Direct selling – a way of selling directly to the final consumer without another intermediary. This can be split into 2: Direct selling- usually made face-to-face; either where a product is demonstrated in the home or catalogue is left with the consumer Advantages: feature and functions of product can be explained fully; orders can be collected and delivered; feedback can be gathered. Disadvantages: expensive to maintain a sales team; some customers dislike ‘cold callers’. Direct mailing- Sending information about a product to potential customers through the post.
Merchandising -the visual presentation of a product to the consumer at the point of sale. Advertising -the use of media to communicate with consumers. -Is known as ‘above the line’ promotion, whereas all other types of promotion is ‘below the line’. -Advertising is categorized into 2 main types: – Persuasive: trying to convince consumers to buy the product. – Informative: increasing consumer awareness of a product, by providing details of its features. Public relations -communicating with the media and other interested arties to enhance the image of he business and its products, and thereby increase sales.
Branding -Creating an identity for a business and is products to differentiate it from its rivals in the market. The promotional mix The combination of promotional activities which make up a campaign to communicate with a target market. The combination chosen will depend on a number of factors: Cost: Many small businesses do not have enough money. Competitors: n/a Target market: any business should have a clear idea about what market they are aiming at. The product: Is it new? Then focus should be making people aware of it ND so on.
The market: n/a Using the marketing mix: Pricing Pricing strategies: long-term pricing plans which take into account the objectives of the business and the value associated with the product. For Price skimming: entering a market with a high price to attract early adopters and recoup high development cost. Penetration pricing: below market pricing to gain a foothold in an established and competitive market. For example, existing product strategies Price leaders: a product that has significant market share and can influence the market price.
Price takers: a firm which sets its prices at the same or similar level to those of the dominant firm in the industry. Pricing tactics: The manipulation of price to achieve a specific short-term objective. For example, Loss leaders: products sold at less than cost to attract customers to a product range. Aim is to create interest and encourage customers to visit the shop/website. Psychological pricing: the use of odd number pricing to increase the value-for-money appeal off product. Influencing on pricing decisions Costs Competitors The market The target market
Objectives of the business Sensitivity of demand to price changes Price elasticity of demand The responsiveness of demand for a product to a change in it price. Price inelastic demand: the demand for a product changes relatively less that the change in price. Price elastic demand: the demand for a product changes relatively more that the change in price. What determines a products price elasticity of demand? The number of similar products available to consumers If there are many, PEED is likely to be elastic because a rise or fall in price will cause customers to switch form one supplier to another.
How essential is the product? If it’s a necessity, or really addictive, customers will continue to buy the product even if the price changes. So these products are price inelastic. Time will affect price elasticity. Brand or product? The demand for petrol is likely to be price inelastic due to the essential nature of the product. However, the demand for any one brand of petrol could be elastic if only one company, shell for example, increased their prices. Car owners would quickly switch to other retailers. Using the marketing mix: Place
Distribution channel: method by which a product is sold to the customer. Direct distribution Direct sale: where no intermediaries are used. The development of e-commerce has made direct sales increasingly realistic option for many smaller firms as it can keep price that the consumer pays to the minimum. Intermediaries: organizations involved in the distribution of goods and services on Traditional distribution For many firms, whose customers are geographically dispersed or who need to reduce the quantity sold into smaller units, intermediaries such as wholesalers, tillers and agents are used.
Business to consumer markets: Companies meeting the needs of final consumers of goods and services. Retail -This can be expensive form of distribution because the cost for premises and staff are higher than other alternatives. Mail order -Catalogues can give access to a greater number of potential customers or can be used to target a particular consumer group. Costs are low. Direct selling -Producer sells straight to the final consumer of the products, without intermediaries. Examples, door to door selling and telephone sales.
Multi-channel Business using more than one channel of distribution. Business to business markets: Companies meeting HTH needs of other businesses in the market place. Direct sales -Very important in the business to business market because many products or services are high-value and complex. E-commerce -Growing interest and use of theses. Mail order -used particularly when a business has a wide range of product options for clients to choose from. Choosing appropriate outlets or distributors Factors influencing place decisions: Cost -Fixed and variable will to need be calculated and compared.
Many small businesses now distribute their products via the internet as the start-up and running cost are much lower. The target market – should always been consider, for example placing a clothes retail in a dodgy place for teenage grill, isn’t good. Control -control over the distribution process is also very important, and the more intermediaries a business uses, the less influence the original supplier may have. Volume of sales -If the business needs high volume to cover cost and achieve profit, there must be an appropriate distribution network in place.
Marketing and competitiveness Degree of competition: the number and size of businesses operating in a given market, be it local Key features Great competition regional, national or international. Less competition A few large firms dominate industry One dominant form- monopoly. Similar product Try to differentiate products Little consumer choice Price takers Price competition could lead to price wars Price maker Competition will force firms to be cost efficient High marketing and promotional spending May not have incentive to develop new products or services.
How do market conditions impact on the marketing mix? Market conditions: the nature of them product, the needs of consumers, the number of firms and the ease of entry to the market. Marketing mix MS: very competitive with many small to medium-sized firms MS: a few firms dominate MS: one firm control the market Product All products similar, firms must try to develop and differentiate goods and services to meet needs of particular customers. New product development, USPS, and extension strategies enable a Fri. to compete. No pressure on business to improve their products or innovate. Promotion
Don’t have much money to spend so need to find effective ways on how to attract customers to their business. Branding is very important, and firms will compete in order to establish brand loyalty. Concentrate on information advertising to consumers and public relations. Pricing Firms are price takers. Pricing can be very competitive. The largest of the dominant firms may be the price leaders. Pricing is not completive. Place Direct selling is becoming increasingly important. Technology will be used to great effect by large businesses with the resources to pay for latest expertise.