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marketing strategies Flashcards

1
Q

Importance of market segmentation

A

One strategy for the whole market won’t effectively meet specific consumers needs and wants

Market segmentation is when the total market is divided into subgroups of people who share one or more common characteristics

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2
Q

Importance of market segmentation: process

A
  1. The business divided the entire market into different segments
  2. They analyse which segment is the most attractive
  3. They choose their target market and tailor their marketing strategies to them
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3
Q

Importance of market segmentation: aims

A

Segmentation leads to a competitive advantage

Aim

The aim is to boost market share, sales and profits by better understanding the needs of the target market

  • Promotion will be more effective
  • Products will better meet customer needs
  • Price points will be more suitable
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4
Q

Segmentation variables

A

Segmentation variables are used by marketing managers to split up the total market

They are:

  • Demographic
  • Geographic
  • Psychographic
  • Behavioural
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5
Q

Segmentation variables: demographic

A

The market is divided by personal features

Personal features can be easily identified and measured and deeply impact customer spending

Example variables: age, gender and income

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6
Q

Segmentation variables: geographic

A

The market is divided based on geographical location

Businesses usually segment this way because people in different locations have different needs and preferences

Example variables: regions, climate and rural vs urban living

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7
Q

Segmentation variables: psychographic

A

The market is divided by psychological factors

Market research is important for businesses to find out things like a customer’s values, like and dislikes and even hobbies

Example variables: lifestyle, motives and personality

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8
Q

Segmentation variables: behavioural

A

The market is divided by a customer’s relationship with the product

It’s all about finding out exactly what customers want from the product

This helps marketers design products that satisfy these preferences

Example variables: purchase occasion, price sensitivity, product knowledge, product attitudes, benefit expectations and loyalty

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9
Q

Differentiation

A

Differentiation is the creation of products or product features that distinguish a business’s goods and services from competitors

It’s about making a product different so it will stand out in the marketplace

Businesses can implement marketing strategies such as increased prices because they’re offering something unique

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10
Q

Differentiation: point of differentiation

A

How businesses set themselves apart

These include:

  • Eye-catching packaging
  • Better features
  • Value for money

These methods can mean that customers view the business’s product as superior to competitors, so they’ll be more likely to buy them

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11
Q

Differentiation: points of differentiation (customer service)

A

Customers want caring and personalised customer service

If salespeople assist customers at every step of the way and exceed their expectations, they’ll keep coming back for more

Personalised service

Customers want products that are tailored to their specific needs and wants

Caring service

Customers want to be treated honestly and with efficiency

Poor services equals lost sales and reputational damage

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12
Q

Differentiation: points of differentiation (environmental, social and ethical concerns)

A

Businesses can take into account customer concerns of important issues in society

Businesses can attract more customers when they show concern for important issues in society

Environmental

People are becoming increasing concerned about the health of the environment

Social and ethical

Known as ethical consumerism, consumers want to buy products that are not harmful to people, the planet or animals

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13
Q

Differentiation: points of differentiation (convenience)

A

Customers look for convenience in using and acquiring a product

Attainment convenience

If the product is the exact same, for the exact same price, customers will turn to the more convenient option

Product convenience

Customers want products that are easy to use

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14
Q

Positioning

A

Positioning is about creating an image or identify for a product or brand that distinguishes it from competitors

Example factors: price, quality, luxury, safety

How to position a product

  1. Decide what position that business wants to create
  2. Develop a marketing mix that will build this image

Repositioning a product

  • Benefits: regain market share and improve profits
  • How: new packaging, features or promotion
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15
Q

Tangible vs intangible

A

Product: a good or services that’s offered to the market for exchange, with the aim of satisfying a need or want

Tangible: Physical objects that can be owned. Goods fall into this category.

Intangible: Cannot be touched or owned. Services are intangible products as they don’t involve ownership, instead, they are experienced

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16
Q

Tangible vs intangible: total product concept

A

Most products are made up of both tangible and intangible benefits

Eg. when staying in a hotel, tangibles benefit may be food in a buffet whereas intangible benefit may be room service

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17
Q

Branding

A

Brand: a collection of features that identifies a product and differentiates it from competitors’ products

Brand symbol: An image that identifies a business or its products

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18
Q

Branding: importance

A

A strong brand is a very powerful asset that benefits both businesses and customers

Importance for customers

  • Identification
  • Evaluates quality
  • Intangible benefits

Importance for businesses

  • Differentiation
  • Familiarity
  • Brand loyalty

Developing the brand

Businesses put a lot of time, money and effort into developing their brand

Protecting the brand

Brands protect themselves through copyright and trademarks

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19
Q

Branding: strategies

A

There are three main types of branding strategies and they’re categorised by who owns them

Manufacturer’s brand

Owned by the manufacturer and is widely recognised and available

Private or house brand

Owned by retailers or wholesalers and typically sold at a lower price because their products are cheaper to produce

Generic brand

Products don’t have a brand name, only the product name, and are usually sold in plain packaging

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20
Q

Packaging

A

Packaging is a really important element with lots of different functions

Protection

It protects the product

Attention

It attracts consumer attention by using elements like bright colours

Convenience

It creates extra convenience for transporting, storing and using products

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21
Q

Packaging: labelling

A

Labelling is part of the product or its package that provides important information

Functions of labelling

Information: lets customers identify element such as use-by date and country of origin

Promotion: might be helpful in promoting the business’s other products

Protection: it can protect consumers

Most of the information displayed on labelling is required by law in Australia

Labelling aims to ensure customers use products safely and can easily compare similar products

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22
Q

Why is price important?

A

Price is the amount of money the business charges for a product and has to be consistent with how much money a customer is willing to spend on it

Importance for customer

Price is an indicator of value

Importance for businesses

It allows businesses to generate revenue and make a profit

Too high: this can turn off customers and reduce sales

Too low: The business might not cover costs and they might be seen as ‘cheap’

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23
Q

Pricing methods

A
  • Cost-based pricing
  • Marketing-based pricing
  • Competition-based pricing
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24
Q

Pricing methods: cost-based pricing

A

The business determines their cost of production or purchasing and then adds a mark-up

The business starts at the cost it takes to produce one unit. Then, they add an extra amount, which is the profit.

Direct costs are stuff like materials and indirect costs are stuff like insurance.

Price = cost + mark-up

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25
Q

Pricing methods: cost-based pricing (pros and cons)

A

Advantages

It’s a great starting point as if a business wants to make a profit, it has to cover its costs first

It’s also very simple to use

Businesses can use market research to determine the mark-up

Disadvantages

It can be difficult to determine the mark-up percentage: if it is too high, the product might be overpriced and unsold and if it is too low, the business could lose profit it could have made

It doesn’t consider other elements of the marketing mix such as promotion methods and location of sale

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26
Q

Pricing methods: market-based pricing

A

Prices are set following the levels of supply and demand in the market

To use this method, we need to understand the relationship between supply and demand

Supply: the quantity of products that businesses will sell at a particular price

More supply than demand → prices fall

Demand: the quantity of product that customers will buy at a particular price

More demand than supply → prices rise

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27
Q

Pricing methods: market-based pricing (pros and cons)

A

Advantages

can be very effective as it takes advantage of what’s happening in the market to maximise profits

Disadvantages

prices will constantly fluctuate, so it can be difficult to apply

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28
Q

Pricing methods: competition-based pricing

A

Prices are set to cover production and operating costs, and are comparable with competitors

When customers see similar products, they usually pick the one at the lowest price (so when there’s a lot of competition in the market, this method is used)

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29
Q

Pricing methods: competition-based pricing (options)

A

Below competitors

Helps businesses to break into a new market

Equal to competitors

Avoids the risk of price competition, and instead competes on features like quality

Above competitors

Businesses can create a superior images for their product to appeal to status-conscious buyers

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30
Q

Price skimming

A

The business charges a very high price for a product in its introduction stage and then eventually lowers the price

Usually there’s no substitute as the product is unique or prestigious, so demand is high

So customers are willing to pay any price to be the first to own it

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31
Q

Price skimming: advantages

A
  • Testing and feedback
  • Recovers costs early
  • Improves brand image
  • Slow rise in market share
32
Q

Price penetration

A

Businesses charge the lowest price possible when a product hits the market

This encourages customers to try before they buy, because they can purchase the product at a lower price than normal

33
Q

Price penetration: advantages and disadvantages

A

Advantages

It can build a large market share early in a competitive market

It can discourage competitors from entering the market

Businesses can increase their price when the product is more established

Disadvantages

If the price is too low, it’s harder to cover costs and make a profit

It can be difficult to increase prices as customers are so used to them

34
Q

Loss leader

A

This is when businesses sell their product at, or below their cost so they don’t profit from these products

Why do this?

The loss leaders attracts customers to the store in the hope they’ll also buy other products

So the business makes up for the loss from the loss leader by selling its other higher-priced items

35
Q

Loss leader: advantages

A

It can be used when a product is overstocked or difficult to sell

A business can position itself as a high value option

36
Q

Loss leader: advantages

A

It can be used when a product is overstocked or difficult to sell

A business can position itself as a high value option

37
Q

Price point

A

Prices are sold at predetermined levels

The business chooses a few key price points for each product line

Price points are based on the idea that customers form psychological associations with products at different price points

38
Q

Price points: advantages

A

Advantages

Customers can be encouraged to trade up to the next price point

39
Q

Factors influencing pricing

A

The choice of strategy can depend on a number of different factors

Marketers need to ask themselves

  • What is our marketing objective?
  • What stage of the product life cycle is the product in?
  • Is our product unique or innovative?
  • What does the economy look like?
  • Who is our target market?
40
Q

Factors influencing pricing: price and quality interaction

A

Products that are higher in quality are normally sold for higher prices and vice versa as higher quality products usually require higher costs

Together, price and quality form part of the product’s image

Low price → ‘cheap’ → some customers can be so price sensitive that small increases in the price of these items means they turn to competitors

High price → ‘prestigious, high quality’ → this is what appeals to status-conscious buyers because they believe they’re getting a better product

However, there are always exceptions to the rule!

41
Q

Reasons for promotion

A

Promotion involves the activities that inform, persuade and remind current and potential customers about a business’s products

It’s about making sure people are aware of and interested in the product

Businesses invest lots of time and money into developing promotional campaigns

42
Q

Reasons for promotion: inform customers about products

A

Promotion helps consumers make informed decisions by providing them with information about the product

It informs customers of:

  • What is does
  • Features
  • How it stands out from competitors

Importance for:

  • New products: helps build a customer base
  • New customers: it attracts and encourages them by creating awareness of both new and existing products
  • Existing customers: reminds them about a product and encourages them to make repeat purchases
43
Q

Reasons for promotion: develop a product’s image

A

Reinforcing a product’s image also reinforces the business’s image, which encourages brand loyalty

The product image depends on the target market and their likes and dislikes

44
Q

Reasons for promotion: persuade customers

A

The aim of promotion is to create customer interest in the product to the point that they would choose it over competitors’ products

This means using tactics such as:

  • customer testimonials
  • special offers
45
Q

Reasons for promotion: increase sales

A

If more people are aware of and persuaded to buy the product, sales will increase

This will lead to:

  • higher profits
  • greater market share
46
Q

Importance of the promotion mix

A

The promotion mix is the combination of methods that businesses use to promote their products

Businesses can use any of these to attract customers but if they want to maximise their success, it’s important to use a mix of strategies

Includes 4 elements: advertising, personal selling and relationship marketing, sales promotions, publicity and public relations

Each element of the promotion mix has different strengths and appeals to different people. So a combination of strategies ensures the business can reach as many customers as possible.

47
Q

Advertising

A

Advertising is a paid, non-personal message that’s communicated to a mass audience through a mass medium

48
Q

Advertising: advertising media

A

There are a range of media that a business can use to advertise its products

A business could combine these to create a very saturated coverage of the market

Mass marketing: the most popular form of advertising (eg. TV, radio and newspaper ads)

Direct marketing: organisations directly communicate product information to customers (eg. mailing out catalogues, email, texts)

Telemarketing, e-marketing and social media advertising: these mediums use telephones and the internet to advertise products (eg. instagram)

Billboards: usually placed in strategic locations to make sure they’re seen (eg. airports)

49
Q

Advertising: advertising media (factors influencing advertising media)

A

It’s really important to choose the right media so your ads reach your target market

Type of product and its positioning: a chanel perfume aimed at women might be advertised in Vogue while a men’s Rolex might appear in GQ Men

Size and features of the target market: a small target market could be reach with flyers and telemarketing. A large target market might require television and radio ads.

Budget: a business with a large budget can probably afford TV ads. A small start-up might opt for e-marketing to save costs.

Product life cycle: when the product is new, promotion is very intense. Promotion is reduced later on once customers are aware of the product

50
Q

Advertising: advertising media (pros and cons)

A

Advantages

Flexibility: an ad could focus on a small target market or be tailored to reach a large or even global audience.

Businesses who run successful advertising campaigns can greatly increase their sales and profits

Disadvantages

Expensive: businesses should investigate how they can advertise cost-effectively and within their budget constraints

51
Q

Personal selling

A

Involves the activities of a sales consultant directed towards customers

Best used for:

  • Expensive and complex products
  • Personalised products

These items requires sales staff to familiarise customers with the product and explain its features, benefits and how to use it

52
Q

Personal selling: advantages and disadvantages

A

Advantages

Sales staff can tailor their message to suit the customer’s circumstances

Customers really value this service

It can lead to a long-term relationship, resulting in repeat sales

Disadvantages

It can be expensive as it requires more employees

Employees need the skills to interact and connect with customers

Face-to-face interaction is difficult with customers further away

53
Q

Relationship marketing

A

This involves building strong relationships with individual customers that are long-term and cost-effective

It’s about rewarding customers who make frequent purchases so they keep coming back

54
Q

Relationship marketing: advantages

A

By knowing your customers you can meet their individual needs and wants, so you’re offering something uniquely suited to them

The business gains a competitive advantage so the end result is brand loyalty

55
Q

Sales promotion

A

The activities or materials designed to encourage customers to purchase a product

Examples

  • Coupons or 2-for-1 deals (offers customers extra value for their money)
  • Premiums (also known as free gift with purchase)
  • Point of sale displays (located at the end of a store aisle or at front of a shop to catch the customer’s eye)
  • Free samples (encourages customers to try, and then hopefully buy new products)
  • Competition (such as giveaways on social media)
56
Q

Sales promotion: advantages and disadvantages

A

Advantages

  • Attracts new customers
  • Persuades new and existing customers to trial new products
  • While used to boost sales in the short-term, if customer ends up liking the product, it leads to repeat purchases
  • Can increase the effectiveness of other strategies like advertising

Disadvantages

  • If overused, customers will get used to the promotion price and be hesitant to buy at full price
  • It won’t work for every product
57
Q

Publicity

A

Any free news coverage about a business or its products

Media attention is a great way for businesses to boost their profile without spending money

58
Q

Publicity: advantages and disadvantages

A

Advantages

  • Raises awareness of new or existing products
  • It can improve a product’s image, leading to more sales
  • It’s great for damage control when a business needs to improve its negative reputation by highlighting its positive qualities
  • As it’s basically free, it’s a great option for businesses with smaller budgets

Disadvantages

  • Publicity can backfire
  • Sometimes a business can’t control the timing and content of the message
  • It risks miscommunication or sensitive information being released that reflects negatively on the company
  • Publicity reaches a mass audience so it isn’t tailored to the target market
59
Q

Public relations

A

Communications aimed at creating and maintaining positive relationships between a business and its customers

Usually done through the media

60
Q

Public relations: advantages and disadvantages

A

Advantages

  • Promotes a positive business image by highlighting positive qualities customers love
  • When a firm has failed PR could turn an untrustworthy or unethical reputation into a responsible and positive one
  • It communicates information about a business and its products to a wider audience
  • It can provide insight into public trends that could affect the business’s sales

Disadvantages

  • Businesses have little control over the message once it’s released
61
Q

The communication process

A

Promotion is all about communication!

Marketers need to find ways to communicate with their customers clearly and efficiently.

No matter how great or important the message, without effective communication promotion essentially has zero value.

This can lead to lost sales, lost profits and reputational damage.

62
Q

The communication process: effective communication

A

Communication is integral to business success! So, it’s important that promotional messages are delivered through trusted and respected channels, like television advertisements or salespeople who interact directly with customers.

But sometimes communication through these channels can become distorted, and communication turns into miscommunication. This is because of ‘noise’. Noise includes misinterpretations, grammatical errors or inappropriate images.

To avoid these miscommunications, businesses can use reliable and respected channels like opinion leaders and word of mouth to spread their messages.

63
Q

The communication process: Opinion leaders

A

An opinion leader is a person with the ability to influence others.

They’re usually held in high esteem by others, so their opinions are valued and their advice or recommendations are followed. An opinion leader could be a footballer like Cristiano Ronaldo, an actress like Julia Roberts, or simply someone from your peer group.

Many companies use celebrity endorsement as part of their marketing strategy, whether it’s to endorse an existing product or spread publicity for a new release.

64
Q

The communication process: word of mouth

A

Word of mouth is when people influence each other through their conversations.

People are more trusting of people they know than they are of businesses. After all, a business’s main focus is usually profit maximisation.

Word of mouth can also be really valuable when customers are faced with several similar alternatives. If you’re choosing a new pair of sneakers from five options, the recommendations that your friends or family make will probably be a deciding factor.

In today’s world, many companies are even using social media platforms like Instagram to start word of mouth communications.

65
Q

What is place?

A

All of the activities that make products available to customers at the time and location they want to purchase them

It’s about forming a chain from the producer to the consumer

66
Q

Distribution channels

A

The routes that products travel along from the producer to the consumer

This journey usually involves a few intermediaries (such as producers, wholesalers, retailers, customers)

This means everyone can focus on what they do best, so it’s all about efficiency

67
Q

Distribution channels: producers to consumer

A

Producer → consumer

The product travels straight from the producer to the consumer with no intermediaries involved

The producer could use retail outlets to sell directly to customers

Customers could shop online or place mail orders

It can be done through telesales, which is when goods or services are sold via the telephone

This channel is mostly used for services or businesses with a low sales volume and less customers

68
Q

Distribution channels: producer to consumer (pros and cons)

A

Advantages:

  • The business doesn’t have to pay intermediaries to sell for them, meaning lower costs for businesses and lower prices for customers
  • This can lead to a competitive advantage

Disadvantages

  • More time and expenses spent on personalised sales and delivery
  • It’s best used by businesses with fewer customers otherwise it’s too difficult to create cost savings
69
Q

Distribution channels: selling via retailers

A

Producer → retailer → consumer

Retailers purchase goods from the producer and on-sell them to consumers at a higher price

Retailers are probably the intermediaries we see most and sell many products including bulky and perishable items

70
Q

Distribution channels: selling via retailers (pros and cons)

A

Advantages

  • Producers can focus on manufacturing
  • Customers receive better customer service, so they’ll be more satisfied
  • Retailers can help in providing knowledge and promoting products
  • Products can be sold in more places, so there are more potential customers

Disadvantages

  • Small businesses might find it hard to convince retailers to sell their products
71
Q

Distribution channels: selling via wholesalers

A

Producer → wholesaler → retailer → consumer

The wholesalers buys products in bulk from the producer and resells them in smaller quantities to retailers or consumers

It’s usually used by producers who mass-produce

72
Q

Distribution channels: selling via wholesalers (pros and cons)

A

Advantages

  • Save costs in logistics
  • Products are sold in more places to more customers

Disadvantages

  • When wholesalers sell directly to customers, customers might get lower level of customer service
73
Q

Distribution channels: selling via agents

A

Producer → agent → wholesaler → retailer → consumer

Agents are people who are paid commission by producers to distribute goods to wholesalers

They are usually used for goods that are inexpensive or frequently used

They’re also used to sell services

74
Q

Distribution channels: selling via agents (advantages)

A

Advantages

  • The producer doesn’t have to deal with selling its products
  • Agents can negotiate better deals and help the producer sell their products at the highest possible price
75
Q

Contemporary distribution methods

A

These are all non-store retailing methods, meaning products aren’t sold through stores

Door to door

Usually used by companies who provide utilities like electricity and water and have unique customer cases

Vending machines

Placed in locations like train stations and airports so customers can buy products at any time of the day

Telemarketing

Salespeople call via telephone in an attempt to make a sale

76
Q

Choosing a channel

A

Marketers go about choosing their distribution channel based on the following factors

Customer preferences

Where are our customers likely to shop?

Market reach

How many customers do we need, or want, to reach?

Speed

How quickly do we need to get the product to customers?

Customer service

How much customer service should we provide?

Business Studies (17 decks)

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