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Business Studies > 5 - Marketing > Flashcards

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
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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
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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
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4
Q

Why do businesses conduct market research? (4)

A 
To gather information about:
• Demand 
• Market share 
• Competition
• Target market
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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

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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

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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
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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
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9
Q

Qualitative data

A

Involves views and opinions but does not provide statistically reliable information

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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

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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)
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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
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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
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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
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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
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16
Q

Market share equation

A

Market share = sales of product/total market sales x 100

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17
Q

List pricing methods (5)

A
  • Price skimming
  • Price penetration
  • Competitive pricing
  • Loss leader
  • Cost-plus
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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
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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
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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
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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
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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
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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
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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
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25
Q

Benefits of developing new products (4)

A
  • 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
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26
Q

Risks of developing new products (4)

A
  • 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
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27
Q

When developing a new product, a business will consider? (4)

A
  • The design
  • The price
  • The expected sales
  • The cost of development and of production
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28
Q

Importance of the design when developing a product (2)

A

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

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29
Q

Importance of the price when developing a product (2)

A

A business will consider
• Will the customer be willing to pay for the product
• How much are the benefits worth

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30
Q

Importance of the expected sales when developing a product

A

A business will consider:

• What is the likely demand for this product

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31
Q

Importance of the cost of development and of production when developing a product

A

Given the expected sales and the price, will this product make a return that justifies the risk in producing and launching it

32
Q

Significance of having a Unique selling point (2)

A
  • 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
Q

Importance of having a good brand image

A

It is a way a business can differentiate from its rivals e.g through the logo, its design and its communications

34
Q

Two types of product differentiation

A
  • Building the brand image

* Unique selling point (USP)

35
Q

Product life cycle (6)

A
  • Research and development
  • Introduction
  • Growth
  • Maturity
  • Decline
  • Extension strategies
36
Q

How can demand for a product or service change over time (3)

A
  • 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
Q

Define extension strategies

A

Are attempts to maintain sales of a product and prevent it from entering the decline stage of the product life cycle

38
Q

Examples of extension strategies (5)

A
  • Updating packaging
  • Adding more or different features
  • Changing target market
  • Advertising
  • Price reduction
39
Q

Define ‘product portfolio’

A

A product portfolio is the collection of products that a firm produces

40
Q

How and why businesses might broaden and balance their product portfolio using the Boston Matrix?

A

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
Q

Identify the four categories of the Boston Box/Matrix

A
  • Stars
  • Question marks
  • Cash cows
  • Dogs
42
Q

Stars - boston box/matrix (2)

A
  • Have a high market share in a fast-growth market

* They are future cash cows

43
Q

Cash cow - boston box/matrix (2)

A
  • 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
Q

Question mark - boston box/matrix (2)

A
  • 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
Q

Dogs - boston box/matrix (2)

A
  • 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
Q

Examples of promotional methods - Advertising (5)

A
  • Advertising
  • Newspapers
  • Television
  • Internet
  • Billboards
47
Q

Examples of promotional methods - Sales promotion (6)

A
  • 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
Q

Promotional methods - Public relations activities (3)

A
  • 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
Q

Promotional method - Sponsorship (3)

A
  • 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
Q

Promotional method - Social media (2)

A
  • 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
Q

Factors influencing the promotional mix (5)

A
  • 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
Q

Reasons for promotion (4)

A
  • 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
Q

Channels of distribution (3)

A
  • telesales
  • Wholesalers
  • Retailers
54
Q

Define ‘distribution channel’

A

Describes how the ownership of a product passes from the producer to the final customer

55
Q

Define ‘promotional mix’

A

Is the combination of promotional methods used by a business to communicate with its customers

56
Q

Define ‘sales promotion’

A

Are short term incentives to encourage customers to buy

57
Q

Channel of distribution - retailers (4) (3 advantages 1 disadvantage)

A
  • 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
Q

Wholesaler - channel of distribution (2 advantages 1 disadvantage)

A
  • 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
Q

Telesales - channel of distribution (4)

A
  • 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
Q

Benefits of using e-commerce and m-commerce (3)

A
  • Customers can order at any time
  • Customers can order from home
  • Customers can order from anywhere in the world potentially
61
Q

Drawbacks of e-commerce and m-commerce (3)

A
  • 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
Q

4Ps of the marketing mix

A
  • Product
  • Price
  • Promotion
  • Place
63
Q

Product - marketing mix (2)

A
  • The firm must identify customers’ needs (or wants)

* Then it needs to come up with a product that will fulfil those needs

64
Q

Price - marketing mix

A

The price must be one that the customer thinks is good value for money

65
Q

Promotion - marketing mix

A

The product must be promoted so that potential customers are aware that it exists

66
Q

Place - marketing mix (2)

A
  • 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
Q

How do the 4Ps of the marketing mix work together (2)

A
  • 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
Q

How does the marketing mix evolve over time

A

As customers’ needs and wants usually change over time

69
Q

Example of how a business will react to a change in the marketing mix (3)

A
  • 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
Q

Advantages of primary market research such as telephone surveys

A

Can call when it is convenient to the business

71
Q

Disadvantages of primary market research such as telephone surveys (2)

A
  • Cannot see how people respond - e.g their body language responses
  • People may not answer their phones or be reluctant to give answers
72
Q

Advantages of primary market research such as door-to-door survey

A

Can see how people react and people may be more likely to tell the truth

73
Q

Disadvantages of primary market research such as telephone surveys

A

Can be time-consuming

74
Q

Advantages of primary market research such as Focus groups

A

Can get in-depth responses

75
Q

Disadvantages of primary market research such as Focus groups

A

Small groups may not reflect all your target customers

76
Q

Advantages of primary market research such as Internet research

A

Cheap, quick

77
Q

Disadvantages of primary market research such as internet research

A

May not find the views of your target customers if they are not online

Business Studies (13 decks)

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