A local restaurant wants advice on how to

approach new customers. They tell you that

everyone is welcome!
a)
Take them through segmentation
variables for identifying key market
segments (20 marks)
Segmentation is the process of analysing and
dividing the market to get a better understanding
of that market or country in order to implement
strategies to target them.
Dividing a market into distinctive groups with
distinct needs, characteristics, or behaviour who
might require separate products or marketing
mixes (Kotler & Armstrong, 2013 p.214)
Segmentation is most effective when using the
MASDA model It Should be measurable,
Accessible, Substantial, Differentiable, and
actionable.
These are divided into 4 segments
Geographic: for this purpose it would be location,
rural or urban and climate would fall under this
category.
Demographic: The kind of population that live in
the target area like age group , genders, families ,
young people, students etc would fall under this
category, so we can strategise and cater to
accordingly
Psychographic: Social status, economical standing
and wealth distribution would fall into this area

Behavioral : The markets attitude towards

expectations, value, loyalty etc. would fall into this
category
Segmentation is key when you are trying to open a
restaurant or trying to target new customers. In
this case the restaurant is caf style selling bistro
style food, coffees, teas, confectionary etc .
Through segmentation in the Hampton court of
Surrey, we have (explain segment and how it is
relevant to the restaurant using examples )
b)
Explain the importance of market
positioning and show how this could help
them to target customers (20 marks)
Positioning is the process of identifying the place
that the product or service occupies in the
customers mind.
In order for the restaurant to be successful and to
have the right appeal it needs to be positioned
according.
To have a competitive advantage positioning can
capitalise on one or all of the following
Communicable visible to consumers
Important can it offer high value to the consumer
Pre- emptive not easy to copy
Distinctive competitors are not offering this
Superior compared to current offers

c)Give an example of how a perceptual

map & show how this tool could work for
them (10 marks)
(Giving a brief description of the restaurant, draw a
position map based on high and low value and
high and low cost and place your restaurant within
this map) Read over Perpetual map.

Explain the Diffusion process and summarise

key adoption stages an innovation goes
through before it becomes more widely
known
The process by which the acceptance of an
innovation is spread by communication to
members of a social system over a period of time.
Or in laymans terms The journey of an
innovation and the stages it goes through before it
becomes well known or widely accepted by society.
There are stages in the Diffusion process:
1. Innovators -This is the primary stage where an
innovation is released. At this stage there is no
guarantee that this innovation will go
anywhere as not all innovations are successful.
(2.5%) e.g. space travel
2. Early Adopters: This is followed by the second
stage where the audience is usually tech
savvy and are the first group to try out an
innovation This group is usually an influencer
(not always) to other groups who are keen to
follow them. (13.5%) e.g. Richard Branson

attempting to use this innovation to travel to

space.
3. Early Majority This group are quick to follow
the early adopters and are easily influenced
enough to start using this innovation. This
group make the innovation a success and will
be the ones to make it widely known. (34%)
E.g. once the space travel has been successful
this large group will use this innovation widely.
At this stage the product is widely known and will
be widely circulated. The diffusion process
continues though.
4. Late Majority - This group are usually aware of
the innovation, however not enough to adopt
it yet. They eventually come around to it and
soon start to adopt the innovation make it very
widely spread. This group also makes us 34%
of the social system. E.g. the everyday people
who travel around the world and are keen to
take it to the next level as several trendy
people have been doing it for a while.
5. The Laggards This is the final group in the
process and make up 16%. This group come
rather late to table and by this stage the
innovation is in its phasing out staged as its
usually being outshine by a new innovation.
E.g. this group seldom travel and will usually
adopt this innovation out of necessity or
through peer pressure of being behind the
times. They are sceptical to anything new and
rather stick with what they know then try
something different. E.g. this group probably
take annual holidays, dont travel much by air
and will usually take tried and tested
transportation.

Draw the Diffusion cycle according to Rogers

Define Opinion leaders and explain and
explain why they are so valuable in the
diffusion process
Opinion leaders are people that informally
influence the consumption and attitude of other.
These groups are key in the success of any
innovation as they influence opinion seekers and
receivers. They are specialist in their field/s and are
usually experts in one area (monomorphic) or in
several areas (polymorphic)
Opinion leaders shape business and industries,
influence study and debate, spread ideas, expand
the conversation and affect policy decisions.
(Washintonpost.com. 2014)
The interesting thing about this group is that they
are not usually associated with company or brand.
They are valuable because they are usually
technically competent, have similar values to
Influence seekers and receivers, and have
credibility, confidence and legitimate power. They
are the quickest to be attracted to a new
innovation and can usually perceive that success of
the same. They know what they want and what
they are looking for and are the first to try out a
new product, technology etc and as result of this
they influence its success. This group is the most
valuable in the diffusion process and are extremely
sought after by both innovators and society.

An example would be Jeremy Clarkson who can

influence a large population into buying almost
any car that hits the market. He is not a part of
any of these companies, however his knowledge
and experience in the industry is huge, which
make him an Opinion leader in this field. If BMW
release a flying car, Jeremey Clarkson will be one
of the first to try it and his opinion will contribute
towards the success of the car. As to several
people If Jeremy Clarkson likes it, then it must be
good.

Social Factors are becoming increasingly

influential to marketing.
Explain why and how, social networks and
reference
groups
influence
consumer
behaviour.
We are all influenced by people we like, respect or
admire and this more than often takes the form of
influencing, what, how, when, why and where we
buy things as a consumer. Not everyone is able to
just pick something up and decide its good, we are
usually try or buy something because someone or
something (advertising, marketing etc) has told us
about a product or service.
We are guilty of buying something that others view
as good for the fear of being seen as someone with
poor taste or choice. This drives the cars we buys,
the clothes we wear, the restaurant we visit etc.
We call these groups social networks that exists in
several forms .These can be face to face as well
through social media, like Facebook, twitter,
Instagram , mums net etc.

Reference groups are what we call these

influencers and they come in two types. Primary:
which can be small or large groups consisting of
your friends, family, class mates or colleagues etc
and are people you have face to face contact with.
As an example, you go to a trendy new bar with a
group of friends. Three of them have been there
before and they all order a Japanese whisky thats
is apparently fantastic. Even though you dont
usually drink whisky, everyone in the group
decides to try some because its been suggested
by close friends. Some of the group will actually
like the whisky and might try it again and some will
continue to drink it even though they dont like it
as much, as they dont want to be seen as not
having refined taste in good whisky.
We see similar trends with restaurants, electronics
and clothing.
Secondary: These groups are one that you dont
have much face to face interaction with and are
usually much larger like church groups, university
Alumni, professional organisations. These groups
have less influence than primary groups.
An example would be a university which has a
shop that sells university branded merchandise. A
lot of the students buy and wear the branded
merchandise of campus to show they belong to the
university, however not every student shares this
sentiment and would see it as unfashionable or
unflattering
to
be
seen
in
university
merchandising. In this situation the influence is not
as strong as with primary groups, however it still
has influence on some.

Irrespective what form or shape these social

networks and groups take, they all voluntarily or
involuntarily influence consumer behaviour.
Summarise the similarities and differences
between WOM & Buzz marketing.
WOMword of mouth marketing: This involves
recommendation and words of friends, peer groups
other consumers that promote a product or service
based on their personal experiences. This is highly
influential and trusted as this group do not usually
belong to the brand they are promoting. This is
more credible than advertising and sales &
campaigns.
Buzz Marketing : Buzz marketing involves
enlisting opinion leaders and influencers to serve
as brand ambassadors and to spread the word
about the products they are representing. These
people are respected as being knowledgeable, tech
savvy, highly skilled in certain professions and
have social followings.
Buzz marketing attempts to be quite targeted and
makes it seem that its special aimed at a select
group or person of influence that will spread the
word to their circle of influence.
Both Buzz and WOM are similar in the sense that
its not mass marketing done through advertising
and sales. The approach is quite selective and
spread through small groups and depending on
their influence will tend to go viral on a small or
large scale.
The difference is that word of mouth is more
personal and is done mostly voluntarily amongst

smaller groups, whereas Buzz marketing is tactical

and initiated by companies that enlist the service
of others to spread their brand power to
consumers.

Describe basic economic pricing and give

examples.
Draw demand curve with axis lines.
Then draw a demand curve for inelastic demand
using salt and Petrol as an example
Then draw a demand curve for elastic price using
the wine example.
What are the key factor affecting customer
price
sensitivity
and
company
pricing
strategy? Give examples throughout.
What are the 2 main approaches of pricing
new products?
When pricing new products there are two broad
strategies that are used:
Market- skimming price where companies set
high prices for new products to secure the
maximum revenue from a certain segment that is
willing to pay the high price. These companies may
have lower sales but high profitability.
The practice of price skimming involves charging a relatively high price for a
short time where a new, innovative, or much-improved product is launched
onto a market.
The objective with skimming is to skim off customers who are willing to pay
more to have the product sooner; prices are lowered later when demand from
the early adopters falls.

The success of a price-skimming strategy is largely dependent on the

inelasticity of demand for the product either by the market as a whole, or by
certain market segments.
High prices can be enjoyed in the short term where demand is relatively
inelastic. In the short term the supplier benefits from monopoly profits, but
as profitability increases, competing suppliers are likely to be attracted to the
market (depending on the barriers to entry in the market) and the price will
fall as competition increases.
The main objective of employing a price-skimming strategy is, therefore, to
benefit from high short-term profits (due to the newness of the product) and
from effective market segmentation ( Riley 2014)
http://www.tutor2u.net/business/marketing/pricing_strategy_skimming.asp

Market-penetration pricing this strategy is to set

the price low when release a new product in order
to attract a large number of buyers and a larger
market share. This is all about high sales and lower
profit.
The demand is elastic and there are usually several
competitors in the market. The focus is getting the
product into the market on a large scale and
staying there for a long term.
These products are not unique and are
undifferentiated. Production cost are low and the
intention is to have a long life cycle.
Give examples on how these strategies are
used for pricing in the product mix.
For price skimming use the Apple and Samsung
curved TVs
(High demand for a niche product that is inelastic.
There is usually nothing like it in the market. It
short lived as competitors will soon be at hand and
the demand will eventually become elastic.

For Market penetration use the Ikea in China

example or Primark as well.