Marketing

Question 1

Why is Marketing important?

Answer 1

Marketing is important to all types of organisations. It helps them to meet customers’ needs and also makes customers aware of what products are available. However, it may be carried out differently, depending on the product or service and the type of organisation.

For marketing to be successful for an organisation, it must combine a successful mix of:

· The right product.

· Sold at the right price.

· In the right place.

· Using the most suitable promotion.

Question 2

What is the Purpose of Marketing?

Answer 2

The purpose of marketing is to;

· Satisfy the needs of customers

· Inform consumers about the launch of new products.

· Remind customers of existing products eg Kellogg’s cornflake

· Identify the market segments.

· Increase revenue and profitability.

· Increase the organisation’s market share.

· Improve the image of the product or the organisation.

· Keep ahead of competition.

Question 3

What is Target Market and what are benefits?

Answer 3

A particular group of consumers at which a product or service is aimed.

Benefits of Target Marketing:

· Improves customer satisfaction as the customers needs are being met this means they will buy the product or service.

· Customers will be more loyal to the product and keep buying.

· Market share can increase.

· New opportunities to sell more products if a product or service can be tailored to meet the needs of a new segment.

· The correct price can be set for the product

· Advertising and promotion will be more relevant than advertising to everyone.

Question 4

What is Market Segmentation?

Answer 4

Customers can be divided up into different categories depending on a number of factors. This can help in finding out which customers are most likely to buy a specific product this means a group of potential customers can be identified and then targeted and persuaded to buy the product.

Question 5

Name the 5 Market Segmentation and describe them and give an example

Answer 5

Age:

The product is targeted towards a particular age group. For example, Kelloggs Coco Pops targeting children known as “kids preferred”

Gender Product is targeted towards men or women. Perfume or aftershave.

Religious:

Beliefs/Culture Market products towards particular beliefs or cultures. For example, Polish products available in supermarkets.

Income:

Targeting the product according to level of income. For example, Waitrose target products to people on a higher income.

Lifestyle:

Targeting people according to hobbies and interests. For example, Sports equipment.

Question 6

What is Market Research and what is used to find out?

Answer 6

· consumer wants regarding existing products

· what makes consumers buy a firm’s products

· consumer reaction to new products

· consumer wants to help in the development of new products

· information about the company’s competitors.

Question 7

What are 3 reasons why market research is important?

Answer 7

· provides information which can help firms develop marketing plans by finding out what people want because, otherwise, they would not sell their product and would lose out to the competition.

· help firms find out why some products are more successful than others, and how to make their product more successful.

· help firms avoid costly mistakes – for example, making products that people don’t wish to buy.

· gives firms ideas about how to promote or advertise their products.

· takes some of the risk out of launching new products or redesigning products as firms are making decisions based on information that they collect and can rely on.

· allows firms to decide on the target market – i.e. the particular segment of consumers a firm wishes to sell to.

Question 8

What are the 2 types of market research?

Answer 8

· Desk research

· Field research

Question 9

Describe Desk research and name 1 advantage and 1 disadvantage.

Answer 9

Desk research is when the business looks at
information that someone else has already found. They can find the information via newspapers, books and websites and this allows the business to gather secondary information.

· internal information – for example, sales records, financial information

· external information – for example, newspapers, government statistics, trade magazines, journals, and the Internet.

Advantages of Desk Research:

· it already exists, therefore it is relatively inexpensive to obtain and use.

· it is obtained easily as the information is readily available

Disadvantages of Desk Research:

· data may be out of date

· Information may also be available to competitors

· Information may contain bias.

Question 10

Describe Field research and name 1 advantage and 1 disadvantage.

Answer 10

Field research this is when the business will gather new information themselves with ways like surveys, interviews and observations and this allows the business to collect primary information.

Advantages of Field Research:

· it is more reliable as it has been gathered first hand and the source can be verified.

· it is more likely to meet the needs of the organisation.

Disadvantages of Field Research:

· it is more expensive to use as the data has to be collected and processed

· it takes time to gather the information.

Question 11

What are some of the Methods of Market Research?

Answer 11

Postal surveys

Telephone Surveys

Focus Group

Personal Interviews

Social Networking Sites

Question 12

What is Postal surveys and what are the variables?

Answer 12

Sending out/delivering questionnaires

· Cheap to operate

· Response rate from people can be low

· Questions need to be simple so that people are able to fill in without misunderstanding.

Question 13

What is Telephone Surveys and what are the variables?

Answer 13

Researcher questions people in their own homes by telephone.

· Cheap to operate

· A large number of people can be targeted

· People do not like being bothered at home

Question 14

What is Focus Group and what are the variables?

Answer 14

People are selected to discuss a specific ideas or products eg young women aged between 18-25 to discuss a range of clothing aimed at young women. Normally has a chairperson who encourages the discussion.

· This is qualitative information which can be difficult to analyse.

Question 15

What is Personal Interviews and what are the variables?

Answer 15

Face to face interviews which can be in the home or in the street.

· Mistakes or misunderstandings can be cleared up

· Communication is 2-way.

· Can be expensive as researchers required training.

Question 16

What is Social Networking Sites and what are the variables?

Answer 16

Many businesses now use sites such as Twitter and Facebook to communicate with their customers and this can include asking their opinions.

· Large numbers of customers can be contacted.

· Customers will respond quickly.

· Customers may not have Facebook or Twitter Accounts.

· Competitors can view information as it is public.

Question 17

what are the 4 Ps

Answer 17

· Product

· Price

· Place

· Promotion

Question 18

Describe Product

Answer 18

Product – the actual item for sale.

The product must meet the needs of the customer and benefit the customer. The product may be goods or a service. Different versions of the same basic product may be offered by competing firms and can vary greatly in terms of quality, style, packaging and so on – for example, cola or bottled water.

Question 19

Describe The stages of Researching and Developing a New Product

Answer 19

There are number of steps involved in developing a new product:

· Generation the idea:

A number of issues need to be considered, such as will the new product meet the objectives of the business? Will the new product contribute to the continued growth of the business?

· Testing the new idea:

Is there a market for the new product? This stage of the product development process will involve carrying out market research to test consumers’ reactions to the suggested product. Consumers may suggest slight alterations and modifications.

· Create a prototype:

A prototype of the product will be developed using the details that the market research indicated that consumers wanted.

· Test marketing the new product:

The business may often decide to test market the new product in a small geographic area, in order to test consumer response, before it launches the product nationally. If the consumer response is favorable, then the product is likely to be launched nationally.

· National launch:

This is where the product enters the ‘Introductory’ stage of its product life-cycle. This is a very costly operation, since a national launch will need advertising and promotional campaigns to tell customers about the new product.

Question 20

Explain the 4 stages in the product life-cycle

Answer 20

Introductory Stage:

The product is introduced to the market. Few sales at this stage

Growth Stage:

Sales are rising quickly as more customers become aware of the product.

Maturity Stage:

Product is well known in the market and growth begins to slow down.

Competition increases and the price of product falls. This stage makes the most profit.

Decline stage:

Sales and profits start to fall as new and more advanced products enter the market and customers no longer want the product.

Question 21

Describe Branding and what is the aim of branding?

Answer 21

A brand is a product or a range of products with a unique and easily recognisable character. For example we all recognise Heinz, Cadbury, Virgin or Coca-Cola, not only by the logo, but also by the packaging, taste, advertising and other features.

The aim of the manufacturer is to market the product, so that it is instantly recognizable to the consumer, and appears to be better than other, similar products.

Question 22

What are the Advantages of Branding?

Answer 22

Brand is easily recognised as the logo/design used helps identify it. This could mean that customers may buy more as they are familiar with the product.

· Brand loyalty can develop when customers feel that that brand is the best available for that particular good or service. This could increase market share for the business

· Can charge higher prices for a branded good as customers are willing to pay more for that particular brand over what they see as inferior brands. This can lead to a certain brand image for the product.

· Easier to launch new products because once a customer is loyal to a brand, new products under that brand will be looked at in the same way eg Branston Beans.

· Can save money on marketing/advertising because each new product under the brand name will not need to be marketed separately – just a global marketing campaign for the brand.

· Customers can be reassured that they are buying a quality product.

· There may be good after-sales service available for customers.

Question 23

What are the Disadvantages of Branding?

Answer 23

· One fault with a product may affect the perception of the whole product range.

· Brands can be copied and fake products can be produced and sold to try to give the impression they are the real item.

· It is time-consuming and expensive for a business to establish a brand which impacts upon profitability.

· It is very difficult to change a well established brand. Customers may resist change e.g. New Coke and GAP re-branding – both changed back very quickly following protests from customers.

Question 24

Describe Price

Answer 24

Price - The price is the amount of money the customer will pay for the product

The product must be priced so that an organisation covers its costs and can make a profit. If the product has too high a price the customer will not buy it, particularly if a competitor has a similar more reasonably priced product on the market.

Question 25

what are Factors a business would have to consider when setting the price of a product?

Answer 25

· Cost of production.

· Competitors’ prices.

· Level of profit organisation wishes to make.

· Level of promotion/advertising carried out.

· The market segment, what price are customers willing to pay.

· The Place where the product is sold eg an exclusive store or a supermarket.

Question 26

Name and describe at least 3 Pricing Strategies

Answer 26

1. Cost-plus pricing:

The firm calculates the cost of producing the product and adds on a percentage to that price to arrive at the selling price.

2. Competitive pricing:

Rival companies charge similar prices for similar products – for example, petrol or DVDs.

3. Price skimming:

Firms often charge high prices for new products. Some consumers are prepared to pay this price in order to have the product first eg 3D televisions.

4. Destroyer Pricing:

Prices are lowered in order to force competitors out of the market. Some competitors will not be able to compete at the low price and so leave the market. Prices can then be increased once the competition has been eliminated.

5. Promotional Pricing:

Prices are reduced for a short period of time. This strategy is used by a company that wants to inject new life into a product or reduce stock levels quickly.

6. High price:

Setting prices higher than competitors.

7. Low price:

Setting prices lower than competitors.

8. Psychological Pricing:

Making the customer think a product is cheaper than it really is by charging 99p rather than £1.00.

8. Premium Pricing:

Charging a high price for a luxury item.

Question 27

Describe Place

Answer 27

This is where the product is available to the customer, this is important as the product must be accessible to the customers so they can purchase it.

Question 28

What are factors to consider when a Business is choosing a Location?

Answer 28

Government Grants and Incentives:

Grants can be made available to businesses to encourage them to locate in an area.

Competition:

A business could locate further away to avoid competitors or it may choose to locate nearby to increase their share of the market

Customers:

A business may need to locate near to where the customers are in order to meet their needs.

Available Employees:

Employees with the right skills and education need to be close by.

Good transport links Good services:

Services such as gas, electricity and water and good access to motorways, train stations etc

Parking facilities:

Customers need easy access to the business otherwise they may go elsewhere.

Question 29

What is Distribution?

Answer 29

The way in which the product reaches the customer– i.e. where it is sold and how it gets there – is important to the success of the product.

Question 30

What are some Methods of Distribution?

Answer 30

Road

Rail

Air

Sea

Question 31

Explain Road and give some advantages and Disadvantages

Answer 31

Road:

The road network is used to transport goods using large trucks, lorries and vans.

Advantages:

-Can be cheaper than other methods.
-Many types of good can be delivered
-Can be delivered to the customer’s door

Disadvantages:

-Speed limits mean goods may be delayed.
-Fuel costs are high
-Traffic jams and road works can cause delays

Question 32

Explain Rail and give some advantages and Disadvantages

Answer 32

Rail:

The rail network is used to transport goods.

Advantages:

-Less delays than road
-Large orders can be transported

Disadvantage:

-Train station may not be close to delivery destination.

Question 33

Explain Air and give some advantages and Disadvantages

Question 34

Explain Sea and give some advantages and Disadvantages