Decision Making to Improve Marketing Performance 3.3

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  • Decision Making to Improve Marketing Performance 3.3
    • Setting Marketing Objectives
      • Importance of Marketing
        • Understand the market business operates in
        • Understand what customers want
        • Understand relative strengths and weaknesses
        • Build a strong brand
        • Build a relationship with customers
        • Understand the nature of pricing for its products
      • The Market
        • Where buyers meet sellers
        • Market exists wherever there are potential customers
          • And where a business is able to sell a product
        • All markets have unique characteristics and operate in different ways
        • Can grow or shrink and can be local, regional,  national or global
      • Marketing Objectives
        • Market and Sales Growth
          • Measured in volume or value
          • Marketing can increase the awareness, desire and ability of customers to buy the product
            • Leads to increased revenue
        • Market Share
          • The amount a business sells as a percentage of the whole market
          • Increasing market share gives business more influence and power
            • Means that it has increased its number of customers
        • Brand Loyalty
          • Businesses need regular custom in order to succeed
          • Brand loyalty involves building a relationship with customers
            • Encorages repeate purchases
        • Brand Image
          • Building brand characteristics
          • If a business develops a good reputation it can attract customers
          • Can allow businesses to charge a premium price
      • Internal and External Influences
        • All business functions are interlinked and influence each other
        • Internal
          • Finance
          • Operations
          • Human Resource
        • External
          • Political
          • Economic
          • Social
          • Competitors
    • Understanding Markets and Customers
      • Market Research
        • The Market Research Process
          • 1) Define problem/ question
          • 2) Develop market research plan
          • 3) Collect data
          • 4) Analyse data
          • 5) Interpret and report findings
        • Primary Market Research
          • Research collected first hand
          • + Specific to the needs of the business
          • + More up to date and reliable
          • + Gives more opportunity for two-way communication
          • + Often better if you want to collect qualitative data
          • - Can be more time consuming
          • - More expensive
          • - Difficult to conduct large sample size
          • Includes questionnairs, consumer panels, interviews, focus groups
        • Secondary Market Research
          • Research that already exists
          • + Easily accessible and good starting point
          • + Fast and less time consuming
          • + Often better if you want to collect quantitative data
          • - Some data can be free, but detailed reports may be costly
          • - Not always up to date or specifically tailored to the businesses needs
          • Includes market research reports, competitors, websites
        • Market Mapping
          • A technique used to understand how products/ businesses are viewed
          • Helps businesses decide if there is a gap in the market
          • Useful process for comparing similarities and differences between businesses
          • Helps a business gain a better understanding of its competition
          • Useful to understand customer perceptions
          • Only considers two main variables so can be limited
        • Uses of Market Research
          • Budgeting
          • Production forecast
          • Sales forecasting
          • Cash flow forecast
          • Workforce forecast
          • Product development
          • Developing marketing activities
      • Interpreting Marketing Dats
        • Correlation
          • Helps businesses understand the relationship between factors
          • Means businesses can manipulate factors to achieve higher sales
        • Sampling
          • Involves selecting a representative groups of people from the target population
          • + Quicker and easier than trying to collect research from everyone
          • - Not always fully representative
          • The sample size and method of conducting research will determine its accuracy
          • Confidence level = indication of how accurate the research findings are
          • Confidence interval = possible range of outcomes for a given confidence
        • Extrapolation
          • Means predicting future trends
            • based on past results
          • Reliable when conditions remain the same
          • Further into the future for extrapolation, the less confidence level
      • Price and Income Elasticity
        • Price/ Income Elastic
          • Price increase leads to a bigger percentage decrease in demand
            • Revenues fall
          • Price decrease leads to a bigger percentage increase in demand
            • Revenues rise
          • More than 1
        • Price/ Income Inelastic
          • Price increase leads to a smaller percentage decrease in demand
            • Revenues rise
          • Price decrease leads to a smaller percentage increase in demand
            • Revenues fall
          • Less than 1
        • Factors Influencing Elasticity
          • Number of substitutes
          • Number of competitors
          • Relative costs of switching to another product
          • Extent to which the product is a necessity
          • Perceived value of the brand
        • Calculations
          • Market size = expressed in units sold or value
          • Market share = (total company sales / total market sales) X 100
          • Market and sales growth = (increase in market size / original market size) X 100
          • PED = (percentage change in quantity demanded / percentage change in price) X 100
          • IED = (percentage change in quantity demanded / percentage change in income) X 100
    • Making Marketing Decisions
      • Segmentation, Targeting and Positioning
        • Value of Market Segmentation
          • Differentiate from its competitors
          • Develop and build its brand
          • Identify and satisfy needs of specific group of customers
          • Reach its customers with relevant marketing
          • Focus the business activities
          • Build loyalty towards its brand and products
        • Methods of Segmentation
          • Geographic
          • Behavioral
          • Income
          • Demographic
        • Positioning
          • Businesses might use a market map to help them position their business
          • Involves a business considering the combination of benefits and price relative to competitors
      • Mass and Niche Markets
        • Scale of Segmentation in a Market
          • Mass Market
            • Targeting a large population with a generic product
            • Requires production on a large scale and investment in capacity
            • Potential for high sales revenue
            • May compete with many other businesses in the market
            • Promotion will involve mass marketing techniques
            • Businesses will have to compete on price
          • Niche Market
            • Targeting small population with specialized product
            • Production on small scale
            • Low volumes but high profit margins
            • Few competitors but limited consumers
            • Promotion through specialist mediums
            • Business will have to compete on quality and customization
          • Individual Markets
            • Technology has allowed businesses to profile individuals
              • Can customize their products accordingly
        • STP Process
          • Segmentation
            • Identify target based on strengths, potential sales, profitability
          • Targeting
            • Use a method for categorizing customers based on demographic
          • Positioning
            • Position business relative to competitors in order to meet needs not currently satisfied
    • The Market Mix
      • 7 P's
        • Product
          • Everything the customer buys
          • Brand features and benefits of good or service
        • Price
          • Set to match expectations of customers
          • Relates to features of product
        • Place
          • Using right channels to get product to customer
        • Promotion
          • Communicating the product offer
          • Creating awareness and desire to buy
        • Physical Environment
          • Matching physical environment where transaction takes place
        • People
          • Adding to the product by using right people in transaction
          • HR
        • Process
          • Making transaction convenient and effective
      • Product
        • Types of Consumer Product
          • Convenience Item
            • Bought on impulse
            • Not brand loyal
            • Sensitive to price changes
            • Products must be widely available
          • Shopping Goods
            • Consumers will 'shop around'
            • Consumers take time comparing product features
            • Brand and price are important
            • Consumers susceptible to promotion techniques
          • Specialty Products
            • High levels of engagement
            • Consumers take long time to process info
            • People involved in transaction are important
            • Physical environment very important
            • Consumers willing to travel far
        • The Whole Product
          • Core benefits are what the product actually does
          • Actual product includes all of the product features
            • Added value
          • Augmented product is everything the business builds around the product
        • Influences on and Value of Product Development
          • When developing products business must think of whole picture
            • Also need to consider design, function and cost
          • All products must have a balance
          • Influencing one of the features can detrimentally impact the others
      • The Product Lifecycle
        • Research and Development
          • Finding best way of production and distribution
          • Researching possible markets to enter
        • Introduction
          • Price may be low to initial sales
          • Heavy promotion
          • Low number of product variants
        • Growth
          • Price may increase with popularity
          • New varieties and distribution methods
          • Business must keep up with demand
        • Maturity
          • Consider cutting price to maintain demand
          • Promotion slows
          • Introduction of new customers slows
          • Focus on customer retention
        • Decline
          • Further price cuts to maintain demand
          • Variety of products streamlined to most popular
          • Possibly discontinuing product
        • Extension Strategy
          • Used to relaunch product and boost growth
          • Modifications may be made
      • The Boston Matrix
        • Stars
          • High market growth rate
          • High market share
          • Possibly leading brand in market
          • Distribution must be effective
        • Question Marks
          • High market growth rate
          • Low market share
          • Fast growing market but not established product
          • Requires heavy investment to develop
          • High competition
        • Dogs
          • Low market growth
          • Low market share
          • Invest to revitalize or discontinue
        • Cash Cow
          • Low market growth
          • High market share
          • Successful products in mature markets
          • Generate high revenue for a business
          • Little promotion required
      • Price
        • Influences on Price
          • Elements of the marketing mix
          • Branding
          • Costs
          • Competition
          • Price elasticity
          • Product life cycle
        • Pricing Strategies
          • Dynamic pricing
          • Price skimming
          • Penetration pricing
      • Promotion
        • Influences on Promotion
          • Target audience
          • Competition
          • Technology
          • Promotion budget
        • Promotion Methods
          • Advertising
          • Direct marketing
          • Sales promotions
          • Sponsorship
          • Social media
          • Public relations
        • Importance of Branding
          • Adds value
          • Premium pricing
          • Builds trust
          • Makes products recognisable
          • Helps business positioning
      • Distribution
        • Influences on Distribution
          • Scope
          • Nature of product
          • Control over promotion
          • Expectations of customers
        • Value of Digital Marketing and E-commerce
          • Allows small business to target global markets
          • Builds relationships through personal service
          • Targeting specific segments is easier
          • Opportunities for personalisation

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