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Craft & Design higher Int 2. Factors that Influence Design Consumer Demand & Marketing. MASLOWS HIERACHY OF NEEDS THEORY. Fulfilling potential, creativity. SELF- FULFILLMENT. Status self respect, responsibility, achievement. ESTEEM NEEDS.

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Craft & Design higher Int 2

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Craft design higher int 2

Craft & Design higher Int 2

Factors that Influence Design

Consumer Demand

&

Marketing

Craft & Design


Maslows hierachy of needs theory

MASLOWS HIERACHY OF NEEDS THEORY

Fulfilling potential, creativity

SELF- FULFILLMENT

Status self respect, responsibility, achievement

ESTEEM NEEDS

Social acceptance, need to belong love, respect, friendship

SOCIAL NEEDS

SAFETY NEEDS

Safety security protection, shelter, warmth

PHYSICAL NEEDS

Basic physiological needs e.g. food and water

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Marketing

Marketing

“The process involved in identifying, anticipating and satisfying consumer requirements profitably”.

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Identifying consumers requirements

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

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Anticipating consumers requirements

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)

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Satisfying consumers requirements

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

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The casualties of not adapting to the market

The casualties of not adapting to the market

  • The American car industry

  • The British motor cycle industry

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Marketing successes

Marketing Successes

  • Swatch

  • Easyjet and Ryanair

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Marketing a strategic activity

Marketing - a Strategic Activity

  • Inception/design

  • Price

  • Distribution

  • Selling and promotion

  • After-sales services

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Assessment of the market

Assessment 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?

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Product led product orientated

Product-led - Product 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

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Market led customer orientated

Market-led - Customer 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

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Marketing products and services

Marketing Products and Services

  • Consumer goods

  • Industrial goods (capital goods)

  • Services (intangible)

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The marketing environment

The MarketingEnvironment

Consumer trends and behaviour

Competition

Government

THE MARKET

The economy

Technology

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Branding

Branding

  • Branding distinguishes a product from its competitors

  • Instantly recognisable by consumers

  • Often linked to quality and reliability

  • Can command a premium price

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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)

Unique Selling Point (USP)

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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”

Own Brands

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The marketing mix

The Marketing Mix

Product

Price

Promotion

Place

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Product service

Core

Actual

Augmented

The basic product - eg toothpaste cleans teeth

The way the product is presented - design, brand name, packaging, etc (Colgate toothpaste - red packaging)

Additional features - protection against decay, fresh breath, attracting the opposite sex, etc

Product/Service

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The product life cycle

The Product Life Cycle

£000

Costs/Sales

New

Product

Maturity

(Saturation)

Growth

Decline

Idea

Youth

Death

Launch

Time

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The product mix

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”

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Product innovation

Product Innovation

  • Generating an idea

  • Analysing the idea

  • Producing a prototype

  • Test market

  • Adapt product to solve problems

  • Launch the product

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Pricing strategies

Pricing Strategies

  • Low-price strategy

    in a market with strong competition

  • Market-price strategy

    petrol – matching competitors

  • High-price strategy

    up-market, exclusive image

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The price of a product

The Price of a Product?

  • The price of a product is one of the main factors in buying that product. Too low a price could give the impression of poor quality and too high a price may not give the feeling of value for money

  • Price is influenced by:- the product being new, what competitors are charging, the product’s stage in its life-cycle, the selling location, the market segment and many other factors

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Short term pricing tactics

Short-term Pricing Tactics

  • Skimming – high initial price for max profit

  • Penetration – low initial price for new product

  • Destroyer – eliminating the competition (‘Go’ and ‘EasyJet’/’Ryanair’)

  • Promotional – lowering prices for a period to ‘promote’ more sales

  • Demand-oriented – charging different prices according to the level of demand eg cross-channel ferry fares in summer

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Place distribution channels

Place - Distribution Channels

Producer 1

Producer 2

Producer 3

Consumer

Retailer

Wholesaler

Consumer

Retailer

Consumer

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The wholesaler function

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

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The retailer function

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

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Types of retailer

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

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Promotional strategies

Promotional Strategies

Three main aims:

  • Persuading - to purchase the products

  • Informing - telling consumers about the product

  • Reminding - that the product still exists

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Two main types of promotion

Two Main Types of Promotion

Above The Line

  • TV and newspapers to reach mass audience

  • A lot of waste

    Below The Line

  • Directly controlled by the business

  • Sales promotion, direct mail, trade fairs - targeted consumers who may be interested

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Advertising decisions

Advertising Decisions

  • The effect on Sales?

  • The target market?

  • Why do the consumers NOT buy the product?

  • Which is the best medium to use?

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Types of advertising media

Types of Advertising Media

  • Print - newspapers and magazines

  • Broadcast - TV, radio and cinema

  • Outdoor - billboards, posters, etc

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Two 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

Two Main Types of Sales Promotion

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Public relations pr

Public Relations (PR)

  • Improving the image of the product and organisation

  • Supporting and promoting a charity

  • Sponsoring sporting or cultural events

  • Product endorsement by celebrities

  • Press conferences and press releases in times of difficulty or when good publicity can be obtained

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Extending the product life cycle

Extending the Product Life Cycle

  • Changing the product - size, colour, taste

  • Providing variants - Mars: fun-sized, yoghurt, ice cream, mini-sized, giant-sized

  • Altering the packaging for different market segments

  • Altering the channels of distribution

  • Changing the price

  • Special promotions - offers, gifts, competitions

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Market segmentation

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.”

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Methods of segmentation

Methods of Segmentation

  • Age

  • Gender

  • Socio-economic grouping

  • Education level

  • Income

  • Religion

  • Residential area

  • Lifestyle preferences - hobbies, politics

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Market research definitions

“Market research is the systematic gathering, recording and analysing of data about problems relating to the marketing of goods and services.”

“Market research is the means by which those who provide goods and services keep themselves in touch with the needs and wants of those who buy these goods and services.”

Market Research -Definitions

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The need for market research

Predict changes required in its product/service

Identify what is selling

Identify who is buying the product/service

Explain what is happening in the market

Investigate possible courses of action

Identify the size of the market

Discover what consumers think of the product

Discover what consumers are willing to pay

Discover if a promotion is appropriate

Discover if the packaging is appropriate

Identify what competition exists - now and in the future

The Need for Market Research

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Methods of research primary

Methods of Research -Primary

  • By observation or asking people questions

  • Up-to-date

  • Collected for the exact purpose of the organisation

  • Not easily available to competitors

  • Time-consuming

  • Expensive

Primary data is gathered by field research

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Market research secondary

Sales figures

Stock figures

Accounting records

Customer comments

Sales reps reports

Market research data gathered previously

Government publications - social and economic trends, annual statistics, population census

Competitors’ data - annual reports, promotions, price lists, web sites

Newspapers, trade magazines, Mintel (research org), etc

Market Research - Secondary

Internal Sources

External Sources

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Ict and market research

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 e-mail comments back to the company

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Problems with market research

Problems with Market Research

  • Sampling Bias - small sample can give a wrong impression

  • Human Behaviour - opinions change rapidly

  • Interviewer Bias - leading questions may be asked

  • Lies Dammed Lies and Statistics

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The marketing topic

The Marketing Topic

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

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