Marketing Flashcards
what is the role of the marketing department
- to help raise awareness of products and services
- to help raise the business profile
- encourage new customers to purchase
- to know what customers want
- monitoring changes and trends
what is market share
market share is the percentage of all sales within a market that is held by one brand/product or company
what is a market leader
a market leader could be a product, brand, organisation, which has the highest percentage of total sales revenue of a particular market
what is market growth
the increase in demand for a product or service over a period of time. The sales of all businesses within the same market could benefit in a period of market growth
what does product-led mean
product-led focuses on producing a technically sound product and then introduces it to the market, where customers are persuaded to buy. No form of market research will have been carried out prior to its development. It is normally a new invention e.g i-pad
what does market-led mean
market-led continually identifies, reviews and analyses consumer needs. The organisation will then modify its products or services in response to change in the market e.g walkers crisps
what is field research
this is when information is obtained first hand, it is primary information
advantages of field research
- information is specific to the business needs
- information is unique to the business so they can have a competitive edge
- information is up-to-date
- the source can be verified as they know who gathered it and conditions of this
disadvantages of field research
- expensive to collect-staff wages
- time consuming as it has to be gathered first hand
- questionnaires must be well constructed
- information may not always be truthful and accurate
what is desk research
this is when the business uses information that has already been collected, this is secondary information
advantages of desk research
- information is usually cheap as it as already available and does not involve as much labour/wage to collect like field research does
- information is easily accessible and readily available, therefore saves time allowing decisions to be made faster
Disadvantages of desk research
- may not be up to date
- may not be totally relevant to the business’s needs
- information is available to competitors
Methods of field research
Telephone survey: a market researcher telephones customers and asks them questions
Postal service: a survey is sent to customers through the post and is returned once completed
Online survey: a website or email is used to ask customers questions
Personal interview: often conducted as a street survey or by ‘cold calling’ at customers homes
Hall tests: a product is given to customers to try and their feedback is gathered
Focus groups: a group of customers is brought together and asked to answer and discuss questions put forward by a market researcher
Test marketing: a new product is launched into a regional area and the reaction is monitored. Successful products are then launched to a wider market
Electronic point of sale (EPOS): information on customer preferences and habits is gathered as their loyalty cards are swiped through electronic tills. Used to match purchasing information with customer details.
Telephone survey advantages and disadvantages
Advantages: easy to target specific customers
Information is obtained immediately and can be clarified if necessary
Disadvantages: customers can feel that telephone surveys are intrusive and may not want to respond
Only short surveys can be carried out
Postal survey Advantages and Disadvantages
Advantages: easy to target specific customers
Customers can choose to complete the survey at any time that is most convenient for them
Disadvantages: questions must be simple and easy to follow for the best result
Customers often via postal services at ‘junk mail’ and will simply ignore them
online survey, advantages and disadvantages
Advantages: customers can be surveyed across a very large geographical area
Online software can often be used to collate and analyse the results easily
Disadvantages: the responses may be too brief to be meaningful as clarification cannot be gained
Access to the internet must be available
personal interview advantages and disadvantages
Advantages: Allows two-way communication. Interviews can respond to the customers, body language, tone of voice, and facial expressions to encourage fuller responses
Disadvantages: I can take a lot of time to conduct these interviews
Customers may feel that this sort of questioning is a nuisance and may not wish to respond
Hall tests, advantages, and disadvantages
Advantages: good quality feedback can be gathered based on the product trial allowing changes to be made
inexpensive and easy to do
Disadvantages: customers, opinions and feelings can be more difficult to analyse
Customers might feel the need to give a positive response to have been given a free product
Focus groups advantages and disadvantages
Advantages: more in-depth feedback can be gathered
customers have agreed to participate, so considered responses are more likely
Disadvantages: participants are often paid which can increase research and development costs
Strong personalities within the group can sway discussions and opinions
test, marketing advantages and disadvantages
Advantages: changes can be made to the product before they ate launched to a wider market
money can be saved on launching a product to wait or market if it is unsuccessful in the test area
Disadvantages: customers in one area may have tests are not representative of the wider market
Electronic point of sale, advantages and disadvantages
advantages: gathers, vital information about consumer behaviour, such as where they buy, what they buy, how they react to promotions or price changes, which can allow for inventory to be ordered accordingly
allows retailers to offer promotions
disadvantages: it can be very expensive to set up the systems
It can be time consuming to set up
When used with loyalty schemes reward points with money off vouchers which lowers potential profits for the business
Information could be incomplete, if customers decide to shop elsewhere at times
internal desk research methods
- examining customers records
- Studying trends and sales figures
- examining managing reports
- Analysing the firms accounts
external desk research methods
- newspapers and magazines
- Books, reports and journals
- Government publications
- Internet and technology
Different methods of sampling
Random: totally random from the list of names. Each person must be interviewed. this can therefore become costly.
Stratified: The sample is more representative of the population as a whole
Quota: selection of a number of people who meet specific characteristics according to age, gender or income group. The researcher must find people to interview for this categories
Cluster: the population of split into smaller ‘clusters’, often geographically, which could represent the population on a smaller scale
What is qualitative research?
- research that has expressed in words and is descriptive and involves judgements or opinions
- Qualitative research provides information on consumer perception, such as how do you feel of a product of services or what they like or what, they do not like about your product
What is quantitive research?
- research that can be measured, and there’s normally expressed in numerical form
- expresses information in numerical form such as graphs tables of charts to compute to analyse information
different types of consumer behaviours
- why do consumers buy products
- what types of purchases do consumers make
- how do consumers purchase products
- where do consumers purchase products
description of why do consumers buy products
Need/Want, social status, gift for someone else?
impact of why do consumers buy products on businesses
understand the motivation of customers and adapt products to suit
description of what types of purchases do consumers make
- Routine buying e.g food or fuel
- Impulse buying just because something cause their eye
- Informed purchases e.g a new car
impact of what types of purchases do consumers make on businesses
putting products at tills for impulse buying
description of how do consumers purchase products
do consumers pay with:
- cash/debit
- credit card
- store credit etc.
impact of how do consumers purchase products on businesses
move towards cashless society e.g contactless payments
description of where do consumers purchase products
retail outlets?
e-commerce?
catalog?
impact of where do consumers purchase products on businesses
must cater for buying preferences e.g click and collect, home delivery
factors influencing consumer behaviour
- shop layout
- point of sale display
- music
- flooring
- product location (in store)
- product placement (on shelves)
7 P’s of the marketing mix
product: this is the actual product - good or service - this is produced and sold
place: this is how the product gets to customers, where the product or service can be purchased
price: the amount paid by the customer in return for the product/service
promotion: this is the way in which the organisation draws attention to their product or service
people: the employees involved in providing customer service
process: this is the processes or systems used to deliver the product/service
physical: the location/environment that the service is being provided in
how can altering one part of the mix can affect another
when altering one part of the mix will often result in having to alter another part to keep the balance right:
- increasing the price of the product may require, improving the quality of the product
- promoting the luxury brand or image of the product may require to change the place to meet the luxury image
stages of the product life cycle
- research and development
- introduction
- growth
- maturity
- saturation
- decline
describe the stages of the product life cycle
R&D: the product is being researched and developed. Prototypes will be made and tested. Changes may have to be made after research feedback.
Introduction: the product is launched. This usually coincides with introductory promotional activities to creat ‘hype’ for the product.
Growth: the product has been on the market for some time, customers are fully aware of the product and purchasing it
Maturity: the product has been on the market for some time. Competition enters the market
Saturation: the product suffers from too many competitors being on the market
Decline: the products life is nearing the end. The product will stop being produced
impact of the stages of the product life cycle on sales
R&D: there are no sales yet as the product is still being developed
Introduction: sales are slow to being with as customer are unsure of the product. Customers may have to be persuaded to move from competitors products
Growth: sales start to rise rapidly. This can be the result of slightly reduced prices, lack of competition and/or customer confidence in the product
Maturity: sales growth peaks and levels out. Many sales can still be made for a long time at this stage
Saturation: Sales begin to fall as consumers flock to competitors’ products
Decline: Sales all rapidly and eventually the product will be withdrawn from the market
impact of the stages of the product life cycle on profits
R&D: the product will actually be making a loss due to the cost of development and zero income from sales
Introduction: the product beings to cut into the losses from development, but high promotional costs still result in a loss being made overall
Growth: profits are starting to be made and losses from development and promotions during the initial stages are recouped
Maturity: profits can be still be health but start to fall the competition will take sales away and thus profits will fall
Saturation: profits fall rapidly, especially since prices are slashed to encourage sales
Decline: profits continue to fall. Eventually products may be sold at unit costs just to break even
what are extension strategies and why are they uses
when a product reaches the maturity or saturation stage in the product life cycle organisations will try and extend the life of the product by attempting to boost sales of the product. They can do this by amending elements of the marketing mix e.g changing packaging
examples of extension strategies
- introduce new variations of the product
- find new markets for existing products
- modify the products design or packaging.
- sell through a different outlet
- Update the product
- Change the products price
- Use a new advertising campaign
what is a product portfolio
An organisation product partfolio
is the range of products it creates. Having a range of productis allows organisations to Keep their products fresh by bringing out new ones in response to new trends of customer demands, and by retiring any that are in serious decline.
what is a product-line portfolio
when one products is then used to introduce ‘spin-off’ or closely related products
what is a diverse product portfolio
having a product portfolio allows the business to spread the risk of failure. If one product fails or the market declines the business can rely on the profits from the different products in the different markets
advantages of product portfolio
- spreads the risk if one product fails because there is others to rely on
- maximise sales/profits because you are attached different segments of the market
- easier to launch new products
- a business can plan when to introduce new products when old products start to go into decline
- increases brand awareness. Can raise the profile of the business because they have several products
- increased market share as they are able to meet the needs of a number of different market segments
disadvantages of product portfolio
- heavy investment is required in research and development
- need to build up knowledge and expertise in various markets
- may lose focus on core activity of the business and lose customers
- bad publicity surrounding one product can affect the whole portfolio
- high marketing costs are introduced to promote new products
- resources assigned to new products may affect the performance of existing products
what is the Boston matrix
a marketing tool used to analyse a product portfolio. It enables the products to be analysed on two fronts:
1. market share - the percentage of sales in the market a product makes
2. market growth - the overall potential for sales that the market has as a whole
what are stars (Boston matrix)
products that have a high market share in a high growth market e.g apples iphone
what are question marks
products that have low market share in a market with high growth potential
what are cash cows
products that have high market share of a low growth market
what are dogs
products that have low market share in a low growth market
advantages of the Boston matrix
- It can help analyse which products should be pursued, how best company profits should be invested and which products should be removed from the range
- It is simple and easy to understand
Disadvantages of the Boston matrix
- it can only take into account the current market position and does not take into account the external factors
- High market share, doesn’t always translate to profit
what is price
Price is often determined by the amount of product or service that is available (supply) and the number of customers that wish to buy the product or service (demand)
factors to consider when setting price
- fixed and variable cost of production
- competition
- company objectives
- target group and their willingness to pay
- the position of product in its product life cycle
- demand for the product
- external factors (e.g trends)
target market description
mass market products need to be priced in a way that more pure to most income segments
demand for the product description
If the demand for a product is high, the business can maximise profits possessing the price he wants to come and drop second lower, the price to encourage sales
Objective in a business description
If the objectives is to maximise sales a lower price might be offered of the objective is to maximise profits a higher price may be set
external factors description
prices should be Lord during a recession to encourage sales increased during periods to maximise profits.
cost of a product description
any pricing strategy should have to take into account the cost to produce the product as well as other costs that need to be covered, such as rent.
pricing strategies
- cost plus
- competitive
- skimming
- penetration
- price discrimination
- destroyer/predatory
- loss leaders
- psychological
- promotional
cost plus pricing description, advantages and disadvantages
the business calculates the unit costs of a product and then adds a percentage markup for profit
advantages:
- a quick and easy way of setting price
- ensures that total costs are covered and a profit is generated
disadvantages:
- doesn’t cover indirect cost
- doesn’t take external factors into account
competitive pricing description, advantages and disadvantages
the price of a product is set similar to the competitors
advantages:
- avoids a price war
- encourages competition which improve the market as a whole
disadvantages:
- other elements of the marketing mix must be better than the competitors to ensure sales
skimming pricing description, advantages and disadvantages
the price is set high to begin with and lowers over time
advantages:
- sufficient ‘hype’ around a new product enables higher prices to be changed which can increase profits
- lack of competition allows for maximum prices to be charged
disadvantages:
- high initial prices can put off some customers
- techniques results in low initial sale numbers
penetration pricing description, advantages and disadvantages
the price is set low to begin with and increases over time
advantages:
- encourages customers to try a new product
- the business hopes to gain repeat customers once the price rises
price discrimination pricing description, advantages and disadvantages
prices are altered depending on a discriminating factor
advantages:
- ensures products appeal to different market segments
- allows for high profit margins on some price brackets
disadvantages:
- harder to budget for sales revenue in advance
- loss in potential revenue from selling at a cheaper price
destroyer/predatory pricing description, advantages and disadvantages
the price is deliberately set extremely low for a period of time to force out competitors
advantages:
- competitors are forced out of the market then prices can increase again
- market share increases
disadvantages:
- can only be used by larger companies that can afford to make losses while prices are low
- this illegal practice could breach the CMA’a anti-competition regulation
loss leaders pricing description, advantages and disadvantages
a promotional price one or more products is set unprofitably low to entice customers to buy other products
advantages:
- creates greater footfall i.e brings customers to the business
- hopefully customers will buy normal priced products while buying loss leaders
- encourages repeat purchases
disadvantages:
- there is a risk that some customers will only buy the loss leaders, impacting on profits
psychological pricing description, advantages and disadvantages
the price is set just below the next rounded number
advantages:
- makes the customer think the product is much cheaper that it actually is
- products fit price brands customers have in mind
disadvantages:
- calculating total money owned or giving change can be more difficult
- some customers may ignore the attempt at making the product seem cheaper so the rest of the marketing mix would have to convince them to purchase
what is place
place is how the product gets to customers at the right time and in the right place
the 4 channels of distribution
manufacturer ————> customer
manufacturer->wholesaler->customer
manufacturer->retailer->customer
manufacturer->wholesaler->retailer ->customer
factors affecting the choice of channel of distribution
- the product: perishable, unique, technical, direct to customer
- the market: size. large like mars bars- via wholesaler who can break down into smaller volumes for retailers/customers
- legal requirements: alcohol medicines are restricted to license premises
- finance available: too expensive to have own retail outlet, use a wholesaler
methods of direct selling
- E-commerce: global market, available 24/7, credit card security, technical issues
- Direct mail: specific groups targeted, wide reach, poor response (junk mail)
- personal selling (door to door): demonstration, tech. issues, addressed, instant feedback, intrusive
- mail order: credit facilities, exclusive products, no cost of stores, high AD costs, lack of personal service
- TV selling: wide reach, 24/7, high costs
direct selling advantages
- products can be demonstrated
- can be made to specific requirements
- save costs of setting up shops
- manufacturers can control marketing
direct selling disadvantages
- high advertisement costs
- increased admin costs (lots of individual orders, delivery etc)
use of a wholesaler advantages
- selling in bulk reducing costs of transport, admin, and sales staff
- wholesalers bear the risk and cost of holding large qualities of stock
- wholesaler may package products, saving the manufacturer time
use of a wholesaler disadvantage
- loss of control over marketing of product
- having to sell at a lower price than direct to customer losing profits
use of a retailer advantages
- retailers have access to huge markets and break down bulk supplies for the public
- retailer may offer credit, guarantees, after sales service, which is attractive to the customer
use of a retailer disadvantages
- manufacturers products may be next to a competitors
- more stages in channel of distribution the more profit is lost/expensive the product becomes
Types of retailers
- hyper market/supermarket: 24/7, huge range of products but lack of competition near by can lead to poor quality
- convenience supermarket: meets customers needs so guaranteed footfall, can change higher price due to convenience but, smaller range of products can be frustrating for customers, higher level of waste as it’s more difficult to predict sales
- out of town retail parks: infrastructure attracts customer, often near amenities such as restaurants or cinema which can increase footfall but only suitable for customers with transport, limited choice of shops compared to high street or shopping mall
- online retailers: 24/7, access to a world wide market but, delivery charges put some customers off, customers can’t touch or try on product before purchase
- discount stores: low prices attract customers but limited product range, some customers don’t like the image
what is e-commerce
transaction that takes place online. The Internet is a common market place for all types of products or services.
advantages and disadvantages of e-commerce for consumer
advantages:
- available 24/7
- can compare prices
- choice of items is vast access to global market
- online stock checker and delivery tracker
- customer reviews
disadvantages:
- security- fake sites to obtain bank details
- technical issues especially mid transaction
- returning goods is more difficult/costly
- no option to try before you buy or ask questions
advantages and disadvantages of e-commerce for seller
advantages:
- no need for expensive retail outlet saving overhead such as wages and rent
- option to keep customers detail for market research purpose
- customers in the global market can be researched 24/7
disadvantages:
- expensive/time consuming to have the entire product range available online
- websites will need to be constantly updated
- staff turnover can impact on customer service as new will be less familiar with stock
what is into the pipeline promotion
sales promotions offered by the manufacturer to encourage retailers to purchase products from them
what is out of the pipeline promotion
sales promotions offered by the retailer to encourage customers to purchase products from them
into the pipeline promotions - aimed at retailers
- trade credit: this give retailers time to pay for goods they have ordered and encourages them to stock more as they can buy now pay later.
- point of sale: these could be promotional sales videos, posters, or display stands to draw the eye to the product
- dealer loaders: specific offers given to retailers to encourage them to buy more e.g a free box with every 6 ordered
- staff training: manufacture will train retail staff so they are knowledgeable about the product-especially good if it’s technical products
- dealer competition: prizes offered to the most successful retailer to encourage them to sell more
- sale or return: manufacture guarantee to return and refund products that have not been sold by the retailer
out of the pipeline promotion - aimed at customers
- BOGOF: buy one get one free
- free sample: smaller versions of the products given to encourage you to purchase a full sized version
- bonus packs: package containing 2 items that sell for the price of only buying one item
- credit facilities: allows customers to buy now pay later
- loyalty scheme: allows customers to collect points which can be exchange for discounts or free products
what is public relations
a wide ranging set of activities with the aim of ensuring that the relationship between the company and the customer/the public remain positive and strong
example of PR
- use of press releases to share good news or apologies
- hold a press conference which offers the opportunity for two-way conversations and answering questions
- give donations to charity or organise events to demonstrate CSR
- sponsor events locally and nationally to raise awareness
- give our company merchandise and branding to demonstrate good will
how can the success of a customers experience be altered by people
as people buy from people they like, so the attitude, skills and appearance of staff all leave to be first class
the most important element of any service experience
people
methods to improve people and justification of the methods
- training staff well to deal with customers effectively: this enables staff to be informed of the expectations of the business when dealing with customers, such as being polite and helpful
- regularly update staff on product/service developments: this ensures staff appear knowledgeable and can assist customers
- ensure selection methods are rigorous and staff aren’t appointed on a ‘whim’: this ensures the people employed are suitable to represent the business and its values
- monitor staff e.g by recording customer service calls or sending mystery shoppers: this ensures employees are representing the business appropriately and standards are maintained
what are processes
they’re largely associated with providing good customer service. This involves looking at procedures and processes that are carried out in order to make the customer experience as positive as possible.
processes that need to be considered
- processes to handle customers complaints
- processes for identifying customer needs/wants
- processes to make ‘check-out’ efficient and user friendly
- use of loyalty card to offer targeted offers
- processes involved in home delivery service
what is physical evidence
- physical evidence is about what the customer sees that gives them clues about a business from the image it portrays
- It ensures that customers feel their needs are recognised before they even need to make a purchase.
methods to improve physical evidence and justification of the methods
- premises and vehicles that are modern and clean: this ensures that customer opinions of the business isn’t ruined by old-fashion or dirty shops, reception areas or delivery vans
- setting should convey the type of ambiance to match the product or service on offer: this ensures that customers feel that their needs are recognised before they purchase a good/service
- feedback and testimonials from previous customers should be promoted: this provides reference material for new customers which is especially important which purchasing a service as it cannot be tried beforehand
use of technology in marketing
- internet (websites) - the business can create their own website to promote themselves and their products. It can be easily updated and refreshed and can target a worldwide market 24/7. They can also appear as a pop up on other websites
- email and SMS: can be used to target promotions at particular people. It can also be used to survey customers and get feedback from them
- EPOS: EPOS systems gathered information when consumers are making a purchase at the checkout this can be used for market research purposes and direct mail to customers
- Youtube: videos can be shared to allow the business to promote new products. They can also have short adverts before other video clips
- Twitter: can reach thousands of followers and enables customer comments to be dealt with promptly
- Facebook: companies can post facebook updates that link to particular products. This could be new products or offers
- Phone (apps): can help a business in many ways. Customers can buy products, pay bills etc whilst on the go. Promotes more access to the business
- QR codes: QR codes can be scanned by smartphones and will take you to a website containing further information. Can be found on products in magazines, posters etc.
