Marketing Flashcards
What three objectives might the marketing department have?
- reach a certain level of sales
- increase market share
- reach a new target audience
What are the advantages of setting objectives?
- helps identify what it hopes to achieve
- good way of motivating
- helps business rank projects so that money can be targeted
- allows the business to assess performance
What are the disadvantages of setting objectives?
- may look at every part of marketing except the customer
- have to endure other departments of the business are on board
- need to have specific objectives
- must take the external situation into account
What is market share?
Proportion or percentage of total sales within the market in question that is controlled by the business
How might a business assess success?
- sales
- market share
- number of enquires
- satisfaction surveys
What factors need to be taken into account before a marketing strategy?
- business objectives
- size of the business
- nature of the market
- management changes
What might a market leader strategy be? And what is it?
Every market has one dominant firm in the market. These leaders use a variety of strategies to maintain their position
- aggressive marketing
What is a SWOT analysis?
Involves looking at strengths, weaknesses, opportunities and threats for a business
What are the uses of SWOT analysis?
- used as a forward looking tool
- useful for discussion and planning
Why is market research undertaken?
In order to;
- describe the market
- explain the market
- predict the changes in the market
- investigate the reaction of consumers in the future
What is quantitative research?
Research that is numerical and factual.
What is qualitative research?
Research that is subjective and opinion based
What is an example of primary research?
- Interviews
- questionnaires
- focus groups
- consumer panels
What is secondary research?
Data that already exists
What are examples of secondary research?
- sales data
- previous survey results
- customer information
- company reports
What are examples of external sources of data?
- market research companies
- the internet
- trade publications
- newspapers and magazines
- competitors
- government statistics
What is trial marketing?
Where the business “tests the water” before going ahead with a full launch of the product.
What are the advantages of trial marketing?
- can be done at almost no cost, feedback can be instant
What are the advantages of primary research?
- allows the business to change variables such as questions
- in full control of the research
- no bias
- comes from a reliable source
What are the advantages of secondary research?
- cheaper than others
- quicker
- may come from experts
What is population?
Total group included in the sample
What is simple random sampling?
Where individuals are randomly selected from a list of the population, and every single individual has an equal chance of selection
What is systematic sampling?
Where you choose every “nth” of the population e.g. every 4 people
What are the problems with systematic sampling?
May result in some sort of bias
What is quota sampling?
Involves splitting the population into sub-groups according to their distribution in the population
What is stratified sampling?
Where you split the population into sub groups (strata) based on characteristics of the population. The selection is then done in the stratum usually by random.
What is cluster sampling?
the total population is divided into groups and a simple random sample of the groups is selected
Why might the research have errors?
- non sampling errors, interviewer may have emotions etc.
- differences in averages
What is meant by sampling?
the action or process of taking samples of something for analysis.
How do you work out the mean?
Add up all the values and divide by how many values there are
What shape is normal distribution?
Bell shaped
What is standard deviation
How spread out the data is
What does a large standard deviation mean?
There is a larger spread of data around the mean
What is the formula for standard deviation?
1) (Each value from the population - population mean) squared
2) divide the answer from 1 by the size of the population
3) square root this answer = population standard deviation
how might a business segment a market?
- Age
- geography
- gender
- social class
- residence
- religion
How is social class split up?
- A
- B
- C1
- C2
- D
- E
What are the disadvantages of market segmentation?
- exclude other segments of the market
- too much segmentation may mean potential sales are lost
- hard to categorise certain consumers
What is the formula for market share?
Sales volume/sales volume for whole market x 100
What are the advantages of using market share?
- can assess performance and competitors
What factors might affect market growth?
- nature of the product
- changes in fashion and taste
- population changes
- standard of living
What is the formula for market growth?
Increase or decrease in total sales volume /original sales volume x 100
What factors affect buyer behaviour?
- income
- consumer confidence
- advertising
- layouts of shops
- media coverage.
What is niche marketing?
Targeting a clear and identifiable segment of the market
What is mass marketing?
Selling into a market containing many products that are similar.
What are the advantages of niche marketing?
- Fewer competitors
- can exploit economies of scale
What are the disadvantages of niche marketing?
- less potential to make a profit
- success of a niche market encourages others to enter it
What does DAGMAR stand for?
Defining Advertising Goals Measuring Advertising Results
What is DAGMAR aimed at?
Promotion
How is DAGMAR used by a business?
The business is able to formulate a strategy for any new promotional campaign
What is AIDA?
Attention
Interest
Desire
Action
What is the AIDA model used for?
Used specifically for advertising, helps a business judge whether an advertisement is likely to succeed.
What is needed for an advertising campaign to work?
Each step needs to competed in AIDA
How is Awareness trail repurchase (ATR) marketing model useful?
Because it goes through the steps that a consumer will follow, from early decision making all the way to an actual purchase
What is product and market orientation?
Product - Gets the product right
Market - gets the right product
What are examples of tools used for market orientation and product orientation?
Market - market research, market testing, customer focus
Product - product research, product testing, product focus
What is the importance of customer service?
- gives the firm a good reputation
In what ways would service marketing be likely to be different to service sector businesses?
- quality of service is more important for a service sector business
- use satisfied customers to promote business
- service providers need to ensure that all employees are honest and trust worthy
What is the difference between a consumer and customer?
- Customer buys the product
- consumer uses the product
What is marketing?
Meeting the needs and wants of customers so that marketing’s primary aim of increasing sales can be met
What are the 4p’s of marketing/marketing mix?
- product
- promotion
- price
- place
What is promotion?
The collection of techniques used to inform and pursade consumers to buy a product or service
What is above the line promotion and examples?
Where the promotion has no direct contact with the potential customer e.g. TV ads, Radio, Billboards, magazines
Advantages and disadvantages of Bill boards?
Advantages
- more cost effective than TV adverts
Disadvantages
- content needs to be consist and eye catching
- hard to change information
- less people are exposed to them
Advantages and disadvantages of TV ads?
Advantages
- reach a mass audience
- easy to remember
Disadvantages
- expensive
What is below the line promotion? And examples?
- promotion where the business can directly contact the customer. E.g. email, personal sales, tele sales, product sampling, trade fairs
What are the advantages and disadvantages of below the line promotion?
Advantages
- personalised
- customer has already shown interest in the product so is likely to purchase
Disadvantages
- easy to ignore
- doesn’t reach as many people as above the line promotion
What is a problem with branding?
If the target audience no longer wants to be associated with it
What types of marketing are social media and websites?
Below the line
What are the advantages of social media?
- more cost effective
- can be personalised
- boost traffic to website
- target audience can be reached through the platform
- used by young people
What are the disadvantages of social media?
- time intensive
- competitive
- constantly has to be updated
- trolls
- only reaches followers
What is price?
The amount of money that a customer needs to give up in order to obtain a product or service
What is competitor pricing?
When a price is set based on prices charged by competitor businesses for a similar or identical product. This price is often lower in order to gain sales from rivals
What is cost plus pricing?
Pricing method that adds a percentage to the cost of making a product to give the selling price
What’s price skimming?
Where a product is more advanced than that of competitors and/or customer wants 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
What is marginal pricing?
Cost of producing any extra unit will compromise only of variable costs. Any amount by which the selling price exceeds the variable costs incurred by the marginal output will be profit
What is penetration pricing?
When a business is new to the market, a price is set lower than competitor businesses. This is a short term strategy to help break customer loyalties from trusted brands
What is psychological pricing?
Pricing tactic that is designed to appeal to customers who use emotional rather than rational responses to primary messages e.g. $12.99
How do you work out price elasticity of demand?
% change in quantity demanded/ % change in price
What does it mean if a PED value is between 0 and 1?
Inelastic
What dies it mean if a PED Value is above 1?
Elastic
What is income elasticity of demand and its formula?
Responsiveness of QD to a change in income
% change in QD/ % change in income
If the YED is negative or positive what does that mean?
Negative = inferior Positive = normal
What is cross elasticity of demand and its formula?
Responsiveness if a change in demand for good X following the change in price of Y
If the XED is positive or negative what does that mean?
Positive - substitutes
Negative - complements
What are the advantages and disadvantages of using elasticities?
Benefits
- helps marketers decide whether they should increase/decrease prices
Limitations
- it assumes you know what will happen to demand as a result of a change in variable
- uses past data
What is the product life cycle and what are the stages?
Theoretical model which describes the stages that a product goes through over time.
Introduction, growth, maturity, decline
What are the characteristics of an introduction stage?
- sales slow
- cash flow issues
- penetration pricing may be used
- high promotional costs
What are the characteristics of a growth stage?
Sales are the quickest
Competitors become interested
High promotional spending continues
Increased distribution
What are the characteristics of a maturity stage?
- Weaker rivals will leave the market
- competitive pricing will be adopted
- positive cash flow
What are the characteristics of a decline stage?
- prices may be reduced to sell off remaining stock
- distribution may be limited
- cost plus pricing
What is an extension strategy?
- Something/strategy to prolong the maturity stage of a products life cycle
What are the pros and cons of using a product life cycle?
Pros: helps with planning, can make appropriate changes to their marketing strategies
Cons: sometimes a products sales may never raise beyond the introduction phase, may cause managers to be too ridged in their strategies
What does a product positioning do?
Plotting grid where each product sets on scales based on two important features of a market
What factors can you use for product positioning chart?
- quality
- price
- choice
What are the benefits of product positioning charts?
- help a business identify a gap in the market
-
What is a product portfolio?
- product positioning chart used to analyse a businesses own product portfolio to ensure they have got good coverage of the market
Why would a business want good coverage of a market?
- increase sales , reduce risk, meet the needs of customers, compete with rivals, brand recognition
What is a boston matrix?
Tool used to help a business allocate investment across is product portfolio
What are he two factors used in boston matrix?
- market share
- market growth
What are the four categories used in the boston matrix?
- dogs
- stars
- cash cows
- problem child’s/ question marks
What are the characteristics of a star product? What are the problems with this?
Category where the product has high market share and growth - these may potentially become cash cows
- a business may need to advertise heavily in order to establish itself fully and maintain a high advertising spend.
What are the characteristics of cashcows?
A product that has high market share/revenues, usually a more mature product and does not need heavy advertising spending.
- profits from cash cows are used to support problem child/question mark products
What are the characteristics of question marks/problem child products?
Low market share, but in a market that is rapidly growing.
- the aim is for problem child’s to become future cash cows and stars. For this the business needs to heavily invest to help increase market share of the product.
What are the characteristics of dog products?
- low market share and low market growth. These products should be dropped
What are the advantages of using the boston matrix?
- enables the business to see if it has a balanced portfolio, and whether it has sufficient cash cows to feed the problem child.
- enables businesses to see if they have too many stars as these needs lots of investment
- shows what products need investment
What are the disadvantages of the boston matrix?
- cannot use it for tertiary sector
- doesn’t take competitors into account
- doesn’t take into account qualitative factors.
What can a consumer use price for?
To compare the price of a product to other goods and services
What must price also fit with ?
The rest of the marketing mix
What factors must the pricing mix take into account?
- costs of the business
- prices charged by competitors
- willingness of consumers to pay and the business objectives
What impact would price have on stakeholder objectives?
- finance department what a price that yields high profit
- Marketing department will want a price that helps gain a foothold in a market
- consumers will want value for money and a lower price
- shareholders will want a return on their investment
What factors affect price?
- objectives of business
- consumers their income and tastes
- level of demand within the market
- level of competition within the market
- nature of the product or service
- stage in the product life cycle
What does price elasticity if demand measure?
The responsiveness of demand to a change in price
What is the formula for PED?
Percentage change in demand/percentage change in price
What is income elasticity of demand?
The responsiveness if demand to a change in income
What is the formula for YED?
Percentage change in demand/percentage change in income
How do you know if a good is PED elastic?
If its above 1. A change in price will cause a greater change in QD
How do you know if a good is inferior?
If the answer is negative. An increase in income will cause a fall in QD
What does cross elasticity of demand measure?
Measures the change of price in one good to the change of demand for another.
How do you calculate cross elasticity of demand?
Percentage change in demand for good A / percentage change in the price of B
If the XED is high what does that mean?
That the goods are substitutes
If the XED is negative what does this mean?
That they are compliments.
What is price skimming? And what sort of products would use it?
Where the business sets a high price for its goods or services in an attempt to gain profits quickly.
- Short life cycle products would use it
What is penetration pricing and what sort of product would use it?
- sets a low price hoping to attract consumers
- a product entering the market would use this
What is premium price or prestige pricing?
- high price set for a product in an attempt to create an image and indicate a high level of quality
What is psychological promotion?
Involves setting a price that sounds less than it really is. E.g. 99p instead of $1
What is loss leaders?
Where firms price products below the cost of buying or producing it to entice consumers into the shop and buy other products.
What is completion based pricing?
Where firms set their prices below their competitors prices - usually shorter term.
What is predatory pricing?
When an established business responds to a new business entering the market by reducing it prices lower then the new firms average costs
What is market based pricing?
Where the price is established by the market. E.g. oil or milk
What are examples of promotional pricing?
E.g. BOGOF deals, 10% off
What is cost plus pricing?
Cost-plus pricing is a pricing strategy in which the selling price is determined by adding a specific amount markup to a product’s unit cost.
What is contributing/marginal cost pricing?
Method whereby fixed costs or overheads are ignored and the business only considers variable costs of production
What is price discrimination?
Occurs when different prices are charged to different segments of society e.g. time, age, area
What does place refer to?
The methods and processes by which the business delivers it goods and services to the right place and right time
What are channels of distribution?
The method by which the good travels from the producer to the consumer
What is the main job of wholesalers?
To “break the bulk”
What are the advantages of wholesalers?
- they have specialist knowledge of their part of distribution network to benefit producers and retailers.
- they move goods around the country using their own network, reducing costs and valuable time for other businesses
- they have purpose built warehouses and storage facilities
- they offer choice to the retailer
