3.3 Marketing management Flashcards
What is the value of setting marketing objectives?
To give business a direction and purpose to fufil their overall objectives, to ensure bus supplies goods and service that fufil consumer wants and needs and to make a profit.
Examples of marketing objectives?
- sales volume and value
- sales growth
- market share
- market size and growth
What is the value of primary and secondary marketing research?
Primary market research is research data that is collected first-hand for a specific research purpose, examples include interviews, surveys, focus groups. Pros: tailored businesses research objectives so fit to purpose, reliable and provides detailed insights into customers views. Cons: time consuming, can be costly, risk of survey bias (not representative of pop).
Secondary market research uses data that already exists and has been collected by someone else for another purpose, examples include government publications, marketing reports, feedback from salesmen and financial accounts. Pros: may be unsuitable, or out of date, errors.
What is quantitative and qualitative data?
Quantitative data is data expressed in numbers, closed questions with pre-determined answers e.g. from questionnaires.
Qualitative is data expressed in words, looks at feelings and motivations of consumer, uses focus groups and are open questions
How to calculate Sales Growth?
Sales growth(%)= Sales this year - Sales last year / Sales last year x100
How to calculate Market Growth?
Market growth (%)= New market size - Old market size/ Old market size x100
How to calculate Market Share?
Market share (%)= Sales / Total Market Size x100
What sampling methods are there? What’s the value of sampling?
Random sample, names picked randomly from list (electoral register).
Stratified sample, population divided into groups and people are selected randomly from each group, number of people picked from each group proportional to size of group.
Quota sample, people are picked who fit into a category, business use quota sampling to get opinions from the people the product is directly targeted at.
Valuable as keep costs their costs down, saves them a lot time and resources.
Refer to Positive and Negative Correlation.
Correlation is measure of how closely two variables are related (e.g. age of customers and their income).
Refer to flashcards to see correlation.
What is a confidence interval?
Confidence interval gives the percentage probability that an estimated range of possible values in fact includes the actual value being estimated (95% confidence interval means you are 95% certain CI contains the value for the population), if bus wants to be more confident can increase the confidence level (wider CI), however wide CI can be to vague to be helpful.
What is extrapolation?
Extrapolation involves the use of trends established by historical data to make predictions about future values, assumes predictions will follow if evidence portrays otherwise.
What is price elasticity of demand?
PED of a product is how much price change affects demand. If PED is greater than 1 the product is price elastic (1.5), if less than 1 it’s price elastic (0.5). For price elastic products, change in demand is greater than change in price. For price inelastic, change in demand is less than change in price.
What is income elasticity of demand?
When people earn more money there’s more demand for some products, and less for other products. Income elasticity of demand measures the relationship between a change in quantity demanded for good X and a change in real income.
Normal goods (fruit, veg) have positive IED that’s less than 1, meaning as income rise, demand rises but at slower rate than increase in come.
Luxury goods (designer items) have positive IED which is more than 1, means demand for luxury goods grows faster than increase in income.
Inferior goods, cheaper than value products (cheap supermarket value products), have negative IED, when demand falls when income rises and demand rises when income falls.
How does changes in price impact revenue and income?
If product price elastic (necessity item, milk), price increase will make sales revenue go down, firm that has price elastic products can increase revenue by reducing prices (as increases no. of sales).
If a product is price elastic (individual brands), rise in price will make sales revenue go up (money lost from decrease in sales is less than money gained from price increase). For price inelastic products decreasing price will make sales increase slightly, but sales revenue goes down because price has fallen but only a few ore units have been sold.
How does PED and IED help marketing decisions?
PED helps manufacturer decide whether to raise or lower price of a product. As they could reduce the price of a price elastic product to increase sales revenue and demand only if profit m is big enough. For price inelastic product, increase the price, demand will fall slightly but revenue and profit will still increase.
IED helps a manufacturer see what will happen to sales if economy grows or shrinks. In times of economic growth,
for price elastic product sales will fall so need to change brand image to appeal. In recession, demand for product will increase. For price elastic product in times of economic growth, sales will grow so aspirational brand image should be maintained, in times of recession, demand for product will fall , so incentives (such as discounts)over number of years could encourage sales.
What is the process and value of STP (segmentation, targeting and positioning)?
STP aims to focus marketing efforts where they’ll be most effective, marketing process with three stages.
- Segment, divide the market into groups with similar characteristics or needs (age, income groups).
- Target, decide which market segment to focus on and adapt the product and the marketing mix to appeal to this group.
- Position, the product in the target customers’ minds so they see it as better than the competition.
What segmentation methods are included?
Segmentation divides a market into groups of buyers.
- Demographic (age, gender, socio-economic class, family size).
- Geographic (neighbourhood, city, county, country and world region).
- Income (high income, low income).
- Behaviour (amount of use, lifestyle).
Influences on choosing target market and positioning?
Positioning is creating an image of your band/product in mind of target consumer, developing opinion of product you want them to.
Influences: state of market (e.g. recession more likely to position in way that offers best value for money or economic boom, emphasise product is great quality), company’s current products (if other products seen as reliable and cheap may position new products in same place) and attributes of company (need to position products to match strengths and weaknesses).
Influences on choosing target market?
- nature of product
- competition
- the consumer
Examples of target marketing?
Niche marketing, where a business targets a smaller segment of a larger market, where customers have specific needs and wants, so don’t have to directly compete with larger businesses.
Mass marketing, largest group of customers with specific needs and wants in an industry.
Concentrated marketing, involves targeting one or two segments (good for small businesses w limited resources).
Differentiated marketing, where several segments are targeted marketing mix adapted to appeal to each segment ( larger businesses).
Undifferentiated marketing, where segments are ignored firm tries to reach entire market w single product and marketing mix.
What is market mapping?
As consumers have mental map of the market and will position new products relative to the alternatives, thus firms plan marketing strategies to position their products in a way that persuades customers to chose them over competitors.
Market map helps business to spot a gap in the market, bus can try position its new product in that gap (knowing there won’t be any close competitors, however needs to be a demand in this gap. If sales are declining firm can use market map to find out how customers view their product and try to reposition it on the map. MM can simplify things too much and may not always be accurate representation of the market (as usually matter of opinion so may be biased, more opinion business has on target market more reliable market map).
What are the 4P’s?
- product (has to be right)
- price (has to be right)
- place (distributed in right places)
- promotion (in the right way)
What are the extra 3P’s?
specifically can applied to service industry
- people (needs to target the right consumer, more likely to buy if employees are well-trained, reliable and friendly).
- physical environment (presentation of bus environment where service delivered is important, e.g. clean hair salon).
- process (waiting times, ordering, payment systems and after-sales service).
What influences the marketing mix?
Influences on the integrated MM may be:
- competitors (price of product influenced by price of similar products, and may pay more for promotions and train staff better for better customer service than competitors).
- target market segment (need to use different forms of media promotion, wealthy consumers less price sensitive than low income consumers).
- where product is positioned in consumers mind
- location (determines what is realistic when putting together MM)
- type of product
- whether firm is selling goods or a service
- product life cycle
- resources (finances, tech, knowledge and skill, etc).
- marketing and corporate objectives
- boston matrix (product mix)
