3 PED/YED; ATL/BTL Marketing; Segmentation, Targeting & Positioning Flashcards
Definition of PED
the correlation between price and the quantity demanded
PED Equation
% change in quantity demanded / % change in price (usually a negative figure)
PED > 1
price elastic
demand change > price change
demand is responsive to price changes
PED < 1
price inelastic
demand change < price change
demand is unresponsive to price changes
PED = 1
unitary elasticity
demand changes same as price changes
Why is PED usually a negative figure?
when the price increases, demand falls
when price falls, demand increases
opposite and negative relationship
Examples of price inelastic goods
necessities
heavily branded products
USP (added value/differentiated)
patent or trademarked goods
expensive/difficult to switch supplier
Examples of price elastic goods
luxury goods
more (cheaper) substitutes available
over time - convenience
YED Definition
the responsiveness of demand to a change in income
YED Equation
% change in quantity demanded / % change in customer income
Why is YED usually a positive figure?
when income rises, people buy more and revenue rises
YED > 1
income elastic
demand changes by a more significant amount with an income change - consumers buy more luxury goods as they become wealthier
demand is responsive to a change in income
YED < 1
income inelastic
demand is unresponsive to change in income
usually includes necessities such as basic foods/fuel
YED = 1
unitary income elasticity
consumer income change is cancelled out by demand changes
What type of goods have a negative YED?
Inferior goods - increase in income decreases quantity demanded
What type of goods have a positive YED?
Normal (& luxury) goods - increase in income increases quantity demanded.
What is Above the Line Marketing? (ATL)
focuses on mass media promotion to reach a large audience to establish brand image
widespread media campaigns, largely untargeted and undertaken at a general level
Examples of ATL Promotion?
TV ads
Radio ads
Newspapers
Magazines
Billboards
Print Media
Benefits of ATL Promotion
brand awareness
attention grabbing
large reach
increase visibility
Drawbacks of ATL Promotion
cost of production
bad placement
small airtime
cannot calculate effectiveness (ROI)
less engaging
limited in personalisation
less control over message
slower response time
Below The Line Marketing (BTL) Definition
directed to reach a small, targeted audience of potential customers
Examples of BTL Promotion
direct mail
event management
door to door
sampling
sponsorships
brochures
trade shows and exhibitions
email marketing
targeted search enginer marketing
in store promotion (store fronts etc)
Benefits of BTL
customer loyalty
focuses on segments - meeting needs
can give insight into audience
measurable success (ROI)
often lower costs
more frequent communication
faster response time
Drawbacks of BTL
smaller audience
can still be costly for small business
most people ignore junk mail
risk of spending money without results
Market Segmentation
occurs when similar customer needs are grouped within a market (MARKET SEGMENTS)
Demographic Segmentation
characteristics of the people in the target population
age, gender, stage of life
Geographic Segmentation
based on the area that customers live in
tyre tread (snow/ice); types of houses; types of food
Behavioural Segmentation
the benefits that customers want from the product & brand loyalty
how/when/why/what they buy
Income Segmentation
luxury vs inferior goods
income categories
Process of Market Segmentation
segmentation -> targeting -> positioning
Value of Segmentation
more cost-effective focused advertisements
focused marketing budgets
understamds customers to try and satisfy varying needs
Targeting
occurs when a business decides which segments to operate in and market to a specific segment
ability to be competitive & gain sales
sufficient demand & potential profit to justify investment
Positioning
establishing customers’ perception of how a product is distinguished from its competitors - brand loyalty/brand identity
Niche Marketing Definition
targeting a specific segment of a larger market
Niche Marketing Advantages
few competitors - minimising competition
can charge higher prices
easier/more cost effective marketing
better customer loyalty
less money spent on advertising
Niche Marketing Disadvantages
sales are limited in comparison to mass marketing
more suseptible / vunerable to external market changes
limited growth
new competitors having large impact on customers
Mass Marketing Defintion
aims to provide products that meets the needs of most people
Mass Marketing Advantages
potential for high sales and growth
cost-effective, wide range of customers
builds brand identity
increased sales volumes
easier logistics - larger warehouses
Mass Marketing Disadvantages
advertising may not appeal to everyone
standardised goods, less able to personalise
does respond to all geographical areas
high competition
assumption all customer needs are the same
Factors influencing a company’s positioning
price
product
image
services
