Marketing

• Product Led vs Market Led 


  • Product led focuses on developing and producing a quality product and then attempting to sell it, whereas Market led produces a product that consumers want or need.
  • Product led carries out no market research before the product is developed, whereas Market led carries out market research as it is central to find out what should be produced.
• Product Led vs Market Led


  • Product led focuses on product research, whereas Market led focuses on customers needs.
  • Product led focuses on designing new and innovative products, whereas Market led is more able to meet changes in customer tastes.
  • Product led usually has little competition in the market, whereas Market led usually is part of a highly competitive market.
• Market Research

  -> Desk Research


  • Involves researching and analysing information that has already been gathered, it is secondary information.
• Market Research

  -> Desk Research - Advantages and Disadvantages


  • Timely - desk information is quick to gather.
  • Cost Effective - desk information does not require trained and paid interviewers.
  • Available - desk information already exists so it is easy to look up.
  • Not Objective - could be biased.
  • Not Appropriate - is not fit for the exact purpose of the businesses needs.
• Market Research

  -> Field Research 


  • Involves the business gathering brand new information suited for the businesses exact needs, it is primary information.
• Market Research

  -> Field Research - Advantages and Disadvantages.


  • Complete - information should have no missing parts.
  • Timely - information is up-to-date.
  • Appropriate - fit for the purpose needed.
  • Accurate - information should be correct as it can be validated.
  • Not Cost Effective - field information requires trainers and paid interviewers.
  • Timely - can be time consuming to gather and analyse.
• Comparing Desk Research and Field Research

  • Desk research can be inexpensive as the information already exists, whereas Field research can be expensive as paying for interviewers to carry out research is expensive.
  • Desk research takes less time to gather as it already exists, whereas Field research takes time to prepare, carry out and analyse information.
• Comparing Desk Research and Field Research

  • Desk information is often online in the public domain, whereas Field information is not available to competitors.
  • Desk research analyses information that already exists, whereas Field research involves gathering new information.
  • Desk research may not be specific to the information wanted, whereas Field research is appropriate to what is being researched.
• Field Research Methods

  • Personal Interview -> stopping people in the street or visiting them at home. The interviewer can clarify any questions to aid understandment for interviewee. People don't like being disturbed in the street or at home.
  • Postal Survey -> sending out questionnaires by post for people to complete and return. Reaches a large geographical area. May have to add prizes or awards to get a response.
  • Telephone Survey -> phoning people at home or at work to ask their opinions. Large numbers can be contracted quickly. Sometimes gains a hostile response from interviewee.
• Field Research Methods

  • Hall Test -> consumers are invited to comment on a range of products. Allows product to be demonstrated. Consumers often give favourable replies to be polite.
  • Customer Audit -> determining the businesses ideal customer by measuring their experience with your product. It can be used to predict customer trends. It is very expensive as many consumers receive payments.
  • Test Marketing -> selling the new product in one small market before launching it worldwide. Allows the product to be improved before launch. Regional tastes may not represent the nation as a whole.
• Field Research Methods

  • Observation -> watching how consumers shop and behave in stores and how they react to products on display. There is no direct contact with the customers, so no bias is introduced. Cannot clarify any situations or ask for an explanation.
  • Internet Survey -> businesses contact customers directly once they have purchased online. Businesses can create a database of customer details to help analyse the result. Can end up in a spam folder.
• Field Research Methods

  • Social Media -> many businesses have a team set up to monitor comments that appear on social media. Businesses can respond quickly to negative comments. Information will be available to competitors.
  • Loyalty Cards -> a loyalty scheme to convince customers to come back using things such as discounts. Up-to-date information on customer buying habits is obtained. Need to provide discounts to encourage customers to continuously use.
• Why do Market Research?

  • Ask customers for their opinions -> can then alter the product based on the feedback given.
  • Test products to a group of consumers -> this ensures the product meets customer needs.
  • Use the internet to find out about their market -> this gains a better understanding of the profile of their market.
  • Ask customers for their opinions -> Use the information to enter new markets/ increase market share.
  • Use feedback from customers -> To ensure advertising is targeted at the correct market segment.
• Types of Sampling

  -> Random Sampling


  • This involves producing a random list of individuals to survey. Those picked are generated randomly, using a computer and the telephone directory or the electoral register.
• Types of Sampling

  -> Stratified Random Sampling


  • A sample is selected that is a representative of the target market.
• Types of Sampling

  -> Quota Sampling


  • The researcher chooses from a group of people with a certain characteristics eg, age, income ect.
• Advantages and Disadvantages of Random Sampling


  • There is no chance of bias being introduced when selecting individuals for the sample.
  • It is simple to draw up a sample.
  • It may not be focused on any particular market segment.
  • It assumes that all members of the group are the same, which is not always the case.
  • It is an expensive method to administer and run.
• Advantages and Disadvantages of Stratified Random Sampling


  • The sample will represent the target market.
  • No researcher bias as the sample is random.
  • Sample could be geographically dispersed, adding to the cost of research,
• Advantages and Disadvantages of Quota Sampling

  • It is cheaper to operate than random sampling as it needs fewer resources.
  • Statistics are available showing the proportions of different groups within the population that are readily available.
  • Interviewers can substitute someone else if the interviewee is not at home at the time of the visit or phone call.
  • Results can be less representative than using random sampling methods.
  • It is easier to introduce bias which may affect results.
• Product Life Cycle

  Development -> Description, Impact on Sales and Profits


  • Product is being researched and developed. Prototypes will be made and tested. Changes may have to be made after research feedback.
  • No sales as the product is still being developed.
  • The profit will be making a loss due to the cost of development and no sales.
• Product Life Cycle

  Introduction -> Description, Impact on Sales and Profits


  • The product is launched. High advertising costs at this stage to raise awareness of product.
  • Sales are low to begin with. Customers need to be persuaded to move from competitor products.
  • High promotional costs could result in an overall loss being made or low profit.
• Product Life Cycle

  Growth -> Description, Impact on Sales and Profits


  • The product has been on the market for some time, customers are fully aware of the product and are purchasing it.
  • Sales start to rise rapidly. This can be customer confidence in the product, lack of competition or slightly reduced prices.
  • Profits are starting to be made and losses from previous stages are recouped.
• Product Life Cycle

  Maturity -> Description, Impact on Sales and Profits



  • Product had been on the market for some time. Competition enters the market.
  • Sales growth peaks and levels out. Many sales can still be made for a long time at this stage.
  • Profits reach a peak as the product is fully established and then level out.
• Product Life Cycle

  Saturation -> Description, Impact on Sales and Profits



  • The product suffers from too many competitors.
  • Sales begin to fall as customers go elsewhere.
  • The competition will take away sales and profits will therefore fall, especially if prices are slashed to encourage sales.
• Product Life Cycle

  Decline -> Description, Impact on Sales and Profits


  • The product life is nearing the end. The product will stop being produced.
  • Sales will fall rapidly and eventually the product will be withdrawn from the market.
  • Profits will continue to fall. Eventually the product may be sold at unit cost just to break-even.
• Why do businesses carry out research and development?

  • Ensuring customers you have the product they want.
  • Have a competitive edge.
  • Be known as an innovator.
  • Improve existing products.
  • Be able to sell a unique product.
  • Ensure products are safe.
• Extension Strategies Examples

  • Change the product's design or packages.
  • Introducing new variations of the product.
  • Find new markets for existing products.
  • Change the name of the product.
  • Change the recipe of the product.
  • Change the price of the product - increase or decrease.
  • Change method of promotion.
  • Change the place the product is sold.
• Product Portfolio

  Advantages

  • Spreads risk - if one product fails then you have others to rely on.
  • Maximise sales - attracting different market segments.
  • Raise the profile of the business - because they have several products.
  • Consumers see a variety of products with the same brand so recognition is high.
  • Increase market share - as they are able to meet the needs of a number of different markets.
  • Can easily cope with seasonal fluctuations - the range of products will bring in revenue at different times.
  • Easier to launch new products as recognition is high.
• Product Portfolio

  Disadvantages

  • Advertising costs can be higher to ensure customers know all about their products.
  • Research and development costs can be high to maintain a variety of new products.
  • If one product has a problem it can affect the whole portfolio.
  • Training staff for each new product can be time consuming.
• Boston Matrix

  Star -> Description and Impact


  • Stars have a high market share in a high growth market.
  • Stars need to constantly invest to keep ahead in a competitive market. Stars allow a business to become a market leader. Over time, stars will decline into either a question mark or a cash cow.
• Boston Matrix

  Cash Cows -> Description and Impact


  • Cash cows are products that have a high market share of a low growth market.
  • Cash cows should require little marketing expense due to a lack of competition. Funds generated can be used to strengthen stars and improve their riskier ventures, such as question marks.
• Boston Matrix

  Question Marks -> Description and Impact


  • Question marks are products that have a low market share in a market with high growth potential.
  • Question marks can be invested due to their position in a promising market. They need development of a strong marketing mix if they are to be turned into stars.
• Boston Matrix

  Dogs -> Description and Impact


  • Dogs are products that have a low market share of a market with low growth.
  • Dogs can adversely affect profits. Dogs should be deinvested due to a lack of market share and the declining market for the product. They cannot be turned into stars.
• Use of Boston Matrix


  • Helps the business to make decisions about which products to invest in or which ones to withdraw.
  • Helps the business to spot gaps in its product portfolio.
  • Helps the business to identify where you need to research.
  • But it only shows the product portfolio at one point in time.
• Pricing Strategies

  -> Cost Plus - Description, Advantages and Disadvantages


  • This involves setting the selling price by calculating the cost of producing the product then adding on a percentage for the businesses own profit.
  • Simple and quick to calculate. Good way to ensure that the business covers the cost and makes profit.
  • However, it fails to consider market needs. Does not consider competitor pricing.
• Pricing Strategies

  -> Skimming - Description, Advantages and Disadvantages


  • When a business launches a new product at a high price, which allows them to make a large profit. As competition enters the market the price will start to fall.
  • The business can charge a high price for a quality product. They are able to make a high revenue to cover research and development costs. Gives exclusivity value as people want to be the first to own the product.
  • May discourage consumption due to high prices. Customers who bought the product at a high price may be dissatisfied when the price is lowered.
• Pricing Strategies

  -> Penetration - Description, Advantages and Disadvantages


  • Used when a company enters a competitive market. The price is set lower than competitors to tempt customers away, then when the product is popular it is raised to be in line with competitors prices.
  • Lower prices attract more customers, leads to high sales and high market share. High sales lead to a decrease in the cost of production.
  • Might not necessarily achieve high profit. Consumers may think it is a low quality product. It is only suitable for very price sensitive goods.
• Pricing Strategies

  -> Destroyer - Description, Advantages and Disadvantages


  • Used by businesses to eliminate competition. Prices are lowered to force competition prices down, weaker competition who are unable to survive are forced to leave the market. Prices then return to original or higher prices.
  • Consumers benefit from the low prices. It allows a business to dominate the market.
  • However, it is an illegal practise.
• Pricing Strategies

  -> Promotional - Description, Advantages and Disadvantages


  • Prices are reduced for a short amount of time. Used by a business to inject new life into a product or reduce stock levels quickly eg, 'buy one get one free'.
  • Consumers benefit from the low prices. Increases the cash flow of the business. Helps to reduce stock levels quickly. Can boost sales in an established product or create interest in a new one.
  • However, lower profits as prices are reduced for a short price.
• Pricing Strategies

  -> Price Discrimination - Description, Advantages and Disadvantages


  • Used for when businesses charge a different price for the same product according to the time of day, year or amount of usage.
  • Can benefit both consumers and producers.
  • Needs to be certain about the characteristics of the market.