Business

• Target Market


  The market an enterprise wants to sell its products to
• Importance of establishing target market


  • To develop a brand
  • Reduce costs of marketing to those outside the segment
  • Better understand customer needs - increase satisfaction and builds strong brand loyalty
• Market segmentation


  Uses key differentiators that divide customers into specific groups to be targeted
• Advantages of Segmentation


  • Provides a competitive advantage over enterprises who don't use segmentation
  • Ensures that resources are not wasted on marketing - increases efficiency
  • Allows a business to target the right products at the right people - ensures marketing efforts are focused and effective
  • Increases profit and opportunity for growth
• Segmentation criteria


  • Demographics - age, race, religion, gender
  • Geographic - location
  • Psychographic - social class, lifestyle
  • Behavioural - spending, consumption, rate of usage
• Mass market


  Targets everyone
• Niche market


  Targets a particular group with the same interests
• B2B


  Business to business
• B2C


  Business to consumer
• Product Life cycle


  1. Development

  2. Introduction

  3. Growth

  4. Maturity

  5. Decline
• USP


  A distinguishing feature of a product or service that makes it stand out from the competition
• Brand personality


  A set of characteristics associated with a brand
• Why do enterprises use Brand personality?

  • Can help to differentiate a product from the competition
  • Helps to define a product, what class it sits in and the potential experience of using the product
  • Builds long term brand loyalty with the customer
• Brand image


  A customer perception of a product or enterprise. It conveys what they can expect from the enterprise in terms of quality, variety and customer service
• Product portfolio


  When a business has a range of products, they are able to target a wider audience and generate sales
• Price penetration


  Main aim is to gain market share quickly by entering the market at a very low price and gradually increasing prices as it becomes more established
• Advantages of price penetration


  • Encourages large volumes of sales (due to low price)
  • Generates brand loyalty
• Disadvantages of price penetration


  • Unsuitable for any product with a short-life cycle
  • May make small profits or losses on each product sold
• Price skimming


  Main aim is to maximise profits earned on a product by charging a high price but only for a short period of time. Selling price is reduced gradually to enable a wider market appeal
• Advantages of price skimming


  • Offers something unique to consumers that they are willing to pay a high price for - brand image is high
  • Profits generated are used to repay the high costs of research and development and to maximise revenue before competition enters the market
• Disadvantages of price skimming

  • The product's brand image must be of a high quality so that customers think that the product is worthy of a high price - meets the demands of customers
• Competitive pricing


  When an enterprise sets their prices according to those of their competition. They either try to undercut them or at least match their prices
• Advantages of competitive pricing


  • Gain a competitive advantage in the market
  • Attract more customers
• Disadvantages of competitive pricing


  • Low initial prices may not cover start up and running costs
  • Enterprise must establish brand identity and USP between their goods and those of competitors which can be time consuming to develop and expensive
• Cost plus pricing


  Adds a set percentage profit amount into the average cost of producing the good
• Advantages of cost plus pricing


  • Quick and easy strategy to ensure sales revenue will cover total costs and generate a profit
• Disadvantages of cost plus pricing


  • Falls to take into account the immediate needs of the market and consumers - for example, if competitors are lowering their prices can lead to lower sales and profits for the business
  • The allocation of overheads is a time consuming and complex process
• Premium pricing


  Involves pricing products above the competition to establish a perception of quality and that of a luxury brand
• Advantages of physical location

  • Enables customers to have an experience to physically observe the products and its customer service. Trustworthy.
  • Enables customers to build relationship with the store
• Disadvantages of physical location

  • Higher costs for maintenance, bills, rent etc
• Advantages of operating online

  • Cheaper initial costs
  • Wider market reach and export opportunities
  • Lower marketing costs - use of social media
• Disadvantages of operating online


  • Security and fraud risks - can damage reputation
  • Website costs - designing and maintaining a professional e-commerce website
• Sales promotion


  The process of persuading a potential customer to buy a product
• Sales promotion techniques


  • Coupons
  • Loyalty incentives
  • Free samples and gifts
  • BOGOF
  • Competition
• Purpose of sales promotion


  • To entice people
  • Clear old stock
  • Attract new buyers
  • Boost sales figures
• Advantages of sales promotion


  • Effective at achieving quick boost to sales
  • Encourages customer loyalty
• Disadvantages of sales promotion

  • Sales effect may be short term
  • Customers may expect further incentives
• Personal selling


  When a business sells product face to face with customer
• Advantages of personal selling


  • High customer attention
  • Message can be customised and personalised - use of body language to interest customers
  • Greater interactivity - develop relationships and opportunity to close the sale
• Disadvantages of personal selling


  • High costs
  • Labour intensive
  • Can only reach a limited number of customers