Chapter 7: Nature and Purpose of Marketing Flashcards
What are the 3 approaches to marketing? [Explain Each]
Product Led Approach: Best possible product at any price, they will find a buyer through connections afterwards.
Sales Led Approach: Try to sell what you have even if the demand isn’t there, classic door to door salesman.
Marketing Led Approach: Outward looking review of customer needs, market research and willingness to pay. Profit through satisfying need. (Can create illusion of need with adverts and pre orders).
What is the PESTEL Environment?
Its a way to define the environment a market is in.
Explain each component of the PESTEL environment.
P (Political Factors): Tariffs, War, Covid, Tourism etc.
E (Economic Factors): Tax changes and S/D shocks.
S (Social Factors): Immigration, Trends, Age Demos.
T (Tech Factors): Customer Info, Competitor Info etc.
E (Environmental Factors): Sustainable wins customers.
L (Legal Factors): Regulation, Restrictions and Price Setting.
What is market segmentation?
Breaking down the market into demographics who may want different products. Its a great way to find gaps in the market.
What is market targeting?
Its the use of market segmentation to decide which markets to pursue.
What are the 3 types of market targeting?
Undifferentiated Market Targeting: Having on product to suit all demographics (rare as even mineral water markets are segmented today).
Differentiated Market Targeting: The most common type, the same company will make a range of products to cover all demographics (toothpaste).
Concentrated Marketing: Seeing a segmented market and focusing on one segment of this, it can be done by companies with a smaller budget or specific specialist knowledge.
What is McCarthy’s Marketing Mix?
Price, Product, Place, Promotion: The terminology used to describe how a product is addressing a certain segment of the market.
Why were 3 new Ps added to the system? What are they?
They were specific to services, which have no physical product and therefore require an outline for people (involved), processes and physical evidence.
What is Product? [P]
The features of the product: Quality, Design, Brand, Packaging and Attributes.
What is Price? [P]
The sale price of the product but also any discounts for sales or bulk buying or payment plans etc.
What are the 3 types of pricing?
Price Skimming: Set a high initial price and gradually reduce to access all WTP (Video Games).
Penetration Pricing: Use a low initial price to gain market share then raise later on.
Related Product Pricing: Low initial product price but add-ons cost more e.g. printer ink.
What are the 4 price influencers?
Costs: Revenue must have a profit margin to sustain.
Competitors: Determines price based on the type of competitive environment you are in.
Consumers: All have a WTP, so price can vary by region. Poor respond to competition seeking out lowest price but the rich do this less. Perceived value can also inflate price through brand like supreme.
Controls: Price cartels like in the sunglasses industry can be broken apart by regulation controls.
What are the 4 competitive market environments?
Perfect Competition: No controlling influence, free entry and exit, prices are fair.
Oligopoly: Small cartel have similar products and same prices.
Monopoly: One supplier controls price solely to maximize revenue.
Monopolistic Competition: Many products that are not perfect substitutes so all can survive, they monopolize one product but utility loss of a sub is not that much so people switch.
What is Promotion? [P]
Its the means of encouraging sales of your product to the consumer through: Advertising, Discount Sales, Personalized Selling (Salesman), Public Relations.
What are the two types of promotion in marketing?
Push: The product into shops (hard bit), then it will eventually sell.
Pull: Get customers to demand shops stock a product and they will be middlemen profiting from demand (Hard Bit) then it will sell.
