3.3 Marketing Flashcards
1
Q
Define marketing
A
The process of identifying anticipating and satisfying customer needs profitably
2
Q
What is a marketing objective?
A
A specific goal or target relating to the marketing activities and performance of a business
3
Q
Formula for sales value ?
A
Units sold x price
4
Q
Define market size
A
A measure of the total value/volume of sales within a market
5
Q
Market size value formula?
A
Units sold in the market x price
6
Q
Define market growth
A
A measure in percentage terms of any increase in the size of the market
7
Q
Market growth formula?
A
Change in market size / original market size x 100
8
Q
Define market share
A
The proportion of a market that is held by an individual product or business
9
Q
Market share formula ?
A
Sales of one business or company / total market sales x 100
10
Q
Define branding
A
The process of establishing a distinctive and lasting identity for a product or service in the minds of consumers
11
Q
Benefits of branding?
A
Helps encourage repeat purchases in the form of brand loyalty
Brand owner can usually charge higher prices
Easier to persuade retailers to stock your product in their stores
12
Q
Problems with branding?
A
High advertising costs - brands must be prominent + maintain consumer awareness
Brand contagion - one bad brand can harm all of a company’s other brands
High research + development costs
13
Q
Advantages of marketing objectives?
A
Ensure functional activities consistent with corporate objectives
Provide a focus for marketing decision
Establish priorities for marketing resources and effort
14
Q
Disadvantages of marketing objectives ?
A
Easy to be too ambitious with marketing objectives
Does the business have the necessary skills and resources available
Potential conflict between marketing objectives
15
Q
State the internal influences on marketing objectives
A
Corporate objectives
Finance
HR
Operational
16
Q
State the external influences on marketing objectives
A
Economic environment
Competitor actions
Market conditions
Technological change
Social & political change
17
Q
External influences on marketing objectives:
Define economic environment
A
State of the economy has big impact on marketing objectives
Economic boom = good time to increase sales volumes since income levels are generally higher
18
Q
External influences on marketing objectives:
Define competitor actions
A
Marketing objectives have to take account of possible competitor response
19
Q
External influences on marketing objectives:
Define market conditions
A
Key factor in determining demand
E.g marketing objectives changed as a result of the recession. Factors such as exchange rates would also impact objectives concerned with international marketing
20
Q
External influences on marketing objectives:
Define technological change
A
Many markets are affected by rapid technological change, shortening product life cycles and creating great opportunities for innovation
21
Q
External influences on marketing objectives:
Define social & political change
A
Changes to legislation may create or prevent marketing opportunities
Change in the structure and attitudes of society also have major implications for many markets
22
Q
Internal influences on marketing objectives:
Define corporate objectives
A
The marketing department has to make sure its objectives are aligned with the company’s overall goals
23
Q
Internal influences on marketing objectives:
Define finance
A
This influence allocates the marketing departments budget
This affects what the marketing department are able to do e.g if the budget is cut, they may need to scale down
24
Q
Internal influences on marketing objectives:
Define Human Resources
A
For a services business in particular, the quality and capacity of the workforce is a key factor in affecting marketing objectives
A motivated and well-trained workforce can deliver market-leading customer service and productivity to create a competitive marketing advantage
25
Internal influences on marketing objectives:
Define operational
This influence has a key role to play in enabling the business to compete on costs (efficiency/ productivity) and quality
26
Define market research
The process of collecting information and data about a business’s customers, the market place and the activities of competitors within that marketplace
27
What are the three key areas of market research ?
- collecting of info
- analysing the info
- acting upon + making decision based on this info
28
Define primary market research
Collects data that is first hand and specific to the needs of your business
29
Define secondary market (desk) research
Data that already exists and which has been collected for a different purpose
30
Define quantitative data
Statistical information; includes numbers and values that are measurable; expressed numerically
31
Define qualitative data
Info about opinions and values ; cannot be expressed numerically
32
State three advantages of quantitative data
data is relatively easy to analyse
Numerical data provides insights into relevant trends
Can be compared with data from other sources (e.g competitors, history)
33
State three disadvantages of quantitative data
Doesn’t explain the reasons behind numerical trends
Focuses on data rather than explaining why things happen
May lack reliability if sample size and method isn’t valid
34
State three advantages of qualitative data
Focused on understanding customer needs, wants and expectations
Can highlight issues that need addressing e.g why customers don’t buy
Essential for important new product development and launches
35
State three disadvantages of qualitative data
Time - consuming to collect
Based around opinions = risk that sample is not representative
Expensive to collect and analyse - requires specialist research skills
36
Define the method of primary research
Focus groups
Interviews
Surveys
Mystery shoppers
Product testing
37
Methods of primary research:
Define focus groups
Small, carefully chosen groups of people who discuss products and services offered by a business
38
Methods of primary research:
Define interviews
Structured conversations used to obtain detailed info from a limited number of respondents
39
Methods of primary research:
Define surveys
Usually carried out using questionnaires using a range of open and closed questions
40
Methods of primary research:
Define mystery shoppers
A person employed to visit a shop or restaurant incognito in order to assess the quality of the goods or services
41
Methods of primary research:
Define product testing
Small-scale launch of a good/service in an area of the country chosen to best represent the entire market
42
Advantages of methods of primary research ?
Kept private = not publicly valuable
Directly focused to research objectives
More detailed insight - particularly into customer views
43
Disadvantages of methods of primary research
Risk of survey bias
Can quickly become out of date
Time-consuming and costly to obtain
44
Define the methods of secondary research
Government produced data
Internet
Industry magazines
45
Methods of secondary research:
Define government produced data
Collections of official statistics and data about the uk population
46
Methods of secondary research:
Define internet
Accessing the plethora of online data through different websites
47
Methods of secondary research:
Define industry magazines
Specialised magazines and journals written to support particular industries
48
Advantages of methods of secondary research ?
Often free and easy to obtain
Quick to access and use
Good source of market insights
49
Disadvantages of methods of secondary research ?
Not tailored to business needs
Specialist reports = often expensive
Sampling may not be representative
50
Define sampling
Selecting a smaller group from a larger population that a business will collect data from in your research
51
Name the three sampling methods
Random, quota and stratified
52
Define random sampling
Makes sure that every member of the population has an equal chance of selection
53
Benefits of random sampling
Simple to design and interpret
Free from bias and prejudice
54
Drawbacks of random sampling
Difficulty accessing lists of the full population
May not guarantee a true representation of larger population
55
Define quota sampling
Step 1 - divide larger population in segments
Step 2 - same are deliberately selected from these segments
56
Benefits of quota sampling
Relatively easy to administer
Closer representation of the population
57
Drawbacks of quota sampling
Sample selection is not random
Some risks of bias
58
Define stratified sampling
Step 1 - divide larger population into segments
Step 2 - same are randomly selected from these segments
59
Benefits of stratified sampling
More precision vs random
Enables representation from different segments
60
Drawbacks of stratified sampling
More time consuming
Risk of missing key segments
61
State three advantages of sampling
Flexible and relatively quick
Even a small sample size (if representative) can provide useful research insights
Using sampling before making marketing decisions can reduce risk and costs
62
Disadvantages of sampling
Risk of bias in research questions
Biggest risk = sample is unrepresentative of population leading to incorrect conclusions
Less useful in market segments where customer tastes and preferences are changing frequently
63
Market research - business constraints ?
Financial
Time
Data quality
64
Define market (positioning) mapping
A market (or positioning) map illustrates the range of “positions” that a product can take in a market based on two dimensions that are important to customers
65
Define advantages of market mapping
Helps identifying gaps in the market
Good for analysing competitors
Promotes market research
66
Disadvantages of market mapping ?
Just because there is a “gap in the market” does not mean that there is a demand
Only analyses two dimensions
Subjective
67
Define extrapolation
Uses trends established from historical data to forecast the future
68
Define moving averages
Takes a data series and “smoothes” the fluctuations in data to show an average
69
Define three advantages of moving averages
Allows a business to make decisions based on data
Smooths out fluctuations to reveal patterns
Helps set targets
70
Define three disadvantages of moving averages
May not consider unforeseen changes in circumstances
Relies on accuracy of data previously collected
Ignores qualitative factors (e.g changes in tastes and fashions)
71
Define correlation
Looks at the strength of a relationship between two variables
72
Define positive correlation
Two variables move in the same direction
73
Define negative correlation
Two variables move in opposite directions
74
Define no correlation
No relationship between factors
75
What does a strong correlation mean ?
That there is little room between the data points and the line
76
What does a weak correlation mean ?
That the data points are spread wide and far away from the line of best fit
77
Define confidence intervals
A confidence interval gives the percentage probability that an estimated range of possible values, will be achieved
78
Factors that influence the confidence interval ?
Sample size
95% standard to make business decisions
Narrower confidence interval represents a lower margin of error
79
Why are confidence intervals so useful in business?
Predicting future events
Evaluate the reliability
Businesses need to know how confident they should be in their estimates
80
Define price elasticity of demand
Price elasticity of demand measures the responsiveness of demand to changes in price
81
Formula for price elasticity of demand ?
% change in quantity demanded / % change in price
82
If the result is outside of -1 we can say demand is ?
Price elastic
83
If the result is exactly -1 we can say demand is ?
Unitary price elasticity
84
If the result is in between -1 and 0 we can say demand is ?
Price inelastic
85
Define inelastic price of demand
When change in QD is smaller than change in price
E.g water, power, petrol
Factors:
Necessities, strong branding, less alternatives, high income customers
86
Define elastic
When change in QD is greater than change in price
E.g cereals, chocolate bars, sport cars
Factors:
Goods that have a lot of substitutes, in a very high competitive market, luxury goods, goods that consumers want
87
Define income elasticity of demand
Measures the extent to which the quantity of a product demanded, is affected by a change in income
88
Formula for income elasticity of demand ?
% change in quantity demanded / % change in income
89
Define inferior goods
Have the characteristic of seeing demand decline when income levels rise
Have a negative income elasticity of demand
90
Define necessities
Income elasticity less than 1 but more than 0
As income grows, proportionally less is spent on necessities
91
Define luxury goods
Have an income elasticity of demand more than +1
Means that demand rises more than proportionally to any change in income
92
Limitations of calculating + using elasticities?
Can be difficult to get reliable data
Other factors affect demand
Competitors will react
93
Define the STP model
Segmentation, targeting, positioning
94
Define targeting
This is when a business selects which segments of the market that they will focus their efforts upon
95
Define mass market
Where a business sells into the largest part of the market, where there are many similar products on offer e.g baked beans
96
Define niche market
Where a business targets a smaller segment of a larger market, where customers have specific needs and wants e.g vegan
97
Define features of the mass market
- more general and less specific
- associated with mass production output
- mass advertising
98
Advantages of mass market?
Large market size + economies of scale
99
Disadvantages of mass market?
Lower profit margins and highly competitive
100
Features of niche market?
- small target group
- limited availability
- target advertising
101
Advantages of niche market
Can charge a premium price and customer loyalty
102
Disadvantages of niche market
Smaller market size and high manufacturing cost
103
Define customer profile
Businesses can build up a customer profile which shows the characteristics of their customers and what makes them behave in a certain way
104
Define the advantages of market segmentation
- focuses resources
- allows a business to grow share in markets
- helps make the marketing mix more effective
- helps with new product development
105
Define the disadvantages of market segmentation
- extensive market research required
- high research and development costs/ production costs
- high promotional costs
- higher production and stock holding costs
106
Define market segmentation
Involves dividing a market into parts that reflect different customer needs and wants
107
Define the 4 step process of segmentation
Step 1:
Conduct research into the different types of customer within the marketplace
Step 2:
See if they have common taste/habits
Step 3:
Identify the segment you wish to focus on
Step 4:
Devise a product for particular segment
108
Define the 4 categories of the market segment
- demographic
- behavioural
- income
- geographic
109
Define market positioning
The place a product occupies in customer minds relative to competing products
110
Define the 4 possible positioning strategies
- offer more for less
- offer more for more
- offer more for the same
- offer less for much less
111
Define the influences on positioning
- business strengths
- competition
- market conditions
- business innovation
112
Define the marketing mix
The marketing mix is the combination of elements used by a business to enable it to meet the needs and expectations of customers
113
Marketing mix:
Define the 7P’s
- product
- place
- price
- promotion
- physical
- process
- people
114
Marketing mix - 7Ps:
Define place
The location in which the product is made and the means of distributing the product
115
Marketing mix - 7Ps:
Define promotion
In the context of marketing this is the process of communicating with customers
116
Marketing mix - 7Ps:
Define physical environment
The nature and appeal of the physical evidence the customer will observe during a transaction
117
Marketing mix - 7Ps:
Define process
The system involved in ensuring that an efficient service is provided to prospective and actual customers
118
Marketing mix - 7Ps:
Define price
The sum of money paid by the customer for the unit of product
119
Marketing mix - 7Ps:
Define people
Anyone who represents the firm and comes into contact with its customers
120
Marketing mix - 7Ps:
Define product
The good or service provided by the business for its customers
121
Define a consumer product
Bought by final consumers for personal consumption e.g shampoo
122
Define industrial product
Bought for further processing by another business e.g raw material (steel)
123
What is the product life cycle?
A theoretical model which describes the stages a product goes through over its life
124
Define the 6 stages of the PLC
- development
- introduction
- growth
- maturity
- saturation
- decline
125
Stages of PLC
Define development
This stage is when lots of money is being invested into R&D
126
Stages of PLC
Define the key features of the development stage
- often complex
- absorbs significant resources
- may not be successful
127
Stages of PLC
Define the introduction stage
Sales are low as the new idea is first introduced to the market
128
Stages of PLC
Define the key features of the introduction stage
- costs high
- low level of sales
- small scale distribution
- high promotional spending
129
Stages of PLC
Define the growth stage
Rapid growth in sales and revenue
130
Stages of PLC
Define the key features of the growth stage
- fast growing sales
- cash flow may become positive
- attracts the entry of new competitors
- wider distribution
131
Stages of PLC
Define the saturation stage
Where sales are rapidly slowing and may start to slowly decline
132
Stages of PLC
What are the key features of the saturation stage ?
- weaker competition start to leave the market
- advertising is persuasive
- promotion focused on product differentiation
133
Stages of PLC
Define the decline stage
Shrinking market share, sales are low and declining
134
Stages of PLC
Define the key features of the decline stage
- falling sales
- competitors leave the market
- products could be withdrawn from production
- products may be sold at a reduced price
135
Define the benefits of the PLC
- forecast sales trends over time
- business can adapt their strategy depending on the stage
- can be applied across the portfolio of products
136
Drawbacks of PLC
- not all products follow the PLC
- hard to predict how long the product will be in each stage
137
Why do products enter the decline stage ?
- technological advancements
- changes in consumer tastes and behaviour
- increased competition
- failure to innovate and develop the product
138
Define extension strategy
Used to stop sales from falling and to prolong the life cycle as long as possible
139
Define the 5 examples of extension strategies
- finding new markets
- increasing marketing activity
- lowering the price
- changing the packaging/rebranding
- product differentiation
140
Extension strategies:
Advantages and disadvantages of product differentiation
Adv = customer loyalty
Disadv = high r+d costs
141
Extension strategies:
Advantages and disadvantages of changing the packaging/rebranding
Adv = raise PR
Disadv = loose existing customers
142
Extension strategies:
Advantages and disadvantages of increasing marketing activity
Adv = increase customer awareness
Disadv = high initial costs
143
Extension strategies:
Advantages and disadvantages of lowering the price
Adv = increase sales volumes
Disadv = decreases profit margins
144
Extension strategies:
Advantages and disadvantages of finding new markets
Adv = gain new customers
Disadv = high risk
145
Define product portfolio
The collection/range of all the goods and services offered by a business
146
Define Boston Matrix
A method of analysing the products in a business’ portfolio based on relative market share and market growth
147
Define the four categories in the Boston matrix
Problem child Star
Dog Cash cow
148
Boston matrix:
Define problem child
- have potential
- need substantial investment
E.g Apple smart speaker
149
Boston matrix:
Define star
- one of the market leaders
- requires high market spending
- cash flow positive
E.g iPhone
150
Boston matrix:
Define dog
- may generate enough cash to break even
- rarely worth investing in
E.g Apple TV
151
Boston matrix:
Define cash cow
- successful products
- little need for investment
152
Define two positives of the Boston matrix
- useful tool for analysing product portfolio decisions
- can understand market trends and suggest appropriate marketing strategies
153
Define two negatives of the Boston matrix
- is only a snapshot of the current position
- market share and market growth are not the only important dimensions to a business
154
Define promotion
The communication between the business and the customer
155
Define above the line promotion
Describes any form of paid for promotions that uses the mass media
156
Define below the line promotion
A business has direct control over the target audience
157
Define the 6 features of the promotional mix
- advertising
- personal selling
- sales promotion
- public relations
- direct marketing
- sponsorship
158
The promotional mix:
Examples of Advertising
(Above the line)
- tv
- radio
- websites/social media
Persuasive & informative advertising
159
The promotional mix:
Define personal selling
Where businesses use people to sell the product after meeting face to face with the customer
(Below the line)
160
The promotional mix:
Define sales promotion and provide examples
An attempt to give a short-term boost to sales
- buy one get one free
- discounts
- better value
- customer loyalty cards
(Above the line)
161
The promotional mix:
Define public relations and provide examples
PR relations activities are those that create goodwill toward an individual, business or cause
- open days
- hospitality events
- press releases
(Both)
162
The promotional mix:
Examples of direct marketing
- mail
- email
- telephone to individuals or businesses
(Below)
163
The promotional mix:
Define sponsorship
A business pays to be associated with a particular event or image
(Both)
164
Define place (channels of distribution)
To make products available in the right place at the right time in the right quantities
165
Define channels of distribution
A distribution channel moves a product through the stages from production to final consumption
166
Define intermediaries
Firm or person who acts as a link between people in order to try and bring about an agreement
167
Define indirect channels
Involves the use of intermediaries between the producer and consumer
168
Define the 4 channels of distribution
Retailer
Wholesalers
Distributors
Agents
169
Define the process of retailer and its features
Producer - retailer - customer
- deals directly with customer
- offer convenience
- have specialist staff
- offer after sales support
170
Define the process of wholesalers and its features
Producer - wholesaler - retailer - customer
- buy in bulk
- saves producers on storage
- one central location
- can offer credit
171
Define the process of distributors and its features
Producer - distributor - customer
- local sales point
- specialise in a particular industry
- greater choice
- holds stock
172
Define the process of agents and its features
Producer - agent - customer
- specialist type of distributor
- does not hold stock
- operate in territory sector (services) e.g travel, insurance
- earn commission
173
Define direct channels
Where a producer and consumer deal directly with eachother
174
What is the process and features of direct channels ?
Producer - customer
- increasingly popular
- methods include; direct mailing, e-commerce, telemarketing
175
What are the influences of the choice of channel ?
- costs
- perishable goods
- technology
- physical geography
176
Define multi-channel distribution
Involves a business using more than one type of distribution channel
177
Benefits of multi-channel distribution?
-allows more target market segments to be reached
Enables higher revenues
178
Drawbacks of multi-channel distribution?
Potential for channel “conflict”
Can be complex to manage
