self-completion.

True or False If every member of the target population has an equal chance of selection, this is a quota sample FALSE It’s a random sample! A quota = looking at specific segment of customres

True or False A focus group is an example of qualitative research True They collect people’s opinions rather than statistics

True or False The findings of a focus group are statistically reliable. False They collect people’s opinions rather than statistics

Market Segmentation & Consumer Profile Market segment – A sub-group of a whole market in which consumers have similar characteristics Market segmentation – Identifying different segments within a market and targeting different products or services to them Consumer profile – A quantified picture of consumers of a firm’s products, showing proportions of age groups, income levels, location, gender and social class

Segmentation Sometimes referred to as differentiated marketing Different products are targeted at different segments, this is a form of niche marketing Sometimes businesses only aim to satisfy the needs and wants of one segment

Identifying different consumer groups Segmentation requires a business to have a very clear picture of their target market This is called the consumer profile

Market segmenting Markets can be segmented in different ways Three most common 1.Geographic differences (location specific) 2.Demographic differences (age, sex, family size, income) 3.Psychographic Factors (differences in peoples lifestyles, personalities, values and attitudes)

Market segmentation Advantages Can define their target market precisely and design \ produce goods specifically Helps identify gaps in the market which then can be exploited Can design differentiated marketing strategies Small firms can specialise on one or two segments Limitations R&D and production costs may be high Promotional costs may be high Production and stock holding costs may be high By focusing on one or two segments, excessive specialisation may be a problem in consumers purchasing habits change

Positioning Before targeting a niche market businesses will analyse consumers’ perceptions of existing brands Positioning the product by using market mapping

Market Mapping Stages – Identify features of the product important to the consumers – price, quality (achieved through market research) This then – Identifies a gap in the market – Key features of the product are made aware – Can monitor existing brands

Corporate Image - Consumer perception of the company behind a brand Unique Selling Point (USP) – Differentiating factor that makes a company’s product unique, designed to motivate customers buy

USP Can be based on any aspect of the marketing mix – Product – Technology of the product – Price – Right price – Place – Selling on the internet – Promotion - Slogan