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Business Topic 3 Flashcards

1
Q

Why are corporate objectives a key internal influence on marketing objectives?

A

A marketing objective should not conflict with corporate objectives, as they are the most important internal influence.

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2
Q

How does the financial position of a business influence its marketing objectives?

A

The financial position (profitability, cash flow, liquidity) directly affects the scope and scale of marketing activities.

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3
Q

Why is the quality and capacity of the workforce critical for a services business in terms of marketing objectives?

A

A motivated and well-trained workforce can deliver superior customer service and productivity, creating a competitive marketing advantage.

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4
Q

What role does the operations function play in influencing marketing objectives?

A

Operations enable competition on cost and quality, and effective capacity management helps achieve revenue objectives.

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5
Q

How does business culture influence marketing objectives?

A

A marketing-oriented culture focuses on meeting customer needs, while a production-oriented culture may set unrealistic or irrelevant objectives.

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6
Q

How does the economic environment act as an external influence on marketing objectives?

A

It determines demand; for example, recessions or changes in exchange rates can thwart or alter marketing objectives, especially in international markets.

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7
Q

Why must marketing objectives account for competitor actions?

A

Achieving objectives like increasing market share requires anticipating and overcoming competitor responses.

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8
Q

What market dynamics influence marketing objectives?

A

Market size, growth, and segmentation; for instance, slowing market growth may limit revenue or new product development objectives.

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9
Q

How does technological change influence marketing objectives?

A

Rapid technological advancements shorten product life cycles and create opportunities for innovation, which must be reflected in marketing objectives.

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10
Q

How do social and political changes impact marketing objectives?

A

Changes in legislation or societal attitudes can create or hinder marketing opportunities, affecting strategies and objectives.

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11
Q

Why do businesses need accurate and up-to-date information about changes in technology?

A

Changes in technology enable new products and production processes, such as digital study tools reducing demand for printed textbooks.

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12
Q

How do changes in consumer tastes influence market demand?

A

Consumer tastes shift demand; for example, there’s increased demand for activity-related holidays instead of mass-market beach holidays.

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13
Q

Why is it important for businesses to monitor competitors’ product ranges?

A

New rival products or pricing changes can significantly affect demand, as seen with the Microsoft X-Box challenging Sony’s PlayStation 2.

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14
Q

How do changes in economic conditions impact market demand?

A

Economic changes affect incomes, influencing demand differently for luxuries versus necessities.

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15
Q

What is one purpose of marketing research related to consumer needs?

A

Marketing research helps businesses gain a detailed understanding of consumer needs, including opinions on product prices, packaging, and advertising.

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16
Q

How does marketing research help reduce the risk of product or business failure?

A

By providing accurate and up-to-date market information, it helps businesses make informed decisions, increasing the likelihood of commercial success.

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17
Q

What role does marketing research play in forecasting future trends?

A

It anticipates future customer needs, allowing businesses to adjust product portfolios and output levels to maintain success.

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18
Q

What is primary market research?

A

Primary market research is data collected first-hand for a specific research purpose.

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19
Q

Name five common methods of primary market research.

A

1.Focus groups
2. Interviews (online & in-person)
3. Surveys & questionnaires
4. Mystery shoppers
5. Product testing and product trials

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20
Q

What is one advantage of primary market research related to research objectives?

A

It is directly focused on research objectives, making it fit for purpose.

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21
Q

Why is primary market research often more reliable than secondary research?

A

It tends to be more up-to-date and provides detailed insights, especially into customer views.

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22
Q

What is a drawback of primary market research related to time and cost?

A

It can be time-consuming and often costly to obtain.

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23
Q

Why might primary market research suffer from survey bias?

A

Research samples may not be representative of the entire population.

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24
Q

What is secondary market research?

A

Secondary market research uses data that already exists and has been collected by someone else for a different purpose.

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25
Q

What is internal secondary data?

A

Internal secondary data comes from within the firm itself, such as records of past advertising campaigns, sales invoices, past sales figures, or loyalty card data.

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26
Q

Why should internal sources of secondary data be the first line of enquiry?

A

They are usually the quickest, cheapest, and most convenient source of information and are exclusive to the organisation.

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27
Q

What are the limitations of internal secondary data?

A

It may be incomplete, out of date, or irrelevant for new projects.

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28
Q

What is external secondary data?

A

External secondary data is information published by other organisations, such as commercial research firms, government data, competitor reports, trade publications, and the general media.

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29
Q

Name three examples of commercial market research organisations that provide external secondary data.

A
  1. MINTEL
  2. Keynote
  3. Euromonitor
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30
Q

How can government data serve as an external source of secondary research?

A

The availability of open data from the government provides businesses with valuable information on various topics.

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31
Q

Why are competitors a useful source of external secondary data?

A

Their company reports and websites offer accessible information, though limited, that can provide insights.

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32
Q

What are two examples of external secondary data sources other than commercial organisations and the government?

A
  1. Trade publications
  2. The general media
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33
Q

What is sampling in market research?

A

Sampling involves collecting opinions from a specific group of people to gain insights about the entire population.

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34
Q

Why do market researchers use sampling instead of studying the whole population?

A

Sampling is less expensive and time-consuming while still providing valuable insights through careful design and analysis.

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35
Q

What are the key elements of sample design?

A
  1. Method of selection
  2. Sample structure
  3. Plans for analyzing and interpreting results
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36
Q

What affects the size of a sample in market research?

A

The required precision, sample design complexity, and the need for a representative population.

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37
Q

Why is random selection important in sampling?

A

It allows justifiable inference to the population, ensures precision, and guards against sample bias

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38
Q

What is the first step in good sample design?

A

Clearly and completely defining the target population to ensure all elements are represented.

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39
Q

What is a sampling frame?

A

A list or method used to identify the population, such as payrolls, company lists, government registers, or geographical indicators like postcodes.

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40
Q

What are the key factors influencing sample size?

A
  1. Margin of error
  2. Variability in the population
  3. Confidence level (e.g., 95%)
  4. Proportion of the population sampled
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41
Q

Does population size usually affect sample size?

A

No, larger populations require a smaller proportion to be sampled unless the sample size exceeds 5% of the population.

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42
Q

What is cluster sampling?

A

Sampling where geographic groups (clusters) are randomly selected, and all units in each cluster are examined.

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43
Q

What are the advantages and disadvantages of cluster sampling?

A

Advantages: Quick, easy, and good for face-to-face surveys.
Disadvantages: Expensive for large clusters, higher risk of sampling error.

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44
Q

What is convenience sampling?

A

Using subjects who volunteer or are easiest to involve.

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45
Q

What are the advantages and disadvantages of convenience sampling?

A

Advantages: Quick, readily available data.
Disadvantages: Not representative, prone to volunteer bias.

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46
Q

What is judgement sampling?

A

Deliberately choosing the sample rather than selecting randomly.

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47
Q

What are the advantages and disadvantages of judgement sampling?

A

Advantages: Useful for case studies and examples.
Disadvantages: Very prone to bias and limited representativeness.

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48
Q

What is quota sampling?

A

Dividing the population by key variables (e.g., income, age) and drawing a sample from each stratum.

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49
Q

What are the advantages and disadvantages of quota sampling?

A

Advantages: Quick and easy.
Disadvantages: Not random, risks bias, and requires prior knowledge of population structure.

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50
Q

What is simple random sampling?

A

Ensuring every population member has an equal chance of selection.

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51
Q

What are the advantages and disadvantages of simple random sampling?

A

Advantages: Simple to design, precise, and allows calculation of sampling error.
Disadvantages: Requires a complete population list and may not be practical for large geographic areas.

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52
Q

What is systematic sampling?

A

Selecting every nth unit after randomly picking a starting point between 1 and *n (population size ÷ sample size).

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53
Q

What are the advantages and disadvantages of systematic sampling?

A

Advantages: Easier than simple random sampling, ensures population-wide coverage.
Disadvantages: Can be costly and time-consuming for dispersed samples.

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54
Q

What is correlation in sales forecasting?

A

Correlation examines the strength of the relationship between two variables, such as sales and factors like advertising, weather, or consumer income.

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55
Q

What does a scatter diagram represent in correlation analysis?

A

A scatter diagram plots data points to show the relationship between two variables:

X-axis: Independent variable (causes change).
Y-axis: Dependent variable (influenced by the independent variable).

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56
Q

What is the “line of best fit” in correlation?

A

A line that represents the mathematical relationship between variables, helping to identify trends or predict outcomes.

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57
Q

What are the three types of correlation?

A
  1. Positive correlation: As the independent variable increases, so does the dependent variable.
  2. Negative correlation: As the independent variable increases, the dependent variable decreases.
  3. No correlation: No discernible relationship between the variables.
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58
Q

What does the strength of the correlation indicate?

A

Strong correlation: Data points are close to the line of best fit, showing a strong relationship.
Weak correlation: Data points are widely spread from the line, indicating a weaker relationship.

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59
Q

How can strong correlation be used in marketing?

A

If the data shows strong correlation, the relationship can be used to make marketing predictions.

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60
Q

What is the danger of misinterpreting correlation?

A

Assuming a causal relationship when the variables are not truly related. For example, linking childhood obesity to rising household disposable income.

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61
Q

Give an example of a logical causal link in correlation.

A

A correlation between daily temperature and ice-cream van sales is logical, as warmer weather likely increases demand for ice cream.

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62
Q

Why might correlation not imply causation?

A

Two variables may change simultaneously due to external factors but may not directly influence each other.

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63
Q

What is a confidence interval?

A

A confidence interval gives the percentage probability that an estimated range of possible values includes the actual value being estimated.

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64
Q

Why are confidence intervals important in business?

A

They help businesses evaluate the reliability of estimates and decide whether to act on them since no estimate can be 100% accurate.

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65
Q

What does a 95% confidence interval mean?

A

It means there is a 95% probability that the estimate is representative of the overall population, while 5% of samples may be unrepresentative.

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66
Q

How are confidence intervals used in market research?

A

To assess how confident management can be that customer opinions from a sample are representative of all target customers.

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67
Q

How are confidence intervals used in quality control?

A

To determine how representative a sample of inspected finished products is of all products being produced.

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68
Q

What happens when accuracy in sampling is critical?

A

The acceptable confidence interval is increased to ensure higher reliability of the results.

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69
Q

Why do businesses need confidence intervals for decision-making?

A

They allow businesses to predict future events and estimate reliability, which is crucial for planning and minimizing risk.

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70
Q

What is an example of a situation where a higher confidence interval might be required?

A

When launching a new product, where incorrect data could lead to significant financial loss or brand damage.

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71
Q

What is Price Elasticity of Demand (PED)?

A

PED measures how responsive the quantity demanded of a product is to a change in its price.

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72
Q

What happens to demand when price changes?

A

Increase in price: Quantity demanded falls.
Decrease in price: Quantity demanded rises.

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73
Q

What does the PED value tell businesses?

A

It shows by how much the quantity demanded will change in response to a price change.

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74
Q

How is PED calculated?

A

PED= %change in quantity demanded/%change in price.
​

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75
Q

How is a percentage change calculated?

A

%Change = New Value - Old Value/Old Value x 100.

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76
Q

Is the PED value positive or negative?

A

PED is always negative because price and demand move in opposite directions.

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77
Q

Why does responsiveness differ for different products?

A

The nature of the product (e.g., necessity or luxury) influences how sensitive consumers are to price changes.

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78
Q

What is market segmentation?

A

The process of dividing a market into smaller groups of customers with similar characteristics, needs, and wants to tailor products, services, and marketing strategies effectively.

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79
Q

What are the characteristics used in market segmentation?

A
  1. Location: Dividing based on geographical areas (e.g., city, region).
  2. Demographics: Based on age, gender, income, occupation, and family size.
  3. Behavior: Based on usage rate, loyalty, and attitudes toward products.
  4. Lifestyle: Based on social class, occupation, and leisure activities.
  5. Income: Dividing based on income levels (e.g., high-income, low-income customers).
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80
Q

Can you provide examples of businesses using market segmentation?

A
  1. Boohoo.com: Targets teenage females, advertising in magazines like Bliss.
  2. Next: Offers “Next Kids” clothing for infants and toddlers.
  3. Supermarkets: Focus on Polish food in areas with large Polish populations.
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81
Q

What are the benefits of market segmentation?

A
  1. Tailored products: Meet specific segment needs.
  2. Effective marketing: More targeted marketing campaigns.
  3. Increased competitiveness: Differentiates businesses from competitors.
  4. Improved customer relationships: Better understanding of customer needs and preferences.
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82
Q

What are the limitations of market segmentation?

A
  1. Over-segmentation: Dividing markets too finely can waste resources.
  2. Under-segmentation: Ignoring differences can result in ineffective strategies.
  3. Changing consumer behavior: Requires constant adaptation as preferences evolve.
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83
Q

Why is segmentation important for businesses?

A

It allows businesses to focus efforts on specific groups, improving product development, marketing efficiency, and customer satisfaction while maintaining a competitive edge.

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84
Q

What is a market (positioning) map?

A

A conceptual tool that illustrates the range of “positions” a product can take in a market based on two dimensions that are important to customers.

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85
Q

What are some possible dimensions for the axes of a market positioning map?

A

Low price vs. High price
Basic quality vs. High quality
Low volume vs. High volume
Necessity vs. Luxury
Light vs. Heavy
Simple vs. Complex
Unhealthy vs. Healthy
Low-tech vs. High-tech

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86
Q

What are the advantages of market positioning maps?

A
  1. Spot gaps: Helps identify potential gaps in the market.
  2. Competitor analysis: Shows how competitors’ products are positioned.
  3. Market research: Encourages businesses to use customer insights for decisions.
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87
Q

What are the disadvantages of market positioning maps?

A
  1. A gap in the market doesn’t guarantee demand for the product.
  2. Success is not guaranteed even if a gap is identified.
  3. The reliability of market research for mapping existing product positions is uncertain.
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88
Q

How can businesses use a positioning map effectively?

A

By carefully selecting dimensions that reflect customer priorities and validating gaps with thorough market research before acting on opportunities.

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89
Q

What is a dominant segment in a market?

A

It is the largest segment of a market, where the majority of sales occur and is often dominated by a few major producers.

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90
Q

Can you give an example of a dominant market segment in the confectionery market?

A

The plain chocolate bar segment, dominated by Cadbury’s, Nestle, and Mars.

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91
Q

What is niche marketing?

A

It is where a business targets a smaller segment of a larger market, focusing on customers with specific needs and wants.

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92
Q

Name two advantages of niche marketing.

A

Less competition (big fish in a small pond) and the ability to charge higher prices due to expertise.

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93
Q

What are two disadvantages of niche marketing?

A

Lack of economies of scale and vulnerability to market changes.

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94
Q

What is mass marketing?

A

It is where a business sells to the largest part of the market, offering products that appeal to a broad audience.

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95
Q

What are two key features of mass marketing?

A

Customers form the majority in the market and customer needs are more general.

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96
Q

What is a major advantage of mass marketing?

A

It benefits from economies of scale due to higher production output and capacity.

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97
Q

What are customers in niche markets typically willing to do?

A

Pay higher prices for specialist products or expertise.

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98
Q

Why might a niche market business be at risk of over-dependence?

A

It often relies heavily on a single product or market.

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99
Q

What often drives the success of mass marketing?

A

Low-cost operations, heavy promotion, widespread distribution, or market-leading brands.

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100
Q

Name one characteristic of customers in a mass market.

A

Their needs and wants are less specific compared to niche markets.

101
Q

What are the two key decisions businesses make to create value for customers?

A
  1. Choose which customers to serve (segmentation and targeting).
  2. Choose how to serve those customers (differentiation and positioning).
102
Q

What does market segmentation involve?

A

Analyzing the different parts of a market.

103
Q

What is targeting in marketing?

A

Deciding which market segments to enter.

104
Q

What are the two key parts of marketing strategy when serving customers?

A

Product differentiation and market positioning.

105
Q

What is market positioning?

A

How customers perceive a product relative to competing products.

106
Q

What is a value proposition in marketing?

A

The position a business takes to compete in targeted segments, defined by customer perceptions.

107
Q

What is a positioning map?

A

A conceptual model illustrating a product’s position in a market based on dimensions important to customers.

108
Q

Name two possible dimensions for a positioning map.

A

Price and quality (e.g., used for chocolate bars).

109
Q

What are two advantages of positioning maps?

A
  1. Help spot gaps in the market.
  2. Useful for analyzing competitors.
110
Q

What are two disadvantages of positioning maps?

A
  1. Gaps in the market don’t guarantee demand.
  2. Market research may not always be reliable.
111
Q

How is competitive advantage linked to market positioning?

A

By offering a superior value proposition that customers perceive as better than alternatives.

112
Q

What does “offer more for less” mean in value propositions?

A

Providing good quality at low prices (e.g., Aldi).

113
Q

What does “offer more for more” mean in value propositions?

A

Selling high-priced luxury products with prestige value.

114
Q

What does “offer less for much less” mean in value propositions?

A

Offering no-frills, low-cost services with basic quality (e.g., budget airlines).

115
Q

What is the risk of basing decisions on a positioning map?

A

A gap might not indicate demand, and the map does not ensure success.

116
Q

What is a target market?

A

A set of customers sharing common needs, wants, and expectations that a business tries to sell to.

117
Q

What process should selecting a target market follow?

A

It should follow an analysis of available market segments.

118
Q

What are the three main approaches to market targeting?

A
  1. Mass marketing (undifferentiated).
  2. Segmented marketing (differentiated).
  3. Concentrated marketing (niche).
119
Q

What is mass marketing?

A

Targeting the whole market while ignoring segments, focusing on common needs and wants rather than differences.

120
Q

What is segmented marketing?

A

Targeting several market segments within the same market by designing specific products for each segment.

121
Q

What does segmented marketing require?

A

Separate marketing plans, business units, and product portfolios for different segments.

122
Q

What is concentrated (niche) marketing?

A

Focusing narrowly on smaller segments or niches to achieve a strong market position within them.

123
Q

Which approach targets the widest range of customers?

A

Mass marketing.

124
Q

Which targeting approach is best for achieving strong market share in a specific niche?

A

Concentrated (niche) marketing.

125
Q

What is the aim of differentiated (segmented) marketing?

A

To design and target products at multiple market segments to meet their specific needs.

126
Q

What is the sequence of the marketing strategy process?

A

Segmentation → Targeting → Positioning → Marketing Mix.

127
Q

What are the 7Ps in the marketing mix?

A

Product, Price, Place, Promotion, People, Process, and Physical Environment.

128
Q

What does “Product” represent in the 7Ps?

A

The goods or services offered by the business, designed to meet customer needs.

129
Q

What does “Price” represent in the 7Ps?

A

The amount customers pay for the product or service, influenced by factors like competition, costs, and target market.

130
Q

What does “Place” represent in the 7Ps?

A

The distribution channels and logistics used to deliver the product or service to customers.

131
Q

What does “Promotion” represent in the 7Ps?

A

The communication and advertising efforts used to raise awareness and drive sales.

132
Q

What does “People” represent in the 7Ps?

A

The customer-facing staff and employees involved in transactions, emphasizing skills, knowledge, and behavior.

133
Q

What does “Process” represent in the 7Ps?

A

The systems and procedures in place to support transactions, ensuring ease and convenience for customers.

134
Q

What does “Physical Environment” represent in the 7Ps?

A

The tangible aspects of the business, like store layout, décor, and ambiance, which influence customer perceptions and behaviors.

135
Q

Why are the 7Ps particularly relevant in service economies?

A

Because the quality of people, process, and physical environment significantly impacts customer satisfaction and loyalty.

136
Q

How does Marks & Spencer illustrate the “People” aspect of the 7Ps?

A

By focusing on high-quality customer service.

137
Q

How does Marks & Spencer illustrate the “Process” aspect of the 7Ps?

A

Through its efficient online ordering and payment systems.

138
Q

What is the main difference between the traditional 4Ps and the extended 7Ps marketing mix?

A

The 7Ps include People, Process, and Physical Environment, which are crucial in service-oriented industries.

139
Q

How can the 7Ps help businesses stand out from competitors?

A

By differentiating themselves and creating a unique customer experience.

140
Q

Why is it important to consider all 7Ps in marketing strategy?

A

To ensure a comprehensive approach to delivering value and meeting customer expectations.

141
Q

What should you focus on when revising the 7Ps?

A

Differences between the 4Ps and 7Ps, how each element contributes to customer experience, and case studies like Marks & Spencer.

142
Q

What is the Boston Matrix?

A

A model used to analyze a business’s portfolio of products based on market share and market growth.

143
Q

What are the two key dimensions of the Boston Matrix?

A

Market share (low or high) and market growth (low or high).

144
Q

What is the purpose of the Boston Matrix?

A

To help businesses decide how to allocate investment across their product portfolio.

145
Q

What are the four categories of the Boston Matrix?

A

Stars, Cash Cows, Question Marks, and Dogs.

146
Q

What characterizes “Stars” in the Boston Matrix?

A

High growth products with high market share that often require heavy investment to sustain growth.

147
Q

What do “Stars” typically become over time if they maintain market share?

A

Cash Cows.

148
Q

What characterizes “Cash Cows”?

A

Low-growth products with high market share that generate strong cash flows and require minimal investment.

149
Q

What characterizes “Question Marks”?

A

Products with low market share in high-growth markets that may require substantial investment to increase market share.

150
Q

What decision must management make about “Question Marks”?

A

Whether to invest in them or let them fail/shrink.

151
Q

What characterizes “Dogs”?

A

Products with low market share in low-growth markets, typically not worth investing in and often sold or closed.

152
Q

Why is it beneficial for a business to have products in all categories except “Dogs”?

A

To maintain a balanced product portfolio.

153
Q

Name two advantages of the Boston Matrix.

A
  1. It helps analyze product portfolio decisions.
  2. It provides a snapshot of the current position.
154
Q

Name two criticisms of the Boston Matrix.

A
  1. Market growth is not an adequate measure of a market’s attractiveness.
  2. It ignores factors like sustainable competitive advantages.
155
Q

What is a key assumption of the Boston Matrix?

A

Market share gains will always generate cash surpluses.

156
Q

Why does the Boston Matrix have limited predictive value?

A

It only provides a snapshot of the current market and does not account for environmental factors.

157
Q

What does the Product Life Cycle (PLC) describe?

A

The stages a product goes through from introduction to the market to its eventual decline and withdrawal.

158
Q

What are the five stages of the Product Life Cycle?

A

Development, Introduction, Growth, Maturity, and Decline.

159
Q

What happens during the Development stage of the PLC?

A

The product is designed and developed, with high costs for R&D, market research, and product testing, leading to negative cash flow.

160
Q

What characterizes the Introduction stage of the PLC?

A

Slow sales growth as the product is new, with high costs for promotion and distribution, resulting in negative cash flow.

161
Q

What is the business focus during the Growth stage of the PLC?

A

Building market share and increasing production to meet growing demand as sales rise rapidly, typically turning cash flow positive.

162
Q

What happens during the Maturity stage of the PLC?

A

Sales growth slows as the product reaches market saturation. The business focuses on maintaining market share, reducing costs, and increasing profitability.

163
Q

What characterizes the Decline stage of the PLC?

A

Sales decline as the product becomes obsolete or replaced. The business focuses on managing decline and reducing costs, often with negative cash flow.

164
Q

How can businesses extend the life of a product beyond its natural life cycle?

A

Through extension strategies like price reductions, repositioning, or finding new markets.

165
Q

What factors influence the length of a product’s life cycle?

A

Market dynamics, brand image, and product life expectancy.

166
Q

Why is the PLC important for businesses?

A

It helps plan marketing strategies, manage cash flow, and ensure long-term profitability at each stage.

167
Q

When is cash flow typically negative in the PLC?

A

During the Development and Introduction stages due to high investment and slow sales growth.

168
Q

When is cash flow typically positive in the PLC?

A

During the Growth and Maturity stages as sales revenue increases and costs stabilize or reduce.

169
Q

What is the key difference between pricing strategies and pricing tactics?

A

Pricing strategies are medium to long-term approaches aimed at achieving marketing objectives, while pricing tactics are short-term measures for specific situations.

170
Q

What is the impact of pricing strategies compared to pricing tactics?

A

Pricing strategies have a significant impact on marketing strategy, whereas pricing tactics have limited effects beyond short-term sales.

171
Q

What are the four pricing positions a business can find itself in?

A

Price Taker, Price Maker, Price Leader, and Price Follower.

172
Q

What is a Price Taker?

A

A business that has no option but to charge the ruling market price.

173
Q

What is a Price Maker?

A

: A business with a strong competitive position that allows it to set its own price, higher or lower than competitors.

174
Q

What is a Price Leader?

A

A market leader whose market share is so strong that its price changes are followed and often copied by competitors.

175
Q

What is a Price Follower?

A

A business that follows the price changes made by the market leader, ignoring the rest of the competition.

176
Q

Why might a business’s pricing strategies be constrained?

A

By its competitive position in the market.

177
Q

How do pricing tactics typically influence sales?

A

They primarily affect short-term sales rather than long-term strategic outcomes

178
Q

How does being a Price Maker benefit a business?

A

It allows the business to control pricing to reflect its competitive advantages, profitability goals, or market positioning.

179
Q

Why must a business’s price align with its strategic objectives?

A

To ensure the pricing reflects the business’s positioning and supports its goals, such as signaling quality or achieving cost leadership.

180
Q

How does a high price align with the strategy of a luxury brand?

A

A high price signals high quality and exclusivity, reinforcing the brand’s positioning as a premium provider.

181
Q

What is the pricing strategy for businesses positioning as low-cost providers?

A

To set prices lower than competitors to gain competitive advantage, focusing on long-term cost leadership.

182
Q

Give examples of industries where a low-cost pricing strategy is common.

A

Discount supermarkets (e.g., Aldi) and low-cost airlines (e.g., Ryanair).

183
Q

What are two main pricing objectives for businesses?

A
  1. Maximizing profits and return on investment.
  2. Maximizing sales revenue.
184
Q

Why is price critical for maximizing profits?

A

Because the selling price directly affects the gross profit margin on each sale.

185
Q

How is sales revenue calculated?

A

Sales revenue = Price per product × Number of sales.

186
Q

Why is setting a price challenging for new businesses with new products?

A

They lack experience and data on what customers are willing to pay.

187
Q

How can market research help new businesses with pricing?

A

By identifying competitor prices and understanding market trends.

188
Q

What risks do businesses face when setting prices too high or too low?

A

Too high: Sales might be lost.
Too low: Customers willing to pay more will not need to, reducing potential revenue.

189
Q

What is the best way for a business to determine the optimal price for a product?

A

Start selling at a particular price and observe customer behavior to find the right balance.

190
Q

What is price skimming?

A

A pricing strategy that involves setting a high price for a new product before competitors enter the market.

191
Q

When is price skimming most commonly used?

A

For the launch of innovative products with little or no competition, often targeting “early adopters.”

192
Q

Why are “early adopters” important in price skimming?

A

They are willing to pay a higher price to access the latest or best product in the market.

193
Q

Why is price skimming a temporary strategy?

A

Competitors eventually launch rival products, which puts downward pressure on prices.

194
Q

How can distribution challenges affect price skimming?

A

Retailers may need higher margins to stock the product, reducing the profitability of price skimming.

195
Q

How can price skimming slow down demand growth?

A

The high price can reduce the volume of initial sales, giving competitors more time to develop rival products.

196
Q

What is the risk of slowing volume growth with price skimming?

A

It may allow competitors to enter the market when demand is strongest.

197
Q

What kind of products typically use price skimming?

A

Products with technological advancements or unique features.

198
Q

What is penetration pricing?

A

A pricing strategy where a product is launched at a low initial price to attract customers and gain market share.

199
Q

What is the primary aim of penetration pricing?

A

To increase market share or sales volume, often with the potential to raise prices later.

200
Q

Why is penetration pricing effective in markets with price-elastic demand?

A

Because customers are more likely to switch to the new product due to its lower price.

201
Q

What are the short-term financial effects of penetration pricing?

A

It often results in lower profits initially due to the low price.

202
Q

List three advantages of penetration pricing.

A
  1. It surprises competitors, giving a competitive edge.
  2. It encourages word-of-mouth promotion due to attractive pricing.
  3. High sales volume can make distribution easier.
203
Q

How does penetration pricing act as a barrier to entry for competitors?

A

The low price discourages new competitors from entering the market with similar strategies.

204
Q

Why is penetration pricing beneficial for cost efficiency?

A

It forces businesses to focus on minimizing unit costs from the start, improving productivity.

205
Q

What are two major drawbacks of penetration pricing?

A
  1. Customers may expect permanently low prices, making price increases difficult.
  2. It may attract bargain hunters rather than loyal customers
206
Q

How might competitors react to a penetration pricing strategy?

A

Established competitors may retaliate to maintain their market share, potentially leading to a price war.

207
Q

When is penetration pricing most effective?

A

In markets with little product differentiation where price plays a significant role in customer choice.

208
Q

What is dynamic pricing?

A

A pricing strategy where businesses adjust prices for products or services based on current market demands.

209
Q

What is the primary aim of dynamic pricing?

A

To allow businesses to adjust prices in real-time based on changing demand.

210
Q

How are dynamic pricing changes made?

A

They are made automatically by software agents that use algorithms to adjust prices based on business rules.

211
Q

What factors are commonly considered in dynamic pricing?

A
  1. Customer’s location
  2. Time of day
  3. Day of the week
  4. Level of demand
  5. Competitors’ pricing
212
Q

Where is dynamic pricing often seen in action?

A

In services like Uber, airline tickets, hotel bookings, and online reservations.

213
Q

Is dynamic pricing legal?

A

Yes, dynamic pricing is legal and is increasingly used across various industries.

214
Q

What is a brand?

A

A product with unique characteristics, such as design or image, that is consistent and well-recognized.

215
Q

What are the advantages of having a strong brand?

A
  1. Customer loyalty, leading to repeat sales and word-of-mouth recommendations.
  2. Ability to charge higher prices, especially for market leaders.
  3. Retailers are more likely to stock top-selling brands.
  4. Higher profitability for retailers through “own-label” brands.
216
Q

What is a global brand?

A

A brand that is sold in many countries with similar contents across those markets. Examples include Microsoft, Coca-Cola, Disney, Mercedes, and Hewlett Packard.

217
Q

What is brand extension?

A

Developing new products that contain some of the brand’s characteristics, such as Dove soap and Dove Shampoo.

218
Q

What is brand stretching?

A

Using the brand for a diverse range of products, not necessarily connected. Examples include Virgin Airlines and Virgin Cola, or Marks & Spencer clothes and food.

219
Q

Why is a logo important for a product?

A

It serves as a symbol or picture that represents the business, is easy to recognize, establishes brand loyalty, and can create a favorable image.

220
Q

What does “Place” or “Distribution” refer to in marketing?

A

It refers to how a business gets its products to customers, ensuring they are available at the right place, time, and in the right quantities.

221
Q

What is the main objective of distribution?

A

To make products available in the right place, at the right time, and in the right quantities.

222
Q

What are the common distribution channels?

A
  1. Retailers
  2. Distributors/Sales Agents
  3. Direct (e.g., via e-commerce)
  4. Wholesalers
223
Q

What is a distribution channel?

A

A distribution channel is defined as “all the organizations through which a product must pass between its point of production and consumption.”

224
Q

Why do businesses use intermediaries in distribution?

A

Intermediaries specialize in selling, have the contacts, experience, and scale to achieve greater sales and efficiency, and reduce the direct distribution costs for the business.

225
Q

What is the main function of a distribution channel?

A

To provide a link between production and consumption, ensuring the product reaches the final buyer.

226
Q

What are “channel levels” in a distribution channel?

A

Channel levels refer to the layers of marketing intermediaries involved in bringing a product to its final buyer. Each level performs specific work in the distribution process.

227
Q

What is an example of a two-layer distribution channel?

A

Channel 1, which involves two intermediaries: a wholesaler and a retailer. The wholesaler buys and stores large quantities, breaking them into smaller deliveries for retailers.

228
Q

What is an example of a one-intermediary distribution channel?

A

Channel 2, where a producer sells products to retailers (e.g., Sony or Panasonic selling directly to retailers like Tesco or Amazon).

229
Q

What is a “direct-marketing” channel?

A

A distribution channel with no intermediaries, where the manufacturer sells directly to the customer, such as in factory outlet stores or direct sales from holiday companies.

230
Q

What factors should be considered when choosing the best distribution channel?

A
  1. Nature of the product (e.g., perishable, technical, customized)
  2. Type of product (e.g., convenience, shopping, speciality)
  3. Desired image for the product
  4. Geographic spread and competition
  5. Business size and scope
  6. Marketing objectives
  7. Control over distribution
  8. Legal issues and risks
231
Q

What is the impact of using more intermediaries in a distribution channel?

A

The longer the channel (with more intermediaries), the less control the business has over the distribution process.

232
Q

What is multi-channel distribution?

A

Multi-channel distribution involves a business using more than one type of distribution channel to reach customers. For example, a business may sell through both physical stores and e-commerce.

233
Q

Can you provide an example of a company using multi-channel distribution?

A

Apple is a prime example, as it sells through physical Apple Stores, e-commerce, and other retail partners, creating a multi-channel distribution strategy.

234
Q

What are the benefits of multi-channel distribution?

A

Reaches more target market segments
Meets customer expectations for availability across multiple channels
Can lead to higher revenues, e.g., by allowing customers to purchase online if items are out of stock in stores

235
Q

What are the potential drawbacks of multi-channel distribution?

A

Risk of channel conflict, such as competing with retailers when selling directly to consumers
Complexity in managing multiple channels
Confusion over pricing strategy from customers’ perspective

236
Q

Why do businesses increasingly adopt multi-channel distribution?

A

Because customers expect products to be available through multiple channels, and multi-channel distribution allows businesses to reach a broader audience and increase sales opportunities.

237
Q

What is email marketing?

A

Email marketing involves broadcasting email messages to audiences of email addresses. It’s widely used but has become more sophisticated over time, often targeting specific groups with personalized content.

238
Q

What are the main benefits of online advertising?

A
  1. Ability to target specific audiences and locations
  2. Real-time performance tracking
  3. Advertising attributed directly to online sales
    4 .Dominated by major platforms like Google, Bing, Facebook, Instagram, Twitter, and LinkedIn
239
Q

What is Search Engine Optimisation (SEO)?

A

SEO involves optimizing website content so that it appears near the top of search engine results, particularly on Google. It helps businesses be found by potential customers and increases website traffic.

240
Q

What is content marketing?

A

Content marketing involves creating and distributing valuable and relevant content (like blogs, videos, and webinars) to attract and engage a defined audience. The goal is often to capture customer contact information, like emails, for future communication.

241
Q

What is influencer marketing?

A

Influencer marketing is a form of social media marketing where endorsements come from influencers—individuals with a significant online following or expert knowledge in a field. Their endorsements help businesses reach a targeted audience.

242
Q

What is viral marketing?

A

Viral marketing uses social media to spread product information rapidly, much like a virus. Consumers share content within their networks, helping businesses grow their audiences. Video content is often the most effective for viral marketing.

243
Q

What factors should businesses consider when choosing marketing technology?

A
  1. Pricing (e.g., subscription or per-user costs)
  2. Ease of use for employees
    3 .Compatibility with other systems
  3. Scalability for business growth
    5 .Compliance with regulations (e.g., data protection laws)
244
Q

How does analytics and customer insights technology benefit businesses?

A

Analytics tools like Google Analytics and Mixpanel help businesses track user behavior, providing valuable insights into how customers found their website and how they interact with it. This data is used to improve marketing efforts and customer experience.

245
Q

What is dynamic pricing?

A

Dynamic pricing technology enables businesses to adjust prices for products or services in real-time based on current market demand, ensuring that prices are optimized to maximize revenue.

246
Q

How does technology improve audience reach and segmentation?

A

Social media marketing platforms and other tools help businesses effectively target specific audience segments by analyzing user data. However, this area is now under more regulation, especially concerning data security and privacy.

247
Q

What is Customer Relationship Management (CRM)?

A

CRM technology helps businesses manage interactions with customers and prospects. It improves customer service, boosts sales, and streamlines processes. Popular CRM systems include Salesforce, Microsoft Dynamics, and SAP.

248
Q

What is the purpose of campaign testing in digital marketing?

A

Campaign testing allows businesses to run multiple versions of a marketing campaign (e.g., different messages or images) to determine which performs best. The most successful campaigns are then expanded, reducing waste in marketing spend.

249
Q

How does competitor analysis technology help businesses?

A

Competitor analysis tools track competitors’ activities online, such as their website, pricing, social media, and digital marketing campaigns. This information helps businesses adjust their strategies to stay competitive.

Business (10 decks)

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