How the finance function interacts with sales and marketing Flashcards
Marketing
The management process that identifies, anticipates and supplies customer needs efficiently and profitably.
Marketing Orientation
Starts by understanding customers’ needs and then purchases products with benefits and features to fulfil these needs.
Production Orientation
Focus is on high volume production to achieve low unit cost.
Product Orientation
Focus is on continual improvement of products assuming customers simply want the best quality for their money.
Sales Orientation
Uses aggressive promotional policies to entice the customer.
Steps in the market planning process
Situation Analysis (SWOT/PESTLE)
Review Mission & Objectives
Set Marketing Objectives
Devise an appropriate Marketing Strategy
Implementation
Review
Macro Environment
Includes all factors that influence an organisation but are outside of their control.
The 7 P’s of the Marketing Mix
Product
Place
Promotion
Price
People
Processes
Physical Evidence
The 4 C’s of deciding how to price a product
Cost
Customers
Competition
Corporate Objectives
Cost-Plus Pricing
Cost per unit is calculated and then a mark-up is added
Penetration Pricing
A low price is set to gain market share
Perceived Quality Pricing
High price is set to reflect/create an image of high quality
Price Discrimination
Different prices are set for the same product in different markets. E.g. peak/off peak rail fares
Going Rate Pricing
Prices set to match competitors
Dynamic Pricing
Prices are altered in line with demand, e.g. airline industry
Price Skimming
High prices set when a new product is launched. Later the price is dropped to increase demand once customers who are willing to pay more have been ‘skimmed’ off
Loss Leaders
One product may be sold at a loss with the expectation that customers will then go on and buy other more profitable products
Captive Product Pricing
This is used where customers must buy two products. First is cheap to attract customer but the second is expensive, once they are captive.
Promotion - ‘AIDA Sequence’
Awareness
Interest
Desire
Action
Viral Marketing
Encourages individuals to pass on a marketing message to others, so creating exponential growth in the message’s exposure in the same way computer viruses grow.
Guerrilla Marketing
Relies on well thought out, highly focused and often unconventional attacks on key targets. Often low cost and has allowed organisation with small promotional budgets to be very effective.
Experiential Marketing
Interactive marketing experience aimed at stimulating all the senses, for example road shows, street theatre, product trials. The next time the consumer sees the product, it should trigger a range of positive memories making it the first choice.
Digital Marketing
Promotion of products or brands via one or more forms of electronic media, for example using email, social media, the organisation’s website or Google search.
Search Engine Marketing
Form of digital marketing that involves the promotion of an organisation’s website by increasing its visibility in search engine results pages, such as Google.
Social Media Marketing
Form of digital marketing, refers to the process of gaining traffic or attention through social media sites.
Postmodern Marketing
Philosophical approach to marketing which focuses on giving the customer an experience that is customised to them and in ensuring they receive marketing messages in a form they prefer.
Market Segmentation
Sub-dividing of the market into homogenous groups to whom a separate marketing mix can be focused.
Kotler’s three marketing segments criteria
Measurable
Accessible
Substantial
Targeting
Process of selecting the most lucrative market segment(s) for marketing the product.
Concentrated Marketing
Specialises in one of the identified markets only, where a company knows it can complete successfully.
Differentiated Marketing
Company makes several products each aimed at a separate target segment.
Undifferentiated Marketing
Delivery of a single product to the entire market.
Market Positioning
Involves the formulation of a definitive marketing strategy around which the product would be marketed to the target audience.
Porter’s Four Market Positioning Strategies
Cost Leadership, Low Cost/Broad Target
Differentiation, High Cost/Broad Target
Cost Focus, Low Cost/Narrow Target
Differentiation Focus, High Cost/Narrow Target
Reasons for finance interacting with sales/marketing
Budgeting
Advertising
Pricing
Market Share
KPI’s
Stages of Product/Service Development
Consider customers’ needs
Concept screening
Design process
Time-to-market
Product Testing
Stages of the Product Life Cycle
Revenue
Introduction
Growth
Maturity
Decline
Cost
Life Cycle Costing
Considers costs and revenues of a product/service over its whole life rather than one accounting period.
Balanced Portfolio
Products/services at different stages in the lifecycle have different implications for resource requirements, risk and strategy.
