Marketing

Question 1

Marketing

Answer 1

Marketing is about meeting the needs and wants of customers so that marketing’s primary aim of increasing sales can be made.
DON’T SAY THIS WILL LEAD TO INCREASED PROFITS AS IT’S MARKET SHARE.

Question 2

Promotion

Answer 2

The collection of techniques used to inform and persuade consumers to buy a product or service.

Question 3

Above the line

Answer 3

Is promotion which uses media where there is no direct contact with the potential customer.

Question 4

Below the line

Answer 4

Is promotion where the business can directly contact the potential customer.

Question 5

BELOW THE LINE STRATEGIES

Answer 5

Personal selling (when there is a direct link between the customer and the sales person. It includes sales assistants, door-to-door sales etc.
Trade fairs
Email
Telesales
Leaflet distribution

Question 6

ABOVE THE LINE STRATEGIES

Answer 6

Radio
Magazines
Cinema 
Sponsorship
Newspapers

Question 7

Cold sell

Answer 7

To make a sale to a client that is not a lead.

Question 8

Price

Answer 8

The amount of money that a customer needs to give up in order to obtain a product or service.

Question 9

Cost-plus pricing

Answer 9

This is a pricing method that adds a percentage to the cost of making a product to give the selling price.

Question 10

Competitive pricing

Answer 10

This is when a price is set based on prices charged by competitor businesses for a similar or identical product. This price is often lower to gain sales from rivals.

Question 11

Price skimming

Answer 11

This is where a product is more advanced than that of competitors and or/ customers want to associate with a particular brand, and therefore a price is set high because customers are willing to pay higher prices to own that product.

Question 12

Penetration pricing

Answer 12

When a business is new to a market, a price is set lower than competitive businesses. This is a short-term strategy to help break customer loyalties from trusted brands.

Question 13

Marginal pricing

Answer 13

Marginal pricing is based on the assumption that since fixed and variable costs are covered by the current output level, the cost of producing any extra unit will be made up of only variable costs. Hence, any amount by which the selling price exceeds the variable costs become subject to marginal output will become profit.

Question 14

Contribution pricing

Answer 14

Contribution pricing involves setting a price based on variable cost of producing or buying a product. The aim is to ensure the selling price generates an acceptable contribution towards covering fixed costs of business.

Question 15

Psychological pricing

Answer 15

A pricing tactic that is designed to appeal to customers who use emotional rather than rational responses to pricing messages.

Question 16

Price elasticity of demand

Answer 16

The responsiveness/sensitiveness of quantity demanded for a product to a change in price.

Question 17

Income elasticity of demand

Answer 17

Measures responsiveness of demand to a change in income.

Question 18

Cross price elasticity of demand

Answer 18

This measures the responsiveness of demand for good x following a change in price of a related good y.

Question 19

Product life cycle

Answer 19

A theoretical model which describes the stages that a product goes through over time.

Question 20

Price elasticity of demand (PED)

Answer 20

% change in demand/ % change in price

Question 21

Income elasticity of demand (IED)

Answer 21

% change in demand/ % change in income

Question 22

Cross price elasticity of demand (XED)

Answer 22

% change in demand for good x/ % change in price of good y

Question 23

Extension strategy

Answer 23

At some point, sales begin to decline and the business has to decide to withdraw the item or use an extension to support sales.

Question 24

How to extend the life cycle of a product?

Answer 24

Advertising 
Price reduction 
Adding value (new features to a product)
Explore new markets 
New packaging

Question 25

Product positioning

Answer 25

Plotting a grid where each product sits on scales based on two important features of a market. Eg to meet needs and wants of target customers.

Question 26

Product portfolio

Answer 26

Collection of products.

Question 27

Boston matrix

Answer 27

A business with a range of products has a portfolio of products. It must decide how to allocate investment across the portfolio. This decision can be made after analysing the portfolio using the boston matrix.
This categorises the products into one of four different areas, based on market share and growth.

Question 28

Stars

Answer 28

High growth products competing in markets where they are strong compared to competition.
Often stars need heavy investment to sustain growth. Eventually, growth will slow, and assuming they keep their market share, stars will become cash cows.

Question 29

Dogs

Answer 29

Usually sold or closed.
Dogs refer to products that have a low market share in unattractive, low-growth markets.
Dogs may generate enough cash to break-even, but they’re rarely worth investing in.

Question 30

Question marks

Answer 30

Are products with low market share operating in high growth markets.
Suggest they have potential, but may need substantial investment to grow market share at expense of larger competitors.
Management have to think hard about ‘Question Marks’, which ones should they invest in?

Question 31

Cash cows

Answer 31

Are low growth products with a high market share.
These are mature, successful products with relatively little need for investment.
They need to be managed for continued profit, so that they continue to generate strong cash flows that the company needs for stars.

Question 32

Place

Answer 32

Refers to how product is distributed.

Question 33

Channels of distribution

Answer 33

A distribution channel provides a link between production and consumption. It can be very simple, with just two layers (producer and consumer). However, it can be more complicated, with several layers.

Question 34

Producer

Answer 34

The manufacturer of a product.

Question 35

Retailer

Answer 35

Responsible for selling the final product to the consumer. Retailers include;
Chains of stores, multiples.
Department stores
Convenience stores
Independents
Franchises

Question 36

Wholesaler

Answer 36

Purchases great quantities of products then stores them in storage then sells to stores and shops. Act as a third party and to break bulk.

Question 37

Agent

Answer 37

A third party who negotiates between producer (seller) and buyer, eg ticketmaster.

Question 38

Online distribution

Answer 38

Refers to a tangible product being purchased online and delivered to the customer by means of physical distribution.

Question 39

Digital distribution

Answer 39

Refers to electronic methods being used to deliver a good to the customer.

Question 40

Physical distribution

Answer 40

Refers to how a business moves goods. Eg air transport, road transport and sea-shipping.

Question 41

Service marketing

Answer 41

Concerns marketing for a service.
How a business increases sales for an activity that a business does for you.
It is a stand alone topic because marketing will have to differ from that of a product.

Question 42

3 additional P’s

Answer 42

1) People - the people who make contact with customers in delivering the product.
2) Process - systems and processes that deliver a product to a customer.
3) Physical evidence - the elements of physical environment the customer experiences.

Question 43

Viral marketing

Answer 43

Involves the use of social media sites to increase brand awareness and is so-called because the advert will be shared.
Works as people want to experience the product themselves.

Question 44

Drip marketing

Answer 44

Drip campaigns are automated processes that send messages (usually emails) to customers to move them through the sales cycle. Eg sending ‘new season’ from clothes retailers to customers.
Works as it can help break a customer down, then they decide to view the advertisement and pay interest in it.

Question 45

Marketing objectives

Answer 45

Set out what a business wants to achieve from its marketing activities. They need to be consistent with overall aims and objectives of the business.