Marketing Management (3.3) Flashcards
The Role of Marketing is the process of… :
The process of identifying, anticipating (predicting) and satisfying customer needs profitably.
Marketing Objectives are target’s that a…
Targets that a company’s marketing department sets itself.
~ They are valuable in helping the company to achieve its overall objectives. Should be SMART.
(Marketing Objectives) Sales Volume and Sales Value :
~ Objective might be to reach a certain salves volume over a period of time.
~ Easy to visualise but it doesn’t tell you anything about the money coming in from sales.
~ Businesses that that sell lots of differently priced items usually base objectives on sales value instead.
The Marketing Objectives above were…
Quantitive - there are specific figures to aim for.
~ There can also be qualitative (non-numeric) objectives e.g. improving quality & creating brand loyalty.
The Marketing Objectives in a business have 3 basic objectives, Determine, Develop, Deliver :
~ Determine what the market wants.
~ Develop the strategy to achieve the marketing and business objectives.
~ Deliver a he marketing actions to achieve the objectives.
Marketing objectives set out what a business wants to achieve from its various marketing activities, they need to be :
- SMART (Specific, measurable, achievable, realistic, time specific).
- Provide a focus for marketing management, set usually by the marketing team.
(Marketing Objectives) Market Size is the total… :
The total volume of a given market.
~ If it increases from one period of time to another than the market’s growing.
~ A company might set objectives to stimulate market growth.
(Marketing Objectives) Market Share :
The percentage of total sales that a business has in a specified market.
~ Tells a business how well it’s doing compared to its competitors.
~ To increase this, a business must either entice customers away from competitors or attract brand new customers.
(Marketing Objectives) Market Growth is the percentage growth in… :
The percentage growth in the size of the market, measured over a specific period.
(Marketing Objectives) Sales Growth, The increase in… :
The increase in sales of a product or service over time.
(Marketing Objectives) Brand Loyalty, customers have a… :
Customers have a strong preference towards the identity of a particular product or company.
Marketing Objectives and decisions, internal (2) & external (2) :
Internal : Workforce skills, shareholders’ objectives.
External : Interest rates, Competitors’ actions.
Market Growth (%) formula :
New market size - old
market size
——————————- x 100
Old market size
(if number is negative them the market is shrinking).
In a growing market…
In a shrinking market…
Several firms can grow easily. In a shrinking market, competition can be heavy - there are fewer customers to go around.
- Firms can diversify or they may want to get out the market all together.
Market Share (%) formula :
Sales
—————— x 100
Total market size
Letting your market share go down is not good…
It means that competitors are gaining an advantage over you.
Sales Growth (%) formula :
Sales this year - Sales last year
—————————————— x 100
Sales last year
If sales growth is positive…
If sales growth is negative…
Positive-> Company is gaining sales.
Negative ~> Company is losing sales.
The marketing department combines its analysis of these figures in order to see if they’re meeting objectives.
Effective marketing objectives (4) :
- Ensure functionial….
- Provide a focus for…
- Provide incentives…
- Establish priorites for…
~ Ensure functional objectives consistent with corporate objective:
~ Provide a focus for marketing decision-making and effort.
~ Provide incentives for marketing team and a measure of success and failure.
~ Establish priorities for marketing resources and effort.
What Internal factors will influence a businesses’ Marketing Objectives? (3)
- Corporate/Business objectives.
- Finance.
- Human Resources.
What external factors will influence a businesses’ Marketing Objectives? (4)
- Market.
- Technology.
- Competitors.
- Ethics and Environmental factors.
(Internal Factors influencing Marketing objectives) Corporate/Business Objectives :
Marketing department has to make sure its objectives are aligned with the company’s overall goal e.g. increasing profits.
(Internal Factors influencing Marketing objectives) Finance :
Finance department allocate the budget.
(Internal Factors influencing Marketing objectives) Human Resources :
HR identifies how many staff the company needs. If they decide to cut/increase staff, marketing will have to adjust its objectives to make sure they’re achievable.
(External Factors influencing Marketing objectives) Market :
State of the economy. Economic boom will mean the company could focus on sales volume increasing. While a recession could focus around maintaining market share.
(External Factors influencing Marketing objectives) Technology :
Changes mean marketing objectives need to follow and stay dynamic. New technology can cause prices to rise and fall very fast.
(External Factors influencing Marketing objectives) Competitors :
Their actions will impact marketing objectives, especially in highly competitive markets. If a competitor focuses on low prices the marketing objectives may need to alter e.g. lower prices after competitor does.
(External Factors influencing Marketing objectives) Ethics & Environmental Factors :
Awareness for the issues are increasing amongst consumers and behaving in a harmful way could lead to a companies reputation getting damaged e.g. use less plastic packaging (emphasise this in their adverts).
Government Regulations will also have a direct impact :
- Predatory pricing.
- Trade Description Act.
- What can and cannot be advertised (including at certain times of the day).
A market is just a place…
Where people buy and sell things.
- There are different markets for different things.
- Businesses try to get ahead of their competition by analysing the market which impacts them.
Businesses need to understand their market (3) :
- Local, national or international scale?
- Selling online or physically?
- Target audience?
How can a market be classified? (5) :
- G…
- N…
- S…
- D…
- P…
- Geography (local…).
- Nature of the product (e.g. agricultural).
- Seasonality (seasonal or all year round).
- Development level (new, growing, saturated).
- Product destination (trade, private consumers).
Market Mapping identifies how…
Identifies how products/brands are perceived by customers relative to other products/brands in the market.
- Spots gaps in the market.
Market Mapping, Advantages (3) :
+ Helps spot gaps in the market.
+Useful for analysing competitors (where are their products positioned?).
+ Encourages use of market research.
Market Mapping, Disadvantages (3) :
- Not a guarantee of success,
- Just because there is a ‘gap’ doesn’t mean there is demand for the product.
- How reliable is the market research that maps the position of existing products?, it’s opinion based.
Ways a business can identify customer needs (4) :
- Questionnaires/surveys.
- Focus groups.
- Books
- Quantitative/qualitative data.
Market Research is a process used by businesses to gain a…
A process used by businesses to gain a deeper understanding of who their audience is and aid decision making.
Market Research is used to… (4)
- Identify customer needs (price, quality, choice and convenience).
- Identify gaps.
- Reduce risk.
- Inform decisions.
Market research helps entrepreneurs/managers to make better decisions (3) :
- Launching a new product or service.
- Make a change to existing products.
- Investing in a new store location.
Market Research is the process of gathering…
Process of gathering information about the market and customer needs and wants in order to help inform business decisions.
- Also used to reduce risk and identify gaps in the market.
Qualitive data, + & - (3):
Information that is gathered about opinions, judgements and attitudes of customers.
+ Broad, provides meaning and context behind answers.
- Expensive, takes longer and smaller sample size.
Quantitative, + (3) & - (2):
Data that can be expressed as numbers and can be statistically analysed about customers.
+ Quick and simple to conduct, increased number of participants and results are easy to analyse.
- Focused solely on numbers and facts, no explanation/meaning of results.
Primary Research :
The gathering of new info, called primary data, which has not been collected before, e.g. :
- Survey, questionnaire, focus group, interviews and observations.
Secondary Research :
Process of gathering data, which is info that has already been gathered, e.g. :
- Internet, government statistics, company reports, newspapers/books and trade associations.
In market research, most errors can be traced back to…
Problems with the way the data was gathered.
- Particularly the validity (can the research be trusted?) and reliability (are they representative of the population?).
Social media can be a source of…
Both primary and secondary research.
- Software can quickly highlight what customers are saying about the product or brand.
- Surveys are easy to set-up and analyse results in real time.
Value of Digital Technology (5) :
- Ease…
- More informed…
- Greater integration…
- Availability of…
- New…
- Ease if entering new markets.
- More informed new product development.
- Greater integration of functional areas (quick communication).
- Availability of information to stakeholders.
- New processes e.g. E-Commerce, automation
How can Technology be used to gather information about customers? (6)
- Search engines.
- Social media.
- Track trends in sales.
- Online surveys & emails.
- Loyalty cards, track.
- Cookies.
Product Life Cycle 5 Stages :
- Research & Development.
- Introduction.
- Growth.
- Maturity.
- Decline.
Product :
- Can be…
Anything that is capable of satisfying customer needs.
- Can be a GOOD (physical thing, tangible).
- Or can be a SERVICE (can’t touch, intangible).
Marketing Mix (7) :
- Product.
- Price.
- Place.
- Promotion.
- People.
- Process.
- Physical Environment.
The Product Life Cycle is…
The theory that suggests that all products follow a similar pattern over time of development, introduction, growth, maturity and decline.
(PLC) Research and Development is when…
When a business gathers knowledge to create new products or discover new ways to improve their existing products and services.
Challenges/Disadvantages of Research and Development (3) :
- May not be successful.
- Absorbs significant resources.
- Often complex.
Product Life Cycle, BENEFITS (3) :
+ Finance managers can use this to choose which investments/products they should focus on.
+ Sales and marketing manager to forecast sale trends.
+ General managers to analyse and manage a product portfolio.
Product Life Cycle, NEGATIVES (2) :
- PLC shape and duration varies, length of product life also varies.
- Companies need to change strategies to grow sales/maintain market share e.g. extension strategies.
Extension Strategies :
Aim to extend the life of a product and keep products within the maturity stage.
- Businesses use these when they identify that a product is close to entering the decline stage.
(Extension Strategies) Price Reduction :
- The business may no longer be able to charge a high price, it keeps customers by lowering the price.
(Extension Strategies) Re-designing/Re-branding :
- To make the product more desirable to customers&consumers?????????
(Marketing Mix play a role in PLC, PRODUCT) Introduction, Growth, Maturity and Decline :
INTRODUCTION - Low sales, high promotional spending, high cost per customer.
GROWTH - Increasing sales and profit, lower costs per customer, more customers and competitors.
MATURITY - Peak sales, profits rise, large number of customers.
DECLINE : Falling sales, profits fall, customer base contracts.
- In which stage do businesses make the highest profit?
- In which stage do businesses have few (if any) competitors?
- Maturity.
- Introduction.
The Boston Matrix is a… helps…
- Ideally, a business would prefer…
A model which helps businesses to analyse their portfolio of brands and products.
- Products in Star, Cash Cow or Question Mark (NOT dog) to give it a balanced product portfolio.
Product Portfolio is a range of…
A range of products or brands provided by a business.
The Boston Matrix categorises the products into one of the four different quadrans based on (2) :
- Market share (high or low).
- Market growth (number of potential customers).
Reasons for using the Boston Matrix (3) :
+ A useful tool for analysing portfolio decisions.
+ Helps businesses to decide which of their units/products they should keep.
+ Where they should invest further/where they should consider getting rid of.
Boston Matrix makes a series of Key Assumptions (3) :
- Market share can be gained by investment in marketing.
- Market share gains will always generate profit.
- Cash surpluses will be generated when the product is in the maturity stage of the life cycle.
(Boston Matrix) Star :
High growth products competing in markets where they’re strong compared with the competition.
- Need heavy investment to sustain growth.
(Boston Matrix) Cash-Cows :
Low-growth products with a high market share. Mature, successful products with relatively little need for investment.
(Boston Matrix) Question Marks/Problem Child :
Products with low market share operating in high growth markets. They have potential, but may need substantial investment to grow market share at the expense of larger competitors.
(Boston Matrix) Dogs :
Products with a low market share in unattractive, low-growth markets.
Limitations of Boston Matrix (4) :
- Only a snapshot of the current position and has little or no predictive value.
- It is highly subjective.
- Focus on market share & market growth ignores issues e.g. developing a sustainable competitive advantage,
- BM classifies businesses as low and high, but businesses could be medium also.
Price must be consistent with…
Other elements of the Marketing Mix.
- Without a reliable and realistic price, businesses will not be able to promote their products/services.
Price :
Amount of money customers are wiling to give up to purchase a product or access a service to satisfy their needs and wants.
Costs :
Expense incurred for making a product or service that is sold by a company (e.g. raw materials).
Factors that influence Price (5) :
- Where…
- A…
- Q…
- C…
- B…
- Where the product is in its life cycle.
- Availability.
- Quality.
- Competitors.
- Brand Image.
How do businesses determine Price? :
Divided into 2 things :
- The market determines the highest price that can be charged. Will need to take into account company objectives.
- Companies decide on a price after understanding the overall costs and the market competition.
2 TYPES : Pricing a new product & Managing the price throughout the product life.
How high should mark-up % be?
- Depends on the market & customers and whether the price chosen is beneficial to customers.
Cost Plus Pricing, + and - :
A strategy that adds a markup to a product’s unit cost to determine the final SP.
+ Profit guaranteed on each item sold.
- If mark-up is too high, Price may be expensive compared to rivals and therefore uncompetitive.
Pricing Low (Penetration Pricing) is…, + (3) and - (2) :
Involves setting a low initial price for a new product in order to get a foothold in the market and gain market share.
- Suitable for mass market.
+ Builds customer loyalty, Can gain market share quickly, Can develop LT profitability of having higher sales and MS.
- ST likely to result in lower profits, May be difficult to raise SP in the future.
Pricing High (Price Skimming), + (3) and - (2) :
Involves setting a high initial price for a new product in order to recoup costs.
- Firms often base initial promotional campaign on this, create a ‘must have’ mentality. Then usually lower price.
+ Potential for high profits straight away (help pay back R&D costs, Product may get reputation for quality (encourage brand loyalty), Additional profits can be invested on other products.
- Can’t last long as competitors soon launch rival products which puts pressure on price, May slow down growth in sales of product (not all customers can afford this), competitors pressure.
Competitive Pricing, + (2) and - (2) :
Companies match their product’s price to competitors, common in big companies with direct competition.
+ Businesses can attract more customers and create more leads with competitive prices, Prevent market share losses.
- Business may need other ways to attract customers other than CP (non-price methods), Business will be researching what competitors are charging often which is time consuming.
(Pricing) Predatory Pricing :
When a business deliberately lowers prices to force another business out of the market (illegal).
(Pricing) Psychological Pricing :
Basing the price on customers expectations i.e. high price for perceived high value products.
- Emotional 20/2/25.
(Pricing) Loss Leaders :
Sold at below costs price to entice people in, (hopefully customers will buy more products).
(Pricing) Price Discrimination :
Prices are different depending on the type of consumer, i.e. child gets ticket for cheaper.
(Pricing) Dynamic Pricing :
Pricing aims to increase revenue by changing prices depending on customers and demand.
- e.g. When demand is high, prices rise, like for hotels near concerts.
Promotion is the process of…
- There are 2 main forms :
Is the process of communicating with customers or potential customers to increase sales through various methods.
- Informative promotion and Persuasive Promotion.
(Promotion)
- Above-the-line :
- Below-the-line :
- Above-line-promotion : All types of PAID advertising through various different media outlets e.g. TV, radio and billboards.
- Below-the-line promotion : All other types of targeted promotions used by a firm (non-paid media avenues) e.g. sponsorship, PR and sales promotion.
What is promotion trying to achieve? (4)
- I…
- C…
- B…
- P…
Inform : The customer about the product (e.g. features, price, etc).
Create : Awareness and customers loyalty.
Build : A brand image.
Persuade : The customer to purchase or keep purchasing the product.
Branding is the process of…
Building an image that helps to differentiate a product from it’s competitors.
Main Benefits of Branding :
- Higher…
- Ability to…
- Helps…
- Create…
- Higher demand and sales.
- Ability to charge higher prices and maximise profits.
- Helps products to stand out from competition.
- Create customer loyalty.
7 Types of Marketing :
- Advertising.
- Sponsorship.
- Public Relations.
- Personal Selling.
- Sales Promotion.
- Social Media.
- Direct Marketing
Advertising, + AND - (3) :
Paying for a message to be shown through various media.
+ Wide coverage, Control of message, Repetition means the message can be communicated effectively.
- Often expensive, impersonal, one way communication.
Sponsorship, + AND - (2) :
Providing financial assistance to an individual, event or organisation in return for exposure and advertising.
+ Can increase brand awareness at large scale (sports team), Public relations with community.
- Very expensive and may not reach audience, Wrong image may be presented (e.g. loosing team, poor behaviour).
Personal Selling, + AND - (3) :
Using specialist sales staff to directly speak to customers. Person to person basis.
+ Message is customised, Interactivity, Persuasive impact.
- High cost, Labour intensive, Only reach a limited number of customers.
Public Relations (PR), + and - (2) :
Creating a favourable image of the company without paying for advertising e.g. celebrity endorsements.
+ Connect with target audience (relationship), Achieve favourable publicity about the business.
- Difficult to control, Lack of guarantee of success.
Sales Promotion, + AND - (2) :
Tactical, point of sale material or other incentives designed to stimulate purchases e.g. Coupons, Free gifts and samples.
+ Effective at achieving a quick boost in sales, Encourages customers to trial a product or switch brands.
- Sales effect may only be short-term, Customers may come to expect or anticipate further promotions.
Direct Marketing, + AND - (3) :
Promotional material directed through mail, email or telephone to individual households or businesses.
+ Focus limited resources on targeted promotion, Can personalise marketing message, Relatively cost-effective.
- Response rates vary, Negative image of junk and email spam, Databases expensive to maintain and keep accurate.
Promotion Mix, helping make decisions (3) :
1) Target Market.
2) Nature of Market.
3) Finance Available.
(Promotion) Digital Marketing is the use of…
The use of any form of digital technology to improve communications with customers.
- e.g. SMS messages, social media, targeted feed, SEO, online advertising etc.
(Promotion) Advantages of digital marketing + E-Commerce (4) :
+ Access to a global market.
+ 24/7 exposure.
+ Improved understanding of buying habits.
+ Greater two-way communication.
(Marketing Data) Information is when data is…
When data is processed, organised and structured to give a useful meaning.
(Marketing Data) Data :
Raw recognised facts that need to be processed.
Businesses interpret marketing data by…
Looking for trends, connections, patterns and gaps.
(Marketing Data) Moving Average (MA) is when you identify…
Identify trends in sales data, smooth out seasonal fluctuations.
(Marketing Data) Extrapolation uses data that…
Uses data that has been collected in the past to predict future patterns of behaviour.
- Based on quantitative data.
(Marketing Data) Interpolation :
Prediction between two given data points.
(Marketing Data) Extrapolation + & - (2) :
+ Based on data already collected (cheaper).
+ Allows a business to make decisions based on data.
- Based on past experience and may not consider unforeseen changes in circumstances.
- Relies on accuracy of data previously collected.
Correlation :
A statistical technique used to establish the extent of the relationship between two variables such as sales and customer income.
Confidence Intervals/Confidence Level is an expression of how…
It is an expression of how confident researchers are in debt collected by calculating the probability that research findings are correct.
Benefits of using Confidence Intervals (2) :
+ Businesses benefit from the use of these in evaluating the reliability of a particular estimate.
+ Management can utilise confidence level or intervals in making decisions about their processes.
A prediction based on a strong, negative correlation will have a ___________ confidence level than one based on a weak, positive correlation.
A prediction based on a strong, negative correlation will have a higher confidence level than one based on a weak, positive correlation.
Elasticity :
PED :
YED :
Measure the extent to which demand for a product changes.
PED : Price elasticity of demand.
YED : Income elasticity of demand.
Elastic Demand :
- Where the % change in quantity demanded is greater than % change in price.
CUSTOMERS HIGHLY SENSITIVE TO ELASTIC PRODUCTS WHEN IT COMES TO PRICE (MAY NOT PURCHASE).
Inelastic Demand :
(In….)
- Where % change in quantity demanded is less than % change in price.
CUSTOMERS BUY THE SAME AMOUNT OF INELASTIC PRODUCTS REGARDLESS OF PRICE CHANGES (WILL PURCHASE).
INDIFFERENT
Whether a product is ELASTIC or INELASTIC depends on 4 things :
- T…
- A…
- S…
- C…
- Type of product.
- Availability.
- Substitute products.
- Choice.
Price Elasticity of Demand FORMULA :
% change in quantity demanded / % change in price
Price Elasticity of Demand is a measurement of the…
Measurement of the change in demand for a good or service in relation to the change in it’s price.
If answer is between ___ and ___ : relationship is INELASTIC.
If answer is between -___ and _________ : relationship is ELASTIC>
0 & 1 : RELATIONSHIP INELASTIC.
-1 & INFINITY : RELATIONSHIP ELASTIC.
PED always has a ‘ - ‘ in front because…
As price rises, demand falls and vice-versa.
- (Inverse relationship between price and demand means answer will always be negative).
If DEMAND is PRICE ELASTIC :
(E FOR E___________)
- INCREASING price would…
- REDUCING price would…
- INCREASING price would REDUCE total revenue.
(%∆ quantity demanded > %∆ price) - REDUCING price would INCREASE total revenue.
(%∆ quantity demanded > %∆ price)
If DEMAND is PRICE INELASTIC :
- Increasing price would…
- Reducing price would…
- INCREASING price would INCREASE total revenue.
(%∆ quantity demanded < %∆ price) - REDUCING price would REDUCE total revenue.
(%∆ quantity demanded < %∆ price)
YED (Income Elasticity of Demand) measures the…
Measures the responsiveness of demand to a change in real income.
YED (Income Elasticity of Demand) FORMULA :
%∆ in quantity demanded / %∆ in income
Inferior Goods :
An economic turn that describes a good whose demand drops when people’s income rise.
- Goods fall out of favour as income and economy improves, leads to consumers buying more costly products.
(INFERIOR GOODS)
- YED __ 0 : __________
- Inferior goods will always have a ‘__‘…
- An increase in income leads to…
YED < 0 : Elastic
- Inferior goods will always have a ‘-‘ income elasticity of demand.
- An increase in income leads to a fall in quantity demanded.
(NORMAL GOODS)
- YED __ 0 .
- Will always have a positive ‘__‘…
- An increase in income leads to an ____________ in quantity demanded.
- YED > 0.
- Will always have a ‘+’ income elasticity of demand.
- An increase in income leads to an increase in quantity demanded.
(NORMAL GOODS) Two Types :
- NECESSITY GOODS :
- LUXURY GOODS :
Necessity Goods : e.g. Clothes.
- Only a small increase (inelastic).
Luxury Goods : e.g. Ray bands.
- YED > 1.
(larger increase, elastic).
% DIFFERENCE FORMULA :
Difference between two
values
————————————- x 100
Average Value
(Marketing Mix) People :
Are the employees involved in dealing with customers before, during and after a sale.
(Marketing Mix) People :
- Customer service is…
- Staff must be…
- Important aspect in all businesses : …
- Customer service is extremely important.
- Staff must be appropriately trained, motivated and show good communication skills when dealing with customers.
- Important aspect in all businesses : they’re the ones interacting with the customer.
(Marketing Mix) Role of People in the Marketing Mix (4) :
- Providing information.
- Supporting the customer when it comes to making decisions.
- Resolving problems.
- Completing the transaction.
(Marketing Mix) Process :
Includes all the steps a customer goes through to actually complete a transaction.
- Easiness will directly impact a customer’s perception of the business, e.g. credit card.
- Also includes payment systems, distribution and logistics.
(Marketing Mix) Physical Environment / Physical Evidence :
The design and features of the actual place where a transaction takes place.
- Can directly influence the customer’s shopping experience and their level of satisfaction as well as willingness to return.
(Marketing Mix) Aspects of Physical Environment/ Physical Evidence (3) :
- Cleanliness.
- Design, e.g. ease of movement around the premises and the ability to find what you are looking for.
- Facilities.
(Marketing Mix) Place :
Defines both the 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.
- Can be physical or virtual.
(Marketing Mix, Place) Distribution is the process of…
Process of getting the firm’s product to the market.
(Marketing Mix, Place)
- Distribution Channels : are the routes…
- Short Distribution : are where the…
- Long Distribution : where there are more…
- Are the routes to a market that a product takes from producers to final customers.
- Channels are where the producer sells either directly to the customer or through a retailer, e.g. Apple store.
- Where there are more than one intermediary (middle person) between producer and customer e.g. Amazon.
