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Topic Four: Marketing - Coggle Diagram
Topic Four: Marketing
4.5 Seven Ps of Marketing Mix
4.5a Product
Product life cycle
refers to the typical process that products go through from their initial design and launch to their eventual decline and withdrawal at varying speeds**
Research + Development stage
all activities that take place before a product is released to the market.
General ideas are tested and developed
Promotion can start at this stage for specific products such as films and series
What are some extension strategies
Changing target market
If a product no longer meets the needs of its existing target market, a new group of consumers could be found.
Advantages
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Redesigning packaging
Changing the material shape, form, aesthetics
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Product update
Adding new or different features to products
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Price reduction
Lowering the price of the product
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New promotional strategies
Using promotional campaigns to encourage clients to use the product more often or differently.
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Product differentiation
Using the porters generic strategies to make the product have a USP
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Market research, analysis, product development, preparing production
Launch Stage
a lot of attention is placed on the promotion and marketing to raise awareness
limited distrubution channels so the sales are gernerally low
possibly high prices if there is limited competition and to recoup R+D costs or low prices to differentiate
Growth stage
Known and accepted by customers
The firm begins to make a profit since more people are buying the product and more distributors are likely to carry the product and distribute it to the customers.
To continue growth the company must re-evaluate its marketing mix to direct the product to a new target segment
Maturity Stage
High sales revenue and steady growth but minimal at a slower rate
The market may be already saturated and has a lot of competition
Marketing objectives are usually focused on building customer loyalty and not attracting new customers
Decline Stage
Falling sales or loss of the market share
It may still be profitable but it is decreasing
Marketing costs are lowered during the decline stage
Might be changed to target a target price-conscious audience by changing to discount retailers
What is branding?
Brand awareness
Measures the ability to which people recognize a particular brand. Often expressed as a percentage of the sample surveyed.
differentiates, can give the firm a competitive edge, important during the launch/ introduction stage.
Branding
refers to the practice of using an exclusive name,symbol or design to identify a specific product or organization.
Brand development
Refers to increasing the power of a brand name which leads to higher sales.
Can be done through advertising and offering free samples etc. Risk of generalised brand which has problems reinforcing copyrights
Brand loyalty
When customers become committed to one brand and will choose it over competitors.
They perceive more value from the brand and will therefore pay a higher price for it. Loyal customers often become brand ambassadors saving the company money on marketing. (word-of-mouth advertising)
Brand value
can mean the value of the intellectual property associated with the brand or the additional value that consumers give to the products because of its strong brand.
the premium that customers are willing to pay for a brand name over and above the value of the product itself since they believe famous and expensive brands are better
Packaging
Customers perceive quality in the design of products
can be a key unique selling point, shapes the perspective of the brand
Branding encourages customer loyalty and creates a unique identity for a product, enabling it to be distinguished from other rival products on the market
4.5b Price
What is price?
The amount that a customer has to pay in order to purchase a good or service. It can directly impact the image of a company
Cost-plus (mark-up) pricing
involves adding a percentage or pre-determined amount of contribution to the cost per unit of output to determine the selling price
Advantages
Simple and easy to calculate
Can be applied to all products
Ensures that selling price covers all production costs
Disadvantages
Inward facing and takes no account of the market
Ignores competition and rival business with low prices
Penetration pricing
method that involves setting a low price in order to enter an industry. It allows the business to compete against existing firms in the industry and to gain market share. Usually heavily advertised products
Advantages
Market share and customer loyalty may be established quickly.
Discourage potential new competitors from entering due to low prices and low profit margins
Give a competitive advantage
Encourage word of mouth
Focus on cutting cost and raising productivity or improving efficiency
Disadvantages
Low profit margins are likely during the initial low price.
Customers may not accept the price rise
If costs increase suddenly the company can be at a loss
Brand image can be low quality which is hard to change
Loss leader
involves selling a good or service below its cost value. Hopes to attract consumers to come in and purchase other products.
Advantages
Can lead to a large boost in sales revenue
Gain customer loyalty since they like bargains
Can get rid of old stock and merchandise
Disdvantages
Is only possible for multi-product retailers.
Makes a loss on these items potentially since customers might not buy the rest of the stuff
Needs sufficient stock
Predatory Pricing
involves temporarily reducing price in an attempt to force competitors out of the industry as they cannot compete in a profitable way.
Advantages
Once competition is eliminated, higher prices and higher market share can lead to increased profits
Act as a barrier to entry for other firms
Disadvantages
It is illegal in many countries
Unsustainable in the long term
Encourage or force competitors to retaliate, thus can start price war
Competitive pricing
Sets the price of its goods or services at the same or similar level to that of its competitors. Suitable in industries where a product has been out the market for a while and many substitutes are available.
Advantages
simplifies pricing decisions and requires minimal effort
helps to maintain competitiveness
price stability
Disadvantages
Profit magin may suffer
Limit differentiation
Price wars
The company needs a new way to differentiate themselves in the markert
Dynamic pricing (also known as price discrimination)
the practice of varying the price of a good or service to reflect changing market demand, oſten with price changes throughout the day. It is flexible and adaptable so businesses can update their prices
Advantages
Greater control
Real time data
Maximise profit
Disadvantages
Customers often feel unhappy and feels exploited,
Damage reputation
Contribution pricing
A business sets its price above the variable costs per unit so that each item contributes to paying off the fixed costs. Easy way to price a product to know when the company will break even
Advantages
Allows flexibility in the pricing of individual products.
It predicts loss and reduces risks
Demand factors can be taken into consideration
Disadvantages
Difficult to classify the costs as direct and indirect.
Premium pricing
when the price of a good or service is set significantly higher than similar competing products, usually because the product is of higher quality or is suffciently unique enough to justify the premium price.
Advantages
Higher profit margin
Higher barriers to entry so better loyalty
Increase brand value
Disadvantages
Limit number of customers
Loose appeal to mass market
Price Elasticity of Demand
4.5c Promotion
What is promotion?
Promotion
refers to methods of communicating marketing messages to existing and potential customers, usually with the intention of selling a firm’s products.
.
Above the line
is any form of paid-for promotional method through independent mass media sources (such as television, magazines, and the radio) to promote a business, its products or its brands. It is undifferentiated form of promotion
(+) reaches a large audience, helps build brand awareness, more interesting and engaging
( - ) Easily forgotten might not appeal, Not very targeted, Hard to calculate the impact of promotion, Costly
Television advertising
(+) visually stimulating, reaches large audience, can be designed to meet specific groups of people
(-) EXTREMELY expensive, effectiveness usually depends on time slot, only good for MNCs
Radio advertising
(+) can reach large audience, viewers can just listen while doing other things
( - ) low attention levels, only audio messages
Cinema
(+) Audiences can be directly targeted and segmented, Size of cinema screen can provide more impact than tv making it hard to ignore
( - ) Limited viewers and audience size compared to audio and tv
Newspaper advertising
(+) Potentially reach a wide audience but is cheap, can target different markets
( - ) High cost for small businesses, hard to stand out, short product life time
Magazines
(+) High definition photo quality to display product, can target a market, Longer shelf life
( - ) Static, people might miss it because theres so many, Long lead time between submitting ad and publishing which is delayed time
Outdoor advertising
(+) High exposure rate as dynamic dimension since can have sound and visual, High rate of exposure if they are able to get it in many diff locations
( - ) Difficult to monitor effectiveness since its not targeted, prone to damage in bad weather
Below the line
refers to the use of non-mass media promotional activities, allowing the business to have direct control.
Direct marketing
(+) Business keeps a larger share of any financial returns as there is no intermediary, Control of the way it describes and promotes the product
( - ) may not always reach the right people, cost of producing and distributing promotional materials such as leaflets, brochures and catalogues
Personal selling
(+) Tailored to individual needs and preferences, develops customer engagement
( - ) Can be expensive to hire sales agents, earn piece rate salary
Sales promotions
(+) Boost sales, Sway customers from rival brands, Encourages action instead of reminding
( - ) costly so reduce profit margin per unit: samples and free gifts etc, only short term
Point of sales promotion
promotion of a product at the place or location where the customer buys the product.
Publicity and public relations
(+) Better brand reputation
(-) The need for training. Employee training is required for crisis management skills and keeping positive community relations, long term marketing strategy
Trade show
(+) Events attract a large targeted customers and audience
(-) Likely competition, Cost to join these shows
Sponsorship
(+) Reach intended audience
(-) Might be ignored
Guerrilla marketing
Guerrilla marketing: uses untraditional, unconventional, and perhaps unruly but creative and original methods of promotion, on a relatively low budget
(+) Cheap for people that are on a tight budget, flexible and simple to intended audiences
(-) High chances of delivering wrong message if not properly planned and give bad reputation
Packaging
(-) encourages impulse buying
(+) Can be costly and risk over packaging
(+) Reaches a more targets audience, Builds good customer relations, Easy to measure impact, Cheaper
(-) Must think about cultural issues when targeting markets, Requires more training if doing personal selling, Can be time consuming
Merchandising
Through the line
promotion refers to promotional strategies that involve both above and below the line methods. This approach allows customers to engage with the product or brand in multiple ways, such as TV and radio adverts, direct sales marketing methods, social media platforms, and during a sponsored event.
Advantages
Can be extremely targeted
Easy control
Tailor made
Wide reach
Better connection with consumers
Disadvantages
Very expensive
Adverts are often ignored
People can complain about the amount of ads
Social media marketing
Advantages
Wide reach
Differentiation at a low cost
More knowledge about customer
Improve customer service
Market information about trends customer buying habits and feedback
Speed of distribution
Cost savings
Targeted promotional opportunities for businesses due to algorithm
Disadvantages
Does not work in all markets
Consumers dont actually engage with the platforms, continue to scroll
The company has no control over what is being written about them
Hackers can spread false information
Must be a part of a broad promotional strategy
4.5d Place
What is place in the marketing mix?
Where and how the product reaches intended users. Think about how it is going to be distributed to customers and reach as many as possible accessibly. Where to locate in regions.
What are channels of distribution?
the means used to get a product to the consumer
Intermediation -
process used to facilitate channels of distribution, they are agents or businesses that act as the middleman between manufacturers and consumers.
Zero Intermediary channel (direct distribution)
: Producer directly sells to consumer, no middle man
Advantages
Low cost
Fast
Producers gets to make all distribution decisions
Disadvantages
Expensive due to marketing storage and cost of delivery
Small reach in some cases.
One-level Intermediary channel:
Producer to retailer to consumer, the producer sells to a retailer or agent and then distributes the product such as supermarkets.
Advantages
Promotion and customer service is done by retailer
Has more reach than zero intermediary
Disadvantages
Retailer adds a mark up which means higher prices for consumers and less revenue for the producer, Competing products in the same store
Two-level Intermediary channel
: The producer sells to wholesaler who then distributes it to multiple retailers before sold to the final consumer used in large countries where distrubution is more difficult.
Advantages
Can break large orders into small batches to sell to smaller retailers
Good for selling over a large geographical area
Disadvantages
Two markups hurt producers and customer
Lack of control over distribution
Types of intermediaries in the channel of distribution
Wholesalers
are businesses that purchase large quantities of products from a manufacturer and then separate or ‘break’ the bulk purchases into smaller units for resale, mainly to retailers.
(+) Bear the cost of storage so more space for retailers, Breaking bulk so retailers don't need to purchase directly from the manufacturer, Low transaction cost, Frees up time for a manufacturer to focus on production
( - ) Wholesalers takes responsibility of marketing its products and may not see success, this will waste producer’s effort, Some big retailers dont use wholesalers which cuts the cost of intermediary
Distributors:
independent and specialist businesses that trade in the products of only a few manufacturers
(+) Opportunity to new markets since agents and distributors have specific information on legal aspects of each country which is need to introduce a new product
Agents usually offer a range of products for consumers to choose from, perhaps from several different suppliers. Distributors have a few manufacturers only
(-) Does not have full control
Agents
representatives and negotiators who act on behalf of buyers and vendors (sellers) of a product
Retailers
are the sellers of products to the final consumer. They are often referred to as ‘shops’ in everyday language.
They are important since they have the ability to reach large numbers of customers.
Specialty channels of distribution
any indirect way to distribute products that do not involve retailers such as vending machines
E-commerce
Reduce cost and risks of international marketing, More customer coverage
Not suitable for all types of products some may require to be direct touch
Vending machine
Running costs and maintenance are low
Reduce competition because manufacture owns and runs the machines
Physical product can be seen, attracts more customers
Only a small selection and range of products can be sold
Theft and vandalism
Mail orders
Cheapest form
Direct mail are often regarded as junk mail so low response rate
Obsolete data about address
shelf life is relatively short due to changing prices and new products being added to the market.
4.5e People
Refers to the employee's need to produce or deliver the product or service to a customer, in service businesses this is usually one of the most important elements of the marketing mix.
Workers need to be trained well to provide the service properly, be friendly and helpful to customers, and maintain the image of the business
Cultural differences in service relationships
There is a distinction between different types of service quality due to geographical and cultural differences and backgrounds.
4.5f Processes
The procedures and policies pertaining to how an organization’s product is provided and delivered. Might involve businesses thinking about how they can get their product quicker to their customer at home or at the store.
4.5g Physical evidence
The atmosphere of a business, everything your customers see and hear when interacting with the business from music to cleanliness and even uniform.
4.3 Sales Forecasting
What is sales forecasting?
Sales forecasting
is a quantitative management technique used to predict a firm’s level of sales over a given period.
Variation
is the difference between actual past data and the trend which helps to identify periods with the highest fluctuation from the trend
What is the time series analysis?
Time series analysis technique attempts to predict sales levels by identifying the underlying trend from a sequence of actual sales figures.
Cyclical
based on the cycle of economics
Random
does not rely on anything
Seasonal variation
depends on seasons
Advantages of sales foreacasting
Assists marketing planning
helps to maintain liquidity
helps to manage stocks
reduces risks
helps to secure external sources of finance
Improved productive efficiency
Improved budgeting
Disadvantages of sales forecasting
based on the assumption that the future depends on the past
Still just a prediction
time consuming and costly
subject to bias
4.4 Marketing Research
What is market research?
Market research -
marketing activities designed to discover the opinions, beliefs and preferences of potential and existing customers.
Continuous marketing
research happens on a regular ongoing basis like government research of cost of living
What is the purpose of market research?
Give updated information which is crucial in a fast moving industry like electronics
Improve their marketing strategies
Assess customer reaction to new products
Better understanding of competition's strategies
Predict what is likely to happen in the future, take advantages and act accordingly
It is a strategic planning tool >> that reduces and forecasts risks
Ad hoc marketing research
is conducting market research when necessary
Primary market research
Primary market research(bespoke research/field research) -
involves gathering new and first-hand data for a specific purpose, is often used to gather data and information from customers to identify their buying patterns and to anticipate changes in market trends
Advantages
up to date
relevant directly to company's needs
Confidential and unique to the business
Disadvantages
Time consuming
costly
can be biased
Types of primary research
Surveys:
A survey (sometimes referred to as a questionnaire) is a document that contains a series of questions used to collect data for a specific purpose.
Advantages
Collect a large quantity of data
Collect a wide range of information on attitudes
Quickly and easily completed by respondents
The ability to generate quantitive and qualitative answers specific to the needs of researchers
Disadvantages
Respond rates are generally low
Might not represent the market
Much care needs to be taken to write good questions
Subjectivity and tendency to lie and false information
Interviews:
one-to-one discussions between an interviewer and interviewees to investigate their personal circumstances and opinions. Beliefs, attitudes and feelings can also be explored in detail.
Advantages
Easier to ask more in-depth questions
Can ask follow up questions
High response rate
Detailed information can be gained
Disadvantages
Time consuming to interview and analyze the results
Can be expensive due to time taken
Might influence respondent and making it biased
Focus groups:
Small discussion groups to gain insight into the opinions attitudes and behaviors of respondents.
Advantages
Allows more immediate thoughts on a product
Idea from multiple people within the specific target
Target certain deomgraphic
Open-ended questions(dynamic)
Disadvantages
Extroverts tend to take part more
Paid
Harder to analyse only qualitative data
Moderator’s bias can affect answer
Small group of people not representative of target market
Observation:
Watching how people behave and respond in different situations. Does not consider the motives
Advantages
A cost effective way to gather data
Does not depend on respondents, they are only being observed
No interviewer bias
Disadvantages
Should be combined with other methods to gain in depth insights
Cannot collect information on attitudes, preferences or opinions
Secondary market research
Secondary research -
involves the collection of second-hand data and information that already exists
Advantages
CAN cheaper and faster to collect and analyse
Insight to changes or trends in an industry
Huge range more accessible
Large sample sizes
Disadvantages
May be outdated information
Inappropriate format for researcher cuz collected for diff purpose
Provide partial information, doesnt answer all questions
Information also available for competitors
Types of secondary market research
Market analyses
are in-depth reports about markets, trends, and other business-specific issues . Market analysis reveals the characteristics, trends, and outlook for a particular product or industry, such as market size, market share, and market growth rates.
Advantages
Carried out by professionals
Highly detailed
Disadvantages
Can be costly
Academic journals
These are scholarly publications written by experts. They will be well-referenced and usually done by professors, graduate students or a field expert
Advantages
Highly reliable due to the peer review process
Quicker publish time than books
Disadvantages
Can be very technical and specific
Government publications
are articles provided by the government on a wide range of topics. They provide information on demographics, economics, social trends, etc. of the country
Advantages
Usually free
Large range of topics
Disadvantages
can be difficult to access
Media articles
Texts written on a variety of topics submitted for publication either online or in print.
Advantages
Widely available
Many sources are free
Easy to update in real time
Disadvantages
Most publications have some bias
Online
is Gathering information from websites that are not media organizations
Advantages
Large variety of topics
Easily accessible
Disadvantages
Information can be inaccurate, biased and out-of-date
Different sampling methods
Sampling
is a primary research technique that selects a small group (called a sample) of the population from a particular market for research purposes.
Sample
is a selected group or proportion of the population used for primary market research purposes.
Sampling errors
are caused by mistakes made in the sample design, such as an unrepresentative sample being used or the sample size being too small
Quota sampling
- Segmenting the population into groups and setting targets for the number of people needed in each group. They could segment by age, gender, religion, etc.
Advantages
Quick and easy when the segments are known
Disadvantages
Not random so may not be representative of the population
Random Sampling -
Everyone in the population has an equal chance of being selected as part of the sample.
Advantages
Reduces bias
Easy way to obtain a sample
Disadvantages
May not represent that population because it is random
Convenience Sampling -
Participants are chosen based on their proximity and ease of access to complete the research.
Advantages
Reduces bias
Easy way to obtain a sample
Disadvantages
May not represent that population because it is random
The difference between qualitative and quantitative research
Quantitative research
Collects numerical data that can be measured
It is objective and not open to interpretation
Uses surveys to collect data
Qualitative data
Collects data on opinions, attitudes and beliefs
It is subjective and open to interpretation
Uses interviews, and focus groups to collect data
4.1 The Role of Marketing
Marketing
is the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational objective
How does marketing work with other functions of the business
?
Human Resources Management:
hiring the right people, expanding the workforce
Operation management
tells what people actually want
Finance:
Discusses budgets and market research funds
Market Orientation
is an approach to marketing that bases its decisions on customer needs. It is outward looking and carries out market research to create products and services. Produces products services that meet consumer demands.
Advanatges
Increased confidence that their products will sell well
Can respond a lot quicker to changes in the market
Challenge new competitors due to regular feedback from customers
Disadvantages
Can be expensive to carry out market research
Consumer needs and wants changing so frequently businesses can find it difficult to meet everyone’s needs
Time consuming
Product Orientation
is an approach adopted by business that is inward looking. They focus on selling products that they make, rather than making products that they can sell.
Advantages
Quality is assured
Business has more control
Develops a unique selling point
Disadvantages
May not align with consumer tastes
can be costly and high risk
only for specific industries
What are the objectives of marketing?
Right product is produced for the consumers
Right prices so people can actually buy
Right Place to distribute
Adequate and effective promotion to convince customers to buy
What is market share?
Refers to an organization’s portion of the total value of sales revenue in a specific industry measured by expressing the organization’s sale revenue as a percentage of total sales revenue in the industry per time period.
Benefits of having a high market share
Gain a range of economies of scale
Dominant market player
Known as market leaders
Better price setting abilities
Less threatened by competition
How to grow the market share
Promotions to develop brand value and brand loyalty
Product development, improvements, and innovations >> novel ideas
Motivation and training workforce >> better customer service
Establishing intellectual property rights
Use of more efficient channels of distribution
What is market growth?
Refers to the state at which the size of a market is increasing. Usually expressed as a percentage change in total sales of the market over a specific period, usually per year.
Usually used as a measure of success of a business in relation to its market share.
It is an important factor to consider the development or launch of a product in a particular market.
Market Leadership and Market Share
What is Market Leadership?
Market leadership
refers to the position of a business having the largest market share in a given market for a particular good of service.
Market Concentration
measures the degree of competitiveness that exists within a market by calculating the market share of the largest few firms in the industry.
Advantages of being a market leader
Premium prices can be charged ⇒ status
Lower production cost ⇒ economies of scale
Longer product life cycle ⇒ high loyalty
More publicity and brand exposure ⇒ preferred brand for new customers
Easier to attract and recruit good employees ⇒ proud to associate with.
Disadvantages of being a market leader
Constant pressure of employee and managers>>maintain a high standard
Add pressure >> aggressive price reduction to attract customer
4.2 Marketing Planning
The role of marketing planning
Market plan -
a document outlining an organization’s marketing objectives and the marketing strategies to be used to achieve these objectives.
Marketing audit -
a review of the current position of an organization’s marketing mix, in terms of its strengths and weaknesses and consideration of opportunities and threats facing the organization.
Market Planning
is a systematic process of devising marketing objectives and appropriate marketing strategies to achieve these goals.
What are the five stages of market planning
Marketing audit: an examination of the current climate in which the business operates.
Marketing objectives: The marketing audit enables the business to set marketing goals and targets
Marketing strategies: the plan and use of an appropriate marketing mix to achieve marketing objectives.
Monitoring and review: a continual process of checking and monitoring of progress so that marketing objectives can be met.
Evaluation: examination of the extent to which the business has succeeded in achieving its marketing objectives.
Advantages
Improves change of success
Identify and deal with anticipated problems
have a clearer idea of the organization’s objectives and constraints
Allows marketing managers to have better control of their operations
Disadvantages
Do not have sufficient time, resources, or expertise
Can be inflexible and outdated quickly due to rapid market place changes
Unrealistic expectations and hurt motivation
What is STP
A marketing model that is a commonly used strategic approach to modern marketing.
Segmentation
- dividing a market into groups to meet their wants and needs more easily
Targeting
- refers to each distinctive market segment having its own specific marketing mix.
Positioning
how the firm is viewed in the market at this moment
Step one: segmentation
Demographic segmentation
Demography:
the study of characteristics of the human population within a certain area, region, or country looking at age, gender, race, marital status, religion, language, income, and socioeconomic class
Geographical segmentation
can be largely influenced by geographic variables - Race, language, and religion
Psychological segmentation
Psychographic factors are those that consider the emotions and lifestyle of customers
Step two: targeting
Target market
is a particular market segment a business chooses to serve or sell. It focuses its marketing activities on this group and hopes that they will buy their products
Measurable
Accessible
Profitable
Niche targeting
is focusing on a small and specific portion of the market as their audience
Advantages
Better focus >> targeted
Less competition >> charge higher prices
Highly specialized >> encourage customer loyalty
Easiest and most cost-effective
Can charge a higher price as they are specific
Disadvantages
Small >> limits potential customer
few(er) opportunities of economies of scale >> higher cost per product
Attract new entrants >> Threat of larger firms
Mass market targeting
undifferentiated marketing.
It is an approach to marketing that ignores targeting individual market segments. Instead, a broad range of market segments are targeted collectively to maximize sales
Advantages
Huge potential economies of scale ⇒ mass supplying
No need to modify marketing strategies ⇒ saves time and resource
Establish a larger customer base ⇒ higher sales revenue and more profit
Disadvantages
High barriers to entry for mass production
Competition ⇒ substantial budget
Lack focus ⇒ can be wasteful, no target
Step three: positioning
Identifying the competitive advantages of the product
Deciding on which aspects of these strengths should be marketed
implementing the desired positioning by using an appropriate marketing mix
Cost leadership - aiming to excel as low-cost suppliers of particular economy products
Differentiation - distinct products to distinguish them from competitors (USP)
Focus - close attention to a particular market segment
Unique Selling Point (USP)
any aspect of a good or service that makes it stand out from those offered by competitors.
Gives a competitive advantage
Through distinct feature/packaging
Often through word of mouth
First mover advantage -
being the first business to provide a certain product
Differentiation
act of distinguishing a business or its products from competitors in the market.
Advantages
Price advantages ⇒ add value to good and service, allowing it to charge higher prices
Brand recognition and loyalty ⇒ competitive advantage more sales
Distribution ⇒ successful product differentiation can have more distrubution
Disadvantages
Expensive ⇒ only large companies have financial resources to differentiate
Economies of scale ⇒ require additional marketing costs so less cost saving
Choice not always desirable ⇒ excessive differentiation can drain firm’s resources and customers
Product differentiation
create the perception among customers that the organization’s goods and services are different (unique, exclusive or special), so adds value compared to the substitute products from rival businesses.
4.6 International Marketing
What is international marketing?
International Marketing
is related to selling goods and services from one country to another. Companies not only change their marketing by country but also change their product names and offerings.
How to businesses enter other countries?
Internet, exporting, franchising, joint ventures, direct investments. The increases by the cost and commitment.
Method of entry
Internet:
Sell internationally to online customers through webpage and use shipping services to get their products to their customers
Exporting
: Buy selling them in established stores already in the country
Franchising:
Businesses allow locals to buy the rights to set up in their home country.
Joint venture
: Businesses come together for a new project in a new country usually where one business has experience and the other company offers some other benefit
Direct investment:
Businesses open a physical location in another country either through stores or production facilities
Opportunities
A large group of customers
Possible economies of scale
Low operating costs than home markets
Spread the risk over different markets
Forming new business relationships
Improved brand image
Benefiting from government incentives
Benefiting from different laws and regulations
Threats
Social and cultural differences
Technological challenges
Infrastucture issues
Legal regulations
Political issues
Economic disparity