Marketing Flashcards
Marketing
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.
Promotion
The collection of techniques used to inform and persuade consumers to buy a product or service.
Above the line
Is promotion which uses media where there is no direct contact with the potential customer.
Below the line
Is promotion where the business can directly contact the potential customer.
BELOW THE LINE STRATEGIES
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
ABOVE THE LINE STRATEGIES
Radio Magazines Cinema Sponsorship Newspapers
Cold sell
To make a sale to a client that is not a lead.
Price
The amount of money that a customer needs to give up in order to obtain a product or service.
Cost-plus pricing
This is a pricing method that adds a percentage to the cost of making a product to give the selling price.
Competitive pricing
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.
Price skimming
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.
Penetration pricing
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.
Marginal pricing
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.
Contribution pricing
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.
Psychological pricing
A pricing tactic that is designed to appeal to customers who use emotional rather than rational responses to pricing messages.
Price elasticity of demand
The responsiveness/sensitiveness of quantity demanded for a product to a change in price.
Income elasticity of demand
Measures responsiveness of demand to a change in income.
Cross price elasticity of demand
This measures the responsiveness of demand for good x following a change in price of a related good y.
Product life cycle
A theoretical model which describes the stages that a product goes through over time.
Price elasticity of demand (PED)
% change in demand/ % change in price
Income elasticity of demand (IED)
% change in demand/ % change in income
Cross price elasticity of demand (XED)
% change in demand for good x/ % change in price of good y
Extension strategy
At some point, sales begin to decline and the business has to decide to withdraw the item or use an extension to support sales.
How to extend the life cycle of a product?
Advertising Price reduction Adding value (new features to a product) Explore new markets New packaging
Product positioning
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.
Product portfolio
Collection of products.
Boston matrix
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.
Stars
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.
Dogs
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 marks
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?
Cash cows
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.
Place
Refers to how product is distributed.
Channels of distribution
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.
Producer
The manufacturer of a product.
Retailer
Responsible for selling the final product to the consumer. Retailers include; Chains of stores, multiples. Department stores Convenience stores Independents Franchises
Wholesaler
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.
Agent
A third party who negotiates between producer (seller) and buyer, eg ticketmaster.
Online distribution
Refers to a tangible product being purchased online and delivered to the customer by means of physical distribution.
Digital distribution
Refers to electronic methods being used to deliver a good to the customer.
Physical distribution
Refers to how a business moves goods. Eg air transport, road transport and sea-shipping.
Service marketing
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.
3 additional P’s
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.
Viral marketing
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.
Drip marketing
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.
Marketing objectives
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.
