3.3 Marketing Performance Flashcards
Why are marketing objectives important?
They need to support the overall objectives of the business
What 3 internal factors influence a marketing objective?
Corporate objectives
- in-line with company’s overall goals
Finance
- they allocate the budget
HR
- identify how many staff are needed
What are the 4 external factors which could influence a business marketing objective?
Market
- state of the economy
Technology
- tech changes + new tech
Competitions
- what are competitors doing? E.g. low prices
Ethics and environmental factors
- issues with animal testing and packaging can damage reputations
How can government regulations impact marketing objectives?
- predatory pricing
- trade description
- what can abs can’t be advertised (including certain times of day)
What 5 sectors can a market be classified as?
- geography
- nature of the product
- seasonality
- development level
- product destination
What do company’s carry out analysis on when researching?
- sales growth
- market growth
- market share
- market mapping
How do you calculate market growth?
Market growth = new market size - old market size / old market size X100
What is market mapping?
Give an example of what there could be a gap for
Identifies gaps in the market
High price, low quality
High price, high quality
Low price, high quality
Low priced low quality
Why do companies conduct market research?
- spots opportunities
- helps decide what to do next
- supports if current plans are working
What are 2 disadvantages to bad market research
- is expensive, so don’t want to waste money
- can lead to disastrous business decisions
What does a business look to gain from market research?
- more detailed understanding of customer needs
- reduce the risk of product/business failure
- forecast future trends
- see what the market / competition is doing
What is quantitative research?
- concerned with data
- based on larger samples and are therefore more statistically valid
- main methods include surveys, this could be via telephone, postal, face to face
What is qualitative research?
Based on opinions, attitudes and beliefs
- aims to understand why customers want/need/behave in a certain way
What is primary data?
When a business gathers new data (or employs someone new to do it)
Give a positive and a negative for primary data
+ the business control what type of data they want, business specific
- time consuming, can be expensive if someone is hired to conduct it
What is secondary data?
Analysing data that has already been collected
Give a positive and a negative for secondary data
+ already available, cheaper
- can be outdated, not always business specific
What is sampling?
A sample is a group of people that have been chosen from a larger group, the population, for investigation
Give a positive and a negative for sampling
+ Better chance of being accurate
- Not always 100% representative, always a margin for error
Why do businesses use sampling?
Allows a business to gain insight into the wants and needs of the customer in a cost-effective manner
What is ‘the quality of sampling’?
- how many people you ask (sample size)
- how the sample has been carried out
- the sample technique used
- the importance of accuracy
What influences the size of the sample?
- the budget available
- degree of confidence in results
What are the three types of sampling?
- Random
- Quota
- Stratified
What is random sampling?
Names picked randomly from a list
What is quota sampling?
People are picked who fit the category
What is stratified sampling?
The population is the first segmented into subgroups before respondents are randomly selected from within that subgroup
What are the advantages and dis for random sampling?
Advantages:
- wider range of people
- quick way to survey
- may possibly get more responses
Disadvantages:
- could result in a poor outcome
- might not be in a specific age range for product/service
Give an advantage and disadvantages for quota sampling
Advantage:
- these people fit directly into the category
Disadvantages:
- have more ‘valid’ opinions
- smaller amount of people to survey
- may not respond
Give some advantages and disadvantages for stratified sampling
Advantages:
- detailed
- more reliable
Disadvantages:
- gives an average
- gives a smaller amount of respondents
- more planning is needed
What are the 3 aspects of ‘non bias’ research?
- no leading questions
- more confidence with sample by baling a larger representative
- no intimidating tactics during interviews or focus groups
What is market research?
Research on the market AS A WHOLE
Give some examples of what is included in market research
- how big is the market?
- how fast is the market growing?
- key factors (PEST) driving market change
- competition / market share info
- how the market is segment
What are the 4P’s when looking into mistimed preferences for market research?
- when abs where they will but the product
- what prices they pay/are willing to pay
- ow they react to promotions / advertising
- new channels they might like
Define correlation
Looks at the strength of a relationship between two variables
Why and how would a business use sales forecasting?
- useful to be able to see if something is working
E.g advertising compared to the number of customers
What is the independent variable?
CHIMED
On what axis?
The change
X axis
What is the dependant variable?
CHIMED
On what axis?
The thing that stays the same
Y axis
Describe a positive correlation?
When the line of best fit is going from the bottom left to the top right as well as the scattered points
Describe negative correlation
When the line of best fit is going from the top left to the bottom right as well as the scattered points
Describe no correlation
No discernible relationship between the independent and dependent variable
What is ‘strong correlation?’
Mean that there is a little room between the data points and the line
What is weak correlation?
Mean that the data points are spread quite wide and far away from the line of best fit
Define time series analysis
A method of interpreting marketing data - looks at data over time
It reveals underlying patterns over the year
What is an upward trend?
Variable (sales) changing upwards
What is a downward trend?
Variable (sales) changing downward
What is a constant trend?
Variable (sales) constant
What are seasonal fluctuations?
Change depending on the time of year
E.g. ice creams go up in summer
What are seasonal fluctuations with an upward trend?
Go up and down but mainly remains positive
What is random fluctuations?
Variable (sales) constantly changing
What is time series analysis used for?
- analyse information over a period of time
- predictions for the future
- links between sales and marketing activities
- see if marketing has been affected
What is extrapolation?
- using past data to extend an identified trend into the future
- a general slow upward trend has been identified
What is the value of technology?
- gather and analyse large volumes of data quickly and accurately
- track and interpret consumer spending habits
- collect customer opinions
- encourage consumer feedback through social media and review sites
- enable two way communication
What are confidence intervals?
A range of values that you are fairly sure the value of the population will lie within
Reflect the degree of certainty with which a business believes a stated outcome will happen
Give 4 different ways technology can be used to gather information about customers
- loyalty cards
- social networking sites
- search engines
- wifi signals
What are some advantages for a business using technology?
- quicker more efficient
- can hold more data
- can organise the data
- more reliable
- once staff have been trained, can improve productivity
Give some disadvantages for the use of technology in a business
- fixed higher cost to begin with
- need to train staff
- updating software can take time
- not all computers can cope with the software
What is price elasticity of demand?
A measure of how responsiveness demand is to a change in price
As price goes up, demand goes down
As demand goes up, price goes down
Whether a product is elastic or inelastic will depend on what?
- type of product
- availability
- substitute products
- choice
What is price elastic demand?
Change in price will lead to a more than proportional chance in demand
Sensitive to price changes
What is price inelastic demand?
Means that a change in price will lead to less than proportional change in demand
Demand is not so sensitive to change in price
What is the price elasticity of demand formula?
%change in quantity demanded • — • %change in price
A business always assumes their price elasticity of demand is …
Negative
If price elasticity of demand is between 0 and -1 then demand is…
Elastic
If price elasticity of demand is lesser than -1 then demand is…
Price elastic
What is income elasticity of demand? (YED)
Measures the extent to which the quantity of a product demanded is affected by the change in income
What is the formula for income elasticity of demand?
%change in quantity demand • — • %change in income
But at a slow rate
What is ‘luxury’ when looking at income elasticity?
- income elasticity is more than 1
- as income grows, proportionally more is spent on luxuries
What is a ‘necessity’ when looking at income elasticity?
- income elasticity less than 1 but more than 0
- as income grows, proportionally less is spent on necessities
What are inferior goods?
Cheaper value products (own brand)
Have a negative elasticity of demand
What is segmentation of a market?
Divides a market into a group of buyers
Name 4 methods use to segment the market
- demographic (age, gender, family size)
- geographic (location)
- income (income of customers)
- behaviour (lifestyle, amount of use)
Why do businesses segment the market?
- identify new products
- can identify new customers
- can clearly advertise a product/service to someone in a specific group
- don’t waste resources
Why do some businesses ignore the needs of POTENTIAL customers?
It can be difficult to break the market into obvious segments and find ways to market to specific demographics
What is concentrated marketing?
- involves targeting one or two segments
- segment must be big enough for a decent return, have growth potential
- should have a need that the business can meet that hasn’t been met by competitors
What is differentiated marketing?
Where several segments are targeted and the product and marketing mid is adapted to appeal to each segment
Only really feasible for large companies with large budgets
What is undifferentiated marketing?
- segments are ignored and the company tried to reach the entire market with a single product and marketing mix
- makes sense for widely used products (e.g. toothpaste)
- advantages of potentially high sales volumes and relatively low marketing costs
What is mass targeting?
- products focused at large numbers
- usually big companies
- congested markets
What is niche targeting?
- focuses on small markets
- allows a business to still make a profit, could be limited
- a small manufacturer can meet the demand of a niche business but not necessarily a mass business
What is positioning?
- creating an image of the brand in mind of the target customer, allows them to develop an opinion
- customers mental map, products positioned next to competitors
Give three influences on positioning
- state of the market
- company’s current products
- attributes of the company
Describe a ‘product’ in the marketing mix
- should fit the needs and wants of customers
- consumers should get what they expect
- service also fits in this
Describe ‘price’ in the marketing mix
- refers to how much the product / service costs
- the product must represent good value
- the price needs to be worth the product
Describe ‘promotion’ in the marketing mix
- how the product is communicated to consumers
- methods include: advertising, PR, social media, personal selling, promotion and more
- must target the correct audience, appeal to them, pull on their emotions
Describe ‘place’ in the marketing mix
- where the product is available
- needs to be accessible
- could be E-commerce, high street, social media
Describe ‘people’ in the marketing mix
- having the right people working and creating / delivering your product and services
- staff must be trained correctly
- includes all job roles
Describe process in the marketing mix
- the systems processes that deliver a product to a customer
- this can cause a customer to buy or not from a business
- includes: pay systems, distribution systems, ordering process
Describe ‘physical evidence’ in the marketing mix
- the elements of the physical environment the customer experiences
- the space, the decoration, the environment is included
- the service provided should also have physical evidence e.g. receipts
Give 5 factors which could influence that integrated marketing mix?
- competitors
- when a company wants to position a product in the mines or consumers
- target market (wealthy customers are less price sensitive)
- product life cycle
- type of product (promotion and physical environment)
What is the Boston matrix?
- One technique used to analyse a business’ product portfolio is the Boston Matrix
- Considers each product within the portfolio in relation to its market share and the rate of market growth
What are the 4 quadrants?
- high market share + low market growth
- high market share + high market growth
- low market share + low market growth
- low market share + high market growth
What are the four segments in the Boston matrix?
Rising star Question mark
Cash Cow Dog
What are cash cow?
High market share in a low market growth
- these are established products
- profits made from these can help finance other products
- firms want as many as possible
- low market growth - less likely for more competition - spend less on advertising
What are rising stars?
High market share in a high growth market
- increasing sales revenue
- because the market is growing, other firms are entering the market with similar products
- there will be competition
- heavy promotional spending
- cash flow can be negative at first
- hoped that a star can become a cash cow
What is a question mark?
Low market share in a high market growth
- with growth in the market it can be successful if demand is high
- some are unsuccessful so need to decide if it should be discontinued
- requires lots of attention, mainly marketing
- costs money to achieve potential
What are dogs?
Low market share in a low market growth
- unlikely to be kept on by a company
- little growth in the market and little market share the company might settle for for future profits
- not very concentrated on
What is the product life cycle?
Plots the sales of a product through five stages of its life
What are the 5 stages in the product life cycle?
Development Introduction Growth Maturity Decline
Describe the first stage of the product life cycle
Development - developing product ready for release
Describe the second stage of the product life cycle
Introduction - product is launched / released onto the market. Sales are low
Describe the third stage of the product life cycle
Growth - sales (hopefully) increase sharply and the product moves towards profit
Describe the fourth stage of the product life cycle
Maturity - sales grow less quickly but (hopefully) the product develops customer loyalty and repeat customers / profits should be high at this stage but may have competition
Describe the fifth stage of the product life cycle
Decline - sales start to fall and the product may be going out of fashion. Evening it may be withdrawn
Name fifth reasons why a products life can be extended
- advertising
- price reduction
- adding value
- explore new markets
- new packaging
Why can’t businesses always stop the decline in products?
- products / services become obsolete
- changing in consumer tastes or buying behaviour
- poor marketing
What are the strategies for stage one of the PLC
- market mapping ( look for gaps )
- market research
- use retained profits
- often complex
- absorbs significant resources
- no sales to cover high costs
- high rate of failure
Give three reasons as to why a product doesn’t always launch
- inadequate demand
- action of competitors
- change in external environment
- production problems
- high cost
What are the strategies for phase 2 of the PLC?
- evaluation
- market research
- potentially limited competition
- promotion (high spending)
- pricing strategies
- encourage customer adaption
- low level of sales
- low capacity utilisation
- high unit costs
- usually negative cash flow
- heavy production
