FBP - Sales and Marketing Flashcards
What is marketing research?
Marketing research involves collecting information about the marketing mix and the overall market.
What are the four elements of the marketing mix?
- Product
- Price
- Promotion
- Place
What is the difference between marketing research and market research?
Market research is a sub-section of marketing research focused on the overall market, while marketing research also includes the marketing mix.
What is secondary research?
Secondary research uses existing data and is often the first step in the research process.
What are some sources of secondary research?
- Trade associations/professional bodies
- National and local press
- Industry magazines
- Websites
- Published company accounts
- Market surveys
- Public records
What is primary research?
Primary research involves actively gathering new data, often at a higher cost.
How can primary research be collected?
- Interviews
- Questionnaires
- Observation
- Test marketing
- Mystery shoppers
- Focus groups
What is market segmentation?
Market segmentation is dividing the market into groups of buyers with similar needs and behaviors.
What are the four characteristics to consider in market segmentation?
- Relevance to the product
- Size of the segment
- Measurable characteristics
- Accessibility of the segment
What is demographic segmentation?
Demographic segmentation divides the market based on measurable characteristics like age, gender, and income.
What is psychographic segmentation?
Psychographic segmentation focuses on shared interests, beliefs, and traits of customers.
What is targeting in marketing?
Targeting involves selecting specific market segments to serve with tailored marketing approaches.
What is positioning in marketing?
Positioning is deciding how to gain a competitive advantage against competitors.
What is perceptual mapping?
Perceptual mapping is a technique to visualize competitors based on quality and price.
What defines a market leader?
A market leader has the largest market share and strong brand recognition.
What defines a market challenger?
A market challenger has a lower market share but aims to become the market leader.
What defines a market follower?
A market follower has a lower market share and aims to remain profitable without aspiring to lead.
What is a market niche strategy?
A market niche strategy focuses on specific customer segments rather than competing broadly.
What are the two types of data in marketing research?
- Qualitative
- Quantitative
What is premium pricing?
Premium pricing sets a high price for unique products with a competitive advantage.
What is market skimming?
Market skimming involves setting high prices for innovative products, gradually lowering them to attract different customer segments.
What is penetration pricing?
Penetration pricing sets a low price to gain market share, then increases it once established.
What is economy pricing?
Economy pricing charges low prices for no-frills services, focusing on high sales volume.
What is psychological pricing?
Psychological pricing considers customer perceptions, e.g., pricing at £99 instead of £100.
What is cost-plus pricing?
Cost-plus pricing sets prices by adding a percentage markup to the cost of the product.
What is optional product pricing?
Optional product pricing offers extras alongside the main product to increase revenue.
What is captive product pricing?
Captive product pricing involves pricing products that require a main purchase, like games for a console.
What is optional product pricing?
Optional extras sold alongside the main product to increase revenues and profitability.
Example: Cars with optional upgrades to a better music system or a faster engine.
Define captive product pricing.
Where a captive market exists once an initial purchase is made.
Example: Computer games after computer games consoles have been purchased.
What is product bundle pricing?
Combining a number of products in the same package to create perceived savings for consumers.
Example: A games console sold with an extra controller and a few games.
Explain promotional pricing.
Pricing to promote a product, often with a low price to attract new customers, reverting to a higher price later.
Commonly used for interest rates on loans, mortgages, and credit cards.
What is dual pricing?
Different prices for the same product to different markets, often enforced by barriers preventing arbitrage.
Example: Peak and off-peak train fares.
True or False: Predatory pricing aims to drive competitors out of business by setting prices low.
True.
The aim is to raise prices higher again after the competitive battle is won.
What is a loss leader?
A product sold at a loss to attract customers and establish market share.
Example: Games consoles sold cheaply to profit from game sales.
Define product differentiation.
Varieties of the same product designed to appeal to a larger market.
Example: A teddy bear offered in different colors and outfits.
What are the key elements of a promotional campaign?
- Personal selling
- Public relations (PR)
- Direct mail
- Trade fairs and exhibitions
- Advertising
- Sponsorship
- Sales promotion
Each element serves to communicate and influence potential customers.
What is social media marketing?
The process of gaining website traffic or attention through social media sites.
Includes sharing videos via platforms like YouTube.
What is guerilla marketing?
Unconventional campaigns that surprise and raise awareness among large groups of people.
Example: Politically motivated images projected on buildings.
What is viral marketing?
A commercial message that spreads from user to user, appearing to come from a trusted source.
Designed to generate interest rapidly.
What does customer relationship management (CRM) involve?
Tracking and analyzing customer preferences, activities, and complaints to build relationships.
Helps in targeting marketing efforts and improving customer service.
What is business-to-consumer (B2C) marketing?
Marketing aimed at selling products directly to consumers.
Example: Mobile phone manufacturers marketing to individual customers.
What is business-to-business (B2B) marketing?
Marketing focused on selling products directly to businesses.
Involves building relationships with corporate clients.
What is business-to-government (B2G) marketing?
Marketing aimed at selling products to government entities.
Often involves a formal tender process.
What are key performance indicators (KPIs)?
Metrics used to monitor the success of operations, particularly in sales and marketing.
Examples include cost per customer acquisition and sales team response time.
What is direct product profitability (DPP)?
Profitability of a product line after accounting for direct costs like materials and labor.
An application of Activity Based Costing.
Fill in the blank: The profitability of each customer relationship is referred to as _______.
Customer account profitability (CAP)
Helps marketing departments identify profitable customers.
What defines a profitable customer?
Revenues exceed all costs associated with attracting, selling to, and servicing that customer
This includes costs related to marketing, proposals, contracting, customer support, order processing, and delivery.
What often accounts for a large portion of company profit?
A small percentage of the organisation’s best customers
This is due to economies of scale when dealing with larger customers.
What is Activity Based Costing (ABC)?
A costing method where costs are allocated to customers based on cost drivers
Cost pools are created for departments like technical support.
What is an example of customer segmentation in John’s IT support business?
Identifying unprofitable customers B and Smally as ‘small online businesses without internal support’
This helps avoid similar customers in the future.
What are the five stages of the CAP calculation?
- Identify customer revenues 2. Identify customer costs 3. Analyze profitability 4. Segment customers 5. Make strategic decisions
CAP stands for Customer Profitability Analysis.
True or False: CAP can overlook the lifetime value of a customer.
True
CAP may miss potential future revenue from currently loss-making customers.
What is Customer Lifetime Value (CLV)?
The present value of future cash flows generated by the entire customer relationship
It helps marketing departments determine target segments.
What is the discount rate in a CLV calculation?
It converts future cash flows into today’s money
It reflects the time value of money.
What does churn rate measure?
The percentage of customers who leave a company in a given period
It highlights the importance of customer retention.
What does the retention cost entail?
Money spent to retain a customer, including admin, support, and promotional costs
It’s critical for understanding overall customer profitability.
What are digital traction metrics?
Metrics used to gauge the effectiveness of an organization’s digital business
They are more effective than traditional KPIs for digital investments.
What does CAC stand for?
Cost to Acquire a Customer
It measures the expense of convincing a potential customer to purchase.
What is the relationship between LTV and CAC for profitability?
LTV must be greater than CAC
Otherwise, the organization is spending more to attract customers than it receives.
What is the LTV : CAC ratio used for?
It measures organizational success, showing time to profitability and cash flow
A higher ratio indicates better profitability prospects.
What is a modern approach to finance business partnering?
Finance works closely with sales and marketing to achieve company objectives
Improved technology facilitates collaboration across departments.
What role does finance play in budgeting?
Sets budgets based on sales and marketing targets
This ensures that financial resources align with business goals.
What is the importance of pricing input from finance?
Ensures costs are covered and products remain profitable
Finance can set parameters for price reductions.
How does finance monitor advertising effectiveness?
By comparing sales with the cost of advertising campaigns
This helps assess the return on marketing investments.
What do key performance indicators (KPIs) help establish?
Metrics for monitoring marketing function success
Finance collaborates to set and track these indicators.
