Buisness unit 3.1, 3.2, 3.3, 3.4 Flashcards
what is marketing?
identifying customer wants and satifying them probitability
what are the 4 roles of marketing?
- identifying customer needs
- satisfy customer needs
- maintain customer loyalty
- building customer relationships
why do customers spending patterns change? (why do they buy different products than before?) (4)
- customer tastes and fashions might change
- chinges in technology
- changes in income
- ageing population
why do some markets have become more competitive? (3)
- globalisation meant that businesses can now sell to other countries –> more competition
- transportation –> easier to ship products to other countries
- improved technology has led to e-commerce –> increasing competition as people can buy from other countries
how can businesses respond to changing spending patterns and increased competition? (4)
- maintain good customer relationships
- keep improving their existing products
- bring out new products
- keep costs low
what is a niche market?
a small specialized version of a larger market
what is a mass market?
where the products are designed for a large number of customers
what are examples of niche marketing? (2)
hiking boots
wedding dress
what are examples of mass marketing? (2)
coca cola
washing powder
what is market research?
is the process of gathering, analysing, and interpreting information about a market
what are examples a buisness can find out from market research? (4)
- how much customers are willing to pay
- where would they like the product to be sold
- what type of promotion would be effective
- who their main competitors are
what does product orientated mean?
producing the product first and then a market for it
what does market orientated mean?
when businesses carry out market research to find out consumer wants before a product is developed and produced
what are the two types of market research?
primary and secondary research
what is primary research?
collection of new data involves direct contact with potential or existing customers
what are the methods of primary research?
questionnaires, online surveys, interviews, groups
what are the benefits of postal questionnaires? 2
- opinions of customers on open ended questions
- detailed information about the price customers are willing to pay
what are the drawbacks of postal questionnaires? 2
- gathering and collating results is time consuming
- bias could occur if they do not question a fair sample
what are the benefits of online surveys? 3
- can find out what the customers want
- quick responses
- easy to complete
what are focus groups?
group of people provide information through a group discussion with a researcher present
what are the drawbacks of online surveys? 2
- answers may be too brief as the interviewer is not there
- consumers may rush the survey so inaccurate results
what are the benefits of interviews? 2
- detailed information can be gathered about preferences
- interviewer can answer the questions in detail so consumers answer them correctly
what are the drawbacks of interviews? 2
- very time consuming
- interviewer might prompt the consumers with the answers they want to hear
what are the benefits of focus groups? 2
- provides detailed information about customers tests and preferences
- quicker and cheaper than individual
what are the drawbacks of focus groups? 2
- feedback could be uneven and people might be influenced by the opinion of others
- time consuming
what are the two methods for sampling? 2
- a random sample (people are selected at random)
- a quota sample (are selected on specifically)
whats are the methods for secondary research? 3
- government statistics
- newspapers
- market research agencies
what are the disadvantages of primary research?
- more expensive as you need to pay interviewers and researchers
what are the advantages of primary research? 2
- up to date information so more accurate
- more specific and accurate as it’s produced by the business itself
what are the advantages of secondary research? 2
- cheap/free
- easy and quick to obtain
what are the disadvantages of secondary research? 3
- more likely to be out of date, could be inaccurate
- not collected for the business itself so not specific
- rival firms have access to same sources
what is the marketing mix? (product)
a term which is used to describe all activities which fo into marketing a product or service (4 ps)
what are the four marketing mix things? (product)
product
price
place
promotion
what are the benefits of developing new products? 2 (product)
- will give th ebuisness USP
- allows business to expand into new business markets
what are the drawbacks of developing new products? 3 (product)
- will have to carry out market research before launching new product
- brand image could be damaged –> fails to meet customer needs
- expensive
what is brand image? (product)
image or identity given to the product which gives personality of its own and blocks it out from competitors
what are the benefits of a strong brand image? 3 (product)
- will give buisness unique selling point
- customers are more likely to be loyal –> increase in sales
- allow business to charge premium price
what are the two functions of the role of packaging? 2 (product)
- it has to be suitable for the product to be stored
- used for promoting the product (eyecatching)
what are the product life cycle stages? 6 (product)
- development
- introduction
- growth
- maturity
- saturation
- decline
what is development (product life cycle stages) (product)
market research is carried out and the prototype is tested before the product is launches (no sale)
what is introduction (product life cycle stages) (product)
lots of capital is spent on advertising the product, prices are high
what is growth (product life cycle stages) (product)
sales grow rapidly, prices are high, profits start to be made
what is saturation (product life cycle stages) (product)
prices have to be reduced as competiotion is big , advertising may be high
what is maturity (product life cycle stages) (product)
competiton starts to get intense, prices are reduced to gain competitive advantage, lots of advertising is used to maintain sales and profiys
what is decline (product life cycle stages) (product)
sales decrease as competition is high, product may have gone out of fashion, product is withdrawn from the market
what are some of the extension strategies? (5) (product)
- sell to new markets
- modify the packaging
- use a new advertising campaign
- introduce the new improved version of the old one
- sell through additional retail outlets
what is e-commerce?
buying products and services online
what are the benefits of using e commerce to a business? 4
- easy access for customers –> more sales for business
- website can be used to promote business, cheap
- customers can buy all over the world
- dynamic pricing can be used
what are the drawbakcs of using e commerce to a business? 5
- more competitors
- some customers like to try the product before buying
- no face to face contact with consumers –> lack of customer service
- customers may not use internet
- shipping costs are expensive
what are the drawbacks of using the internet and social media networks for promotion?
- customer find adverts annoying, they will ignore them
- customers might not use social media
- people may give bad reviews on the business page –> impacting brand image
what are the benefits of using the internet and social media networks for promotion?
- reaches target market
- ads can be updated
- cheap to use as can advertise their own business page
what is a distribution channel? (place)
when a product is passed from the producer to the customer
what is a producer in a buisness? (place)
the company that makes the good
what is a wholesaler in a business? (place)
buys from producers in large quantities and sells in smaller quantities to retailers
what is a retailer in a buisness? (place)
buys goods from either the producer or the wholesaler and sells to consumers
what is an agent in a buisness? (place)
sells products on behalf of the producer
what are the two types of promotion (promotion)
- advertisements (above the line promotion)
- sales promotion (below the line promotion)
what are the aims of promotion? 4 (promotion)
- to increase brand awareness and to increase sales
- to introduce new products to the market
- to compete with competitors products
- to improve the company image
what are the two types of advertising? 2 (promotion)
- persuasive (persuading customer they need it)
- informative (giving info on the product)
what are the advantages of using TV for advertising your business? (promotion)
- targets a large audience
what are the disadvantages of using TV for advertising your business? 2 (promotion)
- expensive
- not many people watch tv
what are the advantages of using the radio for advertising your business? (promotion)
- use a specific song so the ad will be remembered increasing bad awareness
what are the disadvantages of using the radio for advertising your business? (promotion)
- no visual messages
what are the advantages of using the newspapers for advertising your business? (promotion)
- permanent on paper so people can look back increasing brand awareness
what are the disadvantages of using the newspapers for advertising your business? (promotion)
- no one uses newspapers anymore
what are the advantages of using magazines for advertising your business? (promotion)
- niche market can advertise their product specifically to their target market
what are the disadvantages of using magazines for advertising your business? (promotion)
- magazines are not published often
what are the advantages of using billboards/posters for advertising your business? 2 (promotion)
- cheap
- seen often
what are the disadvantages of using billboards/posters for advertising your business? 2 (promotion)
- many people ignore them
- not a lot of detail or information on the business
what are the advantages of using ads in the cinema before movies for advertising your business? (promotion)
- effective to pinpoint target marker
what are the disadvantages of using ads in the cinema before movies for advertising your business? 3 (promotion)
- expensive
- seen in only a limited time
- many people stream at home other than cinemas
what are the advantages of using leaflets for advertising your business? 3 (promotion)
- cheap
- can be delivered to door
- adverts can be kept
what are the disadvantages of using leaflets for advertising your business? (promotion)
- may be ignored and dumped away
what are the disadvantages of using the internet for advertising your business? 2 (promotion)
- customers will have direct link to buy it
- email ads can be sent to existing customers
what are the disadvantages of using the internet for advertising your business? 2 (promotion)
- some customers may not use the internet
- customers may ignore emails
what is the marketing budget? (promotion)
specifies how much money is available to advertise and promote the product
what are examples of below the line production? 4 (promotion)
- free gifts
- price reductions
- free samples
- point of sale displays
what is cost plus pricing? (price)
estimating how many products will be sold, calculating the total cost of making these products and then adding a percentage markup for profit
what are the advantages of cost plus pricing? (price)
- each product earns profit for the business
- easy method to apply
what are the disadvantages of cost plus pricing? (price)
- the buisness could lose sales if the selling price is too high compared to competitors
- the costs are passed off to the consumer in the form of a higher price so there is o incentive to reduce costs
what is competitive pricing? (price)
setting prices in line with your competitors or just below them
what are the advantages of competitive pricing? (price)
- product is not overpriced than competitors so sales increase
what are the disadvantages of competitive pricing? (price)
- higher quality products need to be at higher prices for higher quality image
- if cost of production is higher than competitors, then a competitive piece can lead to losses being made
what are the advantages of penetration pricing? (price)
- useful for new products to encourage customers to buy the product
- will lead to an increase in sales and an increase in market share
what is penetration pricing? (price)
when the price is set lower than the competitors’ prices in order to be able to enter a new market
what are the disadvantages of penertration pricing? (price)
- it is sold at a low price, profit per unit will be low
- might not be good for a product with reputation for quality
- customers might get used to the low prices and when the business wants to increase the price, it could lead to customer dissatisfaction
what is price skimming? (price)
a high price is set for a new product on a market
what are the advantages of price skimming? (price)
- helps to make the product be seen as high quality
- research and development costs can be recouped form the profit made on the product at the high price
what is promotional pricing? (price)
when a product is sold at a very low price for a short period of time
what are the disadvantages of price skimming? (price)
- as it is high price customers will not want to buy it
- the high profits the business is making may encourage other competitors to enter the market, this could result as a decrease in sales
what are the advantages of promotional pricing? (price)
- useful to get rid of stock that will not sell
- it can help to renew interest in the product if sales are failing
what are the disadvantages of promotional pricing? (price) 2
- the revenue will be lower per unit because the price of the product has been reduced
- might lead to a price war –> competitors also reducing their prices, and customers will go to them
what is the price elasticity of demand? (price)
the responsiveness of demand to a change in price
what is price elastic? (price)
when consumers are very sensitive to a change in price, if price increases, demand will decrease
what is price inelastic? (price)
consumers are not very sensitive to a change in price, if the price of a product increases, demand will not decrease
what is a marketing strategy?
a plan to combine all four Ps to achieve the objectives of the business
what are the opportunities of entering new foreign markets? 2
- more growth potential as they have access to more customers
- home markets might be saturated –> limited opportunities for growth
what are the problems of entering new foreign markets? 4
- lack of knowledge of foreign market
- cultural differences
- exchange rates may negatively impact customers
- transport costs may be higher
what are the methods to overcome problems when entering foreign markets?
- joint ventures
- licencing
- franchising
- localising existing brands
what are the benefits and disadvantages of joint ventures? (1,2)
benefits =
- can gain more important local knowledge about the culture in the country so they adapt the product
disadvantage =
- need to share profits between two firms
- management conflicts between two businesses
what are the benefits and drawbacks of licencing?
benefits =
- goods do not have to be transported to the new market which saves time and transport costs
drawbacks =
- unexperienced licence could damage brand and reputation
- people now have access to how the product is made, so they might become a competitor and develop a better version
what are the benefits and drawbacks of franchising?
benefits =
- local knowledge is used to know where to place the store
drawbacks =
- same drawbacks of franchising
what are the benefits and drawbacks of localising existing brands?
benefits =
- metts local customr needs increasing customer satidfaction
drawbacks =
- expensive to change packaging/advertising/develop
