Marketing management Flashcards
What are the key marketing objectives?
Sales volume and sales size
Market size
Market and sales growth
Market share Brand loyalty
What is the definition of marketing?
Gaining an understanding of what product/service is needed to match customer requirements.
What are marketing objectives and their purpose?
Marketing target/goals that an organisation hopes to achieve
steer the direction of the business
probability of success is likely to increase as the business is more focussed
What is sales volume?
Number of products/services sold and is expressed in whole numbers
What is sales size?
£ revenue earned from selling products/services and is expressed as a value
What is market size?
The total sales revenue made from selling all the products/services that a business has to offer over a year
What is the formula for market growth?
Market size year 2 - Market size year 1/ Market size year 1 x100
What is the formula for sales growth?
Sales year 2 - Sales year 1/ Sales year1 x100
What is the formula for market share?
Sales of business/ Total market sales x100
What is market share and what does it measure?
It measures the amount of sales as a % of the total sales that a business has in a market.
Explains how the overall market is split between the existing competitors.
Why is setting marketing objectives important?
Ensures functional activities consistent with corporate objectives.
Provide a focus for marketing decision-making and effort.
Provide incentives for the marketing team and a measure of success/failure.
Establish priorities for marketing resources and effort.
What is the definition of brand?
Identifying symbol, mark, logo, or name that businesses use to distinguish one company from another.
What are the benefits of brand loyalty?
Increase repeat business from the customer
What are the internal influences that impacts marketing objectives set by businesses?
Cost
Corporate objectives
Human resources
Business culture
What are the external influences that impacts marketing objectives set by businesses?
Economic environment
Market dynamics
Competitor actions
Social and political change
Technological change
What is market research?
Process of identifying, gathering, and analysing information and data to be more informed about competitors and customers.
What is the purpose of market research?
Gain a more detailed understanding of consumers’ needs
Reduce the risk of product/ business failure
Forecasts future trends
What is sampling?
When researchers question a portion or “sample” of a larger group and use the results to make conclusions about the whole group.
What is market mapping?
Useful framework for identifying the market positioning of a business, brand, or product relative to others in the market using simple criteria.
What are the advantages of market mapping?
Easy to put together
Helps spot gaps in the market
Useful for analysing competitors
Is part of the process of conducting market research
What are the disadvantages of market mapping?
Just because there is a “gap” doesn’t mean there is demand for the product.
Not a guarantee of success
How reliable is the market research that maps the position of existing products based on chosen dimensions?
What is a correlation?
A relationship between 2 variables
What is extrapolation?
Trend line has been extended
Researchers use quantitative data to predict future sales
What happens if PED<1?
The price is inelastic so consumers will continue to buy continue to buy if the price rises.
What happens if PED>1?
The price is elastic so consumers will switch to alternatives/substitutes if price rises.
How can PED be used?
Forecast the effect on sales of any price changes it plans to make - this will assist in determining production output levels.
To determine if a price change is a wise decision
Helps with decision-making
Helps with calculating total revenue of any price changes that are made.
What are the factors influencing PED?
Time
Competition for the same product
Branding
The proportion of income spent on a product
Product type vs the product of an individual business
What is segmentation?
The process of identifying different groups of similar needs.
What is demographic segmentation?
Characteristics of the people in the target population.
E.g. similar needs and wants based on aspects such as age or gender (clothes for men and women are different)
What is geographic segmentation?
Groups needs and wants based on the geographical area in which customers are based.
What is income segmentation?
The division of customers into groups based on income levels.
What are the socioeconomic groups?
A (higher management, administrative or professionals)
B (Intermediate managerial, administrative or professional)
C1 (Supervisors, clerical, and junior managerial)
C2 (Skilled manual workers)
D (Semi and unskilled manual workers)
E (Casual labour)
What is behavioural segmentation?
Focuses on what customers actually do.
What is the value of segmentation?
Specific groups of consumers can be targeted with appropriate products, which provides consumers with the right product that suits their preferences.
Enables more focused and efficient marketing- do not waste money.
What is targeting?
A way of identifying a group of people with similar characteristics and aiming an advertising message at them, on a platform they might use.
What is the value of targeting?
Once the audience is segmented they can be targeted.
This means the business can develop objectives and a strategy to and work out how best to communicate with that segment.
What is positioning?
Promote and advertise a product/service in a specific market segment.
What is the value of positioning?
Final stage
Product/service is promoted to customers in the target segment.
Promotion may be to; inform, remind, engage, or call in action e.g. bank holiday special sale.
Educate customers about the features and benefits of the product.
What are the factors affecting positioning?
Price
The benefit it offers - Product relative to competitors
Brand image - Inelastic in demand?
Level of services it provides
What is a mass market?
aimed at the general population e.g. regular toothpaste (Colgate)
What is a niche market?
Subset of the main markets and addresses a specialist need e.g. Sensodyne toothpaste for sensitive teeth.
What are the characteristics of mass markets?
Products are sold to all customers in the same way. e.g. Coca-Cola, one advert can be shown to everyone because the bears can’t speak.
Many products can be sold globally with just a few language tweaks.
What are the benefits and drawbacks of competing in a mass market?
BENEFITS: Large-scale production means economies of scale and lower average unit costs.
Straightforward as everyone is equally targeted.
Large volume of scales means high revenue.
DRAWBACKS: Lots of competition means consumers have lots of substitutes and if goods have elastic demand they will have to compete on non-price factors.
Similar products need to be differentiated through marketing which is expensive.
What are the characteristics of niche markets?
Many small start-ups begin by targeting a niche market e.g. artisan bakery making vegan breads.
Little competition in these markets as these businesses are targeting a small segment.
What are the benefits and drawbacks of competing in a niche market?
BENEFITS: Premium prices can be charged which will increase sales revenue.
Easier to target customers.
Small-scale production can be flexible and follow trends.
Less competition than in mass markets.
DRAWBACKS: Very risky as demand may not be constant.
Higher unit costs so no economies of scale.
Small-scale production limits the opportunity to make profits.
The market for more expensive items may be limited.
What is a marketing mix?
Combination of elements used by a business to enable it to meet the needs and expectations of customers.
What are the traditional 4P’s?
Product (Design, quality, packaging, accessories, warranties)
Price (Skimming, penetration, value-based, cost-plus, competitive)
Place (distribution channel, retail, online, wholescale)
Promotion (special offers, adverts, direct marketing, competitions)
What are the 4P’s extended to the 7P’s?
People (Employees + customer contact, recruitment, training and skills)
Process (Service industries, the way the service is carried out)
Physical environment (website design, shop or office, layout and design, paperwork, staff uniforms)
What is an effective marketing mix?
Achieves marketing objectives
Meets customer needs
Is balanced and consistent
Creates a competitive advantage
Consistent with the chosen target market and positioning
What are consumer goods?
Bought and used by consumers (rather than by other businesses)
What are the 3 types of consumer goods?
Durable e.g. microwave
Non-durable e.g. food
Services e.g. hair cut
What are industrial/capital goods?
Products that are used to produce goods which will be bought by consumers.
What are the disadvantages of capital goods?
Very expensive so the marketing process needs to be different from consumer goods.
Reputation is critical, there is a limited amount of customers.
What is a product portfolio?
Collection of all products and services offered by a company.
What is the Boston matrix?
Marketing planning tool that helps managers to plan for a balanced product portfolio.
It looks at 2 dimensions: Market share and growth, to assess new and existing products in terms of their market potential.
Helps marketing managers work out how much to spend on each product.
What is the product life cycle?
From R&D at the start to launch (birth) and through to decline (death)
The marketing mix will change depending on the stage of the life cycle the product is at.
What are the characteristics of star products in the Boston matrix?
High market share and growth
Need to maintain their current marketing spend to keep sales high
Stars should become cash cows in time- if managed correctly.
What are the characteristics of question mark products in the Boston matrix?
Have a low market share and are in a high-growth market.
Have lots of potential to become stars if they are managed correctly.
Will need lots of investment in marketing and promotion- if they are to succeed.
What are the characteristics of cash cow products in the Boston matrix?
Have a high market share and are in a low-growth market.
Good sellers and need little or no new investment.
The product just needs to be “milked” for cash.
Need monitoring in case they become dogs.
What are the characteristics of dog products in the Boston matrix?
Have a low market share and low growth market.
Require no investment as they are in the decline phase of their life cycle.
May become obsolete or replaced
Businesses may consider discontinuing or withdrawing the product.
How is the product life cycle shown in products?
Introduction: likely to be a limited number of versions of the product as it has just launched.
Growth: may develop other varieties/models.
Maturity: may start to focus on bestsellers as demand is not growing fast any longer.
Decline: focus on the most profitable models.
How is the product life cycle shown in price?
Introduction: may enter with a low price to gain sales/high price if demand is high.
Growth: may be able to maintain a relatively high price.
Maturity: likely to consider cutting price to sustain sales.
Decline: may cut price to boast sales.
How is the product life cycle shown in place?
Introduction: may be limited as the product is not yet established.
Growth: will become wider as more businesses will want to sell the product.
Maturity: may focus on best-selling distribution channels.
Decline: may find it more difficult to maintain distribution as stores may drop your product for more popular brands (delisting)
How is the product life cycle shown in promotion?
Introduction: may focus on raising awareness of the product.
Growth: continuing to raise awareness.
Maturity: focus on the benefits of this product compared to rivals.
Decline: reduced to focus on the most cost-effective methods.
Why use the product life cycle?
It can illustrate the broad trends in revenue that a product might earn for a business.
It will identify points at which a business may need to consider launching a new product as old ones decline- or a possible extension strategy.
It can help businesses manage their product portfolio.
Can help manage cash flow- identifies where revenue in certain products is growing/declining.
What are the limitations of the product life cycle?
No two products product life cycles are the same and therefore it’s difficult to predict.
Not all products go through every stage- it is common to go straight from introduction to decline.
Difficult to tell which stage a product is in- marketing actions may be taken too early/late.
What are the criticisms of the product life cycle?
Unpredictability- how long is the life cycle of a product?
Change- most of the factors that influence the products’ life cycles are changing: consumer demand, and cost of production.
It’s a model and decision-making tool- many manufacturers place too much emphasis on the model.
Why are new product scrapped before launch?
Inadequate demand
Action of competitors
Change in the external environment
Production problem
High costs
Does not fit in the firm’s product range
Life cycle expected to be too short
What are the influences on new product development (NPD)?
Desirability
Feasibility -will it work?
Viability -is it financially buyable?
Ethics
What is the value of new product development?
As old products are withdrawn/reach decline the business will need to have plenty of new products to replace them.
Extension strategies do not suit every product/service.
This means that the business will need to invest in new product development to ensure that the business continues to grow.
What is new product development?
Investment to modify or replace an existing product.
Why is new product development required?
Existing products are coming to the end of their product life cycle e.g. petrol and diesel cars.
New opportunities are opening up due to changes in the market.
To reinvent the brand
To match what competitors are doing.
What are the risks of new product development?
High risk of failure
Introduce products or other solutions without a real need for them
Many products do not sell well and are withdrawn
What are the different pricing strategies?
Penetration pricing: aim to increase market share by setting an initial low entry price to attract new customers BUT the process has to be price elastic.
Cost plus: aim to cover production costs and then add a profit margin onto the price.
Elasticity: help raise or lower the price according to how it would improve revenue.
Market skimming: setting a high price before competitors come into the market.
Premium: setting a high price to reflect the exclusive and luxury nature of the product.
Psychological: prices are set with a view to perceive customers of the price e.g. 99p instead of £1.
Dynamic pricing: varying the price for a product or service to reflect demand.
Predatory pricing: reducing the price with the intention or effect of undercutting the competition and preventing new businesses from entering the market.
What is a promotional mix (marketing communication mix)?
The set of communication tools and tactics that a company uses to promote its product or services to its target customers.
Typically includes a blend of advertising, public relations, and direct marketing.
What are the advantages and disadvantages of sales promotions (buy one get one free)?
Advantages: very popular with shoppers, encourages trial and use of the product, a good way to encourage shoppers to switch from their normal brand, boasts sales which increases sales revenue.
Disadvantages: loss of profit because there is an increase in costs, this will not be balanced by the increase in sales, only useful in the short-run.
What are the advantages and disadvantages of sales promotions (price discounts)?
Advantages: a great way to clear old or out-of-date stock.
Disadvantages: customers may regard the business as a cheap option, too many discounts, and customers become suspicious.
What are the advantages and disadvantages of sales promotions (money off coupons)?
Advantages: coupons can help the customer feel they are getting better value for money, coupons are available from websites, loyalty cards, store magazines, and on the back of some packs to encourage repeat purchases.
Disadvantages: reduced profits from the cost of running the promotion, some customers may be waiting for the coupons before they purchase, customers may have been wanting to make a purchase anyway.
What are the advantages and disadvantages of sales promotions (samples and giveaways)?
Advantages: ideal for new product launches, works especially well with some products e.g. food, encourages word-of-mouth recommendation.
Disadvantages: not all customers want to try samples when shopping, can be expensive.
What are the advantages and disadvantages of sales promotions (special events)?
Advantages: encourages customers to attend, rewards loyal customers with a special event, ideal for small businesses.
Disadvantages: can be expensive, hard to measure how valuable this marketing is.
What are the advantages and disadvantages of sales promotions (point of sale e.g. cardboard display)?
Advantages: ideal way to promote new products, works best with products that have an event/holiday tie e.g. crème eggs for Easter, manufacturers can add extra punch to the promotion by giving a discount.
Disadvantages: only successful if the product meets the needs of the customer, needs to be designed and out to stores in time for the event/holiday, displays may be put in poor locations by shops.
What is personal selling?
An effective way to manage business to customer relationships.
Sales person acts on behalf of the organisation.
Sales people are well-trained in the approaches and techniques of personal selling.
However, sales people are very expensive; salary, training, commission.
What are public relations (PR)?
Aims to build a relationship between the business and the public, to create a favourable corporate image.
Unpaid communication about an organisation that appears in mass media.
It could be a review of a paper on a product, guest columns, blogs, fact sheets, press releases, etc.
What is direct marketing?
Highly focused targeted mail based on what customers have bought before.
May be special offers to re-engage customers who have stopped buying.
What is viral marketing?
Strategy that aims to generate a buzz and interest in a product, service, or brand by creating content that is engaging, entertaining or informative enough to be shared by consumers on their social networks.
What do social media platforms allow?
Allow the business to target specific demographics and interests so that promotions can be tailored to the audience increasing the possibility of engagement.
What are distribution (place) decisions?
Strategies that a business uses to make sure its products and services reach the customers in the most effective way e.g. logistics and transportation, warehousing (location), channel (factory shops, online)
What are multichannel decisions?
Using more than one distribution channel to reach customers e.g. e-commerce, social media, direct mail, direct email, and mobile apps.
Provides a better customer experience.
What factors will a distribution manager consider?
Degree of coverage-targeting customers globally?
Costs of different distribution strategies- online or national?
Nature of the product- high value product in small quantities easy to distribute for FMCG intermediaries might be needed.
The degree of control a business wants over the way its products are priced and promoted.
How customers expect to access the product and why technology allows a business to deliver- multichannel or single channel distribution.
What is process in the marketing mix?
Refers to systems and procedures that the business uses e.g. electronic processes (AQ codes on concert tickets), technology process (ordering screens), direct progress (helping a customer), indirect process (customer helpline or warranty)
What is physical evidence in the marketing mix?
The tangible elements that customers can see, touch, or experience in relation to the product or service.
Can include: store layout including signs and lighting, testimonials and reviews of customer experiences.
What is digital marketing?
Practice of promoting and selling products/services through digital channels e.g. search engines, social media, email, mobile apps, and websites. It includes a wide range of strategies that use digital technologies to reach and engage with target audiences, drive website traffic, generate leads, and increase sales.
It enables companies to quickly adapt their marketing strategy based on market trends and customer behaviour.
What is e-commerce (electronic commerce) ?
Buying and selling of goods/services over the internet. It involves the use of electronic platforms, such as websites, mobile apps, or social media, to facilitate transactions between buyers and sellers.
e.g. online market place (Amazon)
What is above the line advertising?
Advertising to a mass audience (TV adverts, online adverts)
Advantages- reaches a large audience
Disadvantages- very expensive to make an advert and air it, so only suitable for large companies.
What is below the line advertising?
More personal advertising to niche markets
used to create awareness
