Marketing Flashcards
marketing
meeting the wants and needs of customers so that marketings primary aim of increasing sales can be met
the marketing mix
4 Ps of marketing
price, product, promotion, place
each part affects the other
promotion
collection of techniques used to inform+persuade customers to buy a product or service
above the line promotion
uses media where there is no direct contact with potential customer
television advertising (above the line promotion)
reaches mass audiences
visual+sound easy to remember
very expensive
billboards (above the line promotion)
busy roads+traffic lights
more cost effective than tv
people less exposed bc they’re static
content needs to be concise
below the line promotion
business can contact customer directly
below the line promotion techniques
email personal selling telesales (phone) product sampling leaflet distribution trade fairs
personal selling
direct link between a customer and a sales persons
inclu. sales assistants,door to door+telesales
advantages of below the line promotion
target those who shown genuine interest in product
offer personalised service
disadvantages of below the line promotion
customers become frustrated so media is ignored
Above the line promotion techniques
Billboards Tv advertising Radio Magazines Cinema Sponsorship
Radio (above the line promotion)
Locally Reach large group Doesn’t need full attention Change radio station Expensive prime time spots
Magazine (above the line promotion)
Target certain group Well respected mag association Pass on to friends Flick past it Put at the back with others
Cinema (above the line promotion)
People from all sections of society Big impact big screen Audience can’t turn it off Arrive late Limited exposure
Sponsorship (above the line promotion)
Sports persons/team Product awareness Positive association Bad actions of sponsor linked Lack of control brand displayed wrong
Newspapers (above the line promotion)
National or local
what are the other two types of below the line promotion
branding
social media
branding
powerful for people to want to be associated with your brand
helps boost sales
social media
business website+social media pages directing target consumers
advantages of social media as a below the line promotion technique
more cost effective
personal customer interaction
social med boost traffic to website
easy to measure success
three social media strategies for promotion
cold sell
influencers/ambassadors
organic posts
disadvantages of social media
fail to respond/engage on sm=bad rep
costs of someone running it
influencer controversy
price
amount of money given up to obtain a good/service
cost plus pricing
adds % cost of making product to selling price
competitor pricing
based on prices charged by competitor
this price often lower to gain sales from rivals
price skimming
product more advanced/customers want to associate wi a particular brand
price is set higher
customers willing to pay
penetration pricing
business new to market
set prices lower to break customer loyalties
short term
marginal pricing
fixed+variable cost covered by current output
cost of producing extra unit only compromise variable cost
contribution pricing
price covers variable cost and gives a contribution to the fixed cost
psychological pricing
appeals to emotion over rational repsonses over price
e.g 0.99- would round down not up
price elasticity of demand formula
% change in demand/% change in price
how do you work out % change in demand
from a demand graph
what does it mean if price elasticity of demand is over 1
elastic in relation to price
what does it mean if price elasticity of demand is 1
its unit elastic (15% rise in price=15% contraction in demand)
what does it mean if price elasticity of demand is between 0-1
inelastic in relation to price
what does it mean if price elasticity of demand is 0
perfectly inelastic
demand doesn’t change when price does
What type figure does price elasticity usually come out as
Negative
Follows law of demand
Income elasticity of demand
Measure responsiveness of demand with changes in income
Formula for income elasticity of demand
% change in QD/ % change in income
What does it mean if income elasticity is more than one
They’re luxury products
What does in mean if income elasticity of demand is less than 1 but more than 0
Product is a necessity
Define cross price elasticity of demand
Responsiveness of demand for good x following a change in the price relating for good y
Formula for cross price elasticity of demand
% change in demand for good x/ % change in price for good y
Substitutes (cross price elasticity of demand)
Close substitutes have a strongly positive cross price elasticity
Complement (cross price elasticity of demand)
Strong relationship, highly negative
Unrelated products (cross price elasticity of demand)
Products have zero cross elasticity
Summary points for elasticity formulas
Marketers decide wether to increase/decrease price
Assumes you will know what happens demand as a result of a change in variable
This info won’t always be available/accurate
Product life cycle
Theoretical model which describes stages that a product goes through overtime
Four stages of the product life cycle
Introduction
Growth
Maturity
Decline
Key points of intro stages of product life cycle
Sales initially slow
Heavy promotion
Cash flow could be an issue
Penetration pricing used
Key points of growth stage of product life cycle
Sales increase quick Competitors become interested High promotion spending continues Adoptions to product made Increase distribution
Key points of maturity stage of product life cycle
Weak rivals leave market
Defend position from remaining comp
More improvement to product
Positive cash flow likely
Key points of decline stage of product life cycle
Tech advance,eco conditions + fashion fads=cause of decline
Drastic price fall (cost plus wi small %)
Limit distribution
What is an extension strategy
Product starts to decline
Don’t withdraw
use strategy to bolster sales
What are potential extension strategies
Advertising (potential new audience) Price reduction (more attractive) Add value Explore new markets (new geographical) New packaging
Benefits of a product life cycle
Helps with planning
Spot trends in previous life cycles, avoid pitfalls
Cons of the product life cycle
Too rigid e.g sales might dip in intro then rise again
Self fulfilling- product looks in decline so is discontinued, but just be a dip
Product positioning chart
Plotting products on a grid
In relation to two important market features
Why would marketers want to position a product in a highly saturated area of the market
Suggest high sales volume
Product portfolio
Collection of products produced by a business
How can a business analyse its product portfolio
With a product positioning chart
Why would a business want to ensure it has multiple products in a market
Increase sales Meet needs of multiple customer groups Compete with rivals Reduce risk Increase brand recognition
Boston Matrix
Tool used to identify where to allocate investment
Categorises products into one of four areas based on market share and growth
Four areas of Boston Matrix
Question marks (problem child)
Stars
Dogs
Cash cows
Summarise stars (Boston Matrix)
High growth products
Heavy investment to sustain growth
Growth will slow but if maintain market share will become cash cows
Summarise dogs (Boston Matrix)
Low market share in low growth market
Might have enough cash to break even, rarely invest
Usually closed/sold
Summarise question marks/problem child (Boston Matrix)
Low market share, high growth market
Have potential but need substantial investment
Hardest products to make decisions on
Summarise cash cows (Boston Matrix)
Low growth product, high market share
Little need for investments
Need to be managed for consistent profit
Can generate strong cash flow to fund stars
Benefits of the Boston Matrix
Identify stars to invest in
Identify cash cows to reduce investment
See which question marks to invest in
Why is the Boston Matrix limited
Other indicators which determine which stars to invest
Cash cows may still require advertising to maintain market share
Doesn’t identify the question marks to invest in
Define place
How the product is distributed
Channels of distribution
Provides link between production
Retailer
Responsible for selling the final product to the consumer
Types of retailing
Multiples (chains) Department (John Lewis) Convenience (costcutter) Independents (shop run by owner) Franchises
Key trends in retailing
Growth in out of town stores
Decline in independents
Increased use of tech in retailing
Role of a wholesaler
Good for producers can’t deal wi every shop it sells to
Help small shops (can’t bulk)
Have own logistics
Allow producer+retailer focus on specialist areas
Agent
Negotiate between seller+buyer
E.g admiral
Key points about agents
Tertiary sector
Usually on commission
Don’t hold stock
Reduce cost of marketing
What is channel 3 also called
Direct marketing
Why have channels of distribution changed
From 1-2= increase size of supermarkets
From 2-3= internet sales
What is online distribution
Tangible product being purchased online
Delivered by physical distribution
What is digital distribution
Electronic methods to deliver good
Downloadable
Advantages of online distribution
Geographical reach increase
Overhead lower e.g don’t need physical stores
Open all times
Drawbacks of online distribution
Shipping+returns complicated
High initial capital investment
Some like to try before buy
Security problems
Advantages of digital distribution
Convenient
No physical stores
No delivery costs
Disadvantages of digital distribution
Not suitable for all products
Customers need Internet
Ongoing cost of systems+security
Illegal streaming competition
Physical distribution
Physical method business used to distribute goods
Types of physical distribution
Air-perishable
Road-smaller distance
Sea shipping- big bulky products
Service marketing
How business increases sales for an activity that a business does for you. Intangible in nature
Additional 3 Ps/ extended marketing mix
People
Process
Physical evidence
People extended marketing mix
Make contact with customer to deliver product
Process extended marketing mix
Systems and processes that deliver a product to a customer
Physical evidence
Elements of the physical environment the customer experiences
Viral marketing
Use of social media sites to increase brand awareness
Will be shared like a computer virus
Drip marketing
Automated process send a set of messages
E.g ‘new season’ emails from clothes brands
Why does drip marketing work
Increases visibility
Remind customer of business
Why does viral marketing work
Shared instantly
Examples of physical evidence
Uniform
Appearance
Cleanliness
Examples of process
Website layout
Booking
Mobile apps
Examples of people
Customer service
Friendliness
Capability
