Introduction to Marketing
In this assignment I will be talking about Adidas and Pizza Express. I will be describing the research methods Adidas uses in order to develop their market plans, I’ll also explain some of the limitations of marketing research. For both Adidas and Pizza Express I will pick two products of each business and talk about how the market is segmented for the products. Lastly, I will talk about the marketing mix of adidas.
Market research is the practical gathering, recording and analysis of information about problems relating to the marketing of products and services. Some of the uses of marketing research are:
- It helps the marketing planning process on decisions about objectives, strategies and tactics.
- Marketing research is essential for establishing what customers want and how to reach them. Adidas would have to find out the requirements of customers to come up with strategies on new product development.
- It looks at the changes in society and technology. Adidas can use social media to find out the new fashion trends to find out what customers are interested in.
- The business can find out about competitors. For example, it can help Adidas to identify competitor’s products and prices and that way the business can come up with tactics.
Primary and Secondary Research
There are two types of research: primary and secondary. This type of information can be gathered internally (within the business) or externally (outside of the business).
- Primary research is information that the business has gathered first-hand and has not been gathered before and it is data that is gathered for a specific purpose. Adidas’ internal information can be the sales figures for their products and their external information can be focus groups, face to face interviews in which the researcher meets the consumer and asks them questions on things they like. Mystery shoppers (mystery shoppers are people who visit a shop without revealing their true identity so they can assess the quality of products), questionnaires and surveys so they find out what customers want and to see how successful their products are.
- Secondary research is information that has already been gathered before and it is easy for the business to access it. Adidas’ internal information can be reports from sales which is to see how much each customer spends or how often they shop. Previous market research which can help Adidas decide on tactics for the future. Their external information can come from magazines, books, newspapers, government.
It is more cost effective for Adidas to do the secondary research first before the primary research. This will allow the business to have an understanding of the market and it allows the business to develop assumptions about what customers like which means that the business can use the primary research to test the assumptions.
Qualitative and Quantitative Research
This is another type of research.
- Qualitative research is subjective and often open-ended. It involves finding out a person’s views on something and they get results in wide range of answers based on personal experiences. Adidas would use qualitative research to ask customer questions about their goods and services like what they think of the product they bought or why they bought it and come up with ways to improve this to the standards of customers.
- Quantitative research involves numbers and figures that can be analysed. If there are no numbers involved then it is not quantitative research. Adidas might use this kind of research to find out how many people buy the same product or how many people like sports that way they can see how popular the product is and they can aim their products to a certain type of audience. They can also use questionnaires since they have questions that give a series of answers to choose from.
Adidas would use the results of market research for marketing planning. Marketing planning is developing marketing strategies that will help a business achieve their goals. They would use marketing research to develop:
- Objectives – They are goals that the business sets for itself. Objectives can be expressed in terms of profitability and growth or market share. With the market research Adidas could have objectives like increasing sales, by the end of the year
- Strategies – It is a long-term plan for success. Adidas can use Ansoff Matrix for their market planning. Ansoff Matrix is a growth strategy developed by Igor Ansoff in 1957 and it looks like this:
|Product / Market||Present||New|
|Present||Market penetration||Product development|
- Market penetration – is when a business sells the same product in the same market. Adidas make sportswear products such as clothing and shoes so their market would consist of people who are into sports. The business could grow if they increase the share of current markets with current products through lower prices to increase the market share and sales volume. Adidas would use secondary research since they already have information about the market they are selling.
- Market development – This is when a business sells the same product but in a new market. For example, Adidas could sell their products in another country. By doing market research, Adidas can find out how successful their products would be in new markets. The business would use primary research to find out about the new market.
- Product development – This is when the business develops a new product to sell to an existing market. Adidas could use qualitative data to find out what customers like and therefore develop a product using their feedback.
- Diversification – This is selling a new product in a new market. For example, Adidas could sell a new sportswear product that would enter a completely new, unrelated area. The business would have to carry out a quantitative and qualitative research about the new products and new market.
- Tactics – They are plans and methods used to achieve a particular short-term aim. It is a marketing mix that provides a good framework for developing marketing plans. This includes the 4 P’s:
- Product – A product is anything that can be offered to the market to satisfy customers. Products can include physical goods, services, events, places and experiences which is a combination of goods and services that are offered to the clients. By doing marketing research, Adidas could develop their products in ways that are up to customers’ standards.
- Price – This is the amount of money that customers would have to pay for a product. Prices can be controlled and be flexible. For example, Adidas offers student discounts for their products. Adidas can use marketing research to come up with prices that are suitable for their clients.
- Place – It involves where and how customers can get their products. For example, Adidas has physical stores all over the world but they also have an online store where customers can buy things in case, they can’t go to the store physically.
- Promotion – This involves advertising, sales promotion, public relations and personal selling. These are ways in which a business makes sure that customers know about the products. By using market research, Adidas can develop ways to attract their customers.
There are some limitations of the marketing research methods in part a. It doesn’t matter how big or small a market research project may be, any research that is not done correctly will not get accurate results. When a business such as Adidas is making a decision based on their research, it must take into account the limitations that there are. Both primary and secondary research have their limitations which means that the results may not be valid and accurate. Some limitations can be that:
- The sample size may be too small which means that there will be limited results.
- The business may have researched the wrong people. For example, a sportswear business like Adidas asking musicians about sports.
- Validity: A valid method is when the result that is given is truthful. Secondary research can be a disadvantage to Adidas since some of the information may be old as the data has been collected in the past. This means that the business will not be able to use secondary research because the results will not match their idea for new product or service. The information wouldn’t be valid either because the organisation or individual that carried out the research in the past could have altered the results and this could be a problem for the business because they would do market planning with fake results which can create a failure in their new product or service. They also wouldn’t be able to use the information as it is not done truthfully.
- The research is conducted in the wrong place or the wrong time and the researchers don’t have the right skills to carry out the research and it can cause the research to be biased.
- Cost and time effectiveness: This is how much it costs to do market research and how long it takes to do the research. The business may have to spend a lot of money to use the right techniques and avoid making a wrong decision in which it can be expensive to the business. Research can also be time consuming as different techniques take more time than others. For example, the manager may not have the results of the research at the moment he/she wants to make a decision and if the research is rushed then the results may not be reliable. Some of the limitations of primary research is that it can cost a lot of money to hire people to carry out the research, it can also cost money to train workers who don’t have the right skills to do the research. People would also have to travel from one place to another. Travelling can cost money and it can also be time consuming since travelling can take hours. Another reason why primary research is time consuming is because sometimes researchers can have difficulties in accessing information.
- Accuracy: Sometimes research may not be accurate because researchers will not be using the appropriate technique or people in a focus group may not reveal their true opinions.
Market research can only provide the information, it cannot provide the business with a strategic decision. Doing observations will also be a limitation for the researcher as it does not give accuracy of age or social class.
Some recommendations that have the ability to improve the validity of the marketing research used to contribute to the development of Adidas’ marketing plan would be that Adidas would need to make sure that the sample size that will be used for their research is big enough to get the right amount of information. In the event that the business decides to use primary research such as questionnaires as a form of market research, they need to make sure that they know the number of customers and the type of audience that they will send the questionnaires to. For example, if Adidas were to send around 200 questionnaires for their research and they only get back 15 questionnaires then the data will not be reliable. This can be due to the fact that the questionnaire was too long which made it boring to complete or the questions were too complicated so it was difficult for people to answer them. However, if the business receives 100 questionnaires out of the 200 that they sent then the data will be reliable and they can also make the questionnaires better using that data that is received. When gathering qualitative data, Adidas would need to make sure that their questions are easy to understand so people can answer them and that are quick to answer. In addition to this, Adidas would also need to make sure that the questions are straight to the point and specific to what the company needs so time is not wasted. When questionnaires are designed carefully it can improve the validity of market research for the business. Some other recommendations that have the ability to improve the validity of marketing research can be that for Adidas, the company should train researchers on how to carry out a research or they can also hire a person who has experience in market research. Training researchers can be useful due to the fact that can save up money and by hiring a specialist, it will be a quicker method for market research and it can also help the business grow. By doing this, it will avoid bias and the information will be accurate which will help Adidas to create a very good product or service. Researchers in Adidas need to make sure that when doing primary research, they do research on the right people. For example, since Adidas is a sportswear business, they would usually target athletes and anyone who is into sports. They should also carry out their research in the right place and at the right time so they can gather more accurate results. Lastly, If Adidas decides to use secondary research then they will need to make sure they get the information from reliable sources such as Mintel. This can be useful given the fact that the company will be using information that is up to date, the results will match with the strategies the company has in mind and the information will not be altered which means that the data will be more accurate.
Market segmentation is the sub-diving of a market into distinct subsets of customers where any subset may conceivably be selected as a target market to be reached with a distinct marketing. If a business sells a certain product, the market would be anyone who might buy the products. A business can’t make and advertise only one product that meets the needs of everyone. Each market segment has different types of needs and preferences so marketing has to be targeted towards meeting the needs and preferences of customers. Customers may be influenced by a wide range of factors. There are 4 different types of segmentation:
- Geographic segmentation – this depends on the regions/countries, cities/rural
- Demographic segmentation – this is grouping customers on the basis of age, gender, income, religion, family size
- Psychographic/Lifestyle segmentation – segmenting customers depending on activities, interests, opinions
- Behavioural segmentation – purchase occasion, benefit sought, user status, end use
Pizza Express products:
|Product/Service||Type of customer||Segmentation method||Why is this method used?|
|Vegan Giardiniera||Healthy Men and Women||Psychographic||Pizza express has segmented their market psychographic by people’s interests and opinions. Not all people eat normal pizzas. This is due to the fact that people have different lifestyles. Some people may decide to become vegan. There are different reasons why people might decide to have this product. It can be due to the fact that people want a healthy lifestyle or that they don’t like to eat anything out of an animal and want to save the environment. Pizza Express wants to meet up the needs and preferences of their customers to increase sales and having different types of foods will attract more people.|
|Piccolo Sundae||Kids/Adults||Demographic||Pizza Express has segmented this product by ages. Most of the sweets and desserts such as ice cream are mainly aimed towards kids given the fact that it is quite common for them to want something sweet after a meal. However, some adults can also get ice cream after a meal. Pizza Express wants to meet up the needs and preferences of their customers by having products or services for all ages.|
|Pompom Beanie||Men or Women||Geographic/Demographic/
|Adidas has segmented this product by regions / countries. Especially in areas where seasons change from warm to cold. A beanie provides protection for people who live in areas of cold weather. However, it can also be psychographic due to the fact that people have different interests and styles so the product can be used as a fashion trend for young adults. It can also be demographic because of age and gender so people of all ages and genders can use this product. Adidas wants to meet up the needs and preferences of customers by making sure they have products or services that are required for different places, different age groups, genders, and interests.|
|Phone Case||Young/Adult Men and Women||Psychographic/Behavioural||This product is segmented by people’s interests and special occasions. This product can be psychographic given the fact that there are a lot of people who have phones so the reason why they might buy a phone case can be so they protect the phone from breaking and that way they save up money or it can be used as fashion and it is very popular to have a phone case. It can also be behavioural due to the fact that a phone case can be given as gift for a friend or family member.|
Marketing mix is sometimes referred to as the four P’s. These are ideas that are considered when marketing a product. The product that I have chosen to develop a marketing mix is Adidas super star originals shoes.
A product can be seen in different levels. For example, level 1 is The Core product which is the benefit of the product that makes it valuable to someone. Level 2 is The Actual product and this is the physical item. In this level, branding and other features are added to differentiate the product from competitors and level 3 is The Augmented Product which is the additional value beyond the physical product.
The product life cycle recognises distinct stages in the sales history of a product. In the introductions of the product life cycle there are low demands so it takes time to find the acceptance by clients and therefore the business will have low profits, there will also be high promotion spend, a few competitors and a high failure rate at this stage of the product life cycle. The second stage of this cycle is the growth. In this stage, profit begins to take place since the increase of production reduces the unit costs, competitors start to enter the market and they may drive prices down. The next stage that follows is maturity and this is usually the longest period of success of the product’s life. This is where there are higher sales volume but then eventually sales will fall, innovative production may be needed and marketing activity is based on strengthening the brand and it will reinforce loyalty. The last stage of the product life cycle is the decline. This happens when sales fall remarkably and it will lead the business to abandon the market.
Price is the element of marketing mix that produces income. A business must set a price a price for a product. There are three factors that affect price and these are:
- Cost – There are different types of costs such as the fixed cost which are the costs of running a business, like wages and rent. The variable cost are costs that varies with the level of sales and the total.
- Competition – The business needs to know the competitors’ costs, prices and offers so they can compete against them. The business can set prices that are relative to the competition or the business can target an alternative segment.
- Demand – Having strong demands may lead to a high price and low demands may lead to low prices.
This refers to where the product is purchased. The business might use two different types of distribution direct or indirect. Direct distribution is when a business sells and distributes their products directly to their clients. For example, Adidas sells their product online and they send them directly to the person who bought the product. Indirect distribution is when a business sells products through a person that acts as a link to distribute to clients. For example, Adidas can pass its products to a wholesaler which is then passed on to a retailer and then to the customer.
This part of the marketing mix is designed to raise awareness of a business, the products they sell and its services. Promotion should persuade, inform and persuade a client to buy a product. They can do this through the promotional mix which involves:
- Advertising – this is a way to send a message to customers and persuade them into buying the product. They can use celebrities as a way to increase the attention.
- Sales promotion – this is a short-term method to promote a product. It can include things like coupons, samples, displays and other promotional efforts.
- Personal selling – this is where the seller presents the product to the customers in which is often face to face but it can also happen in other ways. This kind of method requires good skills and sometimes it might require training.
- Public relations – it covers a firm’s relationships and communications with the public. This includes customers, employees, suppliers, the government, stockholders and more.
Another way of doing this is through AIDA which stands for:
- Attention – it has to gain the attention of the audience.
- Interest – targeted messages will help customers identify the business and products they sell.
- Desire – the business needs to make sure that their product/service makes customers want to buy it.
- Action – the audience needs to know where and how they can purchase the product and motivates them to buy it as soon as possible.
- The 4 P’s are targeted at particular segment of the market because the product has a link to those customers who like shoes. The product also links to the ages within the target audience because young people are more likely to buy the product because of the fashion/trend which would fall into the demographic and psychographic segment. The price would be targeted at the demographic segment because it depends to who is able to afford the product. Young people wouldn’t be able to get the product since they don’t have enough money for it but older and wealthier people are willing to pay for the product. The place links to geographic segmentation because a business would sell their products in a place where people shop often and they would have to make products according to the area that people live in so customer buy products according to their needs in the place they live. When promoting products, the business needs to consider the area where they promote. The business needs to target large groups so a lot of people are aware of the business and the products/services they have and so they can go to purchase them.
- Penetration pricing is when a product/service is being sold into a market at a low initial price in order to make sales before the price is increased. Businesses do this in order to help break down barriers to the market and generate sales volume. This method can be used as a short-term strategy to get market share. Price skimming is a pricing strategy that is used for business products in a particular market segment because at the launch of a new product there is less competition in the marketplace. This involves by setting the product at a reasonable high price in which wealthy people will be willing to buy the products at the price that is initially set. Over time, the price of the product will be reduced. As competitors enters the market, and customers that bought the product previously are satisfied, the firm lowers the prices to attract more customers who can afford the product.
- When a business has produced a product or service, they need to think about how that product will be distributed and how they are going to sell them to the customers. There are three factors that influence the decision in selecting the distribution channels for a particular market segment are:
- Customers – The number of the potential customers, their geographical location and their buying habits are an important influence when selecting a distribution channel. The use of mail order for customers who have limited mobility is an example of the influence of customers on channel design.
- Product – The characteristics of a product have an effect when selecting a distribution channel. For example, customisation. Customised products tend to be distributed direct. When a wide range of options is available sales may be made using demonstration units, with customised delivery to follow.
- Competition – Sometimes, a supplier’s brand will be alongside its competitors’ products. For other products, distributors may stock one name brand only and in return be given an exclusive area.
- A promotional mix that Adidas would use to reach a particular market segment would be advertising. This way, it will persuade customers to buy their products and what they will be advertising is a lifestyle or an image about the product. They can do this by advertising their products through the media such as television, newspapers, magazines, the internet and billboards.
- Bevan J, Dransfield R, Coupland-Smith H, Goymer J and Richard C – BTEC Level 3 National Business Student Book 1 (Pearson, 2009) ISBN 9781846906343
- BPP Learning Media (2013) Business Essentials, Marketing Principles (Third Edition) ISBN 9781445368214