ABC College

L3 Diploma in Business

Unit: Marketing Principles and Techniques

By
A. Learner

Registration No
2234/2100

Submitted To
Sample Tutor

Submission Date
13/05/2016

Report to the owner of

Crystal Design + Printing Company.

Terms of reference

This report will explain the principles of marketing. Using examples it will show how a printing and design business can use marketing techniques to increase its sales and profitability

Introduction to the business

Crystal Design + Printing wasset up in 1952 in the centre of Manchester. Originally it was a printing company - producing all types and sizes of printed materials: posters, leaflets and booklets. Most of the output was for other businesses or individuals in and around the Manchester area.

Crystal Design + Printing is a family owned and run business and the grandson of the founder now manages the business. The business is successful and profitable although it has changed a lot.

In 2001 the business changed its name from Crystal Printing to Crystal Design + Printing. This change was made because the profitability and volume of printing had declined. It was felt that offering a design service would help regain business, which it has done. A qualified designer is now employed full time and two freelance web designers are used for specific projects.

Report Contents

Marketing

1.1 An explanation of marketing activities

1.2 Market segmentation

1.3 The marketing mix

1M The different tools used to market products and services

1D The marketing mix and decision making

Market Research

2.1 The aims of market research and market analysis

2.2 Different research methods

2.3 Market analysis tools

2.D. Evaluation of market research techniques used

E- marketing

3.1 Methods used to e-market products and services

3.2 Managing on line Image

3.M Assessment of the benefits of e-marketing

3.D Evaluation of measures used to manage on line image

Application of Learning

4.1 Using market analysis techniques

4.2 Interpret findings of market research

4.3 Present findings

4.M Make decisions using market analysis

4D analyse and present findings

1.1.

Marketing isthe process of identifying customer needs in a marketand creating products that satisfy those needs. By doing this successfully businesses will generate profits.Marketing is not a one off activity, it has to be ongoing as customer needs and markets are always changing. There are a number of different aspects to marketing and a business that wants to effectively market itself should undertake all the steps.

  1. Market research

This involves gathering information about the size and growth of a market and the level of competition within that market. This helps firms to understand boththeir position within the current market and howthe market is changing over time.

Example. Looking at changing sales figures for a business’s own products over a period of time.

  1. Customer profiling

Customer profiling is about creating the fullest and most detailed picture of a business’scustomers. The profile should take into account:age, gender, income, likes and dislikes,sports, hobbies, where they live, personality type, hobbies and interests.

Example. The main customers of the company are small businesses local to Manchester.

  1. Targeting

Targeting is when a specific group of customers, defined by their profile is targeted by a business. This works best if the target group is very well defined: it does not mean that the firm will not sell to customers outside of its target market.

Example. Magazines are a good example of how individuals are targeted according to their hobbies, interest and lifestyles.

  1. Advertising and Promotion

Advertising is paid for communications from the business to the customer. A range of different media can be used for advertising: TV, magazines, radio, leaflets, technology or posters. Promotion involves distributing information about products to others who then promote it –many magazines have review sections where they “test” and talk about a product. Promotion is a form of advertising.

Example. Advertising in craft magazines, attending a business to business meeting at the Manchester Chamber of Commerce, putting an advertisement on the Chamber of Commerce website.

  1. Pricing

Firms use different approaches to setting the price of their product or service.

  • A business may work out the costs of production – fixed and variable costs and then then add either a percentage or fixed amount as a mark-up.
  • A business may take into account what they think the customers are willing to pay
  • A business may set the price in relation to what its competitors are charging.
  • Alternatively a business may take a more strategic view of where it wants to be in the market. There are different types of strategic pricing strategy: Price skimmingis a strategy in which a firm charges the highest initialpricethat customers will pay. Examples of this are new games for PS4 or X box. As the demand of the first customers is satisfied, the firm lowers thepriceto attract another, moreprice-sensitive segment; Penetration pricingis the tactic of offering a lowpricefor a new product or service during its initial offering in order to attract customers away from competitors. Examples would include the launch of a new type of chocolate bar, where consumers must be persuaded away from their existing choices.
  1. Public Relations (PR) andManaging social media

PR is the careful management of communications between the business and customers. With the growth of social media it is important that businesses have a presence on social media, however it is equally important that they manage what is being said about them.

Example. Creating a press release about a special aspect of the company, e.g. the business has been printing on their site for over 60 years.

1.2

Market Segmentation means breaking the total market down into different segments. In each segment the customers will have the same characteristics. There are a range of such characteristics that can be used to divide a market. Three of the main headings are:

  • Geographicalsegmentationis when a business divides its market according togeography. This can be done by area, such as cities, counties, regions or countries. A market can also be divided into rural, suburban and urban areas.
  • Demographicsegmentationis dividing the marketaccording to age, race, religion, gender, family size, ethnicity, income, and education.
  • Socioeconomic segmentation is dividing the market according to characteristics such as income, occupation and education.

Examples of segmentation relevant to CDP are:

Geographical, the vast majority of the customers live or are near to where the business is based, Manchester.

Demographic, most of the customers of the printing business are male and middle aged.Whilst customers of the design service come from a wider demographic they tend to share the same socioeconomic group

Socioeconomic, most customers of the design service manage or are setting up new businesses. They, or their business have relatively high disposable income

1.3

The marketing mix is the process of combining the main elements of marketing together in a way that best suits the market segment that the business is targeting. The main elements are the 4Ps; Product, Price, Place and Promotion.

  • Product. A business must have the product that consumers want to buy; it is why it is important to undertake market research to fully understand how the characteristics of a product meets the wants and needs of customers. Plus how it is different from a competitor’s product. Furthermore demand for a product changes over time and so there is a life cycle for each product. A successful business will have a mix of products at different stages of the life cycle. The key question that a marketing department has to ask is: “What can I do to offer a better product than other firms in this market”.

CDP has two distinct products. Firstly printed materials.Most of this output now takes the form of promotional leaflets; the volume of printing has declined in recent years. Leaflets are a non-differentiated product, the final output will look the same regardless of who printed it. Secondly a design service, where the designs are sold to larger companies, the number of design commissions is growing year by year. The product is highly differentiated; designs produced by different designers will look very different

  • Price. The price the customer is asked to pay is possibly the most important element of the marketing mix. Changing the price of a productdirectly impacts on the demand and sales revenue of the product. Furthermore the price can also affect the customer’s perceptions of the product. A price lower than one charged by a competitor means an inferior product in the eyes of some consumers.

The market for printed materials is very price sensitive, so there is little scope for increasing prices: customers would be most likely move to another printer. In contrast the prices charged for design work are less price sensitive.

  • Place. Where the products are sold or how they are distributed to customers is an important part of the marketing mix. The product must be easily and conveniently available for customers.

Nearly all the printed output is for businesses in the Manchester area. It is either delivered to the customer, for a small additional charge, or collected from the printing shop. In contrast commissions for designs are coming from a diverse range of companies and individuals, many from the Manchester region but also from across the UK and even two from Holland and Belgium. Recently several designs have been produced for small craft companies. The design proofs are either sent electronically or by courier.

  • Promotion. Promotion includes advertising and is paid for communication and PR which are typically not paid for communications such as press releases, exhibitions or events. One of the best forms of promotion is word of mouth, where current customers tell others about the product, either directly or through social media. This is why managing a business’s social media reputation is important

Most of the printing jobs are now repeat business, customers who have used the firm for many years. CDP pays to be listed in Yellow Pages and in the past it printed a calendar, with the company name that was sent out to names on a mailing list. Other than that, the printing side of the company no longer advertises or promotes itself. To begin with the designer side of the business paid for advertisements in the house magazine of the Manchester Chamber of Commerce. This generated some work and they still attend monthly meetings of the Chamber where they meet and socialise with other local businesses owners.

The 4Ps has been summarised as:“Putting the right product in the right place, at the right price, at the right time”. No one element is more important than the other, each element combines to make a product different from competitor’s products. The way the marketing mix is combined makes the Unique Selling Point USB for the product and helps differentiate it.

1M 1

Different tools need to be used to market goods and services. This is because there are some key differences between goods and services. Goods are an actual product - they can be touched and held. In contrast services are harder to define. The service that a plumber gives is very different from the service that an air steward, accountant, or a hairdresser provides. It is therefore harder to standardise services.

Also the level of service that different customers receive can change each time the service is used or over a period of time. This is especially true where there is a high level of face to face contact between the customer and the provider.

In addition different tools will need to be used at different stages in the product or service life cycle, so something which is new to the market will require different tools compared to something which is established. It is also the case that different organisations depending on their size and profitability will use different marketing tools. A small business in start-up phase may have a higher marketing budget for a period of time and may use a range of different tools to inform customers that it is trading. Some of these tools might include use of the internet but they may also be low tech such as leaflets posted through the front doors of houses or the name of the business on the delivery vans. A public limited company may have a recognised brand and marketing will be geared to reinforcing that brand image e.g. a high street bank.

And of course the marketing tools will be influenced by the nature of the product or service. For example a Rolex watch compared with a Swatch. Rolex is an exclusive product which is sold at a high price. The marketing strategy is to use celebrities to endorse the product and the advertising is in glossy, up-market magazines or prime time television. Insurance companies and airlines use comparison websites to advertise their services.

1.D 1.

The Marketing Mix is one of the most important tools in business decision making.Within a business there are different levels of decisions that need to be made,

Strategic decisions: These are made by senior managers; they affect the future direction of the business and as such impact on everyone who works for the business. By their nature they are complex, non-routine decisions. An example would be to decide to introduce a new product or to start selling the product in a new international market.

Tactical decisions: These are made by middle managers, they are concerned with how to implement the big strategic decisions and meet medium term objectives. So they are less complex decisions. An example would be how to reach an agreed sales target for a product.

Operational decisions: These are the day to day decisions required to runthe business. Examples would be setting a staff rota or ordering supplies

There are different models exploring how businesses make decisions. Below is the IDEAL framework for decision making

  1. IdentifytheProblem. This can be harder than it would first appear: if sales are falling is it because the price or the packaging is wrong, or is it that new products from competitors have made the product obsolete?
  2. Define or describe the problem. It is most important to ensure that all levels of management have a clear and shared understanding of any issues. It should then lead logically to the proposed actions to be taken
  3. Explore possible solutions and their impact on the business. If sales are falling and it is because the price is too high in comparison with competitors then the solution will be to change the price. However if it’s because a better/newer product is being produced then the actions required are very different.
  4. Action to tackle the problem. This is the implementation stage, when the agreed actions are put into place and all managers are involved with making sure they work
  5. Look back and review progress in dealing with the problem, this is really important to evaluate the actions and the outcomes in order to learn for the future

Each element of the Marketing Mix is relevant and applicable within the IDEAL decision making model, which can be used at the strategic, tactical and operational level of business decision making.

Stages 1, 2 and 3are strategic decision and the focus will be on which element, or elements, of the Marketing Mix is not working and hence causing the issue. Is it that the product does not meet the needs of customers, or is at the end of its life cycle? It may be that the price is out of line with the positioning of the product within the market. Or is that the promotion of the product is wrong given market conditions?

Stage 3 is when strategic and tactical decision makers must work together to ensure the agreed actions are the best and are understood by everyone.

Stage 4 is a tactical decision. This is focussed on which combination of elements of the mix can be used to achieve the planned outcome. Reducing the price may lead to a short term increase in sales that allows longer term development of new products.

All the variables of the Marketing Mix are within the control of business butare interlinked. This means that strategic and tacticaldecision makers can change any aspects of the Marketing Mix but when it does so other elements of the marketing mix will change.

2.1

The purpose of gathering market research is to gain a more detailed understanding of:

  • Current customers - what are the views and feelings of existing customers towards the existing range of products and services offered.
  • Changes in the size of the market – is the market growing or shrinking, are there new product developments that will change the size and future growth of the market
  • New customers – are there new groups of customers that could be purchasing the product but either are not or are using a competitor
  • New markets – are there new products or services that could be sold to existing customers

Collecting this information will improve decision making. Although there are costs involved with gathering the data, good market research should also help reduce some of the risks involved with making decisions