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Business EL > 3.3.2 Marketing Management > Flashcards

3.3.2 Marketing Management Flashcards

1
Q

What is market segmentation

A

Dividing a market into parts that reflect different customers needs and wants
Eg age gender

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2
Q

What are the 4 segments

A

Demographic geographic income and behavioural

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3
Q

What are the benefits of market segmentation

A

Focuses resources on parts of a market where business will succeed

Helps with new product developments

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4
Q

What are the drawbacks of market segmentation

A

Data not always available or reliable
Markets change quickly

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5
Q

What is demographic segmentation

A

Dividing a market into segments based on demographic variables
Eg age gender, lifestyle, religion

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6
Q

What is income segmentation

A

Dividing markets into different income segments often on the basis of socioeconomic grouping

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7
Q

What is behavioural segmentation

A

Dividing a market into segments based on the different ways customers use or respond to a product

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8
Q

What is geographical segmentation

A

Dividing a market into different geographical units

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9
Q

What is niche marketing

A

A business targets a smaller segment of a larger market - customers have specific needs and wants

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10
Q

What is mass marketing

A

Where a business sells into the largest part of the market where there are many similar products offered by competitors

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11
Q

What are the advantages of niche marketing

A

They can charge more for products
Less competition
Brand loyalty

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12
Q

What are the disadvantage for niche marketing

A

Only targeting a small amount of customers
Customer needs and wants change

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13
Q

What are the advantages of mass market

A

Access larger customer base
High demand for products

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14
Q

What is targeting

A

Deciding which market segment to focus on

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15
Q

What is positioning

A

Position the product - what image do you want to create for the product

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16
Q

What is a target market

A

The set of customers sharing common needs and wants that a business decides to target

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17
Q

What’s a market map

A

Illustrates the positions a product can take in a market based on two dimensions that are important to customers

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18
Q

What is an advantage of using market mapping

A

Help spot gaps in the market
Useful for analysing competitors

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19
Q

What are disadvantages of using market mapping

A

Not a guarantee of success
Just because there’s a gap doesn’t mean there’s demand

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20
Q

What’s the product life cycle

A

A model which describes the stages a product goes through over its life

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21
Q

What are the key uses of the product life cycle model

A

Forecast future sale trends
Help wirh market targeting and positioning

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22
Q

Why do businesses want to develop new products

A

Increase sales revenue
Fill a gap in market
Meet customer needs and wants
Increase brand loyalty

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23
Q

What are the negatives of new product development

A

Time consuming
Cost of development rises before launch
Market research has to be done
Most new products don’t reach the launch phase

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24
Q

What is marketing research

A

The gathering and analysis of research to help support the implementation of marketing strategy

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25
Q

Two types of market research

A

primary
secondary

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26
Q

What is primary research

A

Data collected first-hand for specific research purposes

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27
Q

What is secondary research

A

Data that already exists and which has been collected for a different purpose

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28
Q

Examples of primary research

A

Observation
postal surveys
telephone surveys
online survey
focus groups
face to face surveys
test marketing
experiments

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29
Q

Benefits and drawbacks of primary research

A

Benefits
Directly focussed to research objectives
Kept private- not publicly into customer view
More detailed insights- particularly into customer views

Drawbacks
Time-consuming and costly to obtain
risk of survey bias
sampling may not be representative

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30
Q

Examples of secondary research

A

Google

Government departments

trade associations

trade press and magazines

competitor web-sights and marketing materials

market research reports

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31
Q

Benefits and drawbacks of secondary research

A

Benefits
often free and easy to obtain
good source of market insights
quick to accesses and use

Drawbacks
Can quickly become out of date
not tailored to business needs
specialist reports often quite expensive

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32
Q

What is Quantitive research

A

Concerned with numerical data

addresses question’s such as “how many?” etc
Main methods are surveys, ie. telephone, postal, face to face and online

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33
Q

Benefits of quantitative research

A

Data relatively easy to analyse

Numerical data provides insights into relevent trends

Can be compared with data from other sources (eg competition history)

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34
Q

Drawbacks of quantitative research

A

Focuses on data rather than explaining why things happen

Doesn’t explain the reasons behind numerical trends

May lack reliability if sample size and methods

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35
Q

What is qualitative research

A

Based on opinions, attitudes, beliefs and intensions

Answers questions such as “why? who? how?

Aims to understand why customers behave in certain ways it how they may respond to a new product or service

Main methods are focus groups and interviews

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36
Q

Benefits of qualitative research

A

essential for important new product development

focussed on understanding customer needs ,wants, expectations = very useful insights for a business

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37
Q

Drawbacks of qualitative research

A

expensive to collect and analyse – requires specialist research skills

Based around opinions- always a risk that sample is not representative

38
Q

What is sampling

A

Involves the gathering of data from a sample of respondents, the result of which should be representative of the population as a whole

39
Q

3 types of sampling

A

random
stratified
quota

40
Q

What is random sampling

A

makes sure every member of the population has an equal chance of selection

does not target any specific market segmemntn

41
Q

advantages of random sampling

A

simple to design and interpret
less chance of biast

42
Q

Disadvantages of random sampling

A

may not reflect target market
expensive
time consuming

43
Q

What is stratified sampling

A

Dividing population into subgroups (strata) based on relavent characteristics (eg gender, age range, income bracket, job etc)

based on proportion of the population- calculate how may poeple should be sampled in each subgroup

Then you use random sampling to select a sample from each sub group

44
Q

Advantages of stratified sampling

A

Free from researcher bias

produces a sample that is representative of all groups

reduces sampling error

45
Q

Disadvantages of stratified sampling

A

Cannot reflect all differences
Time consuming

46
Q

What is quota sampling

A

The aim is to obtain a sample that is “representative” of the population

Population is divided by the most important variables such as income, age and location

The research then chooses the sample from this until the quota (target number of respondents) is reached

47
Q

Advantages of quota sampling

A

quick and easy way of obtaining a sample
cheaper than other methods
representative of the population

48
Q

Disadvantage of quota sampling

A

Not random, so some risk of bias

49
Q

How to calculate percentage change

A

New value- original value
—————————- X 100
original value

50
Q

What is market size

A

indicates potential sales for a business

can be done by volume or value

51
Q

What is market size by value

A

Number of units sold in the market
X
(average) price per unit

52
Q

What is market size by volume

A

Total number of units sold in the market

53
Q

What is market growth

A

The % growth of the overall market size overtime

can be value of sales/ profits or volume of sales (units sold)

54
Q

What is market growth

A

Market size in the yr - market size in previous yr
——————————————— X 100
market size in previous yr

55
Q

What is sales growth

A

sales in year- sales in previous year
———————————————-X100
sales in previous year

56
Q

What is market share

A

explains how the overall market is split between competitors

good indicator of competitive advantage

57
Q

Market share calculation

A

Total sales of the company
————————————– X 100
Total sales of the market

58
Q

What is corretation

A

correlation looks at the strength of a relationship between two variables

59
Q

What is a line of best fit

A

Plots the relationship between the variables based on data points

indicates the strength of correlation = stronger the better

60
Q

What is positive correlation

A

An independent variable increases in value, so does the dependent variable

61
Q

What is negative correlation

A

As the independent variable increases in value, the dependent falls in value

62
Q

Where is the dependent variable plotted and the independent on graph

A

dependent- y axis
independent- x

63
Q

What is no correlation

A

No discernible relationship between independent and dependent variables

64
Q

What are confidence intervals

A

A confidence interval gives the percentage probability that an estimated range of possibile values in fact includes the actual value being estimated

helps a business evaluate the reliability of a particular estimate

65
Q

What is extrapolation

A

Uses trends established from historical data to forecast the future

66
Q

What are moving averages

A

takes a data series and “smoothes” the fluctuations in data to show an average

aims to take out the extremes of the data from period to period

67
Q

Advantages of extrapolatation

A

a simple method of forecasting
not much data required
quick and cheap

68
Q

disadvantages of extrapolation

A

unreilable if there are significant fluctuations in historical data

assumes past trends will continue into the future

ignores qualitative factors (such as change in taste & fashios

69
Q

What is price elasticity of demand

A

measures the extent to which the quantity of a product demanded is affected by a change in price

70
Q

PED formula

A

% change in price

71
Q

What does it mean if a product is price elastic

A

If PED is HIGHER than 1

A change in demand is more than a change in price

overall revenues would increase with a price cut

overall revenues would decrease with a price increase

72
Q

What does it mean if a product is price inelastic

A

If PED is LOWER than 1

A change in demand is less than a change in price

overall revenues would decrease with a price cut

revenue would increase with a price increase

73
Q

What is unitary price elastcity

A

PED is exactly 1

change in demand
=
change in price

74
Q

What factors might influence the PED of a product

A

brand strength
necessity
habit
availability of subsitutes

75
Q

How does brand strength effect PED

A

products with strong brand loyalty and reputation tend to be price inelastic

76
Q

How does the product being a necessity effect PED

A

the more necessary a product is, the more the demand tends to be inelastic

77
Q

How does that product being a habit for consumers effect PED

A

products that are demanded and consumed as a matter of habit tend to be price inelastic

78
Q

how does availability of substitutes effect PED

A

demand for products that have lots of alternatives tends to be price elastic

79
Q

What happens to total revenue when PED is inelastic and a firm raises its price

A

total rev INCREASES

80
Q

What happens to total revenue when PED is elastic and firm lowers its price

A

total rev increases

81
Q

What happens to total revenue when PED is elastic and a firm raises price

A

total rev DECREASES

82
Q

What happens to total revenue when PED is -1.5 and firm raises price by 4%

A

total rev Decreases

83
Q

What happens to total revenue when PED is -0.4 and firm raises price by 30%

A

total rev INCREASES

84
Q

What happens to total revenue when PED is -.02 and firm lowers price by 20%

A

total rev DECREASES

85
Q

What happens to total revenue when PED is -4 and the firm lowers price by 15%

A

total rev INCREASES

86
Q

How would price elasticity impact marketing decisions

A

if the product is price inelastic than a business should increase their price to increase revenue

if the product is price elastic than a business should decrease their price to increase revenue

87
Q

What is income elasticity

A

measures how the demand for a product can change with a change in income

88
Q

Calculation for income elasticity

A

% change in income

89
Q

What is income elastic products and what are examples

A

LUXURIES
- income elasticity more than 1
As income grows, more is spent on luxuries- demand grows faster than the increase in income

eg expensive holidays
branded goods
designer clothes

90
Q

What are income inelastic products and examples

A

NECESSITIES
-income elasticity less than 1 but more than 0
As income grows, demand rises but not as fast as the increase in income

eg groceries (milk)
fresh fruit and veg
public transport
petrol

91
Q

What are negative income elastic products and example

A

INFERIOR
Income elasticity less than 0
As income grows, demand falls

eg value brands

92
Q
A

Business EL (7 decks)

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