marketing process

Question 1

What is SWOT analysis?

Answer 1

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.

Question 2

Internal assessment

Answer 2

Internal factors operate from inside the business, so they can be directly controlled.

Most businesses start by assessing their internal environment

Question 3

Internal assessment: strengths

Answer 3

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?

Question 4

Internal assessment: weaknesses

Answer 4

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Example weaknesses: out of date market research, inaccurate record keeping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?

Question 5

External assessment

Answer 5

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

Question 6

External assessment: opportunities

Answer 6

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?

Question 7

External assessment: threats

Answer 7

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?

Question 8

What is the product life cycle?

Answer 8

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

Question 9

Product life cycle: introduction

Answer 9

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

Question 10

Product life cycle: growth

Answer 10

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

Question 11

Product life cycle: maturity

Answer 11

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

Question 12

Product life cycle: decline

Answer 12

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

Question 13

Product decline

Answer 13

All products have a limited lifespan.

There are three key reasons why products decline:

• changing public perceptions
• technology and innovation
• changes in economic activity

Question 14

Product decline: changing public perceptions

Answer 14

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.

Question 15

Product decline: technology and innovation

Answer 15

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.

Question 16

Product decline: changes in economic activity

Answer 16

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.

Question 17

Importance of market research

Answer 17

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

Question 18

Purpose of market research

Answer 18

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

Question 19

Purposes of market research: demand

Answer 19

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

Question 20

Purposes of market research: competition

Answer 20

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

Question 21

Purposes of market research: target market

Answer 21

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

Question 22

Purposes of market research: market opportunities

Answer 22

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

Question 23

Determining information needs

Answer 23

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

Question 24

Data collection

Answer 24

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

Question 25

Data collection: primary data

Answer 25

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

Question 26

Data collection: types of primary data

Answer 26

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

Question 27

Data collection: secondary data

Answer 27

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

Question 28

Data collection: types of secondary data

Answer 28

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

Question 29

Data analysis and intepretation

Answer 29

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

Question 30

Data analysis and interpretation: cross tabulation

Answer 30

Using a table to analyse the data, or ‘tabulating’ the data, could be used to make comparisons between different categories

Question 31

Data analysis and interpretation: statistical interpretation analysis

Answer 31

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

Question 32

What are marketing objectives?

Answer 32

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

Question 33

Specific marketing objectives: increasing market share

Answer 33

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

Question 34

Specific marketing objectives: expanding product mix

Answer 34

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

Question 35

Specific marketing objectives: maximising customer service

Answer 35

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

Question 36

Why select a target market?

Answer 36

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

Question 37

Primary vs secondary target market: primary

Answer 37

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

Question 38

Primary vs secondary target market: secondary

Answer 38

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

Question 39

Approaches

Answer 39

Markets can be big or small depending on the type of business and what products they make

Question 40

Approaches: mass marketing

Answer 40

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

Question 41

Approaches: market segmentation

Answer 41

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

Question 42

Approaches: niche market

Answer 42

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

Question 43

What are marketing strategies?

Answer 43

Marketing strategies are the plans of action that are developed to achieve marketing objectives using the marketing mix

Question 44

Determining the marketing mix

Answer 44

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

Question 45

Determining the marketing mix: factors

Answer 45

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

Question 46

Determining the marketing mix: factors (product life cycle)

Answer 46

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

Question 47

Determining the marketing mix: factors (business environment)

Answer 47

Businesses need to understand that customers’ needs and wants change over time, so the marketing mix should constantly adapt

Question 48

Elements of the marketing mix: 4 Ps (product)

Answer 48

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

Question 49

Elements of the marketing mix: 4 Ps (price)

Answer 49

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

Question 50

Elements of the marketing mix: 4 Ps (promotion)

Answer 50

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

Question 51

Elements of the marketing mix: 4 Ps (place)

Answer 51

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

Question 52

Implementation

Answer 52

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

Question 53

Implementation: financial forecast

Answer 53

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

Question 54

Monitoring

Answer 54

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

Question 55

Controlling

Answer 55

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

Question 56

Controlling: analysis (sales analysis)

Answer 56

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

Question 57

Controlling: analysis (market share analysis)

Answer 57

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.

Question 58

Controlling: analysis (marketing profitability analysis)

Answer 58

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.

Question 59

Changing the marketing mix

Answer 59

Since the business environment is dynamic and fast-changing, the marketing mix has to be revised almost constantly.

Question 60

Changing the marketing mix: product

Answer 60

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.

Question 61

Changing the marketing mix: price

Answer 61

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.

Question 62

Changing the marketing mix: promotion

Answer 62

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.

Question 63

Changing the marketing mix: place

Answer 63

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!

Question 64

New product development

Answer 64

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!

Question 65

Product deletion

Answer 65

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.