3. Decision making to improve marketing performance Flashcards
Advantages and disadvantages of niche marketing 4 + 3
Advantages:
- May benefit from price skimming
- enables differentiation and specialisation
- often less competition
- Customer loyalty
Disadvantages:
- If profitable, could attract competition
- May be difficult to generate acceptable profit
- Higher costs due to small scale
What is market segmentation?
Dividing the market into identifiable sub-markets, each with its own customer characteristics
What is market targeting?
Deciding which market segment a business wants to operate in
What is market positioning?
Where a particular brand stands in relation to other brands in the market
The effect of changes in price - elastic and inelastic
elastic demand:
price rise - revenue falls
price fall - revenue rises
inelastic demand:
price rise - revenue rises
price fall - revenue falls
What is elasticity?
The measure of the responsiveness of demand to a change in a variable, e.g. price or income
What is a confidence interval or margin of error?
The plus or minus figure used to show the accuracy of results arising from sampling
What is a confidence level?
the probability that research findings are correct
What is extrapolation?
Analyses the past performance of a variable, such as sales, and extends the trend into the future.
What is correlation?
used to establish the extent of a relationship between two variables
What is sampling?
The selection of a representative group of consumers from a larger population
What is random sampling?
when each member of the population has an equal chance of being included
What is stratified random sampling?
Seperates the population into segments or strata
What is quota sampling?
Splits the population into a number of groups, each sharing common characteristics
What are the five external factors influencing marketing objectives and decisions?
market and competition: objectives will vary according to the state of the market and the actions of competitors.
economic factors: factors such as an economic cycle and interest rates affect consumer spending
social factors: consumer tastes and fashion change over time
ethics: consumers have become more aware of environmental issues, e.g. the amount of packaging
technology: this affects the way businesses both produce and sell goods, e.g. mass customization and online sales
What are four internal factors influencing marketing objectives and decisions?
finance: The marketing function needs to operate within the budget allocated
production capacity: It must be physically possible to achieve growth targets
human resources: market growth may be dependent on the skills of the workforce and the availability of labour
nature of product: innovative products have more scope for growth than staples such as bread and fuel
3 key marketing objectives (4 sub)
- Sales growth% (sales volume, sales value, launching new products, entering new markets)
- market share increase
- brand loyalty increase
what is primary data
data collected first-hand for business
what is secondary data
data that already exists and which has been collected for a different purpose
4 methods of primary research
surveys/questionnaires
observations
focus groups
test marketing
5 secondary research methods
pulished reports by industry publications newspapers internet government market research reports
2 strengths of primary research + 3 weaknesses
s:
- specific to the business/product
- up to date
w:
- expensive, time consuming
- sample size may be too small
- poor validity of research
3 strengths 3 weaknesses of secondary research
s:
- can be cheaper
- immediately available
- looks at the whole market
w:
- not specific to the business/product
- can be out of date
- accessible to competitors
4 criteria to segment market
demographic (age, gender etc)
geographic (location, urban or rural)
income (disposable income, level of earnings)
behaviour (specific needs, frequency, interests, hobbies etc)
pros of segmentation
- helps understand the need of a specific group of customers
- helps design a tailored product or service
- helps differentiate a product or service
- makes marketing more targeted and efficient
cons of segmentation
- segment size may be too small to be profitable (not enough customers and revenue)
cons of segmentation
- segment size may be too small to be profitable (not enough customers and revenue)
pros of mass market
- large target market - high revenue + market share
- economies of scale
- helps brand awareness
cons of mass market
- more competition - price competition
- high levels of inital investment
- higher costs (product adaptation to segments)
- generic products may not meet customers needs
internal influences on new product development 5
- availability of a budget for r&d
- talent
- past success/failure
- need to increase sales
- how old current products are
external influences on new product development
- new gap in the market
- customers expectations
- new technology
- competitors actions
- government policies
pros of multichannel distribution 4
- open 24/7
- different prices for different channels
- increased brand awareness
- access to customer feedback
cons of multichannel distribution 2
- costs may be increased (shop+website)
- lack of consistency of customer service
pros of e-commerce 4
- less expensive costs
- open 24/7 / 365 days
- access to larger inter/national market
- revenue up & costs down = profit up
cons of ecommerce 8
- lacks personal touch
- delays
- doesnt allow experience
- packaging and delivery costs
- subcontracting delivery
- returns
security issues
high competition
cons of ecommerce 8
- lacks personal touch
- delays
- doesnt allow experience
- packaging and delivery costs
- subcontracting delivery
- returns
- security issues
- high competition
what is digital marketing
any online methods of marketing e.g. email, social media, blogging etc
pros of digital marketing
- allows global reach
- cheaper
- allows personalisation
- can suggest similar products
pros of digital marketing
- misses out customers not online
- can annoy customers
- customers can opt out of receiving it
6 factors affecting the choice of promotional mix
- target market/audience
- type of product
- stage in product life cycle
- budget
- competitors choice
- technology available
what are consumer products
bought by final customers for personal comsumption
what are industrial products
bought by other businesses not consumers for further processing or for use
