4.2 Market Planning Flashcards
Define the term ‘Market Planning’
Marketing planning is the formal and systematic process of formulating marketing objectives and appropriate marketing strategies in order to achieve these goals. A market plan is used to devise this.
Define the term ‘Market Plan’
A marketing plan requires consideration of all elements of the marketing mix (product, price, promotion, place, people, processes, and physical evidence) in order to meet the marketing objectives of the organization.
State three ADVANTAGES and DISADVANTAGES of ‘Market Plans’
ADVANTAGES:
1. Helps marketing managers to formulate more effective marketing strategies in order to meet the needs and wants of the firm’s customers.
2. Enables marketing managers and marketers to have a better sense of direction and purpose. This helps to improve employee motivation and labor productivity.
3. Helps marketers to identify potential problems and plan appropriate solutions to these issues.
DISADVANTAGES:
1. Time and money are used. This comes at an opportunity cost, i.e. the money and resources could have been better spent on other areas of the business.
2. Might not be realistic for smaller firms to use due to their very limited marketing budgets. Hence, the value of marketing planning is somewhat questionable for such firms.
3. Can become outdated very quickly, and is unlikely to be followed too rigidly, as the organization will need to adjust its strategies as unforeseen opportunities and threats
Define the term ‘Market Strategies’
Marketing strategies are the different long-term actions used by an organization to achieve its marketing goals. A marketing plan is a prerequisite to formulating marketing strategies to achieve the objectives of the organization.
Define the key terms:
- A market
- Market Segmentation
- Market Segments
A market is the collective term for the buyers and sellers of a particular good or service.
Market segmentation describes the process of dividing a market for a product into smaller or distinct groups of customers in an effort to meet their specific desired needs and wants.
Market segments are the individual sub-groups of a large market, consisting of customers who share common or similar characteristics.E.g by age, gender, culture etc.
Define the following types of segmentation:
1. Demographic
2. Geographic
3. Psychological
4. Socio-economic
Demographic segmentation involves splitting consumers according to statistical characteristics of the population, such as age, gender, family size, religion, ethnicity, and income.
Geographic segmentation splits consumers according to their different geographical factors, such as population density, climate (weather), and geographical location. It enables marketers to localize their products to better suit customers in different areas or regions of the world.
Psychographic segmentation splits the market according to people’s lifestyle choices and personal values. Lifestyle choices include people’s personal interests, such as their hobbies and other pursuits. Personal values are the moral beliefs held by particular market segments.
Socio-economic segmentation splits the market according to consumer or household income levels. This is often linked to their type of profession and/or their level of educational attainment. For instance, airline carriers offer different ticket prices
State a key limitation of Market Segmentation
It should be noted that market segmentation often creates a limited number of customer groupings, which potentially contain bias, generalizations, and stereotypes. Many customers may not fit neatly into these market segments. In addition, limited marketing budgets may not enable all identified market segments to be specifically targeted.
Define the terms ‘Targeting’ and ‘Target Market’.
Targeting is the systematic process of marketing to a specific target segment. Market segmentation is a prerequisite to targeting.
The target market is a clearly identifiable group of customers that an organization focuses its marketing efforts on, i.e., it is the segment(s) of the market that the business aims its marketing strategy at.
Establishing suitable target markets enables the business to know which customers to aim the firm’s goods or services at. The target market can apply to both existing and potential customers. For example, some businesses operate in:
Mass markets – businesses operating in mass markets supply products to cater for a broad range of target markets, e.g., smartphones, breakfast cereal, and washing detergents.
Niche markets – businesses operating in niche markets supply highly specialised products to cater for a small and select target market, e.g., a newspaper or magazine that targets readers with a particular interest such as snowboarding, antique model toys, or classic cars.
Define the term ‘Product Position Map (sometimes referred to as a perception map)’
A position map is a visual marketing tool used to show the perspectives of customers regarding a firm’s products or brands against those of rival ones in the market.
Define the term ‘Niche Marketing’
Outline two characteristics of organisations operating within a niche market to do with: (and why)
- Marketing costs
- Prices
Niche marketing is an approach that involves businesses focusing on a relatively small segment or a specific segment of the market. It is usually a subset of a larger market. E.g Korfball, Snowboarding, Synchronised Swimming.
Firms operating in niche markets tend to have lower marketing costs as resources are more directed to the specific product to meet the demands of the targeted customers.
Prices in niche markets tend to be relatively high because:
- There is limited, if any, direct competition.
-Customer loyalty is likely to be high.
- Lack of substitutes means that premium prices can be charged
Define the term ‘Mass Marketing’. Define the term ‘Mass Marketing’ and describe the characteristics of ‘mass market products’.
Mass marketing is an approach that involves businesses targeting all customers (all segments) in the market for a particular product. It focuses on selling standardized (homogeneous) products to the generic public or a large and broad group of customers.
“Mass Markets Products” are standardized products, usually made using mass production techniques, to cater to large consumer markets. Hence, there are opportunities to have economies of scale, but the profit margin of each unit of output is relatively low.
Define the terms ‘Unique Selling Point’ and ‘Product Differentiation’ and state how they connect to one another.
A unique selling point (or unique selling proposition) refers to the distinctive attributes that make a business, its products and/or brands special in the eyes of its customers. It is the ultimate purpose of product differentiation.
Product differentiation refers to the process by which firms attempt to make their goods and services different from those provided by other firms in the market in order to increase their own sales revenue.
State three ADVANTAGES and DISADVANTAGES of a business having a USP
ADVANTAGES:
1. Helps to determine if a new commercial project or idea is likely to succeed.
2. Leads to greater customer loyalty as customers identify something distinctive and superior about the product over rival ones.
3. Makes the product or brand stand out from the competition in the market, i.e. it helps to attract customers by drawing attention to its competitive advantage.
DISADVANTAGES:
1. Competitors might simply copy, tweak, or enhance it. This can weaken the business’s advantage over time, resulting in more competition and possible price wars.
2. Might not attract a larger market. This can limit the organization’s growth if it relies solely on its uniqueness.
3. Customers expect it. If the business needs to change its USP, this could disappoint customers, making it challenging to retain customer loyalty.
Define the term ‘Differentiation’ and state two of its ADVANTAGES and DISADVANTAGES.
The process of distinguishing an organization’s products from those of other firms in the same industry.
ADVANTAGES:
1. Enables businesses to charge higher prices due to the distinctive features
2. Can help to hinder or prevent new entrants in the market, thereby maintaining the business’s market share as customers remain loyal.
DISADVANTAGES:
1. Can be highly expensive
2. Can create unnecessary or wasteful competition, such as excessive packaging and marketing clutter
