3. Marketing Flashcards

Question

What is ‘brand image’?

Answer 1

general impression of a product held by consumers

Answer 2

Consumers recognise their product more easily Product can be charged higher than less well-known brands Easier to launch new products into market

Answer 3

Protect product Give information about product To help consumers recognise product To keep product fresh

Answer 4

the cycle which every product goes through from introduction to withdrawal or eventual demise

Answer 5

marketing activities to extend the maturity stage of a product

Answer 6

Finding new markets for product Finding new uses for product Adapting product or packaging to improve its appeal to consumers Increased advertising and other promotional activities

Answer 7

price skimming penetration pricing competitive pricing cost-plus pricing promotional pricing

Answer 8

Setting a high price for a new product that is unique or very different from any other product on the market

Answer 9

ads: Profit earned is very high Helps to recover research and development costs disads: Laws may have been placed to stop this Backfire if competitors produce similar products at a lower price

Answer 10

Setting a low price to attract customers to buy a new product

Answer 11

ads: Attracts customers more quickly Can increase market share quickly disads: Cannot recover development costs quickly Possible loss of revenue due to lower prices

Answer 12

Setting a price similar to that of competitor’s products which are already established in the market

Answer 13

ads: Business can compete on other things e.g. service disads: Still need to find ways of competing in order to attract sales

Answer 14

Setting price by adding a fixed amount to the cost of making or buying the product

Answer 15

ads: Quick + easy to work out price Makes sure that price covers all costs disads: Price might be set higher than competitors/ more than customers are willing to pay, → reduces sales and profits

Answer 16

Setting price of a small number of products at below cost to attract customers into outlet in hope that they will buy other products priced to earn a profit

Answer 17

Measures by how much demand for a product changes when there is a change in price

Answer 18

The percentage change demand is less than the percentage change in price. Products that are not very responsive to changes in price

Answer 19

The percentage change demand is greater than the percentage change in price. Products that are more responsive to changes in price

Answer 20

a chain of businesses or intermediaries through which a good or service passes until it reaches the end consumer

Answer 21

ads: All of profit is earned by producer Producer controls all parts of the marketing mix Quickest method of getting product to the consumer disads: Consumers are not always able to see or try product before they buy it Delivery costs may be high if there are customers over a wide area All storage costs must be paid for by producer All promotional activities must be carried out and financed by producer

Answer 22

ads: - Consumers can see and try product before buying it - Cost of holding inventories of product Is paid by retailer - Retailer will pay for advertising + other promotional activities - Retailers are more conveniently located for consumers disads: Retailer takes some of the profit away from the producer Producers lose some control of marketing mix Producer must pay for delivery costs to retailers Retailers usually sell competitors’ products as well

Answer 23

ads: Wholesaler buys in bulk from the producer Wholesalers will advertise and promote the product to retailers Wholesalers pay for transport costs + storage costs disads: Another middleman so more profit is taken away from the producer Producer loses even more control of the marketing mix

Answer 24

ads: - The agent has specialist knowledge of the market disads: - Another middleman is added so even more profit is taken away from the producer

Answer 25

Marketing activities used to communicate with customers and potential customers to inform and persuade them to buy a business’s products

Answer 26

Attract attention of consumers by making them aware of the product Persuading consumers to buy to product Explaining how a product is better than competitors’ products Creating and developing brand image Encouraging wholesalers and retailers to stock the product Reassuring consumers

Answer 27

advertising sales promotion below-the-line promotion personal selling direct email sponsorship

Answer 28

Incentives used to encourage short-term increases in sales or repeat purchases

Answer 29

Promotion that is not paid for, uses incentives to encourage consumers to buy.

Answer 30

Promotion that is not paid for, uses incentives to encourage consumers to buy.

Answer 31

Sales staff communicate directly with consumer to achieve a sale and form a long-term relationship between firm + consumer

Answer 32

Also known as mail shots, printed materials which are sent directly to addresses of customers

Answer 33

Payment by a business to have its name or products associated with a particular event

Answer 34

the amount of money made available by a business for its marketing activities during a particular period of time

Answer 35

Use of internet and other technologies used by businesses to the market and sell goods and services to customers.

Answer 36

Increased market Reduced costs Better information

Answer 37

laws that control the activity of businesses

Answer 38

Protect consumers from faulty and dangerous goods Prevent businesses from using advertising to mislead consumers Protect consumers from being exploited in industries where there is little or no competition, also known as monopolising

Answer 39

Increase sales, revenue and profits Increases potential customers

Answer 40

Difference in language and culture Lack of market knowledge Economic differences Social differences Difference in legal controls to protect consumers

Answer 41

Joint venture

Answer 42

ads: Market and product knowledge can be shared to benefit of businesses Market potential for businesses in joint venture is increased Each business brings different expertise Reduces risks and cuts costs disads: Decision-making may be ineffective due to different business culture/ leadership styles Any mistakes made will reflect on all parties, may damage their reputations

Answer 43

affects whether or not consumer wants to go to shop, depends on how convenient it is to reach, how far away it is and how important it is to go there

Answer 44

affects whether or not consumer will be willing to pay for product, if it is too cheap they may think product is dodgy

Answer 45

affects whether or not consumer is aware of product and how many consumers are aware of product

Answer 46

affects whether or not consumer wants to buy product, if it is not unique enough or not useful then consumers may not want to buy it

Answer 47

Increased market Reduced costs Better information

Answer 48

To businesses: Increased market Reduced costs Better info To consumers: Convenience Wider choice Lower prices Better info

Answer 49

To businesses: Increase competition Unfamiliarity To consumers: Fraud Hacking No personal service Returning items

Answer 50

Marketing is identifying customer wants and satisying them profitability.

Answer 51

A customer is a person, business or other organisation which buys goods or services from a business.

Answer 52

The Sales team. The market research section. The promotion section. Distribution.

Answer 53

Transports the products to the market.

Answer 54

The sales of the product.

Answer 55

Finding out customers’ needs, market changes and the impact of competitors’ actions.

Answer 56

Organising the advertising for products.

Answer 57

Identifying customer needs. Satisfying customer needs. Maintaining customer loyalty. Building customer relationships to gain information about customers. Anticipate changes in customer needs.

Answer 58

Customer loyalty is when existing customers continually buy products from the same business.

Answer 59

Customer relationships is communicating with customers to encourage them to become loyal to the business and its products.

Answer 60

Market share is the percentage of total market sales held by one brand or business.

Answer 61

Raise customer awareness of a product or service of the business. Increase revenue and profitability. Maintain or improve the image of products or a business. Target a new market or market segment. Enter new markets at home or abroad. Develop new products or improve existing products. Increase or maintain market share.

Answer 62

A consumer buys goods or servoces for personal use - not to re-sell.

Answer 63

Consumer tastes and fashions change. Changes in technology. Changes in incomes. Ageing products.

Answer 64

Globalisation of markets has meant that products are increasingly sold all over the world. Transportation improvements have meant that it is easier and cheaper to transport products from one part of the world to another. Internet/E-Commerce has meant that consumers can search for products and buy from overseas markets.

Answer 65

Maintain good customer relationships. This has a key role in continuing to meet customer needs and it also provides market research information about customers. Keep improving its existing product. Bring out new products to keep customers’ interest. Helps the business to maintain, or even increase, its market share. Keep costs low to maintain competitiveness.

Answer 66

It can be measured by the total number of sales or by the value of the sales for that good or service by all suppliers of that particular good or service.

Answer 67

These can be either mass market or niche markets.

Answer 68

Mass market is where there is a very large number of sales of a product.

Answer 69

Total sales in these markets are very high. The business can benefit from economies of scale. Opportunities for growth of the business due to large potential sales. Risks can be spread.

Answer 70

High levels of competition between businesses selling similar products. High costs of advertising and promotion. Standardised products or services are produced and so many not meet the specific needs of all customers or potential customers.

Answer 71

A niche market is a small usually specialised, segment of a much larger market.

Answer 72

Niche markets are usually relatively small and therefore have limited sales potential. Often businesses in a niche market will specialise in just one product and this is risky because if the product is no longer in demand then the business will fail.

Answer 73

Small businesses may be able to sell successfully in niche markets as larger businesses may not have identified them but concentrated on the mass markets instead. The needs of consumers can be more closely focused on and therefore targeted, by businesses in a niche market.

Answer 74

Market segment is an identifiable sub-group of a whole market in which consumers have similar characteristics or preferences.

Answer 75

Make marketing expenditure cost-effective by producing a product which closely meets the needs of these customers. Enjoy higher sales and profits because of cost-effective marketing. Identify a market segment which is not having its needs fully met and therefore offers opportunities to increase sales.

Answer 76

By socio-economic group. By age. By region/location. By gender. By use of the product. By lifestyle.

Answer 77

Detailed analysis of the market and the size of each potential segment in terms of consumers and likely sales. Company image and brand image. Costs of entering each segment.

Answer 78

The marketing mix is a term that is used to describe all the activities which go into the marketing of a product or service. These activities are often summarised as the four P’s - product, price, place, and promotion.

Answer 79

Product. Price. Place. Promotion.

Answer 80

This applies to the good or service itself - its design, features and quality.

Answer 81

The price at which the product is sold to the customer is a key part of the marketing mix.

Answer 82

This refers to the channels of distribution that are selected.

Answer 83

This is how the product is advertised and promoted.

Answer 84

The product itself is probably the most important element in the marketing mix - without a product that meets customer needs, the rest of the marketing mix is unlikely to be able to achieve marketing success.

Answer 85

After deciding on the product and the appropriate market segment, the other parts of the marketing mix - price, place and promotion - will be determined.

Answer 86

Consumer goods. Consumer services. Producer goods. Producer services.

Answer 87

Goods which are bought by consumers for their own use.

Answer 88

There are services that are bought by consumers for their own use.

Answer 89

These are goods that are produced for either businesses to use.

Answer 90

These are services that are produced to help other businesses.

Answer 91

The product needs to satisfy consumer wants and needs and stimulate new wants. The product needs to be of the right quality. Not too expensive to produce. Design - performance, reliability and consistent quality. Has something very distinctive that makes it appear different.

Answer 92

Generate ideas (customer suggestions, employees, research and development department, sales department and competitors’ products. Select the best ideas for further research. Decide if the company will be able to sell enough for the product to be a success. Develop a prototype. Launch the product in one area to test the market. Fully launch the product.

Answer 93

Unique selling point means the business will be first in the market. Diversification for the business. Allows the business to expand into new markets. May allow the business to expand into existing markets.

Answer 94

Carrying out market research. Producing trail products. Lack of sales if the target market is wrong. Loss of company image if new product fails.

Answer 95

The brand name is the unique name of a product that distinguishes it from other brands.

Answer 96

Brand loyalty is when consumers keep buying the same brand again and again instead of choosing a competitor’s brand.

Answer 97

Brand image is an image or identity given to a product that gives it a personality of its own and distinguishes it from its competitors’ brands.

Answer 98

Branded products are normally sold as being of higher quality and this gives assurance of a standard quality that makes consumers confident in buying it.

Answer 99

Unique packaging. Unique name. Higher quality than unbranded products. Assured quality. Encourages brand loyalty to customers. Creates a brand image. Needs advertising to reinforce. Higher prices than unbranded products.

Answer 100

Packaging is the physical container or wrapping for a product. It is also used for promotion and selling appeal.

Answer 101

Eye-catching. Promotes the brand image. Carries information about the product. Easy to open the container and use the product. Easy to transport the product. Protects the product. Suitable for the product to fit in.

Answer 102

The product life cycle describes the stages a product will pass through from its introduction to its decline.

Answer 103

A product is DEVELOPED and no sales at this time. The product is INTRODUCED and sales grow slowly because consumers don’t know of the product. Sales start to GROW rapidly and profits start to be made as costs are covered. MATURITY as sales now increase slowly. Sales reach SATURATION and stabilize at their highest point. Sales of the product DECLINE as new products come along.

Answer 104

It is affected by the type of product e.g fashionable items will go out of fashion quickly whereas food products will not.

Answer 105

Introduce new variations of the original product e.g. children’s version. Sell into new markets e.g. export outside the country. Make small changes to the product’s design, color, or packaging. Use a new advertising campaign. Introduce a new or improved version of the old product. Sell through addition or different retail outlets.

Answer 106

A business will need to have products coming up into the growth phase to counteract those that are in decline.

Answer 107

A branded product is likely to be sold at a high price. Prices are likely to be higher than competitors in the growth phase. In saturation or maturity stage a business will likely lower prices as competitors would have released new products. Some substantial price discounts might be offered during the decline stage.

Answer 108

Spending on promotion will be higher at the introduction stage. Advertising would probably be reduced in later stages. Promotion spending might be increased again if the business decides to adopt an extension strategy.

Answer 109

An extension strategy is a way of keeping a product at the maturity stage of the life cycle and extending the cycle.

Answer 110

To try to break into a new market. To try to increase its market share. To try to increase its profits. To make sure all its costs are covered and target profit is earned.

Answer 111

Cost-plus pricing. Competitive pricing. Penetration pricing. Price skimming. Promotional pricing.

Answer 112

Cost-plus pricing is the cost of manufacturing the product plus a profit mark up.

Answer 113

The method is easy to apply. Different profit mark up could be used in different markets. Each product earns a profit for the business.

Answer 114

Competitive pricing is when the product is priced in line with or just below competitors’ prices to capture more of the market.

Answer 115

Sales are likely to be high as the price is at a realistic level. Avoids price competition, which can reduce profits for all businesses in the industry. Often used when it is difficult for consumers to tell the difference between the products of different businesses.

Answer 116

A higher quality product might need to be sold at a price above competitors to give higher quality. In order to decide what this price should be, detailed research would be needed to see what prices competitors are charging. If a business’s production costs are higher than those of competitors, then a competitive price could lead to losses.

Answer 117

Penetration pricing is when the price is set lower than the competitor’s prices in order to be able to enter a new market.

Answer 118

Often used for newly launched products to create an impact on customers. Market share should build up quickly. It should ensure that sales are made and the new product enters the market successfully.

Answer 119

The product is sold at a low price and therefore the profit per unit may be low. Customers might get used to low prices and reject the product if the business starts to raise the price after the product’s early success. Might not be appropriate for a branded product with a reputation for quality.

Answer 120

Price skimming is where a high price is set for a new product on the market.

Answer 121

Skimming can help to establish the product as being of good quality. High research and development costs can be rapidly recouped. If the product is unique, a high price will lead to profits being made before competitors launch similar products.

Answer 122

The high price may discourage some potential customers from buying it. The high price and high profitability may encourage more competitors enter the market.

Answer 123

Promotional pricing is when a product is sold at very low price for a short period of time.

Answer 124

It is useful for getting rid of unwanted inventory that will not sell. It can renew interest in a product if sales are falling.

Answer 125

The revenue will be lower because the price of each item will be reduced. It might lead to a price competition with competitors.

Answer 126

A very high price for a high-quality product may mean that high-income customers wish to purchase it as a status symbol.

Answer 127

If a price for a product is set just below a whole number this creates the impression of it being much cheaper.

Answer 128

Supermarkets may charge low prices for products purchased on a regular basis which will give customers the impression of being given good value for money.

Answer 129

Repeated sales are often made when the price reinforces consumers’ perceptions of the product - this may be its brand image when the price is set high.

Answer 130

Dynamic pricing is when businesses change product prices depending on the level of demand.

Answer 131

Often customers can be spilt into two or more groups and are then charged different prices for basically the same product or service because they had different abilities or willingness to pay these prices or price sensitvity.

Answer 132

Price elastic demand is where consumers are very sensitive to changes in price.

Answer 133

Price inelastic demand is where consumers are not sensitive to changes in price.

Answer 134

If there are many close substitutes for the product then, even if its price rises only a small percentage, consumers will respond by buying the substitute product.

Answer 135

If the price of a chocolate bar rose by 5 percent, some customers would buy alternative chocolate bars and sales might fall by 15 percent.

Answer 136

If products such as electricity where they are not really any close substitutes increase in price by 15 percent it will not cause much of a fall in sales.

Answer 137

Therefore, if the demand for the products of a business is elastic then it is not a good idea to raise prices unless there have been rising costs. If the price elasticity of demand is inelastic then businesses can increase revenue by increasing prices.

Answer 138

The product or service must be available where and when customers want to buy it. If the product is not available to customers in convenient locations and they have to go searching in different shops, then they may give up and buy a competitors product. OR Luxury high-priced chocolates would not sell well in a local shop where people are on low incomes.

Answer 139

A distribution channel is the method by which a product is passed from the place of production to the customer.

Answer 140

Producer → Consumer.

Answer 141

Producer → Retailer → Consumer.

Answer 142

Producer → Wholesaler → Retailer → Consumer.

Answer 143

Producer → Agent → Wholesaler → Retailer → Consumer.

Answer 144

Very simple as the manufacturers sell directly to consumers. Suitable for certain products e.g. food sold straight from the farm. Lower prices as it cuts out wholesalers/retailers. Products can be sold by mail order catalog or via the Internet.

Answer 145

Impractical as some consumers do not live near the factory. May not be suitable for products that cannot be sent by post. Expensive to send products by post or courier.

Answer 146

Car components are sold directly to the car producer.

Answer 147

Producer sells large quantities to retailers. Reduced distribution costs compared to selling directly to consumers.

Answer 148

No direct contact with customers. The price is higher than ‘direct selling’ as retailer has to cover costs and make a profit.

Answer 149

Wholesaler saves storage space and reduces storage costs. Small retailers can purchase fresh products in small quantities from wholesalers. Wholesalers may save on transport costs. Wholesale can advise small retailers. Wholesalers may give credit to retail customers.

Answer 150

May be more expensive for small shops to buy from a wholesaler. Wholesalers may have a limited range of products to sell. May take longer for fresh products to reach the shops. Wholesalers may be a long way from the small shops. The consumer price is often higher as both the wholesaler and retailer have to cover costs and make a profit.

Answer 151

Manufacturers may not know the best way to sell the product in other markets. Agents will be aware of local conditions and will select the best most effective place to sell.

Answer 152

The producer has less control over they way the product is sold.

Answer 153

Department stores. Chain stores. Discount stores. Superstores. Supermarkets. Independent retailers. Direct sales. Mail order. Internet/ e-commerce.

Answer 154

What type of product is it? Is it sold to other businesses or to consumers? Technical product? The product must be sold to someone with technical knowledge who how it works etc. Pruchased often? If it is bought every day, it will need to be sold in many retail outlets e.g. newspapers. Expensive product? Would a Rolex sell in a discount jewelry shop? Perishable product? If the food rots like fruit, it will need to be widely available. Location of customers? If customers are in the city don’t sell in only rural areas. If customers are located in another country, online trading would be necessary. Where do the competitors sell their products? Manufacturers will sell their products in the same outlets as competitors so that they can compete directly for customer.

Answer 155

Marketing is identifying the customers wants and satisfying them to make profit

Answer 156

When existing customers continually buy products from the same business

Answer 157

A small usually specialised segment of a much larger market

Answer 158

less competition from larger businesses as many large business are mass markets and aren’t specialised into one main product the needs of the consumer can be more closely focused easier to have a USP, can charge higher prices are usually relatively small and therefore have limited sales will specialise in one main product if demand falls for that product the business will lose sales quickly

Answer 159

Where there is a very large number of sales of a variety of products

Answer 160

Sales are high easier to benefit of economics of scales lower prices High levels of competition High costs of advertising and promotion Standish (basic) products may not meet the customers needs

Answer 161

Identifying and satisfying customers needs Building brand image Increasing customer base Maintaining customer loyalty

Answer 162

Change in incomes Change in age Change in tastes, likes and dislikes Maintain good customer relationships Keep improving its existing product Bringing out a new product to keep the customers interest Keeping costs low

Answer 163

Process of gathering, analysing and interpreting information about the market

Answer 164

Demand How much competition there is and what type Target market A suitable price on summers are willing to pay What features do the cus timers like/dislike the most

Answer 165

Research on people opinions and views

Answer 166

Collects factual information can be recorded down easily

Answer 167

The collection of original data by talking to potential customers

Answer 168

The use of information that has already been collected and is available for the use by others

Answer 169

Questionnaires Focus groups Interviews Online surveys

Answer 170

Research reports Government Newspapers article

Answer 171

Research is up to date and exactly what you need is as detailed as much as you want it to be

Answer 172

Time consuming Often costly Risk of survey bias

Answer 173

Fast and low cost

Answer 174

Provides broader results and is less detailed may not be up to date

Answer 175

Sample - the group of people who are selected to take part in a market research exercise Random sampling - people are selected at random often by a computer progam Quota sampling - when people are selected based on characteristics such as age gender or income

Answer 176

An organisation which carries out market research to find out the consumer wants before the product is formed

Answer 177

When the market is categorised into sub groups with consumers have characteristics or preferences

Answer 178

Can increase sales as business aim their product to consumers that are more likely to use and want that product

Answer 179

Gender Age Hobbies Income

Answer 180

The 4ps price promotion place and product

Answer 181

Price skimming Price penetration Cost plus pricing Competitive pricing

Answer 182

When you price higher initially and it lowers over time

Answer 183

When a business tries to increase market share by lowering its price

Answer 184

The cost of manufacturing the product plus a profit mark-up

Answer 185

When a product is priced in line or just below competitors’ prices (to try to capture more of the market)

Answer 186

Costs Product life cycle Degree of competition Quality of the product

Answer 187

Maximise revenue Covers fixed cost quickly Your product is seemed higher quality

Answer 188

Slower sales People may think its to high Competitiors may sell for cheaper

Answer 189

Increases market share Attracts customers Switches customers from competitors

Answer 190

Your product may seem low quality Short term profits Risky if customers have brand loyalty to your competitors Customers may get used to the low prices, harder to set higher prices in the future

Answer 191

Easily can cover costs Easy to work out and use

Answer 192

Ignores market conditions and customers wants Competitors may have lower prices

Answer 193

Have on edge over your competitors, increase market share

Answer 194

Ignores customers you might risk selling at loss Risky if customers have brand loyalty Pricing is not unique

Answer 195

When a product is sold at a low price for a short period of time to increase short term sales

Answer 196

When business change product prices depending on the level of demand

Answer 197

When consumers are very sensitive to changes in prices and the percentage change of products demanded/bought is greater than the percentage change in price eg: prices increase by 5% then sales decrease by 15% = falling revenue for the business This usually happens when the product is common on the market so consumers can easily buy a cheaper version of it (eg: chocolate bars) Therefore its better to decrease prices to increase revenue

Answer 198

Where consumers are not sensitive to changes in the prices The percentage change in quanity demanded/bought is less than the percentage change in price Prices increase by 15% then sales decrease by 5% = increase revenue for the business This usually happens to products that are not common on the market (have less competitors) so consumers cant really chose a cheap option and it may be just easier if they stick to buying the product Therefore its better to increase prices to increase revenue

Answer 199

Market driven approach responds to the needs and wants of the customers Product differentiation, USPS

Answer 200

Definition - describes the stages of a product will pass through Research and development - where the prototype is made and market research is carried out - no sales at this point Introduction - launched to the market, sales are slow (not many people know about it) - price skimming can be used as their is no competitors - informative advertisement happens at this stage - no profits as developmental costs need to be covered Growth - sales grow rapidly price go down a little as new competitors enter the market - the advertisement may change to more of a persuasive tone (to encourage brand loyalty) - profits are made Maturity - sales now increase slowly, so is profit, as competition and advertisement is at its highest Decline - product is now lost appeal, may be withdrawn from the market price and sales are at the bottom Remember : pricing and promotion lowers over time and extension strategies can be used to prolong the product from going into the decline stage

Answer 201

A strategies to try and prevent a product to go to the decline stage and keep it at the maturity stage to maximise profits

Answer 202

Update packaging Advertisement Adding more features Lowering the price

Answer 203

Low cost of production No need for advertisement No need to set up a distribution channel

Answer 204

Risky High costs

Answer 205

Brand loyalty - when consumers keep buying from the same brand again Brand image - an image or identity given to a product to distinguish from its a competitors brand

Answer 206

has to be suitable for the product to be put in has to give protection to the product has the allow the product to be used easily used for promotion, to appeal to the customer

Answer 207

The business will be the first into the market with a new product (gives a USP) Diversification for the business Allows the business to expand into new or original markets The costs of carrying out market research They cost of trial products Time consuming May fail, may lead to bad brand image

Answer 208

It is the assurance of a certain quality the business is known to have business like to have good brand image as consumers are more likely to buy from them as they know that the quality of the products is known to be good it may also encourage them to buy less/none from their competitors

Answer 209

Sales promotion Advertisement

Answer 210

Advertisement (above the line promotions) - Promoting your product, service long term eg: newspaper television adverts Sales promotion (below the line promotions) - short term promotions to reinforce the long term promotions this usually includes special offers and deals eg: coupons free gifts or product placement

Answer 211

Buy one get one free Offers customers extra value Encourages them to buy more Loss of profit increases cost and time

Answer 212

When you buy a product and get entered into a competition More likely for customers to buy a product Customers may view your competitions not special anymore

Answer 213

Putting branded products in a movie Easy to read a wider audience A larger market Can reach your target market Expensive Competitive brands cancel each other out

Answer 214

A printed sheet apparently containing infomation Easy to produce Cheap, great when starting out Discarded after its read, bad for the environment Easily dismissed by consumers

Answer 215

Adverts pop up when scrolling or watching Easy to target market Reaches a large market Easy to produce Expensive

Answer 216

Business donating money to an event/ team or in ideal to return of displaying or talking about your product Reaches many people and target market Expensive af

Answer 217

The amount of money made available by a business for its marketing activities during a particular period of time

Answer 218

Where the marketing activities aim to raise customers awareness of a product or a brand to generate more potential customers and sales

Answer 219

Refers the people who are more potentially to buy your product or service

Answer 220

Distribution channels - by which a product is passed from the place of production to the consumer Direct to consumer Manufacturer- wholesaler- retailer- customers Manufacturer- retailers- customer Manufacturer- agent- wholesaler- retailer- customers

Answer 221

An organisation where they buy products from manufacturers in large quantities and divide the inventory into smaller quantities for the retailers to buy

Answer 222

An organisation that sells directly to customers

Answer 223

Large network of buyers, easier to get your product in the public Saves storage costs for small retailers Wholesalers may give credit to retailers Wholesaler may pay for transportation costs Wholesaler can also say what is selling well and what isn’t to retailers and manufacturers

Answer 224

More expensive for the retailer than to buy directly from the manufacturer Takes longer for fresh produce to reach the shops (may not be as fresh) Consumer price will also be higher

Answer 225

Advantages Controls over which shops so they can react there target market Lower prices retailers are more likely to put lower prices because we don’t have the middle man Disadvantages - hard to contact retailers - Higher cost to deliver the goods to the retailers Products that are used on a daily basis are more likely to use this channel

Answer 226

Buying goods online with a mobile phone eg: app M= mobile phone, how to remember

Answer 227

Buying goods eletronically on the internet

Answer 228

Advantages Nobody takes the cut Can charge low prices Simple distribution channel Great to keep fresh produce fresh Disadvantages Don’t have a lot of recognition Heavy advertisement is needed Impractical for customers to go to the factories transportation costs will be high A product that is more technical will be the best use of this channel as the manufacturer can give more information about the product (aircraft engines) A product that is fresh

Answer 229

Reaches more customers (globally) Easy and cheap to set up Sell direct to consumer Can reach target markets

Answer 230

Increased competition Goods are hard to judge

Answer 231

An independent business that appointed to deal with the sales and distribution of a product Advantages - manufacturer may not know the best way to sell the product in other markets - agents will be aware of local conditions, therefore more effective places to sell Disadvantages - less control over the way the product is sold to the customer

Answer 232

A form of using the internet and social media to advertise your products by sharing and creating content

Answer 233

A set of arrangements, which allows buyers and sellers to communicate and trade in goods and services.

Answer 234

The proportion of sales in a total market that a business or product enjoys.

Answer 235

Identifying customer needs and satisfying them profitably.

Answer 236

The key elements in a firm’s marketing strategy, commonly known as the 4Ps (Product, Place, Price and Promotion).

Answer 237

Where a business focuses on the needs of consumers when developing products.

Answer 238

A set of plans designed to achieve marketing objectives.

Answer 239

Where a business focuses on the design and manufacture of the product itself rather than the needs of consumers.

Answer 240

Part of the whole market where a particular customer group has similar characteristics.

Answer 241

Division of people according to social class based on employment status.

Answer 242

Division of people according to social class based on employment status.

Answer 243

The elements of a firm’s marketing that are designed to meet the needs of customers. Often called the 4Ps, they include Product, Price, Promotion and Place.

Answer 244

Pricing strategies based on the prices charged by rivals.

Answer 245

Cost Plus or Cost-Based Pricing.

Answer 246

Setting a low price until rivals have gone out of business.

Answer 247

A product sold below cost of draw in customers.

Answer 248

Pricing strategies based upon the conditions in the market.

Answer 249

The percentage added to costs, which makes a profit for a business when setting the price.

Answer 250

Setting a low price to start with in order to get established in the market. Price may be raised once established.

Answer 251

Measures the responsiveness of demand to a change in price.

Answer 252

Where a price change will result in a significant change in demand.

Answer 253

Where a price change will result in a much smaller change in demand.

Answer 254

Setting a high price initially and then lowering it later.

Answer 255

Placing adverts using the media.

Answer 256

Communication between a business and its customers where messages are placed in the media to encourage the purchase of products.

Answer 257

Any promotion that does not involve using the media.

Answer 258

Making a financial contribution to an event in return for publicity.

Answer 259

An intermediary that brings together buyers and sellers.

Answer 260

Where businesses sell their products directly to consumers.

Answer 261

The route taken by a product from the producer to the customer.

Answer 262

A business, which buys goods from manufactures and wholesalers and sells them in small quantities to consumers.

Answer 263

A business, which buys goods from manufacturers and sells them in smaller quantities to retailers.

Answer 264

A 2 x 2 matrix, which describes products according to the market share they enjoy and whether the market has any potential for growth.

Answer 265

The name of a product which consumers see as being different from those of rivals.

Answer 266

Methods used to prolong the life of a product.

Answer 267

The level of sales at the different stages through which a product passes over time.

Answer 268

Groups of customers are asked for feedback about products over a set period.

Answer 269

The collection, presentation and analysis of information relating to the marketing and consumption of goods and services.

Answer 270

The gathering of ‘new’ information, which does not already exist.

Answer 271

A small group of people, which must represent a proportion of a total market when carrying out market research.

Answer 272

The collection of data that is already in existence.

Answer 273

Identifying and meeting the needs of customers.

Answer 274

The proportion (%) of total market sales held by one brand or business

Answer 275

The willingness of customers to continue to buy the same product from the same business.

Answer 276

Communication with customers to encourage them to become loval to the business and its products.

Answer 277

Where there is a large number of sales of a product.

Answer 278

A small specialised segment of a larne market

Answer 279

Identifiable sub-group of a whole market in which consumers have similar characteristics or preferences.

Answer 280

Gathering, analysing and interpreting information about a market.

Answer 281

Carrying out market research to find out consumer wants before developing and producing a product.

Answer 282

Business that focuses on the product itself, not the market for it.

Answer 283

Collection of original data - also known as field research.

Answer 284

Information that has already been collected but is available for use by others (desk research).

Answer 285

Group of people selected to respond to a research survey.

Answer 286

Everyone has an equal chance of being selected for the sample.

Answer 287

Sample is selected on a particular basis, e.g. people aged between 18 and 25 years.

Answer 288

A group, representative of the target market, which provides market research information - often during a discussion.

Answer 289

All the activities that go into marketing a good or service: product, price, promotion, place.

Answer 290

The special feature of a product that differentiates it from the products of competitors.

Answer 291

The unique name of a product that distinguishes it from other brands

Answer 292

The identity of a product that consumers can recognise and which gives it a ‘personality’ distinct from other products.

Answer 293

The physical container or wrapping used for a product

Answer 294

The stages the sales of a product pass through from introduction, growth, maturity to decline.

Answer 295

A way of keeping a product at the maturity stage of the life cycle and extending the cycle.

Answer 296

Unit cost of the product plus a profit mark-up.

Answer 297

The price is the same as or just below the price of competitors’ products to try to capture more of the market.

Answer 298

The price is set to match the consumers’ expectations and perceptions of the product

Answer 299

The price is set high for a new product on the market.

Answer 300

The price is set lower than competitors’ prices to enter a new market and gain market share.

Answer 301

The price is set at a low level for a short time period.

Answer 302

A measure of the responsiveness of demand following a price change

Answer 303

Demand changes by a greater proportion than price change

Answer 304

Demand changes by a smaller proportion than price change.

Answer 305

Marketing activities that air to raise customer awareness of a product or brand, generating sales and helping to create brand loyalty.

Answer 306

Paid-for communication with customers: Informative (giving information about the product); Persuasive - creating an image that increases customer desire for it

Answer 307

Incentives such as special offers or rewards to achieve a short-term increase in sales.

Answer 308

The consumer groups that are the potential buyers of a product.

Answer 309

The financial plan for the marketing of a product over a specific time period includes the amount to be spent on promotion.

Answer 310

and selling of goods and services using computers linked to the internet

Answer 311

The means by which a product is passed from the place of production to the customer.

Answer 312

Appointed to deal with the distribution of products - often in another country.

Answer 313

A plan with the appropriate marketing mix for a product to achieve a marketing objective.

Answer 314

Mass marketing is where there are a very large number of sales and typically an undifferentiated approach. These products are designed for people of all ages, races, religions, locations, lifestyles, etc. The advertising and promotion should appeal to most customers

Answer 315

The main features of mass markets are: Low prices Similar customer needs across the market Undifferentiated products A wide range of sales outlets / wide availability Extensive promotion High sales volume

Answer 316

Advantages A large amount of sales Economies of scale reduction in average costs per unit (we will learn more about this in 4.2) Risk can be spread out between different products Opportunities for growth Disadvantages High levels of competition High cost of advertising Standardised products - they are not tailored towards certain wants or needs

Answer 317

Tailoring product to a particular type of customer (small specialised market)

Answer 318

The main features of mass markets are: Premium prices Small sales volumes Highly differentiated products A high skills base – it is often difficult for large companies / competitors to easily find the skilled labour to product the product

Answer 319

Advantages Less competition from big companies. Can meet a customers specific needs. Can charge a higher price The added value can be very high for these products. Disadvantages Limited number of sales Most businesses in these markets specialise in one product If that product is no longer wanted, the business may fail. Few economies of scale (can’t benefit from the lower costs that arise from a larger operations/market)

Answer 320

Cost-plus pricing estimates the amount of products that will be produced, calculates the total cost of production, and then adds a mark-up for profit.

Answer 321

Pros: This method is very easy to apply. Easy to set price according to profit targets Cons: The business can very easily lose sales if the price is higher than the competition. Ignores customer expectations, geographic differences etc

Answer 322

for single-product businesses, who can easily calculate costs, e.g. banh mi seller

Answer 323

Total cost of production ——————————— + % of profit wanted = Total price The amount of products

Answer 324

Competitive pricing is putting prices very close to competitor’s prices. It can be the same or a little lower or higher.

Answer 325

Pros: - The consumers will make choices based on factors other than price such as: Location Quality Customer service - Price matches consumer expectations - Sales are likely to be high as the price is competitive cons: - The business will need to research competitor’s prices, which costs both time and money. No advantage gained in terms of price

Answer 326

when products are very similar to competitors, business compete on other factors, e.g. branding.

Answer 327

This method is used when a brand is trying to enter an existing market.

Answer 328

pros: - The business will set their price lower than the competitors to try and take some market share. This helps the business gain sales in a competitive market. cons: However, the product is sold at a low price and so the profit is usually low. It may be difficult to raise the price in future Low price may not fit with brand image

Answer 329

launching new products in competitive markets

Answer 330

This is used when a business has a new and unique product. The business will sell the product for a very high price at first and lower it over time.

Answer 331

pros: Using a high price can help establish a premium / high-quality image Helps the firm gain maximum profit early in the product life cycle cons: - However, this method might lose the business some customers because of the high price. - A price reduction early in the product life cycle may damage the brand image

Answer 332

High price for new and unique products, e.g. new smartphones, cameras etc

Answer 333

This method is used when the business wants to set a low price for a short time period. This helps the business get rid of stock that they are having a hard time selling.

Answer 334

pros: Can increase sales in the short-term Can increase brand awareness Can stop consumers buying competing products if they ‘stock up’ on a firm’s products cons: Reduces profit margins for the promotional period Customers may not purchase unless it is on offer/ promotion May harm brand image

Answer 335

low prices to sell unwanted stock / sales periods e.g. Black Friday, Christmas, New Year etc

Answer 336

Demand is the quantity of a product that consumers are willing and able to purchase at a given price in a time period. Typically the lower the price, then there should be more customers willing to buy it!

Answer 337

Price elasticity is a measure of the responsiveness of demand to a change in price. (measures the extent to which demand will change in response to a rise in prices)

Answer 338

elastic - Where % change in demand is greater than % change in price (A product that is sensitive to price changes has price elastic demand.) inelastic - Where % change in demand is less than % change in price (A product that is not sensitive to price changes has price inelastic demand.)

Answer 339

Availability of substitutes – the more choices consumers have, the greater the price sensitivity Buyers’ knowledge – the more they know about alternatives, prices etc, the more price sensitive they will be Switching costs – if someone is ‘locked in’ to a gym / mobile phone/broadband contract, it is usually expensive for them to switch, therefore they are less sensitive to changes in price. When customers can switch easily, they will be more sensitive to changes in price!

Answer 340

Businesses can analyse potential impacts of price changes, promotions etc They can also predict: - Impact of a change in price on total revenue – if a price rise causes demand to fall significantly, revenue will also fall. The firm should reconsider this price change! - Effect of a government tax change – can the business pass on all/some of this tax onto the consumers? - PED can be used to support discriminatory pricing – e.g. a firm can calculate price sensitives of weekend and weekday cinema goers and adjust prices accordingly.

Answer 341

Price elastic products (those with lots of competitors with similar products) It is NOT a good idea to raise the price (unless costs increase)

Answer 342

Price inelastic products (necessities/products with a strong brand image and loyal customers) Increased prices will lead to increased revenues (up to a point… if it increases a lot in price, consumers will switch eventually)

Answer 343

Unless they are very small, most businesses will have a marketing department The bigger the business, the more departments and sections there are likely to be.

Answer 344

Identify and satisfy consumer needs Keep customers loyal Gather information about customers Recognise how customer’s needs are changing

Answer 345

Identify customer wants and needs satisfying customers needs maintaining customer loyalty Building customer relationships

Answer 346

Responsible for the sales of the products. There are usually regional and export departments.

Answer 347

Responsible for: - Finding out the wants and needs of customers, market changes, the impact of competitor actions. - This information is used to make decisions on making new products, price, sales strategies,

Answer 348

They are responsible for advertising. They must inform customers about their products in the most effective way.

Answer 349

This department transports the product to the market.

Answer 350

What do they want? How much would they pay? Where and how do they want to buy the products? What after-sales services do they want?

Answer 351

The process of identifying and satisfying consumer needs are wants

Answer 352

Identifying customer needs Satisfying customer needs Maintaining customer loyalty: building customer relationships through a variety of methods that encourage customers to keep buying one firm’s products instead of their rivals’. For example, loyalty card schemes, discounts for continuous purchases, after-sales services, messages that inform past customers of new products and offers etc. Gain information on customers: by understanding why customers buy their products, a firm can develop and sell better products in the future Anticipate changes in customer needs: the business will need to keep looking for any changes in customer spending patterns and see if they can produce goods that customers want that are not currently available in the market.

Answer 353

through market research

Answer 354

by producing and selling goods and services

Answer 355

By building customer relationships through a variety of methods that encourage customers to keep buying one firm’s products instead of their rivals’. For example, loyalty card schemes, discounts for continuous purchases, after-sales services, messages that inform past customers of new products and offers etc.

Answer 356

by understanding why customers buy their products, a firm can develop and sell better products in the future

Answer 357

the business will need to keep looking for any changes in customer spending patterns and see if they can produce goods that customers want that are not currently available in the market.

Answer 358

the business will need to keep looking for any changes in customer spending patterns and see if they can produce goods that customers want that are not currently available in the market.

Answer 359

-Develop products that meet customer needs and wants - Promoting product to customers - increase sales - Target a new market

Answer 360

change in their tastes and preferences change in technology: as new technology becomes available, the old versions of products become outdated and people want more sophisticated features on products change in income: the higher the income, the more expensive goods consumers will buy and vice versa ageing population: in many countries, the proportion of older people is increasing and so demand for products for seniors are increasing (such as anti-ageing creams, medical assistance etc.)

Answer 361

Firms need to always know what their consumers want (and they will need to undertake lots of research and development to do so) in order to stay ahead of competitors and stay profitable. If they don’t produce and sell what customers want, they will buy competitors’ products and the firm will fail to survive.

Answer 362

Globalization: products are being sold in markets all over the world, so there are more competitors in the market Improvement in transportation infrastructures: better transport systems means that it is easier and cheaper to distribute and sell products everywhere Internet/E-Commerce: customers can now buy products over the internet form anywhere in the world, making the market more competitive

Answer 363

maintaining good customer relationships: by ensuring that customers keep buying from their business only, they can keep up their market share. By doing so, they can also get information about their spending patterns and respond to their wants and needs to increase market share keep improving its existing products, so that sales is maintained. introduce new products to keep customers coming back, and drive them away from competitors’ products keep costs low to maintain profitability: low costs means the firm can afford to charge low prices. And low prices generally means more demand and sales, and thus market share.

Answer 364

identifying and exploiting a small segment of a larger market by developing products to suit it. For example, Versace designs and Clique perfumes have niche markets- the rich, high-status consumer group.

Answer 365

Small firms can thrive in niche markets where large forms have not yet been established If there are no or very few competitors, firms can sell products at a high price and gain high profit margins because customers will be willing be willing to pay more for exclusive products Firms can focus on the needs of just one customer group, thereby giving them an advantage over large firms who only sell to the mass market

Answer 366

Lack of economies of scale (can’t benefit from the lower costs that arise from a larger operations/market) Risk of over-dependence on a single product or market: if the demand for the product falls, the firm won’t have a mass product they can fall back on Likely to attract competition if successful

Answer 367

selling the same product to the whole market with no attempt to target groups with in it. For example, the iPhone sold is the same everywhere, there are no variations in design over location or income.

Answer 368

Larger amount of sales when compared to a niche market Can benefit from economies of scale: a large volume of products are produced and so the average costs will be low when compared to a niche market Risks are spread, unlike in a niche market. If the product isn’t successful in one market, it’s fine as there are several other markets More chances for the business to grow since there is a large market. In niche markets, this is difficult as the product is only targeted towards a particular group.

Answer 369

They will have to face more competition Can’t charge a higher price than competition because they’re all selling similar products

Answer 370

A market segment is an identifiable sub-group of a larger market in which consumers have similar characteristics and preferences

Answer 371

Market segmentation is the process of dividing a market of potential customers into groups, or segments, based on different characteristics. For example, PepsiCo identified the health-conscious market segment and targeted/marketed the Diet Coke towards them.

Answer 372

socio-economic groups (income), age location gender lifestyle use of the product (home/ work/ leisure/ business) etc.

Answer 373

Makes marketing cost-effective, as it only targets a specific segment and meets their needs. The above leads to higher sales and profitability Increased opportunities to increase sales Marketing becomes more effective (e.g. advertising)

Answer 374

Business may only focus on one segment which is very risky (incase demands fall business wont make money) Difficulty in measuring and predicting consumer behaviour: humans don’t all behave in the same way all of the time. The way that they behave also changes over time! A good example is the “grey generation” (i.e. people aged over 50). The attitudes and lifestyles of the grey generation have changed dramatically in recent years.

Answer 375

such firms produce the product first and then tries to find a market for it. Their concentration is on the product – its quality and price. Firms producing electrical and digital goods such as refrigerators and computers are examples of product-oriented businesses.

Answer 376

such firms will conduct market research to see what consumers want and then produce goods and services to satisfy them. They will set a marketing budget and undertake the different methods of researching consumer tastes and spending patterns, as well as market conditions. Example, mobile phone markets.

Answer 377

the process of collecting, analysing and interpreting information about a product.

Answer 378

Importance: Firms need to conduct market research in order to ensure that they are producing goods and services that will sell successfully in the market and generate profits. Market research will answer a lot of the business’s questions prior to product development such as ‘will customers be willing to buy this product?’, ‘what is the biggest factor that influences customers’ buying preferences- price or quality?’, ‘what is the competition in the market like?’ and so on. If they don’t: If they don’t, they could lose a lot of money and fail to survive.

Answer 379

numerical e.g. what percentage of teenagers in the city have internet access

Answer 380

opinion/ judgement- why do more women buy the company’s product than men?

Answer 381

primary research secondary research

Answer 382

The collection of original data. It involves directly collecting information from existing or potential customers. First-hand data is collected by people who want to use the data (i.e. the firm).

Answer 383

Examples of primary market research methods include questionnaires, focus groups, interviews, observation, and online surveys and so on.

Answer 384

Sample is a subset of a population that is used to represent the entire group as a whole.

Answer 385

When doing research, it is often impractical to survey every member of a particular population because the number of people is simply too large. Selecting a sample is called sampling. A random sampling occurs when people are selected at random for research, while quota sampling is when people are selected on the basis of certain characteristics (age, gender, location etc.) for research.

Answer 386

Detailed information can be collected Customer’s opinions about the product can be obtained Online surveys will be cheaper and easier to collate and analyse Can be linked to prize draws and prize draw websites to encourage customers to fill out surveys

Answer 387

If questions are not clear or are misleading, then unreliable answers will be given Time-consuming and expensive to carry out research, collate and analyse them.

Answer 388

Interviewer is able to explain questions that the interviewee doesn’t understand and can also ask follow-up questions Can gather detailed responses and interpret body-language, allowing interviewer to come to accurate conclusions about the customer’s opinions.

Answer 389

The interviewer could lead and influence the interviewee to answer a certain way. For example, by rephrasing a question such as ‘Would you buy this product’ to ‘But, you would definitely buy this product, right?’ to which the customer in order to appear polite would say yes when in actuality they wouldn’t buy the product. Time-consuming and expensive to interview everyone in the sample

Answer 390

A group of people representative of the target market (a focus group) agree to provide information about a particular product or general spending patterns over time. They can also test the company’s products and give opinions on them.

Answer 391

They can provide detailed information about the consumer’s opinions

Answer 392

Time-consuming Expensive Opinions could be influenced by others in the group.

Answer 393

Inexpensive

Answer 394

Only gives basic figures. Does not tell the firm why consumer buys them.

Answer 395

The collection of information that has already been made available by others. Second-hand data about consumers and markets is collected from already published sources.

Answer 396

Sales department’s sales records, pricing data, customer records, sales reports Opinions of distributors and public relations officers Finance department Customer Services department

Answer 397

Government statistics: will have information about populations and age structures in the economy. Newspapers: articles about economic conditions and forecast spending patterns. Trade associations: if there is a trade association for a particular industry, it will have several reports on that industry’s markets. Market research agencies: these agencies carry out market research on behalf of the company and provide detailed reports. Internet: will have a wide range of articles about companies, government statistics, newspapers and blogs.

Answer 398

Departmental records Newspaper Internet Reports Statistics

Answer 399

How carefully the sample was drawn up, its size, the types of people selected etc. How questions were phrased in questionnaires and surveys Who carried out the research: secondary research is likely to be less reliable since it was drawn up by others for different purpose at an earlier time. Bias: newspaper articles are often biased and may leave out crucial information deliberately. Age of information: researched data shouldn’t be too outdated. Customer tastes, fashions, economic conditions, technology all move fast and the old data will be of no use now.

Answer 400

Tables Tally charts Graphs Charts

Answer 401

refers to the different elements involved in the marketing of a good or service- the 4 P’s- Product, Price, Promotion and Place.

Answer 402

Product is the good or service being produced and sold in the market. This includes all the features of the product as well as its final packaging.

Answer 403

Consumer goods – consumed by people (final users of the product) Consumer services – services for people Producer goods – goods produced for other businesses to use (e.g. machines, raw materials) Producer services – Services for other businesses (e.g. Corporate lawyers, business consultants)

Answer 404

It satisfies existing needs and wants of the customers It is able to stimulate new wants from the consumers Its design – performance, reliability, quality etc. should all be consistent with the product’s brand image It is distinctive from its competitors and stands out It is not too expensive to produce, and the price will be able to cover the costs

Answer 405

Satisfies consumer needs and wants Low production cost to make profit Quality of the product that is kept consistent with the product image Introduced to the market before competitors Unique

Answer 406

Generate ideas: the firm brainstorms new product concepts, using customer suggestions, competitors’ products, employees’ ideas, sales department data and the information provided by the research and development department Select the best ideas for further research: the firm decides which ideas to abandon and which to research further. If the product is too costly or may not sell well, it will be abandoned Decide if the firm will be able to sell enough units for the product to be a success: this research includes looking into forecast sales, size of market share, cost-benefit analysis etc. for each product idea, undertaken by the marketing department Develop a prototype: by making a prototype of the new product, the operations department can see how the product can be manufactured, any problems arising from it and how to fix them. Computer simulations are usually used to produce 3D prototypes on screen Test launch: the developed product is sold to one section of the market to see how well it sells, before producing more, and to identify what changes need to be made to increase sales. Today a lot of digital products like apps and software run beta versions, which is basically a market test Full launch of the product: the product is launched to the entire market

Answer 407

Can create a Unique Selling Point (USP) by developing a new innovative product for the first time in the market. This USP can be used to charge a high price for the product as well as be used in advertising. Charge higher prices for new products (price skimming as explained later) Increase potential sales, revenue and profit Helps spreads risks because having more products mean that even if one fails, the other will keep generating a profit for the company

Answer 408

Market research is expensive and time consuming Investment can be very expensive

Answer 409

Unique name of a product that makes it different from other brands

Answer 410

Brand image is an identity given to a product that differentiates it from competitors’ products.

Answer 411

Brand loyalty is the tendency of customers to keep buying the same brand continuously instead of switching over to competitors’ products.

Answer 412

Consumers recognise the firm’s product more easily when looking at similar products- helps differentiate the company’s product from another. Their product can be charged higher than less well-known brands – if there is an established high brand image, then it is easier to charge high prices because customers will buy it nonetheless. Easier to launch new products into the market if the brand image is already established. Apple is one such company- their brand image is so reputed that new products that they launch now become an immediate success.

Answer 413

It protects the product It provide information about the product (its ingredients, price, manufacturing and expiry dates etc.) To help consumers recognise the product (the brand name and logo on the packaging will help identify what product it is) It keeps the product fresh Easy for transportation Attractive and appealing to customers Consistent with the brand image of the product (e.g. High end product in a fancy packaging)

Answer 414

The product life cycle refers to the stages a product goes through from it’s introduction to it’s retirement in terms of sales. At these different stages, the product will need different marketing decisions/strategies in terms of the 4Ps.

Answer 415

Product is being developed, The business is spending money on research and development. There are no sales at this time.

Answer 416

Product is introduced onto the market, sales are starting to grow. Informative advertising is used to make consumers aware of the product.

Answer 417

Product: Only a basic model of the product is available. Price: Price skimming used for a unique product; market penetration otherwise Promotion: High advertising activity to boost customer awareness Place: The product may be offered for sale in specially selected outlets.

Answer 418

Product: Changes might be made to the product as a result of feedback from consumers Price: Pricing may be adjusted - lower prices to attract more sales or keep a high price to maintain brand image Promotion: Promotional activity still high to continue persuading customers Place: The product is more widely available, which helps to increase sales

Answer 419

Product: Extension strategies might be used to maintain sales Price: competitive pricing to maintain sales Promotion: Promotional activities are aimed at reminding the customers that the products are still available Place: the product is available for purchase through a wide distribution network Place: the product is available for purchase through a wide distribution network

Answer 420

Product: The product and packaging in not altered Price: The price might be reduced - promotional selling to maintain sales Promotion: Advertise the products at a lower price Place: The product is only available in profitable outlets.

Answer 421

marketing techniques used to extend the maturity stage of a product (to keep the product in the market)

Answer 422

Finding new markets for the product Finding new uses for the product Redesigning the product or the packaging to improve its appeal to consumers Increasing advertising and other promotional activities decrease the price of the product

Answer 423

A marketing strategy is a plan to combine the right combination of the four elements of the marketing mix for a product to achieve its marketing objectives. Marketing objectives could include maintaining market shares, increasing sales in a niche market, increasing sale of an existing product by using extension strategies etc.

Answer 424

Increase sales Increase market share Entering a new market

Answer 425

Misleading promotion – Falsely advertise a product. Weights & measures – Businesses can’t sell underweight goods (e.g. chocolate bar containing less chocolate than advertised) Sale of goods – Businesses can’t sell products that are faulty or doesn’t work like it is advertised

Answer 426

Low trade barriers – low trade barrier allows businesses to easily and profitably trade between countries. Home markets are saturated – demand for the product are no longer growing the country. Other countries developing – New markets opens up abroad as other countries become more developed.

Answer 427

High transport costs – increased costs as businesses have to pay to ship products abroad. Lack of knowledge – Company X may not know consumer habits in the country they are expanding to. (e.g. where consumers like to shop) Trade barriers – Countries may have trade barriers to protect local businesses, this may make importing products less profitable for the business. (import quotas) Exchange rate changes – Exchange rates can change which may mean cost of importing products may become more expensive.

Answer 428

Joint ventures – A joint venture can be created between a business in country X and another business in country Y, this means that business X can gain information from business Y. International franchising – An example of this is McDonald’s a US company can sell its franchise to a franchisor in China with local knowledge. Licensing – Business in country X can sell the license of their product to a business in country Y, This can avoid transport costs and trade barriers

Answer 429

Reduces risks and cuts costs Each business brings different expertise to the joint venture The market potential for all the businesses in the joint venture is increased Market and product knowledge can be shared to the benefit of the businesses

Answer 430

Any mistakes made will reflect on all parties in the joint venture, which may damage their reputations The decision-making process may be ineffective due to different business culture or different styles of leadership Franchise/License: the owner of a business (the franchisor) grants a licence to another person or business (the franchisee) to use their business idea – often in a specific geographical area. Fast food companies such as McDonald’s and Subway operate around the globe through lots of franchises in different countries.

Answer 431

Price is the amount of money producers are willing to sell or consumer are willing to buy the product for.

Answer 432

market skimming Penetration pricing Competitive pricing Cost plus pricing Loss leader pricing/promotional pricing

Answer 433

Setting a high price for a new product that is unique or very different from other products on the market.

Answer 434

Profit earned is very high Helps recover/compensate research and development costs

Answer 435

It may backfire if competitors produce similar products at a lower price

Answer 436

Setting a very low price to attract customers to buy a new product

Answer 437

Attracts customers more quickly Can increase market share quickly

Answer 438

Low revenue due to lower prices Cannot recover development costs quickly

Answer 439

Setting a price similar to that of competitors’ products which are already available in the market

Answer 440

Business can compete on other matters such as service and quality

Answer 441

Still need to find ways of competing to attract sales.

Answer 442

Setting price by adding a fixed amount to the cost of making the product

Answer 443

Quick and easy to work out the price Makes sure that the price covers all of the costs

Answer 444

Price might be set higher than competitors or more than customers are willing to pay, which reduces sales and profits

Answer 445

Setting the price of a few products at below cost to attract customers into the shop in the hope that they will buy other products as well

Answer 446

Helps to sell off unwanted stock before it becomes out of date A good way of increasing short term sales and market share

Answer 447

Revenue on each item is lower so profits may also be lower

Answer 448

If it’s new, then price skimming or penetration pricing will be most suitable. If it’s an existing product, competitive pricing or promotional pricing will be appropriate.

Answer 449

If yes, then price skimming will be beneficial, otherwise competitive or promotional pricing.

Answer 450

If yes, competitive pricing will need to be used.

Answer 451

If yes, price skimming will be highly successful.

Answer 452

If there are high costs, costs plus pricing will be needed to cover the costs. If costs are low, market penetration and promotional pricing will be appropriate.

Answer 453

If the business objective is to quickly gain a market share and customer base, then penetration pricing could be used. If the objective is to simply maintain sales, competitive pricing will be appropriate.

Answer 454

The PED of a product refers to the responsiveness of the quantity demanded for it to changes in its price. PED (of a product) = % change in quantity demanded / % change in price

Answer 455

When the PED is >1, that is there is a higher % change in demand in response to a change in price, the PED is said to be elastic.

Answer 456

When the PED is <1, that is there is a lower % change in demand in response to a change in price, the PED is said to be inelastic.

Answer 457

If the product is found to have an elastic demand, the producer can lower prices to increase profitability. The law of demand states that a fall in price increases the demand. And since it is an elastic product (change in demand is higher than change in price), the demand of the product will increase highly. The producers get more profit.

Answer 458

If the product is found to have an inelastic demand, the producer can raise prices to increase profitability. Since quantity demanded wouldn’t fall much as it is inelastic, the high prices will make way for higher revenue and thus higher profits.

Answer 459

Place refers to how the product is distributed from the producer to the final consumer. There are different distribution channels that a product can be sold through.

Answer 460

manufacturer to consumer manufacturer to retailer to consumer manufacturer to wholesaler to retailer to consumer manufacturer to agent to wholesaler to retailer to consumer

Answer 461

direct (manufacturer to consumer) Modern (manufacturer to retailer to consumer) Traditional (manufacturer to wholesaler to retailer to consumer) Agent (manufacturer to agent to wholesaler to retailer to consumer)

Answer 462

The product is sold to the consumer straight from the manufacturer. A good example is a factory outlet where products directly arrive at their own shop from the factory and are sold to customers.

Answer 463

– All of the profit is earned by the producer – The producer controls all parts of the marketing mix – Quickest method of getting the product to the consumer

Answer 464

– Delivery costs may be high if there are customers over a wide area – All storage costs must be paid for by the producer – All promotional activities must be carried out and financed by the producer

Answer 465

The manufacturer will sell its products to a retailer (who will have stocks of products from other manufacturers as well) who will then sell them to customers who visit the shop. For example, brands like Sony, Canon and Panasonic sell their products to various retailers.

Answer 466

– The cost of holding inventories of the product is paid by the retailer – The retailer will pay for advertising and other promotional activities – Retailers are more conveniently located for consumers

Answer 467

– The retailer takes some of the profit away from the producer – The producer loses some control of the marketing mix – The producer must pay for delivery of products to the retailers – Retailers usually sell competitors’ products as well

Answer 468

The manufacturer will sell large volumes of its products to a wholesaler (wholesalers will have stocks from different manufacturers). Retailer will buy small quantities of the product from the wholesaler and sell it to the consumers. One good example is the distribution of medicinal drugs.

Answer 469

– Wholesalers will advertise and promote the product to retailers – Wholesalers pay for transport and storage costs

Answer 470

– Another middleman is added so more profit is taken away from the producer – The producer loses even more control of the marketing mix

Answer 471

The manufacturer will sell their products to an agent who has specialized information about the market and will know the best wholesalers to sell them to. This is common when firms are exporting their products to a foreign country. They will need a knowledgeable agent to take care of the products’ distribution in another country

Answer 472

– The agent has specialised knowledge of the market

Answer 473

– Another middleman is added so even more profit is taken away from the producer

Answer 474

* The type of product it is: if it’s sold to producers of other goods, distribution would either be direct (specialist machinery) or wholesaler (nuts, bolts, screws etc.). * The technicality of the product: as lots of technical information needs to be passed to the customer, direct selling is usually preferred. * How often the product is purchased: if the product is bought on a daily basis, it should be sold through retail stores that customers can easily access. * The price of the product: if the products is an expensive, luxury good, it would only be sold through a few specialist, high-end outlets For example, luxury watches and jewellery. * The durability of the product: if it’s an easily perishable product like fruits, it will need to be sold through a wide amount of retailers to be sold quickly. * Location of customers: the products should be easily accessible by its customers. If customers are located over the world, e-commerce will be required * Where competitors sell their product: in order to directly compete with competitors, the products need to be sold where competitors are selling too.

Answer 475

* The type of product it is: if it’s sold to producers of other goods, distribution would either be direct (specialist machinery) or wholesaler (nuts, bolts, screws etc.). * The technicality of the product: as lots of technical information needs to be passed to the customer, direct selling is usually preferred. * How often the product is purchased: if the product is bought on a daily basis, it should be sold through retail stores that customers can easily access. * The price of the product: if the products is an expensive, luxury good, it would only be sold through a few specialist, high-end outlets For example, luxury watches and jewellery. * The durability of the product: if it’s an easily perishable product like fruits, it will need to be sold through a wide amount of retailers to be sold quickly. * Location of customers: the products should be easily accessible by its customers. If customers are located over the world, e-commerce will be required * Where competitors sell their product: in order to directly compete with competitors, the products need to be sold where competitors are selling too.

Answer 476

A market is where businesses sell, and consumers buy.

Answer 477

shops or town centre markets, markets are increasingly moving online with the growth of sales websites and e-commerce.

Answer 478

consumers, it also refers to potential consumers, those interested in buying a product or service and who have the financial ability to do so. (In other words enough money)

Answer 479

A target market is when a business aims goods or services at a particular group of consumers.

Answer 480

The customer base is the group of customers who repeatedly buy the goods or services of a business.

Answer 481

Marketing is the process a business undertakes to promote the buying or selling of a product or service and includes advertising, selling, and delivering products to consumers or other businesses.

Answer 482

Marketing to other businesses is often referred to as B2B (business to business) so could be a delivery company hired by amazon to send orders to customers, or a company which designs websites for businesses.

Answer 483

Marketing aims to identify customer needs, and satisfy those needs. What marketing aims to do is take a want, and through marketing and promotional activity, convert it into a need. If we use the example of Apple, through market research they find their potential customers desire for an improved camera. They design the Iphone 11 with a high performance camera and promote it so consumers feel they need to buy or upgrade, so their needs are satisfied.

Answer 484

Through market research.

Answer 485

It is when current customers come back for repeat purchases, additional services or upgrades,

Answer 486

For example, online shopping businesses like Amazon and Alibaba offer free returns of products. A returned product may be an additional cost for the business in the short term, but in the long term, it builds customer loyalty as the consumer will have the confidence to buy in the future if they know they can easily return items.

Answer 487

if the price rises less consumers will buy a product. Consumers will choose the cheaper price if products or services are very similar. population structure of a country slowly impact spending patterns. e.g. Many Western European countries and Japan have an ageing population. There is a lower number of new births and older people are living longer so the average age is rising. This has resulted in more older and less younger consumers. consumers’ incomes may change

Answer 488

Businesses must adapt to competitors by either matching prices or differentiating their products so consumers are willing to spend more. E.g. When start up Low Cost airlines like Ryanair and Air Asia launched their services, it had a huge impact on consumer spending on air travel.

Answer 489

Businesses may adapt by targeting the “grey dollar”, for example a holiday company offering cruises to the over 50’s.

Answer 490

In a recession or economic hardship consumers will have less income so business will have to adapt by providing more price conscious budget options. If consumer incomes rise businesses can offer more non-essential luxury products.

Answer 491

There are changes in consumer tastes over time. For example the movement to more environmentally friendly products like electric cars or “fake meat”. changes in promotional spending can influence consumer behaviour.

Answer 492

Toyota has stopped producing diesel cars and are now focused on developing new models of electric cars which can meet customer needs for convenience and an affordable price. Tik Tok reportedly spent $3 million a day in the United States to establish its customer base among younger people. Nike’s worldwide marketing spend in 2019 was $3.75 billion. By establishing a strong brand image consumers are willing to spend up to $400 on a pair of running shoes.

Answer 493

by passing laws making it easier for new startup companies to open or stopping businesses that are too dominant. In 2019 the European Union fined Google 1.5 billion euros for using it’s position unfairly to stop competitors.

Answer 494

Technology means business can find new customers who may not have been able to access their products or services before. E -commerce has meant bricks and mortar stores now have to compete against online retailers like Amazon in addition to their traditional competitors. Private tutors who visit students in their area now have to compete against online tutors who can offer their services to students all over the world using video conferencing software.

Answer 495

Increasing efficiency to offer lower prices. Established airlines have had to change their business model to offer lower cost flights with no extras to compete against low cost airlines. Product development to meet changing customer need and trends, so car makers like Ford and Toyota now spend billions to develop electric cars, due to the change in demand for environmentally friendly products. Business can increase promotion to make a stronger brand image and strengthen customer loyalty. Finally businesses can find new markets. In many developed countries consumer tastes are more health-conscious and have moved away from smoking, so tobacco companies have focused on selling their products in the developing world.

Answer 496

Niche marketing is promoting and selling a product or service to a very small part of a market.

Answer 497

For example, a niche producer of natural fluoride free toothpaste will target just a very small part of the whole market.

Answer 498

Niche marketing allows a “way in” for smaller firms in markets dominated by large operators offering specialised products to a specific target market. By “finding their niche” businesses can find areas of the market where there is little or no competition.

Answer 499

Benefits: As niche products are more likely to be exclusive, they can market niche products as high status luxury products, and can charge higher prices earning higher profit margins. A newly discovered niche will have less competition Limitations: vulnerable to changes in market conditions, if incomes drop, like in a recession, niche focused businesses can quickly lose their customer base. higher margins, the production costs of niche products are higher as economies of scale can’t be achieved. Competitors can enter lucrative niche markets

Answer 500

Benefits: Higher demand so higher sales mass market products by definition have high sales so there is greater potential for high profits. Lower unit costs of production possible due to economies of scale Limitations: More competition so prices must be kept lower Not all markets are large enough to support mass produced products

Answer 501

market segmentation aims to split the total market into different sections and then target a different type of product at each section.

Answer 502

Markets can be segmented by geography. This could be by different regions of the world, different countries or different regions within a country. Business can segment by gender Income Segmentation by age lifestyle

Answer 503

McDonald’s segments by country. In India McDonald’s burgers are made from chicken due to religious beliefs. In Japan they sell Teriyaki Burgers and in Mexico more quanti chili sauce is used. Thereby McDonalds can adapt a mass market product to local tastes.

Answer 504

male and female watches.

Answer 505

basic watches for a low budget consumer, watches with more features but still reasonably priced for middle income consumers and high status, exclusive watches like Rolex for high income consumers.

Answer 506

colourful kids watches, digital watches targeted at younger people and more traditional style watches for older people.

Answer 507

runners watches measuring heart rate, divers watches measuring depth and surfers watches measuring wave count, wave speed and distance surfed.

Answer 508

allows firms to focus on the needs of different sets of consumers. market specifically to each segment, so they don’t waste resources Splitting the market into segments may reveal a group willing to pay high prices, allowing higher profits. It allows business to target groups who may not already have their needs fulfilled. Small firms that may not have the resources to mass market a product or service, can focus on one segment or niche.

Answer 509

The key is to be able to justify your choice as the best most suitable method of segmenting a market to satisfy most consumer needs. Income can be the most straightforward “one size fits all” method of segmentation, that you can apply to nearly all businesses. Start with your standard product and price point, then you can add a budget “super saver” option and an exclusive, luxury option.

Answer 510

* All potential consumers who have an interest in buying a product and the money to do so = Target Market * Customers who make repeated purchases of a specific product or brand = Customer loyalty * the process a business undertakes to promote the buying or selling of a product or service and includes advertising = Marketing * is where businesses sell, and consumers buy = Market

Answer 511

* Harry Potter book series aimed at children = Age * A camera designed for extreme sports = Lifestyle * Budget brand cans of beans = Income * Offering halal meat in Muslim countries = Geography

Answer 512

* Customer change to vegan and vegetarian lifestyle = Develop "fake meat" products * New low cost competitors = Increasing efficiency to offer lower prices * Products no longer popular in traditional markets = Find new markets * An aging population = Design products for older customers

Answer 513

Yes because a loyalty means marketing through word of mouth customers might recommend the product to others No because customer taste changes So it may be easier to find new customers than change existing products Attracting new customers is more expensive than keeping existing customers so maintaining loyalty may be more important, but business still have to always look for new customers to increase market share

Answer 514

The more a business knows about potential consumers, competitors and the market the greater the chance of success. Market research allows a company to explore a target market and get opinions and other feedback from consumers about their interest in the product or service.

Answer 515

Crucially market research can guide a business to the products and strategy that is most likely to be successful. Without accurate market research data, businesses will have to base their decisions on instincts or guesswork, a high risk strategy.

Answer 516

Market orientation is an approach that focuses on identifying the needs and wants of consumers and creating products that satisfy them. Essentially, finding out what customers want and giving it to them.

Answer 517

Product orientation

Answer 518

The opposite is a product oriented or a “take it or leave it” approach, where a business focuses on making the best product, but does not consider consumer needs.

Answer 519

If a business finds out what consumers want, then builds a product or service to fulfill those needs, it is much more likely to have higher sales. A market-oriented approach, therefore, lowers the risk of failure when launching or updating a product or service.

Answer 520

identifying customer needs. The more accurately a business understands customer needs the more likely they are to make a product or service to satisfy those needs and generate higher sales. consider the current and future size of the market crucial in making decisions over developing a new product or choosing between a number of different options for offering new services. How strong are the competition? Business can learn from the strengths of competitors when designing their own products, but also improve on competitor’s products offering by improving in areas where competitors are weak. What marketing strategy to use? Business must figure out the most effective way of connecting with consumers, pricing their products and persuading them to buy, based on current market research. analysing consumers views predict future trends and changes in consumer spending.

Answer 521

Primary research is research you do yourself (or hire someone to do for you.) It involves going directly to a source, usually customers and potential customers in your target market, asking questions and gathering information.

Answer 522

the information is specifically for the individual business needs. Primary research is tailor made for the specific business’s needs. the information is up to date. Markets can quickly change, so research carried out a number of years ago may be inaccurate for a product launch today.

Answer 523

the information is specifically for the individual business needs. Primary research is tailor made for the specific business’s needs. the information is up to date. Markets can quickly change, so research carried out a number of years ago may be inaccurate for a product launch today.

Answer 524

very high cost for the business as he business has to design and carry out the market research itself, it takes time to complete the primary research process from design, to collection of results to analysing the results. requires skills in market research to ensure the correct information is collected from a representative sample of the target market. If the wrong questions are asked, or if the sample is incorrect it can mean the research is inaccurate and unhelpful in guiding marketing decisions. A business can hire market research experts to conduct the primary research but this will further add to costs.

Answer 525

very high cost for the business as he business has to design and carry out the market research itself, it takes time to complete the primary research process from design, to collection of results to analysing the results. requires skills in market research to ensure the correct information is collected from a representative sample of the target market. If the wrong questions are asked, or if the sample is incorrect it can mean the research is inaccurate and unhelpful in guiding marketing decisions. A business can hire market research experts to conduct the primary research but this will further add to costs.

Answer 526

Consumer surveys Interviews Surveys questionnaires

Answer 527

Consumer surveys ask the target market set questions about the product or trends and can be conducted face to face in an interview, or in written form either online or by post.

Answer 528

Interviews may be conducted by stopping potential customers in the street. It allows the market research participants to ask questions if they don’t understand a question. As there is human contact people are more likely to complete the research compared to a written survey.

Answer 529

interviewers must be employed to conduct the research so interviews have a much higher cost than online surveys or written questionnaires.

Answer 530

Surveys can also be completed online and are now highly popular, as online surveys are quick and easy to set up, and can be sent to the target market easily by email or social media.

Answer 531

as there are so many surveys and requests for feedback sent to consumers these days, they are also easy for consumers to ignore, so response rate may be low and it is difficult to get accurate data.

Answer 532

An incentive to complete a survey like a money off voucher or entry into a competition can help increase the number of potential consumers willing to complete a survey.

Answer 533

Surveys or questionnaires can also be sent by post. This may allow participation from consumers who can’t access online surveys.

Answer 534

However, this increases cost as the business will have to pay for postage, and it is also more inconvenient for respondents as they have to spend time posting the survey. Therefore, the response rate may be low.

Answer 535

there is a free exchange of ideas about the product, customer needs and preferences. Therefore, a business can find high quality information about what typical customers think about a product.

Answer 536

focus groups are costly and time consuming to organise. As the information is qualitative and comes from opinions and experiences, it is difficult to analyse statistics, patterns or represent the data from focus groups on charts.

Answer 537

Secondary market research uses information that already exists and has been collected by someone else for another reason. This could be finding information online, from government records, newspapers or business reports.

Answer 538

+ Lower cost than primary research and less time consuming - Information may be out of date - Research is not focused on a business individual needs

Answer 539

1. Governments publish official statistics about their countries for example the average income, population of different regions, average age and income. This may be useful to businesses launching a product in another country. 2. Market research companies produce reports 3. Businesses will also have internal records of customer sales. This may guide a future marketing campaign.

Answer 540

sampling, taking a small number of potential customers and finding out their preferences. If the target market is 10,000 consumers, a business may survey 1% of their target market or 100 consumers. Generally speaking, the larger the sample, the more accurate the results. However, the sample must be representative, so the age, gender and income of the target market is reflected by the sample.

Answer 541

The accuracy of secondary research is often limited as it can often be out of date, or not specifically related to the business.

Answer 542

Certainly businesses need to be careful when making business decisions based on market research. Market research can be a very useful guide, but conducting market research and following the results is no guarantee of future success. However, it is a much higher risk to ignore customer preferences and base decisions on instinct rather than hard data about market trends and consumer needs. Generally, the more a business invests in market research the more accurate the results. However, there is also an opportunity cost of investing capital on market research rather than other areas, like product development. Therefore, businesses need to find a balance between accuracy and cost to keep the market research budget low. Cost effective market research methods like online surveys can be less time consuming and lower cost.

Answer 543

Charts can bring information to life. It is much easier to see trends represented visually rather than figures on a computer screen.

Answer 544

Pie charts are useful for showing the breakdown of market share.

Answer 545

Line graphs are useful for showing market trends and performance against competitors.

Answer 546

Bar charts are an effective way of comparing results visually, but it’s difficult to see precise results so it is more useful for seeing an overview of performance.

Answer 547

With all market research results, it’s important to think about the accuracy of the results. Was the sample size large enough to get representative results? What further information would be useful to know before making a decision?

Answer 548

research and development

Answer 549

Product development is the creation of products with new or different characteristics that offer new or additional benefits to the customer. Product development may involve changing an existing product, or creating a new product that satisfies a newly discovered customer want or market niche.

Answer 550

market research?

Answer 551

as it aims to satisfy customer needs. Just like market research it is hugely costly. For new technology companies like Tesla, product development costs are huge, 1.3 billion in 2019. Tesla has been successful in developing new electric cars. However, there is no guarantee that after spending on product development that the product will make it to the market. after product launch there is no guarantee that consumers will buy a newly developed product; hundreds of millions of dollars of product development costs can never be repaid.

Answer 552

in fast moving or high technology sectors it’s absolutely essential to keep developing new products. If Apple decided after producing their first Iphone, not develop the product further they would have lost all of their market share and been overtaken by competitors a long time ago. However, by staying ahead of competitors, by developing new features like the dual lense camera Apple can charge higher prices and make higher margins. This competitive advantage also means higher sales. Furthermore, if businesses develop products for new markets this means higher sales and profits. Developing new products means spreading risk. Apple originally focused on selling desktop computers, but has continually moved into new markets so if sales in one market fall, they can generate revenue from their other products. Finally, product development leads to business growth which means business can benefit from further economies of scale

Answer 553

Brands are easily recognisable by consumers, and if trusted with a valued brand image, customers will choose their favourite brand over many competitors, leading to higher sales. Customers are also willing to pay higher prices for trusted brands, so higher profits. (apple chart insert) Finally, brands increase the success of new products. If consumers are loyal to a brand they can be more easily persuaded to buy new products.

Answer 554

it keeps the product clean, safe, fresh and in perfect condition. packaging also plays an important role in brand image and promotion. Well designed, stylish packaging made with quality materials reinforces brand image and “unboxing” has become part of the customer experience. packaging is a way of differentiating the product from the competition and promoting to the consumer.

Answer 555

Product Life Cycle follows the pattern of sales of a product over time, from product launch until it is finally withdrawn from the market. There are four stages in the product life cycle, with different marketing activities associated with every stage. You need to know the stages of the life cycle, extension strategies and know how each stage of the product life cycle affects the marketing mix. Product life cycle is plotted on a chart with the time on the x axis and sales on the y axis.

Answer 556

The introduction stage is when the product is launched. Sales are low and promotional spending will be high to inform consumers about the product. Therefore, the product is usually making a loss during this period.

Answer 557

Growth is when sales are increasing rapidly. The product will pass the break even point and start to earn profit.

Answer 558

Maturity is when sales are at their highest and the product is most profitable. The increase in sales slows before sales gradually start to decrease.

Answer 559

Decline is when sales begin to fall before the product is removed from the market when it becomes unprofitable.

Answer 560

The length of the product life cycle will vary massively from product to product. Clothes have a very short product life cycle, and this has been accelerated by the rise of “fast fashion” where consumers may only wear an item of clothing a few times and shop very often. Therefore, the maturity stage where sales peak is reached quickly, but may only last a few weeks before sales decline and as the latest fashions appear. Aircraft have a very long product life cycle as the product development costs are so high and the life of aircraft can be very long. The Boeing 747 was launched in 1970 and is still being produced today. Developing new products is a high cost for the business, so businesses aim to lengthen the maturity stage, so they can keep products profitable for as long as possible and delay decline and withdrawal.

Answer 561

Extension strategies prolong the life of a product, and a number of different methods can be used.

Answer 562

Increased advertising and promotion, to try and find new consumers or remind current users about the product. Improved or Updated Packaging, can give an existing product a new, fresh appeal and increase sales. Find new markets for the product in other countries. Find new uses for the product, ropes designed for tying up ships are often now used in cross fit.

Answer 563

Each stage of the product life cycle will require a different balance between the different parts of the marketing mix. Promotional spending will be very high during the product launch and supports increased sales through growth. Promotional spending will be decreased during maturity and decline, except for short periods when an extension strategy may be employed. In price competitive markets businesses may launch with a low penetration price, and move to competitive pricing in the growth and maturity stages before price discounting in the decline stage. With a unique product, a high price or skimming strategy may be employed during launch. The price can be reduced if competitors introduce similar products in the growth and maturity stages, before further discounting prices in the decline stage. For place, businesses might focus distribution on specific areas where sales will be higher during introduction and decline phases, but aim to distribute the product widely during growth and maturity. Products may have additional features added to extend the life of the product during the extension phase. For example a car may be fitted with parking sensors or leather seats.

Answer 564

supply and demand. If there is low supply and high demand this will push prices up

Answer 565

Cost-plus is the cost of producing the product plus an extra percentage for profit

Answer 566

+ Ensures all costs are included in selling price - Insensitive to competitors prices

Answer 567

Competitor pricing does the reverse, and means prices are set close to competitors.

Answer 568

+ Reduces loss of customers due to price - Can mean all costs are not covered by selling price

Answer 569

Penetration pricing offers new products at a lower price in order to gain market share and develop a customer base.

Answer 570

+ Allows rapid growth of customer base when launching a product - Low prices mean low revenues

Answer 571

Market skimming does the opposite of penetration pricing by charging very high prices at product launch.

Answer 572

+ High profit margins during launch phase - Lower sales volumes

Answer 573

Promotional pricing is when a seller reduces the price of a product or service to attract customers. They can also use offers like “BOGOF” buy one get one free, or offer 50% extra free.

Answer 574

+ Increase sales in the short term - Lower profit margins

Answer 575

If price rises for a product, we would expect less consumers to buy and demand to decrease, likewise, if a product decreases in price demand will rise. Price elasticity takes this one step further and looks at how big an impact on demand, a change in price will have. Some products have price inelastic demand. No matter how much the price goes up it won’t have a big impact on demand. Petrol is a good example, if the price rises, it won’t lead to a big decrease in demand as consumers still need to fuel their cars to get around. Cigarettes are highly addictive, so if prices rise smokers will continue to buy cigarettes. Other products have price elastic demand. A small change in price leads to a big change in demand. For example a small change in price for beef may lead to a big change in demand as consumers switch to chicken or pork.

Answer 576

Asking questions like this can help find the correct strategy Is the product new? A launch strategy like price penetration may be suitable. If the product is unique, skimming may be suitable. How competitive is the market? Does the business need to match competitors’ prices? Does the product have a strong brand image? Customers pay more for trusted and proven brands like Apple. What product costs have to be paid? Business must charge a price to cover costs and make a profit over the life cycle of the product. What are the firm’s objectives? Penetration or promotional pricing is suitable for increasing market share, however, market skimming may be more suitable for maximising profits. Finally, what is the price elasticity of demand?

Answer 577

farmers markets, or companies with a website who sell directly to their customers.

Answer 578

producer keeps all of the final selling price, and has complete control over the customer experience of the product, without retailers or wholesalers getting involved. Because of the direct contact with customers, producers can get valuable feedback from customers, and it ensures the products are fresh

Answer 579

producers have responsibility for all storage, promotion and delivery to all customers. This could be incredibly complex without the assistance of a wholesaler and retailers, and highly costly

Answer 580

try the product before purchasing, for example with clothes to check the fit or if the style suits.

Answer 581

It allows consumers the chance to try on or physically see the products, and increases convenience for customers. Some of the costs of storing inventory and promotion is passed on to the retailer.

Answer 582

the producer must pay the delivery costs to the retailer, and the producer will lose complete control of the marketing mix. The retailer will take some of the potential profit and the producer’s goods will have to compete against other brands.

Answer 583

A wholesaler connects producers with smaller retailers.

Answer 584

the producer can sell its goods to a larger market. Furthermore, the wholesaler will collect from the producer so it means low delivery costs.

Answer 585

the wholesaler will demand a competitive price and will take another chunk of the profit from the producer. The producer is now two intermediaries away from the final consumer, so even more control is lost over the marketing mix. Finally, an agent may get involved, often if a producer is selling in foreign markets. The agent will organise a suitable wholesaler or retailers in return for a slice of the profit.

Answer 586

uitable channels vary with the product. There are three questions to consider to guide your choice. What kind of product is it? Fresh food will require a short distribution channel, and may require chilled storage. Services like music streaming may be easily sold from a producers website. Cost? Can a business afford the capital investment to store and deliver their own products, which will mean keeping more of the profits. Or do they involve retailers and wholesalers in the distribution channel? Nature of the Market? In a geographically dispersed market producers may work with wholesalers and retailers to reach all potential customers. Control? Nike and Adidas have recently stopped all sales through small independent retailers, as they feel the sales experience at smaller stores is damaging to their brand image, and they want to maximise sales and profits in their own stores.

Answer 587

communication with the customer

Answer 588

Inform consumers or wholesalers or retailers about new products or existing products Explain how their products are better than competitors Persuade consumers to buy Develop and reinforce brand image, and Responding to criticism, as a result of faulty products or accusations of unethical behaviour.

Answer 589

Advertising informs or promotes the product to the target audience through different media such as TV, radio, online, social media and magazines to encourage them to buy.

Answer 590

Advertising is used to inform consumers about the price, product features and where they can buy. Persuasive advertising entices consumers to buy the product.

Answer 591

Sales Promotion is using different short-term tactics to increase sales, like competitions, offers like buy one get one free, or money off coupons. Sales promotion can also include point of sales displays in stores and loyalty schemes like a coffee card, for example, buy ten coffees and get one free.

Answer 592

Personal Selling is suitable for high value products that may need expert guidance from the sales person, like a car or a house. After building a strong relationship with the sales person the consumer feels confidence to buy.

Answer 593

The disadvantage is the high cost of the sales person who normally receives a percentage of the selling price (called commission).

Answer 594

Sponsorship is when a business pays to have it’s name linked to an event or sporting team. It can be highly beneficial if the company’s target market has a strong link with the sport or event.

Answer 595

Cost effectiveness in promotion is achieving the business marketing objectives successfully with the lowest cost. Businesses must consider all possible options for promotion, and estimate how much each will cost to achieve their objectives.

Answer 596

for businesses e-commerce means they can reach a potentially huge market as they can sell products and services worldwide. Costs are reduced. Information, by using complex algorithms and software, businesses can see what visitors were searching for on their website and offer suggestions of related products.

Answer 597

massive increase in target market there is also a giant increase in competition it takes time to build customer relationships and a positive reputation, and customers may not be willing to risk online transactions with firms they are unfamiliar with

Answer 598

ffers the convenience of shopping from home rather than travelling to retailers. There is a greater choice as they aren’t restricted to shops in their local area and prices are often lower online due to increased competition. Consumers can also access much more information about products and do not rely on a knowledgeable sales person who may be too busy to answer their questions in store.

Answer 599

some consumers prefer the personal touch, and free communication of talking to an employee in person. Many consumers enjoy the experience of shopping, being able to look at the actual products rather than a photo, and try on clothes. Although many online retailers offer free returns this is inconvenient for customers as they have to pack up and arrange collection of the unwanted products. There is also the risk of online fraud, where payment is taken but no products are delivered. Consumers may be concerned about their personal information or bank account details being stolen in online transactions.

Answer 600

Through Instagram, Facebook and YouTube, businesses can precisely select their target market on age, gender and direct specific messages to different groups. Businesses can easily update their customers on new products, sales promotions and further develop brand image. Businesses can use influencers to make a direct connection with their followers about a product. Kylie Jenner charges $1.2 million per post which reaches her 172 million followers worldwide.

Answer 601

However, managing social media marketing requires time and expertise. Businesses face increased competition to capture social media users attention and get noticed.