Aqa bus2-effectivemarketing

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Slide 1

Effective Marketing

What this topic is aboutThe purpose of marketingDifferent approaches to marketingSegmentationNiche &mass marketsB2C & B2B marketing

What is Marketing?The process of identifying, anticipating and satisfying customer needs profitablySource: Chartered Institute of Marketing

which means

IdentifyingUse market research and other methods to understand customersAnticipatingAnalyse data and use marketing skills to judge market opportunitiesSatisfying customer needsDo everything possible to provide develop products that meet customer needs and provide great customer serviceProfitablyAdd value to a product to ensure it is sold profitably

The Purpose of MarketingMarketing is about making products consumers want to buyThe marketing function in a business:Determines what the market wantsDevelops the strategy to achieve the marketing and business objectivesDelivers the marketing actions to achieve the objectives

CustomersAre generally looking for valueProducts which meet their needsAt a price they find acceptableAre prepared to be loyalProvide positive word-of-mouth recommendationGreat source of market researchTheir tastes change frequentlyFirms need to respond

Business responds to customer needs and wants designs products accordinglyBusiness develops products based on what it is good at doingTwo marketing orientationsProductionOrientationMarketingOrientation

Marketing ObjectivesSet out what a business wants to achieve from its marketing activitiesNeed to be consistent with overall aims and objectives of the businessProvide a focus for marketing management

Smart ObjectivesSPECIFICMEASURABLEACHIEVABLEREALISTICTIMEDSMARTDetails exactly what needs to be doneAchievement or progress can be measuredObjective is accepted by those responsible for achieving it Objective is possible to attain (important for motivational effect)Time period for achievement is clearly stated

Examples of Marketing ObjectivesIncrease company sales by 12% in 2009Achieve a market share of 27% for Product C within 3 years of launchIncrease the percentage of customers who rate service as excellent from 80% to 85% within 18 months

Link with Business ObjectivesIt is important that marketing objectives and marketing plans support the overall objectives of the business. Below is an example of how business objectives translate into marketing objectives and activities

Planning StageExampleBusiness Aims / MissionOverall mission to be the market leaderBusiness ObjectivesTo achieve a market share of 25% and annual profits of 2mMarketing ObjectivesIncrease sales of existing products by 15%Launch two new products into the market to add at least 5% to overall market shareMarketing ActivitiesAdvertising campaign to promote new productsDecrease price of existing products by 10%New packaging for existing products

Market SegmentationA reminder from Unit 1:

Market segmentation is the technique used to enable a business to better target it products at the right customers

In any market there will be several segmentsSegment BSegmentCSegment DSegmentASegments are usually measured in terms of sales value or volume

E.g. segment B is twice the size of segment C

Why segment? BecauseCustomers differ in theBenefits they wantAmount they are able to or willing to payMedia (e.g. television, newspapers, and magazines) they seeQuantities they buyTime and place that they buy

Why segment the market?

Better matching of customer needsCustomer needs differ. Creating separate products for each segment makes senseEnhanced profits for businessCustomers have different disposable incomes and vary in how sensitive they are to price. By segmenting markets, businesses can raise average prices and subsequently enhance profitsBetter opportunities for growthMarket segmentation can build sales. For example, customers can be encouraged to "trade-up" after being sold an introductory, lower-priced productRetain more customersBy marketing products that appeal to customers at different stages of their life ("life-cycle"), a business can retain customers who might otherwise switch to competing products and brands.Target marketing communicationsBusinesses need to deliver their marketing message to a relevant customer audience. By segmenting markets, the target customer can be reached more often and at lower costGain share of the market segmentThrough careful segmentation and targeting, businesses can often achieve competitive production and marketing costs and become the preferred choice of customers and distributors

Main Bases of SegmentationGeographicDemographicBehaviouralPsychographicCustomers within 10 miles of the M25A Level & University StudentsCustomers wanting a value for money impulse buyCustomers who prefer to buy fairtrade foodCustomer locationRegionUrban / RuralACORN classificationAgeGenderOccupation Socio-economic group Rate of usageBenefits soughtLoyalty statusReadiness to purchasePersonalityLifestylesAttitudesClass

Niche v Mass MarketingIn most markets there is one dominant segment and several smaller (niche) segments

Niche Marketing - DefinedWhere a business targets a smaller segment of a larger market, where customers have specific needs and wants

Niche Marketing AdvantagesLess competition - a big fish in a small pondClear focus - target particular customersBuilds up specialist skill and knowledgeCan often charge a higher priceProfit margins often higherCustomers tend to be more loyal

Niche Marketing DisadvantagesLack of economies of scale Risk of over dependence on a single product or marketLikely to attract competition if successfulVulnerable to market changes all eggs in one basket

Mass Marketing - DefinedWhere a business sells into the largest part of the market, where there are many similar products on offer

Mass Marketing Key FeaturesCustomers form the majority in the marketCustomer needs and wants are more general & less specificAssociated with higher production output and capacitySuccess usually associated with low-cost operation or market leading brands

B2C v B2B MarketingB2CB2BBusiness to ConsumerBusiness to BusinessRetailingFamily tourismPersonal bankingHouse buildingWholesalingBusiness travelBusiness bankingCommercial property

B2B Marketing What is Different?

Business to BusinessBusiness to ConsumerBased on relationships with business buyersProducts more important than relationshipsOften small & focused marketUsually larger marketsMore complex & longer buying processSingle step buying process; often short (e.g. impulse purchase)More sophisticated buyersLess sophisticated buyersAim is to turn prospects into buying customersEmotional considerations affect buying behaviourEducational element to promotionBrands very important

Effective Marketing