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BUSINESS STUDIES (COMPONENT 1) > MARKETING > Flashcards

MARKETING Flashcards

1
Q

What is marketing?

A

The management process involved in identifying, anticipating and satisfying customer requirements profitably

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2
Q

What does marketing involve?

A
  • researching the market (about customer, market place and competition)
  • analysing market
  • setting marketing goals
  • developing marketing structure
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3
Q

What is market orientation?

A

When a business bases its marketing mix on its perception of what the market wants

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4
Q

What is product orientation?

A

When a business bases its marketing mix on what the business sees as its internal strengths

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5
Q

What is asses-led marketing?

A

When marketing decisions are based on the need of the consumer and the strengths of the business

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6
Q

What are advantages of market orientation?

A
  • flexible to changes in taste and fashion
  • decisions based on effective market research
  • new products designed to meet customers needs
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7
Q

What are disadvantages of market orientation?

A
  • high costs of market research to understand the market
  • unpredictable changes in the future
  • constant internal changes as the needs pf the market are met
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8
Q

What are advantages of product orientation?

A
  • focus on product development
  • easier to apply product management methods
  • focus on product development
  • focus on quality
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9
Q

What are disadvantages of product orientation?

A
  • changes in the market structure will not be responded to

- fashion and taste are not accounted for in the product mix

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10
Q

What are advantages of asset-led marketing?

A
  • maximising return from assets

- quality of output

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11
Q

What is a product?

A

Any good or service offered for sales to customers

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12
Q

What is the purpose of product portfolios?

A
  • spread fixed costs
  • allows targeting for larger market
  • smooths out overall sales
  • creates opportunities for growth
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13
Q

What is the purpose of branding

A

Brand names given to differentiate it from other similar products

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14
Q

What are advantages of branding?

A
  • increase customer loyalty, important when competition is intense
  • increases price inelasticity of demand, gives greater control over pricing strategies
  • ease customer choice
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15
Q

What are disadvantages of branding?

A
  • high cost of advertising
  • brands invite competitor, though copycat manufacturers
  • high cost of research and development
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16
Q

What does the unique selling point mean?

A

That the product or service has a feature or features that can be used to separate it from the competition

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17
Q

How can a product be differentiated?

A
  • methods of promotion
  • packaging (eg: eco packaging)
  • quality and reliability
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18
Q

What does the product life cycle show?

A

The different stagers that the sales of a product passes through over time, from introduction to withdrawal from the market

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19
Q

In a product life cycle what order are the stages in?

A 
Development
Introduction
Growth
Maturity
Decline
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20
Q

Describe the changes to the a product life cycle graph

A
  • starts at introduction
  • peaks at maturity
  • begins to decline at decline
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21
Q

Describe the development stage of the product life cycle

A

BEFORE IT REACHES MARKET

  • numerous ideas created and analysed, only few make it through development
  • complete test marketing, decide whether commercial needed for the product (will it be profitable? etc)
  • expenditures can be high, creating negative cash flow- made but not sold
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22
Q

Describe the introduction stage in the product life cycle

A
  • marketing costs are high (trying to get brand known)
  • negative cash flow likely to continue, due to high marketing costs and low sales
  • carefully monitored for growth otherwise may need to withdraw end product
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23
Q

Describe the growth stage of the product lifecycle

A
  • characterised by rapid growth in sales and profits, firms aim to maximise sales in this stage
  • positive cash flow due to increase in sales revenue
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24
Q

Describe the maturity stage of the product lifecycle

A
  • competition most intense as companies fight to maintain their market share
  • marketing key to maintaining sales
  • most profit earned in this stage, cashflow= positive and high
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25
Q

Describe the decline stage of the product life cycle

A
  • decrease in profit
  • reduce production costs
  • care needs to be taken to control the amount of stocks of the product
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26
Q

What are extension strategies?

A
  • techniques used by a business to prolong the life of a product
  • objective is to maintain and hopefully increase sales and profits of the production
  • lifts sales from their decline, showing an upturn in the product life cycle
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27
Q

What are examples of extension strategies?

A
  • changing the product (eg: new flavours, new features)

- increasing promotion or changing promotional methods (eg: repackaging, tragedian new markets)

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28
Q

What do extension strategies lead to?

A
  • increase sale revenue generated from the product for a longer period of time
  • ability ton respond to trends
  • cheaper and lower risks than new product development
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29
Q

What is the Boston matrix?

A

A useful tool in analysing a firms product portfolio
Asses two aspects:
-market growth
-market share

30
Q

Why is the Boston matrix useful?

A
  • ensure they have a good balanced portfolio- this then avoids the problem, of too many products in one category
  • helps management to take appropriate decisions on each type of product
31
Q

What are criticisms of the Boston matrix?

A
  • only focuses on market share and growth and although this might imply profitability
  • products can have erratic sales performances so it can be difficult to allocate to one part of the BM
  • has little to no predictive value
  • doesn’t take into account of environmental factors
32
Q

What are the six types of pricing?

A 
Penetration
Skimming
Cost-plus
Competitive
Psychological 
Contribution
33
Q

Describe penetration pricing

A
  • involves setting low initial price for new product in order to gain a market
  • may be a suitable pricing strategy for a product in Maas market
  • firm will release a new product at a low price with the aim of enticing people to buy
  • aim to earn early customer base
34
Q

Describe price skimming

A
  • set high initial price for a new product in order to recoup costs
  • when a firm releases a new product it often changes a high price targeting segment of the market known as ‘early adopters’
35
Q

Describe cost pricing

A

-when a percentage mock up is added to the cost of producing a good or service to calculate the selling price
Variable costs + proportion of fixed costs + % mark up
% mark up= how much a business wants to achieve as profit

36
Q

Describe price leaders

A
  • firms that dominate the market with an existing product set the price and other firms in the market follow suit
  • illegal for firms to get together to set prices in order to increase the total value of the market
  • smaller firms look at larger firms and determine their prices off that, often set lower
37
Q

Describe price takers

A

-smaller firms in the market who set their price based on market price, may have been set by market leader or a competitive market where firms sell similar products

38
Q

Describe psychological pricing

A

-occurs when a firm sets a price for the product in order to entice the customer into making purchase as it sounds cheaper than it actually is
Eg: 99p

39
Q

Describe contribution pricing

A

-prices are set to cover the variable costs of making a product and make a contribution towards
>fixed costs
>profit once- all fixed costs are covered- contribution becomes profit contribution= selling price- variable costs

40
Q

Whats the importance of price strategies?

A

-helps meet objectives
>high sales for a new product
>protect market share
>high profits to invest in future R and D

41
Q

The importance of pricing strategies depends on…

A
  • poor market research
  • poor assessment of own product
  • lack of awareness of different pricing methods and tending to stick with one, often cost plus
42
Q

Define place

A

Physical location where a product is available as well as the distribution channel it has travelled through to get from the manufacturer to the customer

43
Q

How do you get the right place?

A

-products must be available where customers want to go and buy
-also must suit the target market
>eg: expensive designer brands sold through outlets and department stores
-products need to be available to customers at the time they want to buy them
>increase quantity of toys at xmas

44
Q

Define distribution

A

The process of getting the firms product to the main market

Distribution channels the routers to the market that products take from producer to final customers

45
Q

What are examples of distribution channels?

A
  • short DC= producer sells either directly to customer or through retailer
  • long DC= more than one intermediary (middle person) between producer and customer
46
Q

What are the types of distribution channels?

A 
Traditional (long)
1. manufacturer 
2. wholesaler 
3. retailer 
4. consumer 
Modern (medium)
1.manufacturer 
2. retailer 
3. consumer 
Direct (short)
1. manufacturer 
2. consumer
47
Q

What is a manufacturer/ producer?

A

Organisations that take raw materials and process them into finished or semi-processed goods
-operate in secondary sector of the economy if the economy such as housing or car production

48
Q

What is a wholesaler?

A

Buy large quantities of supplies from producer and sell them in smaller quantities
-intermediary between manufacturers, retailers and consumers

49
Q

What is a retailer?

A

Organisations that sell goods or services to the general public

  • at the end of channel distribution
  • intermediary between producer, wholesaler and consumer
50
Q

How to producers sell directly to consumers?

A
  • internet- via website
  • direct mail- consumers receive and respond to postal promotional material
  • direct selling- door to door
51
Q

How to manufacturers sell to retailers then to consumers?

A
  • shops
  • supermarkets
  • outlet
  • department stores
52
Q

What are advantages of selling through a retailer?

A
  • remove cost of promoting and distributing goods direct to consumer
  • retailers buy large quantities, which increases sales for manufacturers
  • sell in convenient locations, customer likely to repeat purchase
53
Q

What are drawbacks of selling through a retailer?

A

-retailer will expect to factor in their own profit margin, will expect to buy at lower price than manufacturers could sell directly to customers= decrease in profit margin

54
Q

Manufacturer to wholesaler to retailer to consumer

What are their roles?

A
  1. break bulk- buy large quantities from the manufacturers (good for their sales) and sell in smaller quantities to retailers (avoid lots of unsold products)
  2. provide credit to buyers, easing their cash flow- buyers receive goods immediately and pay later (usually once sold goods)
  3. provide convenient location for collection of goods to buyers
55
Q

What is the importance of promotion?

A

-aware of the product
>important for new businesses/ businesses launching new products
-reach target audience which might be geographically dispersed to maximise sales
-encourage repeat sales
-better than competition
-develop product image

56
Q

Define promotion

A

Component of marketing mix that informs and persuades customers about the product in order to sell that product. Promotion is designed to create awareness, interest, desire and action

57
Q

Define promotional mix

A

Combination of promotional activities that a firm uses in order to create consumer awareness and generate sales

58
Q

Define below the line promotion

A

Promotional methods where the business has direct control over the methods used
Short term incentives, largely aimed at the target market and is far more personal, does not include mass advertising techniques

59
Q

What are the internal influenced factors to consider in promotional decisions?

A

Segmentation, targeting and positioning process

60
Q

What are the external influences factors to consider in promotional decisions?

A
  • technology
  • competitors actions
  • environmental issues
61
Q

What is it important to choose promotional strategies appropriately?

A
  • complement other elements of the marketing mix
  • within budget, effective use of budget
  • appeal to target market
  • support brand image
62
Q

Define above the line promotion

A

Promotion through independent media that allows a business to reach a wide audience easily
Can be seen by anyone

63
Q

What are types of above the line promotion

A

Internet
Television
National and local newspaper
Radio

64
Q

What is digital marketing

A

Any media that is encoded into a machine

e.g. websites

65
Q

What is social media

A

Website and applications that enable users to create and share content or to participate in social networking

66
Q

What is E-tailing/E-commerce

A

The sale of goods and services through the internet electronic retailing, or e-tailing, can include the business to business or business to customer

67
Q

What is m-commerce

A

The use of wireless handheld devices such as mobile phones to conduct commercial transactions online

68
Q

Briefly describe a star (BM)

A

High market share and growth

Not as profitable, high R&D

69
Q

Briefly describe a cash cow

A

High market share but low market growth

Successful products, high profits

70
Q

Briefly explain a question mark/problem child

A

Low market share but high growth

Not very sustainable as low market growth in fast growing market

71
Q

Briefly explain a dog

A

Low growth and share worst place to be in market

Generate enough cash to breakeven but not highly invested in

BUSINESS STUDIES (COMPONENT 1) (7 decks)

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