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AS3 Marketing. MODULE 3.03. MARKETING STRATEGY AND PRODUCT. The Marketing Mix.

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module 3 03

AS3 Marketing

MODULE 3.03

MARKETING STRATEGY

AND PRODUCT

slide2

The Marketing Mix

The marketing mix forms the basis of the marketing plan which is set to achieve both marketing and corporate objectives of the business. Whenever the objectives of business change or if the external environment changes, it is likely that the business will have to alter its marketing mix.

slide3

The Marketing Mix

  • The 4 P’s of the basic marketing mix are:
  • Product
  • Price
  • Place
  • Promotion
slide4

Market Segmentation

Dividing the market into segments with similar needs and wants and common characteristics, and tailoring the marketing mix to meet the needs of a particular segment.

slide5

Methods

Geographic

Demographic/Socio-Economic

Geo-demographic

lifestyle

slide6

Methods

Geographic

Countries, regions, neighbourhoods.

slide7

Methods

Demographic/socio-economic

Age, gender, income, education, occupation, religion, race, marital status,family life cycle.

slide9

Methods

Geo-demographic

  • Classification of small geographical areas according to age, race, social class – links purchasing power with how people live and where people live.
slide10

Methods

Lifestyle/Psychographic

  • Lifestyles -
  • activities, interests,opinions.

YUPPIES – young upwardly progressing professional

DINKY-double income no kids household

slide11

Methods

  • Personality

Trendsetter

Environmentalist

Risk-taker

Eg

slide12

Strategies for Marketing a product

3 main strategies

  • Undifferentiated marketing
  • Differentiated marketing
  • Concentrated marketing
slide13

Undifferentiated

This is a single marketing mix offered to the total market after market research has been carried out

slide14

Differentiated

This involves dividing the market into different segments and, as a result of market research, having separate marketing mixes for each segment.

slide15

Concentrated

This is choosing one segment of the market and developing the best marketing mix for this segment only. It is often the best strategy for the smaller firm and is also known as niche marketing.

slide16

Niche Marketing

A corporate strategy which focuses on identifying and satisfying a relatively small segment of the market.

slide17

Niche Marketing

A corporate strategy which focuses on identifying and satisfying a relatively small segment of the market.

Often used by smaller firms unable to compete with larger.

slide18

Niche Marketing

Benefits

Limitations

slide19

Niche Marketing

Benefits

Limitations

  • Fewer resources.
  • Can enable smaller firms to operate in markets dominated by larger.
slide20

Niche Marketing

Benefits

Limitations

  • Lack of economies of scale - prices / profit.
  • Vulnerable to market changes.
  • Large business in several niches - requires flexible production.
slide21

Mass Marketing

A strategy which involves firms aiming products or services at whole markets rather than particular market segments.

slide22

Mass Marketing

Benefits

Limitations

slide23

Mass Marketing

Benefits

Limitations

  • Less vulnerable – spreading risk
  • Economies of scale
  • Greater sales and profits
slide24

Mass Marketing

Benefits

Limitations

  • Greater investment - mass production.
  • Greater competition likely.
slide25

Product Positioning

  • Firms position themselves in their market with regard, for eg,
  • Price
  • Quality
  • Reliability
  • And use a positioning map to show this. The map can help identify gaps in the market where new products/services can be provided

High Price

Low Alcohol

Content

High Alcohol

Content

Low Price

slide26

Portfolio Analysis

Relevant Terms

Product Line

Group of products with similar characteristics or uses or sold to the same type of customer. Eg Ormo bakery produces a line of white loaves – thin, medium, thick cut

slide27

Portfolio Analysis

Relevant Terms

Product Mix/Product Portfolio

The combination of all a firm’s product lines. Eg Ormo bakery produces a wide variety of breads (loaf, soda, wheaten etc) and cakes/buns. This is known as its product mix/portfolio

slide28

Deciding upon Product Mix

  • 1. Likely to meet a defined need?
  • 2. To what segment(s)?
  • 3. What position in the market place?
  • 4. Fit in with objectives?
  • Improve or diminish image / reputation?
  • Cost?/has business resources
slide29

Product Life Cycle

The different stages through which a product passes and the levels of sales experienced at each stage.

slide30

Product Life Cycle

Like humans, products have a life cycle:

  • Development (conception -pregnancy)
  • launch / introduction (birth).
  • growth (childhood - adolescence).
  • Maturity & saturation (adulthood).
  • Decline (old age).
slide31

Extension strategies

SALES

Growth

Introduction

Development

Maturity

Saturation

Decline

Time

Product Life Cycle

Stages of development shown in relation to sales over time:

slide32

Product Life Cycle

  • No 2 products identical. Depends on:
  • nature of product
  • marketing
  • customer tastes & income
  • competition
  • technology.
slide33

The Stages Involved

Development

Ideas investigated, designed, tested & selected.

Involves::

a) product research.

b) customer research.

Marketing plan prepared. High costs, no sales, cash, profit. The more novel the longer the development.

slide34

The Stages Involved

Introduction

Product launched into market place.

  • Price - high / low depending on uniqueness.
  • Promotion - informative to educate.
  • Profit - unlikely as sales low, promotion costs high.
slide35

The Stages Involved

Introduction

Many go no further.

slide36

The Stages Involved

Growth

More & more customers aware of product.

  • Sales & Profits - rapidly rise.
  • Profits - attract customers.
  • Competitors - enter the market.
slide37

The Stages Involved

Growth

Changes required to marketing strategy:

  • Price - rises or falls. High to recover costs / maximise profits; low to discourage competition.
  • Promotion - persuasive - special offers to build loyalty.
slide38

The Stages Involved

Maturity & Saturation

Maturity

  • Sales - rise but rate slows, level off due to competition.
  • Promotion - defensive - emphasis on branding & packaging.
  • Extension strategies - planned.
slide39

The Stages Involved

Maturity & Saturation

Saturation

  • Competition - too many firms competing for customers.
  • Sales - level off.
slide40

The Stages Involved

Decline

  • Sales & Profits - rapidly decline.
  • Can be a lucrative stage if marketing effort withdrawn.
  • Product withdrawn if damaging company’s image.
slide41

Extension Strategies

Definition

Methods to extend the life of a product.

Implementedduring maturity or early decline.

slide42

Extension Strategies

Examples

  • Change design, image, appearance, packaging.
  • Increase frequency of product’s use.
  • Attract new users / target new markets.
slide43

Extension Strategies

Examples

  • Develop alternative / new uses.
  • Introduce additional models / wider range.
  • Extend products into other formats.
slide44

Extension Strategies

NB

Advertising and sales promotion alone not extension strategies: can be used to boost sales at any stage.

slide45

Use of the product life cycle

Can help a firm to:

  • analyse present position.
  • Identify action to fulfil objectives.
slide46

Use

and make decisions regarding...

  • promotion & price
  • extension strategies
  • when / how to withdraw a product
slide47

Potential Problems / Limitations

Knowledge of what is currently happening - not guarantee success:

marketing manager still needs to select the right strategies and implement them successfully.

slide48

Product Portfolio Analysis

Boston Matrix

  • Allows firms to analyse their product mix / portfolio.
  • Visual means of showing route new product might take in terms of market growth and share.
slide49

Portfolio Analysis

Boston Matrix

  • Products placed into 4 categories, usually move from problem children to stars to cash cows.
slide50

1. STAR-

Growth stage

2. QUESTION MARK-intro stage

4. DOG-

Decline stage

3. CASH COW- maturity stage

Portfolio Analysis

Boston Matrix

Market Share

High

Low

High

Market Growth

Low

slide51

Portfolio Analysis

Boston Matrix

2. Star/Prospect (Growth Stage)

  • Large share of high growth market.
  • Generate lots of cash but probably require lots of cash to maintain dominant position.
slide52

Portfolio Analysis

Boston Matrix

2. Question Mark – Intro stage

  • Low share of rapidly growing market.
  • Need high investment to gain market share.
slide53

Portfolio Analysis

Boston Matrix

contd

  • New products but also those previously strong.
  • Hope - becomes stars or cash cows, most become dogs.
slide54

Portfolio Analysis

Boston Matrix

3. Cash Cow/Yielder (Maturity Stage)

  • Considerable share in low growth market.
  • Need little investment, excellent cash generators.
slide55

Portfolio Analysis

Boston Matrix

Cash Cow/Yielder contd

  • Resemble products in mature stage of life cycle.
  • Part of profit they make often used to finance new products.
slide56

Portfolio Analysis

Boston Matrix

4. Dog (Decline Stage)

  • Small share of low growth market.
  • Resemble products in decline.
  • Should be dropped unless essential part of product range.
slide57

Portfolio Analysis

Boston Matrix

Firms don’t want lots of dogs, need to avoid lots of stars (drain resources). Balance with cash cows:

R & D costs probably recovered + promotion cost low relative to sales.

slide58

Ansoff’s Matrix – strategies for growth

  • Ansoff’s matrix shows the 4 options a business can choose if it wants to grow:
  • Market Penetration
  • Market Development
  • Product Development
  • Diversification
  • Explained in diagram overleaf.
slide59

Market penetrationopps – try selling more of present products in present markets

Product development opps- try bringing out new products in present market

Diversification opps- try looking at completely new products and new markets

Market development opps- try looking for new markets for presentproducts

Ansoff’s Matrix – strategies for growth

Products

present

New

present

Markets

new

slide60

Adding Value through Branding

Branding

A strategy used by businesses to differentiate its products from others in the market place and influence customer purchasing patterns.

slide61

Adding Value through Branding

Brand

Any distinctive name, term,symbol, image, design or packaging given to a product (or group of products) which enable it to be easily recognised and differentiates it from other products.

slide62

Adding Value through Branding

Brand

Significant advertising often required to build positive image.

Largely depends on packaging.

slide63

Adding Value through Branding

Types

  • Line
  • Individual
  • Family
  • Company name
  • Sub-brands
  • Own Brand / Own Label
slide64

Adding Value through Branding

Purpose & Benefits

  • Differentiation
  • Recognition
  • Repeat purchase - Brand loyalty
  • Brand promotion
  • Pricing flexibility
  • Intangible fixed asset-adds value to business worth
slide65

Adding Value through Branding

Purpose & Benefits

Only successful if product lives up to customers expectations & image built through advertising.

Can have adverse affects - bad press with one branded product can negatively affect another.

slide66

Adding Value through Branding

Qualities of a Good Brand

  • Suggests benefits.
  • Suggests use or special feature.
  • Easy to pronounce, spell, remember, recognise.
slide67

Adding Value through Branding

Qualities of a Good Brand

  • Distinctive.
  • Versatile (apply to new products).
  • Capable of legal protection.
  • Does not break the law!
slide68

Adding Value through Branding

Qualities of a Good Brand

Really successful brand names become generic, eg

Biro (ballpoint pen).

Hoover (vacuum cleaner).

slide69

Classification of Products

Consumer Goods

  • FMCG’s – fast moving consumer goods bought by consumer for immediate consumption eg food, petrol,
  • Consumer durables- goods bought for intention of keeping and using for a considerable period of time eg cooker, fridge, car, carpet etc
slide70

Classification of Products

Industrial goods

  • Industrial consumables – raw materials that business buys in and uses daily
  • Capital goods- these goods will last for a considerable period of time eg machines, computers, vehicles etc
slide71

Services

Things other people do for you eg cutting your hair, looking after your money, prescribing treatment. They are intangible, ie cannot be seen or touched.

slide72

Services

  • Trade.
  • Services to trade.
  • Direct Services.
slide73

Services

NB Not just a good or service:

  • a place eg holiday destination.
  • a person eg popstar.
slide74

Common Reasons for Failure of product/service

  • Inadequate market/product research.
  • Product defects.
  • Greater costs than expected
  • Poor pricing policy/strategy
  • Inadequate marketing effort eg promotion
  • Inadequate salesforce.
  • Weaknesses in distribution.
  • Too much Competition
slide75

AS Marketing

- END -

MARKETING STRATEGY