3) Marketing Management (Clutterbuck)

Question 1

Define marketing objectives

Answer 1

the process of identifying, anticipating (predicting), and satisfying customer needs profitably.

Question 2

Name the 5 main marketing objectives

Answer 2

1.) sales Volume and sales Value
2.) market Size
3.) market and sales Growth %
4.) market Share %
5.) brand Loyalty

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Question 3

What is the value of setting marketing objectives?

Answer 3

 Ensure functional activities consistent with corporate objectives
 Provide a focus for marketing decision-making and effort
 Provide incentives for marketing team and a measure of success/failure
 Establish priorities for marketing resources and effort

Question 4

What is market research?

Answer 4

The systematic and objective collation, analysis, and evaluation of information that is intended to assist in the marketing process.

Question 5

What are the advantages of market research?

Answer 5

• Gives an idea of consumer needs/wants and what they are willing to pay to create a product which maximises sales.
• Avoid expensive products which are unlikely to succeed - opportunity cost
• Intelligence on competitors
• Create market forecasts and see trends
• Customer feedback refines the offering and builds loyalty.

Question 6

What are the disadvantages of market research?

Answer 6

• Time consuming
• Meaningful primary research requires expertise which can be expensive
• Sampling may not be representative of whole market.
• Secondary research can be outdated.

Question 7

What is primary market research?

Answer 7

Involves the collection of first-hand data that did not exist before and therefore it is original data. It fills gaps that secondary research cannot.

Question 8

Give some examples of primary market research?

Answer 8

• Interviews (face-to-face, telephone, email)
• Questionnaires/surveys
• Focus groups
• Observation

Question 9

What are the advantages of primary research?

Answer 9

• Directly focused on research objectives = fit for purpose.
• Tends to be more up-to-date than secondary research.
• Provides more detailed insights, particularly into customer views.

Question 10

What are the disadvantages of primary research?

Answer 10

• Time-consuming and often costly to obtain.
• Risk of survey bias – research samples may not be representative of the population.

Question 11

What is secondary market research?

Answer 11

Research that has already been undertaken by another organisation and therefore already exists.

Question 12

Name some sources of secondary research

Answer 12

• Government publications
• Newspapers
• Magazines
• Company records
• Competitors
• Market research organisation e.g MINTEL
• Loyalty cards
• Internet

Question 13

Advantages of secondary research

Answer 13

• Already gathered so may be quicker to collect
• May be gathered on a much larger scale than possible for an individual firm
• In some cases it can be very cheap or free to access

Question 14

Disadvantages of secondary research

Answer 14

• Information may be outdated, therefore inaccurate
• The data may be biased and it is hard to know if the information was collected is accurate
• The data was not gathered for the specific purpose the firm needs or is not relevant to the original context
• In some cases it can be costly (e.g. marketing firm reports)

Question 15

What is it essential that marketing research includes?

Answer 15

Both qualitative and quantitative data.

Question 16

How is sales growth calculated?

Answer 16

[(current net sales - prior sales period net sales) / prior sales period net sales] x 100

Question 17

How is market growth calculated?

Answer 17

Use your fucking brain

Question 18

How is market share calculated in both value and volume?

Answer 18

click 5 or take a long hard look at yourself

Question 19

What is market mapping?

Answer 19

A framework for analysing market positioning is a ‘market (positioning) map’. A market map illustrates the range of positions that a product can take in a market based on two dimensions that are important to customers.

Question 20

Give a few examples for the axes of a market map.

Answer 20

• Low price v high price
• Basic quality v high quality
• Low volume v high volume
• Necessity v luxury
• Light v heavy
• Simple v complex
• Unhealthy v healthy
• Low-tech v hi-tech

Question 21

Advantages of market mapping

Answer 21

• Help spot gaps in the market
• Useful for analysing competitors – where are their products positioned?
• Encourages use of market research

Question 22

Disadvantages of market mapping

Answer 22

• Just because there is a gap in the market doesn’t mean there is demand for the product, so it’s not a guarantee of success
• How reliable is the market research that maps the position of existing products based on the chosen dimensions?

Question 23

What is sampling?

Answer 23

Involves gathering data from respondents whose views or behaviours are representative of the target market as a whole.

Question 24

What is random sampling?

Answer 24

Each member of target population has an equal chance of being chosen.

Question 25

What is stratified sampling

Answer 25

Based on obtaining a sample that reflects the types of consumers from whom the business wished to gain information (e.g. gender, age).

Question 26

What is quota sampling?

Answer 26

The aim is to obtain a sample that is “representative” of the overall population.

The population is divided (“stratified”) by the most important variables such as income, age and location. The required quota sample is then drawn from each stratum.

Question 27

Advantages of sampling

Answer 27

• Provides a good indication
• Helps avoid expensive errors
• Can be used flexibly
• Reliable information
• Helps firms learn about the market
  quickly .

Question 28

Disadvantages of sampling

Answer 28

• May be unrepresentative
• Bias
• Difficult to locate suitable correspondents
• May not have an accurate profile of customers
• Can be out of date due to time taken to collate

Question 29

What is a confidence interval?

Answer 29

They measure the probability that a population parameter will fall between two set values. Used to assess the reliability of sampled data when forecasting figures (e.g. sales levels). Usually 95% or 99%, or e.g. +/- 1%

Question 30

What factors influence the confidence interval of a piece of data?

Answer 30

• Sampling size – the larger the sample, the better the reflection of opinion of the whole population, so confidence intervals fall.
• % of sampling choosing a particular answer – if high or low % of sample expresses the same opinion, then confidence intervals are likely to be low.

Question 31

What is extrapolation?

Answer 31

It is like an educated guess or a hypothesis
- When you make an extrapolation, you take facts and observations about a present or known situation and use them to make a prediction about what might eventually happen.
- Usually, predicting future trends based on existing data, like finishing a graph.

Question 32

Disadvantages of extrapolation?

Answer 32

• Less reliable if fluctuations occur (e.g. weather is unpredictable)
• Assumes past changes will continue
• Ignores qualitative factors (e.g. changes in tastes and fashion)
• Ignores the product life cycle

Question 33

What is positive correlation?

Answer 33

When two sets of data are related in some way. An increase in one leads to an increase in another. e.g. as incomes increases, the demand for luxury products also increases.

Question 34

What is negative correlation?

Answer 34

• Negative correlations also means the two sets of data are related but as x increases, y decreases. e.g aas incomes increases, the demand for inferior goods decreases.

Question 35

What is important to remember when looking at the relationship between two factors?

Answer 35

Whether one factor is causing the change in the other factor, or whether the data given shows a coincidence, and the factors are unrelated.

Question 36

value of tech in gath…

Question 40

What is the scientific marketing process?

Answer 40

1. Set corporate objectives
2. Set manufacturing objectives
3. Gather data
4. Analyse data
5. Form hypothesis
6. Test options
7. Control and review

Question 41

What is price elasticity of demand?

Answer 41

Measures the responsiveness of quantity demanded for a product to a change in price.

Question 42

How is PED calculated

Answer 42

percentage change in quantity demanded / percentage change in price

• Duck over pond

Question 43

What do firms use PED to predict?

Answer 43

• The effect of a change in price on the total revenue and expenditure on a product.

Question 44

What do the values of PED mean?

Answer 44

• If PED = 0 demand is said to be perfectly inelastic – this means that demand does not change at all when the price changes (the demand curve will be drawn as vertical)
• If PED is between 0 and 1 (i.e. the percentage change in demand from A to B is smaller than the percentage change in price), then demand is inelastic
• If PED = 1 (i.e. the percentage change in demand is exactly the same as the percentage change in price), then demand is said to unit elastic. A 15% rise in price would lead to a 15% contraction in demand leaving total spending by the same at each price level
• If PED > 1 then demand responds more than proportionately to a change in price i.e. demand is elastic. For example a 20% increase in the price of a good might lead to a 30% drop in demand. The price elasticity of demand for this price change is –1.5

Question 45

What factors affect the PED of a product?

Answer 45

• The number of close substitutes for a good – the more close substitutes in the market, the more elastic is demand because consumers can easily switch their demand if the price of one product changes relative to others.
• The cost of switching between products – there may be significant costs involved in switching between products. In this case, demand tends to be relatively inelastic (e.g. mobile phone service providers may insist on 12 or 18-month contracts being taken out)
• The degree of necessity or whether the good is a luxury – goods and services deemed by consumers to be necessities tend to have an inelastic demand whereas luxuries tend to have a more elastic demand.
• The % of a consumer’s income allocated to spending on the good – goods and services that take up a high proportion of a household’s income will tend to have a more elastic demand than products where large price changes makes little or no difference to someone’s ability to purchase the product.
• Whether the good is subject to habitual or addictive consumption – when this occurs, the consumer becomes less sensitive to the price of the good in question because their default position is to buy the same products at regular intervals.

Question 46

What is income elasticity of demand?

Answer 46

Measures the relationship between a change in quantity demanded for good ‘X’ and a change in real income.

Question 47

Give some examples of when marketing analysis is needed

Answer 47

• Forecasting sales for new products or investments into new markets
• Gathering evidence to support a finance raising exercise
• To support a new marketing strategy or significant changes to the marketing objectives
• To help make decisions in relation to significant organisational or operational change

Question 47

How is YED measured?

Answer 47

percentage change in demand / percentage change in income

Question 48

What is an inferior good?

Answer 48

A good which has a negative income elasticity of demand, meaning demand falls as incomes rise.
e.g. own brand food, council houses, public transport e.t.c.

Question 49

What are the limitations of using elasticity to make marketing decisions?

Answer 49

• Consumer tastes change
• Difficult to calculate
• It assumes things stay equal
• Consumers may not be able to predict their own spending so primary research could be unreliable
• Consumers may react differently to what’s expected
• Image of product may have changes
• Technology
• Competitors entering or leaving the market.

Question 49

What is a normal good?

Answer 49

Goods which have an income elasticity of demand between 0 and 1. Demand is rising but less than proportionately to income.

e.g. necessities like bread e.t.c

Question 50

What is a luxury good?

Answer 50

A good with an income elasticity of demand of more than 1, so demand rises more than proportionately to a change in income.

e.g. holidays, jewellery e.t.c.

Question 51

What is hunch-based decision making

Answer 51

One based on a gut-feeling rather than a forensic approach to the situation.

Question 52

What are the advantages of hunch-based decision making?

Answer 52

Fast - gain first mover advantage, brand loyalty, barriers to entry, market share

Cheap - lower fixed costs, higher profits.

Question 53

What are the disadvantages of hunch-based decision making?

Answer 53

High risk - lose money, opportunity cost

Misunderstand consumers creating poor marketing mix and failing to attract consumers.

Question 54

What is digital technology?

Answer 54

Electronic tools that store and process data

Question 55

What is digital marketing?

Answer 55

Communicating a firm’s products/services via the cloud and electronic devices.

Question 56

What are the potential rewards to firms of increased use of digital marketing?

Answer 56

1.) Target more specific groups due to data collection techniques, therefore stimulating demand more effectively.
2.) Can make more informed decisions with reduced risk e.g. product development.
3.) Relatively cheap fixed costs due to viral marketing
4.) Can reach a mass audience - lower average cost of marketing per unit.
5.) Speeding up decisions (can see patterns more easily through improved data collection) - first mover advantage = increased brand loyalty = oligopolistic market = barriers to entry = growth in market share.

Question 57

What is viral marketing?

Answer 57

Viral marketing is a marketing strategy that involves producing captivating content that raises awareness of a product or brand by creating word-of-mouth. This has become prevalent in the age of social media.

Question 58

What are the potential risks to firms of the increased use of digital marketing?

Answer 58

1.) Reputational damage - e.g. influencer scandals.
2.) Poorly designed clickbait can alienate and lose trust of customers.
3.) Ethics of data sharing - breach of GDPR = fines + lack of trust = fall in customers.

Question 59

What is relationship marketing?

Answer 59

Where firms use the storage capacity of modern IT to form relationships with their customers. The firms can ‘mine’ this data to offer meaningful, attractive offers to increase brand loyalty and generate more revenue.