4.2 - Marketing planning

Question 1

What is marketing planning?

Answer 1

The process of formulating appropriate strategies and preparing marketing activities to meet marketing objectives.

Question 2

What are the elements of a marketing plan?

Answer 2

• Details of SMART marketing objectives
• Sales forecasts
• Marketing budget
• Marketing strategies to be adopted
• Detailed action plans: show marketing tactics used to implement strategies

Question 3

What are the limitations of marketing planning?

Answer 3

• plans can become outdated if they are not revised
• Plans are insufficient on their own and must be constantly reviewed
• an up to date assessment of the market and consumer profiles must exist for the planning to be appropriate

Question 4

What is the marketing mix?

Answer 4

The key decisions that must be taken in the effective marketing of a product. There are seven interrelated decisions (the seven P’s).

Question 5

What are the 4 P’s?

Answer 5

Product, price, place and promotion.

Question 6

What is a market segment?

Answer 6

A subgroup of a market made up of consumers with similar characteristics, tastes and preferences

Question 7

What is a target market?

Answer 7

The market segment that a particular product is aimed at.
Business look at market segments and then decide on target markets for their products. Each target market then requires its own marketing strategy and promotion mix.

Question 8

What is market segmentation?

Answer 8

Identifying different segments within a market and targeting different products or services to them. This is sometimes called differentiated marketing and is a form of niche marketing. Firms research and analyse the market and identify specific consumer goods or segments existing in it.

Question 9

What is a consumer profile?

Answer 9

A quantified picture of consumers of a firm’s products, showing proportions of age groups, income levels, location, gender and social class. Successful segmentation is when a business has a clear idea of consumers in the target market they are selling to.

Question 10

What are the main characteristics of consumers in a profile?

Answer 10

Income levels
Age
Gender
Social class
Region

Question 11

Name and explain the 3 commonly used bases for segmentation.

Answer 11

Geographic differences

• consumer tastes vary based on geographical locations
• for example: northern Europe needs warmer clothing

Demographic differences

• Age, sex, family size, ethnic background
• Individuals social class → great impact on expenditure patterns

Psychographic factors

• Differences between peoples lifestyle, personalities, values and attitudes
• Lifestyle = broad term: activities undertaken, interests and opinions (not personality)

Question 12

Name 3 marketing acronyms for demographic customer groups.

Answer 12

DINKY - double income no kids yet
NILK - no income lots of kids
WOOF - well - off older folk

Question 13

What are the advantages of market segmentation?

Answer 13

• increased sales: businesses can define their target market and design goods specifically aimed at these groups
• helps identify the gaps in the market that can be successfully exploited
• differentiated marketing strategies means company’s avoid wasting money advertising to groups that wont buy their product
• small firms that can’t compete in the whole market can specialise in 1 or 2 market segments
• price discrimination can be used to increase revenue and profits

Question 14

What are the disadvantages of market segmentation?

Answer 14

• R and D as well as production costs may be high
• promotional costs may be high
• cannot exploit marketing economies of scale fully
• production and stock holding costs may be higher
• danger of excessive specialisation if consumers change their purchasing habits significantly

Question 15

Define niche market and niche marketing

Answer 15

niche market: a small and specific part of a larger market

niche marketing: identifying and exploiting a small segment of a larger market by developing products to suit it

Question 16

Define mass market and mass marketing.

Answer 16

mass market: a market for products that are often standardised and sold in large quantities

mass marketing: selling the same products to the whole market with no attempt to target groups within it

Question 17

What are the advantages of niche marketing?

Answer 17

• small firms able to survive and thrive
• chance to sell at high prices and high profit margins if the market is unexploited by competitors
• consumers pay more for an exclusive product
• niche market products can be used by large firms to create status and image as mass market products lack these qualities.

Question 18

What are the advantages of mass marketing?

Answer 18

• able to use economies of scale (lower average costs of production)
• fewer risks than niche marketing strategies

Question 19

What is a product positioning map and how does it help a business?

Answer 19

A graph that analyses consumer perceptions of each of a group of competing products in respect of two product characteristics. Used to:

Identify gaps in the market

Manager aware of key features of a product that should most heavily be marketed (based on gap in market)

Firms can see if repositioning of a product/brand is needed (eg. new advertising, campaign, restyled packaging instead of newly launched product)

Question 20

Define what a unique selling point (USP) is.

Answer 20

A factor that differentiates a product from its competitors, such as the lowest cost, the highest quality or the first ever product of its kind; a USP could be thought of as ‘what you have that competitors don’t’

Question 21

Name 5 different forms of differentiation.

Answer 21

Low prices
trust
ethical stance
convenience
product features

Question 22

What are the benefits and limitations of low prices?

Answer 22

Benefits: customers have limited spending power and will be attracted to low prices

limitations:
- total profit might fall if profit margin is reduced to very low levels
- do the low prices integrate into the marketing mix
- the consumers could perceive the brand or product to be of low quality

Question 23

What are the benefits and limitations of trust?

Answer 23

benefits: consumers will buy from company’s they trust often

limitations:
- trust is very difficult to establish
- trust can be damaged easily (especially with social media) and it is difficult to regain trust

Question 24

What are the benefits and limitations of ethical stance?

Answer 24

benefits: in some communities ethics are very important and although ethical stance may lead to higher costs and prices, many customers are willing to spend more for a good cause.

limitations:
- in some markets ethical stance is less important than low prices (aka rich people care, poor people don’t)
- lack of genuine ethical position can lead to loss of trust if consumers realise the company is only window dressing

Question 25

What are the benefits and limitations of convenience?

Answer 25

benefits: effective differentiation as consumers usually have little time

limitations:
- these methods are so widespread that it is difficult to gain true differentiation

Question 26

What are the benefits and limitations of product features?

Answer 26

benefits:

• difficult for competitors to copy this type of differentiation if R and D leads to patented products or processes
• can lead to a reputation of innovative products that can charge premium prices

limitations:
- R and D is an expensive and time consuming process and does not always lead to a successful product
- constant development is needed to stay ahead of competitors so the company must constantly invest resources into developing innovative products (otherwise this strategy will not work)