Marketing Flashcards
Marketing and its role
An dynamic, constantly reevaluated and reviewed bridge between an organisation and its customer.
The role of marketing is to anticipate, identify and create new needs and wants.
Marketing goods versus marketing services
- A service is often location-based to which customers need to travel while products may be delivered through distribution channels.
- Customers like their products to be standardised but their services to be customised to suit their individual needs.
- Products are tangible so customers can inspect them (before buying), while services need to be experienced first to have review.
To rival the products benefits of being delivered, services market through physical evidence, process and trained people.
Market share
The sales of the individual firm expressed as an percentage of the total industry sales:
Market share = (total revenue the firm generates)/(total revenue the whole industry generates) x 100
Market size = the total sales of alle the producers within a market
Importance of market share and market leadership
Having significant market share allows an organisation to influence pricing in that market. Revenue growth will also be possible and these additional funds can be invested into improving the marketing effort, further consolidating its position.
Marketing key points
- identify target audience: define key stakeholder
- maintain consisten communication
- create strong visual identity: use logos
- use message repetition whenever possible: create a slogan
- employ multiple communication tactics
Marketing strategies and customer preferences
- trends towards purchasing online rather than from retail stores
- organisations need to be to be more ethical, socially responsible and transparent (growing consumer awarenesses)
- widespread adoption of m-commerce in many countries through an improvement in mobile phones technologies
However, although changing a marketing strategy may benefit some customers, some customers resist change, loosing significant brand value, if it changes too quickly.
Elements of a marketing plan
- a marketing budget
- the strategy employed to fulfil the overall objectives of the organisation
- tactical methods, e.g. elements of the marketing mix, to increase consumer awareness
- a breakdown of expected revenue and costs earned by the product
- a time frame/line to monitor and review progress
- contingencies of action plans to be used if the original plan fails to achieve its objectives
The role of marketing planning
To ensure the organizations marketing strategy is put into operation. Ideally, the plan will have a number of short- and long-term objectives to achieve. It is also important that managers of all departments understand the reason and timings for the plan giving that finance, operation and human resources will be affected: otherwise conflicts could occur.
Good marketing plans allow for:
• adjustments in the external environments to be incorporated into the plan to make it realistic
• an understanding of the competitive environment in which the organization is operating, which will have a direct influence on the marketing mix chosen.
Once again, marketing plans stretch over a number of years, updated regularly especially if the business operating in a rapidly changing marketplace (e.g. Nokia). This can be expensive in both time and capital.
Marketing mix
- product
- price
- people
- place
all important, but not equally: without a quality product, successful promotion can hardly take place
Achieving marketing objectives via marketing mix
a quality product may be successful if:
• an appropriate price, either aimed at the target market or trying to appeal to a new one
• a promotional campaign that raises awareness and is appropriate to the target market
• a distribution channel that allows the consumer purchase the product quickly and avoids frustrations
Target markets and market segmentation
Market segmentation is the process of classifying customers with similar needs and wants within a whole market (e.g. age, lifestyle, occupation).
Once classification has taken place, a business determines an appropriate target market, which allows the business to direct financial resources and the marketing effort more effectively to avoid waste.
- Once a target market has been established, the organisation will monitor consumer preferences and any changes that occur to ensure its own relevance.
- With the internet and social media, the growth of consumer profiling is inevitable.
Features of e-commerce
The list ongoing, adding more and more with advances in technology and Internet.
- no geographical limits; global reach; large potential audience
- huge amounts of data that can be collected in real-time and cost efficiently
- ubiquity: available anywhere and time
- universal standards
- reduces time and cost of buying goods
- reduced supply chain
- often richer experience for customers; social media
- reduced entry costs into markets
- greater personalisation of the marketing message; greater targeting of goods
Below-the-line promotion vs. Above-the-line promotion
Above The Line (ATL) advertising is where mass media is used to promote brands and reach out to the target consumers; not specific to individual consumers.
+ reaches wider audience
– This promotion may not be directly controlled by the company selling the goods or service, such as television or press advertising (loss of control)
– no immediate feedback
Below the line (BTL) advertising is more one to one, and involves the distribution of pamphlets, handbills, stickers, promotions, brochures placed at point of sale, on the roads through banners and placards. \+ immediate feedback \+ better in niche markets \+ cheaper \+ personal -- not as fast
Benefits of e-commerce to consumers
Case study: Amazon.com
- Consumer benefit from significant cost savings by ordering online
- Huge range of choice for products
- direct customer feedback from previous customers allows consumers to assess product performance
- ultrafast (same-day) delivery
- substantial discounts for big orders
- customised online shopping for customers, allowing greater consumer targeting and greater sales (e.g. language and personalised recommendations)
- greater price transparency (comparison of price); consequently the market has become more competitive, to the benefit for all costumers
Drawbacks/costs of e-commerce to consumers
Many drawbacks have minimised over time.
• concerns of personal data being leaked (encryption has mostly eliminated this fear) - PRIVACY AND INTRUSION
• products can not be physically be seen or touched over online websites, however, “try before buy” and better reviews and media of product have minimised this limitation
• increase in spamming and phishing
• information overload
• not ideal in internet-lacking locations
Growth of business-to-business (B2B) trade over the Internet
B2B activity is outnumbering the B2C activity. That is because the sheer volume is larger and was increased by Internet, which increased connectivity.
(C2C, like eBay, has smaller activities)
Effects of changing technology and e-commerce on the marketing mix
Product: more products can be sold over online shops, with greater product range, increased customization and customer satisfaction.
Price: easy price comparisons, increasing manufacturer-to-consumer selling (reducing distribution costs)
Promotion: most cost-effective advertisement, most stimulus (audio, video, interaction), personalized
Place: reduced need for intermediaries in distribution (ergo, lower costs), no waiting times…
primary vs secondary market research
primary: first-hand knowledge, up-to-date but costly
secondary: external research, cheaper and out-of-date (maybe)
market research can ascertain the current
- market size
- competitive nature of the market via market share
- potential market growth
too much market research
Market research does not guarantee anything.
“Market research is an illusion. There is no objective reality. There are no facts. There is no best product. All that exists in the world of marketing are perceptions in the minds of customers. The perception is the reality.”
how to overcome bias in collecting and analyzing data
hiring third party agencies
primary research methods:
surveys:
consumer feedback or reaction to a company’s product or service
interviews:
more in-depth but with fewer respondents, also more costly
- good for qualitative data
focus groups:
- overcomes the intimidation of interviews by asking groups of individuals - a more calming participation
- but the bandwagon effect may cause dishonest opinions to be said.
- good for qualitative data
observations:
can be carried out fairly quickly at the locations but there are ethical considerations from observing too long
- example, observing the customer numbers of rivals
secondary research methods
- internet surveys from NGOs and other organisations (trust?)
- academic journals and government publications (census)
- media articles can provide balanced views of the public
qualitative vs quantitive research
qualitative: emotions to brands and products, often collected by psychologists
quantitative: researchers have prepared questions which can be answered by large samples
different sampling methods
as populations are usually too big, samples are taken, trying to reduce time and cost, while maintaining accuracy and bias:
random
equal chance that any respondents will be chosen; costly and time consuming; least bias; not accurate
quota
respondents are segmented into specific groups; cheap but time-consuming; segmentation has bias but results are more accurate
stratified
similar to quota but not targets
cluster
geographical areas are used for group characteristics; regional bias
snowballing
existing respondents recruit future respondents from among their acquaintances, resulting in respondents that fit the criteria very well; time consuming but cost effective; significant bias, narrow range of feedback
Moore’s Law - its impact given rapidly changing technological markets
the observation that the number of transistors in a dense integrated circuit doubles approximately every two years.
that means higher speed and more power for products
the product life cycle
- investment (R&D): high outflow
- introduction: low sales; heavy promotion
- growth: increasing sales, cash flow becomes positive
- maturity increased competition
- saturation
- decline
in the millennium of “tyranny of choice”, it has been observed that the life cycle has become shorter
extension strategies for matured products
- repackaging (physically and literary “special limited edition”)
- additional new features
- increasing promotion
- reducing product price
- introducing a new product that compliments the older product (e.g. new shaving cream boosting the razor)
- finding new markets (e.g. overseas)
the Boston Consulting Group matrix
powerful decision-making tool:
high market growth & high relative market share: STAR
high market growth & low relative market share: PROBLEM CHILD
low market growth & high relative market share: CASH COW
low market growth & low relative market share: DOG
a guarded dog is the iPod touch, blocking potential competitors
definition and aspects of branding
+ brand identity vs. brand image
the sum of all experiences and values associated with a particular product
- establish brand awareness
- develop and manage a brand image
- develop brand equity
- develop brand loyalty (enables charging higher prices)
- brand identity is how the organisation wants to be seen by its customers
- brand image is how customers actually see the organisation
marketing and branding always seek to make the image as close as possible to image
benefits of branding
- introductions of new products are less risky
- increases the company value allowing for more additional funds for expansion
- creates a very high barrier to entry for new entrants into an industry
- Significantly increase revenue by ensuring higher demand and market share
- Improve profitability by commanding premium prices and offer better supplier terms
- Reduce the costs of entry into new products due to a strong consumer base
- Be more resistant to external shocks
guerrilla marketing
designed to provoke a reaction or simply sensationalise for maximum exposure; cheap
different pricing methods
COST-PLUS (MARK-UP)
price is determined by calculating the cost of an individual product and a profit margin is added
- used in expensive luxury items and one-off purchases
PRICE LEADERSHIP
the market leader by market share sets the price
PENETRATION
a firm tries to undercut existing market firms with a lower price
- Virgin Airlines, easyJet
SKIMMING (market-based)
a firm identifies a group and tries to target niche customers by charging high prices to attract early adopters
- new technological products
- market growth may be limited until prices are reduced
PREDATORY (competition)
a firm sets a very low price with the intention to remove competition from the market
- easyJet; concerns with quality and safety; “race to the bottom”
PRICE DISCRIMINATION (market-based)
a firm charges a range of prices for effectively the same product depending on the “price elasticity of demand” of the end user
- movie tickets for adults, children
- leakage may be a problem (small adult buys children ticket)
LOSS LEADER (market-based) a product is sold below cost to encourage consumers into a retail environment who (it is hoped) will then purchase other items with higher margins - supermarkets
PSYCHOLOGICAL (market-based)
the product is priced to break some psychological barrier to create positive word of mouth or is priced due to cultural factors
- 1.99 € or not using the number “13”
promotional channels
BROADCAST MEDIA
- large audience
- expensive
- no direct feedback
PRINTED MATERIAL
- cheap
- high information density
POINT-OF-SALE MATERIAL
- cheap
- updated quickly
- visual impact limited
COUPONS, SPECIAL OFFERS
- cheap
- direct customer contact
- limited reach
INTERNET
- privacy issues
- very cheap and unlimited reach
SALES PROMOTIONS
- costly
- need to be short term
- overuse may lead to skepticism
PR/ WORD OF MOUTH
- perception cannot be controlled
- costly
channels of distribution
how a final good or service passes from producer to the end user:
from manufacturer to consumer
- in-between there may be a “wholesaler” and “retailer”
SHORT AND DIRECT: Tesla and Apple
