marketing Flashcards
strategic objectives
-attract consumers so increase revenue/profit
-maintain/increase market share by being seen as best
-target new market to increase sales
-increase global sales to establish product in new market
-meet changing needs by modifying existing products
-prevent decline of sales using extension strategies
constraints on achievement of marketing objectives
-image of product or organisation with some consumers
-lack of finance can affect size of marketing budget
-legal requirements eg tobacco
-level of competition, harder to be successful in a competitive market
product led approach
a product led approach means designing and manufacturing a product then trying to persuade customers to buy
business doesn’t carry out market research so does not know wether there is a demand for the product, they presume there is
eg: first tv, concorde, dyson products
being product led assumes that:
-the product being sold is the best on the market and will be easy to sell
-the product is unique therefore no real competition exists
-no need to research or modify the product to attract consumers attention
market led approach
a market led approach is a feature of competitive markets and puts consumers needs at the centre of all decisions
extensive market research and testing is carried out before production begins to make sure there is sufficient interest and demand for the product
eg: most industries use this technique including car and food industries
market orientation assumes that:
-satisfying consumer needs and wants is a necessary or main purpose
-market research and testing is critical in understanding the consumer
-constant and quick modifications to the product are needed to suit changing consumer tastes
types of consumer buying behaviour
-routine purchases are habitual and requires little thought by the buyer eg milk/bread in the weekly shop
-informed decision making purchases will require some degree of consideration and possible research by the buyer eg clothes for a wedding, a car, a house
-impulse purchases are bought without prior thought eg chocolate/crisps
how market research can be used to improve the effectiveness of an organisation
-can help to identify specifics of the market the business operate in, size or number of existing and potential consumers including spending patterns and average customer profile helps market segmentation & easier targeting/meeting consumer needs
-can help assess the strength and activities of competitors, name, location, market share & USP which gives rivals a competitive advantage and which the business needs to take action against
-spot a gap in the market that has potential to make money, identify a product that isn’t currently available or a new market which the business can enter will increase their product range and profits by increased sales
-assesses how successful the marketing mix is by finding out consumers opinions of the product and potential changes to be made to increase customer satisfaction, finding out potential demand so a good price & quantity can be set, identify how to improve product availability and identify best media to reach the market for adverts
methods of sampling
-quota sampling
>used if average consumer profile is known and involves picking respondents with specific characteristics within target market
>researcher is told precisely how many to interview and their characteristics so they must find and interview a specific number of consumers who match the requirements
✅cheaper as any suitable candidate can be interviewed
❌results may not represent target market as interviewer bias impacts who is picked
-random sampling
>respondents are picked randomly from a list with each person having an equal change of being chose randomly
>if they aren’t available the interviewer must try constant them again and again until a response is obtained
>if response is a ‘no’ a known substitute will be approached to complete the research
✅simple system and free from bias
❌expensive to run and time consume as those selected must be interviewed
desk research
reusing previously published information for another purpose, completed by a researcher without direct contact with respondents
-does not bring a competitive advantage as info available to all, may not be good quality
involves research of secondary info:
-websites give a great deal of info about the external environment the business operates in
-trade journals gives specialist knowledge and research on market
-statistics (eg demographics) which help make informed decisions
-previous internal records are useful to spot trends
field research
carried out by a researcher to obtain first hand information which often involves direct contact with respondents
it will be exclusive and only available to the user - should meet exact needs of organisation
methods of field research
-personal interview, face to face interview between respondent and trained researcher
✅2 way communication, clarification can be given
✅skilled/trained researcher
❌time consuming and unpopular
-telephone survey, researcher phones people at home to ask them questions
✅inexpensive
✅immediate response can be given
❌straightforward questions needed
❌participants hostile if privacy invaded
-postal survey, researcher posts a questionnaire to selected houses
✅inexpensive
✅no interviewer bias
✅easy to segment market
❌time needed to design
❌only simple questions
❌low response rate
-group discussion, involves a meeting between selected people led by an experienced chair
✅more detailed data gained
✅idea of opinions and feelings
❌analysis harder
❌dominant members can sway discussion
-observation, researcher watches and records particular occurrences or habits
✅accurate quantitative info
✅large number of consumers surveyed over a short time
❌unable to ask questions
❌cost of setting up and running
-test marketing, monitors consumer reaction by launching new product in one region before market
✅modifications possible before launch
✅greater chance of long term success
❌consumers may have regional bias so don’t reflect target market
❌poor marketing may still result in failed launch
the marketing mix
-product, actual good/service being sold
-price, how much to be paid to buy product, its value
-promotion, actions to attract attention and persuade to buy
-place, how consumers can access product
-people, employees who come into contact with consumers
-process, systems used to deliver the service
-physical evidence, where the service is being delivered from
elements of the marketing mix relating to each other
-a product with high production costs needs a high price to cover costs
-to establish an exclusive product a high price will be charged
-a product with a good image will need less promotion
-lower prices often available when buying from the internet (place)
-product can be improved if people element do a good job
researching and products
-market research, designed to identify who the customer is, what the want from the product, identify gaps in the market, highlight rival products, what competitors are doing and understand current economic conditions
-product research, designed to improve existing products, develop new products and take advantage of emergent technologies
product life cycle
the product life cycle diagram shows the expected sales of a product over time
the stages are: r&d, introduction, growth, maturity, saturation, decline
explain research and development stage of product life cycle
-product not yet on market so no sales = no profits
-losses are made as high R&D costs to pay and no sales revenue to off set
-product prototypes being developed and best version chosen
-what price to charge set/established for launch and long term
-pre launch advertising to inform consumers
-agreement of place with retailers being put in place or own outlets primed
explain introduction stage of product life cycle
-just launched so low sales but aim of building awareness of the product
-still loss-making as high launch and promo costs still being paid and low revenue
-one product model launched, may be technically advanced
-short term pricing tactic eg skimming or penetration depending on market
-heavy promotion and advertising to raise consumer awareness
-limited number of distribution methods used (place)
explain growth stage of product life cycle
-sales rapidly increasing and much greater public profile
-becoming profitable with increased sales and lower costs
-product improved by making minor modifications in response to initial sales and feedback
-long term pricing strategy employed
-new promotions used to target new potential consumers
-growing number of places helps improve consumer access
explain maturity stage of product life cycle
-sales increase is slowing down but still rising as rivals leaving market
-profitable and only periodic marketing costs to be paid
-product range diversified into different version to maintain consumer interest
-move towards more competitive pricing as increasing rivals
-short bursts of sales promotion to remind consumers of product
-all place methods used and considered to increase sales
explain saturation stage of product life cycle
-sales increase level off unless take over of competitor
-profitability spectrum depending on product, from highly profitable to reducing profitability
-technical updates and advances are used to encourage purchase of product
-lower prices to maintain consumer interest
-new promotion designed helps differentiate product from competitors
-more direct methods used for consumer ease
explain decline stage of product life cycle
-sales are falling as consumer loyalty declines
-may become loss making as sales fall and low price used to sell remaining stock
-selling off current stock and withdraw from selling market
-increased price to exploit loyalty or reduced to sell off stock
-reduced budget for promotions to keep costs down
-reduced number of channels which may be becoming unprofitable (place)
extension strategies
-changing an element of the marketing mix
>change name so appears different and new in consumer eyes
>new logo/symbol will enhance branding and brand awareness
>new pack size which may be more convenient eg families
>change packaging to attract consumer attention
>lower/increase price
>limited editions to encourage sales
>improve product to attract consumers
>selling in more places to improve accessibility
-target new segment of consumers to attract a wider customer base
-develop new uses for product so it can be launched in new markets
the product portfolio
a product portfolio contains all of the items an organisation has available for sale
-some products are related, this is a product line manufactured by a single business eg health and beauty products
-in a well managed business new products are introduced as old are being phased out, this is called managing the product portfolio
advantages and disadvantages of a product portfolio
✅spreads risk of failure
✅meets the needs of more segments/consumers so more sales
✅revenue from a mature product can help fund development of new products
✅easier to launch new products under same logo and increased consumer awareness
❌bad publicity can affect all the products
❌complicated scheduling of machines when producing many products
❌staff may need to be knowledgeable of many markets
❌increasing costs as many products and R&D costs can be high to help maintain variety of new products
the boston matrix
used by organisation to analyse their product range and allocate limited resources to gain maximum benefit
-stars - products that have high market share in a high growth market and earn large returns so must be protected from competitors
-question marks - products with low market share in a high growth market so have potential and may yield high profits
-cash cows - products which a high market share of a low growth market so are highly profitable
-dogs - products that have a low market share in a low growth market so had little appeal or profit for business
threats of wrong price being chosen
-loss of customers because if the price is too high customers will buy rival products
-loss of revenue as fewer customers means reduced sales as well as lost revenue
-there needs to be a balance between sales and revenue
pricing strategies and tactics
-price strategy - your price compared to competitors set over the long term, there is no known end date
-price tactic - change of price over the short term designed to influence demand and will finish at a known date
long term pricing strategies
-low price strategy, used if competition is strong and involves setting a price below rivals to attract consumers
-competitive/market price strategy, used if product is a frequent purchase or is similar to competitors set
-premium/high price strategy, used as a long term policy to establish an exclusive image, higher than similar products
-psychological pricing, sets a price just below meaningful price barrier, eg setting it £99.99 instead of £100
-discrimination pricing, charges different prices for same product
short term pricing strategies
for a NEW product:
-skimming, sets a high price when launched to maximise sales then the price is lowered over time to appeal to mass market and increase sales
-penetration, sets a low price when a product is launched onto a competitive market to attract customers from rivals then once loyalty has been established the price is raised
for an EXISTING product:
-loss leader, sets a very low price for a leading product to encourage more customers, hopefully consumer will see and buy other products which in turn generates additional revenue/profit
-destroyer pricing, is an illegal practice under competition regulations and involves setting a very low price in an attempt to drive inefficient rivals out the market, once weaker firm closes price returns to market level
-promotional pricing, sets a price below known RRP, helps to boost sales, sell inventory quick and aid cash flow in the short term
what does the level of promotion used depend on?
-competition, if there are no rivals there is less need to persuade customers to buy
-availability, there is little need to promote a product in short supply
-product differentiation, if the product has a USP there will be less need for promotion to inform consumers
-stage in life cycle, at launch products have promotional support and over time periodic promotions remind consumers about product
what are sales promotions designed to do?
-increase demand specifically from first time buyers or previous consumers
-increase revenue in the short term
-increase profit in the long term
-improve consumer loyalty and encourage repeat purchasing
types of sales promotion
-into the pipeline - promotions offered by manufacturers to retailers to encourage them to stock their products
-out of the pipeline - promotions are offered by retailers to consumer to encourage them to purchase the product
-product endorsement - link a celebrity with a product
-product placement - sell a lifestyle as products appear in appropriate tv programmes/films
into the pipeline promotions
-dealer loaders - used as inducements to retailers to increase the size of their orders eg buy 10 get 2 free
-sale or return - encourages retailers to stock untried products which are often new to the market, supplier agrees to take back any unsold inventory after an agreed period so retailer not left with unsold items if unsuccessful
-dealer competitions/promotional gifts - encourages retailers to push the sales of a particular product to gain the reward
-staff training - improves sales staff knowledge so they can provide better customers service
out of the pipeline promotions
-free samples/trial packs - allows consumers to try the product for free to see if it suits in the hope the consumers will like it and choose to buy
-buy one get one free(bogof) - gives consumers better value as they get more for their money and encourages multi-purchasing
-promotional pricing - offer better value for money in the short term so new consumers are persuaded to try and existing consumers buy more or purchase early
-free gifts - given with another product to encourage consumers to purchase as they are attracted to something appealing that is free
public relations
involves planned communication at a corporate level or publicity
-press releases are statements that outline something positive about the organisation to the general public to present them in a positive way and improve image
-holding press conferences which bring to one room media representatives who will be told something positive about the organisation to broadcast to their users
-literature and feature stories in the media eg providing services free in the hope a news story is created about it
-hold an open day which allows members of the general public to see how the organisation works and find tour more about it
-partner with a charity to support their cause and allow staff to volunteer or donate to the cause to be seen as a good neighbour
-manage social media forums and handle complaints quickly to show consumer views and opinions matter
-merchandising that can be give to agents to draw attention to organisation and act as a reminder
advantages and disadvantages of public relations
✅may promote a positive image and improve reputation
✅increases public awareness of business and products
✅stories in the media are free and carry no extra costs
✅supports other promos so increases sales and customer loyalty
❌the public might think the story is just a ‘spin’ and so don’t believe the message being given
❌both good and bad publicity on the media are outwith the control of the organisation
❌no guarantee of media exposure if a better story comes out the same day
channel of distribution
the route a product takes to reach the final consumer and involves:
> manufacturer who makes the product
wholesaler who buys directly from the manufacturer then sells to retailers
retailer who offers a direct service to the public
consumer who buys the product
direct = manufacturer > consumer
short = manufacturer > retailer > consumer
traditional = manufacturer > wholesaler > retailer > consumer
impact of wholesaler to manufacturer
✅bulk buys so saves manufacturer making many smaller deliveries
✅admin costs reduced as fewer big orders to process
✅provides research data which can inform future decisions
❌loss of control of how the product is presented in the warehouse
❌less profits as both manufacturer and wholesaler (middle man) must make a profit
impact of wholesaler to retailer
✅wholesalers break product down into smaller more saleable sizes so retailer can buy the amount they need
✅wholesalers provide more market research data to retailer about (un)popular items
❌may pay more compared to buying directly from manufacturer
❌own vehicle needed so increased transport costs
❌time out of business to visit wholesaler, buy goods, load/unload stock
types of retailers
-small independent retailers eg corner shops, clothes boutiques and gift shops
-high street department stares with specialist departments which could be franchises eg M&S
-chain stores that may have a connected product range eg next, boots, ikea
-multi-branch supermarkets which have a range of shop sizes and product ranges eg tesco superstore, sainsbury’s local
high street outlet retailer (benefits and costs)
> eg independent store, chain store, discount store, pop up shop
✅retailers are closer to the customer so improved access
✅often have customer loyalty so regular sales guaranteed
✅trained staff know the products so better customer service
✅customers can see and touch product before buying
❌cost of running a branch network
❌rent in city or town centres is higher than out of town locations
❌nearby rivals located give consumers an easy choice
❌inconvenience of getting deliveries in city centre
❌customers may not be able to park easily, inconvenient
mobile retailer (benefits and costs)
> eg farmers market, mobile van
✅products can be accessed by consumers at different events attended by the retailer
✅increased brand awareness
✅less expensive as lower running costs
✅flexible as can target highly profitable venues
✅can move location if low profits being made
❌only available to stock very limited range of items
❌only available to target a narrow market
❌rivals set up in same location
❌cosy of vendors licence and petrol needs to be paid
temporary retailer (benefits and costs)
> eg pop up shop
✅consumer interest increased as outlet time limited
✅good for seasonal items at specific times
✅no long term commitment to a lengthy lease (less costs)
✅can create a unique environment and support a marketing campaign
❌consumers may return to buy but shop is no longer there
❌may be viewed with suspicion by consumers who question its validity/authencity
❌may be difficult to recruit quality staff as positions temporary
❌reduced public image which can have a negative impact on brand
❌difficult to contact retailer
direct selling
selling via websites/e/s/m-commerce
> huge range of goods/ services available
✅popular as it saves time and hassle of shopping
✅zoom, tilt and rotate functions improves purchasing
✅regular shopping basket can be established which is easier and maintains sales
✅can leave comments providing useful market research
✅no need to finance physical outlets so cheaper prices offer consumers better value for money
❌more returns as consumers have not tried before they buy
❌some consumers unwilling to buy from a website as security fears or prefer to physically see item
direct selling
mail order
> selling through a catalogue or by filling out form in magazine
often with specialist and luxury products
✅reduced overheads as fewer staff and premises passed on as lower prices to consumers
✅home shopping allows time to peruse and make more informed purchasing desicions so fewer consumer returns
✅possible to target potential consumers eg geographically
✅good customer service provided by experts
❌consumers put off if prefer to see/feel/try on
❌design important as adverts must have enough detail and info
❌publication costs can be high especially if large advert
❌delivery must be organised by the seller and delivery charges increases costs to consumer
direct selling
personal selling
> promotes product through personal contact eg kitchens
✅experts provide good advice to help consumer
✅tailor-made products (one off) increases satisfaction
✅personal recommendations and positive feedback used in marketing
❌consumers put off by door to door or telesales and hard sell tactics can give a poor image
❌turnover of sales staff increases recruitment and training costs and loss of expertise
direct selling
direct mail
> promotional letters, leaflet/brochures to home or work
✅can target market segment who should be interested in product so it is more likely to generate sales
✅feeling of personalisation as letters can be created using mail merge and mailing list of target consumers which helps them feel valued
❌out of date mailing lists have a cost but no benefit
❌consumers may view the mail as junk and bin it which has a detrimental impact on public image
what will the channel of distribution or retailer chosen depend upon?
-actual product eg short/direct channel is used with technical products that need a demonstration and also perishable items with a short life
-market size eg mass market items are often sold via wholesalers and retailers to give the greatest number of consumers access
-buying habits eg consumers may choose to access online whilst others prefer more traditional and buy from physical premises
-product image and target market segment eg premium brands are more likely to be sold in department stores/boutiques to maintain exclusive image
-stage in the product life cycle eg a mature product moving towards decline more direct distribution channels to make product more available
-legal restrictions eg access to some products is restricted by as eg drugs and guns can only be sold from licensed premises
-distribution capacity of organisation eg some businesses need to sell via other parties whilst others have their own branch network
extended marketing mix
-process
all services should be underpinned by clearly defined and efficient processes
-effective procedures ensures good service so helps increase customer satisfaction
-good processes are designed to take account needs of organisation
-different processes can be used depending on in/external influences
-areas of concern:
>customer complaints procedures
>waiting times on phone
>ability to leave feedback
>individual steps involved
-good processes are clearly laid down and consistently applied which helps consumer loyalty and confidence
-must be delivered effectively or little value and negative impression eg if left hanging on phone may make them use a rival instead
eg ordering mcd and receiving order fast and in good condition may make that your go to fast food place in future
how to ensure a business is marketing ethically
-ensure there is no invasion of privacy (market research)
-not draw unfair/in appropriate conclusions from stereotypes
-make product available to all and don’t refuse certain groups
-ensure the product is safe and meets high safety standards
-cause no harm to the environment and supplies sourced from ethical traders
-ensure adverts don’t cause offence to public
-appropriately priced and not exploit consumers
technology and marketing
-social media to get consumer information which helps marketing activities and products at consumers who will be most interested and most likely to buy
-setting up a website so more potential consumers can use e/s/m-commerce facilities and sales, market share and profits and also to use for internet advertising
-text alerts to mobile phones informs consumers of new products etc which can help increase sales
-online survey or customer feedback form on website gathers info from customers and this can help make informed decisions to improve satisfaction
extended marketing mix
-physical evidence
the way a service and everything related to it appears from the outside
-customers look for physical evidence to support decisions and reassure them
-encompasses every single visual element about organisation which is important as judgements made based on what they see
-can be used to charge a premium price and establish a positive experience
-where service is being delivered from:
>premises and temp/air con to help keep fresh and clean
>parking at building and landscaping outside
>interior design/furnishing/layout
-other physical evidence might include easy to open packaging, good condition, paperwork, uniform, info sources
eg logos on tickets and players wearing uniforms, impressive stadium and comfortable seats, business eg disney world
extended marketing mix
-people
essential in services and help deliver customer satisfaction
-one of the few elements that customers see/interact with
-the public image of business and can leave a positive or negative impression
-belief that ’good people equates to good service’
-recruiting and training right staff is key to creating a competitive advantage/satisfaction
-staff add value to service by skills quality
-level of after sales support and advice can lead to consumer loyalty
eg volunteers during london olympics and call centre staff who work to keep response time down
