Marketing Flashcards
Market
all the producers and consumers of a given product
Marketing
the anticipation, identification, creation and satisfaction of consumer needs and wants
Product oriented firm
a business that focuses on production processes and products
Market oriented firm
a business that focuses on identifying consumer needs and wants using market research
Marketing mix
the combined elements of a marketing strategy focused on the design, price, promotion and place of sale of a product
Niche marketing
a marketing strategy aimed at a small, specialised market
Niche market
a small part or segment of a large market consisting of consumers with specialised tastes or preferences.
Market conditions
features or characteristics of a given market, including the degree of competition between producers and the numbers, types and spending levels of different groups of consumers.
Expanding market
a market in which a consumer demand and sales revenues are rising over time; there is an upward trend in sales
Contracting market
a market in which a consumer demand and sales revenues are falling over time; there is a downward trend in sales
Disposable income
personal income that is available to spend or save after the deduction of taxes
Price competition
rivalry between similar businesses over the selling prices of their competition
Non-price competition
rivalry between businesses over different features of their products, such as quality, image, and packaging, and their customer services, after-sales care and advertisements
Market segmentation
grouping together consumers who have similar characteristics, preferences and buying habits
Market segment
an identifiable group of individual or business consumers sharing similar characteristics or preferencesan identifiable group of individual or business consumers sharing similar characteristics or preferences
Target market
a group of consumers that a business will design its products and marketing strategies to appeal to
Lifestyle segmentation
dividing up consumers into groups according to their hobbies, interests and opinions
Socio-economic group
a group of consumers with similar social, economic and/or educational status
Name the objectives of marketing
Raise consumer awareness of a product Improve brand image Maintain or increase market share Enter new markets Maintain customer loyalty and retention Maintain or increase sales and profits
Explain Product from the 4Ps
The design and quality of the product and its packaging. How it compares to rival products
Explain Price from the 4Ps
Price at which the product is sold and the pricing strategies that are used. What kinds of pricing strategies exist?
Explain Place from the 4Ps
Channels of distribution to final customers. Where and how the product is sold
Explain Promotion from the 4Ps
Brand name and product image; advertising and other promotions to raise consumer awareness
Explain the advantages and disadvantages of mass marketing
Advantages: Creates opportunities for business expansion, increased sales and profits, business can benefit from marketing economies of scale
Disadvantages: More competition, mass marketing can be expensive as it has to apply to everyone
Explain the advantages and disadvantages of niche marketing
Advantages: less competition, product quality becomes more important rather than price, customers willing to pay a higher price, lower advertising costs
Disadvantages: opportunities for sales and growth are limited, many niche companies that specialize in only one product are at risk of failing
What are the advantages of market segmentation?
Marketing becomes more effective, ability to appeal to the preferences of those consumers in the different market segments. Gaps in the market can be identified. Increase in sales and profits
Market Research
The collection and analysis of data about consumers’ preferences, spending patterns and other market conditions
Quantitative data
numerical information
Qualitative data
written or verbal information
Primary research
new data collection from “field research”
Secondary research
desk-based research using data from existing sources
Test Marketing
a limited field trial of a new product or promotion to test consumer reaction
Random sampling
choosing consumers to interview or survey at random
Quota Sampling
choosing consumers to interview according to pre-specified characteristics, such as age or sex
Sampling Bias
choosing consumers to interview or survey who are not fully representative of those in the target population in terms of their characteristics, buying behaviour, tastes or opinions
Market Leader
the firm with the largest share of a market or market segment measure by its share of the total number of units sold or total value of sales per period
Name methods of primary data collection
Face to face interviews
Telephone and online surveys
Postal surveys
Consumer panels – asking a group of customers or “focus group” to give their opinion on new products
Observation (e.g. counting the number of shoppers visiting a shopping mall at different times of the day)
Test marketing (also called field trials) – used to test a focus group of the market before releasing the product to the whole market.
What are internal sources?
Internal sources are accounting records; stock records; records of customer orders; sales records showing variations in sales over time, by season and by area; opinions of retailers
What are examples of external sources?
External sources are:
Government reports and statistical publications
Market reports published by specialist market research organisations
Newspapers magazines and journals
Trade associations
Publications from competing organisations
The Internet
What are some sources of inaccurate market research?
Sampling bias – abiasin which asample is collected in such a way that some members of the intended population are less likely to be included than others.
Questionnaire bias – can happen due to misleading or badly worded questions.
Response bias – is the tendency of a person to answer questions on a survey untruthfully or misleadingly. For example, they may feel pressure to give answers that are socially acceptable.
Other – biased results may have been presented on purpose; or statistics may be out of date and may not reflect the latest market trends.
Product benchmarking
comparing rival products so that a firm is able to match or improve on them
Reverse engineering
taking apart competing products to discover their strengths and weaknesses and how they were made
Branding
the process of creating distinctive and durable perceptions of a product in the minds of consumers
Brand name
a name used to identify and distinguish specific goods, services or businesses from others
Product life cycle
the profile of sales and profitability of a product over its commercial lifespan
Extension strategies
marketing methods used to extend sales and the profitable life of a mature product
Product portfolio
the range of different products produced and marketed by a business at any given point in time
Cost plus pricing
adding a mark-up for profit over the average cost of producing a product
Destruction pricing
: strategy where a product or service is set at a very lowprice, intending to drive competitors out of the market, or create barriers to entry for potential new competitors
Price war
intense price competition between rival businesses
Price skimming
setting the initial price high at product launch in order to maximise profit in the short run when where is little or no competition
Penetration pricing
setting price low at a product launch to encourage sales and consumer acceptance of the new product
Promotional pricing
reducing the price of a product for a short period of time to boost sales
Psychological pricing
using prices to influence consumer perceptions of a product
Price elasticity of demand
the responsiveness of consumer demand to a change in price
Price elastic demand
when a small change in price causes a significant change in demand
Price inelastic demand
when a chance in price causes only a small change in demand
Logistics
the process of planning, implementing, and controlling procedures for the efficient and effective transportation and storage of goods. Includes managing inventories, transportation and distribution systems
Distribution channel
the people and organisations involved in the physical movement and transfer of goods and services from producers to consumers
Retailer
a business organisation specialising in the sale of products to consumers
Wholesaler
an intermediary that buys and stores products in bulk from producers and sells small quantities to retailers
Delivery lead time
the time lag between placing an order for a product and its delivery
Above-the-line promotions
marketing communications using mass advertising media
Below-the-line promotions
marketing promotions that do not use mass media
Informative advertising
advertising that provides factual information about goods, services or organisations. This helps increase product credibility and generate good reputation. Governments use informative advertising
Persuasive advertising
advertising designed to influence consumer preferences, encourage brand switching and increase sales.
Public relations
actions to establish and maintain a good company and product image with the general public
Point-of-sale promotions
promotions targeted at the customer at places where a product is displayed or sold
Personal selling
face to face marketing communications with a customer
Marketing budget
the money allocated to the marketing of a product
What is a product life cycle? Explain the stages
A product life cycle describes the stages a product goes through in relation to sales and revenue from when it was first thought of until it finally is removed from the market. The main stages are introduction, growth, maturity, and decline Other stages include product development and extension
What are extension strategies?
Strategies used to extend the maturity stage of a product. These include finding new markets for the product, adapting the product or the packaging to improve its appeal to consumers, increased advertising and other promotional activities (longer warranty periods; free delivery)
What do businesses have to consider when setting the price of a product?
Costs of production and level of profit required
Amount of competition
The level and strength of consumer demand
Is the product unique?
Brand image?
Marketing objectives?
Explain the advantages and disadvantages of having 2 distribution channel
Producer – Consumer
Advantages: Business retains full control of the distribution channel
Can build close relation ship with consumers
Distribution cost are lower because there is no middle man adding mark up
Producer controls all parts of the marketing mix
Quickest method of getting the product to the customer
Disadvantages: Consumers are not always able to try before they buy
Delivery costs may be high if there are customers over a wide area
Storage costs must be paid for by producer
All promotional activities must be carried out and financed by the producer
Explain the advantages and disadvantages of having 3 distribution channels
Producer – Retailer - Consumer
Advantages: Consumers can try the product before buying
The cost of holding inventories of the product is paid by the retailer
The retailer will pay for advertising and other promotional activities
Retailers are usually more conveniently located for consumers
Disadvantages: The retailer takes some of the profit away from the producer
Business has no relationship with final consumers of its product
The producer must pay for delivery costs to the retailers
Retailers usually sell competitors products as well
What does a wholesaler do?
acquires goods from a manufacturer, farmer or miner, holds them in a distribution center and then sells them to retailers
Give examples of Above the Line promotion
Uses mass advertising media to increase sales. e.g. TV, Radio, Newspapers
Give examples of Below the Line promotion
Uses product placement and endorsements by famous celebrities; public relations; personal selling; and sales incentives
Why is brand loyalty important?
Repeat purchases from loyal customers who continue to buy the product even if the competitors product is more appealing. Protects market share. Customers may pay a higher price for the brand. Reduces price elasticity of demand for the product
Marketing Strategy
a plan detailing the marketing objectives of a business and the actions and resources needed to achieve them
Customer protection laws
legal controls on businesses designed to protect consumers from misleading or inaccurate marketing claims, unfair trading practices and the production and sales of damaged, faulty or dangerous
Market entry
targeting promotion and sales of a new or existing product at a group of consumers, often overseas, that has not previously been targeted by the producer
What are some examples of marketing strategies?
Grow sales of an existing product
Grow sales with new products: Introducing updated versions or extensions of current products; and introducing new and innovative products
Grow market share: Often relies on aggressive marketing tactics as growing market share can only be achieved by taking away sales from competitors
Gain sales in a niche market
Maintain the status quo: Important if product is reaching maturity and competition is increasing. Strategy aims to maintain the same level of market share.
Exit a market
What are the problems of entering overseas markets?
Language barriers, different cultures, customs and tastes, different legal controls and taxes, exchange rate risks, increased risks of non-payment
