functional areas and marketing Flashcards
1
Q
what is a functional area?
A
a department that has clearly defined roles and responsibilities
2
Q
why are businesses split into departments? (3)
A
- so you know who to talk to if there’s a problem
- helps workers to understand their specific roles and how the business works
- so that employees can be staffed by experts and benefit from economies of scale
3
Q
in most large companies what are the functional areas? (4)
A
- Marketing (sales and marketing)
- Human resources (personnel)
- Finance ( accounts )
- Operations ( production)
4
Q
what are the additional departments? (5)
A
- legal department
- distribution
- supply chains
- research and development
- ICT support
5
Q
what could happen if functional departments fail to work together
(6)
A
- damaged reputation
- increased costs
- loss of revenue
- loss of customers
- fall in staff motivation
- delays
6
Q
- what does the marketing department do?
- what are the main functional activities? (3)
A
- concerned with fining out the needs and wants of potential customers and promoting the company’s products or services
- advertising- how and when to advertise
market research- gathering information on customer needs and wants
promotion- e.g. buy one get one free
selling products- increasing sales through correct pricing and designing attractive packaging
7
Q
- what’s the role of human resources?
- what are the main functional activities? (4)
A
- manages the people who work for the organisation
- recruitment and selection- finding best people to come and work for the company
- staff training- give staff training required to enable them to provide a good quality service to customers
- industrial relations- supports the remationship between the employer and employee regarding working conditions, grievances, contracts of employment
- health and safety- ensures that all staff work within the guidelines set out in the appropriate health and safety legislation
8
Q
- what’s the role of operations?
- what are the main functional activities? (3)
A
- responsible for making the product or providing the service. it is their responsibility to ensure that the product or service is of the required quality to satisfy the customer
- •production of goods- managing stock, choosing the most suitable production methods and distributing finished goods•buying raw materials- cost effective and high quality supplies
•control of quality - best quality methods to ensure a product or service is of acceptable standard
9
Q
- what is the role of the finance department? (2)
- what are the main functional activities? (3)
A
- -responsible for managing the money coming into and going out of the business
- deals with all the financial aspects of the business such as paying suppliers and staff wages
- raising finance- ensure business has enough money to pay bills, extra finance may need to be raised through bank loans or grants
preparing budget - plan ahead so they can see how much money is expected to come in and out of a business
preparing final accounts- illustrated how much profit or loss has been made and what business is worth
10
Q
what are the three types of market
A
-market orientation
- product orientation
- asset led marketing
11
Q
what is market orientation/ market led?
A
- business activities are dictated by the market and the most important asset is the customer
- they believe that as long as it is able to identify potential customers, find out what they want and then produce it for them, they will be successful
12
Q
- what are the advantages of market orientation? (3)
- what are the disadvantages of market orientation?
A
- flexible to changes in taste and fashion
- new products are designed to meet customer needs
- decisions are based on effective market research
- -high costs of market research to understand the market
- constant internal change as the needs of the market are met
- unpredictably of the future
13
Q
- what is product orientation?
- give an example
A
- when a business based its marketing mix on what the business sees as its internal strengths
- for example the walkman cassette player in the 70s, marketing professionals said it wouldn’t sell because it had no recording facilities but it did
14
Q
- what are the advantages of product orientation?
- what are the disadvantages of product orientation?
A
- easier to apply production management
- focuses on product development
- increased economies of scale
- focused on quality - -could be changes in market structure that won’t be responded to
- fashion and taste are not accounted for in the product mix
15
Q
what is asset led marketing?
A
- when marketing decisions are based on the needs of the consumer and the strengths of the business
- by identifying what you are good at and relating this to customer needs
16
Q
- what are the advantages of asset lex marketing
- what are the disadvantages of asset led marketing
A
- good quality of output
- strengths are linked to market needs
- progressive change
- maximise return from assets
2 - high costs of market research
- constant internal change as needs of market are met
17
Q
- define product
- define branding
A
- any good or service offered for sale to a customer
- the name, term, sign, symbol or design which identifies the sellers products and differentiated them from competitors products
18
Q
- why is brand important? (5)
A
- increases customer loyalty e.g. apple when comp is intense
- seperate products from others
- increases inelasticity (control over pricing strategies)
- increases value to business (highest asset
- eased customer choice (makes recognition of product easier so purchase more likely)
19
Q
what are the disadvantages of branding?
(4)
A
- high advertising costs
- loss of brand value/ image can affect other products
- invited competition (copycats)
- high research and development costs
20
Q
1.what is a product portfolio
- what is the advantage of a product portfolio? (6)
A
- mix of products the business produces and sells
- -spreads fixed costs
- spreads risk
- wider market
- greater economies of scale
- improves sales
- opportunity for growth
21
Q
- what is the breadth?
- what is the depth?
A
- number of product lines
e.g. mcdonald’s has burger, wraps, fries - product varieties within each product line
e.g. flavours
22
Q
- what is a USP
- how can a business achieve a USP(5)
A
- unique selling point
- -methods of promotion
- packaging
- looking different
- ad ons such as warranty
- quality
23
Q
what are the 6 stages of the product lifecycle?
A
- research
- introduction
- growth
- maturity
- saturation
- decline
24
Q
what happens in the introduction phase?
A
- product is new to market
- few potential consumers know of it
- prices are high so sales are restricted
25
what happens in the growth stage of the product lifecycle?
- advertising strengthens brand
- profits start to be earned
- however advertising is pricey
26
what happens in the maturity stage of the product lifecycle?
- sales at peak
- profit is high
- competition increases so advertising should firm up
27
what happens in saturation?
- few new customers
- replacement purchases trending
- profits decline
28
what happens in the decline section?
- sales fall fast
- advertising costs will be reduced
- business will focus on core strengths and survival
- extension strategies introduced
29
what is the product lifecycle?
a graph that measures the change in sales of the product that occurs overtime
30
1. what is a straw on fire lifecycle?
2. give an example
1. product quickly moves through all the stages
2. furbees
31
what is an extended product lifecycle?
give an example
products remain in the market place for a long time often much longer than competitors
e.g. coca cola
32
1. what are extension strategies
- a medium to long term plan for lengthening the lifecycle for a product or brand
- usually implemented during maturity or the early decline stage of a product
33
what could extension strategies include? (5)
- finding new markets or repositioning the product in the market place
- relaunching the product and aiming it at a different segment
- using a ‘new with’ policy (packaging, promo, sized)
- price reduction
- limited edition
34
1. what is the boston matrix?
2. what are the 4 categories?
1. a graph that allows the analysis of a business’s products by dividing the products into 4 categories
2. question marks, stars, dogs , cash cows
35
1. what are cash cows? (4)
2. give an example
1. - products that have high market share and slow market growth
- they are very profitable, expenditure on advertising is low
- brand value has been established and customers now and understand product
2. e.g. macbook
36
1. what are stars?
2. give an example
1. -high market share , fast market growth
- market is immature with new businesses being attracted to the market place by potential profits and market share
- competition is high
- products have high levels of revenue and high costs such as advertising.
2. apple ipad
37
1. what are question marks
2. give and example
3. give a 2nd important example
1. -low market share in fast growing markets
- being beaten by competitors, but it’s still worth doing something about it
- product relaunch or redesign may increase sales
2. apple smart tv
3. Levi’s jeans in the 80s got relaunched
38
1. what are dogs?
2. give an example
1. -low market share , in a slow growing market
- not worth spending money on or relaunching product
- however can still be profitable
- problems: take up management time, ties up assets, low returns
2. ipods
39
how could a business use the boston matrix? (3)
1. judge how to manage individual products given market conditions
2. recognise the importance of using successful, profitable products to fund the development of stars and cash cows
3. see whether they have products in fast growing and potentially profitable market sectors
40
why is pricing important? (2)
-if price is too high demand will be low and costs won’t be covered
-if price is too low customer may doubt quality and reliability so sales fall
41
what are price takers?
- the market mechanism will set the price of product and determine the QS
- so businesses have to accept the price set by the market
42
what are price makers?
-when a business is not a price taker and has the opportunity of using pricing strategies
43
1. what are market orientated price strategies?
2. what are the 6 main market orientated strategies?
1. when businesses produce what the market wants, the price is set at the level the market is willing to accept
2. - market skimming
- market penetration
- loss leader pricing
- destroyer pricing
- going rate pricing
- psychological pricing
44
1. what is market skimming?
2. what are the advantages
3. what are the disadvantages ?
1. -charging a high price for a product which has a USP for a limited period of time
- these products are sold to the most profitable segment of the market before the wider market
2. - newness of the product helps to gain most revenue
- generates a lot of revenue in a short time
- higher prices can create a perception of high value
3. - high prices deter price sensitive customers
- high initial prices can attract competitors who can sell at a lower price
- outdated quickly
45
1. what is penetration pricing?
2. advantages
3. disadvantages
1. - pricing a product at a low level so retailers are encouraged to purchase the product in large quantities
- used to establish brand loyalty
2. - low prices can quickly attract a large number of customers increasing market share
- encourages customers to try a new product, leading to brand loyalty
3. - customers may assume product is low quality
- may initially loose revenue
46
1. what is loss leader pricing?
2. advantages
3. disadvantages
1. - selling products at a loss with the expectation this will generate further sales from else where in the business
- e.g. supermarkets selling bread at a loss
2. - attracts customer to store or website
- cross selling opportunities as customers may make additional purchases after being drawn in
3. - selling products at a loss can significantly impact overall profit margins which isn’t sustainable in the long run
- customers may expect low prices and only shop when discounts are available
47
1. what is destroyer pricing?
2. advantages
3. disadvantages
1. setting a price low enough to drive competitors out of the market
2. - eliminates competition allowing greater market control
- encouraged brand awareness as prices are so low
3. - method is often seen as anticompetitive, therefore illegal leading to legal challenges and a bad rep
- customers may expect low prices harming the business in the future when considering raising prices
48
1. what is competition based pricing?
2. advantages
3. disadvantages
1. accepting the current market pricing structure based on competitors pricing. especially used by new entrants
2. - allows business to set prices in line with competitors, ensuring they remain competitive in the market
- allows flexibility as businesses can quickly respond to changes in competitor pricing, which helps maintain market relevance
3. - potential price wars, constant lowering of prices
- relying too heavily on heavily on this strategy can limit a companies ability to differentiate making it harder to develop unique brand identity
49
1. what is psychological pricing ?
2. advantages
3. disadvantages
1. - prices are set at the level that matches what the consumer expects to pay as they perceive that they are recieving value for the price paid
2. -creates a perception of value making a product seem attractive e.g. £9.99
-leads to increased sales because customers think they’re getting better value for money
3. -consumer skepticism as some consumers can see through prices
- if perceived value doesn’t match actual quality of customer is can lead to dissatisfaction
50
1. what is cost based strategies?
2. what are the 3 strategies?
1. businesses concentrate on internal costs and pricing strategies are based around the costs of production
2. -cost plus pricing
- contribution pricing
- full cost pricing
51
1. what is cost plus pricing?
2. advantages
3. disadvantages
1. a profit percentage is added in the average cost of producing the good (adding a mark up)
2. - changes in costs can be passed directly onto buyer
- every good sold at a profit
3. - actions of competition is completely ignore which could lead to loss of profit if a higher price is charged
- for exporters this method makes no allowance for currency changes
-
52
1. what is contribution pricing?
2. advantages
3. disadvantages
1. price is based on the variable costs plus a contribution towards overheads. this approach focuses on covering variable costs and contributing to profit
2. - gives flexibility because orders can be accepted on a different contribution basis for different products
- allows businesses to maximise profits by focusing on contribution margin of each product
3. - doesn’t consider fixed costs in pricing strategy which can lead to underpricing
- may overlook market demand and consumer willingness to pay, leading to loss of sales opportunity
53
1. what is full cost pricing?
2. advantages
3. disadvantages
1. price is based on all the costs of the business
2. same as cost plus pricing
3. same as cost plus pricing
54
1. what is promotion?
the attempt through various forms of media to draw attention to a product and thereby gain and retain customers
55
what are the objectives of promotion?
(5)
- provide potential customers with readily available info
- increase sales and market share
- give product image and establish brand identity
- establish corporate image
- enable long term business planning to take place
56
what are the 5 stages of purchasing a product
- unaware of product existence
- awareness of product existence
- understanding of the benefits of product
- establishing a liking or commitment for prod
- purchase of product
57
what are the methods of promotion?
- above the line
- below the line
58
1. what is above the line promotion
2. give 6 examples
1. generally called advertising used to reach a mass audience
2. -TV
- magazines
- newspapers
- radio
- posters
- internet
59
1.what is below the line promotion?
2. give 6 examples
1. promition that offers a wide range of alternative promotional strategies, that targets consumers directly, to support above the line promotion
2. -personal selling
- packaging
- sales promotion
- direct mailing
- exhibitions and trade fairs
- public relations
60
what factors should be considered when using methods of promotion? (6)
- target market
- whether the objective is to convey information or persuade consumers to buy
- costs (large companies have bigger budgets)
- reach if media
- stage in product lifecycle
- cultural or religious considerations
61
1. what is guerrilla marketing?
2. what does it involve?
1. advertising strategy concept designed for businesses to promote products or services in an unconventional way with little budget
2. involves high energy and imagination focusing on grasping attention of the public in a memorable way
62
1. what are the advantages of using television as a promotional method
2. disadvantages
1. -can reach millions of people
- use of sound, video, famous people can make it appealing
2. - very expensive to buy airtime and make advert
- if it’s not a mass product it’s not effective for targeting potential customers
- not affordable for smaller businesses
63
1. what are the advantages of using the radio as a promotional method (3)
2. disadvantages (2)
1. - use of sound and music is effective and can reach large audiences
- can choice national or local stations to help target audiences
- cheaper than TV advertising
2. - still expensive for smaller businesses and smaller audience than tv
- no visual image to see what product looks like
64
1. what are the advantages of using national newspapers as a promotional method (3)
2. disadvantages (3)
1. - many newspapers to choose from so can target the adverts at the readership profile of paper
- visual impact in colour is effective
- can include a lot of information about product
2. - still expensive, especially for main tabloid
- no use of sound or video to show
- only large businesses can afford as full page adverts in colour are expensive
65
1. what are the advantages of using the local newspaper as a promotional method? (4)
2. disadvantages (2)
1. - local papers are quite cheap compared to radio and national newspapers
- can target local market
- visual impact (colour)
- lots of info
2. -smaller readership numbers as only advertise locally
-colour adverts more expensive
66
1. advantages of using website as a promotional method (4)
2. disadvantages
1. -relatively cheap and very large coverage as most households have internet access
- good selection of different of advertisement such as social media and direct mail
- use sound and video
- target certain individuals
2. - a lot of people ignore it because there’s too much of it
- can have a negative impact on business if it causes a nuisance
67
1. advantages of using leaflets as a promotional method
2. disadvantages
1. - relatively cheap to produce and distribute
- very useful for small and local businesses who want to target particular geographical areas
- can use colour and catchy designs to get attention
2. - many of the leaflets get thrown in the bin without being read- a waste of money
- using colour can be expensive
68
1. what is the advantage of using posters as a promotional method (2)
2. disadvantages (2)
1. -very eye catching, can be seen many people many times
- very good for products with short life cycle such as films
2. - can be very expensive to produce and are vulnerable to the weather and graffiti
- limited reach: only passing trade will see them
69
1. define place
2. what decisions must be made regarding place
1. “the marketing place”, where buyers and sellers meet and exchange payment in return for G&S
2. - where to sell
- what distribution methods work to get to final consumer
70
what is the distribution chanel?
the route the good takes to get to the customer
71
1. what is method one?
1. using a wholesaler
manufacturer < wholesaler < retailer < consumer
72
1. what is method 2?
2. what are EPOS systems?
1. manufacturer < retailer < consumer
2. electronic points of sale which has led to a reduction in the need for the middle man and reduction in price
73
1. what is method 3?
2. what are the advantages?
3. give an example
1. Direct selling
2. - the internet allows manufactures to charge much lower prices
- allows manufactures to keep most products and attract customers by charging competitive prices, and convenience
3. books bought over the internet are 40% cheaper than in store
74
1. what is method 4
2. what are the advantages
1. multi channel distribution
2. -allows businesses to reach a broader audience
- customers can choose their preferred shopping method
- if one channel of distribution fails you can rely on the other
75
1. what are the advantages of an internet presence? (5)
- products sold worldwide
- low cost ( no need for shop or front sales staff)
- low cost as most hosting sites charge a small fee
- auction sites and etsy reduces costs further
- stock can be changed quickly
76
what are the disadvantages of an internet presence? (4)
- security issues with fraud
- some customers still prefer to visit in store to get a feel for the product
- maintenance can be a struggle if you don’t have the skills
- postage costs
77
how has global branding changed?
global superstars can be used like influencers
78
what factors should be considered when looking at marketing mix? (6)
- local markets ( needs to be specific)
- national markets ( needs to be consistent)
- global market ( identified global brand)
- goods / service ( as it’s easier to sell goods)
- mass marketing (can be expensive )
- niche marketing ( such as designer goods)
79
what are the relations between new tech and marketing ? (6)
- click and bricks ( web and physical presence )
- social media ( celebs to market )
- m- commerce ( buying g&s via handheld wireless devices)
- pricing and internet ( easy price comparisons)
- E- tailing ( online shopping)
