3.3 Marketing Leadership and Deci. Making

Question 1

What are some Marketing Objectives?

Answer 1

Quantitative:

• Sales Volume & Sales Value: achieve a volume of sales or a sale value by the end of a decided period of time, e.g. annual.
• Sales Growth: growth in sale volume/value, or a percentage growth in sales.
• Market Share: the percentage of sales in a market made by one firm or brand, might want to increase by a %. This is done by enticing customers away from competitors or attract new customers in growing market.
• Market Size and Market Growth: market size is the total no. sales or value of sales revenue in market over a period of time. If market size increases between 2 time periods, market is growing.

Qualitative:

• Brand Loyalty: holding onto existing customers, good tool is social media (allows consumer and business to interact)
• Improving product quality/reputation.
• Ensuring new product survives when entering market

Question 2

What are some internal factors that influence marketing objectives?

Answer 2

• Corporate- make sure marketing objectives are aligned with company’s overall goals.
• Finance- marketing budget, seeing what activities are in the means of the business budget.
• Human Resources- HR planning identifies how many staff company needs, so there is influx or efflux in employee numbers, marketing departments will need to adjust objectives to match what is achievable with the staff levels.

Question 3

What are some external factors that affect Marketing Objectives?

Answer 3

• Market- state of economy (economic boom: increase sales volume; or recession: maintain market share)
• Technology: in markets where technology changes rapidly, marketing objectives are sales and price focused, as new tech causes prices to rise or fall rapidly
• Competitors- actions of competitors affect decisions in highly competitive markets
• Ethics and Environmental- awareness of these are increasing in consumers, behaving in harmful way damages brand image. Business might change their marketing objectives to include communicating how ethically and environmentally conscious they are.

Question 4

What is market growth (include formula):

Answer 4

Market growth (%) = (new market size - old market size / old market size) x 100

Market growth means that demand is increasing, allowing firms to grow easily and allows to see how tight competition is.

Question 5

What is market share (include formula):

Answer 5

Market share (%) = (sales / total market size) x 100

market share is the % of sales in a market that is made by 1 firm. Letting market share means that competitors are gaining advantage over you.

Question 6

What is Sales Growth (include formula):

Answer 6

Sales Growth (%) = (sales this year - sales last year / sales last year) x 100

If sales growth = + company is gaining sales

If sales growth = - company is losing sales.

Question 7

Why is market research done?

Answer 7

• Helps spot opportunities, e.g. market gaps, predicting consumer buying patterns, and seeing which markets are growing/declining.
• Helps launch marketing campaigns and launch products
• Allows businesses to see if their marketing activities are having the right effect on sales figures.

Question 8

What is an issue with market research?

Answer 8

Market Research can be expensive, and bad market research can lead to disastrous business decisions.

Question 9

What is Primary Market Research?

Answer 9

1. Primary data is gathered with things like questionnaires, interviews, post/ phone/ internet surveys and focus groups
2. Businesses do test marketing — e.g. they launch a product in one region and measure sales and customer response before launching it across the country.
3. Primary research uses sampling to make predictions about the whole market based on a sample
4. Primary data is needed to find out what consumers think of a new product or advert
5. Primary data is specific to the purpose it’s needed for. This is great for niche markets — secondary data might be too broad or too mainstream to tell you anything useful
6. Primary data is exclusive to the business who researched it, so competitors can’t benefit from it.

However, primary research is labour-intensive, expensive and slow.

Question 10

What is Secondary Market Research?

Answer 10

1. Internal sources of secondary data include information from loyalty cards, feedback from company salesmen and analysis of company sales reports, financial accounts, and stock records.
2. External sources include Government publications, marketing agency reports, pressure groups and trade magazines.
3. Secondary data is much easier, faster and cheaper to get hold of than primary data.
4. However, secondary data that was gathered for a different purpose might be unsuitable. It may contain errors and it may be out of date.
5. Secondary data is often used to get an initial understanding of a market. A business may then do more specific primary research to investigate any issues or problems that are shown up by the secondary data.

Question 11

Time series analysis looks at data over time:

Answer 11

Question 12

Extrapolation as a method used to predict future sales:

Answer 12

Question 13

Interpreting correlation graphs:

Answer 13

Question 14

Read this on confidence intervals:

Answer 14

Question 15

How can tech be used to help analyse marketing data?

Answer 15

Question 16

What is price elasticity of demand? PED

Answer 16

Question 17

What is income elasticity?

Answer 17

Question 18

PED - read!!

Answer 18

Question 19

How do PED values affect elastic/inelastic products?

Answer 19

Question 20

YED- read!!

Answer 20

Question 21

What is STP in marketing?

Answer 21

Question 22

What are the different ways to segment a market?

Answer 22

• Demographics: age, gender, socio-economic class, family size
• Geographic: neighbourhood, city, count, country, world region.
• Income: high income or low income
• Behaviour: amount of use, lifestyle

Question 23

What are three approaches to targeting a market?

Answer 23

• Concentrated marketing- targeting 1 or 2 segments, good approach for smaller businesses with limited resources
• Differentiated marketing- several segments are targeted, feasible for large companies with large budgets.
• Undifferentiated marketing- segments are ignored and company tries to reach entire market with single product and marketing mix. Makes sense for widely used products, has advantage of potentially high sales volumes and relatively low marketing costs.

Question 24

What is Niche vs Mass marketing?

Answer 24

concentrated marketing is also known as niche marketing.

Focusing on niche marketing means small businesses don’t have to directly compete with larger businesses.

A small manufacturer can meet demand of small niche more easily than mass market

Also easier to market product to niche market than mass

Some products are aimed at mass markets (undifferentiated marketing), also designed to appeal to lots of customers.

Question 25

What are some influences on positioning in a market?

Answer 25

Positioning is about creating brand image in the mind of your target customer.

Influences:

• State of the market- if economy in recession, companies more likely to position brand to make customers think it offers best value for money, whereas in booming economy companies might emphasise product is great quality or environmentally friendly.
• Company’s current products- if company’s other products are reliable and cheap , they are likely to position their product in similar place
• Attributes of company- companies need to position products to match their strength and weaknesses.

Question 26

What are the 3 types of consumer products? (product- 7ps)

Answer 26

• Convenience products: inexpensive, everyday items bought regularly by lots of people, bought out of habit, consumers don’t put too much thought into looking for cheaper alternatives.
• Shopping products: bought less regularly than convenience products, more expensive and sold in fewer places, people might pay more for particular brand.
• Speciality products- consumers believe these are unique, perceived image and quality are more important to consumers than price, often higher profits.

Question 27

Describe the Boston Matrix:

Answer 27

Question 28

Why are new products great for a business?

Answer 28

New products can bring in new customers

Provide competitive advantage

Allow companies to maintain balanced product portfolio.

Question 29

What factors influence the release of new products?

Answer 29

• technological developments
• competitor- initiative to launch new product in response to competitor.
• A gap in market is identified- in order to create innovative products, companies have to spend more in research and development (R&D), high risk but also highest potential for reward.

Question 30

What is a USP?

Answer 30

Question 31

Describe the product life cycle:

Answer 31

• 1- Development:
  
  • R&D department develop product
  • marketing dep. does market research
  • costs are high, no sales yet
  • development has high failure rate, either because there isn’t high enough demand, or business can’t make product cheaply enough to make profit.
• 2- Intro:
  
  • product is launched in 1+ markets, sometimes with complementary products
  • business promotes product heavily, but ensure that they have enough resources and capacity to meet demand that promotions create.
  • initial price may be high to cover promotional costs = price skimming
  • OR price can start off low to encourage sales = penetration pricing
  • sales go up, but before profit is made, SR has to pay for high fixed costs
  • competition may be limited if product is innovative.
• 3- Growth:
  
  • sales grow fast- new + repeat customers
  • competitors may be attracted to market, promotion shows differences from competitor’s products
  • product is improved and developed, and targeted at different market segment
  • rising sales encourage more outlets to stock product
• 4- Maturity:
  
  • sales reach peak, profitability increases because FC have been paid for.
  • At saturation (when market is full and has reached maximum growth) sales may start to drop, often for long-lasting products
  • price sometimes reduced to stimulate demand, reduces profit
  • Not many new customers, competition within industry becomes fierce so sales may suffer
• 5- Decline:
  
  • the product doesn’t appeal to customers anymore
  • sales fall rapidly, profits decrease
  • if sales carry on falling, product is withdrawn or sold to another business (divestment)

Question 32

What are some extension strategies that businesses deploy when product reach maturity stage in product life cycle?

Answer 32

Extension strategies try to prolong life of product by changing marketing mix:

• Product development- improve, reformulate, redesign, special editions
• Market development- find new market, new uses, new market segment
• Change why product is distributed- selling through internet, in supermarkets or convenience stores, different country
• Change product pricing- special offers, competitions
• Change the way they promote product- new ad campaign

Question 33

What are the factors affecting pricing decisions?

Answer 33

• the other 7Ps
• price is often set to cover cost of making product (BOM, bill of materials) = cost-plus pricing. the % added on top = mark-up
• price must be acceptable to customers, depends how price sensitive target market is.
• PED, availability of substitutes, type of product, age of product, if it is expensive purchase, and loyalty to brand.
• stage of product life cycle it is in
• price needs to be in line with corporate objectives
• price of competitor products, charge too high and it will bring bad publicity, charge too low and consumers start to question quality.

Question 34

What is price skimming?

Answer 34

Question 35

What is penetration pricing?

Answer 35

Question 36

What is predatory pricing?

Answer 36

• When business deliberately lowers prices to force another business out of market (illegal in EU and US)

Question 37

What is competitive pricing?

Answer 37

When companies monitor competitor prices to make sure their own prices are set at equal or lower level. Supermarket and department stores often use this method.

Question 38

What is psychological pricing?

Answer 38

Bases price on customer expectations, high price may may consumer think product is high quality. (99.99 vs 100.00)

Question 39

What is loss leader pricing?

Answer 39

Loss Leaders are products sold at or below cost price, the lose money but they make profit for business in indirect way, e.g. buying full priced products a long with it.

Question 40

What is price discrimination?

Answer 40

When company sells its products at different prices to different groups of consumers. e.g. tickets to cinema vary for age groups.

Question 41

What is dynamic pricing?

Answer 41

Question 42

What is promotion in the 7Ps?

Answer 42

Question 43

How is social media used for promotion?

Answer 43

Question 44

How does promotion change during product life cycle?

Answer 44

Question 45

Why is branding a key aspect of product image?

Answer 45

Question 46

What are the different types of promotion?

Answer 46

• sales promotions (special offers,)
• merchandising (ensuring retailers are displaying products effectively as possible, point of sale displays with company logo)
• direct mail (sometimes waste of money)
• personal selling or direct selling (salesperson and customer interaction)
• relationship marketing (offering existing customers special offers/loyalty cards)
• event sponsorship (good image)
• direct response TV marketing (shopping channels QVC)

Question 47

What is the promotional mix?

Answer 47

Question 48

What are the different intermediates in between the producer to consumer?

Answer 48

Question 49

What are the different channels of distribution?

Answer 49

Question 50

Business choose channel of distribution to suit their needs?

Answer 50

Question 51

Describe the people part of the 7Ps:

Answer 51

Question 52

Describe the process of the 7Ps:

Answer 52

Question 53

Describe the physical environment part of 7Ps:

Answer 53