3 Decision making to improve marketing performance Flashcards
what is sales value
units sold x average selling price
what is sales volume
no of units sold by a business
market size volume
average no of units sold in market
market size value
total units sold in market x average selling price of each unit
what is market growth
(current - original / original) x 100
market research is
the process of collecting data about customers and competitors to make informed decisions
types of marketing decisions include
- effective promotion
- product development
- setting sales/performance targets
- budget allocations for r&d, promotions
disadvantages of quantitative data
- doesn’t explain the ‘why’
- relies on honest answers
advantages of quantitative data
- allows for numerical breakdowns such as graphs
- allows for patterns to be easily identified
- allows for large amounts of data to be analysed
advantages of qualitative data
- allows for follow up questions to be asked
- reasons for consumer behaviour can be asked
disadvantages of qualitative data
- relies on honesty
- time consuming
- difficult to breakdown
- small sample groups may not be representative of a large population
market mapping is
a way of analysing the level of competition using the characteristics of the brands
benefits of market mapping
- help identify competitors
- help identify customer perception of competitors
- help identify gaps in the market
weaknesses of market mapping
- depends on opinions of creator of the map
- oversimplifies complex markets
- doesn’t consider consumer demand
sampling is
a group of consumers representative of the entire market
what is random sampling
where everyone has an equal chance of being chosen
stratified sampling is when
the sample group has a key characteristic that the overall market has
benefits of sampling
- time effective
-cost effective - can be used for both qualitative and quantitative data
- generalised conclusions can be reached quickly
weaknesses of sampling
- is it truly representative of the whole market?
- bias if the sample isn’t random?
- does the sample even use your products?
the effectiveness of sampling depends on
- size of sample
- budgets available
- skill of research team
- how quickly the information has been used
correlation occurs when
there’s a relationship between two sets of data
confidence intervals are
the level of confidence you have that the information you have gathered is accurate
confidence intervals depend on
- size of sample
- budget
- skill of research team
- level of deviation
benefits of extrapolation include
- allows to identify patterns
- quick
- cheap
weakness of extrapolation include
- relies on accuracy of past data
- future is unpredictable
- doesn’t account for seasonal changes
how can you use technology in market research
- spreadsheets
- loyalty cards
- data storage software
- social media
benefits of using technology in market research
- relatively cheap
- collect large data samples
- effective analysis of data
drawback of using technology in market research
- loss of reliability on ‘hunch’
ped is
% change in demand / % change in price
price inelasticity is when the value is …. than 1
less
price elasticity is when the value is …. than 1
more
influences on ped include
- no of substitutes
- habitual purchases
- consumer perception
inferior goods have a …. YED
negative
normal goods have a YED that is
between 0 and 1
luxury goods have a YED that is
more than 1
Segmentation is
dividing a mass market into subgroups w similar characteristics
markets can be segmented by
- demographics
- geographical
- income
- behavioural
benefits of segmentation
- used to identify gaps
- can target their specific target
- allows for specialised products can be created
drawbacks of segmentation
- difficult to accurately categorise consumers
- risk of not identifying target market correctly
targeting is the…
process of deciding the groups of customers a company will decide to sell their products too
a mass market is
as much of the market as possible
advantages of targeting a mass market
- economies of scale
- greater brand awareness
- lower advertising costs per unit
disadvantages of targeting a mass market
- high competition
- fewer premium products so less scope to add value
- low levels of consumer satisfaction
a niche market is
a small sub section of a mass market w similar needs
advantages of targeting a niche market
- usp and differentiation
- charge higher prices
- build brand loyalty
disadvantages of targeting a niche market
- lack of economies of scale
- what if the niche changes
positioning is
how you communicate w your target market
influences on stp
- core competencies and usp
- competitors usp
- budgets
- ability to reach target market
value of stp
- identify gaps in the market
- identify future trends
- differentiate from competition
marketing mix
how the business goes about achieving a specific brand identity using the elements of the marketing mix
an example of why an integrated marketing mix is important
if your promotion claims a product to be of high quality, the price should reflect that
price skimming is when you have a ____ which maximises _____ _____ _____.
Eventually prices should _____, in order to atttract a ______ _____.
high initial price
short term profits
drop
wider market
price skimming is often used in the
technology market
benefits of price skimming include
- attracting ‘early adopters’
- business gaining a premium price from customers who are prepared to buy it
- good for inelastic products
drawback of price skimming is that
the high initial price may put of many potential customers
price penetration is setting a _____ initial price in order to attract _____ and gain _____ _____. Eventually you will _____ prices.
low
attention
market share
increase
price penetration is usually used in
mass markets like the magazine market
elastic products
benefits of price penetration include
- gain interest and market share
drawback of price penetration is that
consumers may not be willing to pay the higher price later
ped is
the sensitivity of demand is compared to price
PED/YED below 1 is
inelastic
PED/YED above 1 is
elastic
PED is calculated
% change demand/% change price
price elastic means that change in
change in quantity demanded is greater than change in price
price inelastic means that change in
change is quantity demanded is less than change in price
why will the PED coefficient always be negative
inverse relationship
normal good has a —– YED between ….
positive
0 and 1
inferior good has a —— YED
negative
luxury goods have a —– coefficient
+1
