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Factors that Influence Design Consumer Demand

&Marketing

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MASLOWS HIERACHY OF NEEDS THEORY

Basic physiological needs e.g. food and water

Safety security protection, shelter, warmth

Social acceptance, need to belong love, respect, friendship

Status self respect, responsibility, achievement

Fulfilling potential, creativity

PHYSICAL NEEDS

SAFETY NEEDS

SOCIAL NEEDS

ESTEEM NEEDS

SELF- FULFILLMENT

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Marketing

“The process involved in identifying, anticipating and satisfying consumer requirements profitably”.

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Identifying Consumers’ Requirements

What do they want? Consumers must buy products and continue to do so

Fierce competition and consumers’ expectations mean that products must be constantly updated and altered to suit

Other factors - price, quality, prompt delivery, attractive packaging and after-sales service

Advertising and promotion play a big part

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Anticipating Consumers’ Requirements

What do they want today? What do they want in the future? Trends must be considered to

anticipate future needs Volatile markets - fashion, toys,

technology (mobile phones, computers, etc)

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Satisfying Consumers’ Requirements

“The customer is king!” Businesses must be customer-

focused No customers no business Must offer - good service, quality

products, value for money, prompt delivery, good after-sales service (eg returns), well presented and packaged goods, at the right price and available at the right place

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The casualties of not adapting to the market

The American car industry

The British motor cycle industry

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Marketing Successes

Swatch

Easyjet and Ryanair

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Marketing - a Strategic Activity

Inception/design

Price

Distribution

Selling and promotion

After-sales services

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Assessment of the Market

Where are the consumers of the product?

How many consumers are there? What are their attitudes and

preferences? How effective are the distribution

methods? What are the strengths and

weaknesses of competitors?

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Product-led - Product Orientated

Putting a product on the market without prior market research

Assumption of best available and no real competition

Often new inventions like Dyson vacuum cleaners or Playstation 2

A risky approach which can fail - British motor bikes

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Market-led - Customer Orientated

Considering what the customers want before putting a product on to the market

Competition has led to companies focusing on the needs of the customer

Also looks at the influences on purchasing decisions

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Marketing Products and Services

Consumer goods Industrial goods

(capital goods) Services (intangible)

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The Marketing Environment

THE MARKET

Consumer trends and behaviour

Technology

GovernmentCompetition

The economy

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Branding

Branding distinguishes a product from its competitors

Instantly recognisable by consumers

Often linked to quality and reliability

Can command a premium price

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Unique Selling Point (USP)

Try to identify the USP of each of the products listed opposite

Think of how they are presented to you in the advertising you see daily on TV, in newspapers and magazines

Coca Cola Nike Kit Kat Sunny D Skoda Cars Mercedes Cars Baxter’s Soups Fairy Liquid Finish

(dishwasher tablets)

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Own Brands

Products branded with the name of the store selling them

Most of the big supermarkets (Tesco) and chain stores (Boots) have their own brands

Often cheaper alternatives to branded goods

Make a list of as many “own brands” you can think of. Indicate which branded product they are designed to rival

Eg “Wheat Bisks” by Safeway to rival “Weetabix”

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The Marketing Mix

Product

Price

Promotion

Place

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Product/Service

Core

Actual

Augmented

The basic product - eg toothpaste cleans teeth

The way the product is presented - design, brand name, packaging, etc (Colgate toothpaste - red packaging)

Additional features - protection against decay, fresh breath, attracting the opposite sex, etc

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The Product Life Cycle

Time

£000Costs/Sales Idea

NewProdu

ctLaunc

hYouth Growth Declin

e

Maturity(Saturation

)Death

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The Product Mix

Very few companies have only one product

Some companies have a range of related products eg Proctor & Gamble

Some companies have totally unrelated products in their product portfolios eg Imperial Group

It is important that you have new products being launched to replace products going into decline in your “Product Mix”

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Product Innovation

Generating an idea Analysing the idea Producing a prototype Test market Adapt product to solve

problems Launch the product

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Pricing Strategies

Low-price strategy

in a market with strong competition

Market-price strategypetrol – matching competitors

High-price strategyup-market, exclusive image

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The Price of a Product?

The price of a product is one of the main factors in buying that product. Too low a price could give the impression of poor quality and too high a price may not give the feeling of value for money

Price is influenced by:- the product being new, what competitors are charging, the product’s stage in its life-cycle, the selling location, the market segment and many other factors

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Short-term Pricing Tactics

Skimming – high initial price for max profit

Penetration – low initial price for new product

Destroyer – eliminating the competition (‘Go’ and ‘EasyJet’/’Ryanair’)

Promotional – lowering prices for a period to ‘promote’ more sales

Demand-oriented – charging different prices according to the level of demand eg cross-channel ferry fares in summer

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Place - Distribution Channels

Producer 1

Producer 2

Producer 3

Consumer Retailer Wholesaler

RetailerConsumer

Consumer

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The Wholesaler Function

Buys in bulk from producers (low transport costs) and sells to retailers in smaller quantities

Bears stock-holding risk Offers a wide variety of goods in

small quantities Packages and labels goods Offers advice to both producers and

retailers as to which goods are selling well

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The Retailer Function

Breaks down bulk to quantities consumers wish to buy and store at home

Provides information to consumers through advertising, displays and trained staff

Stores a variety of goods, displays them and marks on prices

Offers range of related services - credit, HP, after-sales service and delivery

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Types of Retailer

Independent - convenience stores, corner shops

Multiple Chains - M&S, Dixons, Boots Supermarkets - Tesco, Asda, Safeway, etc Co-operatives Department Stores - Jenners, Harrods,

Selfridges Franchises - Benetton, Body Shop,

McDonald’s Others - mail-order, internet, direct-

response advertising, telephone and TV shopping channel

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Promotional Strategies

Three main aims: Persuading - to purchase

the products Informing - telling

consumers about the product Reminding - that the product

still exists

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Two Main Types of Promotion

Above The Line TV and newspapers to reach mass

audience A lot of waste

Below The Line Directly controlled by the business Sales promotion, direct mail, trade

fairs - targeted consumers who may be interested

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Advertising Decisions

The effect on Sales? The target market? Why do the consumers NOT

buy the product? Which is the best medium to

use?

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Types of Advertising Media

Print - newspapers and magazines

Broadcast - TV, radio and cinema

Outdoor - billboards, posters, etc

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Two Main Types of Sales Promotion

Into the pipeline Enhancing sales

to trade outlets Helping retailers

to sell to their customers eg displays, posters, videos, etc

Out of the pipeline Helping to

persuade customers to buy from retailers

Providing free samples, a percentage extra free, 2 for 1 offers, money-off coupons, etc

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Public Relations (PR)

Improving the image of the product and organisation

Supporting and promoting a charity Sponsoring sporting or cultural

events Product endorsement by celebrities Press conferences and press releases

in times of difficulty or when good publicity can be obtained

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Extending the Product Life Cycle

Changing the product - size, colour, taste

Providing variants - Mars: fun-sized, yoghurt, ice cream, mini-sized, giant-sized

Altering the packaging for different market segments

Altering the channels of distribution Changing the price Special promotions - offers, gifts,

competitions

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Market Segmentation

Advantages Seller can meet buyers’ requirements Advertising can be focused - less wasteful Expertise developed for a specific market Higher sales Increased profits

“Breaking down of markets into sub-groups that can be targeted with a specific marketing mix.”

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Methods of Segmentation

Age Gender Socio-economic grouping Education level Income Religion Residential area Lifestyle preferences - hobbies,

politics

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Market Research -Definitions

“Market research is the systematic gathering, recording and analysing of data about problems relating to the marketing of goods and services.”

“Market research is the means by which those who provide goods and services keep themselves in touch with the needs and wants of those who buy these goods and services.”

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The Need for Market Research

Predict changes required in its product/service

Identify what is selling Identify who is buying

the product/service Explain what is

happening in the market

Investigate possible courses of action

Identify the size of the market

Discover what consumers think of the product

Discover what consumers are willing to pay

Discover if a promotion is appropriate

Discover if the packaging is appropriate

Identify what competition exists - now and in the future

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Methods of Research -Primary

By observation or asking people questions

Up-to-date Collected for the exact purpose of the

organisation Not easily available to competitors Time-consuming Expensive

Primary data is gathered by field research

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Market Research - Secondary

Sales figures Stock figures Accounting records Customer

comments Sales reps reports Market research

data gathered previously

Government publications - social and economic trends, annual statistics, population census

Competitors’ data - annual reports, promotions, price lists, web sites

Newspapers, trade magazines, Mintel (research org), etc

External SourcesInternal Sources

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ICT and Market Research

Databases compiled by research agencies

Electronic point of sale information (EPOS)

Supermarket loyalty cards Stock control software gives sales

breakdown Web sites - customers can e-mail

comments back to the company

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Problems with Market Research

Sampling Bias - small sample can give a wrong impression

Human Behaviour - opinions change rapidly

Interviewer Bias - leading questions may be asked

Lies Dammed Lies and Statistics

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The Marketing Topic

In last years exam 2003 product life cycle and consumer demand appeared the correct answer being worth 10 marks be aware, this is an important topic