Marketing Flashcards
Why is Marketing important?
Can attract new customers by letting them know
about the range of products
It can allow a business to enter new markets (e.g.
entering a new country or using the web to sell to
people abroad)
It can help the business grow
Can increase profits
Name any 3 market segments
Gender
Age
Occupation
Religion
Income/social class
Geography
Lifestyle
Describe 2 advantages of segmenting the market
The PRODUCT is suitable to that group
The product is sold in the right PLACE for the customer
The right PRICE can be charged
PROMOTION and adverts are targeted towards the correct group
(Then link to aims and objectives E.G. which therefore increases profit)
What is the Marketing Mix? (The 4 P’s)
Product, Price, Promotion and Place.
Describe Product development.
Market research is done to find out what
consumers want
Ideas are generated
Prototypes are made
Changes then made to prototype
Product released and sold!
Identify the stages in the product life cycle
Introduction – Sales are low as the product is not well
known when it is launched onto the market. No profit
is made
Growth – Sales increase as more consumers are
aware of the product
Maturity – Sales reach a peak – everyone has bought
the product. The market becomes saturated
Decline – Sales start to fall and product may even be withdrawn from market
What are some extension strategies?(Product life cycle)
Changing or modifying the PRODUCT
Changing where it is sold (PLACE)
Changing the PRICE
Using a new PROMOTIONAL campaign
What is branding?
Brands are a logo, name or symbol given to a product or group of products
e.g. Heinz, Bosch, Walkers
What are the Advantages of brands?
Makes the products instantly recognisable
Makes customers “brand loyal”
Allows the business to charge higher prices
Easier to introduce new products as the brand name is
well known e.g. Apple
What the Disadvantages of brands
Brands are easy to copy/fake
If one product is poor, the whole brand can be affected
Brands take a long time to build up
What is a Product Portfolio?
This is when a firm has a number of different products to sell.
It can also be called the PRODUCT MIX
Why is Product Portfolio important?
Allows the firm to have products for different consumers/market segments
Spreads the risk of failure
Increases sales and profits
Makes it easier to launch new products
Allows firms to have products at different stages of the product life cycle.
What factors do a business need to take into account for when charging a PRICE for a product?
The life cycle of the product
The price charged by competitors
How much it costs to make the product
How much profit is wanted
How much of the product can be supplied
The market segment that the product is focused towards
Identify and Describe different pricing strategies
1) LOW PRICE: Where a business sets a price based on their competitors and offers a lower price. This attracts more customers and can lead to higher sales
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2) HIGH/PREMIUM PRICE: Where a business sets a price based on their competitors and offers a higher price to signify luxury and quality. They may not rely on a large number of sales but will usually have a higher profit margin
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3) PROMOTIONAL PRICING: This is where a business temporarily reduces the price of a product to attract customers, This gives a sense of urgency to encourage customers to buy a product as the discount is advertised as a limited time deal (This can be done through Seasonal promotions, Discounts, By on get one free/BOGOF)
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4) COST-PLUS PRICING: This is where the price of a product is determined by giving it a specific fixed percentage to the Products unit cost. (E.G. A chocolate bar costs £1 to make but you want to make a 50% profit, so you make the retail price £1.50.)
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5) PSYCHOLOGICAL PRICING : This is where a business sets prices based on psychological effects and perceptions rather than logical or rational factors (E.G. Setting a products price at £19.99 instead of £20 as £19.99 just feels and looks better and cheaper when in reality it’s only 1p)
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6) SKIMMING PRICING: This is where high prices are given to a new product and as competitors enter the market the business lowers their own prices. The opposite of Penetration Pricing
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7) PENETRATION PRICING: This is where a business lures in consumers by initially giving a low price for a product and increases the price over time. The opposite of Skimming Pricing
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8) DISCRIMINATION PRICING: This is where different customers and consumers are charged different prices for the same product based on what the seller believes they can get the customer to agree to.
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9) COMPETITIVE PRICING: This is where a business prices their product
Based on the price their competitors are setting and charging a similar price.
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10) DESTROYER PRICING: This is where a business charges a very low price for their product attracting customers away from their competitors which will make them struggle and potentially go bust.
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What Factors affect the choice of product location? (PLACE)
Competition
Where the customer is (footfall)
Availability of suitable premises
Infrastructure e.g. roads, stations,
airports
Employee availability
Identify the 4 main methods of distributions
Road, Rail, Air and Sea
What are the advantages and disadvantages of Road and Rail Distribution?
ROAD
Advantages - One of the cheapest methods of transporting.
Door-to-door delivery
Disadvantages - Large products difficult to transport.
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RAIL
Advantages - Can transport large volume of goods
Disadvantages - Stations not always close to businesses or customers
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What are the Advantages and Disadvantages of Air and Sea distribution?
AIR
Advantages - Quickest way to transport goods to worldwide destinations
Disadvantages - Very Expensive.
Large items cannot be transported by air
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SEA
Advantages - Can transport large volumes in container ships
Disadvantages - Very slow and time consuming
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Identify the different methods of advertising.
TV, Radio, Cinema, Newspaper/Magazines and Billboards
Describe the Advantages and Disadvantages of TV and Radio Advertising (PROMOTION)
1) TV
ADVANTAGES -Can reach wide geographical audience.
Demonstrations can be shown .
The best advertising campaigns can be memorable.
DISADVANTAGES - Very expensive.
Viewers may not watch when ads come on
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2) RADIO
ADVANTAGES - Can reach a wide geographical audience.
Cheaper to advertise than on TV
DISADVANTAGES - Only sound, no products or demonstrations shown.
Listeners can tune out during the ads
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Describe the Advantages and Disadvantages of Cinema and Newspaper/Magazine Advertising (PROMOTION)
1) CINEMA
ADVANTAGES - A captive audience.
Adverts can be matched to audiences that represent market segments
DISADVANTAGES - Limited audience
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2) NEWSPAPER/MAGAZINES
ADVANTAGES - Can target market segments through choice of newspaper or special interest magazines.
Readers often keep magazines for reference and will see ads many times
DISADVANTAGES - Ads can be expensive.
No demonstration can be made.
Easy to ignore and turn the page
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Describe the Advantages and Disadvantages of Billboard Advertising (PROMOTION)
BILLBOARDS
ADVANTAGES - Usually in busy locations.
Can be cheaper than other forms of advertising.
Potential customers will see the ad repeatedly over a long period.
Can promote business in a specific geographical area.
DISADVANTAGES - May be ignored by Passers-by.
Can only include limited information.
No demonstration can be made.
Only reaches a specific geographical area.
Identify and describe different methods of Sales PROMOTION (Special offers)
1) DISCOUNTS
By offering products at a reduced price for a set period of time, a business can offer customers better value, for example 20% off the price of a brand of washing-up liquid. This can encourage customers to buy more or to buy from them rather than a rival company.
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2) BUY ONE, GET ONE FREE
Buy One, Get One Free (BOGOF) is a commonly used special offer. This deal is used to offer customers extra value and may encourage them to buy more or to choose one business or product over another.
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3) POINT OF SALES DISPLAY
Point of sale displays are to be found at the checkout, for example at supermarkets. The point of sale display is most commonly designed to attract the customer to products that are new, for example the latest DVDs, books or video games.
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4) LOYALTY CARDS
Loyalty cards can encourage a customer to keep coming back to the same business. Most commonly, loyalty cards operate on a points-based system. The more that a customer spends in a shop, the more points are added to their loyalty card. These points can then be converted into some sort of reward, for example a discount on other products.
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5) FREE SAMPLES
Many food companies will offer
free samples
as a way to let potential customers test a product. For example, supermarket shoppers will be given the chance to taste a new snack. The idea is that people will try the product and hopefully like it, encouraging them to buy.
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6) FREE GIFTS
Often a business will encourage customers to buy by offering a free gift with its product. For example, fast food companies give away toys with children’s meals, or some products include tokens in their packaging which have to be cut out and posted off in order to claim the free gift.
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What is Market Research?
Market research
provides information about:
the market itself (size and make-up – i.e. age, gender, income, tastes)
customer feedback
promotional methods
sales data
competitors
effect of price on market
Businesses use the information they gather to design new products and modify existing ones. This approach helps to maximise the potential success of products and services.
