Unit 320 – Principles of Marketing and Evaluation
Aim of this unit
This unit concerns understanding the principles of market segmentation, how to assess market opportunities for new products and/or services, the principles of marketing strategy development and how to evaluate the effectiveness of a marketing strategy.
1. Understand the principles of market segmentation
Segmentation is the process of dividing a market into homogeneous groups, or segments, that can be targeted with different marketing mixes. The purpose of market segmentation is to identify and understand different needs and wants among consumers in order to better serve them.
There are a number of factors that influence how a market should be segmented, including the size and heterogeneity of the market, the nature of the product or service, and the availability of data on consumer behaviour.
Once segments have been identified, marketers can then develop specific strategies and messages for each one. Segmenting a market requires a great deal of research and analysis, but it can be a very effective way to increase sales and profits.
There are four main types of market segmentation:
- Demographic segmentation: This type of segmentation is based on factors such as age, gender, income, education, and occupation.
- Psychographic segmentation: This type of segmentation is based on factors such as lifestyle, personality, and values.
- Geographic segmentation: This type of segmentation is based on factors such as region, climate, and population density.
- Behavioural segmentation: This type of segmentation is based on factors such as purchase history, brand loyalty, and the benefit sought.
Each type of market segmentation has its own advantages and disadvantages, so it’s important to choose the right one for your business.
1.1 Explain the importance of defining market segments to the development and achievement of the marketing strategy
Marketing investigates potential customers’ needs and develops products and services to satisfy those needs. Marketing strategies put this concept into effect for specific companies and target markets.
Companies that implement marketing strategies find that different customers have different needs. To address this problem, they group similar consumers into market segments and focus on their common needs.
Such marketing strategies are only effective if they use market segments with the appropriate characteristics, allowing the companies to target the segments with products and services tailored to their specific needs
Marketing segments are among the different techniques that companies will use to attract the right customers. Segmentation is used to reduce the risk of deciding when, where, how and to whom the product will be marketed too.
For example – Kellogg’s Frosties are marketed to young children, and at the same time, Crunchy Nut Corn Flakes are marketed to adults. I used these examples because both show how two different products are marketed to different types of people but with the same basic need, to eat breakfast, which is a trait and requirement.
Market segments could include age, gender, religion, culture, income and lifestyle.
Elements to be aware of include:
- identification of potential customer needs
- understanding of market behaviour
- understanding of the size the of potential market.
1.2 Explain the difference between market segments and customer classification
Segmentation and classification are two different ways of looking at your customer base.
Segmentation is the process of dividing customers into groups based on shared characteristics, while classification is the process of putting customers into groups based on how they behave.
Market segmentation is popularised within four main categories; demographics, geographic, psychographic and behavioural. Each has its own set of criteria and can be applied to any group of customers.
There are many different ways to segment customers, but some common ones include demographic factors (age, gender, income level), behavioural factors (how often they buy, what type of products they buy), and geographic factors (where they live).
Market segments are very broad and can include geographic locations, industries to target, behavioural traits, etc. It would also typically include not just customers, but prospects, partners, suppliers, etc. This is typically used for high-level strategy while customer classification is too generalised.
Customer classification focuses on just customers. Depending on the company you may be talking about account scoring (for B2B marketing), and customer types, you can do customer classification based on lifetime value analysis on that customer, what products they buy, industry, county and other characteristics based on your customer CRM (Client Relationship Management).
Classification can be done in a number of different ways as well. Some common classifications are first-time buyers vs. returning buyers, loyalists vs. price shoppers, and brand switchers vs. brand loyalists.
Examples of customer classification could include all tea and coffee drinkers. Whilst we know what the group drink, we do not know what they value or how often they consume. Therefore, market segmentation probes deeper to explore customer traits and provide more insight for strategic marketing decisions.
The difference between market segments and customer classification is that market segments separate customers into homogenous groups so that companies can determine how they can design specific products for them. The customers usually share enough characteristics to make it possible for the company to be effective with its resources and bring about an ROI.
Both segmentation and classification can be useful for understanding your customer base and making marketing decisions. However, it’s important to keep in mind that each approach has its own advantages and disadvantages.
Advantages of Segmentation:
- Can help you target specific groups of customers with tailored messages
- Can be used to identify new market opportunities
- Can help you better understand your customers
Disadvantages of Segmentation:
- Can be difficult to identify the right segments
- Can be time-consuming and expensive to collect data on segments
- There is always the risk that segments will change over time
Advantages of Classification:
- Can be used to identify which customers are the most valuable
- Can help you target promotions and discounts
- Can be used to predict customer behaviour
Disadvantages of Classification:
- Can be difficult to identify the right classes
- Can be time-consuming and expensive to collect data on classes
- There is always the risk that classes will change over time
1.3 Explain how the characteristics, motivations and behaviours of potential target customers are identified
Characteristics are identified by using both marketing segmentation and customer classification. They can be separated into different groups and then analysed.
A key requirement for market segmentation is that companies have to be able to identify the characteristics that form the basis of commonality in a segment. Groups of consumers may have common preferences and needs but, unless they share these with the company, a marketing strategy targeting these segments will fail since the company has not identified the characteristics it wants to target.
Customer surveys or an evaluation of customer behaviour are ways of identifying such characteristics.
Market segmentation has to be based on characteristics that are important for consumers. If a characteristic is negligible, a marketing strategy based on it will not motivate potential customers in a market segment to buy the product or service. An insubstantial characteristic results in weak motivation.
Market segmentation based on strong consumer needs plays an essential role in marketing. Such segmentation together with marketing strategies that address these needs are effective tools for achieving a company’s marketing goals.
Areas it includes:
- through their purchases
- through analysis of the behaviour
- their decision-making power
Segmentation and classification are two important aspects of modern marketing. By segmenting a market, businesses can focus their resources on specific groups of people who are more likely to buy their product or service. Classification is the process of grouping similar customers together so that they can be targeted with tailored marketing messages.
There are a number of different ways to segment and classify customers. The most common method is to use demographic criteria such as age, gender, income and location. However, other factors such as lifestyle, interests and buying behaviour can also be used.
Once a market has been segmented, businesses need to decide which segments they want to target. This decision will be based on a number of factors, including the size of the segment, its growth potential and how well it fits with the company’s marketing strategy.
Once a target market has been selected, businesses need to develop a marketing mix that is tailored to the needs of that market. The mix should take into account the 4Ps of marketing (product, price, place and promotion) as well as the unique needs of the target market.
By segmenting and classifying their customers, businesses can develop marketing strategies that are more likely to succeed. By targeting specific groups of people with tailored messages, businesses can increase their sales and profits.
1.4 Explain how to cluster customers with similar characteristics
When it comes to marketing, it’s important to target your customers in a way that allows you to best serve them. This means clustering customers with similar characteristics together so that you can better understand what they want and need.
There are a number of ways to cluster customers, but one of the most popular methods is by dividing them into four basic types: innovators, early adopters, majority, and laggards.
- Innovators are the ones who always want the latest and greatest thing, even if it’s not fully developed.
- Early adopters are willing to try new things as long as they have some idea of what they’re getting themselves into.
- The majority falls somewhere in the middle – they like things when they reach a certain level of maturity, but they also don’t want to be too far behind the curve.
- Laggards are those who wait until everyone else has tried something before giving it a go themselves.
Once you’ve determined which type of customer falls into which category, you can start to tailor your marketing efforts to better target each group.
For example, innovators might be interested in hearing about new products before they’re available to the general public, while laggards might appreciate discounts for trying something that’s already been well-established.
No matter which method you use to cluster your customers, the important thing is to make sure that you understand the needs and wants of each group. Only then will you be able to develop targeted marketing campaigns that are truly effective.
1.5 Describe how to confirm that proposed segments are real, distinctive, viable and their buying power measurable
Segmenting a market means dividing it into smaller, more manageable parts. This can be done in a number of ways, including by demographics (age, gender, income, etc.), geography or interests.
Once the segments are identified, you need to confirm that they are real (that is, there really is a market for your product or service in that segment), distinctive (the segment is different enough from all the others that you can create a unique marketing strategy for it), viable (the segment is large enough and has enough buying power to support your business) and measurable (you can track sales and/or customer data to determine whether you are reaching this segment).
There are a number of ways to confirm these things:
– Look at market research data: This can be either primary (you commission your own research) or secondary (you use existing data, such as from government statistics or industry reports). This will give you an idea of the size of the segment and whether it is growing or shrinking.
– Look at your own customer data: If you already have customers, look at who they are and see if you can identify any patterns. This will give you an idea of whether you are already reaching the segment and how much buying power it has.
– Talk to potential customers: This can be either through formal market research (focus groups, surveys, etc.) or informally (talking to people you know who fit into the target segment). This will give you a better idea of whether the segment is interested in your product or service and whether they would be willing to buy it.
Once you have confirmed that the segments are real, distinctive, viable and measurable, you can then start to think about how to target them with your marketing.
1.6 Explain how to evaluate the profitability and stability of market segments
When evaluating the profitability and stability of market segments, you need to take a variety of factors into account. Some of these factors include:
- The size of the market segment
- The growth potential of the market segment
- The competitive landscape in the market segment
- The barriers to entry for competing firms
- The profitability and stability of similar firms in the same industry
You also need to have a clear understanding of your own firm’s strengths and weaknesses, as well as your company’s goals. Therefore, carrying out a SWOT analysis (strengths, weaknesses, opportunities, and threats) is also beneficial.
Once you have considered all of these factors, you can then make an informed decision about whether or not a particular market segment is right for your business.
Other specific areas to look at include:
You can evaluate the market potential of a segment by looking at the number of potential customers in the segment, their income and the number of people in the segment who need the kind of product you offer. A market participant is one who is going to buy such a product, and the total number of participants times their purchases forms the total market.
A market participant has to need the product, have the ability to pay the price of the product and has to want to buy the product. Evaluating how many such people are in each segment lets you gauge the potential market.
The sales potential is the share of the potential market of a segment that your company expects to achieve. You can estimate your company’s share based on your performance in other markets, or you can build up your share by asking how much of your product you expect an average customer of a segment to buy and multiplying by the total number of customers. The result of this evaluation gives you an idea of how valuable each segment is to your company.
A key factor in the evaluation of each segment is the competitive situation. If the total sales of existing suppliers are below the market potential, then you can achieve sales without taking business away from competitors. If the sales of your competitors are close to the market potential, then any sales you make will result in fewer sales for them. This means you will have to lower your prices or spend more money on promotion to achieve your sales potential, and it makes the segment less valuable for your company.
Some markets cost a lot of money to service and this affects the value of the segment. If you physically have to deliver large items over long distances, the freight costs will be high and the resulting prices may put your product out of the reach of the customers’ income range.
If the cost of the promotional campaign you think is required to introduce your product to a particular segment is high in relation to the expected sales, then the value of the segment is low. Your evaluations identify the segments which will be the most valuable for your company.
1.7 Describe how a range of products may appeal to different market segments
Different people are attracted to different products for a variety of reasons. Some people might be looking for a product that is high-quality and will last a long time, while others might be looking for something flashy or trendy. Still, others might be looking for a bargain or a product that is environmentally friendly.
A range of products may appeal to one customer but not to another. For example, you have companies who would bulk buy items and therefore save themselves a considerable amount of money, but not sell to the various groups of audiences identified. This is very much the case with regard to breakfast cereals.
No matter what someone is looking for, there is sure to be a product out there that appeals to them. Different market segments exist for every type of product, and companies often spend a lot of time and money trying to figure out which segment they should target with their advertising.
It can be difficult to appeal to every market segment at once, so most companies focus on one or two key segments and try to appeal to them as best they can. This can involve designing products specifically for those segments, or simply marketing the products in a way that resonates with those customers.
Some companies are very successful at appealing to multiple market segments, while others struggle to find the right mix. It all depends on the products, the company, and the target customers.
Looking at alcohol which has a diverse audience and appeals to different market segments. From non-alcoholics to those who consume too much, as well as the preference of what they drink. Lagers to spirits and the multitude of brands within each grouping.
1.8 Explain the motivators and inhibitors that influence customer behaviour
People are influenced by a variety of motivators and inhibitors when it comes to making decisions about what to buy.
Some of the most common motivators include things like a need for status or recognition, the desire to save money, or a craving for new and exciting experiences. Meanwhile, inhibitors can include factors like fear of change, a lack of knowledge or information, or simply not having enough time.
Ultimately, it’s up to each individual customer to decide what motivates them and what inhibits them from making a purchase. However, understanding these factors is essential for businesses that want to create products and services that appeal to their customers.
Price is probably the biggest motivator, but this only underpins what the buyer wishes to achieve from the desired product. Whether it’s quality, brand loyalty, great support or familiarisation with the products already. Literally, there could be dozens of reasons that a buyer chooses one product over another. The influence of sales and discounts can massively affect a customer’s behaviour and stimulate the sales you desire.
Likewise, some customer behaviour is not always within their control and elements such as availability within the market, affordability of the product and the ability to be able to even consider buying the product. For example, a Ferrari car compared to a family estate car.
Many elements play a part in influencing customer behaviour, including culture, lifestyle, social status, age, life stages, aspirations, career choices, etc.
Some of these factors include:
- status or recognition: People want to feel like they’re part of a group or community, and they want to be recognized for their accomplishments.
- saving money: This is always a popular motivator, especially in today’s economy. People want to feel like they’re getting the best deal possible.
- new experiences: Many people crave novelty and excitement, and they’re always on the lookout for new products and services that can provide them with these things.
- fear of change: Some people are resistant to change, even if it might be beneficial for them. They may be worried about the unknown or afraid of making a mistake.
- lack of knowledge or information: If people don’t know about a product or service, they’re less likely to buy it. They may also be hesitant to purchase something if they’re not sure how it works or what it’s for.
- not enough time: In our busy world, time is often a limiting factor when it comes to making purchasing decisions. If people feel like they don’t have enough time to research a product or service, they may be less likely to buy it.
The desire to want or need the product will be different amongst each potential buyer and deciding between ‘must-have’ and ‘nice-to-have’ are again influenced by timing as some potential buyers will take several touchpoints before they commit.
1.9 Explain the use of Customer Relationship Management
Customer Relationship Management (CRM) is a strategy for managing a company’s interactions with current and potential future customers. It involves using technology to collect and store customer data and then analyzing it to identify patterns and preferences. This information can be used to improve customer service, marketing, and sales efforts.
Some of the ways that CRM can be used include:
- Tracking customer interactions and communications, such as phone calls, emails, and live chat sessions
- Managing customer data, including contact information, demographics, purchase history, and preferences
- Analyzing customer data to identify patterns and trends
- Creating targeted marketing campaigns based on customer segmentation
- Improving customer service by providing more personalized assistance
- Increasing sales by upselling and cross-selling products and services
CRM software is the most common way to implement a CRM strategy. This type of software can be used to track customer interactions, store customer data, and generate reports. It can also be integrated with other business software, such as accounting and invoicing programs.
CRM systems vary in features and price, so it’s important to select one that meets the specific needs of your business. Small businesses may be able to get by with a basic CRM system, while larger businesses may need a more comprehensive solution. There are also cloud-based and on-premises CRM solutions available.
Methods for keeping good customer relationships:
- Call the customer every so often to see how they are and if things are good have a chat with them, and just ask if they need anything quoting. That way you will remain on the mind of the customer.
- Listening to your customers is an easy way to maintain customer relationships. One way social media can help is by providing a space for businesses and customers to connect. By creating a company Twitter handle, Facebook page, and Instagram account, your company can help customers reach out if they have any concerns, issues, or feedback. Listening to them on these social networks will allow you to respond quickly
- People can spot a fake from afar, and the last thing you want your company to do is to have an insincere business’ persona. The same goes for how you converse with your customers online or offline. Being genuine with your customers goes a long way when it comes to maintaining customer relationships. For example, if your customers are having issues with your product, provide an honest answer and don’t make promises you can’t keep. The worst thing you can do as a business is to make false promises instead of providing an effective customer-orientated solution.
- Customer success is a pivotal focal point for businesses. If you provide support to your customers, they will, in turn, reward you with loyalty and valuable feedback. This could start out small: for example, by entrusting someone on your team with customer support duties. This will help you maintain customer relationships, and establish your business as that which makes meeting their customer’s needs a top priority.
2. Understand how to assess market opportunities for new products and/or services
When it comes to new products and services, many people think that the only way to assess market opportunities is through quantitative research. However, this is not the only way to do things. In fact, qualitative research can be just as useful – if not more so – than quantitative research when it comes to assessing market opportunities. Let’s take a look at some of the benefits of qualitative research:
I) Qualitative research can help you understand people’s motivations and behaviours
In order to assess market opportunities, it is essential to understand why people buy certain products and services. What are their motivations? What do they look for when making a purchase? What kind of emotions do they feel when they use certain products or services? Qualitative research can help you answer these kinds of questions and give you a better understanding of people’s behaviours.
2) Qualitative research can provide insights that quantitative research cannot
Quantitative research is often seen as being more “objective” than qualitative research. However, this objectivity can sometimes be a disadvantage. This is because quantitative research often focuses on measurable factors, such as demographics, income levels, and so on.
While these factors are important, they do not always give you the full picture. Qualitative research, on the other hand, can provide insights into people’s attitudes, beliefs, and values – which can be extremely valuable when it comes to assessing market opportunities.
3) Qualitative research is often more cost-effective than quantitative research
Many people believe that qualitative research is more expensive than quantitative research. However, this is not always the case. In fact, qualitative research can often be more cost-effective, particularly if you are working with a limited budget. This is because qualitative research often requires fewer resources than quantitative research, such as fewer interviewers and less data analysis.
4) Qualitative research can be conducted relatively quickly
Another advantage of qualitative research is that it can be conducted relatively quickly. This is because qualitative research often relies on small-scale studies, such as focus groups or in-depth interviews. As a result, it is often possible to get results from a qualitative study within a few weeks – which is much faster than the months or even years that it can take to complete a quantitative study.
5) Qualitative research is flexible
Qualitative research is also very flexible, which means that it can be adapted to changing circumstances and new information. For example, if you are conducting a focus group and you realise that the discussion is going in a different direction than what you had originally planned, you can easily change the focus of the group. This flexibility is not always possible with quantitative research, which can be more rigid and inflexible.
Qualitative research has many advantages when it comes to assessing market opportunities. It can help you understand people’s motivations and behaviours, provide insights that quantitative research cannot, and be more cost-effective and flexible. If you are thinking of conducting research into a new product or service, qualitative research should definitely be a consideration.
2.1 Describe the economic and buyer behavioural factors to be taken into account when assessing new market opportunities
When assessing new market opportunities, it is important to take into account a variety of economic and buyer behavioural factors. These include seasonal trends, recessionary conditions, taxation levels, pandemic risk, employment levels, and the cost of living.
By considering all of these factors, businesses can make more informed decisions about where to allocate their resources in order to achieve the greatest success.
When it comes to seasonal trends, businesses need to be aware of when demand for their product or service is likely to peak. This information can help them to plan their production and marketing efforts accordingly. For example, if a company knows that demand for its product spikes during the summer months, it can ramp up production in advance to meet this demand.
Recessionary conditions can also have a significant impact on business operations. During periods of economic downturn, consumers may be more reluctant to spend money on non-essential items. As a result, businesses may need to adjust their pricing and marketing strategies in order to stay afloat.
Taxation levels can also impact business decisions, as companies may be reluctant to enter markets where they will be subject to high levels of taxation as this diminishes the likelihood of a return on investment in the short to medium term.
Pandemic risk is another important factor to consider when assessing new market opportunities. In recent years, we have seen a number of major outbreaks of diseases such as Sars and Covid. These outbreaks can have a devastating impact on businesses, as people may be reluctant to travel or purchase goods and services from affected areas.
As a result, it is important to consider the potential risks of operating in markets where there is a high risk of disease outbreaks.
Employment levels are also an important consideration when assessing new market opportunities. regions with high levels of unemployment may be less attractive for businesses, as there may be fewer people with disposable income to spend on goods and services.
The cost of living is another important factor, as businesses need to be aware of how much it will cost to operate in a given market. Higher costs of living can eat into profits, so this is an important consideration for businesses when making decisions about where to expand.
Other important factors that influence us are motivation and perception. Changing either of these will help increase opportunities that will influence buyer behaviour.
Consumer behaviour is influenced largely by economic factors. Economic factors that influence consumer behaviour range from various incomes, savings and expenditures. The way we manage our finances also influences our consumer credit rating and what we wish to borrow or spread over multiple payments.
2.2 Describe the cultural factors’ perception of products and/or services and sales performance
Man is a social animal. Hence, our behaviour patterns, likes and dislikes are influenced by the people around us to a great extent. We always seek confirmation from the people around us and seldom do things that are not socially acceptable. The social factors influencing consumer behaviour include:
- Reference Groups
- Roles and status.
- Supply and demand
Philip Kotler observed that human behaviour is largely the result of a learning process and as such individuals grow up learning a set of values, perceptions, preferences and behaviour patterns as the result of socialisation both within the family and a series of other key institutions. From this, we develop a set of values, which determine and drive behavioural patterns to a very large extent.
Cultural Factors can have a big impact on how people view products and services. In some cultures, such as the United States, people are often encouraged to be independent and make their own decisions. As a result, there is a strong demand for products that allow people to express their individuality.
In contrast, many Asian cultures place a high value on harmony and conformity. As a result, products that emphasize group identity or social status tend to do better in those cultures.
Belonging to certain groups will influence opportunities within the said market as it may be default to certain items to participate. For example, sports teams, business and networking groups, exhibitions, events, etc.
Understanding these cultural differences is essential for companies that want to sell their products and services internationally. For example, a company selling individualized products would need to tailor its marketing strategy to the United States, while a company selling status-oriented products would need to adjust its strategy for Asian markets.
- Demographics can also play a role in how people perceive products and services. For instance, younger people are often more open to new ideas and experiences, while older people may be more set in their ways.
- Income level is another important factor. People with higher incomes tend to be able to afford more expensive products, while people with lower incomes may be more price-sensitive.
- Economic sanctions brought against a country can also have a profound effect on those who live under that regime and some of the common effects of this regime include restrictions on importing and exporting goods, which in turn will force supply and demand amongst those living within that country.
- Another example is some products supplied might cause offence or might go against the individual’s cultural beliefs, so when doing the initial research about the demographics it is vital that the cultural beliefs are addressed to make sure that no one is offended, either by being sold the product or being told about the product.
- The recent pandemic COVID-19 (Coronavirus) has caused restrictions on movement and this in turn has affected all sectors of each country’s economy and forced restrictions upon its inhabitants. The lack of available goods and services has dramatically declined which has changed the pattern of buyer behaviour – shopping once a week, rationing certain goods, priorities of NHS shopping at supermarkets, etc.
- Finally, people’s religious beliefs can also influence their perceptions of products and services. For example, some religious groups forbid the use of certain products or services, while others consider them to be essential.
All of these factors need to be taken into account when designing a marketing strategy for any product or service. Failing to do so could lead to poor sales and disappointing results.
2.3 Explain how to identify opportunities and threats in new markets and for new products in existing markets
It’s important for businesses to be able to identify opportunities and threats in new markets and for new products in existing markets. Doing so can help them make the most of available resources, while avoiding potential pitfalls. In order to do this effectively, businesses should consider a number of factors.
For starters, they need to have a clear understanding of what it is they’re trying to accomplish.
What problem are they trying to solve?
What needs are not being met by the current offerings in the market?
Once they have a good idea of what they’re aiming for, they can start looking at potential markets and products.
Market research is essential in this process. Businesses need to understand who their target audience is, what needs and wants those consumers have, and how best to reach them. They also need to be aware of any existing competition in those markets, as well as potential threats posed by new entrants or disruptive technologies.
By taking all of these factors into account, businesses can develop a strong strategy for identifying and capitalizing on opportunities, while mitigating the effects of any potential threats.
Identifying threats and new products in existing markets are done so by carrying out market research.
There are several tools to ascertain opportunities and threats within your market. The most popular and well-known is a SWOT analysis. This looks not only at your threats and opportunities but also at your strengths and weaknesses.
When you need a better analysis of your competitor, another well-known tool is Porter’s five forces matrix. This looks at forces upon your business and derives how much competitive intensity is within your market.
Both of these combined methods give you a better picture of how your business competes against competitors and within its marketplace. This is also known as situational analysis.
- filling a gap in the market
- innovative product/service
- new to the particular market segment
- too expensive
- wrong market segment chosen
2.4 Explain how competitor and potential competitor activity may affect projected sales performance
It’s no secret that businesses compete with one another for customers. But what may be less well-known is the effect that competitor and potential competitor activity can have on a company’s projected sales performance. In order to understand how to better project sales performance, it is important to first understand the various factors that can impact it.
Competitor and potential competitor activity are two such factors. When a business sees increased competition from other companies or anticipates competition from new entrants in the market, it can cause them to re-evaluate their projections. This is because competition can lead to price wars or changes in customer buying habits which could impact the bottom line.
It is therefore important for businesses to stay up-to-date on their competitors’ activities, as well as keep an eye on any new entrants in their industry.
In addition to competitor and potential competitor activity, other factors that can impact sales projections include changes in the economy, consumer confidence, seasonality, and even world events. By taking all of these factors into account, businesses can develop a more accurate picture of their projected sales performance.
Competitors always want to be in competition and they will always want their business to be the best and better than yours. They will make sure that they do everything in their power to make their product line way beyond your own. They will do this by looking at your product or other products that are on the market and identifying possible development opportunities.
Carrying out a competitor analysis will allow you to see how to measure alongside your competitors. Seeing where you have POPs (Points Of Parity – share common traits), POIs (Points Of Irrelevance – things that are not valued by potential buyers) and PODs (Points Of Difference – what sets you apart from your competition and provides some of your USPs – Unique Selling Points).
- reducing the potential market
- introducing a similar product/service
- offering discounts
- lower prices
Carrying out a competitor analysis will allow you to deduce what is working and what is not, in order to adjust your marketing campaigns so that they deliver a better ROI. This helps towards sales forecasting which allows you to project potential sales performance and capitalise on your expenditure and expended resources.
Watching your competitors and seeing how they operate within the same market allows you to keep refining your offering to your existing and potential customers.
2.5 Explain the basis of recommendations to exploit new market opportunities
In order to exploit new market opportunities, it is important for businesses to be aware of the habits that can interfere with creativity. The eight bad habits listed in the article are a good starting point for businesses looking to increase their creativity and capitalize on new market opportunities.
1. Not taking time to daydream: When people are caught up in the hustle and bustle of their everyday lives, they often forget to take time to daydream. This is a crucial mistake, as daydreaming allows people to tap into their creative subconscious and come up with new and innovative ideas.
2. Relying on old ideas: Once an individual or business has found success with a certain idea, they may be tempted to stick with it and not deviate from what has already proven to be successful. However, in order to take advantage of new market opportunities, it is important to be open to new ideas and ways of doing things.
3. Being too risk-averse: Many people are afraid to take risks, as they fear failure. However, in order to be successful, it is important to take risks and try new things. Without taking risks, businesses will never know what new opportunities are out there for them.
4. Failing to collaborate: Collaborating with others is a great way to generate new ideas and build on existing ones. When people come together and share their ideas, they can come up with solutions that they may never have thought of on their own.
5. Being too focused on the bottom line: It is important for businesses to be profitable, but they should not be so focused on the bottom line that they lose sight of their creativity. By being too focused on making money, businesses may miss out on new market opportunities.
6. Being resistant to change: In order to exploit new market opportunities, businesses need to be open to change. The world is constantly changing, and businesses need to change with it in order to stay relevant.
7. Being too comfortable: When people are too comfortable, they often become complacent and stop looking for new opportunities. It is important for businesses to keep pushing themselves and striving for more, even when they are doing well.
8. Failing to learn from mistakes: Mistakes are inevitable, but it is important to learn from them. By learning from their mistakes, businesses can avoid making the same mistakes in the future and can capitalize on new market opportunities.
By avoiding these bad habits, businesses can open themselves up to new market opportunities and be more innovative overall.
Once you have identified new business opportunities, narrow the list down to those customers that you think are potentially the most profitable. Using a more targeted approach will prevent you spreading your marketing budget too thin and getting too little back.
- identification of gaps in the market
- customer demand
- keeping up with latest technology/trends
Part of targeting the right customers will involve defining buyer personas. These can be fictional or semi-fictional and should be representative of the selection of customers who have or wish to have.
3. Understand the principles of marketing strategy development
Developing a marketing strategy is essential for any business, no matter how big or small. It can be difficult to know where to start, but by understanding the basic principles of marketing, you can create a plan that will help your business succeed.
The first step is to understand your customers and their needs. What are they looking for in a product or service? What problems do they need solved? Once you have a clear idea of what your customers want, you can begin to develop products and services that meet those needs.
You also need to identify your competition and what they are offering. What sets your product or service apart from the competition? How can you make sure that potential customers see the value in what you offer?
Finally, it’s important to have a solid plan for reaching your target audience. How will you get the word out about your product or service? What channels will you use? By thinking through all these factors, you can create a marketing strategy that will help your business succeed.
When developing a marketing strategy, it is important to:
- Understand your customers and their needs
- Identify your competition and what they are offering
- Have a solid plan for reaching your target audience
Marketing strategies can vary depending on the size and type of business, but all businesses need to have a plan in place to succeed. If you take the time to understand your customers, identify your competition, and create a plan for reaching your target audience, you’ll be well on your way to success.
3.1 Describe the topics to be addressed in a marketing strategy
Your marketing strategy is your path to sales goals. Ask yourself “How will I find and attract my most likely buyers?”
This is the core of what the strategy should explain. It should look at the entire marketplace and then break down specific tactics including such as events, direct mail, email, social media, content strategy, street teams, couponing, webinars, seminars, partnerships, and other activities that will help you gain access to customers.
Implementing a well-constructed and thought-through marketing strategy does not take just five minutes, It is carefully crafted over time and constantly reviewed and updated. It is the blueprint for your success. Ignore it at your peril.
Essential elements to the marketing strategy can and most often do include the following:
- Market research
- Target market
- Competitor analysis
- Marketing mix
- Sales forecasting
Any marketing strategy or marketing plan is going to begin with the basics. What is your brand and what does it do? This is your opportunity to tell a bit about your story and lay the groundwork for the rest of your document.
Challenges, Opportunities and Goals
Lay out the essential challenges, opportunities, and goals you see for your company. Start with challenges.
Is the market you’re looking to enter dominated by one key player? Or maybe your product solves a problem people don’t quite understand yet. These are both examples of challenges that you will need to address later in your marketing strategy with messaging, positioning, and strategies for creating exposure.
Next, think about your opportunities. If there are only a few companies out there, you might have the opportunity to gain a large portion of the market share if you create brand advocacy early on. If the market is saturated, you might have a very unique angle with your product positioning that will make your brand extra appealing to a key market segment.
No matter how tough an industry might be, there is always an opportunity available to you if you take the time to find it.
You would be surprised how many start-up founders cannot clearly articulate the goals they want to reach with their brand – either in the short term or the long term. How can you reach your goals if you never actually set them? You cannot.
Setting distinct goals for users, revenue, paid subscriptions, etc. and when you expect to achieve these goals is a very important component of your marketing strategy.
Market research can actually be more difficult to complete than you would actually think. If you already have paying customers, that is the first place you should go for feedback and insights. If you do not have paying customers yet, you will need to develop your customer avatars by looking at creating buyer personas and making some educated guesses about what they both want and need.
When it comes to market research, you are going to want to start with the basics: Age, gender, location, job title, and hobbies. But then, you’ve got to start asking some less obvious questions….
Who are their favourite thought leaders? Where do they like to shop? Podcasts or books? What’s their biggest challenge at work right now?
Answers to these kinds of questions will really help you develop your messaging, and your positioning, and even help you to determine the best strategies to use to reach your intended audience.
You can’t move forward without knowing your competition and studying them. You should certainly pay attention to their pricing, their messaging, how their advertising, and even the way they show up on social media.
This will help you learn a lot about what you should be doing, but it will also give you incredible insight into what you do not want to do.
Studying your competition will aid you in discovering much about marketing for your industry, but it will also tell you a ton about what makes you special and how you can do things differently. Part of your Value Proposition.
Pricing and Positioning
Pricing is an important part of positioning. Are you at the high end? The low end? You need to figure out how you fit into the market. But, of course, positioning goes much farther than that.
Once you understand your competition, you can identify your “position” in the market. How are you like them? How are you different? Are you approaching your customer’s pain point from a unique angle? When you know more about your positioning, you can construct effective messaging and strategies to share that message with the world.
Messaging is so important. Based on your competitive analysis and what you see as your unique position in the market, you can begin to develop your brand’s core messaging. As you do this, try to identify specific words or phrases that will really speak to your audience and speak directly to their pain points.
It will also allow you to define a clear voice and tone for the brand. Messaging done right will carve out a clear market share for your company and it will speak straight to the heart of your ideal customer.
Everything you have done up until this point has been about research and defining your own brand at the base level. Now we must take the next steps and determine the actual strategies we will use to market your product or service. Part of the marketing mix.
Start with your competitor analysis. What are your competitors doing? Are they on Instagram or LinkedIn? Are they utilising paid ads or SEO? This is a good opportunity for you to identify what you think is working well and choose some strategies of your own.
Some marketing strategies to consider include:
- Search engine optimization
- Content marketing
- Social media marketing
- Influencer marketing
- Paid advertising (Social ads, Google Ads, or even print ads)
- Networking and association membership
- Print materials like flyers or mailers
- Strategic partnerships
Executing any particular strategy is going to be near impossible if you haven’t allocated a clear budget for its implementation. You might need money for ads or money for someone to produce content for you. All of this needs to be worked out before you get started. This is where sales forecasting comes into play. It utilises budgets and paints a picture of how much something will cost or need to be spent to initiate.
Using this again as your baseline will allow you to refine your costings as you go forward and become much more accurate in future budget planning.
Last but certainly not least is your execution plan. Now that you have set goals and identified strategies that will help you reach those goals you must create a plan for how each thing will be implemented.
Start with one goal at a time, declaring when you would like to achieve that goal. Now work backwards to see what milestones you will have to achieve each day, each month, each quarter, etc. to see that goal to fruition. Now you will know which strategies you need to implement and when. Write it all down.
3.2 Explain the use of market analyses to inform the development of a marketing strategy
Market analysis is the process of gathering, analyzing and interpreting information about a particular market. This data can be used to help businesses understand and plan their marketing strategies. There are a number of different types of market analysis, each with its own benefits. The most common are competitor analysis, customer analysis and trend analysis.
Competitor analysis is used to identify the strengths and weaknesses of your competitors. This information can be used to develop strategies to improve your own business. Customer analysis helps businesses understand their target market and develop marketing strategies that are tailored to them. Trend analysis is used to identify patterns in the market, which can help businesses anticipate future trends.
Market analysis is a vital tool for businesses looking to succeed in today’s competitive marketplaces. By understanding their customers, their competitors and the trends affecting their industry, businesses can develop strategies that will help them stay ahead of the competition.
The use of market analyses to inform the development of marketing strategy is important for the following reasons:
1. To understand the needs of your target market: Without understanding the needs of your target market, it would be difficult to develop marketing strategies that are relevant to them. Market analysis can help you understand what your customers want and need so that you can develop marketing strategies that address their needs.
2. To understand your competition: Knowing your competition is important in order to develop strategies that will help you gain market share. Competitor analysis can help you understand the strengths and weaknesses of your competitors so that you can develop strategies to improve your own business.
3. To identify trends: Trend analysis can help businesses anticipate future trends in the market so that they can develop strategies to stay ahead of the competition.
4. To make informed decisions: Market analysis can help businesses make informed decisions about their marketing strategies. By understanding the needs of their customers, their competition and the trends affecting their industry, businesses can develop strategies that are more likely to succeed.
5. To measure success: Market analysis can help businesses measure the success of their marketing campaigns. By tracking the results of your marketing efforts, you can determine what is working and what is not. This information can then be used to improve future marketing strategies.
Market analysis is an essential tool for businesses looking to succeed in today’s competitive marketplace. By understanding their customers, their competition and the trends affecting their industry, businesses can develop strategies that will help them stay ahead of the competition.
3.3 Explain how to evaluate risks to the achievement of objectives
In order to make sound decisions, it is necessary to evaluate risks. This process involves assessing the probability and potential severity of an event occurring and the consequences of that event. By doing this, individuals can make informed choices about how best to proceed in a given situation.
One common example of risk evaluation is in the context of business decisions. In order to decide whether or not to launch a new product, for instance, a company will assess the likelihood of success as well as potential losses if the product fails. Other factors such as marketing costs and time required for development may also be considered.
Risk evaluation is not only important for businesses, but for individual decision-makers as well. When choosing between two job offers, for example, it is important to consider the risks associated with each position. A high-paying job that requires long hours may seem desirable on the surface, but if the risk of burnout or illness is high, it might be wiser to take a lower-paying job with fewer hours.
While making any decision carries some element of risk, evaluating those risks allows individuals to make informed choices that are most likely to lead to success.
There are a number of different ways to evaluate risks. One common method is to use a risk matrix, which plots the probability of an event occurring on one axis and the potential severity of that event on the other. This can help individuals quickly assess the level of risk involved in a given situation.
Another approach is to conduct a cost-benefit analysis, which involves weighing the costs of taking a certain action against the benefits that are expected to result. This can be a helpful way to compare different options and make the best decision possible.
No matter what method is used, it is important to remember that risk evaluation is an ongoing process. As new information arises, it may be necessary to reassess the risks and modify the course of action accordingly. By remaining flexible and keeping an open mind, it is possible to make decisions that are in line with changing circumstances.
So the risks to be aware of:
Brand risk. Any company can lose its brand’s value. This can be caused by stiff competition or poor marketing. If you overestimate the strength of your brand, you may end up making use of the wrong marketing techniques. It might be already too late when you realize that you need to boost your efforts or spend more resources promoting your brand.
Miscalculating your target market. Failure to conduct ample market research, collecting data from the wrong places and improper use of data can pose risks to your marketing plan. If you don’t understand your market, you may develop a strategy that targets the wrong people or paints the wrong picture of the product you are selling. To create a marketing message that appeals to your target audience, ensure you conduct extensive research beforehand.
Changing trends. In today’s digital world, marketing trends change on a daily base. If your marketing strategies aren’t up to date, your business’s bottom line will be threatened. Always be on the lookout for the latest promotional messages in your niche, price shifts, and automation technologies, and constantly check out what your competitors are doing.
Promotional risk. How you promote your product heavily impacts the success of your marketing plan. If you use an approach that isn’t well-calculated, your efforts will fail. False, misleading, and exaggerated messages can also harm your marketing efforts. Apart from making sure your promotional techniques are compelling, powerful, and effective, ensure your advertising practices are ethical.
3.4 Describe how to forecast sales by product and/or service
Forecasting sales by product and/or service is a critical part of any business. In order to make sound decisions about what products or services to offer, you need to have an accurate idea of how much demand there will be for them. You also need to know whether you can afford to produce and sell them at the prices you anticipate.
There are a number of different methods you can use to forecast sales. The most important part is to use the right method for your data and your assumptions. Here are three popular methods:
- trend analysis
- regression analysis
- market research surveys
Trend analysis is a method of forecasting sales by looking at past sales data. You can identify trends by looking at graphs or tables of data. Look for patterns in the data, such as an increase or decrease in sales over time. You can then use this information to predict future sales.
Regression analysis is a more complex method of forecasting sales. It involves using mathematical equations to model the relationship between different variables. For example, you might use regression analysis to predict sales based on factors such as advertising expenditure, economic conditions, and changes in consumer confidence.
Market research surveys are another way of forecasting sales. This involves asking people about their buying intentions. You can survey a representative sample of consumers or businesses to find out what they intend to buy and when. This information can then be used to predict future sales.
When forecasting sales, it is important to make sure that your assumptions are realistic. You also need to consider the impact of external factors such as the economy and changes in consumer behaviour. The most important thing is to use the right method for your data and your assumptions.
3.5 Explain how to present a marketing strategy including aims, objectives, actions, accountabilities, resources, budgets and forecasts
Marketing strategy is the process of developing and implementing a plan to reach desired customer segments with an offer of products or services that meets their needs. The goal of any marketing strategy is to create value for the customer and, in turn, for the company.
A successful marketing strategy will include clear aims, objectives, actions, accountabilities, resources, budgets and forecasts. It should be tailored to meet the specific needs of the business and its customers.
Aims are the long-term goals of the company, while objectives are the specific steps that need to be taken to achieve those aims. Actions are the tactics that will be used to implement the objectives, and accountabilities ensure that everyone involved knows who is responsible for what.
Resources include both human and financial resources and should be sufficient to support the planned activities. Budgets provide a financial framework for the strategy, and forecasts help to track progress and identify any necessary course corrections.
The marketing strategy should be reviewed on a regular basis to ensure that it is still relevant and effective. Adjustments may need to be made as the business or its customer base evolves.
The following is a description of the components to lay the marketing strategy plan out:
The Executive Summary – A high-level summary of the marketing plan as a whole, and a paradox on paper: this is the last section that you should write, but the first section should be in the finished report. It’s best to keep the Executive Summary as short and sweet as possible — just a couple of sentences to sum everything up The Challenge – This section should contain a brief description of the product and/or product lines that your company offers. With each description, include goals that you want to set for each product and product line (sales figures, strategic and company-wide goals, etc.) Situation Analysis – This section contains a snapshot of your company, your customer base, and your market at large.
It should be divided into six subsections:
- Long and Short-Term Company-wide goal
- The focus of your company including your mission and vision statements
- Analysis of the culture of your company
- Strengths of your company
- Weaknesses of your company
- Your companies estimated market share
- Estimate size of your customer base include various segmented audiences
- Key Demographics of your customer base
- Value drivers applicable to your customer base
- Market Position – are you big or small
- Market shares
- People and companies that are key to continuing what you do
- Subsidiaries, joint ventures, distributors, suppliers, etc.
- PEST Analysis
- Political and legal environment
- Economic environment
- Social and cultural environment
- Technological environment
- Your company’s internal strengths
- Your company’s internal weaknesses
- External opportunities for your company
Each market has its own different segments. Understanding the relevant segments for your product (in your market is important, for they allow you to adjust your “marketing mix” (the “Four P’s” discussed lower) to better adapt to the different needs of each segment.
Alternative Marketing Strategies
Write down details about any alternatives that you and your team considered before arriving at your current strategy. These may include eliminating a particular product or line, changing the price point of a product or line, etc.
Selected Marketing Strategy – Explain the strategy that you and your team have developed and agreed upon. Why did you choose this strategy? Why do you feel that it’s the best possible strategy for the near future?
Once that’s on paper, put your “Four P’s” down for each product.
Short and Long-Term Projections – This section should include forecasts of revenues and expenses, your break-even analysis, and any changes or adjustments that you predict you’ll need to make in the future.
The Conclusion – This is an expanded version of your Executive Summary. You should include all specific numbers (projected costs, revenues, profits, etc.
3.6 Explain the importance of engaging stakeholders in the development of a marketing strategy
Developing a marketing strategy is essential for any business, but it’s especially important to engage stakeholders in the process. After all, they are the ones who will be implementing the plan and carrying out your vision.
There are a few key reasons why engaging stakeholders is so important.
- First, it ensures that everyone has a shared understanding of the goals and objectives of the campaign.
- Second, it allows you to get feedback and input from those who will be responsible for putting the plan into action.
- And finally, it builds buy-in and commitment from stakeholders, which is essential for success.
Of course, engaging stakeholders is not always easy. It takes time and effort to build relationships and gain trust. But the payoff is worth it. When stakeholders are engaged, they will be more invested in the success of your marketing strategy—and that’s something any business can benefit from.
3.7 Explain the significance of customer loyalty to the achievement of marketing objectives and strategy
Marketing objectives and strategy rely heavily on customer loyalty to be successful. When customers are loyal, they are more likely to return to a business, recommend it to others, and spend more money there. In order to create customer loyalty, businesses must focus on meeting the needs of their customers and delivering excellent service.
They must also make it easy for customers to interact with them, through multiple channels including online and in-person. Finally, businesses should continue to innovate and offer new products and services that appeal to their customers. By doing all of these things, businesses can create customer loyalty and achieve their marketing objectives and strategy.
Studies across a number of industries have revealed that the cost of keeping an existing customer is around 10% of the cost of acquiring a new one. So, economically it makes pretty good sense.
Putting together a good retention strategy will also lead to increased customer profitability, as the longer the relationship, the lower the account maintenance cost.
A better understanding of the customer will aid in knowing what marketing strategies to roll out, such as discounts, special offers, loyalty cards, and a higher level of service.
Loyalty marketing focuses on bringing back and retaining existing and past customers with initiatives and incentives—which is better for your business.
Four main areas to achieve this include:
- Solicit customer feedback
- Celebrate your loyal customers online
- Incentivise with reward programs
- Use customers to use referral programs
3.8 Explain how to set performance indicators and evaluation arrangements that are capable of measuring returns on investment
Setting performance indicators and evaluation arrangements that are capable of measuring returns on investment can be tricky. A good way to start is by looking at what you want to achieve with the investment. What are your goals? Once you have a good idea of what you want to accomplish, it will be easier to find the right measures.
One common mistake is trying to measure too many things at once. This can lead to confusion and inaccurate results. It’s important to focus on just a few key measures, and make sure they are accurate indicators of progress towards your goals.
Another thing to keep in mind is that different investments will have different returns. You need to tailor your measures accordingly. Trying to use the same measures for all types of investments will not give you accurate results.
Finally, it’s important to remember that performance indicators and evaluation arrangements should be adjustable over time. As your business changes, or as new information becomes available, you may need to update your measurements.
With all of this in mind, here are a few tips to help you set performance indicators and evaluation arrangements that are capable of measuring returns on investment:
- Define your goals for the investment. What do you want to achieve?
- Identify a few key measures that will accurately indicate progress towards your goals.
- Make sure the measures are appropriate for the type of investment being made.
- Remember to update the measures over time as circumstances change.
4. Understand how to evaluate the effectiveness of a marketing strategy
Marketing is all about creating connections with potential customers and building relationships. It’s a process of understanding what people want or need and then providing it in a way that meets their needs. But how do you know if your marketing strategy is effective? Here are three ways to evaluate its effectiveness.
1. Look at your conversion rates
Conversion rate is a measure of how many people take the desired action, such as making a purchase, signing up for a newsletter, or filling out a form. If you’re not getting enough conversions, it’s an indication that your marketing strategy needs to be improved. To calculate your conversion rate, divide the number of conversions by the number of people who saw your ad, email, or other marketing campaigns.
2. Look at your ROI
ROI, or return on investment, is a measure of how much money you’re making from your marketing campaigns compared to how much you’re spending. If you’re not seeing a good ROI, it’s an indication that your marketing efforts are not effective and need to be improved.
3. Look at your brand awareness
Brand awareness is a measure of how familiar people are with your brand. If people aren’t familiar with your brand, they’re not likely to buy from you. To measure brand awareness, you can conduct surveys or ask people how they heard about your brand.
If you’re not seeing the results you want from your marketing campaigns, don’t give up. Evaluate what’s not working and make changes to improve your strategy. With a little trial and error, you’ll be able to find a marketing strategy that works for your business.
4.1 Explain the importance of conducting the evaluation in accordance with the specification
Considering how successful the product meets these criteria and what could be changed to improve it are fundamental to evaluating a marketing campaign’s success.
There are several steps that are involved when it comes to tracking the results of any marketing campaign.
Step #1 – Plan the campaign and how you want to track it
It all needs to start with a well-thought-out and effective plan. Once the marketing campaign is planned, then next you must decide which methods you want to use to track its effectiveness.
Step #2 – Define the channels you want to be tracked
To measure the success of your ad campaign, it’s easiest to do this when you divide your marketing-derived traffic into subgroups that are more typically referred to as channels. Here are some of the most common types of channels and what they entail.
- Direct – These are potential customers that find your business in a direct manner without being directed there by other parties. An example of this is a person that saw your web address on a print ad and typed it into their web browser to get information about your product or service.
- Referral – These are potential customers that find their way to your site via a third party that did not use a social media site or a search engine to get to you. Maybe your company will give the third party something like a referral bonus for this or you have a mutual agreement to have links to each other’s sites on your individual websites.
- Organic – This is people that find your company through search engines such as Google. They generally were looking for a type of product or service your company offers, but they were not specifically looking for your company. Many times there will be a UTM (Urchin Tracking Module) parameter that is set up to help them find you.
- E-mail – These potential customers are people that came to you through such things as an e-mail campaign that you put on.
- Paid – These are potential customers that came to you as a result of an ad campaign that you paid for such as a print ad in a newspaper or an ad on a web content site.
- Social – These are people that found you while surfing through social media sites like Twitter and Facebook. There are hundreds of websites which fall into this category.
- None – This is a catch-all category (it does not necessarily have to be called “none”) where all the people who find you through other channels than those mentioned above are placed.
Step #3 – Define the Marketing Metrics You Want to Measure
As any responsible company does, you will want to measure the return on investment you are getting from your marketing campaigns, and one of the best ways to do this is through marketing metrics. Marketing metrics are simply a collection of numerical data that allows you to get some perspective on a marketing campaign to see if it met the goals your company set for it.
There are several different ways you can generate data with which to form a specific metric. Here are a few ways in which this can be done:
- Web content – This is the study of how effective what you place on your website is at both informing the people who visit the site and getting them to take some action as a result; this shows that the quality of the content actually was good enough that those people followed along all the way to the actionable task you set.
- Lead conversion – This is gathering data on people from the first time they come into contact with your marketing strategy and then following them all the way through the different stages of the lead generation process. This includes the initial contact, then on to be a sales prospect and all the way to becoming an actual customer. This metric will track where you lost potential customers in the lead process and help you develop theories as to why.
- Individual visitors – This is data that tracks when an individual user first visits your website during a specific period of time and how many times that same person came back to visit it again. This metric lets you see how effective each phase of a specific marketing plan was.
- Tracking new visitors versus returning ones – This metric helps you to establish how effective new site content drives traffic to your website. This is one method that is not easy to get accurate. It is sometimes best done by actually asking the people who visit your website why they came there the first time or what it was that piqued their interest to make them come again.
- Click-through rate (CTR) – This most likely will include a web page on your site that has an action that needs to be performed in order for the viewer to proceed along further in an information gathering or sales process. It will measure such things as how many people visited the webpage and went no further or how many people visited the web page and initiated the actionable step.
- Bounce rate – This is the metric that causes many marketers or web content developers to lose their job or get demoted. It is compiled data on how many viewers go to one of your web pages and then leave without visiting anything else or taking any actionable steps.
- Page views – This metric measures the number of pages each visitor to your site looks at. You can also do such things with it as learn how much time a visitor spent on a webpage to get a feel for which ones were appealing to them. The more times a page was viewed, and the longer people viewed it could help you measure a marketing campaign’s success even if no action was performed by the user.
- Search engine referrals – Many search providers such as Google have special ways to track what keywords people used that landed them on your site and which search engines directed those same people to you (Google has a tool called ‘Google Analytics’ to do this).
- Social media effectiveness – You can use such things as ‘likes’ on Facebook and ‘mentions’ on Twitter to measure the effectiveness of your advertising there. There are also other tools built into social media sites for tracking purposes too.
- Word-of-mouth – Maybe the age of the door-to-door salesman has come to an end but never overlook direct customer feedback when establishing the effectiveness of your marketing campaigns. Some ways in which consumers were led to becoming customers of your product or service will never be known unless you ask them. You can do this by using such things as a follow-up survey or asking a question on the purchasing form.
- Form conversion rate – A lot of marketers have their web designers put actual forms onto web pages that have some call to action on them. These could seek more information or get a discount coupon. These types of things are very easy to track and accumulate data for metrics.
- E-mail Openings – This metric simply measures how many e-mails were opened based on how many you sent in a particular marketing campaign.
Step #4 – Measuring Your Campaigns
Once you have done the planning for how you will track and measure your marketing campaign as well as set the parameters for it, and then it is time for the actual tracking to take place once your campaign has gone into effect.
Measuring your “search” marketing performance – Google Analytics is very necessary to measure traffic and other data that has to do with the traffic pertaining to your website, but it alone is not enough anymore. Here are some other things that pertain to search functions that are very relevant to marketing strategy.
- SEO Position – For years many businesses have been obsessed with site ranking but that is starting to change as search engines like Google are constantly changing the way searches are done when using them. But make no mistake about it; SEO ranking is still very important.
- Pay-per-click ads – This is best done by what is known as ‘Dynamic Number Insertion’. It is a code that is embedded into a webpage that will help you to track conversions from all of your tracking resources.
- Measuring the Effectiveness of Your Social Media Marketing – All of the major social media sites have built-in analytics that helps you track the effectiveness of your posts and other messages that you put on them.
- Measuring Print Ads and Other Media – This is done by making a dedicated webpage on your site that can only be linked out of so you know what the source for those links is. Setting up tracking URLs is also a good way of doing this type of thing.
4.2 Describe the factors to be taken into account in the evaluation of the effectiveness of a marketing strategy
Key areas that help you determine whether your marketing strategies have been successful:
Return on Investment
Return on investment is always a major concern when it comes to marketing or any other business expense. The idea is to check whether the money you put into your marketing plan has resulted in a profit. You must measure the amount spent on each campaign, versus the number of sales each campaign brought in specifically. You can calculate an overall measurement, but a more specific breakdown by each marketing initiative will tell you exactly which campaigns worked and which fell short.
Reviewing Sales Numbers
Reading the numbers can be the fastest and most basic way to determine whether your plan is working. For example, if your overall sales for last year from June 1 to September 1 totalled £100,000 and your total sales for this year totalled £150,000, you can deduce that your current marketing plan is having some sort of positive effect. Take into account any rise in prices or expansion of the business, but when all is said and done, in raw numbers, you are selling more than you did a year ago.
Customer Response and Reactions
Customer response in all its varied forms can help you to determine what type of reactions your marketing creates. Surveys online and in person, general customer service feedback and online commentary can all reveal what your customers think of your marketing and which campaigns have the greatest impact. Simple questions like “How did you find out about our seasonal sale?” can reveal which initiatives are reaching the customer and which market segments are making purchases.
Marketing Reach Expansion
If your marketing reach is expanding, the effectiveness of your plan is the probable cause. Marketing that makes its way into new regions either by customer recommendation or natural growth indicates both a successful and popular product or experience and an effective marketing message. The expansion of your marketing budget is another sign that your plan is working well and has gained more support from the company.
Marketing Partner Response
Your marketing partners will offer feedback about whether your marketing plan is working. Partner feedback reveals the effectiveness of your efforts in relation to associated brands, suppliers and vendors. These outside members of the team might feel the effects of a successful campaign before you do because they are often on the front lines and might have more direct customer interaction.
The same goes for a negative report. If your partners are asking when you will be releasing new marketing efforts, it might be time to revamp the marketing plan.
Outside Salespeople Feedback
Outside salespeople are a great barometer for the measurement of marketing effectiveness. Ask for feedback from your soldiers in the field to determine whether the message you are providing and the ways you are providing it is effective. You are sure to get advice in any case, but if the feedback is overwhelmingly negative or customers are completely unaware of your latest marketing efforts, your plan should be revised to better address existing clients and to suit the needs of your sales team.
Actions of Competitors
The actions of your competitors can often be very telling when it comes to the success or failure of your marketing plan. If competitors rush to copy what you’ve done or try their best to one-up your initiatives, the plan is working. If your campaigns go largely ignored or there is an immediate negative response, there may be an issue or at least a question about what you’ve set in motion.
4.3 Explain the strengths and weaknesses of different evaluation methods
When carrying out a SWOT analysis, there are a number of different evaluation methods that can be used. The three most common methods are:
- Qualitative evaluation
- Quantitative evaluation
- Weighted quantitative evaluation
Qualitative evaluation is a subjective method of assessment that relies on the evaluator’s personal judgement. This method is often used when qualitative data is being collected, such as in focus groups or interviews.
Quantitative evaluation is an objective method of assessment that relies on numerical data. This method is often used when quantitative data is being collected, such as in surveys or experiments.
Weighted quantitative evaluation is a combination of qualitative and quantitative evaluation. In this method, the qualitative and quantitative data are weighted according to their importance, and then the results are calculated using statistical methods.
Which evaluation method is used will depend on the type of data being collected, and the objectives of the evaluation.
NB: Carry out a SWOT analysis based on the elements raised in Q4.1 and 4.2
4.4 Describe how to identify trends and themes from evaluation data
The goal of evaluating trends is to determine whether you can use them to predict future change and whether a particular trend has any relevance for your business. When you identify a trend that impacts your markets or your operations, you can plan actions that counter the trend if it is harmful or support it if it is beneficial. You have to evaluate the size, direction and trajectory of a trend before you can react to it.
Check the Underlying Data
Experts or publications sometimes announce trends for their own purposes, or you may mistake a temporary change in data as a trend. Trends require a consistent change in reliable indicators over an extended period.
You have to rely on information that can’t be skewed by interested parties who might pay people to simulate interest or activity. Checking basic data such as sales, usage, website traffic or verifiable reviews lets you determine whether you are seeing a real trend.
Separate Actual Data from Projections
Trends often consist of observed data that industry participants extrapolate to predict future behaviour. The observed part of the trend may be factual but the projections are conjecture. Depending on how much-observed data has gone into the analysis and how reliable the projections are, the claimed trend could be valid or might never materialize.
Since you have to base your planning on real trends, you have to examine claimed trends for actual data, and separate out the part that is based on observation to determine whether a real trend exists.
Look for Possible Reaction
Even real trends may fizzle if they encounter determined reactions from industry participants. Existing competitors have a vested interest in keeping things the way they are, and they may take action to counter trends that are not in their interest.
When evaluating the effects of a trend, you have to take such blocking influences into account and decide whether the trend can overcome them. If your evaluation shows that the trend is stronger than the measures opponents can apply, you have to decide to what extent its effects will be reduced.
Identify Implications for Your Business
The purpose of evaluating trends is to predict the effects they will have on your company and to make changes that will allow you to benefit from each trend. For example, a retail business aimed at young families may want to expand if it sees a trend of more young families moving to the area.
An app developer focused on 10-inch tablets may want to develop a version for smaller tablets if there is a trend toward a 7-inch size. Once you have evaluated a trend to make sure it is based on real data and have adjusted for possible blocking actions, you have to make the changes in your business that the trend requires.
4.5 Explain how to ensure the reliability and validity of evaluation data
One of the most important aspects of any evaluation is ensuring the reliability and validity of the data. This means that the data must be consistent and accurate, and it must also be able to accurately reflect what is being evaluated.
There are a number of ways to ensure reliability and validity. One common way is to use multiple sources of data, which can help to triangulate results and provide a more accurate picture. Another way is to use standardized measures, which helps to ensure that all data is interpreted in the same way. Finally, researchers can use various statistical techniques to test for reliability and validity.
It is important to remember that no data is ever perfect and that there will always be some margin of error. However, by taking steps to ensure reliability and validity, researchers can minimize these errors and ensure that the data is as accurate as possible.
Validity and Reliability
Refers to the ability of a measurement scale to measure what it proposes to measure, and the degree to which it is free from systematic and random error.
Reliability is defined as the degree to which a measurement is error-free and provides consistent results over time. There are three approaches to evaluating reliability:
Ensuring your data is as accurate as possible relies on a method called statistically significant data.
Statistical significance is the likelihood that a relationship between two or more variables is caused by something other than chance.
Therefore, acquiring data from more than one source or increasing the sample size will allow you to use a balance of probability in reducing error and seeing a common trend within the data.
4.6 Explain how to achieve an acceptable level of statistical confidence
When you do statistics, you want to be sure that the numbers you are looking at are correct. This is called having a high level of confidence. To make sure your numbers are right, you need to use a lot of data. The more data you have, the more confident your results will be.
There are two types of data that you can use: qualitative and quantitative. Qualitative data is information that can be observed and classified, but not measured. For example, the colour of a person’s hair is qualitative data. Quantitative data is information that can be measured. For example, the height of a person is quantitative data.
When you’re determining the statistical validity of your data, there are four criteria to consider.
Population: The reach or the total number of people to whom you want to apply the data. The size of your population will depend on your resources, budget and survey method.
Probability or percentage: The percentage of people you expect to respond to your survey or campaign.
Confidence: How confident you need to be that your data is accurate. Expressed as a percentage, the typical value is 95% or 0.95.
Margin of Error or Confidence Interval: The amount of sway or potential error you will accept. It’s the “+/-” value you see in media polls. The smaller the percentage, the larger your sample size will need to be.
For example, if 45% of your survey respondents choose a particular answer and you have a 5% (+/- 5) margin of error, then you can assume that 40%-50% of the entire population will choose the same answer.
4.7 Explain how to address critical issues revealed by evaluation
Most people evaluate too soon and too often, and therefore create less. In order to create more and better ideas, you must separate creation from evaluation, coming up with lots of ideas first, and then judging their worth later.
There are two main types of evaluation: internal and external. Internal evaluation is when you judge an idea yourself, and external evaluation is when you get feedback from others.
1) Internal Evaluation
The best way to do this is to come up with a lot of ideas first, and then pick the best ones later. This allows you to separate the creative process from the evaluation process.
2) External Evaluation
The best way to do this is to get feedback from others. This can be done by sharing your ideas with friends, family, or even strangers and seeing what they think.
3) Be aware of your biases
When evaluating your ideas, it’s important to be aware of your biases. We all have them, and they can distort our judgement. Try to be as objective as possible, and consider all sides of the issue before making a decision.
4) Take your time
Don’t rush into evaluation. Once you have a few good ideas, take some time to think about them before making a decision. This will help you to be more objective and avoid impulsive decisions.
5) Be flexible
Be willing to change your mind if new information arises. We often get attached to our ideas, but we have to be willing to let them go if they’re not working.
Evaluating your ideas is an important part of the creative process, but it’s not something you should do all the time. Separate creation from evaluation, and only evaluate when you have a few good ideas to choose from. Be aware of your biases, take your time, and be flexible. If you do all of this, you’ll be well on your way to making great decisions about your ideas.
4.8 Explain the importance of justifying recommendations and conclusions with evidence
Sometimes, the recommendations and conclusions that you collect can be wrong, so you need to back that up by giving evidence from where you got it from so that you can show it is something legit and not made up.
Your analysis and conclusions should be justified before they are used to change or redirect program activities. Five bases of evidence are commonly used to justify conclusions.
Standards reflect the values held by experts and stakeholders concerning program performance. You can document your conclusions by comparing your program monitoring, feedback and other indicators of progress against known standards.
Deciphering facts from a body of evidence involves deciding how to organize, classify, interrelate, compare and display information. These decisions are guided by the questions being asked, the types of data available and by input from stakeholders and other users of the data.
Analysis and synthesis of findings might detect patterns, either by isolating important findings (analysis) or by combining sources of information to reach a larger understanding (synthesis).
Interpretation is the effort of figuring out what the findings mean and is part of the overall effort to understand the data gathered in context. Evaluation evidence must be interpreted to determine the practical significance of what has been learned.
Interpretations may also draw on information and perspectives that partners and stakeholders bring to the inquiry and can be strengthened through their active participation or interaction.
Judgments are statements concerning the merit, worth or significance of the program. They are formed by comparing the findings and interpretations regarding the program against one or more selected standards. Conflicting claims regarding a program’s quality, value or importance often indicate that stakeholders are using different standards for judgment.
Recommendations are actions for consideration resulting from the findings. Forming recommendations from the program evaluation requires information beyond what is necessary to form judgments regarding program performance.
Knowing that a program is able to reduce the risk of disease doesn’t necessarily translate into a recommendation to continue the effort, particularly when competing priorities or other effective alternatives exist.
Thus, recommendations for continuing, expanding, redesigning or terminating a program are separate from judgments regarding a program’s effectiveness. Making recommendations requires information concerning the context, particularly the organizational context, in which programmatic decisions will be made.
Recommendations that lack sufficient evidence or those that aren’t aligned with stakeholders’ values can undermine an evaluation’s credibility. By contrast, an evaluation can be strengthened by recommendations that anticipate the political sensitivities of intended users and highlight areas that users can control or influence.
Sharing draft recommendations, soliciting reactions from multiple stakeholders, and presenting options instead of directive advice increase the likelihood that recommendations will be relevant and well received.
4.9 Explain the use of impact analysis in the evaluation process
When it comes to evaluating ideas, one of the most important steps is impact analysis. This involves considering how an idea will affect different aspects of our lives, both positively and negatively.
Impact analysis can be helpful in sorting good ideas from bad ones, and in making sure that we are fully aware of the potential consequences of implementing a new plan or policy. It can also help us to identify any potential risks or roadblocks that may stand in the way of success.
By taking the time to do a thorough impact analysis, we can make sure that we are making informed decisions about which ideas to pursue and which ones to abandon. This process can help us to avoid costly mistakes and to ensure that we are always moving forward in the most effective way possible.
Impact analysis helps people answer key questions for evidence-based policymaking: what works, what doesn’t, where, why and for how much? It has received increasing attention in policymaking in recent years in both Western and developing country contexts.
It is an important component of the armoury of evaluation tools and approaches and integral to global efforts to improve the effectiveness of aid delivery and public spending more generally in improving living standards.
Steps to follow should include:
- Gathering information
- Evaluating the collected information
- Preparing a report to document the findings
- Presenting the results to senior management
4.10 Explain the importance of marketing to the achievement of business objectives and strategies
In order to achieve business objectives and strategies, it is important for companies to engage in marketing. Marketing is the process of creating value for a company through the creation and distribution of products or services. It is essential for businesses to identify their target markets and create messaging that resonates with those audiences.
Marketing efforts must also be planned and structured in a way that aligns with overall business goals. By using marketing effectively, businesses can reach new heights and achieve success.
Ultimately, the outcomes found here will influence future marketing planning and activities.
A well-developed strategy simplifies our everyday marketing job as it makes the implementation of different initiatives straightforward. It represents the “road map” to achieve greater results, such as:
- sales growth
- worldwide brand recognition
- higher market penetration
- informing customers of products/services
- contributes to revenue generation
- promoting a positive image of the organisation
4.11 Describe the links between corporate social responsibility and marketing strategies
There is a growing trend among businesses to adopt corporate social responsibility (CSR) practices. While many people see CSR as simply the right thing to do, there are also a number of benefits to be gained from implementing CSR policies and practices.
One such benefit is that CSR can help companies improve their marketing strategies. In particular, CSR can help companies build trust with their customers and create positive associations with their brands. Additionally, CSR can help companies reach new markets and tap into new sources of revenue.
Thus, it is clear that there are strong links between CSR and marketing strategies. By implementing CSR practices, companies can improve their marketing efforts and create a more sustainable and successful business.
Social responsibility in marketing involves focusing efforts on attracting consumers who want to make a positive difference with their purchases. Recyclable packaging, promotions that spread awareness of societal issues and problems, ethical trading, community responsibility, and directing portions of profits towards charitable groups or efforts are examples of social responsibility strategies.
Many companies have adopted social responsibility strategies in marketing as a means to help a community via beneficial services and products.
For example, marketing departments may launch a campaign that encourages consumers to buy a bundle of socks versus one pair; for every bundle sold, the company in turn donates a bundle of socks to military personnel overseas or to local homeless shelters. As a result of such donations, the company brands itself as socially responsible and ethical, which ultimately attracts customers who are engaged in socially responsible commitments and who want to support the welfare of the community.
Corporate responsibility goes hand in hand with socially responsible practices. For example, administrators, executives, shareholders and stakeholders must practice ethical behaviours and join the community in promoting responsible marketing efforts. Putting on appearances or greenwashing, the practice of promoting deceptively environmentally friendly processes or products indicates to customers that the company is not committed to social responsibility; such behaviours can ultimately hurt the brand and the company’s success. Consumers often do their research and can see through gimmicks and slogans, or efforts that are not genuine or ineffectual.
Although an initial investment may be involved to share profits or donate to those in need, social responsibility in marketing promotes a positive company image, which can significantly impact profitability and even productivity favourably.