marketing process Flashcards
What is SWOT analysis?
Situational analysis allows the business to have a better understanding of its current position and where it aims to be
SWOT analysis assesses a businesses:
Strengths (internal) Weaknesses (internal) Opportunities (external) Threats (external)
One of its main focuses is to provide an understanding of a business’s position compared to its competitors
It defines the key factors, both positive and negative, that assist marketers in creating strategies that will move them from where they are now, to where they want to be.
Internal assessment
Internal factors operate from inside the business, so they can be directly controlled.
Most businesses start by assessing their internal environment
Internal assessment: strengths
Strengths are organisational attributes that assist in achieving objectives.
If businesses can identify their strengths, they can harness them to reach their full potential
Example strengths: good internal communication, strong brand reputation
Questions to help identify strengths: Do we have loyal customers? How efficient is our machinery? Are our employees motivated?
Internal assessment: weaknesses
Weaknesses are organisational attributes which hinder the achievement of objectives
Businesses must understand what their weaknesses are to avoid making costly mistakes, and instead actively work to turn their weaknesses into strengths
Example weaknesses: out of date market research, inaccurate record keeping
Questions to help identify weaknesses: Are our machines breaking down often? How many products have been defective? Are our staff unqualified?
External assessment
External factors can only be responded to rather than controlled
Changes in the external environment can significantly alter the course of a business and the state of the internal environment if not responded to correctly
As external factors are more dynamic and unpredictable, businesses need to constantly monitor any changes
Doing this means they can discover opportunities to exploit and threats to avoid
External assessment: opportunities
Opportunities are factors that are potentially helpful in achieving objectives
By understanding the available opportunities, the business can analyse all potential options. This means they could grow larger, gain more customers or achieve higher profits!
Example opportunities: a growing customer base, a boom in the economy
Questions to help identify opportunities: how can we make use of new technology? what is the state of the economy like? are there any opportunities for expansion?
External assessment: threats
Threats are potentially harmful when it comes to achieving organisational objectives
Identifying threats is extremely important, as the business can then work to assess them, and reduce their likelihood of damaging business success
Example threats: a competitor releases a similar or superior product
Questions to help identify threats: What does the market share look like compared to competitors? What new regulations do we have to follow?
What is the product life cycle?
The product life cycle (PLC) is the typical stages a product progresses through during its life
Each stage of PLC comes with different features, which means marketing mixes and strategies should be adapted to maximise profits
Product life cycle: introduction
The introduction is when the product makes its first appearance in the market
The goal is to create consumer interest in and awareness of the product
Businesses will usually experience a loss here because:
- Customers know little to know about the product, meaning sales are low
- Most funds were spent on research and promotion, so costs are high
Marketing mixes and strategies
Product: there is only one or few products as the brand and reputation need to be established
Promotion: advertising or sales promotion encourage customers to trial the brand and educate them about the product
Price: because there is little demand at this stage, the price is often lower than competitors to gain traction
Place: selective distribution is usually used to let customers gradually familiarise themselves with the product
Product life cycle: growth
Growth is where the product experiences increased demand, sales and profit until it becomes established
Businesses here aim to increase sales to gain brand acceptance and market share
As sales rise, the business starts to recover costs so its can break-even and make a profit
Marketing mixes and strategies
Product: the quality of the product should be maintained or improved
Promotion: is used to emphasise differentiation from the increased competitors and reach a wider audience
Price: the same price should be maintained as customer demand increases and market share begins to rise
Place: more distributors are sought as product popularity and demand in different markets increases
Product life cycle: maturity
Maturity is where the total market potential is reached
Demand reaches its peak, and the market becomes so saturated that there is no more room to grow
Sales and profits are still high, but they will start to plateau
The goal is to focus on retaining existing customers and to cut costs, as boosting sales is now more difficult
Marketing mixes and strategies
Product: because of a high level of competition, differentiation is a key focus
Promotion: while still used, promotion is less intense than at launch
Price: many products are now sold at lower prices to maintain sales and market share
Place: distributions is intensive to ensure the product is widely available to as many people as possible
Product life cycle: decline
During the decline stage there is decreased interest in the product as customers move to alternative and superior products
As demand drops, sales and profits decline rapidly and the business might make a loss
Marketing mixes and strategies
Product: the firm spends less money supporting the product and will either stop making it, or rejuvenate it
Promotion: will be discontinued as the focus shifts to newer and better products
Price: is usually reduced to sell off last bits of leftover stock
Place: distribution channels are reduced, with the product mainly available to loyal customer segments
Product decline
All products have a limited lifespan.
There are three key reasons why products decline:
- changing public perceptions
- technology and innovation
- changes in economic activity
Product decline: changing public perceptions
The first reason why many products decline is public perceptions and trends, which change over time.
Trends come and go as new ideas and products enter the market, causing others to become outdated.
Consumers are no longer interested in past versions.
Product decline: technology and innovation
Technology and innovation create new and improved products.
These eliminate the need for older, less advanced products.
Technology also means that things can be done in a cheaper and faster manner.
Product decline: changes in economic activity
Changes in economic activity will lead to constant shifts in consumer spending habits.
The willingness or ability to spend money rises or falls in line with economic fluctuation.
While spending will rise alongside rising incomes during a period of boom, a recession will usually have the opposite effect as incomes and spending power fall.
Importance of market research
Market research is the process of gathering, recording and analysing data to solve a specific marketing problem
The insights gained from this process allow markets to make informed decisions about the marketing mix, such as:
- which price to charge
- what forms of promotion to use
Businesses wanting to undertake marketing effectively need to understand the market they’re entering to make the most of opportunities and avoid problems
Purpose of market research
Includes: demand, competition, target market, market opportunities
Marketing strategies are most effective when they’re based on accurate, up-to-date and relevant data, which market research provides
Without market research, the chances of product, or even business failure could increase
Purposes of market research: demand
Market research helps to estimate the level of market demand, which is the quantity of a product that consumers are willing and able to buy given its price
Effect for business
Businesses can increase sales by adjusting their prices accordingly
Businesses don’t accidentally overproduce, which would create large amounts of leftover stock and waste money
Purposes of market research: competition
Market research helps businesses remain competitive by analysing competitors
Effect for business
If a business knows what strategies competitors are using they’ll learn how they can differentiate themselves and gain a competitive advantage
Example research includes investigating:
- What products competitors are selling
- What prices competitors are charging
Purposes of market research: target market
Market research helps to more accurately define the target market, which is the group of customers the business is trying to sell to
Effect for business
The marketing plan is less likely to fail, as it’s accurate and responsive to customer needs
Understanding of customer needs and wants will lead to:
- Effective promotional campaigns and price points
- Products that customers actually want to buy
Purposes of market research: market opportunities
Market research can help businesses discover new market opportunities, or ‘gaps in the market’, and businesses should aim to fill these up
When customers desires goods or services that aren’t available, or they have needs and wants that haven’t been met, this represents a market opportunity
Effect for business
If a business meets these needs before competitors do, they can get a competitive advantage!
Market opportunities might call for:
- Developing a new product
- Selling a product to different markets
- Selling a product at different prices
Determining information needs
Market research is about solving a specific marketing question or problem
By identifying the problem clearly and accurately, a business can determine what information it needs to collect
Effect on business
If it’s done well, this means that market research will help to develop strategies that:
- Meet customer needs
- Achieve marketing objectives
Data collection
Collecting the information needed to solve the problem
There are two different types of data that can be relevant to the marketing problem:
- Primary data
- Secondary data
Data collection: primary data
Primary data is collected from original sources to solve a specific marketing problem
Collection
Businesses have to collect it themselves. As this takes time and money, a business can hire researcher to do it for them.
Result
Helps to get into the minds of consumers
The information collected will be much more useful and specific to the problem
Data collection: types of primary data
Survey method: collect first-hand opinions about customer opinions
Observation method: provides accurate information, but only focuses on the what, not the why of customer behaviour
Experiment method: involves keeping the environment the same and changing one thing to see if it changes others
Data collection: secondary data
Secondary data involves analysing data that was already collected by others
Collection
It’s getting insights from information that’s already available. This means less time, money and effort goes into research.
Result
The information gathered probably won’t be very specific as it wasn’t collected to solve the specific problem
Data collection: types of secondary data
Internal data
Collected from sources inside the business, but wasn’t collected for the purpose of solving the marketing problem
External data
Gathered from sources outside the business
Data analysis and intepretation
After collecting all the data that is needed, marketers need to analyse it and interpret what it means for the business
It’s essential that both researchers and managers are involved in this step to make sure there is no personal bias
This step is about determining what the data means and putting it into a report for management so it can be used to make important decisions
Data analysis and interpretation: cross tabulation
Using a table to analyse the data, or ‘tabulating’ the data, could be used to make comparisons between different categories
Data analysis and interpretation: statistical interpretation analysis
This focuses on data that represents the average, or divergences from typical patterns. Any patterns or trends in the data can then be identified and acted upon
What are marketing objectives?
Marketing objectives are realistic and measurable goals that businesses aim to achieve using their marketing plan
Objectives are what provide a sense of purpose and direction so they should include specific targets rather than broader goals
Even though marketing objectives should be similar to the business’s overall goals, they should be more focused on customers
Specific marketing objectives: increasing market share
Market share is the business’s share of total industry sales for a product
Every business wants growth in market share as greater sales means greater revenue
How to achieve increased market share
Develop a large range of products that satisfy a large range of customers in the market
In bigger companies, small increases usually lead to large gains in revenue and profits
Specific marketing objectives: expanding product mix
Product mix is the set of products a business makes available to its customers
Expanding the product mix means that a business is creating a wider range of products to sell
Customer preferences are always changing, so a large product mix can help to cater for adapting needs, which will boost profits in the long-run
How to achieve an expanded product mix
Understand customers and their needs, as these will determine the level of demand for both new and existing products
Create a large and varied product mix that responds to demand, maximising sales
Cater to a range of different target markets
Specific marketing objectives: maximising customer service
Maximising customer service is all about responding to a customer’s needs, wants and concerns so that they can walk away feeling satisfied
Effective customer service means customers think positively about the business, which create a growing customer base and repeat purchases
How to achieve maximum customer service
Ensure it takes place before, during and after a sales transaction
Everyone in the business should adopt it, from finance to marketing
Some businesses can use higher levels of customer service as a way to differentiate themselves
Why select a target market?
A target market is a group of customers at which a business aims to sell its products
This group usually shares similar characteristics, needs and wants, such as: age, income, lifestyle
Marketing resources can be used more efficiently, leading to cost-effective and efficient strategies
Market research data is collected more effectively, so the business can make comparisons and monitor trends over time
Marketing can better understand consumer buying behaviour, leading to effective marketing strategies that cater to the target market
Primary vs secondary target market: primary
The market segment that marketers target most of their resources towards
Areas like promotion, products and price will all cater to this group specifically, as they make up the majority of sales
Primary vs secondary target market: secondary
A smaller and less important market segment that the business sells to
Strategies like promotional campaigns will usually not be catered towards this groups
Businesses should still be prepared to engage with these customers and understand their needs
Approaches
Markets can be big or small depending on the type of business and what products they make
Approaches: mass marketing
Mass marketing is when a business targets a large range of customers with common needs, wants and demands
Mass marketing assumes that a single product can meet the needs of most people, even though it has little or no variation
This means developing just one promotional strategy, price point, and distribution system which can reach every customer
Marketing mix
Businesses targeting a mass market usually develop a single marketing mix directed at everyone
Approaches: market segmentation
Market segmentation is when the total market is divided into subgroups of people who share one or more common characteristics
Market segmentation is based on the idea that buyers have unique needs, wants and demands. So product offerings are more customised
As these businesses will have less customers, the trick is to build relationships with them to gain repeat sales
Marketing mix
The marketing mix is designed to meet the needs of a relatively uniform group
To select a segment, the business will divide the market into parts, and then choose the segment or segments with the most potential
Approaches: niche market
A niche market is when a business selects a very narrow target market segment
Usually, this segment is too small to be profitable for large businesses, so these unique needs are overlooked
As they sell a very particular product to a very particular group of people, niche businesses can avoid competition
What are marketing strategies?
Marketing strategies are the plans of action that are developed to achieve marketing objectives using the marketing mix
Determining the marketing mix
The marketing mix refers to the four elements that make up the marketing strategy: product, price, promotion, place
Businesses can control these variables and combine them to reach their target market
If a firm gets them right, customers will be more likely to buy their products
Determining the marketing mix: factors
The marketing mix is highly integrated, so changing one P will also change other Ps
There are lots of factors that affect it, so some Ps might become more important than others depending on the situation
These include: product life cycle, business environment
Determining the marketing mix: factors (product life cycle)
The product life cycle determines the emphasis placed on each variable, and which marketing mix the business should adopt at a certain point in time
Promotion
During the introduction stage, promotion is emphasised to spark customer interest
During decline, promotion is discontinued as the business promotes newer products
Determining the marketing mix: factors (business environment)
Businesses need to understand that customers’ needs and wants change over time, so the marketing mix should constantly adapt
Elements of the marketing mix: 4 Ps (product)
Businesses should first identify what customer needs and wants are, and then create a product that will satisfy these
Not just deciding what product to make! It includes determining: features, packaging, guarantees, quality.
Customers don’t just buy tangible products that fulfil their needs and wants, but they also want to gain intangible benefits
Elements of the marketing mix: 4 Ps (price)
Businesses need to determine what the price is as well as what pricing method and strategy to use
Price is the only P that directly generates revenue
Setting the right price can be a tricky balancing act, as customers want good value, but the business also needs to cover its costs
How do businesses set their prices?
- Price products above the cost of production
- Price products below, at or above competitor prices
- Factors like consumer demand
Elements of the marketing mix: 4 Ps (promotion)
All about informing, persuading and reminding customers about products
Even if a product is best in the market, if no one knows about it, no one will buy it
Promotional strategies like advertising or sales promotions should be developed carefully
The rise of technology means that businesses are changing the way they promote their products
Elements of the marketing mix: 4 Ps (place)
The distribution channels that get the product to customers
Multiple intermediaries form a path from the factory to the customer
The number of intermediaries used determines how widely a product is distributed
Implementation
Implementation is the process of putting marketing strategies into operation
Describes how, where and when things are to be done
It can be difficult as unexpected circumstances can threaten the success of the marketing plan
How it’s done
Monthly, weekly and daily decisions to ensure the plan is effectively being put into place
Implementing changes to ensure the plan is adapting to circumstances
Implementation: financial forecast
A financial forecast will estimate what the income statement will look like for a particular strategy
By comparing the potential revenues and costs, the business can see if the strategy will be profitable
Then they will be in a better position to allocate their marketing resources
Cost estimate
Estimate costs, like market research and promotional costs
Revenue estimate
A revenue estimate is how much sales and revenue the strategy is expected to generate
Monitoring
Monitoring is about observing the actual progress of the marketing plan
It’s watching what happens when a product or marketing mix hits the market and collecting information
How it’s done
Monitoring requires every employee to gather information and report any changes, problems or opportunities that might emerge
Controlling
Controlling means comparing planned results against actual results and taking corrective action to make sure marketing objective are achieved
Marketers need to ask themselves: What are the objectives that the marketing plan aims to achieve? Are the objectives being met?
How it’s done: analysis
To compare results accurately, businesses should first establish key performance objectives (KPIs) that outline what should be achieved
Businesses can use a mix of 3 KPIs to measure the effectiveness of the marketing plan:
- Sales analysis
- Market share analysis
- Marketing profitability analysis
Controlling: analysis (sales analysis)
Compares actual sales against budgeted sales to measure the success of the market plan
Pros: Sales figures are usually simple and inexpensive to collect and process
Cons: Sales figures don’t reveal exact profit levels for a strategy as no costs are considered, so this might limit their effectiveness
Controlling: analysis (market share analysis)
Compares the business’s portion of total market sales to competitors
Pros: The business can see how effective its strategies are when compared to others in the same industry. Businesses can determine if fluctuations in sales are due to their marketing strategies, or uncontrollable external market forces.
Controlling: analysis (marketing profitability analysis)
Involves splitting up the total marketing costs into specific activities
Pros: marketers can see the big picture and its different components. Businesses can see the success of each activity and then decide how to best allocate resources.
Changing the marketing mix
Since the business environment is dynamic and fast-changing, the marketing mix has to be revised almost constantly.
Changing the marketing mix: product
Products need to be continually upgraded to maintain a competitive position. Just think about Apple and how they’re constantly adding new and shiny features such as facial recognition.
Changing the marketing mix: price
Prices also need to change with the external environment. For example, if the economy goes into a recession, prices fall dramatically to make sure customers can still afford certain products.
Changing the marketing mix: promotion
The different stages of the product life cycle will create different levels of emphasis on promotion. While there might be high levels of advertising and publicity when a product hits the market, investments in promotion will probably fall in growth and maturity as customers become more familiar with the business and its products.
Changing the marketing mix: place
When product popularity grows, expanding distribution channels is necessary. On the other hand, distribution contracts when products are no longer desired and reach the end of their life cycle!
New product development
If a business wants to be successful in the long-term, they should provide a large and varied product mix that changes as their customers change. This means constantly introducing new products that meet the changing needs and wants of customers.
Usually, this will involve research and development so that businesses can stay up-to-date with the latest technology and create innovative new products!
Product deletion
To maintain a product mix that is relevant to its customers, businesses will have to eliminate products that are no longer popular or that are out-of-date.
Most of the time, keeping outdated products creates a dated and unfavourable image for the business. This means that if a product enters the decline stage, it’s usually best to delete it as soon as possible, or redevelop it to boost its popularity once more.
