Marketing Flashcards
What is marketing?
Involves identifying, anticipating and satisfying of customers needs to create a competitive advantage and allow a business to make greater profit
What is the purpose of marketing? (2)
- Identify and analyse, using market research, new products for current markets and future markets
- Satisfy customers needs so that loyalty to the product or/and brand means repeat sales
What is the importance of marketing, to a business? (2)
- Increases customer awareness to products, influencing sales
- Forecasts produced by marketing department are used to plan their production schedules and staffing requirements
What is meant by product orientation? Give 3 advantages
A business focuses primarily on producing and developing a high quality good or service
- Increased benefits from economies of scale
- Focused on product development and quality
- Easier to apply production management methods
What is meant by asset-led marketing? Give 2 advantages
When the qualities of the business and it’s products (assets) are used to meet customer needs
- Maximises return from assets
- Progressive change
What is meant by the marketing mix?
Means the way in which a business controls four elements to ensure the product is suitable for potential customers.
- Product
- Price
- Place
- Promotion
What is meant by product?
An object or service that is offered for sale to the customer.
It can be as simple as an apple or as sophisticated as an aircraft
What is a product portfolio? Give an example
The term give to the full range of products and brands produced by a business.
E.g. online shopping channel QVC has +15,000 items in its product portfolio
What is a unique selling point?
Something about a product that differentiates it from other products, used especially by brands. E.g. Dyson bagless vacuum
What is product depth and product breadth?
Breadth = no. of product lines within a business
Depth = no. of varieties within each product line
What is the design mix?
The 3 factors needed to create an effective product;
- Function
- Aesthetic
- Costs of production
What is meant by market orientation? Give 2 advantages
When a business bases it’s marketing mix on its perception of what the market/customers want
- Flexible to changes in taste and fashion
- New products are designed to meet customer needs
What is meant by the product life cycle?
Describes the stages that product goes through from its very beginnings until it’s final removal from the market
What are the 6 stages of a products life cycle?
- Development
- Introduction
- Growth
- Maturity
- Saturation
- Decline
What are extension strategies?
They are strategies used to prolong the long of a product
Why might a business use an extension strategy? Give 2
- May use them because a company has failed to bring out a new developed product to replace an ageing one
- May use them because a product has a decline in market share
What might an extension strategy include?
Change in colour,
name,
improvement or development of product,
relaunch with new advertising campaign
Give 3 factors that will effect an extension strategy:
- Competitors - if they introduced a new product
- Customers - if they are loyal, more likely to be effective
- Age of the product - if outdated product, unlikely to be effective
Give 1 advantage and 1 disadvantage to using an extension strategy:
Advantage:
May increase sales of a product in decline or saturation
Disadvantage:
It is costly
Give a summary of what a Boston matrix does:
Helps a business to decide on its spending priorities regarding products development and promotion
Explain the cash cow section of the Boston matrix:
Low growth, mature products with high market share. Little need for investment
Explain the star section of a Boston matrix:
Strong share of a high growth market making them very valuable. Profitable today and even more so in the future
Explain the problem child section of a Boston matrix:
Low share or a market in high growth, have potential if the right investment is put behind it
Explain the dog section of a Boston matrix:
Low market share in a low growth market, may create some sales revenue but not to be invested in
Give 6 of the pricing strategies used by businesses:
- Cost plus pricing
- Price skimming
- Penetration pricing
- Competition pricing
- Psychological pricing
- Contribution pricing
What is cost plus pricing? Give 1 advantage and 1 disadvantage:
Profit percentage is added to the cost per unit.
Advantage:
Price increases can be justified cost increases
Disadvantage:
Ignore price elasticity if demand
What is price skimming? Give 1 advantage and 1 disadvantage:
Sets a high price before other competitors enter the market
Advantage:
Greater profits from customers willing and able to pay premium price
Disadvantage:
Strategy can break down if competitors enter the market
What is penetration pricing? Give 1 advantage and 1 disadvantage:
Sets relatively low initial price to attract customers
Advantage:
Encourages customers to switch to new product = increasing market share
Disadvantage:
Profit levels are likely to be low, hard to make reputation for product
What is competition pricing? Give 1 advantage and 1 disadvantage:
Business must accept market price = PRICE TAKERS
Advantage:
Avoids price competition, can compete through other forms, such as promotion
Disadvantage:
Fixed market price may not cover production costs, of allow for much profit
What is physiological pricing? Give 1 advantage and 1 disadvantage:
When a business does the following, £9.99 instead of £10, to make the customer believe the product is cheaper
Advantage:
Perception that customer is receiving good value
Disadvantage:
May be recognised as gimmick to customer and may lose their trust
What is contribution pricing? Give 1 advantage and 1 disadvantage:
Making sure that the selling price covers fixed costs
Advantage:
Not only covers break even, but is making a profit
Disadvantage:
Price set may be higher than competitors
Give 7 things that a business must take into account when choosing the most appropriate price:
- USP
- Price elasticity if demand
- Level of competition
- Strength of brand
- Costs
- The need to make profit
- Where the product is in its life cycle
Give 2 reasons why it is important that a business selects the most appropriate pricing strategy:
- Vital aspect of customers decision to purchase a good or service
- Could lose customer loyalty if the price it seemed unfair
What is promotion and what does it involve?
Promotion is the attempt, through various forms of media, to draw attention to a product or service.
It involves communication with customers to provide information about a product to encourage consumers to make a purchase.
What is above the line and below the line marketing?
Above = communication that is paid for, e.g. TV advertising
Below = alternative promotional methods, e.g. leaflets
What is viral marketing? Give 1 advantage and 1 disadvantage:
Creating memorable and attention grabbing advertising for use in social media campaigns, with the hope that customer will share the advert
Advantage:
Can be cheap for smaller businesses
Disadvantage:
Cannot be repeated even if it is successful
What is emotional advertising?Give 1 advantage and 1 disadvantage:
Advertising that aims to appeal to customers needs and aspirations through their emotions
Advantages:
Often, emotional factors are a large part of purchasing decisions
Disadvantage:
Emotions are difficult to predict and engage with
What is meant by place?
Where the business sells it’s product/service.
It involves making sure that products are available to customers at the right place and time, in the right quantity
Give the 3 main distribution channels:
- Producer to wholesaler to retailer to customer
- Producer to retailer to customer
- Producer to customer
What is the main importance of place, to a business?
Key to products success and ability to maximise products
What is meant by multi-channel distribution?
Where a business uses more than one type of distribution channel.
E.g. Apple sells phones through websites, its own stores and retailers such as Carphone warehouse
What factors must be taken into consideration when selecting a location or distribution channel? (5)
- Customer choice and convenience
- Image business wishes to create
- Social trends (buying habits may change)
- Online distribution
- Changes from product to service, e.g. CDs to digital downloads
What are the 3 main types of branding?
Product - logo or packaging
Personal - use of celebrity
Corporate - business advertises a range of positive images
What is global marketing?
A strategy that aims to increase sales by marketing products/services internationally
What is globalisation? Give 1 example:
Business thinks about its overall marketing strategy globally but adapts ur to meet the needs of the local market.
E.g. McDonalds, customise menus and practices to suit local tastes
Give 4 ways that new technology is used in marketing:
Digital media, social media, E-tailing (using the internet) and M-commerce (using smartphones)
What is a producer?
Business that makes, grows or supplies goods or commodities for sale
What is a wholesaler?
Business that acts as a link between producer and retailer.
Buys in bulk and sells to resellers rather than customers
What is a retailer?
Business that sells good or services to the customer, directly
What are the impacts of technology on a business? (4)
- Costs - can be reduced in terms of advertising, e.g. social media
- Widens the potential audience
- Can target customers with tailored advertising based on purchasing habits
- Costs of the technology, it’s an investment
