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GCSE Business 5 GCSE Business 5 Marketing Index Marketing – 1 Identifying and understanding customers – 2 Market segmentation - 4 Market research – 17 The marketing mix - 36 Product - 43 Price - 66 Promotion - 78 Place - 115 Acknowledgements - 132 GCSE Business • Marketing Marketing Marketing is a very important function for any business. Marketing is the process in a business of identifying customer needs and satisfying those needs at a profit in such a way that the customer will buy the product or service again and again. In other words, it is the art of making it as easy as possible to get potential customers to buy products and services. In a very competitive and dynamic business environment, marketing is important to the whole business, as without it the business will be unable to sell its products and services at a profit. Marketing involves the following activities: • finding out who your customers are – known as market segmentation • finding outwhat your customers want – known as market research • producing a product or service that meets their needs • calculating a price that customers will pay • promoting the product or service to persuade customers to buy it • making the product or service available to buy at the right place Explain why the following products and services have to be marketed: • a new movie to be shown in cinemas • mobile phones • a sofa retailer carrying out a sale • a locally owned and independent fast food outlet located on a busy street Which of the following activities would the marketing function of a business carry out? • selecting the right materials to make a product • deciding on the types of products a business will sell to its customers • designing a television advertising campaign • paying bills to suppliers • deciding where to sell the product or service • employing people to help sell the product or service • finding out who buys the product or service • deciding how much to charge for the product or service • asking customers what they think about a product or service 1 GCSE Business • Marketing Identifying and understanding customers Without customers, a business will fail. Any successful business must be able to identify potential customers and then be able to understand the reasons why customers are willing to pay for the products or services the business is selling. Businesses that are attentive to customer needs will be rewarded with customers that are loyal and continue to spend their money on the business’s products and services. Every product or service a business has to sell must be aimed at potential customers; a business needs to consider what the needs of the customers are before it decides to invest in developing, producing and selling a product or service. Many new businesses have failed as they assumed that customers would buy their product or service – they failed to identify customers and consider what the customers needed. Established and successful businesses have also introduced new products that were not popular with customers and turned out to be failures. Read the following article and answer the questions that follow. Sinclair C5 voted biggest innovation disaster The Sinclair C5 three-wheeler has been voted the greatest innovation disaster of all time. Sir Clive Sinclair’s battery and pedal-powered C5 trike topped a list of inventions which included those from big names such as Sony, Sega and Amstrad. With a top speed of 15mph, the C5 was launched in 1985, but was widely ridiculed and just 20 000 were sold. It was voted the biggest gadget disaster ever in a poll of 1000 technology fans ahead of the Gadget Show Live at Birmingham’s NEC. Some on the list simply failed to capture the public’s imagination while others seemed a good idea at the time but were soon overtaken by better technology. In second place is the Rabbit mobile, an early mobile phone that worked only when the user was near a specific location, marked by a box with the Rabbit logo. The phones failed to take off and were overtaken by mobile phones that were a lot more mobile. However, the company behind the Rabbit went on to become the mobile phone giant, Orange. In third place is the Betamax video, which tried and failed to compete with VHS, and fourth is Sony’s MiniDisc, invented to replace cassettes but which were quickly overtaken by CDs. Sally Bent, marketing manager of Gadget Show Live said, ‘Gadgets like the Sinclair C5, pizza scissors and e-mailer telephone failed to take off because they misjudged consumer demand and were designed to solve problems that simply didn’t exist. ‘But there are many other reasons why gadgets fail and it’s not always because the products are poor. The Betamax, for example, was widely acclaimed to be superior to VHS, but a lack of marketing prowess pushed it out of the market. Sony’s MiniDisc and Sega’s Game Gear 2 GCSE Business • Marketing were great bits of kit that were simply overtaken by competitor products.’ The top ten in full: 1. Sinclair C5 – the electric tricycle designed to revolutionise commuter travel, but became an object of ridicule. 2. Rabbit mobiles – the location-specific telephone service that promised mobile capability, but failed to deliver, bagging just 10 000 customers. 3. Betamax video – widely considered as superior technology to VHS, but lacked the marketing prowess to beat its rival. 4. MiniDisc – developed by Sony to supersede the digital cassette tape, but quickly replaced by recordable CDs. 5. Laserdisc – failed home video format replaced by DVDs. 6. Sega Game Gear – the 8-bit handheld console that could not compete with Nintendo’s Game Boy. 7. The Squarial – the BSB square-shaped rival to the Sky dish. 8. E-mailer telephone – the Amstrad-made office ‘superphone’. 9. Pizza scissors – spatula/scissor combination to cut a slice of pizza. 10. DAT (digital audio tape) – another Sony home recording invention and predecessor to the doomed MiniDisc. Adapted source: http://www.telegraph.co.uk/technology/news/9951876/Sinclair-C5-voted- biggest-innovation-disaster.html 1. Why did the Sinclair C5 fail? 2. Explain how the products listed in the article showed that the business introducing them did not understand the needs of potential customers. 3. What are the consequences for a business when it introduces products that do not sell? In 1985 the Coca-Cola Company took arguably the biggest risk in consumer goods history, announcing that it was changing the formula for the world’s most popular soft drink. This turned out to be a disaster for the company. Use the internet to carry out research to find out what happened and why it was a disaster. 3 GCSE Business • Marketing Market segmentation To identify the right customers and find out what they need, a business will segment the market. If a business sells its products to a wide range of people – its market – it may divide these into smaller groups called segments. Market segmentation splits up a market into different types (segments) to enable a business to better target the relevant customers with its products. This allows the business to make different products to meet the different needs of each group. Think of the whole market as an orange which is made up of many segments; when you eat an orange, you will break off a segment. Each segment can represent a different group within the whole market. The whole market Market segments The mareket segment at which a business aims its products is called its target market. The market is divided into groups of people with similar characteristics, each group making up one segment. The different segments will have products or services with common features or made up of customers that make buying decisions which are based on common factors. A good example of how a market is segmented is the car market. The following segments below are possible ways the car market is divided into different market segments – these are based on the needs of the customer: The car market Family Off-roaders y Qualit Status l aware Functiona Environmentally 4 GCSE Business • Marketing 1. For each of the car segments identified on the previous page explain the needs of the customers in each segment. 2. Identify what segment the following cars will be in: VW e-Up! electric car Ford C-Max Porsche 718 Dacia Sandero 3. Explain why car manufacturers produce and sell cars aimed at different market segments. 4. What would happen if a car manufacturer made just one model of car and tried to sell it to every customer? Select one market below and suggest how the market is divided into different segments: • hotels • confectionery (chocolate bars) • sport shoes • fast food • bicycles Produce a poster, using images of different products, to be displayed in your classroom that shows the possible different segments for the market you chose. 5 GCSE Business • Marketing How markets are segmented Businesses can use several recognisable and targetable market segments, these include: • age • gender • income • geographical location • lifestyle Age A business will offer products that will appeal to people of certain ages. For example, businesses such as Cadbury, Kellogg’s, Heinz and McDonald’s all include products that are aimed at young children. Many products are specifically aimed at teenagers and there is a growing market for products and services aimed at the over 60s, often referred to as the ‘grey market’. As it is too difficult to match products and services to actual ages, marketers categorise customers into age ranges, such as: Children The ‘grey’ market – plenty of surplus Teenagers – plenty of income disposable income 0–11 Over 60s 12–19 Segmentation by age 20–34 50–60 35–49 Established middle-agers – Post teens and young fewer family commitments, marrieds – o en with more income family commitments Late married early middle-agers – with family and mortgage commitments 6 GCSE Business • Marketing Most businesses will try to target as many age groups as possible.
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