5 - Marketing Flashcards
1
Q
What is the importance of identifying and satisfying customer needs? (5)
A
- To provide a product or service that customers will buy - increase the demand
- To increase sales - increase revenue and profits
- Select the correct marketing mix - to know how to appeal to the customers
- Avoid costly mistakes - key to getting sales
- To be competitive - offer better value for money
2
Q
How do businesses you segmentation to target customers (5)
A
- Gender
- Age
- Location
- Income
- The stage someone has reached in their life cycle
3
Q
Why do businesses use segmentation to target customers? (3)
A
- So a business can develop its products to fit customer needs more closely
- So it can target its customers more precisely
- So the business can set an appropriate price
4
Q
Why do businesses conduct market research? (4)
A
To gather information about: • Demand • Market share • Competition • Target market
5
Q
Why does a business collect information about demand when conducting market research
A
To see the size and growth of the market and the different segments that exist within the overall market
6
Q
Why does a business collect information about market share when conducting market research
A
To see the sales of each producer as a percentage of total sales in the market
7
Q
Why does a business collect information about competition when conducting market research (2)
A
- To see the number and size of competitors and their share of the total market sales
- This can help managers identify which businesses are growing and what those businesses are doing in order to grow
8
Q
Why does a business collect information about target market when conducting market research (2)
A
- This allows the business to make marketing activities more targeted
- It can also give itself a different position in the market compared to competitors
9
Q
Qualitative data
A
Involves views and opinions but does not provide statistically reliable information
10
Q
Quantitative data
A
Involves the use of numbers such as the market, the growth of the market or the number of customers a business has
11
Q
Methods of primary market research (4)
A
- Questionnaires
- Surveys
- Interviews
- Focus groups (where a small group of people discuss their opinions of a product)
12
Q
Methods of secondary market research (3)
A
- Market research reports - from Mintel
- Government publications - such as the Family Expenditure Survey or social trends)
- Printed press - e,g Articles in newspapers, magazines
13
Q
Advantages of Secondary market research (2)
A
- It can be gathered quickly and cheaply e.g financial times carry good business surveys which are useful for exploring general trends in markets
- It can provide information on large sections of the population
14
Q
Disadvantages of secondary market research (2)
A
- The existing data may not be exactly what the business wants
- The existing data may be out of data - could lead to the business making wrong decisions if its in a frequently changing market
15
Q
Market size equation (2)
A
- Market size can be measured in the value or volume of sales
- Value of sales = number of units sold x price per unit
16
Q
Market share equation
A
Market share = sales of product/total market sales x 100
17
Q
List pricing methods (5)
A
- Price skimming
- Price penetration
- Competitive pricing
- Loss leader
- Cost-plus
18
Q
Price skimming (3)
A
- This is where a business charges a high price to begin with and once the product is established the business will lower its price
- The high price helps established businesses to increase revenue and cover any research and development costs
- The lowering of the price helps the product to become a mass-market product
19
Q
Price penetration (3)
A
- This is where a business charges a very low price when a product is new to get lots of people to try it
- This allows a business to establish a market share within a competitive market
- At first the product will make little profit but once it becomes established the business increases the price
20
Q
Competitive pricing (2)
A
- This is where a business charges similar prices as its competitors
- The business may make very little profit and have to find ways other than price to attract new customers
21
Q
Loss leader (3)
A
- This is when a product’s price is set below cost
- The business doesn’t make profit but it aims for customers to buy other products as well (which it does make a profit from)
- E,g games console are often prices below cost but firms make profit on bundles
22
Q
Cost-plus (3)
A
- This is where a business works out the total cost of making the product and then adds a certain amount depending on how much profit they want to make while still having reasonable demand
- This can be done using a percentage mark-up
- Also can be done using a profit margin
23
Q
Internal factors which might influence pricing decisions (4)
A
- A business’s aims and objectives
- A business’s internal costs
- Where a product is within its life cycle
- Elements of the marketing mix
24
Q
External factors which might influence pricing decisions (3)
A
- The nature of the market
- Whether the product is sold in a competitive market or not
- The cost of raw materials
25
Benefits of developing new products (4)
* New products will increase overall sales for the business and may extend the life-cycle of existing products
* They may appeal to a new market segment and so open business opportunities
* Businesses can initially charge higher prices for new products before their competitors bring similar products to the market
* Can be good for a firm's reputation - if they've been the first to launch exciting new products in the past, people will naturally be interested in their future
26
Risks of developing new products (4)
* It can be very costly and time consuming - businesses risk running out of money if they invest too much into research and development and don't get the products to market quickly enough
* Businesses can end up wasting resources by developing something customers don't want
* Businesses might not be able to produce the new product on a large scald at a low enough cost
* Businesses risk ruining their reputation if the new product is of poor quality
27
When developing a new product, a business will consider? (4)
* The design
* The price
* The expected sales
* The cost of development and of production
28
Importance of the design when developing a product (2)
A business will consider:
• What it offers in terms of features, design, look, ease of use or reliability compared to competitors
• The customers' needs and wants that it fulfils
29
Importance of the price when developing a product (2)
A business will consider
• Will the customer be willing to pay for the product
• How much are the benefits worth
30
Importance of the expected sales when developing a product
A business will consider:
| • What is the likely demand for this product
31
Importance of the cost of development and of production when developing a product
Given the expected sales and the price, will this product make a return that justifies the risk in producing and launching it
32
Significance of having a Unique selling point (2)
* A USP is when a business will try to develop some aspect of the product or the service it offers that makes it unique
* It is a form of product differentiation - it can hopefully attract more sales and may even be able to charge more
33
Importance of having a good brand image
It is a way a business can differentiate from its rivals e.g through the logo, its design and its communications
34
Two types of product differentiation
* Building the brand image
| * Unique selling point (USP)
35
Product life cycle (6)
* Research and development
* Introduction
* Growth
* Maturity
* Decline
* Extension strategies
36
How can demand for a product or service change over time (3)
* At the growth phase demand increases until the product becomes established
* At the maturity phase demand reaches its peak
* At the decline phase demand starts to fall as rival products take over
37
Define extension strategies
Are attempts to maintain sales of a product and prevent it from entering the decline stage of the product life cycle
38
Examples of extension strategies (5)
* Updating packaging
* Adding more or different features
* Changing target market
* Advertising
* Price reduction
39
Define 'product portfolio'
A product portfolio is the collection of products that a firm produces
40
How and why businesses might broaden and balance their product portfolio using the Boston Matrix?
A balanced product portfolio means that a business can use money from its cash cows to invest in its question marks so they can become stars
41
Identify the four categories of the Boston Box/Matrix
* Stars
* Question marks
* Cash cows
* Dogs
42
Stars - boston box/matrix (2)
* Have a high market share in a fast-growth market
| * They are future cash cows
43
Cash cow - boston box/matrix (2)
* A cash cow product has a high market share in a low-growth market
* They are in a maturity phase - costs are low since they have already been promoted and are produced in high lows
44
Question mark - boston box/matrix (2)
* A question mark product has a low market share in a fast-growth market
* They aren't profitable yet and need heavy marketing to give them a chance of success
45
Dogs - boston box/matrix (2)
* Have a low market share and low market growth
| * The business will either get what profit it can before discontinuing them or sell them off
46
Examples of promotional methods - Advertising (5)
* Advertising
* Newspapers
* Television
* Internet
* Billboards
47
Examples of promotional methods - Sales promotion (6)
* Discounts - reducing the price to give more incentive to buy
* Buy one get one free offers
* Competitions and coupons
* Point of sales displays i.e in-store displays attract buyers
* Free gifts
* Free samples
48
Promotional methods - Public relations activities (3)
* Involves communicating with the media e.g TV interviews or press releases
* Cheaper and easy way to get a firm noticed by a wide audience
* however, have no control over what the press can see or hear
49
Promotional method - Sponsorship (3)
* Is when a firm sometimes give money to organisations and events so their name is displayed e.g sport and television
* It can create a high profile for the business
* Bad publicity if the the thing you're sponsoring starts to get bad publicity your company's image may suffer too
50
Promotional method - Social media (2)
* Is a quick, easy and cheap way for firms to promote their products
* However, any mistakes or negative customer comments can be seen quickly by lots of people so time and money needs to be spent to carefully monitor the site
51
Factors influencing the promotional mix (5)
* Finance available - large firms can usually afford to spend more than smaller ones
* Nature of the product or service - some products need lots of description to say what they are
* What competitors are doing - firm might want to use social media if all competitors are
* Nature of the market - if a market is growing rapidly, a firm may be willing to spend more on promotion as they are predicting a large increase in sales, which will cover the costs
* Target Market - promotions might need to be in a place where they'll be seen by the right people, and need to be presented in a way that they'll appeal to the right people
52
Reasons for promotion (4)
* Inform/remind customers about the product
* Create or increase sales
* Create or change the image of the product
* Persuade customers to buy the product
53
Channels of distribution (3)
* telesales
* Wholesalers
* Retailers
54
Define 'distribution channel'
Describes how the ownership of a product passes from the producer to the final customer
55
Define 'promotional mix'
Is the combination of promotional methods used by a business to communicate with its customers
56
Define 'sales promotion'
Are short term incentives to encourage customers to buy
57
Channel of distribution - retailers (4) (3 advantages 1 disadvantage)
* Customers have higher satisfaction with the products due to retailer providing better customer service through product knowledge
* The retailer can help promote products - can increase sales
* Products can be sold in more places - so more potential customers are exposed to them
* However, it can be hard for new firms to persuade many retailers to stock their products
58
Wholesaler - channel of distribution (2 advantages 1 disadvantage)
* Good for manufacturers that make lots of a particular product e.g baked beans
* Wholesalers already have customers so products can reach lots of potential customers quickly
* However, consumers may get lower levels of customer service compared to other channels
59
Telesales - channel of distribution (4)
* Often the cheapest channel for the consumer
* It can be time consuming for firms to sell products to individual customers especially if each customer buys only small quantities
* Arranging deliveries can be difficult and expensive
* This channel is good for firms who don't have loads of customers or firms selling one-off items e.g custom made wedding dresses
60
Benefits of using e-commerce and m-commerce (3)
* Customers can order at any time
* Customers can order from home
* Customers can order from anywhere in the world potentially
61
Drawbacks of e-commerce and m-commerce (3)
* Need to be able to distribute to a much wider range of destinations; logistical can cost issues
* Need to be able to handle returned goods; because customers cannot try on or touch items, they are more likely to return them
* Need to ensure the security of the site and product customers' data; logistical and cost issues when distributing overseas raises the price of products can can impact on competitiveness
62
4Ps of the marketing mix
* Product
* Price
* Promotion
* Place
63
Product - marketing mix (2)
* The firm must identify customers' needs (or wants)
| * Then it needs to come up with a product that will fulfil those needs
64
Price - marketing mix
The price must be one that the customer thinks is good value for money
65
Promotion - marketing mix
The product must be promoted so that potential customers are aware that it exists
66
Place - marketing mix (2)
* It must be sold in a place that the customer will find convenient e.g that's why you can buy buckets and spades at the beach also goggles at the swimming pool
* Place can also refer to the channel of distribution
67
How do the 4Ps of the marketing mix work together (2)
* If a firm gets them right then customers will be more likely to buy its products
* Even if it gets one wrong it can have negative effects on the other Ps
68
How does the marketing mix evolve over time
As customers' needs and wants usually change over time
69
Example of how a business will react to a change in the marketing mix (3)
* Customers used to buy music on vinyl records from a shop
* Nowadays they're more likely to download music from the internet
* As a result the product and place have changed - so many record stores now have websites where music can be downloaded
70
Advantages of primary market research such as telephone surveys
Can call when it is convenient to the business
71
Disadvantages of primary market research such as telephone surveys (2)
* Cannot see how people respond - e.g their body language responses
* People may not answer their phones or be reluctant to give answers
72
Advantages of primary market research such as door-to-door survey
Can see how people react and people may be more likely to tell the truth
73
Disadvantages of primary market research such as telephone surveys
Can be time-consuming
74
Advantages of primary market research such as Focus groups
Can get in-depth responses
75
Disadvantages of primary market research such as Focus groups
Small groups may not reflect all your target customers
76
Advantages of primary market research such as Internet research
Cheap, quick
77
Disadvantages of primary market research such as internet research
May not find the views of your target customers if they are not online
