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Business AQA > Business UNIT 3 - Marketing > Flashcards

Business UNIT 3 - Marketing Flashcards

Marketing

1
Q

Name 2 Marketing Objectives

A

-Sales volume
-Sales value (revenue)
- Market growth (%)
- Market share (%)
- Brand loyalty/awareness

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2
Q

Name 2 External influences on marketing objectives

A

the economic environment, competitors, market dynamics and technological change

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3
Q

what are 2 internal influences on marketing objectives

A

corporate objectives, Finance, human resources, operational issues

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4
Q

what is market research?

A

the systematic and objective collation, analysis, and evaluation of information that is intended to assist in the marketing process

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5
Q

what is the difference between primary and secondary market research?

A

Primary research is first-hand data, collected by yourself
e.g through a survey

secondary research is likely to be off the internet or across something you have read
e.g in other terms its data which already exists

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6
Q

what are 2 advantages and disadvantages of primary market research?

A

Advantages of primary research:
- Directly focused on research objectives = fit for purpose
- Tends to be more up-to-date than secondary research
- Provides more detailed insights– particularly into customer views

Disadvantages of primary research:
- Time-consuming and often costly to obtain
- Risk of survey bias – research samples may not be representative of the population

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7
Q

what are 2 advantages and disadvantages of secondary market research?

A

Advantages of secondary research:
- Already gathered so may be quicker to collect
- May be gathered on a much larger scale than possible for the firm
- In some cases it can be very cheap or free to access

Disadvantages of secondary research:-
-Information may be outdated, therefore inaccurate

  • The data may be biased and it is hard to know if the information was collected is accurate
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8
Q

what is market mapping?

A

a framework for analysing market positioning is a ‘market (positioning) map’. A market map illustrates the range of positions that a product can take in a market based on two dimensions that are important to customers

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9
Q

what are some possible dimensions of market mapping?

A

-Low price v high price
- Basic quality v high quality
- Low volume v high volume
- Necessity v luxury
- Light v heavy
- Simple v complex
- Unhealthy v healthy
- Low-tech v hi-tech

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10
Q

what are 2 advantages and disadvantages of positioning maps?

A

Advantages of positioning maps:
- Help spot gaps in the market
- Useful for analysing competitors
– where are their products positioned?
- Encourages use of market research

Disadvantages of positioning maps:
- Just because there is a gap in the market doesn’t mean there is demand for the product

  • Not a guarantee of success
  • How reliable is the market research that maps the position of existing products based on the chosen dimensions?
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11
Q

What is sampling?

A

sampling involves gathering data from respondents whose views or behaviours are representative of the target market as a whole

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12
Q

What is the difference between Quota/Stratified and Random sampling?

A

Random is where member of target population has an equal chance of being chosen.
Whereas,
Quota/Stratified is based on obtaining a sample that reflects the types of consumers from whom the businesswished to gain information (e.g. gender, age)

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13
Q

What are 2 advantages and disadvantages of sampling?

A

Advantages of sampling:
- Provides a good indication
- Helps avoid expensive errors
- Can be used flexibly
- Reliable information
- Helps firms learn about the market quickly

Disadvantages of sampling:
- May be unrepresentative
- Bias
- Difficult to locate suitable correspondents
-May not have an accurate profile of customers
- Can be out of date due to time taken to collate

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14
Q

What is meant by Confidence Intervals?

A

they measure the probability that a population parameter will fall between two set values. The confidence interval can take any number of probabilities, with the most common being 95% or 99%

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15
Q

What Factors Influence Confidence Intervals?

A

Factors influencing confidence levels:

  • Sampling size – the larger the sample, the better the reflection of opinion of the whole population, so confidence levels fall- Population size

– the target market for the product has a minor effect on confidence intervals

  • % of sampling choosing a particular answer – if high or low % of sample expresses the same opinion, then confidence intervals are likely to be low
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16
Q

What is meant by Extrapolation?

A

it is like an educated guess or a hypothesis

  • When you make an extrapolation, you take facts and observations about a present or known situation and use them to make a prediction about what might eventually happen
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17
Q

What are 2 disadvantages of Extrapolation?

A

Disadvantages of extrapolation:

  • Less reliable if fluctuations occur (e.g. weather is unpredictable)- Assumes past changes will continue
  • Ignores qualitative factors (e.g. changes in tastes and fashion)
  • Ignores the product life cycle
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18
Q

Define Negative and Positive Correlations

A

another method of sales forecasting that looks at the strength of a relationship between two variables

  • Positive correlations means the two sets of data are connected in some way (e.g the closer it gets to Christmas, the more Christmas trees that are sold)
  • Negative correlations also means the two sets of data are related but as x increases, y decreases
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19
Q

What is meant by Big Data?

A

Big data is the process of collecting and analysing large data sets from traditional and digital sources to identify trends and patterns that can be used in decision-making

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20
Q

How is data generated? (2 ways)

A
  • Retail e-commerce databases
  • User-interactions with websites and mobile apps
  • Usage of logistics, transportation systems, financial and health care
  • Social media data
  • Location data (e.g. GPS-generated)
  • Internet of Things (IoT) data generated
  • New forms of scientific data (e.g. human genome analysis)
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21
Q

How does technology enable us to make more effective marketing decisions?

A
  • Analytics and customer insights – this help businesses track how users and customers use their online products and services
  • Dynamic pricing – the technology behind dynamic pricing enables a business to adopt a pricing strategy where prices are set flexibly for products or services based on current market demands
  • Audience reach and segmentation – the widespread use of social media marketing is an example of how technology is enabling businesses to more effective reach their target audience and communicate with them
  • Customer relationship management (CRM) – this is a technology used to manage interactions with customersand potential customers. A CRM system helps businesses build customer relationships and streamline processes so they can increase sales, improve customer service, and increase profitability
  • Campaign testing – this is a key feature of digital marketing technology. It allows a business to set up more than one (and in some cases many thousands) of different marketing campaigns to test which is most effective.
  • Competitor analysis – software is available to monitor what competitors are doing
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22
Q

What is Price Elasticity of Demand (PED)?

A

measures the responsiveness of quantity demanded for a product to a change in price
EQUATION= percentage change in quantity demanded / percentage change in price

23
Q

What is 2 reasons why PED is used?

A

-To see the effect of a change in price on the total revenue of a product
-The price volatility (if theres a sudden change) in a market following changes in supply. (important for commodity producers who many suffer big price movements from time to time).
-The effect of a change in an indirect tax (e.g. VAT or Fuel) on price and quantity demanded and also whether the business is able to pass on some or all of the tax onto the consumer.
- A business contemplating a tactical price war, or planning a promotional discount based on price will want to know how responsive customer demand will be.

24
Q

What are 2 values of PED?

A
  • If PED = 0 demand is said to be perfectly inelastic – this means that demand does not change at all when the price changes (the demand curve will be drawn as vertical)
  • If PED is between 0 and 1 (i.e. the percentage change in demand from A to B is smaller than the percentage change in price), then demand is inelastic
  • If PED = 1 (i.e. the percentage change in demand is exactly the same as the percentage change in price), then demand is said to unit elastic. A 15% rise in price would lead to a 15% contraction in demand leaving total spending by the same at each price level
  • If PED > 1 then demand responds more than proportionately to a change in price i.e. demand is elastic. For example a 20% increase in the price of a good might lead to a 30% drop in demand. The price elasticity of demand for this price change is –1.
25
Q

Give 2 factors that affect PED?

A
  • The number of close substitutes for a good – the more close substitutes in the market, the more elastic is demand because consumers can easily switch their demand if the price of one product changes relative to others.
  • The cost of switching between products – there may be significant costs involved in switching between products. In this case, demand tends to be relatively inelastic (e.g. mobile phone service providers may insist on 12 or 18-month contracts being taken out)
  • The degree of necessity or whether the good is a luxury – goods and services deemed by consumers to be necessities tend to have an inelastic demand whereas luxuries tend to have a more elastic demand.
  • The % of a consumer’s income allocated to spending on the good – goods and services that take up a high proportion of a household’s income will tend to have a more elastic demand than products where large pricechanges makes little or no difference to someone’s ability to purchase the product.
  • The time period allowed following a price change – demand tends to be more price elastic, the longer that we allow consumers to respond to a price change.
  • Whether the good is subject to habitual consumption – when this occurs, the consumer becomes less sensitive to the price of the good in question because their default position is to buy the same products at regular intervals.
  • Peak and off-peak demand - demand tends to be price inelastic at peak times and more elastic at off-peak times.
  • The breadth of definition of a good or service – if a good is broadly defined, i.e. the demand for petrol or meat, demand is often inelastic. But specific brands of petrol or beef are likely to be more elastic following a price change.
26
Q

What is Income Elasticity of Demand (YED)?

A

measures the relationship between a change in quantity demanded for good ‘X’ and a change in real income
EQUATION= percentage change in demand / percentage change in income

27
Q

What are 2 values of YED?

A

-Most products have positive YED meaningh consumer income rising means more demand.

  • Normal necessities have an income elasticity of demand of between 0 and +1 for example, if income increases by 10% and the demand for fresh fruit increases by 4% then the income elasticity is +0.4. Demand is rising less than proportionately to income.
  • Luxury goods and services have an income elasticity of demand > +1 i.e. demand rises more than proportionate to a change in income – for example a 8% increase in income might lead to a 10% rise in the demand for restaurant meals. The income elasticity of demand in this example is +1.25.
  • However, there are some products (inferior goods) which have a negative income elasticity of demand, meaning that demand falls as income rises. Typically inferior goods or services tend to exist where superior goods are available if the consumer has the money to be able to buy it (e.g. the demand for cigarettes, low-priced own label foods in supermarkets and the demand for council-owned properties)
28
Q

What is YED usually positive for? (2 Examples)

A
  • Fine wines and spirits, high quality chocolates (e.g. Lindt) and luxury holidays overseas
  • Consumer durables - audio visual equipment, 3G mobile phones and designer kitchens
  • Sports and leisure facilities (including gym membership and sports clubs)
29
Q

What is YED usually lower for? (2 examples)

A

Income elasticity elasticity of demand is lower for:- Staple food products such as bread, vegetables and frozen foods
- Mass transport (bus and rail)
- Beer and takeaway pizza
- Income elasticity of demand is negative (inferior) for cigarettes and urban bus services

30
Q

What are 2 limitations to using elasticity to make marketing decisions?

A
  • Consumer tastes change
  • Difficult to calculate
  • It assumes things stay equal
  • Consumers may not be able to predict their own spending so primary research could be unreliable
  • Consumers may react differently to what’s expected
  • Image of product may have changes
  • Technology
  • Competitors entering or leaving the market
31
Q

When is marketing analysis needed?

A
  • Forecasting sales for new products or investments into new markets
  • Gathering evidence to support a finance raising exercise
  • To support a new marketing strategy or significant changes to the marketing objectives
  • To help make decisions in relation to significant organisational or operational change
32
Q

Define market segmentation.

A

Market segmentation splits up a market into different types (segments) to enable a business to better target its products to the relevant customers.

33
Q

Give 2 advantages of market segmentation

A
  • Better matching of customer needs – needs differ frequently so creating separate products for each segment makes sense
  • Enhanced profits for business – customers have different disposable incomes and vary in how sensitive they are to price. By segmenting markets, businesses can raise average prices and subsequently enhance profits
  • Better opportunities for growth – market segmentation can build sales (e.g. customers can be encouraged to “trade-up” after being sold an introductory, lower-priced product)
  • Retain more customers – by marketing products that appeal to customers at different stages of their life, a business can retain customers who might otherwise switch to competing products and brands
  • Target marketing communications – firms need to deliver their marketing message to a relevant customer audience. By segmenting markets, the target customer can be reached more often and at lower cost
  • Gain share of the market segment – through careful segmentation and targeting, businesses can often achieve competitive production and marketing costs and become the preferred choice of customers and distributors
34
Q

What are the main bases of segmentation?

A

-Geographic- E.g. “Customers within 10 miles of the M25”.
=Customer, Location, Region,Rural/ Urban, classification.

-Demographic- E.g. “A Level & Uni Students”.
=Age, Gender, Occupation, Socio-economic group.

-Behavioural- E.g. “Customers wanting a value for money impulse to buy”.
=Rate of usage, Benefits sought, Loyalty, Rewadiness to purchase.

-Psychographic- E.g. “Customers who prefer to buy organic food”.
=Personality, Lifestyles, Attitudes, Class.

35
Q

What is meant by Mass marketing? (undifferentiated)

A

-Business targets the WHOLE market, ignoring segments
-Products focus on what customers need and want in common, not how they differ

36
Q

What is meant by segmented? (differentiated)

A

-Business target several market segments within the same market
-Products are designed and targeted at each segment
-Requires separate marketing plans and often different business units & product portfolios

37
Q

What is meant by concentrated? (niche)

A

-Business focuses narrowly on smaller segments or niches
-Aim is to achieve a strong market position (share) within those niches

38
Q

What is the marketing mix?

A

the marketing mix is the combination of marketing elements used by a firm to enable it to meet the needs and expectations of the customer

39
Q

What are the 7 elements?(P’s)

A
  • Product – the good or service that the customer buys
  • Price – how much the customer pays for the product
  • Place – how the product is distributed to the customer
  • Promotion – how the customer is found & persuaded to buy
  • People – the people who make contact with customers in delivering the product
  • Process – the systems and processes that deliver a product to a customer
  • Physical – the elements of the physical environment the customer experiences
40
Q

What are external influences on the marketing mix?

A
  • Economic influence (e.g. trends; domestic and international trade)
  • Competitive influence (e.g. market structure; competitive strategy and position)
  • Social and demographic influence (e.g. demographic trends; multiculturalism; lifestyles; ecological concerns)
  • Technological influence (e.g. advances; research and development investment
  • Information technology (e.g. legal and regulatory influence; federal laws/regulations; provincial laws/regulations; self-regulation)
41
Q

What is a product?

A

A product is the essence of what a business is trying to sell (it can be either a good or a service)

42
Q

What is the Boston Matrix and what are the 4 different categories?

A

The Boston Matrix is a portfolio of products is analysed using this as it categorises the products into one of four different areas based on market share and market growth.
-Dogs have low market share and low market growth.
-Cash cows have high market share but low market growth.
-Question marks have low market share but high market growth.
-Stars have high market share and high market growth.

43
Q

What is meant by market share and market Growth?

A

Market Share is whether the product has a high or lower share of the industry.
Market Growth refers to the number of potential customers and whether this number is growing or not

44
Q

Describe each of the 4 categories of the Boston Matrix.

A
  • Stars (high market growth and high market share)
    .Often need heavy investment
    .They will eventually become cash cows in investment isn’t
    retained and they lose their market share
  • Cash cows (low market growth and high market share)
    .Mature and successful products with little need for investment
    .Have to be managed for continued profits
  • Question marks (high market growth and low market share)
    .Have potential but need substantial investment to growth their
    market share
  • Dogs (low market growth and low market share)
    .Only really generate enough cash to breakeven
    .Rarely worth investing in
45
Q

What is the Product Life Cycle?

A

The Product Life Cycle describes the stages a product goes through from when it was first thought of, until it is finally removed from the market.

46
Q

What are the stages of the product life cycle?

A
  • Introduction – launching the developed product into the market place
  • Growth – when sales are increasing at their fastest rate
  • Maturity – sales are near their highest but the of growth is slowing down
  • Decline – the final state when sales begin to fall
  • Extension strategy – devised by a business to extend its life cycle
47
Q

What are 2 extension strategies?

A
  • Advertising
  • Price reduction
  • Adding value
  • Exploring new markets
  • New packaging
48
Q

What are the pricing strategies and what is the difference?

A
  • Penetration = aim to increase market share by setting an initial low entry price to attract new customers For this to be successful, the process has to be price elastic
  • Cost Plus = aim to cover costs of production and then add a profit margin onto the price
  • Contribution = aim to make a gross profit and use this to contribute to fixed costs of running of the business
  • Elasticity = aim to use the PED calculation which is relevant to the product and raise or lower the price according to how it would improve revenue
    -Marginal cost = aim to set the price of a product above the marginal costs to produce it
  • Market Skimming = involves setting a high price before competitors come into the market
  • Premium = involves setting a high price to reflect the exclusive and luxury nature of the product
  • Loss Leader = prices are set deliberately below the cost of production in order to attract customers who will buy other, more profitable products -

Psychological = prices are set with a view to perceive customers of the price e.g. 99p instead of £1

  • Leadership = prices are set by the dominant leader in the market and all other smaller firms flow their price Done to avoid price wars or to maintain market share
49
Q

What are two methods of promotion?

A
  • Advertising
  • Public relations and sponsorship
  • Personal selling
  • Direct marketing
  • Sales promotion
50
Q

What are 2 factors that influence which promotional method is used?

A
  • Stage in the product life cycle
  • Nature of the product
  • How much information is required by customers before they buy
  • Competition
  • Marketing budget
  • Marketing strategy
  • Other elements of the mix
  • Target market
51
Q

How are products distributed?

A
  • Retailers
  • Distributors/sales agents
  • Direct (e.g. via e-commerce)
  • Wholesalers
52
Q

Decisions of othjer elements of marketing mix (I dont know what this is)

A
  • People – all companies are reliant on the people who run them from front line Sales staff to the Managing Director. Having the right people is essential because they are as much a part of your business offering as the products/services you are offering.
  • Process – the delivery of your service is usually done with the customer present so how the service is delivered is once again part of what the consumer is paying for.
  • Physical Evidence – almost all services include some physical elements even if the bulk of what the consumeris paying for is intangible.
53
Q

What is the importance of and infuences on an integrated marketing mix?

A
  • The position in the product life cycle
  • The Boston Matrix
  • The type of product
  • Marketing objectives
  • The target market
  • Competition
  • Positioning
54
Q

What is the value of digital marketing and e-commerce?

A
  • Marketing strategy of differentiation increasingly effective (easier to reach niche markets online)
  • Product life cycles are shortened (note the link with technological disruption)
  • Greater use of digital promotion (much easier now to track effectiveness of promotion)
  • Brands and retailers increasingly using multiple distribution channels
  • Greater use of dynamic pricing (easier to maximise revenues, but is it fair for customers?)
  • Increased need for localisation (but on its own, not enough)
  • Ability to sell a much wider product range (the ‘long tail’)

Business AQA (4 decks)

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