2 - A dvert/singand Merchandrain9 Dr.

Ayyad

FEGG

Master Programs: CCA & FAB

2022-2023
Dr. Ayyad Dr. Ayyad

Dr. Ayyad

Vocabulary Practice
1. What is the differencebetweena marketand a
cccscrner? Give twodefinitionsof a producr.
!
 9
Give a general definitionof advert/sing.
Give a specificdefinitionof advertising,as used in
marketing. 9

1
Name twoformsof merchandising.
(

Name five
aspectsof
marketing, e

0
What is the marketingconcept?

What is the differencebetweensecondarydata and primarydata?

0

What is the differencebetweenqua/ltativeresearch

and quantita 9

tive research?
 The Market ’ 3

10. What does M/S stand for? Describe

MIS and its use. 11. Define marketshare.
Give a synonym for it.
12. Give an example of distribution.
l3. What does 80/stand for? Which sales figuresdoes
it compare?14. What does CD/ stand for? Which
sales figuresdoes it compare?15. Define store-
countdistribution.
16. What does ACV stand for? Define it.

The Market

Communicatingthe marketingconcept
Marketingbegins with a consumer need. Something is
n
produced i responseto thatneed. In a
~
marketingsociety,theconsumerrules. lVlar keting
societieshave produced a great abundance and varietyof
con sumer goods. They have done this by means of
competition.Each pro ducer competeswith every other
producerfor a share of the market. The market,simply, is
people who have money and are ready to spendit. But
consumershave a finiteamountof money tospend. They will
y
bu only whatthey wantand need. As a nation becomes
more developed, consumers become more demanding.
»
Their needs become more spe cific, and they
wantproductsthatsatisfytheir changingneeds. Onlythose
producerswho compete effectivelywill sell their
d
productsan survive. Successful producers are guided by
the marketingconcept: re sponse to consumersneeds.
Marketingis a matterof
communicationbetweenconsumersandproducers.Adverti
»
singis notthe producersonly means of communica tion. The
productitself, its packaging, brand name, and price carry
a
message to the potentialuser. 80 does the place wherethe
s
producti sold. Marketingcommunications,then, can be
g
defined as all marketin activitiesvisible to
consumersthatmay influencetheirpurchasingdeci sions.
These activitiesinclude both advertising and
merchandising. Everyone involved in thoseactivitiesis a
marketingcommunicator.Thebasis of all
marketingcommunicationis one essential Question: Howcan
we best inform consumersthatour productmeets their
needs?" The arswer to that question is what an advertising
campaign is all about.
4 ’ Advertisingand Merchandising
Marketresearch
Planning an advertisingcampaign begins withan analysis ofthemarket
situationSituationanalysis moves from the genera to the specific. It
begins withthe broad economicpicture.Is this a time of growth,reces»
sion, inflation?Is it a time for optimismor pessimism? Next, the com
panys general marketing objectives must be consi" red. Does the
companyaim to increaseor maintainits marketshare? ls it aggressively
pursuinggrowth?is it introducinga new productor proroiingan estab
lished one? Is it pioneering, or is it respondingto a c5nsein the com
petition?Situationanalysis ends withobservations800,1:roolemswith
and opportunitiesfor promotinga specificbrand.
The purposeof marketresearch is to solve a «:3»; 3 or exploitan
opportunity.For a marketingcommunicator.a b ’ ’iortbe, Our sales in the
Southeasthave dropped. Will incre . ’ing in local newspapershelp? An
opportunitymightbe "Cu’ ._::"::tr.ionsmar ket share decreased in the last
year. What promo: :"5 sgtivitywould help us take advantage of the
situation?
Research is the gathering and analyzing "if "s e.
a: data. Rel
H

evant" is the key word. Facts and figures are notdifficulttosecure. Much
more difficults so . thatrelatetothesuccessofa particularbrand.Such r
EC..indant and a a,those
}
!
I
V
(
I

can be time-
consumingand expensive, but it is usually worn . i a ’ :ts:
.

Sources of data
Two sources of data are available: secondary ano "zm Secondary
data are informationthathas already been gathere"" r s: s 0ther pur
pose. lt may be internal iwithinthe companyi or
outsidethe
i . ’e excellent
companyl. A companysown sales records and a
sourcesof internalsecondarydata. They are usue i. .t: obtain, and they can
be extremelyuseful. Governmentcensus ;_ provide ex ternal
secondarydata. In some countriesthereare :5’**e.’cialsources of
informaton,too. A disadvantageof secondary :: r the: they may not be
relevant. They tell only what happened i’ _, pest. and they may be out
of date. Secondary research can indic TE sales trends in a
productcategory. it can tell how many people have boughta product.
But it cannotexplain whytheyboughtit. And consumermotivationis an
increasinglyimportantconsiderationin advertising.
Pr/marydata are collectedfor the firsttime or research study. There are
two kinds of primary iexploratory,or subjective}and quantitativelcorc
specific market rein: qualitative
yet. or objective).
The purpose of qua/I’tat/i/eresearch is to obtain a g
are feeling about
the market. the consumer, or the product. lt is rein};
to reach specific
conciusions n example of qualitativeresearch is the depth interview, in
which one u’ner is questionedextensively. A disadvantage of
qualitativerescarf’s :Iatthesampling is necessarilyvery small. Quan
The Market - 5
6 - Advertisingand Merchandising

titativeprimary data are gathered by three methods:

experiment, ob servation,and survey. The consumersurvey
is by farthe mostcommon methodused in planning an
advertisingcampaign. A wide sampling of the populationis
surveyed, by mail, telephone, or personal interview. The
surveywill generally help to
determinewhichadvertisingmessage to use, and whichis the
likely audience for it. Ouann we researchaims for
definiteconclusions.
Once the data (primaryor secondary, interna 0.
external,qualita tive or quantitative)are gathered, they are
analyzed. Useful, relevant informationis extractedand can be
used to solve T"E foolemor exploit the opportunitythatbegan
the study. With today’ssophisticatedcom puters, typical
marketing research methods a:- oecorning obsolete. More
and more companies are using a compcte= ’ marketingin
formationsystem HWS) for help in making mam: ;
decisions. The ’ "rch. Properly
used, it will produce only relevantdata, ana 5.23 ’"":" .tion
about rev currentproblems, and encouragecoordinatlcrc"
"esearch activities. An up-to-dateMIS can provide
information52s
past performance,presentconditions,and 7’s.
valuable in planning an advertisingcampaign

Areas of marketresearch
Marketresearch (situationanalysis) must be cc; n inf-s:
areas: mar» ket potentialor industrysales, company saes.
"rr-e: snare, distribu tion, and advertisingcosts.
To analyze marketpotentialis to analyze the came":
fora specific type of productat a certaintime, under cerze’"
Meme: g conditions. Under conditionsof high
unemploymentand r’s’"; : ’Les forexample, the demand for
luxury items such as fine ft:r"’:..’e ae low. Under
oppositeconditions,the demand for the same :EMS increase.
The market for these items is volatile; it changes remake as
general economicconditionschange. The marketforgc ’" :a 1y
use, such as bread and milk, is stable; it changes littleWith e
"t : conditions.The analysis of market potentialreveals sales
fig; s- 52’ an industryas a whole.
In analyzing the market potential,the
advertise"considers broad questions such as these: Should
we be pessrr v: or optimistic? Should we concentrateon
exiSting markets or loss or new ones? Should we increase or
decrease our advertising.Srcscwe raise or lowerour prices?
The Study of industrysales pro: :es tertativeanswers to these
questions.ThatsjLiSt a start.
The next step is to Study sales for
inoividua :C’npanies. The goal is still to i:" e problems and
opportunities.Carter. company sales should be crematedto
earlier ones, to determinet. nds. They should also be
compete: LO cornpetitorssales, past and present.
The Market - 7

Analysis of industrysales and company sales togetherprovides

informationaboutmarketshare, or brand share. Marketshare indicates
the performanceof a specificbrand in relationto a competitorsbrand,

and to the industryas a whole. A major difficultywith brand share analysis

is thatit shows only relative market position and changes in that
.
position. It does not show why those changes are taking place
Furtheranalysis of the figuresis necessary.
 e
Distributionis the next area of research. Four kinds of index ar used in
analysis of distribution.The firsttwoare often based on distri butionby
geographicalarea. In both, the index is based on an arbitrary scale of 100.
The brand-developmentindex (BDl) compares sales of a specificbrand
and totalsales in the productcategory.(in the Southeast, ne BDl for
Cereal Brand X was 117. ln the Northeast,it was 73.) The category-
developmentindex (00/)compares sales in the productcate gory and
sales in the region. (ln the Northeast,the CDl for all cereals
was 92. In the Southeast,it was 94.) A comparisonof the BDl and CDl
showsthatCereal Brand X is doing poorly in the Northeastand well in the
Southeast.Store-countd/str/but/onrefersto the number of stores
thatcarrya brand. For example, 89.1% of all grocerystorescarryCereal
Brand X. All-commodityvolume (ACV/ refers to the total amount of sees
in a category,forexample, sales of all cereals in all grocerystores. 4
ewstoreshave a high volume of sales. lVlost storeshave a low sales
.clume. Therefore, it is possibletoachieve high distributionby selling a
c’o-ductin only a fewstoresthose withhigh sales volume.
The nextarea for research and analysis is costsof advertisingand
merchandising,both for the company and for the competition.ldeally,
marketshare oughtto reflectadvertisingshare. Suppose thatfive com~
:ecies are selling a similarproduct.Together,theymake up 100% ofthe
market for thatproduct.They accountfor 100% of the advertisingex-
:enditurefor it. If one company spends 50% of the total advertising
expenditurebut has only 10% of the market,somethingis wrong.That
::mpany needs to study its adVertising costs and effectiveness.The
natureof competitorsadvertisingshould also be studied. What are its
3’? and content?What claims does it make forthe product?Are they -
oue and valid? Which consumers are the targetaudience for the :tner
companiespromotionalefforts?