3.3 Marketing models

• The product life cycle - if a product is in the decline stage, we can employ extension strategies such as changing packaging

  
• The Boston matrix

  
• Market shares?

  total sales of a firm/total sales in the market x 100
• Sales growth?

  difference in sales (between years)/earliest year x 100 (a percentage change)
• market growth?

  difference in total market sales/earliest year x 100
• market size?

  sales/market share x 100
• price elasticity of demand?


  %change in demand/%change in price
• income elasticity of demand?

  %change in demand/%change in income
• Marketing objectives 


  Market share

  Brand loyalty

  Market and sales growth

  Market size
• External factors on marketing decisions

  Ethics

  Social factors (trends)

  Competition

  Economic factors (interest rates)

  Technology
• Internal factors on marketing decisions

  Finance available

  Production capacity

  Human resources, skills of the workforce

  Nature of the product
• Primary research


  Research done by an organisation itself, specific to the business
• Secondary research 


  Research already available on public domains, not specific to that business. Still useful e.g data from government about demographics.
• Market mapping


  A map where companies are placed on according to price and quality (e.g), allows businesses to spot gaps in the market and exploit this.
• Sampling


  The selection of a representative group. Can help make decisions such as types of promotion, target market and product design.

  Random - each member of the population has an equal chance of taking part

  Stratified - separates population into stratas reflecting the % of groups in the entire population.

  Quota - separating people due to sharing common characteristics
• 3 types of marketing data

  Correlations

  Confidence intervals

  Extrapolation
• Correlations 


  Statistical technique to show the relationship between two co-variables, helps in forecasting sales etc.

  
• Confidence intervals / margin of error

  The plus or minus figure used to show the accuracy of results collected from sampling. Most common confidence interval = 95%. Likely to be affected by sample size, the smaller it is, the larger the margin of error will be. E.g using a confidence interval of 5 and 70% of the population said they liked eggs, it would range from 65% to 75%
• Extrapolation


  Analyses past performance of a variable such as sales and extends the trend into the future, not suitable in industries which are subject to rapid change e.g technology.

  
• Using technology to gather and analyse data

  Provides faster communication

  Forecasting easier

  Relies on the accuracy of the data
• Market segmentation


  dividing the market into sub-sections each with its own characteristics
• Market targeting


  Deciding which market segment a business wants to operate in

  Depends on…

  Nature of the product, competition and the consumer
• Marketing mix (7 PS)


  Promotion, place, people, process, physical environment, product, price
• Integrated marketing mix


  A marketing mix that utilises all 7 ps.
• USP


  Unique selling point, gives the business and product competitive advantage, differentiates from other products, important for homogeneous markets e.g chocolate bars
• Pricing strategies


  Skimming - setting price high, then lowering it. Good for new and innovative products.

  Penetration - setting a low price to build market share, price gradually rises.

  Price leadership - used for established products and firms which dominate the market

  Price taking - setting price to the same as other products, common for small and medium sized businesses.
• Promotion


  Packaging, branding, personal selling, public relations (PR), ATL / BTL advertising.

  Affected by ;

  Stage in the product life cycle, finance available
• Distributions 


  Location, credit terms, multi-channel distributions,

  • Traditional
  • Modern
  • Direct