MARKETING Marketing

BM Unit 2 - LO22 Success Criteria: To introduce marketing and its significance in modern business practices. Learning Intentions: You should be able to: Describe what marketing means to you Describe consumer and industrial markets Describe and understand identifying, anticipating and satisfying consumer requirements

MARKETING BM Unit 2 - LO23 Marketing – What it means to me?

MARKETING What is a market? Any place where buyers and sellers meet.

MARKETING Consumer markets Consumer markets - are made up of individuals who purchase goods/services for personal or domestic use. Consumable goods, eg food, cosmetics, magazines Durable goods, eg cars, televisions, clothes

MARKETING BM Unit 2 - LO26 Identifying Consumers’ Requirements What do they want? Consumers must buy products and continue to do so Fierce competition and consumers’ expectations mean that products must be constantly updated and altered to suit Other factors - price, quality, prompt delivery, attractive packaging and after- sales service Advertising and promotion play a big part

MARKETING Industrial markets Industrial markets - organisations that purchase goods and services to use in the production of other goods and services. Consumable goods, eg raw materials Durable goods, eg machinery and equipment

MARKETING What is marketing? ‘Marketing is the management process responsible for identifying, anticipating and satisfying consumer requirements profitably.’

MARKETING BM Unit 2 - LO29 Anticipating Consumers’ Requirements What do they want today? What do they want in the future? Trends must be considered to anticipate future needs Volatile markets - fashion, toys, technology (mobile phones, computers, etc)

MARKETING BM Unit 2 - LO210 Satisfying Consumers’ Requirements “The customer is king!” Businesses must be customer-focused No customers no business 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

MARKETING Marketing objectives To target a new market or market segment. To achieve or maintain market share. To develop a new range of products. To improve the image of the product.

MARKETING Marketing activities Market research New product development Selling Pricing Promotion and advertising Preparing publicity information

MARKETING BM Unit 2 - LO213 Assessment (looking) of the Market Where are the consumers of the product? How many consumers are there? What are their attitudes and preferences? How effective are the distribution methods? What are the strengths and weaknesses of competitors?

MARKETING Factors leading to the importance of marketing Economic growth and booms – with more disposable income, marketing is needed to gain market share. Fashion – marketing attempts to anticipate trends and/or changes in tastes, lifestyle. Technology – new product innovation is essential for firms to keep up with competitors. Competition – rivals may come from overseas. Firms have to be aware of the market environment both at home and abroad.

MARKETING BM Unit 2 - LO215 Success Criteria: To introduce marketing casualties and success stories. Learning Intentions: You should be able to: Identify and describe marketing casualties in both the UK and World-wide markets Identify and describe marketing success stories in both the UK and World-wide markets To describe product and market orientation

MARKETING BM Unit 2 - LO216 The casualties of not adapting to the market The American car industry The British motor cycle industry In pairs have a discussion to see if you can think of any others.

MARKETING Product/Marketing failures Ford Edsel New Coke Sony Betamax VCR McDonald’s Arch Deluxe Sinclair C5 DeLorean motor car

MARKETING BM Unit 2 - LO218 Marketing Successes Swatch Starbucks Easyjet and Ryanair In pairs have a discussion to see if you can think of any others.

MARKETING Product orientation Production capabilities Manufacture product Aggressive sales effort Customers Production orientation is when a business focuses on the production process and seeks to make goods that are viewed as superior.

MARKETING BM Unit 2 - LO220 Product-led - Product Orientated and Production Orientated Putting a product on the market without prior market research Assumption of best available and no real competition Often new inventions like Dyson vacuum cleaners or Playstation 2 A risky approach which can fail - British motor bikes Making as many products as possible at the lowest price

MARKETING Market orientation Customer needs Potential market opportunities Marketing product and services Customers Market orientation starts with the consumer and looks at consumer needs. It is customer orientated.

MARKETING BM Unit 2 - LO222 Market-led - Customer Orientated and Sales Orientated Considering what the customers want before putting a product on to the market Competition has led to companies focusing on the needs of the customer Also looks at the influences on purchasing decisions Pressure to sell to the public

MARKETING Advantages of market-orientated approach Can respond more quickly to changes in market due to market research. Increased chance of new product success. Stronger position to combat new competitors/entrants. Can anticipate market changes.

MARKETING Review of learning What are the 2 types of orientation a product uses in the market. What are the features of each type. Give examples.

MARKETING BM Unit 2 - LO225 Success Criteria: To introduce marketing environment and how it links to PESTEC Learning Intentions: You should be able to: Describe how the market adapts to PESTEC (external factors – that we have previously covered)

MARKETING The marketing environment The market

MARKETING The marketing environment The market Social - Consumer trends and behaviour Technology PoliticalCompetition The economy

MARKETING BM Unit 2 - LO228 Success Criteria: To introduce market share Learning Intentions: You should be able to: Identify and describe market share giving examples of UK supermarkets and business organisations Describe the benefits of a high market share

MARKETING Market share and market growth Market share is the percentage of customers who buy/use a company’s goods/services. Market growth is the volume of new sales or customers within a market.

MARKETING Having a High Market Share Power to buy raw materials in bulk Special components – can make them themselves Research and development – profits reinvested Economies of scale 30

MARKETING Supermarket market share Learning and Teaching Scotland

MARKETING Soft drink market share Learning and Teaching Scotland

MARKETING Coca cola world wide share Learning and Teaching Scotland

MARKETING Online book retailers Learning and Teaching Scotland

MARKETING BM Unit 2 - LO235 Success Criteria: To introduce MARKET RESEARCH and MARKET SEGMENTATION. Learning Intentions: To enable pupils to: 1.To introduce pupils to market research and techniques, linking to marketing mix from previous lessons. 2.To introduce ICT and how it links to Market research 3.How linking MKT RES and Market segmentation creates a common goal – to aim product or service at particular group. 4.To be able to summarise marketing topic.

MARKETING Target markets Undifferentiated or mass marketing When a product is sold to the entire market. Differentiated marketing When a product is offered to a group or groups within the total market. This is done by market segmentation. Click for clip

MARKETING BM Unit 2 - LO237 Market Segmentation Advantages Seller can meet buyers’ requirements Advertising can be focused - less wasteful Expertise developed for a specific market Higher sales Increased profits “Breaking down of markets into sub-groups that can be targeted with a specific marketing mix.”

MARKETING BM Unit 2 - LO238 Methods of Segmentation Age Gender Socio-economic grouping Education level Income Religion Residential area Lifestyle preferences - hobbies, politics

MARKETING Involves aiming products and services at the population as a whole without producing different products for different market segments eg Heinz Beans 39

MARKETING Undifferentiated marketing Firm Market Marketing mix

MARKETING Involves providing different products and services for particular segments 41

MARKETING Differentiated marketing Firm Segment 1 Segment 2 Segment 3 Marketing mix 1 Marketing mix 2 Marketing mix 3

MARKETING Concentrated marketing Firm Segment 1 Segment 2 Segment 3 Marketing mix

MARKETING BM Unit 2 - LO244 Market Segmentation - Similar to a Cake!

MARKETING Socio-economic group A Higher managerial, administrative or professional BIntermediate, clerical, administrative or professional C1Supervisory, clerical, junior administrative or professional C2Skilled manual DSemiskilled and unskilled EState pensioners, widows, casual and lowest paid

MARKETING Psychographic segmentation Segments people according to lifestyle. Lifestyle is a person’s individual pattern of behaviour, including attitudes, beliefs, interests, hobbies, habits, religion.

MARKETING Answer a question Describe six methods that an organisation could use to segment their market. (6 marks) minutes

MARKETING Solution Age – segments the market by different age groupings, such as young or old, under 12, 13–19, 20–35, over 35. Occupation – segments the market by different types of occupation. Education – segments the market by the level of education attained. Socio-economic – segments the market by grouping customers into different economic classifications. Geographical – segments the market by the area they live in. Cultural/religious background – segments the market by religion or ethnicity. Family lifestyle – segments the market by customers being either married or single.

MARKETING BM Unit 2 - LO249 Success Criteria: To introduce market share Learning Intentions: You should be able to: Identify and describe marketing share giving examples of UK supermarkets and business organisations Describe the benefits of a high market share

MARKETING Niche marketing A niche market is when a firm concentrates on selling to a specific market segment. Niche markets are normally very small, but can be highly profitable. Niche markets normally know their customers’ needs very well. Click for clip

MARKETING Niche marketing Advantages Niche market may be overlooked Gain competitive advantage Disadvantages If successful, larger competitors may enter market Niche markets are smaller and may suffer more frequent swings in consumer spending

MARKETING BM Unit 2 - LO252 Success Criteria: To introduce market share Learning Intentions: You should be able to: Identify and describe marketing share giving examples of UK supermarkets and business organisations Describe the benefits of a high market share

MARKETING Market research What is market research? ‘The collection, collation, and analysis of data relating to the marketing and consumption of goods and services.’ Click for clip

MARKETING Market research is used to find information about: the market itself (size and make-up – age, gender, income, tastes) promotional methods customer feedback (opinions, usage and attitudes) sales data (best sellers, best stores, best sales staff) influence and impact of competitors effect of price on market.

MARKETING Primary (field) research 1. Questionnaires 2. Personal interviews 3. Telephone interviews 4. Postal surveys 5. Observations 6. Technology, eg loyalty cards 7. Focus groups 8. Customer panels Used to collect primary data

MARKETING Sampling Sampling is a way to find out the views of the population without asking everyone! Random sampling – A randomly generated list of individuals. Free of bias, but not targeted at any market segment. Quota sampling – A group selected to reflect a proportion of the whole population. Cheaper than random sampling but can be less representative than the random method. Click for clip

MARKETING Primary research Positives Only firm that collects data has access Can be controlled/verified Negatives Expensive to collect Lengthy time involved, information could be out of date

MARKETING Secondary (desk) research Used to collect secondary data. Examples: sales figures annual reports and data internet data (eg other businesses’ websites) government publications, eg Social Trends commercial publications, eg Keynote, Mintel.

MARKETING Secondary (desk) research Positives Saves time Relatively inexpensive Negatives Not specifically related to project undertaken Cannot be verified

MARKETING Problems with market research Human behaviour is unpredictable. Sampling and bias. Other forms of bias, eg leading questions.

MARKETING Answer a question Describe four methods of field research. (8 marks), minutes

MARKETING Solution Personal interview: this is a face-to-face interview, conducted in the street or at a person’s home, where an interviewer asks a respondent questions. Focus group: a small group of selected individuals are involved in discussions about an organisation’s product or service, led by a facilitator to provide qualitative information. Telephone survey: individuals are telephoned at their home and asked specific questions by an interviewer. Postal survey: questionnaires are sent through the post to selected individuals, but the response rate is very poor.

MARKETING Solution Consumer audit: continuous market research is carried out with a selected group of consumers who record their purchases in a diary. This is then analysed for trends by marketers. Hall test: individuals are invited to try out a product and then give their opinion on it. These are collated and analysed. Observation: customers’ actions and purchasing patterns are observed by trained staff, who look for consumer behavioural trends. Test marketing: product is launched on a small area to gauge the consumers response. If successful the product can be mass produced.

MARKETING The Marketing Mix Product Price Promotion Place People Process Physical environment

MARKETING BM Unit 2 - LO265 The Marketing Mix ProductPeople Price Physical Environment Promotion Process Place Now the 7 p’s not the 4 p’s

MARKETING BM Unit 2 - LO266 Success Criteria: To introduce product as one of the 7p’s Learning Intentions: You should be able to: Describe core, actual and augmented products - giving examples Describe the boston box principle of categorises success against market share of products Describe and identify the product life cycle

MARKETING Product/service Product – the good or item to be made for sale to customers. From the product everything else follows in the marketing mix (product, price, place, promotion).

MARKETING Levels of a product Core – the basic product. Actual – the product on sale to the public. Augmented – a product with additional features to boost its USP. Let’s try the worksheet

MARKETING Boston box Market share Market growth High Low

MARKETING Boston box – strategies Stars Build sales/market share Invest to turn into cash cow Problem children Build selectively Harvest or divest rest Cash cows Hold sales/market share Use excess cash to invest in stars, problem children Dogs Harvest or divest

MARKETING BM Unit 2 - LO271 The Product Mix Very few companies have only one product Some companies have a range of related products eg Proctor & Gamble Some companies have totally unrelated products in their product portfolios eg Imperial Group It is important that you have new products being launched to replace products going into decline in your “Product Mix”

MARKETING Product lifecycle The product lifecycle is a theory that has some assumptions: Products have a lifespan. All products pass through the stages described. All products decline. Click for Clip

MARKETING Stages in cycle Development – In this costly stage, money is spent on research to create a viable prototype. Introduction – The product is launched onto the market but normally sales are low due to competition and lack of awareness from the public. Growth – Sales rise sharply as awareness increases. This is the first stage where the company starts making a profit.

MARKETING Stages in cycle Maturity – The product is now a market leader and ways to expand sales become more difficult. When there is an overkill of supply, this is the saturation point. Decline – Sales begin to fall, and the product begins a slow death as trends, technology or imitators overtake it.

MARKETING Sales Time IntroductionGrowthMaturity Decline DevelopmentSaturation Similar products enter the market Price lowered Some businesses my be forced out of the market Sales falling Profits continue to fall Sales reach its highest point Rate of growth Slows Competitors enter the market Sales increasing rapidly Profits will reach their highest at the end of this stage Sales are low Profits will be negative Product may be unknown Product is being designed

MARKETING Sales Time IntroductionGrowthMaturity Decline DevelopmentSaturation

MARKETING Product lifecycle

MARKETING BM Unit 2 - LO278 The Product Life Cycle Time £000 Costs/Sales Idea New Product Launch Youth GrowthDecline Maturity (Saturation) Death

MARKETING Extension strategies Change the product – have additional features or upgrade the product. Change the price – lower prices to make it more appealing to non-users/buyers. Change the place/channel of distribution – look to more outlets or go online to widen market opportunities.

MARKETING Extension strategies Change the promotion method – introduce sales promotional campaigns, such as BOGOF. Change the packaging – to make it more eye-catching to customers.

MARKETING Effects of extension strategies

MARKETING Extension of life cycle - LUCOZADE From this To this:

MARKETING The Product Mix Very few companies have only one product Some companies have a range of related products eg Proctor & Gamble

MARKETING Product mix/portfolio Some companies have totally unrelated products in their product portfolios eg Imperial Group It is important that you have new products being launched to replace products going into decline in your “Product Mix”

MARKETING Answer a question Changing the packaging of products can make them more appealing and eye-catching to consumers. Explain five other methods of extending the product lifecycle. (5 marks) minutes

MARKETING Solution Improve the product by adding new or additional features customers will want, eg cameras on mobiles. Alter price, either lower or increase price to attract customers. Change the method of advertising, move the message, eg from TV to radio. Change the use of the product, eg Lucozade once was used to reenergise ill people, now used as a sports drink. Introduce line extensions to the product, create new flavours, different sizes or even alter the format like the PSP. Change the name of the product, eg Opal Fruits to Starburst, Marathon to Snickers. Alter the place the product is sold, offer products online to reach a wider customer base.

MARKETING Product Innovation –step by step process Generating an idea Analysing/market research of the idea Producing a prototype Test market Adapt product to solve problems Launch the product Next : Product innovation by diagram

MARKETING

Identify and describe 3 stages of the product life cycle. 6 marks Development − product is planned, developed and tested before being introduced onto the market. Introduction − product is launched onto the market. Growth − sales of the product are rising as consumers become more aware of it. Maturity − product is well known in the market and growth is slowing down. Competition increases and the price of the product falls. Saturation − competition is very fierce and prices fall significantly. Decline − sales and profits fall as new and more advanced products enter the market. Death − product withdrawn from the market. 1 mark per stage − max 3 1 mark per description − max 3 (6)

MARKETING Summary of learning What have you learned today?

MARKETING BM Unit 2 - LO291 Success Criteria: To introduce market share Learning Intentions: You should be able to: Identify and describe marketing share giving examples of UK supermarkets and business organisations Describe the benefits of a high market share

MARKETING What is a new product? New to the world New product lines Additions to existing product lines Improvements and revisions to existing products Repositioned products Click for clip

MARKETING BM Unit 2 - LO293 Product Innovation Generating an idea Analysing the idea Producing a prototype Test market Adapt product to solve problems Launch the product

MARKETING New product development stages Generate ideas – Brainstorming session to come up with ideas. Quantity rather than quality is needed before refining the idea to something realistic. Analysis and further research – Time and money spent on discovering what is possible and what is not. Can existing technologies be used? Or will something totally new be created? Are the products marketable? – Will customers buy the product? Potential customers may be surveyed at this stage.

MARKETING New product development stages (contd.) Prototype – A working model is developed. Test marketing – Potential customers may test several versions (or generations) of the product, and feedback will be used to modify the prototype. Full launch – If satisfactory, the product will be put into full production and a marketing campaign will be put in place to raise awareness of the product, emphasising the benefits it brings to customers.

MARKETING Successful NPD Does the product have a USP? Is there a specific market segment to target? Is the market large enough and will there be a return on investment? Are R&D and marketing communicating? Was NPD process handled well?

MARKETING BM Unit 2 - LO297 Success Criteria: To introduce market share Learning Intentions: You should be able to: Identify and describe marketing share giving examples of UK supermarkets and business organisations Describe the benefits of a high market share

MARKETING BM Unit 2 - LO298 Success Criteria: To introduce pupils to branding and own branding Learning Intentions: You should be able to: 1.Describe the benefits of branding to an organisation 2.Describe the benefits of own branding to an organisation

MARKETING Branding A brand is a registered trademark of a company, including the name or logo that can only be used by that company. Branding helps create USPs (unique selling points), and via advertising and creating a positive, desirable image, build brand loyalty. Brands promote an image of high quality, which means a premium price can be charged.

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

MARKETING Branding Branding distinguishes a product from its competitors Instantly recognisable by consumers Often linked to quality and reliability – or “ snob ” value Can command a premium price

MARKETING Advantages of branding Easily identifiable. Brand loyalty – repeat purchases. Premium pricing can occur. High quality is associated with brands. Can create a family of branded products.

MARKETING Disadvantages of branding Brands take time to establish reputation and quality. Advertising and promotion costs will be expensive. Negative press can tarnish entire family of products. Cheap imitations may flood the market.

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

MARKETING Answer a question Discuss the effects on an organisation of branding their products. (6 marks) minutes

MARKETING Solution Products in the brand range are instantly recognisable and are uniquely different from other products. Brand loyalty can be built up, which can lead to repeat purchases. Brand is perceived to be of high quality, which can mean premium prices can be charged. Makes it easier to launch new products onto the market as there is already a brand family of products. Brand names can be expensive to build up as it takes time to achieve their reputation. Bad publicity can affect the whole brand, which can ruin the brand’s reputation overnight. Imitator and fake products are common, which can damage sales in the long run.

MARKETING BM Unit 2 - LO2107 Success Criteria: To introduce market share Learning Intentions: You should be able to: Identify and describe marketing share giving examples of UK supermarkets and business organisations Describe the benefits of a high market share

MARKETING Own brands Own brands are goods made by a producer who sells them to a well-known retailer such as Tesco or Sainsbury’s, who repackage them and sell them at a low price under their own brand label. What are the own brands for the major supermarkets?

MARKETING Advantages of own brands Own brands will attract more customers and more sales within the store. Producer will have guaranteed sales. Products are cheaper. Disadvantages of own brands Some customers believe own brands are of lower quality than established brand names (although this is not necessarily true).

MARKETING Answer a question Discuss the advantages and disadvantages of selling own brands. (4 marks) minutes

MARKETING Solution Own labels require very little advertising as customers will be normally be regular shoppers. The retailer does not need to produce the own-brand products as they can buy them from manufacturers and re-label them. A range of products with own labels can be sold because a brand family is established. Some own brands can be seen as value for money and a quality product when customers look for good deals. Own labels are cheaper to customers as the price is always lower than that of regular brands. Whole brands can be tarnished over one product’s failure or problem. This can ruin reputation overnight. Run the risk of imitator brands, which can damage sales.

MARKETING BM Unit 2 - LO2112 Success Criteria: To introduce market share Learning Intentions: You should be able to: Identify and describe marketing share giving examples of UK supermarkets and business organisations Describe the benefits of a high market share

MARKETING BM Unit 2 - LO2113 Success Criteria: To introduce PRICE. Price being one of the factors linking into the MARKETING MIX. Learning Intentions: To enable pupils to: describe pricing objectives identify how businesses use pricing strategies to price products and services describe short-term pricing tactics and give current examples be able to describe pricing methods and elasticity of demand

MARKETING BM Unit 2 - LO2114 BBC Price Clip dex.php/business- studies/comments/pricing-in- uk-supermarkets/

MARKETING Price Price has to be set appropriately or else customers will not purchase the product. High quality and high price normally go together and vice versa. In determining price firms have to consider: production costs of materials profit mark-up the market price (what competitors charge). Click for clip

MARKETING Long-term pricing strategies Low price – Price lower than competitors. Only appropriate where there is a little brand loyalty and competition in the market is high. Market price – Setting price at a similar price to competitors. Homogeneous product means that price competition is not of benefit. They compete in other areas, eg service. High price – High-quality products, premium goods and services where image is important, such as perfumes.

MARKETING Short-term pricing strategies Market skimming – In a new market a high price is set and then once the first customers have bought, the price is lowered to continue to skim the cream of the market layer by layer. Penetration pricing – A low price used to enter a new highly competitive market.

MARKETING Short-term pricing strategies Destroyer pricing – An illegal pricing tactic used to eliminate competition where a ridiculously low price is charged (sometimes at a loss) to smash competitors. Once market share is achieved, prices soar. Promotional pricing – A short-term strategy to gain media attention and renew consumer interest, eg BOGOF or loss-leader tactics. Demand-oriented pricing – When different prices are charged at different times for the same good/service based on high demand or lack of demand.

MARKETING Answer a question Describe three pricing tactics that could be used when an organisation attempts to break into a new market. (6 marks) mimutes

MARKETING Solution High price – price is set higher than competitors to give the image of quality and exclusiveness. Low price – price is set lower than competitors to attract customers to their product/service. Skimming – price is set high initially, when no competition exists. When competitors enter the market, price is lowered to market price. Market/competitive pricing – price is set at the same level as competitors, normally used for products that are identical.

MARKETING Solution (cont’d) Penetration pricing – price is set slightly lower than competitors to attract customers; once a customer base is established, the price is slowly increased to same as competitors Promotional pricing – a low price is set for a short period of time to boost sales in the short term, possibly even making a loss on the product. This is often used by supermarkets to attract customers. Destroyer pricing – price is set very low compared to competitors and once there is no competition in the market the price is then put back up to the previous level or higher. This is mainly used by larger organisations to destroy competition, as you must have large reserves to sustain this tactic over any length of time. Cost-plus pricing – is the cost of buying in the materials with a mark-up added on.

MARKETING BM Unit 2 - LO2122 Success Criteria: To introduce market share Learning Intentions: You should be able to: Identify and describe marketing share giving examples of UK supermarkets and business organisations Describe the benefits of a high market share

MARKETING BM Unit 2 - LO2123 Place - Distribution Channels Producer 1Producer 2Producer 3 ConsumerRetailerWholesaler RetailerConsumer

MARKETING Place Producers Wholesalers Retailers Consumers Direct selling Producer to wholesaler Two or more intermediaries Producer to retailer Click for clip

MARKETING Choice of distribution channel Projected level of demand Geographical spread Optimum methods of stock control Seasonal trends Costs of distribution Speed of distribution Legal restrictions Changes in buying habits and life style Existing buying habits

MARKETING Manufacturer Wholesaler Retailer Consumer A distribution channel

MARKETING Direct channel This is from manufacturer to consumer. Fastest way (perishable goods?). Cheapest for consumer (no costs added on by each part of the chain).

MARKETING Manufacturers ABCDE Company warehouse Wholesalers Company outlets Retailers E-tailers C o n s u m e r s

MARKETING BM Unit 2 - LO2129 The Wholesaler Function Buys in bulk from producers (low transport costs) and sells to retailers in smaller quantities Bears stock-holding risk Offers a wide variety of goods in small quantities Packages and labels goods Offers advice to both producers and retailers as to which goods are selling well

MARKETING Advantages of using wholesalers Buy in bulk, saving manufacturers the delivery costs of many small runs. They bear the risk of holding stock. Break down the bulk supplies and sort into quantities retailers will buy. Give advice to manufacturers, knowing what goods will sell well.

MARKETING BM Unit 2 - LO2131 The Retailer Function Breaks down bulk to quantities consumers wish to buy and store at home Provides information to consumers through advertising, displays and trained staff Stores a variety of goods, displays them and marks on prices Offers range of related services - credit, HP, after-sales service and delivery

MARKETING BM Unit 2 - LO2132 Types of Retailer Independent - convenience stores, corner shops Multiple Chains - M&S, Dixons, Boots Supermarkets - Tesco, Asda, Safeway, etc Co-operatives Department Stores - Jenners, Harrods, Selfridges Franchises - Benetton, Body Shop, McDonald’s Others - mail-order, internet, direct-response advertising, telephone and TV shopping channel

MARKETING Key terms Manufacturer – firm that makes goods. Wholesaler – company that stores goods in bulk before selling them on in smaller batches. Retailer – firm that sells goods to end-users. Consumer – person who uses final good/service.

MARKETING Answer a question Discuss the advantages and disadvantages to a manufacturer of using a wholesaler. (5 marks) mimutes

MARKETING Solution Advantages Saves on a number of smaller deliveries as retailers will buy in bulk. Less money tied up in stock as the wholesaler stores the materials. Wholesalers may label the product for the retailer, saving costs. Wholesalers break product down into smaller more saleable sizes that can be packaged and sold by the retailer. Wholesalers can give market research direct to manufacturer, which may affect future buying decisions. Disadvantages Loss of control of how the product is presented because it is normally packaged already. Lower profits as wholesaler, as intermediaries, take their cut.

MARKETING BM Unit 2 - LO2136 Success Criteria: To introduce PROMOTION. Promotion being one of the factors linking into the MARKETING MIX. Learning Intentions: To enable pupils to: describe types of promotional activities identify how businesses use promotional techniques to sell products and services describe types of advertising and give current examples describe the role of Public Relations (PR) within promotional activity.

MARKETING Types of promotion Promotion Advertising Sales promotion Direct mail Personal selling Public relations Exhibitions and trade fairs Merchandising

MARKETING What is promotion? Promotion is the way firms inform customers of their products and try to generate sales. Click for clip

MARKETING Methods of promotion Advertising Sales promotion Public relations Merchandising Packaging Exhibitions and trade fairs Direct mail Personal selling Click for clip

MARKETING BM Unit 2 - LO2140 Advertising Decisions The effect on Sales? The target market? Why do the consumers NOT buy the product? Which is the best medium to use?

MARKETING Types of advertising Informative: Health Education Board for Scotland – smoking, drugs, alcohol etc Persuasive: used in very competitive markets, uses powerful images and language – ‘Probably the world’s favourite lager’. Corporate: promoting the whole company not a single product – BP adverts focus on their ‘green image’ not on the product (petrol) Generic: the whole industry comes together to promote the whole industry – Scottish beef, Scottish tourism Click for clip Some classic adverts

MARKETING Types of advertising media Print: newspapers and magazines Broadcast: TV, radio, internet Outdoor: billboards, buses, round football grounds etc Which one is chosen depends on: cost: TV expensive but memorable target audience: choice of programme, newspaper competitors’ advertising: match to competitors impact required: new product  wide variety of methods the law: tobacco and alcohol Click for clip

MARKETING Sales promotion – out of the pipeline and into the pipeline Into the pipeline targets retailers to purchase from suppliers. It also includes materials to help them sell to customers, eg merchandising displays and posters. Out of the pipeline targets customers and end users, eg trial packs and BOGOF.

MARKETING BM Unit 2 - LO2144 Main Types of Sales Promotion Into the pipeline Enhancing sales to trade outlets Helping retailers to sell to their customers eg displays, posters, videos, etc Out of the pipeline Helping to persuade customers to buy from retailers Providing free samples, a percentage extra free, 2 for 1 offers, money-off coupons, etc

MARKETING BM Unit 2 - LO2145 Success Criteria: To introduce market share Learning Intentions: You should be able to: Identify and describe marketing share giving examples of UK supermarkets and business organisations Describe the benefits of a high market share

MARKETING Public relations (PR) This is when an organisation tries to communicate with customers, shareholders, employees and the government – all of whom form the organisation’s ‘public’. The aim of public relations is to improve the image of an organisation’s products and the image of the organisation itself.

MARKETING The role of PR Provides public with information about the organisation. Builds confidence/reputation of the organisation and awareness of its products. Develops goodwill in the community. Presents the organisation in a positive way. Supports and enhances other areas of the promotional mix, such as advertising and selling.

MARKETING PR activities Opening a new store Charitable donations Event sponsorship Celebrity product endorsement Press conferences and press releases It is important to remember that PR is always conducted with ‘spin’ involved. In other words it always tries to have the firm viewed in the best possible light.

MARKETING Merchandising Merchandising involves making sure a firm’s products are laid out in the most enticing or attractive way possible to customers. Special displays, stands or posters may be given to retailers to help point-of-sale advertising. ‘Eye level is buy level’, for example when a new DVD comes into the local supermarket expect giant posters and cardboard cut-outs of the characters to be emblazoned around the store!

MARKETING Packaging The ‘cover’ or packaging of the product can also generate sales. Design – the colour scheme should help make the product stand out from rivals. Protection – is the packaging appropriate to ensure it doesn’t get damaged during distribution or when being taken home by the customer? Information – most products sold in supermarkets have to carry labels with information on their content or to indicate if they pass the BSI quality standard.

MARKETING Answer a question Describe and justify four different methods of direct selling that could be used by an organisation. (8 marks) minutes

MARKETING Solution Personal selling – Products are sold by experienced sales personnel. Direct contact can be made with the retailer or consumer. Can be tailor-made to customer requirements. Demonstrations of the product or service can be shown. Mail order – Goods sold via catalogues. Offers credit facilities. No need for high-street stores. Internet selling – making use of websites to sell products. Consumers can order online from offices or homes. Is available worldwide. Can be accessed 24/7. Specialist magazines – Used to describe and sell specialised products or services. Customers who are sent or purchase the magazine are directly interested. Consumers can phone in orders or speak to specialists.

MARKETING BM Unit 2 - LO2153 ICT and Market Research Databases compiled by research agencies Electronic point of sale information (EPOS) Supermarket loyalty cards Stock control software gives sales breakdown Web sites - customers can comments back to the company