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
What things should you consider when choosing pricing strategies?
How much it’ll cost to make the product. Must cover costs.
The Target Market/Market Segmentation
The price customers must be willing to pay.
The price charged by competitors.
Quality of the product.
Image you wish to present to customers.
External Factors (PESTEC)
Government Restrictions
The Stage of the Product Life Cycle
Describe low pricing
A business will set their prices low compared to their competitors e.g. Primark, Tesco products etc.
It is used for value for money products
This should attract customers.
Low prices should result in higher sales.
However, some customers are put off as they believe the low price indicates low quality
What are the advantages of low pricing?
Can easily attract customers
Lower prices result in higher sales
What are the disadvantages of low pricing?
Some customers may be out off as they believe that the low price indicates low quality
Lower prices means that the business will make less profit on each product
Describe high (premium) pricing
Business will set their prices higher than their competitors
Gives the image of exclusiveness and high quality
Some customers are attracted to the prestige of high prices
Believe the product is the best quality
Can’t target all market segments
What are the advantages of high premium pricing?
Some customers are attracted to the prestige of high prices
They believe that the product is the best quality
What are the disadvantages of high premium pricing?
They can’t target all market segments
Describe competitive pricing
This is when companies in the same market charge similar prices to avoid a price war.
The businesses deliberately agree not to compete on price.
E.g.: petrol stations often charge similar prices for petrol diesel
Other elements to the marketing mix must be better than competition to ensure sales
What are the advantages of competitive pricing?
Higher success rates
Prevents market loss
What are the disadvantages of competitive pricing?
Incentives must be offered for customers to choose your business over competitors
Describe promotional pricing
The price charged for a product/service is lower than the normal price for a short period of time
Used to quickly sell inventory and aid cash flow
What are the advantages of promotional pricing?
Encourages customers to buy the product
Creates demand from consumers looking for a bargain
Improves cash flow in the short term
Old stick is sold to make space for newer stock
What are the disadvantages of promotional pricing?
Profit from each item sold is reduced as the price was also reduced
Can damage the image of the brand or product by lowering the price
Describe cost-plus pricing
The cost of the product is calculated first then the business will add a mark-up onto the cost of making a product.
This is mainly used in supermarkets and doesn’t consider any external factors like competitors pricing and the economic climate
What are the advantages of cost plus pricing?
A quick and easy way of setting the selling price
Ensure that the total costs are covered and a profit is generated
What are the disadvantages of cost plus pricing?
Does not cover indirect costs e.g. other expenses such as rent
Does take external factors into account e.g. increasing prices during boom periods to maximise profits
Describe physiological pricing
The price charged makes customers think the product is cheaper than it actually is. Prices are set just below the next rounded number.
What are the advantages of psychological pricing?
Makes the customers think the product is cheaper than it actually is
Fits products into a lower price band e.g. a car priced at £9,999.99 instead of rounding up to £10,000, means it will fit the customers requirement of
“a car costing less than £10,000”
What are the disadvantages of psychological pricing?
Some customers will not be persuaded by this strategy
Business must have change for £49.99
customer if they pay by cash
Describe market skimming
Used for new products and has a high price to begin with when no competition exists - new and unique products
“must have” products
Price lowers once competition enters the market
High profits to begin with
Once the sales start to slow, the business will begin to lower the price so that more customers can afford their product
Once lowered, can attract people on lower income to purchase the product
What are the advantages of market skimming?
Sufficient ‘hype around a new product enables higher prices to be charged which can increase profits
Initial profit recoups some of the research and development costs
Lack of competition also allows maximum prices to be charged
What are the disadvantages of market skimming?
High initial prices can put off some
customers
Technique results in low initial sales numbers
Describe destroyer pricing
Is used to eliminate competition. It involves a business setting a very low price in order to attract customers away from competitors, who will struggle to match the low price and may go bust.
The business deliberately sets low prices to force their competition to do the same
What are the advantages of destroyer pricing?
Competitors are forced out of the market, then prices can increase again
Increases market share
What are the disadvantages of destroyer pricing?
Can only be used by larger companies that can afford to make losses while prices are low
Could breach anti-competition legislation
Describe loss leaders
The price charged is lower than the cost of making the product
It is likely when customers are in the store they will buy other products at full price
Might buy items in bulk
Profit is therefore made on the total amount of purchases.
For example - supermarkets will use Loss Leader pricing strategies
What are the advantages of loss leaders?
Creates greater footfall, that is brings in customers to the business
Hopefully customers will buy normal priced products while buying loss leaders
Encourages repeat purchases
What are the disadvantages of loss leaders?
There is a risk that some customers will buy the loss leaders, impacting negatively on profit
Describe penetration pricing
Used for new products.
The price will be initially lower than competition to tempt customers to buy and switch brands.
When the product is popular the price is raised in line with the competitors.
Encourages customers to switch brands and try new product.
However, very little profit is made during the initial low price
period.
What are the advantages of penetration pricing?
Encourages customers to try a new product
The business hopes to gain repeat custom once the price rises
What are the disadvantages of penetration pricing?
Very little profit can be generated during the initial low-price period
Could result in a price war is competitors
set lower prices too
Describe price discrimination
Price Discrimination occurs when identical goods or services are sold at different prices from the same provider.
Prices are altered depending on a discriminating factor, e.g. age, gender, place or even time of year.
What are the advantages of discrimination pricing?
Ensures products appeal to different market segments
Allows for high profit margins on some price brackets
What are the disadvantages of discrimination pricing?
Harder to budget for sales revenue in
advance
Loss in potential revenue from selling at a lower price e.g. a child taking a seat which could be sold to an adult instead
Why is pricing important?
Price must be set at a level that customers are willing to pay.
If it is too low then the business will lose out on money as costs are not covered
Customers might think that it is low quality
If it is too high then the business might not target all customers
What are the methods of distribution?
Rail
Road
Sea
Air
What are the advantages of road?
Cheaper than other methods such as planes because…
Delivery can be quicker than other methods because…
Customer receives product right to their door
Refrigerated vehicles can be used to transport perishable goods
Can depart at any time/24 hours
What are the disadvantages of road?
It is not suitable for all products – large items
Not as environmentally friendly as other methods – carbon emissions
Traffic congestion can cause delays
Restrictions to the number of hours a lorry driver can work
Petrol prices increases makes this more expensive
What are the advantages of rail?
Large products can be transported easily be freight
No traffic to get stuck in
It is often faster than by road
It is more environmentally friendly than road and air
What are the disadvantages of rail?
There may not be a train station nearby so deliveries can be restricted
Rail services can be disrupted – technical difficulties or rail track issues
It is not suitable in rural areas with no rail network
Specialist rail-freight terminals are required
What are the advantages of sea?
Large items can be transported worldwide
Less expensive than air for large loads
Good for items that have a long shelf life
What are the disadvantages of sea?
Slower method than others meaning longer delivery times
The dock is not the final destination so could incur road haulage costs
What are the advantages of air?
Products can be transported across the world quickly
Ideal for long distance and more remote locations
What are the disadvantages of air?
Very costly in comparison to other methods
Large items cannot be transported easily
The airport is not the final destination so often still requires road transport for the final delivery
What are channels of distribution?
The channel of distribution is the way in which the product gets from the manufacturer to the consumer.
What are the different channels if distribution?
There are different routes relating to the channel of distribution. These include:
Manufacturer ———–DIRECTLY———> Customers
Manufacturer ———–> Retailer ———-> Customers
Manufacturer ———–> Wholesaler ———-> Customers
Manufacturer ——> Wholesaler ——> Retailer ——> Customers
Describe manufacturers/producers
This is the business which produce the products.
Describe retailers
This is the business that sell the product to the customer on behalf of the manufacturer. They decide on the price to be charged and how to display the products to be sold.
Describe wholesalers
This is the business that buys in bulk and sells to retailers or direct to customers.
Describe direct sales
Direct selling means selling direct to the consumer from the manufacturer.
This is the shortest channel of distribution and means there are less ‘middle men’ taking a cut of the profits.
List the methods of direct selling
E-Commerce
Catalogues/Mail Order
Direct Mail
Teleshopping
Personal Selling
Describe e-commerce
This is when a business sell its products using the internet e.g. ASOS, Shein, BooHoo
What are the advantages of e-commerce?
Can target customers worldwide
Can gain customer info easily for market research
Can sell more items online
Can sell 24/7
Don’t need to pay for a retail premise
What are the disadvantages of e-commerce?
Website can be costly if it wants to be high quality
Lots of competition as you are competing with businesses all over the world
Websites can crash – no sales
Customers might not want to wait for the product being delivered
Customers might be put off
- Security and fraud
- Not being able to see the products
Describe catalogues/mail order
This is when a business sells its products using a catalogue, which is sent directly to the consumer e.g. M and M Direct, Avon and Scentsy
What are the advantages of catalogues/mail order?
Might attract customers as they can order from home
Saves costs as they don’t need to pay rent for retail stores
Credit facilities are offered to customers
What are the disadvantages of catalogues/mail order?
Expensive to produce good quality catalogues
Customers might be put off waiting for the product to arrive/pay delivery
Not environmentally friendly due paper use
Describe direct mail
This is when a business posts letters, leaflets and brochures to customers
What are the advantages of direct mail?
Specific market segments can be targeted
A wide geographical area can be targeted
What are the disadvantages of direct mail?
Customers can view this as junk mail and throw it away
Mailing lists can become out of date quickly
Cost of producing leaflets and postage costs
Describe teleshopping
This is when a business sells products via the TV using dedicated shopping channels e.g. QVC
What are the advantages of teleshopping?
Customers can see products modelled and demonstrated
What are the disadvantages of teleshopping?
Cant target all customers as not everyone has the shopping channels
Customers skipping the channel
Describe personal selling
This is when a salesperson sells products directly to the customer (face-to-face) door-to-door, over the phone or at counters e.g. SKY sales men in the Overgate
What are the advantages of personal selling?
Customers can see products modelled and demonstrated
Feedback can be gathered
What are the disadvantages of personal selling?
Customers not keen on being disturbed at home/while shopping
Often use commission so staff costs can be high
What are the advantages of direct selling?
Manufacturer does not need to share profits with wholesalers or retailers
Cost saving – premises may not be needed in some cases and not as many employees needed for retail shops, e.g. internet selling.
Manufacturer has more control over how product is priced and promoted.
Convenient for customer – can purchase by telephone, or internet web-site.
Good where product needs to be made to specific customer needs, e.g. dress-maker, windows sales
What are the disadvantages of direct selling?
Manufacturer will have to do all their own administration, packaging and advertising – costly as may have to pay an extra member of staff.
In some cases, customers may have to pay for postage and packaging – making the product more expensive and less attractive.
List the different types of retailers
Supermarkets/Hypermarkets
Convenience Supermarkets
Department Stores
Discount Stores
Specialist Stores
E-tailer (Online Retailers)
Independent Retailer
Out of Town Retailers
Describe supermarkets/hypermarkets
Supermarkets are a key feature of consumer shopping as they offer a very wide range of food and other products at low prices, operating on the principle of low mark-up and rapid turnover.
Supermarkets tend to only sell groceries whereas hypermarkets will sell groceries as well as things like clothes and decor etc.
Hypermarkets are a mix of supermarkets and department stores
What is an advantage of supermarkets/hypermarkets?
Sell a huge range of product
Target all different types of customers
Cope with seasonal demand
Most hypermarkets are open 24/7
What is an disadvantage of supermarkets/hypermarkets?
Lots of competition
Cost a lot in rent/staffing costs because they are so big
Describe convenience stores
These are smaller supermarkets, situated in convenient locations e.g. city centres, petrol stations and train stations. Examples include Tesco Metro, M&S Simply Food.
This type of retailer meet changing consumer needs e.g. shopping for fewer items more regularly rather than one large weekly shop.
What is an advantage of convenience stores?
Cater to the changing needs of customers
Prices are slightly higher than larger supermarkets due to convenience factor
What is an disadvantage of convenience stores?
Limited choices due to of smaller store sizes
Customers might be put off because of high prices charged
Describe out of town retailers
These are located on the outskirts of towns and cities and have good infrastructure such as road and transport links and free car parking. Increasing car ownership makes travelling to these retail parks convenient.
Describe online retailers (e-tailers)
Rather than setting up their own e-commerce sites manufacturers may use online retailers such as Amazon to sell their products. Retailers like Amazon are know as e-tailers.
Describe department stores
Department stores such as Debenhams and John Lewis have a large number of different departments offering a range of goods all under one roof. They tend to have an upmarket image and charge higher prices. This type of retailer has declined in recent years.
Describe discounted stores
In response to the recession discount stores such as Home Bargains, B&M and Poundland have become very popular as well as discount supermarkets such as Lidl and Aldi.
They tend to sell large quantities of a limited range of products at discounted prices. The expenditure on displays is kept to a minimum to minimise costs and keep prices low.
The recession has resulted in a significant growth in this type of retailer.
What is an advantage of discounted stores?
Attracts customers because of low prices
What is an disadvantage of discounted stores?
Customers might think the products are bad quality
Limited product range compared to other stores
What are the advantages of retailers?
Convenience as retailers are located close to customers
Retailers often promote the product for the manufacturer
Retailer employs sales assistants to help sell the product
Large retailers buy in bulk
Retailers can offer credit facilities and after sales services
What are the disadvantages of retailers?
Retailers take a cut of the profit
Retailers may alter the price of the product and so have an effect on the image of the product
Products are sold and promoted by retailer, therefore wholesaler looses control
The product will face competition from other products stocked by the retailer
These are often displayed next to one another
What are the advantages of wholesalers?
Wholesaler buys in bulk, saving manufacturer from making lots of smaller deliveries.
Wholesaler carries the risk of stock not selling e.g. clothes going out of fashion.
Wholesaler also label and package products – saves time- manufacturer and retailers.
Retailers can save on storage by buying smaller quantities from wholesalers than they would get from manufacturers.
What are the disadvantages of wholesalers?
Wholesaler will charge for their service which decreases profit of manufacturer.
The manufacturer loses control over how product is promoted and displayed to customer.
Wholesalers offer the same products to retailers’ competition.
It is more expensive than going directly to manufacturers for the retailer as wholesalers add on a margin of profit
What factors should be considered when choosing a channel of distribution?
The product being sold e.g. - Perishable items need to get to customers as quickly as possible and require suitable transportation
The cost involved – it’s cheaper for Cadbury’s to use wholesalers and retailers than sell directly to customers
Reliability of companies in the chain (wholesalers/retailers)
Legal requirements/restrictions – petrol, alcohol and medicine can only be sold in licensed outlets
The image the manufacturer wants the product to have – premium products will only be sold in selected retailers e.g. Canada Goose
Manufacturer’s distribution capability – Apple retailers will have the experience and skills to show customers how it is used & answer questions effectively, retailers advertise products according to guidelines from manufacturer
Finance available – a manufacturer may not have the money to open a shop or have a website
Age of business – new business may only be able to sell direct to customers
Where the product is in the life cycle – new products will want to be widely available
Target market – should be accessible for customers
What is promotion?
The process of:
Raising awareness of products
Persuading customers to buy a business’ products instead of competitors
Reminding customers about products
List the sales promotions
There are two different types of sales promotions that businesses can use to promote their products.
Into the Pipeline
Out of the Pipeline
Describe into the pipeline
Promotions aimed at those involved in distributing a product
e.g. promotions that the manufacturer offers to wholesaler or retailer.
Describe out of the pipeline
Promotions aimed at end users (customers), usually to encourage them to make a purchase.
List into the pipeline promotions
Allowing Trade Credit
Merchandising materials – point of sale displays
Sale or return
Bulk-buying discount
Dealer loaders e.g five boxes for the price of 4
Staff training for wholesaler/retailer employees
Promotional gifts
Describe trade credit
Trade Credit Where the wholesaler or retailer receives stock and has time to sell it before having to pay the manufacturer. This improves cash flow.
Describe point of sale sale displays
Point of Sale materials Posters, racks to hold leaflets, window display materials or in-store displays are provided by the manufacturer free of charge.
These materials can draw customers eye and encourage them to purchase the products.
Describe dealer loaders
Dealer Loaders The retailer is offered an inducement to attract more orders e.g. ten boxes for the price of nine
Describe sale or return
Any unsold stock can be returned to the manufacturer. This can encourage retailers to stock new products as it removes the risk of having unsold stock
Describe staff training
If products or services require technical explanations or demonstrations the manufacturer will offer staff training e.g. car manufacturers will train staff on technical specifications, how to promote new cars and customer service
List out of the pipeline promotions
Buy one get one free
Free samples
Free gifts
50% extra
Price reductions (£1 off etc)
Vouchers
3 for 2
Loyalty schemes/cards
Competitions
Describe special offers
Used for a limited time frame to encourage customers to purchase selected products. Can be used to sell excess stock.
Describe free gifts
For example, a fashion magazine offering a free lipstick with every purchase or a free bowl with the purchase of cereal
Describe coupons and vouchers
These offer money off future purchases and e.g. coupon in newspapers, bus tickets and direct mailing. Often used to encourage loyalty e.g. £40 and receive £5 off your next shop.
Describe credit facilities
Customers can purchase a product now and pay for it at a later date. This encourages customers who could not afford to pay upfront for a product
Describe free samples
Samples of a product are offered to a customer e.g. perfume samples or food tasting or a free trial e.g. Amazon Prime
Describe demonstrations
At the point of sale, the retailer will offer to demonstrate the product to encourage sales e.g. test drive a car
Describe competition
Customers have to buy the product to allow them to enter competitions or prize draws. This is promoted on the packaging e.g. McDonalds’s Monopoly
Describe bonus packs
More of the product is offered for the same as the original price e.g. 20% extra free
Describe PR (Public Relations)
This is when a business tries to communicate with customers, shareholders, employees and the government – all of whom form the business’s ‘public’. The aim of the public relations is to improve the public image of its products and the image of the business itself.
List PR activities
Press conferences
Press releases
Charitable donations
Event sponsorship
Open door events
Promotional merchandise
Celebrity endorsement
Product placement
Describe press conferences
This is when the media are invited to a business presentation, where they are given information or news. Can be used when launching a new or updated product.
What are the advantages of press conferences?
Communicate with wide audience
Business is in control of the content being reported
Gets the media ‘on side’ and they can ask questions
What are the disadvantages of press conferences?
Could face difficult questions and be put on the spot
If the business is underprepared, it can damage their image
Describe press release
This is when the media are provided with a written account of activities or events.
What are the advantages of press release?
Can be used to counteract bad publicity
Factual content
Not subject to questioning by media
What are the disadvantages of press release?
Must make sure the wording is appropriate, especially if it is to counteract bad publicity
Describe donations to charities
The business can make regular donations or a one-off donation in response to changing circumstances
What are the advantages of donations to charities?
Promotes the CSR objectives
Improves business image
What are the disadvantages of donations to charities?
Some shareholders would prefer this money was reinvested in the business
Describe sponsorship
This is when a business is sponsoring an event, team or venue. Very common in the sporting industry, both locally and nationally.
What are the advantages of sponsorship?
Customers who support the team etc may be attracted to the business
If team etc is successful, this will increase the sponsors exposure
What are the disadvantages of sponsorship?
The cost of sponsorship can be very high e.g. Standard Chartered paid Liverpool £160M in 2018 in a 4-year shirt sponsorship deal
Describe company visits
This is when the premises may be opened to the public for short periods or arranged visits e.g. Amazon warehouse tours.
What are the advantages of company visits?
Customers can see first-hand how the business is run
What are the disadvantages of company visits?
Staff conducting tours could be used more productively elsewhere in the business
Describe promotional merchandise
This is when businesses are giving out free stationery, key rings and other items with the company logo and contact information on them
What are the advantages of promotional merchandise?
Customers are reminded of the company when they use the product
Customers feel rewarded and are more likely to return
Merchandise can be passed on to other people giving more exposure for the business
What are the disadvantages of promotional merchandise?
Cost of purchasing the merchandise
Cheap looking goods could damage the reputation of the business
Describe product
(celebrity) endorsement
This is when a business uses celebrities to promote a product e.g. Adidas pay Lionel Messi to wear their football boots and appear in adverts.
What are the advantages of product
(celebrity) endorsement?
Consumers who like the celebrity are more likely to purchase the product
The product will be advertised for free every time the celebrity is seen wearing or using it in public
Positive media coverage for the celebrity will give positive exposure of the product they endorse
Higher prices can be charged
Consumers are more likely to be brand loyal
What are the disadvantages of product
(celebrity) endorsement?
Some consumers may be put off product if they do not like the celebrity
If the celebrity gets bad publicity it will tarnish the image of the products
It is expensive to pay celebrities
Describe product placement
This is when the business pay for product to appear in films, TV shows or video games e.g. fizzy drinks, alcohol and cars.
What are the advantages of product placement?
Awareness of products is generated often worldwide
It is subliminal advertising; the audience don’t know they are watching a promotion while watching a film
If the character using the product is popular there will be an increase in sales
What are the disadvantages of product placement?
Exposure time can be short
Can be bidding wars between similar brands making it an expensive method of promotion
If products are shown as part of a negative storyline it can put customers off
How can technology be used in marketing?
Market Research
Promotions – Advertising and
Promotion activities
Sales
List the methods of using technology in marketing
electronic point of sale (EPOS) for market research
online survey
internet advertising
e-commerce
e-mail
databases
social media
desktop publishing (DTP)
text alerts
apps
quick response (QR) codes
Describe EPOS in marketing
Provides highly detailed research and is designed to work alongside retailer loyalty cards like the Tesco Clubcard
The till records the details of every transaction, providing detailed information about exactly which product was bought in combination with others.
This information can then be combined with the personal details of the shopper (age, gender, postcode, etc.) to develop a fuller picture of the buying habits of customers.
Makes it easy to offer promotions linked to customer needs.
It allows the business to identify what is being purchased in different parts of the country and in different stores.
Describe e-commerce
This is the buying and selling of goods online. The marketing department can use e-commerce to reach the global market who will be able to shop 24-hours-a-day 7-days-a-week.
What are the advantages of e-commerce to a business?
Can sell worldwide means the business will be better known
Increased sales, leading to increased profit
Savings on expensive showrooms/stores
Business is open 24/7
Can sell a larger variety of stock
What are the disadvantages of e-commerce to a business?
Business is in competition with lots of others
Designing and keeping the website up-to-date is expensive and requires specialists
Not all the businesses target customers have access to the internet.
If the website crashes then customers wont be able to buy any goods.
What are the advantages of e-commerce to customers?
Customers have a wider range of goods to choose from
They can ‘shop around’ and get the best deal
Internet prices are often lower than in shops
Customers can shop from the comfort of their own home ‘24/7’
Arrange when you want your items delivered and where
What are the disadvantages of e-commerce to customers?
Customers need to own or have access to a computer and be on-line and know how to use the Internet.
It is not easy to assess the quality and suitability of many products on the screen.
Can’t try goods on and don’t get your item there and then
Delivery problems
Inconvenience of returning unwanted goods.
Time it takes for refund to be put back into your account
Difficulty in communicating with business
Security risks of buying on-line
Describe online surveys
Market research conducted over the internet in the form of a questionnaire.
A quick online survey on the company website.
Surveys can be sent via e-mail.
Generated through Survey Money
What are the advantages and disadvantages of online surveys?
Inexpensive method
Large sample sizes and can target customers
Less hassle than a hand written questionnaire
However, high number of customers don’t respond
Describe e-mails
Are sent to consumers who have bought from them before – customer lists can be generated
Can be sent special offers, new products and other promotions
Survey’s can sent to customers
Can keep consumers up to date with orders
What are the advantages of e-mails?
Very quick and cost effective method of marketing
Can email specific target markets
Describe apps
Easier access to products/services for customers
Notifications:
directly to phone when promotional deals are on
when products are back in stock
When item has been dispatched
Describe internet advertising
Businesses use customers browsing history to target specific market segments
Direct interaction with advert
YouTube, 4OD, Sky App
Describe social media in marketing
Consumers follow businesses they like to see products on sale
Quick interactions with customer
Sharing/ “like”ing of information
Updates on stock
Competitions
Celebrities tagging businesses in post
Describe text alerts
Can be used to inform customers of new products, special offers or promotions.
Can tell customers when item is on its way/be delivered
Describe desktop publishing
Desktop Publishing can be us to create posters, leaflets, brochures, business cards, booklets
Eye catching marketing materials to persuade customers to buy products
Describe QR codes
When a customer scans a QR code it will take them directly to a company website.
They are often shown on promotional advertising billboards and magazines.
It enables the customer to access the goods quickly and easily.
