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Business EL > 3.3.3 and 3.3.4 making marketing decisions: segmentation, targeting, positioning and marketing mix > Flashcards

3.3.3 and 3.3.4 making marketing decisions: segmentation, targeting, positioning and marketing mix Flashcards

1
Q

How businesses use marketing

A

1- choose which customers to serve
market segmentation
targeting

2- decide how to serve those customers
product differentiation
marketing position

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2
Q

What is market segmentation

A

involves dividing a market into parts that reflect different customer needs and wants

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3
Q

Main categories of market segment

A

demographic segments
geographic segments
income segments
behavioural segments

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4
Q

What is demographic segmentation

A

dividing market into segments based on demographic variables such as age, gender, family, lifestyle, religion, nationality, ethnicity etc

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5
Q

What is income segmentation

A

dividing market into different income segments, often on the basis of social-economic grouping

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6
Q

what is behavioural segmentation

A

dividing a market into segments based on the different ways customers use or respond to a product and the benefits they seek

eg chocolate for holidays, or active wear

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7
Q

Examples of geographic segmentation: localisation by multi nationals

A

KFC in china
Starbucks in india

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8
Q

Benefits of market segmentation

A

-Focuses resources on parts of a market where the business can succeed
-allows a business to grow its share in markets
-helps with new product development
-helps make the marketing mix more effective

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9
Q

Drawbacks of market segmentation

A

-segmentation is an imprecise science- data not aways available, up-to-date or reliable

  • just because you can identify a segment doesn’t mean you can reach the customers in it

-markets are increasingly dynamic-fast changing; soo too are the segments

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10
Q

What is a niche market

A

where a business targets a smaller segment of a larger market, where customers have a specific needs and wants

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11
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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12
Q

Example of niche market

A

Vegan products

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13
Q

Advantages of niche marketing

A

less competition
clear focus- target customers
builds up specialist skill and knowledge
can often charge a higher price
profit margins higher
loyal customers

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14
Q

Disadvantages of niche marketing

A

lack of economies of scale

risk of over dependence on a single product or market

likely to attract competition if successful

vulnerable to market changes- “all eggs in one basket”

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15
Q

Key features of a mass market

A

majority in the market

customer needs and wants are more “general”

higher production output and capacity

potential for economies of scale

low-cost (highly efficient) operation

market leading brands

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16
Q

Mass market examples

A

rynair
coca cola

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17
Q

What does STP stand for

A

Segment
target
position

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18
Q

What is segmenting

A

divide the market into groups with similar characteristics or needs eg age, gender etc

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19
Q

What is targeting

A

Decide which market segment to focus on

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20
Q

What is positioning

A

position the product

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21
Q

What is a target market

A

A target market is the set of customers sharing common needs and wants that a business decides to target

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22
Q

What is market mapping

A

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

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23
Q

Advantages of market mapping

A

help spot gaps in the market in thge market

useful for analysing competitors- where are their products positioned?

encourages use of market research

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24
Q

Disadvantages of market mapping

A

just because there is a gap in the market doesn’t mean there is demand for the product

not a guarantee of success

how reliable is the market research that the position is based on

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25
Q

What are the traditional four Ps in the marketing mix

A

product
price
place
promotion

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26
Q

What is product

A

the product or service that the customer buys

what does it do
look like
reliability
how long does it last

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27
Q

What is price

A

how much the customer pays for the product

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28
Q

What is place

A

how is the product distributed to the customer

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29
Q

What is promotion

A

How the customer is found & persuaded to buy

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30
Q

What are the last 3 additional Ps in the marketing mix

A

physical
process
people

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31
Q

What is physical

A

layout and design of premises: ambience, easy of movement

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32
Q

What is process

A

Transaction process; website design, operational support

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33
Q

What is people

A

customer service; skills & experience CRM,

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34
Q

Different business emphasis different parts of the marketing mix- can you think of different businesses for each part of marketing mix

A
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35
Q

What are elements of an effective marketing mix

A

meets customer needs
Achieves marketing objectives
is balanced and consistent
creates a competitive advantage

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36
Q

What might influence the marketing mix of a product

A

1- finanical resources
2- target market
3- stage in life cycle
4- competition
5- consumer tastes and trends
6- elasticity of demand
7- reputation and brand image of the business
8- impact of technogly

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37
Q

What is a core benefit product

A

the main benefit it provides eg washing machine providing clean clothes

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38
Q

What is a tangible product

A

specification, reliability, design eg washing machine size, look and features

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39
Q

What is an augmented product

A

the extras like the brand name, the delivery, the guarantee and after sales service

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40
Q

What is a consumer products

A

goods bought for consumption by the general public

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41
Q

What is a industrial product

A

goods bought for use in a business process

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42
Q

What are key features of marketing industrial proucts

A

specialist buyers and sellers- will have speicalist requirements

buyer-seller relationship- strong emphasis on relationship and repeat business

transaction value- purchase value often substantial in a single transaction

quality and price- greater emphasis on product quality and price

support- greater requirement for after-sales support

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43
Q

What is the product life cycle

A

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

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44
Q

What is the research and development stage of the product life cycle

A

r&d a product before its made available for sale in the market

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45
Q

What is the introduction phase of the product life cycle and what occurs in it

A

launching the product into the market

new product launched
low sales
high unit costs
negative cash flow
heavy promotion

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46
Q

What is the growth phase of the product life cycle and what occurs

A

when sales are increasingly at their fastest rate

arrival of competitors
fast growing sales
cash flow becomes positive
unit costs fall

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47
Q

What is the maturity phase of the product life cycle and what ocurs

A

sales are near their highest, but the rate of growth is slowing down eg new competitors in the market

slower sales growth
intense competition
cash flow strongly positive
weaker competitors start to leave
prices and profits fall

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48
Q

What is the decline stage of the product life cycle and what occurs

A

final stage- when sales begin to fall

falling sales
market saturation
decline in profits
weaker cash flows
more competitors leave the market

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49
Q

Why would products enter the decline phase

A

technological advance
changes in consumer tastes and behaviour
increased competition
failure to innovate and develop the product

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50
Q

What could we do when we get to the decline stage?

A

Extension strategies-

lower price
change promotion
change product
look for alternative distribution channels
develop new markets
find new use for the product
reposition the product

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51
Q

Weaknesses of the product life cycle

A

the shape and duration of the cycle varies from product to product

It is difficult to recognise exactly where a product is in its life cycle

Length cannot be reliably predicted

decline is not inevitable

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52
Q

Key uses of the product life cycle model

A

forecast future sales trends
Help with market targeting and positioning
Help analyse and manage the product portfolio

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53
Q

Why do businesses want to develop new products?

A

increase market share
increase sales and profits
increase brand loyalty
open up more markets
improve competitiveness
utilise new technology
meet customer needs and wants

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54
Q

Why new products might be scrapped before launch

A

Inadequate demand
action of competitors
change in external environment
product problems
high costs
does not fit in the firms product range
life cycle expected to be too short

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55
Q

What is product portfolio analysis

A

assesses the position of eah product or brand in a firms portfolio to help determine the right marketing strategy for each

56
Q

What is the Boston matrix

A
57
Q

What are the two arrows of the boston matric

A

relative market share- a measure of the firms/ products strengths in the market

market growth- measure of market attractiveness

58
Q

`What is the Star part of the boston matrix

A

these products are doing well in fast growth markets

may need some investment to support them and maintain market share; these funds may come from the cash cow

59
Q

What is the cash cow part of the boston matrix

A

these are well established products- generating revenue and need less investment to promote

60
Q

What is the dogs part of the boston matrix

A

Managers may need to revise these dogs or stop producing them

61
Q

What is the question mark part of the boston matirx

A

product is now well established

have to invest in products to help promote and distribute them

62
Q

How valuable is the boston matrix model

A

useful for analysing product portfolio decions

but only a snapshot of the current position

has little or no predictive value

63
Q

Link between product life cycle and boston matrix

A

each stage of the boston matrix can be related to the stage of the product life cycle as seen in the diagram

64
Q

What is price skimming and the objective

A

set a high price to maximise profit

product is sold to different market segments at different times

top segment is skimmed off first with the highest price

objective- maximise profits per unit to achieve quick recovery of developmental costs

65
Q

When does price skimming work best

A

products that create exitment amongst “early adopters”

best used in introduction or early growth stage of product life cycle

elctronic items are an example

66
Q

Advantages of price skimming

A

increase profit
help recoup investment costs
helps to perceive product as good quality

67
Q

Disadvantages of price skimming

A

cannot last for long- competitors soon launch rival products which put pressure on the price

customers may be put off the high price

it requires market power

68
Q

What is penetration pricing

A

offer a product at a low introductory price

aim is to
- gain market share quickly
-build customer usage loyalty
-build sales of higher-priced related items

prices can be increased once target market share is reached

69
Q

eg of penetration prices

A

starbucks starting prices low then increasing them once customers accustomed to first prices

70
Q

Advantages of following this strategy

A

Encourages word-of mouth recommendation for product because of attractive pricing

forces the business to focus on minimizing unit costs right from the start

can be more competitive

71
Q

Disadvantages

A

customers may not want to pay when price increases

competitors may change their price too

can give perception of low quality

72
Q

What is dynamic pricing

A

business set flexible prices for products or services based on current market demands

used by business that sells goods or services online and/or via mobile apps

done automatically- by algorithms to adjust pricing according to business rules

using factors such as the customers location, time of day, day of week, level of demand, competitors pricing

73
Q

examples of dynamic pricing

A

ticket master
uber

74
Q

What factors influence price?

A

competitors

costs of production, promotion, etc

state of economy

consumers disposable income

location of business

brand image, rep and customer
loyalty

product quality and packaging

price elasticity of demand

75
Q

If demand is price elastic whats the best pricing strategy to use?

A

penetration- high demand when prices are low

but demand drops when prices rise

76
Q

When is price skimming most effective

A

when the product follows an inelastic demand curve-
meaning the quantity demanded doesn’t rise or fall drastically in response to a change in prices

77
Q

What is promotion

A

The way in which a business makes its product known to the customers, both current and potential

78
Q

Why do business undertake promotion

A

increase sales
attract new customers
encourage customer loyalty
encourage trial
create awareness
inform
remind potenial customers
launch a new product
reposition a product3

79
Q

What is the promotional mix

A

The specific mix of promotional methods that a business uses to pursue its marketing objectives

elements must be integrated in a cohesive, consistent and local manner

80
Q

Main elements of the promotional mix

A

-advertising (offline & online)
-sales promotion & merchandising
-personal selling
-public relations/publicity/sponsorship
-direct marketing

81
Q

What is advertising

A

paid for communication
many different advertising media
consumers subjected to many advertising messages each day = hard to get through

mass marketing is very expensive

82
Q

benefits of advertising

A

wide coverage

control of message

repetition means that the message

can be communicated effectively

effective for building brand

awareness and loyalty

83
Q

Disadvantages

A

often expensive

impersonal

one way communication

lacks flexibility

limited ability to close a sale

84
Q

What is personal selling

A

promotion on a person to person basis

two way communications

meeting with potenial customers to close a sale

by telephone, at meetings, in retail outlets and by knocking on doors

highly priced, low volume and highly technical products rely heavily on personal selling

85
Q

Benefits of personal selling

A

high customer attention

message is customised

interactivity

persuasive impact

potential for development of relationship

adaptable

oppurtunity to close the sale

86
Q

Disadvantages of personal selling

A

high cost

labour intensive

expensive

can only reach a limited number of customers

87
Q

example of personal selling

A

department store makeup counters where they help you tty the makeup

88
Q

What is sales promotion

A

short term incentives to increase sales

89
Q

Examples of sales promotion

A

coupons
money off
competitions
free gifts
free samples
merchandise

90
Q

Benefits of sales promotion

A

effective at achieving a quick boost to sales

encourages customers to trial a product or switch brands

91
Q

Drawbacks of sales promotion

A

sales effect may only be short-term

customers may come to expect further promotions

may damage brand image

92
Q

What is public relations (PR)

A

public relations activities are those that create goodwill toward an individual, business, cause or product

93
Q

Main aims of PR

A

achieve favourable publicity
build image and rep of business
communicate effectively with customers and other stakeholders

94
Q

Typical PR activities

A

promoting new products
enhancing public awareness
promote social responsibility
project business as a good employer

95
Q

What is sponsorship

A

sponsorship takes place when a payment for an event, person, organisation is given in return for some consideration or benefit

a specialist form of public relations

common in worlds of arts and sports

sponsorship should benefit both sides

96
Q

What is direct marketing

A

promotional material directed through mail, email, social media or phone to individuals or businesses

97
Q

Why use direct marketing

A

allows business to generate specific response from targeted groups of customers

focus on increasing sales to existing customers, build customer loyalty, generate new businees

98
Q

Benefits of direct marketing

A

can personalise marketing message
easy to measure response and success
cost effective

99
Q

Negatives of direct marketing

A

response rates vary
negative image of junk mail and email spam
databases expensive to maintain and keep accurate

100
Q

What is merchandising

A

the various attempts used to persuade customers to take action at the point of sale

101
Q

How might business use merchandising

A

window displays
in-store displays
signs
giveaways

102
Q

Advantage of merchandising

A

increased number of customers
higher sales
high profits
increased brand recognition

103
Q

Disadvantages of merchandising

A

cost involved
needs to be consistent
can be ineffective if not done correctly

104
Q

What is informative promotion

A

intended to increase consumer awareness of a product/service eg health campaigns

105
Q

What is persuasive promotion

A

intended to encourage consumers to purchase the product/service

106
Q

What is viral marketing

A

is a marketing campaign that has proven to be very successful and is well known

107
Q

What is branding

A

a brand is a product with unique character, for instance in design or image

it is consistent and well recognised

108
Q

Why is branding so important

A

higher prices
customer loyalty
differentiation
more likely to get shelf space
create awareness

109
Q

What is place

A

to make products available in the right place at the right time in the right quantities

110
Q

What is a producer

A

supplies the product or service

111
Q

What is a wholesaler

A

purchases products in large quantities (Bulk) and supply them in smaller quantities to retailers

112
Q

What is a retailer

A

sells goods/services to the final customer

113
Q

What is an agent

A

never actually owns the goods but will facilitate buyers and sellers coming together to make a deal happen

114
Q

What is the first flow chart of distribution channels

A
115
Q

What are the disadvantages of the first flow chart of distribution channels

A

lowest profit margin as wholesaler and retailer taking a %

116
Q

What are the advantages of the first distribution channel

A

reduce the producers transport costs
retailers can order in smaller amounts from wholesaler

117
Q

What is the second flow chart of distribution channels

A
118
Q

What are the advantages of the second distribution channel

A

retailers hold the stock
convenient for customers
uk wide reach
higher profit margins than with wholesaler

119
Q

What are the disadvantages of the second distribution channel

A

retailer expects to pay a lower price than consumers
higher transport costs

120
Q

What is the third distribution channel

A
121
Q

Whats the advantage of the third distribution channel

A

selling directly to consumer will help maximise profit margins as profits aren’t lost in intermediary’s mark ups

122
Q

What are the disadvantages of the third distribution channel

A

may not be possible depending on product type
hard to get a wider reach of cutomers

123
Q

What is the fourth distribution channel

A
124
Q

What are the advantages of using the fourth distribution channel

A

help bring all the different holiday firms together making it easier for the consumer and producer

they are specialists

125
Q

What is the disadvantage of the fourth distribution channel

A

have to pay commission

126
Q

What factors affect the choice of distribution channel?

A

profit margins
distribution costs
control
the market
the business
type of product

127
Q

What is multi-channel distribution

A

involves a business using more than one type of distribution channel

eg a producer of branded consumer products may distribute via retail stores as well as selling directly to customers using e-commerce

128
Q

What distribution channels does apple use

A
129
Q

What distribution channels doe heinz use

A
130
Q

Benefits of multi-channel distribution

A

allows more target market segments to be reached

customers increasingly expect products to be available via more than one channel

enables higher revenues- eg if retail outlets have no stock, but customers can buy online

131
Q

What are people - in the 7ps

A

the staff of a company who come into contact with customers

-have a major impact on the firms quality of customer service and therefore their brand image and customer loyalty

-it is impacted by the firms human resource policies such as recruitment, training, motivation and remuneration methods

132
Q

What is process- in the 7ps

A

how the company deals with its customers and delivers the product or service

-it covers communication, how the customer is dealt with, how quickly and effectively they have their needs satisfied, after-sales service, etc

133
Q

What is physical- in the 7ps and some examples

A

The tangible features of the service that can enhance customers’ experience

eg- buildings they operate in
store layout an displays
websites
staff uniform/appearance
packaging

134
Q

What is digital marketing

A

the use of the internet, mobile devices, social media, search engines, and other channels to reach consumers

135
Q

6 main types of digital marketing

A

email marketing
online advertising
search engine optimism
content marketing
influencer marketing
viral marketing

136
Q

What is search engine optimisation

A

the goal of SEO is to optimise content in a way that makes it appear among the first results on the results pages of search engines- particularly Google

137
Q

What is content marketing

A

creating and distributing valuable, relevant and consistent content to attract and retain a clearly defined audience

through blogs ,specialist reports, e-books, streamed videos etc

Business EL (12 decks)

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