3.1 - Marketing Flashcards
What is marketing?
Identifying and understanding customer needs and wants.
What are the 3 main stages in marketing?
- Market research to identify and understand customers.
- Developing and testing products and services
- Communicating products and services to customers
What are 4 reasons as to why businesses need to think about marketing?
- To reduce risk of product failure
- Understand their customers
- Communicate products effectively to encourage customers to buy them
- Keep up to date with market trends so products can continue to meet customer needs.
What is a market segment?
A group of customers in a market that have similar characteristics and needs.
What are 3 benefits of market segmentation?
- Carries out market research
- Tailors products to customer needs
- Target promotions at specific groups
What is market research?
Gathering information about customers, competitors and market trends by collecting PRIMARY and SECONDARY data.
What is the 1st stage of market research?
PLANNING and DESIGNING the research
What are 3 potential questions a business may ask in the 1st stage of market research?
- What are the aims of the research?
- What research techniques could you use?
- Should you use primary or secondary, qualitative or quantitative data?
What is the 2nd stage of market research?
DOING the research
What are 2 potential questions a business may ask in the 2nd stage of market research?
- What are the time limits for the research?
2. What is the sample size?
What is the 3rd stage of market research?
ANALYSING the information
What are 2 potential questions a business may ask in the 3rd stage of market research?
- Did people make the same or different comments?
2. Could you identify any trends in the data?
After analysing the information from market research, what 4 questions might a business ask?
- Is the marketing mix appropriate?
- Does a product or service need to be changed to make it more appropriate for customer’s needs?
- Should a product or service be left unchanged?
- Is it time to withdraw or replace a product or service?
When reading about market research in a case study, what 4 questions could you ask yourself?
- Was the right type of research used?
- How accurate is the research likely to be?
- Is the research representative of the target market?
- Is there any important information that the market research does not tell us?
What is a PRODUCT TRIAL?
When customers buy a product for the first time to assess whether or not they want to buy it again.
What is REPEAT PURCHASE (links with customer loyalty)?
Where customers buy a product more than once and keep coming back.
What are 5 methods of Product Trial?
- Low trial prices
- Advertising
- Free samples
- Viral marketing, e.g Facebook
What are 4 methods that could encourage repeat purchase and customer loyalty?
- Special promotions
- Reminder adverts
- Product innovations
- Customer loyalty schemes (loyalty cards)
What are the 4 phases of the Product Life Cycle (PLC) ?
- Introduction
- Growth
- Maturity
- Decline
What happens in the Introduction stage of a PLC? What potential question might a business ask in this situation?
The product is launched/released onto the market.
What promotion methods will encourage customers to trial a product?
What happens in the Growth stage of a PLC?
What potential question might a business ask in this situation?
If the launch is successful, sales increase sharply and the product may make a profit for the first time.
How can we meet demand and maintain customer service?
What happens in the Maturity stage of a PLC? What potential question might a business ask in this situation?
Sales growth slows down, but repeat customers continue to buy and customers become loyal. The market becomes saturated as rivals bring out competing products.
How can we encourage repeat purchase and build customer loyalty?
What happens in the Decline stage of a PLC? What potential question might a business ask in this situation?
Eventually the product is outdated and there is a big fall in sales, leading to withdrawal.
How can we innovate products to compete with competitors? Should we use extension strategies?
How can businesses increase the life of a product? What does this involve?
EXTENSION STRATEGIES - these involve slightly changing the product so that it has a fresh appeal to the target market or appeals to a new market segment.
What is the PRODUCT MIX / PRODUCT PORTFOLIO?
Where businesses sell a range of products.
What 4 things can a product portfolio analysis help a business to make decisions about?
- What products to launch and when
- When to withdraw a product
- What products are doing well or badly now and in future
- How to increase sales
What is the Net Cash Flow like in the INTRODUCTION PHASE?
Net cash flow is NEGATIVE due to increased funding on the product.
What is the Net Cash Flow like in the GROWTH phase?
Net cash flow is POSITIVE but small
What is the Net Cash flow like in the MATURITY stage?
Cash flow is likely to be positive
What is the Net Cash flow like in the DECLINE stage?
Businesses will start to experience cash-flow issues.
What is The Boston Matrix?
A product portfolio analysis tool used to plan the development of products.
What is plotted on the x-axis on the Boston Matrix?
What is plotted on the y-axis on the Boston Matrix?
x-axis: Market Share
y-axis: Market Growth
What does the ‘Dog’ represent in The Boston Matrix?
Few prospects, low market share and low market growth. It is often ‘killed’.
Should the business continue to sell it if it is profitable and it funds other products?
What does the Cash Cow represent in The Boston Matrix?
High market share but low market growth.
An established and profitable product that can support others.
What does a Star represent in The Boston Matrix?
Very successful product - high market share, high market growth.
But growth has to be funded to keep up with demand and cash flow may be a problem.
What does a Question / Problem Child represent in The Boston Matrix?
Presents a problem - should the business invest to increase sales?
Why do business prefer to invest Stars into becoming Cash Cows?
To prevent cash flow problems and excessive funding.
What are two decisions a business can make with a Problem Child?
Either PRIORITISE or DIVEST.
What is a BRAND?
A named product which consumers see as being different from other products and which they can associate and identify with.
What are 6 reasons as to why Branded products are beneficial?
- Consumers are more willing to TRIAL PRODUCTS in the brand range.
- Brands encourage CUSTOMER LOYALTY.
- Consumers trust brands, leading to REPEAT PURCHASE.
- Brands can often charge PREMIUM PRICES.
- Consumers have GREATER AWARENESS of brands.
- Brands can lead to INCREASED SALES and MARKET SHARE.
What is one disadvantage of generic/non-branded products?
Very little difference between the product of one business compared to another. There is nothing to differentiate the product by.
What can a MARKET MAP show?
The difference between strongly branded products. This map shows the positions of cars in relation to their performance and practicality.
What is PRODUCT DIFFERENTIATION?
Making a product different from others in some way.
What are 2 reasons as to why product differentiation can help businesses?
- To position their products and target different market segments.
- To gain an advantage over rivals when faced with competition.
What can product differentiation allow consumers to do?
To see clearly that their needs are being met more effectively by one product than by another.
What are 6 examples of differentiating a product?
- Unique and catchy product name
- Quality
- Design, formulation or function
- Packaging
- Customer service
- Differentiation across the value chain.
What is the MARKETING MIX?
A combination of factors which help a business to take into account customer needs when selling a product.
What are the 4 Ps in the Marketing Mix?
PRICE, PLACE, PRODUCT, PROMOTION
What is important that a business must do when implementing the Marketing Mix into their products?
That all aspects of the Marketing Mix complement each other and work together well.
Why is the PRODUCT aspect of the Marketing Mix meet?
The needs of the customer.
What 6 questions could a business consider when DIFFERENTIATING their product from others?
- Who is our product targeted at?
- What will be our product range (variety) ?
- What will be our Unique Selling Point (USP) ?
- What will our brand be about / brand name be?
- What will be our formula (ingredients/materials) ?
- What will our packaging be?
What are 3 reasons as to why PRICE is important?
- The price of a product gives customers an indication of quality.
- In competitive markets, changes in price can have a significant influence on demand.
- Branded products generally have a higher price than non-branded products because they are more expensive to produce and promote.
When might a low price be used (2) ?
- For GENERIC / NON-BRANDED PRODUCTS
2. To encourage PRODUCT TRIAL when a product is first launched.
What is PROMOTION?
The way in which a business makes consumers aware that a product is for sale.
What are 4 reasons as to why promotion of a business or product is used?
- Creates awareness
- Communicating product benefits and features to customers.
- Building a strong brand image.
- Boosting sales
What is PLACE about?
Having a product available to customers when they want it and where they want it.
What are 3 ways in which a business can deliver its PLACE aspect of the Marketing Mix?
- DIRECT (e.g. internet, or a sales force to sell directly to customers)
- RETAIL (distributing products through retailers which helps sell the product by improving the buying experience of customers and improving customer service)
- WHOLESALE - (breaks down bulk supply of a product and distributes it to retailers)
