Marketing Flashcards
List the roles of marketing
• To raise awareness of products.
• To raise the business’s image in the market.
• To provide information about the product.
• To encourage new customers to purchase products.
• To target new and existing customers
• To increase the number of customers (market growth).
• To anticipate what customers want in order to satisfy needs - to find out customers needs and wants
• To monitor changes and trends
Why is marketing important?
Can attract new customers into the business
Lead to Market Growth
Lead to increased Market Share
Can increase the amount of profit a business can make.
Lead to a business becoming the market leader.
Describe market share
The share of the whole market (sales/customers) that one organisation has.
Describe market growth
When the amount of sales and customers within a market increases.
Describe market leader
Having the most customers compared to other businesses in that market
Describe customers
Marketing aims to raise customer awareness of their products.
The level of which they try and meets the needs of customers will depend on whether the business is Market led or Product led.
Name the steps for market led organisations
Research the Market
Produce the Product
Sell the Product
Describe market-led organisations
Product produced based on what the customers need and want.
Huge emphasis placed on carrying out market research before producing a new product.
It is more able to meet and respond to changes in fashion and trends.
Constantly modify their products/services in response to changes in the market.
These businesses operate in a highly competitive market.
Examples include L’Oréal, MAC, Zara, and Cadburys
Name the steps of product-led organisations
Generate the Idea
Produce the Product
Try to Sell it
Describe product led organisations
Product produced because the business thinks they are good at providing the product.
Business will assume their product is the best and customers will buy it.
• Little market research carried out before developing a new product.
•These businesses are often dealing with new innovative products and will have little competition.
• Products will usually have a USP
Examples include Apple, Dyson, and Bentley’s
Describe market segmentation
Market Segments = part of the market that contains a groups of buyers with similar buying habits.
• This means a business looks at its market and splits the customers into different groups
What is market segmentation?
Market segmentation allows a business to identity its target market
Customers will be split into groups determined by
• Age
• Gender
• Occupation
• Income
• Taste/Fashion
• Lifestyle
• Location
• Religious or cultural belief
Describe age (market segmentation)
Children want different products compared to adults
Describe gender (market segmentation)
Men want different products compared to women
Describe income (market segmentation)
People with a high income will buy different products compared to those on a low income
Describe occupation (market segmentation)
Products can be marketed to go with certain jobs eg Crocs for a doctor or nurse
Describe religious and cultural beliefs (market segmentation)
People with certain religions buy certain products eg Halal meat for people who are Muslim
Describe location (market segmentation)
People in different countries or areas of the same country have different product preferences and spending habit
Describe lifestyle (market segmentation)
Many people have a sporting lifestyle and buy products associated with this
Why is market segmentation useful?
Products developed are appropriate & meet the needs of the customer group.
Can help to identify gaps in the market.
• Prices can be set appropriately for the market segment
• Ensures products are sold in appropriate places with easy access for customer groups
• Ensures appropriate advertising and promotions are targeted towards the correct market segment e.g. certain
TV channels, websites
Describe customer behaviour
Businesses, especially market-led businesses, need to take account of consumer behaviour.
Consumers display different types of behaviour depending on what they are buying.
Businesses look at consumer behaviour, so they can better understand:
• the decision behind why customers purchase certain products
• what influences them to make those purchasing decisions
Name the different customer behaviours
Impulse Purchases
Routine/Habit Purchases
Informed but Limited decision making purchases
Informed but Extensive decision making purchases
Brand Conscious
Price/Quality Conscious
Describe impulse purchases
These happen without any prior planning or thought. Impulse purchasing often happens because a product has caught a customer’s eye, such as a bar of chocolate placed at the checkout.
Describe routine/habit purchases
These require little involvement by the customer. Routine purchases are made automatically for items such as: milk and bread
Describe Informed but Limited decision making purchases
This requires some consideration by the consumer - asking your friend for their opinion or advice on the purchase “will this dress be nice for Saturday night?! (not thorough investigation) e.g. clothes and shoes
Describe Informed but Extensive decision making purchases
This is spending a lot of time researching and thinking about buying the product. “Is this car the right choice for me? Can I afford it?! Is it too big? Will I go for black or grey?” (high priced items) e.g. car and house
Describe brand conscious purchases
This is when the consumer has made an informed purchase because what they are most concerned about is the brand/image.
Describe price/quality conscious decisions
This is when the consumer cares most about the price and/ or quality.
What is market research?
The methods used by businesses to find out what customers need or want.
It involves gathering, recording and analysing information about a market
What are the different types of market research?
Businesses have the choice of using two types of Market research:
Desk research
Field research
Describe field research
This is new and first-hand information gathered by the business itself for a specific purpose (not already published).
The information gathered is called Primary Information.
What are the advantages of field research?
Information is gathered for a specific purpose to the business needs
Research has gathered new information and is therefore up-to-date
What are the disadvantages of field research?
It is expensive to carry out, which means money can’t be spent elsewhere
People need to be trained to collect information which is also expensive
Time consuming to gather the information
The information must be analyzed and interpreted once collected
List some methods of field research
Postal Surveys
Observations
EPOS
Loyalty Cards
Social Media
Describe postal surveys
This is a method of market research conducted via the mail in the form of a questionnaire
This is where questionnaires are sent out to people to complete and return. There is often an incentive like a prize draw to encourage return of the survey.
What are the advantages of postal surveys?
Relatively cheap way of surveying a large volume of potential respondents.
People in a large geographical area can be questioned or alternatively respondents can be targeted by postcode.
What are the disadvantages of postal surveys?
Response rate for this method of research is very low, even with incentives offered.
This is a relatively slow way of conducting research as it takes time to post out and receive back the questionnaires, which then have to be analysed.
Describe observations
An observation involves watching something and recording what happens.
The observer might have to count how many times something happens, or someone does something, or what someone’s reaction is to a situation.
What are the advantages of observations?
Facts and figures (quantitative information) are gathered, which are easier to analyse than qualitative information
People being observed might not be aware so should act naturally
What are the disadvantages of observations?
Those being observed are not usually asked for their opinion or to give an explanation as to why they did or did not do something
There are privacy and ethical issues to consider when observing people
Describe EPOS in market research
This is the system used by the vast majority of retailers to keep track of their sales information.
Every time an item is scanned at a till, the information is recorded. Detailed reports about consumer buying habits can be produced - for example, information about the impact of sales promotions can be analysed.
Many retailers link loyalty cards to their EPoS systems to gather even more specific information about their customers.
What are the advantages of EPOS?
Large quantities of information can be gathered
The information gathered is factual and not just opinions
What are the disadvantages of EPOS?
It can be expensive to purchase an EPOS system - especially for a small business
No opportunity to gain the opinion of the customer
Describe loyalty cards
Loyalty card systems allow customers to present this business/organisations card when purchasing goods and services and receive a reward in return e.g. Tesco Clubcard.
What are the advantages of loyalty cards?
Up to date information on consumer buying habits is obtained
Can encourage customer loyalty as there is an incentive to make repeat purchases
What are the disadvantages of loyalty cards?
Expensive to set up and run
Need to provide discounts or other incentives to encourage customers to keep using them.
Describe social media in market research
Social media platforms such as Facebook and Twitter can be used to gain feedback from people on goods and services.
Many businesses use these sites to interact with their customers and to find out their reactions and opinions on different issues.
What are the advantages of social media?
Can give a true picture of service
Can give immediate feedback
Can be used to gain information on competitors.
What are the disadvantages of social media?
Can be expensive if third party employed
as a mystery shopper.
Describe desk research
This is information that already exists and was collected for a specific purpose by someone else.
The information gathered is called Secondary
Information.
What are the advantages of desk research?
Information is usually cheap as it is already available and does not involve as much labour/wages
Information is easily accessible and readily available
Less time consuming as the information already exists
What are the disadvantages of desk research?
May not be totally relevant to the businesses needs
Information is available to competitors
May not be up-to-date
Information might be bias
What are the different types of desk research?
Internal
External
Describe internal desk research
Examining customer records
Analysing customer complaints
Studying past trends in sales figures
Analysing the final accounts
Describe external desk research
Newspapers and Magazines
Radio and TV reports
Books, Reports and Journals
Internet
Competitors websites
What are the uses of market research?
Allow groups of customers to test out products and give feedback to ensure new products meet the needs and wants of customers
Asks customers their opinions and use the information to make alterations to existing products
Identifies how much the customer is willing to pay
Ask questions to identify target market, therefore the most appropriate methods of advertising is used.
Gain a competitive advantage
Reduces the chance of failure
What are the features of reliable source of research?
The information is up to date - means decisions made may be more accurate
Information is free from a bias point of view
Information is relevant to the organisation’s needs
Describe sampling
It is costly and time-consuming to interview all consumers.
Therefore a sample of the population must be interviewed.
There are three decisions to be taken when planning a sample to research.
1. Who is to be surveyed?
2. How many people/companies should be surveyed?
3. How will people be selected for the survey?
List the different types of sampling
Random Sampling
Quota Sampling
Describe random sampling
These are pre-selected from a list and then a random number of candidates are chosen to take part.
E.g From a telephone directory or the electoral role All must be interviewed
What are the advantages of random sampling?
Reduces risk of bias being introduced when selecting individuals for the sample
It is simple to draw up the sample - so saves time
What are the disadvantages of random sampling?
Sample may not reflect the target market of the business
Can over represent a certain segment e.g majority males chosen a random
It can be expensive to carry out
Describe quota sampling
This is when a number of people who meet specific characteristics are chosen, for example, according to age, gender, income group.
The researcher must find people to interview who fit these categories e.g. 50 males that are aged 18-25
Once the quota has been reached, no more are surveyed
What are the advantages of quota sampling?
Quick and easy method as group lists are pre-made
Less expensive to carry out as it needs fewer resources
What are the disadvantages of quota sampling?
Results can be less representative than using random sampling
It is easier to introduce bias which may affect results
Describe the marketing mix
The Marketing Mixis the combination of the 7Ps.
Business must develop a strategy based on the Ps in order to sell and market its products.
Product
Price
Place
Promotion
Physical evidence
Process
People
Describe product
This is the actually for being sold to customers by businesses and organisations
A business can adjust the features, appearance and packaging of a product to create competitive advantage
It must meet the needs and want of customers or else they won’t buy
Describe price
This is the cost of the products and how much customers will have to pay in order to purchase the product/good
Production costs, competition and demand can all affect a business’s pricing strategy
Describe place
This is where the product or good and sold and where the customers will purchase it from
A business needs to decide where best to distribute a product
Describe promotion
This is how the product or good is advertised to customers and how they become aware of it and encouraged to purchase it
Businesses use promotion methods to make customers aware of their products and services
Describe physical evidence
This is the physical environment experienced by the customer including
the physical design and layout of the premises
the layout of the company website
It is important that physical evidence is appealing to customers. It should also reflect how the business wants to be seen by its customers
Describe process
This refers to the systems and procedures that are put in place to deliver a product or service to the customer.
Process involves looking at the experience the customer has when purchasing a product.
Describe people
These are any members of staff who are in contact with the customers of a business
Customers are important to a business. They are the people who buy the goods or services it provides.
Customer satisfaction relies on good customer service. This is provided by the people who work for the organisation.
Describe product development
Before products are made available to customers they must go through
Product Development.
Below is the key stages of the Research and Development of a product.
There are many stages a product must go through before it is launched:
Market Research
Phenotype
Test Marketing
Changes Made
Method of Production Decided
Price Decided
Place Decided
Promotion Decided
Describe the product lifecycle
Every product has a life-span with different stages.
• Changes in the market are always occurring (PESTEC)
• Some have a long life-span, e.g. Snickers.
• Some are shorter, e.g. fashion items.
Describe development
•MR carried out to see what customers want and ideas are generated
•Work closely with MR and prototype has been produced.
•Test Marketing-changes can be made
•Think about Price, Place and Promotion
•High costs, zero sales, zero profits
Describe introduction
Product is launched onto the market
Sales are LOW
The business will be at a loss (no profit will be made)
Products will be expensive
Lots of advertising and promotion to encourage sales
Describe growth
Customers are now fully aware of the product
Sales increase and grow rapidly
Business has made a profit at this stage
Competition have launched similar products
Describe maturity
Sales reach their peak
Growth slows
Product is at its most profitable
Product is well known
The price will fall
Competition may be fierce
Describe saturation
The end of maturity.
People are no longer demanding the product.
High profits but sales starting to decrease.
Need to keep product at this stage for as long as possible by using extension strategies (eg price of product might fall)
Describe decline
Sales and Profits fall
Market share decreases
Product outlives its usefulness/value eg changes in fashion, technology
Competition is too strong
Product is withdrawn
Describe extension strategies
Businesses want to keep their products at the maturity stage as long as possible (highest profit!)
They don’t want a product entering the decline stage
To do this they must INJECT NEW LIFE into their products to encourage customers to keep buying them
These are called extension strategies
List the different extension strategies
Change/modify the product - variety of colours, size, shape, version, capabilities
Produce product line extensions - different variations of the original product
Change the packaging - changes the image and may make
the product appeal to other people
Change the price - makes it more appealing to non-buyers
Change the place - sell in different location
Change the promotional activities - offer discounts, advertising campaigns, celebrity endorsement
Rebrand the product - can generate publicity and new appeal
Extend products into other markets - appeals to different market segments, brand loyalty
What is a brand?
A Brand is a product or service which is identified by a specific name, logo, slogan and colour.
Describe product packaging
Packaging is the materials used to protect and promote goods.
Packaging is desianed to capture a customer’s attention and it can directly effect whether they bu the product or not.
Packaging has to fulfil a number of important functions, including
• communicating the brand and its benefits
• protecting the product from damage preventing leakage of the contents
• presenting government-required warning and information labels.
It is almost as important as the product itself and it has to represent the brand and the product!
Describe the importance of product packaging
Makes them recognisable and identifies the product from their competitors
Attracts consumers and persuades them to try a product
Protects the product and keeps it from going bad
Makes the product easy and convenient to use
Can be updated to attract new customers e.g. Coca-Cola name bottles and Santa bottles
Can make the product look like its of a higher quality
Describe the costs of product packaging
Can be costly for the business to make packaging if it wants to give off a high quality image
Needs to be updated to stay in line with Government legislation
Product packaging can be misleading which can give the business a bad reputation
If packaging is not easy to use then it can put customers off from buying the product
Packaging can be copied easily
Describe product portfolios
This refers to the different products an organisation may choose to sell
This is when businesses sell more than one product. This will be a range of different products that the business usually sells under the same brand name.
However, the business could also decide to move into very different product ranges.
Name the types of product portfolio
Product Line Portfolio
Diversified Product Portfolio
Describe product line portfolios
This is when a business has a variety of similar products on sale.
A product line is a group of products that are closely related and sold to the same customer group.
E.g. Heinz sells a range of finned soups which form one product line.
A Product Line Portfolio is the sum of all the product lines an organisation produces.
E.g. Heinz also sells beans, pasta, sauces and baby foods.
Describe diversified product portfolio
This is where a business sells a mix of unrelated products.
E.g. virgin
What are the advantages of product portfolios?
To spread the risk of failure - if sales of one product decline, another’s could be growing e.g., failure of Virgin Cola and rise in Virgin plane
The chances of success with a new product are enhanced because loyal customers will be happy to try it e.g., Estee Lauder new foundation
Appealing to more than one customer segment should increase customer sales e.g. Heinz soups - meat eaters, vegetarians (V and vegans (Plant Proteinz Soup)
To cope with products which have seasonal demand, e.g., Heinz soup decrease in summer.
A range of products improves brand awareness
Growth should create financial stability making it easier to raise finance
What are the disadvantages of product portfolios?
Cost of promoting and advertising lots of different
products to different segments.
If one product receives a bad reputation, this can impact on the rest of the portfolio.
Cost of purchasing and maintaining different types of machinery.
Staff may require training on the different products which
is time-consuming and expensive.
Requires heavy expenditure to research and develop products that are so different from each other
Describe the Boston matrix
A Boston Matrix is often used to plot the range of products a business has, to identify what products need changed or introduced.
This is used to analyse a company’s product portfolio
The Boston Matrix categorises products into four different areas, based on:
• Market share
• Market growth
Companies should identify which products are in each category then plan their marketing accordingly.
Describe stars
High Market Growth
High Market Share
Needs constant and huge investment to keep ahead of competition
Generates a lot of income
Can become market leader
Stars will eventually become to cash cows
For example - iPhones
Describe cash cows
Low Market Growth
High Market Share
Very good cash flows
Maturity stage
Require little marketing
Funds from cash cows bring in a steady income and can help to further strengthen stars
For example - Mars Bars
Describe questions marks
High Market Growth
Low Market Share
Called Question Mark/Problem Child because you don’t know what to do with them, but they belong to you
Low cash flows
Can be invested in due to their position in a promising market
For example - Juicers
Describe dogs
Low Market Growth
Low Market Share
Decline stage
No longer worth investing in
Can adversely affect profits
For example - CDs
