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Business A Level > 3.4. Marketing planning > Flashcards

3.4. Marketing planning Flashcards

1
Q

Define marketing plan

A
  • A marketing plan is a detailed, fully researched written report on marketing objectives and marketing strategy to be used to achieve them
  • A marketing plan should be a part of a strategy to achieve corporate objectives
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2
Q

How marketing plan differs from marketing mix? (4)

A

Because it includes:

  • The marketing objectives and how they help the business achieve its overall objectives
  • The resources required to achieve marketing objectives
  • The research required to achieve the marketing objectives and how the results of this research may change the objectives
  • How the elements of the marketing mix can be used to achieve the marketing objectives
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3
Q

Key contents of typical marketing plan (6)

A
  • Purpose of the plan and the mission of the business
  • Where the firm is now - situational analysis
  • Where it aims to get to - marketing objectives and marketing strategy
  • Turning strategy into appropriate tactics - marketing mix
  • The budget
  • Summary and time frame
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4
Q

What should situational analysis cover? (5)

A
  • Current product analysis
  • Target market analysis - consumer profiles and segmentation
  • Competitor analysis
  • Economic and political environment - PEST analysis
  • SWOT analysis
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5
Q

Marketing strategy (4) (4)

A

Strategic decisions include:

  • Mass marketing or niche marketing
  • Market segmentation
  • Development of new products
  • Market research methods

Marketing strategy depends on:

  • Situational analysis
  • Company’s mission and objectives
  • Competitors
  • Resources
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6
Q

What is a marketing budget?

A

The marketing budget sets out how much money is allocated to the marketing function and how it is intended to spend it.

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7
Q

Factors affecting size of marketing budget (4)

A
  • The financial position of the business
  • Competitor actions
  • The demand for and prices for marketing services
  • The responsiveness from marketing spending
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8
Q

Benefits of marketing plan

A
  • Convince potential investors or entrepreneurs that the proposal is ound and potentially profitable
  • Reduces the risk of failure, especially when designing a new product or entering a new market
  • Clear directions to keep and gain consumer
  • The situational analysis would identify key competitors and considers their strengths and weaknesses
  • If the plan is drawn up in collaboration with other departments, such as finance and operations, then there is more chance of having a suitable budget to meet marketing objectives and being able to produce the output to meet sales targets
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9
Q

Limitations of marketing plan (5)

A
  • Complex
  • Costly
  • Time consuming
  • Lack of skilled management to produce a good plan
  • Can be out of date quickly due to the changing nature of business environment
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10
Q

Factors influencing elasticity (4)

A
  • Consumer incomes
  • Price of the goods
  • Price of related goods
  • Promotional spending
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11
Q

Define income elasticity of demand

A
  • measures the responsiveness of demand for a product following a change in consumer incomes
  • % change in demand/ % change in incomes
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12
Q

Indicators of income elasticity (3)

A
  • Negative - inferior goods because quantity demand rises as incomes fall and vice versa. e.g. cigarettes, frozen foods
  • High positive - luxury goods/normal goods because demand rises when income rises and vice versa. e.g. wine, smartphones, cars
  • Low positive - necessity. e.g. salt
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13
Q

Define promotional elasticity of demand

A
  • measures the responsiveness of demand for a produt following a change in the amount spent on promoting it
  • % change in demand/ % change in spending
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14
Q

Indicators of promotional elasticity (4)

A
  • >1: demand = elastic
  • =1: demand = neutral
  • <1: demand = inelastic
  • =0: no effect on demand
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15
Q

Define cross elasticity of demand

A
  • measures the responsiveness of demand for a product following a change in price of another
  • % change in demand for good A/ % change in price for good B
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16
Q

Indicators of cross elasticity (2)

A
  • Negative => two goods are complements to each other, they are often bought together
  • Positive => two goods are substitues and are competing against eac other
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17
Q

Weaknesses of elasticity methods (3)

A
  • State (levels of growth/spending/GDP) of the economy - recession, unemployment and disposable income, increased consumer spending
  • Seasonal demand could change: Christmas, Thanksgiving
  • Competitors action: scandals from rivals, promotions

=> misleading results

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18
Q

Define AIDA

A
  • a model that explains the successive stages a customer passes through in buying a product
  • Attention -> Interest -> Desire -> Action
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19
Q

How AIDA works?

A
  • Attention - does sales promotion/ advertising capture attention of potential consumers
  • Interest - keeping potential consumers interested in the product after initial awareness
  • Desire - combination of benefits and price should create a desire in the consumer to purchase
  • Action - company must make it easy to buy - payment methods, location
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20
Q

Define DAGMAR

A

a process of establishing goals for a promotion campaign so that it is possible to determine whether it has been successful or not. Defining Advertising Goals for Measured Advertising Results

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21
Q

What does DAGMAR emphasise?

A
  • The communication task of advertising
  • Importance of setting a clear and measurable goal for advertising such as AIDA
  • E.g. unaware -> aware -> comprehension -> conviction -> action
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22
Q

Define new product development (NPD)

A

is a series of steps that includes the conceptualisation, design, development and marketing newly created or newly rebranded goods or service

23
Q

Steps of product development (7)

A
  1. Generate new ideas
  2. Idea screening
  3. Conceptual development
  4. Business analysis
  5. Product testing
  6. Test marketing
  7. Commercialisation
24
Q

Sources for generating new ideas (6)

A
  • Company’s own R&D
  • Adaptation of competitor’s idea
  • Market research, such as focus groups
  • Employees
  • Salespeople who have close contact with final consumers
  • Teamworking
25
Q

What is idea screening?

A

Eliminate those ideas that stand the least chance of being commercially successful

26
Q

Concept development and testing (5)

A
  • Ask key questions about what features of the product should have and the cost needed to make the product
  • Most likely consumers?
  • Specific benefits?
  • Most cost effective methods to manufacture?
  • How will consumers react to it?
27
Q

Business analysis (5)

A
  • Considers the likely impact of the new product on company’s cost, sales and profits
  • Is finance available to develop this product?
  • Can it be patented? offer monopoly rights
  • Will it fit in with the existing product mix?
  • Impact of changes in econ environment on sales
28
Q

Product testing (4)

A

Concerned with technical performance and if it will meet consumer’s expectations, it includes:

  • developing a prototype of the product or working model of it
  • testing the product in typical use conditions
  • using focus groups to gather opinions
  • adapting product as required after testing
29
Q

Define test marketing

A

the launch of the product on a small-scale market to test consumer’s reaction to it

30
Q

Benefits of test marketing

A
  • actual consumer behaviour can be observed and measured
  • feedback from consimers will enable a final decision for full launch
  • risks associated with a product failing after full-scale launch are reduced
  • weaknesses in the product can be identified and moderated
31
Q

Limitations of test marketing

A
  • Expensive
  • Competitors are able to observe a firm’s intention and react
32
Q

Commercialisation (4)

A
  • Refers to full scale launch of the product
  • Corresponds to the introduction phase of product life cycle
  • Promotional strategy will be put in place
  • Distributional channel will be filled up
33
Q

Define research and development

A

the scientific research and technical development of new products and processes

34
Q

How do governments encourage R&D? (2)

A
  • Provide legal security to inventors and designers by allowing them to ‘patent’ and ‘register’ => prevents unauthorised copying of new idea or design
  • Provide financial assistance to businesses. Done by either tax-reduction incentives, or by offering grants to firms to be spent on specific projects
35
Q

What are the factors that influence spending on R&D? (4)

A
  • The nature of the industry: rapidly changing technologies and consumer expectations in pharmaceuticals, defence, computer or software products and transportation lead to the need for substantial investment. Other industry such as hotels, food and hairdressing need to spend much less
  • R&D spending plans of competitors: it is essential to spend as much or more than competitors if market share and technical leadership are to be maintained
  • Business expectations
  • Risk profile or culture of the business: affect sums that business can inject into R&D, attitude of management to risks
  • Government policy: grants to businesses and universities
36
Q

Rewards of R&D (4)

A
  • Develop USP
  • Competitive Advantage
  • High added value (Premium Pricing)
  • Established reputation
37
Q

Risks of R&D (5)

A
  • Time consuming
  • Resource intensive
  • No guarantee of success
  • Potential loss of focus on core
  • Potential damage to brand image/ reputation
38
Q

Reasons why R&D can fail? (4)

A
  • Inadequate market research
  • Poor marketing support or inappropriate pricing
  • changes in technology, product becomes out-dated
  • competitors release a product that consumers prefer
39
Q

Define sales forecasting

A

Predicting future sales levels and sales trends. It is a quantitative technique that aims to anticipate a business’s level of sales at a particular future time period.

40
Q

Key factors affecting the accuracy and reliability of sales forecasts (3)

A
  • Consumer trends:
    • Demand in many markets changes as consumer tastes & fashions change
    • Affects both overall market demand & the market shares of existing competitors
  • Economic variables
    • Demand often sensitive to changes in variables such as exchange rates, interest rates, taxation etc.
    • Overall strength of the economy (GDP growth) also important
  • Competitor actions - Hard to predict, but often significant reason why sales forecasts prove over-optimistic
41
Q

Benefits of sale forecasting (4)

A
  • The production department would know how many units to produce and what quantity of materials to order and would hold the correct level of stocks
  • The marketing department would be aware of how many products to distribute and whether changes to the existing marketing mix were needed to increase sales
  • Human resources workforce plan would be more accurate, leading to the appropriate level of staffing
  • Finance could plan cash flows with much greater accuracy.
42
Q

Limitations of sales forecasting (3)

A
  • Inaccuracy of predictions: Attempts to look into the future are speculative and often the forecasters biases and subjectivity can be influential in determining the result. For example, a manager who would like to keep staffing costs down may choose a lower estimate of forecast sales to justify to staff lower wage rises.
  • Limited information: Sales forecasting is an estimated prediction based on trends in past data. Estimates are only as good as the quality of the data and information available at the time.
  • External influences: There are so many factors outside of a firm’s control that can influence sales at any time. The economy may suddenly boom benefiting all, the exchange rate may rise hurting exporting firms, or a competitor may launch a great new product and capture market share. The external environment can be significant.
43
Q

Circumstances where sales forecasts are likely to be inaccurate (6)

A
  • Business is new – a startup (notoriously difficult to forecast sales)
  • Market subject to significant disruption from technological change
  • Demand is highly sensitive to changes in price and income (elasticity)
  • Product is a fashion item
  • Significant changes in market share (e.g. new market entrants)
  • Management have demonstrated poor sales forecasting ability in the past
44
Q

Methods of sales forecasting (5)

A
  • Sales force composite
  • Delphi method
  • Hunch
  • Consumer surveys
  • Jury of experts
45
Q

Define sales force composite

A

A method of sales forecasting that adds together all of the individual predictions of future sales of all the sales representatives working for a business

46
Q

Define Delphi method

A

a long range qualitative forecasting technique that obtains forecast from a panel of experts.

Uses experts not directly employed by the business

47
Q

Application of Delphi

A
  • There is little accurate or predictable historical data available (e.g. in the case of a new product launched into a new market)
  • Where a market is subject to wide fluctuations in demand (e.g. unexpected surges or shocks)
  • Where a market experiences significant change (e.g. shortened product life cycles, rapid changes in technology)
48
Q

Define jury of experts

A

The jury of experts are people who use the specialists within a business to make forecast for the future

49
Q

Define correlation (quantitative methods)

A

Correlation looks at the strength of a relationship between two variables.

50
Q

Define seasonal fluctuations

A

Regular and repeated variations that occur in sales data within a period of 12 months or less.

51
Q

Define cyclical fluctuations

A

Variations in sales occurring over periods of time of much more than a year – they are related to the business cycle.

52
Q

Define random variations

A

May occur at any time and will cause unusual and unpredictable sales figures, e.g. exceptionally poor weather or negative public image following a high profile product failure

53
Q

Advantages of moving average sales forecasting method (3)

A
  • Useful for identifying and applying seasonal variation to predictions
  • Accurate for short term in stable economic conditions
  • Identifies the average seasonal variations for each time period -> assist in planning
54
Q

Disadvantages of moving average sales forecasting method (3)

A
  • Fairly complex calculation
  • Inaccurate for long term. External environmental factors can change
  • Long term would require the use of more qualitative methods that are less dependent on past result

Business A Level (18 decks)

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